Op-Ed: “Two Opinions on free movement and unemployment benefits in the EFTA Court: A Bit of a Dog’s Breakfast” by Mads Andenæs
On 30 June 2021 the EFTA Court delivered two Advisory Opinions on free movement and unemployment benefits, Criminal proceedings against P (Case E-15/20 ) and O v the Norwegian Government (Case E-13/20). The facts of the cases differ, but both concerned persons had travelled from Norway and stayed temporarily in other EEA States whilst in receipt of unemployment benefits. Importantly, they had done so without availing themselves of the right to export in the Social Security Coordination Regulation 883/2004.
They were considered to be in breach of a statutory requirement to stay in Norway. They lost their entitlements, were issued with a recovery order with a penalty interest, criminally charged and convicted to a prison sentence. The Opinions have already been presented on EU Law Live, see here.
For the purposes of this Op-Ed, it suffices to note that the main question in both cases was whether the requirement to stay in Norway, and the sanctions imposed for non-compliance, were compatible with EEA law.
With respect to the first issue, the EFTA Court answered that a requirement to stay is compatible with the Regulation. Interestingly, the Court also held that since the exportability of unemployment benefits was exhaustively regulated in the Regulation, the free movement provisions in the EEA Agreement were not applicable.
With respect to the second issue, the EFTA Court held that sanctions for non-compliance with the requirement to stay must respect the principles of proportionality, equivalence and effectiveness, and legal certainty, but left it for the national courts to decide whether the sanctions imposed in the two cases were in line with these requirements.
Both Opinions raise several interesting questions that deserve further scrutiny. One constitutional aspect of the Opinions is the relationship between primary and secondary EEA law.
The two Advisory Opinions are closely related, and in Criminal proceedings against P ‘a general reference’ is made to O v the Norwegian Government, ‘which is applied and adjusted for the purposes of the present case’ (paragraph 40). The following analysis focuses on the latter.
The EFTA Court starts out with a standard phrase on how EEA law is merely seeking to coordinate and not harmonise national legislation in the field of social security law, and does not ‘detract from the power of the EEA States to organise their social security systems’. EEA law leaves it to each EEA State ‘to determine the conditions on which social security benefits are granted’ (paragraph 38). It then adds a standard proviso: ‘Nevertheless, when exercising that power, the EEA States must comply with EEA law (see Case E-2/18 Concordia, judgment of 14 May 2019, paragraph 43)’.
It is not clear from the Advisory Opinion what exactly the Court has in mind here. In Concordia the Court refers to the joined cases Rindal and Slinning (E-11/07 and E-1/08) from 19 December 2008, paragraph 43, where the Court was much more specific with respect to what this reference is about:
‘[…] when exercising that power, the EEA States must comply with EEA law, in particular with the provisions on the freedom to provide services. Those provisions prohibit the EEA States from introducing or maintaining unjustified restrictions on the exercise of that freedom in the healthcare sector, see, for comparison, Smits and Peerbooms, at paragraphs 44 to 46 and Watts, at paragraph 92.’
Rindal and Slinning concerns the right to receive health care services in other EEA States, which is also regulated in the Social Security Coordination Regulation.
As explained by Professor Michael Dougan at the University of Liverpool:
“[…] the [CJEU’s] use of the Treaty provisions on the free movement of services so as to encourage the exportation of health insurance between the Member States, even though Article 22 Regulation 1408/71 already contains specific provisions for coordinating the grant by the competent national authorities of prior authorization for patients to receive medical treatment in another Member State.” (fn 1)
For reasons that remain unexplained, this now seems to have changed. With reference to the fact that Articles 64 and 65a exhaustively regulate the only three situations in which the competent state is required to allow the export of unemployment benefits (paragraph 58), the Court simply concludes that:
‘[…] outside the situations expressly mentioned in Articles 64, 65 and 65a of the Regulation, a condition to stay in the competent EEA State for entitlement to unemployment benefits does not fall to be assessed under Articles 31 and 36 of the EEA Agreement. According to the same considerations, the condition does not fall to be assessed in the light of Directive 2004/38.’ (paragraph 61)
This finding is surprising, and seems to contradict the settled case law of both the CJEU and the EFTA Court, which held that even though a situation is regulated by the Basic Regulation, this does not exclude the applicability of the primary provisions of the TFEU or the EEA Agreement. Notably, this has been stated in the context of unemployment benefits and the very same requirement to stay in Norway, see Jonsson (E-3/12) paragraph 55. With respect to unemployment benefits, the Court of Justice’s judgments in De Cuyper (C-406/04) and Petersen (C-228/07), which concerned residence requirements for very different forms of benefits relating to unemployment, illustrate the relevant point: even where the national legislation is based on and in accordance with the Social Security Regulations, it must nevertheless be determined whether restrictions on the free movement provisions pursue legitimate objectives and are proportional. (fn 2) The EFTA Court simply ignores the relevance of De Cuyper and Petersen on the basis that they ‘concerned unemployment benefits with the special feature that the beneficiaries were not subject to the requirement to be available for work’ (paragraph 52).
This attempt to distinguish O v the Norwegian Government is unpersuasive considering that the Court of Justice explicitly rejected such a narrow reading of its ratio decidendi. Commenting on the special features that applied to the benefit in question in Petersen, the Court of Justice added that:
‘[i]n any event, even if such checks were provided for, it would still have to be ascertained whether it was not sufficient to request that the recipient go to the Member State concerned for the purpose of undergoing such checks, if necessary, on pain of suspension of payment of the benefit in the event of unwarranted refusal on the part of the recipient (see, to that effect, Case C-499/06 Nerkowska  ECR I 0000, paragraph 45).’
With the two Advisory Opinions, the EFTA Court seems to part ways with the Court of Justice on this constitutional question on the relationship between primary and secondary law. It is unfortunate that this departure from settled case law of the Court of Justice and the EFTA Court is not explained better, creating not only individual injustice, but legal uncertainty for future cases.
Furthermore, if the proviso that EEA States must comply with EEA law when exercising their power to set conditions for social security benefits is to mean anything, these conditions may be tested against the free movement provisions of the EEA Agreement. The fact that an EEA citizen receives unemployment benefits does have the effect of suspending that person’s right to free movement. It is still a requirement to assess the proportionality. For the many individuals who have lost their entitlement to unemployment benefits and even served prison sentences, the relationship between primary and secondary law is anything but theoretical. By defining this class of people outside the scope of the free movement provisions altogether, they have effectively lost their right to free movement.
The rupture that occurred with the resignation of the former president, Professor Carl Baudenbacher, widens. Unsurprisingly, the Norwegian Government Attorney has expressed satisfaction with the ruling . But the task of the EFTA Court is not to satisfy governments. It is high time a panel be established in the EFTA pillar, along the lines of Article 255 of the TFEU, to verify the independence of judgeship proposed by the EFTA Governments.
Mads Andenæs QC is Professor, University of Oslo and Institute of Legal Studies, School of Advanced Study, University of London
(fn 1) M. Dougan ‘Expanding the Frontiers of Union Citizenship by Dismantling the Territorial Boundaries of the National Welfare States?’ in C. Barnard and O. Odudu (eds.) The Outer Limits of European Union Law, 2009, pp. 141-142.
(fn 2) See the analysis by T. Bekkedal, ‘The Internal, Systemic and Constitutional Integrity of EU Regulation 883/2004 on the Coordination of Social Security Systems: Lessons from a Scandal’, Oslo Law Review 3/2020, p. 145 (at 148,149), which was followed by the EFTA Court in its Advisory Opinion E-8/20 Criminal Proceedings against N.