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Laval un Partneri Ltd- Case [341/05]

August 5th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of [of 18 December 2007] of the Court the Grand Chamber in Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 

 

Referred by [Arbetsdomstolen – Sweden]

 

FACTS:

The Swedish Law on the posting of workers sets out the terms and conditions of employment falling within the matters listed in Directive 96/71, save for minimum rates of pay. The Law is silent on remuneration, the determination of which in Sweden is traditionally entrusted to labour and management by way of collective negotiations. Under Swedish law, trade unions are entitled to have recourse to collective action, under certain conditions, which is aimed at forcing any employer both to enter into negotiations on pay and to sign a collective agreement.

In May 2004, Laval un Partneri Ltd, a Latvian company, posted workers from Latvia to work on building sites in Sweden. The work was carried out by a subsidiary, L&P Baltic Bygg AB, and included the renovation and extension of school premises in the town of Vaxholm.

In June 2004, Laval and Baltic Bygg, on the one hand, and the Swedish building and public works trade union, Svenska Byggnadsarbetareförbundet, on the other, began negotiations with a view to determining the rates of pay for the posted workers and to Laval’s signing the collective agreement for the building sector. However, the parties were unable to reach an agreement. In September and October, Laval signed collective agreements with the Latvian building sector trade union, to which 65% of the posters workers were affiliated.

On 2 November 2004, Byggnadsarbetareförbundet began collective action in the form of a blockade (‘blockad’) of all Laval’s sites in Sweden. The Swedish electricians’ trade union joined in with a sympathy action, the effect of which was to prevent electricians from providing services to Laval. None of the members of those trade unions were employed by Laval. After work had stopped for a certain period, Baltic Bygg was declared bankrupt and the posted workers returned to Latvia.

 

ISSUES/QUESTIONS:

Interpretation of Articles 12 EC and 49 EC (now Articles 18 and 56 TFEU) and Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services/Is it compatible with rules of the EC Treaty on the freedom to provide services and the prohibition of any discrimination on the grounds of nationality and with the provisions of Directive 96/71/EC, for trade unions to attempt, by means of collective action in the form of a blockade, to force a foreign provider of services to sign a collective agreement in the host country in respect of terms and conditions of employment, such as the collective agreement for the building sector, if the situation in the host country is characterised by the fact that the legislation to implement that directive has no express provision concerning the application of terms and conditions of employment in collective agreements? Is it contrary to EU law the existence of a prohibition contained in national rules against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended?

 

ANSWER of the COURT:

Article 56 TFEU and Article 3 of Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services are to be interpreted as precluding a trade union, in a Member State in which the terms and conditions of employment covering the matters referred to in Article 3(1), first subparagraph, (a) to (g) of that directive are contained in legislative provisions, save for minimum rates of pay, from attempting, by means of collective action in the form of a blockade (‘blockad’) of sites such as that at issue in the main proceedings, to force a provider of services established in another Member State to enter into negotiations with it on the rates of pay for posted workers and to sign a collective agreement the terms of which lay down, as regards some of those matters, more favourable conditions than those resulting from the relevant legislative provisions, while other terms relate to matters not referred to in Article 3 of the directive.

Where there is a prohibition in a Member State against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended, Articles 49 EC and 50 EC preclude that prohibition from being subject to the condition that such action must relate to terms and conditions of employment to which the national law applies directly.

 

REASONING of the Court

 

The Court points out, first of all, that Directive 96/71 does not allow the host Member State to make the provision of services in its territory conditional on the observance of terms and conditions of employment which go beyond the mandatory rules for minimum protection. As regards the matters referred to in Directive 96/71, the latter expressly lays down the degree of protection which undertakings established in other Member States must guarantee, in the host Member State, to the workers posted to the territory of the latter.

 

The Court then accepts that the right to take collective action must be recognised as a fundamental right which forms an integral part of the general principles of Community law the observance of which the Court ensures, but states that the exercise of that right may be subject to certain restrictions. The fundamental nature of the right to take collective action is not such as to render Community law inapplicable to such action, taken against an undertaking established in another Member State which posts workers in the framework of the transnational provision of services.

 

In this case, the Court points out that the right of trade unions of a Member State to take collective action by which undertakings established in other Member States may be forced into negotiations with the trade unions of unspecified duration in order to ascertain minimum wage rates and to sign a collective agreement – the terms of which go beyond the minimum protection guaranteed by Directive 96/71 – is liable to make it less attractive, or more difficult, for such undertakings to carry out construction work in Sweden, and therefore constitutes a restriction on the freedom to provide services.

 

A restriction on the freedom to provide services may be justified only if it pursues a legitimate objective compatible with the Treaty and is justified by overriding reasons of public interest; if that is the case, it must be suitable for securing the attainment of the objective which it pursues and not go beyond what is necessary in order to attain it.

 

In that regard, the Court points out that the right to take collective action for the protection of the workers of the host State against possible social dumping may constitute an overriding reason of public interest[1]. In that context, the blockading of sites by a trade union of the host Member State which is aimed at ensuring that workers posted in the framework of a transnational provision of services have their terms and conditions of employment fixed at a certain level, falls within the objective of protecting workers.

 

However, as regards the specific obligations, linked to signature of the collective agreement for the building sector which the trade unions seek to impose on undertakings established in other Member States by way of collective action, the obstacle which that action forms cannot be justified with regard to such an objective. With regard to workers posted in the framework of a transnational provision of services, their employer is required, as a result of the coordination achieved by Directive 96/71, to observe a nucleus of mandatory rules for minimum protection in the host Member State.

 

As regards the negotiations on pay which the trade unions seek to impose, by way of collective action, on undertakings established in another Member State which post workers temporarily to their territory, the Court emphasises that Community law does not prohibit Member States from requiring such undertakings to comply with their rules on minimum pay by appropriate means.

 

However, collective action cannot be justified with regard to the public interest objective of protecting workers where the negotiations on pay which that action seeks to require an undertaking established in another Member State to enter into form part of a national context characterised by a lack of provisions, of any kind, which are sufficiently precise and accessible that they do not render it impossible or excessively difficult in practice for such an undertaking to determine the obligations with which it is required to comply as regards minimum pay.

 

Finally, the Court states that that national rules which fail to take into account, irrespective of their content, collective agreements to which undertakings that post workers to Sweden are already bound in the Member State in which they are established, give rise to discrimination against such undertakings, in so far as under those national rules they are treated in the same way as national undertakings which have not concluded a collective agreement.

 

It follows from the Treaty that such discriminatory rules may be justified only on grounds of public policy, public security or public health.

 

The application of those rules to foreign undertakings which are bound by collective agreements to which Swedish law does not directly apply is intended, first, to allow trade unions to take action to ensure that all employers active on the Swedish labour market pay wages and apply other terms and conditions of employment in line with those usual in Sweden, and secondly, to create a climate of fair competition, on an equal basis, between Swedish employers and entrepreneurs from other Member States.

 

Since none of the considerations constitute grounds of public policy, public security or public health, such discrimination cannot be justified[2].

 

Comments:

 

The Court finding regarding the discrimination issue raised by the applicant in the main proceedings is interesting from the standpoint of which it was made a difference between fundamental rights and fundamental freedoms.

