Fratila & Anor v Secretary of State for Work and Pensions [2021] UKSC 53

Romanian nationals with pre-settled status under the EU Settlement Scheme challenged refusal of universal credit as nationality discrimination under EU law. The Supreme Court held that EU citizens without EU law residence rights cannot claim equal treatment under Article 18 TFEU for social assistance benefits.

Facts

The respondents were two Romanian nationals present in the United Kingdom whose right to reside arose solely from pre-settled status granted under the EU Settlement Scheme (EUSS). They applied for Universal Credit, which was refused. The Social Security (Income-related Benefits) (Updating and Amendment) (EU Exit) Regulations 2019 prevented leave to remain arising from pre-settled status from constituting a qualifying right of residence for eligibility for relevant non-contributory benefits.

The respondents challenged the refusals by judicial review, contending that the 2019 Regulations should be quashed as contrary to the prohibition on nationality discrimination in Article 18 TFEU.

Procedural History

Swift J dismissed the claim at first instance, holding that whilst the respondents could rely on Article 18 TFEU, the Regulations gave rise only to indirect discrimination which was justified. The Court of Appeal allowed the appeal (Dingemans LJ dissenting), concluding that the discrimination was prohibited by EU law and justification did not arise.

Issues

Principal Issues

The Supreme Court identified two principal issues:

1. Whether the respondents were entitled to rely on Article 18 TFEU by virtue of being granted a domestic law right of residence, namely pre-settled status.
2. If so, whether the 2019 Regulations breached Article 18 TFEU; specifically whether the discrimination was direct (incapable of justification) or indirect (and if indirect, whether justified).

Judgment

The CJEU Decision in CG

Prior to the Supreme Court hearing, the CJEU delivered judgment in CG v Department for Communities in Northern Ireland (Case C-709/20), which addressed materially similar regulations. The Supreme Court noted that this judgment had binding force in the United Kingdom by virtue of the Withdrawal Agreement.

Lord Lloyd-Jones summarised the CJEU’s reasoning:

The CJEU concluded that an EU citizen can claim equal treatment in respect of social assistance only if his or her residence in the territory of that member state complies with the conditions of the Directive.

The CJEU held that the principle of non-discrimination is given specific expression in Article 24 of Directive 2004/38/EC in relation to EU citizens exercising their right to move and reside within member states. Therefore, Article 18 TFEU does not apply independently where specific non-discrimination provisions exist.

Application to the Present Case

Lord Lloyd-Jones stated:

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.

It was common ground that the respondents did not reside in the United Kingdom in accordance with the Directive at the time of their claims. They could not therefore rely on the EU principle of non-discrimination to claim equal treatment.

The Respondents’ New Argument

The respondents sought to raise an entirely new case based on the Charter of Fundamental Rights of the European Union. The Court refused to permit this:

While an appellate court will always be cautious before permitting a new point to be raised for the first time on appeal, it would clearly be inappropriate to do so where, as in the present proceedings, the new case would raise issues of fact which have not been determined.

Implications

This decision confirms that EU citizens residing in the United Kingdom on the basis of purely domestic law rights (such as pre-settled status) cannot invoke Article 18 TFEU to claim equal treatment regarding social assistance benefits. Equal treatment claims must be assessed under Article 24 of Directive 2004/38/EC, which requires residence to comply with the conditions of that Directive.

The decision clarifies the scope of EU non-discrimination protections following Brexit and during the transition period, limiting access to social security benefits for EU nationals who lack EU law-derived residence rights.

Verdict: Appeal allowed. The respondents, as EU citizens with only pre-settled status (a domestic law right of residence), could not rely on Article 18 TFEU to claim equal treatment in respect of entitlement to universal credit, as their residence did not comply with the conditions of Directive 2004/38/EC.

Source: Fratila & Anor v Secretary of State for Work and Pensions [2021] UKSC 53