Opinion of Mr Advocate General Sir Gordon Slynn delivered on 14 July 1988. - Commission of the European Communities v Hellenic Republic. - Failure of a Member State to fulfil its obligations - Admissibility - Measures having equivalent effect to a customs duty - Accession of the Hellenic Republic. - Case 229/87.



European Court reports 1988 Page 06347



Opinion of the Advocate-General

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My Lords,

Article 49 ( 1 ) of Greek Law No 1089 of 12 November 1980 provides for the creation of a Union of Greek Chambers of Commerce and Industry (" the UGCCI "). By Article 49 ( 3 ) ( g ) of that law, one of the functions of the UGCCI is :

"on the order of the Minister for Trade, to collect information and supply it to the banks authorized to conduct foreign exchange transactions, so as to enable them to carry out effective checks on the operations covered by Article 1 ( 3 ) of Law No 936/1979 on the amendments and additions to the provisions governing foreign trade ...".

Article 49 ( 6 ) deals with the collection of the resources necessary to enable the UGCCI to fulfil the various objectives assigned to it . By Article 49 ( 6 ) ( b ) the amount of the levy charged by the UGCCI for the services provided in accordance with Article 49 ( 3 ) ( g ) is to be set by order of the Minister for Trade, and the proceeds of the levy are to be shared "between the bodies which collaborate in the study of the information collected" - that is, it seems, between participating chambers of commerce .

Detailed rules for the application of the levy are laid down in the Ministry of Trade' s Circular No EG/8324/2714 of 10 December 1980, which makes specific reference to Greek accession to the EEC and to the requirements of Article 30 et seq . of the EEC Treaty . By virtue of paragraph I it is the responsibility of the intermediate banks, when permission to import or pay for goods is granted, to operate exchange controls so as to safeguard the rights of the Hellenic Republic regarding currency . By paragraph II ( b ) of the circular, the levy is to be collected at a rate of 0.1% of the cif value shown on the invoice for the goods in question, subject to a minimum of DR 250 and a maximum of DR 5 000, save that if the importation or payment is on behalf of a legal entity regulated by public law, only half the normal levy is charged; if on behalf of the State, no sum is charged . The sums so collected are to be sent to the Bank of Greece, which places them in a special account whose contents are allocated by ministerial decree .

The Commission brought proceedings under Article 169 of the EEC Treaty during the transitional period founded on Article 28 of the Act of Accession of the Hellenic Republic to the Communitites (" the Act of Accession "), which provides that : "Any charge having equivalent effect to a customs duty on imports introduced as from 1 January 1979 in trade between the Community as at presently constituted and Greece shall be abolished on 1 January 1981 ".

That action followed the usual procedure . The letter of formal notice of 26 March 1984 set out the substance of the Commission' s argument, namely that the Greek levy was a tax of equivalent effect to a customs duty and was contrary to Article 28 of the Act of Accession . In due course a reasoned opinion followed and an application was made to the Court ( Case 138/85 ). After the close of the written procedure in that case and in answer to a written question from the Court, the Greek Government submitted legislative texts showing that the contested levy had its roots in legislation first enacted in 1947 . That, it appears, removed the contested measures from the scope of Article 28 of the Act of Accession ( since that article refers to charges "introduced as from 1 January 1979 ").

At all events, the Commission withdrew the action in Case 138/85, which was deleted from the register of the Court by order dated 3 October 1986 . The Commission had by then already started new proceedings under Article 169, this time based on Article 29 of the Act of Accession, which provides for the progressive abolition, by successive reductions, of charges having equivalent effect to customs duties on imports over a transitional period, the final reduction in such charges to be made on 1 January 1986 .

In its new formal letter of notice ( 8 August 1986 ), the Commission specified the legal basis for its intended action as being "Article 29 of the Act of Accession in conjunction with Article 13 of the EEC Treaty", but made reference to the argument on the substance set out in Case 138/85, thereby inter alia referring to Article 28 of the Act of Accession . The Greek Government replied challenging that letter on the grounds that it referred to a line of argument developed in another case which was legally closed . The Commission continued the pre-contentious procedure under Article 169 of the Treaty and, in its reasoned opinion, it set out in full the legal argument on which it relies . Having received a further reply from the Greek Government contesting both admissibility and substance, the Commission brought the present action on 29 July 1987 for a declaration that, by levying a charge for the checking of prices of goods imported from other Member States of the Community, Greece has failed to fulfil its obligations under Article 12 et seq . of the EEC Treaty and Article 29 of the Act of Accession .

The Greek Government contests the admissibility of the action on the grounds that the cross-referencing to Case 138/85 in the letter of formal notice of 8 August 1986 vitiates the Article 169 procedure by depriving the Greek Government of its opportunity to reply fully, at that stage in the procedure, to the case purportedly being made against it, citing Case 45/64 Commission v Italy (( 1965 )) ECR 857, at pp . 864 and 865; Case 20/59 Italy v High Authority (( 1960 )) ECR 325, at pp . 338 and 339 ( a case concerning Article 88 of the ECSC Treaty ) and Case 31/69 Commission v Italy (( 1970 )) ECR 25, paragraph 13 . The Commission maintains that the procedural requirements of Article 169 have been observed and contends, without asking for a declaration that there has been a breach of the Treaty to that effect, that the Greek Government has given less than the full cooperation to be expected of a Member State under Article 5 of the EEC Treaty .

