CELEX: 62004CJ0064
Failure of a Member State to fulfil obligations
Fishing licences
Regulation (EC) No 3690/93
Vessels Cleopatra and Ocean Quest
Definitive transfer of those vessels to Argentina

1       By its application, the Commission of the European Communities requests the Court to declare that, by not withdrawing the
fishing licences for the vessels
Cleopatra
and
Ocean Quest
following the definitive transfer of those vessels to Argentina, the United Kingdom of Great Britain and Northern Ireland
has failed to fulfil its obligations under Article 5 of Council Regulation (EC) No 3690/93 of 20 December 1993 establishing
a Community system laying down rules for the minimum information to be contained in fishing licences (OJ 1993 L 341, p. 93).

Legal context
2       The Agreement on relations in the sea fisheries sector between the European Economic Community and the Argentine Republic
was approved on behalf of the Community by Council Regulation (EEC) No 3447/93 of 28 September 1993 (OJ 1993 L 318, p. 1;
‘the Fishing Agreement’). The ninth recital in the preamble to that agreement states that the parties to the Fishing Agreement
are ‘convinced that this new type of cooperation in the fisheries sector will provide regular access to new fishing opportunities,
further the aims of renewing and converting the Argentine fleet and restructuring the Community fleet and promote the rational
exploitation of resources in the long term’.
3       Article 5(1) and (3) of the Fishing Agreement provides:
‘1.      The Parties shall create suitable conditions for the establishment in Argentina of undertakings using capital originating
in one or more Member States of the Community and the creation of joint enterprises and joint ventures in the fisheries sector
between Argentinian and Community shipowners with the aim of jointly exploiting and, where appropriate, jointly processing
Argentinian fishery resources under the conditions laid down in Protocol I and Annexes I and II.
…
3.      As part of its policy for the restructuring of its fleet, the Community shall facilitate the inclusion of Community vessels
in undertakings established or to be established in Argentina. To that end, and as part of its policy for the technical renovation
of its fishing industry, Argentina shall facilitate the transfer of current fishing licences and issue the appropriate new
licences pursuant to this Agreement.’
4       Article 5 of Council Regulation (EEC) No 3760/92 of 20 December 1992 establishing a Community system for fisheries and aquaculture
(OJ 1992 L 389, p. 1), provided:
‘1.      The Council, acting in accordance with the procedure laid down in Article 43 of [the] Treaty, shall, before 31 December 1993,
establish a Community system which shall apply from a date no later than 1 January 1995 laying down rules for the minimum
information to be contained in fishing licences, to be issued and managed by Member States.
From the date of application of the Community system, Member States shall be required to operate national systems of fishing
licences. Except where otherwise provided, all Community fishing vessels shall be required to have a fishing licence, which
is attached to the vessel.
The above provisions shall apply without prejudice to any specific system which may be in force at the Community level or
those required under present and future international agreements.
2.      The licensing system shall apply to all Community fishing vessels in the Community fishing waters or operating in the waters
of third countries or on the high seas. The Community minimum information requirements shall also apply to third country vessels
fishing in Community fishing waters where provided for under international agreements.’
5       Article 11 of Regulation No 3760/92 stated:
‘Having regard to Title I, on a multiannual basis and for the first time not later than 1 January 1994, the Council, acting
in accordance with the procedure laid down in Article 43 of the Treaty, shall set the objectives and detailed rules for restructuring
the Community fisheries sector with a view to achieving a balance on a sustainable basis between resources and their exploitation.
Such restructuring shall also take account on a case-by-case basis of possible economic and social consequences and of the
specificities of the fisheries regions.’
6       According to the third recital in the preamble to Regulation No 3690/93, ‘the Community system should set out the rules concerning
the minimum information to be contained in the fishing licences for each fishing vessel flying the flag of a Member State’.
7       Article 1 of that regulation provides:
‘1.      A Community system of fishing licences shall be established laying down rules on the minimum information to be contained in
the fishing licences referred to in Article 5 of Regulation (EEC) No 3760/92.
2.      All Community fishing vessels shall be required to have a fishing licence for the vessel.
3.      The licence must be kept on board the vessel.
4.      Fishing vessels shall be forbidden to catch, retain on board, transfer or land fish where a fishing licence has not been granted
or where the fishing licence has been withdrawn or suspended.’
8       Article 3 of Regulation No 3690/93 provides:
‘The flag Member State shall issue and administer fishing licences for the fishing vessels flying its flag, having due regard
to the provisions of Article 11 of Regulation (EEC) No 3760/92.’
9       Article 5 of Regulation No 3690/93 reads as follows:
‘The flag Member State shall suspend temporarily or definitively the fishing licences of vessels which are subject to temporary
immobilisation and shall withdraw the fishing licences of vessels which are subject to definitive withdrawal from fishing
activities.’
10     Pursuant to Article 8(1) and (2) of Council Regulation (EC) No 3699/93 of 21 December 1993 laying down the criteria and arrangements
regarding Community structural assistance in the fisheries and aquaculture sector and the processing and marketing of its
products (OJ 1993 L 346, p. 1):
‘1.      Member States shall take measures to adjust fishing effort to achieve at least the objectives of the multiannual guidance
programmes referred to in Article 5.
Where necessary, Member States shall take measures to stop vessels’ fishing activities permanently or restrict them.
2.      Measures to stop vessels’ fishing activities permanently may include:
–       scrapping,
–       permanent transfer to a third country, provided such transfer is not likely to infringe international law or affect the conservation
and management of marine resources,
–       permanent re-assignment of the vessel in question to uses other than fishing in Community waters.
…
Member States shall ensure that vessels concerned by such measures are deleted from the registration lists for fishing vessels
and from the Community fishing vessel register. They shall also ensure that deleted vessels are permanently excluded from
fishing in Community waters.’
11     Article 9(1) of Regulation No 3699/93 stated:
‘Member States may take measures to promote the re-orientation of fishing activities by encouraging the creation of temporary
joint ventures and/or joint enterprises.’
12     Regulation No 3699/93 was repealed by the first paragraph of Article 20 of Council Regulation (EC) No 2468/98 of 3 November
1998 laying down the criteria and arrangements regarding Community structural assistance in the fisheries and aquaculture
sector and the processing and marketing of its products (OJ 1998 L 312, p. 19); the terms of Articles 8(1) and (2) and 9(1)
are identical to the corresponding provisions of Regulation No 3699/93.

