Neri v. European School of Economics (ESE Insight World Education

System Ltd) (Case C-153/02)

Before the Court of Justice of the European Communities

(Fifth Chamber)

ECJ (5th Chamber) Presiding, Edward, acting as P.C.; La Pergola and von Bahr (

Rapporteur) JJ. Francis Jacobs, Advocate General

November 13, 2003

Freedom of establishment; Qualifications; Universities H1 Establishment--recognition of diplomas--degree issued by university established in a Member State--courses of study in preparation for that degree taking place in another Member State through another educational establishment--such courses offered for remuneration--European court procedure--admissibility of reference--university services caught by Art.43 EC--non-recognition of degree constituting obstacle to the freedom of establishment of course provider--justifications--legitimate objective-- maintenance of high standard of university education--measures not suitable for achieving objective--disproportionate. H2 Reference from Italy by the Giudice di pace di Genova (Magistrate's Court, Genoa) under Art.234 EC. H3 N enrolled at Nottingham Trent University (NTU), to study for a BA Honours degree. Although NTU was established in the United Kingdom, it was also authorised by United Kingdom legislation to approve courses offered by other bodies, including bodies in other States, as preparation for an NTU degree. The European School of Economics (ESE), a limited liability company established in the United Kingdom, was a body authorised under the United Kingdom educational system to organise and provide such courses of study. ESE had secondary establishments in several Member States, including Italy. Its courses were subject to audit by the UK Quality Assurance Agency for Higher Education. N enrolled for the first year of a course of studies held by ESE in Genoa, the study plan being validated by NTU. She paid the required fees in advance, then learned that a degree obtained in this way would not be recognised in Italy. Circulars from the Ministry for Universities and Scientific and Technological Research stated that degrees awarded by

universities in the Member States might be recognised in Italy *506 only if students had attended courses in the States in which the degrees were issued. Degrees awarded to Italian nationals on the basis of periods of study at private law establishments operating in Italy, although leading to decrees valid in the awarding State, were not to be recognised. On N seeking reimbursement of the fees paid, the magistrate considered that the Italian administrative practices evidenced in the circulars might be obstacles to the free movement of persons, freedom of establishment or the free movement of services, and might be incompatible with Directives 89/48 and 63/266. It referred questions of interpretation of the relevant provisions of Community law to the Court. Held: Court of Justice obliged to respect factual and legislative context described in order for reference H4 Although it was alleged that the account of Italian law in the order for reference contained inaccuracies, the Court had to take account, under the division of jurisdiction between the Community Courts and the national courts, of the factual and legislative context as described in the order for reference when examining the questions referred. [35]-[36] Ambulanz Glöckner ( C-475/99): [2001] E.C.R. I-8089; [2002] 4 C.M.L.R. 21, followed. Organisation for remuneration of university courses subject to Community law right of establishment H5 The organisation for remuneration of university courses -- the activity undertaken by ESE -- was an economic activity falling within the chapter of the Treaty dealing with the right of establishment when that activity was carried on by a national of one Member State in another Member State on a stable and continuous basis from a principal or secondary establishment in the latter Member State. [39]-[40] Commission v Italy (C-439/99): [2002] E.C.R. I-305, followed. Administrative practice leading to non-recognition of degrees constituting a restriction on freedom of establishment H6 Article 43 EC required the elimination of restrictions on freedom of establishment. All measures which prohibited, impeded or rendered less attractive the exercise of that freedom had to be regarded as constituting such restrictions. For an institution like ESE, which organised courses intended to enable its students to obtain degrees capable of facilitating their access to the employment market, the recognition of those degrees by the authorities of a Member State was of considerable importance. Therefore an administrative practice such as the one at issue in the main proceedings, under which certain degrees awarded at the end of a university training course given by ESE were not recognised in Italy, was likely to deter students from attending those courses and thus seriously hinder the pursuit by ESE of its economic activity in that Member State, thereby constituting a restriction on ESE's freedom of establishment. [41]-[44] Commission v Italy (C-145/99): [2002] E.C.R. I-2235, followed. *507 Administrative practice not suitable for attaining legitimate objective of ensuring high standards of university education H7 (a) Whilst the aim of ensuring high standards of university education appeared legitimate to justify restrictions on fundamental freedoms, such restrictions should be suitable for securing the attainment of the objective which they pursued and should not go beyond what was necessary in order to attain it. [46]

Commission v Italy (C-439/99): [2002] E.C.R. I-305, followed. H8 (b) The Italian legal order in question appeared to allow agreements between Italian universities and other Italian establishments of higher education which were comparable to the agreement entered into between NTU and ESE. Furthermore, the non-recognition of degrees awarded in circumstances like those at issue in the main proceedings related solely to degrees awarded to Italian nationals. The administrative practice described in the order for reference did not therefore appear suitable for attaining the objective of ensuring high standards of university education. [47] Administrative practice not proportionate to objective pursued H9 The administrative practice at issue did not appear to satisfy the requirement of proportionality in relation to the objective pursued. It appeared to preclude any examination by the national authorities and, consequently, any possibility of recognition of degrees awarded in circumstances like those in the main proceedings. This clearly went beyond what was necessary to secure the objective pursued. [48]-[50] H10 Cases referred to in the judgment: 1. Ambulanz Glöckner v Landkreis Sudwestpfalz (C-475/99), October 25, 2001: [2001] E.C.R. I-8089; [2002] 4 C.M.L.R. 21. 2. Commission of the European Communities v Italy (C-439/99), January 5, 2002: [2002] E.C.R. I-305. 3. Commission of the European Communities v Italy (C-145/99), March 7, 2002: [2002] E.C.R. I-2235. H11 Further cases referred to by the Advocate General: 4. Commission of the European Communities v Council (Re The Erasmus Legislation) (242/87), May 30, 1989: [1989] E.C.R. 1425; [1991] 1 C.M.L.R. 478. 5. Commission of the European Communities v Greece (Re Private Teaching) (147/86), March 15, 1988: [1988] E.C.R. I-1637; [1989] 2 C.M.L.R. 845. 6. Commission of the European Communities v Italy (Re Restrictions on Foreign Securities Dealers) (C-101/94), June 6, 1996: [1996] E.C.R. I-2691; [1996] 3 C.M.L.R. 754. 7. Germany v Commission of the European Communities (C-156/98), September 19, 2000: [2000] E.C.R. I-6857. 8. Gravier v City of Liege (293/83), February 13, 1985: [1985] E.C.R. 593; [1985] 3 C.M.L.R. 1. 9. Kraus v Land Baden-Württemberg (C-19/92), March 31, 1993: [1993] E.C.R. I-1663. *508 10. R v Inland Revenue Commissioners, Ex parte Commerzbank AG (C-330/91), July 13, 1993: [1993] E.C.R. I-4017; [1993] 3 C.M.L.R. 457. 11. Skattministeriet v Vestergaard (C-55/98), October 28, 1999: [1999] E.C.R. I-7641; [2001] 3 C.M.L.R. 65. H12 Representation

A Rocca, avvocato, for Valentina Neri. G Conte, E Minozzi, G Giacomini and CG Izzo (in the oral proceesdings only), avvocati, for the European School of Economics. IM Braguglia, acting as Agent, assisted by M Massella Ducci Teri and A Cingolo (in the oral proceedings only), avvocati dello Stato, for the Italian Government E Traversa and M Patakia, acting as Agents, for the Commission of the European Communities.