Although Greece is right to stress the importance of the initiating letter which is intended to give the Member State to which it is addressed adequate notice of the substance of the case against it, in the present case there is no doubt in my mind that the Greek Government was fully and adequately informed of the nature of the Commission' s argument . The proceedings in Case 138/85 concerned exactly the same contested legislation and were - as the Greek Government knew - withdrawn simply because, at a very late stage, the Greek Government submitted material which led the Commission to conclude that its action should have been brought under Article 29, rather than Article 28, of the Act of Accession .

Despite the incorporation by reference in the formal letter of the earlier arguments, which in my view was not misleading, I consider that the Member State' s essential procedural guarantees under Article 169 have not been infringed and that the action is, accordingly, admissible ( see Case 211/81 Commission v Denmark (( 1982 )) ECR 4547, at pp . 4557 and 4558, paragraphs 7 to 12 of the judgment ). It is not a valid objection that the argument incorporated by reference appeared in pleadings which were part of a case which had already come to an end .

The substance of the case is that, in the Commission' s view, the Greek legislation clearly imposes a prohibited tax of equivalent effect to a customs duty, as the levy is a pecuniary charge imposed unilaterally on goods imported from another Member State when they cross the Greek frontier and is not imposed on goods produced in Greece . Basing itself, inter alia, on Joined Cases 52 and 55/65 Germany v Commission (( 1966 )) ECR 159, at pp . 169 and 170, Case 24/68 Commission v Italy (( 1969 )) ECR 193, at pp . 200 and 201, paragraphs 7-10, Case 8/70 Commission v Italy (( 1970 )) ECR 961, at pp . 965 and 966, paragraphs 2 and 3, Case 39/73 Rewe Zentralfinanz GmbH v Direktor der Landwirtschaftskammer Westfalen-Lippe (( 1973 )) ECR 1039, at pp . 1043 and 1044, paragraphs 3 and 4 and Case 87/75 Bresciani v Amministrazione italiana delle finanze (( 1976 )) ECR 129, at p . 138, paragraphs 8 and 9, the Commission argues that the checking of import invoices by the chambers of commerce - the justification for the contested levy - is an administrative activity carried out for reasons of public administration, in the general interest or in the interest of the national economy, and is unrelated to the safequarding of importers' interests . The Commission accepts that, were a service provided for the importer, that might justify the imposition of a charge .

For its part, the Greek Government maintains that the amounts collected by way of levy are charged solely and exclusively in respect of a service provided by the UGCCI . It argues that the sums are levied by the UGCCI in respect of activities which fall within its specific sphere of competence, that the amount of the levy and the method of its imposition are set by the Ministry of Trade and that the result is a levy the proceeds of which are shared out between all members of the UGCCI as compensation for the work involved in assisting the exchange control commission .

At the hearing, counsel for the Greek Government amplified those arguments, suggesting that there was a nexus between the "quid pro quo collected" ( the levy ) and the invoice price of the imported goods . The service provided by the members of the chambers of commerce consisted, he said, in making sure that what was carried out was indeed exchange control rather than a disguised restriction to trade : thus, it was argued, the levy did not finance the administrative activity of the State, but the provision of a genuine service to importers . Counsel concluded that the levy was something which neither by its nature nor by the effect which it produced could constitute an impediment to imports and that, therefore, the levy had nothing whatsoever in common with a charge having equivalent effect to a customs duty .

In my view, the Greek Government' s argument should be rejected . I can find no real link between the levy and a service provided by the chambers of commerce to their members . It seems to me from the evidence presented to the Court that the checking of invoices - the alleged service - is a measure taken for reasons of public policy which have little, if anything, to do with the interests of the importers themselves . On the evidence available, it seems to me that what is done, even if by the chambers of commerce using their staff, is ancillary to the State control of foreign exchange rather than done as a service to those traders on whose importations the charge is levied . Even if the chambers of commerce assist the bank employees and State officials who are principally concerned with directing exchange control transactions, that is done essentially in the public interest rather than as a service to the members of the chambers of commerce .

At the end of the hearing, counsel for the Greek Government stated that proof that importers had an interest in the levy being charged could be provided . If such evidence was available, it should have formed part of the written submissions . It clearly cannot be admitted at this stage; nor can the suggestion that it may exist influence the result of this case .

In my view, the contested levy falls fairly and squarely within the definition of a charge of equivalent effect to a customs duty . "Any pecuniary charge, whatever its designation and mode of application, which is unilaterally imposed on goods imported from another Member State by reason of the fact that they cross a frontier, constitutes a charge having an effect equivalent to a customs duty" ( Bresciani, at p . 138, paragraph 9 ).

In the alternative, counsel for the Greek Government suggested that the contested charge was not levied on imports per se, but only when the foreign exchange procedure had to be inititated, which might be at a wholly different time . I am not persuaded by that argument . It seems to me that the foreign exchange clearance is so inextricably bound up with the process of importing goods - and applies only to imported goods - that such a distinction is without any real meaning .

In the further alternative, the Greek Government argues that the protective effect of the levy is negligible, citing three examples by way of illustration . However, any pecuniary charge, however small, imposed on goods by reason of the fact that they cross a frontier constitutes an obstacle to the movement of such goods ( see, e.g ., Bresciani at p . 138, paragraph 8 and Case 24/68 Italy, at p . 200, paragraph 7 ) and accordingly that argument fails . It is, in any event, open to doubt whether the total sum involved is negligible .

Nor is the nature of the charge affected by the fact that on very small consignments no charge is levied .

In my view, the Commission is therefore entitled to the declaration which it seeks and to the costs of these proceedings .