Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Fifth Chamber)

29 October 1998 (1)

(Freedom of establishment - Directive 64/427/EEC - Activities of self-employed persons in manufacturing and processing industries - Conditions for taking up an occupation)

In Joined Cases C-193/97 and C-194/97,

REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunal Administratif, Luxembourg, for a preliminary ruling in the proceedings pending before that court between

Manuel de Castro Freitas (C-193/97),

Raymond Escallier (C-194/97)

and

Ministre des Classes Moyennes et du Tourisme

on the interpretation of Article 52 of the EC Treaty and Article 3 of Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries) (OJ, English Special Edition 1963-1964, p. 148),

THE COURT (Fifth Chamber),

composed of: P. Jann, President of the First Chamber, acting as President of the Fifth Chamber, C. Gulmann, D.A.O. Edward (Rapporteur), L. Sevón and M. Wathelet, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

- Mr de Castro Freitas, by Marc Baden, of the Luxembourg Bar,

- Mr Escallier, by Albert Rodesch, of the Luxembourg Bar, and

- the Commission of the European Communities, by Berend Jan Drijber, of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Mr de Castro Freitas, represented by Robert Loos, of the Luxembourg Bar; of Mr Escallier, represented by Albert Rodesch; of the Portuguese Government, represented by Luís Fernandes, Director of the Legal Service of the European Communities Directorate-General in the Ministry of Foreign Affairs, and Margarida Telles Romão, of the same service, acting as Agents; and of the Commission, represented by Bernard Mongin and James Macdonald Flett, of its Legal Service, acting as Agents, at the hearing on 10 February 1998,

after hearing the Opinion of the Advocate General at the sitting on 5 March 1998,

gives the following

Judgment

1. By two judgments of 7 May 1997, received at the Court on 21 May 1997, the Tribunal Administratif (Administrative Court), Luxembourg, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty three questions on the interpretation of Article 52 of the EC Treaty and Article 3 of Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small

   craft industries) (OJ, English Special Edition 1963-1964, p. 148, hereinafter 'the Directive').

2. Those questions arose in the context of two actions brought, by Mr de Castro Freitas and Mr Escallier respectively, against two decisions of the Ministre des Classes Moyennes et du Tourisme (Minister for Small and Medium-sized Businesses and the Self-employed, and for Tourism, hereinafter 'the Minister') refusing to grant them the licences for which they had applied in order to carry on a number of trades in Luxembourg.

   The Luxembourg legislation

3. The first subparagraph of Article 1(1) of the Luxembourg Law of 28 December 1988 regulating authorisation to engage in business as a craftsman, tradesman or industrial entrepreneur and admission to certain professions, and amending Article 4 of the Law of 2 July 1935 regulating the conditions for obtaining the title and certificate of master craftsman (Mémorial A, 1988, p. 1494), provides, inter alia, that no person may engage in business as an industrial entrepreneur, tradesman or craftsman, whether as a principal or as an ancillary occupation, without written authorisation.

4. Pursuant to Article 13(1) of that Law, a list of principal and ancillary trades was laid down by Grand-Ducal Regulation of 19 February 1990 (Mémorial A, 1990, p. 186). That regulation lists as principal trades those of 'building contractor', 'roofer', 'sheet and galvanised metal craftsman', 'construction carpenter' and 'plasterer and façade finisher', the scope of each of which is specified in the Grand-Ducal Regulation of 26 March 1994 (Mémorial A, 1994, p. 492).

5. The Grand-Ducal Regulation of 15 September 1989 (Mémorial A, 1989, p. 1169) lays down the equivalence criteria, pursuant to Article 13(2) of the Law of 28 December 1988, for determining whether an applicant is sufficiently qualified to pursue a trade included in that list, on the basis of documentary evidence accepted as equivalent.

6. Article 6 of the Grand-Ducal Regulation of 15 September 1989 provides:

   'Certificates issued by the competent bodies of the Member States of the Common Market on the basis of Community directives in the field of small craft industries are to be accepted as equivalent documents where the person concerned fulfils the conditions laid down therein in respect of professional ability.'

   The Directive

7. Under Article 3 of the Directive, where, in a Member State, the taking up or pursuit of any activity as a self-employed person in a manufacturing or processing industry or small craft industry is dependent on the possession of general, commercial or professional knowledge and ability, 'that Member State shall accept as sufficient evidence of such knowledge and ability the fact that the activity in question has been pursued in another Member State for any of the following periods:

   (a) six consecutive years either in an independent capacity or as a person responsible for managing an undertaking; or

   ...

   (c) three consecutive years in an independent capacity, where the beneficiary can prove that he has pursued the occupation in question for at least five years in a non-independent capacity; or

   ...'.

8. Under the second paragraph of that article, in the cases referred to in subparagraphs (a) and (c), pursuit of the activity in question must not have ceased more than 10 years before the date when the application referred to in Article 4(3) is made.

