62009CC0291_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
1. The Court has issued a number of judgments on whether a national rule which requires foreign claimants in legal proceedings to furnish security for costs ( cautio judicatum solvi ) complies with the Treaty. The present case is unusual because it concerns the position of a third country national and raises the question whether, in that context, cautio judicatum solvi
is a hindrance to the free movement of goods.
The legal framework
The EC Treaty (2)
2. The first paragraph of Article 12 EC states: ‘Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.’
3. Article 28 EC provides: ‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.’
4. Article 29 EC states: ‘Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.’
5. Article 30 EC provides: ‘The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.’
6. Monaco is not listed in Article 299 EC as one of the territories to which the Treaty applies. Moreover, unlike (for example) the Republic of San Marino (3) there is no special international agreement with Monaco governing its trade relations with the European Union.
The Community Customs Code
7. Article 3(2)(b) of Regulation No 2913/92 (4) provides: ‘The following territories situated outside the territory of the Member States shall, taking the conventions and treaties applicable to them into account, be considered to be part of the customs territory of the Community: … (b) France[:] The territory of the Principality of Monaco as defined in the Customs Convention signed in Paris on 18 May 1963’.
Relevant national legislation
8. Under Article 851 of the Gerechtelijk Wetboek (Belgian Judicial Code) a foreign national who institutes or intervenes in proceedings must, upon the application of a Belgian defendant, provide security for costs and damages arising from the proceedings which he might be ordered to pay, except in the case of nationals of States with which a bilateral convention exists exempting their nationals from this obligation.
Facts, procedure and the question referred
9. The claimant in the main proceedings, Francesco Guarnieri & Cie (‘Guarnieri’), is a limited partnership under Monegasque law whose registered office is in Monaco. The defendant, Vandevelde Eddy VOF (‘Vandevelde’), has its registered office in Belgium.
10. A third party, Fourcroy NV, placed an order with Vandevelde for 21 000 glasses and 100 000 tea-lights with accessories in connection with a promotion campaign for the sale of bottles of the liqueur ‘Mandarine Napoléon’. Vandevelde ordered the tea-lights and glasses from Guarnieri.
11. Upon receipt of the goods, Vandevelde refused to pay Guarnieri, alleging that delivery was too late, that the plastic packaging for 3 000 items was damaged and 65% of the glasses were broken, that those items that were intact were very dirty and that the promotional stickers which were intended to be affixed to the glasses had been placed on the wrong side.
12. Accordingly Guarnieri brought proceedings before the Rechtbank van Koophandel te Brussel (Brussels Commercial Tribunal) claiming payment in the sums of USD 51 034.98 and EUR 16 345.27 in settlement of outstanding invoices for the goods supplied together with default interest. Vandevelde introduced a counterclaim seeking damages in the sum of EUR 31 530.38 and statutory interest in respect of the goods and damages for loss of income in the sum of EUR 60 000 together with statutory interest.
13. Vandevelde then lodged an application under Article 851 of the Belgian Judicial Code for an order requiring Guarnieri to furnish security for costs in the sum of EUR 2 500.
14. Guarnieri submits that an order requiring it to provide security for costs would be contrary to the principle of non-discrimination and Articles 28, 29 and 30 EC. Guarnieri contends that despite the fact that it is established in Monaco it benefits from the Treaty’s provisions on the free movement of goods.
15. The referring court notes that the Treaty provisions concerning the free movement of goods are directly applicable and refers the following question to the Court:
‘Do Articles 28, 29 and 30 EC preclude a claimant of Monegasque nationality, who lodges a claim in Belgium for payment of invoices relating to the delivery of “twister-glazen” (turning glasses) and tea-lights with accessories, from being required, upon application by a defendant of Belgian nationality, to give security for the costs and damages arising from the proceedings which he may be ordered to pay?’
16. Written observations have been submitted by the Belgian Government and the Commission. No hearing was requested and none was held.
Assessment
Preliminary observations
Origin of the goods
17. There is no dispute that Guarnieri is Monegasque and therefore a third country national. However, there is no information in the order for reference or the national court’s file as to the origin of the goods at issue. The provenance of the goods is crucial to the assessment of the substantive issue in the dispute before the national court.
18. There are various possible scenarios as to origin. The goods might have been produced in Monaco or (perhaps more likely) have been imported into Monaco from a third country like Taiwan and then dispatched from Monaco to Belgium. Alternatively, the goods might have entered Belgium from another Member State: for example, they may have been produced in the Netherlands or imported into the Netherlands from a third country and then exported from there to Belgium. (5) Finally, the goods might have been produced in Belgium itself or imported directly into Belgium from a third country.
