Report for the Hearing in Case C-104/91

I — Facts and written procedure

1. In Spain, the profession of estate agent is regulated by Decree No 3248 dated 4 December 1969, as amended. Access to the profession is dependent upon passing an examination which is held by the Ministry for Public Works and Town Planning and for which an official qualification is given, and on affiliation to the official professional association (Colegio Oficial de Agentes de la Propiedad Inmobiliaria, hereinafter referred to as ‘the Colegio’).

2. Article 321 of the Spanish Penal Code, relating to the offence of wrongful exercise of an occupation, provides that anyone carrying on activities specific to a profession without holding the appropriate official qualification or the qualification recognized by law or international agreement shall be liable to a term of imprisonment and that, if such a person publicly holds himself out to be a member of the profession, he shall in addition be liable to a fine.

3. Under Article 572 of the Spanish Penal Code it is an offence punishable by a fine for a qualified or authorized person to practise without being affiliated to the Colegio or to the relevant official body or association where that requirement is laid down by regulation.

4. Article 1 of Council Directive 67/43/EEC of 12 January 1967, concerning freedom of establishment and freedom to provide services in respect of activities of self-employed persons concerned with: 1. matters of ‘Real Estate’ ... imposes on Member States the duty to abolish, in respect of natural persons and companies or firms, restrictions resulting from discrimination on grounds of nationality on access to self-employed activities in the sphere of real estate.

5. That directive was implemented by Royal Decree No 1464/88 of 2 December 1988.

6. Stephen Kenneth Newman, a British national, holder of a British diploma in Estate Management and a member of the Royal Institution of Chartered Surveyors set up, with some Spanish nationals, a company called ‘Aguirre Newman SA’ with the object of carrying on business as an estate agent. On 4 August 1989, Mr Newman applied to the Governing Council of the Madrid Colegio for membership of the Colegio but received no official response.

7. On 2 January 1990, the Colegio instigated criminal proceedings against Aguirre Newman SA, as represented by its officers S. Aguirre and S. K. Newman, for wrongful exercise of the profession within the meaning of Article 321 of the Spanish Penal Code, relying on: (a) failure to hold the official qualification awarded by the relevant Spanish ministry after passing the selection examinations, and non-affiliation to the Colegio; (b) the fact that the profession of estate agent can only be practised by individuals and not legal entities.

8. As the dispute involves an interpretation of the relevant Community legislation, the Juzgado de Instrucción No 20 of Madrid decided by an order dated 21 February 1991 to seek a preliminary ruling under Article 177 of the EEC Treaty on the following questions:

‘1. Must the Community rules on freedom of establishment in Article 52 et seq. of the EEC Treaty and Directive 67/43/EEC and the current state of implementation of Article 57(1) of the Treaty be interpreted as meaning that it is possible that in a Member State a citizen of another Member State who holds a qualification validly issued in his country of origin which has not been recognized in the country where he wishes to establish himself and carry on the occupation of estate agent is liable to criminal penalties?

2. Must the aforesaid Community legislation be interpreted as meaning that Article 57(1) of the Treaty, which imposes on the Council the obligation to issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications within a reasonable time, and the absence of any action to that end in so far as concerns estate agents in 24 years, permit the maintenance in a Member State of the requirement for a person who wishes to carry on that occupation and holds the requisite qualification in his country of origin to pass an examination?’

9. The order of the Juzgado de Instrucción No 20 of Madrid was registered at the Court on 2 April 1991.

10. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 25 July 1991 by the Colegio, represented by Jesus Zarzalejos Nieto, of the Madrid Bar, on 9 July 1991 by the Ministerio Fiscal (Public Prosecutor's Office) attached to the Tribunal Superior de Justicia (Supreme Court) of Madrid, represented by Mr Joaquin Sánchez-Covisa Villa, Public Prosecutor at the Fiscalía del Tribunal Superior de Justicia, on 4 July 1991 by the Spanish Government, represented by Alberto José Navarro Gonzalez, Director-General of Community Legal and Institutional Affairs at the State Secretariat for the European Communities, and Antonio Hierro Hernández-Mora, Abogado del Estado, acting as Agents, on 2 July 1991 by the French Government represented by Philippe Pouzoulet, Assistant Director of Legal Affairs at the Foreign Ministry, acting as Agent, and Hélene Duchène, Secretary for Foreign Affairs in the same Ministry, also acting as Agent, and on 28 June 1991 by the Commission of the European Communities, represented by Étienne Lasnet, Legal Adviser and Daniel Calleja, of its Legal Service, acting as Agents.