Trade unions rely on the legitimate aim of the protection of workers with regard to the blockade to force Laval to sign the collective agreement containing terms and conditions not listed in Article 3(1) a to g and terms and conditions that are more favourable than the legislative minimum applicable in Sweden. The Court applies the principle of proportionality and states that in principle the action is suitable to achieve the aim of worker protection. However, in this case the terms and conditions go beyond the minimum required in Sweden. Clearly worker protection cannot serve as a justification ground when forcing the signing of a collective agreement which goes beyond the minimum level of protection.

 

Regarding the imposing of negotiations on wages through collective action the Court draws the same conclusion. Trade unions rely on the protection of workers and the protection of the fundamental right to collective action as justifying legitimate interests. However, these aims cannot justify collective action imposing wage negotiations when there is no national context which can determine the minimum rate of pay that needs to be observed. In other words, as the minimum wage is determined on a case by case basis it is not possible to determine the minimum which needs to be observed.

 

The Court assessed that the issue of discrimination shall be interpreted only in the light of Article 56 TFEU, ex Article 49 TEC, given the fact that Article 18 TFEU, ex Article 12 TEC contains no specific expression and effect of the principle of non-discrimination, while the latter does.

 

As the second question submitted in Laval revolves entirely on possible justification I will deal with it briefly here. As the national rules are a form of direct discrimination it can only be justified by relying on Article 46 EC, now Article 52 TFEU, the grounds of public policy, public security and public health. As the aims of the Swedish rules are to ensure that wages and other terms and conditions of employment are applied equally in Sweden and to create a climate of fair competition, it cannot be justified by Article 46 EC.

 

The Court reiterated that the principle of non-discrimination derives from the principle of equal treatment, which requires that comparable situations must be treated the same way and that different situations must not be treated in the same way[3]. As a consequence, given that the same national rules were applied to different situations, i.e. the Swedish nationals that did not conclude a collective agreement and foreigners that concluded such an agreement in the State in which they are established, the Court found this to be direct discrimination, that cannot be justified under Article 52 TFEU, ex Article 49 TEC.



[1]Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 ,paragraph 103

[2] Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, SvenskaByggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I 11767,paragraph 108

 

[3] Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, SvenskaByggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 ,paragraph 115

 

Grzelczyk- Case [C-184/99]

August 5th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 13 20 September 2001 of the Court in Case [C-184/99], Rudy Grzelczyk v Centre public d’aide sociale d’Ottignies-Louvain-la-Neuve [2001] ECR I-06193

 

 

Referred by [Tribunal du travail de Nivelles – Belgium]

 

FACTS:

 

Mr. Grzelczyk, a French national, undertook a course of studies in physical education at the Catholic University of Louvain-la-Neuve. During the first three years of his course, he defrayed his own costs of maintenance, accommodation and studies by taking on various minor jobs and by obtaining credit facilities. The fourth year of his studies being the most demanding, Mr Grzelczyk applied to the Public Social Assistance Centre for Ottignies-Louvain-la-Neuve (“the CPAS”) for payment of the minimum subsistence allowance, or “minimex”, for the year 1998/1999. He was initially granted the allowance.

Mr. Grzelczyk’s entitlement to the minimex was then withdrawn with effect from 1 January 1999, the competent minister basing his decision to stop payment on the fact that Mr Grzelczyk was a student.

When the benefit was introduced in 1974, entitlement was reserved to adults of Belgian nationality, residing in Belgium and not in possession of adequate resources. In 1987 entitlement was extended to include, amongst others, persons to whom the 1968 Community regulation on the freedom of movement of workers within the Community applied.

Mr. Grzelczyk brought an action before the competent Belgian court challenging the CPAS’s decision of 29 January 1999 to stop payment of the minimex.

 

ISSUES/QUESTIONS:

 

 Does the principle of non-discrimination on grounds of nationality and the provisions of the EU citizenship preclude entitlement to a non-contributory social benefit to be made conditional, in the case of nationals of other Member States (in this case France), upon their being regarded as workers, given that that condition did not apply to nationals of the host Member State (in this case Belgium)?

 

ANSWER of the COURT:

 

 The principle of non-discrimination and the provisions of EU citizenship, as enshrined by the Treaty, preclude entitlement to a non-contributory social benefit, such as the minimex, from being made conditional, in the case of nationals of Member States other than the host State where they are legally resident, on their falling within the scope of Regulation No 1612/68 of the Council of 15 October 1968 on the freedom of movement for workers within the Community when no such condition applies to nationals of the host Member State.

 

REASONING of the Court

The Court of Justice first of all held that the minimex was indeed a social benefit and that a Belgian student in the same position as Mr Grzelczyk would have satisfied the conditions for obtaining it. The Court thus found that Mr Grzelczyk had suffered discrimination solely on the ground of his nationality, which, within the sphere of application of the EC Treaty, was prohibited.

The Court of Justice held that among the situations falling within the scope of the Treaty are those involving the exercise of fundamental rights guaranteed by the Treaty and, in particular, situations involving the exercise of the right to move and reside freely in other Member States, which is guaranteed by the Treaty provisions concerning European citizenship. The status of citizen of the European Union is destined to be the fundamental status of nationals of all the Member States, conferring on them, in the fields covered by Community law, equality under the law, irrespective of their nationality.

Since the introduction of European Union citizenship by the Treaty on European Union, which entered into force on 1 November 1993, nothing prevents a citizen of the Union who pursued university studies in a Member State other than the State of which he was a national from relying on the prohibition of all discrimination on grounds of nationality.

The Court pointed out that the Member States may nevertheless require students wishing to benefit from the right of residence on their territory to declare that they have, in accordance with a Community directive, sufficient resources for themselves and, in relevant cases, for their family in order to avoid becoming a burden on the social assistance scheme of the host Member State.

The Court stated, however, that any assessment must be made at the time when the relevant declaration is made, adding that a student’s financial position may change with the passage of time for reasons beyond his control. The provisions of the Community directive do not therefore bar students from subsequently having recourse to the social security system of a host Member State.

That being so, the Court of Justice held that the provisions concerning non-discrimination and European citizenship preclude entitlement to non-contributory social benefits from being made conditional on a criterion which need not be satisfied by nationals of the host Member State in question.

The Court refused the request of the Belgian Government to limit the temporal effects of the judgment. The provisions concerning citizenship of the Union were applicable from the entry into force of the Treaty on European Union.

Comments:

 

This was a cornerstone Ruling which set up the basis for the following Judgments in the area of EU discrimination and citizenship. In this respect, following the introduction of the EU citizenship in 1993, Article 17 and 18 TEC, the Court assessed the case brought before it under these provisions, and in the light of the principle of non-discrimination, even if the Belgian and UK Government argued that the case falls outside the scope rationae materiae of the Treaty. The assessment developed under the principle of equal treatment, where direct discrimination is prohibited. It was found to be direct discrimination, as the sole criteria that led to a difference in treatment was the nationality one. In this regard, the Court compared similar situations, i.e. two students, one French and one Belgian, and found that under Belgian law, the two categories of nationals are treated differently, where the latter is clearly disadvantaged.

Land Hessen- Case [C-360/00]

August 5th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 6 June 2002 of the Court the Fifth Chamber in Case [C-360/00], Land Hessen v G. Ricordi & Co. Bühnen- und Musikverlag GmbH [2002] ECR I-05089

 

Referred by [Bundesgerichtshof – Germany]

 

FACTS:

 

 The question referred  was raised in proceedings between the Land Hessen and G. Ricordi & Co. Bühnen- und Musikverlag GmbH (hereinafter Ricordi), a firm publishing musical and dramatic works, concerning the right to have the opera La Bohème by the Italian composer Giacomo Puccini performed in the 1993/1994 and 1994/1995 seasons.

