Francesco and Letizia Reina v. Landeskreditbank Baden-Württemberg. (Case 65/81) Before the Court of Justice of the European Communities (3rd Chamber)

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1 Francesco and Letizia Reina v. Landeskreditbank Baden-Württemberg. (Case 65/81) Before the Court of Justice of the European Communities (3rd Chamber) ECJ (3rd Chamber) (Presiding, Touffait P.C.; Lord Mackenzie Stuart and Everling JJ.) Sir Gordon Slynn Advocate General. 14 January 1982 [FN1] Reference from Germany by the Verwaltungsgericht (Administrative Court), Stuttgart, under Article 177. European Court procedure. Reference under Article 177. When receiving a reference under Article 177 EEC, the European Court is entitled to confirm whether the matter is being referred to it by a 'court or tribunal' of a member-state. But it may not enquire whether the decision to refer was made in accordance with the rules of judicial organisation and procedure of the lex fori. The European Court will abide by a decision of a court of a member- State making a reference so long as it is not rescinded following an appeal in the national legal system. An objection that the referring court did not sit with the correct number or type of judges is, therefore, not a proper demurrer cognisable by the European Court. [7] FN1 The judgment of the Court has been translated by us, since the Court's own translation was not yet available to us when this report went to press,--ed. Social policy. Aliens. 'Social advantages'. The 'social advantages' which Article 7 (2) of EEC Regulation 1612/68 extends to workers who are nationals of other member-states, include all those benefits which, whether discretionary or granted as of right and whether or not related to a contract of employment, are generally granted to national workers by reason mainly of their status as workers or by the mere fact of their residence in national territory and whose extension to other Community nationals is likely to facilitate their movement within the Community. [12], [17]

2 Social policy. 'Social advantages'. A social benefit, in casu, childbirth loans, which otherwise falls within the definition of 'social advantage' in Article 7 (2) of Regulation 1612/68, will not lose that status merely because it was motivated by demographic *745 (maintenance of the national birthrate) rather than social welfare reasons. [15] The Court interpreted Article 7 (2) of EEC Regulation 1612/68 in the context of childbirth loans granted by the provincial government of Land Baden- Württemberg to German parents resident in the province, a claim for such loan made by a resident Italian couple being refused on nationality grounds, to the effect that, although the loans were instituted in order to encourage the German birthrate and not to relieve poverty and although they were discretionary, they nevertheless constituted 'social advantages', and so must be made available to nationals of other member-states on the same conditions as to German nationals (local residence, low income, etc.). Representation Irene Kessler for the defendant institution. Guido Fienga, avvocato dello stato, for the Italian Government as amicus curiae. Manfred Beschel, of the Legal Service of the E.C. Commission, for the Commission as amicus curiae. The following case was referred to by the Court in its judgment: 1. Ministere Public v. Even (207/78), 31 May 1979: [1979] E.C.R. 2019, [1980] 2 C.M.L.R. 71. The following further cases were referred to by the Advocate General: 2. Fiorini/Cristini v. S.N.C.F. (32/75), 30 September 1975: [1975] E.C.R. 1085, [1976] 1 C.M.L.R Casagrande v. Landeshauptstadt Munich (9/74), 3 July 1974: [1974] E.C.R. 773, [1974] 2 C.M.L.R Unger/Hoekstra v. Bestuur der Bedrijfsvereniging voor Detailhandel en Ambachten (75/63), 19 March 1964: [1964] E.C.R. 177, [1964] C.M.L.R TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE Facts Article 7 (1) and (2) of Council Regulation 1612/68 of 15 October 1968 on freedom of movement for workers in the Community is worded as follows: Article 7

