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COMMISSION OPINION

of 28 February 1985

addressed to the French Government pursuant to Council Regulation (EEC) No 954/79 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a code of conduct for liner conferences

(85/185/EEC)

1. In accordance with the consultation procedure referred to in Article 6 of Council Regulation (EEC) No 954/79 of 15 May 1979 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a code of conduct for liner conference (1), the French Permanent Representation to the European Communities, under a covering letter dated 21 November 1984, sent the Commission the following documents:

(a) a draft Law authorizing approval of the United Nations Convention on a code of conduct for liner conferences, together with an explanatory memorandum;

(b) a draft Law concerning the ratification of the United Nations Convention on a code of conduct for liner conferences, together with an explanatory memorandum.

These were discussed with the relevant Commission departments on 20 December 1984.

2. An examination of the documents calls for the following observations:

(a) draft Law referred to in 1 (a) above: no comments;

(b) draft Law referred to in 1 (b) above:

Article 1 of the draft Law should be applied in such a way as to take full account of Article 1 of Regulation (EEC) No 954/79, and in particular the reservations. As indicated in the explanatory memorandum, the French Government is prepared to do so.

Among the criteria for participating in commercial negotiations with a view to acceding to a given conference, Article 3 of the draft Law requires that companies must regularly and primarily use ships flying the French flag. According to information given by the French administration, French law permits foreigners to hold up to 100 % of the registered capital of a company and therefore, particularly in view of the judgments of the Court of 4 April 1974 and 21 June 1974 in case No 167/73 and case No 2/74 respectively, this provision of the draft law does not run counter to the provisions concerning the right of establishment laid down in the Treaty.

Article 4 of the draft Law lays down criteria for conciliation proceedings between the parties concerned in the event of commercial negotiations breaking down.

The criteria include those provided for in the minutes of the Council meeting at which Regulation (EEC) No 954/79 was adopted.

Taking the criterion provided for in the first indent of Article 4 (recourse to chartering) in conjunction with the last indent of Article 3 (regularly and primarily using vessels flying the French flag) gives rise to the following comment: Whilst Article 3 permits recourse to chartering, the criterion laid down in the first indent of Article 4 give preference to shipowners. It would therefore seem that discrimination might occur in the following hypothetical case: A company based in another Member State could establish an agency or a branch in France but if it were regularly and primarily to make use of vessels flying the French flag it would have to use chartered ships only.

Under Article 3 the said agency or branch would then be able to participate in the commercial negotiations provided for in Article 2 (1) of Regulation (EEC) No 954/79. However, in the event of a dispute being brought before the administrative authorities, the said agency or branch would be penalized for the very fact of having used a chartered ship, because of the criterion laid down in the first indent of Article 4.

The representatives of the French Government have indicated that they will be able to amend the wording so as to eliminate the potential - unintended - discrimination against nationals of the Member States.

If such an amendment is made, the problem will be solved.

As far as Article 3 is concerned, it would be desirable for the French Government to amend Article 3 of its draft Law to the effect that, subject to reciprocity, shipping lines of other OECD member countries may be accepted as 'national lines'.

As regards the explanation of Article 3 in the explanatory memorandum, the Commission cannot agree with the French Government that the requirement to fly the national flag is consistent with the Code, even though one Article - Article 23 (2) - refers to the potential use of a flag. On the contrary, the text of the Code seems to be based rather on recognition of the possible need of developing countries to charter ships flying another flag (see the definition of a national line and Article 2 (11)).

3. Subject to the abovementioned conditions, the Commission therefore hereby issues a favourable opinion on the draft Law communicated by the French Government.

Done at Brussels, 28 February 1985.

For the Commission

Stanley CLINTON DAVIS

Member of the Commission

(1) OJ No L 121, 17. 5. 1979, p. 1.