Opinion of Mr Advocate General Lenz delivered on 15 March 1989. - Commission of the European Communities v Council of the European Communities. - Maritime transport - Cargo-sharing arrangement - Authorization given by the Council to a Member Sate to ratify an agreement concluded with a non-member country. - Case 355/87.



European Court reports 1989 Page 01517



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

A - Facts

1 . In the case with which we are concerned today we are once again faced with the sometimes delicate problem of how principles of European Community law can be applied in relation to non-member countries .

2 . During the 1980s the Italian Republic, the intervener in these proceedings, experienced certain difficulties in its trade relations with Algeria; Algeria was frequently reserving for Algerian vessels the carriage of cargoes on liner services between Italy and Algeria . The Italian share of liner traffic with Algeria fell during that period from approximately 40% to approximately 12% of the total .

3 . In July 1985 the Italian Republic informed the other Member States and the Commission of the European Communities ( the applicant ) of those difficulties . However, a diplomatic démarche in October 1985 on behalf of the Community and the Member States met with no practical results .

4 . On 17 March 1987 the Italian Government informed the Commission of its Agreement on Maritime Transport and Navigation with the People' s Democratic Republic of Algeria which had been initialled on 30 January 1987 and signed on 28 February 1987 . ( 1 )

5 . That information was regarded by the Community institutions as notification pursuant to Article 6(1 ) of Council Regulation No 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries, ( 2 ) which had come into force on 1 January 1987 .

6 . On 6 July 1987 the Commission submitted to the Council, the defendant, a proposal for a decision pursuant to Article 6(2 ) of Regulation No 4055/86 . It proposed that Italy should be authorized to ratify the agreement it had negotiated with Algeria subject to the conditions that :

( i ) Italy would accede as rapidly as possible to the United Nations Convention on a Code of Conduct for Liner Conferences;

( ii ) the cargo-sharing arrangement contained in the Agreement would be brought into line with Community law;

( iii ) the cargo-sharing arrangement would cease to have effect as soon as the Code of Conduct was applicable to trade between Italy and Algeria, and at the latest three years after the adoption of the Council' s decision .

7 . On 17 September 1987 the Council unanimously adopted the contested decision relating to maritime transport between Italy and Algeria, ( 3 ) in which the Italian Republic was authorized to ratify the Agreement with Algeria "on the understanding that (( nell' intesa che essa, étant entendu que )) Italy"

( i ) would take the necessary steps to accede as soon as possible to the Code of Conduct;

( ii ) would reiterate to Algeria that the provisions of the Agreement would be implemented in accordance with Community law .

8 . In the mean time Algeria had ratified the Code of Conduct, which entered into force as regards that State on 12 June 1987 . For its part Italy had initiated the parliamentary procedure for the approval of the Code and of the Agreement but at the time of the hearing they had not yet been finally approved .

9 . The applicant takes the view that by adopting the decision the defendant has infringed Articles 5 and 6 of Regulation No 4055/86 and Article 7 of the EEC Treaty . It also alleges a breach of essential procedural requirements .

10 . The applicant therefore claims that the contested decision should be declared void .

11 . The defendant and the intervener contend that the application should be dismissed . They consider the decision to be lawful .

12 . I shall examine the content of the Agreement, the details of the proposed decision and the submissions of the parties during the course of my analysis . For the rest I would refer to the contents of the Report for the Hearing .

B - Analysis

Admissibility

13 . The admissibility of the application is not open to any serious doubt . It will be established in the course of my examination of the merits that the intervener is subject to the same obligations under Community law whether or not the application is successful . Those obligations of the intervener will, however, be affected only indirectly by the present proceedings; the direct issue is the legality of a decision of the defendant, which the applicant can challenge without proving a particular interest in bringing proceedings . ( 4 )

The power of Member States to conclude international agreements on maritime transport

14 . In the statement of the reasons for its proposal for the contested decision, the applicant explained that the negotiation and conclusion of a cargo-sharing arrangement fall in fact within the powers of the Community . In the oral procedure too the plaintiff put forward that basic view, but stated that in certain circumstances, in particular if an international agreement had already been negotiated and only certain amendments were to be added before its ratification, the Member State could be authorized to conclude the agreement .

15 . Although the applicant did not elaborate on that point of view, I believe it is necessary to examine it further since the boundary between the competence of the Community on the one hand and of the Member States on the other, in particular as regards international obligations assumed with regard to third countries, which thus cannot be terminated unilaterally, is of particular importance for the constitutional structure of the Community .

