Reports - EUR-Lex - European Union

ISSN 1022-842X

C O U R T O F J U S T I C EOF THE

EUROPEAN COMMUNITIES

I: 519-1300

Reports 2009 –

2 I:

11*-22*

Reportsof

Cases

before the Court of Justice and

the Court of First Instance

*Section I

Court of Justice*

2009 – 2 ISSN 1022-842X EN

LUXEMBOURG Catalogue No: QD-AB-09-002-EN-C

These Reports are published, pursuant to the Rules of Procedure of the Court of Justiceand in accordance with the rules on the languages to be used in the Communities, in theofficial languages1 namely Bulgarian, Czech, Danish, Dutch, English, Estonian,Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese,Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish, the language of each case being specified. From 1 May 2004, unless the Judges hearing the case decide otherwise, the following willno longer be published in the Reports: — judgments in cases other than references for a preliminary ruling delivered by

Chambers of three Judges, — judgments in cases other than references for a preliminary ruling delivered by

Chambers of five Judges where the Advocate General does not give an Opinion, — orders. Those decisions can, however, be found on the Court’s website (http://curia. europa.eu) in the languages available, namely the language of the case and the language of the deliberations. From Volume 2006 – 1, the Reports will include a section containing details of un-published decisions (pages numbered I-1*, I-2*, etc.).

* The summaries of judgments and orders do not bind the Court and are in no way tobe regarded as an official interpretation of the decisions summarised.

* In order to facilitate use of the Reports, pagination is the same in all the languageversions. It is therefore inevitable that some pages will not be fully utilised. These Reports may be reproduced, provided the source is acknowledged. The recommended mode of citation is as follows: the case number, the names of theparties in the form used in the heading of the pages of the Reports, the year (in squarebrackets) and abbreviated title (ECR) of the Reports, the page number, preceded bythe numeral ‘I’ for cases before the Court of Justice and by the numeral ‘II’ for cases before the Court of First Instance.

1 For Irish, temporary derogation measures have been laid down in Council Regulation (EC) No 920/2005 (OJ 2005 L 156, p. 3).

Parts published — Section I

2009 – 1 pp. 1‐ 518 2009 – 2 pp. 519‐1300

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THE COURT OF FIRST INSTANCE

Pursuant to the renumbering of the articles of the Treaty on European Union(EU) and of the Treaty establishing the European Community (EC), broughtabout by the Treaty of Amsterdam, the Court of Justice and the Court of FirstInstance have introduced, with effect from 1 May 1999, a new method ofcitation of the articles of the EU, EC, ECSC and Euratom Treaties.

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I

— ‘Article 53 of the EC Treaty (repealed by the Treaty of Amsterdam)’, where the article has been repealed by the Treaty of Amsterdam.

● By way of exception to the latter rule, the initial citation of (the former)Articles 117 to 120 of the EC Treaty, which have been replaced en bloc bythe Treaty of Amsterdam, is followed by the following wording in brackets: ‘(Articles 117 to 120 of the EC Treaty have been replaced byArticles 136 EC to 143 EC)’.

For example:

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The same applies to Articles J to J.11 and K to K.9 of the EU Treaty.

For example:

— ‘Article J.2 of the Treaty on European Union (Articles J to J.11 of theTreaty on European Union have been replaced by Articles 11 EU to28 EU)’;

— ‘Article K.2 of the Treaty on European Union (Articles K to K.9 of theTreaty on European Union have been replaced by Articles 29 EU to42 EU)’.

● Comprehensive lists setting out the new method of citation of the art-icles of the EC Treaty and of the articles of the EU Treaty as they stoodbefore 1 May 1999 are published in Sections I and II of the EuropeanCourt Reports for May 1999.

II

INDEX OF SUBJECT MATTER

page

Actions for annulment

— Judgment annulling a measure — Effects — Partial annulment: judgment of 19 February 2009 (Gorostiaga Atxalandabaso v Parliament, C-308/07 P) I - 1059

— Natural or legal persons — Measures of direct and individual concern to them: order of 17 February 2009 (Galileo Lebensmittel v Commission, C-483/07 P) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 959

Acts of the institutions

— Choice of legal basis: judgment of 10 February 2009 (Ireland v Parliament and Council, C-301/06) . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 593

Approximation of laws

— Common system of taxation applicable in the case of parent companies andsubsidiaries of different Member States — Directive 90/435: judgment of 12 February 2009 (Cobelfret, C-138/07) . . . . . . . . . . . . . . . . . . . . . I - 731

— Copyright and related rights — Directive 2001/29 — Harmonisation of certain aspects of copyright and related rights in the information society —Intermediaries within the meaning of Article 8(3) of Directive 2001/29 —Definition: order of 19 February 2009 (LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten, C-557/07) . . . . . . . . . . . . . . . . . . . . I - 1227

III


page — Harmonisation of certain aspects of copyright and related rights in the

information society — Directive 2001/29 — Electronic commerce —Directive 2000/31 — Processing of personal data and protection of privacy in the electronic communications sector — Directive 2002/58 —Enforcement of intellectual property rights — Directive 2004/48: order of 19 February 2009 (LSG-Gesellschaft zur Wahrnehmung von Leis-tungsschutzrechten, C-557/07) . . . . . . . . . . . . . . . . . . . . . . . . . I - 1227

Common commercial policy

— Measures to prevent counterfeit or pirated goods being placed on themarket — Regulation No 1383/2003 — Simplified procedure of abandoninggoods, suspected of infringing an intellectual property right, for destruction:judgment of 12 February 2009 (Schenker, C-93/08) . . . . . . . . . . . . . I - 903

Common Customs Tariff

— Tariff headings — Monitors capable of transmitting signals coming both from an automatic data-processing machine and from other sources: judgment of 19 February 2009 (Kamino International Logistics, C-376/07) I - 1167

— Tariff headings — Monitors capable of transmitting signals coming bothfrom an automatic data-processing machine and from other sources —Application by analogy of Classification Regulation No 754/2004 —Conditions — Sufficient similarity of the products — None: judgment of 19 February 2009 (Kamino International Logistics, C-376/07) . . . . . . . I - 1167

IV


Community law

— Principles — Fundamental rights — Observance ensured by the Court —Taking into consideration the European Convention on Human Rights —Right of every person to a fair hearing: judgment of 19 February 2009(Gorostiaga Atxalandabaso v Parliament, C-308/07 P) . . . . . . . . . . .

— Principles —Right to effective judicial protection: order of 17 February 2009 (Galileo Lebensmittel v Commission, C-483/07 P) . . . . . . . . . . . . . .

I - 1059

I - 959

page

Community trade mark

— Effects of Community trade marks — Rights conferred by a trade mark: order of 19 February 2009 (UDV North America, C-62/08) . . . . . . . . . I - 1279

Environment

— Deliberate release of genetically modified organisms — Directive 2001/18: judgment of 17 February 2009 (Azelvandre, C-552/07) . . . . . . . . . . . I - 987

European Communities

— Institutions — Obligations — Obligation to cooperate in good faith —Reciprocity: judgment of 12 February 2009 (Commission v Greece, C-45/07) I - 701

V


page Free movement of capital

— Restrictions — Inheritance tax: judgment of 12 February 2009 (Block, C-67/08) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 883

Free movement of goods

— Quantitative restrictions — Measures having equivalent effect: judgment of 10 February 2009 (Commission v Italy, C-110/05) . . . . . . . . . . . . . . I - 519

— Quantitative restrictions — Measures having equivalent effect — Meaning: judgment of 10 February 2009 (Commission v Italy, C-110/05) . . . . . . . I - 519

International agreements

— Agreements concluded by the Member States — Agreements predating the EC Treaty — Article 307 EC — Scope: judgment of 12 February 2009 (Commission v Greece, C-45/07) . . . . . . . . . . . . . . . . . . . . . . . . I - 701

— Community not a member of an international organisation — Area falling within the external competence of the Community: judgment of 12 February 2009 (Commission v Greece, C-45/07) . . . . . . . . . . . . . . . I - 701

— EEC-Turkey Association Agreement — Freedom of movement for persons — Freedom of establishment — Freedom to provide services — Standstill rule in Article 41(1) of the Additional Protocol: judgment of 19 February2009 (Soysal and Savatli, C-228/06) . . . . . . . . . . . . . . . . . . . . . I - 1031

VI


Judicial cooperation in civil matters

— Insolvency proceedings — Regulation No 1346/2000: judgment of 12 February 2009 (Seagon, C-339/07) . . . . . . . . . . . . . . . . . . . . . .

— Jurisdiction and the enforcement of judgments in civil and commercialmatters — Regulation No 44/2001 — Scope: judgment of 10 February 2009 (Allianz and Generali Assicurazioni Generali, C-185/07) . . . . . . . . . .

I - 767

I - 663

page

Member States

— Obligations — Obligation to cooperate in good faith with the Community institutions — Ship and port facility security: judgment of 12 February 2009 (Commission v Greece, C-45/07) . . . . . . . . . . . . . . . . . . . . . . . . I - 701

Procedure

— Decision given by reasoned order — Challenge — Conditions: judgment of 19 February 2009 (Gorostiaga Atxalandabaso v Parliament, C-308/07 P) I - 1059

Social policy

— Approximation of laws — Transfers of undertakings — Safeguarding of employees’ rights — Directive 2001/23 — Scope — Transfer — Meaning: judgment of 12 February 2009 (Klarenberg, C-466/07) . . . . . . . . . . . I - 803

VII


page Tax provisions

— Harmonisation of laws — Turnover taxes — Common system of value added tax — Deduction of input tax: judgment of 12 February 2009 (Vereniging Noordelijke Land- en Tuinbouw Organisatie, C-515/07) I - 839

— Harmonisation of laws — Turnover taxes — Common system of value added tax — Refund of the tax to taxable persons not established in theCommunity: judgment of 19 February 2009 (Athesia Druck, C-1/08) I - 1255

— Harmonisation of laws — Turnover taxes — Common system of value added tax — Supply of services — Determination of relevant place for taxpurposes: judgment of 19 February 2009 (Athesia Druck, C-1/08) . . . . . I - 1255

Transport

— Road transport — Driving licences — Directive 91/439: judgment of 19 February 2009 (Schwarz, C-321/07) . . . . . . . . . . . . . . . . . . . . . . I - 1113

Visas, asylum, immigration

— Asylum policy — Minimum standards for determining who qualifies forrefugee status or for subsidiary protection status — Directive 2004/83 —Eligibility conditions for subsidiary protection: judgment of 17 February2009 (Elgafaji, C-465/07) . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 921

VIII

Case C-110/05

Commission of the European Communities v

Italian Republic

(Failure of a Member State to fulfil obligations —Article 28 EC —Concept of ‘measures having equivalent effect to quantitative restrictions on imports’ — Prohibition on

mopeds, motorcycles, motor tricycles and quadricycles towing a trailer in the territoryof a Member State — Road safety — Market access — Obstacle — Proportionality)

Opinion of Advocate General Léger delivered on 5 October 2006 . . . . . I - 522 Opinion of Advocate General Bot delivered on 8 July 2008 . . . . . . . . I - 535 Judgment of the Court (Grand Chamber), 10 February 2009 . . . . . . . I - 568

Summary of the Judgment

1. Free movement of goods — Quantitative restrictions — Measures having equivalent effect —Meaning (Art. 28 EC)

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SUMMARY — CASE C-110/05

2. Free movement of goods — Quantitative restrictions — Measures having equivalent effect (Arts 28 EC and 30 EC)

1. Article 28 EC reflects the obligation to respect the principles of non-discrimin-ation and of mutual recognition of products lawfully manufactured and marketed in other Member States, as well as the principle of ensuring free access ofCommunity products to national markets.Measures adopted by a Member State theobject or effect of which is to treat productscoming from other Member States less favourably are to be regarded as measureshaving equivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC, as are, in theabsence of harmonisation of national legislation, obstacles to the free movementof goods which are the consequence of applying, to goods coming from other Member States where they are lawfullymanufactured and marketed, rules that laydown requirements to be met by such goods even if those rules apply to all products alike. Any other measure whichhinders access of products originating inother Member States to the market of a Member State is also covered by that concept.

(see paras 34, 35, 37)

2. A Member State which, for reasons of road safety, prohibits mopeds, motorcycles, motor tricycles and quadricycles from towing a trailer specially designed for them and lawfully produced and marketedin other Member States has not failed to fulfil its obligations under Article 28 EC.

Such a prohibition certainly constitutes ameasure having equivalent effect to quan-titative restrictions on imports prohibitedby that article to the extent that its effect isto hinder access to the market at issue for trailers specifically designed for motor-cycles inasmuch as it has a considerableinfluence on the behaviour of consumers and prevents a demand from existing in themarket at issue for such trailers.

However, that prohibition must be regarded as justified by reasons relatingto the protection of road safety. Whilst it istrue that it is for a Member State which invokes an imperative requirement as justification for the hindrance to free movement of goods to demonstrate thatits rules are appropriate and necessary toattain the legitimate objective being

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COMMISSION v ITALY

pursued, that burden of proof cannot be soextensive as to require the Member State toprove, positively, that no other conceivablemeasure could enable that objective to beattained under the same conditions.

Although it is possible, in the present case,to envisage that measures other than theprohibition at issue could guarantee a certain level of road safety for the circula-tion of a combination composed of a

motorcycle and a trailer, the fact remainsthat Member States cannot be denied the possibility of attaining an objective such asroad safety by the introduction of generaland simple rules which will be easily understood and applied by drivers and easily managed and supervised by the competent authorities.

(see paras 56-58, 66, 67, 69)

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OPINION OF MR LÉGER — CASE C-110/05

OPINION OF ADVOCATE GENERALLÉGER

delivered on 5 October 2006 1

1. In these proceedings, the Commission ofthe European Communities asks the Court tofind that, by maintaining rules which prohibitmopeds from towing trailers, the Italian Republic has failed to fulfil its obligations under Article 28 EC.

I — Legal background

A — Community law

1. The Treaty establishing the European Community

2. Article 28 EC provides:

‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.’

3. Under Article 30 EC, prohibitions or restrictions on imports between Member States which are justified, in particular, ongrounds of public security or the protection ofhealth and life of humans are authorised, provided that they do not constitute a meansof arbitrary discrimination or a disguisedrestriction on trade between Member States.

2. The rules on procedures for the type-approval of two or three-wheel motor vehicles

4. Council Directive 92/61/EEC 2 was adopted in order to establish a Community

2 — Council Directive 92/61/EEC of 30 June 1992 relating to thetype-approval of two or three-wheel motor vehicles (OJ 1992

1 — Original language: French. L 255, p. 72).

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type-approval procedure 3 for two or three- and to the components or separate technicalwheel motor vehicles. units of such vehicles.’

5. As is clear from the preamble to that directive, the aim of that procedure is to guarantee the functioning of the internal market by removing technical barriers to trade in the motor vehicle sector. 4 A further aim is to improve road safety and environ-mental and consumer protection. 5

6. In order to implement that Communitytype-approval procedure, the directive provides for total harmonisation of the technical requirements which such vehiclesmust satisfy. 6 It also provides that the technical requirements applicable to the various components and characteristics of such vehicles should be harmonised by meansof separate directives. 7

7. By virtue of the first subparagraph of Article 1(1), Directive 92/61 applies to ‘two or three-wheel motor vehicles, twin-wheeled or otherwise, intended to travel on the road,

3 — According to Article 2(6) of Directive 92/61, ‘type approval’means the procedure whereby a Member State certifies that atype of vehicle satisfies the technical requirements set out inthe separate directives and the checks on the correctness of themanufacturers’ data, as provided in Annex I to that directive.

4 — See the first to third, twelfth and last recitals. 5 — See the last recital. 6 — Ibid. 7 — See the eighth recital.

8. Pursuant to Article 1(2) and (3) of the directive, the vehicles concerned are mopeds, 8 motorcycles, tricycles and quadri-cycles.

9. The requirements concerning the massesand dimensions of two or three-wheel motor vehicles were harmonised pursuant to Council Directive 93/93/EEC. 9

10. Other technical requirements concerning, in particular, coupling devices and attachments for such vehicles were harmonised pursuant to Directive 97/24/ECof the European Parliament and of the Council. 10

8 — According to Article 1(2), first indent, of Directive 92/61,‘moped’ means ‘two or three-wheel vehicles fitted with an engine having a cylinder capacity not exceeding 50 cm3 if of the internal combustion type and a maximum design speed of notmore than 45 km/h.’

9 — Directive of 29 October 1993 on the masses and dimensions of two or three-wheel motor vehicles (OJ 1993 L 311, p. 76).

10 — Directive of 17 June 1997 on certain components and characteristics or two or three-wheel motor vehicles (OJ 1997 L 226, p. 1).

I - 523


11. Directives 93/93 and 97/24 both state, in II — The pre-litigation procedure their preambles, that the requirements theylay down should not have the aim or effect ofobliging Member States that do not allow twoor three-wheel motor vehicles in their terri-tory to tow a trailer to amend their rules. 11

B — National law

12. Article 53 of Legislative Decree No 285(Decreto Legislativo No 285) of 30 April 1992 12 defines mopeds as ‘motor vehicles with two, three or four wheels’, the latter constituting the category of ‘motor quadri-cycles’.

13. Pursuant to Article 54 of the HighwayCode, automobiles are motor vehicles with at least four wheels, excluding mopeds.

14. Pursuant to Article 56 of that code, onlyautomobiles, trolleybuses 13 and automobile tractors are allowed to tow trailers.

11 — See the last recitals to those directives. 12 — GURI No 114 of 18 May 1992, hereinafter ‘the Highway

Code’. 13 — Trolleybuses are vehicles with an electric motor not

travelling on rails which take their energy from an overheadcontact line.

15. Following an exchange of correspon-dence between the Italian Republic and theCommission, the latter, considering that Italyhad failed to fulfil its obligations under Article 28 EC by adopting the rules at issue,sent a letter on 3 April 2003 calling on Italy tosubmit its observations.

16. In its reply, dated 13 June 2003, the ItalianRepublic gave a commitment to make the requisite changes to the national rules and toremove the obstacle to imports mentioned bythe Commission. That Member State also stated that the changes concerned not onlythe type approval of vehicles but also the registration and use of such vehicles and roadside checks of trailers.

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COMMISSION v ITALY

17. However, the Commission received no further communication concerning the making of such changes and therefore, on 19 December 2003, sent a reasoned opinion tothe Italian Republic calling on it to take themeasures needed to comply with its obliga-tions under Article 28 EC within a period oftwo months as from service of that notice. Having received no reply, the Commissioninstituted the present proceedings under Article 226 EC by application lodged at theRegistry of the Court of Justice on 4 March2005.

III — The application

18. The Commission claims that the Court of Justice should:

— declare that, by prohibiting the towing oftrailers by mopeds, the Italian Republichas failed to fulfil its obligations underArticle 28 EC;

— order the Italian Republic to pay the costs.

19. The Italian Republic contends that theCourt should dismiss the application.

IV — The failure to fulfil obligations

A — Principal arguments of the parties

20. The Commission criticises the Italian Republic for breaching the principle of freemovement of goods laid down in Article 28 ECby prohibiting mopeds from towing trailers.

21. In support of that charge, the Commis-sion points out first of all that, in the absenceof harmonised Community legislation on typeapproval, registration and use of trailers formopeds, Articles 28 EC and 30 EC apply.

22. The Commission then states that the measure at issue precludes the use of trailerslegally produced and marketed in the otherMember States, thereby impeding importsand sales of such trailers in Italy. In its view,such a measure, constituting an obstacle to

I - 525


imports within the meaning of Article 28 EC,could only be considered compatible with theTreaty if it were justified by one of the public-interest grounds set out in Article 30 EC or byone of the imperative requirements recog-nised by the case-law of the Court.

trailers and not the refusal to register mopedsor trailers manufactured in another Member State and intended to be marketed within Italian territory.

23. In that connection, the Commission observes that the fact that the Italian Republicallows mopeds that are registered in otherMember States and tow trailers to be used in its territory proves that the towing prohibitionat issue does not reflect any road safety requirement.

24. Finally, the Commission states that therecitals to Directives 93/93 and 97/24, reliedon by the Italian Republic in support of therules at issue, are not in any way binding andcannot have the object or effect of renderingcompatible with Community law national rules of the kind at issue in these proceedings.In that connection, the Commission refers to the settled case-law of the Court of Justice concerning the primacy of primary law oversecondary law.

25. In response to those arguments, the Italian Republic submits that the infringe-ment imputed to it concerns a prohibition onmopeds registered in Italy from towing

26. The Italian Republic also contends thatthe reservation appearing in the last recitals toDirectives 93/93 and 97/24 renders the contested measure permissible. In its view, such a reservation is accounted for by thedifferences of terrain between national terri-tories. The prohibition could only be lifted ifthe technical rules on type approval, registra-tion and use on the road of trailers towed bytwo or three-wheeled motor vehicles were harmonised. 14 The Italian Republic states that the applicable Community law does not provide for any such harmonisation. Accord-ingly, mutual recognition of trailer require-ments remains within the discretion of the Member States.

27. The Italian Republic emphasises, finally, that the technical characteristics of the vehicles are important from the point of view of road safety. The Italian authorities consider that, in the absence of type-approvalrules for vehicles towing a trailer, the requisitesafety requirements are not fulfilled.

14 — The Italian Republic observes that such rules already exist fortrailers towed by other types of vehicle.

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COMMISSION v ITALY

B — Assessment

28. The Commission seeks a finding by theCourt that, by prohibiting mopeds from towing a trailer, the Italian rules impede thefree movement of goods, contrary to the Treaty.

29. It must be observed, as a preliminarypoint, that the provisions of secondary lawrelied upon do not govern the technical characteristics that must be fulfilled bymopeds towing a trailer. National measuresconcerning this matter are not therefore subject to harmonisation at Community level.

30. Nevertheless, in the absence of common or harmonised rules, the Member States remain obliged to respect the fundamentalfreedoms upheld by the Treaty, which includethe free movement of goods. 15

15 — It should be borne in mind that, under Article 3(1)(c) EC,European Community action includes the creation of aninternal market characterised by the abolition, as betweenMember States, of obstacles to, in particular, the free movement of goods. Moreover, Article 14(2) EC provides:‘[t]he internal market shall comprise an area without internalfrontiers in which the free movement of goods … is ensured in accordance with the provisions of this Treaty’; those provisions are set out notably in Article 28 EC et seq. See,to that effect, Case C-265/95 Commission v France [1997] ECR I-6959, paragraph 24 et seq.).

31. That freedom guarantees in particular, byvirtue of Article 28 EC, the prohibition between Member States of quantitative restrictions on imports and all measures having equivalent effect.

32. It is clear from settled case-law that anyState measure which is capable of directly orindirectly, actually or potentially, hinderingintra-Community trade is a measure havingan effect equivalent to a quantitative restric-tion prohibited by Article 28 EC. 16 Thus, although a measure may not be intended to govern trade in goods between Member States, the decisive factor is its effect on intra-Community trade, whether actual or potential.

33. Moreover, it is clear from the case-law of the Court that, in the absence of harmonisa-tion of laws, measures that apply without distinction to domestic products and thoseimported from other Member States are liableto constitute restrictions on the free move-ment of goods. 17

16 — See, in particular, Joined Cases C-267/91 and C-268/91 Keck and Mithouard [1993] ECR I-6097, paragraph 11, and JoinedCases C-158/04 and C-159/04 Alfa Vita Vassilopoulos and Carrefour Marinopoulos [2006] ECR I-8135, paragraph 15and the case-law there cited.

17 — See, in particular, Case 120/78 Rewe-Zentral (‘Cassis de Dijon’) [1979] ECR 649, paragraphs 6, 14 and 15.

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34. Such measures may nevertheless be justified if they pursue legitimate aims. It hasbeen consistently held that a national rulewhich hinders the free movement of goods isnot necessarily contrary to Community law ifit may be justified by one of the public-interestgrounds set out in Article 30 EC or by one ofthe overriding requirements laid down by theCourt’s case-law where the national rules are applicable without distinction. 18

35. However, as the Court has emphasised,any derogation from the fundamental prin-ciple of the free movement of goods must beconstrued strictly. 19 Each of the justificationsset out in Article 30 EC must therefore be viewed restrictively and that article cannot beextended to cases other than those which are exhaustively set out in it. Accordingly, it is forthe national authorities to demonstrate, first, that their rules are necessary in order to attainthe objective pursued and, second, that thoserules are proportionate to that aim. 20

18 — See, to that effect, the judgment in Alfa Vita Vassilopoulos and Carrefour Marinopoulos, cited above (paragraph 20 andthe case-law there cited). It should be borne in mind that ajustification based on Article 30 EC or on one of the fundamental requirements recognised by Community law isnot available where Community directives provide for harmonisation of the measures necessary for attainment ofthe specific objective pursued. In such cases, protectivemeasures must be adopted within the framework defined bythe harmonising directive (see, in particular, Case C-5/94Hedley Lomas [1996] ECR I-2553, paragraph 18).

19 — See, in particular, Case C-205/89 Commission v Greece [1991] ECR I-1361, paragraph 9.

20 — See, by way of illustration, Case C-270/02 Commission v Italy [2004] ECR I-1559, paragraph 22.

36. It is in the light of those principles that weshould consider whether the national rules at issue constitute an obstacle to the free move-ment of goods prohibited by Article 28 ECand, if they do, whether there may be justification for them.

1. The existence of an obstacle to the free movement of goods

37. I consider that the national rules at issue in these proceedings constitute a measure having an effect equivalent to a quantitativerestriction prohibited by Article 28 EC.

38. First, it is clear from the file that the prohibition at issue is a measure that applieswithout distinction to both domestic productsand products imported from other MemberStates. The Italian Republic emphasises in itsreply that the prohibition extends to all trailers, regardless of where they are manu-factured. 21

21 — Paragraph 2.

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39. Second, it is undeniable that, by imposing a general and absolute prohibition on the towing of trailers by mopeds throughoutItalian territory, the national rules at issueimpede the free movement of goods and, inparticular, that of trailers.

40. Although that prohibition relates only tomopeds, it seems to me that the coupling of atrailer to a vehicle of that kind constitutes a normal and frequently used means of trans-port, particularly in rural areas. However, those rules, although not prohibiting importsof trailers and their marketing in Italy, havethe effect of limiting their use throughoutItalian territory. I am therefore of the opinionthat such a prohibition is liable to limit opportunities for trade between the ItalianRepublic and the other Member States and tohamper imports and the marketing in Italy oftrailers from those States, even though they are lawfully manufactured and marketed there.

42. It must nevertheless be considered whether those rules, despite their restrictiveeffects on intra-Community trade, may bejustified on one of the public-interest groundsset out in Article 30 EC or by one of theoverriding requirements upheld by the case-law of the Court and, if so, whether such a restriction is suitable for attaining the aimpursued and is proportionate thereto.

2. Possible justification of the obstacle

43. In this case, the Italian Republic contendsthat the prohibition at issue was laid down inorder to ensure safety for drivers. That groundis not expressly mentioned in Article 30 ECand that provision, as I have stated, must beinterpreted strictly.

41. In those circumstances, it seems to me that the national rules at issue constitute a measure having an effect equivalent to a quantitative restriction, in principle prohib-ited by Article 28 EC.

44. I consider, however, that the promotion ofroad safety constitutes a legitimate groundwhich may, in certain circumstances, justify ahindrance to trade in goods within the Community.

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45. It is undeniable that road safety is an objective recognised and pursued by Commu-nity law. 22

46. Moreover, it should be noted that the grounds of justification mentioned in Article 30 EC include public safety and protection of the health and life of humans. Iconsider that each of those grounds must naturally be taken to include the prevention ofroad accidents.

47. Finally, the Court has already conceded,in its judgment of 11 June 1987 in Gofette and Gilliard 23 regarding a control measure imposed as a precondition for registration of a vehicle imported from another Member State, that an obstacle to the free movement of goods may be justified on the basis of

22 — See, in particular, the Commission Recommendation of 6 April 2004 on enforcement in the field of road safety(OJ 2004 L 111, p. 75); the Commission Communication of2 June 2003 concerning the European road safety action programme — Halving the number of road accident victims in the European Union by 2010: a shared responsibility (COM(2003) 311 final), and the Council Resolution of 26 June 2000 on the improvement of road safety (OJ 2000C 218, p. 1).

23 — Case 406/85 [1987] ECR 2525, paragraph 7.

Article 30 EC where that measure provesnecessary in order to guarantee road safety. 24

48. In those circumstances, I am of the opinion that the national rules at issue maybe justified on the basis of Article 30 EC to theextent to which they are, first, capable of guaranteeing drivers’ safety and, second, proportionate to that aim.

49. As regards, first, the suitability of the measure at issue for attaining the aim pursued, it seems to me that national ruleswhich prohibit mopeds from towing a trailerare capable, in certain cases, of responding toroad safety concerns.

50. It seems to me that coupling a trailer to amoped may, in certain circumstances, consti-tute a danger to traffic in so far as such

24 — Mention must also be made of the judgment in Case C-55/93Van Schaik [1994] ECR I-4837, in which the Court, ruling ona preliminary question concerning, among other things, theinterpretation of Article 49 EC (freedom to provide services),took the view that road safety requirements constitute overriding reasons relating to the public interest justifyingrules of a Member State which exclude the issue of test certificates for vehicles registered in that State by garagesestablished in another Member State (paragraph 19).

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vehicles are slow and encroach significantlyupon the carriageway. I can therefore imaginethat vehicular traffic of that kind may belimited on certain roads, such as motorwaysand particularly dangerous roads.

51. Accordingly, the possibility cannot in myview be excluded that such a measure maycontribute to road safety.

52. As regards, second, the proportionality ofthat measure, it should be borne in mind that, even though it is for the Member States, in theabsence of harmonised rules on the use of mopeds towing a trailer, to decide at whatlevel they wish to uphold the safety of driversand the manner in which that level of safetyshould be attained, they may nevertheless doso only within the limits laid down by theTreaty and, in particular, in compliance withthe principle of proportionality.

53. For national rules to comply with thatprinciple, it is important that the means employed should not go further than is necessary to ensure protection of the interestsreferred to.

54. It must, first of all, be pointed out that anational measure such as the one at issue in

the present proceedings places a significantrestriction on freedom of trade between Member States.

55. It is clear from the information in the documents before the Court that the measure in question involves a general and absoluteprohibition. That measure does not merelylimit the use of mopeds towing a trailer inspecific areas or itineraries, but appliesthroughout Italian territory, regardless of thehighway infrastructures and traffic condi-tions.

56. It must next be observed that the Italian authorities have not referred to any precisefactor capable of showing that the require-ments imposed are proportionate to the aimof effectively promoting drivers’ safety.

57. First, the Italian Republic confines itself tostating, in wholly general terms, that ‘the terrain of the various national territories is not uniform’ and that ‘the technical characteris-tics of the vehicles are important to the safetyof persons and traffic’.

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58. Second, the Italian Republic does not deny that the prohibition at issue relates onlyto mopeds registered in Italy. 25 Vehicles registered in other Member States are there-fore allowed to be used with a trailer on Italian roads.

61. In view of the foregoing considerations, Iam of the opinion that a general and absoluteprohibition, like the one at issue in this case, isnot a measure proportionate to the objectivepursued by the national authorities.

59. Finally, it seems to me that the safety ofdrivers pursued by the rules at issue can beguaranteed by measures less restrictive of intra-Community trade. I consider, for example, that localised prohibitions, applic-able to itineraries that are considered dangerous, such as Alpine crossings or particularly heavily used public highways,would contribute to the pursuit of that aim.In that connection, the Italian Republic’s stated intention to amend its rules to conform with Community law in my viewconfirms that analysis.

60. In any event, I consider that it is incum-bent upon the Italian authorities to considercarefully, before adopting a measure as radicalas a general and absolute prohibition, whetherit might be possible to resort to measures lessrestrictive of freedom of movement and to rule them out only if their unsuitability forattainment of the aim pursued is clearly established.

25 — Paragraph 2 of the Defence.

62. Consequently, I consider that the nationalrules at issue, by breaching the principle ofproportionality, cannot be validly justified onroad safety grounds. In my view, those rulesmust therefore be declared incompatible withArticle 28 EC.

63. I do not think that the foregoing analysiscan be seriously contradicted by the ItalianRepublic’s argument that the final recitals toDirectives 93/93 and 97/24 authorise the Member States to keep such rules in force.

64. It is clear from settled case-law that ‘the preamble to a Community act has no bindinglegal force and cannot be relied on either as aground for derogating from the actual provi-sions of the act in question or for interpreting

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those provisions in a manner clearly contrary 67. In those circumstances, I consider that to their wording’. 26 the Italian Republic cannot validly rely on the

recitals to Directives 93/93 and 97/24 to justify the prohibition laid down by the rulesat issue.

65. In this case, neither of the recitals referred to by the Italian Republic is repeated in theactual body of the directives. And, as I havealready emphasised in point 70 of my Opinionin the Meta Fackler case, 27 although the preamble to a directive in principle may givethe Court information as to the legislature’s intention and the meaning to be given to the measure’s provisions, the fact remains that,where a concept set out in a recital is not givenconcrete expression in the actual body of thedirective, it is the terms of the latter that must predominate.

66. In any event, the Court has repeatedlyheld that a provision of secondary law, in this case a directive, ‘cannot be interpreted as authorising the Member States to imposeconditions contrary to the Treaty rules on thefree movement of goods’. 28

26 — See, in particular, Case C-136/04 Deutsches Milch-Kontor [2005] ECR I-10095, paragraph 32, and the case-law therecited.

27 — Case C-444/03 [2005] ECR I-3913. 28 — Case C-47/90 Delhaize and Le Lion [1992] ECR I-3669,

paragraph 26. See also Case C-315/92 Verband Sozialer Wettbewerb (‘Clinique’) [1994] ECR I-317, paragraph 12, inwhich the Court held that a ‘directive must, like all secondarylegislation, be interpreted in the light of the Treaty rules onthe free movement of goods’.

68. In view of the foregoing considerations, Iam of the opinion that the Italian Republic hasfailed to fulfil its obligations under Article 28 EC by adopting and keeping inforce rules prohibiting mopeds registered inItaly from towing trailers.

V — Costs

69. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have beenapplied for in the successful party’s pleadings.Since the Commission has applied for costsand the Italian Republic has, for the most part,been unsuccessful, it must be ordered to paythe costs.

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VI — Conclusion

70. In view of the foregoing considerations, I propose that the Court:

— find that, by adopting and keeping in force rules prohibiting mopeds registered inItaly from towing a trailer, the Italian Republic has failed to fulfil its obligationsunder Article 28 EC;


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OPINION OF ADVOCATE GENERALBOT

delivered on 8 July 2008 1

1. Must national rules concerning the ‘arrangements for the use’ of goods be examined in the light of Article 28 EC ormust they be assessed in the light of the criteria set out by the Court in its judgment inKeck and Mithouard, 2 in the same way as rules concerning ‘selling arrangements’?

2. That is, in essence, the question to be answered by the Court in these proceedings.

3. This case concerns proceedings brought bythe Commission of the European Commu-nities against the Italian Republic, on the basisof Article 226 EC, for failure to fulfil its Treatyobligations. According to the Commission, the Italian Republic has failed to fulfil its obligations under Article 28 EC by includingrules in its Highway Code prohibiting

mopeds, motorcycles, tricycles and quadri-cycles from towing a trailer. 3

4. This is the second time that an Opinion hasbeen given in these proceedings.

5. Originally, the Court decided to assign thiscase to a five-judge chamber 4 and to givejudgment without a hearing, since none of theparties had asked to present oral argument.Advocate General Léger delivered his Opinion on 5 October 2006, after which theoral procedure was declared closed. The Advocate General concluded that the Italian Republic had failed to fulfil its obligationsunder Article 28 EC by adopting and keepingin force rules of that kind.

3 — In this Opinion, I shall also use the word ‘motorcycle’ to cover 1 — Original language: French. all those vehicles. 2 — Joined Cases C-267/91 and C-268/91 [1993] ECR I-6097. 4 — The Third Chamber.

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OPINION OF MR BOT — CASE C-110/05

6. Since that proposal raised new questionsconcerning the scope of Article 28 EC whichwere not debated by the parties in the courseof the proceedings, the Court, by order of7 March 2007, reopened the oral procedureand referred the case to the Grand Chamber. It also invited not only the parties but also theMember States other than the Italian Republicto give their views on:

‘the question of the extent to which and theconditions under which national provisionswhich govern not the characteristics of goodsbut their use, and which apply without distinction to domestic and imported goods, are to be regarded as measures havingequivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC.’

7. Observations were submitted not only bythe Commission and the Italian Republic butalso by the Czech Republic, the Kingdom ofDenmark, the Federal Republic of Germany,the Hellenic Republic, the French Republic,the Republic of Cyprus, the Kingdom of theNetherlands and the Kingdom of Sweden.

8. This Opinion will be divided into two parts.

9. In the first part, I shall give my views on theanswer to be given to the question put to theparties by the Court.

10. This will necessitate general consider-ation of the meaning and scope of the rules onthe free movement of goods. It will require, atthe expense of returning to views alreadyexpressed on this subject, an analysis of thescope of Article 28 EC and the criteria forclassifying a given national provision as a measure having an equivalent effect to a quantitative restriction on imports. The question put by the Court also provides anopportunity to clarify the scope of the Keck and Mithouard judgment. That judgment, asis well known, has given rise to numerousdifficulties of interpretation which it has onlybeen possible to resolve on a case-by-case basis.

11. In this Opinion, I shall set out the reasonsfor which I consider that national measures governing conditions for the use of goodsshould not be examined in the light of thecriteria laid down by the Court in Keck and Mithouard. I shall put forward the view that such measures fall within the scope of Article 28 EC and may constitute measureshaving an effect equivalent to quantitativerestrictions on imports contrary to the ECTreaty if they hinder access to the market forthe product concerned.

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12. On the basis of that analysis, I shall, in thesecond part, examine the merits of the Treatyinfringement proceedings brought by the Commission against the Italian Republic.

13. After examining the effects of the measure in question on intra-Communitytrade, I shall suggest that the Italian legisla-tion, in so far as it prevents access to the Italianmarket for trailers lawfully produced and marketed in other Member States, constitutes a measure having an effect equivalent to aquantitative restriction on imports contraryto Article 28 EC.


A — Community law

1. The EC Treaty

14. Article 28 EC prohibits quantitative restrictions on imports and all measures having equivalent effect between Member States.

15. Nevertheless, under Article 30 EC, Article 28 EC does not preclude prohibitionsor restrictions on imports which are justified,in particular, on grounds of public policy,public security or protection of health and lifeof humans, provided that they do not constitute a means of arbitrary discriminationor a disguised restriction on trade betweenMember States.

2. Secondary law

16. The Community legislature established aCommunity type-approval procedure for two-wheel or three-wheel motor vehicles in Directive 92/61/EEC. 5

17. Pursuant to Article 1(2) and (3) of Directive 92/61, the vehicles concerned aremopeds, 6 motorcycles, motor tricycles and motor quadricycles.

5 — Council directive of 30 June 1992 relating to the type-approvalof two- or three-wheel motor vehicles (OJ 1992 L 225, p. 72).

6 — Under the first indent of Article 1(2) of Directive 92/61, ‘moped’ refers to ‘two- or three-wheel vehicles fitted with an engine having a cylinder capacity not exceeding 50 cm3 if of the internal combustion type and a maximum design speed of notmore than 45 km/h’.

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18. As is clear from the recitals in the preamble to that directive, that proceduremakes it possible to ensure better functioningof the internal market by removing technicalobstacles to trade in the motor vehicle sector and also to contribute to the improvement ofroad safety and environmental and consumerprotection. 7

19. For the implementation of that proce-dure, Directive 92/61 provides for total harmonisation of the technical requirementsto be satisfied by such vehicles. It also providesthat the technical requirements applying tothe various components and characteristics ofsuch vehicles are to be harmonised by meansof separate directives. 8

20. Thus, the requirements concerning mass,dimensions and coupling devices and attach-ments for such vehicles were harmonised byDirectives 93/93/EEC 9 and 97/24/EC. 10

21. Those directives both state, in their preambles and in identical terms, that the requirements they lay down may not have the

7 — See the third, twelfth and last recitals. 8 — See the eighth recital. 9 — Council directive of 29 October 1993 on the masses and

dimensions of two- or three-wheel motor vehicles (OJ 1993 L 311, p. 76).

10 — Directive of the European Parliament and of the Council of17 June 1997 on certain components and characteristics oftwo- or three-wheel motor vehicles (OJ 1997 L 226, p. 1).

effect of obliging those Member States whichdo not allow two-wheel or three-wheel motor vehicles in their territory to tow a trailer toamend their rules. 11

B — National law

22. Article 53 of Legislative Decree No 285(decreto legislativo n. 285) of 30 April 1992 12

defines mopeds as any motor vehicles withtwo, three or four wheels, the latter consti-tuting the category of ‘motor quadricycles’.

23. Under Article 54 of the Highway Code,automobiles are motor vehicles with at least four wheels, excluding mopeds.

24. Pursuant to Article 56 of that code, onlyautomobiles, trolleybuses and automobile tractors are allowed to tow trailers.

11 — See the last recitals in the preambles to Directives 93/93 and97/24.

12 — GURI No 114 of 18 May 1992; ‘the Highway Code’.

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II — The pre-litigation procedure

25. Following an exchange of correspon-dence between the Italian Republic and theCommission, the latter took the view that Italyhad failed to fulfil its obligations under Article 28 EC by adopting the rules at issue.It then sent the Italian Republic a formal notice, by letter of 3 April 2003, calling on it tosubmit its observations.

26. In its reply, dated 13 June 2003, the ItalianRepublic gave a commitment to amend itsrules in order to remove the obstacles to imports mentioned by the Commission. It also stated that the changes concerned notonly the type-approval of vehicles but also theregistration and use of such vehicles and roadside checks of trailers.

27. The Commission received no commu-nication concerning the making of any suchchanges. On 19 December 2003, it thereforesent a reasoned opinion to the Italian Republiccalling on it to take the measures needed tocomply with its obligations under Article 28 EC within a period of two monthsas from service of that notice. Having receivedno reply, the Commission instituted Treatyinfringement proceedings on the basis of

Article 226 EC by application lodged at theRegistry of the Court of Justice on 4 March2005.

III — The application

28. The Commission claims that the Court of Justice should:

— declare that, by prohibiting the towing oftrailers by mopeds, the Italian Republichas failed to fulfil its obligations underArticle 28 EC;


29. The Italian Republic contends that theCourt should dismiss the application.

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IV — The question put to the parties bythe Court

30. As indicated earlier, the Court, after the reopening of the oral procedure, asked theparties and the Member States to give theirviews on:

‘the question of the extent to which and theconditions under which national provisionswhich govern not the characteristics of goodsbut their use, and which apply without distinction to domestic and imported goods, are to be regarded as measures havingequivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC.’

A — The answers proposed by the parties and the Member States

31. Written observations were submitted and oral argument was presented by the Commis-sion, the Italian Republic, the Czech Republic,the Kingdom of Denmark, the Federal Republic of Germany, the Hellenic Republic,

the French Republic, the Republic of Cyprus,the Kingdom of the Netherlands and, finally,the Kingdom of Sweden.

32. The Commission submits that the arrangements for the use of a product govern the conditions under which a product may be used. That applies in the case of a measure which limits the use of a product in terms of place or time. 13 That concept also covers cases in which the rulesprohibit the use of a product.

33. According to the Commission, in order todetermine whether national rules concerningthe use of a product constitute a measurehaving equivalent effect within the meaning ofArticle 28 EC, account must be taken, on a case-by-case basis, of the direct or indirect,actual or potential, effects of that measure.There is no doubt, as far as the Commission is concerned, that rules absolutely or almost absolutely prohibiting the use of a productconstitute a measure having an effect equiva-lent to a quantitative restriction within themeaning of Article 28 EC. 14

13 — Cases in which it is necessary to possess an administrativeauthorisation (for example, permission to bear arms), or tohave attained a particular age before acquiring or usingcertain products, or cases in which use of the product isprohibited in certain places or at certain times of day (forexample, the prohibition of using mobile telephones in hospitals).

14 — Case C-473/98 Toolex [2000] ECR I-5681, paragraphs 34 to 37. In that judgment, the Court held that national rulescontaining a prohibition in principle of using a given productconstituted a measure having an effect equivalent to a quantitative restriction, even where those rules provided for asystem of individual exemptions from that prohibition.

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34. The Kingdom of the Netherlands advo-cates a clear delimitation of the scope of Article 28 EC. It considers that the aim pursued by that provision, namely the proper functioning of the internal market, cannot imply that national legislationconcerning, for example, road safety, shouldbe caught by the prohibition laid down inArticle 28 EC. 15 But it also contends that unimpeded access to markets is of particularimportance.

35. The Kingdom of the Netherlands supports the view put forward by AdvocateGeneral Kokott in her Opinion in Case C-142/05 Mickelsson and Roos, pendingbefore the Court of Justice, since it would allow a set of rules not designed to protecteconomic interests to fall outside the scope ofArticle 28 EC. It nevertheless notes certain disadvantages of that approach. First, it wouldbe difficult clearly to define the concept of‘arrangements for use’. If a provision concerning use required adaptation of the product, there would then be a requirementrelating to the characteristics of the product.

36. The Kingdom of the Netherlands also considers that the addition of a new categoryexempted from the application of Article 28 EC would be a source of confusion for national courts. Depending on the cat-

egory to which a given provision related, onecriterion or another would have to be applied.

37. The Kingdom of the Netherlands also criticises the judgment in Keck and Mithouard for failure to provide an appro-priate criterion and it refers, in that connec-tion, to the Opinion of Advocate General Poiares Maduro in Alfa Vita Vassilopoulos and Carrefour-Marinopoulos. 16 It also observes that, in the same way as sellingarrangements, certain arrangements for usemay have serious repercussions on intra-Community trade and it questions the prac-tical usefulness of creating a new exemption.The Kingdom of the Netherlands thereforeproposes adopting the de minimis approachrecommended by Advocate General Jacobs inhis Opinion in Leclerc-Siplec, 17 although it also notes the difficulties which would be faced by the national courts in implementingit.

38. In contrast to the Czech Republic, theKingdom of Denmark, the Federal Republic ofGermany, the French Republic, the Republicof Cyprus and the Kingdom of Sweden consider that the criteria laid down in Keck and Mithouard may be transposed to measures governing the use of a product. They maintain, in essence, that national provisions which apply without distinction so as to limit but not prohibit the use of aproduct do not in principle fall within theconcept of a ‘restriction’ within the meaning

15 — The Kingdom of the Netherlands cites the example of 16 — Joined Cases C-158/04 and C-159/04 [2006] ECR I-8135. national rules on road speed limits and the use of fireworks. 17 — Case C-412/93 [1995] ECR I-179.

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of Article 28 EC. Nevertheless, in their view, an exception may be made to that principle ifit is shown that the measures in question purely and simply prohibit the use of a product or authorise only marginal use, thereby limiting the product’s access to the market.

39. The Hellenic Republic maintains that rules on the use of a product are not in themselves liable to hinder trade between Member States. It nevertheless observes that if the use of a product is a feature of themovement of the product, then the questionof classifying the measure must be examinedon a case-by-case basis and any hindrancefound to exist may fall within the scope ofArticle 28 EC.

40. Finally, the Italian Republic considers, inessence, that the answer to the question put bythe Court also depends on whether the product can be used for other purposes. It also draws attention to concerns relating toroad safety and the particular features of Italian terrain.

B — My assessment

41. In these proceedings, the Court is called on to establish whether the Italian rules

prohibiting the use within its territory of agiven product constitute a measure having aneffect equivalent to a quantitative restriction on imports within the meaning of Article 28 EC or whether those rules, in so far as they lay down ‘arrangements for the use’of goods, escape the application of that provision by virtue of the criteria laid downby the Court in Keck and Mithouard.

42. This question is particularly interestingsince another case, Mickelsson and Roos, pending before the Court, raises a similar issue.

43. In that case, the Court is asked whether Articles 28 EC and 30 EC preclude Swedishrules which limit the use of jet skis in certainwaters. Those rules differ from the measure at issue in this case because they limit the use of aproduct but do not prohibit its use outright asin the case of the Italian rules.

44. In her Opinion in that case, Advocate General Kokott suggests that, by analogy with‘selling arrangements’, ‘arrangements for the use’ of goods should be placed outside thescope of Article 28 EC if, in particular, the

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conditions laid down by the Court in Keck and 47. That said, I think it is now important toMithouard are satisfied. 18 set out the broad outlines of the case-law on

the free movement of goods.

45. Advocate General Kokott observes that national provisions on arrangements for theuse of products and those concerning sellingarrangements are comparable in terms of thenature and the intensity of their effect on trade. Those provisions are not normallydesigned to regulate trade in goods betweenMember States. In principle, they take effectonly after the product has been imported andhave only an indirect impact on sales of theproduct. According to Advocate General Kokott, it would therefore be logical to extend the rule in Keck and Mithouard to measures governing the use of goods and, consequently, to exclude such measures fromthe scope of Article 28 EC. 19

46. Nevertheless, Advocate General Kokott invites the Court to refine and supplement theconditions laid down in Keck and Mithouard and suggests that national rules which prohibit the use, or permit only marginal use, of a product fall within the scope of Article 28 EC ‘in so far as they (virtually) prevent access to the market for the product’. 20

18 — In point 44 of her Opinion, Advocate General Kokott defines‘arrangements for use’ as ‘national rules governing how andwhere products may be used’.

19 — Points 52 to 55. 20 — Point 87.

1. The case-law on the free movement of goods

48. The free movement of goods between Member States is one of the fundamental principles of the Community. 21

49. Thus, Article 3 EC, in Part One of the Treaty, entitled ‘Principles’, provides in para-graph 1(c) that, for the purposes set out inArticle 2 EC, the activities of the Community are to include an internal market charac-terised by the abolition, as between MemberStates, of obstacles to the free movement of goods.

50. In addition, Article 14(2) EC provides thatthe internal market is to comprise an areawithout internal frontiers in which the free

21 — See, in particular, Case C-194/94 CIA Security International[1996] ECR I-2201, paragraph 40, in which the Court made itclear that the free movement of goods is ‘one of the foundations of the Community’, and also Alfa Vita Vassilo-poulos and Carrefour-Marinopoulos, paragraph 14.

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movement of goods is ensured in accordancewith the provisions of the Treaty.

51. That fundamental principle is imple-mented in particular by Article 28 EC.

52. That provision, it will be remembered,states that quantitative restrictions on imports and all measures having equivalenteffect are to be prohibited between MemberStates.

53. It has been settled case-law since the judgment of 11 July 1974 in Dassonville 22 that that provision must be construed as seekingthe elimination of ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually orpotentially, intra-Community trade’. 23

54. Also, the Court expressly acknowledged in the Cassis de Dijon case 24 that, in the absence of harmonisation of national laws,

22 — Case 8/74 [1974] ECR 837. 23 — Ibid., paragraph 5. See also Case 178/84 Commission v

Germany [1987] ECR 1227 (‘Beer purity’), paragraph 27; Case C-265/95 Commission v France [1997] ECR I-6959, para-graph 29; Case C-366/04 Schwarz [2005] ECR I-10139, paragraph 28; and Case C-265/06 Commission v Portugal[2008] ECR I-2245, paragraph 31 and the case-law therecited.

24 — Case 120/78 Rewe-Zentral [1979] ECR 649 (‘Cassis de Dijon’).

measures applying without distinction to domestic products and products importedfrom other Member States are also liable to constitute restrictions on the free movement of goods. 25

55. According to the Court, those restrictionsmay nevertheless be justified by one of thegrounds listed in Article 30 EC or by one of theoverriding requirements referred to in the judgments of the Court, 26 provided that, ineither case, such measures are appropriate forsecuring attainment of the objective pursuedand do not go beyond what is necessary inorder to attain it. 27

56. The Court’s interpretation in Dassonville of the meaning of a measure having equivalenteffect is very broad. 28 In the light of the case-

25 — That case concerned national rules laying down a minimumalcohol content for certain beverages. The Court consideredthat the German legislation that reserved the description‘fruit liqueurs’ for alcoholic beverages with an alcohol contentof 25% or more and therefore made it impossible to sell inGermany French liqueurs containing between 15 and 25%alcohol constituted a measure having an effect equivalent to aquantitative restriction within the meaning of Article 28 EC.

26 — For a critique of the case-law of the Court on this point, seeHatzopoulos, V., ‘Exigences essentielles, impératives ou impérieuses: une théorie, des théories ou pas de théorie dutout?’, Revue trimestrielle de droit européen, No 2, April-June 1998, p. 191.

27 — See, in particular, Case C-14/02 ATRAL [2003] ECR I-4431, paragraph 64.

28 — See White, E., ‘In search of the limits to Article 30 of the EEC Treaty’, Common Market Law Review, No 2, 1989, p. 235, and Reich, N., ‘The “November Revolution” of the European Court of Justice: Keck, Meng and Audi Revisited’, Common Market Law Review, 1994, p. 449.

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law cited above, even if a measure does not pursue the aim of regulating trade in goodsbetween Member States, what is decisive for the Community judicature is its effect on intra-Community trade, whether actual or potential. That interpretation has thus made itpossible in practice to bring within the scopeof Article 28 EC all forms of economic protectionism practised by Member States,since all national rules liable to have restrictive effects on trade, even those displaying no connection with imports, may be the subjectof review by the Court.

57. Seeking to reduce what it regarded as excessive recourse to Article 28 EC and to avoid excessive encroachment on the regula-tory powers of the Member States, the Courtadopted a new approach in its endeavours tolimit the scope of that provision.

58. Initially, the Court tried to rule out theapplication of Article 28 EC to certain national rules which pursued an objective inthe general interest and had no connectionwith commercial activity.

59. Thus, in its judgment in Oebel, 29 the Court held that national rules on night work

29 — Case 155/80 [1981] ECR 1993.

in bakeries and confectionery establishmentsconstituted a legitimate economic and socialpolicy choice, in accordance with the object-ives of general interest pursued by the Treaty.According to the Court, such rules, ‘which …apply by virtue of objective criteria to all undertakings in a particular industry whichare established within the national territory,without leading to any difference in treatmentwhatsoever on the ground of the nationality oftraders and without distinguishing betweenthe domestic trade of the State in question andthe export trade’, did not have the effect of restricting patterns of trade within MemberStates and did not therefore manifestly constitute a measure having equivalent effect contrary to Article 28 EC. 30

60. In the same way, in its judgment in Blesgen, 31 the Court considered that legisla-tion restricting the consumption, sale and offering of alcoholic beverages in public placeswas not contrary to Article 28 EC, in so far assuch rules, having no connection with theimport of the products concerned, were notliable to hinder trade between Member States. That measure drew no distinction based on the nature or origin of the products and didnot affect the marketing of those spirit-basedbeverages in other forms. As regards its restrictive effects, the Court held that theydid not exceed the effects intrinsic to trade rules. 32

30 — Paragraphs 12 and 16. 31 — Case 75/81 [1982] ECR 1211. 32 — Paragraphs 8 and 9.

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61. In a second stage, the Court decided toreconsider its case-law. The Keck and Mithouard judgment marks a turning pointin the Court’s approach. The Court consid-ered it necessary to re-examine and clarify itscase-law ‘[i]n view of [what it saw as] theincreasing tendency of traders to invoke Article [28 EC] as a means of challenging any rules whose effect is to limit their commercial freedom, even where such rules are not aimed at products from other MemberStates’. 33

62. That case concerned French legislationprohibiting resales at a loss. Whilst recog-nising that such legislation was liable to restrict the volume of sales of importedproducts by depriving economic operators ofa way of promoting sales, the Court posed thequestion ‘whether such a possibility [was] sufficient to characterise the legislation in question as a measure having equivalent effectto a quantitative restriction on imports’ 34

within the meaning of Article 28 EC.

63. In answering that question, the Court drew a distinction between two categories ofrules, namely those laying down conditions to

33 — Paragraph 14. To the same effect, see the views set out inpoints 31 and 32 of the Opinion of Advocate General Fennelly in Case C-190/98 Graf [2000] ECR I-493.

34 — Keck and Mithouard, paragraph 13.

be satisfied by the goods and those limiting orprohibiting certain selling arrangements. TheCourt laid down a different set of rules for each of those two categories.

64. The first category concerns rules relating,in particular, to the name, form, weight anddimensions of the product, and also its composition, presentation, labelling and packaging, which differ from those prescribedby the Member State of origin. 35

65. In that case, the Court confirmed the long-standing precedent laid down in Cassis de Dijon, according to which such rules, even if applicable without distinction to all products, are caught by Article 28 EC. 36

35 — Ibid., paragraph 15. See also Case 261/81 Rau Lebensmittel-werke [1982] ECR 3961, concerning an obligation to use aparticular form of packaging; Case 179/85 Commission v Germany [1986] ECR 3879, relating to a restriction on the useof certain shapes of bottles; Case C-315/92 Verband Sozialer Wettbewerb [1994] ECR I-317 (‘Clinique’), concerning thename of a cosmetic product; Case C-317/92 Commission v Germany [1994] ECR I-2039, concerning indications of use-by dates; Case C-358/95 Morellato [1997] ECR I-1431, concerning the composition of bread; Case C-416/00 Morellato [2003] ECR I-9343, concerning the need to amend the label of imported products; and Alfa Vita Vassilopoulos and Carrefour-Marinopoulos, concerning national rules making ‘bake-off ’ products subject to the same requirements as those applicable to traditional breadand bakery products.

36 — Keck and Mithouard, paragraph 15.

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66. The hindrance to trade derives from the obligation to make adjustments to goodscoming from other Member States in orderto comply with the conditions laid down bythe Member State in which they are marketed.By requiring repackaging or modification of aproduct’s composition, for example, such rules give rise to additional difficulties andcosts for importers.

67. The second category concerns rules limiting or prohibiting ‘certain selling arrangements’. The Court has not defined that concept. We can nevertheless make a non-exhaustive inventory, on the basis of itscase-law. In addition to the prohibition of resale at a loss with which Keck and Mithouard was concerned, the Court consid-ered that ‘selling arrangements’ were affected by rules which restrict certain forms of salespromotion, such as prohibitions relating totelevision advertising in a particular sector orfor a particular audience, 37 rules reserving the

37 — See, in particular, Case C-292/92 Hünermund and Others [1993] ECR I-6787, paragraphs 19 to 21, concerning a measure prohibiting pharmacists from advertising para-pharmaceutical products in cinemas, or on radio or television; Leclerc-Siplec, paragraphs 21 and 22, concerninga domestic measure prohibiting television advertising forundertakings in the distribution sector; and Joined CasesC-34/95 to C-36/95 De Agostini and TV-Shop [1997] ECR I-3843, paragraph 39, concerning a total prohibition of television advertising directed at children.

sale of certain products to certain establish-ments 38 or those which govern, for example,shop opening hours. 39

68. Now, in the absence of direct or disguiseddiscrimination in favour of domestic industry,those rules no longer fall within the scope ofArticle 28 EC.

69. As is apparent, those measures concernthe exercise of commercial activity as such.They are of a general nature and do not affectdifferently the marketing of products fromother Member States and that of domestic products. Those rules are not liable directly toaffect access to the market for the product inquestion. They may nevertheless have an indirect effect on imports, in that they mayin practice lead to a reduction of sales.

70. Departing from its earlier case-law, theCourt therefore took the view that such rules

38 — See, in particular, Case C-391/92 Commission v Greece [1995] ECR I-1621, paragraphs 13 to 15, concerning rulesreserving the sale of processed milk for infants to pharmacies,and Case C-387/93 Banchero [1995] ECR I-4663, paragraphs34 to 36, concerning rules reserving retail sales of tobacco toauthorised distributors.

39 — See, in particular, Joined Cases C-401/92 and C-402/92 Tankstation ’t Heukske and Boermans [1994] ECR I-2199,paragraphs 12 to 14, concerning rules on the opening hoursof service stations, and Joined Cases C-69/93 and C-258/93Punto Casa and PPV [1994] ECR I-2355, paragraphs 12 to 14,concerning Italian rules on the closure of retail shops onSundays.

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do not constitute measures having equivalenteffect within the meaning of Article 28 EC, inso far as they apply ‘to all relevant traders operating within the national territory’ and affect ‘in the same manner, in law and in fact, the marketing of domestic products and ofthose from other Member States’. 40

71. The Court then made it clear that, provided that those conditions are fulfilled,‘the application of such rules to the sale ofproducts from another Member State meeting the requirements laid down by thatState is not by nature such as to prevent theiraccess to the market or to impede access anymore than it impedes the access of domesticproducts’. 41

72. What is the reason for the distinction drawn by the Court between the two cat-egories of rules?

73. Products must in principle be exportable,with their existing composition, name, form,labelling and packaging, to all Member States,provided that, in those respects, they meet therequirements of the State of origin. Applica-tion of the laws of the importing State is lawfulonly if it can be justified by a higher publicinterest. The aim is to ensure that the access of such products to the market of the importingMember State is not impeded more than

40 — Keck and Mithouard, paragraph 16. 41 — Ibid., paragraph 17.

necessary and thereby to preclude protectionfor the domestic industry.

74. On the other hand, once such products, intheir existing form, have access to the marketof the importing Member State, they must besubject to the ‘marketing rules’ in force in that State. In that regard, they must be on an equalfooting with domestic products.

75. The introduction of such a distinction seems to me to be inspired by the concern toensure the existence of balanced legal rules.An examination of the case-law of the Court discloses a latent conflict between, on the one hand, the Community judicature’s wish to make Article 28 EC serve as a ‘safety barrier’against the various forms of economic protectionism in the Member States and, onthe other, the concern expressed by the Courtnot to encroach upon certain areas of theMember States’ domestic policy.

76. In that respect, the present case goes tothe root of that problem.

77. The Keck and Mithouard judgment caused puzzlement. Many commentators regretted the contradictions contained in it

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and its lack of reasoning and of clarity. 42 The implementation of the criteria set out in thatjudgment gave rise to numerous difficulties ofinterpretation which the Court has had to confront and which it has been possible toresolve only on a case-by-case basis.

categories of measures on the market, the existence of a restriction may also depend onother factors, such as the way the relevantrules are applied and their specific effects ontrade.

78. I shall consider, in particular, two criti-cisms of that case-law.

79. First, I think, as do others before me, that a distinction between different categories ofmeasures is not appropriate. 43

80. Whilst it is legitimate to try to developpresumptions regarding the effects of various

42 — See, in particular, Picod, F., ‘La nouvelle approche de la Cour de justice en matière d’entraves aux échanges’, Revue trimestrielle de droit européen, No 2, April-June 1998, p. 169; Mattera, A., ‘De l’arrêt “Dassonville” à l’arrêt “Keck”: l’obscure clarté d’une jurisprudence riche en principes novateurs et en contradictions’, Revue du Marché Unique Européen, No 1, 1994, p. 117; Weatherill, S.,‘After Keck: some thoughts on how to clarify the clarification’, Common Market Law Review, 1996, p. 885; Kovar, R., ‘Dassonville, Keck et lesautres: de la mesure avant toute chose’, Revue trimestrielle de droit européen, No 2, April-June 2006, p. 213; and Poiares Maduro, M., ‘Keck: The End? The Beginning of the End? Orjust the End of the Beginning?’, Irish Journal of European Law,1994, p. 36.

43 — See point 38 of the Opinion of Advocate General Jacobs in theLeclerc-Siplec case.

81. The distinction made by the Court maytherefore be artificial and the demarcation line between those different categories of measures may be uncertain. 44 In some cases, the Court describes rules on product char-acteristics as ‘selling arrangements’. 45 In other cases, it treats measures concerning sellingarrangements for goods as rules concerningproduct characteristics. That applies, in parti-cular, to rules governing advertising where they have an effect on the packaging of theproduct. 46 Finally, it may happen that the Court abandons that distinction and makes an

44 — For an illustration, see Picod, F., op. cit., in particular pp. 172to 177, and also points 27 to 29 and 31 of the Opinion ofAdvocate General Poiares Maduro in Alfa Vita Vassilopoulos and Carrefour-Marinopoulos.

45 — Thus, in its judgment in Case C-416/00 Morellato, the Court held that, in the circumstances of that case, ‘the requirement for … packaging, since it relates only to the marketing of thebread which results from the final baking of pre-baked bread,is in principle such as to fall outside the scope of Article[28 EC], provided that it does not in reality constitute discrimination against imported products’ (paragraph 36). Itseems that the Court relied on the fact that the requirementof packaging, and therefore adaptation of the product, wasimposed only at the final stage of marketing of the product, sothat actual access of the imported product to the nationalmarket was not an issue.

46 — Case C-470/93 Mars [1995] ECR I-1923. That case concerned German rules prohibiting the import and marketing of a product lawfully marketed in another Member State, the size of which had been increased for thepurposes of an advertising campaign and the packaging ofwhich contained the marking ‘+ 10%’. The Court considered that those rules were liable to hamper intra-Communitytrade, in that they required the importer to adjust the presentation of his products according to the place wherethey were to be marketed and consequently to incur additional packaging and advertising costs (paragraph 13).

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analysis based only on the effects of the rules. 47 Those examples demonstrate the difficulties which the Court may encounterin classifying certain measures. It is therefore,in my view, difficult to work on the basis ofcategories when, in practice, national courtsand the Community judicature may be confronted with very different rules, whichthey must assess having regard to the circum-stances of each individual case.

82. Second, by identifying new criteria andestablishing a different approach dependingon the type of measures involved, that case-law gave rise to differences in the way thatrestrictions on the free movement of goods are viewed by comparison with the rules applicable to other freedoms of movement. 48

83. As we shall see, the view taken of restrictions on those various freedoms displays the common feature that it is basedon a single criterion, that of access to themarket. However, to adopt a different

47 — See, in particular, Case C-323/93 Centre d’insémination de la Crespelle [1994] ECR I-5077, paragraph 29, concerning French rules requiring economic operators importingsemen from another Member State to deliver it to a centre enjoying an exclusive concession, and Case C-189/95 Franzén [1997] ECR I-5909, paragraph 71, concerning the Swedish rules on imports and marketing of alcoholic beverages.

48 — I refer to the free movement of persons (Articles 39 EC to48 EC), of services (Articles 49 EC to 55 EC) and capital(Articles 56 EC to 60 EC).

approach in the area of free movement ofgoods is not, in my view, consistent with therequirements inherent in the construction ofa single European market and the emergenceof citizenship of the Union.

84. In the light of the foregoing, it seems tome that the tests laid down by the Court inKeck and Mithouard have not clarified the scope of Article 28 EC or facilitated the implementation of that article.

85. Nevertheless, like Advocate General Poiares Maduro, I do not think that at the present time it is appropriate to depart fromthat case-law. 49

86. I likewise am not of the opinion that thatcase-law should be extended to rules which, like those at issue in this case, concern ‘arrangements for use’ of the products.

49 — Point 25 of the Opinion in Alfa Vita Vassilopoulos and Carrefour-Marinopoulos.

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2. The reasons for which I do not favour an extension of the criteria in Keck and Mithouard to rules governing arrangementsfor the use of products

90. Moreover, as I have already indicated, Iconsider that the drawing of distinctions between different categories of rules is notappropriate. Such an approach is artificial andmay be a source of confusion for the nationalcourts.

87. To extend the criteria in Keck and Mithouard to rules concerning arrangementsfor the use of products involves, in my view, anumber of disadvantages, even though theCourt’s ‘traditional analytical pattern’ seems to me to be fully satisfactory.

88. First, such a course of action would result in the introduction of a new category of exemption from the application of Article 28 EC, a development which I do notfavour, for a number of reasons.

89. I am not certain that the reasons which prompted the Court to exclude from the scope of Article 28 EC rules on sellingarrangements for products also exist in thecase of rules governing arrangements for use.In fact, unless I am mistaken, the Court has not had an extremely large number of cases onmeasures of this kind brought before it.

91. Finally, I think that to exclude from the scope of Article 28 EC national rules governing not only selling arrangements forgoods but also arrangements for their use iscontrary to the Treaty’s objectives, namely thecreation of a single and integrated market. Inmy view, such a solution would underminethe useful effect of Article 28 EC, since it would once more make it possible for Member States to legislate in areas which, on the contrary, the legislature wished to ‘communitarise’. That is not the course that European construction and the creation of asingle European market should follow. A product must be able to move, unhindered,within the common market, and national measures which, in whatever way, create anobstacle to intra-Community trade must beones that the Member States can justify.

92. Second, I consider that there is no interest in limiting the Court’s review of measures which, in fact, may constitute a serious obstacle to intra-Community trade.

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93. The judicial review carried out by the Court in accordance with the ‘traditional analytical pattern’ laid down in Dassonville and Cassis de Dijon is, in my opinion, fullysatisfactory and I see no reason to depart fromit.

94. That analytical approach not only makesit possible for the Court to monitor MemberStates’compliance withTreaty provisions, butit also allows Member States the necessaryroom for manoeuvre to defend their legit-imate interests.

95. It will be remembered that, in order to ensure that the liberalisation of trade does not affect the pursuit of other general interests,the Community legislature and the Court ofJustice, through its case-law, have laid downexceptions to the principle of free movementof goods. 50

96. Article 30 EC thus gives a list of groundson which the Member States may justify theadoption of restrictions on the free movementof goods. That list is limitative and must bestrictly interpreted. 51

50 — As early as 1985, in its judgment in Case 240/83 ADBHU [1985] ECR 531, the Court held that ‘the principle of freedomof trade is not to be viewed in absolute terms but is subject tocertain limits justified by the objectives of general interestpursued by the Community provided that the rights in question are not substantively impaired’ (paragraph 12).

51 — See, in particular, Case 113/80 Commission v Ireland [1981] ECR 1625, paragraph 7.

97. In parallel, through its case-law, the Court has defined ‘overriding public interest requirements’, which include concerns linked to the environment or consumer protection. 52 Thus, in the absence of Commu-nity harmonisation, a national measure adopted to protect the environment may constitute an ‘imperative requirement’ that is capable, within the meaning of the Cassis de Dijon judgment, of limiting the application ofArticle 28 EC.

98. The recognition by the legislature and theCommunity judicature of cases in which itmay be legitimate to restrict the free move-ment of goods does not thereby give carte blanche to the Member States. Even if the measures adopted by them may be justified onpublic interest grounds, the measures mustnevertheless be necessary and propor-tionate. 53

99. Furthermore, this analytical approachenables the Court to ensure judicial reviewof all measures adopted by the Member States.

52 — See Cassis de Dijon; Case 181/82 Roussel Laboratoria and Others [1983] ECR 3849; and Case C-2/90 Commission v Belgium [1992] ECR I-4431 (‘Walloon waste’).

53 — The Community judicature therefore verifies whether theways in which the measures operate are appropriate forensuring attainment of the objective pursued and do not gofurther than is necessary to attain that objective. See, in particular, Case C-463/01 Commission v Germany [2004] ECR I-11705, paragraph 78, and Case C-309/02 Radlberger Getränkegesellschaft and S. Spitz [2004] ECR I-11763, paragraph 79.

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100. Such review is necessary. It is necessaryto make certain that the Member States take account of the extent to which the rules adopted by them are liable to affect the freemovement of goods and the enjoyment offreedoms of movement by operators in themarket. It is also necessary to ensure that thenational courts are not prompted to excludetoo many measures from the prohibition laiddown by that provision. The term ‘restriction’should therefore be viewed in broad terms.

101. At the same time, that judicial reviewmust remain limited, since the Court’s role is not systematically to challenge policingmeasures adopted by the Member States. Itis thus the review of proportionality whichenables the Court to weigh the interests associated with attainment of the internal market against those relating to the legitimateinterests of the Member States. 54

102. In view of the foregoing, I see no reasonfor departing from that analytical approach infavour of a solution which, ultimately, would

54 — The Court observed in its judgment in Case C-169/91 B & Q [1992] ECR I-6635, concerning national rules restrictingSunday opening of shops, that the review of proportionalityinvolves ‘weighing the national interest in attaining [the aimpursued] against the Community interest in ensuring the freemovement of goods’ (paragraph 15).

to some extent render nugatory one of the keyprovisions of the Treaty.

103. Third, I consider that the Keck and Mithouard criteria cannot be extended either to rules prohibiting the use of a product oreven to rules laying down arrangements for its use.

104. The rules at issue in this case, in so far as they prohibit the use of a product outright andthus render it entirely unusable, constitute, bytheir nature, an impediment to the free movement of goods. Even if those rules apply in the same way to domestic and imported products, they prevent the latter from gaining access to the market. That is clearly a restriction, and an examination basedon the relationship between Articles 28 ECand 30 EC is called for.

105. That also applies, in my view, to measures which lay down the arrangementsfor a product’s use. Even if those measures do not in principle seek to regulate trade in goodsbetween Member States, they may never-theless have effects on intra-Communitytrade by affecting access to the market for

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the product concerned. It is therefore, in myview, preferable to examine measures of thatkind in the light of the Treaty rules rather thanto remove them from the scope of the Treaty.

106. In the light of the foregoing, I am of theopinion that national provisions governingthe use of a product must not be assessed byreference to the criteria laid down by the Court in Keck and Mithouard, but must be examined in the light of Article 28 EC.

107. The examination which the Communityjudicature must carry out should, in my view,be based on a criterion that has been developed in the light of the aim pursued byArticle 28 EC and is common to all restric-tions on freedom of movement, namely thecriterion of access to the market. 55

55 — See also Picod, F., op. cit., in particular pp. 184 to 189; O’Keeffe, D. and Bavasso, A.F., ‘Four freedoms, one marketand national competence: in search of a dividing line’, Liber Amicorum Slynn, Kluwer Law International, The Hague,2000, p. 541, in particular p. 550; Barnard, C., ‘Fitting the remaining pieces into the goods and persons jigsaw’,European Law Review, No 1, 2001, Vol. 26, p. 35; Snell, J., ‘Goods and services in EC law: a study of the relationshipbetween the freedoms’, Oxford University Press, London, 2002; Oliver, P. and Enchelmaier, S.,‘Free movement of goods:recent developments in the case law’, Common Market Law Review, 2007, p. 649, in particular pp. 666 to 671; Weatherill,S., op. cit.; Tryfonidou, A., ‘Was Keck a Half-baked Solution after all?’, Legal Issues of Economic Integration, Kluwer LawInternational, The Hague, 2007, p. 167, in particular p. 178;and Prete, L., ‘Of Motorcycle Trailers and Personal Water-crafts: the Battle over “Keck”’, Legal Issues of Economic Integration, Kluwer Law International, The Hague, 2008,p. 133. See also the Opinions of Advocate General Jacobs inLeclerc-Siplec; of Advocate General Tizzano in Case C-442/02 CaixaBank France [2004] ECR I-8961, and of Advocate General Poiares Maduro in Alfa Vita Vassilopoulos and Carrefour-Marinopoulos.

3. Judicial review based on the criterion of access to the market

108. It will be remembered that, under Article 28 EC, the Treaty prohibits ‘measures having equivalent effect’ between Member States. 56 In any judicial review of national rules, it would therefore be more consistent with the letter and spirit of the Treaty to assessspecifically the effects of such rules on themarket.

109. The criterion I propose would thereforebe a general criterion, based on the effect ofthe measure on access to the market rather than on the object of the rules in question.That criterion would therefore apply to alltypes of rules, be they requirements relating tothe characteristics of a product, sellingarrangements or arrangements for use.

110. That criterion would be based on the extent to which national rules hinder trade between Member States. 57

56 — Emphasis added. 57 — As the Court has observed, the concept of a common market

involves the abolition of all ‘obstacles’ to intra-Community trade (see, in that regard, Case 15/81 Schul Douane Expéditeur [1982] ECR 1409, paragraph 33).

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111. According to that criterion, a nationalmeasure would amount to a measure havingan effect equivalent to a quantitative restric-tion, contrary to the Treaty, where it prevented, impeded or rendered more diffi-cult access to the market for products fromother Member States.

115. As regards, first, measures causing overtdiscrimination, the obstacle to intra-Commu-nity trade is clear. Such measures are prohib-ited as such by Article 28 EC.

112. On the basis of that criterion, the Member States would only have to providejustification for measures that impede intra-Community trade. That would facilitate a more appropriate balance between require-ments relating to the proper functioning ofthe common market and those relating to therequisite respect for the sovereign powers ofthe Member States.

113. As regards the implementation of thatcriterion, I, like the Commission, consider that the Community judicature should take acase-by-case approach. In carrying out its review, the Court would specifically examinethe extent of the obstacle to intra-Communitytrade caused by the measure limiting access tothe market.

114. A review of the case-law of the Court gives us some guidance as to the application ofsuch a criterion.

116. As regards, next, the other categories ofmeasures, it is necessary to examine their specific impact on patterns of trade, but theanalysis to be carried out by the Court shouldnot involve any complex economic assess-ment. Indeed, according to the Court, Article 28 EC does not draw, between measures that can be described as measures having an effect equivalent to a quantitativerestriction, a distinction based on the magni-tude of the effects they have on trade withinthe Community. 58

117. The Court must nevertheless have sufficient information to enable it to establish that such measures are liable to prevent orhinder trade between Member States. It is thus apparent from the case-law of the Court

58 — See, in particular, Case C-126/91 Yves Rocher [1993] ECR I-2361, paragraph 21.

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that purely hypothetical effects 59 or totally uncertain and indirect effects 60 or again wholly insignificant effects 61 are not sufficient for the measures to be classified as measures having an effect equivalent to a quantitativerestriction, contrary to Article 28 EC. That obstacle does not therefore need to be actual and significant, but must be at least possible.That, for example, would be the case of measures, applying without distinction, thatlaid down conditions concerning product characteristics.

118. The use of a single and simple criterionbased on access to the market would make it possible to approximate the rules for moni-toring restrictions on the various freedoms ofmovement. As I have stated, the criteria laid down in Keck and Mithouard have given riseto differentiation in the way in which restric-tions on free movement of goods are assessedas compared with other freedoms. However, acommon approach for the various freedoms isnecessary, having regard, in particular, to therequirements relating to construction of thesingle European market and the emergence ofEuropean citizenship.

119. Clearly, the analogies between the free-doms of movement for goods, persons,

59 — See, in particular, B & Q, paragraph 15.60 — See, in particular, Case C-69/88 Krantz [1990] ECR I-583,

paragraph 11; Case C-379/92 Peralta [1994] ECR I-3453, paragraph 24; Case C-134/94 Esso Española [1995] ECR I-4223, paragraph 24; and Case C-67/97 Bluhme [1998] ECR I-8033, paragraph 22.

61 — Case C-20/03 Burmanjer and Others [2005] ECR I-4133, paragraph 31.

services and capital are not perfect. Never-theless, the approach to the assessment ofsuch restrictions on those various freedoms displays the common feature of being basedon the existence of an obstacle to access to the market.

120. In the sphere of free movement of persons, services and capital, the Court examines whether the contested measure prohibits, impedes or renders less attractivethe exercise of the freedom in question andholds to be contrary to the Treaty any ruleswhich affect, for example, access by a workerto the employment market or which preventaccess of capital to a financial market.

121. The Court recently referred to that approach in its judgment in Government of the French Community and Walloon Govern-ment, in which it stated that ‘Articles 39 EC and 43 EC militate against any national measure which, even though applicablewithout discrimination on grounds of nation-ality, is capable of hindering or rendering lessattractive the exercise by Communitynationals of the fundamental freedoms guar-anteed by the Treaty’. 62

62 — Case C-212/06 [2008] ECR I-1683, paragraph 45 and thecase-law there cited.

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122. Such measures include those which, although applicable without distinction, affect some aspect of the activity concernedand have the effect of depriving an economicoperator of an effective way of competing inorder to penetrate a market. 63

123. Thus, in CaixaBank France, the Court considered that French legislation prohibitingremuneration of sight accounts was a restric-tion within the meaning of Article 43 EC, inthat it constituted, for companies establishedin a Member State other than the French Republic, a ‘serious obstacle to the pursuit oftheir activities’, thereby affecting their accessto the French market. 64

124. As regards, next, the freedom to provideservices, the Court also held in Fidium Finanz, 65 concerning German rules requiringprior approval in the Member State in whichthe service is provided, that the contested rules had the effect of impeding access to theGerman financial market for economic oper-ators not having the qualities required by German law and in particular companiesestablished in non-member countries. 66

125. In that case, even though the aspectconcerning the free movement of capital was

63 — CaixaBank France, paragraphs 12 and 14. 64 — Ibid., paragraph 12 and the case-law there cited. 65 — Case C-452/04 [2006] ECR I-9521. 66 — Paragraphs 46 and 49.

regarded as ancillary, the Court observed thatthose rules meant that financial services offered by companies established outside theEuropean Economic Area were rendered lessaccessible for clients established in Germanyand as a result there was a decrease in cross-border financial traffic relating to such services. 67

126. As regards, finally, the free movement ofworkers, the Court considered in Graf 68 that provisions which, even if they are applicablewithout distinction, preclude or deter a national of a Member State from leaving hiscountry of origin in order to exercise his rightto freedom of movement constitute an obstacle to that freedom. In that regard, theCourt stated that ‘in order to be capable ofconstituting such an obstacle, [the measuresin question] must affect access of workers tothe labour market’. 69 That is what it had already held in Bosman, 70 in relation to rules governing the transfer of professional foot-ballers from one club to another. 71

127. Such rules constitute restrictions contrary to the Treaty to the extent to which, by impeding access to the market for

67 — Paragraph 48.68 — Case C-190/98 [2000] ECR I-493.69 — Paragraph 23.70 — Case C-415/93 [1995] ECR I-4921.71 — Paragraphs 92 to 104, in particular paragraph 103.

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new operators, they are objectively barriers tofreedom of movement. Such measures freeze the market concerned in its present state andare therefore inherently contrary to the free-doms of movement and competition, on which the common market is in fact based. 72

State] or impede access any more than [theyimpede] the access of domestic products’. 74 Bydistinguishing various categories of measures,the Court thus endeavoured to identify theconditions under which each of those cat-egories may affect access to the market. 75

128. In the sphere of free movement of goods,the criterion of access to the market underlies the approach taken by the Court in its case-law.

129. In Dassonville, the Court defined a measure having equivalent effect as being, itwill be remembered, ‘all trading rules enacted by Member States which are capableof hindering … intra-Community trade’. 73

Then, in Keck and Mithouard, the Court considered that national provisions which limit or prohibit certain selling arrangementsfall outside the scope of Article 28 EC if they are not ‘such as to prevent [access to the market of products from another Member

72 — See, in that connection, point 73 of my Opinion in CaseC-500/06 Corporación dermoestética, pending before the Court.

73 — Paragraph 5 (emphasis added).

130. There are numerous examples of case-law based on that criterion. In Gourmet International Products, 76 for example, theCourt observed that rules which prohibit anyadvertising for alcoholic beverages addressedto consumers constitute an obstacle to intra-Community trade, falling within the scope ofArticle 28 EC, in so far as they are liable toimpede access to the market for products from other Member States more than for domestic products. 77 Similarly, in its judg-ment in De Agostini and TV-Shop, concerninga total prohibition of television advertisingaddressed to children, the Court considered that national rules which deprive an advertiserof the only form of promotion enabling him topenetrate the relevant market may constitutea measure having an effect equivalent to aquantitative restriction. 78

74 — Paragraph 17. 75 — See, in particular, the Opinions of Advocate General Fennelly

in Graf, point 19, and of Advocate General Tizzano in CaixaBank France, point 72.

76 — Case C-405/98 [2001] ECR I-1795. 77 — Paragraphs 18 to 25. 78 — Paragraph 43. See also Case C-322/01 Deutscher Apotheker-

verband [2003] ECR I-14887, in which the Court classified asa measure having equivalent effect a measure prohibitingmail-order sales of medicinal preparations on the ground thatit might be liable to impede access to the market for productsfrom other Member States to a greater extent than for domestic products (paragraph 74).

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131. As Advocate General Tizzano observed in his Opinion in CaixaBank France, we thus see once more a test of the same tenor in the case-law relating to the free movement of goods as that applied in relation to other freedoms. 79

132. The use of one and the same test for all freedoms of movement makes it possible todeal more easily with cases in which the measures being reviewed by the Court withregard to the free movement of goods mayalso be classified as restrictions on other freedoms of movement.

133. Although, in the majority of cases, theCourt examines measures of this kind in the light of only one of the fundamental free-doms, 80 the Court has on occasion considered that the aspect of free movement of goods andthat of freedom to provide services, for example, were intimately linked and thereforeexamined the restriction in question in thelight of Articles 28 EC and 49 EC at the sametime.

79 — Point 73. Advocate General Tizzano was referring in particular to the approach adopted by the Court in relationto the free movement of persons.

80 — The Court follows that course where it appears that one of thefundamental freedoms is secondary to another and may belinked to it. See, in particular, Case C-275/92 Schindler [1994] ECR I-1039, paragraph 22, in relation to lotteries, andCase C-36/02 Omega [2004] ECR I-9609, paragraphs 25 to27, concerning the exploitation and use of a particular form of game.

134. Thus, in Canal Satélite Digital, 81 the Court held that rules that subjected the marketing of certain equipment and the provision of services relating thereto to a prior authorisation procedure were contraryto the principles of free movement of goodsand freedom to provide services, in that, as aresult of the duration of the procedure and thecosts consequently incurred, it was liable todissuade the operators concerned from pursuing their business plan. 82

135. Moreover, there are also cases in which the Court has, by analogy, applied the criteriaset out in Keck and Mithouard to the sphere ofother freedoms of movement. Thus, in the Alpine Investments judgment, 83 concerning freedom to provide services, the Court specifically emphasised the fact that, in contrast to Keck and Mithouard, the prohib-ition at issue in that case ‘directly [affected]access to the market in services in the other Member States [and was] thus capable of hindering intra-Community trade in services’. 84

81 — Case C-390/99 [2002] ECR I-607. 82 — Paragraph 41. 83 — Case C-384/93 [1995] ECR I-1141, concerning Netherlands

rules prohibiting telephone marketing. 84 — Paragraph 38 (emphasis added). See also Case C-254/98 TK-

Heimdienst [2000] ECR I-151, concerning the compatibilitywith Article 28 EC of Austrian rules governing door-to-doorsales by bakers, butchers and grocers, in which the Courtexpressly referred to the criterion of access to the market andto Alpine Investments (paragraph 29).

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136. In the light of the foregoing, I am of theopinion that national rules are liable to constitute a measure having an effect equiva-lent to a quantitative restriction, contrary tothe Treaty, if they impede access for a productto the market, regardless of the aim pursuedby the measure in question.

137. Thus, to answer the question put by theCourt in these proceedings, I consider thatnational provisions governing the conditionsfor the use of a product, which apply withoutdistinction to domestic products and products imported from other Member States, constitute measures having an effectequivalent to quantitative restrictions on imports within the meaning of Article 28 ECif they impede access to the market for theproduct concerned.

138. It is on the basis of those factors that I shall examine the conformity of the measurein question with the principle of free move-ment of goods laid down by Article 28 EC.

V — The failure to fulfil Treaty obliga-tions

139. The Commission’s application, it will beremembered, seeks a declaration by the Court

that, by prohibiting the towing of a trailer bymopeds, motorcycles, tricycles and quadri-cycles, the Italian rules have created an obstacle to the free movement of goods contrary to the Treaty.

A — Principal arguments of the parties 85

140. At the outset, the Commission states that, in the absence of Community harmoni-sation of rules on the type-approval, registra-tion and use of trailers for mopeds, Arti-cles 28 EC and 30 EC apply.

141. The Commission notes that the Italian rules preclude the use of trailers legally produced and marketed in other Member States, thereby, in its view, impeding theirimportation and sale in Italy. Such a prohib-ition could therefore be considered compat-ible with the Treaty only if it were justified byone of the grounds set out in Article 30 EC orby one of the overriding requirements laiddown in the case-law of the Court.

85 — I refer, in this regard, to points 20 to 27 of the Opinion ofAdvocate General Léger in this case.

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142. In that connection, the Commission observes that the fact that the Italian Republicallows mopeds registered in other MemberStates to be used in its territory despite towinga trailer proves that the rules in question donot reflect any road-safety requirement.

143. Finally, the Commission draws attentionto the fact that the recitals in the preambles toDirectives 93/93 and 97/24, relied on by theItalian Republic in support of its rules, are not,by virtue of settled case-law, in any waybinding and cannot have the aim or effect ofrendering compatible with Community lawnational rules of the kind at issue in the present proceedings.

144. In response to those arguments, the Italian Republic retorts that the infringementimputed to it concerns a prohibition on mopeds registered in Italy from towing trailers and not the refusal to registermopeds or trailers manufactured in anotherMember State and intended to be marketed within Italian territory.

145. The Italian Republic also contends thatthe reservation appearing in the last recitals inthe preambles to Directives 93/93 and 97/24makes the contested measure permissible. Inits view, such a reservation is accounted for bythe differences of terrain between national

territories. That reservation could only be setaside if the technical rules on type-approval,registration and use on the road of trailerstowed by two-wheel or three-wheel motor vehicles were harmonised. 86 However, the Italian Republic states that the applicable Community law does not provide for any such harmonisation. Accordingly, mutual recognition of trailer requirements remainswithin the discretion of the Member States.

146. The Italian Republic emphasises, finally, that the technical characteristics of the vehicles are important from the road-safetypoint of view. The Italian authorities considerthat, in the absence of type-approval rules forvehicles towing a trailer, the requisite safetyrequirements are not fulfilled.

B — Assessment

147. At the outset, it must be observed that Community law does not govern rules on thedriving and use, in particular, of vehicles towhich a trailer is attached.

86 — The Italian Republic notes, in that connection, that such rulesalready exist for trailers towed by other types of vehicle.

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148. In the absence of harmonising provi-sions at Community level, the Member Statesmay therefore define the level of road-safetyprotection they consider appropriate withintheir territory and adopt measures designed toprotect public safety. They may therefore impose restrictions regarding the use of trailers.

149. However, that power cannot be exer-cised in a wholly unfettered manner.

150. In the absence of common or har-monised rules, the Member States are required to respect the fundamental freedomsenshrined in the Treaty, which, it will be remembered, include the free movement of goods. 87 As I have indicated, that freedom upholds, by virtue of Article 28 EC, the prohibition as between Member States of quantitative restrictions on imports and allmeasures having equivalent effect.

151. The definition of a measure having equivalent effect given by the Court in Dassonville means that all national rules that

87 — See, to that effect, Commission v France, paragraph 24 et seq.

impede access to the market for an importedproduct fall within the scope of Article 28 EC.

152. In the light of the analysis just made, theissue is therefore whether the Italian legisla-tion is liable to impede intra-Communitytrade and, in particular, to prevent trailerslegally produced and marketed in other Member States from reaching the Italian market.

153. In the present case, the rules at issue are a policing measure adopted by the Italian Government to ensure the safety of driversand other road users. As such, it forms part ofthe Highway Code. The measure prohibits the users of trailers from attaching them to a moped, motorcycle, tricycle or even a quad-ricycle, anywhere within Italian territory. It does not appear that there is any exception tothat general prohibition. In contrast to the rules at issue in Mickelsson and Roos, the measure here does not just limit the use of aproduct but prohibits its use outright.

154. In addition, the measure at issue does not draw any distinction based on whether thetrailers are produced and marketed in Italy or

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are imported from other Member States. 88

The Italian Republic emphasises, in its rejoinder, that the prohibition measure concerns all trailers, regardless of where theyare manufactured and marketed. 89

155. As the Commission pointed out in itswritten observations, 90 the trailers covered bythe rules at issue represent a special market.They have specific technical characteristicsenabling them to be attached to motorcycles.

156. On the basis of that information, although I fully recognise the importance ofroad safety and the growing awareness of it inthe Community and the Member States, Iconsider that the Italian rules impose severerestrictions on the producers and distributorsof trailers established in the other Member States.

157. The prohibition in question makes it practically impossible to penetrate the Italianmarket.

88 — It appears from the case-file that there is no domestic manufacture of trailers of this kind.

89 — Paragraph 2. 90 — I refer to the document lodged by the Commission when the

proceedings were reopened (p. 3).

158. The extent of the prohibition is such thatit leaves no scope for anything other thanpurely marginal use of trailers. They are rendered entirely useless because theycannot be used for the normal purpose forwhich they are intended, namely to increasethe luggage-carrying capacity of a motorcycle.The prohibition therefore dissuades distribu-tors from importing them. It is rather point-less to import them if the retailer knows thatthey will not be sold or rented. 91 The prohibition will therefore have the effect ofsignificantly reducing imports.

159. Consequently, I consider that the rulesat issue, which prohibit outright the use of aproduct throughout national territory, giverise to a substantial, direct and immediate obstacle to intra-Community trade. Such rules therefore amount, in my view, to a measure having an effect equivalent to a quantitative restriction within the meaningof Article 28 EC.

160. Nevertheless, the measure is not neces-sarily contrary to Community law. As we haveseen, freedoms of movement may be subject

91 — I refer, in that regard, to the Opinion of Advocate GeneralKokott in Mickelsson and Roos. The Advocate General emphasised, in point 45 of her Opinion, that measures governing the use of a product (for example, a prohibition ofoff-road use in woodlands or speed limits on motorways) maydissuade certain people from purchasing a cross-countryvehicle or a particularly fast car because they could not usethem as they wish, and the restriction on use thus constitutesa potential hindrance to intra-Community trade.

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to restrictions imposed by the Member States ground which may justify a restriction on theif they are justified on legitimate grounds and free movement of goods. 93

are appropriate and proportionate.

161. As far as justification of the measure isconcerned, it is clear from settled case-law that national rules which impede the free movement of goods may be justified by one ofthe grounds listed in Article 30 EC or by one ofthe overriding requirements identified in thecase-law of the Court in cases where the national rules apply without distinction. 92

162. In the present proceedings, the ItalianRepublic contends that the prohibition at issue was laid down with a view to ensuringroad safety.

163. According to settled case-law, such anaim constitutes an overriding public interest

92 — See the judgment in Cassis de Dijon.

164. Nevertheless, the prohibition must beproportionate. Whilst it is for the Member States, in the absence of harmonised rules on the use of motorcycles towing trailers, to decide at what level they wish to ensure safetyfor drivers and in what manner that level should be attained, they may do so only withinthe limits defined by the Treaty and, in particular, in compliance with the principleof proportionality.

165. In assessing whether national rules conform to the principle of proportionality,it is important to establish, first, whether theyare appropriate for protection of the interestpursued and, second, whether the means useddo not go further than is necessary to attainthat objective. 94

93 — See, with regard to road safety, Commission v Portugal,paragraph 38 and the case-law there cited. See, in particular,Commission Recommendation 2004/345/EC of 6 April 2004on enforcement in the field of road safety (OJ 2004 L 111,p. 75); the communication from the Commission of 2 June2003 concerning the European road safety action programme — Halving the number of road accident victims in the European Union by 2010: a shared responsi-bility (COM(2003) 311 final); and the Council resolution of26 June 2000 on the improvement of road safety (OJ 2000C 218, p. 1).

94 — See, in particular, Case C-463/01 Commission v Germany,paragraph 78; Radlberger Getränkegesellschaft and S. Spitz,paragraph 79; and Case C-297/05 Commission v Netherlands [2007] ECR I-7467, paragraph 76 and the case-law therecited.

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166. It is clear that such legislation may be aneffective means of protecting road users. AsAdvocate General Léger pointed out in thefirst Opinion given in this case, the attach-ment of a trailer to a motorcycle may, incertain circumstances, constitute a danger totraffic, in so far as such vehicles are slow and may encroach significantly upon the car-riageway.

167. Nevertheless, I find it difficult to acceptthat the contested measure could meet the requirement of proportionality.

168. The Italian legislation does not confineitself to prohibiting the use of trailers attachedto a motorcycle in specific localities or onparticular itineraries, but applies throughoutItalian territory, regardless of road infrastruc-ture and traffic conditions.

169. The Italian authorities do not refer to any specific factor of such a kind as to demonstrate that those requirements are proportionate to the objective pursued. More-over, the prohibition at issue concerns onlymotorcycles registered in Italy. 95 Vehicles registered in other Member States are there-

95 — Paragraph 2 of the Italian Republic’s defence.

fore authorised to tow a trailer on Italian roads.

170. I also consider that the driver safety sought by the Italian legislation may be achieved by means that restrict freedom oftrade to a much lesser extent. It would be appropriate, for example, to define which itineraries in Italy are considered to be fraughtwith risks — such as mountain crossings,motorways or even particularly heavily usedpublic highways — for the purpose of laying down sectoral prohibitions or limitations. That alternative would reduce the risks arising from the use of trailers and wouldcertainly be less restrictive of trade.

171. In any event, I consider that it was incumbent on the Italian authorities to examine closely, before adopting as radical ameasure as a general and absolute prohibition,the possibility of resorting to measures lessrestrictive of freedom of movement and not to reject them unless it was clearly establishedthat they were not consonant with the aimpursued. However, it does not appear from thecase-file that the national authorities carried out any such examination.

172. In view of the foregoing, I consider that,by adopting and maintaining in force rulesprohibiting within its territory the use of trailers attached to a moped, motorcycle,

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tricycle or quadricycle, the Italian Republichas failed to fulfil its obligations under Article 28 EC.

173. As regards the argument put forward bythe Italian Republic to the effect that the lastrecitals in the preambles to Directives 93/93and 97/24 authorise the Member States tomaintain such rules, I do not consider that it can justify the restriction imposed by the measure at issue.

174. Indeed, as pointed out by Advocate General Léger in his Opinion in this case,the preamble to a Community act does not,according to settled case-law, have anybinding legal force and cannot be relied oneither as a ground for derogating from theenacting terms of the measure in question orfor interpreting those provisions in a mannerclearly contrary to their wording. 96

175. It is immediately clear from a reading ofDirective 93/93 that neither of the recitalsreferred to by the Italian Republic is reiterated

96 — See, in particular, Case C-162/97 Nilsson and Others [1998] ECR I-7477, paragraph 54, and Case C-136/04 Deutsches Milch-Kontor [2005] ECR I-10095, paragraph 32and the case-law there cited.

in the actual body of that directive. In thatregard, as pointed out by Advocate GeneralLéger in point 65 of his Opinion in this case,although the preamble to a directive may inprinciple give the Court information as to thelegislature’s intention and the meaning to be given to the measure’s provisions, the factremains that, where a concept set out in arecital is not given concrete expression in theactual body of the directive, it is the terms ofthe latter that must predominate. 97

176. In any event, I should point out that it isclear from settled case-law that a provision ofsecondary law, in this case a directive, ‘cannot be interpreted as authorising the Member States to impose conditions contrary to theTreaty rules on the movement of goods’. 98

177. In the light of the foregoing, I proposethat the Court find that, by adopting and maintaining in force rules prohibiting the useof trailers attached to a moped, motorcycle,tricycle or quadricycle, the Italian Republichas failed to fulfil its obligations under Article 28 EC.

97 — Advocate General Léger refers to point 70 of his Opinion inCase C-444/03 Meta Fackler [2005] ECR I-3913.

98 — Case C-47/90 Delhaize and Le Lion [1992] ECR I-3669, paragraph 26. See also the judgment in Clinique, in which the Court held that a ‘directive must, like all secondarylegislation, be interpreted in the light of the Treaty rules onthe free movement of goods’ (paragraph 12).

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VI — Costs ordered to pay the costs if they have beenapplied for in the successful party’s pleadings.Since the Commission has asked for costs and the Italian Republic has essentially failed in its

178. Under Article 69(2) of the Rules of submissions, it should be ordered to pay theProcedure, the unsuccessful party is to be costs.

VII — Conclusion

179. In the light of the foregoing considerations, I suggest that the Court:

— find that, by adopting and maintaining in force rules prohibiting the use of trailersattached to a moped, motorcycle, tricycle or quadricycle, the Italian Republic hasfailed to fulfil its obligations under Article 28 EC;


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v

JUDGMENT OF 10. 2. 2009 — CASE C-110/05

JUDGMENT OF THE COURT (Grand Chamber)

10 February 2009 *

In Case C-110/05,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 4 March2005,

Commission of the European Communities, represented by D. Recchia and F. Amato, acting as Agents, with an address for service in Luxembourg,

applicant,

Italian Republic, represented by I.M. Braguglia, acting as Agent, assisted by M. Fiorilli,avvocato dello Stato, with an address for service in Luxembourg,

defendant,

* Language of the case: Italian.

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THE COURT (Grand Chamber),

composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaertsand T. von Danwitz, Presidents of Chambers, A. Tizzano, J.N. Cunha Rodrigues,A. Borg Barthet, J. Malenovský, U. Lõhmus (Rapporteur), A. Arabadjiev and C. Toader,Judges,

Advocate General: P. Léger, later Y. Bot,Registrar: L. Hewlett, Principal Administrator, later M. Ferreira, PrincipalAdministrator,

having regard to the written procedure,

after hearing the Opinion of the Advocate General at the sitting on 5 October 2006,

having regard to the order of 7 March 2007 re-opening the oral procedure and furtherto the hearing on 22 May 2007,

having regard to the written and oral observations submitted by:

— the Commission of the European Communities, by D. Recchia and F. Amato, actingas Agents,

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— the Italian Republic, by I.M. Braguglia, acting as Agent, assisted by M. Fiorilli,avvocato dello Stato,

— the Czech Republic, by T. Boček, acting as Agent,

— the Kingdom of Denmark, by J. Bering Liisberg, acting as Agent,

— the Federal Republic of Germany, by M. Lumma, acting as Agent,

— the Hellenic Republic, by N. Dafniou, acting as Agent,

— the French Republic, by G. de Bergues and R. Loosli, acting as Agents,

— the Republic of Cyprus, by K. Lykourgos and A. Pantazi-Lamprou, acting as Agents,

— the Kingdom of the Netherlands, by H.G. Sevenster and C. ten Dam, acting asAgents,

— the Kingdom of Sweden, by A. Kruse, acting as Agent,

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after hearing the Opinion of the Advocate General at the sitting on 8 July 2008,

gives the following

Judgment

In its application, the Commission of the European Communities asks the Court to findthat, by maintaining rules which prohibit mopeds, motorcycles, tricycles and quadricycles (‘motoveicoli’, hereinafter ‘motorcycles’) from towing a trailer, the Italian Republic has failed to fulfil its obligations under Article 28 EC.

Legal context

Community rules

Council Directive 92/61/EEC of 30 June 1992 relating to the type-approval of two orthree-wheel motor vehicles (OJ 1992 L 225, p. 72) laid down uniform definitions and the

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2


procedure for granting Community type-approval or component type-approval inrespect of certain types of vehicle covered by the directive. Article 1(1) and (2) thereofprovide as follows:

‘1. This Directive applies to all two or three-wheel motor vehicles, twin-wheeled orotherwise, intended to travel on the road, and to the components or separate technicalunits of such vehicles.

…

2. The vehicles referred to in paragraph 1 shall be subdivided into:

— moped[s], i.e. two or three-wheel vehicles fitted with an engine having a cylindercapacity not exceeding 50 cm3 if of the internal combustion type and a maximumdesign speed of not more than 45 km/h,

— motorcycles, i.e. two-wheel vehicles with or without sidecar, fitted with an enginehaving a cylinder capacity of more than 50 cm3 if of the internal combustion typeand/or having a maximum design speed of more than 45 km/h,

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— motor tricycles, i.e. vehicles with three symmetrically arranged wheels fitted with anengine having a cylinder capacity of more than 50 cm3 if of the internal combustion type and/or a maximum design speed of more than 45 km/h.’

3 It is apparent from Article 1(3) that Directive 92/61 also applied to motor vehicles withfour wheels, namely ‘quadricycles’, which were to be considered to be mopeds or motortricycles depending on their technical characteristics.

4 The sixth recital in Council Directive 93/93/EEC of 29 October 1993 on the masses anddimensions of two or three-wheel motor vehicles (OJ 1993 L 311, p. 76), which isintended to harmonise imperative technical requirements in order to enable the type-approval and component type-approval procedures laid down in Directive 92/61 to beapplied, states the following:

‘Whereas the provisions of this Directive should not oblige those Member States whichdo not allow two-wheel motor vehicles on their territory to tow a trailer to amend theirrules’.

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The purpose of Directive 97/24/EC of the European Parliament and of the Council of17 June 1997 on certain components and characteristics of two or three-wheel motorvehicles (OJ 1997 L 226, p. 1) is to further harmonise certain technical requirements ofsuch vehicles, including coupling devices and attachments. The 12th recital in thisdirective states as follows:

‘Whereas … the object of the requirements of this Directive should not be to obligethose Member States which do not allow two or three-wheel motor vehicles in their territory to tow a trailer to amend their rules’.

National legislation

6 In Italy, Article 53 of Legislative Decree No 285 of 30 April 1992 (GURI, ordinarysupplement, No 114 of 18 May 1992,‘the Highway Code’) defines motorcycles as motorvehicles with two, three or four wheels. Only four-wheeled vehicles may be called‘motor quadricycles’.

7 Pursuant to Article 54 of the Highway Code, automobiles (‘autoveicoli’) are motorvehicles with at least four wheels, excluding the vehicles defined in Article 53 of theCode.

Pursuant to Article 56 of the Highway Code, only automobiles, trolleybuses (vehicleswith an electric motor not travelling on rails which take their energy from an overhead

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contact line) and automobile tractors (three wheeled motor vehicles intended to towsemi-trailers) are allowed to tow trailers.

The pre-litigation procedure

9 As a result of a complaint lodged by an individual concerning the Italian Republic andan informal inquiry by the Commission, the latter, on 3 April 2003, sent a formal noticeto the Member State in which it argued that the prohibition on motorcycles towingtrailers constituted a failure to fulfil obligations under Article 28 EC.

10 In a letter of 13 June 2003, the Italian Republic gave a commitment to make the requisitechanges to the national rules and to remove the obstacle to imports raised in the formalnotice mentioned above.

Since it received no further communication concerning the making of such changes,the Commission, on 19 December 2003, sent a reasoned opinion to the Italian Republiccalling on it to submit its observations within a period of two months as from receipt ofthat notice.

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11

12


Having received no reply to that notice, the Commission decided to institute thepresent proceedings.

Procedure before the Court

13 By decision of 11 July 2006, the Court assigned the case to the Third Chamber. Sincenone of the parties applied to submit oral arguments, the Court decided to rule withoutholding a hearing. Advocate General Léger delivered his Opinion on 5 October 2006,after which the oral procedure was closed.

14 Pursuant to Article 44(4) of the Rules of Procedure, theThird Chamber, on 9 November2006, decided to refer the case back to the Court in order that it might be reassigned to aformation composed of a greater number of judges.

15 By order of 7 March 2007, the Court ordered the re-opening of the oral procedure andthe holding of a hearing. The parties to the case and, pursuant to the second paragraphof Article 24 of the Statute of the Court of Justice, the Member States other than the Italian Republic were invited to answer the question of the extent to which and theconditions under which national provisions which govern not the characteristics ofgoods but their use, and which apply without distinction to domestic and importedgoods, are to be regarded as measures having equivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC.

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The action

Observations submitted on the Court’s question

16 The parties to the case as well as the Czech Republic, the Kingdom of Denmark, theFederal Republic of Germany, the Hellenic Republic, the French Republic, the Republicof Cyprus, the Kingdom of the Netherlands and the Kingdom of Sweden submittedwritten or oral observations to the Court on the question.

17 In the Commission’s view, it is possible to identify two categories of rules concerningthe use of a product, namely, first, those which make use of the product subject tocompliance with certain conditions specific to the product or which limit that use in space or time and, second, those which lay down absolute, or almost absolute, prohibitions of the use of the product.

18 The Commission proposes to apply to the first category of rules the criteria set out inparagraph 5 of the judgment in Case 8/74 Dassonville [1974] ECR 837 and to considereach case separately. With regard to the second category of rules, once they impose anabsolute prohibition on the use of a certain product or a prohibition which permits onlylimited or exceptional use of it, they constitute, by definition, measures having equivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC. The Commission considers that it is neither appropriate nor necessary toextend the criteria set out in paragraphs 16 and 17 of the judgment in Joined CasesC-267/91 and C-268/91 Keck and Mithouard [1993] ECR I-6097 to rules concerningthe use of a product and thereby create an additional category of measures which arenot within the scope of Article 28 EC.

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19


The Italian Republic argues that a rule concerning use is covered by Article 28 EC only ifit prohibits all uses of a product or its only use, if the product only has one. On the otherhand, if there is a discretion as to the possible uses of the product, the situation nolonger falls under Article 28 EC.

20 The Czech Republic argues that it is inappropriate to draw rigid distinctions betweendifferent categories of measures and to apply different legal criteria depending on thecategory into which they fall because the introduction of any new category of measuresinevitably implies difficulties in regard to its definition.

21 Like the Commission, that Member State points out that the criteria introduced by Keck and Mithouard, for selling arrangements for products should not be extended to rulesconcerning the use of products because the application of those criteria has not beenwithout difficulty in the Court’s case-law and they have not really been necessary.Indeed, the provisions declared to govern selling arrangements could have beendefended by the national authorities even in the absence of the criteria laid down in thatjudgment.

22 On the other hand, the Kingdom of Denmark, the Federal Republic of Germany, theHellenic Republic, the French Republic, the Republic of Cyprus and the Kingdom ofSweden consider that the case-law commencing with Keck and Mithouard, should be applied by analogy to a national provision which restricts or prohibits certain forms ofuse of a product. They therefore propose that a national provision should not fall underArticle 28 EC in so far as it is not connected with the product, it applies to all economicoperators concerned who pursue their activities in the national territory and it affects inthe same manner, in law and in fact, national products and those coming from otherMember States.

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23 By contrast, those same Member States point out that a derogation from those criteriawould be necessary if it was established that restrictive national provisions simplyprohibited the use of a particular product or permitted only a limited use thereof,thereby restricting its access to the market.

24 In the view of the Kingdom of Denmark, it is important to note that national rules whichlimit the freedom of action of an individual or an undertaking in regard to a particularproduct are not all prohibited. With regard to the criterion that a national rule may notprevent a product’s access to the market, it considers that it is difficult to determine from what point a restriction on the use of a product may be regarded as so restrictivethat it hinders such access. It is of the opinion that it is for the national courts to decideto what extent the person who challenges such a rule has established that access to themarket has been hindered by the application thereof.

25 The Federal Republic of Germany considers that rules concerning the use of a productconstitute the other side of those concerning selling arrangements in the sense thatsome of the forms of use may be regarded as selling arrangements and vice versa. In it’s view, the principles flowing from Keck and Mithouard, should apply in the same fashionto rules concerning the use of a product in so far as those rules do not involvediscrimination, ensure equal opportunity in regard to competition between productsmanufactured in the Member State having laid down such rules and those coming fromother Member States and not hinder, completely or almost completely, access to themarket of the said Member State for those products.

26 The Hellenic Republic considers that the use of a product is not, in itself, apt to hinderintra-Community trade. If, however, use is a relevant factor inherent in placing theproduct in circulation, a matter which must be considered in each individual case, theobstacle to its use would fall within the scope of Article 28 EC.

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27


The French Republic considers that national rules concerning the use of a product andthose concerning selling arrangements for that product are comparable in regard toboth the nature and the degree of their effect on intra-Community trade inasmuch asthose rules give rise to effects, in principle, only after the importation of the product andby way of consumer behaviour. The same criteria must therefore apply to both types ofprovision.

28 The Republic of Cyprus, although sharing the reserves expressed by other MemberStates concerning the introduction of a new, essentially economic, criterion, argues thatif the case-law flowing from Keck and Mithouard, is not extended to measures governing the use of a product, any measure concerning use could be assimilated to aprohibition under the rule laid down in Dassonville. In it’s view, the Court’s analysisshould concentrate on the question whether the measure at issue is likely to preclude, inwhole or in part, access of goods to the national market.

29 The Kingdom of Sweden considers that a national measure which prohibits a form ofuse of a product comes within the scope of Article 28 EC if the measure is drawn up insuch a way as to prevent, in practice, the product’s access to the market.

30 The Kingdom of the Netherlands argues that national measures must be examined firstin regard to the question whether their repercussions on the free movement of goodsare not too uncertain and too indirect. In other words, it must be asked whether there is a causal link between the measures and the effect on intra-Community trade. Manyrules concerning the use of a product could be upheld under this first test, whichconstitutes a filter permitting them to avoid the scope of Article 28 EC.

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COMMISSION v ITALY

31 With regard to the extension of the case-law commencing with Keck and Mithouard, to rules concerning the use of a product, the Kingdom of the Netherlands puts forwardarguments both for and against such an extension. On the positive side, such anapproach would first of all allow all rules intended to protect interests of a non-economic nature to fall outside the scope of Article 28 EC. Secondly, such an approachwould follow the Court’s earlier case-law and permit the national courts to make areasonably abstract application which would increase legal certainty and promoteconsistency in the case-law. Finally, it would prevent misuse of the exception flowingfrom Keck and Mithouard in the case of rules which lead to a prohibition of the use of aproduct or permit it only to a limited extent.

32 With regard to arguments against extension of the said case-law to rules concerning theuse of a product, it considers, first, that it is difficult to define forms of use of a productclearly as a category. It also considers that a new category of exceptions could createconfusion for the national courts because different criteria apply depending on thecategory into which a given provision falls. Finally, it argues that there are stillexceptions among rules concerning the use of a product, namely the cases in which a measure fulfils the criteria for the exception even though it will have serious repercussions on trade between the Member States.

Preliminary observations

33 It should be recalled that, according to settled case-law, all trading rules enacted byMember States which are capable of hindering, directly or indirectly, actually orpotentially, intra-Community trade are to be considered as measures having an effectequivalent to quantitative restrictions and are, on that basis, prohibited by Article 28 EC(see, in particular, Dassonville, paragraph 5).

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34 It is also apparent from settled case-law that Article 28 EC reflects the obligation torespect the principles of non-discrimination and of mutual recognition of productslawfully manufactured and marketed in other Member States, as well as the principle ofensuring free access of Community products to national markets (see, to that effect,Case 174/82 Sandoz [1983] ECR 2445, paragraph 26; Case 120/78 Rewe-Zentral (‘Cassis de Dijon’) [1979] ECR 649, paragraphs 6, 14 and 15; and Keck and Mithouard, paragraphs 16 and 17).

35 Hence, in the absence of harmonisation of national legislation, obstacles to the freemovement of goods which are the consequence of applying, to goods coming fromother Member States where they are lawfully manufactured and marketed, rules that laydown requirements to be met by such goods constitute measures of equivalent effect toquantitative restrictions even if those rules apply to all products alike (see, to that effect,‘Cassis de Dijon’, paragraphs 6, 14 and 15; Case C-368/95 Familiapress [1997] ECR I-3689, paragraph 8; and Case C-322/01 Deutscher Apothekerverband [2003] ECR I-14887, paragraph 67).

36 By contrast, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as tohinder directly or indirectly, actually or potentially, trade between Member States forthe purposes of the case-law flowing from Dassonville, on condition that those provisions apply to all relevant traders operating within the national territory and thatthey affect in the same manner, in law and in fact, the marketing of domestic productsand of those from other Member States. Provided that those conditions are fulfilled, the application of such rules to the sale of products from another Member State meetingthe requirements laid down by that State is not by nature such as to prevent their accessto the market or to impede access any more than it impedes the access of domesticproducts (see Keck and Mithouard, paragraphs 16 and 17).

37 Consequently, measures adopted by a Member State the object or effect of which is totreat products coming from other Member States less favourably are to be regarded as

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COMMISSION v ITALY

measures having equivalent effect to quantitative restrictions on imports within themeaning of Article 28 EC, as are the measures referred to in paragraph 35 of the presentjudgment. Any other measure which hinders access of products originating in otherMember States to the market of a Member State is also covered by that concept.

The failure to fulfil obligations

38 The Commission’s complaints concerning Article 56 of the Highway Code must beconsidered in the light of the principles set out in paragraphs 33 to 37 of the presentjudgment.

Arguments of the parties

39 In support of its action, the Commission claims that the effect of the prohibition laiddown in Article 56 of the Highway Code is to prevent the use of trailers lawfullyproduced and marketed in the Member States where there is no such prohibition and tohinder their importation into, and sale in, Italy.

40 Therefore, that prohibition constitutes, in the Commission’s view, an obstacle to imports within the meaning of Article 28 EC and may be regarded as compatible withthe EC Treaty only if justified under Article 30 EC or by an overriding reason relating tothe public interest. However, the Italian Republic put forward no justification nor anyoverriding reason relating to the public interest during the pre-litigation procedure. On

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the contrary, the Member State admitted the existence of the prohibition and theobstacle to imports which flowed from it and undertook to remove it.

41 The Italian Republic points out, in regard to the alleged obstacle to imports, that theinfringement complained of refers to a prohibition on motorcycles registered in Italytowing a trailer and not the refusal to register such a vehicle or a trailer manufactured inanother Member State and intended to be marketed in Italy. It considers that theCommission is confusing the legal conditions for circulation, in Italy, of a vehiclespecifically type-approved in another Member State or in a non-member country withthe marketing of the same vehicle in Italy.

42 The Italian Republic also contends that the Commission’s conclusion is based on an erroneous premise. Article 56 of the Highway Code is a means of exercising a power ofderogation expressly granted to the Member States in the sixth recital in Directive 93/93. Until there has been harmonisation at Community level both of thetechnical requirements for type-approval of trailers and the rules concerningregistration and circulation of them on the road, mutual recognition of such trailersremains at the discretion of the Member States.

43 In its reply, the Commission submits that the recitals in a directive are not binding andthat it is neither the purpose nor the effect of the sixth recital in Directive 93/93 todeclare compatible with Community law national provisions such as those in Article 56of the Highway Code. That recital determines the scope of Directive 93/93 by excludingtherefrom rules concerning trailers intended to be towed by two-wheeled vehicles,without stating whether or not any prohibition which might be laid down is compatiblewith the rules in the Treaty. The Commission also draws attention to the principle ofthe primacy of the provisions of the Treaty over secondary legislation, which the Courthas recognised on several occasions.

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44

COMMISSION v ITALY

In addition, the Commission observes that the absence of harmonised rules in no wayjustifies the infringement of a fundamental freedom guaranteed by the Treaty.

45 In its rejoinder, the Italian Republic contends that, given the possibilities for usingmotorcycles and trailers, which may be used separately, those products cannot beregarded as the subject of quantitative restrictions on imports within the meaning ofArticle 28 EC.

46 Moreover, the prohibition at issue affects only the product as such, irrespective of theplace of production and the nationality of the manufacturer, and does not thereforeconstitute a means of protecting Italian products or rules which discriminate againstproducts manufactured in the other Member States. In Italy, no motorcycle can obtaintype-approval to tow a trailer and no trailer to be towed by a motorcycle. Since theconsequence of the prohibition on using such vehicles and trailers together is thatItalian undertakings have no interest in manufacturing motorcycles equipped to towtrailers or trailers intended solely to be towed by such vehicles, the effect of theprohibition is to exclude products with such characteristics from the Italian market.

47 The Italian Republic refers to the Convention on Road Traffic, concluded in Vienna on8 November 1968, which provides, in point 3(a) of Annex I thereto, that ‘ContractingParties may refuse to admit to their territories in international traffic the followingcombinations of vehicles in so far as the use of such combinations is prohibited by theirdomestic legislations: … Motor cycles with trailers’. However, it makes clear that it did not avail itself of that possibility and that motorcycles that are registered in otherMember States are allowed to tow a trailer in Italian territory since they are consideredto be in international traffic within the meaning of the said Convention.

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48


The Italian Republic also refers to the 12th recital in Directive 97/24, which hasessentially the same content as the 6th recital in Directive 93/93. It points out that thereservation granted to the Member States in that recital corresponds to the fact that, byreason of the different contours of the national territories, the technical characteristics of vehicles are important from the point of view of road safety. In the Member State’s view, in the absence of rules for type-approval of the two products used together(towing vehicle and trailer), there are no safety conditions necessary for road traffic.

Findings of the Court

49 In order to assess whether the Commission’s complaint is well founded, it should bepointed out that, although Article 56 of the Highway Code concerns a prohibition onusing a motorcycle and a trailer together in Italy, the national provision must beconsidered, in particular, from the angle of the restriction that it could represent for freemovement of trailers. Although it is not disputed that motorcycles can easily be usedwithout a trailer, the fact remains that the latter is of little use without a motor vehicle that may tow it.

50 It is common ground that Article 56 of the Highway Code applies without regard to theorigin of trailers.

The Commission has not specified whether its action concerns solely trailers which arespecially designed for motorcycles or if it also covers other types of trailers. Those twotypes of trailers must therefore be distinguished when assessing the alleged failure tofulfil obligations.

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51

52

COMMISSION v ITALY

With regard, first, to trailers not specially designed for motorcycles but intended to betowed by automobiles or other types of vehicle, it should be noted that the Commissionhas not established that the prohibition laid down in Article 56 of the Highway Codehinders access to the market for that type of trailer.

53 The Commission’s action must therefore be dismissed in so far as it concerns trailers which are not specially designed to be towed by motorcycles and are legally producedand marketed in Member States other than the Italian Republic.

54 Secondly, the failure to fulfil obligations alleged by the Commission in regard to trailerswhich are specially designed to be towed by motorcycles and are legally produced andmarketed in Member States other than the Italian Republic remains to be examined.

55 In its reply to the Court’s written question, the Commission claimed, without beingcontradicted by the Italian Republic, that, in the case of trailers specially designed formotorcycles, the possibilities for their use other than with motorcycles are very limited.It considers that, although it is not inconceivable that they could, in certain circumstances, be towed by other vehicles, in particular, by automobiles, such use isinappropriate and remains at least insignificant, if not hypothetical.

It should be noted in that regard that a prohibition on the use of a product in theterritory of a Member State has a considerable influence on the behaviour of consumers, which, in its turn, affects the access of that product to the market of thatMember State.

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56

57


Consumers, knowing that they are not permitted to use their motorcycle with a trailerspecially designed for it, have practically no interest in buying such a trailer (see, byanalogy, Case C-265/06 Commission v Portugal [2008] ECR I-2245, paragraph 33,concerning the affixing of tinted film to the windows of motor vehicles). Thus, Article 56 of the Highway Code prevents a demand from existing in the market at issuefor such trailers and therefore hinders their importation.

58 It follows that the prohibition laid down in Article 56 of the Highway Code, to the extentthat its effect is to hinder access to the Italian market for trailers which are speciallydesigned for motorcycles and are lawfully produced and marketed in Member Statesother than the Italian Republic, constitutes a measure having equivalent effect toquantitative restrictions on imports within the meaning of Article 28 EC, unless it canbe justified objectively.

59 Such a prohibition may be justified on one of the public interest grounds set out inArticle 30 EC or in order to meet imperative requirements (see, in particular CaseC-420/01 Commission v Italy [2003] ECR I-6445, paragraph 29, and Case C-270/02 Commission v Italy [2004] ECR I-1559, paragraph 21). In either case, the nationalprovision must be appropriate for securing the attainment of the objective pursued andnot go beyond what is necessary in order to attain it (Case C-54/05 Commission v Finland [2007] ECR I-2473, paragraph 38, and Case C-297/05 Commission v Netherlands [2007] ECR I-7467, paragraph 75).

In the present case, the justification put forward by the Italian Republic relates to theneed to ensure road safety, which, according to the case-law, constitutes an overridingreason relating to the public interest capable of justifying a hindrance to the free

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60

COMMISSION v ITALY

movement of goods (see, in particular, Case C-55/93 van Schaik [1994] ECR I-4837, paragraph 19; Case C-314/98 Snellers [2000] ECR I-8633, paragraph 55; Commission v Finland, paragraph 40, Commission v Netherlands, paragraph 77, Commission v Portugal, paragraph 38; and judgment of 5 June 2008 in Case C-170/07 Commission v Poland, paragraph 49).

61 In the absence of fully harmonising provisions at Community level, it is for the MemberStates to decide upon the level at which they wish to ensure road safety in their territory,whilst taking account of the requirements of the free movement of goods within theEuropean Community (see, to that effect, Case 50/83 Commission v Italy [1984] ECR 1633, paragraph 12, and, by analogy, Case C-131/93 Commission v Germany [1994] ECR I-3303, paragraph 16).

62 According to settled case-law, it is for the competent national authorities to show thattheir rules fulfil the criteria set out in paragraph 59 of the present judgment (see, to thateffect, Commission v Netherlands, paragraph 76, Commission v Portugal, paragraph 39, and judgment of 24 April 2008 in Case C-286/07 Commission v Luxembourg, paragraph 37).

63 With regard, first, to whether the prohibition laid down in Article 56 of the HighwayCode is appropriate, the Italian Republic contends that it introduced the measurebecause there were no type-approval rules, whether at Community level or nationallevel, to ensure that use of a motorcycle with a trailer was not dangerous. In the absenceof such a prohibition, circulation of a combination composed of a motorcycle and anunapproved trailer could be dangerous both for the driver of the vehicle and for othervehicles on the road, because the stability of the combination and its braking capacitywould be affected.

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64 In that regard, it must be held that the prohibition in question is appropriate for thepurpose of ensuring road safety.

65 With regard, second, to whether the said prohibition is necessary, account must betaken of the fact that, in accordance with the case-law of the Court referred to in paragraph 61 of the present judgment, in the field of road safety a Member State maydetermine the degree of protection which it wishes to apply in regard to such safety andthe way in which that degree of protection is to be achieved. Since that degree ofprotection may vary from one Member State to the other, Member States must beallowed a margin of appreciation and, consequently, the fact that one Member Stateimposes less strict rules than another Member State does not mean that the latter’s rules are disproportionate (see, by analogy, Case C-262/02 Commission v France [2004] ECR I-6569, paragraph 37, and Case C-141/07 Commission v Germany [2008] ECR I-6935, paragraph 51).

66 In the present case, the Italian Republic contends, without being contradicted on thispoint by the Commission, that the circulation of a combination composed of amotorcycle and a trailer is a danger to road safety. Whilst it is true that it is for a MemberState which invokes an imperative requirement as justification for the hindrance to freemovement of goods to demonstrate that its rules are appropriate and necessary to attainthe legitimate objective being pursued, that burden of proof cannot be so extensive as torequire the Member State to prove, positively, that no other conceivable measure couldenable that objective to be attained under the same conditions (see, by analogy, CaseC-157/94 Commission v Netherlands [1997] ECR I-5699, paragraph 58).

67 Although it is possible, in the present case, to envisage that measures other than theprohibition laid down in Article 56 of the Highway Code could guarantee a certain levelof road safety for the circulation of a combination composed of a motorcycle and atrailer, such as those mentioned in point 170 of the Advocate General’s Opinion, the factremains that Member States cannot be denied the possibility of attaining an objective

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COMMISSION v ITALY

such as road safety by the introduction of general and simple rules which will be easilyunderstood and applied by drivers and easily managed and supervised by the competent authorities.

68 Moreover, it should be noted that neither the terms of the International Convention on Road Traffic nor those of the recitals in Directives 93/93 and 97/24, referred to by theItalian Republic, allow the presumption that road safety could be ensured at the samelevel as envisaged by the Italian Republic by a partial prohibition of the circulation ofsuch a combination or by a road traffic authorisation issued subject to compliance withcertain conditions.

69 In the light of those factors, it must be held that the prohibition on motorcycles towingtrailers specially designed for them and lawfully produced and marketed in MemberStates other than the Italian Republic must be regarded as justified by reasons relatingto the protection of road safety.

70 The Commission’s action must therefore be dismissed.

Costs

Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered topay the costs if they have been applied for in the successful party’s pleadings. Since theItalian Republic has applied for costs to be awarded against the Commission and thelatter has been unsuccessful, the Commission must be ordered to pay the costs.

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71


On those grounds, the Court (Grand Chamber) hereby:

1. Dismisses the action;

2. Orders the Commission of the European Communities to pay the costs.

[Signatures]

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Case C-301/06

Irelandv

European Parliamentand

Council of the European Union

(Action for annulment — Directive 2006/24/EC — Retention of data generated orprocessed in connection with the provision of electronic communications services —

Choice of legal basis)

Opinion of Advocate General Bot delivered on 14 October 2008 . . . . . . I - 595Judgment of the Court (Grand Chamber), 10 February 2009 . . . . . . . I - 628


Acts of the institutions — Choice of legal basis

(Art. 95 EC; European Parliament and Council Directive 2006/24)

I - 593


Directive 2006/24/EC on the retention of datagenerated or processed in connection with theprovision of publicly available electronic communications services or of public communications networks had to be adopted on the basis of Article 95 EC.

The Community legislature may have recourse to Article 95 EC in particular wheredisparities exist between national rules which are such as to obstruct the fundamental freedoms or to create distortions of competi-tion and thus have a direct effect on the functioning of the internal market.

It is apparent that the differences between thevarious national rules adopted on the reten-tion of data relating to electronic commu-nications were liable to have a direct impacton the functioning of the internal market andthat it was foreseeable that that impact wouldbecome more serious with the passage of time.Such a situation justified the Communitylegislature in pursuing the objective of safe-guarding the proper functioning of the

internal market through the adoption of harmonised rules.

Furthermore, Directive 2006/24 regulates operations which are independent of the implementation of any police and judicial cooperation in criminal matters. It har-monises neither the issue of access to data by the competent national law-enforcementauthorities nor that relating to the use andexchange of those data between those autho-rities. Those matters, which fall, in principle,within the area covered by Title VI of the EUTreaty, have been excluded from the provi-sions of that directive. It follows that the substantive content of Directive 2006/24 isdirected essentially at the activities of serviceproviders in the relevant sector of the internalmarket, to the exclusion of State activities coming under Title VI of the EU Treaty. Inlight of that substantive content, it must beheld that that directive relates predominantlyto the functioning of the internal market.

(see paras 63, 71, 72, 83-85, 93)

I - 594

IRELAND v PARLIAMENT AND COUNCIL



1. Disputes concerning the choice of legalbasis have recently given rise to a number ofjudgments in which the Court has had to divide up the areas falling within the compe-tence of the European Community and thosefalling within the competence of the EuropeanUnion. 2

2. The division of areas of competenceswithin a constitutional structure comprisingthree pillars, namely a Community pillar andtwo pillars the intergovernmental dimensionof which is more marked, generates the type ofdispute in which the Court has the delicateand complex task of tracing a line demar-cating the areas of activity belonging to theCommunity legislature and those assigned tothe legislature of the European Union.

3. In the present case, the Court is called upon to determine the boundary between the

1 — Original language: French. 2 — In particular, Case C-176/03 Commission v Council

[2005] ECR I-7879; Joined Cases C-317/04 and C-318/04 Parliament v Council and Commission [2006] ECR I-4721; Case C-440/-05 Commission v Council [2007] ECR I-9097; and Case C-91/05 Commission v Council [2008] ECR I-3651.

Community pillar and the third pillar, namelyTitleVI of the EU Treaty relating to police andjudicial cooperation in criminal matters.

4. By its action, Ireland asks the Court toannul Directive 2006/24/EC of the EuropeanParliament and of the Council of 15 March 2006 on the retention of data generated orprocessed in connection with the provision ofpublicly available electronic communicationsservices or of public communications networks and amending Direct-ive 2002/58/EC 3 on the ground that it wasnot adopted on an appropriate legal basis.

5. Ireland, supported by the Slovak Republic,takes the view that the only legal basis onwhich the measures contained in Direct-ive 2006/24 may legitimately be based is notArticle 95 EC, but in Title VI of the EU Treatyconcerning police and judicial cooperation in

3 — OJ 2006 L 105, p. 54.

I - 595


criminal matters, in particular Articles 30 EU,31(1)(c) EU and 34(2)(b) EU.

6. In this Opinion, I will set out the reasonswhy, in my view, the Community legislatureacted correctly in choosing to adopt Direct-ive 2006/24 on the basis of Article 95 EC.


7. Article 47 EU provides:

‘Subject to the provisions amending the Treaty establishing the European EconomicCommunity with a view to establishing theEuropean Community, the Treaty estab-lishing the European Coal and Steel Commu-nity and the Treaty establishing the EuropeanAtomic Energy Community, and to these finalprovisions, nothing in this Treaty shall affectthe Treaties establishing the European Communities or the subsequent Treaties and Acts modifying or supplementing them.’

8. Article 95(1) EC provides:

‘By way of derogation from Article 94 and savewhere otherwise provided in this Treaty, thefollowing provisions shall apply for the achievement of the objectives set out in Article 14. The Council shall, acting in accordance with the procedure referred to inArticle 251 and after consulting the Economicand Social Committee, adopt the measures forthe approximation of the provisions laid downby law, regulation or administrative action inMember States which have as their object theestablishment and functioning of the internalmarket.’

9. The following three directives were adopted on the basis of Article 95 EC:

— Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection ofindividuals with regard to the processingof personal data and on the free move-ment of such data; 4

— Directive 2002/58/EC of the EuropeanParliament and of the Council of 12 July

4 — OJ 1995 L 281, p. 31.

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2002 concerning the processing of personal data and the protection of privacy in the electronic communicationssector (Directive on privacy and elec-tronic communications); 5 and

— Directive 2006/24.

A — Directive 95/46

10. Directive 95/46 lays down rules relatingto the processing of personal data in order toprotect the fundamental rights and freedomsof natural persons, notably their privacy, whileensuring the free movement of those data within the Community.

11. Article 3(2) of Directive 95/46 lays downthe following limitation on the material scopeof the directive:

‘This Directive shall not apply to the process-ing of personal data:

— in the course of an activity which fallsoutside the scope of Community law,such as those provided for by Titles V andVI of the Treaty on European Union and,in any case, to processing operations concerning public security, defence, State security (including the economic well-being of the State when the process-ing operation relates to State securitymatters) and the activities of the State inareas of criminal law,

…’

12. Under paragraph (1) of Article 13 of Directive 95/46, entitled ‘Exemptions and restrictions’:

‘Member States may adopt legislativemeasures to restrict the scope of the obliga-tions and rights provided for in Articles 6(1),10, 11(1), 12 and 21 when such a restrictionconstitutes a necessary measure to safeguard:

5 — OJ 2002 L 201, p. 37. (a) national security;

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(b) defence;

(c) public security;

(d) the prevention, investigation, detectionand prosecution of criminal offences, orof breaches of ethics for regulated profes-sions;

(e) an important economic or financial interest of a Member State or of the European Union, including monetary,budgetary and taxation matters;

(f ) a monitoring, inspection or regulatory function connected, even occasionally,with the exercise of official authority incases referred to in (c), (d) and (e);

(g) the protection of the data subject or of therights and freedoms of others.’

B — Directive 2002/58

13. Directive 2002/58 was adopted with a view to supplementing Directive 95/46 withprovisions specific to the electronic commu-nications sector.

14. As stated in Article 1(1) of Direct-ive 2002/58:

‘This Directive harmonises the provisions ofthe Member States required to ensure an equivalent level of protection of fundamentalrights and freedoms, and in particular the right to privacy, with respect to the processingof personal data in the electronic commu-nication sector and to ensure the free move-ment of such data and of electronic commu-nication equipment and services in the Community.’

15. Like Article 3(2) of Directive 95/46,Article 1(3) of Directive 2002/58 lays down alimitation on the scope of that directive asfollows:

‘This Directive shall not apply to activitieswhich fall outside the scope of the Treatyestablishing the European Community, such

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as those covered by Titles V and VI of theTreaty on European Union, and in any case toactivities concerning public security, defence,State security (including the economic well-being of the State when the activities relate toState security matters) and the activities of theState in areas of criminal law.’

must be erased or made anonymous when it is no longer needed for the purpose of the transmission of a communication without prejudice to paragraphs 2, 3 and 5 of thisArticle and Article 15(1).’

16. Articles 5, 6 and 9 of Directive 2002/58define the rules applicable to the processing,by network and service providers, of trafficdata and location data generated by the use ofelectronic communications services. Those data must be erased or made anonymous when they are no longer needed for the purpose of the transmission of a communica-tion, with the exception of data required forbilling and interconnection payments. Furthermore, with the agreement of the person concerned, certain data may also beprocessed for commercial purposes or the provision of value added services.