9. Article 4 of the Directive provides:

   'For the purpose of applying Article 3:

   1. Member States in which the taking up and pursuit of any occupation referred to in Article 1(2) is subject to the possession of general, commercial or professional knowledge or ability shall, with the assistance of the Commission, inform the other Member States of the main characteristics of that occupation (description of the activities covered by the occupation).

   2. The competent authority designated for this purpose by the country whence the beneficiary comes shall certify what professional activities were actually pursued by the beneficiary and the duration of those activities. Certificates shall be drawn up having regard to the official description of the occupation in question supplied by the Member State in which the beneficiary wishes to pursue such occupation, whether permanently or temporarily.

   3. The host Member State shall grant authorisation to pursue the activity in question on application by the person concerned, provided that the activity certified conforms to the main features of the description of the activity communicated pursuant to paragraph 1 and provided that any other requirements laid down by the rules of that State are satisfied.'

   The disputes in the main proceedings

10. According to certificates issued by the Confederação da Industria Portuguesa (Confederation of Portuguese Industry) on 24 April, 27 September and 25 December 1994, Mr de Castro Freitas engaged in the activity of 'civil construction', including 'exterior finishings, façades and roofing', in Portugal from 6 January 1981 to 31 December 1989.

11. According to a certificate issued by the Chamber of Commerce and Industry for the Moselle, Mr Escallier engaged, as a person responsible for managing an undertaking, in the activities of roofer, sheet and galvanised metal craftsman and construction carpenter in France from 21 January 1983 to 5 February 1990.

12. Mr de Castro Freitas and Mr Escallier applied to the Minister for the licences necessary to engage in their respective activities in the Grand Duchy of Luxembourg.

13. On 15 June 1994 the Minister granted Mr de Castro Freitas a licence for the activity of 'building contractor'. On 24 January 1996, he granted Mr Escallier a licence to engage in the trade of 'roofer'.

14. The Minister refused, however, to grant Mr de Castro Freitas's application in respect of the activity of 'façade finisher' or that of Mr Escallier in respect of the activities of 'sheet and galvanised metal craftsman' and 'construction carpenter', on the ground that they had not yet completed the periods of activity required under Article 3(a) of the Directive for each of those trades, it being necessary to fulfil the conditions laid down in that article separately for each trade concerned.

15. On 19 April 1995 and 14 February 1996 respectively, Mr de Castro Freitas and Mr Escallier applied to the Tribunal Administratif for judicial review.

16. That court, taking the view that the disputes raised questions of interpretation of Community law, stayed proceedings and in Case C-193/97 referred the following questions to the Court:

    '1. Does the first paragraph of Article 3 of Directive 64/427 of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries), which refers to the taking up "or pursuit of any activity referred to in Article 1(2)" and to "the fact that the activity in question has been pursued", also cover the situation where a Community national has pursued simultaneously in the Member State from which he comes more than one activity falling within the scope of this directive and applies to establish his

    business in another Member State, continuing the simultaneous pursuit of those activities, having regard, in particular, to the principle of the freedom of establishment laid down in Article 52 of the Treaty, now amended, of 17 April 1957 establishing the European Economic Community?

    2. If so, is the period of experience required by Article 3(a) altered in respect of all or some of the activities concerned owing to the fact that they were pursued simultaneously?

    3. Does the fact that the activities in question are closely connected, or even unconnected, have any relevance?'

17. In Case C-194/97, the national court also stayed proceedings and referred the same questions to the Court for a preliminary ruling, except that in the first question the phrase 'simultaneous pursuit of those trades' was substituted for 'simultaneous pursuit of those activities'.

18. By those questions, which should be considered together, the national court is asking in substance whether on a proper construction of Article 3 of the Directive, where, in a Member State, the possession of specific knowledge and ability is a condition for taking up and pursuing an activity as a self-employed person in a manufacturing or processing industry or small craft industry, that Member State may require of a Community national who applies for licences to pursue occupational activities in that Member State which he is certified by the competent authorities of his Member State of origin to have pursued there, that he have completed separately, in respect of each of the trades whose scope is defined by the legislation of the host State, the periods prescribed by that article.

19. First, it must be borne in mind that the Directive is intended to make it easier to attain freedom of establishment and freedom to provide services in a broad range of industrial and small craft activities in the manufacturing and processing industries, pending harmonisation of conditions for taking up those activities in the different Member States, which is an essential prerequisite for complete liberalisation in that field.

20. It is not disputed that no measures have yet been adopted, as envisaged in Article 6 of the Directive, relating to the harmonisation of conditions for taking up and pursuing the activities in question.

21. Failing such harmonisation, the Member States remain, in principle, competent to define the general, commercial or professional knowledge and ability necessary in order to engage in the activities in question and to require production of diplomas, certificates or other formal evidence attesting that applicants possess such knowledge and ability.

22. With regard more particularly therefore to the fields of activity falling within ISIC groups 23-40 (Industry and small craft industries), a Member State cannot be precluded from defining, with due regard to the objective differences pertaining to activities falling within each individual group, the scope of a number of trades within each of those groups and the conditions for taking them up.

