Navigation path

Left navigation

Additional tools

Other available languages: FR

J/98/19

Proceedings of the Court of justice and the court of first instance of the european Communities week of 13 to 17 July and 20 to 24 July 1998

I. JUDGMENTS

Court of Justice

Safety Hi-Tech Srl v S. & T. Srl

Free movement of goods

Gianni Bettati v Safety Hi-Tech Srl

Free movement of goods

Commissioners of Customs & Excise v First National Bank of Chicago

Taxation

Hermann Josef Goerres

Approximation of laws

Aher-Waggon GmbH v Bundesrepublik Deutschland

Free movement of goods

A.G.R. Regeling v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid

Social policy

Rui Alberto Pereira Roque v His Excellency the Lieutenant Governor of Jersey

New accessions

Imperial Chemical Industries plc (ICI) v Kenneth Hall Colmer (Her Majesty's Inspector of Taxes)

Freedom of movement for persons

Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH

Approximation of laws

The Scotch Whisky Association v Compagnie Financière Européenne de Prises de Participation (Cofepp) and Others

Approximation of laws

Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt · Amt für Lebensmittelüberwachung and Others

Agriculture

Kyritzer Stärke GmbH v Hauptzollamt Potsdam

Agriculture

Oelmühle Hamburg AG and Jb. Schmidt Söhne GmbH & Co. KG v Bundesanstalt für Landwirtschaft und Ernährung

Agriculture

Fédération Belge des Chambres Syndicales de Médecins ASBL v Flemish Community and Others

Freedom of movement for persons

AGS Assedic Pas-de-Calais v François Dumon

Social policy

Commission of the European Communities v Portuguese Republic

Environment and consumers

Commission of the European Communities v Grand Duchy of Luxembourg

Environment and consumers

Court of First Instance

Alfred Hauer v Council of the European Union and Commission of the European Communities

Agriculture

Giorgio Lebedef v Commission of the European Communities

Staff Regulations of Officials

Giorgio Lebedef v Commission of the European Communities

Staff Regulations of Officials

Anita Brems v Council of the European Union

Staff Regulations of Officials

Claus Jensen v Commission of the European Communities

Staff Regulations of Officials

Sandro Forcheri v Commission of the European Communities

Staff Regulations of Officials

Laboratoires Pharmaceutiques Bergaderm SA and Jean-Jacques Goupil v Commission of the European Communities

Law governing the institutions

Regione Toscana v Commission of the European Communities

Agriculture

Kia Motors Nederland BV and Broekman Motorships BV v Commission of the European Communities

Free movement of goods

Gilberte Gebhard v European Parliament

Law governing the institutions

Andrea von Löwis and Marta Alvarez-Cotera v Commission of the European Communities

Law governing the institutions

Proderec · Formação e Desinvolvimento de Recursos Humanos, ACE v Commission of the European Communities

Social policy

Catherine Presle v Centre Européen pour le Développement de la Formation Professionnelle

Staff Regulations of Officials

Y v European Parliament

Staff Regulations of Officials

Y v European Parliament

Staff Regulations of Officials

Agnès Hubert v Commission of the European Communities

Staff Regulations of Officials

ITT Promedia NV v Commission of the European Communities

Competition

Thai Bicycle Industry Co. Ltd v Council of the European Union

Commercial policy

John Mellett v Court of Justice of the European Communities

Staff Regulations of Officials

II. Opinions

Regina v Secretary of State for Employment ex parte: Nicole Seymour-Smith and Laura Perez

Commission of the European Communities v Industrial Refuse & Coal Energy Ltd

European Parliament v Giuliana Gaspari

Commission of the European Communities v Grand Duchy of Luxembourg

Giuseppe Manfredi v Regione Puglia

Kingdom of Spain v Commission of the European Communities

Centros Limited v Erhvervs- og Selskabsstyrelsen

Norbury Developments Ltd v Commissioners of Customs & Excise

Ibiyinka Awoyemi v Openbar Ministerie

Landelijk Instituut voor de Sociale Verzekeringen v C.J.M. Voeten and J. Beckers

Georg Bruner in Firma Georg Bruner v Hauptzollamt Hamburg-Jonas

Commission of the European Communities v Kingdom of Belgium

Commission of the European Communities v Ireland

Ecotrade Srl v Altiforni e Ferriere di Servola SpA (AFS)

Paula Gomez Rivero v Bundesanstalt für Arbeit

French Republic v Commission of the European Communities

AFS Intercultural Finland ry v Kuluttajavirasto

Connemara Machine Turf Company Ltd v Coillte Teoranta

Commission of the European Communities v Ireland

Portuguese Republic v Commission of the European Communities

Commission of the European Communities v Portuguese Republic

III. New cases

1.

Judgments

Court of Justice

Case C-284/95

Safety Hi-Tech Srl v S. & T. Srl

Free movement of goods

14 July 1998

Preliminary ruling

(Regulation (EC) No 3093/94 · Measures to protect the ozone layer · Restrictions on the use of hydrochlorofluorocarbons and halons · Validity) (Full Court)

By order of 8 August 1995, the Giudice di Pace di Genova (Justice of the Peace, Genoa) referred to the Court for a preliminary ruling a number of questions on the interpretation and validity of Council Regulation (EC) No 3093/94 of 15 December 1994 on substances that deplete the ozone layer (hereinafter 'the Regulation').

Those questions were raised in proceedings between Safety Hi-Tech Srl (hereinafter 'Hi-Tech') and S. & T. Srl (hereinafter 'S. & T.') concerning the performance of a contract between them for the sale of a product known as 'NAF S III', composed of hydrochlorofluorocarbons (hereinafter 'HCFCs'), which is used for firefighting.

According to the case-file in the national proceedings, Hi-Tech had contracted to deliver to S. & T. a quantity of that product for the price of LIT 3 213 000, including VAT. Under the contract, the product was to be stored by Hi-Tech and made available to S. & T. in Genoa at the latter's request.

On 4 August 1995, the date on which payment was to be made against presentation of an invoice by Hi-Tech to S. & T., the latter refused to take delivery of the product, contesting the validity of the contract on the ground that the use, and therefore the marketing, of HCFCs for firefighting was prohibited by Article 5 of the Regulation.

On 8 August 1995 Hi-Tech therefore applied for an order from the Giudice di Pace for the payment to it by S. & T. of the agreed price, plus incidental charges and fees.

Article 1 of the Regulation, which determines its scope, states that it is to apply to the production, importation, exportation, supply, use and recovery of various substances, referred to as 'controlled substances', which it lists and which include HCFCs and halons.

Having regard to the conditions relating to HCFCs and halons and to Hi-Tech's arguments, the national court, considering that the outcome of the proceedings before it depends on the validity of the Regulation, has stayed proceedings pending a preliminary ruling on four questions:

The first question

By its first question, the national court seeks to ascertain, first, whether Article 5 of the Regulation prohibits the use and, consequently, the marketing of HCFCs for firefighting and, second, raises the problem of the legality of that prohibition in the light of Article 130r of the Treaty.

The interpretation of Article 5 of the Regulation

It is clear from the terms of the Regulation that no provision is made for the use of HCFCs for firefighting, with the result that their use is prohibited, by virtue of Article 5(1) of the Regulation, as from 1 June 1995.

The question must therefore be considered whether the total prohibition of the use of HCFCs for firefighting means that their marketing is also prohibited.

The marketing of HCFCs for firefighting is not mentioned in Article 5 of the Regulation. However, in so far as the release of HCFCs into commercial channels for those purposes is a step preparatory to the use of such substances and has no aim other than their use for those same purposes, it must be concluded that, because the use of HCFCs has been totally prohibited since 1 June 1995, the marketing of them for firefighting must also be regarded as prohibited from that date.

The legality of the prohibition on the use of HCFCs in the light of Article 130r of the Treaty

Hi-Tech considers that the prohibition on the use of HCFCs for firefighting is illegal under Article 130r of the Treaty since the Council, by not observing the objective, the principles and the criteria of that provision, exceeded the bounds of the discretion conferred on it.

However, in view of the need to strike a balance between certain of the objectives and principles mentioned in Article 130r and of the complexity of the implementation of those criteria, review by the Court must necessarily be limited to the question whether the Council, by adopting the Regulation, committed a manifest error of appraisal regarding the conditions for the application of Article 130r of the Treaty.

As the Court held in Case C-379/92 Peralta [1994] ECR I-3453, paragraph 57, Article 130r is confined to defining the general objectives of the Community in the matter of the environment. Responsibility for deciding what action is to be taken is conferred on the Council by Article 130s. Moreover, Article 130t states that the protective measures adopted jointly pursuant to Article 130s are not to prevent any Member State from maintaining or introducing more stringent protective measures compatible with the Treaty.

It does not follow from those provisions that Article 130r(1) of the Treaty requires the Community legislature, whenever it adopts measures to preserve, protect and improve the environment in order to deal with a specific environmental problem, to adopt at the same time measures relating to the environment as a whole.

It follows that Article 130r(1) of the Treaty authorises the adoption of measures relating solely to certain specified aspects of the environment, provided that such measures contribute to the preservation, protection and improvement of the quality of the environment

In that connection, as is apparent from its title, the aim of the Regulation is to control substances that deplete the ozone layer. The fact that only that aspect of environmental preservation, protection and improvement is referred to by the Regulation cannot therefore be regarded as incompatible with the purpose of Article 130r(1) of the Treaty.

Secondly, according to Hi-Tech, by authorising the use of halons, which display a much higher ODP than HCFCs and therefore represent a much greater threat to ozone, the Regulation failed to ensure a high level of environmental protection as required by Article 130r(2) of the Treaty.

As far as that requirement is concerned, it must be observed that the Regulation ensures a high level of protection. It is clear from the fourth and fifth recitals in its preamble that, in the light of scientific evidence and with a view to fulfilling the Community's obligations under the Vienna Convention and the second amendment to the Montreal Protocol, the purpose of the Regulation is to lay down measures to control, in particular, the use of HCFCs.

Finally, whilst it is undisputed that Article 130r(2) of the Treaty requires Community policy in environmental matters to aim for a high level of protection, such a level of protection, to be compatible with that provision, does not necessarily have to be the highest that is technically possible. Article 130t of the Treaty authorises the Member States to maintain or introduce more stringent protective measures.

Lastly, Hi-Tech considers that, by not prohibiting the use of other substances also intended for firefighting, including hydrofluorocarbons and perfluorocarbons, the Regulation did not take account of the available scientific and technical data, as required by Article 130r(3) of the Treaty, because those substances, the GWP and ALT of which are considerable, are more damaging to the environment than HCFCs, the ODP, GWP and ALT for which are regarded as acceptable.

Article 130r(3) of the Treaty requires the Community, in preparing its policy on the environment, to take account in particular of available scientific and technical data. However, the Regulation cannot be regarded as failing to meet that requirement.

The Community legislature, by imposing the prohibition on the use, and hence the marketing, of HCFCs for firefighting, did not therefore commit any manifest error of appraisal. That being so, the complaint examined above, alleging that the Regulation is unlawful on the ground that it is contrary to Article 130r of the Treaty, must be rejected.

Hi-Tech also considers that the prohibition on the use, and hence the marketing, of HCFCs for firefighting is disproportionate in relation to the aim of environmental protection.

In considering that complaint, it must be borne in mind that, according to settled case-law, in order to establish whether a provision of Community law complies with the principle of proportionality, it must be ascertained whether the means which it employs are suitable for the purpose of attaining the desired objective and whether they go beyond what is necessary for that purpose.

In view of the objective of the Regulation, which is to protect the ozone layer, it must be held that the means employed by the Regulation, in Article 5(1), namely the prohibition on the use, and hence the marketing, of HCFCs for firefighting, was suitable for the purpose of attaining that objective. In view, however, of the fact that other substances that are equally, or indeed more, harmful to the ozone layer, such as halons, are authorised for firefighting, it is necessary to determine whether that prohibition exceeds the limitations inherent in observance of the principle of proportionality.

It need merely be recalled that, as is clear from the case-file in the proceedings before the national court, halons display an extinguishing capability which is not otherwise available, particularly in dealing with fires in small spaces, and are of extremely low toxicity, whereas, to achieve the same result, a larger quantity of HCFCs would be needed, entailing a greater toxic impact.

Since, as indicated in paragraph 54 of this judgment, there are effective substitutes for HCFCs such as water, powder and inert gases and, as indicated in paragraph 59, for certain essential uses there are irreplaceable substitutes such as halons, the prohibition of using HCFCs cannot be regarded as contrary to the principle of proportionality.

The second question

By its second question, the national court seeks to ascertain whether, in the light of Article 30 of the Treaty, the prohibition laid down in Article 5(1) of the Regulation on the use and marketing of HCFCs for firefighting is valid.

It is settled law that the prohibition of quantitative restrictions and of all measures having equivalent effect applies not only to national measures but also to measures adopted by the Community institutions.

Environmental protection has already been considered by the Court to be one of the essential objectives of the Community. In Case 302/86 Commission v Denmark [1988] ECR 4607, paragraph 9, the Court held that protection of the environment is an imperative requirement which may limit the application of Article 30 of the Treaty.

The third and fourth questions

By its third and fourth questions, the national court seeks essentially to ascertain, first, whether Article 5(1) of the Regulation, by prohibiting the use and marketing of HCFCs, has the effect of favouring, contrary to Article 85 of the Treaty, a restrictive agreement or practice on the part of producers and sellers of other substances which are authorised by the Regulation or an abuse of a dominant position by such producers and sellers, contrary to Article 86 of the Treaty, and, second, whether the abovementioned provision of the Regulation may, as a provision ensuring protection of the ozone layer, justify exceptions to Articles 85 and 86 of the Treaty.

In that connection, it should be noted that, according to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it necessary that the national court define the factual and legal context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based.

The information in the order for reference, in so far as it refers with insufficient precision to the situations of law or fact to which the national court is referring, do not enable the Court to give a helpful interpretation of Community law.

The Court ruled:

  • '1. Article 5 of Council Regulation (EC) No 3093/94 of 15 December 1994 on substances that deplete the ozone layer must be interpreted as prohibiting entirely the use and, consequently, the marketing of hydrochlorofluorocarbons for firefighting.
  • 2. Consideration of the questions submitted has not disclosed any factor of such a kind as to affect the validity of Regulation No 3093/94.'

    Advocate General P. Léger delivered his Opinion at the sitting of the Full Court on 3 February 1998.

    He proposed that the Court should interpret Article 5 of the Regulation as prohibiting the use, marketing, production and importation of HCFCs in firefighting as from 1 June 1995. He found no factor of such a kind as to affect the validity of that provision.

    Case C-341/95

    Gianni Bettati v Safety Hi-Tech Srl

    Free movement of goods

    14 July 1998

    Preliminary ruling

    (Regulation (EC) No 3093/94 · Measures to protect the ozone layer · Restrictions on the use of hydrochlorofluorocarbons and halons · Validity) (Full Court)

    By order of 16 October 1995, the Pretura Circondariale di Avezzano (Magistrate's Court for the District of Avezzano) referred to the Court for a preliminary ruling a question on the validity of Council Regulation (EC) No 3093/94 of 15 December 1994 (OJ 1994 L 333, p. 1, hereinafter 'the Regulation').

    That question was raised in proceedings arising from the fact that Gianni Bettati, the owner of the company Bettati Antincendio di Reggio Emilia, had refused to pay Safety Hi-Tech Srl (hereinafter 'Hi-Tech') for a consignment of a product known as 'NAF S III', composed of hydrochlorofluorocarbons (hereinafter 'HCFCs'), which is used for firefighting.

    According to the documents before the Court, Hi-Tech delivered to Mr Bettati, under a contract of 12 May 1995, a quantity of the abovementioned product, for which it received part payment. Following Mr Bettati's refusal to pay the balance, namely LIT 22 294 730, Hi-Tech applied to the Pretura Circondariale for an order against Mr Bettati.

    On 31 July 1995 that court ordered Mr Bettati to pay the balance to Hi-Tech. Mr Bettati appealed against that decision on the ground that, subsequent to the conclusion of the contract, the product had been found to be inappropriate and unusable: the contract was liable to cancellation since Article 5 of the Regulation prohibited the marketing of that product as from 1 June 1995.

    Hi-Tech, which contested the appeal, contended that the Regulation was incompatible with Articles 3, 5, 30, 86, 92 and 130r of the EC Treaty, in that it prohibited the use of HCFCs for firefighting.

    Article 1 of the Regulation, which determines its scope, states that it is to apply to the production, importation, exportation, supply, use and recovery of various substances, referred to as 'controlled substances', which it lists and which include HCFCs and halons.

    With respect in particular to the conditions governing the use of HCFCs, Article 4(8), the second subparagraph of Article 4(9) and Article 4(10) of the Regulation lay down special conditions applicable to HCFCs marketed or used by producers or importers for their own account.

    All other use of HCFCs, apart from use by producers or importers for their own account, is governed by Article 5 of the Regulation.

    The Pretura Circondariale had doubts as to the validity of Article 5 of the Regulation, inasmuch as it unconditionally prohibits, as from 1 June 1995, the use of HCFCs as fire-fighting material, in the light of the Treaty provisions concerning the environmental policy of the Community, the free movement of goods and freedom of competition, since that provision does not lay down a similar prohibition with respect to halons, also used in the sector in point, whose potential for destruction of the ozone layer is greater than that of HCFCs and which have an even more negative impact on the environment.

    Having regard to those considerations, the national court stayed proceedings pending a preliminary ruling on the question from the Court of Justice.

    By its question, the national court seeks solely to ascertain whether the prohibition on the use of HCFCs for firefighting as from 1 June 1995 is compatible with certain provisions of the Treaty. However, although that court considers that such a prohibition is incontestably clear from the Regulation, it is appropriate to examine the relevant provisions thereof.

    It is clear from the terms of the Regulation that no provision is made for the use of HCFCs for firefighting, with the result that their use is prohibited, by virtue of Article 5(1) of the Regulation, as from 1 June 1995.

    The question must therefore be considered whether the total prohibition of the use of HCFCs for firefighting means that their marketing is also prohibited.

    The marketing of HCFCs for firefighting is not mentioned in Article 5 of the Regulation. However, in so far as the release of HCFCs into commercial channels for those purposes is a step preparatory to the use of such substances and has no aim other than their use for those same purposes, it must be concluded that, because the use of HCFCs has been totally prohibited since 1 June 1995, the marketing of them for firefighting must also be regarded as prohibited from that date.

    The compatibility of Article 5 of the Regulation with Article 130r of the Treaty

    Hi-Tech considers that the prohibition on the use of HCFCs for firefighting is illegal under Article 130r of the Treaty since the Council, by not observing the objective, the principles and the criteria of that provision, exceeded the bounds of the discretion conferred on it.

    However, in view of the need to strike a balance between certain of the objectives and principles mentioned in Article 130r and of the complexity of the implementation of those criteria, review by the Court must necessarily be limited to the question whether the Council, by adopting the Regulation, committed a manifest error of appraisal regarding the conditions for the application of Article 130r of the Treaty.

    As the Court held in Case C-379/92 Peralta [1994] ECR I-3453, paragraph 57, Article 130r is confined to defining the general objectives of the Community in the matter of the environment. Responsibility for deciding what action is to be taken is conferred on the Council by Article 130s. Moreover, Article 130t states that the protective measures adopted jointly pursuant to Article 130s are not to prevent any Member State from maintaining or introducing more stringent protective measures compatible with the Treaty.

    It does not follow from those provisions that Article 130r(1) of the Treaty requires the Community legislature, whenever it adopts measures to preserve, protect and improve the environment in order to deal with a specific environmental problem, to adopt at the same time measures relating to the environment as a whole.

    It follows that Article 130r(1) of the Treaty authorises the adoption of measures relating solely to certain specified aspects of the environment, provided that such measures contribute to the preservation, protection and improvement of the quality of the environment

    In that connection, as is apparent from its title, the aim of the Regulation is to control substances that deplete the ozone layer. The fact that only that aspect of environmental preservation, protection and improvement is referred to by the Regulation cannot therefore be regarded as incompatible with the purpose of Article 130r(1) of the Treaty.

    Secondly, according to Hi-Tech, by authorising the use of halons, which display a much higher ODP than HCFCs and therefore represent a much greater threat to ozone, the Regulation failed to ensure a high level of environmental protection as required by Article 130r(2) of the Treaty.

    As far as that requirement is concerned, it must be observed that the Regulation ensures a high level of protection. It is clear from the fourth and fifth recitals in its preamble that, in the light of scientific evidence and with a view to fulfilling the Community's obligations under the Vienna Convention and the second amendment to the Montreal Protocol, the purpose of the Regulation is to lay down measures to control, in particular, the use of HCFCs.

    Finally, whilst it is undisputed that Article 130r(2) of the Treaty requires Community policy in environmental matters to aim for a high level of protection, such a level of protection, to be compatible with that provision, does not necessarily have to be the highest that is technically possible. Article 130t of the Treaty authorises the Member States to maintain or introduce more stringent protective measures.

    Lastly, Hi-Tech considers that, by not prohibiting the use of other substances also intended for firefighting, including hydrofluorocarbons and perfluorocarbons, the Regulation did not take account of the available scientific and technical data, as required by Article 130r(3) of the Treaty, because those substances, the GWP and ALT of which are considerable, are more damaging to the environment than HCFCs, the ODP, GWP and ALT for which are regarded as acceptable.

    Article 130r(3) of the Treaty requires the Community, in preparing its policy on the environment, to take account in particular of available scientific and technical data. However, the Regulation cannot be regarded as failing to meet that requirement.

    The Community legislature, by imposing the prohibition on the use, and hence the marketing, of HCFCs for firefighting, did not therefore commit any manifest error of appraisal. That being so, the complaint examined above, alleging that the Regulation is unlawful on the ground that it is contrary to Article 130r of the Treaty, must be rejected.

    Hi-Tech also considers that the prohibition on the use, and hence the marketing, of HCFCs for firefighting is disproportionate in relation to the aim of environmental protection.

    In considering that complaint, it must be borne in mind that, according to settled case-law, in order to establish whether a provision of Community law complies with the principle of proportionality, it must be ascertained whether the means which it employs are suitable for the purpose of attaining the desired objective and whether they go beyond what is necessary for that purpose.

    In view of the objective of the Regulation, which is to protect the ozone layer, it must be held that the means employed by the Regulation, in Article 5(1), namely the prohibition on the use, and hence the marketing, of HCFCs for firefighting, was suitable for the purpose of attaining that objective. In view, however, of the fact that other substances that are equally, or indeed more, harmful to the ozone layer, such as halons, are authorised for firefighting, it is necessary to determine whether that prohibition exceeds the limitations inherent in observance of the principle of proportionality.

    It need merely be recalled that, as is clear from the case-file in the proceedings before the national court, halons display an extinguishing capability which is not otherwise available, particularly in dealing with fires in small spaces, and are of extremely low toxicity, whereas, to achieve the same result, a larger quantity of HCFCs would be needed, entailing a greater toxic impact.

    Since, there are effective substitutes for HCFCs such as water, powder and inert gases and, for certain essential uses there are irreplaceable substitutes such as halons, the prohibition of using HCFCs cannot be regarded as contrary to the principle of proportionality.

    The compatibility of Article 5 of the Regulation with Article 30 of the Treaty

    The national court also seeks to ascertain whether, in the light of Article 30 of the Treaty, the prohibition of using and marketing HCFCs laid down in Article 5(1) of the Regulation for firefighting is valid.

    It is settled law that the prohibition of quantitative restrictions and of all measures having equivalent effect applies not only to national measures but also to measures adopted by the Community institutions.

    Environmental protection has already been considered by the Court to be one of the essential objectives of the Community. In Case 302/86 Commission v Denmark [1988] ECR 4607, paragraph 9, the Court held that protection of the environment is an imperative requirement which may limit the application of Article 30 of the Treaty.

    The compatibility of Article 5 of the Regulation with Article 86 of the Treaty

    The national court seeks essentially to ascertain whether Article 5(1) of the Regulation, by prohibiting the use and marketing of HCFCs, has the effect, contrary to Article 86 of the Treaty, of favouring an abuse of a dominant position by producers and sellers, of substances other than HCFCs which are not prohibited by the Regulation.

    In that connection, it should be noted that, according to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it necessary that the national court define the factual and legal context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based.

    Thus, the information in the order for reference, in so far as it refers with insufficient precision to the situations of law or fact to which the national court is referring, do not enable the Court to give a helpful interpretation of Community law.

    The compatibility of Article 5 of the Regulation with Article 92 of the Treaty

    The Court has consistently held that only advantages which are granted directly or indirectly through State resources are to be regarded as State aid within the meaning of Article 92(1) of the Treaty. The wording of that provision itself and the procedural rules laid down by Article 93 of the EC Treaty show that advantages granted from resources other than those of the State do not fall within the scope of the provisions in question.

    In this instance, any advantage accruing to undertakings producing halons from the prohibition on the use of HCFCs for firefighting derives from a measure adopted by the Community legislature in the environmental field, not from a State measure, and thus involves no direct or indirect transfer of State resources to undertakings producing halons. Accordingly, Article 5 of the Regulation does not fall within the scope of Article 92 of the Treaty.

    The compatibility of Article 5 of the Regulation with Articles 3 and 5 of the Treaty

    It has been found in this judgment that Article 5 of the Regulation is compatible with Article 30 of the Treaty and that the question of its compatibility with Article 86 of the Treaty cannot be determined in view of the lack of the requisite information in the order for reference. It is thus unnecessary to give an answer to the question concerning its compatibility with Article 3 of the Treaty.

    The Court ruled:

    'Consideration of the question submitted has not disclosed any factor of such a kind as to affect the validity of Council Regulation (EC) No 3093/94 of 15 December 1994 on substances that deplete the ozone layer.'

    Advocate General P. Léger delivered his Opinion at the sitting of the Full Court on 3 February 1998.

    He found no factor of such a kind as to affect the validity of Article 5 of the Regulation.

    Case C-172/96

    Commissioners of Customs & Excise v First National Bank of Chicago

    Taxation

    14 July 1998

    Preliminary ruling

    (Sixth VAT Directive · Scope · Foreign exchange transactions) (Fifth Chamber)

    By order of 13 May 1996, the High Court of Justice, Queen's Bench Division, referred for a preliminary ruling two questions on the interpretation of Sixth Council Directive 77/388/EEC of 17 May 1977 (hereinafter 'the Sixth Directive').

    Those questions were raised in proceedings between First National Bank of Chicago ('the Bank') and the Commissioners of Customs and Excise ('the Commissioners') concerning deduction of input tax on certain foreign exchange transactions.

