JUDGMENT OF THE COURT (Second Chamber)

11 September 2014 ( *1 )

‛EEC-Turkey Association Agreement — Article 41(1) of the Additional Protocol and Article 13 of Decision No 1/80 — Scope — Introduction of new restrictions on the freedom of establishment, the freedom to provide services and the conditions for access to employment — Prohibition — Freedom to provide services — Articles 56 TFEU and 57 TFEU — Posting of workers — Nationals of non-Member States — Requirement for a work permit for the deployment of labour’

In Case C‑91/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Raad van State (Netherlands), made by decision of 20 February 2013, received at the Court on 25 February 2013, in the proceedings

Essent Energie Productie BV

v

Minister van Sociale Zaken en Werkgelegenheid,

THE COURT (Second Chamber),

composed of R. Silva de Lapuerta (Rapporteur), President of the Chamber, J.L. da Cruz Vilaça, G. Arestis, J.-C. Bonichot and A. Arabadjiev, Judges,

Advocate General: Y. Bot,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 20 March 2014,

after considering the observations submitted on behalf of:

—

Essent Energie Productie BV, by T.L. Badoux, advocaat,

—

the Netherlands Government, by M. Bulterman and J. Langer, acting as Agents,

—

the Danish Government, by M. Wolff, acting as Agent,

—

the European Commission, by J. Enegren and M. van Beek, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 8 May 2014,

gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 41(1) of the Additional Protocol signed at Brussels on 23 November 1970 and concluded, approved and confirmed on behalf of the Community by Council Regulation (EEC) No 2760/72 of 19 December 1972 ( OJ 1973 C 113, p. 17 ; ‘the Additional Protocol’) and of Article 13 of Decision No 1/80 of the Association Council of 19 September 1980 on the development of the Association (‘Decision No 1/80’). The Association Council was set up by the Agreement establishing an Association between the European Economic Community and Turkey, signed at Ankara on 12 September 1963 by the Republic of Turkey, of the one part, and by the Member States of the EEC and the Community, of the other part, and concluded, approved and confirmed on behalf of the Community by Council Decision 64/732/EEC of 23 December 1963 ( OJ 1973 C 113, p. 1 ; ‘the Association Agreement’).

2The request has been made in proceedings between Essent Energie Productie BV (‘Essent’) and the Minister van Sociale Zaken en Werkgelegenheid (Minister for Social Affairs and Employment, ‘the Minister’) concerning a fine imposed on it by the Minister for having had works carried out by nationals of non-Member States without those workers having been issued with a work permit.

Legal context

European Union law

The Association Agreement

3According to Article 2(1) of the Association Agreement, the aim of the agreement is to promote the continuous and balanced strengthening of trade and economic relations between the Contracting Parties which includes, in relation to the workforce, the progressive securing of freedom of movement for workers (Article 12 of the Association Agreement), and the abolition of restrictions on freedom of establishment (Article 13 of the agreement) and on freedom to provide services (Article 14 of the agreement), with a view to improving the standard of living of the Turkish people and facilitating the accession of the Republic of Turkey to the European Union at a later date (fourth recital in the preamble to and Article 28 of the agreement).

The Additional Protocol

4The Additional Protocol — which, in accordance with Article 62 thereof, forms an integral part of the Association Agreement — lays down, as is stated in Article 1, the conditions, arrangements and timetables for implementing the transitional stage referred to in Article 4 of the Association Agreement.

5The Additional Protocol includes Title II, ‘Movement of persons and services’, Chapter I of which concerns ‘Workers’ and Chapter II of which concerns the right of establishment, services and transport.

6Article 41(1) of the Additional Protocol, which appears in Chapter II of Title II, provides:

‘The Contracting Parties shall refrain from introducing between themselves any new restrictions on the freedom of establishment and the freedom to provide services.’

7Article 59 of the Additional Protocol, which appears in Title IV, ‘General and final provisions’, is worded as follows:

‘In the fields covered by this Protocol Turkey shall not receive more favourable treatment than that which Member States grant to one another pursuant to the [FEU Treaty].’

Decision No 1/80

8Article 13 of Decision No 1/80 provides:

‘The Member States of the [European Union] and Turkey may not introduce new restrictions on the conditions of access to employment applicable to workers and members of their families legally resident and employed in their respective territories.’

Netherlands law

9Under Article 1(1)(1)(b)(1) of the Law on the employment of foreign nationals (Wet arbeid vreemdelingen), in the version applicable to the dispute in the main proceedings (‘the Wav 1994’), ‘employer’ means a person who, in the exercise of an office, occupation or business, has work carried out by another.

10Under Article 2(1) of the Wav 1994, an employer is prohibited from having work carried out in the Netherlands by a foreign national who does not hold a work permit.

The dispute in the main proceedings and the questions referred for a preliminary ruling

11Essent is a company established in the Netherlands, which instructed BIS Industrial Services Nederland BV (‘BIS’), also established in the Netherlands, to carry out works consisting in the erection of scaffolding at its branch in Geertruidenberg (Netherlands).