11. 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 inquiry.

12. By decision of 14 November 1991 the Court assigned the case to the Sixth Chamber pursuant to Article 95(1) and (2) of the Rules of Procedure.

II — Written observations submitted to the Court

1. The Madrid Colegio, complainant in the main proceedings, begins by arguing that regulation of the liberal professions, in particular that of estate agent, is exclusively a matter for the Spanish State, which has the right to determine which national diplomas or qualifications are needed to exercise a profession and the conditions for recognition of foreign qualifications. Directive 67/43/EEC only prescribes discrimination on grounds of nationality but is not concerned with the recognition of national professional qualifications relating to real estate. Directive 67/43/EEC was implemented in Spain by Decree No 1464/88. With regard to the national court's first question the Madrid Colegio points to the fact that Article 52(2) of the EEC Treaty provides that nationals of other Member States should be treated in the same way as Spanish nationals, and claims that Royal Decree No 1464/88 complies with this condition. The Treaty does not impose automatic recognition or approval of national professional qualifications. In the absence of a Community directive or convention, the validation or approval of qualifications can only be achieved by national legislation. In the event, Mr Newman's qualification is neither recognized nor approved in Spain, and the qualification of estate agent can be conferred on Mr Newman only after he has passed the examination held by the relevant Spanish ministry. In the absence of Community rules to the contrary, each Member State is, in principle, free to regulate the exercise of a profession on its territory, and, in view of this, Community law does not prevent Mr Newman from being prosecuted for wrongful exercise of a profession. The Madrid Colegio's response to the first question would be as follows: The national court's second question contains a political criticism by the national court of the Council of Ministers of the European Communities for failing in 24 years to draw up a directive relating to the mutual recognition of estate agents' qualifications. According to the Madrid Colegio, the delay in implementing the general programme of mutual recognition of professional qualifications is due to the diversity of the various national legal systems. This delay should not, however, entail the non-application of the existing Spanish legislation. In view of this, the Madrid Colegio's reply to the second question would be as follows:

‘The conviction in Spain of a national of another Member State practising, in Spain, a profession for which there is the legal requirement (applicable also to Spanish nationals) of the official qualification of estate agent, which the foreign national does not possess (his own qualification not being recognized in Spain), is consistent with Community law.’

‘It is compatible with Community law for the Spanish State to continue to require persons (including Spanish nationals) to pass an examination prior to receiving the official qualification of estate agent until such time as either the Council or the Spanish State has adopted rules on mutual recognition of qualifications.’

2. The Ministerio Fiscal, which is joined as a party to the main proceedings, claims that a preliminary ruling on the questions put is not necessary for the national court to make a decision. The observations of the Ministerio Fiscal include, in support of this argument, the proposition that the national proceedings have not established that the offence under Article 321 of the Spanish Penal Code has been committed. As for the alleged contravention of Article 572 of the Spanish Penal Code relating to the exercise of a profession without being affiliated to the official professional body, the Ministerio Fiscal points to the fact that Mr Newman holds the British professional qualification, that he has taken all the correct steps to be affiliated to the Colegio, that the decision to recognize his diploma is a point of administrative law on which there has not yet been a ruling, and that in the circumstances as far as Mr Newman is concerned there is no proven mens rea. Furthermore, the Ministerio Fiscal points out that the questions asked by the Spanish court relate to the consistency of Spanish legislation, and in particular of Decree No 1464/88, with Community law and in particular with Articles 52 and 57 of the EEC Treaty and Directive 67/43/EEC. The procedure for obtaining a preliminary ruling on interpretation cannot be used to achieve the same objective as infringement proceedings. The Ministerio Fiscal considers that in any event both questions should be answered in the affirmative. In support of this, it argues that Directive 67/43/EEC seeks only to impose the principle of nondiscrimination but does not aim to harmonize either the requirements for access to the estate agents' profession or the conditions relating to its practice. The principle of nondiscrimination was implemented by Decree No 1464/88. The Court has consistently held (see the judgment in Case 222/86 UNECTEF v Heylens [1987] ECR 4097; judgment in Case C-340/89 Vhssopoulou v Ministerium für Justiz, Bundes-und Europaangelegenheiten Baden-Württemberg [1991] ECR I-2357) that, in the absence of harmonization of conditions of access to a profession, the Member States are free to define the skills and qualifications necessary for the exercise of that profession and to require production of relevant qualifications. In light of the above, the Ministerio Fiscal suggests the following answer to the questions submitted:

