ECJBlog.com

Case C-426/10 P, Bell and Ross

2011-11-16T22:15:00.000+01:00

Bell and Ross sought to have set aside the order of the General Court of the European Union of 18 June 2010 in Case T‑51/10 Bell and Ross v OHIM (‘the order under appeal’), by which that court dismissed as manifestly inadmissible, by reason of its lateness, the appellant’s action against a decision of the Third Board of Appeal of OHIM of 27 October 2009 (case R 1267/2008‑3) relating to invalidity proceedings between Klockgrossisten I Norden AB and Bell & Ross.

By application received by fax at the Registry of the General Court on 22 January 2010, the appellant brought an action against the decision of the Third Board of Appeal of OHIM of 27 October 2009. That application was received at the Registry before the expiry, on 25 January 2010, of the time-limit for bringing proceedings.

By letter of 28 January 2010, the appellant indicated that it was transmitting to the Registry of the General Court the original of the application sent by fax on 22 January 2010 and its annexes, as well as seven sets of true copies of the application and the documents required by Article 44(3) to (5) of the Rules of Procedure of the General Court.

On 2 February 2010, the Registry contacted the appellant to bring to its attention the fact that the original of the application could not be identified with certainty from among the documents lodged on 1 February 2010.

By letter of 3 February 2010, the appellant’s lawyer sent the copy of the application which remained on his file to the Registry, explaining:

‘Since I am convinced that I previously sent you the original document with a set of photocopies, I cannot tell you whether or not the attached document is the original. I am of the view that it is the copy that we kept in the file. I leave you to examine it, and accordingly look forward to hearing your views.’

On 5 February 2010, the Registry of the General Court informed the appellant that it had concluded that that document was an original, since the black ink smudged slightly after a damp cloth had been applied to the signature.

The Registry of the General Court entered the application in the register on 5 February 2010, that is, after the expiry of the 10-day period which ran from the transmission of the application by fax, in accordance with Article 43(6) of the Rules of Procedure of the General Court.

By letter of 12 February 2010, the appellant claimed an excusable error to justify the lodgment of the signed original application after the expiry of the abovementioned 10-day period.

By the order under appeal, the General Court dismissed the application as manifestly inadmissible on the basis of Article 111 of its Rules of Procedure. The General Court recalled that Article 43(6) of its Rules of Procedure provides for a 10-day period within which to lodge the original of an application transmitted by fax. Taking account of this additional period, the original of the application should have reached the Registry before the expiry of that period on 1 February 2010. Since the original of the application was received on 5 February 2010, however, the application was lodged out of time, and there was no excusable error permitting derogation from the time-limit for bringing proceedings

In support of its appeal, the appellant put forward six pleas in law.

By its first plea, the appellant stated that the Advocate General was not heard, in breach of Article 111 of the Rules of Procedure of the General Court.

The Court however held that, although Article 111 of the Rules of Procedure of the General Court, on which the order under appeal was based, required the Advocate General to be heard, Article 2(2) of those rules of procedure stated that references to the Advocate General ‘apply only where a Judge has been designated as Advocate General’. In the present case, however, no judge was designated as Advocate General in the proceedings before the General Court.

But its second plea, the appellant complained that the General Court wrongly interpreted Article 43 of its Rules of Procedure in considering that the application was lodged out of time. The appellant argued that the relevant issue was that of identifying the original application. Article 43 did not specify detailed rules for the signing of the application (colour, type of pen, etc). It argued that the damp cloth test to which the General Court had recourse was questionable, as some inks did not smudge. In the order under appeal, the General Court, without referring to the method which allowed it to distinguish the original from the copy, therefore imposed conditions additional to those set out in Article 43 of its Rules of Procedure.

The Court however held that the order under appeal did not impose any particular requirement in terms of detailed rules for the signing of an application, or the means by which the original nature of the signature that must appear on it might be evidenced.

The Court furthermore argued it was not disputed that the version of the application received at the Registry after the expiry of the time-limit for bringing proceedings bore the lawyer’s original signature.

By its third plea, the appellant submitted that the General Court erred in law by failing to provide an opportunity to put the application in order pursuant to Article 7(1) of the Instructions to the Registrar and point 57(b) of the Practice Directions to Parties.

The Court pointed out that Article 43(1) of the Rules of Procedure of the General Court requiredthe lodgment of the original of every pleading, signed by the party’s lawyer, whereas, under Article 43(6) of the Rules of Procedure, the date on which a copy of the signed original of a pleading was received at the Registry of the General Court by fax was to be deemed to be the date of lodgment for the purposes of compliance with the time-limits for taking steps in proceedings only if the signed original of the pleading was lodged at the Registry no later than 10 days after receipt of that fax.

The Court held that the failure to submit the signed original of the application was not one of the defects capable of being regularised under Article 44(6) of the Rules of Procedure of the General Court. Thus, an application which was not signed by a lawyer was affected by a defect which was such as to entail the inadmissibility of the action upon the expiry of the procedural time-limits, and could not be put in order (see order in Case C‑163/07 P Diy-Mar Insaat Sanayi ve Ticaret and Akar v Commission [2007]).

By its fourth and fifth pleas, the appellant pleaded an excusable error. It argued that, given the considerable volume of copies required (2 651 pages in total), it had to turn to an external service provider. The latter forgot to include one document in the package sent to the General Court, an error which the lawyer was able to put right in time. It argued that the confusion between the original and the copies stemmed from external and exceptional circumstances attributable to an omission on the part of the service provider.

The Court however held that the responsibility for preparing, monitoring and checking procedural documents to be lodged at the Registry rested with the lawyer of the party concerned. Accordingly, the fact that the confusion between the original and the copies of the application was attributable to the intervention of a third party, a company instructed by the appellant to make copies, and the other circumstances put forward by the appellant could according to the Court not be considered exceptional circumstances or abnormal events unconnected to the appellant entitling it to rely on excusable error or unforeseeable circumstances.

By its sixth plea, the appellant alleged that in declaring the action inadmissible even though seven copies of the application, all bearing the lawyer’s signature, had been received within the time-limits, the General Court infringed the principles of proportionality and the protection of legitimate expectations.

The Court pointed out that, as the original of the application was not submitted within the prescribed time‑limit, the appellant’s action was inadmissible. That conclusion was not affected by the appellant’s reliance on the principle of proportionality.

With regard to the alleged breach of the principle of the protection of legitimate expectations, the Court recalled that the Court had repeatedly held that the right to rely on that principle extended to any person with regard to whom an institution of the European Union had given rise to justified hopes.

The Court however held that the appellant had not put forward, in support of its appeal, any matter justifying a conclusion that the General Court gave it precise assurances regarding its application’s compliance with procedural requirements.

The Court hence dismissed the appeal

Text of Judgment

Case C‑148/09 P, Belgium v. Deutsche Post AG and DHL International

2011-11-15T21:27:00.001+01:00

Lawfulness of a decision not to raise objections

In this appeal case , Belgium, supported by the European Commission, sought to have set aside the judgment of the Court of First Instance of the European Communities of 10 February 2009 in Case T-388/03 Deutsche Post and DHL International v Commission [2009], annulling the Commission’s decision of 23 July 2003 not to raise objections, following the preliminary examination procedure provided for in Art. 88(3) EC, to several measures taken by the Belgian authorities in favour of La Poste SA, the Belgian public postal undertaking (C(2003) 2508 final).

La Poste SA (‘La Poste’) was converted to a share company governed by public law in 1992, but remained the operator of the universal postal service in Belgium and had to meet specific obligations in regard to services of general economic interest (‘SGEIs’). The detailed rules for compensating the additional net cost of SGEIs were determined in the management contract concluded with the Belgian State.

The express parcels sector accounts for 4% of the turnover of La Poste, which corresponded to an 18% market share in that sector. Deutsche Post AG (‘Deutsche Post’) and its Belgian subsidiary DHL International held a 35 to 45% share of that market.

After three meetings with the Belgian authorities as well as several exchanges of letters, the Commission found that the capital contribution notified by those authorities was compatible with the common market.

The contested decision hence was a decision not to raise objections, adopted under Art. 4(3) of Regulation 659/1999, the lawfulness of which depended on whether there were doubts as to the compatibility of the aid with the common market. Since such doubts must trigger the initiation of a formal investigation procedure in which the interested parties referred to in Art. 1(h) of Regulation 659/1999 could participate, it must be held that any interested party within the meaning of the latter provision was directly and individually concerned by such a decision.

The Court held that if the beneficiaries of the procedural guarantees provided for in Art. 88(2) EC and Art. 6(1) of Regulation 659/1999 were to be able to ensure that those guarantees were respected, it must be possible for them to challenge before the European Union judicature the decision not to raise objections (see Case C-83/09 P Commission v Kronoply and Krontex [2011]).

The Court held that by seeking the annulment of a contested decision not to raise objections, an applicant essentially alleged that the Commission adopted the decision in relation to the aid at issue without initiating the formal investigation procedure, thereby acting in breach of the applicant’s procedural rights. In order to have its action for annulment upheld, the applicant might rely on any plea to show that the assessment of the information and evidence which the Commission had at its disposal during the preliminary examination phase of the measure notified should have raised doubts as to the compatibility of that measure with the common market. According to the Court, the use of such arguments could not, however, change the subject-matter of the action or the conditions for its admissibility. The Court held that the existence of doubts concerning that compatibility was precisely the evidence which must be adduced in order to show that the Commission was required to initiate the formal investigation procedure under Art. 88(2) EC and Art. 6(1) of Regulation 659/1999.

The Court held that it followed from Art. 4(4) of Regulation 659/1999 that if, following the preliminary examination, it found that the contested measure raises doubts as to its compatibility with the common market, the Commission was required to adopt a decision initiating the formal investigation procedure under Art. 88(2) EC and Art. 6(1) of that regulation.

The Court pointed out the lawfulness of a decision not to raise objections adopted under Art. 4(3) of Regulation 659/1999 depended on whether there were doubts as to the compatibility of the aid with the common market.

The Court held that the concept of “doubts” referred to in Art. 4(4) of Regulation 659/1999 was an objective one and their existence must be sought not only in the circumstances in which the contested measure was adopted but also in the assessments upon which the Commission relied (see, to that effect, Case C-431/07 Bouygues and Bouygues Télécom v Commission [2009]).

Text of judgment

Case C-120/10, European Air Transport SA

2011-10-13T22:48:00.001+02:00

Member States can establish maximum noise levels, as measured on the ground, to be complied with by airlines overflying areas located near an airport

Case C-120/10, European Air Transport SA

In order to reduce noise pollution generated by aircraft using EU airports, Directive 2002/301 permitted Member States to adopt restrictive measures known as “operating restrictions’. Operating restrictions could be adopted only where certificated noise levels measured at source – that was the aircraft itself – were exceeded. More specifically, Directive 2002/30 took into account, in essence, the certificated noise levels of an aircraft. That noise certification was carried out according to a theoretical reference system of meteorological, geophysical and operational conditions. That reference system took into account the following parameters: sea level, ambient temperature, moisture content, approved soil characteristics and microphone height as well as flight path and flight data recorders.

Brussels-National Airport (Belgium) was located in the Région flamande (Flanders Region), although the flights operating from it also overfly the Région de Bruxelles-Capitale (Brussels-capital region) at a low height.

This case stemmed from a dispute between the airline European Air Transport (EAT) – specialising in operating cargo flights (DHL group) – and the Région de Bruxelles-Capitale (Belgium) and the Collège d’environnement de la Région de Bruxelles-Capitale.

On 19 October 2007, the competent regional authorities imposed an administrative penalty of €56 113 on EAT for exceeding, during the night, the limit values laid down in the rules of the Région de Bruxelles-Capitale. According to those rules, the limit values were measured on the ground.

The referring court inter alia asked whether the concept of “operating restriction” in Art. 2(e) of Directive 2002/30 must be interpreted as including rules imposing limits on noise levels, as measured on the ground, to be complied with by aircraft overflying areas located near the airport and providing that any person responsible for exceeding those limits might incur a penalty.

The Court held that operating restrictions were applicable only when any other noise management measures had failed to achieve the aims of Directive 2002/30, as laid down in Art. 1. Recital 10 in the preamble to that Directive stated that the balanced approach constituted a policy approach to address aeroplane noise, including international guidance for the introduction of operating restrictions on an airport‑by-airport basis. The “balanced approach” to aircraft noise management, defined in Resolution A33-7, adopted by the 33rd ICAO Assembly, comprised four principal elements and required careful assessment of all different options to mitigate noise, including reduction of aeroplane noise at source, land-use planning and management measures, noise abatement operational procedures and operating restrictions, without prejudice to relevant legal obligations, existing agreements, current laws and established policies (Case C‑442/05 Commission v Belgium [2007]).

The Court held that an operating restriction within the meaning of Art. 2(e) of that directive concerned a prohibition on access to the airport in question, whether the prohibition was absolute or restricted.

However, environmental legislation, such as that at issue in the main proceedings, imposing limits on maximum noise levels, as measured on the ground, to be complied with by aircraft overflying areas located near the airport, did not itself constituted a prohibition on access to the airport in question.

The Court held that Article 2(e) of Directive 2002/30 must be interpreted as meaning that an “operating restriction” was a prohibition, absolute or temporary, that prevented the access of a civil subsonic jet aeroplane to a European Union airport. Consequently, national environmental legislation imposing limits on maximum noise levels, as measured on the ground, to be complied with by aircraft overflying areas located near the airport, did not itself constituted an “operating restriction” within the meaning of that provision, unless, in view of the relevant economic, technical and legal contexts, it could have the same effect as prohibitions of access to the airport in question.

Text of Judgment

Case C‑347/09, Dickinger and Ömer

2011-10-13T22:04:00.001+02:00

Monopoly on operation of internet casino games justifiable only if it seeks in consistent and systematic manner to combat risks connected with such games

This reference for a preliminary ruling concerned the interpretation of Arts 43 EC and 49 EC freedom to provide services and freedom of establishment. The reference was made in the course of criminal proceedings brought against Mr Dickinger and Mr Ömer alleging failure by bet-at-home.com Entertainment, a company incorporated under Austrian law of which they were the directors, to comply with the Austrian legislation on the operation of games of chance, more precisely the offering of casino games over the internet.

The Austrian Federal Law on games of chance (Glücksspielgesetz, BGBl. 620/1989 (GSpG)), provided in Paragraph 3, “Monopoly of games of chance’, that the right to organise games of chance was reserved to the Austrian State. Paragraphs 14 and 21 of the GSpG provided in parallel that the Federal Finance Minister might grant concessions for the organisation of lotteries and the operation of casinos respectively. Since sporting bets were not regarded as gambling in the strict sense, they, with the exception of a form of totalisator betting called “Toto’, were not subject to the rules laid down by the GSpG.

Casino games marketed over the internet were, under Paragraph 12a of the GSpG, treated as lotteries and were consequently subject to the concession rules for lotteries rather than those for casinos. Paragraph 12a, which was inserted in the GSpG in 1997 (BGBl. I, 69/1997), contained the following definition of the term “electronic lotteries’:

‘lotteries where the gaming contract was concluded via electronic media, the decision on winning or losing was centrally brought about or made available, and the player could discover the outcome immediately after taking part in the game’.

A concession for the organisation of lotteries might, under Paragraph 14(2) of the GSpG, be granted only to an operator which:

‘1. was a capital company established in Austria,

2. had no owners (partners) who had a dominant influence and whose influence did not ensured reliability from a regulatory point of view,

3. had a supervisory board and paid-up nominal or share capital of at least EUR 109 million; the lawful origin of the funds must be showed in proper form,

4. appointed managers who, on the basis of corresponding previous training, were qualified, had the necessary characteristics and experience for running the business properly, and were not subject to any ground of exclusion under Paragraph 13 of the Trade Code (Gewerbeordnung) 1973 … and

5. might on the basis of the circumstances (in particular experience, knowledge and funds) be expected to produce the best federal tax revenue (concession levy and betting duty), and

6. in whose case the structure of any group to which the owner or owners of a qualified holding in the undertaking belonged did not prevent effective supervision of the holder of the concession.’

A concession might, under Paragraph 14(3)(1) of the GSpG, be granted for a maximum period of 15 years. The first sentence of Paragraph 14(5) of the GSpG provided that, as long as a lottery concession was in force, no other concessions might be granted.

If several applicants who satisfy the conditions set out in Paragraph 14(2) of the GSpG applied for a concession, the Federal Finance Minister was required, under the second sentence of Paragraph 14(2), to decide on the basis of the criterion in Paragraph 14(2)(5), in other words to award the contract to the operator who might be expected to produce the best federal tax revenue.

Österreichische Lotterien GmbH (‘Österreichische Lotterien’) was a limited liability company governed by private law. By decision of the Federal Finance Minister of 16 March 1995, it was granted the sole concession for the organisation of lotteries in Austria for the period from 1 December 1994 to 31 December 2004. After the establishment of “electronic lotteries” by the insertion of Paragraph 12a into the GSpG in 1997, that company’s concession was expanded to include lotteries of that kind and extended to 2012, by decision of the Federal Finance Minister of 2 October 1997. The duration of the concession was defined, having regard to the maximum of 15 years, to 30 September 2012.

The majority shareholder in Österreichische Lotterien was Casinos Austria AG (‘Casinos Austria’), a share company governed by private law which held the 12 concessions for casinos provided for by the GSpG (see Case C‑64/08 Engelmann [2010], on which I wrote this post). At the material time for the main proceedings, one third of the shares in the capital of Casinos Austria were held indirectly by the State and the remainder by private investors.

Mr Dickinger and Mr Ömer, who were Austrian nationals, were the founders of the multinational on-line games group bet-at-home.com. Criminal proceedings were brought against Mr Dickinger and Mr Ömer in their capacity as directors of bet-at-home Entertainment, alleging infringements of Paragraph 168(1) of the StGB. The indictment was worded as follows:

‘[Mr] Dickinger and [Mr] Omer, as decision-maders of [bet-at-home-com Entertainment], had from 1 January 2006 to date committed the offence of gaming under Paragraph 168(1) of the StGB for the benefit of [bet-at-home-com Entertainment] by offering over the internet, for unlimited stook, games in which winning and losing depended exclusively or predominantly on chance or which were expressly prohibited, namely various kinds of poker (Texas held’Em, Seven Card Stud, etc), blackjack, baccarat, table games such as roulette and virtual “one‑armed bandits”, in order to obtain a pecuniary advantage for themselves or another person, in particular [bet-at-home-com Entertainment]’.

Mr Dickinger and Mr Ömer pleaded that the national legislation applicable to games of chance was unlawful from the point of view of Arts 43 EC and 49 EC.

The referring court inter alia asked whether legislation of a Member State providing for criminal penalties for persons infringing a monopoly of operating games of chance, such as the monopoly laid down by the national legislation at issue in the main proceedings, must be compatible with the fundamental freedoms guaranteed by the Treaty, and in particular with Art. 49 EC.

The Court of Justice reiterated that European Union law set certain limits to the powers of Member States in criminal matters, since criminal legislation might not restrict the fundamental freedoms guaranteed by European Union law (see, to that effect, Case 186/87 Cowan [1989], and Case C‑348/96 Calfa [1999]).

The Court therefore held that European Union law, in particular Art. 49 EC, precluded the imposition of criminal penalties for infringing a monopoly of operating games of chance, such as the monopoly of operating internet casino games laid down by the national legislation at issue in the main proceedings, if such legislation was not compatible with European Union law.

The Court furthermore held that Article 49 EC applied to an operator of games of chance established in one Member State who offered his services in another Member State, even if he made use for that purpose of intermediaries established in the same Member State as the recipients of those services (see also Case C‑243/01 Gambelli and Others [2003]). That article applied a fortiori where the operator of games of chance made use not of intermediaries but of a mere provider of computer supported services in the host Member State.

The Court therefore held that Article 49 EC must be interpreted as applying to services of games of chance marketed over the internet in the territory of a host Member State by an operator established in another Member State despite the fact that the operator:

– had set up certain computer supported infrastructure, such as a servedr, in the host Member State and

– made use of computer supported services of a provider established in the host Member State in order to provide his services to consumers who were likewise established in that Member State.

The referring court also informed on the conditions under which Art. 49 EC allowed a monopoly of the organisation of casino games marketed over the internet to be set up for the benefit of a single operator.

