Judgment — ECLI:EU:C:2002:630
Date: 2002-11-05
Language of the case: German
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: General;Rights of non-member countries under prior agreements;Defences;Negotiation and conclusion;Air transport
Procedure: Action for failure to fulfil obligations - successful;Action for failure to fulfil obligations - unfounded
Origin: Austria

Summary of the Judgment 
1. Actions for failure to fulfil obligations — Pre-litigation procedure — Purpose 
(EC Treaty, Art. 169 (now Art. 226 EC}) 
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2. Actions for failure to fulfil obligations — Commission's right to bring proceedings — 
Time-limits within which the right must be exercised — None — Exception — 
Where the excessive duration of the pre-litigation procedure is prejudicial to the rights 
of defence — Burden of proof 
(EC Treaty, Art. 169 (now Art. 226 EC)) 
3. Member States — Obligations — Failure to fulfil obligations — Justification — 
Principle of protection of legitimate expectations — Reliance on the principle by a 
Member State to preclude a finding of failure to fulfil obligations — Not permissible 
(EC Treaty, Art. 169 (now Art. 226 EC)) 
4. International agreements — Agreements concluded by Member States — Agreements 
pre-dating the EC Treaty — Article 234 of the Treaty (now, after amendment, 
Article 307 EC) — Scope — Maintenance in force of previous commitments on the 
occasion of renegotiation — Excluded 
(EC Treaty, Art. 234 (now, after amendment, Art. 307 EC)) 
5. 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)) 
6. International agreements — Competence of the Community — Creation of an 
exclusive competence competence on the part of the Community by 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)) 
7. 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 No 2407/92, Arts 1(1) and 4, and No 2408/92, Arts 3(1) and 
2(b)) 
8. 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)) 
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9. 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 national companies of that Member State — Not permissible 
(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC) and Art. 58 (now Art. 48 
EC)) 
1. The purpose of the pre-litigation pro­
cedure laid down by Article 169 of the 
Treaty (now Article 226 EC) is to give 
the Member State concerned an oppor­
tunity to comply with its obligations 
under Community law or to avail itself 
of its right to defend itself against the 
complaints made by the Commission. 
(see para. 35) 
2. The rules in Article 169 of the Treaty 
(now Article 226 EC) must be applied 
with no attendant obligation on the 
Commission to act within a specific 
period, save where the excessive dur­
ation of the pre-litigation procedure 
laid down by Article 169 is capable of 
making it more difficult for the 
Member State concerned to refute the 
Commission's arguments and of thus 
infringing the rights of defence. It is for 
the Member State concerned to provide 
evidence that it has been so affected. 
(see para. 36) 
3. The procedure for a declaration of a 
failure on the part of a Member State 
to fulfil its obligations is based on the 
objective finding that a Member State 
has failed to fulfil its obligations under 
Community law. The principle of pro­
tection of legitimate expectations can­
not be relied on by a Member State in 
order to preclude an objective finding 
of a failure on its part to fulfil its 
obligations under the Treaty or second­
ary legislation, since to admit that 
justification would run counter to the 
aim pursued by the procedure under 
Article 169 of the Treaty (now 
Article 226 EC). 
(see para. 38) 
4. The amendments made, following the 
accession of a Member State to the 
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SUMMARY — CASE C-475/98 
European Communities, to a bilateral 
air transport agreement concluded 
between that Member State and a 
non-member State provide proof of a 
renegotiation of the agreement in its 
entirety. It follows that, while some 
provisions of the agreement were not 
formally modified by those amend­
ments or were subject only to marginal 
changes in drafting, the commitments 
arising from those provisions were 
none the less confirmed during the 
renegotiation. In such a case, the 
Member States are prevented not only 
from contracting new international 
commitments but also from maintain­
ing such commitments in force if they 
infringe Community law. 
(see para. 49) 
5. 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 hypothesis is that where the 
internal competence may be effectively 
exercised only at the same time as the 
external competence, the conclusion of 
the international agreement 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, 
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COMMISSION v AUSTRIA 
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 non-member States 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 
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 66-68, 70, 72) 
6. 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 
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SUMMARY — CASE C-475/98 
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 
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 92, 94, 96-101) 
7. As is clear from the title and 
Article 3(1) of Regulation No 2408/92 
on access for Community air carriers to 
intra-Community air routes, that regu­
lation is concerned with access to 
intra-Community air routes for Com­
munity air carriers alone, these being 
defined by Article 2(b) of that regu­
lation as air carriers with a valid 
operating licence granted by a Member 
State in accordance with Regulation 
No 2407/92 on licensing of air carriers. 
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COMMISSION v AUSTRIA 
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 at 
all times effectively controlled by such 
States or such nationals, and also the 
criteria for the maintenance in force of 
those licences. 
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. 
A bilateral air transport agreement 
concluded between a Member State 
and a non-member State therefore 
cannot be regarded as affecting those 
regulations since it enables an airline 
designated by that non-member State 
to transport passengers between that 
Member State and another Member 
State of the European Union on flights 
the origin or destination of which is in 
the non-member State. 
(see paras 103, 105-107) 
8. 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 
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SUMMARY — CASE C-475/98 
and under Regulations No 2409/92 on 
fares and rates for air services and 
No 2299/89 on a code of conduct for 
computerised reservation systems. 
(see paras 124-126) 
9. Article 52 of the Treaty (now, after 
amendment, Article 43 EC) is properly 
applicable to airline companies estab­
lished in a Member State which supply 
air transport services 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 
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 concluded 
by a Member State and a non-member 
State in the field of air transport, the 
clause on the ownership and control of 
airlines which, amongst other things, 
permits the non-member State to with­
draw, suspend or limit the operating 
licences or technical authorisations of 
an airline designated by the Member 
State but of which a substantial part of 
the ownership and effective control is 
not vested in that Member State or in 
its nationals indisputably affects air­
lines established in the Member State 
of which a substantial 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 'Community' airlines may 
always be excluded from the benefit 
of that bilateral agreement, while that 
benefit is assured to national airlines of 
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COMMISSION v AUSTRIA 
which a substantial part of the owner­
ship and effective control is vested 
either in the Member State or in its 
nationals. Consequently, Community 
airlines suffer discrimination which 
prevents them from benefiting from 
the treatment which the host Member 
State accords to its own nationals. 
The direct source of that discrimination 
is not the possible conduct of the 
non-member State but the clause on 
the ownership and control of airlines, 
which specifically acknowledges the 
right of that State to act in that way. 
(see paras 134, 136-139, 141-142) 
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