Facts and pre-litigation procedure
13     In the context of the Fishing Agreement, the vessels
Cleopatra
and
Ocean Quest
, flying the United Kingdom flag and registered in that Member State, were transferred to Argentina. That transfer took place
when a joint enterprise was founded, bringing together Community and Argentine shipowners. Those vessels were deleted from
the United Kingdom fishing vessel register in November 1996 and July 1997 respectively and entered in the Argentine register.
14     The Commission found that the fishing licences relating to the vessels
Cleopatra
and
Ocean Quest
had been used for other vessels.
15     By letter of 19 April 2001, the Commission informed the United Kingdom that the re-use of fishing licences was contrary to
the obligation under Article 5 of Regulation No 3690/93 requiring the competent national authorities to withdraw licences
from vessels which are subject to definitive withdrawal from fishing activities. The Commission’s letter gave that Member
State formal notice to submit its observations on the alleged failure to fulfil its obligations pursuant to the first paragraph
of Article 226 EC.
16     In the absence of any response, on 16 January 2003 the Commission sent a reasoned opinion to the United Kingdom in which,
firstly, it restated the arguments set out in the letter of formal notice and, secondly, called upon that Member State to
fulfil its obligations within a period of two months from receipt of the reasoned opinion.
17     In its response of 20 March 2003 to the reasoned opinion, the United Kingdom put forward a number of arguments. Firstly, it
stated that the United Kingdom authorities took the view that their only obligation was to remove the vessels
Cleopatra
and
Ocean Quest
from the national register of fishing vessels but not to withdraw the fishing licences relating to those vessels. Secondly,
it submitted that the Commission confirmed the requirement to withdraw the fishing licences only after the owners of the vessels
had entered into binding legal contracts obliging them to transfer the vessels to third parties. Finally, it considered that
the attitude of those authorities was understandable and that procedures had been put in place to prevent similar fishing
licence transfers in the future.
18     Since it was not satisfied with those explanations, the Commission decided to bring the present action.