The Court answered that legislation of a Member State such as that at issue in the main proceedings under which exclusive rights to organise and promote games of chance were conferred on a single operator, and all other operators, including operators established in another Member State, were prohibited from offering over the internet services within the scope of that regime in the territory of the first Member State, constituted a restriction on the freedom to provide services guaranteed by Art. 49 EC

However, such a restriction of the freedom to provide services might be allowed as a derogation expressly provided for in Arts 45 EC and 46 EC, applicable in this area by virtue of Art. 55 EC, or justified in accordance with the case-law of the Court by overriding reasons in the public interest.

The Court held that where a monopoly system had been established in a Member State for games of chance and that system was incompatible with Art. 49 EC, an infringement by an economic operator could not be penalised by criminal penalties.

Conditions for establishing a monopoly of games of chance

The Court held that objectives pursued by national legislation adopted in the area of betting and gaming, considered as a whole, usually concerned the protection of the recipients of the services in question and of consumers more generally, and the protection of society.

The mere fact that a Member State had opted for a system of protection which differed from that adopted by another Member State could not affect the assessment of the need for and proportionality of the relevant provisions. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they sought to ensure.

The Court held that the public authorities of a Member State might legitimately consider that the fact that, in their capacity as overseers of the entity holding the monopoly, they would have additional means of influencing its conduct outside the statutory regulating and monitoring mechanisms was likely to secure for them a better command over the supply of games of chance and better guarantees that their policy would be implemented effectively than in the case where those activities were carried on by private operators in a situation of competition, even if the latter were subject to a system of authorisation and a regime of supervision and penalties.

However, the Court reiterated that the restrictions imposed by the Member States must satisfy the conditions laid down in the Court’s case-law as regards their proportionality, a matter which it was for the national courts to determine. The Court held that it was for the referring court to ascertain, in the light inter alia of the development of the market for games of chance in Austria, whether the State controls to which the monopoly holder’s activities were subject were suitable for ensuring that the holder would in fact be able to pursue, in a consistent and systematic manner, the objectives relied on by means of a supply that was quantitatively measured and qualitatively planned by reference to those objectives (see Case C‑258/08 Ladbrokes Betting & Gaming and Ladbrokes International [2010]).

Pursuit of expansionist commercial policy by entity holding monopoly games of chance

The referring court expresses doubts as to whether the monopoly set up by the national legislation at issue in the main proceedings might be regarded as appropriate for ensuring realisation of the objective of preventing incitement to squander money on gambling and of fighting against addiction to gambling, in view of the expansionist commercial policy pursued by the holder of the monopoly by means of an intensive advertising effort.

The Court of Justice answered that an increase in the commercial activity of an operator who had been granted exclusive rights in the field of games of chance and a substantial increased in the income received from those games required particular attention in the examination of whether the legislation at issue was consistedent and systematic, and hence whether it was appropriate for pursuing the objectives recognised by the Court’s case-law. According to that case-law, the financing of activities in the public interest by means of income from games of chance must not be the real aim of a restrictive policy in that sector, but could only be regarded as an incidental beneficial consequence (see, inter alia, Case C‑275/92 Schindler [1994]; Case C‑124/97 Läärä and Others [1999]; Case C‑67/98 Zenatti [1999]).

A Member State was not therefore entitled to rely on reasons of public policy relating to the need to reduce opportunities for gambling in so far as the public authorities of that State incite and encourage consumers to participate in games of chance so that the public purse could benefit.

The Court held that was for the referring court to assess, in the light of the circumstances of the dispute pending before it, whether the commercial policy of the holder of the monopoly might be regarded, both with regard to the scale of advertising undertook and with regard to the creation of new games, as forming part of a policy of controlled expansion in the sector of games of chance, aiming in fact to channel the propensity to gamble into controlled activities.

Location of registered office of holder of monopoly

The Court of Justice held, with respected more specifically to the objective of monitoring and supervising the holder of the monopoly and the Austrian Government’s argument that it was necessary to ensured effective supervision of economic operators, inter alia by the presence of State commissioners, that the concept of public policy, first, presumes that there was a genuine and sufficiently serious threat to a fundamental interest of society and, second, must, as a justification for a derogation from a fundamental principle of the Treaty, be narrowly construed (see, to that effect, Joined Cases 115/81 and 116/81 Adoui and Corneille [1982] ; Case C‑268/99 Jany and Others [2001] Case C‑161/07 Commission v Austria [2008]).

It was therefore for the referring court to determine, first, whether the objectives relied on by the Austrian Government were capable of falling within that concept and, if so, secondly, whether the obligation concerning the registered office at issue in the main proceedings satisfied the criteria of necessity and proportionality laid down in the Court’s case-law.

The Court held that a Member State seeking to ensure a particularly high level of consumer protection in the sector of games of chance might be entitled to consider that it was only by setting up a monopoly for a single entity subject to strict control by the public authorities that it could tackle crime linked to that sector and pursued the objective of preventing incitement to squander money on gambling and combating addiction to gambling with sufficient effectiveness;

Furthermore, to be consistent with the objective of fighting crime and reducing opportunities for gambling, national legislation establishing a monopoly of games of chance which allowed the holder of the monopoly to follow an expansionist policy must:

– be based on a founding that the crime and fraud linked to gaming and addiction to gambling were a problem in the Member State concerned which could be remedied by expanding authorized regulated activities, and

– allow only moderate advertising limited strictly to what was necessary for channeling consumers towards monitored gaming networks;

The Court held that the fact that a Member State had opted for a system of protection that differed from that adopted by another Member State could not affect the assessment of the need for and proportionality of the relevant provisions, which, according to the Court, must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they seek to ensured.

Text of judgment

Case C-506/08 P, Sweden v. MyTravel

2011-08-25T23:52:00.001+02:00

Court further interprets scope of Access to Documents Regulation

The Access to Documents Regulation (Regulation 1049/2001) confers on the public a wide right of access to documents of the institutions of the European Union.

It also provides for a system of exceptions authorising the institutions to refuse access to a document in cases where its disclosure would undermine, in particular, the decision-making process and the protection of legal opinions, unless there is an overriding public interest in disclosure.

In 1999, when MyTravel (then called Airtours), a UK tour operator, informed the Commission of a planned merger with its competitor First Choice in order to obtain a decision authorising that operation. Authorisation was refused on the ground that it was incompatible with the common market. Following the action brought by MyTravel, the Commission’s decision was annulled by the General Court in 2002 (Case T-342/99, Airtours v Commission).

The Commission then established a working group comprising officials of the Directorate-General for Competition (‘DG Competition’) and the legal service in order to consider whether it was appropriate to bring an appeal against that judgment and to assess the implications of that judgment for merger control procedures or in other areas. The report of the working group was presented to the Commissioner responsible for competition prior to the expiry of the period allowed for bringing an appeal against the judgment of the General Court.

MyTravel made a request to the Commission for access to the report, to the documents relating to its preparation and the documents contained in the file relating to the merger, on which the report was based.

By two separate decisions, the Commission refused to communicate those documents on the ground that, first, their disclosure would undermine, in particular, the decision-making process and the protection of legal opinions and, secondly, there was no overriding public interest in disclosure.

By judgment of 9 September 2008(Case T-403/05), the General Court dismissed the action by MyTravel against those decisions on the ground that the Commission was entitled to refuse access to the documents requested in so far as their communication could have undermined the protection of the decision-making process of the institution and the protection of legal advice. Subsequently, Sweden decided to apply to the Court of Justice to have that judgment of the General Court set aside.

By this appeal, the Kingdom of Sweden sought to have set aside this judgment of the Court of First Instance of the European Communities.

The Court held that Regulation No 1049/2001 was intended to give the fullest possible effect to the right of public access to documents of the institutions (Joined Cases C-39/05 P and C-52/05 P Sweden and Turco v Council [2008], on which I wrote this post), Case C-139/07 P Commission v Technische Glaswerke Ilmenau [2010]; on which I wrote this post).

However, that right was none the less subject to certain limitations based on grounds of public or private interest. More specifically, and in reflection of recital 11 in the preamble thereto, Article 4 of Regulation No 1049/2001 provided that the institutions were to refuse access to a document where its disclosure would undermine the protection of one of the interests protected by that provision. The Court however held that since they derogated from the principle of the widest possible public access to documents, those exceptions must be interpreted and applied strictly (see, to that effect, Case C-266/05 P Sison v Council [2007], on which I wrote this post). and Case C-528/07 P and C-532/07 P Sweden and Others v API and Commission [2010]).

Thus, according to the Court, if the institution concerned decided to refuse access to a document which it had been asked to disclose, it must, in principle, explain how disclosure of that document could specifically and effectively undermine the interest protected by the exception – among those provided for in Article 4 of Regulation No 1049/2001 – upon which it was relying. Moreover, the risk of that undermining must be reasonably foreseeable and not purely hypothetical.

The Court furthermore held that once the decision was adopted, the requirements for protecting the decision-making process were less acute, so that disclosure of any document other than those mentioned in the second subparagraph of Article 4(3) of Regulation No 1049/2001 can never undermine that process and that refusal of access to such a document cannot be permitted, even if its disclosure would have seriously undermined that process if it had taken place before the adoption of the decision in question.

The Court of Justice found that the General Court should have required the Commission to indicate the specific reasons why that institution considered that closure of the administrative procedure did not exclude the possibility that refusal of access to the report might remain justified having regard to the risk of the said decision-making process being seriously undermined.

It followed that the General Court erred in law by holding that the Commission could, in such circumstances, refused access to the whole of the report.

The General Court had furthermore held that disclosure of the notes would risk communicating to the public information on the state of internal discussions between DG Competition and the legal service on the lawfulness of the assessment of the compatibility of the Airtours/First Choice concentration with the common market, which would, as such, risk affecting decisions which might fall to be made as regards the same parties or in the same sector.

Secondly, the General Court held that to accept that the notes in question should be disclosed would be liable to lead the legal service to display reticence and caution in the future in the drafting of such notes in order not to affect the Commission’s decision-making capacity in areas in which it was involved in its administrative capacity.

Thirdly, the General Court held that disclosure of those notes would risk putting the Commission in the difficult position in which its legal service might see itself required to defend a position before the Court which was not the same as the position which it had argued for internally in its role as adviser to the services responsible for the file, which it was its duty to perform during the administrative procedure.

The Court held that, first, the fear that disclosure of an opinion of the Commission’s legal service relating to a draft decision could lead to doubts as to the lawfulness of the final decision, it was precisely openness in this regard that contributed to conferring greater legitimacy on the institutions in the eyes of European citizens and increasing their confidence in them by allowing divergences between various points of view to be openly debated. The Court held

“It is in fact rather a lack of information and debate which is capable of giving rise to doubts in the minds of citizens, not only as regards the lawfulness of an isolated act, but also as regards the legitimacy of the decision-making process as a whole. Furthermore, the risk that doubts might be engendered in the minds of European citizens as regards the lawfulness of an act adopted by an institution because the latter’s legal service had given an unfavourable opinion would more often than not fail to arise if the statement of reasons for that act were reinforced, so as to make it apparent why that unfavourable opinion was not followed. “

Concerning, next, the argument that the legal service would be liable to be led to display reticence and caution, the Court held that the General Court, without in any way verifying whether that argument was supported by concrete and detailed evidence, based its reasoning solely on general and abstract considerations.

Finally, as regards the argument that the legal service might find itself obliged to defend before the Union judicature the legality of a decision in relation to which it had issued a negative opinion, the Court noted that an argument of such a general nature could justify an exception to the transparency required by Regulation 1049/2001.

Text of Judgment

Case C-309/10, Agrana Zucker

2011-08-25T23:22:00.005+02:00

Surplus in restructuring fund not contrary to principle of conferral, nor unjust enrichment of European Union

This reference for a preliminary ruling concerned the interpretation and validity of Article 11 of Council Regulation 320/2006.

Regulation 320/2006 was adopted in order to bring the Community system of sugar production and trading into line with international requirements and to ensure its competitiveness in the future by launching a profound restructuring process of the sector leading to a significant reduction of unprofitable production capacity in the Community.

To that end, it established, by that regulation, a separate and autonomous temporary scheme for the restructuring of the sugar industry in the Community. Within the framework of that temporary scheme, Regulation 320/2006 established an economic incentive in the form of restructuring aid, intended for undertakings with the lowest productivity and designed to encourage them to give up their quota production. To that effect, Article 3 of that regulation provides for restructuring aid for four marketing years – the years 2006/2007 to 2009/2010 – with the aim of reducing production to the extent necessary to reach a balanced market situation in the Community.

In order to finance that restructuring aid the Council set up a temporary restructuring fund and in particular decided that the financing for those measures would be ensured by raising temporary amounts from those sugar, isoglucose and inulin syrup producers which will eventually benefit from the restructuring process.

The referring court inter alia asked whether Article 11 of Regulation 320/2006 was contrary to the principle of conferral to the extent that it would permit the introduction of a general tax which was not limited to covering the financing expenditure for which the temporary amount was intended.

The Court held that it was necessary, in the light of the order for reference and the observations lodged before the Court, to examine the validity of that provision also in relation to the obligation to state reasons, the principle of proportionality and the alleged unjust enrichment of the European Union.

Agrana Zucker argued that the levying of a tax which was used to finance measures which fall outside the common organisation of the markets in the sugar sector would vest that tax with the character of a general tax the imposition of which does not fall within the competence of the European Union.

The Court held that since it intended to contribute to the restructuring of the sugar industry in the Community, the raising of the temporary amount was a common agricultural policy measure lawfully adopted on the basis of Article 37 EC (see Case 265/87 Schräder HS Kraftfutter [1989], and Case C-8/89 Zardi [1990]).

According to the Court, the fact that a revenue surplus might arise on the expiry of such a temporary multiannual restructuring scheme, inter alia because producers had ultimately had less recourse than expected to the restructuring aid offered in return for the renunciation of production quotas, did not call into question the competence of the EU legislature to adopt that measure; nor did it divest the measure of its character as an agricultural measure.

The Court first of all argued that the legality of an EU measure must be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted (see Joined Cases 15/76 and 16/76 France v Commission [1979]) and could not in particular depend on retrospective considerations relating to its efficacy (Case C-449/98 P IECC v Commission [2001])
.

Second, in so far as any surplus in the restructuring fund was assigned to the EAGF, of which that fund formed part, the surplus continued to be earmarked for financing common agricultural policy measures only.

It followed that Article 11 of Regulation No 320/2006 was not contrary to the principle of conferral.

Alleged unjust enrichment of the European Union

Agrana Zucker also submitted that the raising of the second instalment of the temporary amount for the marketing year 2008/2009 constituted unjust enrichment of the European Union and that the sugar producing undertakings are therefore justified in calling for the repayment of that second instalment, which was unlawfully levied.

The Court however held that a claim for restitution based on unjust enrichment of the European Union required, in order to succeed, proof of an enrichment on the part of the European Union for which there was no legal basis and of impoverishment on the part of the applicant which was linked to that enrichment (see, to that effect, Case C-47/07 P Masdar (UK) v Commission [2008]).

The Court held that Regulation No 320/2006 was valid in the light, specifically, of the principles of conferral and of proportionality and that the raising of the second instalment of the temporary amount for the 2008/2009 marketing year, notwithstanding the appearance of a surplus in the restructuring fund, was therefore not without valid legal foundation.

Consequently, the raising of that instalment did not constitute unjust enrichment of the European Union which might properly found a claim for restitution and, in any case, could not be relied upon for the purposes of assessing the validity of Article 11 of the regulation as the legal basis for raising that instalment.

Text of Judgment

Case C‑71/10, Office of Communications

2011-08-25T22:52:00.004+02:00

Court further defines scope of public access to environmental information

This reference for a preliminary ruling concerned the interpretation of Article 4 of Directive 2003/4 on public access to environmental information

At the request of the Department of Health, an independent investigation was conducted by experts into the risks connected with mobile phones. Their report, entitled ‘Mobile phones and Health’, identified as matters of public interest the location of base stations and the procedures for authorisation of those stations.

Subsequently, the United Kingdom Government set up a website called ‘Sitefinder’, which had been operated since the end of 2003 by the Office of Communications, in order to provide information on the location of mobile phone base stations in the United Kingdom. The site was constructed from information voluntarily provided by mobile phone operators from their databases. It made it possible for any individual to search a map square, by inputting a postcode, town or street name, for information about the base stations within it.

The Sitefinder website showed the approximate location in each square of each base station, but did not show either the precise location of the base station to within a metre; nor did it show whether the base station had been mounted at street level or concealed within or on top of a structure or building.

In 2005, an Information Manager for Health Protection Scotland, which was a branch of the National Health Service, asked the Office of Communications for the grid references for each base station.The Office of Communications refused the request, both initially and on review, relying on two grounds for refusal. First, the Office of Communications claimed that disclosure of that information would adversely affect public security within the meaning of Article 4(2)(b) of Directive 2003/4, as disclosure of the location of the sites would have included the location of the sites used to provide the police and emergency service radio network and could therefore be of use to criminals. Secondly, the Office of Communications relied on the adverse effect of disclosure of that information on the intellectual property rights of the mobile phone operators who had provided the information.

In subsequent proceedings, the Supreme Court of the United Kingdom asked the Court whether a public authority, where it held environmental information or such information was held on its behalf, may, when weighing the public interests served by disclosure against the interests served by refusal to disclose, in order to assess a request for that information to be made available to a natural or legal person, take into account cumulatively a number of the grounds for refusal listed in Article 4(2) of Directive 2003/4, or whether it must weigh the interests served by refusal to disclose, one at a time, against the public interests served by disclosure.

The Court first of all noted that the right to information meant that the disclosure of information should be the general rule and that public authorities should be permitted to refuse a request for environmental information only in a few specific and clearly defined cases. The Court stressed that the grounds for refusal should therefore be interpreted restrictively, in such a way that the public interest served by disclosure was weighed against the interest served by the refusal.

The Court argued that, according to the introductory wording in Article 4(2) of Directive 2003/4, ‘Member States may provide for’ exceptions to the general rule that information must be disclosed to the public. That provision did not specify any particular procedure for examining the grounds for refusal in cases where a Member State had had provided for such exceptions on that basis.

The Court pointed out that Recital 1 to Directive 2003/4 set out the various reasons for disclosure; they included, in particular, ‘a greater awareness of environmental matters, a free exchange of views, more effective participation by the public in environmental decision-making and … a better environment’.

The Court held that, therefore,the concept of ‘public interest served by disclosure’, referred to in the second sentence of the second subparagraph of Article 4(2) of that directive, must be regarded as an overarching concept covering more than one ground for the disclosure of environmental information.

The Court thus found that the second sentence of the second subparagraph of Article 4(2) was concerned with the weighing against each other of two overarching concepts, which meant that the competent public authority might, when undertaking that exercise, evaluate cumulatively the grounds for refusal to disclose.

Case C‑310/10, Ministerul Justiţiei și Libertăţilor Cetăţenești

2011-08-25T22:23:00.001+02:00

Court rejects invitation to extend its own jurisdiction

This reference for a preliminary ruling concerned the interpretation of Article 15 of Directive 2000/43, which implemented the principle of equal treatment between persons irrespective of racial or ethnic origin.

The Romanian Curtea de Apel Bacău asked the Court of Justice whether, once Article 15 of Directive 2000/43 and Article 17 of Directive 2000/78 had been implemented in national law, these provisions must be interpreted as precluding the possibility for the Romanian Curtea Constituțională of finding that that provision of national law could not give rise to the right, for persons who had been discriminated against as regards pay on the basis of socio-professional category or place of work, to compensation in the form of salary rights provided for by law for another socio-professional category.

On the assumption that that was the case, the questions seek to ascertain, second, whether a national court was then required to disregard such a provision of national law or the constitutional case-law in question without being obliged to await the amendment of that provision by legislative means or a new interpretation of the provision by the constitutional court which were appropriate for ensuring its compliance with European Union law.

However, the Romanian Government and Ireland questioned whether the questions referred were admissible, in particular on the ground that the situation at issue in the main proceedings did not fall within the scope of Directives 2000/43 and 2000/78 or, more generally, of European Union law.

The Court of Justice stressed that under Article 267 TFEU, the Court of Justice had jurisdiction to give preliminary rulings concerning the interpretation of the Treaties and of acts of the institutions of the European Union.

The Court reiterated that the procedure provided for in Article 267 TFEU was a means of cooperation between the Court of Justice and national courts.

It was therefore for the national courts alone which were seised of the case and were responsible for the judgment to be delivered to determine, in view of the special features of each case, both the need for a preliminary ruling in order to enable them to give their judgment and the relevance of the questions which they put to the Court.

