Judgment of the Court of 23 November 1978. - Regina v Ernest George Thompson, Brian Albert Johnson and Colin Alex Norman Woodiwiss. - Reference for a preliminary ruling: Court of Appeal (England) - United Kingdom. - Means of payment and movements of capital. - Case 7/78.



European Court reports 1978 Page 02247

Greek special edition Page 00681

Portuguese special edition Page 00765

Spanish special edition Page 00667

Swedish special edition Page 00225

Finnish special edition Page 00245



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . FREE MOVEMENT OF GOODS - GOODS - CONCEPT - MEANS OF PAYMENT - GOLD AND SILVER COINS - DESIGNATION

( EEC TREATY , ARTS . 30 TO 37 )

2 . FREE MOVEMENT OF GOODS - DEROGATIONS - GROUNDS OF PUBLIC POLICY - SILVER COINS WHICH ARE NO LONGER LEGAL TENDER - BAN ON EXPORT - LAWFULNESS

( EEC TREATY , ART . 36 )

Summary

1 . IN THE SYSTEM OF THE EEC TREATY MEANS OF PAYMENT ARE NOT TO BE CONSIDERED AS GOODS FALLING WITHIN THE TERMS OF ARTICLES 30 TO 37 OF THE TREATY . THESE PROVISIONS DO NOT THEREFORE APPLY TO

( A ) SILVER ALLOY COINS WHICH ARE LEGAL TENDER IN A MEMBER STATE ,

( B ) GOLD COINS SUCH AS KRUGERRANDS WHICH ARE PRODUCED IN A NON- MEMBER COUNTRY BUT WHICH CIRCULATE FREELY WITHIN A MEMBER STATE .

2 . A BAN ON THE EXPORT FROM A MEMBER STATE OF SILVER ALLOY COINS , WHICH HAVE BEEN BUT ARE NO LONGER LEGAL TENDER IN THAT STATE AND THE MELTING DOWN OR DESTRUCTION WHEREOF ON NATIONAL TERRITORY IS FORBIDDEN , WHICH HAS BEEN ADOPTED WITH A VIEW TO PREVENTING SUCH MELTING DOWN OR DESTRUCTION IN ANOTHER MEMBER STATE , IS JUSTIFIED ON GROUNDS OF PUBLIC POLICY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY BECAUSE IT STEMS FROM THE NEED TO PROTECT THE RIGHT TO MINT COINAGE WHICH IS TRADITIONALLY REGARDED AS INVOLVING THE FUNDAMENTAL INTERESTS OF THE STATE .

Parties

IN CASE 7/78

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE COURT OF APPEAL ( CRIMINAL DIVISION ), FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

REGINA

AND

ERNEST GEORGE THOMPSON , BRIAN ALBERT JOHNSON AND COLIN ALEX NORMAN WOODIWISS

Subject of the case

ON THE INTERPRETATION OF THE TERM ' ' CAPITAL ' ' WITHIN THE MEANING OF PART TWO , TITLE III , CHAPTER 4 OF THE TREATY OF ROME ,

Grounds

1THE COURT OF APPEAL OF ENGLAND AND WALES ( CRIMINAL DIVISION ), BY AN ORDER OF 15 DECEMBER 1977 RECEIVED AT THE COURT ON 16 JANUARY 1978 REFERRED TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY SEVERAL QUESTIONS ON THE INTERPRETATION OF ARTICLES 30 TO 37 AND ARTICLES 67 TO 73 OF THE TREATY .

2THESE QUESTIONS WERE RAISED IN A CRIMINAL APPEAL BY THREE BRITISH NATIONALS ( HEREINHAFTER REFERRED TO AS ' ' THE APPELLANTS ' ' ) WHO HAD BEEN FOUND GUILTY BY THE CROWN COURT AT CANTERBURY OF BEING KNOWINGLY CONCERNED IN A FRAUDULENT EVASION OF THE PROHIBITION ON IMPORTATION OF GOLD COINS INTO THE UNITED KINGDOM AND ON THE EXPORT OF SILVER ALLOY COINS MINTED BEFORE 1947 FROM THE UNITED KINGDOM .

