Commission of the European Communities v Kingdom of Spain.
Date: 2006-10-26
25. According to settled case-law, 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 objectives pursued by the rules of which it is part (see, inter alia, Case C-301/98 KVS International  [2000] ECR I‑3583, paragraph 21, and Case C-156/98 Germany  v Commission  [2000] ECR I-6857, paragraph 50).
26. The main objective of the Directive, as can be seen more precisely from the seventh recital, is to guarantee that authors and performers receive appropriate income and recoup the especially high and risky investments required particularly for the production of phonograms and films (Case C-200/96 Metronome Musik  [1998] ECR I-1953, paragraph 22, and Case C-53/05 Commission  v Portugal  [2006] ECR I-0000, paragraph 24).
27. Exempting almost all, if not all, categories of establishments which engage in such lending from the obligation laid down in Article 5(1) of the Directive would deprive authors of remuneration allowing them to recoup their investments, with inevitable repercussions for the creation of new works (see Metronome Musik , paragraph 24, and Commission  v Portugal , paragraph 25). In those circumstances, a transposition of the Directive that results, in practice, in such an exemption for almost all, if not all, categories of establishments goes against the main objective of that directive.
30. Furthermore, the interpretation of the directive on the basis of its main objective, as set out in paragraph 26 of this judgment, is borne out by the very wording of Article 5(3), a provision which refers only to ‘certain categories of establishments’. Therefore the Community legislature did not intend to allow Member States to exempt almost all, if not all, categories of establishments from payment of the remuneration referred to in Article 5(1) ( Commission  v Portugal , paragraph 21).
31. In addition, under Article 5(3), the Directive in fact allows Member States to derogate, in respect of public lending, from the general obligation of remuneration of authors referred to in paragraph 1 of that article. According to settled case-law, the provisions of a directive which derogate from a general principle established by that directive must be strictly interpreted (Case C-476/01 Kapper  [2004] ECR I-5205, paragraph 72, and Commission  v Portugal , paragraph 22).
32. It follows that, contrary to the submission of the Kingdom of Spain and as is apparent from paragraph 30 of this judgment, the expression ‘certain categories of establishments’ in Article 5(3) is to be understood as meaning that it refers to a concept which is quantitative in nature. Thus, only a limited number of categories of establishments potentially required to pay remuneration pursuant to Article 5(1) are capable of being exempt from that requirement.
33. Lastly, it is important to bear in mind that, in the absence of sufficiently precise Community criteria in a directive to delimit the obligations under the directive, it is for the Member States to determine, in their own territory, what are the most relevant criteria for ensuring, within the limits imposed by Community law and in particular by the directive concerned, compliance with that directive (see, to that effect, Case C-245/00 SENA  [2003] ECR I-1251, paragraph 34, and Case C‑433/02 Commission  v Belgium  [2003] ECR I-12191, paragraph 19).
34. In that regard, it has already been held that Article 5(3) of the Directive authorises but does not oblige a Member State to exempt certain categories of establishments. Consequently, if the circumstances prevailing in the Member State in question do not enable the relevant criteria to be determined for drawing a valid distinction between categories of establishments, the obligation to pay the remuneration provided for in Article 5(1) must be imposed on all the establishments concerned ( Commission  v Belgium , paragraph 20).
38. That argument must however be rejected in the light of the settled case-law of the Court from which it is clear that an action for failure to fulfil obligations is objective in nature (see, inter alia, Case C-73/92 Commission  v Spain  [1993] ECR I-5997, paragraph 19), so that failure to comply with an obligation imposed by a rule of Community law is itself sufficient to constitute a breach, and the fact that such a failure had no adverse effects is irrelevant (see, inter alia, Case C-392/96 Commission  v Ireland  [1999] ECR I-5901, paragraphs 60 and 61, and Case C-233/00 Commission  v France  [2003] ECR I-6625, paragraph 62). By taking the view that it could interpret the Directive by reference to the consequences of its implementation, such as insufficient income for authors, the Kingdom of Spain is making the interpretation of the directive contingent on the effects of its application, which does not respect the logical order of those two stages of legal reasoning.