3 (1) A worker who is a national of a member-state may not, in the territory of another member-state, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards *746 remuneration, dismissal and, should he become unemployed, reinstatement or re-employment. (2) He shall enjoy the same social and tax advantages as national workers.' The main action is an administrative law case concerning the grant of a childbirth loan by Landeskreditbank Baden-Württemberg, a public law institution with legal personality and supervised by Land Baden-Württemberg. In compliance with guidelines, issued by the appropriate Land Minister, on the grant of family loans this bank grants loans, on application, 'for the purpose of avoiding, mitigating or eliminating the economic difficulties with which families are confronted' (point 1 of the guidelines) inter alia, on the birth of a child. Loans of this kind on the birth of a child are of a sum up to 8,000 DM which may be increased to 12,000 DM in exceptional cases, according to the directions. They are for a term of seven years and do not bear interest. For this purpose the Landeskreditbank receives subsidies from Land Baden-Württemberg on the basis of credits entered in the State budget. According to the guidelines, couples may apply for a childbirth loan providing that at least one of them is a German national. Persons entitled to apply must, at the date of making the application, have established their usual place of residence in Land Baden-Württemberg. Such loans are granted only if the net average family income of the spouses does not exceed a certain maximum. As stated in the order making the reference, the above-mentioned guidelines by the Minister of Baden-Württemberg are not legal rules which create direct rights in favour of individuals. The referring court defines them, on the contrary, as internal administrative rules which merely oblige the defendant as a subordinate authority, and only in its relations with the Minister, to perform the tasks entrusted to it; the guidelines produce legal effects vis-à-vis an individual only indirectly to the extent that, in applying them, the Landeskreditbank cannot derogate from them without an objective reason in a particular case, as otherwise it will infringe the principle of equality. The referring court states that the grant of childbirth loans is a special characteristic of Land Baden-Württemberg. The loans are said to be intended as benefits which should have a favourable influence on the birth rate in the Federal German Republic and should help to limit the number of voluntary terminations of pregnancy. The plaintiffs in the main action, Francesco and Letizia Reina, are Italian nationals residing in the Federal German Republic as workers. When they had twins, they applied for a childbirth loan. The Landeskreditbank refused the loan on the ground that it could only be granted if at least one of the spouses was German, in accordance with the guidelines on the grant of family loans. *747 The plaintiffs then brought the matter before the Stuttgart Verwaltungsgericht (Administrative Court) to compel the Landeskreditbank to grant them the loan in question.

4 The latter court took the view that its decision depended on the question whether the grant of the loan could be subject to the condition that at least one of the spouses be German, where the applicants were nationals of member-states. The court therefore stayed the proceeding and, pursuant to Article 177 of the EEC Treaty, asked the Court of Justice for a preliminary ruling on the following questions: 1. Must Article 7 (2) of Council Regulation (EEC) 1612/68 of 15 October 1968 on freedom of movement for workers within the Community be construed as meaning that it puts other nationals of the EEC on an equal footing with German nationals if, pursuant to internal administrative rules and without there being any legal entitlement thereto, a loan institute incorporated under public law grants upon application in the event of the birth of a child interest-free loans to married couples whose income does not exceed a certain amount for the purpose of averting, alleviating or removing financial difficulties and in respect of which loans the Land of Baden-Württemberg provides the institute with assistance for the service of debts on the basis of the funds appropriated from time to time in the State budget, with the aim, inter alia, of countering by measures for family assistance the decline in the birthrate in the Federal Republic of Germany and reducing the number of abortions? 2. If Article 7 (2) of Regulation (EEC) 1612/68 is not applicable, is Article 7 (1) of the Treaty establishing the European Economic Community of 25 March 1957 to be construed as meaning that in the circumstances referred to above it precludes discrimination between other nationals of the EEC and German nationals as regards the grant of childbirth loans? Opinion of the Advocate General (Sir Gordon Slynn) Mr. and Mrs. Reina are Italian nationals who have for many years been resident as workers in the Federal Republic of Germany. On 1 October 1979 they applied to the Landeskreditbank, Baden-Württemberg (where they resided) for a childbirth loan, following the birth of their twins. Provision is made for such loans in the 'Guidelines on the grant of Family Loans' issued by the Ministry for Labour, Health and Social Affairs of the Land of Baden-Württemberg. The loans are made by the bank, the cost being borne by the Land, on the conditions set out in 'the Guidelines.' The latter provide that loans shall be granted, free of interest, on account of the birth of a child to married couples ordinarily resident in Baden- Württemberg, whose average monthly income does not exceed a specified amount, but that in order to be eligible for a loan, *748 at least one of the parents must be a German national. The bank refused the application solely on the basis that neither parent was a German national. Mr. and Mrs. Reina instituted proceedings before the Verwaltungsgericht Stuttgart for an order compelling the bank to grant the loan to them. They relied primarily on Article 7 (2) of Council Regulation 1612/68 of 15 October 1968 'on freedom of movement for workers within the Community' which reads as follows: 1. 'A worker who is a national of a member-state may not, in the territory of another member-state, be treated differently from national workers by reason of

