Case C-182/03: Action brought on 28 April 2003 by the Kingdom of Belgium against the Commission of the European Communities
Date: 2003-06-07
Institutions: Court of Justice
Subjects: Belgium, European Commission, action for annulment (EU), equal treatment, infringement of EU law, legal status, tax system, type of business

7.6.2003

EN

Official Journal of the European Union

C 135/21

Action brought on 15 April 2003 by the Commission of
the European Communities against the Council of the
European Union

(Case C-176/03)

(2003/C 135/31)

An action against the Council of the European Union was
brought before the Court of Justice of the European Communi-
ties on 15 April 2003 by the Commission of the European
Communities, represented by J.-F. Pasquier and W. Bog-
ensberger, acting as Agents, with an address for service in
Luxembourg.

The Commission of the European Communities claims that
the Court should:

— declare that the Council Framework Decision of 27 Janu-
ary 2003 on the protection of the environment through
criminal law (1) is unlawful;

— annul that framework decision;

— order the Council of the European Union to pay the costs.

Pleas in law and main arguments

The action is based on Article 35(6) of the Treaty on European
Union.

The Commission unreservedly supports the objectives of the
framework decision but disputes the legal basis adopted in
order to provide for the measures in question, namely the
Treaty on European Union and in particular Articles 29, 31(e)
and 34(2)(b) of that treaty. The measures in question are
clearly matters of Community competence. The choice of
legal basis is important in this case because of the special
institutional features of Title VI of the Treaty on European
Union which, inter alia, does not have any equivalent to the
infringement procedure.

The choice of legal basis of an act must, according to the case-
law, be based on objective criteria that are susceptible to
judicial review, as regards in particular the purpose and content
of the act.

In the present case, both the purpose and the content of
the framework decision manifestly fall within the scope of
Community competencies. The aim of the framework decision
is to protect
the environment by imposing penalties on
infringements adversely affecting it, which corresponds to
Community competencies such as those referred to in Title XIX
of the EC Treaty (Articles 174 to 176) and by Article 6 of that

treaty. The same is true of the content of the framework
decision. The matters which Articles 2 and 3 of the framework
decision require Member States to regard as environmental
offences refer, for the most part,
to actions covered by
Community law.

Article 47 of the Treaty on European union lays down the
primacy of Community provisions and it is therefore not
legally possible to adopt acts on the basis of that treaty if there
is Community competence to do so.

The Commission also claims that the Communities have
competence to require the Member States to impose criminal
penalties where that is necessary in order to guarantee the
effect and efficacy of Community law.

In that regard, the Commission submits, first, that according
to settled case-law of the Court of Justice, as set out for
example in Case 68/88 Commission v Greece [1989] ECR
2966,
the Member States must ensure that infringements
of Community law are penalised under conditions, both
procedural and substantive, which are analogous to those
applicable to infringements of national
law of a similar
nature and importance and which make the penalty effective,
proportionate and dissuasive. The Member States may there-
fore be required to provide criminal penalties for infringements
of Community law. The Community measure may even itself
define the types of penalties which the Member States may
establish (see, for example, Article 31 of Council Regulation
(EEC) No 2847/93 of 12 October 1993 establishing a control
system applicable to the common fisheries policy (2).

The Commission observes, next, that as Community law
currently stands, if the Community legislature considers that
compliance with the rules which it lays down can be guaran-
teed only by the imposition of criminal penalties, it has power
to require the Member States to provide for such penalties.

(1) Framework Decision 2003/80/JHI, OJ L 29, 5.2.2003, p. 55.
(2) OJ L 261, 20.10.1993, p. 1.

Action brought on 28 April 2003 by the Kingdom
of Belgium against the Commission of the European
Communities

(Case C-182/03)

(2003/C 135/32)

An action against the Commission of the European Communi-
ties was brought before the Court of Justice of the European
Communities on 28 April 2003 by the Kingdom of Belgium,
represented by A. Snoecx, acting as Agent, assisted by P. Kelley,
B. van der Walle de Ghelcke and J. Wouters, avocats.

