by Marc Morsa, Senior Researcher at the Faculty of Law of the University of Louvain-La-Neuve

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1. Social dumping and binding force of E101 certificate (A1 document)

1.1 The scope of the binding force of E101 certificate

In the fight against cross-border social fraud and social dumping the competent authorities of the host Member State in whose territory posted workers are employed often come up against the binding force attached to the E101 certificates stating that the worker concerned continued to be subject to the legislation of that Member State, and until which date. This binding force has been defined by the ECJ in a well-established jurisprudence[i]. This certificate thus necessarily implies that the other Member State’s social security system cannot apply[ii]. It establishes a presumption that the worker concerned is properly registered with the social security system of the Member State in which the undertaking employing him is established[iii][iv]

1.2 The cornerstone of the binding force of E101 certificate: the principles of loyal cooperation and mutual trust between the EU and its Member States

For the ECJ this presumption of regularity of affiliation derives from the principle of loyal cooperation, set out in Article 4 (3) TEU and its corollary, the principle of mutual trust[v]. Both principles impose on the social security institutions concerned a double reciprocal and interdependent obligation[vi]. Thus, to the negative obligation incumbent on the competent institution of the host Member State (and on all the courts and tribunals of the Member States regardless of the nature of the proceedings brought, whether civil or criminal) not to unilaterally challenge the certificate E101 – its particulars[vii] and not to question the validity of an E 101 certificate in the light of the elements on the basis of which it was issued corresponds to the positive obligation incumbent on the competent institution (issuing the E 101 certificate) to make a proper assessment of the facts relevant for the application of the rules relating to the determination of the legislation applicable to social security and, consequently, to ensure that the information contained in an E 101 certificate is accurate[viii].

Mutual trust requires, therefore, that the institutions of other Member States are entitled to expect the institution of the Member State concerned to comply with the latter obligation[ix]. As a result, it is incumbent on the competent institution of the Member State which issued the E 101 certificate to reconsider the grounds for its issue and, if appropriate, to withdraw the certificate if the competent institution of the Member State in which the employee actually works expresses doubts as to the accuracy of the facts on which the certificate is based and, consequently, of the information contained therein.

1.3 The obligation to use the dialogue and conciliation procedure

In the event that the institutions concerned do not reach an agreement on the applicable legislation they have to follow the dialogue and conciliation procedure (procedure to be followed in order to resolve any dispute between the institutions of the Member States concerned as regards the validity or the accuracy of an E 101 certificate must be complied with). even in the case of a manifest error of assessment of the conditions governing the application of Regulations No 1408/71 and No 574/72, and even if it were established that the conditions under which the workers concerned carry out their activities clearly do not fall within the material scope of the provision on the basis of which the E 101 certificate was issued, the procedure to be followed in order to resolve any dispute between the institutions of the Member States concerned as regards the validity or the accuracy of an E 101 certificate must be complied with[x].

2. The binding force of E101 certificate where a court of the host Member State finds that there has been fraud

2.1 The general principle of EU Law of prohibition of fraud and abuse of rights in the framework of the coordination of social security systems

But does the jurisprudence of the ECJ establishing the binding nature of the E 101 certificate apply also where a court of the host Member State finds that fraud has been committed? That is in essence the request for a preliminary ruling made by the Court of Cassation of Belgium (referring court) to the European Court of Justice. The question raised by the referring court in this case is therefore a novel one[xi] and justifies that the Court delivered its judgment in the grand chamber[xii]. From the start, the ECJ has answered in the negative by considering that this case law consecrating the binding force of the E101 certificate must not, however, result in individuals being able to rely on EU law for abusive or fraudulent ends[xiii]. In this way the ECJ considers that there is a general principle of the EU Law of prohibition of fraud and abuse of rights which individuals must comply with[xiv]. Indeed, the application of EU legislation cannot be extended to cover transactions carried out for the purpose of fraudulently or wrongfully obtaining advantages provided for by EU law[xv]. In particular, findings of fraud are to be based on a consistent body of evidence that satisfies both an objective and a subjective factor.

2.2 The concept of fraud: the objective and subjective factors

The objective factor consists in the fact that the conditions for obtaining and relying on an E 101 certificate, laid down in Title II of Regulation No 1408/71 (including the rules of conflict of laws to determine the social security legislation applicable), are not met.  On the other hand, the subjective factor corresponds to the intention of the parties concerned to evade or circumvent the conditions for the issue of that certificate, with a view to obtaining the advantage attached to it. In essence, The fraudulent procurement of an E 101 certificate may thus result from a deliberate action, such as the misrepresentation of the real situation of the posted worker or of the undertaking posting that worker, or from a deliberate omission, such as the concealment of relevant information, with the intention of evading the conditions governing the application of Article 14(1)(a) of Regulation No 1408/71 regarding the posting of workers (entailing the maintenance of the affiliation of the worker to the social security scheme of the home Member State).