    No transaction fee or commission is charged for or invoiced by the Bank for the transactions at issue in the main proceedings. The Bank seeks to make a profit out of its foreign exchange dealings as a result of the spread between its bid and offer quotes. Each of its traders will have his or her book of particular currencies and will be expected to make a profit over appropriate periods. This profit is a result of all of their dealings over a particular period.

    The Bank is partly exempt for VAT purposes. It does, however, have the right to deduct input tax corresponding to transactions completed with counterparties established outside the Community. In order to determine the deductible amount, the Bank has agreed with the Commissioners a special partial exemption method under Regulation 31 of the Value Added Tax (General) Regulations 1985 (SI 1985 No 886). The recoverable proportion of input tax which the agreed method allocates to the Bank is determined by reference to the number of foreign exchange transactions carried out as represented by the fraction in which the numerator is the number of transactions with counterparties outside the European Union and the denominator is the total number of transactions.

    In its return for the period from 1 May 1994 to 31 July 1994, which included its annual adjustment for the period from April 1993 to April 1994, the Bank took into account, in determining the numerator and

    denominator of the relevant fraction, the foreign exchange transactions into which it had entered over the period from April 1993 to July 1994. It calculated that the input tax credit to which it was entitled over that extended 15-month period attributable to foreign exchange transactions with counterparties established in countries outside the Community amounted to £251 454.90.

    By decision of 26 September 1994, the Commissioners reduced the input tax credit which the Bank was claiming by disallowing the portion corresponding to the foreign exchange transactions concluded with those counterparties.

    The Bank appealed to the Value Added Tax Tribunal. The appeal was heard on the agreed limited issue of whether or not the relevant foreign exchange transactions were supplies of services or goods for VAT purposes. By a decision of 12 September 1995, the Value Added Tax Tribunal allowed that appeal.

    The Commissioners appealed to the High Court of Justice against that decision.

    Taking the view that resolution of the case depended on an interpretation of the Sixth Directive, the High Court of Justice decided to stay proceedings and refer two questions to the Court:

    The first question

    By its first question, the High Court of Justice is asking essentially whether transactions between parties for the purchase by one party of an agreed amount in one currency against the sale by it to the other party of an agreed amount in another currency, both such amounts being deliverable on the same value date, and in respect of which transactions the parties have agreed (whether orally, electronically or in writing) the currencies involved, the amounts of such currencies to be purchased and sold, which party will purchase which currency and the value date, constitute supplies of goods or services effected for consideration within the meaning of Article 2(1) of the Sixth Directive.

    The Court observes first of all that the currencies which are exchanged against other currencies in a foreign exchange transaction cannot be regarded as 'tangible property' within the meaning of Article 5 of the Sixth Directive, since money used as legal tender is involved. Foreign exchange transactions are thus supplies of services within the meaning of Article 6 of the Sixth Directive.

    With regard, second, to the question whether services are supplied for consideration, the Court has already held that a supply of services is effected 'for consideration' within the meaning of Article 2(1) of the Sixth Directive, and is therefore taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.

    In the present case, it cannot be disputed that a bilateral legal relationship exists between the Bank and its counterparty under which the two parties to the transaction give reciprocal undertakings to transfer amounts in a given currency and to receive the countervalue in another currency.

    Apart from the actual exchange transaction, the service provided by the Bank is characterised by the Bank's preparedness to conclude such transactions in the currencies in which it specialises.

    From the mere fact that no fees or commission are charged by the Bank upon a specific foreign exchange transaction it does not follow that no consideration is given.

    In addition, it is apparent from the case-file that the rates at which the Bank is prepared to sell or purchase currencies are different and are separated by a spread. The conclusion must therefore be that, in return for the service which it provides, the Bank takes for itself a consideration which it includes in the calculation of those rates.

    It must therefore be held that foreign exchange transactions, performed even without commission or direct fees, are supplies of services provided in return for consideration, that is to say supplies of services effected for consideration within the meaning of Article 2(1) of the Sixth Directive.

    The second question

    By its second question, the High Court of Justice essentially seeks to ascertain the precise nature of the consideration. The question must therefore be understood as seeking to determine the taxable amount.

    It should be borne in mind that Article 11A(1)(a) of the Sixth Directive provides that the taxable amount is, in respect of supplies of services, that which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser for such supplies.

    While they are the subject of a supply, the currencies transferred to a trader by his counterparty in the course of a foreign exchange transaction cannot be regarded as constituting remuneration for the service of exchanging currencies for other currencies or consequently as constituting consideration for that service.

    Determining the consideration therefore comes down to determining what the Bank receives for foreign exchange transactions, that is to say the remuneration on foreign exchange transactions which it can actually take for itself.

    Thus the consideration, namely the amount which the Bank can actually apply to its own use, must be regarded as consisting of the net result of its transactions over a given period of time.

    It should be borne in mind in this regard that, in the case of transactions which are effected for consideration but the actual consideration for which depends on future factors such as passage of time, the Court has already ruled that the taxable amount must be defined on the basis of, in particular, the interest accrued over a deferred payment period, which was not yet known when the taxable transaction was concluded.

    Nor is it necessary for either the taxable person supplying the goods or performing the service or the other party to the transaction to know the exact amount of the consideration serving as the taxable amount in order for it to be possible to tax a particular type of transaction. Consequently, it does not matter that when the transaction is concluded the parties do not know the basis on which VAT will be charged and that it remains unknown, even afterwards, to the recipient of the service.

    The Court ruled:

  • '1. Transactions between parties for the purchase by one party of an agreed amount in one currency against the sale by it to the other party of an agreed amount in another currency, both such amounts being deliverable on the same value date, and in respect of which transactions the parties have agreed (whether orally, electronically or in writing) the currencies involved, the amounts of such currencies to be purchased and sold, which party will purchase which currency and the value date, constitute supplies of services effected for consideration within the meaning of Article 2(1) of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes · Common system of value added tax: uniform basis of assessment.
  • 2. Article 11A(1)(a) of the Sixth Directive must be construed as meaning that, in foreign exchange transactions in which no fees or commission are calculated with regard to certain specific transactions, the taxable amount is the net result of the transactions of the supplier of the services over a given period of time.'

    Advocate General C.O. Lenz delivered his Opinion at the sitting of the Fifth Chamber on 16 September 1997.

    He proposed that the questions referred for a preliminary ruling be answered as follows:

  • (1) In relation to foreign exchange transactions as defined by the British Bankers' Association, the Bank effects a service for consideration within the meaning of the Sixth Directive where that service is not paid for by a charge but by the spread between the bid and offer rates.
  • (2) The consideration for the service is what the Bank receives by way of spread between the bid and offer rates.

    Case C-385/96

    Hermann Josef Goerres

    Approximation of laws

    14 July 1998

    Preliminary ruling

    (Approximation of laws · Labelling and presentation of foodstuffs · Directive 79/112/EEC · Consumer protection · Language) (Fifth Chamber)

    By order of 6 November 1996, the Amtsgericht Aachen (Aachen Local Court) referred to the Court for a preliminary ruling two questions on the interpretation of Article 14 of Council Directive 79/112/EEC of 18 December 1978 ('the directive').

    The questions were raised in criminal proceedings brought against Mr Goerres by the Oberkreisdirektor des Kreises Aachen (the Chief Executive for the administrative district of Aachen; hereinafter 'the Oberkreisdirektor') for offering for sale in his shop in Germany various foodstuffs that were not labelled in German but only in French, Italian or English, contrary to Paragraph 3(3) of the Verordnung über die Kennzeichnung von Lebensmitteln (Regulations of the labelling of foodstuffs; 'LMKV').

    Mr Goerres runs a food market in Eschweiler, near Aachen. On 13 January 1995, he offered products for sale in his shop which were not labelled in German but only in French, Italian or English.

    On 6 July 1995, the Oberkreisdirektor imposed an administrative penalty of DM 2 000 on Mr Goerres for infringement of Paragraph 3(3) of the LMKV.

    The first question

    The Court has ruled in Case C-369/89 Piageme v Peeters [1991] ECR I-2971 that Article 30 of the EEC Treaty and Article 14 of the directive preclude a national law from requiring the exclusive use of a specific language for the labelling of foodstuffs, without allowing for the possibility of using another language easily understood by purchasers or of ensuring that the purchaser is informed by other means.

    The Court has further held in Case C-85/94 Piageme v Peeters [1995] ECR I-2955 ('Piageme II') that Article 14 of the directive precludes a Member State, having regard to the requirement of a language easily understood by purchasers, from requiring the use of the language most widely spoken in the area in which the product is offered for sale, even if the use at the same time of another language is not excluded.

    Unlike the legislation at issue in those cases, this case concerns national legislation which, whilst prescribing the use of a specific language for the labelling of foodstuffs, also allows, as an alternative, the use of another language easily understood by purchasers. Such legislation does not impose a stricter obligation than that of using a language that is easily understood.

    It follows that, so far as language requirements are concerned, Article 14 of the directive does not preclude such legislation.

    In that respect, it is for the national court to assess, in the light of all the circumstances of each individual case, the ease with which the information supplied can be understood. That assessment must be made in respect of each of the particulars required by the directive and must take account of the fact that the directive provides for the possibility of stating the required particulars not only by using a language but also by means of other measures such as designs, symbols or pictograms.

    The second question

    In its second question, the national court essentially asks whether the placing in the shop, adjacent to the product in question, of a supplementary sign containing the prescribed particulars in a language which is easily understood, is sufficient to ensure that the consumer is informed.

    On that point, it is sufficient to recall that, at paragraph 26 of its judgment in Piageme II, the Court of Justice held that consumer protection is not ensured by measures other than labelling such as, for example, information supplied at the sales point or as part of wide-ranging advertising campaigns.

    The Court reached that conclusion on the view that the aim of Article 14 of the directive, which is to inform and protect consumers, would not be attained if they did not always have access to the compulsory particulars specified in the directive, not only at the time of purchase, but also at that of consumption. The Court further pointed out that the ultimate consumer is not necessarily the person who purchased the foodstuffs.

    The Court ruled:

  • '1. Article 14 of Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer does not preclude national legislation which, as regards language requirements, prescribes the use of a specific language for the labelling of foodstuffs but which also permits, as an alternative, the use of another language easily understood by purchasers.
  • 2. All the compulsory particulars specified in Directive 79/112 must appear on the labelling either in a language easily understood by consumers of the State or the region in question, or by means of other measures such as designs, symbols or pictograms. The placing in the shop of a supplementary sign adjacent to the product in question is not sufficient to ensure that the ultimate consumer is informed and protected.'

    Case C-389/96

    Aher-Waggon GmbH v Bundesrepublik Deutschland

    Free movement of goods

    14 July 1998

    Preliminary ruling

    (Measures having equivalent effect · Directives on noise emissions from aircraft · Stricter domestic limits · Barrier to the importation of an aircraft · Environmental protection) (Fifth Chamber)

    By order of 25 September 1996, the Bundesverwaltungsgericht (Federal Administrative Court) referred to the Court for a preliminary ruling a question on the interpretation of Article 30 of the Treaty.

    That question was raised in proceedings between Aher-Waggon GmbH ('Aher-Waggon') and the Luftfahrt-Bundesamt (Federal Office of Aviation; 'the Bundesamt') following the refusal by the Bundesamt to grant Aher-Waggon registration for a propeller-driven aircraft previously registered in Denmark.

    In order to combat disturbance from air-traffic noise, the Council adopted Directive 80/51/EEC of 20 December 1979 on the limitation of noise emissions from subsonic aircraft, as amended by Council Directive 83/206/EEC of 21 April 1983 ('the Directive'). The Directive sets limits based on the relevant standards adopted by the International Civil Aviation Organisation. Those standards are set out in Annex 16/5 to the Convention on International Civil Aviation, signed in Chicago in 1944 ('the Convention').

    In 1992 Aher-Waggon bought in Denmark a propeller-driven Piper PA 28-140 aircraft which had been registered in that State since 1974.

    In July 1992 it applied to the Bundesamt for German registration for the aircraft, which was refused on the ground that it exceeded the noise limits permitted in Germany.

    While, with a sound level of 72.2 dB(A) for a maximum take-off weight of 976 kg, the aircraft at issue in the main proceedings complies with the relevant Community standards (73 dB(A)), it actually exceeds the German thresholds (69 dB(A)).

    Aher-Waggon then claimed, in an application for review on a point of law before the Bundesverwaltungsgericht, that the refusal to grant it German registration was contrary to Community law. It relied on the fact that aircraft of the same type already registered in Germany and with the same sound level retained their registration.

    The Bundesverwaltungsgericht noted first that the relevant provisions of the Directive merely laid down minimum requirements, so that the barriers to trade arising from the stricter German noise limits did not, in principle, infringe Community law.

    It pointed out, however, that in the case before it the tightening of the minimum European standards concerned only aircraft from the other Member States of the Community. Since it had doubts as to whether such a difference in treatment was permissible on grounds relating to the safeguarding of acquired rights vis-à-vis owners of aircraft already registered in Germany, it referred a question to the Court for a preliminary ruling.

    By that question, the national court essentially asks whether Article 30 of the Treaty precludes national legislation which makes the first registration in national territory of aircraft previously registered in another Member State conditional upon compliance with stricter noise standards than those laid down by the Directive, while exempting from those standards aircraft which obtained registration in national territory before the Directive was implemented.

    It should be noted at the outset that the Directive merely lays down minimum requirements, as is shown by the words 'in accordance with requirements which are at least equal to the applicable standards' which appear in Article 3(1). The Directive thus allows the Member States to impose stricter noise limits.

    Nevertheless, it is necessary to consider whether a Member State which, like the Federal Republic of Germany, has introduced stricter noise limits has, in exercising that power, infringed other provisions of Community law, in particular Article 30 of the Treaty.

    National legislation of the kind at issue in the main proceedings restricts intra-Community trade since it makes the first registration in national territory of aircraft previously registered in a Member State conditional upon compliance with stricter noise standards than those laid down by the Directive, while exempting from those standards aircraft which obtained registration in national territory before the Directive was implemented.

    Such a barrier may, however, be justified by considerations of public health and environmental protection of the kind relied upon by the German Government. The German Government states in particular that the Federal Republic of Germany, which is a very densely populated State, attaches special importance to ensuring that its population is protected from excessive noise emissions.

    It is also settled case-law that national legislation which restricts or is liable to restrict intra-Community trade must be proportionate to the objectives pursued and that those objectives must not be attainable by measures which are less restrictive of such trade.

    As regards the imposition of stricter standards than those laid down in the Directive, suffice it to state that, as the German Government has explained, limiting noise emissions from aircraft is the most effective and convenient means of combating the noise pollution which they generate. Without extremely costly investment, it is generally difficult to reduce noise emissions appreciably by carrying out works in the vicinity of airports.

    Furthermore, the restriction, through stricter rules governing noise emissions from aircraft, on the possibility of registering an aircraft in Germany applies to all aircraft, new or used, irrespective of their origin, and does not prevent aircraft registered in another Member State from being used in Germany.

    The national authorities were thus entitled to consider that the number of aircraft not meeting the stricter noise standards was necessarily going to fall and, therefore, that the overall level of noise pollution could not fail to diminish gradually. Furthermore, the effectiveness of that policy of progressively eliminating from the national fleet aircraft not meeting the stricter noise standards would be undermined if their number could be increased, to an extent not foreseeable by the national authorities, by aircraft from other Member States.

    Legislation of the kind at issue in the main proceedings therefore does not appear to be disproportionate.

    The Court ruled:

    'Article 30 of the EC Treaty does not preclude national legislation which makes the first registration in national territory of aircraft previously registered in another Member State conditional upon compliance with stricter noise standards than those laid down by Council Directive 80/51/EEC of 20 December 1979 on the limitation of noise emissions from subsonic aircraft, as amended by Council Directive 83/206/EEC of 21 April 1983, while exempting from those standards aircraft which obtained registration in national territory before that directive was implemented.'

    Advocate General G. Cosmas delivered his Opinion at the sitting of the Fifth Chamber on 15 January 1998.

    He proposed that the Court should answer the question referred to it for a preliminary ruling as follows:

    'Directive 80/51/EEC, as amended by Directive 83/206/EEC, lays down minimum noise requirements for aircraft engines as a condition for the first registration of aircraft in the Member States but allows the Member States to enact stricter requirements. The introduction by a national measure, pursuant to the abovementioned specific Community legislation, of lower noise emission limits for aircraft whose first registration is applied for is compatible with the principles of the free movement of goods as safeguarded by Article 30 of the EC Treaty, even if it has the consequence of preventing the registration in Germany of an aircraft already registered in another Member State when aeroplanes of the same type registered in the German register before the abovementioned directive was adopted retain their registration.'

    Case C-125/97

    A.G.R. Regeling v Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid

    Social policy

    14 July 1998

    Preliminary ruling

    (Social policy · Directive 80/987/EEC · Guarantee institutions' obligation to pay · Outstanding claims) (Fifth Chamber)

    By order of 18 March 1997, the Arrondissementsrechtbank te Alkmaar (Alkmaar District Court) referred to the Court for a preliminary ruling a question on the interpretation of Article 4 of Council Directive 80/987/EEC of 20 October 1980 ('the Directive').

    That question was raised in proceedings between Mr Regeling and the Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid (Metal Industry Professional and Trade Association, 'the guarantee institution') concerning the calculation of the guarantee provided for by the Directive.

    The Directive is intended to guarantee employees a minimum level of protection under Community law in the event of their employer's insolvency, without prejudice to more favourable provisions existing in the Member States.

    For that purpose, Article 3(1) of the Directive requires the Member States to take the measures necessary to ensure that guarantee institutions guarantee payment of employees' outstanding claims resulting from contracts of employment or employment relationships and relating to pay for the period prior to a given date; in accordance with Article 3(2), the date is, at the choice of the Member States, that of the onset of the employer's insolvency (first indent), or that of the notice of dismissal issued on account of insolvency (second indent) or that of the onset of the employer's insolvency or that on which the contract of employment or the employment relationship was discontinued on account of the employer's insolvency (third indent).

    However, under Article 4(1) and (2) of the Directive, payment may be limited to outstanding claims relating to pay for certain periods, depending on the choice made by the Member States pursuant to Article 3(2).

    On 29 October 1990 Mr Regeling was engaged as a welder by Mr Moojen. The contract of employment was terminated on 14 June 1991 with effect from 1 August 1991. The employer was declared insolvent on 21 April 1992; the insolvency procedure was closed several months late on the ground of lack of assets.

    Up to and including December 1990 Mr Regeling received his pay on the due date. Between 1 January and 1 August 1991, however, the employer paid him a fraction of his wages at irregular intervals. Whereas Mr Regeling was entitled, according to his calculations, to net pay of HFL 21 892 for the period in question, consisting of basic pay, overtime and holiday pay, his employer made sporadic payments in that period totalling HFL 18 136. Therefore, according to Mr Regeling, his employer still owes him HFL 3 756 by way of arrears of wages and other amounts.

    On 1 July 1992 Mr Regeling claimed those arrears from the guarantee institution.

    By decision of 11 November 1993 the defendant rejected the application on the ground that Mr Regeling had no claim for wages in respect of the reference period, that is to say, 15 March to 25 July 1991, since the total amount of payments made by the employer during that period was greater than the applicant's entitlement to pay for the same period.

    By its question the national court is in substance asking whether, on a proper construction of Article 4(2) of the Directive, where an employee has, simultaneously, claims against his employer in respect of periods of employment before the reference period laid down in that provision and claims relating to the reference period itself, payments of wages made by the employer during the latter period must be regarded as

    covering solely the employee's claims arising during the reference period or whether they must be set in priority against earlier claims.

    The guarantee institutions are required, in principle, in accordance with Article 3(1) of the Directive, to guarantee payment of employees' outstanding claims relating to pay for the period prior to a given date. It is purely by way of derogation that Member States have the option, under Article 4(1), to limit that liability to pay to a given period fixed in accordance with the detailed rules laid down in Article 4(2). As the Advocate General observes, that provision must be construed narrowly and in conformity with the social purpose of the Directive, which is to ensure a minimum level of protection for all workers.

    Where, as in the circumstances of the main action, a worker has outstanding claims relating to periods of employment before the reference period, the direct consequence of setting payments made by the employer during the reference period against claims arising during that period, notwithstanding the existence of earlier claims, would be to undermine the minimum protection guaranteed by the Directive, the provision of which would in such cases depend on the employer's fortuitous or deliberate decision to make or not to make certain payments during the reference period.

    It would be contrary to the purpose of the Directive to interpret Article 4(2) in such a way that a worker in that situation is not entitled to the guarantee in respect of wages which he has in fact lost during the reference period.

    The Court ruled:

    'On a proper construction of Article 4(2) of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer, where a worker has, simultaneously, claims against his employer in respect of periods of employment before the reference period laid down in that provision and claims relating to the reference period itself, payments of wages made by the employer during the latter period must be set in priority against earlier claims.'

    Case C-171/96

    Rui Alberto Pereira Roque v His Excellency the Lieutenant Governor of Jersey

    New accessions

    16 July 1998

    Preliminary ruling

    (Free movement of persons · Act of Accession 1972 · Protocol No 3 concerning the Channel Islands and the Isle of Man · Jersey) (Full Court)

    By order of 11 April 1996, the Royal Court of Jersey referred to the Court for a preliminary ruling three questions on the interpretation of Article 4 of Protocol No 3 on the Channel Islands and the Isle of Man (OJ, English Special Edition of 27 March 1972, p. 164; 'Protocol No 3') annexed to the Act concerning the Conditions of Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the European Economic Community and to the European Atomic Energy Community and the Adjustments to the Treaties.

    Those questions were raised in proceedings between Mr Pereira Roque and His Excellency the Lieutenant Governor of Jersey ('the Lieutenant Governor') concerning the deportation order made by the latter against Mr Pereira Roque.

    The main proceedings

    Mr Pereira Roque, a Portuguese national, arrived in Jersey on 18 February 1992. He was admitted without restriction, in accordance with Section 7(1) of the United Kingdom Immigration Act 1988.

    In August 1993, Mr Pereira Roque obtained employment as a night porter at a Jersey hotel. In October 1993, he committed a theft at that hotel.

    After being dismissed from the hotel where he was working, Mr Pereira Roque was unable to find long-term employment until April 1994, when he obtained a job as a day porter in another Jersey hotel. On 20 October 1994, he was convicted of three thefts committed at that hotel in June of that year.

    On 22 December 1994, the Lieutenant Governor of Jersey issued a deportation order against Mr Pereira Roque under Section 3(5)(b) of the United Kingdom Immigration Act 1971. The order was served on Mr Pereira Roque on 29 December 1994.

    On 3 January 1995, Mr Pereira Roque made an application to the Royal Court of Jersey for annulment of the deportation order or a declaration of its invalidity, and for suspension of its implementation pending the determination of the case. On that date, the Royal Court ordered the proceedings to be served on the Lieutenant Governor and the deportation order to be suspended.

    The first question

    In its first question, the national court essentially asks whether the effect of the rule on equal treatment set out in Article 4 of Protocol No 3 is to prohibit the deportation from Jersey of nationals of a Member State other than the United Kingdom, since British citizens, including those who are not Channel Islanders within the meaning of Article 6 of Protocol No 3, are not liable to be deported from Jersey.

    In so far as Mr Pereira Roque's situation falls under, inter alia, rules on the free movement of workers in territories where the Treaty is fully applicable, the rule set out in Article 4 of Protocol No 3 applies to him, even if Community nationals cannot thereby obtain in the Channel Islands the benefit of the rules on the free movement of workers. That rule in Article 4 of Protocol No 3 applies in particular in the case of a deportation order made against him by the Jersey authorities.

    In order to assess the implications of the principle of equal treatment laid down by Article 4 of Protocol No 3 in a situation such as that in the main proceedings, it is important to recall that the Court has held that the reservation contained in Article 48(3) of the EC Treaty permits Member States to adopt, with respect to the nationals of other Member States and on the grounds specified in that provision, in particular grounds justified by the requirements of public policy, measures which they cannot apply to their

    own nationals, inasmuch as they have no authority to expel the latter from the national territory or deny them access thereto.

    That difference of treatment between a State's own nationals and those of other States derives from a principle of international law which precludes a State from denying its own nationals the right to enter its territory and reside there, and which the EC Treaty cannot be assumed to disregard in the context of relations between Member States.

    That principle must also be complied with in applying Article 4 of Protocol No 3.

    Turning to Mr Pereira Roque's argument that the requirement of equal treatment should nevertheless be applied between citizens of the United Kingdom who are not Channel Islanders and nationals of other Member States, it is true that Protocol No 3 distinguishes citizens of the United Kingdom having certain links with the Channel Islands from other citizens of the United Kingdom.

    However, since Channel Islanders are British nationals, the distinction between them and other citizens of the United Kingdom cannot be likened to the difference in nationality between the nationals of two Member States.

    It follows from the above considerations that Article 4 of Protocol No 3 does not prohibit a difference of treatment resulting from the fact that a national of another Member State may be deported from Jersey under national legislation, whereas citizens of the United Kingdom, including those who are not Channel Islanders within the meaning of Article 6 of Protocol No 3, are not liable to deportation.

    The second question

    In its second question, the national court essentially asks whether Article 4 of Protocol No 3 is to be interpreted as limiting the reasons for which a national of a Member State other than the United Kingdom may be deported from Jersey to those justified on grounds of public policy, public security or public health.

    The rule on equal treatment laid down by Article 4 of Protocol No 3 prohibits the Jersey authorities, even if difference of treatment between citizens of the United Kingdom and nationals of other Member States is allowed, from basing the exercise of their powers on factors which would have the effect of applying an arbitrary distinction to the detriment of nationals of other Member States.

    Such an arbitrary distinction would be applied if a deportation order were made against a national of another Member State on the basis of an assessment of conduct which, when attributable to the nationals of the first State, does not give rise to repressive measures or other genuine and effective measures intended to combat such conduct.

    In the case of Jersey, that comparison must be made between the deportation order at issue in the main proceedings and the measures to which the same type of conduct gives rise when attributable to a citizen of the United Kingdom.

    The third question

    In its third question, the national court asks whether Article 4 of Protocol No 3 prohibits the Jersey authorities from deporting a national of another Member State when the public policy considerations relied upon by those authorities would not in practice entail the deportation of that person from the United Kingdom.

    In so far as the Channel Island authorities may, in order to deport a national of another Member State, rely on reasons and considerations other than those laid down by Community law, the extension of the effects of a deportation order to the territory of the United Kingdom might have the indirect consequence

    of making the provisions of Community law on freedom of movement for persons no longer fully applicable there.

    It is clear from Article 227(5)(c) of the Treaty and Protocol No 3 that those provisions are not intended to affect provisions of Community law concerning, in particular, the free movement of nationals of other Member States in the territory of the United Kingdom. They cannot therefore be interpreted in such a way that, as a result of the system they establish, the rights of nationals of other Member States would be weakened as regards entry to and residence in the territory of the United Kingdom.

