OPINION OF ADVOCATE GENERAL

Jacobs

delivered on 17 November 2005 ( )

Case C-371/03

Siegfried Aulinger

v

Germany





1. In this case the Oberlandesgericht Köln (Higher Regional Court, Cologne) has referred to the Court two questions concerning the interpretation of Council Regulation (EEC) No 1432/92 of 1 June 1992 prohibiting trade between the European Economic Community and the Republics of Serbia and Montenegro (the ‘Embargo Regulation’). ( )

2. The national court seeks in essence clarification on whether Article 1(d) of the Embargo Regulation prohibits ‘split transport’ of passengers to or from the embargoed countries. Such transport is to be understood as the commercial transport of persons by means of a joint and single economic operation between an undertaking established in a Member State of the Community and an undertaking established in the territory under embargo, the former providing transport to and from the vicinity of the border of the territory under embargo and the latter transport to and from there into or from the territory covered by the embargo, the passengers changing vehicles in a prearranged manner and paying a single ticket giving them the right to transport for the whole itinerary.





Legal framework

3. In the context of the conflicts arising from the achievement of independence by several republics of the former Socialist Federal Republic of Yugoslavia, and in particular, of the conflicts affecting Bosnia-Herzegovina in 1992, the Security Council of the United Nations (‘UN’), acting under Chapter VII of the Charter of the UN, adopted Resolution No 757 (1992) establishing an economic embargo on the Republics of Serbia and Montenegro (the ‘UN Embargo Resolution’). That embargo targeted in particular all trade in commodities and products.

4. Paragraph 4 of the UN Embargo Resolution provided that all States were to prevent:

‘(a) The import into their territories of all commodities and products originating in the Federal Republic of Yugoslavia (Serbia and Montenegro) exported therefrom after the date of the present resolution;

(b) Any activities by their nationals or in their territories which would promote or are calculated to promote the export or trans-shipment of any commodities or products originating in the Federal Republic of Yugoslavia (Serbia and Montenegro); and any dealings by their nationals or their flag vessels or aircraft or in their territories in any commodities or products originating in the Federal Republic of Yugoslavia (Serbia and Montenegro) and exported therefrom after the date of the present resolution, including in particular any transfer of funds to the Federal Republic of Yugoslavia (Serbia and Montenegro) for the purposes of such activities or dealings;

(c) The sale or supply by their nationals or from their territories or using their flag vessels or aircraft of any commodities or products, whether or not originating in their territories, but not including supplies intended strictly for medical purposes and foodstuffs notified to the Committee established pursuant to resolution 724 (991), to any person or body in the Federal Republic of Yugoslavia (Serbia and Montenegro) or to any person or body for the purposes of any business carried on in or operated from the Federal Republic of Yugoslavia (Serbia and Montenegro), and any activities by their nationals or in their territories which promote or are calculated to promote such sale or supply of such commodities or products.’

5. Paragraph 5 of the UN Embargo Resolution provided: ‘[a]ll States shall not make available to the authorities in the Federal Republic of Yugoslavia (Serbia and Montenegro) or to any commercial, industrial or public utility undertaking in the Federal Republic of Yugoslavia (Serbia and Montenegro), any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to those authorities or to any such undertaking any such funds or resources and from remitting any other funds to persons or bodies within the Federal Republic of Yugoslavia (Serbia and Montenegro), except payments exclusively for strictly medical or humanitarian purposes and foodstuffs.’

6. In the wake of the UN Embargo Resolution, the Community and its Member States agreed to have recourse to a Community instrument, namely the Embargo Regulation, in order to ensure, according to its Recital 10, ‘a uniform implementation throughout the Community of certain of the embargo measures’ contained therein.

7. In addition to a general prohibition as from 31 May 1992 on trade or any activity promoting, directly or indirectly, trade in commodities and products between the Community and the Republics of Serbia and Montenegro, Article 1(d) of the Embargo Regulation also prohibits the provision of non-financial services whose object or effect it is, directly or indirectly, to promote the economy of the Republics of Serbia and Montenegro, in particular those non-financial services provided:

(i) for the purpose of any economic activity carried out in or from the Republics of Serbia and Montenegro; or

(ii) to one of the following persons:

– any natural person in the Republics of Serbia and Montenegro,

– any legal person so constituted or incorporated under the law of the Republics of Serbia and Montenegro,

– any organisation exercising an economic activity (whether or not in the Republics of Serbia and Montenegro) controlled by persons resident in the Republics of Serbia and Montenegro or by organisations constituted or incorporated under the law of these Republics.