Opinion AG1 [FN1]This case concerns a private educational organisation, registered as a company in the United Kingdom, which provides teaching at various centres, some of which are in Italy. The teaching in question is approved and monitored by an English university and leads to a degree awarded by that university, in accordance with the applicable United Kingdom legislation. However, under the Italian rules as applied at the material time, that degree is not recognised in Italy if it is awarded to an Italian citizen on completion of the course of study in Italy. FN1 Opinion of AG Jacobs, delivered on April 10, 2003. AG2 In a dispute between an Italian student and the educational organisation, the Giudice di Pace (Magistrates Court), Genoa, wishes to know whether such an application of the Italian rules conflicts with Community law, in particular with the Treaty provisions concerning freedom of movement for workers, freedom of establishment and freedom to provide services, with Council Directive 89/48 [FN2] and with Council Decision 63/266. [FN3] FN2 Council Directive 89/48 of December 21, 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years duration: [1989] O.J. L19/16. FN3 Council Decision 63/266 of April 2, 1963 laying down general principles for implementing a common vocational training policy: [1963-1964] O.J. Spec. Ed. (I), p.25.

Background and legislation

The degree course arrangements AG3 The Nottingham Trent University ("Nottingham Trent") is a university in Nottingham, England. It is a "recognised body" for the purposes of section 216(1) of the Education Reform Act 1988, being authorised to grant degrees. It offers Bachelor of Arts (Honours) degrees in, inter alia, politics and economics. AG4 The European School of Economics ("ESE") is a private limited company incorporated and established in the United Kingdom. It also has establishments in a number of other countries, in particular Italy, where it apparently offers courses of study at 12 locations. It is included in lists compiled by the Secretary of State pursuant to section 216(2) of the Education Reform Act, and may thus provide courses of study

which prepare students for a degree to be granted by a recognised body and are approved by or on behalf of that body. AG5 *509 In 1998, Nottingham Trent and ESE entered into an agreement for the validation of specified courses provided by ESE. Nottingham Trent validates and reviews the courses concerned, ensures quality control and awards qualifications. One of those courses is a Bachelor of Arts (Honours) degree in International Political Studies, awarded after four years study with ESE, in particular at its establishments in Italy. Students on such courses are enrolled not only with ESE but also with Nottingham Trent. Examinations are organised in accordance with the regulations and procedures which Nottingham Trent applies in the United Kingdom, and the outside examiners, appointed by ESE, must be approved by Nottingham Trent. AG6 At the hearing, the representative of the Italian Government stated that ESEs relationship with Nottingham Trent had been terminated in December 2002.

Relevant Community rules AG7 Articles 39 and 40 EC concern freedom of movement for workers. Art.39 prohibits any discrimination based on nationality as regards work and employment, and Art.40 provides for the adoption of specific Community measures to bring about freedom of movement. AG8 Article 43 EC prohibits restrictions on the freedom of establishment of nationals of one Member State in another. In particular: "Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms ... under the conditions laid down for its own nationals by the law of the country where such establishment is effected ..." Under Article 48 EC, companies and firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business in the Community are to be treated in that regard in the same way as natural persons who are nationals of Member States. AG9 In order to facilitate the pursuit of self-employed activities, Art.47(1) EC provides for the adoption of Council directives for mutual recognition of professional qualifications as between Member States. AG10 Article 49 EC prohibits restrictions on the freedom to provide services where the provider of the service is established in a Member State other than that of the recipient. AG11 Council Decision 63/266, adopted on the basis of what is now Art.151 EC concerning the promotion of culture within the Community, establishes 10 general principles for implementing a Community vocational training policy, designed to enable citizens of the Community to receive adequate vocational training and to help bring about freedom of movement for workers. Member States and Community institutions are responsible for applying those principles within the framework of the Treaty. One of the fundamental objectives set out in the second principle is to "avoid any harmful interruption ... between completion of general education and commencement of vocational training". AG12 Council Directive 89/48, adopted in particular on the basis of what are now Arts 40 and 47(1) EC, establishes a general Community system for mutual recognition of higher-education diplomas awarded on completion of at least three years professional education and training, to enable Community nationals holding a *510 qualification

issued in one Member State to pursue a regulated profession in another Member State. It defines the types of diploma covered [FN4] and sets out mechanisms for their mutual recognition. FN4 It is confined to diplomas of higher education, that is to say at university level. For other post-secondary diplomas required for access to regulated professions, a complementary system is set up by Council Directive 92/51 of June 18, 1992 on a second general system for the recognition of professional education and training to supplement Directive 89/48: [1992] O.J. L209/25.

Relevant Italian rules AG13 According to the order for reference, under Decree No.1592 of August 31, 1933, [FN5] which confers a wide discretion on the public administration and the universities, degrees awarded by foreign institutions may be recognised on the basis of special laws giving effect to specific bilateral agreements entered into with other countries. Legislative Decree No.115 of January 27, 1992 [FN6] implements Council Directive 89/48. FN5 GURI, December 7, 1933, No.283. FN6 GURI, February 18, 1992, No.40. AG14 In the context of that Legislative Decree, the Italian authorities have adopted certain administrative rules and practices. AG15 A letter from the Ministry for Universities and Scientific Research dated October 3, 2000 states that "recognition obtained pursuant to Legislative Decree 115/92 allows only pursuit of the profession already pursued in the country of origin". AG16 Another from the same ministry dated January 8, 2001 states that "degrees awarded by universities recognised in the United Kingdom may be recognised in Italy only if completed after regular attendance for the whole course of studies at those universities or other foreign body of the same educational level, to the exclusion therefore of degrees awarded to Italian nationals on the basis of periods of study completed with branches or private bodies operating in Italy with whom they have entered into private-law contracts". AG17 Both those letters, which have been produced before the Court, refer expressly to qualifications obtained after study at ESE. AG18 A circular issued by the Ministry of Foreign Affairs and also produced before the Court confirms those indications by stating that Italian citizens applying for recognition of degrees awarded abroad must have "an attestation from the Italian diplomatic or consular representation in the foreign country in which the degree was awarded, proving actual residence in that country by the person concerned for the whole period of the university studies". That condition is explicitly stated to apply only to Italian citizens. AG19 According to the order for reference, under Italian legislation no specific authorisation or approval is necessary in order to provide educational courses. As regards the type of arrangement in issue in the present case, there does not appear to be any specific provision governing situations where the university is outside Italy; universities in Italy however are authorised to call on the cooperation of private bodies in order to