    The Court ruled:

  • '1. The rule on equal treatment set out in Article 4 of Protocol No 3 on the Channel Islands and the Isle of Man annexed to the Act concerning the Conditions of Accession of the Kingdom of Denmark, Ireland, and the United Kingdom of Great Britain and Northern Ireland to the European Economic Community and to the European Atomic Energy Community and the Adjustments to the Treaties does not have the effect of prohibiting the deportation from Jersey of nationals of a Member State other than the United Kingdom, even though British citizens, including those who are not Channel Islanders within the meaning of Article 6 of Protocol No 3, are not liable to be deported from Jersey.
  • 2. Article 4 of Protocol No 3 is not to be interpreted as limiting the reasons for which a national of a Member State other than the United Kingdom may be deported from Jersey to those justified on grounds of public policy, public security or public health, laid down by Article 48(3) of the EC Treaty and set out in detail by Council Directive 64/221/EEC of 25 February 1964 on the co-ordination of special measures concerning the movement and residence of foreign nationals which are justified on grounds of public policy, public security or public health. Article 4 of Protocol No 3 does, however, prohibit the Jersey authorities from making a deportation order against a national of another Member State by reason of conduct which, when attributable to citizens of the United Kingdom, does not give rise on the part of the Jersey authorities to repressive measures or other genuine and effective measures intended to combat such conduct.
  • 3. Protocol No 3 cannot be interpreted in such a way that a deportation order made by the Jersey authorities against a national of a Member State other than the United Kingdom would have the effect of prohibiting that person's entry to and residence in the territory of the United Kingdom for reasons and considerations other than those for which the United Kingdom authorities might otherwise restrict the free movement of persons under Community law.'

    Advocate General A. La Pergola delivered his Opinion at the sitting of the Full Court on 23 September 1997.

    He proposed that the Court should reply as follows to the questions referred by the Royal Court of Jersey:

  • '(1) Article 4 of Protocol No 3 to the Act of Accession of the United Kingdom to the European Communities does not confer on citizens of a Member State other than the United Kingdom

    immunity from deportation from the territory of the Bailiwick of Jersey, notwithstanding that British citizens are not subject to immigration controls in that territory or liable to be deported from it.

  • (2) Article 4 of the Protocol does, however, preclude the competent Jersey authorities from deporting a citizen of a Member State other than the United Kingdom from Jersey unless that person's continued presence in the territory of the Bailiwick constitutes a genuine and sufficiently serious threat to its fundamental interests, such as those relating to public policy, public security or public health.
  • The island authorities are to interpret and apply those concepts having regard to the fundamental interests of Jersey society at the material time.
  • In particular, the personal conduct of a non-British Community citizen cannot be regarded as giving rise to a genuine and sufficiently serious threat to the fundamental interests of Jersey where it is shown that, in the case of similar conduct by British citizens, the Jersey authorities do not usually adopt restrictive measures which, although of a different type, are in practice designed to restrain such conduct, such as binding over.
  • Moreover, the justification for a deportation order must be assessed by balancing the interests involved against the fundamental rights of the individual concerned, such as, in particular, the right to his private and family life, taking into account also the length of his previous residence in the territory of the Bailiwick.
  • (3) Article 4 of the Protocol does not preclude the competent Jersey authorities from deporting a citizen of a Member State from the island's territory where the public policy considerations on which those authorities base their decision would not in practice lead to that person's deportation from the United Kingdom. However, a deportation order adopted by the Jersey authorities against a citizen of a Member State does not take effect outside the territory of the island, even in the absence of an express measure by the British Secretary of State limiting the territorial effect of the order.'

    Case C-264/96

    Imperial Chemical Industries plc (ICI) v Kenneth Hall Colmer (Her Majesty's Inspector of Taxes)

    Freedom of movement for persons

    16 July 1998

    Preliminary ruling

    (Right of establishment · Corporation tax · Surrender by one company to another company in the same group of tax relief on trading losses · Residence requirement imposed on group companies · Discrimination according to the place of the corporate seat· Obligations of the national court) (Full Court)

    By order of 24 July 1996, the House of Lords referred to the Court of Justice for a preliminary ruling two questions on the interpretation of Articles 5 and 52 of the EC Treaty.

    Those questions were raised in proceedings between Imperial Chemical Industries plc (hereinafter 'ICI') and the United Kingdom tax authorities (hereinafter 'the Inland Revenue') concerning the latter's refusal to grant to ICI tax relief in respect of trading losses incurred by a subsidiary of the holding company beneficially owned by ICI through a consortium.

    ICI and Wellcome Foundation Ltd, both of which are companies resident in the United Kingdom, together form a consortium through which they beneficially own 49% and 51%, respectively, of Coopers Animal Health (Holdings) Ltd (hereinafter 'Holdings').

    The sole business of Holdings is to hold shares in some 23 trading companies which are its subsidiaries and which operate in many countries. Of those 23 subsidiaries, 4 · including Coopers Animal Health Ltd (hereinafter 'CAH') · are resident in the United Kingdom, 6 in other Member States and 13 in non-member countries.

    CAH incurred losses on its United Kingdom trade in the accounting periods ending in 1985, 1986 and 1987. ICI sought to set 49% of CAH's losses for those periods (the proportion corresponding to its shareholding in Holdings) against its chargeable profits for the corresponding periods by way of tax relief.

    The Inland Revenue refused ICI's application for tax relief on the ground that Holdings does not constitute a holding company.

    Contesting that interpretation of the domestic legislation, ICI brought an action against the decision rejecting its claim. The High Court found in ICI's favour and its decision was subsequently affirmed by the Court of Appeal.

    On appeal, the House of Lords considered an interpretation of Community law to be necessary regarding both the compatibility of the residence requirement laid down by the Act for the grant of tax relief as claimed by ICI with the rules of the Treaty and, should the Act prove to be contrary to Community law, the approach to be taken by national courts in such a situation. It therefore decided to stay proceedings and refer two questions to the Court of Justice for a preliminary ruling:

    The first question

    By its first question, the House of Lords asks essentially whether Article 52 of the Treaty precludes legislation of a Member State which, in the case of companies established in that State belonging to a consortium through which they control a holding company, makes a particular form of tax relief subject to the requirement that the holding company's business consist wholly or mainly in the holding of shares in subsidiaries that are established in the Member State concerned.

    Under the legislation at issue in the main proceedings, companies belonging to a resident consortium which have, through a holding company, exercised their right to freedom of establishment in order to set up subsidiaries in other Member States are denied tax relief on losses incurred by a resident subsidiary where the majority of the subsidiaries controlled by the holding company have their seat outside the United Kingdom.

    Such legislation, therefore, applies the test of the subsidiaries' seat to establish differential tax treatment of consortium companies established in the United Kingdom. Consortium relief is available only to companies controlling, wholly or mainly, subsidiaries whose seats are in the national territory.

    It is therefore necessary to determine whether there is any justification for such inequality of treatment under the Treaty's provisions on freedom of establishment.

    As regards the justification based on the risk of tax avoidance, suffice it to note that the legislation at issue in the main proceedings does not have the specific purpose of preventing wholly artificial arrangements, set up to circumvent United Kingdom tax legislation, from attracting tax benefits, but applies generally to all situations in which the majority of a group's subsidiaries are established, for whatever reason, outside the United Kingdom. However, the establishment of a company outside the United Kingdom does not, of itself, necessarily entail tax avoidance, since that company will in any event be subject to the tax legislation of the State of establishment.

    Furthermore, the risk of charges being transferred, which the legislation at issue is designed to prevent, is entirely independent of whether or not the majority of subsidiaries are resident in the United Kingdom. The existence of only one non-resident subsidiary is enough to create the risk invoked by the United Kingdom Government.

    In answer to the argument that revenue lost through the granting of tax relief on losses incurred by resident subsidiaries cannot be offset by taxing the profits of non-resident subsidiaries, it must be pointed out that diminution of tax revenue occurring in this way is not one of the grounds listed in Article 56 of the Treaty and cannot be regarded as a matter of overriding general interest which may be relied upon in order to justify unequal treatment that is, in principle, incompatible with Article 52 of the Treaty.

    It is true that in the past the Court has accepted that the need to maintain the cohesion of tax systems could, in certain circumstances, provide sufficient justification for maintaining rules restricting fundamental freedoms. Nevertheless, in the cases cited, there was a direct link between the deductibility of contributions from taxable income and the taxation of sums payable by insurers under old-age and life assurance policies, and that link had to be maintained in order to preserve the cohesion of the tax system in question. In the present case, there is no such direct link between the consortium relief granted for losses incurred by a resident subsidiary and the taxation of profits made by non-resident subsidiaries.

    The second question

    By its second question the House of Lords essentially asks the Court to explain the scope of the duty to cooperate in good faith, laid down by Article 5 of the Treaty. More specifically, if it were to follow from the reply to the first question that the legislation at issue in the main proceedings is incompatible with Community law in not granting tax relief where the holding company owned by the consortium controls mainly subsidiaries having their seat in the Community, in a case where this condition is not fulfilled by subsidiaries resident in the United Kingdom, the House of Lords asks whether it must likewise disapply that legislation, or construe it in a way conforming with Community law, where the holding company controls mainly subsidiaries having their seat in non-member countries.

    It must be emphasised that the difference of treatment applied according to whether or not the business of the holding company belonging to the consortium consists wholly or mainly in holding shares in subsidiaries having their seat in non-member countries lies outside the scope of Community law.

    Consequently, Articles 52 and 58 of the Treaty do not preclude domestic legislation under which tax relief is not granted to a resident consortium member where the business of the holding company owned by that consortium consists wholly or mainly in holding shares in subsidiaries which have their seat in non-member countries. Nor does Article 5 of the Treaty apply.

    Accordingly, when deciding an issue concerning a situation which lies outside the scope of Community law, the national court is not required, under Community law, either to interpret its legislation in a way conforming with Community law or to disapply that legislation. Where a particular provision must be disapplied in a situation covered by Community law, but that same provision could remain applicable to a situation not so covered, it is for the competent body of the State concerned to remove that legal uncertainty in so far as it might affect rights deriving from Community rules.

    The Court ruled:

  • '1. Article 52 of the EC Treaty precludes legislation of a Member State which, in the case of companies established in that State belonging to a consortium through which they control a holding company, by means of which they exercise their right to freedom of establishment in order to set up subsidiaries in other Member States, makes a particular form of tax relief subject to the requirement that the holding company's business consist wholly or mainly in the holding of shares in subsidiaries that are established in the Member State concerned.
  • 2. In circumstances such as those in point in the main proceedings, Article 5 of the EC Treaty does not require the national court to interpret its legislation in conformity with Community law or to disapply the legislation in a situation falling outside the scope of Community law.'

    Advocate General G. Tesauro delivered his Opinion at the sitting of the Full Court on 16 December 1997.

    He proposed that the Court should reply as follows:

  • '(1) Article 52 of the Treaty is to be interpreted as precluding the application of legislation of a Member State which prevents a company established in the territory of that State from obtaining tax relief in respect of losses incurred by another company, established in the same State and controlled by the first company through a holding company, in cases where the holding company's business consists, wholly or mainly, in holding shares of subsidiaries resident outside that State, in so far as such legislation constitutes a restriction on the exercise of the right of establishment in other Member States of the European Union.
  • (2) Article 5 of the Treaty does not require the national courts to interpret domestic legislation consistently with Community law in respect of a situation, or aspects of a situation, falling outside the scope of Community law'.

    Case C-355/96

    Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH

    Approximation of laws

    16 July 1998

    Preliminary ruling

    (Directive 89/104/EEC · Exhaustion of trade mark · Goods put on the market in the Community or in a non-member country) (Full Court)

    By order of 15 October 1996 the Oberster Gerichtshof referred to the Court for a preliminary ruling two questions on the interpretation of Article 7 of the First Council Directive 89/104/EEC of 21 December 1988 ('the Directive'), as amended by the Agreement on the European Economic Area of 2 May 1992 ('the EEA Agreement').

    Those questions were raised in proceedings between two Austrian companies, Silhouette International Schmied GmbH & Co. KG ('Silhouette') and Hartlauer Handelsgesellschaft mbH ('Hartlauer').

    Silhouette produces spectacles in the higher price ranges. It markets them worldwide under the trade mark 'Silhouette', registered in Austria and most countries of the world. In Austria, Silhouette itself supplies spectacles to opticians; in other States it has subsidiary companies or distributors.

    Hartlauer sells inter alia spectacles through its numerous subsidiaries in Austria, and its low prices are its chief selling point. It is not supplied by Silhouette because that company considers that distribution of its products by Hartlauer would be harmful to its image as a manufacturer of top-quality fashion spectacles.

    In October 1995 Silhouette sold 21 000 out-of-fashion spectacle frames to a Bulgarian company, Union Trading, for the sum of USD 261 450. It had directed its representative to instruct the purchasers to sell the spectacle frames in Bulgaria or the states of the former USSR only, and not to export them to other countries.

    In November 1995 Silhouette delivered the frames in question to Union Trading in Sofia. Hartlauer bought those goods and offered them for sale in Austria from December 1995.

    Silhouette brought an action for interim relief before the Landesgericht Steyr, seeking an injunction restraining Hartlauer from offering spectacles or spectacle frames for sale in Austria under its trade mark, where they had not been put on the market in the European Economic Area ('EEA') by Silhouette itself or by third parties with its consent. It claims that it has not exhausted its trade mark rights, since, in terms of the Directive, trade-mark rights are exhausted only when the products have been put on the market in the EEA by the proprietor or with his consent.

    Silhouette's action was dismissed by the Landesgericht Steyr and, on appeal, by the Oberlandesgericht Linz. Silhouette appealed to the Oberster Gerichtshof on a point of law.

    The Oberster Gerichtshof decided to stay proceedings and refer two questions to the Court for a preliminary ruling:

    Question 1

    By its first question the Oberster Gerichtshof is in substance asking whether national rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the EEA under that mark by the proprietor or with his consent are contrary to Article 7(1) of the Directive.

    It is to be noted at the outset that Article 5 of the Directive defines the 'rights conferred by a trade mark' and Article 7 contains the rule concerning 'exhaustion of the rights conferred by a trade mark'.

    Like the rules laid down in Article 6 of the Directive, which set certain limits to the effects of a trade mark, Article 7 states that, in the circumstances which it specifies, the exclusive rights conferred by the trade mark are exhausted, with the result that the proprietor is no longer entitled to prohibit use of the mark. Exhaustion is subject first of all to the condition that the goods have been put on the market by the

    proprietor or with his consent. According to the text of the Directive itself, exhaustion occurs only where the products have been put on the market in the Community (in the EEA since the EEA Agreement entered into force).

    No argument has been presented to the Court that the Directive could be interpreted as providing for the exhaustion of the rights conferred by a trade mark in respect of goods put on the market by the proprietor or with his consent irrespective of where they were put on the market.

    In that respect, although the third recital in the preamble to the Directive states that 'it does not appear to be necessary at present to undertake full-scale approximation of the trade mark laws of the Member States', the Directive none the less provides for harmonisation in relation to substantive rules of central importance in this sphere, that is to say, according to that same recital, the rules concerning those provisions of national law which most directly affect the functioning of the internal market, and that that recital does not preclude the harmonisation relating to those rules from being complete.

    Articles 5 to 7 of the Directive must be construed as embodying a complete harmonisation of the rules relating to the rights conferred by a trade mark.

    Accordingly, the Directive cannot be interpreted as leaving it open to the Member States to provide in their domestic law for exhaustion of the rights conferred by a trade mark in respect of products put on the market in non-member countries.

    This, moreover, is the only interpretation which is fully capable of ensuring that the purpose of the Directive is achieved, namely to safeguard the functioning of the internal market.

    Finally, the Community authorities could always extend the exhaustion provided for by Article 7 to products put on the market in non-member countries by entering into international agreements in that sphere, as was done in the context of the EEA Agreement.

    Question 2

    By its second question the Oberster Gerichtshof is in substance asking whether Article 7(1) of the Directive can be construed as meaning that the proprietor of a trade mark is entitled, on the basis of that provision alone, to obtain an order restraining a third party from using its mark for products which have been put on the market outside the EEA under that mark by the proprietor or with his consent.

    While it is undeniable that the Directive requires Member States to implement provisions on the basis of which the proprietor of a trade mark, when his rights are infringed, must be able to obtain an order restraining third parties from making use of his mark, that requirement is imposed, not by Article 7, but by Article 5 of the Directive.

    That being so, it is to be remembered, first, that, according to settled case-law of the Court, a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual. Second, according to the same case-law, when applying domestic law, whether adopted before or after the directive, the national court that has to interpret that law must do so, as far as possible, in the light of the wording and the purpose of the directive so as to achieve the result it has in view and thereby comply with the third paragraph of Article 189 of the Treaty.

    The Court ruled:

  • '1. National rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the EEA under that mark by the proprietor or with its consent are

    contrary to Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992.

  • 2. Article 7(1) of Directive 89/104 cannot be interpreted as meaning that the proprietor of a trade mark is entitled, on the basis of that provision alone, to obtain an order restraining a third party from using his trade mark for products which have been put on the market outside the European Economic Area under that mark by the proprietor or with his consent.'

    Advocate General F.G. Jacobs delivered his Opinion at the sitting of the Full Court on 29 January 1998.

    He proposed that the Court should reply as follows:

  • '(1) Article 7(1) of the First Council Directive (89/104/EEC) of 21 December 1988 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that the proprietor of a trade mark is entitled to prevent a third party from using the mark for goods which have been put on the market under that mark outside the EEA.
  • (2) Even where Article 7(1) alone of the relevant provisions of the Directive has been specifically transposed into national law, the proprietor of the trade mark is entitled to obtain an order prohibiting the third party from using the mark for goods which have been put on the market under that mark outside the EEA.'

    Case C-136/96

    The Scotch Whisky Association v Compagnie Financière Européenne de Prises de Participation (Cofepp) and Others

    Approximation of laws

    16 July 1998

    Preliminary ruling

    (Definition, description and presentation of spirit drinks · Regulation (EEC) No 1576/89 · Conditions for the use of the generic term 'whisky' · Drinks consisting entirely of whisky and water) (Fifth Chamber)

    By order of 23 February 1996, the Tribunal de Grande Instance (Regional Court), Paris, referred to the Court for a preliminary ruling a question on the interpretation of Council Regulation (EEC) No 1576/89 of 29 May 1989.

    That question was raised in the context of proceedings brought by The Scotch Whisky Association, a company incorporated under the law of Scotland, with the objects of protecting and promoting the interests of the Scotch whisky trade throughout the world and of bringing legal proceedings to defend those interests, against Compagnie Financière Européenne de Prises de Participation ('Cofepp', formerly known as La Martiniquaise LM), Prisunic SA and Centrale d'Achats et de Services Alimentaires SARL (Casal), concerning the marketing by those companies of a drink with an alcoholic strength by volume of 30% under a description including the term 'whisky'.

    Cofepp is the proprietor of the trade mark 'Gold River', registered on 30 March 1988 to designate wines, spirits and liqueurs, more particularly whisky, which it uses for a drink having a minimum alcoholic strength of 30%, made by blending various Scotch, Canadian and American whiskies together with water. The label on the bottles containing that drink bears the words 'Blended Whisky Spirit' and 'spiritueux au whisky' ('whisky-based spirit').

    On two occasions, in 1992 and 1993, The Scotch Whisky Association obtained a bailiff's official report attesting that Prisunic SA was, in a number of shops in Paris, offering Gold River brand spirit drinks for sale on the same shelving as whiskies.

    The Scotch Whisky Association brought proceedings before the Tribunal de Grande Instance, Paris, against Cofepp, Prisunic SA and Centrale d'Achats et de Services Alimentaires SARL (Casal), seeking, inter alia, a finding that they had engaged in unfair competition against it.

    The Tribunal de Grande Instance, considering that an interpretation of Regulation No 1576/89 was necessary in order to settle the dispute, stayed proceedings and sought a ruling by the Court.

    With a view to answering that question, it must first be noted that a drink such as Gold River is a spirit drink within the meaning of Article 1(2) of Regulation No 1576/89 and thus falls within the scope of that regulation.

    Thus, a drink such as Gold River, which consists entirely of whisky diluted with water so that the alcoholic strength by volume is less than 40%, does not constitute 'whisky' within the meaning of Regulation No 1576/89 and cannot be sold under that name · a finding which is not disputed in the context of the main proceedings.

    Article 5(1) of Regulation No 1576/89 specifies both that a product such as Gold River must be described as a 'spirit drink' or 'spirit' and that it may not be given one of the names referred to in Article 1(4), which means that the term 'whisky' may not appear in the sales description of such a product.

    Indications may not be freely used in addition to the sales description.

    First, such use requires authorisation to be given by the Commission under the derogating power conferred on it by Article 6(1) of Regulation No 1576/89.

    The prohibition, set out in Article 5(1) of Regulation No 1576/89, of the use of a name referred to in Article 1(4) to describe spirit drinks other than those referred to therein, is fully applicable, subject only to the reservation that the Council intended to permit the Commission to derogate expressly from Article 5 in the exercise of the powers conferred on it by Article 6(1).

    The use of an additional indication such as 'whisky' in the sales description is thus precluded by Article 5 of Regulation No 1576/89, subject to any derogations based on Article 6 thereof · and, in the present instance, there are none.

    The words 'spiritueux au whisky' do not constitute a compound term within the meaning of Article 7b of Regulation No 1014/90. In the first place, it is clear from the second recital in its preamble that

    Regulation No 1781/91 applies to liqueurs. Secondly, by 'compound term', the Community legislature intended to refer to a combination of the names of two different drinks, not the combination of the words 'spirit' and 'whisky', whisky being itself a spirit.

    Since Article 5 of Regulation No 1576/89 is a mandatory provision as regards the sales description of a drink such as Gold River, the use of a descriptive name for the drink is not possible.

    Whilst under Article 5(1) of Regulation No 1576/89 the term 'whisky' may not appear anywhere in the sales description of a product such as Gold River, it may none the less, pursuant to Article 7(1) of Directive 79/112, appear on the label of such a product, subject to the general proviso under Article 2(1) of that directive that the labelling of a foodstuff must not be such as could mislead the purchaser as to its characteristics and, in particular, its nature and properties. It must be pointed out that Regulation No 1576/89 is a specific legislative provision, and thus prevails over Directive 79/112.

    Consequently, whilst the term 'whisky' may appear without qualification in the list of ingredients, it may not, without defeating the prohibition of the use of the term 'whisky' in the sales description, appear in close proximity to that sales description unless it is clearly separated and more discreet.

    The Court ruled:

    'Article 5 of Council Regulation (EEC) No 1576/89 of 29 May 1989 laying down general rules on the definition, description and presentation of spirit drinks prohibits the inclusion of the generic term "whisky" in the sales description of a spirit drink containing whisky diluted with water, with an alcoholic strength by volume of less than 40%, or the addition of the term "whisky" to the description "spirit" or "spirit drink" applied to such a drink.'

    Advocate General J. Mischo delivered his Opinion at the sitting of the Fifth Chamber on 19 March 1998.

    He proposed that the Court should reply as follows:

    'Article 5 of Council Regulation (EEC) No 1576/89 of 29 May 1989, laying down general rules on the definition, description and presentation of spirit drinks, must be interpreted as prohibiting the inclusion of the term "whisky" in the sales description of a spirit drink consisting of whisky diluted with water, having an alcoholic strength by volume lower than 40°, and the addition of the term "whisky" to the name "spirit drink" or "spirits" applied to such a drink.'

    Case C-210/96

    Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt · Amt für Lebensmittelüberwachung and Others

    Agriculture

    16 July 1998

    Preliminary ruling

    (Marketing standards for eggs · Promotional descriptions or statements liable to mislead the purchaser · Reference consumer) (Fifth Chamber)

    By order of 8 February 1996, the Bundesverwaltungsgericht referred to the Court for a preliminary ruling three questions on the interpretation of Council Regulation (EEC) No 1907/90 of 26 June 1990 on certain marketing standards for eggs.

    The questions have been raised in proceedings brought by Gut Springenheide GmbH (hereinafter 'Gut Springenheide') and its director, Rudolf Tusky, against Oberkreisdirektor des Kreises Steinfurt · Amt für Lebensmittelüberwachung (Chief Administrative Officer of the Rural District of Steinfurt · Office for Supervision of Foodstuffs, hereinafter 'the Office for Supervision of Foodstuffs') concerning a description appearing on packs of eggs marketed by Gut Springenheide and an insert enclosed in the packs.

    Gut Springenheide markets eggs ready-packed under the description '6-Korn · 10 frische Eier' (six-grain · 10 fresh eggs). According to the company, the six varieties of cereals in question account for 60% of the feed mix used to feed the hens. A slip of paper enclosed in each pack of eggs extols the beneficial effect of this feed on the quality of the eggs.

    On 24 July 1989, having repeatedly advised Gut Springenheide of its reservations with regard to the description 'six-grain · 10 fresh eggs' and the pack insert, the Office for the Supervision of Foodstuffs gave the company notice that it must remove them. Also, a fine was imposed on its director, Rudolf Tusky, on 5 September 1990.

    By judgment of 11 November 1992, the Verwaltungsgericht (Administrative Court), Münster, dismissed the declaratory action brought by Gut Springenheide and Rudolf Tusky on the ground that the description and the pack insert infringed Paragraph 17(1) of the Lebensmittel- und Bedarfsgegenständegesetz (Foodstuffs and Consumer Goods Law) under which misleading descriptions were prohibited.

    Gut Springenheide and Rudolf Tusky appealed unsuccessfully against that judgment. The appeal court considered that the description and the pack insert in question infringed Article 10(1)(a) and (2)(e) of Regulation No 1907/90. According to that court, the description 'six-grain · 10 fresh eggs', which is also a trade mark, and the pack insert were likely to mislead a significant proportion of consumers in that they implied falsely that the feed given to the hens is made up exclusively of the six cereals indicated and that the eggs have particular characteristics.

    Gut Springenheide and Rudolf Tusky then brought an appeal on a point of law before the Bundesverwaltungsgericht (Federal Administrative Court).

    The Bundesverwaltungsgericht took the view that the outcome of the proceedings turned on Article 10 of Regulation No 1907/90, but had doubts regarding the interpretation of Article 10(2)(e), which allows packs to bear statements designed to promote sales provided that they are not likely to mislead the purchaser. According to the referring court, that provision could be interpreted in two ways. Either the misleading nature of the statements in question is to be assessed in the light of the actual expectations of consumers, in which case those expectations ought, if necessary, to be ascertained by means of a survey of a representative sample of consumers or on the basis of an expert's report, or the provision in question is based on an objective notion of a purchaser, which is only open to legal interpretation, irrespective of the actual expectations of consumers.