3THE IMPORTATION OF GOLD COINS INTO THE UNITED KINGDOM IS PROHIBITED BY THE IMPORT OF GOODS ( CONTROL ) ORDER 1954 MADE BY THE BOARD OF TRADE IN EXERCISE OF ITS POWERS UNDER THE IMPORT , EXPORT AND CUSTOMS POWERS ( DEFENCE ) ACT 1939 .

4BY VIRTUE OF AN OPEN GENERAL LICENCE GRANTED BY THE SECRETARY OF STATE FOR TRADE AND INDUSTRY AND DATED 5 JULY 1973 THE IMPORTATION OF ALL GOODS WAS AUTHORIZED WITH CERTAIN EXCEPTIONS NOT INCLUDING GOLD COINS . HOWEVER , PURSUANT TO AN AMENDMENT TO THE SAID LICENCE ENTITLED ' ' AMENDMENT NO 10 ' ' DATED 15 APRIL 1975 , WHICH CAME INTO OPERATION ON 16 APRIL 1975 , GOLD COINS WERE INCLUDED AMONG THE GOODS THE IMPORTATION OF WHICH WAS PROHIBITED EXCEPT UNDER THE AUTHORITY OF A LICENCE GRANTED BY THE BOARD OF TRADE .

5BY VIRTUE OF THE EXPORT OF GOODS ( CONTROL ) ORDER 1970 , MADE IN EXERCISE OF POWERS UNDER THE SAID ACT OF 1939 , THE EXPORT FROM THE UNITED KINGDOM , EXCEPT UNDER LICENCE , OF SILVER ALLOY COINS MINTED BEFORE 1947 IN A QUANTITY EXCEEDING TEN IN NUMBER AND NOT MORE THAN 100 YEARS OLD AT THE DATE OF EXPORTATION IS PROHIBITED .

6THE EXPORT OF SUCH COINS TO ANOTHER MEMBER STATE OF THE EEC WAS AUTHORIZED BY AN OPEN GENERAL LICENCE DATED 20 DECEMBER 1972 WHICH WAS GRANTED BY THE SECRETARY OF STATE AND WHICH , AS FAR AS SUCH COINS ARE CONCERNED , WAS REVOKED AND REPLACED BY ANOTHER OPEN GENERAL LICENCE DATED 25 JUNE 1973 .

7THIS SECOND OPEN GENERAL LICENCE WAS REVOKED BY ANOTHER OPEN GENERAL LICENCE DATED 5 JULY 1974 WHICH CAME INTO OPERATION ON 15 JULY 1974 AND HAD THE EFFECT OF TAKING SUCH COINS OUT OF THE AMBIT OF THE OPEN GENERAL LICENCE WITH THE RESULT THAT AS FROM 15 JULY 1974 THEY COULD NOT BE EXPORTED EXCEPT UNDER LICENCE .

8THE APPELLANTS ARRANGED FOR 3 400 SOUTH AFRICAN KRUGERRANDS WHICH CAME FROM THE AGOSI FIRM IN PFORZHEIM IN THE FEDERAL REPUBLIC OF GERMANY TO BE BROUGHT INTO THE UNITED KINGDOM BETWEEN 24 APRIL 1975 AND 30 JUNE 1975 .

9THEY ALSO EXPORTED BETWEEN 7 AUGUST 1974 AND 26 MAY 1975 FOR THE SAME GERMAN FIRM 40.39 TONNES OF SILVER ALLOY COINS MINTED IN THE UNITED KINGDOM BEFORE 1947 , NAMELY SIXPENCES , SHILLINGS , FLORINS AND HALF-CROWNS .

10THE APPELLANTS , HAVING PLEADED GUILTY BEFORE THE COURT OF FIRST INSTANCE , APPEALED TO THE COURT OF APPEAL ( CRIMINAL DIVISION ) BEFORE WHICH THEY SUBMITTED THAT THE PROVISIONS OF BRITISH LAW PROHIBITING THE IMPORTS AND EXPORTS IN QUESTION INFRINGE ARTICLES 30 AND 34 OF THE TREATY .

