Fratila and another (AP) (Respondents) v Secretary of State for Work and Pensions (Appellant)

Michaelmas Term

[2021] UKSC 53

On appeal from: [2020] EWCA Civ 1741

Fratila and another (Respondents) v Secretary of State for Work and Pensions (Appellant)

before

Lord Reed, President

JUDGMENT GIVEN ON
1 December 2021
Appellant
Sir James Eadie QC

Tim Ward QC

Julia Smyth

George Molyneaux

(Instructed by The Government Legal Department)

Respondents
Richard Drabble QC
Thomas de la Mare QC
Tom Royston
Gayatri Sarathy

(Instructed by Child Poverty Action Group)

1st Intervener (The AIRE Centre)

Charles Banner QC Yaaser Vanderman

(Instructed by Herbert Smith Freehills LLP (London))

2nd Intervener (Independent Monitoring Authority for the Citizens’ Rights Agreements)

Marie Demetriou QC
Emma Mockford
(Instructed by Independent Monitoring Authority Legal Department)

LORD LLOYD-JONES: (with whom Lord Reed, Lord Hodge, Lord Sales and Lord
Hamblen agree)

1. This appeal is concerned solely with EU law as it applied in the United Kingdom

while the United Kingdom was a Member State and during the transition period
following the withdrawal of the United Kingdom from the European Union.

2.          The appeal concerns the compatibility with EU law of statutory provisions

governing eligibility for various non-contributory benefits which were inserted into existing Regulations by the Social Security (Income-related Benefits) (Updating and Amendment) (EU Exit) Regulations 2019 (“the 2019 Regulations”). In broad terms, the
2019 Regulations prevent leave to remain in the United Kingdom arising from pre-
settled status granted under the EU Settlement Scheme (“EUSS”) from constituting a
qualifying right of residence for the purposes of eligibility for the relevant benefits. The
case has been argued by reference to the amendment which the 2019 Regulations
made to the Universal Credit Regulations 2013, which govern eligibility for universal
credit. The 2019 Regulations also made analogous amendments to six other sets of
Regulations, which relate to other benefits.

3. The appellant, the Secretary of State for Work and Pensions, submits that article

18 TFEU, which prohibits, within the scope of application of the EU Treaties, any
discrimination on grounds of nationality, is inapplicable and that in any event there is
no breach of the provision. The appellant’s case, in broad summary, is that a person
with no EU law right of residence in the United Kingdom is not entitled to rely on
article 18 TFEU to claim equal treatment in respect of the relevant benefits and, in any
event, that any nationality discrimination to which the 2019 Regulations give rise is
indirect and justified.

4.          The respondents are both Romanian nationals who are present in the United

Kingdom and who made applications for Universal Credit which were refused. At the time of the relevant applications the respective right of each of them to reside in the United Kingdom arose solely from their pre-settled status. They submit that once an EU citizen is lawfully resident in a member state, whether by virtue of an EU law right
of residence or, as in the present case, a purely domestic law right of residence, they are within the scope of article 18 TFEU and any refusal of social assistance to them by reference to an eligibility criterion not applied to a UK national is discrimination
prohibited by article 18 TFEU.

5.          The respondents challenged by way of judicial review the refusals of their

applications for universal credit, contending that the 2019 Regulations should be
quashed as contrary to the prohibition on nationality discrimination in article 18 TFEU.
On 27 April 2020 Swift J dismissed the claim ([2020] EWHC 998 (Admin); [2020] PTSR
1424). He held that the respondents were entitled to rely on article 18 to assert a claim
of discrimination on the grounds of EU nationality, but he further held that the 2019
Regulations did not breach article 18 because:

(i)         they gave rise only to indirect, not direct, discrimination (applying the

decision of the Supreme Court in Patmalniece v Secretary of State for Work and
Pensions (AIRE Centre intervening) [2011] UKSC 11; [2011] 1 WLR 783, itself
applying the decision of the Court of Justice of the European Union (“CJEU”) in
Bressol v Gouvernement de la Communauté française (Case C-73/08) [2010] ECR
I-2735; [2010] 3 CMLR 20, paras 24-29; and

(ii)        the indirect discrimination in question was justified, since the 2019

Regulations served to maintain the status quo prior to the introduction of pre- settled status and protected the social security system from claims by persons who were not sufficiently economically integrated into, or insufficiently closely connected with the United Kingdom (at paras 31-32).

