The Queen v Secretary of State for Health, ex parte British American Tobacco (Investments) Ltd and Imperial Tobacco Ltd.
Date: 2002-12-10
32.  Under Article 234 EC the Court has jurisdiction to give preliminary rulings concerning the validity and interpretation of acts of the Community institutions, regardless of whether they are directly applicable (see, to that effect, Case 111/75   Mazzalai  [1976] ECR 657, paragraph 7, and Case C-373/95   Maso and Others   [1997] ECR I-4051, paragraph 28).
34.  In that regard, it is to be remembered that when a question on the validity of a measure adopted by the Community institutions is raised before a national court, it is for that court to decide whether a decision on the matter is necessary to enable it to give judgment and consequently whether it should request the Court to rule on that question.  Accordingly, where the national court's questions relate to the validity of a provision of Community law, the Court is obliged in principle to give a ruling (Case C-408/95   Eurotunnel and Others   [1997] ECR I-6315, paragraph 19).
35.  Nevertheless, the Court has held that it cannot give a preliminary ruling on a question submitted by a national court where,   inter alia  , it is quite obvious that the ruling sought by that court on the interpretation or validity of Community law bears no relation to the actual facts of the main action or its purpose or where the problem is hypothetical (see, in particular, Joined Cases C-430/99 and C-431/99   Sea-Land Service and Nedlloyd Lijnen   [2002] ECR I-5235, paragraph 46).
36.  With regard, first of all, to the actual facts of the dispute in the main proceedings, it is clear from the order for reference that, pursuant to the permission granted to them for that purpose by the High Court, the claimants in the main proceedings may make an application for judicial review of the legality of   "the intention and/or obligation"   of the United Kingdom Government to implement the Directive even though, when that application was made, the period prescribed for implementation of the Directive had not yet expired and that Government had adopted no national implementation measures.  There is, moreover, some disagreement between the claimants and the Secretary of State for Health as to whether or not the abovementioned application is well founded.
37.  With regard, next, to the relevance of the questions referred to the outcome of the dispute in the main proceedings, it is first to be observed that, should the Directive be held to be invalid, that would indeed influence the outcome.  The claimants in the main proceedings maintain that implementation by the United Kingdom Government of a directive by means of regulations adopted on the basis of Article 2(2) of the European Communities Act 1972 is subject to the condition that the directive should be valid, with the result that its invalidity would prevent its being implemented by means of regulations under that legislation.  Second, it must be stated that interpretation of the provisions of the Directive may also influence the outcome of the dispute in the main proceedings.
38.  It is therefore not obvious that the assessment of the Directive's validity or its interpretation, requested by the national court, bear no relation to the actual facts of the main action or its purpose or raise a purely hypothetical question.
39.  As for the argument that to accept the admissibility of the order for reference seeking a decision on validity in a situation such as that in the main proceedings could be tantamount to circumventing the requirements of Article 230 EC, it must be stated that, in the complete system of legal remedies and procedures established by the EC Treaty with a view to ensuring judicial review of the legality of acts of the institutions, where natural or legal persons cannot, by reason of the conditions for admissibility laid down in the fourth paragraph of that article, directly challenge Community measures of general application, they are able, depending on the case, either indirectly to plead the invalidity of such acts before the Community judicature under Article 241 EC or to do so before the national courts and ask them, since they have no jurisdiction themselves to declare those measures invalid, to make a reference to the Court of Justice for a preliminary ruling on validity (Case C-50/00 P   Unión de Pequeños Agricultores   v   Council   [2002] ECR I-6677, paragraph 40).
40.  The opportunity open to individuals to plead the invalidity of a Community act of general application before national courts is not conditional upon that act's actually having been the subject of implementing measures adopted pursuant to national law.  In that respect, it is sufficient if the national court is called upon to hear a genuine dispute in which the question of the validity of such an act is raised indirectly.  That condition is amply fulfilled in the circumstances of the case in the main proceedings, as is apparent from paragraphs 36 and 37 above.
43.  The claimants in the main proceedings argue that under Article 152(4)(c) EC the Community does not have the power to harmonise national rules in the domain of public health as such and that it has the power to adopt a harmonising measure under Article 95 EC only on condition that the measure genuinely has as its object the improvement of the conditions for the establishment and functioning of the internal market and actually contributes to eliminating obstacles to the free movement of goods or to the freedom to provide services, or to removing distortions of competition (see, to that effect, Case C-376/98   Germany   v   Parliament and Council   [2000] ECR I-2247, in particular, paragraphs 84 and 95,   "the tobacco advertising judgment"  ).  In their submission, the Directive, notwithstanding the statements made in its recitals, is not intended to ensure the free movement of tobacco products but rather to ensure the protection of public health.
