Judgment of the Court (Fifth Chamber) of 12 June 1997. - Commission of the European Communities v Ireland. - Failure of a Member State to fulfil its obligations - Registration of vessels other than fishing vessels - Nationality requirement for the owner. - Case C-151/96.



European Court reports 1997 Page I-03327



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

Freedom of movement for persons - Freedom of establishment - Registration of a vessel other than a fishing vessel in a Member State - Condition relating to the nationality of the owners - Not permissible

(EC Treaty, Arts 6, 48, 52 and 58; Commission Regulation No 1251/70, Art. 7; Council Directive 75/34, Art. 7)

Summary

A Member State which maintains in force laws, regulations or administrative provisions limiting the right to register a vessel other than a fishing vessel in the national register to vessels which are owned in whole or in part by the Government, a Minister, a citizen of that Member State or a body corporate established under national law fails to fulfil its obligations under Community law.

Specifically, with regard to vessels used for the pursuit of an economic activity, such legislation is contrary to Article 52 of the Treaty in so far as it makes registration subject to a condition that where a vessel is owned or chartered by natural persons they must be of a particular nationality and, in the case of a company, the shareholders and directors must be of that nationality. Furthermore, such legislation is contrary to Articles 52 and 58 of the Treaty in so far as it requires legal persons owning vessels to be established under and subject to national law and to have their principal place of business in that Member State, thus precluding registration or management of a vessel in the case of a secondary establishment such as an agency, branch or subsidiary.

With regard to vessels not used for the pursuit of an economic activity, registration in the host Member State by a national of another Member State falls within the scope of the Community provisions relating to freedom of movement for persons and such legislation, in so far as it allows only nationals to register pleasure craft which they own, is contrary to Articles 6, 48 and 52 of the Treaty, Article 7 of Regulation No 1251/70 on the right of workers to remain in the territory of a Member State after having been employed in that State and Article 7 of Directive 75/34 concerning the right of nationals of a Member State to remain in the territory of another Member State after having pursued therein an activity in a self-employed capacity.

Parties

In Case C-151/96,

Commission of the European Communities, represented by Frank Benyon, Legal Adviser, and Xavier Lewis, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

applicant,

v

Ireland, represented by Michael A. Buckley, Chief State Solicitor, acting as Agent, with an address for service in Luxembourg at the Irish Embassy, 28 Route d'Arlon,

defendant,

APPLICATION for a declaration that, by maintaining in force laws, regulations and administrative provisions which limit the right to register a vessel other than a fishing vessel in the Irish shipping register to a vessel which is owned in whole or in part by the Government, a Minister of State, an Irish citizen or an Irish body corporate, Ireland has failed to comply with Articles 6, 48, 52 and 58 of the EC Treaty, Article 7 of Commission Regulation (EEC) No 1251/70 of 29 June 1970 on the right of workers to remain in the territory of a Member State after having been employed in that State (OJ 1970 L 142, p. 24) and Article 7 of Council Directive 75/34/EEC of 17 December 1974 concerning the right of nationals of a Member State to remain in the territory of another Member State after having pursued therein an activity in a self-employed capacity (OJ 1975 L 14, p. 10),

THE COURT

(Fifth Chamber),

composed of: J.C. Moitinho de Almeida, President of the Chamber, C. Gulmann, J.-P. Puissochet, P. Jann (Rapporteur) and M. Wathelet, Judges,

Advocate General: C.O. Lenz,

Registrar: R. Grass,

having regard to the Report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 15 April 1997,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 6 May 1996, the Commission of the European Communities brought an action under Article 169 of the EC Treaty for a declaration that, by maintaining in force laws, regulations and administrative provisions which limit the right to register a vessel other than a fishing vessel in the Irish shipping register to a vessel which is owned in whole or in part by the Government, a Minister of State, an Irish citizen or an Irish body corporate, Ireland has failed to comply with Articles 6, 48, 52 and 58 of the EC Treaty, Article 7 of Commission Regulation (EEC) No 1251/70 of 29 June 1970 on the right of workers to remain in the territory of a Member State after having been employed in that State (OJ 1970 L 142, p. 24) and Article 7 of Council Directive 75/34/EEC of 17 December 1974 concerning the right of nationals of a Member State to remain in the territory of another Member State after having pursued therein an activity in a self-employed capacity (OJ 1975 L 14, p. 10).

2 Section 2 of the Irish Mercantile Marine Act 1955 provides, inter alia:

`(1) In this Act:

...

"Irish body corporate" means a body corporate established under and subject to the law of the State and having its principal place of business in the State ...'.

3 Section 9 states:

`The following ships shall be known as Irish ships and shall, subject to subsection (3) of section 18 of this Act, be entitled to wear the proper national colours and assume national character:

(a) State-owned ships;

(b) ships which are wholly owned by persons being citizens of Ireland (hereinafter referred to as Irish citizens) or Irish bodies corporate and are not registered under the law of another country;

(c) other ships registered or deemed to be registered under this Act.'

4 Section 16 provides:

`Subject to section 19 of this Act respecting reciprocating States, the following shall alone be qualified to own a registered ship or a share therein:

(a) the Government;

(b) a Minister of State;

(c) an Irish citizen;

(d) an Irish body corporate.'

5 In its complaints, the Commission distinguishes between vessels which are a means of pursuing an economic activity and those which are not.

