Evidencing the Effectiveness of Health Interventions in Free Movement Cases

Angus MacCulloch, Lancaster University Law School

Two judgments on Articles 34/36 TFEU (concerning the free movement of goods) handed down by separate courts in the same week give stark examples of the importance of having a good evidence base before a State seeks to justify a public health intervention in the market. The first example was the judgment of the CJEU in Case C-148/15 Deutsche Parkinson Vereinigung, a preliminary reference considering the compatibility of a German measure setting fixed prices for prescription-only medicines. The second being the judgment of the Inner House of the Court of Session in Scotland in Scotch Whisky Assoc v LA [2016] CSIH 77, where the court upheld the Lord Ordinary’s finding that the Scottish Government’s plans to introduce Minimum Unit Pricing (MUP) for alcohol were not contrary to Art 34 (following the CJEU reference in Case C-333/14). Both measures involved health justifications for pricing restriction measures that fell foul of Art 34, but the results were very different.

Fixed Price Prescriptions

The German measure in DPV fixed the prices of all prescription-only medicines in Germany; restricting the ability of pharmacists to provide products at a discounted price. DPV, a self-help organisation for Parkinson’s disease sufferers, had set up an arrangement with a Dutch mail order pharmacy DocMorris (yes, that DocMorris) to put in place a bonus system for its members. That bonus system was challenged. The scheme was found to infringe Art 34 TFEU as mail-order pharmacies are limited in the services they can offer, and the ability to price competitively is the most likely means they have to access the German market directly [24]. The Court then turned to the argument that the system of fixed prices was justified in order to ‘ensure a safe and high quality supply of medicinal products’ [32]. The argument was that without set prices pharmacies may enter into ‘ruinous price competition’ which might result in the closure of physical pharmacies in rural or underpopulated areas. It was argued those pharmacies alone were well suited to offering safe high quality supplies, tailored advice, and effective checks on medicines [33]. At [35] the Court applied the test it set out in the Case C-333/14 SWA reference:

‘The reasons which may be invoked by a Member State by way of justification must thus be accompanied by an analysis of the appropriateness and proportionality of the measure adopted by that State, and by specific evidence substantiating its arguments’.

It was this final point on ‘specific evidence’ that proved to be crucial in the case, as the Court went on to explain in [36].

‘that court must examine objectively, through statistical or ad hoc data or by other means, whether it may reasonably be concluded from the evidence submitted by the Member State concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods’.

In the subsequent paragraphs the Court went through the submissions of the parties and suggested that there was ‘no evidence to substantiate the contention’ that the scheme was necessary to ensure a uniform supply of prescription-only medicines [37]. In fact nothing before the Court suggested that without the system mail order pharmacies, competing on the basis of price, would threaten essential services, such as emergency care or providing activities in the general interest; in fact competition might encourage traditional pharmacies to improve such services [39-40]. The assertion of the Court at [42] is perhaps the most telling:

‘it should be noted that the existence of a genuine risk to human health must be measured, not according to the yardstick of general conjecture, but on the basis of relevant scientific research’.

Because of the failure to provide convincing evidence of the effectiveness of the measure the Court found that it had ‘not been shown to be an appropriate means of attaining the objectives relied on’ [45]. It had therefore fallen at the 1st hurdle in the two-part test. As it was not shown to be ‘appropriate’, there was no need to consider if it was ‘necessary’.

Minimum Unit Pricing

The Inner House (IH) in SWA were tasked with applying the same two-part test, but this time the result was very different. The court’s summary of the evidence presented by the Scottish Govt runs across many paragraphs, [125]-[143], citing numerous studies, both domestic and international in scope. The Petitioner challenged the conclusions and methodology of a number of those studies, but the Scottish Government argued that the State had discretion and it was not unreasonable that it would ‘prefer one body of evidence the other, so long as the information which supported the choice was cogent’ [130]. As the IH was acting in an appeal it confined its review, in the most part, to confirming that the Lord Ordinary, in the Outer House, had correctly applied the law. The first important, and perhaps the most important, question was to confirm that the Lord Ordinary had identified the correct aim of the legislation. Both the AG and CJEU, in the reference, had noted that the legislation appeared to have a dual objective, whereas the Lord Ordinary had focused on a particular aim; the reduction of alcohol consumption by harmful and hazardous drinkers. The IH found that the Lord Ordinary’s particular view was identical to that of the CJEU. That is perhaps surprising, as many commentators had seen a different emphasis in the CJEU; suggesting that it had struck some form of balance between the narrow goal of dealing with harmful and hazardous drinkers, and the wider goal of reducing general alcohol consumption. The IH implicitly rejected that interpretation of the judgment.

In its examination of the appropriateness of the measure the IH noted the extent of the problem with alcohol consumption; the ‘societal, family, and personal effects of excessive alcohol consumption in Scotland are difficult to over-estimate’ [178]. This assertion was based on the ‘raft of statistical material [which] was produced’ [180]. It also recognised the clear view that the policy would target harmful and hazardous drinkers. It noted that it was possible to attempt to rebut figures used in support of the measure, or counter the conclusions drawn by the Govt, but that ‘there was and is ample objective material to support the proposition’ [182], and, at [183], that:

‘the Lord Ordinary cannot be faulted in finding that there was evidence from which it could be inferred that minimum pricing was an appropriate method of securing the objective by tackling the specific consumption of cheap alcohol’.