59.  As a preliminary point, the case-law concerning Article 100a(1) of the EC Treaty (now, after amendment, Article 95(1) EC) must be borne in mind.
60.  First of all, it is clear from paragraphs 83, 84 and 95 of the tobacco advertising judgment that the measures referred to in that provision are intended to improve the conditions for the establishment and functioning of the internal market and must genuinely have that object, actually contributing to the elimination of obstacles to the free movement of goods or to the freedom to provide services, or to the removal of distortions of competition.
61.  Also, it follows from that case-law that while recourse to Article 95 EC as a legal basis is possible if the aim is to prevent the emergence of future obstacles to trade resulting from multifarious development of national laws, the emergence of such obstacles must be likely and the measure in question must be designed to prevent them (see, to that effect, Case C-350/92   Spain   v   Council   [1995] ECR I-1985, paragraph 35; the tobacco advertising judgment, paragraph 86, and Case C-377/98   Netherlands   v   Parliament and Council   [2001] ECR I-7079, paragraph 15).
62.  Finally, provided that the conditions for recourse to Article 95 EC as a legal basis are fulfilled, the Community legislature cannot be prevented from relying on that legal basis on the ground that public health protection is a decisive factor in the choices to be made (see, to that effect, the tobacco advertising judgment, paragraph 88).  Moreover, the first subparagraph of Article 152(1) EC provides that a high level of human health protection is to be ensured in the definition and implementation of all Community policies and activities, and Article 95(3) EC explicitly requires that, in achieving harmonisation, a high level of protection of human health should be guaranteed.
64.  The following considerations ought to be noted at the outset.  First, as the Advocate General observed in paragraph 61 of his Opinion, the market for tobacco products, especially cigarettes, in the Community is one in which trade between Member States represents a relatively large part.  Second, national rules laying down the requirements to be met by products, in particular those relating to their designation, composition or packaging, are in themselves liable, in the absence of harmonisation at Community level, to constitute obstacles to the free movement of goods (see, to that effect, Joined Cases C-267/91 and C-268/91   Keck and Mithouard   [1993] ECR I-6097, paragraph 15).
66.  On the one hand, some provisions contained in the Community harmonisation measures already adopted merely laid down minimal requirements, leaving the Member States a degree of discretion to adapt them (see Case C-222/91   Philip Morris Belgium and Others   [1993] ECR I-3469, paragraphs 11 and 17, and also Case C-11/92   Gallaher and Others   [1993] ECR I-3545, paragraphs 14 and 20).  On the other hand, Directives 89/622 and 90/239 covered only certain aspects of the conditions for manufacture, presentation and sale of tobacco products, the Member States being free to adopt national rules in respect of those aspects not thereby covered.
67.  In that context, having regard to the fact that the public is increasingly conscious of the dangers to health posed by consuming tobacco products, it is likely that obstacles to the free movement of those products would arise by reason of the adoption by the Member States of new rules reflecting that development and intended more effectively to discourage consumption of those products by means of warnings and information appearing on their packaging or to reduce the harmful effects of tobacco products by introducing new rules governing their composition.
68.  That analysis is confirmed by the content of the recitals in the preamble to the Directive and by the observations submitted during the procedure.
70.  Similarly, the ninth recital in the preamble to the Directive states that differences had emerged between the laws of the Member States on the limitation of the maximum nicotine yield of cigarettes.  Observations submitted during the procedure show that three Member States had already introduced such limitations and that several others were thinking of doing so.  Even if it is accepted that, having regard to the levels at which they were set and to the biochemical link between tar and nicotine, those limitations did not in practice form an obstacle to the marketing of cigarettes which complied with the requirements relating to the maximum tar yield permitted under Community law, the fact nevertheless remains that for Member States to set specific maximum yields for nicotine creates a risk that the subsequent lowering of those maximum yields may entail the creation of obstacles to trade.
73.  Lastly, the written procedure reveals that one Member State had adopted provisions regulating the use of certain of the descriptive terms mentioned in the 27th recital in the preamble to the Directive and referred to in Article 7.
