SOURCE: Monthly Case-law Digest – June 2021
Reference for a preliminary ruling – Articles 49 and 54 TFEU – Freedom of establishment – National legislation requiring third-country nationals employed on a vessel flying the flag of a Member State to hold a work permit in that Member State – Exemption covering vessels that call at the Member State’s port no more than 25 times in a one-year period – Restriction – Article 79(5) TFEU – National legislation aimed at fixing the volumes of admission of third-country nationals coming from third countries to the territory of the Member State concerned in order to seek work, whether employed or self-employed
VAS Shipping, a company established in Denmark and owned by a Swedish company, is the managing owner of four part-owned companies established in Sweden. They registered four vessels in Denmark in order to pursue their maritime transport activities there. Under Danish law, VAS Shipping has authority over all legal transactions normally involved in that activity.
In 2018, a Danish court ordered VAS Shipping to pay a fine for having employed, on board those four vessels flying the Danish flag, third-country national seafarers who did not hold a Danish work permit and were not exempt from the requirement to have that permit. It is only when vessels enter Danish ports on no more than 25 occasions in one year that third-country nationals working on board those vessels are exempt from the requirement to hold a work permit in Denmark. In the present case, the four vessels called at Danish ports more than 25 times from August 2010 to August 2011. According to that court, although the requirement of a work permit laid down by the national legislation constitutes a restriction on the freedom of establishment within the meaning of Article 49 TFEU, that requirement is, however, justified and proportionate in order to avoid disturbances on the national labour market.
Hearing the appeal brought by VAS Shipping, the Østre Landsret (High Court of Eastern Denmark, Denmark) decided to refer a question to the Court of Justice asking whether Danish legislation that requires third-country nationals employed on a vessel flying the Danish flag and owned by a company established in another Member State to have a work permit in Denmark, unless the vessel concerned has called at ports in Denmark no more than 25 times in one year, is compatible with the freedom of establishment.
In its judgment, the Court defines the scope of the obligations of the Member States in respect of the freedom of establishment, in the light of the right which they enjoy under Article 79(5) TFEU to determine volumes of admission of third-country nationals coming to their territory in order to seek work, whether employed or self-employed.
Findings of the Court
As a preliminary point, the Court notes that the situation at issue in the main proceedings falls within the scope of the freedom of establishment enshrined in Article 49 TFEU. The Court notes, in that regard, that that freedom confers, in accordance with Article 54 TFEU, on companies lawfully established in a Member State, the right to exercise their activity in another Member State through a subsidiary, a branch or an agency, including through the acquisition of a holding in the capital of a company established in that other Member State that allows it to exert a definite influence on that company and to determine its activities. Furthermore, as regards the registration of a vessel, the Court points out that it cannot be separated from the freedom of establishment where the vessel serves as a vehicle for the pursuit of an economic activity that includes a fixed establishment in the Member State of registration.
It is in the light of the above clarifications that the Court examines whether the national legislation concerned is liable to constitute a restriction on the freedom of establishment. In that regard, the Court notes, first of all, that, under Article 79(5) TFEU, Member States retain the right to determine volumes of admission of third-country nationals coming from third countries to their territory in order to seek work, the flag State of a vessel being, in that context, the State in which a third-country national working on board that vessel is employed.
Relying on that provision, the Court considers, next, that the requirement for third-country nationals employed in the territory of a Member State, including on a vessel registered in that State, to have a work permit is a measure intended to regulate access to work and to residence of those nationals on the national territory. Therefore, the Member State concerned is entitled to provide that those thirdcountry nationals must obtain a work permit, providing also, where appropriate, for exceptions from that requirement. Accordingly, the Court holds that the national legislation at issue, applicable without distinction to all vessels flying the flag of the Member State concerned, which lays down an obligation for all third-country nationals employed as crew members of such vessels to have a work permit, and which exempts from that obligation only crew members of such vessels who, in the course of a year, call at the ports of that Member State no more than 25 times, does not constitute a restriction on the freedom of establishment within the meaning of the first paragraph of Article 49 TFEU.
Lastly, the Court observes that such legislation may, admittedly, disadvantage companies established in a first Member State which then establish themselves in a second Member State in order to operate a vessel flying the flag of that second Member State, as compared to companies which operate, in the second Member State, vessels flying the flag of another Member State and whose legislation does not impose a similar obligation. However, such adverse consequences stem from possible differences in the application, by the Member States, of the right provided for in Article 79(5) TFEU, enabling those states to determine volumes of admission of third-country nationals seeking work in their territory, which is a right that they are expressly granted.