Avis juridique important

Judgment of the Court (Sixth Chamber) of 20 May 1992. - Claus Ramrath v Ministre de la Justice, and l'Institut des réviseurs d'entreprises. - Reference for a preliminary ruling: Conseil d'Etat - Grand Duchy of Luxemburg. - Auditors - Requirement of a professional establishment within a Member State. - Case C-106/91. European Court reports 1992 Page I-03351 Swedish special edition Page I-00101 Finnish special edition Page I-00145

Summary Parties Grounds Decision on costs Operative part

++++

1. Freedom of movement for persons ° Freedom of establishment ° More than one centre of activity within the Community ° Auditors

(EEC Treaty, Art. 52)

2. Freedom of movement for persons ° Freedom to provide services ° Workers ° Auditors ° Access to the profession ° Restrictions justified in the general interest ° Whether permissible ° Conditions

(EEC Treaty, Arts 48 and 59)

1. The Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established in its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.

2. Articles 48 and 59 of the Treaty do not preclude a Member State from making practice as an auditor within its territory by a person who is already authorized to practise as an auditor in another Member State subject to conditions which are objectively necessary for ensuring compliance with the rules of professional practice and which relate to a permanent infrastructure for carrying out the work, actual presence in that Member State and supervision of compliance with the rules of professional conduct, unless compliance with such rules and conditions is already ensured through an auditor, whether a natural or legal person, who is established and authorized in that State' s territory and in whose service the person who intends to practise as an auditor is employed for the duration of the work.

In Case C-106/91,

REFERENCE to the Court under Article 177 of the EEC Treaty from the judicial division of the Conseil d' État, Luxembourg, for a preliminary ruling in the action pending before that court between

Claus Ramrath

and

Ministre de la Justice (Minister of Justice)

in the presence of the Institut des Réviseurs d' Entreprises (Institute of Auditors), intervener in the main proceedings,

on the interpretation of the rules on freedom of movement for persons,

THE COURT (Sixth Chamber),

composed of: F.A. Schockweiler, President of the Chamber, G.F. Mancini, C.N. Kakouris, M. Díez de Velasco and J.L. Murray, Judges,

Advocate General: F.G. Jacobs,

Registrar: H.A. Ruehl, Principal Administrator,

after considering the written observations submitted on behalf of:

° the Minister of Justice, by Francis Delaporte, of the Luxembourg Bar,

° the Institut des Réviseurs d' Entreprises, by Claude Kremer and Patrick Kinsch, of the Luxembourg Bar,

° the Commission of the European Communities, by Henri Étienne, Legal Adviser, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Claus Ramrath, represented by J.J. Wagner, of the Luxembourg Bar, the Minister of Justice, the Institut des Réviseurs d' Entreprises and the Commission, at the hearing on 13 February 1992,

after hearing the Opinion of the Advocate General at the sitting on 19 March 1992,

gives the following

Judgment

1 By order of 12 March 1991, received at the Court on 3 April 1991, the Conseil d' État, Luxembourg, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of the provisions of the EEC Treaty relating to freedom of movement for persons.

2 Those questions arose in proceedings between Mr Ramrath and the Luxembourg Minister of Justice ("the Minister"), in the presence of the Institut des Réviseurs d' Entreprises.

3 The proceedings relate to the withdrawal by the Minister in 1989 of Mr Ramrath' s authorization to practise as an auditor.

4 The profession of auditor is regulated in Luxembourg by the Law of 28 June 1984 (Mémorial 1984, p. 1346). Article 3 of that Law provides that

"The statutory audit of the documents referred to in Article 1 may be carried out only by persons authorized by the Minister of Justice.

(1) Natural persons must, in order to obtain authorization, satisfy the following conditions:

(a) they must be nationals of a Member State of the European Community ...

(b) provide proof of professional qualifications and integrity ...

(c) have a professional establishment in Luxembourg.

(2) Legal persons must, in order to obtain authorization, satisfy the conditions stated in paragraph 1, subparagraphs (a) and (c), and the following conditions:

(a) natural persons who carry out the statutory audit of the documents referred to in Article 1 on behalf of a legal person must satisfy the conditions prescribed in paragraph 1 above and be able to bind the legal person;

...

(3) The Minister of Justice shall withdraw authorization from persons who no longer satisfy one of the conditions listed above ..."

5 Under Article 6 of the aforesaid Law,

"The profession of auditor is not compatible with any activity likely to impair the professional independence of the auditor. He may not be employed except by a person authorized under Article 3."

