Fratila & Anor, R (on the application of) v Secretary of State for Work and Pensions & Anor

The claim challenged regulation 9(3)(c)(i) of the Universal Credit Regulations 2013 as amended by the Social Security (Income-related Benefits) (Updating and Amendment) (EU exit) Regulations 2019, on the basis that excluding pre-settled status from the list of rights to be counted for the habitual residence test discriminated on grounds of nationality contrary to Article 18 TFEU. The court accepted that pre-settled status is a domestic right of residence distinct from rights under the Citizens' Rights Directive and that Article 18 TFEU can be relied upon in appropriate circumstances (following Grzelczyk and Trojani).

However, the court held that the exclusion of pre-settled status from the habitual residence test gives rise to indirect, not direct, discrimination and that the measure is objectively justified. The justification accepted was that the amendment preserves the pre-existing habitual residence regime and protects the social security system from claims by those not sufficiently economically integrated or closely connected with the United Kingdom. The judicial review claim therefore fails.

Background and parties. The claimants were two Romanian nationals who had been granted pre-settled status under Appendix EU to the Immigration Rules; one claimant later obtained settled status. They challenged the lawfulness of regulations which prevent reliance on pre-settled status to satisfy the habitual residence / "in Great Britain" condition for a range of social security benefits. The challenged amendment is regulation 9(3)(c)(i) of the Universal Credit Regulations 2013 as inserted by the 2019 Social Security Regulations. Relief sought was judicial review of that amendment and a declaration that it unlawfully discriminated on grounds of nationality.

Issues framed by the court. (i) Whether Article 18 TFEU could be relied upon directly in circumstances where the claimant's right of residence arose under domestic rules (Appendix EU) rather than under the Citizens' Rights Directive; (ii) whether the exclusion of pre-settled status amounted to direct or indirect discrimination on grounds of nationality; and (iii) if discriminatory, whether the measure was objectively justified.

Court's reasoning. The court accepted that pre-settled status is a domestic right of residence, separate from rights codified in Directive 2004/38/EC, and that the claimant (Mr Tanase) could therefore rely on Article 18 TFEU, applying the reasoning in Grzelczyk and Trojani. The judge rejected the defendant's submission that later CJEU authorities (notably Dano and Alimanovic) implicitly ousted that reasoning. On the characterisation of discrimination the court followed the approach in Patmalniece: the correct analysis is of the composite effect of the habitual residence regime and its constituent parts. The exclusion of pre-settled status was not an exact, indissociable match with nationality and therefore constituted indirect, not direct, discrimination. The defendant succeeded on justification: the amendment maintained the pre-existing status quo, pursued the legitimate objective of protecting the social security system from persons not sufficiently economically integrated with the United Kingdom, and was proportionate in that context.

Conclusion. The amendment did not amount to unlawful discrimination and the claim for judicial review failed. The court dismissed the application.

The claim is dismissed. The court held that although Article 18 TFEU could be relied on where a right of residence arises under domestic law (so Grzelczyk and Trojani remain relevant), the exclusion of pre-settled status from the habitual residence test amounted to indirect discrimination which was objectively justified because it preserved the existing habitual residence regime and protected the social security system. For those reasons the judicial review challenge failed.