Opinion of Mr Advocate General Alber delivered on 20 September 2001. - Inspecteur van de Belastingdienst Douane, district Rotterdam v Sea-Land Service Inc. and Nedlloyd Lijnen BV. - Reference for a preliminary ruling: Raad van State - Netherlands. - Maritime transport - Freedom to provide services - Vessel traffic services system. - Joined cases C-430/99 and C-431/99.



European Court reports 2002 Page I-05235



Opinion of the Advocate-General

I - Introduction

1. In this reference for a preliminary ruling, the Netherlands Raad van State (Council of State) has submitted questions concerning the Netherlands system of charges for vessel traffic services in coastal waters and port areas. The charges are levied on sea-going vessels of over 41 metres in length, but not on smaller sea-going vessels or inland vessels. The national court has doubts as to whether the structure of the charges in question and the obligation to pay them are compatible with the provisions on freedom to provide services, and asks whether the exemption of smaller vessels and inland vessels may constitute aid which is prohibited.

II - Legal framework

A - The provisions of Community law

2. Pursuant to Article 61(1) of the EC Treaty (now, after amendment, Article 51(1) EC), freedom to provide services in the field of transport is governed by the provisions of the Title relating to transport. In accordance with Article 84(1) of the EC Treaty (now, after amendment, Article 80(1) EC), those provisions apply to transport by inland waterway, but not to maritime transport. However, Article 84(2) of the EC Treaty empowers the Council to lay down provisions in respect of maritime transport.

3. On the basis of that article, the Council adopted Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries, Article 1 of which reads:

1. Freedom to provide maritime transport services between Member States and between Member States and third countries shall apply in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.

2. The provisions of this regulation shall also apply to nationals of the Member States established outside the Community and to shipping companies established outside the Community and controlled by nationals of a Member State, if their vessels are registered in that Member State in accordance with its legislation.

3. The provisions of Articles 55 to 58 and 62 of the Treaty shall apply to the matters covered by this regulation.

4. For the purpose of this regulation, the following shall be considered "maritime transport services between Member States and between Member States and third countries" where they are normally provided for remuneration:

(a) intra-Community shipping services:

the carriage of passengers or goods by sea between any port of a Member State and any port or off-shore installation of another Member State;

(b) third-country traffic:

the carriage of passengers or goods by sea between the ports of a Member State and ports or off-shore installations of a third country.

4. Article 8 of this regulation provides:

Without prejudice to the provisions of the Treaty relating to right of establishment, a person providing a maritime transport service may, in order to do so, temporarily pursue his activity in the Member State where the service is provided, under the same conditions as are imposed by that State on its own nationals.

B - The Netherlands provisions

5. In 1995, the piloting service in the Netherlands was privatised. The verkeersbegeleidingssyteem (vessel traffic services system, hereinafter, the VTS) remained in State ownership. The costs of that system, which were previously covered by the piloting tariffs, have since been financed largely by the VTS charge, which is levied separately. The legal basis for that charge is the Scheepvaartverkeerswet (Shipping Act; hereinafter, the SVW) and the implementing provisions based on that law.

6. Article 1(1)(i) of the SVW defines vessel traffic services as the bringing about and maintenance of safe and smooth shipping traffic by means of a system of personnel and infrastructural facilities on a systematic and interactive basis.

7. The first paragraph of Article 15(c) of the SVW requires those who (on the basis of a subsequent implementing rule) are subject to vessel traffic services in accordance with Article 4(3) of the SVW to pay the VTS charge.

8. Under the first paragraph of Article 15(d) of the SVW, the VTS charge serves to offset the vessel traffic services costs payable by the State in so far as such operations are performed as part of an individual service.

9. The second paragraph of Article 15(d) provides that the VTS charge is payable to the State and that the shipping lanes on which the charge is payable and the criteria for the application of the VTS charge and the exemptions from it are to be determined by an administrative decree.

10. The third paragraph of Article 15(d) provides that the VTS charge is to be determined by ministerial decree.

11. Effect was given to the second paragraph of Article 15(d) of the SVW by the Besluit verkeersbegeleidingstarieven scheepvaartverkeer (Decree on vessel traffic services tariffs for shipping traffic) of 4 November 1994 (hereinafter, the BVS). Under Article 2(1) of the BVS, the tariff determined by ministerial decree is payable in respect of shipping movements in the following areas subject to the VTS:

- Eems

- Den Helder

- North Sea channel

- Nieuwe Waterweg, and

- Westerschelde.

12. Under Article 4(1) of the BVS, the basis and amount of the charge payable are to be determined by reference to the length of the ship rounded up to whole metres, whole metres alone being taken into consideration.

13. Under Article 5(1) of the BVS, the charge is not payable on a ship belonging to the following categories:

- ships not exceeding 41 metres in length;

- Netherlands warships;

- other ships in the ownership of the State or under its management;

- warships of countries other than the Netherlands, where so agreed with the flag State of the ships concerned;

- ships coming from port, anchor or a mooring in an area subject to tariff which leave the channel in order to put out to sea and subsequently enter by the same channel (zeezwaaiers (lighters));

- ships calling at a Netherlands port, anchorage or mooring without carrying out an economic activity in that connection.

14. In order to give effect to the third paragraph of Article 15(d) of the SVW, the Regeling verkeersbegeleidingstarieven scheepvaartverkeer (Regulation on vessel traffic services tariffs for shipping traffic) of 14 September 1995 was adopted. It provides that, for vessels of between 41 and 100 metres in length, the charge is NLG 250, NLG 17 being payable for each additional metre, up to a maximum of NLG 2 800 for vessels measuring 250 metres and above in length.

III - Facts and procedure

15. The claimants in the two similar sets of main proceedings, Sea-Land Service Inc. (Case C-430/99) and Nedlloyd Lijnen B.V. (Case C-431/99) (hereinafter, Sea-Land and Nedlloyd, or the claimants) operate sea-going vessels. Sea-Land was founded in Wilmington, Delaware, United States of America. According to the decision of the Rotterdam Customs Office of 15 March 1996 on the objection raised by Sea-Land, its head office is in Charlotte, North Carolina, United States of America. Sea-Land also has an office in Maasvlakte (Rotterdam), Netherlands. Nedlloyd is a company incorporated under Netherlands law and established in Rotterdam.

16. The claimants' vessels are subject to the VTS when operating in Netherlands coastal waters. The VTS provides shipping in areas characterised by heavy traffic and/or frequent movements of dangerous goods and/or navigational difficulties with up-to-date traffic information intended primarily to ensure the safe navigation of vessels in those areas. Furthermore, since communication between all the vessels concerned is intercepted and monitored, the orderly movement of shipping can be monitored from the coast and timely action taken to deal with dangerous situations. The vessels subject to vessel traffic services are required to report in when entering an area subject to the VTS and when carrying out certain manoeuvres.

17. The Inspecteur van de Belastingsdienst Douane, Rotterdam district (hereinafter, the defendant) sought to recover the VTS charge from both undertakings in late 1995 and early 1996. The claimants lodged an unsuccessful objection against the demand and subsequently brought an action before the Arrondissementsrechtbank (District Court), Rotterdam.