organise study courses in accordance with the rules laid down by those universities. [FN7] FN7 Art.8 of Law No.341 of November 19, 1990, GURI No.274 of November 23, 1990. AG20 *511 At the hearing the representative of the Italian Government stated that the legal situation had been changed in particular by Law No.148/2002 of July 2002 thus after the date of the order for reference with the result, essentially, that the recognition of foreign degrees was no longer subject to ministerial instructions or practices but was a matter for each university alone. It is not however clear what effect such amendments may have on problems such as that which has arisen in the present case.

The main proceedings AG21 In the summer of 2001, having obtained her secondary school leaving qualification in Italy, Valentina Neri enrolled at Nottingham Trent for a four- year BA Honours course in International Political Studies. She then learnt that she could study for the degree at an educational institution outside the United Kingdom which offered courses validated by Nottingham Trent. One such institution was ESE, which offered the Nottingham Trent course at various branches in Italy. AG22 Thus, in order to avoid the extra expense of studying in the United Kingdom, Ms Neri enrolled for the Nottingham Trent course offered through ESE at its Genoa campus. She paid ESE a fee instalment of ITL 4,000,000 (euro2, 065.83) for the academic year 2001/02. AG23 Some time later, she became aware of the Italian rules described above. She therefore sought reimbursement of the fee already paid, but ESE refused on the grounds, inter alia, that it was authorised to provide courses of university study leading to the award of a degree by Nottingham Trent and that the degree awarded would have full legal status in the United Kingdom. Ms Neri then brought the action in the main proceedings.

The order for reference AG24 The national court considers that the Italian administrative practice is regulatory in nature since it is applied by all branches of the public administration. It may have the effect of deterring students from enrolling for ESEs courses or, as in Ms Neris case, of prompting them to withdraw their registrations. [FN8] It may thus constitute a barrier to freedom of movement for persons, freedom of establishment and freedom to provide services. FN8 It appears that an appreciable number of cases in which students are similarly seeking reimbursement of fees paid to ESE are pending throughout Italy. Another reference has been made to the Court in Trombin ( C-432/02): the procedure in which has been suspended pending the outcome of the present case. AG25 The national court further considers that the Courts judgment in Kraus, [FN9] concerning the type of verification permissible when a Member State is requested by one

of its own nationals for administrative authorisation to use an academic title awarded in another Member State, is also relevant. In addition, Directive 89/48 could be contravened if the rights which it confers may be relied on during the course of study prior to the award of a qualification. Finally, the Italian practice might be contrary to the principles laid down in Decision 63/266. FN9 Kraus ( C-19/92): [1993] E.C.R. I-1663. AG26 The Giudice di Pace has therefore stayed the proceedings and seeks a preliminary ruling from the Court on the following questions: *512 "1. Are the rules or administrative practices of the national legal order, such as those described., compatible with the principles of the EC Treaty concerning the free movement of persons ( Art.39 et seq. EC), the right of establishment ( Art.43 et seq. EC) and freedom to provide services ( Art.49 et seq. EC), as interpreted by the Court of Justice? Of particular relevance in that regard are national rules and/or administrative practices which: impede the Italian establishment of a limited company whose principal business is in the United Kingdom from carrying on in the host state the business of organising and administering courses of study for preparation for university examinations, for which the company is duly authorised and accredited by the United Kingdom public authorities; discriminate as between nationals pursuing the same activities; prohibit and/or seriously impede the Italian establishment of that undertaking in obtaining, in another Member State and for valuable consideration, the services conducive to the pursuit of the abovementioned activity; discourage students from enrolling in those courses of study; impede the professional training of enrolled students and the obtaining of an award capable of conferring on its holder advantages either in securing access to a professional activity or in exercising it with greater reward in other Member States as well. 2. On an interpretation herein requested of Art.2 of Council Directive 89/48, does that directive confer rights which may be relied on also before acquisition of the degree mentioned in Art.1 of the directive itself? If the reply to that question is affirmative, does the directive itself, regard also being had to the Courts judgment of March 7, 2001 in Case C-145/99 Commission v Italy, [FN10] permit rules or administrative practices in the national legal order which: FN10 Commission v Italy ( C-145/99): [2002] E.C.R. I-2235. make recognition of university degrees obtained on completion of training of at least three years duration subject to the discretion of the public authorities; grant recognition in Italy of degrees awarded by universities recognised in the United Kingdom only if completed after regular attendance for the whole course of studies at those universities, to the exclusion therefore of degrees awarded to Italian nationals on the basis of periods of study completed with foreign institutions operating in Italy even though they are approved and accredited by the competent public authorities in the Member State to which they belong; require production of an attestation from the diplomatic representation Italian consulate

in the foreign country in which the degree was awarded proving actual residence in that country by the person concerned for the whole period of the university studies; *513 limit recognition of degrees 'solely' to pursuit of a profession already pursued in the State of origin, thus precluding recognition for the purposes of access to a regulated profession even though not previously exercised? 3. What is the meaning and scope of the expression 'harmful interruption ... of vocational training' in Council Decision 63/266 and does it cover the creation at national level by the public authorities of a permanent system of information which evidences that degrees awarded by a university, even though legally recognised in the United Kingdom, cannot be recognised under national legislation if they have been obtained on the basis of periods of study completed in Italy?" AG27 ESE, the Italian Government and the Commission have submitted written observations and were represented at the hearing. Ms Neri has submitted written observations.

Assessment

The first question AG28 By its first question the national court asks essentially whether the national administrative practices described involve a prohibited restriction of one or more of the Treaty freedoms enshrined in Arts 39, 43 and 49 EC, namely freedom of movement for workers, freedom of establishment and freedom to provide services. AG29 When considering those aspects, the actual effects of the Italian practices as presented to the Court must be borne in mind. In that regard, the relevant situation must be that prevailing at the time of the events giving rise to the order for reference, leaving aside the factual and legal developments which appear to have taken place since then. AG30 There is no suggestion that the Italian authorities systematically refuse to recognise all degrees awarded by Nottingham Trent or any other university in the United Kingdom or another Member State. The practices described do however appear to mean that recognition is automatically refused that is to say without any examination of the nature or content of the course of study to which the degree attests when three factors are present: (i) the awarding university is outside Italy, (ii) the course of study was followed in Italy, or at least not in the country of the awarding university, and (iii) the student is an Italian national. AG31 The effect in the circumstances of the present case is such as to discourage Italian students from studying with ESE in Italy for a degree awarded by Nottingham Trent. Demand for ESE courses of that kind is likely to be curtailed,perhaps endangering their continued existence, since it may be surmised that they are aimed primarily at Italian students, many of whom will wish to use their degree at least for some purposes in Italy.