    Accordingly, the Bundesverwaltungsgericht ordered that proceedings be stayed and three questions be referred to the Court of Justice for a preliminary ruling:

    By its three questions, which it is appropriate to answer together, the referring court is essentially asking the Court of Justice to define the concept of consumer to be used as a standard for determining whether

    a statement designed to promote sales of eggs is likely to mislead the purchaser, in breach of Article 10(2)(e) of Regulation No 1907/90.

    There have been several cases in which the Court of Justice has had to consider whether a description, trade mark or promotional text is misleading under the provisions of the Treaty or of secondary legislation. Whenever the evidence and information before it seemed sufficient and the solution clear, it has settled the issue itself rather than leaving the final decision for the national court.

    In those cases, in order to determine whether the description, trade mark or promotional description or statement in question was liable to mislead the purchaser, the Court took into account the presumed expectations of an average consumer who is reasonably well-informed and reasonably observant and circumspect, without ordering an expert's report or commissioning a consumer research poll.

    Thus national courts ought, in general, to be able to assess, on the same conditions, any misleading effect of a description or statement designed to promote sales.

    It should be noted, further, that, in other cases in which it did not have the necessary information at its disposal or where the solution was not clear from the information before it, the Court has left it for the national court to decide whether the description, trade mark or promotional description or statement in question was misleading or not.

    The Court has not therefore ruled out the possibility that, in certain circumstances at least, a national court might decide, in accordance with its own national law, to order an expert's opinion or commission a consumer research poll for the purpose of clarifying whether a promotional description or statement is misleading or not.

    In the absence of any Community provision on this point, it is for the national court, which may find it necessary to order such a survey, to determine, in accordance with its own national law, the percentage of consumers misled by a promotional description or statement that, in its view, would be sufficiently significant in order to justify, where appropriate, banning its use.

    The Court ruled:

    'In order to determine whether a statement intended to promote sales of eggs is liable to mislead the purchaser, in breach of Article 10(2)(e) of Regulation (EEC) No 1907/90 of 26 June 1990 on certain marketing standards for eggs, the national court must take into account the presumed expectations which it evokes in an average consumer who is reasonably well-informed and reasonably observant and circumspect. However, Community law does not preclude the possibility that, where the national court has particular difficulty in assessing the misleading nature of the statement or description in question, it may have recourse, under the conditions laid down by its own national law, to a consumer research poll or an expert's report as guidance for its judgment.'

    Case C-287/96

    Kyritzer Stärke GmbH v Hauptzollamt Potsdam

    Agriculture

    16 July 1998

    Preliminary ruling

    (Agriculture · Common organisation of the markets · Production refunds · System of securities · Time-limits · Primary requirement · Subordinate requirement) (Fifth Chamber)

    By order of 4 July 1996, the Bundesfinanzhof (Federal Finance Court) referred to the Court for a preliminary ruling two questions on the interpretation of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products in conjunction with Commission Regulation (EEC) No 1722/93 of 30 June 1993 laying down detailed rules for the application of Council Regulations (EEC) No 1766/92 and (EEC) No 1418/76.

    Those questions were raised in proceedings between Kyritzer Stärke GmbH ('Kyritzer') and the Hauptzollamt Potsdam (Principal Customs Office, Potsdam, hereinafter 'the Hauptzollamt') concerning the release of securities provided in the context of applications for production refunds in respect of starch.

    Kyritzer processes natural starch into approved products within the meaning of the regulations concerning production refunds in the cereals and rice sectors and, in particular, into esterified starch. In that connection, it receives production refunds.

    In December 1991 and January 1992 Kyritzer procured the issue of refund certificates concerning the production of esterified starch falling within CN code 3505 10 50, for which it lodged security pursuant to Article 7(1) of Regulation No 2169/86.

    In January and February 1992 Kyritzer gave notice of production of certain quantities of esterified starch.

    However, since proof that that product had been put to proper use · that is to say, that it had either been subsequently turned into a processed product other than starch or exported to a third country (hereinafter 'proper use') · was provided in relation to part only of those quantities, the Hauptzollamt declared, during the course of May 1995, that the security lodged by Kyritzer was partially forfeit.

    Kyritzer brought an action contesting those decisions, which was dismissed by the Finanzgericht (Finance Court). It appealed on a point of law to the Bundesfinanzhof, which considered that Regulation No 2220/85 was applicable. However, since the Bundesfinanzhof was uncertain regarding the provisions of that regulation which govern the security in question, it decided to stay proceedings and to refer two questions to the Court for a preliminary ruling.

    The first question

    By its first question, the national court is essentially seeking to ascertain what type of requirement the proper-use obligation governing products within CN code 3505 10 50 constitutes, and what is the time-limit within which proof of compliance with that obligation must be produced; on those factors depends the determination of the question as to what is to happen to the security lodged.

    It must be observed, as a preliminary point, that, although the security in issue was lodged pursuant to Article 7 of Regulation No 2169/86, its release is subject, in accordance with Article 14 of Regulation No 1722/93, to the conditions laid down by Article 10 of the latter regulation. This, combined with the similarities between the two regulations, justifies their being considered together.

    Article 7(2) of Regulation No 2169/86 and Article 8(2) of Regulation No 1722/93 expressly classify the processing of goods into approved products as a primary requirement. Moreover, it is clear from the first recital in the preamble to Regulation No 3642/87 and the first recital in the preamble to Regulation No 165/89, which introduced into Regulation No 2169/86 specific provisions, reproduced in essence in Regulation No 1722/93, relating to products falling within CN code 3505 10 50, that the proper-use requirement is designed to take account of the consequences arising from the particular nature of esterified starch, which can be reprocessed into a raw material the use of which may prompt a fresh application for a production refund.

    Thus it is clear that the processing of goods into approved products constitutes the essential operation aimed at by the Community legislature, and that the special system applicable to products falling within CN code 3505 10 50 is intended to ensure that that operation is irreversible. It follows that the proper-use requirement introduced in Article 7(4) of Regulation No 2169/86 and reproduced in Article 10(1) of Regulation No 1722/93 must be regarded, irrespective of the position which it occupies in the specific rules applying, as a component part of the processing obligation. Consequently, the express categorisation by the Community legislature of the latter obligation as a primary requirement must be construed as covering, by extension, the proper-use requirement.

    Article 10 of Regulation No 1722/93 amends the detailed rules previously in force concerning compliance with the proper-use obligation. However, it does not lay down any specific time-limit for compliance with that obligation or for production of proof of such compliance. It is necessary, therefore, to apply the general provisions of Article 28 of Regulation No 2220/85, which govern cases in which no time-limit is prescribed for production of the proof needed to procure the release of a security.

    In accordance with Article 28(1)(b) and (2) of Regulation No 2220/85, proof of proper use must therefore be produced within 12 months from the date on which the obligation in that regard is fulfilled and, in any event, by no later than three years after the security was lodged, save in cases of force majeure. If those time-limits are not respected, the security becomes forfeit in its entirety pursuant to Article 22(1) and (2) of Regulation No 2220/85.

    The second question

    In view of the answer given to the first question, there is no need to reply to the second question.

    The Court ruled:

    'Article 10(1) of Commission Regulation (EEC) No 1722/93 of 30 June 1993 laying down detailed rules for the application of Council Regulations (EEC) No 1766/92 and (EEC) No 1418/76 concerning production refunds in the cereals and rice sectors respectively is to be interpreted as follows:

  • · the use of a product falling within CN code 3505 10 50, as prescribed by that provision, constitutes a primary requirement within the meaning of Article 20(2) of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products;
  • · compliance with that requirement must be proved within the time-limits laid down in Article 28 of that regulation, failing which the whole of the security becomes forfeit pursuant to Article 22(1) and (2) of that regulation.'

    Advocate General P. Léger delivered his Opinion at the sitting of the Fifth Chamber on 19 March 1998.

    'Article 10(1) of Commission Regulation No 1722/93 (EEC) of 30 June 1993 relating to the methods of applying the Council's Regulation No 1766/92 (EEC) and Regulation No 1418/76 (EEC) regarding production refunds in the cereals and rice sectors should be interpreted as meaning that the use of a product within the scope of Code CN 3505 10 50 or the export of this product to a third country as laid down in this text constitutes a primary requirement within the meaning of Article 20(2) of Commission Regulation No 2220/85 (EEC) of 22 July 1985 establishing the common detailed rules for the system of securities for agricultural products, the fulfilment of which must be proved within the time-limits laid down in Article 28 of the said regulation, failing which the whole of the security will be forfeit under the terms of Article 22(1) and (2) of this Regulation.'

    Case C-298/96

    Oelmühle Hamburg AG and Jb. Schmidt Söhne GmbH & Co. KG v Bundesanstalt für Landwirtschaft und Ernährung

    Agriculture

    16 July 1998

    Preliminary ruling

    (Unduly paid Community subsidy · Recovery · Application of national law · Conditions and limits) (Fifth Chamber)

    By order of 27 August 1996, the Verwaltungsgericht (Administrative Court) Frankfurt am Main referred to the Court for a preliminary ruling a question on the principles of Community law applicable to measures taken by national authorities for the recovery of an unduly paid Community subsidy.

    That question was raised in proceedings between, on the one hand, the oil mills Oelmühle Hamburg AG ('Oelmühle') and Jb. Schmidt Söhne GmbH & Co. KG ('Schmidt') and, on the other, the Bundesanstalt für Landwirtschaft und Ernährung (Federal Office of Agriculture and Food, 'the BLE') concerning part repayment of subsidies granted for the processing of colza.

    In the first case, the documents before the Court show that in 1988 Oelmühle bought several consignments of colza of Irish origin from a French supplier through a brokerage company established in Hamburg.

    The BLE issued Oelmühle with identification certificates ('ID certificates') for colza originating in Ireland and, by three decisions of 20 May 1989, granted it a subsidy for processing a total of 1 167 858 kg of colza, based on the rate applicable to colza of Irish origin.

    Subsequently the Irish customs authorities ascertained that 389 400 kg of colza in fact originated not in Ireland but in Northern Ireland, and thus in the United Kingdom. As a result, the BLE cancelled the ID certificates which it had issued and the three decisions by which it had granted the subsidy, and demanded repayment of the subsidy.

    When its complaint against that decision was rejected by decision of 17 February 1994, Oelmühle brought an action on 17 March 1994 before the Verwaltungsgericht Frankfurt am Main.

    In the second case, Schmidt appears to have acquired a quantity of colza between 1984 and 1986, part of which was supplied to it direct by a previous purchaser.

    Following an investigation of the previous purchaser, the customs authorities concluded that part of the subsidised colza had been imported from France. The BLE therefore cancelled the ID certificates issued to Schmidt and the decisions granting the subsidy, and demanded repayment of the subsidy.

    Following the rejection on 3 June 1991 of its complaint against the BLE's decision, by application of 25 June 1991 Schmidt, too, brought an action before the Verwaltungsgericht Frankfurt am Main.

    The Verwaltungsgericht Frankfurt am Main stayed proceedings and referred a question to the Court for a preliminary ruling.

    By that question, the national court is in substance asking whether it is contrary to Community law for domestic legislation to permit unduly paid Community subsidies not to be recovered, on the basis, assuming that the recipient's good faith is established, of criteria such as loss of enrichment, where the recipient had already, at the time when the subsidy was granted, passed on the pecuniary advantage resulting from it by paying the target price provided for under Community legislation and any right of recourse against his suppliers would be worthless.

    First, it should be recalled that it is for the Member States, by virtue of Article 5 of the EC Treaty, to ensure that Community regulations, particularly those concerning the common agricultural policy, are implemented within their territory. Similarly, it follows from Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (1), p. 218), that Member States must take the measures necessary to recover sums lost as a result of irregularities or negligence. The exercise of any discretion to decide whether or not it would be expedient to demand repayment of Community funds unduly or irregularly granted would be inconsistent with that duty.

    Oil mills are in a position to challenge a demand for recovery only if they acted in good faith as regards the conformity of the goods with the declaration submitted by them in order to obtain the subsidy in question. To ascertain whether that is so, it is necessary to consider, first, whether the oil mills may plead good faith even though they themselves drafted the declaration as to the origin of the goods with a view to obtaining the subsidy and, second, whether in order to be in good faith, it was incumbent on them to carry out inspections as to the origin of the goods.

    In the present case there is no provision of Community law governing the recovery of subsidies where they were paid on the basis of documents subsequently shown to be inaccurate. In that regard, it should be noted in particular that Council Regulation No 136/66/EEC of 27 September 1966 on the establishment of a common organisation of the markets in oils and fats, Council Regulation (EEC) No 1594/83 of 14 June 1983 on the subsidy for oil seeds, and Commission Regulation (EEC) No 2681/83 of 21 September 1983 laying down detailed rules for the application of the subsidy system for oil seeds makes no reference

    to recovery. Accordingly, if a trader draws up and submits a declaration with a view to obtaining a subsidy, the mere fact of having drawn up that document cannot deprive him of the right to plead his good faith when the declaration is based exclusively on information which was provided by third parties. It is, however, for the national court to consider whether certain factors should not, in the circumstances, have caused the trader to check the accuracy of this information.

    Should the national court decide that the oil mills acted in good faith, it would not be contrary to Community law to take into consideration the plea of loss of unjust enrichment. Since that principle also forms part of the Community legal system, it cannot be considered contrary to Community law for domestic legislation to apply that principle in a field such as that of recovery of unduly paid Community subsidies.

    As for the fact that the recipient of a subsidy had already, at the time when it was granted, passed on the pecuniary advantage resulting from it by paying the target price to the producer, it should be noted that this is a particularity of the Community scheme set up to provide for subsidies in the sphere of oil-seed processing, and the effects of any malfunctioning of that scheme are not to be borne by the processing undertakings.

    In that regard, it must be stated that one of the requirements to be satisfied in order to plead lost enrichment is that the national court should have established that in the specific circumstances the trader has no possibility of recourse against his suppliers.

    The information provided by the national court shows that the general rule applying in domestic law is for unduly paid subsidies to be recovered and that the plea of lost enrichment is accepted, purely by way of exception, where compensation by third parties is not possible. In those circumstances, the mere presumption that the financial situation of producers is generally deplorable, as the Commission seems to claim, is not sufficient to establish that recovery is practically impossible in the sense contemplated by the judgment in Joined Cases 205/82 to 215/82 Deutsche Milchkontor and Others v Germany [1983] ECR 2633.

    In that regard, it is sufficient to state that that finding, which was made in the context of Article 93 of the EC Treaty, cannot be transposed to recovery of unduly paid Community subsidies. The two situations are not comparable; in particular, the competitive advantage given to national undertakings, which is a feature of State aid, does not exist in the context of Community aid under the common agricultural policy.

    The Court ruled:

    'Community law does not in principle preclude national legislation from allowing recovery of unduly paid Community subsidies to be barred, on the basis of criteria such as loss of the enrichment, where:

  • · the recipient of the subsidy had already, at the time when it was granted, passed on the pecuniary advantage resulting from it by paying the producer the target price prescribed by Community law, and

    · any right or recourse against his suppliers is worthless.

    That presupposes, however:

    · that the good faith of the recipient has first been established, and

  • · that the conditions prescribed are the same as those which apply with respect to the recovery of purely national financial benefits.'

    Advocate General P. Léger delivered his Opinion at the sitting of the Fifth Chamber on 4 December 1997.

    He proposed that the Court should reply as follows:

    'Community law in its present state does not prevent the national law concerned from taking account, in excluding the recovery of sums wrongly paid as subsidies under Community law, provided that the recipient of the subsidy was unaware of the circumstances rendering the decision to grant the subsidy unlawful and provided that such ignorance was not the result of gross negligence, of a factor such as the loss of the unjustified enrichment, which is generally found to have occurred where the recipient has passed on the pecuniary advantage arising from the subsidy by paying the target price laid down by Community law and where he has no right of recourse against the supplier or where such right is valueless, provided however that the conditions laid down are the same for the recovery of purely national financial charges and provided that the interests of the Community are taken fully into consideration.'

    Case C-93/97

    Fédération Belge des Chambres Syndicales de Médecins ASBL v Flemish Community and Others

    Freedom of movement for persons

    16 July 1998

    Preliminary ruling

    (Directive 93/16/EEC · Specific training in general medical practice · Article 31) (Fifth Chamber)

    By judgment of 19 February 1997, the Cour d'Arbitrage (Court of Arbitration) of Belgium referred to the Court for a preliminary ruling three questions on the interpretation of Article 31 of Council Directive 93/16/EEC of 5 April 1993.

    Those questions were raised in proceedings brought before the Cour d'Arbitrage on 26 January 1996 by the Fédération Belge des Chambres Syndicales de Médecins ASBL (Belgian Federation of Doctors' Associations, hereinafter 'the Fédération'), an association representing the interests of persons exercising the medical profession in Belgium, to secure the annulment of Article 4(2) of the Decree of the Flemish Community of 5 April 1995, amending the Decree of 12 June 1991 relating to universities in the Flemish Community, which makes provision for specific training in general medical practice and lays down other provisions relating to universities (hereinafter 'the 1995 Decree').

    The Fédération considers that Article 4(2) of the 1995 Decree derogates from Directive 93/16 by granting access to specific training in general medical practice to students who are not entitled to assume medical

    responsibilities and thus creates discrimination between trainees authorised to embark on such training in the Flemish Community and trainees from the other Communities.

    Considering that the dispute is concerned with determining the year as from which specific training in general medical practice may commence and, more specifically, whether access to such training implies that the person concerned should hold a diploma, certificate or other evidence of formal qualifications referred to in Article 3 of Directive 93/16 (hereinafter 'the basic diploma referred to in Article 3'), the Cour d'Arbitrage stayed proceedings pending a preliminary ruling from the Court of Justice on three questions.

    First question

    By its first question, the national court seeks to ascertain whether Article 31(1)(a) of Directive 93/16 makes access to specific training in general medical practice subject to the condition that a basic diploma referred to in Article 3 must first be obtained.

    As is clear from its wording, Article 31 of Directive 93/16 draws a distinction between the requirement of successful completion of six years' study of medicine and that of possession of a basic diploma referred to in Article 3. The first requirement, laid down in Article 31(1)(a), concerns access to specific training in general medical practice, whereas the second, laid down in Article 31(3), concerns the issue of diplomas, certificates, or other evidence of specific training in general medical practice.

    The two requirements laid down in Article 31 of Directive 93/16 are therefore different in scope and cannot be assimilated to each other.

    Moreover, as regards the conditions for access to training leading to the award of a diploma, certificate, or other evidence of formal qualification as medical specialist, Article 24 of Directive 93/16 draws the same distinction as Article 31 between the successful completion of at least six years' study of medicine and possession of a basic diploma referred to in Article 3.

    It follows that, contrary to the Fédération's assertion, neither the terms of Article 31 nor the scheme of Directive 93/16 require the person concerned to hold a basic diploma referred to in Article 3 in order to be granted access to specific training in general medical practice.

    The second and third questions

    By its second and third questions, the national court seeks essentially to ascertain whether the nature of the activities that the candidate must pursue in the course of his specific training in general medical practice in implementation of Article 31(1)(d) implies that he should have obtained a basic diploma referred to in Article 3 before embarking on that training.

    It must be borne in mind that the case of the 'medical practitioner' mentioned in Article 32 of Directive 93/16, who works in his own surgery under the supervision of an authorised training supervisor and who must therefore hold a basic diploma referred to in Article 3, is different from that of the candidate mentioned in Article 31(1)(d), who shares the 'responsibilities of the persons with whom he works', the latter, for their part, being entitled to pursue the activities of a doctor. In contrast to Article 32, the latter provision does not mention the experience 'acquired by the medical practitioner in his own surgery'.

    Training in general medical practice does not involve the exercise of the profession of doctor in an independent manner, with the attendant freedom to make diagnoses and prescribe treatment; indeed, Article 31(1)(d) merely requires participation in the activities of a fully qualified medical practitioner. As for Article 31(1)(b) of Directive 93/16, it provides that the training is to be 'supervised by the competent authorities or bodies'.

    Directive 93/16 does not thus impose the requirement of possession of a basic diploma referred to in Article 3 in relation to participation in the professional activity referred to in Article 31(1)(d) thereof.

    Since Directive 93/16 does not make possession of a basic diploma referred to in Article 3 a precondition for commencing specific training in general medical practice but only imposes that requirement when the diploma, certificate, or other evidence of formal training in specific general medical practice is awarded, and since that is a minimum requirement, Directive 93/16 leaves the Member States free to decide whether the trainee must already hold the basic diploma referred to in Article 3 at an earlier stage.

    The Court ruled:

  • '1. Article 31(1)(a) of Council Directive 93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications does not make access to specific training in general medical practice subject to the condition that a diploma, certificate or other evidence of formal qualifications referred to in Article 3 of that Directive must first be obtained.
  • 2. The nature of the activities which a trainee must pursue in the course of his specific training in general medical practice in implementation of Article 31(1)(d) of Directive 93/16 does not necessarily imply that he should have obtained a diploma, certificate or other evidence of formal qualifications referred to in Article 3 before starting such training. It is for the Member States to determine whether, and if so to what extent, the participation of a person undergoing training in general medical practice in the professional activities and responsibilities of the persons with whom he works in the course of his training means that he should hold the diploma, certificate or other evidence of formal qualifications referred to in Article 3 of that Directive.'

    Case C-235/95

    AGS Assedic Pas-de-Calais v François Dumon

    Social policy

    16 July 1998

    Preliminary ruling

    (Social policy · Protection of employees in the event of the insolvency of their employer · Directive 80/987/EEC · Article 4 · Direct effect · Whether national provisions fixing the ceiling for the guarantee of payment may be relied upon against individuals where the Commission has not been informed) (Sixth Chamber)

    By a judgment of 27 January 1995, rectified by a further judgment of 31 May 1995, the Cour d'Appel (Court of Appeal), Douai, referred to the Court for a preliminary ruling two questions on the interpretation of Council Directive 80/987/EEC of 20 October 1980 (hereinafter 'the directive').

    By its second question, which it is appropriate to examine first, the national court is essentially asking whether Articles 4(3) and 11 of the Directive preclude the application of provisions such as Article D 143-2 of the French Code du Travail, setting a ceiling on the payment guarantee in respect of employees' outstanding claims, where the Member State has failed to inform the Commission of the methods used to set that ceiling.

    It should be borne in mind that, in proceedings under Article 177 of the Treaty, which is based on a clear separation of functions between the national courts and the Court of Justice, any assessment of the facts in the case is a matter for the national court. The Court of Justice is thus empowered to rule on the interpretation or validity of Community provisions only on the basis of the facts which the national court puts before it.

    Moreover, to alter the substance of questions referred for a preliminary ruling would be incompatible with the Court's function under Article 177 of the Treaty and with its duty to ensure that the Governments of the Member States and the parties concerned are given the opportunity to submit observations under Article 20 of the EC Statute of the Court, bearing in mind that, under that provision, only the order of the referring court is notified to the interested parties.

    In those circumstances, it is for the national court to verify whether new information presented in the course of the proceedings before the Court of Justice are useful, or indeed necessary, in resolving the dispute in the main proceedings.

    As for the answer to be given to the second question, it should first be pointed out that the second subparagraph of Article 4(3) of the Directive requires Member States which have set a ceiling to the liability for employees' outstanding claims, as the preceding subparagraph authorises them to do, to inform the Commission of the methods used to set that ceiling.

    However, that provision does not imply that the duty to inform the Commission gives rise to a Community procedure for monitoring the methods chosen by the Member State, or that Member States' exercise of the option to set a ceiling is subject to the express or implied agreement of the Commission.

    Moreover, neither the wording nor the purpose of the provision in question provides justification for the view that Member States' non-compliance with their obligation to give prior notice in itself renders the ceilings thus adopted unlawful.

    It is therefore apparent that the purpose of the obligation to give notice laid down in the second subparagraph of Article 4(3) is simply to inform the Commission whether Member States have exercised the option referred to in the preceding subparagraph and, if so, in what manner.

    As for Article 11(2) of the Directive, which requires Member States to communicate to the Commission the texts of the laws, regulations and administrative provisions which they adopt in the field governed by the Directive, it is clear from that provision that it concerns relations between the Member States and the Commission and confers no right upon individuals which could be infringed in the event of a breach by a Member State of the obligation to give prior notice to the Commission of the methods used to set the ceiling referred to in Article 4(3).

    The Court ruled:

    'Articles 4(3) and 11 of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer do not preclude the application of provisions setting a ceiling on the payment guarantee in respect of employees' outstanding claims, where the Member State has failed to inform the Commission of the methods used to set that ceiling.'

    Advocate General G. Cosmas delivered his Opinion at the sitting of the Sixth Chamber on 21 November 1996.

    He proposed that the Court should reply as follows:

  • '1) Article 4 of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer lays down a precise and unconditional obligation for Member States to guarantee that employees are paid at the very least the minimum amount of their outstanding claims resulting from the insolvency of their employer, as provided for in paragraphs 1 and 2 of that Article, having chosen from the methods of calculation provided for in paragraph 2, the one that entails the least liability for the national guarantee institution.
  • 2) The provisions of Article 4 (3) of the abovementioned Directive 80/987 are not in themselves directly applicable in national law, in the sense of limiting the rights of employees resulting from the other provisions of the Directive. However, in cases where Member States have set national ceilings to the liability for employees' outstanding claims within the meaning of Article 4 (3) of the said Directive, employees cannot rely on the failure to communicate those national ceilings to the Commission, pursuant to the second subparagraph of paragraph 3 and to Article 11 of the Directive, in order to apply to the national courts for the annulment or suspension of those ceilings.'

    Case C-285/97

    Commission of the European Communities v Portuguese Republic

    Environment and consumers

    16 July 1998

    (Failure of a Member State to fulfil its obligations · Failure to transpose Directive 94/51/EC within the prescribed period) (Sixth Chamber)

    By application lodged at the Court Registry on 1 August 1997, the Commission of the European Communities brought an action for a declaration that, by failing to adopt within the prescribed period the laws, regulations and administrative provisions necessary to comply with Commission Directive 94/51/EC of 7 November 1994, the Portuguese Republic had failed to fulfil its obligations under the third paragraph of Article 189 of the EC Treaty and Article 2 of Directive 94/51/EC.

    The Portuguese Government does not deny that it failed to fulfil its obligations. However, it points out that a draft decree intended to transpose Directive 94/51 is currently awaiting publication in the Diário da República.

    Since the transposition of Directive 94/51 has not been achieved within the prescribed period, the action brought by the Commission must be held to be well founded.