12According to a report drawn up by the labour inspectorate on 8 March 2010, during an inspection which it carried out at that establishment on 15, 19 and 20 May 2008, it was found that 33 nationals from non-Member States, 29 of whom were Turkish, took part in those works between 1 January and 20 May 2008.

13According to that report, the workers who were nationals of non-Member States were posted to BIS by Ekinci Gerüstbau GmbH (‘Ekinci’), an undertaking established in Germany which employed them, without any work permit having been issued by the Netherlands authorities for the purposes of that posting.

14By a decision of 11 May 2010, the Minister fined Essent EUR 264 000 for infringement of Article 2(1) of the Wav 1994 on the ground that that company had had that work carried out by foreign workers who had not been issued with work permits, even though under Netherlands legislation such permits were compulsory.

15Essent lodged an objection to that decision.

16By decision of 22 November 2010, the Minister rejected the objection as unfounded on the ground that the service provided by Ekinci had consisted solely of the posting of a workforce, so that Essent, as the principal contactor and employer of the foreign workers concerned, should have had work permits for those workers.

17By judgment of 27 September 2011, the Rechtbank ’s-Hertogenbosch (Netherlands) dismissed the appeal brought by Essent against the decision rejecting the complaint. That court held that the Minister was right to have imposed a fine on Essent, since the service provided by Ekinci consisted only of posting the foreign workers and, in that context, European Union law did not preclude legislation of a Member State requiring workers posted in the territory of that State to hold a work permit.

18Essent appealed against that judgment to the referring court.

19It is on that basis that the Raad van State decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.

In a situation such as that at issue in the main proceedings, can a principal contactor which must, under Article 2(1) of the [Wav 1994], be regarded as the employer of the Turkish workers concerned rely, as against the Netherlands authorities, on the standstill rule in Article 13 of Decision No 1/80 or on the standstill rule in Article 41 of the Additional Protocol?

2.(a)

Must the standstill rule in Article 13 of Decision No 1/80 or the standstill rule in Article 41 of the Additional Protocol be interpreted as precluding the introduction of a prohibition, as set out in Article 2(1) of the [Wav 1994], for principal contractors of having carried out in the Netherlands by workers who are nationals of a non-member country, in this case [the Republic of] Turkey, without a work permit, if those workers are in the employ of a German undertaking and work for the principal contractor in the Netherlands via a Netherlands user undertaking?

(b)

Is it significant in that regard that an employer was already prohibited, before both the standstill rule in Article 41 of the Additional Protocol and the standstill rule in Article 13 of Decision No 1/80 entered into force, from having work carried out under a contract of employment by a foreign national without a work permit and that that prohibition was extended likewise before the standstill rule in Article 13 of Decision No 1/80 entered into force, to user undertakings to which foreign nationals are posted?’

Consideration of the questions referred

20By its questions, which should be considered together, the national court asks, in essence, whether Article 41(1) of the Additional Protocol and Article 13 of Decision No 1/80 must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, under which, where Turkish workers are made available by an undertaking established in another Member State to a user undertaking established in the first Member State, which uses them to carry out work on behalf of an undertaking established in the same Member State, such making available is subject to the condition that those workers have been issued with work permits.

The applicability of Article 41(1) of the Additional Protocol and Article 13 of Decision No 1/80

21It must be observed that it is the established case-law of the Court that Article 41(1) of the Additional Protocol and Article 13 of Decision No 1/80 have direct effect. As a consequence, both those provisions may be relied on by the Turkish nationals to whom they apply before the courts or tribunals of the Member States in order to prevent the application of inconsistent rules of national law (see judgments in Abatay and Others , C‑317/01 and C‑369/01, EU:C:2003:572 , paragraphs 58 and 59, and Demirkan , C‑221/11, EU:C:2013:583 , paragraph 38).

22Moreover, the Court has stated that neither the Association Agreement and its Additional Protocol, nor Decision No 1/80, which concerns only freedom of movement for workers, establishes any general principle of freedom of movement of persons between Turkey and the European Union (see judgment in Demirkan , EU:C:2013:583 , paragraphs 53).

23In that context, the Court has repeatedly held that, unlike workers from the Member States, Turkish nationals are not entitled to freedom of movement within the European Union but can rely only on certain rights in the territory of the host Member State alone (see, in particular, Savas , C‑37/98, EU:C:2000:224 , paragraph 59; Abatay and Others , EU:C:2003:572 , paragraph 64; and Derin , C‑325/05, EU:C:2007:442 , paragraph 66.)

24In the case at issue in the main proceedings, the host Member State of the workers concerned, who are Turkish nationals, is the Federal Republic of Germany, where they are legally resident and working.

25Consequently, it is in connection with that Member State that those workers may assert their rights under Article 13 of Decision No 1/80.

26In addition, Article 13 concerns national measures relating to access to employment and is not intended to protect Turkish nationals already integrated into a Member State’s labour force (see judgment in Sahin , C‑242/06, EU:C:2009:554 , paragraph 51).

