Report for the Hearing delivered in Case 63/86

I — Facts and procedure

1. Article 4 (3) (a) of Decree No 655 of 23 May 1964 of the President of the Italian Republic laying down rules for the allocation of social housing(GURI No 197 of 12.8.1964) provides that social housing built by bodies listed in Article 1 with the assistance or participation of the State ... may not be sold or leased to anyone who is not of Italian nationality. The housing in question is that built by the Istituti per le case popolari, the Istituto nazionale per le case per gli impiegati dello stato, the Istituto per l'edilizia sociale, the provinces, the local authorities and the Enti pubblici economici provided for in Article 16 of Royal Decree No 1165 of 28 April 1938. The aforementioned provision is confirmed by Article 6 of Presidential Decree No 655 of 1964, which provides that the documents which the interested party must append to the application to lease or purchase include a certificate of Italian nationality.

2. Article 2 (a) of Decree No 1035 of 30 December 1972 of the President of the Republic laying down rules on the allocation and withdrawal of publicly built housing (and on fixing and reviewing rent) (GURI No 58 of 3.3.1973, page 1331) provides that publicly built housing may be allocated only to Italian nationals and to foreign nationals permitted to apply for allocation of such housing.

3. Law No 33 of 24 April 1980 of the Region of Puglia, setting out the five-year programme to promote local-authority purchases of housing and renovation work undertaken by individuals {Bollettino ufficiale della regione Puglia No 31 of 2.5.1980) pursues the aim, which is expressly defined in Article 1, of fulfilling citizensneeds with regard to housing; Article 4 restricts the letting at a reduced rent of housing acquired by local public bodies to citizens.

4. Article 9 of Law No 38 of 7 May 1980 of the Region of Tuscany, entitled Public construction for housing purposes. Territorial planning of measures and choice of contractors {Bollettino ufficiale della regione Toscana No 28 of 16.5.1980) provides that the dwellings which are constructed or renovated are to be allocated or sold to Italian nationals.

5. Article 11 (a) of Law No 15 of 25 May 1981 of the Region of Emilia-Romagna, laying down criteria for selecting entities to carry outapproved housing building programmes qualifying for public assistance {Bollettino ufficiale della regione Emilia-Romagna No 57 of 27.5.1981) provides that persons allocated or purchasing dwellings built by cooperatives or undertakings and persons occupying renovated housing (as owners, tenants or in some other capacity) must have Italian nationality. Moreover, as far as the allocation of rented housing is concerned the above law is based on the aforementioned provision of Presidential Decree No 1035.

6. On the basis of Law No 15, cited above, the Region of Emilia-Romagna issued, by Decision No 3552 of 8 September 1981 of the Giunta Regionale, a 10-year plan to promote the building of housing {Bolletino ufficiale della regione Emilia-Romagna No 115 of 16.9.1981), Artide 7 of which provides that participants wishing to take advantage of that plan must be of Italian nationality.

7. Lastly, Article 25 of Law No 22 of 23 April 1982 of the Region of Liguria laying down criteria for selecting entities responsible for effecting construction measures {Bolletino ufficiale della regione Liguria No 19 of 17.5.1982) provides that Italian nationality is required in order to be able to rent or purchase dwellings built with the assistance of public funds.

8. An application for a reduced-rate mortgage loan which was submitted by a Belgian national, residing at Mordano (Bologna), with a view to the purchase of a dwelling needed to carry on his business activities was rejected under the aforementioned legislation of the region of Emilia-Romagna.

9. By letter dated 10 September 1984 the Commission notified the Italian Republic that the aforementioned legislation infringed Community law in so far as it contained provisions whereby only Italian nationals might purchase or rent housing built or renovated with the assistance of the State or other public bodies and obtain reduced rate mortgage loans, thereby infringing Articles 48, 52 and 59 of the Treaty and Regulation (EEC) No 1612/68 of the Council of 15 October 1968 (Official Journal English Special Edition 1968 (II), p. 475).

10. Article 9 (1) of Regulation No 1612/68 provides as follows: a worker who is a national of a Member State and who is employed in the territory of another Member State shall enjoy all the rights and benefits accorded to national workers in matters of housing, including ownership of the housing he needs.

11. Since it received no reply to that letter, on 16 April 1985 the Commission forwarded to the Italian authorities a reasoned opinion pursuant to Article 169 of the EEC Treaty.

12. In a telex message of 24 April 1985, the Italian Government stated that it had sent to the Commission, by letter dated 10 December 1984, a copy of a ministerial circular of 24 November 1984. The circular in question, which was issued by the Minister for Public Works, is addressed to the Minister for External Affairs, the Regions, the Associazione nazionale dei communi italiani and ali the Istituti autonomi per le case popolari. The circular refers to the Commission's observations relating to ... workers' general access to publicly built housingand acknowledges that the present national and regional regulations give rise to actual discrimination between Italian nationals and non-Italians. Furthermore, it refers to Judgment No 170 of 8 June 1984 of the Italian Constitutional Court in which it is held that the rules issued by the Community legislature, and in particular regulations, are directly applicable and that such rules must always be applied in the national territory. Accordingly, national and regional regulations must be read in conjunction with the relevant Community rules. The circular concludes as follows: the system of reciprocity ... must be construed as applying solely to nationals of non-member countries and nationals of EEC Member States carrying on their main occupation and residing in Italy must... be treated in all respects in the same way as Italian nationals with regard to the allocation of publicly built housing and access to the advantages linked to State aid with regard to housing.

13. That letter of 10 December 1984 of the Italian Government was sent to Directorate-General V and not to Directorate-General III and hence was not received in time by the competent Commission departments.

14. Consequently the Commission sent the Italian Government a supplementary reasoned opinion on 4 September 1985 in which it stated that that circular was not sufficient to bring an end to the alleged infringement.

15. By telex message of 4 September 1985 the Italian Government asked for an extension of the period given in the reasoned opinion and stated in a letter dated 13 January 1986, first, that a new circular interpreting the previous circular was being drawn up and, secondly, that new legislation was being considered with a view to putting Community nationals completely and expressly on a equal footing with Italian nationals.

16. Nevertheless, in view of the 30 months which had elapsed since the commencement of the procedure, the Commission brought this action by application received at the Court Registry on 6 March 1986.

17. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory enquiry. However, the Court asked the Commission to inform it in writing by 2 March 1987 whether it was aware of similar problems in the other Member States.

II — Conclusions of the parties

1. The Commission claims that the Court should:

2. The Italian Government claims that the Court should:

HI — Submissions and arguments of the parties

1. The parties agree that, as regards migrant workers who are nationals of other Member States, the aforementioned Italian legislation is contrary to Article 9 of Regulation No 1612/68. They also agree that the circular of 24 November 1984 is not sufficient to eliminate the infringement in question because it has not been published, it is addressed to departments which are not hierarchically linked to central government and its operative part is ambiguous.

2. The discussion between the parties covered the following aspects:

(a) The possibility of bringing an end to the infringement on a provisional basis by a circular more fitted to the circumstances

3. The parties agree that the infringement can only be resolved definitively by rules of the same rank as the rules criticized by the Commission. As regards the hierarchical relationship between the legislation of the Italian Republic and the legislation of the Regions, the parties agree that an outline law adopted by the legislature of the Italian Republic would suffice to repeal the regional laws in question in accordance with Article 10 of Law No 62 of 10 February 1953 on the constitution and operation of regional bodies.

4. The Commission emphasises that the maintenance of a provision incompatible with the Treaty gives rise to an ambiguous state of affairs by maintaining, as regards those subject to the law who are concerned, a state of uncertainty as to the possibilities available to them of relying on Community law, as the Court held in its judgment of 25 October 1979 in Case 159/78 (Commission ν Italian Republic [1979] ECR 3247). However, the Commission concedes that administrative circulars could be regarded as satisfying the requirements of legal certainty, at least provisionally, subject to their being officially published and having mandatory effect erga omnes. The Commission considers that the circular issued in this case has been shown to be ineffective in so far as a new discriminatory law on the same subject (No 32 of 15 April 1985 of the region of Veneto) was published some seven months after the distribution of the circular (GURI No 158 of 6 7.1985). That law is not at issue in these proceedings.

5. The Italian Government points out that the conflicts between the contested rules and Community law are not radical and that legal certainty could be secured by interpreting provisions whereby a specific category of foreigners, that is to say, nationals of other Member States of the European Community, would be deemed to be Italian nationals. Initially that could be brought about by a ministerial circular, which is the instrument normally used to require public authorities to apply laws in a particular manner. The Italian Government also stated that it intended to draw up legislation satisfying the requirements mentioned by the Commission.

(b) The alleged infringement of Articles 52 and 59 of the Treaty

6. The Commission considers that rights normally associated with self-employed activities include the right to purchase, utilize or sell immovable property and rights and to obtain the various forms of credit, as is spelt out in the general programmes for the abolition of restrictions on the freedom of establishment and the freedom to supply services (Journal Officiel of 15.1.1962, pp. 32 to 46). That right is given direct effect by Articles 52 and 59 of the EEC Treaty, as was recognized by the Court in its judgments of 21 July 1974 (Case 2/74 Reyners ν Belgian State [1974] ECR 631) and 3 December 1974 (Case 33/74 Van Binsbergen ν Bestuur van de Bedrijfsvereniging [1974] ECR 1299).

7. As regards the circular, the Commission points out that the requirements of main activity and residence — even if, as the Italian Government maintains, they are alternatives and do not overlap — conflict with the possibility of having a secondary establishment. Nationals of other Member States should be entitled to have a secondary establishment even if nationals are denied that right by virtue of the said criteria (see the Court's judgment of 12 July 1984 in Case 107/83 Ordre des Avocats ν Klopp [1984] ECR 2971).

8. The Italian Government contends that what is involved in the case of guaranteed access to subsidized or assisted public building is measures aimed at encouraging and facilitating the effectiveness of the right of establishment and not measures necessary for the exercise of that right. Since there has been no harmonization comparable to Article 9 of Regulation No 1612/68 considerable scope remains for rules coordinating measures intended to foster and facilitate the actual exercise of the right of establishment, which measures fall outside the direct effect held to exist in Reyners' case, cited above.

9. As regards the freedom to supply services, similar considerations apply in the light of the judgment in Van Binsbergen's case. Moreover, in view of the fact that the supply of services by the establishment in question was not characterized by continuity and stability, the Government cannot see how access to the advantages of publicly built housing could be affected by the rules prohibiting discrimination which are laid down in Articles 7 and 59 of the Treaty. As regards the example of frontier areas provided by the Commission, the Italian Government stresses that the objective of the business activities of the frontier worker is precisely that of providing services in a neighbouring country without his having to have housing there.

10. As for the wording of the circular, the Italian Government states that the requirements of main activity and residence are alternatives and do not overlap. Those general requirements, which Italian nationals also have to fulfil in order to obtain the relevant social advantages, cannot constitute discrimination. The Commission's assessment of the judgment in Klopp's case, cited above, is wrong since, on the one hand, the judgment is still concerned with real obstacles to the exercise of the occupation in question and, on the other, the Commission is claiming conditions with regard to the right of establishment and the freedom to supply services which are more favourable than those granted to employees under Regulation No 1612/68.

IV — Answer to the question put by the Court

The Commission stated that it had no information about similar problems existing in other Member States.

1 Language of the Case: Italian.