An IMGW.News Report:
Updated on May 24th 2024 with additional details and background information.
The much-anticipated first public hearing in the European Commission’s case against Malta’s Citizenship by Investment (CBI) Programme is scheduled for 17 June at 14:30 at the Grand Chamber of the European Court of Justice in Luxembourg.
In September 2022, the European Commission announced its decision to take legal action against Malta over its CBI programme, which offers EU citizenship in exchange for investment. The European Commission alleges that Malta’s Citizenship by Naturalisation for Exceptional Services by Direct Investment programme, introduced in 2020, violates EU law. The programme allows foreigners to acquire Maltese – and thus EU – citizenship by investing approximately €1 million in Malta. According to the Commission, this arrangement lacks a genuine link between the investors and Malta, undermining the essence of Union citizenship, and asserts that “European values should not be for sale”. These are essentially the Commission’s arguments, largely explained in press statements in the past.
The Commission’s argument is based on Union law, which – so the Commission argues – precludes citizenship programmes that systematically grant nationality in exchange for predetermined payments or investments without a substantive connection to the state. The Commission believes Malta’s programme compromises the integrity of Union citizenship and violates the principle of sincere cooperation enshrined in the Treaty on European Union.
However, some EU lawyers disagree with these arguments, as they see citizenship as a matter of member states’ sovereign competence. In a recent, widely observed contribution on Verfassungsblog, a respected European constitutional law blog, a leading EU lawyer asked the question: Who actually is selling European values, Malta or the EU Commission? See Joseph H. H. Weiler, Citizenship for Sale (Commission v Malta), Who of the Two is Selling European Values?
Malta remains defiant. The Maltese government, acknowledging the Commission’s action, maintains that it is not in breach of European law. Local media reports indicate that despite warnings from the Commission in 2020 and 2021, Malta has not discontinued its programme, although it did make a number of adjustments. The programme also has been suspended for Russian and Belarusian nationals following the invasion of Ukraine but remains open to most other nationalities.
“On January 29, 2014, representatives from the European Commission and the Maltese Government issued a joint statement after discussing Malta’s Individual Investor Programme (IIP). In the statement, the European Commission welcomed these amendments, emphasizing the spirit of sincere cooperation and mutual understanding between both parties.”
Critics of the EU’s legal action, among them Professor Weiler, argue that it infringes on the sovereignty of member states, particularly concerning citizenship. They contend that the power to grant citizenship rests exclusively with individual countries, not a supranational entity like the EU. Indeed, the EU treaties would need to be amended if the member states wanted to give the EU more power in this area. This stance also emphasises that member states should determine their citizenship policies based on their unique social and economic realities.
The case of Malta highlights this tension. For smaller states, Citizenship by Investment (CBI) programs represent significant economic opportunities. The European Union initially recognized these programs in a joint press statement between Malta and the European Commission following the launch of Malta’s CBI program in 2014.
On January 29, 2014, representatives from the European Commission and the Maltese Government issued a joint statement after discussing Malta’s Individual Investor Programme (IIP). The Maltese authorities presented amendments to the Maltese Citizenship Act to ensure that the IIP grants full citizenship rights and responsibilities. Key changes included requiring genuine links to Malta through effective residence status and proof of residing in Malta for at least 12 months before naturalisation. In the statement, the European Commission welcomed these amendments, emphasizing the spirit of sincere cooperation and mutual understanding between both parties.
Critics of the EU Commission’s action say that the EU’s uniform approach to citizenship may not account for these nations’ economic needs and challenges. Without investment migration opportunities, some of these countries might have to rely on international financial assistance, which may not be sustainable in the long term. At least residence by investment programmes, which the EU also challenged some time ago, are now viewed as acceptable. It is also difficult to go against a successful policy measure to attract foreign direct investment, which more than a third of EU countries actively pursue.
Both parties will present their cases at the June hearing of the EU vs. Malta case. So far, no member states have intervened in support of the EU Commission. The Advocate General’s opinion will be most likely issued by October, with a court judgment expected towards the end of 2024 or the beginning of 2025. The outcome could have profound implications for the future of CBI programmes within the EU and the sovereign rights of EU member states with regard to citizenship.
This is a developing story, and IMGW.News will be following it closely to keep our readers up-to-date with the latest information. Stay tuned for further updates.