11ARTICLE 30 , AS COMPLEMENTED BY ARTICLE 42 OF THE ACT OF ACCESSION , PROHIBITS , AS FROM 1 JANUARY 1975 AT THE LATEST , IN THE CASE OF THE UNITED KINGDOM , ANY MEASURE HAVING AN EFFECT EQUIVALENT TO A QUANTITATIVE RESTRICTION ON IMPORTS FROM OTHER MEMBER STATES .

12ARTICLE 34 , AS COMPLEMENTED BY THE SAID ARTICLE 42 , PROHIBITS , AS FROM 1 JANUARY 1975 AT THE LATEST , IN THE CASE OF THE UNITED KINGDOM , ANY MEASURE HAVING AN EFFECT EQUIVALENT TO A QUANTITATIVE RESTRICTION ON EXPORTS TO OTHER MEMBER STATES .

13THE APPELLANTS ALSO SUBMITTED THAT THE RESTRICTIONS ON EXPORTS AND IMPORTS CONTAINED IN BRITISH LEGISLATION CANNOT BE JUSTIFIED ON GROUNDS OF PUBLIC POLICY ON THE BASIS OF ARTICLE 36 OF THE TREATY .

14ON THE OTHER HAND THE BRITISH GOVERNMENT HAS MAINTAINED THAT THE COINS IMPORTED AND THOSE EXPORTED ARE ' ' CAPITAL ' ' WITHIN THE MEANING OF ARTICLE 67 ET SEQ . OF THE TREATY AND THAT THE PROVISIONS OF ARTICLES 30 AND 34 ARE CONSEQUENTLY INAPPLICABLE .

15EVEN IF THE COINS IN QUESTION WERE TO BE REGARDED AS GOODS FALLING WITHIN THE SCOPE OF ARTICLE 30 ET SEQ . OF THE TREATY THE RESTRICTIONS ON IMPORTS AND EXPORTS WOULD BE AUTHORIZED UNDER ARTICLE 36 OF THE TREATY , SINCE THEY COULD BE JUSTIFIED ON GROUNDS OF PUBLIC POLICY .

16AS FAR AS CONCERNS THE RESTRICTIONS ON IMPORTS THE BAN ON THE IMPORTATION OF CERTAIN GOLD COINS INTO THE UNITED KINGDOM WAS , ACCORDING TO THE BRITISH GOVERNMENT , ENACTED IN ORDER :

( I ) TO PREVENT THE DRAIN ON ITS BALANCE OF PAYMENTS AND

( II ) TO PREVENT THE SPECULATION AND HOARDING OF UNPRODUCTIVE ASSETS .

17AS FAR AS CONCERNS THE RESTRICTIONS ON EXPORTS THE BAN ON EXPORTS FROM THE UNITED KINGDOM OF SILVER COINS MINTED BEFORE 1947 WAS ENACTED IN ORDER :

( I ) TO ENSURE THAT THERE IS NO SHORTAGE OF CURRENT COINS FOR USE OF THE PUBLIC ;

( II ) TO ENSURE THAT ANY PROFIT RESULTING FROM ANY INCREASE IN THE VALUE OF METAL CONTENT OF THE COIN ACCRUES TO THE MEMBER STATE RATHER THAN TO AN INDIVIDUAL AND

( III ) TO PREVENT THE DESTRUCTION OF THESE UNITED KINGDOM COINS - WHICH IF IT OCCURRED WITHIN ITS JURISDICTION WOULD BE A CRIMINAL OFFENCE - FROM OCCURRING OUTSIDE ITS JURISDICTION .