 

At the material time, artistic and intellectual works were protected in Germany under the 1965 version of the Gezetz über Urheberrecht und verwandte Schutzrechte (German rules). That legislation distinguished between the protection of the works of German nationals and that of the works of foreign authors. Whilst the former enjoyed protection for all their works, whether published or not and regardless of where they were first published, the latter were entitled to protection only for works published in Germany for the first time or within 30 days of their being first published.In other cases, foreign authors enjoyed the protection afforded to their rights by international treaties. The copyright protection granted by German legislation expires 70 years after the 1 January following the author’s death.

Under Italian law the term of copyright protection is 56 years from the time of the author’s death.

The main international agreement governing copyright protection is the Berne Convention for the Protection of Literary and Artistic Works (Paris Act of 24 July 1971) which applies to the main proceedings in the version as amended on 28 September 1979 (the Berne Convention). Provisions related to copyright stipulate that the term of protection granted thereby is to be the life of the author and 50 years after his death. Article 7(5) provides that the 50-year term is to be deemed to begin on 1 January of the year following the death. Under Article 7(6), the contracting parties may, however, grant a longer term of protection. This Convention institutes a scheme known as comparison of the terms of protection. Under that provision, the term of protection is, in any case, to be governed by the legislation of the country where protection is claimed. However, unless the legislation of that country otherwise provides, which German legislation has not, the term is not to exceed the term fixed in the country of origin of the work.

Ricordi holds the rights of performance in the opera La Bohème by Puccini, who died on 29 November 1924. The Land Hessen operates the Staatstheater (State theatre) in Wiesbaden (Germany). During the 1993/1994 and 1994/1995 seasons, the Staatstheater in Wiesbaden staged a number of performances of that opera without Ricordi’s consent. Ricordi argued before a Landgericht (Regional Court, Germany) that, in the light of the prohibition of discrimination on grounds of nationality in the EC Treaty, Puccini’s works were necessarily protected in Germany until the expiry of the 70-year term prescribed by German law, that is, until 31 December 1994. The Land Hessen contended that the opera La Bohème was covered by the term of protection of 56 years prescribed by Italian law, so that the copyright in that work had expired on 31 December 1980.

The Landgericht seised allowed Ricordi’s application. The appeal brought by the Land Hessen was unsuccessful. The Land thus brought an appeal on points of law (Revision).

In the order for reference, the Bundesgerichtshof points out that since, according to the findings made, the opera La Bohème was first published in Italy and not in Germany, it was, at the material time, protected in Germany solely to the extent provided by international treaties. Accordingly, in the light of Article 7(8) of the Berne Convention and the fact that German law does not contain any provision derogating from the principle according to which the term of protection must not exceed the term fixed in the country of origin of the work, the term of protection in Germany for the opera La Bohème was restricted by the term of protection prescribed by Italian law and thus expired in 1980.

According to the referring court, the outcome of the main proceedings depends on the applicability to the facts of the case of the prohibition of discrimination on grounds of nationality in the first paragraph of Article 6 of the EC Treaty.

 

ISSUES/QUESTIONS:

 Term of copyright protection – Principle of non-discrimination on grounds of nationality – Applicability to copyright which arose prior to the entry into force of the EEC Treaty/ Whether the prohibition of discrimination in the first paragraph of Article 6 of the EC Treaty is also applicable to the protection of copyright in cases where the author had died when the EEC Treaty entered into force in the Member State of which he was a national and, if so, whether it precludes the term of protection gran

Ruling of 13 September 2007 [.of the Court Fourth Chamber] in Case [C-260/04] Commission of the European Communities v Italian Republic [2007] ECR I-07083

 

Direct action under Article 226 EC, now Article 258 TFEU, for failure to fulfil obligations- infringement

 

FACTS:

 

In Italy, horse-race betting and gaming operations were originally run exclusively by the Unione Nazionale per l’Incremento delle Razze Equine (National Union for the Improvement of Horse Breeding, ‘UNIRE’), which had the option of operating the services of collecting and taking bets directly or delegating them to third parties. The UNIRE entrusted the operation of those services to bookmakers.

 

In 1996 a national law subsequently assigned the responsibility for the organisation and management of horse-race betting and gaming to the Ministry of Finance and the Ministry of Agriculture, Food and Forestry Resources, which were authorised either to operate the activity directly or through public bodies, companies or bookmakers appointed by them. Moreover, the national legislation provided a future reorganisation, by way of regulation, of the organisational, functional, fiscal and penal aspects of horse-race betting and gaming, as well as the sharing out of revenue from such betting. In the following years the Italian competent Authorities extended the period of validity of the licences that had already been granted until 30 October 2011 or until the date on which the new licences are allocated by means of a call for tenders, in order to take the necessary steps to calculate the amounts to be paid by the licence holders. Moreover, in 1999, only 329 licenses ware renewed, although  an additional 671 new licences were put out to tender.

 

In 2001 a private operator in the horse race betting sector lodged a complaint and as a result the Commission sent a letter of formal notice under Article 258 TFEU, to the Italian State, informing the latter about the irregularities contained in the national system of granting horse race betting licenses, in particular, the renewal by the contested decision of the 329 old licences granted by UNIRE without a competitive tendering procedure, with the general principle of transparency and the requirement of publication resulting from Articles 43 and 49 EC.

 

In response, the Italian State announced a bill for the adoption of a new Law tha would comply whit EU law. Because the Commission was not satisfied with the implementation of the provisions of that law, it issued a reasoned opinion on 16 October 2002 in which it asked the Italian Republic to adopt the necessary measures to comply with the reasoned opinion within two months of its receipt. By letter of 10 December 2002, the Italian Government responded that it had to conduct a detailed assessment of the financial status of existing licence holders before issuing calls for tenders. Because the Commission received no further information concerning the completion of that assessment and the launching of a call for tenders for the purposes of reallocating the licences at issue, the Commission decided to the action before the Court, arguing that by renewing the 329 old licences for horse-race betting operations without inviting any competing bids, the Italian Republic has failed to fulfil its obligations under the Treaty and has, in particular, infringed the general principle of transparency and the publication requirement resulting from Articles 43 and 49 EC, now Articles 49 and 56 TFEU.

 

ISSUES/QUESTIONS:

 

Failure of a Member State to fulfil obligations – Freedom of establishment and freedom to provide services – Public service concessions – Renewal of 329 horse-race betting licences without inviting competing bids – Requirements of publication and transparency/the Commission of the European Communities seeks a declaration by the Court that, by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic has failed to fulfil its obligations under the EC Treaty and has, in particular, infringed the general principle of transparency and the publication requirement resulting from Articles 43 and 49 EC, now Articles 49 and 56 TFEU.

 

ANSWER of the COURT:

 

The Court stated that by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic failed to fulfil its obligations under Articles 43 and 49 EC and, in particular, infringed the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

 

REASONING of the Court

 

After assessing that the award of licenses for horse-race betting operations in Italy constitutes a public service concession the Court noted that public service concession contracts are subject to the fundamental rules enshrined by the Treaty, in particular the principle of non-discrimination on grounds of nationality.

 

The Court noted that the complete failure to invite competing bids for the purposes of granting licences for horse-race betting operations does not accord with Articles 43 and 49 EC, and, in particular, infringes the general principle of transparency and the obligation to ensure a sufficient degree of advertising. The renewal of the 329 old licences without a call for tenders precludes the opening up to competition of the licences and review of the impartiality of the procurement procedures.