17. In particular, Article 6(1) of Direct-ive 2002/58 provides:

‘Traffic data relating to subscribers and usersprocessed and stored by the provider of apublic communications network or publiclyavailable electronic communications service

18. According to Article 15(1) of Direct-ive 2002/58:

‘Member States may adopt legislativemeasures to restrict the scope of the rightsand obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), andArticle 9 of this Directive when such restric-tion constitutes a necessary, appropriate andproportionate measure within a democraticsociety to safeguard national security (i.e.State security), defence, public security, andthe prevention, investigation, detection andprosecution of criminal offences or of unauthorised use of the electronic commu-nication system, as referred to in Article 13(1)of Directive 95/46/EC. To this end, MemberStates may, inter alia, adopt legislativemeasures providing for the retention of datafor a limited period justified on the groundslaid down in this paragraph. All the measuresreferred to in this paragraph shall be in accordance with the general principles of Community law, including those referred toin Article 6(1) and (2) of the Treaty on European Union.’

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C — Directive 2006/24

19. Recitals 5 to 11 in the preamble to Directive 2006/24 provide as follows:

‘(5) Several Member States have adoptedlegislation providing for the retentionof data by service providers for theprevention, investigation, detection, and prosecution of criminal offences.Those national provisions vary considerably.

(6) The legal and technical differences between national provisionsconcerning the retention of data forthe purpose of prevention, investiga-tion, detection and prosecution of criminal offences present obstacles to the internal market for electronic communications, since service pro-viders are faced with different require-ments regarding the types of trafficand location data to be retained and the conditions and periods of reten-tion.

(7) The Conclusions of the Justice and Home Affairs Council of 19 December 2002 underline that, because of the significant growth in the possibilitiesafforded by electronic communica-tions, data relating to the use of

electronic communications are parti-cularly important and therefore a valuable tool in the prevention, inves-tigation, detection and prosecution ofcriminal offences, in particular orga-nised crime.

(8) The Declaration on CombatingTerrorism adopted by the EuropeanCouncil on 25 March 2004 instructed the Council to examine measures for establishing rules on the retention ofcommunications traffic data by service providers.

(9) Under Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms [signed in Rome on 4 November 1950] (ECHR), everyonehas the right to respect for his privatelife and his correspondence. Public authorities may interfere with the exercise of that right only in accor-dance with the law and where neces-sary in a democratic society, inter alia,in the interests of national security orpublic safety, for the prevention of disorder or crime, or for the protec-tion of the rights and freedoms of others. Because retention of data has proved to be such a necessary and effective investigative tool for law enforcement in several Member States, and in particular concerningserious matters such as organisedcrime and terrorism, it is necessary

I - 600


to ensure that retained data are made available to law enforcement autho-rities for a certain period, subject tothe conditions provided for in this Directive. The adoption of an instru-ment on data retention that complieswith the requirements of Article 8 ofthe ECHR is therefore a necessary measure.

(10) On 13 July 2005, the Council re-affirmed in its declaration condemning the terrorist attacks onLondon the need to adopt common measures on the retention of tele-communications data as soon as possible.

(11) Given the importance of traffic andlocation data for the investigation,detection, and prosecution of criminaloffences, as demonstrated by researchand the practical experience of severalMember States, there is a need to ensure at European level that data that are generated or processed, in the course of the supply of communica-tions services, by providers of publiclyavailable electronic communications services or of a public communica-tions network are retained for a certain period, subject to the condi-tions provided for in this Directive.’

20. It is also stated in recital 15 in the preamble to Directive 2006/24:

‘Directive 95/46/EC and Direct-ive 2002/58/EC are fully applicable to the data retained in accordance with this Direct-ive. …’

21. According to recital 21 in the preamble toDirective 2006/24:

‘Since the objectives of this Directive, namelyto harmonise the obligations on providers toretain certain data and to ensure that those data are available for the purpose of the investigation, detection and prosecution of serious crime, as defined by each MemberState in its national law, cannot be sufficientlyachieved by the Member States and can therefore, by reason of the scale and effectsof this Directive, be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5of the Treaty. In accordance with the principleof proportionality, as set out in that Article,this Directive does not go beyond what isnecessary in order to achieve those objectives.’

I - 601


22. Recital 25 in the preamble to Direct-ive 2006/24 is worded as follows:

‘This Directive is without prejudice to the power of Member States to adopt legislativemeasures concerning the right of access to,and use of, data by national authorities, asdesignated by them. Issues of access to dataretained pursuant to this Directive by nationalauthorities for such activities as are referred to in the first indent of Article 3(2) of Direct-ive 95/46/EC fall outside the scope of Community law. However, they may be subject to national law or action pursuant toTitle VI of the Treaty on European Union.Such laws or action must fully respectfundamental rights as they result from the common constitutional traditions of the Member States and as guaranteed bythe ECHR. Under Article 8 of the ECHR, as interpreted by the European Court of HumanRights, interference by public authorities withprivacy rights must meet the requirements ofnecessity and proportionality and must there-fore serve specified, explicit and legitimatepurposes and be exercised in a manner that isadequate, relevant and not excessive in relation to the purpose of the interference.’

23. Article 1(1) of Directive 2006/24 provides:

‘This Directive aims to harmonise Member States’ provisions concerning the obligations

of the providers of publicly available elec-tronic communications services or of publiccommunications networks with respect to theretention of certain data which are generatedor processed by them, in order to ensure thatthe data are available for the purpose of theinvestigation, detection and prosecution of serious crime, as defined by each MemberState in its national law.’

24. Article 3 of Directive 2006/24 lays downan obligation to retain data. Article 3(1) is worded as follows:

‘By way of derogation from Articles 5, 6 and 9of Directive 2002/58/EC, Member States shalladopt measures to ensure that the data specified in Article 5 of this Directive are retained in accordance with the provisionsthereof, to the extent that those data are generated or processed by providers of publicly available electronic communicationsservices or of a public communications network within their jurisdiction in the process of supplying the communications services concerned.’

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25. As regards access to retained data, Article 4 of Directive 2006/24 provides:

‘Member States shall adopt measures to ensure that data retained in accordance with this Directive are provided only to the competent national authorities in specificcases and in accordance with national law. The procedures to be followed and the conditions to be fulfilled in order to gainaccess to retained data in accordance with necessity and proportionality requirementsshall be defined by each Member State in itsnational law, subject to the relevant provisionsof European Union law or public internationallaw, and in particular the ECHR as interpretedby the European Court of Human Rights.’

26. As to the periods of retention of data,Article 6 of Directive 2006/24 provides:

‘Member States shall ensure that the cat-egories of data specified in Article 5 are retained for periods of not less than six months and not more than two years fromthe date of the communication.’

‘Member States shall ensure that the data specified in Article 5 are retained in accor-dance with this Directive in such a way thatthe data retained and any other necessary information relating to such data can be transmitted upon request to the competentauthorities without undue delay.’

28. By reason of the obligation to retain dataestablished by Directive 2006/24, Article 11thereof inserts a new paragraph into Article 15of Directive 2002/58. That paragraph is worded as follows:

‘1a. Paragraph 1 shall not apply to data specifically required by Directive 2006/24/EC … to be retained for the purposes referred toin Article 1(1) of that Directive.’

29. Finally, Article 12 of Directive 2006/24 isworded as follows:

27. Furthermore, as regards the storagerequirements for retained data, Article 8 of ‘1. A Member State facing particular circum-Directive 2006/24 states: stances that warrant an extension for a limited

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period of the maximum retention periodreferred to in Article 6 may take the necessarymeasures. That Member State shall immedi-ately notify the Commission and inform theother Member States of the measures taken under this Article and shall state the groundsfor introducing them.

2. The Commission shall, within a period ofsix months after the notification referred to in paragraph 1, approve or reject the nationalmeasures concerned, after having examinedwhether they are a means of arbitrarydiscrimination or a disguised restriction oftrade between Member States and whether they constitute an obstacle to the functioningof the internal market. In the absence of a decision by the Commission within that period the national measures shall be deemed to have been approved.

…’

II — Background to the dispute

30. On 28 April 2004, the French Republic,Ireland, the Kingdom of Sweden, and the United Kingdom of Great Britain and

Northern Ireland submitted to the Council a draft of a framework decision based on Articles 31(1)(c) EU and 34(2)(b) EU. The draft concerned the retention of data processed and stored in connection with theprovision of publicly available electronic communications services or data in publiccommunication networks for the purposes ofthe prevention, investigation, detection andprosecution of criminal offences, including terrorism. 6

31. Taking the view that this draft frameworkdecision consisted of two parts, namely,obligations on operators to retain traffic datarelating to users of their services for a certainperiod and obligations concerning access toand exchange of those data by the competentauthorities in criminal matters, the Commis-sion stated that it favoured Article 95 EC as the legal basis for the continuous measures inthe first part of the draft framework decision.In particular, it pointed out that Article 47 EUdid not allow an instrument based on the EU Treaty to affect the acquis communautaire, in this case Directives 95/46 and 2002/58. Taking the view that the determination of the categories of data to be retained and of theretention period fell within the competence ofthe Community legislature, the Commissionreserved the right to submit a proposal for adirective.

6 — Council Document No 8958/04, CRIMORG 36 TELECOM82.

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32. On 21 September 2005, the Commissionadopted a proposal for a directive of the European Parliament and of the Council, based on Article 95 EC, on the retention of data processed in connection with the provi-sion of public electronic communication services and amending Directive 2002/58. 7

33. During its session on 1 and 2 December2005, the Council opted for a directive on thelegal basis of the EC Treaty, rather than for theadoption of a framework decision.

34. On 28 November 2005, the Civil Liber-ties, Justice and Home Affairs Committee of the European Parliament approved a report on the proposal for a directive. 8 On 14 December 2005, the Parliament issued its opinion in accordance with the co-decisionprocedure under Article 251 EC. 9

35. The Council adopted Directive 2006/24 by qualified majority at its session on 21 February 2006. Ireland and the Slovak Republic voted against it.

7 — COM(2005) 438 final. 8 — A6-0365/2005. 9 — T6-0512/2005.

III — Forms of order sought

36. Ireland claims that the Court should:

— annul Directive 2006/24 on the groundthat it was not adopted on an appropriatelegal basis, and

— order the Council and the Parliament to pay the costs.

37. The Parliament contends that the Court should:

— reject the application as unfounded, and

— order the applicant to pay all the costs ofthe present proceedings,

— or, in the alternative, declare that the effects of the contested Directive are to

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remain in force until a new measure enters into force.

38. The Council contends that the Court should:

— reject Ireland’s application for annulmentof Directive 2006/24, and

— order Ireland to pay the costs.

IV — Proceedings before the Court

39. By orders of 1 February 2007, the President of the Court granted leave to theSlovak Republic to intervene in support of theform of order sought by the applicant and tothe Kingdom of Spain, the Kingdom of theNetherlands, the Commission and the European Data Protection Supervisor (‘EDPS’) to intervene in support of the formsof order sought by the defendants.

V — Main arguments of the parties

40. Ireland submits that the choice of Article 95 EC as the legal basis for Direct-ive 2006/24 is incorrect. It argues that neitherArticle 95 EC nor any other provision of the EC Treaty is capable of providing an appropriate legal basis for that directive.

41. Ireland claims principally that the soleobjective or, alternatively, the main or pre-dominant objective of Directive 2006/24 is tofacilitate the investigation, detection and prosecution of serious crime, includingterrorism. Therefore, it submits that the onlylegal basis on which the measures containedin that directive may be validly based is to befound in Title VI of the EU Treaty, in particular in Articles 30 EU, 31(1)(c) EU and34(2)(b) EU.

42. In the view of Ireland, an examination of the recitals in the preamble (in particular recitals 7 to 11 and 21) and of the basic provisions (in particular Article 1(1)) of Directive 2006/24 shows that reliance on Article 95 EC as the legal basis for that directive is inappropriate. The directive, it submits, is clearly directed towards the fightagainst serious crime.

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43. It is established that measures based on Article 95 EC must have as their centre of gravity the harmonisation of national laws inorder to improve the functioning of the internal market. The provisions of Direct-ive 2006/24 concern the fight against seriouscrime and are not intended to address defects in the internal market.

44. Alternatively, even if, contrary to Ireland’s main argument, the Court were to hold thatDirective 2006/24 is indeed intended, interalia, to prevent distortions of competition orobstacles to the internal market, Ireland submits that that aim must be regarded aspurely incidental to the main or predominantobjective of combating crime.

45. Ireland argues that the Community legis-lature is not competent to use an amendingdirective adopted on the basis of Article 95 ECin order to incorporate provisions falling outside the competence conferred on the Community under the first pillar. The obliga-tions intended to ensure that data are available for the investigation, detection and prosecu-tion of serious criminal offences fall within an area which may only be the subject of a measure based on Title VI of the EU Treaty.The adoption of such an instrument wouldtherefore not affect the provisions of Direct-ive 2002/58 within the meaning of Arti-cle 47 EU.

46. Furthermore, Ireland argues that the firstindent of Article 3(2) of Directive 95/46 and

Article 1(3) of Directive 2002/58 expresslyexclude from their scope activities which falloutside the EC Treaty, activities concerningpublic security, defence, State security and theactivities of the State in areas of criminal law. Directive 2006/24 does not contain anyexclusion of that kind. On the contrary, thematters excluded from the scope of Directives95/46 and 2002/58 are included within thescope of Directive 2006/24, as is shown clearlyby the provisions of Article 1(1) of the latter.Even if it is not the case with respect toDirectives 95/46 and 2002/58, it is permissibleto question the choice of Article 95 EC as thelegal basis of Directive 2006/24 on the groundthat it contains matters expressly excludedfrom the earlier directives.

47. The fact that Directive 2006/24 does notcontain provisions providing for access to data for purposes of the investigation, detec-tion and prosecution of serious criminal offences is, Ireland contends, not conclusive and does not prevent the Court from following the same reasoning as that whichit adopted in its above judgment in Parlia-ment v Council and Commission.

48. Finally, as regards the Parliament’s request that any judgment annulling the contested measure should be limited in time, Ireland submits, first, that such an annulment would not give rise to a risk of serious economic repercussions and, second, that legal certainty does not require that the provisions of Directive 2006/24 be maintained

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in force despite its invalidity. Accordingly,Ireland takes the view that it would not be appropriate for the Court to apply a limit intime if that directive were to be annulled.

49. The Slovak Republic supports Ireland’s position. It takes the view that Article 95 ECcannot serve as the legal basis for Direct-ive 2006/24, since the latter’s main objective isnot to eliminate barriers and distortions in the internal market. The directive harmonises the retention of personal data in a manner whichgoes beyond commercial objectives in orderto facilitate State action in the area of criminal law. For that reason, it cannot be adoptedunder Community competence regardless ofwhether or not the Community act providesfor transmission of those data or for other processing by law-enforcement authorities.

50. The retention of personal data to the extent required by Directive 2006/24 would, itargues, amount to an extensive interference inthe right of individuals to privacy, as protectedby Article 8 of the ECHR. It is also question-able whether such a far-reaching interferencecould be justified on economic grounds, inthis case the enhanced functioning of the internal market. The adoption of an act outside the scope of Community competence,the primary and undisguised purpose of which is the fight against crime and terrorism,would be a more appropriate solution, providing a more proportionate justification

for interference in the right of individuals toprotection of their privacy.

51. Unlike Ireland, the Slovak Republic takes the view that it would be appropriate, if Directive 2006/24 were annulled, for the Court to suspend the effects of its judgmentuntil the adoption of a replacement instru-ment.

52. According to the Parliament, Ireland’s action is based on an incorrect assessment of the purpose and content of Directive 2006/24and on a misunderstanding of the powersaccorded to the Community under the firstpillar and of those of the Union under thethird pillar, namely Title VI of the EU Treaty.

53. Thus, the Parliament submits that the applicant is selective in its interpretation ofthe provisions of Directive 2006/24. Recitals 5and 6 in the preamble make it clear that thedirective’s main or predominant purpose is toeliminate obstacles to the internal market for electronic communications services, and recital 25 in the preamble to the directiveconfirms that the access to and use of the retained data for law-enforcement purposesfall outside the scope of Community compe-tence.

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54. Article 3(1) of Directive 2006/24 dero-gates from Articles 5, 6 and 9 of Direct-ive 2002/58 by requiring the providers of electronic communications to retain data which they were previously required to erase. Such a modification of existing obliga-tions must necessarily be adopted on the basisof the powers under the first pillar, since theuse of a third-pillar instrument would infringeArticle 47 EU. The Parliament also observes that the main provisions of Directive 2006/24,namely Articles 5 to 8, undeniably seek toharmonise the requirements relating to retained data.

55. The Parliament points out that, followingthe terrorist attacks of 11 September 2001 inthe United States of America and the subse-quent attacks in Madrid and London, a number of Member States adopted or werein the process of adopting widely differingrules on the retention of data. Such differences would have been liable to impede the free flowof personal data between the Member Statesand, therefore, the provision of electronic communications services.

56. The retention of data constitutes a significant cost element for the operators concerned and the existence of different requirements in that field may distort compe-tition within the internal market. The main purpose of Directive 2006/24 is to harmonisethe obligations imposed by the Member Stateson providers of electronic communicationsconcerning data retention. It follows that Article 95 EC is the correct legal basis forthat directive. Reliance on Article 95 EC as the

legal basis is not invalidated by the importanceattributed to combating crime. While the fightagainst crime has clearly influenced the choices made in Directive 2006/24, that concern does not invalidate the choice of Article 95 EC as the legal basis for the directive.

57. The Parliament also observes that Dir-ective 2006/24 does not contain any provisionthe aim or effect of which is to grant access to,or permit the processing of, the retained datafor law-enforcement purposes, unlike the cases which gave rise to the judgment in Parliament v Council and Commission, cited above, in which access was granted to a law-enforcement body from a non-member country. Furthermore, Directive 2006/24 does not contain any provisions on co-operation between law-enforcement serviceswithin the meaning of Article 30 EU or cooperation between judicial authorities within the meaning of Article 31 EU. In summary, the directive does not contain anyprovision relating to ‘the activities of the State in areas of criminal law’ within the meaning ofArticle 1(3) of Directive 2002/58.

58. According to the Parliament, although the retention of an individual’s personal data may in principle constitute interference within the meaning of Article 8 of the ECHR,that interference may be justified, in terms ofthat article, by reference to public safety and

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crime prevention. That justification must be common Community rules to ensure uni-distinguished from the correct choice of the formity in the internal market.legal basis within the legal system of theUnion, that being an unrelated matter.

59. Finally, the Parliament takes the view that, were the Court to annul Direct-ive 2006/24, its effects should be maintained on the basis of Article 231 EC until the adoption of a replacement measure. Althoughthe applicant seeks annulment of the directive on the ground that it was adopted on an inappropriate legal basis, it does not challengeits content. Maintenance of the effects of the directive would be justified on grounds of legal certainty and in order to protect theinterests of data subjects.

60. The Council submits that, in the yearsfollowing the adoption of Directive 2002/58,national law-enforcement authorities were becoming increasingly concerned about theexploitation of developments in the area ofelectronic communications for the purpose ofcommitting criminal acts. Those new concerns led the Member States to adoptmeasures to prevent data relating to thosecommunications being erased and to ensurethat they were available to law-enforcementauthorities. Those measures were divergentand began to affect the proper functioning ofthe internal market. Recitals 5 and 6 in the preamble to Directive 2006/24 are explicit inthat regard. Those circumstances led the Community legislature to lay down preciseand harmonised obligations for service pro-viders concerning whether or not the personaldata referred to in Article 5 of that directive are to be erased, thereby guaranteeing

61. The Council also takes the view that, while the need to combat crime, includingterrorism, was a determining factor in thedecision to amend the scope of the rights andobligations laid down in Articles 5, 6 and 9 ofDirective 2002/58, that fact does not precludeDirective 2006/24 from having to be adoptedon the basis of Article 95 EC. Neither Arti-cles 30 EU, 31 EU and 34 EU nor any otherarticle in the EU Treaty can, without infringing Article 47 EU, serve as the basisfor a measure which amends the obligationsimposed on operators by Directive 2002/58.

62. Apart from the constraints imposed byArticle 47 EU, the Council denies that the area regulated by Directive 2006/24 may be thesubject-matter of a measure which must beadopted under Title VI of the EU Treaty, sincenothing in that directive relates to the organisation of cooperation between, inter alia, police forces, customs authorities andjudicial authorities or to the harmonisation ofthe rules of criminal law of the Member States.

63. The Council adds that the rightsprotected by Article 8 of the ECHR are notabsolute and may be subject to restrictions

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under the conditions laid down in Article 8(2)thereof. As provided in Directive 2006/24, theretention of data serves a legitimate publicinterest recognised in Article 8(2) of the ECHRand constitutes an appropriate means by which to protect that interest.

the latter was based on Article 95 EC, Direct-ive 2006/24, which amended it, must be basedon the same article of the EC Treaty.

64. The Kingdom of Spain and the Kingdomof the Netherlands support the Parliamentand the Council, submitting arguments to theCourt which are essentially the same as thoseput forward by the defendants.

65. The Commission recalls that, prior to theadoption of Directive 2006/24, several Member States had adopted national measures on data protection pursuant to Article 15(1) of Directive 2002/58. It high-lights the significant divergences which existed between those measures. For example, the retention period varied from three months in the Netherlands to four yearsin Ireland. The obligations relating to dataprotection have serious economic repercus-sions for service providers. A divergence inthose obligations could lead to significant market distortions. In that context, it was legitimate to adopt Directive 2006/24 on thebasis of Article 95 EC.

66. Directive 2006/24 limits, in a manner harmonised at Community level, the obliga-tions laid down by Directive 2002/58. Since

67. The Commission also takes the view that, contrary to arguments put forward by Ireland,Directive 2006/24 must be understood as adata protection measure which forms part ofthe regulatory framework established byDirectives 95/46 and 2002/58. In particular,a distinction must be made, from the point ofview of data protection, between operationswhich do not come within the scope of Community law by reason of an exclusionclause and those which come under Commu-nity law but which may be subject to certainlimits that are justified and proportionate byreason of a restrictive clause.

68. Admittedly, Article 3(2) of Direct-ive 95/46 and Article 1(3) of Directive 2002/58exclude from the scope of those directives,inter alia, State activities in areas of criminal law. However, Directive 2006/24 does not cover activities of the State as such, but data processing by telecommunications operatorsfor commercial purposes related to the provision of electronic communications services on public communications networks.That activity falls clearly within the scope ofCommunity law and in particular that of Directives 95/46 and 2002/58.

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69. Furthermore, if the possibility for a Member State to limit the scope of data-protection rights for the purposes of the investigation, detection and prosecution of serious crime was indeed an issue which fell outside the scope of Community law, Article 13(1) of Directive 95/46 and Article 15(1) of Directive 2002/58 would beredundant and, therefore, ineffective in regardto Article 3(2) of Directive 95/46 and Article 1(3) of Directive 2002/58.

70. Finally, the Commission submits that themention of the investigation, detection andprosecution of serious crime in Article 1(1) ofDirective 2006/24 falls under Community lawbecause it indicates the legitimate objective ofthe restrictions imposed by that directive onthe rights of individuals with regard to theprotection of their personal data. Such an indication is necessary in order to comply both with the requirements of Directives 95/46 and 2002/58 and with those of Article 8of the ECHR.

71. As regards the EDPS, his arguments consist, inter alia, in demonstrating the impact of the choice of legal basis on the Community system for the protection of personal data. According to the EDPS, if the EC Treaty could not serve as the basis forDirective 2006/24, the provisions of Commu-nity law relating to data protection would notprotect citizens when the processing of theirpersonal data would facilitate the preventionand combating of crime. In such a situation,the general system of data protection underCommunity law, stemming in particular fromDirectives 95/46 and 2002/58, would apply todata processing for commercial purposes but

not to the processing of those data for the purposes of crime prevention. That would give rise to difficult distinctions for serviceproviders and a reduction in the level of protection for data subjects. Such a situationshould be avoided. The need for consistencyjustifies the adoption of Directive 2006/24 under the EC Treaty.

VI — Analysis

72. In order to mark out the boundary, in thecontext of a dispute relating to the choice oflegal basis, between the spheres of action belonging to the Community legislature andthose allocated to the legislature of the European Union, the Court has indicated thescope to be given to Article 47 EU, which acts as a pivot between matters covered by Community law and those covered by the law of the Union.

73. I would point out that, under Article 47EU, no provisions of the EC Treaty may beaffected by a provision of the EU Treaty. Thatrequirement also appears in the first para-graph of Article 29 EU, which introduces TitleVI of the EU Treaty dealing with police andjudicial cooperation in criminal matters.

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74. In guaranteeing a link between the areasfalling with the respective scopes of the ECand EU Treaties in accordance with the rule laid down in Article 47 EU, the Court’s role is to ensure that acts which a party claims fallwithin the scope of Title V or Title VI of theEU Treaty do not encroach upon the powersconferred on the Community by the EC Treaty. 10

75. In that context, the powers enjoyed by theCommunity under the EC Treaty must beregarded as being affected within the meaningof Article 47 EU where the provisions of an actadopted on the basis of the EU Treaty couldhave been adopted on the basis of an article ofthe EC Treaty. 11 According to the Court, Article 47 EU thus seeks, in accordance with the fifth indent of Article 2 EU and the first paragraph of Article 3 EU, to maintain andbuild on the acquis communautaire. 12

76. As far as concerns the method used to determine whether an act adopted on the basis of the EU Treaty could have been adopted on the basis of the EC Treaty, theCourt examines whether, by reason of its aimand content, such an act has as its main purpose the implementation of a policy conferred on the Community by the EC Treaty. 13 The Court thereby applies its settled case-law, according to which the choice of legal basis for a measure must reston objective factors which are amenable to

10 — See, in that regard, Case C-91/05 Commission v Council,paragraph 33 and the case-law cited.

11 — Ibidem, paragraph 58 and the case-law cited. 12 — Ibidem, paragraph 59. 13 — Ibidem, paragraph 60.

judicial review, including in particular the aimand the content of that measure. 14

77. In the present case, the issue is not, ofcourse, whether a measure adopted on thebasis of the EU Treaty should have been adopted on the basis of the EC Treaty, butwhether a measure was correctly adopted onthe basis of the EC Treaty and not that of theEU Treaty, as the applicant claims. The method to be used is, however, identical. It consists in determining whether or not, having regard to the centre of gravity of themeasure in issue, Article 47 EU would have authorised the adoption of that measure onthe basis of the EU Treaty.

78. The issue in this case consists, therefore, in determining whether Ireland’s argument,namely that Directive 2006/24 should havebeen adopted on the basis of Articles 30 EU,31(1)(c) EU and 34(2)(b) EU, is compatiblewith the provisions of Article 47 EU. In otherwords, would the adoption under the EU Treaty of the measures contained in that directive have amounted to an infringementof Article 47 EU? In order to answer that question it is first necessary to ascertain whether, regard being had to its purpose andits content, Directive 2006/24 does in fact fallwithin the area covered by Article 95 EC.

14 — Case C-440/05 Commission v Council, paragraph 61.

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79. As regards the use of Article 95 EC as thelegal basis for a Community act, it followsfrom the case-law of the Court that, while a finding that disparities exist between nationalrules is not sufficient in itself to justify recourse to that article, the situation is otherwise where differences exist between the laws, regulations or administrative provi-sions of the Member States which are such as to obstruct the fundamental freedoms and thus have a direct effect on the functioning ofthe internal market. 15 It is also clear from settled case-law that, although recourse to Article 95 EC as a legal basis is possible if theaim is to prevent the emergence of futureobstacles to trade resulting from multifariousdevelopment of national laws, the emergenceof such obstacles must be likely and the measure in question must be designed to prevent them. 16 In summary, in order to justify recourse to Article 95 EC as the legalbasis, what matters is that the measure adopted on that basis must actually be intended to improve the conditions for theestablishment and functioning of the internalmarket. 17

80. The adoption of Directive 2006/24 on thebasis of Article 95 EC appears to me to satisfythe requirements thus laid down by the Court.

81. It is quite clear from recitals 4 to 6 in thepreamble to Directive 2006/24 that the

15 — Case C-380/03 Germany v Parliament and Council [2006] ECR I-11573, paragraph 37 and the case-law cited.

16 — Ibidem, paragraph 38 and the case-law cited. 17 — Ibidem, paragraph 80 and the case-law cited.

Community legislature started from the finding that there were legislative and tech-nical disparities between the national provi-sions relating to data retention by service providers. Several Member States, exercisingthe powers conferred on them by Article 15(1)of Directive 2002/58, had legislated on dataretention by service providers for the purposes of the prevention, investigation, detection and prosecution of criminal offences. Those national provisions varied substantially, particularly in regard to the retention period required and the types ofdata to be retained. 18

82. Such disparities could therefore make itnecessary to harmonise national provisionsrelating to the obligations of providers of publicly available electronic communicationsservices or public communications networksin respect of data retention.

83. It is appropriate, however, to ascertainwhether the disparities found were in fact capable of affecting the establishment and functioning of the internal market, with theresult that the Community legislature was entitled to use Article 95 EC in order to adoptthe measures contained in Directive 2006/24.

18 — See, in that connection, Annex I to the rejoinder lodged bythe Parliament and the Commission working document of21 September 2005 in the annex to its proposal for a directive(SEC(2005) 1131, paragraph 1.4).

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84. From that perspective, it is important tonote that the retention of data by the providersof electronic communications services repre-sents a significant financial burden on them,and that that burden is proportionate to theamount of data to be retained and the retention period. 19 The costs concerned are attributable not only to the upgrading of thetechnology required to retain and archive thedata in a secure manner, but also to the maintenance and operation of systems allowing the retention of data.

85. It follows that, in the absence of harmo-nisation, a provider of electronic communica-tions services would be faced with costs related to the retention of data which differ according to the Member State in which hewishes to provide those services. Such differ-ences may constitute obstacles to the free movement of electronic communications services between the Member States and may therefore create obstacles to the estab-lishment and functioning of the internal market in electronic communications. They may, in particular, slow down the cross-border development of new electronic communications services which are regularlyintroduced in the information society. Theymay also give rise to distortions in competi-tion between undertakings operating on theelectronic communications market.

19 — See, in particular, the estimates given in the abovementionedCommission working document of 21 September 2005 (paragraph 4.3.4).

86. As is clear from recital 6 in the preambleto Directive 2006/24, such disparities betweenthe laws of the Member States ‘presentobstacles to the internal market for electronic communications, since service providers arefaced with different requirements regardingthe types of traffic and location data to beretained and the conditions and periods ofretention’.

87. In so far as Directive 2006/24 proceedswith harmonisation of national laws on the obligation to retain data (Article 3), the categories of data to be retained (Article 5),periods of retention of data (Article 6), anddata protection and data security (Article 7), Itake the view that it facilitates the develop-ment of the internal market for electronic communications by providing common requirements for service providers.

88. I would add that the impact which differences between national laws on data retention have on the functioning of the internal market is also taken into consider-ation in Article 12(2) of Directive 2006/24.When evaluating national measures providing for an extension of the maximumdata retention period in particular circum-stances and for a limited period, the Commis-sion must ascertain whether such measures

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amount to a means of arbitrary discriminationor a disguised restriction on trade between theMember States, and whether they constitutean obstacle to the functioning of the internalmarket.

89. In the light of those factors, the interven-tion of the Community legislature on the basisof Article 95 EC appears to me to be justified.

90. Ireland, supported by the Slovak Republic, takes the contrary view that Direct-ive 2006/24 cannot be based on Article 95 ECinasmuch as its centre of gravity is not theestablishment and functioning of the internalmarket. The directive, it submits, has as its sole, or at least its main purpose, the investigation, detection and prosecution of serious crime. Ireland relies, in that connec-tion, on a number of provisions of the directive which do in fact emphasise that objective.

91. Among those provisions is recital 11 inthe preamble to Directive 2006/24, accordingto which, it will be recalled, ‘[g]iven the importance of traffic and location data forthe investigation, detection, and prosecutionof criminal offences, as demonstrated by

research and the practical experience of several Member States, there is a need to ensure at European level that data that aregenerated or processed, in the course of thesupply of communications services, by pro-viders of publicly available electronic commu-nications services or of a public communica-tions network are retained for a certain period,subject to the conditions provided for in thisDirective’. Also, according to Article 1(1), Directive 2006/24 ‘aims to harmonise Member States’ provisions concerning the obligations of the providers of publicly avail-able electronic communications services or of public communications networks with respect to the retention of certain data which are generated or processed by them,in order to ensure that the data are available for the purpose of the investigation, detectionand prosecution of serious crime, as definedby each Member State in its national law’.

92. It has not been disputed by any partyduring these proceedings, and it appears tome to be unarguable, that the rationale of theobligation to retain data which is imposed onproviders of electronic communications services lies in the fact that it facilitates the investigation, detection and prosecution of serious crimes. It cannot be denied that it is because the retention of data constitutes an effective investigative tool in inquiries under-taken by the law-enforcement authorities ofthe Member States, and particularly in casesof organised crime and terrorism, that theCommunity legislature wished to make general the obligation to retain traffic and location data generated or processed by theproviders of electronic communications services or public communications networks.

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93. The Community legislature therefore sought to go a stage further than is providedfor in Article 15(1) of Directive 2002/58. Thatprovision, it will be recalled, gives MemberStates the possibility to ‘adopt legislativemeasures to restrict the scope of the rightsand obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), andArticle 9 of this Directive when such restric-tion constitutes a necessary, appropriate andproportionate measure within a democraticsociety to safeguard national security (i.e.State security), defence, public security, andthe prevention, investigation, detection andprosecution of criminal offences or of unauthorised use of the electronic commu-nication system, as referred to in Article 13(1)of Directive 95/46/EC. To this end, MemberStates may, inter alia, adopt legislativemeasures providing for the retention of datafor a limited period justified on the groundslaid down in this paragraph.’ By adoptingDirective 2006/24, the Community legislaturesought to go further, first, by transformingthat option available to Member States into anobligation to require data retention and, second, by harmonising the categories of data to be retained and their retention period.

94. Among the grounds cited in Article 15(1)of Directive 2002/58, the Community legis-lature adopted only that relating to the investigation, detection and prosecution of serious crime. In so doing, it indicated the legitimate objective of the restrictions imposed by Directive 2006/24 on the rightsof persons concerning the protection of theirpersonal data. One of the particular features ofthat directive is that it must be understood as forming part of the system for the protectionof personal data which has been graduallyintroduced by the Community legislature. Asthat directive introduces an exception to anumber of protective measures laid down by

Directive 2002/58, it was necessary for thelegislature to mention such a public-interestobjective in order to demonstrate the need toadopt an instrument on data retention in thelight of the requirements of Article 8 of the ECHR.

95. Must the mention of such a ground justifying interference in the right of indi-viduals to privacy protected by Article 8 ofthe ECHR, as well as the statement that the retention of data is an effective tool in the area of law enforcement for the purposes of investigation, detection and prosecution of serious crime, none the less be regarded asincompatible with the use of Article 95 EC as alegal basis for a Community act such as Directive 2006/24?

96. I think not for the following reasons.

97. First of all, the Court has already hadoccasion to state that if the conditions for recourse to Article 95 EC as a legal basis arefulfilled, the Community legislature cannot beprevented from relying on that legal basis onthe ground that a public interest is a decisivefactor in the choices to be made. 20 In that

20 — See, to that effect, in the area of public health, Germany v Parliament and Council, paragraph 39 and the case-law cited.

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connection, sight must not be lost of the factthat Article 95(3) EC explicitly requires that,in achieving harmonisation, a certain numberof overriding requirements of public interestmust be taken into account and that these must be the subject of a high level of protection. 21 In my view, those overriding requirements include the requirement of security. A measure such as Directive 2006/24,which harmonises the conditions on the retention of certain data for the purposes ofthe investigation, detection and prosecutionof serious crime, contributes to this require-ment that a high level of security be guaran-teed within the internal market. Thus, in myview, Article 95(3) EC authorises measures forthe approximation of the provisions laid downby law, regulation or administrative action inMember States which have as their object theestablishment and functioning of the internalmarket and which also pursue a public-interest objective such as guaranteeing a high level of security within the Community.

98. Next, contrary to Ireland’s submissions, I take the view that the mere fact that a measure refers to an objective such as the investigation,detection and prosecution of serious crime isnot sufficient to shift such a measure from the first to the third pillar. In other words, theexistence of such a purpose is not, in my view,sufficient to constitute an act coming withinthe area covered by ‘police and judicial

21 — Ibidem, paragraph 40 and the case-law cited.

cooperation in criminal matters’ within the meaning of Title VI of the EU Treaty.

99. It follows from Article 29 EU that, without prejudice to the powers of the European Community, the Union’s objectiveof providing citizens with a high level of safetywithin an area of freedom, security and justiceis achieved by preventing and combating crime through three types of action: first, through closer cooperation between policeforces, customs authorities and other compe-tent authorities in the Member States, both directly and through the European Police Office (Europol), in accordance with the provisions of Articles 30 EU and 32 EU; second, through closer cooperation betweenjudicial and other competent authorities ofthe Member States, including cooperationthrough the European Judicial CooperationUnit (Eurojust), in accordance with the provisions of Articles 31 EU and 32 EU; and,finally, through approximation, where neces-sary, of rules on criminal matters in the Member States, in accordance with the provisions of Article 31(e) EU.

100. In my opinion, the obligation to retaindata generated or processed in connectionwith the provision of communications services does not correspond to any of thosethree types of action. It does not, therefore,have the characteristics necessary for its inclusion within the scope of Title VI of theEU Treaty.

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101. It is true that the objective of investi-gating, detecting and prosecuting serious crime has a criminal aspect which suggeststhat all measures pursuing that objective should be brought under the third pillar.Such an approach would, however, amount toextending unduly the scope of Title VI of theEU Treaty, which, as I have indicated, does notmerely state an objective but lists the kinds ofaction which give expression to the concept of‘police and judicial cooperation in criminalmatters’ within the meaning of that title.

102. I would observe in this regard that themeasures provided for by Directive 2006/24do not involve any direct intervention by thelaw-enforcement authorities of the Member States. It is merely envisaged that the pro-viders of publicly available electronic commu-nications services or public communicationsnetworks must retain the data which are generated or processed when the commu-nications services in question are being supplied, that is to say, only those data which are closely related to the commercialactivities of those providers.

103. In summary, Directive 2006/24 containsmeasures which relate to a stage prior to theimplementation of police and judicial co-operation in criminal matters. It does not harmonise either the issue of access to data bythe competent national law-enforcement authorities or that relating to the use and exchange of those data by such authorities, for

example in the context of criminal investiga-tions. Those matters, which come, in my view,within the area covered by Title VI of the EUTreaty, were properly excluded from the provisions of Directive 2006/24. 22

104. Furthermore, it is expressly stated in recital 25 in the preamble to Directive 2006/24that the latter ‘is without prejudice to the power of Member States to adopt legislativemeasures concerning the right of access to,and use of, data by national authorities, asdesignated by them. Issues of access to data retained pursuant to this Directive by nationalauthorities for such activities as are referred to in the first indent of Article 3(2) of Direct-ive 95/46/EC fall outside the scope of Commu-nity law. However, they may be subject tonational law or action pursuant to Title VI ofthe Treaty on European Union’. 23 The only requirement as to data access which the Community legislature wished to highlight,and which is more akin to a warning that aharmonisation measure, appears in Article 4of Directive 2006/24, which provides that ‘Member States shall adopt measures to ensure that data retained in accordance with this Directive are provided only to the competent national authorities in specificcases and in accordance with national law. The procedures to be followed and the

22 — Among the proposals for framework directives which dealwith the issues relating to the consultation, use and exchangeof information by the competent law-enforcement autho-rities, see, in particular, the proposal of 12 October 2005 for aCouncil framework decision on the exchange of informationunder the principle of availability (COM(2005) 490 final), andthe proposal of 6 November 2007 for a Council frameworkdecision on the use of Passenger Name Record data (Passenger Name Record — PNR) for law-enforcement purposes (COM(2007) 654 final).

23 — Emphasis added.

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conditions to be fulfilled in order to gainaccess to retained data in accordance with necessity and proportionality requirementsshall be defined by each Member State in itsnational law, subject to the relevant provisionsof European Union law or public internationallaw, and in particular the ECHR as interpretedby the European Court of Human Rights’.

105. The boundary between measures coming under the Community pillar and those which must be adopted within the framework of Title VI of the EU Treaty maytherefore, in my view, be drawn as follows.

106. Measures which harmonise the condi-tions under which providers of communica-tions services must retain traffic and location data which are generated or processed in thecourse of their commercial activities belong tothe Community pillar. Such an approximationof national laws on data retention reduces the risk of obstacles to the development of theinternal market in electronic communications by presenting operators with common requirements. The fact that the Communitylegislature deemed it necessary to impose anobligation to retain data by reason of the efficacy of this tool for the investigation,detection and prosecution of serious offencesis not sufficient to remove such a measure from the Community pillar, since that over-riding requirement of public interest may betaken into account by a harmonisation measure adopted on the basis of Article 95 EC. Furthermore, the mention of

such an overriding requirement of publicinterest is vital in order to justify the inter-ference by the Community legislature in theright to privacy of the users of electronic communications services.

107. On the other hand, measures harmon-ising the conditions under which the compe-tent national law-enforcement authorities may access, use and exchange retained datain the discharge of their duties belong to thethird pillar. The direct involvement of suchauthorities with private operators and the mandatory transmission by the latter of datafor law-enforcement purposes fall, in my view,within the scope of ‘police and judicial cooperation in criminal matters’ within the meaning of Title VI of the EU Treaty. At thatstage, the participation of private operators ina criminal investigation and their collabor-ation with the competent national authoritiesacquire a specific and certain character.

108. This dividing line is certainly not exemptfrom criticism and may appear artificial insome respects. I agree that it would be moresatisfactory if the overall issue of data reten-tion by the providers of electronic commu-nications services and the detailed rules on their cooperation with the competent national law-enforcement authorities were the subject of a single measure which wouldensure coherence between those two aspects.Although it is regrettable, the constitutionalarchitecture consisting of three pillars never-theless requires that the areas of action be split

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up. The priority in this context is to guaranteelegal certainty by clarifying as far as possiblethe respective boundaries between the spheres of action covered by the different pillars.

109. The analysis that I suggest here does notappear to me to be at variance with the Court’s findings in its judgment in Parliament v Council and Commission, cited above. On the contrary, in my view it serves to clarify thescope to be given to that judgment.

110. I would point out that, in the cases whichgave rise to that judgment, the Parliamentsought, first, the annulment of Council Decision 2004/496/EC of 17 May 2004 onthe conclusion of an Agreement between theEuropean Community and the United Statesof America on the processing and transfer ofPNR data by Air Carriers to the United StatesDepartment of Homeland Security, Bureau ofCustoms and Border Protection 24 and, second, the annulment of Commission Deci-sion 2004/535/EC of 14 May 2004 on the adequate protection of personal data contained in the Passenger Name Record ofair passengers transferred to the United StatesBureau of Customs and Border Protection. 25

111. In its judgment, the Court first consid-ered the legality of the decision on adequacy in

the light of the first indent of Article 3(2) ofDirective 95/46. That provision, it will be recalled, excludes from the scope of Direct-ive 95/46 the processing of personal data ‘in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union and in any case …processing operations concerning public security, defence, State security (includingthe economic well-being of the State when theprocessing operation relates to State-securitymatters) and the activities of the State in areasof criminal law’.

112. The Court held that the transfer of personal data contained in the passenger name records (‘PNR data’) to the Bureau of Customs and Border Protection of the American Department of Homeland Security(‘CBP’) was a processing operationconcerning public safety and the activities ofthe State in the areas of criminal law. It ruled that the decision on adequacy did not concerndata processing necessary for a supply of services, but did concern data processing regarded as necessary for safeguarding public security and for law-enforcement purposes. Furthermore, while it follows fromthe judgment in Lindqvist 26 that the activities mentioned by way of example in the first indent of Article 3(2) of Directive 95/46 are, inany event, activities of the State or of Stateauthorities unrelated to the fields of activity ofindividuals, the Court held that it none the less does not follow that the fact that the PNR data were collected by private operators forcommercial purposes and it was they who

24 — OJ 2004 L 183, p. 83, ‘the Council decision’.25 — OJ 2004 L 235, p. 11, ‘the decision on adequacy’. 26 — Case C-101/01 [2003] ECR I-12971.

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arranged for the transfer of those data to anon-member country has the consequence ofexcluding the transfer concerned from the scope of that provision. The Court observedthat that transfer fell within a framework established by the pubic authorities and relating to public safety.

Agreement related to the same transfer of dataas the decision on adequacy, and therefore todata-processing operations which are excluded from the scope of Directive 95/46.It inferred from this that the Council decision could not have been validly adopted on thebasis of Article 95 EC.

113. From this the Court inferred that the decision on adequacy concerned the process-ing of personal data within the meaning of thefirst indent of Article 3(2) of Directive 95/46and that therefore it did not come within the scope of that directive. The Court concludedthat it was necessary to annul the decision onadequacy.

114. Next, in examining the legality of theCouncil decision, the Court simply ruled onthe plea alleging that the choice of Article 95 EC as the legal basis for that decision was wrong. It held that Article 95 EC,read in conjunction with Article 25 of Directive 95/46, could not justify Communitycompetence to conclude the Agreementbetween the European Community and theUnited States of America on the processingand transfer of PNR data by air carriers to theUnited States Department of Homeland Security, Bureau of Customs and Border Protection (‘the Agreement’), approved on behalf of the Community by that decision. 27 In support of that finding, the Court held that the

27 — This agreement was later the subject of a corrigendum (OJ 2005 L 255, p. 168).

115. Ireland relies on the judgment in Parlia-ment v Council and Commission to supportthe arguments which it puts forward in thiscase, that is, essentially, that, on account of thesingle, or at least the principal, objectivepursued by Directive 2006/24, consisting inthe investigation, detection and prosecutionof serious crime, that directive should have been adopted under Title VI of the EU Treaty.However, that judgment was delivered in acontext the principal characteristics of whichdistinguish it from the present case.

116. In the case which gave rise to the judgment in Parliament v Council and Commission, the Agreement principallyrequired air carriers providing internationalpassenger transport services to or from theUnited States of America to provide the CBPwith electronic access to PNR data collected and stored in the air carriers’ automated reservation/departure control systems. The Agreement thus established a form of inter-national cooperation between the contractingparties which was intended to achieve the

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objective of combating terrorism and otherserious crimes while attempting to reconcilethat objective with the objective of protectingairline passengers’ personal data. 28 The exist-ence of such a form of international co-operation with the public authorities of a non-member country already constitutes a substantial difference from the present case.

117. Next, the data processing in question inthe cases which gave rise to the judgment inParliament v Council and Commission concerned a stage subsequent to the initialcollection of the data by airline companies.That processing concerned the consultation,use by the CBP, and the making available tothe latter of air passenger data from the aircarriers’ reservation systems located in the territory of the Member States. 29 It was therefore a form of cooperation involvingnot only private operators but also a publicauthority, in that case the CBP, for the purpose of combating terrorism and other serious crimes.

118. In such a context, an act which providesfor the consultation and use of personal databy an entity tasked with safeguarding a State’s internal security, and for the making availableof those data to such an entity, must, in my

view, be treated as constituting an act of cooperation between public authorities. In particular, in such a situation of compulsorydisclosure of data to a national body for security and law-enforcement purposes,requiring a legal person to transfer data doesnot appear to be fundamentally different from a direct exchange of data between publicauthorities, for example in criminal investiga-tions. 30

119. The international dimension of the cooperation put in place and the methods ofcollaboration established between air carriers and the CBP, methods which bring it, in myview, within the area covered by Title VI of theEU Treaty, thus constitute two fundamentaldifferences vis-à-vis the situation at issue in the present case.

120. It is, moreover, precisely because of thecharacteristics which have just been identifiedthat Council Decision 2007/551/CFSP/JHAof 23 July 2007 on the signing, on behalf of theEuropean Union, of an Agreement betweenthe European Union and the United States ofAmerica on the processing and transfer of

28 — See point 139 of the Opinion of Advocate General Léger inParliament v Council and Commission.

29 — Ibidem, point 102. 30 — Ibidem, points 159 and 160.

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Passenger Name Record (PNR) data by aircarriers to the United States Department ofHomeland Security (DHS) (2007 PNR Agree-ment) 31 was adopted on the basis of Articles24 EU and 38 EU.

121. The differences that have been high-lighted also help to clarify the scope of thejudgment in Parliament v Council and Commission.

122. In my view, that judgment does not mean that only the examination of the objective pursued by the processing of personal data is relevant for the purpose ofincluding or excluding such processing fromthe scope of the system of data protectioninstituted by Directive 95/46. It is also necessary to ascertain in the course of whichtype of activity data processing is carried out.It is only where it is undertaken in the courseof activities specific to States or to State authorities and unrelated to the fields of activity of individuals that it is excluded from the Community system of personaldata protection arising from Directive 95/46pursuant to the first indent of Article 3(2)thereof. It is therefore left to the legislature ofthe European Union to take over and establisha general system of data protection designedto cover data processing carried out in thecourse of such State-specific activities. 32

31 — OJ 2007 L 204, p. 16. 32 — See, in that connection, the proposal of 4 October 2005 for a

Council framework decision on the protection of personaldata processed in the framework of police and judicialcooperation in criminal matters (COM(2005) 475 final).

123. In the judgment in Parliament v Council and Commission, the Court held that the transfer of data by air carriers to the CBP inorder to safeguard public security and for thepurposes of law enforcement could be treatedas data processing in the course of activitiesspecific to the State or State authorities andunrelated to the fields of activity of indi-viduals. That is why the Court held that it wasexcluded from the scope of Directive 95/46.

124. Construed thus, the judgment in Parlia-ment v Council and Commission clarifies the distinction to be drawn between the exclusion clauses and the restrictive clauses which appear in Directive 95/46 and Direct-ive 2002/58.

125. As the Commission explained clearly during the present proceedings, the first indent of Article 3(2) of Directive 95/46 andArticle 1(3) of Directive 2002/58 are exclusionclauses, in so far as they exclude from thescope of those two directives data processingcarried out in the course of activities which fall outside the EC Treaty, such as those env-isaged in Titles Vand VI of the EU Treaty, andin any case processing operations concerning

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public security, defence, State security and theactivities of the State in areas of criminal law.

126. By contrast, the scope of the restrictiveclauses in Article 13(1) of Directive 95/46 andin Article 15(1) of Directive 2002/58 is entirelydifferent. Under those clauses, the Member States alone are authorised to restrict the scope of certain rights and obligations definedin those two directives where such a restric-tion is a measure necessary to safeguard apublic-interest objective such as national security, defence and public health and theprevention, investigation, detection and pro-secution of criminal offences. The data processing concerned continues, however, tobe covered by the Community system of protection of personal data.

127. The fact that those two types of clausesmention similar public-interest objectivesundoubtedly maintains the confusion as totheir respective scopes. That confusion is probably one of the reasons for Ireland’s contentions, inasmuch as that Member State relies only on the exclusion clauses, which itinterprets as meaning that the mere fact that ameasure refers to a public-interest objective,such as the investigation, detection and prosecution of serious crime mentioned inArticle 1(1) of Directive 2006/24, is sufficientfor it to be excluded from the scope of Community law.

128. The very existence of the restrictive clauses in Directives 95/46 and 2002/58, which set out the public-interest groundspursuant to which the scope of the rights andobligations relating to data protection may berestricted, demonstrates, however, that that argument is flawed and that the mere mentionof a public-interest objective, such as that relating to the investigation, detection andprosecution of serious crime in Article 1(1) ofDirective 2006/24, is insufficient in itself toidentify what is or is not covered by Commu-nity law, or, more precisely, by the Commu-nity system for the protection of personal data.

129. In order to preserve the effectiveness ofrestrictive clauses and to ensure that they arenot merely a repetition of exclusion clauses, itis thus necessary to take the view that underthe exclusion clauses contained in the first indent of Article 3(2) of Directive 95/46 and inArticle 1(3) of Directive 2002/58 it is onlydata-processing operations pertaining to activities specific to the State or to State authorities and unrelated to the fields of activity of individuals, to repeat the formulafirst used by the Court in its judgment in Lindqvist and subsequently in its judgment inParliament v Council and Commission, that are excluded from the Community system ofpersonal data protection.

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130. Bearing in mind those factors, I wouldtherefore submit, in so far as Direct-ive 2006/24 does not contain any provisionsharmonising the conditions for access to dataand their use for activities specific to the Stateor to State authorities and unrelated to the fields of activity of individuals and, in parti-cular, does not contain any provisions liable tocome within the notion of ‘police and judicialcooperation in criminal matters’ within the meaning of Title VI of the EU Treaty, thatDirective 2006/24 was correctly adopted under the Community pillar and, more specifically, on the basis of Article 95 EC.

131. Were it to have been accepted, Ireland’s argument that Directive 2006/24 should havebeen adopted on the basis of Articles 30 EU,31(1)(c) EU and 34(2) EU would thus have ledto an infringement of Article 47 EU.

132. Finally, it is necessary to state that, evenif it were held that Directive 2006/24 has atwofold component covering both the estab-lishment and functioning of the internal market, in accordance with the provision ofArticle 95 EC, and ‘police and judicial cooperation in criminal matters’ within the

meaning of Title VI of the EU Treaty, withoutone being ancillary to the other, Article 47 EUwould continue to stand in the way of the useof a legal basis under TitleVI of the EU Treaty.

133. The Court, in its judgment in Case C-91/05 Commission v Council, indicated the scope of Article 47 EU in the case wherethe examination of a measure reveals that it pursues a twofold aim or that it has a twofoldcomponent, falling respectively within the ECand the EU Treaties, without one beingancillary to the other. In such circumstances,the Court held that, since Article 47 EU precludes the Union from adopting, on thebasis of the EU Treaty, a measure which couldproperly be adopted on the basis of the ECTreaty, the Union cannot have recourse to alegal basis coming within an area covered bythe EU Treaty in order to adopt provisionswhich also come within an area of compe-tence conferred by the EC Treaty on the Community.

134. Thus, where a measure has a twofold component, with the result that it could becovered by both the EC Treaty and the EUTreaty, Article 47 EU gives priority, in anyevent, to the EC Treaty.

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VII — Conclusion

135. Having regard to all of the foregoing considerations, I propose that the Courtshould:

(1) dismiss the action;

(2) order Ireland to pay the costs;

(3) order the Kingdom of Spain, the Kingdom of the Netherlands, the Slovak Republic,the Commission of the European Communities and the European Data ProtectionSupervisor to bear their own respective costs.

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10 February 2009 *

In Case C-301/06,

ACTION for annulment under Article 230 EC, brought on 6 July 2006,

Ireland, represented by D. O’Hagan, acting as Agent, E. Fitzsimons, D. Barniville andA. Collins, SC, with an address for service in Luxembourg,

applicant,

supported by:

Slovak Republic, represented by J. Čorba, acting as Agent,

intervener,

* Language of the case: English.

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v


European Parliament, represented initially by H. Duintjer Tebbens, M. Dean and A. Auersperger Matić, and subsequently by the latter two and K. Bradley, acting asAgents, with an address for service in Luxembourg,

Council of the European Union, represented by J.-C. Piris, J. Schutte and S. Kyriakopoulou, acting as Agents,

defendants,

supported by:

Kingdom of Spain, represented by M.A. Sampol Pucurull and J. Rodríguez Cárcamo,acting as Agents, with an address for service in Luxembourg,

Kingdom of the Netherlands, represented by C. ten Dam and C. Wissels, acting as Agents,

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Commission of the European Communities, represented by C. Docksey, R. Troosters and C. O’Reilly, acting as Agents, with an address for service in Luxembourg,

European Data Protection Supervisor, represented by H. Hijmans, acting as Agent,

interveners,


composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas and K. Lenaerts, Presidents of Chambers, A. Tizzano, J. N. Cunha Rodrigues (Rapporteur),R. Silva de Lapuerta, K. Schiemann, J. Klučka, A. Arabadjiev, C. Toader and J.-J. Kasel, Judges,

Advocate General: Y. Bot,Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 1 July 2008,


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gives the following

Judgment

1 By its action, Ireland requests the Court to annul Directive 2006/24/EC of the EuropeanParliament and of the Council of 15 March 2006 on the retention of data generated orprocessed in connection with the provision of publicly available electronic commu-nications services or of public communications networks and amending Direct-ive 2002/58/EC (OJ 2006 L 105, p. 54), on the ground that it was not adopted on anappropriate legal basis.

Legal framework

Directive 95/46/EC

2 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995on the protection of individuals with regard to the processing of personal data and onthe free movement of such data (OJ 1995 L 281, p. 31) lays down rules relating to theprocessing of personal data in order to protect the rights of individuals in that respect,while ensuring the free movement of those data in the European Community.

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3


Article 3(2) of Directive 95/46 provides:

‘This Directive shall not apply to the processing of personal data:

— in the course of an activity which falls outside the scope of Community law, such asthose provided for by Titles V and VI of the Treaty on European Union and in anycase to processing operations concerning public security, defence, State security(including the economic well-being of the State when the processing operationrelates to State security matters) and the activities of the State in areas of criminallaw,

— by a natural person in the course of a purely personal or household activity.’

Directive 2002/58/EC

Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002concerning the processing of personal data and the protection of privacy in theelectronic communications sector (Directive on privacy and electronic communica-tions) (OJ 2002 L 201, p. 37) was adopted with a view to supplementing Directive 95/46by provisions specific to the telecommunications sector.

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4

5

6


Under Article 6(1) of Directive 2002/58:

‘Traffic data relating to subscribers and users processed and stored by the provider of apublic communications network or publicly available electronic communications service must be erased or made anonymous when it is no longer needed for the purposeof the transmission of a communication without prejudice to paragraphs 2, 3 and 5 ofthis Article and Article 15(1).’

Article 15(1) of Directive 2002/58 states:

‘Member States may adopt legislative measures to restrict the scope of the rights andobligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9of this Directive when such restriction constitutes a necessary, appropriate and proportionate measure within a democratic society to safeguard national security (i.e.State security), defence, public security, and the prevention, investigation, detectionand prosecution of criminal offences or of unauthorised use of the electronic communication system, as referred to in Article 13(1) of Directive 95/46/EC. To thisend, Member States may, inter alia, adopt legislative measures providing for theretention of data for a limited period justified on the grounds laid down in thisparagraph. All the measures referred to in this paragraph shall be in accordance with thegeneral principles of Community law, including those referred to in Article 6(1) and (2)of the Treaty on European Union.’

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7


Directive 2006/24

Recitals 5 to 11 in the preamble to Directive 2006/24 provide as follows:

‘(5) Several Member States have adopted legislation providing for the retention ofdata by service providers for the prevention, investigation, detection and prosecution of criminal offences. Those national provisions vary considerably.

(6) The legal and technical differences between national provisions concerning theretention of data for the purpose of prevention, investigation, detection andprosecution of criminal offences present obstacles to the internal market forelectronic communications, since service providers are faced with differentrequirements regarding the types of traffic and location data to be retained andthe conditions and periods of retention.

(7) The Conclusions of the Justice and Home Affairs Council of 19 December 2002 underline that, because of the significant growth in the possibilities afforded byelectronic communications, data relating to the use of electronic communica-tions are particularly important and therefore a valuable tool in the prevention,investigation, detection and prosecution of criminal offences, in particularorganised crime.

(8) The Declaration on Combating Terrorism adopted by the European Council on25 March 2004 instructed the Council to examine measures for establishingrules on the retention of communications traffic data by service providers.

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(9) Under Article 8 of the European Convention for the Protection of Human Rightsand Fundamental Freedoms (ECHR), everyone has the right to respect for hisprivate life and his correspondence. Public authorities may interfere with theexercise of that right only in accordance with the law and where necessary in ademocratic society, inter alia, in the interests of national security or public safety,for the prevention of disorder or crime, or for the protection of the rights andfreedoms of others. Because retention of data has proved to be such a necessaryand effective investigative tool for law enforcement in several Member States,and in particular concerning serious matters such as organised crime andterrorism, it is necessary to ensure that retained data are made available to lawenforcement authorities for a certain period, subject to the conditions providedfor in this Directive. The adoption of an instrument on data retention thatcomplies with the requirements of Article 8 of the ECHR is therefore a necessary measure.

(10) On 13 July 2005, the Council reaffirmed in its declaration condemning theterrorist attacks on London the need to adopt common measures on theretention of telecommunications data as soon as possible.

(11) Given the importance of traffic and location data for the investigation, detectionand prosecution of criminal offences, as demonstrated by research and thepractical experience of several Member States, there is a need to ensure atEuropean level that data that are generated or processed, in the course of thesupply of communications services, by providers of publicly available electronic

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communications services or of a public communications network are retainedfor a certain period, subject to the conditions provided for in this Directive.’

8 Recital 21 in the preamble to Directive 2006/24 states:

‘Since the objectives of this Directive, namely to harmonise the obligations on providersto retain certain data and to ensure that those data are available for the purpose of theinvestigation, detection and prosecution of serious crime, as defined by each MemberState in its national law, cannot be sufficiently achieved by the Member States and cantherefore, by reason of the scale and effects of this Directive, be better achieved atCommunity level, the Community may adopt measures, in accordance with theprinciple of subsidiarity as set out in Article 5 of the [EC] Treaty. In accordance with theprinciple of proportionality, as set out in that Article, this Directive does not go beyondwhat is necessary in order to achieve those objectives.’

9 Recital 25 in the preamble to Directive 2006/24 is worded as follows:

‘This Directive is without prejudice to the power of Member States to adopt legislativemeasures concerning the right of access to, and use of, data by national authorities, asdesignated by them. Issues of access to data retained pursuant to this Directive bynational authorities for such activities as are referred to in the first indent of Article 3(2)of Directive 95/46/EC fall outside the scope of Community law. However, they may besubject to national law or action pursuant to Title VI of the Treaty on European Union.

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Such laws or action must fully respect fundamental rights as they result from the common constitutional traditions of the Member States and as guaranteed by the ECHR. …’

10 Article 1(1) of Directive 2006/24 provides:

‘This Directive aims to harmonise Member States’ provisions concerning the obligations of the providers of publicly available electronic communications servicesor of public communications networks with respect to the retention of certain datawhich are generated or processed by them, in order to ensure that the data are availablefor the purpose of the investigation, detection and prosecution of serious crime, asdefined by each Member State in its national law.’

11 Article 3(1) of that directive provides:

‘By way of derogation from Articles 5, 6 and 9 of Directive 2002/58/EC, Member Statesshall adopt measures to ensure that the data specified in Article 5 of this Directive areretained in accordance with the provisions thereof, to the extent that those data aregenerated or processed by providers of publicly available electronic communicationsservices or of a public communications network within their jurisdiction in the processof supplying the communications services concerned.’

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12

13


Article 4 of Directive 2006/24 states:

‘Member States shall adopt measures to ensure that data retained in accordance withthis Directive are provided only to the competent national authorities in specific casesand in accordance with national law. The procedures to be followed and the conditionsto be fulfilled in order to gain access to retained data in accordance with necessity andproportionality requirements shall be defined by each Member State in its national law,subject to the relevant provisions of European Union law or public international law,and in particular the ECHR as interpreted by the European Court of Human Rights.’

Article 5 of Directive 2006/24 states:

‘Member States shall ensure that the following categories of data are retained under thisDirective:

(a) data necessary to trace and identify the source of a communication:

…

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(b) data necessary to identify the destination of a communication:

…

(c) data necessary to identify the date, time and duration of a communication:

…

(d) data necessary to identify the type of communication:

…

(e) data necessary to identify users’ communication equipment or what purports to be their equipment:

…

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(f ) data necessary to identify the location of mobile communication equipment:

…

2. No data revealing the content of the communication may be retained pursuant tothis Directive.’

14 Article 6 of Directive 2006/24 provides:

‘Member States shall ensure that the categories of data specified in Article 5 are retainedfor periods of not less than six months and not more than two years from the date of thecommunication.’

15 Article 7 of Directive 2006/24 states:

‘Without prejudice to the provisions adopted pursuant to Directive 95/46/EC andDirective 2002/58/EC, each Member State shall ensure that providers of publiclyavailable electronic communications services or of a public communications networkrespect, as a minimum, the following data security principles with respect to dataretained in accordance with this Directive:

…’

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16

17


Under Article 8 of Directive 2006/24:

‘Member States shall ensure that the data specified in Article 5 are retained inaccordance with this Directive in such a way that the data retained and any othernecessary information relating to such data can be transmitted upon request to thecompetent authorities without undue delay.’

Article 11 of Directive 2006/24 is worded as follows:

‘The following paragraph shall be inserted in Article 15 of Directive 2002/58/EC:

“1a. Paragraph 1 shall not apply to data specifically required by Directive [2006/24] tobe retained for the purposes referred to in Article 1(1) of that Directive”.’

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Background to the dispute

18 On 28 April 2004, the French Republic, Ireland, the Kingdom of Sweden and the UnitedKingdom of Great Britain and Northern Ireland submitted to the Council of theEuropean Union a proposal for a framework decision to be adopted on the basis ofArticles 31(1)(c) EU and 34(2)(b) EU. The subject of that proposal was the retention ofdata processed and stored in connection with the provision of publicly availableelectronic communications services or data in public communication networks for the purposes of the prevention, investigation, detection and prosecution of criminal offences, including terrorism (Council Document 8958/04).

19 The Commission of the European Communities stated that it favoured the legal basisused in that proposed framework decision with respect to a part of it. In particular, itpointed out that Article 47 EU did not allow an instrument based on the EU Treaty toaffect the acquis communautaire, in this case Directives 95/46 and 2002/58. Taking theview that the determination of the categories of data to be retained and of the relevantretention period fell within the competence of the Community legislature, theCommission reserved the right to submit a proposal for a directive.

On 21 September 2005, the Commission adopted a proposal, based on Article 95 EC,for a directive of the European Parliament and of the Council on the retention of dataprocessed in connection with the provision of public electronic communication[s]services and amending Directive 2002/58 [COM(2005) 438 final].

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20

21


During its session on 1 and 2 December 2005, the Council decided to seek the adoptionof a directive based on the EC Treaty, rather than pursuing the adoption of a frameworkdecision.

22 On 14 December 2005, the European Parliament delivered its opinion in accordancewith the co-decision procedure under Article 251 EC.

23 The Council adopted Directive 2006/24 by qualified majority at its session on 21 February 2006. Ireland and the Slovak Republic voted against the adoption of thatdirective.

Forms of order sought by the parties

24 Ireland claims that the Court should:

— annul Directive 2006/24 on the ground that it was not adopted on an appropriatelegal basis, and

— order the Council and the Parliament to pay the costs.

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25

26


The Parliament contends that the Court should:

— primarily, dismiss the action as unfounded, and

— order Ireland to pay all the costs of the present proceedings,

— or, in the alternative, should the Court annul Directive 2006/24, declare that theeffects of that directive are to remain in force until a new measure enters into force.

The Council contends that the Court should:

— dismiss the action brought by Ireland, and

— order Ireland to pay the costs.

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27


By orders of 1 February 2007, the President of the Court granted leave to the SlovakRepublic to intervene in support of the form of order sought by Ireland and to theKingdom of Spain, the Kingdom of the Netherlands, the Commission and the EuropeanData Protection Supervisor to intervene in support of the forms of order sought by theParliament and the Council.

The action


28 Ireland submits that the choice of Article 95 EC as the legal basis for Directive 2006/24is a fundamental error. Neither Article 95 EC nor any other provision of the EC Treatyis, in its view, capable of providing an appropriate legal basis for that directive. Irelandargues principally that the sole objective or, at least, the main or predominant objectiveof that directive is to facilitate the investigation, detection and prosecution of crime,including terrorism. Therefore, the only legal basis on which the measures contained inDirective 2006/24 may be validly based is Title VI of the EU Treaty, in particularArticles 30 EU, 31(1)(c) EU and 34(2)(b) EU.

29 Ireland argues that an examination of, in particular, recitals 7 to 11 and 21 in thepreamble to Directive 2006/24 and of the fundamental provisions laid down therein, inparticular Article 1(1) thereof, shows that reliance on Article 95 EC as the legal basis forthat directive is inappropriate and unjustifiable. That directive, it contends, is clearlydirected towards the fight against crime.

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30


Ireland submits that measures based on Article 95 EC must have as their ‘centre of gravity’ the harmonisation of national laws in order to improve the functioning of theinternal market (see, inter alia, Joined Cases C-317/04 and C-318/04 Parliament v Council and Commission [2006] ECR I-4721). The provisions of Directive 2006/24concern the fight against crime and are not intended to address defects in the internalmarket.

31 If, contrary to its main argument, the Court were to hold that Directive 2006/24 isindeed intended, inter alia, to prevent distortions or obstacles to the internal market,Ireland submits in the alternative that that objective must be regarded as being purelyincidental to the main or predominant objective of combating crime.

32 Ireland adds that Directive 2002/58 could be amended by another directive, but theCommunity legislature is not competent to use an amending directive adopted on thebasis of Article 95 EC in order to incorporate into Directive 2002/58 provisions fallingoutside the competence conferred on the Community under the first pillar. The obligations designed to ensure that data are available for the investigation, detectionand prosecution of criminal offences fall within an area which may only be the subject ofa measure based on Title VI of the EU Treaty. The adoption of such an instrumentwould not affect the provisions of Directive 2002/58 within the meaning of Article 47EU. If the verb ‘affect’, which is used in that article, were to be properly construed, itwould be necessary to interpret it as not precluding a random or incidental overlap ofunimportant and secondary subject matter between instruments of the Communityand those of the Union.

The Slovak Republic supports Ireland’s position. It takes the view that Article 95 ECcannot serve as the legal basis for Directive 2006/24, since the latter’s main objective isnot to eliminate barriers and distortions in the internal market. The directive’s purpose,it submits, is to harmonise the retention of personal data in a manner which goes

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33


beyond commercial objectives in order to facilitate action by the Member States in thearea of criminal law and, for that reason, it cannot be adopted under Communitycompetence.

34 According to the Slovak Republic, the retention of personal data to the extent requiredby Directive 2006/24 amounts to an extensive interference in the right of individuals toprivacy as provided for by Article 8 of the ECHR. It is questionable whether such far-reaching interference may be justified on economic grounds, in this case the enhancedfunctioning of the internal market. The adoption of an act outside the scope ofCommunity competence, the primary and undisguised purpose of which is the fightagainst crime and terrorism, would be a more appropriate solution, providing a moreproportionate justification for interference with the right of individuals to protection oftheir privacy.

35 The Parliament submits that Ireland is being selective in its interpretation of theprovisions of Directive 2006/24. Recitals 5 and 6 in the preamble thereto, it argues,make it clear that the main or predominant purpose of that directive is to eliminateobstacles to the internal market for electronic communications services, while recital 25 confirms that the access to and use of the retained data for law-enforcement purposes fall outside the scope of Community competence.

36 The Parliament submits that, following the terrorist attacks of 11 September 2001 inNew York (United States), 11 March 2004 in Madrid (Spain) and 7 July 2005 in London(United Kingdom), a number of Member States adopted divergent rules on theretention of data. Such differences were liable to impede the provision of electroniccommunications services. The Parliament takes the view that the retention of data constitutes a significant cost element for the providers of publicly available electroniccommunications services or of public communications networks (‘service providers’)and the existence of different requirements in that field may distort competition withinthe internal market. It adds that the main purpose of Directive 2006/24 is to harmonise

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the obligations imposed by the Member States on service providers in regard to dataretention. It follows that Article 95 EC is the correct legal basis for that directive.

37 The Parliament also argues that reliance on Article 95 EC as the legal basis is notinvalidated by the importance attributed to combating crime. While crime preventionhas clearly influenced the choices made in Directive 2006/24, that concern does notinvalidate the choice of Article 95 EC as the legal basis for that directive.

38 Furthermore, Article 4 of Directive 2006/24 provides, in a manner consistent with theview expressed in recital 25 in the preamble thereto, that the conditions for access toand processing of retained data must be defined by the Member States subject to thelegal provisions of the Union and international law, in particular the ECHR. Thatapproach differs from that adopted for the measures which were the subject of thejudgment in Parliament v Council and Commission, a case in which airline companieswere obliged to grant access to passenger data to a law-enforcement authority in a non-member country. Directive 2006/24 thus respects the separation of areas of competence between the first and third pillars.

39 According to the Parliament, although the retention of an individual’s personal datamay in principle constitute interference within the meaning of Article 8 of the ECHR,that interference may be justified, in terms of that article, by reference to public safetyand crime prevention. The issue of justification for such interference must be distinguished from that of the correct choice of the legal basis within the legal system ofthe Union, that being an unrelated matter.

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40 The Council submits that, in the years following the adoption of Directive 2002/58,national law-enforcement authorities were becoming increasingly concerned about theexploitation of developments in the area of electronic communications for the purposeof committing criminal acts. Those new concerns led the Member States to adoptmeasures to prevent data relating to those communications from being erased and toensure that they were available to law-enforcement authorities. Those measures, theCouncil continues, were divergent and began to affect the proper functioning of theinternal market. Recitals 5 and 6 in the preamble to Directive 2006/24 are explicit inthat regard.

41 That situation obliged the Community legislature to ensure that uniform rules wereimposed on service providers with regard to the conditions under which they carriedout their activities.

42 For those reasons, during 2006 the Community legislature considered it necessary toput an end to the obligation to erase data imposed by Articles 5, 6 and 9 of Directive 2002/58 and to provide that, in future, the data referred to in Article 5 ofDirective 2006/24 would have to be retained for a certain period. That amendmentobliges the Member States to ensure that such data are retained for a minimum periodof six months and a maximum of two years from the date of the communication. Thepurpose of that amendment was to establish precise and harmonised conditions withwhich service providers must comply in respect of the erasure or non-erasure of thepersonal data referred to in Article 5 of Directive 2006/24 by thus introducing commonrules in the Community with a view to ensuring the unity of the internal market.

The Council takes the view that, while the need to combat crime, including terrorism,was a determining factor in the decision to amend the scope of the rights andobligations laid down in Articles 5, 6 and 9 of Directive 2002/58, that circumstance didnot prevent Directive 2006/24 from having to be adopted on the basis of Article 95 EC.

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43

44


Neither Articles 30 EU, 31 EU and 34 EU nor any other article in the EU Treaty canserve as the basis for a measure which, in substance, has the objective of amending theconditions under which service providers carry out their activities or of making thesystem established by Directive 2002/58 inapplicable to them.

45 Rules relating to the categories of data to be retained by service providers and theretention period for those data which amend the obligations imposed on the latter byDirective 2002/58 cannot be the subject of an instrument based on Title VI of the EUTreaty. The adoption of such an instrument would affect the provisions of thatdirective, in breach of Article 47 EU.

46 According to the Council, the rights protected by Article 8 of the ECHR are not absoluteand may be subject to restrictions under the conditions laid down in Article 8(2)thereof. As provided in Directive 2006/24, the retention of data serves a legitimatepublic interest, recognised in Article 8(2) of the ECHR, and constitutes an appropriatemeans by which to protect that interest.

47 The Kingdom of Spain and the Kingdom of the Netherlands submit that, as is apparentfrom recitals 1, 2, 5 and 6 in the preamble to Directive 2006/24, the main purpose of thatdirective is to eliminate obstacles to the internal market generated by existing legal andtechnical differences between the national provisions of the Member States. That directive, in their view, regulates the retention of data with the aim of eliminating thattype of obstacles, first, by harmonising the obligation to retain data and, second, byspecifying the criteria relevant to that obligation, such as the categories of data to beretained and the retention period.

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48


The fact that, under Article 1, Directive 2006/24 effects such harmonisation ‘in order to ensure that the data are available for the purpose of the investigation, detection andprosecution of serious crime, as defined by each Member State in its national law’ is a separate matter. Directive 2006/24 does not regulate the processing of data by thepublic or law-enforcement authorities of the Member States. On the contrary, thatharmonisation relates only to the aspects of data retention which directly affect thecommercial activities of service providers.

49 In so far as Directive 2006/24 amends Directive 2002/58 and has a connection withDirective 95/46, the amendments which it contains may be properly implemented onlyby means of a Community instrument and not by an instrument based on the EUTreaty.

50 The Commission recalls that, prior to the adoption of Directive 2006/24, severalMember States had adopted national measures on data retention pursuant to Article 15(1) of Directive 2002/58. It highlights the significant divergences whichexisted between those measures. For example, the retention periods varied from threemonths in the Netherlands to four years in Ireland. The obligations relating to dataretention have significant economic implications for service providers. Divergencesbetween those obligations could lead to distortions in the internal market. In thatcontext, it was legitimate to adopt Directive 2006/24 on the basis of Article 95 EC.

Furthermore, Directive 2006/24 limits, in a manner harmonised at Community level,the obligations laid down by Directive 2002/58. Since the latter was based on Article 95 EC, the legal basis of Directive 2006/24 cannot be different.

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51

52


The reference to the investigation, detection and prosecution of serious crime inArticle 1(1) of Directive 2006/24 falls under Community law because it serves toindicate the legitimate objective of the restrictions imposed by that directive on therights of individuals with regard to data protection. Such an indication is necessary inorder to comply both with the requirements of Directives 95/46 and 2002/58 and withthose of Article 8 of the ECHR.

53 The European Data Protection Supervisor submits that the subject-matter of Directive 2006/24 is covered by Article 95 EC because, first, that directive has adirect impact on the economic activities of service providers and may thereforecontribute to the establishment and functioning of the internal market and, second, hadthe Community legislature not intervened, a distortion of competition in the internalmarket might have occurred. The aim of combating crime is not the sole, or even thepredominant, objective of that directive. On the contrary, it was intended in the firstplace to contribute to the establishment and functioning of the internal market and tothe elimination of distortions of competition. The directive harmonises the nationalprovisions on the retention by private undertakings of certain data in the course of theirnormal economic activities.

54 Furthermore, Directive 2006/24 amends Directive 2002/58, which was adopted on thebasis of Article 95 EC, and ought for that reason to be adopted on the same legal basis.Under Article 47 EU, the Community legislature alone is competent to amend obligations arising from a directive based on the EC Treaty.

55 According to the European Data Protection Supervisor, if the EC Treaty could not serveas the basis for Directive 2006/24, the provisions of Community law relating to dataprotection would not protect citizens in cases where the processing of their personaldata would facilitate crime prevention. In such a situation, the general system of dataprotection under Community law would apply to data-processing for commercialpurposes but not to the processing of those data for purposes of crime prevention. That

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would give rise to difficult distinctions for service providers and to a reduction in thelevel of protection for data subjects. Such a situation should be avoided. The need forconsistency justifies the adoption of Directive 2006/24 under the EC Treaty.


56 It must be noted at the outset that the question of the areas of competence of theEuropean Union presents itself differently depending on whether the competence inissue has already been accorded to the European Union in the broad sense or has not yetbeen accorded to it. In the first hypothesis, it is a question of ruling on the division of areas of competence within the Union and, more particularly, on whether it is appropriate to proceed by way of a directive based on the EC Treaty or by way of aframework decision based on the EU Treaty. By contrast, in the second hypothesis, it isa question of ruling on the division of areas of competence between the Union and theMember States and, more particularly, on whether the Union has encroached on thelatters’ areas of competence. The present case comes under the first of those twohypotheses.

57 It must also be stated that the action brought by Ireland relates solely to the choice oflegal basis and not to any possible infringement of fundamental rights arising frominterference with the exercise of the right to privacy contained in Directive 2006/24.

Ireland, supported by the Slovak Republic, contends that Directive 2006/24 cannot bebased on Article 95 EC since its ‘centre of gravity’ does not concern the functioning of

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58


the internal market. The sole objective of the directive, or at least its principal objective,is, it is contended, the investigation, detection and prosecution of crime.

59 That argument cannot be accepted.

60 According to the Court’s settled case-law, the choice of legal basis for a Communitymeasure must rest on objective factors which are amenable to judicial review, includingin particular the aim and the content of the measure (see Case C-440/05 Commission v Council [2007] ECR I-9097, paragraph 61 and the case-law cited).

61 Directive 2006/24 was adopted on the basis of the EC Treaty and, in particular,Article 95 EC.

62 Article 95(1) EC provides that the Council is to adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioningof the internal market.

The Community legislature may have recourse to Article 95 EC in particular wheredisparities exist between national rules which are such as to obstruct the fundamental

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63


freedoms or to create distortions of competition and thus have a direct effect on thefunctioning of the internal market (see, to that effect, Case C-380/03 Germany v Parliament and Council [2006] ECR I-11573, paragraph 37 and the case-law cited).

64 Furthermore, although recourse to Article 95 EC as a legal basis is possible if the aim isto prevent the emergence of future obstacles to trade resulting from the divergentdevelopment of national laws, the emergence of such obstacles must be likely and themeasure in question must be designed to prevent them (Germany v Parliament and Council, paragraph 38 and the case-law cited).

65 It is necessary to ascertain whether the situation which led to the adoption of Directive 2006/24 satisfies the conditions set out in the preceding two paragraphs.

66 As is apparent from recitals 5 and 6 in the preamble to that directive, the Communitylegislature started from the premiss that there were legislative and technical disparitiesbetween the national provisions governing the retention of data by service providers.

67 In that connection, the evidence submitted to the Court confirms that, following theterrorist attacks mentioned in paragraph 36 of this judgment, several Member States,realising that data relating to electronic communications constitute an effective meansfor the detection and prevention of crimes, including terrorism, adopted measurespursuant to Article 15(1) of Directive 2002/58 with a view to imposing obligations onservice providers concerning the retention of such data.

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68


It is also clear from the file that the obligations relating to data retention have significanteconomic implications for service providers in so far as they may involve substantialinvestment and operating costs.

69 The evidence submitted to the Court shows, moreover, that the national measures adopted up to 2005 pursuant to Article 15(1) of Directive 2002/58 differed substantially, particularly in respect of the nature of the data retained and the periods of data retention.

70 Finally, it was entirely foreseeable that the Member States which did not yet have ruleson data retention would introduce rules in that area which were likely to accentuateeven further the differences between the various existing national measures.

71 In the light of that evidence, it is apparent that the differences between the variousnational rules adopted on the retention of data relating to electronic communicationswere liable to have a direct impact on the functioning of the internal market and that itwas foreseeable that that impact would become more serious with the passage of time.

Such a situation justified the Community legislature in pursuing the objective ofsafeguarding the proper functioning of the internal market through the adoption ofharmonised rules.

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72

73


Furthermore, it must also be noted that, by laying down a harmonised level of retentionof data relating to electronic communications, Directive 2006/24 amended the provisions of Directive 2002/58.

74 Directive 2002/58 is based on Article 95 EC.

75 Under Article 47 EU, none of the provisions of the EC Treaty may be affected by aprovision of the EU Treaty. That requirement appears in the first paragraph ofArticle 29 EU, which introduces Title VI of the EU Treaty, entitled ‘Provisions on police and judicial cooperation in criminal matters’ (Case C-440/05 Commission v Council, paragraph 52).

76 In providing that nothing in the EU Treaty is to affect the Treaties establishing theEuropean Communities or the subsequent Treaties and Acts modifying or supplementing them, Article 47 EU aims, in accordance with the fifth indent ofArticle 2 EU and the first paragraph of Article 3 EU, to maintain and build on the acquis communautaire (Case C-91/05 Commission v Council [2008] ECR I-3651, para-graph 59).

77 It is the task of the Court to ensure that acts which, according to one party, fall withinthe scope of Title VI of the Treaty on European Union and which, by their nature, arecapable of having legal effects, do not encroach upon the powers conferred by the ECTreaty on the Community (Case C-91/05 Commission v Council, paragraph 33 and the case-law cited).

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78


In so far as the amendment of Directive 2002/58 effected by Directive 2006/24 comeswithin the scope of Community powers, Directive 2006/24 could not be based on aprovision of the EU Treaty without infringing Article 47 thereof.

79 In order to determine whether the legislature has chosen a suitable legal basis for theadoption of Directive 2006/24, it is also appropriate, as follows from paragraph 60 ofthis judgment, to examine the substantive content of its provisions.

80 In that connection, the provisions of Directive 2006/24 are essentially limited to theactivities of service providers and do not govern access to data or the use thereof by thepolice or judicial authorities of the Member States.

81 More specifically, the provisions of Directive 2006/24 are designed to harmonisenational laws on the obligation to retain data (Article 3), the categories of data to beretained (Article 5), the periods of retention of data (Article 6), data protection and datasecurity (Article 7) and the conditions for data storage (Article 8).

82 By contrast, the measures provided for by Directive 2006/24 do not, in themselves,involve intervention by the police or law-enforcement authorities of the MemberStates. Thus, as is clear in particular from Article 3 of the directive, it is provided thatservice providers are to retain only data that are generated or processed in the course ofthe provision of the relevant communication services. Those data are solely those whichare closely linked to the exercise of the commercial activity of the service providers.

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83 Directive 2006/24 thus regulates operations which are independent of the implementa-tion of any police and judicial cooperation in criminal matters. It harmonises neitherthe issue of access to data by the competent national law-enforcement authorities northat relating to the use and exchange of those data between those authorities. Thosematters, which fall, in principle, within the area covered by Title VI of the EU Treaty,have been excluded from the provisions of that directive, as is stated, in particular, inrecital 25 in the preamble to, and Article 4 of, Directive 2006/24.

84 It follows that the substantive content of Directive 2006/24 is directed essentially at theactivities of service providers in the relevant sector of the internal market, to theexclusion of State activities coming under Title VI of the EU Treaty.

85 In light of that substantive content, Directive 2006/24 relates predominantly to thefunctioning of the internal market.

86 Against such a finding, Ireland argues that, by the judgment in Parliament v Council and Commission, the Court annulled Council Decision 2004/496/EC of 17 May 2004on the conclusion of an Agreement between the European Community and the UnitedStates of America on the processing and transfer of PNR data by Air Carriers to theUnited States Department of Homeland Security, Bureau of Customs and BorderProtection (OJ 2004 L 183, p. 83, and — corrigendum — OJ 2005 L 255, p. 168).

87 In paragraph 68 of the judgment in Parliament v Council and Commission, the Court held that that agreement related to the same transfer of data as did Commission

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Decision 2004/535/EC of 14 May 2004 on the adequate protection of personal datacontained in the Passenger Name Record of air passengers transferred to the UnitedStates Bureau of Customs and Border Protection (OJ 2004 L 235, p. 11).

88 The latter decision concerned the transfer of passenger data from the reservationsystems of air carriers situated in the territory of the Member States to the United StatesDepartment of Homeland Security, Bureau of Customs and Border Protection. TheCourt held that that the subject-matter of that decision was data-processing which wasnot necessary for a supply of services by the air carriers, but which was regarded asnecessary for safeguarding public security and for law-enforcement purposes. In paragraphs 57 to 59 of the judgment in Parliament v Council and Commission, the Court held that such data-processing was covered by Article 3(2) of Directive 95/46,according to which that directive does not apply, in particular, to the processing ofpersonal data relating to public security and the activities of the State in areas ofcriminal law. The Court accordingly concluded that Decision 2004/535 did not fallwithin the scope of Directive 95/46.

89 Since the agreement which was the subject of Directive 2004/496 related, in the sameway as Decision 2004/535, to data-processing which was excluded from the scope ofDirective 95/46, the Court held that Decision 2004/496 could not have been validlyadopted on the basis of Article 95 EC (Parliament v Council and Commission, paragraphs 68 and 69).

90 Such a line of argument cannot be transposed to Directive 2006/24.

91 Unlike Decision 2004/496, which concerned a transfer of personal data within aframework instituted by the public authorities in order to ensure public security,

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Directive 2006/24 covers the activities of service providers in the internal market anddoes not contain any rules governing the activities of public authorities for law-enforcement purposes.

92 It follows that the arguments which Ireland draws from the annulment of Decision2004/496 by the judgment in Parliament v Council and Commission cannot be accepted.

93 Having regard to all of the foregoing considerations, Directive 2006/24 had to beadopted on the basis of Article 95 EC.

94 The present action must accordingly be dismissed.

Costs

95 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered topay the costs if they have been applied for in the successful parties’ pleadings. Since theParliament and the Council have applied for Ireland to be ordered to pay the costs andIreland has been unsuccessful, Ireland must be ordered to pay the costs. Pursuant to thefirst subparagraph of Article 69(4), the interveners in this case are to bear their owncosts.

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On those grounds, the Court (Grand Chamber) hereby:

1. Dismisses the action;

2. Orders Ireland to pay the costs;

3. Orders the Kingdom of Spain, the Kingdom of the Netherlands, the SlovakRepublic, the Commission of the European Communities and the EuropeanData Protection Supervisor to bear their own respective costs.

[Signatures]

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Case C-185/07

Allianz SpA, formerly Riunione Adriatica di Sicurtà SpAand

Generali Assicurazioni Generali SpAv

West Tankers Inc.

(Reference for a preliminary rulingfrom the House of Lords)

(Recognition and enforcement of foreign arbitral awards — Regulation (EC)No 44/2001 — Scope of application — Jurisdiction of a court of a Member State to issue

an order restraining a party from commencing or continuing proceedings before acourt of another Member State on the ground that those proceedings would be contrary

to an arbitration agreement — New York Convention)

Opinion of Advocate General Kokott delivered on 4 September 2008 . . . . I - 666 Judgment of the Court (Grand Chamber), 10 February 2009 . . . . . . . I - 686


Judicial cooperation in civil matters — Jurisdiction and the enforcement of judgments in civil and commercial matters — Regulation No 44/2001 — Scope

(Council Regulation No 44/2001, Arts 1(2)(d) and 5(3))

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It is incompatible with Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters for a court of a Member State to make an order to restrain a personfrom commencing or continuing proceedingsbefore the courts of another Member State on the ground that such proceedings would becontrary to an arbitration agreement.

If, because of the subject-matter of the dispute, that is, the nature of the rights to beprotected in proceedings, such as a claim fordamages, those proceedings come within the scope of Regulation No 44/2001, a preli-minary issue concerning the applicability ofan arbitration agreement, including in parti-cular its validity, also comes within its scope ofapplication.

It follows that the objection of lack of jurisdiction raised on the basis of the existenceof an arbitration agreement, including the question of the validity of that agreement, comes within the scope of RegulationNo 44/2001 and that it is therefore exclusivelyfor the court to rule on that objection and onits own jurisdiction, pursuant to Articles 1(2)(d) and 5(3) of that regulation.

Accordingly, the use of an anti-suit injunctionto prevent a court of a Member State, whichnormally has jurisdiction to resolve a disputeunder Article 5(3) of Regulation No 44/2001,from ruling, in accordance with Article 1(2)(d) of that regulation, on the very applic-ability of the regulation to the dispute broughtbefore it necessarily amounts to stripping thatcourt of the power to rule on its own jurisdiction under that regulation.

It follows, first, that an anti-suit injunction iscontrary to the general principle that everycourt seised itself determines, under the rules applicable to it, whether it has jurisdiction toresolve the dispute before it. It should be borne in mind in that regard that RegulationNo 44/2001, apart from a few limited excep-tions, does not authorise the jurisdiction of acourt of a Member State to be reviewed by acourt in another Member State.

Secondly, in obstructing the court of anotherMember State in the exercise of the powersconferred on it by Regulation No 44/2001,namely to decide, on the basis of the rulesdefining the material scope of that regulation,including Article 1(2)(d) thereof, whether thatregulation is applicable, such an anti-suit injunction also runs counter to the trust

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ALLIANZ AND GENERALI ASSICURAZIONI GENERALI

which the Member States accord to one another’s legal systems and judicial institu-tions and on which the system of jurisdictionunder Regulation No 44/2001 is based.

Lastly, if, by means of an anti-suit injunction,the national court were prevented from examining itself the preliminary issue of thevalidity or the applicability of the arbitrationagreement, a party could avoid the proceed-ings merely by relying on that agreement andthe applicant, which considers that the agree-ment is void, inoperative or incapable of beingperformed, would thus be barred from accessto the court before which it brought proceed-ings under Article 5(3) of RegulationNo 44/2001 and would therefore be deprivedof a form of judicial protection to which it isentitled.

This finding is supported by Article II(3) ofThe Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in New York on 10 June 1958, according to which it is the court of a Contracting State, when seised of an actionin a matter in respect of which the parties havemade an arbitration agreement, that will, atthe request of one of the parties, refer theparties to arbitration, unless it finds that thesaid agreement is null and void, inoperative orincapable of being performed.

(see paras 26-31, 33, 34, operative part)

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OPINION OF MRS KOKOTT — CASE C-185/07

OPINION OF ADVOCATE GENERALKOKOTT

delivered on 4 September 2008 1

I — Introduction

1. The House of Lords has referred a questionto the Court of Justice for a preliminary ruling as to whether anti-suit injunctions to giveeffect to arbitration agreements are compat-ible with Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and therecognition and enforcement of judgments incivil and commercial matters (Regulation No 44/2001). 2

2. In its judgment in Turner 3 the Court has already held, in a different context, that theBrussels Convention 4 precludes anti-suit

1 — Original language: German. 2 — OJ 2001 L 12, p. 1. 3 — Case C-159/02 Turner [2004] ECR I-3565. 4 — Brussels Convention on Jurisdiction and the Enforcement of

Judgments in Civil and Commercial Matters of 27 September1968, as amended by the Convention of 9 October 1978 on theAccession of Denmark, Ireland and the United Kingdom ofGreat Britain and Northern Ireland (OJ 1978 L 304, p. 1, and —amended text — p. 77), by the Convention of 25 October 1982on the Accession of the Hellenic Republic (OJ 1982 L 388, p. 1)and by the Convention of 26 May 1989 concerning the accession of the Kingdom of Spain and the Portuguese Republic (OJ 1989 L 285, p, 1).

injunctions. In that case a party to proceed-ings pending before a national court of the United Kingdom was restrained from commencing or continuing proceedingsbefore the courts of another Member State. Now the Court must decide whether anti-suit injunctions are also impermissible when made in support of arbitral proceedings.

3. In the United Kingdom, courts have continued to issue anti-suit injunctions sincethe judgment in Turner when, in their view, a party is bringing proceedings before a court ofanother Member State in breach of an arbitration agreement under which the arbi-tral seat is the United Kingdom. 5 They are of the opinion that the judgment in Turner is not incompatible with that practice, since Regula-tion No 44/2001 does not apply to arbitration.

5 — See Through Transport Mutual Assurance Association (Eurasia) Ltd v India Assurance Co Ltd [2005] 1 Lloyd’s Rep 67.

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II — Legal framework

A — New York Convention

4. All the Member States of the EuropeanCommunity are parties to the New York Convention on the Recognition and Enforce-ment of Foreign Arbitral Awards of 10 June1958 (‘New York Convention’). 6

5. Article I(1) of the New York Conventionlays down its scope of application:

‘This Convention shall apply to the recogni-tion and enforcement of arbitral awards made in the territory of a State other than the Statewhere the recognition and enforcement of such awards are sought, and arising out ofdifferences between persons, whether physical or legal…’

6 — United Nations Convention on the Recognition and Enforce-ment of Foreign Arbitral Awards, New York, 10 June 1958,United Nations Treaty Series (UNTS), Volume 330, p. 3. Forlist of Contracting States see:www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html.

6. Article II of the New York Convention provides:

‘1. Each Contracting State shall recognise anagreement in writing under which the partiesundertake to submit to arbitration all or anydifferences which have arisen or which mayarise between them in respect of a definedlegal relationship, whether contractual or not,concerning a subject matter capable of settle-ment by arbitration.

…

3. The court of a Contracting State, whenseised of an action in a matter in respect ofwhich the parties have made an agreementwithin the meaning of this article, shall, at therequest of one of the parties, refer the partiesto arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.’

7. Article V of the New York Convention governs the recognition and enforcement ofarbitral awards, in particular the conditionsunder which the recognition and enforcementof an arbitral award may, exceptionally, berefused. Those conditions include, inter alia, the incapacity of one of the parties to thearbitration agreement under the law

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governing the person, the invalidity of the 15. arbitration agreement under the proper law ofthe contract or under the law of the countrywhere the award was made, infringement ofthe basic principle of due process under thelaw of the country in which the arbitrationproceedings took place and the fact that theaward goes beyond the scope of the arbitra-tion agreement. In addition recognition andenforcement may be refused if, under the lawof the country in which the arbitral award is tobe recognised and enforced, the subject-matter of the difference is not capable of settlement by arbitration or recognition orenforcement would be contrary to the publicpolicy of that country.

16.

B — Regulation No 44/2001

8. Recitals 14, 15, 16 and 25 in the preambleto Regulation No 44/2001 read as follows:

…

‘14. The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to 25. determine the courts having jurisdic-tion is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regula-tion.

In the interests of the harmonious administration of justice it is neces-sary to minimise the possibility of concurrent proceedings and to ensurethat irreconcilable judgments will notbe given in two Member States. Theremust be a clear and effective mechanism for resolving cases of lis pendens and related actions. …

Mutual trust in the administration of justice in the Community justifiesjudgments given in a Member Statebeing recognised automaticallywithout the need for any procedureexcept in cases of dispute.

Respect for international commit-ments entered into by the MemberStates means that this Regulationshould not affect conventions relatingto specific matters to which the Member States are parties.’

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9. Article 1 of the Regulation governs its …scope as follows:

‘1. This Regulation shall apply in civil andcommercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or adminis-trative matters.

2. The Regulation shall not apply to:

…

(d) arbitration.’

10. Article 5 of the Regulation specifies thecourts having jurisdiction in respect of tort:

‘A person domiciled in a Member State may, inanother Member State, be sued:

3. in matters relating to tort, delict or quasi-delict, in the courts for the place wherethe harmful event occurred or may occur;

…’

11. Reference should also be made to the rules of the Regulation aimed at preventingconflicting decisions. Article 27 of the Regula-tion governs cases of lis pendens:

‘Where proceedings involving the same causeof action and between the same parties arebrought in the courts of different MemberStates, any court other than the court firstseised shall of its own motion stay its proceedings until such time as the jurisdictionof the court first seised is established.’

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12. In addition, Article 28 of the Regulation C — Applicable national law provides for the prevention of irreconcilablejudgments in respect of related actions:

‘1. Where related actions are pending in thecourts of different Member States, any courtother than the court first seised may stay itsproceedings.

2. Where these actions are pending at firstinstance, any court other than the court firstseised may also, on the application of one ofthe parties, decline jurisdiction if the courtfirst seised has jurisdiction over the actions inquestion and its law permits the consolidationthereof.

3. For the purposes of this Article, actions aredeemed to be related where they are so closelyconnected that it is expedient to hear anddetermine them together to avoid the risk ofirreconcilable judgments resulting from sepa-rate proceedings.’

13. In English law the legal basis for anti-suitinjunctions is Section 37(1) of the SupremeCourt Act 1981, which reads: ‘The High Courtmay by order (whether interlocutory or final)grant an injunction … in all cases in which it appears to the court to be just and convenientto do so.’ Regarding anti-suit injunctions insupport of arbitration agreements, it is clearfrom Section 44(1) and (2)(e) of the Arbitra-tion Act 1996 that the national courts have the same power of making orders as they have incourt proceedings.

14. Anti-suit injunctions are directed againstactual or potential claimants in proceedingsabroad. Such parties are restrained from commencing or continuing proceedings before the foreign court. Non-compliancewith an anti-suit injunction is a contempt ofcourt, for which serious penalties can be imposed, including imprisonment or seizureof assets situated in the United Kingdom. Inaddition there is a risk that the United Kingdom courts will not recognise and enforce judgments delivered abroad in breach of an anti-suit injunction. 7

7 — See Toepfer International GmbH v Molino Boschi (Q.B.D) [1996] 1 Lloyd’s Rep 510, [1996] C.L.C 738, [1997] I.L.Pr. 133;Philip Alexander Securities and Futures Limited v Bamberger(Court of Appeal) [1997] I.L.Pr. 73; [1996] C.L.C 1757.

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III — Facts, the reference for a preli-minary ruling and proceedings before theCourt of Justice

15. In August 2000 the Front Comor, a vesselowned by West Tankers Inc and chartered toErg Petroli SpA, collided with a jetty owned byErg Petroli in Syracuse (Italy) and caused damage. The charterparty contained an arbi-tration agreement providing that all disputesarising from the contract were to be dealt withby an arbitral body in London. Further it wasagreed that English law was applicable to thecontract.

16. Riunione Adriatica di Sicurtà SpA, since1 October 2007 Allianz SpA, and GeneraliAssicurazioni Generali (‘Allianz and Others’)had insured Erg Petroli and paid compensa-tion for the damage arising from the collisionup to the limit of the insurance cover. Erg Petroli claimed damages against West Tankers for its uninsured losses in arbitration proceedings in London.

17. On 30 July 2003 Allianz and Others commenced proceedings against West Tankers before a court in Syracuse to recover the amounts which they had paidErg Petroli under the insurance policies. Theissues of liability in the court proceedings inItaly are essentially the same as those in the

arbitration proceedings. The main question inboth cases is whether West Tankers can relyon the exclusion from liability for navigation errors in clause 19 of the charterparty or under the so-called Hague Rules. 8

18. On 10 September 2004 West Tankers commenced proceedings in the High Court ofthe United Kingdom against Allianz and Others, seeking a declaration that the dispute which was the subject-matter of theproceedings in Syracuse arose out of the charterparty and that Allianz and Others, who were claiming by right of subrogation, were therefore bound by the arbitration agreement. West Tankers also applied for aninjunction to restrain Allianz and Others fromtaking any further steps in relation to the dispute except by way of arbitration and, inparticular, requiring them to discontinue theproceedings in Syracuse.

19. The High Court referred to the fact that,according to the case-law of the Court of Appeal, 9 the judgment in Turner did not preclude anti-suit injunctions in support ofarbitration agreements and granted the appli-cations.

8 — International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Brussels, 25 August 1924), amended by the Protocol to Amend the International Convention for the Unification of Certain rules of Law relatingto Bills of Lading (Visby Rules) (Brussels, 23 February 1968) and the Protocol amending the Convention, as amended by theProtocol of 23 February 1968 (Brussels, 21 December 1979)(UNTS Vol. 1412, p. 127 [No 23643]).

9 — Through Transport Mutual Insurance Association (Eurasia)Ltd v New India Assurance Co Ltd [2005] 1 Lloyd’s Rep 67.

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20. By order of 21 February 2007 the House ofLords, before which an appeal against thatdecision was brought, referred the followingquestion to the Court for a preliminary ruling:

‘Is it consistent with Regulation (EC)No 44/2001 for a court of a Member State tomake an order to restrain a person from commencing or continuing proceedings in another Member State on the ground thatsuch proceedings are in breach of an arbitra-tion agreement?’

21. In the proceedings before the Court observations were submitted by the partiesto the main proceedings, the French Govern-ment, the United Kingdom Government andthe Commission of the European Commu-nities.

IV — The question referred for a preli-minary ruling

22. By the question which it has referred for apreliminary ruling, the House of Lords wishesto clarify, in connection with the judgment inTurner, whether anti-suit injunctions are alsoincompatible with Regulation No 44/2001 ifthey are granted in relation to a dispute whichthe parties have made subject to arbitration.

A — The judgment in Turner

23. In Turner the Court held that the Brussels Convention precludes the imposition of ananti-suit injunction in connection with proceedings before the court of another Member State, even where the proceedingsabroad are brought by a party in bad faith witha view to frustrating the existing proceedings.

24. In the grounds of that judgment, theCourt relies, essentially, on the principle ofmutual trust which underpins the system ofthe Convention. 10 It states:

‘At the outset, it must be borne in mind that the [Brussels] Convention is necessarily based on the trust which the Contracting States accord to one another’s legal systems and judicial institutions. It is that mutual trust which has enabled a compulsory system ofjurisdiction to be established, which all thecourts within the purview of the Conventionare required to respect, and as a corollary thewaiver by those States of the right to apply

10 — See in particular recital 16 in the preamble to RegulationNo 44/2001 (cited in paragraph 8 of this Opinion).

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their internal rules on recognition and en-forcement of foreign judgments in favour of asimplified mechanism for the recognition andenforcement of judgments.’ 11

25. In that connection the Court cited the judgment in Gasser 12 in which it had to answer the question whether a court secondseised must stay proceedings on account of lis pendens in another Contracting State pursuant to Article 21 of the Brussels Convention (corresponding to Article 27 ofRegulation No 44/2001) even where, in theview of the court seised subsequently, thecourt first seised clearly has no jurisdiction onaccount of an agreement conferring jurisdic-tion. Even if the proceedings to determinejurisdiction before the court first seised arevery protracted and may have been broughtthere only in order to delay proceedings, theCourt refused to make exceptions to the lis pendens rule. The court first seised must examine its jurisdiction itself. Only if that court declines jurisdiction may the court seised subsequently continue the proceedingspending before it. 13

26. Also in the judgment in Turner the Court points out that the Convention does not permit — apart from the exceptions referredto in the first paragraph of Article 28 — a court to review the jurisdiction of a court of anotherContracting State. 14 If a party is restrainedfrom commencing or continuing proceedingsbefore a court of another Contracting Party by

11 — Turner (cited in footnote 3, paragraph 24).12 — Case C-116/02 Gasser [2003] ECR I-14693, paragraph 72.13 — Gasser (cited in footnote 12, paragraphs 54 and 73).14 — Turner (cited in footnote 3, paragraphs 25 and 26).

an anti-suit injunction, that constitutes inter-ference with that court’s jurisdiction which isincompatible with the system of the Conven-tion and impairs its effectiveness. 15 The fact that that injunction is addressed to the defendant and not directly to the foreign court is irrelevant. 16

B — Compatibility with RegulationNo 44/2001 of anti-suit injunctions to giveeffect to an arbitration agreement

27. The crucial question in the present case iswhether the principles set out in Turner can be applied to anti-suit injunctions in supportof arbitration proceedings.

28. The fact that the basis of the judgment inTurner was the Brussels Convention, whereas Regulation No 44/2001 is applicable, ratione temporis, to the present case, is no hindrance. The regulation is intended to update the Convention, while adhering to its structureand basic principles 17 and ensuring its con-

15 — Turner (cited in footnote 3, paragraphs 27 and 29). 16 — Turner (cited in footnote 3, paragraph 28). 17 — Commission Proposal of 14 July 1999 for a Council

Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters(COM(1999) 348 final, OJ 1999 C 376 E, p. 1, points 2.1and 4.1).

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tinuity. 18 The provisions characteristic of the system’s arrangements and the principle ofmutual trust on which that system is basedtherefore remain essentially the same. 19

29. In particular, however, nothing has changed regarding the exclusion of arbitra-tion from the scope of application of the Brussels Convention or the Regulation. 20 In defining ‘arbitration’, reference may thereforebe made to the travaux préparatoires for theConvention, as well as to the case-law of the Court in that regard.

30. It is specifically because of the exclusionof arbitration from the scope of RegulationNo 44/2001 in Article 1(2)(d) that the Houseof Lords takes the view that the Turner case-law cannot be applied to the present case. Inthat case the Court expressly related the principle of mutual trust to proceedingswithin the scope of the Convention. Arbitra-tion includes not only arbitration proceedingsthemselves and the recognition and enforce-ment of arbitral awards but also all national

18 — See recital 19 in the preamble to Regulation No 44/2001. 19 — In the judgments it has delivered so far concerning

Regulation No 44/2001 the Court has thus simply referredto its case-law on the Brussels Convention, in so far as theprovisions remain unchanged (See Case C-103/05 Reisch Montage [2006] ECR I-6827, paragraph 22, and Case C-98/06 Freeport [2007] ECR I-8319, paragraphs 23 and 39). On theother hand, however, in Case C-462/06 Glaxosmithkline and Others [2008] ECR I-3965, paragraph 15 et seq.), it did not doso, since the applicable provisions on contracts of employ-ment have changed.

20 — Article 1(2)(d) of Regulation No 44/2001.

court proceedings in which the subject-matter is arbitration. As anti-suit injunctionssupport the conduct of arbitration proceed-ings, it argues that proceedings seeking theissue of such injunctions are covered by theexception in Article 1(2)(d) of Regulation No 44/2001.

1. The exclusion of arbitration from the scopeof application of Regulation No 44/2001

31. Before defining the term ‘arbitration’ in Article 1(2)(d) of Regulation No 44/2001, it is necessary to clarify in relation to which proceedings the scope of application of theregulation is to be determined more specific-ally.

32. The House of Lords, West Tankers and the United Kingdom Government lay emphasis on the proceedings pending in England for the issue of an anti-suit injunc-tion. They assume that those proceedingscannot be contrary to the regulation sincethey fall within the arbitration exception. 21 On

21 — In defining ‘arbitration’ the House of Lords refers to Case C-190/89 Rich [1991] ECR I-3855, and Case C-391/95 Van Uden [1998] ECR I-7091.

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the other hand, the national court appears toregard as irrelevant the effect of the anti-suitinjunction on the proceedings before the court in Syracuse.

principle of mutual trust can also be infringedby a decision of a court of a Member Statewhich does not fall within the scope of theregulation obstructing the court of anotherMember State from exercising its competenceunder the regulation.

33. That view is surprising, since in Turner the Court found that the effect of an anti-suit injunction on the foreign proceedingsinfringed the Brussels Convention, even if itwere assumed that the anti-suit injunction, asa measure of a procedural nature, was a matterof national law alone. 22 Accordingly, the decisive question is not whether the applica-tion for an anti-suit injunction — in this case, the proceedings before the English courts —falls within the scope of application of theRegulation, but whether the proceedings against which the anti-suit injunction is directed — the proceedings before the court in Syracuse — do so.

34. Nor is it a prerequisite of infringement ofthe principle of mutual trust, on which thejudgment in Turner was substantially based, that both the application for an anti-suit injunction and the proceedings which wouldbe barred by that injunction should fall withinthe scope of the regulation. Rather, the

22 — See Turner (cited in footnote 3, paragraph 29).

35. The national authorities of a Member State may not impair the practical effective-ness of Community law when they exercise acompetence which, for its part, is not governed by Community law. 23 That corre-sponds for instance to a consistent line ofcases in which it has been held that national tax legislation must observe the fundamentalfreedoms, even though direct taxation fallswithin the competence of the Member States. 24

36. In respect of the Brussels Convention theCourt has also already confirmed, in its judgment in Hagen, that the application ofnational procedural rules — specifically theconditions governing the admissibility of anaction — may not impair the effectiveness ofthe Convention. 25 In that regard it is irrelevantthat the provisions at issue in Hagen were of

23 — See Turner (cited in footnote 3, paragraph 29). 24 — See inter alia Case C-446/03 Marks and Spencer [2005]

ECR I-10837, paragraph 29; Case C-196/04 Cadbury Schweppes and Cadbury Schweppes Overseas [2006] ECR I-7995, paragraph 40; and Case C-374/04 Claimaints in Class IV of the ACT Group Litigation [2006] ECR I-11673, para-graph 36).

25 — Case C-365/88 Hagen [1990] ECR I-1845, paragraph 20. See also Turner (cited in footnote 3, paragraph 29).

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national origin and from the outset certainly stood in that broad sense, as discussed in the did not fall within the scope of the Brussels report prepared by Professor Dr P. SchlosserConvention, whereas arbitration is merely on the accession of Denmark, Ireland and the excluded from the scope of application of the United Kingdom: Regulation.

37. It is more important whether the Regula-tion applies to the action against which theanti-suit injunction is directed — thus, in this case, the action pending in Syracuse. Shouldthat not be the case, the effectiveness of the Regulation could not be impaired by the anti-suit injunction.

38. The House of Lords, West Tankers and the United Kingdom Government are of theview that, where the parties have contractuallyagreed to settle disputes arising from a contract exclusively by arbitration, that legalrelationship is completely removed from theoutset from the national courts, apart fromthe courts at the arbitral seat. Should that view be correct, an anti-suit injunction which has an impact on national court proceedingscannot in fact be assessed under the criteria of the Regulation.

39. It has always been a matter of disputebetween the Anglo-Saxon and the continentalEuropean schools of law whether the exclu-sion of arbitration should, though, be under-

‘Two divergent basic positions which it wasnot possible to reconcile emerged from thediscussion on the interpretation of the rele-vant provisions of Article 1, second para-graph, point (4) [of the Brussels Convention].The point of view expressed principally onbehalf of the United Kingdom was that thisprovision covers all disputes which the partieshad effectively agreed should be settled byarbitration, including any secondary disputesconnected with the agreed arbitration. The other point of view, defended by the originalMember States of the EEC, only regardsproceedings before national courts as part of“arbitration” if they refer to arbitration proceedings, whether concluded, in progressor to be started.’ 26

40. Those divergent views can have an effecton the recognition and enforcement of judg-ments which, in the opinion of a court of a

26 — P. Schlosser, Report on the Convention on the Association ofthe Kingdom of Denmark, Ireland and the United Kingdomof Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgments in civil andcommercial matters and to the Protocol on its interpretationby the Court of Justice (OJ 1979 C 59, p. 71 paragraph 61). Seealso the Opinion of Advocate General Darmon in Case C-190/89 Rich [1991] ECR I-3855, paragraph 23, and theOpinion of Advocate General Léger in Van Uden, cited above in footnote 21, paragraph 40 et seq.

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Member State in which recognition is sought,have been delivered in disregard of an arbitration clause. 27 In addition they affectoverall the issue of who has jurisdiction toexamine the effectiveness and scope of thearbitration clause.

41. According to the view favoured by theHouse of Lords, only the arbitral body itselfand the national courts at the seat of arbitra-tion, which support its activities, have juris-diction to answer that question. The HighCourt therefore not only issued the anti-suitinjunction in the dispute in the main proceed-ings here, but also found that the dispute arosefrom the charterparty. Further, it affirmed thatthe insurance companies, which were not themselves parties to the contract but wereclaiming by right of subrogation under thecontract, were bound by the arbitration clause.

42. According to the continental Europeanapproach, it depends, however, on whetherthe claim for damages falls, in principle,within the scope of Regulation No 44/2001and whether the Syracuse court — subject to the arbitration plea — has jurisdiction as theplace in which the harmful event occurred inaccordance with Article 5(3). If the defendantlegitimately invokes the arbitration clause inthose proceedings, the court would be obligedin principle under Article II(3) of the NewYork Convention to refer the dispute to thearbitral body.

27 — See Schlosser Report (cited in footnote 26, paragraph 62).

43. The crucial difference between the two approaches is therefore that the arbitrationexception is understood broadly in the firstview: as soon as it is claimed that there is an arbitration agreement, all disputes arisingfrom the legal relationship are subject exclu-sively to arbitration, irrespective of the substantive subject-matter. Only the arbitralbody and the courts at the seat of arbitrationare entitled to examine jurisdiction.

44. The opposite view takes account first andforemost of the substantive subject-matter. Ifthat subject-matter falls within RegulationNo 44/2001, a court which in principle hasjurisdiction thereunder is entitled to examinewhether the exception under Article 1(2)(d)applies and, according to its assessment of theeffectiveness and applicability of the arbitra-tion clause, to refer the case to the arbitral body or adjudicate on the matter itself.

45. The wording of Article 1(2)(d) of Regula-tion No 44/2001 does not give any clear indication as to which interpretation shouldbe preferred. It can be concluded from the useof the term ‘arbitration’, however, that that means not only the actual arbitration proceedings but also related proceedingsbefore the national courts can be excluded from the scope of the regulation.

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46. Recourse to the travaux préparatoires forthe previous version of the provision in theBrussels Convention confirm that view. The Jenard Report 28 and the Evrigenis and Kera-meus Report 29 explain the reasons for the exclusion of arbitration from the scope of theBrussels Convention, although the EC Treatyreferred to arbitration in the former Article 220 (now the second indent of Article 65(a)). Accordingly, the arbitration exception was included in Article 1(2)(4) ofthe Brussels Convention in order to complywith international agreements already existing in this area — in particular, the New York Convention.

47. The New York Convention lays down rules which must be respected not by thearbitrators themselves but by the courts of theStates in question, for example, rules relatingto agreements whereby parties refer a disputeto arbitration or on the recognition and enforcement of arbitral awards by the courtsof a Contracting State. As the wording alsosuggests, the parties to the Brussels Conven-tion thus wished to exclude arbitration in its entirety, over and above the actual arbitrationproceedings, including proceedings broughtbefore the national courts which are related to arbitration. 30

28 — P. Jenard, Report on the Convention on jurisdiction and theenforcement of judgments in civil and commercial matters of27 September 1968, and the enforcement of authentic instruments, OJ 1979 C 59, p, 1, Chapter 3, IV D.

29 — Evrigenis and Kerameus Report on the Accession of theHellenic Republic to the Community Convention on Jurisdiction and the enforcement of Judgments in Civil andCommercial Matters (OJ 1986 C 298, p. 1), 10, paragraph 35.

30 — Rich (cited in footnote 21, paragraph 18) and Van Uden (cited in footnote 21, paragraph 31).

48. In the Schlosser Report 31 the followingcases are given as examples: the appointmentor dismissal of arbitrators, the fixing of theplace of arbitration or the extension of thetime-limit for making awards. In the same waya judgment determining whether an arbitra-tion agreement is valid or not, or because it isinvalid, ordering the parties not to continuethe arbitration proceedings, is not covered bythe Brussels Convention. Nor does the Brussels Convention cover proceedings anddecisions concerning applications for the revocation, amendment, recognition and enforcement of arbitral awards. 32

49. In contrast, concerning such proceedingswhich deal with arbitration, Evrigenis and Kerameus state in their report: 33

‘However, the verification, as an incidental question, of the validity of an arbitration agreement which is cited by a litigant in orderto contest the jurisdiction of the court beforewhich he is being sued pursuant to the Convention, must be considered as falling within its scope.’

31 — Schlosser Report (cited in footnote 26, paragraph 61). 32 — Schlosser Report (cited in footnote 26, paragraph 64 et seq.). 33 — Cited in footnote 29, paragraph 35.

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50. The Court took up that distinction within the scope of the Convention or between the subject-matter of proceedings Regulation No 44/2001 must therefore be and preliminary issues in the judgment in determined from the substantive subject-Rich: 34 matter of the dispute. 36

‘In order to determine whether a dispute fallswithin the scope of the Convention, referencemust be made solely to the subject-matter ofthe dispute. If, by virtue of its subject-matter,such as the appointment of an arbitrator, adispute falls outside the scope of the Conven-tion, the existence of a preliminary issue which the court must resolve in order to determine the dispute cannot, whatever thatissue may be, justify application of the Convention.’

51. In that specific case, the defendant hadcontended that in fact the preliminary issue asto whether a valid arbitration agreement exists was decisive. In the Court’s view, it is, however, contrary to the principle of legalcertainty for the applicability of the exclusionto vary according to the existence or otherwiseof a preliminary issue, which might be raisedat any time by the parties. 35

52. As the Court confirmed in its judgment inVan Uden, whether or not proceedings fall

34 — Rich (cited in footnote 21, paragraph 26). 35 — Rich (cited in footnote 21, paragraph 27).

53. In the dispute before the court in Syracuse, Allianz and Others are claiming damages by right of subrogation for loss caused to the insured party, Erg Petroli, following a collision between Front Comorand the jetty. The subject-matter is therefore aclaim in tort (possibly also in contract) fordamages, which falls within the scope of Regulation No 44/2001, and not arbitration.

54. The existence and applicability of the arbitration clause merely constitute a preli-minary issue which the court seised must address when examining whether it has jurisdiction. Even if the view were taken thatthat issue fell within the ambit of arbitration, 37

as a preliminary issue it could not change theclassification of the proceedings, the subject-

36 — Van Uden (cited in footnote 21, paragraphs 33 and 34). 37 — In Rich, the defendant had in fact argued that the

corresponding preliminary issue fell within the scope of theConvention and caused the proceedings as a whole to beincluded. The Court did not decide the classification of the preliminary issue in the end because it was immaterial tothe inclusion of the proceedings within or exclusion of the proceedings from the scope of the Convention.

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matter of which falls within the scope of the — the court seised does not find that that Regulation. 38 It can be left undecided here agreement is null and void, inoperative orhow proceedings which concern similar find- incapable of being performed. ings in the main case should be evaluated. 39

55. Incidentally, it is consistent with the NewYork Convention for a court which has jurisdiction over the subject-matter of the proceedings under Regulation No 44/2001 toexamine the preliminary issue of the existenceand scope of the arbitration clause itself. Article II(3) of the New York Convention requires national courts to refer the parties toarbitration only under three conditions:

— the subject-matter of the dispute is actually capable of settlement by arbitra-tion. If that is not the case, under Article II(1) of the New York Convention theContracting State (and its courts) are notrequired to recognise the arbitration agreement;

— the court of a Contracting State is seisedof an action in a matter in respect ofwhich the parties have made an agree-ment within the meaning of that article;

38 — See, to that effect, Rich (cited in footnote 21, paragraph 27). 39 — The Schlosser Report (cited in footnote 26, paragraph 64)

states in that regard: ‘In the same way a judgmentdetermining whether an arbitration agreement is valid ornot, or because it is invalid, ordering the parties not tocontinue the arbitration proceedings, is not covered by the1968 Convention.’ That passage is cited by the Court in Van Uden (cited in footnote 21, paragraph 32).

56. Every court seised is therefore entitled,under the New York Convention, before referring the parties to arbitration to examine those three conditions. It cannot be inferred from the Convention that that entitlement is reserved solely to the arbitralbody or the national courts at its seat. As theexclusion of arbitration from the scope of Regulation No 44/2001 serves the purpose ofnot impairing the application of the New YorkConvention, the limitation on the scope of theRegulation also need not go beyond what isprovided for under that Convention.

57. In its judgment in Gasser the Court recognised that a court second seised shouldnot anticipate the examination as to jurisdic-tion by the court first seised in respect of thesame subject-matter, even if it is claimed thatthere is an agreement conferring jurisdictionin favour of the court second seised. 40 As the Commission correctly explains, from that may be deduced the general principle thatevery court is entitled to examine its ownjurisdiction (doctrine of Kompetenz-Kompe-tenz). The claim that there is a derogating

40 — Gasser (cited in footnote 12, paragraph 13).

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agreement between the parties — in that case arbitration, there are no courts of any Statean agreement conferring jurisdiction, here an that have jurisdiction as to the substance ofarbitration agreement — cannot remove that the case for the purposes of the Brussels entitlement from the court seised. Convention. 42

58. That includes the right to examine thevalidity and scope of the agreement put forward as a preliminary issue. If the court were barred from ruling on such preliminaryissues, a party could avoid proceedings merelyby claiming that there was an arbitration agreement. At the same time a claimant whohas brought the matter before the court because he considers that the agreement isinvalid or inapplicable would be denied accessto the national court. That would be contraryto the principle of effective judicial protectionwhich, according to settled case-law, is a general principle of Community law and oneof the fundamental rights protected in theCommunity. 41

59. There is no indication otherwise in Van Uden. In that case the Court had to give aruling regarding jurisdiction in respect of interim measures in a case which had been referred to arbitration in the main proceed-ings. In that context the Court stated that, where the parties have excluded the jurisdic-tion of the courts in a dispute arising under acontract and have referred that dispute to

41 — Case C-222/84 Johnston [1986] ECR 1651, paragraphs 18 and 19; Case C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677, paragraph 39; and Case C-432/05 Unibet [2007] ECR I-2271, paragraph 37. On the fundamental safeguarding of effective judicial protection, see Articles 6and 13 of the European Convention for the Protection ofHuman Rights and Fundamental Freedoms (signed in Romeon 4 November 1950) and Article 47(1) of the Charter ofFundamental Rights of the European Union (proclaimed inNice on 7 December 2000, OJ 2000 C 364, p. 1).

60. That statement is certainly correct. Thejustification for the exclusive jurisdiction ofthe arbitral body specifically requires,however, an effective arbitration agreementcovering the subject-matter concerned. It cannot be inferred from the judgment in Van Uden that examination of preliminaryissues relating thereto is removed from thenational courts.

61. It is also not obvious why such examin-ation should be reserved to the arbitral bodyalone, as its jurisdiction depends on the effectiveness and scope of the arbitration agreement in just the same way as the jurisdiction of the court in the other Member State. The fact that the law of the arbitral seat has been chosen as the law applicable to the contract cannot confer onthe arbitral body an exclusive right to examinethe arbitration clause. The court in the other Member State — here the court in Syracuse —is in principle in a position to apply foreignlaw, which is indeed often the case under private international law.

42 — Van Uden (cited in footnote 21, paragraph 24).

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62. Finally it should be emphasised that alegal relationship does not fall outside the scope of Regulation No 44/2001 simply because the parties have entered into an arbitration agreement. Rather the Regulationbecomes applicable if the substantive subject-matter is covered by it. The preliminary issueto be addressed by the court seised as to whether it lacks jurisdiction because of anarbitration clause and must refer the disputeto arbitration in application of the New YorkConvention is a separate issue. An anti-suitinjunction which restrains a party in that situation from commencing or continuing proceedings before the national court of a Member State interferes with proceedingswhich fall within the scope of the Regulation.

2. Can considerations regarding the practicalreality of arbitration proceedings constitutejustification?

63. In the view of the House of Lords, above all the practical reality of arbitration proceed-ings as a method of resolving commercial disputes requires the English courts to be ableto grant anti-suit injunctions in support ofarbitration.

64. The House of Lords states in addition that national courts must respect the autonomousdecision of the parties to refer disputes toprivate arbitration. The parties wished to avoid becoming involved in protractedproceedings before national courts. In their

choice of the place of arbitration people engaged in commerce will have regard to whether the courts there have effective remedies in support of arbitration at their disposal. The other Member States are at liberty to give their courts similar tools toenhance their attractiveness as a seat of arbitration.

65. Finally, the House of Lords refers to thecompetitive disadvantage with which Londonwould be threatened, as compared to otherinternational seats of arbitration such as New York, Bermuda and Singapore, if Englishcourts could no longer issue anti-suit injunc-tions, unlike the courts of those places.

66. To begin with it must be stated that aimsof a purely economic nature cannot justifyinfringements of Community law. 43 On the other hand, in the interpretation of the Regulation account can be had to the obser-vance of the principle of autonomy, as theCourt has stressed in connection with agree-ments conferring jurisdiction 44 and as recital 14 in the preamble to the Regulation empha-sises in that context. Even if arbitration —unlike agreements conferring jurisdiction —does not fall within the scope of the Regula-

43 — See, as regards restrictions on the fundamental freedoms:Case C-288/89 Gouda [1991] ECR I-4007, paragraph 10; Case C-158/96 Kohll [1998] ECR I-1931, paragraph 41; and Case C-109/04 Kranemann [2005] ECR I-2421, paragraph 34).

44 — See Case C-23/78 Meeth [1978] ECR 2133, paragraph 5, and Case C-387/98 Coreck [2000] ECR I-9337, paragraph 14.

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tion, the background to the provision shows,nevertheless, that the international rules on arbitration should not be interfered with byRegulation No 44/2001. 45

67. The interpretation advanced here respects individual autonomy, however, andalso does not call into question the operationof arbitration. Proceedings before a nationalcourt outside the place of arbitration will result only if the parties disagree as to whetherthe arbitration clause is valid and applicable tothe dispute in question. In that situation it isthus in fact unclear whether there is consensus between the parties to submit aspecific dispute to arbitration.

68. If it follows from the national court’s examination that the arbitration clause is valid and applicable to the dispute, the New YorkConvention requires a reference to arbitra-tion. There is therefore no risk of circumven-tion of arbitration. It is true that the seising ofthe national court is an additional step in theproceedings. For the reasons set out above,however, a party which takes the view that it isnot bound by the arbitration clause cannot bebarred from having access to the courts having jurisdiction under Regulation No 44/2001.

45 — See above, paragraph 46.

69. Were the national courts which may havejurisdiction not to be seised, owing to the anti-suit injunction, there is also the risk that thosecourts might later refuse to recognise and enforce the arbitral award in reliance on Article V of the New York Convention. Also from the point of view of proceduraleconomy, an anti-suit injunction may there-fore lead to unsatisfactory results.

70. It is true that the arbitral body or thenational courts at its seat, on the one hand, and the courts in another Member State which have jurisdiction under the Regulationin respect of the subject-matter of the proceedings, on the other, may reach diver-gent decisions regarding the scope of the arbitration clause. If both the arbitral bodyand the national court declare that they havejurisdiction, conflicting decisions on the merits could result, as pointed out by the House of Lords.

71. Within the scope of application of theRegulation irreconcilable decisions in two Member States should be avoided as far as possible. In cases of conflict of jurisdictionbetween the national courts of two Member

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States, Articles 27 and 28 of RegulationNo 44/2001 ensure that there is coordination,as particularly noted by the French Govern-ment. However, since arbitration does not come within the scope of the Regulation, atpresent there is no mechanism to coordinateits jurisdiction with the jurisdiction of the national courts.

72. A unilateral anti-suit injunction is not,however, a suitable measure to rectify thatsituation. In particular, if other Member Stateswere to follow the English example and alsointroduce anti-suit injunctions, reciprocal injunctions would ensue. Ultimately the jurisdiction which could impose higher pen-

alties for failure to comply with the injunctionwould prevail.

73. Instead of a solution by way of such coercive measures, a solution by way of law iscalled for. In that respect only the inclusion ofarbitration in the scheme of Regulation No 44/2001 could remedy the situation. Until then, if necessary, divergent decisionsmust be accepted. However it should once more be pointed out that these cases are exceptions. If an arbitration clause is clearlyformulated and not open to any doubt as to itsvalidity, the national courts have no reasonnot to refer the parties to the arbitral bodyappointed in accordance with the New YorkConvention.

V — Conclusion

74. On the basis of the above considerations, I propose that the question referred by theHouse of Lords should be answered as follows:

Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and therecognition and enforcement of judgments in civil and commercial matters precludes acourt of a Member State from making an order restraining a person from commencing

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or continuing proceedings before the courts of another Member State because, in theopinion of the court, such proceedings are in breach of an arbitration agreement.

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v



10 February 2009 *

In Case C-185/07,

REFERENCE for a preliminary ruling under Articles 68 EC and 234 EC from the Houseof Lords (United Kingdom), made by decision of 28 March 2007, received at the Courton 2 April 2007, in the proceedings

Allianz SpA, formerly Riunione Adriatica di Sicurtà SpA,

Generali Assicurazioni Generali SpA,

West Tankers Inc.,

* Language of the case: English.

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composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaertsand A. Ó Caoimh, Presidents of Chambers, P. Kūris, E. Juhász, G. Arestis, A. Borg Barthet, J. Klučka (Rapporteur), E. Levits and L. Bay Larsen, Judges,

Advocate General: J. Kokott,Registrar: K. Sztranc-Sławiczek, Administrator,

having regard to the written procedure and further to the hearing on 10 June 2008,

after considering the observations submitted on behalf of:

— Allianz SpA, formerly Riunione Adriatica di Sicurtà SpA, and Generali Assicurazioni Generali SpA, by S. Males QC and S. Masters, Barrister,

— West Tankers Inc., by I. Chetwood, Solicitor, and T. Brenton and D. Bailey, Barristers,

— the United Kingdom Government, by V. Jackson and S. Behzadi-Spencer, acting asAgents, and V. Veeder and A. Layton QC,

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— the French Government, by G. de Bergues and A.-L. During, acting as Agents,

— the Commission of the European Communities, by A.-M. Rouchaud-Joët and M. Wilderspin, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 4 September 2008,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognitionand enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1).

2 The reference was made in the context of proceedings between, on the one hand,Allianz SpA, formerly Riunione Adriatica di Sicurtà SpA, and Generali AssicurazioniGenerali SpA (‘Allianz and Generali’) and, on the other, West Tankers Inc. (‘West Tankers’) concerning West Tankers’ liability in tort.

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Legal context

International law

3 The Convention on the Recognition and Enforcement of Foreign Arbitral Awards,signed in New York on 10 June 1958 (United Nations Treaty Series, Vol. 330, p. 3) (‘the New York Convention’), provides as follows in Article II(3):

‘The court of a Contracting State, when seised of an action in a matter in respect ofwhich the parties have made an agreement within the meaning of this article, shall, atthe request of one of the parties, refer the parties to arbitration, unless it finds that thesaid agreement is null and void, inoperative or incapable of being performed.’

Community law

4 According to recital 25 in the preamble to Regulation No 44/2001:

‘Respect for international commitments entered into by the Member States means thatthis Regulation should not affect conventions relating to specific matters to which theMember States are parties.’

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5

6


Article 1(1) and (2) of that regulation provides:

‘1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.


…

(d) arbitration.’

Article 5 of that regulation provides:

‘A person domiciled in a Member State may, in another Member State, be sued:

…

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(3) in matters relating to tort, delict or quasi-delict, in the courts for the place where theharmful event occurred or may occur;

…’

National law

7 Section 37(1) of the Supreme Court Act 1981 provides:

‘The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to the court to be just and convenient to do so.’

8 Section 44 of the Arbitration Act 1996, entitled ‘Court powers exercisable in support of arbitral proceedings’, provides:

‘(1) Unless otherwise agreed by the parties, the court has for the purposes of and inrelation to arbitral proceedings the same power of making orders about the matterslisted below as it has for the purposes of and in relation to legal proceedings.

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9


(2) Those matters are:

…

(e) the granting of an interim injunction …’

The dispute in the main proceedings and the question referred for a preliminaryruling

In August 2000 the Front Comor, a vessel owned by West Tankers and chartered by Erg Petroli SpA (‘Erg’), collided in Syracuse (Italy) with a jetty owned by Erg and caused damage. The charterparty was governed by English law and contained a clause providing for arbitration in London (United Kingdom).

Erg claimed compensation from its insurers Allianz and Generali up to the limit of itsinsurance cover and commenced arbitration proceedings in London against WestTankers for the excess. West Tankers denied liability for the damage caused by thecollision.

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10

11


Having paid Erg compensation under the insurance policies for the loss it had suffered,Allianz and Generali brought proceedings on 30 July 2003 against West Tankers beforethe Tribunale di Siracusa (Italy) in order to recover the sums they had paid to Erg. Theaction was based on their statutory right of subrogation to Erg’s claims, in accordance with Article 1916 of the Italian Civil Code. West Tankers raised an objection of lack ofjurisdiction on the basis of the existence of the arbitration agreement.

12 In parallel, West Tankers brought proceedings, on 10 September 2004, before the HighCourt of Justice of England and Wales, Queens Bench Division (Commercial Court),seeking a declaration that the dispute between itself, on the one hand, and Allianz andGenerali, on the other, was to be settled by arbitration pursuant to the arbitrationagreement. West Tankers also sought an injunction restraining Allianz and Generalifrom pursuing any proceedings other than arbitration and requiring them to discontinue the proceedings commenced before the Tribunale di Siracusa (‘the anti-suit injunction’).

13 By judgment of 21 March 2005, the High Court of Justice of England and Wales,Queens Bench Division (Commercial Court), upheld West Tankers’claims and grantedthe anti-suit injunction sought against Allianz and Generali. The latter appealed againstthat judgment to the House of Lords. They argued that the grant of such an injunction iscontrary to Regulation No 44/2001.

14 The House of Lords first referred to the judgments in Case C-116/02 Gasser [2003] ECR I-14693 and Case C-159/02 Turner [2004] ECR I-3565, which decided in substance that an injunction restraining a party from commencing or continuingproceedings in a court of a Member State cannot be compatible with the systemestablished by Regulation No 44/2001, even where it is granted by the court havingjurisdiction under that regulation. That is because the regulation provides a complete

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set of uniform rules on the allocation of jurisdiction between the courts of the MemberStates which must trust each other to apply those rules correctly.

15 However, that principle cannot, in the view of the House of Lords, be extended toarbitration, which is completely excluded from the scope of Regulation No 44/2001 byvirtue of Article 1(2)(d) thereof. In that field, there is no set of uniform Communityrules, which is a necessary condition in order that mutual trust between the courts ofthe Member States may be established and applied. Moreover, it is clear from thejudgment in Case C-190/89 Rich [1991] ECR I-3855 that the exclusion in Article 1(2)(d)of Regulation No 44/2001 applies not only to arbitration proceedings as such, but alsoto legal proceedings the subject-matter of which is arbitration. The judgment in CaseC-391/95 Van Uden [1998] ECR I-7091 stated that arbitration is the subject-matter of proceedings where they serve to protect the right to determine the dispute by arbitration, which is the case in the main proceedings.

16 The House of Lords adds that since all arbitration matters fall outside the scope ofRegulation No 44/2001, an injunction addressed to Allianz and Generali restrainingthem from having recourse to proceedings other than arbitration and from continuingproceedings before the Tribunale di Siracusa cannot infringe the regulation.