The action

Arguments of the parties
19     According to the Commission, pursuant to Article 5 of Regulation No 3690/93, the flag Member State is to withdraw the fishing
licences of vessels which are subject to definitive withdrawal from fishing activities.
20     The Commission submits that the obligation to withdraw fishing licences must be interpreted as meaning that the fishing capacity
made available by such withdrawal may not be re-used for the issue of new licences to other vessels, since such re-use would
be contrary to the first subparagraph of Article 8(1) of Regulation No 2468/98, pursuant to which Member States are to take
measures to adjust fishing effort to achieve at least the objectives of the multiannual guidance programmes. If the Community
authorised such re-use of licences relating to vessels definitively transferred to a non-Member State, the objective of reducing
the fishing fleet would not be achieved. That would still be the case even though the definitive transfer took place in the
context of the founding of a joint enterprise.
21     The United Kingdom notes that Article 8 of Regulation No 2468/98 makes no mention of fishing licences. Furthermore, since
that regulation was adopted only after the events which gave rise to the present case, it cannot affect any obligation that
the United Kingdom might have been under at the date on which those events occurred.
22     The United Kingdom submits, moreover, that the obligation to withdraw fishing licences pursuant to Article 5 of Regulation
No 3690/93 cannot become effective until the Commission has agreed that the vessels concerned may be transferred to a joint
enterprise and the Member State has been notified of that decision. In the present case, the owners of the vessels
Cleopatra
and
Ocean Quest
sold the licences relating to those vessels before the Member State was notified of the Commission’s decision approving the
plan to transfer the vessels to a joint enterprise. Since the owners were no longer the holders of the licences, the United
Kingdom did not infringe any obligation under Article 5 of that regulation.
23     According to the United Kingdom, the real ‘mischief’ of the case lies in the fact that the owners of the vessels
Cleopatra
and
Ocean Quest
received money both from the sale of the licences relating to those vessels and from the Community, whereas such a sale should
have had the effect of depriving them of the possibility of receiving assistance relating to the founding of a joint enterprise.
Although the Commission had been informed that the licences remained in circulation, it nevertheless decided to pay Community
assistance to the owners, applying a test of ‘good faith’ that it has not however extended to the United Kingdom.
24     Since the transfer of a vessel in the context of the Fishing Agreement amounts to a definitive withdrawal within the meaning
of Article 5 of Regulation No 3690/93, the United Kingdom has established a procedure to ‘freeze’ a vessel’s licence as soon
as an application for the founding of a joint enterprise is received by the competent department. The licence can come back
into effect only if the application for the founding of a joint enterprise is withdrawn or the transfer of a vessel to such
an enterprise is not approved by the Commission. Consequently, the United Kingdom maintains that it has ensured that, in future,
there will be no further cases of re-use of licences.

