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Document 62002CC0153

Opinion of Mr Advocate General Jacobs delivered on 10 April 2003.
Valentina Neri v European School of Economics (ESE Insight World Education System Ltd).
Reference for a preliminary ruling: Giudice di pace di Genova - Italy.
Freedom of establishment - Recognition of diplomas - Degree issued by a university established in a Member State - Courses of study in preparation for a degree awarded in another Member State and by another educational establishment.
Case C-153/02.

European Court Reports 2003 I-13555

ECLI identifier: ECLI:EU:C:2003:236

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Conclusions

OPINION OF ADVOCATE GENERAL
JACOBS
delivered on 10 April 2003(1)

Case C-153/02

Valentina Neri
v
European School of Economics

(())

1. This case concerns a private educational organisation, registered as a company in the United Kingdom, which provides teaching at various centres, some of which are in Italy. The teaching in question is approved and monitored by an English university and leads to a degree awarded by that university, in accordance with the applicable United Kingdom legislation. However, under the Italian rules as applied at the material time, that degree is not recognised in Italy if it is awarded to an Italian citizen on completion of the course of study in Italy.

2. In a dispute between an Italian student and the educational organisation, the Giudice di Pace (Magistrate̕s Court), Genoa, wishes to know whether such an application of the Italian rules conflicts with Community law, in particular with the Treaty provisions concerning freedom of movement for workers, freedom of establishment and freedom to provide services, with Council Directive 89/48 (2) and with Council Decision 63/266. (3)

Background and legislation

The degree course arrangements

3. The Nottingham Trent University (‘Nottingham Trent̕) is a university in Nottingham, England. It is a ‘recognised body̕ for the purposes of section 216(1) of the Education Reform Act 1988, being authorised to grant degrees. It offers Bachelor of Arts (Honours) degrees in, inter alia , politics and economics.

4. The European School of Economics (‘ESE̕) is a private limited company incorporated and established in the United Kingdom. It also has establishments in a number of other countries, in particular Italy, where it apparently offers courses of study at 12 locations. It is included in lists compiled by the Secretary of State pursuant to section 216(2) of the Education Reform Act, and may thus provide courses of study which prepare students for a degree to be granted by a recognised body and are approved by or on behalf of that body.

5. In 1998, Nottingham Trent and ESE entered into an agreement for the validation of specified courses provided by ESE. Nottingham Trent validates and reviews the courses concerned, ensures quality control and awards qualifications. One of those courses is a Bachelor of Arts (Honours) degree in International Political Studies, awarded after four years̕ study with ESE, in particular at its establishments in Italy. Students on such courses are enrolled not only with ESE but also with Nottingham Trent. Examinations are organised in accordance with the regulations and procedures which Nottingham Trent applies in the United Kingdom, and the outside examiners, appointed by ESE, must be approved by Nottingham Trent.

6. At the hearing, the representative of the Italian Government stated that ESE̕s relationship with Nottingham Trent had been terminated in December 2002.

Relevant Community rules

7. Articles 39 and 40 EC concern freedom of movement for workers. Article 39 prohibits any discrimination based on nationality as regards work and employment, and Article 40 provides for the adoption of specific Community measures to bring about freedom of movement.

8. Article 43 EC prohibits restrictions on the freedom of establishment of nationals of one Member State in another. In particular: ‘Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms … under the conditions laid down for its own nationals by the law of the country where such establishment is effected …̕ Under Article 48 EC, companies and firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business in the Community are to be treated in that regard in the same way as natural persons who are nationals of Member States.

9. In order to facilitate the pursuit of self-employed activities, Article 47(1) EC provides for the adoption of Council directives for mutual recognition of professional qualifications as between Member States.

10. Article 49 EC prohibits restrictions on the freedom to provide services where the provider of the service is established in a Member State other than that of the recipient.

