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Judgment of the Court of 19 February 1991. - Commission of the European Communities v Kingdom of Belgium. - Failure of a State to fulfil obligations - Failure to comply with the judgment in Case 5/86. - Case C-375/89.



European Court reports 1991 Page I-00383

Pub.RJ Page Pub somm



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1. Member States - Obligations - Failure to fulfil obligations - Justification - Not acceptable

(EEC Treaty, Art. 169)

2. Application for failure to fulfil obligations - Judgment of the Court finding such failure - Period for compliance

(EEC Treaty, Art. 171)

Summary

1. As the Court has consistently held, a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with its obligations under Community law.

2. The process of complying with a judgment declaring that a Member State has failed to fulfil its obligations must be initiated at once and must be completed as soon as possible (see the judgment of 13 July 1988 in Case 169/87 Commission v France [1988] ECR 4093).

Parties

In Case C-375/89,

Commission of the European Communities, represented by A. Abate, Principal Legal Adviser, and M. Nolin, a member of its Legal Department, acting as Agents, with an address for service in Luxembourg at the Office of Guido Berardis, a member of its Legal Department, Wagner Centre, Kirchberg,

applicant,

v

Kingdom of Belgium, represented by Robert Hoebaer, Director of Administration at the Ministry for Foreign Relations, Foreign Trade and Cooperation with Developing Countries, acting as Agent, with an address for service in Luxembourg at the Belgian Embassy, 4 rue des Girondins,

defendant,

APPLICATION for a declaration that, by failing to take the measures needed to comply with the judgment of the Court of Justice of 9 April 1987 in Case 5/86 Commission v Belgium [1987] ECR 1773, the Kingdom of Belgium has failed to fulfil its obligations under Article 171 of the EEC Treaty,

THE COURT

composed of O. Due, President, G. F. Mancini, T. F. O' Higgins and G. C. Rodríguez Iglesias (Presidents of Chambers), Sir Gordon Slynn, R. Joliet and F. A. Schockweiler, Judges,

(the grounds of the judgment are not reproduced)

hereby:

Operative part

(1) Declares that, by failing to take the measures needed to comply with the judgment of the Court of Justice of 9 April 1987, the Kingdom of Belgium has failed to fulfil its obligations under Article 171 of the EEC Treaty;

(2) Orders the Kingdom of Belgium to pay the costs.
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Free movement of persons - Freedom of establishment - Companies - Directive 77/91 - Change in the capital of a public limited liability company - Direct effect of Article 25(1) of the directive - National rules providing for the capital of a company in difficulties to be increased by administrative act - Not permissible

(Council Directive 77/91, Arts 25 and 41(1))

Summary

Article 25 of the Second Council Directive 77/91/EEC on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, may be relied upon by individuals against the public authorities before national courts.

By providing that any increase in capital must be decided upon by the general meeting, Article 25(1) lays down provisions which appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise for them to be held to have direct effect.

Article 25 in conjunction with Article 41(1) of that directive must be interpreted as meaning that they preclude national rules which, in order to ensure the survival and continued operation of undertakings which are of particular economic and social importance for society as a whole and are in exceptional circumstances by reason of their excessive debt burden, provide for the adoption by administrative act of a decision to increase the company capital, without prejudice to the right of pre-emption of the original shareholders when the new shares are issued. In that regard, it is irrelevant that those rules provide that the shares so created may, in the context of a policy of encouraging shareholding by private individuals, be transferred to employees of the company or other groups of private individuals as long as that possibility has not crystallized.
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Social security for migrant workers - Equal treatment - National provision limiting overlapping of an old-age pension and an accident pension - Implementing rules having the effect of discriminating against workers who have been employed in more than one Member State - Not acceptable - Justification on grounds of practical difficulty - None

(EEC Treaty, Arts 7 and 48 to 51; Council Regulation No 1408/71, Art. 3(1) )

Summary

Articles 48 to 51 of the Treaty and the legislation adopted in implementation thereof, which includes Article 3 of Regulation No 1408/71, prevent a worker from losing, as a consequence of the exercise of his right to freedom of movement, the advantages in the field of social security guaranteed to him by the laws of a single Member State, since such a consequence could deter workers from exercising that right and would therefore constitute an obstacle to that freedom. Those provisions must therefore be interpreted as meaning that a migrant worker who is receiving an old-age pension under the legislation of one Member State and accident insurance benefits paid by an insurance institution of another Member State may not be put in a worse position, for the purpose of calculating the portion of the benefit to be suspended pursuant to the legislation of the first State, than a worker who has not exercised his right of free movement and is receiving both benefits under the legislation of a single Member State. No justification for such inequality of treatment can be afforded by any practical difficulties which social security institutions may encounter when calculating entitlement to benefits.
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Agriculture - Common organization of markets - Wine - Name and presentation of wines - Definition of "wine" - Requirement of a minimum degree of alcoholic strength