5 his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal and, should he become unemployed, reinstatement or re-employment; 2. He shall enjoy the same social and tax advantages as national workers.' Mr. and Mrs. Reina contended that a childbirth loan was a 'social advantage' and that in being refused a loan because of their nationality they were not enjoying the same social advantages as national workers. The bank argued that this loan was not a social advantage; that it was bound to observe the conditions set out in the Guidelines which did not in any event confer a legal right to a loan, the grant of which remained discretionary. The Verwaltungsgericht thereupon referred two questions to this Court, the first of which reads as follows: 'Must Article 7 (2) of Regulation (EEC) 1612/68 be construed as meaning that it puts other nationals of the EEC on an equal footing with German nationals if, pursuant to internal administrative rules and without there being any legal entitlement thereto, a loan institute incorporated under public law grants upon application in the event of the birth of a child interest-free loans to married couples whose income does not exceed a certain amount for the purpose of averting, alleviating or removing financial difficulties and in respect of which loans the Land of Baden-Württemberg provides the institute with assistance for the service of debts appropriated from time to time in the State budget, with the aim, inter alia, of countering by measures for family assistance the decline in the birthrate in the Federal Republic of Germany and reducing the number of abortions?' The bank takes a preliminary objection to this Court's jurisdiction to answer that question, on the ground that the order was not made by a properly constituted tribunal. It observes that the order to stay proceedings and to refer a question to the Court was made only by three professional judges whereas section 5 (3) of the Verwaltungsgerichtsordnung (the German law prescribing procedure before administrative tribunals) provides that an administrative tribunal deciding upon cases at first instance should consist of three professional and two lay judges. *749 It is, of course, for the Court to decide whether a body asking the Court to give a ruling under Article 177 of the EEC Treaty is 'any court or tribunal of a member-state'. It is not contested that the Verwaltungsgericht is a tribunal of a member-state so that question does not arise. Whether the tribunal is properly constituted for the purpose of making an order under its own rules of procedure is a different question. In Case 75/63 Hoekstra v. Bedrijfsvereniging voor Detailhandel en Ambachten [FN2] it was objected that the questions were formulated and transmitted by the President of the national tribunal rather than by the tribunal as a whole in its judgment; yet the Court answered the questions. I am not satisfied on the material before the Court that there is a defect here (in the sense that the reference could not be made and signed by the three professional judges) which vitiates the reference, and in my opinion the reference should be regarded as being admissible. FN2 [1964] E.C.R. 177, [1964] C.M.L.R. 319 (Sub nom. Unger).