11. Council Decision 63/266, adopted on the basis of what is now Article 151 EC concerning the promotion of culture within the Community, establishes 10 general principles for implementing a Community vocational training policy, designed to enable citizens of the Community to receive adequate vocational training and to help bring about freedom of movement for workers. Member States and Community institutions are responsible for applying those principles within the framework of the Treaty. One of the fundamental objectives set out in the second principle is to ‘avoid any harmful interruption … between completion of general education and commencement of vocational training̕.

12. Council Directive 89/48, adopted in particular on the basis of what are now Articles 40 and 47(1) EC, establishes a general Community system for mutual recognition of higher-education diplomas awarded on completion of at least three years̕ professional education and training, to enable Community nationals holding a qualification issued in one Member State to pursue a regulated profession in another Member State. It defines the types of diploma covered (4) and sets out mechanisms for their mutual recognition.

Relevant Italian rules

13. According to the order for reference, under Decree No 1592 of 31 August 1933, (5) which confers a wide discretion on the public administration and the universities, degrees awarded by foreign institutions may be recognised on the basis of special laws giving effect to specific bilateral agreements entered into with other countries. Legislative Decree No 115 of 27 January 1992 (6) implements Council Directive 89/48.

14. In the context of that Legislative Decree, the Italian authorities have adopted certain administrative rules and practices.

15. A letter from the Ministry for Universities and Scientific Research dated 3 October 2000 states that ‘recognition obtained pursuant to Legislative Decree 115/92 allows only pursuit of the profession already pursued in the country of origin̕.

16. Another from the same ministry dated 8 January 2001 states that ‘degrees awarded by universities recognised in the United Kingdom may be recognised in Italy only if completed after regular attendance for the whole course of studies at those universities or other foreign body of the same educational level, to the exclusion therefore of degrees awarded to Italian nationals on the basis of periods of study completed with branches or private bodies operating in Italy with whom they have entered into private-law contracts̕.

17. Both those letters, which have been produced before the Court, refer expressly to qualifications obtained after study at ESE.

18. A circular issued by the Ministry of Foreign Affairs and also produced before the Court confirms those indications by stating that Italian citizens applying for recognition of degrees awarded abroad must have ‘an attestation from the Italian diplomatic or consular representation in the foreign country in which the degree was awarded, proving actual residence in that country by the person concerned for the whole period of the university studies̕. That condition is explicitly stated to apply only to Italian citizens.

19. According to the order for reference, under Italian legislation no specific authorisation or approval is necessary in order to provide educational courses. As regards the type of arrangement in issue in the present case, there does not appear to be any specific provision governing situations where the university is outside Italy; universities in Italy however are authorised to call on the cooperation of private bodies in order to organise study courses in accordance with the rules laid down by those universities. (7)

20. At the hearing the representative of the Italian Government stated that the legal situation had been changed in particular by Law No 148/2002 of July 2002 – thus after the date of the order for reference – with the result, essentially, that the recognition of foreign degrees was no longer subject to ministerial instructions or practices but was a matter for each university alone. It is not however clear what effect such amendments may have on problems such as that which has arisen in the present case.

The main proceedings

21. In the summer of 2001, having obtained her secondary school leaving qualification in Italy, Valentina Neri enrolled at Nottingham Trent for a four-year BA Honours course in International Political Studies. She then learnt that she could study for the degree at an educational institution outside the United Kingdom which offered courses validated by Nottingham Trent. One such institution was ESE, which offered the Nottingham Trent course at various branches in Italy.

22. Thus, in order to avoid the extra expense of studying in the United Kingdom, Ms Neri enrolled for the Nottingham Trent course offered through ESE at its Genoa campus. She paid ESE a fee instalment of ITL 4 000 000 (EUR 2 065.83) for the academic year 2001/02.

23. Some time later, she became aware of the Italian rules described above. She therefore sought reimbursement of the fee already paid, but ESE refused on the grounds, inter alia , that it was authorised to provide courses of university study leading to the award of a degree by Nottingham Trent and that the degree awarded would have full legal status in the United Kingdom. Ms Neri then brought the action in the main proceedings.