‘The Community rules on freedom of establishment, as contained in Article 52 et seq. of the EEC Treaty, in Directive 67/43/EEC and Article 57(1) of the Treaty in its current state of implementation, allows the conviction of a citizen of another Member State who holds a formal qualification which was validly awarded in his country of origin, but has not been recognized or approved by the country in which he seeks to establish himself and practise the profession of estate agent, if he infringes the rules regulating that profession.

It is not contrary to the Community rules for a Member State to require a person wishing to practise as an estate agent to pass an examination or to lay down any other procedure for approval so as to ensure that the applicant has reached the same level of training and qualification as its own nationals.’

3. With regard to the first question, the Spanish Government points out that the Court has held that, in the absence of harmonization at Community level, Member States retain the right to define the syllabus of study and the qualifications needed in order to pursue an occupation. Recognition of estate agents' qualifications is not within the ambit of Directive 67/43/EEC. 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 (OJ 1989 L 19, p. 16), which did not have to be implemented until 4 January 1991, does not apply to the present case as the events complained of occurred in 1988 and in 1989. Even if it did apply, it relates to Article 57(1) of the Treaty on the mutual recognition of professional qualifications and not to Article 57(2) on the coordination of the provisions concerning the taking up of a profession. The Spanish Government points out that the Court has held (judgment in Case 11/77 Patrick v Ministre des Affaires Culturelles [1977] ECR 1199, and in Case 71/76 Thieffry v Conseil de l'Ordre des Avocats à la Cour de Paris [1977] ECR 765) that Article 52 of the Treaty imposes a sufficiently clearly defined obligation to attain a precise result, the fulfilment of which is to be made easier by, but not made dependent on, the implementation of a programme of progressive measures. The Court recognized in the aforementioned Vlassopoulou case that, where Community law has itself not yet been able to initiate freedom of establishment, the Member States should, according to Article 5 of the Treaty, adopt measures to that effect. Thus the Member States are obliged to take into consideration qualifications obtained in another Member State in order to establish a comparison with those required according to national law. This would allow an individual to ask a competent administrative body to assess whether the qualifications which he obtained abroad are equivalent to those required by the law of the State concerned. The competent authorities could refuse to recognize the foreign qualification if it were of a lower level than the national qualification or too dissimilar to it, in order to protect the confidence which people place in the competence of the relevant professionals. In the light of the above, the Spanish Government suggests the following answer to the national court's first question: With regard to the second question, the Spanish Government observes that, whilst criminal law remains the preserve of the Member States, the primacy of Community law places an obligation on any national court to refer, if necessary, to Community law to ascertain whether all the elements of the offence are present. The offence of wrongful exercise of a profession, which is the subject of the main proceedings, consists of different elements, one of which, namely irregularity of the professional qualification, raises a question of Community law. The Spanish Government considers, however, that before tackling the question in those terms it should be remembered that, according to the judgment in Case 26/62 Van Gend en Loos v Nederlandse Administratie der BeUstingen [1963] ECR 3, the Article 177 procedure does not allow the Court to rule on the compatibility of internal legislation with Community law. That principle was admittedly refined in the judgment in Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthai [1978] ECR 629, but only inasmuch as it relates to the protection of the rights which Comunity law confers on individuals, a proposition which does not necessarily apply in the case in point. Failure to implement Article 57(1) and (2), even if it is capable of founding an action against the Council for failure to act, has no other legal effects in relation to Article 52 of the Treaty. As for Directive 67/43/EEC, it would appear to be redundant because of the direct effect of Article 52(2) of the Treaty following the judgment in Case 2/74 Reyners v Belgium [1974] ECR 631. Furthermore, that directive has been wholly incorporated into Spanish law by Royal Decree No 1464/88. In the light of the above, the Spanish Government would suggest the following answer to the second question:

‘The present Community rules concerning freedom of establishment should be interpreted as allowing or not preventing a Member State from imposing criminal penalties on a citizen of another Member State who practises as an estate agent in its territory without having his qualification from his country of origin validated.’

