From a formalist to a substantive understanding of equal treatment in higher education (Case C-20/12 Giersch)
The case Giersch, decided on the 20th of June, dealt with residence-based restrictions on financial aid for students. According to Luxembourg law, students received financial aid if they were residents in Luxembourg, regardless of nationality. The measure was challenged on the basis of Article 7(2) of Reg No 1612/68 (now Reg No 492/2011), which requires equal treatment in regard to social advantages, which also includes financial grants for children of workers who are students (Bernini).
The plaintiffs were children of frontier workers employed in Luxembourg, who would not receive student aid, however, because they had not resided in Luxembourg. The Court found the residence requirement to be indirectly discriminatory. Luxembourg replied that the measure was justified as a means of „increasing the proportion of residents with a higher education degree in order to promote the development of the economy“. The Court accepted this as a legitimate objective able to justify differential treatment, and also recognized that a residence requirement could be an appropriate instrument to achieve that goal.
It has been long recognized by the Court that a Member State may reserve student aid to individuals who have a sufficiently close connection to that Member State (see below). However, the Luxembourg measure failed the necessity test because it employed residency as the sole indicator of such connection. As the measure does not take into account the situation of the children of frontier workers who do not reside in Luxembourg, the measure fails the least-restrictive-means requirement. According to the Court, the measure
„[…] precludes the taking into account of other elements potentially representative of the actual degree of attachment of the applicant for the financial aid with the society or with the labour market of the Member State concerned, such as the fact that one of the parents, who continues to support the student, is a frontier worker who has stable employment in that Member State and has already worked there for a significant period of time.“
Equal treatment in higher education has long been an important issue to the Court. At the same time, the Court had to learn to acknowledge the multiple political and financial limitations within which Member States have to organize their higher education systems. While the Court’s case law on higher education is usually separated into cases on the access to higher education on the one hand, and those on financial aid for students on the other, I would suggest that the Court’s case law has moved into a similar direction in both. Until the early 2000s, the Court used to apply a very formalist, competence-oriented approach: financial aid is formally outside the scope of the Treaty, so Member States can discriminate on grounds of nationality as they please (Brown, 1988); whereas university access is inside the scope of the Treaty, thus a strict equal treatment requirement is enforced (Forcheri, 1984, and Gravier, 1985). However, in later cases this formalist approach made it difficult for the Court to acknowledge the complex issues Member States faced in the field of higher education. This is exemplified in the Austrian and Belgian university access cases (2005).
Both countries had organized their university systems based on the principle of open access, i.e., without entry exams and without numerus clausus. Germany and France, however, restricted access to their own universities, and therefore were liable to push their students into the open systems of their smaller neighbors. The Austrian system required students with a non-Austrian highschool diploma to provide proof that they have a study place available in their home country (i.e., an indirectly discriminatory measure). The effect of the measure was that students from open-access countries could study in Austria without problems, whereas students from countries with access limitations – among them, not incidentally, Germany – would be effectively restricted. Austria argued that without this restriction the number of students would be drastically higher, thereby threatening the financial equilibrium of the education system. The Court found the measure not justifiable on grounds of the public interest. Inter alia, the Court proposed that entry restrictions (like exams) could constitute a non-discriminatory alternative to the Austrian measure that would ensure no excessive rise in student numbers.
But this proposition made sense only from a completely formalist perspective that ignores the broader policy questions. Not only did this approach ignore the fact that big countries like Germany and France had designed their higher education systems without any regard to the adverse effects they might have on their tiny neighbors; but also did it ignore that some people simply find open access to universities a commendable policy in itself. A few years later, the Court moved away from this purely formalist approach. In Bressol (2010), the Court not only held that the choice between open and restricted university access was one for the Member States to make, but it also found a quota on non-resident students for certain para-medical studies justifiable in the light of the unsolved problems arising from the fact that the Member States organize their higher education systems in ways that create adverse effects for other Member States. It could be argued that as long as countries like Germany or France are not willing to consider the effects that their policy choices have on their neighbors, it would be deeply problematic to enforce a formalist equal treatment requirement that has the effect of shifting the burden on the small Member States.
A similar move from a formalist towards a substantive understanding is perceivable in regard to student aid. In Brown (1988), the Court had argued that the issue of social benefits for students fell outside the scope of the Treaty, so that the Treaty’s non-discrimination requirement was therefore not applicable. In Grzelczyk (2001) and Bidar (2005), however, the Court moved away from this purely formalist approach. While acknowledging that a Member State may reserve social benefits to individuals that have a certain connection to the society of that state, the same states also have a responsibility to individuals that do in fact have such connection. Giersch continues this approach. The Court acknowledges that social benefits can be limited, but rejects limitations that are based on purely formalist, nationality- or residence-based criteria.
In slightly non-technical terms, the Court’s current approach in the field of higher education requirements could be expressed as follows: the Court acknowledges the financial and political pressures that Member States have to deal with, as well as the fact that different Member States may find very different regulatory solutions to these challenges. A purely formalist equal-treatment approach is simply unhelpful to conceptualize the complexities of the regulation of higher education in Europe today. However, the Court requires the Member States to go beyond formalist (both competence-based and nationality-based) arguments, too. In particular, the Court requires Member States to re-think their political goals in ways where nationality no longer is a criterion. In Bressol, for example, where Belgium expressed concerns that it might not get a sufficient number of medical personnel in the future, the Court suggested that the solution might not lie in restrictions on non-residents, but in an attractive work environment that entices professionals to stay, regardless of nationality. In Giersch, the Court essentially makes a similar point: why would you disadvantage the smart kids you want to entice to reside in your country just because they happened to grow up on the other side of the border?
 Para 83