The order for reference

24. The national court considers that the Italian administrative practice is regulatory in nature since it is applied by all branches of the public administration. It may have the effect of deterring students from enrolling for ESE̕s courses or, as in Ms Neri̕s case, of prompting them to withdraw their registrations. (8) It may thus constitute a barrier to freedom of movement for persons, freedom of establishment and freedom to provide services.

25. The national court further considers that the Court̕s judgment in Kraus , (9) concerning the type of verification permissible when a Member State is requested by one of its own nationals for administrative authorisation to use an academic title awarded in another Member State, is also relevant. In addition, Directive 89/48 could be contravened if the rights which it confers may be relied on during the course of study prior to the award of a qualification. Finally, the Italian practice might be contrary to the principles laid down in Decision 63/266.

26. The Giudice di Pace has therefore stayed the proceedings and seeks a preliminary ruling from the Court on the following questions:‘1. Are the rules or administrative practices of the national legal order, such as those described …, compatible with the principles of the EC Treaty concerning the free movement of persons (Article 39 et seq. EC), the right of establishment (Article 43 et seq. EC) and freedom to provide services (Article 49 et seq. EC), as interpreted by the Court of Justice? Of particular relevance in that regard are national rules and/or administrative practices which:

– impede the Italian establishment of a limited company whose principal business is in the United Kingdom from carrying on in the host state the business of organising and administering courses of study for preparation for university examinations, for which the company is duly authorised and accredited by the United Kingdom public authorities;

– discriminate as between nationals pursuing the same activities;

– prohibit and/or seriously impede the Italian establishment of that undertaking in obtaining, in another Member State and for valuable consideration, the services conducive to the pursuit of the abovementioned activity;

– discourage students from enrolling in those courses of study;

– impede the professional training of enrolled students and the obtaining of an award capable of conferring on its holder advantages either in securing access to a professional activity or in exercising it with greater reward in other Member States as well.

2. On an interpretation – herein requested – of Article 2 of Council Directive 89/48/EC, does that directive confer rights which may be relied on also before acquisition of the degree mentioned in Article 1 of the directive itself? If the reply to that question is affirmative, does the directive itself, regard also being had to the Court̕s judgment of 7 March 2001 in Case C-145/99 Commission v Italy , permit rules or administrative practices in the national legal order which:

– make recognition of university degrees obtained on completion of training of at least three years̕ duration subject to the discretion of the public authorities;

– grant recognition in Italy of degrees awarded by universities recognised in the United Kingdom only if completed after regular attendance for the whole course of studies at those universities, to the exclusion therefore of degrees awarded to Italian nationals on the basis of periods of study completed with foreign institutions operating in Italy even though they are approved and accredited by the competent public authorities in the Member State to which they belong;

– require production of an attestation from the diplomatic representation – Italian consulate in the foreign country in which the degree was awarded – proving actual residence in that country by the person concerned for the whole period of the university studies;

– limit recognition of degrees “solely” to pursuit of a profession already pursued in the State of origin, thus precluding recognition for the purposes of access to a regulated profession even though not previously exercised?

3. What is the meaning and scope of the expression “harmful interruption ... of vocational training” in Council Decision 63/266/EEC and does it cover the creation at national level by the public authorities of a permanent system of information which evidences that degrees awarded by a university, even though legally recognised in the United Kingdom, cannot be recognised under national legislation if they have been obtained on the basis of periods of study completed in Italy?̕

27. ESE, the Italian Government and the Commission have submitted written observations and were represented at the hearing. Ms Neri has submitted written observations.

Assessment

The first question

28. By its first question the national court asks essentially whether the national administrative practices described involve a prohibited restriction of one or more of the Treaty freedoms enshrined in Articles 39, 43 and 49 EC, namely freedom of movement for workers, freedom of establishment and freedom to provide services.

29. When considering those aspects, the actual effects of the Italian practices as presented to the Court must be borne in mind. In that regard, the relevant situation must be that prevailing at the time of the events giving rise to the order for reference, leaving aside the factual and legal developments which appear to have taken place since then.

