OPINION OF ADVOCATE GENERAL

STIX-HACKL

delivered on 11 July 2002 ( 1 )

I — Introduction

1. In its action under Article 226 EC for failure to fulfil Treaty obligations brought before the Court on 3 July 2001, the Commission seeks a declaration that, by failing to adopt the laws, regulations and administrative provisions necessary to comply with Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas ( 2 ) (‘the directive’), or in any event by not notifying the Commission thereof, the French Republic had failed to fulfil its obligations under that directive, in particular under Article 29 thereof.

II — Pre-litigation procedure and forms of order sought

2. Article 29 of the directive requires the Member States to adopt the provisions necessary to implement it in national law at the latest two years after the directive enters into force, and to inform the Commission thereof. The directive entered into force on 10 August 1998, and therefore this prescribed period ended on 10 August 2000.

3. By letter of 17 August 2000, the French authorities informed the Commission of the progress made towards implementing the provisions of the directive in French law. In this connection, the French Government stated that a bill had been approved by the Council of Ministers and was to be presented to Parliament.

4. Since the Commission received no further information from the French Government, by letter of 22 September 2000 it gave the French Government formal notice to submit observations within two months with regard to the failure to implement the directive in French law.

5. By letter of 21 November 2000, the French Government replied, stating that the implementation of the directive would entail extensive amendments to the legal framework in French law. However, it stated that French economic operators had already adopted transitional measures to liberalise network access.

6. On 5 February 2001, the Commission sent a reasoned opinion to the French Republic under Article 226 EC, requesting it to take the necessary measures within two months.

7. By letter of 6 April 2001, the French Republic replied, emphasising its intention to implement the directive in French law. In addition, it again stated that transitional measures were in place to ensure that the aims of the directive were met directly.

8. Since the Commission regarded such measures as insufficient and moreover received no notification that the measures necessary to implement the directive had been taken, it decided to bring this action before the Court. The Commission claims that the Court should: — declare that, by failing to adopt the laws, regulations and administrative provisions necessary to comply with Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas, ( 3 ) or in any event by not notifying them to the Commission, the French Republic had failed to fulfil its obligations under that directive, and in particular under Article 29 thereof; — order the French Republic to pay the costs of the proceedings.

9. In the defence, the French Republic claims that the Court should: — dismiss the action in part.

III — Failure to fulfil Treaty obligations

A — Submissions of the parties

10. The Commission, referring to the obligations of the Member States under Articles 10 EC and 249(3) EC and to the fact that the Court has consistently held that a Member State may not rely on provisions, practices or circumstances existing in its internal legal system to justify a failure to comply with the obligations and time-limits laid down in the directive, submits that the French Republic has failed to fulfil its obligations under Article 29 of the directive.

11. In the reply, the Commission also submits that the existence of a transitional system, such as that apparently initiated by the market participants, does not create a legal situation that is certain enough to release the Member State from its obligation to adopt laws, regulations and administrative provisions. In this connection, it refers to the decisions of the Court which hold that, in order to ensure that directives are fully applied in practice as well as in law, Member States must provide a precise legal framework in the field in question, by adopting rules of law capable of creating a situation which is sufficiently precise, clear and transparent to enable individuals to know their rights and to be able to rely on them before the national courts. ( 4 ) The latter is of particular importance where a directive is to give rights to nationals of other Member States, as in the present case.

12. In addition, in its judgment of 29 October 1998 in Commission v Greece ( 5 ) the Court stated that ‘the maintenance in force of legislation which, if it had not become obsolete, would infringe Community law, is likely to engender doubt incompatible with the principle of legal certainty, in so far as such a situation exacerbates the difficulties for potential beneficiaries in ascertaining the extent of their rights’.

13. The French Government submits that in order to fulfil the obligations of the Member States under the provisions cited by the Commission it is not necessary to formally adopt provisions. On the contrary, it is sufficient to make practical changes in the management of a sector which are appropriate to achieve the goals of the directive.

14. The French Government considers that having regard to the goals of the directive, in particular as set out under the seventh and ninth recitals in the preamble, it has fulfilled its obligations at least in part, as the liberalisation of the gas sector has been implemented in practice in France, by a transitional system for that purpose.

15. With regard to this transitional system for access to the long-distance pipeline network and distribution network, the French Government points out that it entered into force on 10 August 2000 and the Commission was notified of it on 17 August 2000. This system permitted eligible customers to have access to the network under contracts with a minimum term of one year. The general terms and conditions and the rates for this access were published by the relevant participants in the market. In addition, the customers given access had the possibility of having the use for a limited period of time of storage facilities at certain points on the network, albeit with the proviso that they made certain guarantees as to the daily volumes.

16. In the opinion of the French Government, this system made it possible for certain customers to renegotiate their gas supply contracts and even change their supplier. Fourteen per cent of the eligible customers in France changed their supplier within one year; four new suppliers started business in the same period.

17. In addition, the participants in the market had undertaken to separate their accounting for transport and trade activities and to ensure a perfect transparency of trade and financial relationships between these activities.

18. In the rejoinder, the French Government adds that the Commission questioned the form of implementation, but not the effectiveness of the measures taken.

19. The French Government also submits that the liberalisation of the gas sector in France will proceed more rapidly. In the first place, some of the measures necessary for this have been passed. It mentions, in particular, Article 81 of the Finance Amendment Act of 31 December 2001, which is to abolish the concession system for gas lines. In the second place, the opening of the market achieved by the transitional system mentioned above affects a growing proportion of the consumption of eligible customers. The French Government estimates this proportion at approximately 30%.