74.  It must be added that, unlike the directive at issue in the case giving rise to the tobacco advertising judgment, the Directive contains a provision, Article 13(1), which guarantees the free movement of products which comply with its requirements.  By forbidding the Member States to prevent, on grounds relating to the matters harmonised by the Directive, the import, sale or consumption of tobacco products which do comply, that provision gives the Directive its full effect in relation to its object of improving the conditions for the functioning of the internal market.
77.  The fact is that since the Community legislature made exhaustive provision in Directive 90/239 over the question of fixing the maximum tar yield of cigarettes, the Member States no longer had the power to enact individual rules in that area.  As the Advocate General has observed in paragraph 124 of his Opinion, the Community legislature can properly carry out its task of safeguarding the general interests recognised by the Treaty, such as public health, only if it has the freedom to amend the relevant Community legislation so as to take account of any change in perceptions or circumstances.
78.  It follows that, even where a provision of Community law guarantees the removal of all obstacles to trade in the area it harmonises, that fact cannot make it impossible for the Community legislature to adapt that provision in step with other considerations.
82.  Although the prohibition of manufacture at issue is not a provision aimed directly at improving the conditions for the functioning of the internal market, the fact remains that a measure adopted on the basis of Article 95 EC may incorporate such a provision so long as its purpose is to ensure that certain prohibitions concerning the internal market and imposed in pursuit of that object are not circumvented (see, to that effect, the tobacco advertising judgment, paragraph 100).
83.  It is to be noted that the Court has accepted that the risks of unlawful reimports or deflections of trade liable to jeopardise the effectiveness of a Community measure adopted in the sphere of the common agricultural policy justified a prohibition of exports to non-member countries (Case C-180/96   United Kingdom   v   Commission   [1998] ECR I-2265, paragraphs 62 and 109).
87.  It is however unarguable that the cigarette market particularly lends itself to the development of unlawful trade and that if the manufacture within the Community itself of cigarettes which could not legally be put into circulation or on the market in the Community were to be allowed, that would be likely to increase the risks of fraud.
93.  As a preliminary point, it must be borne in mind that, according to settled case-law, in the context of the organisation of the powers of the Community the choice of a legal basis for a measure must rest on objective factors which are amenable to judicial review.  Those factors include in particular the aim and the content of the measure (see, in particular, Case C-269/97   Commission   v   Council   [2000] ECR I-2257, paragraph 43, and Case C-36/98   Spain   v   Council   [2001] ECR I-779, paragraph 58).
94.  If examination of a Community act shows that it has a twofold purpose or twofold component and if one of these is identifiable as main or predominant, whereas the other is merely incidental, the act must be founded on a sole legal basis, that is, the one required by the main or predominant purpose or component (see,   inter alia  , Case C-42/97   Parliament   v   Council   [1999] ECR I-869, paragraphs 39 and 40, and Case C-36/98   Spain   v   Council  , cited above, paragraph 59).  Exceptionally, if it is established that the act simultaneously pursues a number of objectives, indissociably linked, without one being secondary and indirect in relation to the other, such an act may be founded on the various corresponding legal bases (Opinion 2/00 [2001] ECR I-9713, paragraph 23).
96.  Without there being any need to consider whether, in its provisions affecting tobacco products exported to non-member countries, the Directive also pursued an objective linked to the implementation of the common commercial policy under Article 133 EC, that objective is in any event secondary in relation to the aim and content of the Directive as a whole, which is primarily designed to improve the conditions for the functioning of the internal market.
97.  It follows that Article 95 EC constitutes the only appropriate legal basis for the Directive and that it is incorrect for it to cite Article 133 EC also as a legal basis.
98.  However, that incorrect reference to Article 133 EC as a second legal basis for the Directive does not of itself mean that the latter is invalid.  Such an error in the legal basis relied on for a Community measure is no more than a purely formal defect, unless it gave rise to irregularity in the procedure applicable to the adoption of that act (see, to that effect, Case 165/87   Commission   v   Council   [1988] ECR 5545, paragraph 19), a matter which, in the case of the Directive, is the subject of Question 1(b), considered in paragraphs 100 to 111 below.