30. There is no suggestion that the Italian authorities systematically refuse to recognise all degrees awarded by Nottingham Trent or any other university in the United Kingdom or another Member State. The practices described do however appear to mean that recognition is automatically refused – that is to say without any examination of the nature or content of the course of study to which the degree attests – when three factors are present: (i) the awarding university is outside Italy, (ii) the course of study was followed in Italy, or at least not in the country of the awarding university, and (iii) the student is an Italian national.

31. The effect in the circumstances of the present case is such as to discourage Italian students from studying with ESE in Italy for a degree awarded by Nottingham Trent. Demand for ESE courses of that kind is likely to be curtailed, perhaps endangering their continued existence, since it may be surmised that they are aimed primarily at Italian students, many of whom will wish to use their degree at least for some purposes in Italy.

Article 39 EC – Freedom of movement for workers

32. ESE submits that the teachers it employs are workers concerned by the article and that their freedom of movement is likely to be curtailed; the Commission takes the view that the dispute in the main proceedings concerns only the relationship between Ms Neri and ESE.

33. The Italian measures might, it is true, have an effect on the employment of Community workers exercising their freedom of movement. If demand for ESE courses drops, teaching staff may have to be laid off. Some members of that staff may well be nationals of another Member State who have taken up work in Italy. However, the relationship between that potential effect and, on the one hand, the application of the Italian practice with regard to recognition of the degrees concerned or, on the other hand, the nationality of ESE̕s employees and their exercise of freedom of movement seems too distant to allow any serious scope for examining the practice in the light of Article 39 EC.

34. As regards Ms Neri herself, the facts of the case as presented do not disclose any way in which her freedom to move to another Member State as a worker might be affected.

35. Consequently, I do not consider Article 39 EC to be of relevance in the present case.

Article 43 EC – Freedom of establishment

36. According to settled case-law, Article 43 EC embodies one of the fundamental principles of the Community. It seeks to ensure that nationals of a Member State who establish themselves in another Member State in order to carry on business there receive the same treatment as nationals of the host Member State. (10) It requires the elimination of restrictions on freedom of establishment, and all measures which prohibit, impede or render less attractive the exercise of that freedom are to be regarded as constituting such restrictions. (11) In that context, it precludes ‘not only overt discrimination by reason of nationality or, in the case of a company, its seat, but all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result̕. (12)

37. It is not disputed that ESE is a company registered in the United Kingdom which has exercised its right of freedom of establishment in Italy.

38. ESE carries on an economic activity at its establishments there under conditions which, as outlined above, appear unfavourable. Those conditions apply without reference to its nationality or to the Member State in which it is based.

39. However, they are triggered by the conjunction of three factors all dependent either on nationality (Italian, in the case of students) or place of establishment (outside Italy in the case of Nottingham Trent; in Italy in the case of ESE). Any change in any one of those factors is likely, as the Commission̕s representative pointed out so colourfully at the hearing, to involve a drastic change in the conditions under which the educational courses are provided, despite the fact that there is no change in any criterion relevant to the way in which they are taught.

40. The Court has held that a difference in treatment depending on the place where a service is provided is prohibited by Article 49 EC, (13) and that case-law may easily be transposed to a situation where the service is provided at a fixed establishment.

41. Since the disputed administrative practice renders ESE̕s courses in Italy leading to a Nottingham Trent degree less attractive for Italian students, it inevitably renders establishment in Italy in order to provide those courses less attractive for ESE.

42. I therefore have no difficulty in reaching the view that the Italian administrative practice described entails a restriction on the freedom of a company like ESE to establish itself in Italy and carry on there the economic activity of providing courses of study leading to the award of a degree from a university such as Nottingham Trent.

Article 49 EC – Freedom to provide services

43. ESE submits that it is both a recipient and a provider of services. It is a recipient of services from Nottingham Trent, but is prevented by the Italian authorities from receiving such services. It also offers services in Italy not merely to Italian students, but to students from other Member States. The Commission submits that there is no cross-border element in the services provided by ESE.

