Action brought on 20 January 2003 by the EFTA Surveillance Authority against the Republic of Iceland

(Case E-1/03)

(2003/C 75/13)

An action against the Republic of Iceland was brought before the EFTA Court on 20 January 2003 by the EFTA Surveillance Authority, represented by Niels Fenger and Elisabethann Wright, acting as Agents of the EFTA Surveillance Authority, Rue de Trèves/Trierstraat 74, B-1040 Brussels.

The applicant claims that the Court should:

1. Declare that by maintaining in force the Icelandic Act on Air Transport Infrastructure Budget and Revenues for Aviation Affairs No 31/1987 (Lög nr. 31 frá 27. mars 1987 um flugmálaáætlun og fjáröflun til framkvæmda í flugmálum), which subjects flights from Iceland to other EEA States to a higher tax rate than that charged for domestic flights and flights to Greenland and the Faroe Islands, the Republic of Iceland has failed to respect its obligations under Article 36 of the Agreement on the European Economic Area and Article 3(1) of Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes; and

2. Order the Republic of Iceland to pay the costs of the proceedings.

Legal and factual background and pleas in law adduced in support:

- Article 36 of the EEA Agreement requires the abolition of all restrictions on the provision of services within the EEA in respect of nationals of EC Member States and EFTA States who are established in an EC Member State or an EFTA State other than that of the person for whom the services are intended.

- Article 38 of the EEA Agreement states that the freedom to provide services in the field of transport shall be governed by the provisions of Chapter 6 of the Agreement governing transport. Article 39 of the EEA Agreement provides that Articles 30, 32-34 shall also apply to the freedom to provide services.

- Article 49 of the EC Treaty, which corresponds to Article 36 of the EEA Agreement, excludes the application of national provisions that, without objective justification, restrict a service provider from exercising the freedom for which that Article provides. Moreover, Article 49 of the EC Treaty excludes the application of a national provision that makes the provision of services between Member States more difficult than the provision of services exclusively within a single Member State.

- According to the Court of Justice of the European Communities, Article 49 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, including a charge set by law for the performance of a service connected to a transport service.

- According to the Court of Justice of the European Communities, the purpose of Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes is, inter alia, to define the conditions for applying in the air transport sector the principle of the freedom to provide services, and to eliminate, with regard to air travel, restrictions on the freedom to provide services within the framework of the common transport policy.

- According to a translation of the Icelandic Act on Air Transport Infrastructure Budget and Revenues for Aviation Affairs No 31/1987 (Lög nr. 31 frá 27. mars 1987 um flugmálaáætlun og fjáröflun til framkvæmda í flugmálum), Article 5(1), as amended, provides that "a separate airport tax shall be paid in respect of each individual travelling by aircraft from Iceland to other countries;" Article 6(1) provides that "the airport tax shall amount to ISK 1250 for each passenger travelling from Iceland to other countries;" and, Article 7(1) provides that "airlines engaged in the transport of passengers within Iceland or to the Faroe Islands or Greenland shall pay a tax amounting to ISK 165 for each passenger travelling on these routes."