Case C-299/02

Commission of the European Communities

v

Kingdom of the Netherlands

(Failure of a Member State to fulfil obligations – Articles 43 EC and 48 EC – National measures requiring as a condition for being able to register a ship in the Netherlands that the shareholders, directors and natural persons responsible for the day-to-day management of the Community company owning the ship have Community or EEA nationality – National measures requiring that the director of a shipping company be of Community or EEA nationality and have a Community or EEA residence)

Summary of the Judgment

1. Freedom of movement for persons – Freedom of establishment – Registration of ships in a Member State – Conditions relating to the nationality of the shareholders and directors of shipowner companies and/or the local representatives of those shipowners – Not permissible – Grounds – Exercise of effective control and jurisdiction – None

(Arts 43 EC and 48 EC)

2. Freedom of movement for persons – Freedom of establishment – Management of ships – Conditions relating to the nationality and residence of the directors of shipping companies – Not permissible – Grounds – Exercise of effective control and jurisdiction – None

(Arts 43 EC and 48 EC)

1. A Member State which adopts and maintains legislation under which certain conditions are fixed concerning the nationality of a Member State of the Union or of the European Economic Area of the shareholders and directors of companies owning seagoing ships which they wish to register in that Member State, and also of the natural persons responsible for the day-to-day management of the place of business from which the shipping business which is necessary for registration in that Member State is carried out, fails to fulfil its obligations under Articles 43 EC and 48 EC, as such a ship registration scheme has the effect of restricting the freedom of establishment of the shipowners.

In effect, the only course of action open to shipowner companies which do not satisfy the abovementioned nationality conditions and wish to register their ships is to alter the structure of their share capital or their boards of directors. Likewise, shipowners must adjust their recruitment policies in order to ensure that their local representatives are not nationals of a State which is not a Member State of the Community or of the European Economic Area.

Furthermore, in the absence of a harmonised rule valid for the entire Community, a condition of Community or European Economic Area nationality imposed unilaterally may, like a condition of nationality of a specific Member State, constitute an obstacle to freedom of establishment.

Such a restriction cannot be justified by grounds of the exercise of effective control and jurisdiction over ships flying the flag of the Member State concerned.

(see paras 19-21, 39, operative part)

2. A Member State which adopts and maintains legislation under which certain conditions are fixed concerning the nationality of a Member State of the Union or of the European Economic Area and the residence in one of those States of the directors of shipping companies owning ships registered in that Member State fails to fulfil its obligations under Articles 43 EC and 48 EC, as such a ship registration scheme has the effect of restricting the freedom of establishment of the owners of those ships.

In effect, Community nationals wishing to operate in the form of a shipping company with a director who is a national of or is resident in a non-member country are prevented from doing so.

Such a restriction cannot be justified by grounds of the exercise of effective control and jurisdiction over ships flying the flag of the Member State concerned.

(see paras 32-33, 39, operative part)