    The Court held:

  • '1. By failing to adopt within the prescribed period the laws, regulations and administrative provisions necessary to comply with Commission Directive 94/51/EC of 7 November 1994 adapting to technical progress Council Directive 90/219/EEC on the contained use of genetically modified micro-organisms, the Portuguese Republic has failed to fulfil its obligations under Article 2 of that directive;
  • 2. The Portuguese Republic is ordered to pay the costs.'

    Advocate General A. La Pergola delivered his Opinion at the sitting of the Sixth Chamber on 30 April 1998.

    He proposed that the Court should uphold the action and order the Portuguese Republic to pay the costs.

    Case C-339/97

    Commission of the European Communities v Grand Duchy of Luxembourg

    Environment and consumers

    16 July 1998

    (Failure of a Member State to fulfil its obligations · Failure to transpose Directives 94/15/EC and 94/51/EC) (Sixth Chamber)

    By application lodged at the Court Registry on 30 September 1997, the Commission of the European Communities brought an action for a declaration that, by failing to adopt, within the prescribed periods, the laws, regulations and administrative provisions necessary to comply with

  • · Commission Directive 94/15/EC of 15 April 1994 adapting to technical progress for the first time Council Directive 90/220/EEC on the deliberate release into the environment of genetically modified organisms, and
  • · Commission Directive 94/51/EC of 7 November 1994 adapting to technical progress Council Directive 90/219/EEC on the contained use of genetically modified micro-organisms,

    the Grand Duchy of Luxembourg had failed to fulfil its obligations under those directives.

    The Grand Duchy of Luxembourg admits that it has not transposed Directives 94/15 and 94/51 within the periods laid down therein. It points out, however, that the legislative procedure for the adoption of the directives could not commence before the adoption of the Law of 13 January 1997 which transposed Council Directive 90/219/EEC of 23 April 1990 on the contained use of genetically modified micro-organisms and Council Directive 90/220/EEC of 23 April 1990 on the deliberate release into the environment of genetically modified organisms.

    By letter of 14 May 1998, the Grand Duchy of Luxembourg pointed out that it had transposed Directive 94/15 by the Grand Ducal Regulation of 17 April 1998.

    By letter lodged on 25 June 1998, the Commission took formal note of the adoption of that measure and withdrew that part of its application, but maintained the action in so far as it concerns Directive 94/51.

    So far as concerns Directive 94/51, it is settled case-law that a Member State cannot rely on provisions, practices or situations of its own internal legal order in order to justify its failure to respect the obligations and time-limits laid down by a directive.

    The Court held:

  • '1. By failing to adopt, within the prescribed period, the laws, regulations and administrative provisions necessary to comply with Commission Directive 94/51/EC of 7 November 1994 adapting to technical progress Council Directive 90/219/EEC on the contained use of genetically modified micro-organisms, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 2 of that directive;
  • 2. The Grand Duchy of Luxembourg is ordered to pay the costs.'

    Advocate General A. La Pergola delivered his Opinion at the sitting of the Sixth Chamber on 5 May 1998.

    He proposed that the Court should uphold the application and order the Grand Duchy of Luxembourg to pay the costs.

    Court of First Instance

    Case T-119/95

    Alfred Hauer v Council of the European Union and Commission of the European Communities

    Agriculture

    14 July 1998

    (Action for annulment · Regulation (EEC) No 816/92 · Time-limit for bringing proceedings · Admissibility · Action for damages · Common organisation of the market in milk and milk products · Reference quantities · Additional levy · Reduction of reference quantities without compensation) (First Chamber)

    The applicant is a milk producer in Germany. In accordance with the rules on the common organisation of the market in milk and milk products, his milk production was limited at the material time to a reference quantity fixed by the national authorities on the basis of the quantity delivered during a reference year. He also had an additional reference quantity which he had purchased from the German authorities during 1990 and 1991.

    By decision of 29 June 1992 the dairy Erbeskopf eG, established in Thalfang, Germany, withdrew without compensation 4.74% of the applicant's reference quantity, in accordance with Paragraph 4 b VI in conjunction with Paragraph 4 c VI of the Milch-Garantiemengen-Verordnung (Regulation on guaranteed quantities for milk), the national regulation on reference quantities which took up the applicable Community provisions.

    The applicant brought a complaint against that decision, which was rejected by the competent German authorities on 17 August 1993.

    By letter of 16 March 1995 he asked the Commission to annul that regulation in part and pay compensation.

    The claim for annulment

    Since the applicant's claim is for the annulment of a regulation, the period prescribed for bringing proceedings is that laid down in the fifth paragraph of Article 173 of the Treaty, namely two months. For an action brought against a measure published on 1 April 1992, that period ran from 16 April 1992, in accordance with Article 102(1) of the Rules of Procedure. With the addition of the extension on account of distance of six days in accordance with Article 102(2) of the Rules of Procedure, the period therefore expired during June of that year.

    Since the application was lodged on 12 May 1995, nearly three years later, the action is out of time.

    In those circumstances, without there being any need to rule on the pleas of inadmissibility raised by the defendants, the claim for annulment must be dismissed as inadmissible.

    The claim for compensation

    Existence of an unlawful act as the source of the alleged damage

    First plea: breach of the right to property

    Arguments of the parties

    The applicant submits that the right to property is one of the general principles whose observance is ensured by the Court. In the present case, the fact that the contested regulation does not provide for compensation for the reduction in the reference quantity has equivalent effect to an expropriation, in that the milk sold in excess of the quota is subject to the supplementary levy. The effect is thus that of a prohibition of marketing. Even if it derives from a legislative provision, an expropriation may take place, from the point of view of national law, only if the instrument which imposes it makes provision for the manner and amount of compensation. If there is no compensation, the situation created constitutes a breach of the right to property.

    Findings of the Court

    The right to property, which the applicant claims was infringed, is guaranteed in the Community legal order. However, that right is not absolute but must be considered in relation to its social function. Consequently, the Community may, in the pursuit of its objectives of general interest, impose restrictions on the right to property, in particular in the context of a common organisation of a market, provided that those restrictions actually correspond to those objectives and do not constitute, in the light of the aim pursued, a disproportionate and intolerable interference.

    In pursuing the objectives of the common agricultural policy, the political responsibilities conferred by the Treaty on the Community legislature bring with them a wide discretion. That discretion must enable the Community institutions inter alia to ensure the constant reconciliation which may be required by any conflicts between those objectives taken individually and, where necessary, to give one or other of them the temporary priority demanded by the economic facts or conditions in view of which their decisions are made. Reductions of reference quantities may thus be accepted if they are intended to ensure that supply and demand are balanced and the market in milk stabilised.

    In the present case, the reduction of the reference quantities under Council Regulation No 816/92 of 31 March 1992 complies with those requirements. As can be seen from the preamble to the regulation, the withdrawal of reference quantities was justified by the concern to continue with the rationalisation of the milk market, following other similar measures adopted for previous years.

    The reduction at issue was not so large that it exceeded a tolerable interference, and it thus did not affect the very substance of the right to property. As the Court of Justice acknowledged in Case C-311/90 Hierl v Hauptzollamt Regensburg [1992] ECR I-2061, and Case 203/86 Spain v Council [1988] ECR 4563, temporary reductions of reference quantities with the objective of stabilising markets on which there are surpluses do not breach the right to property.

    Second plea: breach of the principle of the protection of legitimate expectations

    Arguments of the parties

    The applicant states that the withdrawal of reference quantities, until the adoption of the contested regulation, was the subject of compensation. He was therefore entitled to think that he could preserve and take account of those items of his property. Moreover, he had made investments with a view to profiting from the additional quantities acquired from the national authorities. If he had suspected that such an

    intervention might take place, he would not have acquired the additional quantities or made those investments.

    Findings of the Court

    The Council and the Commission did not create a situation in which milk producers could legitimately expect that the reference quantities temporarily withdrawn would be restored on the indicated dates. Even before the date on which the withdrawal arrangements introduced by Council Regulation (EEC) No 775/87 of 16 March 1987 temporarily withdrawing a proportion of the reference quantities mentioned in Article 5c(1) of Regulation No 804/68 ('Regulation No 775/87') were to expire, those arrangements were extended by Council Regulation (EEC) No 1111/88 of 25 April 1988 amending Regulation No 775/87. The latter regulation also introduced compensation which, unlike that provided for by Regulation No 775/87, was degressive. Moreover, the Commission had made a formal proposal for the reduction of the reference quantities without compensation, that proposal being published on 31 December 1991. Finally, when the arrangements thus extended expired, namely on 31 March 1992, milk producers could not have been unaware of the continuing surplus in milk production, and hence of the need to maintain the levy scheme.

    It follows that the duration of the temporary withdrawal scheme was intrinsically linked, from its entry into force as well as from its renewal, to the duration of the additional levy scheme.

    In those circumstances, and since the applicant has not put forward any factor which might displace that conclusion, he cannot claim that the defendant institutions aroused a legitimate expectation on his part.

    Nor can his decision to make investments following the acquisition of additional reference quantities from the national authorities be justified by such a legitimate expectation.

    Third plea: breach of the principle of equality

    The applicant submits that the reduction of reference quantities introduced by Regulation No 816/92 is unlawful in that it provides for a uniform rate of reduction for all holdings, which in practice has the consequence that the reduction affects a small holding more than it does a large holding. The introduction of a uniform rate of reduction is thus contrary to the principle of equal treatment. That also constitutes a breach of Article 39 of the Treaty.

    The fact that a measure adopted within the framework of a common organisation of the market may affect producers in different ways depending on the particular nature of their production thus does not constitute discrimination if that measure is based on objective rules which are formulated to meet the needs of the general common organisation of the market. That is the case with the temporary withdrawal arrangements at issue, which are such that the quantities withdrawn are proportional to the reference quantities.

    The Court held:

    '1. The claim for annulment is dismissed;

    2. The claim for compensation is dismissed as unfounded;

    3. The applicant is ordered to pay the costs.'

    Case T-192/96

    Giorgio Lebedef v Commission of the European Communities

    Staff Regulations of Officials

    14 July 1998

    (Staff Committee · Procedure · Amendment of rules · General assembly · Voting system · Admissibility)

    (First Chamber)

    Case T-42/97

    Giorgio Lebedef v Commission of the European Communities

    Staff Regulations of Officials

    14 July 1998

    (Officials · Refusal to authorise a secondment for trade union duties · Admissibility)

    (First Chamber)

    Case T-219/97

    Anita Brems v Council of the European Union

    Staff Regulations of Officials

    14 July 1998

    (Officials · Action for annulment · Thermal cure · Article 59 of Staff Regulations · Sick leave · Special leave (Fifth Chamber)

    Case T-156/96

    Claus Jensen v Commission of the European Communities

    Staff Regulations of Officials

    16 July 1998

    (Officials · Remuneration · Installation allowance · Recovery of undue payment)

    (Second Chamber)

    Case T-162/96

    Sandro Forcheri v Commission of the European Communities

    Staff Regulations of Officials

    16 July 1998

    (Officials · Secondment in the interests of the service · Temporary posting · Entitlement to differential allowance · Discretion of the administration) (Second Chamber)

    Case T-199/96

    Laboratoires Pharmaceutiques Bergaderm SA and Jean-Jacques Goupil v Commission of the European Communities

    Law governing the institutions

    16 July 1998

    (Cosmetic products · Directive 76/768/EEC · Directive 95/34/EC · Sun creams and tanning products · Public health · Community non-contractual liability) (Third Chamber)

    Legal background

    Pursuant to Article 4 of Council Directive 76/768/EEC of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products (hereinafter 'the Cosmetics Directive'), as amended in particular by Council Directive 93/35/EEC of 14 June 1993, the Member States were required to prohibit the marketing, beyond the limits and outside the conditions laid down, of cosmetic products containing any of the substances specified in the 'List of substances which cosmetic products must not contain' (Annex II to the Directive) or the 'List of substances which cosmetic products must not contain except subject to the restrictions and conditions laid down' (Annex III, Part 1).

    Article 9 of the Cosmetics Directive sets up a Committee on the adaptation to technical progress of the directives on the removal of technical barriers to trade in the cosmetic products sector (hereinafter 'the Adaptation Committee')

    n 78/45

    (hereinafter 'the Scientific Committee') attached to the Commission. Under Article 2 of that Decision, the Committee's task is to give the Commission an opinion on any problem of a scientific or technical nature in the field of cosmetic products and particularly on substances used in the preparation of cosmetic products and on the composition and conditions of use of those products.

    Facts

    Bergasol is a sun oil containing, in addition to vegetable oil and filters, bergamot essence. Some of the molecules to be found in bergamot essence are 'psolarens', otherwise known as 'furocoumarines'. One of these is the 'bergapten', also referred to in scientific circles as 5-methoxypsoralen (hereinafter '5-MOP').

    5-MOP in its chemically pure state is suspected of being potentially carcinogenic. Several scientific studies have therefore been carried out in order to determine whether that is so when 5-MOP is present in the bergamot essence used in a tanning product.

    Of those studies, the most favourable towards Bergasol was carried out by Thomas B. Fitzpatrick, Professor of Dermatology at Harvard Medical School (USA).

    On the other hand, other research has warned of the potentially carcinogenic effects of bergamot essence when used in sun oil.

    At a meeting of the Scientific Committee on 2 October 1990, the Committee recommended that the maximum level of 5-MOP in sun oils be set at 1 mg/kg.

    At a further meeting on 4 November 1991, the Scientific Committee confirmed its opinion that the level of 5-MOP in sun oils should not exceed 1 mg/kg.

    On 2 June 1992 the Scientific Committee issued a 'supplementary opinion' confirming its opinion of 4 November 1991.

    On 24 June 1994 the Scientific Committee once again reaffirmed its opinion.

    On 28 April 1995 the Adaptation Committee made a recommendation that the level of psoralens in sun products should not exceed 1 mg/kg. All the delegations within the Committee, save for the French, voted in favour of that position, and the Finnish delegation was absent.

    On 10 July 1995 the Commission adopted the 18th Commission Directive 95/34/EC adapting to technical progress Annexes II, III, VI and VII to Directive 76/768. This required the Member States inter alia to take all the necessary measures to ensure that as from 1 July 1996 neither manufacturers nor importers established in the Community place on the market sun creams or bronzing products containing 1 mg/kg or more of psoralens and that, as from 1 July 1997, such products cannot be sold or otherwise supplied to the final consumer.

    By judgment of the Tribunal de Commerce (Commercial Court), Créteil, of 6 July 1995, a procedure was initiated with a view to placing Bergaderm in liquidation. On 10 October 1995 Bergaderm formally entered into liquidation.

    Substance

    The parties' arguments

    First plea: procedural defects

    In the present case, the Commission disregarded the procedural rules in Article 10 of the Cosmetics Directive, since, instead of returning to the Council when the Adaptation Committee delivered an unfavourable opinion on 1 June 1992 concerning its proposal to restrict the maximum level of psoralens in sun products, it submitted the same proposal to the Adaptation Committee some years later. In so doing, it also infringed the procedural rule non bis in idem.

    Moreover, the Commission showed no regard for the applicants defence rights. It failed to pass on to the members of the Adaptation Committee the scientific information which the applicants had submitted to the members of the Scientific Committee. Thus the fact that the applicants' right to an intra partes procedure had not been respected prevented the Adaptation Committee from reaching a position on an objective basis.

    Second plea: manifest error of assessment and breach of the principle of proportionality

    The applicants maintain that the Commission's findings regarding Bergasol were inevitably disproportionate, and that it adopted a measure without providing or obtaining evidence of a scientific nature that the measure in question was necessary in order to protect the health of consumers.

    They argue that the restriction of 5-MOP levels to 1 mg/kg in sun products is out of all proportion to the objective purportedly sought by the Commission, namely protection of the health of consumers.

    Third plea: misuse of powers

    The applicants maintain that, by excluding them from the market, the Commission merely aided their competitors.

    Findings of the Court

    First plea: procedural defects

    Contrary to the applicants' assertion, the Adaptation Committee did not, at its meeting on 1 June 1992, issue an opinion disapproving the Commission's proposal that the maximum level of psoralen in sun products should be restricted.

    As for the alleged infringement of the applicants' right to an inter partes procedure, it is clear from the facts that the applicants had ample occasion to express their views to the members of the Scientific Committee and the Commission, and that they were allowed to address the ad hoc group of experts.

    Second plea: manifest error of assessment and breach of the principle of proportionality

    There is nothing in the papers before the Court to support the conclusion that the Commission misunderstood the scientific arguments concerning the extent of the risk involved in the use of sun oil containing bergamot essence.

    The protection of public health is one of the objectives of the Cosmetics Directive and the Commission is not in a position to carry out the scientific assessments needed to further that objective. The Scientific Committee has the task of assisting the Community authorities on scientific and technical issues in order to enable them to determine, from a fully informed position, which adaptation measures are necessary.

    In the light of those considerations, the Commission cannot be criticised for having placed the issue before the Scientific Committee or for complying with that body's opinion, which was drafted on the basis of a multitude of meetings, visits and specialist reports.

    Furthermore, where there is uncertainty as to the existence or extent of risks to the health of consumers, the institutions may take protective measures without having to wait until the reality and the seriousness of those risks become fully apparent (Case C-157/96 National Farmers' Union and Others [1998] ECR I-0000, paragraph 63).

    Having regard to the above observations, the Commission's conduct and the measure adopted by it cannot be regarded as vitiated by a manifest error of assessment or as disproportionate.

    Third plea: misuse of powers

    In the present case, the applicants have failed to provide such evidence in support of their plea in law. In particular, they have not shown that, during the legislative process at issue, the Commission's desired objective was other than the protection of public health.

    The Court held:

    '1. The application is dismissed.

    2. The applicants are ordered to pay the costs.'

    Case T-81/97

    Regione Toscana v Commission of the European Communities

    Agriculture

    16 July 1998

    (Integrated Mediterranean programmes · Community financial assistance · Regulation (EEC) No 4256/88 · Regulation (EEC) No 2085/93) (Third Chamber)

    Within the framework of Council Regulation (EEC) No 2088/85 of 23 July 1985 concerning the integrated Mediterranean programmes, by decision of 27 October 1988, the Commission approved Project No 88.20.IT.006.0, relating to works for the supply of drinking water in Tuscany. The Commission thus undertook to fund the project up to a maximum of LIT 676 742 000.

    By a letter dated 21 November 1994, signed by the director of the European Agricultural Guidance and Guarantee Fund (EAGGF) and addressed to the President of the Italian Council of Ministers and the Region of Tuscany, the Commission stated that the request for final payment in respect of the project in question should reach it by 31 March 1995 at the latest, on the basis of Article 10 of Council Regulation (EEC) No 4256/88 of 19 December 1988 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the EAGGF guidance section, as amended by Council Regulation (EEC) No 2085/93 of 20 July 1993 (hereinafter 'Article 10').

    That article reads as follows: 'Those portions of the sums committed for the granting of assistance in respect of projects decided on by the Commission before 1 January 1989 which have not been the subject of a request for final payment by 31 March 1995 shall be automatically released by the Commission by 30 September 1995 at the latest ... '.

    On 31 March 1995, the Region of Tuscany sent a letter to the Commission seeking payment of the final balance. That letter was received by the Commission on 4 April 1995.

    The Commission replied by letter of 31 January 1997, which was received by the applicant on 7 February 1997. It recalled that, in accordance with its letter of 21 November 1994, it should have received the request for final payment on 31 March 1995 at the latest. In this instance the applicant's letter dated 31 March 1995 only reached it on 4 April 1995; the accounting documents sent by the Ministry only arrived on 29 May 1995. It concluded that, in accordance with Article 10, the corresponding sums had been automatically released on 30 September 1995.

    It is in those circumstances that the applicant brought the present proceedings.

    The main plea: infringement of Article 10

    The applicant recalls that Article 10 concerns allocated sums in respect of which no request for final payment has been made before 31 March 1995. That rule relates only to the final date for sending requests and not the final date for receipt of those requests by the Commission.

    By relying on the fact that it only received the Region of Tuscany's request on 4 April 1995, the Commission therefore infringed Article 10.

    This plea is therefore limited to the question whether the date specified in Article 10 is to be interpreted as the date on which requests for final payment are to be sent or the date on which they are to be received by the Commission.

    It should be pointed out, first, that neither the wording of the provision in question, nor the recitals in the preamble to Regulation No 2085/93 of 20 July 1993, nor the preparatory work preceding its adoption justify favouring either one of those interpretations.

    Furthermore, it appears that in all essential respects the arguments raised by the Commission do not make it possible to give a response to the applicant's claim.

    They are designed to demonstrate that the time-limit laid down in Article 10 is mandatory.

    However, the applicant is specifically not challenging the existence of an absolute time-limit but, rather, the Commission's interpretation of it in concluding that it applied to the deadline for receipt of the request for final payment.

    The Commission submits, however, that it had informed the applicant of its interpretation of Article 10, in its letter of 21 November 1994. If the applicant did not agree with that interpretation, it should have challenged that letter.

    That argument cannot be accepted. First, as has already been held, the letter of 21 November 1994 did not constitute an act challengeable by way of an action for annulment. Second, the interpretation of a Community provision is a matter exclusively for the Community judicature and hence the approach adopted by the Commission cannot be regarded as having any specific legal value.

    The Court considers that the deadline laid down in Article 10 must be understood as being the date on which a request is sent.

    First, such an interpretation ensures equal treatment for potential applicants, since it ensures that the time-limit is the same, irrespective of the geographical distance of the recipients and the time necessary for transmission.

    Second, in view of the radical consequences, under Article 10, of exceeding the time-limit laid down by law, legal certainty requires that reference be made to the date on which the request is sent, to the advantage of the potential recipients; potential recipients can determine only the date on which the request is sent, of which they can provide proof, and not the time taken to transmit that request.

    The fact that the Commission may consequently only receive requests from recipients some days later cannot be regarded as detrimental to the effectiveness of an absolute time-limit and the requirements of proper administration of the Community budget.

    The Court held:

    '1. The decision contained in the letter of 31 January 1997 is annulled;

    2. The remainder of the application is dismissed as inadmissible;

    3. The Commission is ordered to pay the costs.'

    Case T-195/97

    Kia Motors Nederland BV and Broekman Motorships BV v Commission of the European Communities

    Free movement of goods

    16 July 1998

    (Commission decision declaring repayment of import duties unjustified · Application for annulment · Article 239 of the Customs Code · Duty to state reasons) (Third Chamber)

    In spring 1994, an importer established in Turkey, IHLAS Industry and Foreign Trade ('IHLAS') ordered a shipment of 300 company cars from Kia Motors Corporation (hereinafter 'Kia Motors'), a South Korean motor manufacturer. Before those vehicles arrived, however, IHLAS realised that it could not sell them in Turkey because of the poor economic climate. When the vehicles arrived, IHLAS placed them under customs supervision and contacted Kia Motors in order to find a solution. The vehicles remained under customs supervision and have not been cleared in Turkey.

    When Kia Motors Nederland became aware of the situation, it expressed an interest in distributing the vehicles in the Netherlands and repurchased them. In the interests of efficiency, the vehicles were not physically taken over by Kia Motors before they were delivered to Kia Motors Nederland, but were sent directly from Turkey to the Netherlands on 1 July 1994. Broekman Motorships took responsibility for the import declaration by Kia Motors Nederland. In the declaration, dated 18 July 1994, it claimed the preferential tariff applicable to vehicles originating in South Korea. It produced a certificate of origin for that purpose issued by the South Korean authorities.

    On 5 October 1994 the Netherlands customs authorities imposed non-preferential import duties on Broekman Motorships, totalling HFL 474 584.30. They refused to grant the preferential tariff on the ground that the vehicles had not been 'transported direct' within the meaning of Article 75(1) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code ('the implementing regulation'). Kia Motors Nederland paid the sum charged to Broekman Motorships which paid it to the customs authorities.

    On 10 July 1995 Kia Motors Nederland submitted an application for repayment to the customs controller of the district of Rotterdam on the basis of Article 239 of the Customs Code and Article 899 et seq. of the implementing regulation.

    By decision of 8 April 1997 addressed to the Netherlands (hereinafter 'the contested decision'), the Commission declared that the repayment of the import duties requested was not justified.

    On the basis of the Commission's decision, the customs controller of the district of Rotterdam adopted a decision on 28 April 1997 rejecting Kia Motors Nederland's application.

    Law

    The first plea, based on infringement of Article 190 of the Treaty

    Arguments of the parties

    The applicants claim that the Commission failed to examine, in particular on the basis of the supporting documents annexed to the application for repayment, whether there were particular circumstances which could justify repayment.

    Findings of the Court of First Instance

    The Court notes that, of all the legal rules governing the repayment of import duties only Article 905 grants the Commission power to adopt a decision. That provision enables it to adopt a position on applications for repayment submitted under Article 239 of the Customs Code and transmitted to it by the national customs authorities. As the Court has held in the context of proceedings brought on the basis of Article 13 of Regulation No 1430/79, it is for the Commission to indicate in respect of each application for repayment submitted to it whether or not special circumstances within the meaning of that provision exist and to give reasons for its decision on that point.

    In the present case the Commission considered that the situation was not the result of special circumstances, but did not set out the reasons which led it to that conclusion.

    In the statement of reasons for the contested decision, the Commission in fact attempted to explain why it considered that the import duties imposed on the applicants by the Netherlands customs authority were lawfully payable, whilst the operative part of that decision, rejecting the application submitted on the basis of Article 239 of the Customs Code, answers the question whether the fact that the vehicles had been placed under customs supervision in Turkey and were therefore still of Korean origin at the time they were imported into the Netherlands made it possible, pursuant to the general equitable clause, to exonerate the applicants from payment of the duties which were, according to the technical legal provisions, legally payable. The Court therefore concludes that, in view of all the legal rules governing the subject, the Commission failed to give the reasons for its decision.

    The Court held:

  • '1. The Commission decision of 8 April 1997, addressed to the Netherlands and concerning an application for repayment of import dues is annulled;

    2. The Commission is ordered to pay the costs.'

    Case T-109/96

    Gilberte Gebhard v European Parliament

    Law governing the institutions

    16 July 1998

    (Officials · Auxiliary staff · Auxiliary interpreters at sessions of the European Parliament · Whether lawful to require them to pay Community tax)

    (Third Chamber, Extended Composition)

    Joined Cases T-202/96 and T-204/96

    Andrea von Löwis and Marta Alvarez-Cotera v Commission of the European Communities

    Law governing the institutions

    16 July 1998

    (Freelance conference interpreters · Whether lawful to require them to pay Community tax) (Third Chamber, Extended Composition)

    Case T-72/97

    Proderec · Formação e Desinvolvimento de Recursos Humanos, ACE v Commission of the European Communities

    Social policy

    16 July 1998

    (European Social Fund · Decision to reduce two financial aids · Action for annulment · Admissibility · Certification of factual and accounting accuracy · Lack of competence of the national body · Statement of reasons · Rights of the defence) (Fourth Chamber)

    n 83/51

    n 83/51

    operations.