16 . As we know, on 22 December 1986 the Council adopted a series of measures in connection with maritime transport : Regulation No 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries; Regulation No 4056/86 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport; Regulation No 4057/86 on unfair pricing practices in maritime transport and Regulation No 4058/86 concerning coordinated action to safeguard free access to cargoes in ocean trades . ( 5 )

17 . The Community thereby made maritime transport subject to Community rules . Consequently, as the Court has held, the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those legal rules .

18 . As and when such common rules come into being, the Community alone is in a position to assume and carry out contractual obligations towards third countries affecting the whole sphere of application of the Community legal system . ( 6 ) The system of internal Community measures may not be separated from that of external relations .

19 . However, as is also explained in the above-cited judgment of 31 March 1971, ( 7 ) this distribution of powers is only required where negotiations are undertaken at a time when the vesting of powers in the Community has taken effect, either by virtue of the Treaty itself or by virtue of measures taken by the institutions . In this connection it must be borne in mind that the negotiations between Italy and Algeria took place for the most part before 1 January 1987, the date on which Regulation No 4055/86 entered into force . The basic distribution of powers between the Community and the Member States thus still permitted the conclusion of an agreement by Italy .

20 . That result is further underscored by the fact that under Article 2 of Regulation No 4055/86 national restrictions in existence before 1 July 1986 are to be phased out in accordance with a specific timetable, that is to say, as regards carriage between Member States and third countries by 31 December 1991 or 1 January 1993 . That point, which is relevant here, since the negotiations between Italy and Algeria had already been initiated before 1 January 1987, shows that the implementation of Community law in maritime transport to and from non-member countries was not required immediately but was to be introduced in stages .

21 . Finally, that conclusion is supported by a comparison with Regulation No 4056/86, also adopted on 22 December 1986, laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport . Under the heading "Conflicts of international law", Article 9(2 ) of that regulation, which entered into force in its entirety on 1 July 1987, also provides for the possibility of agreements with third countries and lays down rules for the negotiating procedure modelled on the procedure of Article 113 of the EEC Treaty . That indicates the conclusion of Community agreements .

22 . The situation is different, however, in regard to Article 6(2 ) of Regulation No 4055/86, which is worded more flexibly and is more consistent with the fact that the regulation is in certain respects to be implemented only in stages .

23 . Consequently it must be held that Italy has the power to conclude a maritime transport agreement with Algeria .

Breach of Articles 5 and 6 of Regulation No 4055/86

24 . The applicant complains that the Agreement between Italy and Algeria contains a cargo-sharing arrangement . The conditions under which the defendant could authorize a Member State to conclude a cargo-sharing arrangement were not, however, fulfilled .

25 . The defendant and, albeit not so clearly, the intervener regard the main purpose of the Agreement as the establishment of a liner conference, not provisions on the sharing of cargoes .

26 . Article 4 of the Agreement provides as follows :

"Shipowners will be responsible for taking the measures necessary for the organization and sharing of trade in the framework of a conference or other organization of shipowners for the most effective operation of lines, in accordance with the trade-sharing principle laid down in the Code of Conduct for Liner Conferences and subject to compliance with the international obligations of each party ."

27 . As the defendant asserts, that provision does not amount directly to a trade-sharing arrangement . It does, however, provide that the shipowners concerned are to engage in such trade-sharing in the framework of a conference or other organization .

28 . I have no hesitation in regarding such a provision as a cargo-sharing arrangement under Articles 5 and 6 of Regulation No 4055/86 . That assessment does not necessarily follow from the applicant' s submissions, which conclude from the wording of the French version of the regulation (" arrangement en matière de partage des cargaisons ") that the concept of a cargo-sharing arrangement should be interpreted broadly so as to cover every arrangement that provides for or entails the sharing of trade . The decisive point to my mind is that according to the spirit and purpose of Regulation No 4055/86 cargo-sharing arrangements are in principle undesirable and only permitted in exceptional cases . If, as a rule, the Member States are not allowed to conclude cargo-sharing agreements themselves, then they cannot encourage or prescribe the making of such arrangements by private individuals either .

29 . Consequently I regard the rules in Article 4 of the Agreement as a cargo-sharing arrangement covered by Articles 5 and 6 of Regulation No 4055/86 .