18. The Arrondissementsrechtbank found in favour of the claimants and set aside the contested decisions on the ground that, contrary to the first paragraph of Article 15(d) of the SVW, the charge was not intended exclusively to cover the costs of an individual service, but served also to finance the VTS in general. Moreover, it had not been proved that the amount of the charge was proportionate to the actual costs. The defendant appealed against both decisions.

IV - The reference for a preliminary ruling

19. The national court before which the appeals were brought rejects the findings of the Arrondissementsrechtbank. It states that the charge is largely consistent with the costs of the services provided to individual sea-going vessels. According to the explanatory memorandum to the SVW, 90% of the costs of the VTS are attributable to maritime shipping and 10% to inland shipping. When the charge was set, the costs of certain general services were not taken into account, so that the revenue expected from the charges in 1995 accounted for approximately 72% of the general costs of the VTS. Even on the basis of other estimates to the effect that maritime shipping accounts for 60% of the traffic using the system and inland shipping 40%, the charges for maritime shipping are still not disproportionate to the rate of uptake by such vessels. According to findings which are not yet definitive, the revenue generated by the VTS charge in fact accounts for only about 62% of the costs of traffic accompaniment. The national court also considers the length of a vessel to be an appropriate and easily verifiable criterion for calculating the charges in question.

20. The national court considers that the charging system does not conflict with the free movement of goods (prohibition of customs duties and charges having equivalent effect). First, the charge is not levied in respect of cross-border movements. Second, there is no direct connection between the import and export of goods and the VTS charge.

21. However, the national court has doubts as to whether the levying of the VTS charge is compatible with the freedom to provide services enshrined in Article 59 of the EC Treaty (now, after amendment, Article 49 EC). Regulation No 4055/86 makes that principle also applicable to maritime shipping.

22. The legislation at issue is not contrary to the prohibition of discrimination on grounds of nationality. The charge is levied on all vessels without distinction, irrespective of the flag they fly. The exemption of inland shipping and smaller vessels does not constitute indirect discrimination. It is true that Netherlands vessels make up a clearly greater proportion of the inland shipping in waters subject to the VTS than they do of the maritime shipping in such waters, and the exemption therefore favours national shipping undertakings to a greater extent. However, that exemption is objectively justified by the fact that inland shipping makes much less use of the VTS.

23. However, the Raad van State considers that there may have been a breach of the prohibition of all - even non-discriminatory - restrictions on freedom to provide services, and refers to the judgment in Corsica Ferries III. In its view, both the obligation to take part in the VTS and the imposition of the charge may constitute a restriction.

24. The national court nevertheless sees potential grounds of justification for any such restrictions. The measures may be permissible under Article 56 of the EC Treaty (now, after amendment, Article 46 EC). However, the Court of Justice has laid down a number of conditions for permitting exceptions to the principle of freedom to provide services. It is unclear to what extent the levying of the charges is a suitable means of attaining the objective of ensuring the safety of traffic. There are also doubts, in its view, as to the proportionality of the obligation on sea-going vessels alone to pay charges.

25. Finally, the national court considers the possibility of transposing the principles developed by the Court of Justice in the judgment in Keck and Mithouard to freedom to provide services.

26. The Raad van State raises the following questions on these issues:

1.(a) Does a system such as VTS, in so far as it provides for mandatory participation in vessel traffic services, constitute an obstacle to freedom to provide services for the purposes of Regulation (EEC) No 4055/86 in conjunction with Article 59 (now, after amendment, Article 49 EC) of the EC Treaty?

(b) If not, is the position otherwise if participants in the system are charged for services provided?

(c) Must Question 1.(b) be answered differently if that charge is levied on shipping whose participation in the system is mandatory, but not on other users, such as inland waterway or sea-going vessels the length of which does not exceed 41 metres?

2.(a) If a system such as VTS and its associated tariff constitute an obstacle to freedom to provide services, does that obstacle come under the exceptions in Article 56 (now, after amendment, Article 46 EC) of the EC Treaty for provisions justified on grounds of public security?

(b) Is it material to the reply to Question 2.(a) whether the tariff is greater than the actual cost of the service provided to a given ship?

3. If a system such as VTS and its associated tariff constitute an obstacle to freedom to provide services, and if that obstacle is not justified under Article 56 (now, after amendment, Article 46 EC) of the EC Treaty, can it be justified either because it is merely a non-discriminatory selling arrangement, as referred to in Keck and Mithouard, or because it fulfils the conditions which the Court has laid down in other judgments, in particular in Gebhard?

27. The national court also considers whether the exemption of inland shipping constitutes aid prohibited under Article 92 of the EC Treaty (now, after amendment, Article 87 EC). In Case 173/73, the Court made it clear that the exemption of a branch of economic activity from certain financial charges could also constitute aid for the beneficiary undertakings. However, the national court finds that the exemption from the VTS charge is justified by the nature and internal structure of the system. It is also unsure whether the exemption distorts competition and affects trade between Member States. Finally, if that is the case, the national court considers that the exemption may constitute de minimis aid, which is permissible.

28. In this connection, the national court submits the following questions:

4.(a) Must a system of Member State such as VTS be deemed to constitute aid within the meaning of Article 92(1) (now, after amendment, Article 87(1) EC) of the EC Treaty, inasmuch as it exempts certain categories of participants in that system, in particular inland waterway vessels, from the requirement to pay the tariff?

(b) If so, does that aid come within the prohibition laid down in that provision?

(c) If Question 4.(b) must also be answered affirmatively, does the classification as aid prohibited under Community law also have consequences under Community law for the tariff which participants, apart from those exempted, are required to pay?

V - Submissions of the parties

(1) The claimants

(a) The structure of the VTS tariff system

29. In contrast to the national court, the claimants take the view that vessel traffic services is a system which serves the general interest and not a service which can be attributed to an individual vessel. The costs of vessel traffic services must therefore be met out of the public purse. In their submission, there is no specific connection between a particular service performed and the amount of the VTS charge.

30. Under international treaties between the Netherlands and Belgium, the sum of the piloting fees and VTS charge payable for using the Schelde must not be greater than the piloting fees for using the Meuse. According to the claimants, it is only by fixing the amount of the VTS charge that the State can achieve an equal charge, since the piloting fees are fixed in what are largely freely-negotiated agreements between pilots' associations, the port authorities and shipping undertakings. The amount of the VTS charge is therefore not dependent on costs, but is rather the expression of an economic policy decision.

31. The overwhelming majority of the costs, they argue, originate from traffic vessel services in the Rhine Estuary (VTS Waterweg). The State has assigned that task to the Gemeentelijk Havenbedrijf Rotterdam (Rotterdam Municipal Port Operator) and pays towards the operation of the port, although that contribution bears no relation to cost. However, the costs of vessel traffic services in the Waterweg area are already partly covered by the Rotterdam port fees, which means that sea-going vessels are charged twice. The revenue from this VTS area is used to finance the costs of traffic accompaniment in other, quieter areas.

32. The claimants submit that the charging structure is at odds with the case-law of the Court to the effect that a charge must be proportionate to the actual costs of the service. In connection with the system of charges for use of the Brenner motorway, Advocate General Saggio pointed out that only the costs specifically attributable to the sections of road used should be taken into account in assessing the charges, not the costs of the whole motorway network. A charge must constitute consideration for a personal benefit enjoyed by the person required to pay it.

