In Government of the French Community, and Walloon Government v Flemish Government Case C-212/06, ECJ (Grand Chamber), the European Court of Justice (ECJ) determined that Flemish legislation limiting eligibility to a care insurance scheme was contrary to European provisions concerning the right to freedom of movement within the European Community (EC) in so far as the care insurance scheme included a residence requirement that excluded persons who worked in the Flemish region or in the bilingual Brussels-Capital, but who resided in another part of the national territory (ie the French or German speaking region).

In a referral from the Belgium Court of Arbitration, the ECJ was asked to consider, amongst other issues, whether Articles 18, 39 and 43 of the EC Treaty must be interpreted as precluding an autonomous Community of a federal Member State (such as the Flemish Community) from adopting provisions for access to and cover under a social security scheme that excluded persons, whatever their nationality, who resided in a part of the territory of the federal State for which another autonomous Community (such as the French Community) was competent.

In reaching its decision, the ECJ noted that "although Member States retain the power to organise their social security schemes, they must none the less, when exercising that power, observe Community law and, in particular, the provisions of the EC Treaty on freedom of movement for workers". The ECJ went on to say that, by limiting affiliation to and entitlement to the benefits provided by the care insurance scheme to persons resident in a limited part of the national territory or in another Member State, migrant workers might be dissuaded from making use of their freedom of movement and from leaving their Member State of origin to stay in Belgium, since moving to certain parts of Belgium would cause them to lose the opportunity of eligibility for the benefits which they might otherwise have claimed.

The decision in this case should serve as a warning to European Member States, in particular federal Member States, to ensure that social security schemes comply with EC provisions concerning freedom of movement within the EC, regardless of whether the differentiation at issue is based solely on the place of residence on national territory and not on any condition of nationality.