Opinion of Mr Advocate General La Pergola delivered on 20 April 1999. - Commission of the European Communities v Kingdom of Belgium (C-171/98 and C-201/98) and Grand Duchy of Luxemburg (C-202/98). - Failure to fulfil obligations - Regulation (EEC) No 4055/86 - Freedom to provide services - Maritime transport. - Joined cases C-171/98, C-201/98 and C-202/98.



European Court reports 1999 Page I-05517



Opinion of the Advocate-General

1 The present case relates to the cargo-sharing arrangements in certain agreements concluded by the Kingdom of Belgium and the Grand Duchy of Luxembourg, in the context of the Belgo-Luxembourg Economic Union (hereinafter `the BLEU'), with Togo, Mali, Senegal and Côte d'Ivoire. The Commission maintains that conclusion of the agreements with Mali and Togo is contrary to Article 5 of Council 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. (1) It also alleges that the Member States in question infringed Articles 3 and 4(1) of that regulation by failing either to adjust the agreements with Senegal and Côte d'Ivoire in such a way as to provide for fair, free and non-discriminatory access by Community nationals to the cargo shares due to Belgium and Luxembourg or to denounce those agreements.

Legislative background

2 Regulation No 4055/86 is intended to implement Council Regulation (EEC) No 954/79 of 15 May 1979 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a Code of Conduct for Liner Conferences. (2) In particular, it is intended to `apply the principle of freedom to provide services ... to maritime transport between Member States and between Member States and third countries, so as progressively to abolish existing restrictions and prevent the introduction of new restrictions'. (3) Article 1(1) of the regulation provides that `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'.

3 The provisions of the regulation which are significant in the present case are those on cargo-sharing arrangements. In this context, a distinction must be made between arrangements contained in existing agreements and those contained in future agreements. With respect to the latter, Article 5(1) of the regulation provides that they `are prohibited other than in those exceptional circumstances where Community liner shipping companies would not otherwise have an effective opportunity to ply for trade to and from the third country concerned. In these circumstances such arrangements may be permitted in accordance with the provisions of Article 6'. (4) With respect to existing arrangements, Article 3 provides that these `shall be phased out or adjusted in accordance with the provisions of Article 4'. Article 4 provides:

`1. Existing cargo-sharing arrangements not phased out in accordance with Article 3 shall be adjusted in accordance with Community legislation and in particular:

(a) where trades governed by the United Nations Code of Conduct for Liner Conferences are concerned, they shall comply with this Code and with the obligations of Member States under Regulation (EEC) No 954/79;

(b) where trades not governed by the United Nations Code of Conduct for Liner Conferences are concerned, agreements shall be adjusted as soon as possible and in any event before 1 January 1993 so as to provide for fair, free and non-discriminatory access by all Community nationals, as defined in Article 1, to the cargo-shares due to the Member States concerned.

2. National action in pursuance of paragraph 1 shall be notified immediately to the Member States and the Commission. The consultation procedure established by Council Decision 77/587/EEC shall apply.

3. Member States shall report to the Commission on progress made on the adjustments referred to in paragraph 1(b), initially every six months and subsequently every year.

4. When difficulties arise in the process of adjusting agreements to bring them into conformity with paragraph 1(b), the Member State concerned shall inform the Council and the Commission. In cases where agreements are incompatible with paragraph 1(b) and where the Member State concerned so asks, the Council shall, acting on a proposal from the Commission, take appropriate action.'

4 On 25 October 1973, the independent Republic of Côte d'Ivoire and the BLEU concluded an international agreement, Article 3(1) of which made provision for a cargo-sharing arrangement as follows:

`As regards maritime freight traffic of any kind between the countries of the two Parties, whatever the port of loading or unloading, the system to be applied by the Contracting Parties to vessels operated by their respective fleets shall be based on the allocation formula 40/40/20, with respect to cargoes by value of freight and by volume.' (5)

5 A similar agreement was concluded on 3 September 1984 between the Republic of Senegal and the BLEU. Article 4(2) of that agreement provided for a cargo-sharing arrangement in the same terms as that provided for in the agreement with Côte d'Ivoire.

6 On 12 February 1985, an agreement was concluded between the Republic of Mali and the BLEU. Article 4(2) of this agreement made provision for the following cargo-sharing arrangement:

`As regards maritime freight traffic (liner traffic) between the countries of the two Parties, whatever the port of loading or unloading, the system to be applied by the Contracting Parties to vessels operated by their respective national shipping lines shall be based on the allocation formula 40/40/20, with respect to cargoes by value of freight and by volume. If the 20% allocated to third countries is not transported by them, the remainder shall be divided equally by freight and by volume between the national shipping lines of the Republic of Mali and the national shipping lines of the BLEU.' (6)

7 Lastly, I turn to the agreement concluded on 19 October 1984 between the Republic of Togo and the BLEU. Article 4(2) thereof provides:

`As regards maritime freight traffic (liner traffic) between the countries of the two Parties, whatever the port of loading or unloading, the Contracting Parties agree to apply the principle of sharing cargoes on the basis of strict equality of rights and according to criteria of tonnage of paying unit and value of the freight, the latter criterion taking precedence.

