Court of Justice of the EU: a host Member State court may ”disregard” A1 PD certificates, if it finds the existence of fraud in issuing them
An important judgment of 6 February 2018 regarding the A1 PD / E101 certificates in the Belgian case C-359/16 Altun has just appeared in the CJEU’s resources. The Court essentially followed the Opinion of the Danish Advocate General H. S. Øe of 9 November 2017 therein. It therefore held that when the evidence shows that A1 PDs were obtained as a result of ”fraud”, a national court may, in the context of proceedings brought against persons suspected of having used posted workers ostensibly covered by such certificates, disregard such A1 PDs. Such a conclusion is a departure from the existing EU jurisprudence regarding the permanent nature of the A1 PDs / E101 forms issued. The CJEU at the same time conditioned this with specific ”emergency brakes”.
On what conditions could a court of a host Member State disregard an A1 PD issued in another Member State of the EU?
In the Court’s view, such disregarding of the A1 PD is possible when:
- an institution issuing the A1 PD failed to take into consideration evidence that supports the conclusion that A1 PDs were fraudulently obtained or relied on or failed to carry out a review of such evidence (provided by the institution of the host Member State) ”within a reasonable period of time”;
- a court of the host Member State, with due regard to the safeguards inherent in the right to a fair trial, finds the existence of ”fraud”.
The Court ruled the above in the Belgian case concerning E101 (A1) certificates issued for posted workers from Bulgaria. They were challenged by the Belgian Social Security Inspectorate which found, after an inspection carried out in the Belgian company Absa NV, that it had employed practically no staff for several years and that all work was subcontracted to Bulgarian undertakings posting workers to Belgium. The latter, according to the Belgians, ”carried out no significant activity in Bulgaria”. They only posted workers to carry out work for Absa. The Belgian authorities sent to the Bulgarian institution a reasoned request for review or withdrawal of the A1 / E101 certificates. That institution only replied to the next letter (of reminder) in the case, by sending over a summary of the A1 / E101 certificates issued, indicating their period of validity and stating that the Bulgarian undertakings in question ”met the conditions of posting” for administrative purposes ”at the time those certificates were issued”. In the reply, however – according to the Belgian institution, the facts established by the Belgian authorities were not taken into account.
As a result, court proceedings against the members of management board of Absa were initiated in Belgium. First instance court acquitted the accused, in the second instance they were however convicted in September 2015. The Court of Appeal in Antwerp stated in the judgment that the E 101 certificates ”had been obtained fraudulently”. Subsequently, the Belgian Court of Cassation, to which an appeal on a point of law was brought, referred to the CJEU a question for a preliminary ruling.
Potentially far-reaching consequences of the CJEU’s judgment
The Court’s judgment can have far-reaching consequences. There is a risk that this judgment (and the earlier Opinion of the Advocate General) can be used as a legal tool to question A1 PDs by the host Member States (their courts), contrary to the settled case-law. It states that host country institutions (including courts) should take A1 / E101 certificates into account as long as they have not been withdrawn or declared invalid by the Member State in which they were issued. It is only the competent institution of the sending Member State which issued them that may withdraw or cancel them. However, the Court of Justice in the Altun judgment laid down certain requirements (”emergency brakes”):
- the court of the host country must find the existence of fraud related to obtaining the A1 PD. In order to do this, both an objective factor (conditions for obtaining and relying on an A1 PD have not been met – because, for example, an error was made in the assessment of the conditions of application of social security coordination regulations) as well as a subjective factor (the parties concerned intended to evade or circumvent the conditions for the issue of that certificate, with a view to obtaining the advantage attached to it). What is important, both elements must appear simultaneously.
- the host Member State institution should request the institution of the sending Member State to review the A1 PDs and withdraw them, while providing concrete evidence. The condition is met when the institution of the host Member State fails to take them into account / fails to carry out the review ”within a reasonable period of time”.
- the parties are to be guaranteed a fair trial.
Thus, the court of the host Member State may disregard (not take into account) the certified A1 / E101 forms when fraud (including its two above-mentioned factors being met at the same time) is demonstrated and the institution of the sending Member State refuses to cooperate. The attitude of a given Party is important, too – it is particularly important to actively support your arguments before the court / authority of the host Member State.
A number of doubts remain
The judgment, however, gives rise to a plethora of legal and facts-related doubts. The CJEU did not indicate:
- how a court of a host Member State is meant to learn about fraud?
- who would collect evidence for existence of fraud (and whether a judicial investigation through letters rogatory in the sending Member State is enough)?
- how the court of one Member State is to assess evidence from another country (as two or more different legal orders are involved therein).
The Court of Justice also failed to explain a link between potential ”fraud” of the posting undertaking and the liability of the entrepreneur who makes use of the services provided via posted workers.
What about the dialogue and conciliation procedure?
Furthermore, the judgment clearly shows that the Belgian authorities have not exhausted the procedure laid down for cases of dispute over the validity of A1 PDs. It is a dialogue and conciliation procedure. On the one hand, the CJEU maintained its opinion that an A1 PD certificate shall remain in force until it is withdrawn or declared invalid by the issuing institution. If this is the Court’s final position – then it would be necessary to add the requirement of having to exhaust the dialogue and conciliation procedure to the above-styled ”emergency brakes”. However, on the other hand, the Court pointed out that the principle of prohibition of fraud and abuse of rights was a general principle of EU law. 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. The Court has not explained the relationship between the principle of prohibition of ”fraud” and the dialogue and conciliation procedure. In particular, it did not indicate whether the finding of ”fraud” by a court of a host Member State constitutes a prerequisite for not using the dialogue and conciliation procedure and / or whether ”fraud” may be found irrespectively of whether that procedure had previously been used in a given case or not.
In the face of the above-mentioned doubts, it seems all the more pertinent for undertakings posting workers to actively monitor relevant court / administrative proceedings in the host Member States. It is especially so, when any doubts concerning A1 PDs are voiced by the competent institutions of such Member States.
Labour Mobility Initiative
Labour Mobility Initiative is Europe’s largest think thank dealing with work, mobility and posting of workers. Since 2013 it has been bringing together scholars, enterpreneurs, trade unions and public administration to create the only Polish and the largest European substantive forum for exchanging knowledge on the posting of workers in the framework of freedom to provide services. more >>>