18IN THESE CIRCUMSTANCES THE COURT OF APPEAL HAS ASKED THE FOLLOWING QUESTIONS :

1 . ARE THE FOLLOWING COINS IN PRINCIPLE ' ' CAPITAL ' ' WITHIN THE MEANING OF PART TWO , TITLE III , CHAPTER 4 OF THE TREATY OF ROME :

( A ) GOLD COINS WHICH ARE PRODUCED IN A THIRD COUNTRY SUCH AS KRUGERRANDS , BUT WHICH CIRCULATE FREELY WITHIN A MEMBER STATE ;

( B ) SILVER ALLOY COINS , WHICH ARE LEGAL TENDER IN A MEMBER STATE ;

( C ) SILVER ALLOY COINS OF A MEMBER STATE , WHICH HAVE BEEN , AND WHICH , ALTHOUGH NO LONGER LEGAL TENDER IN THAT STATE ARE PROTECTED AS COIN FROM DESTRUCTION IN THAT STATE?

2 . IF SO , CAN THE QUANTITY AND MANNER IN WHICH AND THE PURPOSES FOR WHICH SUCH COINS ARE TRADED RESULT IN SUCH COINS CEASING TO BE WITHIN THE TERM ' ' CAPITAL ' ' IN PART TWO , TITLE III , CHAPTER 4?

3 . DO THE PROVISIONS OF PART TWO , TITLE III , CHAPTER 4 OF THE TREATY OF ROME APPLY TO SUCH OF THE AFORESAID COINS AS ARE ' ' CAPITAL ' ' TO THE EXCLUSION OF THE PROVISIONS OF PART TWO , TITLE I , CHAPTER 2 OF THE TREATY?

4 . IF THE ANSWERS TO ALL OR ANY OF THE ABOVE QUESTIONS ARE SUCH AS TO DETERMINE THAT THE ARTICLES IN THIS CASE FALL WITHIN PART TWO , TITLE I , CHAPTER 2 , DOES THE TERM ' ' PUBLIC POLICY ' ' IN ARTICLE 36 OF THE TREATY OF ROME MEAN THAT A MEMBER STATE MAY SEEK TO JUSTIFY RESTRICTIONS ON :

( A ) THE IMPORT OF GOLD COINS ON EITHER OR BOTH OF THE FOLLOWING GROUNDS :

( I ) TO PREVENT THE DRAIN ON ITS BALANCE OF PAYMENTS ,

( II)TO PREVENT THE SPECULATION AND HOARDING OF UNPRODUCTIVE ASSETS ,

( B)THE EXPORT OF ITS OWN SILVER ALLOY COINAGE ON ANY OR ALL OF THE FOLLOWING GROUNDS :

( I)TO ENSURE THAT THERE IS NO SHORTAGE OF CURRENT COINS FOR USE OF THE PUBLIC ,

( II)TO ENSURE THAT ANY PROFIT RESULTING FROM ANY INCREASE IN THE VALUE OF METAL CONTENT OF THE COIN ACCRUES TO THE MEMBER STATE RATHER THAN TO AN INDIVIDUAL ,

( III)TO PREVENT THE DESTRUCTION OF ITS COINS OCCURRING OUTSIDE ITS JURISDICTION , WHICH IF IT OCCURRED WITHIN ITS JURISDICTION WOULD BE A CRIMINAL OFFENCE?

19AN EXAMINATION OF THE QUESTIONS ASKED SHOWS THAT , EVEN IF THESE QUESTIONS HAVE BEEN FORMULATED SO AS TO LAY EMPHASIS ON THE DESCRIPTION OF THE COINS IN QUESTION AS ' ' CAPITAL ' ' , THEIR ACTUAL PURPOSE IS TO FIND OUT WHETHER THESE COINS ARE GOODS FALLING WITHIN THE PROVISIONS OF ARTICLES 30 TO 37 OF THE TREATY OR CONSTITUTE A MEANS OF PAYMENT FALLING WITHIN THE SCOPE OF OTHER PROVISIONS .

20UNDERSTOOD IN THIS WAY , THESE QUESTIONS MUST BE CONSIDERED IN THE CONTEXT OF THE GENERAL SYSTEM OF THE TREATY .

