Gransian Ltd & Anor, R (on the application of) v Secretary of State For the Home Department

EU Treaty rights do not give a third-country national an immigration right merely because he or she is connected with a company incorporated in a Member State. The relevant freedom to provide services principles protect a genuine undertaking established and operating in one Member State which temporarily transfers its existing staff to another Member State. They do not permit a newly formed shell company to recruit a third-country national with no prior economic relationship to the undertaking. Member States retain control of third-country immigration, subject to applicable EU rights. A claim founded on such an artificial arrangement may be wholly without merit.

Mr Zhou, a Chinese national with no leave to remain in the United Kingdom, faced removal to Austria under the Dublin arrangements. While earlier judicial review proceedings were pending, he and his wife acquired an Irish company and formed an English subsidiary. He claimed that the company’s rights under Articles 43 and 48 of the EC Treaty prevented his removal because he could work for the Irish company in the United Kingdom.

The renewed application for permission to bring judicial review proceedings relied principally on Loutchansky, [2005] EWHC 1779 (Admin), and the Court of Justice decisions in Rush Portuguesa Lda v Office nationale d'immigration and Raymond Vander Elst v Office des Migrations Internationales. The central issue was whether those authorities extended EU company or services rights to the proposed arrangement.

1. Application dismissed. The claim disclosed no arguable EU law basis capable of preventing the Secretary of State’s immigration decision. The court did not need to determine abuse of rights because no relevant EU right was engaged.
2. The principles in Rush Portuguesa Lda v Office nationale d'immigration, [1990] EUECJ C-113/89, and Raymond Vander Elst v Office des Migrations Internationales, [1994] ECR 1-3803, concern a business lawfully established and genuinely operating in one Member State which undertakes economic activity in another Member State. Subject to proportionality and other EU principles, it may transfer its existing staff for the relevant work without being placed at a competitive disadvantage by additional work-permit requirements.
3. Those principles require a prior economic relationship between the undertaking and the workers. They do not apply where there is no genuine and effective commercial undertaking in the first Member State, no prior business activity, and no prior employment relationship with the proposed worker.
4. Article 43 and Article 48 do not create a freestanding immigration right for a third-country national merely because he or she is a director, shareholder or worker of an EU company. A company establishing itself for the first time in the United Kingdom must recruit labour under national rules, in the same position as a newly established domestic company.
5. The facts showed an Irish company with no activity in Ireland, acquired shortly after the claimant’s temporary admission, whose only proposed activity and worker were in the United Kingdom. The arrangement could not engage the non-discrimination principle. The court agreed with the observations of Sullivan J and Pitchford J that the claim was an empty device or vessel.
6. The claimants were ordered jointly and severally to pay £1,964, including the previously ordered £480. A further order was made against the claimant solicitors under CPR 44.14 because their advice, involvement in similar claims, failure to serve and lodge material properly, excessive bundle and pursuit of a wholly meritless claim amounted to unreasonable conduct. There was to be only one recovery.

The judgment records an earlier permission refusal by Pitchford J on 21 October 2008. Permission was refused on the papers, and the renewed application was dismissed by the High Court (Administrative Court).