The Court held that where questions submitted by national courts concerned the interpretation of a provision of European Union law, the Court was, in principle, obliged to give a ruling. (see, inter alia, Joined Cases C‑297/88 and C‑197/89 Dzodzi [1990]; Case C‑28/95 Leur‑Bloem [1997]; and Case C‑409/06 Winner Wetten [2010].

Nevertheless, the Court pointed out that it had also stated that, in exceptional circumstances, it could examine the conditions in which the case was referred to it by the national court, in order to confirm its own jurisdiction (see, inter alia, Case C‑13/05 Chacón Navas [2006]).

The Court held that a reference by a national court could be rejected if, inter alia, it was obvious that European Union law cold not be applied, either directly or indirectly, to the circumstances of the case.

Article 1 of Directive 2000/78 stated that the purpose of the directive was to lay down a general framework, as regards employment and occupation, for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation. The purpose of Directive 2000/43, as was apparent from Article 1 thereof, was to lay down a framework for combating discrimination on the grounds of racial or ethnic origin.

However, it was apparent from the order for reference that the discrimination at issue in the main proceedings was not based on any of the grounds thus listed in those directives, but operated instead on the basis of the socio-professional category, within the meaning of national legislation, to which the persons concerned belong, or their place of work.

The Court concluded that a situation such as that at issue in the main proceedings fell outside the general frameworks established by Directives 2000/43 and 2000/78 respectively for combating certain forms of discrimination. The Court held that the questions referred by the Curtea de Apel Bacău, the purpose of which was not to ascertain whether a situation such as that at issue in the main proceedings fell within the scope of Article 15 of Directive 2000/43 or Article 17 of Directive 2000/78, but which were in fact based on the assumption that that was the case in order to seek an interpretation from the Court, even though those provisions of European Union law clearly could not be applied, either directly or indirectly, to the circumstances of the case, were inadmissible.

The Court held that the need to ensure uniform interpretation of the provisions of European Union law might justify extending the Court’s jurisdiction in matters of interpretation to the content of such provisions, including in situations in which, because a rule of national law refered to such provisions, they were applicable indirectly to a given situation. The Court held, however, that such a consideration could not, without disregarding the divisions of powers between the European Union and its Member States, confer on that provision of European Union law primacy over higher‑ranking provisions of domestic law which would require that, in such a situation, the rule of national law or any interpretation of it must be disregarded.

Text of Judgment

Case C-47/08, Commission v Belgium

2011-06-16T23:23:00.001+02:00

Nationality condition for access to the profession of notary discrimination on grounds of nationality

In this case, the Commission asked the Court to declare that, by reserving access to the profession of notary exclusively to its own nationals, the Belgium had failed to fulfil its obligations under Art. 43 EC and the first paragraph of Art. 45 EC.

The Court first of all held that the concept of establishment within the meaning of Art. 43 EC was a very broad one, allowing a national of the European Union to participate, on a stable and continuous basis, in the economic life of a Member State other than his State of origin and to profit therefrom, so contributing to economic and social interpenetration within the European Union in the sphere of activities of self-employed persons (see, inter alia, Case C‑161/07 Commission v Austria [2008]).

The Court held that Article 43 EC was intended to ensure that all nationals of all Member States who established themselves in another Member State for the purpose of pursuing activities there as self-employed persons receive the same treatment as nationals of that State, and it prohibited, as a restriction on freedom of establishment, any discrimination on grounds of nationality resulting from national legislation (see: Case 270/83 Commission v France [1986]).

The Court held that the Belgium legislation at issue reserved access to the profession of notary to Belgian nationals, thus enshrining a difference in treatment on the ground of nationality which was prohibited in principle by Art. 43 EC.

Belgium submitted, however, that the activities of notaries were outside the scope of Art. 43 EC because they were connected with the exercise of official authority within the meaning of the first paragraph of Art. 45 EC.

The Court held that as regards the concept of the “exercise of official authority” within the meaning of the first paragraph of Art. 45 EC, the assessment of that concept must take account of the character as European Union law of the limits imposed by that provision on the permitted exceptions to the principle of freedom of establishment, so as to ensure that the effectiveness of the Treaty in the field of freedom of establishment was not frustrated by unilateral provisions of the Member States (see, to that effect, Reyners, paragraph 50; Commission v Greece, paragraph 8; and Case C-438/08 Commission v Portugal [2009]

The Court furthermore held that since the first paragraph of Art. 45 EC was an exception to the fundamental rule of freedom of establishment, it must be interpreted in a manner which limits its scope to what was strictly necessary to safeguard the interests it allowed the Member States to protect (Case 147/86 Commission v Greece [1988]; Case C-114/97 Commission v Spain [1998] ; Case C-451/03 Servizi Ausiliari Dottori Commercialisti [2006]; Case C-393/05 Commission v Austria [2007]; Case C‑404/05 Commission v Germany [2007]).

The Court held the activities of notaries as defined in the current state of the Belgian legal system were not connected with the exercise of official authority within the meaning of the first paragraph of Art. 45 EC.

Consequently, the nationality condition required by Belgian legislation for access to the profession of notary constituted discrimination on grounds of nationality prohibited by Art. 43 EC.

Text of Judgment

Case C‑306/08, Commission v Spain

2011-06-16T22:26:00.001+02:00

Court further clarifies application EU procurement rules to urban development

By its action, the Commission criticised Spain for awarding integrated action programmes (IAPs) for the joint urban development of several parcels in accordance with a single programme converting those parcels into building plots in breach of Directives 93/37 and 2004/18 respectively.

The Court stressed that the Commission’s complaints concerned only the procedure for approving IAPs in indirect management, which, under the legislation in question, involved the delegation, by the competent contracting authority to an individual, of the status of developer, selected according to a competitive public procedure whether or not the developer owned the plots concerned.

The Court held that the concept of “public works contracts” within the meaning of Art. 1(a) of Directive 93/37 and of Art. 1(2)(b) of Directive 2004/18 covered contracts for pecuniary interest, concluded in writing between one or more economic operators and one or more contracting authorities and having as their object either the execution, or both the design and execution, of works related to one of the activities referred to in Annex II to Directive 93/37 or Annex I to Directive 2004/18 or of a work defined in Art. 1(c) of Directive 93/37 or Art. 1(2)(b) of Directive 2004/18, or the execution, by whatever means, of a work corresponding to the requirements specified by the contracting authority. The Court held that a contract could be deemed to be a “public works contract” only if its subject-matter corresponded to this definition and that works which were incidental to, and not the subject-matter of, the contract did not justify the contract’s qualification as a public works contract.

The Court reiterated that, where a contract contained elements relating both to a public works contract and another type of contract, it was the main object of the contract which determined which body of European Union rules on public contracts was to be applied in principle (see Case C-220/05 Auroux and Others [2007]).

The Court held that that determination must be made in the light of the essential obligations which predominated and which, as such, characterised the transaction, as opposed to those which were only ancillary or supplementary in nature and were required by the very object of the contract (Case C‑412/04 Commission v Italy [2008]).

The Court held that the Commission confined itself to putting forward the argument that the urban development contracts at issue must be classified as “public works contracts” on the ground that the main object of IAPs was, for the purposes of Arts 1(c) of Directive 93/37 and 1(2)(b) of Directive 2004/18, a “work” of urban development of two or more parcels leading to the construction of highway access by a paved road, the distribution of drinking water and electricity, the evacuation of waste water from gutters and public lighting.

The Court furthermore observed that the Spain rejected the Commission’s assessment that IAPs should be classified as a “work’, in the sense of Directives 93/37 and 2004/18, and contended that the execution of such a work did not constitute its exclusive or even fundamental purpose. Spain contended that the contracts at issue must be classified as “service concessions’, within the meaning of Art. 1(4) of Directive 2004/18.

The Court reiterated that in proceedings under Art. 226 EC for failure to fulfil obligations, it was for the Commission to prove that failure. It was the Commission, indeed, which must place before the Court all the information needed to enable the Court to establish that failure, and in so doing the Commission might not rely on any presumptions (Case C-490/09 Commission v Luxembourg [2011] ).

The Court held that Commission had not sought to substantiate its own allegations or to refute those of the defendant Member State by detailed examination of that information. The Court therefore found that it had not been established that the works consisting of the connection and integration of the plots concerned to the existing infrastructure, energy, communications and public services networks constituted the main object of the contract concluded between the community and the urban developer within the framework of an IAP in indirect management.

The Court held that in fact, the execution of the IAP by the developer included activities which could not be classified as “works’, within the meaning of the directives relied on by the Commission in its application, namely the preparation of the development plan, the proposal and management of the corresponding land consolidation project, obtaining for the administration free of charge plots for public ownership and for the community’s public land bank, management of the legal conversion of the plots concerned or even the equitable division of the costs and profits between the parties concerned as well as the transactions for financing and guaranteeing the cost of the investments, works, installations and compensation necessary for the execution of the IAP.

The Court furthermore held that some of the activities which IAPs involved seemed to correspond, by their nature, to the activities referred to in Category 12 in Annexes IA to Directive 92/50 and IIA to Directive 2004/18, relating to the services referred to, respectively, in Art. 1(a) of Directive 92/50 and Art. 1(2)(d) of Directive 2004/18.

The Court concluded that the Commission had not proved that the main object of the contract concluded between the local authority and the urban developer was a public works contract within the meaning of Directive 93/37 or Directive 2004/18, which was a condition precedent to a declaration of the alleged failure to fulfil obligations.

The Court therefore found that Commission’s action had to be dismissed.

Text of Judgment

Joined Cases C‑165/09 to C‑167/09, Stichting Natuur en Milieu

2011-06-15T23:00:00.001+02:00

These references for a preliminary ruling concerned the interpretation of Art. 9 of the IPPC Directive 96/61 (Directive 96/61) and certain provisions of the NEC Directive (Directive 2001/81).

The references had been made in proceedings brought, as regards Case C-165/09, by the foundations Stichting Natuur en Milieu and Stichting Greenpeace Nederland and by four natural persons against the Provincial Executive of the Province of Groningen concerning a decision by which the latter granted the company RWE Eemshaven holding BV, formerly RWE Power AG, a permit for the construction and operation of a power station in the province of Groningen.

As regards Cases C-166/09 and C-167/09, proceedings had been brought by the foundations Natuur en Milieu, Stichting Zuid-Hollandse Milieufederatie and Greenpeace and the Association of concerned Citizens of Voorne against the Provincial Executive of the Province of South Holland concerning the decisions by which that authority granted the companies Electrabel Nederland N.V. and E.On Benelux N.V. respectively, permits for the construction and operation of two power stations in the province of South Holland.

Obligation to include national emission ceilings?

The referring Court first of all asked whether Art. 9(1), (3) and (4) of the IPPC Directive must be interpreted as meaning that, when granting an environmental permit for the construction and operation of an industrial installation, the competent national authorities were obliged to include among the conditions for grant of that permit the national emission ceilings for SO2 and NOx laid down by the NEC Directive.

The Court first of all pointed out that none of these paragraphs of Art. 9 of the IPPC Directive referred, expressly or by implication, to those emission ceilings. Furthermore, the obligation, laid down in the second sentence of Art. 9(4) of the IPPC Directive, to see to it that the conditions of the permit contained provisions on the minimisation of long-distance or transboundary pollution and ensure a high level of protection for the environment as a whole, could be interpreted only in the context of the system established by the IPPC Directive itself and in particular of the rule, set out in the first sentence of Art. 9(4), under which it was mandatory for the emission limit values to be based on the best available techniques.

The Court held that equally no provision of the NEC Directive imposed obligations on the competent national authorities to regard the national emission ceilings for SO2 and NOx, when granting an environmental permit, as a condition for the permit.

On the contrary, the European Union legislature expressly stated, in recital 19 in its preamble, that the NEC Directive should applied ‘without prejudice to [the provisions of the IPPC Directive] in relation to emission limit values and use of best available techniques’, thereby, according to the Court, indicating that the obligations owed by the Member States under the NEC Directive could not directly affect those flowing, inter alia, from Art. 9 of the IPPC Directive.

According to the Court, this interpretation was borne out, finally, by the different purpose and the general scheme of both of the directives in question.

The answer to the first question therefore was it followed from Article 9(1), (3) and (4) of the IPPC Directive that, when granting an environmental permit for the construction and operation of an industrial installation, such as those at issue in the main actions, the Member States were not obliged to include among the conditions for grant of that permit the national emission ceilings for SO2 and NOx laid down by the NEC Directive, whilst they must comply with the obligation arising from the NEC Directive to adopt or envisage, within the framework of national programmes, appropriate and coherent policies and measures capable of reducing, as a whole, emissions of inter alia those pollutants to amount not exceeding the ceilings laid down in Annex I to that directive by the end of 2010 at the latest.

Obligations during period prescribed for transposition of directive

The referring Court furthermore asked what obligations were owed by the Member States under the NEC Directive during the period between 27 November 2002, when the time-limit for its transposition expired, and 31 December 2010, the deadline after which the Member States must comply with the emission ceilings laid down by it.

The Court of Justice first of all reiterated that that, during the period prescribed for transposition of a directive, the Member States to which it was addressed must refrain from taking any measures liable seriously to compromise the attainment of the result prescribed by that directive (Case C-129/96 Inter-Environnement Wallonie [1997] ; Case C-14/02 ATRAL [2003]; and Joined Cases C-261/07 and C-299/07 VTB-VAB and Galatea [2009]).

The Court held that such an obligation to refrain owed by all the national authorities must be understood as referring to the adoption of any measure, general or specific, liable to produce such a compromising effect (see Case C-212/04 Adeneler and Others [2006]).

This obligation to refrain from taking measures was also owed by the Member States, by virtue of the application of Art. 4(3) TEU in conjunction with the third paragraph of Art. 288 TFEU, during a transitional period in which they were authorised to continued to apply their national systems, even though those systems did not complied with the directive in question (see Case C-316/04 Stichting Zuid-Hollandse Milieufederatie [2005] and Case C-138/05 Stichting Zuid-Hollandse Milieufederatie [2006]).

The Court however held that a simple specific measure relating to a single source of SO2 and NOx, consisting in the decision to grant an environmental permit for the construction and operation of an industrial installation, did not appear liable, in itself, seriously to compromise the result prescribed by the NEC Directive, namely limiting emissions from those sources of pollution into the atmosphere to annual total amounted not exceeding the national ceilings in 2010 at the latest.

The Court held that this conclusion applied all the more where, in circumstances such as those in the main actions, the installation in question was not to be brought into operation until 2012 at the earliest.

The Court furthermore held that the obligation of a Member State to take all the measures necessary to achieve the result prescribed by a directive was a binding obligation imposed by the third paragraph of Art. 288 TFEU and by the directive itself (Case 152/84 Marshall [1986];Case 72/95 Kraaijeveld and Others [1996]).

The Court reiterated that it followed from that obligation that, during the period prescribed for transposition, the Member States must take the measures necessary to ensure that the result prescribed by the directive was achieved at the end of that period. The same was true as regards a transitional period, such as the period provided for in Art. 4 of the NEC Directive.

As regards the specific content of those national programmes the Court nevertheless emphasised the wide flexibility accorded to the Member States by the NEC Directive prevented limits from being placed upon them in the development of the programmes and their thus being obliged to adopt or to refrain from adopting specific measures or initiatives for reasons extraneous to assessments of a strategic nature which take account globally of the factual circumstances and the various competing public and private interests.

The Court summarised that during the transitional period from 27 November 2002 to 31 December 2010, provided for in Art. 4 of the NEC Directive:

– Art. 4(3) TEU, the third paragraph of Art. 288 TFEU and the NEC Directive required the Member States to refrain from adopting any measures liable seriously to compromise the attainment of the result prescribed by that directive;

– adoption by the Member States of a specific measure relating to a single source of SO2 and NOx did not appear liable, in itself, seriously to compromise the attainment of the result prescribed by the NEC Directive. It was for the national court to review whether that was true of each of the decisions granting an environmental permit for the construction and operation of an industrial installation such as the permit at issue in the main actions;

– the third paragraph of Art. 288 TFEU and Arts 6, 7(1) and (2) and 8(1) and (2) of the NEC Directive required the Member States, first, to draw up, to update and to revise as necessary programmes for the progressive reduction of national SO2 and NOx emissions, which they were obliged to make available to the public and appropriate organisations by means of clear, comprehensible and easily accessible information, and to notify to the Commission within the time-limit prescribed, and second, to prepare and annually update national inventories of those emissions and national emission projections for 2010, which they must report to the Commission and the European Environment Agency within the time-limit prescribed;

– the third paragraph of Art. 288 TFEU and the NEC Directive itself did not require the Member States to refuse or to attach restrictions to the grant of an environmental permit for the construction and operation of an industrial installation such as the permit at issue in the main actions, or to adopt specific compensatory measures for each permit granted of that kind, even where the national emission ceilings for SO2 and NOx were exceeded or risked being exceeded.

Whether Arts 4 and 6 NEC Directive directly effective

Thirdly, the national court asked whether and, if so, to what extent an individual could rely directly before the national courts upon the obligations imposed by Arts 4 and 6 of the NEC Directive.

The Court reiterated that, whenever provisions of a directive appear, so far as their subject-matter was concerned, to be unconditional and sufficiently precise, they might be relied upon by individuals against the Member State where the latter had failed to implement the directive in domestic law by the end of the period prescribed or where it had failed to implement the directive correctly (see, inter alia, Joined Cases C‑6/90 and C‑9/90 Francovich and Others [1991]; Case C‑62/00 Marks & Spencer [2002]; and Joined Cases C-397/01 to C‑403/01 Pfeiffer and Others [2004]).

The Court held that it would be incompatible with the binding effect which the third paragraph of Art. 288 TFEU ascribes to a directive to exclude, in principle, the possibility of the obligation imposed by a directive being relied on by persons concerned. That consideration applied particularly in respect of a directive whose objective was to control and reduce atmospheric pollution and which was designed, therefore, to protect public health (see Case C-237/07 Janecek [2008]).

The Court nevertheless added that a provision of European Union law was unconditional where it set forth an obligation which was not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the institutions of the European Union or by the Member States (see, inter alia, Case 28/67 Molkerei-Zentrale Westfalen/Lippe [1968] and Case C‑236/92 Comitato di coordinamento per la difesa della cava and Others [1994]).

According to the Court, it was clear that Article 4 of the NEC Directive did not display the characteristics set out above. That Article was purely programmatic in nature, in that it merely laid down an objective to be attained, leaving the Member States wide flexibility as to the means to be employed in order to reach that objective.

On the other hand, the Court found that Art. 6 of the NEC Directive was unconditional and sufficiently precise in that it required the Member States in unequivocal terms, first, under Art. 6(1) and (3), to draw up national programmes for the progressive reduction of national emissions of inter alia SO2 and NOx in order to comply with the ceilings laid down in Annex I to the directive by the end of 2010 at the latest and, second, as provided in Art. 6(4), to make those programmes available to the public and to appropriate organisations such as environmental organisations by means of clear, comprehensible and easily accessible information.

Text of Judgement

Case C‑115/09,Bund für Umwelt und Naturschutz Deutschland, Landesverband Nordrhein‑Westfalen

2011-06-05T22:34:00.000+02:00

Plea raised against decision which alleged infringement of the rules of national law flowing from Article 6 of Habitats Directive must be capable of being relied on by environmental protection organisation.

This reference for a preliminary ruling had been made in proceedings between the Nordrhein-Westfalen branch of Friends of the Earth, Germany; “Friends of the Earth” and the Bezirksregierung Arnsberg, concerning the authorisation granted by the latter to Trianel Kohlekraftwerk GmbH & Co. KG (‘Trianel’) for the construction and operation of a coal-fired power station in Lünen.

The referring court asked essentially whether Art. 10a of Directive 85/337 precluded legislation which did not permit non-governmental organisations promoting environmental protection, as referred to in Art. 1(2) of the “EIA” (Environmental Impact Assessment) Directive (Directive 85/337), to rely before the courts, in an action contesting a decision authorizing projects likely to have “significant effects on the environment” for the purposes of Art. 1(1) of Directive 85/337, on the infringement of a rule which protected only the interests of the general public and not the interests of individuals.

The referring court also asked the Court whether Art. 10a of the EIA Directive precluded such legislation in general or only in so far as it did not permit an organisation of that nature to rely before the courts on particular provisions of environment law, whether of Community or purely national origin.

