Sentenza

Fratila and another (AP) (Respondents) v Secretary of State for Work and Pensions (Appellant) [2021] UKSC 53

Case ID: UKSC 2021/0008
Case summary
Issue

This appeal concerns the entitlement of EU citizens to UK benefits in light of UK's withdrawal from the EU ("Brexit"). The Supreme Court is asked to consider: 1. whether a person with no EU law right to reside in an EU Member State is entitled to rely on the prohibition on nationality discrimination contained in Article 18 of the Treaty on the Functioning of the European Union ("TFEU"); and 2. the proper approach to the distinction between direct and indirect discrimination and whether indirect discrimination may, in the circumstances of the present case, be objectively justified.
Facts

The UK Government established a settled status scheme to enable EU citizens living in the UK to continue to do so after Brexit (the "EUSS"). The EUSS operates to protect the existing benefit entitlements of EU citizens. The eligibility rules for universal credit ("UC"), a consolidated benefit entitlement, include the requirement for the recipient to be habitually resident in the UK, Ireland or certain Crown dependencies and have a qualifying right to reside in one of those locations. Amendments to the statutory framework in light of Brexit do not permit an applicant for UC to rely upon "leave to remain" in the UK as a result of pre-settled status ("PSS") granted under the EUSS. The two Respondents are Romanian nationals. Each resides in the UK but they have been economically inactive for a period of time. They submit that the change introduced by amendments to the statutory framework establishing the UC regime constitute unlawful discrimination against them on the grounds of their nationality.
Judgment appealed

[2020] EWCA Civ 1741
Parties
Appellant(s)

Secretary of State for Work and Pensions
Respondent(s)

Fratila and another (AP)
Appeal
Justices

Lord Reed, Lord Hodge, Lord Lloyd-Jones, Lord Sales, Lord Hamblen
Hearing start date

This hearing has been adjourned as a result of information provided to the Court.