(Council Regulations No 337/79, Annex II, point 8, No 355/79 Art. 45(1)(a) and No 822/87, Annex I, point 10)

Summary

It is clear from the definition in point 8 of Annex II to Regulation No 337/79, re-enacted in point 10 of Annex I to Regulation No 822/87 on the common organization of the market in wine, to which Article 45(1)(a) of Regulation No 355/79 laying down general rules for the description and presentation of wines refers, that wine must be the product of total or partial alcoholic fermentation, that such fermentation must be the only production process, and that a product obtained from grapes by any process other than alcoholic fermentation is not wine. It follows that those provisions require that wine, when supplied, must have a minimum degree of alcoholic strength.
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Member States - Obligations - Implementation of directives - Failure to fulfil obligations not contested

(EEC Treaty, Art. 169)
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1. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of normal value - Imports from non-market economy countries - Choice of reference country - Discretion of institutions - Review by the Court - Limits

(Council Regulation No 2423/88, Art. 2(5)(a) )

2. Common commercial policy - Protection against dumping practices - Dumping margin - Determination of normal value - Imports from non-market economy countries - Reference to price in a third country with a market economy - Determination in an appropriate and not unreasonable manner - Criteria to be applied in the choice of a reference country

(Council Regulations No 2423/88, Art 2(5)(a) and No 725/89)

Summary

1. Although the choice under Article 2(5)(a) of the basic anti-dumping regulation, No 2423/88, of the reference country for purposes of the determination of the normal value of products from a non-market economy country is a matter falling within the discretion enjoyed by the institutions in analysing complex economic situations, it is not thereby excluded from review by the Court.

As regards such a discretion, the Court' s review relates to compliance with the procedural rules, the question of whether the facts on which the choice is based have been accurately stated and whether there has been a manifest error of appraisal or a misuse of powers, which implies, as regards the choice of reference country, that it must be verified whether the institutions have neglected to take account of essential factors for the purpose of establishing the appropriate nature of the country chosen and whether the information contained in the documents in the case has been considered with all the care required for the view to be taken that the normal value has been determined in an appropriate and not unreasonable manner.

2. It cannot be concluded that the normal value of products from a non-market economy country has been determined by reference to the price in a market-economy third country in "an appropriate and not unreasonable manner" within the meaning of Article 2(5)(a) of the basic anti-dumping regulation, No 2423/88, when, on the one hand, various factors already known to the Commission relating to the volume and methods of production, to conditions of access to raw materials and to the prices on the domestic market were such as to raise doubts as to the appropriateness of the third country chosen as a reference country and when, on the other hand, the institutions have not made a serious or sufficient attempt to determine whether the third country suggested by one of the parties to the proceedings could be regarded as an appropriate reference country. For that reason it must be considered that Regulation No 725/89 imposing a definitive anti-dumping duty on imports of paint, distemper, varnish and similar brushes originating in the People' s Republic of China and definitively collecting the provisional anti-dumping duty on such imports is invalid.
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1. Convention on jurisdiction and the enforcement of judgments - Enforcement - Legal remedies - Appeal in cassation - Judgments which may be contested by an appeal in cassation - Decision by the court with which the appeal against the enforcement order is lodged as to a stay of proceedings or the provision of security - Excluded

(Convention of 27 September 1968, second paragraph of Art. 37 and Art. 38)

2. Convention on jurisdiction and the enforcement of judgments - Enforcement - Appeal against the enforcement order - Power of the court with which the appeal is lodged to stay the proceedings - Exercise - Taking into consideration only submissions not already put forward by or known to the applicant at the time of the proceedings before the court of the State in which the judgment was given

(Convention of 27 September 1968, Art. 31, third paragraph of Art. 34 and first paragraph of Art. 38)

Summary

1. The second paragraph of Article 37 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is to be interpreted as meaning that a decision taken under Article 38 of the Convention by which the court with which an appeal has been lodged against an order for the enforcement of a judgment given in another Contracting State has refused to stay the proceedings and has ordered the party to whom the enforcement order was granted to provide security does not constitute a "judgment given on the appeal" within the meaning of the second paragraph of Article 37 of the Convention and may not, therefore, be contested by an appeal in cassation or similar form of appeal. The position is the same where the decision taken under Article 38 of the Convention and the "judgment given on the appeal" within the meaning of the second paragraph of Article 37 of the Convention are given in a single judgment.