…’

8. Article 5 of the Embargo Regulation provides that it is to ‘apply within the territory of the Community, including its air space and in any aircraft or vessel under the jurisdiction of a Member State, and to any person elsewhere who is a national of a Member State and any body elsewhere which is incorporated or constituted under the law of a Member State’.





The main proceedings and the questions referred

9. Mr Aulinger is a bus operator established in Germany. Even after the Embargo Regulation entered into force, he transported immigrant workers, in particular Serbian and Montenegrin nationals, to the vicinity of the border of the territory covered by the embargo. From there passengers were transferred and carried onwards to a final destination in Serbia and Montenegro by a bus undertaking established in the territory covered by the embargo. The inverse journey from Serbia and Montenegro to Germany proceeded in a similar manner. That practice is referred to by the national court as ‘split transport’.

10. Mr Aulinger acted as a subcontractor for a travel agency established in Germany, Deutsche Touring GmbH, which organised the entire bus trip between departure points in Germany and arrival points in Serbia and Montenegro, and vice versa, and issued single ‘through tickets’ for the whole itinerary. The companies providing the leg of the bus trip taking place in Serbia and Montenegro operated on the basis of a cooperation agreement with Deutsche Touring GmbH, who paid their remuneration into a trust account or provided credit. The partner in the territory covered by the embargo could then transfer such credit or use it as collateral in transactions with third parties.

11. After being checked by the customs officers at the Austrian-German border on a return journey towards Germany in January 1993, Mr Aulinger was subject to criminal proceedings for infringement of the Embargo Regulation. Mr Aulinger then ceased his split transport activities, in particular since, following informal contacts, the German authorities confirmed that such operations were unlawful.

12. The criminal proceedings against Mr Aulinger were discontinued after the Bundesgerichtshof (Federal Court of Justice) ruled by judgment of 21 April 1995 that the UN Embargo Resolution did not prohibit the carriage of private individuals in the territory of Serbia and Montenegro. It also held that there was no need to rule on whether the same applied to the Embargo Regulation since under national law an infringement of that regulation could not constitute a criminal offence.

13. Mr Aulinger then sought compensation for his losses. After settling with the Free State of Bavaria, which was responsible for the criminal prosecution, he also brought an action for damages against the Federal Republic of Germany in September 2001. Mr Aulinger claimed DEM 500 000 in damages for loss of his main source of income due to the almost total interruption of his transport activities to and from the border with Serbian and Montenegro. His claim was based on the argument that, contrary to the German authorities’ interpretation, the Embargo Regulation did not prohibit the practice of ‘split transport’. In support of his action, Mr Aulinger referred to the fact that other Member States and, initially, also the Commission considered that such activities were not prohibited under the Embargo Regulation and that, as a consequence, the German authorities should have consulted other Member States before adopting their position on the issue, which was of crucial importance to the survival of many bus operators.

14. The Landgericht Bonn (Regional Court) dismissed Mr Aulinger’s action for damages by judgement of 4 September 2002, on the ground, in particular, that Germany’s interpretation of the Embargo Regulation was justifiable and therefore there was no fault of the kind required by Paragraph 839 of the Bürgerliches Gesetzbuch (Civil Code) to engage the liability of the State.

15. Mr Aulinger appealed against that judgment to the Oberlandesgericht Köln, which has stayed the main proceedings and asked the Court for guidance on the two following questions:

‘(1) Is Article 1(d) of Council Regulation No 1432/92 of 1 June 1992 to be interpreted as meaning that the commercial carriage of persons to or from the territory covered by the embargo involving so-called “split” transport was permitted or prohibited?

“Split transport” is to be understood as meaning the carriage of persons to or from the territory covered by the embargo by means of a joint operation between an undertaking established in a Member State of the Community and an undertaking established in the territory covered by the embargo, the former providing carriage to the vicinity of the border of the territory covered by the embargo and the latter carriage from there into the territory covered by the embargo (the passengers changing vehicles).

(2) If the Court of Justice finds that split transport was permissible, was there an obligation under Article 10 or Article 297 EC or other provisions of Community law to consult other Member States and/or the Commission before taking national measures based on the unlawfulness of split transport?’

