Judgment — ECLI:EU:C:2003:669
Date: 2003-12-11
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Freedom to provide services
Concepts: The various services
Procedure: Reference for a preliminary ruling
Origin: Germany

summary offences, service-related faults or infringement of professional obligations, in which the client cannot bring or defend proceedings himself, a European lawyer who provides services may act as representative or defending counsel for a client only in agreement with a lawyer (domestic lawyer). (2) The domestic lawyer must be authorised to act as representative or defending counsel before the judicial or administrative authority in question. He shall ensure that the European lawyer providing services complies with the principles of the proper administration of justice when providing representation or defence services. (3) In the absence of agreement between the parties concerned to the contrary, no contractual relationship is established between the domestic lawyer and the client. ... 8. Paragraph 28(4) of the EuRAG refers in turn to Paragraph 52 of the BRAGO, which establishes in its first subparagraph that a lawyer who merely liaises between the client and the legal representative or one who files expert witness statements in case-files transferred to a lawyer acting in a higher court shall receive remuneration for that work equivalent to the fees for lodging the application (Prozessgebühr) payable to the legal representative. III - Facts and procedure in the main proceedings 9. The main proceedings, before the Oberlandesgericht München hearing the matter on appeal, concern the taxation of costs pursuant to proceedings arising from a contractual dispute brought before the Landgericht (Regional Court) Traunstein (Germany), between an Austrian undertaking, A & R Gastronomie GmbH (hereinafter A & R), established in Salzburg, and hence near the German border, and a German undertaking, AMOK Verlags GmbH (hereinafter AMOK), the unsuccessful party. A & R was represented by its Austrian lawyer, acting in conjunction with a local lawyer, described by the referring court as a correspondence lawyer. 10. A & R seeks recovery of its legal costs from AMOK, the unsuccessful party. Specifically it is claiming, on the one hand, reimbursement of the costs of the Austrian lawyer calculated according to the rates in the Rechtsanwaltstarifgesetz (Austrian law on lawyers' fees, hereinafter the RATG) and, on the other, reimbursement of the fees of the German local lawyer who acted in conjunction with him. 11. The opposing party disputes the claim, arguing that the costs of a foreign lawyer must be limited to the costs calculated according to the German scale set in the BRAGO which is, here, a considerably lower scale. Nor does AMOK see any reason why it should reimburse the costs of two lawyers. 12. The Oberlandesgericht München, hearing the application for the taxation of costs at second instance, informs us that, according to its settled case-law, a foreign party who instructs a foreign lawyer can only claim legal costs from the opposing party up to the amount it would have incurred in instructing a German lawyer, and under no circumstances the costs of the local lawyer who acted in conjunction with the foreign lawyer. 13. Uncertain, however, as to whether that case-law practice is consistent with Community law, the Oberlandesgericht München stayed proceedings and referred the following question to the Court for a preliminary ruling: Are Articles 49 EC and 12 EC to be interpreted as precluding a decision of a national court in accordance with which, in a Member State (domestic territory), the maximum amount of a claim for reimbursement of the costs of the services of a lawyer of a different Member State in domestic proceedings and of an Einvernehmensanwalt (domestic lawyer acting in conjunction with the foreign lawyer) is the sum of the costs including VAT which would have been incurred in the case of representation by a domestic lawyer? IV - Law 14. At the hearing the Commission told the Court that it no longer held the reservations it had expressed in its written observations regarding the admissibility of the order for reference. 15. For my part, I take the view, likewise, that even if the order for reference is very brief, it does nevertheless contain the necessary information to enable the Court to give an interpretation of Community law which will be helpful to the referring court. (3) I also take the view that there is no reason to doubt that the Oberlandesgericht München is acting, in the main proceedings, as a court or tribunal within the meaning of Article 234 EC. A - The first limb of the question (applicability of the Austrian fee scale) 1. Arguments submitted to the Court 16. A & R, the defendant in the main proceedings, asserts that limiting to the BRAGO rates the maximum costs recoverable in respect of a foreign lawyer contravenes Article 49 EC. 17. Thus, whereas, where its case is successful, a (German) domestic party to proceedings can in principle claim reimbursement in full of its lawyers' fees, a foreign litigant, and a party to the proceedings, which has to pay higher fees under foreign rules governing the fees of lawyers established in that other place, is liable for an at times not insignificant part of the fees payable. The litigant is accordingly restricted in its freedom to choose a lawyer and is indirectly obliged to engage a lawyer established in the place where the proceedings are held. At the same time, the foregoing restricts the freedom to provide services of the foreign lawyer. 