Commission of the European Communities v Kingdom of Sweden.
Date: 2002-11-05
34 It must be pointed out, however, that examination of the substance of the principal claim does not necessarily presuppose the Court's first taking a position on the preliminary issue referred to above.
35 In that regard, it is clear from the file and from the oral argument before the Court that the amendments made in 1995, described in paragraph 28 above, had the effect of totally liberalising air transport between the United States of America and the Kingdom of Sweden by ensuring free access to all routes between all points situated within those two States, without limitation of capacity or frequency, without restriction as to intermediate points and those situated behind or beyond (`behind, between and beyond rights') and with all desired combinations of aircraft (`change of gauge'). That total freedom has been complemented by provisions concerning opportunities for the airlines concerned to conclude code-sharing agreements and by provisions stimulating competition or non-discrimination, in relation to CRSs for example.
36 It follows that the amendments made in 1995 to the 1944 Agreement have had the effect of creating the framework of a more intensive cooperation between the United States of America and the Kingdom of Sweden, which entails new and significant international commitments for the latter.
37 It must be pointed out, moreover, that the amendments made in 1995 provide proof of a renegotiation of the 1944 Agreement in its entirety.  It follows that, while some provisions of the agreement were not formally modified by the amendments made in 1995 or were subject only to marginal changes in drafting, the commitments arising from those provisions were none the less confirmed during the renegotiation.  In such a case, the Member States are prevented not only from contracting new international commitments but also from maintaining such commitments in force if they disregard Community law (see, to that effect, Case C-62/98 Commission v Portugal [2000] ECR I-5171; Case C-84/98 Commission v Portugal [2000] ECR I-5215).
38 In particular, that finding applies to access to intra-Community routes granted to airlines designated by the United States of America. Even if, as the Swedish Government maintains, that access originates in commitments entered into before 1995, it is clear from Section 1 of Annex I to the 1944 Agreement, concerning the list of routes, as amended in 1995, that access for carriers designated by the United States of America to intra-Community routes was, at the very least, reconfirmed in 1995 in the context of an exchange of traffic rights agreed by the two States.
39 The same is true of the clause on the ownership and control of airlines, the wording of which, as set out in paragraph 29 above, was already included in the 1944 Agreement.  Furthermore, it must be regarded as undisputed that, as the Advocate General rightly pointed out in paragraphs 136 to 138 of his Opinion, the amendments made to the 1944 Agreement in its entirety in 1995 affect the scope of the provisions, such as that clause, which were not formally modified by the amendments, or were modified only to a limited extent.
40 It follows that all the international commitments challenged in the principal claim must be assessed in relation to the provisions of Community law cited by the Commission in support of that claim which were in force at the time when those commitments were entered into or confirmed, namely in 1995 in any event.
78 According to the Court's case-law, that is the case where the international commitments fall within the scope of the common rules (AETR judgment, paragraph 30) or in any event within an area which is already largely covered by such rules (Opinion 2/91, paragraph 25). In the latter case, the Court has held that Member States may not enter into international commitments outside the framework of the Community institutions, even if there is no contradiction between those commitments and the common rules (Opinion 2/91, paragraphs 25 and 26).
80 The same applies, even in the absence of any express provision authorising its institutions to negotiate with non-member countries, where the Community has achieved complete harmonisation in a given area, because the common rules thus adopted could be affected within the meaning of the AETR judgment if the Member States retained freedom to negotiate with non-member countries (Opinion 1/94, paragraph 96; Opinion 2/92, paragraph 33).
93 In that regard, it should be noted, first, that, according to Article 1(2)(a) of Regulation No 2409/92, that regulation does not apply to fares and rates charged by air carriers other than Community air carriers, that restriction however being stated to be `without prejudice to paragraph 3' of the same article. Under Article 1(3) of Regulation No 2409/92, only Community air carriers are entitled to introduce new products or fares lower than the ones existing for identical products.
