ECJ -Vueling Airlines SA – To Rule or Not to Rule

Go to the profile of Tanel Feldman
Mar 16, 2020
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On 31 March, the ECJ will finally release its ruling in Vueling Airlines SA (the AG’s Opinion was delivered on 11 July 2019).

However, the ECJ will only rule on the case C-37/18 (Vueling Airlines SA v Jean-Luc Poignant).

Two references for a preliminary ruling have been made by the tribunal de grande instance de Bobigny (France), and by the French Cour de Cassation, both concerning claims for loss sustained by CRPN (the retirement fund for civil aviation flying personnel),and respectively by Mr. Jean‑Luc Poignant (formerly employed by Vueling),as a result of employment of flying personnel by Vueling Airlines in France, without having affiliated them to the French social security.

Employees were declared under the posting scheme, and E101 certificates were issued by the competent authority in Spain.

The E101 certificates were disregarded by the Court of Appeal (Paris), and Vueling was convicted for concealed employment by dissimulation of activity (Article R. 330‑2‑1 Civil Aviation Code read in conjunction with Articles L-1262-3 and L-8221-3  French Labour Code).The Cour de Cassation dismissed the appeal lodged by Vueling.

It is worth noting that:

  • E101 certificates were disregarded by French courts, before the ECJ released its ruling in Alton and Others (C‑359/16, 6 February 2018, EU:C:2018:63)
  • Article L-1262-3 should produce its effect exclusively under French labour law

As the case at issue, considering the most recent French official position (see below),on the one hand, Vueling should have been convicted for concealed employment (under the French labour law), and on the other hand, the E101 certificates should have been challenged under the social security coordination regulations, regardless the breach of labour law.

The binding effect of E101 certificates issued by the competent authority of a Member State, was brought (again) into question, in the context of claims for loss.

Three of the questions referred to the ECJ, are related to the binding effect of E 101 certificates obtained or relied on a fraudulent manner. The fourth question concerns the application of the principle of res judicata in situations in which a criminal court ruling is in breach of EU law.

By decision of the President of the Court of 22 February 2018, Cases C370/17 and C37/18 were joined, on account of the connection between them, for the purposes of the written and oral parts of the procedure and also of the judgment”. (Opinion of AG SAUGMANDSGAARD ØE 11 July 2019, ECLI:EU:C:2019:592 paragraph 46).

It is important to mention that the questions were referred to the ECJ before the latter released its ruling in Altun and Others, however the AG Opinion in Vueling, post-dates the said ruling.

In his Opinion delivered in joined cases C-370/17 and C-37/18, underlining the overriding value of the principle of prohibition of fraud expressed by the ECJ’ case law, the AG:

  • brings an (eventually) unexpected interpretation of the ECJ ruling in Altun and Others
  • reiterates his view that situations of fraud can give rise to social security subjection in two Member States
  • emphasizes the relevance of the concept of fraud, exclusively in the sense of EU law

Practically, in Alton and Others, AG SAUGMANDSGAARD ØE took the view that a court of the host Member State may disapply an E 101 certificate issued by the institution designated by the competent Member State, where that court finds that that certificate was obtained or invoked fraudulently. The ECJ followed the AG’s opinion, however under certain conditions, inter alia related to the dialogue between the institutions designated by the MS involved (pursuant to the social security coordination regulations).

Invoking the ruling in Altun and Others, the AG rules out the binding value of E 101 certificates fraudulently obtained or relied on, however, undermines the value of the dialogue between competent institutions:

  • in Altun and Others, the ECJ addressed the dialogue exclusively “as the case at issue
  • as a matter of principle, judicial proceedings and the dialogue between competent institutions, can “go hand in hand”. The dialogue may allow “procedural economy” (if the issuing institution agrees to cancel or withdraw the E 101 certificates), and subsequently, make possible a smooth solution for the financial consequences of the fraud.

The ruling in Altun and Others does not exclude the “hand in hand “option. The difference is in the synchronization between the two forms of actions. It must be also admitted that the concept of “reasonable period of time”, makes the enforcement of the ruling in Altun and Others laborious (see to that context C-359/16, 2018 ECLI:EU:C:2018:63 paragraph 55).