When turning to the proportionality of the measure the IH considered the Petitioners preferred measure, the increase of general taxation, which they argued would be ‘as effective’ as MUP. But that argument was rejected; ‘[t]he fundamental problem with an increase in tax is simply that it does not produce a minimum price’ [196]. The IH pointed towards evidence that retailers have sold below cost or absorbed, or off-set, tax increases. Also that price increases in the lowest cost products would ‘produce a greater reduction in sales than across the board price increases’ [199], as trading down to lower cost products was not possible. In fact a general taxation increase would have, ‘disproportionate, undesirable and unnecessary effect on moderate drinkers, who do not generally represent a significant problem in societal terms’ [200]. Finally, at [204], the IH addressed the choice of 50p per unit:

‘Such a figure, on the material produced, will reduce consumption amongst harmful and hazardous drinkers in that quintile of the population whose health is affected most by the consumption of cheap alcohol. The benefits of this are well documented’.

On that basis the Inner House, upheld the findings of the Lord Ordinary and refused the reclaiming motion.

One interesting feature of the case before the IH was that the CJEU had made it clear in its preliminary reference that a domestic court should address the proportionality of the measure at the time it gives its ruling, not at the time the measure was adopted. As the original pleadings were lodged in 2012 a significant amount of new evidence and policy material had become available in the intervening period; including new evidence since the CJEU judgment in the reference was handed down in December 2015. The IH took note of the evidence that was considered by the Lord Ordinary, and the subsequent proceedings, and decided that it was in the interests of justice that any pertinent new material should be considered. But it stressed that the new information would only be significant if it was such that it would have altered the Lord Ordinary’s view of the facts. It was apparent that the new evidence merely added to the exiting body of evidence that supported the effectiveness of MUP as an intervention.

Conclusions

In a series of recent decisions, including, for example, Case C‑639/11 Poland & Case C‑61/12 Lithuania, the CJEU has begun to stress the importance of evidence to support an attempt to justify a restriction on free movement. In DPV we see that requirement given greater emphasis, and a new focus on the type of evidence that will be required. It is not sufficient for a member State to rely on mere assertion or conjecture. They will have to produce more. The Court’s preference is clearly for hard statistical or scientific evidence, although it will accept other forms. Domestic courts are charged with ensuring that the State has good evidence to support the appropriateness and proportionality those measures. The judgment of the IH shows how that analysis can be undertaken. It also makes clear that the analysis of proportionality is not an event, rather a process. If a policy stands or falls by its evidence, it must therefore be the case that changes in the evidence base can alter whether that measure is ‘appropriate’ and/or ‘necessary’ over time.

Barnard & Peers: chapter 12, chapter 16

Art credit: “Beer Street and Gin Lane”, William Hogarth

Pulling the rug from under Mario’s feet: the BVerfG and the ECB’s OMT programme

Ioannis Glinavos (@iGlinavos), Senior Lecturer, University of Westminster

A key decision relating to EU economic and monetary union will be delivered by the German Constitutional Court (Bundesverfassungsgericht, “BVerfG”) next week (Tuesday June 21). That court will be deciding on the case of Gauweiler (C-62/14), where it had asked the European Court of Justice (CJEU) for an opinion (preliminary reference) on the legality of the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) programme after 37,000 plaintiffs questioned the legal basis of the ECB’s scheme. It is notable that Jens Weidmann, Bundesbank president, had voted against the OMT programme and Eurozone Quantitative Easing (QE). The Court referred two questions to the CJEU in what it classified as an ultra vires review of acts of the European Union.

In summary, the BVerfG wanted to check whether the ECB had transgressed the limits of its powers derived from the EU Treaties. If the ECB had, this would have consequences for the constitutional identity of Germany. Therefore, the BVerfG asked for clarification on whether the OMT programme was an economic rather than a monetary measure and whether the ECB had as a consequence exceeded its powers by establishing it.  Second, the BVerfG raised the question whether the OMT programme was not violating the prohibition of monetary financing of Member States.

The BVerfG set out the following specific conditions that could render OMT compatible with the German constitution: (1) OMT should not undermine the conditionality of the EFSF and ESM (‘bail-out’) programmes; (2) OMT should only be of a supportive nature to other economic policies; (3) any debt restructuring must be excluded (no pari passu for the ECB) (4) no unlimited purchases of government bonds and (5) avoidance of interference with the price formation on the market where possible.

Indeed, the ECB is not allowed to engage in economic policy, neither is it allowed to finance member states, as articles 120, 123, 127 TFEU (primarily) set out. On the face of it, the concerns of the claimants at the BVerfG seem justified. Let us therefore examine the nature of the complaint in some more detail. The OMT, announced in September 2012, is an initiative aimed to help struggling Eurozone economies by buying short-term government bonds on secondary markets. It is widely perceived as an important tool to calm markets. The way in which OMT offers relief to states experiencing funding difficulties is by opening an avenue to short term affordable liquidity. In a way, it allows funds to reach governments by creating demand for sovereign debts in secondary markets, therefore lowering the costs of borrowing overall. Its critics, however, have argued that OMT exceeds the ECB’s mandate and undermines the rules that keep the Eurozone from becoming a ‘transfer union’ where stronger members are constantly bailing out weaker ones.

These transfers are supposedly prevented by the fact that the OMT operates in conjunction with fiscal discipline measures in the affected countries. The ECB insists that a necessary condition for OMT is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full macroeconomic adjustment programme or a precautionary programme, provided that they include the possibility of EFSF/ESM primary market purchases. The ECB Governing Council considers OMTs to the extent that they are warranted from a monetary policy perspective as long as programme conditionality is fully respected (which is why Greek government bonds are not included in the OMT shopping list), and terminate them once their objectives are achieved or when there is non-compliance with the macroeconomic adjustment or precautionary programme. As to the transactions themselves, they are focused on the shorter part of the yield curve, and in particular on sovereign bonds with a maturity of between one and three years. No ex ante quantitative limits are set on the size of transactions. In purchasing these bonds, which is likely to be a sticking point for the BVerfG, the ECB accepts the same (pari passu) treatment as private or other creditors with respect to bonds issued by euro area countries and purchased by the Eurosystem through OMT, in accordance with the terms of such bonds.