94 It follows from those provisions, taken together, that Regulation No 2409/92 has, indirectly but definitely, prohibited air carriers of non-member countries which operate in the Community from introducing new products or fares lower than the ones existing for identical products. By proceeding in that way, the Community legislature has limited the freedom of those carriers to set fares and rates, where they operate on intra-Community routes by virtue of the fifth-freedom rights which they enjoy. Accordingly, to the extent indicated in Article 1(3) of Regulation No 2409/92, the Community has acquired exclusive competence to enter into commitments with non-member countries relating to that limitation on the freedom of non-Community carriers to set fares and rates.
95 It follows that, since the entry into force of Regulation No 2409/92, the Kingdom of Sweden has no longer been entitled to enter on its own into international commitments concerning the fares and rates to be charged by carriers of non-member countries on intra-Community routes.
96 The documents before the Court show that a commitment of that type was entered into by the Kingdom of Sweden by virtue of the amendments made in 1995 to Article 9 of the 1944 Agreement, which was rewritten. By proceeding in that way, that Member State thus infringed the Community's exclusive external competence resulting from Article 1(3) of Regulation No 2409/92.
98 Secondly, it follows from Articles 1 and 7 of Regulation No 2299/89 that, subject to reciprocity, that regulation also applies to nationals of non-member countries, where they offer for use or use a CRS in Community territory.
99 By the effect of that regulation, the Community thus acquired exclusive competence to contract with non-member countries the obligations relating to CRSs offered for use or used in its territory.
100 It is not in dispute that the amendments made in 1995 to the 1944 Agreement added an Annex III to that agreement, concerning the principles relating to CRSs, including those applying to CRSs offered for use or used in Swedish territory. By acting in that way, the Kingdom of Sweden infringed the exclusive external competence of the Community arising from Regulation No 2299/89.
106 Article 5 of the Treaty requires Member States to facilitate the achievement of the Community's tasks and to abstain from any measure which could jeopardise the attainment of the objectives of the Treaty.
107 In the area of external relations, the Court has held that the Community's tasks and the objectives of the Treaty would be compromised if Member States were able to enter into international commitments containing rules capable of affecting rules adopted by the Community or of altering their scope (see Opinion 2/91, paragraph 11, and also, to that effect, the AETR judgment, paragraphs 21 and 22).
108 It follows from the foregoing considerations that, by contracting international commitments concerning air fares and rates charged by carriers designated by the United States of America on intra-Community routes and concerning CRSs offered for use or used in Swedish territory, the Kingdom of Sweden has failed to fulfil its obligations under Article 5 of the Treaty and under Regulations Nos 2409/92 and 2299/89.
Infringement of Article 52 of the Treaty
Arguments of the parties
113 As regards the applicability of Article 52 of the Treaty in this case, it should be pointed out that that provision, which the Kingdom of Sweden is charged with infringing, applies in the field of air transport.
114 Whereas Article 61 of the EC Treaty (now, after amendment, Article 51 EC) precludes the Treaty provisions on the freedom to provide services from applying to transport services, the latter being governed by the provisions of the title concerning transport, there is no article in the Treaty which precludes its provisions on freedom of establishment from applying to transport.
115 Article 52 of the Treaty is in particular properly applicable to airline companies established in a Member State which supply air transport services between a Member State and a non-member country. All companies established in a Member State within the meaning of Article 52 of the Treaty are covered by that provision, even if their business in that State consists of services directed to non-member countries.
117 Articles 52 and 58 of the Treaty thus guarantee nationals of Member States of the Community who have exercised their freedom of establishment and companies or firms which are assimilated to them the same treatment in the host Member State as that accorded to nationals of that Member State (see Case C-307/97 Saint-Gobain v Finanzamt Aachen-Innenstadt [1999] ECR I-6161, paragraph 35), both as regards access to an occupational activity on first establishment and as regards the exercise of that activity by the person established in the host Member State.
118 The Court has thus held that the principle of national treatment requires a Member State which is a party to a bilateral international treaty with a non-member country for the avoidance of double taxation to grant to permanent establishments of companies resident in another Member State the advantages provided for by that treaty on the same conditions as those which apply to companies resident in the Member State that is party to the treaty (see Saint-Gobain, paragraph 59; Case C-55/00 Gottardo v INPS [2002] ECR I-413, paragraph 32).