The Court held that whichever option a Member State chose for the admissibility of an action, environmental protection organisations were entitled, pursuant to Art. 10a of the EIA Directive, to have access to a review procedure before a court of law or another independent and impartial body established by law, to challenge the substantive or procedural legality of decisions, acts or omissions covered by that Article .

The Court furthermore held that where, in the absence of EU rules governing the matter, it was for the legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derived from EU law, those detailed rules must not be less favourable than those governing similar domestic actions (principle of equivalence) and must not made it in practice impossible or excessively difficult to exercise rights conferred by EU law (principle of effectiveness).

Although the national legislature was entitled to confined to individual public-law rights the rights whose infringement might be relied on by an individual in legal proceedings contesting one of the decisions, acts or omissions referred to in Art. 10a of Directive 85/337, such a limitation could not be applied as such to environmental protection organisations without disregarding the objectives of the last sentence of the third paragraph of Art. 10a of Directive 85/337.

The Court held that if, as was clear from that provision, those organisations must be able to rely on the same rights as individuals, it would be contrary to the objective of giving the public concerned wide access to justice and at odds with the principle of effectiveness if such organisations were not also allowed to rely on the impairment of rules of EU environment law solely on the ground that those rules protected the public interest.

It followed first that the concept of “impairment of a right” could not depended on conditions which only other physical or legal persons could fulfil, such as the condition of being a more or less close neighbour of an installation or of suffering in one way or another the effects of the installation’s operation.

It followed more generally that the last sentence of the third paragraph of Art. 10a of Directive 85/337 must be read as meaning that the “rights capable of being impaired” which the environmental protection organisations were supposed to enjoy must necessarily include the rules of national law Implementing EU environment law and the rules of EU environment law having direct effect.

The Court that “in order to give the referring court the most useful answer possible, it should be pointed out that a plea raised against a contested decision which alleged infringement of the rules of national law flowing from Art. 6 of the Habitats Directive must be capable of being relied on by an environmental protection organisation.”

The Court furthermore held that a non-governmental organisation could derive, from the last sentence of the third paragraph of Art. 10a of Directive 85/337, as amended by Directive 2003/35, the right to rely before the courts, in an action contesting a decision authorising projects “likely to have significant effects on the environment” for the purposes of Art. 1(1) of Directive 85/337, even where, on the ground that the rules relied on protected only the interests of the general public and not the interests of individuals, national procedural law did not permit this.

Text of Judgment

Case C‑305/09, Commission v Italy

2011-06-05T21:42:00.002+02:00

Court of Justice stresses limited reasons not to recover State Aid

Only when “absolutely impossible”

This case concerned an Italian aid scheme which allowed any undertaking liable to corporate income tax in Italy and in business on 2 October 2003 to reduce its taxable income by the amount of the expenses directly incurred with respect to its participation in trade fairs abroad. For undertakings whose business cycle followed the calendar year, that reduction affected the determination of their 2004 taxable income.

The Commission decided, having found the aid scheme in question to be incompatible, that it was necessary to recover from the beneficiaries the aid already made available (Decision 2005/919)

In order to implement that decision, the Italian authorities adopted a number of measures and informed the Commission accordingly. However, since it considered that the recovery of the aid had not progressed despite the legislative action, the Commission decided to bring the present action.

The Court reiterated that the Member State to which a decision requiring recovery of unlawful aid was addressed was obliged under Art. 249 EC (now Art. 288 TFEU) to take all measures necessary to ensured implementation of that decision (Case C‑232/05 Commission v France (2006)). The Member State must actually recover the sums owed (see Case C-304/09 Commission v Italy [2010).

Pursuant to the second subparagraph of Art. 2(1) of Decision 2005/919, Italy was to recover the aid in question from the beneficiaries at the earliest opportunity. The Court noted that several years after Decision 2005/919 was notified to Italy and after the expiry of all the deadlines fixed by that decision, some of the unlawful aid had not yet been recovered by Italy. Such a situation was, according to the Court, clearly irreconcilable with that Member State’s obligation actually to recover the sums owed and constituted a breach of the duty to implement Decision 2005/919 immediately and effectively.

That founding was not affected by the fact that about 90% of the capital of the unlawful aid had been recovered up to the day of the hearing in the present case.

As regards the arguments submitted by Italy in its defence, the Court held that the only defence available to a Member State in infringement proceedings brought by the Commission under Art. 88(2) EC was to plead that it was absolutely impossible for it properly to implement the decision at issue (see, in particular, Case C‑177/06 Commission v Spain [2007]; Case C‑214/07 Commission v France [2008]).

The condition that it be absolutely impossible to implement a decision was not fulfilled where the defendant Member State merely informed the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real steps to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for Implementing the decision which could have enabled those difficulties to be overcome (see, in particular Joined Cases C‑485/03 to C‑490/03 Commission vSpain [2006]).

The Court held that the fact that Italy found it necessary to verify the individual situation of each company concerned, to conduct a screening to identify persons in receipt of benefits covered by the Commission’s decision, could not justify non‑implementation of that decision (see Case C-99/02 Commission v Italy [2004]).

The Court held, as regards, moreover, the Commission’s argument concerning the right to adopt, by the national courts, suspension measures in the course of the process of recovery of the aid, that such measures might be granted, provided that certain conditions stated in the case-law were met (see, in particular, Joined Cases C-143/88 and C‑92/89 Zuckerfabrik Süderdithmarschen and Zuckerfabrik Soest [1991] and Case C-465/93 Atlanta Fruchthandelsgesellschaft and Others (I) [1995]).

The Court stressed that national courts were required, under Art. 14(3) of Regulation 659/1999, to ensure that the decision ordering the recovery of the unlawful aid was fully effective and achieved an outcome consistent with the objective pursued by that decision. In fact, annulment of a national measure implementing a Commission decision ordering recovery of unlawful aid, which impeded the immediate and effective implementation of that decision, was irreconcilable with the requirements arising from Art. 14(3) of Regulation 659/1999 (see Case C‑210/09 Scott and Kimberly Clark [2010]).

The Court concluded that, by failing to adopt, within the prescribed time‑limits, all necessary measures to recover from the beneficiaries all the aid granted under the aid scheme declared unlawful and incompatible with the common market by Decision 2005/919, Italy had failed to fulfill its obligations under Art. 2 of that decision.

Text of Judgment

Case C‑291/09, Francesco Guarnieri

2011-06-03T09:09:00.001+02:00

Requirement non-Belgian nationals to provide security for costs too uncertain and indirect to be regarded as hindering intra-Community trade.

This reference for a preliminary ruling had been made in proceedings between Francesco Guarnieri & Cie, a company governed by Monegasque law established in Monaco, and Vandevelde Eddy VOF, whose registered office was in Belgium, concerning the delivery of and payment for various goods.

Article 851 of the Belgian Judicial Code distinguished between Belgian and non-Belgian nationals on the basis of nationality. It required non-Belgian nationals to provide security for costs where there was no reciprocal arrangement between their State of nationality and Belgium. d

The referring Court asked whether Articles 28 EC, 29 EC and 30 EC preclude a claimant of Monegasque nationality, who lodged a claim in Belgium for payment of invoices relating to the delivery of “twister-glazen” (glasses) and tea-lights with accessories, from being required, upon application by a defendant of Belgian nationality, to give security for the costs and damages arising from the proceedings which he may be ordered to pay.

The Court pointed out Articles 52 TEU and 355 TFEU did not include in ‘the territorial scope of the Treaties’ the territory of the Principality of Monaco. Furthermore, exclusion from the customs territory of the European Union entailed the inapplicability of the FEU Treaty rules on the free movement of goods (Case C‑30/01 Commission v United Kingdom [2003]).

However, pursuant to Article 3(2)(b) of Regulation 2913/92, the territory of the Principality of Monaco was to be considered to be part of the customs territory of the European Union. As no customs duty or charge having equivalent effect could, consequently, be applied to trade between Monaco and the Member States, goods originating in Monaco, exported directly to a Member State, must be treated as if they originated in those Member States.

The result of that assimilation to goods originating in Member States was that goods originating in Monaco were covered by the rules of the Treaty on the free movement of goods (see, by analogy, Case 41/76 Donckerwolcke and Schou [1976]).

The Court held that in relation to the question of whether a provision of a Member State, that required any foreign national, such as Monegasque nationals, to provide security pending judgment when he sought to bring proceedings against a national of that Member State, although such a requirement was not imposed on nationals of that State, constituted a hindrance to the free movement of goods, all trading rules enacted by Member States, that were capable of hindering, directly or indirectly, actually or potentially, intra‑Community trade, were to be considered to be measures having an effect equivalent to quantitative restrictions (see, to that effect, Case 8/74 Dassonville [1974] and Case C‑421/09 Humanplasma [2010]).

However, a national rule, such as that relating to cautio judicatum solvi under Article 851 of the Judicial Code, was purely procedural and its purpose was not to regulate trade in goods. Further, its application depended not on the origin of the goods in question, but on two cumulative conditions, namely, first, that a dispute must arise subsequent to the conclusion of a contract that lead to litigation before the Belgian courts and, second, that any such action must involve a Belgian national as defendant who choose to avail himself of the provision in question.

The Court admitted that a measure of that sort had the effect of making traders wishing to bring proceedings subject to different procedural rules according to whether or not they had the nationality of the Member State concerned.

Nevertheless, the possibility that nationals of other Member States would therefore hesitate to sell goods to purchasers established in that Member State who had the nationality of that State was too uncertain and indirect for that national measure to be regarded as liable to hinder intra-Community trade (see, by analogy, Case C‑69/88 Krantz [1990]; Case C‑379/92 Peralta [1994]; Case C‑96/94 Centro Servizi Spediporto [1995]; and Case C‑412/97 ED [1999].

The causal link between the possible distortion of intra-Community trade and the difference in treatment at issue was therefore not established.

Article 34 TFEU therefore did not preclude a national measure such as that established by Article 851 of the Judicial Code.

Case C‑119/09, Société fiduciaire nationale d’expertise comptable

2011-06-02T23:26:00.003+02:00

Services Directive precludes total ban canvassing by qualified accountants

This reference for a preliminary ruling concerned the interpretation of Article 24 of the services (Directive 2006/123).

The reference had been made in proceedings between the French Association of Qualified Accountants and the French Minister for the budget in an action for annulment of the Code of professional conduct and ethics of qualified accountants (Decree No 2007-1387).

Société fiduciaire had applied to the Conseil d’État for the annulment of Decree No 2007-1387 in so far as it prohibited canvassing. Société fiduciaire submitted that the general and absolute prohibition on any canvassing under Article 12-I of the Code was contrary to Article 24 of Directive 2006/123 and seriously undermined the implementation of that directive.

The Court first of all addressed the argument of the French argument that the time-limit for the transposition of Directive 2006/123 (December 28, 2009), had not yet expired on the date of the decision to refer, which was March 4.

The Court has often held that Member States must refrain from taking any measures liable seriously to compromise the attainment of the result prescribed by that directive (Case C‑129/96 Inter-Environnement Wallonie [1997]; Case C‑14/02 ATRAL [2003]; and Joined Cases C‑261/07 and C‑299/07 VTB-VAB and Galatea [2009]

The Court now held that it was for the referring court before which the main proceedings were pending to assess whether the national provisions whose legality was challenged were liable seriously to compromise the attainment of the result prescribed by a directive.

In making that assessment, the referring court must consider, in particular, whether the provisions in issue purported to constitute full transposition of the directive, as well as determining the effects in practice of applying those incompatible provisions and of their duration in time.

The Court held that to establish whether Article 24 of Directive 2006/123, and particularly Article 24(1), proscribed a prohibition on canvassing such as that laid down by the national legislation at issue in the main proceedings, it was necessary to interpret that provision by reference not only to its wording but also to its purpose and context and the objective pursued by the legislation in question.

The Court reiterated that Directive 2006/123 was intended to remove restrictions on the freedom of establishment for providers in Member States and on the free movement of services between the Member States, in order to contribute to the completion of a free and competitive internal market.

According to the Court, it followed from both the purpose and the context of Article 24 that the intention of the EU legislature was not only to put an end to total prohibitions, on the members of a regulated profession, from engaging in commercial communications whatever their form but also to remove bans on one or more forms of commercial communication within the meaning of Article 4(12) of Directive 2006/123, such as, for example, advertising, direct marketing or sponsorship.

However, the Court held that the Member States retained the right to lay down prohibitions relating to the content or methods of commercial communications as regards regulated professions, provided that the rules laid down were justified and proportionate for the purposes of ensuring, in particular, the independence, dignity and integrity of the profession, as well as the professional secrecy necessary in its practice. Commercial communication covered not only traditional advertising but also other forms of advertising and communications of information intended to obtain new clients.

The Court held that canvassing constituted a form of communication of information intended to seek new clients. However, canvassing involved personal contact between the provider and a potential client, in order to offer the latter services. It could, therefore, be classified as direct marketing. Consequently, canvassing came within the concept of ‘commercial communication’, within the meaning of Articles 4(12) and 24 of Directive 2006/123.

The Court held that the French ban on canvassing was of broad conception, in that it prohibited any canvassing, whatever its form, content or means employed. Thus, that ban included a prohibition of all means of communication enabling the carrying out of that form of commercial communication.

It followed that such a ban must be regarded as a total prohibition of commercial communications prohibited by Article 24(1) of Directive 2006/123.

Case C-331/09, Commission v. Poland

2011-06-01T23:05:00.002+02:00

Poland infringing Article 288 TFEU by not recovering state aid within prescribed period

By its application, the Commission sought a declaration from the Court that, by failing to comply with its obligations under Decision 2008/344 of 23 October 2007, Poland had failed to comply with the provisions of the fourth paragraph of Article 249 EC (now Article 288 TFEU) and Articles 3, 4 and 5 of that decision.

By that decision, Commission had declared that the measures taken by Poland in favour of the Technologie Buczek Group (‘TBG’) constituted State aid incompatible with the common market.

TBG operated in the steel production sector as a manufacturer of tubes and was composed of Technologie Buczek SA (‘TB’), which owned several subsidiaries, two of which, according to the Commission, were also beneficiaries of the aid in question, namely Buczek Automotive sp. z.o.o. (‘BA’) and Huta Buczek sp. z.o.o (‘HB’).

The aid at issue received by TBG consisted in the non-enforcement of public debt held by several public creditors, in particular the social security authority, Sosnowiec municipality, where TBG’s head office was situated, and the State Fund for the Rehabilitation of Disabled Persons.

When in October 2009, the Commission, taking the view that Poland had still not properly implemented Decision 2008/344, decided to bring the present action. The Commission argued that Articles 3 and 4 of the Commission’s decision provided for a period of four months from the date of its notification to recover the aid at issue, while, after more than 21 months after the date of reception of that decision by Poland, no aid had been repaid by HB and BA and, in any event, the Commission had not been informed, in accordance with Article 5 of that decision, of the steps taken by that Member State.

As a subsidiary point, the Commission relied on the fact that TB had repaid only part of the total amount to be recovered from TBG. Finally, it submitted that Poland had not pleaded exceptional circumstances which would have prevented it from properly implementing that decision.

As far as concerns the effective implementation of Decision 2008/344, the Commission, relying in particular on Case 106/77 Simmenthal [1978] and Case C-119/05 Lucchini [2007] submitted that it was Polish insolvency law which had caused the substantial delay in the recovery of the aid at issue and had therefore prevented the immediate implementation of that decision.

Poland inter alia took the the view that the Commission did not prescribe a period for the implementation of Decision 2008/344. Since the period of four months, calculated from the date of its notification, could not be binding, the expiry of such a period could not be regarded as constituting a time-limit for the implementation of that decision.

The Court of Justice reiterated that the relevant date for the assessment of a failure to fulfil obligations brought pursuant to Article 88(2) EC could be, contrary to the Republic of Poland’s assertions and because that provision did not provide for a pre-litigation phase in contrast to Article 226 EC and therefore the Commission did not issue a reasoned opinion allowing Member States a certain period within which to comply with its decision, when the former provision was applied the reference period, only that provided for in the decision failure to implement which was denied or, where appropriate, that subsequently fixed by the Commission (Case C-378/98 Commission v Belgium [2001]; Case C-499/99 Commission v Spain [2002]; Case C-207/05 Commission v Italy [2006]; and Case C-232/05 Commission v France [2006]).

In the present case, Article 4(2) of Decision 2008/344 imposed a period of four months from the date of notification thereof in order to enable Poland to take the measures necessary to recover the aid at issue. Therefore, according to the Court, that period, in the absence of a new period fixed by the Commission, must be regarded as relevant for the assessment of the failure to fulfil obligations complained of.

The Court reiterated that recovery of unlawful aid was the logical consequence of the finding that it was unlawful. That consequence could not depend on the form in which the aid was granted (see, Case C-183/91 Commission v Greece [1993];Commission v Portugal [2000]; and Case C-507/08 Commission v Slovakia [2010]).

Consequently, the Member State to which a decision requiring recovery of illegal aid was addressed was obliged under Article 249 EC to take all measures necessary to ensure implementation of that decision (see Case C-209/00 Commission v Germany [2002]; Case C-404/00 and Commission v Spain [2003].

The Court reiterated that this must result in the actual recovery of the sums owed (see, to that effect, Case C-415/03 Commission v Greece [2005] and Commission v France [2006]).

Furthermore, the Court stressed that the obligation on a Member State to abolish aid found by the Commission to be incompatible with the common market was to restore the previous situation on the European Union market (Case C-350/93 Commission v Italy [1995], and Case C-75/97 Belgium v Commission [1999]). The Court argued that as long as the aid was not recovered, the beneficiary of the aid was able to keep funds deriving from the aid declared incompatible and to benefit from the resulting unfair competitive advantage (C-232/05, Commission v France [2006]).

The Court held that, thus, a Member State which, pursuant to a decision of the Commission, was obliged to recover unlawful aid was free to choose the means of fulfilling that obligation, provided that the measures chosen did not adversely affect the scope and effectiveness of Union law. A Member State could fulfil such an obligation to recover only if the measures adopted by it were appropriate for the purpose of establishing the normal conditions of competition which were distorted by the grant of the unlawful aid the recovery of which had been ordered by a Commission decision (Case C-209/00 Commission v Germany [2002]; and Case C-210/09 Scott and Kimberly Clark [2010]).

Furthermore, in accordance with Article 14(3) of Regulation 659/99, recovery of unlawful aid imposed by a Commission decision was to be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allowed the immediate and effective execution of the Commission decision.

However, it must be recalled that, as follows from the case-law on bankrupt undertakings that have received aid, the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may, in principle, be achieved by registration of the liability relating to the repayment of the aid in question in the schedule of liabilities (Case 52/84 Commission v Belgium [1986]; Case C-142/87 Belgium v Commission (‘Tubemeuse’) [1990]; and Case C-277/00 Commission v Germany [2004]).

The Court found that Poland had not provided the documents enabling the Commission to conclude that TBG was insolvent and had definitively and completely ceased its activity, so that the mere registration of the debts relating to the repayment of the aid in the schedule of liabilities of those companies in the group could suffice in order to comply with Decision 2008/344. As regards BA and HB, the case-law on bankrupt undertakings which had received aid was not applicable so that the registration of those debts after the expiry of the period mentioned above did not constitute proper implementation by Poland of its obligations under Articles 4 and 5 of Decision 2008/344.

The Court reiterated that the condition that it be absolutely impossible to implement a decision was not fulfilled where the defendant Member State merely informed of the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real steps to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled those difficulties to be overcome (Joined Cases 485/03 to C-490/03 Commission v Spain [2006], and Case C-214/07 Commission v France [2006].

Poland, although it had pleaded ‘serious difficulties’, ‘problems’ and ‘major obstacles’ encountered in implementing Decision 2008/344, itself explained, in its written submissions, that it did not regard the existing problems as making impossible recovery of the aid at issue.

The Court reiterated that apprehension of internal difficulties in the course of implementing a decision on State aid could not justify a failure by a Member State to comply with its obligations under Community law (Case C-52/95 Commission v France [1995]; Case C-265/95 Commission v France [1997]; and Case C-441/06 Commission v France [2007]).

It follows from the foregoing that it must be held that, on the expiry of the period prescribed in Article 4(2) of Decision 2008/344 , the actions undertaken by the Polish authorities did not lead to an effective recovery of the aid at issue and, consequently, the normal conditions of competition have not been restored.