30 . That is not to say, however, that the resulting cargo-sharing arrangement is not permissible, since according to Article 6(2 ) of the regulation cargo-sharing arrangements may be concluded even in future agreements with third countries, in exceptional circumstances where Community shipowners would otherwise have no effective opportunity to ply for trade to and from the third country concerned or where there is a threat of such a situation .

31 . It is not disputed that Algeria' s conduct in reserving for ships flying the Algerian flag the transport of cargoes to Algeria led to a significant fall in the Italian share of trade from 40 to 12% of the total volume . Such a change in the share of trade, brought on by the deliberate conduct of a third country can be regarded as exceptional circumstances warranting the action provided for in Article 6 of Regulation No 4055/86 .

32 . Having regard to the basic stance of Regulation No 4055/86, the rejection of cargo-sharing arrangements, the applicant' s view that such arrangements should be considered only as a last resort when all other possible means of giving shipowners an effective opportunity to ply for trade to and from the third country concerned have been exhausted is perfectly valid .

33 . The applicant considers that means encroaching less on Community law were in fact available inasmuch as the Member State concerned could have acceded to the United Nations Convention on a Code of Conduct for Liner Conferences in accordance with Council Regulation No 954/79 of 15 May 1979, ( 8 ) as the Member States were required to do by that regulation and by Article 5 of the EEC Treaty .

34 . It should be pointed out first of all that Article 2 of the Code of Conduct provides that a conference is to determine the shares of trade of the member lines . It is not obvious - and was not explained - how the "determination of the share of trade" can be distinguished from a cargo-sharing arrangement under Regulation No 4055/86 . It should also be borne in mind that Article 4 of the Agreement between Italy and Algeria provides for the organization and sharing of trade in the framework of a conference "in accordance with the trade-sharing principle laid down in the Code of Conduct for Liner Conferences ". Since the Agreement refers to the Code of Conduct and that code permits the determination of shares of trade, it is not clear how the resolution of the difficulies between Italy and Algeria in the framework of the Code of Conduct is "more in keeping with Community law" than the solution sought by means of the Agreement .

35 . The applicant submitted that under Article 3 of Regulation No 954/79, in the regulation of trade under the Code of Conduct shipping lines of other Member State are ensured fair access to the trade regulated by the conference, since the volume of cargo to which the group of national shipping lines of each Member State participating in that trade is entitled is to be redistributed .

36 . However, Article 3(1 ) of Regulation No 954/79 expressly permits other arangements by unanimous decision . The decisive point is that Regulation No 954/79 constitutes purely internal Community law which is in no way binding on third countries . Furthermore, in that respect the content of Article 3 of that regulation is not the same as that of the reservations which the Member States are to enter when ratifying the Code of Conduct . Even if it was incorporated into the reservations, there is nothing at all to say how far third countries are to accept those reservations or to comply with them .

37 . Moreover, the interpretation of Articles 5 and 6 of Regulation No 4055/86 put forward by the applicant would have the result of obliging Member States who find themselves in "exceptional circumstances" to accede to the Code of Conduct . The obligation to accede to the Code of Conduct would thus differ from one Member State to another because, contrary to the applicant' s view, no such obligation is to be inferred from Regulation No 954/79 . That is quite clear from a comparison of the applicant' s proposal for the regulation, which contains such an obligation and even a time-scale for compliance, and the text which was ultimately accepted by the Council .

38 . Regulation No 954/79 was intended only to lay down measures concerning accession by Member States to the Code of Conduct, not to create an obligation to accede to it .

39 . When Regulation No 954/79 was adopted the Member States were no doubt entitled, given that the common maritime transport policy had not then been elaborated, to accede to the Code of Conduct . After the adoption of the measures of 22 December 1986, which considerably advanced the common maritime transport policy, the question arises whether Member States still have the power to accede to the Code of Conduct . Having regard to the principles set out in the judgment of 31 March 1971 in Case 22/70 on the division of powers between the Community and the Member States I would have very serious doubts on the issue, which would not be dispelled by reference to the fact that under Article 48 only States are entitled to accede to the Code of Conduct . If need be the Code of Conduct would have to be amended to enable the Community to accede to it, either by way of the simplified amendment procedure under Article 51 or as part of a review under Article 52 of the Code of Conduct .

40 . Consequently, there can be no question of an obligation to accede to the Code of Conduct as asserted by the Commission .