2.3 Fight against social dumping and the right to a fair trial before national courts

When, in the dialogue procedure provided for in Article 84a(3) of Regulation No 1408/71, the institution of the Member State to which the workers have been posted puts before the institution that issued the E 101 certificates concrete evidence that suggests that those certificates were obtained fraudulently, it is the duty of the latter institution, by virtue of the principle of sincere cooperation, to review, in the light of that evidence, the grounds for the issue of those certificates and, where appropriate, to withdraw them. If the latter institution fails to carry out such a review within a reasonable period of time, it must be possible for that evidence to be relied on in judicial proceedings, in order to satisfy the court of the Member State to which the workers have been posted that the certificates should be disregarded. But the ECJ emphasizes that the persons who are alleged, in such proceedings, to have used posted workers ostensibly covered by fraudulently obtained certificates must, however, be given the opportunity to rebut the evidence on which those proceedings are based, with due regard to the safeguards associated with the right to a fair trial, before the national court decides, if appropriate, that the certificates should be disregarded and gives a ruling on the liability of those persons under the applicable national law.

3. Conclusions

• If the ECJ accepts that the principle of prohibition of fraud and abuse of rights is a general principle of EU law allowing the national courts to refrain from applying the E 101 certificate fraudulently obtained or invoked, the Court also readily specifies that such principle can only apply in very specific circumstances. The judge of the host Member State must have found that the certificates were obtained fraudulently; this entails that the authority of the host Member State has reported the proof of the fraud (objective and subjective elements). The subjective element (fraudulent intent) will be difficult to report in most cases. For this reason the use of the dialogue and conciliation procedure is central, since the institution which issued the E 101 certificate should, as a general rule, be regarded as being best placed to assess the factual elements.
• The ECJ specifies the clear relationships between the dialogue and conciliation procedure and the recourse to the judge of the State of employment in the case of the fraudulent obtaining of E101 certificates. However, the judgment of the ECJ leaves some issues unresolved. Indeed, when will it be considered that the issuing institution seized with evidence pointing to the existence of fraud has not responded in a reasonable time? In addition, can this option of disregarding the E101 certificate obtained fraudulently be only applied in the context of criminal proceedings or is it also likely to be implemented in the context of civil proceedings?
• The jurisprudence of the ECJ establishing the binding force of E101 certificates (and by extension portable A1 documents) is therefore not put into question by the Altun judgment. It is in no way a reversal of that jurisprudence which has been operated by the ECJ in Altun but simply a clarification provided for by it in the context of a novel question.
• This priority given to the fight against social security cross-border fraud on the principle of unity of the applicable legislation and that of legal certainty must, however, be weighed against the right of the person who is accused of using fraudulent posting certificates to refute the elements of fraud invoked in the context of a procedure offering guarantees of a fair trial.
• This possibility for the host Member State (possibility recognized by the ECJ in Altun case) to disregard a certificate fraudulently obtained or relied on can, in turn, lead to some practical abuses and jeopardize the whole system of imperative rules of conflict of laws laid down in Title II of the Regulation No 1408/71. Such abuses shall undermine the fundamental freedoms of movement of persons as well as that of providing services. This possibility can only be implemented in very specific circumstances.
• Although rendered under the Regulations No 1408/71 and 574/72, this Altun judgment may, in our view, also apply in a case which implements the new Regulations Nos 883/2004 and 987/2009.

 

[i] ECJ, C-202/97, Fitzwilliam, ECLI:EU:C:2000:75, paragraphs  48 ff. (as long as the A1 certificate is not withdrawn or declared invalid, the competent institution of the Member State to which the workers are posted must take into account that the latter are already subject to the social security legislation of the State where the undertaking employing them is established and that the institution cannot, therefore, subject the workers in question to its own social security scheme); ECJ, C-178/97, Barry Banks E.A./Théâtre royal de la Monnaie, paragraph  51 where the ECJ has admitted that a posting certificate produces, as the case may be, retroactive effects; ECJ, C-2/05, Herbosch Kiere, ECLI:EU:C:2006:69 (the judge of another Member State than the one that issued the E101 certificate is not authorized to disregard that certificate and / or to cancel it if the factual circumstances submitted to his judgment establish the absence of an organic relationship during the posting period between the posting company and the worker).