 

The Court asked whether the renewal may be recognised as an exceptional measure, as expressly provided for in Articles 45 EC and 46 EC, now 49 and 56 TFEU,or justified, in accordance with the case-law of the Court, for reasons of overriding general interest. The assessment led to the conclusion that by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic failed to fulfil its obligations under Articles 43 and 49 EC and, in particular, infringed the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

Comments:

 

As regards the principle of non discrimination in this case, it constituted a key criteria for the Courts ruling. The principle of non-discrimination was analysed in the light of Articles 49 and 56 TFEU, which give specific conditions to the effect of the principle of equal treatment. The obligation of transparency was assessed together with the foregoing. The outcome was that a complete failure to invite competing bids for the purposes of granting licences for horse-race betting operations does not accord with Articles 43 and 49 EC, and, in particular, infringes the general principle of transparency and the obligation to ensure a sufficient degree of advertising.

It must be pointed out that the Commissions’ application did not contained any forms of order sought in relation to the principle of non-discrimination. It was after the obligation of transparency was analysed that the Court put it all together and found that the national rules are in breach of the principle of non-discrimination, as expressed by the principle of equal treatment and of the obligation of transparency.

The court assessed this Case according to its settled case –law in the area of gambling, where the discrimination matter was always used when assessing the restrictions of the freedom to provide services.

So although, the parties made no reference to the principle of non-discrimination, the Court went in depth of the issue and ruled that this is case of indirect discrimination, that by not complying with the obligation of transparency, a national system such as the one at issue, cannot be justified under the objective invoked by the Italian Government, i.e. to discourage the development of clandestine activities for collecting and allocating bets.

Was this a matter of discrimination on grounds of nationality at EU level, on hypothetical grounds, that the fact that a non-national, not knowing about the bid, but wanting to establish or provide services of betting on the Italian territory? There must be a cross border element between EU Member States, that the situation falls under the provisions of non-discrimination.

Is this a new approach of the Court in the area of gambling services, in relation to the principle of non-discrimination on grounds of nationality, as enshrined by the Treaty? Because one is transparency and advertising obligations and discrimination on grounds of nationality is different.

 

Ruling of 1 July 2004 of the Court the Third Chamber in Case [C-65/03], Commission of the European Communities v Kingdom of Belgium [2004] ECR I-06427

 

Direct Action under Article 258 TFEU- Infringement

 

FACTS:

 

 Belgian national legislation provided that holders of secondary education diplomas obtained in other Member States cannot gain access to higher education organised by Belgium’s French Community under the same conditions as holders of the certificat d’enseignement secondaire supérieur (CESS).

 

Considering that the national rules governing the academic recognition of qualifications and diplomas awarded on completion of secondary studies and access to higher education and university education in the French Community infringed Articles 12 EC, 149 EC and 150 EC, the Commission initiated the infringement procedure. Having called on the Kingdom of Belgium to submit its observations, the Commission delivered a reasoned opinion on 23 October 2001 requesting that Member State to take the measures necessary to comply with the opinion within a period of two months from its notification.

 

The Government of the French Community then informed the Commission that at its meeting on 20 December 2001 it had decided to comply with the conclusions set out by the Commission in its reasoned opinion. It also notified the Commission that the rules in force would be amended for the purpose of putting an end to the discrimination in question and that the measures necessary to implement that decision would be taken before the end of the academic year 2001/2002.

 

Since the French Community did not respond to the Commission’s two letters of reminder, the latter brought the present action for a declaration that, by failing to take the measures necessary to ensure that holders of secondary education diplomas awarded in other Member States can gain access to higher education organised by Belgium’s French Community (‘the French Community’) under the same conditions as holders of the certificat d’enseignement secondaire supérieur (Certificate of higher secondary education) (CESS), the Kingdom of Belgium has failed to fulfil its obligations under Articles 12 EC, 149 EC and 150 EC.

 

ISSUES:

 

 Failure of a Member State to fulfil obligations – Articles 12 EC, 149 EC and 150 EC – Secondary education diploma awarded in another Member State – Access to higher education.

 

ANSWER of the COURT:

 

 By failing to take the measures necessary to ensure that holders of secondary education diplomas obtained in other Member States can gain access to higher education organised by Belgium’s French Community under the same conditions as holders of the certificat d’enseignement secondaire supérieur (CESS), the Kingdom of Belgium has failed to fulfil its obligations under Article 12 EC, read in conjunction with Articles 149 EC and 150 EC.

 

REASONING of the Court

 

First the court points out that the conditions of access to vocational training fall within the scope of the Treaty. In this respect, the scope of Article 149 TEC, now 165 TFEU is to encourage mobility of students and teachers, inter alia by encouraging the academic recognition of diplomas and periods of study. Further, Article 150(2) EC, third indent, provides that Community action is to aim to facilitate access to vocational training and encourage mobility of instructors and trainees and particularly young people.

 

Next the Court assessed the issue of access to higher education under the principle of non-discrimination, as enshrined by Article 12 TEC, now article 18 TFEU. Considering that it is applicable to the Case brought before it, the Court found that the legislation in question places holders of secondary education diplomas awarded in a Member State other then Belgium at a disadvantage, since they cannot gain access to higher education organised by the French Community under the same conditions as holders of the CESS or the equivalent Luxembourg diploma. The criterion of differentiation applied works primarily to the detriment of nationals of other Member States.

 

As regards the justification of the restrictive measure, the Belgian Government did not put forward any argument.

 

Comments:

 

The Court decided to rule without need of the Advocate general Opinion.

The European Commission argued that the Belgian system creates twofold discrimination, against holders of diplomas awarded in other Member States, and against nationals of other Member States on the basis of the education system within which they were awarded their diploma on completion of secondary studies.

The Court recalled that the principle of equal treatment, of which the prohibition on any discrimination on grounds of nationality in the first paragraph of Article 12 EC is a specific instance, prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result.

Even if the contested national rules were amended in 2003, after the period laid down by the reasoned opinion of the Commission, expired, the Court withhold the applicant arguments relating to the fact that in past non-nationals were put in a disadvantage by the infringement of Community law complained of by the Commission in its application.

 

Tod’s SpA- Case [C-28/04]

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 30 June 2005 of the Court the Second Chamber in Case [C-28/04], Tod’s SpA and Tod’s France SARL v Heyraud SA [2005] ECR I-05781

 

Referred by [Tribunal de grande instance de Paris – France]

 

FACTS:

 

 Tod’s is a company established under Italian law which claims to be the proprietor of artistic intellectual property rights in the shoes distributed under the Tod’s and Hogan trade marks. Tod’s France is the distributor of those shoes in France.

 

Having learnt that Heyraud was offering for sale and selling under the Heyraud name designs of shoes which copied or at least imitated the principal characteristics of the Tod’s and Hogan designs, Tod’s arranged for a bailiff’s report to be drawn up on 8 February 2000. On 13 February 2002, the claimants in the main proceedings brought an action against Heyraud before the referring court.

 

The subject matter of the main proceedings consists, inter alia, of an action for infringement of registered designs of shoes bearing the Tod’s and Hogan trademarks, against which Heyraud raises a plea of inadmissibility under Article 2(7) of the Berne Convention. Heyraud contends that, under that provision, Tod’s is not entitled to claim copyright protection in France for designs that do not qualify for such protection in Italy.

