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A Flemish act discriminating against Walloon residents violates EU Law

Araceli Turmo , 13 mai 2013

The Court of Justice handed down its judgment in Joined Cases Libert e.a. (C-197/11 and C-203/11) on 8 May 2013. The actions in the main proceedings concerned disputes which arose out of the 2009 Flemish Decree on land and real estate policy, aimed at, among other things, restricting the access of non-Flemish Belgians to real estate property within certain communes. The Belgian Constitutional Court made two preliminary references to the Court of Justice after several proceedings were brought before it, seeking the annulment of certain provisions set out in Books 4 and 5 of the decree.

The first set of provisions makes the transfer of immovable property in certain ‘target’ communes subject to verification, by a provincial committee, that the prospective buyer or tenant has a ‘sufficient connection’ with the commune. Such a connection will be held to exist where: the candidate has been resident there, or in a neighbouring commune, for at least six consecutive years; she carries out activities for at least half a working week in the commune; or has a professional, family, social or economic connection with it as a result of a significant circumstance of long duration. The references sought to determine whether these provisions are compatible with Directive 2004/38 and the Treaty provisions which guarantee the free movement of persons, services and capital.

Although the proceedings concerned Belgian nationals or undertakings established under Belgian law, the Court held that the questions were admissible since other individuals or undertakings could be affected in a similar way. The Court of Justice held that such provisions are contrary to the free movement of persons guaranteed by Articles 21, 45 and 49 TFEU, and Articles 22 and 24 of Directive 2004/38. The primary consequence of such rules is to prevent persons without a ‘sufficient connection’ with a commune from purchasing property thereon; they are also likely to deter owners of such property from moving to, or working in, another Member State. The provisions also violate Article 56 TFEU, since they restrict the freedom of property undertakings wishing to offer services in these communes. Lastly, they are contrary to Article 63(1) TFEU, which precludes prior authorisation procedures for investments in immovable property.

The Flemish government claimed that the condition requiring a ‘sufficient connection’ aimed to respond to the housing needs of the disadvantaged local population. Whilst requirements relating to social housing may constitute overriding reasons in the public interest, the conditions set out in the decree were held not to be appropriate, or necessary, to attain such an objective. Firstly, such criteria did not benefit the local disadvantaged population more than people with sufficient resources; secondly, less restrictive measures such as subsidies would be more appropriate. Moreover, the vagueness of the third criterion leaves too much discretion to the provincial committee.

Other questions concerned the ‘social obligation’ imposed by Book 4 of the Decree, which requires operators to allow the use of part of their building projects for the development of social housing units, or pay a financial contribution to the commune. The scheme was examined only in the light of the free movement of capital, which the Court ruled it violates since investors cannot freely use the land for the purposes for which they wished to acquire it. However, as the government invoked the same justification, the Court chose to let the national court assess whether the scheme satisfies the principle of proportionality. Lastly, the referring court had asked whether other measures provided for in the Decree constituted State aid, requiring notification to the Commission, and as public works contracts, under Directive 2004/18. On these matters, the Court of Justice held that it did not have sufficient information to verify whether the necessary conditions were met, and simply provides the national court with a restatement of the applicable law.

Reproduction autorisée avec l’indication: Araceli Turmo, "A Flemish act discriminating against Walloon residents violates EU Law", www.ceje.ch, actualité du 13 mai 2013.