OPINION OF ADVOCATE GENERAL

MAZÁK

delivered on 6 July 2010 1( )

Case C‑565/08

European Commission

v

Italian Republic

(Lawyers – Fees – Obligation to comply with compulsory maximum tariffs)

1. The present infringement proceedings concern the Italian legislation which, according to the European Commission, sets out compulsory maximum tariffs for lawyers’ services.

2. The Commission maintains that the obligation imposed on lawyers to comply with maximum tariffs constitutes a restriction on freedom of establishment, within the meaning of Article 43 EC, and a restriction on freedom to provide services, within the meaning of Article 49 EC. Since that obligation appears unsuitable for realising general-interest objectives and, in any event, appears to be more restrictive than is necessary to realise those objectives, it constitutes an unjustifiable restriction.

3. The Italian Republic bases its defence primarily on the claim that, in its legal order, there is no principle which prohibits the maximum tariffs applicable to lawyers’ services from being exceeded. It is only in the alternative that it seeks to establish that the imposition of maximum tariff limits is designed to ensure access to justice, the protection of service recipients, and the proper administration of justice.

National legal framework

4. In general terms, remuneration of the liberal professions, which include the legal profession, under a contract for the provision of services is regulated in Article 2233 of the Italian Civil Code, according to which:

‘If the remuneration has not been agreed by the parties and cannot be determined by reference to scales of charges or custom and practice, it shall be determined by the court, after the opinion of the professional association to which the service provider belongs has been heard.

In any event, the amount of the remuneration shall be commensurate with the scale of the work performed and the dignity of the profession.

Any agreement concluded between lawyers or authorised assistants and their clients which sets legal fees shall be void unless drawn up in writing.’

5. The provisions concerning, in particular, the remuneration of lawyers are contained in Royal Decree-Law No 1578 of 27 November 1933, which became Law No 36 of 22 January 1934, as subsequently amended (‘the Royal Decree‑Law’), which constitutes the basic legislation governing the legal profession in Italy.

6. Under Article 57 of the Royal Decree-Law:

‘The criteria for determining fees and emoluments payable to lawyers and “procuratori” in respect of criminal proceedings and out-of-court work ( ) are to be set every two years by the National Council of Lawyers. Fees in respect of criminal proceedings before the Court of Cassation and the Supreme Military Tribunal are also to be set by the National Council of Lawyers.

The decisions establishing the criteria referred to in the previous paragraph must be approved by the Minister for Justice.’

7. The conditions applicable to the criteria referred to in Article 57 of the Royal Decree-Law are laid down in Article 58 thereof, which is worded as follows:

‘The criteria referred to in the previous paragraph are to be based on the monetary value of disputes, the level of the court seised and, in criminal matters, the duration of the proceedings.

For each procedural step, or series of steps, maximum and minimum limits are to be set.

In respect of out-of-court work, account is to be taken of the importance of the case.’

8. When the National Council of Lawyers has decided upon the scale of lawyers’ fees in accordance with Article 57 of the Royal Decree-Law, the tariff for lawyers’ fees must be approved by the Minister for Justice, after he has obtained the opinion of the Comitato interministeriale dei prezzi (Interministerial Committee on Prices), pursuant to Article 14(20) of Law No 887 of 22 December 1984, and consulted the Consiglio di Stato (Council of State), pursuant to Article 17(3) of Law No 400 of 23 August 1988. The most recent ministerial decree regulating lawyers’ fees adopted in accordance with the aforementioned procedure is Decree No 127 of 8 April 2004 (‘Ministerial Decree No 127/2004’).

9. As regards the determination of fees, Article 60 of the Royal Decree-Law provides that determination is to be made by the court concerned on the basis of the aforementioned criteria, having regard to the seriousness and number of the issues dealt with. That determination must remain within the maximum and minimum limits set beforehand. However, in cases of exceptional importance, regard being had for the special nature of the disputes and where the inherent value of the service justifies it, the court may exceed the maximum limit set by the tariff. Conversely, where the case proves to be straightforward, the court may fix fees below the minimum limit. In both cases, the court must give reasons for its decision.

