Earlier this month Advocate General Bobek delivered his opinion in joined cases C-724/18 and C-727/18 Cali Apartments. The cases involve two Parisian hosts who were sanctioned for letting their apartments via Airbnb without an authorisation required under national and municipal law. Unlike in the previous cases on the so-called platform economy (see, in particular: Airbnb scores a victory before the Court of Justice), the questions referred did not revolve around the role of the platform operator. Rather, the Court was asked to define the limits of the freedom to provide services by the peer providers.
Background of the case
Under applicable French law letting apartments for short periods to a transient clientele is only allowed if a number of conditions are fulfilled. Firstly, it is necessary to declare this fact to the mayor of the relevant municipality. Secondly, and most importantly to the dispute, in municipalities with more than 200 000 inhabitants, change of use of residential premises is additionally subject to a prior authorisation. Detailed conditions for obtaining the authorisation are set out at the local level and may include offset requirements in the form
of the concurrent conversion of non-residential premises into housing. The appellants, who were sanctioned for letting their Parisian properties to tourists without necessary authorisations, argued that requirements imposed under French law were contrary to Directive 2006/123/EC on services.
Opinion of AG Bobek
The Advocate General considered the answer to the first two questions asked by the referring court to be fairly straightforward. In his view, Services Directive does apply to the activities and rules in
question and the national/municipal framework at issue should be qualified as an 'authorisation scheme' under Articles 9 to
13 of Services Directive. While the reasoning in this respect is rather convincing (note especially reference to Visser), it is hard to overlook a similarilty with another recent case, in which AG Bobek gave an opinion: C-393/17 Kirschstein. There as well, the AG argued for a broad reading of the act's scope - in that case Directive 2005/29/EC on unfair commercial practices - and centered his analysis on the substance of the act. As we reported on this blog, however, the Court did not share this opinion and considered the applicability question to be decisive (see: CJEU in Kirschstein...).
Having established the applicability of Service Directive to the Cali case, the AG moved to assessing the compatibility of the relevant
authorisation scheme with Services Directive. Here, a distinction was made between the benchmark for evaluating the need for establishing such a scheme in the first place and more specific conditions of such a scheme. Following the opinion, the former should comply with Article 9 of Services Directive, while the more extensive list of Article 10 is relevant for the latter. Crucially, both provisions contain a common core, requiring the applicable measures to be non-discriminatory, justified by an overriding reason relating
to the public interest and proportionate to the objective pursued.
As regards the public interest objective, para. 97 of the opinion lists the different reasons put forward by participants to the proceedings: combating a housing shortage; offering affordable and sufficient housing; social housing policy; the protection of the urban environment; resisting pressures on land; the protection of consumers; the efficiency of tax inspections; fair trading; and the protection of the recipients of housing services. The relevant French authorities focused, in particular, on considerations of housing
shortage and protection of urban environment, both of which the AG accepted without hesitation. Other reasons, including the more consumer-oriented ones, thus remained on the sidelines of the analysis, even if their role in other context has not been discounted.
As regards the remaining questions, the AG took the view that establishment of the authorisation scheme at issue can be seen proportionate under Article 9(1) of the Services Directive, but questioned the proportionality and the non-discriminatory nature of its specific requirements under Article 10(2). According to the AG, offsetting required by the City of Paris can in many instances actually defeat the purpose of asking for an authorisation in the first place (para. 127). This is especially the case for 'non-professional owners' of an extra flat in which they personally do not reside. Hence, the analysed offsetting requirement eventually reserves the access to market for short-term accommodation rental only for the big players, who would typically be legal persons or property developers. Having said that, the AG made clear that offsetting requirements need not always be contrary to EU law. Proportionality of such requirements could potentially be achieved by limiting them to premises above a certain size or to owners with more residential properties. A system of temporary authorisations not subject to offset, which would be periodically reviewed and potentially redistributed, could be another option to consider (para. 134).
Concluding thought
Concluding thought
Two elements transpiring from the AG's proportinality analysis are additionally worth highlighting: the role of evidence-based assessment and of local diversity. According to the AG, the conclusion on both Article 9 and 10 requires that account is taken of "specific data" concerning the housing market in the cities where an authorisation scheme is envisaged. Such evidence, collected at the local level, is needed to assess whether the scheme does not go beyond what is
necessary to achieve the objectives pursued (paras. 112, 121). The opinion concludes with a thought, towards which - as the AG notes - the Commission showed some "intellectual unease" during the hearing: that local diversity as to the specific authorisation conditions is not only permissible; it is even desirable (para. 136). While this finding might be true for limitations justified by the reasons related to housing
shortage and urban environment, this is not necessarily the case for ones related to consumer protection.
* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.