Art.39 EC Freedom of movement for workers AG32 ESE submits that the teachers it employs are workers concerned by the article and that their freedom of movement is likely to be curtailed; the Commission takes *514 the view that the dispute in the main proceedings concerns only the relationship between Ms Neri and ESE.

AG33 The Italian measures might, it is true, have an effect on the employment of Community workers exercising their freedom of movement. If demand for ESE courses drops, teaching staff may have to be laid off. Some members of that staff may well be nationals of another Member State who have taken up work in Italy. However, the relationship between that potential effect and, on the one hand, the application of the Italian practice with regard to recognition of the degrees concerned or, on the other hand, the nationality of ESEs employees and their exercise of freedom of movement seems too distant to allow any serious scope for examining the practice in the light of Art.39 EC. AG34 As regards Ms Neri herself, the facts of the case as presented do not disclose any way in which her freedom to move to another Member State as a worker might be affected. AG35 Consequently, I do not consider Art.39 EC to be of relevance in the present case.

Article 43 EC Freedom of establishment AG36 According to settled case law, Art.43 EC embodies one of the fundamental principles of the Community. It seeks to ensure that nationals of a Member State who establish themselves in another Member State in order to carry on business there receive the same treatment as nationals of the host Member State. [FN11] It requires the elimination of restrictions on freedom of establishment, and all measures which prohibit, impede or render less attractive the exercise of that freedom are to be regarded as constituting such restrictions. [FN12] In that context, it precludes "not only overt discrimination by reason of nationality or, in the case of a company, its seat, but all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result". [FN13] FN11 See, for example, Commission v Italy ( C-101/94): [1996] E.C.R. I-2691; [1996] 3 C.M.L.R. 754, para.[12]. FN12 Commission v Italy ( C-145/99): [2002] E.C.R. I-2235. FN13 See, for example, Commerzbank ( C-330/91): [1993] E.C.R. I-4017; [1993] 3 C.M.L.R. 457, para.[14].; more recently Germany v Commission ( C-156/98): [2000] E.C.R. I-6857, para.[83]. AG37 It is not disputed that ESE is a company registered in the United Kingdom which has exercised its right of freedom of establishment in Italy. AG38 ESE carries on an economic activity at its establishments there under conditions which, as outlined above, appear unfavourable. Those conditions apply without reference to its nationality or to the Member State in which it is based. AG39 However, they are triggered by the conjunction of three factors all dependent either on nationality (Italian, in the case of students) or place of establishment (outside Italy in the case of Nottingham Trent; in Italy in the case of ESE). Any change in any one of those factors is likely, as the Commissions representative pointed out so colourfully at the hearing, to involve a drastic change in the conditions under which the educational courses are provided, despite the fact that there is no change in any criterion relevant to the way in which they are taught.

AG40 The Court has held that a difference in treatment depending on the place where a service is provided is prohibited by Art.49 EC, [FN14] and that case law may easily be transposed to a situation where the service is provided at a fixed establishment. FN14 See Vestergaard ( C-55/98): [1999] E.C.R. I-7641 *515 ; [2001] 3 C.M.L.R. 65, para.[22], and the Opinion of Advocate General Saggio at point 21. AG41 Since the disputed administrative practice renders ESEs courses in Italy leading to a Nottingham Trent degree less attractive for Italian students, it inevitably renders establishment in Italy in order to provide those courses less attractive for ESE. AG42 I therefore have no difficulty in reaching the view that the Italian administrative practice described entails a restriction on the freedom of a company like ESE to establish itself in Italy and carry on there the economic activity of providing courses of study leading to the award of a degree from a university such as Nottingham Trent.

Article 49 EC Freedom to provide services AG43 ESE submits that it is both a recipient and a provider of services. It is a recipient of services from Nottingham Trent, but is prevented by the Italian authorities from receiving such services. It also offers services in Italy not merely to Italian students, but to students from other Member States. The Commission submits that there is no cross-border element in the services provided by ESE. AG44 As regards the services provided by ESE, ESEs activities in Italy appear to be carried out on a continuous and stable basis at several educational establishments in that country, and to involve no cross-border element. There is no suggestion that students from other Member States wishing to follow its courses in Italy may do so other than by attending them in that country. Any restrictions placed on ESEs exercise of its activities thus do not fall to be assessed in the light of the freedom to provide services to recipients in another Member State. AG45 The situation is different as regards ESEs receipt of services, although this is not in fact an aspect in issue in the main proceedings. Nottingham Trent, a university established in one Member State, provides inspection and validation services to ESE in another Member State. To the extent that ESEs provision of courses leading to Nottingham Trent degrees is affected by the disputed administrative practice, the provision of services by Nottingham Trent itself will likewise be affected.

Possible justification of the restrictions AG46 I have reached the view that application of the Italian administrative practice in issue is such as to restrict freedom of establishment and freedom to provide services, contrary to Arts 43 and 49 EC. However, such restrictions may be justified either if they fall within one of the exceptions specifically provided for in the Treaty or, in so far as they apply in a non-discriminatory manner, if they serve overriding requirements relating to the public interest, are suitable for securing the attainment of the objective which they pursue and do not go beyond what is necessary in order to attain it. [FN15] FN15 See, for example, Commission v Italy ( C-439/99), cited above.