19. The provenance of the goods is a question of fact which is for the national court to decide. However, the legal analysis of the issue raised by the referring court will differ, depending on how this fundamental question is answered.
Goods originating in Monaco
20. If the goods originate from Monaco, which is not a territory to which the Treaty applies under Article 299 EC, there is a preliminary issue whether Articles 28 and 30 EC apply to the facts at issue in the main proceedings.
21. There is no judgment of the Court on the question whether goods of Monegasque origin benefit from the Treaty’s free movement provisions. However, Advocate General Fennelly addressed the issue in his Opinion in Estée Lauder . (6) The product in that case (a cosmetic) was produced in Monaco and distributed from there throughout Europe. The issue before the Court was whether the then Articles 30 and 36 of the EC Treaty and/or Article 6(3) of the Cosmetics Directive (7) precluded the application of national legislation on unfair competition which allowed the import and distribution of a cosmetic product lawfully manufactured or distributed in an EU Member State to be prohibited on the ground that consumers might be misled by its name into assuming that it had lasting effects.
22. Advocate General Fennelly acknowledged that Monaco is indeed a third country, but considered that, ‘… since no customs duties or charges having equivalent effect may be applied to trade between Monaco and the Community, it seems at first sight to follow that goods originating there and exported directly to a Member State should be treated as if they were of Community origin’. (8) After examining whether that view was undermined by the lack of a complete system governing trade relations between Monaco and the Community, Advocate General Fennelly concluded: ‘I believe that the very fact that Monaco is part of the customs territory of the Community justifies treatment of goods originating in Monaco as benefiting from the rules on free movement’. (9)
23. The Court decided Estée Lauder
on other grounds and therefore did not address this issue in its judgment. However, I respectfully endorse Advocate General Fennelly’s approach and concur with his view that goods of Monegasque origin, together with goods imported into Monaco from a third country and placed into free circulation there, (10) should benefit from the Treaty’s free movement provisions.
Goods originating in another Member State
24. If the national court finds that the goods originate in another Member State the provisions of Articles 28 EC to 30 EC would naturally apply. Goods imported into another Member State from a third country and placed into free circulation there would likewise benefit from those provisions.
Goods originating in Belgium
25. In contrast to the two hypotheses described above, if the goods originate in Belgium (or have been imported directly into Belgium from a third country and first placed into free circulation within the European Union in Belgium) the Treaty’s provisions on free movement of goods are, in my view, irrelevant.
26. It is true that the Court held, in Pistre (11) and Guimont, (12) that references originating in proceedings where the products and the parties involved were confined to a single Member State were admissible; and proceeded to rule on the interpretation of what was then Article 30 of the EC Treaty. However, both those cases concerned national measures that were capable, at least potentially, of having an obvious effect on the free movement of goods.
27. In Pistre, the French legislation prohibited the inclusion of the designation ‘mountain’ or ‘Monts des Lacaune’ on the label of cooked meat p roducts without prior authorisation from the competent administrative authorities (such authorisation concerning the use of indications being reserved for mountainous areas). The persons charged in the case were French citizens who had been prohibited from producing and marketing their own cooked meat products in France. The Court held that what was then Article 30 of the EC Treaty ‘cannot be considered inapplicable simply because all the facts of the specific case before the national court are confined to a single Member State. In such a situation, the application of the national measure may also have effects on the free movement of goods between Member States, in particular when the measure in question facilitates the marketing of goods of domestic origin to the detriment of imported goods’. (13) The Court went on to note that the contested national measure discriminated directly against imported products (because the designation could only, in principle, apply to goods produced in France) and held that it could not be justified. (14)
28. In Guimont, national rules on labelling penalised the designation of a domestically produced cheese as ‘Emmenthal’ because, although complying in other respects with the specification there laid down, (15) it was rindless. The contested national rule applied without distinction to imported and domestic products. The Court accepted that the reference was admissible, because ‘a reply might be useful to [the national court] if its national law were to require, in proceedings such as those in this case, that a national producer must be allowed to enjoy the same rights as those which a producer of another Member State would derive from Community law in the same situation’. (16) However, the Court was then careful to answer the question referred solely in terms of the effect of the contested rule on imported products, finding that in that respect the national legislation was precluded by what was then Article 30 of the EC Treaty. (17)
29. In contrast, in the present case the Court is dealing with a rule ( cautio judicatum solvi ) that forms part of a Member State’s rules on civil procedure. The contested measure does not directly concern the marketing of goods. (18) Its discriminatory effect turns on the nationality of the plaintiff, not on the origin of the goods. It applies without distinction to imported and domestic products. Given the uncertainty as to the actual origin of the goods, it is clear that the Court must give an answer to the national court; but it is equally evident that the Treaty provisions on free movement of goods are not applicable if the goods at the centre of the dispute before the national court are of Belgian origin.