10. With regard to the fees charged by lawyers to their clients, Article 61 of the Royal Decree-Law provides:

‘The fees charged by lawyers to their clients, for both court work and out-of-court work, are to be determined, if not by special agreement, on the basis of the criteria laid down in Article 57, having regard to the seriousness and number of the issues dealt with.

Those fees may, having regard to the special nature of the case, its monetary value or the result of the service provided, be higher than those calculated as payable by the person ordered to pay the costs.

…’

11. As regards lawyers’ fees in respect of civil proceedings, Article 24 of Law No 794 of 13 June 1942 concerning lawyers’ fees in respect of court services in civil proceedings (‘Law No 794/1942’) provides that there may be no derogation from the minimum fees set by the scale for lawyers’ court services in civil proceedings and that any derogating agreement is void.

12. Article 13 of Law No 31 of 9 February 1982 on the freedom for lawyers who are nationals of the Member States of the European Community to provide services, which implements Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services, ( ) provides that ‘the lawyers listed in Article 1 are entitled to payment, for their professional services, of the fees and emoluments set in respect of court proceedings and out-of-court work by the legislation in force governing the profession’.

13. It should be pointed out that, during the pre-litigation stage of the present case, the Italian legislation relating to the remuneration of the liberal professions and, therefore, also of lawyers was amended by Decree-Law No 223 of 4 July 2006, which became Law No 248 of 4 August 2006 (‘Decree-Law No 223/2006’). Article 2 thereof, entitled ‘Urgent provisions for the protection of competition in the professional services sector’, provides:

‘1. In accordance with the Community principles of free competition, freedom of movement of persons and freedom to provide services, and in order to guarantee consumers a meaningful choice when exercising their rights and the ability to compare services offered on the market, from the date of entry into force of the present decree the laws and regulations shall be repealed which impose, with regard to the liberal professions and those engaged in intellectual work:

(a) compulsory fixed or minimum tariffs, and therefore the prohibition of establishing remuneration contractually on the basis of the attainment of the objectives pursued;

…

2. This shall be without prejudice to the provisions concerning the exercise of the professions in the context of the national public health service or a contractual relationship with that service and any maximum tariffs established beforehand, in a general way, with the objective of protecting consumers. The court shall determine the costs and fees, in cases of winding-up by court order and legal aid, on the basis of the fee scale. In tendering procedures, the awarding authorities may use scales, properly regarded as being adequate, as a criterion or reference basis for determining fees.

3. Rules of professional ethics, rules relating to agreements and codes of conduct which include the provisions contained in paragraph 1 shall be amended by 1 January 2007, including by means of the adoption of measures designed to ensure the quality of professional services. If these are not amended, rules which are contrary to the provisions of paragraph 1 shall, in any event, be invalid as from that date.’

Pre-litigation procedure and procedure before the Court

14. On 13 July 2005 the Commission, taking the view that the Italian legislation concerning a lawyer’s out-of-court services might be incompatible with Article 49 EC, sent the Italian Republic a letter of formal notice. The Italian Republic replied by letter of 19 September 2005.

15. The Commission subsequently, on two occasions, supplemented the analysis made in the letter of formal notice. In a first supplementary letter of formal notice, dated 23 December 2005, the Commission expressed the view that the Italian provisions imposing the obligation to comply with compulsory tariffs for lawyers’ court and out-of-court services were incompatible with Articles 43 EC and 49 EC. The Italian Republic replied by letters of 9 March 2006, 10 July 2006 and 17 October 2006.

16. By a second supplementary letter of formal notice, dated 23 March 2007, the Commission reacted to the new Italian legislation on the matter, namely Decree-Law No 223/2006. The Italian Republic replied by letter of 21 May 2007.