(b) Freedom to provide services

33. In the view of the claimants, the obligation to participate in the traffic accompaniment scheme does not in itself entail a restriction on freedom to provide services.

34. However, the levying of the VTS charge is, in their view, contrary to the provisions on freedom to provide services. Although 82% of the vessel traffic services involve inland waterway vessels, inland shipping is exempt from the VTS charge. Netherlands vessels account for an estimated 75% of inland shipping. On the other hand, only 13.6% of vessels entering the port of Rotterdam fly the Netherlands flag, while around 40% fly the flags of other Member States. The exemption of inland shipping therefore entails covert discrimination on grounds of nationality.

35. Moreover, there is no justification for the infringement of the provisions on freedom to provide services. Financing by way of charges is permissible only if the charges are proportionate to the service, and the costs are not spread among users in a discriminatory manner.

36. The discrimination renders the rule in Keck and Mithouard inapplicable. Furthermore, it is not clear what the levying of the charge has to do with a selling arrangement.

37. There are no overriding reasons relating to the public interest capable of justifying the scheme. The VTS charge is not a suitable means of attaining the objective sought. Nor is it necessary, since it is disproportionate to the costs. Moreover, the length of a vessel is not an objective criterion for calculating the charge.

(c) The prohibition of State aid

38. In the claimants' submission, the exemption of inland waterway vessels constitutes State aid which is capable of distorting competition and restricting trade between Member States. There is fierce competition between the sea ports of Antwerp and Rotterdam. The service provided by transport undertakings often consists in door-to-door delivery. When deciding through which port transport is to be effected, the cost of onward transport by inland waterway between those two ports is of considerable significance. Cost advantages of inland waterway vessels in Rotterdam are therefore capable of distorting competition with Antwerp.

(2) The Netherlands Government

(a) The structure of the VTS tariff system

39. The Netherlands Government states that maritime shipping makes greater use of the VTS than inland waterway vessels. Sea-going vessels require far more particulars to be entered in the system, and, in the case of sea-going vessels with dangerous goods on board, such particulars are even prescribed by Community law in Directive 93/75/EEC. Requests for pilots for sea-going vessels are also made via the VTS.

40. The rules governing vessel traffic services on inland waterways and in ports provide for less intense supervision. In the waters frequented by sea-going vessels, which are the main focus of the VTS, inland waterway vessels are hardly ever to be found. It is no coincidence that the VTS charge used to be part of the piloting fees, which were also payable only in respect of sea-going vessels. Moreover, larger sea-going vessels are more difficult to manoeuvre. In particular, they can be steered reliably only at certain speeds. In principle, therefore, smaller vessels have to keep out of the way of larger ones. Finally, since smaller sea-going vessels and inland vessels probably frequent the waters subject to the VTS far more often than larger sea-going vessels, their crews will have a better knowledge of the local area than the crews of larger sea-going vessels. The latter are therefore much more dependent on vessel traffic services.

41. Internationally, there are other maritime vessel traffic schemes, based on the rules of the International Maritime Organisation, which are, to varying degrees, comparable to the Netherlands scheme.

(b) Freedom to provide services

42. According to the Netherlands Government, the rules on the VTS charges contain neither direct nor indirect discrimination on grounds of nationality. On the contrary, the obligation to pay such charges is incumbent on all sea-going vessels - both national and foreign - in the same way. The provisions do not impose any additional eligibility requirements on service providers who are established in another Member State and already meet all the requirements applicable there. Rather, the conditions laid down relate only to performance of the service. This is comparable with the situation underling the judgment in Keck and Mithouard.

43. In the alternative, the Netherlands Government considers that any restrictions on freedom to provide services on grounds of public security in accordance with Article 56 of the EC Treaty and for overriding reasons relating to the public interest are justified. The relevant provisions of Directive 93/75 and the fact that vessel traffic services are widely used around the world show that there is a public interest in coastal waters being subject to such a scheme. It is permissible to levy charges to cover the costs of financing these necessary public services.

(c) The prohibition of State aid

44. On the subject of the prohibition of State aid, the Netherlands Government cites the case-law of the Court of Justice to the effect that advantages which result for individual undertakings from general economic policy measures do not constitute aid.

45. The VTS charge is levied only on maritime shipping because such shipping relies heavily on vessel traffic services. The advantages resulting from vessel traffic services for inland shipping are purely incidental.

46. The exemption of other groups of vessels, in particular those under 41 metres in length, is objectively justified.

(3) The Commission

(a) Freedom to provide services

47. In the view of the Commission, the Netherlands rules infringe the prohibition of discrimination in Article 9 of Regulation No 4055/86. The system of VTS charges favours inland shipping and thus predominantly vessels flying the Netherlands flag. The Commission sees a parallel here between this case and the judgment in Corsica Ferries II. Even though inland vessels seldom operate in the waters forming the main focus of vessel traffic services (e.g. entrances to ports), it is not inconceivable that an inland vessel will occasionally benefit from the system in the same way as a sea vessel, but will not have to pay the charge.

48. The Commission maintains that the unequal treatment of sea-going vessels predominantly flying foreign flags cannot be justified under Article 56 of the EC Treaty; in particular, it is not clear to what extent the discriminatory charging structure is necessary to improve the safety of shipping.

(b) The prohibition of State aid

49. By waiving the charge on certain categories of vessels, the State is granting aid. This is not a general measure. Rather, individual undertakings benefit from a service which would not be available free of charge under market conditions.

50. The waiver of the charge cannot be justified by the nature or internal structure of the system. The fact that inland vessels spend less time in the coastal waters subject to traffic accompaniment and are not obliged to have on board the equipment necessary for the VTS does not mean that they will not occasionally avail themselves of the support provided by the VTS. The fact that they use the system less could be reflected in correspondingly lower, or flat-rate, charges. Finally, when introducing the VTS charge, the legislature itself assumed a rate of uptake of the system by inland shipping of 10%, which is not a negligible percentage.

51. The Commission appears to object also to the exemption of other categories of vessels, in particular the general exemption of vessels in State ownership.

52. The VTS charging system distorts competition and affects intra-Community trade in two ways. First, inland shipping has an advantage over maritime shipping on some routes. On the Antwerp-Rotterdam route in particular, there is competition between inland waterway vessels and maritime shipping. Secondly, that advantage strengthens the position of Netherlands inland shipping on the intra-Community market, since domestic undertakings benefit most from the exemption.

53. In its submission, the de minimis rule does not apply because the transport sector is characterised by extreme fragmentation and overcapacity. Nor can the financing of the VTS be compared to the financing of infrastructure measures, because the monitoring of vessel traffic is an individual service.

54. In the written procedure, the Commission also expressed the view that the best way for the national court to put an end to the infringement of the provisions concerning aid would be to terminate the application of the entire system and exempt all operators from the charge. At the hearing, however, the Commission representative indicated that it would be more effective to impose appropriate charges retrospectively on all VTS participants, though he doubted whether the national court could make an order to that effect.

VI - Legal assessment

55. The national court seeks an assessment of the obligation to participate in the VTS and to pay the VTS charges in the light of what may be infringements of the freedom to provide services and the provisions concerning State aid.