Fratila and another (AP) (Respondents) v Secretary of State for Work and Pensions (Appellant)  [2021] UKSC 53
Michaelmas Term
[2021] UKSC 53
On appeal from: [2020] EWCA Civ 1741
JUDGMENT
Fratila and another (Respondents) v Secretary of State
for Work and Pensions (Appellant)
before
Lord Reed, President
Lord Hodge, Deputy President
Lord Lloyd-Jones
Lord Sales
Lord Hamblen
JUDGMENT GIVEN ON
1 December 2021
Appellant
Sir James Eadie QC
Tim Ward QC
Julia Smyth
George Molyneaux
(Instructed by The Government Legal Department)
Respondents
Richard Drabble QC
Thomas de la Mare QC
Tom Royston
Gayatri Sarathy
(Instructed by Child Poverty Action Group)
1st Intervener (The AIRE Centre)
Charles Banner QC
Yaaser Vanderman
(Instructed by Herbert Smith Freehills LLP (London))
2nd Intervener (Independent Monitoring Authority for the Citizens' Rights Agreements)
Marie Demetriou QC
Emma Mockford
(Instructed by Independent Monitoring Authority Legal Department)
Page 2
LORD LLOYD-JONES: (with whom Lord Reed, Lord Hodge, Lord Sales and Lord
Hamblen agree)
1. This appeal is concerned solely with EU law as it applied in the United Kingdom
while the United Kingdom was a Member State and during the transition period
following the withdrawal of the United Kingdom from the European Union.
2. The appeal concerns the compatibility with EU law of statutory provisions
governing eligibility for various non-contributory benefits which were inserted into
existing Regulations by the Social Security (Income-related Benefits) (Updating and
Amendment) (EU Exit) Regulations 2019 ("the 2019 Regulations"). In broad terms, the
2019 Regulations prevent leave to remain in the United Kingdom arising from pre-
settled status granted under the EU Settlement Scheme ("EUSS") from constituting a
qualifying right of residence for the purposes of eligibility for the relevant benefits. The
case has been argued by reference to the amendment which the 2019 Regulations
made to the Universal Credit Regulations 2013, which govern eligibility for universal
credit. The 2019 Regulations also made analogous amendments to six other sets of
Regulations, which relate to other benefits.
3. The appellant, the Secretary of State for Work and Pensions, submits that article
18 TFEU, which prohibits, within the scope of application of the EU Treaties, any
discrimination on grounds of nationality, is inapplicable and that in any event there is
no breach of the provision. The appellant's case, in broad summary, is that a person
with no EU law right of residence in the United Kingdom is not entitled to rely on
article 18 TFEU to claim equal treatment in respect of the relevant benefits and, in any
event, that any nationality discrimination to which the 2019 Regulations give rise is
indirect and justified.
4. The respondents are both Romanian nationals who are present in the United
Kingdom and who made applications for Universal Credit which were refused. At the
time of the relevant applications the respective right of each of them to reside in the
United Kingdom arose solely from their pre-settled status. They submit that once an
EU citizen is lawfully resident in a member state, whether by virtue of an EU law right
of residence or, as in the present case, a purely domestic law right of residence, they
are within the scope of article 18 TFEU and any refusal of social assistance to them by
reference to an eligibility criterion not applied to a UK national is discrimination
prohibited by article 18 TFEU.
5. The respondents challenged by way of judicial review the refusals of their
applications for universal credit, contending that the 2019 Regulations should be
Page 3
quashed as contrary to the prohibition on nationality discrimination in article 18 TFEU.
On 27 April 2020 Swift J dismissed the claim ([2020] EWHC 998 (Admin); [2020] PTSR
1424). He held that the respondents were entitled to rely on article 18 to assert a claim
of discrimination on the grounds of EU nationality, but he further held that the 2019
Regulations did not breach article 18 because:
(i) they gave rise only to indirect, not direct, discrimination (applying the
decision of the Supreme Court in Patmalniece v Secretary of State for Work and
Pensions (AIRE Centre intervening) [2011] UKSC 11; [2011] 1 WLR 783, itself
applying the decision of the Court of Justice of the European Union ("CJEU") in
Bressol v Gouvernement de la Communauté française (Case C-73/08) [2010] ECR
I-2735; [2010] 3 CMLR 20, paras 24-29; and
(ii) the indirect discrimination in question was justified, since the 2019
Regulations served to maintain the status quo prior to the introduction of pre-
settled status and protected the social security system from claims by persons
who were not sufficiently economically integrated into, or insufficiently closely
connected with the United Kingdom (at paras 31-32).
6. On appeal, the Court of Appeal ([2020] EWCA Civ 1741; [2021] PTSR 764)
(McCombe, Moylan and Dingemans LJJ) allowed the appeal (Dingemans LJ dissenting).
The Court of Appeal concluded, unanimously, that the respondents were entitled to
rely on article 18 TFEU for the reasons given by Swift J. McCombe LJ, with whom
Moylan LJ concurred, concluded that on the application of CJEU case law
discrimination of this type was prohibited by EU law and the question of justification
did not arise. He rejected the Secretary of State's submission that any nationality
discrimination to which the 2019 Regulations gave rise was indirect and in principle
capable of justification. Dingemans LJ, dissenting on this issue, concluded that the 2019
Regulations gave rise only to indirect discrimination which it was open to the Secretary
of State to justify. The Court of Appeal refused permission to appeal but granted a stay