44. As regards the services provided by ESE, ESE̕s activities in Italy appear to be carried out on a continuous and stable basis at several educational establishments in that country, and to involve no cross-border element. There is no suggestion that students from other Member States wishing to follow its courses in Italy may do so other than by attending them in that country. Any restrictions placed on ESE̕s exercise of its activities thus do not fall to be assessed in the light of the freedom to provide services to recipients in another Member State.

45. The situation is different as regards ESE̕s receipt of services, although this is not in fact an aspect in issue in the main proceedings. Nottingham Trent, a university established in one Member State, provides inspection and validation services to ESE in another Member State. To the extent that ESE̕s provision of courses leading to Nottingham Trent degrees is affected by the disputed administrative practice, the provision of services by Nottingham Trent itself will likewise be affected.

Possible justification of the restrictions

46. I have reached the view that application of the Italian administrative practice in issue is such as to restrict freedom of establishment and freedom to provide services, contrary to Articles 43 and 49 EC. However, such restrictions may be justified either if they fall within one of the exceptions specifically provided for in the Treaty or, in so far as they apply in a non-discriminatory manner, if they serve overriding requirements relating to the public interest, are suitable for securing the attainment of the objective which they pursue and do not go beyond what is necessary in order to attain it. (14)

47. The Italian Government puts forward justifications based essentially on the need to ensure high standards in university education and to guarantee the authenticity of qualifications awarded by foreign universities. Italian law views university education as a matter of public interest, expressing as it does the cultural and historical values of the State which is responsible for monitoring courses and qualifications and for ensuring that establishments awarding such qualifications are in compliance with the law. Article 149(1) EC stresses the responsibility of the Member States for the content of teaching and the organisation of education systems. The Italian authorities are particularly concerned by the existence of certain degrees awarded by complaisant procedures in the context of private, commercial arrangements beyond any State or public control. The type of ‘hybrid̕ degree offered under the ‘franchising̕ arrangement between Nottingham Trent and ESE does not provide a sufficient guarantee of quality. At the hearing, the representative of the Italian Government referred to specific doubts which had been expressed in the press over the quality of some of ESE̕s teaching staff.

48. The concern of the Italian Government can clearly form the basis of an overriding requirement in the public interest, given the importance of subjecting the quality of university education and qualifications to public verification and control.

49. However, even assuming the existence of such a justification, any such verification and control must be exercised on a case-by-case basis. By contrast, the administrative practice described in the order for reference appears to preclude as a general rule any recognition of degrees awarded in the circumstances I have set out in paragraph 30 above. It leaves, apparently, no scope for verification of the content or quality of the education leading to the award of those degrees.

50.

Commission v Greece (15) the Court pointed out that private teaching activities may be ‘subject to supervision by the official authorities which have at their disposal appropriate means for ensuring, in any event, the protection of the interests entrusted to them, without there being any need to restrict freedom of establishment for that purpose̕. The same considerations apply to the quality control required in the context of recognition of university degrees.

51. There appears to be nothing in the nature of the agreement between Nottingham Trent and ESE which might prevent the Italian authorities from exercising such quality control in order to allay their concerns about the nature and standards of the degrees provided through ESE, or generally about the commercialisation of education. Bearing in mind that the Italian Government has stated that private universities in Italy are subject to quality control, it is difficult to see why an organisation like ESE should be excluded from such supervision.

52. It appears that degrees awarded by a foreign university to an Italian citizen following a course of study in Italy cannot be recognised in that country on the basis of any actual verification of the standard of education attested to. By contrast, degrees awarded in only slightly different circumstances do appear to qualify for a recognition procedure. On those grounds, I reach the view that the Italian administrative practice in issue is neither suitable nor proportionate for the purposes of achieving the aims adduced by the Italian Government, and that the restrictions which it entails on freedom of establishment and freedom to provide services therefore cannot be justified.

The second question

53. The second question asks whether Directive 89/48 confers rights on individuals prior to the acquisition of a university degree or equivalent qualification and, if so, whether it allows the Italian authorities to impose restrictions on the recognition of foreign degrees.