30. In the remainder of this Opinion, I shall proceed on the basis that the goods at issue in the main proceedings were legally placed on the EU market, but that the national court must determine their origin before it can rule on the outcome of the proceedings.
Applicability of Article 29 EC
31. The second preliminary issue is whether Article 29 EC (which prohibits quantitative restrictions on exports) is relevant to the present matter. Both the Commission and the Belgian Government contend that the Court should confine its analysis to Articles 28 and 30 EC.
32. In principle, if the goods that form the subject-matter of a dispute are in free circulation within one Member State and have subsequently crossed, or are intended to cross, the frontier into another Member State, I cannot see why – depending on the terms of the contractual agreement giving rise to the litigation – Article 29 EC should not bite. After all, export from Member State A to Member State B is merely the obverse of import into Member State B from Member State A.
33. That said, it is clear that on the facts of the present case the national court is concerned with a dispute involving goods that are in the same Member State (Belgium) as the court seised. To the extent that they have crossed any frontier, the relevant movement was an importation into Belgium, not an export from Belgium. I shall therefore proceed on the basis that only Articles 28 and 30 EC are relevant to the outcome of the national proceedings.
Substance
34. The Court’s settled case-law confirms that national legislation which requires cautio judicatum solvi
falls within the scope of the Treaty. (19) However, hitherto the Court’s case-law has concerned claimants in the main proceedings who are nationals of a Member State, rather than claimants who are third country nationals.
35. Thus, for example, Data Delecta concerned an English registered company required to provide security for costs in proceedings seeking payment for the supply of goods that it had instituted in Sweden against a Swedish company. The Court held: ‘In prohibiting “any discrimination on grounds of nationality”, [Article 12 EC] requires perfect equality of treatment in Member States of persons in a situation governed by Community law and nationals of the Member State in question’. The Swedish rule under which foreign nationals could be required to provide security for costs was therefore held to constitute direct discrimination on grounds of nationality. (20)
36. It seems to me that two factors emerge from Data Delecta
and similar cases. First, the cautio judicatum solvi
is incompatible with Article 12 EC where it distinguishes between persons before national courts ‘in a situation governed by Community law’ on grounds of nationality, to the disadvantage of the non-national. Second, such a rule impinges upon a claimant’s right to enjoy the fundamental freedoms guaranteed by the Treaty, because the possibility (where necessary) of asserting a claim in the course of legal proceedings before a court having jurisdiction is an essential corollary to the exercise of those rights. (21)
37. I note that the interpretation of Article 12 EC has not been explicitly raised by the national court. In my view, it is however relevant to determining the outcome of the present case.
38. In order to invoke the Court’s case-law concerning cautio judicatum solvi, is it sufficient that the goods
which are the subject of the main proceedings are subject to the Treaty’s free movement provisions? Or must the claimant
in those proceedings also be an EU national or a company established within the territory of the Union?
39. The Court held recently in Vatsouras that two conditions must be satisfied in order for Article 12 EC to apply: ‘That provision [Article 12 EC] concerns situations coming within the scope of Community law in which a national of one Member State suffers discriminatory treatment in relation to nationals of another Member State solely on the basis of his nationality and is not intended to apply to cases of a possible difference in treatment between nationals of Member States and nationals of non-member countries’. (22)
40. In my view, the formula in the Court’s case-law on cautio judicatum solvi referring to ‘persons in a situation governed by Community law’ should be read in the light of the Court’s judgment in Vatsouras . Thus, the claimant in the main proceedings would have to satisfy two conditions: first, that the situation at issue falls within the scope of EU law; second, that the claimant is a national of a Member State who has been subjected to discriminatory treatment.
41. Since Guarnieri is a Monegasque company, it would follow that it cannot rely upon Article 12 EC.
42. Strictly speaking, that should be sufficient to dispose of the case. However, in case the Court considers that the nationality of the claimant is irrelevant to the application of Article 12 EC and/or wishes to examine the present matter further in the light of Articles 28 to 30 EC, I shall briefly assess how the free movement of goods provisions might apply.