C 135/22

EN

Official Journal of the European Union

7.6.2003

The Kingdom of Belgium claims that the Court should:

— annul the decision of the Commission of the European
Communities C(2003) final of 17 February 2003 con-
cerning the aid scheme implemented by the Kingdom of
Belgium in favour of coordination centres established in
Belgium, inasmuch as it does not authorise Belgium to
grant, even temporarily, renewal of coordination centre
status to the coordination centres which benefited from
the scheme as at 31 December 2000;

— order the Commission to pay the costs.

Pleas in law and main arguments

First plea:
infringement of Article 88(2) of the EC Treaty,
infringement of the principle of legal certainty, of the protec-
tion of legitimate expectations and of proportionality in that
the Commission did not allow a reasonable period for the
Belgian State and the coordination centres whose individual
authorisations expire before 31 December 2010; more specifi-
cally in the months following the notification of the decision.

Article 2 of the decision requires the Belgian State to repeal
the tax regime for the coordination centres or to amend it so
as to make it compatible with the common market and
Article 3 of the decision fixes a period of two months within
which to take the measures necessary to comply with that
obligation. That period is manifestly insufficient, as the scheme
in question can be amended only by a formal law adopted by
the Parliament. The Commission thus infringes Article 88(2)
of the EC Treaty, which, according to the case-law, is based on
the notion of cooperation between the Member State and the
Commission. The requirement for a reasonable period applies
all the more in a case such as this where the scheme in
question, notified in the 1980s, had not been considered by
the Commission to constitute an aid.

Nor is the period reasonable for the coordination centres. The
authorisations are for 10 years and are renewable on the sole
condition that
the centre continues to comply with the
conditions laid down by the rules. The recitals of the decision
recognise that
the legitimate
there is a need to protect
expectation of existing coordination centres, but the decision
prohibits any renewal of approvals, even for those which
expire in the months following notification of the decision.
For a number of the centres concerned, the decision entails the
immediate cessation of their activities.

Second plea: infringement of Article 88(2) of the EC Treaty
and infringement of the principle of legitimate expectation
resulting from the Council Decision on the code of conduct.

A code of conduct for business taxation was adopted by
resolution of the Council and representatives of governments
of the Member States, meeting within the Council, on 1 Decem-
ber 1997. With regard to the 66 taxation measures covered by
the code of conduct,
including the coordination centres
scheme, the ECOFIN Council of 26 and 27 November 2000
decided that, as regards undertakings benefiting from a harmful
regime on 31 December 2000, the effects of those regimes
would expire at the latest on 31 December 2005, whether
they are regimes granted for a fixed period or not. Lastly, on
21 January 2003 agreement in principle was made within the
Council relating to the application of the code of conduct
which provides in particular that the coordination centres
which benefited from the regime on 31 December 2000 could
continue to benefit fully from their authorisation for the 10-
year period under way and until 31 December 2010 at the
latest.

The contested decision prohibits renewal of authorisations
expiring after the notification of the decision and therefore
infringes the legitimate expectations of both the Belgian State
and of the coordination centres with regard to the extension
of existing authorisations until 31 December 2010.

Third plea: infringement of the principle of equal treatment.

The system adopted by the Commission introduces unjustifia-
ble discrimination between the situation of centres whose
approval has been renewed shortly before 31 December 2000
and who benefit from the regime until 2010 and centres
whose authorisation will expire in 2003 and which lose the
benefit of the regime because of an expiration date of only a
few months.

Fourth plea: infringement of the obligation to state reasons.

The Commission does not give reasons that are adequate in
law to explain why it has not provided a transitional period
for centres whose authorisation expires shortly after the date
of the decision. Lastly, the decision is wholely deficient in
regard to the failure to take into account, for implementation
of transitional measures, of the period from 1 January 2001 to
16 February 2003.