of execution until 26 February 2021.
7. On 22 February 2021 the Supreme Court granted permission to appeal and
continued the stay of execution until the determination of the appeal. The hearing of
the appeal was listed for 18 and 19 May 2021. The principal issues which arise on this
appeal are:
(i) Whether the respondents are entitled to rely on article 18 TFEU by virtue
of being granted a domestic law right of residence, namely pre-settled status.
Page 4
(ii) If so, whether or not the 2019 Regulations breach article 18 TFEU; in
particular,
(a) whether the discrimination is prohibited or direct, such that it is
not capable of justification; or
(b) if not and the discrimination is indirect, whether it is justified.
8. On 21 December 2020, a Social Security Tribunal in Northern Ireland had made
a preliminary reference to the CJEU in a case, CG v Department for Communities in
Northern Ireland, which concerned the compatibility with article 18 TFEU of the
Universal Credit Regulations (Northern Ireland) 2016, as amended by the Social
Security (Income-related Benefits) (Updating and Amendment) (EU Exit) Regulations
(Northern Ireland) 2019, which are materially similar to the Universal Credit
Regulations 2013, as amended by the 2019 Regulations, with which this appeal is
concerned. The CJEU ordered expedition and listed an oral hearing in the matter of CG
for 4 May 2021. The parties to the present appeal agree that by virtue of articles 86(2)
and 89(1) of the Withdrawal Agreement, which has domestic effect by virtue of section
7A of the European Union (Withdrawal) Act 2018, the judgment of the CJEU in CG will
have binding force in its entirety on and in the United Kingdom.
9. In these circumstances, on 11 May 2021 Lord Reed directed that the hearing
date of the appeal to the Supreme Court should be vacated pending the decision of the
CJEU in CG.
10. The CJEU delivered its judgment in CG on 15 July 2021 (Case C-709/20) [2021]
WLR 5919. It observed that every EU citizen may rely on the prohibition of
discrimination on grounds of nationality laid down in article 18 TFEU (at para 63).
However, the first paragraph of article 18 TFEU is intended to apply independently only
to situations governed by EU law with respect to which the TFEU does not lay down
specific rules on non-discrimination (para 65). Thus the principle of non-discrimination
is given specific expression in article 24 of Parliament and Council Directive
2004/38/EC ("the Directive") in relation to EU citizens who exercise their right to move
and reside within the territory of the member states (para 66). An EU citizen who
moves to or resides in a member state other than that of which he or she is a national
falls within the scope of the Directive and is a beneficiary of the rights conferred by it
(para 67). Accordingly, the question whether that EU national faces discrimination on
Page 5
grounds of nationality falls to be assessed by reference to article 24 of the Directive
and not by the independent application of article 18 TFEU. The CJEU concluded that an
EU citizen can claim equal treatment in respect of social assistance only if his or her
residence in the territory of that member state complies with the conditions of the
Directive (para 75, citing Dano v Jobcenter Leipzig (Case C-333/13) [2015] 1 WLR 2519,
paras 68 and 69).
11. As a result, the first issue in this appeal has been answered by the CJEU
definitively in favour of the appellant and the second issue does not arise.
12. Furthermore, it is common ground between the appellant and the respondents
that the respondents did not reside in the United Kingdom in accordance with the
Directive at the time of their claims for universal credit. They cannot therefore rely on
the EU principle of non-discrimination to claim a right to equal treatment in respect of
entitlement to universal credit.
13. However, by letter to the court dated 23 July 2021, the respondents submit that
since EU citizens who are lawfully resident in the United Kingdom on the basis of pre-
settled status are within the scope of EU law, they are entitled to rely on the
fundamental rights guaranteed in the Charter of Fundamental Rights of the European
Union ("the Charter"). In particular, the member state of residence must ensure the
protection of such an EU citizen's rights under article 1 (human dignity), article 7
(respect for private and family life) and article 24(2) (rights of the child). The
respondents now seek to challenge the 2019 Regulations and the decision to refuse
them universal credit on these new grounds.
14. In other words, the respondents now seek to advance an entirely new case
which has never previously been raised in these proceedings. The respondents have
never previously sought to argue that the Charter confers on them an entitlement to
universal credit. While an appellate court will always be cautious before permitting a
new point to be raised for the first time on appeal, it would clearly be inappropriate to
do so where, as in the present proceedings, the new case would raise issues of fact
which have not been determined. (See the observations of Lord Reed and Lord Hodge
in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly
Inland Revenue Comrs) [2020] UKSC 47; [2020] 3 WLR 1369 at paras 89-93 and the
cases there cited.) I would add that while the CJEU in CG drew attention to the possible
relevance of the Charter to the particular circumstances of that case, it is immediately
apparent from para 92 of the judgment of the CJEU that CG's situation was materially
different from that of the respondents to the present appeal.
Page 6
15. As a result, there are no further issues for this court to determine in this appeal
and, for the reasons stated above, I would allow the appeal.