But how can the above transactions avoid violating the monetary financing prohibition? Benoît Cœuré (of the ECB) offers the following explanation for the actions of the ECB. He argues that the economic rationale of the monetary financing prohibition is clear, as central banks cannot ensure price stability if they have to permanently make up for weak performance in other policy domains. This is why Article 123 TFEU is central to the architecture of EMU. In the view of the ECB, the aim and design of OMTs fully respect this economic requirement, via the link to conditionality. As presented above, the link to policy conditionality of an EFSF/ESM programme ensures that central bank intervention via OMTs does not replace reform efforts in other policy domains. Rather, OMTs can only be complementary to national reform efforts. This is designed to prevent a scenario of harmful central bank support, or fiscal dominance over the central bank. 

Cœuré continues by arguing that OMTs would never be used to indiscriminately push down government bond spreads. By contrast, spreads should continue to reflect the underlying country-specific economic fundamentals, fiscal positions and market risk perceptions that incentivise governments to engage in sustainable fiscal spending and competitiveness-enhancing structural reforms. The aim of OMT is therefore not to reduce yields below the fundamentally justified level so as to preserve debt sustainability despite weak policy performance, but to aim at that portion of the bond yield spreads that is not fundamentally justified and based on undue risks of a euro area break-up. In other words OMT deals with market anxiety over Eurozone wide systemic risks not linked to the underlying fundamentals of Member State economies (at least as those are understood by the ECB). This is perhaps because central bank independence and a clear focus on price stability are deemed necessary but not sufficient to ensure monetary dominance. The ECB maintains the position that by creating the right environment and providing appropriate incentives for governments to take action to ensure fiscal solvency, OMTs create the conditions to affirm the monetary dominance regime, which is at the heart of the Treaty.

The European Court of Justice seems to be largely in agreement with the above. In its 2015 judgment in Gauweiler, it ruled that a plan by monetary policy makers to buy government bonds, even in potentially unlimited quantities, was legal. The court found that Mario Draghi’s pledge in the summer of 2012 to do “whatever it takes” to save the region from economic ruin through OMT, complied with EU law. “The programme for the purchase of bonds on secondary markets does not exceed the powers of the ECB in relation to monetary policy and does not contravene the prohibition of monetary financing in member states,” the ECJ declared, offering an important win to Draghi against German opposition to ECB attempts to stave off a Eurozone financial crisis. This decision is also perceived as shielding monetary policy makers from legal attacks on their landmark €1.1tn QE package, unleashed in 2015.

Alicia Hinarejos writes that the CJEU has recognized the broad discretion of the ECB to make complex economic assessments and technical choices, while at the same time striving to discharge a meaningful and necessary role. The Court clearly does not want to be seen to be second-guessing the other institution’s policy choices, so it focuses on procedural requirements and applies a light-touch review when it comes to assessing the proportionality of the scheme. This is most evident in the final part of the judgment, where the court assesses the compatibility of the OMT programme with the ban on monetary financing. Here the Court seeks to apply (and be seen to be applying) a coherent, rigorous-enough-yet-within-judicial-boundaries compatibility test. 

The CJEU found (para 103-5) that the ESCB is entitled to purchase government bonds — not directly, from public authorities or bodies of the Member States — but only indirectly, on secondary markets. Intervention by the ESCB of the kind provided for by a programme such as OMT thus cannot be treated as equivalent to a measure granting financial assistance to a Member State. The Court recognised however that the ESCB’s intervention could, in practice, have an effect equivalent to that of a direct purchase of government bonds from public authorities and bodies of the Member States. This could happen if the potential purchasers of government bonds on the primary market knew for certain that the ESCB was going to purchase those bonds within a certain period and under conditions allowing those market operators to act, de facto, as intermediaries for the ESCB for the direct purchase of those bonds from the public authorities and bodies of the Member State concerned. However, the ECB convinced the Court that the implementation of a programme such as that announced in September 2012 must be subject to conditions intended to ensure that the ESCB’s intervention on secondary markets does not have an effect equivalent to that of a direct purchase of government bonds on the primary market.

The decision can be said to continue in the Pringle vein of ratifying a move away from a rules-based EMU to a policy-based one in the wake of the crisis, with the CJEU limiting its role of review to a strictly formalist position. This can be seen in the fact that the discussion (like the AG’s Opinion before it) does turn on the specific features of the OMT programme rather than on more abstract questions such as the nature of EMU, its evolution, and the role of solidarity within its constitutional framework. 

Will the BVerfG decide along the same lines? Analysts at Société Générale model three possible outcomes. In the best case scenario, the BVerfG will simply find the OMT in line with the German Constitution based on the ECJ preliminary ruling. At the opposite end of possibility, the BVerfG could find the participation of the Bundesbank in OMT incompatible with German constitutional law or even declare German participation in ESM programmes that are supported by OMT incompatible. Such a ruling would then require German primary law to be changed to allow the Bundesbank to participate in an eventual OMT programme. A middle position is in effect more likely, with the BVerfG tinkering with some aspects of the programme (such as pari-passu for instance) and linking the operation of the OMT with ECB’s QE by highlighting the issue limits of QE as an important feature to respect under OMT. Such a move would address the concerns of Germany at being pushed under OMT to take on uncapped risks towards other euro area sovereigns, and assuage the fears of other EU members as to violations of Article 123 TFEU. At the same time, the BVerfG seems keen to avoid becoming an instrument of politics and is unlikely to allow itself to be used as a tool for the transmission of political concerns over ECB decision-making onto the constitutional law domain.

Will Mario find himself on the floor on June 21st? This is unlikely to happen, but considering the British are holding the Brexit referendum on the 23rd of the month, anything other than total support from the BVerfG to the architecture of Eurozone rescues is likely to cause a noticeable wobble.

Art credit: David Simonds

Barnard & Peers: chapter 19 

Can Member States seize asylum-seekers’ assets?

