Klaus Konle v Republik Österreich.
Date: 1999-06-01
7 Furthermore, under Section 13(1) of the TGVG 1993, authorisation may be granted to a foreigner only on condition that the intended purchase does not conflict with the policy interests of the State and there is an economic, cultural or social interest in acquisition by the foreigner. That rule is not, however, applicable where it is precluded by obligations under international agreements (Section 13(2) of the TGVG 1993).
20 In those circumstances, the Landesgericht für Zivilrechtssachen Wien took the view that the solution of the dispute required an interpretation of the relevant provisions of the Treaty and the Act of Accession and referred the following questions to the Court of Justice for a preliminary ruling:
`1. Does it follow from the interpretation of Article 6 of the EC Treaty, Article 52 et seq. (Part Three, Title III, Chapter 2) of the EC Treaty and Article 73b et seq. (Part Three, Title III, Chapter 4) of the EC Treaty and Article 70 of the Act of Accession (Act concerning the conditions of accession of ... the Republic of Austria ... and the adjustments to the treaties on which the European Union is founded) that
(a) in that, while the TGVG 1993 was in force, the plaintiff was required to prove that he would not establish a holiday residence, whereas in the case of an acquisition by an Austrian a mere declaration under Section 10(2) would have sufficed to obtain the authorisation of the land transactions authority, and he was refused such authorisation, and
(b) in that, under the TGVG 1996, the plaintiff, even before his property right is entered in the land register, must - as is now also the case for Austrians - undergo an authorisation procedure, the possibility of making an effective declaration that no holiday residence is being created no longer existing for Austrians either,
Community law was infringed and the plaintiff injured in respect of a fundamental freedom guaranteed by provisions of Community law?
2. If Question 1 is answered in the affirmative, is it for the Court of Justice in proceedings under Article 177 of the EC Treaty also to decide whether a breach of Community law is "sufficiently serious" (as the phrase is used, for example, in the judgment in Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame)?
3. If Questions 1 and 2 are answered in the affirmative, is the breach "sufficiently serious"?
4. Is the principle of the liability of Member States for the damage caused to an individual by breaches of Community law complied with, on a proper interpretation of Article 5 of the EC Treaty, if the national law on liability of a Member State with a federal structure lays down that in the case of infringements attributable to a part of the State, the injured party may claim only against that part of the State, not the State as a whole?'
The first question
22 First of all, it is common ground that national legislation on the acquisition of land must comply with the provisions of the Treaty on freedom of establishment for nationals of Member States and the free movement of capital. The Court has already held that, as is apparent from Article 54(3)(e) of the Treaty, the right to acquire, use or dispose of immovable property on the territory of another Member State is the corollary of freedom of establishment (Case 305/87 Commission v Greece [1989] ECR 1461, paragraph 22). As for capital movements, they include investments in real estate on the territory of a Member State by non-residents, as is clear from the nomenclature of capital movements set out in Annex I to Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5).
The scheme established under the TGVG 1993
23 Section 10(2) of the TGVG 1993, which exempts only Austrian nationals from having to obtain authorisation before acquiring a plot of land which is built on and thus from having to demonstrate, to that end, that the planned acquisition will not be used to establish a secondary residence, creates a discriminatory restriction against nationals of other Member States in respect of capital movements between Member States.
27 Determination of the content of the existing legislation regarding secondary residences on 1 January 1995, the date of the accession of the Republic of Austria, is, in principle, a matter for the national court. It is, however, for the Court of Justice to supply it with guidance on interpreting the Community concept of `existing legislation' in order to enable it to carry out that determination.
28 The concept of `existing legislation' within the meaning of Article 70 of the Act of Accession is based on a factual criterion, so that its application does not require an assessment of the validity in domestic law of the national provisions at issue. Thus, any rule regarding secondary residences which was in force in the Republic of Austria at the date of accession is, in principle, covered by the derogation laid down in Article 70 of the Act of Accession.
29 It would be otherwise if that rule were withdrawn from the domestic legal system by a decision subsequent to the date of accession but with retroactive effect from before that date, thereby eliminating the provision in question as regards the past.
30 In proceedings for a preliminary ruling, it is for the courts of the Member State concerned to assess the temporal effects of declarations of unconstitutionality made by the constitutional court of that Member State.
33 However, as the Court has consistently held, it can refrain from giving a preliminary ruling on a question submitted by a national court only where it is quite obvious that the interpretation or assessment of validity of Community law sought by that court bears no relation to the actual facts of the main action or its purpose, or where the problem is hypothetical and the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, inter alia, Case C-415/93 Union Royale Belge des Sociétés de Football Association and Others v Bosman and Others [1995] ECR I-4921, paragraph 61).
38 In that regard, although the system of property ownership continues to be a matter for each Member State under Article 222 of the Treaty, that provision does not have the effect of exempting such a system from the fundamental rules of the Treaty (see Case 182/83 Fearon v Irish Land Commission [1984] ECR 3677, paragraph 7).
39 Accordingly, a procedure of prior authorisation, such as that under the TGVG 1996, which entails, by its very purpose, a restriction on the free movement of capital, can be regarded as compatible with Article 73b of the Treaty only on certain conditions.
40 In that regard, to the extent that a Member State can justify its requirement of prior authorisation by relying on a town and country planning objective such as maintaining, in the general interest, a permanent population and an economic activity independent of the tourist sector in certain regions, the restrictive measure inherent in such a requirement can be accepted only if it is not applied in a discriminatory manner and if the same result cannot be achieved by other less restrictive procedures.