2. The first paragraph of Article 38 of the Convention is to be strictly interpreted so as not to prejudice the effectiveness either of Article 31, which lays down the principle that a judgment given in a Contracting State and enforceable in that State may be enforced in another Contracting State even if it has not yet become res judicata, or of the third paragraph of Article 34, which prohibits the courts of the State in which enforcement is sought from reviewing the substance of the judgment given in the first State.

Hence the first paragraph of Article 38 of the Convention is to be interpreted as meaning that a court with which an appeal is lodged against an order for the enforcement of a judgment given in another Contracting State may take into consideration, in a decision concerning an application for the proceedings to be stayed under that paragraph, only such submissions as the appellant was unable to put before the court of the State in which the judgment was given.
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Tax provisions - Harmonization of laws - Indirect taxes on the raising of capital - Capital duty levied on capital companies - Mandatory reduction in the rate when a company transfers a part of its business - Transfer of a parcel of shares held in another company - Transaction not regarded as the transfer of part of a business

(Council Directive 69/335, as amended by Council Directives 73/79 and 73/80, Art. 7(1)(b) and (bb) )

Summary

Article 7(1)(b) of Council Directive 69/335 concerning indirect taxes on the raising of capital, as amended by Council Directives 73/79 and 73/80, which requires Member States to reduce the rate of capital duty when a company transfers to another company a part of its business is to be interpreted as meaning that the transfer of all the shares which one company holds in another company is not to be regarded as a transfer of part of the business, even if it constitutes 100% of the capital of that other company. Transactions involving the transfer of shares are the subject of the special provision in Article 7(1)(bb) of the directive, which merely gives Member States an option to reduce the rate.
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Common Customs Tariff - Exemption from import duties - Scientific instruments and apparatus - Commission decision - Power of appraisal subject to procedural guarantees for persons applying for an exemption - Review by the Court - Procedural guarantees not respected - Illegality

(Regulation (EEC) No 1798/75 of the Council; Commission Regulation No 2784/79, Art. 7; Commission Decision 83/348)

Summary

The decision which the Commission is required to adopt at the end of the procedure laid down in Article 7 of Regulation No 2784/79 implementing Regulation No 1798/75 on the importation free of Common Customs Tariff duties of educational, scientific and cultural materials entails complex technical evaluations. In order to be able to fulfil its tasks, the Commission must have a power of appraisal which makes respect for the rights guaranteed by the Community legal order in administrative procedures of fundamental importance. Those guarantees include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case and the right of the person concerned to make his views known and to have an adequately reasoned decision. Only in this way can the Court verify whether the factual and legal elements upon which the exercise of the power of appraisal depends were present.

Decision 83/348 must be declared invalid because it was adopted without regard to the above principles which, in the instant case, would have required the group of experts, whose opinion the Commission followed, to have been appropriately composed, the applicant for exemption to have been given an opportunity to make its views known on the relevant circumstances and, where necessary, on the documents taken into account by the Commission and the statement of reasons for the decision finally adopted not to have merely reproduced the reasoning for a previous decision.
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Social policy - Equal treatment of men and women - Scope ratione materiae of Directive 79/7 - Housing benefit - Excluded

(Council Directive 79/7, Art. 3(1) )

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Article 3(1) of Directive 79/7 on the progressive implementation of the principle of equal treatment for men and women in matters of social security, which defines the directive' s scope ratione materaie, must be interpreted as not applying to a scheme for housing benefit the amount of which is calculated on the basis of the relationship between a notional income to which the beneficiary is deemed to be entitled and his or her actual income, even if criteria concerning protection against some of the risks covered by the directive, such as sickness or invalidity, are applied in order to determine the amount of the notional income.
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Agriculture - Common organization of markets - Wine - Aid for preventive distillation of table wines - Harvest, production and stock declarations - Non-observance of time-limit for submissions - Total loss of eligibility for aid irrespective of the extent to which time-limit exceeded - Principle of proportionality - Infringement