Kees Groenendijk (Professor Emeritus, Radboud University Nijmegen) and Steve Peers

In recent days, several EU and non-EU countries have been in the news for taking asylum-seekers' assets upon arrival. Is this compatible with EU law? We examine first of all national practice, then the legislative history of the relevant EU rules, then reach our conclusions.  

Denmark

In November 2015 the Danish government presented among a catalogue of 34 measures to discourage people from seeking asylum in Denmark, to introduce the possibility to confiscate cash, jewellery and other assets of asylum seekers in other to make them contribute in the costs of their reception. They proposal caused heated debate after a Minister suggested that wedding rings could be also confiscated. In January the Social-Democratic Party voiced that it would only support this proposal of the centre-right minority government, only assets above 1,340 euro could be confiscated. The new law is to be voted on 26 January.

Similar practices or rules are to be found in the national law of other Member States.

Switzerland, only few asylum seekers concerned

According to Dutch newspapers, Swiss legislation requires asylum seekers who enter the country with more than 1,000 Swiss francs have report and hand over the surplus to the Swiss authorities. The rule only covers money, not other valuables such as personal jewellery. Of the 45,000 asylum seekers coming to Switzerland in 2015, only 112 had to hand in a surplus, totalling around € 150,000 that year. Not really an impressive amount. Most asylum seekers, apparently, do not carry large amounts of money, once they arrive in Western Europe. Besides, under Swiss law beneficiaries of protection with income from employment, have to pay 10% of that income to contribute to reception costs during ten years.

Germany, an old practice?

The German legislation on reception of asylum seekers, the Asylbewerberleistungsgesetz, provides, already several decades that asylum seekers can be forced to contribute from their own assets and income to the cost of their reception. Asylum seekers have to declare their assets and income. The rules for applicant for public social assistance are applicable. From the assets only 200 euro and the goods necessary for exercising a profession or employment are exempted (§ 7(5) of the law). German national TV news reported on 21 January 2016 that in Bavaria asylum seekers were asked by the police to hand over their cash in excess of €750. In Baden-Wurttemberg the threshold is €350. The federal law leaves room for difference in application between the Lander. A spokesman of the Baden-Wurttemberg minister of integration stated that although cash was taken from refugees in individual cases following police spot-checks, searches are not carried out on every refugee. He was quoted as saying "In the context of a general police check it was established that individual refugees had cash with them" and "Refugees are not being systematically searched for cash or valuables".

Netherlands, only contributions from income not from assets

The Junior Minister for Immigration recently told the press that that he was not going to follow the Danish and German example and force asylum seekers to hand over small amounts of cash and jewellery. His spokesman explained this is not on the agenda right now, since we do not expect that it will reduce the influx.” (Volkrant 23 January 2016) Already for decades asylum seekers in the Netherlands if lawfully employed (only possible after six months and until an asylum status is acquired for 24 weeks per year only) have to pay the surplus above 185 euro of his monthly income as a contribution in reception costs.

Compatible with EU law?

Are such rules and practices on seizure of assets in order to contribute in reception costs compatible with EU law, and especially with the Reception Conditions Directive 2013/33? We do not deal here with the question whether such confiscation of valuables and jewellery is compatible with Article 1 of the First Protocol and Article 8 ECHR.

The relevant provisions are to be found in Article 17(3) and (4) of the 2013 recast Reception Conditions Directive, reading:

“3.   Member States may make the provision of all or some of the material reception conditions and health care subject to the condition that applicants do not have sufficient means to have a standard of living adequate for their health and to enable their subsistence.

4.   Member States may require applicants to cover or contribute to the cost of the material reception conditions and of the health care provided for in this Directive, pursuant to the provision of paragraph 3, if the applicants have sufficient resources, for example if they have been working for a reasonable period of time.

If it transpires that an applicant had sufficient means to cover material reception conditions and health care at the time when those basic needs were being covered, Member States may ask the applicant for a refund.”

Identical provisions were already present in Article 13(3) and (4) of the original Reception Conditions Directive 2003/9. They returned unchanged in the 2013 recast of the Directive. In order to understand those provisions it may be useful to have a short look at their legislative history. The various drafts are set out in more detail in the Annex, but we will summarise them here.

Legislative history of EU rules on financial contributions by asylum seekers

The Commission in its proposal for the original 2003 Directive (COM(2001)181) inserted an Article 19 on financial contributions. Member States could require applicants who can afford to do so to contribute to the cost of their material reception conditions. The relevant decisions should be taken individually, objectively and impartially and reasons shall be given. An effective judicial remedy against such decisions should be available, making explicit reference to Article 47 EU Charter.

During the first negotiations on this Article reaction eight Member States made proposals for amendments. Six Member States proposed to refer to “the general principle of the real need of the applicant, which would lead to entitlement to material benefits” (document 11320/01, p. 33). Germany proposed that “some of the applicant's income should be protected in all cases”. That proposal only covered the asylum seeker’s income. But it implied that all the income above a certain threshold could be seized by a Member State. The Netherlands made a similar proposal linking the asylum seeker’s contribution to his income: “if the applicant has a certain income, a contribution may be asked of him to cover some or all of the costs”. Both proposals intended to regulate a possibly contribution in reception costs, but did not include the asylum seekers’ assets as an object of seizure.

In January 2002 the text of Article 19 was consolidated with two other Articles in a new Article 18, entitled ‘Financial means test’ (document 5300/02). The Dutch proposal, concerning contribution out of income from employment was included. The German proposal, implying that a Member State could seize all income above a certain fixed threshold, did not find its way in this and later versions of provisions on financial contributions by asylum seekers. During the negotiations in February 2002 this Article was considerably shortened (a.o. replacing the general means test by the condition that the applicants do not have sufficient means to cover their basic needs, and deleting the reference to income from employment) and it was renumbered Article 17 (document 6253/02). Only three Member States made suggestions: Portugal and Greece pleaded for more reduction of the reception conditions, once an asylum seeker or his family member had been allowed access to the labour market. Germany proposed to integrate Article 17 in the general Article on material reception conditions.