17 Finally, the House of Lords points out that the courts of the United Kingdom have formany years used anti-suit injunctions. That practice is, in its view, a valuable tool for thecourt of the seat of arbitration, exercising supervisory jurisdiction over the arbitration,as it promotes legal certainty and reduces the possibility of conflict between thearbitration award and the judgment of a national court. Furthermore, if the practicewere also adopted by the courts in other Member States it would make the EuropeanCommunity more competitive vis-à-vis international arbitration centres such as NewYork, Bermuda and Singapore.

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18


In those circumstances, the House of Lords decided to stay its proceedings and to referthe following question to the Court for a preliminary ruling:

‘Is it consistent with Regulation No 44/2001 for a court of a Member State to make anorder to restrain a person from commencing or continuing proceedings in anotherMember State on the ground that such proceedings are in breach of an arbitrationagreement?’

The question referred for a preliminary ruling

19 By its question, the House of Lords asks, essentially, whether it is incompatible withRegulation No 44/2001 for a court of a Member State to make an order to restrain aperson from commencing or continuing proceedings before the courts of anotherMember State on the ground that such proceedings would be contrary to an arbitrationagreement, even though Article 1(2)(d) of the regulation excludes arbitration from thescope thereof.

20 An anti-suit injunction, such as that in the main proceedings, may be directed againstactual or potential claimants in proceedings abroad. As observed by the AdvocateGeneral in point 14 of her Opinion, non-compliance with an anti-suit injunction iscontempt of court, for which penalties can be imposed, including imprisonment orseizure of assets.

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21 Both West Tankers and the United Kingdom Government submit that such an injunction is not incompatible with Regulation No 44/2001 because Article 1(2)(d)thereof excludes arbitration from its scope of application.

22 In that regard it must be borne in mind that, in order to determine whether a disputefalls within the scope of Regulation No 44/2001, reference must be made solely to thesubject-matter of the proceedings (Rich, paragraph 26). More specifically, its place inthe scope of Regulation No 44/2001 is determined by the nature of the rights which theproceedings in question serve to protect (Van Uden, paragraph 33).

23 Proceedings, such as those in the main proceedings, which lead to the making of ananti-suit injunction, cannot, therefore, come within the scope of Regulation No 44/2001.

24 However, even though proceedings do not come within the scope of RegulationNo 44/2001, they may nevertheless have consequences which undermine its effectiveness, namely preventing the attainment of the objectives of unification of therules of conflict of jurisdiction in civil and commercial matters and the free movementof decisions in those matters. This is so, inter alia, where such proceedings prevent acourt of another Member State from exercising the jurisdiction conferred on it byRegulation No 44/2001.

25 It is therefore appropriate to consider whether the proceedings brought by Allianz andGenerali against West Tankers before the Tribunale di Siracusa themselves comewithin the scope of Regulation No 44/2001 and then to ascertain the effects of the anti-suit injunction on those proceedings.

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26 In that regard, the Court finds, as noted by the Advocate General in points 53 and 54 ofher Opinion, that, if, because of the subject-matter of the dispute, that is, the nature ofthe rights to be protected in proceedings, such as a claim for damages, thoseproceedings come within the scope of Regulation No 44/2001, a preliminary issueconcerning the applicability of an arbitration agreement, including in particular itsvalidity, also comes within its scope of application. This finding is supported byparagraph 35 of the Report on the accession of the Hellenic Republic to the Conventionof 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil andCommercial Matters (OJ 1978 L 304, p. 36) (‘the Brussels Convention’), presented byMessrs Evrigenis and Kerameus (OJ 1986 C 298, p. 1). That paragraph states that theverification, as an incidental question, of the validity of an arbitration agreement whichis cited by a litigant in order to contest the jurisdiction of the court before which he isbeing sued pursuant to the Brussels Convention, must be considered as falling within its scope.

27 It follows that the objection of lack of jurisdiction raised by West Tankers before theTribunale di Siracusa on the basis of the existence of an arbitration agreement,including the question of the validity of that agreement, comes within the scope ofRegulation No 44/2001 and that it is therefore exclusively for that court to rule on thatobjection and on its own jurisdiction, pursuant to Articles 1(2)(d) and 5(3) of thatregulation.

28 Accordingly, the use of an anti-suit injunction to prevent a court of a Member State,which normally has jurisdiction to resolve a dispute under Article 5(3) of RegulationNo 44/2001, from ruling, in accordance with Article 1(2)(d) of that regulation, on thevery applicability of the regulation to the dispute brought before it necessarily amountsto stripping that court of the power to rule on its own jurisdiction under RegulationNo 44/2001.

29 It follows, first, as noted by the Advocate General in point 57 of her Opinion, that ananti-suit injunction, such as that in the main proceedings, is contrary to the general

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principle which emerges from the case-law of the Court on the Brussels Convention,that every court seised itself determines, under the rules applicable to it, whether it hasjurisdiction to resolve the dispute before it (see, to that effect, Gasser, paragraphs 48 and49). It should be borne in mind in that regard that Regulation No 44/2001, apart from afew limited exceptions which are not relevant to the main proceedings, does notauthorise the jurisdiction of a court of a Member State to be reviewed by a court inanother Member State (Case C-351/89 Overseas Union Insurance and Others [1991] ECR I-3317, paragraph 24, and Turner, paragraph 26). That jurisdiction isdetermined directly by the rules laid down by that regulation, including those relating toits scope of application. Thus in no case is a court of one Member State in a betterposition to determine whether the court of another Member State has jurisdiction(Overseas Union Insurance and Others, paragraph 23, and Gasser, paragraph 48).

30 Further, in obstructing the court of another Member State in the exercise of the powersconferred on it by Regulation No 44/2001, namely to decide, on the basis of the rulesdefining the material scope of that regulation, including Article 1(2)(d) thereof, whetherthat regulation is applicable, such an anti-suit injunction also runs counter to the trustwhich the Member States accord to one another’s legal systems and judicial institutionsand on which the system of jurisdiction under Regulation No 44/2001 is based (see, tothat effect, Turner, paragraph 24).

31 Lastly, if, by means of an anti-suit injunction, the Tribunale di Siracusa were preventedfrom examining itself the preliminary issue of the validity or the applicability of thearbitration agreement, a party could avoid the proceedings merely by relying on thatagreement and the applicant, which considers that the agreement is void, inoperative orincapable of being performed, would thus be barred from access to the court beforewhich it brought proceedings under Article 5(3) of Regulation No 44/2001 and wouldtherefore be deprived of a form of judicial protection to which it is entitled.

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32


Consequently, an anti-suit injunction, such as that in the main proceedings, is notcompatible with Regulation No 44/2001.

33 This finding is supported by Article II(3) of the New York Convention, according towhich it is the court of a Contracting State, when seised of an action in a matter inrespect of which the parties have made an arbitration agreement, that will, at therequest of one of the parties, refer the parties to arbitration, unless it finds that the saidagreement is null and void, inoperative or incapable of being performed.

34 In the light of the foregoing considerations, the answer to the question referred is that itis incompatible with Regulation No 44/2001 for a court of a Member State to make anorder to restrain a person from commencing or continuing proceedings before thecourts of another Member State on the ground that such proceedings would becontrary to an arbitration agreement.

Costs

Since these proceedings are, for the parties to the main proceedings, a step in the actionpending before the national court, the decision on costs is a matter for that court. Costsincurred in submitting observations to the Court, other than the costs of those parties,are not recoverable.

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35


On those grounds, the Court (Grand Chamber) hereby rules:

It is incompatible with Council Regulation (EC) No 44/2001 of 22 December 2000on jurisdiction and the recognition and enforcement of judgments in civil andcommercial matters for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of anotherMember State on the ground that such proceedings would be contrary to anarbitration agreement.

[Signatures]

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Case C-45/07

Commission of the European Communitiesv

Hellenic Republic

(Failure of a Member State to fulfil obligations — Articles 10 EC, 71 EC and 80(2) EC —Maritime safety — Monitoring of ships and port facilities — International

agreements — Division of powers between the Community and the Member States)

Opinion of Advocate General Bot delivered on 20 November 2008 . . . . . I - 704Judgment of the Court (Second Chamber), 12 February 2009 . . . . . . . I - 716


1. Member States — Obligations — Obligation to cooperate in good faith with the Community institutions — Ship and port facility security(Arts 10 EC, 71 EC and 80(2) EC; European Parliament and Council Regulation No 725/2004)

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2. European Communities — Institutions — Obligations — Obligation to cooperate in good faith — Reciprocity(Arts 10 EC, 71 EC and 80(2) EC)

3. International agreements — Community not a member of an international organisation —Area falling within the external competence of the Community

4. International agreements — Agreements concluded by the Member States — Agreements predating the EC Treaty — Article 307 EC — Scope(Art. 307(1) EC)

1. To the extent to which Community rulesare promulgated for the attainment of theobjectives of theTreaty, the Member Statescannot, outside the framework of the Community institutions, assume obliga-tions which might affect those rules or altertheir scope. The provisions of RegulationNo 725/2004 on enhancing ship and portfacility security, which has as its legal basisArticle 80(2) EC, the second subparagraphof which refers to Article 71 EC, are Community rules promulgated for the attainment of the objectives of the Treaty.

In asking the International Maritime Or-ganisation (IMO) Maritime Safety Committee to examine the creation of check lists or other appropriate tools forassisting the Contracting States of the International Convention for the Safety ofLife at Sea in monitoring whether ships andport facilities comply with the require-ments of Chapter XI-2 of the Annex to that

convention and the International Ship andPort Facility Security Code, a Member State submits to that committee a proposalwhich initiates a procedure which couldlead to the adoption by the IMO of newrules. The adoption of such new rules would as a consequence have an effect onthe regulation, the Community legislaturehaving decided to incorporate in substanceboth of those international instruments into Community law.

In those circumstances, the Member State which sets in motion such a procedure takes an initiative likely to affect the provisions of the regulation, which is aninfringement of the obligations under Articles 10 EC, 71 EC and 80(2) EC.

(see paras 17, 18, 21-23)

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COMMISSION v GREECE

2. Any breach by the Commission of Article 10 EC cannot entitle a Member State to take initiatives likely to affect Community rules promulgated for the attainment of the objectives of the Treaty,in breach of that State’s obligations, which arise under Articles 10 EC, 71 EC and 80(2) EC. Indeed, a Member State may notunilaterally adopt, on its own authority,corrective or protective measures designedto obviate any breach by an institution ofrules of Community law.

(see para. 26)

3. The mere fact that the Community is not amember of an international organisation inno way authorises a Member State, actingindividually in the context of its participa-tion in an international organisation, to assume obligations likely to affect Community rules promulgated for the attainment of the objectives of the Treaty.

The fact that the Community is not a member of an international organisationdoes not prevent its external competencefrom being in fact exercised, in particularthrough the Member States acting jointlyin the Community’s interest.

(see paras 30, 31)

4. Article 307(1) EC is designed to apply onlyif there is an incompatibility between, onthe one hand, an obligation arising underan international convention and, on the other, an obligation arising under Commu-nity law.

(see para. 35)

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delivered on 20 November 2008 1

1. By the present action, the Commission ofthe European Communities seeks a declar-ation from the Court that, by submitting tothe International Maritime Organisation(IMO) a proposal for monitoring the compli-ance of ships and port facilities with the requirements of Chapter XI-2 of the 1974 International Convention for the Safety of Lifeat Sea (‘the SOLAS Convention’) and the International Ship and Port Facility SecurityCode (‘the ISPS Code’), 2 the Hellenic Republic has failed to fulfil its obligations under Articles 10 EC, 71 EC and 80(2) EC.

2. By its proposal, the Hellenic Republic submitted to the IMO Maritime SafetyCommittee check lists and other tools which it considered appropriate for the purpose ofassisting the Contracting States of the SOLASConvention in monitoring whether ships andport facilities complied with the requirementslaid down in that convention and the ISPS Code.

3. The Commission takes the view that, byacting on an individual basis in an area inwhich the European Community enjoys

exclusive external competence and therebyundermining the principle of a united externalrepresentation for the Community, the Hellenic Republic acted in breach of Commu-nity law.

4. In this Opinion, I shall set out the reasonsfor which I consider the present infringementproceedings to be well founded.

I — Legal framework

5. Article 1 of Regulation (EC) No 725/2004 of the European Parliament and of the Council of 31 March 2004 on enhancing ship and port facility security, 3 entitled ‘Objectives’, provides as follows:

1 — Original language: French.2 — Proposal of 18 March 2005 (MSC 80/5/11). 3 — OJ 2004 L 129, p. 6.

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COMMISSION v GREECE

‘1. The main objective of this Regulation is tointroduce and implement Communitymeasures aimed at enhancing the security ofships used in international trade and domesticshipping and associated port facilities in theface of threats of intentional unlawful acts.

2. The Regulation is also intended to providea basis for the harmonised interpretation andimplementation and Community monitoringof the special measures to enhance maritimesecurity adopted by the Diplomatic Confer-ence of the IMO on 12 December 2002, which amended the [SOLAS Convention] and established the [ISPS Code].’

6. Article 9 of Regulation No 725/2004, entitled ‘Implementation and conformity checking’, is worded as follows:

‘1. Member States shall carry out the admin-istrative and control tasks required pursuantto the provisions of the special measures toenhance maritime security of the SOLAS Convention and of the ISPS Code. They shallensure that all necessary means are allocatedand effectively provided for the implementa-tion of the provisions of this Regulation.

…’

7. Annex I to Regulation No 725/2004contains the amendments inserting the newchapter XI-2 into the Annex to the SOLASConvention in its updated version. The updated version of the ISPS Code is to befound in Annex II to the regulation.

II — The pre-litigation procedure

8. On 10 May 2005, taking the view that thenational proposal lodged on 18 March 2005 bythe Hellenic Republic with the IMO MaritimeSafety Committee encroached upon an areafalling within the exclusive external compe-tence of the Community, the Commission sent to that Member State a letter of formal notice, to which the latter responded on 7 July2005.

9. Since it was unsatisfied with that response,the Commission issued a reasoned opinion on19 December 2005, to which the Hellenic Republic responded on 21 February 2006.

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10. Remaining unconvinced by the argu- 12. The Hellenic Republic contends that thements put forward by the Hellenic Republic, Court should:the Commission decided to bring the presentaction.

III — The action

11. By its action, the Commission claims thatthe Court should:

— declare that, by submitting a proposal tothe IMO for monitoring the complianceof ships and port facilities with the requirements laid down in Chapter XI-2of the SOLAS Convention and the ISPS Code, the Hellenic Republic has failed tofulfil its obligations under Articles 10 EC,71 EC and 80(2) EC, and

— order the Hellenic Republic to pay thecosts.

— dismiss the action, and

— order the Commission to pay the costs.

13. By order of the President of the Court ofJustice on 2 August 2007, the United Kingdomof Great Britain and Northern Ireland was granted leave to intervene in support of theform of order sought by the Hellenic Republic.

IV — The principal arguments of the parties

14. Relying on the case-law established in Case 22/70 Commission v Council, known as the ‘AETR’ judgment, 4 the Commission argues that, since the adoption of RegulationNo 725/2004, integrating Chapter XI-2 of theAnnex to the SOLAS Convention and the ISPS Code into Community law, the Commu-nity has enjoyed exclusive competence to assume international obligations in the

4 — Case 22/70 [1971] ECR 263.

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domain covered by that regulation. It follows,in its view, that the Community has exclusivecompetence to ensure that that regulation isproperly applied at Community level and todiscuss with other IMO members the correct implementation of or subsequent develop-ments in the standards laid down in the SOLAS Convention and the ISPS Code. The Member States therefore no longer have competence to submit to the IMO nationalpositions on matters falling within the exclu-sive competence of the Community, unlessexpressly authorised to do so by the Commu-nity.

15. The Hellenic Republic’s defence is based on the following arguments.

16. First of all, it considers that it compliedwith its obligation of genuine cooperation under Article 10 EC by submitting, on 1 March 2005, the contested proposal to theMarsec (Maritime Safety) Committee, estab-lished by Article 11 of RegulationNo 725/2004, so that it could be discussed atthe meeting held by that committee on 14 March 2005 and a Community positionemerge. The Hellenic Republic states that theCommission, acting through its representa-tive, who chairs the Marsec Committee, did not, however, include that proposal on theagenda for that meeting. It deduces from thisthat the Commission failed to comply with itsobligation of genuine cooperation under Article 10 EC.

17. Secondly, the Hellenic Republic states that the submission of its proposal to the IMOwas an act undertaken in the context of its participation in that international organisa-tion. In its view, active participation in aninternational organisation as a member of thatorganisation is not tantamount to enteringinto international commitments, which alone is covered by the case-law established in theAETR judgment. The submission of the Greekproposal did not, therefore, undermine theCommunity’s exclusive competence.

18. Thirdly, the preparation and submissionof proposals to the IMO is governed by agentleman’s agreement adopted by the Council of the European Union in 1993. Under that agreement, Member States are permitted to submit proposals to the IMO notonly collectively but also individually, whereno Community position exists on the issue inquestion.

19. Fourthly, the Hellenic Republic is of theview that, in a case such as the present, inwhich there is no consensus on a Communityposition, the protection of the Communityinterest is ensured by the active participationof the Member States within the IMO, and not by an obligation to refrain from active participation. Any obligation requiring passive participation, which in practice

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entails abstaining from any involvement inprocedures for drawing up IMO rules, cul-minates in restricting, devaluing and, ulti-mately, losing its status as member of thatorganisation. Moreover, in a case such as thepresent, in which the Community does notenjoy the status of member of the IMO, anobligation to abstain from active involvementis even less likely to ensure the protection ofthe Community interest precisely because thefact that the Member States are not involved in procedures for drawing up legislationmeans that it is not possible for that interestto be defended, which is to the advantage ofnon-member countries.

20. Fifthly, the Hellenic Republic points outthat Article 9(1) of Regulation No 725/2004itself confers exclusive responsibility on theMember States for implementing, by means oftheir own conditions, the security require-ments laid down by that regulation, which arebased on amendments to the SOLAS Conven-tion and the ISPS Code. Both the wording andthe content of the contested proposal are consistent with the spirit of Communitylegislation, which confers wide discretion onthe Member States to develop best practiceconcerning technical issues.

21. Sixthly, it was apparent at the hearingthat, according to the Hellenic Republic,Article 307 EC confirms that its argument iswell founded.

22. The United Kingdom puts forward threespecific arguments. It contends that the Community’s exclusive competence in the field of maritime security is confined to theareas falling within the scope of RegulationNo 725/2004 and Directive 2005/65/EC of theEuropean Parliament and of the Council of26 October 2005 on enhancing port security. 5

The United Kingdom also states that the dutyof cooperation under Article 10 EC does notextend to imposing an obligation upon theMember States to facilitate the Community’s accession to international organisations,especially where, as in the case of the IMO,an international organisation is not permittedunder the terms of its constitution to admit as parties entities such as the Community.Lastly, the United Kingdom is of the viewthat, in order to fulfil its obligation of genuinecooperation in accordance with Article 10 EC,the Commission should have endeavoured to submit the Greek proposal to the Marsec Committee so that it was possible for thatissue to be debated.

V — Assessment

23. It is appropriate, first of all, to recall theprinciples established by the Court in the AETR judgment and the contributions of subsequent case-law concerning, first, the question whether there is an implied externalcompetence and, second, whether that competence is exclusive.

5 — OJ 2005 L 310, p. 28.

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24. At paragraphs 16 to 18 and 22 of the AETR judgment, the Court held that the competence of the Community to concludeinternational agreements arises not only froman express conferment by the EC Treaty butmay equally flow from other provisions of theTreaty and from measures adopted, within theframework of those provisions, by the Community institutions; that in particular,each time the Community, with a view toimplementing a common policy envisaged bythe Treaty, adopts provisions laying downcommon rules, whatever form these may take,the Member States no longer have the right,acting individually or even collectively, to undertake obligations with non-member countries which affect those rules; that as and when such common rules come into being, the Community alone is in a position toassume and carry out contractual obligationstowards non-member countries affecting thewhole sphere of application of the Commu-nity legal order; and that to the extent to which Community rules are adopted for theattainment of the objectives of the Treaty, theMember States cannot, outside the frame-work of the Community institutions, assumeobligations which might affect those rules oralter their scope. 6

25. The Court stated that, if the Member States were free to enter into international obligations affecting the common rules, thatwould jeopardise the attainment of the objective pursued by those rules as well as

6 — See, also, Case C-266/03 Commission v Luxembourg [2005] ECR I-4805, paragraph 40, and Case C-433/03 Commission v Germany [2005] ECR I-6985, paragraph 42.

the attainment of the Community’s tasks and the objectives of the Treaty. 7

26. The circumstances in which the scope ofcommon rules may be affected or distorted byinternational commitments undertaken bythe Member States and, therefore, the circum-stances in which the Community acquiresexclusive external competence by virtue of theexercise of its internal competence have beensummarised by the Court in what are knownas the ‘Open skies’ judgments 8 and reiterated in its judgments in Case C-266/03 Commis-sion v Luxembourg and Case C-433/03 Commission v Germany.

27. That occurs where the international commitments fall within the scope of the common rules or, in any event, within an areawhich is already largely covered by such rules, even if there is no contradiction between those rules and the commitments. 9

7 — Commission v Luxembourg, paragraph 41, and Commission v Germany, paragraph 43.

8 — Judgments of 5 November 2002 in Case C-466/98 Commission v United Kingdom [2002] ECR I-9427; Case C-467/98 Commission v Denmark [2002] ECR I-9519; Case C-468/98 Commission v Sweden [2002] ECR I-9575; Case C-469/98 Commission v Finland [2002] ECR I-9627; Case C-471/98 Commission v Belgium [2002] ECR I-9681; Case C-472/98 Commission v Luxembourg [2002] ECR I-9741; Case C-475/98 Commission v Austria [2002] ECR I-9797; and Case C-476/98 Commission v Germany [2002] ECR I-9855.

9 — See, inter alia, Commission v Germany, paragraph 45.

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28. Thus it is that, whenever the Community has included in its internal legislative acts provisions relating to the treatment of nationals of non-member countries or expressly conferred on its institutions powers to negotiate with non-member coun-tries, it acquires an exclusive external compe-tence in the spheres covered by those acts. 10

29. According to the Court, the same applies,even in the absence of any express provisionauthorising its institutions to negotiate withnon-member countries, where the Commu-nity has achieved complete harmonisation in agiven area, because the common rules thusadopted could be affected, within the meaningof the AETR judgment, if the Member States retained freedom to negotiate with non-member countries. 11

30. I consider that those aspects of the Court’s case-law should lead it to find that the present action for failure to fulfil obliga-tions is well founded.

31. I am of the opinion that, by submitting tothe IMO Maritime Safety Committee checklists and other tools which it considered appropriate for the purpose of assisting theContracting States of the SOLAS Convention

in monitoring whether ships and port facilitiescomplied with the requirements laid down inthat convention and the ISPS Code, the Hellenic Republic intervened in an area falling within the exclusive external compe-tence of the Community. That area is concerned with enhancing the security of ships and port facilities and is specificallydelimited by Regulation No 725/2004.

32. By adopting that regulation on the basis ofArticle 80(2) EC, the Community legislatureintended that the objective of ensuring, at alltimes, ‘[t]he security of … Community ship-ping and of citizens using it and of the environment in the face of threats of inten-tional unlawful acts such as acts of terrorism, acts of piracy or similar’ 12 should be met bycommon rules at Community level within theframework of that part of the common transport policy relating to sea transport.

33. As stated in recital 5 in the preamble toRegulation No 725/2004, that security objec-tive ‘should be achieved by adopting appro-priate measures in the field of maritime transport policy establishing joint standards for the interpretation, implementation and monitoring [ 13] within the Community of the

10 — Ibid., paragraph 46. 12 — Recital 2 in the preamble to Regulation No 725/2004. 11 — Ibid., paragraph 47. 13 — Emphasis added.

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COMMISSION v GREECE

provisions adopted by the Diplomatic Confer-ence of the IMO on 12 December 2002’, namely the special measures to enhance maritime security of the SOLAS Conventionand the ISPS Code. From that point of view,Article 1(2) of that regulation provides thatthat provision is intended to ‘provide a basis for the harmonised interpretation and imple-mentation and Community monitoring [ 14] of [those] special measures’.

34. By virtue of the fact that the Communityexercises its internal competence in the areaof sea transport and, more especially, on account of the fact that common rules were adopted for enhancing ship and port facilitysecurity, exclusive external competence wasconferred to that extent upon it.

35. It is clear that, since the Communityharmonised the conditions for interpreting,implementing and monitoring specialmeasures adopted under the auspices of theIMO, which are incorporated into RegulationNo 725/2004, the common rules establishedby that regulation could be affected if a Member State retained the possibility, on anindividual basis, of proposing to the IMO the

14 — Idem.

adoption of new rules for implementing andmonitoring the requirements laid down in Chapter XI-2 of the SOLAS Convention andthe ISPS Code.

36. In particular, where a proposal such asthat at issue in this case is submitted to the IMO, a procedure is initiated which could leadto the adoption by that international organ-isation of new rules on the implementationand monitoring of the standards establishedin Chapter XI-2 of the SOLAS Conventionand the ISPS Code. As an indirect result, such new rules could have an impact on RegulationNo 725/2004 precisely because that regula-tion incorporates Chapter XI-2 of the SOLASConvention and the ISPS Code into Commu-nity law and harmonises the implementationand monitoring of those measures at Commu-nity level.

37. It follows that, in the area governed byRegulation No 725/2004, the Member States no longer have competence to act on an individual basis at international level, either by undertaking new contractual obligations orindeed by proposing amendments or add-itions to the existing rules. Having made thechoice, when adopting that regulation, to establish common rules at Community level,the Member States cannot be given the possibility of altering their scope, even indir-ectly, unless such a step represents the intention of the Community.

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38. It also seems to me that conduct on the part of a Member State such as the conductchallenged by the Commission in these proceedings constitutes an infringement ofArticle 10 EC. It is to be borne in mind that Article 10 EC requires Member States to facilitate the achievement of the Community’s tasks and to abstain from any measure whichcould jeopardise the attainment of the ob-jectives of the Treaty. 15 It should also be recalled that, according to the Court, this dutyof genuine cooperation is of general applica-tion and does not depend either on whetherthe Community competence concerned is exclusive or on any right of the Member Statesto enter into obligations towards non-member countries. 16

39. In circumstances such as those in the present case, I consider that a Member State isunder an obligation to abstain from anyinvolvement, which can be disregarded onlywhere concerted action agreed at Communitylevel is taken.

40. The Hellenic Republic does not acceptthat it has failed to fulfil its obligations underArticle 10 EC, 71 EC and 80(2) EC. However, Ido not find the arguments put forward by thatMember State in its defence convincing.

15 — See, inter alia, Commission v Germany, paragraph 63, and Case C-523/04 Commission v Netherlands [2007] ECR I-3267, paragraph 74.

16 — Commission v Germany, paragraph 64 and the case-law cited.

41. In the first place, as regards the objectionthat the Commission itself failed to complywith its obligation of genuine cooperation byfailing to include the Greek proposal on theagenda for the Marsec committee meeting on14 March 2005, I am inclined to the view, in the light of the documents on the file, that theHellenic Republic was endeavouring to inform the other Member States of the national proposal it had submitted to the IMO rather than to establish a Communityposition on that matter. The chair of that committee was therefore entitled to take the view that it was not appropriate to include thatproposal on the agenda for the meeting on14 March 2005 and, by declining to do so, didnot infringe Article 10 EC.

42. Moreover, it is apparent from the obser-vations submitted to the Court that the Commission put in place Community measures specifically for the purpose of coordinating the application of Chapter XI-2of the SOLAS Convention and the ISPS Code, with the aim of presenting a Community position at the 80th session of the IMO Maritime Safety Committee. Accordingly, on27 April 2005, the Commission submitted tothe Council a working document entitled ‘IMO — European Community position to beadopted by the Council on maritime issues forthe 80th session of the Maritime Safety Committee (MSC 80) meeting in London from 11 to 20 May 2005’. 17 That document was considered by a group of experts convened by the presidency on 29 April 2005 and was approved by the Council Shipping Working Party on 3 May 2005. 18

At the same time, it is apparent from thecase-file that, on a number of occasions, the

17 — SEC(2005) 586.18 — See Annexes 2 and 3 to the Commission’s reply.

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Hellenic Republic was requested by the Commission to withdraw the national proposal which it lodged with the IMO on18 March 2005, but to no avail. The fact that the document setting out the Communityposition does not refer to that proposal may beperceived to be the result of that approach onthe part of the Hellenic Republic.

43. In those circumstances, I consider that the Commission cannot be criticised for having failed in its duty to promote coordin-ation at Community level.

44. Moreover, I share the Commission’s view that, since the Community legal order is notbased on the principle of reciprocity, any breach by that institution of the duty of genuine cooperation binding upon it byvirtue of Article 10 EC cannot, in any event,entitle a Member State to justify its own breaches of Community law, which, in thisinstance, consist of a breach of the exclusive external competence of the Community.

45. Secondly, unlike the Hellenic Republic, I do not take the view that the case-law established by the AETR judgment can be confined to cases in which a Member State has acted in breach of the exclusive external competence of the Community by enteringinto an international commitment. The reasoning followed by the Court in the progression of cases that were brought

before it was that the Member States should be precluded from encroaching, either indi-vidually or collectively, on an area that fallswithin the exclusive external competence ofthe Community. That is the case where intervention on the part of a State is liable toaffect common rules or distort their scope. AsI indicated above, action such as that taken bythe Hellenic Republic in its approach to theIMO initiates a procedure which could lead tothe adoption by that international organisa-tion of new rules, which are themselves liable to have an effect on existing Community legislation.

46. Thirdly, as regards the argument allegingthat a gentleman’s agreement adopted by theCouncil in 1993 permits Member States tosubmit proposals to the IMO not only collectively but also individually where no common position exists, it is difficult to ascribe to that agreement the legal effects which the Hellenic Republic wishes to confer upon it. It is, in fact, apparent from the observation submitted to the Court by theCommission that that ‘gentleman’s agree-ment’ is a declaration made by that institutionand recorded in the minutes drawn up by theCouncil for the Transport Working Groupmeeting on 14 December 1993. It is thereforenot a binding measure and, moreover, cannotbe treated in the same manner as an inter-institutional agreement. In addition, the content of that declaration, in the same wayas the other extracts of minutes of meetingsreferred to in the documents submitted to the Court, rather confirms the Commission’s argument, to which I subscribe, which maybe summarised as follows: the exclusive competence of the Community does not

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preclude the Member States from actively priate, a common position or approach in theparticipating in the IMO, provided that the competent international fora’. positions adopted by those states within thatinternational organisation are coordinated atCommunity level beforehand.

47. Fourthly, it does not follow, in my view,from the fact that the Community is not amember of the IMO that Member States can submit national proposals to that internation-al organisation in an area falling within theexclusive external competence of the Community. I concur with the Commission’s view that, if an international organisation doesnot permit it to act as the Community’s lawful representative in a domain in which the Community has exclusive competence, suchcompetence may be exercised through themedium of the Member States acting jointlyin the interest of the Community and withthat body’s authorisation. 19 A Communityposition, such as that I have referred to above, may therefore be put to an international organisation of which the Community is nota member. The Community legislature drewattention to the need for such a position, moreover, in Article 10(4) of RegulationNo 725/2004, which provides that; ‘[f]or thepurposes of this Regulation and with a view toreducing the risks of conflict between Community maritime legislation and inter-national instruments, Member States and the Commission shall cooperate, through coord-ination meetings and/or any other appro-priate means, in order to define, as appro-

19 — See, to that effect, Opinion 2/91 [1993] ECR I-1061, paragraph 5.

48. Fifthly, I do not accept the argument that the effect of Article 9(1) of RegulationNo 725/2004 is that the Community’s exclu-sive competence does not extend to the implementation by the Member States of therequirements laid down in Chapter XI-2 of theSOLAS Convention and the ISPS Code, as incorporated in that regulation.

49. It should be recalled that the harmonisa-tion of the conditions for implementing andmonitoring special measures to enhance maritime security adopted by the DiplomaticConference of the IMO on 12 December 2002 is, indeed, according to Article 1(2) of Regulation No 725/2004, one of the main objectives of that regulation. Moreover, Article 9(1) of Regulation No 725/2004 is aclassic provision of that type of regulation,which has to be implemented via the admin-istrative machinery of the Member States. Theeffect of the decentralised implementation ofCommunity law cannot, in my opinion, be toconfer upon the Member States, in an area inwhich the Community alone has competence,

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COMMISSION v GREECE

the competence to develop harmonised obligations arising under the convention monitoring rules at international level, previously concluded at the time of the which, by virtue of Regulation No 725/2004, accession of the Hellenic Republic to the must first be agreed at Community level. European Community. In particular, the

object of the present action is not to preventthat Member State from participating in thework of the IMO as an active member of that organisation. The purpose is simply to indi-cate to the Hellenic Republic that, in an area inwhich the Community has exclusive external

50. Sixthly and finally, I consider that the competence, its participation in the IMO argument relating to Article 307 EC is cannot circumvent the constraints imposedirrelevant. The present case is not concerned by the adoption, at Community level, of ruleswith calling into question the rights and common to the Member States.

VI — Conclusion

51. In the light of the foregoing considerations, I propose that the Court should:

(1) declare that, by submitting to the International Maritime Organisation a proposalfor monitoring the compliance of ships and port facilities with the requirementslaid down in Chapter XI-2 of the 1974 International Convention for the Safety ofLife at Sea and the International Ship and Port Facility Security Code, the HellenicRepublic has failed to fulfil its obligations under Articles 10 EC, 71 EC and 80(2) ECand Regulation (EC) No 725/2004 of the European Parliament and of the Council of31 March 2004 on enhancing ship and port facility security;

(2) order the Hellenic Republic to pay the costs of the proceedings, and the UnitedKingdom of Great Britain and Northern Ireland to bear its own costs.

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v


JUDGMENT OF THE COURT (Second Chamber)

12 February 2009 *

In Case C-45/07,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 2 February2007,

Commission of the European Communities, represented by K. Simonsson, M. Konstantinidis, F. Hoffmeister and I. Zervas, acting as Agents, with an addressfor service in Luxembourg,

applicant,

Hellenic Republic, represented by A. Samoni-Rantou and S. Chala, acting as Agents,

defendant,

* Language of the case: Greek.

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COMMISSION v GREECE

supported by:

United Kingdom of Great Britain and Northern Ireland, represented by I. Rao, acting as Agent, and D. Anderson QC,

intervener,

THE COURT (Second Chamber),

composed of C.W.A. Timmermans (Rapporteur), President of the Chamber,J.-C. Bonichot, K. Schiemann, J. Makarczyk and C. Toader, Judges,

Advocate General: Y. Bot,Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 13 November2008,

after hearing the Opinion of the Advocate General at the sitting on 20 November 2008,

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gives the following

Judgment

1 By its application, the Commission of the European Communities seeks a declarationfrom the Court that, by submitting to the International Maritime Organisation (IMO) aproposal (MSC 80/5/11, ‘the contested proposal’) for monitoring the compliance ofships and port facilities with the requirements of Chapter XI-2 of the InternationalConvention for the Safety of Life at Sea, concluded in London on 1 November 1974 (‘the SOLAS Convention’) and the International Ship and Port Facility Security Code (‘the ISPS Code’), the Hellenic Republic has failed to fulfil its obligations under Articles 10 EC,71 EC and 80(2) EC.

2 By order of the President of the Court of 2 August 2007, the United Kingdom of GreatBritain and Northern Ireland was granted leave to intervene in support of the form oforder sought by the Hellenic Republic.

Legal framework

3 Article 1 of Regulation (EC) No 725/2004 of the European Parliament and of theCouncil of 31 March 2004 on enhancing ship and port facility security (OJ 2004 L 129,p. 6; ‘the Regulation’), entitled ‘Objectives’, provides as follows:

‘1. The main objective of this Regulation is to introduce and implement Communitymeasures aimed at enhancing the security of ships used in international trade and

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COMMISSION v GREECE

domestic shipping and associated port facilities in the face of threats of intentionalunlawful acts.

2. The Regulation is also intended to provide a basis for the harmonised interpretationand implementation and Community monitoring of the special measures to enhancemaritime security adopted by the Diplomatic Conference of the IMO on 12 December2002, which amended the [SOLAS Convention] and established the [ISPS Code].’

Article 3 of the Regulation, entitled ‘Joint measures and scope’, provides as follows:

‘1. In respect of international shipping, Member States shall apply in full, by 1 July2004, the special measures to enhance maritime security of the SOLAS Convention andPart A of the ISPS Code, in accordance with the conditions and with respect to theships, companies and port facilities referred to therein.

2. In respect of domestic shipping, Member States shall apply, by 1 July 2005, thespecial measures to enhance maritime security of the SOLAS Convention and Part A ofthe ISPS Code to Class A passenger ships within the meaning of Article 4 of CouncilDirective 98/18/EC of 17 March 1998 on safety rules and standards for passenger ships[OJ 1998 L 144, p. 1, as last amended by Commission Directive 2003/75/EC of 29 July2003 (OJ 2003 L 190, p. 6)] operating domestic services and to their companies, asdefined in regulation IX-1 of the SOLAS Convention, and to the port facilities servingthem.

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5


3. Member States shall, after a mandatory security risk assessment, decide the extent towhich they will apply, by 1 July 2007, the provisions of this Regulation to differentcategories of ships operating domestic services other than those referred to in paragraph 2, their companies and the port facilities serving them. The overall level ofsecurity should not be compromised by such a decision.

…

4. When implementing the provisions required pursuant to paragraphs 1, 2 and 3,Member States shall take fully into account the guidelines contained in Part B of theISPS Code.

5. Member States shall conform to the following paragraphs of Part B of the ISPS Codeas if they were mandatory:

…’

Article 9 of the Regulation, entitled ‘Implementation and conformity checking’, provides in paragraph 1:

‘Member States shall carry out the administrative and control tasks required pursuantto the provisions of the special measures to enhance maritime security of the SOLAS

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Convention and of the ISPS Code. They shall ensure that all necessary means areallocated and effectively provided for the implementation of the provisions of thisRegulation.’

6 Article 11 of the Regulation, entitled ‘Committee procedure’ provides in paragraph 1 that ‘[t]he Commission shall be assisted by a Committee’.

7 Annex I to the Regulation contains the amendments inserting the new Chapter XI-2into the Annex to the SOLAS Convention in its amended version. The amended version of the ISPS Code is to be found in Annex II to the regulation.

8 The first subparagraph of Article 7(1) of Council Decision 1999/468/EC of 28 June 1999laying down the procedures for the exercise of implementing powers conferred on theCommission (OJ 1999 L 184, p. 23) provides as follows:

‘Each committee shall adopt its own rules of procedure on the proposal of its chairman,on the basis of standard rules of procedure which shall be published in the Official Journal of the European Communities.’

9 Article 2 of the Standard rules of procedure — Council Decision 1999/468 (OJ 2001 C 38, p. 3; ‘the Standard rules of procedure’), entitled ‘Agenda’, provides in paragraph 2:

‘The agenda shall make a distinction between:

…

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(b) other issues put to the committee for information or a simple exchange of views,either on the Chairman’s initiative, or at the written request of a committee member …’

The pre-litigation procedure

10 On 18 March 2005, the Hellenic Republic submitted the contested proposal to the IMOMaritime Safety Committee. By that proposal, that Member State asked the committeeto examine the creation of check lists or other appropriate tools for assisting theContracting States of the SOLAS Convention in monitoring whether ships and portfacilities complied with the requirements of Chapter XI-2 of the Annex to thatconvention and the ISPS Code.

11 Taking the view that the Hellenic Republic had thus submitted a national positionwithin an international organisation in an area falling within the exclusive externalcompetence of the European Community, on 10 May 2005 the Commission sent to thatMember State a letter of formal notice, to which the latter responded on 7 July 2005.

Since it was unsatisfied with that response, the Commission issued a reasoned opinionon 13 December 2005, to which the Hellenic Republic responded on 21 February 2006.

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12

13

COMMISSION v GREECE

Unconvinced by the Hellenic Republic’s response to the reasoned opinion, the Commission decided to bring the present action.

The action

14 The Commission argues that, since the adoption of the Regulation, integrating bothChapter XI-2 of the Annex to the SOLAS Convention and the ISPS Code intoCommunity law, the Community has enjoyed exclusive competence to assume international obligations in the area covered by that regulation. It follows, in its submission, that the Community alone is competent to ensure that the standards on thesubject are properly applied at Community level and to discuss with other IMOContracting States the correct implementation of or subsequent developments in thosestandards, in accordance with the two measures referred to. The Member States therefore no longer have competence to submit to the IMO national positions onmatters falling within the exclusive competence of the Community, unless expresslyauthorised to do so by the Community.

15 In that connection, it must first be observed that, under Article 3(1)(f) EC, the setting ofa common policy in the sphere of transport is specifically mentioned as one of theobjectives of the Community (see also Case 22/70 Commission v Council [1971] ECR 263, paragraph 20, ‘AETR’).

Second, under Article 10 EC, the Member States must both take all appropriatemeasures to ensure fulfilment of the obligations arising out of the EC Treaty orresulting from action taken by the institutions and also abstain from any measure whichmight jeopardise the attainment of the objectives of the Treaty (AETR, paragraph 21).

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16


17 If those two provisions are read in conjunction, it follows that to the extent to whichCommunity rules are promulgated for the attainment of the objectives of theTreaty, theMember States cannot, outside the framework of the Community institutions, assumeobligations which might affect those rules or alter their scope (AETR, paragraph 22).

18 It is common ground that the provisions of the Regulation, which has as its legal basisArticle 80(2) EC, the second subparagraph of which refers to Article 71 EC, areCommunity rules promulgated for the attainment of the objectives of the Treaty.

19 It is thus necessary to examine whether, by submitting to the IMO Maritime SafetyCommittee the contested proposal, which the Hellenic Republic does not dispute is anational proposal, that Member State may be regarded as having assumed obligationswhich might affect the provisions of the Regulation.

20 The Commission argues that the case-law arising from AETR applies to non-bindingmeasures such as the contested proposal, whereas the Hellenic Republic submits that,by making such a proposal in the context of its active participation in an internationalorganisation, it did not assume an obligation within the meaning of that case-law. ThatMember State adds that, in any event, the fact that it submitted the contested proposalto the IMO did not lead to the adoption of new rules within that internationalorganisation.

21 However, as the Advocate General noted at point 36 of his Opinion, in asking the IMOMaritime Safety Committee to examine the creation of check lists or other appropriatetools for assisting the Contracting States of the SOLAS Convention in monitoringwhether ships and port facilities complied with the requirements of Chapter XI-2 of the

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Annex to that convention and the ISPS Code, the Hellenic Republic submitted to thatcommittee a proposal which initiates a procedure which could lead to the adoption bythe IMO of new rules in respect of Chapter XI-2 and or/the ISPS code.

22 The adoption of such new rules would as a consequence have an effect on theRegulation, the Community legislature having decided, as is apparent from bothArticle 3 of that regulation and Annexes I and II thereto, to incorporate in substanceboth of those international instruments into Community law.

23 In those circumstances, since it set in motion such a procedure with the contestedproposal, the Hellenic Republic took an initiative likely to affect the provisions of theRegulation, which is an infringement of the obligations under Articles 10 EC, 71 EC and80(2) EC.

24 That interpretation cannot be undermined by the Hellenic Republic’s argument thatthe Commission infringed Article 10 EC by refusing to include the contested proposalon the agenda for the meeting on 14 March 2005 of the Maritime Safety Committee(Marsec committee), which is provided for in Article 11(1) of the Regulation andchaired by the Commission’s representative.

25 It is true that, in order to fulfil its duty of genuine cooperation under Article 10 EC, theCommission could have endeavoured to submit that proposal to the Maritime SafetyCommittee and allowed a debate on the subject. As is apparent from Article 2(2)(b) ofthe Standard rules of procedure, such a committee is also a forum enabling exchanges

I - 725


of views between the Commission and the Member States. The Commission, in chairing that committee, may not prevent such an exchange of views on the sole groundthat a proposal is of a national nature.

26 None the less, any breach by the Commission of Article 10 EC cannot entitle a MemberState to take initiatives likely to affect Community rules promulgated for the attainmentof the objectives of the Treaty, in breach of that State’s obligations, which, in a case suchas the present, arise under Articles 10 EC, 71 EC and 80(2) EC. Indeed, a Member Statemay not unilaterally adopt, on its own authority, corrective or protective measuresdesigned to obviate any breach by an institution of rules of Community law (see, byanalogy, Case C-5/94 Hedley Lomas [1996] ECR I-2553, paragraph 20 and case-law cited).

27 In support of its argument, the Hellenic Republic also invokes a gentleman’s agreementallegedly adopted by the Council of the European Union in 1993 under which MemberStates are permitted to submit proposals to the IMO, not only collectively but alsoindividually, where no common position has been established beforehand.

28 However, the documents comprising that alleged gentleman’s agreement do not bear out the Hellenic Republic’s argument. As the Advocate General noted in point 46 of hisOpinion, it is apparent in essence from those documents that the exclusive competenceof the Community does not preclude the Member States from actively participating inthe IMO, provided that the positions adopted by those States within that internationalorganisation are coordinated at Community level beforehand. It is common ground, inthe present case, that no such coordination occurred.

I - 726

29

COMMISSION v GREECE

Moreover, a gentleman’s agreement, even if it had the scope ascribed to it by theHellenic Republic, could not, in any event, affect the division of powers between theMember States and the Community, such as it results from the provisions of theTreaty;it cannot permit a Member State, acting individually in the context of its participation inan international organisation, to assume obligations likely to affect Community rulespromulgated for the attainment of the objectives of the Treaty (see, to that effect, Case204/86 Greece v Council [1988] ECR 5323, paragraph 17).

30 Similarly, the Hellenic Republic’s argument that an obligation to abstain from activeparticipation in the IMO will not ensure that the Community interest is protected, sincethe Community is not a member of that international organisation, cannot be accepted.The mere fact that the Community is not a member of an international organisation inno way authorises a Member State, acting individually in the context of its participationin an international organisation, to assume obligations likely to affect Community rulespromulgated for the attainment of the objectives of the Treaty.

31 Moreover, the fact that the Community is not a member of an international organisation does not prevent its external competence from being in fact exercised,in particular through the Member States acting jointly in the Community’s interest (see, to that effect, Opinion 2/91 [1993] ECR I-1061, paragraph 5).

The Hellenic Republic also relies on Article 9(1) of the Regulation, which in itssubmission confers exclusive competence on the Member States for implementing thesafety requirements laid down by that regulation, which are based on the amendmentsto the SOLAS Convention and the ISPS Code.

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32


33 In that connection, it is sufficient to note that the competence of the Member States,which stems from that provision, does not imply that they have an external competenceto take initiatives likely to affect the provisions of the regulation.

34 At the hearing, the Hellenic Republic also invoked Article 307(1) EC, arguing that, sinceit became an IMO member before it joined the Community, its obligations towards theIMO and, more specifically, its obligation to participate actively in that internationalorganisation as a member of it are not affected by the provisions of the Treaty.

35 However, it must be borne in mind that Article 307(1) EC is designed to apply only ifthere is an incompatibility between, on the one hand, an obligation arising under theinternational convention, concluded by the Hellenic Republic before its accession tothe Community and by which that State became an IMO member, and, on the other, anobligation arising under Community law (see, to that effect, Case C-62/98, Commission v Portugal [2000] ECR I-5171, paragraphs 46 and 47).

36 First, the whole thrust of the Hellenic Republic’s argument is that its submission of thecontested proposal to the IMO Maritime Safety Committee is not at variance with thatMember State’s obligations under Community law, which rules out precisely thepossibility of relying on Article 307(1) EC.

37 Second, the Hellenic Republic does not establish that it was required to submit thecontested proposal to that committee by virtue of the IMO’s founding documents and/or legal instruments drawn up by that international organisation.

I - 728

38

39

COMMISSION v GREECE

Consequently, it must be declared that, by submitting the contested proposal to theIMO, the Hellenic Republic has failed to fulfil its obligations under Articles 10 EC,71 EC and 80(2) EC.

Costs

Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered topay the costs if they have been applied for in the successful party’s pleadings. Since theCommission has applied for costs and the Hellenic Republic has been unsuccessful, thelatter must be ordered to pay the costs.

On those grounds, the Court (Second Chamber) hereby:

1. Declares that, by submitting to the International Maritime Organisation(IMO) a proposal (MSC 80/5/11) for monitoring the compliance of ships andport facilities with the requirements of Chapter XI-2 of the InternationalConvention for the Safety of Life at Sea, concluded in London on 1 November1974, and the International Ship and Port Facility Security Code, the Hellenic

I - 729


Republic has failed to fulfil its obligations under Articles 10 EC, 71 EC and80(2) EC;

2. Orders the Hellenic Republic to pay the costs.

[Signatures]

I - 730

Case C-138/07

Belgische Staat v

Cobelfret NV

(Reference for a preliminary rulingfrom the hof van beroep te Antwerpen)

(Directive 90/435/EEC — Article 4(1) — Direct effect — National legislation designed to prevent double taxation of distributed profits — Deduction of the amount of

dividends received from a parent company’s basis of assessment only in so far as it hasmade taxable profits)

Opinion of Advocate General Sharpston delivered on 8 May 2008 . . . . . I - 734 Judgment of the Court (First Chamber), 12 February 2009 . . . . . . . . I - 743


1. Approximation of laws — Common system of taxation applicable in the case of parentcompanies and subsidiaries of different Member States — Directive 90/435(Council Directive 90/435, Article 4(1), first indent)

I - 731


2. Approximation of laws — Common system of taxation applicable in the case of parentcompanies and subsidiaries of different Member States — Directive 90/435(Council Directive 90/435, Article 4(1), first indent)

1. The first indent of Article 4(1) of Direct-ive 90/435 on the common system of taxation applicable in the case of parentcompanies and subsidiaries of different Member States is to be interpreted as precluding legislation of a Member Statewhich provides that the dividends receivedby a parent company are to be included inthe latter’s basis of assessment, to be subsequently deducted in the amount of95%, to the extent to which the parentcompany has, for the tax period in ques-tion, a positive profit balance after otherexempted profits have been deducted.

The obligation on a Member State whichhas chosen the system set out in the firstindent of Article 4(1) of Directive 90/435 torefrain from taxing the profits of the parentcompany which it receives by virtue of itsassociation with its subsidiary is not subordinated to any condition and is expressly subject only to Articles 4(2) and(3) and 1(2) of that directive. The first indent of Article 4(1) of the directive doesnot lay down, in particular, any conditionthat there must be other taxable profits inorder for the dividends received by the parent company not to be subject to taxation. Accordingly, Member States cannot unilaterally introduce restrictive measures such as a requirement that theparent company have taxable profits and

thus impose conditions on the possibilityof benefiting from the advantages providedfor in Directive 90/435.

Furthermore, when the parent companydoes not make other taxable profits in thetax period concerned, such legislation hasthe effect of reducing the losses of the parent company in the amount of the dividends received. Since, in principle, thattax legislation allows losses to be carriedforward to subsequent tax years, the reduction of losses to the parent companywhich could benefit from being thus carried forward up to the amount of thedividends received, has an effect on the basis of assessment of that company duringthe tax year which follows that in whichthose dividends were received in so far as its profits exceed the losses which can becarried forward. It follows that, even if the dividends received by the parent companyare not subject to corporation tax for thetax year in the course of which those dividends were distributed, that reduction of losses of the parent company may havethe effect that the parent company is subject indirectly to taxation on those dividends in subsequent tax years whenits results are positive. Such a restriction onthe reduction of dividends received is not compatible with Directive 90/435.

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COBELFRET

Even where, in applying that system to thedividends distributed by both resident subsidiaries and those established in other Member States, a Member State seeks to eliminate all penalisation of cooperation between companies of different Member States as compared with cooperation between companies of the same Member State, that does not justify the application of a system which isnot compatible with the system for preventing economic double taxation setout in the first indent of Article 4(1) ofDirective 90/435.

(see paras 33, 34, 36, 37, 39, 41, 46, operative part)

2. The first indent of Article 4(1) of Direct-ive 90/435 on the common system of taxation applicable in the case of parentcompanies and subsidiaries of different Member States is unconditional and suffi-ciently precise to be capable of being reliedon before national courts. The obligationto refrain from taxing profits which a subsidiary distributes to its parent company, set out in the first indent of Article 4(1) of Directive 90/435, is wordedin unequivocal terms and is not subject toany condition. Likewise, its implementa-tion or effects are not subject to the intervention of any other act on the partof the Community institutions or the Member States.

(see paras 64, 65, operative part)

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OPINION OF MS SHARPSTON — CASE C-138/07

OPINION OF ADVOCATE GENERALSHARPSTON

delivered on 8 May 2008 1

1. Article 4(1) of Council Direct-ive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in thecase of parent companies and subsidiaries ofdifferent Member States 2 (‘the Parent/ Subsidiary Directive’ or ‘the Directive’)provides that, where a parent company resident in one Member State receives a dividend from a subsidiary resident in another Member State, the Member State of the parent company must either refrain fromtaxing the dividend or authorise the parentcompany to deduct from the amount of taxpayable thereon tax paid by the subsidiary onthe profits thereby distributed.

2. In the present case the Hof van beroep teAntwerpen (Court of Appeal, Antwerp), Belgium, has asked the Court essentiallywhether Article 4 of the Directive precludesnational legislation under which such divi-dends are first included in the basis of assessment of the parent company and subsequently deducted therefrom only in sofar as the parent company has taxable profits.

1 — Original language: English. 2 — OJ 1990 L 225, p. 6. The Directive has subsequently been

amended but the main proceedings concern the original version only.

The Parent/Subsidiary Directive

3. The Parent/Subsidiary Directive seeks toeliminate the tax disadvantage suffered bycompanies from different Member States, bycomparison with companies of the same Member State, where they seek to cooperateby forming groups of parent companies andsubsidiaries. 3 It does this in two ways.

4. First, Article 4(1) provides that, where aparent company 4 receives distributed profitsfrom a subsidiary, the Member State of theparent company must either ‘refrain from taxing such profits’ (the exemption method) or ‘tax such profits while authorising the parent company to deduct from the amount of

3 — See the third recital in the preamble: ‘the existing tax provisions which govern the relations between parentcompanies and subsidiaries of different Member States varyappreciably from one Member State to another and are generally less advantageous than those applicable to parentcompanies and subsidiaries of the same Member State; …cooperation between companies of different Member States isthereby disadvantaged in comparison with cooperation between companies of the same Member State; … it is necessary to eliminate this disadvantage by the introduction ofa common system in order to facilitate the grouping togetherof companies’.

4 — ‘Parent company’ and ‘subsidiary’ are defined in Article 3 of the Directive. The definition incorporates the requirement thatthe parent company and the subsidiary be resident for taxpurposes in different Member States.

I - 734

COBELFRET

tax due that fraction of the corporation taxpaid by the subsidiary which relates to thoseprofits … up to the limit of the amount of thecorresponding domestic tax’ (the credit or imputation method).

5. Second, Article 5(1) requires Member States to exempt from withholding tax profits which a subsidiary distributes to itsparent company.


6. Although the order for reference is laconicas to the relevant national rules, it appears tobe common ground that the Belgian legisla-tion 5 operates, in so far as relevant, as follows.First, dividends received from subsidiaries within the meaning of the Directive are included in the basis of assessment of the parent company. Second, 95% of the amountof such dividends is deducted from the parent company’s taxable profits. 6 That deduction is known as the ‘aftrek van definitief belaste inkomsten’ (deduction of definitively taxed income,‘ADBI’). Third, the ADBI is limited tothe amount of profits for the taxable periodconcerned. The ADBI cannot therefore be used in a year where no profits are made;moreover, where the ADBI exceeds profits

5 — Articles 202, 204 and 205 of the Wetboek van de inkom-stenbelastingen (Income Tax Code) 1992.

6 — Article 4(2) of the Directive in effect authorises Member Stateswhich have opted for the exemption method to limit theexemption to 95% of dividends received.

made, the unused portion of the ADBI cannotbe carried forward.

The main proceedings and the questionreferred

7. Again, the order for reference is econom-ical with information. In so far as relevant, however, the following facts may be deducedfrom the written observations.

8. In each year from 1992 to 1998 CobelfretNV (‘Cobelfret’), a Belgian company, receiveddividends from its holdings in companies inboth Belgium and the United Kingdom. It is common ground that, with regard to its holdings in the Belgian companies, Cobelfretis a parent company, and those companies areits subsidiaries, within the meaning of the Directive.

9. In 1994, 1995 and 1997, Cobelfret suffered losses and was hence unable to use the ADBI for those years. In 1996 the ADBI to whichCobelfret was entitled exceeded its taxable profits by EUR 277 432. It was unable to carrythat unused portion forward to the followingyear, when it made a loss. Cobelfret takes theview that Belgium therefore does not genu-inely exempt dividends since tax losses which

I - 735


can be carried forward are reduced in such a dividends, which, in the absence of fiscalway that, in the following year, the taxable losses, ought in any case to have beenprofit is artificially increased by the amount of exempted up to 95%?’dividends which should have been exempted.

10. Cobelfret successfully argued before theRechtbank van eerste aanleg (Court of FirstInstance), Antwerp, that so limiting the ADBIwas contrary to Article 4(1) of the Directive.The Belgian tax authorities appealed to theHof van beroep te Antwerpen, which has referred the following question to the Court:

‘Is a set of rules such as the Belgian system ofdefinitive taxed income, under which relevant dividends are, first, added to the taxable basis of the parent company and, subsequently, theamount of those received dividends is, pursuant to Article 205(2) of the BelgianIncome Tax Code, deducted from the taxable basis of the parent company (in the amount of95%) only in so far as the parent company hastaxable profits, compatible with Article 4 of[the Parent/Subsidiary Directive], inasmuchas the result of such a limitation on deduction of definitively taxed income is that a parentcompany will, in a subsequent taxable period,be taxed on the dividends received in the case where it had no, or had inadequate, taxableprofits over the taxable period in which thedividends were received, or at least that the fiscal losses relating to the taxable period arewrongly used up and are, as a result, no longertransferable up to the amount of received

11. Written observations have been submitted by Cobelfret, Belgium and the Commission, all of which were also repre-sented at the hearing.

Direct effect

12. The question referred does not refer to the direct effect of Article 4(1) of the Directive. However, it is stated in the order for reference that the referring court considers that ‘it is necessary to obtain a conclusive answer as to the direct effect of the [D]irective’, and all the parties make submis-sions on this point. I will accordingly make thefollowing brief observations.

13. It is clear from settled case-law that wherever the provisions of a directive appear, so far as their subject-matter is concerned, to be unconditional and suffi-

I - 736

COBELFRET

ciently precise, they may, in the absence ofimplementing measures adopted within theprescribed period, be relied on against anynational provision which is incompatible withthe directive or in so far as they define rightswhich individuals are able to assert against theState. 7 A Community provision is uncondi-tional where it lays down an obligation whichis not qualified by any condition and is notmade subject, in its implementation or effects,to the adoption of any measure either by theCommunity institutions or by the MemberStates. 8 It is sufficiently precise to be relied onby an individual and applied by the courtswhere it lays down an obligation in un-equivocal terms. 9

14. I agree with Cobelfret and the Commis-sion that Article 4(1) of the Directive satisfiesboth of those criteria. The obligation which itlays down, namely either to refrain from taxing distributed profits received by a parent company from its subsidiary or to taxsuch profits while authorising the parentcompany to deduct from the amount of taxdue tax paid by the subsidiary which relates tothose profits, is laid down in unequivocalterms and is not qualified by any condition ormade subject, in its implementation or effects,to the adoption of any measure either by theCommunity institutions or by the MemberStates.

7 — See for example Case C-363/05 JP Morgan Fleming Claver-house Investment Trust and The Association of Investment Trust Companies [2007] ECR I-5517, paragraph 58, and thecase-law there cited.

8 — Case C-389/95 Klattner [1997] ECR I-2719, paragraph 33. 9 — Ibid.

15. Belgium asserts that Article 4(1) cannothave direct effect since it offers Member States a choice of methods for achieving thedesired result.

16. As Cobelfret points out, however, the Court has held that ‘the right of a State to choose among several possible means of achieving the result required by a directivedoes not preclude the possibility for indivi-duals of enforcing before the national courtsrights whose content can be determined sufficiently precisely on the basis of the provisions of the directive alone’. 10

17. I accordingly consider that Article 4(1) ofthe Directive has direct effect.

Compatibility with Article 4(1)

18. Cobelfret and the Commission submit that the Belgian rules are contrary to the

10 — Joined Cases C-6/90 and C-9/90 Francovich [1991] ECR I-5357, paragraph 17; Case C-91/92 Faccini Dori [1994] ECR I-3325, paragraph 17.

I - 737


Directive; the Belgian Government takes theopposite position.

19. I agree with the former view.

20. Article 4(1) of the Directive requiresMember States either to refrain from taxingthe dividend or to authorise the parentcompany to deduct from the amount of taxdue thereon tax paid by the subsidiary on theprofits thereby distributed. To my mind, theBelgian rules do not properly implement either of those two methods.

21. The effect of those rules is that dividends received from a subsidiary are always includedin the parent company’s basis of assessment but not always deducted therefrom, since nodeduction is operated where the parent has notaxable profits for the same period. In such acase, accounting for the dividends in the basisof assessment will lead to higher tax overall,since it will reduce the amount of the loss which can be carried forward. In conse-quence, tax will be levied in the next year inwhich a taxable profit is made on an additionalamount corresponding to a part or all of theamounts of the dividends.

22. The Belgian system accordingly does notprovide for the systematic exemption of dividends. Rather, it provides for their exemp-tion solely where there are other taxable profits. Belgium thus subjects the exemptionof dividends from tax to a condition not envisaged by the Directive. It is thus not a trueexemption system.

23. The Court has already ruled that, sincethe purpose of the Directive is to facilitate thetax arrangements governing cross-border cooperation, Member States cannot unila-terally introduce restrictive measures such asa requirement that a minimum holding periodmust already have been completed when theprofits in respect of which the tax advantage issought are distributed. 11 I see no reason for not applying the same principle with regard towhat is in effect a requirement that the parentcompany have taxable profits.

24. Nor is the Belgian system an imputationsystem, which would provide that tax paid bythe subsidiary is deducted from the tax payable by the parent company.

11 — Joined Cases C-283/94, C-291/94 and C-292/94 Denkavit [1996] ECR I-5063, paragraph 26.

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COBELFRET

25. Belgium argues, first, that limiting theADBI leads to at least the same result as the imputation method. It submits that, if the imputation method satisfies Article 4(1), thelimited ADBI must also do so, since there is no reason why ‘refrain[ing] from taxing’ distrib-uted profits must lead to a more generousresult than the imputation method.

26. I am not persuaded by Belgium’s submis-sions on this point. Moreover, if limiting theADBI does lead to a result that is at least as favourable to the taxpayer as what he wouldget under the imputation method, it is settledcase-law that a Member State may not rely onhow it might have implemented a directivehad it chosen to do so in a particular way. 12

Belgium does not purport to have opted toimplement Article 4(1) of the Directive by theimputation method. It is therefore to my mindirrelevant whether and to what extent the alternative method which it has chosen operates no less favourably than the imput-ation method would have operated.

27. Belgium submits, second, that it does notfollow from the wording of Article 4(1) of theDirective, which requires Member States to‘refrain from taxing’ dividends, that Member States are required to grant an ‘exemption’and that such an ‘exemption’ requires thatdividends received can have no effect on the amount of losses to be carried forward. The

12 — Francovich, cited in footnote 10, paragraph 21, and Case C-184/04 Uudenkaupungin kaupunki [2006] I-3039, para-graph 28.

recitals in the preamble to the Directive andthe text of Article 4(1) refer simply to ‘refrain[ing] from taxing’ such profits and not to ‘exempting’.

28. I cannot accept that argument. There isnothing in the scheme or purpose of the Directive to suggest that there is any signifi-cant difference between the concepts of ‘refraining from taxing’ and ‘exempting from tax’. As Cobelfret points out, the preamble to adirective recently amending the Parent/ Subsidiary Directive in effect describes Article 4(1) as requiring that ‘double taxation should be eliminated either by exemption ortax credit’. 13 The Court has, moreover, used the concept of ‘exempting’ interchangeably with that of ‘refrain[ing] from taxing’ within the meaning of Article 4(1). 14

29. Belgium considers, third, that its legisla-tion is in accordance with the objective ofArticle 4(1), in particular the elimination ofthe disadvantage in cross-border parent/subsidiary relations in comparison with suchrelations in a domestic context. 15 Limiting the

13 — Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system oftaxation applicable in the case of parent companies andsubsidiaries of different Member States (OJ 2004 L 7, p. 41),recital 10. See also point 17 of the Explanatory Memorandumto the Proposal for this directive (COM(2003) 462 final).

14 — Case C-446/04 Test Claimants in the FII Group Litigation[2006] ECR I-11753, paragraph 102; Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation [2006] ECR I-11673, paragraph 53.

15 — See the third recital in the preamble, set out in footnote 3above.

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ADBI does not disadvantage the creation ofparent/subsidiary relations, in particularcross-border relations, as is decisively illus-trated by the way the Belgian market works inpractice and by the fact that application of thelimited ADBI treats equally domestic and cross-border parent/subsidiary relations. Limiting the ADBI does not therefore conflictwith the objective of Article 4(1).

30. Again, I am not persuaded. Even if Belgium’s assertions are correct, the fact that a Member State’s incorrect transposition of aprovision of a directive does not conflict withthe objectives of that directive cannot in itselfrender that transposition correct.

31. Belgium refers, next, to Council Direct-ive 90/434/EEC on the common system oftaxation applicable to mergers, divisions, transfers of assets and exchanges of sharesconcerning companies of different MemberStates, 16 which essentially requires MemberStates to ensure that such reconstructions do not result in the taxation of capital gains andexempted reserves. With regard to losses

16 — Directive of 23 July 1990 (OJ 1990 L 225, p. 1).

arising from cross-border reconstructions, however, Belgium notes that that directive simply requires that Member States treat suchlosses in the same way as losses arising fromreconstructions within a single Member State. 17 Belgium appears to be arguing that, by analogy, Article 4(1) of the Parent/ Subsidiary Directive likewise permits a Member State to apply a system such as theADBI rules to dividends received by a parent company from a subsidiary in another Member State provided that it applies the same system to dividends received from a domestic subsidiary. That is not, however, what Article 4(1) says; and I do not see how aprovision of an entirely separate instrument isrelevant.

32. Belgium refers, finally, to the Model Convention with respect to taxes on incomeand on capital, published by the Organisationfor Economic Cooperation and Development(‘OECD’). 18 Chapter V, entitled ‘Methods for elimination of double taxation’, provides forboth the exemption method (Article 23A) andthe credit method (Article 23B). Belgium

17 — Article 6 provides: ‘To the extent that, if the operationsreferred to in Article 1 were effected between companiesfrom the Member State of the transferring company, theMember State would apply provisions allowing the receivingcompany to take over the losses of the transferring companywhich had not yet been exhausted for tax purposes, it shallextend those provisions to cover the take-over of such lossesby the receiving company's permanent establishments situated within its territory.’

18 — The Model Convention was originally published in 1963.Since then it has been regularly updated. The articles as theyread on 28 January 2003 may be found at http://www.oecd.org/dataoecd/52/34/1914467.pdf.

I - 740

COBELFRET

asserts that the Model Convention does not give detailed rules on how the exemptionmethod has to be implemented, so that it is forthe contracting States to determine.

33. It is settled case-law that, in the absence of any unifying or harmonising Communitymeasures, Member States retain the powerto define, by treaty or unilaterally, the criteriafor allocating their powers of taxation, parti-cularly with a view to eliminating doubletaxation, by applying, in particular, the appor-tionment criteria followed in international tax practice, including the model conventions drawn up by the OECD. 19 I do not, however, see how that can be relevant to the presentcase, where what is at issue is the interpreta-tion of a harmonising Community measure.

Limitation in time

34. Belgium concludes its written observa-tions with a request that the Court, if it rules

that Article 4(1) of the Directive precludesnational legislation such as the ADBI system,limit the effects of that ruling in time. It reliesin this context on (i) the legal certainty whichthe Commission created by allegedly approving (albeit implicitly) the ADBI system, (ii) the imprecise scope of Article 4(1),(iii) the lack of any case-law on the point and(iv) the budgetary impact if the Belgian rulesare found to be incompatible.

35. It is clear from the Court’s case-law that the financial consequences which mightensue for a Member State from a preliminaryruling do not in themselves justify limiting thetemporal effects of the ruling — such a limitation will be imposed only in very specificcircumstances, namely where (a) there is a riskof serious economic repercussions owing inparticular to the large number of legalrelationships entered into in good faith onthe basis of rules considered to be validly inforce and (b) it appears that both individualsand national authorities have been led into adopting practices which did not comply withCommunity law by reason of objective,significant uncertainty regarding the implica-tions of Community provisions, to which theconduct of other Member States or the Commission may even have contributed. 20

19 — Case C-524/04 Test Claimants in the Thin Cap Group Litigation [2007] ECR I-2107, paragraph 49 and the cases 20 — See most recently Case C-313/05 Brzeziński [2007] there cited. ECR I-513, paragraphs 57 and 58.

I - 741


36. In the present case, whatever the merits ofits other arguments, Belgium has made noattempt in its written or oral observations todemonstrate that there is such a risk of serious economic repercussions.

37. It is accordingly in my view not appro-priate for the Court, if it rules that Article 4(1)of the Directive precludes national legislationsuch as the ADBI system, to limit the effects ofthat ruling in time.

Conclusion

38. For the reasons set out above, I am of the view that the question referred by the Hofvan beroep te Antwerpen, Belgium, should be answered as follows:

Article 4 of Council Directive 90/435/EEC precludes national legislation under whichdividends received by a parent company in one Member State from a subsidiary inanother Member State are, first, added to the taxable basis of the parent company and,subsequently, deducted from that taxable basis (in the amount of 95%) only in so far asthe parent company has taxable profits.

I - 742

v

COBELFRET

JUDGMENT OF THE COURT (First Chamber)

12 February 2009 *

In Case C-138/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Hof van beroep teAntwerpen (Belgium), made by decision of 27 February 2007, received at the Court on9 March 2007, in the proceedings

Belgische Staat

Cobelfret NV,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, M. Ilešič, A. Tizzano, E. Levits (Rapporteur) and J.-J. Kasel, Judges,

* Language of the case: Dutch.

I - 743


Advocate General: E. Sharpston,Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 5 March 2008,


— Cobelfret NV, by A. Huyghe and M. Isenbaert, advocaten,

— the Belgian Government, by C. Pochet, acting as Agent, assisted by J. Werbrouck,advocaat,

— the Commission of the European Communities, by R. Lyal, W. Wils and W. Roels,acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 8 May 2008,

I - 744

COBELFRET

gives the following

Judgment

1 The reference for a preliminary ruling concerns the interpretation of Article 4(1) ofCouncil Directive 90/435/EEC of 23 July 1990 on the common system of taxationapplicable in the case of parent companies and subsidiaries of different Member States(OJ 1990 L 225, p. 6).

2 The reference has been made in the course of proceedings between the Belgische Staat(Belgian State) and the company Cobelfret NV (‘Cobelfret’) relating to the determination of that company’s taxable profits for the purposes of corporation taxin respect of the tax years 1992 to 1998.

Legal framework

Community legislation

3 As set out in the third recital in the preamble to Directive 90/435, the directive seeks, inparticular, to eliminate the fiscal disadvantages incurred by groups of companies fromdifferent Member States in comparison with groups of companies from the sameMember State.

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4 Under Article 3(1)(a) of Directive 90/435, the status of parent company is to beattributed to any company of a Member State which fulfils certain conditions, set out inArticle 2 of that directive, and has a minimum holding of 25% in the capital of acompany of another Member State fulfilling the same conditions.

5 Article 4(1) and (2) of Directive 90/435 provides:

‘1. Where a parent company, by virtue of its association with its subsidiary, receivesdistributed profits, the State of the parent company shall, except when the latter isliquidated, either:

— refrain from taxing such profits, or

— tax such profits while authorising the parent company to deduct from the amountof tax due that fraction of the corporation tax paid by the subsidiary which relates tothose profits and, if appropriate, the amount of the withholding tax levied by theMember State in which the subsidiary is resident, pursuant to the derogationsprovided for in Article 5, up to the limit of the amount of the correspondingdomestic tax.

2. However, each Member State shall retain the option of providing that any chargesrelating to the holding and any losses resulting from the distribution of the profits of thesubsidiary may not be deducted from the taxable profits of the parent company. Wherethe management costs relating to the holding in such a case are fixed as a flat rate, thefixed amount may not exceed 5% of the profits distributed by the subsidiary.’

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COBELFRET


6 Directive 90/435 was transposed into Belgian law by the Law of 23 October 1991(Belgisch Staatsblad of 15 November 1991, p. 25619), which amended the existingsystem of definitively taxed income (‘the DBI system’) and fixed at 95% the amount ofdividends received which could be deducted from the basis of assessment of the parent company.

7 Following the codification which took place in 1992, the relevant provisions to the DBIsystem were brought together in Articles 202, 204 and 205 of the Income Tax Code,coordinated by the Royal Decree of 10 April 1992 and confirmed by the Law of 12 June1992 (‘the ITC 1992’) (supplement to the Belgisch Staatsblad of 30 July 1992), asimplemented by the Royal Decree for the implementation of the IncomeTax Code 1992(‘the Royal Decree implementing the ITC 1992’) (Belgisch Staatsblad of 13 September 1993).

8 Under those provisions, a company may deduct from its profits 95% of the dividendsreceived from its subsidiaries, within the meaning of Directive 90/435, in respect of itsdefinitively taxed income (this deduction is hereinafter referred to as ‘the ADBI’).

The functioning of the DBI system can be succinctly described as follows. First, thedividend distributed by the subsidiary must be included in the basis of assessment of the

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9


parent company. Second, that dividend is deducted from that basis of assessment, butonly in so far as, for the tax period in question, a profit remains after deduction of otherexempted profits.

10 Article 202 of the ITC 1992 states:

‘1. The following shall also be deducted from the profits for the tax period, to the extentto which they are included:

1° Dividends, with the exception of income which is received on the transfer to acompany of its own listed or unlisted shares or during the complete or partialdistribution of the assets of a company;

…’

11 The first paragraph of Article 204 of the ITC 1992 is worded as follows:

‘The deductible income under Article 202(1)(1) … is deemed to be found in the profitsfor the tax period up to 95[%] of the amount collected or received, which may beincreased by real or notional equalisation tax …’

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12

COBELFRET

Article 205(2) of the ITC 1992 states:

‘The deduction provided for under Article 202 shall be limited to the amount of profitremaining in the relevant taxable period after the application of Article 199 …

…’

13 Article 77 of the Royal Decree implementing the ITC 1992 provides:

‘The amounts referred to in Articles 202 to 205 of the [ITC] 1992 which are deductibleas definitively taxed income… shall be deducted in the amount of the profits remainingafter application of Article 76; that deduction is to be made having regard to the originof the profits and, as a matter of priority, from the profits which contain those amounts.’

The dispute in the main proceedings and the question referred for preliminaryruling

14 Cobelfret, a company established in Belgium, received dividends on its shareholdings incompanies established in Community territory in the course of the tax years 1992 to1998, while suffering losses in the course of several of those years.

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15


Under Belgian legislation, Cobelfret was unable to profit from the ADBI for the taxyears in the course of which it suffered losses, and was unable to carry the unused part ofthat deduction forward to the following year in cases where the ADBI which it couldhave claimed exceeded its taxable profits.

16 Taking the view, consequently, that the dividends received were not entirely exemptedfrom taxation, Cobelfret lodged objections in respect of the notices of assessment tocorporation tax for the tax years 1992 to 1998.

17 Following rejection of its objections, Cobelfret brought the matter before the Rechtbank van eerste aanleg (Court of First Instance), Antwerp, which, by decisionof 16 December 2005, held, inter alia, that the restriction of the ADBI to the amount of the profits made during the tax period and which remained after application ofArticle 199 of the ITC 1992 resulted in partial taxation of the distributed profits inregard to Cobelfret, an outcome which was incompatible with Article 4(1) of Directive 90/435.

18 The Belgische Staat appealed this judgment to the Hof van beroep te Antwerpen (Courtof Appeal, Antwerp). That court held that, in order to determine the true nature ofCobelfret’s taxable profits with regard to the tax periods at issue, it was necessary toobtain a ruling on the question of the direct effect of Directive 90/435 and on that of thepossible incompatibility of Article 205(2) of the ITC 1992 with that directive.

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COBELFRET

19 In those circumstances, the Hof van beroep te Antwerpen decided to stay theproceedings and to refer the following question to the Court of Justice for a preliminaryruling:

‘Is a set of rules such as the [DBI system], under which relevant dividends are, first,added to the basis of assessment of the parent company and, subsequently, the amountof those received dividends is, pursuant to Article 205(2) of the [ITC 1992], deductedfrom the basis of assessment of the parent company (in the amount of 95%) only in sofar as the parent company has taxable profits, compatible with Article 4 of [Directive 90/435], inasmuch as the result of such a restriction on deductibility fromdefinitively taxed income is that a parent company will, in a subsequent tax period, betaxed on the dividends received in the case where it had no, or had inadequate, taxableprofits over the tax period in which the dividends were received, or at least that the fiscallosses relating to the tax period are wrongly used up and are, as a result, no longertransferable in the amount of received dividends, which, in the absence of fiscal losses, ought in any case to have been exempted in the amount of 95%?’


Admissibility

20 According to Article 1 of Directive 90/435, the latter applies to distributions of profitsreceived by companies of one Member State which come from their subsidiaries inother Member States. In addition, Article 2 of Directive 90/435 defines its scope inrelation to the forms of companies listed in the annex thereto, while Article 3(1) laysdown the minimum holding necessary to enable one company to be considered aparent company and the other company to be considered a subsidiary within themeaning of Directive 90/435.

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21 It must be noted in that regard that the referring court has omitted to indicate the originof the dividends received by Cobelfret and the percentage of shares held by the latter inthe companies distributing the dividends.

22 Cobelfret submits to the Court, without being challenged by the Belgian Government inthat regard, that it received dividends from its subsidiaries established in the UnitedKingdom and that its holdings in those companies meet the conditions laid down inArticle 3 of Directive 90/435.

23 If it is for the national court, and not the Court of Justice, to determine whether those facts are correct (Case 104/77 Oehlschläger [1978] ECR 791, paragraph 4), it is also forthe national court alone, within the framework of the cooperation between the Court ofJustice and national courts and tribunals established by Article 234 EC, to determine, inthe light of the particular circumstances of the case, both the need for a preliminaryruling in order to enable it to deliver judgment and the relevance of the questions whichit submits to the Court (see, to that effect, Case C-17/03 VEMW and Others [2005] ECR I-4983, paragraph 34 and the case-law cited).

24 The presumption of relevance which attaches to questions referred by national courtsfor a preliminary ruling can be rebutted only in exceptional cases, in particular where itis quite obvious that the interpretation of Community law sought bears no relation tothe actual facts of the main action or to its purpose (see Case C-500/06 Corporación Dermoestética [2008] ECR I-5785, paragraph 23 and the case-law cited).

25 In the present case, as the admissibility of the reference for a preliminary ruling has, moreover, not been contested by Cobelfret, the Belgian Government or the

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COBELFRET

Commission of the European Communities, there are no obvious grounds on which totake the view that the interpretation of Community law requested by the national courtis irrelevant for its purposes.

Substance

26 The reference for a preliminary ruling concerns, first, the interpretation of Article 4(1)of Directive 90/435. Second, the referring court considers it necessary to determinewhether that provision is capable of having a direct effect. Those two aspects must beexamined separately.

The scope of Article 4(1) of Directive 90/435

27 By its question, the referring court asks in essence whether Article 4(1) of Directive 90/435 is to be interpreted as precluding legislation of a Member Statewhich provides that the dividends received by the parent company are included in thelatter’s basis of assessment, to be subsequently deducted in the amount of 95%, to theextent to which the parent company has, for the tax period in question, a positive profitbalance after other exempted profits have been deducted.

As is particularly apparent from the third recital in the preamble to Directive 90/435,the aim of the directive is to eliminate, by introducing a common system of taxation, anydisadvantage to cooperation between companies of different Member States, as

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28


compared with cooperation between companies of the same Member State, andthereby to facilitate the grouping together of companies at Community level (see CaseC-27/07 Banque Fédérative du Crédit Mutuel [2008] ECR I-2067, paragraph 23 and the case-law cited).

29 In order to ensure the neutrality, from the tax point of view, of the distribution of profitsby a subsidiary established in one Member State to its parent company established inanother Member State, Directive 90/435 aims to avoid, in economic terms, doubletaxation of profits, in other words, to avoid taxation of distributed profits, first, in thehands of the subsidiary and, then, in the hands of the parent company (see, to that effect, Banque Fédérative du Crédit Mutuel, paragraphs 24 and 27).

30 To that end, Article 4(1) of Directive 90/435 provides that, where a parent company, byvirtue of its association with its subsidiary, receives distributed profits, the MemberState in which the parent company is established must either refrain from taxing suchprofits or authorise the parent company to deduct from the amount of tax payable thatfraction of the corporation tax paid by the subsidiary which relates to those profits and ifappropriate, the amount of the withholding tax levied by the Member State in which thesubsidiary is resident, up to the limit of the amount of the corresponding domestic tax(Banque Fédérative du Crédit Mutuel, paragraph 25).

31 The Court has already held that Article 4(1) of Directive 90/435 expressly leaves it opento Member States to choose between the exemption system and the imputation system,which, in the case of shareholders receiving those dividends, do not necessarily lead tothe same result (see, to that effect, Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, paragraphs 43 and 44).

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COBELFRET

32 It follows from the observations submitted to the Court by the Belgian Governmentthat the system for which the Kingdom of Belgium has opted is that which is set out inthe first indent of Article 4(1) of Directive 90/435. According to that Government, theADBI guarantees that no tax is levied on the parent company in respect of the dividendsreceived by it by reason of its shareholding in its subsidiary.

33 It should be pointed out that the obligation on a Member State which has chosen thesystem set out in the first indent of Article 4(1) of Directive 90/435 to refrain fromtaxing the profits of the parent company which it receives by virtue of its associationwith its subsidiary is not subordinated to any condition and is expressly subject only toArticles 4(2) and (3) and 1(2) of that directive.

34 The first indent of Article 4(1) of the directive does not lay down, in particular, anycondition that there must be other taxable profits in order for the dividends received bythe parent company not to be subject to taxation.

35 However, the effect of the DBI system, which provides that dividends received by theparent company are to be added to its basis of assessment and that subsequently anamount corresponding to 95% of those dividends is deducted from that basis only ifthere are taxable profits in the hands of the parent company, is that the parent companycan benefit in full from that advantage only on condition that it has not sufferednegative results for the same tax period with regard to its other taxable income.

36 As has been noted by the Advocate General at point 23 of her Opinion, Member Statescannot unilaterally introduce restrictive measures such as a requirement that the

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parent company have taxable profits and thus impose conditions on the possibility ofbenefiting from the advantages provided for in Directive 90/435.

37 Furthermore, when the parent company does not make other taxable profits in the taxperiod concerned, legislation such as that at issue in the main proceedings has the effectof reducing the losses of the parent company up to the amount of the dividendsreceived.

38 In that respect, the Belgian Government acknowledges that the restriction of the ADBIaffects the losses of the parent company. However, in its view, the first indent ofArticle 4(1) of Directive 90/435 does not imply that such effects on losses must beprohibited.

39 It is evident from the file submitted to the Court that, in principle, Belgian tax legislationallows losses to be carried forward to subsequent tax years. Consequently, the reductionof losses to the parent company which could benefit from being thus carried forward upto the amount of the dividends received has an effect on the basis of assessment of that company during the tax year which follows that in which those dividends were receivedin so far as its profits exceed the losses which can be carried forward. Following thereduction in the losses which can be carried forward, that basis of assessment is increased.

40 It follows that, even if the dividends received by the parent company are not subject tocorporation tax for the tax year in the course of which those dividends were distributed,that reduction of losses of the parent company may have the effect that the parentcompany is subject indirectly to taxation on those dividends in subsequent tax yearswhen its results are positive.

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COBELFRET

41 Such an effect of the restriction on the ADBI is not compatible with the terms or theobjective and scheme of Directive 90/435.

42 First, contrary to the assertions of the Belgian Government, the use in the first indent ofArticle 4(1) of the Directive 90/435 of the words ‘refrain from taxing’ instead of the verb ‘exempt’ cannot give rise to the inference that the directive allows the restriction of theADBI to have such an effect on the losses of the parent company.

43 As the Advocate General has indicated in point 28 of her Opinion, there is nothing inthe scheme or purpose of Directive 90/435 to suggest that there is any significantdifference between the concepts of ‘refraining from taxing’ and ‘exempting’ the profits received by the parent company, as the Court has used the concept of ‘exempting’interchangeably with that of ‘refrain[ing] from taxing’ within the meaning of Article 4(1) (see, inter alia, Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation [2006] ECR I-11673, paragraph 53; Test Claimants in the FII Group Litigation, paragraphs 44 and 102; and Banque Fédérative du Crédit Mutuel, para-graph 44).

44 Second, the Belgian Government argues that the DBI system is compatible withDirective 90/435 because, by subjecting the dividends received from subsidiariesestablished in Belgium and those received from subsidiaries established in otherMember States to the same tax treatment, that system manages to achieve the objectivelaid down in the third recital in the preamble to Directive 90/435 of eliminating anypenalisation of cooperation between companies of different Member States as compared with cooperation between companies of the same Member State.

45 As follows from paragraphs 39 and 40 of the present judgment, when the parentcompany does not make other taxable profits in the period during which the dividends

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are received, the DBI system does not allow the objective of preventing economicdouble taxation, as set out in the first indent of Article 4(1) of Directive 90/435, to befully attained.

46 Accordingly, even though, in applying that system to the dividends distributed by bothresident subsidiaries and those established in other Member States, the Kingdom ofBelgium seeks to eliminate all penalisation of cooperation between companies ofdifferent Member States as compared with cooperation between companies of the sameMember State, that does not justify the application of a system which is not compatiblewith the system for preventing economic double taxation set out in the first indent ofArticle 4(1) of Directive 90/435.

47 Third, as the Belgian Government does not claim that the system chosen is theimputation system set out in the second indent of Article 4(1) of Directive 90/435, itcannot rely on the fact that the restriction of the ADBI leads, at the very least, to thesame result as that imputation system and that there is no indication that the othersystem, which is set out in the first indent of Article 4(1), would necessarily lead to amore favourable result than that set out in the second indent.

48 On the one hand, as has been pointed out in paragraph 31 of the present judgment, thechoice between the exemption system and the imputation system does not necessarilylead to the same result for the company receiving the dividends.

49 On the other hand, it follows from the Court’s case-law that a Member State which has failed to transpose the provisions of a directive into national law cannot rely, as againstCommunity citizens, upon limitations that might have been laid down on the basis ofthose provisions (see Case C-184/04 Uudenkaupungin kaupunki [2006] ECR I-3039, paragraph 28 and the case-law cited).

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50

COBELFRET

Likewise, a Member State which has opted, when transposing a directive, for one of thealternative systems provided for by that directive cannot rely on the effects or restrictions which might have arisen from the implementation of the other system.

51 Fourth, it should be pointed out that the references made by the Belgian Government toCouncil Directive 90/434/EEC of 23 July 1990 on the common system of taxationapplicable to mergers, divisions, transfers of assets and exchanges of shares concerningcompanies of different Member States (OJ 1990 L 225, p. 1) and the model conventiondrawn up by the Organisation for Economic Cooperation and Development (OECD)are irrelevant for the purposes of interpreting the first indent of Article 4(1) ofDirective 90/435.

52 Contrary to the assertions of the Belgian Government, the conclusion cannot be drawnfrom Directive 90/434 and, in particular, from Article 6 thereof, that the first indent ofArticle 4(1) of Directive 90/435 requires only that dividends which a parent companyestablished in Belgium receives from its subsidiaries established in other MemberStates be treated in the same way as dividends distributed by the subsidiaries of thatcompany established in Belgium, without prohibiting the effects on losses resultingfrom the limitation of the ADBI.

53 Article 6 of Directive 90/434 provides that, to the extent that, if the mergers, divisions,transfers of assets and exchanges of shares in which companies from two or moreMember States are involved were effected between companies from the Member Stateof the transferring company, the Member State would apply provisions allowing thereceiving company to take over the losses of the transferring company which had notyet been exhausted for tax purposes, it must extend those provisions to cover the take-over of such losses by the receiving company’s permanent establishments situatedwithin its territory. Such an article has therefore a different substantive content to thatof the first indent of Article 4(1) of Directive 90/435. In addition, it makes no referencewhatsoever to that provision.

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54


The Belgian Government also cannot rely on the absence, in the model conventiondrawn up by the OECD, of precise rules governing the arrangements under which theexemption system is to be implemented, with the result that it is for the Member Statesto establish those rules.

55 Suffice it to indicate in this regard that, in the absence of an express indication to thecontrary, a Community act such as Directive 90/435 must be interpreted in the contextof the sources of Community law and of the Community legal order itself (see, to thateffect, Case 12/73 Muras [1973] ECR 963, paragraph 7).

56 It is only in the absence of unifying or harmonising Community measures that it is forthe Member States, which retain the power to define, by treaty or unilaterally, thecriteria for allocating their powers of taxation, particularly with a view to eliminatingdouble taxation, to take the measures necessary to that end by applying, in particular,the apportionment criteria followed in international tax practice, including the modelconventions drawn up by the OECD (see, to that effect, Case C-524/04 Test Claimants in the Thin Cap Group Litigation [2007] ECR I-2107, paragraph 49 and the case-lawcited). That is not the situation in the present case.

57 In view of the foregoing, the answer to the question referred is that the first indent ofArticle 4(1) of Directive 90/435 must be interpreted as precluding legislation of aMember State, such as that at issue in the main proceedings, which provides thatdividends received by a parent company are to be included in its basis of assessment inorder subsequently to be deducted from that basis in the amount of 95%, in so far as, forthe tax period in question, the parent company has a positive profit balance afterdeduction of other exempted profits.

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COBELFRET

The direct effect of Article 4(1) of Directive 90/435

58 According to settled case-law of the Court, whenever the provisions of a directiveappear, so far as their subject-matter is concerned, to be unconditional and sufficientlyprecise, they may be relied on before the national courts by individuals against the Statewhere the latter has failed to implement the directive in domestic law by the end of theperiod prescribed or where it has failed to implement the directive correctly (see, interalia, Joined Cases C-6/90 and C-9/90 Francovich and Others [1991] ECR I-5357, paragraph 11; Case C-62/00 Marks & Spencer [2002] ECR I-6325, paragraph 25; and Joined Cases C-397/01 to C-403/01 Pfeiffer and Others [2004] ECR I-8835, para-graph 103).

59 The Belgian Government contend that the choice left to the Member States byArticle 4(1) of Directive 90/435 in regard to the precise rules for the tax treatment ofprofits distributed to a parent company by its subsidiaries, as well as the lack ofprecision with regard to those rules and their scope, result in that provision not beingunconditional or, at least, not being sufficiently precise to have direct effect.

60 According to the Belgian Government, that provision can at most be consideredunconditional and sufficiently precise with regard to the minimum result which isguaranteed by the implementation of each practical arrangement which it authorises.

61 In this regard, it is consistent case-law of the Court that the right given to MemberStates to choose among several possible means of achieving the result required by adirective does not preclude the possibility for individuals to enforce before the national

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courts rights the content of which can be determined with sufficient precision on thebasis of the provisions of the directive alone (see, inter alia, Francovich and Others, paragraph 17, and Case C-226/07 Flughafen Köln/Bonn [2008] ECR I-5999, para-graph 30).

62 In the present case, however, it is not necessary to consider whether, notwithstandingthe choice left to the Member States by Article 4(1) of Directive 90/435, it is possible toidentify the minimum rights accorded to individuals under that provision.

63 In so far as it appears from the file that the Kingdom of Belgium opted for the system setout in the first indent of Article 4(1) of Directive 90/435, it is sufficient to establishwhether that provision is unconditional and sufficiently precise to be capable of beingrelied on before national courts.

64 The obligation to refrain from taxing profits which a subsidiary distributes to its parentcompany, set out in the first indent of Article 4(1), is worded in unequivocal terms and isnot subject to any condition. Likewise, its implementation or effects are not subject tothe intervention of any other act on the part of the Community institutions or theMember States.

It follows that the first indent of Article 4(1) of Directive 90/435 is unconditional andsufficiently precise to be capable of being relied on before national courts.

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65

COBELFRET

The request for the judgment to be limited in time

66 In its written observations, the Belgian Government requested the Court, should itinterpret Article 4(1) of Directive 90/435 as precluding national legislation such as theDBI system, to limit the temporal effects of its judgment.

67 In support of its request, the Belgian Government invoked the legitimate expectationwhich it was entitled to entertain on the following grounds: the Commission hadimplicitly approved the DBI system; the imprecise scope of Article 4(1); the lack ofrelevant case-law; and the impact which the judgment would have on Belgian publicfinances if that system were held to be incompatible with Directive 90/435.

68 According to settled case-law, it is only exceptionally that the Court may, in applicationof the general principle of legal certainty inherent in the Community legal order, bemoved to restrict for any person concerned the opportunity of relying on a provisionwhich it has interpreted with a view to calling in question legal relationships establishedin good faith. Two essential criteria must be fulfilled before such a limitation can beimposed, namely that those concerned should have acted in good faith and that thereshould be a risk of serious difficulties (see Case C-313/05 Brzeziński [2007] ECR I-513, paragraph 56 and the case-law cited).

Without it being necessary to examine the arguments of the Belgian Governmentconcerning legitimate expectation, it need merely be pointed out that, as stated by the

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69

70

71


Advocate General at point 36 of her Opinion, the Belgian Government has made noattempt in its written observations or in the course of the hearing to demonstrate thatthere is a risk of serious economic repercussions.

It is therefore not appropriate to limit in time the effects of the present judgment.

Costs


On those grounds, the Court (First Chamber) hereby rules:

The first indent of Article 4(1) of Council Directive 90/435/EEC of 23 July 1990 onthe common system of taxation applicable in the case of parent companies andsubsidiaries of different Member States must be interpreted as precludinglegislation of a Member State, such as that at issue in the main proceedings, whichprovides that dividends received by a parent company are to be included in itsbasis of assessment in order subsequently to be deducted from that basis in theamount of 95%, in so far as, for the tax period in question, the parent company hasa positive profit balance after deduction of other exempted profits.

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COBELFRET

The first indent of Article 4(1) of Directive 90/435 is unconditional and sufficiently precise to be capable of being relied on before national courts.

[Signatures]

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Case C-339/07

Christopher Seagon, in his capacity as liquidator in respect of theassets of Frick Teppichboden Supermärkte GmbH

v Deko Marty Belgium NV

(Reference for a preliminary rulingfrom the Bundesgerichtshof)

(Judicial cooperation in civil matters — Insolvency proceedings — Court with jurisdiction)

Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 16 October2008 . . . . . . . . . . . . . . . . . . . . . . . . . . I - 769 Judgment of the Court (First Chamber), 12 February 2009 . . . . . . . . I - 791


Judicial cooperation in civil matters — Insolvency proceedings — Regulation No 1346/2000

(Council Regulation No 1346/2000, Arts 3(1), 16 and 25, and Recitals 2, 4, 6 and 8)

I - 767


Article 3(1) of Regulation No 1346/2000 oninsolvency proceedings must be interpreted asmeaning that the courts of the Member Statewithin the territory of which insolvencyproceedings have been opened have jurisdic-tion to decide an action to set a transaction aside by virtue of insolvency that is broughtagainst a person whose registered office is inanother Member State.

Such an interpretation results from the effectiveness of that regulation and the inten-

tion of the legislature to limit that regulationto the provisions which govern jurisdiction foropening insolvency proceedings and judg-ments which are delivered directly on the basis of insolvency proceedings and are closely connected with such proceedings.

(see paras 20, 21, 28, operative part)

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SEAGON

OPINION OF ADVOCATE GENERALRUIZ-JARABO COLOMER


I — Introduction

1. Not all debtors have a father like Goriot. Generosity and nobility of spirit are rare in therealm of the market since traders lack the advantages which allowed Delphine and Anastasie, ungrateful and vain daughters, tolive and get into debt with such a lack ofrestraint at the expense of their devoted father,who, when he died in complete financial ruin,was still praising his offspring. 2

2. The insolvency of an undertaking is nohuman comedy but the desperate conduct ofthose who are unable to meet their paymentsgoes back to the origins of humanity. The lawseeks to counteract the ruses of defaultingdebtors in dire straits, although, on occasions,difficulties such as the ones identified by theBundesgerichtshof (German Supreme Court)

in the present case are encountered when therules of law are implemented.

3. In that regard, the Bundesgerichtshof hasreferred to the Court of Justice for a preli-minary ruling under Article 234 EC two questions concerning the interpretation of Article 3(1) of Regulation (EC) No 1346/2000on insolvency proceedings 3 and Article 2(1)and (2) of Regulation (EC) No 44/2001 onjurisdiction and the recognition and enforce-ment of judgments in civil and commercialmatters. 4

4. The referring court asks whether an action in the context of an insolvency to set a transaction aside is subject to the provisionsof Regulation No 1346/2000 or to those ofRegulation No 44/2001, for the purposes ofdetermining the appropriate court to hear across-border dispute.

1 — Original language: Spanish. 2 — H. de Balzac, Père Goriot, translated by A.J. Krailsheimer, 3 — Council Regulation of 29 May 2000 (OJ 2000 L 160, p. 1).

Oxford University Press, Oxford, 1991. 4 — Council Regulation of 22 December 2000 (OJ 2001 L 12, p. 1).

I - 769

OPINION OF MR RUIZ-JARABO — CASE C-339/07

5. Actions in the context of an insolvency toset a transaction aside have their roots in the actio pauliana, a legal remedy governed by civil law which protects creditors against disposals of assets made by their debtors with the intention to defraud. Accordingly, itis necessary to examine the development andthe current state of both remedies and to interpret the two regulations concerned witha view to establishing the correct jurisdiction.

II — The facts

6. Frick Teppichboden Supermärkte GmbH (‘the debtor’) paid EUR 50 000 to Deko MartyBelgium NV (‘the defendant’) on 14 March 2002. Although the defendant is a Belgiancompany established in Belgium, that sum was credited to a bank account the companyholds with KBC Bank in Dusseldorf, Germany.

7. The following day, the debtor applied tocommence insolvency proceedings before theAmtsgericht (Local Court), Marburg, and thatapplication was granted on 1 June 2002. In theorder opening the proceedings Mr Christo-pher Seagon (‘the applicant’) was appointed as liquidator.

8. The applicant brought an action to havethe transaction set aside before the Land-gericht (Regional Court), Marburg and claimed repayment of the EUR 50 000 paidto the defendant.

9. The Landgericht considered the appli-cant’s claim separately and dismissed it as inadmissible on the grounds that German courts were not entitled to rule on the applicant’s action because the defendant has its registered office in another State (Belgium)and Regulation No 1346/2000 does not applyto actions in the context of an insolvency to seta transaction aside. An appeal at last instancewas brought against that judgment before theBundesgerichtshof.

III — Legal framework

A — The Community legal framework

1. Regulation No 1346/2000 on insolvencyproceedings

10. The case turns on the interpretation of the rules on international jurisdiction contained in Community insolvency law. However, it is appropriate to assess the general legal framework applicable to conflictof laws in this field, by also analysing the ruleson the law applicable and the recognition ofjudgments.

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SEAGON

11. Article 3(1) and (2) of RegulationNo 1346/2000 sets out the rules on jurisdic-tion applicable to insolvency proceedings witha Community dimension.

‘Article 3

International jurisdiction

1. The courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction toopen insolvency proceedings. In the case of acompany or legal person, the place of theregistered office shall be presumed to be thecentre of its main interests in the absence of proof to the contrary.

2. Where the centre of a debtor’s main interests is situated within the territory of aMember State, the courts of another Member State shall have jurisdiction to open insol-vency proceedings against that debtor only ifhe possesses an establishment within the territory of that other Member State. The effects of those proceedings shall be restrictedto the assets of the debtor situated in the territory of the latter Member State.

…’

12. The provisions of RegulationNo 1346/2000 governing the law applicableare closely linked to the article cited above.Thus, Article 4 provides:

‘Article 4

Law applicable

1. Save as otherwise provided in this Regula-tion, the law applicable to insolvency proceed-ings and their effects shall be that of the Member State within the territory of whichsuch proceedings are opened, hereafter referred to as the “State of the opening of proceedings”.

2. The law of the State of the opening of proceedings shall determine the conditionsfor the opening of those proceedings, theirconduct and their closure. It shall determine in particular:

…

(m) the rules relating to the voidness, void-ability or unenforceability of legal actsdetrimental to all the creditors.’

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13. As concerns acts detrimental to creditors, Article 13 qualifies the wording of Article 4.

‘Article 13

Detrimental acts

Article 4(2)(m) shall not apply where the person who benefited from an act detrimentalto all the creditors provides proof that:

— the said act is subject to the law of aMember State other than that of the State of the opening of proceedings, and

— that law does not allow any means ofchallenging that act in the relevant case.’

14. Chapter II of Regulation No 1346/2000concerns the recognition and enforcement ofjudgments. Articles 16(1) and 25(1) and (2)are of particular significance for the purposesof the present case.

‘Article 16

Principle

1. Any judgment opening insolvency proceedings handed down by a court of a Member State which has jurisdictionpursuant to Article 3 shall be recognised inall the other Member States from the time that it becomes effective in the State of the openingof proceedings.

…’

‘Article 25

Recognition and enforceability of other judg-ments

1. Judgments handed down by a court whosejudgment concerning the opening of proceed-

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ings is recognised in accordance with Article 16 and which concern the course and closure of insolvency proceedings, and compositions approved by that court shall also be recognised with no further formalities.Such judgments shall be enforced in accor-dance with Articles 31 to 51, with the exception of Article 34(2), of the Brussels Convention on Jurisdiction and the Enforce-ment of Judgments in Civil and CommercialMatters, as amended by the Conventions ofAccession to this Convention.

The first subparagraph shall also apply to judgments deriving directly from the in-solvency proceedings and which are closelylinked with them, even if they were handeddown by another court.

The first subparagraph shall also apply tojudgments relating to preservation measurestaken after the request for the opening of insolvency proceedings.

2. The recognition and enforcement of judg-ments other than those referred to in para-graph 1 shall be governed by the Conventionreferred to in paragraph 1, provided that thatConvention is applicable.’

2. Regulation No 44/2001

15. The general rules on jurisdiction and therecognition and enforcement of judgments are contained in Regulation No 44/2001,whose provisions transpose into Communitylaw the 1968 Brussels Convention, which it supplanted. Article 1, which lays down thescope of the regulation, provides:

‘Article 1

1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or adminis-trative matters.


…

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(b) bankruptcy, proceedings relating to thewinding-up of insolvent companies or other legal persons, judicial arrange-ments, compositions and analogous proceedings;

…’

B — The national legal framework

16. In German insolvency law, measures toprotect assets are set out in Paragraph 129 et seq. of the Insolvenzordnung (InsolvencyCode) of 5 October 1994.

17. However, German law lacks any specificrules on international jurisdiction for actionsin the context of an insolvency to set a transaction aside. In line with RegulationNo 1346/2000, Paragraphs 3 and 102 of theInsolvenzordnung, which concern inter-national jurisdiction, do not provide for anymatters expressly relating to actions to set atransaction aside.

18. Notwithstanding that legislative silence,by judgment of 11 January 1990, the Bundes-gerichtshof held that such actions derive from

insolvency proceedings and are closely connected those proceedings. 5 That judg-ment arose in a case concerning the jurisdic-tion of the German courts in insolvency proceedings with links to other Member States. The Bundesgerichtshof gave that classification of actions to set a transaction aside following an analysis of Article 1 of theBrussels Convention (now RegulationNo 44/2001), the wording of which excludedinsolvency from the scope of the convention.The Bundesgerichtshof ruled that the BrusselsConvention was not applicable because anaction to set aside comes within the insol-vency proceedings and is therefore not covered by the rules of jurisdiction set out inthe convention.

IV — The questions referred for a preli-minary ruling

19. By order of 21 June 2007, the Bundesger-ichtshof referred to the Court the followingquestions arising from the action brought bythe liquidator, Mr Christopher Seagon, against Deko Marty Belgium NV:

‘(1) Do the courts of the Member State withinthe territory of which insolvency proceedings regarding the debtor’s assets have been opened have inter-national jurisdiction under Regulation (EC) No 1346/2000 in respect of an

5 — Judgment of the Bundesgerichtshof of 11 January 1990 (IX ZR27/89).

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action in the context of the insolvency to V — The first question set a transaction aside that is broughtagainst a person whose registered officeis in another Member State?

(2) If the first question is to be answered inthe negative:

Does an action in the context of the insolvency to set a transaction aside fallwithin Article 1(2)(b) of Regulation (EC)No 44/2001?’

20. Observations were lodged, within the time-limit laid down in Article 23 of the EC Statute of the Court of Justice, by the applicantand the defendant in the main proceedings,the Greek and Czech governments, and theCommission.

21. At the hearing on 11 September 2008, oralargument was presented by the legal repre-sentative of Mr Seagon and by the agents ofthe Greek Government and the Commission.

22. The referring court has submitted to theCourt of Justice a question which requires aninitial conceptual analysis. Essentially, it isnecessary to determine whether a civil action,in this case, an action in the context of an insolvency to set a transaction aside, is part ofthe insolvency proceedings by reason of itsconnection with the insolvency. First of all, itis appropriate to pay particular attention tothe action concerned, and to analyse its origins and subsequent development.

A — Actions in the context of an insolvencyto set a transaction aside under Communitylaw on conflicts of jurisdiction

1. Origin and evolution of the action to setaside in insolvency law

23. The protection of creditors against thefraudulent schemes of debtors has improvedconsiderably with the passage of time. Romanlaw produced the first learned legal views onthe matter, although those beginnings were

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not distinguished as being a model of moderation and equity. 6

24. The actio per manus iniectio, the original version of the action to set aside, was an enforcement instrument which granted thecreditor the right to sell the debtor as a slave,together with his family, or to kill him, if thedebt was proved by judgment or confession. 7

Table III of the Law of the Twelve Tables enshrined in explicit terms the severity of theRoman procedural system, closing the table on debt with the famous maxim adversus hostem aeterna auctoritas esto (against an enemy, the right of property is valid forever). 8

25. In around 150 to 125 BC, a praetor namedPaulus, about whom little is known, 9 contrib-uted to the removal of the excessive adherence

6 — The Spanish Roman law specialist Xavier D'Ors began a workby describing the setting aside of fraudulent acts as one of themost difficult and disputed areas in the whole of Roman law (El interdicto fraudatorio en el derecho romano clásico, Rome-Madrid, 1974, p. 1).

7 — The manus iniectio procedure was carried out as follows. If 30days had passed since the declaratory judgment was handeddown and the debtor had not paid, the creditor would take thedebtor, by force if necessary, before the judge and state ‘youwere ordered to pay me 10 000 sesterces and you have not paidthem and I therefore take possession of you under judgmentfor 10 000 sesterces’ (Gaius 4, 21).

8 — Some commentators are of the opinion that this statementproves the existence of a rule to the effect that there was nolimitation period for personal debts. Others take the view thatthe term ‘enemy’ refers to individuals who did not have Roman citizenship, against whom a creditor was entitled to take actionat any time. Whatever the correct interpretation is, whetherthe rule was disproportionate or discriminatory, Roman lawdeveloped along more subtle lines.

9 — The mysterious praetor Paulus has been the source of greatdebate between Roman law specialists. Some argue that he wasthe jurist Paul, a praetorian prefect in 222 BC, while othersmaintain that the name comes from a procedure which wasdeveloped in the Byzantine period. Those views are describedby Planiol, M., Traité élémentaire de droit civil, 8th ed., LGDJ,Paris, 1920-1921, No 1413, and, in more detail, by Collinet, P.,‘L’origine byzantine du nom de la Paulienne’, Nouvelle revue historique de droit français et étranger, 43, 1919.

to formalities from the earliest civil actions bycreating a procedure that was personal anddiscretionary in nature, which enabled a creditor to revoke any acts carried out fraudulently and to his detriment by a debtor. 10 Centuries later, the Digest consoli-dated the most sophisticated version of theactio pauliana, by merging it, in its classicalform, with the interdictum fraudatorium. 11

From that time, the actio pauliana was based on the concepts of alienatio (alien-ation), eventus fraudis (detriment), fraus (fraud) and participatio fraudis (knowledge of the fraud).

26. Two thousand years is sufficient time forthe law and those who practise it to moveforward. However, the genius of the Romanjurists ensured that the main features of theactio pauliana have survived intact to this day. Despite the differences between the legalsystems of the Member States, the solutionswhich those systems offer in respect of

10 — Ankum, J.A., De geschiedenis der ‘actio pauliana’ , Zwolle Tjeenk Willink, 1962; Coing, H., ‘Simulatio und Fraus in der Lehre des Bartolus und Baldus’, Festschrift P. Koschaker,volume III, 1939, p. 402 et seq.; D'Ors, X., op. cit., p. 203; Gutiérrez, F., Diccionario de Derecho Romano, Editorial Reus, Madrid, 1982, p. 25; and Torrent, A., Manual de Derecho Privado Romano, Librería General, Zaragoza, 1995, p. 381.

11 — Digest, Book XXII, Volume I, 38.4: ‘The proceeds of the actio fabiana must also be restored and therefore, in the actio pauliana, whereby the alienation of property effected infraud of the creditors is revoked, the praetor intervenes toensure that everything is left as if nothing was alienated,which is just, because the term ‘you will restore’, which thepraetor uses in this edict, has a sufficiently broad meaning toinclude the restoration of the proceeds’ (Paulo 6 ad Plaut.).

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disposals of assets in fraud of creditors have acommon genetic code. Thus, nowadays theactio pauliana constitutes an exception to theprinciple of privity of contract and is contraryto the rule that a person who is not party to acontract may not benefit from or suffer itslegal consequences. 12 The majority of the national legal systems recognise that what is atthe heart of the action to set aside is not compensation but rather the preservation of a creditor’s rights over a debtor’s assets. From a procedural point of view, the action is broughtagainst a third-party who has acquired thedisputed asset, although the debtor is frequently named so that the judgment givenmay be enforced against him.

27. Over time, there have been significant changes to the actio pauliana in the sphere of insolvency proceedings. 13 The first alteration was to the name, since in insolvency law ittook the title ‘action to set a transaction aside’. 14 The fundamental difference between the action to set aside in civil law and the action in the context of an insolvency to set atransaction aside lies in the effects which each action produces, since, under the general rules, those effects are confined to the individual creditors who have brought theaction, whereas, under the insolvency rules,

12 — A principle which the Latin maxim defines as res inter alios acta aliis neque nocere, neque prodesse potest.

13 — Forner Delaygua, J.J. (ed.), La protección del crédito en Europa: la acción pauliana, Bosch, Barcelona, 2000, carriesout a comparative analysis of the actio pauliana in the sphere of both civil law and insolvency law.

14 — Also called a revocatory action, a term which comprises otherspecific actions for the restitution of assets.

the effects apply to the whole of the assets andtherefore benefit all the creditors, a typicalfeature which has become a general principleof insolvency law under the Latin maxim par conditio creditorum. 15

28. In some national legal systems, such asthe French one, the distinction between the rules of civil law and the rules of insolvencylaw also extends to the rules on nullity, sincethe liquidator may have certain acts declaredautomatically void, a feature which under thegeneral scheme of the action to set aside isrestricted to voidability. 16 That special featureis also found in United Kingdom law, where,depending on the reason behind them, acts may be declared automatically void. 17 In addition, it is appropriate to mention that insolvency law has dispensed with the sub-jective element of the actio pauliana, which required the applicant to prove the debtor’s fraudulent intention. In contrast to their civil law counterparts, provisions governingactions in the context of an insolvency to set a transaction aside generally include a presumption of fraud, thereby reversing theburden of proof. 18

15 — The principle has a number of names and different definitions, as pointed out by Beltrán, E., ‘Artículo 49’, Rojo, A. and Beltrán, E., Comentario a la Ley Concursal, Thomson-Civitas, Pamplona, 2004, p. 990: equal treatment of creditors,pooling of losses, creditors’ settlement or proportionality.With regard to German law, see Balz, M. and Landfermann,H.-G., Die neuen Insolvenzgesetze, 2nd ed., Dusseldorf, 1999.

16 — On French law, see Terré, F., Simler, P. and Lequette, Y., Droit Civil. Les obligations, Dalloz, 7th ed., Paris, 1999, pp. 969 to 970.

17 — Goode, R., Principles of Corporate Insolvency Law, Sweet & Maxwell, London, 2005, pp. 411 to 413.

18 — In Italian law, for example, Royal Decree 267/1942 amendedarticle 708 et seq. of the Commercial Code of 1885 in order to remove the subjective requirements from insolvency proceedings. The need to prove fraud was also removedfrom Spanish law by Article 71 of Law 22/2003 of 9 July oninsolvency.

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29. A further indication of the autonomous nature of the action in the context of an insolvency to set a transaction aside vis-à-visthe general civil action is the fact that the latteraction is secondary in nature, since it may onlybe brought by a liquidator where the condi-tions laid down in insolvency law for bringingan action to set a transaction aside (usually,the limitation periods set out in insolvencylegislation) are not satisfied. 19

2. Actions in the context of an insolvency toset a transaction aside and the Communityprovisions on international jurisdiction

30. The civil action to set aside and its counterpart in insolvency law have been addressed in secondary Community legisla-tion and the case-law of the Court. It has been found that, in Community law, a distinctionbetween the type of action to be broughtunder the general law on debt and the specificproceedings to be brought in the sphere ofinsolvency has endured. That distinction is particularly important with regard to the ruleson conflict of laws, since the outcome varies according to which classification is applicable.

19 — With regard to French law, it is pertinent to cite the judgmentof the Cour de cassation (commercial chamber) of 8 October1996. Spanish law provides for the same solution and,according to academic opinion, the ordinary civil action issecondary to the action in the context of an insolvency to set atransaction aside. That is the view of León, F., ‘Artículo 71. Acciones de reintegración’, Rojo, A. And Beltrán, E., op. cit., pp. 1319 and 1320.

31. In Reichert, 20 the Court was required to carry out an interpretation to determine whether the action paulienne under Frenchlaw was subject to the jurisdiction laid downin the Brussels Convention (now RegulationNo 44/2001) for personal actions or for actions in rem. The dispute between Mr andMrs Reichert and Dresdner Bank concerned the fraudulent donation of immovable prop-erty in France to the couple’s son. Dresdner Bank brought an action paulienne against Mrand Mrs Reichert before a court in France, the country where the immovable property wassituated, thus relying on the principle of locus rei sitae. In the light of a challenge to thejurisdiction of the French courts, the Tribunalde grande instance de Grasse referred to theCourt of Justice for a preliminary ruling aquestion concerning the application of the Brussels Convention to the action paulienne.

32. The Court examined the definition of the action paulienne, concluding that it was a personal rather than an action in rem, andthat, therefore, courts of the locus rei sitae did not have jurisdiction. The Court analysed thenature of the action paulienne in French lawand ruled that it ‘is based on the creditor’s personal claim against the debtor and seeks toprotect whatever security he may have overthe debtor’s estate. If successful, its effect is to render the transaction whereby the debtor haseffected a disposition in fraud of the creditor’s rights ineffective as against the creditor alone.’ 21 Although the Court did not makean explicit ruling to that effect, it is apparentfrom the judgment that jurisdiction lies with

20 — Case C-115/88 Reichert and Kockler [1990] ECR I-27. 21 — Ibid, paragraph 12.

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the courts in the defendant’s State of domi-cile. 22

33. Following that analysis of the action governed by civil law, it must be noted thatthe view of the Court has been considerablydifferent when examining actions in the context of an insolvency to set a transactionaside. In Gourdain, 23 the Court was requiredto define such actions, also in the light ofprovisions of the 1968 Brussels Convention,holding that the convention did not applywhen the action brought was connected withproceedings for the liquidation of assets or thesuspension of payments.

34. It is well known that subparagraph 2 of the second paragraph of Article 1 of the Brussels Convention, together with Article 1(2)(b) of Regulation No 44/2001which is now applicable, excluded from thescope of the convention certain matters such as ‘bankruptcy, proceedings relating to thewinding-up of insolvent companies or otherlegal persons, judicial arrangements, com-positions and analogous proceedings’. In Gourdain, the Court found that actions in the context of an insolvency were caught bythe definition of ‘analogous proceedings’, but with the proviso that such actions must ‘derive directly from the bankruptcy or winding-upand be closely connected with the proceed-

22 — That view was confirmed in Case C-261/90 Reichert and Kockler [1992] ECR I-2149. Borrás, A., Revista Jurídica de Catalunya, 1990, p. 1133 et seq., and 1992, p. 2149, discussedboth judgments. See also Forner Delaygua, J.J., ‘La acción pauliana ante el TJCE’, Revista de Instituciones Europeas,Centro de Estudios Políticos y Constitucionales, 1991, pp. 635 to 637.

23 — Case 133/78 Gourdain [1979] ECR 733.

ings for the “liquidation des biens” or the “règlement judiciaire”’. 24

35. Accordingly, whereas the Court held thatthe action paulienne under civil law fell withinthe scope of the Brussels Convention, it ruledthat actions in the context of an insolvency toset a transaction aside were not covered by theconvention on the grounds that subparagraph2 of the second paragraph of Article 1 excluded them from its conflicts of laws rules.

36. I must point out that, in Gourdain, the Court gave as the reason for that exclusion thedirect relationship between the action and the insolvency proceedings. 25 However, in that judgment the Court does not put forward anautonomous Community definition of actionsin the context of an insolvency to set a transaction aside. On the contrary, the Courtsets out a number of general criteria, which dohave a Community dimension and may thenbe applied to the actions provided for in thelegal systems of the Member States. 26 Usingthe same methodology, the Court acknow-

24 — Ibid, paragraph 4. 25 — Bermejo Gutiérrez, N. and Rodríguez Pineau, E., ‘Normas de

protección de acreedores: entre el derecho de sociedades y elderecho concursal’, InDret, No 4, 2006, pp. 22 to 23, and Enriques, L. and Gelter, M., ‘Regulatory Competition in European Company Law and Creditor Protection’, European Business Organization Law Review, No 7, 2006, p. 440.

26 — That has resulted in the Gourdain case-law being applied bynational courts, which adapt it to each type of action in thecontext of an insolvency to set a transaction aside, as demonstrated by the judgments of inter alia the Tribunal de Bari, Italy, of 27 January 2004, RDIPP, 2004, pp. 1386 to 1390;the Arrondissementsrechtbank Leeuwarden of 31 May 1979;the High Court, Chancery Division (Manchester) of 5 May2005, ILP, 2005-9, p. 552 et seq.; and the Cour de Cassation(Chambre commercial) of 24 May 2005, RCDIP, vol. 94, 2005,p. 489 et seq. In that connection, see Bermejo Gutiérrez, N.and Rodríguez Pineau, E., op. cit., pp. 22 to 23.

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ledged the existence of a link between theinsolvency proceedings and the action underFrench law (disputed in the main proceedingsin that case), having regard to a number offactors. First, under French law, which governed the main proceedings, the action isbrought only before the court which made theinsolvency order; second, only the liquidatoror the court (of its own motion) may bring theaction; third, the action is brought on behalf ofand in the interest of the general body ofcreditors; and fourth, a different limitation period is provided for under the insolvencyprovisions. 27

37. Actions in the context of an insolvency toset a transaction aside have not received the same attention in secondary legislation. Regulation No 1346/2000 on insolvencyproceedings is certainly ambiguous on thissubject, a matter which I will discuss later.

38. However, the 1995 Brussels Convention on insolvency proceedings, which was drawn up under the auspices of the European Community but never entered into force because not all the Member States agreed tosign it, warrants a separate mention. 28

Although the failed instrument is similar incontent to Regulation No 1346/2000, its provisions are accompanied by an explanatoryreport, drawn up and negotiated by the Member States. 29 The report was drafted by

27 — Judgment in Gourdain, paragraph 5.28 — The Convention, opened for signature in Brussels on

22 November 1995, was signed on that day by the plenipotentiaries of Belgium, Denmark, Germany, Greece,Spain, France, Italy, Luxembourg, Austria, Portugal, Finlandand Sweden.

29 — Council document No 6500/1/96 REV1 DRS (CFC).

Professor Miguel Virgós Soriano, professor atthe Universidad Autónoma, Madrid and the Luxembourg magistrate Etienne Schmit, whowere also involved in drafting the conven-tion. 30 In paragraph 77 of the report, theauthors state with authority that, although theconvention does not enshrine the proceduralprinciple of vis atractiva concursus, it does partially address that principle. Citing the Gourdain judgment, the authors assert thatthere is an element of attraction when ‘actions [are] directly derived from insolvency and inclose connection with the insolvency proceedings’. They conclude by stating that ‘[l]ogically, to avoid unjustifiable loopholesbetween the two Conventions, these actions are now subject to the Convention on insolvency proceedings and to its rules of jurisdiction’. 31

3. Summary

39. The rules governing insolvency proceed-ings have diverged significantly from the general provisions of civil law, to the extentthat the traditional actio pauliana has become a very different action in the insolvency law ofthe Member States. The Court has given rulings on both types of action in cases concerning conflicts of jurisdiction at Community level, holding that civil actionsare subject to the general rules of jurisdictionin the Brussels Convention (now Regulation

30 — The names of the authors of the report explains why it isusually referred to as the Virgós-Schmit Report.

31 — Emphasis added.

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No 44/2001) but that actions in the context ofan insolvency to set a transaction aside areexcluded from that convention. Since the rules on international jurisdiction do not apply to insolvency proceedings or to ‘analo-gous proceedings’, the Court has taken the view that, even though actions to set aside donot have an autonomous community defin-ition, they are part of insolvency proceedingswhere they are closely connected with thoseproceedings. That connection is determinedby reference to the nature of each action as it isdefined in the relevant national legislation.

40. That legislative and case-law frameworkformed the applicable law before the entryinto force of Regulation No 1346/2000 on insolvency proceedings. In my view, it is essential to determine next whether the adoption of that provision confirms or amends the points I have set out above.

B — Actions in the context of an insolvency to set a transaction aside and Regulation No 1346/2000

41. The question referred for a preliminaryruling by the Bundesgerichtshof may be reduced simply to the following: does Article 3(1) of Regulation No 1346/2000,which lays down provisions on jurisdictionin the field of insolvency, apply to actions inthe context of an insolvency to set a trans-action aside, even though it does not expresslystate as much?

42. Contrary to the assertions of the applicantand the defendant, I do not believe that in the present case there are any lacunae in the Community legislation. The analogy principle comes into play when the law does not provide a solution to the problem. Where there is no applicable provision, pursuant tothe analogy principle, a legal practitioner mayinvoke another provision with an identical legal basis and identical subject-matter. 32

That may not occur in the present proceed-ings because there are applicable rules (Article 3(1) of Regulation No 1346/2000), inaddition to other articles in the same legisla-tion which assist with the resolution of the proceedings.

43. There is, however, a pitfall with regard tointerpretation, which calls for an analysis ofArticle 3(1). That is where the uncertainties ofthe referring court lie. There is no lacuna andinstead it is necessary to carry out an interpretation.

1. Regulation No 1346/2000 and its conflictsof laws rules

44. Regulation No 1346/2000 appears to remain silent on the matter of jurisdiction

32 — On the definition of a lacuna and the use of analogy in thetheory of legal argument, see Perelman Ch., (ed.), Le problème des lacunes en droit, Bruylant, Brussels, 1968, and Díez-Picazo, L., Experiencias jurídicas y teoría del derecho, Ariel, Barcelona, 1973, pp. 280 to 283.

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for bringing an action in the context of aninsolvency to set a transaction aside, but Article 3(1) of the regulation contains a general rule of jurisdiction based on the jurisdiction of the State within the territoryof which the centre of a debtor’s main interests is situated. 33

45. That rule is capable of providing a straightforward solution, bolstered by another argument put forward by the de-fendant. Article 18(2) of RegulationNo 1346/2000, which sets out the powers ofthe liquidator, confers on the liquidator theright to ‘bring any action to set aside which isin the interests of the creditors’, from which it may be inferred that, by providing that theliquidator may bring such actions without adopting a rule of jurisdiction in that regard,the Community legislature wished to excludeactions to set aside from the scope of theregulation. It follows from the same argumentthat international jurisdiction is provided forin Regulation No 44/2001 or in the separaterules of national law.

33 — That rule does not mean that Regulation 1346/2000 hasadopted the principle of vis atractiva concursus. Paragraph 77 of the Virgós-Schmit Report confirms this, stating that: ‘Certain Contracting States recognise a “vis attractiva concursus” in their national law, by virtue of which theCourt which opens the insolvency proceedings has within itsjurisdiction not only the actual insolvency proceedings butalso all the actions arising from the insolvency. Although theprojection of this principle in the international domain iscontroversial, the 1982 Community Draft Convention contained a provision in Article 15 which... was inspired bythe “vis attractiva” theory. This Article conferred on the courts of the State of the opening of insolvency proceedingsjurisdiction over a wide series of actions resulting from theinsolvency. Neither this precept nor this philosophy has beenadopted in this Convention’.

46. Notwithstanding the logic of that argu-ment advanced by the defendant, to my mind,the reply of the applicant is more persuasivesince, although, unlike Article 3(1), Article 18(2) of Regulation No 1346/2000refers nominally to actions to set aside, such an a contrario interpretation must be applied with caution. 34 The wording of recital 6 in thepreamble to Regulation No 1346/2000, whichreflects the uncertainties of the institutions with regard to the issue of jurisdiction andactions in the context of an insolvency to set atransaction aside, is evidence of that need for caution. After stating that the provisions ofthe regulation are intended to comply with theprinciple of proportionality, the recital goes on to state that the Regulation ‘should be confined to provisions governing jurisdictionfor opening insolvency proceedings and judgments which are delivered directly on the basis of the insolvency proceedings andare closely connected with such proceedings’. The recital points out that the regulation goesfurther than that, since it also concerns ‘the recognition of those judgments and the applicable law which also satisfy that prin-ciple’.

47. The intention of the Council to resolve the difficulties inherent in cases such as the present one is clearly and unequivocallydemonstrated, which moves me to minimise the importance of Article 18(2) when it comesto interpreting Article 3(1).

34 — The interpretation of Article 18(2) advanced by the defendantis severely criticised by Pannen, K. (ed.), European Insolvency Regulation, De Gruyter, Berlin, 2007, p. 125. In the latter’s opinion, the draftsmen of the regulation were fully aware ofthe difficulties raised by actions connected with insolvencyproceedings.

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48. An analysis of the scheme of RegulationNo 1346/2000 leads to an outcome which differs from the one proposed by the de-fendant, 35 since Article 4(2)(m) and the second subparagraph of Article 25(1) lay down rules on the law applicable and the recognition of judgments with regard to actions in the context of an insolvency to seta transaction aside. The fact that the second subparagraph of Article 25(1) contains such arule is of particular significance, since, byreferring to the provisions on recognition andenforcement laid down in RegulationNo 44/2001, the article provides that thoseprovisions ‘shall also apply to judgmentsderiving directly from the insolvency proceed-ings and which are closely linked with them,even if they were handed down by anothercourt’. That is a clear reference to the Gourdain judgment, which bolsters the posi-tion of the applicant. 36

49. Regulation No 1346/2000 does not differ-entiate between the rules on jurisdiction andthe rules on recognition. In fact, the two setsof rules feed off one another, since the judgments which must be recognised underArticle 25 concern the matters which come under the jurisdiction of the court seised ofthe insolvency proceedings. 37

35 — The defendant is supported by the Greek and Czech governments.

36 — That view is shared by Duursma-Kepplinger, H.-C., Duursma, D. and Chalupsky, E., Europäische Insolvenzver-ordnung, Springer, Vienna — New York, 2002, p. 441.

37 — In that connection, it is appropriate to cite the authoritativeopinions of Virgós, M. and Garcimartín, F., Comentario al Reglamento Europeo de Insolvencia, Thomson-Civitas, Pamplona, 2003, p. 66: ‘suffice it to state that the Insolvency Regulation does not differentiate between the rules on jurisdiction and the rules on recognition/enforcement withregard to their material scope, since they were drafted asparallel rules. As a result, the range of judgments referred toin Article 25 serves to specify the matters or disputes whichfall within the jurisdiction of the court seised of the insolvency proceedings’.

50. For the reasons set out, the intention of the Council in laying down the proceduralrules governing actions in the context of aninsolvency to set a transaction aside is clear.The analysis of Regulation No 1346/2000 demonstrates that there is not a total but rather a partial silence. That factor con-tributes to the solution which I will proposeto the Court, but before that I must consider the role played by Regulation No 44/2001.

2. The interpretation of Regulations No 1346/2000 and No 44/2001

51. In order to ensure that Article 3(1) ofRegulation No 1346/2000 confers over-arching jurisdiction on the court seised of the insolvency proceedings, it is appropriateto establish whether, pursuant to the Gour-dain case-law, Regulation No 44/2001 excludes actions in the context of an in-solvency to set a transaction aside.

52. The defendant claims that the entry intoforce of Regulation No 1346/2000 broughtabout a substantial change in the legislativeframework which modified the terms of the Gourdain judgment, discussed above, in thatsubparagraph 2 of the second paragraph ofArticle 1 of the 1968 Brussels Convention was interpreted broadly owing to the fact that there was only one Community instrument inthe field and accordingly no risk of over-lapping. The Gourdain judgment was, there-fore, the final link in a chain the only pendant

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on which was a single piece of legislation inthe field concerned. The defendant maintains that, following the adoption of RegulationNo 1346/2000, the need to prevent lacunae inthe rules on jurisdiction required a differentinterpretation of the aforementioned provi-sion, now Article 1(2)(b) of Regulation No 44/2001. In the view of the defendant, since there is already a provision governingjurisdiction in the field of insolvency, it mustbe interpreted restrictively. That view wouldleave the determination of international jurisdiction to the autonomous national rules, in this case the rules of German law.

53. However, the defendant’s position is totally unconvincing, since it would be possible to accept such a position only if it were really the case that Article 3(1) of Regulation No 1346/2000 fails to lay downany rules on jurisdiction with regard to actionsin the context of an insolvency to set a transaction aside. In line with the argumentadvanced by the Czech Government in itswritten observations, there is nothing to indicate that the Community legislation oninsolvency is silent on the matter; moreover,the fact that the two regulations exist side byside strengthens the principle of the absenceof lacunae, although not in the way claimed bythe defendant. 38

38 — On the principle of the absence of lacunae, see SánchezLorenzo, S. and Fernández Rozas, J.C., Derecho Internacional Privado, 3rd ed.,Thomson-Civitas, Pamplona, 2004, pp. 64 to67, and Virgós, M. y Garcimartín, F., op. cit., pp. 62 and 63.

54. The consistency of Community law entails two consequences. The first is that when the general provision is silent or refers,implicitly or explicitly, to another provision, itis necessary to look for the rule of jurisdictionin the special provisions. The second conse-quence is that the large number of Commu-nity provisions means that any reference tonational law would be superfluous, not onlybecause of the scheme of the relationship between provisions but also for reasons connected with the effectiveness of the rules on jurisdiction and recognition laid down inthe Community rules on conflict of laws. 39

55. Accordingly, the Gourdain judgment is ingood health and provides useful guidance forresolving the present proceedings. 40 Rather than weakening the usefulness of that judg-ment, the adoption of RegulationNo 1346/2000 increases it. Since there is nouniform action to set aside in Community law,the nature of the action and its subsequentconnection with the insolvency proceedings isof particular importance. 41 Thus, an analysisof the action to set aside in German law offers sufficient reasons to rely on Gourdain and to establish which regulation contains the rule ofjurisdiction. 42

39 — Virgós, M. and Garcimartín, F., op. cit., p. 63, cite by way ofexample the absurd consequences of such an approach.

40 — However, the Gourdain judgment does not apply only toactions in the context of an insolvency to set a transactionaside. The rule laid down by the Court in Gourdain is also satisfied in disputes between the liquidator and the debtorconcerning whether an asset is part of the estate in bankruptcy; disputes about the powers of the liquidator totake decisions regarding the fulfilment of contractual relationships in force; and actions for liability against liquidators.

41 — See in that regard, Pannen, K. (ed.), op. cit., pp. 122 and 123. 42 — Ibid., p. 124.

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56. Paragraph 129 et seq. of the Insolven-zordnung, 1994 provides that the action in thecontext of an insolvency to set a transactionaside has the following features. The action isgoverned exclusively by insolvency law andmay be brought only in the context of aninsolvency, 43 and legal standing to bring theaction rests solely with the liquidator whomust be acting to protect the interests of thegeneral body of creditors. 44 Further, in seekingto protect the assets of the debtor, the action isbrought vis-à-vis dispositions preceding the opening of the insolvency proceedings, andthere is a limitation period for that purpose. 45

57. The fact that the proceedings are adver-sarial rather than collective, as is the case in the context of insolvency, is not sufficient for afinding that there is no connection betweenthe action to set aside and the insolvency proceedings. 46 All the indications are that the action is closely linked to the judicial declar-ation of insolvency, which only the liquidatorhas legal standing to apply for, thereby demonstrating its undeniable connection with the insolvency proceedings.

43 — Paragraph 129 et seq. of the Insolvenzordnung. 44 — Paragraph 129(1) of the Insolvenzordnung. 45 — Paragraphs 130, 132 and 133 of the Insolvenzordnung. 46 — That argument is capable of giving rise to quite ridiculous

outcomes, since the insolvency proceedings must, withoutany exceptions, comply with the adversarial principle, whichis an integral guarantee of the fundamental right to effectivelegal protection. It might be possible to argue that insolvencyproceedings are different from ordinary civil proceedings, butto my mind that claim is excessively concerned with procedural matters. Insolvency proceedings are required tocomply with all the legal safeguards, including the principle ofthe universal nature of the proceedings laid down in Regulation 1346/2000.

58. Therefore, the joint interpretation of Regulations No 44/2001 and No 1346/2000in the light of the Gourdain case-law leads me to agree that an action in the context of aninsolvency to set a transaction aside does notcome under the general Community provi-sions on jurisdiction. Accordingly, the connection must be found in the provisionsof Regulation No 1346/2000, and specificallyin Article 3(1) of that regulation. That view isbolstered by a number of considerations relating to the legislative policy underlyingCommunity insolvency law. I will examine that point in the next section before finishingwith an important qualification of the fore-going considerations.

3. The aims of the action in the context of an insolvency to set a transaction aside and thelegislative policy underlying Regulation No 1346/2000

59. Community action in the field of in-solvency is based on the need for effectivenessand legal certainty. In order to avoid a complicated legislative framework which discourages financial transactions within theEuropean Union, Regulation No 1346/2000sets out clear guidelines which providestability and consistency in such importantfields as jurisdiction, applicable law, and therecognition and enforcement of judgments.There have been other developments in thesecondary legislation on the subject, all of

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which have the same aim and together formthe body of Community insolvency law. 47 In short, it is a body of law which is fullydedicated to the aim of ensuring that there isconsistency in the adoption of judicial deci-sions. 48

60. Recital 4 in the preamble to RegulationNo 1346/2000 expresses that concern in thecontext of conflict of laws, stating that: ‘[i]t isnecessary for the proper functioning of theinternal market to avoid incentives for the parties to transfer assets or judicial proceed-ings from one Member State to another, seeking to obtain a more favourable legal position (forum shopping)’. With that aim in mind, the regulation provides for a universal international insolvency model based, on asingle definition of all collective proceedings,regardless of the territory in which they wereopened. 49 The advantages of that model areeasily visible, since it provides for a predictablesystem, discourages forum shopping and reduces the costs of the proceedings. 50 Never-

47 — In addition to Regulation 1346/2000, that body of law includes Directive 2001/17/EC of the European Parliamentand of the Council of 19 March 2001 on the reorganisationand winding-up of insurance undertakings (OJ 2001 L 110,p. 28); Directive 98/26/EC of the European Parliament and ofthe Council of 19 May 1998 on settlement finality in paymentand securities settlement systems (OJ 1998 L 166, p. 45);Directive 2001/24/EC of the European Parliament and of theCouncil of 4 April 2001 on the reorganisation and winding-up of credit institutions (OJ 2001 L 125, p. 15); and Directive 2002/47/EC of the European Parliament and ofthe Council of 6 June 2002 on financial collateral arrange-ments (OJ 2002 L 168, p. 43).

