The Court of Justice of the European Union has found in the case of C-165/16 Lounes that EU citizens who move to the UK and later naturalise as British retain their free movement rights under EU law even though they have become British. The court has held that the UK has wrongly been refusing to recognise free movement rights for such EU citizens since 2012.

The case has particular significance to those EU citizens who have naturalised as British following the Brexit referendum because it means that the UK has wrongly been denying them their EU law rights in the meantime. The victory is a Pyrrhic one for them, perhaps, because after Brexit these rights will be lost, unless the UK agrees that free movement law continues in some form, for example with a transitional deal.

The judgment does not just apply to EU citizens coming to the UK, though. It has considerable signficance across the EU for the integration of long term residents from other EU countries.

The case concerns a Spanish national who came to the UK in 1996, Ms Lounes. She acquired permanent residence automatically some years later and then naturalised as a British citizen in 2009. She later married an Algerian national in the UK. The question was whether her husband could accompany her in the UK on the basis of EU law or whether he would have to meet strict UK rules on spouses, which would in effect mean that he would not be allowed to live in the UK and the couple would either have to separate or move to another country.

The court held that Directive 2004/38/EC does not apply to Ms Lounes or her husband, but that equivalent rights could be drawn instead from Article 21 of the Treaty on the Functioning of the EU. This follows the approach proposed by the Advocate General, on which we previously reported. The rights are often referred to as “derived rights of residence”.

The problem with directly relying on the Directive itself arises from Article 3, which reads:

This Directive shall apply to all Union citizens who move to or reside in a Member State other than that of which they are a national, and to their family members as defined in point 2 of Article 2 who accompany or join them.

The court confirmed that this must be interpreted as meaning that a person who naturalises in the host state (for example a French citizen who lives in the UK and naturalises as British) loses the benefit of the Directive on acquiring the nationality of the host state.

This is not the end, though. In a series of cases unbeloved by the UK government, the Court of Justice has relied on Article 21 TFEU to go beyond the Directive and give life to the right of free movement around the EU. This is not novel: see Chen, Baumbast, Ibrahim and Teixera, Zambrano, Dereci, and O and B v Netherlands, to name just a few. In this vein, the Court concludes here in Lounes:

A national of one Member State who has moved to and resides in another Member State cannot be denied that right merely because he subsequently acquires the nationality of the second Member State in addition to his nationality of origin, otherwise the effectiveness of Article 21(1) TFEU would be undermined.

It is worth quoting the reasoning in full:

54 In the first place, denying him that right would amount to treating him in the same way as a citizen of the host Member State who has never left that State, disregarding the fact that the national concerned has exercised his freedom of movement by settling in the host Member State and that he has retained his nationality of origin.

55 A Member State cannot restrict the effects that follow from holding the nationality of another Member State, in particular the rights which are attendant thereon under EU law and which are triggered by a citizen exercising his freedom of movement.

56 In the second place, the rights conferred on a Union citizen by Article 21(1) TFEU, including the derived rights enjoyed by his family members, are intended, amongst other things, to promote the gradual integration of the Union citizen concerned in the society of the host Member State.

57 Union citizens, such as Ms Ormazabal, who, after moving, in the exercise of their freedom of movement, to the host Member State and residing there for a number of years pursuant to and in accordance with Article 7(1) or Article 16(1) of Directive 2004/38, acquire the nationality of that Member State, intend to become permanently integrated in that State.

58 As is stated, in essence, by the Advocate General in point 86 of his Opinion, it would be contrary to the underlying logic of gradual integration that informs Article 21(1) TFEU to hold that such citizens, who have acquired rights under that provision as a result of having exercised their freedom of movement, must forego those rights –– in particular the right to family life in the host Member State –– because they have sought, by becoming naturalised in that Member State, to become more deeply integrated in the society of that State.

The court went on to observe that treating EU citizens who have naturalised and therefore integrated in accordance with the purpose of free movement laws worse than EU citizens who have not naturalised would be perverse. Indeed, but one suspects that the British government would say with a straight face that integrating means losing rights and levelling down to the situation of UK citizens, who have very restricted family reunion rights.

What should those affected by Lounes do now?

Any EU citizens who have naturalised as British and who have been denied their free movement rights should now consider re-applying. Legal advice may be helpful in some cases, but on the face of it the UK will have to amend its approach very quickly and such applications should now succeed. The demand for residence documents created by Brexit and the Home Office’s failure to recruit more staff to meet that demand has caused long waiting times to develop, however.

At this point there is no reason to think that a family member of a naturalised British citizen who enters the UK under the Lounes judgment will not be allowed to remain after Brexit. However, the UK has been basically silent on other categories of third country national who rely on derived rights of residence, such as Zambrano carers, so this is by no means certain.

There is also the question of whether those who derive a right of residence from the Treaty in this way and not from Directive 2004/38/EC will ever acquire a right of permanent residence. At the moment, the UK says they do not. There is some authority for this: in C-529/11 Alarape the CJEU itself found that some forms of derived rights do not lead to the acquisition of permanent residence. This was applied to Chen derived residence cases by the Upper Tribunal in the case of Bee and another (permanent/derived rights of residence) [2013] UKUT 83 (IAC).

As Lounes shows, the UK can be and often is wrong about the interpretation of EU law, though. So, often, is the tribunal. Paragraph 60 of Lounes certainly opens the door to the argument that permanent residence can be acquired by Lounes family members:

It follows from the foregoing that, if the rights conferred on Union citizens by Article 21(1) TFEU are to be effective, citizens in a situation such as Ms Ormazabal’s must be able to continue to enjoy, in the host Member State, the rights arising under that provision, after they have acquired the nationality of that Member State in addition to their nationality of origin and, in particular, must be able to build a family life with their third-country-national spouse, by means of the grant of a derived right of residence to that spouse.

The current refusal of the UK government to countenance derived rights holders ever acquiring EU law permanent residence may not matter here in the UK with Brexit around the corner: the UK could easily say that those with derived rights of residence are lawfully resident and will be allowed to acquire settled status if they apply and pass the criminal records and ongoing residence tests. This seems to me to be arguably implicit in the UK offer so far but it would helpful for it to be explicit.

As things stand, it remains possible that the UK would deny settled status to those from outside the EU who currently benefit from EU law rights of residence.