The Court held that by failing to take, within the period prescribed, all the measures necessary to ensure the implementation of Decision 2008/344, Poland has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and Articles 3 and 4 of that decision.

Guest Post by Stanislovas Tomas (CMS DeBacker Leclère Walry)

2011-04-22T10:17:00.000+02:00

Continuation of Köbler at the ECHR

Guest Post by Stanislovas Tomas (CMS DeBacker Leclère Walry)

Article 267(3) of the Treaty on the Functioning of the European Union requires the national court of last instance to make a preliminary reference to the ECJ on questions of interpretation of the Union law.

In case Köbler v Austria, C-224/01, the ECJ interpreted that if a national court of last instance refuses to make the preliminary reference, the interested party may sue the State before a respective national court of first instance.

This is exactly what has happened in case Tomas v Lithuania, 51226/09. When the national court of last instance refused to make the preliminary references, the State was sued for the violation of current Article 267(3) TFEU following the Köbler procedure. However the Lithuanian national courts declared the action inadmissible.

The next step was suing Lithuania for the violation of the Köbler procedure before the ECHR. On 12/04/2011 the sinle judge chamber (judge András Sajó) interpreted that the right to court (Article 6(1) of the European Convention of Human Rights) is not applicable to the Köbler procedure.
However, since it is a single judge chamber judgment, it is possible that this interpretation will not be applicable to futurer litigations.

Case C‑400/08, Commission v Spain

2011-03-30T03:49:00.004+02:00

In this case, the Commission of the European Communities claimed that Spain had failed to fulfil its obligations under Article 43 EC, by imposing restrictions on the establishment of shopping centres in Catalonia.

The action brought by the Commission comprised, in essence, three complaints relating to the incompatibility with Article 43 EC of: (i) the restrictions on the location and size of large retail establishments; (ii) the conditions for obtaining the specific retail licence required to set up such establishments; and (iii) certain aspects of the procedure for the grant of that licence.

The first complaint, which related to the restrictions on the location and size of large retail establishments, concerned a prohibition on setting up such establishments outside consolidated urban areas of a limited number of municipalities and the sales area limitations for each district and municipality . As regards the sales area limitations for each district and municipality, the Commission argued that the limitation was particularly severe in the case of hypermarkets.

The second complaint, which related to the conditions for obtaining a specific retail licence, was composed of six parts, respectively concerning: (i) the need to obtain a specific retail licence before opening large retail establishments; (ii) the taking into account, under the licensing procedure, of the existence of retail facilities in the area concerned and the effects of setting up a new establishment on the retail structure of that area; (iii) the requirement, under the licensing procedure, of a market share report which was binding if unfavourable and which must be unfavourable if the market share exceeds a certain value; (iv) the required consultation with the Competition Court; (v) the obligation to obtain the opinion of the Retail Facilities Committee, whose members include potential competitors of the applicant; and (vi) the lack of a clear definition of the criteria applicable.

Lastly, the third complaint, which related to certain aspects of the procedure for the issue of retail licences, was composed of three parts, respectively concerning: (i) a ‘negative silence’ rule ; (ii) the charging of fees which were unrelated to; and (iii) the excessive length of the procedure .

The existence of restrictions on the freedom of establishment

The Court first of all held that in proceedings for failure to fulfil obligations under Article 226 EC, it was incumbent upon the Commission to prove the allegation that an obligation had not been fulfilled. It was the Commission’s responsibility to place before the Court all the factual information needed to enable the Court to establish that the obligation had not been fulfilled and, in so doing, the Commission may not rely on any presumption (see, to that effect, inter alia, Case 290/87 Commission v Netherlands [1989]; and Case C‑241/08 Commission v France [2010]).

The Court held that if the Commission’s allegation that the contested legislation had indirectly discriminatory effects as regards operators from Member States other than Spain was to be regarded as sound, the Commission must first show that large retail establishments were treated differently from other retail establishments and that that difference constituted a disadvantage for large retail establishments. Secondly, the Commission must show that that difference in treatment worked to the advantage of Spanish operators, because Spanish operators favoured small and medium-sized establishments while operators from other Member States prefered large retail establishments.

The Court found that the Commission had not adduced conclusive evidence capable of establishing that the figures which it had provided in support of its argument actually confirm that its argument was sound. Nor had the Commission put forward other factors to show that the contested legislation indirectly discriminated against operators from other Member States as compared with Spanish operators.

However, the Court reiterated that Article 43 EC precluded any national measure which, even though it was applicable without discrimination on grounds of nationality, was liable to hinder or to render less attractive the exercise by EU citizens of the freedom of establishment that was guaranteed by the Treaty (see, inter alia, Case C‑299/02 Commission v Netherlands [2004], and Case C‑140/03 Commission v Greece [2005]).

The Court furthermore reiterated that the concept of ‘restriction’ for the purposes of Article 43 EC covers measures taken by a Member State which, although applicable without distinction, affected access to the market for undertakings from other Member States and thereby hindered intra-Community trade (see Case C‑442/02 CaixaBank France [2004] ; Case C‑518/06 Commission v Italy [2009] and, by analogy, Case C‑110/05 Commission v Italy [2009]).

The Court stated that national legislation which made the establishment of an undertaking from another Member State conditional upon the issue of prior authorisation fell within that category, since it was capable of hindering the exercise by that undertaking of freedom of establishment, by preventing it from freely pursuing its activities through a fixed place of business (see Joined Cases C‑570/07 and C‑571/07 Blanco Pérez and Chao Gómez [2010]).

The Court found that in the present case, the contested legislation, taken as a whole, established a system under which prior authorisation, in the form of a licence, was necessary for the opening of any large retail establishment on the territory of the Autonomous Community of Catalonia.

The Court held that that legislation restricted the localities available for new establishments and imposed limits on the sales areas for which such a licence could be obtained.

Secondly, the legislation provided for the licensing of new establishments only in so far as there would be no effect on existing small traders.

Thirdly, for the issue of licences, it laid down a number of procedural rules which were likely to have an appreciable negative effect on the number of licence applications made and/or granted.

Consequently, according to the Court, the contested legislation, taken as a whole, had the effect of hindering or of rendering less attractive the exercise by economic operators from other Member States of their activities on the territory of Catalonia through a permanent establishment and thus of affecting their establishment in the Spanish market.

Moreover, Spain accepted that that legislation entailed certain restrictions on the freedom of establishment.

The Court found that the contested legislation, taken as a whole, constituted a restriction on the freedom of establishment for the purposes of Article 43 EC.

The justifications for restrictions on the freedom of establishment

The Court reiterated that restrictions on freedom of establishment which were applicable without discrimination on grounds of nationality might be justified by overriding reasons relating to the general interest, provided that the restrictions were appropriate for securing attainment of the objective pursued and did not go beyond what was necessary for attaining that objective (Case C‑169/07 Hartlauer [2009]; Joined Cases C‑171/07 and C‑172/07 Apothekerkammer des Saarlandes and Others [2009]; and Joined Cases C‑570/07 and C‑571/07 Blanco Pérez and Chao Gómez [2010]).

The Court held that Spain had not produced sufficient evidence to explain the reasons for which the restrictions at issue were necessary to achieve the objectives pursued. According to the Court, given that lack of explanation and the significant impact of the restrictions in question on the possibility of opening large retail establishments on the territory of Catalonia, the restrictions on the freedom of establishment laid down in that regard were not justified.

The second complaint

With regard to the requirement to obtain a specific retail licence to open large retail establishments, Spain contended that the disputed provisions pursue, in general, objectives of environmental protection, town and country planning and consumer protection, by seeking, as regards that last objective, to ensure more effective competition in terms of price, quality and choice.

The Commission, however, maintained that those provisions pursue purely economic objectives in that they seek to protect small local traders.

In that regard, the Court held that that contested provisions required the application of ceilings as regards the market share and the impact on existing retail trade, above which it was impossible to open large retail establishments and/or medium-sized retail establishments.

Being purely economic, such considerations could not, according to the Court, constitute an overriding reason in the public interest.

The third complaint.

With regard to the third complaint, relating to a negative silence system, the Court reiterated that Member States could not be denied the possibility of pursuing objectives such as environmental protection, town and country planning and consumer protection through the introduction of rules which were easily managed and supervised by the competent authorities (see Case C‑137/09 Josemans [2010]).

The Court explained that the negative silence system, provided for in the context of a retail licensing procedure the objectives of which were environmental protection, town and country planning and consumer protection and the role of which was to ensure legal certainty in the event that the authority responsible for ruling on that application did not take an express decision within the period allowed, by providing that that failure to act constituted an implied decision rejecting the application, thus enabling the party which made that application to apply to the courts, was a system which the competent authorities could easily manage and supervise. Where no decision was taken in the context of its system, the administration was required to adopt a reasoned act. The Court found that, therefore, the third complaint must be rejected.

Text of Judgment

Case C‑565/08, Commission v Italy

2011-03-30T02:55:00.002+02:00

By this application, the Commission asked the Court to declare that, by maintaining provisions which obliged lawyers to comply with maximum tariffs, the Italian Republic had failed to fulfil its obligations under Articles 43 EC and 49 EC.

The profession of lawyer is regulated in Italy by Regio decreto legge n. 1578 – ordinamento delle professioni di avvocato e procuratore legale (Royal Decree-Law No 1578 governing the professions of lawyer and ‘procuratore legale’). Pursuant to Articles 52 to 55 of the Royal Decree-Law, the Consiglio nazionale forense (National Council of Lawyers; ‘the CNF’) is established under the auspices of the Minister for Justice and consists of lawyers elected by their fellow members, with one representative for each appeal court district.

Article 57 of the Royal Decree-Law provides that the criteria for determining fees and emoluments payable to lawyers and ‘procuratori’ in respect of both civil and criminal proceedings and out-of-court work are to be determined every two years by decision of the CNF. Those criteria must then be approved by the Minister for Justice after he has obtained the opinion of the Comitato interministeriale dei prezzi (Interministerial Committee on Prices) and consulted the Consiglio di Stato (Council of State). Lawyers’ charges and fees have been regulated successively by several ministerial decrees.

The Italian law transposing Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services, extended the obligation to comply with the professional tariffs in force to lawyers from other Member States who performed court and out-of-court activities in Italy.

The Commission argued that the contested provisions had the effect of discouraging lawyers established in other Member States from establishing themselves in Italy or from temporarily providing their services there and, as a result, constituted restrictions on the freedom of establishment within the meaning of Article 43 EC and the freedom to provide services within the meaning of Article 49 EC.

The Court reiterated that measures which prohibit, impede or render less attractive the exercise of such freedoms constitute such restrictions (see, inter alia, Case C‑439/99 Commission v Italy [2002]; Case C‑442/02 CaixaBank France [2004]; Case C‑451/03 Servizi Ausiliari Dottori Commercialisti [2006]; and Case C‑330/07 Jobra [2008]).

In particular, the concept of restriction covered measures taken by a Member State which, although applicable without distinction, affect access to the market for economic operators from other Member States (see, inter alia, Case C-518/06 Commission v Italy [2009).

The Court held that the contested provisions applied without distinction to all lawyers providing services on Italian territory. The Court reiterated that rules of a Member State did not constitute a restriction within the meaning of the EC Treaty solely by virtue of the fact that other Member States applied less strict, or more commercially favourable, rules to providers of similar services established in their territory (see, inter alia, Case C-518/06 Commission v Italy [2009]).

According to the Court, the existence of a restriction within the meaning of the Treaty could not therefore be inferred from the mere fact that lawyers established in Member States other than the Italian Republic must become accustomed to the rules applicable in that latter Member State for the calculation of their fees for services provided in Italy.

By contrast, such a restriction existed, in particular, if those lawyers were deprived of the opportunity of gaining access to the market of the host Member State under conditions of normal and effective competition (see Joined Cases C‑94/04 and C‑202/04 Cipolla and Others [2006]; and Case C‑384/08 Attanasio Group [2010]).

The Court found that the Commission had not, however, demonstrated that the contested provisions had such an object or effect.

Text of Judgment

Case C-359/09, Donat Cornelius Ebert

2011-02-15T21:45:00.000+01:00

This was an interesting case on the relationship between the Professional Qualification Directive and the Lawyers Directive

The European Professional Qualification Directive (Directive 89/48) established a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years’ duration. Directive 98/5, generally known as the Lawyers Directive, provides a comprehensive framework for attorneys wishing to practice in an EU Member State other than the one in which they were formally trained.

The reference had been made in the course of proceedings between Mr Ebert, a German national and lawyer registered as a “Rechtsanwalt” at the Düsseldorf Bar (Germany), and the Budapesti Ügyvédi Kamara (Budapest Bar Association, Hungary) as to the right claims by Mr Ebert to use the title “ügyvéd” (lawyer in Hungary) without being a member of the Bar Association.

The national court asked first of all whether Directive 98/5 excluded the application of Directive 89/48, as the detailed rules laid down in Art. 10(1) and (3) of Directive 98/5 were the only means for lawyers from other Member States to gain access to the title of lawyer of a host Member State, or whether the two directives complement one another by establishing, for lawyers from Member States, two ways to gain admission to the profession of lawyer in a host Member State under the professional title of the latter State.

The Court held Directive 98/5 did not deprive a lawyer, in particular where he had not yet effectively and regularly pursued a professional activity for a period of at least three years in the host Member State, of the possibility of applying to take up the profession of lawyer under the title of that Member State by relying on Directive 89/48.

The holder of a “diploma’, within the meaning of Art. 1(a) of Directive 89/48, such as Mr Ebert, enjoyed, in accordance with Art. 3, first paragraph, subparagraph (a) thereof, access to the regulated profession of lawyer in the host Member State. The Court however held that, since the profession was one whose practice required a precise knowledge of national law and an essential and constant element of which was the provision of advice and/or assistance concerning national law, Art. 3 of Directive 89/48 as amended did not prevent the host Member State from requiring, pursuant to Art. 4(1)(b) thereof, that the applicant take an aptitude test, provided that that Member State first verified whether the knowledge acquired by the applicant in the course of his professional experience was capable of covering, in whole or in part, the substantial difference referred to in the first subparagraph of that latter provision (see Case C‑118/09 Koller [2010]).

It followed that a lawyer from a Member State might gain admission to the profession of lawyer, in a host Member State where that profession was regulated, and practise under the professional title awarded by it, either under Directive 89/48 or Art. 10(1) and (3) of Directive 98/5.

Therefore, the Court found that Directives 89/48 and 98/5 complemented one another by establishing, for lawyers from Member States, two means for gaining admission to the profession of lawyer in a host Member State under the professional title of that State.

Furthermore, the national court asked, in essence, whether Directives 89/48 and 98/5 precluded national rules laying down the requirement to be a member of a body such as a Bar Association in order to practise the profession of lawyer under the title of lawyer of the host Member State.

The Court reiterated that even lawyers practising under their home-country professional title in a host Member State were subject to the same rules of professional conduct as lawyers practising under the professional title of that State (see, to that effect, Case C-225/09 Jakubowska [2010]).

The Court held that neither Directive 89/48 nor Directive 98/5 precluded the application, to any person practising the profession of lawyer in a Member State, particularly as regards the taking up or pursuit thereof, of national provisions laid down by law, regulation or administrative action justified by the general good, such as rules relating to organisation, qualifications, professional ethics, supervision and liability.

It was for the national court to ascertain whether the Budapesti Ügyvédi Kamara had applied those rules in accordance with the rules of European Union law and, in particular, the principle of non-discrimination (see, to that effect, Case C-19/92 Kraus [1993]; Case C-564/07 Commission v Austria [2009]).

The Court therefore held that neither Directive 89/48 nor Directive 98/5 precluded national rules laying down the requirement to be a member of a body such as a Bar Association in order to practise the profession of lawyer under the title of lawyer of the host Member State.

Text of Judgment

Case C-463/09, CLECE SA

2011-02-05T20:43:00.000+01:00

This reference for a preliminary ruling concerned the interpretation of Art. 1(1) of the (revised) Transfer of Undertakings Directive (Directive 2001/23).

The question had arisen in the course of legal proceedings brought by CLECE SA against Mrs Martín Valor and the Ayuntamiento de Cobisa (municipal authority of Cobisa (pictured right)) concerning Mrs Martín Valor’s dismissal.

On 27 May 2003, CLECE, a company that supplies cleaning services, entered into a contract with the Ayuntamiento de Cobisa for the cleaning of schools and premises belonging to the council.

Pursuant to that contract, Mrs Martín Valor was employed by CLECE as a cleaner from 25 March 2004. On 9 November 2007, the Ayuntamiento de Cobisa informed CLECE that it was terminating its contract with that company with effect from 31 December 2007.

On 2 January 2008, CLECE informed Mrs Martín Valor that, as of 1 January 2008, she would become a member of the staff of the Ayuntamiento de Cobisa, since that body would henceforth carry out the cleaning of the premises in question. According to CLECE, pursuant to Art. 14 of the Collective Agreement concerning workers employed in the cleaning of buildings and premises in Toledo, the Ayuntamiento de Cobisa had taken over from that company all the rights and obligations relating to the employment relationship forming the subject of the dispute in the main proceedings.

On the same day, Mrs Martín Valor presented herself for work at the premises of the Ayuntamiento de Cobisa, but was not permitted to carry out her work there. CLECE, for its part, did not offer her an alternative job.

On 10 January 2008, the Ayuntamiento de Cobisa hired five workers to clean its premises, through an employment agency.

Mrs Martín Valor then brought an action against CLECE and the Ayuntamiento de Cobisa, seeking a founding of unlawful dismissal.

The referring court asked, in essence, if Art. 1(1)(a) and (b) of Directive 2001/23 must be interpreted as meaning that that directive applied to a situation in which a municipal authority which had contracted out the cleaning of its premises to a private company decided to terminate its contract with that company and to undertake those cleaning services itself, by hiring new staff for that purpose.

The Court first of all pointed out that, pursuant to Art. 1(1)(c) of Directive 2001/23, that directive applied to public undertakings engaged in economic activities whether or not they were operating for gain.

The Court reiterated that the mere fact that the person to whom the activity was transferred was a public-law body, in this case a municipal authority, could not be a ground for excluding the existence of a transfer within the scope of that directive (see Case C-175/99 Mayeur [2000] and Case C-151/09 UGT-FSP [2010]).

Therefore, the fact that, as in the dispute in the main proceedings, one of the parties was a municipal authority did not, of itself, prevent Directive 2001/23 from applying.

Pursuant to Art. 1(1)(a) of Directive 2001/23, that directive applied to any transfer of an undertaking, business or part of an undertaking or business to another employer as a result of a legal transfer or merger.

The Court reiterated the scope of that provision could not be determined solely on the basis of a textual interpretation, primarily because of the differences between the language versions of that directive and the divergences between the laws of the Member States with regard to the concept of legal transfer (see, inter alia, Case C-458/05 Jouini and Others [2007]).

The Court therefore found that it could not automatically be excluded that Directive 2001/23 might apply in circumstances such as those of the dispute in the main proceedings, where a municipal authority unilaterally decided to terminate a contract with a private undertaking and to carry out itself the cleaning work it used to contract out to that undertaking.

Nonetheless, according to Art. 1(1)(b) of Directive 2001/23, a condition for the application of that directive was that the transfer must concern an economic entity which retained its identity after the change of employer.

In order to determine whether such an entity retained its identity, it was necessary to consider all the facts characterising the transaction in question, including in particular the type of undertaking or business concerned, whether or not its tangible asset, such as buildings and movable property, were transferred, the value of its intangible asset at the time of the transfer, whether or not the majority of its employees were taken over by the new employer, whether or not its customers were transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities were suspended. However, all those circumstances were merely single factors in the overall assessment which must be made and could not therefore be considered in isolation.

The Court held that it was of no consequence whether the majority of employees were taken on following a legal transfer negotiated between the transferor and the transferee, or whether it was the result of a unilateral decision made by the former employer to terminate the employment contracts of the transferred employees, followed by a unilateral decision made by the new employer to take on the majority of the same employees to carry out the same work.

The Court held that the mere fact that the activity carried out by CLECE and that carried out by the Ayuntamiento de Cobisa were similar, even identical, did not lead to the conclusion that an economic entity had retained its identity. An entity could not be reduced to the activity entrusted to it. Its identity emerges from several indissociable factors, such as its workforce, its management staff, the way in which its work was organised, its operating methods or indeed, where appropriate, the operational resources available to it. The Court held that, in particular, the identity of an economic entity, such as that forming the subject of the dispute in the main proceedings, which was essentially based on manpower, could not be retained if the majority of its employees were not taken on by the alleged transferee.

The Court concluded that notwithstanding any national protection rules, the mere taking over by the Ayuntamiento de Cobisa, in the dispute in the main proceedings, of the cleaning work that was previously carried out by CLECE, could not, of itself, indicate the existence of a transfer pursuant to Directive 2001/23.

Text of Judgement

Case C‑155/09, Commission v Greece

2011-02-04T23:17:00.001+01:00

An interesting case on Arts 12 EC, 18 EC, 39 EC and 43 EC regarding a tax exemption granted solely to persons residing in Greece and to persons of Greek origin not residing in Greece at the date of purchase. The Commission argued that Greece had failed to fulfil its obligations under these provisions by, first of all, granting exemption from a Greek tax on the transfer of immovable property solely to persons permanently resident in Greece but not to non-residents who intended to settle in Greece in the future, and, secondly, by granting, on certain conditions, exemption from the tax solely to Greek nationals on the purchase of a first home in Greece, expressly discriminating against persons resident abroad who were not Greek nationals.

The Court first of all reiterated its – famous wording - that although direct taxation fell within their competence, the Member States must none the less exercise that competence consistedently with EU law (see, inter alia, C-347/04, Rewe Zentralfinanz [2007] on which I wrote this post).

The Court of Justice has – since 1974 – rather consistently held that the rules regarding equal treatment forbade not only overt discrimination by reason of nationality but also all covert formed of discrimination which, by the application of other criteria of differentiation, led in fact to the same result (see, inter alia, Case 152/73 Sotgiu [1974]; or, more recently, Case C‑103/08 Gottwald [2009]).

In the present case, the national provision concerned reserved entitlement to the tax exemption solely to permanent residents in Greece. Although it applied irrespective of the nationality of the purchaser of immovable property, the requirement that a person be resident in Greece in order to be eligible for the tax exemption was, according to the Court of Justice, liable to operate particularly to the detriment of persons who were not Greek nationals – the reason being that in most cases those were the persons whose residence would be outside Greece.

According to the Court, the provision concerned therefore placed at a disadvantage persons not residing in Greece who purchased a first home with a view to settling in Greece in the future, since it did not admit that such persons were entitled to the exemption from the tax due on the purchase of a first home, whereas persons already residing in Greece who purchased a first home there might benefit from the exemption.

The Court held that, in those circumstances, the provision had a deterrent effect in relation to persons not residing in Greece who wished to purchase a first home there.

However , as is well known, national measures which are liable to hinder or made less attractive the exercise of fundamental freedoms guaranteed by the Treaty may nevertheless be allowed provided that they pursue an objective in the public interest, are appropriate for attaining that objective and do not go beyond what is necessary to attain the objective pursued (see inter alia: Case C‑345/05 Commission v Portugal [2006])

In the present case, Greece argued that the permanent residence requirement was justified inter alia by objectives consisting, on the one hand, in facilitating the purchase of a first home by individuals and preventing any property speculation and, on the other, in restricting tax evasion and preventing abuse. Furthermore, it argued that such a requirement was part of the more general context of Greece’s social policy, in relation to which the national practices pertaining to the implementation of social objectives were covered by the discretion which Member States retained in determining their social policy, with regard to the nature and extent of social protection which they applied, provided that their actions were proportionate to the objective pursued.

The Court, however, held that even supposing that such arguments might be relied on to justify an obstacle to the freedom of movement of persons, the requirement for residence on Greek territory laid down in the provision concerned did not, in any event, secure the objectives which that law purportedly pursued and, in addition, went beyond what was necessary to attain those objectives.

The Court furthermore held that there were other less restrictive methods which would allow the Greek authorities to ensure that a purchaser of immovable property complied with all the conditions for entitlement to the tax exemption by satisfying themselves that he did not own another property in Greece. They included entry on the tax register or the land register, a requirement for declarations as to tax or accommodation or the implementation of checks by the tax authorities, supplemented by statements under oath by purchasers, the latter being criminally liable for the content and accuracy of their statements.

The Court furthermore held that as regards persons who were not resident in Greece and who were not carrying out any economic activity there, the same conclusion applied, for the same reasons, to the complaint relating to Art. 18 EC (see Case C‑522/04 Commission v Belgium [2007])

As regards the Commission’s second complaint concerning the fact that the tax exemption was granted only to Greek nationals or persons of Greek origin, the Court held that the provision concerned drew a distinction based on the criterion of nationality.

The Court reiterated that Article 12 EC or Arts 39 EC or 43 EC, required that comparable situations must not be treated differently and that different situations must not be treated in the same way. Such treatment might be justified only if it was based on objective considerations independent of the nationality of the persons concerned and was proportionate to the objective being legitimately pursued (see, to that effect, Case C-164/07 Wood [2008] and Case C‑524/06 Huber [2008]).

In the present case, Greek nationals and nationals of Member States other than Greece who intended to settle in Greece were, so far as the purchase of a first residence in that Member State was concerned, in a comparable situation. Only Greek nationals or persons of Greek origin were entitled to the exemption. Thus, that different treatment, expressly and solely based on nationality, constituted direct discrimination. It followed that the exemption constituted discrimination prohibited by the first paragraph of Art. 12 EC and by Arts 39 EC and 43 EC.

The Court concluded that by granting, on certain conditions, exemption from the tax solely to Greek nationals or persons of Greek origin on the purchase of a first residence in Greece, Greece had failed to fulfil its obligations under Arts 12 EC, 39 EC and 43 EC.

Text of Judgement

C‑239/09 Seydaland Vereinigte Agrarbetriebe v BVVG

2011-02-04T21:05:00.002+01:00

This case concerned the interpretation of the Commission Communication on State aid elements in sales of land and buildings by public authorities (OJ 1997 C 209, p. 3), which inter alia provides that land and buildings are to be sold by public authorities following either a sufficiently well-publicized, open and unconditional bidding procedure or 'an independent evaluation … carried out by one or more independent asset valuers prior to the sale negotiations in order to establish the market value on the basis of generally accepted market indicators and valuation standards’.

In order to adapt the system of ownership over agricultural and forestry land of the new Länder to Germany’s legal system, Germany adopted the Indemnification and Compensation Act of 27 September 1994. That law included a programme for the acquisition of land, subsequently implemented by the Land Purchase Order, Art. 5(1) of which provided that:

‘The market value of agricultural land under Paragraph 3(7) … of the AusglLeistG shall be determined in accordance with the Land Valuation Order of 6 December 1988 … Where there are regional reference valuations of arable and pasture land, the market value shall be determined according to them. The regional reference valuations shall be published by the Federal Finance Minister in the Bundesanzeiger [Federal Gazette]. The potential purchaser or the Privatisation Authority may seek a determination of the market value which differs from those valuations by means of an expert report prepared by the competent regional valuation committee, established under Paragraph 192 of the Federal Law on Construction, where there is genuine evidence that the regional reference valuations are not a suitable basis for determining market value.’

Seydaland was a company operating in the agro‑industrial sector. BVVG was a wholly‑owned subsidiary of the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (the federal body responsible for special tasked connected with German reunification), responsible for the privatisation of agricultural and forestry land.

By contract dated 18 December 2007, BVVG sold land for agricultural used to Seydaland. The total selling price was EUR 245 907.91, of which agricultural land accounted for EUR 210 810.18.

As it considered that the price it paid was excessive, Seydaland sought reimbursement of part of the selling price of the land, claiming that, calculated on the basis of the regional reference valuations, that selling price was only EUR 146 850.24. According to Seydaland, BVVG ought to have calculated the selling price of the land at issue on the basis of the regional reference valuations, or to have referred to the valuation committee pursuant to Paragraph 5(1) of the Land Purchase Order. Seydaland also claimed that, in any event, it was not permissible to determine that selling price on the basis of the prevailing market situation, as BVVG did.

Seydaland brought an action before the Landgericht Berlin seeking reimbursement. The Landgericht Berlin asked the Court of Justice whether Art. 87 EC must be interpreted as precluding national legislation laying down calculation methods for determining the value of agricultural and forestry land, being offered for sale by public authorities in the context of a privatisation programme, such as those laid down in the second and third sentences of Paragraph 5(1) of the Land Purchase Order.

The Court first of all reiterated that the notion of aid might include not only positive benefits such as subsidies, loans or direct investment in the capital of undertakings, but also interventions which, in various forms, mitigated the charges which were normally included in the budget of an undertaking and which therefore, without being subsidies in the strict sense of the word, were of the same character and had the same effect (see, inter alia, Case C‑156/98 Germany v Commission [2000] and Joined Cases C-341/06 P and C-342/06 P Chronopost and La Poste v UFEX and Others [2008]).

The Court furthermore reiterated that in relation to the sale by public authorities of land or buildings to an undertaking or to an individual involved in an economic activity, such as agriculture or forestry, such a sale might include elements of State aid, in particular where it was not made at market value, that was to say, where it was not sold at the price which a private investor, operating in normal competitive conditions, would have been able to fix (see, to that effect, Case C‑290/07 P Commission v Scott [2010] on which I wrote this post).

The Court held that where the national law established rules for calculating the market value of land for their sale by public authorities, the application of those rules must, in order to comply with Art. 87 EC, led in all cases to a price as close as possible to the market value. As that market value was theoretical, except in the case of sales accepting the highest bid, a margin for variation on the price obtained as compared with the theoretical price must be tolerated.

As regards the provision at issue in the present case, the Court held that in cases in which the method based on the regional reference valuations did not include a mechanism for updating those valuations which would allow the selling price of the land to reflect in so far possible, the market value of that land, especially when prices were rising sharply, that method was not suitable for reflecting the actual market prices in question.

The Court held that it was therefore for the referring court to examine whether Paragraph 5(1) of the Land Purchase Order could be interpreted in a manner consistent with Art. 87 EC, in particular, in the light of other provisions of national law which might be applicable. The Court added that even if the referring court were to find that Paragraph 5(1) of the Land Purchase Order was consistent with Art. 87 EC, it could not be ruled out that, in certain instances, the method laid down in that provision of national law might lead to a result far removed from market value.

Text of Judgment

Case C-540/08, Mediaprint Zeitungs- und Zeitschriftenverlag

2010-11-11T02:25:00.002+01:00

This reference for a preliminary ruling, which concerned the Unfair Commercial Practices Directive (Directive 2005/29), was made in a dispute between two newspaper publishers, Mediaprint and Österreich’-Zeitungsverlag, concerning the lawfulness or otherwise of a sale with bonuses organised by the latter.

From 25 November to 6 December 2007, the daily newspaper “Österreich’, belonged to the defendant in the main proceedings, organised the election of the “footballer of the year” and invited the public to join in that competition, by internet or by means of a voting slip appearing in the newspaper. Participation in that competition carried the prize of dinner with the footballer chosen.

By its first question, the referring court asked, in essence, whether the Directive must be interpreted as precluding a national provision which laid down a general prohibition on sales with bonuses and was designed not only to protect consumers but also pursued other objectives, such as, for example, the safeguarding of pluralism of the press and protection of the weakest competitors.

The Grand Chamber of the Court first of all reiterated that promotional campaigns, such as those at issue in the main proceedings, which enabled consumers to take part free of charge in a lottery subject to their purchasing a certain quantity of goods or services, clearly formed part of an operator’s commercial strategy and related directly to the promotion thereof and its sales development. It followed that they constituted commercial practices within the meaning of Art. 2(d) of the Directive and, consequently, came within its scope (Case C-304/08 Plus Warenhandelsgesellschaft [2010]).

The Court furthermore held that the Unfair Commercial Practices Directive was characterised by a particularly wide scope ratione materiae which extended to any commercial practice directly connected with the promotion, sale or supply of a product to consumers.

Citing recital 6 in the preamble to the Directive, the Court stated that only national legislation relating to unfair commercial practices which harmed “only” competitors” economic interests or which related to a transaction between traders was thus excluded from that scope.

The Court held that that was clearly not the case with the national provision at issue in the main proceedings.

Since Directive 2005/29 fully harmonised the rules relating to unfair business-to-consumer commercial practices, Member States might not adopt stricter rules than those provided for in the Directive, even in order to achieve a higher level of consumer protection (Case C-304/08 Plus Warenhandelsgesellschaft [2010]).

The Court held that in accordance with Art. 5(2) of the Directive, a commercial practice was unfair if it was contrary to the requirements of professional diligence and materially distorts, or was likely materially to distort, the economic behaviour of the average consumer with regard to the product.

The Court found that Directive 2005/29 precluded a prohibition, such as that provided for by the national legislation at issue in the main proceedings, on sales with bonuses and was not only designed to protect consumers but also pursued other objectives.

By its second question, the national court asked, in the event of an affirmative answer to the first question, whether sales with bonuses must be regarded as unfair commercial practices within the meaning of Art. 5(2) of the Directive, merely on the ground that the possibility of gain represented, for at least part of the public concerned, the deciding factor which caused it to buy the main product.

The Court held that the fact that, for at least part of the public concerned, the possibility of participating in a competition represented the factor which determined the purchase of a newspaper constituted one of the factors which the national court might take into account when making such an assessment. That fact might lead the national court to consider that the commercial practice in question materially distorted or was likely materially to distort the economic behaviour of the consumer, within the meaning of Art. 5(2)(b) of the Directive.

However, according to the Court, that fact did not in any way lead in itself to the conclusion that a sale with a bonus constituted an unfair commercial practice within the meaning of the Directive. For that purpose, it must also be verified whether the practice in question was contrary to the requirements of professional diligence within the meaning of Art. 5(2)(a) of the Directive.

The Court therefore concluded that the possibility of participating in a prize competition, linked to the purchase of a newspaper, did not constitute an unfair commercial practice within the meaning of Art. 5(2) of Directive 2005/29, simply on the ground that, for at least some of the consumers concerned, that possibility of participating in a competition represented the factor which determined them to buy that newspaper.

Text of Judgment

Case C‑67/09 P, Nuova Agricast

2010-11-09T00:01:00.000+01:00

By the present appeal, Nuova Agricast and Cofra sought to have set aside the judgment in Joined Cases T‑362/05 and T-363/05 Nuova Agricast and Cofra v Commission

In the latter case, the Court of First Instance of the European Communities (now “the General Court’) dismissed their actions for damages in respect of losses allegedly suffered as a result of the adoption by the Commission of the decision of 12 July 2000 not to raise objections to an aid scheme for investment in the less-favoured regions of Italy.

Background to the dispute

In 1992, the Italian legislature provided for financial measures intended to encourage undertakings to develop certain productive activities in the less-favoured regions of the country. On 1 March 1995 and 21 May 1997, the Commission adopted two decisions not to raise objections, initially until 31 December 1996 and subsequently until 31 December 1999, to the successive aid schemes. Summary notices regarding those decisions were published in the Official Journal of the European Communities on 18 July 1995 in relation to the decision of 1 March 1995 and on 8 August 1997 in relation to the decision of 21 May 1997 (hereinafter: “the 1997 decision”’).

On 1 December 1997, the Italian Ministry of Industry, Commerce and Craft Trades published, under the 1997-1999 aid scheme, the third invitation to apply for aid in the industrial sector, relating to the first half of 1998. Undertakings having an interest had until 16 March 1998 to lodge their applications for aid.

Nuova Agricast and Cofra each lodged an application for aid for an investment project under the third invitation to apply. The total amount of planned expenditure were ITL 9 516 000 000 and ITL 8 062 000 000, respectively. Each of those amounts included expenditure incurred before the corresponding application for aid had been lodged, but after the date on which the preceding invitation to apply had been closed.

Those applications, which were held to be eligible, were included in the ranking list for the Apulia Region by two decrees of the MICA of 14 August 1998. However, because of the ranking of those applications, the appellants did not obtain the aid applied for on the ground that insufficient funds were available.

In the meantime, the fourth invitation to apply had been published. Nuova Agricast and Cofra waived their right to automatic inclusion of their applications in the list relating to the fourth invitation to apply, in order to be able to lodge fresh, reformulated applications under the next relevant invitation to apply.

However, no relevant invitation to apply was published by the Italian authorities before 31 December 1999, the date up to which the 1997-1999 aid scheme had been approved by the Commission.

On 14 July 2000, that was, after the 2000-2006 aid scheme had come into effect, the Italian authorities published the eighth invitation to apply for aid in the industrial sector. Given the conditions in force under the 2000-2006 aid scheme, the appellants’ reformulated applications, which could not benefit from the transitional provision contained in the contested decision, were held to be inadmissible and were not included in the list relating to the eighth invitation to apply.

The appellants, together with other Italian undertakings in the same situation, thereupon brought a first action before the General Court, seeking the annulment of the contested decision. By order of 15 June 2005 in Case T-98/04 SIMSA and Others v Commission, the General Court dismissed that action as inadmissible, on the ground that it had been brought after the expiry of the two-month period laid down by the fifth paragraph of Art. 230 EC.

Nuova Agricast also brought an action before the Rome District Court by which it sought compensation from the Ministero delle Attività Produttive, which had taken over the responsibilities of the Ministry of Industry, Commerce and Craft Trades, in respect of the damage allegedly suffered by Nuova Agricast because of the non-payment of the aid applied for. In those proceedings, the Tribunale ordinario di Roma, by decision of 14 June 2006, made a reference for a preliminary ruling concerning the validity of the contested decision in the light of the principle of equal treatment and the obligation to provide a statement of reasons. By its judgment in Case C-390/06, Nuova Agricast [2008], the Court held, in its reply, that examination of the question referred revealed nothing which might affect the validity of the contested decision.

By applications lodged with the Registry of the General Court on 21 September 2005, Nuova Agricast and Cofra each brought an action seeking to have the Commission ordered to pay damages in respect of the loss which they had allegedly suffered as a result of the adoption of the contested decision. The two cases were joined for the purposes of the oral procedure and the judgment.

The General Court dismissed the actions and ordered the present appellants to pay the costs. Nuova Agricast and Cofra appealed, arguing in particular that the General Court, in order to ensure compliance with the principles of legal certainty, the protection of legitimate expectations and equal treatment, was required to interpret the 1997 decision as comprising the authorisation for the launching of an invitation to submit ad hoc applications for aid after 31 December 1999, the date on which the authorisation given by that decision for the 1997-1999 aid scheme expired, exclusively for undertakings in the first and second categories, with the result that the appellants ought to have been regarded as being authorised to submit their reformulated application pursuant to the next relevant invitation to apply under the 2000-2006 aid scheme, namely the eighth invitation to apply.

Findings of the Court

The Court of Justice held that in order to determine whether those grounds of appeal were well founded, it was appropriate to consider whether the 1997 decision, when interpreted as not comprising an authorisation for launching such an invitation to submit ad hoc applications, infringed those principles, as the appellants contended. As part of that analysis, it was according to the Court necessary to consider not only the actual wording of that decision, only a summary of which was published in the Official Journal of the European Communities, but also to take account of the 1997-1999 aid scheme, as notified (see, to that effect, Case C‑138/09 Todaro Nunziatina [2010]).

The Court also stated that State aid which, in some of its detailed rules, infringed the general principles of European Union law, such as the principles of legal certainty, the protection of legitimate expectations and equal treatment, could not be declared by the Commission to be compatible with the common market.

The Court reiterated in the absence of an overriding public interest, the Commission infringed a superior rule of law if it fails to couple the repeal of a set of rules with transitional measures for the protection of the expectations which a trader might legitimately had derived from the European Union rules (see Joined Cases C‑182/03 and C‑217/03 Belgium and Forum 187 v Commission [2006]).

As for the compatibility of the 1997 decision and the 1997-1999 aid scheme with the principle of the protection of legitimate expectations, the Court reiterated that the right to rely on that principle extended to any person in a situation where a European Union institution had caused him to entertain expectations which were justified. However, a person might not plead infringement of that principle unless he had been given precise assurances by that institution. Similarly, if a prudent and alert economic operator could have foreseen the adoption of a measure likely to affect his interests, he could not plead that principle if the measure was adopted (Case C‑519/07 P Commission v Koninklijke FrieslandCampina [2009], on which I wrote this post).

The Court held that, contrary to the appellants’ submissions, a prudent and alert economic operator, who was supposed to be familiar with that decision, could have inferred from that statement that the possibility of submitting an application, through automatic inclusion or reformulation under the detailed rules of the 1997-1999 aid scheme, pursuant to an invitation to apply which was subsequent to that under which the aid application had been lodged, was limited by the duration of the authorisation granted for that scheme.

The Court reiterated that the principle of legal certainty required that European Union legislation must be certain and its application foreseeable by those subject to it (see Joined Cases C‑182/03 and C‑217/03 Belgium and Forum 187 v Commission [2006])). The Court held since the 1997 decision indicated an expiry date, it was foreseeable for the undertakings likely to avail themselves of the 1997-1999 aid scheme that, after that date, no further invitation to apply for aid could be launched under that scheme.

Text of Judgment

Case T-85/09, Kadi II

2010-10-26T16:10:00.010+02:00

Guest post by Tim Stahlberg, Lawyer at CMS Hasche Sigle in Hamburg

The General Court of the EU quashes the regulation freezing terror suspect Yassin Abdullah Kadi's funds. The judgment of 30 September 2010 – it is the sequel to the seminal Kadi decision of the Court of Justice – deals with fundamental rights and EU anti-terror sanctions based on UN Security Council resolutions.

On 20 October 2001, following a European regulation giving effect to UN Security Council resolutions, Mr Kadi's funds and other economic resources were frozen. The Sanctions Committee, a sub-organ of the Security Council, had designated Mr Kadi as being associated with Usama Bin Laden.

The General Court found clear words to describe this situation. 'Such measures are particularly draconian ... All the applicant's funds and other assets have been indefinitely frozen for nearly 10 years now and he cannot gain access to them without first obtaining an exemption from the Sanctions Committee … the UK Supreme Court took the view that it was no exaggeration to say that persons designated in this way are effectively “prisoners” of the State: their freedom of movement is severely restricted without access to their funds and the effect of the freeze on both them and their families can be devastating.' (para. 149)

Mr Kadi denies having ever supported terrorist organisations. He maintains that he has never been tried for or convicted of any criminal offence relating to terrorism anywhere in the world.

The Kadi judgment of the Court of First Instance (2005)

The legal odyssey of Mr Kadi in Europe began with the proceedings he initiated in December 2001 before the Court of First Instance (now the General Court). The applicant's case was dismissed in September 2005. Community courts must not review the lawfulness of the EU regulation at issue, the Court said, because resolutions of the UN Security Council have primacy over Community law. Except with regard to certain mandatory fundamental rights, recognised under international law as jus cogens, the regulation therefore enjoys immunity from jurisdiction.

The Kadi judgment of the Court of Justice (2008)

Mr Kadi appealed and the Court of Justice set aside the judgment of the Court of First Instance in September 2008 (see this comment on ECJBlog regarding Joined Cases C-402/05 P and C-415/05 P, C-402 Kadi and Al Barakaat). The Court of Justice asserted that 'an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the Community legal system'; 'the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty'; the European Community is an 'internal' and 'autonomous legal system'.

Thus, the Court of Justice examined the regulation and found a breach of fundamental rights. Since the Council had not communicated any evidence to the applicant, the rights of defence and the right to effective judicial review had been infringed.

With regard to the right to property the Court of Justice held that the restrictive measures might, in principle, be justified. However, without any meaningful opportunity to make his position heard, the applicant's right to property was disproportionately restricted.

In the aftermath of the judgment, the Commission sent a summary of reasons provided by the Sanctions Committee to Mr Kadi and informed the applicant that it intended to keep his assets frozen. Mr Kadi asked for evidence. The Commission did not reply and adopted a new regulation maintaining the freeze. Mr Kadi again took legal action.

The Kadi II judgment of the General Court (2010)

In the judgment of 30 September 2010, the General Court seized the occasion to criticise the Court of Justice's understanding of the relationship between the EU and the UN order (although the criticism was wrapped up as 'certain doubts voiced in legal circles'):

Even though the Court of Justice stated that it was not for the Community judicature to review the legality of a UN resolution, the fact remains that examining the legality of a Community act which merely implements a resolution necessarily amounts to a review of such a resolution, the General Court said.

The Court of Justice in fact scrutinised the UN system; and 'such judicial review is liable to encroach on the Security Council’s prerogatives.' (para. 114)

Nevertheless, the General Court grudgingly followed the path of the higher court and considered that it must, in principle, ensure a full and rigorous review of the European regulation; it may only decline to do so if sufficient judicial guarantees are already in place at UN level.

The General Court therefore read into the Court of Justice's Kadi decision an element of potential deference, reminiscent of the first 'Solange' ('so long as') jurisprudence of the German Federal Constitutional Court: So long as the UN system does not offer effective judicial protection, the EU has to do so.

And judicial protection in the UN system is still not good enough: 'In essence, the Security Council has still not deemed it appropriate to establish an independent and impartial body responsible for hearing and determining, as regards matters of law and fact, actions against individual decisions taken by the Sanctions Committee ... Moreover, the evidence which may be disclosed to the person concerned continues to be a matter entirely at the discretion of the State which proposed that he be included on the Sanctions Committee’s list and there is no mechanism to ensure that sufficient information be made available to the person concerned in order to allow him to defend himself effectively (he need not even be informed of the identity of the State which has requested his inclusion on the Sanctions Committee’s list).' (para. 128)

Having found so, it was clear that sending the applicant a summary of reasons, containing 'general, unsubstantiated, vague and unparticularised allegations,' would hardly remedy these deficiencies. (paras. 177, 157) 'The applicant's rights of defence have been “observed” only in the most formal and superficial sense,' the General Court lambasted. (para. 171) The Commission 'failed to take due account of the applicant's comments' and 'did not grant him even the most minimal access to the evidence against him.' (paras. 172 – 173) As a consequence, the right to effective judicial review and the right to property were also infringed.

The Kadi saga, however, does not end with this judgment. An appeal by the Commission is most likely. This means that it might take even more than ten years until Mr Kadi will ever know the evidence against him.

'In the scale of a human life,' the General Court said, '10 years in fact represent a substantial period of time and the question of the classification of the measures in question as preventative or punitive, protective or confiscatory, civil or criminal seems now to be an open one.' (para. 150)

The Court also cited the UN High Commissioner for Human Rights:

‘Because individual listings are currently open-ended in duration, they may result in a temporary freeze of assets becoming permanent which, in turn, may amount to criminal punishment due to the severity of the sanction. This threatens to go well beyond the purpose of the United Nations to combat the terrorist threat posed by an individual case. In addition, there is no uniformity in relation to evidentiary standards and procedures. This poses serious human rights issues, as all punitive decisions should be either judicial or subject to judicial review.’ (para. 150)

Indeed, 'smart sanctions', as the listings are called in comparison to traditional sanctions like embargoes, is a strange formula of newspeak: A decision not to trade with a particular state is one thing, freezing all financial means of an individual is quite another.

Moreover, the substantive criteria for listing a person are still unclear. The Kadi judgments of the Court of Justice and the General Court vindicate procedural rights (until today unsuccessfully), but do not elucidate what 'associated' with Usama Bin Laden or a terrorist organisation actually means.

In some respects, this parallels legal developments in the US, where judicial rights have been defended by the US Supreme Court without however clarifying the definition of an 'enemy combatant' in the war on terror (see, for instance, the Hamdi and Boumediene judgments).

Text of Judgment

C-208/09, Sayn-Wittgenstein (Opinion)

2010-10-19T10:23:00.002+02:00

Of Princesses and Castles

Guest post by Tim Stahlberg, Lawyer at CMS Hasche Sigle in Hamburg

Last Thursday, Advocate General Sharpston issued a thoughtful opinion in the preliminary ruling procedure C-208/09 Sayn-Wittgenstein, a case which raises interesting questions of private international law and European citizenship (not to be confused with case 5/88 in which Prinzessin zu Sayn-Wittgenstein seemed to profit unfairly from European milk quotas, to the detriment of a small farmer who made her land suitable for milk production, a result which the Court of Justice corrected by holding for the first time that Member States must respect fundamental rights when they implement European rules).

This case also concerns a princess – or maybe not? In fact, that is the question. Sayn-Wittgenstein is about Ms Ilonka Havel, an Austrian estate agent for castles and stately homes in Bavaria and Austria. Following her adoption (as a grown up) in Germany by Lothar Fürst von Sayn-Wittgenstein, she obtained a judgment in 1992 by a German court confirming that her name has changed to 'Ilonka Fürstin von Sayn-Wittgenstein'. She was registered under that name in Austria for fifteen years until Austrian authorities objected to the 'Fürstin von' (Princess of) element. They relied on the constitutional principle of equality between citizens and the abolition of the nobility in Austria. Ms Ilonka (Fürstin von) Sayn-Wittgenstein, however, complained that her European rights to freedom of movement had been violated.

What makes this case so peculiar is that it raises a host of puzzling issues. Was the adoption as an adult a genuine one or was it only arranged to gain an advantage in the real estate market with a name suggestive of princely ancestry? Why did the Austrian authorities accept the 'Fürstin von' element for fifteen years before deciding otherwise? And does the Austrian ban on names of nobility constitute a consistent practice or is it marred by implausible exceptions?

It is also startling that German private international law concerning a person's name in fact refers to the law of the state of the person's nationality, which in this case is Austrian law. This implies that the German court was wrong in 1992 to rubber-stamp the name 'Fürstin von Sayn-Wittgenstein' since, in principle, names of nobility are prohibited in Austria. The gears of German and Austrian law in fact mesh – only because of the incorrect, albeit valid decision of the German court does this case arise.

Advocate General Sharpston found her way through this maze. Building on the case-law of Konstantinidis, García Avello, and Grunkin and Paul, she took the view that there is an interference with the citizen's freedom of movement (now Article 21 TFEU). During the fifteen years in which the appellant in the main proceedings was registered as 'Fürstin von Sayn-Wittgenstein', she was issued a driving licence and registered a company in Germany under that name. She will have opened bank accounts and entered into ongoing contracts. 'In short, she has lived for a considerable time in a Member State under a particular name, which will have left many traces of a formal nature in both the public and the private sphere. It can hardly be described as other than a serious inconvenience to be obliged to modify all those traces because her official identity papers now give her a different name.' (para. 44)

Turning to the question of justification, the Advocate General held: 'It seems clear that the abolition of the nobility, and of all privileges and designations pertaining thereto, is a legitimate aim for a newly founded republic – such as Austria in 1919 – based on the equality of all citizens and struggling out of the ruins of an empire which had been dominated by privileged classes.' (para. 59)

She continued: 'It further seems to me to be legitimate for such a republic to wish to maintain a firm safeguard against any resurrection of the privileged castes whose abolition was the original aim, which may legitimately be enshrined as a constitutional principle.' (para. 61)

Given the complexity and ambiguity in fact and national law, the remarks on proportionality were nuanced: 'If, for example, it were established that the legal position in 1992 was such that the appellant, the German court and the Austrian authorities could justifiably believe that the appellant’s surname was to be determined by German law alone, then a rectification 15 years later might well seem disproportionate. If, on the other hand, it transpired that the appellant had acted in bad faith in seeking to be registered under a surname to which she knew she was not entitled, or had in any way misled any of the authorities in question, then rectification might seem a just and proportionate measure. In any event, the length of the period concerned and the official and professional use the appellant has made of the name ‘Fürstin von Sayn-Wittgenstein’ are necessarily factors to be weighed in the balance.' (para. 68)

One may wonder whether the proportionality assessment may be different if the case is analysed solely under the umbrella of European citizen's rights. National authorities might enjoy greater leeway than in the framework of the free movement of services and the freedom of establishment. Strangely, the Austrian court only asked for an interpretation on the rules of European citizenship, although the appellant's economic activity was clearly at stake, too. In her analysis, Advocate General Sharpston took account of the obstacles to the appellant's professional endeavours.

It remains to be seen whether the Court will follow the Advocate General and touch upon the thorny issues of justification. A strategy of avoidance would be to avert the gaze from the economic dimension of the case and submit to the Austrian court that there is no restriction to the citizen's free movement. But this would be unconvincing. Sayn-Wittgenstein concerns the freedom to provide services and the freedom of establishment which are restricted. It is a curious case, arisen out of errors and omissions, apparently.

Text of Opinion

Case C‑64/08, Engelmann

2010-09-12T14:44:00.001+02:00

This reference for a preliminary ruling, which related to the interpretation of Arts 43 EC and 49 EC had been made in the context of criminal proceedings against Mr Engelmann for failure to comply with the Austrian legislation concerning the operation of gaming establishments.

In Austria, games of chance were regulated by the Federal Law on Games of Chance (Glücksspielgesetz).

Pursuant to Paragraph 21(1) of the GSpG, the Federal Minister for Finance might grant the right to organise and operate games of chance by issuing concessions to operate gaming establishments. The number of concessions which might be granted was limited to a total of 12 and only one concession might be issued for each municipal territory.

In Germany, the 12 operating concessions for gaming establishments provided for in Paragraph 21 of the GSpG were currently held by Casinos Austria AG.

The concessions were initially granted to that company by administrative order of 18 December 1991 for a maximum period of 15 years.

Mr Engelmann, a German national, operated gaming establishments in Austria, from the beginning of 2004 to 19 July 2006 in Linz and from April 2004 to 14 April 2005 in Schärding. In those establishments, he offered his customers, inter alia, a game called “observation roulette” and the card games “Poker” and “Two Aces’. He had not sought a concession to organise games of chance, nor was he the holder of a lawful authorisation in another Member State.

By judgment of 5 March 2007, the Bezirksgericht Linz (District Court, Linz) found Mr Engelmann guilty of organising games of chance on Austrian territory in order to obtain a pecuniary advantage. It therefore ordered him to pay a fine of EUR 2 000.

In appeal, the national court asked whether Art. 43 EC prohibited two of the conditions imposed by the national legislation on holders of concessions to operate gaming establishments, namely, the obligation to adopt the legal form of a public limited company and the obligation to have their seat in national territory.

Obligation on concessionaires to adopt legal form of public limited company

The Court first of all reiterated that the condition that persons wishing to operate gaming establishments must adopted the legal form of a public limited company was a restriction on freedom of establishment within the meaning of Art. 43 EC. Such a condition prevented, inter alia, operators who were natural persons and undertakings which, in the country in which they were established, had chosen another corporate form from setting up a secondary establishment in Austria (see, to that effect, Case 107/83 Klopp [1984]; Case 143/87 Stanton and L’Étoile 1905 [1988]; and Case C‑171/02 Commission v Portugal [2004]).

However, Art. 46(1) EC allowed restrictions justified on grounds of public policy, public security or public health. A certain number of overriding reasons in the public interest which might also justify such restrictions had been recognised by the case-law of the Court, including, in particular, the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling, as well as the general needed to preserve public order.

The Court held that certain objectives might justify requiring operators to adopt a particular legal form. The obligations binding public limited companies in regard, in particular, to their internal organisation, the keeping of their accounts, the scrutiny to which they might be subject and relations with third parties could justifiy such a requirement, having regard to the specific characteristics of the gaming sector and the dangers connected with it.

According to the Court, it was for the national courts to carry out that assessment.

Obligation on persons holding concessions to operate gaming establishments to have their seat in national territory

The Court held that, in essence the obligation on persons holding concessions to operate gaming establishments to have their seat in national territory constituted a restriction on freedom of establishment within the meaning of Art. 43 EC inasmuch as it discriminated against companies which had their seat in another Member State and prevented those companies from operating gaming establishments in Austria by way of an agency, branch or subsidiary.

According to the Court, doubt was not in any way cast on that founding by the fact, raised by the Austrian Government, that the obligation in question was imposed on operators only from the time that they were selected and for the duration of the concession. The Court held that such an obligation might deter companies established in other Member States from applying, owing to the establishment and installation costs in Austria that they would have to incur if their application were successful. Nor could that system avoid a company whose seat was located in another Member State being prevented from operating gaming establishments in Austria through an agency, a branch or a subsidiary.

The Court reiterated that, to the extent that a restriction, such as that which had been found to exist in the present case, was discriminatory, it was compatible with European Union law only if it was covered by an express derogating provision, such as Art. 46 EC, namely public policy, public security or public health (Case C‑388/01 Commission v Italy [2003] and Case C‑153/08 Commission v Spain [2009]).

Moreover, such a restriction must satisfy the conditions which flow from the Court’s case-law in regard to proportionality and might be regarded as appropriate for ensuring attainment of the objective relied upon only if it genuinely reflected a concern to attain it in a consistent and systematic manner (Case C‑42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009]).

The Court reiterated that the categorical exclusion of operators whose seat was in another Member State appeared disproportionate, as it went beyond what was necessary to combat crime. There were indeed various measures available to monitor the activities and accounts of such operators (see, to that effect, Case C‑243/01 Gambelli and Others [2003]; Joined Cases C‑338/04, C‑359/04 and C‑360/04 Placanica and Others [2007]).

The Court thus concluded that Article 43 precluded national legislation under which games of chance might be operated in gaming establishments only by operators whose seat was in the territory of that Member State.

The Court added that the obligation of transparency flowing from Arts 43 EC and 49 EC and from the principle of equal treatment and the prohibition of discrimination on grounds of nationality precluded the grant without any competitive procedure of all the concessions to operate gaming establishments in the territory of a Member State.

Text of Judgment

Case C‑399/08 P, Deutsche Post

2010-09-05T06:48:00.001+02:00

Appeal in Deutsche Post state aid case dismissed

By its appeal, the Commission of the European Communities sought to have set aside the judgment of the Court of First Instance of the European Communities (now “the General Court’) in Case T‑266/02 Deutsche Post v Commission [2008], by which it annulled Commission Decision 2002/753/EC of 19 June 2002 on measures implemented by Germany for Deutsche Post AG.

By virtue of the German Postverfassungsgesetz , the German postal administration was divided into three distinct legal entities, namely Deutsche Bundespost Postdienst (‘DB Postdienst’), Deutsche Bundespost Telekom (‘DB Telekom’) and Deutsche Bundespost Postbank.

In 2001, Commission decided that Deutsche Post had infringed Art. 82 EC since it had abused its dominant position only in the market segment of parcel deliveries for mail-order businesses for goods ordered by catalogue or electronically, in particular by practising, from 1990 to 1995, a policy of selling below cost at prices lower than the actual costs connected to the type of service concerned (Decision 2001/354)

In 2002, the Commission adopted the contested decision, by which it decided that the amount of the transfers made – pursuant to Art. 37(3) of the PostVerfG – by DB Telekom then by Deutsche Telekom AG in favour of DB Postdienst then of Deutsche Post as compensation for the provision of services of general economic interest (‘SGEI’) was greater than that necessary to compensate for the net additional costs caused to the latter two undertakings by their provision of those services.

The Commission inferred therefrom that the amount corresponding to such overcompensation had been used to make good losses in the segments of the door-to-door parcel delivery sector open to competition. According to the contested decision, those losses amounted to a total of DEM 1 118.7 million and were the result of DB Postdienst’s policy of selling below cost, then that of DEUTSCHE POST during the period from 1994 to 1999, as established by Decision 2001/354.

The Commission therefore concluded that such overcompensation constituted State aid incompatible with the EC Treaty and ordered Germany to take the necessary steps to recover the aid from Deutsche Post.

In support of the present appeal, the Commission raised two grounds, the first alleging breach of Arts 87(1) EC and 86(2) EC, in that the General Court held that the method used to conclude that there was State aid was unlawful, and the second alleging breach of Art. 230 EC, on the ground that the General Court exceeded its powers by substituting its own method for calculating the additional costs associated with the provision of SGEI for that employed by the Commission.

The Court of Justice first of all reiterated that the classification as “aid” within the meaning of Art. 87(1) EC required that all the conditions set out in that provision were fulfilled (see inter alia Case C-206/06 Essent Netwerk Noord and Others [2008], on which I wrote this post).

Thus, for a national measure to be classified as State aid, first, there must be an intervention by the State or through State resources; second, the intervention must be liable to affect trade between Member States; third, it must conferred an advantage on the recipient; fourth, it must distort or threaten to distort competition (see in particular, Case C‑237/04 Enirisorse [2006]; Case C‑451/03 Servizi Ausiliari Dottori Commercialisti [2006], on which I wrote this post).

Since this ground of appeal concerned only the third of those conditions, it was, according to the Court appropriate to note that, according to settled case-law, measures which, whatever their form, were likely directly or indirectly to favour certain undertakings or were to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions were regarded as State aid.

