ON 29 April 2025, the Court of Justice as a Grand Chamber delivered its seminal judgment in Commission v Malta, C-181/23, EU:C:2025:283. This decision not only clarifies EU citizenship law, it also further defines its precise contours and in the process clarifies EU values and the federal nature of the EU constitution. It is the first infringement action brought against a Member State for operating a so-called citizenship-by-investment (CBI) scheme and the first case on the grant of citizenship. Both acquisition and loss of citizenship fall within the exclusive competence of the Member States but even in areas of exclusive competence, the Member States’ discretion is, according to the Court of Justice, not unlimited. The decision is perhaps just the logical continuation of the Judgment of 2 March 2010, Rottmann, C-135/08, EU:C:2010:104. In that case the court ruled that when deciding on the loss of citizenship, the Member States have to take the loss of genuine enjoyment of EU citizenship into consideration. The Rottmann decision had been criticised for potentially violating the principle of conferral for limiting the Member States’ exclusive competence. On the other hand, it has been widely accepted that the benefit of EU citizenship is now of a quality that it must limit the Member States’ discretion in this area. The constitutional significance of this decision should not be underestimated as it resets the federal relationship between the Member States and the EU institutions.

Under the Maltese citizenship law, introduced in 2020 as the “Naturalisation for Exceptional Services by Direct Investment”, wealthy third-country nationals could acquire Maltese nationality, and by virtue of being a Member State national also EU citizenship according to Article 20 of the Treaty on the Functioning of the European Union (TFEU), in return for significant financial contributions subject only to minimal residence requirements.

The Commission, while accepting that granting citizenship falls under the exclusive competence of the Member States, argued that such commodification of citizenship was incompatible with Article 20 of the TFEU, which establishes Union citizenship as a constitutional status, and violated the principle of sincere cooperation in Article 4(3) of the Treaty Establishing the European Union (TEU). It argued (at [42]) that a Member State

Malta countered that the determination of nationality remained a matter of sovereign competence, immune from supranational scrutiny. It highlighted that “the Court can review the exercise of national competences to grant nationality only in so far as they constitute serious breaches of the values or objectives of the European Union [but not] in a general and systematic manner” (at [45]).

The Advocate General Collins in his opinion of 4 October 2024 (EU:C:2024:849) sided with Malta and highlighted that there was contrary to the Commission’s view no requirement for a “genuine link” either in EU or international law, meaning that the Commission had failed to prove any violation of EU law.

The Court however sided with the Commission. It reaffirmed that Member States retain the competence to determine who their nationals are but stressed that this competence must be exercised in accordance with EU law. It also somewhat surprisingly confirmed “the Court has repeatedly held that Union citizenship constitutes the fundamental status of nationals of the Member States” (at [92]) when at most the court had confirmed the destiny of EU citizenship in that regard.

In a striking passage, the court declared “[u]nion citizenship is thus one of the principal concrete expressions of the solidarity which forms the very basis of the process of integration” (at [91]), thereby elevating it to an EU constitutional value that Member States are bound to respect. By granting nationality in exchange for predetermined payments, Malta had disregarded the bond of good faith between State and citizen, undermining the mutual trust upon which automatic recognition of nationality across the Union rested. The Court declared that “the bedrock of the bond of nationality of a Member State is formed by the special relationship of solidarity and good faith between that State and its nationals and the reciprocity of rights and duties”. The absence of this kind of bond between the applicants and Malta meant that the scheme treated citizenship as a mere commodity, incompatible with the constitutional structure of the Union. On this basis the court declared the scheme contrary to Articles 20 of the TFEU and 4(3) of the TEU. The court also clarified that it felt empowered to rule on the grant of citizenship due to the principle of loyal cooperation. Unfortunately, the discussion of the international law conditions establishing a “genuine link” for citizenship after the ICJ Nottebohm Case (Liechtenstein v Guatemala) (Second Phase) (1955) I.C.J. Rep 4), were not discussed beyond a mere reference to international law.

The Court of Justice judgment is remarkable both for its doctrinal innovation and for the criticisms it has already attracted. On one reading it represents the logical continuation of earlier jurisprudence, notably Rottmann and Judgment of 8 March 2011, Zambrano, C-34/09, EU:C:2011:124, in which the court subjected nationality decisions to EU scrutiny in order to protect the “substance” of EU citizenship rights. But whereas those cases expanded the protective reach of citizenship for individuals, the decision in Commission v Malta imposes limits on a Member State’s generosity by insisting that acquisition of nationality presupposes substantive ties of solidarity and good faith. In this sense the court might be seen as having shifted from a conception of citizenship as enhancing freedoms inside the EU to the opposite and to a status that requires proof of belonging.