48 — Recital 8 in the preamble to Regulation 1346/2000 states thatit is necessary ‘to achieve the aim of improving the efficiencyand effectiveness of insolvency proceedings having cross-border effects’. That aim is repeated in recital 16.

49 — As the regulation intimates, forum shopping, is not a completely unlawful practice. The Community legislation counters the opportunistic and fraudulent use of the right tochoose a forum, which is very different to the demonisationfor the sake of it of a practice which on occasions it isappropriate to encourage. I argued as much in my opinion inCase C-1/04 Staubitz-Schreiber [2006] ECR I-701, para-graphs 70 to 77.

50 — Westbrook, J.L., ‘A Global Solution to Multinational Default’,Michigan Law Review, vol. 98, 2000, p. 2313 et seq.; and, inthe same volume, Guzmán, A., ‘International Bankruptcy: in Defence of Universalism’, p. 2186 et seq.

theless, universalism has drawbacks, notablythe situation in which it leaves certain local creditors, particularly when they are isolatedand have fewer resources than other creditors to bring proceedings in a Member State wherethey do not reside. However, the overall benefits of the universal model speak forthemselves, especially when regard is had tothe true purpose of all insolvency proceed-ings, namely, the reorganisation of an under-taking and guaranteeing credit. The clear reduction of costs which results from the centralisation of all the proceedings is a decisive incentive when it comes to optingfor universal international insolvencyproceedings, which is what, in general terms,Regulation No 1346/2000 provides for. 51

61. Some uncertainty has arisen concerningthe financial sense of separating actions in thecontext of an insolvency to set a transactionaside. The Greek and Czech governments maintain 52 that there would be a significant

51 — In the judgment in Case C-1/04 Staubitz-Schreiber, para-graphs 25 and 26, a case concerning the universal nature ofthe rules on international jurisdiction in Regulation1346/2000, the Court confirmed that view, holding that theregulation seeks ‘to avoid incentives for the parties to transferassets or judicial proceedings from one Member State toanother, seeking to obtain a more favourable legal position.That objective would not be achieved if the debtor couldmove the centre of his main interests to another Member State between the time when the request to open insolvencyproceedings was lodged and the time when the judgmentopening the proceedings was delivered and thus determinethe court having jurisdiction and the applicable law. Such atransfer of jurisdiction would also be contrary to the objective, stated in the second and eighth recitals in thepreamble to the Regulation, of efficient and effective cross-border proceedings, as it would oblige creditors to be incontinual pursuit of the debtor wherever he chose to establishhimself more or less permanently and would often mean inpractice that the proceedings would be prolonged’.

52 — Section IV, paragraphs 2 and 3 of the Greek Government’s observations, and Section 4.2, paragraph 16 of the CzechGovernment’s observations.

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distortion of the universal principle laid downin Regulation No 1346/2000, in that the liquidator would be required to bring actionsin a number of Member States in accordance with the rules of international jurisdiction laiddown in instruments other than the regula-tion. It would also foster legislative differ-ences, and traders would seek the most favourable jurisdiction, thereby disrupting the normal course of insolvency proceed-ings. 53 Although it would give creditors residing in the State where the liquidatorbrings proceedings a certain advantage, it isimportant to remember the global interests which the insolvency proceedings seek to protect, which are not only the interests ofindividual creditors but also those of the general body of creditors and the total liabilities. 54

62. However, there are circumstances in which the universal model is unsatisfactory.For example, I refer to cases where there is aconnection outside the Community, in whichthe guarantee that the judgment handed downin the Member State of the opening of proceedings will be recognised in a non-Member country, where the debtor’s assets are situated, is reduced. Moreover, cen-tralising jurisdiction for insolvency proceed-ings does not always lower the costs, and there

53 — Judgment in Staubitz-Schreiber, paragraph 28. 54 — Although there are conflicting definitions of insolvency

proceedings, some of which refer to the realisation of assetsand others to the preservation of assets, I agree with certainacademic legal writers who argue that the two types of proceedings have a common denominator, namely, ‘the attainment of an ideal of justice’ as Bermejo Gutiérrez, N. Créditos y quiebra, Civitas, Madrid, 2002, pp. 467 to 468, suggests.

are cases in which it would be more advanta-geous to bring actions in the Member Statewhere the assets are situated in order not to waste time or money on recognition and enforcement proceedings.

63. For all of the foregoing reasons, it is appropriate to qualify the universalism of Regulation No 1346/2000 with regard to actions in the context of an insolvency to seta transaction aside.

4. Is the jurisdiction laid down in RegulationNo 1346/2000 alternative or exclusive?

64. Community legislation on insolvencycontains a number of different types of ruleson jurisdiction. The provisions provide for exclusive jurisdiction for the opening, conductand termination of the proceedings, and foractions deriving directly from those proceed-ings. By contrast, jurisdiction for preservationmeasures is alternative in nature.

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65. The particular features of actions in thecontext of an insolvency to set a transactionaside mean that jurisdiction for deciding suchactions is not always exclusive. As a number ofwriters have pointed out, jurisdiction for suchactions is relatively exclusive, which is to be construed as meaning that it comes within thepowers of the liquidator. 55 I agree with thosewho maintain that bringing an action to set atransaction aside is a right of action in thehands of the liquidator. Accordingly, it is forthe liquidator alone to bring the most appro-priate actions in the course of the proceedingsfor the purposes of protecting the assets as awhole.

66. That assertion is supported by Article 18(2) of Regulation No 1346/2000, which provides that the liquidator ‘may in any other Member State claim through the courtsor out of court that moveable property wasremoved from the territory of the State of theopening of proceedings to the territory of thatother Member State after the opening of theinsolvency proceedings’. 56 The article goes onto provide that the liquidator may ‘bring anyaction to set aside which is in the interests of the creditors’. It may logically be presumedthat such an action may be brought in anyMember State, as stated in the first sentence of the article. 57

55 — Virgós, M. y Garcimartín, F., op. cit., pp. 69 to 71. 56 — Emphasis added. 57 — Pannen, K., op. cit., pp. 329 and 330, and the Virgós-Schmit

Report, paragraph 167 et seq.

67. The same approach may also be inferredfrom the second subparagraph of Article 25(1)of the regulation. With regard to the rulesconcerning the recognition and enforcementof judgments, that provision lays down anobligation to recognise judgments ‘derivingdirectly from the insolvency proceedings andwhich are closely linked with them, even if they were handed down by another court’. 58

Thus the regulation provides that judgmentsarising from an action in the context of theinsolvency to set a transaction aside may beadopted by the court seised of the insolvencyproceedings or by another court which is situated either in the same Member State or in a different one.

68. That power of the liquidator is consistentwith the tasks he carries out during the insolvency proceedings. Article 2(b) of Regu-lation No 1346/2000 defines liquidator as aperson or body whose function is to ‘admin-ister or liquidate assets of which the debtorhas been divested or to supervise the admin-istration of his affairs’. The powers and obligations of liquidators vary between theMember States but have the general feature ofexclusive responsibility for the principal formalities in any insolvency proceedings. The liquidator protects the assets and the par conditio creditorum, and he instigates thecompositions and reorganisation plans whichenable an undertaking to overcome the crisis.In line with the strategic decisions which theliquidator must take, he must choose betweendifferent jurisdictions when it comes to bringing actions to protect the assets.

58 — Emphasis added

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C — Corollary

69. In those circumstances, it is my view that,in accordance with Article 3(1) of RegulationNo 1346/2000, a national court which is seisedof insolvency proceedings has jurisdiction tohear an action in the context of the insolvencyto set a transaction aside brought against adefendant whose registered office is in another Member State. Since that jurisdictionis relatively exclusive, it is for the liquidator tochoose the forum which, having regard to theconnections of the contested disposition, ismost suitable for protecting the assets.

VI — The second question

70. The second question from the referringcourt is framed in such a way that it is subjectto the Court giving a negative reply to the firstquestion. Accordingly, in the light of the replyI propose to the first question, it is not necessary to analyse the second question.

71. However, should the Court disagree withthe view put forward in this Opinion, it wouldbe necessary to rely on the principle of theabsence of lacunae between RegulationNo 44/2001 and Regulation No 1346/2000.

Pursuant to that principle and to the principleof the consistency of Community law, therules of jurisdiction applicable to actions inthe context of an insolvency to set a transac-tion aside with a Community dimension arecontained in those regulations. If the Courtfinds that Article 3(1) of Regulation No 1346/2000 does not apply to such actions, they would come under RegulationNo 44/2001 and the rules of international jurisdiction laid down therein.

72. That is not the most desirable outcome because it would be tantamount to ruling thatthe Gourdain case-law has become obsolete following the adoption of Regulation No 1346/2000. In those circumstances, the Court would be required to provide a consistent and full statement of the law offering a convincing alternative to the one itlaid down in that case. 59

73. The other solution, namely, the determi-nation of international jurisdiction in accor-dance with national rules on conflicts of jurisdiction, would be contrary to the effec-tiveness sought by both regulations, as I haveexplained in paragraph 53 of this Opinion.

59 — Needless to say, should the Court overturn the Gourdain case-law, it follows that when it gives judgment in theseproceedings it must sit as the Grand Chamber.

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74. My proposal is bolstered by the unfortu- theory. I am therefore moved to stress morenate consequences which would result from a forcefully the arguments I have put forward innegative reply to the first question, in relation to the first question from the referringaccordance with the reductio ad absurdum court.

VII — Conclusion

75. In the light of the foregoing considerations, I propose that the Court should reply tothe questions referred for a preliminary ruling by the Bundesverwaltungsgericht,declaring that:

Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that a nationalcourt which is seised of insolvency proceedings has jurisdiction to hear an action in thecontext of the insolvency to set a transaction aside brought against a defendant whoseregistered office is in another Member State.

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v

SEAGON


12 February 2009 *

In Case C-339/07,

REFERENCE for a preliminary ruling under Article 234 EC, from the Bundesgerichtshof (Germany), made by decision of 21 June 2007, received at theCourt on 20 July 2007, in the proceedings

Christopher Seagon, in his capacity as liquidator in respect of the assets of FrickTeppichboden Supermärkte GmbH,

Deko Marty Belgium NV,


composed of P. Jann (Rapporteur), President of the Chamber, A. Tizzano, A. BorgBarthet, E. Levits and J.-J. Kasel, Judges,

* Language of the case: German.

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Advocate General: D. Ruiz-Jarabo Colomer, Registrar: B. Fülöp, Administrator,

having regard to the written procedure and further to the hearing on 11 September2008,


— Mr Seagon, in his capacity as liquidator in respect of the assets of Frick Teppichboden Supermärkte GmbH, by B. Ackermann, Rechtsanwältin,

— Deko Marty Belgium NV, by H. Raeschke-Kessler, Rechtsanwalt,

— the Czech Government, by T. Boček, acting as Agent,

— the Greek Government, by O. Patsopoulou, M. Tassopoulou and I. Bakopoulos,acting as Agents,

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SEAGON

— the Commission of the European Communities, by A.-M. Rouchaud-Joët and S. Gruenheid, acting as Agents,


gives the following

Judgment

This reference for a preliminary ruling concerns the interpretation of Article 3(1) ofCouncil Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings(OJ 2000 L 160, p. 1) and Article 1(2)(b) of Council Regulation (EC) No 44/2001 of22 December 2000 on jurisdiction and the recognition and enforcement of judgmentsin civil and commercial matters (OJ 2001 L 12, p. 1).

The reference was made in the course of proceedings between Mr Seagon, in hiscapacity as liquidator in respect of the assets of Frick Teppichboden SupermärkteGmbH (‘Frick’), and Deko Marty Belgium NV (‘Deko’) concerning repayment by the latter of EUR 50 000 paid to it by Frick.

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2


Legal background

3 Recital 2 in the preamble to Regulation No 1346/2000 states:

‘The proper functioning of the internal market requires that cross-border insolvencyproceedings should operate efficiently and effectively and this Regulation needs to beadopted in order to achieve this objective which comes within the scope of judicialcooperation in civil matters within the meaning of Article 65 of the [EC] Treaty.’

4 According to recital 4 in the preamble to that regulation ‘[i]t is necessary for the properfunctioning of the internal market to avoid incentives for the parties to transfer assets orjudicial proceedings from one Member State to another, seeking to obtain a morefavourable legal position (forum shopping)’.

5 Recital 6 in the preamble to Regulation No 1346/2000 provides:

‘In accordance with the principle of proportionality this Regulation should be confinedto provisions governing jurisdiction for opening insolvency proceedings and judgmentswhich are delivered directly on the basis of the insolvency proceedings and are closelyconnected with such proceedings. In addition, this Regulation should contain provisions regarding the recognition of those judgments and the applicable law which also satisfy that principle.’

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Recital 8 in the preamble to Regulation No 1346/2000 states:

‘In order to achieve the aim of improving the efficiency and effectiveness of insolvencyproceedings having cross-border effects, it is necessary, and appropriate, that theprovisions on jurisdiction, recognition and applicable law in this area should becontained in a Community law measure which is binding and directly applicable inMember States.’

7 Article 3(1) of Regulation No 1346/2000 provides:

‘The courts of the Member State within the territory of which the centre of a debtor ’s main interests is situated shall have jurisdiction to open insolvency proceedings. In thecase of a company or legal person, the place of the registered office shall be presumed tobe the centre of its main interests in the absence of proof to the contrary.’

8 Article 16(1) of Regulation No 1346/2000 states:

‘Any judgment opening insolvency proceedings handed down by a court of a MemberState which has jurisdiction pursuant to Article 3 shall be recognised in all the otherMember States from the time that it becomes effective in the State of the opening ofproceedings.

This rule shall also apply where, on account of his capacity, insolvency proceedingscannot be brought against the debtor in other Member States.’

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9 The first and second subparagraphs of Article 25(1) of Regulation No 1346/2000provide:

‘Judgments handed down by a court whose judgment concerning the opening ofproceedings is recognised in accordance with Article 16 and which concern the courseand closure of insolvency proceedings, and compositions approved by that court shallalso be recognised with no further formalities. …

The first subparagraph shall also apply to judgments deriving directly from theinsolvency proceedings and which are closely linked with them, even if they werehanded down by another court.’

10 Article 1(1) of Regulation No 44/2001 defines the scope of the regulation. The latter isto apply in civil and commercial matters and is not to extend, in particular, to revenue,customs or administrative matters.

11 Article 1(2)(b) of Regulation No 44/2001 provides:

‘The Regulation shall not apply to:

…

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(b) bankruptcy, proceedings relating to the winding-up of insolvent companies orother legal persons, judicial arrangements, compositions and analogous proceed-ings.’


12 On 14 March 2002, Frick, which has its seat in Germany, transferred EUR 50 000 to anaccount with KBC Bank in Düsseldorf in the name of Deko, a company with its seat inBelgium. Pursuant to an application made by Frick on 15 March 2002, the AmtsgerichtMarburg (Local Court, Marburg) (Germany) opened insolvency proceedings on 1 June2002 in respect of Frick’s assets. By application to the Landgericht Marburg (RegionalCourt, Marburg), Mr Seagon, in his capacity as liquidator in respect of Frick’s assets, requested that court, by way of an action to set a transaction aside by virtue of thedebtor’s insolvency, to order Deko to repay the money.

13 The Landgericht Marburg dismissed that application as inadmissible on the groundthat it did not have international jurisdiction to hear and determine it. Since the appealbrought by Mr Seagon was also dismissed he brought an appeal on a point of law(‘Revision’) before the Bundesgerichtshof (Federal Court of Justice) (Germany).

14 In those circumstances the Bundesgerichtshof decided to stay the proceedings before itand to refer the following questions to the Court for a preliminary ruling:

‘(1) Do the courts of the Member State within the territory of which insolvencyproceedings regarding the debtor’s assets have been opened have internationaljurisdiction under Regulation [No 1346/2000] in respect of an action in the context

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of the insolvency to set a transaction aside that is brought against a person whoseregistered office is in another Member State?

(2) If the first question is to be answered in the negative:

Does an action in the context of the insolvency to set a transaction aside fall withinArticle 1(2)(b) of Regulation [No 44/2001]?’

The questions referred for a preliminary ruling

15 The questions referred by the national court concern the international jurisdiction ofcourts in respect of actions to set a transaction aside by virtue of insolvency.

16 It is clear from the order for reference that the action to set a transaction aside is governed in German law by Paragraph 129 et seq. of the Insolvency Code (Insolvenzordnung) of 5 October 1994 (BGBl. 1994 I, p. 2866). Only the liquidatormay bring such an action in the event of insolvency with the sole purpose of protectingthe interests of the general body of creditors. Under the provisions of Paragraphs 130 to146 of that code, the liquidator may challenge acts undertaken before the insolvencyproceedings were opened which are detrimental to the creditors.

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17 The action to set a transaction aside at issue in the main proceedings is thereforeintended to increase the assets of the undertaking which is the subject of insolvencyproceedings.

18 It is appropriate to examine whether these actions to set a transaction aside are includedwithin the scope of Article 3(1) of Regulation No 1346/2000.

19 In that connection, it must be noted, as a preliminary point, that the Court has held, inits case-law relating to the Convention of 27 September 1968 on jurisdiction and theenforcement of judgments in civil and commercial matters (OJ 1978 L 304, p. 36), thatan action similar to that at issue in the main proceedings is related to bankruptcy orwinding-up if it derives directly from the bankruptcy or winding-up and is closelyconnected with the proceedings for the ‘liquidation des biens’ or the ‘règlement judiciaire’ (see Case 133/78 Gourdain [1979] ECR 733, paragraph 4). An action withsuch characteristics does not therefore fall within the scope of that convention.

20 It is exactly that criterion that is used by recital 6 in the preamble to RegulationNo 1346/2000 in order to delimit the purpose of the regulation. Thus, according to thatrecital, the regulation should be confined to provisions governing jurisdiction foropening insolvency proceedings and judgments which are delivered directly on thebasis of the insolvency proceedings and are closely connected with such proceedings.

21 Taking into account that intention of the legislature and the effectiveness of theregulation, Article 3(1) thereof must be interpreted as meaning that it also confersinternational jurisdiction on the Member State within the territory of which insolvencyproceedings were opened in order to hear and determine actions which derive directlyfrom those proceedings and which are closely connected to them.

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22 Concentrating all the actions directly related to the insolvency of an undertaking beforethe courts of the Member State with jurisdiction to open the insolvency proceedingsalso appears consistent with the objective of improving the effectiveness and efficiencyof insolvency proceedings having cross-border effects, referred to in recitals 2 and 8 inthe preamble to Regulation No 1346/2000.

23 Furthermore, that interpretation is confirmed by recital 4 in the preamble to thatregulation, according to which it is necessary for the proper functioning of the internalmarket to avoid incentives for the parties to transfer assets or judicial proceedings fromone Member State to another, seeking to obtain a more favourable legal position (forumshopping).

24 The possibility for more than one court to exercise jurisdiction as regards actions to seta transaction aside by virtue of insolvency brought in various Member States wouldundermine the pursuit of such an objective.

25 Finally, the interpretation of Article 3(1) of Regulation No 1346/2000, as set out inparagraph 21 above, is supported by Article 25(1) of that regulation. The first subparagraph of that provision imposes an obligation to recognise judgments handeddown by a court whose judgment concerning the opening of proceedings is recognisedin accordance with Article 16 of the regulation and which concern the course andclosure of insolvency proceedings, that is to say, a court with jurisdiction underArticle 3(1) of that regulation.

26 Pursuant to the second subparagraph of Article 25(1) of Regulation No 1346/2000, thefirst subparagraph of Article 25(1) is also to apply to judgments deriving directly fromthe insolvency proceedings and which are closely linked with them. In other words, that

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provision allows the possibility for courts of a Member State within the territory ofwhich insolvency proceedings have been opened, pursuant to Article 3(1) of thatregulation, also to hear and determine an action of the type at issue in the mainproceedings.

27 In that context, the words ‘even if they were handed down by another court’, at the end of the last sentence of the second subparagraph of Article 25(1) of RegulationNo 1346/2000, do not mean that the Community legislature wished to exclude thejurisdiction of the courts of the State within the territory of which the insolvencyproceedings for the type of actions concerned were opened. Those words mean, inparticular, that it is for the Member States to determine the court with territorial andsubstantive jurisdiction, which does not necessarily have to be the court which openedthe insolvency proceedings. Moreover, those words refer to the recognition of judgments opening insolvency proceedings, which is provided for in Article 16 ofRegulation No 1346/2000.

28 Having regard to all of the foregoing considerations, the answer to the first question isthat Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that thecourts of the Member State within the territory of which insolvency proceedings havebeen opened have jurisdiction to decide an action to set a transaction aside by virtue ofinsolvency that is brought against a person whose registered office is in anotherMember State.

Given the answer to the first question, there is no need to answer the second question.

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29

30


Costs



Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as meaning that the courts of theMember State within the territory of which insolvency proceedings have beenopened have jurisdiction to decide an action to set a transaction aside by virtue ofinsolvency that is brought against a person whose registered office is in anotherMember State.

[Signatures]

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Case C-466/07

Dietmar Klarenbergv

Ferrotron Technologies GmbH

(Reference for a preliminary rulingfrom the Landesarbeitsgericht Düsseldorf)

(Social policy — Directive 2001/23/EC — Transfer of undertakings — Safeguarding ofemployees’ rights — Concept of ‘transfer’ — Legal transfer of a part of a business to

another undertaking — Organisational autonomy following the transfer)

Opinion of Advocate General Mengozzi delivered on 6 November 2008 . . . I - 805Judgment of the Court (Fourth Chamber), 12 February 2009 . . . . . . . I - 819


Social policy —Approximation of laws —Transfers of undertakings — Safeguarding of employees’rights — Directive 2001/23 — Scope — Transfer — Meaning

(Council Directive 2001/23, Art. 1(1)(a) and (b))

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Article 1(1)(a) and (b) of Directive 2001/23 onthe approximation of the laws of the MemberStates relating to the safeguarding of employees’ rights in the event of transfers ofundertakings, businesses or parts of under-takings or businesses must be interpreted asmeaning that that directive may also apply in asituation where the part of the undertaking orbusiness transferred does not retain its organisational autonomy, provided that thefunctional link between the various elements of production transferred is preserved, andthat that link enables the transferee to use those elements to pursue an identical or analogous economic activity, a matter whichit is for the national court to determine.

Regard being had, in particular, to the objective pursued by Directive 2001/23,

which seeks to ensure effective protection ofemployees’ rights in the event of a transfer, anunderstanding of the identity of the economicentity, according to which that identitydepends entirely on the single factor relatingto organisational autonomy, cannot be accepted. It would imply that, on account ofthe sole fact that the transferee decides to break down the part of the undertaking orbusiness which it has acquired and to integrate it into its own structure, that directive could not be applied to that part ofthe undertaking or business, thus deprivingthe employees concerned of the protectionafforded by that directive.


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OPINION OF ADVOCATE GENERALMENGOZZI


1. By this reference, the LandesarbeitsgerichtDüsseldorf seeks from the Court of Justice a preliminary ruling on the interpretation of Article 1(1)(a) and (b) of Council Direct-ive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers ofundertakings, businesses or parts of under-takings or businesses. 2

2. The question arose in proceedings broughtby Mr Dietmar Klarenberg against FerrotronTechnologies GmbH (‘Ferrotron’),concerning the continuation under Ferrotronof the applicant’s employment relationshipwith ET Electrotechnology GmbH (‘ET’).

I — Law

A — Community law

3. Recitals 1, 2 and 3 in the preamble to Directive 2001/23 state as follows:

‘Council Directive 77/187/EEC of 14 February1977 on the approximation of the laws of theMember States relating to the safeguarding ofemployees’ rights in the event of transfers ofundertakings, businesses or parts of under-takings or businesses 3 has been substantially amended. In the interests of clarity and rationality, it should therefore be codified.

1 — Original language: Italian.2 — OJ 2001 L 82, p. 16. 3 — OJ 1977 L 61, p. 26.

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OPINION OF ADVOCATE GENERAL MENGOZZI — CASE C-466/07

Economic trends are bringing in their wake, atboth national and Community level, changesin the structure of undertakings, throughtransfers of undertakings, businesses or partsof undertakings or businesses to other employers as a result of legal transfers or mergers.

It is necessary to provide for the protection ofemployees in the event of a change of employer, in particular, to ensure that theirrights are safeguarded’.

4. Article 1(1)(a) and (b) of Directive 2001/23provides as follows:

‘(a) This Directive shall apply to any transferof an undertaking, business, or part of anundertaking or business to another employer as a result of a legal transfer or merger.

(b) Subject to [point] (a) and the followingprovisions of this Article, there is a transfer within the meaning of this Directive where there is a transfer of an economic entity which retains its iden-tity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whetheror not that activity is central or ancillary.’

5. Under Article 3(1) of that directive:

‘The transferor’s rights and obligations arisingfrom a contract of employment or from anemployment relationship existing on the dateof a transfer shall, by reason of such transfer,be transferred to the transferee.’

B — National law

6. Directive 2001/23 and its predecessors 4

were transposed into German law by Para-graph 613a of the Bürgerliches Gesetzbuch(BGB) (German Civil Code). Paragraph 613a(1) provides that:

‘In the event of a transfer of a business or partof a business to another employer as a result ofa legal transaction, the latter shall assume therights and obligations arising under employ-

4 — Directive 77/187/EEC cited in point 3 above, and CouncilDirective 98/50/EC of 29 June 1998 amending Direct-ive 77/187/EEC on the approximation of the laws of the Member States relating to the safeguarding of employees’rights in the event of transfers of undertakings, businesses orparts of undertakings or businesses (OJ 1998 L 201, p. 88).

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ment contracts existing at the time of the measurement and control techniques for thetransfer.’ steel industry.

II — The dispute in the main proceedingsand the question referred for a preliminaryruling

7. From 1 January 1989, Mr Klarenberg, theapplicant in the main proceedings was employed by ET, a company active in the field of industrial automation, and measure-ment and control technology. On 1 May 1992he was appointed head of the F+E/ET-Systeme/Netzwerk/IBS (R&D/ET-Systems/ Network/Interface technology and bus systems) (‘IBS’) unit of ET. That unit comprised three teams, namely the F+E/ETSysteme (R&D/ET) team, for which Mr Klarenberg was directly responsible; the EDV/Netzwerk/Serversysteme/Datensi-cherung (Data Processing/Network/Server Systems/Data Protection) team and the Produktion/Schaltschränke/Platinen(Production/Control Cabinets/CircuitBoards) team, headed by Mr Neumann, whowas also deputy head of the whole unit.

8. Ferrotron, the defendant in the main proceedings, specialises in the design and manufacture of products in the field of

9. On 22 November 2005, ET entered into an ‘asset and business sale and purchase agree-ment’ with Ferrotron and with Ferrotron’s US-based parent company, concerning the following products developed by ET: ET-DecNT (digital electrode controller for elec-tric arc furnaces), FT7000, ET-TempNet andET-OxyNet (metallurgical measuringsystems). All the products in question werethe work of the F+E/ET Systeme team. Underthat agreement, Ferrotron’s parent companyacquired all rights over the software, patents,patent applications and inventions, as well as over the product names and the technical know-how relating to those products. Ferro-tron acquired the development hardware, aninventory of product materials, a list of suppliers and a list of customers. Additionally,some of ET’s employees were transferred toFerrotron: Mr Neumann, deputy head of F+E/ET-Systeme/Netzwerk/IBS unit, and three engineers from the F+E/ET-Systeme team, namely Mr Heck, Dr Thiessen and Mr Pavlina.

10. The products covered by the agreementwere incorporated into the range offered byFerrotron, and the former ET employees wereintegrated into Ferrotron’s existing organis-ational structure. They also perform tasks inrelation to products that were not acquiredfrom ET.

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11. On 17 July 2006 insolvency proceedings to be operated as an organisationally auton-were initiated against ET. omous part of an undertaking or business?.’

12. By an action before the ArbeitsgerichtWesel (Labour Court, Wesel), Mr Klarenbergsought confirmation that his employment relationship with ET had continued under Ferrotron. When the Arbeitsgerichtdismissed his action, Mr Klarenberg lodged an appeal with the LandesarbeitsgerichtDüsseldorf (Regional Labour Court), seeking(i) an order requiring Ferrotron to reinstatehim as head of unit under the terms of the employment contract concluded with ET on1 January 1989 or, in the alternative, (ii) adeclaration that an employment relationshiphad existed between the parties since 9 December 2005.

13. On the view that the outcome of the dispute depends on the interpretation of Directive 2001/23, the LandesarbeitsgerichtDüsseldorf referred the following question tothe Court of Justice for a preliminary ruling:

‘Is a part of an undertaking or business onlytransferred to another employer within themeaning of Article 1(1)(a) and (b) of Direct-ive 2001/23 … if, under the new employer, thatpart of the undertaking or business continues

III — Assessment

A — Preliminary observations on the admis-sibility of the reference and on the subject of thequestion referred for a preliminary ruling

14. Ferrotron disputes the relevance of thequestion referred for the purposes of deter-mining the outcome of the dispute in the mainproceedings on three grounds.

15. First, it maintains that the existence of a transfer within the meaning of Direct-ive 2001/23 is precluded since it has not been demonstrated that the elements acquired by Ferrotron formed an entitycapable of being regarded as the subject ofsuch a transfer. Secondly, it argues that even ifa transfer within the meaning of the directivewere found to have occurred, that would not entail the transfer of the applicant’s employ-ment contract since his duties with ET were mostly performed in units other than F+E/ET-Systeme and could not therefore be regarded

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as related to that unit. 5 Thirdly, Ferrotronmaintains that the applicant had forfeited theright to rely on the transfer of his contractbecause, even though he was aware of theagreement between Ferrotron and ET, he had none the less waited until ET’s insolvencybecame apparent before lodging any claimsagainst Ferrotron.

16. By those arguments, Ferrotron is askingthe Court to determine the admissibility of thequestion referred in terms of its relevance tothe resolution of the dispute in the main proceedings. In that regard, I note that theCourt has consistently held that, in principle,it is for the national courts alone to determine, having regard to the particular features of each case, both the need for a preliminaryruling in order to enable them to give theirjudgment and the relevance of the questionswhich they refer to the Court. 6 It follows that, in the factual and legislative context which thenational court is responsible for defining andthe accuracy of which is not a matter for theCourt to determine, the questions submittedby the national court enjoy a presumption of

5 — I note, incidentally, that in Case 186/83 Botzen and Others [1985] ECR 519, the Court has already ruled on a reference fora preliminary ruling which raised a question similar to that putby Ferrotron in its second line of argument. In that judgment,the Court explained that where the transfer relates only to abusiness or to part of a business — in other words to part of the undertaking — the protection afforded by the directive extends to the employees assigned to that part of the business,because ‘an employment relationship is essentially charac-terised by the link existing between the employee and the partof the undertaking to which he is assigned to carry out hisduties’ (paragraph 15). Moreover, in Case C-51/00 Temco [2002] ECR I-969, the Court clarified that, in the event oftransfer of part of a business, ‘the fact that the transferor undertaking continues to exist after one of its activities is takenover by another undertaking and that it retains part of the staffengaged in that activity has no effect on the classification of thetransfer under the directive, since the transferred activity is aneconomic entity in its own right’ (paragraph 29).

6 — See Case C-448/98 Guimont [2000] ECR I-10663, paragraph22, and Joined Cases C-515/99, C-519/99 to C-524/99 andC-526/99 to C-540/99 Reisch and Others [2002] ECR I-2157, paragraph 25.

relevance. 7 A reference for a preliminaryruling from a national court may be rejectedby the Court only if it is quite obvious that theinterpretation of Community law sought bythat court is unrelated to the actual facts of the case or the subject-matter of the main action. 8

17. As it is, the arguments submitted by Ferrotron do not appear to dislodge the presumption of relevance enjoyed, in accor-dance with the case-law, by the question referred in these proceedings.

18. With regard in particular to Ferrotron’s assertion that the existence of an entitycapable of being regarded as the subject of atransfer has not been demonstrated, I would also point out that the referring court clearlybases its analysis on the contrary assumption,since it expresses the view that the F+E/ET-Systeme unit, which is the unit covered by theagreement between ET and Ferrotron, consti-tutes ‘a part of a business within the meaningof the first sentence of Paragraph 613a(1) BGBwhich — as a result of the acquisition of significant tangible assets and related customer and supplier lists, the defendant’s taking over of a proportion of the people withknow-how employed in the part of the

7 — See Case C-213/04 Burtscher [2005] ECR I-10309, para-graph 35.

8 — See Case C-281/98 Angonese [2000] ECR I-4139, paragraph 18.

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business and the acquisition, by the parent company, of the rights over its essential products and technologies — was transferred to the defendant’. 9 Rather, the referring courtis uncertain whether the transaction in ques-tion can be categorised as a transfer within themeaning of the national legislation trans-posing the directive, given that the transferredentity did not retain its organisationalautonomy under the transferee.

19. In consequence, the question whether anentity capable of being transferred existed atthe time of the transfer lies outside the scopeof the question referred for a preliminary ruling.

B — The concept of a ‘transfer’ within the meaning of Directive 2001/23

20. It is well established that Direct-ive 77/187 10 did not originally contain a definition of the concept of a ‘transfer’. It was not until Directive 98/50 11 that a defin-ition was incorporated into the wording ofDirective 77/187, in the form of an amend-ment to Article 1 thereof. In relation to that amendment, recital 4 of Directive 98/50 stated that considerations of legal security and transparency required that ‘the legal

concept of transfer be clarified in the light ofthe case-law of the Court of Justice’ and noted that such clarification did not alter the scopeof Directive 77/187 as interpreted by the Court of Justice.

21. The same definition of the concept of ‘transfer’ as was introduced by Directive 98/50appears in Article 1(1)(b) of Directive 2001/23,which repealed Directive 77/187. Recital 8 ofDirective 2001/23 reiterates the content ofrecital 4 of Directive 98/50, therebyconfirming that there is continuity, not onlyin terms of legislation, but also in terms ofinterpretation, with Directive 77/187, whichDirective 2001/23 12 codifies.

22. In order to clarify the concept of a ‘transfer’ within the meaning of Direct-ive 2001/23 it is therefore necessary to referto the case-law of the Court on the inter-pretation of Directive 77/187.

23. The scope ratione materiae of the direct-ive has been defined in particularly broadterms from the outset; it applies ‘wherever, in

9 — See Part II, paragraph 3, of the order for reference.10 — See point 3 of this Opinion.11 — See footnote 4. 12 — See recital 1 of Directive 2001/23.

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the context of contractual relations, there is a change in the legal or natural person who isresponsible for carrying on the business andwho incurs the obligations of an employertowards employees of the undertaking’. 13

24. In Spijkers 14 in 1986, the Court — in response to a question from the SupremeCourt of the Netherlands on the factors to be taken into consideration in order to ascertain the existence of a transfer within the meaningof the directive — provided a definition of the concept of ‘transfer’, the wording of which was to be reiterated consistently in all subsequent case-law.

25. In that judgment the Court stated firstthat, in the light of the aim of the directive,which is ‘to ensure the continuity of employ-ment relationships within an economic entity,irrespective of any change of ownership’, the decisive test for establishing the existence of atransfer within the meaning of the directive, asopposed to a mere transfer of business assets,is ‘whether the business in question retains its identity’. 15 The Court went on to say that in a case such as the one before the SupremeCourt of the Netherlands, in which, at the time of the transfer, the transferor was no longer carrying on business activities, it wasnecessary to consider ‘whether the business was disposed of as a going concern, as wouldbe indicated, inter alia, by the fact that itsoperation was actually continued or resumed

13 — See Case 287/86 Ny Mølle Kro [1987] ECR 5465, paragraph12; Joined Cases 144/87 and 145/87 Berg and Busschers [1988] ECR 2559, paragraph 17; and Case 101/87 Bork International and Others [1988] ECR 3057, paragraph 13.

14 — See Case 24/85 Spijkers [1986] ECR 1119. 15 — Paragraph 11; emphasis added.

by the new employer, with the same or similaractivities’. 16 Furthermore, the Court held that in order to determine whether those condi-tions were met, ‘it is necessary to consider allthe facts characterising the transaction […],including the type of undertaking or business,whether or not the business’s tangible assets,such as buildings and movable property, aretransferred, the value of its intangible assets atthe time of the transfer, whether or not the majority of its employees are taken over by thenew employer, whether or not its customersare transferred and the degree of similaritybetween the activities carried on before and after the transfer and the period, if any, forwhich those activities were suspended’. 17 The Court explained that all those circumstances‘are merely individual factors in the overallassessment which must be made and cannot therefore be considered in isolation’. 18 Finally,the Court stated that it is for the national court to make the necessary factual appraisal, in thelight of the criteria for interpretation set outby the Court of Justice, in order to establishwhether or not there is a transfer within the meaning of the directive.

26. In Spijkers, as in most of the subsequent case-law, 19 at least towards the end of the 1990s, the Court placed particular importance on whether the business activities of the transferor, or similar activities, were continued or resumed by the transferee. The ability of the economic entity transferred notto lose its own identity appeared substantively

16 — Paragraphs 12 and 15.17 — Paragraph 13.18 — Paragraph 13.19 — See, inter alia, Case 324/86 Foreningen af Arbejdsledere i

Danmark [1988] ECR 739, paragraph 10; Bork International and Others, cited in footnote 13, paragraph 14; Case C-29/91Redmond Stichting [1992] ECR I-3189, paragraph 31; Case C-209/91 Watson Rask and Christensen [1992] ECR I-5755, paragraph 19; and Joined Cases C-171/94 and C-172/94 Merckx and Neuhuys [1996] ECR I-1253, paragraph 16.

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comparable to its capacity to remain ‘in operation and viable’ 20 after the transfer. That interpretation was substantiated by thefact that the only cases in which the Court hadruled out the existence of a transfer were those involving an undertaking which was in liquidation or administration. 21 Moreover, even within that case-law, the Court con-sistently distinguished between creditors’arrangement procedures designed to liquidateassets and procedures under which the activities of the undertaking were to continue:in the latter case, the directive still applied. 22

27. The judgment in Süzen, 23 however, marked a change of direction as comparedwith previous decisions.

28. In that case the Court was asked to determine whether Directive 77/187 also applies to a situation in which a person whohas entrusted the cleaning of his premises to afirst undertaking terminates his contract withthe latter and, for the performance of similarwork, enters into a new contract with a second

20 — This expression is taken from the Opinion of Advocate General Mancini in Berg and Busschers, cited in footnote 13, p. 2573.

21 — See Case 135/83 Abels [1985] ECR 469, and Case 105/84Foreningen af Arbejdsledere i Danmark [1985] ECR 2639.

22 — See Case C-362/89 d’Urso and Others [1991] ECR I-4105; Case C-472/93 Spano and Others [1995] ECR I-4321, paragraphs 24-29; and Case C-319/94 Dethier Équipement[1998] ECR I-1061, paragraphs 31 and 32.

23 — Case C-13/95 [1997] ECR I-1259.

undertaking without any concomitant transfer of tangible or intangible business assets from one undertaking to the other ortaking over by the new employer of a majorpart of the workforce assigned by his prede-cessor to the performance of the contract.After defining the concept of ‘economic entity’ as ‘an organised grouping of persons and assets enabling the exercise of an economic activity which pursues a specificobjective’ 24 the Court stated that ‘the mere fact that the service provided by the old andthe new awardees of a contract is similar does not justify the conclusion that an economicentity has been transferred’. The Court went on to say that ‘an entity cannot be reduced to the activity entrusted to it’; rather ‘[i]ts identityalso emerges from other factors, such as itsworkforce, its management staff, the way inwhich its work is organised, its operatingmethods or indeed, where appropriate, theoperational resources available to it’. 25

29. That position has been maintained in subsequent judgments, 26 in which less impor-tance has been attached to the continuation of business activity by the transferee and greater

24 — Paragraph 13. In Case C-48/94 Rygaard [1995] ECR I-2745,paragraph 20, the Court had ruled that for the purposes of theapplication of the directive, ‘the transfer relates to a stable economic entity whose activity is not limited to performingone specific works contract’.

25 — Paragraph 15; emphasis added. In his Opinion, AdvocateGeneral La Pergola had suggested that the Court shouldabandon the criterion relating to pursuit of business activityin favour of one relating to the transfer of business assetsbetween the transferor and the transferee.

26 — See Joined Cases C-127/96, C-229/96 and C-74/97 Hernández Vidal and Others [1998] ECR I-8179, paragraph30; Joined Cases C-173/96 and C-247/96 Hidalgo and Others[1998] ECR I-8237, paragraph 30; Case C-172/99 Liikenne [2001] ECR I-745, paragraph 34; and Case C-340/01 Abler and Others [2003] ECR I-14023, paragraph 35.

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importance to an overall assessment of thefacts characterising the transfer operation. Inthat assessment, however, the degree of importance to be attached to each factor varies according to the characteristics of thecase in question, 27 and it is not possible tosingle out any factor which in the abstract hasgreater weight than the others. In that regard,the Court has explained that ‘[t]he safe-guarding of employees’ rights, which consti-tutes the subject-matter of the directive […]cannot depend exclusively on consideration of a [single] factor’, 28 even where that factor is one of those upon which that assessment must be based.

30. Thus, for example, the Court has viewedas important, but not decisive, the fact that anundertaking is temporarily closed at the timeof the transfer and therefore has no employees, in particular in the case of a seasonal business. 29 Similarly, even thoughthe transfer of business assets is one of the criteria on the basis of which the overall assessment of the transaction must be made, the absence of such a transfer does not, according to the Court, mean that the transaction as a whole falls outside the scopeof the directive, 30 unless some of the under-

27 — In that regard, see Süzen, cited in footnote 23, paragraph 18; and Hernández Vidal and Others, cited in footnote 26, paragraph 31; Temco, cited in footnote 5, paragraph 25; Case C-460/02 Commission v Italy [2004] ECR I-11547, paragraph41; Joined Cases C-232/04 and C-233/04 Güney-Görres and Demir [2005] ECR I-11237, paragraph 35; and Liikenne, cited in footnote 26, paragraph 35.

28 — See Case C-392/92 Schmidt [1994] ECR I-1311, paragraph 16. Emphasis added.

29 — See Ny Mølle Kro, cited in footnote 13, paragraphs 19 and 20. 30 — See Schmidt, cited in footnote 28, paragraph 16; Merckx and

Neuhuys, cited in footnote 19, paragraph 21; Süzen, cited in footnote 23, paragraph 17; and Temco, cited in footnote 5, paragraph 25.

takings involved are in sectors ‘where the tangible assets contribute significantly to theperformance of the activity’. 31 Moreover, although the fact that the new employerdoes not merely pursue the activity in ques-tion but also takes over an essential part, interms of their numbers and skills, of the employees engaged by his predecessor, may besufficient to constitute a transfer within the meaning of the directive in sectors in whichactivities are based essentially on manpower, 32

it may not be decisive in other cases. 33 Finally, in Mayeur, 34 the Court held that ‘it cannot be ruled out that, in certain circumstances, factors such as organisation, operation, finan-cing, management and the applicable legalrules identify an economic entity in such a waythat any alteration of those factors resultingfrom transfer of that entity would lead to achange in its identity’. 35 The Court none the less ruled that that was not the situation in the case before it, ‘where a municipality, a legal person governed by public law operating within the framework of specific rules of administrative law, takes over activities relating to publicity and information concerning the services which it offers to thepublic, where such activities were previouslycarried out, in the interests of that munici-pality, by a non-profit-making association which was a legal person governed by private law’. 36 It should none the less be noted that, among the various factors consid-ered in that judgment, the Court attachedparticular importance to the continuation bythe municipality of the activities formerly

31 — See Liikenne, cited in footnote 26, paragraphs 39 to 42. In thatjudgment, the Court ruled that the directive did not applyfollowing the procedure for the award of a public servicescontract in the public transport (bus routes) sector, despitethe fact that the new contractor had taken over a major part ofthe previous contractor’s employees and there was a transfer of customers.

32 — See Süzen, cited in footnote 23, paragraph 21; Hernández Vidal and Others, cited in footnote 26, paragraph 32; Hidalgo and Others, cited in footnote 26, paragraph 32; and Temco,cited in footnote 5, paragraph 26.

33 — See, for example, Liikenne, cited in footnote 26 and Abler and Others, cited in footnote 26, paragraph 37.

34 — Case C-175/99 Mayeur [2000] ECR I-7755, paragraph 49. 35 — Paragraph 53. 36 — Operative part of the judgment.

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engaged in by the association and, in parti-cular, to the proportion of the activities connected to the operations of the applicantin the main proceedings. 37

31. The foregoing brief examination revealsthat the approach taken by the Court in orderto establish the existence of a transfer within the meaning of Directive 77/178 has essen-tially been based on a case-by-case assess-ment.

32. By favouring that approach, the Court hasunquestionably — as has been noted by Advocate General La Pergola — preserved ‘a suitable degree of flexibility in applying therelevant criteria to the various economic circumstances that may arise in the Commu-nity’ 38, but at the same time has held back from defining the core of the concept of ‘transfer of an undertaking’ or, in other words, its essential minimum content — which would enable a distinction to be drawn in practice between such a transfer and a meretransfer of business assets — thus making the boundaries of the protection provided forunder the directive more fluid, but less clear.

33. On the basis of the foregoing consider-ations, I shall now examine the question referred by the national court.

37 — See paragraph 54.38 — Opinion in Süzen, cited in footnote 23.

C — The question referred for a preliminary ruling

34. The referring court is essentially asking the Court whether, for the purposes of Article 1(1)(a) and (b) of Directive 2001/23,there is a transfer of a part of an undertakingor business where the new owner does not preserve the organisational autonomy of theelements acquired, but instead incorporatesthem into its existing organisational structure.According to the order for reference, recentcase-law of the Bundesarbeitsgericht tends toconstrue such circumstances as a mere transfer of business assets, and to rule out a transfer within the meaning of the nationallegislation transposing the directive.

35. Referring to the case-law of the Bunde-sarbeitsgericht, Ferrotron contends that thetransferred entity does not retain its identitywhere it loses its organisational autonomy as aresult of the transfer, as would be the case where the resources acquired are incorp-orated by the transferee into an entirely neworganisational structure. In the present case,the way in which Ferrotron’s work is organisedis based on sub-division by sector of activity,rather than by product range as was the practice of ET. The employees of ET, like thevarious elements taken over by Ferrotron, have therefore been incorporated into the structure of the transferee on the basis of a new way of organising the work.

36. The German Government and the Commission, however, take a different view. Referring to the case-law of the Court, they

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argue that the existence of a transfer withinthe meaning of the directive must be estab-lished in the framework of an overall assess-ment which has regard to all the relevant factors. The preservation of the organisationalautonomy of the entity transferred is only oneof the criteria on the basis of which that assessment must be made.

financing, management and the applicablelegal rules, that aspect can so strongly markthe identity of an economic entity that anyalteration of that aspect as a result of the transfer would lead to a change in the identityof the entity. 42

37. I share that view.

38. Above all, it is consistent with the case-by-case approach hitherto taken by the Courtand with the emphasis placed by the Court onthe importance of assessing each transactionin the light of all the circumstances character-ising it. In terms of method, that approachseems to be wholly at odds with the approachwhereby the possibility of a transfer of an undertaking within the meaning of the directive is ruled out on the basis of a singlefactor considered in isolation from an overall assessment. 39

39. There is no question that, in general terms, the organisational aspect helps to define the ‘identity’ of the transferred economic entity 40 and that — as the Court held in Mayeur 41 — in certain cases, in the same way as factors such as the operation,

39 — To that effect, see Schmidt, cited in footnote 28. 40 — See Süzen, cited in footnote 23 and the case-law cited in

footnote 26. 41 — Cited in footnote 34.

40. However, the case-law contains a number of precedents where the Court has held that achange in the organisational structure of thetransferred entity, 43 or a change in the way its work is organised 44 cannot preclude the existence of a transfer within the meaning ofthe directive even where such changes havebrought about a radical transformation in themanagement methods of the transferred entity, with repercussions for the possible continuation under the transferee of the employment relationships with the trans-ferred staff. 45

41. In support of its position, Ferrotron refersto the concept of ‘economic entity’ as devel-oped in the case-law and set out in Article1(1)(b) of Directive 2001/23, arguing that the

42 — Paragraph 53. 43 — See, for example, Merckx and Neuhuys, cited in footnote 19,

and Case C-458-05 Jouini and Others [2007] ECR I-7301. 44 — Thus, for example, the decision to take on the task of cleaning

premises with one’s own staff involves a change in the waywork is organised, but does not preclude the existence of atransfer (see, inter alia, Hernández Vidal and Others, cited in footnote 26).

45 — See Mayeur, cited in footnote 34.

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transferred entity retains its identity onlywhere the transferee preserves the organisa-tional link between all the staff and material assets which go to make up that entity.

42. Under Article 1(1)(b) of Direct-ive 2001/23, there is a transfer within the meaning of that directive where there is atransfer of an economic entity, meaning ‘an organised grouping of resources which hasthe objective of pursuing an economic activity, whether or not that activity is central or ancillary’, which retains its identitydespite the transfer. In effect, that provisionrefers to organisation as the decisive factor inrelation to the concept of ‘economic entity’, which marks its identity. To my mind, thatreference must be interpreted as relating notso much to the specific organisation imposedby the employer on the various factors of production, but to the link of interdependenceand complementarity between those factors,which ensures that they all work together forthe performance of a specified economic activity.

43. However, contrary to what Ferrotron appears to be maintaining, that link is notnecessarily weakened where the transferredentity is incorporated into the structure of thetransferee, a structure which, for argument’s sake, we shall assume is different in terms of scale and/or organisation from that of the transferor.

44. In other words, the preservation of theidentity of the transferred entity does not depend on it retaining its ‘organisational autonomy’ — in the sense of structural autonomy, as referred to by Ferrotron — but on it retaining the link, in terms of operationand objectives, between the various elementstransferred, which enables the new owner to make use of those elements in order to carryon a specific economic activity, even wherethey are incorporated into a different organ-isational structure.

45. In the case before the referring court, Ferrotron has acquired a number of elementsgeared to the manufacture and trading of certain products and — contrary to the statement made at the hearing by Ferrotron’s representative — the transaction has not merely supplemented Ferrotron’s staff, but has enabled it to offer a new range of productsin addition to those already on offer. Further-more, it is common ground that Ferrotron hascontinued the activity formerly carried on byET, using the organised grouping of personnel, material and non-material elements acquired from ET, even though theemployees transferred have been integratedinto Ferrotron’s structure and perform theirduties in an organisational context which iscompletely different from that of their previous employer.

46. In those circumstances, it is reasonable to take the view that despite the changes in theway the work is organised, there has been noweakening, as a result of the transfer, of thelink which existed between the various elements acquired by Ferrotron and whichidentified them as an ‘organised grouping of

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KLARENBERG

resources which has the objective of pursuingan economic activity’. On the other hand, the fact that there was a special contractual provision to the effect that, in the two yearsfollowing the transfer, ET would make otherqualified staff available to Ferrotron in theevent that staff already transferred were notavailable, or would train Ferrotron staff, clearly shows that the transferee acknow-ledged the relationship of interdependencebetween the various factors of production thatit had acquired and the need to preserve thatrelationship with a view to continuing theactivity in question.

47. However, it is for the national court to determine, having regard to all the particularcircumstances which characterise the trans-action in question and to the various relevantfactors, including the organisational factor asreferred to above, 46 whether, in the presentcase, the transferred entity retained its iden-tity following the transfer, as required underthe case-law of the Court.

48. Ferrotron argues, lastly, that in the eventthat the economic entity loses its organisa-tional autonomy following a transfer, the objective which the directive seeks to achieve — namely, to safeguard the employ-ment relationship of the staff affected by thetransfer —would in any event be unattainable.In that respect, Ferrotron notes that, under itsnew way of organising the work, there is nopost equivalent to that held by Mr Klarenbergwith ET.

49. An argument somewhat similar to thatcontended for by Ferrotron was put forwardby the French Republic in the case which gaverise to the judgment in Mayeur. 47 In an attempt to show that there had been no transfer within the meaning of Direct-ive 77/187 in that case, the French Govern-ment stated inter alia that under national law a public entity which takes over an activity previously performed by a legal person governed by private law is required to terminate the employment contracts enteredinto by the latter. The Court held that the factthat it was impossible for employment contracts to continue under the transferee had no bearing on the question whether therehad been a transfer. It held that the obligationto terminate employment contracts consti-tuted, in accordance with Article 4(2) of theDirective, a change in working conditions tothe detriment of the employee, directlybrought about by the transfer, with the resultthat the termination of those contracts of employment had to be regarded as resultingfrom the action of the employer. 48

50. In concluding my analysis, I should like toexpress one final thought. The possibility of atransfer, not of an undertaking in its entiretybut of one part of an undertaking, is expresslyprovided for in Directive 2001/23, which extends to the workers affected by such transactions the specific protection providedfor therein. It is precisely in such cases that thedividing line between a transfer proper and a

47 — Cited in footnote 34. 46 — See paragraphs 42 to 44. 48 — Paragraph 56.

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mere transfer of factors of production is indanger of becoming extremely fine, making it more difficult to identify the criteria for distinguishing the one from the other, andincreasing the risk that certain cases may beregarded as outside the scope of the directivewhen in fact they properly fall within its purview. If the incorporation of the elementstransferred into the organisational structureof the transferee were sufficient in itself to preclude the possibility of a transfer within themeaning of the directive, it would be espe-cially difficult to identify cases where the directive applies when it is part of an under-taking or business that is transferred, and thetransaction in question concerns, as in thepresent case, the transfer of a branch of

activity between undertakings operating onthe same market and each with their own organisational structure.

51. It follows from all the foregoing consid-erations that the fact that the transferred partof an undertaking or business does not, underthe new employer, continue to be operated asan organisationally autonomous part of theundertaking or business is not sufficient initself to preclude the existence of a transferwithin the meaning of Directive 2001/23.

IV — Conclusions

52. For the reasons set out above, I propose that, in reply to the question referred to theCourt for a preliminary ruling from the Landesarbeitsgericht Düsseldorf the Courtshould state as follows:

Article 1(1)(a) and (b) of Council Directive 2001/23/EC of 12 March 2001 on theapproximation of the laws of the Member States relating to the safeguarding ofemployees’ rights in the event of transfers of undertakings, businesses or parts ofundertakings or businesses is to be interpreted as meaning that recognition that atransfer has occurred is not precluded by the fact that, under the new employer, thetransferred part of the undertaking or business does not continue to be operated as anorganisationally autonomous part of the undertaking or business, provided that thetransferred entity retains its identity.

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v

KLARENBERG

JUDGMENT OF THE COURT (Fourth Chamber)

12 February 2009 *

In Case C-466/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Landesarbeitsgericht Düsseldorf (Germany), made by decision of 10 August 2007,received at the Court on 22 October 2007, in the proceedings

Dietmar Klarenberg

Ferrotron Technologies GmbH,

THE COURT (Fourth Chamber),

composed of K. Lenaerts, President of the Chamber, T. von Danwitz, R. Silva de Lapuerta, G. Arestis and J. Malenovský (Rapporteur), Judges,


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Advocate General: P. Mengozzi,Registrar: H. von Holstein, Deputy Registrar,

having regard to the written procedure and further to the hearing on 4 September 2008,


— Mr Klarenberg, by J. Dieker, Rechtsanwalt,

— Ferrotron Technologies GmbH, by M. Trayer, Rechtsanwalt,

— the German Government, by M. Lumma and C. Blaschke, acting as Agents,

— Commission of the European Communities, by V. Kreuschitz and J. Enegren, actingas Agents,


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KLARENBERG

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 1(1)(a)and (b) of Council Directive 2001/23/EC of 12 March 2001 on the approximation of thelaws of the Member States relating to the safeguarding of employees’ rights in the eventof transfers of undertakings, businesses or parts of undertakings or businesses (OJ 2001L 82, p. 16).

2 The reference was made in the course of proceedings brought by Mr Klarenberg againstFerrotron Technologies GmbH (‘Ferrotron’) for a declaration that the employmentcontract had been transferred to that company.

Legal context


Directive 2001/23 consolidated Council Directive 77/187/EEC of 14 February 1977 onthe approximation of the laws of the Member States relating to the safeguarding of

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3


employees’ rights in the event of transfers of undertakings, businesses or parts ofundertakings or businesses (OJ 1977 L 61, p. 26), as amended by Council Directive 98/50/EC of 29 June 1998 (OJ 1998 L 201, p. 88) (‘Directive 77/187’).


‘Considerations of legal security and transparency required that the legal concept oftransfer be clarified in the light of the case-law of the Court of Justice. Such clarificationhas not altered the scope of Directive 77/187/EEC as interpreted by the Court ofJustice.’

5 Article 1(1)(a) and (b) of Directive 2001/23 provides:

‘(a) This Directive shall apply to any transfer of an undertaking, business, or part of anundertaking or business to another employer as a result of a legal transfer or merger.

(b) Subject to [point] (a) and the following provisions of this Article, there is a transferwithin the meaning of this Directive where there is a transfer of an economic entitywhich retains its identity, meaning an organised grouping of resources which hasthe objective of pursuing an economic activity, whether or not that activity iscentral or ancillary.’

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6

KLARENBERG

The first subparagraph of Article 3(1) of Directive 2001/23 provides:

‘The transferor’s rights and obligations arising from a contract of employment or froman employment relationship existing on the date of a transfer shall, by reason of suchtransfer, be transferred to the transferee.’

7 Article 4(2) of that directive provides:

‘If the contract of employment or the employment relationship is terminated becausethe transfer involves a substantial change in working conditions to the detriment of theemployee, the employer shall be regarded as having been responsible for termination ofthe contract of employment or of the employment relationship.’

8 The first and fourth subparagraphs of Article 6(1) of Directive 2001/23 state:

‘If the undertaking, business or part of an undertaking or business preserves itsautonomy, the status and function of the representatives or of the representation of theemployees affected by the transfer shall be preserved on the same terms and subject tothe same conditions as existed before the date of the transfer by virtue of law, regulation,administrative provision or agreement, provided that the conditions necessary for theconstitution of the employee’s representation are fulfilled.

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…

If the undertaking, business or part of an undertaking or business does not preserve itsautonomy, the Member States shall take the necessary measures to ensure that theemployees transferred who were represented before the transfer continue to be properly represented during the period necessary for the reconstitution or reappoint-ment of the representation of employees in accordance with national law or practice.’

9 The wording of the abovementioned provisions of Article 1(1) of Directive 2001/23 is,in essence, identical to that of the provisions of Article 1(1) of Directive 77/187.


10 The first sentence of Paragraph 613a(1) of the German Civil Code (BürgerlichesGesetzbuch; ‘the BGB’) states:

‘In the event of a transfer of a business or part of a business to another employer as aresult of a legal transaction, the latter shall assume the rights and obligations arisingunder employment contracts existing at the time of the transfer.’

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KLARENBERG


11 From 1 January 1989 Mr Klarenberg was employed by ET Electrotechnology GmbH(‘ET’), a company specialising in the development and manufacture of products in thefield of industrial automation, and measurement and control technology, for the steelindustry.

12 From 1 May 1992, Mr Klarenberg headed the ‘F+E/ET-Systeme/Netzwerk/IBS’ (R&D/ET-Systems/Network/Interface technology and bus systems) unit of ET. That unit wasitself subdivided into three teams, namely ‘F+E/ET-Systeme’ (R&D/ET Systems), headed by Mr Klarenberg, ‘EDV/Netzwerk/ServerSysteme/Datensicherung’ (Data Processing/Network/Server Systems/Data protection), and ‘Produktion/Schalts-chränke/Platinen’ (Production/Control Cabinets/Circuit Boards), headed by Mr Neumann, who was also deputy head of the whole unit.

13 Ferrotron specialises in the design and manufacture of products in the field of measurement and control techniques for the steel industry.

14 On 22 November 2005, ET entered into an ‘asset and business sale and purchase agreement’ with Ferrotron and its parent company, which has its company seat in the USA, in respect of the following products, developed by the ‘F+E/ET-Systeme/ Netzwerk/IBS’ unit of ET, and called ‘ET-DecNT’, ‘Et-DecNT light’, ‘ET-DecNT Power Melt’, ‘ET-TempNet’, ‘ET-OxyNet’ and ‘FT7000’.

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15 Pursuant to that agreement, Ferrotron’s parent company acquired all the rights over thesoftware, patents, patent applications and inventions relating to the abovementionedproducts, as well as all the rights over the product names and technical know-how.Ferrotron acquired the development hardware and the inventory of product materialsbelonging to ET, as well as a related list of suppliers and of customers. Ferrotron also re-engaged a certain number of ET employees, namely Mr Neumann and three engineersfrom the ‘F+E/ET-Systeme’ team.

16 It is also apparent from the order for reference that, apart from the products which werethe subject-matter of that contract, Ferrotron develops, manufacturers and distributesother products in the field of the metallurgical measurement techniques, and that theformer employees of ET were integrated into the structure established by Ferrotron. Inaddition, those employees also carry out duties in relation to products other than thoseacquired by Ferrotron from ET.

17 On 17 July 2006, insolvency proceedings were initiated against ET.

18 Mr Klarenberg brought an action before the Arbeitsgericht Wesel (Labour Court,Wesel) claiming that Ferrotron should re-employ him in his role as head of unit.However, by judgment of 29 November 2006, the Arbeitsgericht Wesel dismissed hisaction.

19 Mr Klarenberg appealed that judgment to the Landesarbeitsgericht Düsseldorf (Regional Labour Court), claiming that Ferrotron should be ordered to re-employhim in his position under the terms of the employment contract concluded on 1 January1989 with ET. In the alternative, Mr Klarenberg sought a declaration from that courtthat an employer-employee relationship had existed between the parties since 9 December 2005.

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KLARENBERG

20 The Landesarbeitsgericht Düsseldorf takes the view that the ‘F+E/ET-Systeme/ Netzwerk/IBS’ unit, headed by Mr Klarenberg, is a part of the business — within the meaning of the first sentence of Paragraph 613a(1) of the BGB — which was transferred to Ferrotron, given that Ferrotron acquired the essential tools of production of thebusiness concerned, the related lists of suppliers and of customers, that it re-engaged anumber of the employees who were fully competent as regards the technical know-how,and that its parent company acquired the rights over the principal products andtechnologies.

21 However, the Landesarbeitsgericht Düsseldorf is uncertain whether the case before itconcerns a transfer within the meaning of Directive 2001/23. According to a certainnumber of recent decisions of the Bundesarbeitsgericht (Federal Labour Court), a partof a business is not recognised as having been transferred to a new employer if thetransferee does not continue to operate the relevant part of the business substantiallyunchanged and with its identity retained. It follows from that case-law that a transferpre-supposes that the transferee preserves the organisational autonomy of that part ofthe business. By contrast, a part of the business cannot be regarded as transferred whereit is fully integrated into the other undertaking’s organisational structure or where itsfunctions are carried out in a significantly larger organisational structure.

22 In the case before it, according to the referring court, Ferrotron did not retain theorganisational autonomy of the relevant part of the business, in so far as the re-engagedemployees were integrated into different units, and the functions taken over are nowcarried out in the framework of a different organisational structure.

23 It is in those circumstances that the Landesarbeitsgericht Düsseldorf decided to stay theproceedings and to refer the following question to the Court for a preliminary ruling:

‘Is a part of an undertaking or business only transferred to another employer within themeaning of Article 1(1)(a) and (b) of Directive 2001/23 … if, under the new employer,

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that part of the undertaking or business continues to operate as an organisationallyautonomous part of an undertaking or business?’

Admissibility of the order for reference

24 In its observations, Ferrotron expressed doubts regarding the admissibility of the orderfor reference, disputing the relevance of the question referred for the purposes ofdetermining the outcome of the dispute in the main proceedings.

25 In that regard, it should be borne in mind that, according to settled case-law, theprocedure provided for by Article 234 EC is an instrument of cooperation between theCourt of Justice and the national courts, by means of which the Court provides thenational courts with the points of interpretation of Community law which they need inorder to decide the disputes before them (see, inter alia, Case C-380/01 Schneider [2004] ECR I-1389, paragraph 20; Case C-228/05 Stradasfalti [2006] ECR I-8391, paragraph 44; and Case C-313/07 Kirtruna and Vigano [2008] ECR I-7907, para-graph 25).

26 In the context of that cooperation, it is solely for the national court, before which thedispute has been brought and which must assume responsibility for the subsequentjudicial decision, to determine in the light of the particular circumstances of the caseboth the need for a preliminary ruling in order to enable it to deliver judgment and therelevance of the questions which it submits to the Court. Consequently, where thequestions submitted concern the interpretation of Community law, the Court is, inprinciple, bound to give a ruling (Schneider, paragraph 21; Case C-165/03 Längst [2005] ECR I-5637, paragraph 31; and Kirtruna and Vigano, paragraph 26).

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27

28

29

30

KLARENBERG

It follows that questions on the interpretation of Community law referred by a nationalcourt in the factual and legislative context which that court is responsible for definingand the accuracy of which is not a matter for the Court to determine, enjoy apresumption of relevance. The Court may refuse to rule on a question referred by anational court only where it is quite obvious that the interpretation of Community lawthat is sought is unrelated to the actual facts of the main action or its purpose, where theproblem is hypothetical, or where the Court does not have before it the factual or legalmaterial necessary to give a useful answer to the questions submitted to it (see, interalia, Joined Cases C-202/04 and C-94/04 Cipolla and Others [2006] ECR I-11421, paragraph 25; Joined Cases C-222/05 to C-225/05 van der Weerd and Others [2007] ECR I-4233, paragraph 22; and Kirtruna and Vigano, paragraph 27).

In that regard, it is clear from the case-law that the presumption of relevance ofquestions referred for a preliminary ruling cannot be rebutted by the simple fact thatone of the parties to the main proceedings contests certain facts, the accuracy of whichis not a matter for the Court to determine and on which the delimitation of the subject-matter of those proceedings depend (Cipolla and Others, paragraph 26, and van der Weerd and Others, paragraph 23).

In the first place, Ferrotron contends that the existence of a transfer within the meaningof Directive 2001/23 is, from the outset, excluded, as it has not been established that theelements acquired by Ferrotron constituted an entity capable of being the subject ofsuch a transfer. It follows that the question referred for a preliminary ruling is notrelevant to the outcome of the dispute in the main proceedings.

However, it must be observed that the referring court made a different assessment onthat point. According to it, the ‘F+E/ET-Systeme/Netzwerk/IBS’ unit is a part of abusiness, within the meaning of the first sentence of Paragraph 613a(1) of the BGB,which was transferred to Ferrotron, since Ferrotron acquired the essential tools ofproduction of the business, the related lists of suppliers and of customers, that it re-engaged a number of the employees who were fully competent as regards the technicalknow-how, and that the parent company acquired the rights over the principalproducts and technologies. In the light of those factors referred to by the referring

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court, and the conclusion which it reached, and for which it is responsible, doubt shouldnot be cast on the relevance of the question referred by that court.

31 In the second place, Ferrotron argues out that, even if it were to be held that a transfer ofa business took place on the basis of Directive 2001/23, that would not imply thetransfer of the employment contract of the applicant in the main proceedings, since theduties which the latter carried out at ET were, in large part, carried out in units otherthan the ‘F+E/ET-Systeme/Netzwerk/IBS’ unit and could not therefore be linked to that unit.

32 The order for reference, however, in its description of the factual context in which thequestion referred arises, explicitly indicates, on the contrary, that the applicant in themain proceedings was the head of the ‘F+E/ET-Systeme/Netzwerk/IBS’ unit. As is clear from paragraph 27 of this judgment, the national court alone is responsible for such afactual assessment, and it is not for the Court to determine the accuracy of thatassessment.

33 In the third place, Ferrotron maintains that Mr Klarenberg has forfeited the right toinvoke the transfer of his employment contract since, although he was aware of theagreement between Ferrotron and ET, he nevertheless waited until ET was insolventbefore asserting claims against Ferrotron.

34 The existence, in Germany, of legislation laying down a time-limit after which theapplicant in the main proceedings would no longer be in a position to rely on thetransfer of his employment contract is a matter which, as is clear from paragraph 28 ofthis judgment, it is not for the Court to determine.

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35

KLARENBERG

Having regard to the foregoing, it must be held that the reference for a preliminaryruling is admissible.


36 By its question, the referring court asks, in essence, whether Article 1(1)(a) and (b) ofDirective 2001/23 must be interpreted as meaning that that Directive may also apply ina situation where the new employer does not preserve the organisational autonomy ofthe part of the undertaking or business transferred.

37 At the outset, it should be borne in mind that, according to settled case-law, ininterpreting a provision of Community law it is necessary to consider not only itswording but also the context in which it occurs and the objectives pursued by the rulesof which it is part (see, inter alia, Case C-301/98 KVS International [2000] ECR I-3583, paragraph 21; Case C-53/05 Commission v Portugal [2006] ECR I-6215, paragraph 20; and Case C-298/07 Bundesverband der Verbraucherzentralen und Verbraucherver-bände [2008] ECR I-7841, paragraph 15).

It is clear from the very wording of Article 1(1)(a) of Directive 2001/23 that any transfer,to another employer, involving an undertaking, a business, or part of an undertaking orbusiness and brought about by a legal transfer or merger falls within the scope of thatdirective.

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38

39


Subject to those conditions, the transfer must nevertheless also satisfy the conditionslaid down in Article 1(1)(b) of Directive 2001/23 if that directive is to apply: that is tosay, it must concern an economic entity — understood by ‘an organised grouping ofresources which has the objective of pursuing an economic activity, whether or not thatactivity is central or ancillary’ — which, following the transfer, retains its ‘identity’.

40 It should at the outset be recalled that, as is clear from recital 8 in the preamble toDirective 2001/23, the above provision was adopted to clarify the concept of transfer inthe light of the case-law of the Court (see, inter alia, Case 186/83 Botzen and Others [1985] ECR 519, paragraph 6, and Case 24/85 Spijkers [1986] ECR 1119, paragraph 11).According to that case-law, Directive 2001/23 is intended to ensure the continuity ofemployment relationships existing within an economic entity, irrespective of anychange of ownership and, thus, to protect employees in the event that such a change occurs.

41 It is clear from the provisions of Article 1(1)(a) of Directive 2001/23, read in conjunction with those of Article 1(1)(b) thereof, that, in the event that the economicentity transferred does not retain its identity, the application of point (b) of Article 1(1)forestalls the operation of point (a) of that provision. It follows that Article 1(1)(b) ofDirective 2001/23 is capable of restricting the scope of Article 1(1)(a) of that directive,hence the scope of the protection afforded by that directive. Such a provision musttherefore be construed narrowly.

42 Ferrotron contends that the ‘economic entity’, defined in Article 1(1)(b) of Directive 2001/23, retains its identity only if the organisational link which connectsall of the staff and/or all of the elements is preserved. By contrast, the economic entitytransferred does not retain its identity in a situation where, following the transfer, it

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KLARENBERG

loses its organisational autonomy, the acquired resources having been integrated by thetransferee into an entirely new structure.

43 However, regard being had, in particular, to the objective pursued by Directive 2001/23,which seeks — as is clear from paragraph 40 of this judgment — to ensure effective protection of employees’ rights in the event of a transfer, such an understanding of theidentity of the economic entity, according to which that identity depends entirely on thesingle factor relating to organisational autonomy, as contended by Ferrotron, cannot beaccepted. It would imply that, on account of the sole fact that the transferee decides tobreak down the part of the undertaking or business which it has acquired and tointegrate it into its own structure, Directive 2001/23 could not be applied to that part ofthe undertaking or business, thus depriving the employees concerned of the protectionafforded by that directive.

44 As regards, specifically, the factor relating to organisation, although the Court haspreviously held that that factor contributes to defining an economic entity (see, to thateffect, Case C-13/95 Süzen [1997] ECR I-1259, paragraph 15; Case C-234/98 Allen and Others [1999] ECR I-8643, paragraph 27; Case C-175/99 Mayeur [2000] ECR I-7755, paragraph 53; and Case C-172/99 Liikenne [2001] ECR I-745, paragraph 34), it has alsoheld that an alteration in the organisational structure of the entity transferred is notsuch as to prevent the application of Directive 2001/23 (see, to that effect, Joined CasesC-171/94 and C-172/94 Merckx and Neuhuys [1996] ECR I-1253, paragraphs 20 and 21; Mayeur, paragraph 54; and Case C-458/05 Jouini and Others [2007] ECR I-7301, paragraph 36).

45 Moreover, of itself, Article 1(1)(b) of Directive 2001/23 defines the identity of aneconomic entity by referring to an ‘organised grouping of resources which has theobjective of pursuing an economic activity, whether or not that activity is central orancillary’, thus emphasising not only the organisational element of the entity transferred but also the element of pursuing an economic activity.

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46 Having regard to the foregoing, in order to interpret the condition relating to thepreservation of the identity of an economic entity, within the meaning of Directive 2001/23, account should be taken of the two elements — as laid down in Article 1(1)(b) of Directive 2001/23 — which, taken together, constitute that identity,and of the objective pursued by that directive, namely the protection of employees.

47 In accordance with those considerations and, in order not to frustrate in part theeffectiveness of Directive 2001/23, that condition should be interpreted, not as requiring the retention of the specific organisation imposed by the undertaking on thevarious elements of production which are transferred, but — as the Advocate General stated in points 42 and 44 of his Opinion — as requiring the retention of a functionallink of interdependence, and complementarity, between those elements.

48 The retention of such a functional link between the various elements transferred allows the transferee to use them, even if they are integrated, after the transfer, in a new anddifferent organisational structure, to pursue an identical or analogous economic activity (see, to that effect, Case C-392/92 Schmidt [1994] ECR I-1311, paragraph 17).

49 It is for the referring court to ascertain, in the light of the foregoing elements, in thecontext of a global assessment of all the facts characterising the transaction in questionin the main proceedings (see, to that effect, Spijkers, paragraph 13; Case C-29/91 Redmond Stichting [1992] ECR I-3189, paragraph 24; Süzen, paragraph 14; and Allen and Others, paragraph 26) whether the identity of the economic entity transferred was preserved.

50 As was pointed out both by the referring court in its order for reference, and by theGerman Government and the Commission of the European Communities in theirobservations to the Court, the wording of the first and fourth subparagraphs of

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KLARENBERG

Article 6(1) of Directive 2001/23 confirm that, in the mind of the Communitylegislature, that directive is intended to apply to any transfer satisfying the conditionslaid down in Article 1(1) of that directive, whether or not the economic entitytransferred retains its autonomy in the transferee’s organisational structure.

51 It is, lastly, necessary to reply to Ferrotron’s argument that, in the event of thetransferred economic entity losing its organisational autonomy, the continuity of theemployment relations that Directive 2001/23 seeks to guarantee cannot, in any event,be assured because the employment position of head of unit, previously occupied by MrKlarenberg, cannot be linked to any equivalent employment position in the new workstructure established by the transferee.

52 In that regard, it should be recalled that the Court has already held that an obligation toterminate contracts of employment governed by private law in the case of the transfer ofan economic activity to a legal person governed by public law constitutes, in accordancewith Article 4(2) of Directive 2001/23, a substantial change in working conditions to thedetriment of the employee and resulting directly from the transfer, with the result thattermination of such contracts of employment must, in such circumstances, be regardedas resulting from the action of the employer (Mayeur, paragraph 56). Likewise, it mustbe held that the impossibility, which may arise in the event of a transfer, of assigning toan employee, in the organisational structure put in place by the transferee, a position ofemployment which is equivalent to that which that employee occupied under theprevious owner could, if it leads to a substantial change in working conditions to thedetriment of that employee, be assimilated with termination of the employmentcontract resulting from the action of the employer, for the purposes of that provision.

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53

54


The reply to the question referred by the Landesarbeitsgericht Düsseldorf is thereforethat Article 1(1)(a) and (b) of Directive 2001/23 must be interpreted as meaning thatthat directive may also apply in a situation where the part of the undertaking or businesstransferred does not retain its organisational autonomy, provided that the functionallink between the various elements of production transferred is preserved, and that thatlink enables the transferee to use those elements to pursue an identical or analogouseconomic activity, a matter which it is for the national court to determine.

Costs


On those grounds, the Court (Fourth Chamber) hereby rules:

Article 1(1)(a) and (b) of Council Directive 2001/23/EC of 12 March 2001 on theapproximation of the laws of the Member States relating to the safeguarding ofemployees’ rights in the event of transfers of undertakings, businesses or parts ofundertakings or businesses must be interpreted as meaning that that directivemay also apply in a situation where the part of the undertaking or businesstransferred does not retain its organisational autonomy, provided that the functional link between the various elements of production transferred is

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KLARENBERG

preserved, and that that link enables the transferee to use those elements topursue an identical or analogous economic activity, a matter which it is for thenational court to determine.

[Signatures]

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Case C-515/07

Vereniging Noordelijke Land- en Tuinbouw Organisatie v

Staatssecretaris van Financiën

(Reference for a preliminary rulingfrom the Hoge Raad der Nederlanden)

(Sixth VAT Directive — Goods and services forming part of the assets of a business foruse in taxable transactions and in transactions other than taxable transactions — Rightto an immediate and full deduction of the tax paid in respect of the acquisition of such

goods and services)

Opinion of Advocate General Mengozzi delivered on 22 December 2008 . . . I - 841 Judgment of the Court (Fourth Chamber), 12 February 2009 . . . . . . . I - 865


Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Deduction of input tax

(Council Directive 77/388, Arts 6(2)(a) and 17(2))

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Articles 6(2)(a) and 17(2) of Sixth CouncilDirective 77/388 on the harmonisation of thelaws of the Member States relating to turnovertaxes must be interpreted as not beingapplicable to the use of goods and servicesallocated to the business for the purpose oftransactions other than the taxable transac-tions of the taxable person, activities such asthose by which an association promotes thegeneral interests of its members, as the valueadded tax due in respect of the acquisition ofthose goods and services, and relating to suchtransactions, is not deductible.

Article 6(2)(a) of the directive is not intendedto establish a rule that transactions outside the scope of the system of value added tax may beconsidered to be carried out for ‘purposes other than’ those of the business within the meaning of that provision.


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VERENIGING NOORDELIJKE LAND- EN TUINBOUW ORGANISATIE


delivered on 22 December 2008 1

I — Introduction

1. By this reference for a preliminary ruling,the Hoge Raad der Nederlanden (SupremeCourt of the Netherlands) asks the Court, inessence, whether the entitlement to deduct input value added tax (VAT) applies not onlyto the acquisition of capital goods but mayextend to the acquisition of other goods andservices used both for output business trans-actions and for other purposes, that is to say,for non-economic activities undertaken bythe taxpayer and regarded by the referringcourt as purposes other than those of the business. If so, the national court enquires asto the detailed rules for the application of thatentitlement.

II — Community legal framework

2. Article 2(1) of Sixth Council Direct-ive 77/388/EEC of 17 May 1977 on the

1 — Original language: French.

harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis ofassessment, 2 as amended by Council Direct-ive 95/7/EC of 10 April 1995 3 (‘the Sixth Directive’), makes subject to VAT ‘the supplyof goods or services effected for considerationwithin the territory of the country by a taxableperson acting as such’, that is to say, where hecarries out transactions in the course of his taxable activity. 4

3. Article 6(2), first subparagraph, (a) of theSixth Directive treats as supplies of servicesfor consideration ‘the use of goods formingpart of the assets of a business for the privateuse of the taxable person or of his staff or moregenerally for purposes other than those of hisbusiness, where the value added tax on such goods is wholly or partly deductible’.

2 — OJ 1977 L 145, p. 1.3 — OJ 1995 L 102, p. 18.4 — Joined Cases C-354/03, C-355/03 and C-484/03 Optigen and

Others [2006] ECR I-483, paragraph 42 and the case-law cited.

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OPINION OF MR MENGOZZI — CASE C-515/07

4. Article 6(2), first subparagraph, (b) of thedirective treats as supplies of services for consideration ‘supplies of services carried outfree of charge by the taxable person for hisown private use or that of his staff or moregenerally for purposes other than those of hisbusiness’.

‘Before a period of four years at the latest haselapsed from the date of entry into force of thisDirective, the Council, acting unanimously ona proposal from the Commission, shall decidewhat expenditure shall not be eligible for adeduction of value added tax.

5. Article 17(2)(a) of the Sixth Directive provides that, in so far as the goods and services are used for the purposes of his taxable transactions, the taxable person is tobe entitled to deduct from the tax which he is liable to pay VAT due or paid within the country in respect of goods or services supplied or to be supplied to him by anothertaxable person.

6. Under Article 17(5) of the Sixth Directive,as regards goods and services to be used by ataxable person both for transactions coveredby Article 17(2) and (3), in respect of whichvalue added tax is deductible, and for transac-tions in respect of which value added tax is notdeductible, only such proportion of the VAT isto be deductible as is attributable to the former transactions.

7. Article 17(6) of the Sixth Directive provides:

Value added tax shall in no circumstances be deductible on expenditure which is not strictly business expenditure, such as that onluxuries, amusements or entertainment.

Until the above rules come into force, Member States may retain all the exclusionsprovided for under their national laws whenthis Directive comes into force.’

8. Article 20(2) of the Sixth Directive provides that, in the case of capital goods,adjustment is to be spread over five years including that in which the goods were acquired or manufactured. The annual adjust-ment is to be made only in respect of one fifthof the tax imposed on the goods. The

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adjustment is to be made on the basis of thevariations in the deduction entitlement in subsequent years in relation to that for the year in which the goods were acquired or manufactured. The provision also states that,by way of derogation from the first subpara-graph, Member States may base the adjust-ment on a period of five full years startingfrom the time at which the goods are firstused. It adds inter alia that, in the case of immovable property acquired as capital goodsthe adjustment period may be extended up to20 years.

III — The facts in the main proceedings and the questions referred for a preli-minary ruling

9. The Vereniging Noordelijke Land- en Tuinbouw Organisatie (‘the VNLTO’), the appellant in the main proceedings, promotesthe interests of the agricultural sector in Groningen, Friesland, Drenthe and Flevoland.Its members — undertakings operating within that sector — pay contributions to it. Apartfrom promoting the general interests of itsmembers, the VNLTO provides a certain number of individual services for both its members and third parties, for which it issuesinvoices for separate payment.

10. It is not disputed that theVNLTO must betreated as liable to VAT in respect of the provision of individual services in return for afee and that the contributions used to

promote the general interests of its membersdo not constitute a fee for VAT purposes.

11. In 2000, the VNLTO acquired goods andservices which it used both for its economic activities, subject to VAT under Article 2 ofthe Sixth Directive, and for its activities in connection with the promotion of the generalinterests of its members, which are uncon-nected with the former activities. TheVNLTO applied for a deduction of the amounts ofinput VAT paid on those goods and services,including those relating to its activities to promote the general interests of its members.

12. The tax inspector refused to allow thededuction applied for and sent an adjustmentnotice to the VNLTO. By that notice, amountsof input VAT in relation to the activities connected with the promotion of the generalinterests of the members were allocated, in proportion to the VNLTO’s income generatedby those activities. The VNLTO’s complaintagainst that adjustment notice was rejected as was, subsequently, the appeal against the decision rejecting the complaint. In its judg-ment, the Gerechtshof Leeuwarden (RegionalCourt of Appeal, Leeuwarden) (Netherlands)ruled that the protection of the members’general interests did not constitute a direct,

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durable and necessary extension of the VNLTO’s economic activities and that there-fore the VNLTO could not deduct the VAT it had been charged in so far as the goods andservices in question were used for the promotion of the general interests of its members.

13. Hearing the case on appeal, the Hoge Raad der Nederlanden referred to Charles and Charles-Tijmens, 5 according to which Articles 6(2) and 17(2) and (6) of the SixthDirective preclude national legislation whichdoes not make it possible for a taxable personto allocate wholly to his business capital goodsused in part for business purposes and in partfor other purposes and which does not authorise, where appropriate, immediate deduction in full of the VAT due on the acquisition of those goods. The national courtstated that it is not reasonably open to doubtthat Charles and Charles-Tijmens must also apply in the case of a legal person which, as inthe present case, exercises, at the same time asits economic activities, activities which are not subject to VAT. In that case and in so far as thegoods acquired are capital goods, the nationalcourt stated that the VNLTO is entitled to deduct in full the VAT charged in respect ofgeneral costs, but the documents in the case-file in the main proceedings do not indicatewhat portion of the VAT deducted relates tocapital goods. On the other hand, the HogeRaad der Nederlanden considered that there is some doubt as to whether the ruling inCharles and Charles-Tijmens should be

5 — Case C-434/03 [2005] ECR I-7037.

extended to goods other than capital goodsand to services. The national court also raised the question whether the taxpayer is entitledto allocate non-capital goods and services tohis business assets so as to make an immediate deduction in full of the VAT paid on the acquisition of those goods and services, even ifthey are partly used in connection with activities unrelated to the supplies taxed pursuant to Article 2 of the Sixth Directive.

14. In those circumstances, the Hoge Raadder Nederlanden decided to stay the proceed-ings and to refer the following questions to theCourt for a preliminary ruling:

‘(1) Are Articles 6(2) and 17(1), (2) and (6) ofthe Sixth... Directive to be interpreted aspermitting a taxable person to allocatewholly to his business not only capitalgoods but all goods and services usedboth for business purposes and for purposes other than business purposesand to deduct immediately and in full the

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VAT due on the acquisition of those V — Analysis goods and services?

(2) If the answer to Question 1 is affirmative, does the application of Article 6(2) of theSixth Directive to services and goodsother than capital goods mean that VATis collected once during the tax periodover which the deduction in respect ofthose services and goods is enjoyed, ormust collection also occur in ensuing periods and, if so, how is the taxable amount to be determined in respect ofgoods and services which the taxable person does not write off?’

IV — Procedure before the Court

15. In accordance with Article 23 of the Statute of the Court of Justice, written observations have been submitted by the Netherlands, German, Portuguese and United Kingdom Governments, and by theCommission. Those parties also presented oral argument at the hearing held on 16 October 2008, with the exception of theFederal Republic of Germany and the Portu-guese Republic, which were not represented.

16. By its first question, the national courtasks whether, under Articles 6(2) and 17 of theSixth Directive, a taxpayer may allocate to hisbusiness not only capital goods but also allgoods and services used both for business purposes and for purposes other than busi-ness purposes, thus permitting him to deductimmediately and in full the VAT paid on theacquisition of those goods and services.

17. By its second question, which is raisedonly if the reply to the previous question is inthe affirmative, the national court wishes to know, in essence, in so far as non-capitalgoods and services qualify for the mechanismprovided by the first subparagraph of Article 6(2) of the Sixth Directive, first, overwhat period the output tax must be charged,that is to say, it explains, once or in instalments over several taxation periods,and, second, how the taxable amount is to be determined in respect of goods and services which are not written off.

18. It is clear from the order for reference that these questions are based on the legal premissthat a taxable person who acquires capitalgoods is entitled to rely on the provisions ofthe first subparagraph of Article 6(2) of the

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Sixth Directive, where those goods are usedfor the taxpayer’s non-economic activities. They are also based on the idea that the expression ‘purposes other than those of [the] business’, within the meaning of that article,include non-economic activities undertaken by the taxable person.

19. The following arguments will show, principally, that the premiss in question, which relates to the interpretation of the Sixth Directive, is incorrect, as some of the governments which have lodged observationsbefore the Court have also pointed out, and,accordingly, that the questions raised do notmerit a reply because they are not relevant tothe outcome of the main proceedings. I shallexamine, in the alternative, the specific pointsraised by the two questions referred for a preliminary ruling in case the Court does notconcur with my main proposal.

A — General considerations and relevance of the legal premiss on which the questionsreferred for a preliminary ruling are based

20. VAT is a general tax on consumptionborne entirely by the final consumer. Up tothe final consumer stage, the taxpayers who

participate in the production and marketing process transfer to the tax authorities the amounts of VAT which they have chargedtheir customers (output VAT collected) afterdeducting the amounts of VAT which theyhave paid to their suppliers (input VAT deductible). 6 Where a taxpayer acquiresgoods and services to carry out transactionssubject to output tax, he is entitled to deductthe VAT payable on the acquisition of thosegoods and services. 7

21. VAT is characterised by its neutrality at allstages of production and marketing. By virtueof the principle of neutrality, a person mustbear the burden of VAT only when it relates togoods or services which are used by him forhis private consumption and not for his taxable business activities. 8 Accordingly,where an asset is not used for the taxable person’s economic activities but is used by him for private consumption, no right to

6 — See, generally, Article 2 of First Council Directive 67/227/EECof 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English SpecialEdition 1967, p. 14), the content of which is reproduced inArticle 1(2) of Council Directive 2006/112/EC of 28 November2006 on the common system of value added tax (OJ 2006 L347, p. 1), which repealed Directive 62/227 and the SixthDirective. See also Joined Cases C-283/06 and C-312/06 KÖGÁZ and Others [2007] ECR I-8463, paragraph 29.

7 — See Article 17(2)(a) of the Sixth Directive. The charging ofoutput VAT without allowing the deduction of input VATwould have led to the introduction of a cumulative multistagetax system, the abolition of which was one of the specificobjectives of the common system of VAT, as is stated in theeighth recital in the preamble to Directive 62/227. See alsoCase C-184/04 Uudenkaupungin kaupunki [2006] ECR I-3039, paragraph 24.

8 — See inter alia Case C-25/03 HE [2005] ECR I-3123, para-graph 43.

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deduct can arise. 9 A fortiori, input VAT cannot be deducted where it relates to a taxpayer’s activities which are of a non-economic nature and therefore fall outside the scope of the Sixth Directive. 10

such goods is wholly or partly deductible, andunder point (b), supplies of services carriedout free of charge by the taxable person for hisown private use or that of his staff or moregenerally for purposes other than those of hisbusiness. 12

22. Problems may arise in so-called ‘mixed’use situations, that is to say, where a taxpayer,having acquired goods or services in the course of his economic activity, uses thempartly for his taxed operations and partly forother purposes.

23. The Sixth Directive envisages two cat-egories of mixed use. 11

24. In the first of those categories is the firstsubparagraph of Article 6(2) of the directive —to which the order for reference expressly refers — which treats as a supply of servicesfor consideration, under point (a), the use ofgoods forming part of the assets of a businessfor the private use of the taxable person or ofhis staff or more generally for purposes otherthan those of his business where the VAT on

9 — See Case C-97/90 Lennartz [1991] ECR I-3795, paragraphs 8 and 9; HE, paragraph 43; and Uudenkaupungin kaupunki,paragraph 24.

10 — See Case C-437/06 Securenta [2008] ECR I-1597, paragraph 30. See also to that effect Case C-72/05 Wollny [2006] ECR I-8297, paragraph 20.

11 — See point 11 of the Opinion delivered by Advocate GeneralJacobs in Charles and Charles-Tijmens.

25. As the Court has already had the oppor-tunity to state, the purpose of the first subparagraph of Article 6(2) of the Sixth Directive is to ensure equal treatment as between a taxable person and a final consumer. 13 By treating transactions carriedout free of charge as transactions effected forconsideration, Article 6(2), first subpara-graph, (a) seeks to prevent a taxable person,who has been able to deduct VAT on the purchase of goods used for his business, fromescaping payment of VAT when he appliesthose goods from his business for his ownprivate use (or for purposes other than business purposes) and from thereby enjoyingadvantages to which he is not entitled bycomparison with an ordinary final consumerwho buys goods and pays VAT on them. 14

That also applies to Article 6(2), first subpar-agraph, (b) of the Sixth Directive, the aim of

12 — It should be noted that the second subparagraph of Article 6(2) of the Sixth Directive allows the Member Statesto derogate from the provisions of the first subparagraphprovided that such derogation does not lead to distortion ofcompetition. In the light of the documents in the case-file, thesecond subparagraph of Article 6(2) does not seem to be thesubject-matter of the order for reference.

13 — See inter alia Case C-230/94 Enkler [1996] ECR I-4517, paragraph 35; Case C-412/03 Hotel Scandic Gåsabäck [2005] ECR I-743, paragraph 23; and Case C-371/07 Danfoss and AstraZeneca [2008] ECR I-9549, paragraph 46.

14 — See to that effect Enkler, paragraph 33; Hotel Scandic Gåsabäck, paragraph 23; and Danfoss and AstraZeneca,paragraph 47.

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which is to prevent a taxable person (or full cost to the taxable person of providing themembers of his staff) from obtaining, free of services’. tax, services provided by the taxable personfor which a private individual would have tohave paid VAT. 15

26. The similar treatment on which Article 6(2) of the Sixth Directive is basedmeans in practice that a taxpayer who usesgoods partly for the purposes of taxable business transactions and partly for private use and who, upon acquiring the goods, recovered all or part of the input VAT, is deemed to use the goods entirely for the purposes of his taxable transactions within themeaning of Article 17(2) of the directive. Consequently, such a taxpayer is in principleentitled to deduct immediately and in full theinput VAT paid on purchasing the goods. 16

27. As, in the present situation, there is notransaction with a third party or considerationpaid by him which would constitute the taxable amount for VAT — since the taxpayer provides a service to itself — Article 11(A)(1)(c) of the Sixth Directive providesthat the taxable amount is constituted by ‘the

15 — See Hotel Scandic Gåsabäck, paragraph 23, and Danfoss and AstraZeneca, paragraph 48.

16 — See to that effect Lennartz, paragraph 26, and Charles and Charles-Tijmens, paragraph 24.

28. The application of the first subparagraphof Article 6(2) of the Sixth Directive gives thetaxpayer a number of advantages, inter aliathat of spreading the taxation over the wholeperiod of private use of the business goodsacquired, whereas the deduction of the inputVAT paid on acquisition of those goods isimmediate and in full. The taxpayer thereforereceives a cash-flow benefit. 17 Although the

17 — See, in that regard, Wollny, paragraph 38, and point 74 of the Opinion in Charles and Charles-Tijmens. An exampleillustrates how the provision applies. It is supposed that ataxable person has acquired a new vehicle, with a probable lifeof 10 years, intended for business and private purposes. Itsnet cost is EUR 10 000 and the VAT is fixed at a rate of 17.5%. It is also supposed that, during the first year, 40% of the use ofthat vehicle is for business purposes and, accordingly, 60% isfor private purposes. The mechanism of Article 6(2) of theSixth Directive permits the immediate deduction of all theinput VAT paid, EUR 1 750. The output tax on the private useof the vehicle will be calculated by dividing the purchase priceby 10 (corresponding to the writing-off of the vehicle) and bymultiplying the result by the annual proportion of private use,which is 10 000/10 = 1 000 x 17.5% x 60%, which gives outputtax for the first year of EUR 105. If the use for private purposesdecreases for years 2 to 10 to 30%, the output tax will beEUR 52.5 for each of those years. The VAT payable on theprivate use during the life of the vehicle will therefore be 105+ 52.5 x 9 = EUR 577.5. If that amount is subtracted from the input deduction, there is a net VAT deduction of EUR 1 172.5.If the input tax payable on the vehicle at the time of purchasewere apportioned, the taxable person could deduct only theportion relating to use for business purposes, that is 40% ofthe VAT payable, namely EUR 700. If the use for businesspurposes increases to 70% (in the same proportion as theprivate use decreased in the preceding example) during years2 to 10, the overall use for business purposes during the life ofthe vehicle rises to an average of 67% during that life (whichcorresponds to a net VAT deduction of EUR 1 172.5) but theinput deduction will have been lower than that use. However,theVAT may be adjusted to reflect the actual use of the goods.It is then seen that application of the method provided for inArticle 6(2) of the Sixth Directive gives a cash-flow advantageto the taxpayer who may deduct the input VAT paidimmediately and in full, whereas the output taxation will bespread over the life of the vehicle.

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national court has not explained the issues inthe main proceedings, it is possible, as theUnited Kingdom Government suggested atthe hearing, that such a tax advantage liesbehind the VNLTO’s attempt to rely on the application of the first subparagraph of Article 6(2) of the Sixth Directive before thenational courts.

29. Article 17(5) of the Sixth Directive belongs to the second category of the provi-sions relating to mixed use. Under the firstsubparagraph of that provision, as regardsgoods and services to be used by a taxable person both for transactions in respect of which VAT is deductible (that is to say, which are used for taxable transactions), and for transactions in respect of which VAT is notdeductible (namely, exempt transactions), only such proportion of the VAT is to be deductible as is attributable to the former transactions. 18

30. As the Court recently held in Securenta, which was mentioned a number of times during the hearing, Article 17(5) of the SixthDirective thus relates to input VAT on expenditure connected exclusively with economic activities, and distinguishes

18 — Under the second subparagraph of Article 17(5) of the SixthDirective, the proportion is determined, in accordance withArticle 19 of the directive, for all the transactions carried outby the taxable person.

between economic activities which are taxed and give rise to the right to deduct and thosewhich are exempt and do not give rise to sucha right. On the other hand, the Sixth Directiveprovides no mechanism for apportioningamounts of input VAT paid relating both toeconomic transactions and non-economic transactions carried out by a taxable person.Although it is thus for the Member States todetermine that apportionment, the Court hasnevertheless pointed out that, having regardto the aims and broad logic of the Sixth Directive, they must exercise their discretionin such a way as to ensure that deduction ismade only for that part of the VAT propor-tional to the amount relating to transactionsgiving rise to the right to deduct, that is to say,the Member States must ensure that the calculation of the proportion of economic activities to non-economic activities objec-tively reflects the part of the input expenditureactually to be attributed, respectively, to thosetwo types of activity. 19

31. In the present case, it should be pointedout that it is apparent from the informationprovided by the national court that the VNLTO carries out both economic activities which fall within the scope of the Sixth Directive and non-economic activities, namely the protection of the general interestsof its members, which fall outside the scope ofthat directive. According to the explanationsgiven by the national court, the VNLTO acquired capital goods but it was not possibleto determine what portion of the VAT

19 — Paragraphs 33, 35 and 37 of the aforementioned judgment.

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deducted by the VNLTO related to the acquisition of those capital goods, unless thecase was referred back to the court of first instance. It is also clear from the order for reference that the acquisition of those goodswas entered in the accounts as general costs ofthe VNLTO and was therefore not allocated exclusively to the output economic activitiescarried out by the VNLTO. The national courtconsiders that the VNLTO may neverthelessrely on the provisions of Article 6(2), firstsubparagraph, (a) of the Sixth Directive andaccordingly deduct all the input VAT paid onacquisition of capital goods, since, accordingto the national court, the carrying-out by theassociation of non-economic activities is linked to the concept of ‘purposes other than those of his business’ mentioned in that provision. The national court bases that interpretation on the case-law of the Courtand, more specifically, on Charles and Charles-Tijmens.

32. In their written observations, the Nether-lands and Portuguese Governments stronglydisputed the premiss on which the questionsreferred for a preliminary ruling are based.The Netherlands Government repeated thatobjection at the hearing, an objection whichalso received the support of the representativeof the United Kingdom Government. Withoutactually denying that a legal person liable forVAT may rely on the provisions of Article 6(2),

first subparagraph, (a) of the Sixth Directive,as may natural persons who are subject to thetax, 20 those governments nevertheless main-tain that the deduction of input VAT is excluded in so far as the capital goods areused to carry out non-economic activities, inthe present case those relating to the generalprotection of its members’ interests. The Netherlands and Portuguese Governments add that goods acquired by a legal personliable for VAT which are, from the time of their acquisition, used to pursue the objectunder that body’s statutes cannot be consid-ered to be used for private purposes or purposes other than those of the business.

33. In that regard, it should be pointed outthat it is apparent from Securenta — which concerned a company which simultaneouslycarried out economic activities, on which it paid VAT, and non-economic activities, whichfell outside the scope of VAT, and which sought to deduct input VAT paid in relation toexpenditure unconnected with specific

20 — It will be noted that Article 4(1) of the Sixth Directive gives abroad definition of the term ‘taxable person’ and that the first subparagraph of Article 6(2) also provides for the use ofgoods or services for the purposes of the taxable person’s staff, factors which both support the idea that the latter articlealso applies to legal taxable persons, contrary to what theNetherlands Government maintained in its written observa-tions, which were judiciously corrected at the hearingfollowing questions from the Court. Finally, the principle offiscal neutrality would preclude inter alia economic operatorscarrying out the same transactions from being treated differently as far as the levying of VAT is concerned; see tothat effect, in another context, Case C-216/97 Gregg [1999] ECR I-4947, paragraph 20.

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output activities — that ‘to the extent that 36. In my view, this line of reasoning can beinput VAT relating to expenditure incurred by followed only in part. a taxpayer is connected with activities which,in view of their non-economic nature, do not fall within the scope of the Sixth Directive, itcannot give rise to a right to deduct’. 21

34. Therefore, deduction of the input VATpaid is allowed only to the extent that theexpenditure incurred is attributable to the taxpayer’s output economic activity. 22

35. However, in the present case, the nationalcourt appears to interpret Article 6(2), firstsubparagraph, (a) of the Sixth Directive asproviding the opportunity to derogate fromthe general rule which has just been noted. Itthus seems to treat the use, by a taxpayer, ofcapital goods partly for carrying out non-economic activities as the use, by that taxpayer, of capital goods allocated to the business ‘for purposes other than those of his business’, within the meaning of Article 6(2),first subparagraph, (a) of the Sixth Directive.

37. It is true that Article 6(2) of the SixthDirective, by treating as supplies for consid-eration, and therefore as falling within thescope of the directive, transactions which, inprinciple, ought not to be subject to VAT, is aderogating provision in the general scheme ofthe Sixth Directive. Accordingly, when askedwhat interpretation should be given to theexpression ‘use of goods’ in Article 6(2), firstsubparagraph, (a) of the Sixth Directive, theCourt stated that ‘the private use of goods istaxable only exceptionally’ and concluded that the words ‘use of goods’ must be interpretedstrictly, including only the use of the goodsthemselves. 23

38. Consequently, the purpose of Article 6(2)of the Sixth Directive is not to establish a general rule under which transactions whichfall outside the scope of VAT are assumed tofall within that provision. As the United Kingdom Government rightly pointed out atthe hearing, to interpret Article 6(2) of theSixth Directive as establishing a general rule ofthat kind would have the effect of renderingArticle 2(1) of the directive meaningless.

21 — Paragraph 30. 23 — Case C-193/91 Mohsche [1993] ECR I-2615, paragraphs 13 22 — Ibidem, paragraph 31. and 14, and Enkler, paragraph 34.

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39. At this stage, it is appropriate to consider theless appears to consider that that conditionthe situations covered by Article 6(2) of the is satisfied in the main proceedings, whichSixth Directive. must accordingly be taken as established for

the purposes of this analysis. 26

40. In essence, three cumulative conditions govern the application of that provision.

41. First, the goods must have been acquiredby a taxable person acting as such, and beallocated by him to his business. This condi-tion means that a taxable person performing atransaction in a private capacity does not actas a taxable person within the meaning of theSixth Directive. 24 It also means that, althoughcapital goods are used for both private andbusiness purposes, the allocation of all thosegoods to a taxpayer’s private assets excludesdeduction of the VAT paid on acquisition ofthe goods. 25

42. Although, on reading the order for reference, it still appears doubtful whether the capital goods to which it refers were allocated to the business assets, that is to say,allocated to the taxpayer’s economic activities, the national court, which alone has jurisdic-tion to assess the facts of the case, never-

24 — See Case C-291/92 Armbrecht [1995] ECR I-2775, para-graphs 17 and 18, and Case C-415/98 Bakcsi [2001] ECR I-1831, paragraph 24.

25 — Backsi, paragraph 27.

43. Secondly, Article 6(2), first subparagraph,(a) of the Sixth Directive requires the VAT onthe goods in question to be wholly or partlydeductible. That condition, also interpreted inthe light of Article 17(2)(a) of the Sixth Directive, means inter alia that a taxable person, although acting as such, who acquiresgoods for the purposes of an activity exemptfrom VAT, under the provisions of the SixthDirective, will not qualify for application ofArticle 6(2) of the Sixth Directive, even if healso uses those goods partly for private purposes.

44. Thirdly, the capital goods in questionmust be for the private use of the taxableperson or of his staff or ‘more generally forpurposes other than those of his business’.

26 — Indeed, if the capital goods were regarded as only partiallyallocated to the assets of the business, the questions referredfor a preliminary ruling would not be raised since, accordingto the case-law, the operator would act as a taxable persononly to the extent to which the goods were used for businesspurposes (see inter alia HE, paragraphs 46 and 47). Input VATon the purchase of capital goods could therefore be deductedonly to the extent to which they were used for business purposes.

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45. On reading Article 6(2) of the Sixth Directive, the expression ‘purposes other than those of his business’, introduced by the adverbial phrase ‘more generally’, appears tocontain an extension of the first two situations in which that provision applies, namely where,so far as concerns the first subparagraph (a) ofthat provision, the capital goods are ‘for the private use of the taxable person or of hisstaff ’.

46. In that regard, it seems first of all reason-able to think that, in the light of the aims andgeneral scheme of the Sixth Directive, the term ‘business’ in the first subparagraph of Article 6(2) of the Sixth Directive has a substantive content, that is to say that it relates to the taxpayer’s economic activity.Therefore I think it need only be pointed outthat the application of Article 6(2), first subparagraph, (a) of the Sixth Directive is excluded where a taxpayer uses capital goodssimultaneously for taxable transactions andexempt transactions in connection with hiseconomic activity. Although it is a mixed useof the same goods, that situation will never-theless fall within the scope of Article 17(5) ofthe Sixth Directive, which provides that inputVAT is deductible only in proportion to theamount relating to the taxable transactions.The concept of purposes other than those ofhis business can therefore include, at most, only purposes other than the taxpayer’s economic activity.

47. The question then arises whether that finding must lead to the conclusion that Article 6(2) of the Sixth Directive extends tothe use of business goods for the purposes ofall the taxpayer’s non-economic activities,

apart from cases of use for his private purposes.

48. In the light in particular of the case-law, Iconsider that this question should be answered in the negative.

49. First, in its case-law the Court does not seem to interpret in any way the use of goods‘for purposes other than for [the] business’ as a situation concerning use other than for private purposes. Thus, the Court has held that ‘it follows from the structure of the Sixth Directive that Article 6(2)(a) [of the directive]is designed to prevent the non-taxation ofbusiness goods used for private purposes’. 27

50. Secondly, in Securenta, the Court observed that the provisions of the Sixth Directive do not include rules relating to themethods or criteria which the Member States are required to apply when adopting provi-sions permitting the apportionment of input

27 — See Case 50/88 Kühne [1989] ECR 1925, paragraph 8; Mohsche, paragraph 8; Case C-258/95 Fillibeck [1997] ECR I-5577, paragraph 25; Case C-155/01 Cookies World [2003] ECR I-8785, paragraph 56; and Wollny, paragraph 31 (emphasis added). See also point 42 of the Opinion of Advocate General Sharpston delivered on 23 October 2008 inDanfoss and AstraZeneca. See too, as regards Article 6(2), first subparagraph, (b) of the Sixth Directive, Fillibeck,paragraph 25.

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VAT according to whether the relevant expenditure relates to economic activities orto non-economic activities. 28 It held, however, that, in exercising their discretion, the Member States, which are required inter aliato comply with the principle of fiscal neutrality on which the common system ofVAT is based, must ensure that deduction is made only for that part of the VAT propor-tional to the amount relating to transactionsgiving rise to the right to deduct. 29 It is unlikely that the Court, if it considered thatArticle 6(2), first subparagraph, (a) of the Sixth Directive allowed the use of capital goods, allocated to the business, for non-economic purposes to be treated as a supplyfor consideration authorising the taxable person to deduct in full the input VAT paidon acquisition of those goods, would havestated that the Member States have compe-tence to adopt rules relating to the apportion-ment of the input VAT in relation to expenditure connected with both economicand non-economic activities and would have required those Member States to ensure that the deduction of VAT was in proportion to theamounts relating only to deductible transac-tions.

51. If the Court interpreted Article 6(2) of theSixth Directive as a general derogation fromthe provisions of Article 17 of the Sixth Directive, the findings which it made in Securenta would at least have been more qualified, if not supplemented by certain considerations relating to Article 6(2) of theSixth Directive. According to the case-law,

28 — Securenta, paragraph 33. 29 — Ibidem, paragraphs 36 and 37.

there was nothing to prevent the Court frominterpreting that provision, even though it wasnot expressly mentioned in the questions referred for a preliminary ruling in Secur-

30 enta.

52. The foregoing considerations lead me, thirdly, to share the view expressed by Advocate General Sharpston in Danfoss and AstraZeneca, that Article 6(2) of the SixthDirective covers purposes which are whollyextraneous to those of the taxable business, 31

that is to say, that they do not serve the interests of the business either directly or indirectly.

53. However, the use of goods for a taxpayer’s non-economic activities, at the same time as their use for his taxable economic activities, may, in many situations, serve, directly or indirectly, the interests of the business, unlike,as a rule, the private use of those goods. Topermit the extension of Article 6(2) of theSixth Directive to uses for a taxpayer’s non-

30 — According to the case-law, it is for the Court to provide thenational court with all those elements for the interpretationof Community law which may be of assistance in adjudicatingon the case pending before it, whether or not that court hasspecifically referred to them in its questions: see, in the sphereof application of the Sixth Directive, Case C-452/03 RAL (Channel Islands) and Others [2005] ECR I-3947, para-graph 25.

31 — Point 38 of the Opinion in Danfoss and AstraZeneca.

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economic activities would also mean that it would be necessary to distinguish in each specific case the uses which were actuallyunconnected with the purposes of the busi-ness from those which served its needs. The common system of VAT would become morecomplex, which, in my view, does not correspond generally to the spirit of the Sixth Directive. 32

54. I therefore consider that use ‘for purposesother than those of [the] business’ as providedin Article 6(2) of the Sixth Directive cannotinclude any use for the purposes of the taxpayer’s non-economic activities. 33

55. That assessment does not prejudice theeffectiveness of the expression ‘purposes other than those of [the] business’ since this may extend to any use for private purposes bypersons other than the taxpayer or membersof his staff. As the Portuguese Governmentpointed out in its written observations, thatwould be the case, for example, of capitalgoods which the VNLTO used simultaneouslyfor its taxable activities and for the privatepurposes of its members or of one of theirmanagers. However, as I have just stated, thatdoes not appear to be the situation in respect

32 — See, by analogy, Case C-390/96 Lease Plan [1998]ECR I-2553, paragraph 28, in a context in which the Courtrejected a criterion on which to base the existence of a fixedestablishment which could not be regarded as ‘a clear, simpleand practical criterion, in accordance with the spirit of theSixth Directive’.

33 — See also to that effect point 59 of the Opinion in Charles and Charles-Tijmens.

of which the VNLTO seeks to rely on theapplication of the first subparagraph of Article 6(2) of the Sixth Directive.

56. I therefore consider that the interpreta-tion of the first subparagraph of Article 6(2)and Article 17 of the Sixth Directive on the basis of which the national court bases the premiss for the questions referred is incorrect.Consequently, those questions seem to me tobe irrelevant for the purposes of deciding thedispute in the main proceedings.

57. I therefore propose, principally, that thereply to be given to the order for reference isthat the first subparagraph of Article 6(2) ofthe Sixth Directive is not applicable to the useof capital goods allocated to the business forthe taxable person’s non-economic activities.

58. It is only if the Court were not to agreewith this assessment that it would be neces-sary to reply to the specific points raised by thefirst question referred and then, if appro-priate, to those raised in the second question.It is therefore only in the alternative that Ishall now examine these matters.

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B — The specific points raised by the firstquestion

59. As already stated, the national court isasking whether a taxable person may, underArticles 6(2) and 17 of the Sixth Directive,allocate to his business non-capital goods andservices used both for business purposes andfor purposes other than business purposes,thus authorising him to deduct immediatelyand in full the VAT paid on acquisition ofthose goods and services.

60. It should be pointed out first of all that,according to the case-law, where capital goodsare used both for business and for privatepurposes the taxpayer has the choice, for thepurposes of VAT, of (i) allocating those goodswholly to the assets of his business, (ii) retaining them wholly within his privateassets, thereby excluding them entirely fromthe system of VAT, or (iii) integrating theminto his business only to the extent to whichthey are actually used for business purposes. 34

61. As I have already had occasion to mention, should the taxable person chooseto treat capital goods used for both business

34 — See inter alia HE, paragraph 46; Charles and Charles-Tijmens, paragraph 23; and Wollny, paragraph 21.

and private purposes as business goods, theinput VAT due on the acquisition or construc-tion of those goods is, as a rule, immediatelydeductible in full. 35

62. However, since use for the privatepurposes of the taxable person or of his staff or for purposes other than those of his business is treated as a taxable transaction under Article 6(2), first subparagraph, (a) ofthe Sixth Directive, a taxable person who haschosen to allocate a whole capital asset to hisbusiness and uses part of that asset for hisprivate purposes is required to pay VAT on theamount of expenditure incurred to effect suchuse, and has the corresponding right to deductthe input VAT paid on all acquisition or construction costs relating to that capital asset. 36

63. That being so, the issue is whether the factthat that case-law of the Court has developedin the context of the mixed use of capitalgoods is purely fortuitous or, on the contrary,there is a particular reason for it stemmingfrom the provisions of Article 6(2), first subparagraph, (a) of the Sixth Directive.

35 — Charles and Charles-Tijmens, paragraph 24, and Wollny,paragraph 22.

36 — See to that effect Wollny, paragraphs 23 and 24 and the case-law cited therein.

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64. First of all, on a straightforward reading,that provision is not restricted to the use ofcapital goods but refers, more broadly, to ‘use of goods’.

65. Secondly, it should be pointed out that, inthe case-law relating to the interpretation ofArticle 6(2) of the Sixth Directive, the Courthas never defined the expression ‘capital goods’ to which it has regularly referred.

66. In Verbond van Nederlandse Onderne-mingen, 37 which concerned the interpretation of Article 17 of Second Council Direct-ive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value added tax, 38 the Court held, in the light of the ordinary meaning of the expression and its function in the context of Directive 67/228, that ‘capital goods’ covers goods used for the purposes ofsome business activity and distinguishable bytheir durable nature and their value, such that the acquisition costs are not normally treatedas current expenditure but are written off overseveral years. 39

37 — Case 51/76 [1977] ECR 113.38 — OJ, English Special Edition 1967, p. 16.39 — See paragraph 12 of the aforementioned judgment.

67. The essential elements of that definition, namely the durable nature of those goods andthe attendant writing-off of their acquisitioncosts, were reproduced by the Court in connection with the interpretation of Article 20 of the Sixth Directive relating inter alia to the period over which the adjustment in respect of capital goods is made, 40 despite the fact that that provisionconfers competence on the Member States todefine the concept of capital goods. 41

68. Even though there is no overlap betweenthe material scope of the first subparagraph ofArticle 6(2) of the Sixth Directive and that ofArticle 20 of the directive, 42 nevertheless, as the Court has held, those provisions have acommon aim, 43 which I consider may meanthat the essential elements of the definition of ‘capital goods’, within the meaning of Article 20 of the directive, namely the durable nature of their use and the attendant writing-off of their acquisition costs —elements which, moreover, are also covered by the ordinary meaning of that expression —are also relevant so far as concerns the use which the Court’s case-law has made of that concept when interpreting Article 6(2) of theSixth Directive.

40 — Case C-63/04 Centralan Property [2005] ECR I-11087, paragraph 55.

41 — See Article 20(4) of the Sixth Directive. See, in that regard,Case C-98/07 Nordania Finans and BG Factoring [2008] ECR I-1281, paragraph 32.

42 — See, in that regard, Uudenkaupungin kaupunki, paragraphs 30 to 34.

43 — Wollny, paragraphs 35 to 37.

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69. However, as the case-law cited in point 62 of this Opinion implicitly but necessarilyshows, under Article 6(2), first subparagraph,(a) of the Sixth Directive, the VAT paid on theprivate use of the goods acquired will be charged as and when consumption of the goods on which input VAT has been deductedoccurs. The fact that the use by the taxableperson of a business asset for private purposesis treated as a supply of services for consider-ation, that is to say, a transaction which takesplace over a period of time, leads to the logicalconclusion that the recovery of the VAT onthe costs necessary for the services to be provided (a fiction) must be effected in instalments. 44 In the event of any change in the portion of the goods allocated by thetaxable person to his private use, the adjust-ment to the VAT for which he is liable on the amount of expenditure incurred to effect suchuse will, in any event, be self-executing 45 since it will vary precisely according to actual use ofthe goods for private purposes 46 throughoutthe life of the goods, or even over a shorterperiod, in accordance with that provided for inArticle 20(2) and (3) of the Sixth Directive, asthe Court appears to recognise. 47

70. Accordingly, as the Netherlands, Portu-guese and United Kingdom Governments andthe Commission have pointed out, in essence,in reference inter alia to point 88 of the Opinion in Charles and Charles-Tijmens, the mechanism introduced by Article 6(2), first

44 — See to that effect point 70 of the Opinion of Advocate GeneralLéger in Wollny.

45 — See to that effect point 61 of the Opinion of Advocate GeneralJacobs in Charles and Charles-Tijmens.

46 — See, in that regard, Enkler, paragraphs 36 and 37. 47 — Wollny, paragraphs 37 and 53.

subparagraph, (a) of the Sixth Directive thusmakes sense only if the consumption of thegoods is spread over time, that is to say, that itrelates to capital goods and not to other goodsconsumption of which is, as a rule, immediate.

71. For non-capital goods, I consider that thesolution is to be found in the provisions ofArticle 17(5) of the Sixth Directive, that is tosay, the taxable person must apportion thegoods in question for business purposes orother purposes and deduct the amount of VAT which reflects the actual use of those goods for the purposes of the business at thetime the VAT is due.

72. In my view, that will also apply to goodswhich, losing their distinctive nature, are incorporated into the capital goods after these have been acquired and which tend toretain their value. 48 Article 6(2), first subpar-agraph, (a) of the Sixth Directive refers only tothe use of the goods acquired themselves when they are deductible and not to the

48 — See, by analogy, Joined Cases C-322/99 and C-323/99 Fischer and Brandenstein [2001] ECR I-4049, paragraph 67,concerning the interpretation of Article 5(6) of the SixthDirective, which treats as supplies made for consideration theapplication by a taxable person of goods forming part of hisbusiness assets for his private use or their application forpurposes other than those of his business, where the VAT onthe goods in question or the component parts thereof waswholly or partly deductible.

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expenditure incurred for their use and main-tenance. 49

73. As for items which are incorporated intothe capital goods after these are acquired butwhich increase their value, apart from the factthat Article 6(2), first subparagraph, (a) of theSixth Directive refers only to capital goodsonce they have been acquired, I also think it ispreferable, for reasons relating to the simpli-city of the common scheme of VAT, for theinput VAT paid on the acquisition of suchitems to be apportioned according to the rulelaid down in Article 17(5) of the Sixth Directive. As the United Kingdom Govern-ment explained in detail in its written observations, in view of the differences concerning the date of acquisition of the goods and their expected life, the applicationof Article 6(2), first subparagraph, (a) of theSixth Directive would mean that the taxable person would be required to calculate, eachyear, the output VAT on each item incorpor-ated into the body of capital goods, a taskwhich seems particularly complex. 50

49 — Kühne, paragraph 13. 50 — In accordance with the method described in footnote 17 to

this Opinion. The United Kingdom Government thus givesthe example of a yacht (capital goods) acquired in 2000,intended basically for hiring out but also for private use for20% of the year; the taxable person renews the mast in 2001(expected to last for 15 years, that is, until 2016), renews thewooden decks in 2002 (expected to last for 10 years, that is,until 2012), renews the anchor in 2003 (expected to last for 8years, that is, until 2011), and so forth. In that case, each yearthe taxable person would have to divide the net cost of each ofthose items by its estimated lifespan and multiply the resultby the relevant national VAT rate and by the proportion ofprivate use during the year concerned.

74. As regards services, the national courtconsiders that the extension of the scheme applicable to the mixed use of capital goodsmight possibly be extended to services whichare subject to writing-off (that is to say, ‘capital services’) since, for commercial purposes,those services are no different from capitalgoods. The Commission shares that view forreasons connected with the observance of the principle of equal treatment, 51 and the assess-ment was also endorsed by the United Kingdom Government at the hearing. On the other hand, the Netherlands, German and Portuguese Governments reject the extensionenvisaged by the national court. Those governments refer inter alia to the wordingof the first subparagraph of Article 6(2) of theSixth Directive. However, the Netherlands and German Governments appear to acknowledge that services incorporated intocapital goods after their acquisition may fallwithin the scope of Article 6(2), first subpar-agraph, (a) of the Sixth Directive.

75. I consider from the outset that this last assessment must be rejected inter alia for thesame reasons as those set out in points 72 and73 of this Opinion with regard to goods

51 — In its observations, the Commission compares the acquisi-tion, as full owner, by an undertaking of vehicles also used forthe private purposes of the taxable person, which mightqualify for application of the provisions of Article 6(2), firstsubparagraph, (a) of the Sixth Directive, and the acquisitionby the same undertaking of vehicles under a leasing agreement, which would also be used for the taxable person’s private purposes.

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incorporated following the acquisition of thecapital goods. 52

76. As regards the extension of the schemefor the mixed use of capital goods to capitalservices, it should first of all be noted that there is no provision in the Sixth Directivegoverning the use for a taxable person’s private purposes of a capital service allocatedto his business. Indeed, as has already beenpointed out, Article 6(2), first subparagraph,(a) of the Sixth Directive refers only to goods.Also, Article 6(2), first subparagraph, (b) ofthe directive treats as supplies of services forconsideration only supplies of services carriedout free of charge by the taxable person for himself or members of his staff and not those by third parties. 53

77. The exclusion of the use of services from the scope of Article 6(2), first subparagraph,

52 — See also Mohsche, paragraph 14. This does not therefore concern the services used for the acquisition or constructionof capital goods, such as a building, which precede or accompany that acquisition: see, in that regard, Case C-269/00 Seeling [2003] ECR I-4101, paragraph 43, and Wollny, paragraph 24, which state ‘where a taxable personchooses to treat an entire building as forming part of theassets of his business and uses part of that building for privatepurposes he is, on the one hand, entitled to deduct the inputVAT paid on all construction costs relating to that buildingand, on the other, subject to the corresponding obligation topay VAT on the amount of expenditure incurred to effectsuch use’ (emphasis added). See also Wollny, paragraphs 27 and 50.

53 — See, in that regard, Hotel Scandic Gåsabäck, paragraph 23, and Danfoss and AstraZeneca, paragraph 48, which state ‘…Article 6(2)(b) of the Sixth Directive prevents a taxable person or members of his staff from obtaining, free of tax,services provided by the taxable person for which a private individual would have to have paid VAT’ (emphasis added).See also point 22 of the Opinion of Advocate General Jacobsin Mohsche.

(a) of the Sixth Directive and the simultaneouslimitation of the scope of the first subpara-graph (b) of that provision to supplies of services by the taxable person may be inter-preted in two slightly different ways.

78. On the one hand, it might be suggestedthat the Community legislature considered that the use for private purposes of servicessupplied to the taxable person by third parties was to be dealt with by dividing betweenbusiness use and private use the amounts ofinput VAT payable on the acquisition of capital services rather than by chargingoutput VAT on the private use correspondingto the right to deduct immediately and in fullthe input VAT paid, in accordance with Article 6(2), first subparagraph, (a) of the Sixth Directive.

79. In that situation, since the private use ofcapital services would not be treated as a supply of services for consideration, it wouldtherefore fall outside the scope of the SixthDirective and, accordingly, of the rules in Article 17(5) of the directive, which, as theCourt has pointed out, relates only to theapportionment of input VAT on expenditure

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connected exclusively with economic activ-ities. 54 However, the problem arises, in thatsituation, of the adjustment of the VAT initially deducted where changes affect, during the period over which the capitalservice is written off, that proportion of thecapital service used for business purposes (and therefore, correlatively, that used for private purposes), since Article 20(2) and (3)of the Sixth Directive covers only the adjust-ment of the deduction in respect of capitalgoods.

80. Consequently, and on the other hand, itmight thus be considered that, in the absenceof Community provisions relating to the mixed use of capital services, the Communitylegislature intended to leave to the MemberStates the option of apportioning the inputVAT paid between the professional use andthe private use of a capital service, in whichcase only the proportion relating to businesspurposes would be deductible, or of treatingprivate use as a service for consideration, sothat output VAT is paid in instalments on theexpenditure relating both to the business useand the private use of a capital service.

81. In that situation, it seems clear that, in the exercise of their competence, the Member States must nevertheless have regard to theaims and broad logic of the Sixth Directive,that is, they must in particular comply with

the principle of fiscal neutrality on which thecommon system of VAT is based. 55

82. Irrespective of the general question of whether a Member State may reasonablyextend the scheme applicable to the mixed use of capital goods, as provided under Article 6(2), first subparagraph, (a) of the Sixth Directive, to the mixed use of capitalservices, without creating any distortions ofcompetition and differences between the levels of the fiscal burden in the Member States, there is no indication at all in the documents before the Court that this was the option taken by the legislation in force in theNetherlands. In that regard, the national courtonly mentions the hypothesis that, under Community law, the Member States are required to extend the scheme applicable tothe mixed use of capital goods, as provided inArticle 6(2) of the Sixth Directive, to services,including capital services. However, as has already been pointed out, that hypothesis must, in my view, be ruled out.

83. In any event, contrary to what the Commission stated in its observations, I do not consider that a refusal to apply the firstsubparagraph of Article 6(2) of the Sixth Directive to the mixed use of capital serviceswould impose on the taxable person a taxburden in respect of his business use whichwould infringe the principle of neutrality.

54 — See Securenta, paragraph 33. 55 — See, in that regard, Securenta, paragraphs 35 and 36.

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Since it is only the portion used for private purposes which would be regarded as a transaction free of charge, the deduction ofthe input VAT paid in respect of the taxable person’s business use would be fully available.

84. For all these reasons and in the event that the Court were to reply to the specific pointsraised by the first question referred by thenational court, I propose that the reply to thequestion should be that Article 6(2) of theSixth Directive is to be interpreted as meaningthat it does not extend either to the mixed use of goods other than capital goods or to themixed use of services.

C — The specific points raised by the secondquestion

85. It is only if the Court were not to endorseeither my principal proposal or the replywhich I suggest be given, in the alternative, tothe first question, that it would be necessary toexamine the second question raised by thenational court.

86. As I have already emphasised, by thislatter question the national court wishes toknow, in essence, in so far as goods other than capital goods and services qualify for the mechanism provided by the first subpara-graph of Article 6(2) of the Sixth Directive, (a) over which period output tax must be

charged, that is to say, should it be chargedonce or in instalments over several taxation periods, and (b) how the taxable amount is tobe determined in respect of goods and services which are not written off.

87. As regards that part of the questionrelating to the chargeability of VAT, as theNetherlands and Portuguese Governments maintained in their written observations, since the supplies of services referred to inArticle 6(2), first subparagraph, (a) of the Sixth Directive are regarded as supplies forconsideration, the rules relating to charge-ability of VAT are therefore the same. Accordingly, under the first sentence of Article 10(2) of the Sixth Directive, the chargeable event is to occur and the tax is tobecome chargeable when the services are performed. 56 Where a business asset is used partly for private purposes, VAT thereforebecomes chargeable at the time of that use.For goods (and services) which are consumedimmediately, it is reasonable to suppose thatVAT will be paid once, that is to say in thetaxable person’s tax declaration for the taxation period concerned, the Member States retaining, pursuant to Article 22(4) of

56 — It should be noted that the third sentence of Article 10(2) ofthe directive also confers the power on the Member States toprovide that, in certain cases, continuous supplies of serviceswhich take place over a period of time are to be regarded asbeing completed at least at intervals of one year. This power,to which the Netherlands Government also referred in its written observations in respect of the supplies of servicescovered by Article 6(2) of the Sixth Directive, was introducedinto the Sixth Directive only at the time of the adoption ofCouncil Directive 2000/65/EC of 17 October 2000 amendingDirective 77/388 (OJ 2000 L 269, p. 44), the provisions ofwhich were to be transposed by the Member States by 31 December 2001 at the latest. The third sentence of Article 10(2) of the Sixth Directive is therefore not applicable,ratione temporis, to the facts in the main proceedings which,as has already been pointed out, concern the VNLTO’S tax assessment only for the year 2000.

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the Sixth Directive, the power to determinethat period. As stated by the United KingdomGovernment in its written observations, this approach not only has the advantage of simplicity but is also likely to ensure equaltreatment with the final consumer, who cannot spread the impact of VAT over a period longer than that of the actual use ofgoods or services consumed immediately.

88. As regards capital services, I consider, concurring with what the United KingdomGovernment maintained, that there is nothingto prevent a Member State from spreading theoutput taxation over the period for writing offthe service in question or, as the Court hasacknowledged in respect of capital goods, overa shorter period, corresponding, for example,to the period of adjustment of deductions provided for in Article 20 of the Sixth Directive. 57

89. Finally, as regards that part of the ques-tion referred relating to the determination ofthe taxable amount for VAT in respect ofgoods and services which are not written off, itshould be pointed out that, under Article 11(A)(1)(c) of the Sixth Directive, this is constituted, for the transactions covered byArticle 6(2) of the directive, by the amount ofthe expenses incurred by the taxable person

for the supply of services. This conceptcorresponds to the expenses which relate tothe goods themselves, 58 but also to those, incurred on acquisition of the goods, withoutwhich the private use could not have takenplace. 59 However, the Court has held that the Sixth Directive did not contain the guidancenecessary for defining uniformly and preciselythe rules for establishing the amount of theexpenses concerned, and that the MemberStates therefore have a certain margin of discretion as regards those rules provided thatthey do not fail to have regard to the aims androle of the provision at issue within the scheme of the Sixth Directive. 60

90. In that regard, it is apparent, in essence,from the written observations of the Nether-lands Government that the Netherlands legislation would link the determination ofall the elements to be taken into consideration for calculating the taxable amount of the supplies of services covered by Article 6(2) ofthe directive to that applicable to ‘normal’supplies of services for consideration. I consider that it is for the national court to verify that statement in the main proceedingsand to examine, in the light of the principlesreiterated in the previous point of this Opinion, whether such treatment, in so faras it relates to the determination of the taxable amount for VAT, complies inter alia with theprinciple of fiscal neutrality.

58 — Enkler, paragraph 36, and Wollny, paragraph 27. 59 — See to that effect Wollny, paragraph 27.

57 — See to that effect Wollny, paragraphs 42 and 48. 60 — Ibidem, paragraph 28.

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VI — Conclusion

91. In the light of the foregoing considerations, I propose that the Court give thefollowing reply to the reference for a preliminary ruling from the Hoge Raad derNederlanden:

The first subparagraph of Article 6(2) of Sixth Council Directive 77/388/EEC of 17 May1977 on the harmonisation of the laws of the Member States relating to turnovertaxes — Common system of value added tax: uniform basis of assessment, as amendedby Council Directive 95/7/EC of 10 April 1995, is to be interpreted as meaning that it isnot applicable to the use of capital goods allocated to a business for the taxable person’s non-economic activities which are not subject to value added tax.

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v



12 February 2009 *

In Case C-515/07,

REFERENCE for a preliminary ruling under Article 234 EC by the Hoge Raad derNederlanden (Netherlands), made by decision of 2 November 2007, received at theCourt on 22 November 2007, in the proceedings

Vereniging Noordelijke Land- en Tuinbouw Organisatie

Staatssecretaris van Financiën,


composed of K. Lenaerts, President of the Chamber, R. Silva de Lapuerta (Rapporteur),E. Juhász, G. Arestis and J. Malenovský, Judges,


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Advocate General: P. Mengozzi,Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 16 October 2008,


— the Netherlands Government, by C. Wissels and M. de Grave, acting as Agents,


— the Portuguese Government, by L. Inez Fernandes, acting as Agent,

— the United Kingdom Government, by T. Harris, acting as Agent, assisted by K. Lasok QC,

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1


— the Commission of the European Communities, by D. Triantafyllou and W. Roels,acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 December 2008,

gives the following

Judgment

This reference for a preliminary ruling concerns the interpretation of Article 6(2) andArticle 17(2) and (6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on theharmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the directive’).

The reference has been made in proceedings between Vereniging Noordelijke Land- enTuinbouw Organisatie (‘VNLTO’) and the Staatssecretaris van Financiën (StateSecretary for Finance) (Netherlands) concerning an adjustment in respect of valueadded tax (‘VAT’).

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2


Legal framework


3 Article 2 of the directive provides:

‘The following shall be subject to value added tax:

1. the supply of goods or services effected for consideration within the territory of thecountry by a taxable person acting as such;

…’

4 Article 6(2) of the directive provides:

‘The following shall be treated as supplies of services for consideration:

(a) the use of goods forming part of the assets of a business for the private use of thetaxable person or of his staff or more generally for purposes other than those of hisbusiness where the [VAT] on such goods is wholly or partly deductible;

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5


(b) supplies of services carried out free of charge by the taxable person for his ownprivate use or that of his staff or more generally for purposes other than those of hisbusiness.

Member States may derogate from the provisions of this paragraph provided that suchderogation does not lead to distortion of competition.’

Under Article 17(2) and (6) of the directive:

‘2. In so far as the goods and services are used for the purposes of his taxabletransactions, the taxable person shall be entitled to deduct from the tax which he isliable to pay:

(a) [VAT] due or paid in respect of goods or services supplied or to be supplied to himby another taxable person;

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6


…

6. Before a period of four years at the latest has elapsed from the date of entry into forceof this Directive, the Council, acting unanimously on a proposal from the Commission,shall decide what expenditure shall not be eligible for a deduction of [VAT]. [VAT] shallin no circumstances be deductible on expenditure which is not strictly businessexpenditure, such as that on luxuries, amusements or entertainment.

Until the above rules come into force, Member States may retain all the exclusionsprovided for under their national laws when this Directive comes into force.’


Article 2 of the Law of 1968 on turnover tax (Wet op de omzetbelasting 1968) states:

‘A trader may deduct from the tax to be paid on supplies of goods and services the taxcharged on supplies of goods and services to him, acquisitions of goods effected by himwithin the Community and imports of goods intended for him.’

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7


Article 15 of that Law provides:

‘1. The tax referred to in Article 2 which is deductible by the trader shall be:

(a) the tax which, in the period covered by the return, other traders have charged himby means of an invoice issued in accordance with the applicable rules, in respect ofsupplies of goods and services which they have made to him;

…

in so far as the trader uses the goods and services for the purposes of his business …

…

4. Deduction of the tax is made in accordance with the intended use of the goods andservices at the time when the tax is invoiced to the trader or at the time when the tax becomes chargeable. If it appears, at the time when the trader is preparing to use thegoods or services, that he is deducting the tax relating to them to an extent which ishigher or lower than that to which the use of the goods or services entitles him, the

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8


excess deducted shall be chargeable from that time. The tax which becomes chargeableshall be paid in accordance with Article 14 [of the Law of 1968 on turnover tax].

The amount of tax which could have been deducted and was not deducted shall be refunded to him on request.

…’

The dispute in the main proceedings and the questions referred for a preliminaryruling

VNLTO promotes the interests of the agricultural sector in the provinces of Groningen,Friesland, Drenthe and Flevoland. Its members, who are traders in that sector, pay amembership subscription to it, the greater part of which goes towards activitiesdesigned to promote their general interests.

In addition to promoting those interests, VNLTO provides a number of individualservices to its members, for which it charges a fee. Those services are also offered tonon-members. The profits generated by those economic activities are allocated tosafeguarding the general interests of members.

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9

10


During 2000, VNLTO acquired goods and services which it used both for its activitiessubject to VATand for other, unrelated activities. VNLTO applied for full deduction ofthe amounts of input VAT paid in respect of those goods and services, including thoserelating to its activities in promoting the general interests of its members.

11 For the 2000 tax year, VNLTO deducted the amounts of input VAT paid relating totaxable supplies. It also deducted part of the amounts of input VAT paid with regard toactivities connected with the promotion of the general interests of its members. On14 May 2001, VNLTO applied for reimbursement of an additional amount of VATrelating to those activities. In this way, VNLTO claimed the right to deduct an amountrepresenting 79% of the total goods and services which it had acquired. By decision of3 August 2001, the Tax Inspectorate refused the reimbursement applied for.