21AN ANALYSIS OF THIS SYSTEM SHOWS THAT THE RULES RELATING TO THE FREE MOVEMENT OF GOODS AND , IN PARTICULAR , ARTICLES 30 ET SEQ . CONCERNING THE ELIMINATION OF QUANTITATIVE RESTRICTIONS AND MEASURES HAVING EQUIVALENT EFFECT , MUST BE CONSIDERED NOT ONLY WITH REFERENCE TO THE SPECIFIC RULES RELATING TO TRANSFERS OF CAPITAL BUT WITH REFERENCE TO ALL THE PROVISIONS OF THE TREATY RELATING TO MONETARY TRANSFERS , WHICH CAN BE EFFECTED FOR A GREAT VARIETY OF PURPOSES , OF WHICH CAPITAL TRANSFERS ONLY COMPRISE ONE SPECIFIC CATEGORY .

22ALTHOUGH ARTICLES 67 TO 73 OF THE TREATY , WHICH ARE CONCERNED WITH THE LIBERALIZATION OF MOVEMENTS OF CAPITAL , ASSUME SPECIAL IMPORTANCE AS FAR AS ONE OF THE AIMS SET OUT IN ARTICLE 3 OF THE TREATY IS CONCERNED , NAMELY THE ABOLITION OF OBSTACLES TO FREEDOM OF MOVEMENT FOR CAPITAL , THE PROVISIONS OF ARTICLES 104 TO 109 , WHICH ARE CONCERNED WITH THE OVERALL BALANCE OF PAYMENTS AND WHICH FOR THIS REASON RELATE TO ALL MONETARY MOVEMENTS , MUST BE CONSIDERED AS ESSENTIAL FOR THE PURPOSE OF ATTAINING THE FREE MOVEMENT OF GOODS , SERVICES OR CAPITAL WHICH IS OF FUNDAMENTAL IMPORTANCE FOR THE ATTAINMENT OF THE COMMON MARKET .

23IN PARTICULAR , ARTICLE 106 PROVIDES THAT ' ' EACH MEMBER STATE UNDERTAKES TO AUTHORIZE , IN THE CURRENCY OF THE MEMBER STATE IN WHICH THE CREDITOR OR THE BENEFICIARY RESIDES , ANY PAYMENTS CONNECTED WITH THE MOVEMENT OF GOODS , SERVICES OR CAPITAL , AND ANY TRANSFERS OF CAPITAL AND EARNINGS , TO THE EXTENT THAT THE MOVEMENT OF GOODS , SERVICES , CAPITAL AND PERSONS BETWEEN MEMBER STATES HAS BEEN LIBERALIZED PURSUANT TO THIS TREATY ' ' .

24THE AIM OF THIS PROVISION IS TO ENSURE THAT THE NECESSARY MONETARY TRANSFERS MAY BE MADE BOTH FOR THE LIBERALIZATION OF MOVEMENTS OF CAPITAL AND FOR THE FREE MOVEMENT OF GOODS , SERVICES AND PERSONS .

25IT MUST BE INFERRED FROM THIS THAT UNDER THE SYSTEM OF THE TREATY MEANS OF PAYMENT ARE NOT TO BE REGARDED AS GOODS FALLING WITHIN THE PURVIEW OF ARTICLES 30 TO 37 OF THE TREATY .

26SILVER ALLOY COINS WHICH ARE LEGAL TENDER IN A MEMBER STATE ARE , BY THEIR VERY NATURE , TO BE REGARDED AS MEANS OF PAYMENT AND IT FOLLOWS THAT THEIR TRANSFER DOES NOT FALL WITHIN THE PROVISIONS OF ARTICLES 30 TO 37 OF THE TREATY .

27ALTHOUGH DOUBTS MAY BE ENTERTAINED ON THE QUESTION WHETHER KRUGERRANDS ARE TO BE REGARDED AS MEANS OF LEGAL PAYMENT IT CAN NEVERTHELESS BE NOTED THAT ON THE MONEY MARKETS OF THOSE MEMBER STATES WHICH PERMIT DEALINGS IN THESE COINS THEY ARE TREATED AS BEING EQUIVALENT TO CURRENCY .

