Opinion of Mr Advocate General Darmon delivered on 29 September 1987. - Commission of the European Communities v Hellenic Republic. - Free movement of capital - Act off Accession of Greece. - Case 194/84.



European Court reports 1987 Page 04737



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

1 . In its action against Greece for failure to fulfil its obligations, brought following the reasoned opinion of 31 January 1984, the Commission claims that the defendant Member State did not authorize, from 1 January 1981 and under the conditions laid down in Article 52 of the Act of Accession of the Hellenic Republic to the European Communities ( hereinafter referred to as Article 52 ), transfers to other Member States of "funds blocked in Greece" belonging to non-resident Community nationals . The outcome of the present case depends on the interpretation of Article 52, the relationship between that provision and the Community rules applicable to "blocked funds" within the meaning of the two directives adopted for the application of Article 67 of the EEC Treaty ( hereinafter referred to as Article 67 ) and, finally, the compatibility of the Greek legislation complained of and the way it has been applied after accession with the relevant Community provisions .

2 . Article 52 is to be found in the part of the Accession Treaty which deals with "free movement of persons, services and capital" and, more precisely, in Chapter 2 thereof, entitled "Capital movements and invisible transactions ".

3 . Article 49 of the Accession Treaty ( hereinafter referred to as Article 49 ) introduces the provisions and states that "The Hellenic Republic may, under the conditions and within the time-limits set out in Articles 50 to 53, defer the liberalization of capital movements provided for in the First Council Directive of 11 May 1960 for the implementation of Article 67 of the EEC Treaty and in the Second Council Directive of 18 December 1962 adding to and amending the First Directive for the implementation of Article 67 of the EEC Treaty ". Thus Article 52 appears to contain some of the rules of the transitional system for the application of Article 67 and of the two directives adopted for the implementation of that provision .

4 . Article 52 contains a timetable for the progressive release of funds blocked in Greece belonging to persons resident in other Member States . The Commission and the Hellenic Republic disagree on the concept of both "liberalization" and "blocked funds ".

5 . Greece takes the view that liberalization means that the owner of the funds should have the possibility of being able to use the funds again, but exclusively on Greek territory . The Commission believes that the funds released must in addition and above all be transferable to any other Member State of the Community . I concur with the Commission' s view that that interpretation can be inferred from the terms of Article 51 ( 2 ) of the Accession Treaty which provides that : "The repatriation of the proceeds from the liquidation of real-estate investments situated in Greece and acquired before accession by persons resident in the present Member States shall be the subject of a gradual liberalization through the inclusion of the operation in question in the liberalization system introduced for the funds blocked in Greece as defined in Article 52 ." ( 1 ) There could be no clearer affirmation that the "liberalization system" of Article 52 includes the possibility of a transfer, without which there would be no repatriation .

6 . As far as the concept of blocked funds is concerned, only a Community definition may be sought, not a national definition, as the Hellenic Republic suggests . In fact, Article 52, which establishes the procedures for the release of those funds, must be considered within the framework of Article 49, which refers to the two directives adopted for the application of Article 67 . The 1960 Directive imposes a duty on Member States to grant "all foreign exchange authorizations required for the conclusion or performance of transactions or for transfers between residents of Member States in respect of the capital movements set out in List A of Annex I to ( that ) directive ". ( 2 ) That list, in the version as amended by the 1962 Directive, mentions among the movements benefiting from unconditional liberalization under item of nomenclature XL "annual transfers of blocked funds to another Member State by a non-resident account-holder, up to an amount or a percentage of the total assets, fixed uniformly by the Member State concerned for all applicants ".

7 . Certainly, there is no Community text which gives a definition of blocked funds . However, as the Commission suggests, regard should be had to the terminology used in the Code of liberalization of capital movements of the Organization for Economic Cooperation and Development ( OECD ). ( 3 ) Article 21 of that Code states that :

"( i ) 'Blocked funds' shall mean funds owned by residents of other Member States in accordance with the laws and regulations of the Member State where the funds are held and blocked for balance-of-payments reasons ."

The characteristic of such funds is thus the fact that national rules, for economic or monetary reasons or both, prohibit the free transfer abroad of funds belonging to non-residents, whatever their composition - national or foreign currency - or origin . In that respect, the generality of the terms in Item XL militates against acceptance of the argument of the defendant government, which considers that liberalization only relates to funds arising from gifts or endowments of any kind, dowries and inheritances, which are dealt with under different headings in List A of the two directives and therefore constitute other personal capital movements .

8 . The spirit, the objective and the scheme of the directives for the implementation of Article 67 require that the concept of liberalization of blocked funds be interpreted as meaning the possibility of transferring them outside the national territory under conditions which are to be determined, subject, of course, to protective and safeguard measures provided for in the EEC Treaty, in particular in Article 73 .

9 . Inasmuch as they are opened in the name of Community nationals not resident in Greece, the blocked funds governed by the contested Greek Law certainly fall within the Community concept which I believe must be applied . The defendant Member State, bound by the abovementioned obligation contained in the directive, agreed, in Article 52, to the measures for its implementation in the negotiations which resulted in the Act of Accession . Liberalization should thus have taken place by the dates and in the proportions specified in that article, including the possibility of transferring blocked funds .

10 . I would add that the result sought in Article 52, the progressive release of funds blocked in Greece which was to culminate in their abolition, is perfectly compatible with the legal situation for all the other Member States . The two directives adopted for the application of Article 67, which provides for the progressive abolition of "restrictions on the movement of capital belonging to persons resident in the Member States", have, while respecting the condition of progressive liberalization, liberalized unconditionally transfers of blocked funds belonging to non-residents . According to the Commission, which was not contradicted on this point, no legislation of any other Member State any longer contains provisions dealing with it . Article 52 therefore provides for the progressive alignment of the situation in Greece with that prevailing in all the other Member States .

11 . Consequently, I consider that by merely permitting the free use in Greece of blocked funds without authorizing the transfer thereof on the conditions laid down in Article 52 of the agreement concerning its accession to the European Communities, the Hellenic Republic has failed to fulfil its obligations under that provision during the period to which this application relates . I therefore conclude that the Court should accordingly declare the defendant to be in breach of its obligations and order it to pay the costs .

(*) Translated from the French .

( 1 ) My emphasis .

( 2 ) Article 1, my emphasis .

( 3 ) Annex A, List A of the Code reads as follows :

No XV, A : "Annual transfer of blocked funds by their owners within general limits or percentages of the total holdings to be determined by the Member States concerned shall be free . Such limits or percentages shall be uniform for all cases ."