20. It follows that the concrete implementation of the directive in national law is to be assessed not only on the basis of its formal implementation, but also in the light of the actual opening-up of the gas market in France.

B — Appraisal

21. Since the French Government does not deny that there has been delay in preparing the necessary legislative measures, it also does not deny that it failed to implement the directive within the prescribed period.

22. The existence or introduction of certain practices among the participants in the market which are to achieve a liberalisation of access to the network — for a transitional period, according to the French submissions — does not alter this fact.

23. The French Government does emphasise that, according to settled case-law, ‘legislative action on the part of each Member State is not necessarily required in order to implement a directive’. ( 6 )

24. However, this possibility — again according to settled case-law — is subject to the proviso that ‘it is essential for national law to guarantee that the national authorities will effectively apply the directive in full, that the legal position under national law should be sufficiently precise and clear, and that individuals are made fully aware of all their rights and, where appropriate, may rely on them before the national courts’. ( 7 )

25. In this connection, the Court emphasises that ‘this last-mentioned condition is of particular importance where the directive in question is intended to accord rights to nationals of other Member States’. ( 8 )

26. However, the certainty of law demanded by the Court in settled case-law is, according to the French Government's own submissions, very unlikely to be guaranteed in the present case.

27. First, it should be noted that the French Government did not deny that the national law (which continues in force) does not satisfy the requirements of the directive. Rather, it relies on the existence of practical measures taken by the participants in the market involved, which are said to be capable of realising the aims of the directive for the transitional period until the directive is implemented in national law.

28. In the reply, however, the Commission rightly refers to the judgment in Case C-23 6/9 1, ( 9 ) according to which ‘mere administrative practices, which by their nature are alterable at will by the authorities and are not given the appropriate publicity, cannot be regarded as constituting the proper fulfilment of a Member State's obligations under the Treaty’. ( 10 )

29. In my opinion, this must apply all the more to practices or — in the present case — what is called a transitional system adopted by the market participants in question. It should be recalled here that the subject of the directive is the opening of the market, in particular for undertakings from other Member States. It therefore accords these participants in the market rights within the meaning of the case-law cited above, ( 11 ) so that it may be assumed that there is a greater need of certainty in the law.

30. Firstly, even some participants in the market may in principle change their own practices at will. ( 12 ) This is as impossible to reconcile with the requirement of legal certainty, as is the lack of transparency of such practices or the slight degree of familiarity that can be expected. ( 13 )

31. Nor does the maintenance of national legislation that is in itself incompatible with the directive, even if practical measures of the Member State concerned are in accordance with the directive, ensure adequate certainty and clarity in the national legal order. Here it is sufficient to refer to the established case-law of the Court, which holds that ‘the maintenance of national legislation which is itself incompatible with Community law, even if the Member States concerned act in accordance with Community law, gives rise to an ambiguous state of affairs by maintaining, as regards those subject to the law who are concerned, a state of uncertainty as to the possibilities for them of relying on Community law’. ( 14 )

32. It follows from all this that the system described by the French Government is not sufficient to ensure proper implementation of the directive in national law. Since, therefore, the directive was not implemented within the prescribed period, the Commission's action must be considered to be well founded.

33. By failing to adopt within the prescribed period the laws, regulations and administrative provisions necessary to comply with the directive, the French Republic has thus failed to fulfil its obligations under the directive.

34. Under Article 69(2) of the Rules of Procedure, the unsuccessful party, on application, is to be ordered to pay the costs. Since the Commission has applied for the French Republic to be ordered to pay the costs and the French Republic has been unsuccessful, the French Republic must be ordered to pay the costs.

IV — Conclusion

35. In the light of the foregoing, I propose that the Court (1) declare that, by failing to adopt within the prescribed period the laws, regulations and administrative provisions necessary to comply with Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas, or in any event by not notifying the Commission thereof, the French Republic has failed to fulfil its obligations under that directive, in particular under Article 29 thereof; (2) order the French Republic to pay the costs of the proceedings.

( 1 ) Original language: German.

( 2 ) OJ 1998 L 204, p. 1.

( 3 ) Cited above in footnote 2.

( 4 ) In this connection, the Commission relics, in particular, on Case C-220/94 Commission v Luxembourg (1995) ECR I-1589 and Case C-162/99 Commission v Italy [2001] ECR I-541.

( 5 ) Case C-185/96 Commission v Greece [1998) ECR I-6601, paragraph 30.

( 6 ) See, for example, Case C-144/99 Commission v Netherlands [2001] ECR I-3541, paragraph 17.

( 7 ) See the judgment cited in footnote 6, paragraph 17.

( 8 ) Sec the judgment cited in footnote 6, paragraph 18.

( 9 ) Commission v Ireland [1992] ECR I-5933, paragraph 6.

( 10 ) See also, most recently, Case C-367/98 Commission v Portugal [2002] ECR 4731, paragraph 41.

( 11 ) See above, paragraph 25.

( 12 ) The files give no information as to any form of national supervision.

( 13 ) The possibility of consulting the general terms and conditions of contract and the rates on the Internet is therefore probably insufficient, since this information cannot take the place of a clear legal framework.

( 14 ) Judgment cited above in footnote 5 (paragraph 32, with further references).