18. According to A & R, the Austrian fee scale should furthermore be used according to private international law, since the Community connection for the lawyer's claim for costs is the place where he is established. 19. The facts of the case likewise, in the view of A & R, justified use of the Austrian fee scale. As a party established abroad, it was entitled to instruct a reputable lawyer established close to the place where it has its address. 20. The Austrian Government, for its part, draws a distinction between the lawyer-client relationship, which is a matter of contract law, and the issue of the recovery of legal costs, which can give rise to an action in public law, since it is a matter of procedural law and subject to the lex fori. The lex fori applies, moreover, as a result of the principle of equality of arms, according to which each party should bear the same risk as regards the reimbursement of costs. 21. Consequently, the Austrian Government submits, there is no restriction on the freedom to provide services within the meaning of Article 49 EC nor any discrimination within the meaning of Article 12 EC, since an Austrian lawyer can pursue his activity in Germany on the same terms, as regards the recovery of costs, as the Federal Republic of Germany prescribes for its own nationals. 22. The German Government, in turn, points out that, under the law applicable in Germany, liability for a lawyer's fees falls under the law of the place where he is established, whereas the successful party's action against the unsuccessful party for reimbursement of its costs is a matter of the German law of civil procedure. 23. The German Government also draws attention to the fact that the limitation on the reimbursement of lawyers' costs emerges from the notion of necessity in Article 91(1) of the ZPO and adds that there may be cases where it is necessary to have recourse to a foreign lawyer as a result of the particular nature of the case, for example because foreign law applies. The amount of the recoverable costs may then exceptionally take into account a foreign fee scale. The restriction being questioned by the referring court, however, clearly does not relate to a situation in which recourse to the foreign lawyer was necessary due to the particular nature of the case. 24. The German Government asserts, thereafter, that the nationality of the parties is completely irrelevant, as is the lawyer's nationality or place of establishment. Even if a lawyer registered in Germany, under a fee agreement, claims remuneration above the BRAGO rates, it will not be recoverable at the level under that agreement. 25. According to the German Government, the rules under the BRAGO, which lays down non-discriminatory arrangements for the exercise of the profession which apply to the costs of every lawyer practising in Germany, are analogous to selling arrangements which fall outside the general prohibition on restrictions. It refers in this regard to the judgments in Alpine Investments (4) and Gourmet International Products (5) in which the Court, it claims, broadened the scope of the case-law on selling arrangements in the Keck and Mithouard (6) ruling to cover restrictions on the freedom to provide services. The German Government draws the conclusion from the foregoing that the limitation on the reimbursement of legal costs is not a prohibited restriction. 26. Even if, the German Government continues, the limitation on the reimbursement of legal costs laid down by the BRAGO did include a restriction on the freedom to provide services, that restriction would be justified on the basis of the conditions identified by the Court in Gebhard. (7) According to that government, it meets requirements for the proper administration of justice, which in Reisebüro Broede the Court has acknowledged to be an imperative requirement in the general interest. (8) 27. The German legislature has chosen the BRAGO to be the guiding framework for establishing an adequate balance between the interests involved. By limiting the reimbursement of costs to set rates, it protects the unsuccessful party from exaggerated claims for costs. Where, in the event of losing a case, a party has to reimburse costs, the relevant liability must, in the interests of legal certainty, be predictable and cannot depend on the arbitrary decision of the opposing party. The unsuccessful party in fact has no influence over the choice of lawyer nor on the level of fees set between the opposing party and its legal representative. 28. The German Government further points out that Article 49 EC, which is a special provision on the freedom to provide services, has precedence over Article 12 EC. 29. The Commission, for its part, draws attention to the fact that Article 4(1) of the Directive expressly states that (cross-border) activities relating to the representation of a client are pursued in each host Member State under the conditions laid down for lawyers established in that State. Lawyers established in a different Member State who engage in the cross-border provision of services in Germany are therefore subject in that State to the same rules on costs as are applicable to German lawyers. 