    Article 1 of Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516/EEC ('Regulation No 2950/83') lists the items of expenditure which may be the subject of assistance from the European Social Fund ('ESF')

    Under Article 5(1) of Regulation No 2950/83, approval given by the ESF to an application for finance is to be followed by the payment, on the date on which the training programme is scheduled to begin, of an advance of 50% of the assistance approved. Under Article 5(4), final payment claims are to contain a

    detailed report on the content, results and financial aspects of the relevant operation, the Member State certifying accuracy of the facts and accounts in those claims.

    Article 6(1) of Regulation No 2950/83 provides that, when Fund assistance is not used in conformity with the conditions set out in the approval decision, the Commission may suspend, reduce or withdraw the aid after giving the Member State concerned an opportunity to comment.

    n 83/67

    n 83/67

    the Commission within 10 months of the date of completion of the operations concerned.

    Facts and procedure

    In 1988 the Departamento para os Assuntos do Fundo Social Europeu (Department of European Social Fund Affairs, part of the Portuguese Ministry of Labour and Social Security) ('DAFSE'), acting for the Portuguese Republic and on behalf of the applicant, applied to the ESF for assistance for the 1988 financial year in respect of two projected training programmes relating to, first, a projected training programme intended to prepare young Portuguese nationals for taking up their first employment (File No 881311 P1) and, secondly, a projected training programme intended to promote greater specialisation and recycling in view of the economic crisis (File No 880249 P3).

    The two projects were approved by two decisions of the Commission notified to the applicant by letters from the DAFSE of 25 May 1988.

    On 14 July 1988 the applicant received, pursuant to Article 5(1) of the regulation, an advance of 50% of the assistance granted by the ESF together with 50% of that granted by the OSS/IGFSS.

    After completion of the two operations concerned, the applicant submitted to the DAFSE a claim for final payment of the assistance granted.

    On 2 February 1990, the DAFSE informed the applicant that its claim for the balance in File No 881311 P1 had been forwarded to the Commission, but that ESC 6 491 845 had been considered ineligible.

    On 16 October 1991 the applicant asked the DAFSE to state the date of payment of the balance of the assistance obtained for the two projects completed. The DAFSE replied on 24 October 1991 that it awaited the submission of a report and an audit.

    Since the DAFSE did not forward those two documents, the applicant brought an action against the Portuguese State on 17 September 1993 under Article 69 of the Lei do Processo dos Tribunais Administrativos, Decreto-lei No 262/85 (Law on Procedure before the Administrative Courts), of 16 July 1985 (hereinafter 'LPTA'), for a declaration that it was entitled to payment of the balance of the assistance.

    On 9 September 1994, the DAFSE communicated to the applicant the decisions it had taken following the claims for payment of the balance, and requested the applicant to repay to it, within 30 days, a total of ESC 62 856 998. On 10 October 1994, the applicant brought an action before the Tribunal Administrativo de Círculo de Lisboa (Lisbon Administrative Circuit Court) challenging that repayment order, arguing in particular that any claim by the DAFSE in that respect was time-barred.

    On 11 May 1995, the DAFSE informed the applicant that the Commission had approved the claim for payment of the balance relating to File No 880249 P3, whilst referring to the certification made by the DAFSE on 9 September 1994, which also concerned File No 881311 (see the preceding paragraph).

    On 25 May 1995, counsel for the applicant asked the DAFSE to send him a certificate or a certified true copy of the decision approving the claim for payment of the balance relating to File No 880249 P3. The applicant has, however, not received any reply to that letter.

    By application lodged at the Court Registry on 10 July 1995, the applicant brought an action for the annulment of the Commission's decision to reduce the two ESF aids, notified to it by the letter from the DAFSE of 11 May 1995.

    On 9 December 1996, the Commission decided to reduce the amount of the contribution granted.

    By order of 28 May 1997 in Case T-145/95 Proderec v Commission [1997] ECR II-823, the Court held that, by adopting the contested decisions, the Commission implicitly withdrew the act contested in Case T-145/95 on the ground that it did not satisfy the requirements in regard to the reasoning of decisions reducing the amount of Community assistance initially granted. It also took the view that the withdrawal of the contested act had produced effects equivalent to those of a judgment annulling it, without prejudice to the applicant's right to challenge the legality of the two Commission decisions of 9 December 1996 by way of a separate action. It concluded that the applicant had no further interest in obtaining the annulment of the contested act, with the result that its action had become devoid of purpose and there was no further need to adjudicate thereon.

    By application lodged at the Court Registry on 27 March 1997, the applicant brought the present action for the annulment of the contested decisions.

    Substance

    The first plea, alleging infringement of the relevant rules, resulting from the second certification by the DAFSE

    Arguments of the parties

    According to the applicant the second factual and accounting certification by the DAFSE in 1994 was clearly made outside the period laid down by those provisions.

    · Second part of the plea

    The applicant argues that the DAFSE exceeded the bounds of the competence allocated to it in the matter

    No 37/91

    provisions limited the DAFSE's competence to the factual and accounting certification of the statements accompanying the claim for payment of the balance of the ESF aids. The DAFSE could only exercise its power of factual and accounting certification at the time of the forwarding of the claim for payment of the balance.

    · Third part of the plea

    The applicant observes that the DAFSE used a criterion based on 'reasonableness' and 'sound financial management' in order to carry out the second factual and accounting certification which was brought to its knowledge on 9 September 1994. In that respect it argues, first, that the DAFSE was not competent to apply such a criterion when making its factual and accounting certification, and, secondly, that that criterion had not been used at the time of the first certification of 30 October 1989.

    Findings of the Court of First Instance

    · The nature and scope of factual and accounting certification

    · First part of the plea

    The applicant cannot claim that the DAFSE was out of time in carrying out the acts of verification referred to in its letter of 9 September 1994. First, those acts cannot be regarded as the manifestation of a second factual and accounting certification for the purposes of Article 5(4) of Regulation No 2950/83. It is in reality a case of the competent authorities of the Portuguese Republic carrying out the tasks which they are required to carry out in the context of implementing ESF aids, pursuant to Article 2(2) of Decision

    n 83/67

    The fact that the DAFSE did not inform the applicant of its suspicions regarding its claim for payment of the balance of the aid when it informed it on 2 February 1990 of the carrying out of the factual and accounting certification cannot affect the legality of the contested decisions, since Article 7 of Decision 83/673 does not in any way require the Member State or the Commission to keep the beneficiary immediately informed of the existence of suspicions as to the validity of data submitted in support of a claim for payment of a balance.

    Finally, both as regards the Member State's obligation to notify the Commission where it suspects the existence of certain irregularities and as regards the competence of the Commission to reduce an ESF aid, no particular time-limit has been laid down in Community legislation. Therefore, even if it were held to be necessary to perform that obligation and exercise that power within a reasonable period, it would be sufficient to find that, in this case, the applicant has not claimed that the length of the periods which elapsed between the various measures taken by the DAFSE and the Commission was unreasonable, and thus adversely affected the legality of the contested decisions as such, even though the applicant mentions those various periods.

    · The second part of the plea

    It also follows from the considerations concerning the nature and scope of the factual and accounting certification that, in carrying out certain supplementary enquiries and a number of checks, the DAFSE did not exceeded the bounds of the competence allocated by Community legislation to the Member States in the management of the process for examining an application for payment of the balance of an ESF aid. On the contrary, its attitude shows that it performed the obligations which that legislation imposes on it,

    n 83/67

    Moreover, since the measures taken by the DAFSE after the factual and accounting certification of 30 October 1989 cannot be assimilated to a certification within the meaning of Article 5(4) of Regulation No 2950/83, it cannot be maintained that on that occasion it exceeded the bounds of its competence in certification matters.

    · The third part of the plea

    Contrary to what the applicant maintains, the irregularities impugned in the contested decisions were not established on the basis of a criterion which did not appear amongst the conditions for grant to which payment of those aids was subject. On the other hand, application of the criterion of 'reasonableness' and 'sound financial management', which consists simply of verifying whether the expenses claimed by a beneficiary and which it paid take appropriate account of the services in respect of which they were incurred, falls perfectly within the context of the control which the Member State is required to carry out

    n 83/67

    it suspects the existence of irregularities, fraudulent or otherwise.

    The second plea, alleging infringement of Article 190 of the Treaty

    Arguments of the parties

    The applicant claims that the application by DAFSE of the criterion of 'reasonableness' and 'sound financial management' infringes the duty to state reasons under Article 190 of the Treaty, since that criterion was not first defined and was not used at the time of the first certification. The applicant argues that the DAFSE altered the rules governing the certification operation and adversely affected comprehension of the contested decisions, preventing the applicant from knowing the real scope of that criterion.

    Findings of the Court of First Instance

    In this case, it should be recalled at the outset that, in so far as the measures taken by the DAFSE in 1994 do not constitute a factual and accounting certification for the purposes of Article 5(4) of Regulation No 2950/83, application by the DAFSE of a criterion of 'reasonableness' and 'sound financial management' cannot have altered the rules on certification. Moreover, the irregularities discovered in carrying out the projects financed by the ESF do not all result from the application of that criterion.

    It follows that application of the criterion impugned by the applicant did not entail an infringement of Article 190 of the Treaty.

    The third plea, alleging misuse of powers

    Arguments of the parties

    The applicant maintains that, taking account of the circumstances in which they were taken, the two contested decisions reveal a misuse of powers.

    Findings of the Court of First Instance

    In this case, the applicant merely refers to the circumstances in which the contested decisions were adopted, without stating the specific factors capable of establishing the existence of a misuse of powers.

    The fourth plea, alleging infringement of the applicant's defence rights

    Arguments of the parties

    The applicant complains of an infringement of its defence rights, arising, on the one hand, from the application without prior notification of the criterion of 'reasonableness' and 'sound financial management' and, on the other, from the fact that it was not heard by the Commission before the latter adopted the contested decisions.

    Findings of the Court of First Instance

    The disputed criterion was applied by the DAFSE and the Commission at the conclusion of the checks undertaken in the context of an inspection the results of which were brought to the applicant's knowledge and on which it could make observations.

    Its application was not therefore capable of infringing the applicant's defence rights.

    In this case, the facts on file show that the DAFSE kept the applicant up to date with the various checking measures undertaken and their results, while giving it the opportunity to submit its observations.

    The Court held:

    '1. The action is dismissed.

    2. The applicant is ordered to pay the costs.'

    Case T-93/96

    Catherine Presle v Centre Européen pour le Développement de la Formation Professionnelle

    Staff Regulations of Officials

    16 July 1998

    (Officials · Change of posting · Duty to state reasons · Principle of the protection of legitimate expectations · Duty to pay due regard to welfare of officials) (Fifth Chamber)

    Case T-144/96

    Y v European Parliament

    Staff Regulations of Officials

    16 July 1998

    (Officials · Criminal conviction · Disciplinary sanction · Removal from post · Duty to state reasons · Duty to pay due regard to welfare of officials) (Fifth Chamber)

    Case T-219/96

    Y v European Parliament

    Staff Regulations of Officials

    16 July 1998

    (Officials · Article 88 of Staff Regulations · Suspension · Withholding of remuneration · Entitlement to pension · Damages)

    (Fifth Chamber)

    Case T-28/97

    Agnès Hubert v Commission of the European Communities

    Staff Regulations of Officials

    17 July 1998

    (Officials · Action for annulment · Transfer/change of post · Interests of the service · Failure to state reasons · Action for compensation)

    (Fourth Chamber)

    Case T-111/96

    ITT Promedia NV v Commission of the European Communities

    Competition

    17 July 1998

    (Competition · Actions for annulment · Rejection of a complaint · Article 86 of the EC Treaty · Abuse of a dominant position · Actions before national courts · Right of access to the courts · Claim for performance of an agreement · Manifest error of assessment · Obligation to carry out an examination · Error of characterisation · Inadequate statement of reasons) (Fourth Chamber, Extended Composition)

    Legal and factual background to the dispute

    The applicant, ITT Promedia NV, formerly NV Promedia, is a company incorporated under Belgian law whose main business is concerned with the publication of commercial telephone directories in Belgium. It is a subsidiary of, and owned as to 99.95% by, ITT World Directories Inc., a company incorporated under United States law, whose main business is the publication of commercial telephone directories worldwide. ITT World Directories Inc. is owned as to 80% by ITT World Directories Enterprises Inc., which in its turn is a wholly-owned subsidiary of ITT Corporation, the latter two companies being both incorporated under United States law.

    Factual background

    In a first agreement concluded in 1969 RTT granted NV Promedia the exclusive right to publish directories based on data which RTT was to supply to it. That concession was renewed by a second agreement dated 9 May 1984 ('the agreement of 9 May 1984') which conferred on NV Promedia the exclusive right, for a period of ten years commencing on 1 January 1985 and ending upon publication of the complete tenth edition of the official telephone directories, to publish and distribute the official telephone directory in RTT's name and commercial directories in its own name. Pursuant to those two agreements, the latter of which expired on 15 February 1995, the applicant published commercial directories under the trade mark 'Gouden Gids/Pages d'Or'.

    Belgacom and the applicant entered into negotiations in 1993 with a view to concluding a new agreement. As the two parties were unable to agree terms, on 12 July 1994 Belgacom decided to cease its cooperation with the applicant and to seek another partner for the publication of telephone directories from 1 January 1995.

    On 13 July 1994 the applicant announced in a press release that it had decided to continue to publish its 'Gouden Gids/Pages d'Or'. At the same time, the applicant intensified its activities in relation to the canvassing and sale of advertising space in preparation for the 1995 edition of its directories.

    On the same day, 13 July 1994, Belgacom issued a press release in which it warned its customers that any canvassing or sales activities engaged in by the applicant for the 1995 edition of its telephone directories were undertaken without the authorisation of Belgacom and fell outside the scope of any contractual relationship. Belgacom also informed its customers that it had decided to publish the white and yellow pages of its official telephone directory itself, in cooperation with a partner specialising in that field.

    On 22 July 1994 the applicant brought a action against Belgacom, summoning it to appear before the President of the Brussels Tribunal de Commerce (Commercial Court) in summary proceedings for an injunction. The President was asked to rule that Belgacom had infringed the Belgian legislation on commercial practices and on competition, as well as Article 86 of the EC Treaty, and to order Belgacom to cease spreading false, misleading and disparaging information concerning the applicant.

    By judgment of 5 October 1994 the President of the Brussels Tribunal de Commerce allowed the applicant's action. By judgment of 19 October 1995 the Brussels Cour d'Appel (Court of Appeal) upheld that judgment. It also dismissed Belgacom's counterclaim.

    Having requested Belgacom, by letters of 10 May, 1 July and 27 July 1994, to make it a fair, reasonable and non-discriminatory offer for the supply of data relating to subscribers (hereinafter 'subscriber data'), the applicant again brought an action against Belgacom on 16 August 1994, summoning it to appear before the President of the Brussels Tribunal de Commerce in summary proceedings for an injunction. Belgacom brought a counterclaim against the applicant's new action (hereinafter 'Belgacom's second counterclaim' or 'Belgacom's second action').

    Having commissioned an expert to determine a fair, reasonable and non-discriminatory price for the subscriber data, the President of the Brussels Tribunal de Commerce delivered a judgment on 11 June 1996

    in which he allowed the applicant's claim and declared that the price should be established in accordance with the expert's findings.

    On 21 October 1994 Belgacom and GTE Information Services Inc., a company incorporated under United States law, created a joint venture company to publish telephone directories in Belgium, Belgacom Directory Services SA ('BDS'), the two partners holding 80% and 20% of its shares respectively. BDS, a company incorporated under Belgian law, commenced its activities in 1995.

    On 16 March 1995 Belgacom and the applicant concluded an agreement concerning the supply of subscriber data. By letter of 24 March 1995 the BIPT, having received a copy of that agreement, informed the applicant that it had been granted a provisional authorisation. The letter stated that the authorisation could become definitive once the financial conditions of the agreement had been modified to correspond with the fair, reasonable and non-discriminatory conditions to be determined by the BIPT.

    By letter of 29 March 1995 Belgacom gave the applicant formal notice requiring it to comply with its contractual obligations under Article XVI(2) of the agreement of 9 May 1984. That letter was accompanied by a list of the items which Belgacom was claiming from the applicant in accordance with that article.

    That demand for performance of the agreement of 9 May 1984 gave rise to a third set of legal proceedings between Belgacom and the applicant (hereinafter 'Belgacom's third action'). On 14 April 1995 Belgacom made a summary application to the President of the Brussels Tribunal de Commerce, seeking an order that the applicant, pursuant to Article XVI(2) of the agreement of 9 May 1984, should transfer to Belgacom various items of data, commercial know-how and intellectual property rights. By judgment of 19 June 1995 the President of the Tribunal de Commerce declared that the action did not fulfil the criteria for summary proceedings and dismissed it as unfounded.

    Following the summary proceedings, substantive proceedings were initiated on 7 August 1995 by Belgacom and BDS before the President of the Brussels Tribunal de Commerce in which they sought an order requiring the applicant to pay damages. By judgment of 11 December 1996 the President of the Tribunal de Commerce declared that the exclusivity clause in the agreement of 9 May 1984 infringed Article 85(1) of the EC Treaty and that, since that clause went to the very essence of the agreement, the entire agreement was void under Article 85(2) of the EC Treaty. He therefore dismissed the action as unfounded. He held that it had not been shown that the institution of the proceedings was frivolous and vexatious, and therefore also dismissed the applicant's counterclaim as unfounded.

    The administrative procedure before the Commission

    On 20 October 1994 the applicant submitted a complaint to the Commission in which it claimed, first, under Article 3 of Regulation No 17 of the Council · First Regulation implementing Articles 85 and 86 of the Treaty (hereinafter 'Regulation No 17'), that Belgacom's conduct infringed Article 86 of the Treaty and, second, that the relevant Belgian provisions were incompatible with Articles 86 and 90(1) of the Treaty. The Commission separated the complaint into two parts: the complaint against Belgacom's conduct was registered under No IV/35.268 (hereinafter 'complaint No IV/35.268') and that against the relevant

    No 94/51

    In complaint No IV/35.268, the applicant asserted that Belgacom had abused a dominant position, contrary to Article 86 of the Treaty, by:

  • (I) communicating to the applicant's existing or potential customers false, misleading and disparaging statements concerning the applicant;
  • (II) refusing to supply to the applicant the subscriber data needed for the production of directories on terms which were fair, reasonable and non-discriminatory;
  • (III) imposing excessive and/or discriminatory prices for the sale of the subscriber data in question;

    (IV) initiating vexatious litigation against the applicant before the Belgian courts; and

  • (V) requiring the applicant to surrender to it its industrial and commercial know-how in accordance with contractual commitments binding the two parties.

    In April 1997 the Commission reached a settlement with Belgacom regarding the conditions of access to the subscriber data, following which the applicant withdrew that head of complaint.

    By letter of 21 December 1995 the Commission notified the applicant of its final decision to reject the first and second heads of complaint No IV/35.268. No action has been brought before the Court of First Instance concerning the rejection of those heads of complaint.

    The contested decision

    By decision of 21 May 1996 (hereinafter 'the contested decision'), communicated to the applicant by letter of the same date, the Commission definitively rejected the fourth and fifth heads of complaint No IV/35.268, concerning Belgacom's allegedly vexatious litigation and the claim for performance of Article XVI(2) of the agreement of 9 May 1984 requiring the transfer to Belgacom of the applicant's industrial and commercial know-how.

    Substance

    The first plea: manifest error of assessment of Belgacom's pricing practices, resulting in an inadequate statement of reasons

    The applicant points out that in complaint No IV/35.268 it argued that Belgacom had sought to put it out of business by requesting the Brussels Tribunal de Commerce, on the basis of the Belgian provisions governing the publication of telephone directories (which were incompatible with Community law), to order the applicant to discontinue its canvassing and sales activities for the 1995/1996 edition of its commercial directories, on the ground that the applicant had not obtained authorisation from the BIPT to publish directories, as required by Article 113(2) of the 1991 Law. In its letter of 21 December 1995 the Commission stated that Belgacom's first counterclaim did not constitute an abuse, because Belgacom had merely asserted a right 'resulting from the situation of [the applicant] before the authorisation required by law had been obtained'.

    The applicant argued in response, in its letter of 9 February 1996, that that approach completely ignored the fact that its initial failure to obtain an authorisation was caused by Belgacom's pricing practices, which had been the subject of close scrutiny in the statement of objections of 20 December 1995.

    Findings of the Court

    The first plea is in fact in two parts, the first part alleging a manifest error of assessment and the second alleging an inadequate statement of reasons.

    In the first part the applicant submits in essence that point 16 of the contested decision is based on a manifest error of assessment. In that regard, the Court finds, first, that it must reject the applicant's argument that the Commission wrongly concluded that the pricing practices which were the subject-matter of the statement of objections of 20 December 1995 had no bearing on the applicant's inability to obtain authorisation.

    The pricing practices which were the subject-matter of the statement of objections of 20 December 1995 did not prevent the applicant from obtaining an authorisation allowing it to publish directories.

    Nor, second, can the Court accept the applicant's argument that the Commission failed to take account of the fact that the applicant's lack of authorisation was due specifically to Belgacom's abusive pricing practices.

    According to the first of the two cumulative criteria set out by the Commission in the contested decision, legal proceedings can be characterised as an abuse, within the meaning of Article 86 of the Treaty, only if they cannot reasonably be considered to be an attempt to assert the rights of the undertaking concerned and can therefore only serve to harass the opposing party. It is therefore the situation existing when the action in question is brought which must be taken into account in order to determine whether that criterion is satisfied.

    Furthermore, when applying that criterion, it is not a question of determining whether the rights which the undertaking concerned was asserting when it brought its action actually existed or whether that action was well founded, but rather of determining whether such an action was intended to assert what that undertaking could, at that moment, reasonably consider to be its rights.

    Under Article 113(2) of the 1991 Law, only Belgacom and persons authorised by the BIPT were entitled to publish telephone directories.

    In those circumstances, an examination of the question whether the applicant's lack of authorisation was due to Belgacom's pricing practices could not have shown that Belgacom's first action was not intended to assert what that company could, at the moment when it brought that action, have reasonably considered to have been its rights and that the action only served to harass the applicant. That question was therefore irrelevant to the question whether the first criterion was satisfied. It therefore fell within the scope of the substantive proceedings and was a matter for the national court before which the applicant's first action had been brought.

    As for the second part of the first plea, the contested decision therefore sets out the considerations on which the Commission based its view and thus enabled the applicant to challenge the correctness of that part of the contested decision and the Court to exercise its power of review. This part of the plea cannot therefore be upheld either.

    The second plea: manifest error of assessment of the relevant Belgian provisions governing the publication of telephone directories

    Arguments of the parties

    The applicant maintains that the Commission committed a manifest error of assessment by relying on a conclusion which could only have been reached after a proper review of the applicant's complaints concerning the relevant Belgian provisions governing the publication of telephone directories.

    Findings of the Court

    Under Article 113(2) of the 1991 Law, apart from Belgacom, only persons authorised by the BIPT were authorised to publish telephone directories, in accordance with the criteria and procedures laid down by Royal enactment. It is common ground that such authorisation could not be granted until the measure determining those criteria and procedures had entered into force. That measure, the Royal Decree of 15 July 1994, entered into force on 26 August 1994. Prior to that date, it therefore followed that under the relevant Belgian provisions no one could obtain the necessary authorisation to publish telephone directories and, accordingly, that Belgacom was, as a result of that legislation, the only undertaking entitled to publish such directories.

    The purpose of Belgacom's first two actions must therefore be regarded as the assertion of what Belgacom, at the moment when it brought those two actions, could reasonably consider, on the basis of the Belgian provisions governing the publishing of telephone directories, to be its rights. Consequently, the first of the Commission's two cumulative criteria was not satisfied.

    In such circumstances, an examination of the question whether the relevant Belgian provisions governing the publishing of telephone directories were compatible with Community law could not have shown that the objective of Belgacom's first two actions was not to assert what Belgacom, at the moment when it brought those actions, could reasonably consider to be its rights under those provisions and that the two actions therefore served only to harass the applicant. Consequently, that question fell to be considered in the examination of the merits, which was a matter for the national court hearing Belgacom's first two actions.

    When applying the first of its two cumulative criteria, the Commission correctly held in points 17 and 21 of the contested decision, without having previously considered the question whether the relevant Belgian provisions were compatible with Community law, that Belgacom could legitimately refer to those provisions, in the case of its first action, so long as they had not been invalidated and, in the case of its second action, so long as the absence of an implementing decree had not been held to be unlawful.

    The third plea: incorrect characterisation of Belgacom's rights

    Arguments of the parties

    The applicant challenges the Commission's finding in point 22 of the contested decision, claiming that it is based on an incorrect characterisation. Since Article 45 of the Law of 24 December 1993 abolished all of Belgacom's exclusive rights in regard to directory activities with effect from 10 January 1994, the monopoly right could no longer be relied upon in order to justify the refusal to supply the subscriber data. The Commission therefore fails to apply the first of its two criteria for determining whether an action aims to assert a right, in other words a title recognised or protected by law, because, as Belgacom's exclusive rights were abolished with effect from 10 January 1994, its subsequent court action to prevent the applicant from canvassing or selling advertising space could not, by definition, have been intended to assert a legitimate title to exclusivity that was protected or recognised by Belgian or Community law.

    Findings of the Court

    On a reading of point 19 of the contested decision, in conjunction with point 22, it is therefore clear that the expression 'Belgacom's statutory monopoly on that market' must be understood as meaning that Belgacom's legal position on the market for telephone directories, as a direct result of Article 13(2) of the 1991 Law and the absence of any Royal Decree laying down the criteria and procedures for the grant of authorisations, was in actual fact that of a monopoly.

    In any event, the present plea is ineffective. Even if the Commission had committed an error of appraisal in characterising Belgacom's position on the Belgian market for telephone directories as a statutory monopoly, it nevertheless follows from the foregoing that in actual fact Belgacom had a monopoly on that market by virtue of the relevant Belgian provisions. It is clear from point 19 of the contested decision that this is the factor which led the Commission to conclude that Belgacom's second action did not satisfy the first of the two cumulative criteria.

    The fourth plea: manifest error of assessment regarding Belgacom's refusal to supply the subscriber data

    The applicant states that Article 86 of the Treaty prohibits an undertaking in a dominant position from refusing to supply a product or service unless that refusal is objectively justified. In the present case, Belgacom's refusal to supply the applicant with the subscriber data requested substantially affected the applicant's ability to prepare its directory publishing activities. By contrast, Belgacom's directories business

    was not affected by a decision to supply those data or not. Belgacom's refusal was therefore unjustified. That refusal was designed solely to protect Belgacom's monopoly, which had been abolished by the Law of 24 December 1993. Consequently, the Commission committed a manifest error of assessment regarding Belgacom's refusal to supply the subscriber data requested. Contrary to the view advanced by the Commission, that refusal could not be justified by the relevant Belgian provisions.