6 At Community level, authorization to practise as an auditor is dealt with in the Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54(3)(g) of the Treaty on the approval of persons responsible for carrying out the statutory audits of accounting documents (OJ 1984 L 126, p. 20, hereinafter referred to as "the Eighth Directive").

7 Article 3 of the Eighth Directive reads as follows:

"The authorities of a Member State shall grant approval only to persons of good repute who are not carrying on any activity which is incompatible, under the law of that Member State, with the statutory auditing of the documents referred to ..."

8 Articles 23, 24, 25 and 26 of Section III ("Professional integrity and independence") of the Eighth Directive read as follows:

"Article 23

Member States shall prescribe that persons approved for the statutory auditing of the documents referred to in Article 1(1) shall carry out such audits with professional integrity.

Article 24

Member States shall prescribe that such persons shall not carry out statutory audits which they have required if such persons are not independent in accordance with the law of the Member State which requires the audit.

Article 25

Articles 23 and 24 shall also apply to natural persons who satisfy the conditions imposed in Articles 3 to 19 and carry out the statutory audit of the documents referred to in Article 1(1) on behalf of a firm of auditors.

Article 26

Member States shall ensure that approved persons are liable to appropriate sanctions when they do not carry out audits in accordance with Articles 23, 24 and 25."

9 On 11 February 1985 the Minister granted Mr Ramrath authorization to practise as an auditor. Mr Ramrath was employed at the time by Société Civile Treuarbeit, established in Luxembourg (hereinafter "Treuarbeit Luxembourg"), a legal person which was likewise authorized to practise in Luxembourg.

10 In 1988, Mr Ramrath stated that he was employed by Treuarbeit AG, a company established in Duesseldorf, Germany (hereinafter "Treuarbeit Duesseldorf"), and that his professional establishment was in Duesseldorf. Mr Ramrath explained that he and Treuarbeit Duesseldorf were both authorized by the German authorities to practise as auditors, adding that Treuarbeit Duesseldorf had agreed not to exert any influence on him when Treuarbeit Luxembourg asked him to carry out audits in Luxembourg. Treuarbeit Luxembourg later stated that when Mr Ramrath worked in Luxembourg, he was in fact employed by Treuarbeit Luxembourg for the duration of that work.

11 On 19 May 1989 the Minister withdrew Mr Ramrath' s authorization on two grounds: first, he had admitted, by implication, in stating that his professional address was in Duesseldorf, that he no longer had a professional establishment in Luxembourg within the meaning of Article 3(1)(c) of the Law of 28 June 1984, and secondly, as an employee of Treuarbeit Duesseldorf he no longer fulfilled the condition of professional independence laid down by Article 6 of that Law.

12 In support of his appeal against the Minister' s decision, Mr Ramrath argued before the Luxembourg Conseil d' État inter alia that he was the victim of discrimination: under the Law of 28 June 1984 it was consistent with professional independence for an auditor to be employed by a legal person authorized as such by the Luxembourg authorities, whereas it was not permitted for an auditor to be employed by a legal person authorized to practise as an auditor by the authorities of another Member State, even if the legislation of that State laid down similar requirements of independence with regard to economic agents.

13 By judgment of 12 March 1991 the Luxembourg Conseil d' État stayed the proceedings pending a preliminary ruling by the Court of Justice on the following questions:

"1. (a) Do Article 52 et seq., or any other provisions of the Treaty and the implementing rules, permit the competent authorities of a Member State to deem it incompatible with the exercise by a natural person of the profession of auditor in that Member State for that person to be established as an auditor in another Member State?

and if not,

(b) May a Member State impose, on a person authorized to carry on the profession of auditor in another Member State in which that person also has a business establishment, requirements with regard to a permanent infrastructure for the performance of his work, minimum conditions with regard to actual presence in that Member State and the conditions necessary for ensuring compliance with the rules of professional conduct?

2. Do Article 52 et seq. of the EEC Treaty, or any other provisions of the Treaty and the implementing rules, permit the competent authorities of a Member State to grant authorizations to practise as auditors only to employees of a person so authorized under its national legislation, to the exclusion of employees of a person authorized under the legislation of another Member State?"

14 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

15 It is important to note, first, that at this stage of the proceedings the national court has not finally determined Mr Ramrath' s position from the point of view of the provisions of Community law applicable to him. The national court' s findings of fact and the selected provisions of Community law referred to in its questions raise various possibilities in that respect, depending on whether Mr Ramrath falls within the provisions of Community law on the basis of a professional activity carried on by him, or of employment sought by him, or as an employee covered by the provisions of Community law by reason of his professional activity.