12 By decision of 26 March 2002, the Tax Inspectorate sent VNLTO an adjustment noticefor the tax year in question. By that notice, the amounts of input VAT relating toactivities in promoting the general interests of VNLTO’s members were reincorporatedin proportion to the income which those activities generated for VNLTO. This resultedin a deduction representing 49% of the total goods and services acquired by VNLTO.

By letter of 26 April 2002, VNLTO lodged a complaint against that adjustment notice.By decision of 15 May 2002, the Tax Inspectorate confirmed that notice.

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13


14 VNLTO subsequently appealed that decision to the Gerechtshof (Regional Court ofAppeal) Leeuwarden (Netherlands). On 17 June 2005, that court dismissed the appeal,holding that activities relating to the promotion of general interests did not constitute adirect, durable and necessary extension of VNLTO’s economic activities. According tothat court,VNLTO was not entitled to deduct the tax it had been charged in so far as thegoods and services acquired had been used to promote the general interests of itsmembers.

15 On 27 July 2005, VNLTO appealed on a point of law against the decision of theGerechtshof Leeuwarden.

16 The case accordingly came before the Hoge Raad der Nederlanden (Supreme Court ofthe Netherlands), which stated that the dispute in the main proceedings concerns thededuction of amounts of VAT levied when expenditure is incurred in the acquisition ofgoods and services used both for economic activities subject to VAT and for othertransactions unrelated to those activities.

17 The Hoge Raad der Nederlanden therefore wishes to determine whether VNLTO isentitled to treat as assets of its business goods other than capital goods and services,thereby enabling it immediately to deduct the total amount of VAT paid in respect oftheir acquisition even though they are used in part for activities unrelated to suppliestaxable under Article 2 of the directive.

18 In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1) Are Articles 6(2) and 17(1), (2) and (6) of the [directive] to be interpreted aspermitting a taxable person to allocate wholly to his business not only capital goods

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but all goods and services used both for business purposes and for purposes otherthan business purposes and to deduct immediately and in full the VAT due on theacquisition of those goods and services?

(2) If the answer to Question 1 is affirmative, does the application of Article 6(2) of the[directive] to services and goods other than capital goods mean that VAT iscollected once during the tax period over which the deduction in respect of thoseservices and goods is enjoyed, or must collection also occur in ensuing periods and,if so, how is the taxable amount to be determined in respect of goods and serviceswhich the taxable person does not write off?’


The first question

Observations submitted to the Court

The Netherlands Government states that, with regard to the acquisition of capitalgoods or goods and services other than capital goods, a taxable person cannot deductthe VAT invoiced inasmuch as those services are used for purposes of transactionswhich are not subject to VAT. That is the case where the activities in question consist inthe promotion of general interests.

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19

20


The Netherlands Government points out that, according to its statutes, VNLTO’s purpose is to promote the interests of the agricultural sector in a number of provinces ofthe Netherlands as well as those of traders operating within that sector. It explains that,for that purpose,VNLTO is affiliated to the Land- en Tuinbouw Organisatie Nederlandand, through that organisation, seeks to safeguard farmers’ interests at local, provincial,national and international levels. The Netherlands Government states that VNLTO seeks to stimulate the implementation of an agricultural development policy in thefields of research, awareness-raising, training and teaching.

21 During the hearing before the Court, the Netherlands Government specified that nodistinction is to be made between a natural and a legal person for the purpose ofreplying to the first question referred. It added, however, that, in the case in the mainproceedings, VNLTO seeks to obtain a deduction of VAT in connection with its non-economic activities, in this case, those related to the promotion of the general interestsof its members.

22 The German Government takes the view that a taxable person is permitted to allocatewholly to his business not only capital goods but also all goods used both for businesspurposes and for purposes other than those of his business. That option applies toservices only in so far as they are acquired in connection with the use of goods whollyallocated to the business. With regard to taxing the use of such goods or services forpurposes other than those of the business, it is for the Member States to determine thetaxing arrangements and the periods in respect of which tax is to be charged.

23 The Portuguese Government submits that a legal person cannot wholly deduct theVATcharged on capital goods or any other goods or services for use exclusively in pursuit ofits own objectives, where, at the moment of their acquisition, those goods have beenused both for carrying out activities subject to that tax and in pursuit of transactions notsubject to that tax.

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24


The United Kingdom Government states that, with the exception of capital goods andservices used in order to create new capital goods, a taxable person is not entitled toallocate wholly to his business goods and services in mixed use, that is to say, in use forbusiness purposes and for private or non-business purposes.

25 The Commission takes the view that a taxable person is authorised to allocate to hisbusiness only capital goods and, by way of exception, services exhibiting characteristicscomparable to those of capital goods, used both for business purposes and for purposesother than business purposes, and to deduct immediately and in full the input VATpaid.


26 By its first question, the national court seeks essentially to determine the extent of theright to deduct VAT, provided for in Articles 6(2) and 17(2) of the directive, in asituation where the taxable person has used goods and services, upon the acquisition ofwhich it paid the input VAT due, both for the purposes of its business and, according tothe wording of the question referred, ‘for purposes other than business purposes’, in other words, in this case, for purposes of transactions other than taxable transactions.

It is necessary to recall, at the outset, that the deduction system established by thedirective is meant to relieve the trader entirely of the burden of the VAT payable or paidin the course of all his economic activities. Thus, the common system of VAT seeks to ensure complete neutrality of taxation of all economic activities, whatever their

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27


purpose or results, provided that they are themselves subject, in principle, to VAT (seeCase C-408/98 Abbey National [2001] ECR I-1361, paragraph 24 and the case-law cited).

28 Consequently, where goods or services acquired by a taxable person are used forpurposes of transactions that are exempt or do not fall within the scope of VAT, nooutput tax can be collected or input tax deducted (see Case C-184/04 Uudenkaupungin kaupunki [2006] ECR I-3039, paragraph 24, and Case C-72/05 Wollny [2006] ECR I-8297, paragraph 20).

29 In order to give a meaningful answer to the first question raised, it is necessary to place itin the factual context described by the national court in its order for reference.

30 It follows from the summary of the facts by the Hoge Raad der Nederlanden thatVNLTO carries out not only taxable activities, but also non-taxable activities, namely,promotion of the general interests of its members. That court also pointed out that theacquisition of goods and services by VNLTO was entered in the accounts as generalcosts of VNLTO, without those transactions being exclusively allocated to outputtaxable activities carried out by VNLTO.

31 In view of that factual situation, and in the light of the application by VNLTO fordeduction of amounts of VAT paid on the acquisition of the goods and services both fortaxable activities and for activities not linked to taxable activities, namely activitiesconsisting in the promotion of the general interests of its members, the national court isuncertain whether those latter activities could be regarded as having been performed

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‘for purposes other’ (within the meaning of Article 6(2)(a) of the directive) than thosecarried out by the association in the economic field.

32 In its observations, the national court referred to, inter alia, Case C-434/03 Charles and Charles-Tijmens [2005] ECR I-7037, particularly paragraphs 23 to 25 of that judgment,in which the Court referred to the case-law on the system of VAT applicable to capitalgoods in mixed use, that is to say, in use for both business and private purposes. Itfollows that the taxable person has the choice, for VAT purposes, of (i) allocating goodswholly to the assets of his business, (ii) retaining them wholly within his private assets,thereby excluding them entirely from the system of VAT, or (iii) integrating them intohis business only to the extent to which they are actually used for business purposes.Should the taxable person choose to treat capital goods used for both business andprivate purposes as business goods, the input VAT due on the acquisition of those goodsis, in principle, immediately deductible in full. In those circumstances, when the inputVAT paid on goods forming part of the assets of a business is wholly or partlydeductible, their use for the private purposes of the taxable person or of his staff or forpurposes other than those of his business is treated as a supply of services forconsideration pursuant to Article 6(2)(a) of the directive.

33 The Hoge Raad der Nederlanden is of the view that those principles are capable of beingapplied equally to ‘a legal person engaged in, inter alia, certain activities as a taxableperson which are not subject to VAT’, with the result that Article 6(2)(a) of the directive may be applicable to that person.

34 It is common ground that activities such as those by which an association promotes thegeneral interests of its members are not activities ‘subject to [VAT]’ under the terms of Article 2(1) of the directive, since they do not consist of the supply of goods or serviceseffected for consideration (see, to that effect, Joined Cases C-354/03, C-355/03 andC-484/03 Optigen and Others [2006] ECR I-483, paragraph 42 and the case-law cited).

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35


With regard to the question whether such activities may be considered to be carried outfor ‘purposes other than’ those of the business within the meaning of Article 6(2)(a) ofthe directive, it should be noted that in Case C-437/06 Securenta [2008] ECR I-1597,judgment in which was delivered after the present order for reference had been lodged,inter alia, a question was referred to the Court as to how to determine the right to adeduction of the input VAT paid in the case of a taxable person simultaneously carryingout economic activities and non-economic activities.

36 In that regard, the Court stated, at paragraph 26 of that judgment, that non-economicactivities do not fall within the scope of the directive, specifying, at paragraph 28thereof, that the deductions scheme laid down by the directive relates to all economicactivities of a taxable person, whatever their purpose or results, provided that they are,in principle, themselves subject to VAT.

37 The Court accordingly held, at paragraphs 30 and 31 of the judgment in Securenta, that the input VAT relating to expenditure incurred by a taxable person cannot give rise to aright to deduct in so far as it relates to activities which, in view of their non-economicnature, do not come within the scope of the directive and that, where a taxable personsimultaneously carries out economic activities, whether taxed or exempt, and non-economic activities outside the scope of the directive, deduction of the input VATrelating to expenditure is allowed only to the extent to which that expenditure may beattributed as an output to the economic activity of the taxable person.

It follows from these considerations that, as the Advocate General has noted in point 38of his Opinion, Article 6(2)(a) of the directive is not intended to establish a rule thattransactions outside the scope of the system of VAT may be considered to be carried out

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for ‘purposes other than’ those of the business within the meaning of that provision.Such an interpretation would have the effect of rendering Article 2(1) of the directivemeaningless.

39 It is also appropriate to state that, unlike Charles and Charles-Tijmens, which concerned immoveable property allocated to the assets of the business before beingattributed, in part, to private use, by definition completely different from the business ofthe taxable person, the situation in the main proceedings in the present case relates totransactions other than VNLTO’s taxable transactions, consisting in safeguarding thegeneral interests of its members, and not capable of being considered, in this case, to benon-business transactions, given that they constitute the main corporate purpose ofthat association.

40 Consequently, the answer to the first question is that Articles 6(2)(a) and 17(2) of thedirective must be interpreted as not being applicable to the use of goods and servicesallocated to the business for the purpose of transactions other than the taxabletransactions of the taxable person, as the VAT due in respect of the acquisition of thosegoods and services, and relating to such transactions, is not deductible.

The second question

In the light of the answer given to the first question referred for a preliminary ruling, it isnot necessary to answer the second question.

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41

42


Costs



Articles 6(2)(a) and 17(2) of Sixth Council Directive 77/388/EEC of 17 May 1977on the harmonisation of the laws of the Member States relating to turnovertaxes —Common system of value added tax: uniform basis of assessment, must beinterpreted as not being applicable to the use of goods and services allocated to thebusiness for the purpose of transactions other than the taxable transactions of thetaxable person, as the value added tax due in respect of the acquisition of thosegoods and services, and relating to such transactions, is not deductible.

[Signatures]

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Case C-67/08

Margarete Block v

Finanzamt Kaufbeuren

(Reference for a preliminary rulingfrom the Bundesfinanzhof)

(Free movement of capital — Articles 56 EC and 58 EC — Inheritance tax — National rules not allowing inheritance tax in respect of capital claims, paid by an heir in one

Member State, to be credited against inheritance tax payable in another Member Statewhere the owner of the assets was resident at the time of death — Double taxation —

Restriction — None)

Judgment of the Court (Third Chamber), 12 February 2009 . . . . . . . I - 885


Free movement of capital — Restrictions — Inheritance tax

(Arts 56 EC and 58 EC)

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Articles 56 EC and 58 EC must be interpreted as not precluding legislation of a Member State which — as regards the assessment of inheritance tax payable by an heir who is resident in that Member State in respect ofcapital claims against a financial institution inanother Member State — does not provide forinheritance tax paid in that other MemberState to be credited against inheritance taxpayable in the first Member State where the person whose estate is being administered was, at the time of death, resident in the first Member State.

That fiscal disadvantage is the result of theexercise in parallel by the two Member Statesconcerned of their fiscal sovereignty, which isdemonstrated by the fact that one State hasdecided to make capital claims subject todomestic inheritance tax where the creditor is resident in that Member State, while the other has decided to make such claims subject todomestic inheritance tax where the debtor is established in that other Member State. Community law, in the current stage of itsdevelopment and in a situation that concernsthe payment of inheritance tax, does not laydown any general criteria for the attribution ofareas of competence between the MemberStates in relation to the elimination of double taxation within the European Community. Itfollows from this that, in the current stage ofthe development of Community law, the Member States enjoy a certain autonomy in

this area provided they comply with Commu-nity law, and are not obliged therefore to adapttheir own tax systems to the different systemsof tax of the other Member States in order, inter alia, to eliminate the double taxation arising from the exercise in parallel by thoseMember States of their fiscal sovereignty and,in consequence thereof, to allow the inheri-tance tax paid in a Member State other thanthat in which the heir is resident to be deducted.

These considerations are not liable to be affected by the fact that national legislationlays down more favourable offsetting rules where the person whose estate is being administered was, at the time of death, residing in another Member State, since thatdifference in treatment, as regards the inher-itance of a person who was not resident at thetime of death, arises equally from the choiceby the Member State concerned — made pursuant to the exercise of its fiscal sover-eignty — of the place of residence of the creditor as a connecting criterion for the purposes of establishing the ‘foreign’ nature of the estate and, therefore, for the ability tooffset inheritance tax paid in another MemberState.

(see paras 28, 30-32, 34, 36, operative part)

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v

BLOCK

JUDGMENT OF THE COURT (Third Chamber)

12 February 2009 *

In Case C-67/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Bundesfinanzhof(Germany), made by decision of 16 January 2008, received at the Court on 20 February2008, in the proceedings

Margarete Block

Finanzamt Kaufbeuren,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, A. Ó Caoimh (Rapporteur), J. N. Cunha Rodrigues, J. Klučka and A. Arabadjiev, Judges,


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Advocate General: J. Mazák, Registrar: B. Fülöp, Administrator,



— Ms Block, by S. Gorski, Rechtsanwalt,

— Finanzamt Kaufbeuren, by M. Stock, acting as Agent,


— the Spanish Government, by M. Muñoz Pérez, acting as Agent,

— the Netherlands Government, by C. Wissels and M. Noort, acting as Agents,

— the Polish Government, by M. Dowgielewicz, acting as Agent,

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BLOCK

— the United Kingdom Government, by S. Ossowski, acting as Agent, assisted byS. Ford, Barrister,

— the Commission of the European Communities, by R. Lyal and W. Mölls, acting asAgents,

having decided, after hearing the Advocate General, to proceed to judgment without anOpinion,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Articles 56 ECand 58 EC relating to the free movement of capital.

2 The reference has been made in the course of proceedings between Ms Block, heir to aperson deceased in Germany, and Finanzamt Kaufbeuren (‘the Finanzamt’) concerningthe assessment of inheritance tax payable in respect of capital claims of the deceasedagainst financial institutions in Spain.

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3


Legal context


Article 1 of Council Directive 88/361/EEC of 24 June 1988 for the implementation ofArticle 67 of the Treaty (article repealed by the Treaty of Amsterdam) (OJ 1988 L 178,p. 5) provides:

‘1. Without prejudice to the following provisions, Member States shall abolish restrictions on movements of capital taking place between persons resident in MemberStates. To facilitate application of this Directive, capital movements shall be classified inaccordance with the Nomenclature in Annex I.

2. Transfers in respect of capital movements shall be made on the same exchange rateconditions as those governing payments relating to current transactions.’

Among the capital movements listed in Annex I to Directive 88/361 are, under headingXI of that annex, personal capital movements, which include inheritances and legacies.

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4

BLOCK


5 Paragraph 1(1)(1) of the Law on inheritance and gift tax (Erbschaftsteuer- und Schenkungsteuergesetz), as applicable in 1999 (BGBl. 1997 I, p. 378; ‘the ErbStG’), provides that inheritances are subject to that law as taxable transactions.

6 Paragraph 2(1)(1) of the ErbStG is worded as follows, under the heading ‘Personal tax liability’:

‘(1) Liability to tax arises

1. in the cases referred to in Paragraph 1(1), points 1 to 3, to the entire estate where thedeceased, at the date of death, the donor, at the time of making the gift, or theacquiror, on the date on which the tax arises, is a resident. The following are deemedto be residents:

(a) natural persons whose domicile or habitual residence is in Germany,

…’

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Under the heading ‘Offsetting of foreign inheritance tax’, Paragraph 21(1) and (2) of the ErbStG provides:

‘(1) Where the foreign property of acquirors is subject, in a foreign country, to a foreigntax corresponding to German inheritance tax, the foreign tax set and payable by theacquiror, paid and not eligible for reduction, shall, in the cases referred to in the firstpoint of Paragraph 2(1) and, in so far as the provisions of a double-taxation agreementdo not apply, be offset, if an application is made for that purpose, against the Germaninheritance tax in so far as the foreign assets are also subject to German inheritance tax. …

(2) Foreign assets for the purposes of subparagraph (1) shall mean,

1. where the deceased was a resident at the date of his death, all assets of the typereferred to in Paragraph 121 of the [Valuation Law (Bewertungsgesetz), as applicable in 1999 (BGBl. 1991 I, p. 230; ‘the BewG’)] which are situated in anotherState, as well as all rights of enjoyment attached to those assets;

2. where the deceased was not a resident at the date of his death, all assets, with the exception of domestic assets within the meaning of Paragraph 121 of the [BewG], aswell as all rights of enjoyment attached to those assets.’

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BLOCK

Under the heading ‘Domestic assets’, Paragraph 121 of the BewG is worded as follows:

‘Domestic assets include:

1. domestic agricultural and forestry assets;

2. domestic property assets;

3. domestic business assets, meaning assets used in connection with an industrial orcommercial activity in Germany, where a permanent business establishment ismaintained for that purpose in Germany, or where a permanent representative hasbeen designated;

4. shares in capital companies, where the company’s registered office or centralmanagement is in Germany, and the shareholder, either alone or together withother parties connected to him within the meaning of Paragraph 1(2) of the ForeignTransaction Tax Law [Gesetz über die Besteuerung bei Auslandsbeziehungen(Außensteuergesetz)] … holds, either directly or indirectly, at least one tenth of the company’s initial or share capital;

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5. inventions, utility models and layout designs not covered by point 3 which areregistered in a national book or register;

6. economic assets not covered by points 1, 2 or 5 and which are at the disposal of adomestic industrial or commercial undertaking, in particular under a tenancy orlease;

7. mortgages, charges on land, rentcharges and other debts or rights where these aresecured, directly or indirectly, on domestic immovable property, on rightsequivalent to domestic immovable property, or on vessels registered in a nationalshipping register. Loans and debts in respect of which part debentures have beenissued are excluded;

8. claims arising from participation in a commercial undertaking as a silent partnerand from loans with profit participation, where the debtor’s domicile or habitual residence, registered office or central management is in Germany;

9. rights of enjoyment attached to one of the assets referred to at points 1 to 8.’

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BLOCK


9 Ms Block, who is resident in Germany, is the sole heir of a person who died in 1999 inGermany, where the deceased was last resident. The estate essentially consisted ofcapital assets, of which DEM 144 255 were invested in Germany, and the remainder —an amount equivalent to DEM 994 494 — with financial institutions in Spain. Ms Blockpaid inheritance tax in Spain in the amount of DEM 207 565 in respect of the latterassets.

10 In its notice of assessment of 14 March 2000, the Finanzamt fixed the inheritance tax payable by Ms Block in Germany without taking into consideration the inheritance taxpaid in Spain. Ms Block lodged an objection to that notice of assessment, by which sheapplied for the inheritance tax paid in Spain to be credited against the inheritance tax tobe paid in Germany and, therefore, for the amount in excess of the latter tax to be repaidto her.

11 By decision of 4 July 2003, the Finanzamt, in response to that objection, allowed thededuction of the Spanish tax liability as a liability of the estate, meaning the deduction ofinheritance tax paid in Spain from the basis of assessment of inheritance tax payable inGermany. According to that decision, the taxable acquisition, after deduction ofliabilities from legacies and a personal allowance, amounted to DEM 579 000, and theamount of inheritance tax to which that acquisition was subject was fixed at DEM 124 500 (EUR 63 655.84).

12 Having been seised of Ms Block’s application — by which she requested that theinheritance tax paid in Spain be credited against the inheritance tax to be paid inGermany, instead of being deducted from the basis of assessment in the same way as adebt of the estate — the Finanzgericht (Finance Court) took the view that it was notpossible to credit Spanish inheritance tax pursuant to Paragraph 21(1) of the ErbStGunder Paragraph 21(2)(1), because capital claims against financial institutions in Spaindo not fall within the scope of Paragraph 121 of the BewG. Those capital claims did nottherefore constitute ‘foreign assets’ within the meaning of Paragraph 21(2)(1) of the

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ErbStG. According to the Finanzgericht, whilst double taxation would occur withrespect to the capital claims at issue, it is not for the German tax authorities to subsidiseother Member States.

13 An appeal on a point of law (‘Revision’) was brought before the Bundesfinanzhof(Federal Finance Court) which finds that, owing to the fact that there is no Communityharmonisation concerning the meaning of ‘foreign assets’, Ms Block is subject to doubletaxation in so far as the Federal Republic of Germany applies the criterion of theresidence of the creditor for the purposes of determining the amount of inheritance taxto be levied on capital claims, whereas the Kingdom of Spain applies that of theresidence of the debtor.

14 The referring court queries whether such double taxation is contrary to Communitylaw. If all the deceased’s assets had been invested in Germany, only German inheritancetax would have been levied. Moreover, as regards the connection for taxation purposes,the criterion of the residence of the creditor is no less reasonable than that of the residence of the debtor, since the inherited assets belong to the creditor.

15 Furthermore, on the assumption that such double taxation constitutes a restriction onthe free movement of capital, the referring court queries whether it is justified underArticle 73d(1)(a) of the EC Treaty (now Article 58(1)(a) EC), as interpreted inDeclaration No 7 on Article 73d of the Treaty establishing the European Community,annexed to the EU Treaty (OJ 1992 C 191, p. 95), according to which ‘[t]he Conferenceaffirms that the right of Member States to apply the relevant provisions of their tax lawas referred to in Article 73d(1)(a) of this Treaty will apply only with respect to therelevant provisions which exist at the end of 1993. However, this Declaration shall onlyapply to capital movements between Member States and payments effected betweenMember States’. However, the provisions of Paragraph 21 of the ErbStG existed before

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16

BLOCK

1993, since the promulgation in 1997 of the revised version of that law was not aconstitutive act of the legislature constituting fresh publication.

In those circumstances, the Bundesfinanzhof decided to stay the proceedings and torefer the following questions to the Court for a preliminary ruling:

‘(1) Do the provisions of Article 73d(1)(a) and (3) of the EC Treaty (now Article 58(1)(a)and (3) EC) allow the crediting of Spanish inheritance tax against Germaninheritance tax to be precluded under Paragraph 21(1) and (2)(1) of the [ErbStG] inconjunction with Paragraph 121 of the [BewG] (category restriction) even in thecase of inheritances which occurred in 1999?

(2) Is Article 73b(1) of the EC Treaty (now Article 56(1) EC) to be interpreted asmeaning that the inheritance tax which another European Union Member Statelevies in respect of the inheritance, by an heir resident in Germany, of the capitalclaims of a testator last resident in Germany against credit institutions in that otherMember State must be credited against German inheritance tax?

(3) In deciding which of the States involved has to avoid double taxation, is thejustification for the different connecting factors in the national tax law systemsrelevant and, if so, is the connection to the residence of the creditor more justifiedthan the connection to the registered office of the debtor?’

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17 By its questions, which should be examined together, the national court asks, essentially, whether Articles 56 EC and 58 EC must be interpreted as precluding therules of a Member State, such as those at issue in the main proceedings, which, asregards the assessment of the inheritance tax payable by an heir resident in thatMember State in respect of capital claims against a financial institution in anotherMember State, do not provide for inheritance tax paid in that other Member State to becredited against inheritance tax payable in the first Member State where the personwhose estate is being administered was, at the date of death, residing in the firstMember State.

18 According to settled case-law, Article 56(1) EC lays down a general prohibition onrestrictions on movements of capital between Member States (Joined Cases C-463/04and C-464/04 Federconsumatori and Others [2007] ECR I-10419, paragraph 19 and case-law cited).

19 In the absence of a definition in the Treaty of ‘movement of capital’ within the meaningof Article 56(1) EC, the Court has previously recognised the nomenclature whichconstitutes Annex I to Directive 88/361 as having indicative value, even if the latter wasadopted on the basis of Articles 69 and 70(1) of the EEC Treaty (after amendment,Articles 69 and 70(1) of the EC Treaty, repealed by the Treaty of Amsterdam), it beingunderstood that, according to the third paragraph of the introduction to that annex, thenomenclature it contains is not exhaustive as regards the term ‘movement of capital’(see, in particular, Case C-513/03 van Hilten-van der Heijden [2006] ECR I-1957, paragraph 39, and Case C-256/06 Jäger [2008] ECR I-123, paragraph 24).

20 In that regard, the Court — noting, in particular, that inheritances consisting in thetransfer to one or more persons of assets left by a deceased person fall under heading XI

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BLOCK

of Annex I to Directive 88/361, entitled ‘Personal capital movements’— has held that an inheritance, whether of money, immovable or movable property, is a movement ofcapital for the purposes of Article 56 EC, except in cases where its constituent elementsare confined within a single Member State (see, in particular, Case C-364/01 Barbier [2003] ECR I-15013, paragraph 58; Case C-43/07 Arens-Sikken [2008] ECR I-6887, paragraph 30; Case C-11/07 Eckelkamp [2008] ECR I-6845, paragraph 39; and Case C-318/07 Persche [2009] ECR I-359, paragraphs 30 and 31).

21 A situation in which a person resident in Germany at the date of death leaves to anotherperson also resident in that Member State capital claims against a financial institutionin Spain on which inheritance tax is levied both in Germany and in Spain is certainly nota situation purely internal to a Member State.

22 Consequently, the inheritance at issue in the main proceedings constitutes a movementof capital for the purposes of Article 56(1) EC.

23 It is necessary therefore to examine whether, as Ms Block claims, national rules such asthose at issue in the main proceedings amount to a restriction on the movement ofcapital.

As regards inheritances, it is apparent from the case-law of the Court that the measuresprohibited by Article 56(1) EC as being restrictions on the movement of capital includethose the effect of which is to reduce the value of the inheritance of a resident of a State

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24


other than the Member State in which the assets concerned are situated and which taxes the inheritance of those assets (van Hilten-van der Heijden, paragraph 44; Jäger, paragraph 31; Arens-Sikken, paragraph 37; and Eckelkamp, paragraph 44).

25 It is, however, common ground that the national legislation at issue in the mainproceedings — in so far as it determines the assessment of the inheritance tax payableby an heir who is resident in Germany in respect of the capital claims of a person who, atthe time of her death, was also resident in Germany — provides for identical rules oftaxation on inheritances, regardless of whether the debtor financial institution inrespect of those claims is in Germany or in another Member State.

26 Ms Block maintains, however, that that national legislation restricts the free movementof capital, since all the assets of a person’s estate which are situated in a Member State other than that in which that person was residing at the date of death do not necessarilygive rise to a right to offset inheritance tax paid in that other Member State. Where, as inthe main proceedings, the proprietor of those assets was resident in Germany at thetime of death, the meaning of ‘foreign assets’ for the purposes of Paragraph 21 of theErbStG, establishing an entitlement to such offsetting, does not — according to Paragraph 21(2)(1) — include certain assets, such as capital claims, even if in economicterms they are manifestly situated abroad. As a result of this there is an impediment,contrary to Article 56(1) EC, in that the risk of double taxation would deter investors aswell as their heirs from investing in certain Member States.

27 In that regard, it should admittedly be noted that, as Ms Block submits, the fact thatinherited assets such as capital claims are excluded in Germany from ‘foreign assets’which, under national rules, establish an entitlement to have inheritance tax paidabroad credited against inheritance tax payable in Germany results — where the claims are against a financial institution in another Member State which has levied inheritance

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BLOCK

tax on those claims, in the present case, the Kingdom of Spain — in a higher tax burdenthan if those claims had been against a financial institution established in Germany.

28 However, as all the Governments that have submitted written observations to the Court, as well as the Commission of the European Communities, correctly submit, thatfiscal disadvantage is the result of the exercise in parallel by the two Member Statesconcerned of their fiscal sovereignty, which is demonstrated by the fact that one State,the Federal Republic of Germany, has decided to make capital claims subject to Germaninheritance tax where the creditor is resident in Germany, while the other, the Kingdomof Spain, has decided to make such claims subject to Spanish inheritance tax where thedebtor is established in Spain (see, to that effect, Case C-513/04 Kerckhaert and Morres [2006] ECR I-10967, paragraph 20, and Case C-298/05 Columbus Container Services [2007] ECR I-10451, paragraph 43).

29 In this respect, double taxation conventions such as those envisaged in Article 293 ECare designed to eliminate or mitigate the negative effects on the functioning of theinternal market resulting from the coexistence of national tax systems referred to in thepreceding paragraph (Kerckhaert and Morres, paragraph 21, and Columbus Container Services, paragraph 43).

30 Community law, in the current stage of its development and in a situation such as thatin the main proceedings, does not lay down any general criteria for the attribution ofareas of competence between the Member States in relation to the elimination ofdouble taxation within the European Community. Consequently, apart from CouncilDirective 90/435/EEC of 23 July 1990 on the common system of taxation applicable inthe case of parent companies and subsidiaries of different Member States (OJ 1990L 225, p. 6), the Convention of 23 July 1990 on the elimination of double taxation inconnection with the adjustment of profits of associated enterprises (OJ 1990 L 225,p. 10) and Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income

I - 899


in the form of interest payments (OJ 2003 L 157, p. 38), no uniform or harmonisationmeasure designed to eliminate double taxation has as yet been adopted at Communitylaw level (see Kerckhaert and Morres, paragraph 22, and Columbus Container Services, paragraph 45).

31 It follows from this that, in the current stage of the development of Community law, theMember States enjoy a certain autonomy in this area provided they comply withCommunity law, and are not obliged therefore to adapt their own tax systems to thedifferent systems of tax of the other Member States in order, inter alia, to eliminate thedouble taxation arising from the exercise in parallel by those Member States of theirfiscal sovereignty and, in consequence thereof, to allow the inheritance tax paid in aMember State other than that in which the heir is resident to be deducted in a case such as that of the main proceedings (see, to that effect, Columbus Container Services, paragraph 51).

32 These considerations are not liable to be affected by the fact that, as Ms Block claimed inher written observations, Paragraph 21 of the ErbStG lays down more favourableoffsetting rules where the person whose estate is being administered was, at the time ofdeath, residing in a Member State other than the Federal Republic of Germany,inasmuch as Paragraph 21(2)(2) of the ErbStG defines ‘foreign assets’ in such cases more broadly than in a situation such as that of the applicant in the main proceedings.

33 Admittedly, as the German Government and the Commission confirmed at the hearing, where the person whose estate is being administered was, at the time of death,residing in a Member State other than the Federal Republic of Germany, national rulesprovide — as regards the assessment of inheritance tax payable in Germany by aresident heir in respect of the capital claims of the deceased against a financialinstitution in that other Member State — for inheritance tax paid in that other Member

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BLOCK

State to be credited against those claims, since those claims are, in such cases, coveredby the concept of ‘foreign assets’ under Paragraph 21(2)(2) of the ErbStG.

34 However, that difference in treatment, as regards the inheritance of a person who wasnot resident at the time of death, arises equally from the choice by the Member Stateconcerned — made, according to the case-law cited in paragraphs 28 to 31 of thisjudgment, pursuant to the exercise of its fiscal sovereignty — of the place of residence ofthe creditor as a connecting criterion for the purposes of establishing the ‘foreign’nature of the estate and, therefore, for the ability to offset in Germany inheritance taxpaid in another Member State.

35 Furthermore, according to the settled case-law of the Court, the Treaty offers noguarantee to a citizen of the Union that transferring his residence to a Member Stateother than that in which he previously resided will be neutral as regards taxation. Giventhe disparities in the tax legislation of the Member States, such a transfer may be to thecitizen’s advantage or not, according to circumstances (see, to that effect, Case C-365/02 Lindfors [2004] ECR I-7183, paragraph 34, and Case C-403/03 Schempp [2005] ECR I-6421, paragraph 45).

36 Accordingly, the answer to the questions referred is that Articles 56 EC and 58 EC mustbe interpreted as not precluding legislation of a Member State, such as that at issue inthe main proceedings, which — as regards the assessment of inheritance tax payable byan heir who is resident in that Member State in respect of capital claims against afinancial institution in another Member State — does not provide for inheritance taxpaid in that other Member State to be credited against inheritance tax payable in thefirst Member State where the person whose estate is being administered was, at the timeof death, resident in the first Member State.

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37


Costs


On those grounds, the Court (Third Chamber) hereby rules:

Articles 56 EC and 58 EC must be interpreted as not precluding legislation of aMember State, such as that at issue in the main proceedings, which — as regardsthe assessment of inheritance tax payable by an heir who is resident in thatMember State in respect of capital claims against a financial institution in anotherMember State — does not provide for inheritance tax paid in that other MemberState to be credited against inheritance tax payable in the first Member Statewhere the person whose estate is being administered was, at the time of death,resident in the first Member State.

[Signatures]

I - 902

Case C-93/08

Schenker SIA v

Valsts ieņēmumu dienests

(Reference for a preliminary rulingfrom the Augstākās tiesas Senāta Administratīvo lietu departaments)

(Reference for a preliminary ruling — Regulation (EC) No 1383/2003 — Article 11 —Simplified procedure of abandoning goods for destruction — Prior determination

whether an intellectual property right has been infringed — Administrative penalty)

Judgment of the Court (Second Chamber), 12 February 2009 . . . . . . . I - 905


Common commercial policy — Measures to prevent counterfeit or pirated goods being placed on the market — Regulation No 1383/2003 — Simplified procedure of abandoning goods, suspectedof infringing an intellectual property right, for destruction

(Council Regulation No 1383/2003, Arts 11 and 18)

I - 903


The initiation, with the agreement of an intellectual property right-holder and of theimporter, of the simplified procedure laid down in Article 11 of Regulation No 1383/2003 concerning customs action against goods suspected of infringing certainintellectual property rights and the measuresto be taken against goods found to have infringed such rights, does not deprive thecompetent national authorities of the powerto impose, on the parties responsible for importing those goods into the Communitycustoms territory, a ‘penalty’, within the meaning of Article 18 of that regulation, such as an administrative fine.

The initiation of such a simplified proce-dure — the introduction of which into the legal order of Member States is only

optional — cannot deprive the authorities ofthose States of the power to impose a ‘penalty’within the meaning of Article 18 of RegulationNo 1383/2003, since that provision, read inconjunction with recital 10 in the preamble tothat regulation, provides that Member Statesare required to introduce penalties, in case ofinfringement of that regulation, which mustbe effective, proportionate and dissuasive. Inthat regard, the destruction of the goodsfollowing an optional procedure, subject to anagreement between the trade mark proprietorand the importer, cannot be considered as apenalty imposed by a national authorityapplying the system of penalties which theMember States are required to introduce pursuant to that provision.

(see paras 27-30, 33, operative part)

I - 904

v

SCHENKER

JUDGMENT OF THE COURT (Second Chamber)

12 February 2009 *

In Case C-93/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Augstākās tiesas Senāta Administratīvo lietu departaments (Latvia), made by decision of 14 February2008, received at the Court on 28 February 2008, in the proceedings

Schenker SIA

Valsts ieņēmumu dienests,


composed of C.W.A. Timmermans, President of the Chamber, J.-C. Bonichot, J. Makarczyk, P. Kūris and C. Toader (Rapporteur), Judges,

* Language of the case: Latvian.

I - 905


Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Şereş, Administrator,

having regard to the written procedure and further to the hearing on 4 December 2008,


— Schenker, SIA, by A. Tauriņš, Member of the Board of Directors, and by I. Faksa, advokāte,

— the Valsts ieņēmumu dienests, by Dz. Jakāns and E. Krimela, acting as Agents,

— the Latvian Government, by E. Balode-Buraka, E. Eihmane and K. Drēviņa, acting as Agents,

— the Czech Government, by M. Smolek, acting as Agent,

— the Greek Government, by O. Patsopoulou and Z. Chatzipavlou, acting as Agents,

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1

SCHENKER

— the Finnish Government, by J. Heliskoski, acting as Agent,

— the Commission of the European Communities, by E. Kalniņš and S. Schønberg, acting as Agents,


gives the following

Judgment

This reference for a preliminary ruling concerns the interpretation of Article 11 ofRegulation (EC) No 1383/2003 of 22 July 2003 concerning customs action againstgoods suspected of infringing certain intellectual property rights and the measures tobe taken against goods found to have infringed such rights (OJ 2003 L 196, p. 7).

The reference was made in the course of proceedings between Schenker SIA (‘Schenker’) and the Valsts ieņēmumu dienests (State Tax Authority) relating to a fine

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2


imposed on Schenker following the destruction of goods suspected of infringing certainintellectual property rights.

Legal context


3 Regulation No 1383/2003 repealed and replaced Council Regulation (EC) No 3295/94of 22 December 1994 laying down measures to prohibit the release for free circulation,export, re-export or entry for a suspensive procedure of counterfeit and pirated goods(OJ 1994 L 341, p. 8).

4 Recitals 3, 5, 9 and 10 in the preamble to Regulation No 1383/2003 state as follows:

‘(3) In cases where counterfeit goods, pirated goods and, more generally, goodsinfringing an intellectual property right originate in or come from third countries, their introduction into the Community customs territory … should be prohibited and a procedure set up to enable the customs authorities to enforcethis prohibition as effectively as possible.

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SCHENKER

…

(5) Action by the customs authorities should involve, for the period necessary todetermine whether suspect goods are indeed counterfeit goods, pirated goods orgoods infringing certain intellectual property rights, suspending release for freecirculation, export and re-export or … detaining those goods.

…

(9) To make the Regulation easier to apply for customs administrations and right-holders alike, provision should also be made for a more flexible procedureallowing goods infringing certain intellectual property rights to be destroyedwithout there being any obligation to initiate proceedings to establish whetheran intellectual property right has been infringed under national law.

(10) It is necessary to lay down the measures applicable to goods which have beenfound to be counterfeit, pirated or generally to infringe certain intellectualproperty rights. Those measures should not only deprive those responsible fortrading in such goods of the economic benefits of the transaction and penalisethem but should also constitute an effective deterrent to further transactions of the same kind.’

I - 909

5

6


Article 2(1)(a)(i) of Regulation No 1383/2003 provides:

‘For the purposes of this Regulation, “goods infringing an intellectual property right”means:

(a) “counterfeit goods”, namely:

(i) goods, including packaging, bearing without authorisation a trademark identical to the trademark validly registered in respect of the same type ofgoods, or which cannot be distinguished in its essential aspects from such atrademark, and which thereby infringes the trademark-holder’s rights under Community law … or the law of the Member State…’

The first paragraph of Article 10 of that regulation states:

‘The law in force in the Member State within the territory of which the goods are placedin one of the situations referred to in Article 1(1) shall apply when deciding whether anintellectual property right has been infringed under national law.’

I - 910

7

SCHENKER

Article 11(1) of that regulation states:

‘Where customs authorities have detained or suspended the release of goods which aresuspected of infringing an intellectual property right … the Member States mayprovide, in accordance with their national legislation, for a simplified procedure, to beused with the right-holder’s agreement, which enables customs authorities to have suchgoods abandoned for destruction under customs control, without there being any needto determine whether an intellectual property right has been infringed under nationallaw. To this end, Member States shall, in accordance with their national legislation,apply the following conditions:

— that the right-holder inform the customs authorities in writing within 10 workingdays … of receipt of the notification provided for in Article 9, that the goodsconcerned by the procedure infringe an intellectual property right referred to inArticle 2(1) and provide those authorities with the written agreement of thedeclarant, the holder or the owner of the goods to abandon the goods for destruction. … This period may be extended by a further 10 working days wherecircumstances warrant it;

— that destruction be carried out, unless otherwise specified in national legislation, atthe expense and under the responsibility of the right-holder, and be systematicallypreceded by the taking of samples for keeping by the customs authorities in suchconditions that they constitute evidence admissible in legal proceedings in theMember State in which they might be needed.’

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8


Article 18 of Regulation No 1383/2003 provides:

‘Each Member State shall introduce penalties to apply in cases of violation of thisRegulation. Such penalties must be effective, proportionate and dissuasive.’


9 The second paragraph of Article 201.12 of the Latvian Code of Administrative Offences(Administratīvo pārkāpumu kodekss) provides:

‘In the prosecution of customs proceedings against counterfeit goods and piratedgoods, or the temporary detention of such goods, a natural person shall be liable to afine of between LVL 50 and 250, and a legal person to a fine of between LVL 500 and5 000, together with the seizure of the goods.’

The dispute in the main proceedings and the question referred

10 Pursuant to a contract, Schenker, a customs agent, in its own name and on behalf of theconsignee of the goods, Rovens SIA (‘Rovens’), released goods bearing the trade mark ‘Nokia’ for free circulation.

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11

SCHENKER

On 16 February 2005, while carrying out a customs inspection on the imported goods,the Rīgas muitas iestāde (Riga Customs Office) suspected that the goods were counterfeit.

12 In accordance with Article 9 of Regulation No 1383/2003, the customs authoritiesdetained the goods and took samples which were sent to a representative of the NokiaCorp., the proprietor of the trade mark ‘Nokia’, for its opinion. They also informed Rovens of the procedure.

13 On 1 March 2005, Nokia Corp. informed the customs authorities that they were indiscussions with Rovens concerning the possibility of applying the simplified procedurefor the destruction of the goods, and requested them to extend the period for detentionof the goods by 10 days.

14 On 3 March 2005, Nokia Corp. informed the customs authorities that the samplesestablished that the goods were counterfeit. On 4 March 2005, Nokia Corp. and Rovensreached an agreement concerning the destruction of the goods in question at Rovens’expense. That agreement was sent to the customs authorities on 11 March 2005.

On 1 April 2005, those authorities drew up a certificate of administrative offence inwhich they held that Schenker, in its role as ‘declarant’, had infringed Articles 9 and 16of Regulation No 1383/2003. Relying on the opinion sent by Nokia Corp. on 3 March

I - 913

15


2005, they held that Schenker had committed an ‘infringement’ within the meaning ofthe second paragraph of Article 201.12 of the Code of Administrative Offences andimposed a fined of LVL 500 on it.

16 Schenker unsuccessfully contested that decision before the Director of the Valstsieņēmumu dienests. It then filed an action with the Administratīvā rajona tiesa(Administrative District Court) for annulment of that decision claiming that Article 11of Regulation No 1383/2003 actually provides for the possibility of not reaching afinding that the goods are counterfeit. That action was dismissed.

17 On appeal, the Apgabaltiesa (Regional Court) held that Article 11 was not applicable,since the agreement for the destruction of the goods was not reached until after thecustoms authorities had carried out the inspection in relation to infringement of anintellectual property right.

18 Schenker then appealed on a point of law to the Augstākās tiesas Senāta Administratīvo lietu departaments (Administrative Proceedings Division of the Supreme Court of theRepublic of Latvia), which decided to stay the proceedings and refer the followingquestion to the Court for a preliminary ruling:

‘Must Article 11 of Regulation No 1383/2003 be interpreted as precluding thepossibility of imposing a penalty on the declarant or owner of goods under national law,where the intellectual property right-holder (the right-holder) reaches an agreement,with the declarant or owner of those goods, to abandon them for their destruction, orengages in discussions in respect of the possibility of the goods being abandoned fortheir destruction, and, in the course of that procedure, the customs authorities receiveinformation that the goods are counterfeit?’

I - 914

SCHENKER


19 By its question, the referring court asks, in essence, whether the initiation, with theagreement of the intellectual property right-holder and of the importer, of the simplified procedure laid down in Article 11 of Regulation No 1383/2003 deprives thecompetent national authorities of the power to impose, on the parties responsible forimporting those goods into the Community customs territory, a ‘penalty’, within the meaning of Article 18 of that regulation, such as an administrative fine.

Observations submitted to the Court

20 Schenker takes the view that Regulation No 1383/2003 does not allow the customsauthorities to impose a penalty when a simplified procedure is initiated between theintellectual property right-holder and the importer as, first, the destruction of the goodsin question of itself constitutes a penalty and, second, those authorities are notauthorised to interfere with the resolution of disputes between private operators whichcome within the domain of civil law and civil proceedings alone. In addition, as customsagent, Schenker cannot be the subject of an administrative penalty, such as a fine,instead of and in the place of the importer or the manufacturer.

21 Furthermore, in the main proceedings, the customs authorities relied solely on theunilateral statement of the trade mark proprietor to impose the disputed fine.Supported on this point by the Commission of the European Communities, Schenkercalls into question whether that statement has sufficient probative value to permit afinding that ‘an intellectual property right has been infringed’ within the meaning of Regulation No 1383/2003.

I - 915


22 The Valsts ieņēmumu dienests, the Latvian, Czech, Greek and Finnish Governments, and the Commission, for their part, are of the opinion that the application of the‘simplified procedure’ within the meaning of Article 11 of Regulation No 1383/2003does not deprive the competent authorities of the possibility of imposing ‘penalties’within the meaning of Article 18 of that regulation, since, as is also clear from recital 10in the preamble to that regulation, the Member States are required to impose effective,proportionate and dissuasive penalties in cases of infringement of an intellectualproperty right.

The reply of the Court

23 As regards the possibility that the competent authorities may impose a ‘penalty’ within the meaning of Article 18 of Regulation No 1383/2003 when a ‘simplified procedure’within the meaning of Article 11 of that regulation has been initiated, it should bepointed out, as is apparent from recital 9 in the preamble to that regulation, that thatsimplified procedure was introduced to make Regulation No 1383/2003 easier to applyfor customs administrations and intellectual property right-holders alike.

24 Under Article 9(1) of Regulation No 1383/2003, where, following the acceptance of anapplication for action from the right-holder, the competent customs office finds that thegoods in question are suspected of infringing intellectual property rights, it is tosuspend release of the goods or detain them so that it can be established whether therewas an infringement of the intellectual property right.

25 First, the failure to complete that procedure within the prescribed periods can lead tothe introduction of goods infringing certain intellectual property rights into the Community customs territory and, second, where the trade mark proprietor makes an

I - 916

SCHENKER

application for action, it is to append to that application, in accordance with the secondsubparagraph of Article 6(1) of Regulation No 1383/2003, a statement in which it agreesto bear all costs incurred under that regulation in keeping goods retained undercustoms control pursuant to Article 9, and where applicable Article 11, of thatregulation.

26 In order to remedy the disadvantages associated with, in particular, the length of theprocedure and the costs of storage borne by the intellectual property right-holder,Regulation No 1383/2003 provides for the possibility of a simplified procedure allowingthat right-holder, with the agreement of the declarant, the holder, or the owner of thesuspected goods, and under the control of the customs authorities, to have those goodsdestroyed, and, as is apparent from recital 9 in the preamble to that regulation, that iswithout there being any obligation to initiate proceedings to establish whether anintellectual property right has been infringed under national law.

27 However, the initiation of such a simplified procedure — the introduction of which into the legal order of Member States is only optional — cannot deprive the authorities of those States of the power to impose a ‘penalty’ within the meaning of Article 18 ofRegulation No 1383/2003, since that provision provides that Member States mustintroduce such penalties in the case of infringement of that regulation.

As is apparent from recital 3 in the preamble to Regulation No 1383/2003, generally,goods infringing an intellectual property right should be prohibited in the Communitycustoms territory.

I - 917

28

29


In that regard, as Article 18 of Regulation No 1383/2003 read in conjunction withrecital 10 in the preamble to that regulation provides, the Member States are required tointroduce penalties, in case of infringement of that regulation, which must be effective,proportionate and dissuasive.

30 In contrast to what Schenker claims, the destruction of the goods following an optionalprocedure, subject to an agreement between the trade mark proprietor and theimporter, cannot be considered as a penalty imposed by a national authority applyingthe system of penalties which the Member States are required to introduce pursuant toArticle 18 of Regulation No 1383/2003.

31 Then, as the Czech and Finnish Governments correctly point out, it is expresslyprovided, in the second indent of Article 11(1) of Regulation No 1383/2003, that thedestruction is to be systematically preceded by the taking of samples for keeping by thecustoms authorities in such conditions that they constitute evidence admissible in legalproceedings in the Member State in which they might be needed.

32 Lastly, as regards the level of proof necessary for a finding of an infringement of anintellectual property right, it must be pointed out that, in accordance with Article 10 ofRegulation No 1383/2003, it is the law in force in the Member State within the territoryof which the goods are placed in one of the situations referred to in Article 1(1) of thatregulation which is to apply when deciding whether an intellectual property right hasbeen infringed under national law.

I - 918

33

34

SCHENKER

Having regard to the foregoing, the reply to the question referred is that the initiation,with the agreement of an intellectual property right-holder and of the importer, of thesimplified procedure laid down in Article 11 of Regulation No 1383/2003 does notdeprive the competent national authorities of the power to impose, on the partiesresponsible for importing those goods into the Community customs territory, a ‘penalty’, within the meaning of Article 18 of that regulation, such as an administrative fine.

Costs


On those grounds, the Court (Second Chamber) hereby rules:

The initiation, with the agreement of an intellectual property right-holder and ofthe importer, of the simplified procedure laid down in Article 11 of CouncilRegulation (EC) No 1383/2003 of 22 July 2003 concerning customs action againstgoods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights, does

I - 919


not deprive the competent national authorities of the power to impose, on theparties responsible for importing those goods into the Community customs territory, a ‘penalty’, within the meaning of Article 18 of that regulation, such as anadministrative fine.

[Signatures]

I - 920

Case C-465/07

Meki Elgafaji and Noor Elgafaji v

Staatssecretaris van Justitie

(Reference for a preliminary rulingfrom the Raad van State)

(Directive 2004/83/EC — Minimum standards for determining who qualifies forrefugee status or for subsidiary protection status — Person eligible for subsidiary

protection — Article 2(e) — Real risk of suffering serious harm — Article 15(c) —Serious and individual threat to a civilian’s life or person by reason of indiscriminate

violence in situations of armed conflict — Proof)

Opinion of Advocate General Poiares Maduro delivered on 9 September 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . I - 924 Judgment of the Court (Grand Chamber), 17 February 2009 . . . . . . . I - 938


1. Visas, asylum, immigration — Asylum policy — Minimum standards for determining whoqualifies for refugee status or for subsidiary protection status —Directive 2004/83 —Eligibility conditions for subsidiary protection (Council Directive 2004/83, Art. 15(b) and (c))

I - 921


2. Visas, asylum, immigration — Asylum policy — Minimum standards for determining whoqualifies for refugee status or for subsidiary protection status —Directive 2004/83 —Eligibility conditions for subsidiary protection (Council Directive 2004/83, Arts 2(e) and 15(c))

1. The fundamental right guaranteed underArticle 3 of the European Convention onHuman Rights (ECHR) forms part of thegeneral principles of Community law, observance of which is ensured by the Court. In addition, the case-law of the European Court of Human Rights is takeninto consideration in interpreting the scope of that right in the Communitylegal order. However, it is Article 15(b) ofDirective 2004/83 on minimum standardsfor the qualification and status of third country nationals or stateless persons asrefugees or as persons who otherwise needinternational protection and the content ofthe protection granted, which corre-sponds, in essence, to Article 3 of the ECHR.

By contrast, Article 15(c) of that directive is a provision, the content of which is different from that of Article 3 of the ECHR, and the interpretation of which must, therefore, be carried out independently, although with due regardfor fundamental rights as they are guaran-teed under the ECHR.

(see para. 28)

2. Article 15(c) of Directive 2004/83 on minimum standards for the qualificationand status of third country nationals orstateless persons as refugees or as personswho otherwise need international protec-tion and the content of the protectiongranted, in conjunction with Article 2(e)thereof, must be interpreted as meaningthat:

— the existence of a serious and individual threat to the life or person of an applicant for subsidiary protection is not subject to the condition that thatapplicant adduce evidence that heis specifically targeted by reason offactors particular to his personal circumstances;

— the existence of such a threat can exceptionally be considered to be established where the degree of indis-criminate violence characterising thearmed conflict taking place — assessed by the competent national authoritiesbefore which an application for subsidiary protection is made, or by

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ELGAFAJI

the courts of a Member State to which a decision refusing such an applicationis referred — reaches such a high levelthat substantial grounds are shown forbelieving that a civilian, returned tothe relevant country or, as the casemay be, to the relevant region, would,solely on account of his presence onthe territory of that country or region,face a real risk of being subject to thatthreat.

That interpretation is fully compatible withthe European Convention on Human Rights (ECHR), including the case-law ofthe European Court of Human Rights relating to Article 3 of the ECHR.


I - 923

OPINION OF MR POIARES MADURO — CASE C-465/07

OPINION OF AVOCATE GENERALPOIARES MADURO


1. The dispute giving rise to this reference for a preliminary ruling gives the Court the opportunity to define the conditions for subsidiary protection granted on the basis ofrefugee status to third-country nationals pursuant to Article 15 of Council Direct-ive 2004/83/EC of 29 April 2004 on minimumstandards for the qualification and status ofthird-country nationals or stateless persons asrefugees or as persons who otherwise needinternational protection and the content ofthe protection granted 2 (‘the Directive’). The national court’s reference is set out in such a way as to invite the Community Courts tocarry out a comparative study on the scope ofCommunity protection in the light of thatprovided for in Article 3 of the European Convention for the Protection of Human Rights and Fundamental Freedoms signed inRome on 4 November 1950 (‘the ECHR’).Such a question involves reconsideration ofthe relationship between the two legal orders,a relationship which cannot be disregarded inview of the objective of creating a Europeanarea of protection of fundamental rights suchas the right to asylum. Even more important isthe fundamental question presented by thiscase, which is to determine to what degree thereal risk to which a person is exposed must beindividualised in order for him to be eligiblefor the subsidiary protection conferred by theDirective.

1 — Original language: French. 2 — OJ 2004 L 304, p. 12.

I — The facts in the main proceedings, thelegal framework and the questions referredfor a preliminary ruling

2. The dispute in which the questions werereferred to the Court for a preliminary rulingarose from the rejection by the Staatssecre-taris van Justitie (State Secretary for Justice) ofthe applications by Mr and Mrs Elgafaji, Iraqinationals, for temporary residence permits inthe Netherlands.

3. The Staatssecretaris van Justitie, the de-fendant in the main proceedings, gave reasonsfor his refusal of 20 December 2006, taking theview that the applicants in the main proceed-ings had not shown satisfactorily that they were running a real risk of serious and individual harm in their country of origin.

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ELGAFAJI

He relies, in particular, on Article 29(1)(b) and(d) of the Netherlands Law on Aliens 2000(Vreemdelingenwet 2000; ‘the Vw 2000’) and the interpretation it has been given.

4. According to Article 29(1)(b) and (d) of theVw 2000:

‘A residence permit for a fixed period, as referred to in Article 28, may be issued to analien:

…

(b) who has proved that he has good groundsfor believing that if he is expelled he will run a real risk of being subjected to torture or to inhuman or degrading treatment or punishment;

…

(d) for whom return to his country of originwould, in the opinion of the [Staatssecre-taris van Justitie], constitute an excep-tional hardship in the context of the overall situation there.’

5. The Circular on Aliens of 2000 (Vreemde-lingencirculaire 2000; ‘the 2000 Circular’), in the version which was in force on 20 December 2006, states in para-graph C 1/4.3.1:

‘Article 29(1)(b) of the [Vw 2000] allows thegrant of a residence permit where the alien hasproved satisfactorily that he has good groundsfor believing that if he is expelled he will run areal risk of being subjected to torture or toinhuman or degrading treatment or punish-ment.’ The 2000 Circular states that that provision is derived from Article 3 of the ECHR under which ‘[n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment’. Accord-ingly, the removal of a person to a country inwhich he runs a real risk of being subjected tosuch treatment constitutes an infringement ofthat article. If that real risk has been or is established, a temporary (asylum) residencepermit is in principle issued by the competentNetherlands authorities.

6. The applicants consider that they haveproved that they run a real risk if they areexpelled to Iraq. In support of their argu-ments, they rely on the facts which are individual to their case. They therefore relate

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that Mr Elgafaji, of Shiite origin, worked forapproximately two years as a security officerin Baghdad for the British organisationJanusian Security which provides security forpersonnel transport between the ‘green zone’and the airport. Mr Elgafaji’s uncle, who worked in the same organisation, was targetedby militia, his death certificate stating that hisdeath followed a terrorist attack. Several dayslater, a threatening letter was fixed to the doorof Mr and Mrs Elgafaji, his wife of Sunni origin, which stated ‘death to collaborators’. On the basis of those events, the Elgafajissubmitted their asylum application to the authorities in the Netherlands, where Mr Elgafaji’s father, mother and sisters already live.

7. The Staatssecretaris van Justitie never-theless considered that the documents produced by the applicants in the main proceedings, particularly in the absence of official documents, did not suffice to show the threat they would be under if they were expelled to their country of origin. Their situation did not therefore fall within the scope of Article 29(1)(b) and (d) of the Vw2000.

8. The applicants challenged that decision,relying on Article 15(c) in conjunction withArticle 2(e) of the Directive.

9. Article 2(e) of the Directive defines a person eligible for subsidiary protection as ‘a third-country national or a stateless person

who does not qualify as a refugee but in respect of whom substantial grounds have been shown for believing that the personconcerned, if returned to his or her country oforigin, or in the case of a stateless person, tohis or her country of former habitual resi-dence, would face a real risk of sufferingserious harm as defined in Article 15 …’

10. Under Article 15, ‘“serious harm” consists of:

(a) death penalty or execution; or

(b) torture or inhuman or degrading treat-ment or punishment of an applicant inthe country of origin; or

(c) serious and individual threat to a civilian’s life or person by reason of indiscriminateviolence in situations of international or internal armed conflict’.

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11. The applicants observe that only the situation referred to in Article 15(b) is covered by Article 29(1)(b) of the Vw 2000which reproduces its wording almost literally.Taking the view that the threat referred to inArticle 15(c) can be distinguished from thosepreceding it and that they fall within that situation, on that basis they should or at leastcould have obtained a favourable outcome to their asylum application.

12. The Staatssecretaris van Justitie rejectsthat plea. In his view, the standard of proofremains identical whether this is a question ofthe protection granted under Article 15(b) ofthe Directive or that referred to in Article 15 (c). The defendant notes that those two provisions, like Article 29(1)(b) of the Vw 2000, mean that applicants for asylum mustshow satisfactorily that they would face a riskof serious and individual harm if they were toreturn to their country of origin. Conse-quently, in the absence of adducing such proof under Article 29(1)(b) of the Vw 2000,they cannot reasonably rely on Article 15(c) ofthe Directive which requires similar proof.

13. Following that decision, the applicants then brought proceedings before the Rechtbank (District Court) (Netherlands).That court sets out a different interpretationof the relevant provisions of the Directive. Inparticular, the national court takes the viewthat the high degree of individualisation of thethreat required by Article 15(b) of the Directive and by the national legislation at

issue is required to a lesser degree in the casereferred to by Article 15(c) of the Directive,which takes into account situations of armed conflict in the country of origin. The proofrelating to the existence of an individual andserious threat against the applicant could thusbe adduced more easily in application of Article 15(c) of the Directive, in comparisonwith Article 15(b). Consequently, the Rechtbank annulled the orders of 20 December 2006 refusing to grantsubsidiary protection since the standard ofproof required under Article 15(c) of the Directive had been aligned with that requiredfor the application of Article 15(b) as repro-duced in Article 29(1)(b) of the Vw 2000. TheNetherlands Justice Minister ought,according to that court, to have examinedwhether there were grounds for issuing theapplicants with a temporary residence permitunder Article 29(1)(d) of the Vw 2000 byreason of serious harm referred to in Article 15(c) of the Directive.

14. The referring court, the Nederlandse Raad van State (Netherlands Council of State), before which the dispute was broughton appeal, shares the difficulties of interpreta-tion of the relevant provisions of the Directiveexpressed by the defendant and the court offirst instance. Moreover, Article 15(c) of theDirective had not been transposed into Netherlands law on 20 December 2006, when Mr and Mrs Elgafaji made their applications. Accordingly, in order to be ableto assess whether such transposition was necessary, the Raad van State decided to staythe proceedings and refer the following questions to the Court for a preliminary ruling:

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‘(1) Is Article 15(c) of [the Directive] to beinterpreted as offering protection only in a situation in which Article 3 of the [ECHR], as interpreted in the case-law ofthe European Court of Human Rights,also has a bearing, or does Article 15(c),in comparison with Article 3 of the [ECHR], offer supplementary or other protection?

(2) If Article 15(c) of the Directive, in comparison with Article 3 of the [ECHR], offers supplementary or otherprotection, what are the criteria in thatcase for determining whether a personwho claims to be eligible for subsidiaryprotection status runs a real risk of serious and individual threat by reasonof indiscriminate violence within the terms of Article 15(c) of the Directive,read in conjunction with Article 2(e) thereof?’

II — Legal analysis

15. By its first question, the national courtasks, essentially, whether Article 15(c) offersprotection which is supplementary or merelyequivalent to that arising from Article 3 ofthe ECHR concerning applicants for asylum.The second question seeks to determine thecriteria underlying the grant of subsidiary protection.

16. In other words, the Court is called uponto rule on the scope of the protection grantedby Article 15(c) of the Directive, in com-parison with that offered by Article 3 of the ECHR. The observations of the partiesrelate, essentially, to that question. However,they demonstrate above all the differences between the Member States concerning theinterpretation of Article 3 and of the case-lawof the European Court of Human Rights which stems from it. Those conflicts are illustrated by the fact that, even among theMember States which take the view that Article 15(c) of the Directive does not provide protection which is supplementaryto that already conferred by the ECHR, someconsider nevertheless that the protectiongranted by the Convention extends, in thelight of the case-law of the Strasbourg court,to situations which other Member States attempt, by contrast, to exclude from the scope of the Directive, taking precisely theview that the subsidiary protection conferredby the Directive is restricted to that which canbe obtained under the ECHR.

17. Those disagreements on the scope of Article 3 of the ECHR fail to conceal the real heart of the debate which concerns, in actual fact, the scope of the protection which mustbe afforded to applicants for asylum on thebasis of Community law. Accordingly, prior tothe actual legal analysis of the protectionoffered by Community law to applicants forasylum, it seems helpful, in the light of theobservations submitted by the parties, to reconsider the controversy surrounding theinterpretation and consideration of Article 3of the ECHR for the purposes of answering thequestions referred for a preliminary ruling.

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A — Clarification on the scope and consid-eration of Article 3 of the ECHR in the context of the answer to be given to the national court

18. Beyond the comparison of the respectivescope of Article 3 of the ECHR and Article 15of the Directive, the Court is asked, primarilyand essentially, whether the protection granted under the Directive covers only situations in which the person may be a victim of a particularly serious breach of hisfundamental rights on the basis of conditionsconcerning him individually or specifically, orwhether that protection also covers situationsin which a person may be exposed to a similarrisk by reason of a general background of indiscriminate violence.

19. My belief is that the answer to that question cannot be inferred from Article 3 ofthe ECHR but must be sought principally through the prism of Article 15(c) of the Directive. Community provisions, irres-pective of which provisions are concerned, are given an independent interpretation which cannot therefore vary according to and/or be dependent on developments in thecase-law of the European Court of HumanRights.

20. I would add, furthermore, that the inter-pretation of the Convention by the Strasbourgcourt is a dynamic interpretation which is

always changing. In terms of the dynamic interpretation, it must be noted that the interpretation of Article 3 of the ECHR hasnot been linear and that the European Courtof Human Rights currently gives a broadercontent and therefore scope to that article. 3

Moreover, it is necessary for the interpretationof that provision to evolve and it should not,therefore, be fixed. In that context, it is not for the Community Courts to determine the interpretation of Article 3 of the Conventionwhich prevails.

21. None the less, the importance that the ECHR may assume in the interpretationof the Community provisions which concern us cannot be overlooked. The Directive pursues the objective of developing a funda-mental right to asylum which follows from thegeneral principles of Community law which,themselves, are the result of constitutional traditions common to the Member States and the ECHR, as reproduced, moreover, in theCharter of Fundamental Rights of the European Union proclaimed in Nice on 7 November 2000 (OJ 2000 C 364, p. 1). 4 As I pointed out in a previous case, ‘although thecharter in question cannot in itself constitutea sufficient legal basis for the creation of rightscapable of being directly invoked by indi-viduals, it is nevertheless not without effect as a criterion for the interpretation of the instruments protecting the rights mentionedin Article 6(2) EU. From that perspective, that

3 — See, inter alia, the judgments of the European Court of HumanRights, Vilvarajah and Others v. the United Kingdom of 30 October 1991 (Application Nos 13163/87; 13164/87; 13165/87; 13447/87; 13448/87, paragraph 37) and Salah Sheekh v. the Netherlands of 11 January 2007 (ApplicationNo 1948/04, paragraph 148).

4 — Recital 10 in the preamble to the Directive indeed states that‘[t]his Directive respects the fundamental rights and observesthe principles recognised in particular by the Charter of Fundamental Rights of the European Union. In particular thisDirective seeks to ensure full respect for human dignity andthe right to asylum of applicants for asylum and their accompanying family members’.

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charter may have a dual function. In the firstplace, it may create the presumption of theexistence of a right which will then requireconfirmation of its existence either in the constitutional traditions common to the Member States or in the provisions of the ECHR. In the second place, where a rightis identified as a fundamental right protectedby the Community legal order, the Charterprovides a particularly useful instrument fordetermining the content, scope and meaningto be given to that right.’ 5

22. In that regard, the ECHR is reproduced inCommunity case-law for two main reasons.First of all, because the commitment which each Member State has expressed to the Convention demonstrates the status of those rights as corresponding to values common tothe Member States, which therefore neces-sarily wish to safeguard them and reproducethem in the context of the European Union.Next, the protection of fundamental rights inthe Community legal order exists alongsideother European systems of protection of fundamental rights. These include both systems developed within the national legalsystems and those stemming from the ECHR. Each of those protection mechan-isms certainly pursues objectives which arespecific to it and the mechanisms are certainly

constructed from legal instruments particularto them, but sometimes they apply none theless to the same facts. In such a context, it is important, for each existing protectionsystem, while maintaining its independence,to seek to understand how the other systemsinterpret and develop those same funda-mental rights in order not only to minimisethe risk of conflicts, but also to begin a processof informal construction of a European area ofprotection of fundamental rights. The European area thus created will, largely, bethe product of the various individual contri-butions from the different protection systemsexisting at European level.

23. Accordingly, although the case-law of theStrasbourg court is not a binding source ofinterpretation of Community fundamental rights, it constitutes none the less a startingpoint for determining the content and scopeof those rights within the European Union.Taking that case-law into account is, more-over, essential to ensure that the Union, founded on the principle of respect for human rights and fundamental freedoms, 6

will contribute to extending the protectionof those rights in the European area. In thatrespect, it is perfectly natural that the Charterof Fundamental Rights, while acknowledgingthat it ‘contains rights which correspond torights guaranteed by the [European] Conven-tion for the Protection of Human Rights andFundamental Freedoms, the meaning and

5 — Point 48 of the Opinion delivered in Case C-305/05 Ordre des barreaux francophones et germanophone and Others [2007] ECR I-5305. 6 — See Article 6(1) and (2) TEU.

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scope of those rights shall be the same as thoselaid down by the said Convention’, 7 adds that ‘[t]his provision shall not prevent Union lawproviding more extensive protection’. 8

24. For all of those reasons, it is important tostate that it is not a question so much of determining whether the subsidiary protec-tion provided by the Directive is more or lessidentical to that granted on the basis of theConvention as of defining its content in Community law. That objective does not inthe least preclude taking into account the case-law resulting from the application of the ECHR.

B — Interpretation of Article 15(c) of the Directive

25. Interpretation is not easy and is, to a largeextent, open to debate, so much so that it isultimately considered to be an art, hermen-eutics. However, it is not often that, on the basis of reasoning which is broadly similar andbased on shared arguments, the result is nonethe less conflicting, requiring reconsiderationof the very methodology of interpretation.

7 — Article 52(3) of the Charter. It can also be noted that Article 18of the Charter enshrines and confirms the right to asylum.

8 — Ibid.

1. Conflicting interpretation on the basis ofsimilar reasoning

26. It is striking that recitals 25 and 26 in thepreamble to the Directive are used in turn bythe parties to support interpretations of Article 15(c) which are diametrically opposed. Thus, according to one approach,it follows from those recitals that the require-ment of an individual link between the indiscriminate violence and the threat to a civilian’s life or person presupposes that theapplicant show that he is covered by reason offeatures particular to him, whereas, accordingto the second approach, those recitals tend tosever the individual link required. Further-more, there are some, who are not necessarilythose who take the view that the individual link required under Article 15(c) of the Directive must be weaker than that requiredfor the application of Article 3 of the ECHR,who consider that Article 15(c) representsprotection which is supplementary to Article 3of the ECHR, whereas others think it equiva-lent.

27. Accordingly, recital 25 under which ‘…[t]hose criteria [on the basis of which appli-cants for international protection are to berecognised as eligible for subsidiary protec-tion] should be drawn from international obligations under human rights instrumentsand practices existing in Member States’supports a reading of Article 15(c) which varies appreciably in the two principal lines ofargument. To that effect, the Netherlands andthe United Kingdom Governments infer fromthat recital that Article 15 of the Directive and in particular Article 15(c) thereof are modelled on Article 3 of the ECHR, the case-law on which, according to those States,

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attests to the requirement of a strong individual link. 9 At least they consider, pursuant to that recital, that the Communitylegislature did not intend to burden the Member States with new obligations such asto offer a wider protection to third-countrynationals concerning the right to asylum.They thereby play down, if not evade, thereference made by recital 25 to other inter-national and European instruments for protection of human rights and practicesexisting in Member States. The States haveadmittedly adopted very different protectionsystems but the absence of uniformity doesnot necessarily mean that their interpretativevalue is precluded. Therefore the fact that certain States, in their domestic legal systems,have provided for a higher level of protectionthan that conferred under Article 3 of the ECHR cannot be disregarded. 10 The Swedish Government places specificemphasis to that effect on the reference byrecital 25 to practices existing in Member States and infers that the protection referredto in Article 15(c) necessarily then comple-ments that laid down in Article 15(a) and (b).It represents protection supplementary to that already guaranteed by the ECHR and inparticular by Article 3 thereof, which is indeedreproduced literally in Article 15(b) of theDirective.

28. Likewise, although the parties call to mind, on both sides, recital 26 in the preamble

9 — See the judgments of the European Court of Human RightsVilvarajah and Others v. the United Kingdom; Salah Sheekh v. the Netherlands; and Saadi v. Italy of 28 February 2008 (Application No 37201/06).

10 — See, in particular, the study of the UNHCR, Asylum in the European Union. A Study of the Implementation of the Qualification Directive, November 2007, at www.unhcr.org.

to the Directive according to which ‘[r]isks towhich a population of a country or a section ofthe population is generally exposed do normally not create in themselves an indi-vidual threat which would qualify as seriousharm’ in support of one interpretation of Article 15(c), they manage none the less todraw a conflicting interpretation from thatprovision. Accordingly, for the majority of theparties, that recital necessarily requires theapplicant for asylum to show that there is anindividual link, by setting out the principle,through reference to the word ‘normally’, that the risk to which the population of a countryor a section of the population is generallyexposed does not represent an individual threat. Therefore the Directive is not intended to cover the situations of indiscriminate violence referred to in Article 15(c) of thatlegislation. In those circumstances, only proofof a threat against the applicant for asylum by reason of features particular to him could justify the grant of subsidiary protection. Onthe other hand, the Italian Republic concedesthat the word ‘normally’ implies that in other circumstances, that is to say, exceptionalcircumstances which go beyond the ‘normal’, the risk to which a population or a section of apopulation is generally exposed may be described as an ‘individual threat’. It is possible to go on to state that, under thatinterpretation, the exceptional circumstancesare therefore those covered by Article 15(c) ofthe Directive.

29. In the same way, the origin of the Directive, depending on whether emphasis isplaced on the express introduction of the

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requirement of a threat which is individualfollowing the initial proposal of the Commis-sion of the European Communities or on theintention to reproduce the best of the nationalsystems of protection, may come to the support of one or other interpretation.

30. Ultimately, it must be accepted that thevery wording of Article 15(c) of the Directiveplaces the two approaches to interpretationon equal terms. The fact that there is weight on both sides cannot however prevent an interpretation from being identified which issuitable to guarantee the fundamental right toasylum.

2. Methodology of interpretation

31. Indeed, it must be accepted that, againstsuch a background, the person seeking aninterpretation is condemned to try to recon-cile what seems prima facie irreconcilable. Sohe must be guided in that task by the primaryobjective of the legislation concerned. In otherwords, he must arrive at an interpretationwhich, while recognising that Article 15(c) is,above all else, inherently bound to the conceptof ‘indiscriminate violence’, must also take into account the requirement of an individualthreat. 11

11 — Certain authors lament the ambiguity of Article 15 in whichthe concept of indiscriminate violence seems to them irreconcilable with that of individual threat; see, inter alia,McAdam, J., Complementary Protection in International Refugee Law, p. 70.

32. For that purpose, it seems to me that theinterpretation to the effect that Article 15(c) covers any situation of indiscriminate violence would overlook that dual condition of interpretation, in the same way that theinterpretation to the effect that the concept of‘individual threat’ corresponds to a threat directed at a person by reason of circum-stances concerning him individually or spe-cifically (or a social group to which he belongs) would contradict Article 15(c) which is intended specifically and even expressly to apply to situations of indiscrimi-nate violence. 12 In the light of those factors, itwould be inconsistent to consider, as certain Member States do, that Article 15(c) does notoffer protection supplementary to that laiddown in Article 15(a) and (b). How can it beunderstood that Article 15(c) serves only toclarify eligibility for the subsidiary protectiondefined in the cases referred to in paragraphs(a) and (b) in situations in which there is alsoindiscriminate violence if paragraphs (a) and(b) apply generally and irrespective of anysituation of indiscriminate violence? It would in fact be absurd to have a special rule servingto clarify the protection granted by a generalrule by stating that that rule will apply also incases in which the protection is even moreessential.

33. In actual fact, the interpretation of Article 15(c) is dependent, as has been stated, on concentrating on the primaryobjective of the Directive and the fundamentalright to asylum. The aim pursued by thatprovision is to grant international protection

12 — See, to that effect, also the observations of the Commissionwhich note that ‘[t]he value added by the condition in paragraph (c) in relation to that in paragraph (b) [ofArticle 15] lies however in the fact that that [individual]link does not require that it is a question of specific forms ofviolence directed at the person concerned by name, so tospeak, but requires that an individualisation of the threat maybe inferred from all of the circumstances’.

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to a person placed in a situation in which he isat risk of suffering a breach of one of his rights,which is one of the most fundamental (like theright to life, the right not to be tortured, and soon). Accordingly, the criterion established bythe Directive, in order to obtain the status of refugee as well as subsidiary protection, mustbe understood as the instrument making itpossible to evaluate whether that risk and harm to fundamental rights are likely to arise.Therefore the importance and the nature ofthe individual link required to obtain subsidiary protection must be assessed fromthat point of view.

34. The requirement of an individual link tends in fact to raise a presumption that theperson who is covered for reasons concerninghim specifically or because he belongs to acertain group will face a particular risk ofsuffering a breach of his fundamental rights.Further, the discrimination which is intrin-sically linked to and therefore inherent in thatindividualisation or to membership of a socialgroup makes the breach of fundamental rightsmore serious. It is difficult to deny that, inaccordance with a similar analysis, there maybe circumstances in which a substantive breach of fundamental rights can occur evenin the absence of any discrimination. That latter case refers to situations which Article 15 and in particular Article 15(c) are intended to cover, namely, situations of indiscriminate violence which is so serious that, as the case may be, any individual within the ambit of thatviolence may be subject to a risk of seriousharm to his person or life. That risk, if it mustbe measured, is in fact tantamount to the risk

run by those who may claim refugee status orthe application of Article 15(a) or (b).

35. From that point of view, the requirementof a threat which is ‘individual’ is fully justified.That requirement serves to make apparentthe fact that indiscriminate violence must be such that it cannot fail to represent a likely andserious threat to the applicant for asylum. Thedistinction between a high degree of indi-vidual risk and a risk which is based on individual features is of defining importance.Although a person is not covered by reason offeatures concerning him particularly, that person is no less individually affected whenindiscriminate violence substantiallyincreases the risk of serious harm to his life or person, in other words to his fundamentalrights.

36. In order to answer the second questionreferred more specifically, and in particularfrom the point of view of the standard of proofto be borne by the applicant for asylum, itmust be noted that the standard of proof inrespect of the individual link required is certainly lower for the individual targetedunder Article 15(c) than under Article 15(a)and (b). However, the standard of proof will behigher in respect of demonstrating indis-criminate violence, which must be generalised(in the sense of non-discriminatory) and soserious that it raises a strong presumption thatthe person in question is the target of that

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violence. In reading recital 26 in the preambleto the Directive, we are reminded that that violence exceeds the risks to which the population of a country or a section of thepopulation is generally exposed.

37. Those two aspects may in actual fact beclosely connected: the more the person is individually affected (for example, by reasonof his membership of a given social group), theless it will be necessary to show that he facesindiscriminate violence in his country or apart of the territory which is so serious thatthere is a serious risk that he will be a victim of it himself. Likewise, the less the person is ableto show that he is individually affected, the more the violence must be serious and indiscriminate for him to be eligible for thesubsidiary protection claimed.

38. Ultimately, only that interpretationmakes it possible to fulfil the priority objectiveof the Directive. Any other option would introduce unjustified discrimination betweenapplicants for asylum in respect of the protection to which they might be entitled.It would have the absurd result that the more indiscriminate the violence and, conse-quently, the greater the number of personslikely to suffer harm to their life or person, theweaker the Community protection. If the individual link were to be understood as requiring that the person must be targetedby reason of features particular to him, even incircumstances of indiscriminate violence so serious that the individual risk run by personscoming from a particular territory was greaterthan that run by persons applying for refugee

status, only the latter would qualify for protection even though they came from a territory in which breach of their fundamentalrights would not be as serious, where the violence would not be as ‘indiscriminate’. In other words, the protection granted on thebasis of the Directive would depend on whether or not the person is discriminatedagainst in respect of his fundamental rightsbut would not depend on the degree of thethreat to those fundamental rights. That would amount to saying that the only purpose of refugee status is to protectpersons discriminated against in relation tocertain fundamental rights but that it is notintended to protect other persons who arevictims of similar or even more serious breaches of the same fundamental rights inso far as those breaches are generalised.

39. Finally, I would observe that the mostrecent case-law of the European Court of Human Rights, 13 from which it appears that where there is indiscriminate violence a person is eligible for international protectionprovided that he demonstrates, however, thathe is individually affected by reason of specificfeatures, does not relate to subsidiary protec-tion but refers to the grant of refugee status. Inaddition, the objective pursued by that court israther to extend the protection granted underArticle 3 of the ECHR to persons threatenedwith torture and inhuman or degrading treatment. Consequently, it seems not onlycontrary to the case-law of the Strasbourgcourt to seek to restrict the international protection of applicants for asylum but equally difficult to transpose the conditions

13 — Salah Sheekh v. the Netherlands, paragraph 148.

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which in fact apply only to applications for thegrant of refugee status from the point of view,moreover, of Article 3 alone or sometimes Article 2 of the ECHR.

40. In conclusion, Article 15(c) of the Direct-ive must be interpreted as conferring subsidiary protection where the personconcerned demonstrates that he runs a real risk of threats to his life or person in situationsof international or internal armed conflict byreason of indiscriminate violence which is so serious that it cannot fail to represent a likelyand serious threat to that person. It is for the

national courts to ensure that such conditions are fulfilled.

41. Furthermore, that implies from the point of view of the standard of proof that theindividual nature of the threat does not have to be established to such a high standard under Article 15(c) of the Directive as underArticle 15(a) and (b) thereof. However, the seriousness of the violence will have to be clearly established so that no doubt remains asto both the indiscriminate and the serious nature of the violence of which the applicantfor subsidiary protection is the target.

III — Conclusion

42. In conclusion, the answer to the questions referred to the Court for a preliminaryruling should be as follows:

(1) Article 15(c) of Council Directive 2004/83/EC of 29 April 2004 on minimumstandards for the qualification and status of third-country nationals or statelesspersons as refugees or as persons who otherwise need international protection andthe content of the protection granted must be interpreted as conferring subsidiaryprotection where the person concerned demonstrates that he runs a real risk ofthreats to his life or person in situations of international or internal armed conflict

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by reason of indiscriminate violence which is so serious that it cannot fail torepresent a likely and serious threat to that person. It is for the national courts toensure that such conditions are fulfilled.

(2) Furthermore, that implies from the point of view of the standard of proof that theindividual nature of the threat does not have to be established to such a highstandard under Article 15(c) of the Directive as under Article 15(a) and (b) thereof.However, the seriousness of the violence will have to be clearly established so thatno doubt remains as to both the indiscriminate and the serious nature of the violence of which the applicant for subsidiary protection is the target.

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v



17 February 2009 *

In Case C-465/07,

REFERENCE for a preliminary ruling under Articles 68 EC and 234 EC from the Raadvan State (Netherlands), made by decision of 12 October 2007, received at the Court on17 October 2007, in the proceedings

Meki Elgafaji,

Noor Elgafaji

Staatssecretaris van Justitie,


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composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaertsand M. Ilešič, Presidents of Chambers, G. Arestis, A. Borg Barthet, J. Malenovský,U. Lõhmus and L. Bay Larsen (Rapporteur), Judges,

Advocate General: M. Poiares Maduro, Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 8 July 2008,


— Mr and Mrs Elgafaji, by A. Hekman, advocaat,

— the Netherlands Government, by C. Wissels and C. ten Dam, acting as Agents,

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— the Belgian Government, by C. Pochet and L. Van den Broeck, acting as Agents,

— the Greek Government, by M. Michelogiannaki, T. Papadopoulou and G. Papagianni, acting as Agents,

— the French Government, by J-C. Niollet, acting as Agent,

— the Italian Government, by R. Adam, acting as Agent, and P. Gentili, avvocato delloStato,

— the Finnish Government, by J. Heliskoski, acting as Agent,

— the Swedish Government, by S. Johannesson and C. Meyer-Seitz, acting as Agents,

— the United Kingdom Government, by V. Jackson, acting as Agent, and S. Wordsworth, Barrister,

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— the Commission of the European Communities, by M. Condou-Durande and R. Troosters, acting as Agents,


gives the following

Judgment

This reference for a preliminary ruling concerns the interpretation of Article 15(c) ofCouncil Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or aspersons who otherwise need international protection and the content of the protectiongranted (OJ 2004 L 304, p. 12; ‘the Directive’), in conjunction with Article 2(e) of that directive.

The reference was made in the course of proceedings between Mr and Mrs Elgafaji,both Iraqi nationals, and the Staatssecretaris van Justitie (State Secretary for Justice)relating to his refusal of their applications for temporary residence permits in theNetherlands.

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2


Legal context

The European Convention for the Protection of Human Rights and FundamentalFreedoms

3 Article 3 of the European Convention for the Protection of Human Rights andFundamental Freedoms, signed at Rome on 4 November 1950 (‘the ECHR’), is entitled ‘Prohibition of torture’, and provides:

‘No one shall be subjected to torture or to inhuman or degrading treatment orpunishment.’


4 Recital 1 in the preamble to the Directive states:

‘A common policy on asylum, including a Common European Asylum System, is aconstituent part of the European Union’s objective of progressively establishing an area of freedom, security and justice open to those who, forced by circumstances, legitimately seek protection in the Community.’

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5

ELGAFAJI

Recital 6 in the preamble to the Directive states:

‘The main objective of this Directive is, on the one hand, to ensure that Member Statesapply common criteria for the identification of persons genuinely in need of international protection, and, on the other hand, to ensure that a minimum level ofbenefits is available for these persons in all Member States.’

6 Recital 10 in the preamble to the Directive states:

‘This Directive respects the fundamental rights and observes the principles recognisedin particular by the Charter of Fundamental Rights of the European Union [proclaimedat Nice on 7 December 2000 (OJ 2000 C 364, p. 1)]. In particular this Directive seeks toensure full respect for human dignity and the right to asylum of applicants for asylumand their accompanying family members.’

7 Recitals 24 to 26 in the preamble to the Directive state:

‘(24) Minimum standards for the definition and content of subsidiary protectionstatus should also be laid down. Subsidiary protection should be complementaryand additional to the refugee protection enshrined in the [Convention relating tothe Status of Refugees, signed at Geneva on 28 July 1951].

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(25) It is necessary to introduce criteria on the basis of which applicants for international protection are to be recognised as eligible for subsidiary protection. Those criteria should be drawn from international obligationsunder human rights instruments and practices existing in Member States.

(26) Risks to which a population of a country or a section of the population isgenerally exposed do normally not create in themselves an individual threatwhich would qualify as serious harm.’

8 Article 1 of the Directive provides:

‘The purpose of this Directive is to lay down minimum standards for the qualification ofthird country nationals or stateless persons as refugees or as persons who otherwiseneed international protection and the content of the protection granted.’

9 Under Article 2(c), (e) and (g) of the Directive:

‘…

(c) “refugee”means a third country national who, owing to a well-founded fear of beingpersecuted for reasons of race, religion, nationality, political opinion or member-ship of a particular social group, is outside the country of nationality and is unableor, owing to such fear, is unwilling to avail himself or herself of the protection of thatcountry …

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10

ELGAFAJI

…

(e) “person eligible for subsidiary protection” means a third country national or a stateless person who does not qualify as a refugee but in respect of whom substantial grounds have been shown for believing that the person concerned, ifreturned to his or her country of origin, or in the case of a stateless person, to his orher country of former habitual residence, would face a real risk of suffering seriousharm as defined in Article 15 … and [who] is unable, or, owing to such risk,unwilling to avail himself or herself of the protection of that country;

…

(g) “application for international protection” means a request made by a third countrynational or a stateless person for protection from a Member State, who can beunderstood to seek refugee status or subsidiary protection status …’

Under Article 4(1), (3) and (4) in Chapter II of the Directive, entitled ‘Assessment of applications for international protection’:

— Member States may consider it the duty of the applicant to submit all elementsneeded to substantiate the application for international protection;

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— the assessment of an application for international protection is to be carried out onan individual basis taking into account a number of factors as they relate to thecountry of origin at the time of taking a decision on the application and the personalcircumstances of the applicant;

— the fact that an applicant has already been subject to serious harm or to directthreats of such harm, is a serious indication of a real risk of suffering serious harm,unless there are good reasons to consider that such serious harm will not berepeated.

11 Article 8(1) in Chapter II, provides:

‘As part of the assessment of the application for international protection, MemberStates may determine that an applicant is not in need of international protection if in apart of the country of origin there is no well-founded fear of being persecuted or no realrisk of suffering serious harm and the applicant can reasonably be expected to stay inthat part of the country.’

12 Under the heading ‘Serious harm’, Article 15 in Chapter V of the Directive, entitled ‘Qualification for subsidiary protection’, provides:

‘Serious harm consists of:

(a) death penalty or execution; or

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ELGAFAJI

(b) torture or inhuman or degrading treatment or punishment of an applicant in thecountry of origin; or

(c) serious and individual threat to a civilian’s life or person by reason of indiscriminateviolence in situations of international or internal armed conflict.’

13 Article 18 of the Directive provides that Member States are to grant subsidiaryprotection status to a third country national eligible for subsidiary protection inaccordance with Chapters II and V of that directive.


14 Article 29(1)(b) and (d) of the Law on Aliens 2000 (Vreemdelingenwet 2000, ‘the Vw 2000’) provides:

‘A temporary residence permit, as referred to in Article 28, may be issued to an alien:

…

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15


(b) who has proved that he has good grounds for believing that if he is expelled he willrun a real risk of being subjected to torture or to inhuman or degrading treatmentor punishment;

…

(d) for whom return to his country of origin would, in the opinion of the Minister,constitute an exceptional hardship in the context of the overall situation there.’

The Circular on Aliens of 2000 (Vreemdelingencirculaire 2000), in the version in forceon 20 December 2006, states in paragraph C 1/4.3.1:

‘Article 29(1)(b) of the [Vw 2000] allows the grant of a residence permit where the alienhas proved satisfactorily that he has good grounds for believing that if he is expelled hewill run a real risk of being subjected to torture or to inhuman or degrading treatmentor punishment.

That provision is derived from Article 3 of [the ECHR]. The removal of a person to acountry in which he runs a real risk of being subjected to such treatment constitutes aninfringement of that article. If that real risk has been or is established, a temporary(asylum) residence permit is in principle issued.

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ELGAFAJI

…’

16 A new Article 3.105(d) was inserted into the Decree on Aliens of 2000 (Vreemdelingenbesluit 2000) in order expressly to transpose, with effect from 25 April 2008, Article 15(c) of the Directive.


17 On 13 December 2006 Mr and Mrs Elgafaji submitted applications for temporaryresidence permits in the Netherlands, together with evidence seeking to prove the realrisk to which they would be exposed if they were expelled to their country of origin, inthis case, Iraq. In support of their arguments, they relied, in particular, on facts relatingto their personal circumstances.

18 They pointed out, inter alia, that Mr Elgafaji, who is a Shiite Muslim, had worked fromAugust 2004 until September 2006 for a British firm providing security for personneltransport between the airport and the ‘green’ zone. They stated that Mr Elgafaji’s uncle, employed by the same firm, had been killed by militia, his death certificate stating thathis death followed a terrorist act. A short time later, a letter threatening ‘death to collaborators’ was fixed to the door of the residence which Mr Elgafaji shared with hiswife, a Sunni Muslim.

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19 By orders of 20 December 2006, the Minister voor Vreemdelingenzaken en Integratie(Minister for Immigration and Integration; ‘the Minister’) — the competent authorityuntil 22 February 2007, the date on which the Staatssecretaris van Justitie becameresponsible for immigration matters — refused to grant temporary residence permits toMr and Mrs Elgafaji. He found, inter alia, that they had not proved satisfactorily thecircumstances on which they were relying and, therefore, had not established the realrisk of serious and individual threat to which they claimed to be exposed in theircountry of origin. He thus concluded that their situation did not come within the scopeof Article 29(1)(b) of the Vw 2000.

20 According to the Minister, the standard of proof required for the protection grantedunder Article 15(b) of the Directive is identical to that required for the protectiongranted under Article 15(c). Those two provisions, like Article 29(1)(b) of the Vw 2000,require applicants to show satisfactorily, in their individual circumstances, the risk ofserious and individual threat to which they would be exposed were they to be returnedto their country of origin. As Mr and Mrs Elgafaji failed to produce such evidence underArticle 29(1)(b) of the Vw 2000, they could not effectively rely on Article 15(c) of theDirective.

21 Following the refusal of their applications for temporary residence permits, Mr and MrsElgafaji brought actions before the Rechtbank te’s-Gravenhage (District Court, TheHague). Their actions before that court were successful.

22 That court held, inter alia, that Article 15(c) of the Directive, which takes account of theexistence of armed conflict in the country of origin of the applicant seeking protection,does not require the high degree of individualisation of the threat required by Article 15(b) of the Directive and by Article 29(1)(b) of the Vw 2000. Thus, the existence of aserious and individual threat to the persons seeking protection can be proved moreeasily under Article 15(c) of the Directive than under Article 15(b).

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23

ELGAFAJI

Consequently, the Rechtbank te ’s-Gravenhage annulled the orders of 20 December2006 refusing to grant temporary residence permits to Mr and Mrs Elgafaji, since theproof required under Article 15(c) of the Directive had been aligned with that requiredin the application of Article 15(b) of the Directive, as reproduced in Article 29(1)(b) ofthe Vw 2000.

24 According to that court, the Minister ought to have examined whether there weregrounds for issuing temporary residence permits to Mr and Mrs Elgafaji underArticle 29(1)(d) of the Vw 2000 on account of the existence of serious harm within themeaning of Article 15(c) of the Directive.

25 Seised on appeal, the Raad van State (Council of State) held that there were difficultiesin interpreting the relevant provisions of the Directive. It held, furthermore, that Article 15(c) of the Directive had not been transposed into Netherlands law by20 December 2006, the date on which the Minister’s contested orders were made.

26 In those circumstances, the Raad van State decided to stay proceedings and to refer thefollowing questions to the Court for a preliminary ruling:

‘(1) Is Article 15(c) of [the Directive] to be interpreted as offering protection only in asituation in which Article 3 of the [ECHR], as interpreted in the case-law of theEuropean Court of Human Rights, also has a bearing, or does Article 15(c), incomparison with Article 3 of the [ECHR], offer supplementary or other protection?

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(2) If Article 15(c) of the Directive, in comparison with Article 3 of the [ECHR], offerssupplementary or other protection, what are the criteria in that case for determining whether a person who claims to be eligible for subsidiary protectionstatus runs a real risk of serious and individual threat by reason of indiscriminateviolence within the terms of Article 15(c) of the Directive, read in conjunction withArticle 2(e) thereof?’


27 At the outset, it should be noted that the referring court seeks guidance on theprotection guaranteed under Article 15(c) of the Directive, in comparison with thatunder Article 3 of the ECHR as interpreted in the case-law of the European Court ofHuman Rights (see, inter alia, Eur. Court H.R. N.A. v. the United Kingdom, judgment of 17 July 2008, not yet published in the Reports of Judgments and Decisions, § 115 to 117, and the case-law cited).

28 In that regard, while the fundamental right guaranteed under Article 3 of the ECHRforms part of the general principles of Community law, observance of which is ensuredby the Court, and while the case-law of the European Court of Human Rights is takeninto consideration in interpreting the scope of that right in the Community legal order,it is, however, Article 15(b) of the Directive which corresponds, in essence, to Article 3of the ECHR. By contrast, Article 15(c) of the Directive is a provision, the content ofwhich is different from that of Article 3 of the ECHR, and the interpretation of whichmust, therefore, be carried out independently, although with due regard for fundamental rights, as they are guaranteed under the ECHR.

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ELGAFAJI

The questions referred, which it is appropriate to examine together, thus concern theinterpretation of Article 15(c) of the Directive, in conjunction with Article 2(e) thereof.

30 Having regard to those preliminary observations, and in the light of the circumstancesof the case in the main proceedings, the referring court asks, in essence, whetherArticle 15(c) of the Directive, in conjunction with Article 2(e) thereof, must beinterpreted as meaning that the existence of a serious and individual threat to the life orperson of the applicant for subsidiary protection is subject to the condition that thatapplicant adduce evidence that he is specifically targeted by reason of factors particularto his circumstances. If not, the referring court wishes to know the criterion on the basisof which the existence of such a threat can be considered to be established.

31 In order to reply to those questions, it is appropriate to compare the three types of‘serious harm’ defined in Article 15 of the Directive, which constitute the qualificationfor subsidiary protection, where, in accordance with Article 2(e) of the Directive,substantial grounds have been shown for believing that the applicant faces ‘a real risk of [such] harm’ if returned to the relevant country.

32 In that regard, it must be noted that the terms ‘death penalty’,‘execution’ and ‘torture or inhuman or degrading treatment or punishment of an applicant in the country oforigin’, used in Article 15(a) and (b) of the Directive, cover situations in which theapplicant for subsidiary protection is specifically exposed to the risk of a particular typeof harm.

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33


By contrast, the harm defined in Article 15(c) of the Directive as consisting of a ‘serious and individual threat to [the applicant’s] life or person’ covers a more general risk of harm.

34 Reference is made, more generally, to a ‘threat … to a civilian’s life or person’ rather than to specific acts of violence. Furthermore, that threat is inherent in a general situation of‘international or internal armed conflict’. Lastly, the violence in question which gives rise to that threat is described as ‘indiscriminate’, a term which implies that it mayextend to people irrespective of their personal circumstances.

35 In that context, the word ‘individual’ must be understood as covering harm to civiliansirrespective of their identity, where the degree of indiscriminate violence characterisingthe armed conflict taking place — assessed by the competent national authorities beforewhich an application for subsidiary protection is made, or by the courts of a MemberState to which a decision refusing such an application is referred — reaches such a highlevel that substantial grounds are shown for believing that a civilian, returned to therelevant country or, as the case may be, to the relevant region, would, solely on accountof his presence on the territory of that country or region, face a real risk of being subjectto the serious threat referred in Article 15(c) of the Directive.

36 That interpretation, which is likely to ensure that Article 15(c) of the Directive has itsown field of application, is not invalidated by the wording of recital 26 in the preambleto the Directive, according to which ‘[r]isks to which a population of a country or asection of the population is generally exposed do normally not create in themselves anindividual threat which would qualify as serious harm’.

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ELGAFAJI

37 While that recital implies that the objective finding alone of a risk linked to the generalsituation in a country is not, as a rule, sufficient to establish that the conditions set out inArticle 15(c) of the Directive have been met in respect of a specific person, its wordingnevertheless allows — by the use of the word’normally’ — for the possibility of anexceptional situation which would be characterised by such a high degree of risk thatsubstantial grounds would be shown for believing that that person would be subjectindividually to the risk in question.

38 The exceptional nature of that situation is also confirmed by the fact that the relevantprotection is subsidiary, and by the broad logic of Article 15 of the Directive, as the harmdefined in paragraphs (a) and (b) of that article requires a clear degree of individualisation. While it is admittedly true that collective factors play a significantrole in the application of Article 15(c) of the Directive, in that the person concernedbelongs, like other people, to a circle of potential victims of indiscriminate violence insituations of international or internal armed conflict, it is nevertheless the case that that provision must be subject to a coherent interpretation in relation to the other twosituations referred to in Article 15 of the Directive and must, therefore, be interpretedby close reference to that individualisation.

39 In that regard, the more the applicant is able to show that he is specifically affected byreason of factors particular to his personal circumstances, the lower the level ofindiscriminate violence required for him to be eligible for subsidiary protection.

40 Moreover, it should be added that, in the individual assessment of an application forsubsidiary protection, under Article 4(3) of the Directive, the following may be takeninto account:

— the geographical scope of the situation of indiscriminate violence and the actualdestination of the applicant in the event that he is returned to the relevant country,as is clear from Article 8(1) of the Directive, and

I - 955


— the existence, if any, of a serious indication of real risk, such as that referred to inArticle 4(4) of the Directive, an indication in the light of which the level ofindiscriminate violence required for eligibility for subsidiary protection may belower.

41 Lastly, in the case in the main proceedings, it should be borne in mind that, althoughArticle 15(c) of the Directive was expressly transposed into Netherlands law only afterthe facts giving rise to the dispute before the referring court, it is for that court to seek tocarry out an interpretation of national law, in particular of Article 29(1)(b) and (d) of theVw 2000, which is consistent with the Directive.

42 According to settled case-law, in applying national law, whether the provisions inquestion were adopted before or after the directive, the national court called upon tointerpret it is required to do so, as far as possible, in the light of the wording and thepurpose of the directive in order to achieve the result pursued by the latter and therebycomply with the third paragraph of Article 249 EC (see, inter alia, Case C-106/89Marleasing [1990] ECR I-4135, paragraph 8, and Case C-188/07 Commune de Mesquer [2008] ECR I-4501, paragraph 84).

43 Having regard to all of the foregoing considerations, the answer to the questionsreferred is that Article 15(c) of the Directive, in conjunction with Article 2(e) thereof,must be interpreted as meaning that:

— the existence of a serious and individual threat to the life or person of an applicantfor subsidiary protection is not subject to the condition that that applicant adduceevidence that he is specifically targeted by reason of factors particular to hispersonal circumstances;

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44

ELGAFAJI

— the existence of such a threat can exceptionally be considered to be establishedwhere the degree of indiscriminate violence characterising the armed conflicttaking place — assessed by the competent national authorities before which anapplication for subsidiary protection is made, or by the courts of a Member State towhich a decision refusing such an application is referred — reaches such a high levelthat substantial grounds are shown for believing that a civilian, returned to therelevant country or, as the case may be, to the relevant region, would, solely onaccount of his presence on the territory of that country or region, face a real risk ofbeing subject to that threat.

It should also, lastly, be added that the interpretation of Article 15(c) of the Directive, inconjunction with Article 2(e) thereof, arising from the foregoing paragraphs is fullycompatible with the ECHR, including the case-law of the European Court of HumanRights relating to Article 3 of the ECHR (see, inter alia, N.A. v. the United Kingdom, § 115 to 117 and the case-law cited).

Costs


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45


On those grounds, the Court (Grand Chamber) hereby rules:

Article 15(c) of Council Directive 2004/83/EC of 29 April 2004 on minimumstandards for the qualification and status of third country nationals or statelesspersons as refugees or as persons who otherwise need international protectionand the content of the protection granted, in conjunction with Article 2(e) thereof,must be interpreted as meaning that:

— the existence of a serious and individual threat to the life or person of anapplicant for subsidiary protection is not subject to the condition that thatapplicant adduce evidence that he is specifically targeted by reason of factorsparticular to his personal circumstances;

— the existence of such a threat can exceptionally be considered to be establishedwhere the degree of indiscriminate violence characterising the armed conflicttaking place — assessed by the competent national authorities before which anapplication for subsidiary protection is made, or by the courts of a MemberState to which a decision refusing such an application is referred — reaches such a high level that substantial grounds are shown for believing that acivilian, returned to the relevant country or, as the case may be, to the relevantregion, would, solely on account of his presence on the territory of that countryor region, face a real risk of being subject to that threat.

[Signatures]

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Case C-483/07 P

Galileo Lebensmittel GmbH & Co. KGv

Commission of the European Communities

(Appeal — Action for annulment — Registration by the Commission of the domain ‘galileo.eu’ — Fourth paragraph of Article 230 EC — Decision of individual concern to a

natural or legal person — Action manifestly unfounded)

Order of the Court (Sixth Chamber), 17 February 2009 . . . . . . . . . I - 962

Summary of the Order

1. Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them(Art. 230, fourth para., EC)

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SUMMARY — CASE C-483/07 P

2. Community law — Principles — Right to effective judicial protection

1. Natural or legal persons can claim to beconcerned individually only if the contested provision affects them by reason of certain attributes which are peculiar to them or by reason of circum-stances in which they are differentiated from any other person and by virtue ofthese factors distinguishes them individu-ally just as in the case of the addressee of adecision. Where a contested measure affects a group of persons who were identified or identifiable when that measure was adopted by reason of criteriaspecific to the members of the group, thosepersons might be individually concernedby that measure inasmuch as they formpart of a limited class of traders. On thatquestion, the number and the identity ofthe persons potentially concerned by a Commission decision reserving an internetdomain name for use by the Communityinstitutions and bodies could not be known definitively or even be determined. According to the procedure provided forin Regulation No 874/2004 laying downpublic policy rules concerning the imple-mentation and functions of the ‘.eu’ TopLevel Domain and the principles governingregistration, each domain name on the listis reserved not merely in regard to holdersof prior rights but also in regard to thegeneral public.

Similarly, the question whether the persons concerned by that decision are

identified or identifiable is to be assessed at the date on which the decision at issue was adopted.

The fact that a person participates in theprocess by which a Community measure isadopted does not differentiate him indi-vidually in regard to the measure in question except where Community ruleshave provided procedural guarantees in favour of that person. Thus, once a provision of Community law requiresthat, in adopting a decision, a proceduremust be followed in which a natural or legal person may possibly claim rights, including the right to be heard, the special legal position which that personenjoys has the effect of differentiating himindividually within the meaning of the fourth paragraph of Article 230 EC. Although it is true that Regulation No 874/2004 provides for a period of early and reserved registration ofdomain names in favour of holders of priorrights, it provides no procedural guaranteewhich may be analysed as a vested right.Consequently, an applicant cannot rely onthe provisions of that regulation to arguethat they ‘differentiate’ him within the

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GALILEO LEBENSMITTEL v COMMISSION

meaning of the fourth paragraph of concern and whose interests could not Article 230 EC. therefore be affected by that measure

cannot invoke the right to judicial protec-tion in relation to that decision.

(see paras 41-43, 50, 53, 54)

2. An individual to whom a Commission decision is not of direct and individual (see para. 60)

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

ORDER OF THE COURT (Sixth Chamber)

17 February 2009 *

In Case C-483/07 P,

APPEAL under Article 56 of the Statute of the Court of Justice, brought on 5 November2007,

Galileo Lebensmittel GmbH & Co. KG, established in Trierweiler (Germany), represented by K. Bott, Rechtsanwalt,

appellant,

the other party to the proceedings being:

Commission of the European Communities, represented by G. Braun and E. Montaguti, acting as Agents, with an address for service in Luxembourg,

defendant at first instance,


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THE COURT (Sixth Chamber),

composed of J.-C. Bonichot (Rapporteur), President of the Chamber, P. Kūris and L. Bay Larsen, Judges,

Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Grass,

after hearing the Advocate General,

makes the following

Order

1 By its appeal, Galileo Lebensmittel GmbH & Co. KG (‘Galileo Lebensmittel’ or ‘the appellant’) seeks the setting aside of the order of 28 August 2007 in Case T-46/06Galileo Lebensmittel v Commission (‘the order under appeal’), by which the Court ofFirst Instance dismissed as inadmissible the action for annulment of the Commission’s decision to reserve — pursuant to Article 9 of Commission Regulation (EC) No 874/2004 of 28 April 2004 laying down public policy rules concerning the implementation and functions of the.eu Top Level Domain and the principles

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

governing registration (OJ 2004 L 162, p. 40) — the internet domain name ‘galileo.eu’ as a.eu Top Level Domain (‘TLD’) for use by the Community institutions and bodies (‘the contested decision’).

Legal context

2 The legal framework consists of two regulations, namely, a basic regulation, Regulation(EC) No 733/2002 of the European Parliament and of the Council of 22 April 2002 onthe implementation of the.eu Top Level Domain (OJ 2002 L 113, p. 1), and an implementing regulation, Regulation No 874/2004.

Regulation No 733/2002

3 Article 5 of Regulation No 733/2002, entitled ‘Policy framework’, provides as follows:

‘1. After consulting the Registry and following the procedure referred to in Article 6(3),the Commission shall adopt public policy rules concerning the implementation andfunctions of the.eu TLD and the public policy principles on registration. Public policyshall include:

(a) an extra-judicial settlement of conflicts policy;

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(b) public policy on speculative and abusive registration of domain names includingthe possibility of registrations of domain names in a phased manner to ensureappropriate temporary opportunities for the holders of prior rights recognised orestablished by national and/or Community law and for public bodies to registertheir names;

(c) policy on possible revocation of domain names, including the question of bona vacantia;

(d) issues of language and geographical concepts;

(e) treatment of intellectual property and other rights.

2. Within three months of the entry into force of this Regulation, Member States maynotify to the Commission and to the other Member States a limited list of broadly-recognised names with regard to geographical and/or geopolitical concepts whichaffect their political or territorial organisation that may either:

(a) not be registered, or

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

(b) be registered only under a second level domain according to the public policy rules.

The Commission shall notify to the Registry without delay the list of notified names towhich such criteria apply. The Commission shall publish the list at the same time as itnotifies the Registry.

Where a Member State or the Commission within 30 days of publication raises anobjection to an item included in a notified list, the Commission shall take measures, inaccordance with the procedure referred to in Article 6(3), to remedy the situation.

…’

Under Article 7 of Regulation No 733/2002, ‘[t]he Community shall retain all rightsrelating to the.eu TLD including, in particular, intellectual property rights and otherrights to the Registry databases required to ensure the implementation of this Regulation and the right to re-designate the Registry’.

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4


Regulation No 874/2004

5 In the preamble to Regulation No 874/2004, it is stated that that regulation is based on‘Regulation … No 733/2002 …, and in particular Article 5(1) thereof ’.

6 Recital 9 in the preamble to Regulation No 874/2004 states that:

‘A Member State should be authorised to designate an operator that will register as adomain name its official name and the name under which it is commonly known.Similarly, the Commission should be authorised to select domain names for use by theinstitutions of the Community, and to designate the operator of those domain names.The Registry should be empowered to reserve a number of specified domain names forits operational functions.’

7 Article 9 of Regulation No 874/2004, entitled ‘Second level domain name for geographical and geopolitical names’, provides as follows:

‘Registration of geographical and geopolitical concepts as domain names in accordancewith Article 5(2)(b) of Regulation (EC) No 733/2002 may be provided for by a MemberState that has notified the names. This may be done under any domain name that hasbeen registered by that Member State.

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8

ORDER OF 17. 2. 2009 — CASE C-483/07 P

The Commission may ask the Registry to introduce domain names directly under the.eu TLD for use by the Community institutions and bodies. After the entry into force ofthis Regulation and not later than a week before the beginning of the phasedregistration period provided for in Chapter IV, the Commission shall notify the Registryof the names that are to be reserved and the bodies that represent the Communityinstitutions and bodies in registering the names.’

Article 10(1) of Regulation No 874/2004 states that:

‘Holders of prior rights recognised or established by national and/or Community lawand public bodies shall be eligible to apply to register domain names during a period ofphased registration before general registration of.eu domain starts.

“Prior rights” shall be understood to include, inter alia, registered national and community trademarks, geographical indications or designations of origin, and, in asfar as they are protected under national law in the Member State where they are held:unregistered trademarks, trade names, business identifiers, company names, familynames, and distinctive titles of protected literary and artistic works.

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…’

9 The third subparagraph of Article 12(2) of Regulation No 874/2004 provides as follows:

‘During the first part of phased registration, only registered national and Communitytrademarks … may be applied for as domain names...’

10 Under Article 22(1) of Regulation No 874/2004:

‘An [alternative dispute resolution] procedure may be initiated by any party where:

…

(b) a decision taken by the Registry conflicts with this Regulation or with Regulation(EC) No 733/2002.’

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11

ORDER OF 17. 2. 2009 — CASE C-483/07 P

Facts

The background to the dispute was set out as follows in paragraphs 11 to 16 of the orderunder appeal:

‘International system of internet domains

11 The internet Domain Name System (DNS) consists of a registry with a hierarchicalstructure which [contains] the names of all domains and the computers connectedwith them which are registered for certain undertakings and persons using theinternet. The domain name is an electronic text which brings the internet user to agiven page. The [TLD] is the part of the domain name on the right, after the last dotin the name. It designates the highest level of the geographical and organisationalstructure of the internet domain name system used for addresses. On the internet,the TLD is either the ISO two-letter country code or an abbreviation in English, forexample,‘.com’,‘.net’ or ‘.org’. The allocation of codes for the various TLD names (forexample, the ISO country code ‘.lu’ for Luxembourg) is coordinated by the body responsible for the allocation of internet names and addresses, the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit corporationincorporated under US law.

12 On the basis of that system, the ICANN Board of Directors authorised the allocationof the new “.eu” TLD on 21 May 2005 and authorised the President of ICANN toconclude an agreement with the European Registry for Internet Domains (EURid).EURid is a non-profit association incorporated under Belgian law which was

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designated by the Commission to manage the “.eu” TLD (see Commission Decision2002/375/EC of 21 May 2003 on the designation of the.eu Top Level DomainRegistry (OJ 2003 L 128, p. 29)).

Background to the dispute

13 Galileo Lebensmittel holds a licence, dated 13 February 2006, for the exclusive use ofvarious trade marks registered on behalf of IFD Italian Food Distribution SA,established at Mertert (Luxembourg), including the word mark Galileo, registeredwith the German Patent and Trade Mark Office under number 2071982. IFD Italian Food Distribution, the holding company which owns Galileo Lebensmittel, does notengage in any business activities.

14 On 1 December 2005, Galileo Lebensmittel applied to EURid on the basis ofArticle 10(1) of Regulation No 874/2004 and through a German undertaking, 1&1Internet AG, for registration of the domain name “galileo.eu”. On 7 December 2005, the 1&1 internet registration bureau lodged the application for registration withEURid electronically.

15 The applicant also applied for registration of the domain name “galileo-food.eu”. EURid acknowledged receipt of that application, but not of the application relatingto the domain name “galileo.eu”.

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16 EURid did not grant the application, nor did it acknowledge receipt thereof, becausethe domain name “galileo.eu” had been reserved for the Commission since 7 November 2005. EURid informed the applicant accordingly on 2 February 2006. Inits message, EURid states that it had duly reserved that domain name on the basis ofArticle 9 of Regulation No 874/2004. That reservation had not been decided on byEURid but by the Commission. Given that the latter had reserved the domain name“galileo.eu”, note was no longer taken of the order in which applications forregistration of that domain name were received.’

The action before the Court of First Instance and the order under appeal

12 On 13 February 2006, Galileo Lebensmittel brought an action before the Court of FirstInstance for annulment of the Commission’s decision to reserve the domain name ‘galileo.eu’ for use by the Community institutions and bodies.

13 By the order under appeal, the Court of First Instance dismissed the action as inadmissible on the ground that the decision, which was not addressed to GalileoLebensmittel, was also not ‘of individual concern’ to it, within the meaning of the fourth paragraph of Article 230 EC.

The Court of First Instance referred to the case-law according to which the fact that it ispossible to determine more or less precisely the number, or even the identity, of thepersons to whom a measure applies does not mean that that measure must be regarded

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14


as being of individual concern to those persons so long as it is established that themeasure applies to them by virtue of an objective legal or factual situation definedtherein.

15 The Court of First Instance went on to point out that, in order for the contestedmeasure to be of individual concern to Galileo Lebensmittel, that company had to be amember of a limited class of traders and it had to be entitled to particular protection.The Court of First Instance ruled that neither of those conditions was satisfied in the case before it.

16 With regard to the matter of particular protection, the Court of First Instance held thatthere was no provision under which the Commission was required to take account ofGalileo Lebensmittel’s interests.

17 With regard to the question whether Galileo Lebensmittel was a member of a limitedclass of traders by reason of characteristics specific to the members of that class, theCourt of First Instance held that, at the time when the list was drawn up, the numberand identity of the persons likely to be concerned by the reservation was neitherdefinitively known nor even determinable.

Each domain name on the list is reserved not just vis-à-vis holders of prior rights, suchas the applicant claims to be, and public bodies, which is a very large group but which itis possible to identify, but also vis-à-vis the general public. Even supposing that noapplication is introduced during the period scheduled for early and privileged

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

registration, it is always possible that such an application may be introduced during theperiod scheduled for general registration.

19 The Court of First Instance stated in that regard that the date to be taken intoconsideration for the purposes of determining whether there was a limited class oftraders concerned was the date on which the contested measure was adopted.

Forms of order sought

20 In its appeal, Galileo Lebensmittel claims that the Court should:

— set aside the order under appeal and annul the contested decision;

— order the Commission to pay the costs of both sets of proceedings;

— in the alternative, set aside the order under appeal, refer the case back to the Courtof First Instance and order the Commission to pay the costs of the appeal proceedings.

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21


The Commission contends that the Court should:

— dismiss the appeal; and

— order the appellant to pay the costs.

The appeal

22 Under Article 119 of the Rules of Procedure, where an appeal is clearly inadmissible orclearly unfounded, the Court may at any time, acting on a report from the Judge-Rapporteur and after hearing the Advocate General, dismiss the appeal by reasonedorder.

23 In its appeal, Galileo Lebensmittel claims that the Court of First Instance vitiated theorder under appeal by an error of law in finding that the Commission’s decision to reserve the domain name ‘galileo.eu’ for use by the Community institutions and bodieswas not of individual concern to Galileo Lebensmittel.

The appeal may be analysed as raising, essentially, three pleas in law.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

The first plea, alleging that the contested decision is not in the nature of a regulation


25 The first plea alleges that the order under appeal does not take sufficient account of theparticular circumstances of the case and, in particular, of the fact that the contesteddecision is not a regulation.

26 The case-law referred to by the Court of First Instance relates to actions concerningCommunity regulations. However, the contested decision is not in the nature of aregulation; rather, it is a measure applying a regulation to a specific case. Moreover, thecontested decision is intended to protect the particular needs of the Commission withregard to domain names. The case-law used by the Court of First Instance is thereforeinappropriate to the present case.

The Commission replies that the contested decision is a measure of general scope,which produces different effects on the various persons affected by it, according to thedomain name for which registration was sought.

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27



28 The fourth paragraph of Article 230 EC makes it possible for any natural or legal personto bring an action for annulment in the case of two types of decision: (i) decisionsaddressed to that person and (ii) decisions which, albeit in the form of a regulation or ofa decision addressed to another, are of direct and individual concern to that person.

29 The essential distinguishing factor lies in whether or not the applicant for annulment isthe addressee of the decision being challenged. If that is not so, the applicant must, inorder to be able to bring an action for annulment, be directly and individuallyconcerned by that decision. The case-law on that concept of individual concern applies,therefore, where the decision being challenged is not addressed to the applicant.

30 Consequently, and without there being any need to determine the exact nature of thecontested decision, it is sufficient to note that it was not addressed to Galileo Lebensmittel. The Court of First Instance was fully entitled, therefore, in the case beforeit, to apply the case-law on the concept of individual concern for the purposes ofdetermining whether Galileo Lebensmittel had locus standi.

The first plea in law must therefore be rejected as clearly unfounded.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

The second plea, alleging that the order under appeal does not take account of the factthat the word mark which the appellant claims to own is entitled to particular protection


32 The appellant claims that the domain name ‘galileo.eu’constitutes a unique marketableeconomic asset and that the effect of the contested decision is essentially to withdraw itfrom the market without compensation.

33 As user and exclusive holder of a licence for the word mark Galileo, the appellant isindividually concerned by the contested decision, which infringes its trade mark rightsin that it prevents it from registering the domain name ‘galileo.eu’ and, to that extent, the order under appeal is, according to the appellant, vitiated by an error of law.

34 The appellant relies in that regard on the case-law flowing from Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207 and also refers to Case C-309/89 Codorniu v Council [1994] ECR I-1853, as well as the Opinion of the Advocate General in Case C-125/06 P Commission v Infront WM [2008] ECR I-1451).

35 The appellant adds that the Court of First Instance proceeded, incorrectly, to assess thecriterion of individual concern in the light of the factual and legal position at the timewhen the contested decision was adopted, and maintains that there is no reason whyindividual concern should not be assessed in the light of circumstances subsequent tothat date.

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Lastly, the appellant claims that Regulation No 874/2004 gives it, as the holder of theGerman word mark Galileo, a special legal position in the context of the registrationprocedure. The appellant relies in that regard on recitals 6 and 16 in the preamble toRegulation No 733/2002 and on Article 5(1)(b) thereof, as well as on recital 11 in thepreamble to Regulation No 874/2004 and on Articles 10(1) and (2) and 12(2) thereof.

37 The appellant maintains that the purpose of those provisions is to protect trade markholders as regards the possibility of registering, as a top level ‘.eu’ domain name, their name as protected under trade mark law. Regulation No 874/2004 arranges for thephase during which registration is open to the general public to be preceded by aregistration phase which is reserved for the holders of prior rights. That constitutes aprivileged position as compared with the situation of applicants who, like the Commission, do not hold prior rights.

38 The Commission contends that the appellant may well be affected by the contesteddecision, but no more so than other traders, and that it cannot claim to be ‘individually’affected.

39 In addition, the Commission contends that the provisions relied on by the appellant donot place it in a special legal position in the context of the procedure for registering atrade mark. The Commission adds that the measure that the appellant is seeking tochallenge is not the contested decision, but Regulation No 874/2004 itself, and that thetime-limits for bringing an action for annulment of that regulation have expired.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

Lastly, the Commission contends that the appellant holds no exclusive right in relationto the name ‘Galileo’, which appears in at least 60 Community trade marks, 29 of whichcontain only that name.


41 Natural or legal persons can claim to be concerned individually only if the contestedprovision affects them by reason of certain attributes which are peculiar to them or byreason of circumstances in which they are differentiated from any other person and byvirtue of those factors distinguishes them individually just as in the case of the addresseeof a decision (Case 25/62 Plaumann v Commission [1963] ECR 95, at p. 107).

42 As was pointed out in the order under appeal, the Court has held in that regard that,where a contested measure affects a group of persons who were identified or identifiable at the time when that measure was adopted, by reason of criteria specific tothe members of the group, those persons may be individually concerned by thatmeasure inasmuch as they form part of a limited class of traders (Piraiki-Patraiki and Others v Commission, paragraph 31, and Joined Cases C-182/03 and C-217/03 Belgium and Forum 187 v Commission [2006] ECR I-5479, paragraph 60).

On that point, the Court of First Instance was fully entitled to hold that the number andthe identity of the persons potentially concerned by the reservation of the domain namewas neither definitively known nor even determinable. The Court of First Instanceproceeded on the basis of a correct analysis of the procedure provided for in Regulation

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No 874/2004 when it pointed out that each domain name on the list is reserved notmerely vis-à-vis holders of prior rights but also vis-à-vis the general public.

44 In that regard, the appellant cannot compare its situation with the circumstances underconsideration in Piraiki-Patraiki and Others v Commission. In that judgment, the Courtaccepted as admissible an action for the annulment of a Commission decision —authorising a Member State to introduce protective measures with regard to imports ofa product — brought by applicants who, before the adoption of that decision, hadentered into contracts for the sale of the product concerned, performance of whichcould not be carried out, in whole or in part, because of that decision. In the presentcase, the contested decision in no way impedes the performance of contracts to whichthe appellant is a party. Accordingly, the situation on which it relies cannot give rise tothe application of the case-law developed in Piraiki-Patraiki and Others v Commission.

45 Nor can the appellant rely on the fact that, in Codorniu v Council, the Court recognised,in favour of the company concerned in that case, the existence of a situation whichdifferentiated that company from all other traders with regard to a legislative provisionof general scope, inasmuch as that provision ultimately prevented the company fromusing its figurative mark in commerce. It is sufficient to point out in that regard that thecontested decision does not prevent the appellant from using its trade mark, whichmeans that its situation cannot be compared with that under consideration in Codorniu v Council.

46 Similarly, although it is possible under the case-law for a person to be regarded asindividually concerned by a measure because that person forms part of a limited class oftraders, where the measure alters rights which the person had acquired prior to itsadoption (see Joined Cases 106/63 and 107/63 Toepfer and Getreide-Import Gesellschaft v Commission [1965] ECR 405, at 411, and Commission v Infront, paragraph 72), the contested decision does not, in the present case, alter any acquiredright to the disadvantage of the appellant, since the only right on which the appellantrelies relates to the Galileo trade mark, which is governed by different rules.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

47 Lastly, although the appellant claims, essentially, that the contested decision seriouslyimpairs its economic interests, that fact alone is not sufficient to make the appellant‘individually concerned’ within the meaning of Plaumann v Commission, and as a consequence to call into question the analysis made by the Court of First Instance,which merely applied that case-law.

48 In those circumstances, there is no basis for the appellant’s claim that the Court of First Instance erred in considering that it did not form part of a ‘limited class of traders’within the meaning of the case-law referred to above.

49 The first branch of the second plea in law must therefore be rejected as clearlyunfounded.

50 Similarly, the Court of First Instance was fully entitled to assess the question whetherthe persons concerned by the contested decision were identified or identifiable byreference to the date on which that decision was adopted (see, by analogy, Case 97/85Union Deutsche Lebensmittelwerke and Others v Commission [1987] ECR 2265, paragraph 11).

51 The second branch of the second plea in law is therefore clearly unfounded.

52 Lastly, the appellant cannot claim that, in the order under appeal, the Court of FirstInstance failed to have due regard for the right to particular protection which theappellant claims to enjoy on the basis of the procedure under which the contesteddecision was adopted.

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53 The Court has held that the fact that a person participates in the process by which aCommunity measure is adopted does not distinguish that person individually withregard to the measure in question unless provision has been made under the Community rules for procedural guarantees in favour of that person. Thus, where aprovision of Community law requires that, for the purposes of adopting a decision, aprocedure must be followed in respect of which a natural or legal person may assertrights, such as the right to be heard, the special legal position which that person enjoyshas the effect of distinguishing him individually for the purposes of Article 230 EC (see,by analogy, Case 191/82 Fediol v Commission [1983] ECR 2913, paragraph 31, and Case C-263/02 P Commission v Jégo-Quéré [2004] ECR I-3425, paragraphs 47 and 48).

54 In the present case, although Regulation No 874/2004 admittedly sets aside in favour ofholders of prior rights, such as the appellant claims to be, a period for the early andprivileged registration of domain names, it provides no procedural guarantee whichcould be construed as a right in favour of Galileo Lebensmittel. Consequently, theappellant cannot rely on the provisions of Regulation No 874/2004 in order to arguethat they ‘distinguish’ it for the purposes of the fourth paragraph of Article 230 EC.

55 The third branch of the second plea in law must therefore be rejected as clearlyunfounded.

56 It follows from the foregoing that, independently of the question whether the appellantwas indeed the holder of a prior right at the time of applying for the ‘gallileo.eu’ domain name, there is in any event no basis for the appellant’s claim that that name is entitled to particular protection, in order to argue that the Court of First Instance erred in holdingthat the contested decision was not of individual concern to it.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

The three branches of the second plea in law must therefore be rejected as clearlyunfounded.

The third plea, alleging a right to effective judicial protection


58 The appellant claims that, by dismissing its action as inadmissible, the Court of FirstInstance acted in breach of the appellant’s right to effective judicial protection. Theappellant was deprived of any legal remedy against the contested decision, whetherbefore the national courts or before the Community judicature.


59 The conditions for the admissibility of an action for annulment cannot be set aside onthe basis of the applicant’s interpretation of the right to effective judicial protection (see,to that effect, Case C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677, paragraph 44; Commission v Jégo-Quéré, paragraph 36; the order of 8 March 2007 in Case C-237/06 P Strack v Commission, paragraph 108; and the order of 13 March 2007 in Case C-150/06 P Arizona Chemical and Others v Commission, paragraph 40).

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60


Accordingly, an individual to whom a Commission decision is not of direct andindividual concern and whose interests are therefore unaffected by that measure cannotinvoke the right to judicial protection in relation to that decision (see, to that effect, theorder of 1 October 2004 in Case C-379/03 P Pérez Escolar v Commission, paragraph 41).

61 Since the appellant has failed to establish that the contested decision is of individualconcern to it, there is no basis for its claim that the order under appeal undermines itsright to effective judicial protection.

62 The third plea in law must therefore be rejected as clearly unfounded.

63 Since none of the pleas in law relied upon are well founded, the appeal must bedismissed.

Costs

64 Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedingspursuant to Article 118 of those rules, the unsuccessful party is to be ordered to pay thecosts if they have been applied for in the successful party’s pleadings. As the Commission has applied for costs to be awarded against Galileo Lebensmittel and thelatter has been unsuccessful, it must be ordered to pay the costs.

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ORDER OF 17. 2. 2009 — CASE C-483/07 P

On those grounds, the Court (Sixth Chamber) hereby orders:

1. The appeal is dismissed.

2. Galileo Lebensmittel GmbH & Co. KG is ordered to pay the costs.

[Signatures]

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Case C-552/07

Commune de Sausheimv

Pierre Azelvandre

(Reference for a preliminary rulingfrom the Conseil d’État (France))

(Directive 2001/18/EC — Deliberate release of genetically modified organisms —Location of release — Confidentiality)

Opinion of Advocate General Sharpston delivered on 22 December 2008 . . . I - 991Judgment of the Court (Fourth Chamber), 17 February 2009 . . . . . . . I - 1007


1. Environment — Deliberate release of genetically modified organisms — Directive 2001/18 (European Parliament and Council Directive 2001/18, Art. 25(4))

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2. Environment — Deliberate release of genetically modified organisms — Directive 2001/18 (European Parliament and Council Directive 2001/18, Art. 25(4))

1. The system of transparency established byDirective 2001/18 on the deliberate releaseinto the environment of genetically modi-fied organisms and repealing Direct-ive 90/220 is reflected in particular in Articles 9, 25(4) and 31(3) thereof. By thoseprovisions, the Community legislature hassought to establish not only procedures forconsultation of the general public and, ifappropriate, of certain groups on a delib-erate release of genetically modified organ-isms (GMOs), but also a right of public access to information relating to that operation and the establishment of publicregisters which must include informationon the location of every release of GMOs.

It follows also from those provisions thatthe rights set out in them are closely relatedto the information which must be providedin the context of the notification procedurerequired to be followed for every deliberaterelease of GMOs for any purpose otherthan that of being placed on the market, inaccordance with Articles 5 to 8 of Direct-ive 2001/18.

It follows from the connection therebyestablished between the notification proce-dure and the access to information relatingto the proposed deliberate release of GMOs that, save in the case of exemptionsunder that directive, the relevant publicmay request the disclosure of all informa-tion submitted by the notifier in the context of the authorisation procedure relating to that release.

The Member States must take account of all of those factors in their obligations under Article 4(1) and (2) of Direct-ive 2001/18 to ensure that all appropriatemeasures are taken to avoid adverse effects on human health and the environment which might arise from the deliberate release of GMOs and to carry out an appropriate assessment of possible risksfor the environment deriving from such anoperation.

As regards the level of detail of informationto provide, as indicated in Annex III to thatdirective, it varies according to the natureof the proposed deliberate release of GMOs.

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AZELVANDRE

Therefore, the factors relating to the geographical location of a deliberate release of GMOs which must be included in the notification thereof fulfil require-ments intended to determine the concrete effects of such an operation on the environment. The information concerningthe site of such a release must therefore be defined according to the nature of eachoperation and of its possible impact on theenvironment.

Consequently, the ‘location of release’within the meaning of the first indent ofArticle 25(4) of Directive 2001/18 is determined by all the information relatingto the location of the release submitted bythe notifier to the competent authorities ofthe Member State on whose territory thatrelease is to take place in the context of theprocedures referred to in Articles 6 to 8, 13,17, 20 or 23 of that directive.

(see paras 30, 32, 34, 35, 38, 39, operativepart 1)

law cannot be relied on to oppose the disclosure of the information set out in Article 25(4) of Directive 2001/18 on thedeliberate release into the environment of genetically modified organisms and repealing Directive 90/220, including inparticular that relating to the location ofrelease.

Article 25(1) to (3) of Directive 2001/18creates a system which precisely definesthe confidentiality which can apply to thevarious information that is disclosed in the context of the notification procedures andexchange of information provided for bythat directive.

By that body of provisions, Direct-ive 2001/18 therefore established ex-haustive rules relating to the right of public access in the area considered andthe existence of any exceptions to that right.

As regards the information relating to thelocation of release, under the first indent of

2. An exception relating to the protection of Article 25(4) of that directive, it can in nopublic order or other interests protected by case be kept confidential.

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That interpretation of Directive 2001/18 issubstantiated by the requirement, referredto in the third indent of Article 25(4)thereof, that information concerning theenvironmental risk assessment may not bekept confidential. Indeed, such an assess-ment is possible only with full knowledgeof the proposed release, because, withoutsuch information, it would not be possible

validly to assess the potential effects of adeliberate release of genetically modifiedorganisms on human health and the environment.

(see paras 45, 47-49, 51, 55, operativepart 2)

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AZELVANDRE

OPINION OF ADVOCATE GENERALSHARPSTON

delivered on 22 December 2008 1

1. This reference for a preliminary ruling from the French Conseil d’État concerns access to information regarding the locationsof a series of field trials for genetically modified organisms (‘GMOs’), where the authorities consider that there may be a public order risk if such information were tobe released.

Factual background

2. In April 2004, Mr Azelvandre requestedthe Mayor of Sausheim to disclose the publicnotice, planting record 2 and prefectoral covering letter for each GMO field trial which had taken place within the communeof Sausheim. He also asked to be sent the information file on each new GMO field trial taking place within the commune in 2004.

1 — Original language: English 2 — In French: ‘fiche d’implantation’.

3. The Mayor did not respond to this request.Mr Azelvandre therefore applied to the Committee on Access to Administrative Documents. The Committee issued a favour-able opinion on the production of the publicnotice and first page of the prefectoralcovering letter, but issued an unfavourableopinion on the production of a copy of theplanting record and the map showing wherethe field trials had occurred, on the groundthat disclosure would prejudice the privacyand safety of the farmers concerned. The Committee declared inadmissible the appli-cation for disclosure of the information files relating to the releases taking place in 2004.

4. The Mayor duly produced the publicnotices relating to the five field trials whichhad already been carried out within the Commune, and the prefectoral coveringletters for two of them. Mr Azelvandre then appealed to the Strasbourg AdministrativeTribunal, which annulled the Mayor’s implicitdecision to refuse to produce the prefectoralcorrespondence relating to the other threefield trials and the planting records (save forinformation as to names) relating to all fivefield trials, and ordered the Mayor to producethose documents.

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5. The commune appealed to the Conseil registered reference number or numbersd’État against the Tribunal’s decision. The of the location of the release?’Conseil d’État has referred the followingquestions to the Court of Justice:

‘(1) Must “the location where the release” of genetically modified organisms “will be carried out” which, under Article 19 of Council Directive 90/220/EEC of 23 April 1990 on the deliberate releaseinto the environment of genetically modified organisms, 3 may not be keptconfidential, mean the registered parcelof land or a larger geographical area corresponding either to the commune inwhich the release occurs or to an even greater area such as a canton or depart-ment?

(2) If the location is to be understood as requiring designation of the registeredparcel of land, can an exception relatingto the protection of public order or otherconfidential matters protected by lawpreclude, on the basis of Article 95 [EC],or of Directive 2003/4/EC of 28 January2003 on public access to environmentalinformation 4 or of a general principle ofCommunity law, the disclosure of the

3 — OJ 1990 L 117, p. 15. 4 — OJ 2003 L 41, p. 26.

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Preliminary remarks

The applicable legislation

6. Mr Azelvandre made his request in April2004. At that time Council Direct-ive 90/220/EEC (‘Directive 90/220’) had been replaced by Directive 2001/18/EC (‘Dir-ective 2001/18’), 5 and Directive 2003/4/EC (‘Directive 2003/4’) had not yet replaced itspredecessor, Council Directive 90/313/EEC (‘Directive 90/313’). 6

7. I therefore suggest that in answering thequestions submitted by the Conseil d’État, the Court should base its answers upon Direct-

5 — Directive of the European Parliament and of the Council of12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing CouncilDirective 90/220/EEC (OJ 2001 L 106, p. 1).

6 — Directive of 7 June 1990 on the freedom of access to information on the environment (OJ 1990 L 158 p. 56).

AZELVANDRE

ive 2001/18 7 and Directive 90/313. 8 As will become clear later, since there is for the most part no difference between the relevant provisions of the earlier and later directives,the views that I here express would apply,mutatis mutandis, to Directives 90/220 and2003/4.

The type of release

8. From both the wording of the referenceand the national case file, it is clear that the releases at issue are field trials, falling withinthe scope of part B of Directive 2001/18.

9. Furthermore, the referring court has provided the Court of Justice with the identitynumbers for those field trials. The field trial reports 9 reveal that the trials concern maize, which is a ‘higher plant’ as defined by AnnexIII, belonging as it does to the spermatophytae (seed-producing) taxonomic group. The information required from the notifier during the authorisation process is thereforethat set out in Annex III B.

7 — In lieu of Directive 90/220. 8 — In lieu of Directive 2003/4. 9 — Available at:

http://www.ogm.gouv.fr/experimentations/evaluation_scien-tifique/cgb/avis_rapports/rapport_activite_1998/rapport_ac-tivite_1998.pdf.

Legal background

Treaty provisions

10. Article 95(4) EC provides that:

‘If, after the adoption by the Council … of a harmonisation measure, a Member State deems it necessary to maintain national provisions on grounds of major needs referredto in Article 30 [EC] … it shall notify theCommission of these provisions as well as thegrounds for maintaining them.’