16. Mr Aulinger, Germany and the Commission submitted written observations and were represented at the hearing.





The first question

Submissions

17. By its first question the national court seeks to know whether the practice of ‘split transport’ as described above is prohibited by Article 1 of the Embargo Regulation.

18. Mr Aulinger distinguishes between ‘split transport’ from or to the embargo area, taken as a whole, and a partial provision of services contributing to that transport, such as those he provided for the organiser of the ‘split transport’, which took place in territory not caught by the embargo. In Mr Aulinger’s view neither is contrary to the Embargo Regulation.

19. To hold the services provided by Mr Aulinger in the context of the ‘split transport’ contrary to the Embargo Regulation would lead to the absurd conclusion of banning any act which had indirectly contributed to the ‘split transport’. The person selling the tickets for the trip, the worker who filled the petrol tank of the bus, even the travellers who paid the price of the bus ticket would also be infringing the Embargo Regulation. The embargo has an economic nature but does not seek to prohibit personal travel or the transport of persons.

20. The same would apply to the organisation of the ‘split transport’ taken as a whole. To the extent that its aim is to ensure the uniform implementation in the Community of the sanctions contained in the UN Embargo Resolution, Article 1(d) of the Embargo Regulation has to be interpreted in the light of the latter resolution. Paragraph 5 of that resolution merely prohibits all States from making ‘any funds or any other financial or economic resources’ available to the authorities or to any undertaking in the Federal Republic of Yugoslavia (Serbia and Montenegro). Even if the notion of economic resources were to include the provision of services to Serbian and Montenegrin undertakings, the transferring of passengers to Serbian and Montenegrin transport undertakings could not be considered as such. The only recipients of services in that instance are the passengers.

21. The German Government considers that the commercial transport of persons constitutes a service within the meaning of Article 1(d) of the Embargo Regulation, which is drafted in very broad terms. Whether the transport is performed as split or direct transport is irrelevant in that respect. The practice of ‘split transport’ has the effect of promoting, at least indirectly, the economy of the Serbian and Montenegrin Republics by, inter alia, benefiting undertakings established in the embargo area by remunerating them for the transport of passengers – and therefore providing economic resources for them and ultimately for the economy of the embargoed countries – and the indirect import of foreign currency by the passengers.

22. That literal interpretation is also supported by the internal logic and the aims of the Embargo Regulation. The German Government refers to the ninth recital in the preamble to the Embargo Regulation which states, without qualification, that ‘the Community’s economic relations with the Republics of Serbia and Montenegro must be halted’.

23. According to the German Government, the Embargo Regulation must be interpreted independently from the UN Embargo Resolution. The Community legislature is empowered to decide on a harsher embargo than that provided for in the UN Embargo Resolution in view of the proximity to the Community of the embargo area.

24. The German Government further argues that the need to ensure the effectiveness of the Embargo Regulation also requires the prohibition of ‘split transport’. Its provisions could otherwise have been easily circumvented by means of cooperation agreements between Community and Serbian and Montenegrin bus companies.

25. The Commission, referring to the judgment in Bosphorus, ( ) acknowledges that to interpret a provision of Community law adopted to implement a resolution of the Security Council of the UN, it is convenient to refer to that resolution. However, the prohibition on providing non-financial services contained in Article 1(d) of the Embargo Regulation, which is in issue in the main proceedings, does not result from the UN Embargo Resolution, which is concerned only with trade in commodities and products and related services and financial transfers.

26. Having regard only to Article 1(d) of the Embargo Regulation, the Commission distinguishes between three types of transport of persons to and from the embargo area, namely direct transport of passengers to or from the embargo area, transport from a point within the Community to the border with the countries subject to embargo without organised transfer of passengers to a partner bus company ensuring transport for the leg inside the embargo area and vice versa, and ‘split transport’ such as that at issue in the main proceedings.

27. The Commission argues that, whereas the second type of transport would not fall within the prohibition under Article 1 of the Embargo Regulation, both direct and ‘split transport’ of passengers would be prohibited by Article 1 thereof.

28. Direct transport would benefit the economy of the countries under embargo in two ways. On the one hand it would release Serbian and Montenegrin means of transport for other uses and, on the other, it would enable emigrant workers to repatriate financial resources.