6 As to the former, it claims that, by restricting the right to be registered in the Irish register and to fly the Irish flag to vessels which are owned or shared by the Government, a Minister of State, an Irish citizen or an Irish body corporate, sections 9 and 16 of the Mercantile Marine Act discriminate on grounds of nationality, contrary to Article 52 of the Treaty. According to the Commission, the same applies to the requirement under section 2 of the Act in conjunction with section 9 that companies owning vessels registered in Ireland must be established under and subject to Irish law and have their principal place of business in Ireland. It relies in that regard on the judgments in Case C-221/89 The Queen v Secretary of State for Transport ex parte Factortame and Others [1991] ECR I-3905, in Case C-93/89 Commission v Ireland [1991] ECR I-4569, in Case C-246/89 Commission v United Kingdom [1991] ECR I-4585 and in Case C-334/94 Commission v France [1996] ECR I-1307.

7 The Commission also considers that the requirement under sections 2 and 9 of the Act impedes the freedom of establishment of companies fulfilling the conditions laid down in Article 58 of the Treaty. Furthermore, the argument that registration is not needed in order to exercise the right of establishment was expressly rejected in Factortame and Others, at paragraph 25.

8 As regards vessels not used to pursue an economic activity, the Commission considers that, although registration of a pleasure craft does not concern conditions of employment in the strict sense, the opportunity for Community nationals to pursue leisure activities in the host Member State is a corollary of their right to freedom of movement under Articles 48 and 52 of the Treaty, which prohibit all discrimination on grounds of nationality. Under Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34, the same holds for persons entitled to remain in a Member State after working there. The Commission refers in that regard to the judgment in Commission v France, cited above, paragraphs 20 to 23.

9 Ireland acknowledges that it must permit registration of merchant vessels and pleasure craft owned by nationals of another Member State or by bodies corporate established under and subject to the law of another Member State and which have their principal place of business in a Member State. It contends, however, that, as Irish law now stands, Community nationals may establish themselves in Ireland and operate from there a vessel registered in another Member State and that they have the same right of access to Irish ports as an Irish national who owns a vessel registered in Ireland. In any event, it points out that work on the amendment of the legislation currently in force is in progress.

10 As regards the admissibility of the action which Ireland has not contested, it was only in its reasoned opinions that the Commission first complained that Irish legislation was contrary to Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34. Nevertheless, as the Advocate General has stated in point 4 of his Opinion, the letters of formal notice identified to a sufficient extent the alleged failure by Ireland to fulfil its obligations, namely that it had retained certain provisions of the Mercantile Marine Act which were incompatible with the Treaty provisions relating to freedom of movement for persons. Those letters thus informed the Irish Government of the nature of the complaints against it and gave it the opportunity to submit its defence (see, to this effect, Case C-289/94 Commission v Italy [1996] ECR I-4405, paragraph 17). Accordingly, this action is admissible in so far as it relates to infringement of Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34.

11 As to the substance, it suffices to note that in Commission v France, cited above, the Court examined whether legislation similar to the Irish legislation at issue was compatible with Community law.

12 As regards vessels used for the pursuit of an economic activity, the Court noted that, in exercising its powers for the purpose of defining the conditions for the grant of its `nationality' to a vessel, each Member State must comply with the prohibition of discrimination against nationals of Member States on grounds of nationality, and that a condition which stipulates that where a vessel is owned or chartered by natural persons they must be of a particular nationality and, in the case of a company, the shareholders and directors must be of that nationality is contrary to Article 52 of the Treaty (Commission v France, paragraph 14, referring to Factortame and Others, paragraphs 29 and 30). Furthermore, Irish legislation is contrary to Articles 52 and 58 of the Treaty in so far as it requires legal persons owning vessels to be established under and subject to Irish law and to have their principal place of business in Ireland and, therefore, precludes registration or management of a vessel in the case of a secondary establishment such as an agency, branch or subsidiary (Commission v France, paragraph 19).

13 As regards vessels not used for the pursuit of an economic activity, the Court pointed out in Commission v France that, under Community law, every national of a Member State is assured of freedom both to enter another Member State in order to pursue an employed or self-employed activity and to reside there after having pursued such an activity. Access to leisure activities available in that State is a corollary to that freedom of movement (paragraph 21).

14 It follows that registration by such a national of a pleasure craft in the host Member State falls within the scope of the Community provisions relating to freedom of movement for persons (Commission v France, paragraph 22).

15 Irish legislation under which only Irish nationals may register in Ireland pleasure craft which they own is therefore contrary to Articles 6, 48 and 52 of the Treaty, Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34 (Commission v France, paragraph 23).

16 Consequently, it must be held that, by maintaining in force laws, regulations and administrative provisions which limit the right to register a vessel other than a fishing vessel in the Irish shipping register to a vessel which is owned in whole or in part by the Government, a Minister of State, an Irish citizen or an Irish body corporate, Ireland has failed to comply with Articles 6, 48, 52 and 58 of the Treaty, Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34.

Decision on costs

Costs

17 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since Ireland has been unsuccessful, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT

(Fifth Chamber)

hereby:

1. Declares that, by maintaining in force laws, regulations and administrative provisions which limit the right to register a vessel other than a fishing vessel in the Irish shipping register to a vessel which is owned in whole or in part by the Government, a Minister of State, an Irish citizen or an Irish body corporate, Ireland has failed to comply with Articles 6, 48, 52 and 58 of the EC Treaty, Article 7 of Commission Regulation (EEC) No 1251/70 of 29 June 1970 on the right of workers to remain in the territory of a Member State after having been employed in that State and Article 7 of Council Directive 75/34/EEC of 17 December 1974 concerning the right of nationals of a Member State to remain in the territory of another Member State after having pursued therein an activity in a self-employed capacity;

2. Orders Ireland to pay the costs.