 

Tod’s replies, inter alia, that application of the provision in question constitutes discrimination within the meaning of Article 12 EC, now Article 18 TFEU.

 

The referring court takes the view that the use of the phrase ‘shall be entitled … only’ in the second sentence of Article 2(7) of the Berne Convention has the effect of depriving Union nationals who, in the country of origin of their work, enjoy only the protection granted in respect of designs and models, of the right to bring proceedings based on copyright in the countries of the Union which allow accumulation of protection.

 

According to that court, while it appears that that provision makes no distinction based on the nationality of the proprietor of the copyright, it remains the case that its scope under Community law is debatable where the country of origin of the ‘published’ work will most commonly be the country of which the author is a national or in which he has his habitual residence, and where the country of origin of an ‘unpublished’ work will, under Article 5(4)(c) of that convention, be the country of which the author is a national.

 

ISSUES/QUESTIONS:

 

 Equal treatment – Principle of non-discrimination on grounds of nationality – Copyright and related rights/ ‘Does Article 12 … EC … , which lays down the general principle of non-discrimination on grounds of nationality, mean that the right of an author to claim in a Member State the copyright protection afforded by the law of that State may not be subject to a distinction based on the country of origin of the work?

 

ANSWER of the COURT:

 

 Article 12 EC, which lays down the general principle of non‑discrimination on grounds of nationality, must be interpreted as meaning that the right of an author to claim in a Member State the copyright protection afforded by the law of that State may not be subject to a distinguishing criterion based on the country of origin of the work.

 

REASONING of the Court

 

First the Court ruled on the admissibility of the action for a preliminary ruling. In this respect, the EU Court stated that under Article 234 TEC it is competent to provide guidance for the national courts when it comes to interpretation of EU law, in this case Article 12 TEC, now Article 18 TFEU.

 

As regards the question referred by the French court, the Court made reference to its case law, Joined Cases C-92/92 and C-326/92 Phil Collins and Others [1993] ECR I-5145, paragraph 27, and reminded that copyright and related rights, which by reason in particular of their effects on intra-Community trade in goods and services fall within the scope of application of the EC Treaty, are necessarily subject to the general principle of non-discrimination laid down by the first paragraph of Article 12 EC, now article 18 TFEU. Furthermore, the Court regard that the principle of equal treatment prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other distinguishing criteria, lead to the same result.

 

Then the Court examined whether, by adopting a distinguishing criterion based on the country of origin of the work, the application of rules such as those at issue in the main proceedings constitutes indirect discrimination by reason of nationality within the meaning of the settled case law. In this respect, it was noted by the Court that the existence of a link between the country of origin of a work within the meaning of the Berne Convention, on the one hand, and the nationality of the author of that work, on the other, cannot be denied.

 

As published works are concerned, the country of origin is essentially, as Article 5(4)(a) of the Berne Convention indicates, the country where the work was first published. The author of a work first published in a Member State will, in the majority of cases, be a national of that State, whereas the author of a work published in another Member State will generally be a person who is not a national of the first Member State. As a consequence, the application of rules such as those at issue in the main proceedings is liable to operate mainly to the detriment of nationals of other Member States and thus give rise to indirect discrimination on grounds of nationality.

 

In respect to the justification issue, the French Government argued that the legitimate aim of the Berne Convention is the protection of literary and artistic works and that Article 2(7) and Article 5(4) of that convention specify the conditions under which such works are to be protected by copyright on the basis of an objective criterion based on the law applicable to the classification of the work. In its view, where a design cannot aspire to classification as an artistic work in the country where it was first published, it is not entitled to such protection in the States party to the Berne Convention since it does not exist as an artistic work. Article 2(7) thus concerns not the detailed rules for the exercise of copyright, but the law applicable to the artistic classification of the work. In its reply the Court stated that it is apparent from Article 5(1) of the Berne Convention, that the purpose is not to determine the applicable law on the protection of literary and artistic works, but to establish, as a general rule, a system of national treatment of the rights appertaining to such works. Moreover, Article 2(7) of that convention contains, for its part, a rule of reciprocity under which a country of the Union grants national treatment, that is to say, twofold protection, only if the country of origin of the work also does so. The Court recalled that it is settled case-law that implementation of the obligations imposed on Member States by the Treaty or secondary legislation cannot be made subject to a condition of reciprocity.

 

As no further objectives capable of justifying therules such as those at issue in the main proceedings, those rules constitutes indirect discrimination on grounds of nationality prohibited by Article 12 EC, now Article 18 TFEU.

 

Comments:

 

The principle of non-discrimination was assessed by the Court in the light of the general principle of equal treatment. Its worthnoty the part of the Courts’ reasoning related to the reciprocity requirements that are not required under EU law. In this respect the principle of non-discrimination must be applied regardless of the country of origin criteria.

 

Ruling of 7 July 2005 of the Court the Second Chamber in Case [C-147/03], Commission of the European Communities v Republic of Austria [2005] ECR I-05969

 

Direct Action under Article 258 TFEU- Infringement

 

 

FACTS:

 

 The Austrian legislation on university studies (Universitäts-Studiengesetz) provides that students who have obtained their secondary education diploma in a Member State other than

Austria and who wish to pursue their higher or university studies in Austria must not only produce that diploma, but also prove that they fulfil the conditions of access to the chosen course of study in the State in which they obtained their diploma, such as, in particular, success in an entrance examination or obtaining a sufficient grade to be included in the numerus clauses.

 

ISSUES/QUESTIONS:

 

 Failure of a Member State to fulfil obligations – Articles 12 EC, 149 EC and 150 EC – Conditions of access to university education – Discrimination.

 

ANSWER of the COURT:

 

 By failing to take the necessary measures to ensure that holders of secondary education diplomas awarded in other Member States can gain access to higher and university education organised by it under the same conditions as holders of secondary education diplomas awarded in Austria, the Republic of Austria has failed to fulfil its obligations under Articles 12 EC, 149 EC and 150 EC.

 

REASONING of the Court

 

 The Court finds that that legislation on admission introduces not only differential treatment to the detriment of students who have obtained their secondary education diploma in a Member State other than Austria, but also a difference in treatment between those same students according to the Member State in which they obtained their secondary education diploma. That legislation adversely affects students from other Member States more than Austrian students and therefore leads to indirect discrimination on grounds of nationality.

 

That discrimination could be justified only if it were based on objective considerations independent of the nationality of the persons concerned and were proportionate to the legitimate aim of the national provisions.

 

The Court then verifies whether the indirect discrimination is justified.

 

The interest of safeguarding the homogeneity of the Austrian higher or university education system, was first invoked by the Austrian Government. In its reply, the Court ruled that, excessive demand for access to specific courses could be met by the adoption of specific non-discriminatory measures (an entry examination or the requirement of a minimum grade). Second, Austria has failed to demonstrate that, in the absence of the current legislation, the existence of the Austrian education system in general and the homogeneity of higher education in particular would be jeopardised.

 

Secondly, the objective of preventing abuse of Community law, was brought to the table by the Government of Austria. The Court reacted in the sense that the possibility for a student from the European Union, who has obtained his secondary education diploma in a Member State other than Austria, to gain access to Austrian higher or university education under the same conditions as holders of diplomas awarded in Austria constitutes the very essence of the principle of freedom of movement for students guaranteed by the EC Treaty. That possibility cannot therefore of itself constitute an abuse which, in any case, must be subject to assessment on a case-by-case basis.

