CJEU Case C-3/17 / Judgment
Key facts of the case:

Request for a preliminary ruling from the Fővárosi Közigazgatási és Munkaügyi Bíróság.

Reference for a preliminary ruling — Freedom to provide services — Article 56 TFEU — Article 4(3) TEU — Charter of Fundamental Rights of the European Union — Restrictions — Betting and gaming — National legislation — Operation of certain kinds of games of chance by the State — Exclusivity — Licensing system for other kinds of games of chance — Requirement of a licence — Administrative penalty.

Outcome of the case:

On those grounds, the Court (Sixth Chamber) hereby rules:

Article 56 TFEU must be interpreted as meaning that it does not, in principle, preclude a dual system of organisation of the market for games of chance under which certain types of those games fall with the State monopoly system, while others fall within the system of concessions and licences for the organisation of games of chance, if the referring court establishes that the rules restricting the freedom to provide services do, in fact, pursue the objectives relied on by the Member State concerned in a consistent and systematic manner.

Article 56 TFEU must be interpreted as meaning that it precludes a national measure, such as that at issue in the main proceedings, according to which the grant of a licence to organise online games of chance is reserved exclusively to operators of games of chance holding a concession for a casino situated on national territory, since that rule does not constitute a condition indispensable to the achievement of the desired objectives, and that there are less restrictive measures which are capable of attaining them.

Article 56 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which introduces a system of concessions and licences for the organisation of online games of chance, if it contains discriminatory rules with regard to operators established in other Member States or if it lays down rules which are not discriminatory but which are applied in a manner which is not transparent or are implemented in such a way as to prevent or hinder an application from certain tenderers established in other Member States.

Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights of the European Union, must be interpreted as meaning that they do not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the ex officio examination of the proportionality of measures restricting the freedom to provide serves within the meaning of Article 56 TFEU and which puts the burden of proof on the parties to the proceedings.

Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights, must be interpreted as meaning that it is for a Member State which has put in place restrictive legislation to provide evidence to prove the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, in the absence of which the national court must draw all the inferences which result from such a failure.

Article 56 TFEU must be interpreted as meaning that it cannot be held that a Member State has failed to satisfy its obligation to justify a restrictive measure because it has failed to provide an analysis of the effects of that measure on the date on which that measure was introduced into national law or the date of the examination of such a measure by the national court.

Article 56 TFEU must be interpreted as precluding a penalty, such as that at issue in the main proceedings, imposed for the infringement of national rules introducing a system of concessions and licences for the organisation of games of chance, if such national legislation proves to be contrary to that article.
Paragraphs referring to EU Charter

1) This request for a preliminary ruling concerns the interpretation of Article 4(3) TEU, Article 56 TFEU and Articles 41, 47 and 48 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

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17) Furthermore, it asks whether a national measure which provides that a party may raise the issue of the compatibility of national law with EU law only at the stage of legal proceedings infringes the right to sound administration guaranteed by the Charter, specifically the right to be heard and the duty to state reasons.

18) In those circumstances, the Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, Budapest) decided to stay proceedings and refer the following questions to the Court for a preliminary ruling:

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10) Must Article 56 TFEU, the sincere cooperation clause in Article 4(3) TEU and the institutional and procedural autonomy of the Member States, in conjunction with Articles 47 and 48 of the Charter, as well as the right to effective judicial review mechanisms and the rights of defence laid down in those provisions, be interpreted as meaning that, in examining the requirements of EU law deriving from the case-law of the Court of Justice, and the necessity and proportionality of the restriction adopted by the Member State in question, the national court ruling on the dispute may order and carry out of its own motion the examination and the taking of evidence, even if this is not provided for under the national procedural legislation of the Member State?

11) Must Article 56 TFEU, in conjunction with Articles 47 and 48 of the Charter, as well as the right to effective judicial review mechanisms and the rights of defence laid down in those provisions, be interpreted as meaning that in examining the requirements of EU law deriving from the case-law of the Court of Justice, and the necessity and proportionality of the restriction adopted by the Member State in question, the national court ruling on the dispute cannot place the burden of proof on the service providers affected by the restriction, but that rather it is for the Member State — and, in particular, for the State authority that adopts the contested decision in question — to justify and demonstrate the compliance with EU law, as well as the necessity and proportionality of the national legislation, and that failure to do so has, by itself, the consequence that the national legislation breaches EU law?

12) Must Article 56 TFEU be interpreted, in the light also of the right to a fair procedure under Article 41(1) of the Charter, the right to be heard under Article 41(2)(a) thereof, and of the obligation to give reasons under 41(2)(c), as well as the sincere cooperation clause laid down in Article 4(3) TEU, and the institutional and procedural autonomy of the Member States, as meaning that those requirements are not fulfilled if the competent authority of the Member State does not notify the operator of games of chance of the initiation of administrative penalty proceedings in accordance with national law, and does not subsequently, in the course of the administrative proceedings, obtain that operator’s views on the compliance of the Member State’s legislation with EU law, and — without explaining in detail, in the reasons stated for the decision, that compliance and the evidence supporting it — imposes, in a single-instance procedure, a penalty classified as administrative under national law?

13) In the light of Article 56 TFEU, Article 41(1) and (2)(a) and (c) of the Charter and Articles 47 and 48 thereof, as well as the right to effective judicial review mechanisms and the rights of the defence that those provisions entail, are the requirements laid down in those provisions fulfilled if the operator of games of chance may question the compatibility of the national legislation with EU law for the first time only before the national court?

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15) Having regard to the framework laid down by the law for setting the amount of the administrative penalty that may be imposed, the nature of the activity penalised by the penalty, and, in particular, the extent to which the activity affects public policy and public security, as well as the punitive purpose of the penalty, may the administrative penalty in question be regarded as being “of a criminal nature”, for the purpose of Articles 47 and 48 of the Charter? Does this influence the answers to be given to the 11th to 14th questions?

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52) By that question, the referring court asks essentially whether Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter, preclude a national law, such as that at issue in the main proceedings, which makes no provision for the examination by the court of its own motion of the proportionality of measures restricting the freedom to provide services, within the meaning of Article 56 TFEU, and which places the burden of proof on the parties to the proceedings.

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57) Having regard to all of the foregoing considerations, the answer to Question 10 is that Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that they do not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the ex officio examination of the proportionality of measures restricting the freedom to provide serves within the meaning of Article 56 TFEU and which puts the burden of proof on the parties to the proceedings.

58) By Question 11, the referring court asks essentially whether Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that it is for a Member State, which has put in place restrictive rules, to produce the evidence establishing the existence of objectives able to legitimate a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, or whether it may impose that obligation on the other party to the proceedings.

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60) Having regard to the foregoing considerations, Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that it is for a Member State which has put in place restrictive legislation to provide evidence to prove the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, in the absence of which the national court must draw all the inferences which result from such a failure.

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4) Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights of the European Union, must be interpreted as meaning that they do not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the ex officio examination of the proportionality of measures restricting the freedom to provide serves within the meaning of Article 56 TFEU and which puts the burden of proof on the parties to the proceedings.

5) Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights, must be interpreted as meaning that it is for a Member State which has put in place restrictive legislation to provide evidence to prove the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, in the absence of which the national court must draw all the inferences which result from such a failure.
Paragraphs referring to EU Charter (original language)