Judgment — ECLI:EU:C:2002:627
Date: 2002-11-05
Language of the case: Finnish
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Principles, objectives and tasks of the Treaties;Transport
Concepts: Rights of non-member countries under prior agreements;Negotiation and conclusion;Air transport;General
Procedure: Action for failure to fulfil obligations - successful;Action for failure to fulfil obligations - unfounded
Origin: Finland

Summary of the Judgment 
1. International agreements — Agreements concluded by Member States — Agreements 
pre-datitig the EC Treaty — Article 234 of the Treaty (now, after amendment, 
Article 307 EC) — Scope — Maintenance iti force of previous commitments on the 
occasion of renegotiation — Excluded 
(EC Treaty, Art. 234 (now, after amendment, Art. 307 EC)) 
I - 9627 
SUMMARY — CASE C-469/98 
2. International agreements — Competence of the Community — Air transport — 
Express or implied conferment — Criteria for assessment 
(EC Treaty, Art. 84(2) (now, after amendment, Art. 80(2) EC)) 
3. International agreements — Competence of the Community — Creation of an 
exclusive competence on the part of the Community by the adoption of a complete 
system of internal rules — Air transport — Community legislation not sufficient to 
transfer external competence to the Community 
(EC Treaty, Art. 84(2) (now, after amendment, Art. 80(2) EC)) 
4. Transport — Air transport — Scope of Regulations Nos 2407/92 and 2408/92 — 
Community air carriers alone operating on intra-Community air routes — No impact 
on a bilateral agreement concluded by a Member State with a non-member State 
concerning, in the context of relations between those two States, the possibility for 
operators of the non-member State to make commercial stopovers in other Member 
States 
(Council Regulations Nos 2407/92, Arts 1(1) and 4, and 2408/92, Arts 3(1) and 2(b)) 
5. Transport — Air transport — Conclusion by a Member State of a bilateral agreement 
with a non-member State concerning air fares and rates on intra-Community routes 
and the reservation system used in that Member State — Not permissible 
(EC Treaty, Art. 5 (now Art. 10 EC)) 
6. Freedom of movement for persons — Freedom of establishment — Bilateral air 
transport agreement between a Member State and a non-member State not 
guaranteeing to companies of other Member States using the freedom of establishment 
equal treatment with the national companies ofthat Member State — Not permissible 
(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC) and Art. 58 (now Art. 48 
EC)) 
1. Amendments made, after the accession 
of a Member State to the European 
Communities, to a bilateral air trans­
port agreement between that Member 
State and a non-member State and 
subsequently amended by a protocol 
provide proof of a renegotiation of that 
agreement and that protocol in their 
entirety. It follows that, even if some 
provisions of that agreement and that 
protocol were not formally modified by 
those amendments, or were subject 
only to marginal changes in drafting, 
the commitments arising from those 
provisions were none the less con­
firmed during that renegotiation. In 
such a case, the Member States are 
prevented not only from contracting 
new international commitments but 
also from maintaining such commit­
ments in force if they infringe Commu­
nity law. 
(see para. 39) 
I - 9628 
COMMISSION v FINLAND 
2. Although Article 84(2) of the Treaty 
(now, after amendment, Article 80(2) 
EC) may be used by the Council as a 
legal basis for conferring on the Com­
munity the power to conclude an inter­
national agreement in the field of air 
transport in a given case, it cannot be 
regarded as in itself establishing an 
external Community competence in 
that field. 
The Community's competence to enter 
into international commitments may 
arise not only from express conferment 
by the Treaty but also by implication 
from provisions of the Treaty. Such 
implied external competence exists not 
only whenever the internal competence 
has already been used in order to adopt 
measures for implementing common 
policies, but also if the internal Com­
munity measures are adopted only on 
the occasion of the conclusion and 
implementation of the international 
agreement. Thus, the competence to 
bind the Community in relation to 
non-member States may arise by impli­
cation from the Treaty provisions 
establishing internal competence, pro­
vided that participation of the Com­
munity in the international agreement 
is necessary for attaining one of the 
Community's objectives. 
That latter hypothesis in the one in 
which the internal competence may be 
effectively exercised only at the same 
time as the external competence, the 
conclusion of the international agree­
ment thus being necessary in order to 
attain objectives of the Treaty that 
cannot be attained by establishing 
autonomous rules. 