The ECJ might consider that any step further in depriving the principle of sincere cooperation of its (eventual) effectiveness, requires more than an ECJ landmark ruling.

As regards the concept of fraud, the AG underlines that it must be distinguished between fraud as understood in French law, and fraud within the meaning of EU law : “in the judgment in Altun, the Court intended to give fraud in social security matters an autonomous meaning” (Opinion of AG SAUGMANDSGAARD ØE 11 July 2019, ECLI:EU:C:2019:592 paragraph 112).

Although as the case at issue, considering the AG reasoning, fraud can be established under EU law (social security coordination), it is also established that France enforces Article L-1262-3 Labour Code, in view of imposing a “national borderline” between freedom to provide services and freedom of establishment, and that beyond the concept of fraud under EU law.

Lastly, the EU Commission has expressed reservations as regards the fraud established under EU law. The employment situation of aircrew regarding posting, is currently assessed in view of eliminate uncertainties (labour law and social security coordination).

To delay the ruling in C-370/17, the ECJ found an original way around it : the question related to the  binding effect of E 101 certificates, referred in C-37/18, concerns  the interpretation of the judgment of 27 April 2017 A-Rosa Flussschiff, C-620/15, in the context of certificates obtained fraudulently. Or, the ruling in Altun and Others brought a clear response to that question.

Interestingly, the Opinion delivered by the AG in joined cases C‑370/17 and C‑37/18, can be found in the ECJ website, exclusively under the case C-370/17 ,where the ECJ will rule on C-37/18.

Regardless the outcome of the (expected) ruling in C-370/17, the French Cour de Cassation took further steps to cover the enforcement of the concept of fraud as understood in French law.

In Bouygues and Others (C-17/19), the French Cour de Cassation seeks to know whether a Portable Document A1 binds the courts of the host Member State, not only as regards the social security subjection, but as well as regards labour law. Applying mutatis mutandis, the reasoning brought by the French Government at the hearing in C-17/19 to the case in Vueling, regardless whether or not the E 101 certificates are called into question, Vueling can be convicted for concealed employment by dissimulation of activity (breach of Article L-1262-3 French Labour Code). The binding value of the certificates would only determine the outcome of the claims for loss.

It can be alleged that in Vueling, the French Cour de Cassation, applied the said reasoning, before referring the question in Bouygues and Others.

Practically, Portable Documents A1 (former E 101), can be “disregarded” in the following situations:

  • the social security subjection is not called into question, however, a breach was established under French labour law- the PDA1 will produce full effect as regards social security subjection, however, will not rule out the breach established under French labour law
  • the social security subjection is called into question (under the social security coordination regulations)
  • the social security subjection is called into question (under the social security coordination regulations), and a breach was established under French labour law

As regards the distinction must be made between the social security coordination and labour law, it is hard to challenge such a position. The question is whether Article L-1262-3 (see its practical implementation by labour inspections and national courts), is in compliance with EU law.

Conclusion:

The ECJ might have several good reasons to delay the ruling in C-370/17:

  • the amendment of the social security coordination regulations is still “under negotiation” (although a consensus was reached as regards the determination of the legislation applicable)
  • the employment situation of aircrew regarding posting, is currently assessed in view of eliminate uncertainties (labour law and social security coordination)
  • hand in hand with tackling transnational fraud, the French Government should bring more clarity as regards the concept of fraud as understood in French law, and its enforcement in the context of the posting of workers, within the meaning of EU law

 

 

 

Go to the profile of Tanel Feldman

Tanel Feldman

Senior Partner , Immigration Law Associates

Immigration Law Associates provides services in the following areas of law: A- INTRA-EU MOBILITY -European Union Services: A1 Freedom to provide services : Social security and labour law -intra-EU mobility of employed and self-employed workers A2 Freedom of movement of persons : a) Citizenship of the Union and Member State nationality b) Entry and residence rights from the Citizens’ Rights Directive-c) Freedom of movement of workers B LEGAL MIGRATION- Belgium and Luxembourg : corporate and private immigration

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