6.          On appeal, the Court of Appeal ([2020] EWCA Civ 1741; [2021] PTSR 764)

(McCombe, Moylan and Dingemans LJJ) allowed the appeal (Dingemans LJ dissenting). of State to justify. The Court of Appeal refused permission to appeal but granted a stay of execution until 26 February 2021.

The Court of Appeal concluded, unanimously, that the respondents were entitled to
rely on article 18 TFEU for the reasons given by Swift J. McCombe LJ, with whom
Moylan LJ concurred, concluded that on the application of CJEU case law
discrimination of this type was prohibited by EU law and the question of justification
did not arise. He rejected the Secretary of State’s submission that any nationality
discrimination to which the 2019 Regulations gave rise was indirect and in principle
capable of justification. Dingemans LJ, dissenting on this issue, concluded that the 2019

7.          On 22 February 2021 the Supreme Court granted permission to appeal and

continued the stay of execution until the determination of the appeal. The hearing of the appeal was listed for 18 and 19 May 2021. The principal issues which arise on this appeal are:

(i)         Whether the respondents are entitled to rely on article 18 TFEU by virtue

of being granted a domestic law right of residence, namely pre-settled status.

(ii)        If so, whether or not the 2019 Regulations breach article 18 TFEU; in

particular,

(a)	whether the discrimination is prohibited or direct, such that it is

not capable of justification; or

(b)	if not and the discrimination is indirect, whether it is justified.

8.          On 21 December 2020, a Social Security Tribunal in Northern Ireland had made

CG v Department for Communities in (Northern Ireland) 2019, which are materially similar to the Universal Credit Regulations 2013, as amended by the 2019 Regulations, with which this appeal is concerned. The CJEU ordered expedition and listed an oral hearing in the matter of CG for 4 May 2021. The parties to the present appeal agree that by virtue of articles 86(2) and 89(1) of the Withdrawal Agreement, which has domestic effect by virtue of section 7A of the European Union (Withdrawal) Act 2018, the judgment of the CJEU in CG will have binding force in its entirety on and in the United Kingdom.
a preliminary reference to the CJEU in a case,
Northern Ireland, which concerned the compatibility with article 18 TFEU of the
Universal Credit Regulations (Northern Ireland) 2016, as amended by the Social

9.          In these circumstances, on 11 May 2021 Lord Reed directed that the hearing

date of the appeal to the Supreme Court should be vacated pending the decision of the
CJEU in CG.

10.        The CJEU delivered its judgment in CG on 15 July 2021 (Case C-709/20) [2021]

WLR 5919. It observed that every EU citizen may rely on the prohibition of residence in the territory of that member state complies with the conditions of the Directive (para 75, citing Dano v Jobcenter Leipzig (Case C-333/13) [2015] 1 WLR 2519, paras 68 and 69).
discrimination on grounds of nationality laid down in article 18 TFEU (at para 63).
However, the first paragraph of article 18 TFEU is intended to apply independently only
to situations governed by EU law with respect to which the TFEU does not lay down
specific rules on non-discrimination (para 65). Thus the principle of non-discrimination
is given specific expression in article 24 of Parliament and Council Directive
2004/38/EC (“the Directive”) in relation to EU citizens who exercise their right to move
and reside within the territory of the member states (para 66). An EU citizen who
moves to or resides in a member state other than that of which he or she is a national
falls within the scope of the Directive and is a beneficiary of the rights conferred by it
(para 67). Accordingly, the question whether that EU national faces discrimination on
grounds of nationality falls to be assessed by reference to article 24 of the Directive
and not by the independent application of article 18 TFEU. The CJEU concluded that an

11.        As a result, the first issue in this appeal has been answered by the CJEU

definitively in favour of the appellant and the second issue does not arise.