11. The justifications set out in Article 30 ECinclude public security, the protection of health and life of humans or plants, and theprotection of industrial and commercial property.

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Directive 2001/18

12. Directive 2001/18 regulates the release ofGMOs into the environment. 10 It establishes the procedure which must be followed wherea party wishes to effect a deliberate releaseinto the environment of GMOs.

13. Article 1 states that the directive’s objec-tive is ‘to approximate the laws, regulationsand administrative provisions of the MemberStates and to protect human health and theenvironment when … carrying out the delib-erate release into the environment of genet-ically modified organisms …’.

14. Article 2(3) defines ‘deliberate release’ as:

‘… any intentional introduction into the environment of a GMO or a combination of GMOs for which no specific containment measures are used to limit their contact with

10 — Directive 2001/18 repealed Directive 90/220 with effect from17 October 2002.

and to provide a high level of safety for thegeneral population and the environment.’

15. This description encompasses field trialsof GMOs.

16. Directive 2001/18 consists of four partsand a series of annexes. Part A sets out the obligations imposed on Member States whenauthorising the deliberate release of GMOsinto the environment. Parts B and C contain provisions detailing the authorisation proce-dure for a deliberate release for purposesother than placing GMOs on the market (partB), and for placing GMOs on the market as, orin, products (part C). Part D sets out a series offinal provisions, which, like those in part A, are generally applicable. The annexes give more specific details of the obligationsimposed under the main parts of the directive.

17. In part A, Article 4 sets out the generalauthorisation procedure which all notifiers must follow. In particular, it provides that:

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AZELVANDRE

‘1. … GMOs may only be deliberatelyreleased or placed on the market in conform-ity with part B or part C respectively.

…

2. Any person shall, before submitting a notification under part B or part C, carry outan environmental risk assessment. The infor-mation which may be necessary to carry outthe environmental risk assessment is laid down in Annex III.

…

4. Member States shall designate the compe-tent authority or authorities responsible forcomplying with the requirements of this Directive. The competent authority shall examine notifications under part B and partC for compliance with the requirements ofthis Directive and whether the assessment provided for in paragraph 2 is appropriate …’

18. Part B sets out the standard authorisation procedure for notifiers who wish to carry out(inter alia) field trials of GMOs. The proce-dure is detailed in Article 6. The relevant provisions of that article read as follows:

‘1. Without prejudice to Article 5 [which concerns medicinal substances and compounds for human use], any personmust, before undertaking a deliberate releaseof a GMO or of a combination of GMOs, submit a notification to the competentauthority of the Member State within whoseterritory the release is to take place.

2. The notification referred to in paragraph 1shall include:

(a) a technical dossier supplying the infor-mation specified in Annex III necessaryfor carrying out the environmental riskassessment of the deliberate release of a GMO or combination of GMOs …

…

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8. The notifier may proceed with the releaseonly when he has received the written consentof the competent authority, and in conformitywith any conditions required in this consent.

2. The notifier may indicate the information in the notification submitted under this Directive, the disclosure of which might harm his competitive position and which should therefore be treated as confidential. Verifiable justification must be given in such cases.

…’

19. Part D contains two provisions, Arti-cles 25 and 31(3), which impose duties on thenational authorities regarding information acquired during the authorisation process.

20. Article 25 deals with the confidentiality ofthe information submitted to the competentauthorities under the procedure set out in partB. It states that:

‘1. The Commission and the competentauthorities shall not divulge to third parties any confidential information notified or exchanged under this Directive and shall protect intellectual property rights relating to the data received.

3. The competent authority shall, after consultation with the notifier, decide which information will be kept confidential and shallinform the notifier of its decisions.

4. In no case may the following informationwhen submitted according to [inter alia, Article 6] … be kept confidential:

— … location of release …’ 11

11 — This provision corresponds to Article 19 of Directive 90/220,which formed the basis for the first question referred to theCourt of Justice by the Conseil d’État. The relevant material provisions of that article have not changed.

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21. Article 31(3) imposes a duty of publicity concerns a GMO other than a higher plant.upon the Member States. It provides that: Part B sets out the information required in

notifications concerning releases of higher plant GMOs.

‘Without prejudice to paragraph 2 and point ANo 7 of Annex IV[ 12],

(a) Member States shall establish public registers in which the location of the release of the GMOs under part B is recorded.’

22. Of the annexes to the directive, the present reference is only concerned with Annex III. That annex specifies the informa-tion to be notified to the national authorities during the authorisation process. It is dividedinto two parts. Part A sets out the informationto be submitted where the notification

12 — Both of which concern part C notifications.

23. Section E of Annex III B prescribes theinformation relating to the site of release thatis to be required by the competent nationalauthorities. In particular, paragraph 1 of section E specifies that a notifier must disclosethe ‘[l]ocation and size of the release site(s)’. 13

Directive 90/313

24. At the material time, Directive 90/313governed access to environmental informa-tion held by the public authorities of a Member State. 14

13 — By contrast, provision III B 1 of Annex III A, which prescribesthe information as to location which is to be submitted in the case of an application for a non-higher plant GMO, uses thephrasing ‘geographical location and grid reference of the sites[of the proposed releases]’. This phrasing is also used in Directive 90/220.

14 — It was replaced by Directive 2003/4 with effect from 14 February 2005.

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25. Article 1 of that directive states that its objective is to ‘ensure freedom of access to, and dissemination of, information on the environment held by public authorities andto set out the basic terms and conditions on which such information should be made available’.

26. Article 2(a) defines the scope of the directive. It provides that:

‘For the purposes of this Directive:

(a) “information relating to the environ-ment” shall mean any information … on the state of water, air, soil, fauna, flora, land and natural sites, and on activities …or measures adversely affecting, or likelyso to affect these, and on activities or measures designed to protect these, including administrative measures and environmental management pro-grammes’.

are to permit access to environmental infor-mation. It reads as follows:

‘1. Save as provided in this Article, MemberStates shall ensure that public authorities arerequired to make available information relating to the environment to any natural orlegal person at his request and without hishaving to prove an interest.

…

2. Member States may provide for a requestfor such information to be refused where it affects:

…

27. Article 3 of Directive 90/313 establishesthe framework within which Member States — public security,

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…

— material, the disclosure of which would make it more likely that the environmentto which such material related would be damaged.

…’

Procedure

28. The Commune de Sausheim, the French, Greek, Netherlands and Polish Governments and the Commission submitted written observations and made oral submissions at the hearing on 14 October 2008.

Analysis

29. The questions referred seek to clarify howthe directives which govern the release intothe environment of GMOs interact with the

directives which provide for access to envir-onmental information concerning those releases.

The first question

30. Directive 2001/18 is not an ‘access to information’ directive. Its primary purpose is to provide a harmonised legislative frame-work within which Member States mayauthorise releases of GMOs into the environ-ment. It establishes criteria for the case-by-case evaluation of the potential risks whichmay arise. The measures envisaged by thedirective are intended to ensure the safe (andeffective) development of industrial productswhich use GMOs. 15

31. To these ends, the directive obliges anyparty wishing to effect a release to provideinformation to the competent authorities ofthe Member State in which the proposedrelease would take place. The purpose of thisinformation is to enable those authorities to conduct an effective risk evaluation before deciding whether to authorise the notifier tobring its GMOs into contact with the environment.

15 — See recital 7.

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32. Once the authorities have the necessaryinformation to make an informed decision as to whether or not to authorise the release and have taken that decision, Directive 2001/18imposes certain secondary duties upon them,governing the further uses to which the information given by the notifier should beput.

33. One is a duty of public information. 16

However, the obligation to inform the publicis an ancillary obligation rather than one which arises independently.

34. Let us now examine the directive’s structure and contents more closely.

35. Parties wishing to release GMOs into theenvironment are obliged by Article 6 to notifythe competent national authorities and to submit a dossier of information, in order that those authorities can take an informed decision on whether or not to authorise the release.

16 — The recitals to the Aarhus Convention on Access to Information, Public Participation in Decision-Making andAccess to Justice in Environmental Matters, 2161 UNTS 447,strongly reflect the principle that transparency is desirable,notwithstanding that the majority of the public may not bescientific specialists.

36. Article 6 cross-refers to Annex III. That annex prescribes the information which thenotifier must provide. This includes, inter alia,information on the location of the release.

37. In the present case, it is the wording ofAnnex III B that is pertinent. 17

38. Section E, paragraph 1, of Annex III Bstates that notifiers must inform the compe-tent authorities of the ‘location and size of the release site(s)’.

39. Whilst Annex III A (which applies to non-higher plant GMOs) specifies that the notifiermust inform the competent authorities of the‘geographical location and grid reference’ of the intended sites of release, Annex III B appears to provide a less specific definition.

40. It seems to me that the explanation lies inthe purpose of the notification dossier. Thenotifier is required to give the competentauthorities the information that they require

17 — See points 8 and 9 above.

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in order to carry out an environmental risk 43. Article 25 sets out a number of groundsassessment before authorising the release. 18 that the notifier may invoke to request the

national authorities to refrain from disclosinginformation that it provided during the authorisation process outlined in Article 6 and detailed in Annex III.

41. The actual level of detail that those authorities will need will vary from case to case. 19 In some instances, it might be possibleto carry out a satisfactory environmental riskassessment when the location is disclosed at the level of a canton or commune. In other instances, only the exact co-ordinates maysuffice. 20

42. Once the competent national authoritieshave been given the information necessary toconduct an environmental risk assessment and authorise the release if appropriate, thedirective contains ancillary provisionsgoverning the subsequent use to which thatinformation should be put. 21

18 — See Article 4(2) of Directive 2001/18. 19 — The case-by-case approach is reflected in recitals 18 and 19. 20 — The Netherlands Government correctly notes that the degree

of precision to which a location can be pinpointed does notnecessarily correspond with the nomenclature of a piece ofland. A ‘parcelle’ may be small or quite large. The nomenclature will vary between the Member States. Theseelements provide further support for the view that Annex IIIB must be read as prescribing the degree of specificity of thelocation by reference to what is needed for the environmentalrisk assessment.

21 — Two of these provisions, Articles 9 and 24, operate withoutprejudice to Article 25. These provisions are therefore irrelevant for the purposes of this reference.

44. Article 25(4) sets out the limits of thisentitlement to protection. In particular, Article 25(4) states that in no circumstances can the ‘location of release’ be withheld from the public.

45. In my view, the term ‘location of release’in Article 25 is a descriptive phrase whichmust be read as referring back to the information on location which was requiredby the national authorities for the purposes ofthe environmental risk assessment during theauthorisation process in each particular case.

46. As Article 25 is of general application, it istherefore logical that Article 25(4) uses thegeneric term ‘location of release’ to encom-

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pass both situations where a less preciselocation was sufficient to satisfy the needs ofthe environmental risk assessment and situ-ations in which geographical location and gridreferences had to be provided. 22

47. Accordingly, I cannot accept that the term ‘location’ provides Member States with amargin of appreciation for the purposes ofdrawing a balance between public security and the public’s right to access information. 23

48. Article 25(4) should be read as meaningthat the Member State is obliged to disclosewhatever information as to location it possesses by application of Annex III. Moregenerally, the obligation that Direct-ive 2001/18 places on the competent nationalauthorities is to make public the informationwhich it received in order to carry out theenvironmental risk assessment and grant theauthorisation for the release (subject only tothe specific grounds of confidentiality indi-cated in Article 25(1)).

22 — The different language versions of Directive 2001/18 tend toshow a systematic use of a generic term in Article 25(4). See,for example, the Dutch, French, German, English and Spanish versions, which refer to place or location of thereleases, rather than making specific reference to the site orsites of release.

23 — Accordingly I reject the French submission that the mere factthat the majority of Member States have chosen to discloseonly the wider location of releases shows that the legislatorintended Article 25(4) to be construed as a margin of appreciation.

49. The interpretation that I propose has two consequences. First, national authorities cannot be obliged to disclose information that they do not hold. 24 Second, if those authorities are given information (even in thecourse of the authorisation process) which isnot necessary for the environmental risk assessment, that information will not fall within the scope of Annex III and they aretherefore not required under Direct-ive 2001/18 to release it to an inquiring party. 25

50. Article 25 cannot be construed as oper-ating as a filter upon the release of informa-tion as to location. Rather, it seems to me that Article 25 is to be read as follows. Article 25(1)places upon the Commission and the compe-tent authorities of the Member States two obligations: an obligation not to disclose tothird parties ‘confidential information notified or exchanged under the directive’ and an obligation to protect intellectual property rights relating to the data received. Article 25(2) and (3) then set out the processwhereby the scope of the material to be so

24 — The information they must hold is determined by the Member State’s obligation to fulfil its risk assessment duties effectively.

25 — They may, however, be required to release it under Directive 90/313; see infra, points 58 et seq.

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protected is to be determined. It follows that,in applying that process, the competent authorities exercise their judgment. 26 An exercise of judgment connotes some exerciseof discretion.

the release of the GMOs under part B is recorded’. 27 Clearly it would be impossible tocomply with that obligation if information onthe location of release could benefit from the confidentiality envisaged in Article 25(1).

51. In contrast, Article 25(4) states in termswhat may not be kept confidential. Here, anexercise of discretion or judgment is excluded.National authorities are not given a right tofilter the information listed in Article 25(4)and to decide which parts of (for example)plans for monitoring GMOs and for emer-gency response are not to be disclosed. On thecontrary; they are told expressly that ‘in no case’ shall that information be kept confiden-tial. In my view, where the competentauthorities have received, under the notifica-tion process, information in order to carry outthe environmental risk assessment that falls within a category identified in Article 25(4),they enjoy no discretion as to how that information is treated. It may not be kept confidential.

52. Further support for the view that, in particular, the location of release may in nocase be kept confidential comes from consid-ering the terms of Article 31(3)(a). That provision requires Member States to ‘estab-lish public registers in which the location of

26 — See the terms of Article 25(3): ‘shall decide which information shall be kept confidential’.

53. I conclude that under Directives 90/220and 2001/18, the competent authorities of theMember States are obliged to place in thepublic domain information as to the locationof the releases, to the same degree of precision as was necessary in order to perform the environmental risk assessment under the authorisation procedure.

The second question

54. Unlike Directive 2001/18 (which is primarily concerned with procedures for authorising the safe release of GMOs) thespecific purpose of Directive 90/313, as itstitle suggests, is to enable members of thepublic to access environmental informationheld by national authorities. The directive’s

27 — The term ‘location of release’ in Article 31 should be interpreted, in line with the principles used in interpretingthe term in Article 25(4), as referring to the location whichthe notifier is required under Annex III to disclose to thecompetent national authorities.

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framework facilitates access to information whilst providing a number of derogations enabling Member States, in some circum-stances, to refuse to disclose such informa-tion.

55. The purpose of these directives is to provide access to information which would not otherwise be disclosed. It is not to providea further basis for restricting public access toinformation which would otherwise be disclosed. 28

56. A Member State cannot invoke the provisions of Directives 90/313 and 2003/4in order to refuse access to information which should be in the public domain under Directives 2001/18 and 90/220.

57. Accordingly I reject the argument, putforward by the Commune de Sausheim andthe French, Greek and Polish Governments, that Article 25 of Directive 2001/18 providescertain grounds for restricting disclosure (intellectual property, competition, the

28 — See the first, second, fifth and ninth recitals to the directive.

economic interests of the notifier) whilst Article 3 of Directive 90/313 provides othergrounds (inter alia, public security). This argument reflects neither the structure of Directive 2001/18 nor the way in which itinteracts with the directives on access to environmental information. 29

58. Where a Member State’s authorities have more information than they are required todisclose under Directive 2001/18, Direct-ive 90/313 becomes relevant. 30 A request for access to such information may be made under the national provisions transposing Directive 90/313.

59. A Member State may, however, then invoke the reasons set out in Article 3(2) ofDirective 90/313 in order to justify a refusal todisclose information as to the location of

29 — See further my Opinion in Case C-345/06 Heinrich, currentlypending before the Court, at points 55 to 58 in which I express similar views about the structural relationshipbetween Article 254 EC and Regulation (EC) No 1049/2001of the European Parliament and of the Council of 30 May2001 regarding public access to European Parliament,Council and Commission documents (OJ 2001 L 145, p. 43).

30 — For example, suppose that it was not necessary for the purposes of the environmental risk assessment to know thegeographical co-ordinates of the intended field trials, but thatthe notifier disclosed those co-ordinates anyway in the courseof making an application in conformity with Annex III B.

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release, provided the other requirements ofthat article are met. Restriction on the grounds of public security (one of the grounds identified in Article 3(2)) would, inmy view, cover circumstances in which thedisclosure of the specific location of a releasewould lead to its unlawful destruction.

60. I am aware that the interpretation that Ihave put forward will, in some circumstances,leave the Member States concerned with no choice other than to disclose the exact location of the releases. At the hearing the French and Netherlands Governments reminded the Court that a detailed disclosure of location may lead to crops being destroyed.If such action were widespread, that mightslow the development of GMOs. Theyasserted that punitive measures taken afterthe event, such as criminal sanctions for cropdestruction, were not necessarily effective against ‘eco-warriors’.

61. Where access to information is given, thatmay imply accepting some enhanced risk oflower security. It is and remains open to theCommunity legislator to adjust the balancebetween promoting the development of GMOcrops and enhancing public access to envir-onmental information if experience suggeststhat the present balance is unworkable.

62. Moreover, Article 95 EC 31 permits a Member State that faces a particularly serious public order problem to maintain national measures setting stricter limits onpublic access to detailed information on therelease into the environment of GMOs. If a Member State were to exercise that optionand systematically disclose a less well-definedlocation, any more detailed information which it retained would fall under the scopeof Directive 90/313. It would then be possiblefor the State to refuse disclosure under the public security exception in those directives.

63. Any Member State wishing to maintainnational measures in such a way must, however, follow the mandatory procedure prescribed in Article 95 EC. The French Government has not availed itself of this possibility. 32

64. Finally, I am unaware of any generalprinciple of Community law upon which thecompetent national authorities could rely tojustify a refusal to disclose the information inquestion. No such principles were mentioned,still less invoked, during the course of theproceedings by any of the parties that submitted observations.

31 — The Treaty base for Directive 2001/18. Directive 90/220 wasbased on Article 100a of the EC Treaty (the precursor ofArticle 95 EC).

32 — Indeed, I note that the French legislator has recently passedLaw No 2008-595 of 25 June 2008 (JORF No 148 of 26 June2008, p. 10218), which obliges its authorities to disclose theexact location of GMO releases.

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Conclusion

65. I therefore suggest that the Court answer the two questions referred to it by theConseil d’État as follows:

(1) The ‘location’ where the release of genetically modified organisms will be carriedout which, under Article 25 of Directive 2001/18/EC of the European Parliamentand of the Council of 12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing Council Directive 90/220/EEC,may not be kept confidential, corresponds to the area indicated in the notificationsubmitted to the competent authorities of the Member State under the procedureset out in Article 6 of that directive.

(2) Member States may not rely on the exceptions relating to the protection of publicsecurity in Council Directive 90/313/EEC of 7 June 1990 on the freedom of accessto information on the environment to refuse the disclosure of information as to location whose disclosure is mandatory under Directive 2001/18.

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17 February 2009 *

In Case C-552/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Conseil d’État (France), made by decision of 21 November 2007, received at the Court on 11 December 2007, in the proceedings

Commune de Sausheim

Pierre Azelvandre,


composed of K. Lenaerts, President of the Chamber, T. von Danwitz, R. Silva de Lapuerta (Rapporteur), E. Juhász and J. Malenovský, Judges,

* Language of the case: French.

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Advocate General: E. Sharpston,Registrar: R. Şereş, Administrator,



— the Commune de Sausheim, by D. Le Prado, avocat,

— the French Government, by G. de Bergues and A.-L. During, acting as Agents,

— the Greek Government, by S. Papaioannou and V. Karra and by I. Chalkias, actingas Agents,

— the Netherlands Government, by C. Wissels and M. de Mol and by M. de Grave,acting as Agents,

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— the Polish Government, by M. Dowgielewicz and B. Majczyna, acting as Agents,

— the Commission of the European Communities, by C. Zadra and J.-B. Laignelot,acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 December 2008,

gives the following

Judgment

1 This reference for a preliminary ruling, in the terms set out by the referring court,concerns the interpretation of Article 19 of Council Directive 90/220/EEC of 23 April1990 on the deliberate release into the environment of genetically modified organisms(OJ 1990 L 117, p. 15).

2 The main proceedings concern the challenge to an administrative decision which tookeffect in 2004. Under the first subparagraph of Article 34(1) of Directive 2001/18/EC ofthe European Parliament and of the Council of 12 March 2001 on the deliberate releaseinto the environment of genetically modified organisms and repealing CouncilDirective 90/220 (OJ 2001 L 106, p. 1), Member States were to bring into force the laws,regulations and administrative provisions necessary to comply with that directive by17 October 2002. Under Article 36(1) of Directive 2001/18, Directive 90/220 was

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repealed on the same date. In those circumstances, the reference for a preliminaryruling must be examined in the light of Directive 2001/18.

3 That reference was made in the context of a dispute between the Commune deSausheim (Commune of Sausheim) and Mr Azelvandre concerning the refusal todisclose to Mr Azelvandre prefectoral correspondence and planting records relating todeliberate test releases of genetically modified organisms (‘GMOs’).

Legal context


‘In accordance with the precautionary principle, the objective of this Directive is toapproximate the laws, regulations and administrative provisions of the Member Statesand to protect human health and the environment when:

— carrying out the deliberate release into the environment of genetically modifiedorganisms for any other purposes than placing on the market within the Community,

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— placing on the market genetically modified organisms as or in products within theCommunity.’

5 In accordance with Article 2(3) of that directive, ‘deliberate release’ means anyintentional introduction into the environment of a GMO or a combination of GMOs for which no specific containment measures are used to limit their contact with and toprovide a high level of safety for the general population and the environment.

6 Article 4(1) and (2) of that directive defines the relevant general obligations of theMember States as follows:

‘1. Member States shall, in accordance with the precautionary principle, ensure that allappropriate measures are taken to avoid adverse effects on human health and theenvironment which might arise from the deliberate release or the placing on the marketof GMOs. GMOs may only be deliberately released or placed on the market inconformity with part B or part C respectively.

2. Any person shall, before submitting a notification under part B or part C, carry outan environmental risk assessment. The information which may be necessary to carryout the environmental risk assessment is laid down in Annex III. …’

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7

8


With regard to the ‘standard authorisation procedure’, Article 6(1) and (2)(a) of Directive 2001/18 provides:

‘1. Without prejudice to Article 5, any person must, before undertaking a deliberaterelease of a GMO or of a combination of GMOs, submit a notification to the competentauthority of the Member State within whose territory the release is to take place.

2. The notification referred to in paragraph 1 shall include:

(a) a technical dossier supplying the information specified in Annex III necessary forcarrying out the environmental risk assessment of the deliberate release of a GMOor combination of GMOs …’

Article 9 of that directive states:

‘1. Member States shall, without prejudice to the provisions of Articles 7 and 25,consult the public and, where appropriate, groups on the proposed deliberate release. In

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doing so, Member States shall lay down arrangements for this consultation, including areasonable time-period, in order to give the public or groups the opportunity to expressan opinion.

2. Without prejudice to the provisions of Article 25:

— Member States shall make available to the public information on all part B releasesof GMOs in their territory;

…’

With regard to the ‘notification procedure’, Article 13(2)(a) of that directive states:

‘The notification shall contain:

(a) the information required in Annexes II and IV. This information shall take intoaccount the diversity of sites of use of the GMO as or in a product and shall includeinformation on data and results obtained from research and developmental releasesconcerning the impact of the release on human health and the environment.’

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10


Article 25 of that directive provides:

‘1. The Commission and the competent authorities shall not divulge to third partiesany confidential information notified or exchanged under this directive and shallprotect intellectual property rights relating to the data received.

2. The notifier may indicate the information in the notification submitted under thisdirective, the disclosure of which might harm his competitive position and whichshould therefore be treated as confidential. Verifiable justification must be given in such cases.

3. The competent authority shall, after consultation with the notifier, decide whichinformation will be kept confidential and shall inform the notifier of its decisions.

4. In no case may the following information when submitted according to Articles 6, 7,8, 13, 17, 20 or 23 be kept confidential:

— general description of the GMO or GMOs, name and address of the notifier,purpose of the release, location of release and intended uses;

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— …

— environmental risk assessment.’

Article 31(3) of that directive, concerning the exchange of information and reporting,provides:

‘Without prejudice to paragraph 2 and point A No 7 of Annex IV,

(a) Member States shall establish public registers in which the location of the release ofthe GMOs under part B is recorded.

(b) Member States shall also establish registers for recording the location of GMOsgrown under part C, inter alia so that the possible effects of such GMOs on theenvironment may be monitored … Without prejudice [to the provisions of Articles 19(3)(f) and 20(1)], the said locations shall:

— be notified to the competent authorities, and

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— be made known to the public

in the manner deemed appropriate by the competent authorities and in accordancewith national provisions.’

12 Annex III to Directive 2001/18 specifies the information which is required in thenotifications referred to in parts B and C of that directive, that is to say, Articles 5 to 24thereof.

13 Article 3(2) of Council Directive 90/313/EEC of 7 June 1990 on the freedom of access toinformation on the environment (OJ 1990 L 158, p. 56) provides:

‘Member States may provide for a request for such information to be refused where itaffects:

— the confidentiality of the proceedings of public authorities, international relationsand national defence,

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— public security,

…

— commercial and industrial confidentiality, including intellectual property,

…

— material, the disclosure of which would make it more likely that the environment towhich such material related would be damaged.

…’

Directive 2003/4/EC of the European Parliament and of the Council of 28 January 2003on public access to environmental information and repealing Directive 90/313 (OJ 2003L 41, p. 26), which, under the first paragraph of Article 10 thereof, was to be broughtinto force by 14 February 2005, provides in the first subparagraph, under (b), (e) and (h),of Article 4(2) that Member States may provide for a request for environmentalinformation to be refused if disclosure of that information would adversely affect, forexample, public security or national defence, intellectual property rights and theprotection of the environment to which such information relates.

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15 By letter of 21 April 2004, Mr Azelvandre requested the Mayor of the Commune deSausheim to disclose to him, concerning each release of GMOs taking place within thatcommune, the public notice, the planting record allowing the parcel of land that hasbeen planted to be located, and the prefectoral covering letter relating to thosedocuments. He also requested the information file on each new release which wouldtake place in 2004.

16 In the absence of an answer to his request, Mr Azelvandre, by letter of 1 June 2004,applied to the Committee on Access to Administrative Documents (CAAD) fordisclosure of the documents referred to in the letter of 21 April 2004. On 24 June 2004,that committee issued a favourable opinion on the disclosure of the public notice andthe first page of the prefectoral covering letter. By contrast, it decided against thedisclosure of the planting record for the parcels of land and of the map showing wherethe releases had occurred, on the ground that that disclosure would prejudice theprivacy and safety of the farmers concerned. The committee also declared inadmissiblethe application for disclosure of the information files relating to any new release.

17 Following that opinion, on 24 May and 4 August 2004, the Mayor of Sausheim disclosedto Mr Azelvandre the public notices relating to the five releases of GMOs carried outwithin the commune and the prefectoral covering letters relating to two of thosenotices.

18 On 16 September 2004, Mr Azelvandre brought an application before the Tribunaladministrative de Strasbourg (Strasbourg Administrative Court) seeking, first, theannulment of the implicit decision by which the Mayor of Sausheim had rejected hisrequest for disclosure of the prefectoral letters and the planting records for each release

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of GMOs that had taken place within that commune and, second, an order that theMayor disclose those documents to him.

19 By decision of 10 March 2005, theTribunal administrative de Strasbourg, first, annulledthe implicit decision by which the Mayor of Sausheim had refused to disclose to MrAzelvandre the prefectoral letters relating to the other release trials of GMOs and theplanting records relating to five field trials, save for information as to names, and,second, ordered the Mayor of that commune to disclose the abovementioned documents to Mr Azelvandre.

20 On 30 May 2005, the Commune de Sausheim brought an appeal before the Conseild’État against that decision, seeking the annulment thereof.

21 The Conseil d’État has doubts with regard to the interpretation of the publicinformation obligations relating to the deliberate release of GMOs, arising in particularunder Article 19 of Directive 90/220.

22 In those circumstances, the Conseil d’État decided to stay proceedings and refer thefollowing questions to the Court of Justice for a preliminary ruling:

‘1. Must “the location where the release” of genetically modified organisms “will be carried out” which, under Article 19 of … Directive 90/220 …, may not be kept

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confidential, mean the registered parcel of land or a larger geographical areacorresponding either to the commune in which the release occurs or to an evengreater area such as a canton or department?

2. If the location is to be understood as requiring designation of the registered parcelof land, can an exception relating to the protection of public order or otherconfidential matters protected by law preclude, on the basis of Article 95 [EC] …, or of Directive 2003/4 … or of a general principle of Community law, the disclosure ofthe registered reference number or numbers of the location of the release?’

The questions referred

Question 1

Observations submitted before the Court

The Commune de Sausheim considers that the ‘location of release’ within the meaningof the first indent of Article 25(4) of Directive 2001/18 must mean the commune withinwhich the trials are carried out.

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23

24

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The French Government takes the view that the location of release can cover a geographical area larger than the registered parcel of land, such an area possibly beingthe commune or the canton.

25 According to the Greek Government, the location of release should be defined as aparcel of land registered at the land registry and shown as such or, in the absence of aregistry, a specific parcel of land precisely located in the national system for theidentification of parcels of land under the system of geographical information.

26 The Netherlands Government submits that the concept of location of release shouldmean the registered parcel of land only in certain cases. In determining that concept,the administrative and judicial authorities of the Member States should benefit from acertain discretion.

27 The Polish Government asserts that the location of release means not the registeredparcel of land, but a larger geographical area, defined in such a way that it guaranteessuitable public access to the information about the release of GMOs into the environment, whilst protecting the economic interests of the operators performingthose operations.

28 The Commission of the European Communities states that the location of release mustbe determined according to the information which is provided to the national authorities by the person who submits the notification to those authorities, on a case-by-case basis, in accordance with the procedures laid down in parts B and C ofDirective 2001/18.

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The answer of the Court

29 In order to answer that question, it should be noted as a preliminary point thatArticle 25(4) of Directive 2001/18, which provides that a certain amount of informationconcerning deliberate releases of GMOs into the environment cannot be keptconfidential, is part of a body of rules relating to the different procedures applicable tosuch releases. Those rules are informed by the objectives pursued by that directive, asthey are made explicit in recitals 5, 6, 8 and 10 of that directive, namely the protection ofhuman health, the principles that preventive action should be taken, the precautionaryprinciple and the transparency of measures relating to the preparation and implementation of those releases.

30 Concerning the last of the above objectives, it should be stated that the system oftransparency established by that directive is reflected in particular in Articles 9, 25(4)and 31(3) thereof. By those provisions, the Community legislature has sought toestablish not only procedures for consultation of the general public and, if appropriate,of certain groups on a proposed deliberate release of GMOs, but also a right of publicaccess to information relating to that operation and the establishment of publicregisters which must include information on the location of every release of GMOs.

31 As was observed by the Advocate General in points 45 and 48 of her Opinion, it followsalso from those provisions that the rights set out in them are closely related to theinformation which must be provided in the context of the notification procedurerequired to be followed for every deliberate release of GMOs for any purpose other thanthat of being placed on the market, in accordance with Articles 5 to 8 of Directive 2001/18.

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AZELVANDRE

It follows from the connection thereby established between the notification procedureand the access to information relating to the proposed deliberate release of GMOs that,save in the case of exemptions under that directive, the relevant public may request thedisclosure of all information submitted by the notifier in the context of the authorisation procedure relating to that release.

33 Concerning the nature of that information, Article 6(1) and (2) of Directive 2001/18provides that any person wishing to undertake a deliberate release of GMOs is to submita notification to the competent authority of the Member State within whose territorythe release is to take place, which is to include a technical dossier supplying theinformation required by Annex III to that directive. Furthermore, under Article 13(2)(a) of that directive, that information is to take into account the diversity of sites ofuse of the GMOs.

34 The Member States must take account of all of those factors in their obligations underArticle 4(1) and (2) of Directive 2001/18 to ensure that all appropriate measures aretaken to avoid adverse effects on human health and the environment which might arisefrom the deliberate release of GMOs and to carry out an appropriate assessment ofpossible risks for the environment deriving from such an operation.

35 As regards the level of detail of information to provide, the Court notes that, asindicated in Annex III to Directive 2001/18, it varies according to the nature of theproposed deliberate release of GMOs. In that regard, Annex IIIB to that directive,concerning proposed releases of genetically modified higher plants, includes detailedprovisions relating to the information which must be provided by the notifier.

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36


Included in particular amongst the information which must be mentioned in thetechnical dossiers accompanying the notifications, under the provisions of AnnexIIIB(E) to that directive, are the location and size of the release sites, the description ofthe release site ecosystem, including climate, flora and fauna and the proximity toofficially recognised biotopes or protected areas which may be affected.

37 Concerning releases of genetically modified organisms other than higher plants, AnnexIIIA, part III(B), specifies, amongst the information which must be mentioned in thetechnical dossiers accompanying the notifications, the geographical location and gridreference of the release site(s) and the description of target and non-target ecosystemslikely to be affected.

38 Therefore, the factors relating to the geographical location of a deliberate release ofGMOs which must be included in the notification thereof fulfil requirements intendedto determine the concrete effects of such an operation on the environment. The information concerning the site of such a release must therefore be defined accordingto the nature of each operation and of its possible impact on the environment, as isapparent from the two preceding paragraphs.

39 Consequently, the answer to the first question is that the ‘location of release’ within the meaning of the first indent of Article 25(4) of Directive 2001/18 is determined by all theinformation relating to the location of the release submitted by the notifier to thecompetent authorities of the Member State on whose territory that release is to takeplace in the context of the procedures referred to in Articles 6, 7, 8, 13, 17, 20 or 23 ofthat directive.

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AZELVANDRE

Question 2

Observations submitted before the Court

40 The Commune de Sausheim considers that Article 95 EC and Directive 2003/4 allowthe national authorities to decide that the information relating to the location of tests ofa deliberate release of GMOs may be kept confidential for reasons relating to theprotection of public order and security.

41 The French Government claims that, if the Court were to consider the location of release to be the registered parcel of land, Article 4(2) of Directive 2003/4 should beinterpreted to mean that it allows the competent authorities to examine on a case-by-case basis whether, independently of the interests of the notifier, interests relating inparticular to the protection of public security preclude the disclosure of informationrelating to that location.

42 According to the Greek Government, if the ‘location of release’ corresponds to aregistered parcel of land, an exception relating to the protection of public order or othersecrets protected by law could be put forward only in exceptional cases against thedisclosure of land registry references of the location of release, and on condition that itis not expressed in general terms, but based on a sufficient statement of reasons.

43 The Polish Government submits, if the concept of location of release relates to theregistered parcel of land, that the exception relating to the protection of public order

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could, in principle, be put forward against the disclosure of land registry references onthe basis of Directive 2003/4 and Article 95 EC.

44 The Commission maintains that Community law does not provide for any public orderor other exceptions which could be put forward against the rule set out in the firstindent of Article 25(4) of Directive 2001/18.

The answer of the Court

45 In order to answer the second question asked by the referring court, the Court notesthat Article 25(1) to (3) of Directive 2001/18 creates a system which precisely definesthe confidentiality which can apply to the various information that is disclosed in thecontext of notification procedures and exchange of information provided for by thatdirective.

46 It follows from those provisions that confidential information notified to the Commission and to the competent authority or exchanged in accordance with thatdirective and also information liable to harm a competitive position cannot be disclosedand that intellectual property rights relating to that information must be protected.Furthermore, under Article 25(2) and (3), the competent authority decides, afterconsulting the notifier, what information must be kept confidential in the light of the‘verifiable justification’ given by the notifier, who is informed of the decision taken inthat respect by the authority.

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47

AZELVANDRE

By that body of provisions, Directive 2001/18 therefore established exhaustive rulesrelating to the right of public access in the area considered and the existence of anyexceptions to that right.

48 As regards the information relating to the location of release, it should be emphasisedthat, under the first indent of Article 25(4) of that directive, it can in no case be keptconfidential.

49 In those circumstances, considerations relating to the protection of public order andother secrets protected by law, such as specified by the referring court in its secondquestion, cannot constitute reasons capable of restricting access to the informationlisted in Article 25(4) of Directive 2001/18, including in particular those relating to thelocation of release.

50 The Court has already held that apprehension of internal difficulties cannot justify afailure by a Member State to apply Community law effectively (see inter alia CaseC-265/95 Commission v France [1997] ECR I-6959, paragraph 55). In particular,concerning the deliberate release of GMOs into the environment, the Court held inCase C-121/07 Commission v France [2008] ECR I-9159, paragraph 72, that, even onthe assumption that the social unrest referred to by the French Republic is in factattributable in part to the implementation of Community rules, a Member State maynot plead difficulties of implementation which emerge at the stage when a Communitymeasure is put into effect, including difficulties relating to opposition on the part ofcertain individuals, to justify a failure to comply with obligations and time-limits laiddown by Community law.

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51


That interpretation of Directive 2001/18 is substantiated by the requirement, referredto in the third indent of Article 25(4) thereof, that information concerning theenvironmental risk assessment may not be kept confidential. Indeed, such an assessment is possible only with full knowledge of the proposed release, because,without such information, it would not be possible validly to assess the potential effectsof a deliberate release of GMOs on human health and the environment (see, to thateffect, Case C-121/07 Commission v France, paragraphs 75 and 77).

52 Concerning Directives 90/313 and 2003/4, it should be added that, as the AdvocateGeneral pointed out in point 56 of her Opinion, a Member State cannot invoke anexemption provision included in those directives in order to refuse access to information which should be in the public domain under the provisions of Directives90/220 and 2001/18.

53 Finally, as the referring court has referred to Article 95 EC, it suffices to observe that theMember State concerned has not made use of the power provided by that article.

54 It follows from the above considerations that the provisions of Article 3(2) of Directive 90/313 and of Article 4(2) of Directive 2003/4, according to which a requestfor environmental information may be refused if disclosure of the information requested would be liable to adversely affect certain interests, including public security,may not be validly relied upon to oppose the requirements of transparency arising fromArticle 25(4) of Directive 2001/18.

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55

56

AZELVANDRE

In consequence, the answer to the second question is that an exception relating to theprotection of public order or other interests protected by law cannot be relied on tooppose the disclosure of the information set out in Article 25(4) of Directive 2001/18.

Costs



1. The ‘location of release’, within the meaning of the first indent of Article 25(4)of Directive 2001/18/EC of the European Parliament and of the Council of12 March 2001 on the deliberate release into the environment of geneticallymodified organisms and repealing Council Directive 90/220/EEC, is deter-mined by all the information relating to the location of the release submittedby the notifier to the competent authorities of the Member State on whose

I - 1029


territory that release is to take place in the context of the procedures referredto in Articles 6, 7, 8, 13, 17, 20 or 23 of that directive.

2. An exception relating to the protection of public order or other interestsprotected by law cannot be relied on against the disclosure of the informationset out in Article 25(4) of Directive 2001/18.

[Signatures]

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Case C-228/06

Mehmet Soysal and Ibrahim Savatli v

Bundesrepublik Deutschland

(Reference for a preliminary rulingfrom the Oberverwaltungsgericht Berlin-Brandenburg)

(EEC-Turkey Association Agreement — Freedom to provide services — Visarequirement for admission to the territory of a Member State)

Judgment of the Court (First Chamber), 19 February 2009 . . . . . . . . I - 1034


1. International agreements — EEC-Turkey Association Agreement — Freedom of movement for persons — Freedom of establishment — Freedom to provide services — Standstill rule in Article 41(1) of the Additional Protocol (Additional Protocol to the EEC-Turkey Association Agreement, Art. 41(1))

I - 1031


2. International agreements — EEC-Turkey Association Agreement — Freedom of movement for persons — Freedom of establishment — Freedom to provide services — Standstill rule in Article 41(1) of the Additional Protocol (EEC-Turkey Association Agreement; Additional Protocol to the EEC-Turkey AssociationAgreement, Art. 41(1))

1. Article 41(1) of the Additional Protocol tothe EEC-Turkey Association Agreement,which provides that the Contracting Parties are to refrain from introducingbetween themselves any new restrictionson the freedom of establishment and the freedom to provide services, has direct effect. That provision lays down, clearly,precisely and unconditionally, an un-equivocal ‘standstill’clause, which contains an obligation entered into by the Contracting Parties which amounts in lawto a duty not to act. Consequently, therights which Article 41(1) of the AdditionalProtocol confers on the Turkish nationals to whom it applies may be relied on beforethe courts of the Member States.

In addition, Article 41(1) of the AdditionalProtocol may be invoked validly by Turkishlorry drivers who are employed by an undertaking established in Turkey that lawfully provides services in a Member State, on the ground that the employees of

the provider of services are indispensableto enable him to provide his services.

(see paras 45, 46)

2. Article 41(1) of the Additional Protocol tothe EEC-Turkey Association Agreement,which provides that the Contracting Parties are to refrain from introducingbetween themselves any new restrictionson the freedom of establishment and the freedom to provide services, is to be interpreted as meaning that it precludesthe introduction, as from the entry intoforce of that protocol, of a requirementthat Turkish nationals such as the appel-lants in the main proceedings must have avisa to enter the territory of a MemberState in order to provide services there onbehalf of an undertaking established in Turkey, since, on that date, such a visa wasnot required.

That provision prohibits generally the introduction of any new measures havingthe object or effect of making the exercise

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SOYSAL AND SAVATLI

by a Turkish national of the freedom ofestablishment or the freedom to provideservices on the territory of that MemberState subject to stricter conditions than those which applied to him at the timewhen the Additional Protocol entered into force, that is to say, 1 January 1973, withregard to the Member State concerned.

As regards Turkish nationals who intend tomake use in the territory of a Member Stateof the right to freedom to provide servicesunder the Association Agreement,national legislation that makes that activityconditional on the issuing of a visa, which can moreover not be required from Community nationals, is liable to interferewith the actual exercise of that freedom, in particular because of the additional andrecurrent administrative and financial burdens involved in obtaining such a permit which is valid for a limited time.In addition, where a visa is denied, legisla-tion of that kind prevents the exercise ofthat freedom.

It follows that such legislation, which didnot exist on 1 January 1973, has at least theeffect of making the exercise, by Turkishnationals, of their economic freedoms guaranteed by the Association Agreementsubject to conditions that are stricter than

those that were applicable in the relevantMember State at the time of the entry intoforce of the Additional Protocol. In those circumstances, such legislation constitutes a ‘new restriction’, within the meaning ofArticle 41(1) of the Additional Protocol, ofthe right of Turkish nationals resident inTurkey freely to provide services in theMember State concerned.

That conclusion cannot be called into question by the fact that the national legislation in question merely implements a provision of secondary Communitylegislation. In this respect, the primacy ofinternational agreements concluded by theCommunity over provisions of secondaryCommunity legislation means that such provisions must, so far as is possible, beinterpreted in a manner that is consistentwith those agreements.

However, the ‘standstill’ clause laid down by Article 41(1) of the Additional Protocolto the EEC-Turkey Association Agreementdoes not prevent the adoption of rules thatapply in the same manner to Turkish nationals and to Community nationals.

(see paras 47, 55-59, 61, 62, operative part)

I - 1033

v



19 February 2009 *

In Case C-228/06,

REFERENCE for a preliminary ruling under Article 234 EC from the Oberverwaltungsgericht Berlin-Brandenburg (Germany), made by decision of 30 March 2006, received at the Court on 19 May 2006, in the proceedings

Mehmet Soysal,

Ibrahim Savatli,

Bundesrepublik Deutschland,

joined party:

Bundesagentur für Arbeit,


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SOYSAL AND SAVATLI


composed of P. Jann, President of the Chamber, M. Ilešič, A. Tizzano, A. Borg Barthet and J.-J. Kasel (Rapporteur), Judges,

Advocate General: M. Poiares Maduro, Registrar: K. Sztranc-Sławiczek, Administrator,



— Messrs Soysal and Savatli, by R. Gutmann, Rechtsanwalt,

— the German Government, by M. Lumma and J. Möller, acting as Agents,

— the Danish Government, by R. Holdgaard, acting as Agent,

— the Greek Government, by G. Karipsiadis and T. Papadopoulou, acting as Agents,

I - 1035

1


— the Slovenian Government, by T. Mihelič, acting as Agent,

— the Commission of the European Communities, by M. Wilderspin and G. Braun,acting as Agents,


gives the following

Judgment

This reference for a preliminary ruling concerns the interpretation of Article 41(1) ofthe Additional Protocol, which was signed on 23 November 1970 at Brussels andconcluded, approved and confirmed on behalf of the Community by CouncilRegulation (EEC) No 2760/72 of 19 December 1972 (OJ 1977 L 361, p. 60) (‘the Additional Protocol’).

The reference was made in the context of proceedings brought by Messrs Soysal andSavatli, Turkish nationals, against the Bundesrepublik Deutschland in respect of the

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2

SOYSAL AND SAVATLI

requirement for Turkish lorry drivers to obtain visas in order to provide servicesconsisting in the international transport of goods by road.

Legal context


The Association between the EEC and Turkey

3 According to Article 2(1) of the Agreement establishing an Association between theEuropean Economic Community and Turkey, which was signed on 12 September 1963at Ankara by the Republic of Turkey, of the one part, and the Member States of the EECand the Community, of the other part, and which was concluded, approved andconfirmed on behalf of the Community by Council Decision 64/732/EEC of 23 December 1963 (OJ 1973 C 113, p. 1; ‘the Association Agreement’), the aim ofthat agreement is to promote the continuous and balanced strengthening of trade andeconomic relations between the Contracting Parties which includes, in relation to theworkforce, the progressive securing of freedom of movement for workers (Article 12 ofthe Association Agreement), and the abolition of restrictions on freedom of establishment (Article 13) and on freedom to provide services (Article 14), with aview to improving the standard of living of the Turkish people and facilitating theaccession of Turkey to the Community at a later date (fourth recital in the preamble andArticle 28 of that agreement).

4 To that end, the Association Agreement involves a preparatory stage, enabling theRepublic of Turkey to strengthen its economy with aid from the Community (Article 3of the agreement), a transitional stage covering the progressive establishment of acustoms union and the alignment of economic policies (Article 4) and a final stage

I - 1037

5

6


based on the customs union and entailing closer coordination of the economic policiesof the Contracting Parties (Article 5).

Article 6 of the Association Agreement is worded as follows:

‘To ensure the implementation and progressive development of the Association, theContracting Parties shall meet in a Council of Association which shall act within thepowers conferred on it by this Agreement.’

According to Article 8 of the Association Agreement, in Title II headed ‘Implementa-tion of the transitional stage’:

‘In order to attain the objectives set out in Article 4, the Council of Association shall,before the beginning of the transitional stage and in accordance with the procedure laiddown in Article 1 of the provisional Protocol, determine the conditions, rules andtimetables for the implementation of the provisions relating to the fields covered by theTreaty establishing the Community which must be considered; this shall apply inparticular to such of those fields as are mentioned under this Title and to any protectiveclause which may prove appropriate.’

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7

SOYSAL AND SAVATLI

Articles 12 to 14 of the Association Agreement also appear in Title II thereof, underChapter 3 headed ‘Other economic provisions’.

8 Article 12 provides:

‘The Contracting Parties agree to be guided by Articles [39 EC], [40 EC] and [41 EC] forthe purpose of progressively securing freedom of movement for workers betweenthem.’

9 Article 13 provides:

‘The Contracting Parties agree to be guided by Articles [43 EC] to [46 EC] and [48 EC]for the purpose of abolishing restrictions on freedom of establishment between them.’

10 Article 14 states:

‘The Contracting Parties agree to be guided by Articles [45 EC], [46 EC] and [48 EC] to[54 EC] for the purpose of abolishing restrictions on freedom to provide servicesbetween them.’

I - 1039

11


Article 22(1) of the Association Agreement provides as follows:

‘In order to attain the objectives of this Agreement, the Council of Association shallhave the power to take decisions in the cases provided for therein. Each of the partiesshall take the measures necessary to implement the decisions taken...’

12 The Additional Protocol, which, according to Article 62 thereof, forms an integral partof the Association Agreement, lays down, in Article 1, the conditions, detailed arrangements and timetables for implementing the transitional stage referred to inArticle 4 of that agreement.

13 The Additional Protocol includes Title II, headed ‘Movement of persons and services’, Chapter I of which concerns ‘[w]orkers’ and Chapter II of which concerns ‘[r]ight of establishment, services and transport’.

14 Article 36 of the Additional Protocol, which is included in Chapter I, provides thatfreedom of movement for workers between Member States of the Community andTurkey is to be secured by progressive stages in accordance with the principles set out inArticle 12 of the Association Agreement between the end of the 12th and the 22nd yearafter the entry into force of that agreement and that the Council of Association is todecide on the rules necessary to that end.

I - 1040

15

SOYSAL AND SAVATLI

Article 41 of the Additional Protocol, which is in Chapter II of Title II, is worded asfollows:

‘1. The Contracting Parties shall refrain from introducing between themselves any newrestrictions on the freedom of establishment and the freedom to provide services.

2. The Council of Association shall, in accordance with the principles set out inArticles 13 and 14 of the Agreement of Association determine the timetable and rulesfor the progressive abolition by the Contracting Parties, between themselves, of restrictions on freedom of establishment and on freedom to provide services.

The Council of Association shall, when determining such timetable and rules for thevarious classes of activity, take into account corresponding measures already adoptedby the Community in these fields and also the special economic and social circumstances of Turkey. Priority shall be given to activities making a particularcontribution to the development of production and trade.’

It is common ground that, to date, the Council of Association, which was set up by theAssociation Agreement and consists, on the one hand, of members of the Governmentsof the Member States, of the Council of the European Union and of the Commission ofthe European Communities and, on the other hand, of members of the TurkishGovernment, has not adopted any decision on the basis of Article 41(2) of theAdditional Protocol.

I - 1041

16

17

18


Article 59 of the Additional Protocol, which appears in Title IV headed ‘General and final provisions’, is worded as follows:

‘In the fields covered by this Protocol Turkey shall not receive more favourabletreatment than that which Member States grant to one another pursuant to the Treatyestablishing the Community.’

Regulation (EC) No 539/2001

Article 1(1) of Council Regulation (EC) No 539/2001 of 15 March 2001 listing the thirdcountries whose nationals must be in possession of visas when crossing the externalborders [of the Member States] and those whose nationals are exempt from thatrequirement (OJ 2001 L 81, p. 1) provides:

‘Nationals of third countries on the list in Annex I shall be required to be in possessionof a visa when crossing the external borders of the Member States.’

It is apparent from Annex I that the Republic of Turkey is one of the States on that list.

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19

20

SOYSAL AND SAVATLI

The first recital in the preamble to Regulation No 539/2001 recalls that Article 61 ECcites determination of the list of those third countries whose nationals must be in possession of a visa when crossing the external borders of the Member States and thosewhose nationals are exempt from that requirement ‘among the flanking measureswhich are directly linked to the free movement of persons in an area of freedom,security and justice’.


21 It is apparent from the order for reference that, on 1 January 1973, the date on which theAdditional Protocol entered into force with regard to the Federal Republic of Germany,Turkish nationals who, like the appellants in the main proceedings, were engaged inthat Member State for no more than two months in the international transport of goodsby road, did not need a permit to enter Germany. Under Paragraph 1(2)(2) of theRegulation Implementing the Law on Aliens (Verordnung zur Durchführung desAusländergesetzes), in the version published on 12 March 1969 (BGBl. 1969 I, p. 207),such Turkish nationals were entitled to enter Germany without a visa.

22 Turkish nationals were not subject to a general visa requirement until the EleventhRegulation amending the Regulation Implementing the Law on Aliens of 1 July 1980(BGBl. 1980 I, p. 782) came into force.

Today, the requirement that Turkish nationals such as the appellants in the mainproceedings must be in possession of a visa to enter Germany is based on Paragraphs 4(1) and 6 of the German Law on residence (Aufenthaltsgesetz) of 30 July 2004 (BGBl. 2004 I, p. 1950; ‘the Aufenthaltsgesetz’), which replaced the Law on

I - 1043

23

24


Aliens (Ausländergesetz) and entered into force on 1 January 2005, and Article 1(1) ofRegulation No 539/2001 in conjunction with Annex I thereto.

Headed ‘Residence authorisation requirement’, Paragraph 4(1) of the Aufenthaltsgesetz provides:

‘(1) Aliens shall require residence authorisation to enter and reside within FederalGerman territory unless the law of the European Union or regulations should provideotherwise or unless there is a right of residence under the Agreement of 12 September1963 establishing an Association between the European Economic Community andTurkey … Residence authorisation shall be granted as

1. a visa (Paragraph 6)

2. a residence permit (Paragraph 7), or

3. authorisation for establishment (Paragraph 9).’

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25

SOYSAL AND SAVATLI

Paragraph 6 of the Aufenthaltsgesetz, headed ‘Visa’, provides:

‘(1) An alien may be granted:

1. a Schengen visa for transit purposes, or

2. a Schengen visa for residence of up to three months within a period of six monthsfrom the date of first entry (short stays)

if the conditions for the grant of a visa laid down in the Schengen Convention andits implementing regulations are satisfied. In exceptional cases a Schengen visa maybe granted for reasons of international law, on humanitarian grounds or to safeguard the political interests of the Federal Republic of Germany if theconditions for the grant of a visa laid down in the Schengen Convention are notsatisfied. In such cases validity shall be geographically confined to the sovereignterritory of the Federal Republic of Germany.

(2) A visa for short stays can also be granted for multiple stays with a period of validityof up to five years provided that the duration of each stay does not exceed three monthswithin a period of six months from the date of first entry.

I - 1045

26


(3) A Schengen visa granted under the first sentence of subparagraph 1 can beextended in special cases for a total period of three months within a period of sixmonths from the date of first entry. This applies even if the consular representative ofanother Schengen Agreement State has granted the visa. The visa may be extended for afurther three months within the six-month period concerned only in accordance withthe conditions laid down in the second sentence of subparagraph 1.

(4) For long-term stays a visa for Federal German territory is required (national visa),which must be granted before entry. The grant of a visa is governed by the provisionsapplicable to residence permits and authorisations for establishment....’


The order for reference states that Messrs Soysal and Savatli are Turkish nationalsresident in Turkey working for a Turkish company engaged in the internationaltransport of goods, as drivers of lorries that are owned by a German company andregistered in Germany.

Until 2000, upon receipt of applications, the Federal Republic of Germany had on manyoccasions issued each of the appellants in the main proceedings with an entry visa asdrivers of lorries registered in Turkey, for the purposes of providing services inGermany.

I - 1046

27

SOYSAL AND SAVATLI

28 After it was found that the appellants in the main proceedings were driving lorriesregistered in Germany, Germany’s consulate-general in Istanbul rejected further visaapplications submitted by them in the course of 2001 and 2002.

29 Messrs Soysal and Savatli brought actions before the Verwaltungsgericht Berlin (Administrative Court, Berlin) against the decisions refusing them visas, for a declaration that, as lorry drivers providing services consisting in the internationaltransport of goods, they are entitled to enter Germany without a visa for that purpose.They based their claim on the ‘standstill’ clause in Article 41(1) of the AdditionalProtocol, which prohibits the application to them of conditions for access to Germanterritory that are less favourable than the conditions that were applicable on the date ofentry into force of the Additional Protocol with regard to the Federal Republic ofGermany, namely 1 January 1973. On that date, no visa was required for the activity theyare engaged in; a visa requirement was introduced only in 1980. Moreover, the ‘standstill’clause takes priority over the visa requirement provided for under RegulationNo 539/2001, which was adopted after 1 January 1973.

30 After the Verwaltungsgericht Berlin had dismissed their actions by judgment of 3 July2002, Messrs Soysal and Savatli lodged an appeal with the OberverwaltungsgerichtBerlin-Brandenburg (Higher Administrative Court, Berlin-Brandenburg) which takesthe view that the outcome of the proceedings before it depends on the interpretation ofArticle 41(1) of the Additional Protocol.

31 In this respect, the Oberverwaltungsgericht Berlin-Brandenburg observes that theappellants in the main proceedings are employed as lorry drivers by a company whoseregistered office is in Turkey, which lawfully provides services in Germany. In particular, the appellants do not carry out their work for the German company, inwhose name the lorries used to transport the goods are registered, in the course of acontracting-out of labour that requires a permit under German law, since the right to

I - 1047


give work-related instructions to the employees at issue is essentially exercised by theTurkish company that employs them, even during the period for which they work onbehalf of the German company.

32 In addition, the judgment in Joined Cases C-317/01 and C-369/01 Abatay and Others[2003] ECR I-12301, paragraph 106, shows that Turkish workers such as the appellantsin the main proceedings may invoke, in respect of the activity carried out, the protectionof Article 41(1) of the Additional Protocol.

33 Finally, at the time of the entry into force of the Additional Protocol, Turkish workersengaged in Germany in the international transport of goods by road had the right toenter the territory of that Member State without a visa, since a visa requirement wasintroduced into German law only from 1 July 1980 onwards.

34 However, there is as yet no case-law of the Court of Justice on the question of whetherthe introduction of a visa requirement under national legislation on aliens or underCommunity law is one of the ‘new restrictions’ on the freedom to provide serviceswithin the meaning of Article 41(1) of the Additional Protocol.

On the one hand, although paragraphs 69 and 70 of the judgment in Case C-37/98Savas [2000] ECR I-2927 support the interpretation that Article 41(1) of the AdditionalProtocol imposes a general prohibition on the worsening of a situation even in respect

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35

SOYSAL AND SAVATLI

of the right to enter and reside, so that it is enough to determine whether the measure atissue has the object or effect of making the Turkish national’s position with respect tofreedom of establishment or freedom to provide services subject to stricter conditionsthan those which applied at the time when the Additional Protocol entered into force(see, to the same effect, Abatay and Others, paragraph 116), an argument against suchan interpretation is that Article 41(1) of the Additional Protocol cannot obstruct thegeneral legislative power of the Member States that may affect the position of Turkishnationals in one way or another.

36 On the other hand, even though the wording of Article 41(1) of the Additional Protocol,which refers to the ‘Contracting Parties’, supports the argument that the ‘standstill’clause in that provision applies not only to the rules of the Member States but also tothose under secondary Community legislation, the Court has not yet ruled on thematter.

37 In those circumstances, the Oberverwaltungsgericht Berlin-Brandenburg decided tostay the proceedings and to refer the following questions to the Court for a preliminaryruling:

‘(1) Is Article 41(1) of the Additional Protocol … to be interpreted in such a way that itconstitutes a restriction on freedom to provide services if a Turkish national whoworks in international transport for a Turkish undertaking as a driver of a lorryregistered in Germany has to be in possession of a Schengen visa to enter Germanyunder Paragraphs 4(1) and 6 of the Aufenthaltsgesetz … and Article 1(1) of

I - 1049


Regulation … No 539/2001 even though on the date on which the AdditionalProtocol entered into force he was permitted to enter … Germany without a visa?

(2) If the answer to the first question is in the affirmative, should Article 41(1) of theAdditional Protocol be interpreted as meaning that the Turkish nationals mentioned in (1) do not require a visa to enter Germany?’

Jurisdiction of the Court

38 The German Government submits that this reference for a preliminary ruling is‘inadmissible’, on the ground that the reference was made by a court that is not amongstthose against whose decisions there is no judicial remedy under national law within themeaning of Article 68(1) EC, even though the questions referred concern the validity ofa Council regulation adopted on the basis of Title IV of Part Three of the EC Treaty.

39 However, that argument cannot be accepted.

40 The wording of the questions referred by the Oberverwaltungsgericht Berlin-Brandenburg shows, in and of itself, that the questions concern, explicitly and exclusively, the interpretation of the law governing the association between the EECand Turkey and, more specifically, Article 41(1) of the Additional Protocol.

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41

SOYSAL AND SAVATLI

Therefore, the bringing of the matter before the Court under Article 234 EC is valid (seeCase C-192/89 Sevince [1990] ECR I-3461, paragraphs 8 to 11, and the case-law cited),and it is irrelevant that the court making the reference for a preliminary ruling is notamong those mentioned in Article 68(1) EC, which derogates from Article 234 EC.

42 In those circumstances, the Court has jurisdiction to rule on the questions referred bythe Oberverwaltungsgericht Berlin-Brandenburg.


43 By its two questions, which must be examined together, the referring court essentiallyasks whether Article 41(1) of the Additional Protocol is to be interpreted as meaningthat it precludes the introduction, as from the entry into force of that protocol, of arequirement that Turkish nationals such as the appellants in the main proceedingsmust have a visa to enter the territory of a Member State in order to provide servicesthere on behalf of an undertaking established in Turkey.

It must be recalled, as a preliminary point, that the appellants in the main proceedingsare Turkish lorry drivers — resident in Turkey and employed by an internationaltransport company established in Turkey — who at regular intervals transport goodsbetween Turkey and Germany using lorries registered in Germany. In this respect, the

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44


referring court found that both the transport operations and the drivers’ activities in that connection are entirely lawful.

45 With a view to determining the exact scope of Article 41(1) of the Additional Protocolin a situation such as that at issue in the main proceedings, it must be recalled, first, that,in accordance with consistent case-law, the provision has direct effect. It lays down,clearly, precisely and unconditionally, an unequivocal ‘standstill’clause, which contains an obligation entered into by the contracting parties which amounts in law to a duty notto act (see Savas, paragraphs 46 to 54 and 71, second indent; Abatay and Others, paragraphs 58, 59 and 117, first indent, and Case C-16/05 Tum and Dari [2007] ECR I-7415, paragraph 46). Consequently, the rights which Article 41(1) of theAdditional Protocol confers on the Turkish nationals to whom it applies may be reliedon before the courts of the Member States (see, in particular, Savas, paragraph 54, and Tum and Dari, paragraph 46).

46 Further, it must be noted that Article 41(1) of the Additional Protocol may be invokedvalidly by Turkish lorry drivers such as the appellants in the main proceedings who areemployed by an undertaking established in Turkey that lawfully provides services in aMember State, on the ground that the employees of the provider of services areindispensable to enable him to provide his services (see Abatay and Others, paragraphs 106 and 117, fifth indent).

Finally, according to consistent case-law, even if the ‘standstill’ clause set out in Article 41(1) of the Additional Protocol is not, in itself, capable of conferring on Turkishnationals — on the basis of Community legislation alone — a right of establishment or,

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47

SOYSAL AND SAVATLI

as a corollary, a right of residence, nor a right to freedom to provide services or to enterthe territory of a Member State (see Savas, paragraphs 64 and 71, third indent; Abatay and Others, paragraph 62; and Tum and Dari, paragraph 52), the fact remains that sucha clause prohibits generally the introduction of any new measures having the object oreffect of making the exercise by a Turkish national of those economic freedoms on theterritory of that Member State subject to stricter conditions than those which applied tohim at the time when the Additional Protocol entered into force with regard to theMember State concerned (see Savas, paragraphs 69 and 71, fourth indent; Abatay and Others, paragraphs 66 and 117, second indent; and Tum and Dari, paragraphs 49 and 53).

48 Therefore, the Court has held that Article 41(1) of the Additional Protocol precludesthe introduction into the legislation of a Member State of a requirement — not in placeat the time of the entry into force of that protocol with regard to that Member State — of a work permit in order for an undertaking established in Turkey and its employees whoare Turkish nationals to provide services in the territory of that State (Abatay and Others, paragraph 117, sixth indent).

49 Similarly, the Court has held that Article 41(1) of the Additional Protocol also precludesthe adoption, as from the entry into force of that protocol, of any new restrictions on theexercise of freedom of establishment relating to the substantive and/or proceduralconditions governing the admission to the territory of the relevant Member State ofTurkish nationals intending to establish themselves in business there on their ownaccount (Tum and Dari, paragraph 69).

In those cases, the issue was whether national legislation that introduced substantiveand/or procedural conditions for Turkish nationals wishing to gain access to the

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50


territory of a Member State or to a professional activity, that were stricter than thosethat had applied to them in the relevant Member State at the time of the entry into forceof the Additional Protocol, could be considered to be new restrictions within the meaning of Article 41(1) of that protocol.

51 That is also true of the case in the main proceedings. The order for reference shows that,at the time of the entry into force of the Additional Protocol with regard to the FederalRepublic of Germany, namely 1 January 1973, Turkish nationals such as the appellantsin the main proceedings, engaged in the provision of services in Germany in theinternational transport of goods by road on behalf of a Turkish undertaking, had theright to enter German territory for those purposes without first having to obtain a visa.

52 It is only as from 1 July 1980 that the German legislation on aliens made nationals ofnon-member countries, including Turkish nationals, who wished to carry out suchactivities in Germany, subject to a visa requirement. At present, the requirement thatTurkish nationals such as the appellants in the main proceedings must possess a visa toenter German territory is laid down in the Aufenthaltsgesetz, which replaced thelegislation on aliens as of 1 January 2005.

53 It is true that the Aufenthaltsgesetz merely implements, at the level of the Member Stateconcerned, an act of secondary Community legislation, namely RegulationNo 539/2001, which, as is clear from the first recital in its preamble, is a flankingmeasure directly linked to the free movement of persons in an area of freedom, securityand justice which was adopted on the basis of Article 62(2)(b)(i) EC.

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54

55

56

SOYSAL AND SAVATLI

It is also true, as the Commission submitted at the hearing, that the conditionsgoverning a Schengen visa, such as that referred to in Paragraphs 4(1) and 6(2) of theAufenthaltsgesetz, have certain advantages compared with the conditions that appliedin Germany, at the time of the entry into force of the Additional Protocol in thatMember State, to Turkish nationals in the position of the appellants in the mainproceedings. Whereas the right of access enjoyed by such nationals was limited to theterritory of Germany alone, a visa issued under Paragraph 6(2) of the Aufenthaltsgesetzallows them to move freely throughout the territories of all the States that are parties tothe Agreement on the gradual abolition of checks at their common borders, signed atSchengen (Luxembourg) on 14 June 1985 by the Governments of the States of theBenelux Economic Union, the Federal Republic of Germany and the French Republic(OJ 2000 L 239, p. 13), an agreement which was implemented by the signature atSchengen, on 19 June 1990, of a convention (OJ 2000 L 239, p. 19), laying downcooperation measures designed to ensure, as compensation for the abolition of internalborders, the protection of all the territories of the contracting parties.

The fact remains that, as regards Turkish nationals such as the appellants in the mainproceedings, who intend to make use in the territory of a Member State of the right tofreedom to provide services under the Association Agreement, national legislation thatmakes that activity conditional on the issuing of a visa, which can moreover not berequired from Community nationals, is liable to interfere with the actual exercise of thatfreedom, in particular because of the additional and recurrent administrative andfinancial burdens involved in obtaining such a permit which is valid for a limited time.In addition, where a visa is denied, as in the case in the main proceedings, legislation ofthat kind prevents the exercise of that freedom.

It follows that such legislation, which did not exist on 1 January 1973, has at least theeffect of making the exercise, by Turkish nationals such as the appellants in the mainproceedings, of their economic freedoms guaranteed by the Association Agreementsubject to conditions that are stricter than those that were applicable in the relevantMember State at the time of the entry into force of the Additional Protocol.

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57


Under those circumstances, it must be concluded that legislation such as that at issue inthe main proceedings constitutes a ‘new restriction’, within the meaning of Article 41(1)of the Additional Protocol, of the right of Turkish nationals resident in Turkey freely toprovide services in Germany.

58 That conclusion cannot be called into question by the fact that the legislation currentlyin force in Germany merely implements a provision of secondary Community legislation.

59 In this respect, it is sufficient to recall that the primacy of international agreementsconcluded by the Community over provisions of secondary Community legislationmeans that such provisions must, so far as is possible, be interpreted in a manner that isconsistent with those agreements (see Case C-61/94 Commission v Germany [1996] ECR I-3989, paragraph 52).

60 Moreover, the objection, also raised by the referring court, according to which application of the ‘standstill’ clause in Article 41(1) of the Additional Protocol wouldobstruct the general legislative power devolved to the legislature, cannot be accepted.

61 The adoption of rules that apply in the same manner to Turkish nationals and toCommunity nationals is not inconsistent with the ‘standstill’ clause. Moreover, if such rules applied to Community nationals but not Turkish nationals, Turkish nationalswould be put in a more favourable position than Community nationals, which would beclearly contrary to the requirement of Article 59 of the Additional Protocol, according

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SOYSAL AND SAVATLI

to which the Republic of Turkey may not receive more favourable treatment than thatwhich Member States grant to one another pursuant to the Treaty.

62 In the light of all the foregoing considerations, the answer to the questions referred isthat Article 41(1) of the Additional Protocol is to be interpreted as meaning that itprecludes the introduction, as from the entry into force of that protocol, of a requirement that Turkish nationals such as the appellants in the main proceedingsmust have a visa to enter the territory of a Member State in order to provide servicesthere on behalf of an undertaking established in Turkey, since, on that date, such a visawas not required.

Costs

63 Since these proceedings are, for the parties to the main proceedings, a step in the actionpending before the national court, the decision on costs is a matter for that court. Costsincurred in submitting observations to the Court, other than the costs of those parties,are not recoverable.


Article 41(1) of the Additional Protocol, which was signed on 23 November 1970at Brussels and concluded, approved and confirmed on behalf of the Community

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by Council Regulation (EEC) No 2760/72 of 19 December 1972, is to be interpreted as meaning that it precludes the introduction, as from the entry intoforce of that protocol, of a requirement that Turkish nationals such as theappellants in the main proceedings must have a visa to enter the territory of aMember State in order to provide services there on behalf of an undertakingestablished in Turkey, since, on that date, such a visa was not required.

[Signatures]

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Case C-308/07 P

Koldo Gorostiaga Atxalandabaso v

European Parliament

(Appeal — Rules concerning the expenses and allowances to Members of the European Parliament —Recovery of improperly paid sums by means of offsetting — Enforcement of a judgment of the Court of First Instance — Right to an impartial tribunal — Res

judicata — Principle of sound administration)

Opinion of Advocate General Trstenjak delivered on 11 September 2008 . . . I - 1062 Judgment of the Court (First Chamber), 19 February 2009 . . . . . . . . I - 1087


1. Procedure — Decision given by reasoned order — Challenge — Conditions (Rules of Procedure of the Court of First Instance, Art. 111)

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SUMMARY — CASE C-308/07 P

2. Community law — Principles — Fundamental rights — Observance ensured by the Court —Taking into consideration the European Convention on Human Rights — Right of every person to a fair hearing (Art. 6(2), EU)

3. Actions for annulment — Judgment annulling a measure — Effects — Partial annulment (Art. 231, first para., EC)

1. The application of the procedure providedfor in Article 111 of the Rules of Procedure of the Court of First Instance does not in itself prejudice the right to a proper andeffective judicial process, since that provi-sion is applicable only where it is clear thatthe Court of First Instance has no jurisdic-tion over the action, or where the action is manifestly inadmissible or manifestly lacking any foundation in law. Accord-ingly, if an applicant takes the view that theCourt of First Instance has incorrectlyapplied Article 111, he must challenge theassessment by the Court of First Instanceof the conditions to which the applicationof that provision is subject.

Where an appellant merely criticises thefact that the Court of First Instance had recourse to a reasoned order without referring to the conditions governing theapplicability of Article 111 or questioningthe Court’s interpretation of that article in

the order under appeal, his ground of appeal must be dismissed as unfounded.

(see paras 36-38)

2. The right to a fair trial, which derives interalia from Article 6(1) of the EuropeanConvention for the Protection of Human Rights and Fundamental Freedoms, constitutes a fundamental right which theEuropean Union respects as a general principle under Article 6(2) EU. Such a right necessarily implies access for everyperson to an independent and impartialtribunal. Thus, the existence of guaranteesconcerning the composition of the tribunalare the corner stone of the right to a fairtrial, compliance with which must in particular be verified by the Communityjudicature if an infringement of that right iscomplained of and the challenge on thatpoint does not appear from the outset manifestly devoid of merit.

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GOROSTIAGA ATXALANDABASO v PARLIAMENT

However, the fact that the judges who heard and determined a case initially maysit in another formation hearing and determining the same case again is not initself incompatible with the requirementsof a fair trial. In particular, the fact that oneor more of the judges were present in twosuccessive formations and exercised the same functions, such as president or judge-rapporteur, is in itself irrelevant to the assessment of compliance with the requirement of impartiality, since those duties are performed in a collegiate forma-tion of the court. Such considerations are even more relevant where the two succes-sive formations do not have to hear and determine the same case, but two separatecases which are related to some extent.

Furthermore, there are two aspects to therequirement of impartiality. In the first place, the tribunal must be subjectivelyimpartial, that is, none of its members mustshow bias or personal prejudice, there being a presumption of personal imparti-

ality in the absence of evidence to the contrary. In the second place, the tribunalmust be objectively impartial, that is to say,it must offer guarantees sufficient to exclude any legitimate doubt in this respect.

(see paras 41-46)

3. The partial annulment of an act does notprevent the procedure for replacing an annulled measure from being resumed atthe very point at which the illegality occurred without necessarily affecting preparatory acts. Furthermore, an act benefits from the res judicata attached to an earlier act in so far as it is a mere repetition of the part of that act which wasnot annulled.

(see paras 56, 58)

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OPINION OF MS TRSTENJAK — CASE C-308/07 P

OPINION OF ADVOCATE GENERALTRSTENJAK


I — Introduction

1. In the present case, the Court of Justice has to decide on an appeal which the former Member of the European Parliament (MEP)Koldo Gorostiaga Atxalandabaso (‘the appel-lant’) has lodged against the order of the Courtof First Instance of 24 April 2007 in CaseT-132/06 Gorostiaga Atxalandabaso v Parliament. 2

2. In that order, the Court of First Instance dismissed the action brought by the appellantfor the annulment of the decision of the Secretary-General of the European Parlia-ment of 22 March 2006 concerning the repayment of improperly received MEP’s allowances.

1 — Original language: German. 2 — Order of the Court of First Instance of 24 April 2007 in Case

T-132/06 Gorostiaga Atxalandabaso v Parliament.

II — Legal framework

3. Under Article 27 of the Rules Governingthe Payment of Expenses and Allowances toMembers of the European Parliament (‘the EAM Rules’):

‘2. Any Member who considers that these Rules have been incorrectly applied may writeto the Secretary-General. In the event that noagreement is reached between the Memberand the Secretary-General, the matter shall bereferred to the Quaestors, who shall take a decision after consulting the Secretary-General. The Quaestors may also consult thePresident and/or the Bureau.

3. Where the Secretary-General, in consult-ation with the Quaestors, is satisfied that undue sums have been paid by way of allowances provided for Members of the

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European Parliament by these Rules, he shallgive instructions for the recovery of such sumsfrom the Member concerned.

4. In exceptional cases, and on a proposalsubmitted by the Secretary-General after consulting the Quaestors, the Bureau may,in accordance with Article 73 of the Financial Regulation and its implementing rules, instruct the Secretary-General temporarily to suspend the payment of parliamentaryallowances until the Member has repaid thesums improperly used.

The Bureau’s decision shall be taken with due regard for the effective exercise of the Member’s duties and the proper functioningof the Institution, the views of the Member concerned having been heard before the adoption of the said decision.’

4. Article 71(2) of Council Regulation (EC,Euratom) No 1605/2002 of 25 June 2002 onthe Financial Regulation applicable to the general budget of the European Communities(‘the Financial Regulation’) 3 provides:

3 — OJ 2002 L 248, p. 1.

‘The own resources made available to the Commission and any amount receivable thatis identified as being certain, of a fixed amountand due must be established by a recoveryorder to the accounting officer followed by adebit note sent to the debtor, both drawn upby the authorising officer responsible.’

5. Pursuant to Article 73(1) of the FinancialRegulation:

‘The accounting officer shall act on recoveryorders for amounts receivable duly estab-lished by the authorising officer responsible.He/She shall exercise due diligence to ensurethat the Communities receive their revenue and shall see that their rights are safeguarded.

The accounting officer shall recover amountsby offsetting them against equivalent claimsthat the Communities have on any debtor whohimself/herself has a claim on the Commu-nities that is certain, of a fixed amount and due.’

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6. Article 83 of Commission Regulation (EC, the principal authorising officer by delegation.Euratom) No 2342/2002 of 23 December 2002 The subdelegation of powers to authorisinglaying down detailed rules for the Financial officers by subdelegation shall be performedRegulation 4 states: by authorising officers by delegation.’

‘At any point in the procedure the accountingofficer shall, after informing the authorisingofficer responsible and the debtor, recover established amounts receivable by offsettingin cases where the debtor also has a claim on the Communities that is certain, of a fixed amount and due relating to a sum establishedby a payment order.’

7. Article 5 of the Internal Rules on the Implementation of the European Parliament’s Budget, which were adopted by the Bureau on4 December 2002, provides:

‘3. By delegation decision of the Institution,represented by its President, the Secretary-General shall be appointed principal author-ising officer by delegation. …

4. The delegation of powers to authorisingofficers by delegation shall be performed by

4 — OJ 2002 L 357, p. 1.

III — Facts and procedure

A — Background to the dispute

8. The appellant is a former Member of theEuropean Parliament who exercised his mandate during the fifth legislative period(1999 to 2004). By letter of 26 November 2003,the Secretary-General of the European Parlia-ment stated that, in the absence of supportingdocuments relating to the use of various parliamentary allowances, the appellant had adebt of EUR 176 516 to the European Parlia-ment. Part of that debt had already been repaid since 2002.

9. By his decision of 24 February 2004, theSecretary-General ordered that a proportionof the subsistence allowance and of the general expenditure allowance were to be withheld in order to recover the remainder of the amount repayable, amounting to EUR 118 360.18, by offsetting. The decisionalso provided that if the appellant’s mandate

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came to an end before the sum owed to the Secretary-General had not been competent toEuropean Parliament had been repaid, the order the offsetting in question without transitional end-of-service allowance and all having been instructed to do so by the Bureau. other payments due to the appellant would beretained.

10. On 20 April 2004 the appellant broughtan action for annulment of the decision of 24 February 2004 before the Court of FirstInstance. In support of his application for theannulment of the decision, he raised eightpleas in law.

11. By judgment of 22 December 2005 in Case T-146/04 Gorostiaga Atxalandabaso v Parliament, 5. the Court of First Instance partially annulled the decision of 24 February2004. In paragraph 84 of that judgment, theCourt stated that the contested decision comprised essentially two aspects, namely,first, the finding by the Secretary-General thatthe sums mentioned in the decision had been improperly paid to the applicant and that theyhad to be recovered and, secondly, the decision to effect recovery by means of offsetting against allowances payable to theapplicant. After examining the second limb ofthe first plea, which related solely to the lawfulness of the second aspect of the contested decision, the Court annulled that decision in so far as it laid down that the recovery of the sum owed by the applicantshould be effected by means of offsetting. TheCourt based that decision on grounds of abreach of the procedure laid down in Article 27(4) of the EAM Rules, since the

12. The first two points of the operative partof the judgment stated that the Court of FirstInstance:

‘1. Annuls the decision of the Secretary-General of the European Parliament of24 February 2004 concerning the recovery of the sums paid to the applicantby way of parliamentary expenses andallowances in so far as it lays down thatthe recovery of the sum owed by theapplicant shall be effected by means ofoffsetting;

2. Dismisses the remainder of the applica-tion.’

13. Neither of the parties appealed against5 — Case T-146/04 Gorostiaga Atxalandabaso v Parliament [2005] ECR II-5989 that judgment.

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14. By decision of 1 February 2006, the Bureau instructed the Secretary-General to recover the improperly paid allowances pursuant to Article 27(4) of the EAM Rules.

15. On 22 March 2006 the Secretary-Generaladopted another decision (hereinafter also ‘the contested decision’) against the appellant, by which the proceedings against him for recovery of the amount receivable were resumed with the intention of remedying theprocedural defect consisting in the failure togive instructions in accordance with the requirements of the judgment of 22 December2005.

16. In the contested decision, the Secretary-General took account of both the judgment of22 December 2005 and the decision of the Bureau of 1 February 2006. He also referred tothe main stages of the procedure which hadresulted in the ascertainment of the debt amounting to EUR 118 360.18 and pointedout that the decision had been adoptedpursuant to the judgment of 22 December2005.

17. Point 1 of the operative part of the contested decision states that in accordance with Article 73 of the Financial Regulation theParliament’s accounting officer had been instructed to recover the amount receivable of EUR 118 360.18. Points 1 and 2 make clear that recovery may be effected by offsettingagainst various allowances and other payments owed by the appellant.

B — The procedure before the Court of FirstInstance and the contested order

18. By application lodged at the Registry ofthe Court of First Instance on 12 May 2006,the appellant brought an action for annulmentagainst the decision of 22 March 2006. He claimed that the contested decision should be annulled and the Parliament ordered to paythe costs.

19. The appellant based his application on 11pleas in law, which were all rejected by theCourt of First Instance. In the contested order, the Court of First Instance dismissed the action in its entirety and ordered the appellantto pay the costs.

20. Mention will be made below only of thesections of the contested order which are relevant to the present appeal.

21. With his first plea in law, the appellantclaimed an infringement of the principle of res judicata, because in his view it was not possible to rectify the recovery procedure, asthe Court of First Instance had annulled the decision of 24 February 2004 because of afinding of ultra vires. The legal inexistence ofthat measure therefore precluded rectifica-tion.

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22. In this regard, the Court of First Instancestated in paragraph 30 of the contested orderthat the Secretary-General had certainly beenpermitted to adopt the contested decision of22 March 2006 pursuant to Article 27(4) ofthe EAM Rules, as interpreted in paragraphs86 to 97 of the judgment, after the Bureau hadinstructed him to recover the amount re-ceivable. Furthermore, in paragraph 32 of thecontested order the Court of First Instance stated that even though the retention of EUR 40 398.80 no longer had any legal basisfollowing the judgment, this could not haveresulted in the extinction of the Parliament’s claim against the appellant amounting to EUR 118 360.18, as it was a separate questionin relation to that sum whether recovery byoffsetting was possible.

23. The Court of First Instance therefore rejected the first plea in law as manifestly unfounded.

24. With his third plea in law, the appellantalleged force majeure to explain that it wasimpossible to produce supporting documentsfor certain expenditure.

25. The Court of First Instance rejected thatplea as manifestly inadmissible because in itsview that argument could not call into question the force of res judicata of the judgment of 22 December 2005.

26. With his seventh plea in law, the appellantcomplained at the failure to give notificationof the decision of the Bureau of 1 February2006. He took the view that the EuropeanParliament had infringed Article 20 of the European Code of Good Administrative Behaviour, which establishes an obligation togive notification of decisions which affect therights or interests of individual persons.

27. The Court of First Instance rejected that plea in law as manifestly unfounded with reference to the legally non-binding characterof that code.

C — The procedure before the Court of Justice and forms of order sought

28. By an application of 2 July 2007, lodged atthe Registry of the Court of Justice on 5 July2007, the appellant brought the present appeal, in which he claims that the Court should:

— set aside the order of the Court of First Instance of 24 April 2007 in Case T-132/06;

— give a definitive ruling on the case;

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— annul the decision of the Secretary-General of the European Parliament of22 March 2006, ordering the reimburse-ment by the appellant of a sum of EUR 118 360.18 and proceeding to makea deduction from various parliamentaryallowances owed to the appellant by theParliament;

— order the defendant to pay its own costsand those incurred by the appellant.

29. On 18 September 2007 the European Parliament lodged a response, in which it contends that the Court should:

— dismiss the appeal in its entirety as unfounded;

— order the appellant to pay the costs.

30. By order of 12 October 2007, the Presi-dent of the Court of Justice found that the submission of a reply was not necessary.

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31. After the written procedure, a hearingtook place on 5 June 2008 at which the partiesmade their oral observations.

D — Grounds of appeal and arguments ofthe parties

32. The appellant raises six grounds of appealagainst the contested order.

33. In his first ground of appeal, the appellantchallenges the use of Article 111 of the Rulesof Procedure of the Court of First Instance, which he claims denied him the right to a fairtrial, since he had neither been given prioropportunity to express his views before theCourt of First Instance nor been able to replyto the Parliament’s arguments. The appellantalso complains that because the Court of FirstInstance failed to inform him in advance that it had decided to give the decision by order hehad been denied the opportunity to challengethat decision. Accordingly, the Court of FirstInstance had infringed the appellant’s rights ofdefence, the adversarial principle and the rightto a fair trial.

34. The Parliament replies that the Court ofFirst Instance properly applied Article 111 ofits Rules of Procedure and did not infringe theappellant’s rights of defence.


35. In his second ground of appeal, the appellant submits that the principle of impar-tiality was breached since the same judgesruled on the substance of the two successive actions which he brought in Cases T-146/04and T-132/06, which gave rise, respectively, tothe judgment of 22 December 2005 and to theorder of 24 April 2007. That principle demands that a judge cannot hear and determine, even at the same level of jurisdic-tion, a case based on facts which are identical, or sufficiently connected, to those of a case onwhich he has ruled previously.

36. The Parliament contends that the argu-ment put forward by the appellant is comple-tely unfounded and not supported by the case-law of the Community judicature. In addition, the case in which the contested order was made concerned the question whether the Parliament had fulfilled its obligations under the judgment of 22 December 2005. In the view of the Parliament, there could therefore be no legalobjection to the fact that the two cases wereheard and determined by the same judge.

37. In his third ground of appeal, the appel-lant claims that the Court of First Instance incorrectly interpreted the scope of the judgment of 22 December 2005. Since the decision taken by the Secretary-General of theParliament on 24 February 2004 had beenannulled as ultra vires, the appellant in facthad no reason to lodge an appeal against thatjudgment before the Court of Justice, since theeffect of the finding of ultra vires by the Courtof First Instance was that the flawed decision did not exist.

38. The Parliament objects that the Court ofFirst Instance only partially annulled the decision of the Secretary-General of the Parliament of 24 February 2004. In fact, it had been annulled only in so far as it orderedthe recovery of the amounts owed by the applicant by offsetting.

39. In his fourth ground of appeal, the appellant challenges the systematic refusal totake into account the arguments which he hadput forward to obtain the annulment of thedecision of the Secretary-General of the Parliament of 22 March 2006. He submits that the latter decision is in fact a new decision, separate from the decision of 24 February 2004, and the Court of First Instance therefore had a duty to examine allthe pleas, of substance and procedure, whichhe had put forward to challenge it.

40. The Parliament rejects that argument andpoints out that in the judgment of 22 December 2005 the Court of First Instance had agreed with the Parliament’s view that the sums of money had been paid improperly.Consequently, the decision of 24 February2004 could have been rectified.

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41. In his fifth ground of appeal, the appellantcriticises the Court of First Instance for havingrefused to consider the plea alleging force majeure, even though no such plea had been raised in the action brought against the decision of 24 February 2004. His appeal wasbased on facts which had come to light onlyafter the decision in question.

42. The Parliament points out that he hadalready raised an essentially identical plea inthe proceedings which led to the judgment of22 December 2005 and that the Court of First Instance had rightly rejected that plea. In anycase, the facts adduced to prove the existenceof force majeure occurred only after the adoption of the decision of 22 March 2006and could not therefore result in its annul-ment.

43. In his sixth ground of appeal, the appel-lant criticises the Court of First Instance for wrongly having declined to examine whetherthe Parliament had breached the principle ofsound administration, as laid down in Article 41 of the Charter of Fundamental Rights of the European Union and in the Codeof Good Administrative Behaviour adopted byParliament on 6 December 2001. In this connection, the appellant notes that the abovementioned principle forms an integralpart of the fundamental principles of law whose observance the Court of Justice ensures.

44. The Parliament contends that the Court of First Instance merely established the non-legal character of the instrument relied on andtherefore rightly rejected its applicability.

IV — Legal assessment

A — Examination of the grounds of appeal

1. First ground of appeal: infringement of theright to a fair trial

45. Under Article 58 of the Statute of the Court of Justice, an appeal may lie only on thegrounds of a breach of procedure which adversely affects the interests of the appellant.With his first ground of appeal, the appellantessentially objects to an application of Article 111 of the Rules of Procedure of the Court of First Instance, which he considers to be unlawful in so far as he was denied the rightto a fair trial.

46. The appellant thus claims a breach of procedure which adversely affects his own interests and rights. This ground of appeal is

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therefore admissible. It must be examined below whether that complaint is also well founded, that is to say, whether the Court ofFirst Instance misapplied Article 111 of itsRules of Procedure.

47. Under Article 111 of its Rules of Proce-dure, the Court of First Instance may, byreasoned order, and without taking furthersteps in the proceedings, give a decision on theaction where it is clear that the Court of First Instance has no jurisdiction to take cogni-sance of an action or where the action is manifestly inadmissible or manifestly lackingany foundation in law. Such an order may bemade of the Court’s own motion at any stageof the proceedings, without any need to hearthe parties with regard to this option. 6 From a legal point of view, this procedural rule givesthe Court of First Instance scope in assessingwhether the abovementioned legal conditionshave been satisfied and a margin of discretion as regards taking a decision by order. However, the provision also imposes on theCourt the obligation to give reasons for itsdecision.

48. It is therefore consistent with the settled case-law of the Court of First Instance that a decision may be made by order under thatprovision if, for example, the Court considersthat the information in the documents before it is sufficient to enable it to rule on the pending case. 7 As is made clear by paragraph23 of the contested order, this was the case in

6 — To that effect, see Rengeling, H.-W., Middeke, A. and Gellermann, M., Handbuch des Rechtsschutzes in der Euro-päischen Union, Munich, 2003, § 26, paragraph 18, p. 463, andLenaerts, K., Arts, D. and Maselis, I., Procedural Law of the European Union, 2nd edition, London, 2006, paragraph 24-112, p. 577.

7 — Orders in Case T-48/91 Minic v Court of Auditors [1991] ECR II-479, paragraph 11, and in Case T-79/99 Euro-Lex v OHIM (Eu-Lex) [1999] ECR II-3555, paragraph 10.

this instance. Not only did the Court considerthat it had all the facts relevant to the decision with the result that there was no need to arrange a hearing, but, after assessing the factsput forward, the Court was also convincedthat the action was to be dismissed as manifestly inadmissible and in part as mani-festly unfounded. There can therefore be nolegal objection to the application of Article 111of the Rules of Procedure of the Court of First Instance as a procedural rule in the present case.

49. In addition, the appellant does not show in sufficiently substantiated form to what extent he was denied the right to make hisown submissions which he could not alreadyhave made in written form. In particular, theappellant has failed to explain which argu-ments made by the Parliament he would havewished to respond to in adversarial proceed-ings.

50. The first ground of appeal is therefore tobe rejected as unfounded.

2. Second ground of appeal: infringement ofthe right to an impartial tribunal

51. An examination of the breach of the principle of judicial impartiality in the

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proceedings at first instance alleged by theappellant first requires a few factual clarifica-tions to be made.

52. The appellant claims that the substance ofthe two actions which he brought in CasesT-146/04 and T-132/06 were ruled on by thesame judges. However, that is correct only in so far as all the members of the Second Chamber of the Court of First Instance which heard Case T-132/06 also participated in CaseT-146/04, which had been assigned to the Second Chamber, Extended Composition. Onthe other hand, two of the judges who participated in Case T-146/04 did not takepart in Case T-132/06. Furthermore, as theappellant rightly states, in the cases in question the same judges held the functionsof President of the Chamber and Judge-Rapporteur.

53. In the opinion of the appellant, this fact issufficient to show that there was a breach of the right to a fair trial by an impartial tribunalenshrined in Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (‘the ECHR’) and in Article 47 of the Charterof Fundamental Rights of the European Union(‘the Charter of Fundamental Rights’). In his view, that principle demands that a judgecannot hear and determine, even at the same level of jurisdiction, a case based on facts which are identical, or sufficiently connected,

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to those of a case on which he has ruled previously.

54. In this regard, it must first be stated that the Community has not yet acceded to the ECHR, 8 which precludes on legalgrounds a direct application of the provisionsof that international agreement within the Community legal order. 9 Nevertheless, the Court has consistently held that fundamentalrights form an integral part of the general

8 — In its Opinion 2/94 of 28 March 1996 [1996] ECR I-1759, theCourt of Justice concluded, that as Community law then stood,the Community still had no competence to accede to the ECHR. However, the European Union is in the process ofcreating the legal conditions for accession. Thus, Article I-9(2)of the Treaty establishing a Constitution for Europe (OJ 2004C 310, p. 1) made provision for such accession to the ECHR bythe Union. This authorisation has now been incorporated intoArticle 6(2) of the Treaty on European Union as amended bythe Treaty of Lisbon (OJ 2008 C 115, p. 1). Protocol No 14 tothe ECHR of 13 May 2004, which primarily contains provisions on the reform of the European Court of HumanRights, provides, in Article 17, for the following to be insertedin Article 59 of the ECHR: ‘The European Union may accede to this Convention.’

9 — Under Article 281 EC, the Community has legal personalityand, as a subject of international law, is in principle bound,from the point of view of international treaty law, only by theinternational treaties ratified by it. Article 300(7) EC in turngoverns the binding effect of those agreements within theCommunity, requiring the institutions of the Community andMember States to implement and comply with the Commu-nity agreements. According to settled case-law, the Commu-nity agreements duly established having regard to the requirements of primary law ‘form an integral part of Community law’. The condition and the relevant date for the validity of international treaty law within the Community legalorder are the entry into force of the agreement in question, thatis its binding effect on the Community under international law(see Case 181/73 Haegeman [1974] ECR 449, paragraph 5; Case 104/81 Kupferberg [1982] ECR 3641, paragraphs 11 to 13; and Case C-211/01 Commission v Council [2003] ECR I-8913,paragraph 57). Lenaerts, K. and Van Nuffel, P., Constitutional Law of the European Union, 2nd edition, London, 2005,paragraph 17-092, p. 740, also take the entry into force of theCommunity agreement as the basis. However, they point outthat an agreement concluded by the Member States can also bebinding on the Community, in particular where the Commu-nity undertakes to exercise its powers in accordance with thatagreement. They refer in this connection to the Geneva Convention of 28 July 1951 and the Protocol of 31 January1967 relating to the status of refugees, mentioned in Article 63(1) EC, but do not mention the ECHR. Furthermore,in their memorandum of understanding of 10 and 11 May2007, the Council of the European Union and the Council ofEurope agreed to cooperate on law-making, but at the sametime reaffirmed their decision-making autonomy.


principles of law whose observance the Court ensures. 10 For that purpose, the Court drawsinspiration from the constitutional traditionscommon to the Member States and from the guidelines supplied by international treatiesfor the protection of human rights on whichthe Member States have collaborated or to which they are signatories. In that regard, the ECHR has particular significance. 11

55. In the course of the further development of the European integration process, that case-law became embodied in Article 6(2)EU. According to that provision, the Unionmust respect fundamental rights, as guaran-teed by the ECHR signed in Rome on 4 November 1950 and as they result fromthe constitutional traditions common to the Member States, as general principles of Community law.

56. In examining the second ground of appeal, high relevance must be attached to

10 — See Opinion 2/94, cited in footnote 8, paragraph 33; Case29/69 Stauder [1969] ECR 419, paragraph 7; Joined Cases7/56 and 3/57 to 7/57 Algera and Others v Common Assembly [1957] ECR 39, 55; and Case C-299/95 Kremzow [1997] ECR I-2629, paragraph 14.

11 — See, for example, Stauder, cited in footnote 10, paragraph 7; Case 4/73 Nold v Commission [1974] ECR 491; Case 44/79 Hauer [1979] ECR 3727, paragraph 15; Case 222/84 Johnston [1986] ECR 1651, paragraph 18; Case C-7/98 Krombach [2000] ECR I-1935, paragraph 25; Case C-274/99 P Connolly v Commission [2001] ECR I-1611, paragraph 37; Case C-112/00 Schmidberger [2003] ECR I-5659, paragraph 71; Case C-540/03 Parliament v Council [2006] ECR I-5769, paragraph 35; Case C-229/05 P PKK and KNK v Council [2007] ECR I-439, paragraph 76; Case C-305/05 Ordre des barreaux francophones et germanophone and Others [2007] ECR I-5305, paragraph 29; Case C-450/06 Varec [2008] ECR I-581, paragraph 44; and Case C-14/07 Weiss und Partner [2008] ECR I-3367, paragraph 57.

the provision made in Article 6(1) of the ECHR, according to which, in the determination of his civil rights and obliga-tions or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal estab-lished by law. That fundamental right hastaken on a similar form in Article 47 of the Charter of Fundamental Rights.

57. I infer from those two provisions that theright to a fair trial enshrined therein and recognised in the case-law of the Court ofJustice 12 necessarily includes the guarantee ofan independent and impartial tribunal. Thiswas recently confirmed by the Court of Justicein the judgment in Chronopost and La Poste v UFEX and Others 13 relating to the require-ments stemming from the rule of law in relation to the composition of a chamber, inconnection with which the Court of Justice described the abovementioned guarantees as a ‘cornerstone of the right to a fair trial’, whose observance must be checked by the Court ofJustice of its own motion, where this is disputed on a ground that does not immedi-ately appear to be manifestly devoid of merit. 14

12 — Ordre des barreaux francophones et germanophone and Others, cited in footnote 11, paragraph 29.

13 — Joined Cases C-341/06 P and C-342/06 P [2008] ECR I-4777. 14 — Ibid., paragraph 46. The Court first made reference to the

judgment of the European Court of Human Rights in Remli v. France, 23 April 1996, § 48, Reports of Judgments and Decisions 1996-II, which pointed out the duty of every national court to check whether its actual composition observed the principle of impartiality. The Court then referred to its own case-law on the matters which must be raised by the Court of its own motion (see Case C-367/95 PCommission v Sytraval and Brink’s France [1998] ECR I-1719, paragraph 67, and Case C-166/95 P Commission v Daffix [1997] ECR I-983, paragraph 25). Thus, the Court ofJustice has essentially adopted the case-law of the EuropeanCourt of Human Rights with effect for Community law.

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58. There is a functional link between ‘inde-pendence’ and ‘impartiality’ in so far as the former is a requirement for the latter. The term ‘impartial’ refers primarily to the sub-jective position of the judges. 15 They are to beabove the parties and to take their decisionswithout regard to the person, objectively andaccording to the best of their knowledge andbelief. 16 The present principle of impartiality,which is also recognised in the legal orders ofthe Member States, originally dates back tothe Roman law maxim of ‘nemo debet esse iudex in propria causa’. 17

59. The European Court of Human Rightshas held that ‘impartiality’ within the meaningof Article 6(1) of the ECHR normally denotes

15 — In the view of Calliess, G.-P., ‘Judicial Independence andImpartiality in International Courts’, International Conflict Resolution, Tübingen, 2006, p. 144, the principle of imparti-ality is characterised by the absence of unlawful influence andjudicial bias in relation to the parties to the proceedings.According to Decaux, E. and Imbert, P.-H., La Convention européenne des droits de l’homme (ed. L.-E. Pettiti), 2ndedition, Article 6, p. 260, it must first be ascertained what acertain judge thought under the given circumstances andwhether he had a specific reason to discriminate against theapplicant.

16 — In that regard, see Frowein, J. and Peukert, W., Europäische Menschenrechtskonvention, Kehl/Strasbourg/Arlington, 1985, Article 6, paragraph 94, p. 153. In the view of Krekeler, W., ‘Der befangene Richter’, Neue Juristische Wochenschrift, 1981, p. 1633, the requirement of the impartial neutrality of the judge demands that in each individual case which he hears, and at each individual stage ofthe proceedings, he does not allow himself to be influenced byirrelevant, non-objective factors. In the case before him, hemust decide without regard to the person only on the basis ofthe facts of the case and solely according to the law.

17 — See also Kanska, K., ‘Towards Administrative Human Rights in the EU — Impact of the Charter of Fundamental Rights’,European Law Journal, 2004, p. 313, which traces the requirement of impartiality back to that maxim of Romanlaw. Marriott, A., ‘Conflicts of Interest — A Way Forward?’,Appendix No 8 (to Betriebs-Berater 2003, Vol. 47), p. 3, links that maxim to the principles of the independence and impartiality of a dispute resolution body. The Roman lawprinciple literally means that no one may be a judge in their own case (see Liebs, D., Lateinische Rechtsregeln und Rechtssprichwörter, Munich, 1998, p. 145).

the absence of prejudice or bias. 18 It regards itas a basic condition for the confidence which the courts in a democratic society must inspire. 19 According to the established case-law of the European Court of Human Rights,the impartiality of a tribunal can be assessedon the basis of a subjective and an objectivetest. 20 The first test consists in ascertaining the personal conviction or the personalinterest of the judge in a certain case. The impartiality of the judge is assumed in theabsence of evidence to the contrary. 21 The second test consists in examining whether thejudge has offered sufficient guarantees to exclude any legitimate doubt as to his impartiality. 22

60. In the present case, it must be stated thatthe appellant does not make any submissionsto suggest personal bias on the part of thethree judges involved. Consequently, theyenjoy a presumption of impartiality. As theappellant subsequently clarified at the

18 — Kyprianou v. Cyprus [GC], no. 73797/01, § 118, ECHR 2005-XIII.

19 — Hauschildt v. Denmark, 24 May 1989, § 48, Series A no. 154, and Grieves v. the United Kingdom [GC], no. 57067/00, § 69, 16 December 2003.

20 — Lindon, Otchakovsky-Laurens and July v. France [GC], nos.21279/02 and 36448/02, §§ 75 and 76, ECHR 2007-; Forum Maritime S.A. v. Romania, nos. 63610/00 and 38692/05, § 116, 4 October 2007; Schwarzenberger v. Germany,no. 75737/01, § 38, 10 August 2006; Grieves v. the United Kingdom, cited in footnote 19, § 69; and Piersack v. Belgium,1 October 1982, § 30, Series A no. 53.

21 — See Piersack v. Belgium, cited in footnote 20, § 30, and Le Compte, Van Leuven and De Meyere v. Belgium, 23 June 1981, § 58, Series A no. 43. Reid, K., A Practitioner’s Guide to the European Convention on Human Rights, 2nd edition, paragraph IIA-090, p. 114 et seq., points out that that presumption is very difficult to refute in practice, with theresult that even a negative opinion on the part of the judgeconcerning the case on which he must decide is not sufficientto be able to infer bias.

22 — Findlay v. the United Kingdom, 25 February 1997, § 73,Reports of Judgments and Decisions 1997-I.

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hearing, he does not object to their personalconviction or standpoint, but merely the factthat they participated in Cases T-146/04 andT-132/06. As a result, only the objective test ofthe impartiality of the Court of First Instanceis to be applied, against the background of itscomposition in Case T-132/06, 23 the crucial factor, in accordance with the case-law of the European Court of Human Rights, being theprecise circumstances of the specific case. 24

The personal standpoint of those claimingthat it is not impartial is important but notdecisive. What is decisive is whether the concern over the preservation of impartialitycan be objectively justified. 25

61. It should be pointed out, first of all, thatwhilst the appellant relies on Article 6(1) ofthe ECHR, he does not refer at all to relevant case-law of the European Court of HumanRights which could support his plea in law.However, an examination of the previous case-law suggests that the argument put forward by the appellant is completely unfounded.

23 — See Diennet v. France, 26 September 1995, § 36, Series A no. 325-A, and Hauschildt v. Denmark, cited in footnote 19, § 47,in which, in the absence of evidence of personal bias on thepart of the national judges concerned, the European Court ofHuman Rights only applied an objective test of impartiality.

24 — Schwarzenberger v. Germany, cited in footnote 20, § 42. Inconnection with the requirements stemming from the rule oflaw in relation to the composition of a tribunal, Koering-Joulin, R., ‘La notion européenne de tribunal indépendant etimpartial au sens de l’article 6, par. 1, de la Convention européenne des droits de l’homme’, Revue de science criminelle et de droit pénal comparé, 1990, p. 772, uses the expression ‘structural impartiality’.

25 — Lindon, Otchakovsky-Laurens and July v. France, cited in footnote 20, § 77; Kyprianou v. Cyprus, cited in footnote 18, § 58; Grieves v. the United Kingdom, cited in footnote 19, § 69; Incal v. Turkey, 9 June 1998, § 71, Reports of Judgments and Decisions 1998-IV; Findlay v. the United Kingdom, cited in footnote 22, § 73; and Hauschildt v. Denmark, cited in footnote 19, § 48.

62. It is thus apparent from the judgment inSchwarzenberger v. Germany 26 that the mere fact that a court has made previous decisionsconcerning the same case cannot be held as initself justifying fears as to the impartiality ofthat court. This applies, for example, to decisions taken by the same court prior tothe actual judicial proceedings (pre-trial decisions), 27 but also to the specific circum-stances examined by the Court of Justice inChronopost and La Poste v UFEX and Others, in which the judges were asked to re-examine a case after a higher court set aside their original ruling after an appeal had been brought against it. 28

63. It follows that it is not possible to inferfrom Article 6(1) of the ECHR a general prohibition under which a judge may not participate in the same case. That notwith-standing, in assessing the objective imparti-

26 — Cited in footnote 20, § 42. 27 — Schwarzenberger v. Germany, cited in footnote 20, § 42;

Hauschildt v. Denmark, cited in footnote 19, § 50; and Romero Martin v. Spain (dec.), no. 32045/03, 12 June 2006.

28 — Schwarzenberger v. Germany, cited in footnote 20, § 42; Diennet v. France, cited in footnote 23, § 38; and Ringeisen v. Austria, 16 July 1971, § 97, Series A no. 13. In Chronopost and La Poste v UFEX and Others, cited in footnote 13, paragraphs56 to 60, the Court of Justice reached the same conclusion. Inthat judgment, the Court found that the mere fact that achamber included a judge who was already part of anotherchamber which had already heard and determined the samecase was not sufficient in itself to assume an unlawful composition of that chamber. The Court thus essentially concurred with the legal opinion of Advocate General Sharpston (see the Opinion of 6 December 2007 in thatcase, points 58 and 59).

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ality of a tribunal, further aspects must betaken into consideration, for example whetherthe court has ruled on the same case or on two different cases, whether the competentchamber had the same composition in bothcases and whether the first decision alreadyhad force of res judicata, with the result that the tribunal was bound by the substantivelegal force of the first decision. 29

64. In this respect, it should be stated, first ofall, that the three judges in question certainlydid not participate in the same case, but inboth procedural and substantive respects intwo different cases. For example, the Court ofFirst Instance was not called on to review the factual findings of the first case. Irrespective ofthe broad correspondence between the facts,Case T-132/06 did contain new factual elements and raised new points of law whichthe Court of First Instance had to assess. The subject-matter of the dispute was different inso far as this time it concerned the questionwhether and to what extent the EuropeanParliament had complied with the judgmentof 22 December 2005 by adopting the decisionof 22 March 2006.

65. A judgment which is delivered in an action for annulment under Article 230 EC, as is clear from the first paragraph of Article 231 EC, is a judgment in rem, bywhich an act is judicially annulled in whole or

29 — See Lindon, Otchakovsky-Laurens and July v. France, cited infootnote 20, § 79, which concerned the participation of twojudges in two cases, where the first decision had force of res judicata. The European Court of Human Rights explainedthat any other judge would have been bound by the res judicata force of the first decision, which meant that theirparticipation had no influence on the second decision.

in part. 30 The Community judicature may notpronounce on effects of the judgment whichgo beyond annulment, for example a declar-ation or order of measures to be taken on the basis of the judgment. 31 Consequently, the Court of First Instance was able to check indirectly whether the procedural breach giving grounds for the partial nullity of thedecision of 24 February 2004 had been remedied only in the second proceedings.

66. Under those circumstances, bringing thecase before some of the bench of judges whoparticipated in the first case also had the advantage that the judges had precise knowl-edge of the background to the case and wereable to concentrate on the new points of law.In this respect, this was also in the interests ofthe administration of justice.

67. With regard to the composition of thechamber which heard and determined Case T-132/06, I believe there is, against the background of the abovementioned case-lawof the European Court of Human Rights, noevidence to suggest a breach of the principle ofimpartiality. As regards the objections raisedby the appellant that the Judge-Rapporteurwas identical in both cases, it is sufficient in my view to state that the Court of Justice made

30 — Cremer, W., Kommentar zu EUV/EGV (eds Calliess and Ruffert), 3rd edition, 2007, Article 231, paragraph 1; Rengeling, H.-W., Middeke, A. and Gellermann, M., Hand-buch des Rechtsschutzes in der Europäischen Union, Munich, 2003, § 7, paragraph 107, p. 144.

31 — See Cremer, W., loc. cit. (footnote 30), Article 231, para-graph 1.

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clear in the judgment in Chronopost and La Poste v UFEX and Others 32 that the fact that the same judge was entrusted with the dutiesof Judge-Rapporteur in two successive casescannot affect the assessment of impartiality,especially since the Court of First Instancetakes its decisions in a collegiate formation.

68. Lastly, it should be borne in mind that thejudgment of 22 December 2005 has not beenchallenged by either of the parties, with theresult that that judgment has force of res judicata. Consequently, the judges hearingand determining Case T-132/06 would, likeany others, be bound by the substantive legalforce of that judgment. Their participationcould not therefore have had any influence onthe aspects covered, such as the ascertain-ment of the existence of the European Parliament’s right to repayment vis-à-vis the appellant. 33

69. Therefore, the objective test likewise doesnot allow any doubts as to the impartiality ofthe Court of First Instance.

70. In the light of the foregoing, I concludethat there is no infringement of the appellant’s right under Community law to an impartialtribunal. The second ground of appeal musttherefore be rejected as unfounded.

32 — Cited in footnote 13, paragraph 53. 33 — See point 11 of this Opinion.

3. Third ground of appeal: incorrect inter-pretation of the scope of the judgment of 22 December 2005

71. It apparent from the statements made bythe appellant regarding the third ground ofappeal that he believes that the decision of24 February 2004 as an act has been annulledin its entirety as a result of the judgment of theCourt of First Instance of 22 December 2005. In my view, that understanding is based on amisinterpretation of the judgment in ques-tion.

72. Article 231 EC provides that the Court ofJustice or the Court of First Instance must declare the act concerned to be void if the action for annulment brought against it is wellfounded. Nevertheless the effect of such a judgment in rem does not necessarily extendto the whole of the contested act. If that act comprises several elements which are sever-able from each other and only one of thoseelements infringes Community law, only thatelement is to be annulled. 34 Such a case of the partial nullity of an act exists in the mainproceedings, as is apparent from a reading ofthe judgment of 22 December 2005.

73. Thus, in paragraph 84 of the judgment of22 December 2005 the Court of First Instance stated that the decision of 24 February 2004

34 — See Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299; Case 17/74 Transocean Marine Paint Association v Commission [1974] ECR 1063, paragraph 21; and Case 92/78 Simmenthal v Commission [1979] ECR 777, paragraph 107 et seq.

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comprised essentially two aspects, namely,first, the finding by the Secretary-General ofthe Parliament that the sums mentioned in the decision had been improperly paid to theapplicant and that they had to be recoveredand, secondly, the decision to effect recoveryby means of offsetting against allowances payable to the applicant. On the basis of thefinding in paragraph 97 of that judgment thatthe Secretary-General was not competent toorder the offsetting in question without having been instructed to do so by the Bureau in accordance with the procedurelaid down in Article 27(4) of the EAM Rules,and that there was therefore a significantprocedural breach which made the decisionunlawful, the Court ruled that the contested decision had to be annulled in so far as it ordered such offsetting. The annulment thusrelated solely to the second aspect of the decision. That conclusion was repeated by theCourt of First Instance in paragraphs 99 and169 and, lastly, in the operative part of thejudgment.

74. On the other hand, the Court rejected theother grounds for annulment in support of theaction, which were directed against the firstaspect of the decision, with the result that thataspect of the decision was not affected by theannulment. As the Court of First Instance rightly found in paragraph 52 of the contestedorder, the lawfulness of the decision in other respects was thus established, that is to say, inso far as it concerned the finding of the sumsimproperly paid. It follows that, contrary tothe view taken by the appellant, the decision of24 February 2004 could not be considered to

be null and void in its entirety. In so far as theappellant adopts the legally incorrect assump-tion, despite clear evidence to the contrary, ofthe ‘non-existence’ of the remaining aspect of that decision, it must be recalled that, according to the case-law of the Court of Justice, 35 Community measures are in prin-ciple presumed to be valid even where they aredefective. Consequently, the appellant was required to appeal against the judgment of22 December 2005 in order to eliminate completely the legal effects of the decision.Because he failed to do this, he must acceptthat the first aspect of the decision has become final in relation to him.

75. As the Court of First Instance rightlystated in paragraph 30 of the contested order,the partial nullity of the decision of 24 February 2004 does not preclude a resumption of the recovery procedure against the appellant — after the proceduralbreach has been remedied by rectifying theprocedure laid down in Article 27(4) of theEAM Rules — especially since, according to established case-law, 36 annulment of a Community measure does not necessarilyaffect the preparatory acts. The implementa-tion of the judgment of 22 December 2005 didnot therefore require the Parliament to setaside the first aspect of its decision and

35 — The Court has consistently held that measures of the Community institutions are in principle presumed to belawful and accordingly produce legal effects until such timeas they are withdrawn, annulled in an action for annulment ordeclared invalid following a reference for a preliminary rulingor a plea of illegality (see Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555, paragraph 48; Case C-245/92 P Chemie Linz v Commission [1999] ECR I-4643, paragraph 93; and Case C-475/01 Commission v Greece [2004] ECR I-8923, paragraph 18).

36 — Case C-331/88 Fedesa and Others [1990] ECR I-4023, paragraph 34, and Case C-415/96 Spain v Commission [1998] ECR I-6993, paragraph 32.

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completely reinitiate the recovery procedure.

76. This ground of appeal is therefore to berejected as unfounded.

4. Fourth ground of appeal: failure to takeinto account the applicant’s submissions

77. The appellant alleges that the Court ofFirst Instance failed to take into account the arguments which he had put forward to obtainthe annulment of the decision of 22 March 2006. In this connection, he refers to the statements made by the Court in paragraphs53 and 54 of the contested order, according towhich the arguments made against the firstaspect of that decision were to be rejected.

78. The grounds given by the Court of FirstInstance for that decision essentially state thatthis aspect of the decision is a mere repetitionof the first aspect of the decision of 24 February 2004, whose lawfulness was confirmed in the judgment of 22 December2005. The Court takes the view that because the substantive legal force of the judgmentapplied to that aspect of the decision, all complaints which challenge its lawfulness must be rejected as manifestly inadmissible.

79. I consider it necessary, first of all, to makeclear that, contrary to the way they are presented by the appellant in his appeal, 37

the statements of the Court of First Instance certainly do not relate to the entire decision of22 March 2006, but solely to its first aspect,which is substantively similar to the first aspect of the decision of 24 February 2004.

80. Furthermore, there can be no objectionfrom a legal point of view to the statementsmade by the Court of First Instance in paragraphs 49 to 54 of the contested order.Because of the abovementioned substantive correspondence, the relevant aspect of the decision of 22 March 2006 does not constitute a new measure, but merely a confirmatory actwhich does not produce any new legal effectsand is not therefore admissible as the subjectof an action for annulment. 38 In accordance with the case-law of the Court of Justice, 39 to

37 — Paragraph 55 of the appeal. 38 — Case 26/76 Metro v Commission [1977] ECR 1875, paragraph

4; Joined Cases 166/86 and 220/86 Irish Cement v Commis-sion [1988] ECR 6473, paragraph 16; Case C-180/96 United Kingdom v Commission [1998] ECR I-2265, paragraph 28 et seq.; Case C-480/93 P Zunis Holding and Others v Commis-sion [1996] ECR I-1, paragraph 14; Joined Cases T-121/96 andT-151/96 Mutual Aid Administration Services v Commission [1997] ECR II-1355, paragraph 48; Case T-224/95 Tremblay and Others v Commission [1997] ECR II-2215, paragraph 49; Case T-188/95 Waterleiding Maatschappij ‘Noord-West Brabant’ v Commission [1998] ECR II-3713, paragraphs 88to 141; and order in Case T-235/95 Goldstein v Commission [1998] ECR II-523, paragraph 41. See also Cremer, W., loc. cit.(footnote 30), Article 230, paragraph 19; Lenaerts, K., Arts, D.and Maselis, I., loc. cit. (footnote 6), paragraph 7-016, p. 212.

39 — The Court of First Instance refers to the judgment in Case14/64 Gualco (neé Barge) v High Authority [1965] ECR 51. See also Joined Cases 193/87 and 194/87 Maurissen and European Public Service Union v Court of Auditors [1989] ECR 1045, paragraph 26, and Case T-64/92 Chavane de Dalmassy and Others v Commission [1994] ECR-SC I-A-227 and II-723, paragraph 25, according to which an actionagainst a confirmatory decision is inadmissible only if theconfirmed decision has become final in relation to the personconcerned for failing to bring an action within the time-limit.

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which the Court of First Instance refers in paragraph 51 of the contested order, the firstaspect of the decision of 22 March 2006 thushas the legal force of the first aspect of thedecision of 24 February 2004.

reply to his letter of 15 April 2006, by which herequested the surrender of copies of seizeddocuments connected with his term as an MEP, constituted a case of force majeure.

81. The Court of First Instance therefore rightly concluded that the appellant’s complaints against that decision were to berejected as manifestly inadmissible. Conse-quently, this ground of appeal is also to berejected as unfounded.

5. Fifth ground of appeal: failure to take intoaccount circumstances of force majeure

82. The appellant alleges that the Court ofFirst Instance, with reference to the force of res judicata of the decision of 24 February 2004, refused to consider his plea alleging force majeure, even though no such plea hadbeen raised in the action brought against thatdecision. The appellant claims that, contraryto the assumptions made by the Court of FirstInstance, it is not a re-examination of a pleaalready assessed in the judgment of 22 December 2005. He argues that the factthat the Spanish Ministry of Justice did not

83. In principle, the Community law concepts of force majeure and fortuitous events cover only those events which are abnormal and unforeseeable, over which the party relying upon them had no control, andthe consequences of which could not havebeen avoided even if all due care had been exercised. 40 It follows that both force majeure and fortuitous events are concepts which contain an objective element and a subjectiveelement, the former referring to abnormal circumstances outside the sphere of the partyin question and the latter connected with hisobligation to guard against the consequencesof abnormal events by taking appropriate steps without making unreasonable sacri-fices. 41

84. It is not possible to concur with the appellant’s statement that the Court of First

40 — Settled case-law. See, for example, Case 145/85 Denkavit [1987] ECR 565, paragraph 11; Case C-12/92 Huygen and Others [1993] ECR I-6381, paragraph 31; Case C-208/01 Parras Medina [2002] ECR I-8955, paragraph 19; Case C-105/02 Commission v Germany [2006] ECR I-9659, paragraph 89; Case C-377/03 Commission v Belgium [2006] ECR I-9733, paragraph 95; and Case C-314/06 Société Pipeline Méditerranée et Rhône [2007] ECR I-12273, paragraph 23.

41 — Case C-195/91 P Bayer v Commission [1994] ECR I-5619,paragraph 32, and order in Case C-325/03 P Zuazaga Meabe v OHIM [2005] ECR I-403, paragraph 25.

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Instance failed to assess his third plea in lawalleging force majeure. It should be borne in mind that the appellant had already referredin Case T-146/04 42 and in Case T-132/06 43 to his inability to provide some items of his accounts. In both cases, he explained this bythe detention of his treasurer and the seizure of numerous accounting documents by theSpanish and the French authorities, as well asof the sum of EUR 200 304 by the First Examining Magistrate at the Tribunal de grande instance (Regional Court), Paris. Although he expressly described those circumstances as force majeure only in CaseT-132/06, it is clear that in Case T-146/04 hehad already relied on what he considered to beunforeseeable circumstances outside his sphere of control and thus, from a legal point of view, alleged force majeure within the meaning of the definition cited above.

85. This was recognised by the Court of FirstInstance when it found in paragraph 54 of thecontested order that the appellant had essen-tially put forward the same arguments againstthe first aspect of the contested decision as aresummarised in paragraph 147 of the judgmentof 22 December 2005. Because, as the Court also recognises, those arguments had alreadybeen rejected in that judgment and that judgment had become final, the Court alsohad to reject them as inadmissible with reference to the force of res judicata of the first aspect of the decision.

86. It is therefore necessary only to examinethe alleged failure by the Spanish Ministry ofJustice to reply to the letter of 15 April 2006.Irrespective of whether the mere failure toreply to a letter can in itself constitute force majeure, it must be stated that the appellant isrelying on such circumstances for the firsttime in the present appeal proceedings. Thatclaim does appear in the proceedings at firstinstance in connection with the 11th plea inlaw relating to alleged errors of assessment inthe adoption of the contested decision, 44 but not in connection with the third plea in lawconcerning the existence of force majeure. 45

The Court thus assessed that claim in the context of the 11th plea in law, on the basis ofthe classification made in the application, andrejected it together with the other arguments.The rejection of the 11th plea as manifestlyinadmissible is not contested by the appellanthimself.

87. Furthermore, I would like to draw atten-tion to the fact that, according to the appellant, the letter in question was sent tothe Spanish Ministry of Justice on 15 April2006, almost a month after the contested decision was adopted on 22 March 2006. Consequently, the absence of a reaction tothat letter from the Spanish authorities couldnot influence the Parliament’s decision. In this respect, the arguments put forward by theappellant are irrelevant.

42 — See Case T-146/04 Gorostiaga Atxalandabaso v Parliament, 44 — See paragraphs 94 to 98 (in particular paragraph 96) of thecited in footnote 5, paragraph 147. application in Case T-132/06.

43 — See paragraph 67 of the application in Case T-132/06. 45 — See paragraphs 66 to 69 of the application in Case T-132/06.

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88. This ground of appeal must therefore berejected as unfounded.

6. Sixth ground of appeal: failure to take intoaccount the arguments concerning a breachof the principle of sound administration

89. According to the predominant view inlegal doctrine, 46 the principle of sound administration, on which the appellant reliesin connection with his sixth ground of appeal,is not an individual principle of administrativelaw, but a combination of several principles,or a kind of collective term for some or all the principles of administrative law. Sometimes itis used as a synonym for those principles which make up administrative procedure

46 — In that respect, see Wakefield, J., The right to good administration, Alphen, 2007, p. 23; Lais, M., ‘Das Recht auf eine gute Verwaltung unter besonderer Berücksichtigungder Rechtsprechung des Europäischen Gerichtshofs’, Zeits-chrift für europarechtliche Studien, 2002, Vol. 3, pp. 453 and 454, and Dutheil de la Rochère, J., ‘The EU Charter of Fundamental Rights, Not Binding but Influential: the Example of Good Administration’, Continuity and changein EU law: essays in honour of Sir Francis Jacobs, 2008, p. 169, which propose a combination of several principles. Lenaerts, K. and Van Nuffel, P., loc. cit. (footnote 9),paragraph 17-069, p. 713, also assume a plurality of legalprinciples which are listed under the expression ‘principles of sound administration’. Martínez Soria, J., ‘Die Kodizes für gute Verwaltungspraxis’, Europarecht, 2001, Vol. 5, p. 685,points out that the notion of good administrative behaviour isused in different ways. It is common to these views that theysubsume obligations to act on the part of the administrationvis-à-vis the citizens. The list is not intended to be exhaustive,but is open to include new aspects of the relationship betweenthe administration and the citizen.

based on the rule of law. For example, the principle of sound administration requires that the authorities repair faults or omis-sions, 47 that proceedings are conducted impartially and objectively 48 and that a decision is taken within a reasonable period. 49 In addition, it implies a comprehen-sive duty of care and regard for welfare on thepart of the authorities, 50 and the right to a fair hearing, that is the obligation on officials, before taking a decision, to place those affected in a position in which they may make known their views, 51 and the obligationto state reasons for the decision. 52

90. However, which principles may actuallybe subsumed under the notion ‘principle of sound administration’ varies and cannot always be defined precisely. In addition, it isdifficult to establish whether it encompassesprinciples which the administration merelyhas to take into account or in fact rights whichaccord the individual a subjective right to

47 — Case 55/70 Reinarz v Commission [1971] ECR 379, paragraphs 19 and 21.

48 — Case T-62/98 Volkswagen v Commission [2000] ECR II-2707, paragraph 245.

49 — Case C-99/98 Austria v Commission [2001] ECR I-1101, paragraph 73.

50 — Case 321/85 Schwiering v Court of Auditors [1986] ECR 3199, paragraph 18, and Joined Cases T-33/98 and T-34/98 Petrotub and Republica v Council [1999] ECR II-3837, paragraph 133.

51 — Joined Cases 33/79 and 75/79 Kuhner v Commission [1980] ECR 1677, paragraph 25, and Case T-450/93 Lisrestal and Others v Commission [1994] ECR II-1177, paragraph 42.

52 — Case T-167/94 Nölle v Council and Commission [1995] ECR II-2589, paragraph 73.

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demand a specific action or omission from theadministration. 53 The relevant factors are, first of all, the legal character of the sourceand, secondly, the normative content of therelevant provisions.

91. Expressions of the principle of sound administration can be found in the Commu-nity legal order in numerous provisions ofprimary and secondary law, in Article 41 ofthe Charter of Fundamental Rights, in theCode of Good Administrative Behaviour of the European Ombudsman and in the proce-dural rules adopted by each of the Community

53 — Wakefield, J., loc. cit. (footnote 46), p. 23, points out that theindividual rules which the principle of sound administrationas a whole encompasses have different statuses within thehierarchy of Community legal principles and are not there-fore equally relevant. Whilst some appear to be no more thanrules of procedure, others have acquired the status of a legallybinding obligation. In my opinion, this view is suggested bythe definition put forward by the former Ombudsman JacobSödermann, in the absence of a legal definition of ‘mal-administration’ within the meaning of Article 195(1) EC, inhis 1997 Annual Report to the European Parliament, whichhas been used since then. It states that ‘maladministration occurs when a public body fails to act in accordance with arule or principle which is binding upon it’. As I have alreadyargued in my Opinion in Case C-331/05 P Internationaler Hilfsfonds v Commission [2007] ECR I-5475, point 68, it canbe inferred from this definition that in principle maladmin-istration should be construed not only as the infringement ofbinding rules of law, but also any breach of the principles ofordinary administrative practice which are usually classifiedas part of ‘soft law’ on account of their non-binding nature.Reference is also made to the Opinion of Advocate GeneralSir Gordon Slynn in Case 64/82 Tradax v Commission [1984] ECR 1359, point 1387, in which the Advocate Generalstated that he did not believe that there existed a general legalprinciple that the requirements in relation to sound administration were necessarily legally enforceable. A well-functioning filing system may well be an important part ofsound administration, but there is no legally enforceable rightto such a system. The Advocate General took the view in thisconnection that legislation and sound administration mightoverlap to some extent, but are not necessarily synonymous.

institutions to implement that code. There is asimilar variation in its binding character forthe Community institutions and bodies in thecontext of the direct enforcement of Commu-nity law. However, the main source of inspiration in drafting Article 41 of the Charter of Fundamental Rights, which hasnow refined the principle of sound adminis-tration into a fundamental right of the individual, has from the beginning been thecase-law of the Court of Justice. 54

92. The starting point for examining whetherin adopting a measure a Community institu-tion has breached the principle of sound

54 — According to Kanska, K., loc. cit. (footnote 17), p. 304, thecase-law of the Community Courts is the main source ofinspiration of the Convention in drafting Article 41 of theCharter of Fundamental Rights. In the Convention’s Ex-planations relating to the Charter of Fundamental Rights,which are not legally binding, it is stated that that provision isbased on the existence of the Union as subject to the rule oflaw whose characteristics were developed in the case-lawwhich enshrined inter alia good administration (see, interalia, Case C-255/90 P Burban v Parliament [1992] ECR I-2253; Nölle v Council and Commission, cited in footnote 52; and Case T-231/97 New Europe Consulting and Brown v Commission [1999] ECR II-2403). The wording of that rightin the first two paragraphs of Article 41 results from the case-law (Case 222/86 Heylens and Others [1987] ECR 4097, paragraph 15; Case 374/87 Orkem v Commission [1989] ECR 3283; Case C-269/90 Technische Universität München [1991] ECR I-5469; Lisrestal and Others v Commission, cited in footnote 51; and Nölle v Council and Commission, cited infootnote 52) and the wording regarding the obligation to givereasons comes from Article 253 EC. With regard to the role ofthe Community judicature in developing the general legalprinciples of Community procedural law, see Schwarze, J.,European Administrative Law, 1st edition, London, 2006, p. 59 et seq.

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administration must, in the absence of a legally binding document which implementsthe rights stemming from Article 41 of theCharter of Fundamental Rights with effect forall Community institutions and bodies, 55

therefore always be the case-law of the Court of Justice. 56

of uniform rules for good administrative behaviour. In the absence of legally bindingcharacter, the appellant cannot derive rightsfor himself either from that resolution 58 or from the code drafted by the Ombudsmanhimself, which merely serves as a model forthe Community institutions to adopt their own codes of behaviour.

93. The Court of First Instance was therefore correct, in paragraph 72 of the contested order, to refer to the non-regulatory characterof the resolution of 6 September 2001, 57 bywhich the Parliament, on a proposal from theEuropean Ombudsman, called on the Commission to submit an appropriate proposal for a regulation based on Article 308 EC with a view to the introduction

55 — In his speech to the Convention on 2 February 2000, in whichhe advocated the incorporation of the right to good administration, the European Ombudsman stressed that that principle had to be implemented through the adoption ofa provision to ensure good administrative practice. Similarly,in the European Parliament report on the situation as regardsfundamental rights in the European Union it was pointed outthat in order to put into practice the content of Article 41 ofthe Charter of Fundamental Rights, it is essential to adopt aCode of Good Administrative Behaviour (Cornillet report of21 June 2001, The situation as regards fundamental rights inthe European Union, A5-0223/2001, p. 113 et seq.). Followinga query from the European Ombudsman to all Communityinstitutions and bodies, it emerged that no such rules existed.Thereupon, the Ombudsman produced a model code of goodadministrative behaviour and sent it to the Communityinstitutions and bodies with the recommendation to adoptappropriate procedural rules. Those rules were to be published in the form of decisions in the Official Journal of the European Union. Whilst the decentralised agencies haveadopted the model code, the Commission has publishedprocedural rules which are entitled ‘Code for Good Admin-istrative Behaviour’, but were not adopted as a decision, but asan annex to its Rules of Procedure (OJ 2000 L 308, p. 26).

56 — See also Lais, M., loc. cit. (footnote 46), p. 461, who takes theview that with regard to the right to good administration orthe individual elements of which that right is composed, thelimits and barriers developed by the Court of Justice and thecontent formulated by the Court of Justice apply first andforemost.

57 — European Parliament resolution of 6 September 2001 on theEuropean Ombudsman’s Special Report to the European Parliament following the own-initiative inquiry into the existence and the public accessibility, in the different Community institutions and bodies, of a Code of Good Administrative Behaviour, C5-0438/2000 — 2000/2212 (COS).

94. On the other hand, the appellant is correct in his view that in considering theseventh plea the Court of First Instance wasrequired to consult other sources of law andnot to restrict itself solely to Article 20 of theabovementioned Code of Good Administra-tive Behaviour, especially since in its applica-tion the appellant expressly relied on Article 41 of the Charter of Fundamental Rights. 59 Nevertheless, this failure in the statement of reasons cannot in itself justifysetting aside the contested order, as the grounds on which the Court of First Instancebased its decision to reject the seventh plea as

58 — In the view of Lenaerts, K. and Van Nuffel, P., loc. cit. (footnote 9), paragraph 17-140, p. 783, ‘resolutions’ are among the other acts not mentioned in Article 249 EC whichthe Community institutions may adopt. However, they pointout that those acts do not always seek to produce legal effects.Schoo, J., EU-Kommentar (ed. J. Schwarze), 1st edition,Baden-Baden, 2000, Article 189 EC, paragraph 11, p. 1732,classifies political resolutions and calls on other institutionsto act among the acts which the European Parliament adoptsas a political discussion forum, and not as a legislative organ.As a call on the Commission to exercise its power of initiativein the Community rule-making procedure, the resolution of6 September 2001 may be classified in this series of politicalacts.

59 — See paragraphs 49, 50 and 86 of the application. In the pastthe Court of First Instance has examined breaches of the principle of sound administration and itself referred to Article 41 of the Charter of Fundamental Rights. See CaseT-54/99 max.mobil v Commission [2002] ECR II-313, para-graph 48, concerning the right to the diligent and impartialtreatment of a complaint, and Case T-242/02 Sunrider v OHIM [2005] ECR II-2793 paragraph 51, in connection with the principle that decisions must be adopted within a reasonable time, as a component of the principle of goodadministration.

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inadmissible in part and as unfounded in partwithstand a judicial examination.

95. Thus, with regard to the appellant’s complaint that he had not been informed ofthe decision of the Bureau of 1 February 2006,the Court of First Instance objected, first, inparagraph 72 of the contested order that thisdid not constitute the final decision adverselyaffecting him. In fact, it should be stated thatthe addressee of the decision of the Bureau of 1 February 2006 is not the appellant, but theSecretary-General of the Parliament. In add-ition, from a legal point of view, that decisionhas the character of instructions from the Bureau to the Secretary-General pursuant toArticle 27(4) of the EAM Rules to recover theimproperly paid sums by offsetting. However,those instructions are relevant only in the relationship between the Bureau and the Secretary-General and do not themselves produce any external effect. Only the execu-tion of those instructions by the Secretary-General through the adoption of the decisionof 22 March 2006 could affect the appellant’s rights and thus give grounds for a separatecomplaint. It follows that, as the Court of FirstInstance rightly found, the appellant had to beinformed of the decision of 22 March 2006, which concerned him directly, but not thedecision of 1 February 2006.

96. Secondly, in paragraph 33 of the contested order, the Court of First Instance pointed out that the decision of 1 February2006 was not evidence used against the appellant of which he should have had

cognisance. 60 The Court thus rightly deniedan infringement of the appellant’s rights of defence.

97. The Court of First Instance therefore found that the Parliament was not required toinform the appellant of the content of thatdecision. There was therefore no infringe-ment of the appellant’s right to information asa part of the principle of the right to a fairhearing in the administrative procedure.

98. The Court of First Instance thus rightlyrejected the seventh plea in law as inadmis-sible in part and as unfounded in part. Becauseno breach of the principle of sound adminis-tration is apparent from that decision, thisground of appeal must also be rejected asunfounded.

B — Result of my analysis

99. In the light of the foregoing, the appeal isunfounded. It must therefore be dismissed in its entirety.

60 — The Court of Justice referred to the case-law of the Community judicature, already cited in paragraph 118 ofthe judgment in Case T-146/04 Gorostiaga Atxalandabaso v Parliament, cited in footnote 5, on the general principle thatthe rights of the defence must be observed, according towhich a person against whom an objection is directed by theCommunity administration must have the opportunity tocomment on every document which the latter intends to useagainst him.

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V — Costs unsuccessful party is to be ordered to pay thecosts if they have been applied for in the successful party’s pleadings. Since the European Parliament has applied for costs to

100. Under Article 69(2) of the Rules of be awarded against the appellant and the latterProcedure, which applies to appeal proceed- has been unsuccessful, the appellant must beings by virtue of Article 118 thereof, the ordered to pay the costs.

VI — Conclusion

101. In the light of the above considerations, I propose that the Court of Justice:

— dismiss the appeal in its entirety, and

— order the appellant to pay the costs of the appeal.

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19 February 2009 *

In Case C-308/07 P,

APPEAL under Article 56 of the Statute of the Court of Justice, brought on 2 July 2007,

Koldo Gorostiaga Atxalandabaso, former Member of the European Parliament, residing in Saint-Pierre-d’Irube (France), represented by D. Rouget, avocat,

applicant,

the other party to the proceedings being:

European Parliament, represented initially by C. Karamarcos, H. Krück and D. Moore,then by the latter two and A. Padowska, acting as Agents,

defendant at first instance,

* Language of the case: French.