    The applicant adds that the Commission, in contending that it cannot investigate the merits of a claim made in legal proceedings, incorrectly applies its own criteria for determining whether an action brought by an undertaking in a dominant position constitutes an abuse.

    Findings of the Court

    The Commission correctly found in point 22 of the contested decision, when applying the first of the two cumulative criteria, that Belgacom could legitimately fear that the applicant would use the subscriber data in order to canvas customers on the telephone directory advertising market, and that this would have affected Belgacom's legal position on that market under the relevant Belgian provisions.

    Similarly, Belgacom's first and second actions must both be regarded as intended to assert what Belgacom could reasonably consider to be its rights under the relevant Belgian provisions, so that the first of the two cumulative criteria laid down by the Commission in the contested decision was not satisfied.

    The sixth plea: infringement of Article 190 of the Treaty as regards the rejection of the head of complaint IV/35.268 relating to Belgacom's third action

    The applicant maintains that, by merely stating, in point 26 of the contested decision, that the applicant had failed to advance any factual or legal argument to show how Belgacom's claims in relation to Article XVI of the agreement of 9 May 1984 were excessive, the Commission infringed Article 190 of the Treaty.

    Findings of the Court

    The contested decision states that the Commission considered that Belgacom's third action had to be regarded as brought for the purpose of defending what Belgacom considered to be a right stemming from contractual undertakings given by the applicant (point 24). After explaining that the applicant had indicated in its letter of 9 February 1996 that the aim of Belgacom's third action was to enforce claims which fell outside the scope of the contractual obligations assumed by the two parties (point 25), the contested decision asserts that the applicant has not adduced any matter of fact or of law to explain in what respect Belgacom's demands went beyond what was provided for by that contract (point 26). It is also apparent from the contested decision that the Commission considers that Belgacom's third action did not satisfy the first of the two cumulative criteria laid down in point 11 (point 27).

    The contested decision therefore sets out the matters on which the Commission based its view with regard to the application of the two cumulative criteria to Belgacom's third action.

    The seventh plea: infringement of Article 86 of the Treaty as a result of the Commission's characterisation of the claims for performance of Article XVI of the agreement of 9 May 1984

    Arguments of the parties

    The applicant submits, first, that by stating in points 33 and 34 of the contested decision that the claim for performance of Article XVI of the agreement of 9 May 1984 was not an abuse, since it did not have anti-competitive effects on the structure of the market beyond those which the parties could expect under the contract, the Commission infringed Article 86 of the Treaty.

    Findings of the Court

    It follows from the nature of the obligations imposed by Article 86 of the Treaty that, in specific circumstances, undertakings in a dominant position may be deprived of the right to adopt a course of conduct or take measures which are not in themselves abuses and which would even be unobjectionable if adopted or taken by non-dominant undertakings. Thus, the conclusion of a contract or the acquisition of a right may amount to abuse for the purposes of Article 86 of the Treaty if that contract is concluded or that right is acquired by an undertaking in a dominant position.

    A claim for performance of a contractual obligation may also constitute an abuse for the purposes of Article 86 of the Treaty if, in particular, that claim exceeds what the parties could reasonably expect under the contract or if the circumstances applicable at the time of the conclusion of the contract have changed in the meantime.

    The Court finds that the applicant has not submitted any evidence to show that those conditions are satisfied in the present case.

    First, as to the question whether Belgacom's claim exceeded what the parties could expect under the contract, it follows from the applicant's submissions in the context of its sixth plea that it is relying, in essence, on three separate arguments. First, it alleges that Belgacom's demand that it transfer to Belgacom the trade mark ('Gouden Gids/Pages d'Or') falls outside the scope of Article XVI of the agreement of 9 May 1984, which makes no reference whatsoever to trade marks. Second, it complains that Belgacom claimed trade marks owned by ITT World Directories Netherlands, which was not even a party to that agreement. Finally, it submits that Belgacom admitted in its observations on the complaint that it was placing a new construction on Article XVI of the agreement.

    Nor does the applicant show in what respect the fact that the exclusive right to publish directories which Belgacom enjoyed when the agreement of 9 May 1984 was concluded, which included the right to authorise third parties to publish, has been enjoyed since 10 January 1994 by Belgacom and undertakings authorised by the BIPT causes the claim for performance of Article XVI of that agreement to be an act which amounts to an abuse under Article 86 of the Treaty.

    In that context, the Court points out, moreover, that the applicant, shielded from any competition, was able to acquire unique experience, develop its business and enhance the value of its trade marks for 25 years by virtue of Belgacom's exclusive rights.

    Consequently, the applicant's arguments that the conclusions drawn by the Commission in points 33 and 34 of the contested decision are contrary to Article 86 of the Treaty cannot be upheld.

    The Court held:

    '1. The application is dismissed;

  • 2. The applicant is ordered to bear its own costs and to pay those incurred by the Commission and Belgacom.'

    Case T-118/96

    Thai Bicycle Industry Co. Ltd v Council of the European Union

    Commercial policy

    17 July 1998

    (Dumping · Normal value · Constructed value · Production costs · Selling, general and administrative expenses · Profit margin · OEM adjustment)

    (Fourth Chamber, Extended Composition)

    This application seeks the annulment of Council Regulation (EC) No 648/96 of 28 March 1996 imposing a definitive anti-dumping duty on imports of bicycles originating in Indonesia, Malaysia and Thailand and collecting definitively the provisional duties imposed (hereinafter 'the contested regulation'). That regulation follows Commission Regulation (EC) No 2414/95 of 13 October 1995 imposing a provisional anti-dumping duty on imports of bicycles originating in Indonesia, Malaysia and Thailand (hereinafter 'the provisional regulation').

    On 13 October 1995 the Commission adopted the provisional regulation, which imposed a provisional anti-dumping duty of 13.2% on imports of the applicant's bicycles.

    On 28 March 1996 the Council adopted the contested regulation, which imposed a definitive anti-dumping duty of 13% on imports of the applicant's bicycles.

    1.First plea: infringement of the basic regulation, manifest error of assessment and breach of the principle of non-discrimination, in that the Council refused to use the applicant's actual profit margin in establishing the constructed normal value of its products exported to the Community

    The applicant submits that, in order to establish the constructed normal value of its products, the Council should have used its actual profit margin rather than the weighted average profit margin of Siam and Victory.

    First limb: the applicant's profit margin

    Arguments of the parties

    The applicant acknowledges that where complex economic questions are concerned, the Council enjoys a wide discretion. However, by refusing to use the applicant's actual profit margin on the ground that the volume of its profitable domestic sales represented less than 10% of its total domestic sales volume, the Council exceeded its powers.

    Findings of the Court of First Instance

    According to the wording and scheme of Article 2(3)(a) of the basic regulation, in order to establish the normal value regard must be had primarily to the actual price. It is apparent from Article 2(3)(b) of that regulation that that principle may be derogated from only when there are no sales of the like product in the ordinary course of trade or when such sales do not permit a proper comparison.

    The ordinary course of trade is a concept which relates to the nature of sales themselves. It is meant to exclude, for the purpose of determining the normal value, situations in which sales on the domestic market are not made under ordinary trade conditions, in particular where a product is sold at a price below production costs.

    The institutions consider that where the volume of a producer's profitable domestic sales is less than 10% of its total volume of domestic sales of the like product, the actual price does not constitute an appropriate basis for the purpose of establishing the normal value.

    The requirement that domestic sales must permit a proper comparison relates to the question as to whether those sales are sufficiently representative to serve as a basis for the determination of the normal value. Transactions on the domestic market must reflect normal behaviour on the part of purchasers and result from normal patterns of price formation.

    According to the case-law, that requirement is satisfied where sales by the producer concerned on the domestic market exceed 5% of export sales to the Community.

    In the present case, the institutions were unable to establish the normal value of the applicant's bicycles on the basis of the actual price because the models it had sold on the Thailand market were not comparable with those it had sold for export to the Community. They therefore established the normal value on the basis of a constructed value for the products exported to the Community.

    The profit margin must be calculated primarily by reference to the profit realised by the producer concerned on profitable domestic sales of the like product. Only if those data are unavailable or unreliable or not suitable for use is the profit margin to be calculated by reference to the profits realised by other producers on their domestic sales of the like product.

    In the present case, the institutions considered that where a producer realises profits on a domestic sales volume which is less than 10% of the total volume of its domestic sales of the like product, those profits are not 'reliable' and are consequently 'not suitable for use' in calculating the profit margin to be included in the constructed normal value.

    It is therefore necessary to ascertain whether, by using such a threshold, the institutions infringed the basic regulation or committed a manifest error of assessment.

    Adoption of the 10% threshold

    The complaints to be examined are that (a) the institutions introduced a new requirement, (b) the 10% threshold is arbitrary, and (c) that threshold is contrary to the institutions' previous practice.

    (a) Introduction of a new requirement

    Where a producer sells an excessive number of products on the domestic market at a price below the production cost, its sales cannot be regarded as taking place under ordinary trade conditions. Consequently, the institutions may not take into consideration the profits realised on those sales in calculating the profit margin to be included in the constructed normal value. If they were taken into consideration, the effect would be to render the first method of calculating the profit margin unreasonable.

    The 10% threshold is intended to ensure that the producer's profits are realised on a sufficiently large number of domestic sales of the like product.

    Consequently, by adopting such a threshold, the institutions correctly interpreted Article 2(3)(b)(ii) of the basic regulation.

    (b) Arbitrary nature of the 10% threshold

    As regards the concept of the ordinary course of trade, the institutions consider that where the volume of a producer's profitable domestic sales is less than 10% of its total volume of domestic sales of the like product, the actual price does not constitute an appropriate basis for establishing the normal value.

    It is therefore logical that when the institutions determine the constructed normal value, they do not consider the profits realised by that producer on such sales to constitute an appropriate basis for calculating the profit margin either.

    Consequently, far from being arbitrary, the 10% threshold reflects the consistent approach of the institutions in the context of establishing the normal value. It is clear that the applicant cannot seriously maintain that the possibility that a producer might conceal certain information is capable of rendering the 10% threshold arbitrary.

    (c) Existence of a previous practice

    It should be recalled that when they exercise the discretion conferred on them by the basic regulation, the institutions are not obliged to explain in detail and in advance the criteria which they intend to apply in every situation, even where they create new policy options.

    In any event, therefore, without there being any need to rule on the practice alleged by the applicant, the existence of such a practice did not in itself deprive the institutions of the possibility of adopting the threshold at issue.

    It follows that, by adopting the 10% threshold, the institutions did not infringe the basic regulation or commit a manifest error of assessment.

    On that point, the Court observes that, in the absence of a specific legal provision, that threshold gives the economic operators concerned a measure of legal certainty with respect to the assessment by the institutions as to whether the profits realised by a producer on its profitable domestic sales of the like product are representative. In the light of that guarantee, the 10% threshold should be upheld and may be derogated from only in exceptional cases.

    Application of the 10% threshold to the applicant

    The complaints to be considered concern (a) the applicant's profitable domestic sales in absolute terms, (b) its profitable domestic sales in terms of value and (c) the rigid application of the 10% threshold.

    (a) The applicant's sales in absolute terms

    The 10% threshold is intended to guarantee that the profits realised by a particular producer on its domestic sales of the like product constitute a reasonable basis for calculating the profit margin to be included in the constructed normal value. The essential element of the rule is thus the ratio of that producer's profitable domestic sales to its total domestic sales.

    Consequently, the overall volume of the profitable domestic sales realised by the applicant on the domestic market is not material. It does not in any way affect the finding that its profitable domestic sales represented less than 10% of its total domestic sales. Similarly, the comparison between its profitable domestic sales and those of Siam and Victory is irrelevant as long as those producers on their own scale realise their profits on a sufficiently representative number of domestic sales.

    (b) The applicant's domestic sales in terms of value

    That example, which is in any case hypothetical, is not such as to call into question the appropriateness of the above decision. It is for the institutions to examine, in each particular situation, whether specific circumstances require or justify making an exception to the 10% threshold.

    Moreover, the institutions' decision does not exceed the limits of their discretion. It should be observed that the criteria they use in connection with the concept of the ordinary course of trade and in assessing whether sales on the domestic market are representative apply also to the volume of sales of the like product.

    (c) Rigid application of the 10% threshold

    It is common ground here that the volume of its profitable domestic sales represented 9.26% of the total volume of its domestic sales of the like product.

    That is not affected by the fact that for several bicycle models the majority of its domestic sales were profitable. In addition, neither the novelty of the 10% threshold nor the fact that the applicant's profitable domestic sales fell only 0.74% short of satisfying that threshold constituted exceptional circumstances which would permit making an exception thereto.

    It follows that, by applying the 10% threshold to the applicant, the institutions did not infringe the basic regulation or commit a manifest error of assessment.

    Second limb: adjustments of production costs and SG&A expenses

    Without the adjustment of the applicant's production costs or selling general and administrative ('SG&A') expenses, the volume of its profitable domestic sales would have been equal to or greater than 10% of the total volume of its domestic sales of the like product.

    It is necessary therefore to consider whether those adjustments were justified.

    Adjustment of the applicant's production costs

    Arguments of the parties

    The applicant submits that the adjustment of its bicycle production costs is unjustified. During the on-the-spot verification it explained clearly that the difference between the figure for production costs stated in its reply to the questionnaire and that shown in its profit and loss account corresponded to the costs of manufacturing bicycle and motor-cycle parts.

    Findings of the Court of First Instance

    The documents in the case show that it did not produce any evidence enabling the institutions to verify that its explanation was correct.

    Consequently, the institutions were entitled to make an adjustment of its production costs by making an allocation, in accordance with Article 2(11) of the basic regulation, in proportion to the turnover on the basis of the available accounting data.

    Adjustment of the applicant's SG&A expenses

    Arguments of the parties

    The applicant submits that the adjustment of its SG&A expenses is unwarranted. It demonstrated that its export expenses were genuine by submitting a list of all its export sales containing, for each transaction, the precise amount of export expenses actually incurred. Those expenses, when added together, corresponded to the figure of THB 17 076 144 shown under the item 'export expenses' in its profit and loss account.

    Findings of the Court of First Instance

    The applicant did not at any stage of the administrative procedure furnish a breakdown of the costs in question. Similarly, it did not produce or even prepare any evidence enabling the institutions effectively to verify that those expenses were genuine.

    In the context of establishing the export price, the applicant had transmitted to the Commission, a few days before the on-the-spot verification, a list of its export sales to the Community, indicating for each transaction the expenses allegedly incurred. These amounted to THB 7 743 186. However, that list contained numerous errors, so that it could not as such serve as a basis for determining the export price of the applicant's bicycles to the Community. The Commission therefore had to establish that price on the basis of the available accounting data, in accordance with Article 7(7)(b) of the basic regulation.

    The institutions were accordingly entitled to make an adjustment of the export expenses allegedly incurred by the applicant, allocating them in proportion to turnover on the basis of the available accounting data, in accordance with Article 2(11) of the basic regulation.

    Third limb: Siam's profit margin

    Arguments of the parties

    The applicant submits that the Council was not entitled, in order to calculate the profit margin to be included in the constructed normal value of its products, to use the profits realised by Siam on its profitable domestic sales of the like product.

    The institutions applied the 10% threshold only to the domestic sales for which that producer had communicated information on its costs of bicycle production. If they had taken all Siam's domestic sales into account, they would have found that its profitable sales represented only 9.45% of its total domestic sales.

    Findings of the Court of First Instance

    Judicial review is directed towards the accuracy of the facts used by the institutions and whether there has been a manifest error in the assessment of those facts. If the calculation of the profit margin used to determine the constructed normal value of the applicant's bicycles were shown to have been based on incorrect facts or to be the result of a manifest error of assessment, such a calculation would affect the validity of the calculation of the dumping margin, and would consequently entail the annulment of the contested regulation.

    In the present case, the institutions did not commit a manifest error of assessment by applying the 10% threshold only to sales of the units for which Siam had furnished information on its production costs.

    The institutions did not commit a manifest error by using the profits realised by Siam on its profitable domestic sales of the like product for the purposes of calculating the profit margin to be included in the constructed normal value of the applicant's products.

    Fourth limb: Victory's profit margin

    Arguments of the parties

    The applicant submits that, in order to calculate the profit margin to be included in the constructed value of its products, the Council was not entitled to use the profits realised by Victory on its profitable domestic sales of the like product, the information relating to that producer not being suitable for use.

    Findings of the Court of First Instance

    In order to assess whether the fourth limb of the plea is well founded, the Court requested the Council to reply to certain questions and to produce inter alia the provisional and definitive disclosures relating to Victory.

    Information supplied by Victory

    The Commission was entitled to consider that the information obtained from Victory was sufficient to determine the normal value of its products.

    Average sales price of Victory's bicycles

    In determining the average sales price of Victory's bicycles on the basis of the 110 invoices in question, the institutions obtained a reliable result. The applicant's second argument must therefore be rejected.

    Different levels of trade

    The applicant asserts that Victory's domestic sales took place at a different level of trade from its own. However, it has not shown how that circumstance, if it were established, could preclude the institutions from using the profits realised by that producer on its profitable domestic sales in the calculation of the profit margin to be included in the constructed normal value of the applicant's products.

    Victory's production costs

    The applicant submits that the production costs supplied by Victory to the Commission are incorrect and that the institutions committed a manifest error in calculating those costs.

    The applicant further considers that the institutions, by finding that the bicycle production costs incurred by Victory during the investigation period amounted to THB ..., failed to take into account an amount of THB ... corresponding to the purchase of bicycle parts.

    That argument must be rejected. It appears from the Council's replies to the Court's questions that Victory did not use those parts in the manufacture of its bicycles, but sold them as parts on the domestic market. Accordingly, the amount of THB ... should not be included in Victory's bicycle production costs.

    2.Second plea in law: infringement of the basic regulation, in that the Council refused to make an adjustment in calculating the profit margin to be included in the constructed normal value of the applicant's products sold in the Community to OEM purchasers

    Arguments of the parties

    The applicant observes that the Council refused on two grounds to make an adjustment in calculating the profit margin to be included in the constructed normal value of its products sold in the Community to purchasers. First, its request for an adjustment was not supported by evidence. Second, its sales did not satisfy the conditions for granting an OEM adjustment. Those grounds are contrary to Article 2(3) of the basic regulation.

    Findings of the Court of First Instance

    It should be noted that the essential difference between OEM sales and own-brand sales is at the marketing stage. Those two types of sale are aimed at different customers, who generally operate at different marketing stages. An OEM functions in a different way from ordinary retailers. It buys products from a manufacturer and then sells them under its own brand, while assuming the manufacturer's liability and bearing the costs inherent in marketing the products. The special nature of those functions is reflected in particular in the structure of the prices charged by the manufacturer to OEM purchasers, in that those prices are generally lower than those charged to ordinary distributors.

    Consequently, by requiring the applicant to show that its export sales to OEM purchasers in the Community were made at a price and profit margin lower than those of its domestic own-brand sales, the Council did not infringe Article 2(3) of the basic regulation.

    In the present case, the applicant has produced no evidence from which it might be concluded that it satisfied that requirement. Yet such proof, contrary to its assertion, was not impossible to provide. It would have been enough for it to show that there was a distinct and consistent pricing pattern for its export sales to OEMs in the Community and for its domestic own-brand sales.

    As regards the difference in pricing between the applicant's sales to Community OEMs and its own-brand sales to Community distributors, the Council stated that that did not constitute a condition for granting the OEM adjustment but a means of verifying whether the OEMs actually performed specific functions compared to ordinary distributors. The documents in the case show that the applicant sold certain bicycle models to Community OEMs at a higher price than that of the models it sold to Community distributors under its own brand ('Pheasant' and 'Flamingo'). That finding bears out the Council's conclusion that 'the majority of the export sales [of the applicant to the Community] were not made at a level which would constitute an OEM sale'.

    Consequently, by refusing to make an OEM adjustment on the ground that the applicant's sales did not satisfy the conditions for an adjustment, the Council did not infringe Article 2(3) of the basic regulation.

    In those circumstances, any defects there may be in the first ground for refusing to grant the adjustment, namely the absence of a substantiated request, do not in any event have any effect on the assessment of the second plea in law.

    The Court held:

    '1. The application is dismissed;

    2. The applicant is ordered to pay the costs.'

    Joined Cases T-66/96 and T-221/97

    John Mellett v Court of Justice of the European Communities

    Staff Regulations of Officials

    21 July 1998

    (Officials · Establishment · Legitimate expectations) (Fifth Chamber)

    2.

    Opinions

    Case C-167/97

    Regina v Secretary of State for Employment ex parte: Nicole Seymour-Smith and Laura Perez

    Preliminary ruling · House of Lords · Interpretation of Art. 119 of EC Treaty · Social policy · Concept of pay · Compensation for unfair dismissal · Whether included

    Advocate General G. Cosmas delivered his Opinion at the sitting of the Full Court on 14 July 1998.

    He proposed that the Court should reply as follows:

    'A national measure such as that at issue in the main proceedings, which deprives employees dismissed before they have completed two years' continuous employment for the same employer of the right not to be unfairly dismissed, is contrary to Articles 5(1) and 6 of Directive 76/207, in so far as such a measure on the one hand allows dismissal on grounds referable to the employee's sex, and on the other hand makes it impossible or exceptionally difficult to provide a legal remedy for dismissed employees who consider themselves thereby wronged.'

    Case C-337/96

    Commission of the European Communities v Industrial Refuse & Coal Energy Ltd

    Action based on an arbitration clause · Failure to perform a contract

    Advocate General A. Saggio delivered his Opinion at the sitting of the First Chamber on 14 July 1998.

    He proposed that the Court should:

  • '· order Industrial Refuse & Coal Energy Ltd to pay the Commission the sum of ECU 208 340, together with interest calculated at the annual rate of 8.15% with effect from 20 October 1993;
  • · dismiss the counterclaim by Industrial Refuse & Coal Energy Ltd for compensation to be paid by the Commission for damage caused by the adoption of the Directive and breach of confidentiality under the contract;
  • · declare inadmissible the counterclaim by Industrial Refuse & Coal Energy Ltd for compensation to be paid by the Commission for damage caused by a Commission official's defamatory conduct;
  • · order Industrial Refuse & Coal Energy Ltd to bear the costs of these proceedings.'

    Case C-316/97

    European Parliament v Giuliana Gaspari

    Annulment of the judgment delivered by the Court of First Instance (Fifth Chamber) on 10 July 1997 in Case T-36/96 Giuliana Gaspari v European Parliament annulling a decision by the Parliament to treat an absence justified by a medical certificate that was disputed by the examining doctor as irregular

    Advocate General D. Ruiz-Jarabo Colomer delivered his Opinion at the sitting of the First Chamber on 14 July 1998.

    He proposed that the Court should allow the appeal by the European Parliament and rule as follows:

  • '1. The judgment of the Court of First Instance in Case T-36/96 Gaspari v Parliament is annulled;
  • 2. The case is referred back to the Court of First Instance to enable it to rule on the other claims for annulment raised by the applicant;

    3. Costs are reserved.'

    Case C-410/97

    Commission of the European Communities v Grand Duchy of Luxembourg

    Failure of Member State to fulfil its obligations · Failure to adopt the laws, regulations or administrative provisions necessary to comply with Council Directive 92/29/EEC of 31 March 1992 on the minimum safety and health requirements for improved medical treatment on board vessels

    Advocate General D. Ruiz-Jarabo Colomer delivered his Opinion at the sitting of the Fourth Chamber on 14 July 1998.

    He proposed that the Court should hold the Grand Duchy of Luxembourg in breach of its obligations and order it to pay the costs.

    Case C-308/97

    Giuseppe Manfredi v Regione Puglia

    Preliminary ruling · Pretura Circondariale di Bari · Interpretation of Art. 6(1) of Council Regulation (EEC) No 822/87 on the common organisation of the market in wine · Ban on the planting of new vines · Vines producing only table grapes

    Advocate General D. Ruiz-Jarabo Colomer delivered his Opinion at the sitting of the Sixth Chamber on 14 July 1998.

    He found that, during the years 1991 and 1992, Article 6(1) of Council Regulation (EEC) No 822/87 on the common organisation of the market in wine prohibited the planting of new vines intended to produce table grapes.

    Case C-179/97

    Kingdom of Spain v Commission of the European Communities

    Annulment of Article 4a(6) of Commission Regulation No 2868/88 of 16 September 1988 establishing detailed rules for the application of the Joint International Inspection Scheme adopted by the North-West Atlantic Fisheries Organisation, as modified by Commission Regulation No 494/97 of 18 March 1997 · Presence of a NAFO Inspector during inspections

    Advocate General S. Alber delivered his Opinion at the sitting of the Full Court on 16 July 1998.

    He proposed that the Court should:

  • '1. Annul Article 4a(6) of [Commission Regulation No 2868/88 of 16 September 1988, as inserted by Commission Regulation No 494/97 of 18 March 1997] in so far as it provides that, on arrival at the port of diversion, the suspect vessel shall be the subject of a thorough inspection carried out in the presence of a NAFO inspector from any other Contracting Party wishing to take part, without such participation requiring the prior authorisation of the Contracting Party from which the vessel comes;

    2. order the Commission to pay the costs.'

    Case C-212/97

    Centros Limited v Erhvervs- og Selskabsstyrelsen

    Preliminary ruling · Højesteret · Interpretation of Arts 52, 56 and 58 of the EC Treaty · Company not carrying on any business in the Member State in which it has its registered office and under the legislation of which it was established · Establishment of a subsidiary in another Member State · Refusal

    Advocate General A. La Pergola delivered his Opinion at the sitting of the Full Court on 16 July 1998.

    He proposed that the Court should reply as follows:

    'Articles 52 et seq of the EC Treaty preclude the competent authorities of a Member State from refusing registration of a subsidiary of a limited liability company established under the legislation of another Member State and with its registered office in the territory of the latter, where the circumstances attending that refusal are the following: (i) the company itself does not carry on business; (ii) it is intended to

    establish the subsidiary in order to carry on the whole of the company's business in the State where the subsidiary is established; and (iii) that operating structure permits the founder members to avoid the requirement of a higher minimum company capital, which would have applied if the company were established in the Member State in which it is intended to open the subsidiary.'