30. Those rules apply irrespective of what has been agreed between the lawyer and his client. If the agreed fees exceed any costs which the opposing party may have to reimburse under the law of the host Member State, the client remains liable to its lawyer for that debt. 2. Analysis 31. The Oberlandesgericht München asks the Court whether Article 12 EC or Article 49 EC precludes the costs arrangements it has customarily applied. 32. The first paragraph of Article 12 EC provides that within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, (9) any discrimination on grounds of nationality shall be prohibited. 33. Before finding that the provision in question applies in a particular case, it is therefore necessary to ascertain that there is no special provision which defines the operation of that principle in the field concerned. 34. The foregoing has been confirmed by settled case-law from which it emerges that Article 6 of the EC Treaty (now, after amendment, Article 12 EC), which lays down the general principle of the prohibition of discrimination on grounds of nationality, applies independently only to situations governed by Community law in respect of which the Treaty lays down no specific prohibition of discrimination. (10) 35. So, in the present case, the Court is called upon to rule on an issue of the freedom to provide services, an area in which the principle of non-discrimination has been applied and enacted by Article 49 EC. It is therefore that article and the following provisions in Chapter 3 on services which it is necessary to interpret. 36. According to the first paragraph of Article 49 EC, [w]ithin the framework of the provisions below, (11) restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended. 37. The last paragraph of Article 50 EC specifies that [w]ithout prejudice to the provisions of the chapter relating to the right of establishment, the person providing a service may, in order to do so, temporarily pursue his activity in the State where the service is provided, under the same conditions as are imposed by that State on its own nationals. 38. According to the first paragraph of Article 52 EC, [i]n order to achieve the liberalisation of a specific service, the Council shall, on a proposal from the Commission and after consulting the Economic and Social Committee and the European Parliament, issue directives acting by a qualified majority. 39. Such a directive has been issued in relation to the services provided by lawyers. I refer to the Directive to facilitate the effective exercise by lawyers of freedom to provide services, and hence to eliminate all restrictions incompatible with the Treaty. 40. It follows from Article 4(1) of that Directive that [a]ctivities relating to the representation of a client in legal proceedings or before public authorities shall be pursued in each host Member State under the conditions laid down for lawyers established in that State, (12) with the exception of any conditions requiring residence, or registration with a professional organisation, in that State. 41. Article 4(2) adds that [a] lawyer pursuing these activities shall observe the rules of professional conduct of the host Member State .... 42. Although the Community legislature has therefore excluded two conditions which would have the effect of rendering the provision of services analogous to establishment, it plainly took the view that all other conditions and rules in force in the host State can apply. 43. The fact that many of those conditions and rules may be different from those in the State where the provider of the services is established, and that they might therefore be perceived as burdensome, or that they may be such as to make the provision of cross-border services less attractive to the foreign lawyer, does not have to be taken into consideration since there is a harmonising directive which has confirmed their legitimacy. 44. One of those conditions or rules which make the pursuit of cross-border activity less attractive but which must none the less be allowed is that relating to the ceiling on fees imposed by the BRAGO. 45. It has not in fact been disputed in the course of the proceedings before the Court that the expression conditions laid down for lawyers established in that State also covers the terms of lawyers' remuneration. 46. Admittedly, the main proceedings do not directly concern the Austrian lawyer himself. His entitlement to act in proceedings in Germany and to charge his client fees higher than those under the BRAGO has not been called into question. 47. The issue which the Oberlandesgericht München has raised does nevertheless fall within the scope of application of Article 4(1) of the Directive, because the conditions on which a client can recover his lawyer's fees from the opposing party are closely linked to the conditions on which that lawyer can pursue his activity. 48. Furthermore, the very fact that the successful party can, in Germany, recover the fees in question is the result of the conditions laid down for lawyers established in that State. In a number of other Member States there is indeed no such right. 