Commission of the European Communities v French Republic.
Date: 1996-03-07
5. In the first case, the Commission submits that, by restricting the right to register a vessel in the French register and to fly the French flag to vessels more than half of the shares in which are owned by natural persons of French nationality, the French Republic is maintaining in force legislative provisions which discriminate on grounds of nationality, contrary to Article 6, and constitute a restriction on freedom of establishment, contrary to Article 52, of the Treaty.  It refers to Case C-221/89  The Queen  v  Secretary of State for Transport  ex parte  Factortame and Others  [1991] ECR I-3905, paragraph 30, to Case C-246/89  Commission  v  United Kingdom  [1991] ECR I-4585, and to Case C-93/89  Commission  v  Ireland  [1991] ECR I-4569.
6. It further submits that the requirement that legal persons owning vessels must have their seat in French territory and that a certain proportion of their capital must be controlled by French nationals is contrary to Article 52 of the Treaty (see  Factortame and Others , paragraphs 33 and 35).  It is also contrary to Article 52 for the law to require the actual control or management to be in the hands of French nationals.
8. Finally, the restriction on the participation by nationals of other Member States in the capital of the companies or firms referred to in the French legislation is contrary to Article 221 of the EC Treaty, under which Member States must accord such nationals the same treatment as their own nationals as regards participation in the capital of companies or firms ( Factortame and Others , paragraph 31).
10. In the Commission ' s view, even though the registration of a vessel for leisure purposes does not concern the exercise of an economic activity in the strict sense, the availability of leisure activities in the Member States is a corollary to freedom of movement.  The Commission refers to Case 186/87  Cowan  v  Trésor Public  [1989] ECR 195, paragraph 20, and Case C-45/93  Commission  v  Spain  [1994] ECR I-911).
13. The Court has held that the general prohibition of discrimination on grounds of nationality laid down in Article 7 of the EEC Treaty has been implemented by Article 52 of that Treaty in the specific domain which it governs and that, consequently, any rules incompatible with the latter provision are also incompatible with Article 7 of the Treaty ( Commission  v  United Kingdom , paragraph 18).  Article 7 of the EEC Treaty has become Article 6 of the EC Treaty.
14. In  Factortame and Others  the Court noted that, in exercising its powers for the purpose of defining the conditions for the grant of its   " nationality"  to a ship, each Member State must comply with the prohibition of discrimination against nationals of Member States on grounds of their nationality (paragraph 29) and that a condition which stipulates that where a vessel is owned or chartered by natural persons they must be of a particular nationality and where it is owned by a company the shareholders and directors must be of that nationality is contrary to Article 52 of the Treaty (paragraph 30).
15. The Court further stated that such a condition is also contrary to Article 221 of the Treaty, under which Member States must accord nationals of the other Member States the same treatment as their own nationals as regards participation in the capital of companies or firms within the meaning of Article 58 (paragraph 31).
16. Finally, the Court held that a requirement for the registration of a vessel to the effect that it must be managed and its operations directed and controlled from within the Member State in which it is to be registered essentially coincides with the actual concept of establishment within the meaning of Article 52 et seq. of the Treaty, which implies a fixed establishment (paragraph 34).  It pointed out, however, that such a requirement would not be compatible with those provisions if it had to be interpreted as precluding registration in the event that a secondary establishment or the centre for directing the operations of the vessel in the Member State in which the vessel was to be registered acted on instructions from a decision-taking centre located in the Member State of the principal establishment (paragraph 35).
19. Finally, in so far as the French legislation requires legal persons owning vessels to have their seats in French territory and thus precludes the registration or management of a ship in the case of a secondary establishment such as an agency, branch or subsidiary, it is contrary to Articles 52 and 58 of the Treaty.
20. Next, the case of vessels which are not used in the context of an economic activity must be considered.
21. Under Community law, every national of a Member State is assured of freedom both to enter another Member State in order to pursue an employed or self-employed activity and to reside there after having pursued such an activity.  Access to leisure activities available in that Member State is a corollary to that freedom of movement.
22. The registration by such a national of a leisure craft in the host Member State falls within the scope of the Community provisions relating to freedom of movement.
23. French legislation under which only French nationals may register in France leisure craft of which they own more than half the shares is therefore contrary to Articles 6, 48 and 52 of the Treaty, Article 7 of Regulation No 1251/70 and Article 7 of Directive 75/34.
30. It has consistently been held that the incompatibility of national legislation with provisions of the Treaty, even provisions which are directly applicable, can be finally remedied only by means of national provisions of a binding nature which have the same legal force as those which must be amended.  Mere administrative practices, which by their nature are alterable at will by the authorities and are not given the appropriate publicity, cannot be regarded as constituting the proper fulfilment of obligations under the Treaty (Case 168/85  Commission  v  Italy  [1986] ECR 2945, paragraph 13).
31. Furthermore, even though Article 171 does not specify the period within which a judgment must be complied with, the importance of immediate and uniform application of Community law requires that the process of compliance must be initiated at once and must be completed as soon as possible (Case 169/87  Commission  v  France  [1988] ECR 4093, paragraph 14).  In the present case, the French Republic has failed to comply with a judgment delivered by the Court more than 20 years ago.
32. As regards the second branch of the application, therefore, it must be held that by not taking the appropriate measures to comply with the judgment of 4 April 1974 in Case 167/73, the French Republic has failed to fulfil its obligations under Article 171 of the EC Treaty.