56. Questions 1 to 3 relate to the principle of freedom to provide services. It is therefore appropriate to look at them together. The questions concerning the provisions relating to aid will then be examined in a subsequent section.

A - Compatibility of the VTS rules with the freedom to provide services

57. The national court has doubts principally as to whether the levying and the structure of the VTS charges are compatible with the principle of freedom to provide services.

58. First, it wonders whether the obligation to participate in the vessel traffic services scheme constitutes per se a restriction on the freedom to provide services. However, the parties to the proceedings all take the view that the obligation to participate in the VTS does not in itself entail any restriction on freedom to provide services. Indeed, the Commission takes the view that the system promotes freedom to provide services. Against that background, the obligation to participate in the VTS cannot be viewed separately from the associated obligation to pay the VTS charge. Only the obligation of participation subject to a charge is capable of making the transport of goods by sea more difficult. Consideration will therefore be given henceforth only to the obligation of participation subject to a charge from the point of view of its effect on freedom to provide services.

(1) The scope of the freedom to provide services in the field of maritime transport

59. Under Article 61(1) of the EC Treaty, freedom to provide services in the field of transport is governed by the provisions of the Title relating to the common transport policy. The application of the principles relating to the freedom to provide services must therefore be achieved by measures under the common transport policy. Even after the expiry of the transitional period, the provisions of Articles 59 and 60 (now Article 50 EC) of the EC Treaty are not of direct application in the field of transport policy.

60. Pursuant to Article 84(1) of the EC Treaty, the Treaty provisions governing transport policy are themselves applicable only to transport by rail, road and inland waterway. Under Article 84(2) of the EC Treaty, special legal acts adopted by the Council are required to extend the common transport policy to sea transport. On the basis of that provision, the Council adopted Regulation No 4055/86, which renders applicable to the sphere of maritime transport between Member States the totality of the Treaty rules governing freedom to provide services.

61. However, the personal scope of Regulation No 4055/86 differs to some extent from the scope of the rules of the EC Treaty on freedom to provide services.

62. Under Article 1(1) of Regulation No 4055/86, nationals of Member States who are established in a Member State other than that of the person for whom the services are intended may rely on freedom to provide services. In that regard, Regulation No 4055/86 and Article 59 of the EC Treaty are alike. Under Article 1(3) of Regulation No 4055/86 in conjunction with Article 58 of the EC Treaty (now Article 48 EC), companies or firms are to be treated in the same way as natural persons who are nationals of a Member State, provided that the company or firm was formed in accordance with the law of a Member State and has its registered office, central administration or principal place of business within the Community.

63. According to the information provided by the national court, Nedlloyd is a company incorporated under Netherlands law which is established in the Netherlands. It is thus a company which is to be treated in the same way as a national of a Member State. Sea-Land, on the other hand, does not satisfy that condition. It was formed in Delaware (USA). The decision on the objection given by the Rotterdam Customs Office on 15 March 1996, which Sea-Land submitted as Annex 17 to its observations, shows that its principal place of business is in Charlotte, North Carolina (USA).

64. Article 1(2) of Regulation No 4055/86 extends the personal scope of the freedom to provide services to nationals of the Member States established outside the Community and shipping companies established outside the Community and controlled by nationals of a Member State, if their vessels are registered in that Member State in accordance with its legislation.

65. It must be assumed in this respect that the first alternative (nationals of the Member States established outside the Community) is applicable only to natural persons. In order for a company to be treated in the same way as a natural person under Article 58 of the EC Treaty, it would have to be established in the Community itself. At most, therefore, Sea-Land could rely on freedom to provide services as a shipping company within the meaning of the second alternative. For that to happen, two conditions would have to be met:

- Sea-Land would have to be controlled by nationals of the Member States; and

- Sea-Land's vessels would have to be registered in the Member State whose nationals are the controlling shareholders.

66. Whether or not those conditions are satisfied in Sea-Land's case cannot be determined on the basis of the information given in the order for reference. The following submissions on freedom to provide services therefore apply to Sea-Land only in so far as those conditions are met and that company falls within the personal scope of Regulation No 4055/86.

67. A further condition for the application of Regulation No 4055/86, according to the wording of Article 1(1), is that the service provider must be established in a Member State other than that of the person for whom the services are intended. In Case C-381/93, the Court defined the scope of the regulation as follows:

In pursuance of those rules the freedom to provide services may be relied on not only by nationals of Member States established in a Member State other than that of the recipient of the services but also by an undertaking against the State in which it is established where the services are provided to recipients established in another Member State ... , and more generally whenever a provider of services offers services in a Member State other than the one in which he is established.

68. The Court thus transposed its interpretation of freedom to provide services in the Tourist Guide decisions to the special rules applicable to maritime transport. Accordingly, the principle of freedom to provide services applies even if a person providing services and the recipient of the service are established in the same Member State but the service is provided in another Member State. Even the offer of a service in another Member State entails a sufficient cross-border connection. In the case of transport from one Member State to another, the service is provided both in the country of origin and in the country of destination. In such cases there is always a cross-border element.

69. It remains to be clarified whether freedom to provide services in maritime transport also applies where no intra-Community cross-border element is present, only a connection with a third country. That would be the case, for instance, where the service provider and service recipient are established in the Netherlands and the service consists in the transport of goods from the Netherlands to the USA. It is true that, according to the wording of the first sentence of Article 1(1), the express purpose of the regulation is to extend the principle of freedom to provide services to maritime transport between Member States and third countries. The precondition for this, however, is that the service provider and the service recipient must be established in different Member States. The broader conception of freedom to provide services developed by the Court in the Tourist Guide cases cannot result in freedom to provide services also encompassing situations involving a connection with only one Member State of the Community. In the context of the free movement of workers, the Court has consistently held that a cross-border connection with a third country is not sufficient for the application of the basic freedoms.

70. However, as the claimants submit in a different context, the service provided by transport undertakings frequently consists in more than just transport between two sea ports. Goods are often delivered door to door. Consequently, even if the transport by sea takes place solely between the country of establishment of the shipping undertaking and a third country, if the goods are subsequently transported on within the Community, the operation may entail a sufficient intra-Community connection.

71. Consequently, Nedlloyd could rely on freedom to provide services as against its country of establishment even if the recipient of the service were also established there, provided that transport is effected to another Member State. That applies by extension to Sea-Land as well. If the company were controlled by Netherlands nationals and its vessels were registered in the Netherlands, Sea-Land could still rely on freedom to provide services as against the Netherlands provided that another cross-border element is present.

72. However, the national court provides no information as to the persons for whom, and the routes on which, the claimants were providing transport services at the time when the contested VTS charges were incurred.

73. Moreover, Regulation No 4055/86 applies only to services provided for remuneration. The order for reference gives no indication as to whether this was the case either. However, it can be assumed that the claimants' vessels were engaged in economic activity when they entered the area subject to the VTS, since they would otherwise have been exempt from the VTS in accordance with subparagraph (f) of the first paragraph of Article 5 of the BVS.

74. I shall henceforth proceed on the basis that the persons and subject-matter at issue fall within the scope of Regulation No 4055/86, it being assumed that the claimants:

- provide services for remuneration; and

- the service exhibits a cross-border connection with another Member State.