29. ‘Split transport’ would constitute a non-financial service indirectly supporting the national economies under embargo. Under its cooperation agreement with transport undertakings established in the embargo area, the Community undertaking would ensure the arrival of passengers in that area and therefore the repatriation by the latter of foreign currency. Also, by remunerating the associated undertakings established in the embargo area for the part of the trip taking place in the territory of Serbia and Montenegro, the Community undertaking would be contributing indirectly to the economy of the latter.

30. The Commission finally argues that it is up to the national court to establish in the context of the main proceedings who is in fact responsible for the provision of the prohibited service. The national court must determine whether Mr Aulinger, without being directly responsible for its overall organisation and implementation, can be held to have violated the embargo through his participation in the provision of the ‘split transport’.





Assessment

31. First of all, the prohibition of non-financial services contained in the Embargo Regulation can in my view be interpreted independently from the UN Embargo Resolution. The operative part of the Regulation in fact extends the embargo on trade in commodities and products and on financial relations also to non-financial services. Since the UN Embargo Resolution does not contain any provision preventing States from adopting further embargo measures, the Community, acting within its powers under the EC Treaty, in particular Article 113 thereof, and for policy reasons of its own, could decide to do so. Those more far-reaching Community measures can be interpreted independently of the UN Embargo Resolution, provided they do not go against the latter, which in my view is not the case.

32. Article 1(d) is drafted in very broad terms and prohibits the provision of non-financial services whose ‘object or effect it is, directly or indirectly, to promote the economy of the Republics of Serbia and Montenegro’. ( ) As examples of prohibited services that provision mentions, ‘in particular’, ( ) any non-financial services provided for the purpose of ‘any economic activity’ ( ) carried out in or from the Republics of Serbia and Montenegro or provided to any natural person or legal persons in those republics or any organisation exercising an economic activity (whether or not in the Republics of Serbia and Montenegro) controlled by persons resident in those republics or by organisations constituted or incorporated under the law of those republics.

33. It must be concluded from that wording that the provision of ‘split transport’ of the kind in issue in the main proceedings is prohibited.

34. On a literal interpretation, the combined and coordinated operation of the Community and the Serbian and Montenegrin bus companies under the overall direction of the German travel agency amounts to the provision of a non-financial service to natural persons established in Serbia and Montenegro. Passengers acquire a single ticket for the whole itinerary which gives them a right to be transported between point A in the embargo area and point B in the Community. Clearly, at least some of the passengers who are the recipients of such service are likely to be natural persons in Serbia and Montenegro within the meaning of Article 1(d) of the Embargo Regulation.

35. The fact that passengers need to change buses at the border does not affect their rights to a complete journey. Their single ticket entitles them to a transfer at the border to buses run within the same organised scheme by associated bus companies which take them to their final destination. Passengers are not left to their own devices nor do they need to arrange for further transport or acquire another ticket at the border in order to pursue their trip.

36. I also agree with the Commission and the German Government that the provision of ‘split transport’ has, at least indirectly, the effect of promoting the economy of the countries under embargo in two respects. First, it enables the introduction of foreign currency in the embargo area via the returning emigrant workers. Secondly, it provides business opportunities that may not otherwise arise to the bus companies established in Serbia and Montenegro who are responsible and remunerated for the leg taking place within the embargo area.

37. The fact that such remuneration is deposited in a trust account or is in the form of credit by Deutsche Touring GmbH is, in my view, irrelevant since it appears from the order for reference that the Serbian and Montenegrin associated bus companies were still able to transfer that credit or use the amounts credited by way of collateral in their relationships with third parties, thereby deriving economic benefit in exchange for their services.

38. Accepting ‘split transport’ would, as the German Government argues, also impair the effectiveness of the Embargo Regulation in that its provisions could be easily circumvented by means of cooperation agreements between Community and Serbian and Montenegrin undertakings.

39. Finally, it is for the national court to determine in the light of the facts in the main proceedings whether, in view of the actual role played by Mr Aulinger as a subcontractor of Deutsche Touring GmbH in the operation of the ‘split transport’, his behaviour amounted to a breach of the embargo.

40. In view of the foregoing I consider that the Court should reply to the first question that Article 1(d) of the Embargo Regulation prohibits the provision by a Community undertaking of ‘split transport’ to and from the territory subject to embargo.





The second question

41. In view of the reply to the first question, the second question becomes superfluous. I shall however briefly examine it in case the Court should find that ‘split transport’ was not prohibited by the Embargo Regulation.