6 According to the Preamble to the Guidelines on the Grant of Family Loans, the system was established 'in order to avoid the economic difficulties confronting families, single parents and pregnant women or to reduce or remove their impact.' According to clause 6 of the same Guidelines 'a family loan is designed for the promotion of the family'. In its order for reference, the Verwaltungsgericht referred this Court to passages from the records of debates in the Landtag of the Land of Baden-Württemberg, indicating that the promoters of the scheme were concerned at the low birth rate and the large number of terminations of pregnancies in the Land, and hoped to resist this trend by offering assistance for pregnant women with financial difficulties. The loans formed part of that assistance. Together with the factors mentioned by the Verwaltungsgericht in its first question, these considerations indicate that the loans are to be considered, prima facie, as a form of social assistance. Nevertheless, it was contended on behalf of the bank that they do not amount to social advantages within the meaning of Article 7 of Regulation 1612/68 since there is no connection whatever between the grant of the loan and the recipient's status as a 'worker', nor do they do anything to affect the mobility of workers within the Community. It was said that the loans were issued for demographic purposes; and could not on any basis be described as ' conditions of employment' in the sense of Article 48 (2) of the EEC Treaty. It is obviously arguable that Article 7 (2) should be construed as covering only social advantages accorded to national workers qua workers. The Court has, however, already decided that the term 'social advantages' in Article 7 (2) of Regulation 1612/68 cannot be construed restrictively, and in particular it cannot be limited to benefits connected with the contract of employment itself. I refer to Case 32/75, Cristini v. Societe Nationale des Chemins de Fer *750 Francais [FN3] and to Case 207/78, Ministere Public v. Even. [FN4] Moreover, Article 49 imposes on the Council the duty to make regulations setting out the measures required to bring about freedom of movement for workers, 'in particular', the measures listed thereafter. The phrase 'in particular' indicates that the ensuing list is not exhaustive. Rules governing eligibility for benefits of a social character, which discriminate between nationals of the different member-states, are, it seems to me, capable of constituting obstacles to the freedom of movement of workers, even though they are not connected with the contract of employment. Such rules may therefore be eliminated by means of legislation adopted in accordance with Article 49 of the EEC Treaty. FN3 [1975] E.C.R. 1085, 1094, [1976] 1 C.M.L.R. 573 (Sub nom. Fiorini). FN4 [1979] E.C.R. 2019, 2034, [1980] 2 C.M.L.R. 71, 82. Such an approach seems to me to be consistent with the Court's reasoning in Case 9/74 Casagrande v. Landeshauptstadt München [FN5] where it was decided that the prohibition of discrimination on grounds of nationality in Article 12 of Regulation 1612/68 extends not only to rules relating to the admission of children to schools but also to general measures intended to facilitate

7 educational attendance. FN5 [1974] E.C.R. 773, [1974] 2 C.M.L.R The fact that a social advantage may be conferred for reasons of demographic policy, among other considerations, does not seem to me to prevent it from falling within Article 7 (2). As Trabucchi A.G. observed in the Cristini case [FN6]: 'What is involved is undoubtedly a social advantage whose potential or actual connection with a policy of population growth could not change its chief characteristic which is that it be related to family responsibilities.' FN6 At p (E.C.R.), 577 (C.M.L.R.) I do not, therefore, accept the bank's argument that, because the scheme for childbirth loans was not designed to impose a disability on foreigners but to compensate for the low birth rate among German nationals relative to that of the alien population, that concludes the question against Mr. and Mrs. Reina. Even if the birth rate is relatively high among all migrant workers, as appears to be contended, the fact remains that these loans are granted on the basis of need to families with low incomes. A worker who is a national of another member-state is entitled to the same social advantages as national workers in this respect. Nor can I accept the bank's argument that the loans in question fall outside the scope of 'social advantages' by reason of the fact that each member-state retains the power to treat its own nationals and foreigners differently as far as civil rights and obligations are concerned. There are, of course, matters which fall within the sphere of civil rights and outside the field of application of Articles 48 to 51 of the EEC Treaty and the legislation adopted thereunder. *751 I do not consider that childbirth loans, of the kind at issue in this case, are to be categorised as civil rights outside the scope of Articles 48 to 51 of the EEC Treaty. In my view, the bank's argument derives no support from the Gilbert Even case upon which the bank relies. That case was concerned with a scheme providing for benefits for victims of war, the essential object of which was 'to offer to Belgian workers who fought in the allied forces between 10 May 1940 and 8 May 1945 and suffer incapacity for work attributable to an act of war a testimony of national recognition... and to grant them... a benefit by reason of the services thus rendered to their country'. [FN7] Such a benefit, based on a scheme of national recognition, could not be considered as a 'social advantage' within the meaning of Article 7. It is, indeed, to be noted that in that case the Court considered as falling within Regulation 1612/68 advantages which 'whether or not linked to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of their residence on the national territory and the extension of which to workers who are nationals of other member-states therefore seems suitable to facilitate their mobility within the Community.' [FN8] The particular benefit was not one 'granted to a national worker by reason primarily of his status of worker or resident on the national territory and for that reason does not fulfil the essential characteristics of