There is nothing in the Treaty to 
prevent the institutions arranging, in 
the common rules laid down by them, 
concerted action in relation to a non-
member State, or to prevent them 
prescribing the approach to be taken 
by the Member States in their external 
dealings, so as to mitigate any dis­
crimination or distortions of compe­
tition which might result from the 
implementation of the commitments 
entered into by certain Member States 
with a non-member State under 'open 
skies' agreements. It has therefore not 
been established that, by reason of such 
discrimination or distortions of com­
petition, the aims of the Treaty in the 
area of air transport cannot be 
achieved by establishing autonomous 
rules. 
That finding cannot be called into 
question by the fact that the measures 
adopted by the Council in relation to 
the internal market in air transport 
contain a number of provisions con­
cerning nationals of non-member 
States. The relatively limited character 
of those provisions precludes inferring 
from them that the realisation of the 
I - 9629 
SUMMARY — CASE C-469/98 
freedom to provide services in the field 
of air transport in favour of nationals 
of the Member States is inextricably 
linked to the treatment to be accorded 
in the Community to nationals of non-
member States, or in non-member 
States to nationals of the Member 
States. 
(see paras 56-58, 60, 62) 
3. Each time the Community, with a view 
to implementing a common policy 
envisaged by the Treaty, adopts provi­
sions laying down common rules, 
whatever form these may take, the 
Member States no longer have the 
right, acting individually or even col­
lectively, to undertake obligations 
towards non-member States which 
affect those rules or distort their scope; 
as and when such common rules come 
into being, the Community alone is in a 
position to assume and carry out con­
tractual obligations towards non-
member States affecting the whole 
sphere of application of the Commu­
nity legal system. 
If the Member States were free to enter 
into international commitments affect­
ing the common rules adopted on the 
basis of Article 84(2) of the Treaty 
(now, after amendment, Article 80(2) 
EC), that would jeopardise the attain­
ment of the objective pursued by those 
rules and would thus prevent the 
Community from fulfilling its task in 
the defence of the common interest. 
The Community acquires an external 
competence by reason of the exercise of 
its internal competence where the inter­
national commitments fall within the 
scope of the common rules, or in any 
event within an area which is already 
largely covered by such rules. In the 
latter case, Member States may not 
enter into international commitments 
outside the framework of the Commu­
nity institutions, even if there is no 
contradiction between those commit­
ments and the common rules. 
Thus, whenever the Community has 
included in its internal legislative acts 
provisions relating to the treatment of 
nationals of non-member States or 
expressly conferred on its institutions 
powers to negotiate with non-member 
States, it acquires an exclusive external 
competence in the spheres covered by 
those acts. 
The same applies, even in the absence 
of any express provision authorising its 
institutions to negotiate with non-
member States, where the Community 
has achieved complete harmonisation 
in a given area, because the common 
rules thus adopted could be affected 
I - 9630 
COMMISSION v FINLAND 
within the meaning of the judgment in 
Case 22/70 Commission v Council 
[1971] ECR 263 (the 'AETR' judg­
ment) if the Member States retained 
freedom to negotiate with non-member 
States. 
On the other hand, any distortions in 
the flow of services in the internal 
market which might arise from bilat­
eral 'open skies' agreements concluded 
by Member States with non-member 
States do not in themselves affect the 
common rules adopted in that area and 
are thus not capable of establishing an 
external competence of the Commu­
nity. 
There is nothing in the Treaty to 
prevent the institutions arranging, in 
the common rules laid down by them, 
concerted action in relation to non-
member States or to prevent them 
prescribing the approach to be taken 
by the Member States in their external 
dealings. 
(see paras 77, 79, 81-86) 
4. As is clear from the title of Regulation 
No 2408/92 of 23 July 1992 on access 
for Community air carriers to intra-
Community air routes, and from 
Article 3(1) thereof, that regulation is 
concerned with access to intra-Com-
munity air routes for Community air 
carriers alone, these being defined by 
Article 2(b) of that regulation as air 
carriers with a valid operating licence 
granted by a Member State in accord­
ance with Regulation No 2407/92 on 
licensing of air carriers. 