AG47 The Italian Government puts forward justifications based essentially on the need to ensure high standards in university education and to guarantee the authenticity of qualifications awarded by foreign universities. Italian law views university education as a matter of public interest, expressing as it does the cultural and historical values of the State which is responsible for monitoring courses and qualifications and for ensuring that establishments awarding such qualifications *516 are in compliance with the law. Article 149(1) EC stresses the responsibility of the Member States for the content of teaching and the organisation of education systems. The Italian authorities are particularly concerned by the existence of certain degrees awarded by complaisant procedures in the context of private, commercial arrangements beyond any State or public control. The type of "hybrid" degree offered under the "franchising" arrangement between Nottingham Trent and ESE does not provide a sufficient guarantee of quality. At the hearing, the representative of the Italian Government referred to specific doubts which had been expressed in the press over the quality of some of ESEs teaching staff. AG48 The concern of the Italian Government can clearly form the basis of an overriding requirement in the public interest, given the importance of subjecting the quality of university education and qualifications to public verification and control. AG49 However, even assuming the existence of such a justification, any such verification and control must be exercised on a case-by-case basis. By contrast, the administrative practice described in the order for reference appears to preclude as a general rule any recognition of degrees awarded in the circumstances I have set out in point 30 above. It leaves, apparently, no scope for verification of the content or quality of the education leading to the award of those degrees. AG50 In Commission v Greece [FN16] the Court pointed out that private teaching activities may be "subject to supervision by the official authorities which have at their disposal appropriate means for ensuring, in any event, the protection of the interests entrusted to them, without there being any need to restrict freedom of establishment for that purpose". The same considerations apply to the quality control required in the context of recognition of university degrees. FN16 Commission v Greece (147/86): [1988] E.C.R. I-1637; [1989] 2 C.M.L.R. 845, para.[10]. AG51 There appears to be nothing in the nature of the agreement between Nottingham Trent and ESE which might prevent the Italian authorities from exercising such quality control in order to allay their concerns about the nature and standards of the degrees provided through ESE, or generally about the commercialisation of education. Bearing in mind that the Italian Government has stated that private universities in Italy are subject to quality control, it is difficult to see why an organisation like ESE should be excluded from such supervision. AG52 It appears that degrees awarded by a foreign university to an Italian citizen following a course of study in Italy cannot be recognised in that country on the basis of any actual verification of the standard of education attested to. By contrast, degrees awarded in only slightly different circumstances do appear to qualify for a recognition procedure. On those grounds, I reach the view that the Italian administrative practice in

issue is neither suitable nor proportionate for the purposes of achieving the aims adduced by the Italian Government, and that the restrictions which it entails on freedom of establishment and freedom to provide services therefore cannot be justified.

The second question AG53 The second question asks whether Directive 89/48 confers rights on individuals prior to the acquisition of a university degree or equivalent qualification and, if so, *517 whether it allows the Italian authorities to impose restrictions on the recognition of foreign degrees. AG54 In accordance with Art.2, the Directive may be relied on by Community nationals wishing to pursue a regulated profession in a host Member State in a self-employed capacity or as an employed person. Under Art.1(d), [FN17] the Directive applies to regulated professions the taking up or pursuit of which is "subject ... to the possession of a diploma". Article 1(a) defines such a diploma as one awarded on successful completion of a "post-secondary course of at least three years duration, or of an equivalent duration part-time, at a university or establishment of higher education ..." Under Art.3(a), access to a regulated profession may not be refused on the grounds of inadequate qualifications "if the applicant holds the diploma required in another Member State for the taking up or pursuit of the profession in question in its territory, such diploma having been awarded in a Member State". FN17 I refer here to the original para.(d), which appears to be still in force despite the fact that, presumably due to a drafting oversight, another para.(d) defining regulated education and training was "inserted by Art.1(1)(b) of Directive 2001/19 of the European Parliament and of the Council of May 14, 2001 amending Council Directives 89/48 and 92/51 on the general system for the recognition of professional qualifications and Council Directives 77/452, 77/453, 78/686, 78/687, 78/1026, 78/1027, 80/154, 80/155, 85/384, 85/432, 85/433 and 93/16 concerning the professions of nurse responsible for general care, dental practitioner, veterinary surgeon, midwife, architect, pharmacist and doctor: [2001] O.J. L206/1. AG55 Those provisions make it clear that the Directive applies only to diplomas which have already been obtained by a Community national who wishes to pursue a regulated profession in another Member State. Thus, it confers no right which can be relied on before the acquisition of a diploma. AG56 In common with the Italian Government and the Commission, I do not consider that the Directive applies to the present case, since Ms Neri is not yet in possession of a diploma of the relevant level indeed, she has specifically renounced any attempt to obtain such a diploma via the route with which this case is concerned. The Directive would come into play only if she had already been awarded a degree by Nottingham Trent following her studies at ESE and wished to use it to gain access to a regulated profession in Italy. For similar reasons, the Courts case law in Kraus [FN18] is not relevant on this point. FN18 Cited above.

AG57 However, if a student who had already graduated in those circumstances were to seek recognition of his or her degree for the purposes of entering a regulated profession in Italy, the Directive would clearly be capable of applying.

The third question AG58 The third question asks for an interpretation of the term "harmful interruption" in para.(e) of the second principle of Decision 63/266; in particular, is the fact that the Italian authorities inform students that Nottingham Trent degrees awarded following study with ESE in Italy will not be recognised likely to entail such an interruption? AG59 I agree however with the Commission that the Decision, which establishes the principles of a common policy on professional education for citizens of one Member State wishing to pursue an education in another Member State, is of a general and programmatic nature. In Commission v Council [FN19] the Court described *518 it as the point of departure for a process of gradual implementation of the common vocational training policy. It must thus be seen as establishing guidelines or general principles for further, more specific measures which will give shape to that policy. FN19 Commission v Council (242/87): [1989] E.C.R. 1425; [1991] 1 C.M.L.R. 478, para.[10]. AG60 Consequently, in the absence of any binding effect of Decision 63/266 and since Ms Neri is not seeking to study in another Member State, [FN20] that Decision is not relevant to the present proceedings. FN20 In contrast, for example, to the situation in Gravier ( 293/83): [1985] E.C.R. 593; [1985] 3 C.M.L.R. 1.

Final remarks AG61 I am aware that if ESE is able to rely in the main proceedings on the interpretation of Community law which I have advocated above, Ms Neri is likely to lose her action even though she has clearly also suffered from the unlawful restrictions for which neither party is responsible and which neither party wishes to see maintained. AG62 It will be for the Italian authorities to bring their rules into line with Community law as promptly as possible to the extent that this has not already been achieved [FN21] in order to avoid further harm to schools such as ESE or students wishing to study with them. If harm has already been suffered or continues to be suffered, it is possible that a claim for reparation may lie against the Italian State. FN21 See point .20 above.