    Case C-136/97

    Norbury Developments Ltd v Commissioners of Customs & Excise

    Preliminary ruling · Value Added Tax Tribunal, Manchester Tribunal Centre · Interpretation of Art. 28(3)(b) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment · Ability of Member States to retain certain exemptions on a temporary basis · Exemption of supplies of building plots

    Advocate General N. Fennelly delivered his Opinion at the sitting of the Second Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

    'In relation to the supply of land which has been held to be building land, a Member State is entitled to exempt the supply under Article 28(3)(b) of, read in conjunction with point 16 of Annex F to, the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes · Common system of value added tax: uniform basis of assessment, notwithstanding that it has, first, since the adoption of the Sixth Directive introduced an election to waive the VAT exemption in respect of such supplies and, secondly, reduced the material scope of the exemption which it applies in respect of such supplies so that some previously exempt supplies are now subject to VAT.'

    Case C-230/97

    Ibiyinka Awoyemi v Openbar Ministerie

    Preliminary ruling · Hof van Cassatie van België · Interpretation of First Council Directive 80/1263/EEC of 4 December 1980 on the introduction of a Community driving licence and Council Directive 91/439/EEC of 29 July 1991 on driving licences · Obligation to exchange a licence issued to a non-Community national by the Member State where he formerly resided for a licence of the host Member State · Failure to comply with the obligation · Assimilation to driving without a licence

    Advocate General P. Léger delivered his Opinion at the sitting of the Second Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

  • '1. Neither the First Council Directive 80/1263/EEC of 4 December 1980 on the introduction of a Community driving licence (and in particular Article 8 thereof) nor the EC Treaty preclude the driving of a motor vehicle from being assimilated to driving without a licence, and thus punishable by a fine or imprisonment, where that vehicle is driven by a person who is not an EU citizen but holds a national or community-model driving licence issued by a Member State and who could have obtained a driving licence of the State of establishment in exchange for his licence, but has not made that exchange within the prescribed period.
  • 2. In the absence of transposition into the domestic legal system, and by reason of the principle known under the national law of certain Member States that the criminal sanctions to be immediately applied are to be the least severe, Articles 1(2) and 8(1) of Council Directive 91/439/EEC of 29 July 1991 on driving licences preclude the driving of a motor vehicle, at a time when Directive 80/1263 was still in force by the holder of a national driving licence on the Community model, who is not a national of a Member State and who has not exchanged his licence for one issued by the Member State of establishment within the prescribed period, from being assimilated to driving without a licence and thus punishable by a fine or imprisonment.'

    Case C-279/97

    Landelijk Instituut voor de Sociale Verzekeringen v C.J.M. Voeten and J. Beckers

    Preliminary ruling · Centrale Raad van Beroep · Interpretation of Arts 40 and 51(1) of Council Regulation No 574/72 laying down the procedure for implementing Regulation No 1408/71 · Recipient of an invalidity benefit residing in a Member State other than the institution responsible for payment · Medical reports obtained and medical examinations carried out by the institution of the place of residence

    Advocate General D. Ruiz-Jarabo Colomer delivered his Opinion at the sitting of the Third Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

  • '1. Article 51(1) of Regulation No 574/72 precludes the debtor institution of a Member State from requiring the beneficiary of an invalidity benefit to undergo a medical examination in the territory of that State without first requesting that he be examined by the competent institution of the Member State in which he resides. The fact that the beneficiary was a frontier worker when struck by incapacity for work followed by invalidity is irrelevant. However, where the person concerned has waived the procedure which Article 51(1) of Regulation No 574/72 lays down for his benefit and goes voluntarily to the Member State of the debtor institution, he can thereafter no longer require, if he does not agree with the result of the examinations he underwent there, that the procedure be recommenced in such a way that he is to be examined primarily by the competent institution of the Member State in which he resides.
  • 2. Article 40 of Regulation No 574/72 does not preclude the competent institution, when assessing entitlement to an invalidity benefit, from determining the degree of a worker's invalidity by reference solely to medical examinations carried out by its departments.
  • 3. Article 40 of Regulation No 574/72 precludes the institution of the Member State to the legislation of which that worker was subject at the time incapacity for work followed by invalidity arose from determining his degree of invalidity without taking account of documents and medical reports collected by the institution of any Member State, where the worker was subject to the social security legislation of other Member States and where, in accordance with the procedure laid down by Article 39 of the regulation, the institutions of those States sent it those documents and reports.'

    Case C-290/97

    Georg Bruner in Firma Georg Bruner v Hauptzollamt Hamburg-Jonas

    Reference for a preliminary ruling - Bundesfinanzhof · Interpretation of Commission Regulation No 3846/87 establishing an agricultural product nomenclature for export refunds · Annex 8 · Chicken thighs cut vertically (ex 0207 41 11) · Unboned halves or quarters of fowls

    Advocate General N. Fennelly delivered his Opinion at the sitting of the Third Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

    'Product code 0207 41 11 000 in part 8 of the Annex to Commission Regulation (EEC) No 3846/87 of 17 December 1987 establishing an agricultural product nomenclature for export refunds, as amended successively by Commission Regulation (EEC) No 717/88 of 18 March 1988 fixing the export refunds on poultrymeat and Commission Regulation (EEC) No 3216/88 of 19 October 1988 fixing the export refunds on poultrymeat, should be interpreted as including, at the time of the facts giving rise to the main proceedings, the hindquarters of chicken separated at the bone but held together naturally by the skin of the back.'

    Case C-79/98

    Commission of the European Communities v Kingdom of Belgium

    Failure of Member State to fulfil its obligations · Failure to adopt, within the prescribed period, the necessary to comply with Commission Directive 94/69/EC of 19 December 1994 adapting to technical progress for the twenty-first time Council Directive 67/548/EEC on the approximation of laws, regulations and administrative provisions relating to the classification, packaging and labelling of dangerous substances

    Advocate General P. Léger delivered his Opinion at the sitting of the Third Chamber on 16 July 1998.

    He proposed that the Court should hold the Kingdom of Belgium in breach of its obligations and order it to pay the costs.

    Case C-353/96

    Commission of the European Communities v Ireland

    Failure of Member State to fulfil its obligations · Misapplication of Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts · Purchase of fertiliser

    Advocate General S. Alber delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should dismiss the action and order the Commission to pay the costs.

    Case C-200/97

    Ecotrade Srl v Altiforni e Ferriere di Servola SpA (AFS)

    Preliminary ruling · Corte Suprema di Cassazione · Interpretation of Art. 92 of the EC Treaty · Concept of State aid · State measure exempting large undertakings in difficulties from the usual insolvency proceedings, providing for it to continue trading, and prohibiting individual enforcement actions by creditors after the declaration of insolvency · Whether included

    Advocate General N. Fennelly delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

    'The application to an insolvent undertaking within the meaning of Article 80 of the ECSC Treaty of special national rules on insolvency which are applicable only to specific classes of undertakings, which is likely to result in greater losses to the State in its capacity as creditor than the application of the normal insolvency rules, constitutes State aid within the meaning of Article 4(c) of the ECSC Treaty.'

    Case C-211/97

    Paula Gomez Rivero v Bundesanstalt für Arbeit

    Preliminary ruling · Landessozialgericht Niedersachsen · Interpretation of Art. 16(2) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EEC) No 2001/83 of 2 June 1983 Determination of the social security legislation applicable to the spouse, not herself an employed person, of a person employed by a consular post who has opted to be subject to the legislation of the sending Member State

    Advocate General F.G. Jacobs delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

  • '(1) Article 16(2) of Regulation (EEC) No 1408/71 must be interpreted as meaning that where a person employed in a consular post exercises the option, under the first sentence of Article 16(2) of Regulation No 1408/71, to be subject to the legislation of the sending Member State of which he is a national, that has effect also for his spouse, not employed in the consular service, who is also a national of the sending Member State.
  • (2) The effectiveness of the option does not depend upon the prior consent or other cooperation of the spouse.'

    Case C-235/97

    French Republic v Commission of the European Communities

    n 97/33

    by the Member States in respect of the expenditure for 1993 on the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) · Intervention measures in the cereals sector in the form of public storage · Refunds on the export of a consignment of processed cheese to Saudi Arabia

    Advocate General S. Alber delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should dismiss the action and order the Commission to pay the costs.

    Case C-237/97

    AFS Intercultural Finland ry v Kuluttajavirasto

    Preliminary ruling · Korkein hallinto-oikeus · Interpretation of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours · Scope · Organization of exchanges of long duration for secondary school pupils, including free accommodation with a host family

    Advocate General A. Saggio delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

    '1. A trip as part of a student exchange programme of between six months and one year, undertaken in order to attend an educational establishment and become better acquainted with the society and culture of the host country by staying with a family there, falls within the scope of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours. It is irrelevant that the activity of the trip organiser is non-commercial, and that the beneficiary of the exchange programme is required to pay only part of the costs.

  • 2. 2.1 A long-term stay without payment is to be regarded as "accommodation" within the meaning of Article 2(1)(b) of the directive, even if that stay is with a family which treats the beneficiary as its own child.
  • 2.2 Whilst, in principle, the preparation of documentation concerning the host country and the running of a short course preparatory to the stay abroad may be regarded as "other tourist services" within the meaning of Article 2(1)(c) of the directive, it is for the national court to determine whether those elements constitute a significant part of the "package"'

    Case C-306/97

    Connemara Machine Turf Company Ltd v Coillte Teoranta

    Reference for a preliminary ruling · High Court of Ireland · Interpretation of Article 1(b) of Council Directive 77/62/EEC of 21 December 1976 and of Council Directive 93/36/EEC concerning the coordination of procedures for the award of public works contracts · 'Contracting authority' · Irish Forestry Board, set up in the form of a commercial company pursuant to the Forestry Act 1988

    Advocate General S. Alber delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should reply as follows:

    'A company such as that described in the order for reference is not a contracting authority within the meaning of Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts.'

    Case C-431/97

    Commission of the European Communities v Ireland

    Failure of Member State to fulfil its obligations · Failure to transpose, within the prescribed time-limit, Council Directive 94/57/EC of 22 November 1994 on common rules and standards for ship inspection and survey organisations and for the relevant activities of maritime administrations

    Advocate General F.G. Jacobs delivered his Opinion at the sitting of the Fifth Chamber on 16 July 1998.

    He proposed that the Court should hold Ireland in breach of its obligations and order it to pay the costs.

    Case C-159/96

    Portuguese Republic v Commission of the European Communities

    Declaration that the Commission's practice of taking exceptional flexibility measures as regards the management of quantitative restrictions on imports into the European Community of textile and clothing products and from third countries is illegal, and in particular the decision adopted by the Commission following the meeting of the Textile Committee of 6 March 1996 on textile products from the People's Republic of China

    Advocate General A. Saggio delivered his Opinion at the sitting of the Sixth Chamber on 16 July 1998.

    He proposed that the Court should:

    '· hold the action inadmissible in relation to the application for annulment of the Commission's practice of taking exceptional flexibility measures as regards the management of quantitative restrictions on textile imports into the Community;

  • · annul the decision adopted by the Commission following the favourable opinion of the "Textile" Committee of 6 March 1996 concerning the importation of textile products from the People's Republic of China;
  • · dismiss the Commission's application that the effects of the contested decision be declared definitive pursuant to the second paragraph of Article 174 of the Treaty;

    · order the Commission to pay the costs.'

    Case C-229/97

    Commission of the European Communities v Portuguese Republic

    Failure of Member State to fulfil its obligations · Failure to transpose, within the prescribed time-limit, Council Directive 79/869/EEC of 9 October 1979 concerning the methods of measurement and frequencies of sampling and analysis of surface water intended for the abstraction of drinking water in the Member States

    Advocate General S. Alber delivered his Opinion at the sitting of the Sixth Chamber on 16 July 1998.

    He proposed that the Court should hold the Portuguese Republic in breach of its obligations and order it to pay the costs.

    3.

    New cases

    Court of Justice

    Case C-197/98

    Commission v Greece

    Failure of Member State to fulfil its obligations - Failure to comply with the judgment in Case C-365/93 finding that Greece had failed to transpose within the prescribed period Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years' duration - Application for determination of a penalty payment

    Case C-198/98

    G. Everson and T.J. Barrass v Secretary of State for Trade and Industry and Others

    Preliminary ruling · Industrial Tribunal, Bristol · Interpretation of Art. 3 of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer · Competent guarantee institution in the case of an employee employed in a Member State other than that in which the defaulting employer has its registered office

    Case C-199/98

    Anthony Goldstein v Commission

    Appeal against the order of the Court of First Instance (Third Chamber) of 16 March 1998 in Case T-235/95 Goldstein v Commission · Annulment of a Commission decision refusing to reconsider its decision rejecting an application for interim measures brought in connection with proceedings for a declaration that the General Medical Council had infringed Articles 85 and 86 of the EC Treaty · Inadmissibility

    Case C-200/98

    X AB and Y AB v Riksskatteverket

    Preliminary ruling · Regeringsrätten · Interpretation of Arts 52, 58 and 73b and d of the EC Treaty · Tax legislation (tax on company profits) · Tax advantage granted to companies in the same group on condition that the companies are all established in Sweden or in a single other State with which Sweden has concluded a double-taxation agreement containing a non-discrimination clause · Discrimination against the companies in groups established in more than one other Member State

    Case C-201/98

    Commission v Belgium

    Failure by Member State to fulfil its obligations · Arts 3, 4(1) and 5 of Council Regulation (EEC) No 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries · Conclusion and maintenance in force of agreements containing cargo-sharing arrangements with Mali · Failure to adjust or denounce the maritime agreements with Senegal and Côte d'Ivoire

    Case C-202/98

    Commission v Luxembourg

    Failure by Member State to fulfil its obligations · Arts 3 and 4(1) of Council Regulation (EEC) No 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries · Conclusion and maintenance in force of agreements containing cargo-sharing arrangements with Mali and Togo · Failure to adjust or denounce the maritime agreements with Senegal and Côte d'Ivoire

    Case C-203/98

    Commission v Belgium

    Failure of Member State to fulfil its obligations · Arts 6, 52 and 59 of the EC Treaty · Conditions for registering aircraft in Belgium (one year of residence for non-Belgian natural persons, or a presence in Belgium for non-Belgian legal persons having a subsidiary, agency or office there) · Refusal to authorise Community operators to provide aerial services (other than for transport)

    Case C-204/98

    Commission v Greece

    Failure of Member State to fulfil its obligations · Failure to transpose, within the prescribed time-limit, Commission Directive 94/38/EC of 26 June 1994 amending Annexes C and D to Council Directive 92/51/EEC on a second general system for the recognition of professional education and training to supplement Directive 89/48/EEC

    Case C-205/98

    Commission v Austria

    Failure of Member State to fulfil obligations - Council Directive 93/89/EEC on the application by Member States of taxes on certain vehicles used for the carriage of goods by road and tolls and charges for the use of certain infrastructures - Tolls on the Brenner motorway - Increases from 1 July 1995 and 1 February 1996 (Art. 7(b) of the directive) - Use of part of the receipts for purposes not connected with the infrastructure network concerned (Art. 7(h) of the directive)

    Case C-206/98

    Commission v Belgium

    Failure of Member State to fulfil its obligations · Defective transposition of Council Directive 92/49/EEC on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive) · Exclusion from the scope of the national transposing legislation of any insurance fund or undertaking covering the risk of accidents at work, even where such undertakings carry on business at their own risk with a view to profit

    Case C-207/98

    Silke-Karin Mahlburg v Land Mecklenburg-Vorpommern

    Preliminary ruling · Landesarbeitsgericht Mecklenburg-Vorpommern · Interpretation of Council Directive 76/207/EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions - refusal to employ an otherwise qualified applicant in a post which she cannot take up immediately because of pregnancy

    Case C-208/98

    Berliner Kindl Brauerei AG v Andreas Siepert

    Preliminary ruling · Landgericht Potsdam · Interpretation of Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit · Scope · Contract of guarantee in respect of a debt incurred by an individual for the purposes of starting up a commercial enterprise

    Case C-209/98

    Entreprenørforeningens Affalds/Miljøsektion (FFAD), on behalf of Sydhavnens Sten & Grus ApS v Københavns Kommune

    Preliminary ruling · Østre Landsret · Interpretation of Art. 90 of the EC Treaty (in conjunction with Arts 34 and 86 thereof) and of Council Directive 75/442/EEC on waste (as amended by Directive 91/156/EEC) in regard to national rules allowing a commune, in the interest of capacity utilisation and the profitability of a limited number of undertakings, to exclude an undertaking, which is in other respects qualified, from taking part in the recycling of certain types of non-hazardous waste.

    Case C-210/98

    Salzgitter AG, formerly Preussag Stahl AG v Commission and Others

    Appeal against the judgment of the Court of First Instance (Third Chamber, Extended Composition) in Case T-129/96 Preussag Stahl AG v Commission, by which the Court of First Instance dismissed an action

    n 96/54

    Ilsenburg GmbH · Competence of the Commission to adopt an aid decision after expiry of the period in which it could be granted

    Case C-211/98

    Ramazan Örs v Bundesknappschaft

    Preliminary ruling · Bundessozialgericht · Interpretation of the law relating to the EEC-Turkey Association · Whether a general principle of non-discrimination in favour of Turkish workers in social security matters · Condition for recognising, for social security purposes, a date of birth amended by the Turkish authorities after the first declaration made to the German authorities by the person concerned at the time of his joining the scheme

    Case C-212/98

    Commission v Ireland

    Failure of Member State to fulfil its obligations · Failure to adopt or communicate, within the prescribed period, the provisions implementing Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission

    Case C-213/98

    Commission v Ireland

    Failure of Member State to fulfil its obligations · Failure to adopt or communicate, within the prescribed period, the provisions implementing Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property

    Case C-214/98

    Commission v Greece

    Failure of Member State to fulfil its obligations · Failure to comply with Council Directive 93/118/EC of 22 December 1993 amending Directive 85/73/EEC on the financing of health inspections and controls of freshmeat and poultrymeat, in particular points 1, 2 and 5 of Chapter 1 of the annex to that Directive.

    Case C-215/98

    Commission v Greece

    Failure of Member State to fulfil its obligations · Failure to implement Art. 6 of Council Directive 91/157/EEC of 18 March 1991 on batteries and accumulators containing certain dangerous substances · Failure to adopt programmes to reduce pollution caused by spent batteries and accumulators

    Case C-216/98

    Commission v Greece

    Failure of Member State to fulfil its obligations · Failure to comply with Art. 9 of Council Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco · National law requiring the minimum selling price for manufactured tobacco to be fixed by ministerial decree

    Case C-217/98

    Hauptzollamt Hamburg-Jonas v LFZ Nordfleisch AG

    Preliminary ruling · Bundesfinanzhof · Interpretation of the second subparagraph of Art. 33(1) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products in conjunction with Art. 29(1) of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products · Goods put into storage pending export with a view to advance payment of the refund · Additional amount of 20% payable in the event of non-compliance

    Case C-218/98

    Oumar Dabo Abdoulaye v Régie Nationale des Usines Renault SA

    Preliminary ruling · Conseil de Prud'Hommes du Havre · Interpretation of Art. 119 of the EC Treaty, of Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women, and of Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion and working conditions - Collective agreement providing for a maternity grant paid exclusively to female workers taking maternity leave (with maintenance of their salary)

    Case C-219/98

    R. v Minister of Agriculture, Fisheries and Food, ex parte Anastasiou (Pissouri) Ltd (S.P.)

    Preliminary ruling · House of Lords · Interpretation of Art. 12(1)(b) of Council Directive 77/93/EEC of 21 December 1976 on protective measures against the introduction into the Member States of harmful organisms of plants or plant products · Citrus fruits coming from a non-member country other than the one of origin · Citrus fruits from the part of Cyprus north of the United Nations buffer zone

    Case C-220/98

    Estée Lauder Cosmetics GmbH & Co. OHG v Lancaster Group GmbH

    Preliminary ruling · Landgericht Köln · Interpretation of Art. 30 of the EC Treaty and Art. 6(3) of Council Directive 76/768/EEC on the approximation of the laws of the Member States relating to cosmetic products - Compatibility with a national law provision allowing the importation and distribution of a product lawfully manufactured and marketed in another Member State to be prohibited on the ground that the word 'lifting' in the name of the product misleads consumers as to the enduring effect of the product (an effect it does not have)

    Case C-221/98

    Commission v France

    Failure of Member State to fulfil its obligations · Incorrect transposition of Council Directive 90/364/EEC of 28 June 1990 on the right of residence, Council Directive 90/365/EEC of 28 June 1990 on the right of residence for employees and self-employed persons who have ceased their occupational activity, and Council Directive 93/96/EEC of 29 October 1993 on the right of residence for students · Excessive requirements concerning resources and sickness insurance cover

    Case C-222/98

    Hendrik van der Woude v Stichting Beatrixoord

    Preliminary ruling · Kantongerecht te Groningen · Interpretation of Arts 85 and 86 of the EC Treaty in the light of a collective agreement providing for the employer to contribute to the employee's sickness insurance premiums, subject to the condition that the employee must be insured with a specified insurance organisation

    Case C-223/98

    Adidas AG

    Preliminary ruling · Kammarrätten i Stockholm · Interpretation of Council Regulation (EC) No 3295/94 of 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 · Compatibility with Community law of national legislation (Sekretesslagen 1980:100) which prevents the customs authorities from informing the trade-mark owner of the identity of the consignee of an intercepted consignment

    Case C-224/98

    Marie-Nathalie D'Hoop v Office National de l'Emploi

    Preliminary ruling · Tribunal du Travail, Liège · Interpretation of Art. 48 of the EC Treaty and Art. 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968 relating to the free movement of workers within the Community · Conditions for the grant to unemployed young persons of a tideover allowance · Provision requiring secondary education in an establishment of the Belgian education system not capable of being invoked against the children of migrant workers · Reverse discrimination

    Case C-225/98

    Commission v France

    Failure of Member State to fulfil its obligations · Failure to comply with Arts 12, 26 and 29 of Council Directive 71/305/EEC of 26 July 1971 concerning coordination of procedures for the award of public works contracts (as amended by Council Directive 89/440/EEC of 18 July 1989) and Arts 8, 11, 22, and 30 of Council Directive 93/37/EEC of 14 June 1993 concerning coordination of procedures for the award of public works contracts · Construction and maintenance of school buildings by the Nord-Pas de Calais Regions and the Département du Nord

    Case C-226/98

    Birgitte Jørgensen v Foreningen af Speciallæger, Sygesikringens Forhandlingsudvalg

    Preliminary ruling · Østre Landsret · Interpretation of (1) Council Directive 76/207/EC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, and (2) Council Directive 86/613/EEC on the application of the principle of equal treatment between men and women engaged in an activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women during pregnancy and motherhood, in relation to a collective agreement between an association of medical specialists and a social security body concerning the reorganisation of specialist practices · Indirect discrimination · Method of assessing advantages and disadvantages

    Case C-227/98

    Commission v Ireland

    Failure of Member State to fulfil its obligations · Failure to transpose, within the prescribed time-limit, Council Directive 91/328/EEC of 21 June 1991 amending Directive 77/143/EEC on the approximation of the laws of the Member States relating to roadworthiness tests for motor vehicles and their trailers · Directive repealed by Directive 96/96/EC of 20 December 1996, which maintained in force the obligations of Member States concerning the transposition period prescribed by Directive 91/328/EEC

    Case C-228/98

    Charalampos Dounias v Ypourgou Oikonomikon

    Preliminary ruling · Symvoulio Epikrateias · Taxable value of imported goods - Customs value - Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes - Tax on imported products - Calculation of taxable value - Reference to Regulation 1224/80 for the purposes of determining customs value - Compatibility with Arts 30 and 95 of the EC Treaty · State liability towards an individual in the event of breach of Community provisions by that State

    Case C-229/98

    Georges Vander Zwalmen and Elisabeth Massart v Belgian State

    Preliminary ruling · Cour d'Appel de Bruxelles · Interpretation of Art. 13 of the Protocol on the Privileges and Immunities of the European Communities · Exemption from national tax on salaries paid by the Communities · Compatibility of a national rule whereby the spouse of a European official is taxed separately, without the benefit of the matrimonial allowance system

    Case C-230/98

    Amministrazione delle Finanze dello Stato v Fallimento Ditta Schiavon Silvano

    Preliminary ruling · Tribunale di Treviso · Interpretation of Art. 1 of Council Regulation (EEC) No 545/92 of 3 February 1992 concerning the arrangements applicable to the import into the Community of products originating in the Republics of Croatia and Slovenia and the Yugoslav Republics of Bosnia-Herzegovina, Macedonia and Montenegro, and of Annex I to Commission Regulation (EEC) No 859/92 of 3 April 1992 laying down detailed rules governing imports of 'baby-beef' originating in the Republics of Croatia and Slovenia and the Yugoslav Republics of Bosnia-Herzegovina, Macedonia and Montenegro · Import of 'baby-beef' from the former Yugoslav Republic of Macedonia · Determination of body empowered to issue certificates of origin

    Case C-231/98

    Lamboley SA v Administration des Impôts

    Reference for a preliminary ruling · Tribunal de Grande Instance d'Epinal · Interpretation of Art. 95 of the EC Treaty in relation to a system of motor vehicle taxation · Tax increasing sharply above the tax band in which there is no vehicle of domestic manufacture

    Case C-232/98

    René Bouctot v Administration des Impôts

    As Case C-231/98

    Case C-233/98

    Hauptzollamt Neubrandenburg v Lensing & Brockhausen GmbH

    Preliminary ruling · Bundesfinanzhof · Interpretation of Art. 36(3) of Council Regulation No 222/77 of 13 December 1976 on Community transit (as amended by Council Regulation (EEC) No 474/90 of 22 February 1990) and of Article 11a of Commission Regulation 1062/87 of 27 March 1987 on provisions for the implementation of the Community transit procedure and for certain simplifications of that procedure · Offence or irregularity committed during an external Community transit procedure (T1) · Customs office of the place where the offence or irregularity took place required to recover customs duties · Time limit by which proof of the place of the offence or irregularity must be adduced

    Case C-234/98

    G.C. Allen v Amalgamated Construction Co. Ltd

    Preliminary ruling · Industrial Tribunal, Leeds · Interpretation of Council Directive 77/187/EEC of 14 February 1977 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 or parts of businesses · Transfer of part of the employees · Transfer between two companies belonging to the same group

    Case C-235/98

    Panagis Pafitis and Konstantinos Pafitis v Trapeza Kentrikis Ellados AE

    Preliminary ruling · Interpretation of Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the EC Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital

    This bulletin is issued by the Court's Press and Information Division (L-2925 Luxembourg) to provide rapid information on the work of the Court. However, it is only the text of the judgments and opinions published in the European Court Reports that is authentic. This information may be reproduced provided the source is acknowledged.

    Original version: French

    Completed on 23.07.1998

    Catalogue No: DX-AC-98-0019-EN-C


  • Side Bar