Early March 2002, the Asylum Working Party examined the amended proposal based on drafting suggestions from the Spanish Presidency (document 6906/02). Parts of the former Article 17 were now included in Article 13, apparently following German suggestion.

In April 2002 on suggestion of Germany the words “and health care” were added in par. 3 of Article 13. Moreover, the words “for example if they have been working for a reasonable period of time” were added in par. 4, re-introducing an explicit link with participation in the labour market again (document 7802/02). This version of Article 13 of the amended proposal was accepted by Coreper and by the Council in 2002 and became part of the Directive adopted with unanimity on 27 January 2003.

In addition, the 2013 recast Directive now states that Member States can refuse or withdraw benefits if asylum-seekers have ‘concealed financial resources’ (Article 20 of the 2013 Directive). The CJEU, in its CIMADE and GISTI judgment, has ruled that Article 20 sets out an exhaustive list of grounds for reducing or withdrawing benefits.

Analysis

If this legislative history is combined with the general principles of EU law and the EU Charter, we conclude:

(1) The issue of financial contributions by asylum seekers in material reception costs from their own means was been discussed repeatedly during the negotiations on the Directive.

(2) This issue was discussed repeatedly also in relation to the access of asylum seekers to the labour market in the Member State and the income derived from such employment.

(3) The Directive allows Member States to impose a means test for access to material reception conditions, but this does not entail confiscation of assets. The test is not whether the asylum seeker has more than a certain fixed amount of money or assets, but whether the asylum seeker does have sufficient means to have a standard of living adequate for his health and to enable his subsistence.

(4) Since (a) the issue of financial contributions by asylum seekers in material reception costs is covered by the directive and (b) the Directive sets out minimum standards in order to avoid second movements between Member State (recitals 7 and 8), Member States are not allowed to apply less favourable rules only more favourable rules (see recital 15); the Court of Justice repeatedly held that Member States cannot introduce other conditions than those provided for in the EU Directive or Regulation, see the judgments in Ben Alaya, Koushkaki and Air Baltic. Also, by analogy with the CIMADE and GISTI ruling, the grounds in the Directive to refuse or regulate access to benefits are surely exhaustive.

(5) Article 13(3) allows Member States to make the grant of material reception conditions and health care subject to the condition that applicants do not have sufficient means to have a standard of living adequate for their health and to enable their subsistence. It follows that such decision to exclude an asylum seeker from material reception conditions can only be made after the Member State first has established that applicants have sufficient means to have a standard of living adequate for their health and to enable their subsistence in the Member State. In accordance with the general principle of proportionality in EU law, it is questionable whether a Member State could refuse any access to the benefits system, just because an asylum-seeker has a small amount of cash or valuables. Access should only be refused where the applicant either has an ongoing alternative source of funds, or the asylum-seeker has so much wealth that he or she could live off it for a considerable period of time.

(6) Article 13(4) allows Member States to require applicants to contribute to the cost of the material reception conditions and of the health care, when the applicants have sufficient resources. The conditions of paragraph 3 explicitly apply here as well. The Commission with regard to Article 19 of its proposal rightly stated: “Decisions on applicants’ contribution should be taken individually, objectively and impartially and reasons must be given if they are negative in order to make possible their review as accurate as possible.”

While, in the final version of the Directive this clause applies to the reduction or withdrawal of benefits, not the obligation to contribute toward costs, the general principles of EU law still require that national administrative decisions linked to EU law must be fair (see the CJEU’s YS and M and S ruling on asylum procedures, discussed here; and the Mukarubega and Boudjliba judgments on the return of irregular migrants, discussed here). This means that any decision on asylum-seekers’ contributions has to be an individual decision giving reasons, taking into consideration the individual situation of each asylum seeker.

Such decisions must also comply with other general principles of Union law, in particular the principle of proportionality, which means that any confiscation of property must be necessary to achieve a genuine government end. It is hard to see how it is necessary to confiscate property when a less severe measure (delaying or curtailing benefit payments by an equivalent amount, in accordance with the rules on a means test) could achieve the same objective. Again, the principle suggests that asylum-seekers should only be required to contribute where applicants either have an ongoing alternative source of funds, or have so much wealth that they could live off it for a considerable period of time.

It must also be possible to challenge any decision made by a national authority on confiscation, in accordance with Article 47 (the right to an effective remedy) of the EU Charter of Fundamental Rights.

(7) In conclusion: a national rule allowing authorities to confiscate all means of an asylum seeker above a fixed amount, irrespective of the individual circumstance on the grounds mentioned in point 4 and 6 above is not compatible with Union law.

(8) Of course, Denmark and Switzerland are not bound by the Directive, Denmark because of its opt-out and Switzerland because it is not a Member State. Ireland opted out as well. But all other Members State are bound by Directive 2013/33 and the UK is opted in and is bound by the original Reception Conditions Directive 2003/9.

*The paragraph on Germany was amended on 27th January 2016 to add further detail.
Barnard & Peers: chapter 26

JHA4: chapter I:5

Photo: Danish police officer and asylum-seeker

Photo credit: www.channelnewsasia.com

Annex

Legislative history of Article 13(3) and (4) of Directive 2003/9 = Article 17(3) and (4) of Directive 2013/33 on financial contributions by asylum seekers in reception costs

In the Commission’s proposal for the original 2003 Directive COM(2001)181 there was a separate Article 19 reading:

Article 19

Financial contribution

1. Member States may require applicants who can afford to do so to contribute to the cost of

their material reception conditions or to cover it. Decisions to provide material reception

conditions not free of charge shall be taken individually, objectively and impartially and

reasons shall be given.