43. Is the cautio judicatum solvi
a measure of equivalent effect to a quantitative restriction for the purposes of Article 28 EC?
44. It has been settled case-law since the Court’s judgment in Dassonville that ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to be considered as measures having an effect equivalent to quantitative restrictions’. (23)
45. Article 851 of the Belgian Judicial Code distinguishes between Belgian and non-Belgian nationals on the basis of nationality. It requires non-Belgian nationals to provide security for costs where there is no reciprocal arrangement between their State of nationality and Belgium. However, it is not in my view, a measure of equivalent effect within Article 28 EC.
46. The cautio judicatum solvi
is not a trading rule. It relates to the nationality of the litigant, not the origin of the goods, and its purpose is not to regulate trade. Nor is it a condition that is directly linked to the supply of goods in the same way as rules on packaging or labelling might be used to discriminate against foreign imports and thus hinder free movement. It is, rather, a rule of civil procedure. Its application is contingent upon two events. First, a dispute must arise subsequent to the conclusion of a contract (in the present case, for the supply of goods) that leads to litigation before the Belgian courts. Second, any such action must involve a Belgian national as defendant who chooses to avail himself of Article 851 of the Belgian Judicial Code.
47. In my view, the application of Article 851 of the Belgian Judicial Code is therefore too uncertain and indirect to constitute a hindrance to the free movement of goods for the purposes of Article 28 EC. (24)
48. If the Court disagrees with that view and considers that the cautio judicatum solvi
is a measure of equivalent effect for the purposes of Article 28 EC it will be necessary to consider whether it is justified by one of the reasons of public interest laid down in Article 30 EC. Because the contested national rule does not discriminate, so far as the goods
forming the subject-matter of the dispute are concerned, between imported and domestic products, it might also be capable of justification under one of the mandatory requirements, established in the Court’s case-law (25) (were the Court to consider that a third country national claimant may also invoke Article 12 EC, (26) the contested rule – being plainly discriminatory on grounds of nationality – would be capable of justification under Article 30 EC alone, not under the mandatory requirements case-law).
49. Belgium contends that the objective of Article 851 of the Judicial Code is to provide for legal certainty – to guarantee the proper execution of judgments in Belgian courts and tribunals. The purpose of the provision is to ensure that foreign nationals who are not subject to a reciprocal agreement do not avoid paying damages and interest when ordered to do so by the Belgian courts. Thus, the aim is to place foreign nationals in a similar position to Belgian nationals who are of course fully subject to their national courts’ enforcement jurisdiction.
50. Whilst I am prepared to accept that a rule of national procedural law regulating the provision of security for costs may, in principle, be capable of being regarded as pursuing an aim that is in the public interest – be that under the public policy exception in Article 30 EC or as a ‘mandatory requirement’ under ‘ Cassis de Dijon’
– neither the order for reference nor the written observations lodged by Belgium contain sufficient material to enable the Court to take the analysis further. I therefore consider that whether the cautio judicatum solvi
can be justified is a matter for the national court. In any examination of that question the national court should assess whether the rule is the least restrictive means of achieving the desired objective and whether it is proportionate. (27)
Conclusion
51. In the light of the above considerations, I am of the opinion that the Court should reply as follows to the question referred by the Rechtbank van Koophandel te Brussel:
Article 28 EC does not preclude a claimant of Monegasque nationality who lodges a claim in Belgium for payment of delivery of goods being required, upon application by a defendant of Belgian nationality, to give security for costs and damages which he may be ordered to pay arising from the proceedings.
(1) .
(2)  –	Since the main proceedings arose at a time before the Lisbon Treaty entered into force, I refer to the Treaty provisions as they stood at that time. The provisions of Article 12 EC are now to be found in Article 18 TFEU; those of Articles 28, 29 and 30 EC in Articles 34, 35 and 36 TFEU respectively; and those of Article 299 EC in Article 52 TEU and Article 355 TFEU. It should also be borne in mind that, prior to the entry into force of the Amsterdam Treaty in 1999, the provisions of Articles 28, 29 and 30 EC were to be found, subject to some variations, in Articles 30, 34 and 36 of the EC Treaty and are referred to as such in the older case-law cited. References to the Community in older case-law and legislation must obviously be interpreted as references to the European Union in the present context.
(3)  –	See the Agreement on Cooperation and Customs Union between the European Economic Community and the Republic of San Marino of 16 December 1991 (OJ 2002 L 84, p. 43).