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JUDGMENT OF 19. 2. 2009 — CASE C-308/07 P


composed of P. Jann, President of the Chamber, A. Tizzano (Rapporteur), A. BorgBarthet, E. Levits and J.-J. Kasel, Judges,

Advocate General: V. Trstenjak,Registrar: L. Hewlett, Principal Administrator,



gives the following

Judgment

By his appeal, Mr Gorostiaga Atxalandabaso asks the Court to set aside the order of theCourt of First Instance of European Communities of 24 April 2007, Case T-132/06Gorostiaga Atxalandabaso v Parliament, (‘the order under appeal’), dismissing as, inpart, manifestly inadmissible and, in part, manifestly unfounded, his application forannulment of the decision of the Secretary General of the European Parliament of

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1

2


22 March 2006 regularising the procedure for recovery of certain sums received by theapplicant in respect of parliamentary expenses and allowances (‘the contested decision’).

Legal background

Article 27(3) and (4) of the Rules Governing the Payment of Expenses and Allowancesto Members of the European Parliament (‘the EAM Rules’) provide:

‘3. Where the Secretary-General, in consultation with the Quaestors, is satisfied thatundue sums have been paid by way of allowances provided for Members [of theEuropean Parliament] by these Rules, he shall give instructions for the recovery of suchsums from the Member concerned.

4. In exceptional cases, and on a proposal submitted by the Secretary-General afterconsulting the Quaestors, the Bureau may, in accordance with Article 73 of theFinancial Regulation and its implementing rules, instruct the Secretary-Generaltemporarily to suspend the payment of parliamentary allowances until the Member hasrepaid the sums improperly used.

The Bureau’s decision shall be taken with due regard for the effective exercise of the Member’s duties and the proper functioning of the Institution, the views of the Memberconcerned having been heard before the adoption of the said decision.’

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3 Article 71(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on theFinancial Regulation applicable to the general budget of the European Communities(OJ 2002 L 248, p. 1) (‘the Financial Regulation’) is worded as follows:

‘The own resources made available to the Commission and any amount receivable thatis identified as being certain, of a fixed amount and due must be established by arecovery order to the accounting officer followed by a debit note sent to the debtor, bothdrawn up by the authorising officer responsible.’

4 According to the second subparagraph of Article 73(1):

‘The accounting officer shall recover amounts by offsetting them against equivalentclaims that the Communities have on any debtor who himself/herself has a claim on theCommunities that is certain, of a fixed amount and due.’

5 Article 83 of laying down detailed rules for the implementation of CommissionRegulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of Regulation No 1605/2002 (OJ 2002 L 357, p. 1), provides:

‘At any point in the procedure the accounting officer shall, after informing theauthorising officer responsible and the debtor, recover established amounts receivable

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by offsetting in cases where the debtor also has a claim on the Communities that iscertain, of a fixed amount and due relating to a sum established by a payment order.’

6 Article 5(3) and (4) of the Internal Rules on the Implementation of the EuropeanParliament’s Budget, which were adopted by the Bureau of the Parliament (‘the Bureau’)on 27 April 2005, provide:

‘3. By delegation decision of the Institution, represented by its President, the Secretary-General shall be appointed principal authorising officer by delegation. None the less,decisions to waive recovery of an established amount receivable within the meaning ofArticle 87(4)(a) of the implementing rules shall come under the President’s responsibility.

4. The delegation of powers to authorising officers by delegation shall be performed bythe principal authorising officer by delegation. The subdelegation of powers to authorising officers by subdelegation shall be performed by authorising officers bydelegation.’

Facts

7 The appellant is a former Member of the European Parliament who was a memberduring the fifth parliamentary term (1999-2004). Following an audit concerning theexistence of supporting documents relating to the use of sums the appellant hadreceived for secretarial expenses, the Secretary-General of the Parliament (‘the Secretary-General’) established, by decision of 24 February 2004, that he had been

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improperly paid EUR 176 576. The Secretary-General also set the amount to be repaidto the Parliament at EUR 118 360.18, as the appellant had already begun to repay part ofthe debt.

8 By the same decision of 24 February 2004, the Secretary-General indicated that, on thebasis of Articles 16(2) and 27(3) of the EAM Rules, the sum of EUR 118 360.18 was to berecovered by means of offsetting it against the parliamentary allowances least necessaryto the exercise of the appellant’s duties, namely part of the general expenditureallowance and the subsistence allowance. The decision also stated that if the appellant’s mandate came to an end, the outstanding sums would be recovered from the transitional end-of-service allowance and all other payments due to him.

9 On 20 April 2004, the appellant brought an action before the Court of First Instance forannulment of the decision of 24 February 2004.

10 By its judgment of 22 December 2005 in Case T-146/04 Gorostiaga Atxalandabaso v Parliament [2005] ECR II-5989 (‘the Gorostiaga judgment’), the Court partially annulled the decision of 24 February 2004.

First of all, in paragraph 84 of the judgment, the Court noted that the decision of24 February 2004 contained essentially two parts, namely the Secretary-General’s

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11


finding that the sums mentioned in that decision had been improperly paid to theapplicant and that they were to be recovered, and the decision to effect recovery of thesums by offsetting against allowances payable to him.

12 The Court then dismissed all the pleas against the first part of the decision of 24 February 2004, specifically the pleas concerning the existence and the extent of theapplicant’s obligation to repay the Parliament the sum indicated in that decision.

13 Finally, as regards the second part of the decision of 24 February 2004, the Court, inparagraph 97 of the Gorostiaga judgment, held as follows:

‘… since the Secretary-General was not competent to order the offsetting in questionwithout having been instructed to do so by the Bureau in accordance with theprocedure laid down in [Article 27(4) of the EAM Rules], the …decision [of 24 February 2004] must be annulled in so far as it orders such offsetting.’

14 No appeal was brought against the Gorostiaga judgment.

15 In accordance with that judgment, the Bureau, by decision of 1 February 2006instructed the Secretary-General, in accordance with Article 27(4) of the EAM Rules, toproceed to the recovery of the sums improperly paid to the applicant.

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16


By letter of 22 March 2006, the Secretary-General transmitted the contested decision tothe applicant, which essentially repeats the content of the decision of 24 February 2004.

17 According to point 1 of the enacting terms of the contested decision, the accountingofficer of the Parliament is instructed, in accordance with Article 73 of the Financial Regulation to recover EUR 118 360.18 owed by the applicant to the Parliament. Points 1and 2 of the enacting terms state that the recovery of the sums improperly paid to theapplicant may be made by offsetting various allowances and other payments due to him.

The procedure before the Court of First Instance and the order under appeal

18 By application lodged at the Registry of the Court of First Instance on 12 May 2006, theapplicant brought an action seeking annulment of the contested decision and an orderfor the Parliament to pay the costs.

19 In support of his action, the applicant put forward 11 pleas which were all dismissed bythe Court. Only the pleas whose dismissal is challenged in this appeal will be examinedin the following paragraphs.

By his first plea, alleging failure to comply with the principle of res judicata, the applicant argued essentially that the contested decision could not legitimatelyregularise a procedure that the Court of First Instance had considered unlawful onthe ground of lack of competence.

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20

21

22


In that regard, in paragraphs 30 and 32 of the order under appeal, the Court held:

‘30 … [T]he Secretary-General could legitimately, in the light of Article 27(4) of theEAM Rules as interpreted by paragraphs 86 to 97 of the Gorostiaga judgment, takethe contested decision after the Bureau had instructed him to recover the sums concerned in accordance with that provision …

…

32 As regards the deduction of EUR 40 398.80… it is true that it has lost its legal basis after the Gorostiaga judgment. However, that fact does not have the effect of erasing the applicant’s debt to the Parliament of EUR 118 360.18, since the questionwhether that debt could be partially paid off by offsetting … is separate. …’

Accordingly, the Court dismissed the first plea put forward by the applicant in supportof his application as manifestly unfounded.

By the third plea, the applicant relied on the existence of a case of force majeure to explain why it was impossible to submit supporting documents relating to certainexpenses he had incurred.

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23

24


The Court dismissed the plea as manifestly inadmissible in that it challenged the forceof res judicata deriving from the Gorostiaga judgment (paragraphs 49 to 54 of the orderunder appeal). According to that judgment, the Secretary-General was entitled to findthat the sums concerned had been improperly paid to the applicant and therefore had tobe recovered.

25 Finally, by the first part of the seventh plea relied on in support of his action, theapplicant complained that the Parliament had not notified him of the Bureau’s decision of 1 February 2006. The Parliament had thereby infringed Article 20 of its Code of GoodAdministrative Behaviour adopted on 6 September 2001 (‘the Code of Good Behaviour’), which lays down an obligation to notify in writing decisions affectingthe rights or interests of individual persons.

26 The Court dismissed that plea by holding as follows in paragraphs 72 and 73 of the orderunder appeal:

‘72 As regards the notification of the Bureau’s decision of 1 February 2006, it issufficient to note that it does not constitute the final decision adversely affecting theapplicant. …

73 As to the allegation concerning the Code of Good Behaviour, it need only beobserved that the document to which the applicant refers is only a resolution of theParliament amending a draft which had been submitted to it by the EuropeanOmbudsman and calling on the Commission to submit a legislative proposal in that

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27


respect on the basis of Article 308 EC. Therefore, regardless of whether a provisionsuch as that [in Article 20 of the Code] also refers to decisions other than thosehaving adverse effect, it must be made clear that it is not a legal provision. Therefore,this complaint must be dismissed as manifestly unfounded.’

Forms of order sought

By his appeal, the appellant claims that the Court should:

— set aside the order under appeal and annul the contested decision, and

— order the Parliament to pay the costs.

The Parliament asks the Court to dismiss the appeal as manifestly unfounded and toorder the appellant to pay the costs.

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28


The application to reopen the written procedure

29 By document lodged at the Court Registry on 31 October 2007, the appellant requestedthe Court to order the reopening of the written procedure. In support of that request, herelies on the existence of new evidence consisting of a letter from the Parliament, dated17 October 2007, ordering him to pay EUR 77 961 following the dismissal by the orderunder appeal of his action before the Court of First Instance.

30 In that connection, it must be recalled that, in accordance with Article 42(2) inconjunction with Article 118 of the Rules of Procedure, the introduction of new pleas inthe course of proceedings is prohibited unless those pleas are based on matters of law orof fact which come to light in the course of the procedure.

31 That is not the case here. It suffices to state that the supposedly new matters of factrelied on by the appellant cannot be related to any plea raised for the first time orpreviously raised by the appellant in his appeal. In any event, that matter of fact appearscompletely irrelevant to this judgment. By requesting, by the letter of 17 October 2007,payment of the outstanding sums the Parliament merely gave effect to the adoption ofthe order under appeal, which, moreover, has not been the subject of any application forinterim measures or stay of execution. Furthermore, according to the first paragraph ofArticle 60 of the Statute of the Court of Justice, the appeal brought by the appellant doesnot have any suspensory effect with respect to such an order.

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32 In those circumstances, the appellant’s request for the reopening of the written procedure must be dismissed.

The appeal

33 In support of his appeal, the appellant raises six grounds of appeal, alleging, first,infringement of the rights of the defence, breach of the audi alteram partem rule and infringement of the right to a fair trial; second, infringement of the fundamental right toan impartial tribunal; third, an incorrect assessment of the scope of the Gorostiagajudgment; fourth, systematic and automatic refusal of the Court of First Instance to takeaccount of his arguments seeking annulment of the contested decision; fifth, refusal ofthe Court of First Instance to examine the plea alleging force majeure; and, sixth and lastly, refusal by the Court of First Instance to ensure respect for the principle of soundadministration.

The first ground of appeal


34 By his first ground of appeal, the appellant submits that the decision of the Court of FirstInstance to adjudicate on the action by order, in accordance with Article 111 of its Rulesof Procedure, deprived him of the opportunity to reply to the Parliament’s argumentsand to be heard. Furthermore, by failing to communicate such a decision prior tojudgment of the case by order, the Court of First Instance deprived him of the

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opportunity to challenge that decision. Therefore, the Court of First Instance infringedthe rights of the defence, the audi alterm partem rule and the right to a fair trial.

35 The Parliament replies that the Court of First Instance applied Article 111 of its Rules ofProcedure correctly and in no way infringed the appellant’s rights of defence.


36 It must be recalled, as the Court has already had occasion to state, that the application ofthe procedure provided for in Article 111 of the Rules of Procedure of the Court of FirstInstance does not in itself prejudice the right to a proper and effective judicial process,since that provision is applicable only where it is clear that the Court of First Instancehas no jurisdiction over the action, or where the action is manifestly inadmissible ormanifestly lacking any foundation in law. Accordingly, if an applicant takes the viewthat the Court of First Instance has incorrectly applied Article 111, he must challengethe assessment by the court of first instance of the conditions to which the applicationof that provision is subject (see, to that effect, order in Case C-396/03 P Killinger v Germany and Others [2005] ECR I-4967, paragraph 9).

In this case, it is sufficient to state that the appellant merely criticises the fact that theCourt of First Instance had recourse to a reasoned order without referring to theconditions governing the applicability of Article 111 or questioning the Court’s interpretation of that article in the order under appeal.

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37

38


In those circumstances, the first ground put forward by the appellant in support of hisappeal must be dismissed as unfounded.

The second ground of appeal


39 By his second ground of appeal, the appellant relies on infringement of his right to animpartial tribunal, as enshrined in Article 6 of the European Convention for theProtection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, and Article 47 of the Charter of Fundamental Rights of theEuropean Union, proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1). Suchan infringement arises from the allocation of the case giving rise to the order underappeal to a formation consisting of judges, including those carrying out the functions ofPresident and Judge-Rapporteur, who had already sat on the bench which delivered theGorostiaga judgment. Respect for the principle of impartiality requires that the samejudge cannot, including where the same level of jurisdiction is concerned, hear anddetermine a case based on facts identical or sufficiently connected to those of a case thathe has previously decided.

40 The Parliament replies that the appellant’s argument is lacking any legal basis and hasno support in the case-law of the Court. It submits, moreover, that the case relatedessentially to whether the Parliament had complied with its obligations under theGorostiaga judgment. There is therefore nothing to criticize in the fact that the samejudges heard both cases.

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41 The right to a fair trial, which derives inter alia from Article 6(1) of the EuropeanConvention for the Protection of Human Rights and Fundamental Freedoms, constitutes a fundamental right which the European Union respects as a generalprinciple under Article 6(2) EU (Case C-305/05 Ordre des barreaux francophones et germanophone and Others [2007] ECR I-5305, paragraph 29, and Joined Cases C-341/06 P and C-342/06 P Chronopost and La Post v UFEX and Others [2008] ECR I-4777, paragraph 44).

42 Such a right necessarily implies access for every person to an independent and impartialtribunal. Thus, as the Court has had occasion to state, the existence of guaranteesconcerning the composition of the tribunal are the corner stone of the right to a fairtrial, compliance with which must in particular be verified by the Communityjudicature if an infringement of that right is complained of and the challenge on thatpoint does not appear from the outset manifestly devoid of merit (see, to that effect,Chronopost and La Poste v UFEX and Others, paragraphs 46 to 48).

43 However, it is also clear from the case-law of the Court that the fact that the judges whoheard and determined a case initially may sit in another formation hearing anddetermining the same case again is not in itself incompatible with the requirements of afair trial (see, to that effect, Chronopost and La Poste v UFEX and Others, paragraphs 58and 59, and the case-law of the European Court of Human Rights cited).

44 In particular, the fact that one or more of the judges were present in two successiveformations and exercised the same functions, such as president or judge-rapporteur, is

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in itself irrelevant to the assessment of compliance with the requirement of impartiality,since those duties are performed in a collegiate formation of the court (see, to thateffect, Chronopost and La Poste v UFEX and Others, paragraph 53).

45 Such considerations are even more relevant where the two successive formations do not have to hear and determine the same case, as was the case in the proceedings inChronopost and La Poste v UFEX and Others, which concerned the referral of a case back to the Court of First Instance following the annulment of the judgment at firstinstance by the Court, but, as in this case, two separate cases which are related to someextent.

46 Furthermore, it must be observed that there are two aspects to the requirement ofimpartiality. In the first place, the tribunal must be subjectively impartial, that is, noneof its members must show bias or personal prejudice, there being a presumption ofpersonal impartiality in the absence of evidence to the contrary. In the second place, thetribunal must be objectively impartial, that is to say, it must offer guarantees sufficientto exclude any legitimate doubt in this respect (Chronopost and La Poste v UFEX and Others, paragraph 54, and to that effect, Eur. Court HR, Fey v. Austria, judgment of 24 February 1993, Series A No 255-A, p. 12, § 28; Findlay v. United Kingdom, judgment of 25 February 1997, Reports of Judgments and Decisions 1997-I, p. 281, § 73; and Forum Maritime S.A. v. Romania, judgment of 4 October 2007, not yet published in theReports of Judgments and Decisions, § 116).

In this case, it must be observed, first, that the appellant, as he confirmed at the hearing,does not advance any argument liable to call into question the personal impartiality ofmembers of the Court of First Instance.

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47


48 Moreover, it must be recalled that the appellant did not appeal against the Gorostiaga judgment and that, for the rest, that judgment partially upheld his action.

49 Second, the appellant does not put forward any objective evidence capable of raisingany doubt as to the impartiality of the Court of First Instance. In that regard, he in factmerely points to the presence of the same judges in the two formations in question,which is a fact which, as it is clear from paragraphs 43 to 45 of this judgment, is not initself incompatible with the legal requirements for a fair trial.

50 The second ground of appeal must therefore be dismissed as unfounded.

The third and fourth grounds of appeal


51 By his third and fourth grounds of appeal, which it is appropriate to examine together,the appellant essentially criticises the Court of First Instance for having wrongly heldthat the arguments he raised at first instance challenging the lawfulness of the contesteddecision were manifestly inadmissible in that they disregarded the force of res judicata issuing from the Gorostiaga judgment. Following the annulment by that judgment ofthe decision of 24 February 2004, it should have been considered as null and void in itsentirety, and the procedure which led to its adoption could not be regularised. In thosecircumstances, the contested decision constituted a new decision distinct from that of

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24 February 2004, so that all the pleas raised by the appellant against that decisionshould have been examined by the Court of First Instance.

52 The Parliament rejects those claims, submitting principally that, in the Gorostiagajudgment, the Court of First Instance held that the Parliament had correctly establishedthat certain parliamentary allowances had been improperly paid to the appellant.Therefore the procedure which led to the adoption of decision of 24 February 2004could legitimately be regularised.


53 First of all, it must be observed that, as stated in paragraph 11 of this judgment, thedecision of 24 February 2004 contained essentially two parts, namely, first, the findingthat the sums mentioned in the decision had been improperly paid to the appellant andthat they were to be recovered and, second, the decision to proceed to recovery, in so faras possible, by offsetting against allowances still to be paid to the appellant.

54 The annulment of that decision by the Gorostiaga judgment concerns, as expresslyappears in paragraph 169 and paragraph 1 of the operative part of that judgment, onlythe second part, since the court at first instance held that the Secretary-General was notcompetent to order recovery by offsetting sums due by the applicant unless he had beeninstructed to do so by the Bureau in accordance with the procedure laid down in

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Article 27(4) of the EAM Rules. However, all the pleas in the application on thelawfulness of the first part of the decision of 24 February 2004 were dismissed by theCourt of First Instance.

55 Therefore, the Court of First Instance annulled the decision of 24 February 2004 only inso far as it provided that the recovery of the sums due by the applicant was to be effectedby offsetting, thereby dismissing the action for the remainder.

56 Therefore, contrary to the appellant’s contentions, such a partial annulment of thedecision of 24 February 2004 did not preclude the Secretary-General from resuming theprocedure for the recovery of sums due after having been duly empowered by theBureau, in accordance with Article 27(4) of the EAM Rules as interpreted by theGorostiaga judgment. As the Court of First Instance correctly held in paragraph 30 ofthe order under appeal, the procedure for replacing an annulled measure may beresumed at the very point at which the illegality occurred without necessarily affectingthe preparatory acts (see, to that effect, Case C-415/96 Spain v Commission [1998] ECR I-6993, paragraphs 31 and 32).

57 Next, it must be observed that no appeal was brought against the Gorostiaga judgment before the Court and that consequently its operative part and ratio decidendi became final (Joined Cases C-442/03 P and C-471/03 P P & O European Ferries (Vizcaya) and Diputación Foral de Vizcaya v Commission [2006] ECR I-4845, paragraphs 44 and 47and the case-law cited). Therefore, whether the sums to be recovered were undue sumsand whether the appellant was obliged to reimburse them could not be referred back tothe Court of First Instance and examined by it without disregarding the force of res judicata which now applies to the Gorostiaga judgment.

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58


Finally, it is clear from the case-law of the Court that an act benefits from the res judicata attached to an earlier act in so far as it is a mere repetition of the part of that actwhich was not annulled (see, to that effect, Case 14/64 Gualco (née Barge) v High Authority [1965] ECR 51, paragraph 11).

59 In those circumstances, since the contested decision found, in exactly the same terms asthat of 24 February 2004, that EUR 118 360.18 had been improperly paid to theappellant and had to be recovered, the Court of First Instance rightly held, in paragraph53 of the order under appeal, that any complaint challenging the lawfulness of thecontested decision in that respect had to be dismissed as manifestly inadmissible.

60 It follows that the third and fourth grounds relied on by the appellant in support of hisappeal must be dismissed as unfounded.

The fifth ground of appeal


61 By his fifth ground of appeal, the appellant submits that the Court of First Instancewrongly failed to examine the plea alleging the existence of force majeure on the ground that the decision of 24 February 2004 benefited from res judicata arising from the Gorostiaga judgment.

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62


The Court of First Instance wrongly held that it was a plea which had already beenexamined in the Gorostiaga judgment, whereas, in reality, that plea was based on factssubsequent to the judgment, namely the absence of a response from the SpanishMinister of Justice to a letter addressed to him by the appellant on 15 April 2006 toobtain a copy of accounting documents related to the exercise of his mandate as aMember of the European Parliament.

63 The Parliament replies that, in the order under appeal, the Court of First Instancecorrectly interpreted the principle of res judicata since the appellant had already putforward a plea which was essentially identical, relying on the same arguments in theproceedings which gave rise to the Gorostiaga judgment.

64 As regards specifically the failure to reply to the letter of 15 April 2006, the Parliamentpoints out that that argument was relied on before the Court of First Instance not in thecontext of the plea of force majeure, but in support of another plea which was dismissedby the order under appeal, the assessment of which is not challenged by the appellant inthis appeal. In any event, it concerns facts subsequent to the contested decision, whichare therefore irrelevant for the purposes of the annulment of the decision.


65 It must be observed, first, that the facts relied on at first instance by the appellant insupport of his plea of force majeure, in order to justify the fact that he was unable toprovide certain items of his accounts, are identical to those on which one of the pleas inthe action against the decision of 24 February 2004 was based, which was dismissed bythe Court of First Instance in the Gorostiaga judgment.

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66


Therefore, for the reasons set out in paragraphs 57 to 59 of this judgment, the Court ofFirst Instance rightly held, in paragraphs 53 and 54 of the order under appeal, that theplea alleging force majeure was manifestly inadmissible.

67 Second, as regards the argument alleging that the Spanish Minister of Justice failed toreply to the appellant’s letter of 15 April 2006, it suffices to state that, even if suchevidence may constitute a case of force majeure for the purposes of the case-law of theCourt, it is, as the Advocate General rightly observes in point 87 of her Opinion, a factsubsequent to the date of adoption of the contested decision which, in any event, cannothave any effect on the content of that decision.

68 Having regard to the foregoing considerations, the fifth ground of appeal must bedismissed as unfounded.

Sixth ground of appeal


69 By his sixth ground of appeal the appellant claims that the Court of First Instancewrongly refused to examine the issue of whether the Parliament, by failing to notify himof the Bureau’s decision of 1 February 2006, had infringed the principle of soundadministration, as set out in Article 41 of the Charter of Fundamental Rights of theEuropean Union and the Code of Good Administrative Behaviour. In that connection,

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he states that, even if such instruments did not exist, the right to sound administrationis part of the general principles of law with which the institutions are bound to comply.

70 The Parliament replies in that respect that the Court of First Instance merely held thatthe Code of Good Behaviour was a preparatory act, not a legislative measure.


71 It must be held from the outset that the sixth ground of appeal derives from an incorrectinterpretation of the order under appeal.

72 At first instance, the plea raised by the appellant was based exclusively on an infringement of Article 20 of the Code of Good Behaviour, pursuant to which, first, theinstitution is to ensure that decisions which affect the rights or interests of individualpersons are notified in writing, as soon as the decision has been taken, to the person orpersons concerned and, second, that it must abstain from communicating the decisionto other sources until the person or persons concerned have been informed.

Contrary to the appellant’s submissions, the Court of First Instance did not fail to examine whether the failure to communicate the Bureau’s decision of 1 February 2006 had led to an infringement of the appellant’s rights. Thus, in paragraph 72 of the order

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73


under appeal, the Court of First Instance, before ruling on the nature of the Code ofGood Behaviour, observed that that decision did not constitute the final decision adversely affecting the appellant and that the fact that it was not communicated to himcould not therefore harm the appellant’s rights, an assessment which is not challenged in this appeal.

74 It follows that the sixth ground of appeal must also be dismissed.

75 Since none of the six grounds of appeal put forward by the appellant in support of hisappeal may be accepted, it must be dismissed.

Costs

76 Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedings byvirtue of Article 118 thereof, the unsuccessful party is to be ordered to pay the costs ifthey have been applied for in the successful party’s pleadings. Since the Parliament hasapplied for costs and the appellant has been unsuccessful, the appellant must beordered to pay the costs.

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On those grounds, the Court (First Chamber) hereby:

1. Dismisses the appeal;

2. Orders Mr Gorostiaga Atxalandabaso to pay the costs.

[Signatures]

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Case C-321/07

Criminal proceedings against

Karl Schwarz

(Reference for a preliminary rulingfrom the Landgericht Mannheim)

(Directive 91/439/EEC — Holding of driving licences from different Member States —Validity of a driving licence issued before the accession of a State — Withdrawal of a second driving licence issued by the Member State of residence — Recognition of a

driving licence issued before the issue of a second licence later withdrawn on theground that the holder was unfit — Expiry of the period accompanying a measure

withdrawing a driving licence during which no application may be made for the issue ofa new driving licence)

Opinion of Advocate General Bot delivered on 6 November 2008 . . . . . I - 1116 Judgment of the Court (Third Chamber), 19 February 2009 . . . . . . . I - 1133


1. Transport — Road transport — Driving licences — Directive 91/439 (Council Directive 91/439, as amended by Regulation No 1882/2003, Art. 7(5))

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2. Transport — Road transport — Driving licences — Directive 91/439(Council Directive 91/439, as amended by Regulation No 1882/2003, Arts 1 and 8(2) and (4))

1. Article 7(5) of Directive 91/439 on drivinglicences, as amended by RegulationNo 1882/2003, must be interpreted as notprecluding a national of a Member Statefrom holding simultaneously two valid driving licences, one of which is a Commu-nity licence and the other a driving licenceissued by another Member State where both licences were obtained before the accession of the latter State to the European Union.

Although it is true that Article 7(5) affirmsthe single nature of a driving licence, thatarticle does not prohibit a national of aMember State continuing to hold more than one valid licence when one of those licences was issued in a Member State priorto its accession in so far as that licence has not ceased to be valid. In such a situation, where two valid licences exist side by side,that provision does not therefore affect thevalidity of one of them. It does not introduce an order of priority of applica-

tion and does not require either the automatic loss of the first licence or the nullity of the second.

(see paras 56-58, 60, operative part 1)

2. Article 1 and Article 8(2) and (4) of Directive 91/439 on driving licences, asamended by Regulation No 1882/2003, donot preclude a Member State from refusingto recognise the right to drive stemmingfrom a driving licence issued by anotherMember State before the latter acceded to the Union where that licence was issued prior to a driving licence issued by the firstMember State in which the second licence was withdrawn due to the holder’s unfit-ness to drive. The fact that such refusal occurs after the period during which noapplication could be made for the issue of anew driving licence is irrelevant in thatregard.

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SCHWARZ

If a national withdrawal measure could be sidestepped by relying on a driving licenceissued earlier than the licence which was withdrawn on the ground of unfitness todrive without it being established that theperson relying on the earlier licence is, onthe date on which he relies on it, fit to drive in accordance with Directive 91/439, roadtraffic safety would be compromised.

Furthermore, it would be paradoxical torequire a Member State to recognise theright to drive stemming from a driving

licence issued by another Member Stateprior to a licence issued by the first Member State when the second licence has been withdrawn because of its holder’s unfitness to drive. If a national of a Member State holds a single drivinglicence issued in another Member State, the first Member State is entitled, under Article 8(2) of Directive 91/439, to apply itsprovisions on withdrawal, for example, onthe ground of unfitness to drive.

(see paras 96-98, operative part 2)

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1. May a person whose German drivinglicence was withdrawn for drunk driving in1997 and who has not proved that he was onceagain fit to drive rely on an Austrian drivinglicence issued to him in 1964? That, in essence, is the question which the Landgericht(Regional Court) Mannheim (Germany) hasasked the Court.

2. This reference for a preliminary ruling isdistinguished from the other cases broughtbefore the Court by the fact that the two driving licences, issued by two different Member States, were issued to the personbefore the accession of the Republic of Austriato the European Union in 1995.

3. Having regard to those dates, the relevantCommunity measures are Council Direct-ive 80/1263/EEC of 4 December 1980 on theintroduction of a Community driving licence, 2 Council Directive 91/439/EEC of

1 — Original language: French. 2 — OJ 1980 L 375, p. 1. This Directive entered into force on

1 January 1983.

29 July 1991 on driving licences 3 and Commission Decision 2000/275/EC of 21 March 2000 on equivalences between certain categories of driving licences. 4

4. The Court must therefore determine, initially, whether, in the light of those rules,the person concerned could validly hold twodriving licences under such circumstances, even though Article 7(5) of Directive 91/439provides that no person may hold a drivinglicence from more than one Member State.

5. That question will then lead the Court toconsider, once again, the scope of Article 8(2)and (4) of the aforementioned directive, whichpermit a Member State to refuse to recognise

3 — OJ 1991 L 237, p. 1. Directive as amended by Regulation (EC)No 1882/2003 of the European Parliament and of the Councilof 29 September 2003 (OJ 2003 L 284, p: 1, hereinafter ‘Directive 91/439’).

4 — OJ 2002 L 91, p. 1.

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SCHWARZ

the validity of a driving licence issued byanother Member State to a person who is, inthe former State’s territory, the subject of arestriction, suspension, withdrawal or cancel-lation of the right to drive.

6. In the present Opinion, I will set out thereasons why I consider that Article 7(5) ofDirective 91/439 must be interpreted as notpreventing a person holding two drivinglicences where the first licence was issued bya non-member country before the entry intoforce of Directive 80/1263 and where, beforethe entry into force of Directive 91/439, thatperson, who already held a driving licencerecognised in the territory of the Community,undergoes the test of skills required for theissue of a driving licence.

7. I will also indicate why I consider that Article 8(2) and (4) of the latter directive mustbe interpreted as meaning that, in the circumstances of the main proceedings, a Member State is not prevented from refusingto recognise the validity of a driving licenceissued earlier by another Member State.

I — Legal framework

A — Community law

1. Directive 80/1263

8. In order to assist the movement of personswithin the Community or their settling in aMember State other than that in which theyhave passed a driving test, Directive 80/1263established a Community model driving licence.

9. Pursuant to the first paragraph of Article 1of the directive, a national driving licencebased on the Community model entitles theholder to drive both on national and inter-national journeys.

10. The first subparagraph of Article 8(1) ofthe directive provides that the holder of adriving licence issued by a Member State who

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resides in another Member State must, within to the passing of a test of skills and behavioura year following the taking up of residence, and a theoretical test and to meeting medicalexchange his licence. The Member State in standards. which he has taken up residence is to issuehim with a driving licence for the corre-sponding category or categories.

11. According to the second subparagraph ofArticle 8(1) of Directive 80/1263, the MemberState effecting the exchange is to return theold licence to the authorities of the Member State which issued it.

2. Directive 91/439

12. Directive 91/439, which repealed Direct-ive 80/1263 on 1 July 1996, laid down theprinciple of mutual recognition of driving licences. 5

13. Article 7(1)(a) of Directive 91/439 laysdown minimum conditions for the issue of a driving licence and makes such issue subject

5 — See Article 1(2).

14. In particular, points 14.1 and 15.1 of Annex III, to which that provision refers, provide that a driving licence is not to beissued to or renewed for an applicant or adriver who is dependent on alcohol or drugsor who is not dependent on such substancesbut regularly consumes or abuses them.

15. In addition, pursuant to Article 7(5) ofDirective 91/439, no person may hold a driving licence from more than one MemberState.

16. Article 8(2) of the directive provides thatthe Member State of normal residence mayapply its national provisions on the restric-tion, suspension, withdrawal or cancellationof the right to drive to the holder of a drivinglicence issued by another Member State.

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SCHWARZ

17. Article 8(4) of the directive reads as follows:

‘A Member State may refuse to recognise thevalidity of any driving licence issued byanother Member State to a person who is, inthe former State’s territory, the subject of oneof the measures referred to in paragraph 2.

A Member State may likewise refuse to issue adriving licence to an applicant who is the subject of such a measure in another MemberState.’

3. Decision 2000/275

18. Directive 91/439 provides that the Member States are to establish equivalencesbetween the categories of licences issued before the implementation of the directiveand those defined in Article 3 thereof. 6 The purpose of Decision 2000/75 is to lay downtables of equivalences between those two categories of licences. 7

6 — See the first paragraph of Article 10 of Directive 91/439 and thethird recital in Decision 2000/275.

7 — See Article 2 of Decision 2000/275.

19. The models of driving licences issued inAustria between 1 January 1956 and 1 November 1997 appear in the annex to thedecision and are therefore recognised as equivalent to the Community model.

B — National law

20. Paragraph 28(1) of the Regulation on access to driving on the highways (Verord-nung über die Zulassung von Personen zumStraßenverkehr, ‘the FeV’) provides that holders of a driving licence issued by a Member State of the Union are authorised to drive in the territory of the Federal Republicof Germany.

21. However, Paragraph 28(4)(3) of the FeVprovides that the authorisation does not applyto persons whose driving licence has, in Germany, been provisionally or definitivelywithdrawn by act of a court or tribunal or beenwithdrawn by an immediately enforceable orfinal decision of an administrative authority.

22. According to Paragraph 69(1) of the German Criminal Code (Strafgesetzbuch), acompetent criminal court is to order the withdrawal of the driving licence of a driverconvicted of a driving offence if he is

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considered to be unfit to drive. In accordance with Paragraph 69a of the criminal code, whena court orders withdrawal of a licence, it is to couple the withdrawal with a ban on applyingfor a new driving licence for a period whichmay vary from six months to five years.

an Austrian national. In 1968, following thetransfer of his residence to Germany, and atMr Schwarz’s request, the competent Germanauthorities issued him a German licence, on the basis of his Austrian licence. Mr Schwarz retained his Austrian licence.

23. Paragraph 20 of the FeV, and Paragraph 11thereof, to which it refers, provides that theissue of a new driving licence following a withdrawal or surrender of the licence is subject to proof that the candidate satisfies therequired physical and mental conditions, which may be provided by submission of amedical-psychological report.

24. Furthermore, Paragraph 21 of the Law onRoad Traffic (Straβenverkehrsgesetz) provides that any person who drives a vehicle without having the licence requiredfor that purpose is liable to imprisonment forup to one year or to a fine.

II — Facts and main proceedings

25. On 28 October 1964, the Austrian autho-rities issued a driving licence to Mr Schwarz,

26. On 9 May 1968, Mr Schwarz surrenderedhis German driving licence to the competentGerman authorities and applied for a new German licence on 11 November 1993. Since he had passed the medical-psychological testrequired by German law, the OrdnungsamtMannheim (administrative police service ofthe city of Mannheim) issued him with a newlicence on 3 May 1994, without withdrawinghis Austrian licence.

27. By judgment of 1 December 1997, theAmtsgericht (Local Court) Mannheim sentenced Mr Schwarz to a fine of 40 dailypenalties of DEM 50 for drunk driving. HisGerman driving licence was withdrawn andhe was banned from applying for a new driving licence within six months. Pursuantto German law, Mr Schwarz was required toprove, in order to obtain a new driving licence,that he was again fit to drive by submitting, inparticular, a medical-psychological report.

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SCHWARZ

28. On 24 July 2000, Mr Schwarz applied to the Ordnungsamt Mannheim for a new driving licence. By decision of 2 April 2001,the latter rejected the application since Mr Schwarz had not submitted the requiredmedical-psychological report.

29. On 30 January 2006, the Amtsgericht Mannheim made an order sentencingMr Schwarz to a fine of 30 daily penalties ofEUR 25, since he had been convicted of driving without a licence on 11 April 2005.

30. At a second road check, carried out in Mannheim on 23 December 2005, Mr Schwarz showed his Austrian drivinglicence, which he still possessed, since it hadnot been withdrawn when his German licence was issued in 1968 or in 1994. The question ofthe validity of his Austrian licence therefore arose.

31. By judgment of 22 June 2006, the Amtsgericht Mannheim acquittedMr Schwarz of driving on German territorywithout a valid driving licence.

32. The Mannheim Public Prosecutor (Staat-sanwaltschaft Mannheim) appealed againstthat judgment to the Landgericht Mannheim.Before that court, it sought to have

Mr Schwarz convicted of driving on 23 December 2005 without a valid drivinglicence.

III — The questions referred to the Court

33. Since the Landgericht Mannheim had doubts as to the validity of the Austrian licence, it stayed proceedings and referred thefollowing questions to the Court for a preliminary ruling:

‘(1) Is it — contrary to Article 7(5) of Directive 91/439 — possible under Community law for a citizen of the EUto hold a valid German driving licenceand a driving licence issued by anotherMember State, both of which were obtained before the accession to the EU of the foreign Member State and — if so —

(2) Does the withdrawal — before the entryinto force of the Regulation on the rightto drive [Fahrerlaubnisverordnung] of 1 January 1999 — of the later second German driving licence as a consequenceof a drunkenness offence mean that the validity in Germany of the first foreigndriving licence, which was issued earlier,is also no longer required to be recog-nised after accession of the foreign

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Member State, even where the period ofthe ban imposed in Germany has expired?’

36. Thus, the national court is asking thisCourt whether, in view of Article 7(5) of Directive 91/439, which provides that no person may hold more than one drivinglicence, a European citizen may, in circum-stances such as those of the main proceedings,hold two driving licences.

IV — Analysis

34. Mr Schwarz, who holds an Austrian driving licence and a German driving licenceissued before Austrian accession to the Union, had his German licence withdrawn. Several years after that withdrawal, at a road check onGerman territory, he showed his Austrian driving licence to the competent authorities.

35. The national court asks whether Mr Schwarz was guilty of driving without adriving licence or whether the Austrian driving licence must be recognised as validby the German authorities notwithstandingthe withdrawal of the German driving licence.

37. If the answer to that question is in theaffirmative, the national court asks this Court to rule on the question whether Article 8(2)and (4) of Directive 91/439 must be inter-preted as allowing a Member State to refuse torecognise the validity of a driving licenceissued by another Member State, at a dateprior to its accession to the Union, to a personwhose driving licence has been withdrawn inthe first Member State.

38. After indicating what I believe to be thescope of Article 7(5) of Directive 91/439, I willset out the reasons why I consider that Mr Schwarz could validly hold two drivinglicences. I will then explain why, in my view,the Federal Republic of Germany may, by virtue of the withdrawal of the German driving licence, refuse to recognise the validityof the Austrian driving licence.

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SCHWARZ

A — Preliminary observations

39. The scope of Article 7(5) of Direct-ive 91/439 in the scheme which the directiveintroduces must first be determined.

40. Directive 91/439 is intended to facilitatefree movement of persons in the territory ofthe Union and to improve road safety in thatterritory. 8

41. For that purpose, Article 1(2) of the directive states that driving licences issuedby Member States are to be mutually recog-nised. That obligation to recognise drivinglicences permits European citizens to movefreely in the 27 Member States of the Unionwith a single driving licence.

42. Article 7(5) of the directive, which provides that a person may not hold morethan one driving licence, is the corollary of theprinciple of mutual recognition of drivinglicences laid down in that provision. Since aMember State is obliged to recognise a drivinglicence issued by another Member State, that

licence is sufficient for free movement in European territory.

43. Holding a single driving licence is also, in my view, a means of making effective the restrictive measures that the competentauthorities of a Member State might adoptin regard to that licence. The fact that the rightto drive is embodied in a single driving licenceprevents the holder, if the licence is with-drawn, from making use of another drivinglicence and thereby evading the sanction which has been imposed on him.

44. Thus, Directive 91/439 provides that thecompetent authorities effecting the exchangeof a driving licence issued by another MemberState are to return the old licence to the competent authorities of the latter State. 9 In the case of a driving licence issued by a non-member country, the old licence must be surrendered to the competent authorities ofthe Member State making the exchange. 10

45. Consequently, in the framework of theexchange of a driving licence, the issue of anew driving licence is subject to the surrender

9 — See Article 8(3) of the directive.8 — See the first recital. 10 — See the second subparagraph of Article 8(6) of the directive.

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of the old licence. In the analysis which follows, I will show that the latter rule is not applicable to the main proceedings by reasonof the chronological order of the facts.

46. In my view, therefore, the national court’s questions must be answered in the light ofthose considerations.

B — The first question

47. In its first question, the national courtasks whether, in the circumstances of the main proceedings, Mr Schwarz could validlyhold two driving licences.

48. The following is a brief summary of thefacts.

49. It is apparent from the file that Mr Schwarz obtained an Austrian driving licence in 1964. Later, in 1968, after he transferred his residence to Germany, and at

Mr Schwarz’s request, the competent Germanauthorities issued a German licence to him, on the basis of his Austrian licence. Having surrendered his German licence to the competent authorities in 1988, Mr Schwarzobtained a new German licence in 1994. In 1968, as in 1994, the German authorities did not require Mr Schwarz to surrender his Austrian licence. He was therefore in posses-sion of two driving licences until his Germanlicence was withdrawn in 1997 for drunk driving. Mr Schwarz is now relying on hisAustrian licence.

50. In the light of those facts, I am of theopinion that a distinction should be drawnbetween the situation in which the facts occurred before the entry into force of Directive 80/1263 and the situation in whichthe facts antedate the entry into force of Directive 91/439.

51. When the first German licence was issued in 1968, Austria was not a Member of the Union. Moreover, at that date, there were no Community rules on driving licences and, inparticular, on the exchange of driving licencesissued by a non-member country for a drivinglicence issued by a Member State. The FederalRepublic of Germany could therefore validlyissue a German driving licence to Mr Schwarzwithout requiring him to surrender his Austrian licence.

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52. In 1994, when the second German drivinglicence was issued, Directive 91/439 was notyet applicable. Pursuant to Article 12(1) ofthat directive, Member States were to adoptthe laws, regulations or administrative provi-sions necessary to comply with the directive asof 1 July 1996.

Mr Schwarz already held a driving licence, 11

he was legitimately able to obtain a seconddriving licence.

53. On the other hand, Directive 80/1263,which was applicable, provided that a drivinglicence issued by a non-member country andexchanged for a Community model drivinglicence must be surrendered to the competentauthorities of the Member State which carried out the exchange.

54. However, it is apparent from the disputein the main proceedings that the issue of theGerman licence on 3 May 1994 did not takeplace in the context of an exchange with theAustrian licence but as a result of an ordinaryapplication for a driving licence in Germany.

55. At the time, since Community law contained no rule preventing a Member State from issuing a driving licence to a person who already held another licence andsince the Federal Republic of Germany did nothave the physical means of verifying whether

56. It is true that Article 1(2) of Direct-ive 91/439 requires Member States to recog-nise driving licences issued before the acces-sion to the Union of the issuing Member State. 12 However, I note that Article 7(5) of thedirective is not retroactive and does not therefore require a choice to be made in such circumstances between the automatic loss of the first driving licence and the nullityof the second.

57. On the other hand, with effect from the entry into force of Directive 91/439 on 1 July

11 — The cases on driving licences previously before the Courtshow that even when Directive 91/439 entered into force and,with it, the obligation not to hold more than one drivinglicence, it is, in practice, difficult to verify whether the personalready holds a driving licence issued by another MemberState. It is certain that the competent authorities in theMember State issuing the licence will continue to have difficulties until such time as a network containing the fileson driving licences is operational within the Union. In thatregard, Directive 2006/126/EC of the European Parliamentand of the Council of 20 December 2006 on driving licences(OJ 2006 L 403, p. 18), which is intended to replaceDirective 91/439 and will enter into force on 19 January2013, expressly provides in Article 7(5)(b), (c) and (d) that theMember States are to refuse to issue a licence where it establishes that the applicant already holds a driving licence.It is provided that where there are reasonable grounds tosuspect that the applicant is already the holder of anotherdriving licence, the Member States are to verify that fact withother Member States. In order to facilitate that requirement,Member States are to use the EU driving licence networkonce it is operational.

12 — See point 1 of the statement of the reasons for Decision2000/275. I would also point out that driving licences issuedin Austria between 1 January 1956 and 1 November 1997 arerecognised as equivalent to the Community model.

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1996, I think that, in order for Article 7(5) of C — The second question the directive to be effective, persons must nothold more than one driving licence.

58. To that end, it seems logical to me that adriving licence issued after that date when theholder already had a driving licence recog-nised in Community territory should be regarded as void.

59. In the light of the foregoing factors, Iconsider that, in the circumstances of the main proceedings, Mr Schwarz could holdtwo valid driving licences, which the nationalcourt and the Commission of the EuropeanCommunities seem to accept. 13

60. However, the fact that Mr Schwarz can, in those special circumstances, hold two validdriving licences must not permit him to evadethe withdrawal of his licence by the Germanauthorities in 1997 and the obligation to undergo a test of his fitness to drive, includingthe submission of a medical-psychological report.

61. The question which now arises is whetherthe withdrawal of the licence by the Germanauthorities, which affects the German drivinglicence, also affects the validity of the Austriandriving licence and thereby preventsMr Schwarz from relying on that licence.

62. The Commission seems to accept that thewithdrawal has no effect on the latter licence. It considers that if the Austrian licence had been issued while the withdrawal of the other licence was still in effect, the Federal Republicof Germany could, under Article 8(2) and (4)of Directive 91/439, have refused to recognisethe Austrian licence. However, the Commis-sion notes that at the time when the Austrian licence was issued, no other driving licenceissued to the holder had been withdrawn. It therefore considers that the Austrian licence must be recognised by the German autho-rities, notwithstanding the withdrawal of theGerman licence.

63. I am not of that opinion for the following 13 — See point 11 of the order for reference and points 22 to 26 ofthe Commission’s observations. reasons.

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64. Certainly, the Court has consistently heldthat driving licences must be mutually recog-nised without any formality and that MemberStates have no discretion as to the measures to be adopted in order to comply with that obligation. 14

65. On the other hand, Article 8(2) and (4) ofDirective 91/439 clearly provide an exceptionto that principle. They provide that a MemberState may refuse to recognise the validity ofany driving licence issued by another MemberState to a person who is, in the former State’s territory, the subject of a restriction, suspen-sion, withdrawal or cancellation of the right todrive.

66. As I already pointed out in point 58 of myOpinions in Wiedemann and Funk and Zerche and Others, 15 that provision allows aMember State to ensure that persons whom itconsiders, as a result of legal proceedings andin accordance with Community rules, to beunfit to drive, because dangerous, are unableto rely on a licence issued by another MemberState.

67. However, the Court has decided that a Member State may not refuse to recognise thevalidity of any driving licence issued by

14 — See, in particular, Case C-230/97 Awoyemi [1998] ECR I-6781, paragraphs 41 and 42.

15 — Joined Cases C-329/06 and C-343/06 [2008] ECR I-4635 andJoined Cases C-334/06 to C-336/06 [2008] ECR I-4691 respectively.

another Member State to a person whose driving licence has been withdrawn in thatMember State where the licence was issued after the period in which the person was banned from obtaining a new licence withwhich the measure in question was coupledhad expired. 16 The same is true where the withdrawal was not coupled with a measureprohibiting the holder from obtaining a newlicence for a given period and the new licencewas issued following that withdrawal. 17

68. In Kapper and Kremer, the holders of the driving licences whose validity was challengedhad obtained their licences after the with-drawal or after the expiry of the period inwhich they were banned from applying for anew licence. However, the competent autho-rities were able to ascertain, in accordance with Article 7(1)(a) of Directive 91/439,whether those persons were again fit to driveand whether their dangerous condition haddisappeared.

69. The situation is different in the main proceedings. Mr Schwarz obtained his Austrian driving licence 43 years before committing the offence which led to his German licence being withdrawn. In addition,on 2 April 2001, the Ordnungsamt Mannheim

16 — See the judgment in Case C-476/01 Kapper [2004] ECR I-5205, paragraph 76.

17 — Order in Case C-340/05 Kremer [2006] ECR I-98, paragraphs 34 and 35.

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refused to issue him a new licence on the points makes it possible, precisely, to verifyground that he had not submitted the the capacities of the person whose drivingrequired medical-psychological report and licence has been withdrawn for drunk driving. he had not therefore proved that he was again fit to drive.

70. Thus, after the withdrawal of his German licence and the six-month ban on applying fora new licence, no authority was able to carryout a verification of his capacity to drive. In myopinion, the mere fact of holding a drivinglicence obtained years before the commissionof the offence is also not enough to ensure thatMr Schwarz fulfils the medical conditions required by Article 7(1)(a) of Directive 91/439.

71. I would point out in that regard that it isapparent from points 14.1 and 15 of Annex IIIto the directive that a driving licence is not tobe issued to, or renewed for, a person who isdependent on alcohol or drugs or who is notdependent on such substances but regularlyconsumes or abuses them.

73. Accepting that Mr Schwarz could rely on his Austrian driving licence when he has undergone no test proving his fitness to drivewould amount to evading the safety rules laiddown in Directive 91/439 and would run counter to the directive’s objective of improving road safety.

74. I would point out that it is precisely forthat reason that the directive provides that aperson may hold only one driving licence. Theholding of two driving licences in a very special case, such as the one in the main proceedings, must not endanger the double purpose of Directive 91/439, namely, freemovement of persons through the principle ofmutual recognition of driving licences andimprovement of road safety.

72. The medical-psychological report 75. In other words, although Mr Schwarz canrequired by the German authorities for the hold two driving licences, he none the less hasissue of a new licence in application of those only one right to drive.

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76. It would not be in accordance with Directive 91/439 to permit a person who hascommitted a serious traffic offence to rely on asecond driving licence when it is not evenestablished that the person is again fit to drive.

79. Before concluding, I think it would beuseful to outline the general scheme of theapplication of the principle of mutual recog-nition of driving licences and the exceptionsthereto, as results from Directive 91/439 andthe case-law of the Court.

77. In the light of the foregoing, I think that aMember State may, under Article 8(2) and (4)of Directive 91/439, refuse to recognise thevalidity of a driving licence issued by anotherMember State at an earlier date to a personwhose driving licence has been withdrawn inits territory.

78. In the light of all those considerations, Iconsider that Article 7(5) of Directive 91/439must be interpreted as not preventing a person holding two driving licences where the first licence was issued by a non-membercountry before the entry into force of Direct-ive 80/1263 and where, before the entry intoforce of Directive 91/439, that person, whoalready held a driving licence recognised inthe territory of the Community, undergoesthe test of skills required for the issue of adriving licence. However, I consider that Article 8(2) and (4) of the latter directive must be interpreted as meaning that, in thecircumstances of the main proceedings, a Member State is not prevented from refusingto recognise the validity of a driving licenceissued earlier by another Member State.

80. Pursuant to Directive 91/439:

— a European citizen may hold only onedriving licence issued by a Member State;

— a Member State cannot issue a drivinglicence to a person who has been residentin its territory for less than six months orto a person who is dependent on alcoholor drugs;

— a driving licence issued by a Member State is recognised in the other MemberStates;

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— however, under certain circumstances, a Member State may apply to the drivinglicence its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive, and

— the Member States have a duty to cooperate with each other in good faith.

81. According to the Court’s case-law:

— the Court held in Awoyemi, cited above, that driving licences must be mutuallyrecognised without any formality and that Member States have no discretion as to the measures to be adopted in orderto comply with that obligation, 18

— it stated in Kapper, cited above and in the orders in Halbritter 19 and Kremer, cited above, that when the period in which theperson was banned from obtaining a newlicence has expired in the territory of thehost Member State or where the with-drawal was not coupled with such a ban,that Member State may not refuse to

recognise the validity of a driving licenceissued later by another Member State;

— in Wiedemann and Funk, cited above, it laid down an exception to the principle ofmutual recognition. It decided that a Member State may refuse to recognise anew licence issued to a person who hasbeen the subject, in its territory, of a measure withdrawing his driving licenceand prohibiting any application for a newlicence for a given period by another Member State during the period of thatprohibition, 20 and

— the Court has decided that a personwhose right to drive has been restrictedmust not be able to obtain a driving licence in disregard of the residence condition. The Court has decided that that condition helps, inter alia, the fightagainst ‘driving-licence-tourism’, in the absence of complete harmonisation of thelaws of the Member States relating to theissuing of driving licences. Moreover, since the condition is a preconditionmaking it possible to establish that theother conditions imposed by Direct-ive 91/439 have been observed, the condition of residence assumes specialimportance. 21 Here, the Court has emphasised the imperatives of road safety.

20 — See Wiedemann and Funk, cited above, paragraph 65. 18 — Paragraphs 41 and 42. 21 — Ibidem (paragraphs 68 to 71). See also Zerche and Others,19 — Case C-227/05 [2006] ECR I-49. cited above (paragraphs 65 to 68).

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82. In the light of the foregoing, it is clear tome that the consistent case-law of the Court, as I understand it, reflects the desire to combine the exercise of free movement with the need to ensure that all those who avail themselves of that right enjoy the essentialconditions of safety.

83. It seems appropriate to point out thatfreedom of movement can be a concrete reality only if the citizens who exercise it arenot thereby exposed to unjustified dangers. Inmy view, a person who, although he has beenfound to be unfit by a judicial or adminis-trative decision, none the less continues to drive without fulfilling the conditions required by the directive in force creates such a danger.

84. For that reason, I consider it right to saythat, in the present state of the Community

rules, the case-law will not be sufficient to prevent situations of that kind.

85. Even if the Court accepts my proposal, thepresent case unquestionably shows that Dir-ective 91/439 has left a legal void in this regard. If it is decided, as I will propose, thatthe Federal Republic of Germany was justifiedin its refusal to recognise the validity of Mr Schwarz’s Austrian licence, he could drive without difficulty on the basis of thatlicence in the other Member States of the Union, where he would create the same danger as in Germany.

86. For those reasons, I think it would be useful if the Community legislature were toaddress this problem and provide an appro-priate solution to it.

V — Conclusion

87. In the light of the foregoing considerations, I propose that the Court should reply asfollows to the questions referred to it by the Landgericht Mannheim:

Article 7(5) of Council Directive 91/439/EEC of 29 July 1991 on driving licences, asamended by Regulation (EC) No 1882/2003 of the European Parliament and of theCouncil of 29 September 2003, must be interpreted as not preventing a person holding

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two driving licences where the first licence was issued by a non-member country beforethe entry into force of Council Directive 80/1263/EEC of 4 December 1980 on theintroduction of a Community driving licence and where, before the entry into force ofDirective 91/439, that person, who already held a driving licence recognised in theterritory of the Community, undergoes the test of skills required for the issue of adriving licence.

In addition, Article 8(2) and (4) of Directive 91/439, as amended by RegulationNo 1882/2003, must be interpreted as meaning that, in the circumstances of the mainproceedings, a Member State is not prevented from refusing to recognise the validity ofa driving licence issued earlier by another Member State.

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SCHWARZ


19 February 2009 *

In Case C-321/07,

REFERENCE for a preliminary ruling under Article 234 EC from the LandgerichtMannheim (Germany), made by decision of 28 June 2007, received at the Court on12 July 2007, in the criminal proceedings against

Karl Schwarz,


composed of A. Rosas (Rapporteur), President of the Chamber, J.N. Cunha Rodrigues,J. Klučka, P. Lindh and A. Arabadjiev, Judges,

Advocate General: Y. Bot, Registrar: R. Grass,

having regard to the written procedure,

* Language of the case:German.

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— M. Schwarz, by W. Säftel, Rechtsanwalt,


— the Italian Government, by I.M. Braguglia, acting as Agent, assisted by S. Fiorentino,avvocato dello Stato,

— the Portuguese Government, by L. Fernandes and M. Ribes, acting as Agents,

— the Commission of the European Communities, by G. Braun and N. Yerrell, actingas Agents,


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gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 1(2) andArticle 8(2) and (4) of Council Directive 91/439/EEC of 29 July 1991 on driving licences(OJ 1991 L 237, p. 1), as amended by Regulation (EC) No 1882/2003 of the EuropeanParliament and of the Council of 29 September 2003 (OJ 2003 L 284, p. 1, ‘Directive 91/439’).

2 The reference was made in the course of proceedings between Mr Schwarz and theStaatsanwaltschaft Mannheim concerning a driving licence which Mr Schwarz hadobtained in Austria before the accession of that State to the European Union and priorto the issue of a German licence which had been withdrawn in Germany on the groundof alcohol consumption.

Legal context

Community rules

3 Driving licences were harmonised by the adoption of First Council Direct-ive 80/1263/EEC of 4 December 1980 on the introduction of a Community driving

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licence (OJ 1980 L 375, p. 1), which, as the first recital therein states, is intended to makea contribution to improving road traffic safety, and to assist the movement of personssettling in a Member State other than that in which they have passed a driving test, ormoving within the European Community.

4 According to Article 1(1) of Directive 80/1263, a national driving licence based on theCommunity model entitles the holder to drive, both on national and internationaljourneys.

5 By virtue of the first subparagraph of Article 8(1) of the directive, if the holder of a validnational driving licence or valid Community model licence issued by a Member Statetakes up normal residence in another Member State his licence is to remain valid therefor up to a maximum of a year following the taking up of residence. At the request of theholder within that period, and against surrender of his licence, the Member State is toissue him with a Community model driving licence.

6 The second subparagraph of Article 8(1) of Directive 80/1263 provides that theMember State effecting the exchange is to return the old licence to the authorities of theMember State which issued it.

Where a licence issued by a third country is exchanged, Article 8(3) of Directive 80/1263provides, inter alia, that a Community model driving licence may be issued only if thelicence issued by the third country has been surrendered to the competent authoritiesof the Member State issuing the licence.

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7

8

SCHWARZ

According to the first recital in Directive 91/439, which repealed Directive 80/1263with effect from 1 July 1996:

‘… for the purpose of the common transport policy, and as a contribution to improvingroad traffic safety, as well as to facilitate the movement of persons settling in a MemberState other than that in which they have passed a driving test, it is desirable that thereshould be a Community model national driving licence mutually recognised by theMember States without any obligation to exchange licences.’

9 According to the ninth recital in the directive, the obligation to exchange drivinglicences within a period of one year of changing normal residence constitutes anobstacle to the free movement of persons, which is inadmissible in the light of theprogress made towards European integration.

10 The last recital in Directive 91/439 states the following:

‘… for reasons connected with road safety and traffic, Member States should be able toapply their national provisions on the withdrawal, suspension and cancellation ofdriving licences to all licence holders having acquired normal residence in theirterritory.’

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11

12


Article 1 of Directive 91/439 provides as follows:

‘1. Member States shall introduce a national driving licence based on the Communitymodel described in Annex I or Ia, in accordance with the provisions of this Directive …

2. Driving licences issued by Member States shall be mutually recognised.

3. Where the holder of a valid national driving licence takes up normal residence in aMember State other than that which issued the licence, the host Member State mayapply to the holder of the licences its national rules on the period of validity of thelicences, medical checks and tax arrangements and may enter on the licence anyinformation indispensable for administration.’

In accordance with Article 7(1) of Directive 91/439, driving licences are to be issuedonly to those applicants:

‘(a) who have passed a test of skills and behaviour and a theoretical test and who meetmedical standards, in accordance with the provisions of Annexes II and III;

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SCHWARZ

(b) who have their normal residence in the territory of the Member State issuing thelicence, or can produce evidence that they have been studying there for at least sixmonths.’

13 In accordance with point 14 of Annex III to the directive, entitled ‘Minimum standards of physical and mental fitness for driving a power-driven vehicle’, alcohol consumptionconstitutes a major danger to road safety and in view of the scale of the problem, themedical profession must be very vigilant.

14 Point 14.1 of the said Annex states that:

‘Driving licences shall not be issued to, or renewed for, applicants or drivers who aredependent on alcohol or unable to refrain from drinking and driving.

After a proven period of abstinence and subject to authorised medical opinion andregular medical check-ups, driving licences may be issued to, or renewed for, applicantsor drivers who have in the past been dependent on alcohol.’

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15

16


In accordance with Article 7(5) of Directive 91/439:

‘No person may hold a driving licence from more than one Member State.’

Article 8 of the directive provides as follows:

‘1. Where the holder of a valid national driving licence issued by a Member State hastaken up normal residence in another Member State, he may request that his drivinglicence be exchanged for an equivalent licence; it shall be for the Member State effectingthe exchange to check, if necessary, whether the licence submitted is in fact still valid.

2. Subject to observance of the principle of territoriality of criminal and police laws, theMember State of normal residence may apply its national provisions on the restriction,suspension, withdrawal or cancellation of the right to drive to the holder of a drivinglicence issued by another Member State and, if necessary, exchange the licence for that purpose.

…

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SCHWARZ

4. A Member State may refuse to recognise the validity of any driving licence issued byanother Member State to a person who is, in the former State’s territory, the subject of one of the measures referred to in paragraph 2.

…

6. Where a Member State exchanges a driving licence issued by a third country for aCommunity model driving licence, such exchange shall be recorded in the latter as shallany subsequent renewal or replacement.

Such an exchange may occur only if the licence issued by the third country has beensurrendered to the competent authorities of the Member State making the exchange. Ifthe holder of this licence transfers his normal residence to another Member State, the latter need not apply Article 1(2).’

According to Article 10 of Directive 91/439, with the agreement of the Commission,Member States are to establish equivalences between the categories of licence issuedbefore implementation of the directive and those defined in Article 3.

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17

18

19


Article 12 of Directive 91/439 provides as follows:

‘1. After consulting the Commission, Member States shall, before 1 July 1994, adoptthe laws, regulations or administrative provisions necessary to comply with thisDirective as of 1 July 1996.

…

3. The Member States shall assist one another in the implementation of this Directiveand shall, if need be, exchange information on the licences they have registered.’

Article 1 of Commission Decision 2000/275/EC of 21 March 2000 on equivalencesbetween certain categories of driving licences (OJ 2000 L 91, p. 1), as amended byCommission Decision 2002/256/EC of 25 March 2002 (OJ 2002 L 87, p. 57) providesthat it applies to all valid driving licences issued in Member States which are still incirculation.

Article 2 of the said decision provides that tables of equivalences between categories ofdriving licences, which have been issued in Member States before the implementationof Directive 91/439 and the harmonised categories as defined in Article 3 of Directive 91/439 are laid down in the annex to the decision.

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20

21

SCHWARZ


Paragraph 28(1), (4) and (5) of the regulation on the authorisation of persons to drive onthe highways (the regulation on driving licences) (Verordnung über die Zulassung vonPersonen zum Straßenverkehr (Fahrerlaubnis-Verordnung)) of 18 August 1998 (BGBl.1998 I, p. 2214, ‘the FeV’) provides as follows:

‘(1) Holders of a valid [European Union] or [European Economic Area (“the EEA”)]driving licence having their normal residence within the meaning of Paragraph 7(1) or(2) in Germany shall be authorised — subject to the restriction laid down in subparagraphs (2) to (4) — to drive motor vehicles in that country within the limits ofthe rights to which they are entitled. The conditions attached to foreign driving licencesshall be observed in Germany also. The provisions of this regulation shall apply to thoselicences save as otherwise provided.

…

(4) The authorisation referred to in subparagraph 1 shall not apply to holders of a[European Union] or EEA driving licence:

…

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22


3. whose driving licence has been provisionally or definitively withdrawn in Germanyby a court or been withdrawn by an immediately enforceable or final decision of anadministrative authority, or who have been refused a driving licence by a finaldecision or whose driving licence has not been withdrawn solely because they haverenounced it in the meantime,

…

(5) The right to use a [European Union] or EEA driving licence in Germany after one ofthe decisions mentioned in subparagraphs 4(3) and (4) shall be granted on applicationwhen the grounds justifying the withdrawal or the prohibition on applying for a newlicence no longer obtain. …’

According to Paragraph 69 of the Criminal Code (Strafgesetzbuch), a criminal court isto order the withdrawal of a driving licence if it is apparent from the facts of the case thata defendant is unfit to drive a motor vehicle. In accordance with Paragraph 69a of thatcode, when a court orders withdrawal of a licence it is also to order that no applicationmay be made for the issue of a new driving licence for a given period (‘the period of the prohibition’) which may vary from six months to five years and may even, in somecircumstances, be ordered to last for life.

Similarly, by virtue of Article 46 of the FeV, the driving licence authority is to withdrawthe licence if it is shown that the holder is unfit to drive motor vehicles.

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23

24

SCHWARZ

Paragraph 11 of the FeV, headed ‘Fitness’, provides as follows:

‘(1) Applicants for a driving licence must satisfy the relevant physical and mentalrequirements. In particular, those requirements are not satisfied in the case of sicknessor disability referred to in Annex 4 or in Annex 5 which excludes fitness [to drive motorvehicles] or entails only limited fitness. …

(2) Where circumstances exist which give rise to doubt as to the physical or mentalfitness of an applicant for a driving licence, the competent authorities may order theapplicant to produce a medical report preparatory to the decisions to be taken on theissue or extension of a driving licence or on the imposition of restrictions or conditions....

(3) Production of a report made by an officially approved centre for the testing offitness to drive (medical-psychological report) may be ordered in order to dispel doubtsas to fitness to drive for the purposes of subparagraph 2 [in particular]

…

4. in the case of serious or repeated contraventions of the highway code or of roadtraffic offences or offences related to fitness to drive …

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or

5. on the new grant of a driving licence,

…

(b) when the withdrawal of the licence was based on one of the grounds set out insubparagraph 4.

…

(8) If the person concerned refuses to be examined or if he does not within the periodprescribed produce to the competent driving licence authority the medical reportrequired by the latter, the competent authority is entitled to conclude in its decision thatthe person concerned is unfit to drive. …’

Headed ‘Fitness in cases of alcohol problems’, Paragraph 13 of the FeV gives thecompetent authorities power to order, in certain circumstances, the production of amedical-psychological report for the purposes of inquiries preparatory to the decisionsto be taken either to issue or extend a driving licence or to impose restrictions orconditions relating to the right to drive. That is, in particular, the case when, according

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25

SCHWARZ

to medical opinion or on account of certain facts, there is evidence of abuse of alcohol orwhen road traffic offences have on several occasions been committed under the influence of alcohol.

26 Paragraph 20(1) of the FeV provides that, when a new driving licence is issued followinga withdrawal, the same provisions apply as for the first issue of a licence. Although,according to Paragraph 20(2) of the FeV, the competent authority may decide not toorder the tests in relation to the issue of a licence when there is nothing to suggest thatthe applicant no longer possesses the knowledge or fitness required for that purpose,Paragraph 20(3) provides that such a decision does not alter the obligation to produce amedical-psychological report laid down in the fifth point of the first paragraph ofParagraph 11(3) of the FeV.

27 Pursuant to Paragraph 21(1) of the law on road traffic (Straßenverkehrsgesetz, the‘StVG’) any person who drives a motor vehicle without holding the necessary licence forthat purpose is punishable by a term of imprisonment of up to one year or a fine.


On 28 October 1964, the Verkehrsamt Wien (Office for licensing of vehicles, Vienna(Austria)) issued Mr Schwarz with a driving licence for vehicles in categories A and B.

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28


29 In 1968, Mr Schwarz exchanged his Austrian driving licence for a German drivinglicence for categories 1 and 3. He was allowed to retain his Austrian driving licence.

30 On 9 May 1988, Mr Schwarz renounced the German driving licence and handed it in.

31 On May 3 1994, after Mr Schwarz had passed a medical-psychological test, theOrdnungsamt Mannheim (Germany) issued him with a new German driving licence.He was allowed to retain his Austrian driving licence.

32 On 1 December 1997, the Amtsgericht Mannheim sentenced Mr Schwarz to a fine of 40daily penalties of DEM 50 per day for intentional drunk driving. His right to drive waswithdrawn, his licence was confiscated and he was subject to a six month ban on theobtaining of a new driving licence.

33 On 24 July 2000, Mr Schwarz applied to the Ordnungsamt Mannheim for a new drivinglicence for vehicles in category 3. That application was rejected on 2 April 2001 on theground that he had not submitted the required report attesting to his fitness to drive.

34 On 11 April 2005, Mr Schwarz was found to be driving without holding the necessarydriving licence. Consequently, on 30 January 2006, the Amtsgericht Mannheim

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SCHWARZ

imposed on him a fine of 30 daily penalties of EUR 25 per day. Mr Schwarz paid the fineimposed in order to avoid the alternative penalty of imprisonment.

35 Mr Schwarz argued that he had been unable to lodge an objection to the court’s order because it had been sent to Vienna and he had received it too late.

36 At a road check on 23 December 2005, Mr Schwarz produced his Austrian drivinglicence. Subsequently, by judgment of 22 June 2006, the Amtsgericht Mannheimacquitted him of driving a motor vehicle without a valid driving licence contrary toParagraph 21(1) of the StVG.

37 Since it wished to have Mr Schwarz convicted of driving without a licence, theStaatsanwaltschaft Mannheim appealed against that judgment before the LandgerichtMannheim.

38 In those circumstances, the Landgericht Mannheim decided to stay proceedings and torefer the following two questions to the Court for a preliminary ruling:

‘(1) Is it — contrary to Article 7(5) of Directive 91/439 — possible under Communitylaw for a citizen of the EU to hold a valid German driving licence and a drivinglicence issued by another Member State, both of which were obtained before theaccession to the EU of the foreign Member State and — if so —

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(2) Does the withdrawal — before the entry into force of the [FeV] of 1 January 1999 —of the later second German driving licence as a consequence of a drunkennessoffence mean that the validity in Germany of the first foreign driving licence, whichwas issued earlier, is also no longer required to be recognised after accession of theforeign Member State, even where the period of the ban imposed in Germany hasexpired?’

The questions referred to the Court

The first question

39 In its first question, the national court asks, essentially, whether Article 7(5) ofDirective 91/439 must be interpreted as precluding a national of a Member State, whoholds a Community driving licence issued by that Member State, from also holdinganother licence previously issued by another Member State where both licences hadbeen obtained before the latter Member State acceded to the Union.

Observations of the parties

40 Mr Schwarz and the Commission consider that the holding of two driving licences, oneof which was issued by the Member State of residence and the other by anotherMember State prior to the accession of that State to the Union, is possible even if suchholding is contrary to Article 7(5) of Directive 91/439. Although the directive was not

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SCHWARZ

intended to create such a situation, it will cease to exist only when a central management system for driving licences has been introduced for all the Member States.

41 Similarly, the German Government is of the opinion that it is, in principle, possible tohold two driving licences issued by two Member States where both licences were issuedbefore the accession of one of those States to the Union.

42 However, the German Government points out that it is possible, under national law, fora driving licence issued by a third country to become invalid in the national territorybefore the latter State acceded to the Union. That would be the case in a situation such as the one which arises in the main proceedings under the applicable German lawwhereby a driver who holds a valid driving licence issued by a third country loses theright to use that licence if a period of more than 12 months has passed since heestablished his principal residence in Germany.

43 In any event, a possible revival of a driving licence issued in 1964 would be contrary toArticle 7(5) of Directive 91/439, the purpose of which is to prevent the holding of twovalid licences.

44 While observing that the period of validity of the Austrian driving licence appears to beunlimited, the Italian Government leaves it to the Court to determine whether, in a case in which two driving licences are held, Article 7(5) must be interpreted as requiring theMember State concerned, if necessary by making use of the mutual assistance procedure, to accept either the automatic loss of the licence issued previously or thenullity ex novo of the licence issued later.

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45


The Portuguese Government points out that, pursuant to Article 7(5) of Direct-ive 91/439, the right to drive in a Member State may be exercised only on the basis of asingle, Community driving licence. Any restrictive measures thus apply to that solelicence. From an administrative point of view, a single driving licence makes it possibleto monitor and implement any sanctions imposed. In order to transpose Direct-ive 91/439 correctly, the Federal Republic of Germany should therefore have ensuredthat all drivers resident in its territory held only one Community driving licence.

The Court’s answer

— Preliminary remarks

46 The question on the interpretation of Article 7(5) of Directive 91/439, as formulated bythe national court, postulates that the two driving licences are simultaneously valid.

47 The German Government argues that, under German law, Mr Schwarz should have lostthe right to use his Austrian driving licence, issued in 1964 and exchanged in 1968, 12months after establishing his principal residence in Germany.

In that connection, the answer must be that the jurisdiction of the Court is confined toconsidering provisions of Community law only and it has no jurisdiction to rule on

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48

SCHWARZ

national law (see, to that effect, Case C-453/04 innoventif [2006] ECR I-4929, para-graph 29).

49 In any event, under Article 234 EC, the Court of Justice is empowered only to giverulings on the interpretation or the validity of a Community provision on the basis ofthe facts which the national court puts before it (see Case 104/77 Oehlschläger [1978] ECR 791, paragraph 4, and Case C-11/07 Eckelkamp and Others [2008] ECR I-6845, paragraph 52).

50 It is apparent from the order for reference that Mr Schwarz was allowed to keep theAustrian driving licence when it was exchanged for a German driving licence in 1968and when the German driving licence was issued in 1994, and that the Austrian licenceremained valid.

51 With regard to the validity of the German driving licence issued in 1994, the questionarises, first, as to the application of Directive 80/1263, and in particular Article 8(3)thereof, inasmuch as it provides that when a Member State exchanges a driving licenceissued by a third country for a Community model driving licence, the exchange may bemade only if the licence issued by the third country has been surrendered to thecompetent authorities of the Member State making the exchange.

In a situation such as that in the present proceedings, in so far as the issue of theGerman licence in 1994 was not an exchange of the Austrian driving licence but theissue of a new driving licence under German law, as the German Government hasargued, the provisions concerning the exchange of driving licences do not apply.

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52

53

54


Moreover, Article 7(5) of Directive 91/439, which provides that no person may hold adriving licence from more than one Member State, was irrelevant when the Germandriving licence was issued in 1994 since the said directive came into force only on 1 July1996, at which date Directive 80/1263 was repealed (Case C-230/97 Awoyemi [1998] ECR I-6781, paragraph 33).

Even supposing that the issue of the German driving licence in May 1994 should not,contrary to the German Government’s argument, be regarded as the issue of a newdriving licence but as the exchange of an existing licence, it should be noted that anational of a Member State must not suffer a disadvantage by virtue of holding twodriving licences even though the issue of the second licence results from an irregularityin the sense that the issuing Member State did not comply with Community law byfailing to return the licence previously issued by another Member State to the authorities of that State.

— The application of Article 7(5) of Directive 91/439

Article 7(5) of Directive 91/439 provides that no person may hold a driving licence frommore than one Member State. It follows that Member States are precluded from issuinga Community licence when the person applying for it already holds another drivinglicence issued by another Member State.

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55

SCHWARZ

56 Although it is true that Article 7(5) of Directive 91/439 affirms the single nature of adriving licence (see Joined Cases C-329/06 and C-343/06 Wiedemann and Funk [2008] ECR I-4635, paragraph 70, and Joined Cases C-334/06 to 336/06 Zerche and Others [2008] ECR I-4691, paragraph 67), it is also true that the sole effect of thatprovision is to prohibit the issue of a second Community driving licence after the date atwhich the provision was applicable, namely 1 July 1996, at which date Directive 80/1263was repealed.

57 However, Article 7(5) of Directive 91/439 does not prohibit a national of a MemberState continuing to hold more than one valid licence when one of those licences wasissued in a Member State prior to its accession in so far as that licence has not ceased tobe valid.

58 In such a situation, where two valid licences exist side by side, the said provision doesnot therefore affect the validity of one of them. In such a case, it does not introduce anorder of priority of application and does not require either the automatic loss of the firstlicence or the nullity of the second.

59 Where the first driving licence was issued by a State before its accession to the Union,Article 7(5) of Directive 91/439 does not require, where two valid driving licences areheld, either the automatic loss of the earlier licence issued by that State before itsaccession or the nullity of the later licence issued in another Member State, also beforethe said accession.

60 It follows from the foregoing that the answer to the first question must be thatArticle 7(5) of Directive 91/439 must be interpreted as not precluding a national of aMember State from holding simultaneously two valid driving licences, one of which is a

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Community licence and the other a driving licence issued by another Member State,where both licences were obtained before the accession of the latter State to the Union.

The second question

61 In its second question, the national court is asking, essentially, whether Article 1 andArticle 8(2) and (4) preclude a Member State from refusing to recognise the right todrive stemming from a driving licence issued by another Member State before the latteracceded to the Union where that licence was issued prior to a driving licence issued bythe first Member State in which the second licence was withdrawn due to the holder’s unfitness to drive and where the accompanying period of prohibition has expired.

Observations of the parties

62 Mr Schwarz points out that a Member State’s refusal to recognise a driving licenceissued in another Member State is subject to a decision adopted by the national bodyresponsible for road traffic, which is not the case in the main proceedings.

In those proceedings, the national court does not have jurisdiction and cannot thereforeimpose a penalty on Mr Schwarz for driving without a licence. Moreover, the withdrawal of his German driving licence in 1997, which was accompanied by a period

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63

SCHWARZ

during which he was prohibited from applying for a new driving licence, cannot justifyan indefinite refusal to recognise the Austrian driving licence issued to him in 1964.

64 The Commission points out that a driving licence issued in a Member State subsequentto the withdrawal of an earlier licence in another Member State does not have to be recognised in the latter Member State if the second licence was issued during a period inwhich the holder was prohibited from applying for a new licence in the Member Statewhich had withdrawn the earlier licence.

65 On the other hand, it would be possible to drive a motor vehicle once again, on the basisof a second driving licence issued by a Member State after the expiry of the periodduring which the holder was prohibited from applying for a new licence. The Commission points out that, in the case of a driving licence issued before the periodduring which the holder was prohibited from applying for a new licence, and not duringthat period, the holder of such a licence normally does not have a criminal record at thetime that the licence is issued and it should therefore be recognised, unless there arespecial circumstances which require otherwise.

66 In a case such as that before the national court, neither the fact that the Republic ofAustria had not yet acceded to the Union nor the fact that a driving licence issuedsubsequently in Germany had been withdrawn affect the obligation to recognise a validdriving licence issued by the Republic of Austria after the period of prohibitionaccompanying the withdrawal.

67 In the light of the answer given to the first question, the German Government’s argument that Directive 91/439 does not preclude the rule in Paragraph 28 of the FeV,under which Mr Schwarz is not permitted to drive on the basis of his Austrian drivinglicence until he has shown, by the submission of a medical-psychological report, thatthe reasons justifying the withdrawal of the German driving licence issued to him earlier

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have ceased to exist, is put forward only in the alternative. The withdrawal of a Germandriving licence would be deprived of all useful effect if the authorities were required torecognise the foreign licence issued earlier.

68 In addition, Article 8(2) of Directive 91/439 permits the adoption of measures punishing conduct which occurred after the foreign licence was obtained.

69 In addition, unlike a person who obtained a new driving licence in another MemberState after the withdrawal of a German driving licence, the person concerned in theseproceedings has twice failed to demonstrate his fitness to drive motor vehicles. Article 8(1) of Directive 80/1263 and Article 7(5) of Directive 91/439 demonstrate,precisely, the wish of the Community legislature to prevent persons obtaining a doubleright to drive motor vehicles.

70 The German Government also argues that the withdrawal of a national driving licencemust include the right to challenge the validity of a foreign driving licence obtainedearlier, since the objective of Directive 91/439 to ensure the safety of road trafficrequires that a person who is unfit should not be permitted to drive a motor vehicle onthe public highway.

Finally, the German Government points out that the expiry of the period during which anew driving licence may not be applied for is irrelevant in the main proceedings sincethe accused did not obtain a new driving licence during the period of prohibition.

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SCHWARZ

Mr Schwarz’s rights were not unduly affected thereby since he is not prevented fromobtaining a new driving licence at the expiry of the period of prohibition.

72 Similarly, the Italian Government argues that nothing precludes the application ofArticle 8(2) of Directive 91/439, according to which the Member State of normalresidence may apply its national provisions on the restriction, suspension, withdrawalor cancellation of the right to drive to the holder of a driving licence issued by anotherMember State.

73 In the main proceedings, Mr Schwarz was not required to undergo a test of his fitness todrive by the authorities of another Member State after the withdrawal of his Germandriving licence. Nothing therefore happened subsequent to the withdrawal decisionwhich could lead to the conclusion that Mr Schwarz was once again fit to drive.Furthermore, Mr Schwarz is entitled to apply for a new driving licence under Paragraph 28(5) of the FeV.

The Court’s answer

74 It is apparent from the first recital in Directive 91/439 that the general principle ofmutual recognition of driving licences issued by the Member States, laid down inArticle 1(2) of that directive, was established in order, inter alia, to facilitate themovement of persons settling in a Member State other than that in which they havepassed a driving test (Case C-476/01 Kapper [2004] ECR I-5205, paragraph 71; Wiedemann and Funk, paragraph 49; Zerche and Others, paragraph 46; and Case C-1/07 Weber [2008] ECR I-8571, paragraph 26).

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75 The Court has consistently held that Article 1(2) of Directive 91/439 provides formutual recognition, without any formality, of driving licences issued by Member States.That provision imposes on Member States a clear and precise obligation, which leavesno room for discretion as to the measures to be adopted in order to comply with it (see,to that effect, Awoyemi, paragraphs 41 and 42; Case C-246/00 Commission v Netherlands [2003] ECR I-7485, paragraphs 60 and 61; Kapper, paragraph 45; Wiedemann and Funk, paragraph 50; Zerche and Others, paragraph 47; and Weber, paragraph 26; order of 6 April 2006 in Case C-227/05 Halbritter, paragraph 25; order of 28 September 2006 in Case C-340/05 Kremer, paragraph 27).

76 It is for the issuing Member State to investigate whether the minimum conditionsimposed by Community law, particularly those relating to residence and fitness to driverequired by Article 7(1) of Directive 91/439, have been satisfied and, therefore, whetherthe issue of a driving licence is justified (Wiedemann and Funk, paragraph 52; Zerche and Others, paragraph 49).

77 Once the authorities of one Member State have issued a driving licence in accordancewith Article 1(1) of Directive 91/439, the other Member States are not entitled toinvestigate whether the conditions for issue laid down by that directive have beenobserved. The possession of a driving licence issued by one Member State has to beregarded as constituting proof that, on the day that licence was issued, its holderfulfilled those conditions (Wiedemann and Funk, paragraph 53; Zerche and Others, paragraph 50).

In the present case, it must be observed that the driving licences issued in Austriabetween 1 January 1956 and 1 November 1997 appear in the tables of equivalencesannexed to Decision 2000/275, as amended by Decision 2002/256.

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78

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However, Article 8(2) and (4) of Directive 91/439 permit the Member States, undercertain circumstances, in particular, as is apparent from the final recital in the directive,for reasons of road safety, to apply their national provisions on the restriction, suspension, withdrawal or cancellation of driving licences in relation to any licence-holder having normal residence in their territory.

80 The right provided for in Article 8(2) of Directive 91/439 may be exercised by reason ofsome conduct of the person concerned after he has obtained a driving licence issued byanother Member State (see, to that effect, Wiedemann and Funk, paragraph 59, and Zerche and Others, paragraph 56; orders in Halbritter, paragraph 38, and Kremer, paragraph 35; and the order of 3 July 2008 in Case C-225/07 Möginger, para-graph 36).

81 Although it is true that Article 8(2) of Directive 91/439 does not authorise the MemberState of normal residence to refuse to recognise a driving licence issued by anotherMember State merely because the holder has earlier had a previous licence withdrawnin the first Member State, that provision nevertheless authorises the latter, subject toobservance of the principle of territoriality of criminal and police laws, to apply to thatholder its national provisions on the restriction, suspension, withdrawal or cancellationof the licence if his conduct subsequent to the issue of the licence justifies it (Wiedemann and Funk, paragraph 66, and Zerche and Others, paragraph 63).

The first subparagraph of Article 8(4) of Directive 91/439 authorises a Member State torefuse to recognise the validity of a driving licence obtained in another Member State bya person who is, in the first Member State’s territory, the subject of a measurerestricting, suspending, withdrawing or cancelling a licence.

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82

83


The Court has held in that regard that when the person concerned has been the objectof a measure withdrawing his driving licence and prohibiting any application for a newlicence for a given period, it is not contrary to Articles 1(2) and 8(4) of Directive 91/439for a Member State to refuse to recognise a new licence issued by another Member Stateduring the period of that prohibition (Wiedemann and Funk, paragraph 65; Zerche and Others, paragraph 62; and the order in Möginger, paragraph 38).

84 However, the authorisation contained in Article 8(4) of Directive 91/439 constitutes aderogation from the general principle of mutual recognition of driving licences and is,therefore, to be interpreted strictly (Wiedemann and Funk, paragraph 60; Zerche and Others, paragraph 57; and Weber, paragraph 29).

85 The Court has held that Article 8(4) may not be used by a Member State as a basis forrefusing indefinitely to recognise, in relation to a person who has been subject in itsterritory to a measure withdrawing or cancelling a previous licence issued by that State,the validity of any licence that may subsequently, that is to say, after the period ofprohibition, be issued to him by another Member State (see, to that effect, Kapper, paragraph 76; Wiedemann and Funk, paragraph 63; Zerche and Others, paragraph 60; and the orders in Halbritter, paragraph 28, and Kremer, paragraph 29).

86 Thus, where a person’s driving licence has been withdrawn in a Member State,Article 8(4) does not, in principle, authorise that Member State to refuse to recognisethe validity of a driving licence subsequently issued to the same person by anotherMember State outside a period during which no application may be made by him for theissue of a new driving licence (see, to that effect, Kapper, paragraph 76; Wiedemann and Funk, paragraph 64; Zerche and Others, paragraph 60; and the orders in Halbritter, paragraph 27; Kremer, paragraph 29; and Möginger, paragraph 44).

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SCHWARZ

In the present case, as in the cases giving rise to the judgments and orders referred to inthe previous paragraph, the driving licence at issue in the main proceedings was issuedand used outside a period during which no application could be made for the issue of anew driving licence.

88 However, it remains to be considered whether the fact that a driving licence was issuedby a Member State prior to a driving licence issued by another Member State and,consequently, prior to the withdrawal of the later licence, affects the latter MemberState’s obligation to recognise the driving licence issued by the first Member State.

89 Although it is true that a driving licence such as the Austrian licence at issue in the mainproceedings was issued outside a period during which no application could be made forthe issue of a new driving licence and that its holder made use of it outside any suchperiod, that licence was, unlike the licences concerned in the cases cited above,obtained before, and not after, the issue of the German driving licence and, therefore,before the withdrawal of that licence.

90 As the Advocate General had observed in point 40 of his Opinion, Directive 91/439 isintended to strike a balance between the principle of mutual recognition, whichfacilitates free movement of persons, an objective of the directive which was referred toin paragraph 74 of the present judgment, and the directive’s objective of improving roadtraffic safety, in particular, by permitting Member States, on the basis of Article 8(2) and(4), to apply their national provisions on the restriction, suspension, withdrawal orcancellation of a driving licence.

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91 Thus, the Court has held that a Member State may not refuse to recognise, in itsterritory, the right to drive stemming from a driving licence issued in another MemberState and, therefore, the validity of that licence, so long as the licence holder has notsatisfied the necessary conditions in that first Member State for the issue of a newlicence following withdrawal of the licence previously obtained there, including theexamination of fitness to drive certifying that the grounds justifying the withdrawal areno longer in existence (see Wiedemann and Funk, paragraph 64, and Zerche and Others, paragraph 61; orders in Halbritter, paragraph 32, and Kremer, paragraph 38).

92 In those cases, the unfitness to drive, punished by withdrawal of the driving licence in aMember State, was set aside by the test of fitness carried out by another Member Statewhen the later driving licence was issued.

93 At that time, the issuing Member State, as is pointed out in paragraph 76 of the presentjudgment, must, in particular, verify, in accordance with Article 7(1) of Directive 91/439,that the candidate satisfies the minimum standards of physical and mental fitness fordriving.

94 In circumstances such as those in the main proceedings, the withdrawal of a drivinglicence issued by a Member State casts doubt on its holder’s fitness to drive and thus, implicitly, on the driving licence issued earlier by another Member State.

95 As the German and Italian Governments have pointed out, unlike the cases which gaverise to the aforementioned orders in Halbritter and Kremer, the holder did not undergo,after the withdrawal of his German driving licence, a test of his fitness to drive orderedby the authorities of the other Member State. Consequently, it has in no way been

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SCHWARZ

shown that the said holder is fit to drive and to move in road traffic, in accordance with the fitness requirements laid down in Directive 91/439.

96 If a national withdrawal measure such as was imposed in the main proceedings, couldbe sidestepped by relying on a driving licence issued earlier than the licence which waswithdrawn on the ground of unfitness to drive without it being established that theperson relying on the earlier licence is, on the date on which he relies on it, fit to drive inaccordance with Directive 91/439, road traffic safety would be compromised.

97 Furthermore, it would be paradoxical to require a Member State to recognise the rightto drive stemming from a driving licence issued by another Member State prior to alicence issued by the first Member State when the second licence has been withdrawnbecause of its holder’s unfitness to drive. If a national of a Member State holds a singledriving licence issued in another Member State, the first Member State is entitled,under Article 8(2) of Directive 91/439, to apply its provisions on withdrawal, forexample, on the ground of unfitness to drive.

98 It follows from the foregoing that Article 1 and Article 8(2) and (4) of Directive 91/439do not preclude a Member State from refusing to recognise the right to drive stemmingfrom a driving licence issued by another Member State before that State’s accession to the European Union if that licence was issued prior to a driving licence issued by thefirst Member State, in which the second driving licence has been withdrawn on theground of its holder’s unfitness to drive. The fact that such refusal occurs after the period during which no application could be made for the issue of a new driving licenceis irrelevant in that regard.

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99


Costs



1. Article 7(5) of Council Directive 91/439/EEC of 29 July 1991 on drivinglicences, as amended by Regulation (EC) No 1882/2003 of the EuropeanParliament and of the Council of 29 September 2003, must be interpreted asnot precluding a national of a Member State from holding simultaneously twovalid driving licences, one of which is a Community licence and the other adriving licence issued by another Member State where both licences wereobtained before the accession of the latter State to the European Union.

2. Article 1 and Article 8(2) and (4) of Directive 91/439, as amended byRegulation No 1882/2003, do not preclude a Member State from refusing torecognise the right to drive stemming from a driving licence issued by anotherMember State before that State’s accession to the European Union if thatlicence was issued prior to a driving licence issued by the first Member State, inwhich the second driving licence has been withdrawn on the ground of itsholder’s unfitness to drive. The fact that such refusal occurs after the periodaccompanying that withdrawal during which no application could be made forthe issue of a new driving licence is irrelevant in that regard.

[Signatures]

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Case C-376/07

Staatssecretaris van Financiën v

Kamino International Logistics BV

(Reference for a preliminary rulingfrom the Hoge Raad der Nederlanden)

(Common Customs Tariff — Combined Nomenclature — Tariff classification —Monitors of the liquid crystal display (LCD) type with SUB-D, DVI-D, USB, S-video and

composite-video sockets — Heading 8471 — Heading 8528 — Regulation (EC)No 754/2004)

Opinion of Advocate General Mengozzi delivered on 10 September 2008 . . . I - 1171 Judgment of the Court (Third Chamber), 19 February 2009 . . . . . . . I - 1196


1. Common Customs Tariff — Tariff headings — Monitors capable of transmitting signalscoming both from an automatic data-processing machine and from other sources(Council Regulation No 2658/87, Annex I; Commission Regulation No 1789/2003)

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2. Common Customs Tariff — Tariff headings — Monitors capable of transmitting signalscoming both from an automatic data-processing machine and from other sources(Council Regulation No 2658/87, Annex I)

3. Common Customs Tariff — Tariff headings — Monitors capable of transmitting signals coming both from an automatic data-processing machine and from other sources —Application by analogy of Classification Regulation No 754/2004 — Conditions — Sufficient similarity of the products — None (Council Regulation No 2658/87, Annex I; Commission Regulation No 754/2004)

1. Monitors of the LCD type with SUB-D,DVI-D, USB, S-video and composite videosockets are not excluded from classifica-tion in subheading 8471 60 90, as units ofthe kind used ‘principally’ in an automatic data-processing system within the meaning of Note 5(B)(a) to Chapter 84 ofthe combined nomenclature constitutingAnnex I to Regulation No 2658/87 on thetariff and statistical nomenclature and on the Common Customs Tariff, as amended by Regulation No 1789/2003, solely because they are capable of displayingsignals coming both from an automaticdata-processing machine and from other sources.

In that regard, first, it is apparent fromNote 5(E) to Chapter 84 of the CombinedNomenclature only machines incorporat-ing an automatic data-processing machine or working in conjunction with such a machine, whose function is not data

processing, perform ‘a specific function other than data processing’. Those moni-tors, apart from the function of reproduc-tion of images coming from apparatus suchas a games console, a video recorder/playeror a DVD player, which does not constitutedata processing, also display signalscoming from automatic data-processing.

Secondly, if, for the purposes of their theclassification in subheading 8471 60 90,those monitors are not of a kind solely orprincipally used in an automatic data-processing system, because they are connectable to the central processingunit, are capable of receiving or deliveringdata in a form which can be used by thesystem and are able to display imagescoming from other sources, an interpreta-tion of Explanatory Note 5(B)(a) to Chapter 84 of the Combined Nomencla-ture to the effect that the mere fact that the monitors at issue are able to display images

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KAMINO INTERNATIONAL LOGISTICS

coming from sources other than an auto-matic data-processing machine precludestheir classification in heading 8471 amounts to removal of the term ‘princi-pally’ from the text of that note.

Lastly, if the Explanatory Notes relating toheading 8471 of the Harmonised Systemwere to be interpreted as precluding theclassification in subheading 8471 60 90 ofall monitors capable of displaying signalscoming both from an automatic data-processing machine and from other sources, they would have the effect of amending and, in particular, of restrictingthe scope of Note 5(B)(a) to Chapter 84.Accordingly, even if the Explanatory Notesto the Combined Nomenclature relating tosubheading 8471 60 90 and the Explana-tory Notes relating to heading 8471 of theHarmonised System were to be interpretedin that manner, those Notes should be considered inapplicable, since that inter-pretation does not accord with Note 5(B)(a) to Chapter 84 of the Combined Nomenclature.

(see paras 39-46, 49-51, operative part 1)

2. In order to determine whether monitors of the LCD type with SUB-D, DVI-D, USB, S-video and composite video sockets are units of the kind used principally in anautomatic data-processing system, the national authorities, including the courts,

must refer to the indications given in theExplanatory Notes relating to heading 8471 of the Harmonised System intro-duced by the International Convention onthe Harmonised Commodity Descriptionand Coding System, concluded in Brussels on 14 June 1983, and the Protocol of Amendment thereto of 24 June 1986, in particular to points 1 to 5 of Part One,Chapter I(D), relating to display units ofautomatic data-processing machines. In that regard, the number and type of socketswith which such monitors are equippedcannot, alone, constitute decisive criteria for the tariff classification and, for that purpose, an assessment must be made, inrelation also to other criteria and in the light of the characteristics and objectiveproperties of those monitors, both as to thedegree to which they are capable of performing a number of functions and asto the standard of performance which theyachieve when performing those functions,having recourse to the Explanatory Notesrelating to heading 8471 of the Har-monised System.

(see paras 57, 59, 61, operative part 2)

3. Regulation No 754/2004 concerning theclassification of certain goods in the Combined Nomenclature is not applicablefor the purposes of tariff classification ofmonitors of the LCD type with SUB-D,DVI-D, USB, S-video and composite video

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sockets. Although the application by analogy of a classification regulation to goods similar to those covered by thatregulation facilitates a coherent interpreta-tion of the Combined Nomenclature and the equal treatment of traders, it is stillnecessary, in such a case, for the goods tobe classified and those covered by the classification regulation to be sufficientlysimilar. Those monitors of the liquid

crystal display LCD type are not identicalfrom a technological point of view to thegoods classified under RegulationNo 754/2004, which relates to monitorswith plasma screens, which also differ intheir dimensions and their resolutions.


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I — Introduction

1. In this case, the Court of Justice is asked to answer three questions submitted for a preliminary ruling by the national court, theHoge Raad der Nederlanden (Supreme Courtof the Netherlands), concerning certain provi-sions of the Combined Nomenclature. The national court must give a ruling on the rulesgoverning the classification of a liquid crystaldisplay monitor (‘LCD’ monitor) imported by Kamino International Logistics BV (‘Kamino’). It is against that background thatthe national court asks the Court of Justice to interpret certain provisions of the CombinedNomenclature.

II — Legislative background

A — The provisions of the Combined Nomenclature

2. The version of the Combined Nomencla-ture applicable to the facts of this case is the

1 — Original language: Italian.

Combined Nomenclature for 2004 (‘the 2004 CN’), contained in Regulation No 1789/2003. 2

3. Section I of Part One of the 2004 CN, entitled ‘General rules’ provides that:

‘…

Classification of goods in the Combined Nomenclature shall be governed by the following principles:

1. The titles of sections, chapters and sub-chapters are provided for ease of reference

2 — Commission Regulation (EC) No 1789/2003 of 11 September2003 amending Annex I to Council Regulation (EEC)No 2658/87 on the tariff and statistical nomenclature and onthe Common Customs Tariff (OJ 2003 L 281, p. 1).

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only; for legal purposes, classification shall bedetermined according to the terms of the headings and any relative section or chapternotes and, provided such headings or notes donot otherwise require, according to the following provisions.

…

3. When … goods are … classifiable under two or more headings, classification shall beeffected as follows:

(a) the heading which provides the most specific description shall be preferred toheadings providing a more general description. …

(b) mixtures, composite goods consisting ofdifferent materials or made up of differentcomponents, and goods put up in sets forretail sale, which cannot be classified byreference to 3(a), shall be classified as ifthey consisted of the material or compo-nent which gives them their essential

character, in so far as this criterion is applicable;

(c) when goods cannot be classified by reference to 3(a) or (b), they shall be classified under the heading which occurslast in numerical order among those which equally merit consideration.

4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate tothe goods to which they are most akin.’

4. Section XVI of the 2004 CN is entitled ‘Machinery and mechanical appliances; elec-trical equipment; parts thereof; sound re-corders and reproducers; television image andsound recorders and reproducers, and partsand accessories of such articles’. That section contains Chapter 84 which covers ‘Nuclear reactors, boilers, machinery and mechanicalappliances; parts thereof ’, and Chapter 85

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which covers ‘Electrical machinery and equip-ment and parts thereof; sound recorders andreproducers; television image and sound recorders and reproducers, and parts and accessories of such articles’.

5. Chapter 84 is prefaced by the following ‘Notes’:

‘…

5. …

(B) Automatic data-processing machines may be in the form of systems consisting ofa variable number of separate units. Subject toparagraph E below, a unit is to be regarded asbeing a part of a complete system if it meets allof the following conditions:

(a) it is of a kind solely or principally used inan automatic data-processing system;

(b) it is connectable to the central processingunit either directly or through one or more other units;

(c) it is able to accept or deliver data in a form(codes or signals) which can be used bythe system.

(C) Separately presented units of an auto-matic data-processing machine are to be classified in heading 8471.

(D) Printers, keyboards, x-y coordinate inputdevices and disk storage units which satisfythe conditions of paragraphs (B)(b) and (B)(c)above are in all cases to be classified as units of heading 8471.

(E) Machines performing a specific functionother than data processing and incorporatingor working in conjunction with an automaticdata-processing machine are to be classifiedin the headings appropriate to their respectivefunctions or, failing that, in residual headings.

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…’

6. Chapter 84 of the 2004 CN contains thefollowing headings and subheadings, amongothers:

‘8471 Automatic data-processing machines and units thereof; magnetic or opticalreaders, machines for transcribing dataonto data media in coded form and machines for processing such data, notelsewhere specified or included.

…

8471 60 — Input or output units, whether ornot containing storage units in the same housing:

…

8471 60 90 — Other.’

7. Chapter 85 of the 2004 CN, however, includes the following headings and subhead-ings:

‘8528 Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus;video monitors and video projectors:

…

— Video monitors:

8528 21 — — Colour

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— — — With cathode-ray tube:

…

8528 21 90 — — — Other.’

B — The Explanatory Notes to the Har-monised System

8. The Harmonised System, drawn up underthe auspices of the World Customs Organ-isation, is the basis on which the Combined Nomenclature is drafted. 3 The Harmonised System is accompanied by explanatory notes.In particular, the explanatory notes to heading8471, applicable at the time of the facts of themain proceedings, read as follows:

3 — For an explanation of the provisions of the CN and theirrelationship with the Harmonised System in context, see CaseC-311/04 Algemene Scheeps Agentuur Dordrecht [2006]ECR I-609, paragraph 25 and the case-law cited therein.

‘Among the constituent units [of a data-processing system] included are display unitsof automatic data-processing machines whichprovide a graphical representation of the dataprocessed. They differ from the video moni-tors and television receivers of heading 8528in several ways, including the following:

(1) Display units of automatic data-process-ing machines are capable of accepting a signalonly from the central processing unit of anautomatic data-processing machine and aretherefore not able to reproduce a colour imagefrom a composite video signal whose wave-form conforms to a broadcast standard (NTSC, SECAM, PAL, D-MAC etc.). They are fitted with connectors characteristic of data-processing systems (e.g. RS-232C inter-face DIN or [D-Sub] connectors) and do nothave an audio circuit. …

(2) These display units are characterised bylow magnetic field emissions. Their displaypitch starts at 0.41 mm for medium resolutionand gets smaller as the resolution increases.

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(3) In order to accommodate the presenta-tion of small yet well-defined images, displayunits of this heading utilise smaller dot (pixel)sizes and greater convergence standards thanthose applicable to video monitors and tele-vision receivers of heading 8528. …’ 4

C — The Explanatory Notes to the CN

9. The Explanatory Notes to the CN applic-able at the material time, drawn up by theCommission, 5 provide as follows in relation tosubheading 8471 60 90:

‘This subheading includes visual display unitswhich can only be used as output units for anautomatic data-processing machine. These units cannot reproduce an image from a coded (composite video) signal.’

4 — The Explanatory Notes date back to February 2002. They areavailable in English and French only. [Omissis — not relevant to the English text].

5 — Explanatory Notes to the Combined Nomenclature of theEuropean Communities (OJ 2002 C 256, p. 1).

D — Regulation No 754/2004

10. Commission Regulation (EC)No 754/2004 of 21 April 2004 concerningthe classification of certain goods in the Combined Nomenclature 6 classified under subheading 8528 21 90 two products described as follows:

‘1. A colour plasma screen with a diagonalmeasurement of the screen of 106 cm (overall dimension 104 (W) x 64.8 (H) x9.5 (D) cm) with an 852 x 480 pixel configuration.

The device has the following interfaces:

— an RGB connector,

— a DVI connector (digital visual inter-face),

6 — OJ 2004 L 118, p. 32.

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— a control connector.

The RGB connector enables the device to display data directly from an automaticdata-processing machine.

The DVI connector enables the device to display signals from an automatic data-processing machine or from another source, such as a DVD player or a videogame player via a tuner box.

2. A colour plasma screen with a diagonalmeasurement of the screen of 106 cm (overall dimension 103 (W) x 63.6 (H) x9.5 (D) cm) with a 1 024 x 1 024 pixel configuration and detachable loud-speakers.

The device has the following interfaces:

— a DVI connector (digital visual inter-face),


The DVI connector enables the device to display signals from an automatic data-processing machine or from another source, such as a DVD player or a videogame player via a tuner box.’

11. The reasons given for that classification,and they are the same for both the products inquestion, are as follows:

‘Classification is determined by General Rules 1 and 6 for the interpretation of theCombined Nomenclature, and by the wordingof CN codes 8528, 8528 21 and 8528 21 90.

Classification under subheading 8471 60 isexcluded as the monitor is not of a kind solely or principally used in an automatic data-processing system (see Note 5 to Chapter 84).

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Likewise, the product is not classifiable underheading 8531 because its function is not toprovide visual indication for signalling purposes (see the HSEN to heading 8531, point D).’

III — Main proceedings and questions referred

12. In August 2004, Kamino imported a consignment of model BenQ FP231W colour monitors with the following features:23 inch (58.4 2 cm) diagonal measurement, maximum resolution 1 920 x 1 200 pixelpoints, screen aspect ratio 16:10, brightness250 cd/m2, contrast ratio 500:1, 16.7 million colours, pixel dimension 0.25 8 mm. The monitor has connections for D-Sub (VGA),DVI-D, USB, S-video and composite video, aswell as an audio outlet. 7

13. The Netherlands customs authorities took the view that the monitor in questionmust be classified under subheading 8528 21 90 of the 2004 CN. Kamino, however, considers that the product in ques-

7 — I note, moreover, that even though the presence of this ‘audio outlet’ appears in the order for reference and is not challengedby the parties, looking at the documentation available on theproducer’s website (www.benq.com) that ‘audio outlet’appears in fact to be a 12 V socket to power two externalloudspeakers that can be hooked up to the monitor but need tobe connected, as far as the signal is concerned, to an externalaudio source. In other words, the product does not appear tohave an audio circuit.

tion must be classified under heading 8471 ofthe 2004 CN.

14. The national court seised of the dispute atlast instance considered it necessary to submitto the Court, in that regard, the followingquestions for a preliminary ruling:

‘(1) Must Note 5 to Chapter 84 of the Combined Nomenclature in the version of Annex I to Commission Regulation(EC) No 1789/2003 of 11 September2003 be interpreted as meaning that acolour monitor which can display bothsignals from an automatic data-process-ing machine as referred to in heading8471 of the CN and from other sources is excluded from classification under heading 8471 of the CN?

(2) If classification in heading 8471 of the CNof the colour monitor referred to in the first question above is not excluded, onthe basis of which criteria must it then be determined whether it is a unit of the sort that is solely or principally used in anautomatic data-processing system?

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(3) Does the scope of application of Commission Regulation (EC)No 754/2004 of 21 April 2004 on theclassification of certain goods in the CNextend to the monitor at issue and, if so, in the light of the answers to the first andsecond questions, is that regulation valid?’

IV — The first question

15. By its first question, the national courtasks whether Note 5 to Chapter 84 of the 2004CN means that a monitor that is capable ofdisplaying signals originating not only from acomputer, but from other sources also, is excluded from classification under heading8471 of Chapter 84. Although the nationalcourt does not explicitly mention this in thetext of the question, it is clear, including fromthe grounds of the order for reference, that theallusion is more specifically a reference to Note 5(B).

A — Arguments of the parties

16. Kamino maintains that, generally speaking, monitors capable of operatingsolely in connection with a computer do notexist, and have never existed, since, if the appropriate connectors are used, any monitor

is capable of displaying images from a varietyof sources. 8

17. Consequently, the view of the Commis-sion and the Netherlands customs authorities that, if a monitor can be connected to a device other than a computer, then the monitor itselfcannot be classified under heading 8471 of the2004 CN, would imply that no monitor couldbe classified under that heading, and that would be a nonsensical outcome.

18. Furthermore, classification of the moni-tors in question under heading 8471 cannot beruled out on the basis of Note 5(E) to Chapter84 of the 2004 CN, since the monitors at issue do not perform a specific function other thandata processing. 9

19. Note 5(B) to Chapter 84 does not itselfrequire that, in order to be classified as data-processing apparatus, a computer’s periph-erals should be designed solely for use in acomputing context. In fact, since the provi-sion in question requires that the peripheralsshould be ‘of a kind solely or principally used

8 — Paragraph 41 of Kamino’s observations. 9 — Ibid., paragraph 45.

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in an automatic data-processing system’, the possibility that they may be used in a contextother than a data-processing system is not, inprinciple, incompatible with classification inChapter 84. 10

22. The Netherlands Government maintains that, generally speaking, a monitor that is ableto reproduce both signals originating from acomputer and signals from other sources, such as a DVD player or a game console, cannot be classified under heading 8471, butmust instead be classified under heading 8528of the 2004 CN. 12

20. Furthermore, according to Kamino, onother occasions, the Commission has expli-citly acknowledged the possibility of classi-fying under heading 8471 some monitors which are theoretically capable of reprodu-cing audio and video signals that do not originate from a computer. It did so in thecontext of Regulation No 2171/2005 on CNclassification, in particular. 11

21. It follows that Note 5 to Chapter 84 of the2004 CN does not exclude the classification under heading 8471 of a colour monitor that isable to display both signals originating from acomputer and signals from other sources.

10 — Ibid., paragraph 55. 11 — Commission Regulation (EC) No 2171/2005 of 23 December

2005 concerning the classification of certain goods in theCombined Nomenclature (OJ 2005 L 346, p. 7). In particular,that regulation classifies under heading 8471 an LCD monitor with a diagonal measurement of the screen of 15inches, a resolution of 1 024 x 768 pixels and a single D-Subinterface. Among the reasons which the Commission givesfor that classification is the following: ‘[t]he intended use ofthe monitor is that of accepting signals from the centralprocessing unit of an automatic data-processing system. Theproduct is also capable of reproducing both video and soundsignals. Nevertheless, in view of its size and its limited capability of receiving signals from a source other than anautomatic data-processing machine via a card without video-processing features, it is considered to be of a kind solely orprincipally used in an automatic data-processing system.’

23. Furthermore, a monitor of the kind in question, which has D-Sub, DVI-D, USB, S-video and composite video connectors, aswell as an audio outlet, cannot fall within heading 8471, as it cannot be regarded assolely or principally able to be used in anautomatic data-processing system. 13

24. The Commission first considers the characteristics of the monitors in question,and rules out any possibility that they may beregarded as being ‘solely or principally used in an automatic data-processing system’, because, as a result of their technical char-acteristics, they could easily be put to other uses. 14

12 — Observations of the Netherlands Government, paragraph 34.13 — Ibid., paragraph 36.14 — Commission’s observations, paragraphs 28 to 36.

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25. According to the Commission, classifica-tion of the monitors in question in Chapter 84of the 2004 CN is also ruled out pursuant toNote 5(E) of that chapter, because the monitors also have a ‘specific function other than data processing’. 15

26. More generally, the Commission considers that if it is possible for a monitorto reproduce signals originating from sourcesother than a computer, that monitor cannotbe classified under heading 8471 of the 2004CN. 16

B — Analysis

1. Preliminary observations

27. In relation to the first question referred,both the Netherlands Government and the Commission have described at length the specific features of the monitors in question,in support of their contention that those monitors do not possess the characteristicsrequired for classification under heading 8471of the 2004 CN.

15 — Ibid., paragraph 37. 16 — Ibid., paragraph 39.

28. However, I would point out that, by itsfirst question, the national court does not askthe Court of Justice to indicate in which tariff heading the products in question should beclassified. The question actually turns, moregenerally, on how Note 5 to Chapter 84 of the2004 CN is to be interpreted.

29. In my analysis of this question, I shall not,therefore, consider the arguments of the parties concerning the particular character-istics of the products at issue, but shall confinemyself to interpreting Note 5. In any event, thearguments of the parties concerning the particular characteristics of the products tobe classified may be taken into consideration as part of the examination of the second question, even though, as we shall see, thenational court does not ask the Court of Justice to give a ruling on the specific rulesgoverning classification of the products in that question either, but, once again, merelyasks it to provide some general guidelines.

2. The substance of the question

30. The approach taken by the NetherlandsGovernment and the Commission in this case, with the clear aim of resolving the disputesolely on the basis of the answer to the firstquestion, consists of claiming that the mere

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fact that a monitor is capable of displayingimages originating from sources other than acomputer means that the monitor must beexcluded from classification in Chapter 84 ofthe 2004 CN. 17

31. That approach does not, however, seem tome to merit acceptance.

32. The actual wording of Note 5(B) to Chapter 84 of the 2004 CN is in fact clear:for a peripheral to be able to be regarded as anintegral part of a data-processing system, and,therefore, to be classified in Chapter 84, therequirement is not that the peripheral should,theoretically, be capable of being used only as part of that system. The actual requirement isthat the peripheral should be ‘of a kind solely or principally used in an automatic data-processing system’ (emphasis added).

17 — That emerges, more particularly, as I have noted above, fromparagraph 34 of the observations of the Netherlands Government and paragraph 39 of the Commission’s observa-tions. Moreover, I would point out that those same partieshave also put forward arguments which, although this is notmade clear, are based on the supposition that the merepossibility of displaying signals that do not originate from acomputer is not sufficient to exclude classification in Chapter84 of the 2004 CN, as that requires that the ‘alternative’ or ‘further’ function should not be merely marginal or theoretical (see, for example, paragraph 36 of the observa-tions of the Netherlands Government and paragraph 36 ofthe Commission’s observations). For further details in thisconnection, see the analysis of the second question referred.

33. The interpretation proposed by the Neth-erlands Government and the Commission would be tantamount to removing from thetext of the provision the parenthetical ‘or principally’, and it is, therefore, unacceptable.Even a unit designed to be used ‘principally’, although not solely, in connection with a computer may, therefore, be classified as adata-processing product.

34. In all probability, the idea underlying theapproach of the Netherlands Government and the Commission is linked to the practicaldifficulties involved in determining the actualscope of the adverb ‘principally’, particularly in the light of the Court’s case-law, which very much focuses on products’ specific and objectively verifiable characteristics, for thepurposes of customs classification. 18

35. However, the fact that the practicalapplication of the abovementioned provisionis potentially problematic cannot lead to asubstantial element of the provision beingignored. Resolving those problems is actually

18 — See, for example, Case C-42/99 Eru Portuguesa [2000] ECR I-7691, paragraph 13; Case C-396/02, DFDS [2004] ECR I-8439, paragraph 27; and Case C-445/04 Possehl Erzkontor [2005] ECR I-10721, paragraph 19. See also point 75 of this Opinion.

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a matter that arises at a subsequent stage, and which is an entirely secondary, if not irrele-may be discussed, in so far as the Court is vant, function. 19

asked to rule in this case, in the context of the examination of the second question referred.

3. The possible relevance of Note 5(E) to Chapter 84 of the 2004 CN

36. I consider that it is worth commentingonly briefly on the Commission’s argumentthat classification of the monitors in questionunder Chapter 84 of the 2004 CN is excludedon the basis of Note 5(E) to that chapter also.

37. I would first of all point out in that connection that the national court has not asked the Court to assess the applicability inthis case of the provision in question.

38. In any event, I consider that Note 5(E)may not exclude a device from being classifiedin Chapter 84 of the CN unless the ‘specific function other than data processing’ is the only function the device in question performs.Otherwise, certain products might be classi-fied on the basis of a function they possess

39. It does not, therefore, seem to me that Note 5(E) can be applied in this case. On theone hand, in fact, the Court has already heldthat the activity of a monitor consisting in thereproduction of images from a computer cannot constitute a ‘specific function’ as defined above. 20 On the other hand, even though the parties are in dispute as to the usesto which the monitors in question may be put,none of them claims that uses unrelated to data processing (or, in other words, ‘non-computer’ uses) are the only possible uses.

4. The Explanatory Notes to the HarmonisedSystem and the CN

40. It remains to be established whether, in this case, classification of the monitors in question under Chapter 84 of the 2004 CNmust be ruled out on the basis of the Explanatory Notes to the Harmonised System and the CN.

19 — For a more detailed exposition of the problem, I would referto points 50 to 69 of my Opinion delivered on 17 July 2008 inJoined Cases C-362/07 and C-363/07 Kip Europe and Others(judgment pending before the Court).

20 — Case C-11/93 Siemens Nixdorf [1994] ECR I-1945, para-graph 16.

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(a) The explanatory note to heading 8471 ofthe Harmonised System

41. It should first be pointed out that, according to settled case-law, although an important aid, the Explanatory Notes do not,in any event, have legally binding force, andmust not be inconsistent with the provisionsof the Harmonised System and the CN. 21

42. As regards the explanatory note to heading 8471 of the Harmonised System, Iwould point out that since that note, which,moreover, pre-dates the facts of the main proceedings by more that two years (longenough, as far as information technologies areconcerned, for there to be significant changesto the range of products marketed), it couldalso be interpreted as meaning that it does notindicate all of the monitors that are caught byheading 8471, but only some of them. The beginning of the note itself makes provision tothat effect, stating that ‘included’ ‘[a]mong the constituent units’ of a data-processing system ‘are display units of automatic data-process-ing machines’. In that case, there could be other display units which, although not able tobe defined as ‘display units of automatic data-

21 — See, for example, Case C-229/06 Sunshine Deutschland Handelsgesellschaft [2007] ECR I-3251, paragraph 27; Case C-142/06 Olicom [2007] ECR I-6675, paragraph 31 and the case-law cited therein; and Case C-312/07 JVC France [2008] ECR I-4165, paragraph 34.

processing machines’, could still be classified under heading 8471.

43. If, however, it is accepted that the explanatory note in question in fact seeks toprovide an exhaustive list of the monitors tobe classified under heading 8471, the following must be pointed out. Interpretedin that way, the explanatory note is based onthe assumption, which I have already stated tobe incorrect, that only monitors that may beconnected solely to a computer can be classified under heading 8471. In other words, the explanatory note does not envisageeven the possibility, although this is clearlyprovided for in the text of the HarmonisedSystem, of a monitor able to be classified under heading 8471, even though it can alsobe used, albeit not principally, in contexts other than ‘computing’. 22 Consequently, ifconstrued in that way, the note could not beapplied, for it would conflict with the wordingof the Harmonised System itself.

44. I would point out, moreover, that as regards the other technical characteristics which the note in question lists for monitorsfalling within heading 8471, the product atissue in this case appears fully to comply withthem.

22 — The current version of the Explanatory Notes to the Harmonised System, which dates from 2007, is, however,more open. According to the note relating to heading 8528,under which all monitors are now classified, monitors designed to be used solely or principally in connection with a computer (to be classified under subheading 8528.41) ‘include’ monitors able to be connected only to a computer.The classification of other monitors also under that headingis not, therefore, excluded.

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(b) The explanatory note to subheading 5. The role of the WTO agreement on the8471 60 90 of the 2004 CN trade in information technology products

45. Nor does the explanatory note applicableto subheading 8471 60 90 of the 2004 CNpermit classification of the monitors in question under that same subheading to beexcluded.

46. In point of fact, the explanatory note inquestion is illustrative/inclusive, and not exhaustive, in nature. In other words, it identifies a specific group of products thatare caught by that subheading, but does notpreclude the classification under that subheading of different products, other thanthose thus identified. That is quite apparentfrom the wording of the note itself. 23

23 — In some language versions of the Explanatory Notes, thepresence of an adverb indicates that the note in question isnot exhaustive in character. The Italian text, for example,states that the heading covers ‘specialmente’ monitors able to function only when hooked up to a computer; the French text uses the word ‘notamment’ and the Spanish the word ‘especialmente’. The adverb does not, however, appear inother language versions, even though the wording of thesentence seems, in any event, to suggest, in such cases also,that this is not an exhaustive list of the range of productscaught by subheading 8471 60 90 of the 2004 CN. In particular, the English version states that ‘[t]his subheading includes visual display units which can only be used as outputunits for an automatic data-processing machine’; the German version that ‘[h]ierher gehören Datensichtgeräte, die nur alsAusgabeeinheiten von automatischen Datenverarbeitungs-maschinen verwendet werden können’, and the Dutch version that ‘[d]eze onderverdeling omvat beeldschermeed-heden die uitsluitend kunnen worden gebruikt als uitvoer-eenheid voor een automatische gegevensverwerkende machine’ (emphasis added).

47. The observations set out thus far are further confirmed in the light of the WTOagreement on the trade in information technology products.

48. It must not be forgotten that, in the finalanalysis, the essential difficulty in classifyingthe products in question resides in the factthat, depending on the CN heading underwhich those products are classified, they may,or may not, be subject to an import duty.

49. More particularly, information tech-nology products are generally exempt fromthe imposition of duties, pursuant to an agreement to that effect reached within theWorld Trade Organisation (WTO) and basedon the Ministerial Declaration on Trade in

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Information Technology Products of 13 December 1996. That agreement was putinto effect by the Council by Decision 97/359/EC of 24 March 1997 concerning theelimination of duties on information tech-nology products. 24

Community law in a manner compatible withthe agreement, 26 the fact that the latter clearly favours the free movement of information technology products without the impositionof duties must be taken into account when interpreting the CN. 27

50. As a rule, the Commission and some Member States tend to interpret that agree-ment restrictively, limiting as far as possiblethe range of products on which the agreementconfers exemption from duties.

51. However, even if the direct applicability inCommunity law of the WTO agreement isvery problematic, 25 I consider that, in accor-dance with the obligation to interpret

24 — OJ 1997 L 155, p. 1. In May 2008, the United States of America formally challenged at the WTO Communitycustoms practice in relation, among other things, to monitorsof the type at issue in this case. At the time of the drafting ofthis Opinion, only general media accounts were available,making it impossible to make a precise analysis of the issue.Media reports also indicate that the action by the UnitedStates has been followed by similar steps by Japan and Taiwan.

25 — The Court has repeatedly held that the possibility of using aWTO agreement as a criterion for assessing the legality of aCommunity act is subject to very strict conditions: see, by wayof illustration, Case C-94/02 P Biret & Cie v Council [2003] ECR I-10565, paragraphs 55 and 56 and the case-lawcited therein. On that occasion, the Court held that, to be ableto assess the legitimacy of a Community act on the basis of aWTO agreement, it is necessary that ‘the Community hasintended to implement a particular obligation assumed in thecontext of the WTO, or … the Community measure refersexpressly to the precise provisions of the WTO agreements’. Neither of those conditions appears to be met in the case ofthe CN.

6. The voluntary unilateral suspension of theduties on certain types of monitor

52. The Community legislature has itself recognised the difficulty of unequivocallyclassifying LCD monitors. As of 2005 in fact,all colour LCD monitors with a diagonalmeasurement of 48.5 cm or less (about 19inches) and a screen aspect ratio of 4:3 or 5:4have been exempt from duty. 28 That unilateral decision was taken in response to the practicaldifficulties in ascertaining the principal use ofthe products in question, as well as based onthe finding that ‘[t]rade data indicate that currently monitors using liquid crystal tech-

26 — See, generally, in relation to that obligation, Case C-286/90Poulsen and Diva Navigation [1992] ECR I-6019, paragraph 9; Case C-61/94 Commission v Germany [1996] ECR I-3989, paragraph 52; and Case C-341/95 Bettati [1998] ECR I-4355,paragraph 20. With specific reference to the TRIPS Agree-ment, which falls within the WTO system and has the samefeatures, see Case C-53/96 Hermès International [1998] ECR I-3603, paragraph 28; Joined Cases C-300/98 and C-392/98 Dior and Others [2000] ECR I-11307, paragraph 47; and Case C-245/02 Anheuser-Busch [2004] ECR I-10989, paragraph 55.

27 — See also my Opinion in Kip Europe and Others, cited in footnote 19, points 67 to 69.

28 — That is to say as of Council Regulation (EC) No 493/2005 of16 March 2005 amending Annex I to Regulation (EEC)No 2658/87 on the tariff and statistical nomenclatures and onthe Common Customs Tariff (OJ 2005 L 82, p. 1). The provision is, consequently, retained in the subsequentversions of the CN: in the version in force for 2008, containedin Commission Regulation (EC) No 1214/2007 of 20 September 2007 (OJ 2007 L 286, p. 1), the reference subheading is 8528 59 90.

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nology with a diagonal measurement of 48.5cm or less and a screen aspect ratio of 4:3 or5:4 are mainly used as output units of automatic data-processing machines’. 29

53. That voluntary suspension of duties hadyet to enter into force at the time of the facts ofthe main proceedings, and, in any event, thetechnical characteristics of the monitors at issue in these proceedings do not correspondto the characteristics of the products whichbenefit from that suspension of duties (theirdimensions are in fact slightly larger and theyhave a different screen aspect ratio).

54. I would, however, point out that Regula-tion No 493/2005 clearly shows that it is impossible to classify monitors in a simplisticway and, above all, that it must be acceptedthat some monitors that are potentiallycapable of reproducing signals from sourcesother than a computer may, in any event,actually be used primarily in a ‘computing’context.

7. Conclusion on the first question

55. In conclusion, I consider that the first question referred must be answered to theeffect that Note 5 to Chapter 84 of the 2004

29 — Recital 3 in the preamble to Regulation No 493/2005.

CN must be interpreted as meaning that acolour monitor, which is capable of reprodu-cing both signals from an automatic data-processing machine and signals from othersources, is not, solely for that reason, excludedfrom classification under heading 8471 of the2004 CN.

V — The second question

56. By its second question, the national courtasks, if classification of the monitor in question under heading 8471 of the 2004 CN is not excluded, on the basis of what criteria is it possible to ascertain whether monitors of that kind satisfy the requirementsset out in Note 5(B) to Chapter 84 of the 2004CN for classification among data-processingproducts.


57. Kamino maintains that, in order to ascertain whether a monitor is of the sort that is solely or principally used in an automatic data-processing system, it is neces-sary to take account of the sole or principal usefor which the product is intended.

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58. In this case, according to Kamino, a number of objective factors make it possibleto establish that the monitors in questionmust be classified in Chapter 84 of the 2004CN. Those factors include, in particular, thepixel dimension (‘dot pitch’), the resolution,the screen aspect ratio of 16:10, the presenceof VGA and DVI connectors, the absence of a remote control, SCARTconnector, aTV tuner and push buttons for changing channel. 30

59. For their part, however, both the Nether-lands Government and the Commission consider that, in the light of the answer thatthey propose to the first question, it is notnecessary to answer the second.

60. Notwithstanding that position of prin-ciple, however, those parties have also put forward, in the context of the dispute in relation to the first question, a number ofconsiderations which appear actually to belogically connected to the second question.

61. In particular, the Netherlands Govern-ment has stated that, in its view, a monitor with the specific characteristics of the moni-

30 — Kamino’s observations, paragraphs 81 to 99.

tors at issue here cannot be regarded as beingof the sort designed to be used solely or principally in connection with an automaticdata-processing system, especially bearing inmind the connectors which the apparatus possesses (D-Sub, DVI-D, USB, S-video, composite video, audio outlet). 31

62. According to the Netherlands Govern-ment, which stated this in response to theCourt’s questions, for a monitor to be classified under heading 8471 of the 2004 CN, its possible ‘non-computer-related’ uses must be ‘strictly theoretical’.

63. The Commission has stated that the expression ‘of a kind solely or principallyused in an automatic data-processing system’, contained in Note 5(B) to Chapter 84 of the2004 CN, must be regarded as referring not tothe type of use of the apparatus but to thefunctions which it performs. 32 Furthermore, the technical characteristics of the monitor in question, and, in particular, its dimensions,resolution and brightness make it perfectlysuited for use in contexts other than computing, with the result that the conditionsunder Note 5(B)(a) are not satisfied. 33

31 — Observations of the Netherlands Government, paragraph 36.32 — Commission’s observations, paragraph 35.33 — Ibid., paragraph 36.

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B — Analysis

64. This question too, which is probably themost difficult of the three questions referred,requires the Court to provide some generalguidelines on how the Combined Nomencla-ture is to be interpreted. In particular, theCourt is asked to indicate the exact meaningof the provision under Note 5(B)(a) to Chapter 84 of the 2004 CN and, more specifically, which criteria must be taken into account in order to determine whether or not a product satisfies the conditions laiddown by Note 5(B)(a).

65. Since the Court is not asked to indicate under which specific heading of the Combined Nomenclature the monitors in question must be classified, that particulardecision remains a matter for the national court, which will have to decide in accordance with the Court’s guidelines.

66. The key problem raised by this question ishow to define the adverb ‘principally’. 34 While the preceding adverb ‘solely’ is not open toparticular doubts as to its interpretation, the

34 — The various language versions of Note 5(B) to Chapter 84 ofthe 2004 CN do not display significant differences on thatpoint: the Italian ‘esclusivamente o principalmente’ is, for example, mirrored by the French ‘exclusivement ou princi-palement’, the English ‘solely or principally’, the German ‘ausschließlich oder hauptsächlich’, the Spanish ‘exclusiva o principalmente’, and the Dutch ‘uitsluitend of hoofdzakelijk’.

meaning of the word ‘principally’ is very much less unambiguous.

67. Since it is quite obviously not possible tointerpret that adverb in mathematical or percentage terms (for instance, by setting apercentage use in connection with a computerequivalent to 80% of total use), I propose tothe Court that it should interpret the conceptof ‘principal use’ as equivalent to the concept of ‘normal use’.

68. It in fact seems to me that the concept of ‘normal use’ can be applied to the specificcases with less risk of ambiguity.

69. Moreover, I consider that the word ‘principally’, contained in the provision, refers not to an apportionment of the periods of time for which the product is usedbut, rather, to its most frequent use. In otherwords, the person interpreting ‘principally’ is asked to ascertain not the percentageaccounted for by each different use of theproduct, if it is used in different contexts, but,more straightforwardly, the product’s ‘typical’or ‘normal’ use.

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70. In the individual case, the person making the interpretation will have, therefore, to determine, in relation to the product at issueat any given time, the use for which that product must reasonably be regarded as beingintended.

71. Furthermore, again in accordance withthe interpretation that I have suggested, andseeking, therefore, to consider the normal useof the product in question, there is still theproblem of establishing the actual criteria thatshould be applied to the conduct of that analysis.

72. In my view, there is no doubt that thetechnical characteristics of the product constitute the fundamental criterion to be taken into account in that connection. In the case of the monitors at issue, it will plainly becharacteristics like the resolution, the screen aspect ratio (the width of the screen in relationto its height), the available connectors, 35 the possibility of adjusting the height and screentilt angle, the presence of certain specificergonomic features designed to facilitate close‘desktop’ use and so forth, which the national court will have to analyse in order to determine whether or not the product is

35 — I would point out in that connection that, in my view, andcontrary to what the Netherlands Government and the Commission appear to argue, the presence of a DVI connection does not of itself make it possible to excludeprimary use being for ‘computing’ purposes. That is because, in recent years, an ever-increasing number and now,probably, the majority of computers are equipped with aDVI outlet which has in fact taken the place of the VGAoutlet.

normally used in connection with an auto-matic data-processing system.

73. The possibility of taking account of theproduct’s intended commercial use, in other words its ‘target’ use, in order to determine its normal use, seems to me to be more problematical. In my view, that option should be excluded.

74. It is in fact clear that if significance isattached to elements such as the product’s declared use, as indicated on its packaging orin advertising material, there is an increasedrisk of abuse. In a variety of fields, instances ofproducts which are surreptitiously presentedas being intended for uses other than their realuse, in order, for example, to circumvent salesbans or rule out producer liability, are in factanything but infrequent, even though the relevant public is actually perfectly well awareof the real intended use of the products inquestion.

75. The position set out above seems to me,moreover, to be consistent with the case-law of the Court which, while in principle

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accepting the possibility of taking a product’s intended use into account in order to determine its customs classification, has, nevertheless, stressed that that intended use must be based on specific and objective criteria. 36

meaning of Note 5(B)(a) to Chapter 84 of the2004 CN, it is necessary to determine whetherthe product’s normal use is in connection with an automatic data-processing system. For thatpurpose, it is necessary to take into account allof the objective characteristics of the productin question as part of an assessment on anindividual case basis.

76. I do not consider to be well founded the argument, particularly emphasised by the Commission at the hearing, that a product’s intended use is irrelevant for the purposes ofits classification. On the one hand, I would point out that Note 5(B) itself to Chapter 84 ofthe 2004 CN refers to the product’s ‘use’(where it mentions products ‘of a kind solely or principally used in an automatic data-processing system’; emphasis added). On theother hand, I would point out that what isunder discussion here is the use of a producton the basis of its objective characteristics:that itself is an objective criterion, therefore,and not a variable that is subjective or linkedto the methods of marketing the product itself.

77. I therefore propose that the Court shouldanswer the second question by declaring that,in order to be able to ascertain that a productis ‘of a kind solely or principally used in anautomatic data-processing system’, within the

36 — See, for example, Case 309/98 C-Holz Geenen [2000] ECR I-1975, paragraph 15; Case C-201/99 Deutsche Nichimen [2001] ECR I-2701, paragraph 20; Case C-130/02 Krings [2004] ECR I-2121, paragraph 30; and Olicom, cited infootnote 21, paragraph 18. I would also point out that in itsjudgment in Case C-467/03 Ikegami [2005] ECR I-2389,paragraph 24, the Court in any event referred, albeit purely asan aid, to the methods of commercially promoting a product.

VI — The third question

78. By its third and final question, the national court asks whether the monitors in question fall within the scope of RegulationNo 754/2004, and, if so, whether that regula-tion is valid.


79. Kamino, reversing the order of the issuesraised by the national court, begins bycontending that Regulation No 754/2004 isunlawful since, by indicating the Commis-sion’s clear intention of, in any case, preventing the classification under heading8471 of the CN of any monitor capable ofreproducing video signals from sources other

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than a computer, the regulation is incom- B — Analysis patible with the CN itself and, more generally,with the Harmonised System and the obliga-tions entered into by the Community as aparty to that system. 37

83. I consider that Commission Regulation No 754/2004 cannot be applied to the monitors at issue for the following reasons.

80. In any event, even if it were lawful, theregulation in question is not applicable to this case, since it relates to products of a completely different kind from the productsat issue here. 38

81. The Netherlands Government, however, considers that the regulation in question isvalid and may also apply to the monitors atissue, directly or, if necessary, by analogy. 39

82. However, according to the Commission,in the light of the answer to the first question,it is unnecessary to answer the third question.

37 — Kamino’s observations, paragraphs 100 to 106. 38 — Ibid., paragraph 107. 39 — Observations of the Netherlands Government, para-

graphs 38-42.

84. First of all, direct application of the regulation itself has to be ruled out becauseof the significant technical differences between the monitors at issue here and the display units forming the subject-matter ofclassification in the regulation.

85. Regulation No 754/2004 in fact takes intoconsideration, with a view to their classifica-tion for customs purposes, two plasmascreens with a diagonal measurement of 106 cm (equivalent to about 42 inches) and a resolution of 852 x 480 and 1 024 x 1 024 pixels respectively.

86. Solely on that basis, those two aspectsclearly demonstrate that these products arecompletely different from the productsforming the subject-matter of these proceed-ings: it must in fact be recalled that, althoughthey have a far smaller diagonal measurement(23 inches, that is to say 58.42 cm), the monitors at issue in this case have a far higherresolution (1 920 x 1 200 pixels). That, however, seems consistent with the different technologies on which the products under

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comparison are based: whereas, in fact, a liquid crystal screen may be suitable for different uses, depending on its technical characteristics, plasma screens are typicallyused to reproduce, at relatively lower resolu-tions in relation to their dimensions, televi-sion and film signals and presentations.

87. Nor is it possible to accept the argumentof the Netherlands Government, set out in paragraph 41 of its observations in particular,that the plasma technology which charac-terises the monitors to which RegulationNo 754/2004 relates is not a relevant criterionand does not preclude the applicability of thatregulation to the monitors at issue in thisdispute. I actually consider that this is precluded by the objective consideration consisting in the differences that exist between plasma and LCD technology, andthe fact, acknowledged at the hearing by theNetherlands Government itself, that plasma screens are not generally used as outputperipherals for data-processing machines. Inother words, the products in question are notinterchangeable.

88. It remains to be established whether, as the Netherlands Government suggests, againin paragraph 41 of its observations, Regula-tion No 754/2004 may be applicable to the

monitors at issue here not directly but by analogy.

89. Here again, however, I consider that theanswer must be that it is not.

90. Even though the Court has generallyaccepted the possibility of applying a classifi-cation regulation by analogy, it did so makingclear that this may be done in relation to products ‘similar’ to those mentioned in the regulation, since this ‘facilitates a coherent interpretation of the CN and the equal treatment of operators’. 40 In this case, however, as we have seen, the LCD monitors at issue cannot be regarded as in any waysimilar to the plasma screens which formedthe subject-matter of Regulation No 754/2004.