75. With respect to the appellant Sea-Land, it is also assumed that:

- the company is controlled by nationals of the Member States; and

- its vessels are registered in the Member State whose nationals are the controlling shareholders.

76. It is for the national court to establish whether those conditions are in fact satisfied in the main proceedings.

(2) Restriction on freedom to provide services

(a) Discrimination on grounds of nationality

77. The principle of freedom to provide services, as guaranteed by Regulation No 4055/86, excludes any discrimination against service providers on grounds of nationality. Under Article 8 of Regulation No 4055/86, Member States are thus required to treat nationals of other Member States in the same way as their own nationals. Under Article 9 of Regulation No 4055/86, any restrictions on the provision of services must be applied to the service provider without distinction on grounds of nationality.

78. The rules on the VTS charge make virtually no direct reference to the nationality or residence of the shipping undertaking. Sea-going vessels of Netherlands shipping companies are liable to the charge in the same way as similar vessels of shipping companies from other Member States. The flag under which the sea vessel operates is also irrelevant.

79. The only exception is the exemption from charges enjoyed by Netherlands warships and other sea-going vessels in State ownership or under its management (subparagraphs (b) and (c) of the first paragraph of Article 5 of the BVS), which expressly favours Netherlands vessels. However, in Question 1(c) and in the grounds of the order, the national court places primary emphasis on the difference in treatment as between sea-going vessels of over 41 metres in length on the one hand, and inland shipping and smaller sea-going vessels on the other. The Raad van State does not discuss the other groups covered by the exemption.

80. In order to fall within the meaning of the term as used in Article 1(4) of Regulation No 4055/86 and Article 60(1) of the EC Treaty (now Article 50 EC), a service must normally be provided for remuneration. Neither warships nor any other State-owned vessels such as police and customs craft would normally provide services for remuneration which are comparable to the services provided by the sea-going vessels liable to the VTS charge. Only if vessels attributable to the State were to offer similar commercial services would the exemption of those vessels constitute discrimination in breach of freedom to provide services. It is for the national court to make any necessary findings of fact.

(b) Indirect discrimination

81. The claimants - supported by the Commission - take the view that the charging system, while not directly discriminatory, does discriminate indirectly on grounds of nationality because sea-going vessels have to pay the VTS charge while inland vessels are exempt. This, they contend, favours Netherlands undertakings because they operate far more inland vessels than maritime vessels. The national court and the Netherlands Government, on the other hand, consider that the exemption is objectively justified.

82. As already stated, Regulation No 4055/86 renders the totality of the Treaty rules governing the freedom to provide services applicable to the sphere of maritime transport between Member States. In order to apply Regulation No 4055/86 in a manner consistent with the Treaty, regard must therefore be had to all the principles which the Court has developed in interpreting Article 59 of the EC Treaty. Accordingly, it is not only overt discrimination that is prohibited, but also all forms of covert discrimination which, although based on criteria which appear to be neutral, in practice lead to the same result.

83. In this case, sea-going vessels of over 41 metres in length are treated differently from inland waterway vessels. This means that two situations which at first sight appear to be different are also treated differently. Covert discrimination could be assumed to exist if the apparently objective distinguishing criterion (inland waterway as opposed to sea-going vessels) were in fact used to differentiate according to nationality.

84. In Case C-18/93, the Court had to examine whether the Italian piloting tariffs discriminated indirectly on grounds of nationality. The contested system provided for a more favourable tariff for vessels licensed for cabotage. Liberalisation of the sector at that time was such that the right of cabotage was reserved for vessels flying the national flag. The class receiving favourable treatment therefore consisted essentially of Italian nationals because vessels flying the national flag were operated mainly by nationals. The Court viewed that fact alone as sufficient to indicate the existence of discrimination. It did not give any further consideration to whether, by virtue of the different levels of charges, identical situations were in fact accorded unequal treatment. In that case, however, it was obvious that, apart from the nationality of the persons concerned, there was not the slightest difference between those who had to pay the full tariff and those required to pay the reduced tariff.

85. The fact that the group in the better position consists predominantly of nationals of the State applying the system, while the group accorded less favourable treatment comprises mainly nationals of other Member States, is a strong indication of indirect discrimination. However, that circumstance alone does not constitute proof of covert discrimination. If it did, the fact - in this case - that one-man sailing boats, almost all of which are operated off the Netherlands coast by Dutch amateur sailors, are likewise not subject to the VTS charge might also be open to criticism. Rather, the apparently objective and nationality-neutral differentiation must prove in fact to be arbitrary, that is to say that situations which - apart from the nationality of the persons concerned - are comparable must be treated differently, the real reason for the distinction lying solely in the difference in nationality between the members of one group and those of another.

86. In order to answer the question whether the distinction between maritime shipping and inland shipping is arbitrary and whether there has therefore been an infringement of freedom to provide services in the form of covert discrimination, it is necessary to take account of the importance of that principle of Community law in terms of the internal market. The purpose of prohibiting States from according to nationals of another Member State treatment less favourable than that accorded to their own nationals in the context of the provision of services is to open up national markets and create an internal market in services. The favouring by one Member State of its own nationals makes it more difficult for service providers from other Member States to gain access to the national market of the former State, and distorts competition in the internal market.

87. Advocate General Fennelly argued along similar lines in Corsica Ferries III. Those proceedings concerned the structure of the charges for mooring ships in Italian ports, particularly La Spezia, where only vessels with a gross registered tonnage in excess of 500 were required to use the mooring services and thus to pay the charges. The plaintiff in the main proceedings, which itself used larger vessels, contended that vessels with a gross registered tonnage under 500 were operated mainly by Italian undertakings. Advocate General Fennelly ultimately left open the question whether any covert discrimination existed. However, he took the view that the operators of larger vessels could not rely on such discrimination since they were not in competition with the operators of smaller vessels. A better point of comparison, he said, was vessels of equivalent size belonging to domestic operators. These, however, were subject to the same tariffs as undertakings from other Member States.

88. The question whether or not there is a restriction on freedom to provide services in the form of indirect discrimination on grounds of nationality therefore hinges essentially on whether the groups treated differently are comparable in terms of the service which they provide. This could be assumed to be the case if the undertakings in one group were in competition with the undertakings in the other group.

89. However, when examining the issue of discrimination, the national court and the parties to the proceedings have had regard not so much to the comparability of the particular services offered as to the degree to which the VTS is used by maritime shipping and inland shipping respectively. This may be significant in determining whether the costs of the VTS are spread fairly among the users and whether any restriction on the provision of services is proportionate. None the less, for the purposes of determining whether different groups of service providers are indirectly discriminated against on grounds of nationality, or whether the differentiation is objective, what matters most is the comparability of the economic operators in terms of the service provided.

90. There are considerable differences between the transport services provided by sea-going vessels on the one hand and those provided by inland waterway vessels on the other. Sea-going vessels normally serve destinations which are entirely different from those served by inland waterway vessels, they have different capacities and are subject to different rules of law. Pursuant to Article 84 of the EC Treaty, Title V (concerning transport policy) of Part Three of the Treaty is thus directly applicable to transport by inland waterway, but not to maritime transport. In the field of maritime transport, freedom to provide services is governed by Regulation No 4055/86, in the field of transport by inland waterway, however, by Council Regulation (EC) No 1356/96 of 8 July 1996 on common rules applicable to the transport of goods or passengers by inland waterway between Member States with a view to establishing freedom to provide such transport services.