8 the "social advantages" referred to in Article 7 (2)'. FN7 At para. [12]. FN8 At para. [22]. The bank further contended that there is an objective justification for the policy of discriminating between German nationals and aliens, since in the course of the period allowed for the repayment of a loan, which extends to seven years, many migrant workers return to their countries of origin. It is said that it is often difficult to find the new addresses of such workers and that the recovery of the loan in such cases entails additional legal and administrative costs. It is possible that such considerations might warrant the imposition of conditions designed to protect the bank in the event of the departure from the jurisdiction of recipients of loans. They cannot, however, warrant the exclusion of nationals of other member-states from the entire scheme, even when such nationals are firmly settled in the Land of Baden-Württemberg, particularly when German nationals are eligible for the loans irrespective of any intention to change their domicile. Finally the bank contended that the loans in question could not amount to social advantages within the meaning of Article 7 of Regulation 1612/68 because, by contrast with the concessionary fares in the Cristini case, they were not granted as a matter of right, but only on a discretionary basis. The argument is not that Community law cannot give an entitlement to what would otherwise be a *752 discretionary benefit but that a discretionary benefit is not a 'social advantage' within the meaning of Article 7 (2). The consequences of accepting such a proposition would be extremely wide, since it is not uncommon to find social benefits accorded by national authorities on a discretionary basis to those in need; if all these benefits were to be excluded from the concept of 'social advantages' one would expect to find it expressly stated in the Article. It is not so stated: on the contrary the reference is to 'social advantages' and not to 'social rights.' The exclusion of nationals of other member-states from the opportunity to be considered for such benefits would constitute an important obstacle to the free movement of labour. For these reasons I conclude that the term 'social advantages' in Article 7 includes benefits of a discretionary nature. Accordingly, I am of the opinion that the first question should be answered in the affirmative. If that view is accepted it is unnecessary to reply to the Verwaltungsgericht's second question, which this Court is asked to answer only in the event of its giving a negative reply to the first question. By the second question this Court is asked whether Article 7 of the EEC Treaty precludes discrimination between German nationals and nationals of other member-states as regards the grant of childbirth loans. That Article provides, in part, that 'Within the scope of application of this Treaty, and without prejudice to any special conditions contained therein, any discrimination on grounds of nationality shall be prohibited.' For the reasons that I have already given, the terms and conditions governing the award of childbirth loans may amount to obstacles to the freedom of movement

9 of labour, which are to be removed in accordance with Article 49. To that extent, such terms and conditions fall within the scope of application of the Treaty, and would be encompassed by the general rule contained in Article 7 if they were not covered by the specific application of that rule, contained in Article 7 of Council Regulation 1612/68. For these reasons I am of the opinion that the Court should answer the Verwaltungsgericht's first question as follows: If in any member-state provision is made (pursuant to internal administrative guidelines and without there being any legal entitlement thereto) for the grant of interest-free loans, by a loan institute incorporated under public law, to married couples, on the birth of a child, on condition that the income of the couple does not exceed a certain amount, and with the object of averting, alleviating or removing financial difficulties, and in circumstances such that the responsible government provides the institute with assistance from public funds for the service of those debts on the basis of the funds appropriated from time to time in the State budget (and even if this is done with the aim, inter alia, of countering by measures for family assistance the decline in the birth rate in the member-state and *753 reducing the number of abortions) such loans amount to 'social advantages' within the meaning of paragraph 2 of Article 7 of Regulation 1612/68, and accordingly all workers who are nationals of any member-state are eligible for such loans on the same basis as nationals of the State in which such loans are available. JUDGMENT [1] By an order of 17 February 1981, received by the Court on 30 March 1981, the Verwaltungsgericht Stuttgart requested a preliminary ruling, pursuant to Article 177 of the EEC Treaty, on two questions concerning the interpretation of Article 7 (1) of the EEC Treaty and Article 7 (2) of Council Regulation 1612/68 of 15 October 1968 on freedom of movement for workers in the Community. [2] These questions have been raised in the course of an administrative law action relating to the grant of a childbirth loan, between a married couple, both workers and Italian nationals residing in the Federal German Republic, and Landeskreditbank Baden-Württemberg, a public law institution under the supervision of Land Baden-Württemberg. [3] In compliance with guidelines issued by the appropriate authority of Land Baden-Württemberg, the Landeskreditbank grants loans on application, inter alia, on the birth of a child. The loans are interest-free as a result of Land subsidies, are for a term of seven years and for sums up to 8,000 DM, which may be increased to 12,000 DM in exceptional cases. They can only be granted to couples if at least one of the spouses is a German national and if the net family income does not exceed a certain maximum. According to information supplied by the national court, this system of childbirth loans was introduced to increase the German birth rate and to limit the number of voluntary terminations of pregnancy. [4] In the present case the plaintiffs in the main action, Mr. and Mrs. Reina,