54. In accordance with Article 2, the Directive may be relied on by Community nationals wishing to pursue a regulated profession in a host Member State in a self-employed capacity or as an employed person. Under Article 1(d), (16) the Directive applies to regulated professions the taking up or pursuit of which is ‘subject … to the possession of a diploma̕. Article 1(a) defines such a diploma as one awarded on successful completion of a ‘post-secondary course of at least three years̕ duration, or of an equivalent duration part-time, at a university or establishment of higher education ...̕ Under Article 3(a), access to a regulated profession may not be refused on the grounds of inadequate qualifications ‘if the applicant holds the diploma required in another Member State for the taking up or pursuit of the profession in question in its territory, such diploma having been awarded in a Member State̕.

55. Those provisions make it clear that the Directive applies only to diplomas which have already been obtained by a Community national who wishes to pursue a regulated profession in another Member State. Thus, it confers no right which can be relied on before the acquisition of a diploma.

56. In common with the Italian Government and the Commission, I do not consider that the Directive applies to the present case, since Ms Neri is not yet in possession of a diploma of the relevant level – indeed, she has specifically renounced any attempt to obtain such a diploma via the route with which this case is concerned. The Directive would come into play only if she had already been awarded a degree by Nottingham Trent following her studies at ESE and wished to use it to gain access to a regulated profession in Italy. For similar reasons, the Court̕s case-law in Kraus (17) is not relevant on this point.

57. However, if a student who had already graduated in those circumstances were to seek recognition of his or her degree for the purposes of entering a regulated profession in Italy, the Directive would clearly be capable of applying.

The third question

58. The third question asks for an interpretation of the term ‘harmful interruption̕ in paragraph (e) of the second principle of Decision 63/266; in particular, is the fact that the Italian authorities inform students that Nottingham Trent degrees awarded following study with ESE in Italy will not be recognised likely to entail such an interruption?

59. I agree however with the Commission that the Decision, which establishes the principles of a common policy on professional education for citizens of one Member State wishing to pursue an education in another Member State, is of a general and programmatic nature. In Commission v Council (18) the Court described it as the point of departure for a process of gradual implementation of the common vocational training policy. It must thus be seen as establishing guidelines or general principles for further, more specific measures which will give shape to that policy.

60. Consequently, in the absence of any binding effect of Decision 63/266 and since Ms Neri is not seeking to study in another Member State, (19) that Decision is not relevant to the present proceedings.

Final remarks

61. I am aware that if ESE is able to rely in the main proceedings on the interpretation of Community law which I have advocated above, Ms Neri is likely to lose her action even though she has clearly also suffered from the unlawful restrictions for which neither party is responsible and which neither party wishes to see maintained.

62. It will be for the Italian authorities to bring their rules into line with Community law as promptly as possible – to the extent that this has not already been achieved (20) – in order to avoid further harm to schools such as ESE or students wishing to study with them. If harm has already been suffered or continues to be suffered, it is possible that a claim for reparation may lie against the Italian State.

Conclusion

63. In view of all the above considerations, I am of the view that the Court should answer the questions raised by the Giudice di Pace, Genoa, as follows:

(1) A national rule or administrative practice under which degrees awarded to a Member State̕s own nationals by a university in another Member State cannot be recognised when the relevant course of study was not undertaken in the Member State in which the university is established, and which thereby lessens the attractiveness of arrangements by which such a university may approve, for the purposes of awarding its degrees, courses of study offered by other educational organisations and followed in the Member State which applies that rule or practice, is such as to constitute a restriction on the freedom of establishment enshrined in Article 43 EC and/or, as the case may be, the freedom to provide services enshrined in Article 49 EC. Such a practice cannot be justified if it precludes any verification, with a view to recognition, of the standard of education to which each degree attests.

(2) Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years' duration does not apply to situations in which a person is not yet in possession of a diploma of higher education.

(3) Council Decision 63/266/EEC of 2 April 1963 laying down general principles for implementing a common vocational training policy does not impose any binding rules on Member States, nor does it apply to situations in which a person does not seek to study outside his or her home Member State.

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