91. The Commission argues that, on the Antwerp-Rotterdam route at least, there is competition between maritime shipping and inland shipping. It contends that 6.3 million tonnes of freight are transported by inland waterway each year between those two ports. However, it does not say to what extent goods are transported by the corresponding sea route.

92. This conflicts with the claimants' submission that sea-going vessels usually put in at only one port along the entire stretch of coast between Le Havre and Hamburg. Presumably, goods landed at the central mooring place for that area are then transported on by land or inland waterway for distribution in continental north-western Europe. Transport by sea between ports which are also connected by inland waterways therefore seems to be a rare occurrence. Transporting goods by sea between ports located close together, especially using large sea-going vessels of over 41 metres in length, would not be viable. The piloting-service and port-use costs, coupled with the loading and unloading fees, would be disproportionate to the short distance the goods have to be transported.

93. The claimants and the Commission alike highlight the importance of transporting goods by inland waterway between Antwerp and Rotterdam. However, the claimants' submissions seem to provide evidence of competition not so much between maritime and inland shipping as between sea-going vessels calling at Antwerp or Rotterdam, or between those ports themselves for landings of goods to be distributed throughout continental north-western Europe. In that case, transport by inland waterway would be merely one factor affecting such competitive relationships.

94. It must therefore be assumed that inland shipping and maritime shipping do not operate on the same market. It follows that the difference in the treatment accorded to those two transport sectors does not adversely affect the attainment of the objective of creating equal conditions of competition on the internal market. The fact that only sea-going vessels are subject to the VTS charge does not therefore constitute indirect discrimination on grounds of nationality. Even if those who benefit from the exemption of inland shipping are mainly Netherlands nationals, the operators of sea-going vessels cannot claim discrimination since inland shipping is not an appropriate point of comparison.

95. For the same reasons, sea-going vessels liable to the VTS charges are likewise not discriminated against to the benefit of the categories of vessels exempted under subparagraphs (e) and (f) of the first paragraph of Article 5 of the BVS, even if most of those are Dutch. The operators of such vessels either do not provide services for remuneration at all (f), or, if they do, none that are equivalent ((e) - zeezwaaiers (lighters)).

96. The extent to which the exemption of sea-going vessels of up to 41 metres in length leads to indirect discrimination cannot be determined on the basis of the information provided by the national court and the parties to the proceedings. It is not clear whether most of the vessels falling into that category are Dutch or to what extent the services provided by them are comparable with those provided by larger vessels. It is for the national court to determine those facts and to assess them against the aforementioned criteria.

(c) Other restrictions

97. According to settled case-law, Article 59 of the EC Treaty requires not only the elimination of all discrimination against a person providing services on the ground of his nationality but also the abolition of any restriction, even if it applies without distinction to nationals providing services and to those of other Member States, when that restriction is liable to prohibit, impede or otherwise render less advantageous the activities of a provider of services established in another Member State where he lawfully provides similar services.

98. The VTS charges affect all transport services performed via Netherlands ports. The charges incurred on passage through areas subject to the VTS increase the costs of transporting goods and passengers to other Member States of the Community and to third countries. The charging system therefore constitutes a restriction on freedom to provide services.

(d) The rule in Keck and Mithouard

99. However, the national court asks the Court to examine whether a restriction on freedom to provide services must be found not to exist because the levying of charges is comparable to selling arrangements within the meaning of the judgment in Keck and Mithouard.

100. In that decision, the Court held that a national system of selling arrangements which imposed restrictions in the same way on the sale of domestic goods and goods from other Member States did not constitute a restriction on the free movement of goods. The VTS charges are likewise payable irrespective of whether or not the service exhibits a cross-border element and whether it is provided by a domestic or a foreign shipping undertaking.

101. Nevertheless, the findings in the judgment in Keck and Mithouard cannot be transposed to this case. The national legislation at issue in Keck and Mithouard concerned the sale of goods in one Member State. However, the charging system at issue here does not only affect the sale of maritime transport services in the Netherlands. The cross-border character of the service means that local measures of the kind at issue here make it more difficult actually to provide the service and thereby affect the internal market as a whole. The Court made it clear in Alpine Investments that a restriction in the State in which the provider of services is established also affects recipients of the service in other Member States and therefore directly affects access to the market in services in those States. There is therefore no question of the rule in Keck and Mithouard being systematically applied mutatis mutandis to cross-border services.

102. Quite apart from this point of principle, the very fact that the obligation to pay the VTS charge does not constitute a selling arrangement precludes the findings in the judgment in Keck and Mithouard from being transposed to this case. The rules at issue here relate not to the marketing of the service but directly to its provision. The charge increases the cost of transport by sea and thus affects pricing. It may even have an impact on a vessel's chosen port of call on the north-west European coast. The charging system is therefore akin more to a product-related restriction than to a selling arrangement.

103. Consequently, the levying of charges to finance the VTS restricts freedom to provide services and is therefore compatible with Community law only if it is justified.

(3) Justification

(a) Article 56 of the EC Treaty

104. The national court considers any restrictions on freedom to provide services imposed by the VTS charging system to be justified under Article 56(1) of the EC Treaty.

105. Article 1(3) of Regulation No 4055/86 expressly states that Article 56 of the EC Treaty is applicable in the field of maritime transport. Article 56 permits special treatment for foreign nationals which is justified on grounds of public policy, public security or public health. That exception therefore allows discrimination on grounds of nationality in special cases. A traffic accompaniment system operated on the basis of compulsory charges might be justifiable on grounds of public security. However, as has already been established, the system at issue applies without distinction to Netherlands nationals and nationals of other Member States. The question is therefore whether Article 56 of the EC Treaty can in any way be relied upon to justify general provisions which do not relate specifically to foreign nationals.

106. The Court of Justice has already relied on Article 56 of the EC Treaty in order to justify general, non-discriminatory rules. In particular, in the judgment in Corsica Ferries III, it contemplated the possibility that the provisions on the use of mooring services in Italian ports could be justified on the basis of Article 56 of the EC Treaty, even though they applied without distinction to all service providers and contained no rules relating specifically to foreign nationals. In other cases, it has held that Article 56 of the EC Treaty and overriding reasons relating to the public interest together form possible grounds of justification, although it has not clearly defined the scope of the circumstances that constitute one as opposed to the other of those grounds.

107. One argument for the direct application of Article 56(1) of the EC Treaty to non-discriminatory restrictions imposed on grounds of public security is that, if Article 56 of the EC Treaty is capable of permitting discrimination against foreign nationals, it should certainly be capable of justifying the restrictions at issue here. However, that interpretation is precluded by the clear wording of Article 56, which concerns only provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals. Moreover, as an exception to the principle of freedom of establishment and freedom to provide services, Article 56 of the EC Treaty is to be interpreted restrictively. Accordingly, Article 56 applies only to narrowly-defined areas of legislation specifically concerned with foreign nationals, such as the law on police control of foreign nationals.