That latter regulation, as may be seen 
from Articles 1(1) and 4 thereof, 
defines the criteria for the granting by 
Member States of operating licences to 
air carriers established in the Commu­
nity which, without prejudice to agree­
ments and conventions to which the 
Community is a contracting party, are 
owned directly or through majority 
ownership by Member States and/or 
nationals of Member States and are 
effectively controlled by such States or 
such nationals, and also defines the 
criteria for maintaining those licences 
in force. 
It follows that Regulation No 2408/92 
does not govern the granting of traffic 
rights on intra-Community routes to 
non-Community carriers. Similarly, 
Regulation No 2407/92 does not gov­
ern operating licences of non-Commu­
nity air carriers which operate within 
the Community. 
I - 9631 
SUMMARY — CASE C-469/98 
Therefore, a bilateral air transport 
agreement concluded between a 
Member State and a non-member State 
cannot be regarded as affecting those 
regulations in so far as it allows an 
airline designated by the non-member 
State to transport passengers between 
the Member State in question and 
another Member State of the European 
Union in the case of a flight whose 
origin or final destination is in the 
non-member State. 
(see paras 88, 91-93) 
5. Article 5 of the Treaty (now Article 10 
EC) requires Member States to facili­
tate the achievement of the Commu­
nity's tasks and to abstain from any 
measure which could jeopardise the 
attainment of the objectives of the 
Treaty. 
In the area of external relations, the 
Community's tasks and the objectives 
of the Treaty would be compromised if 
Member States were able to enter into 
international commitments containing 
rules capable of affecting rules adopted 
by the Community or of altering their 
scope. 
By entering into international commit­
ments concerning air fares and rates 
charged by carriers designated by a 
non-member State on intra-Commu-
nity routes and concerning compute­
rised reservation systems offered for 
use or used in its national territory, a 
Member State fails to fulfil its obli­
gations under Article 5 of the Treaty 
and under Regulations Nos 2409/92 on 
fares and rates for air services and 
2299/89 on a code of conduct for 
computerised reservation systems. 
(see paras 111-113) 
6. Article 52 of the Treaty (now, after 
amendment, Article 43 EC) is in par­
ticular properly applicable to airline 
companies established in a Member 
State which supply air transport ser­
vices between a Member State and a 
non-member State. All companies 
established in a Member State within 
the meaning of Article 52 of the Treaty 
are covered by that provision, even if 
their business in that State consists of 
services directed to non-member States. 
Article 52 of the Treaty and Article 58 
of the Treaty (now Article 48 EC) 
guarantee nationals of Member States 
of the Community who have exercised 
their freedom of establishment and 
companies or firms which are assimi­
lated to them the same treatment in the 
host Member State as that accorded to 
I - 9632 
COMMISSION v FINLAND 
nationals of that Member State, both as 
regards access to an occupational activ­
ity on first establishment and as regards 
the exercise of that activity by the 
person established in the host Member 
State. 
In particular, the principle of national 
treatment requires a Member State 
which is a party to a bilateral inter­
national treaty with a non-member 
State to grant to permanent establish­
ments of companies resident in another 
Member State the advantages provided 
for by that treaty on the same con­
ditions as those which apply to com­
panies resident in the Member State 
that is party to the treaty. 
In an 'open skies' agreement, con­
cluded between a Member State and a 
non -member State in the field of air 
transport, a clause on the ownership 
and control of airlines which, amongst 
other things, permits the non-member 
State to prohibit or revoke the exercise 
of traffic rights granted to an airline 
designated by the Member State but of 
which a substantial part of the owner­
ship and effective control is not vested 
in that Member State or its nationals 
undoubtedly affects airlines established 
in the Member State of which a sub­
stantial part of the ownership and 
effective control is vested either in a 
Member State other than the host State 
or in nationals of such a Member State. 
Those latter 'Community' airlines may 
always be excluded from the benefit of 
the commitments on air transport 
between the Member State and the 
non-member State, while that benefit is 
assured to national airlines, of which a 
substantial part of the ownership and 
effective control is vested in the 
Member State or its nationals. Con­
sequently, those Community airline 
companies suffer discrimination which 
prevents them from benefiting from the 
treatment which the host Member 
State accords to its own nationals. 
The source of that discrimination is not 
the possible conduct of the non-
member State, but the clause on the 
ownership and control of airline com­
panies, which specifically acknowl­
edges the right of the latter to act in 
that way. 
(see paras 120, 122-125, 127-128) 
I - 9633