(4)  –	Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), now replaced by Article 3(2) of Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ 2008 L 145, p. 1). Monaco has been part of the European Community customs territory at least since 1968, when Article 2 of Regulation (EEC) No 1496/68 of the Council of 27 September 1968 on the definition of the customs territory of the Community (OJ, English Special Edition 1968 (II), p. 436) declared that certain territories (including Monaco) situated outside the Community territory but listed in the annex to the Regulation were to be considered part of the customs territory of the European Community.
(5)  –	Case 41/76 Donckerwolcke
[1976] ECR 1921, paragraphs 14 to 18, established that products in ‘free circulation’ in the Community were those products which, coming from third countries, had been duly imported into any one of the Member States in accordance with the Treaty. Such products were definitively and wholly assimilated to products originating in the Member States. Accordingly, Article 30 of the EC Treaty applied without distinction to products originating in the Community and to those which had been put into free circulation in any Member State, irrespective of the actual origin of the products.
(6)  –	Case C‑220/98 [2000] ECR I‑117, points 12 to 14 of the Opinion.
(7)  –	Council Directive 76/768/EEC of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products (OJ 1976 L 262, p. 169).
(8)  –	Estée Lauder, cited in footnote 6 above, point 12 of the Opinion.
(9)  –	Estée Lauder, cited in footnote 6 above, point 14 of the Opinion.
(10)  –	This follows logically from Donckerwolcke, cited in footnote 5 above: such goods would, ex hypothesi, have been duly imported into the customs territory of the Community and have been definitively and wholly assimilated to goods of Monegasque origin.
(11)  –	Joined Cases C‑321/94 to C‑324/94 [1997] ECR I‑2343.
(12)  –	Case C‑448/98 [2000] ECR I‑10663.
(13)  –	Pistre, cited in footnote 11 above, paragraphs 44 and 45.
(14)  –	Pistre, cited in footnote 11 above, paragraphs 49 to 54.
(15)  –	The relevant legislation described Emmenthal cheese as follows: ‘a firm cheese produced by curing, pressing and salting on the surface or in brine; of a colour between ivory and pale yellow, with holes of a size between a cherry and a walnut; hard, dry rind, of a colour between golden yellow and light brown’.
(16)  –	Guimont, cited in footnote 12 above, paragraph 23.
(17)  –	Guimont, cited in footnote 12 above, paragraphs 25 to 35.
(18)  –	I develop this analysis further below in examining whether the contested rule is a measure of equivalent effect to a quantitative restriction: see point 43 et seq.
(19)  –	Case C‑20/92 Hubbard
[1993] ECR I‑3777 (provision of services); Case C‑43/95 Data Delecta and Forsberg
[1996] ECR I‑4661 (supply of goods); Case C‑323/95 Hayes
[1997] ECR I‑1711 (supply of goods); and Case C‑122/96 Saldanha and MTS [1997] ECR I‑5325 (company law – protection of shareholders’ interests).
(20)  –	Data Delecta, cited in footnote 19 above, paragraph 16.
(21)  –	See to that effect, the Opinion of Advocate General La Pergola in Hayes, cited in footnote 19 above, points 7 to 9.
(22)  –	Joined Cases C‑22/08 and C‑23/08 Vatsouras and Koupatantze
[2009] ECR I‑4585, paragraphs 51 and 52.
(23)  –	Case 8/74 [1974] ECR 837, paragraph 5. For examples of cases in which the Court has held that administrative formalities are measures of equivalent effect within Article 28 EC, see Case 154/85 Commission
v Italy
[1987] ECR 2717, paragraphs 8 to 12 (concerning requirements governing parallel importation of vehicles), and Case C‑54/05 Commission
v Finland
[2007] ECR I‑2473, paragraphs 38 and 39 (concerning a transfer licence system applied only to imported vehicles).
(24)  –	See, in the same vein, Case C‑69/88 Krantz [1990] ECR I‑583, paragraphs 11 and 12; Case C‑339/89 Alsthom Atlantique [1991] ECR I‑107, paragraphs 14 and 15; Case C‑93/92 CMC Motorradcenter
[1993] ECR I‑5009, paragraphs 10 to 13; and Case C‑412/97 ED [1999] ECR I‑3845, paragraphs 11 and 12.
(25)  –	Case 120/78 ‘ Cassis de Dijon’
[1979] ECR 649, paragraph 8.
(26)  –	See point 42 above.
(27)  –	See, for example, Commission
v Finland, cited in footnote 23 above, paragraph 38.