101.  The claimants in the main proceedings maintain that the legislative procedures which the Community must follow in adopting legislation under Articles 95 EC and 133 EC respectively are different from and inconsistent with one another, so that recourse to such a dual legal basis is not permissible (see, in particular, Case C-300/89   Commission   v   Council   ( "Titanium dioxide "  ) [1991] ECR I-2867, paragraphs 17 to 21).  Article 95 EC requires the Council to act jointly with the Parliament in accordance with the co-decision procedure laid down in Article 251 EC, whereas Article 133 EC lays down a procedure in which the Parliament does not participate and the Council acts by a qualified majority.  Application of the co-decision procedure to the adoption of a measure relating to the common commercial policy, when Article 133 EC does not even provide for the Parliament to be consulted, would run counter to the separation of powers between institutions intended by the Treaty.
111.  It follows from the foregoing considerations relating to Question 1(b) that recourse to the twofold legal basis of Articles 95 EC and 133 EC has not vitiated the procedure for adopting the Directive and that the latter is not invalid on that account.
Question 1(c)
122.  As a preliminary point, it ought to be borne in mind that the principle of proportionality, which is one of the general principles of Community law, requires that measures implemented through Community provisions should be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it  (see,   inter alia  , Case 137/85   Maizena   [1987] ECR 4587, paragraph 15; Case C-339/92   ADM Ölmühlen   [1993] ECR I-6473, paragraph 15, and Case C-210/00   Käserei Champignon Hofmeister   [2002] ECR I-6453, paragraph 59).
123.  With regard to judicial review of the conditions referred to in the previous paragraph, the Community legislature must be allowed a broad discretion in an area such as that involved in the present case, which entails political, economic and social choices on its part, and in which it is called upon to undertake complex assessments.  Consequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (see, to that effect, Case C-84/94   United Kingdom   v   Council   [1996] ECR I-5755, paragraph 58; Case C-233/94   Germany   v   Parliament and Council   [1997] ECR I-2405, paragraphs 55 and 56, and Case C-157/96   National Farmers' Union and Others   [1998] ECR I-2211, paragraph 61).
126.  It must first be stated that the prohibition laid down in Article 3 of the Directive on releasing for free circulation or marketing within the Community cigarettes that do not comply with the maximum levels of tar, nicotine and carbon monoxide, together with the obligation imposed on the Member States to authorise the import, sale and consumption of cigarettes which do comply with those levels, in accordance with Article 13(1) of the Directive, is a measure appropriate for the purpose of attaining the objective pursued by the Directive and one which, having regard to the duty of the Community legislature to ensure a high level of health protection, does not go beyond what is necessary to attain that objective.
140.  It is not clear that merely regulating the use of the descriptions referred to in Article 7, as proposed by the claimants in the main proceedings and by the German, Greek and Luxembourg Governments, or saying on the tobacco products' packaging, as proposed by Japan Tobacco, that the amounts of noxious substances inhaled depend also on the user's smoking behaviour would have ensured that consumers received objective information, having regard to the fact that those descriptions are in any event likely, by their very nature, to encourage smoking.
149.  As regards the validity of the Directive in respect of the right to property, the Court has consistently held that, while that right forms part of the general principles of Community law, it is not an absolute right and must be viewed in relation to its social function.  Consequently, its exercise may be restricted, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed (see, in particular, Case 265/87   Schräder  [1989] ECR 2237, paragraph 15; Case C-280/93   Germany   v   Council   [1994] ECR I-4973, paragraph 78, and Case C-293/97   Standley and Others   [1999] ECR I-2603, paragraph 54).
150.  As paragraphs 131 and 132 above make clear, the only effect produced by Article 5 of the Directive is to restrict the right of manufacturers of tobacco products to use the space on some sides of cigarette packets or unit packets of tobacco products to show their trade marks, without prejudicing the substance of their trade mark rights, the purpose being to ensure a high level of health protection when the obstacles created by national laws on labelling are eliminated.  In the light of this analysis, Article 5 constitutes a proportionate restriction on the use of the right to property compatible with the protection afforded that right by Community law.
154.  With regard, finally, to the validity of the Directive in the light of Article 20 of the TRIPs Agreement, the Court has consistently held that the lawfulness of a Community measure cannot be assessed in the light of instruments of international law which, like the WTO Agreement and the TRIPs Agreement which is part of it, are not in principle, having regard to their nature and structure, among the rules in the light of which the Court is to review the lawfulness of measures adopted by the Community institutions (Case C-149/96   Portugal   v   Council   [1999] ECR I-8395, paragraph 47; Case C-377/98   Netherlands   v   Parliament and Council  , cited above, paragraph 52; Case C-301/97   Netherlands   v   Council   [2001] ECR I-8853, paragraph 53, and Joined Cases C-27/00 and C-122/00   Omega Air and Others   [2002] ECR I-2569, paragraph 93).