[ii] ECJ, Fitzwilliam, C-202/97, ECLI:EU:C:2000:75, pts 48 and seq. See Van Hees, B.J.: Detachering: het arrest Fitzwilliam: eindelijk erkenning?, Periodiek voor sociale verzekering, sociale voorzieningen en arbeidsrecht 2000 p.595-601 (NL); De Pauw, Bruno: Het arrest Fitzwilliam van het Europees Hof van Justitie: een verduidelijking van het detacheringbegrip?, Journal des tribunaux du travail 2000 p.297-299 (NL); Pennings, F.J.L.: Administratiefrechtelijke beslissingen ; Rechtspraak bestuursrecht 2000 nº 328 (NL); Keunen, F.W.M.: Rechtspraak sociale verzekering 2001 nº 55 (NL); Rodière, Pierre: Coordination des droits nationaux, loi applicable, compétence juridictionnelle, Revue trimestrielle de droit européen 2003 p.529-552 (FR) ; Fillon, Jean-Claude: Valeur des certificats E 101 désigant la législation applicable en France à des travailleurs d’entreprises établies dans un autre État de l’Union européenne, La Semaine Juridique – édition générale 2016 nº 1-2 p.34-37 (FR).

[iii] However, the probative force of the E 101 certificate is limited to the finding by the competent institution of the applicable law, but is not as such as to affect the freedom of the Member States to organize their own social protection or the latter’s regulation of the conditions of affiliation to the various social security schemes, which continue to fall within the sole competence of the Member State concerned.

[iv] Ibid., pt 53.

[v] ECJ, C-359/16, Altun et al, ECLI:EU:C:2018:63, paragraph  40.

[vi] ECJ, Fitzwilliam, C-202/97, ECLI:EU:C:2000:75, paragraph  51 and 52.

[vii] See by analogy, ECJ, Banks et al, C‑178/97, EU:C:2000:169, paragraph  39, A-Rosa Flussschiff, C‑620/15, EU:C:2017:309, paragraph  40; notes on Academic writings: Fillon, Jean-Claude: Valeur des certificats E 101 désigant la législation applicable en France à des travailleurs d’entreprises établies dans un autre État de l’Union européenne, La Semaine Juridique – édition générale 2016 nº 1-2 p.34-37 (FR).

[viii] The Advocate general, in his opinion (paragraph  36), specifies that is a « system of division of jurisdiction between Member States. See ECJ C-115/11, Format, ECLI:EU:C:2012:606 and our observations « L’arrêt Format de la C.J.U.E. du 5 octobre 2012, aff. C-115/11 ou comment les règles de coordination européennes des systèmes de sécurité sociale peuvent éviter le dumping social lorsqu’elles sont correctement appliquées », in the Law review J.T.T., 2013, pp. 469‑472 ; see other Notes on Academic Writings : Driguez, Laetitia: Législation applicable aux travailleurs dans plusieurs États membres, Europe 2012 Décembre Comm. nº 12 p.23 (FR) ; Lhernould, Jean-Philippe: L’actualité de la jurisprudence européenne et internationale. Conflit de lois et cotisations sociales : un arrêt anti-dumping ?, Revue de jurisprudence sociale 2013 p.21-22 (FR) ; Fillon, Jean-Claude: Valeur des certificats E 101 désigant la législation applicable en France à des travailleurs d’entreprises établies dans un autre État de l’Union européenne, La Semaine Juridique – édition générale 2016 nº 1-2 p.34-37 (FR).

[ix] See by analogy, ECJ, Commission/Malta, C‑12/14, EU:C:2016:135, paragraph 37. See notes on Academic writings: Driguez, Laetitia: Cumul des prestations de vieillesse, Europe 2016 Mai Comm. nº 5 p.20-21 (FR) ; Van der Mei, A.P.: Het materieel toepassingsgebied van Verordening 883/2004: beoordeling van uitkeringsstelsels van andere lidstaten, Tijdschrift Recht en Arbeid 2016 nº 12 p.30-31 (NL).

[x] See, to that effect, judgment of 27 April 2017, A-Rosa Flussschiff, C‑620/15, EU:C:2017:309, paragraphs 52 and 53.

[xi] Opinion of the Advocate General in C-359/16, Altun et al, ECLI:EU:C:2018:63, paragraph 40.

[xii] ECJ, C-359/16, Altun et al, ECLI:EU:C:2018:63.

[xiii] See, to that effect, judgments of 2 May 1996, Paletta, C‑206/94, EU:C:1996:182, paragraph 24; of 21 February 2006, Halifax and Others, C‑255/02, EU:C:2006:121, paragraph 68; of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas, C‑196/04, EU:C:2006:544, paragraph 35; and of 28 July 2016, Kratzer, C‑423/15, EU:C:2016:604, paragraph 37.

[xiv] ECJ, C-359/16, Altun et al, ECLI:EU:C:2018:63, paragraph  49.

[xv] See, to that effect, judgments of 5 July 2007, Kofoed, C‑321/05, EU:C:2007:408, paragraph 38, and of 22 November 2017, Cussens and Others, C‑251/16, EU:C:2017:881, paragraph 27.

Picture credits: Broken reflection by Ryan McGilchrist.