Malta and the EU’s definitive ruling on golden passports

In a trenchant judgement on April 29, 2025 the Grand Chamber of the Court of Justice of the EU (CJEU) in the case of Malta v European Commission ruled that the sale of their nationality by member states under cover of investment programmes fails to comply with EU law.

Not to put too fine a point on it between 2014-20 Malta, Cyprus and Bulgaria were selling their nationality to rich foreigners. Commercially minded political leaders made a lot of money for their countries from the sale of their country’s nationality to wealthy Russians and Arabs and Asians who wished to acquire access to the EU on the back of being nationals of a member state.

Although unscrupulous and transactional and done for commercial profit, such grants of nationality were not obviously unlawful under EU law. This was because on accession member states declared that any question whether a person is a national of a member state was to be settled solely by reference to the nationality law of the member state.

And indeed this was the opinion of advocate-general, Anthony Collins, who advised the CJEU that nationality was exclusively a matter for member states. According to the advocate-general a genuine link with the member state whose nationality was being sought was nothing to the point as the carefully crafted balance of powers between the European Union and its member states reserved nationality exclusively to the states.

Unusually, the CJEU decided not to follow the advice of its advocate-general. It held that while member states are responsible for granting nationality in respect of which the EU had no competence, they had to have due regard both to international and EU law and a failure to do so was actionable as an infringement of EU law.

The principle is that EU law applies to decisions of member states even in areas of their exclusive competence if their decisions have legal consequences on the EU and its member states as such.

According to the court, transactional naturalisation whereby a person acquires the nationality of a member state – and by extension the status of an EU citizen – for money in the form of investment amounted to impermissible commercialisation of union citizenship.

The court held that such transactional naturalisation was incompatible with the fundamental constitutional role EU citizenship plays in the process of European political integration that is the raison d’etre of the EU.

So, acquisition of citizenship by transactional naturalisation was in manifest breach of the principle of sincere cooperation in the attainment of European integration, quite apart from its effect on other member states who are entitled to assume that nationals of another member state in their midst are not nationals of convenience with no real connection to the member state that gave them a passport.

As analysed in this column on Sunday, October 13, 2024 in an article headed “Selling golden passports should remain unlawful” a person’s nationality is not recognised by customary international law if it is not founded on a genuine prior link between the person and his or her country of nationality.

The usual genuine links are birth in a member state to a parent who is a national or permanent resident of that state; or descent from a natural born national; or naturalisation based on length of residence – normally between five and seven years – plus working knowledge of its language.

A genuine link was not referred to as such by the court in the Malta case as constituting a common understanding of nationality. The court preferred to take a different tack even if in the end it arrived at the same destination – a common understanding of citizenship.

What the court did was to confirm from its case law that the bedrock bond of nationality was a special relationship of solidarity and good faith involving a reciprocity of rights and obligations between member states and their nationals that could not be bought and sold like a commodity.

The words national and citizen overlap and are often used interchangeably, but they are different and although the court skated over the difference, its decision was partly based on the difference between them.

A person’s nationality is the country to which a person belongs in international law. Citizenship is the bundle of rights and obligations accorded by a state to those it accepts as its citizens. A country declares who its nationals are internationally from those it accepts as its citizens to whom it ascribes rights and obligations as citizens internally. In the case of the EU, however, there is no such person as an EU national as there is a national of a member state. There are EU citizens, and it is the rights of citizens as citizens, not nationals, that concentrated the mind of the court.

These rights include the right to come and go and live and work and move freely within EU territory, the right to vote locally and nationally and stand as a candidate in elections, the right to security and justice, the right to identity and travel documentation and to diplomatic protection when abroad.

In return the citizen owes allegiance with obligations to obey and respect its laws, pay its taxes and perform any other duties that can lawfully be required of every citizen.

What the CJEU held in Malta v European Commission was that all the above incidents and benefits could not be bought by third country nationals in some kind of market for EU citizenship.

Malta and presumably other countries, including Cyprus, with similar schemes therefore failed to fulfil their obligations of sincere cooperation with the EU and other member states not to abuse the union’s citizenship law because their grant of nationality by transactional naturalisation with an automatic right to EU citizenship was not lawful under EU law.

Alper Ali Riza is a king’s counsel in the UK and a retired part time judge