2. Member States shall ensure that applicants have the right to bring proceedings before a court against the decisions referred to in paragraph 1 and that they have access to legal assistance.

The Explanatory Memorandum to this Article 19 read:

“This Article concerns the financial contribution applicants for asylum may be asked to

provide if they are provided with material reception conditions.

(1) This paragraph allows Member States to require applicants who can afford it to contribute

to the cost of their material reception conditions. The purpose is to meet the Council’s

concern regarding the requirement of “inadequate” resources of the applicants for

asylum. In any case Member States should ensure that applicants for asylum have the

possibility of being housed as even applicants with sufficient financial means might find

it impossible to find suitable housing. Decisions on applicants’ contribution should be

taken individually, objectively and impartially and reasons must be given if they are

negative in order to make possible their review as accurate as possible.

(2) In conformity with the Charter of fundamental rights (Article 47) and in line with the

case law of the Court of Justice, this paragraph ensures that the decisions taken according

to paragraph 1 can be reviewed by a judicial body (including an administrative judicial

body such as the Conseil d’Etat in France) at least in the last instance.”

The first reaction of Member States on this Article was in document 11320/01, p. 33:

“D/E/NL/P/S and UK: reference should be made to the general principle of the real

need of the applicant, which would lead to entitlement to material benefits.

D: some of the applicant's income should be protected in all cases.

NL: stipulate that if the applicant has a certain income, a contribution may be asked of him

to cover some or all of the costs.

D and UK: establish a general principle laying down that Member States may decide

whether or not the applicant requires material benefits.

L and A: make provision for the case in which an applicant is invited to stay in the territory

of a Member State by a national who, if applicable, has served as guarantor for the purpose

of obtaining a tourist visa. In this case, it should be possible to call on the national to

contribute to the costs.

A: reservation on the second sentence in that it creates an obligation to notify these

decisions in writing.

3 A and S: reservation on the financial aspects of legal assistance.

D and UK: a general provision on forms of appeal at the beginning of the Directive should

be sufficient.

In January 2002 the text of Article 19 was consolidated in a new Article 18, consolidating several provisions of the proposal (document 5300/02):

“Article 18 (consolidating Articles 14 bis, 15(4) and 19)

Financial means test

1. Member States may make the grant of all or some of the material reception conditions,

as well as the requirement that applicants and their accompanying family members

cover or contribute to the cost thereof, subject to a financial means test of applicants and

their accompanying family members in accordance with the provisions of this Article.

2. Member States may also reduce or withdraw material reception conditions within a

reasonable period after applicants or their accompanying family members commence an

employment activity in accordance with Article 13, applying the test established in

paragraph 1.

3. Applicants and their accompanying family members may be subject to one or more of

the measures provided for in paragraphs 1 and 2 when it is confirmed that they have

sufficient means.

4. Decisions under this Article shall be taken individually, objectively and impartially and

reasons shall be given.”

In February 2002 this Article was considerably shortened (a.o. deleting the means test and the reference to income from employment) and renumbered as Article 17, reading together with the footnote by Member States and the Commission (document 6253/02):

“Article 17 (formerly 18)1

Financial means criteria

1. Member States may make the grant of all or some of the material reception conditions subject to the condition that applicants do not have sufficient means to cover their basic needs.

2. If it transpires that an applicant had sufficient means to cover these basic needs at the time

when material reception conditions were being provided, then Member States may ask these

to refund.2

3. Decisions under this Article shall be taken individually, objectively and impartially and

reasons shall be given. 3

1 D : this provision should be placed at the end of Article 15.

2 P, supported by EL, suggested adding the following :

"3. Member States may also reduce or withdraw material reception conditions within a

reasonable period after applicants and their accompanying family members have been

allowed access to the labour market in accordance with Article 13, applying the test

established in paragraph 1.

4. In the cases referred to in paragraph 3, if they are not financially independent, Member

States shall grant them the food allowance mentioned in Article 8 and access to basic

social care."

(present paragraph 3 would become 5).

3 Cion : reinsert a paragraph which was included in 12839/01 ASILE 49 (former

Article 14A(6)) :

"Member States shall ensure that before the decisions referred to in paragraph 2 are notified to

the applicants for asylum [and their accompanying family members] the other Articles of

Chapter III of this Directive are applied".

At its meeting on 5 and 6 March 2002, the Asylum Working Party examined the amended proposal based on drafting suggestions from the Spanish Presidency, document 6906/02. Parts of the former Article 17 were now included in Article 13, apparently following the suggestion made before by Germany with regard to that former Article 17.

Article 13

General rules1

1. Member States shall ensure that material reception conditions are available to applicants when they make their application.

2. Member States shall make provisions on material reception conditions to ensure a standard of living adequate for the health and the well-being of applicants.

Member States shall ensure that standard of living is met in the specific situation of persons

who have special needs, in accordance with Article 17, as well as in relation to the situation of

persons who are in detention.

3. Member States may make the grant of all or some of the material reception conditions subject to the condition that applicants do not have sufficient means to have a standard of living adequate for their health and well-being.2

4. Member States may require applicants to cover or contribute to the cost of the material

reception conditions and of the health care provided for in this Directive, pursuant to the

provision of paragraph 3, when the applicants have sufficient resources.

5. Material reception conditions may be provided in kind, or in the form of financial allowances or vouchers or in a combination of these provisions.

Where Member States provide material reception conditions in the form of allowances or

vouchers, their amount shall be set in accordance with the principles set for in this Article.

1 A : a general rule providing for exceptions to be applied by Member States in extraordinary

situations should be introduced.

2 B, D, F and P : the term "well-being" is s too vague and should be defined.

NL, S, UK : say "to enable their subsistence" instead of "to have a standard of living adequate

for their health and well-being".