17. Subsequently, by letter of 3 August 2007, the Commission requested the Italian authorities to provide information on the rules governing the system for reimbursing costs incurred by lawyers. The Italian Republic replied by letter of 28 September 2007.

18. On 4 April 2008 the Commission, unsatisfied with the observations made by the Italian Republic, sent it a reasoned opinion, in which it complained that the national provisions imposing on lawyers the obligation to comply with maximum tariffs were incompatible with Articles 43 EC and 49 EC.

19. Notwithstanding the arguments put forward by the Italian authorities in their reply of 9 October 2008 to the reasoned opinion, the Commission brought the present action, in which it asks the Court to declare that, by adopting provisions requiring lawyers to comply with maximum tariffs, the Italian Republic has failed to fulfil its obligations under Articles 43 EC and 49 EC, and to order the Italian Republic to pay the costs.

20. By order of 5 June 2009, the Court granted the Republic of Slovenia leave to intervene in support of the form of order sought by the Commission.

21. The Italian Republic requested a hearing, which was held on 24 March 2010, in the presence of the agents of the Italian Republic and of the Commission.

Appraisal

22. The Commission’s application is based on the premiss that the Italian legislation contains provisions imposing on lawyers the obligation to comply with maximum tariffs. In the light of the Commission’s arguments set out in the application and those presented at the hearing, it may be concluded that the Commission is criticising the Italian Republic, not for the existence of compulsory maximum tariffs in connection with the judicial determination of costs, which is expressly provided for by Article 60 of the Royal Decree-Law, but rather for the obligation to comply with those tariffs in relations between lawyers and clients, inasmuch as that obligation restricts the freedom of lawyers to negotiate their remuneration.

23. If that were the case, that is to say, if the Italian legislation did indeed contain provisions imposing on lawyers the obligation to comply with maximum tariffs in their relations with their clients, it would hardly be difficult, on the basis of the judgment in Cippola and Others, ( ) in which the Court described a similar obligation concerning compliance with minimum tariffs as constituting a restriction on the freedom to provide services, to acknowledge that the obligation in question constitutes a restriction on the freedom to provide services, and even on the freedom of establishment, with the result that the onus would then be on the Italian Republic to establish that that restriction can be justified by general-interest objectives.

24. However, the Italian Republic specifically disputes the existence of such an obligation imposed on lawyers to comply with maximum tariffs in their dealings with clients. For that reason, before examining whether the obligation on lawyers to comply with maximum tariffs constitutes a restriction on freedom of establishment within the meaning of Article 43 EC and also a restriction on freedom to provide services within the meaning of Article 49 EC, I shall first consider whether the Italian legal order does in fact contain the aforementioned obligation.

25. To begin, I should like to point out that the Italian tariff for lawyers’ services setting, for each procedural step or series of steps, a maximum limit and a minimum limit, has already been examined by the Court on three occasions. The first time was in the judgment in Arduino, ( ) in which the Court examined the procedure for adopting the tariff setting minimum and maximum limits in the light of Articles 10 EC and 81 EC in order to determine whether that tariff constituted a State measure or a decision affecting the economic sphere taken by a private economic operator. On that occasion, the Court found that the aforementioned articles of the EC Treaty did not preclude a Member State from adopting a law or regulation which approves, on the basis of a draft produced by a professional body of lawyers, a scale fixing minimum and maximum fees for members of the profession. ( )

26. The same finding is contained in the judgment in Cipolla and Others. ( ) In that judgment the Court, as well as examining whether the Italian lawyers’ fees tariff met the requirements of Community competition law, also considered the matter of the relationship between the absolute prohibition of derogation, by agreement, from the minimum fees set by that tariff and the principle of the freedom to provide services. In that regard, the Court found that such a prohibition constituted a restriction of the freedom to provide services which might, in principle, be justified by the objectives of consumer protection and the proper administration of justice. The Court left it to the national court to determine whether the Italian legislation at issue did in fact serve the aforementioned objectives and whether the restrictions which it imposed did not appear disproportionate in relation to those objectives. ( )

27. Subsequently, in the order in Hospital Consulting and Others, ( ) the Court reiterated its view with regard to the compliance of the Italian lawyers’ fees tariff with the requirements of Community competition law. In that case, the questions referred to the Court for a preliminary ruling concerned the fact that the national court, when deciding the amount of costs that the unsuccessful party must pay to the other party, was prohibited from derogating from the minimum fees set by the aforementioned tariff.

28. I think it is important to point out that, in both the judgment in Cipolla and Others and in the order in Hospital Consulting and Others, the Court’s arguments related only to the prohibition of derogating from the minimum fees. Those decisions take no account at all of any prohibition of derogating from the maximum fees, notwithstanding the fact that, in Cipolla and Others, the national court had asked the Court whether the rule of the absolute prohibition of derogating from the lawyers’ fees was compatible with the principle of the freedom to provide services. ( )

29. At the time of the events which gave rise to the judgments in Arduino and Cippola and Others and to the order in Hospital Consulting and Others, the existence of a prohibition of derogating from the minimum fees was indisputable. That prohibition was expressly formulated in Article 24 of Law No 794/1942 and sanctioned by the nullity of any derogating agreement, and also in Article 4(1) of Ministerial Decree No 127/2004, under which the minimum tariffs established for lawyers’ fees may not be the subject of derogation. ( )

30. The obligation to comply with minimum tariffs, and therefore the compulsory nature of those tariffs, was removed by Decree-Law No 223/2006, which thus derogates, as lex posterior, from Law No 794/1942 and from Ministerial Decree No 127/2004.

31. In the same way as the existence of the prohibition of derogating from the minimum fees at the time of the events which gave rise to the judgments in Arduino and Cippola and Others and to the order in Hospital Consulting and Others, the existence of maximum tariffs for lawyers’ services in the Italian legislation is, likewise, indisputable.

32. However, it appears that that is not the criticism being levelled at the Italian Republic by the Commission. The Commission is actually criticising the compulsory nature of the maximum tariffs in the relationship between lawyer and client in that it constitutes a restriction on the contractual freedom of the latter. The Commission takes the view that the Italian legislation at issue prohibits lawyers from derogating, by agreement, from the maximum tariffs.

33. In that regard, it should be pointed out that the Italian Republic is not the only Member State whose legal order provides for a tariff setting minimum and maximum limits applicable to lawyers’ fees. ( )

34. I accept that such a tariff may play a moderating role by protecting individuals against the setting of excessive fees and enabling them to know in advance the costs connected with the services provided by lawyers, particularly in the light of the informational imbalance between lawyers and clients.

35. As I have stated above, the allegedly compulsory nature of the maximum tariffs which, according to the Commission, are applicable to lawyers’ services under, inter alia, Articles 57 and 58 of the Royal Decree-Law, Article 24 of Law No 794/1942, Article 13 of Law No 31 of 9 February 1982, and the relevant provisions of Ministerial Decree No 127/2004 and of Decree-Law No 223/2006 lies at the centre of the concerns expressed by the Commission. ( )

36. I take the view, on the basis of the Italian legislation as presented by the Commission and subsequently explained by the Italian Republic both in their pleadings and in their oral explanations at the hearing, that the Commission’s premiss relating to the prohibition of derogating from the maximum tariffs is incorrect.

37. The express effect of Article 2233 of the Italian Civil Code, as lex generalis, and of Article 61 of the Royal Decree-Law, as lex specialis, is that the agreement between a lawyer and his client takes precedence over the tariff drawn up by Ministerial Decree No 127/2004. It is only if there is no agreement that the tariff is applied with a view to determining a lawyer’s fees in a specific case. It follows that the lawyer and his client have the opportunity to determine, by agreement, the lawyer’s fees, on the basis, for example, of the time spent, a flat rate or even depending on the outcome.

