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Gubeladze v Secretary of State for Work and Pensions

19/06/19

The Supreme Court today ruled that the principle of proportionality, one of the general principles of EU law, applied to decisions to extend transitional provisions restricting the freedom of movement of nationals of eight of the ten states which acceded to membership of the Union in 2003 (A8 nationals).

In the Accession Treaty, the Member States were permitted to derogate from the right of freedom of movement for an initial period of five years. The UK chose to derogate by introducing the Workers’ Registration Scheme, under which A8 nationals were required to register before starting work and when changing jobs. A fee of £90 was charged for each registration. The obligation to register applied until the A8 national had been working for a continuous period of 12 months. Failure to register under the scheme meant that the A8 national would not derive from the work the right to reside in the UK.

The Accession Treaty permitted Member States to extend the derogations for a further two years “in case of serious disturbances of its labour market or threat thereof”. In 2008, the Government asked the Migration Advisory Committee to advise whether the Workers’ Registration Scheme should be extended under this provision. It advised that there was the economic downturn constituted a serious disturbance of the UK labour market and that extending the scheme could have a small effect in mitigating that by reducing inflows of A8 nationals.

The Claimant was refused state pension credit, which required 3 years’ residence in the UK prior to retirement, because for part of those 3 years, she had not been registered in accordance with the scheme. The Upper Tribunal ruled that the decision to extend the scheme was disproportionate because it had a potentially serious effect on individuals but the benefit was small and speculative at best. It also held that, under the Citizens’ Directive, there was no requirement for 3 years’ lawful residence; any residence would do. The Court of Appeal upheld the finding on proportionality, but differed on the construction of the Citizens’ Directive.

The Supreme Court permitted the Secretary of State to advance a point not argued below: that the principle of proportionality did not apply at all to decisions to apply the derogations under the Accession Treaty, because the purpose of those provisions was to prevent any relevant EU right or interest from arising at all; and where no relevant protected interest was in play, the principle of proportionality did not apply.

In a judgment by Lord Lloyd Jones and Lord Sales (with which the other members of the panel agreed), the Court declined to depart from the decision of the House of Lords in Zalewska v Department for Social Development [2008] 1 WLR 2602 that the general principle of proportionality did apply, even though the primary treaty provisions guaranteeing free movement did not. The Court upheld the Upper Tribunal’s assessment that the small and speculative benefits of the decision were disproportionate stricto sensu in light of the substantial and serious effects on individuals. The Court held that these points were acte clair. The Court also held that the Upper Tribunal’s construction of Article 17 of the Citizens’ Directive should be preferred over that of the Court of Appeal.

The judgment is here.

Martin Chamberlain QC was lead counsel for the Secretary of State for Work and Pensions.