In April 2002 on suggestion of Germany the words “and health care” were added in par. 3. Besides the words “for example if they have been working for a reasonable period of time” were added in par. 4, introducing an explicit link with participation in the labour market again (document 7802/02).

This version of Article 13 of the amended proposal was accepted by Coreper and by the Council. It became part of the Directive adopted on 27 January 2003

The EU Returns Directive and the Use of Prisons for Detaining Migrants in Europe

Izabella Majcher, Researcher at Global Detention Project / Global Migration Centre and PhD candidate in International Law at the Graduate Institute of International and Development Studies is Geneva.

Can immigration detainees be held in prisons? Can they be confined alongside ordinary prisoners? Last Thursday 17 July 2014, in its decisions on the joint cases of Bero & Bouzalmate (C-473/13 & C-514/13) and the case of Pham (C-474/13), the Court of Justice of the European Union (CJEU) rendered its opinion on this practice. These judgments are the ninth and tenth times that the Court has interpreted the provisions of the EU Returns Directive, the previous one being the Mahdi case, which was decided in early June 2014.

Most of the Luxembourg case law on the Returns Directive has dealt with pre-removal detention. The Court has ruled on the length of detention (Kadzoev case), the relation between (administrative) pre-removal detention and criminal incarceration (El Dridi and Achughbabian cases), detention during asylum procedures (Arslan case), and procedural standards on reviewing and extending detention (G&R and Mahdi cases). In the Bero & Bouzalmate and Pham cases, the Court interpreted the Directive’s provisions on conditions of detention for the first time.

Questions referred to the CJEU for a preliminary ruling

The questions referred to the CJEU addressed the places used for detention in Germany. It is regulated under article 16(1) of the Returns Directive, which provides that:

“Detention shall take place as a rule in specialized detention facilities. Where a Member State cannot provide accommodation in a specialized detention facility and is obliged to resort to prison accommodation, the third-country nationals in detention shall be kept separated from ordinary prisoners.”

All three requests for a preliminary ruling concerned pre-removal detention carried out in prison rather than a specialized immigration detention facility. Ms. Bero was detained alongside ordinary prisoners in Frankfurt prison (in Hesse federated state) for almost a month, while Mr. Bouzalmate was confined in a separate area devoted to immigration detention in Munich prison (in Bavaria federated state) for three months.

In Germany, immigration detention falls under the competency of federated states (Länder). The reason Ms. Bero and Mr. Bouzalmate were confined in jails was that Hesse and Bavaria federated states (and several others) do not dispose of special immigration detention centers. Such practice is based on the German Residence Act. Its section 62a(1), which transposed article 16(1) of the Directive, sets out that:

“As a general principle, custody awaiting deportation shall be enforced in specialized detention facilities. If a Land has no specialized detention facilities, custody awaiting deportation may be enforced in other custodial institutions in that Land; in such cases the persons in detention awaiting deportation shall be accommodated separately from prisoners serving criminal sentences.”

In the joint cases of Bero & Bouzalmate, the referring courts asked the CJEU to determine whether under article 16(1) of the Returns Directive a member state is required, as a rule, to detain non-citizens pending removal in a specialized detention facility if such facilities exist in only part of the federated states of that member state (Bero & Bouzalmate, § 13 and 21).

  

Likewise, the Pham case concerned a pre-removal detention of over three-months being carried out in prison. However, Ms. Pham signed a written declaration in which she consented to being confined in a prison together with ordinary prisoners because she allegedly wanted contact with her compatriots who were detained there. The German Federal Court of Justice referred to the Luxembourg judges a question whether it is consistent with article 16(1) of the Returns Directive to confine a migration detainee together with ordinary prisoners if they consent to such accommodation (Pham, §13).

The CJEU’s decisions

In both judgments the Court followed the Advocate General Bot's Opinion delivered at the end of April 2014. Accordingly, a member state cannot rely on the fact that there are no specialized detention facilities in a part of its territory to justify keeping non-citizens in prison pending their removal (Bero & Bouzalmate). The same rule applies even if the migration detainee has consented to being confined in penitentiary (Pham).

In the joint cases of Bero & Bouzalmate the Court held that article 16(1) of the Return Directive requires a member state, as a rule, to detain migrants pending removal in a specialized detention facility even if the member state has a federal structure and the federated state competent to decide upon and carry out such detention under domestic law does not have such a detention facility (Bero & Bouzalmate, § 33). This conclusion was based principally on two arguments.

At the outset, the Court observed that the first sentence of article 16(1) sets out the principle that pre-removal detention is to take place in specialized detention facilities. The use of prisons allowed under the second sentence of article 16(1) represents a derogation from that principle, which, as such, shall be interpreted strictly (Bero & Bouzalmate, §25).

The interpretation of that second sentence was focused on in the Opinion of the Advocate General. The Advocate General observed that there were significant differences in the wording of article 16(1) between the different language versions. Pursuant to the English version, migrants may be held in prisons if member states cannot provide accommodation in a specialized centre. In contrast, the German version allows member states to use prisons if there are no specialized facilities. According to the Advocate General, the German version of the second sentence of article 16(1) was incorrect. It would allow states to rely on the lack of specialized facilities to derogate from the principle laid down in the first sentence and thus deprive it of all effectiveness (AG’s Opinion, § 63-80).

Secondly, the Court addressed the federal structure of the country. It held that the obligation laid down in the first sentence of article 16(1) requiring detention to take place as a rule in specialized detention facilities is imposed upon member states as such, regardless of the states’ internal administrative or constitutional structures. Thus, the fact that in certain federated states of the member state, the competent authorities have specialized facilities at their disposal cannot amount to sufficient transposition of the Returns Directive if the competent authorities of another federated state of that member state lack such facilities (Bero & Bouzalmate, §30).