The share of trade reserved to vessels operated by their respective shipping lines shall be equal to at least 40% of total traffic, the share available to third countries' fleets not exceeding 20%.' (7)

The pre-litigation procedure

8 The Commission formed the view that the cargo-sharing arrangements provided for in the agreements concluded by Belgium and Luxembourg, in the context of the BLEU, with - respectively - Senegal, Côte d'Ivoire, Mali and Togo reserved shares of maritime traffic for vessels flying the flags of the contracting parties. These arrangements were therefore discriminatory and contrary to the provisions of Regulation No 4055/86. In letters of formal notice of 10 April 1991 and 9 November 1995, sent to the Kingdom of Belgium and the Grand Duchy of Luxembourg respectively, the Commission initiated the pre-litigation procedure provided for in Article 169 of the Treaty. The Commission stated that the agreements concluded with Senegal and Côte d'Ivoire were contrary to Articles 3 and 4(1) of Regulation No 4055/86, and that those concluded with Mali and Togo were in breach of Article 5 thereof.

Since the pre-litigation procedure reached no satisfactory conclusion, the Commission brought the present actions before the Court.

Substance

9 The Commission observes that the agreements concluded with Senegal and Côte d'Ivoire contain arrangements to share cargo reserved to national companies, contrary to the provisions of Regulation No 4055/86. Since these were `existing agreements' at the time when the regulation came into force, they should have been adjusted in accordance with the timetable set out in Articles 3 and 4 of the regulation. However, no adjustment was made.

The agreements with Mali and Togo, on the other hand, are `future agreements', since they came into force after Regulation No 4055/86. These agreements could, therefore, under Article 5 of the regulation, be permitted only in exceptional circumstances, but such circumstances do not exist in this case.

10 The Kingdom of Belgium does not dispute that it has failed to fulfil its obligations. It merely points out that the agreement with Togo had been amended in the manner requested by the Commission; however, because of a material error, it is now necessary to proceed to a new exchange of notes with Togo. This will be done shortly. As to the other agreements, the Belgian Government observes that negotiations to make the necessary adjustments have required more time than expected but are in progress.

11 Luxembourg does not dispute the Commission's complaints but - strangely - contends that the action should be dismissed. On the substance, Luxembourg simply refers to the defence lodged by Belgium in Case C-201/98. However, in those proceedings, the Belgian Government neither disputed the failure to fulfil obligations, nor contended that the application should be rejected. I therefore consider that Luxembourg's failure to fulfil obligations is being contested merely formally, but not in substance. Consequently, I am of the opinion that the actions brought by the Commission should be upheld.

Conclusion

12 In the light of the foregoing considerations, I propose that the Court should:

- uphold the actions brought by the Commission in Cases C-171/98, C-201/98 and C-202/98;

- order the defendant Governments to pay the costs.

(1) - OJ 1986 L 378, p. 1.

(2) - OJ 1979 L 121, p. 1.

(3) - See 11th recital.

(4) - My italics. The procedure provided in Article 6 for authorisation of new arrangements is as follows:

`1. If a Member State's nationals or shipping companies, as defined in Article 1, paragraphs 1 and 2, are experiencing, or are threatened by, a situation where they do not have an effective opportunity to ply for trade to and from a particular third country, the Member State concerned shall inform the other Member States and the Commission as soon as possible.

2. The Council, acting by qualified majority on a proposal of the Commission, shall decide on the necessary action. Such action may include, in the circumstances envisaged in Article 5(1), the negotiation and conclusion of cargo-sharing arrangements.

3. If the Council has not decided on the necessary action within six months of a Member State providing information under paragraph 1, the Member State concerned may take such action as may for the time being be necessary to preserve an effective opportunity to ply for trade in accordance with Article 5(1).

4. Any action taken under paragraph 3 shall be in accordance with Community law and provide for fair, free and non-discriminatory access to the relevant cargo shares by nationals or Community shipping companies, as defined in Article 1(1) and (2).

5. National action in pursuance of paragraph 3 shall be notified immediately to the Member States and the Commission. The consultation procedure established by Council Decision 77/587/EEC shall apply.'

(5) - Free translation.

(6) - Free translation.

(7) - Free translation.