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European Commission vs. Malta: Malta's Citizenship by Investment Programme, Sovereignty and the Question of Genuine Links

By Oliver Said, CEO | Endevio

June 19, 2024

Yesterday's hearing at the European Court of Justice (ECJ) was a landmark moment in the ongoing legal battle between the European Commission and Malta over Malta’s Citizenship by Investment (CBI) programme. Fundamentally, the case, which challenges Malta’s sovereign right to grant citizenship, has broader implications for the nature of EU citizenship and the balance of power within the European Union.  

European Commission vs. Malta: Malta’s CBI Programme and Sovereignty in the European Union

At the heart of the European Commission vs. Malta dispute is the principle of national sovereignty. In effect, unlike the United States, the European Union is a union of member states, each retaining the right to determine its own criteria for nationality. Essentially, there is no "United States of Europe" passport; instead, citizenship remains under the purview of individual nations. Essentially, this distinction is critical, as it underscores the diversity and autonomy of EU member states. 

Primarily, Malta argues that its CBI programme, which allows individuals to acquire citizenship through significant financial investment, is a legitimate exercise of its sovereign rights. Fundamentally, the programme includes stringent due diligence measures to ensure that new citizens meet security and legal standards. Mainly, in the European Commission vs. Malta case, Malta asserts that its approach is neither novel nor inconsistent with historical practices across Europe. 


European Commission vs Malta: Malta's Citizenship by Investment and the EU citizenship

The European Commission’s Challenge against Malta’s CBI Programme 

Conversely, the European Commission contends that Malta’s CBI scheme undermines the integrity of EU citizenship by not requiring a “genuine link” between the applicant and Malta. In essence, they argue that citizenship should not be commoditized without a substantive connection to the granting state, invoking the principle of sincere cooperation among EU member states. 

Notably, in yesterday’s European Commission vs. Malta hearing, the Commission reiterated its stance that EU citizenship is more than a legal status—it embodies a connection to the cultural and social fabric of the member state. The Commission's advocate highlighted the transactional nature of Malta’s Citizenship by Investment programme, contrasting it with historical naturalizations based on cultural or familial ties, such as Spain’s recent naturalization of Sephardic Jews expelled in 1492. 

European Commission vs. Malta: Defining the Concept of “Genuine Link” 

The debate over what constitutes a genuine link came up in the European Commission vs. Malta case and raises profound questions about identity and belonging. To illustrate, consider the famous quote from the movie The Matrix: 

"What is real? How do you define 'real'? If you're talking about what you can feel, what you can smell, what you can taste and see, then 'real' is simply electrical signals interpreted by your brain." 

Applying this analogy to citizenship, we must ask: What defines a “genuine link”? Is it ancestry, residency, economic contribution, or cultural affinity? Malta’s Citizenship by Investment programme brings these questions to the forefront, challenging the EU to consider the multifaceted nature of citizenship. 

In principle, ancestry and lineage, often seen as traditional measures of belonging, can be surprisingly fluid. Essentially, genetic ties dilute over generations, and historical practices like adoption complicate the notion of bloodline purity. For instance, descendants of Sephardic Jews granted Spanish citizenship today may have no direct ancestral link to Spain beyond their cultural heritage. 

The Sovereign Right to Grant Citizenship 

Professor Dimitry Kochenov, a scholar of EU law, has criticized the Commission's stance, arguing that it contradicts established legal precedents. In fact, in the 1992 Micheletti case, the European Court of Justice ruled that EU citizenship must be acknowledged without regard to any substantive connection beyond the legal status of citizenship itself. Consequently, this ruling effectively nullified the requirement for a “genuine link” as a basis for EU rights. 

Additionally, Kochenov suggests that the Commission’s insistence on a genuine link is not only legally groundless but also politically motivated. He argues that this approach risks undermining the principle of non-discrimination on the basis of nationality—a core tenet of EU law. 

Citizenship by Investment in Context 

The statistics from 2022 highlight the dynamic nature of citizenship in the EU. Nearly 1 million people acquired citizenship in the EU, with countries like Italy, Spain, and Germany leading the way. Notably, most new citizens were non-EU nationals, reflecting the ongoing integration and mobility within Europe. Malta’s CBI programme plays a significant role in this landscape by offering a pathway for global mobility and economic contribution despite the country’s small size.

The Future of Malta’s CBI Programme: A Question of Identity 

Overall, as the ECJ prepares to deliver its opinion, the outcome of the European Commission vs. Malta case will have far-reaching implications. It will not only determine the future of Malta’s CBI programme but also shape the broader discourse on what it means to be a citizen in the European Union. 

To summarize, the essence of the debate lies in the balance between national sovereignty and the collective values of the EU. Malta's defense emphasizes that the power to grant citizenship remains a national competence—a view supported by international law and the EU Treaties. Meanwhile, the Commission’s challenge calls for a re-evaluation of the principles underlying EU citizenship. 

In closing, the hearing serves as a reminder that the European Union is a unique entity—a union of diverse nations, each with its own identity and rights. The principle of sovereignty, coupled with the need for cooperation, continues to define the intricate relationship between member states and the EU as a whole. 

As the legal arguments unfold and the principles of sovereignty and citizenship are debated in the European Commission vs. Malta, all eyes will be on the European Court of Justice's decision. The moment of truth will come on October 3, 2024, when the Advocate General delivers their opinion. Until then, the question of what defines a ‘genuine link’ and the limits of EU influence over national citizenship policies such as Malta’s CBI programme remain at the forefront of this pivotal case. 


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