Conclusion AG63 In view of all the above considerations, I am of the view that the Court should answer the questions raised by the Giudice di Pace, Genoa, as follows: (1) A national rule or administrative practice under which degrees awarded to a Member

States own nationals by a university in another Member State cannot be recognised when the relevant course of study was not undertaken in the Member State in which the university is established, and which thereby lessens the attractiveness of arrangements by which such a university may approve, for the purposes of awarding its degrees, courses of study offered by other educational organisations and followed in the Member State which applies that rule or practice, is such as to constitute a restriction on the freedom of establishment enshrined in Art.43 EC and/or, as the case may be, the freedom to provide services enshrined in Art.49 EC. Such a practice cannot be justified if it precludes any verification, with a view to recognition, of the standard of education to which each degree attests. (2) Council Directive 89/48 of December 21, 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years' duration does not apply to situations in which a person is not yet in possession of a diploma of higher education. *519 (3) Council Decision 63/266 of April 2, 1963 laying down general principles for implementing a common vocational training policy does not impose any binding rules on Member States, nor does it apply to situations in which a person does not seek to study outside his or her home Member State. JUDGMENT 1 By order of April 18, 2002, received at the Court on April 26, 2002, the Giudice di pace (Magistrate's Court), Genoa, referred to the Court for a preliminary ruling under Art.234 EC three questions on the interpretation of Arts 39 EC, 43 EC and 49 EC, of Council Decision 63/266 of April 2, 1963 laying down general principles for implementing a common vocational training policy [FN22] and of Council Directive 89/48 of December 21, 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years' duration. [FN23] FN22 [1963-1964] O.J. Spec. Ed. (I), p.25. FN23 [1989] O.J. L19/16. Legal background Community legislation 2 Article 43 EC provides: "Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or

firms within the meaning of the second paragraph of Art.48, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital." 3 Directive 89/48 seeks to make it easier for European citizens to pursue all those professional activities which in a host Member State are dependent on the completion of post-secondary education and training, provided they hold such a diploma preparing them for those activities awarded on completion of a course of studies lasting at least three years and issued in another Member State. 4 Article 1(a) of Directive 89/48 provides: "For the purposes of this Directive the following definitions shall apply: (a) diploma: any diploma, certificate or other evidence of formal qualifications or any set of such diplomas, certificates or other evidence: *520 -- which has been awarded by a competent authority in a Member State, designated in accordance with its own laws, regulations or administrative provisions; -- which shows that the holder has successfully completed a post-secondary course of at least three years' duration, or of an equivalent duration part-time, at a university or establishment of higher education or another establishment of similar level and, where appropriate, that he has successfully completed the professional training required in addition to the post-secondary course, and -- which shows that the holder has the professional qualifications required for the taking up or pursuit of a regulated profession in that Member State, provided that the education and training attested by the diploma, certificate or other evidence of formal qualifications were received mainly in the Community, or the holder thereof has three years' professional experience certified by the Member State which recognised a third-country diploma, certificate or other evidence of formal qualifications. The following shall be treated in the same way as a diploma, within the meaning of the first subparagraph: any diploma, certificate or other evidence of formal qualifications or any set of such diplomas, certificates or other evidence awarded by a competent authority in a Member State if it is awarded on the successful completion of education and training received in the Community and recognised by a competent authority in that Member State as being of an equivalent level and if it confers the same rights in respect of the taking up and pursuit of a regulated profession in that Member State." 5 Under the first paragraph of Art.2 of Directive 89/48, the Directive is to apply to any national of a Member State wishing to pursue a regulated profession in a host Member State in a self-employed capacity or as an employed person. 6 Under the second principle (e) of Council Decision 63/266, the common vocational training policy is to seek to avoid any harmful interruption either between completion of general education and commencement of vocational training or during the latter. Italian legislation 7 In the order for reference, the Giudice di pace, Genoa, set out the Italian legislation in the following way. 8 Under Art.170 of Regio Decreto No.1592 on approvazione del testo unico delle leggi sull'istruzione superiore (Royal Decree relating to approval of the consolidating Act of laws on higher education) of August 31, 1933 [FN24]:

"Academic qualifications awarded abroad shall not have legal force [in Italy] except on the basis of special laws. FN24 Ordinary Supplement to GURI No.283 of December 7, 1933; Royal Decree No.1592/33. *521 However, those who hold one of the degrees referred to in a list approved, and, where appropriate, amended by an order of the Minister of National Education, by a foreign establishment of higher education may obtain from one of the universities or establishments [of higher education] referred to in Tables A and B the degree which is equivalent to the degree awarded abroad. In cases where academic qualifications which are not referred to on the list in the preceding paragraph are at issue, the Minister, after hearing the opinion of the competent academic authorities and the executive committee of the first section of the Higher Council of National Education, may declare that the degree awarded abroad is of the same value as the equivalent degree issued by the universities or establishments [of higher education in Italy] or allow the person concerned to sit masters or degree examinations, with total or partial exemption from examinations required by the regulations of the university or establishment [of higher education] for the equivalent course of studies." 9 Article 332 of Royal Decree 1592/33 provides: "Pending adoption of the ministerial order approving the list referred to in Art.147, Italian citizens abroad, Italians who are not subjects of the Kingdom and foreigners may be admitted to universities and establishments [of higher education] on the year of the course for which the competent academic authorities consider the degrees awarded on completion of secondary and higher education abroad are sufficient. Pending adoption of the ministerial order approving the list referred to in Art.170, the competent academic authorities which are asked to recognise the academic qualifications awarded abroad may, on a case-by-case basis, provided the degrees involved are those awarded by foreign universities or establishments [of higher education] with an excellent reputation, and also having regard to the studies pursued and the special or general examinations taken abroad, declare that the foreign degree is of the same value, in all respects, as the equivalent degree issued by [Italian] universities and establishments [of higher education], or otherwise allow the person concerned to sit masters or degree examinations, with a total or partial exemption from examinations required by the regulations of the university or establishment [of higher education] for the equivalent course of studies." 10 Under Art.8(1) of Law No.341 of November 19, 1990 on the riforma degli ordinamenti didattici universitari (Law on the organisation of university education) [FN25]: "Universities may, in accordance with rules set out by each institution, call upon the cooperation of public and private bodies in order to organise study courses, cultural activities and training sessions referred to in Art.6 of this Law. They can set up associations, in particular of private law, and enter into agreements to this effect." FN25 GURI No.274 of November 23, 1990, p.6; Law No.341/90.