‘In the absence both of Community provisions governing coordination of the taking up and pursuit of activities of self-employed estate agents, and of directives on mutual recognition of diplomas, a Member State may require nationals of other Member States who hold diplomas from their country of origin and who seek to practise in that Member State's territory to take and pass an examination.’

4. The French Government, whilst recognizing that Directive 67/43/EEC does not provide for recognition of estate agents' diplomas, points out that the Court has consistently held (see the abovementioned judgments in Reyners, Patrick, Thieffry and VUssopoulou) that Article 52 is direcdy applicable and that, even in the absence of directives adopted under Article 57(1), freedom of establishment can be achieved byway of measures adopted by the Member States. In the absence of a Community procedure on the mutual recognition of estate agents' diplomas, the Court has held in its judgments in UNECTEF and VUssopoulou that Member States are obliged to recognize the validity of qualifications obtained in the other Member States, at least where they show that the applicant has the required skills; with regard to procedure the Court has stipulated two requirements, namely that reasons be given for any decision on an application for recognition of a diploma and that such a decision be capable of judicial review. In the light of the above, the French Government proposes that the Court give the following answer to the questions asked:

‘Article 52 of the EEC Treaty should be interpreted as meaning that the national authorities of a Member State, upon receiving a request for permission to practise as an estate agent from a national of another Member State who already holds a qualification in estate management from his country of origin, and who exercises that profession there, cannot require that foreign national to pass the national examination allowing access to the profession, but must assess the knowledge and qualifications attested by the diplomas awarded in the country of origin to ascertain whether or not they correspond to those required in the host country. If, on comparison, the diplomas obtained in the country of origin disclose only a partial overlap with those of the host country, the latter may insist that the applicant prove that he has acquired the skills and qualifications which he was deemed to lack.’

5. The Commission considers the second question first, concerning the compatibility with Community law of the requirement of a national diploma. It observes that the Court has held that, in the absence of Community harmonization of the conditions of access to a profession, Member States have the right to define the skills and qualifications necessary for the exercise of that profession. Directive 67/43/EEC is limited to rendering unlawful any discrimination on grounds of nationality without aiming to achieve mutual recognition of diplomas or coordination of the conditions governing access to a profession. Directive 89/48/EEC was not in force at the time of the events material to this case. The Court has held (see the abovementioned judgments in Patrick and in UNECTEF) that Article 52 of the Treaty imposes an obligation to attain a precise result, fulfilment of which may be made easier by, but not made dependent on, implementation of a programme of progressive measures; even in the absence of such a programme each Member State is obliged to ensure freedom of establishment, in particular by way of national provisions allowing the recognition of equivalent foreign diplomas. For the purposes of comparing foreign diplomas and the conditions laid down by national rules, the Court has laid down certain substantive and procedural requirements. The national authorities should ensure objectively that the foreign diploma certifies that its holder has skills and qualifications which are, if not identical, at least equivalent to those required by national law. If this test proves conclusive, the host Member State is obliged to accept the diploma. If there is only a partial overlap, the host State is within its rights in demanding that he applicant prove that he has the skills and qualifications not covered by his foreign diploma. With regard to procedure, the Court requires that reasons be given for the final decision and that it be capable of judicial review. The Commission notes that in Spain there is no legal procedure for approval of estate agents' qualifications awarded in other Member States and that the applicant did not receive a properly reasoned official response. With regard to the first question concerning the limits applied by Community law to the national criminal law relating to wrongful exercise of an occupation, the Commission observes that since Community law imposes on a Member State a duty to assess the professional qualifications of an individual seeking to carry on his occupation in that State, it is all the more contrary to Community law for that Member State to impose criminal penalties for wrongful exercise of that occupation if it has not established a procedure for approval of the qualifications or if that procedure is incompatible with Community legislation. In the light of the above, the Commission proposes the following joint answer to the two questions submitted:

‘In the absence of harmonized Community rules on the conditions governing access to a given activity and mutual recognition of diplomas, Articles 52 and 5 of the EEC Treaty do not allow a Member State to prohibit and even to apply criminal penalties to the pursuit of that activity by a national of another Member State who, although not holding the diploma required by the legislation of the host Member State, none the less holds the corresponding diploma of his country of origin, if the said Member State has not previously assessed whether the skills and qualifications required in the two countries are equivalent, pursuant to an approval procedure compatible with Community law.’

F. A. Schockweiler

Judge-Rapporteur

1 Language of the case: Spanish.