The with regard to undertakings responsible for an SGEI, the Court stressed that where a State measure must be regarded as compensation for the services provided by the recipient undertakings in order to discharge public service obligations, so that those undertakings did not enjoye a real financial advantage and the measure thus did not have the effect of putting them in a more favourable competitive position than the undertakings competing with them, that measure was not caught by Art. 87(1) EC. However, for such compensation to escape classification as State aid in a particular case, a number of conditions must be satisfied. In particular, the compensation could not exceed what was necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations (see, Case C‑53/00 Ferring [2001] and Case C‑280/00 Altmark Trans and Regierungspräsidium Magdeburg [2003]).

The General Court concluded, correctly, that the method applied by the Commission in the contested decision was defective. The Court of Justice found that the General Court could not properly be accused of not having relied upon deficiencies in the method used by the Commission in the contested decision. Indeed, it followed from the foregoing that those deficiencies were noted by the General Court in its examination of the lawfulness of that method in the light of Art. 87(1) EC.

The Court found that the others grounds of appeal must also be rejected as unfounded. The General Court , without making any error of law, accepted Deutsche Post’s first complaint in its action for annulment, according to which the Commission had infringed Art. 87(1) EC in finding that the transfers made by DB Telekom had conferred an advantage on Deutsche Post. Nor could the General Court validly be criticised for having exceeded its powers in breach of Art. 230 EC.

Text of Judgment

Case C‑290/07 P, Commission v. Scott SA

2010-09-04T11:12:00.001+02:00

By its appeal, the Commission of the European Communities requested the Court of Justice to set aside the judgment of 29 March 2007 in Case T‑366/00 Scott v Commission [2007] . By that judgement, the General Court had annulled Art. 2 of Commission Decision 2002/14/EC of 12 July 2000 on the State aid granted by France to Scott Paper SA/Kimberly-Clark.

The state aid concerned was aid granted in the form of a preferential price for developed land. Scott Paper Company was an American company engaged in the manufacture of paper for sanitary and household used. The land in question had been sold to Sempel, for the nominal figure of FRF 1, by the City of Orléans (pictured), which had itself acquired the land earlier through three transactions: 30 hectares in 1975, 32.5 hectares in 1984 and 5.5 hectares in 1987. The City of Orléans and the departément of Le Loiret undertook to cover the costs of developing the site up to a maximum of FRF 80 million.

At the end of 1987, Sempel sold Scott a parcel of the developed land – 48 hectares out of the 68 hectares available – for the sum of FRF 31 million (approximately EUR 4.7 million), in accordance with an agreement concluded on 31 August 1987 between the City of Orléans, the departément of Le Loiret and Scott.

That sale was not notified to the Commission under the rules on State aid.

In January 1996, Scott’s shares were purchased by Kimberly-Clark Corp, which announced the closure of the manufacturing plant in January 1998. The plant’s asset – namely, the site and its improvements – were purchased by Procter & Gamble in June 1998.

Following a report by the French Cour des comptes (Court of Auditors) for 1996 which commented on the sale of the parcel of land to Scott, the Commission received a complaint. In May 1998, it decided to initiate the procedure provided for under Art. 88(2) EC, which led to the adoption of the contested decision.

The contested decision, as amended by the corrigendum of 2 March 2001, declared incompatible with the common market the State aid implemented in favour of Scott in the form of a preferential purchase price for 48 hectares of land – worth an amount assessed at FRF 39.588 million (approximately EUR 6.03 million) or, at present-day values, FRF 80.77 million (EUR 12.3 million) – and the application of the water treatment levy at a preferential rate, the value of which was to be determined by the French authorities.

Art. 2 of that decision required repayment of the amount already unlawfully made available in that way.

By the appeal, the Commission claimed that the Court should set aside the judgment under appeal and gave judgment on the matters subject to appeal, or, for any matter for which it considered that the state of the proceedings did not permit it to give judgment, to refer the case back to the General Court for a decision.

The Commission inter alia took issue with the fact that the General Court held that, for the purposes of assessing the value of the land at issue and its improvements, the Commission was wrong in choosing the costs-based method used by the French authorities and that it had thereby acted in breach of its obligation to examine the facts of the case impartially and diligently.

According to the Commission, however, given the absence, at the date of the grant of the aid in question, of any valuation of that land or of the organisation of a public call for tenders, it was justified in using such a method.

Broad discretion Commission

The Court stressed that in the area of State aid, the Commission enjoyed a broad discretion the exercise of which involved economic assessments which must be made in a European Union context, that did not imply that the European Union judicature must refrain from reviewing the Commission’s interpretation of economic data.

According to the case-law of the Court, not only must the European Union judicature, inter alia, establish whether the evidence relied on was factually accurate, reliable and consistent but also whether that evidence contained all the relevant information which must be taken into account in order to assess a complex situation and whether it was capable of substantiating the conclusions drew from it (Case C‑12/03 P Commission v Tetra Laval [2005] and Case C-346/06, Ruffert [2008], on which I wrote this post).

However, when conducting such a review, the European Union judicature must not substitute its own economic assessment for that of the Commission (Case C‑525/04 P Spain v Lenzing [2007]).

The review by the European Union judicature of the complex economic assessments made by the Commission was necessarily limited and confined to verifying whether the rules on procedure and on the statement of reasons had been complied with, whether the facts had been accurately stated and whether there had been any manifest error of assessment or misuse of powers (see Joined Cases C‑501/06 P, C‑513/06 P, C‑515/06 P and C‑519/06 P GlaxoSmithKline Services and Others v Commission and Others [2009]).

With regard to the choice of the costs-based method and the assessment of the market value of the undeveloped land at issue, the Court stressed that the use of an independent expert was a method by which an assessment of the market value of land could be obtained.

By applying that method, the Commission arrived at a market value for the undeveloped land at issue – FRF 10.9 million – which roughly tallied with the information produced by the French authorities during the administrative procedure. The Commission had no compelling reason to doubt the reliability of that information. According to the Court, it was entirely legitimate for the Commission to prefer to rely on the information provided by the French authorities.

With regard to the assessment of the market value of the improvements carried out on the land at issue, the Court held that the Commission could not be criticized for not requesting clarification from Scott on that point, in so far as a link between the extension of the surface area of the factory and the cost overrun could readily be inferred.

The Court concluded that in so far as the General Court did not demonstrate that the Commission had made a manifest error of assessment in the determination of the market value of the land at issue and its improvements, it had exceeded its jurisdiction by holding that, on the facts, the Commission had, in its examination of the market value of the land at issue, acted in breach of its duty to exercise due diligence.

The Court reiterated that the Commission was required, in the interests of sound administration of the fundamental rules of the EC Treaty relating to State aid, to conduct a diligent and impartial examination of the contested measures, so that it had at its disposal, when adopting the final decision, the most complete and reliable information possible for that purpose (Case C‑367/95 P Commission v Sytraval and Brink’s France [1998]).

According to the Court, it should also be borne in mind that the lawfulness of a decision concerning State aid fell to be assessed by the European Union judicature in the light of the information available to the Commission at the time when the decision was adopted (Case C‑390/06 Nuova Agricast [2008]).

The Court found that the General Court had erred in law in holding that, on the basis of the evidence available to it when it adopted the contested decision, the Commission had acted in breach of its duty to exercise due diligence for the simple reason that the Commission had not requested either Scott or the French authorities to produce the valuations of the land at issue to which they referred merely in order to call in question the valuation used by the Commission and that it had not reopened the investigation procedure.

Text of Judgment

Case C-139/07 P, Technische Glaswerke Ilmenau GmbH

2010-09-03T06:39:00.011+02:00

By letter of 27 March 2002, the Commission rejected that application for access stating, in particular, that the documents sought were covered by the exception in Art. 4(2) of Regulation 1049/2001. The Commission also stated that the documents concerning TGI were documents forming part of the current formal investigation procedure C 44/2001.

On 2 October 2002, at the conclusion of the second formal investigation procedure under reference C 44/2001, the Commission adopted Decision C(2002) 2147 final concluding, in particular, that the bank loan granted to TGI constituted State aid incompatible with the common market. TGI challenged that decision by bringing an action for annulment before the General Court on 17 December 2002 (Case T-378/02), that case having been since removed from the register by an order of 16 might 2007.

By application lodged at the Registry of the General Court on 8 August 2002, TGI brought an action for the annulment of the contested decision, save in so far as the latter refused access to documents directly connected with the procedure currently in progress concerning the review of State aid concerning Schott Glas.

The General Court concluded that the complaint based on the lack of a concrete, individual examination of the documents referred to in the application for access had to be upheld and that the Commission’s pure and simple refusal of access to the applicant was, consequently, vitiated by an error of law. The General Court therefore ruled that the Commission had infringed Art. 4(2) of Regulation 1049/2001 and that the contested decision, in so far as it refused access to documents relating to procedures for reviewing State aid granted to TGI, therefore had to be annulled.

In support of its appeal, the Commission claimed misinterpretation of Art. 4(2) of Regulation 1049/2001; second, disregard of the intention of the legislature; third, disregard of the wording of Art. 4 of that regulation; fourth, infringement of Art. 255 EC having regard to the provisions and the purpose of the said regulation; and, fifth, the existence of other errors of law in the judgment under appeal.

The Court held that the Commission had refused, precisely, to communicate to TGI documents relating to procedures for reviewing State aid which had been granted to it, invoking the exception to the right of access laid down in Art. 4(2), third indent, of Regulation 1049/2001, based on protection of the purposes of inspections, investigations and audits. As was apparent from the judgment under appeal, those documents, such as covered by the application for access brought by TGI on the basis of that regulation, did indeed fell within an activity of “investigation’, within the meaning of that provision.

The Court held that it was true that, in order to justify refusal of access to a document the disclosure of which had been requested, it was not sufficient, in principle, for that document to fell within an activity mentioned in Art. 4(2) of Regulation 1049/2001. The institution concerned must also supply explanations as to how access to that document could specifically and effectively undermined the interest protected by an exception laid down in that Article

However, the Court reiterated that it was, in principle, open to the Community institution to based its decisions in that regard on general presumptions which applied to certain categories of documents, as considerations of a generally similar kind were likely to apply to requests for disclosure relating to documents of the same nature (Joined Cases C-39/05 P and C-52/05 P Sweden and Turco v Council [2008]).

The Court held that the procedure for reviewing State aid was, in view of its general scheme, a procedure initiated in respect of the Member State responsible for granting the aid, and the Commission could not, without infringing the rights of the defence, use in its final decision information on which that Member State was not afforded an opportunity to comment (Joined Cases C‑74/00 P and C‑75/00 P Falck and Acciaierie di Bolzano v Commission [2002]).

The Court held that the interested parties, except for the Member State responsible for granting the aid, did not have a right under the procedure for reviewing State aid to consult the documents on the Commission’s administrative file.

It followed that, for the purposes of interpreting the exception laid down in Art. 4(2), third indent, of Regulation 1049/2001, the General Court should, in the judgment under appeal, had taken account of the fact that interested parties other than the Member State concerned in the procedures for reviewing State aid did not have the right to consult the documents in the Commission’s administrative file, and, therefore, had acknowledged the existence of a general presumption that disclosure of documents in the administrative file in principle undermined protection of the objectives of investigation activities.

Consequently, according to the Court, the judgment under appeal must be set aside in so far as it annulled the contested decision, without there being any need to examine the second part of that plea or the Commission’s other pleas in support of its appeal.

Text of Judgment

Case C-28/08 P, Bavarian Lager

2010-09-03T05:51:00.004+02:00

Commission rightfully refusing Bavaria Lager access to certain EU documents

(Mensing & Stetcher 1879)

By this appeal, the Commission of the European Communities sought the annulment of the judgment of the Court of First Instance of the European Communities (now “the General Court’) of 8 November 2007 in Case T-194/04 Bavarian Lager v Commission [2007], on which I wrote this post,

By that judgment, the General Court had annulled the Commission’s decision of 18 March 2004, rejecting the request by Bavarian Lager for access to the full minutes of a meeting of 11 October 1996, held in the context of a procedure for failure to fulfil obligations

According to its Preamble, the purpose of Regulation 1049/2010 was to give the fullest possible effect to the right of public access to documents and to lay down the general principles and limits on such access. In principle, all documents of the institutions should be accessible to the public.

According to Art. 2 of Regulation 1049/2001, “any citizen of the Union, and any natural or legal person residing or having its registered office in a Member State, had a right of access to documents of the institutions, subject to the principles, conditions and limits defined in this Regulation.”

However, certain public and private interests could be protected by way of exceptions. In particular, institutions were entitled to refuse access to a document where disclosure would inter alia undermined the protection of “privacy and the integrity of the individual, in particular in accordance with Community legislation regarding the protection of personal data” or “ the purpose of inspections, investigations and audits”. This was provided there was no overriding public interest in disclosure.

Bavarian Lager was established in 1992 for the importation of German beer for public House and bars in the United Kingdom, situated primarily in the North of England.

However, Bavarian Lager was not able to sell its product, since a large number of publicans in the United Kingdom were tied by exclusive purchasing contracts obliging them to obtain their supplies of beer from certain breweries.

Under the Supply of Beer (Tied Estate) Order 1989 SI 1989/2390, British breweries holding rights in more than 2 000 pubs were required to allow the managers of those establishments the possibility of buying a beer from another brewery, on condition that it was conditioned in a cask and had an alcohol content exceeding 1.2% by volume. That provision was commonly known as the “Guest Beer Provision” (“the GBP”).

However, most beers produced outside the United Kingdom could not be regarded as “cask-conditioned beers”, within the meaning of the GBP, and thus did not fall within its scope.

Considering that the GBP constituted a measure having equivalent effect to a quantitative restriction on imports, and was thus incompatible with Art. 30 of the EC Treaty (now, after amendment, Art. 28 EC), Bavarian Lager lodged a complaint with the Commission by letter of 3 April 1993, registered under reference P/93/4490/UK.

Following its investigation, the Commission decided, on 12 April 1995, to institute proceedings against the United Great Britain and Northern Ireland under Art. 169 of the EC Treaty (now Art. 226 EC).

On 11 October 1996, the aforementioned meeting was held, which was attended by officers of the Directorate-General (DG) for the Internal Market and Financial Services, officials of the United Kingdom Government Department of Trade and Industry and representatives of the Confederation des Brasseurs du Marche Commun. Bavarian Lager had requested the right to attend the meeting [of 11 October 1996] in a letter dated 27 August 1996, but the Commission refused to grant permission to attend.

On 4 May 1998, Bavarian Lager addressed a request to the Commission under the Code of Conduct for access to all of the submissions made under file reference P/93/4490/UK by 11 named companies and organisations and by three defined categories of person or company. The Commission refused the initial application on the ground that the [said] Code of Conduct applied only to documents of which the Commission was the author. The confirmatory application was rejected on the grounds that the Commission was not the author of the document in question and that any application had to be sent to the author.

On 8 July 1998, Bavarian Lager complained to the European Ombudsman under reference 713/98/IJH, stating, by letter dated 2 February 1999, that it wished to obtain the names of the delegates of the CBMC who had attended the meeting on 11 October 1996 and the names of the companies and any persons who fell into one of the 14 categories identified in the original request for access to documents containing the communications to the Commission under file reference P/93/4490/UK.

By e-mail of 5 December 2003, Bavarian Lager sent a request to the Commission for access to the documents referred to above, based on Regulation 1049/2001.

The Commission replied to that request by letter of 27 January 2004 stating that certain documents relating to the meeting of 11 October 1996 could be disclosed, but adding that five names had been blanked out from the minutes of the meeting of 11 October 1996, following two express refusals by persons to consent to the disclosure of their identity and the Commission’s failure to contact the remaining three attendees.

By the contested decision, the Commission rejected the confirmatory application of Bavarian Lager. It confirmed that Regulation 45/2001 applied to the request for disclosure of the names of the other participants. As Bavarian Lager had not established an express and legitimate purpose or needed for such a disclosure, the conditions set out by Art. 8 of that regulation had not been met and the exception provided for in Art. 4(1)(b) of Regulation 1049/2001 applied. It added that, even if the rules on the protection of personal data did not apply, it would nevertheless had had to refuse to disclose the other names under Art. 4(2), third indent, of Regulation 1049/2001 so as not to compromise its ability to conduct inquiries.”

By the judgment under appeal, the General Court annulled the contested decision.

Regarding access to the full minutes of the meeting of 11 October 1996, the General Court took the view, that Bavarian Lager’s request was based on Regulation 1049/2001.

Relationship between Regulation 45/2001 and Regulation 1049/2001

The Court of Justice of the European Union stressed that Regulation 45/2001 and 1049/2001 were adopted on dates very close to each other. They did not contain any provisions granting one regulation primacy over the other. In principle, their full application should be ensured.

The Court held that the only express link between those two regulations was established in Art. 4(1)(b) of Regulation 1049/2001, which provided for an exception to access to a document where disclosure would undermined the protection of privacy and the integrity of the individual, in particular in accordance with Community legislation regarding the protection of personal data.

Where a request based on Regulation 1049/2001 sought to obtain access to documents including personal data, the provisions of Regulation 45/2001 become applicable in their entirety, including Arts 8 and 18 thereof by not taking account of the reference in Art. 4(1)(b) of Regulation 1049/2001 to the legislation of the Union concerning the protection of personal data and thus to Regulation 45/2001, the General Court dismissed at the outset, in paragraph 107 of the judgment under appeal, the application of Art. 8(b) of Regulation 45/2001, and, in paragraph 109 of the judgment under appeal, the application of Art. 18 of Regulation 45/2001. And yet those Articles constituted essential provisions of the system of protection established by Regulation 45/2001.

Consequently, in the view of the Court of Justice, the particular and restrictive interpretation which the General Court gave to Art. 4(1)(b) of Regulation 1049/2001 did not correspond to the equilibrium which the Union legislature intended to establish between the two regulations in question.

The Court of Justice held that the General Court was right to conclude that the list of participants in the meeting of 11 October 1996 appearing in the minutes of that meeting thus contained personal data for the purposes of Art. 2(a) of Regulation 45/2001, since the persons who participated in that meeting could be identified.

The Court held that, therefore, the decisive question was whether the Commission could grant access to the document including the five names of the participants in the meeting of 11 October 1996, in compliance with Art. 4(1)(b) of Regulation 1049/2001 and Regulation 45/2001.

First of all, it should be noted that Bavarian Lager was able to have access to all the information concerning the meeting of 11 October 1996, including the opinions which those contributing expressed in their professional capacity.

The Commission, at the time of the first request by Bavarian Lager dated 4 May 1998, sought the agreement of the participants at the meeting of 11 October 1996 to the disclosure of their names. As the Commission indicated in the decision of 18 March 2003, that procedure was in compliance with the requirements of Directive 95/46, in force at that time.

Following a new request by Bavarian Lager to the Commission, dated 5 December 2003, seeking communication of the full minutes of the meeting of 11 October 1996, the Commission informed Bavarian Lager on 27 January 2004 that, having regard to the entry into force of Regulation 45/2001 and 1049/2001, it was henceforward obliged to treat that request under the specific regime of those regulations, particularly Art. 8(b) of Regulation 45/2001.

Whether under the former system of Directive 95/46 or under the system of Regulation 45/2001 and 1049/2001, the Commission was right to verify whether the data subjected had given their consent to the disclosure of personal data concerning them.

The Court of Justice found that, by releasing the expurgated version of the minutes of the meeting of 11 October 1996 with the names of five participants removed therefrom, the Commission did not infringe the provisions of Regulation 1049/2001 and sufficiently complied with its duty of openness.

By requiring that, in respect of the five persons who had not given their express consent, Bavarian Lager establish the necessity for those personal data to be transferred, the Commission complied with the provisions of Art. 8(b) of Regulation 45/2001.

As Bavarian Lager had not provided any express and legitimate justification or any convincing argument in order to demonstrate the necessity for those personal data to be transferred, the Commission had not been able to weigh up the various interests of the parties concerned. Nor was it able to verify whether there was any reason to assume that the data subjected” legitimate interests might be prejudiced, as required by Art. 8(b) of Regulation 45/2001.

It followed from the above that the Commission was right to reject the application for access to the full minutes of the meeting of 11 October 1996.

Therefore, the General Court erred in law in concluding that in this case the Commission had wrongly applied Art. 4(1)(b) of Regulation 1049/2001 and held that Bavarian Lager had not established either an express and legitimate purpose in obtaining, or any needed to obtain, the document at issue in its entirety.

As the contested decision did not infringe the provisions of Regulation 45/2001 and 1049/2001, the action for annulment by Bavarian Lager against that decision must therefore be dismissed.

Text of Judgment