 

Thirdly, the last legitimate aim meant to justify the contested national legislation was the compliance with the two conventions concluded within the framework of the Council of Europe in 1953 and 1977 on the equivalence of diplomas leading to admission to universities. In this regard, the Court assessed that the rights arising from international agreements concluded by a Member State before its accession to the European Union may not be invoked in intra-Community relations. That applies, a fortiori, in respect of agreements concluded by it following its accession.

 

The Court therefore holds that the indirect discrimination is not justified and declares that Austria has failed to fulfil its obligations under the principles of the EC Treaty.

 

Comments:

 

The EU Court found the Austrian legislation to be indirectly discriminatory under Article 12 TEC, now Article 18 TFEU. In this respect, the principle of equal treatment was applied to the de facto situation, in order to conclude that the two categories of students ware treated differently. Moreover, the Court followed Advocate General Opinion, as expressed at point 52, that the same objective can be attained by less restrictive measures, e.g. the establishment of an entry examination or the requirement of a minimum grade. In addition, the Austrian Government did not bring enough evidence to demonstrate its allegations, namely no figures ware submitted to the Court, but simply maintained at the hearing that the number of students registering for courses in medicine could be five times the number of available places, which would pose a risk to the financial equilibrium of the Austrian higher education system and, consequently, to its very existence.

As the allegations ware not proven, but even if they would have been, and the proportionality test was found to be breached, the Court ruled that the legislation at issue infringes EU law.

Schempp- Case -C-403/03

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 12 July 2005 [.of the Court Grand Chamber] in Case [C-403/03] Egon Schempp v Finanzamt München [2005] ECR I-06421

 

Referred by [Bundesfinanzhof – Germany]

 

FACTS:

 

 

Following his divorce, Mr. Schempp, a German national resident in Germany, pays maintenance to his former spouse resident in Austria.

 

Mr. Schempp sought to deduct the maintenance payments, in accordance with the correspondent German law. However, in his income tax assessments for 1994 to 1997, the Finances Authorities  refused him the deduction on the ground that it had not received a certificate from the Austrian tax authorities to show that his former spouse had been taxed in Austria on the maintenance payments.

 

Mr. Schempp was unable to produce such a certificate, as Austrian tax law excludes, in principle, taxation of maintenance payments and does not allow them to be deducted. The documents in the case show, however, that Mr. Schempp would have been able to deduct the total amount of the maintenance payments to his former spouse if she had been resident in Germany. In that case, she for her part would not have paid any tax on the maintenance, as her income is less than the taxable minimum in Germany.

 

ISSUES/QUESTIONS:

 

Citizenship of the Union – Articles 12 EC and 18 EC – Income tax – Deductibility from taxable income of maintenance paid by a taxpayer resident in Germany to his former spouse resident in Austria – Proof of taxation of the maintenance payments in that Member State / Is the first paragraph of Article 12 EC and Article 18(1) EC to be interpreted as precluding a taxpayer resident in Germany from being unable, under the national legislation at issue in the main proceedings, to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in Austria, where he would have been entitled to do so if she were still resident in Germany?

 

ANSWER of the COURT:

 

The first paragraph of Article 12 EC and Article 18(1) EC must be interpreted as not precluding a taxpayer resident in Germany from being unable, under national legislation such as that at issue in the main proceedings, to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in another Member State in which the maintenance is not taxable, where he would be entitled to do so if his former spouse were resident in Germany.

 

REASONING of the Court

 

First the Court examined if the case falls under the scope of EU law. In the light of the fact that the applicant did not make use of his rights under Article 18 TEC, now Article 21 TFEU, but his former spouse did, in respect to the effect that this had on his deductibility capacity, the situation is not purely internal, so that it falls under the scope of EU law.

 

As regards the first paragraph of Article 12 EC, now Article 18 TFEU and Article 18(1) EC, now Article 21 TFEU,it must be interpreted as not precluding a taxpayer resident in a Member State from being unable under national legislation to deduct from his taxable income in that Member State the maintenance paid to his former spouse resident in another Member State in which the maintenance is not taxable, where he would be entitled to do so if his former spouse were resident in the same Member State.

Article 12 EC, now Article 18 TFEU is not concerned with any disparities in treatment, for persons and undertakings subject to the jurisdiction of the Community, which may result from divergences existing between the various Member States, so long as they affect all persons subject to them in accordance with objective criteria and without regard to their nationality.

Moreover, the Treaty offers no guarantee to a citizen of the Union that transferring his activities to a Member State other than that in which he previously resided will be neutral as regards taxation. Given the disparities in the tax legislation of the Member States, such a transfer may be to the citizen’s advantage in terms of indirect taxation or not, according to circumstances. The same principle applies a fortiori to a situation in which the person concerned has not himself made use of his right of movement, but claims to be the victim of a difference in treatment following the transfer of his former spouse’s residence to another Member State.

 

Comments:

 

The Court showed no hesitation to examine German tax rules applied to a German citizen residing in Germany. The claimant was placed in a marginally less favourable situation as regards the tax treatment of duly payable alimony, as a result of the fact that his former wife had moved to Austria. The Court considered the case to be far from being purely internal; as his former wife had exercised her free movement rights, there was no bar for him to appeal

to Articles 12 and 18 (1) EC, though the German rules at stake were ultimately found to square with these provisions.

 

Considering that there is no discrimination under Article 18 TFEU, resulting from the existing disparities in the tax regimes of Member states, the Court ruled that there is no difference in treatment, applying the assessement of the principle of equal treatment. The court stated that the payment of maintenance to a recipient resident in Germany cannot be compared to the payment of maintenance to a recipient resident in Austria. The recipient is subject in each of those two cases, as regards taxation of the maintenance payments, to a different tax system. As a consequence, given the fact that there is no breach of the equal treatment principle, there is no discrimination under Article 18 TFEU[1].

 

Under the EU citizenship provisions, namely Article 21 TFEU, the Court followed AGs’ Opinion, as expressed at point 39, and ruled that the disparities between the tax regimes cannot constitute a restriction on the freedom to move and reside within EU, as enshrined by the Treaty, so that no discrimination was found there either.

 

Advocate General in the Case stated at point 34 of his Opinion that the situation is the result of a lack of coordination between the tax systems of the Member States and can only be resolved by the Community legislature. Does that mean that he suggested that maybe a harmonization in the field of taxation at EU level would be welcomed?



[1] C-403/03 Egon Schempp v Finanzamt München [2005] ECR I-06421, paragraph 36

 

Parking Brixen GmbH- Case -C-458/03

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 13 October 2005 of the Court the First Chamber in Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-08585

 

Referred by [Verwaltungsgericht, Autonome Sektion für die Provinz Boz (Italy)]

 

FACTS:

 

 In 2001, the Municipality of Brixen (Italy) converted Stadtwerke Brixen, a municipal undertaking, into a company limited by shares, Stadtwerke Brixen AG. The company’s nominal capital was 100% owned by the municipality which, however, was allowed under national legislation to remain the sole shareholder for only the following two years.

 

In 2002, the Municipality of Brixen concluded an agreement with Stadtwerke Brixen AG for the management, for a nine-year term, of a car park with about 200 spaces.

 

In consideration of the management of the car park, Stadtwerke Brixen AG collects the parking charges. In addition, it provides a free bicycle hiring service and accepts that theweekly market continues to be held on the area in question. Finally, the routine and non routine maintenance of the area is the task of that company which takes full responsibility in

that regard.

 

Parking Brixen GmbH, the company which managed another car park in the Municipality of Brixen, challenged before the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, the award of the management of the car park to Stadtwerke Brixen AG. In its submission, the Municipality of Brixen should have issued a public call for tenders.

 

The Municipality of Brixen maintained that it completely controls Stadtwerke Brixen AG and that there was therefore no award of a contract or concession to a third party. There was no obligation to proceed by way of a public call for tenders.

 

In that context, the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, referred two questions to the Court of Justice of the European Communities for a preliminary ruling.

 

 

ISSUES/QUESTIONS:

 

 Interpretation of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1) Articles 43 EC, 49 EC and 86 EC, and the principles of non-discrimination, transparency and equal treatment/ whether the award of the management of the public pay car parks in question in the main proceedings involves a public service contract within the meaning of Directive 92/50, or a public service concession and; whether the award of a public service concession without it being put out to competition is compatible with Community law, if the concessionaire is a company limited by shares resulting from the conversion of a special undertaking of a public authority, a company whose share capital is at the time of the award 100% owned by the concession-granting public authority, but whose administrative board enjoys all extensive powers of routine administration and can effect independently, without the agreement of the shareholders’ meeting, certain transactions up to a value of EUR 5 million.

 

 

ANSWER of the COURT:

 

 The award, by a public authority to a service provider, of the management of a public pay car park, in consideration for which that provider is remunerated by sums paid by third parties for the use of that car park, is a public service concession to which Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts does not apply.

 

Articles 43 EC and 49 EC, and the principles of equal treatment, non-discrimination and transparency, are to be interpreted as precluding a public authority from awarding, without putting it out to competition, a public service concession to a company limited by shares resulting from the conversion of a special undertaking of that public authority, a company whose objects have been extended to significant new areas, whose capital must obligatorily be opened in the short term to other capital, the geographical area of whose activities has been extended to the entire country and abroad, and whose Administrative Board possesses very broad management powers which it can exercise independently.

 

REASONING of the Court

 

 The Court points out, first, that the Directive relating to the coordination of procedures for the

award of public service contracts[1] applies to contracts which involve consideration which is paid directly by the contracting authority to the service provider, but does not apply to service concessions.

 

In this case, the service provider’s remuneration comes from the sums paid by third party users of the car park concerned. That method of remuneration means that the provider takes the risk of operating the services in question and is thus characteristic of a public service concession.

 

Therefore, since it is a public service concession, the directive does not apply.

Nevertheless, the Court makes clear that a concession-granting public authority is, as a rule, bound to comply with the general rules of the EC Treaty such as freedom of establishment and freedom to provide services, as well as the principles of equal treatment, nondiscrimination and transparency.

 

The application of those rules is excluded only if the concession-granting public authority exercises over the concessionaire a control similar to that which it exercises over its own departments and if that concessionaire carries out the essential part of its activities with the controlling authority. Such control must enable the concession-granting authority to have a decisive influence over both the concessionaire’s strategic objectives and its significant decisions.

 

In this case, Stadtwerke Brixen AG enjoys a high degree of independence which precludes the municipality from exercising over it control similar to that which it exercises over its own departments. Indeed, the company’s objects were broadened to other fields such as the carriage of persons and goods, its activities expanded to the whole of Italy and abroad, and its capital had to be opened to other shareholders. In addition, broad powers were conferred on its Administrative Board with, in practice, no management control by the municipality. Consequently, the award cannot be regarded as an ‘in-house’ transaction to which the rules and principles of Community law do not apply.

 

The Court concludes therefore that the complete failure to put out to tender the award of a public service concession such as that in question is not compatible with Community law.

 

Comments:

 

After the Court found that Directive 92/50 is not applicable, carried on with assessing the case in the light of the freedom of establishment and services, as governed by the principles of equal treatment and non-discrimination, on the basis of the obligation of transparency, that is incumbent to the public authority when granting a concession. Moreover, the Court made reference to the competition provisions as enshrined by the Treaty, namely Article 106 (1) TFEU, which states that, “in the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaty, in particular to those laid down in Articles 18 TFEU and 101 EC to 109 TFEU”.

In this respect, even if the secondary legislation was not found to be applicable to the situation brought before the Court, the Case was analysed under primary legislation, in relation to the fundamental rules that govern EU law. In this regard, the discrimination matter was not assessed as in the light of Article 8 TFEU, which provides for a general expression, but as derived from the freedoms of establishment and services and, consequently in relation to the competition rules.

The Case is retains a high degree of complexity in respect of anti-discrimination law. In this respect, the court emphasized that a member State legislation must always comply with the fundamental freedoms, in particular with the principle of non-discrimination on grounds of nationality[2].

Next, the court found that more specifically applicable provisions, other than the Directive aforementioned, include, so they are not limited to, in particular Articled 49 and 56 TFEU, freedom of establishment and freedom to provide services. In addition, the Court noted that Articles 49 and 56 TFEU are expressions of the principle of equal treatment and not of the principle of non-discrimination, as stated in other Cases that were brought before it.

In order to reach its conclusions in this Case, the Court considered that this was not a matter of internal affairs, but one of the Internal Market, and consequently assessed together the principles of equal treatment and non-discrimination, which sets up a duty of transparency which enables the concession public authority to ensure that these principles are complied with. Moreover, the obligation of transparency consist in ensuring , for the benefit of any potential tenderer a degree of advertising sufficient to enable the service concession to be opened up to competition and the impartiality of procurement procedures to be reviewed[3].

The parties’ arguments sought to maintain that EU law is not applicable, namely the defendants in the main proceedings and the Italian Government, referred to the fact that the situation is an internal one, given that all the parties’ premises are located in Italy and that the plaintiff in the main proceedings is not an entity independent of that municipality.

None of them ware accepted, as the Court assessed the Case in the hypothesis that if a Member State would be interested to provide the same services. When the case maybe, if there is no advertising, then other member States are discriminated and that will hinder the free movement of establishment and services. Moreover, it will distort competition within the Internal Market.

No issues of direct or indirect discrimination were dealt with here, as the principle of discrimination was used to decide whether EU law was applicable or not to the Case brought before the Court. But when the Treaty contains fundamental freedoms based on fundamental rights, that are generally valid, it would be difficult for one not to find them applicable, even if there was a hypothetical situation that the Court ruled on.



[1] Council Directive 92/50/EEC of 18 June 1992

[2] Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-08585, paragraph 46

[3] Idem Paragraoh 49.

UTECA

August 4th, 2011 | Posted by DUCA LL.M in EU Law - (0 Comments)

Ruling of 5 March 2009 [.of the Court Second Chamber] in Case [C-222/07Unión de Televisiones Comerciales Asociadas (UTECA) v Administración General del Estado [2009] ECR I-01407

 

 

Referred by [Tribunal Supremo – Spain]

 

 

FACTS:

 

The Spanish legislation transposing the Television Broadcasting Directive[1]requires television operators to earmark 5% of their operating revenue for the previous year for the funding of full-length and short cinematographic films and European films made for television. 60% of that funding must be reserved for the production of films of which the original language is one of the official languages of Spain.

The Unión de Television Comerciales Asociadas (UTECA) brought an action before the Tribunal Supremo seeking to have that national legislation declared inapplicable on the ground that it infringes Community law. 

 

 

ISSUES/QUESTIONS:

 

Interpretation of Articles 12 EC, 18 EC, 29 EC and 49 EC – Drug tourism – General municipal regulation prohibiting the admission of non-residents to coffee-shops selling narcotic drugs – Public order – Different treatment/whether the Directive and, more particularly, Article 3 thereof and Article 12 EC, now Article 18 TFEU,are to be interpreted as meaning that they preclude a measure adopted by a Member State, such as that at issue in the main proceedings, requiring television operators to earmark 5% of their operating revenue for the pre-funding of European cinematographic films and films made for television and, more specifically, to reserve 60% of that 5% for the production of works of which the original language is one of the official languages of that Member State; Does an obligation imposed by a national measure on television operators to the effect that the latter must earmark a percentage of their operating revenue for the pre-funding of cinematographic films, where 60% of that amount must be earmarked specifically for films having an original language which is one of the languages of Spain the majority of which are produced by the Spanish film industry, amount to State aid in favour of that industry within the meaning of Article 87 EC, now Article 107 TFEU?

 

 

 

 

ANSWER of the COURT:

 

Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, as amended by Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997, and, more particularly, Article 3 thereof and Article 12 EC must be interpreted as meaning that they do not preclude a measure adopted by a Member State such as the measure at issue in the main proceedings which requires television operators to earmark 5% of their operating revenue for the pre-funding of European cinematographic films and films made for television and, more specifically, to reserve 60% of that 5% for the production of works of which the original language is one of the official languages of that Member State.

Article 87 EC must be interpreted as meaning that a measure adopted by a Member State, such as the measure at issue in the main proceedings, requiring television operators to earmark 5% of their operating revenue for the pre-funding of European cinematographic films and films made for television and, more specifically, to reserve 60% of that 5% for the production of works of which the original language is one of the official languages of that Member State does not constitute State aid in favour of the cinematographic industry of that Member State.

 

 

REASONING of the Court

 

The Court recalls that Member States remain free to lay down more detailed or stricter rules than those laid down in the Directive[2]. Nevertheless, when exercising that right, they must respect the fundamental freedoms guaranteed by the Treaty.

The Court finds, firstly, that the measure adopted by Spain, in so far as it lays down a specific rate of funding reserved for works of which the original language is one of the official languages of that Member State constitutes a restriction on several fundamental freedoms, that is to say freedom to provide services, freedom of establishment, the free movement of capital and freedom of movement of workers. However, such a restriction may be justified where it serves overriding reasons relating to the general interest, is suitable for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it.

In the present case, the Court considers that cultural grounds of defence of Spanish multilingualism, on which the measure at issue in the main proceedings is based, constitutes an overriding reason in the public interest. Since the measure introduces an obligation to invest in cinematographic films and films made for television the original language of which is one of the official languages of that Member State, it appears appropriate to ensure that such an objective is achieved. Moreover, such a measure does not go beyond what is necessary to attain the objective pursued. The fact that a linguistic criterion may constitute an advantage for the undertakings benefiting from the funding, which are mostly cinema production undertakings which are established in that Member State cannot, of itself, constitute proof of the disproportionate nature of the measure at issue without rendering nugatory the recognition, as an overriding reason in the public interest, of the objective pursued by a Member State of defending and promoting one or several of its official languages.

The Court holds that Community law does not preclude a measure adopted by a Member State which requires television operators to earmark 5% of their operating revenue for the pre-funding of European cinematographic films and films made for television and, more specifically, to reserve 60% of that 5% for works of which the original language is one of the official languages of that Member State.

With regard to the compatibility of such a measure with the State aid legislation, the Court, after having recalled the conditions which financing must satisfy in order to be classified as State aid, states that in the present case the advantage given by way of the measure at issue to the cinematographic industry does not constitute an advantage granted directly by the State and those granted by a public or private body designated or established by that State. Such an advantage is the result of general legislation applicable to all television operators, whether public or private. Furthermore, since the measure at issue applies to public television operators, it does not appear that the advantage in question is dependent on the control exercised by the public authorities over such operators or on directives issued by those authorities.

 

The Court concludes that the measures adopted in the present case do not constitute State aid in favour of the cinematographic industry.

 

 

Comments:

 

The principle of discrimination, of which interpretation was also asked by the referring court, was assessed in the light of the fundamental freedoms, guaranteed by the Treaty, namely freedom of services, freedom of establishment, freedom of workers and freedom of capital. As regards the measure adopted by a Member State such as the measure adopted under the Spanish legislation, requiring television operators to earmark 5% of their operating revenue for the pre-funding of European cinematographic films and films made for television, the Court found no restriction on the fundamental freedoms, guaranteed by the Treaty.

On the other hand, as concerns a measure such as that at issue in the main proceedings, in so far as it relates to the obligation to reserve for the production of films of which the original language is one of the official languages of the Member State in question 60% of the 5% of operating revenue reserved for the pre-funding of European cinematographic films and films made for television, the court followed AG Opinion and ruled that it constitutes a restriction on more than one freedoms[3]. The discriminatory criterion was considered to be the linguistic one. Being a case of indirect discrimination on grounds of nationality, such a measure can be justified by overriding reasons relating to the general interest, is suitable for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it. The overriding reason invoked by the Spanish Government was the defending and promoting one or several of its official languages constitutes legitimate aim, opinion on which the Court and the AG agreed upon. The Court recalled that it is settled case-law that the defence of one or several official languages of a Member State is considered legitimate (Case C‑379/87 Groener [1989] ECR 3967, paragraph 19, and United Pan-Europe Communications Belgium and Others, paragraph 43). Moreover, Directives 89/552 and 97/36, namely recitals 26 and 44 in their preamble, also confers legitimacy to such a measure, as the one at issue in the main proceedings. The national rules satisfied the other conditions also, in order to be considered justified. Moreover, the Courts’ reasoning contains a reference made to the Convention on the Protection and Promotion of the Diversity of Cultural Expressions, adopted at the General Conference of UNESCO in Paris on 20 October 2005 and approved on behalf of the Community by Council Decision 2006/515/EC of 18 May 2006, which recognizes that language and culture are intrinsically linked, by stating: “linguistic diversity is a fundamental element of cultural diversity”[4].

Furthermore in respect of the principle of non-discrimination as enshrined by Article 12 TEC, now Article 18 TFEU, the Court found that it is not in breach by the Spanish legislation at issue, as that legislation does not hinder the freedoms of establishment, workers, capital and services, as provided by the correspondent Articles in the Treaty, which lay down specific conditions to the effect of the principle of non-discrimination.

This is not a classical case of discrimination, but its basis consists actually in this issue. In this respect, if the linguistic criterion would have been considered discriminatory, in the absence of the Directives’ provisions and of the UNESCO Convention, that recognize the legitimacy of the defence of multilingualism of a Member State, than the fundamental freedoms would have been found to be hindered.

In relation to the state aid matter, the Court analysed the cumulative conditions imposed by Article 107 TFEU, i.e. there must be intervention by the State or through State resources, second, the intervention must be liable to affect trade between Member States, third, it must confer an advantage on the recipient and, fourth, it must distort or threaten to distort competition, and according to its case-law, stated that this is not a case of state aid in favour of the cinematographic industry of that Member State.



[1] Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, as amended by Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997.

[2] Case [C-222/07Unión de Televisiones Comerciales Asociadas (UTECA) v Administración General del Estado [2009] ECR I-01407, paragraph 18

 

[3] [3] Case [C-222/07Unión de Televisiones Comerciales Asociadas (UTECA) v Administración General del Estado [2009] ECR I-01407, paragraph 24.

[4] Paragraph 14 of its preamble.