Arden LJ on CSIC and Permanent Residence

th-12Ahmad v Secretary of State for the Home Department [2014] EWCA Civ 988 (16 July 2014)

Should the spouse of an economically inactive EEA citizen, i.e. a national of one of the member states of the EU or of one of the countries in the European Economic Area (“EEA”), be entitled to permanent residence without the citizen holding Comprehensive Sickness Insurance Cover (“CSIC”)? The Court of Appeal said otherwise and answered this question in the negative. Arden LJ (with whom Beatson & Sharp LJJ agreed) held that in circumstances where an EEA citizen resided in the UK but was economically inactive, the right of such a citizen’s spouse to permanent residence was conditional upon the EEA citizen holding comprehensive sickness insurance cover as laid down in article 7(1) of Directive 2004/38/EC (“the Directive”). The conditions in article 7(1) required strict compliance and the right to a permanent residence card was a privilege that was not conferred unless they were met. Similarly, the EEA citizen’s entitlement to free healthcare under the National Health Service (“NHS”) did not alter this conclusion.

Arden LJ made it extremely clear at paragraph 72 that the conditions in article 7(1) must not be interpreted dynamically. Instead, in line with the CJEU’s decision in Case C-140/12 Pensionsversicherungsanstalt v Brey [2014] 1 WLR 1080, the conditions required strict and literal interpretation but remained subject to the general principles of EU law such as proportionality.


The appellant, Shakil Ahmad (SA), had been working in the UK and had paid national insurance for five years. He was a Pakistani national living with his wife Mrs Ahmad (MA) in the UK since August 2006. He appealed against the Home Secretary’s refusal to grant him permanent residence. MA, who entered the UK to exercise her treaty rights as a worker from April 2006, was a Danish citizen and therefore an EEA citizen. SA lawfully entered the UK to join her but MA then ceased to be a worker and she was a student from about January 2009 to about July 2012. MA was required to have CSIC but did not have it and SA’s right of residence depended on her having CSIC so that she did not become a burden on the UK.

The Upper Tribunal did not accept the argument that MA satisfied article 7(1) of the Directive and found that an entitlement to free NHS treatment did not satisfy the requirement under the Directive, and the implementing Immigration (European Economic Area) Regulations 2006 (“the Regulations”), as regards a student who was an EEA citizen to have CSIC.

The Court of Appeal

The court detected no tension between the Directive and the Regulations in the present case. SA advanced arguments under eight heads including but not limited to points such as (i) CSIC was not restricted to private systems; (ii) the UK had breached the right to equal treatment under article 24 (Equal treatment) and article 4 (Equality of treatment) of Regulation 883/04/EC on the coordination of social security systems; (iii) requiring CSIC was disproportionate; (iv) MA had a right to obtain healthcare in Denmark, and the Home Secretary ought to have investigated whether the costs of healthcare could be recovered from that state; and (v) EEA nationals and family members had a right to free NHS treatment under the National Health Service (Charges to Overseas Visitors) Regulations 2011.


Highly confident that the law was extremely clear on the subject, Arden LJ said at paragraph 9 that the tribunal was right to dismiss the appeal in light of the CJEU’s “clear and consistent case law” and her Ladyship went on to hold at paragraph 70 that if an EEA citizen entered the UK and was economically inactive, for example because she was a student, her residence and that of her family members would not be lawful unless she had CSIC while she was a student in the five years following her arrival. The court held at paragraph 30 that Regulation 883/04/EC is concerned with the co-ordination of social security benefits and was therefore irrelevant in the present case.

The court explained at paragraph 20 that SA’s problem was that W (China) [2006] EWCA Civ 1494 and other binding Court of Appeal case law (Liu v SSHD [2007] EWCA Civ 1275 as cited by the tribunal) meant that free NHS treatment does not satisfy the requirement for CSIC. So for SA to succeed in his appeal, these cases needed to be distinguished or shown to be incompatible with other EU law. Arden LJ went on to hold at paragraph 60 that “the previous and binding decisions of this court cannot be distinguished, and are therefore binding on us.”

The court noted that the European Commission is of the view that by refusing to accept that NHS cover was the same as CSIC, the UK was in breach of EU law. But Arden LJ concluded at paragraph 32 that “[t]hese statements cannot, however, have any bearing on the true meaning and effect of the Directive.” Her ladyship agreed with the view taken by Upper Tribunal Judge Ward in VP v Secretary of State for Work and Pensions [2014] UKUT 0032: namely that the Commission’s point of view is “incompatible with the legislative purpose of Article 7(1)(b) as that purpose was explained in the authorities most recently reviewed in Brey.

Her ladyship explained at paragraph 36 that CSIC could not include the public healthcare system of the host state because that would defeat the object of the Directive and would not relieve that state of the cost of providing healthcare in the first five years of residence and would render the Directive meaningless since the burden on the host state could only arise if there was a health service. Moreover, the court also subscribed to the CJEU’s view in C-424/10 Ziolkowski v Land Berlin [2014] All ER (EC) 314 that a person did not reside lawfully for the purposes of the Directive if he did not comply with the conditions contained within it.

Arden LJ also observed at paragraph 42 that in Abdirahman v SSWP [2007] EWCA Civ 657, the instant court held that article 12 of the EC Treaty (now article 18 TFEU), which prohibited discrimination on the grounds of nationality, did not apply where the relevant person had no right of residence under EU or domestic law. Bound by Abdirahman, her ladyship held at paragraph 43 that SA’s case on discrimination was not made out.