Breach of the prohibition of discrimination

41 . With regard to the alternative claim that the contested decision is contrary to the prohibition of discrimination contained in Article 7 of the EEC Treaty, it should first be observed that Article 3 of the agreement between Italy and Algeria expressly mentions only ships flying the Algerian or Italian flag . However, Article 3 also provides that it is not to affect the right of ships from third countries to carry cargoes . Furthermore, it is open to the contracting parties to charter ships from third countries and, finally, it is laid down in Article 4 of the Agreement that conferences are to share out trade subject to compliance with the international obligations of each party .

42 . In view of those rules the intervener is at least in a position when implementing the Agreement to fulfil its obligations under Community law, including, naturally, compliance with Article 7 of the EEC Treaty and the more specific expression of that principle contained in Article 6(4 ) of Regulation No 4055/86 .

43 . The obligation in Article 7 of the EEC Treaty indirectly implies compliance with the content of Article 6(4 ) of the regulation, and the same would be true directly if the contested decision were annulled and the intervener found itself in the situation described in Article 6(3 ) of the regulation where the Council had reached no decision .

44 . If, in those circumstances, the defendant has, in the contested decision, directed the intervener to reiterate to Algeria that the agreement is to be implemented in accordance with Community law, then the authorization of the intervener to ratify the agreement cannot be regarded as a breach of the prohibition of discrimination since the decision assumes that the agreement will be implemented in accordance with Community law and that is in fact possible .

45 . The intervener is under an obligation to comply with Community law in its implementation of the agreement; in accordance with its general duty under Article 155 of the EEC Treaty to ensure that the provisions of the Treaty and the measures taken by the institutions pursuant thereto are applied it is also the task of the applicant to supervise the implementation of the agreement and if necessary take steps under Article 169 of the EEC Treaty .

Breach of the duty to state reasons

46 . The applicant complains that in not regarding Article 4 of the Agreement as a cargo-sharing arrangement and not specifying the "exceptional circumstances" in which the intervener found itself the defendant has not fulfilled its duty to state reasons under Article 190 of the EEC Treaty .

47 . That complaint cannot be upheld . In its decision the defendant referred to the Algerian practices, the information provided by the intervener and the applicant' s proposal . Thus the parties were aware of the situation with which the defendant' s decision was concerned .

48 . Nor is the fact that the defendant omitted to designate Article 4 of the agreement as a cargo-sharing arrangement a matter for objection . The content of Article 4 is the subject-matter of the decision . However, an assessment of its legality is not of substantial importance in regard to the statement of the reasons for the decision, since where exceptional circumstances exist cargo-sharing arrangements are permissible .

Breach of the applicant' s right of initiative

49 . The applicant complains that the defendant has exceeded the limits of its right to make amendments under Article 149(1 ) of the EEC Treaty . Although the Council may make amendments to a proposal of the Commission by a unanimous decision, it cannot completely reverse a proposal as it did in the present case .

50 . That submission does not stand up to a reading of the proposal for the decision and the decision itself .

51 . The applicant' s assertion during the oral procedure that it proposed a negative decision to the defendant is not correct . Rather, it proposed that the intervener should be authorized to ratify the agreement, but that that ratification should be made subject to certain preconditions .

52 . In its decision the defendant gave such authorization but weakened the conditions for the grant of authorization by substituting directions for the "preconditions" proposed by the applicant .

53 . Since the proposal for the decision and the decision are essentially consistent and modifications are to be found only in the conditions on which the authorization was granted, I do not consider it necessary in the present case to enter into the question of principle whether Article 149(1 ) places limits on the Council' s right of amendment and where those limits might lie in any given case .

C - Opinion

54 . In the result I propose that the Court decide as follows :

"( 1 ) The application is dismissed .

( 2)The applicant is to bear the costs of the proceedings, including those of the intervener ."

(*) Original language : German .

( 1 ) This draft agreement will hereinafter be referred to as the "Agreement ".

( 2 ) OJ 1986, L 378, p . 1 .

( 3 ) OJ 1987, L 272, p . 37 .

( 4 ) See the judgment of the Court of 26 March 1987 in Case 45/86 Commission v Council (( 1987 )) ECR 1493 .

( 5 ) OJ 1986, L 378, pp . 1, 4, 14 and 21 .

( 6 ) Judgment of the Court of 31 March 1971 in Case 22/70 Commission v Council (( 1971 )) ECR 263, at p . 275 .

( 7 ) Loc . cit ., p . 282 .

( 8 ) Council Regulation No 954/79 of 15 May 1979 concerning the ratification by the Member States of, or their accession to, the United Nations Convention on a Code of Conduct for Liner Conferences ( Official Journal 1979, L 121, p . 1 ).