42. In essence the national court wishes to know whether under Community law there was an obligation on Member States to consult other Member States and/or the Commission before taking national measures based on the unlawfulness of ‘split transport’.

43. Mr Aulinger claims that Germany was under such an obligation, which arises from a combined interpretation of Article 10 EC on loyal cooperation between the Member States and the Community, Article 133 EC on the Community’s commercial policy, the recitals of the Embargo Regulation to the effect that Member States have agreed to adopt a Community instrument in order to ensure the uniform application of the embargo measures and Article 297 EC, which requires Member States to consult each other with a view to preventing the functioning of the common market being affected by measures which a Member State may be called upon to take in the event of, inter alia, war or serious international tension constituting a threat of war or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security.

44. Both Germany and the Commission argue that, in the absence of any specific provision of Community law requiring Member States to consult each other or the Commission — which existed in other Community regulations imposing economic embargos but not in the Embargo Regulation in issue — no such obligation exists under Community law. Furthermore, to oblige Member States and the Commission to agree on the correct interpretation of the Community law provisions in question would go against the principle arising from Article 220 EC that only the Court can ultimately provide the authentic interpretation of Community law.

45. I agree with the essence of the Commission and Germany’s reasoning. It is settled case-law that according to the general principles on which the institutional system of the Community is based and which govern the relations between the Community and the Member States, it is for the Member States, by virtue of Article 10 EC, to ensure that Community regulations are implemented within their territory. In so far as Community law, including its general principles, does not include common rules to that effect, the national authorities when implementing Community regulations act in accordance with the procedural and substantive rules of their own national law. ( )

46. Since the Embargo Regulation, a directly applicable Community measure, did not include any specific obligation requiring consultation before its application in the domestic legal orders, Member States were responsible for interpreting and applying its provisions in good faith. Uniform application could ultimately be ensured by the operation of the preliminary reference procedure under Article 234 EC.

47. Nor in my view does any obligation of the kind alleged arise from the other Community law provisions mentioned by Mr Aulinger, either in isolation or read in combination.

48. Article 10 EC does not prevent Member States from interpreting and applying directly applicable Community law provisions without previous consultation, but requires them to do so in good faith. In concluding without consultation that ‘split transport’ is not permitted under the Embargo Regulation, a justifiable interpretation, the German authorities did not act contrary to their obligations under Article 10 EC.

49. As regards Article 297 EC, it clearly follows from the wording that the obligation to consult imposed on Member States concerns situations in which unilateral measures which may affect the proper operation of the EC Treaty freedoms have been adopted by a Member State in the context of serious crisis. It does not apply in my view to a situation such as that in the main proceedings, where a Community legal instrument has laid down the measures to be followed by the Member States.

50. In support of his argument that there was an obligation of prior consultation, Mr Aulinger also refers to Article 30(2)(a) of the Single European Act relating to European cooperation in the field of foreign policy. I fail however to see the relevance of that provision, which has been superseded by subsequent amendments of the EC Treaty. The interpretation of the Embargo Regulation applied by Germany and contested by Mr Aulinger did not amount to a ‘foreign policy matter of general interest’ that would require the High Contracting Parties to the Single European Act to inform and consult with each other as required by Article 30(2)(a) of the Act.

51. Finally, I cannot see anything in Article 133 EC which could be construed as imposing a consultation obligation on Member States such as Mr Aulinger claims.

52. In view of the foregoing, I consider that the answer to the second question is that Member States were not required by Community law to consult other Member States and/or the Commission before taking national measures to implement the Embargo Regulation.

Conclusion

53. In view of the foregoing I am of the opinion that the Court should answer the two questions posed as follows:

(1) Article 1(d) of Council Regulation (EEC) No 1432/92 of 1 June 1992 prohibiting trade between the European Economic Community and the Republics of Serbia and Montenegro prohibits the provision by a Community undertaking of ‘split transport’ to and from the territory subject to embargo, ‘split transport’ being understood as the commercial transport of persons by means of a joint and single economic operation between an undertaking established in a Member State of the Community and an undertaking established in the territory under embargo, the former providing transport to and from the vicinity of the border of the territory under embargo and the latter transport to and from there into or from the territory covered by the embargo, the passengers changing vehicles in a prearranged manner and paying a single ticket giving them the right to transport for the whole itinerary.

(2) Member States were not required by Community law to consult other Member States and/or the Commission before taking national measures to implement that regulation.