Findings of the Court
25     The Court observes, as a preliminary point, that it is common ground in the present case that the vessels
Cleopatra
and
Ocean Quest
were entered in the Argentinian register of fishing vessels and that, accordingly, they were definitively transferred to
Argentina.
26     The complaint raised by the Commission in its application for a declaration by the Court, as set out in paragraph 1 of the
present judgment, is that by not withdrawing the fishing licences relating to those vessels following their definitive transfer
to Argentina, the United Kingdom has failed to fulfil its obligations under Article 5 of Regulation No 3690/93.
27     It is appropriate to recall that, pursuant to the provisions of Article 5 of Regulation No 3690/93, where a fishing vessel
is subject to definitive withdrawal from fishing activities, the licence relating to that vessel is to be withdrawn.
28     Thus, before the Court considers the substance of the Commission’s complaint, preliminary issues arise as to, first, what
exactly constitutes definitive withdrawal of a fishing vessel from fishing activities and, second, whether the definitive
transfer of such a vessel to Argentina in the context of the founding of a joint enterprise can be treated in the same way
as a definitive withdrawal from fishing activities within the meaning of Article 5 of Regulation No 3690/93.

Definitive withdrawal from fishing activities
29     It is common ground, first, that neither Article 5 of Regulation No 3690/93 nor that regulation as a whole gives any indication
as to how the phrase ‘definitive withdrawal from fishing activities’ is to be understood. However, in Regulation No 3699/93,
more precisely in Article 8(2) thereof, it is stated that measures to stop vessels’ fishing activities permanently may include,
inter alia, scrapping, permanent transfer to a non-Member State, provided such transfer is not likely to infringe international
law or affect the conservation and management of marine resources, and permanent re-assignment of the vessel in question to
uses other than fishing in Community waters.
30     Regulations No 3690/93 and No 3699/93 differ greatly in both subject-matter and purpose. Regulation No 3690/93, as is clear
more particularly from the third recital in its preamble, sets out the rules concerning the minimum information to be contained
in fishing licences, whereas Regulation No 3699/93 lays down the criteria and arrangements regarding Community structural
assistance in the fisheries and aquaculture sector.
31     However, although the purpose of those two regulations is different, there is nothing to indicate that the meaning of ‘measures
to stop vessels’ fishing activities permanently’ applies exclusively to Regulation No 3699/93 and that it cannot be used in
the context of other instruments of secondary legislation relating to the sphere of fishing policy.
32     Regulation No 3699/93, which defines the measures to stop vessels’ fishing activities permanently, was, moreover, adopted
after Regulation No 3690/93. As is clear from most language versions of Regulation No 3699/93, particularly from the German,
Spanish, French and Italian versions, the Community legislature knowingly intended to choose the same expression as that already
used in Regulation No 3690/93.
33     Accordingly, there is nothing to preclude the definition ensuing from Regulation No 3699/93 being used in the context of the
implementation of Article 5 of Regulation No 3690/93 regarding the temporary or definitive suspension of fishing licences.
34     The various ‘measures to stop vessels’ fishing activities permanently’ listed in Article 8(2) of Regulation No 3699/93 include,
in particular, ‘permanent transfer to a third country’. In the present case it is not disputed that the fishing vessels
Cleopatra
and
Ocean Quest
were transferred to ‘a third country’, namely the Argentine Republic.
35     Accordingly, the question next arises whether the permanent transfer of such vessels to Argentina, in the context of the founding
of a joint enterprise, may be treated as definitive withdrawal from fishing activities within the meaning of Article 5 of
Regulation No 3690/93.
36     The wording of Article 8(2) of Regulation No 3699/93 in no way precludes the notion of ‘measures to stop vessels’ fishing
activities permanently’ being applied to the permanent transfer of vessels on the basis of an international agreement concluded
between the Community and a non-Member State. On the contrary, that provision makes express reference, in its second indent,
to compliance with international law and, consequently, with international agreements.
37     For its part, the Fishing Agreement does not preclude a transfer of fishing vessels in accordance with its provisions being
classified as a ‘measure to stop vessels’ fishing activities permanently’ within the meaning of Community law.
38     It follows that the permanent transfer of vessels to a non-Member State pursuant to an international agreement constitutes
a measure to stop vessels’ fishing activities permanently within the meaning of Article 8(2) of Regulation No 3699/93. Accordingly,
in the present case, the definitive transfer of the vessels
Cleopatra
and
Ocean Quest
to Argentina must be regarded as a ‘measure to stop vessels’ fishing activities permanently’ for the purposes of Community
law.