The Court’s conclusions in Bero & Bouzalmate were further developed in the case of Pham. The Court ruled that the second sentence of article 16(1) of the Directive does not allow member states to detain migrants pending removal in prison together with ordinary prisoners even if they consent thereto (Pham, § 24).

More precisely, in the case where the derogation in the second sentence of article 16(1) applies, i.e. where a member state cannot provide accommodation in specialized detention facilities and resorts to prison, immigration detainees shall be kept separated from ordinary prisoners. The Luxembourg judges observed that under the Directive, the obligation for migration detainees to be kept separated from ordinary prisoners is not coupled with any exception. Moreover, they stressed that the separation requirement is more than just a specific procedural rule for carrying out detention in prisons and constitutes a substantive condition for that detention, without compliance of which such detention would, in principle, not be consistent with the Directive (Pham, § 17, 19 and 21).

Comments

Ever since the adoption of the Returns Directive in 2008, the terms of article 16(1) have warranted an interpretation. The Court’s judgments in Bero & Bouzalmate and Pham are thus welcome. What impact will they have on the places where migrants are detained across Europe? Several points need to be fleshed out.

First of all, the judgments will obviously trigger changes to the German practice of using prisons for immigration detention purposes. Currently, as the recent report by the Pro Asyl describes, in ten out of sixteen federated German states (Baden-Württemberg, Bavaria, Hamburg, Hesse, Lower Saxony, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Saxony, Saxony-Anhalt, and Thuringia) migration detainees are held in prisons. However, in line with the judgment in Bero & Bouzalmate, a federal state like Germany is not obliged to set up specialized centers in each federated state. However, it shall ensure via, amongst others, cooperation agreements between federated states that the competent authorities of a federated state that does not dispose of such facilities can place migrants in specialized facilities located in other federated states (Bero & Bouzalmate, §31). At present the ten federated states that do not have specialized centers use some sixteen prisons with the total immigration detention capacity exceeding 800. To compare, besides airport detention facilities, there are only four specialized detention facilities in Germany—Berlin-Köpenick, Eisenhüttenstadt, Ingelheim, and Rendsburg—with a combined capacity of around 450.  

The Court’s reasoning in Bero & Bouzalmate that the absence of specialized detention facilities in a federated state cannot in itself justify confining migrants in prisons in that federated state is of relevance to other federal states, like Austria and Switzerland (which is bound by the Returns Directive as a Schengen associate). Arguably, it can have a broader application and impact practice based not only on the administrative structure of a state but also the geographical location of detention facilities. This would be in line with the Advocate General’s view that if a country has a specialized detention facility in its territory, with sufficient detention capacity, it shall order the detention of the person concerned in that facility, the geographical situation of that facility being of little importance (AG’s Opinion, §144). Thus, it appears that authorities would not be able to rely on the derogation clause in the second sentence of article 16(1) and hold migrants in prison, if there is available space in a specialized facility, even if it is located far away.

When would a state thus be able to rely on the second sentence of article 16(1) of the Returns Directive? When can authorities be justified in claiming that they “cannot” detain migrants in a specialized detention facility and instead hold them in a prison? In his Opinion, the Advocate General has explained when this derogation clause might be used. He reads it in conjunction with article 18 of the Directive. Under article 18(1) the Directive explicitly allows states to derogate from article 16(1) in “emergency situations,” i.e. the situations in which “an exceptionally large number of third-country nationals to be returned places an unforeseen heavy burden on the capacity of the detention facilities” of a member state. According to the Advocate General, it is possible to infer from the wording of “emergency situations” related to the influx of migrants under article 18(1) the nature of other circumstances that states may invoke to rely on the derogation clause in article 16(1). Thus, a member state may order detention in prison “only if there are exceptional and legitimate grounds, such as those alleging necessity, showing uncontestably that the weighing up of interests requires that solution” (AG’s Opinion, § 124-136).

The judgments in Bero & Bouzalmate and Pham, read together with the Advocate General’s detailed views, therefore considerably restrict the use of prisons for confining migrants. However, as the research by the Global Detention Project reveals, police stations rather than prisons are most frequently used in Europe as a substitute for specialized detention facilities. This practice has been regularly criticized by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT). The CPT maintains that since the conditions in police stations are usually inadequate for prolonged periods of detention, such premises should be used only for very short periods of time. Yet, in reality states tend to apply their usual maximum time-limits on detention to migration detainees held in police stations. Is this practice compatible with article 16(1) of the Returns Directive, which is silent with respect to the use of police stations? Can the Court’s decisions in Bero & Bouzalmate and Pham be applied by analogy? Arguably, this widespread practice of the Directive’s member states needs to be assessed by the Luxembourg judges.

Finally, the Court’s stance in Pham on the separation obligation clearly puts the Directive’s provisions in line with international human rights standards. For the Court, it represents a “substantive condition” (rather than merely a procedural one) for detention of migrants carried out in prison, without compliance of which such detention, would, in principle, not be consistent with the Directive. This entails that when a state cannot ensure separated accommodation in prison, it would not be able to invoke the derogation clause under article 16(1). However, what does the separation obligation require? Does it suffice that migrants have cells for their own (but may have contact with other detainees during meal or recreation time)? Or, shall authorities set up separate units for immigration detainees to comply with that obligation? The Court does not explain it. Without clarity on the Court’s understanding of the separation principle it is difficult to assess the practice across the EU. In fact, the European Commission’s recent communication on an EU return policy points out that the domestic legislation of nine countries does not fully require a “strict separation” of migration detainees from ordinary prisoners. Arguably, the Advocate General’s views should be followed according to which the separation requirement entails “the strict separation of migrants from ordinary prisoners by establishing a separate unit completely isolated from the rest of the prison, offering no possibility of communication with persons convicted or remanded in custody” (AG’s Opinion, § 100).

Photo Credit: © www.migreurop.org/Sara Prestianni

Barnard & Peers: chapter 26