EU Court of Justice to take landmark decision on Malta’s golden passport scheme

The EU Court of Justice will make its landmark decision of Malta’s golden passport scheme on Tuesday (tomorrow). 

This comes after the European Commission took Malta to court over its controversial investment-for-citizenship scheme in 2022, currently known as Malta’s Exceptional Investor Naturalisation (MEIN) scheme, which offers fast-track citizenship status in exchange for large investments. 

The European Commission’s case against Malta’s citizenship by investment programme is highlighting some of the internal contradictions of the European Union, with a sitting in mid-June in 2024 drawing attention to several points of contention.

At stake is not only the MEIN scheme, but also the future of similar schemes across the EU.

The European Commission contends that this practice undermines the integrity and security of EU citizenship, advocating for a unified policy across member states.

In contrast, Malta defends its sovereign right to manage its own citizenship laws, emphasising the economic benefits and stringent vetting process of the MEIN.

These kind of schemes were introduced by several Member States after the 2008 financial crisis, in the hope of pushing economic growth. 

While Malta’s programme has generated significant revenue, used for national development projects and stimulating economic activity through investments in local businesses and real estate, the European Commission has highlighted potential security risks, questioning the thoroughness and uniformity of background checks.

Essentially, the Commission fears that the sale of citizenship could devalue EU citizenship and pose security threats across the Union.

At the core of Malta’s argument is a long-standing insistence – seemingly confirmed by the Commission itself when Malta first asked it to review its citizenship by investment programme in 2013 – that determining citizenship laws is a fundamental aspect of national sovereignty, crucial for national self-governance.

If Malta wins the case, the country, along with other EU countries, would have a confirmation of its sovereign right to determine citizenship laws. This could potentially open the door to more citizenship by investment programmes across Europe as other countries, emboldened by the decision, seek ways to shore up their public finances.

However, other member states are likely to take a dim view of any such developments, seeing them as undermining the collective integrity and security of EU citizenship, and therefore straining relations within the bloc.

If, on the other hand, Malta loses the case, that would signal the end of the MEIN and its decade-long initiative. This would have a direct impact on the Government purse as well as on the many private sector firms and individuals who have made a living from the passport industry.

A ruling in favour of the European Commission could also lead to stricter, harmonised EU regulations on citizenship by investment programmes across all member states, probably requiring more evidence of a genuine link.

The third option is that the Court of Justice does not take a clear position in favour of either the European Commission or Malta. This would likely lead to further negotiations between the two parties in a bid to find a compromise.

Most likely, this would involve an adjustment to the scheme’s rules to address the Commission’s primary concerns while still allowing Malta to reap the benefits of a citizenship by investment programme.

The Court’s upcoming decision will therefore be pivotal in determining the balance between national sovereignty and EU oversight in citizenship matters. Just yesterday (Sunday) the Financial Times broke the news that Russians hit with EU sanctions over the Ukraine invasion have been allegedly able to circumvent the travel ban because of Malta’s golden passport, with seven recipients of the scheme in total hit by US, EU or Ukrainian sanctions.

Last October, the Attorney General Advocate General Anthony Michael Collins suggested that the Court of Justice should dismiss the European Commission’s case against Malta’s citizenship-by-investment programme.

The formal Opinion is a big win for the Maltese Government, which has strongly defended the programme against mounting criticism from the European Commission.

It is important to note that although the Court of Justice often follows the Advocate General’s Opinion, it is not bound to do so.

What is certain is that tomorrow’s decision will shape the future of citizenship by investment programs across the EU, impacting economic policies, security measures, and the overall cohesion of the union, underscoring the complex interplay between individual member states’ rights and collective EU interests and setting the stage for significant legal and political ramifications.