(Art. 31 of Council Regulation No 822/87; Arts 5(3) and 10a of Commission Regulation No 2102/84)

Summary

Article 10a of Commission Regulation (EEC) No 2102/84 of 13 July 1984 on harvest, production and stock declarations relating to wine-sector products is invalid inasmuch as it excludes traders from the benefit of an aid for distillation, irrespective of the extent to which the time-limit of 7 September, laid down in Article 5(3) of that regulation, is exceeded for the submission of the harvest declarations. That measure adversely affects the principle of proportionality inasmuch as strict observance of the date laid down for the submission of declarations is not indispensable in order to enable the Commission to observe the time-limit imposed upon it by Article 31 of Regulation No 822/87 for the drawing up of an annual forward estimate of Community wine resources and needs.
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1. Action for damages - Subject-matter - Claim for compensation brought against the Community under the second paragraph of Article 215 of the Treaty - Exclusive jurisdiction of the Court - Claim for recovery of sums wrongfully charged by national authorities on the basis of Community rules which are declared invalid - Competence of national courts

(EEC Treaty, Art. 178 and Art. 215, second paragraph)

2. Non-contractual liability - Conditions - Legislative measure - Sufficiently serious breach of a superior rule of law for the protection of the individual - Disregard of the system for the allocation of powers between the Community institutions - No liability

(EEC Treaty, Art. 215, second paragraph)

Summary

1. The combined provisions of Article 178 and Article 215 of the Treaty give the Court exclusive jurisdiction to hear actions seeking compensation for damage attributable to the Community, which is bound, under the second paragraph of Article 215, to make good, in accordance with the general principles common to the laws of the Member States, any damage caused by its institutions or by its servants in the performance of their duties. On the other hand, only the national courts have jurisdiction to entertain an action for the recovery of amounts wrongfully charged by a national administration on the basis of Community rules which are subsequently declared invalid.

2. The mere fact that a legislative measure of the Community is invalid is insufficient by itself for the Community to incur non-contractual liability under the second paragraph of Article 215 of the Treaty for damage caused to individuals. Such liability can only be incurred where a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred. That is not the case where the measure declared invalid has failed to observe the system of the division of powers between the various Community institutions, since the aim of that system is to ensure that the balance between institutions provided for in the Treaty is maintained, and not to protect individuals.
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1. Free movement of persons - Worker - Concept - Existence of an employment relationship - Pursuit of genuine and effective activities - Worker undergoing period of occupational training - Whether included

(EEC Treaty, Art. 48; Council Regulation No 1612/68)

2. Free movement of persons - Worker - Concept - Person pursuing studies after completing an occupational activity - Maintenance of the status of worker - Conditions

(Council No 1612/68, Art. 7(2))

3. Free movement of persons - Workers - Equal treatment - Social advantages - Concept - Assistance awarded to students for maintenance and education - Award to children of a worker who is a national of another Member State - Conditions

(Council Regulation No 1612/68, Art. 7(2))

Summary

1. The concept of worker within the meaning of Article 48 of the Treaty and of Regulation No 1612/68 has a Community meaning and must not be interpreted restrictively. A person is to be regarded as a worker if he carries on genuine and effective activities, to the exclusion of activities which are on such a small scale as to be purely marginal and ancillary. The essential characteristic of the employment relationship is the fact that a person performs services for a given period of time for the benefit and under the direction of another person in return for which he receives remuneration. The fact that the productivity of a trainee is low, that he works only a small number of hours per week and, consequently, receives only a limited remuneration does not preclude the status of worker under the abovementioned provisions from being conferred on a national of a Member State who completes a training period as part of his occupational training in another Member State, where that training period is completed under the conditions of a genuine and effective activity as an employed person.

2. A migrant worker who voluntarily ceases employment in the host country in order to devote himself, after the lapse of a certain period of time, to full-time studies in the country of which he is a national must be regarded as having retained his status as a worker, thus enabling him as such to benefit from Article 7(2) of Regulation No 1612/68, provided, however, that there is a relationship between his previous occupational activity and the studies in question.

3. Study finance granted by a Member State to the children of workers constitues for a migrant worker a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 where the worker continues to support the child. In such a case the child may rely on that provision in order to obtain that finance if, under national law, it is granted directly to the student. The grant of the finance must be subject to the same conditions as are applicable to the children of national workers, and in particular no residence requirement which need not be satisfied by nationals may be laid down.