11 Memorandum No.228 of the Ministry for Universities and Scientific and Technological Research of October 3, 2000 states that recognition in Italy of a *522 degree awarded abroad remains governed by Art.332 of Royal Decree 1592/33, whilst Legislative Decree No.115 of January 27, 1992 implementing Directive 89/48, [FN26] allows only pursuit of the profession already pursued in the country of origin. FN26 GURI No.40 of February 18, 1992, p.6. 12 An information circular issued by the Ministry of Foreign Affairs provides, in accordance with circular No.442 of the same Ministry of April 30, 1997 on courses of studies partly completed in Italy, that a foreign university degree may only be admitted to a recognition procedure if it is accompanied by an attestation from the Italian diplomatic or consular representation in the foreign country in which the degree was awarded proving actual residence in that country by the person concerned for the whole period of the university studies. 13 The circular of the Ministry for Universities and Scientific and Technological Research of January 8, 2001 states that degrees awarded by universities recognised in the United Kingdom may be recognised in Italy only if completed after regular attendance for the whole course of studies at those universities or other foreign body of the same educational level, to the exclusion therefore of degrees awarded to Italian nationals on the basis of periods of study completed with branches or private bodies operating in Italy with whom they have entered into private-law contracts. The main proceedings 14 Ms Neri enrolled at Nottingham Trent University (NTU) with a view to acquiring a BA Honours degree in International Political Studies on completion of a four-year course of studies. 15 NTU is a university subject to United Kingdom legislation and is included in the list of bodies authorised to award, on completion of a four-year course of studies, BA honours degrees having legal status. 16 NTU administers its courses of study at its establishment in the United Kingdom, where final degrees are awarded. 17 However, Art.216 of the Education Reform Act 1988 provides for another system by means of which universities may award degrees. 18 Under this provision, the Secretary of State approves a list of bodies who may provide any course which is in preparation for a degree to be granted by a recognised body and is approved by or on behalf of the recognised body. It is apparent from the order for reference that this list includes the European School of Economics (ESE Insight World Education System Ltd; ESE). 19 It is also apparent from the order for reference that this body is a Higher Education College authorised according to the United Kingdom educational system to organise and provide the university courses of study approved by NTU. 20 ESE, which is incorporated as a limited liability company, is established in the United Kingdom with a number of secondary establishments in other Member States. It is

registered with the Rome Chamber of Commerce having the legal form of a company incorporated according to the laws of another Member State and has 12 branches in Italy. 21 *523 ESE does not award its own degrees but for remuneration organises courses for the students enrolled with NTU in accordance with study plans validated by that university, which then awards a final degree of Bachelor of Arts with Honours. The quality of the courses of study provided by ESE is also subject to audit by the UK Quality Assurance Agency for Higher Education. 22 In order to avoid the high financial cost attendant on residence in the United Kingdom for the entire duration of her studies, Ms Neri decided to attend university courses in Italy at ESE. Having enrolled for the first year of the course of studies held by ESE in Genoa (Italy) and paid in advance to ESE the sum of ITL 4,000,000 (euro2,065.83), she learned from authoritative Italian sources that ESE was not authorised to organise university-level courses and that recognition could not be granted to the university's degrees, albeit legally recognised in the United Kingdom, if they had been obtained on the basis of periods of study completed in Italy. 23 Ms Neri claimed that she had made an undue payment and, unable to secure reimbursement on an amicable basis of the amount paid to ESE, applied to the Giudice di pace, Genoa, for an order enjoining ESE to repay to her the sum at issue. 24 In support of her claim, Ms Neri produced in evidence several circulars from the Ministry for Universities and Scientific and Technological Research which, according to her, could bear out the substance of her claim. 25 The Giudice di pace, Genoa, states that ESE is a private profit-making undertaking which carries on business within the Community in the market for educational services. NTU students who wish to attend the courses organised by ESE enter into a contract with it which provides for payment of a fee which constitutes consideration for ESE's services. 26 ESE through its Italian establishment provides in Italy the same services which it is authorised to provide in its State of origin in full compliance with the legislation of the host State. 27 The Giudice di pace, Genoa, states that the Ministry for Universities and Scientific and Technological Research and the Ministry for Foreign Affairs have issued memoranda and circulars which lay down that degrees awarded by universities in the Member States may be recognised in Italy only if students have attended courses in the States in which the degrees are issued. By contrast, degrees awarded to Italian nationals on the basis of periods of study at establishments operating in Italy with which these universities have entered into private-law contracts are not to be recognised. The referring court believes that these circulars and memoranda may have the effect of deterring students from attending these university courses and, in addition, are likely to hinder the use in Italy of university degrees awarded by foreign universities. 28 For this reason, the Giudice di pace, Genoa, believes that this administrative practice, being regulatory in nature since it is applied by all branches of the public administration, may have the effect of deterring students from enrolling in those university courses and/or, as has been found in the present case, of prompting students to withdraw their registrations for those courses of study. 29 According to the Giudice di pace, Genoa, this administrative practice may therefore constitute a barrier to freedom of movement for persons, freedom of establishment and freedom to provide services.

30 *524 Moreover, the Giudice di pace, Genoa, takes the view that the administrative practice of the Italian authorities may be incompatible with Directive 89/48 if the rights conferred by the directive could be relied on by the nationals of the Member States prior to award of the degree mentioned in Art.1 thereof. 31 The Giudice di pace, Genoa, also points out that the administrative practice of the Italian authorities could be incompatible with Decision 63/266 which provides that the common vocational training policy is to seek to avoid any harmful interruption either between completion of general education and commencement of vocational training or during the latter. The questions referred for a preliminary ruling 32 By order of April 18, 2002 the Giudice di pace, Genoa, decided to stay the proceedings and to seek a preliminary ruling from the Court on the following three questions: "1. Are the rules or administrative practices of the national legal order, such as those described in sections III and IV of this order, compatible with the principles of the EC Treaty concerning the free movement of persons ( Art.39 et seq. EC), the right of establishment ( Art.43 et seq. EC) and freedom to provide services ( Art.49 et seq. EC), as interpreted by the Court of Justice? Of particular relevance in that regard are national rules and/or administrative practices which: -- impede the establishment in Italy of a limited company whose principal business is in the United Kingdom from carrying on in the host state the business of organising and administering courses of study for preparation for university examinations, for which the company is duly authorised and accredited by the United Kingdom public authorities; -- discriminate as between nationals pursuing the same activities; -- prohibit and/or seriously impede the establishment in Italy of that undertaking in obtaining, in another Member State and for valuable consideration, the services conducive to the pursuit of the abovementioned activity; -- discourage students from enrolling in those courses of study; -- impede the professional training of enrolled students and the obtaining of an award capable of conferring on its holder advantages either in securing access to a professional activity or in exercising it with greater reward in other Member States as well. 2. On an interpretation -- herein requested -- of Art.2 of Council Directive 89/48 of December 21, 1988, does that directive confer rights which may be relied on also before acquisition of the degree mentioned in Art.1 of the directive itself? If the reply to that question is affirmative, does the directive itself, regard also being had to the Court's judgment in Case C-145/99 Commission v Italy, [FN27] permit rules or administrative practices in the national legal order which: FN27 Commission v Italy ( C-145/99): [2002] E.C.R. I-2235 *525 . -- make recognition of university degrees obtained on completion of training of at least three years' duration subject to the discretion of the public authorities; -- grant recognition of degrees awarded by universities recognised in the United Kingdom only if completed after regular attendance for the whole course of studies at those