49. By reason of all the foregoing I take the view that it can be inferred from Article 4(1) of the Directive that the German courts are entitled to set the amount of the fees recoverable by a lawyer established in a different Member State on the basis of the relevant national rules. 50. It is therefore unnecessary to examine the first limb of the question referred for a preliminary ruling in the light of Article 49 EC. 51. Since A & R, the German Government and the Commission have nevertheless analysed that limb, I shall comment as follows, by way of observations in the alternative. 52. The fact that a party to proceedings taking place in Germany which wins its case having called upon the services of a lawyer established in a different Member State cannot recover in full the (higher) fees charged by that lawyer amounts to a restriction within the meaning of Article 49 EC. That litigant is, effectively, discouraged from having recourse to such a lawyer. There is, as a result, an indirect obstacle to the provision of cross-border services by lawyers established in different Member States. 53. It is apparent nevertheless that the case-law practice in question does satisfy the four requirements defined by the case-law of the Court. (13) 54. The practice is adopted without distinction in all proceedings taking place before a German court. 55. It is also justified by imperative requirements in the general interest, namely to uphold the principles of legal certainty and the proper administration of justice. (14) 56. Where, under domestic legislation, the unsuccessful party in proceedings has to reimburse the legal costs of the successful party, the relevant liability must not, so far as possible, be unpredictable nor excessive. 57. A party to proceedings in fact has no influence over the opponent's choice of its lawyer nor on the level of fees set between that party and its legal representative, whether the latter is established in the country in issue or in a different Member State. 58. The risk that it might find itself, should it lose its case, facing actions for the recovery of unforeseeable costs could, therefore, prompt an economically weak party to decline to assert its legal rights even if, on a first analysis, it has a good case. 59. Lastly, a rule such as that in issue is also suitable for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it. 60. I therefore propose that the Court should reply, as regards the first limb of the question referred, that Article 49 EC and the Directive should not be interpreted as precluding a national rule of case-law which limits the maximum amount recoverable by the successful party of the costs of the services provided by a lawyer established in a different Member State to the legal costs, including VAT, which would have been incurred in the case of representation by a lawyer established in the State where the proceedings took place. B - The second limb of the question (recovery of the fees of the local correspondence lawyer) 1. Arguments submitted to the Court 61. A & R asserts, in essence, that the fact that a foreign successful party which uses the services of a foreign lawyer established in the place where it is resident cannot recover the fees of the local lawyer further exacerbates the infringement of Article 49 EC. 62. A foreign party in fact, it claims, has an even greater incentive, for financial reasons, to use only the services of a lawyer established in the place where the proceedings are heard. Its right freely to choose a lawyer is therefore restricted. 63. According to the German Government, the fact that the involvement of the local lawyer gives rise to additional costs is an inherent consequence of Article 5 of the Directive. 64. That rule does not in its view require that the person for whom the service is intended should be able to enjoy the assistance of both the local lawyer and the foreign lawyer at no cost, and with all the more reason because there are also types of procedure, it submits, in which there is no provision for any reimbursement by the unsuccessful party. 65. Since the client is always itself liable in the first place to pay its lawyers, there can be no discrimination against the foreign lawyer as a result of the fact that the client's opponent is not bound, in certain cases, to reimburse to the client the costs of the local lawyer. 66. The Commission, conversely, takes the view that, where a foreign lawyer acts in conjunction with a local lawyer within the meaning of Directive 77/249/EEC, both lawyers will receive costs in accordance with domestic law. That conclusion flows indirectly from the Directive, with the effect that it is scarcely necessary to refer to the Treaty provisions. It is therefore expedient only for the sake of completeness to add that there would plainly be an obstacle to the freedom to provide services within the meaning of Article 49 EC if the foreign lawyer were obliged to have recourse to a (local) domestic lawyer but was not able to recover the corresponding costs. There could be no justification for such a - financial - barrier, which would amount to a clear infringement of Article 49 EC. 2. Analysis 67. It is common ground that no provision of Community law requires Member States to prescribe that the unsuccessful party in proceedings must reimburse to the successful party the costs incurred by the latter. 