108. A reading of Article 56(1) of the EC Treaty in conjunction with Article 56(2) bears out that conclusion. According to paragraph 2, the Council may issue directives for the coordination of the provisions laid down by law, regulation or administrative action referred to in paragraph 1. If Article 56(1) of the EC Treaty were to be interpreted extensively, so as to cover not only special provisions specifically concerned with foreign nationals, the Community, pursuant to paragraph 2, would have unrestricted competence to adopt coordinating provisions in all the areas concerned. It would be contrary to the principle of the limitation of powers to specific areas, laid down in the first paragraph of Article 3(b) of the EC Treaty (now Article 5 EC), if the Community's competence were to be extended in this way without regard to the legal basis for that competence.

109. In the recent judgment in Mac Quen, concerning freedom of establishment, the Court did not rely directly on Article 56 of the EC Treaty in order to justify a restriction applicable without distinction on grounds of the protection of public health. Instead, it stated:

Next, with regard to the question whether there are overriding reasons based on the general interest which may justify the restriction on freedom of establishment resulting from the prohibition under challenge, it must be remembered that the protection of public health is one of the reasons which may, under Article 56(1) of the EC Treaty (now, after amendment, Article 46(1) EC), justify restrictions resulting from special treatment for foreign nationals. Protection of public health is therefore, in principle, also capable of justifying national measures which apply indiscriminately, such as those in this case.

110. It is clear from the foregoing that restrictions which apply without distinction do not have to be examined directly against the criterion of Article 56 of the EC Treaty even if the purpose of the restriction is to protect one of the legal interests expressly referred to in that provision. Such national measures may be justified by the need to take into account overriding reasons relating to the public interest. Protection of one of the interests referred to in Article 56 of the EC Treaty must itself be regarded as an overriding reason relating to the public interest.

(b) Overriding reasons relating to the public interest

111. The Court has consistently held that a restriction on the fundamental principle of freedom to provide services can be based only on rules justified by overriding requirements relating to the public interest and applicable to all persons and undertakings operating in the territory of the State where the service is provided, in so far as that interest is not safeguarded by the rules to which the provider of such a service is subject in the Member State where he is established.

112. In particular, according to the Court's case-law, national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty can be justified only if they fulfil four conditions: they must be applied in a non-discriminatory manner; they must be justified by overriding reasons based on the general interest; they must be suitable for securing the attainment of the objective which they pursue; and they must not go beyond what is necessary in order to attain that objective.

113. As has already been established, the VTS is not applied in a discriminatory manner. I have yet to examine whether there are overriding reasons relating to the public interest. Even though public security is already one of the grounds specifically referred to in Article 56 of the EC Treaty, it may at the same time constitute an overriding reason relating to the public interest within the meaning of the case-law cited.

114. The VTS serves to support the navigation of vessels in coastal waters and port areas, and makes possible the trouble-free use of those busy waters. At the same time, vessel traffic services help to prevent accidents and thus to protect people and property on the one hand, and the environment on the other. These two forms of protection - of individual and general legal interests - both serve the public good. Nor is there any doubt that, as a system of vessel traffic services, the VTS is also proportionate.

115. However, it should be borne in mind here that the subject-matter of this reference for a preliminary ruling is not participation in the VTS but liability to, and the level of, the VTS charges. Liability to those charges needs to be justified by the public interest. It is true to say in this respect that charges for State measures are justifiable only if the measures are likewise justified by the public interest. However, the charges themselves require further, specific justification. After all, there are other conceivable ways of financing the measures in question which restrict the provision of services less.

116. The public interest in such cases typically lies in having the costs of the State measure in question being imposed on those who cause them to raise. Transferring responsibility for the costs to those persons also serves the general good ultimately, since the public is relieved of the burden of the costs of vessel traffic services. This is also true of the VTS legislation. Overall, therefore, it serves objectives in the public interest.

117. In its case-law, the Court lays down the following further requirement in respect of restrictions imposed for overriding reasons relating to the public interest:

However, in accordance with the principle of proportionality, the application of national rules to providers of services established in other Member States must be appropriate for securing attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it.

118. Legislation which imposes charges on operators of sea-going vessels of over 41 metres in length for passing through areas subject to the VTS is an appropriate means of ensuring that the costs of the VTS are financed by those, or at least some of those, who incur those costs.

119. The levying of the charge is also necessary. It is true that the costs of the VTS could be met out of the public purse. Then, however, the costs would be borne by the public rather than by the economic operators who are responsible for and caused them. After all, it is only the heavy shipping traffic present in coastal areas that makes the VTS necessary at all.

120. Finally, the charges must be proportionate in the narrower sense. This means that, if subjected to charges, operators of sea-going vessels may be required to finance the VTS only in so far as they actually bear joint responsibility for the costs of the system by virtue of using it. It follows, on the one hand, that the revenue from the charges must not be greater than the share of the costs which are to be attributed to operators of sea-going vessels, as a whole, as a result of their use of the VTS. On the other hand, the charge levied for a particular passage through an area subject to the VTS must not be disproportionate to the costs of the vessel traffic services provided on that occasion.

121. By Question 2(b), the national court seeks to ascertain whether the charge can be greater than the actual costs of the specific service provided to the individual vessel. The issue here is whether the principle of proportionality can provide a clearer indication of which cost factors may be taken into account in such an examination. In connection with the prohibition of customs duties and charges having equivalent effect, the Court has consistently held that Articles 9 and 12 of the Treaty do not apply to a charge imposed on goods by reason of the fact that they cross a frontier if that charge constitutes consideration for a specific service actually rendered to an economic agent individually and represents a proportional payment for that service.

122. However, that does not rule out the possibility that an individual user may be required to finance part of the general costs of the system as well as the specific costs of the individual service in question. For the user bears joint responsibility for the former costs as well. When assessing the amount of the charge payable by a sea vessel for vessel traffic services, the costs of individual services provided to other vessels and the share of the general costs attributable to them - such as, for example, the costs of vessel traffic services for inland vessels - must have no bearing.

123. The level of a particular charge must correspond as far as possible to the actual costs of the vessel traffic services provided, so that the charging system is proportionate for the purposes of attaining the objective of spreading the costs fairly among those who incur them. However, for reasons of administrative simplicity, the national legislature has the power to lay down fixed rates when determining the charge. The scale of charges may be based on objective and easily verifiable criteria but those criteria must be specifically linked to responsibility for costs.

124. When determining what share of the general costs is attributable to a particular user group, however, the vessel traffic services requirements of that group and the benefit it derives from traffic accompaniment could legitimately be taken into account. In that case, the fact that larger sea-going vessels are less easily manoeuvrable and their crews typically less familiar with the local area could certainly justify a larger share of the general costs being attributable to such vessels.

125. The national court cites various figures in connection with the extent to which maritime shipping uses the VTS. However, it still does not appear to have reached any conclusive findings on the matter. Moreover, it is not made definitively clear whether the actual revenue from the charges is proportionate to the costs for which maritime shipping is responsible. The national court does refer in this respect to estimates indicating that the revenue broadly tallies with the rate of use by maritime shipping. The claimants, on the other hand, put forward totally different figures taken from experts' reports. Moreover, they advance various arguments to show that the level of the charges in fact bears no relation to the costs of the VTS, but is determined rather by economic policy decisions.