universities, to the exclusion therefore of degrees awarded on the basis of periods of study completed with foreign institutions operating in Italy even though they are approved and accredited by the competent public authorities in the Member State to which they belong; -- require production of an attestation from the Italian diplomatic or consular representation in the foreign country in which the degree was awarded proving actual residence in that country by the person concerned for the whole period of the university studies; -- limit recognition of degrees solely to the pursuit of a profession already pursued in the State of origin, thus precluding recognition for the purposes of access to a regulated profession even though not previously exercised? 3. What is the meaning and scope of the expression harmful interruption of vocational training in Council Decision 63/266 of April 2, 1963, and does it cover the creation at national level by the public authorities of a permanent system of information which evidences that degrees awarded by a university, even though legally recognised in the United Kingdom, cannot be recognised under national legislation if they have been obtained on the basis of periods of study completed in Italy?" Preliminary remark 33 The Italian Government stated at the hearing that the description of national law in the order for reference is incorrect on certain points and that the order does not take into account all the relevant national provisions. The Italian Government also referred to amendments to the Italian and United Kingdom legislation subsequent to the order for reference as well as to changes in the relationship between ESE and NTU. 34 It is to be remembered in this regard that it is not for the Court of Justice to rule on the interpretation and applicability of provisions of national law or to establish the facts relevant to the decision in the main proceedings. 35 The Court must take account, under the division of jurisdiction between the Community Courts and the national courts, of the factual and legislative context, as described in the order for reference, in which the question put to it is set. [FN28] FN28 Ambulanz Glöckner ( C-475/99): [2001] E.C.R. I-8089; [2002] 4 C.M.L.R. 21, para.[10]. 36 The questions referred for a preliminary ruling should therefore be examined in the factual and legislative context described by the Giudice di pace, Genoa, in the order for reference. *526 The questions 37 The national court asks in its first question, essentially, if an administrative practice such as the one at issue in the main proceedings, under which university degrees awarded by a university of one Member State are not recognised by another Member State when the courses of preparation for those degrees were provided in the latter Member State by another educational establishment in accordance with an agreement made between the

two establishments, is incompatible with Arts 39 EC, 43 EC and 49 EC. 38 Ms Neri pleads this administrative practice before the national court in order to claim reimbursement of the enrolment fees paid to ESE, whereas ESE challenges such administrative practice on the basis of Community law. In order to give a reply to the questions referred for a preliminary ruling which could be of assistance in deciding the main proceedings before the national court, the Community law relevant to ESE's activities must therefore be interpreted. 39 The organisation for remuneration of university courses is an economic activity falling within the chapter of the Treaty dealing with the right of establishment when that activity is carried on by a national of one Member State in another Member State on a stable and continuous basis from a principal or secondary establishment in the latter Member State. [FN29] FN29 See, to that effect, Commission v Italy (C-439/99): [2002] E.C.R. I-305, para.[21]. 40 Given that ESE, which has its principal establishment in the United Kingdom, organises university courses from secondary establishments in Italy, and in this case from its branch in Genoa, the questions referred to the Court, to the extent that they concern the fundamental freedoms protected by the Treaty, must be examined from the point of view of the freedom of establishment of ESE. 41 Article 43 EC requires the elimination of restrictions on freedom of establishment. All measures which prohibit, impede or render less attractive the exercise of this freedom must be regarded as constituting such restrictions. [FN30] FN30 See Commission v Italy ( C-145/99), cited above, para.[22]. 42 For an institution like ESE, which organises courses intended to enable its students to obtain degrees capable of facilitating their access to the employment market, the recognition of those degrees by the authorities of a Member State is of considerable importance. 43 It is clear that an administrative practice such as the one at issue in the main proceedings, under which certain degrees awarded at the end of a university training course given by ESE are not recognised in Italy, is likely to deter students from attending these courses and thus seriously hinder the pursuit by ESE of its economic activity in that Member State. 44 Therefore an administrative practice such as the one at issue in the main proceedings constitutes a restriction on the freedom of establishment of ESE within the meaning of Art.43 EC. 45 The Italian Government appears to wish to justify that restriction by the need to ensure high standards of university education. It maintains that the Italian legal order does not accept agreements such as the one at issue in the main proceedings on university education since it remains attached to a view of such education as a matter of public interest, expressing as it does the cultural and historical values of *527 the State. According to the Italian Government, such an agreement on university education prevents direct quality control of these private bodies by the competent authorities both in the Member State of origin and the host Member State.

46 However whilst the aim of ensuring high standards of university education appears legitimate to justify restrictions on fundamental freedoms, such restrictions must be suitable for securing the attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it. [FN31] FN31 See Case Commission v Italy ( C-439/99), cited above, para.[23]. 47 Given that the Italian legal order appears to allow, pursuant to Art.8(1) of Law No.341/90, agreements between Italian universities and other Italian establishments of higher education which are comparable to the agreement entered into between NTU and ESE and, as appears from the circular cited in para.[13] above, the non-recognition of degrees awarded in circumstances like those at issue in the main proceedings relates solely to degrees awarded to Italian nationals, the administrative practice described in the order for reference doe not appear suitable for attaining the objective of ensuring high standards of university education pleaded by the Italian Government. 48 In any event, the administrative practice at issue does not appear to satisfy the requirement of proportionality in relation to the objective pursued. 49 As the Advocate General makes clear in point 49 of his Opinion, the administrative practice described in the order for reference appears to preclude any examination by the national authorities and, consequently, any possibility of recognition of degrees awarded in circumstances like those in the main proceedings. 50 Clearly such an administrative practice goes beyond what is necessary to secure the objective pursued. 51 In those circumstances, the reply to the first question referred must be that an administrative practice such as the one at issue in the main proceedings, under which degrees awarded by a university of one Member State cannot be recognised in another Member State when the courses of preparation for those degrees were provided in the latter Member State by another educational establishment in accordance with an agreement made between the two establishments, is incompatible with Art.43 EC. 52 In view of the reply given to the first question, there is no need to reply to the second and third questions. Costs 53 The costs incurred by the Italian Government and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. R1 Order On those grounds, THE COURT (Fifth CHAMBER), in answer to the questions referred to it by the Giudice di pace, Genoa, by order of April 18, 2002, *528 Hereby Rules: An administrative practice such as the one at issue in the main proceedings, under which degrees awarded by a university of one Member State cannot be recognised in another

Member State when the courses of preparation for those degrees were provided in the latter Member State by another educational establishment in accordance with an agreement made between the two establishments, is incompatible with Art.43 EC.

(c) Sweet & Maxwell Limited [2004] 1 C.M.L.R. 16