23. It must however be stressed that whilst, as Community law now stands, there is no specific legislation governing the conditions for taking up and pursuing the activities in question, the Member States must none the less, when exercising their powers in this area, respect both the basic freedoms guaranteed by Articles 52 and 59 of the EC Treaty and the effectiveness of a directive laying down transitional measures.

24. Second, it must be recognised that the differing definitions given by the Member States to particular occupations connected with the activities in question may give rise to restrictions on freedom of establishment.

25. In order to deal with that problem, the first paragraph of Article 3(1) of the Directive provides that where, in a Member State, the taking up or pursuit of any activity covered by the Directive is dependent on the possession of specific qualifications, 'that Member State shall accept as sufficient evidence of such knowledge and ability the fact that the activity in question has been pursued in another Member State'.

26. Consequently, whilst Community law leaves the Member States a certain discretion as to the definition of the conditions for taking up those activities and the scope of each of the occupations concerned, the exercise of that discretion is constrained by the obligation laid down in Article 3 of the Directive.

27. In accordance with Article 4(3) of the Directive, the host Member State is to grant authorisation to pursue an occupational activity on application by the person concerned where the activity certified by the competent authority of the Member State of origin conforms to the main features of the description of the activity, as previously communicated by the host Member State, and where any other requirements laid down by the rules of that State are satisfied.

28. The Court has already held that the competent authority of the Member State of origin must certify whether the applicant's pursuit of the activity in question was genuine and real and took place over a given number of consecutive years, that is to say, without any interruption other than those occurring in the ordinary course of life (Case 130/88 Van de Bijl v Staatssecretaris van Economische Zaken [1989] ECR 3039, paragraph 18).

29. The Court has also held that a host Member State which imposes certain conditions as to qualifications is in principle bound by the declarations contained in the

    certificate issued by the Member State of origin, in particular those concerning the activities in which the applicant was engaged there or their duration, as that certificate would otherwise be deprived of its effectiveness (Van de Bijl, cited above, paragraphs 22 and 23).

30. However, where there are objective factors which lead the host State to consider that the certificate produced contains manifest inaccuracies, it may, if it so wishes, approach the Member State of origin with a view to requesting additional information (Van de Bijl, paragraph 24).

31. Consequently, even if the activities certified as having been pursued fall within the scope of several occupations as defined by the host Member State, that Member State is bound by the declarations contained in the certificate issued by the Member State of origin and by any additional information requested. The competent authorities of the Member State of origin issue the certificate as to the activities pursued by the person in question on the basis of the main features of the description of the activity previously communicated by the host Member State.

32. The host Member State may not, therefore, define either the conditions for taking up each of the small craft occupations or their scope in such a way that a certificate issued by the competent authorities of the Member State of origin is rendered useless for the purpose of enabling the applicant to engage in the occupation to which that certificate relates in the host Member State.

33. That interpretation is in accordance with the second paragraph of Article 3 of the Directive, which provides that pursuit of the activity must not have ceased more than 10 years before the date when the application for establishment is made. Were it possible for the host Member State to require an applicant to have carried on each of the trades independently for six consecutive years, in accordance with Article 3(a) of the Directive, that applicant would not be able to prove, on the basis of documentary evidence accepted as equivalent, that he had the knowledge and ability necessary to qualify for authorisation to carry on more than two activities.

34. The interpretation is further justified by the requirements of freedom of establishment and freedom to provide services as guaranteed by Articles 3(c), 52 and 59 of the Treaty. Those freedoms, which are fundamental in the Community system, could not be achieved if each Member State were able to rely on its own restrictive definition of the scope of each of the small craft occupations in order to refuse to allow persons who have acquired the relevant experience prescribed by the Directive in another Member State from benefiting from the provisions of Community law.

35. The answer to the national court's questions must therefore be that on a proper construction of Article 3 of the Directive, where, in a Member State, the possession of specific knowledge and ability is a condition for taking up and pursuing an

    activity as a self-employed person in a manufacturing or processing industry or small craft industry, that Member State may not require of a Community national who applies for licences to pursue occupational activities in that Member State which he is certified by the competent authorities of his Member State of origin to have pursued there, that he have completed separately, in respect of each of the trades whose scope is defined by the legislation of the host State, the periods prescribed by that article.

    Costs

36. The costs incurred by the Portuguese 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 proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Tribunal Administratif, Luxembourg, by judgments of 7 May 1997, hereby rules:

On a proper construction of Article 3 of Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries), where, in a Member State, the possession of specific knowledge and ability is a condition for taking up and pursuing an activity as a self-employed person in a manufacturing or processing industry or small craft industry, that Member State may not require of a Community national who applies for licences to pursue occupational activities in that Member State which he is certified by the competent authorities of his Member State of origin to have pursued there, that he have completed separately, in respect of each of the trades whose scope is defined by the legislation of the host State, the periods prescribed by that article.

JannGulmann Edward SevónWathelet

Delivered in open court in Luxembourg on 29 October 1998.

R. Grass J.-P. Puissochet

Registrar President of the Fifth Chamber

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1: Language of the case: French.