27In addition, it is clear from the structure and purpose of Decision No 1/80 that, at the current stage of development of freedom of movement for workers under the EEC-Turkey Association, that decision is essentially aimed at the progressive integration of Turkish workers in the host Member State through the pursuit of lawful employment which should be uninterrupted (see judgment in Abatay and Others , EU:C:2003:572 , paragraph 90).

28The workers in question, who are Turkish nationals and who reside and work legally in their host Member State, that is to say the Federal Republic of Germany, were posted to the territory of the Netherlands for a limited period, being the time needed to carry out the work of erecting scaffolding which Essent entrusted to BIS.

29Thus, nothing in the papers before the Court suggests that those workers intended to become part of the labour market of the Kingdom of the Netherlands as host Member State.

30It follows that Article 13 of Decision No 1/80 cannot be applied to a situation such as that at issue in the main proceedings.

31Concerning Article 41(1) of the Additional Protocol, it must be stated that, as is apparent from its very wording, it formulates, in clear, precise and unconditional terms, an unequivocal standstill clause, which prohibits the Contracting Parties from introducing new restrictions on freedom of establishment and freedom to provide services with effect from the date of entry into force of the Additional Protocol (see judgment in Demirkan , EU:C:2013:583 , paragraph 37).

32That standstill clause prohibits generally the introduction of any new measures having the object or effect of making the exercise by a Turkish national of the abovementioned economic freedoms on the territory of a Member State subject to stricter conditions than those which were applicable at the time when the Additional Protocol entered into force with regard to that Member State (see judgment in Demirkan , EU:C:2013:583 , paragraph 39).

33The Court has previously held that Article 41(1) of the Additional Protocol may be relied on by an undertaking established in Turkey which lawfully provides services in a Member State and by Turkish nationals who are lorry drivers employed by such an undertaking (see judgments in Abatay and Others , EU:C:2003:572 , paragraphs 105 and 106, and Demirkan , EU:C:2013:583 , paragraph 40).

34However, as the Advocate General stated in point 55 of his Opinion, in the dispute in the main proceedings the only connection with the Republic of Turkey lies in the presence of Turkish nationals among the workers posted by Ekinci to the territory of the Netherlands. In the absence of any economic activity between the Republic of Turkey and the Kingdom of the Netherlands in the situation at issue in the main proceedings, that connecting element is not sufficient to bring that situation within the scope of Article 41(1) of the Additional Protocol.

Articles 56 TFEU and 57 TFEU

38Concerning the dispute in the main proceedings, the service of making workers available is provided by an undertaking established in Germany to a user undertaking established in the Netherlands.

40Similarly, the fact that Essent is not the direct recipient of the service of making available the workers in question in the main proceedings cannot have the effect of depriving that undertaking of the possibility of relying on Articles 56 TFEU and 57 TFEU for the purposes of challenging the penalty imposed on it by the Minister.

41If Essent were denied that possibility, it would suffice for the Member State on whose territory the undertaking receiving that service is established to adopt a broad definition of the concept of employer, such as the one at issue in the main proceedings, in order to obstruct the application of the rules of the FEU Treaty relating to the freedom to provide services and consequently negate the prohibition of restrictions on that freedom in Article 56 TFEU.

42Furthermore, since Essent, as the principal contractor in the chain of undertakings concerned by the provision of the service at issue in the main proceedings, was the only undertaking to be held responsible by the Netherlands authorities and to have a fine imposed on it, the question whether the provisions of the legislation at issue in the main proceedings which gave rise to the imposition of that fine are compatible with Articles 56 TFEU and 57 TFEU is directly relevant to the resolution of the dispute being heard by the referring court concerning the lawfulness of that fine.

43Consequently, it is necessary to examine whether Articles 56 TFEU and 57 TFEU must be interpreted as precluding legislation such as that issue in the main proceedings.

46Under the legislation at issue in the main proceedings, an employer is prohibited, in the framework of the transnational provision of services consisting in making workers available, from having work carried out in the Netherlands by a foreign national who does not hold a work permit.

47Moreover, the conditions and restrictions in terms of deadlines which have to be met in order to obtain that work permit and the administrative burden involved in obtaining such a permit impede the making available of workers who are nationals of non-member countries to a user undertaking established in the Netherlands by a service-providing undertaking established in another Member State, and, consequently, the provision of services by that undertaking (see, to that effect, judgments in Commission v Luxembourg , EU:C:2004:655 , paragraph 23; Commission v Germany , EU:C:2006:49 , paragraph 35; and Commission v Austria , EU:C:2006:595 , paragraphs 39 and 42).

50When questioned on this issue at the hearing, the Netherlands Government claimed that the legislation at issue in the main proceedings was justified by the objective of protecting the national labour market.

Costs

61Since 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. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

Articles 56 TFEU and 57 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, under which, where workers who are nationals of non-member countries are made available by an undertaking established in another Member State to a user undertaking established in the first Member State, which uses them to carry out work on behalf of another undertaking established in the same Member State, such making available is subject to the condition that those workers have been issued with work permits.

[Signatures]

( *1 ) Language of the case: Dutch.