10 applied for a loan when they had twins. The Landeskreditbank Baden- Württemberg refused the loan on the ground that, according to the abovementioned guidelines, a loan could only be granted if at least one of the spouses was a German national. Mr. and Mrs. Reina therefore brought the matter before the Verwaltungsgericht Stuttgart, pleading that this condition was incompatible with Community law. [5] Finding that a decision by the Court of Justice was necessary before it could give judgment, the Verwaltungsgericht Stuttgart has submitted the following questions: 1. Must Article 7 (2) of Council Regulation (EEC) 1612/68 of 15 October 1968 on freedom of movement for workers within the Community be construed as meaning that it puts other nationals of the EEC on an equal footing with German nationals if, pursuant to internal administrative rules and without there being any legal *754 entitlement thereto, a loan institute incorporated under public law grants upon application in the event of the birth of a child interest-free loans to married couples whose income does not exceed a certain amount for the purpose of averting, alleviating or removing financial difficulties and in respect of which loans the Land of Baden-Württemberg provides the institute with assistance for the service of debts on the basis of the funds appropriated from time to time in the State budget, with the aim, inter alia, of countering by measures for family assistance the decline in the birthrate in the Federal Republic of Germany and reducing the number of abortions? 2. If Article 7 (2) of Regulation (EEC) 1612/68 is not applicable, is Article 7 (1) of the Treaty establishing the European Economic Community of 25 March 1957 to be construed as meaning that in the circumstances referred to above it precludes discrimination between other nationals of the EEC and German nationals as regards the grant of childbirth loans? Procedure [6] The Landeskreditbank disputes the admissibility of the request for a preliminary ruling on the ground that the order making the reference was not made by the Verwaltungsgericht as properly constituted. The decision is said to have been made by three career judges of the Verwaltungsgericht whereas the relevant provisions of German procedural law required two non-professional judges in addition also to take part. [7] In this connection it should be pointed out that, pursuant to Article 177 of the Treaty, the Court has jurisdiction to give preliminary rulings on questions of Community law submitted to it by a court of one of the member-states. According to the wording of this provision, it is for this Court to consider, in order to verify its own jurisdiction, whether the matter is referred to it by a court of a member-state. It is not the Court's responsibility, however, having regard to the distribution of duties between it and the national court, to verify whether the decision to refer the matter to it was made in accordance with the rules of judicial organisation and the procedural rules of national law. The Court must therefore abide by a decision making a reference and originating from a court of a member-state so

11 long as it is not rescinded as a result of an appeal for which provision may be made by national law. [8] It follows from these considerations that the Court, when a matter is brought before it by a court of a member-state pursuant to Article 177 of the Treaty, has jurisdiction by virtue of that provision to reply to the question submitted, and it is unnecessary to consider beforehand whether the decision making the reference was taken in accordance with the judicial organisation rules and procedural rules of national law. The first question [9] With the first question the national court is in effect asking *755 whether Article 7 (2) of Council Regulation 1612/68 of 15 October 1968 must be interpreted to mean that the definition of 'social advantage' referred to by that provision covers interest-free childbirth loans, granted by a public law credit institution on the basis of guidelines of and with financial aid from the State, to low-income families for the purpose of encouraging the birth rate. [10] The Landeskreditbank submits first, that this provision cannot be applied to the loans in question because there is no connection whatever between the grant of the loan and the recipient's status as a worker, and because refusal of the loan would in no way obstruct the mobility of workers in the Community. [11] It should be pointed out that Article 7 (1) of Regulation 1612/68, which was adopted to implement Article 49 of the Treaty in particular, in order to bring about freedom of movement for workers in the Community, lays down that a worker who is a national of a member-state cannot, by reason of his nationality, be treated differently in the territory of other member-states from workers who are nationals of those States with regard to any conditions of employment and labour. Paragraph (2) of the same Article adds that the worker shall receive the same social advantages and tax benefits in those States as workers who are nationals. [12] As the Court has repeatedly held, most recently in the judgment of 31 May 1979 (Case 207/78 Even), [FN9] it follows from these provisions, and from their intended purpose, that the benefits which the regulation extends to workers who are nationals of other member-states include all those which, whether or not related to a contract of employment, are generally granted to national workers, by reason mainly of their objective status as workers or by the mere fact of their residence in national territory, and the extension of which to workers who are nationals of other member-states appears likely to facilitate their mobility in the Community. FN9 [1979] E.C.R. 2019, [1980] 2 C.M.L.R. 71. [13] It follows that childbirth loans such as those referred to by the national court satisfy, in principle, the criteria enabling them to be classified as social advantages to be granted to workers of all member-states without any discrimination whatever by reason of nationality, particularly because the object