41 As to the first condition, it is not possible for the person seeking authorisation to provide incontrovertible proof of the future use of the land to be acquired. The administrative authorities thus have, in determining the probative value of the information received, considerable latitude which is closely related to a discretionary power. Furthermore, the explanatory memoranda drawn up by the administrative authorities of the Land of Tyrol on Section 25 of the TGVG 1996, which were produced by the applicant in the main proceedings and the significance of which for the interpretation of the Law has been accepted by the Republic of Austria, reveal the intention of using the means of assessment offered by the authorisation procedure in order to subject applications from foreigners, including nationals of Member States of the Community, to a more thorough check than applications from Austrian nationals. In addition, the accelerated authorisation procedure laid down in Section 25(2) is presented in that document as designed to replace the declaration procedure laid down in Section 10(2) of the TGVG 1993 and reserved for Austrians alone.
44 The Court of Justice has, however, taken the view that provisions making currency exports conditional upon prior authorisation, in order to allow Member States to exercise supervision, may not cause the exercise of a freedom guaranteed by the Treaty to be subject to the discretion of the administrative authorities and thus be such as to render that freedom illusory (Joined Cases 286/82 and 26/83 Luisi and Carbone v Ministero del Tesoro [1984] ECR 377, paragraph 34; Joined Cases C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361, paragraph 25; and Joined Cases C-163/94, C-165/94 and C-250/94 Sanz de Lera and Others [1995] ECR I-4821, paragraph 25). The Court has stated that the restriction on the free movement of capital resulting from the requirement of prior authorisation could be eliminated, by virtue of an adequate system of declaration, without thereby detracting from the effective pursuit of the aims of those rules (see Bordessa and Others, paragraph 27, and Sanz de Lera and Others, paragraphs 26 and 27).
45 That reasoning cannot be applied directly to a procedure prior to the acquisition of immoveable property, since the intervention of the administrative authorities does not, in that case, pursue the same objective. National administrative authorities cannot lawfully prevent a transfer of currency, with the result that their supervision, which reflects essentially a need for information, can also, in that field, take the form of a compulsory declaration. However, prior verification, in connection with the acquisition of property ownership, does not reflect merely a need for information, but can result in a refusal to grant authorisation, without necessarily being contrary to Community law.
46 A procedure simply involving a declaration does not, therefore, in itself enable the aim pursued to be achieved in the context of a procedure for prior authorisation. In order to ensure that the land is used in accordance with its intended purpose, as it appears from the national legislation in force, Member States must also be able to take measures where a breach of the agreed declaration is duly established after the property has been acquired.
47 It is sufficient to note in that regard that an infringement of national legislation on secondary residences such as that at issue in the main proceedings may be penalised by a fine, by a decision requiring the acquirer to terminate the unlawful use of the land forthwith under penalty of its compulsory sale, or by a declaration that the sale is void resulting in the reinstatement in the land register of the entries prior to the acquisition of the property. Moreover, it is clear from the Austrian Government's replies to the questions from the Court that Austrian law provides for mechanisms of that kind.
48 Furthermore, by adopting the TGVG 1993, the legislature of the Tyrol had itself acknowledged that prior declaration, established for the benefit of Austrian nationals, constituted an effective means of supervision capable of preventing the property concerned from being acquired as a secondary residence.
52 Any measure adopted after the date of accession is not, by that fact alone, automatically excluded from the derogation laid down in Article 70 of the Act of Accession. Thus, if it is, in substance, identical to the previous legislation or if it is limited to reducing or eliminating an obstacle to the exercise of Community rights and freedoms in the earlier legislation, it will be covered by the derogation.
53 On the other hand, legislation based on an approach which differs from that of the previous law and establishes new procedures cannot be treated as legislation existing at the time of accession. That is true of the TGVG 1996 which includes a number of significant differences when compared with the TGVG 1993 and which, even if it brings to an end, in principle, the dual scheme of land acquisition which existed before, does not thereby improve the treatment reserved for nationals of Member States other than the Republic of Austria, since it also lays down detailed rules for examining applications for authorisation which are designed, in practice, as the Court stated at paragraph 41 above, to favour applications from Austrian nationals.
58 It is clear from the case-law of the Court that it is, in principle, for the national courts to apply the criteria to establish the liability of Member States for damage caused to individuals by breaches of Community law (Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029, paragraph 58), in accordance with the guidelines laid down by the Court for the application of those criteria (Brasserie du Pêcheur and Factortame, paragraphs 55 to 57; Case C-392/93 The Queen v H.M. Treasury, ex parte British Telecommunications [1996] ECR I-1631; Joined Cases C-178/94, C-179/94, C-188/94, C-189/94 and C-190/94 Dillenkofer and Others v Federal Republic of Germany [1996] ECR I-4845; and Joined Cases C-283/94, C-291/94 and C-292/94 Denkavit Internationaal and Others v Bundesamt für Finanzen [1996] ECR I-5063).
62 It is for each Member State to ensure that individuals obtain reparation for damage caused to them by non-compliance with Community law, whichever public authority is responsible for the breach and whichever public authority is in principle, under the law of the Member State concerned, responsible for making reparation. A Member State cannot, therefore, plead the distribution of powers and responsibilities between the bodies which exist in its national legal order in order to free itself from liability on that basis.
63 Subject to that reservation, Community law does not require Member States to make any change in the distribution of powers and responsibilities between the public bodies which exist on their territory. So long as the procedural arrangements in the domestic system enable the rights which individuals derive from the Community legal system to be effectively protected and it is not more difficult to assert those rights than the rights which they derive from the domestic legal system, the requirements of Community law are fulfilled.
64 The answer to the fourth question must therefore be that, in Member States with a federal structure, reparation for damage caused to individuals by national measures taken in breach of Community law need not necessarily be provided by the federal State in order for the obligations of the Member State concerned under Community law to be fulfilled.