ECJ Ruling Halts Malta Citizenship by Investment Program: Industry Experts Express Concerns

The European Court of Justice (ECJ) has delivered a significant blow to Malta's citizenship by investment program, prompting strong reactions and concerns from investment migration experts. The court's ruling, which deviates from the Advocate General's earlier recommendation  , has raised questions about the legal basis and implications for similar programs within the European Union.

James Muscat Azzopardi, a Partner at Credence Corporate and Advisory Services Limited, described the ECJ's decision as "very unusual," highlighting the contradiction with the Advocate General's opinion, which was based on the same legal articles cited in the final ruling.

When questioned about the possibility of an appeal, Muscat Azzopardi confirmed the finality of the decision, stating, "there is no appeal from the ECJ’s decision." This means Malta must now adapt its approach to citizenship by investment in light of this new legal precedent.

The ruling mandates that Malta cease its current citizenship by investment scheme. "Malta’s Prime Minister has indicated that Malta will amend the program to respect the ECJ decision, but we do not have any more information at this stage," explained Muscat Azzopardi. He also reassured current passport holders that the ruling "does not affect current passport holders."

Looking ahead, Muscat Azzopardi advised other potential EU citizenship programs to "study the decision in detail and avoid a transactional program and one that does not create enough genuine links with the country."

Henley & Partners, the firm that designed Malta’s previous Individual Investor Programme, expressed their disappointment with what they termed a "highly politicized judgment." In an official statement, the company argued that the decision "undermines two of the most important values of the EU itself, democratic legitimization and rule of law."

The firm emphasized the "stark contrast to the thoughtful and legally grounded opinion of the Advocate General" and suggested the decision "appears politically motivated," with reasoning that remains "tenuous at best."

Dr. Juerg Steffen, CEO of Henley & Partners, viewed the ruling as an "encroachment on national sovereignty" concerning citizenship matters. He stated, "At the heart of this case lies the principle of sovereignty and national competence in citizenship matters. Member States have the exclusive right to determine the criteria for the acquisition of their citizenship, which is clearly laid out in the EU treaties."

Henley & Partners refuted the court’s characterization of citizenship by investment as "commercialization," asserting that these programs are "structured and transparent legal pathways that demand lawful conduct, economic contribution, and commitment from applicants."

The firm further pointed out that "in 2023 alone, EU Member States collectively granted over 1.1 million citizenships—and often based on tenuous links to the granting country, such as a remote ancestry connection," suggesting a double standard in the court's reasoning against Malta citizenship by investment.

Highlighting a global trend, the company noted that "while the United States, Canada, UAE, Singapore, and other successful countries are leading the way in attracting investors and talent with investment migration programs, the European Union prefers to go backward."

Professor Dimitry Kochenov, speaking to EU Law Live, described the ruling as a "departure from the liberal conception of EU citizenship" and a "robust departure from the Rule of Law." Kochenov likened the decision to a return to "Blut und Boden" nationalism and criticized the enforcement of "thick citizenship" over the previously embraced liberal model within the EU.

Kochenov argued that the court "invented the law," stating that "there is nothing in international, EU, or Maltese law which would prohibit this approach to naturalizations." He also criticized the court’s repeated emphasis on the "commercialization" of EU citizenship, a term that appears seven times in the ruling despite lacking a clear legal basis. He characterized the decision as an "unprovoked attack against the Micheletti ideal of liberalism," where EU citizenship has been "hijacked by solidarity enthusiasts afraid of money."

James Muscat Azzopardi also suggested that the ruling might embolden the EU to increase pressure on citizenship programs in third countries, particularly concerning Schengen access, a sentiment widely shared among industry leaders.

Dr. Christian H. Kälin, Chairman of Henley & Partners, stressed that "the idea that investment migration undermines solidarity within the EU is not only unfounded but reflects a troubling misunderstanding of the socio-economic role these programs play."

Despite the ruling against Malta citizenship by investment, Henley & Partners anticipates a "significant advantage" as "the termination of Malta’s citizenship program will only increase the demand for specialized advisors." They foresee a rise in clients seeking "alternative citizenship and residency solutions and diversification options" across different jurisdictions.

The collective criticism from these prominent figures in the investment migration sector underscores the perceived legal inconsistencies and concerns about EU overreach in this definitive ECJ decision.