12 of the loans is to lighten the financial burden, for low-income families, connected with the birth of a child. [14] The Landeskreditbank disputes this conclusion by submitting that childbirth loans, such as those in the present case, do not come within the definition of social advantage for the purpose of Article 7 (2) of Regulation 1612/68, because they are granted mainly for reasons of demographic policy in the sense that they are intended to counteract the fall in the German birth rate. Therefore, it is said, this is a measure adopted in the field of political rights and is *756 necessarily related to nationality, and as a result it does not come within the ambit of Articles 48 et seq. of the Treaty and the regulations adopted to implement those provisions. [15] It must be observed that it is in principle open to member-states to pursue, in the absence of any Community powers with regard to demographic policy as such, the aims of such a policy, even if by means of social measures. However, it does not follow that the Community is exceeding the limits of its power merely because to exercise the power would affect measures adopted in implementation of that policy. Consequently such childbirth cannot be considered not to be covered by the Community law rules relating to freedom of movement for persons and, more specifically, by Article 7 (2) of Regulation 1612/68 merely because the loans are granted for demographic policy reasons. [16] The Landeskreditbank also contends that the loans in question constitute voluntary benefits which are granted within the limit of the budget funds voted for this purpose, so that there is no automatic right to receive the benefits. Likewise, it is said to be justified to take account of the fact that many foreign workers return to their country of origin before expiry of the period fixed for repayment of the loan, which would thereby be put at risk. [17] On this subject it should be observed, however, that the definition of ' social advantage' referred to by Article 7 (2) of the regulation covers not only benefits granted by right but also those granted on a discretionary basis. In the latter case the principle of equal treatment requires that access to the benefits be open to nationals of other member-states under the same conditions as to nationals on the basis of the same guidelines which govern loans to nationals. [18] Therefore the reply to the first question should be that Article 7 (2) of Council Regulation 1612/68 of 15 October 1968 must be interpreted to mean that the definition of 'social advantage' referred to by this provision covers interest-free childbirth loans, granted by a public law credit institution on the basis of guidelines of and with the financial assistance of the State, to low-income families for the purpose of encouraging the birth rate. Such loans must therefore be granted to workers of other member-states under the same conditions as to workers who are nationals. The second question The second question was only submitted in the event of a negative reply to the first and therefore requires no reply.

13 Costs [19] The costs incurred by the Italian Government and the Commission, which have submitted observations to the Court, are *757 not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court. Order On these grounds, THE COURT (Chamber Three), in answer to the questions referred to it by the Verwaltungsgericht Stuttgart by order dated 17 February 1981, HEREBY RULES: Article 7 (2) of Council Regulation 1612/68 of 15 October 1968 must be interpreted to mean that the definition of 'social advantage' referred to by this provision covers interest-free childbirth loans, granted by a public law credit institution on the basis of guidelines of and with the financial assistance of the State, to low-income families for the purpose of encouraging the birth rate. Such loan must therefore be granted to workers of other member-states under the same conditions as to workers who are nationals. (c) Sweet & Maxwell Limited [1982] 1 C.M.L.R. 744 END OF DOCUMENT