68. Nor does Community law require Member States to provide that, where one party to an action has recourse to a lawyer established in a different Member State, that lawyer must act in conjunction with a local lawyer. Article 5 of the Directive merely establishes a power to do so. 69. Is it possible, none the less, to infer from Community law that, where a Member State has availed itself of both those rights, the losing party in proceedings must reimburse to the winner the fees of its local lawyer? 70. Without doubt, a reply in the negative to that question would mean that, in such a Member State, the parties to a dispute would be discouraged from having recourse to lawyers established in other Member States and there would in consequence be an impediment to the freedom of those lawyers to provide services. 71. In that respect one can point out first of all that, where the legislation in a Member State provides for reimbursement of costs which are necessary properly to bring or defend an action and where the same legislation requires the engagement of a local lawyer, whose involvement is, as a result, deemed to be necessary, the fees of that lawyer must be recoverable because their reimbursement is one of the conditions laid down for lawyers established in that State within the meaning of Article 4 of the Directive. 72. Even were it appropriate to examine the issue in the light of Article 49 EC rather than from the point of view of the Directive, the outcome would be the same. 73. It should be noted here that, where a Member State requires a local lawyer to act, it is because it considers such involvement to be necessary for the proper administration of justice. 74. That being the case, it is impossible to see how the same principle of the proper administration of justice could also dictate that the successful party cannot recover the costs of that involvement. 75. The only contrary argument which might be put forward is that the unsuccessful party should be protected from exaggerated claims for reimbursement. (15) 76. I did, admittedly, allow, with regard to the first limb of the question referred for a preliminary ruling, although only in the alternative, that the argument referred to could justify limitation of the recoverable fees of the foreign lawyer to the level set by the BRAGO. 77. The position is different, however, as regards the costs of the local lawyer. Paragraph 28 of the EuRAG, effectively, requires him to act, and Paragraph 24a(2) of the BRAGO defines his remuneration. 78. There is therefore no legal uncertainty in that respect. 79. Any party to an action is aware that it runs the risk of the opposing party calling upon the services of a foreign lawyer, who must be assisted by a local lawyer, and that it may be liable to pay the fees of both those lawyers. It therefore has to take that risk into consideration when deciding to bring proceedings or when it declines to seek an amicable solution despite being open to a legal action by the other party to the dispute. 80. As regards the second element of the question referred for a preliminary ruling, I propose that the Court should, accordingly, find that Article 49 EC and the Directive require that the costs recoverable by a successful party in proceedings who has used the services of a lawyer established in another Member State should take into account the costs arising from the involvement of the local lawyer. V - Conclusion 81. Having regard to the foregoing considerations, I propose that the Court should reply as follows to the question referred by the Oberlandesgericht München: (1) Article 49 EC and Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services should not be interpreted as precluding a national rule of case-law which limits the maximum amount recoverable by the successful party of the costs of the services provided by a lawyer established in a different Member State to the legal costs, including VAT, which would have been incurred in the case of representation by a lawyer established in the State where the proceedings took place. (2) Conversely, Article 49 EC and Directive 77/249 do, in this case, require that the successful party should be able to recover the costs of a local lawyer where, under the legislation of the same Member State, the lawyer established in a different Member State was obliged to act in conjunction with such a lawyer. 1: - Original language: French. 2: - OJ 1977 L 78, p. 17. 3: - See, in particular, the order in Case C-190/02 Viacom [2002] ECR I-8287, paragraphs 13 to 16. 4: - Case C-384/93 [1995] ECR I-1141, paragraphs 33 to 35. 5: - Case C-405/98 [2001] ECR I-1795, paragraphs 18 to 21 and 39. 6: - Joined Cases C-267/91 and C-268/91 [1993] ECR I-6097, paragraphs 13 and 17. 7: - Case C-55/94 [1995] ECR I-4165, paragraph 37. 8: - Case C-3/95 [1996] ECR I-6511, paragraph 38 et seq. 9: - Emphasis added. 10: - Case C-100/01 Oteiza Olazabal [2002] ECR I-10981, paragraph 25, and, with respect particularly to Article 49 EC, Case C-18/93 Corsica Ferries [1994] ECR I-1783, paragraphs 19 and 20. 11: - Emphasis added. 12: - Emphasis added. 13: - Case C-79/01 Payroll and Others [2002] ECR I-8923, paragraph 28 and the judgments cited therein. 14: - Reisebüro Broede, op. cit. 15: - See the arguments of the German Government in point 27 above.