155.  It is also clear from that case-law that it is only where the Community intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to the precise provisions of the WTO agreements, that it is for the Court to review the legality of the Community measure in question in the light of the WTO rules (see the judgments cited above,   Portugal   v   Council  , paragraph 49;   Netherlands   v   Council  , paragraph 54, and   Omega Air and Others  , paragraph 94).
165.  It must be borne in mind that, whilst the reasoning required by Article 253 EC must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to enable the persons concerned to ascertain the reasons for it and to enable the Court to exercise judicial review, the authority is not required to go into every relevant point of fact and law (see,   inter alia  , Case C-122/94   Commission   v   Council   [1996] ECR I-881, paragraph 29).
166.  Furthermore, the question whether a statement of reasons satisfies the requirements must be assessed with reference not only to the wording of the impugned measure but also to its context and to the whole body of legal rules governing the matter in question.  Consequently, if the contested measure clearly discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons for each of the technical choices made by the institution (see, in particular, Case C-100/99   Italy   v   Council and Commission   [2001] ECR I-5217, paragraph 64).
179.  It is to be noted, as a preliminary, that the principle of subsidiarity applies where the Community legislature makes use of Article 95 EC, inasmuch as that provision does not give it exclusive competence to regulate economic activity on the internal market, but only a certain competence for the purpose of improving the conditions for its establishment and functioning, by eliminating barriers to the free movement of goods and the freedom to provide services or by removing distortions of competition (see, to that effect, the tobacco advertising judgment, paragraphs 83 and 95).
180.  As regards the question whether the Directive was adopted in keeping with the principle of subsidiarity, it must first be considered whether the objective of the proposed action could be better achieved at Community level.
181.  As the Court has stated in paragraph 124 above, the Directive's objective is to eliminate the barriers raised by the differences which still exist between the Member States' laws, regulations and administrative provisions on the manufacture, presentation and sale of tobacco products, while ensuring a high level of health protection, in accordance with Article 95(3) EC.
182.  Such an objective cannot be sufficiently achieved by the Member States individually and calls for action at Community level, as demonstrated by the multifarious development of national laws in this case (see paragraph 61 above).
189.  As the Court has repeatedly held, a measure is vitiated by misuse of powers only if it appears on the basis of objective, relevant and consistent evidence to have been taken with the exclusive or main purpose of achieving an end other than that stated or evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case (Case C-331/88   Fedesa and Others   [1990] ECR I-4023, paragraph 24; Case C-156/93   Parliament   v   Commission   [1995] ECR I-2019, paragraph 31; and Case C-48/96 P   Windpark Groothusen   v   Commission   [1998] ECR I-2873, paragraph 52, and Case C-110/97   Netherlands   v   Council   [2001] ECR I-8763, paragraph 137).
190.  With particular regard to the express exclusion of any harmonisation of the laws and regulations of the Member States designed to protect and improve human health laid down in the first indent of Article 129(4) of the Treaty (now, after amendment, the first subparagraph of Article 152(4) EC), the Court has held that other articles of the Treaty may not be used as a legal basis in order to circumvent that exclusion (the tobacco advertising judgment, paragraph 79).  The Court has, however, stated that, provided that the conditions for recourse to Articles 100a, 57(2) of the EC Treaty (now, after amendment, Article 47(2) EC) and 66 of the EC Treaty (now Article 55 EC) as a legal basis are fulfilled, the Community legislature cannot be prevented from relying on that legal basis on the ground that public health protection is a decisive factor in the choices to be made (the tobacco advertising judgment, paragraph 88).
203.  The Court has consistently held that, in interpreting a provision of Community law, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it forms part (Case C-223/98   Adidas   [1999] ECR I-7081, paragraph 23; Case C-301/98   KVS International   [2000] ECR I-3583, paragraph 21; Case C-156/98   Germany   v   Commission   [2000] ECR I-6857, paragraph 50, and Case C-191/99   Kvaerner   [2001] ECR I-4447, paragraph 30).