16 His position might therefore come within the chapter of the Treaty on workers, more particularly Article 48, or within the chapters on the right of establishment and on services, in particular Articles 52, 56 and 59.

18 The questions submitted by the Luxembourg Conseil d' État must be answered in the light of those considerations.

The first question

19 In this question, the national court seeks essentially to ascertain whether the Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established in its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.

The second and third questions

23 These questions ask in substance whether the Treaty provisions on the free movement of persons preclude a Member State from making practice as an auditor in its territory by a person who is already authorized to practise that profession in another Member State subject to conditions relating to permanent professional infrastructure, actual presence in that Member State, supervision of compliance with the rules of professional conduct or, in the case of an employee, the fact that his principal employer is authorized to practise as an auditor within that State' s territory.

24 It is unnecessary to consider whether an auditor who wishes to carry out audits in another Member State has the status of an employee, a self-employed person or a provider of services, this being for the national court to decide, if at all; however, all the Treaty provisions relating to freedom of movement for persons must be examined in order to determine whether they preclude the imposition of conditions such as those laid down by the Law of 28 June 1984.

25 The principle of freedom of movement for workers, stated in Article 48 of the Treaty, gives every national of a Member State the right to enter the territory of another Member State and to reside there for the purposes referred to in that article. The same principle also guarantees every employee the right to take up temporary employment in another Member State. He cannot be denied that right on the grounds that he is already in paid employment in his State of origin or that the work performed in the other Member State is part-time work.

26 Furthermore, the Court held in the abovementioned Stanton and Wolf judgments, paragraph 12 in each case, that the considerations set out above in connection with the answer to the first question concerning the right of establishment are also valid in the case of an employee who is established in one Member State and wishes, in addition, to work in a self-employed capacity in another Member State.

27 Finally, freedom to provide services within the meaning of Article 59 et seq. of the Treaty entails the abolition of all forms of discrimination against a person providing a service by reason inter alia of the fact that he is established in a Member State other than that in which the service is to be provided (see the judgment in Case 279/80 Webb [1981] ECR 3305, paragraph 14).

33 In the Minister' s view, it follows from the recitals in the preamble to the Eighth Directive and from Articles 3, 23, 24, 25 and 26 thereof that it is for each Member State to determine the criteria of independence and integrity for auditors. In that respect, supervision of compliance with the rules of professional practice by an auditor within a Member State' s territory presupposes that the auditor is under an obligation to have a permanent infrastructure and minimum presence within that State. Moreover, compliance with those rules by an employed auditor could be guaranteed only through his employer. Supervision by the authorities of compliance with such rules would be possible only at the level of the employer, who would therefore have to be approved by those authorities.

34 On this point, the provisions of the Eighth Directive leave to Member States inter alia the task of assessing in accordance with national law the independence and integrity of auditors practising within their territory.

36 Such requirements are no longer objectively necessary, however, where the statutory audit of the accounting documents is carried out by an auditor who, while established and authorized to practise in another Member State, is temporarily in the service of a natural or legal person authorized to practise as an auditor by the authorities of the Member State in which that audit is carried out. In those circumstances, it is through that person that the Member State can ensure compliance with the rules by an auditor who from time to time carries out audits in its territory.

37 It follows from all those considerations that the answer to the second and third questions of the Luxembourg Conseil d' État must be that Articles 48 and 59 of the Treaty do not preclude a Member State from making practice as an auditor within its territory by a person who is already authorized to practise as an auditor in another Member State subject to conditions which are objectively necessary for ensuring compliance with the rules of professional practice and which relate to a permanent infrastructure for carrying out the work, actual presence in that Member State and supervision of compliance with the rules of professional conduct, unless compliance with such rules and conditions is already ensured through an auditor, whether a natural or legal person, who is established and authorized in that State' s territory and in whose service the person who intends to practise as an auditor is employed for the duration of the work.

Costs

38 The costs incurred by the Luxembourg Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Sixth Chamber),

in answer to the questions referred to it by the Conseil d' État, Luxembourg, by order of 12 March 1991, hereby rules:

1. The Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established on its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.

2. Articles 48 and 59 of the Treaty do not preclude a Member State from making practice as an auditor within its territory by a person who is already authorized to practise as an auditor in another Member State subject to conditions which are objectively necessary for ensuring compliance with the rules of professional practice and which relate to a permanent infrastructure for carrying out the work, actual presence in that Member State and supervision of compliance with the rules of professional conduct, unless compliance with such rules and conditions is already ensured through an auditor, whether a natural or legal person, who is established and authorized in that State' s territory and in whose service the person who intends to practise as an auditor is employed for the duration of the work.