Commentators have been quick to point to the risks of such an approach. Kochenov described the ruling as heralding a “new essentialism”, whereby indeterminate requirements of solidarity may be deployed to exclude individuals from EU citizenship despite the formal validity of their nationality (D. Kochenov, ‘EU Citizenship’s New Essentialism’ (30 April 2025) https://verfassungsblog.de/eu-citizenships-new-essentialism/). Earlier decisions such as Micheletti Judgment of 7 July 1992, C-369/90, EU:C:1992:295 and Zhu and Chen Judgment of 19 October 2004, C-200/02, EU:C:2004:639 had treated EU citizenship as a shield for those whose national links were tenuous, protecting them against restrictive Member State practices. By contrast, the insistence on genuine links in Commission v Malta may expose individuals to uncertainty and the danger of illiberal exclusion. The contrast with Advocate General Sharpston’s liberal vision in Zambrano is particularly stark: there she urged the court to embrace Union citizenship as an independent source of rights, minimising reliance on national ties, whereas here the court requires precisely such ties to ground the legitimacy of citizenship.

The reasoning of the judgment has also come under attack for its brevity and lack of doctrinal precision. As Van den Brink observed, the court relied heavily on rhetorical invocations of solidarity and mutual trust without explaining their precise content or how they derive from the treaties (M. van den Brink, ‘Why bother with legal reasoning? The CJEU Judgment in Commission v Malta (Citizenship by Investment)’ (2 May 2025) https://verfassungsblog.de/why-bother-with-legal-reasoning/). Gormsen similarly noted that while the Commission’s arguments concerning a genuine link had constitutional bite, the court missed an opportunity to anchor it in general principles such as the prohibition of abuse or democratic accountability C. Gormsen ‘Why the Commission’s Case against Malta has (Some) Bite’ (18 November 2024) https://www.europeanlawblog.eu/pub/91c7g1zp/release/1). Peers, in a wry commentary, likened the affair to “Pirates of the Mediterranean meeting the Judges of the Kirchberg”, capturing both the political theatre and the jurisprudential novelty of subjecting grants of nationality to supranational review (S. Peers, (30 April 2025) https://eulawanalysis.blogspot.com/2025/04/pirates-of-mediterranean-meet-judges-of.html). While Peers is “equally unimpressed by both the arrogant Eurofederalism of the court and the fridge-magnet nationalism of the Maltese government”, he highlighted that a lack of strong foundation in the text of the EU treaties might become a problem in the future.

But seen through the lens of EU constitutional law, the judgment is perhaps less surprising. Solidarity and mutual trust have played an outsized role in the recent rule of law cases. The Court of Justice has embedded these values into the very definition of mutual cooperation, thereby ensuring that Member State discretion does not erode the integrity of EU citizenship. Yet this embedding comes at a cost. Without clear benchmarks as to what counts as sufficient residence or integration, the principle of solidarity risks becoming an empty concept, filled only by judicial discretion.

The immediate consequence is that Malta must dismantle its CBI scheme, and other Member States operating similar programmes will face intense scrutiny. While questions about existing Maltese investor passport holders remain, their treatment as EU citizens is not immediately called into question. More broadly, the decision confirms that nationality, though formally a matter of exclusive Member State competence, has become a subject of supranational constitutional law. Whether this development strengthens the cohesion of the Union or undermines its liberal pluralism and by extension the Treaty protected “national identity” of the Member States remains to be seen. EU citizenship has been transformed from a derivative of nationality into a EU constitutional value in its own right.

This judgment constitutes a genuine constitutional and perhaps federalising shift. Nationality has always been understood as part of the exclusive competence of the Member States. Yet, as was already clear in Rottmann, such competence is not unlimited when affecting EU values. In Commission v Malta the court has now gone further. Even in areas where Member States have historically guarded their sovereignty most jealously, the EU now expects that their discretion be exercised consistently with EU values. This line of case law is not without risks, as the current backlash against the EU in some political quarters, might well lead to the faster erosion of EU values than any form of investor citizenship.