38. Nor is this finding brought into question by Article 2(2) of Decree-Law No 223/2006, according to which the repeal of the provisions laid down by law or regulation in the professional services sector which provide for fixed tariffs or compulsory minimum tariffs is without prejudice to any maximum tariffs. In my view, it follows from that provision that the nature of any maximum tariffs remains unchanged. Thus, if the maximum tariffs applicable to lawyers’ activities were not compulsory in the relationship between lawyer and client prior to the adoption of Decree-Law No 223/2006, they cannot be compulsory after the adoption of the aforementioned decree.

39. Moreover, in contrast to Article 2(1) of Decree-Law No 223/2006, the term ‘compulsory’ does not appear in Article 2(2) in relation to maximum tariffs.

40. Having regard to the case-law according to which the scope of national laws, regulations or administrative provisions must be assessed in the light of the interpretation given to them by national courts, ( ) the Commission would, in order for its action to succeed, have to establish that the Italian courts take the view that the maximum tariffs are compulsory in nature.

41. In its application, the Commission claimed, without citing specific examples, that it follows from settled case-law of the Corte suprema di cassazione that the prohibition of derogating from the lawyer’s professional tariff has the effect of rendering void any agreement to the contrary between the parties concerned. The Italian Republic replied that the aforementioned case-law relates only to minimum tariffs.

42. At the hearing, the Commission referred to judgments of the Corte suprema di cassazione No 12297/2001, No 9514/96 and No 19014/2007, without, however, providing copies of those judgments to the Court. It stated that, in those judgments, the Corte suprema di cassazione affirmed that the purpose of the maximum and minimum tariffs is to restrict contractual independence. The Italian Republic challenged this, replying that those judgments related to completely different legislation.

43. In spite of the fact that the aforementioned judgments were not placed on the case-file, I have examined one of them, namely judgment No 12297/2001, which is accessible on the internet. It is apparent from that examination that that judgment concerns only the determination of legal costs and not the contractual freedom to set fees in the relationship between the client and his lawyer.

44. In the light of the foregoing considerations, it is possible to summarise the situation as follows.

45. First, the onus is on the Commission to establish the existence of an obligation which requires lawyers to comply with maximum tariffs and which prohibits them from derogating, by agreement, from those maximum tariffs.

46. The Commission has proved the existence of maximum limits in the matter. In fact, this aspect has not been contested by the Italian Republic. However, the Commission has not succeeded in establishing that those limits are compulsory in the sense that they prohibit lawyers from derogating from them by way of agreement concluded with their clients. An examination of the Italian legislation concerning lawyers’ remuneration does not reveal the existence of an express prohibition of derogating from the maximum tariffs which is identical to that in relation to derogating from the minimum tariffs which applied until the change brought about by Decree-Law No 223/2006.

47. Secondly, the Commission has not established that, notwithstanding the absence of such an express prohibition, the national courts interpret the legislation at issue as meaning that the maximum tariffs constitute the limits of the contractual freedom of lawyers and their clients. To my knowledge, the judgments of the Corte suprema di cassazione cited by the Commission at the hearing, ( ) but which were not placed on the case-file, do not corroborate the Commission’s assertion. Furthermore, the Italian Republic has rightly observed that the judgments in question relate to different legislation from that examined in the present case.

48. It follows from the foregoing summary that the Commission’s application should be dismissed as unfounded.

49. On the question of costs, under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Italian Republic has not applied for costs, each of the parties should bear its own costs.

50. Under the first subparagraph of Article 69(4) of those Rules, any Member State which has intervened in the proceedings is to be ordered to bear its own costs. The Republic of Slovenia must therefore bear its own costs.

Conclusion

51. In the light of the foregoing considerations, I propose that the Court should rule as follows:

1. The action is dismissed.

2. The Italian Republic shall bear its own costs.

3. The European Commission shall bear its own costs.

4. The Republic of Slovenia shall bear its own costs.