The withdrawal of fishing licences and the issue of new fishing licences
39     Accordingly, the question arises whether, in the present case, the fishing licences of the vessels
Cleopatra
and
Ocean Quest
, which were both transferred definitively to Argentina, were withdrawn by the competent United Kingdom authorities.
40     The United Kingdom maintains that the rights conferred by the fishing licences on the former owners of the vessels
Cleopatra
and
Ocean Quest
were sold to third parties who used them for other vessels. It follows that the licences relating to those vessels were indeed
withdrawn.
41     The Commission does not dispute the fact that the fishing licences relating to the vessels
Cleopatra
and
Ocean Quest
were withdrawn. However, it points out that the fishing capacity made available by the transfer of those vessels was used
for other vessels.
42     In that regard, the Commission submits that it follows from Article 5 of Regulation No 3690/93 that, where vessels have been
permanently transferred to a non-Member State, the Member State must not merely withdraw the licences relating to the vessels
thus transferred, but must refrain from utilising the fishing capacity thus made available in the national register to issue
new licences. Such use would be contrary to the objectives of Article 8 of Regulation No 2468/98, a provision which forms
part of a Community policy for the restructuring of the Community fleet.
43     It should be noted, first, that the wording of Article 5 of Regulation No 3690/93 does not prohibit, as such, utilisation
of fishing capacity made available by the transfer of vessels to a non-Member State to issue new licences, since that article
merely requires the flag Member State to withdraw the fishing licences relating to vessels which are subject to definitive
withdrawal from fishing activities. It follows from the foregoing that the United Kingdom complied with that obligation to
withdraw fishing licences.
44     Secondly, Article 5 of Regulation No 3690/93, the sole provision referred to in the Commission’s pleadings, makes no reference
to Article 8 of Regulation No 3699/93 at all, even as amended by Regulation No 2468/98. In any event, the latter article lays
down, inter alia, what the measures to stop vessels’ fishing activities permanently may include and requires vessels deleted
from the register to be excluded from fishing in Community waters. It does not, however, follow from that provision that the
fishing capacity made available in the national register of fishing vessels by the permanent transfer of vessels to a non-Member
State should not be used to issue new fishing licences.
45     Even if the Commission could, under the procedure laid down in Article 226 EC, have taken action against the United Kingdom
on the basis of other provisions of Community law in respect of the system for issuing new fishing licences, as the Advocate
General observed in point 45 of her Opinion, it is common ground that the breach of such provisions does not constitute the
subject-matter of the failure to fulfil obligations complained of (see Case C‑6/04
Commission
v
United Kingdom
[2005] ECR I‑9017, paragraphs 58 to 60; Case C‑225/04
Commission
v
France
[2006] ECR I‑5251, paragraph 24; and Case C‑34/04
Commission
v
Netherlands
[2007] ECR I‑0000, paragraph 53).
46     It follows from all the foregoing that the complaint relied on by the Commission in its action, alleging infringement of Article
5 of Regulation No 3690/93, is unfounded and, therefore, that complaint must be dismissed without there being any need to
examine the argument put forward by the United Kingdom in its defence that, since the transfer to Argentina of the vessels
Cleopatra
and
Ocean Quest
took place before the adoption of the Commission’s decision approving that transfer, there was no effective obligation to
withdraw the fishing licences pursuant to Article 5 of Regulation No 3690/93.
47     In those circumstances, the action brought by the Commission must be dismissed.

Costs
48     Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
applied for in the successful party’s pleadings. Since the United Kingdom has applied for costs and the Commission has been
unsuccessful, the latter must be ordered to pay the costs.
On those grounds, the Court (Third Chamber) hereby:
1.
Dismisses the action;
2.
Orders the Commission of the European Communities to pay the costs.
[Signatures]
*
Language of the case: English.