91. It is, therefore, my view that the thirdquestion must be answered to the effect thatthe monitors at issue are not caught by Regulation No 754/2004. Consequently, there is no evidence to suggest that the regulation is unlawful.

40 — Krings, cited in footnote 36, paragraph 35.

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VII — Conclusion

92. In the light of the above considerations, I propose that the Court should give thefollowing answers to the questions referred by the Hoge Raad der Nederlanden:

(1) Note 5 to Chapter 84 of the Combined Nomenclature for 2004 contained inCommission Regulation (EC) No 1789/2003 of 11 September 2003 amendingAnnex I to Council Regulation (EEC) No 2658/87 on the tariff and statisticalnomenclature and on the Common Customs Tariff must be interpreted as meaningthat a colour monitor, which is capable of reproducing both signals from anautomatic data-processing machine and signals from other sources, is not, solelyfor that reason, excluded from classification under heading 8471 of the CombinedNomenclature for 2004.

(2) In order to be able to ascertain that a product is ‘of a kind solely or principally used in an automatic data-processing system’, within the meaning of Note 5(B)(a) toChapter 84 of the Combined Nomenclature for 2004, it is necessary to determinewhether the product’s normal use is in connection with an automatic data-processing system. For that purpose, it is necessary to take into account all of theobjective characteristics of the product in question as part of an assessment on anindividual case basis.

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(3) The monitors at issue are not caught by Commission Regulation EC No 754/2004of 21 April 2004 concerning the classification of certain goods in the CombinedNomenclature.

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v



19 February 2009 *

In Case C-376/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Hoge Raad derNederlanden (Netherlands), made by decision of 13 July 2007, received at the Court on3 August 2007, in the proceedings

Staatssecretaris van Financiën

Kamino International Logistics BV,


composed of A. Rosas, President of the Chamber, A. Ó Caoimh, J.N. Cunha Rodrigues,U. Lõhmus (Rapporteur) and A. Arabadjiev, Judges,


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Advocate General: P. Mengozzi,Registrar: M.-A. Gaudissart, Head of Unit,



— Kamino International Logistics BV, by H. de Bie and E. Zietse, advocaten,

— the Netherlands Government, by C.M. Wissels and D.J.M. de Grave, acting asAgents,

— the Commission of the European Communities, by G. Wilms, acting as Agent,assisted by F. Tuytschaever, advocaat,


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gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of the CombinedNomenclature constituting Annex I to Council Regulation (EEC) No 2658/87 of 23 July1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), as amended by Commission Regulation (EC) No 1789/2003 of11 September 2003 (OJ 2003 L 281, p. 1; ‘the CN’), and the validity of CommissionRegulation (EC) No 754/2004 of 21 April 2004 concerning the classification of certaingoods in the Combined Nomenclature (OJ 2004 L 118, p. 32).

2 The reference has been made in the context of proceedings between the Staatssecretarisvan Financiën (Secretary of State for Finance) and Kamino International Logistics BV(‘Kamino’) regarding the tariff classification, in August 2004, of certain monitors of theliquid crystal display (LCD) type.

Legal context

3 The International Convention on the Harmonised Commodity Description and Coding System, concluded in Brussels on 14 June 1983, and the Protocol of Amendment thereto of 24 June 1986 (‘the HS Convention’) were approved on behalfof the European Economic Community by Council Decision 87/369/EEC of 7 April1987 (OJ 1987 L 198, p. 1).

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4


Under Article 3(1) of the HS Convention, each Contracting Party undertakes to ensurethat its customs tariff and statistical nomenclatures are in conformity with the harmonised system introduced by that convention (‘the HS’), to use all the headings andsubheadings of the HS without addition or modification, together with their relatednumerical codes, and to follow the numerical sequence of that system. The sameprovision provides that the Contracting Party must apply the General Rules for theinterpretation of the HS and all the Section, Chapter and Subheading notes of the HS,and not modify their scope.

5 Regulation No 2658/87 established the CN, which is based on the HS, from which ittakes the six-digit headings and subheadings, only the seventh and eighth digits formingsubdivisions specific to the combined nomenclature.

6 Under Article 12(1) of that regulation, as amended by Council Regulation (EC)No 254/2000 of 31 January 2000 (OJ 2000 L 28, p. 16), the Commission of the EuropeanCommunities is required to adopt each year a regulation reproducing the completeversion of the CN and the rates of customs duty, as they result from measures adoptedby the Council of the European Union or by the Commission. That regulation is toapply from 1 January of the following year.

Pursuant to Article 2 of Regulation No 1789/2003, which introduced a new version ofthe CN, that regulation entered into force on 1 January 2004.

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7


8 The General Rules for the interpretation of the CN, which appear in Part One, Sec-tion I, A, of the CN, state:

‘Classification of goods in the [CN] shall be governed by the following principles:

1. The titles of sections, chapters and sub-chapters are provided for ease of referenceonly; for legal purposes, classification shall be determined according to the terms of theheadings and any relative section or chapter notes and, provided such headings or notesdo not otherwise require, according to the following provisions.

…

6. For legal purposes, the classification of goods in the subheadings of a heading shallbe determined according to the terms of those subheadings and any related subheadingnotes and, mutatis mutandis, to the above rules, on the understanding that onlysubheadings at the same level are comparable. For the purposes of this rule the relativesection and chapter notes also apply, unless the context requires otherwise.’

9 Part Two of the CN includes Section XVI, covering machinery and mechanicalappliances; electrical equipment; parts thereof; sound recorders and reproducers,television image and sound recorders and reproducers, and parts and accessories ofsuch articles.

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10

11


Section XVI contains Chapters 84 and 85. The first includes nuclear reactors, boilers,machinery and mechanical appliances, and parts thereof. The second concerns machinery and mechanical appliances; electrical equipment; parts thereof; soundrecorders and reproducers, television image and sound recorders and reproducers, andparts and accessories of such articles.

Under note 5 to Chapter 84:

‘…

(B) Automatic data-processing machines may be in the form of systems consisting of avariable number of separate units. Subject to paragraph E below, a unit is to beregarded as being a part of a complete system if it meets all of the followingconditions:

(a) it is of a kind solely or principally used in an automatic data-processing system;

(b) it is connectable to the central processing unit either directly or through one ormore other units; and

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12


(c) it is able to accept or deliver data in a form (codes or signals) which can be usedby the system.

(C) Separately presented units of an automatic data-processing machine are to beclassified in heading 8471 [of the CN (‘heading 8471’)].

…

(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data-processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.’

Tariff heading 8471 is worded as follows:

‘8471 Automatic data-processing machines and units thereof; magnetic or opticalreaders, machines for transcribing data onto data media in coded form andmachines for processing such data, not elsewhere specified or included:

…

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8471 60 — Input or output units, whether or not containing storage units in thesame housing:

8471 60 10— — For use in civil aircraft

— — Other:

8471 60 40— — — Printers

8471 60 50— — — Keyboards

8471 60 90— — — Other

…’

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13


Heading 8528 of the CN (‘heading 8528’) is worded as follows:

‘8528 Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus;video monitors and video projectors:

…

— Video monitors

8528 21 — — colour:

…

8528 21 90 — — — Other

…’

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14

15


In accordance with the second indent of Article 9(1)(a) of Regulation No 2658/87, theCommission provides explanatory notes concerning the CN, which it regularly publishes in the Official Journal of the European Union. Those published on 23 October2002 (OJ 2002 C 256, p. 1) state, under subheading 8471 60 90:

‘This subheading includes visual display units which can only be used as output unitsfor an automatic data-processing machine.

These units cannot reproduce an image from a coded (composite video) signal.’

The explanatory note to the CN concerning subheading 8528 21 90 refers to theexplanatory notes for heading 8528 of the HS, second paragraph, number 6.

At the time material to the facts in the main proceedings, the rate of customs duty onimport applicable to equipment falling within subheading 8528 21 90 was 14%, whereas equipment falling within subheading 8471 60 90 was exempted from duty.

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16

17


In order to ensure uniform application of the CN, the Commission adopted RegulationNo 754/2004, which entered into force, pursuant to Article 3 thereof, on 13 May 2004.The Annex to that regulation reads as follows:

Description Classification (CN code) Reasons

(1) (2) (3)

1. A colour plasma-screen with adiagonal measurement of thescreen of 106 cm (overalldimensions 104 (W) × 64.8 (H) ×9.5 (D) cm) with a 852 × 480pixel configuration.

The device has the followinginterfaces:

— an RGB connector,

— a DVI connector (digitalvisual interface)


The RGB connector enables the device to display data directlyfrom an automatic data-pro-cessing machine.

The DVI connector enables the device to display signals from anautomatic data-processingmachine or another source, such as a DVD player or a video gameplayer via a tuner box.

8528 21 90 Classification is determined byGeneral Rules 1 and 6 for the interpretation of the CombinedNomenclature, and by the wordingof CN codes 8528, 8528 21 and 8528 21 90.

Classification under subheading8471 60 is excluded as the monitor is not of a kind solely or principallyused in an automatic data-pro-cessing system (see Note 5 toChapter 84).

Likewise, the product is not classi-fiable under heading 8531 becauseits function is not to provide visualindication for signalling purposes(see the HSEN to heading 8531,point D).

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18


2. A colour plasma-screen with a 8528 21 90 Classification is determined bydiagonal measurement of the General Rules 1 and 6 for the screen of 106 cm (overall interpretation of the Combineddimensions 103 (W) × 63.6 (H) × Nomenclature, and by the wording9.5 (D) cm) with a 1 024 × 1 024 of CN codes 8528, 8528 21 and pixel configuration and detach- 8528 21 90. able loudspeakers.

Classification under subheadingThe device has the following 8471 60 is excluded as the monitor interfaces: is not of a kind solely or principally

— a DVI connector (digitalvisual interface),

used in an automatic data-pro-cessing system (see Note 5 toChapter 84).

— a control connector. Likewise, the product is not classi-The DVI connector enables the fiable under heading 8531 becausedevice to display signals from an its function is not to provide visualautomatic data-processing indication for signalling purposesmachine or another source, such (see the HSEN to heading 8531,as a DVD player or a video game point D). player via a tuner box.

The Customs Cooperation Council, now the World Customs Organisation (‘WCO’),established by the Convention establishing that Council concluded at Brussels on15 December 1950, is to approve, under the conditions laid down in Article 8 of the HSConvention, the Explanatory Notes and Classification Opinions adopted by the HSCommittee, a body the organisation of which is governed by Article 6 thereof. UnderArticle 7(1) of the HS Convention, the functions of that committee include proposingamendments to that Convention and preparing Explanatory Notes, ClassificationOpinions and other advice as guides to the interpretation of the HS.

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19


The explanatory notes concerning heading 8471 of the HS state as follows:

‘I.— Automatic data-processing machines and units thereof

…

D.— Individual units

…

Among the constituent units [of a data-processing system] included are display units ofautomatic data-processing machines which provide a graphical representation of thedata processed. They differ from the video monitors and television receivers of heading8528 in several ways, including the following:

(1) Display units of automatic data-processing machines are capable of accepting asignal only from the central processing unit of an automatic data-processingmachine and are therefore not able to reproduce a colour image from a compositevideo signal whose waveform conforms to a broadcast standard (NTSC, SECAM,

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PAL, D-MAC etc.). They are fitted with connectors characteristic of data-processing systems (e.g. RS-232C interface, DIN or SUB-D connectors) and do nothave an audio circuit. They are controlled by special adaptors (e.g. monochrome orgraphics adaptors) which are integrated in the central processing unit of the data-processing machine.

(2) These display units are characterised by low magnetic field emissions. Their displaypitch starts at 0.41 mm for medium resolution and gets smaller as the resolutionincreases.

(3) In order to accommodate the presentation of small yet well-defined images, displayunits of this heading utilise smaller dot (pixel) sizes and greater convergencestandards than those applicable to video monitors and television receivers ofheading 8528. (Convergence is the ability of the electron gun(s) to excite a singlespot on the face of the cathode-ray tube without disturbing any of the adjoiningspots.)

(4) In these display units, the video frequency (bandwidth), which is the measurementdetermining how many dots can be transmitted per second to form the image, isgenerally 15 MHz or greater, whereas, in the case of video monitors of heading8528, the bandwidth is generally no greater than 6 MHz. The horizontal scanningfrequency of these display units varies according to the standards for various displaymodes, generally from 15 kHz to over 155 kHz. Many are capable of multiplehorizontal scanning frequencies. The horizontal scanning frequency of the videomonitors of heading 8528 is fixed, usually 15.6 or 15.7 kHz depending on the

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20


applicable television standard. Moreover, the display units of automatic data-processing machines do not operate in conformity with national or internationalbroadcast frequency standards for public broadcasting or with frequency standardsfor closed-circuit television.

(5) Display units covered by this heading frequently incorporate tilt and swivel adjusting mechanisms, glare-free surfaces, flicker-free display, and other ergo-nomic design characteristics to facilitate prolonged periods of viewing at closeproximity to the unit.

…’

The explanatory notes concerning heading 8528 of the HS state as follows:

‘…

This heading includes reception apparatus for television, whether or not incorporating radio-broadcasting receivers or sound video recording or reprodu-cing apparatus: video monitors and video projectors.

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Apparatus falling under this heading includes:

…

(6) Video monitors which are receivers connected directly to the video camera orrecorder by means of co-axial cables, so that all the radio-frequency circuits areeliminated. They are used by television companies or for closed-circuit television(airports, railway stations, steel plants, hospitals, etc.). These apparatus consistessentially of devices which can generate a point of light and display it on a screensynchronously with the source signals. They incorporate one or more video amplifiers with which the intensity of the point can be varied. They can, moreover,have separate inputs for red (R), green (G) and blue (B), or be coded in accordancewith a particular standard (NTSC, SECAM, PAL, D-MAC, etc.). For reception ofcoded signals, the monitor must be equipped with a decoding device covering (theseparation of) the R, G and B signals. The most common means of imagereconstitution is the cathode-ray tube, for direct vision, or a projector with up tothree projection cathode-ray tubes; however, other monitors achieve the sameobjective by different means (e.g., liquid crystal screens, diffraction of light rays onto a film of oil). These may be in the form of CRT monitors or flat panel displays e.g.,LCD, LED, plasma, etc.

Video monitors of this heading should not be confused with the display units ofautomatic data-processing machines described in the Explanatory Note to heading8471.’

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21 In August 2004 Kamino declared, for release into free circulation, a consignment ofcolour monitors of the LCD type, in which the picture is reproduced with the aid ofliquid crystals which reflect light. Those monitors were classified under subheading8528 21 90.

22 The dimensions of their screens are 53.48 x 46.55 x 24.84 cm (w x h x d) with a 58.42 cm(23 inch) diagonal measurement. The maximum resolution is 1 920 x 1 200 pixel pointsand the screen aspect ratio is 16:10; horizontal picture frequency is 30 to 81 kHz andvertical picture frequency is 50 to 76 Hz, and they have a brightness of 250 candela persquare metre, 16.7 million colours and a contrast ratio of 500:1.

23 The monitors have D-Sub, DVI-D, USB, S-video and composite-video sockets. As aresult the monitor can display pictures from an automatic data-processing machine andpictures from other apparatus. They are also fitted with an audio outlet with amaximum power of 4 watts, to which loudspeakers can be attached.

24 Taking the view that those monitors should be classified under subheading 8471 60 90,Kamino appealed against the payment notice. That appeal was dismissed by decision ofthe Customs Inspector on the ground that those monitors are used to reproduce imagesand can be attached to DVD players, home cinema projectors, games consoles, videocameras, camcorders and automatic data-processing machines.

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25


In the appeal lodged before it against that decision, the Gerechtshof te Amsterdam(Court of Appeal, Amsterdam) concluded that the characteristics and properties of thecolour monitors in question, including the resolution and brightness, meant that theywere eminently suitable for use by designers, graphic artists or other such professionalusers and appropriate in particular for being viewed close up, when placed on a desk orwork surface.

26 That court found that the monitor was marketed by the manufacturer exclusively inthat context and also that the monitor is too expensive to be used solely or principallyfor games. Accordingly, it held that although use of the monitors by the above-mentioned professional users is not exclusive — since they offer other possibilities —from the point of view of sensible and useful use, they are aimed at them in such apredominant manner that as a whole they satisfy the requirement in Note 5(B) toChapter 84 of the CN. In the opinion of the Gerechtshof, Regulation No 754/2004 doesnot preclude that conclusion, because it relates to other apparatus with substantiallydifferent technical features.

27 The Staatssecretaris van Financiën appealed against that judgment before the HogeRaad der Nederlanden (Supreme Court of the Netherlands), claiming that, whenconsidering whether Note 5B to Chapter 84 of the CN is satisfied, the Gerechtshof teAmsterdam wrongly did not take into account the other possibilities for use of thosemonitors as part of an automatic data-processing system.

28 The Hoge Raad der Nederlanden asks, on the one hand, where there is no unambiguouscriterion from which to determine, by reference to simple technical characteristics, themain purpose of a particular monitor that can reproduce video images from anautomatic data-processing machine and also from other sources, whether the targetgroup of users, as defined by reference to the way in which the apparatus is marketed, aswell as the sale price of the apparatus, is also of possibly decisive importance. On the

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29


other, it asks whether the scope of Regulation No 754/2004 extends to the monitors atissue in the main proceedings.

Against that background, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1. Must Note 5 to Chapter 84 of the … CN … be interpreted as meaning that a colour monitor which can display both signals from an automatic data-processing machine as referred to in heading 8471 … and from other sources is excluded from classification under heading 8471 …?

2. If classification in heading 8471 … of the … monitor referred to in the first questionabove is not excluded, on the basis of which criteria must it then be determined whether it is a unit of the sort that is solely or principally used in an automatic data-processing system?

3. Does the scope of application of … Regulation … No 754/2004 … extend to the monitor at issue and, if so, in light of the answers to the first and second questions,is that regulation valid?’

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The questions referred

The first question

30 By that question, the national court is essentially asking the Court whether monitorssuch as those at issue before the referring court, capable of reproducing signals comingeither from an automatic data-processing machine or from other sources, may beregarded as being units of ‘a kind … principally used in an automatic data-processing system’ within the meaning of Note 5(B) to Chapter 84 of the CN and classified undersubheading 8471 60 90.

31 It is appropriate to recall that, in accordance with settled case-law, in the interests oflegal certainty and ease of verification, the decisive criterion for the classification ofgoods for customs purposes is in general to be sought in their objective characteristicsand properties as defined in the wording of the relevant heading of the CN and in thesection or chapter notes (see, inter alia, Case C-142/06 Olicom [2007] ECR I-6675, paragraph 16 and the case-law cited).

32 Both the notes which head the chapters of the Common Customs Tariff and theExplanatory Notes to the Nomenclature of the Customs Cooperation Council areimportant means of ensuring the uniform application of the Tariff and as such may beregarded as useful aids to its interpretation (see Case C-11/93 Siemens Nixdorf [1994] ECR I-1945, paragraph 12; Case C-382/95 Techex [1997] ECR I-7363, paragraph 12; Case C-339/98 Peacock [2000] ECR I-8947, paragraph 10; and Olicom, para-graph 17).

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33 In the present case, the wording of heading 8471, within which, according to Kamino,the monitors at issue in the main proceedings fall, refers, inter alia, to automatic data-processing machines and their components, whereas the wording of heading 8528, inwhich, according to the Dutch Government and the Commission, those monitorsshould be classified, relates, inter alia, to television reception apparatus and videomonitors. Subheading 8471 60 90 includes in particular data entry or production unitsother than printers and keyboards which may contain units of memory in the samehousing, while subheading 8528 21 90 includes colour video monitors.

34 The Commission takes the view that, because they can display images other than thosecoming from an automatic data-processing machine, the monitors at issue in the mainproceedings perform a specific function other than data processing within the meaningof Note 5(E) to Chapter 84 of the CN. Consequently, Note 5(B) to the same chapter doesnot apply to those monitors, which should be classified in the heading corresponding totheir function, that is to say, heading 8528, which includes, inter alia, video monitors.

35 However, that argument cannot be accepted.

36 Under Note 5(E) to Chapter 84 of the CN, ‘[m]achines performing a specific functionother than data processing and incorporating or working in conjunction with anautomatic data-processing machine are to be classified in the headings appropriate totheir respective functions or, failing that, in residual headings’.

37 It follows from the wording of that note that the ‘specific function’ performed by amachine working with an automatic data-processing machine must be a function ‘other than data processing’ (see Olicom, paragraph 30).

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38 Furthermore, it follows from the general scheme and purpose of Note 5(E) to Chapter84 of the CN that the expression ‘are to be classified in the headings appropriate to their respective functions’ does not seek to have one function take priority over others alsoperformed by the apparatus to be classified and which also constitute data processing,but to prevent apparatus whose function has nothing to do with data processing frombeing classified under heading 8471 for the sole reason that they incorporate anautomatic data-processing machine or work in connection with such a machine (JoinedCases C-362/07 and C-363/07 Kip Europe and Others [2008] ECR I-9489, para-graph 33).

39 It should be recalled in that regard that, as is apparent from paragraph 36 of thejudgment in Kip Europe and Others, only machines incorporating an automatic data-processing machine or working in conjunction with such a machine, whose function isnot data processing, perform ‘a specific function other than data processing’ within the meaning of Note 5(E) to Chapter 84 of the CN.

40 In accordance with the undisputed information in the documents submitted to theCourt in the present proceedings, apart from the function of reproduction of imagescoming from apparatus such as a games console, a video recorder/player or a DVDplayer, which does not constitute data processing, the monitors at issue in the mainproceedings also display signals coming from automatic data-processing machines.

Accordingly, it must be considered whether, as Kamino submits, such monitors fallwithin heading 8471 as units of an automatic data-processing machine since they meetthe three conditions laid down in Note 5(B)(a) to (c) to Chapter 84 of the CN, that is tosay, they are of a kind solely or principally used in an automatic data-processing system,

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41


are connectable to the central processing unit either directly or through one or moreother units and are capable of receiving or delivering data in a form which can be usedby the system.

42 In that regard, it is common ground that those monitors are connectable to the centralprocessing unit, that they receive data in a form which can be used by the system andthat, since they are able to reproduce signals which also come from other sources, theyare not of a kind used solely in an automatic data-processing system. Accordingly, it isnecessary to examine whether they could, nevertheless, be considered to be of a kindused ‘principally’ in such a system, within the meaning of Note 5(B)(a) to Chapter 84 of the CN.

43 Both the Netherlands Government and the Commission submit that Note 5(B)(a) toChapter 84 of the CN must be interpreted as meaning that the mere fact that themonitors at issue in the main proceedings are able to display images coming fromsources other than an automatic data-processing machine precludes their classificationin heading 8471.

44 That interpretation of Note 5(B)(a) to Chapter 84 of the CN, the wording of whichexpressly takes into consideration two categories of units of automatic data-processingmachines, that is to say that relating to the kind used ‘solely’ in an automatic data processing system and that relating to units used ‘principally’ in such a system, cannot, however, be accepted.

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45 As the Advocate General observed in point 33 of his Opinion, such an interpretationwould amount to removal of the term ‘principally’ from the text of that note.

46 To support their argument, the Netherlands Government and the Commission rely,inter alia, on the Explanatory Notes to the CN relating to subheading 8471 60 90 andon the Explanatory Notes relating to heading 8471 of the HS, in particular the firstsentence of point 1 of Part One, Chapter I(D), regarding display units of automatic data-processing machines.

47 In that regard, it is settled case-law that the Explanatory Notes drafted by theCommission, in respect of the CN, and those adopted by the WCO, in respect of the HS,are an important aid for interpreting the scope of the various tariff headings but do nothave legally binding force (see, inter alia, Case C-311/04 Algemene Scheeps Agentuur Dordrecht [2006] ECR I-609, paragraph 27 and the case-law cited).

48 The content of the Explanatory Notes to the CN, which do not take the place of those ofthe HS but should be regarded as complementary to them (see, to that effect, CaseC-486/06 Van Landeghem [2007] ECR I-10661, paragraph 36), and consulted jointlywith them, must accordingly be compatible with its provisions and may not alter thescope of those provisions (see, in particular, Algemene Scheeps Agentuur Dordrecht, paragraph 28 and the case-law cited).

49 If the Explanatory Notes referred to in paragraph 46 above were to be interpreted, assuggested by the Netherlands Government and the Commission, as precluding theclassification in subheading 8471 60 90 of all monitors capable of displaying signalscoming both from an automatic data-processing machine and from other sources,

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those Explanatory Notes would have the effect of amending and, in particular, ofrestricting the scope of Note 5(B)(a) to Chapter 84 of the CN.

50 It follows that, even if the Explanatory Notes to the CN relating to subheading8471 60 90 and the Explanatory Notes relating to heading 8471 of the HS were to beinterpreted in that manner, in particular the first sentence of point 1 of Part One,Chapter I(D), regarding display units of automatic data-processing machines, thoseNotes should, in that regard, be considered inapplicable, since that interpretation doesnot accord with Note 5(B)(a) to Chapter 84 of the CN.

51 In the light of all of the foregoing, the answer to the first question must be thatclassification of monitors such as those at issue in the main proceedings in subheading8471 60 90, as units of the kind used ‘principally’ in an automatic data-processingsystem within the meaning of Note 5(B)(a) to Chapter 84 of the CN is not precluded onthe sole ground that they are capable of displaying signals coming both from anautomatic data-processing machine and from other sources.

The second question

By that question, the national court asks the Court to define the criteria which make itpossible to determine whether monitors such as those at issue in the main proceedingsare units of a kind used principally in an automatic data-processing system.

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52


53 The Commission submits that the sockets which the monitors at issue in the main proceedings have, that is to say, DVI-D, S-video and composite-video, are found onmonitors intended for use as televisions. For that reason, the monitors at issue in the main proceedings perform a double function, that is to say, the display of signals comingfrom an automatic data-processing machine and the display of video images.

54 The Netherlands Government submits that, if monitors are equipped with a VGAinterface with or without an audio interface, they must be considered to be of the kindused solely in an automatic data-processing system. Except in that situation, it is only ifthe possibility of using monitors also equipped with other interfaces outside anautomatic data-processing system were purely theoretical that those monitors could beconsidered to be of the kind used principally in such systems.

55 However, those arguments cannot succeed.

56 Although it is true, as the Commission pointed out in its observations, that the criterionset out in Note 5(B)(a) to Chapter 84 of the CN, that a monitor ‘[be] of the kind used solely or principally in an automatic data-processing system’ does not refer to the use of the monitor as such, but the functions which it can perform, the fact remains, as isapparent from paragraph 44 above, that that note expressly takes into considerationboth categories of units to which it refers and that that distinction must be applied inpractice.

57 In that regard, it must be found, contrary to the submissions of both the NetherlandsGovernment and the Commission, that the number and type of sockets with whichmonitors such as those at issue in the main proceedings are equipped cannot, alone,

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constitute decisive criteria for the tariff classification of such monitors and that, for that purpose, an assessment must be made, in relation also to other criteria and in the lightof the characteristics and objective properties of those monitors, both as to the degreeto which they are capable of performing a number of functions and as to the standard ofperformance which they achieve when performing those functions.

58 Accordingly, since those monitors cannot be excluded from the concept of units of anautomatic data-processing machine within the meaning of Notes 5(B)(a) and 5(C) toChapter 84 of the CN, it is necessary to identify the criteria which may be relied on todecide whether those monitors are of the kind used principally in an automatic data-processing system or whether their characteristics and technical properties place themamong television screens or video monitors.

59 In the present case, for the purposes of the tariff classification of monitors such as thoseat issue in the main proceedings, it is appropriate to refer to the Explanatory Notesrelating to heading 8471 of the HS, in particular to points 1 to 5 of Part One, Chapter I(D), relating to display units of automatic data-processing machines.

60 In that regard, it is apparent from those points that the monitors used principally in anautomatic data-processing system can be identified not only by the fact that they arefitted with standard sockets for connection to data-processing systems, but also byother technical characteristics, in particular by the fact that they are intended to beviewed close up, that they cannot display television signals, that they have low magneticfield emissions, that their display pitch starts at 0.41 mm for medium resolution andgets smaller as the resolution increases, that their bandwidth is 15 MHz or greater andthat the dimension of the pixels on the screen is smaller than for video monitors inheading 8528, whereas the convergence of the former is greater than that of the latter.

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61


Consequently, the answer to the second question referred is that, in order to determinewhether monitors such as those at issue in the main proceedings are units of a kind usedprincipally in an automatic data-processing system, the national authorities, includingthe courts, must refer to the indications given in the Explanatory Notes relating toheading 8471 of the HS, in particular to points 1 to 5 of Part One, Chapter I(D), relatingto display units of automatic data-processing machines.

The third question

62 By this question, the referring court asks whether the scope of Regulation No 754/2004,the Annex to which classifies, in subheading 8528 21 90, two types of plasma screenwith technical characteristics enabling them to display data from an automatic data-processing machine or another source, such as a DVD player or a video games player (orconsole) via a tuner box, extends to monitors such as those at issue in the mainproceedings. If the answer is affirmative, it also asks the Court to rule on the validity ofthat regulation.

63 It is apparent from case-law, firstly, that a classification regulation, such as RegulationNo 754/2004, is adopted by the Commission when the classification in the CN of aparticular product is such as to give rise to difficulty or to be a matter for dispute and,secondly, such a regulation is of general application in so far as it does not apply to anindividual trader but, in general, to products identical to the one thus classified (see, tothat effect, Case C-119/99 Hewlett Packard [2001] ECR I-3981, paragraphs 18 and 19, and Kip Europe and Others, paragraph 59).

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64 Nevertheless, it must be observed that the goods classified under RegulationNo 754/2004 are not identical from a technological point of view to the monitors atissue in the main proceedings. The two kinds of apparatus described in the Annex tothat regulation are plasma screens, whereas the monitors at issue in the main proceedings are LCD screens.

65 They also differ in their dimensions, since the diagonal screen measurement of theapparatus under Regulation No 754/2004 is 106 cm (41.73 inches), while that of themonitors at issue in the main proceedings is 58.42 cm (23 inches).

66 In addition, the resolution of the two kinds of apparatus classified under RegulationNo 754/2004 is 852 x 480 pixels and 1 024 x 1 024 pixels respectively. However, theresolution of the monitors at issue in the main proceedings is 1 920 x 1 200 pixels.

67 It must be added that, although the application by analogy of a classification regulationto goods similar to those covered by that regulation facilitates a coherent interpretationof the CN and the equal treatment of traders (see Case C-130/02 Krings [2004] ECR I-2121, paragraph 35, and Case C-14/05 Anagram International [2006]ECR I-6763, paragraph 32), it is still necessary, in such a case, for the goods to beclassified and those covered by the classification regulation to be sufficiently similar.

The mere fact that both the monitors at issue in the main proceedings and the goodscovered by Regulation No 754/2000 have a DVI socket and that, for that reason, they areall capable of displaying signals coming from an automatic data-processing machine

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68


and from other sources, leaving aside any assessment of their objective characteristicsand their performance of their various functions, cannot be sufficient, in the light of thedifferences noted in paragraphs 64 to 66 of the present judgment, for that regulation toapply to those monitors by analogy.

69 Since the monitors at issue in the main proceedings are neither identical nor sufficientlyanalogous to the goods classified under Regulation No 754/2004, it follows that thatregulation does not apply to those monitors. Consequently, it is not necessary to assessits validity.

70 In the light of the foregoing considerations, the answer to the third question referred isthat Regulation No 754/2004 is not applicable for the purposes of tariff classification ofthe monitors at issue in the main proceedings.

Costs


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71



1. Monitors such as those at issue in the main proceedings are not excluded fromclassification in subheading 8471 60 90, as units of the kind used ‘principally’in an automatic data-processing system within the meaning of Note 5(B)(a) toChapter 84 of the combined nomenclature constituting Annex I to CouncilRegulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statisticalnomenclature and on the Common Customs Tariff, as amended byCommission Regulation (EC) No 1789/2003 of 11 September 2003, solelybecause they are capable of displaying signals coming both from an automaticdata-processing machine and from other sources.

2. In order to determine whether monitors such as those at issue in the main proceedings are units of the kind used principally in an automatic data-processing system, the national authorities, including the courts, must refer tothe indications given in the Explanatory Notes relating to heading 8471 of theHarmonised System introduced by the International Convention on the Harmonised Commodity Description and Coding System, concluded in Brussels on 14 June 1983, and the Protocol of Amendment thereto of 24 June1986, in particular to points 1 to 5 of Part One, Chapter I(D), relating to displayunits of automatic data-processing machines.

3. Commission Regulation (EC) No 754/2004 of 21 April 2000 concerning theclassification of certain goods in the Combined Nomenclature is not applicable for the purposes of tariff classification of the monitors at issue inthe main proceedings.

[Signatures]

I - 1226

Case C-557/07

LSG-Gesellschaft zur Wahrnehmung vonLeistungsschutzrechten GmbH

vTele2 Telecommunication GmbH

(Reference for a preliminary rulingfrom the Oberster Gerichtshof)

(Article 104(3) of the Rules of Procedure — Information society — Copyright and related rights — Saving and disclosure of certain traffic data — Protecting the

confidentiality of electronic communications — ‘Intermediaries’ within the meaning of Article 8(3) of Directive 2001/29/EC)

Order of the Court (Eighth Chamber), 19 February 2009 . . . . . . . . I - 1230


1. Approximation of laws — Harmonisation of certain aspects of copyright and related rights in the information society — Directive 2001/29 — Electronic commerce — Directive 2000/31 —Processing of personal data and protection of privacy in the electronic communicationssector — Directive 2002/58 — Enforcement of intellectual property rights — Directive 2004/48 (European Parliament and Council Directives 2000/31, 2001/29, 2002/58, Art. 15(1), and2004/48, Art. 8(3))

I - 1227


2. Approximation of laws — Copyright and related rights — Directive 2001/29 —Harmonisation of certain aspects of copyright and related rights in the information society — Intermediaries within the meaning of Article 8(3) of Directive 2001/29 — Definition (European Parliament and Council Directive 2001/29, Art. 8(3))

1. Community law — in particularArticle 8(3) of Directive 2004/48 on theenforcement of intellectual property rights, read in conjunction with Article 15(1) of Directive 2002/58 concerning the processing of personaldata and the protection of privacy in theelectronic communications sector (Direct-ive on privacy and electronic communica-tions) — does not preclude Member Statesfrom imposing an obligation to disclose toprivate third parties personal data relatingto Internet traffic in order to enable them to bring civil proceedings for copyright infringements.

Community law nevertheless requires Member States to ensure that, when transposing into national law Direct-ive 2000/31 on certain legal aspects of information society services, in particularelectronic commerce, in the Internal Market (‘Directive on electronic commerce’), Directive 2001/29 on the harmonisation of certain aspects of copy-right and related rights in the informationsociety, and Directives 2002/58 and 2004/48, they rely on an interpretation ofthose directives which allows a fair balance

to be struck between the various funda-mental rights involved. Moreover, when applying the measures transposing thosedirectives, the authorities and courts of Member States must not only interprettheir national law in a manner consistent with those directives but must also make sure that they do not rely on an interpreta-tion of those directives which would conflict with those fundamental rights orwith the other general principles of Community law, such as the principle ofproportionality.

(see para. 29, operative part 1)

2. Access providers which merely provideusers with Internet access, without offeringother services such as email, FTP or file sharing services or exercising any control,whether de iure or de facto, over the services which users make use of, must be regarded as ‘intermediaries’ within the meaning of Article 8(3) of Direct-ive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society.

I - 1228

LSG-GESELLSCHAFT ZUR WAHRNEHMUNG VON LEISTUNGSSCHUTZRECHTEN

Under that article, Member States are to ensure that rightholders are in a position toapply for an injunction against intermedi-aries whose services are used by a thirdparty to infringe a copyright or related right. Access providers who merely enableclients to access the Internet, even without offering other services or exercising anycontrol, whether de iure or de facto, over the services which users make use of, provide a service capable of being used by a third party to infringe a copyright or related right, inasmuch as those access providers supply the user with the connec-tion enabling him to infringe such rights.

Moreover, according to Recital 59 in thepreamble to Directive 2001/29, right-holders should have the possibility of applying for an injunction against an intermediary who ‘carries a third party’s infringement of a protected work or othersubject-matter in a network’. It is common ground that access providers, in granting

access to the Internet, make it possible forsuch unauthorised material to be trans-mitted between a subscriber to that service and a third party.

That interpretation is also borne out by theaim of Directive 2001/29 which, as is apparent in particular from Article 1(1)thereof, seeks to ensure the legal protec-tion of copyright and related rights in theframework of the internal market. The protection sought by Directive 2001/29would be substantially diminished, in thatregard, if ‘intermediaries’, within the meaning of Article 8(3) of that directive,were to be construed as not covering accessproviders, which alone are in possession ofthe data making it possible to identify theusers who have infringed those rights.


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v

ORDER OF 19. 2. 2009 — CASE C-557/07

ORDER OF THE COURT (Eighth Chamber)

19 February 2009 *

In Case C-557/07,

REFERENCE for a preliminary ruling under Article 234 EC, from the Oberster Gerichtshof (Austria), made by decision of 13 November 2007, received at the Court on14 December 2007, in the proceedings

LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH

Tele2 Telecommunication GmbH,

THE COURT (Eighth Chamber),

composed of T. von Danwitz, President of the Chamber, G. Arestis and J. Malenovský(Rapporteur), Judges,


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Advocate General: Y. Bot, Registrar: R. Grass,

proposing to give its decision on the second question by reasoned order in accordancewith the first subparagraph of Article 104(3) of the Rules of Procedure,

having informed the referring court that the Court proposes to give its decision on thefirst question by reasoned order in accordance with the second subparagraph ofArticle 104(3) of the Rules of Procedure,

after calling on the interested persons referred to in Article 23 of the Statute of theCourt of Justice to submit their observations in that regard,


I - 1231

ORDER OF 19. 2. 2009 — CASE C-557/07

makes the following

Order

1 This reference for a preliminary ruling concerns the interpretation of Direct-ive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 onthe harmonisation of certain aspects of copyright and related rights in the informationsociety (OJ 2001 L 167, p. 10), Directive 2002/58/EC of the European Parliament and ofthe Council of 12 July 2002 concerning the processing of personal data and theprotection of privacy in the electronic communications sector (Directive on privacy andelectronic communications) (OJ 2002 L 201, p. 37) and Directive 2004/48/EC of theEuropean Parliament and of the Council of 29 April 2004 on the enforcement ofintellectual property rights (OJ 2004 L 157, p. 45).

The reference has been made in the context of proceedings brought by LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH (‘LSG’) against Tele2 Telecommunication GmbH (‘Tele2’) concerning Tele2’s refusal to send LSG the names and addresses of the persons for whom it provides Internet access.

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2


Legal context


The provisions concerning the information society and the protection of intellectualproperty, particularly copyright

— Directive 2000/31/EC

3 Under Article 1(1) thereof, Directive 2000/31 of the European Parliament and of theCouncil of 8 June 2000 on certain legal aspects of information society services, inparticular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) (OJ 2000 L 178, p. 1) seeks to contribute to the proper functioning of theinternal market by ensuring the free movement of information society services betweenthe Member States.

— Directive 2001/29


‘In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases suchintermediaries are best placed to bring such infringing activities to an end. Therefore,without prejudice to any other sanctions and remedies available, rightholders should

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ORDER OF 19. 2. 2009 — CASE C-557/07

have the possibility of applying for an injunction against an intermediary who carries athird party’s infringement of a protected work or other subject-matter in a network.This possibility should be available even where the acts carried out by the intermediary are exempted under Article 5. The conditions and modalities relating to such injunctions should be left to the national law of the Member States.’

5 Under Article 1(1) thereof, Directive 2001/29 concerns the legal protection of copyrightand related rights in the framework of the internal market, with particular emphasis onthe information society.

6 Paragraph 1 of Article 5 of Directive 2001/29, which is entitled ‘Exceptions and limitations’, provides:

‘Temporary acts of reproduction referred to in Article 2, which are transient orincidental [and] an integral and essential part of a technological process and whose solepurpose is to enable:

(a) a transmission in a network between third parties by an intermediary, or

(b) a lawful use

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7


of a work or other subject-matter to be made, and which have no independenteconomic significance, shall be exempted from the reproduction right provided for inArticle 2.’

Article 8 of Directive 2001/29, which is entitled ‘Sanctions and remedies’, provides:

‘1. Member States shall provide appropriate sanctions and remedies in respect ofinfringements of the rights and obligations set out in this Directive and shall take all themeasures necessary to ensure that those sanctions and remedies are applied. Thesanctions thus provided for shall be effective, proportionate and dissuasive.

2. Each Member State shall take the measures necessary to ensure that rightholderswhose interests are affected by an infringing activity carried out on its territory canbring an action for damages and/or apply for an injunction and, where appropriate, forthe seizure of infringing material as well as of devices, products or components referredto in Article 6(2).

3. Member States shall ensure that rightholders are in a position to apply for aninjunction against intermediaries whose services are used by a third party to infringe acopyright or related right.’

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8

ORDER OF 19. 2. 2009 — CASE C-557/07


Article 8 of Directive 2004/48 is worded as follows:

‘1. Member States shall ensure that, in the context of proceedings concerning aninfringement of an intellectual property right and in response to a justified andproportionate request of the claimant, the competent judicial authorities may orderthat information on the origin and distribution networks of the goods or services whichinfringe an intellectual property right be provided by the infringer and/or any otherperson who:

(a) was found in possession of the infringing goods on a commercial scale;

(b) was found to be using the infringing services on a commercial scale;

(c) was found to be providing on a commercial scale services used in infringingactivities; or

(d) was indicated by the person referred to in point (a), (b) or (c) as being involved in theproduction, manufacture or distribution of the goods or the provision of theservices.

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2. The information referred to in paragraph 1 shall, as appropriate, comprise:

(a) the names and addresses of the producers, manufacturers, distributors, suppliersand other previous holders of the goods or services, as well as the intendedwholesalers and retailers;

(b) information on the quantities produced, manufactured, delivered, received orordered, as well as the price obtained for the goods or services in question.

3. Paragraphs 1 and 2 shall apply without prejudice to other statutory provisions which:

(a) grant the rightholder rights to receive fuller information;

(b) govern the use in civil or criminal proceedings of the information communicatedpursuant to this Article;

(c) govern responsibility for misuse of the right of information; or

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9

ORDER OF 19. 2. 2009 — CASE C-557/07

(d) afford an opportunity for refusing to provide information which would force theperson referred to in paragraph 1 to admit to his own participation or that of hisclose relatives in an infringement of an intellectual property right; or

(e) govern the protection of confidentiality of information sources or the processing ofpersonal data.’

The provisions concerning the protection of personal data

— Directive 95/46/EC

Paragraph 1 of Article 13 of Directive 95/46/EC of the European Parliament and of theCouncil of 24 October 1995 on the protection of individuals with regard to theprocessing of personal data and on the free movement of such data (OJ 1995 L 281,p. 31), which is entitled ‘Exceptions and restrictions’, provides:

‘1. Member States may adopt legislative measures to restrict the scope of the obligations and rights provided for in Articles 6(1), 10, 11(1), 12 and 21 when such arestriction constitutes a necessary measure to safeguard:

(a) national security;

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(b) defence;

(c) public security;

(d) the prevention, investigation, detection and prosecution of criminal offences, or ofbreaches of ethics for regulated professions;

(e) an important economic or financial interest of a Member State or of the EuropeanUnion, including monetary, budgetary and taxation matters;

(f ) a monitoring, inspection or regulatory function connected, even occasionally, withthe exercise of official authority in cases referred to in (c), (d) and (e);

(g) the protection of the data subject or of the rights and freedoms of others.’

I - 1239

ORDER OF 19. 2. 2009 — CASE C-557/07


10 Article 5(1) of Directive 2002/58 provides:

‘Member States shall ensure the confidentiality of communications and the relatedtraffic data by means of a public communications network and publicly availableelectronic communications services, through national legislation. In particular, theyshall prohibit listening, tapping, storage or other kinds of interception or surveillance ofcommunications and the related traffic data by persons other than users, without theconsent of the users concerned, except when legally authorised to do so in accordancewith Article 15(1). This paragraph shall not prevent technical storage which is necessary for the conveyance of a communication without prejudice to the principle ofconfidentiality.’


‘1. Traffic data relating to subscribers and users processed and stored by the provider ofa public communications network or publicly available electronic communicationsservice must be erased or made anonymous when it is no longer needed for the purposeof the transmission of a communication without prejudice to paragraphs 2, 3 and 5 ofthis Article and Article 15(1).

I - 1240


2. Traffic data necessary for the purposes of subscriber billing and interconnectionpayments may be processed. Such processing is permissible only up to the end of theperiod during which the bill may lawfully be challenged or payment pursued.

3. For the purpose of marketing electronic communications services or for the provision of value added services, the provider of a publicly available electroniccommunications service may process the data referred to in paragraph 1 to the extentand for the duration necessary for such services or marketing, if the subscriber or userto whom the data relate has given his/her consent. Users or subscribers shall be giventhe possibility to withdraw their consent for the processing of traffic data at any time.

…

5. Processing of traffic data, in accordance with paragraphs 1, 2, 3 and 4, must berestricted to persons acting under the authority of providers of the publiccommunications networks and publicly available electronic communications serviceshandling billing or traffic management, customer enquiries, fraud detection, marketingelectronic communications services or providing a value added service, and must berestricted to what is necessary for the purposes of such activities.

6. Paragraphs 1, 2, 3 and 5 shall apply without prejudice to the possibility for competentbodies to be informed of traffic data in conformity with applicable legislation with aview to settling disputes, in particular interconnection or billing disputes.’

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12

13

ORDER OF 19. 2. 2009 — CASE C-557/07

Under Article 15(1) of Directive 2002/58:

‘Member States may adopt legislative measures to restrict the scope of the rights andobligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9of this Directive when such restriction constitutes a necessary, appropriate and proportionate measure within a democratic society to safeguard national security (i.e.State security), defence, public security, and the prevention, investigation, detectionand prosecution of criminal offences or of unauthorised use of the electronic communication system, as referred to in Article 13(1) of Directive 95/46/EC. To thisend, Member States may, inter alia, adopt legislative measures providing for theretention of data for a limited period justified on the grounds laid down in thisparagraph. All the measures referred to in this paragraph shall be in accordance with thegeneral principles of Community law, including those referred to in Article 6(1) and (2)of the Treaty on European Union.’


Paragraph 81 of the Austrian Federal Law on copyright in literary and artistic works andrelated rights (Bundesgesetz über das Urheberrecht an Werken der Literatur und derKunst und über verwandte Schutzrechte), in the version published in BGBl. I, 81/2006(‘the Austrian Federal Law on Copyright’), provides:

‘(1) A person who has suffered an infringement of any exclusive rights conferred by thisLaw, or who fears such an infringement, shall be entitled to bring proceedings for arestraining injunction. Legal proceedings may also be brought against the proprietor ofa business if the infringement is committed in the course of the activities of his business

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14


by one of his employees or by a person acting under his control, or if there is a dangerthat such an infringement will be committed.

1(a) If the person who has committed such an infringement, or by whom there is adanger of such an infringement being committed, uses the services of an intermediaryfor that purpose, the intermediary shall also be liable to an injunction under subparagraph (1).

…’

Paragraph 87b(2) to (3) of the Austrian Federal Law on Copyright is worded as follows:

‘(2) A person who has suffered an infringement of any exclusive rights conferred by thisLaw shall be entitled to require information as regards the origin and distributionchannels of infringing goods and services, to the extent that this would not bedisproportionate to the gravity of the infringement and would not infringe statutoryobligations of confidentiality; the obligation to disclose information is on the infringerand on any persons who in the course of business:

1. have been in possession of infringing goods;

2. have received infringing services; or

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ORDER OF 19. 2. 2009 — CASE C-557/07

3. have supplied services used for the infringement.

(2a) So far as is necessary, the obligation under subparagraph (2) to disclose information includes:

1. the names and addresses of the producers, distributors, suppliers and other previous holders of the goods or services, as well as the intended wholesalers andretailers;

2. the quantities produced, delivered, received or ordered, as well as the price paid forthe goods or services in question.

(3) Intermediaries within the meaning of Paragraph 81(1a) shall give the person whoserights have been infringed information as to the identity of the infringer (name andaddress) or the information necessary to identify the infringer, following an applicationin writing by the person whose rights have been infringed, such application to includesufficient reasons. The reasons given must include in particular sufficiently precisedetails as to the facts which give rise to a suspicion that there has been an infringementof rights. The person whose rights have been infringed shall pay the intermediaryreasonable compensation for the costs incurred in the provision of that information.’


LSG is a collecting society. It enforces as trustee the rights of recorded music producersin their worldwide recordings and the rights of the recording artists in respect of the

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15


exploitation of those recordings in Austria. The rights concerned are, in particular, theright to reproduce and distribute the recordings and the right to make them available tothe public.

16 Tele2 is an Internet access provider which assigns to its clients Internet ProtocolAddresses (‘IP addresses’), which are most often dynamic rather than static. Tele2 isable to identify individual clients on the basis of the IP address and the period or datewhen it was assigned.

17 The holders of the rights defended by LSG suffer financial loss as a result of the creationof file-sharing systems which make it possible for participants to exchange copies ofsaved data. In order to be able to bring civil proceedings against the perpetrators, LSGapplied for an order requiring Tele2 to send it the names and addresses of the persons towhom it had provided an Internet access service and whose IP addresses, together withthe day and time of the connection, were known. Tele2 took the view that it was obligedto refuse that request for information. It stated that it is not an intermediary and is notauthorised to save access data.

18 By judgment of 21 June 2006, the Handelsgericht Wien (Commercial Court, Vienna)granted LSG’s application, on the view that, as an Internet access provider, Tele2 is anintermediary within the meaning of Paragraph 81(1a) of the Austrian Federal Law onCopyright and that, as such, it is required to provide the information referred to inParagraph 87b(3) thereof.

19 According to the order for reference, the decision at first instance was confirmed onappeal by the Oberlandesgericht Wien (Higher Regional Court, Vienna) by judgment of12 April 2007, in respect of which an appeal on a point of law has been brought beforethe Oberster Gerichtshof (Austrian Supreme Court).

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ORDER OF 19. 2. 2009 — CASE C-557/07

Before the Oberster Gerichtshof,Tele2 claims, first, that it is not an intermediary withinthe meaning of Paragraph 81(1a) of the Austrian Federal Law on Copyright orArticle 8(3) of Directive 2001/29, since, as Internet access provider, it indeed enables theuser to access the Internet, but it exercises no control, whether de iure or de facto, over the services which the user makes use of. Secondly, the tensions in the relationshipbetween the right to information entailed by the legal protection of copyright and thelimits placed by data protection laws on the saving and disclosure of personal data havebeen resolved, in favour of data protection, by the Community directives.

21 The Oberster Gerichtshof is of the view that the Opinion of the Advocate General inCase C-275/06 Promusicae [2008] ECR I-271, delivered after the present order for reference, raises doubts as to whether the right to information conferred byParagraph 87b(3) of the Austrian Federal Law on Copyright, read in conjunctionwith Paragraph 81(1a) thereof, is in conformity with the directives adopted in the dataprotection field and, in particular, with Articles 5, 6 and 15 of Directive 2002/58. Theaforementioned provisions of Austrian law require private third parties to be providedwith information on personal data relating to Internet traffic, thereby imposing a dutyto disclose, which presupposes that the Internet traffic data have first been processedand saved.

22 In those circumstances, the Oberster Gerichtshof decided to stay the proceedings andto refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is the term “intermediary” in Article 5(1)(a) and Article 8(3) of Directive [2001/29]to be interpreted as including an access provider who merely provides a user withaccess to the network by allocating him a dynamic IP address but does not himselfprovide him with any services such as email, FTP or file-sharing services and doesnot exercise any control, whether de iure or de facto, over the services which the user makes use of?

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(2) If the first question is answered in the affirmative:

Is Article 8(3) of Directive [2004/48], regard being had to Article 6 and Article 15 ofDirective [2002/58], to be interpreted (restrictively) as not permitting the disclosure of personal traffic data to private third parties for the purposes of civilproceedings for alleged infringements of exclusive rights protected by copyright(rights of exploitation and use)?’


23 Under Article 104(3) of the Rules of Procedure — that is to say, inter alia, where theanswer to a question referred to the Court for a preliminary ruling may be clearlydeduced from existing case-law or where the answer to the question admits of noreasonable doubt — the Court may give its decision by reasoned order.

The second question

24 By its second question, which it is appropriate to consider first, the national courtessentially asks whether Community law, in particular Article 8(3) of Directive 2004/48,read in conjunction with Articles 6 and 15 of Directive 2002/58, precludes MemberStates from imposing an obligation to disclose to private third parties personal datarelating to Internet traffic in order to enable them to bring civil proceedings forcopyright infringements.

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ORDER OF 19. 2. 2009 — CASE C-557/07

The reply to that question can be clearly inferred from the case-law of the Court.

26 In paragraph 53 of Promusicae, the Court stated that the exceptions provided for in Article 15(1) of Directive 2002/58, which refers expressly to Article 13(1) of Directive 95/46, include measures which are necessary for the protection of therights and freedoms of others. As it does not specify the rights and freedoms covered bythat exception, Directive 2002/58 must be interpreted as reflecting the intention of theCommunity legislature not to exclude from its scope the protection of the right toproperty or situations in which authors seek to obtain that protection through civilproceedings.

27 The Court inferred from this, in paragraphs 54 and 55 of Promusicae, that Directive 2002/58 — in particular, Article 15(1) thereof — does not preclude theMember States from imposing an obligation to disclose personal data in the context ofcivil proceedings, nor does it oblige them to impose such an obligation.

28 Moreover, the Court pointed out that the freedom which Member States retain to givepriority to the right to privacy or to the right to property is qualified by a number ofrequirements. Accordingly, when transposing Directives 2000/31, 2001/29, 2002/58and 2004/48 into national law, it is for the Member States to ensure that they rely on aninterpretation of those directives which allows a fair balance to be struck between thevarious fundamental rights protected by the Community legal order. Furthermore,when applying the measures transposing those directives, the authorities and courts ofMember States must not only interpret their national law in a manner consistent withthose directives, but must also make sure that they do not rely on an interpretation ofthose directives which would conflict with those fundamental rights or with the othergeneral principles of Community law, such as the principle of proportionality (Promusicae, paragraph 70).

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29 Accordingly, the answer to the second question is that Community law — in particular, Article 8(3) of Directive 2004/48, read in conjunction with Article 15(1) of Directive 2002/58 — does not preclude Member States from imposing an obligationto disclose to private third parties personal data relating to Internet traffic in order toenable them to bring civil proceedings for copyright infringements. Community lawnevertheless requires Member States to ensure that, when transposing Direct-ives 2000/31, 2001/29, 2002/58 and 2004/48 into national law, they rely on an interpretation of those directives which allows a fair balance to be struck between thevarious fundamental rights involved. Moreover, when applying the measures transposing those directives, the authorities and courts of Member States must notonly interpret their national law in a manner consistent with those directives, but mustalso make sure that they do not rely on an interpretation of those directives whichwould conflict with those fundamental rights or with the other general principles ofCommunity law, such as the principle of proportionality.

The first question

30 By its first question, the national court asks, essentially, whether access providers whichmerely provide users with Internet access, without offering other services or exercisingany control, whether de iure or de facto, over the services which users make use of, are ‘intermediaries’ within the meaning of Articles 5(1)(a) and 8(3) of Directive 2001/29.

31 On the view that the answer to that question admits of no reasonable doubt, the Courtinformed the national court, in accordance with the second paragraph of Article 104(3)of the Rules of Procedure, that it proposed to give its decision by reasoned order, andcalled on the interested parties referred to in Article 23 of the Statute of the Court ofJustice to submit any observations they might have in that regard.

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32

ORDER OF 19. 2. 2009 — CASE C-557/07

LSG, the Spanish and United Kingdom Governments and the Commission of theEuropean Communities indicated to the Court that they had no objection to the Court’s proposal to give its decision by reasoned order.

33 Tele2 confines its observations in that regard, essentially, to those matters alreadyraised in its written pleadings. According to Tele2, Community law accords Internetaccess providers privileged treatment, in terms of liability, which is incompatible withan unlimited obligation to disclose information. However, those arguments are notsuch as to lead the Court to rule out the procedural route envisaged.

34 It follows clearly both from the order for reference and from the wording of thequestions referred that, by its first question, the national court wishes to know whetherInternet access providers who merely enable the user to access the Internet may berequired to provide the information referred to in the second question.

35 First, it should be pointed out that Article 5(1)(a) of Directive 2001/29 requires MemberStates to provide for exemptions from reproduction rights.

The point at issue in the dispute before the referring court is whether LSG can rely on aright to information as against Tele2, not whether Tele2 has infringed reproductionrights.

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36

37


It follows that an interpretation of Article 5(1)(a) of Directive 2001/29 serves nopurpose in relation to the outcome of the dispute before the referring court.

38 Tele2 maintains, inter alia, that intermediaries must be in a position to bring copyrightinfringements to an end. Internet access providers, on the other hand, in as much asthey exercise no control, whether de iure or de facto, over the services accessed by theuser, are not capable of bringing such infringements to an end and, accordingly, are not‘intermediaries’ within the meaning of Directive 2001/29.

39 It should be noted at the outset that Promusicae concerned the communication by Telefónica de España SAU — a commercial undertaking engaged, inter alia, in theprovision of Internet access services — of the identities and physical addresses ofcertain persons to whom it provided such services and whose IP addresses and datesand times of connection were known (Promusicae, paragraphs 29 and 30).

40 It is common ground, as is apparent from the question referred and from the facts inPromusicae, that Telefónica de España SAU was an Internet access provider (Promusicae, paragraphs 30 and 34).

Accordingly, in holding — in paragraph 70 of Promusicae — that Directives 2000/31,2001/29, 2002/58 and 2004/48 do not require the Member States to impose, in asituation such as that in Promusicae, an obligation to communicate personal data inorder to ensure effective protection of copyright in the context of civil proceedings, the

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41

ORDER OF 19. 2. 2009 — CASE C-557/07

Court did not immediately rule out the possibility that Member States may, pursuant toArticle 8(1) of Directive 2004/48, place Internet access providers under a duty ofdisclosure.

42 It should also be pointed out that, under Article 8(3) of Directive 2001/29, MemberStates are to ensure that rightholders are in a position to apply for an injunction againstintermediaries whose services are used by a third party to infringe a copyright or relatedright.

43 Access providers who merely enable clients to access the Internet, even withoutoffering other services or exercising any control, whether de iure or de facto, over the services which users make use of, provide a service capable of being used by a thirdparty to infringe a copyright or related right, inasmuch as those access providers supplythe user with the connection enabling him to infringe such rights.

44 Moreover, according to Recital 59 in the preamble to Directive 2001/29, rightholdersshould have the possibility of applying for an injunction against an intermediary who‘carries a third party’s infringement of a protected work or other subject-matter in a network’. It is common ground that access providers, in granting access to the Internet,make it possible for such unauthorised material to be transmitted between a subscriberto that service and a third party.

45 That interpretation is borne out by the aim of Directive 2001/29 which, as is apparent inparticular from Article 1(1) thereof, seeks to ensure the legal protection of copyrightand related rights in the framework of the internal market. The protection sought byDirective 2001/29 would be substantially diminished if ‘intermediaries’, within the meaning of Article 8(3) of that directive, were to be construed as not covering access

I - 1252


providers, which alone are in possession of the data making it possible to identify theusers who have infringed those rights.

46 In view of the foregoing, the answer to the first question is that access providers whichmerely provide users with Internet access, without offering other services such as email,FTP or file-sharing services or exercising any control, whether de iure or de facto, over the services which users make use of, must be regarded as ‘intermediaries’ within the meaning of Article 8(3) of Directive 2001/29.

Costs

47 Since these proceedings are, for the parties to the main proceedings, a step in the actionpending before the national court, the decision on costs is a matter for that court. Costsincurred in submitting observations to the Court, other than the costs of those parties,are not recoverable.

On those grounds, the Court (Eighth Chamber) hereby rules:

1. Community law — in particular, Article 8(3) of Directive 2004/48/EC of theEuropean Parliament and of the Council of 29 April 2004 on the enforcementof intellectual property rights, read in conjunction with Article 15(1) ofDirective 2002/58/EC of the European Parliament and of the Council of12 July 2002 concerning the processing of personal data and the protection ofprivacy in the electronic communications sector (Directive on privacy and

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ORDER OF 19. 2. 2009 — CASE C-557/07

electronic communications) — does not preclude Member States from imposing an obligation to disclose to private third parties personal datarelating to Internet traffic in order to enable them to bring civil proceedingsfor copyright infringements. Community law nevertheless requires MemberStates to ensure that, when transposing into national law Direct-ive 2000/31/EC of the European Parliament and of the Council of 8 June2000 on certain legal aspects of information society services, in particularelectronic commerce, in the Internal Market (‘Directive on electronic commerce’), Directive 2001/29/EC of the European Parliament and of theCouncil of 22 May 2001 on the harmonisation of certain aspects of copyrightand related rights in the information society, and Directives 2002/58 and2004/48, they rely on an interpretation of those directives which allows a fairbalance to be struck between the various fundamental rights involved. Moreover, when applying the measures transposing those directives, theauthorities and courts of Member States must not only interpret their nationallaw in a manner consistent with those directives but must also make sure that they do not rely on an interpretation of those directives which would conflictwith those fundamental rights or with the other general principles of Community law, such as the principle of proportionality.

2. Access providers which merely provide users with Internet access, withoutoffering other services such as email, FTP or file-sharing services or exercisingany control, whether de iure or de facto, over the services which users make use of, must be regarded as ‘intermediaries’ within the meaning of Article 8(3) of Directive 2001/29.

[Signatures]

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Case C-1/08

Athesia Druck Srl v

Ministero dell'Economia e delle Finanzeand

Agenzia delle Entrate

(Reference for a preliminary rulingfrom the Corte suprema di cassazione)

(SixthVAT Directive —Article 9(2)(e) —Article 9(3)(b) —ThirteenthVAT Directive —Article 2 — Place where services are supplied — Advertising services —

Reimbursement of VAT — Tax representative)

Judgment of the Court (Third Chamber), 19 February 2009 . . . . . . . I - 1258


1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Supply of services — Determination of relevant place for tax purposes(Council Directive 77/388, Art. 9(2)(e) and (3)(b))

I - 1255


2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Refund of the tax to taxable persons not established in the Community(Council Directives 77/388, Art. (9)(3)(b) and 86/560, Art. 2)

1. With regard to advertising services, wherethe recipient of the services is establishedoutside the European Community, the place of supply is, as a rule, according toArticle 9(2)(e) of Sixth Directive 77/388 onthe harmonisation of the laws of the Member States relating to turnover taxes, as amended by Tenth Directive 84/386,defined as the place where that recipienthas his principal place of business. However, the Member States may exercisethe option provided in Article 9(3)(b) ofSixth Directive 77/388, as amended, anddefine the place where the services in question are supplied, by way of derogationfrom that rule, as being within the MemberState concerned. If that option is exercised,advertising services provided by a supplierestablished in the European Community to a customer situated in a non-Member state, whether that customer is the final customer or an intermediate customer, are deemed to be supplied within the European Community, provided that theeffective use and enjoyment of the services,within the meaning of Article 9(3)(b) of theSixth Directive, take place within the Member State concerned. That is the case, with regard to advertising services,where the advertising material being supplied is disseminated from the Member State concerned.

However, advertising services provided by a supplier established outside the

European Community for his own clientscannot be liable to VAT under Article 9(3)(b) of the Sixth Directive, even wherethat supplier acted in the capacity of intermediate customer in respect of an earlier supply of services, since such a supply of services does not fall within thescope of Article 9(2)(e) of that directive or,in more general terms, Article 9 of thedirective as a whole, those being provisionswhich are expressly referred to in Article 9(3)(b) of that directive.

Whether a tax representative is appointeddoes not, of itself, have any effect on whether the services received or providedby the represented person are liable to VAT, since the sole purpose of the systemof representation is to enable the tax authorities to have an intermediary at

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ATHESIA DRUCK

national level where the taxable person isestablished abroad.

(see paras 27-29, 33, 34, 38, operative part)

2. The fact that the supply of services for thepurpose of Article 9(3)(b) of Sixth Direct-ive 77/388 on the harmonisation of thelaws of the Member States relating to turnover taxes, as amended, is subject to

value added tax does not preclude the taxable person’s right to the refund of VATwhere he satisfies the conditions laid down in Article 2 of Thirteenth Directive 86/560on the harmonisation of the laws of the Member States relating to turnover taxes — Arrangements for the refund of value added tax to taxable persons not established in Community territory.


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v



19 February 2009 *

In Case C-1/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Corte suprema dicassazione (Italy), made by decision of 20 September 2007, received at the Court on2 January 2008, in the proceedings

Athesia Druck Srl

Ministero dell’Economia e delle Finanze,

Agenzia delle Entrate,

* Language of the case: Italian.

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ATHESIA DRUCK


composed of A. Rosas, President of the Chamber, J.-N. Cunha Rodrigues, J. Klučka, P. Lindh and A. Arabadjiev (Rapporteur), Judges,

Advocate General: E. Sharpston,Registrar: L. Hewlett, Principal Administrator,



— Athesia Druck Srl, by B. Migliucci and T. Kofler, avvocati,

— the Italian Government, by R. Adam, acting as Agent, and S. Fiorentino, avvocatodello Stato,

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— the Commission of the European Communities, by A. Aresu and M. Afonso, actingas Agents,


gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 9(2)(e) ofSixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the lawsof the Member States relating to turnover taxes — Common system of value added tax:uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Tenth CouncilDirective 84/386/EEC of 31 July 1984 (OJ 1984 L 208, p. 58) (‘the Sixth Directive’).

2 The reference was made in proceedings between Athesia Druck Srl (‘Athesia Druck’) on the one hand and the Ministero dell’Economia e delle Finanze (Ministry of Economy and Finance) and the Agenzia delle Entrate (Revenue Authority) on the other, concerning an additional assessment to value added tax (‘VAT’) which was issued to that company in respect of 1993 and 1994.

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ATHESIA DRUCK

Legal context


3 The sixth recital in the preamble to the Sixth Directive is worded as follows:

‘… the determination of the place where taxable transactions are effected has been thesubject of conflicts concerning jurisdiction as between Member States, in particular asregards … the supply of services;... although the place where a supply of services iseffected should in principle be defined as the place where the person supplying theservices has his principal place of business, that place should be defined as being in thecountry of the person to whom the services are supplied, in particular in the case ofcertain services supplied between taxable persons where the cost of the services isincluded in the price of the goods’.

4 Article 6(4) of the Sixth Directive provides that, where a taxable person acting in hisown name but on behalf of another takes part in a supply of services, he is to beconsidered to have received and supplied those services himself.

5 Article 9 of that directive provides as follows:

‘1. The place where a service is supplied shall be deemed to be the place where thesupplier has established his business or has a fixed establishment from which the

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service is supplied or, in the absence of such a place of business or fixed establishment,the place where he has his permanent address or usually resides.

2. However:

…

(e) the place where the following services are supplied when performed for customersestablished outside the Community or for taxable persons established in theCommunity but not in the same country as the supplier, shall be the place where thecustomer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has hispermanent address or usually resides:

…

— advertising services,

…

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6

ATHESIA DRUCK

3. In order to avoid double taxation, non-taxation or the distortion of competition theMember States may, with regard to the supply of services referred to in 2(e) … consider:

(a) the place of supply of services, which under this Article would be situated within theterritory of the country, as being situated outside the Community where theeffective use and enjoyment of the services take place outside the Community;

(b) the place of supply of services, which under this Article would be situated outsidethe Community, as being within the territory of the country where the effective useand enjoyment of the services take place within the territory of the country.

…’

Article 2 of Thirteenth Council Directive 86/560/EEC of 17 November 1986 on theharmonisation of the laws of the Member States relating to turnover taxes —Arrangements for the refund of value added tax to taxable persons not established inCommunity territory (OJ 1986 L 326, p. 40) (‘theThirteenth Directive’) states as follows:

‘1. Without prejudice to Articles 3 and 4, each Member State shall refund to anytaxable person not established in the territory of the Community, subject to theconditions set out below, any [VAT] charged in respect of services rendered … to him in

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the territory of the country by other taxable persons … in so far as such … services are used for the purposes of … the provision of services referred to in point 1(b) of Article 1 of this Directive.

2. Member States may make the refunds referred to in paragraph 1 conditional uponthe granting by third States of comparable advantages regarding turnover taxes.

3. Member States may require the appointment of a tax representative.’


7 The Decree of the President of the Republic No 633 of 26 October 1972 establishing andregulating value added tax (ordinary supplement to GURI No 292 of 11 November1972), in the version applicable at the material time (‘the VAT Decree’), transposed the provisions of the Sixth Directive referred to above into Italian law.

8 Article 7 of the VAT Decree provides as follows:

‘…

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ATHESIA DRUCK

Supplies of services shall be deemed to be effected in Italy if they are provided by aperson who has a permanent address there or who resides there and does not have apermanent address abroad or are provided by permanent establishments in Italy ofpersons who have a permanent address or reside abroad; they shall not be deemed to beeffected in Italy if they are provided by permanent establishments abroad of personswho have a permanent address or reside in Italy. For the purposes of this article, inrespect of persons other than natural persons, “permanent address” shall mean the place in which the registered office is situated and “residence” the place in which the real seat is situated.

By way of derogation from the rule laid down in the preceding subparagraph:

…

(d) … advertising services … and brokerage services relating to the abovementionedservices and those relating to the obligation not to provide such services shall bedeemed to be effected in Italy where they are supplied to persons having apermanent address in Italy or who reside there and do not have a permanentaddress abroad or are supplied to permanent establishments in Italy of persons whohave a permanent address or reside abroad, unless they are used outside theEuropean Economic Community;

(e) the services referred to at (d) which are supplied to persons who have a permanentaddress or reside in other Member States of the European Economic Communityshall be deemed to be effected in Italy where the person to whom the services are

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9


supplied is not liable to VAT in the State in which he has a permanent address orresides;

(f) the services referred to at (e), … supplied to persons who have a permanent addressand reside outside the European Economic Community … shall be deemed to be effected in Italy if they are used there; if they are supplied by persons who have apermanent address or reside in Italy to persons who have a permanent address orreside outside the European Economic Community, such services shall be deemedto be effected in Italy if they are used there or in another Member State of theCommunity.’

Article 17 of the VAT Decree provides as follows:

‘Persons supplying taxable goods or providing taxable services shall be liable to VAT;those persons shall pay the tax … to the tax authorities …

The rights and obligations arising from the application of this decree with regard totransactions carried out in Italy by or on behalf of persons not established in Italy andnot having a fixed establishment there may be exercised or fulfilled in accordance withthe usual conditions by a representative established in Italy …, who shall be jointly andseverally liable with the person represented for the performance of the obligationsarising from the application of this decree …

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ATHESIA DRUCK

Where no representative is appointed in accordance with the preceding subparagraph,the obligations relating to … services provided in Italy by persons established abroadand the obligations relating to the provision of services referred to in Article 3(2) bypersons established abroad to persons established in Italy must be fulfilled by thesuppliers or the purchasers who … use the services in the operation of an undertakingor the exercise of a trade or profession. …

The provisions in the second and third subparagraphs are not applicable to transactionseffected by or on behalf of the fixed establishments in Italy of persons residing abroad.’

10 Article 38b of the VAT Decree reiterates, in essence, the provisions of the ThirteenthDirective.


11 During 1993 and 1994, Athesia Advertising GmbH (‘Athesia Advertising’), a companygoverned by Austrian law established in Innsbruck (Austria) and engaged in operatingan advertising agency, purchased, in its own name and on behalf of Austrian andGerman clients, advertising space from Italian media (newspapers, magazines, radioand television). It operated from Austria and did not have a fixed establishment in Italy.However, Athesia Advertising had an Italian subsidiary, Athesia Druck, situated inBressanone (Italy), which it appointed as its tax representative pursuant to Article 17 ofthe VAT Decree.

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12 VAT was charged on the invoices in respect of the advertising services at issue in themain proceedings. The invoices were drawn up in the names of both Athesia Advertising and Athesia Druck. Where appropriate, Athesia Advertising then providedits own services to its clients. Since VAT was paid in Italy, Athesia Druck claimedreimbursement of the tax from the Italian tax authorities pursuant to the ThirteenthDirective.

13 In 1999, the Ufficio IVA di Bolzano (the Bolzano (Italy) VAT office) issued AthesiaDruck with a notice of adjustment of VAT in respect of the returns made by thatcompany for 1993 and 1994 in its capacity as the tax representative of AthesiaAdvertising on the basis, as is apparent from the order for reference, that it had omittedto charge VAT on invoices in respect of the advertising services provided to AthesiaAdvertising’s Austrian and German clients. The question as to the place in which thoseservices were supplied thus arose indirectly.

14 A fine was imposed along with the additional assessment to VAT.

15 Athesia Druck challenged the additional assessments in question before the Commissione tributaria di primo grado di Bolzano (Bolzano Tax Court of First Instance), which, by decisions of 11 April and 11 October 2000, rejected that company’s claims in so far as they related to VAT but upheld them as regards the fine and AthesiaDruck was accordingly relieved of any obligation to pay this.

16 On appeal, by decision of 17 December 2004, the Commissione Tributaria di secondogrado di Bolzano (Bolzano Tax Court of Second Instance) dismissed both AthesiaDruck’s appeals relating to the VAT for which it remained liable and the cross-appealslodged by the Ufficio IVA di Bolzano.

I - 1268

17

ATHESIA DRUCK

Athesia Druck appealed against that decision to the Corte suprema di cassazione(Supreme Court of Cassation), the referring court.

18 The Corte suprema di cassazione decided to stay the proceedings and to refer thefollowing question to the Court for a preliminary ruling:

‘What — for VAT purposes, and in accordance with Article 9(2)(e) of the Sixth Directive … — is the place of supply in the case of advertising services supplied by a personestablished in a Member State of the European Community to a recipient which isestablished outside the Community but has a tax representative in the territory of aMember State? In particular, is it: (i) the place in which the recipient of the advertisingmaterial is established; (ii) the place in which the company which is the non-Community company’s tax representative in Italy has its fixed establishment; (iii) theplace in which the non-Community company seeking the advertising services has itsfixed establishment; or (iv) the place in which the non-Community company’s client is established?’


19 By its question, the Corte suprema di cassazione asks, in essence, how the place whereadvertising services are supplied, within the meaning of Article 9 of the Sixth Directive,is to be determined in a situation such as that in the main proceedings, in which theperson supplying the services is established in a Member State, whereas the person towhom the services are supplied, while established in a non-Member country, has a taxrepresentative in that Member State and is sometimes the final customer, that is, theadvertiser, and sometimes an intermediate customer who himself provides services forhis own clients, namely advertisers.

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Preliminary observations

20 It should be borne in mind that Article 9 of the Sixth Directive contains rules for determining the place where services are deemed to be supplied for VAT purposes.Whereas Article 9(1) lays down a general rule in that regard, Article 9(2) sets out anumber of specific instances of places where certain services are deemed to be supplied.The object of those provisions is to avoid, first, conflicts of jurisdiction which may resultin double taxation, and, secondly, non-taxation (Case 168/84 Berkholz [1985] ECR 2251, paragraph 14; Case C-327/94 Dudda [1996] ECR I-4595, paragraph 20; and Case C-291/07 Kollektivavtalsstiftelsen TRR Trygghetsrådet [2008] ECR I-8255, para-graph 24).

21 Those specific instances include advertising services, which are referred to in thesecond indent of Article 9(2)(e) of the Sixth Directive.

The determination of the place where advertising services are deemed to be suppliedunder Article 9(2)(e) of the Sixth Directive

22 It is apparent from the wording itself of the second indent of Article 9(2)(e) of the SixthDirective that the place where advertising services are supplied when performed forcustomers established outside the Community or for taxable persons established in theCommunity but not in the same country as the supplier is the place where the customerhas established his business or has a fixed establishment to which the service is suppliedor, in the absence of such a place, the place where he has his permanent address orusually resides.

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23

ATHESIA DRUCK

In accordance with the case-law of the Court, the second indent of Article 9(2)(e) of theSixth Directive must be interpreted as applying not only to advertising services supplieddirectly and invoiced by the supplier to a taxable advertiser, but also to services suppliedindirectly to the advertiser and invoiced to a third party who, in turn, invoices them tothe advertiser (Case C-108/00 SPI [2001] ECR I-2361, paragraph 22, and Case C-438/01 Design Concept [2003] ECR I-5617, paragraph 17).

24 It follows that the indirect nature of the services, resulting from the fact that they weresupplied and invoiced by a first supplier to an undertaking, which was itself commissioned to perform advertising services, before being invoiced by that undertaking to the advertiser, does not constitute an obstacle to the application ofArticle 9(2)(e) of the Sixth Directive (Design Concept, paragraph 18).

25 The Court has expressly stated that, under Article 9(1) and (2) of the Sixth Directive, thedetermination of the place where a service is supplied depends solely on the place wherethe supplier and the recipient of the service in question are established, since Article 9does not in any way require account to be taken of transactions carried out after thatfirst supply of services (see, to that effect, Design Concept, paragraph 26).

26 Accordingly, in a case of an indirect supply of services such as that at issue in the mainproceedings, involving a first supplier of services, an intermediate customer and anadvertiser who receives services from the intermediate customer, it is necessary toconsider separately the transaction involving the supply of services by the first supplierto the intermediate customer, in order to determine the place of taxation of thattransaction (see, to that effect, Design Concept, paragraph 28).

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27


With regard to advertising services, therefore, where the recipient of the services isestablished outside the Community, the place of supply is, as a rule, according toArticle 9(2)(e) of the Sixth Directive, defined as the place where that recipient has hisprincipal place of business and it is unnecessary for account to be taken of the fact thatthat recipient is not necessarily the final advertiser.

The determination of the place where advertising services are deemed to be suppliedunder Article 9(3)(b) of the Sixth Directive

28 By way of derogation from the rule set out in the preceding paragraph, Article 9(3)(b) ofthe Sixth Directive permits a Member State, in order to avoid non-taxation in respect ofthe supply of services referred to in Article 9(2)(e) of that directive, to consider the placeof supply of services, which under that article would be situated outside the Community, as being within the territory of the country if the effective use andenjoyment of the services take place within that territory.

29 The country within which the effective use and enjoyment of the services take place,within the meaning of Article 9(3)(b) of the Sixth Directive, is to be understood, withregard to advertising services, as referring to the country from which the advertisingmaterial is disseminated.

Irrespective of the fact that the recipients of those services may be located throughoutthe world, the Italian media undoubtedly operates primarily in Italy.

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30

ATHESIA DRUCK

31 The effective use and enjoyment of the advertising material must therefore, in circumstances such as those in the main proceedings, be regarded as taking place inItaly.

32 It follows that, where the option available under that provision is exercised and asituation exists such as that in the main proceedings, the tax authorities of the MemberState concerned would be justified, pursuant to Article 9(2) in conjunction withArticle 9(3) of the Sixth Directive, in regarding the advertising services provided by thesupplier to the customer, be that the final or intermediate customer, as supplied in theterritory of that State and liable to VATas such, but they would not be entitled to regard as being thus liable advertising services provided by an intermediate customer established outside the Community to his own clients.

33 Where services are supplied, according to the criteria laid down in Article 9(1) of theSixth Directive, outside the Community (the principal place of business in a non-Member state and no fixed establishment in a Member State) and are not referred to inArticle 9(2)(e), such a supply of services cannot benefit from the derogation providedfor in Article 9(3)(b) of the Sixth Directive.

Whether the concept of a tax representative has any effect on the determination of theplace where advertising services are deemed to be supplied

34 It should be pointed out that whether a tax representative is appointed, as referred to inparticular in Article 2(3) of the Thirteenth Directive and Article 17 of the VAT Decree,does not, of itself, have any effect on whether the services received or provided by therepresented person are liable to VAT, since the sole purpose of the system of representation is to enable the tax authorities to have an intermediary at national levelwhere the taxable person is established abroad.

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35 That is not the case, however, where the tax representative plays an economic role in thesupply of services in question but, in such circumstances, it is on account of that roleand not his capacity as tax representative that the transactions entered into by him aresubject to tax.

36 It is, however, apparent from the documents before the Court and what was stated bythe Italian Government at the hearing that, in the main proceedings, Athesia Druck didnot play any economic role in the supply of services in question and cannot therefore beregarded as an intermediary for the purpose of Article 6(4) of the Sixth Directive.

Whether the determination of the place where the advertising services are deemed to besupplied has any effect on the right to the refund of VAT

37 It should be noted that the fact that the supply of services for the purpose of Article9(3)(b) of the Sixth Directive is subject to VAT does not preclude the taxable person’s right to the refund of VAT where he satisfies the conditions laid down in Article 2 of theThirteenth Directive.

38 In the light of all the foregoing considerations, the answer to the question referred is asfollows:

— with regard to advertising services, where the recipient of the services is establishedoutside the Community, the place of supply is, as a rule, according to Article 9(2)(e)of the Sixth Directive, defined as the place where that recipient has his principalplace of business. However, the Member States may exercise the option provided in

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ATHESIA DRUCK

Article 9(3)(b) of the Sixth Directive and define the place where the services inquestion are supplied, by way of derogation from that rule, as within the MemberState concerned;

— if the option available under Article 9(3)(b) of the Sixth Directive is exercised,advertising services provided by a supplier established in the Community to acustomer situated in a non-Member state, whether that customer is the final customer or an intermediate customer, are deemed to be supplied within theCommunity, provided that the effective use and enjoyment of the services, withinthe meaning of Article 9(3)(b) of the Sixth Directive, take place within the MemberState concerned. That is the case, with regard to advertising services, where theadvertising material being supplied is disseminated from the Member State concerned;

— advertising services provided by a supplier established outside the Community forhis own clients cannot be liable to VAT under Article 9(3)(b) of the Sixth Directive,even where that supplier acted in the capacity of intermediate customer in respectof an earlier supply of services, since such a supply of services does not fall withinthe scope of Article 9(2)(e) of that directive or, in more general terms, Article 9 ofthe directive as a whole, those being provisions which are expressly referred to inArticle 9(3)(b) of that directive;

— the fact that the supply of services for the purpose of Article 9(3)(b) of the SixthDirective is subject to VAT does not preclude the taxable person’s right to therefund of VAT where he satisfies the conditions laid down in Article 2 of the Thirteenth Directive; and

I - 1275

39


— whether a tax representative is appointed does not, of itself, have any effect onwhether the services received or provided by the represented person are liable toVAT.

Costs



With regard to advertising services, where the recipient of the services is established outside the European Community, the place of supply is, as a rule,according to Article 9(2)(e) of Sixth Council Directive 77/388/EEC of 17 May 1977on the harmonisation of the laws of the Member States relating to turnovertaxes — Common system of value added tax: uniform basis of assessment, asamended by Tenth Council Directive 84/386/EEC of 31 July 1984, defined as theplace where that recipient has his principal place of business. However, MemberStates may exercise the option provided in Article 9(3)(b) of Sixth Direct-

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ATHESIA DRUCK

ive 77/388, as amended, and define the place where the services in question aresupplied, by way of derogation from that rule, as within the Member Stateconcerned.

If the option available under Article 9(3)(b) of Sixth Directive 77/388, as amended,is exercised, advertising services provided by a supplier established in the European Community to a customer situated in a non-Member state, whether thatcustomer is the final customer or an intermediate customer, are deemed to besupplied within the European Community, provided that the effective use andenjoyment of the services, within the meaning of Article 9(3)(b) of Sixth Directive 77/388, as amended, take place within the Member State concerned.That is the case, with regard to advertising services, where the advertisingmaterial being supplied is disseminated from the Member State concerned.

Advertising services provided by a supplier established outside the EuropeanCommunity for his own clients cannot be liable to VAT under Article 9(3)(b) ofSixth Directive 77/388, as amended, even where that supplier acted in the capacityof intermediate customer in respect of an earlier supply of services, since such asupply of services does not fall within the scope of Article 9(2)(e) of that directiveor, in more general terms, Article 9 of the directive as a whole, those beingprovisions which are expressly referred to in Article 9(3)(b) of that directive.

The fact that the supply of services for the purpose of Article 9(3)(b) of SixthDirective 77/388, as amended, is subject to value added tax does not preclude thetaxable person’s right to the refund of VAT where he satisfies the conditions laiddown in Article 2 of Thirteenth Council Directive 86/560/EEC of 17 November

I - 1277


1986 on the harmonisation of the laws of the Member States relating to turnovertaxes — Arrangements for the refund of value added tax to taxable persons notestablished in Community territory.

Whether a tax representative is appointed does not, of itself, have any effect onwhether the services received or provided by the represented person are liable toVAT.

[Signatures]

I - 1278

Case C-62/08

UDV North America Inc. v

Brandtraders NV

(Reference for a preliminary rulingfrom the Hof van Cassatie)

(Article 104(3), second subparagraph, of the Rules of Procedure — Community trade mark — Regulation (EC) No 40/94 — Article 9(1)(a) and (2)(d) — Right of the

proprietor of a registered mark to prevent the use by a third party of a sign which isidentical to the mark — Concept of ‘use’ — Use of a sign which is identical to the markby a trade intermediary in its business papers — Intermediary acting in its own name

but on behalf of a vendor)

Order of the Court (Second Chamber), 19 February 2009 . . . . . . . . I - 1281


Community trade mark — Effects of Community trade marks — Rights conferred by a trade mark

(Council Regulation No 40/94, Art. 9(1)(a) and (2)(d))

I - 1279


The concept of ‘use’ for the purpose of Article 9(1)(a) and (2)(d) of Regulation No 40/94 on the Community trade mark covers a situation in which a trade inter-mediary, which is acting in its own name buton behalf of the vendor and is thus not an interested party in relation to trade in goods inwhich it is itself a contractual party, uses, in its

business papers, a sign which is identical witha Community trade mark in relation to goodsor services which are identical with those for which the mark is registered.

(see para. 54)

I - 1280

v

UDV NORTH AMERICA

ORDER OF THE COURT (Second Chamber)

19 February 2009 *

In Case C-62/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Hof van Cassatie(Belgium), made by decision of 7 February 2008, received at the Court on 18 February2008, in the proceedings

UDV North America Inc.

Brandtraders NV,


composed of C.W.A. Timmermans (Rapporteur), President of the Chamber, J.-C. Bonichot, K. Schiemann, P. Kūris and L. Bay Larsen, Judges,


I - 1281

ORDER OF 19. 2. 2009 — CASE C-62/08

Advocate General: D. Ruiz-Jarabo Colomer, Registrar: R. Grass,

having informed the referring court that the Court proposes to give its decision byreasoned order in accordance with the second subparagraph of Article 104(3) of itsRules of Procedure,

having invited the interested parties referred to in Article 23 of the Statute of the Courtof Justice to submit any observations they may have on that subject,


makes the following

Order

This reference for a preliminary ruling concerns the interpretation of Article 9(1)(a)and (2)(d) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1).

I - 1282

1

2

3

UDV NORTH AMERICA

The reference was made in the context of proceedings between UDV North AmericaInc. (‘UDV’), a company established in Stamford (United States of America), andBrandtraders NV (‘Brandtraders’), a company established in Zeebrugge (Belgium),concerning the use by Brandtraders of the Community trade mark Smirnoff Ice, ofwhich UDV is the proprietor.

Legal context

In the words of the seventh recital in the preamble to Regulation No 40/94:

‘… the protection afforded by a Community trade mark, the function of which is inparticular to guarantee the trade mark as an indication of origin, is absolute in the caseof identity between the mark and the sign and [between] the goods or services; … the protection applies also in cases of similarity between the mark and the sign and[between] the goods or services; … an interpretation should be given of the concept ofsimilarity in relation to the likelihood of confusion; … the likelihood of confusion, the appreciation of which depends on numerous elements and, in particular, on therecognition of the trade mark on the market, the association which can be made withthe used or registered sign, the degree of similarity between the trade mark and the signand between the goods or services identified, constitutes the specific condition for suchprotection.’

I - 1283

4

ORDER OF 19. 2. 2009 — CASE C-62/08

Article 9 of Regulation No 40/94, entitled ‘Rights conferred by a Community trade mark’, provides:

‘1. A Community trade mark shall confer on the proprietor exclusive rights therein.The proprietor shall be entitled to prevent all third parties not having his consent fromusing in the course of trade:

(a) any sign which is identical with the Community trade mark in relation to goods orservices which are identical with those for which the Community trade mark isregistered;

(b) any sign where, because of its identity with or similarity to the Community trademark and the identity or similarity of the goods or services covered by theCommunity trade mark and the sign, there exists a likelihood of confusion on thepart of the public; the likelihood of confusion includes the likelihood of associationbetween the sign and the trade mark;

(c) any sign which is identical with or similar to the Community trade mark in relationto goods or services which are not similar to those for which the Community trademark is registered, where the latter has a reputation in the Community and whereuse of that sign without due cause takes unfair advantage of, or is detrimental to, thedistinctive character or the repute of the Community trade mark.

I - 1284

UDV NORTH AMERICA

2. The following, inter alia, may be prohibited under paragraph 1:

(a) affixing the sign to the goods or to the packaging thereof;

(b) offering the goods, putting them on the market or stocking them for these purposesunder that sign, or offering or supplying services thereunder;

(c) importing or exporting the goods under that sign;

(d) using the sign on business papers and in advertising.

…’

I - 1285

ORDER OF 19. 2. 2009 — CASE C-62/08


5 UDV is the proprietor of the Community trade mark Smirnoff Ice. That mark wasregistered under No 001540913, with effect from 6 March 2000, for goods within Class33 of the Nice Agreement concerning the International Classification of Goods andServices for the Purposes of the Registration of Marks of 15 June 1957, as revised andamended, in respect of goods corresponding to the description ‘Alcoholic beverages, namely, distilled spirits, and liqueurs’.

6 Brandtraders operates a website (‘the website’) on which member companies cananonymously place advertisements, as either vendors or purchasers, and on which theycan, also anonymously, negotiate their transactions and possibly reach an agreement inaccordance with the general terms and conditions to be found on that site.

7 Non-members can also visit the website where they can consult the offers and requests,although they are not provided with any information about the location of the goods orthe price which is sought for them.

In accordance with the general terms and conditions, Brandtraders, as soon as it isinformed of an agreement, concludes with the purchaser a contract of sale for commission, acting as the vendor’s broker, that is to say, in its own name but on behalf of the vendor.

I - 1286

8

9

UDV NORTH AMERICA

On 11 December 2001, a vendor placed an offer on the website for goods described as‘Smirnoff Ice/24 btl/30 cl/5%’, indicating the quantity available and the fact that thosewere goods with the customs status ‘T1’, that is to say, goods in external Community transit.

10 On 13 December 2001, at the request of UDV, a court bailiff drew up a report whichincludes a full copy of the website, and therefore of the offer relating to the goods inquestion, in the form accessible to non-members.

11 On 19 December 2001, following an ex parte application for an injunction brought byUDV, the voorzitter van de rechtbank van koophandel te Brussel (President of theCommercial Court of Brussels) ordered Brandtraders to maintain the goods concernedas they were, subject to a periodic penalty payment of EUR 500 per item not somaintained. That order also appointed an expert in order to describe in more detail thealleged infringement.

12 In the light, in particular, of the expert’s report, the facts in the main proceedings weresubsequently established as follows, as is apparent from the order for reference and thefile.

Following the offer which it had placed on the website, Hillyard Trading Ltd (‘Hillyard’),a company established in Gibraltar, reached an agreement with Checkprice UK Ltd(‘Checkprice’), a company established in Norwich (United Kingdom), for the sale toCheckprice of 3 040 cases of 24 bottles of Smirnoff Ice from Cape Town (South Africa).

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13

14

ORDER OF 19. 2. 2009 — CASE C-62/08

On 3 September 2001, Brandtraders, in its own name but on behalf of Hillyard, enteredinto a contract of sale with Checkprice, adopting the terms and conditions of sale agreedby Hillyard and Checkprice, and also sent a letter to Hillyard confirming the conclusionof that contract. The mark Smirnoff Ice was mentioned in that letter of confirmation, but not in the contract of sale. In that letter, it was also stated that Brandtraders was acting in its own name but on behalf of the vendor.

15 On 15 October 2001, Brandtraders issued an invoice to Checkprice for 2 846 cases ofgoods without customs clearance, 194 cases having been damaged during unloading.That invoice included the sale price, plus Brandtraders’ commission. It mentioned the Smirnoff Ice mark.

16 Following payment of that invoice on 22 October 2001, the goods, unloaded in the portof Felixstowe (United Kingdom), were made available to Checkprice. Subsequently,they were put into free circulation.

17 On 30 October 2001, after receipt of a credit note issued on 29 October 2001 by Hillyardfor the damaged cases, Brandtraders paid the invoice which Hillyard had issued to it on18 September 2001 for the goods concerned. That invoice mentioned the Smirnoff Icemark.

On 28 December 2001, UDVsought an injunction against Brandtraders in proceedingsbefore the voorzitter van de rechtbank van koophandel te Brussel, hearing an application for interim relief.

I - 1288

18

19

UDV NORTH AMERICA

By order of 19 April 2002, that application was declared to be admissible and wellfounded.

20 According to that order, given following inter partes proceedings, Brandtradersinfringed Article 9(1) and (2) of Regulation No 40/94 on account of the fact that, first, on3 September 2001 it purchased a consignment of bottles of Smirnoff Ice from Hillyardwhich it resold to Checkprice, second, it had previously advertised for that transactionon the website and, finally, it again advertised for such a transaction on that site on13 December 2001. Furthermore, Brandtraders was ordered not to repeat thoseinfringements, subject to a periodic penalty payment of EUR 100 per infringement.

21 Hearing the appeal against that order, the hof van beroep te Brussel (Court of Appeal,Brussels), by judgment of 23 September 2003, annulled the order and dismissed asunfounded UDV’s application for an injunction.

22 That court decided, first, that the unloading of the goods in the port of Felixstowe byBrandtraders’ logistical partner could not possibly amount to use of the Smirnoff Icemark by Brandtraders.

Second, according to the hof van beroep te Brussel, since the references on the websitewere not put there by Brandtraders and that company has, moreover, no control overthe offers placed on that site, the offer of the goods with the Smirnoff Ice mark at issue in

I - 1289

23

ORDER OF 19. 2. 2009 — CASE C-62/08

the main proceedings cannot be attributed to Brandtraders. That court concluded that,in this case, there is no ‘use’ for the purpose of Article 9(2)(b) of Regulation No 40/94.

24 Third, concerning the mention of the Smirnoff Ice mark in Brandtraders’ business papers, particularly in the letter of confirmation and the invoices, the hof van beroep teBrussel held that it amounts to use in the course of trade which is made, furthermore, in the territory of the Community even if, in some circumstances, the goods are not in thatterritory.

25 However, according to that court, since Brandtraders did not use the sign which isidentical to a mark at issue in the main proceedings as an interested party in relation totrade in goods in which it was itself a contractual party, given that it was acting on behalfof a third party, in this case the vendor, that company did not make use of that sign forthe purpose of Article 9(1)(a) and (2)(d) of Regulation No 40/94.

26 UDV brought an appeal before the Hof van Cassatie (Court of Cassation) against thejudgment of 23 September 2003 claiming that, contrary to the findings of the hof vanberoep te Brussel, it is not necessary, for the application of Article 9(1)(a) and (2)(d) ofRegulation No 40/94, that the third party concerned, in this case Brandtraders acting asa trade intermediary, act on its own behalf and/or use the sign at issue as an interestedparty in relation to trade in goods in which it is itself a contractual party, in order for it tobe considered to have made use of that sign for the purpose of those provisions.

I - 1290

UDV NORTH AMERICA

27 In those circumstances, the Hof van Cassatie decided to stay the proceedings and torefer the following questions to the Court for a preliminary ruling:

‘(1) For there to be use of the sign within the meaning of Article 9(1)(a) and (2)(d) of …Regulation No 40/94 …, is it necessary that a third party, within the meaning ofArticle 9(1)(a) of [that] regulation:

(a) uses the sign on his own behalf?

(b) uses the sign as an interested party in relation to trade in goods in which he ishimself a contractual party?

(2) Can a trade intermediary who acts in his own name, but not on his own behalf, beregarded as a third party who uses the sign within the meaning of Article 9(1)(a)and (2)(d)?’


28 Since the answer to the questions referred admits of no reasonable doubt, the Court, inaccordance with the second subparagraph of Article 104(3) of its Rules of Procedure,informed the referring court that it proposed to give its decision by reasoned order and

I - 1291

ORDER OF 19. 2. 2009 — CASE C-62/08

invited the interested parties referred to in Article 23 of the Statute of the Court ofJustice to submit any observations they might have on that subject.

29 In its response to the Court’s invitation, UDV did not make any objection to the Court’s intention to give its decision by reasoned order. The United Kingdom Governmentresponded to that invitation by stating that it did not wish to submit any observationson that subject.

30 By its questions, the referring court is asking, in essence, whether the concept of ‘use’for the purpose of Article 9(1)(a) and (2)(d) of Regulation No 40/94 covers a situation,such as that at issue in the main proceedings, in which a trade intermediary, which isacting in its own name but on behalf of the vendor and is thus not an interested party inrelation to trade in goods in which it is itself a contractual party, uses, in its businesspapers, a sign which is identical with a Community trade mark in relation to goods orservices which are identical with those for which the mark is registered.

31 As a preliminary point, it should, first, be noted that one of the infringementsBrandtraders is alleged to have committed, on which the hof van beroep te Brussel ruledto the effect that the mention on the website of the Smirnoff Ice mark, as appearing inthe offer at issue in the main proceedings, cannot be attributed to Brandtraders anddoes not amount therefore to ‘use’ for the purpose of Article 9(2)(b) of Regulation No 40/94, is not the subject of UDV’s appeal before the Hof van Cassatie or, therefore, ofthe reference for a preliminary ruling.

32 As a result, there is no need to address the arguments put forward by Brandtraders in itswritten observations in so far as they relate to that alleged infringement.

I - 1292

33

UDV NORTH AMERICA

Second, there is also no need to examine the arguments that Brandtraders raises in itswritten observations relating to principles arising from the case-law of the Court, inparticular, Case C-405/03 Class International [2005] ECR I-8735, on the subject ofgoods placed under the external transit customs procedure and concerning actsconsisting in offering or importing goods under a sign which is identical with or similarto a registered mark, such as those referred to in Article 9(2)(b) and (c) of RegulationNo 40/94.

34 Indeed, the infringement alleged in the main proceedings concerns acts relating to theuse of such a sign in business papers, such as those referred to in Article 9(2)(d) ofRegulation No 40/94, which, according to the hof van beroep te Brussel and as wasstated in paragraph 24 above, are carried out in the territory of the Community even if,in some circumstances, the goods are not in that territory.

35 However, since the judgment of the hof van beroep te Brussel has not been subject onthat point to an appeal in cassation before the referring court, the legal question decidedby the hof van beroep te Brussel is not covered by the present reference for a preliminaryruling.

36 It is apparent from the order for reference that the questions submitted for a preliminary ruling derive from the argument, put forward by Brandtraders before thehof van beroep te Brussel and accepted by that court, according to which the mentionby that company of the Smirnoff Ice mark in its business papers, in particular in theletter of confirmation and the invoices, does not amount to use of a sign which isidentical with a registered mark for the purpose of Article 9(1)(a) and (2)(d) ofRegulation No 40/94, since Brandtraders did not use the sign as an interested party inrelation to trade in goods in which it was itself a contractual party, in view of the fact thatit acted on behalf of a third party, in this case the vendor.

I - 1293

ORDER OF 19. 2. 2009 — CASE C-62/08

37 In its written observations, Brandtraders based that argument on the followingreasoning, which reproduces that put forward before the hof van beroep te Brussel.

38 Under Belgian law, a broker such as that at issue in the main proceedings acts in his ownname but on behalf of a third party, the principal, in this case the vendor. Thus, if he actsin a contract of sale on behalf of a vendor, the broker does not acquire title to the goods.

39 In the belief that it can derive an argument by analogy from the case-law of the BeneluxCourt of Justice, Brandtraders claims that the use by a third party of a sign which isidentical with a registered mark must relate to that third party’s own goods in order forthe proprietor of that mark to be able to prevent the use by virtue of his exclusive rights.

40 Since, in this case, the use of that sign by the broker by definition does not concern itsown goods, the proprietor of the mark at issue could not oppose it by reason of itsexclusive rights.

41 That argument must be rejected.

42 Indeed, having regard to the established case-law of the Court concerning the conceptof ‘use’ within the meaning of Article 5(1) of First Council Directive 89/104/EEC of21 December 1988 to approximate the laws of the Member States relating to trademarks (OJ 1989 L 40, p. 1) (see, inter alia, Case C-206/01 Arsenal Football Club [2002] ECR I-10273; Case C-245/02 Anheuser-Busch [2004] ECR I-10989; Case

I - 1294

UDV NORTH AMERICA

C-48/05 Adam Opel [2007] ECR I-1017; Case C-17/06 Céline [2007] ECR I-7041 and Case C-533/06 O2 Holdings and O2 (UK) [2008] ECR I-4231, paragraph 57), a provisionwhich is identical to Article 9(1) of Regulation No 40/94 and must be interpreted in thesame way, in order for the proprietor of a mark to be able to invoke its exclusive rights,in a situation such as that at issue in the main proceedings, which comes within thescope of that referred to in the abovementioned Articles 5 and 9(1)(a), namely the use bya third party of any sign which is identical with that mark in relation to goods or serviceswhich are identical with those for which that mark was registered, it suffices that thefollowing four conditions be fulfilled:

— that use is without the consent of the proprietor of the mark,

— it is in the course of trade,

— it is in relation to goods or services,

— the third party uses that sign as a trade mark, that is to say that the use of that sign bythe third party must affect or be capable of affecting the functions of the trade mark,in particular its essential function of guaranteeing to consumers the origin of thegoods or services.

In light of those conditions for application, the fact that the third party at issue uses asign which is identical with a registered mark in relation to goods which are not its own

I - 1295

43

ORDER OF 19. 2. 2009 — CASE C-62/08

goods, in that it does not have title to them, is not relevant and can therefore not meanby itself that that use does not fall under the concept of ‘use’ for the purpose of Article 9(1) of Regulation No 40/94.

44 First, the Court has held that, for that use to be considered to be in the course of trade, it must take place in the context of commercial activity with a view to economicadvantage and not as a private matter (Arsenal Football Club, paragraph 40).

45 In the present case, the use at issue in the main proceedings by an operator such asBrandtraders is clearly in the context of a commercial activity with a view to economicadvantage.

46 Indeed, it is common ground that, in the main proceedings, Brandtraders acted in acontract of sale and received remuneration for that action. The fact that, in that context, the broker acted on behalf of the vendor is in that regard irrelevant.

47 In addition, it is clear that the use at issue in the main proceedings is in relation to goodssince, even though it is not a case of affixing to a third party’s goods a sign which is identical with a registered mark, there is use ‘in relation to goods or services’ within the meaning of Article 9(1)(a) of Regulation No 40/94 where the third party uses that sign insuch a way that a link is established between the sign and the goods marketed or the

I - 1296

UDV NORTH AMERICA

services provided by the third party, in the main proceedings in the form of the use ofthe sign at issue in business papers (see, to that effect, Arsenal Football Club, paragraph 41, and Céline, paragraphs 22 and 23).

48 Since such a link is established, it is, besides, irrelevant that the third party uses a signwhich is identical with a registered mark for the marketing of goods which are not itsown goods in the sense that it does not acquire title to those goods in the course of thetransaction in which it acts.

49 It cannot, furthermore, be disputed that the use of that sign by the third party, in asituation such as that at issue in the main proceedings, is likely to be interpreted by thepublic targeted as designating or tending to designate the third party as the undertakingfrom which the goods originate and is therefore such as to create the impression thatthere is a material link in trade between those goods and the undertaking from whichthey originate (see, to that effect, Anheuser-Busch, paragraph 60).

50 Indeed, by such use, the third party assumes de facto the essential prerogative that isgranted to the proprietor of a mark, namely the exclusive power to use the sign at issueso as to distinguish goods.

In such a case, this is clearly a question of use of the mark as a mark. In that regard, it is,moreover, irrelevant that the use is by the third party in the context of the marketing ofgoods on behalf of another operator having sole title to those goods.

I - 1297

51

52

ORDER OF 19. 2. 2009 — CASE C-62/08

Finally, it is common ground that the use of the sign at issue in the main proceedings byBrandtraders was not authorised by UDV.

53 It follows that the use by a third party of a sign which is identical to a registered mark, incircumstances such as those in the main proceedings, falls under the concept of ‘use’ for the purpose of Article 9(1) of Regulation No 40/94 since all the conditions of application laid down in that provision with regard to that concept are clearly fulfilled.

54 In light of the above, the answer to the questions referred is that the concept of ‘use’ for the purpose of Article 9(1)(a) and (2)(d) of Regulation No 40/94 covers a situation, suchas that at issue in the main proceedings, in which a trade intermediary, which is acting inits own name but on behalf of the vendor and is thus not an interested party in relationto trade in goods in which it is itself a contractual party, uses, in its business papers, asign which is identical with a Community trade mark in relation to goods or serviceswhich are identical with those for which the mark is registered.

Costs


I - 1298

55

UDV NORTH AMERICA

On those grounds, the Court (Second Chamber) hereby rules:

The concept of ‘use’ for the purpose of Article 9(1)(a) and (2)(d) of CouncilRegulation (EC) No 40/94 of 20 December 1993 on the Community trade markcovers a situation, such as that at issue in the main proceedings, in which a tradeintermediary, which is acting in its own name but on behalf of the vendor and isthus not an interested party in relation to trade in goods in which it is itself acontractual party, uses, in its business papers, a sign which is identical with aCommunity trade mark in relation to goods or services which are identical withthose for which the mark is registered.

[Signatures]

I - 1299

CHRONOLOGICAL TABLE OF THE DECISIONS PUBLISHEDFOR THE YEAR 2009

Section I — Court of Justice

Part 1

Joined Cases C-512/07 P(R) and C-15/08 P(R): Achille Occhetto andEuropean Parliament v Beniamino Donnici (Appeal — Application for interim measures — Suspension of operation of a measure — Members of the European Parliament — Verification of credentials — Declaration of election of a member as a result of the withdrawal of candidates on the same list —Verification of the validity of the withdrawal —Decision of the European Parliament declaring invalid the mandate of a candidate declared to be a member) . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 1

Order of the President of the Court, 13 January 2009 . . . . . . . . . . . . I - 6

Case C-140/07: Hecht-Pharma GmbH v Staatliches GewerbeaufsichtsamtLüneburg (Directive 2001/83/EC — Articles 1(2) and 2(2) — Concept of ‘medicinal product by function’ — Product in respect of which it has notbeen established that it is a medicinal product by function — Account taken of the content in active substances) (Reference for a preliminaryruling from the Bundesverwaltungsgericht) . . . . . . . . . . . . . . . . . . I - 41

Opinion of Advocate General Trstenjak delivered on 19 June 2008 . . . . I - 44

Judgment of the Court (First Chamber), 15 January 2009 . . . . . . . . . . I - 72

Case C-281/07: Hauptzollamt Hamburg-Jonas v Bayerische Hypotheken-und Vereinsbank AG (Regulation (EC, Euratom) No 2988/95 —Protection of the European Communities’ financial interests — Article 3 — Recovery of an export refund — Error on the part of the national authorities —Limitation period) (Reference for a preliminary ruling from the Bundesfinanzhof) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 91

Opinion of Advocate General Sharpston delivered on 25 September 2008 I - 93

Judgment of the Court (Second Chamber), 15 January 2009 . . . . . . . . I - 103

I - I

Case C-383/07: M-K Europa GmbH & Co. KG v Stadt Regensburg (Reference for a preliminary ruling — Regulation (EC) No 258/97 —Article 1(1) to (3) — Novel foods and novel food ingredients) (Referencefor a preliminary ruling from the Bayerischer Verwaltungsgerichtshof) I - 115


Case C-495/07: Silberquelle GmbH v Maselli-Strickmode GmbH (Trademarks — Directive 89/104/EEC — Articles 10 and 12 — Revocation —Concept of ‘genuine use’ of a mark — Affixing the mark to promotional items — Distribution of such items free of charge to the purchasers ofgoods sold by the mark’s proprietor) (Reference for a preliminary rulingfrom the Oberster Patent- und Markensenat) . . . . . . . . . . . . . . . . I - 137

Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 18 November 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 139


Case C-502/07: K-1 sp. z o.o. v Dyrektor Izby Skarbowej w Bydgoszczy(VAT — Irregularities in the tax declaration submitted by a taxable person — Additional tax) (Reference for a preliminary ruling from theNaczelny Sąd Administracyjny) . . . . . . . . . . . . . . . . . . . . . . . . . I - 161


Joined Cases C-350/06 and C-520/06: Gerhard Schultz-Hoff v DeutscheRentenversicherung Bund and Stringer and Others v Her Majesty’s Revenue and Customs (Working conditions — Organisation of working time — Directive 2003/88/EC — Right to paid annual leave — Sick leave —Annual leave coinciding with sick leave — Compensation for paid annual leave not taken before the end of the contract because of sickness) (References for a preliminary ruling from the Landesarbeitsgericht Düsseldorf and the House of Lords) . . . . . . . . . . . . . . . . . . . . . . I - 179

Opinion of Advocate General Trstenjak delivered on 24 January 2008 . . I - 182

Opinion of Advocate General Trstenjak delivered on 24 January 2008 . . I - 210

Judgment of the Court (Grand Chamber), 20 January 2009 . . . . . . . . . I - 240

I - II

Case C-240/07: Sony Music Entertainment (Germany) GmbH v FalconNeue Medien Vertrieb GmbH (Rights related to copyright — Rights of phonogram producers — Reproduction right — Distribution right —Term of protection — Directive 2006/116/EC — Rights of nationals of non-Member States) (Reference for a preliminary ruling from the Bundesgerichtshof) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 263

Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 22 May2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 266


Case C-377/07: Finanzamt Speyer-Germersheim v STEKO Industriemontage GmbH (Corporation tax — Transitional provisions —Deduction of the depreciation of holdings in non-resident companies)(Reference for a preliminary ruling from the Bundesfinanzhof) . . . . . . I - 299


Case C-473/07: Association nationale pour la protection des eaux etrivières-TOS and Association OABA v Ministère de l’Ecologie, du Développement et de l’Aménagement durables (Pollution and nuisance — Directive 96/61/EC — Annex I — Subheading 6.6(a) —Intensive rearing of poultry — Definition — Meaning of ‘poultry’ —Maximum number of animals per installation) (Reference for a preliminary ruling from the Conseil d’État (France)) . . . . . . . . . . . . I - 319

Opinion of Advocate General Mengozzi delivered on 6 November 2008 I - 321


Case C-318/07: Hein Persche v Finanzamt Lüdenscheid (Free movementof capital — Income tax — Deduction of gifts to bodies recognised as charitable — Deduction restricted to gifts to national bodies — Gifts in kind — Directive 77/799/EEC — Mutual assistance by the competentauthorities of the Member States in the field of direct taxation) (Referencefor a preliminary ruling from the Bundesfinanzhof) . . . . . . . . . . . . . I - 359

Opinion of Advocate General Mengozzi delivered on 14 October 2008 I - 363


I - III

Case C-311/06: Consiglio Nazionale degli Ingegneri v Ministero dellaGiustizia and Marco Cavallera (Recognition of diplomas —Directive 89/48/EEC — Homologation of an educational qualification —Engineer) (Reference for a preliminary ruling from the Consiglio di Stato) I - 415

Opinion of Advocate General Poiares Maduro delivered on 28 February2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Judgment of the Court (Second Chamber), 29 January 2009 . . . . . . . .

I - 417

I - 435

Joined Cases C-278/07 to C-280/07: Hauptzollamt Hamburg-Jonas v JosefVosding Schlacht-, Kühl- und Zerlegebetrieb GmbH & Co. and Others(Regulation (EC, Euratom) No 2988/95 — Protection of the European Communities’ financial interests — Article 3 — Recovery of an export refund — Determining the limitation period — Irregularities committedbefore the entry into force of Regulation No 2988/95 — Rule on limitation forming part of the general civil law of a Member State) (References for apreliminary ruling from the Bundesfinanzhof) . . . . . . . . . . . . . . . .

Opinion of Advocate General Sharpston delivered on 25 September 2008

Judgment of the Court (Second Chamber), 29 January 2009 . . . . . . . .

I - 457

I - 460

I - 477

Case C-19/08: Migrationsverket v Edgar Petrosian and Others (Right ofasylum — Regulation (EC) No 343/2003 — Taking back by a Member Stateof an asylum seeker whose application has been refused and who is inanother Member State where he has submitted a fresh asylum application — Start of the period for implementation of transfer of the asylum seeker — Transfer procedure the subject-matter of an appealhaving suspensive effect) (Reference for a preliminary ruling from theKammarrätten i Stockholm, Migrationsöverdomstolen) . . . . . . . . . . I - 495

Judgment of the Court (Fourth Chamber), 29 January 2009 . . . . . . . . I - 497

I - IV

Part 2

Case C-110/05: Commission of the European Communities v Italian Republic (Failure of a Member State to fulfil obligations —Article 28 EC —Concept of ‘measures having equivalent effect to quantitative restrictions on imports’ — Prohibition on mopeds, motorcycles, motor tricycles andquadricycles towing a trailer in the territory of a Member State — Road safety — Market access — Obstacle — Proportionality) . . . . . . . . . . . I - 519

Opinion of Advocate General Léger delivered on 5 October 2006 . . . . . I - 522

Opinion of Advocate General Bot delivered on 8 July 2008 . . . . . . . . . I - 535

Judgment of the Court (Grand Chamber), 10 February 2009 . . . . . . . . I - 568

Case C-301/06: Ireland v European Parliament and Council of the European Union (Action for annulment — Directive 2006/24/EC —Retention of data generated or processed in connection with the provisionof electronic communications services — Choice of legal basis) . . . . . . I - 593

Opinion of Advocate General Bot delivered on 14 October 2008 . . . . . I - 595


Case C-185/07: Allianz SpA, formerly Riunione Adriatica di Sicurtà SpAand Generali Assicurazioni Generali SpA v West Tankers Inc. (Recognition and enforcement of foreign arbitral awards — Regulation (EC) No 44/2001 — Scope of application — Jurisdiction of a court of a Member State to issue an order restraining a party from commencing orcontinuing proceedings before a court of another Member State on theground that those proceedings would be contrary to an arbitration agreement — New York Convention) (Reference for a preliminary rulingfrom the House of Lords) . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 663

Opinion of Advocate General Kokott delivered on 4 September 2008 . . . I - 666


I - V

Case C-45/07: Commission of the European Communities v HellenicRepublic (Failure of a Member State to fulfil obligations — Articles 10 EC, 71 EC and 80(2) EC — Maritime safety — Monitoring of ships and port facilities — International agreements — Division of powers between the Community and the Member States) . . . . . . . . . . . . . . . . . . . . . . I - 701

Opinion of Advocate General Bot delivered on 20 November 2008 . . . . I - 704


Case C-138/07: Belgische Staat v Cobelfret NV (Directive 90/435/EEC —Article 4(1) — Direct effect — National legislation designed to preventdouble taxation of distributed profits — Deduction of the amount of dividends received from a parent company’s basis of assessment only in sofar as it has made taxable profits) (Reference for a preliminary ruling fromthe hof van beroep te Antwerpen) . . . . . . . . . . . . . . . . . . . . . . . I - 731

Opinion of Advocate General Sharpston delivered on 8 May 2008 . . . . I - 734

Judgment of the Court (First Chamber), 12 February 2009 . . . . . . . . . I - 743

Case C-339/07: Christopher Seagon, in his capacity as liquidator in respectof the assets of Frick Teppichboden Supermärkte GmbH v Deko MartyBelgium NV (Judicial cooperation in civil matters — Insolvency proceedings — Court with jurisdiction) (Reference for a preliminary ruling from the Bundesgerichtshof) . . . . . . . . . . . . . . . . . . . . . . I - 767

Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 16 October 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 769


Case C-466/07: Dietmar Klarenberg v Ferrotron Technologies GmbH(Social policy — Directive 2001/23/EC — Transfer of undertakings —Safeguarding of employees’ rights — Concept of ‘transfer’ — Legal transfer of a part of a business to another undertaking — Organisationalautonomy following the transfer) (Reference for a preliminary ruling fromthe Landesarbeitsgericht Düsseldorf) . . . . . . . . . . . . . . . . . . . . . I - 803

Opinion of Advocate General Mengozzi delivered on 6 November 2008 I - 805

Judgment of the Court (Fourth Chamber), 12 February 2009 . . . . . . . . I - 819

I - VI

Case C-515/07: Vereniging Noordelijke Land- en Tuinbouw Organisatie vStaatssecretaris van Financiën (Sixth VAT Directive — Goods and services forming part of the assets of a business for use in taxable transactions andin transactions other than taxable transactions — Right to an immediateand full deduction of the tax paid in respect of the acquisition of suchgoods and services) (Reference for a preliminary ruling from the HogeRaad der Nederlanden) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 839

Opinion of Advocate General Mengozzi delivered on 22 December 2008 I - 841


Case C-67/08: Margarete Block v Finanzamt Kaufbeuren (Free movementof capital — Articles 56 EC and 58 EC — Inheritance tax — National rules not allowing inheritance tax in respect of capital claims, paid by an heir inone Member State, to be credited against inheritance tax payable inanother Member State where the owner of the assets was resident at the time of death — Double taxation — Restriction — None) (Reference for a preliminary ruling from the Bundesfinanzhof) . . . . . . . . . . . . . . . . I - 883

Judgment of the Court (Third Chamber), 12 February 2009 . . . . . . . . I - 885

Case C-93/08: Schenker SIA v Valsts ieņēmumu dienests (Reference for a preliminary ruling — Regulation (EC) No 1383/2003 — Article 11 —Simplified procedure of abandoning goods for destruction — Prior determination whether an intellectual property right has been infringed — Administrative penalty) (Reference for a preliminary rulingfrom the Augstākās tiesas Senāta Administratīvo lietu departaments) I - 903


Case C-465/07: Meki Elgafaji and Noor Elgafaji v Staatssecretaris vanJustitie (Directive 2004/83/EC — Minimum standards for determiningwho qualifies for refugee status or for subsidiary protection status —Person eligible for subsidiary protection — Article 2(e) — Real risk of suffering serious harm —Article 15(c) — Serious and individual threat to a civilian’s life or person by reason of indiscriminate violence in situations ofarmed conflict —Proof) (Reference for a preliminary ruling from the Raad van State) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 921

Opinion of Advocate General Poiares Maduro delivered on 9 September2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 924


I - VII

Case C-483/07 P: Galileo Lebensmittel GmbH & Co. KG v Commission ofthe European Communities (Appeal — Action for annulment —Registration by the Commission of the domain ‘galileo.eu’ — Fourth paragraph of Article 230 EC — Decision of individual concern to a natural or legal person — Action manifestly unfounded) . . . . . . . . . . . . . . . I - 959

Order of the Court (Sixth Chamber), 17 February 2009 . . . . . . . . . . . I - 962

Case C-552/07: Commune de Sausheim v Pierre Azelvandre (Directive 2001/18/EC — Deliberate release of genetically modified organisms — Location of release — Confidentiality) (Reference for a preliminary ruling from the Conseil d’État (France)) . . . . . . . . . . . . I - 987

Opinion of Advocate General Sharpston delivered on 22 December 2008 I - 991


Case C-228/06: Mehmet Soysal and Ibrahim Savatli v BundesrepublikDeutschland (EEC-Turkey Association Agreement — Freedom to provide services — Visa requirement for admission to the territory of a Member State) (Reference for a preliminary ruling from the Oberverwaltungsgericht Berlin-Brandenburg) . . . . . . . . . . . . . . . . I - 1031


Case C-308/07 P: Koldo Gorostiaga Atxalandabaso v European Parliament (Appeal — Rules concerning the expenses and allowances toMembers of the European Parliament — Recovery of improperly paid sums by means of offsetting — Enforcement of a judgment of the Court of First Instance — Right to an impartial tribunal — Res judicata — Principle of sound administration) . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 1059

Opinion of Advocate General Trstenjak delivered on 11 September 2008 I - 1062


I - VIII

Case C-321/07: Criminal proceedings against Karl Schwarz (Directive 91/439/EEC — Holding of driving licences from different Member States — Validity of a driving licence issued before the accession of a State — Withdrawal of a second driving licence issued by the MemberState of residence — Recognition of a driving licence issued before theissue of a second licence later withdrawn on the ground that the holder wasunfit — Expiry of the period accompanying a measure withdrawing adriving licence during which no application may be made for the issue of a new driving licence) (Reference for a preliminary ruling from the Landgericht Mannheim) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 1113

Opinion of Advocate General Bot delivered on 6 November 2008 . . . . . I - 1116


Case C-376/07: Staatssecretaris van Financiën v Kamino InternationalLogistics BV (Common Customs Tariff — Combined Nomenclature —Tariff classification — Monitors of the liquid crystal display (LCD) typewith SUB-D, DVI-D, USB, S-video and composite-video sockets —Heading 8471 — Heading 8528 — Regulation (EC) No 754/2004)(Reference for a preliminary ruling from the Hoge Raad der Nederlanden) I - 1167

Opinion of Advocate General Mengozzi delivered on 10 September 2008 I - 1171


Case C-557/07: LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH v Tele2 Telecommunication GmbH (Article 104(3) of the Rules of Procedure — Information society —Copyright and related rights — Saving and disclosure of certain traffic data — Protecting the confidentiality of electronic communications —‘Intermediaries’ within the meaning of Article 8(3) of Directive 2001/29/EC) (Reference for a preliminary ruling from the Oberster Gerichtshof) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 1227

Order of the Court (Eighth Chamber), 19 February 2009 . . . . . . . . . . I - 1230

Case C-1/08: Athesia Druck Srl v Ministero dell’Economia e delle Finanze and Agenzia delle Entrate (Sixth VAT Directive — Article 9(2)(e) —Article 9(3)(b) — Thirteenth VAT Directive — Article 2 — Place where services are supplied — Advertising services — Reimbursement of VAT —Tax representative) (Reference for a preliminary ruling from the Cortesuprema di cassazione) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 1255


I - IX

Case C-62/08: UDV North America Inc. v Brandtraders NV (Article 104(3), second subparagraph, of the Rules of Procedure —Community trade mark — Regulation (EC) No 40/94 — Article 9(1)(a) and (2)(d) —Right of the proprietor of a registered mark to prevent the use by athird party of a sign which is identical to the mark — Concept of ‘use’ —Use of a sign which is identical to the mark by a trade intermediary in itsbusiness papers — Intermediary acting in its own name but on behalf of avendor) (Reference for a preliminary ruling from the Hof van Cassatie) I - 1279

Order of the Court (Second Chamber), 19 February 2009 . . . . . . . . . I - 1281

I - X

INFORMATION ON UNPUBLISHEDDECISIONS

Notice to readers of the European Court Reports

The attention of readers is drawn to the fact that the full texts of the decisions of the Court of Justice listed below are available on the Curia website (http://curia.europa.eu) in the language of the case and, whererelevant, in any other available language.

INFORMATION ON UNPUBLISHED DECISIONS

Order of the Court (Eighth Chamber) of 3 February 2009 —Giannini v Commission

(Case C-231/08 P)

(Appeal — Community civil service — Right to a fair hearing — Infringement of Articles 4, 27 and 29 of the Staff Regulations — Principle of non-discrimination —Interest of the service and duty of care — Distortion of the evidence and rules on

evidence — Appeal manifestly inadmissible in part and manifestly unfounded in part)

1. Procedure — Duration of the proceedings before the Court of First Instance —Reasonable time — Criteria for assessment — Consequences (see para. 30)

2. Appeals — Grounds — Mere repetition of the pleas and arguments put forwardbefore the Court of First Instance — Error of law relied on not identified —Inadmissible (Art. 225 EC; Statute of the Court of Justice, Art. 58, first para.;Rules of Procedure of the Court of Justice, Art. 112(1)(c)) (see paras 43-45)

3. Appeals — Grounds — Mistaken assessment of the facts — Inadmissibility —Review by the Court of Justice of the assessment of the evidence — Possible onlywhere the clear sense of the evidence has been distorted (Art. 225 EC; Statute ofthe Court of Justice, Art. 58) (see paras 62, 63, 68)

Re:

Appeal against the judgment of the Court of First Instance (Third Chamber) deliveredon 12 March 2008 in Case T-100/04 Gianniani v Commission in which the Court of First Instance dismissed the appellant’s application for annulment of the decision of theselection board in Competition COM/A/9/01, to constitute a reserve list for therecruitment of administrators in the fields of economics and statistics, not to include

I - 11*


his name on the competition reserve list and for damages to be awarded —Infringement of the right to a fair hearing by reason of the excessive length of theprocedure — Infringement of Articles 4, 27 and 29 of the Staff Regulations and theconcepts of interest of the service and duty of care — Infringement of the principle of non-discrimination and the rules on evidence.

Operative part


2. Mr Giannini is ordered to pay the costs.

Order of the Court (Third Chamber) of 5 February 2009 —Mechel Nemunas v Valstybinė mokesčių inspekcija prie Lietuvos

Respublikos finansų ministerijos

(Case C-119/08)

(First subparagraph of Article 104(3) of the Rules of Procedure —First VAT Directive —SixthVAT Directive —Article 33(1) —Concept of ‘turnover taxes’ — Tax calculated on the basis of an undertaking’s turnover to finance the maintenance and development

programme for national roads)

Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Prohibition on the levying of other domestic taxes which can be characterised as turnover taxes (Council Directive 77/388, Art. 33(1)) (see paras 34-38,operative part)

I - 12*


Re:

Reference for a preliminary ruling — Lietuvos vyriausiasis administracinis teismas —Interpretation of First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, EnglishSpecial Edition 1967, p. 14) and of Article 33 of Sixth Council Directive 77/388/EEC of17 May 1977 on the harmonisation of the laws of the Member States relating toturnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 45, p. 1) — Lithuanian road tax calculated on the basis of an undertaking’s turnover to finance the maintenance and development programme for national roads.

Operative part

Article 33 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisationof the laws of the Member States relating to turnover taxes — Common system of valueadded tax: uniform basis of assessment, as amended by Council Directive 91/680/EECof 16 December 1991, must be interpreted as meaning that it does not preclude a taxsuch as the levy on revenue laid down by the Lithuanian Law on the financing of theroad maintenance and development programme (Lietuvos Respublikos kelių priežiūros ir plėtros programos finansavimo įstatymas).

Judgment of the Court (Seventh Chamber) of 5 February 2009 —Commission v Luxembourg

(Case C-282/08)

(Failure of a Member State to fulfil obligations — Directive 2005/29/EC — Unfair commercial practices — Failure to transpose within the period prescribed)

I - 13*


1. Member States —Obligations — Implementation of directives — Failure to fulfil obligations — National system pleaded as justification — Not permissible (Art. 226 EC) (see para. 10)

2. Actions for failure to fulfil obligations — Examination of the merits by the Court — Situation to be taken into consideration — Situation on expiry of theperiod laid down in the reasoned opinion (Art. 226 EC) (see para. 10)

Re:

Failure of a Member State to fulfil obligations — Failure to take or communicate, within the prescribed period, the measures necessary to comply with Directive 2005/29/EC ofthe European Parliament and of the Council of 11 May 2005 concerning unfairbusiness-to-consumer commercial practices in the internal market and amendingCouncil Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of theEuropean Parliament and of the Council and Regulation (EC) No 2006/2004 of theEuropean Parliament and of the Council (‘Unfair Commercial Practices Directive’)(OJ 2005 L 149, p. 22).

Operative part

The Court:

1. Declares that, by failing to adopt, within the prescribed period, the laws,regulations and administrative provisions necessary to comply with Directive 2005/29/EC of the European Parliament and of the Council of11 May 2005 concerning unfair business-to-consumer commercial practices inthe internal market and amending Council Directive 84/450/EEC, Directives97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of theCouncil and Regulation (EC) No 2006/2004 of the European Parliament and ofthe Council (‘Unfair Commercial Practices Directive’), the Grand Duchy ofLuxembourg has failed to fulfil its obligations under that directive;

2. Orders the Grand Duchy of Luxembourg to pay the costs.

I - 14*


Judgment of the Court (Seventh Chamber) of 5 February 2009 —Commission v Finland

(Case C-293/08)

(Failure of a Member State to fulfil obligations — Directive 2004/83/EC — Failure to transpose within the prescribed period)

Actions for failure to fulfil obligations — Examination of the merits by the Court —Situation to be taken into consideration — Situation on expiry of the period laid down inthe reasoned opinion (Art. 226 EC) (see para. 7)

Re:

Failure of a Member State to fulfil obligations — Failure to adopt, within the prescribedperiod, the measures necessary to comply with Council Directive 2004/83/EC of29 April 2004 on minimum standards for the qualification and status of third countrynationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted (OJ 2004 L 304,p. 12).

Operative part

The Court:

1. Declares that, by failing to adopt within the prescribed period the laws,regulations and administrative provisions necessary to comply with CouncilDirective 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons asrefugees or as persons who otherwise need international protection and thecontent of the protection granted, the Republic of Finland has failed to fulfil itsobligations under that directive;

2. Orders the Republic of Finland to pay the costs.

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Order of the Court (Eighth Chamber) of 6 February 2009 —MPDV Mikrolab v OHIM

(Case C-17/08 P)

(Appeal — Community trade mark — Regulation (EC) No 40/94 — Article 7(1)(c) —Refusal of registration — Word mark ‘manufacturing score card’ — Descriptive

character)

Appeals — Grounds — Review by the Court of the assessment of the facts and evidence —Possible only where the clear sense of the evidence has been distorted (Art. 225 EC;Statute of the Court of Justice, Art. 58, first para.) (see para. 27)

Re:

Appeal against the judgment of the Court of First Instance (First Chamber) of 8 November 2007 in Case T-459/05 MPDV Mikrolab v OHIM (manufacturing score card), by which the Court of First Instance dismissed the action for annulment of thedecision of the Second Board of Appeal of OHIM of 19 October 2005, which rejectedthe appeal against the decision of the examiner refusing registration of the word mark‘manufacturing score card’ for goods and services in Classes 9, 35 and 42 — Distinctive character of a word mark consisting of words each of which is descriptive of thecharacteristics of the goods or services concerned.

Operative part


2. MPDV Mikrolab GmbH is ordered to pay the costs.

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Judgment of the Court (Eighth Chamber) of 10 February 2009 —Commission v France

(Case C-224/08)

(Failure of a Member State to fulfil obligations — Directive 2006/100/EC — Failure to transpose within the prescribed period)

Actions for failure to fulfil obligations — Examination of the merits by the Court —Situation to be taken into consideration — Situation on expiry of the period laid down inthe reasoned opinion (Art. 226 EC) (see para. 9)

Re:

Failure of a Member State to fulfil obligations — Failure to adopt or notify, within the prescribed period, the measures necessary to comply with Council Directive 2006/100/EC of 20 November 2006 adapting certain Directives in the fieldof freedom of movement of persons, by reason of the accession of Bulgaria and Romania(OJ 2006 L 363, p. 141).

Operative part

The Court:

1. Declares that, by failing to adopt, within the prescribed period, all the laws,regulations and administrative provisions necessary to comply with CouncilDirective 2006/100/EC of 20 November 2006 adapting certain Directives in thefield of freedom of movement of persons, by reason of the accession of Bulgariaand Romania, the French Republic has failed to comply with its obligationsunder Article 2 of that directive;

2. Orders the French Republic to pay the costs.

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Order of the Court (Eighth Chamber) of 10 February 2009 —Correia de Matos v Commission

(Case C-290/08 P)

(Appeals — Application for the word ‘prejudicial’ to be replaced by the word ‘pré-judicial’ in the Portuguese-language version of Community provisions — Commission

decision not to accede to the request — Appeal partly manifestly inadmissible andpartly manifestly unfounded)

1. Actions for annulment — Actionable measures — Meaning — Measures producing binding legal effects — Commission letter rejecting a request for the terminological rectification of Article 234 EC in the Portuguese-language version — Commission incompetent to amend the provisions of the Treaty —Action manifestly unfounded (Art. 230 EC) (see paras 14, 15)

2. Appeals — Grounds — Error of law relied on not identified — Inadmissibility(Statute of the Court of Justice, Arts 21 and 56; Rules of Procedure of the Court ofJustice, Art. 112(1)(c)) (see paras 18-22)

Re:

Appeal brought against the order of the Court of First Instance (Fifth Chamber) of9 April 2008 in Case T-38/08 Corriea de Matos v Commission by which the Court ofFirst Instance dismissed an action for the annulment of the Commission’s letter of 23 October 2007, sent to the applicant in response to his application for the word‘prejudicial’, in the Portuguese-language version of Article 234 EC, to be replaced by the word ‘pré-judicial’.

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Operative part


2. Mr Correia de Matos is ordered to pay the costs.

Judgment of the Court (Third Chamber) of 12 February 2009 —Commission v Poland

(Case C-475/07)

(Failure of a Member State to fulfil obligations — Electricity tax —Directive 2003/96/EC — First subparagraph of Article 21(5) — Time at which the tax

becomes chargeable)

1. Procedure — Application initiating proceedings — Formal requirements —Identification of the subject-matter of the dispute — Brief summary of the pleas in law on which the application is based — Unambiguous wording of the form oforder sought by the applicant (Rules of Procedure of the Court of Justice,Art. 38(1)(c)) (see paras 43, 44)

2. Acts of the institutions — Directives — Implementation by Member States —Need for clear and precise transposition (Art. 249 EC) (see para. 49)

3. Actions for failure to fulfil obligations — Proof of failure — Burden of proof on Commission — Insufficient or inadequate transposition of a directive (Art. 226 EC) (see para. 54)

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Re:

Failure of a Member State to fulfil obligations — Failure to adopt, within the prescribed period, the measures necessary to comply with Article 21(5) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community frameworkfor the taxation of energy products and electricity (OJ 2003 L 283, p. 51) — Time at which the electricity tax becomes chargeable.

Operative part

The Court:

1. Declares that, by failing to adapt, by 1 January 2006, its system of electricity tax,with regard to the time at which the electricity tax becomes chargeable, to therequirements of the first subparagraph of Article 21(5) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Communityframework for the taxation of energy products and electricity, as amended byCouncil Directive 2004/74/EC of 29 April 2004, the Republic of Poland hasfailed to fulfil its obligations under that directive;

2. Orders the Republic of Poland to pay the costs.

Order of the Court (Sixth Chamber) of 12 February 2009 —Bild digital and ZVS Zeitungsvertrieb Stuttgart v Präsident des

Deutschen Patent- und Markenamts

(Joined Cases C-39/08 and C-43/08)

(First subparagraph of Article 103(3) of the Rules of Procedure —Directive 89/104/EEC — Applications for registration of trade marks — Examination

on a case-by-case basis — Failure to take account of earlier decisions — Manifestinadmissibility)

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Approximation of laws — Trade marks — Directive 89/104 — Registration of a trade mark refused or trade mark declared invalid — Prior registration of the trade mark in certain Member States —Effect (Council Directive 89/104, Art. 3(1)(b) and (c)) (see para. 19)

Re:

Reference for a preliminary ruling —Bundespatentgericht (Germany) — Interpretationof Article 3 of First Council Directive 89/104/EEC of 21 December 1988 to approximatethe laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1) —Examination of applications for registration of trade marks on a case-by-case basiswithout account being taken of earlier decisions in similar situations — Refusal to register a trade mark applied for by the proprietor of a series of similar marks.

Operative part

The competent authority of a Member State called upon to rule on an application forregistration of a trade mark is not required to disregard the grounds for refusal ofregistration set out in Article 3(1)(a), (b) and (c) of Council Directive 89/104/EEC of21 December 1988 to approximate the laws of the Member States relating to trademarks, as amended by Council Decision 92/10/EEC of 19 December 1991, and to grantthat application on the ground that the sign for which registration as a trade mark issought is composed in a manner identical or comparable to a sign which it has alreadyaccepted for registration as a trade mark and which refers to identical or similar goodsor services.

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