126. In view of this uncertainty surrounding the facts, the point made by the Court of Justice most recently in Case C-435/97 is relevant here:

So far as concerns the contesting of certain facts by Airport Bolzano-Bozen AG [one of the parties in the main proceedings], it should be remembered that Article 177 of the Treaty is based on a clear separation of functions between the national courts and the Court of Justice, so that, when ruling on the interpretation or validity of Community provisions, the latter is empowered to do so only on the basis of the facts which the national court puts before it ...

It is not for the Court of Justice but for the national court to ascertain the facts which have given rise to the dispute and to establish the consequences which they have for the judgment which it is required to deliver ... .

127. It therefore falls to the national court to ascertain whether the charges levied on maritime shipping as a whole cover the general costs attributable to it on the basis of its rate of use. In this connection, the fact that other traffic, in particular inland shipping, makes use of the VTS without having to bear part of the costs does not in itself constitute a breach of the principle of proportionality. That would be the case only if the charges for sea-going vessels served not only to meet the costs attributable to such vessels but also the costs resulting from vessel traffic services provided to other vessels not liable to the VTS charges.

128. The question whether the level of the charge in this particular case is proportionate to the costs attributable likewise cannot be answered definitively on the basis of the facts presented to the Court. The claimants' principal complaint is that uniform charges are levied in all areas subject to the VTS even though the costs vary greatly from region to region. They rely in this respect on the Opinion of Advocate General Saggio in Case C-205/98. The order for reference does not address this question.

129. In that Opinion, Advocate General Saggio stated that the increase in the toll rates on the Brenner motorway could be justified only by an increase in the cost of operating that motorway, not by cost changes throughout the motorway network, for the use of which, moreover, no comparable charges were levied. That conclusion was based on an interpretation of Directive 93/89. It is true that the provisions of Directive 93/89 applicable in Case C-205/98 constitute a specific expression of the principle of proportionality. However, in view of the special characteristics of those rules and of that case, the findings in Case C-205/98 cannot be transposed to the facts at issue here.

130. It may none the less be necessary to levy the VTS charges at different rates in the various areas subject to the VTS if there are significant regional variations in the use and costs of the system. In those circumstances, the objective of spreading the costs as fairly as possible among those who give rise to them must be offset against the objective of having a charging system which is as simple as possible and based on flat rates, for ease of administration.

131. The questions raised in connection with the freedom to provide services should therefore be answered as follows:

National rules which require the operators of sea-going vessels of over 41 metres in length to participate in a system for the monitoring of traffic in coastal waters and port areas and to pay a charge for services provided under that system may constitute a restriction on freedom to provide services in maritime transport within the meaning of Regulation No 4055/86 in conjunction with Article 59 of the EC Treaty, in so far as the shipping undertakings concerned provide a service with an intra-Community cross-border connection. For the purposes of that restriction, it is irrelevant whether other vessels are exempt from the charge if they do not provide comparable services.

The restriction may be justified by overriding reasons relating to the public interest, in particular the aim of ensuring the safety of traffic and of imposing the costs of the vessel traffic services system necessary for that purpose on those who use it, if the revenue from the charge corresponds to the costs for which the group of persons liable to it is responsible as a whole - depending on the extent to which they use the system - and if the charge payable in a specific case is also proportionate to the costs of the vessel traffic monitoring operation, including the corresponding general costs of the system.

B - The prohibition of State aid

132. The second set of questions concerns the possible incompatibility of the rules on the VTS charge with the prohibition of State aid in Article 92 of the EC Treaty.

133. The VTS charge is applicable in general only to maritime shipping. The national court would like to know whether the exemption of inland shipping and other groups of vessels amounts to State aid for the purposes of Article 92 of the EC Treaty.

134. However, it is questionable whether the questions on this issue need to be answered at all. In the judgment in EKW and Wein & Co., the Court held as follows in this regard:

[A]ccording to consistent case-law, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court ... . Nevertheless, the Court has held that it has no jurisdiction to give a preliminary ruling on a question submitted by a national court where it is quite obvious that the interpretation of Community law sought by that court bears no relation to the actual facts of the main action or its purpose or where the problem is hypothetical and the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it.

135. The Court of Justice has applied those principles to two cases in which, essentially, the plaintiffs challenged certain tax charges and the national courts referred to the Court, inter alia, the question whether the exemption of other undertakings from the tax in question was to be regarded as aid. In both cases, the Court took the view that, in actions directed against taxes, it does not matter whether the exemption of third persons from the tax constitutes aid. It was therefore not necessary to answer the questions on that subject.

136. The present case shows that that conclusion must be endorsed. Under Article 93(3) of the EC Treaty (now Article 88(3) EC), the Commission is to be informed of any plans to grant or alter aid. Aid may not be implemented until the Commission has adopted a final decision. In SFEI, the Court held that the national court is under a duty to provide protection in the final judgment it gives in such a case against the consequences of unlawful implementation of aid. From this it drew the inference that, in an action brought by a competitor under the third sentence of Article 93(3) of the EC Treaty, the national court has jurisdiction to order repayment of the aid. However, the Court did not in any way indicate that an infringement of Article 92 and Article 93(3) of the EC Treaty entitles other economic operators to the same aid. That, however, would be the undesirable result of the view taken by the Commission.

137. If participation in the VTS free of charge were to be classified as aid, then its effect as aid could in principle be eliminated in two ways. Either all participants in the VTS are made liable to the charges, or the VTS is provided free of charge. The first alternative could hardly be implemented retrospectively. The second raises the additional question whether participation in the VTS does not already represent a benefit which would have to be classified as aid if it were granted free of charge. In any event, classification of the exemption of other participants in the VTS as aid would not necessarily result in sea-going vessels of over 41 metres in length having to be exempted in whole or in part from the VTS charge.

138. Moreover, it seems inconceivable that the national court, solely on the basis of the finding that the exemption of other vessels from the VTS charge constitutes aid which is contrary to the Treaty, will also exempt the claimant shipping companies from that charge.

139. Nor will the effects of the aid, if it is aid, on the competitive position of sea-going vessels lead it to a different conclusion. After all, there is no evidence to show that the sea-going vessels charged are to any significant extent in competition with the vessels that are exempt.

140. The questions on whether the exemption from the VTS charge constitutes aid do not therefore need to be answered.

VII - Conclusion

141. In view of the foregoing considerations, I propose that the questions referred for a preliminary ruling be answered as follows:

(1) National rules which require the operators of sea-going vessels of over 41 metres in length to participate in a vessel traffic services system in coastal waters and port areas and to pay a charge for the services provided under that system may constitute a restriction on freedom to provide services in maritime transport within the meaning of Regulation No 4055/86 in conjunction with Article 59 of the EC Treaty (now, after amendment, Article 49 EC), in so far as the shipping undertakings concerned provide a service with an intra-Community cross-border connection. For the purposes of that restriction, it is irrelevant whether other vessels are exempt from the charge if they do not provide comparable services.

(2) The restriction may be justified by overriding reasons relating to the public interest, in particular the aim of ensuring the safety of traffic and of imposing the costs of the vessel traffic services system necessary for that purpose on those who use it, if the revenue from the charge corresponds to the costs for which the group of persons liable to it is responsible as a whole - depending on the extent to which they use the system - and if the charge payable in a specific case is also proportionate to the costs of the vessel traffic services operation, including the corresponding general costs of the system.