The court held at paragraph 45 that SA was unable to rely on C-413/99 Baumbast v SSHD [2002] ECR I-7091 – where the CJEU held that a refusal to allow Mr Baumbast to exercise the right of residence under article 18(1) EC (now article 21(1) TFEU) solely on the ground that his sickness insurance did not cover emergency treatment in the UK, would be a disproportionate interference with his right of residence – because that case’s facts were exceptional and SA was not in the same position. The differences were significant. Mr Baumbast and his family had lived and worked in the UK for many years and had retained a home in the UK when Mr Baumbast began to work abroad. They had CSIC in Germany but it did not cover emergency treatment in the UK and they did not make any calls on the NHS whereas MA has had two children since she arrived in the UK. However, Mr Baumbast did have CSIC in Germany, where he lived for part of the year and such factors were relevant to the proportionality exercise in the present case.

Moreover, applying Kamau (Kenya) v SSHD [2010] EWCA Civ 1302, Arden LJ found at paragraph 46 that the risk that the family would need to rely on the NHS if they became ill was enough to create a burden on the UK. Her ladyship accepted at paragraph 51 the submission that the legitimate aim being pursued by the conditions in article 7(1) is to ensure that no unreasonable financial burden is imposed on the host state and she agreed with the Home Secretary’s view that it is not disproportionate to require non-workers to hold sickness insurance and have sufficient resources, in order to guard against the possibility of them becoming a financial burden on the host state. Adren LJ explained that:

49. … It is not disproportionate for EEA citizens and their family members to comply with those requirements. Furthermore, in Lekpo-Bozua v Hackney LBC, this court has described Baumbast as ‘the high watermark of resort to proportionality under article 18’ (referring to Maurice Kay LJ in Kaczmarek v Secretary of State for Work and Pensions [2008] EWCA Civ 1310, [14]). In other words, Baumbast is likely to represent the furthest the host state will have to go to tolerate any divergence from the condition for CSIC in article 7. As explained above, the facts of this case are materially different.

50. In my judgment, there is nothing in the appellant’s case which makes the requirement for CSIC disproportionate. The period of time during which the CSIC must be held is short, and there is no other way in that period of protecting the host state.

The court roundly rejected the proposition that a proportionality assessment is also required in circumstances where a person has enjoyed entitlement to free NHS care but has had no, or no substantial, need to draw on it. It held at paragraph 52 that throwing the whole of the risk of medical care in the five-year period on to the host state is tantamount to defeating the object of the Directive in Recital (10) which states that “[p]ersons exercising their right of residence should not, however, become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence. Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions.”

Arden LJ noted at paragraph 53 that it was common ground that in the event that there were reciprocal arrangements with the EEA national’s own state that would be sufficient to constitute comprehensive insurance cover. However, as far as the court could see, there was no evidence in the instant case that MA, who was no longer habitually resident in Denmark and had been in the UK since 2006, was still eligible for healthcare in Denmark. The court held at paragraph 56 that there was no basis for imposing upon the Home Secretary an obligation to investigate the position in Denmark and “it would clearly be unprincipled” to make such an assumption.

The court also clarified at paragraph 62 that the conditions in article 7(1) were conditions on the obtaining of permanent residence and not on obtaining treatment under the NHS. The point regarding NHS (Charging of Overseas Visitors) Regulations 2011 – that to impose a condition of having CSIC on EEA citizens (and their family members) who seek permanent residence treats them differently from UK citizens who reside in the UK and is therefore discriminatory and disproportionate – was also toothless and without substance.

MA had to have CSIC while she was a student. The fact that she would have been entitled to treatment under the NHS, and was thus in substantially the same position as she would have been had she had CSIC, was irrelevant. Arden LJ concluded at paragraph 71 that MA’s failure to take out CSIC put the host state at risk of having to pay for healthcare at a time when MA and her family had not then achieved the status of permanent residence and she was economically inactive.

The court also roundly rejected the argument that article 35 (Healthcare) of the Charter of Fundamental Rights bit in the appellant’s favour: it explained at paragraph 68 that the word “everyone” therein cannot mean literally everyone because it is limited to those persons who have the right to healthcare under the EU treaties and so SA needed to establish a right of residence under the Directive before he could rely on article 35.

Moreover, the meaning of the expression “compulsory sickness insurance cover” was clear enough and there was no need to make a reference to the CJEU. Arden LJ also gave short shrift to the argument that Parliament has disapplied the requirement for CSIC and the court opined that:

65. There is, moreover, a difficulty in the basic assumption in this argument that the disapplication of the condition affects only the domestic interest. A person entitled to permanent residency in one member state acquires rights to move to other member states and to build up permanent residency there. In those circumstances it is unlikely that this condition is one which the UK Parliament can unilaterally disapply. Indeed, in Ziolkowski at [47], the CJEU rejected the argument that a period of residence which complied with national law but did not satisfy the conditions in article 7(1) could be regarded as a “legal” period of residence within the meaning of article 16(1) of the Directive.

The court’s overall message was pretty clear: SA was not entitled to the privilege of a permanent residence card unless MA strictly and literally complied with the conditions laid down in article 7(1).

About Asad Ali Khan, BA, MSc, MA, LL.B (Hons), LL.M

Senior Partner, Khan & Co, Barristers-at-Law
This entry was posted in CFR, Citizens Directive, CJEU, Court of Appeal, Pakistan, Permanent Residence, Uncategorized and tagged , , , , . Bookmark the permalink.

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