28THEIR TRANSFER MUST CONSEQUENTLY BE DESIGNATED AS A MONETARY TRANSFER WHICH DOES NOT FALL WITHIN THE PROVISIONS OF THE SAID ARTICLES 30 TO 37 .

29HAVING REGARD TO THE ABOVE-MENTIONED CONSIDERATIONS IT IS UNNECESSARY TO DEAL WITH THE QUESTION UNDER WHAT CIRCUMSTANCES THE TRANSFER OF THESE TWO CATEGORIES OF COINS MIGHT POSSIBLY BE DESIGNATED EITHER AS A MOVEMENT OF CAPITAL OR AS A CURRENT PAYMENT .

30QUESTION 1 ( C ) REFERS TO SILVER ALLOY COINS OF A MEMBER STATE , WHICH HAVE BEEN LEGAL TENDER IN THAT STATE AND WHICH , ALTHOUGH NO LONGER LEGAL TENDER , ARE PROTECTED AS COINAGE FROM DESTRUCTION .

31SUCH COINS CANNOT BE REGARDED AS MEANS OF PAYMENT WITHIN THE MEANING STATED ABOVE , WITH THE RESULT THAT THEY CAN BE DESIGNATED AS GOODS FALLING WITHIN THE SYSTEM OF ARTICLES 30 TO 37 OF THE TREATY .

32IT IS FOR THE MEMBER STATES TO MINT THEIR OWN COINAGE AND TO PROTECT IT FROM DESTRUCTION .

33THE COURT ' S FILE SHOWS THAT IN THE UNITED KINGDOM THE MELTING DOWN OR DESTRUCTION OF NATIONAL COINS IS PROHIBITED , EVEN IF THEY ARE NO LONGER LEGAL TENDER .

34A BAN ON EXPORTING SUCH COINS WITH A VIEW TO PREVENTING THEIR BEING MELTED DOWN OR DESTROYED IN ANOTHER MEMBER STATE IS JUSTIFIED ON GROUNDS OF PUBLIC POLICY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY , BECAUSE IT STEMS FROM THE NEED TO PROTECT THE RIGHT TO MINT COINAGE WHICH IS TRADITIONALLY REGARDED AS INVOLVING THE FUNDAMENTAL INTERESTS OF THE STATE .

Decision on costs

COSTS

35THE COSTS INCURRED BY THE ITALIAN GOVERNMENT , THE GOVERNMENT OF THE UNITED KINGDOM AND THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH HAVE SUBMITTED WRITTEN OBSERVATIONS ARE NOT RECOVERABLE .

36AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT .

Operative part

ON THOSE GROUNDS ,

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE COURT OF APPEAL ( CRIMINAL DIVISION ) BY ORDER OF 15 DECEMBER 1977 , HEREBY RULES :

1 . THE PROVISIONS OF ARTICLES 30 TO 37 OF THE TREATY DO NOT APPLY TO

( A ) SILVER ALLOY COINS WHICH ARE LEGAL TENDER IN A MEMBER STATE ,

( B)GOLD COINS SUCH AS KRUGERRANDS WHICH ARE PRODUCED IN A NON- MEMBER COUNTRY BUT WHICH CIRCULATE FREELY WITHIN A MEMBER STATE .

2 . A BAN ON THE EXPORT FROM A MEMBER STATE OF SILVER ALLOY COINS , WHICH HAVE BEEN BUT ARE NO LONGER LEGAL TENDER IN THAT STATE AND THE MELTING DOWN OR DESTRUCTION WHEREOF ON NATIONAL TERRITORY IS FORBIDDEN , WHICH HAS BEEN ADOPTED WITH A VIEW TO PREVENTING SUCH MELTING DOWN OR DESTRUCTION IN ANOTHER MEMBER STATE , IS JUSTIFIED ON GROUNDS OF PUBLIC POLICY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY .