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The Court clarifies the term ‘establishment’ in connection with collective redundancies | 30 April 2015 ( *1 )‛Reference for a preliminary ruling — Social policy — Collective redundancies — Directive 98/59/EC — Article 1(1)(a) — Meaning of ‘establishment’ — Method of calculating the number of workers made redundant’In Case C‑80/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Court of Appeal of England and Wales (Civil Division) (United Kingdom), made by decision of 5 February 2014, received at the Court on 14 February 2014, in the proceedings Union of Shop, Distributive and Allied Workers (USDAW), B. Wilson v WW Realisation 1 Ltd, in liquidation, Ethel Austin Ltd, Secretary of State for Business, Innovation and Skills, THE COURT (Fifth Chamber),composed of T. von Danwitz, President of the Chamber, C. Vajda, A. Rosas, E. Juhász (Rapporteur) and D. Šváby, Judges,Advocate General: N. Wahl,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 20 November 2014,after considering the observations submitted on behalf of:—the Union of Shop, Distributive and Allied Workers (USDAW) and Mrs Wilson, by D. Rose QC and I. Steele, Barrister, instructed by M. Cain, Solicitor,the United Kingdom Government, by L. Christie, acting as Agent, T. Ward QC and J. Holmes, Barrister,the Spanish Government, by L. Banciella Rodríguez-Miñón and M.J. García-Valdecasas Dorrego, acting as Agents,the Hungarian Government, by M. Fehér, G. Koós and A. Pálfy, acting as Agents,the European Commission, by J. Enegren, R. Vidal Puig and J. Samnadda, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 5 February 2015,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 1(1)(a) of Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (OJ 1998 L 225, p. 16).2The request has been made in proceedings between the Union of Shop, Distributive and Allied Workers (USDAW) and Mrs Wilson, on the one hand, and WW Realisation 1 Ltd, in liquidation (‘Woolworths’), on the other, and between USDAW, on the one hand, and Ethel Austin Ltd (‘Ethel Austin’) and the Secretary of State for Business, Innovation and Skills (‘the Secretary of State for Business’), on the other, concerning the lawfulness of the dismissals made by Woolworths and Ethel Austin. The Secretary of State for Business was joined as a party to the main proceedings on the basis that, if a ‘protective award’ is made against Woolworths or Ethel Austin but they are unable to satisfy that award, he will be required to pay to those employees who make an application the amount to which, in his opinion, the employee is entitled in respect of that debt, up to a statutory maximum. Legal context EU law 3According to recital 1 in the preamble to Directive 98/59, that directive consolidated Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies (OJ 1975 L 48, p. 29).4As set out in recital 2 of Directive 98/59, it is important that greater protection should be afforded to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the European Union.5Recitals 3 and 4 of that directive state:‘(3)Whereas, despite increasing convergence, differences still remain between the provisions in force in the Member States concerning the practical arrangements and procedures for such redundancies and the measures designed to alleviate the consequences of redundancy for workers;(4)Whereas these differences can have a direct effect on the functioning of the internal market’.6Recital 7 of the directive emphasises the need to promote the approximation of the laws of the Member States relating to collective redundancies.7Article 1 of the directive, entitled ‘Definitions and scope’, provides:‘1. For the purposes of this Directive:(a)“collective redundancies” means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:(i)either, over a period of 30 days:at least 10 in establishments normally employing more than 20 and less than 100 workers,at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,at least 30 in establishments normally employing 300 workers or more,(ii)or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question;…For the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employer’s initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies.2. This Directive shall not apply to:collective redundancies effected under contracts of employment concluded for limited periods of time or for specific tasks except where such redundancies take place prior to the date of expiry or the completion of such contracts;…’8Under Article 2 of the directive:‘1. Where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching an agreement.2. These consultations shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.3. To enable workers’ representatives to make constructive proposals, the employers shall in good time during the course of the consultations:supply them with all relevant information and(b)in any event notify them in writing of:the reasons for the projected redundancies;the number and categories of workers to be made redundant;(iii)the number and categories of workers normally employed;(iv)the period over which the projected redundancies are to be effected;(v)the criteria proposed for the selection of the workers to be made redundant in so far as national legislation and/or practice confers the power therefor upon the employer;(vi)the method for calculating any redundancy payments other than those arising out of national legislation and/or practice.The employer shall forward to the competent public authority a copy of, at least, the elements of the written communication which are provided for in the first subparagraph, point (b), subpoints (i) to (v).9Article 3(1) of the directive provides:‘Employers shall notify the competent public authority in writing of any projected collective redundancies.This notification shall contain all relevant information concerning the projected collective redundancies and the consultations with workers’ representatives provided for in Article 2, and particularly the reasons for the redundancies, the number of workers to be made redundant, the number of workers normally employed and the period over which the redundancies are to be effected.’10Article 4(1) and (2) of the directive is worded as follows:‘1. Projected collective redundancies notified to the competent public authority shall take effect not earlier than 30 days after the notification referred to in Article 3(1) without prejudice to any provisions governing individual rights with regard to notice of dismissal.Member States may grant the competent public authority the power to reduce the period provided for in the preceding subparagraph.2. The period provided for in paragraph 1 shall be used by the competent public authority to seek solutions to the problems raised by the projected collective redundancies.’11Article 5 of the directive provides:‘This Directive shall not affect the right of Member States to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers.’ United Kingdom law 12The Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULRCA’) is intended to implement the United Kingdom’s obligations under Directive 98/59.13Section 188(1) of the TULRCA is worded as follows:‘Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.’14Under section 189(1) of the TULRCA, where an employer fails to comply inter alia with one of the requirements relating to that consultation, a complaint may be presented to an employment tribunal on that ground by the relevant trade union in the case of failure relating to representatives of a trade union, or, in any other case, by any of the affected employees or by any of the employees who have been dismissed as redundant. If the complaint is well founded, the payment of an amount by way of compensation, a ‘protective award’, may be ordered under section 189(2) of the TULRCA.15Section 189(3) of the TULRCA states that a protective award is an award in respect of employees who have been dismissed as redundant or whom it is proposed to dismiss as redundant and in respect of whose dismissal or proposed dismissal, the employer has failed to comply, inter alia, with one of the requirements relating to consultation.16Under section 190(1) of the TULRCA, where a protective award is made, every employee of a description to which the award relates is, in principle, entitled to be paid remuneration by his employer for the protected period.17Section 192(1) of the TULRCA provides that an employee of a description to which a protective award relates may present a complaint to an employment tribunal on the ground that his employer has failed, wholly or in part, to pay him remuneration under the award. Where the complaint is well founded, the tribunal is to order the employer to pay him the amount of remuneration due, in accordance with section 192(3) of the TULRCA.18Part XII of the Employment Rights Act 1996 (‘ERA’) is intended to implement the United Kingdom’s obligations under Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (OJ 2008 L 283, p. 36).19Section 182 of the ERA provides:‘If, on an application made to him in writing by an employee, the Secretary of State is satisfied thatthe employee’s employer has become insolvent,the employee’s employment has been terminated, and(c)on the appropriate date the employee was entitled to be paid the whole or part of any debt to which [Part XII of the ERA] applies,the Secretary of State shall, subject to section 186, pay the employee out of the National Insurance Fund the amount to which, in the opinion of the Secretary of State, the employee is entitled in respect of the debt.’20Section 183 of the ERA sets out the circumstances in which an employer has become insolvent.21Under section 184(1) of the ERA, the debts to which Part XII applies include any arrears of pay in respect of one or more weeks, up to a maximum of eight.22Section 184(2) of the ERA specifies that remuneration under a protective award under section 189 of the TULRCA is to be treated as arrears of pay.23Section 188 of the ERA provides that a person who has applied for a payment under section 182 of the ERA may present a complaint to an employment tribunal in the event that the Secretary of State for Business fails to make any such payment, or that the payment made is less than the amount which should have been paid. Where the tribunal finds that the Secretary of State for Business ought to make a payment under section 182, it is to make a declaration to that effect and determine the amount of the payment to be made. The dispute in the main proceedings and the questions referred for a preliminary ruling 24Woolworths and Ethel Austin were companies active in the high street retail sector throughout the United Kingdom, operating chains of stores under the trade names ‘Woolworths’ and ‘Ethel Austin’ respectively. They became insolvent and went into administration, which resulted in the dismissal on grounds of redundancy of thousands of employees across the United Kingdom.25Against that background, USDAW, in its capacity as a trade union organisation, brought claims before the Liverpool Employment Tribunal and the London Central Employment Tribunal against those two companies on behalf of several thousand of its members, former employees of those companies, who had been dismissed on grounds of redundancy.26USDAW has over 430000 members across the United Kingdom, who work in a wide variety of occupations.27Mrs Wilson was employed at one of the stores in the ‘Woolworths’ chain in Saint Ives (United Kingdom), and was the USDAW representative on the national employee forum (known as the ‘Colleague Circle’) created by Woolworths to deal with various issues, including consultations prior to collective redundancies.28USDAW and Mrs Wilson sought protective awards against the employers in favour of the dismissed employees on the ground that, prior to the adoption of the redundancy programmes, the consultation procedure provided for in the TULRCA had not been followed.29Under the relevant provisions of the ERA, if protective awards were made against Woolworths or Ethel Austin but they were not in a position to satisfy them, an employee could require the Secretary of State for Business to pay, and he would be required to pay that award, up to the statutory maximum, as arrears of pay. If the Secretary of State were to fail to pay the amount due, the employment tribunal would judicially compel him to do so, on application by the employee concerned.30By decisions of 2 November 2011 and 18 January 2012 respectively, the Liverpool Employment Tribunal and the London Central Employment Tribunal made protective awards in favour of a number of employees dismissed by Woolworths and Ethel Austin. However, approximately 4500 former employees were denied a protective award on the ground that they had worked at stores with fewer than 20 employees, and that each store was to be regarded as a separate establishment.31USDAW and Mrs Wilson appealed against those decisions to the Employment Appeal Tribunal, which held, in a judgment of 30 May 2013, that a reading of section 188(1) of the TULRCA compatible with Directive 98/59 required the deletion of the words ‘at one establishment’, pursuant to the obligation placed on the national court by the judgment in Marleasing (C‑106/89, EC:C:1990:395) to interpret its national law in the light of the wording and the purpose of the directive concerned. The Employment Appeal Tribunal also held that USDAW and Mrs Wilson could rely on the direct effect of rights under Directive 98/59 on the ground that the Secretary of State for Business was a party to the case, and that he was responsible for payment of the protective awards to all of the employees. It is further apparent from that judgment that the prior consultation obligation applies whenever an employer is proposing to dismiss as redundant 20 or more employees within a period of 90 days or less, regardless of the particular establishments at which they work.32It is in that context that the Secretary of State for Business applied for permission to appeal to the referring court, which permission was granted by the Employment Appeal Tribunal by order of 26 September 2013.33The referring court states that it is common ground between the parties to the main proceedings that when transposing Directive 98/59 the United Kingdom chose the option set out in Article 1(1)(a)(ii) of that directive.34That court states that USDAW and Mrs Wilson have submitted before it that the concept of ‘collective redundancy’ in Article 1(1)(a)(ii) of Directive 98/59 is not limited to a situation in which at least 20 employees in each establishment are made redundant over a period of 90 days, but encompasses a situation in which at least 20 employees of the same employer are made redundant over a period of 90 days, whatever the number of workers at the establishments in question, that is to say, the establishments at which the redundancies are made.35USDAW and Mrs Wilson submit, in the alternative, that even if that provision of Directive 98/59 is to be read as referring to at least 20 workers being made redundant at each establishment, the term ‘establishment’ is to be construed as consisting of the whole of the retail business operated by Woolworths and Ethel Austin, respectively. They submit that it is the retail business as a whole that is an economic business unit.36According to USDAW and Mrs Wilson, to regard each store as constituting an establishment for the purposes of the provision would lead to unjust and arbitrary results where, as in the present case, a large retailer closes down almost all of its business, making redundant a large number of employees at several sales outlets, some employing 20 employees or more, some employing fewer. They submit that in such a situation it does not make sense for the employees of the largest stores to be entitled to a consultation procedure before their collective redundancy, while those who work at smaller stores are denied such consultation.37USDAW and Mrs Wilson further submit that since, regardless of the store at which they work, the employees are part of the same redundancy exercise, and the objective of Directive 98/59 is to afford greater protection to workers, such an interpretation of Directive 98/59 would encourage employers to divide up their activities so as avoid the obligations laid down in that directive.38USDAW and Mrs Wilson submit that, since the Secretary of State for Business is liable for payment of the protective awards pursuant to Directive 2008/94, they are entitled to rely on the effects of Directive 98/59 under the principle of vertical direct effect, which applies to that directive.39Before the referring court, the Secretary of State for Business, referring to the judgments in Rockfon (C‑449/93, EU:C:1995:420) and Athinaïki Chartopoiïa (C‑270/05, EU:C:2007:101), contends that the term ‘establishment’, for the purposes of Article 1(1)(a)(ii) of Directive 98/59, means the unit to which the workers are assigned to carry out their duties, and that the same meaning should be conferred on that term as that given to it for the purposes of Article 1(1)(a)(i) of Directive 75/129 and Article 1(1)(a)(i) of Directive 98/59.40The Secretary of State for Business adds that, if the EU legislature had intended Article 1(1)(a)(ii) to refer to all the workers employed by an employer, it would have used a term other than ‘establishment’, for example ‘undertaking’ or ‘employer’.41It follows, in his view, that if 19 employees of an establishment are made redundant, there is no ‘collective redundancy’ within the meaning of Directive 98/59, whereas if 20 employees are made redundant, the rights guaranteed by that directive are applicable.42In those circumstances, the Court of Appeal of England and Wales (Civil Division) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)In Article 1(1)(a)(ii) of [Directive 98/59], does the phrase “at least 20” refer to the number of dismissals across all of the employer’s establishments in which dismissals are effected within a 90 day period, or does it refer to the number of dismissals in each individual establishment?If Article 1(1)(a)(ii) [of that directive] refers to the number of dismissals in each individual establishment, what is the meaning of “establishment”? In particular, should “establishment” be construed to mean the whole of the relevant retail business, being a single economic business unit, or such part of that business as is contemplating making redundancies, rather than a unit to which a worker is assigned their duties, such as each individual store?(2)In circumstances where an employee claims a protective award against a private employer, can the Member State [concerned] rely on or plead the fact that [Directive 98/59] does not give rise to directly effective rights against the employer in circumstances where:the private employer would, but for the failure by the Member State properly to implement the directive, have been liable to pay a protective award to the employee, because of the failure of that employer to consult in accordance with the directive; andthat employer being insolvent, in the event that a protective award is made against the private employer and is not satisfied by that employer, and an application is made to the Member State, that Member State would itself be liable to pay any such protective award to the employee under domestic legislation that implements [Directive 2008/94], subject to any limitation of liability imposed on the Member State’s guarantee institution pursuant to Article 4 of that directive?’ Consideration of the questions referred 43By its first question, the referring court asks, in essence, first, whether the term ‘establishment’ in Article 1(1)(a)(ii) of Directive 98/59 is to be interpreted in the same way as the term ‘establishment’ in Article 1(1)(a)(i) of that directive and, secondly, whether Article 1(1)(a)(ii) of Directive 98/59 is to be interpreted as precluding national legislation that lays down an obligation to inform and consult workers in the event of the dismissal, within a period of 90 days, of at least 20 workers from a particular establishment of an undertaking, and not where the aggregate number of dismissals across all of the establishments or across some of the establishments of an undertaking over the same period reaches or exceeds the threshold of 20 workers.44It is apparent from the order for reference and the observations submitted to the Court that, when transposing Directive 98/59, the United Kingdom opted for the threshold for its application set out in Article 1(1)(a)(ii) of that directive. Under the applicable national law, where an employer is proposing to shed at least 20 jobs at an establishment within a period of 90 days, he is required to comply with a procedure for informing and consulting workers in connection with that proposal.45It should be stated from the outset in this connection that, in accordance with the case-law of the Court, the term ‘establishment’, which is not defined in Directive 98/59, is a term of EU law and cannot be defined by reference to the laws of the Member States (see, to that effect, judgment in Rockfon, C‑449/93, EU:C:1995:420, paragraph 25). It must, on that basis, be interpreted in an autonomous and uniform manner in the EU legal order (see, to that effect, judgment in Athinaïki Chartopoiïa, C‑270/05, EU:C:2007:101, paragraph 23).46The Court has already interpreted the term ‘establishment’ or ‘establishments’ in Article 1(1)(a) of Directive 98/59.47In paragraph 31 of the judgment in Rockfon (C‑449/93, EU:C:1995:420), the Court observed, referring to paragraph 15 of the judgment in Botzen and Others (186/83, EU:C:1985:58), that an employment relationship is essentially characterised by the link existing between the worker and the part of the undertaking or business to which he is assigned to carry out his duties. The Court therefore decided, in paragraph 32 of the judgment in Rockfon (C‑449/93, EU:C:1995:420), that the term ‘establishment’ in Article 1(1)(a) of Directive 98/59 must be interpreted as designating, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties. It is not essential in order for there to be an ‘establishment’ that the unit in question is endowed with a management that can independently effect collective redundancies.48It is apparent from paragraph 5 of the judgment in Rockfon (C‑449/93, EU:C:1995:420) that the Kingdom of Denmark — the Member State of the court which made the request for a preliminary ruling in that case — had opted for the approach set out in Article 1(1)(a)(i) of the directive.49In the judgment in Athinaïki Chartopoiïa (C‑270/05, EU:C:2007:101), the Court further clarified the term ‘establishment’, inter alia by holding, in paragraph 27 of that judgment, that, for the purposes of the application of Directive 98/59, an ‘establishment’, in the context of an undertaking, may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.50By the use of the words ‘distinct entity’ and ‘in the context of an undertaking’, the Court clarified that the terms ‘undertaking’ and ‘establishment’ are different and that an establishment normally constitutes a part of an undertaking. That does not, however, preclude the establishment being the same as the undertaking where the undertaking does not have several distinct units.51In paragraph 28 of the judgment in Athinaïki Chartopoiïa (C‑270/05, EU:C:2007:101), the Court held that since Directive 98/59 concerns the socio-economic effects that collective redundancies may have in a given local context and social environment, the entity in question need not have any legal autonomy, nor need it have economic, financial, administrative or technological autonomy, in order to be regarded as an ‘establishment’.52Consequently, according to the case-law of the Court, where an ‘undertaking’ comprises several entities meeting the criteria set out in paragraphs 47, 49 and 51 above, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’ for the purposes of Article 1(1)(a) of Directive 98/59.53That case-law is applicable to the present case.54The meaning of the terms ‘establishment’ or ‘establishments’ in Article 1(1)(a)(i) of Directive 98/59 is the same as that of the terms ‘establishment’ or ‘establishments’ in Article 1(1)(a)(ii) of that directive.55The fact, noted during the hearing before the Court, that the term ‘establishment’ is used in the plural inter alia in the English, French, Italian and Spanish versions of that provision is of no account. In those language versions, the term ‘establishments’ is used in the plural in both Article 1(1)(a)(i) and (a)(ii). In addition, as the Advocate General observed in point 53 of his Opinion, a number of other language versions of Article 1(1)(a)(ii) of Directive 98/59 use that term in the singular, which precludes the interpretation that the threshold provided for in the latter provision refers to all the ‘establishments’ of an ‘undertaking’.56The option in Article 1(1)(a)(ii) of Directive 98/59, with the exception of the difference in the periods over which the redundancies are made, is a substantially equivalent alternative to the option in Article 1(1)(a)(i).57There is nothing in the wording of Article 1(1)(a) of Directive 98/59 to suggest that a different meaning is to be given to the terms ‘establishment’ or ‘establishments’ in the same subparagraph of that provision.58In the judgment in Athinaïki Chartopoiïa (C‑270/05, EU:C:2007:101) the Court did not examine whether the Hellenic Republic had opted for the approach set out in Article 1(1)(a)(i) or (a)(ii) of Directive 98/59. The operative part of that judgment refers to Article 1(1)(a) without drawing a distinction between the options set out in points (a)(i) or (a)(ii) of that provision.59The fact that the legislature offers Member States a choice between the options set out in Article 1(1)(a)(i) and (a)(ii) of Directive 98/59 indicates that the term ‘establishment’ cannot have a completely different meaning depending on which of the two alternatives proposed the Member State concerned chooses.60Furthermore, such a major difference would be contrary to the need to promote the approximation of the laws of the Member States relating to collective redundancies, a need that is emphasised in recital 7 of Directive 98/59.61As regards the question raised by the referring court as to whether Article 1(1)(a)(ii) of Directive 98/59 requires that account be taken of the dismissals effected in each establishment considered separately, interpreting that provision so as to require account to be taken of the total number of redundancies across all the establishments of an undertaking would, admittedly, significantly increase the number of workers eligible for protection under Directive 98/59, which would correspond to one of the objectives of that directive.62However, it should be recalled that the objective of that directive is not only to afford greater protection to workers in the event of collective redundancies, but also to ensure comparable protection for workers’ rights in the different Member States and to harmonise the costs which such protective rules entail for EU undertakings (see, to that effect, judgments in Commission v United Kingdom, C‑383/92, EU:C:1994:234, paragraph 16; Commission v Portugal, C‑55/02, EU:C:2004:605, paragraph 48; and Confédération générale du travail and Others, C‑385/05, EU:C:2007:37, paragraph 43).63Interpreting the term ‘establishment’ in the manner envisaged in paragraph 61 above would, first, be contrary to the objective of ensuring comparable protection for workers’ rights in all Member States and, secondly, entail very different costs for the undertakings that have to satisfy the information and consultation obligations under Articles 2 to 4 of that directive in accordance with the choice of the Member State concerned, which would also go against the EU legislature’s objective of rendering comparable the burden of those costs in all Member States.64It should be added that that interpretation would bring within the scope of Directive 98/59 not only a group of workers affected by collective redundancy but also, in some circumstances, a single worker of an establishment — possibly of an establishment located in a town separate and distant from the other establishments of the same undertaking — which would be contrary to the ordinary meaning of the term ‘collective redundancy’. In addition, the dismissal of that single worker could trigger the information and consultation procedures referred to in the provisions of Directive 98/59, provisions that are not appropriate in such an individual case.65It should be recalled, however, that Directive 98/59 establishes minimum protection with regard to informing and consulting workers in the event of collective redundancies (see judgment in Confédération générale du travail and Others, C‑385/05, EU:C:2007:37, paragraph 44). Article 5 of that directive gives Member States the right to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers.66In connection with that right, Article 5 of Directive 98/59 inter alia allows Member States to grant the protection provided for in that directive not only to workers at one establishment, within the meaning of Article 1(1)(a) of the directive, who have been or who will be made redundant, but also to all workers affected by redundancy in an undertaking or in a part of an undertaking of the same employer, the term ‘undertaking’ being understood as covering all of the separate employment units of that undertaking or of that part of the undertaking.67Although the Member States are therefore entitled to lay down more favourable rules for workers on the basis of Article 5 of Directive 98/59, they are nevertheless bound by the autonomous and uniform interpretation given to the EU law term ‘establishment’ in Article 1(1)(a)(i) and (ii) of that directive, as set out in paragraph 52 above.68It follows from the foregoing that the definition in Article 1(1)(a)(i) and (a)(ii) of Directive 98/59 requires that account be taken of the dismissals effected in each establishment considered separately.69The interpretation that the Court has given to the term ‘establishment’, recalled in paragraphs 47, 49 and 51 above, is supported by the provisions of Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community (OJ 2002 L 80, p. 29), Article 2(a) and (b) of which also establishes a clear distinction between the term ‘undertaking’ and the term ‘establishment’.70In the present case, it is apparent from the observations submitted to the Court that because the dismissals at issue in the main proceedings were effected within two large retail groups carrying out their activities from stores situated in different locations throughout the United Kingdom, employing in most cases fewer than 20 employees, the employment tribunals took the view that the stores to which the employees affected by those dismissals were assigned were separate ‘establishments’. It is for the referring court to establish whether that is the case in the light of the specific circumstances of the dispute in the main proceedings, in accordance with the case-law recalled in paragraphs 47, 49 and 51 above.71In those circumstances, the answer to the first question is that, first, the term ‘establishment’ in Article 1(1)(a)(ii) of Directive 98/59 must be interpreted in the same way as the term in Article 1(1)(a)(i) of that directive and, secondly, that Article 1(1)(a)(ii) of Directive 98/59 must be interpreted as not precluding national legislation that lays down an obligation to inform and consult workers in the event of the dismissal, within a period of 90 days, of at least 20 workers from a particular establishment of an undertaking, and not where the aggregate number of dismissals across all of the establishments or across some of the establishments of an undertaking over the same period reaches or exceeds the threshold of 20 workers.72Since the Court’s examination has not indicated that the law of the United Kingdom at issue in the main proceedings was incompatible with Directive 98/59, there is no need to reply to the second question. Costs 73Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: The term ‘establishment’ in Article 1(1)(a)(ii) of Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies must be interpreted in the same way as the term in Article 1(1)(a)(i) of that directive. Article 1(1)(a)(ii) of Directive 98/59 must be interpreted as not precluding national legislation that lays down an obligation to inform and consult workers in the event of the dismissal, within a period of 90 days, of at least 20 workers from a particular establishment of an undertaking, and not where the aggregate number of dismissals across all of the establishments or across some of the establishments of an undertaking over the same period reaches or exceeds the threshold of 20 workers. [Signatures]( *1 ) Language of the case: English. | 61f25-33e7ee8-4bc9 | EN |
The permanent deferral from blood donation for men who have had sexual relations with another man may be justified, having regard to the situation prevailing in the Member State concerned | 29 April 2015 ( *1 )‛Reference for a preliminary ruling — Public health — Directive 2004/33/EC — Technical requirements relating to blood and blood components — Blood donation — Eligibility criteria for blood donors — Criteria for permanent or temporary deferral — Persons whose sexual behaviour puts them at a high risk of acquiring severe infectious diseases that can be transmitted by blood — Man who has had sexual relations with another man — Charter of Fundamental Rights of the European Union — Articles 21(1) and 52(1) — Sexual orientation — Discrimination — Justification — Proportionality’In Case C‑528/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal administrative, Strasbourg (France), made by decision of 1 October 2013, received at the Court on 8 October 2013, in the proceedings Geoffrey Léger v Ministre des Affaires sociales, de la Santé et des Droits des femmes, Établissement français du sang, THE COURT (Fourth Chamber),composed of L. Bay Larsen, President of the Chamber, K. Jürimäe, J. Malenovský, M. Safjan (Rapporteur) and A. Prechal, Judges,Advocate General: P. Mengozzi,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—the French Government, by D. Colas and F. Gloaguen, acting as Agents,the European Commission, by C. Gheorghiu and M. Owsiany-Hornung, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 17 July 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of point 2.1 of Annex III to Commission Directive 2004/33/EC of 22 March 2004 implementing Directive 2002/98/EC of the European Parliament and of the Council as regards certain technical requirements for blood and blood components (OJ 2004 L 91, p. 25).2The request has been made in proceedings between Mr Léger and the Ministre des Affaires sociales, de la Santé et des Droits des femme (Minister for Social Affairs, Health and Women’s Rights) and the Établissement français du sang (French Blood Agency) concerning the refusal to accept Mr Léger’s blood donation on the ground that he had had sexual relations with another man. Legal context EU law Directive 2002/98/EC3Directive 2002/98/EC of the European Parliament and of the Council of 27 January 2003 setting standards of quality and safety for the collection, testing, processing, storage and distribution of human blood and blood components and amending Directive 2001/83/EC (OJ 2003 L 33, p. 30), is based on Article 152(4)(a) EC.4Recitals 1, 2, 24 and 29 in the preamble to Directive 2002/98 state:‘(1)The extent to which human blood is used therapeutically demands that the quality and safety of whole blood and blood components be ensured in order to prevent in particular the transmission of diseases.(2)The availability of blood and blood components used for therapeutic purposes is dependent largely on Community citizens who are prepared to donate. In order to safeguard public health and to prevent the transmission of infectious diseases, all precautionary measures during their collection, processing, distribution and use need to be taken making appropriate use of scientific progress in the detection and inactivation and elimination of transfusion transmissible pathogenic agents.…(24)Blood and blood components used for therapeutic purposes or for use in medical devices should be obtained from individuals whose health status is such that no detrimental effects will ensue as a result of the donation and that any risk of transmission of infectious diseases is minimised; each and every blood donation should be tested in accordance with rules which provide assurances that all necessary measures have been taken to safeguard the health of individuals who are the recipients of blood and blood components.(29)Tests should be carried out in conformity with the latest scientific and technical procedures that reflect current best practice as defined by, and regularly reviewed and updated through, an appropriate expert consultation process. This review process should also take due account of scientific advances in the detection, inactivation and elimination of pathogens which can be transmitted via transfusion.’5Article 1 of that directive provides:‘This Directive lays down standards of quality and safety of human blood and of blood components, in order to ensure a high level of human health protection.’6According to Article 2(1) of that directive:‘This Directive shall apply to the collection and testing of human blood and blood components, whatever their intended purpose, and to their processing, storage, and distribution when intended for transfusion.’7Article 18 of Directive 2002/98, entitled ‘Eligibility of donors’ provides:‘1. Blood establishments shall ensure that there are evaluation procedures in place for all donors of blood and blood components and that the criteria for donation referred to in Article 29(d) are met.2. The results of the donor evaluation and testing procedures shall be documented and any relevant abnormal findings shall be reported to the donor.’8Article 19 of that directive, entitled ‘Examination of donors’, states:‘An examination of the donor, including an interview, shall be carried out before any donation of blood or blood components. A qualified health professional shall be responsible, in particular, for giving to and gathering from donors the information which is necessary to assess their eligibility to donate and shall, on the basis thereof, assess the eligibility of donors.’9Article 20(1) of that directive, entitled ‘Voluntary and unpaid blood donation’, provides:‘Member States shall take the necessary measures to encourage voluntary and unpaid blood donations with a view to ensuring that blood and blood components are in so far as possible provided from such donations.’10Article 21 of Directive 2002/98, headed ‘Testing of donations’, provides:‘Blood establishments shall ensure that each donation of blood and blood components is tested in conformity with requirements listed in Annex IV.Member States shall ensure that blood and blood components imported into the Community are tested in conformity with requirements listed in Annex IV.’11Article 29, second paragraph, (d) of that directive is worded as follows:‘The following technical requirements and their adaptation to technical and scientific progress shall be decided in accordance with the procedure referred to in Article 28(2):(d)requirements concerning the suitability of blood and plasma donors and the screening of donated blood including:permanent deferral criteria and possible exemption thereto,temporary deferral criteria.’12Pursuant to Annex IV to that directive, headed ‘Basic testing requirements for whole blood and plasma donations’:‘The following tests must be performed for whole blood and apheresis donations, including autologous predeposit donations:testing for the following infections in the donors:Hepatitis B (HBs-Ag),Hepatitis C (Anti-HCV),HIV 1/2 (Anti-HIV 1/2),Additional tests may be required for specific components or donors or epidemiological situations.’Directive 2004/3313Article 3 of Directive 2004/33, entitled ‘Information required from donors’, states:‘Member States shall ensure that upon agreement of willingness to commence the donation of blood or blood components, donors provide the information set out in Part B of Annex II to the blood establishment.’14Article 4 of Directive 2004/33, entitled ‘Review of obligations’, provides:‘Blood establishments shall ensure that donors of whole blood and blood components comply with the eligibility criteria set out in Annex III.’15Points 2 and 4 of Annex 1 to that directive contain the following definitions:‘2.“Allogeneic donation” means blood and blood components collected from an individual and intended for transfusion to another individual, for use in medical devices or as starting material/raw material for manufacturing into medicinal products.4.“Whole blood” means a single blood donation.’16Under the heading: ‘Information to be obtained from donors by blood establishments at every donation’, Part B of Annex II to that directive, provides in point 2 that donors must provide the following information:‘Health and medical history, provided on a questionnaire and through a personal interview performed by a qualified healthcare professional, that includes relevant factors that may assist in identifying and screening out persons whose donation could present a health risk to others, such as the possibility of transmitting diseases, or health risks to themselves.’17Annex III to Directive 2004/33, entitled ‘Eligibility criteria for donors of whole blood and blood components’, sets out, in point 2, the criteria for excluding donors of whole blood and blood components.18Point 2.1 of that annex is entitled ‘Permanent deferral criteria for donors of allogeneic donations’. Those criteria concern essentially the following four categories of persons: persons who are carriers of certain diseases, including ‘HIV 1/2’ or who have certain malignant diseases; intravenous or intramuscular drug users; xenotransplant recipients; ‘persons whose sexual behaviour puts them at high risk of acquiring severe infectious diseases that can be transmitted by blood’.19Point 2.2 of that annex, headed ‘Temporary deferral criteria for donors of allogeneic donations’, contains point 2.2.2 concerning exposure to risk of acquiring a transfusion-transmissible infection.20In point 2.2.2, in the table entry concerning ‘[p]ersons whose behaviour or activity places them at risk of acquiring infectious diseases that may be transmitted by blood’ is accompanied by to the following comment: ‘[d]efer after cessation of risk behaviour for a period determined by the disease in question, and by the availability of appropriate tests’. French law 21On 12 January 2009, the Ministre de la Santé et des Sports (Minister for Health and Sport) adopted the Decree laying down the selection criteria for blood donors (JORF of 18 January 2009, p. 1067) (‘the Decree of 12 January 2009’), which mentions Directive 2004/33 in its preamble.22With regard to the clinical characteristics of a donor, Article 1(V)(1) of that decree provides:‘At the interview prior to donation, it is for the person authorised to carry out the selection of donors to assess the possibility of donation in the light of any contraindications and their duration, precedence in time and development, using questions supplementary to the questionnaire prior to the donation.The prospective donor shall defer giving blood if he presents a counter indication mentioned in one of the tables set out in Annex II to the present decree……’23Annex II to that decree contains the tables relating to contraindications, including Table B concerning risks for the recipient. The section of that table on the risk relating to the transmission of a viral infection provides that, as far as concerns the risk of exposure of the prospective donor to a sexually transmissible infectious agent, there is a permanent contraindication to blood donations where a ‘man has had sexual relations with another man’. The dispute in the main proceedings and the question referred for a preliminary ruling 24Mr Léger attended the collection centre of the Établissement français du sang (French Blood Agency) in Metz (France) in order to give blood.25By decision of 29 April 2009, the doctor responsible for donations refused the blood donation on the ground that Mr Léger had had sexual relations with another man.26The doctor based his decision on the Decree of 12 January 2009. Table B in Annex II thereto provides, as regards the risk of exposure of a prospective donor to a sexually transmissible infectious agent, for a permanent contraindication to blood donation for a man who has had sexual relations with another man.27Mr Léger brought an action against that decision before the Tribunal administratif de Strasbourg (Administrative Court, Strasbourg) arguing, inter alia, that Annex II to the Decree of 12 January 2009 was incompatible with the provisions of Directive 2004/33.28The referring court explains that the issue as to whether the existence of a permanent contraindication to blood donation for a man who has had sexual relations with another man is consistent with Annex III to that directive presents a serious difficulty and is decisive for the resolution of the dispute in the main proceedings.29In those circumstances, the Tribunal administrative de Strasbourg decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:‘In the light of Annex III to Directive [2004/33], does the fact that a man has sexual relations with another man constitute in itself sexual conduct placing him at a risk of acquiring severe infectious diseases that can be transmitted by blood and justifying a permanent deferral from blood donation for persons having engaged in that sexual behaviour, or is it merely capable of constituting, in the light of the circumstances of the individual case, sexual behaviour placing him at a risk of acquiring infectious diseases that may be transmitted by blood and justifying a temporary deferral from blood donation for a period determined after cessation of the risk behaviour?’ Consideration of the question referred for a preliminary ruling 30By its question, the referring court asks essentially whether point 2.1 of Annex III to Directive 2004/33 must be interpreted as meaning that the criterion for permanent deferral from blood donation referred to in that provision, relating to sexual behaviour which places a person at risk of acquiring severe infectious diseases that can be transmitted by blood, precludes a Member State from providing for a permanent contraindication to blood donation for men who have had sexual relations with other men.31As a preliminary point, it must be noted, as the French Government and the European Commission have argued, that there are differences between the language versions of points 2.1 and 2.2.2 of Annex III to that directive as regards the level of risk referred to by those provisions.32In the French version of those provisions, permanent deferral from blood donation provided for in point 2.1 and temporary deferral in point 2.2.2 both apply to persons whose sexual behaviour puts them at ‘risk’ of acquiring severe infectious diseases that can be transmitted by blood. In that language version, the level of risk justifying the permanent deferral from blood donation is therefore exactly the same as that applicable to temporary deferral.33However, in some language versions of point 2.1 of Annex III to Directive 2004/33, while temporary deferral requires the presence of a ‘risk’, permanent deferral requires a ‘high risk’. That is the case, in particular, in the Danish (‘stor risiko’), Estonian (kōrgendatud ohtu’), English (‘high risk’), Italian (‘alto rischio’), Dutch (‘groot risico’), Polish (‘wysokie ryzyko’) and Portuguese (‘grande risco’) versions of those provisions.34In yet other language versions, points 2.1 and 2.2.2 of that annex both refer to a ‘high risk’, as in the Spanish (‘alto riesgo’) and German (‘hohes Risiko’) versions.35According to the settled case-law of the Court, the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in that regard. Provisions of EU law must be interpreted and applied uniformly in the light of the versions existing in all EU languages. Where there is divergence between the various language versions of an EU legislative text, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms part (judgments in Cricket St Thomas, C‑372/88, EU:C:1990:140, paragraphs 18 and 19; Kurcums Metal, C‑558/11, EU:C:2012:721, paragraph 48; and Ivansson and Others, C‑307/13, EU:C:2014:2058, paragraph 40).36As regards the general scheme of points 2.1 and 2.2.2 of Annex III to Directive 2004/33, it must be observed that that annex distinguishes between permanent and temporary deferral from blood donation for which, logically, the applicable criteria must be different. Therefore, permanent deferral, which is a stricter measure, requires the existence of a greater risk than that for temporary deferral.37Furthermore, as stated in recital 24 in the preamble to Directive 2002/98, blood and blood components used for therapeutic purposes or for use in medical devices should be obtained from individuals whose health status is such that no detrimental effects will ensue as a result of the donation and that any risk of transmission of infectious diseases is minimised. It follows that, as regards the purpose of Directive 2004/33, permanent deferral must apply where the risk of such transmission is higher.38Accordingly, the general scheme and purpose of that directive mean that it is necessary to adopt the interpretation according to which the permanent deferral from blood donation provided for in point 2.1 of Annex III to that directive concerns persons whose sexual behaviour puts them at a ‘high risk’ of acquiring severe infectious diseases that can be transmitted by blood, while temporary deferral from blood donation concerns a lower risk.39As regards permanent deferral, it must be observed that the expression ‘persons whose sexual behaviour puts them at risk’ of acquiring infectious diseases used in point 2.1 of Annex III to Directive 2004/33 does not precisely determine the persons or categories of persons concerned by that deferral, which leaves a margin of discretion to the Member States in the application of that provision.40Therefore, it is necessary to determine to what extent the permanent contraindication provided for by French law in the case of a ‘man who has had sexual relations with another man’ satisfies the requirement of a ‘high risk’ referred to in point 2.1 of Annex III to Directive 2004/33, while respecting the fundamental rights recognised by the EU legal order.41According to the settled case-law of the Court, the requirements flowing from the protection of those fundamental rights are binding on Member States when they implement EU rules, so that they are bound to apply the rules in accordance with those requirements (see, to that effect, judgment in Parliament v Council, C‑540/03, EU:C:2006:429, paragraph 105 and the case-law cited). In that context, the Member States must make sure they do not rely on an interpretation of wording of secondary legislation which would be in conflict with those fundamental rights (see judgments in Ordre des barreaux francophones et germanophone and Others, C‑305/05, EU:C:2007:383, paragraph 28, and O and Others, C‑356/11 and C‑357/11, EU:C:2012:776, paragraph 78).42In the first place, as regards the assessment of whether there is a high risk of acquiring severe infectious diseases that can be transmitted by blood, account must be taken of the epidemiological situation in France, which has a very specific character, according to the French Government and the Commission, under reference to data supplied by the Institut de veille sanitaire français (French Institute for Public Health Surveillance). It is clear from those data that almost all HIV infections for the period from 2003 to 2008 were due to sexual relations, and that men who have had sexual relations with other men represent the population most affected, corresponding to 48% of new infections. In the same period, while the overall incidence of HIV infection has gone down, in particular as regards heterosexual relations, it has not diminished for men who have had sexual relations with other men. Furthermore, in the same period, they represented the population most affected by HIV infection, with an incidence rate of 1% per annum, which is 200 times greater than that for the heterosexual population in France.43The Commission also refers to a report by the European Centre for Disease Prevention and Control, which was established by Regulation (EC) No 851/2004 of the European Parliament and of the Council of 21 April 2004 (OJ 2004 L 142, p. 1). According to that report, entitled ‘Men who have sex with men (MSM), Monitoring implementation of the Dublin Declaration on Partnership to Fight HIV/AIDS in Europe and Central Asia: 2012 progress’, published in October 2013, the prevalence of HIV in men who have had sexual relations with other men in France is the highest of all the States studied.44It is for the referring court to ascertain, in the light of current medical, scientific and epidemiological knowledge, whether the data in paragraph 42 of the present judgment is reliable and, if that is the case, whether it is still relevant.45In the second place, if the referring court concludes, in particular in the light of those data, that the national authorities could reasonably consider that, in the case of a man who has had sexual relations with another man, there is in France a high risk of acquiring severe infectious diseases that can be transmitted by blood, within the meaning of point 2.1 of Annex III to Directive 2004/33 it must be determined whether, and under what conditions, a permanent deferral from blood donation, such as that at issue in the main proceedings, may be compatible with the fundamental rights recognised by the EU legal order.46In that connection, it should be recalled that the scope of the Charter of Fundamental Rights of the European Union (‘the Charter’) with regard to the action of the Member States, is defined in Article 51(1) thereof, according to which the provisions of the Charter are addressed to Member States ‘only when they are implementing Union law’.47In the present case, the Decree of 12 January 2009, which expressly refers to Directive 2004/33 in its preamble, implements EU law.48Accordingly, among the provisions of the Charter, that decree must respect inter alia Article 21(1) thereof, according to which any discrimination based on sexual orientation must be prohibited. Article 21(1) is a particular expression of the principle of equal treatment, which is a general principle of EU law enshrined in Article 20 of the Charter (see, to that effect, judgments in Römer, C‑147/08, EU:C:2011:286, paragraph 59, and Glatzel, C‑356/12, EU:C:2014:350, paragraph 43).49In that connection, taking as a criterion for a permanent contraindication to blood donation the fact of being a ‘man who has had sexual relations with another man’, Table B of Annex II to the Decree of 12 January 2009 determines the deferral from blood donation on the basis to the homosexuality of the male donors who, on account of the fact that they have had homosexual sexual relations, are treated less favourably than male heterosexual persons.50In those circumstances, the Decree of 12 January 2009 may discriminate against homosexuals on grounds of sexual orientation within the meaning of Article 21(1) of the Charter.51Therefore, it must be determined whether the permanent contraindication to blood donation provided for in the Decree of 12 January 2009 for a man who has had sexual relations with another man none the less satisfies the conditions laid down by Article 52(1) of the Charter in order to be justified.52That provision states that any limitation on the exercise of the rights and freedoms recognised by it must be provided for by law and respect the essence of those rights and freedoms. In addition, that article provides that, subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others.53In the present case, it is common ground that the permanent contraindication to blood donation for a man who has had sexual relations with another man, which constitutes a limitation on the exercise of the rights and freedoms recognised by the Charter, must be regarded as being provided for by law, within the meaning of Article 52(1), since it stems from the Decree of 12 January 2009.54Furthermore, that limitation respects the essential contents of the principle of non-discrimination. That limitation does not call into question the principle as such, as it concerns only the question, which is limited in scope, of deferrals from blood donation in order to protect the health of the recipients.55However, it must still be determined whether that limitation meets an objective of general interest, within the meaning of Article 52(1) of the Charter, and, whether, in the affirmative, it respects the principle of proportionality within the meaning of that provision.56In that connection, it must be recalled that Directive 2004/33 implements Directive 2002/98. The latter directive, in accordance with its legal basis, namely Article 152(4)(a) EC, is intended to protect public health.57In the present case, the permanent deferral from blood donation aims to minimise the risk of transmitting an infectious disease to recipients. That deferral thereby contributes to the general objective of ensuring a high level of human health protection, which is an objective recognised by the EU in Article 152 EC, and in particular in Article 152(4)(a) and (5) EC, and Article 35, second sentence of the Charter, which requires a high level of human health protection to be ensured in the definition and implementation of all Union policies and activities.58As regards the principle of proportionality, it follows from the case-law of the Court that the measures laid down by national legislation must not exceed the limits of what is appropriate and necessary in order to attain the objectives legitimately pursued by that legislation; when there is a choice between several appropriate measures, recourse must be had to the least onerous among them, and the disadvantages caused must not be disproportionate to the aims pursued (see judgments in ERG and Others, C‑379/08 and C‑380/08, EU:C:2010:127, paragraph 86; Urbán, C‑210/10, EU:C:2012:64, paragraph 24; and Texdata Software, C‑418/11, EU:C:2013:588, paragraph 52).59In a case such as that in the main proceedings, that principle is respected only where a high level of health protection for the recipients cannot be ensured by effective techniques for detecting HIV which are less onerous than the permanent deferral from blood donation for the entire group of men who have had sexual relations with other men.60On one hand, it is conceivable that, even where sexual behaviour which puts participants at a high risk of acquiring severe infectious diseases that can be transmitted by blood, within the meaning of point 2.1 of Annex III to Directive 2004/33, which concerns the risk of transmitting such diseases to partners as a result of sexual relations, there are effective techniques which ensure a high level of health protection for recipients.61In that connection, as is clear, inter alia, from Article 21 of Directive 2002/98, in order to ensure the quality and safety of blood and blood components, each donation of blood must be tested in conformity with the requirements listed in Annex IV to that directive, it being understood that those requirements will evolve in line with scientific and technical progress (judgment in Humanplasma, C‑421/09, EU:C:2010:760, paragraph 42). Pursuant to Annex IV, donors must be tested, inter alia, for HIV I/II.62The French Government and the Commission observe none the less that, according to the present state of scientific knowledge there is a ‘window period’ which follows a viral infection, during which the biological markers used in testing donated blood remain negative despite the donor being infected. Therefore, it is recent infections which present a risk of non-detection during tests and, therefore, of transmission of HIV to the recipient.63It is for the referring court to ascertain whether, in such a situation and in compliance with the principle of proportionality, there are effective techniques for detecting HIV in order to avoid transmission to recipients of such a virus, the tests requiring to be performed according to the most recent scientific and technical procedures, pursuant to recital 29 in the preamble to Directive 2002/98.64In particular, it is for the referring court to verify whether scientific or technical progress in the field of science or health, taking account in particular of the cost of systematic quarantining of blood donations from men who have had sexual relations with other men or the cost of the systematic screening for HIV for all blood donations, allows a high level of health protection for recipients to be ensured without the resulting burden being excessive as compared with the objectives of protecting health.65On the other hand, even if, with the current state of scientific knowledge there is no technique satisfying the conditions laid down in paragraphs 63 and 64 of the present judgment, a permanent deferral from blood donation for the whole group of men who have had sexual relations with other men is proportionate only if there are no less onerous methods of ensuring a high level of health protection for recipients.66In that connection, it is for the referring court to determine in particular whether the questionnaire and individual interview with a medical professional, provided for in Annex II B(2) to Directive 2004/33, are able to identify more precisely the type of behaviour presenting a risk for the health of recipients, in order to impose a less onerous contraindication than a permanent contraindication for the entire group of men who have had sexual relations with a man.67To that effect, as the Advocate General noted, in paragraph 61 of his Opinion, the referring court must verify in particular whether the specific questions concerning the period which has elapsed since the prospective donor’s most recent sexual relations in relation to the length of the ‘window period’, the stability of the relationship of the person concerned, or whether sexual relations were protected, enable an evaluation of the level of risk presented by each individual donor on account of his own sexual behaviour.68In those circumstances, it must be concluded that if effective techniques for detecting severe diseases that can be transmitted by blood or, in the absence of such techniques, less onerous methods than the permanent deferral of blood donation for the entire group of men who have had sexual relations with other men ensure a high level of health protection to recipients, such a permanent contraindication would not respect the principle of proportionality, within the meaning of Article 52(1) of the Charter.69Having regard to the foregoing considerations, the answer to the question referred is that point 2.1 of Annex III to Directive 2004/33 must be interpreted as meaning that the criterion for permanent deferral from blood donation in that provision relating to sexual behaviour covers the situation in which a Member State, having regard to the prevailing situation there, provides for a permanent contraindication to blood donation for men who have had sexual relations with other men where it is established, on the basis of current medical, scientific and epidemiological knowledge and data, that such sexual behaviour puts those persons at a high risk of acquiring severe infectious diseases and that, with due regard to the principle of proportionality, there are no effective techniques for detecting those infectious diseases or, in the absence of such techniques, any less onerous methods that such a counter indication for ensuring a high level of health protection of the recipients. It is for the referring court to determine whether, in the Member State concerned, those conditions are met. Costs 70Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fourth Chamber) hereby rules: Point 2.1 of Annex III to Commission Directive 2004/33/EC of 22 March 2004 implementing Directive 2002/98/EC of the European Parliament and of the Council as regards certain technical requirements for blood and blood components must be interpreted as meaning that the criterion for permanent deferral from blood donation in that provision relating to sexual behaviour covers the situation in which a Member State, having regard to the prevailing situation there, provides for a permanent contraindication to blood donation for men who have had sexual relations with other men where it is established, on the basis of current medical, scientific and epidemiological knowledge and data, that such sexual behaviour puts those persons at a high risk of acquiring severe infectious diseases and that, with due regard to the principle of proportionality, there are no effective techniques for detecting those infectious diseases or, in the absence of such techniques, any less onerous methods than such a counter indication for ensuring a high level of health protection of the recipients. It is for the referring court to determine whether, in the Member State concerned, those conditions are met. [Signatures]( *1 ) Language of the case: French. | 3e852-1a81636-4d24 | EN |
Member States may require life assurance companies to send clients information other than that listed in the Third Life Assurance Directive | 29 April 2015 ( *1 )‛Reference for a preliminary ruling — Direct life assurance — Directive 92/96/EEC — Article 31(3) — Information to be provided to the policyholder — Obligation for the insurer to provide further information on costs and premiums under general unwritten rules of national law’In Case C‑51/13,REQUEST for a preliminary ruling from the Rechtbank te Rotterdam (Netherlands), made by decision of 28 November 2012, received at the Court on 31 January 2013, in the proceedings Nationale-Nederlanden Levensverzekering Mij NV v Hubertus Wilhelmus Van Leeuwen, THE COURT (Fifth Chamber),composed of T. von Danwitz, President of the Chamber, C. Vajda, A. Rosas, E. Juhász and D. Šváby (Rapporteur), Judges,Advocate General: E. Sharpston,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 19 March 2014,after considering the observations submitted on behalf of:—Nationale-Nederlanden Levensverzekering Mij NV, by B. Jonk-van Wijk and G. van der Wal, advocaten,Mr Van Leeuwen, by D. Beljon and P. Boeken, advocaten,the Netherlands Government, by B. Koopman and M. Bulterman, acting as Agents,the Czech Government, by M. Smolek, acting as Agent,the Austrian Government, by C. Pesendorfer, acting as Agent,the European Commission, by F. Wilman and K.-P. Wojcik, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 12 June 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 31(3) of Council Directive 92/96/EEC of 10 November 1992 on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC (third life assurance directive; OJ 1992 L 360, p. 1).2The request has been made in proceedings between Nationale Nederlanden Levensverzekering Mij NV (‘NN’) and Mr Van Leeuwen concerning the amount of costs and death risk cover premiums forming part of the life assurance policy taken out by Mr Van Leeuwen with NN. Legal context EU law 3The third life assurance directive was repealed and replaced by Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance (OJ 2002 L 345, p. 1), which was then itself repealed and replaced, with effect from 1 November 2012, by Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ 2009 L 335, p. 1). However, in view of the date on which the life assurance contract at issue in the main proceedings was concluded, the provisions of the third life assurance directive remain relevant for the resolution of this case.4Recitals 9 and 23 in the preamble to the third life assurance directive are worded as follows:‘(9)… certain provisions of this Directive define minimum standards; … a home Member State may lay down stricter rules for assurance undertakings authorised by its own competent authorities;…(23)… in a single assurance market the consumer will have a wider and more varied choice of contracts; … if he is to profit fully from this diversity and from increased competition, he must be provided with whatever information is necessary to enable him to choose the contract best suited to his needs; … this information requirement is all the more important as the duration of commitments can be very long; … the minimum provisions must therefore be coordinated in order for the consumer to receive clear and accurate information on the essential characteristics of the products proposed to him as well as the particulars of the bodies to which any complaints of policyholders, assured persons or beneficiaries of contracts may be addressed;…’5Article 31 of that directive provides:‘1. Before the assurance contract is concluded, at least the information listed in Annex II(A) shall be communicated to the policyholder.2. The policyholder shall be kept informed throughout the term of the contract of any change concerning the information listed in Annex II(B).3. The Member State of the commitment may require assurance undertakings to furnish information in addition to that listed in Annex II only if it is necessary for a proper understanding by the policyholder of the essential elements of the commitment.4. The detailed rules for implementing this Article and Annex II shall be laid down by the Member State of the commitment.’6Annex II to that directive, entitled ‘Information for policyholders’, states:‘The following information, which is to be communicated to the policyholder before the contract is concluded (A) or during the term of the contract (B), must be provided in a clear and accurate manner, in writing, in an official language of the Member State of the commitment.However, such information may be in another language if the policyholder so requests and the law of the Member State so permits or the policyholder is free to choose the law applicable.A. Before concluding the contractInformation about the assurance undertakingInformation about the commitment(a) 4. Definition of each benefit and each option(a) 5. Contract term(a) 6. Means of terminating the contract(a) 7. Means of payment of premiums and duration of payments(a) 8. Means of calculation and distribution of bonuses(a) 9. Indication of surrender and paid- up values and the extent to which they are guaranteed(a) 10. Information on the premiums for each benefit, both main benefits and supplementary benefits, where appropriate7Annex II(B) of that directive lists the information to be provided to the policyholder during the term of the contract. That provision provided that, in addition to the policy conditions, both general and special which must be sent to him, the policyholder must receive, firstly, all the information listed in points (a) 4 to (a) 12 of Title A in the event of a change in the policy conditions or amendment of the law applicable to the contract and, secondly, every year, information on the state of bonuses. Netherlands law 8Article 2 of the Regulation regarding the provision of information to policyholders 1998 (Regeling informatieverstrekking aan verzekeringsnemers 1998; ‘RIAV 1998’) transposed into domestic law Article 31 of the third life assurance directive. In the version applicable to the facts of the main proceedings, that provision reads as follows:‘1. An insurer which proposes a life assurance contract to a policyholder residing or established in the Netherlands shall ensure that the policyholder is in possession of the policy conditions, both general and special.2. The insurer shall ensure, in addition, in so far as it is not clear from the policy conditions, whether general or special, that the policyholder is informed in writing of the following information:q.the impact of costs and deductions charged to the policyholder on the yield and benefit associated with the contract;r.if applicable, the costs which may be charged in addition to the gross premium;9In accordance with the grounds of RIAV 1998, its application is governed by the Law on supervision of the insurance industry 1993 (Wet toezicht verzekeringsbedrijf 1993; ‘the WTV 1993’) and by the national civil law in force, including the requirements of reasonableness and fairness (Article 2 of Book 6 of the Civil Code). The dispute in the main proceedings and the questions referred for a preliminary ruling 10During 1999, Mr Van Leeuwen took out with NN assurance forming part of an investment, known as ‘flexibly insured investing’. It was a life assurance policy under which the accumulated value at the end date of which is not guaranteed but depends on the results of investments. Furthermore, during the term of the assurance contract, payment of a fixed and guaranteed capital is provided for should the policyholder die before the end of the contract.11It follows from the information provided by NN in its written observations that, under the assurance contract, a premium, the amount of which is agreed in advance, designated as the ‘gross premium’ is paid in advance and periodically. That premium is invested in investment funds chosen by the policyholder. Costs are periodically deducted from the value thus determined, as are premiums for the death cover included. The latter premiums are therefore not accounted for separately, but form an integral part, like those costs, of the gross premium.12Before the life assurance policy was taken out, NN provided Mr Van Leeuwen with a ‘flexibly insured investing proposal’. Three examples of capital amounts were set out therein, based on different yields and management costs of 0.3%. Furthermore, under the heading ‘Product yield’ the following is stated: ‘The difference between the fund return and the product yield is dependent on the risks insured, the costs payable as well as any additional coverage’.13After the end of the assurance contract, a dispute arose between NN and Mr Van Leeuwen concerning the amount of the costs and premiums deducted by the insurer in respect of the death risk cover.14Part of the dispute in the main proceedings relates to whether NN gave sufficient information concerning those costs and the risk premiums before the assurance contract was taken out. In particular, the fact that Mr Van Leeuwen was not sent a summary or full overview of the actual and/or absolute costs and their composition is in dispute.15According to the referring court, there are grounds for considering that, by providing the policyholder with only information on the impact of costs and risk premiums on the yield, NN met the requirements referred to in Article 2(2)(q) and (r) of RIAV 1998, but infringed the ‘open and/or unwritten rules’ of Netherlands law which include, in this case, the duty of care of the insurance company, pre-contractual good faith and requirements of reasonableness and fairness.16The referring court notes that the information referred to in paragraph 14 of the present judgment do not include those set out in Annex II to the third life assurance directive. NN is, however, of the opinion that EU law, in particular Article 31(3) of that directive, prohibits requiring insurance companies to send policyholders information covered by those ‘open and/or unwritten rules’.17It was in those circumstances that the Rechtbank Rotterdam decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:‘(1)Does EU law, and in particular Article 31(3) of the third life assurance directive, preclude an obligation on the part of a life assurance provider on the basis of the “open and/or unwritten rules” of Netherlands law — such as the reasonableness and fairness which govern the (pre-)contractual relationship between a life assurance provider and a prospective policyholder, and/or a general and/or specific duty of care — to provide policyholders with more information on costs and risk premiums of the insurance than was prescribed in 1999 by the provisions of Netherlands law by which the third life assurance directive was implemented (in particular, Article 2(2)(q) and (r) of the RIAV 1998)?(2)Are the consequences, or possible consequences, under Netherlands law, of a failure to provide that information relevant for the purposes of answering question 1?’ Consideration of the questions referred The first question 18By its first question the referring court asks, in essence, whether Article 31(3) of the third life assurance directive is to be interpreted as precluding an insurance company, on the basis of general principles of domestic law such as the ‘open and/or unwritten rules’ at issue in the main proceedings, from being required to send to policyholders certain information additional to that listed in Annex II to that directive.19It is apparent from recital 23 in the preamble to the third life assurance directive that the latter seeks, inter alia, to coordinate the minimum provisions in order for the consumer to receive clear and accurate information on the essential characteristics of assurance products proposed to him. As is pointed out in the same recital, if he is to profit fully from the greater choice and diversity in the single market for assurance, and from increased competition, the consumer must be provided with whatever information is necessary to enable him to choose the contract which best meets his requirements.20Article 31(1) of the directive provides to that end that at least the information listed in point A of Annex II must be communicated to the policyholder before the conclusion of the assurance contract and Article 31(2) thereof provides that the policyholder must be kept informed throughout the term of the contract of any change concerning the information listed in point B of that annex. Article 31(3) of the third life assurance directive, the only provision referred to in the request for a preliminary ruling, provides that the Member State of the commitment may require assurance undertakings to furnish information in addition to that listed in Annex II thereto only if it is necessary for a proper understanding by the policyholder of the essential elements of the commitment which he is making.21In that regard, the Court has held that it is apparent from the express wording of Article 31(3), Annex II and recital 23 in the preamble to the third life assurance directive that the additional information Member States may require in accordance with that article must be clear, accurate and necessary for a proper understanding of the essential characteristics of assurance products proposed to the policyholder (judgment in Axa Royale Belge, C‑386/00, EU:C:2002:136, paragraph 24).22An obligation to provide additional information can therefore be imposed only where it is necessary to achieving the objective of informing the policyholder and where the information required is clear and accurate in order to achieve that objective and thus, in particular, in order to guarantee the insurance companies a sufficient level of legal certainty (see, to that effect, judgment in Parliament v Council, C‑48/14, EU:C:2015:91, paragraph 45 and the case-law cited). As the Advocate General noted in point 60 of her Opinion, if information is general and vague, it will not be ‘information that is necessary’ for the purposes described in Article 31(3) of the third life assurance directive.23Although the EU legislature thus sought to restrict the type of additional information which, in the interest of consumers, Member States may require from insurance companies in order to enable them to profit fully from the choice of insurance products proposed in the single insurance market, Article 31(3) of that directive, however, has neither prescribed nor limited the manner in which the Member States may exercise that right.24In that regard, it must be borne in mind that the Member States are not bound to require insurance companies to provide information additional to that which is to be provided to policyholders under Article 31(1) of the third life assurance directive, set out in Annex II(A) thereto, but that Article 31(3) gives the Member States the choice of doing so or not.25In addition, it is apparent from Article 31(4) of the third life assurance directive that the detailed rules for implementing the obligation to provide additional information provided for in national legislation are to be laid down by the Member State of the commitment.26Although the third life assurance directive provides for the minimum of harmonisation as regards the information to be provided to policyholders, Article 31(3) of the directive nevertheless delimits the possibility set out in paragraph 24 of this judgment by stating, firstly, that that information must enable the policyholder to understand the essential elements of the commitment. Secondly, that provision restricts the additional information which may be required from insurance companies by the Member State of commitment to what is necessary to achieve that end.27Accordingly, it is for the Member State concerned to determine, on the basis of the characteristics of its legal order and the specific features of the situation which it seeks to regulate, the legal basis of the obligation to provide additional information in order to ensure both effective understanding by the policyholder of the essential elements of the insurance products proposed to him and a sufficient level of legal certainty.28The legal basis of such an obligation to provide additional information and particularly whether that obligation follows from general principles of domestic law such as the ‘open and/or unwritten rules’, to which the referring court refers, is, in principle, irrelevant as regards its conformity with the directive, provided that that obligation meets the requirements of Article 31(3) of the third life assurance directive referred to in paragraphs 21 and 27 of the present judgment.29It follows therefrom that the legal basis for the use by the Member State concerned of the possibility provided for in Article 31(3) of the third life assurance directive must be such that, in accordance with the principle of legal certainty, it enables insurance companies to identify with sufficient foreseeability what additional information they must provide and which the policyholder may expect.30In that regard, when assessing the requirements to be laid down as regards the foreseeability of such an obligation to provide additional information, the national court may take into consideration the fact that it is for the insurance company to determine the type and characteristics of the insurance products which it offers, so that, in principle, it should be able to identify the characteristics which its products offer and which are likely to justify a need to provide additional information to policyholders.31In the present case, it must be noted that, in accordance with the description of the grounds of RIAV 1998, its application is governed, in particular, by the national civil law in force, ‘including the requirements of reasonableness and fairness’ set out in Article 2 of Book 6 of the Civil Code.32None the less, the referring court has not provided the Court with a detailed explanation as to the exact nature, in Netherlands law, of the obligation to provide additional information nor as to the exact role played and scope, in national law, of the ‘open and/or unwritten rules’ of Netherlands law, merely referring to the duty of care of the insurance company, pre-contractual good faith and/or the requirements of reasonableness and fairness which must preside over the conclusion of assurance contracts.33In any event, it is for the referring court to assess whether the ‘open and/or unwritten rules’ at issue in the main proceedings meet the requirements of Article 31(3) of the third life assurance directive.34Consequently, the answer to the first question is that Article 31(3) of the third life assurance directive must be interpreted as not precluding an insurance company, on the basis of general principles of domestic law such as the ‘open and/or unwritten rules’ at issue in the main proceedings, from being required to send to policyholders certain information additional to that listed in Annex II to that directive, provided that the information required is clear, accurate and necessary for the policyholder to understand the essential characteristics of the commitment and that it ensures a sufficient level of legal certainty, which it is for the referring court to ascertain. The second question 35By its second question, the referring court asks whether the consequences, under Netherlands law, of a failure to provide additional information for the purposes of Article 31(3) of the third life assurance directive are relevant for the purposes of answering the first question.36It follows from the answer to the first question that the consequences under domestic law of a failure to provide that information are, in principle, irrelevant as regards the conformity of the obligation to provide information with Article 31(3) of the directive. Costs 37Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: 1. Article 31(3) of Council Directive 92/96/EEC of 10 November 1992 on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC (third life assurance directive) must be interpreted as not precluding an insurance company, on the basis of general principles of domestic law such as the ‘open and/or unwritten rules’ at issue in the main proceedings, from being required to send to policyholders certain information additional to that listed in Annex II to that directive, provided that the information required is clear, accurate and necessary for the policyholder to understand the essential characteristics of the commitment and that it ensures a sufficient level of legal certainty, which it is for the referring court to ascertain. 2. The consequences under domestic law of a failure to provide that information are, in principle, irrelevant as regards the conformity of the obligation to provide information with Article 31(3) of Directive 92/96. [Signatures]( *1 ) Language of the case: Dutch. | d2645-9b3dd76-4cae | EN |
Protection for animals under EU law does not stop at the outer borders of the EU | 23 April 2015 ( *1 )‛References for a preliminary ruling — Agriculture — Regulation (EC) No 1/2005 — Protection of animals during transport — Long journey between Member States and between Member States and third countries — Article 14(1) — Check to be carried out related to the journey log by the competent authority at the place of departure prior to long journeys — Applicability of that provision in regards to the stages of the journey taking place outside the territory of the European Union — Applicability of the standards fixed by that regulation to that part of the journey’In Case C‑424/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Bayerischer Verwaltungsgerichtshof (Germany), made by decision of 2 July 2013, received at the Court on 25 July 2013, in the proceedings Zuchtvieh-Export GmbH v Stadt Kempten, intervening parties: Landesanwaltschaft Bayern, THE COURT (Fifth Chamber),composed of T. von Danwitz, President of the Chamber, C. Vajda, A. Rosas, E. Juhász and D. Šváby (Rapporteur), Judges,Advocate General: Y. Bot,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 10 July 2014,after considering the observations submitted on behalf of:—Zuchtvieh-Export GmbH, by C. Winterhoff and A. Wolowski, Rechtsanwälte,the Stadt Kempten, by N. Briechle, acting as Agent,the Landesanwaltschaft Bayern, by R. Käß, acting as Agent,the Lithuanian Government, by D. Kriaučiūnas and Mme V. Čepaitė, acting as Agents,the European Commission, by F. Erlbacher and H. Kranenborg and by B. Eggers, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 11 September 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Council Regulation (EC) No 1/2005 of 22 December 2004 on the protection of animals during transport and related operations and amending Directives 64/432/EEC and 93/119/EC and Regulation (EC) No 1255/97 (OJ 2005, L 3, p. 1, and corrigendum OJ 2011, L 336, p. 86).2The request has been made in proceedings between Zuchtvieh-Export GmbH (‘Zuchtvieh-Export’) the applicant in the main proceedings, and the Stadt Kempten (municipality of Kempten, Germany) regarding the decision taken by the Stadt Kempten, as the competent authority of the place of departure, to refuse clearance for a consignment of cattle to be transported by road from Kempten to Andijan (Uzbekistan). Legal context 3Regulation No 1/2005 includes, inter alia, the following recitals:‘(1)The Protocol on protection and welfare of animals annexed to the [EC] Treaty requires that in formulating and implementing agriculture and transport policies, the Community and the Member States are to pay full regard to the welfare requirements of animals....(5)For reasons of animal welfare the transport of animals over long journeys, including animals for slaughter, should be limited as far as possible.(11)In order to ensure a consistent and effective application of this Regulation across the Community in the light of its basic principle according to which animals must not be transported in a way likely to cause injury or undue suffering to them, it is appropriate to set out detailed provisions addressing the specific needs arising in relation to the various types of transport. Such detailed provisions should be interpreted and applied in accordance with the aforesaid principle and should be timely updated whenever, in particular in the light of new scientific advice, they appear no longer to ensure compliance with the above principle for particular species or types of transport....’4Article 1 of Regulation No 1/2005 defines the scope of the regulation:‘1. This Regulation shall apply to the transport of live vertebrate animals carried out within the Community, including the specific checks to be carried out by officials on consignments entering or leaving the customs territory of the Community.2. Only Articles 3 and 27 shall apply to:(a)the transport of animals carried out by farmers using agricultural vehicles or means of transport belonging to them in cases where the geographical circumstances call for transport for seasonal transhumance of certain types of animals;(b)transport carried out by farmers, of their own animals, in their own means of transport for a distance of less than 50 km from their holding.5Article 2 of that regulation includes the following definitions:‘...(d)“border inspection post” means any inspection post designated and approved in accordance with Article 6 of [Council Directive 91/496/EEC of 15 July 1991 laying down the principles governing the organisation of veterinary checks on animals entering the Community from third countries and amending Directives 89/662/EEC, 90/425/EEC and 90/675/EEC (JO L 268, p. 56)], for carrying out veterinary checks on animals arriving from third countries at the border of the territory of the Community;(f)“competent authority” means the central authority of a Member State competent to carry out checks on animal welfare or any authority to which it has delegated that competence;(h)“control posts” means control posts as referred to in [Council Regulation (EC) No 1255/97 of 25 June 1997 concerning Community criteria for staging points and amending the route plan referred to in the Annex to Directive 91/628/EEC (OJ 1997 L 174, p. 1)];(i)“exit point” means a border inspection post or any other place designated by a Member State where animals leave the customs territory of the Community;(j)“journey” means the entire transport operation from the place of departure to the place of destination, including any unloading, accommodation and loading occurring at intermediate points in the journey;(m)“long journey” means a journey that exceeds [eight] hours, starting from when the first animal of the consignment is moved;(s)“place of destination” means the place at which an animal is unloaded from a means of transport and:accommodated for at least 48 hours prior to the time of departure; or(ii)slaughtered;(t)“place of rest or transfer” means any stop during the journey which is not a place of destination, including a place where animals have changed the means of transport, with or without being unloaded;(w)“transport” means the movement of animals effected by one or more means of transport and the related operations, including loading, unloading, transfer and rest, until the unloading of the animals at the place of destination is completed;6Under Article 3 of Regulation No 1/2005, entitled ‘General conditions for the transport of animals’:‘No person shall transport animals or cause animals to be transported in a way likely to cause injury or undue suffering to them.In addition, the following conditions shall be complied with:all necessary arrangements have been made in advance to minimise the length of the journey and meet animals’ needs during the journey;the animals are fit for the journey;(c)the means of transport are designed, constructed, maintained and operated so as to avoid injury and suffering and ensure the safety of the animals;(e)the personnel handling animals are trained or competent as appropriate for this purpose and carry out their tasks without using violence or any method likely to cause unnecessary fear, injury or suffering;the transport is carried out without delay to the place of destination and the welfare conditions of the animals are regularly checked and appropriately maintained;(g)sufficient floor area and height is provided for the animals, appropriate to their size and the intended journey;water, feed and rest are offered to the animals at suitable intervals and are appropriate in quality and quantity to their species and size.’7Article 5 of Regulation No 1/2005, entitled ‘Planning obligations for the transport of animals’, provides:(3) Organisers shall ensure that for each journey:the welfare of the animals is not compromised by insufficient coordination of the different parts of the journey; and the weather conditions are taken into account ……(4) For long journeys between Member States and with third countries for domestic Equidae other than registered Equidae, and domestic animals of bovine, ovine, caprine and porcine species [‘animals concerned’], transporters and organisers shall comply with the provisions on the journey log set out in Annex II.’8According to Article 6(3) and (4) of the same regulation:‘3. Transporters shall transport animals in accordance with the technical rules set out in Annex I.4. Transporters shall entrust the handling of the animals to personnel who have received training on the relevant provisions of Annexes I and II.’9Article 8(2) of Regulation No 1/2005 provides:‘Keepers shall check all animals arriving at a place of transit or a place of destination and determine if the animals are or have been subject to a long journey between Member States and with third countries. In the case of long journeys for [animals concerned], keepers shall comply with the provisions on the journey log set out in Annex II.’10Article 14 of that regulation is entitled ‘Checks and other measures related to journey log to be carried out by the competent authority before long journeys’. Paragraph (1) thereof provides:‘In the case of long journeys between Member States and with third countries for [animals concerned], the competent authority of the place of departure shall:carry out appropriate checks to verify that:transporters indicated in the journey log have the corresponding valid transporter authorisations, the valid certificates of approval for means of transport for long journeys and valid certificates of competence for drivers and attendants;the journey log submitted by the organiser is realistic and indicates compliance with this Regulation;where the outcome of the checks provided for in point (a) is not satisfactory, require the organiser to change the arrangements for the intended long journey so that it complies with this Regulation;where the outcome of the checks provided for in point (a) is satisfactory, the competent authority shall stamp the journey log;send details as soon as possible of the intended long journeys set out in the journey log to the competent authority of the place of destination, of the exit point or of the control post via the information exchange system referred to in Article 20 of [Council Directive 90/425/EEC of 26 June 1990 concerning veterinary and zootechnical checks applicable in intra-Community trade in certain live animals and products with a view to the completion of the internal market (OJ 1990 L 224, p. 29)].’11Article 15(2) of that regulation provides:‘In the case of long journeys between Member States and with third countries, the checks at the place of departure for fitness for transport, as referred to in Chapter I of Annex I, shall be performed before the loading as part of the animal health checks as set out in the corresponding veterinary Community legislation, within the time limits provided by such legislation.’12Article 21 of Regulation No 1/2005 pertains to ‘Checks at exit points and border inspection posts’ and is worded as follows:‘1. ... [W]here animals are presented at exit points or border inspection posts, official veterinarians of the Member States shall check that the animals are transported in compliance with this Regulation and in particular:that transporters have submitted a copy of a valid authorisation ...;that drivers of road vehicles transporting [animals concerned] and attendants have presented a valid certificate of competence ...;that the animals are fit to continue their journey;that the means of transport by which the animals are to continue their journey complies with Chapter II and where applicable Chapter VI of Annex I;that, in case of export, transporters have provided evidence that the journey from the place of departure to the first place of unloading in the country of final destination complies with any international agreement listed in Annex V applicable in the third countries concerned;whether [animals concerned] have been or are to be transported over long journeys.2. In the case of long journeys for [animals concerned], official veterinarians of exit points and border inspection posts shall perform and record the checks listed in Section 3 “Place of destination” of the journey log [referred to] in Annex II. Records of those checks and the check provided for in paragraph 1 shall be kept by the competent authority for a period of at least three years from the date of the checks ...’3. Where the competent authority considers that animals are not fit to complete their journey, they shall be unloaded, watered, fed and rested.’13Chapter V of Annex I to Regulation No 1/2005 contains rules for watering and feeding intervals and journey times and resting periods. As far as cattle are concerned, under points 1.4(d) and 1.5 of Chapter V, long journeys by road must include, after 14 hours of travel, a rest period of at least one hour during which they must be given liquid and if necessary fed, after which they may be transported for a further period of up to 14 hours, at the end of which animals must be unloaded, fed and watered and be rested for at least 24 hours.14Annex II to that regulation contains provisions concerning the journey log, which Article 5(4) thereof requires transporters and organisers to keep in the case of long journeys for long journeys involving animals concerned between Member States and between Member States and third countries. That log comprises five sections relating to planning, place of departure, place of destination, declaration by transporter concerning the actual itinerary, resting, transfer and exit points and any animal injuries or deaths and a specimen anomaly report, where applicable. The annex provides inter alia:3.The organiser shall:ensure that a signed copy of Section 1 of the journey log, properly completed except as regards the veterinary–certificate numbers, is received within two working days before the time of departure by the competent authority of the place of departure in a manner defined by such authority;comply with any instruction given by the competent authority under [Article 14(1)];ensure that the journey log is stamped as required in Article 14(1);ensure that the journey log accompanies the animals during the journey until the point of destination or, in case of export to a third country, at least until the exit point.4.Keepers at the place of departure and, when the place of destination is located within the territory of the Community, keepers at the place of destination, shall complete and sign the relevant sections of the journey log. They shall inform the competent authority of any reservations concerning compliance with the provisions of this Regulation using the specimen form in Section 5 as soon as possible.7.If animals are exported to a third country, transporters shall give the journey log to the official veterinarian at the exit point.In the case of export of live bovine animals with refunds, Section 3 of the journey log shall not be required if the agricultural legislation requires a report.8.The transporter referred to in Section 3 of the journey log shall keep:a copy of the completed journey log;Documents referred to … shall be made available to the competent authority which granted the transporter’s authorisation and upon request to the competent authority of the place of departure, within one month after it has been completed and shall be kept by the transporter for a period of at least three years from the date of the check.Documents referred to in point (a) shall be returned to the competent authority of the place of departure within [one] month after the completion of the journey, unless the [navigation] systems referred to in Article 6(9) were used. ...’15The Appendix to Annex II to Regulation No 1/2005 contains a specimen of the different sections of the journey log. The first of those sections, entitled ‘Planning’, comprises a set of headings covering the total expected duration of the journey (heading 2); the place, country, date and time of departure (headings 3.1 to 3.3); the place and country of destination and the date and time of arrival (headings 4.1 to 4.3); the species and number of animals (headings 5.1 and 5.2); the estimated total weight of the consignment and total space provided for it (headings 5.4 and 5.5); the list of resting points, the time of arrival at those points and the length of the resting time (headings 6.1 to 6.3); and the declaration of the organiser of the journey, confirming having made suitable arrangements to safeguard the welfare of the animals throughout the journey, in accordance with the provisions of Regulation No 1/2005. The dispute in the main proceedings and the questions referred for a preliminary ruling 16Zuchtvieh-Export engaged two lorries to transport 62 cattle from Kempten to Andijan via Poland, Belarus, Russia and Kazakhstan, a total journey of approximately 7000 km. The transport was scheduled to be carried out from 23 April 2012 to 2 May 2012 in an operation described as ‘exportation without application for export refund’.17Section 1, No 6 of the journey log submitted in connection with the request for clearance mentioned, as the only places of rest and transfer for the stages of the journey taking place in the territory of the third countries concerned, the cities of Brest (Belarus) and Karaganda (Kazakhstan), with a rest period of 24 hours being planned in each of those cities and the journey between those points expected to take 146 hours. According to the order for reference, rest periods were scheduled between those cities during which the animals would be fed and watered, but not unloaded. The final stage of the journey, between Karaganda and Andijan, was to take an additional 29 hours.18By decision of 30 January 2012, the Stadt Kempten refused customs clearance for the consignment of cattle in question and required that the transport plans be amended in order to bring them into line with the provisions of Regulation No 1/2005, including for the stages of the journey taking place in the territory of the relevant third countries, between Brest and Andijan, which was not the case in the light of the information provided in section 1 of the journey log.19In addition to an application for an interlocutory injunction, which was not successful, Zuchtvieh-Export brought an action on the merits against the decision of the Stad Kempten, which the Bayerischer Verwaltungsgerichtshof (Higher Administrative Court, Bavaria) is currently hearing on appeal. In that action, Zuchtvieh-Export claims inter alia that the court should rule that the decision of the Stadt Kempten of 30 January 2012 is unlawful and that the Stadt Kempten should be ordered to issue customs clearance for the consignment of cattle in question.20The central question in the main proceedings is whether, in the case of a long journey commencing in the territory of the European Union but ending outside that territory, Regulation No 1/2005 is also applicable to stages of that journey taking place in the territory of one or more third countries. That question arises essentially in relation to the granting or refusal of transport approval by the competent authority of the place of departure on the basis of the planning information provided in section 1 of the journey log submitted to that authority as part of the checks provided for in Article 14 of Regulation No 1/2005.21The referring court considers that a number of provisions of Regulation No 1/2005 support the position that, in such a case, the authority of the place of departure can approve the transport by stamping the journey log only where the provisions of that regulation have been complied with outside the territory of the European Union as well. In that regard it refers to Articles 1, 3, 5 and 21(1)(e) of that regulation, but refers especially to the Appendix to Annex II thereto, where the specimen of the different sections of the journey log, particularly section 1 thereof, relating to the planning of the journey.22The referring court refers, first, to Nos 2 to 4 of section 1 (total expected duration of the journey, place and time of departure, place of destination and time of arrival) which, combined with the definition of the term ‘journey’ in Article 2(j) of Regulation No 1/2005, indicate that information is to be provided for the entire journey.23Next it notes the declaration in No 7 of section 1, to the effect that the organiser has ‘made suitable arrangements to safeguard the welfare of the animals throughout the journey, in accordance with the provisions of Regulation [No 1/2005]’.24The referring court also observes that, even in the case of exports, and even though the transporter must hand over the journey log to the official veterinary at the exit point, under point 7 of Annex II to Regulation No 1/2005, he must nevertheless retain a copy and return it to the competent authority of the place of departure, in accordance with point 8 of that annex.25Should it be held that transport of this nature can be approved only where journey log shows that the provisions of Regulation No 1/2005 are complied with for the stages of the journey taking place outside the territory of the European Union, the referring court considers that it is not sufficient for the organiser of the journey to claim that the provisions of the applicable legislation in the third countries through which the journey passes and the applicable international conventions in those countries pays will be complied with for the stages of the journey outside the European Union. This must also be indicated in the entries in the journey log. However, that is not the case in this instance, as section 1 of the journey log in question contains no ‘realistic’ information within the meaning of Article 14(1)(a)(ii) of Regulation No 1/2005 because it does not mention any places of rest during the journeys between Brest and Karaganda and between Karaganda and Andijan, the final place of destination. Furthermore, if the authority of the place of departure stamped the journey log, this would suggest that all the arrangements for the journey, up to place of destination, have been approved, which, according to the referring court, is also not appropriate vis-à-vis the authorities in the third countries.26According to the opposite view, advocated by Zuchtvieh-Export, approval of the journey planning as part of the checks to be carried out under Article 14 of Regulation No 1/2005 concerns only those stages of the journey to which that regulation is applicable ratione loci. A number of provisions of that regulation, including Article 21(1)(e) pertaining to checks at exit points and border inspection posts, suggest that the scheme it establishes does not apply beyond the borders of the European Union.27Zuchtvieh-Export further submits that the applicability of the rules laid down in Regulation No 1/2005 outside the territory of the European Union, in particular those laid down in Chapter V of Annex I thereto, pertaining to watering and feeding intervals as well as journey times and resting periods, is unrealistic and counter-productive. In third countries there is not much hygienically and technically sound accommodation in which to rest the animals being transported, with the result that there is high risk of injury and cross-contamination. The rules laid down in the regulation are indissociable from the quality of animal transport infrastructure in the territory of the European Union, such as the control posts (which are places of rest) established there, which Article 36 of that regulation makes subject to technical and health requirements.28Furthermore, the fact that the rules of Regulation No 1/2005 are not necessarily applicable, from a substantive point of view is in any event shown by Article 30(6) of that regulation, which provides for the possibility of derogations for long journeys to take account of the remoteness of certain regions from the mainland of the territory of the European Union.29It is also clear from the heading of section 1, No 6 of the specimen journey log (‘List of scheduled resting, transfer or exit points’) that the organiser of the journey is not required to mention all resting points. Furthermore, it is not always possible to predict where rests will be taken because of geographic conditions.30In addition, those rules might conflict with the regulations applicable in the third countries concerned, such as those in force in the Russian Federation, where the standard practice of the authorities is to prohibit the unloading of animals during rest periods.31Lastly, the principle of territoriality weighs in favour of restricting the application of Regulation No 1/2005 to the territory of the European Union.32The Stadt Kempten and the Landesanwaltschaft Bayern (Public Prosecutor’s Office for the Land of Bavaria, Germany) counter these arguments by contending that the absence of resting points outside the territory of the European Union does not release transporters of their obligations in this regard under Regulation No 1/2005, that the fact that the animals are not unloaded for rest periods means that the transport compartments are not cleaned and that it is not guaranteed — or even possible — that all animals are watered and the state of health of each animal inspected. Therefore, having regard to recital 5 in the preamble to that regulation, according to which long journeys should be limited as far as possible, it is necessary to envisage the possibility that certain journeys simply cannot be carried out because it is not possible to comply with the applicable rules.33Against that background, the Bayerischer Verwaltungsgerichtshof decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:Is Article 14(1) of Regulation (EC) No 1/2005 to be interpreted as meaning that in the case of long journeys for [animals concerned], where the place of departure is in a Member State of the European Union but the place of destination is in a third country, the competent authority of the place of departure may stamp the journey log submitted by the organiser in accordance with Article 14(1)(c) only if the journey log meets the requirements set out in Article 14(1)(a)(ii) for the entire journey from the place of departure to the place of destination, and thus also for stages of the journey which lie entirely outside the territory of the European Union?(2)Is Article 14(1) of Regulation (EC) No 1/2005 to be interpreted as meaning that the competent authority at the place of departure pursuant to that provision may, in accordance with Article 14(1)(b) of that regulation, require the organiser of the transport to change the arrangements for the intended long journey in such a way that it will comply with the provisions of that regulation for the entire journey from the place of departure to the place of destination, even if some stages of that journey lie entirely within third countries?’ Consideration of the questions referred 34By its questions, which should be considered together, the referring court asks, in essence, whether Article 14(1) of Regulation No 1/2005 must be interpreted as meaning that, in order for transport involving a long journey for animals concerned which commences on the territory of the European Union and continues outside that territory to be authorised by the competent authority of the place of departure, the organiser of the journey must submit a journey log which, in the light of the arrangements for the journey as planned, is realistic and indicates that the provisions of that regulation will be complied with, including for the stages of the journey which are to take place in the territory of third countries, that authority being empowered, should that not be the case, to require changes to those arrangements to ensure compliance with those provisions throughout the journey.35It should be noted, as a preliminary point, that it follows, first of all, from recital 1 of Regulation No 1/2005 that that regulation is based on Protocol (No 33) on protection and welfare of animals, annexed to the EC Treaty, under which the Community and the Member States, in formulating and implementing the Community’s policies on inter alia agriculture and transport, are to pay full regard to the welfare requirements of animals. According to the case-law, the protection of animal welfare is a legitimate objective in the public interest, the importance of which was reflected, in particular, in the adoption by the Member States of that protocol (see, to that effect, Viamex Agrar Handel and ZVK, C‑37/06 and C‑58/06, EU:C:2008:18, paragraph 22, and Nationale Raad van Dierenkwekers en Liefhebbers and Andibel, C‑219/07, EU:C:2008:353, paragraph 27). The substance of Protocol No 33 is henceforth to be found in Article 13 TFEU, which is a provision of general application of the FEU Treaty, contained in Part One thereof, setting out the ‘Principles’.36It further follows from recitals 5 and 11 in the preamble to that regulation that the legislature intended to lay down detailed provisions based on the principle that animals must not be transported in a way likely to cause injury or undue suffering to them, considering that, for reasons of animal welfare, the transport of animals over long journeys should be limited as far as possible.37It should be observed at the outset that it follows from a number of provisions of Regulation No 1/2005 that it imposes obligations not only on the transport of live vertebrate animals taking place entirely within the territory of the European Union, but also to transport operations having their point of departure within that territory and their destination in a third country, such as the transport at issue in the main proceedings. Those provisions are, in addition to Article 14 thereof, Articles 1(1) 2(i), 5(4), 8(2), 15(2) and 21.38Nor should the examination be limited to an isolated reading of the first part of Article 1(1) of Regulation No 1/2005, according to which that regulation applies to the transport of animals carried out within the European Union. In particular, the second part of that provision, referring to the specific checks to be carried out by officials on consignments entering or leaving the customs territory of the European Union, takes into consideration the external dimension of that territory that such transport may entail. In that context, Article 2(i) of Regulation No 1/2005 provides a definition of the term ‘exit point’ as referring to the place where the animals leave the territory of the European Union.39Moreover, the other provisions referred to in paragraph 37 above also cover the transport of animals with a point of departure within the territory of the European Union and a destination in a third country. In particular, the obligations that Articles 5(4) and 8(2) of that regulation impose on organisers, transporters and keepers of animals refer explicitly not only to long journeys between Member States but also to third countries.40The same is true of the checks to be carried out by the competent authority under Articles 14(1), 15(2) and 21(1) of Regulation No 1/2005. On particular, Article 14 of that regulation, concerning the ‘Checks and other measures related to journey log to be carried out by the competent authority before long journeys’, applies, according to the very wording of paragraph 1 therein, ‘[i]n the case of long journeys between Member States and with third countries’.41In its observations submitted to the Court, the European Commission took the view, based inter alia on Article 21(1) of Regulation No 1/2005, that that regulation makes such transport, for the stages of the transport taking place outside the European Union, subject to a specific check relating only to certain fundamental requirements under the regulation, namely those following from Article 3 thereof.42In that regard it should be observed, first of all, that transport having its point of departure within the territory of the European Union and destination in third countries is not transport in respect of which Article 1(2) of Regulation No 1/2005 provides explicitly that only Articles 3 and 27 of that regulation are to apply.43Next, although Article 21(1) of Regulation No 1/2005 provides for a specific check in which the competent authorities are responsible for checking, inter alia, compliance with a certain number of specific requirements thereunder, the fact remains that that provision also obliges the authorities to ensure ‘that the animals are transported in compliance with [that regulation]’, without restricting the scope of that check to compliance with certain provisions thereof.44Regarding more specifically the authorisation to be obtained from the competent authority of the place of departure, it should be noted that the wording of Article 14(1)(a)(ii) and (b) of Regulation No 1/2005, which expressly regulates the transport of animals with a point of departure within the territory of the European Union and a destination in a third country, refers to compliance with that regulation. No distinction is provided for in that regard between transport within the European Union and transport with a destination in a third country.45Similarly, nor do the provisions setting out the essential obligations to be complied with for a long journey, laid down in Articles 5(4), 6(3) and (4) and 8(2) of Regulation No 1/2005, draw a distinction between transport of animals taking place within the European Union and transport with a destination in a third country. Article 5(4) of that regulation provides that, for long journeys between Member States and between Member States and third countries, organisers and transporters are to comply with the provisions on the journey log. The same is true of the obligations keepers of animals have for long journeys under Article 8(2) in terms of checks and documentation in relation to the journey log.46Lastly, regarding the obligation transporters have under Article 6(3) and (4) of Regulation No 1/2005 to transport animals in accordance with the technical rules set out in Annex I thereto and to entrust the handling of the animals to personnel who have received training on the relevant provisions of Annexes I and II thereto, it must be taken as established that those provisions refer generally to the transport of animals without drawing any distinction according to place of destination.47Thus, in Article 14, Regulation No 1/2005 does not subject the transport of animals with a point of departure within the territory of the European Union and a destination in a third country to any particular approval scheme, different from that applicable to transport taking place within the European Union.48It should also be remembered that the dispute in the main proceedings concerns the question whether all the information referred to in Annex II to that regulation, in particular information on journey times and resting periods, must be included in the journey log submitted to the competent authority of the place of departure in respect of the stage of the long journey at issue in the main proceedings which is to take place in the territory of third countries.49It must be noted, first of all, that Article 5 of that regulation, pertaining to transport planning, provides in paragraph 4 that a journey log must be kept in accordance with the provisions of Annex II to that regulation for any long journey involving animals concerned, including journeys with a destination in a third country. To that end, point 3(b) of that annex places an obligation on the organiser of a long journey to provide the competent authority of the place of departure with a duly completed copy of section 1 (Planning) of the journey log.50The information contained in section 1, concerning inter alia scheduled resting, transfer or exit points (No 6) must, as a result of the legal definition of the term ‘journey’ in Article 2(j) of Regulation No 1/2005, cover the entire planned transport operation, from the place of departure to the place of destination. Accordingly, in the case of a long journey with a destination in a third country, the journey log must contain that information both for the stages of the journey taking place in the territory of the European Union and in the territory of third countries.51Regarding, secondly, the requirements that information must satisfy, it is clear from Article 14(1)(a)(ii) of Regulation No 1/2005 that the competent authority of the place of departure is required to check whether the transport can be regarded as compliant therewith. Thus, as regards planned journey times and resting periods, the journey planning as stated in the journey log must show that the planned transport will observe, inter alia, the technical rules on watering and feeding intervals and journey times and resting periods, specified in Chapter V of Annex I to that regulation, which the transporter is required to observe under Article 6(3) thereof.52It should be observed in that regard that, under Article 14(1)(a)(ii) of Regulation No 1/2005, the journey log is to be subject to ‘appropriate checks’ by the competent authority of the place of departure. Those checks are to be carried out prior to the long journey with a point of departure in the territory of the European Union and with a destination in a third country and thus relate only to the question whether the journey log submitted by the organiser is ‘realistic’ and ‘indicates’ compliance therewith. In conducting that prior check, the authority thus has a certain margin of discretion allowing it to take due account of the uncertainties involved in a long journey, part of which is to take place in the territory of third countries.53Moreover, as stated by the Commission at the hearing before the Court, the practice of granting export refunds on the basis of Commission Regulation (EU) No 817/2010 of 16 September 2010 laying down detailed rules pursuant to Council Regulation (EC) No 1234/2007 as regards requirements for the granting of export refunds related to the welfare of live bovine animals during transport (OJ 2010 L 245, p. 16), which involves a post-transport check of the requirements for watering and feeding intervals and journey times and resting periods resulting from Regulation No 1/2005, has not shown that the transport of animals with a point of departure in the territory of the European Union and with a destination in a third country comes up against systemic difficulties in terms of compliance with those requirements in the territory of third countries. As regards in particular the situation in the territory of the Russian Federation, the Commission has no knowledge of any Russian legislation or administrative practice on the part of the competent Russian authorities prohibiting the unloading of animals at resting or transfer points within Russian territory.54Should it nevertheless be the case that the law or administrative practice of a third country through which the transport will transit verifiably and definitely precludes full compliance with the technical rules of that regulation, the margin of discretion conferred on the competent authority of the place of departure empowers it to accept realistic planning for transport which, in the light inter alia of the means of transport used and the journey arrangements made, indicates that the planned transport will safeguard the welfare of the animals at a level equivalent to those technical rules.55In any event, under Article 14(1)(b) of Regulation No 1/2005 that authority may require, inter alia, changes to the arrangements for the intended transport in order to ensure that it will pass by enough resting and transfer points to indicate that the transport will comply with the aforementioned requirements as to watering and feeding intervals and journey times and resting periods.56In the light of the foregoing considerations, the answer to the questions referred is that Article 14(1) of Regulation No 1/2005 must be interpreted as meaning that, in order for transport involving a long journey for animals concerned which commences on the territory of the European Union and continues outside that territory to be authorised by the competent authority of the place of departure, the organiser of the journey must submit a journey log which, in the light of the arrangements for the journey as planned, is realistic and indicates that the provisions of that regulation will be complied with, including for the stages of the journey which are to take place in the territory of third countries, that authority being empowered, should that not be the case, to require changes to those arrangements to ensure compliance with those provisions throughout the journey. Costs 57Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: Article 14(1) of Council Regulation (EC) No 1/2005 of 22 December 2004 on the protection of animals during transport and related operations and amending Directives 64/432/EEC and 93/119/EC and Regulation (EC) No 1255/97 must be interpreted as meaning that, in order for transport involving a long journey for domestic Equidae other than registered Equidae, and domestic animals of bovine, ovine, caprine and porcine species which commences on the territory of the European Union and continues outside that territory to be authorised by the competent authority of the place of departure, the organiser of the journey must submit a journey log which, in the light of the arrangements for the journey as planned, is realistic and indicates that the provisions of that regulation will be complied with, including for the stages of the journey which are to take place in the territory of third countries, that authority being empowered, should that not be the case, to require changes to those arrangements to ensure compliance with those provisions throughout the journey. [Signatures]( *1 ) Language of the case: German. | 525d5-9b707de-44d3 | EN |
An insurance contract must set out transparently, in plain, intelligible language, the functioning of the insurance arrangements, so that that consumer can evaluate the economic consequences which derive from it | 23 April 2015 ( *1 )‛Reference for a preliminary ruling — Directive 93/13/EEC — Unfair terms — Insurance contract — Article 4(2) — Assessment of the unfairness of contractual terms — Exclusion of terms relating to the main subject-matter of the contract — Term intended to ensure that mortgage loan repayments are covered — Borrower’s total incapacity for work — Exclusion from cover in the event of recognised fitness to undertake an activity, paid or otherwise’In Case C‑96/14,REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal de grande instance de Nîmes (France), made by decision of 26 February 2014, received at the Court on 28 February 2014, in the proceedings Jean-Claude Van Hove v CNP Assurances SA, THE COURT (Third Chamber),composed of M. Ilešič, President of the Chamber, A. Ó Caoimh, C. Toader (Rapporteur), E. Jarašiūnas and C.G. Fernlund, Judges,Advocate General: N. Jääskinen,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 9 December 2014,after considering the observations submitted on behalf of:—CNP Assurances SA, by P. Woolfson and I. de Seze, avocats,the French Government, by S. Menez, D. Colas and S. Ghiandoni, acting as Agents,the European Commission, by M. Owsiany-Hornung and M. van Beek, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1The request for a preliminary ruling concerns the interpretation of Article 4(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).2The request has been made in proceedings between Mr Van Hove and CNP Assurances SA (‘CNP Assurances’) concerning an allegedly unfair contractual term in an insurance contract that includes the definition of ‘total incapacity for work’ for the purposes of that company’s cover of repayments on mortgage loans taken out by Mr Van Hove. Legal context EU law 3The nineteenth and twentieth recitals in the preamble to Directive 93/13 read as follows:‘Whereas, for the purposes of this Directive, assessment of unfair character shall not be made of terms which describe the main subject-matter of the contract nor the quality/price ratio of the goods or services supplied; whereas the main subject-matter of the contract and the price/quality ratio may nevertheless be taken into account in assessing the fairness of other terms; whereas it follows, inter alia, that in insurance contracts, the terms which clearly define or circumscribe the insured risk and the insurer’s liability shall not be subject to such assessment since these restrictions are taken into account in calculating the premium paid by the consumer;Whereas contracts should be drafted in plain, intelligible language, the consumer should actually be given an opportunity to examine all the terms and, if in doubt, the interpretation most favourable to the consumer should prevail.’4Article 1(1) of that directive provides:‘The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer.’5Article 3(1) of that directive provides:‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’6Article 4 of Directive 93/13 states:‘1. Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.2. Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject-matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods [supplied] in exchange, on the other, in so far as these terms are in plain, intelligible language.’7According to Article 5 of that directive:‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. …’ French law 8The seventh paragraph of Article L 132-1 of the Consumer Code, which transposes Article 4(2) of Directive 93/13 into French law, provides:‘Assessment of the unfair character of the terms … shall relate neither to the definition of the main subject-matter of the contract nor to the adequacy of the price or remuneration as against the goods sold or services provided in so far as these terms are in plain, intelligible language.’9Article L. 133-2 of that code is worded as follows:‘Contractual terms proposed by sellers or suppliers to consumers or non-professionals must be presented and drafted in plain, intelligible language.In the event of doubt, they shall be interpreted in the sense which is most favourable to the consumer or the non-professional. …’ The dispute in the main proceedings and the question referred for a preliminary ruling 10In July 1998, Mr Van Hove concluded two loan contracts with Crédit Immobilier de France Méditerranée for the amounts, respectively, of FRF 340600 (EUR 51924), repayable at a rate of EUR 434.43 per month until 31 March 2016, and FRF 106556 (EUR 16244), repayable at a rate of EUR 26.70 per month until 31 March 2017.11At the time of concluding those loan contracts, he also signed a ‘group insurance contract’ with CNP Assurances (‘the insurance contract’). The first clause of that insurance contract guarantees to cover all loan repayments ‘due from the borrowers to the contracting party in the event of death, permanent and absolute invalidity or 75% of such loan repayments in the event of total incapacity for work’.12Under the second clause of that contract, ‘[t]he insured person shall be regarded as being in a state of total incapacity for work if, after 90 consecutive days’ interruption of activity following an accident or illness (“the waiting period”), he finds himself unable to take up any activity, paid or otherwise’.13On 17 February 2010, Mr Van Hove was obliged to take a leave of absence from work due to a relapse connected with a work-related accident of 13 June 2000. Mr Van Hove’s state of health was certified as having stabilised by 17 October 2005. His rate of permanent partial incapacity for work (‘his permanent partial incapacity rate’) was assessed at 23%.14On 14 May 2005, he had surgery on a fistula resulting from the work-related accident. His state of health was certified as having stabilised on 4 November 2005 and his permanent partial incapacity rate was assessed at 67%. Owing to an outbreak of dizziness, he was obliged to take leave of absence from work on 3 August 2007 which was extended until 22 February 2008.15With effect from 1 January 2011, his permanent partial incapacity rate was set by the social security authorities at 72%. On that basis, he was allocated a monthly allowance of EUR 1057.65.16On 18 June 2012, for the purposes of assessing the cover payable by CNP Assurances, the doctor appointed by that company examined Mr Van Hove. He concluded that Mr Van Hove’s state of health allowed him to carry on appropriate employment on a part-time basis. By letter of 10 July 2012, CNP Assurances informed Mr Van Hove that, with effect from 18 June 2012, it would no longer cover his loan repayments. By further letter of 29 August 2012, it maintained its refusal to make repayments, explaining to Mr Van Hove that while his state of health was no longer compatible with him returning to his former post, he was fit to carry on appropriate employment, at least on a part-time basis.17On 4 March 2013, Mr Van Hove brought proceedings before the referring court against CNP Assurances. He asks that court, primarily, on the basis, inter alia, of the provisions of the Consumer Code, to declare that the terms of the contract between him and CNP Assurances relating to the definition of ‘total incapacity for work’ and the conditions under which cover for that incapacity is acquired are unfair, and to order the defendant in the main proceedings to cover the sums which are still outstanding in connection with the two loans referred to above with effect from June 2012.18In support of his claims, Mr Van Hove argues, first, that the term of the insurance contract which makes provision of cover by the insurer conditional upon it being completely impossible for the insured person to take up any activity, paid or otherwise, is unfair because it causes a significant imbalance between the parties to that contract, to the detriment of the consumer. Secondly, he claims that the definition of ‘total incapacity for work’ is worded in such a way as to prevent a lay consumer from being able to grasp its full significance.19CNP Assurances asks the referring court, in essence, to dismiss Mr Van Hove’s action. The definition of ‘total incapacity for work’, within the meaning of the contract, clearly and precisely makes provision of cover conditional upon the person concerned being in a state of total incapacity for work. It contends that, as of 18 June 2012, Mr Van Hove is no longer in a state of total incapacity for work, within the meaning of that contract, because, on that date, the medical expert appointed by that company found that he was fit to carry on an appropriate employment and fixed his functional incapacity rate at 20%. CNP Assurances states in that regard that the criteria which are taken into account for the purposes of fixing that rate are different from the criteria used by the social security authorities. Moreover, that term cannot constitute an unfair term because it concerns the very subject-matter of the contract and does not cause a significant imbalance, to the detriment of the applicant, since his loan repayments were covered for over two years.20The referring court states that, in order to resolve the dispute before it, it is necessary to rule on whether the second clause of the insurance contract constitutes an unfair term.21That court states that the Cour de cassation (Court of Cassation), by a recent judgment, found that the term relating to the provision of cover in the event of temporary total incapacity for work, which provides that daily payments are to be made during the period in which the insured person’s state of health temporarily prevents him from carrying on any employment and which specifies that those payments will be made to that person until such time as he is fit to take up some form of employment, defines the main subject-matter of the contract and is covered by the seventh paragraph of Article L 132-1 of the Consumer Code. Accordingly, the tribunal de grande instance de Nîmes considers that, in the light of that judgment, the term at issue in the case before it may, by virtue of that provision, be classified as falling outside the definition of an ‘unfair term’.22Moreover, while the referring court finds that, contrary to Mr Van Hove’s assertions, the wording of that clause, pursuant to which the provision of cover in the event of total incapacity for work is made conditional upon the insured person being in a situation where, ‘following an accident or illness …, he finds himself unable to take up any activity, paid or otherwise’, is both clear and precise. It notes nevertheless that it cannot be excluded that that term falls within the concept of an ‘unfair term’ within the meaning of Directive 93/13.23That court considers that that clause, in defining the concept of ‘total incapacity for work’, determines the conditions which the insured person must meet in order to receive the insurance cover. However, that clause prevents any insured person who is recognised as being fit to carry on some form of employment from receiving that cover, even if such employment is unpaid. According to the referring court, the purpose of an insurance policy, such as that at issue in the dispute before it, is to ensure that the commitments made by the borrower continue to be honoured in the event that his state of health no longer allows him to carry on an activity which will provide him with the necessary income to meet his obligations.24In so far as that clause would have the effect of preventing the borrower from receiving the cover normally provided in the event of total incapacity for work if he is declared fit to carry on some form of employment, even if that employment cannot provide him with any income whatsoever, that clause would frustrate part of the purpose of the insurance policy. The referring court considers, therefore, that the second clause of the insurance contract could be construed as causing a significant imbalance in the rights and obligations of the parties to that contract, to the detriment of the consumer.25In those circumstances, the tribunal de grande instance de Nîmes decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling:‘Must Article 4(2) of Directive [93/13] be interpreted as meaning that the concept of a term relating to the definition of the main subject-matter of a contract, which appears in that provision, covers a term of an insurance contract intended to ensure that loan repayments payable to the lender will be covered in the event of the borrower’s total incapacity for work if that term prevents the insured person from receiving that cover in the event that he is declared fit to carry on unpaid activity?’ The question referred for a preliminary ruling 26At the outset, it must first be recalled that, according to established case-law, the system of protection established by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier as regards both his bargaining power and his level of knowledge, which leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms (see, inter alia, judgment in Kušionová, C‑34/13, EU:C:2014:2189, paragraph 48 and the case-law cited).27Secondly, as regards such a position of weakness, Directive 93/13 requires Member States to provide for a mechanism ensuring that every contractual term not individually negotiated may be reviewed in order to determine whether it is unfair. Accordingly, it is for the national court to determine, taking account of the criteria laid down in Articles 3(1) and 5 of Directive 93/13, whether, having regard to the particular circumstances of the case, such a term meets the requirements of good faith, balance and transparency laid down by that directive (see judgment in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 40 and the case-law cited).28Likewise, although it is for the referring court alone to rule on the classification of those terms in accordance with the particular circumstances of the case, the fact remains that the Court has jurisdiction to elicit from the provisions of Directive 93/13, in this case the provisions of Article 4(2) thereof, the criteria that the national court may or must apply when examining contractual terms (judgment in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 45).29By its question, the referring court asks, in essence, whether Article 4(2) of Directive 93/13 must be interpreted as meaning that a term of an insurance contract intended to ensure that loan repayments payable to the lender will be covered in the event of the borrower’s total incapacity for work, will, if that term prevents the insured person from receiving that cover in the event that he is declared fit to carry on an activity, paid or otherwise, fall within the exception set out in that provision.30Article 4(2) of Directive 93/13 provides that the assessment of the unfair nature of the terms is to relate neither to the definition of the main subject-matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplied in exchange, on the other, in so far as those terms are drafted in plain, intelligible language.31The Court has already held that that provision must be strictly interpreted, since it lays down an exception to the mechanism for reviewing the substance of unfair terms, such as that provided for by the system of consumer protection put in place by Directive 93/13 (judgments in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 42, and Matei, C‑143/13, EU:C:2015:127, paragraph 49).32It is in that context that the question referred by the referring court must be examined. In order to answer that question, it is necessary to consider, first, whether a term, such as that at issue in the main proceedings, falls within the main subject-matter of an insurance contract and, secondly, whether such term is drafted in plain, intelligible language. The concept of the ‘main subject-matter of the contract ’ 33Contractual terms falling within the concept of ‘the main subject-matter of the contract’, within the meaning of Article 4(2) of Directive 93/13, must be understood as being those that lay down the essential obligations of the contract and, as such, characterise it (see, to that effect, judgments in Caja de Ahorros y Monte de Piedad de Madrid, C‑484/08, EU:C:2010:309, paragraph 34, and Kásler et Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 49). By contrast, terms ancillary to those that define the very essence of the contractual relationship cannot fall within the concept of ‘the main subject-matter of the contract’, within the meaning of that provision (judgments in Kásler et Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 50, and Matei, C‑143/13, EU:C:2015:127, paragraph 54).34As regards the question whether a term falls within the main subject-matter of an insurance contract, it must be stated, first, that according to the case-law of the Court, the essentials of an insurance transaction are that the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of materialisation of the risk covered, with the service agreed when the contract was concluded (judgments in CPP, C‑349/96, EU:C:1999:93, paragraph 17; Skandia, C‑240/99, EU:C:2001:140, paragraph 37; and Commission v Greece, C‑13/06, EU:C:2006:765, paragraph 10).35Secondly, as regards a contractual term contained in an insurance contract concluded between a seller or supplier and a consumer, the nineteenth recital in the preamble to Directive 93/13 states that, in such contracts, the terms which clearly define or circumscribe the insured risk and the insurer’s liability shall not be subject to an assessment of unfair character since those restrictions are taken into account in calculating the premium paid by the consumer.36In the present case, the referring court states that the contractual term at issue includes the definition of the concept of ‘total incapacity for work’ and determines the conditions which a borrower must meet in order to receive the payment cover in respect of his loan. In those circumstances, it cannot be ruled out that such a term will circumscribe the insured risk and the insurer’s liability and lay down the essential obligations of the insurance contract at issue, which is, however, a matter for the referring court to determine.37In that regard, the Court has had occasion to hold that the examination of a contractual term, in order to determine whether that term falls within the concept of the ‘main subject-matter of the contract’ within the meaning of Article 4(2) of Directive 93/13, must be carried out having regard to the nature, general scheme and the stipulations of the contract and its legal and factual context (see, to that effect, judgment in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraphs 50 and 51).38It is, therefore, for the referring court to determine to what extent, having regard to those factors, the term at issue in the dispute before it lays down an essential component of the contractual framework of which it forms part, and, as such, characterises it.39If the referring court were to consider that that term forms part of the main subject-matter of the contractual framework, that court must also determine whether that term has been drafted by the seller or supplier in plain, intelligible language (see, to that effect, judgment in Caja de Ahorros y Monte de Piedad de Madrid, C‑484/08, EU:C:2010:309, paragraph 32, and order in Pohotovosť, C‑76/10, EU:C:2010:685, paragraph 72). The concept of ‘plain, intelligible language ’ 40The Court has made it clear that the requirement of transparency of contractual terms, laid down by Directive 93/13, cannot be reduced merely to their being formally and grammatically intelligible. On the contrary, as the system of protection introduced by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards, in particular, his level of knowledge, that requirement of transparency is to be interpreted broadly (see, to that effect, judgments in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraphs 71 and 72, and Matei, C‑143/13, EU:C:2015:127, paragraph 73).41Of fundamental importance to the consumer, therefore, for the purpose of complying with the requirement of transparency, is not only (i) the information given prior to the conclusion of the contract concerning the conditions as to liability, but also (ii) the information given concerning the specific features of the arrangements for covering the loan repayments payable to the lender in the event of the borrower’s total incapacity for work and the relationship between those arrangements and the arrangements laid down in respect of other contractual terms, so that that consumer is in a position to evaluate, on the basis of plain, intelligible criteria, the economic consequences for him which derive from it. That is so since the consumer will decide, in the light of those two factors, whether he wishes to be contractually bound by agreeing to the terms previously drawn up by the seller or supplier (see, by analogy, judgments in RWE Vertrieb, C‑92/11, EU:C:2013:180, paragraph 44, Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraphs 70 and 73; and Matei, C‑143/13, EU:C:2015:127, paragraph 74).42In the present case, while the referring court considers that the wording of the clause at issue is plain and precise, it also states that the expression ‘take up any activity, paid or otherwise’, set out in that clause, may be understood in various ways. Apart from the interpretation suggested by CNP Assurances, according to which that expression also allows insured persons who are not gainfully employed at the time of an accident or illness to be considered as being in a state of total incapacity for work, it cannot be ruled out, as stated in paragraph 24 of the present judgment and as submitted by the French Government and the European Commission at the hearing, that that expression can be interpreted as meaning that it does not allow a person who is fit to carry on any activity whatsoever to receive cover, under the invalidity guarantee, for payments that he owes to the other contracting party.43Like the Commission, the Court notes that it cannot be ruled out, in the present case, that, even if the term is grammatically intelligible, which it falls to the referring court to assess, the scope of that term was not understood by the consumer.44The Commission states that the insurance contract was concluded in order to protect the consumer against the consequences of being unable to meet the monthly payments on his loans. Accordingly, the consumer could reasonable expect that the concept of ‘activity, paid or otherwise’, appearing in the insurance contract and included in the definition of ‘total incapacity for work’, corresponds to an employment that can, at least potentially, provide sufficient remuneration to enable him to meet the monthly payments on his loans.45As is clear from the arguments presented at the hearing, the doubts as to the lack of clarity of the term at issue in the main proceedings are reinforced by the extremely broad and vague nature of the expression ‘activity, paid or otherwise’ used in that term. Indeed, the word ‘activity’, as the Commission states, can encompass any human operation or activity carried out to achieve a specific purpose.46In the present case, as the French Government stated in its written observations, the consumer was not necessarily aware, when concluding the contract at issue in the main proceedings, of the fact that the concept of ‘total incapacity for work’, within the meaning of that contract, did not correspond to that of ‘partial permanent incapacity’ within the meaning of French social security law.47Accordingly, as regards the specific features of a contractual term, such as that at issue in the main proceedings, it is for the referring court to determine whether, having regard to all the relevant information, including the promotional material and information provided by the insurer in the negotiation of the insurance contract and, more generally, of the contractual framework, an average consumer, who is reasonably well informed and reasonably observant and circumspect, would not only be aware of the existence of the difference between the concept of ‘total incapacity for work’, within the meaning of the contract at issue in the main proceedings, and that of ‘partial permanent incapacity’, within the meaning of the national social security law, but would also be able to assess the potentially significant economic consequences, for him, resulting from the limitation of the cover included in the insurance policy in accordance with the requirements of the case-law referred to in paragraph 41 above.48The fact that the contract at issue in the main proceedings forms part of a broader contractual framework and is related to the loan contracts could be also relevant in this context. The consumer cannot be required, when concluding related contracts, to have the same vigilance regarding the extent of the risks covered by that insurance contract as he would if he had concluded that contract and the loan contracts separately.49Should the referring court come to the conclusion that a term, such as that at issue in the main proceedings, does not fall within the exception provided in Article 4(2) of Directive 93/13, it must be recalled that, under Article 5 of that directive, if the wording of a contractual term is not clear, the interpretation most favourable to the consumer shall prevail.50Therefore, the answer to the question referred is that Article 4(2) of Directive 93/13 must be interpreted as meaning that a term of an insurance contract intended to ensure that loan repayments payable to the lender will be covered in the event of the borrower’s total incapacity for work falls within the exception set out in that provision only where the referring court finds:first, that, having regard to the nature, general scheme and the stipulations of the contractual framework of which it forms part, and to its legal and factual context, that term lays down an essential component of that contractual framework, and, as such, characterises it, and,secondly, that that term is drafted in plain, intelligible language, that is to say that it is not only grammatically intelligible to the consumer, but also that the contract sets out transparently the specific functioning of the arrangements to which the relevant term refers and the relationship between those arrangements and the arrangements laid down in respect of other contractual terms, so that that consumer is in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. Costs 51Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: Article 4(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, must be interpreted as meaning that a term of an insurance contract intended to ensure that loan repayments payable to the lender will be covered in the event of the borrower’s total incapacity for work falls within the exception set out in that provision only where the referring court finds: first, that, having regard to the having regard to the nature, general scheme and the stipulations of the contractual framework of which it forms part, and to its legal and factual context, that term lays down an essential component of that contractual framework, and, as such, characterises it, and, secondly, that that term is drafted in plain, intelligible language, that is to say that it is not only grammatically intelligible to the consumer, but also that the contract sets out transparently the specific functioning of the arrangements to which the relevant term refers and the relationship between those arrangements and the arrangements laid down in respect of other contractual terms, so that that consumer is in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. [Signatures]( *1 ) Language of the case: French. | 80b91-04554ab-46d4 | EN |
The Court confirms the fine of €210 million imposed on LG Display for its participation in the cartel on the market for LCD panels | 23 April 2015 ( *1 )‛Appeal — Competition — Agreements, decisions and concerted practices — Article 101 TFEU and Article 53 of the EEA Agreement — Worldwide market for liquid crystal display (LCD) panels — Price-fixing — Fines — Guidelines on the method of setting fines (2006) — Point 13 — Determination of value of sales — Joint venture — Taking sales to parent companies into account — Notice on immunity from fines and reduction of fines in cartel cases (2002) — Point 23(b), final paragraph — Partial immunity from fines — Evidence of facts previously unknown to the Commission’In Case C‑227/14 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 7 May 2014, LG Display Co. Ltd, established in Seoul (South Korea), LG Display Taiwan Co. Ltd, established in Taipei (Taiwan),represented by A. Winckler and F.-C. Laprévote, avocats,appellants,the other party to the proceedings being: European Commission, represented by F. Ronkes Agerbeek and P. Van Nuffel, acting as Agents, with an address for service in Luxembourg,defendant at first instance,THE COURT (Eighth Chamber),composed of A. Ó Caoimh (Rapporteur), President of the Chamber, C. Toader and C.G. Fernlund, Judges,Advocate General: M. Wathelet,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 26 January 2015,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1By their appeal, LG Display Co. Ltd (‘LGD’) and LG Display Taiwan Co. Ltd (‘LGDT’) request the Court partly to set aside the judgment of the General Court of the European Union in LG Display and LG Display Taiwan v Commission (T‑128/11, EU:T:2014:88; ‘the judgment under appeal’), whereby the General Court (i) varied Commission Decision C(2010) 8761 final of 8 December 2010 relating to a proceeding under Article 101 [TFEU] and Article 53 of the Agreement on the European Economic Area (Case COMP/39.309 — LCD), a summary of which was published in the Official Journal of the European Union of 7 October 2011 (OJ 2011 C 295, p. 8; ‘the contested decision’), by setting at EUR 210000000 the fine imposed jointly and severally on them in Article 2 of that decision and (ii) dismissed, as to the remainder, their action for the partial annulment of that decision, in so far as it concerns them, and for a reduction in the amount of that fine. Legal context 2Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 TFEU] and [102 TFEU] (OJ 2003 L 1, p. 1), provides in Article 23(2) and (3) thereof:‘2. The Commission may by decision impose fines on undertakings and associations of undertakings where, either intentionally or negligently:(a)they infringe Article [101 TFEU] or [102 TFEU] ......For each undertaking and association of undertakings participating in the infringement, the fine shall not exceed 10% of its total turnover in the preceding business year.3. In fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement.’3Article 31 of that regulation provides:‘The Court of Justice shall have unlimited jurisdiction to review decisions whereby the Commission has fixed a fine or periodic penalty payment. It may cancel, reduce or increase the fine or periodic penalty payment imposed.’4Point 6 of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2; ‘the Guidelines on the method of setting fines’) provides:‘The combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement ...’5Under the heading ‘Basic amount of the fine’, point 13 of those Guidelines states:‘In determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly … relates in the relevant geographic area within [the European Economic Area (EEA)]. ...’6Point 23(b) of the Commission notice on immunity from fines and reduction of fines in cartel cases (OJ 2002 C 45, p. 3; ‘the Leniency Notice’) provides for various reductions in fines which can be granted to undertakings according to the order on which they provided information. The final paragraph of that provision reads as follows:‘In addition, if an undertaking provides evidence relating to facts previously unknown to the Commission which have a direct bearing on the gravity or duration of the suspected cartel, the Commission will not take these elements into account when setting any fine to be imposed on the undertaking which provided this evidence.’ Background to the dispute and the contested decision 7The facts giving rise to the dispute and the contested decision, as set out in paragraphs 1 to 31 of the judgment under appeal, may be summarised as follows.8LGD is a company governed by Korean law which controls a group of companies established and operating worldwide in the production of liquid crystal display panels (‘LCD panels’). LGD was formed on 26 July 1999 through a joint venture agreement between LG Electronics Inc., a company governed by Korean law (‘LGE’), and Koninklijke Philips Electronics NV (‘Philips’), a company governed by Netherlands law. From 26 July 1999 until 23 July 2004, LGE and Philips each owned 50% of the capital of LGD. Subsequently, their respective shareholdings fell to 37.9% and 32.87%.9LGDT, a company governed by Taiwanese law, is a wholly owned subsidiary of LGD and is active in the production and supply of LCD panels.10In the spring of 2006, Samsung Electronics Co. Ltd (‘Samsung’), a company governed by Korean law, submitted to the Commission an application for immunity from fines under the Leniency Notice. In doing so, Samsung disclosed the existence of a cartel between several companies, including LGD and LGDT, concerning certain types of LCD panels.11On 17 July 2006 LGD also submitted to the Commission an application for immunity from fines under the Leniency Notice.12On 23 November 2006 the Commission granted conditional immunity to Samsung, in accordance with point 15 of the Leniency Notice, whereas it refused LGD such immunity.13On 27 May 2009 the Commission initiated the administrative procedure and adopted a statement of objections which was sent to 16 companies, including the appellants, LGE, and Philips. That statement of objections explained, inter alia, the reasons why, pursuant to the case-law of the General Court, those parties were to be held jointly and severally responsible for the infringements committed by LGD.14Within the period allowed, the addressees of the statement of objections made known in writing to the Commission their views on the objections raised against them. Further, a number of the addressees of the statement of objections, including the appellants, availed themselves of their right to be heard orally during the hearing held on 22 and 23 September 2009.15On 1 February 2010 LGD submitted an application, based on the final paragraph of point 23(b) of the Leniency Notice, whereby it requested partial immunity with respect to its participation in the cartel in the years 2005 and 2006.16By a request for information of 4 March 2010 and by a supplementary letter of 6 April 2010, the parties were, inter alia, invited to submit to the Commission data concerning the value of the sales to be taken into account for the setting of the basic amount of the fines and to comment on that issue. LGD provided the data concerning it by letter of 21 April 2010.17On 8 December 2010 the Commission adopted the decision at issue. The contested decision is addressed to 6 of the 16 companies to which the statement of objections was addressed, including the appellants and Samsung. By contrast, LGE and Philips were not included.18In the contested decision, the Commission found there to be a cartel among six major international manufacturers of LCD panels, including the appellants and Samsung, concerning the following two categories of products equal to or greater than 12 inches in size: (i) LCD panels for information technology, such as those for notebooks and PC monitors, and (ii) LCD panels for televisions (referred to collectively as ‘cartelised LCD panels’).19According to the contested decision, that cartel took the form of a single and continuous infringement of Article 101 TFEU and Article 53 of the Agreement on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3; ‘the EEA Agreement’) which took place from 5 October 2001 until at least 1 February 2006. During that period, the participants in the cartel held numerous multilateral meetings, which they called ‘Crystal Meetings’. Those meetings had a clearly anti-competitive object, since they provided an opportunity for the participants, inter alia, to fix minimum prices for cartelised LCD panels, to discuss their future prices in order to avoid price reductions and to coordinate price increases and levels of production. During the infringement period, the cartel participants also met bilaterally and frequently exchanged information on matters dealt with in the ‘Crystal Meetings’. They also took steps in order to verify whether the decisions adopted at those meetings had been applied.20In order to set the fines imposed by the contested decision, the Commission used the Guidelines on the method of setting fines. Pursuant to those Guidelines, the Commission established the value of the sales of cartelised LCD panels directly or indirectly concerned by the infringement. To that end, it established the following three categories of sales made by the participants in the cartel:—the category of ‘direct EEA sales’, namely sales of cartelised LCD panels to another undertaking within the EEA;the category of ‘direct EEA sales through transformed products’, namely sales of cartelised LCD panels incorporated, within the group to which the producer belongs, into finished products then sold to another undertaking within the EEA; andthe category of ‘indirect sales’, namely, sales of cartelised LCD panels to another undertaking situated outside the EEA, which then incorporates the panels in finished products which it sells within the EEA.21However, the Commission took the view that it needed to examine only the first two categories above, as the inclusion of the third category was not necessary for the fines imposed to achieve a sufficient level of deterrence.22As regards the appellants, the Commission, despite their objections, considered that the relevant sales value had to be calculated by also taking into account their sales to LGE and Philips. First, sales of cartelised LCD panels to those companies were also covered by the discussions between the participants in the cartel in question and, second, the prices of those sales were influenced by the actual market circumstances, that is to say, the existence of cartelised prices.23The Commission also took into consideration, in order to set the fines, the Leniency Notice. In that regard, the Commission first confirmed the total immunity granted to Samsung. The Commission then reduced by 50% the amount of the fine to be imposed on the appellants, because of the evidence which they had provided and which was of significant added value in relation to the evidence already in the Commission’s possession, in accordance with point 21 and the first indent of point 23(b) of the Leniency Notice. Last, the Commission accepted the appellants’ request for partial immunity from a fine, but solely with respect to the year 2006. According to the Commission, only in relation to that year did the information provided by the appellants constitute evidence of facts of which it was previously unaware. On the other hand, as regards 2005, the information provided by the appellants was added to information which the Commission had already received from Samsung and therefore did not concern facts previously unknown to the Commission.24On the basis of, inter alia, those considerations, the Commission, in Article 2 of the contested decision, imposed on the appellants joint and several liability for payment of a fine of EUR 215000000. The judgment under appeal 25By application lodged at the Registry of the General Court on 23 February 2011, the appellants brought before it an action for partial annulment of the contested decision and reduction of the fine imposed on them by that decision.26In support of their application, the appellants raised four pleas in law. The first of those pleas in law related to the claim that the Commission, wrongly and in breach of their rights of defence, included their internal sales in the calculation of the fine and the second was related to the claim that the Commission wrongly refused to grant them immunity from a fine in respect of the year 2005 and that it failed to take due account of the partial immunity which it granted to them for the month of January 2006.27In the judgment under appeal, the General Court partly upheld the latter plea in law, holding that the Commission had erred in taking into account the month of January 2006 in the value of the appellants’ sales for the calculation of the fine to be imposed on them. Consequently, in the exercise of its unlimited jurisdiction, the General Court reduced the fine to EUR 210000000. As to the remainder, the General Court dismissed the action. Forms of order sought by the parties and the procedure before the Court 28By their appeal, the appellants claim that the Court of Justice should:partly set aside the judgment under appeal, in so far as it dismissed their action for the partial annulment of the contested decision;partly annul the contested decision and, in the exercise of its unlimited jurisdiction, reduce the fine imposed on them, andorder the Commission to pay the costs incurred before the Court of Justice and the General Court.29The Commission contends that the Court should dismiss the appeal and order the appellants to pay the costs. The appeal 30In support of their appeal, the appellants rely on two grounds of appeal. The first ground relates to a claim that the General Court erred in law, that it was in breach of its obligation to state reasons and that it infringed the appellants’ rights of defence, manifestly distorted the evidence, and failed to exercise its unlimited jurisdiction as regards the inclusion of LGD’s sales of cartelised LCD panels to its parent companies in the value of sales taken into account for the calculation of the fine. The second ground relates to a claim of an error in law, a failure to provide adequate reasoning and manifest distortion of the sense of the evidence in the refusal by the General Court to grant LGD partial immunity for the year 2005. The first ground of appeal: taking into account LGD’s sales of cartelised LCD panels to its parent companies for the calculation of the fine Arguments of the parties31This ground of appeal is divided into two parts. In the first part, the appellants claim that the General Court erred in law in its application of point 13 of the Guidelines on the method of setting fines, failed to state reasons for its decision to the requisite legal standard, manifestly distorted the sense of the evidence, infringed LGD’s rights of defence and failed to exercise its unlimited jurisdiction in concluding that the Commission might include in the value of sales taken into account for the calculation of the fine all sales made on the relevant market. In the second part, the appellants claim that the General Court erred in law by disregarding the principle of proportionality, failed to provide adequate reasoning, manifestly distorted the sense of the evidence and infringed LGD’s rights of defence, by upholding the Commission’s conclusion that LGD’s internal sales to its parent companies were in fact affected by the infringement pursued.– The first part of the first ground of appeal, concerning the ability to take into account all sales made on the market affected by the infringement32In the first part of the first ground of appeal, the appellants claim, in essence, that the General Court erred in holding, in paragraph 97 of the judgment under appeal, that the Commission was entitled to include, in order to calculate the fine, LGD’s internal sales to its parent companies, on the sole ground that those sales were made on the market affected by the infringement, even though those sales were not affected by the infringement.33First, the appellants claim that, although the Commission is not obliged to ascertain which individual sales were affected by the cartel, the General Court, by including the value of all sales of cartelised LCD panels made on the market affected by the infringement in the value of sales taken into account in order to calculate the fine, notwithstanding the lack of evidence to show that the infringement affected LGD’s internal sales to LGE and Philips, infringed point 13 of the Guidelines on the method of setting fines and moreover departed from the Commission’s prior decision-making practice, as that emerges from, inter alia, Decision C(2008) 6815 final of 12 November 2008 relating to a proceeding under Article 81 [EC] and Article 53 of the EEA Agreement (Case COMP/39.125 — Car glass) and Decision C(2008) 926 final of 11 March 2008 relating to a proceeding under Article 81 [EC] and Article 53 of the EEA Agreement (Case COMP/38.543 — International removal services).34Second, the appellants claim that the General Court erred in law by failing to state reasons to the requisite legal standard why the internal sales of cartelised LCD panels by LGD to Philips and LGE could have distorted competition on the relevant market, notwithstanding that there were structural guarantees to rule out the possibility of those sales being affected by the cartel, since those sales were, inter alia, made at preferential prices and could not, consequently, be considered to have been made‘on the free market’. In that regard, this case is comparable to that which gave rise to the judgment in Team Relocations v Commission (T‑204/08 and T‑212/08, EU:T:2011:286), relating to international removal services, where the General Court, for that reason, excluded certain sales from the value of sales made on the market concerned.35Third, the appellants claim that the General Court did not exercise its unlimited jurisdiction under Article 261 TFEU and Article 31 of Regulation No 1/2003, by permitting the Commission to deviate, without providing adequate reasons, from its previous decision-making practice, as that emerges from, inter alia, Decision C(2007) 5791 final of 28 November 2007 relating to proceedings under Article 81 [EC] and Article 53 of the EEA Agreement (Case COMP/39165 — Flat glass), and decisions adopted in the area of merger control, where the Commission excluded the taking into account of internal sales in order to calculate the fine.36Fourth, the appellants criticise the General Court for having erred in law and having failed to exercise its unlimited jurisdiction by permitting the Commission to set the fine on the basis of the total turnover relating to the market concerned. In that regard, the General Court failed to examine the evidence produced and arguments put forward by LGD to show that its internal sales to LGE and Philips could not have been affected by the cartel, in particular because of the contractual terms in the joint venture agreement entered into by LGE and Philips.37Fifth, the appellants complain that the General Court’s reasoning was contradictory with respect to the interpretation of the Guidelines on the method of setting fines. In paragraph 97 of the judgment under appeal, according to the appellants, the General Court interpreted those Guidelines as allowing the Commission to include in the value of sales taken into consideration for the calculation of the fine the value of all sales made on the relevant market, and not to exclude the value of sales which were not affected by the infringement. On the other hand, in paragraph 70 of the judgment under appeal, the General Court stated that the value of sales taken into account for that calculation should encompass the value of sales with respect to which competition within the relevant market was distorted. Likewise, in paragraph 68 of the judgment under appeal, the General Court defined the value of sales to be taken into account for that calculation by reference to the sale of goods in respect of which the infringement was committed and products which were the subject of a restrictive practice. Further, in paragraph 62 of the judgment under appeal it is stated that there must be a link between the value of sales taken into consideration and the infringement.38Sixth, the appellants consider that the General Court erred in law and infringed LGD’s rights of defence by relying on an irrebuttable presumption that all sales made on the relevant market were affected by the infringement at issue. Yet the Guidelines on the method of setting fines do not establish such a presumption, but on the contrary impose on the Commission the obligation to examine on a case-by-case basis whether sales were affected by the infringement at issue. The General Court thus failed to assess the evidence adduced by LGD.39The Commission contends that this part of the ground of appeal is unfounded, since neither the Court’s case-law nor the Guidelines prevent it from taking into consideration internal sales in order to calculate the fine. In any event, the argument is ineffective, because it is common ground that LGD’s sales to Philips and LGE constituted sales to other undertakings. As to the remainder, it is compatible both with the Commission’s decision-making practice and point 13 of the Guidelines that the value of sales to be taken into account in order to calculate fines should not be restricted solely to transactions which are in fact affected by the cartel at issue.– The second part of the first ground of appeal, concerning the impact of the infringement on LGD’s internal sales to its parent companies40In the second part of the first ground of appeal the appellants claim, in essence, that the General Court was wrong to hold, in paragraphs 73 and 83 of the judgment under appeal, that, in any event, the cartel did in fact affect LGD’s internal sales to its parent companies.41First, the appellants claim that, since the General Court stated, in paragraph 86 of the judgment under appeal, that the Commission had no evidence regarding specifically LGD’s internal sales to LGE and Philips made in the period from July 2002 to September 2005, the General Court erred in law and infringed LGDs’ rights of defence by taking those sales into account for the calculation of the fine. The Commission deviated in that regard from the practice followed in Commission Decision C(2009) 428 final of 28 January 2009 relating to proceedings under Article 81 [EC] and Article 53 of the EEA Agreement (Case COMP/39406 — Marine Hoses), where the Commission took the view that the principle of proportionality precludes taking into account sales relating to a period for which no evidence is available. That practice is also confirmed by the case-law of the General Court (judgments in Dansk Rørindustri v Commission, T‑21/99, EU:T:2002:74, paragraph 62, and IMI and Others v Commission, T‑18/05, EU:T:2010:202, paragraph 95). Further, the General Court failed to assess whether, taking into consideration that lack of evidence for the period from July 2002 to September 2005, LGD’s internal sales to its parent companies were part of a single and continuous infringement throughout the whole of the infringement period.42Second, the appellants claim that the General Court failed to provide adequate reasoning and manifestly distorted the sense of the evidence when it held that the sales of cartelised LCD panels by LGD to LGE, as opposed to the sales made to Philips, were affected by the infringement. In the first place, the General Court distorted the sense of the notes of a meeting of 15 November 2001, referred to in paragraph 76 of the judgment under appeal, by inferring from that document alone, in paragraph 150 of that judgment, a general rule that the cartel at issue also concerned internal sales, although that document makes no mention of LGE and Philips and there is nothing in its content to support the existence of such a general rule. In the second place, the General Court distorted the sense of Table 2 of the contested decision by inferring from that table, in paragraph 151 of the judgment under appeal, that the prices of cartelised LCD panels sold by LGD to its parent companies were influenced by the cartel, although that table related only to sales to LGD’s customers in general, over a short period of six months, of a specific type of LCD monitor panel.43Third, the appellants claim that the General Court failed to state reasons to the requisite legal standard for its rejection, in paragraph 125 of the judgment under appeal, of their argument that the Commission infringed LGD’s rights of defence when it found that LGD’s internal sales to its parent companies were affected by the cartel. According to the appellants, there is, in that regard, a contradiction in finding, in paragraph 111 of the judgment under appeal, that ‘the objection concerning [the appellants’] sales to LGE and Philips was already clear from the statement of objections’, while, in paragraph 99 of the judgment under appeal, the General Court also stated that ‘it is true that the statement of objections did not expressly state that [the appellants’] sales to LGE and Philips were affected by the cartel’. Yet if LGD had known, at the time of the statement of objections, that the Commission envisaged including its internal sales to its parent companies in the calculation of a fine on the ground that those sales had been made on a market affected by the cartel, LGD could have presented its arguments on that point in order to explain why sales made within the same group ought not, in general, to be taken into consideration when calculating a fine.44The Commission contends, in essence, that the second part of the first ground of appeal is ineffective, for the reason that, even if it were to be held that this part of the first ground of appeal is well founded, that would not preclude the sales of cartelised LCD panels by LGD to Philips and LGE being taken into consideration for the purposes of calculating the fine. In any event, this part of the first ground of appeal is unfounded.Findings of the Court45First, it must be observed that the appellants’ complaint in the first part of the first ground of appeal, stated more than once, is that the General Court was wrong to conclude that the Commission was entitled to include LGD’s internal sales to its parent companies, namely LGE and Philips, in the value of sales taken into account for the calculation of the fine.46It must however be observed that, as is clear from paragraphs 136 to 145 of the judgment under appeal, the General Court held that the Commission was justified in reaching a conclusion which the appellants did not dispute before that court, that the appellants did not form with LGE and Philips a single undertaking for the purposes of application of Article 101 TFEU and therefore did not constitute a vertically-integrated undertaking, and consequently the appellants’ relevant sales to LGE and Philips were included in the category of ‘direct EEA sales’, relating to the sales of cartelised LCD panels to independent third parties. That finding has also not been challenged by the appellants in their appeal. On the contrary, at the hearing, the appellants expressly stated that the sales of cartelised LCD panels to their parent companies were not internal sales.47That being the case, in so far as, in the first part of the first ground of appeal, the appellants complain that the General Court was wrong to conclude that the Commission was entitled to include LGD’s internal sales to its parent companies in the value of sales taken into account for the calculation of the fine, their arguments must be rejected, since those arguments are based on a misreading of the judgment under appeal.48In so far as the appellants’ complaint in that part of the first ground of appeal is that the General Court erred in concluding that the Commission was entitled to include LGD’s relevant sales to its parent companies in the value of sales taken into account for the calculation of the fine, it must be recalled that the second subparagraph of Article 23(2) of Regulation No 1/2003 provides that, for each undertaking and association of undertakings participating in the infringement, the fine is not to exceed 10% of its total turnover in the preceding business year.49As the Court has previously held, the Commission must assess, in each specific case and having regard both to the context and the objectives pursued by the scheme of penalties created by that regulation, the intended impact on the undertaking in question, taking into account in particular a turnover which reflects the undertaking’s real economic situation during the period in which the infringement was committed (judgments in Britannia Alloys & Chemicals v Commission, C‑76/06 P, EU:C:2007:326, paragraph 25, and Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 53).50In accordance with the Court’s settled case-law, it is permissible, for the purpose of fixing the fine, to have regard both to the total turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power, and to the proportion of that turnover accounted for by the goods in respect of which the infringement was committed, which gives an indication of the scale of the infringement (judgments in Musique Diffusion française and Others v Commission, 100/80 to 103/80, EU:C:1983:158, paragraph 121; Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408, paragraph 243; Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission, C‑397/03 P, EU:C:2006:328, paragraph 100; and Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 54).51According to the Court’s case-law, although Article 23(2) of Regulation No 1/2003 leaves the Commission a discretion, it nevertheless limits the exercise of that discretion by establishing objective criteria to which the Commission must adhere. Thus, first, the amount of the fine that may be imposed on an undertaking is subject to a quantifiable and absolute ceiling, so that the maximum amount of the fine that can be imposed on a given undertaking can be determined in advance. Secondly, the exercise of that discretion is also limited by rules of conduct which the Commission imposed on itself, in particular in the Guidelines on the method of setting fines (judgment in Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 55).52According to point 13 of the Guidelines, ‘[i]n determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly … relates in the relevant geographic area within the EEA’. It is added in point 6 of those Guidelines that ‘[t]he combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement’.53It follows that, as the Court has previously held, point 13 of the Guidelines on the method of setting fines pursues the objective of adopting, as the starting point for the setting of the fine imposed on an undertaking, an amount which reflects the economic significance of the infringement and the relative size of the undertaking’s contribution to it. Consequently, while the concept of the value of sales referred to in point 13 of those guidelines admittedly cannot extend to encompassing sales made by the undertaking in question which do not fall within the scope of the alleged cartel, it would, however, be contrary to the goal pursued by that provision if that concept were to be understood as applying only to turnover achieved by the sales in respect of which it is established that they were actually affected by that cartel (judgments in Team Relocations and Others v Commission, C‑444/11 P, EU:C:2013:464, paragraphs 76 and 88, and Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 57).54Such a limitation would, in addition, have the effect of artificially minimising the economic significance of the infringement committed by a particular undertaking, since the mere fact that a limited amount of direct evidence of sales actually affected by the cartel had been found would lead to the imposition of a fine which bore no actual relation to the scope of application of the cartel in question. Such a reward for secrecy would also adversely affect the objective of effective investigation and sanctioning of infringements of Article 101 TFEU and, therefore, cannot be permitted (judgments in Team Relocations and Others v Commission, C‑444/11 P, EU:C:2013:464, paragraph 77, and Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 58).55In any event, it must be stated that the proportion of the overall turnover deriving from the sale of products in respect of which the infringement was committed is best able to reflect the economic importance of that infringement (judgment in Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 59 and case-law cited).56In this case, the General Court was therefore correct to hold, in paragraph 97 of the judgment under appeal, that ‘the Commission’s ability to include sales of cartelised LCD panels made by [the appellants] to LGE and Philips in the value of relevant sales for the purpose of calculating the fine does not depend on whether those sales were made at prices influenced by the cartel but merely on the fact that the sales were made on a market affected by a cartel in which [the appellants] were participating’.57In that regard, the General Court was correct to rely (i) on point 13 of the Guidelines on the method of setting fines, in paragraphs 65 and 66 of that judgment, in finding that point 13 covers, in fact, sales in the relevant market, which is the market concerned by the infringement, and not only the cases for which the Commission has documentary evidence of the infringement, (ii) on the objective of the EU competition rules, in paragraph 67 of the judgment under appeal, after observing that the interpretation put forward by the appellants would mean that, in order to determine the basic amount of the fines to be imposed in cartel cases, the Commission would be obliged in each case to ascertain the individual sales which were affected by the cartel, and (iii), in paragraph 68 of that judgment, on the case-law stemming from the judgment in Musique Diffusion française and Others v Commission (100/80 to 103/80, EU:C:1983:158) referred to in paragraph 50 of this judgment.58Consequently, since the General Court held, in paragraph 69 of the judgment under appeal, in its assessment of the facts against which there is no appeal, there being no claim by the appellants of any distortion of the sense of the evidence, that the appellants’ sales of cartelised LCD panels to LGE and Philips were made on the market concerned by the infringement, that court did not err in law in holding, in paragraphs 71 and 72 of that judgment, that the Commission was entitled to take account of those sales in order to calculate the amount of the fine to be imposed on them, irrespective of whether LGE and Philips actually paid the appellants higher prices because of the cartel and whether they passed on that possible overcharging in the prices of the finished products incorporating the cartelised LCD panels which they sold to consumers in the EEA.59That being the case, the General Court was under no obligation either to clarify how the sales of those LCD panels made by LGD to LGE and Philips, notwithstanding the terms of the contracts linking LGD to LGE and Philips under their joint venture agreement, could have distorted competition on the relevant market, or to examine the evidence supplied by the appellants for that purpose.60In that regard, it must be observed that to ignore the value of sales made to independent third parties on the ground that the undertaking participating in the infringement has particular structural links with those third parties would give an unjustified advantage to such an undertaking by allowing it to avoid the imposition of a fine proportionate to its importance on the product market to which the infringement relates (see, by analogy, judgment in Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraphs 59 and 63).61That is because, in addition to the profit which can be expected from a cartel which provides for horizontal price-fixing in sales to independent third parties, an undertaking may also benefit from such a cartel through growth in its sales to undertakings with which there are certain structural links, where such undertakings are not subject to the increased prices fixed within the cartel, since, as a result, that undertaking acquires a competitive advantage over its competitors who offer those increased prices on the relevant market.62Moreover, the very fact that an undertaking achieves sales on the relevant market to independent third parties at such increased prices entails a distortion of competition affecting the entire relevant market, to the disadvantage, in particular, of consumers.63It follows that, as the General Court stated, in essence, in paragraph 70 of the judgment under appeal, even where a cartel does not relate to the sales of the product in question to undertakings linked to the members of that cartel, competition on the relevant market is distorted, and consequently those sales may be taken into account for the calculation of the fine.64Contrary to what is claimed by the appellants, the General Court did not thereby in any way rely on an irrebuttable presumption that all sales made on the relevant market were affected by the infringement at issue. The General Court rather held, stating reasons which, as is clear from paragraphs 48 to 59 of this judgment, are not vitiated by any error of law, that, even in the absence of any evidence that the sales of cartelised LCD panels by the appellants to their parent companies were affected by that infringement, those sales may nonetheless be taken into account for the purposes of calculation of the fine to be imposed on the appellants, provided that they were made on the market affected by the infringement. The appellants’ arguments are therefore based on a misreading of the judgment under appeal and must accordingly be rejected.65Nor can the complaint be made that the reasons stated by the General Court in paragraphs 62 and 68 to 70 of the judgment under appeal are contradictory.66By stating, in paragraph 62 of the judgment under appeal, that the Commission was required ‘to explain in what way [the appellants’] sales to LGE and Philips were linked to the cartel’, by recalling, in paragraph 68 of that judgment, that ‘it is settled case-law that the proportion of the turnover accounted for by the goods in respect of which the infringement was committed gives a proper indication of the scale of the infringement on the relevant market’ and by observing, in paragraph 70 of that judgment, that ‘where a product covered by a cartel is sold in the internal market, competition within that market is distorted’, the General Court did no more than give expression to the same argument, underpinning its entire statement of reasons and set out, in particular, in paragraphs 66 and 97 of the judgment under appeal, that the appellants’ sales to LGE and Philips might be taken into account by the Commission for the purposes of calculation of the fine since those sales were made on the market affected by the infringement.67Further, as regards the complaint that the General Court deviated from the Commission’s decision-making practice, suffice it to state, as the General Court did in paragraph 143 of the judgment under appeal, that, according to the Court’s settled case-law, the Commission’s practice in previous decisions does not serve as a legal framework for the fines imposed in competition matters (see judgments in JCB Service v Commission, C‑167/04 P, EU:C:2006:594, paragraph 205; Tomra Systems and Others v Commission, C‑549/10 P, EU:C:2012:221, paragraph 104; and Team Relocations and Others v Commission, C‑444/11 P, EU:C:2013:464, paragraph 82).68Consequently, the first part of the first ground of appeal must be rejected as being unfounded.69In those circumstances, the second part of that ground of appeal, whereby the appellants seek to call into question the findings made by the General Court in paragraphs 73 to 89 and 147 to 154 of the judgment under appeal, to the effect that, in essence, as indicated in paragraph 73, it is apparent ‘in any event’ from the file that sales of cartelised LCD panels by the appellants to LGE and Philips had been included in the cartel discussions and that the Commission had proved to the requisite legal standard that the cartel also affected those sales, must be rejected as being ineffective since it concerns a ground included in that judgment purely for the sake of completeness (see, inter alia, judgment in Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408, paragraph 148).70As is clear from the examination of the first part of the first ground of appeal, the reasons stated in paragraphs 65 to 72 and 97 of the judgment under appeal are themselves sufficient justification for taking into account those sales for the setting of the fine.71It follows that the first ground of appeal must be dismissed in its entirety. The second ground of appeal, on partial immunity from a fine 72This ground of appeal is divided into two parts. In the first part, the appellants claim that the General Court erred in law in the application of the final paragraph of point 23(b) of the Leniency Notice and failed to state adequate reasons by placing the undertaking which requested total immunity in a privileged position as compared with the undertaking requesting that it be granted partial immunity. In the second part, the appellants claim that the General Court manifestly distorted the sense of the evidence and erred in law in the application of the Leniency Notice by refusing to grant LGD partial immunity for the period subsequent to 26 August 2005.The first part of the second ground of appeal, on the conditions for the granting of partial immunity– Arguments of the parties73In this part, the appellants’ criticism of the General Court is that it erred in law in the interpretation of the final paragraph of point 23(b) of the Leniency Notice by refusing, by means of a restrictive application of that paragraph, to grant LGD partial immunity from a fine for 2005 while failing to demonstrate that the information submitted by Samsung constituted in itself a sufficient basis for the Commission to establish that the infringement at issue continued throughout 2005. The appellants claim that the judgment in Transcatab v Commission (T‑39/06, EU:T:2011:562) indicates that facts evidence of which is provided by the undertaking requesting partial immunity are to be regarded as having been previously unknown to the Commission where those facts ‘enable the Commission to make new findings concerning the infringement’.74Yet, according to the appellants, the evidence which they provided in their statement of 20 July 2006 was of much greater value than that submitted by Samsung, since that evidence related to the entire duration of the infringement until February 2006, to the main multilateral meetings, to all the participants, and to the various categories of products, whereas the evidence submitted by Samsung was very limited in time and scope and would not have enabled the Commission to investigate the cartel and penalise several members of it with respect to what was done during 2005. The General Court itself recognised, in paragraphs 189 and 190 of the judgment under appeal, that the contested decision most often relies on evidence provided by the appellants so far as the year 2005 is concerned and that the information provided by the appellants had in fact greater evidential value than the information previously disclosed by Samsung.75The appellants consider that the General Court’s interpretation of the final paragraph of point 23(b) of the Leniency Notice is contrary to the ratio legis of that provision since its effect is to discourage members of the cartel other than the undertaking which requested total immunity from providing relevant evidence, concerning further facts which that undertaking chose not to disclose, demonstrating that the infringement under investigation is of longer duration, since it is unlikely that those other members would obtain partial immunity for that additional period and they would even be at risk of being required to pay a higher fine.76The Commission considers that the first part of the second ground of appeal, since it is based on a misinterpretation of that provision, must be rejected.– Findings of the Court77It must be recalled that the final paragraph of point 23(b) of the Leniency Notice provides that ‘if an undertaking provides evidence relating to facts previously unknown to the Commission which have a direct bearing on the gravity or duration of the suspected cartel, the Commission will not take these elements into account when setting any fine to be imposed on the undertaking which provided this evidence’.78As the General Court correctly stated in paragraph 166 of the judgment under appeal, it follows from the very wording of that provision that the partial immunity provided for therein requires two conditions to be satisfied: first, the undertaking in question should be the first to prove facts previously unknown to the Commission; and, second, those facts, which have a direct bearing on the gravity or the duration of the suspected cartel, should enable the Commission to make new findings concerning the infringement.79As is stated in the Court’s case-law, the wording ‘facts ... unknown to the Commission’, in relation to the first of those conditions, is unambiguous and allows, as stated by the General Court in paragraph 167 of the judgment under appeal, the adoption of a restrictive interpretation of the final paragraph of point 23(b) of the Leniency Notice, by limiting that provision to cases in which a company party to a cartel provides the Commission with new information relating to the gravity or the duration of the infringement, and by excluding from it cases in which a company has merely provided information which strengthens the evidence of the existence of the infringement (see, to that effect, the order in Kuwait Petroleum and Others v Commission, C‑581/12 P, EU:C:2013:772, paragraph 19).80In this case, the General Court stated in paragraph 189 of the judgment under appeal, in its assessment of the facts against which there is no appeal, there being no claim of any distortion, that ‘at the time of [the appellants’] statement on 20 July 2006, the Commission knew, because of the evidence provided by Samsung, that bilateral contacts between certain cartel participants had continued in 2005’.81The General Court, having thus found that the information provided by the appellants concerned facts which were not previously unknown to the Commission, was justified, for that reason alone, in rejecting, in paragraph 194 of the judgment under appeal, the appellants’ arguments concerning the grant of partial immunity from a fine under the final paragraph of point 23(b) of the Leniency Notice with respect to those facts, and was not required to examine whether that information was such as to enable the Commission to make new findings concerning the infringement, there being no need to compare the evidential value of that information with that of the information provided earlier by Samsung.82Accordingly, it is of no consequence that, in paragraphs 189 and 190 of the judgment under appeal, the General Court held, respectively, that the contested decision ‘most often relies on evidence provided by the appellants so far as the year 2005 is concerned’ and that ‘the information provided by [the appellants] on 20 July 2006 … had in fact greater evidential value than the information previously disclosed by Samsung’.83Further, it must be observed that those findings, as is clear from paragraph 190 of the judgment under appeal, were included for the sake of completeness by the General Court, not in order to justify the rejection of the request for partial immunity from a fine for 2005, but in order to explain why the Commission had been led to grant the appellants a reduction in the fine, since the conditions governing such a reduction as laid down in the Leniency Notice differ from those laid down for the granting of partial immunity from a fine.84Moreover, contrary to what is claimed by the appellants, that interpretation of the final paragraph of point 23(b) of the Leniency Notice is in no way at odds with the objective pursued by that notice, since, as the General Court held in paragraph 167 of the judgment under appeal, the effectiveness of leniency programmes would be undermined if undertakings no longer had an incentive to be the first to submit information revealing the existence of a cartel to the Commission (see, to that effect, the order in Kuwait Petroleum and Others v Commission, C‑581/12 P, EU:C:2013:772, paragraph 20).85Accordingly, where the undertaking which is the first to submit to the Commission, in order to obtain total immunity from a fine under the Leniency Notice, evidence to enable the Commission to find an infringement of Article 101 TFEU has chosen not to disclose information which demonstrates that the duration of the infringement at issue was longer than disclosed by that evidence, any other undertaking participating in that infringement has an incentive, contrary to what is claimed by the appellants, to be the first to disclose such information, since such disclosure may justify the granting of partial immunity from a fine under the final paragraph of point 23(b) of the Leniency Notice. However, that is precisely not the situation in this case, as has been stated above in paragraph 80 of this judgment, as regards the knowledge which the Commission had of the continuation of the infringement during 2005.86Admittedly, an undertaking which provides information to the Commission under the Leniency Notice, since it is normally unaware of the evidence already in the possession of the Commission, cannot be certain that it meets the conditions to be granted the partial immunity provided for in the final paragraph of point 23(b) of the Leniency Notice.87However, the Leniency Notice is not designed to remove such uncertainty; on the contrary, the effect sought by that notice, as the General Court correctly held in paragraph 163 of the judgment under appeal, is the creation of a climate of uncertainty within cartels in order to encourage the reporting of them to the Commission.88Nor can the appellants maintain that the interpretation adopted by the General Court in the judgment under appeal would, in practice, ensure that the granting of partial immunity from a fine would be unlikely, since, as is clear from, inter alia, paragraphs 182 and 195 to 203 of the judgment under appeal, they were in fact granted partial immunity from a fine for the month of January 2006.89Further, the appellants are wrong to complain that the General Court failed to state sufficient reasons for the judgment under appeal on that point. As is clear from all the foregoing, that judgment, particularly in paragraphs 166, 167 and 189 thereof, set out with all the clarity required the reasons why the General Court held that the Commission was right to refuse to grant to the appellants partial immunity from a fine for 2005.90Consequently, the first part of the second ground of appeal must be rejected as being unfounded.The second part of the second ground of appeal, concerning the refusal of partial immunity for the period subsequent to 26 August 200591In this part, the appellants complain, first, that the General Court wrongly refused partial immunity from a fine to LGD for the period subsequent to 26 August 2005, though the Commission had in its possession no evidence supplied by the undertaking requesting total immunity to demonstrate that LGD had continued to participate in the cartel after that date. The only evidence submitted by Samsung on the subject of the period subsequent to August 2005 was an e-mail dated 6 December 2005 concerning possible bilateral contacts between Samsung, on the one hand, and AU Optronics Corp. and Chi Mei Optoelectronics Corp., on the other, which makes no mention of LGD or other participants. By suggesting, in paragraph 187 of the judgment under appeal, that that document could concern any cartel participant, including LGD, the General Court distorted the content of that e-mail.92Second, the appellants consider that the General Court also erred in law by concluding, in paragraph 193 of the judgment under appeal, that the evidence submitted by Samsung allowed the Commission to presume that LGD had continued to participate in the infringement until the end, since there was a single and continuous infringement. That conclusion is at odds with the case-law stemming from the judgment in Dansk Rørindustri v Commission (T‑21/99, EU:T:2002:74, paragraph 62) where the General Court ruled out the possibility of the Commission presuming, without evidence, that a member of a cartel participated in it until the end of the cartel.93Third, the appellants consider that paragraph 193 of the judgment under appeal is also vitiated by an error of law in that the General Court held that the evidence in question allowed the Commission to hold LGD responsible for the conduct of other participants, while failing to assess the strict conditions governing such an attribution of responsibility. According to the case-law of the General Court, that responsibility can be attributed to an undertaking only where it is established that it was aware of the unlawful conduct of other participants or that it could reasonably have foreseen that conduct and was prepared to accept the risk (judgments in BASF and UCB v Commission, T‑101/05 and T‑111/05, EU:T:2007:380, paragraph 160, and Denki Kagaku Kogyo and Denka Chemicals v Commission, T‑83/08, EU:T:2012:48, paragraph 242). In this case, however, without the evidence submitted by LGD, the Commission would not have been able to extend the duration of the infringement with respect to the participants in the cartel other than Samsung and Chi Mei Optoelectronics Corp. beyond August 2005.94The Commission states that the General Court’s conclusion that the Commission had information, on the date when statements were made by the appellants, that is on 20 July 2006, on the continuation of the cartel throughout the whole of 2005, is a finding of fact which cannot be the subject of an appeal to the Court of Justice, unless the facts or the evidence have been distorted. Yet in this case, the appellants do not claim any distortion of the evidence, but claim rather that the e‑mail of 6 December 2005 is insufficient to justify the conclusion of the General Court.95It is clear that this second part of the second ground of appeal, whereby the appellants claim, in essence, that the General Court erred in refusing to them partial immunity from the fine for the period subsequent to 26 August 2005, is based entirely on the premiss that the General Court was wrong to hold that the Commission had information of the participation of LGD in the cartel after that date solely because of the e‑mail of 6 December 2005 provided by Samsung, cited in paragraph 187 of the judgment under appeal, the content of which the General Court distorted.96That premiss is based on a misreading of the judgment under appeal.97Not only did the General Court not make such a finding in the judgment under appeal, but it is moreover very clear from paragraph 193 of that judgment that, in order to hold that the appellants continued to participate in the cartel throughout the whole of 2005, the General Court relied not on that e‑mail of 6 December 2005 but on another document produced by Samsung, namely an e‑mail of 14 January 2005, referred to in paragraph 185 of that judgment, which mentions the possibility of Samsung asking the appellants about their intentions as to certain prices.98That being the case, the appellants cannot complain that the General Court distorted the content of the e‑mail of 6 December 2005 on the ground that that e‑mail did not demonstrate that they continued to participate in the cartel after 26 August 2005, since the General Court drew no such conclusion from that document, but relied on it, as is clear from paragraph 189 of the judgment under appeal, in order to find, more generally, that the cartel had continued in 2005.99Consequently, the appellants’ claims on this point are unfounded.100For the remainder, since the appellants do not challenge the General Court’s finding in paragraph 193 of the judgment under appeal with respect to the e-mail of 14 January 2005, which finding, it may be added, falls, unless distortion is claimed, exclusively within the jurisdiction of the General Court, the second part of the second ground of appeal must, in accordance with the case-law stated in paragraph 69 of this judgment, be rejected as being ineffective. That finding was sufficient ground for the General Court correctly to hold that the Commission was not unaware of the appellants’ participation in the cartel during 2005. The appellants’ complaints with regard to the second part of the abovementioned paragraph 193 relate, accordingly, to a reason which was stated for the sake of completeness.101Consequently, the second part of the second ground of appeal must be rejected as being unfounded.102It follows that the second ground of appeal must be rejected in its entirety.103In the light of the foregoing, the appeal must be dismissed as being unfounded. Costs 104Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.105Since the Commission has applied for costs against LGD and LGDT, and the latter have been unsuccessful, they must be ordered to pay the costs.On those grounds, the Court (Eighth Chamber) hereby: 1. Dismisses the appeal; 2. Orders LG Display Co. Ltd and LG Display Taiwan Co. Ltd to pay the costs. [Signatures]( *1 ) Language of the case: English. | 1946c-3497200-4614 | EN |
The holder of a driving licence may be refused the right to drive in the territory of another Member State after committing a road traffic offence in that State which results in his being unfit to drive | 23 April 2015 ( *1 )‛Reference for a preliminary ruling — Directive 2006/126/EC — Mutual recognition of driving licences — Refusal of a Member State to recognise, in the case of a person having driven under the influence of narcotic substances, the validity of a driving licence issued by another Member State’In Case C‑260/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgericht Sigmaringen (Germany), made by decision of 30 April 2013, received at the Court on 13 May 2013, in the proceedings Sevda Aykul v Land Baden-Württemberg, THE COURT (Fifth Chamber),composed of T. von Danwitz, President of the Chamber, C. Vajda, A. Rosas (Rapporteur), E. Juhász and D. Šváby, Judges,Advocate General: Y. Bot,Registrar: K. Malacek, Administrator,having regard to the written procedure and further to the hearing on 19 June 2014,after considering the observations submitted on behalf of:—Ms Aykul, by G. Heinzle, Rechtsanwalt,the Italian Government, by G. Palmieri, acting as Agent, and by S. Varone, avvocato dello Stato,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by G. Braun and N. Yerrell, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 4 September 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 2(1) and 11(2) of Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences (OJ 2006 L 403, p. 18).2The request has been made in proceedings between Ms Aykul, an Austrian national who holds a driving licence issued by the Republic of Austria, and the Land Baden-Württemberg concerning a decision denying her the right to use her driving licence in Germany. Legal context EU law Directive 2006/1263Recital 2 in the preamble to Directive 2006/126 states:‘The rules on driving licences are essential elements of the common transport policy, contribute to improving road safety, and facilitate the free movement of persons taking up residence in a Member State other than the one issuing the licence. Given the importance of individual means of transport, possession of a driving licence duly recognised by a host Member State promotes free movement and freedom of establishment of persons. ...’4According to recital 8 of the directive, on road safety grounds, the minimum requirements for the issue of a driving licence should be laid down.5Recital 15 of Directive 2006/126 states:‘For reasons connected with road safety, Member States should be able to apply their national provisions on the withdrawal, suspension, renewal and cancellation of driving licences to all licence holders having acquired normal residence in their territory.’6According to Article 2(1) of Directive 2006/126, ‘[d]riving licences issued by Member States shall be mutually recognised’.7Article 7 of that directive provides:‘1. Driving licences shall be issued only to those applicants:(a)who have passed a test of skills and behaviour and a theoretical test and who meet medical standards, in accordance with the provisions of Annexes II and III;...(e)who have their normal residence in the territory of the Member State issuing the licence, or can produce evidence that they have been studying there for at least six months.5. ...Without prejudice to Article 2, a Member State issuing a licence shall apply due diligence to ensure that a person fulfils the requirements set out in paragraph 1 of this Article and shall apply its national provisions on the cancellation or withdrawal of the right to drive if it is established that a licence has been issued without the requirements having been met.’8Article 11 of Directive 2006/126 is worded as follows:‘...2. Subject to observance of the principle of territoriality of criminal and police laws, the Member State of normal residence may apply its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive to the holder of a driving licence issued by another Member State and, if necessary, exchange the licence for that purpose.4. A Member State shall refuse to issue a driving licence to an applicant whose driving licence is restricted, suspended or withdrawn in another Member State.A Member State shall refuse to recognise the validity of any driving licence issued by another Member State to a person whose driving licence is restricted, suspended or withdrawn in the former State’s territory.A Member State may also refuse to issue a driving licence to an applicant whose licence is cancelled in another Member State....’9According to the first paragraph of Article 12 of that directive:‘For the purpose of this Directive, “normal residence” means the place where a person usually lives, that is for at least 185 days in each calendar year, because of personal and occupational ties, or, in the case of a person with no occupational ties, because of personal ties which show close links between that person and the place where he is living.’10Article 16(1) and (2) of the same directive provides:‘1. Member States shall adopt and publish, not later than 19 January 2011, the laws, regulations and administrative provisions necessary to comply with Article 1(1), Article 3, Article 4(1), (2), (3) and (4)(b) to (k), Article 6(1), (2)(a), (c), (d) and (e), Article 7(1)(b), (c) and (d), (2), (3) and (5), Article 8, Article 10, Article 13, Article 14, Article 15, and Annexes I, point 2, II, point 5.2 concerning categories A1, A2 and A, IV, V and VI. They shall forthwith communicate to the Commission the text of those provisions.2. They shall apply those provisions as from 19 January 2013.’11The first paragraph of Article 17 of Directive 2006/126 provides:‘[Council] Directive 91/439/EEC [of 29 July 1991 on driving licences (OJ 1991 L 237, p. 1, and corrigendum OJ 1991 L 310, p. 16)] shall be repealed with effect from 19 January 2013, without prejudice to the obligations of the Member States with regard to the deadlines indicated in Annex VII, Part B for transposing that Directive into national law.’12Article 18 of Directive 2006/126 reads:‘This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.Article 2(1), Article 5, Article 6(2)(b), Article 7(1)(a), Article 9, Article 11(1), (3), (4), (5) and (6), Article 12, and Annexes I, II and III shall apply from 19 January 2009.’Directive 91/43913According to Article 1(2) of Directive 91/439, ‘[d]riving licences issued by Member States shall be mutually recognised’.14Article 8 of that directive provides:4. A Member State may refuse to recognise the validity of any driving licence issued by another Member State to a person who is, in the former State’s territory, the subject of one of the measures referred to in paragraph 2.A Member State may likewise refuse to issue a driving licence to an applicant who is the subject of such a measure in another Member State. German law 15Paragraph 2 of the Law on road traffic (Straßenverkehrsgesetz; ‘the StVG’), in the version cited by the referring court, provides:‘(1) Any person driving a motor vehicle on the public highway must have the authorisation of the competent authority (driving licence authority) to do so (authorisation to drive) ...(4) Where a person satisfies the necessary physical and mental requirements and has not committed any serious or repeated contraventions of road traffic legislation or criminal law he shall be deemed to be fit to drive motor vehicles. ...(11) Pursuant to more detailed provisions laid down by regulation … a foreign driving licence shall also entitle the holder to drive motor vehicles in the national territory.16Paragraph 3 of the StVG, in the version cited by the referring court, entitled ‘Withdrawal of driving licences’, is worded as follows:‘(1) If a person proves to be unfit to drive or incapable of driving motor vehicles, the driving licence authority must withdraw his driving licence. In the case of a foreign driving licence, withdrawal — even if it is made pursuant to other provisions — shall have the effect of a refusal to recognise the right to use that driving licence in the national territory. ...(2) Withdrawal terminates the authorisation to drive. In the case of a foreign driving licence, withdrawal terminates the right to drive motor vehicles in the national territory. ...17Paragraph 29 of the StVG, in the version cited by the German Government in its written reply to a question put by the Court, provides, under the heading ‘Deadlines for removal’:‘(1) Entries made in the register shall be removed upon expiry of the periods prescribed in the second sentence. Those periods shall be:2. five yearsin the case of decisions on a criminal offence (“Straftat”), subject to point 3(a),(b)in the case of decisions on an administrative offence which ... incurs two points as an administrative offence affecting road safety or as a comparable administrative offence,(c)in the case of bans or restrictions on driving a vehicle without a licence imposed by the competent authority under the legislation of the Land,(d)in the case of notification concerning participation in a fitness to drive seminar, in a training seminar, in a special training seminar or in a driving psychology consultation,…’18Paragraph 11 of the Regulation on the authorisation of persons to drive on the highway (Verordnung über die Zulassung von Personen zum Straßenverkehr), in the version cited by the referring court (‘the FeV’), provides, under the heading ‘Fitness’:‘(1) Applicants for authorisation to drive must satisfy the necessary physical and mental requirements. Those requirements are not satisfied, inter alia, in the case of a sickness or deficiency referred to in Annex 4 or in Annex 5 which precludes fitness to drive motor vehicles or entails only limited fitness. ...’19Annex 4 to Paragraph 11 of the FeV is worded as follows:‘Preliminary remark1. The following list contains common sicknesses and deficiencies which may affect or preclude in the long term a person’s fitness to drive motor vehicles.3. The following evaluations apply in standard cases. Adjustments may be made on the basis of a person’s particular predisposition, habits, particular attitude or particular regulation and modification of behaviour. ...NoSicknesses, deficienciesFitness or limited fitnessCategory B ...9.2Consumption of cannabis 9.2.1Regular consumption of cannabisno9.2.2Occasional consumption of cannabisyesif consumption dissociated from driving and no additional consumption of alcohol or other psychoactive substances, no change in personality, no loss of control20Paragraph 29 of the FeV, entitled ‘Foreign driving licences’, provides:‘(1) Holders of a foreign driving licence may, to the extent permitted by their licence, drive motor vehicles in the national territory when they are not normally resident there within the meaning of Paragraph 7. ...…(3) Authorisation under subparagraph 1 shall not apply to foreign driving licence holders,3.whose authorisation to drive in the national territory has been provisionally or definitively withdrawn by a court, or has been withdrawn by an immediately enforceable or definitive decision of an administrative authority ...(4) Following a decision referred to in subparagraph 3, points 3 and 4, the right to use a foreign driving licence in the national territory shall be granted upon application, if the grounds for withdrawal no longer exist.’21Paragraph 46 of the FeV, entitled ‘Withdrawal, restriction, conditions’, provides:‘(1) If the holder of a driving licence proves to be unfit to drive motor vehicles, the driving licence authority must withdraw his licence. The foregoing applies, in particular, in the case of a sickness or deficiency referred to in Annexes 4, 5 and 6, or where serious or repeated contraventions of road traffic legislation or criminal law have been committed and fitness to drive motor vehicles is thereby precluded.(5) In the case of a foreign driving licence, withdrawal shall have the effect of a refusal to recognise the right to use that driving licence in the national territory.(6) Withdrawal terminates the authorisation to drive. In the case of a foreign driving licence, withdrawal terminates the right to drive motor vehicles in the national territory.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 22Ms Aykul, an Austrian national who was born on 17 November 1980, has had her normal residence, within the meaning of the first paragraph of Article 12 of Directive 2006/126, in Austria since birth. On 19 October 2007, the Bezirkshauptmannschaft Bregenz (administrative authority of the district of Bregenz, Austria) issued her with a driving licence.23On 11 May 2012, Ms Aykul was stopped by police in Leutkirch (Germany). Since Ms Aykul showed signs of being under the influence of narcotic substances, a urine test was carried out, which indicated that cannabis had been consumed. A blood sample was taken that same day, and the analysis of that sample confirmed the presence of cannabinoids in Ms Aykul’s blood.24On 4 July 2012, the Public Prosecutor’s Office of Ravensburg (Germany) closed the criminal investigation proceedings which had been opened against Ms Aykul without taking any further action.25By a decision imposing a fine, issued by the town of Leutkirch on 18 July 2012, Ms Aykul was fined EUR 590.80 for driving a vehicle under the influence of narcotic substances and banned from driving for one month.26By a decision of 17 September 2012, the Landratsamt Ravensburg (Ravensburg District Office, Germany) withdrew Ms Aykul’s Austrian driving licence within Germany. According to the Landratsamt Ravensburg, Ms Aykul had proved to be unfit to drive motor vehicles, since analysis of the blood sample taken on 11 May 2012 had revealed that she used cannabis at least occasionally and that she had driven a motor vehicle under the influence of that narcotic substance. Thus, Ms Aykul was not able to dissociate her driving from the use of narcotic substances.27In the annex to its decision of 17 September 2012, the Landratsamt Ravensburg nevertheless informed Ms Aykul that she could, in the future, apply for authorisation to drive again in Germany by producing a medical-psychological expert’s report by a driving fitness test centre with official recognition in Germany establishing her fitness to drive motor vehicles. The Landratsamt Ravensburg also stated that production of a report of that nature was, as a general rule, conditional on proof of one year’s abstinence by the person concerned from any consumption of narcotic substances.28On 19 October 2012, Ms Aykul filed a complaint against the decision of the Landratsamt Ravensburg of 17 September 2012. She stated, in essence, that the German authorities had exceeded their competence in adopting the decision on the fine of 18 July 2012 and that, under EU law, those authorities were not empowered to verify her fitness to drive motor vehicles, that being a matter, according to the case-law of the Court of Justice, falling solely within the competence of the Member State that issued her driving licence, namely the Republic of Austria.29The Bezirkshauptmannschaft Bregenz, having been informed of the case by the Landratsamt Ravensburg, declared that the conditions under which the authorities may take action against Ms Aykul under Austrian law were not satisfied, since the doctor who took the blood sample on 11 May 2012 had indicated in his report that she did not give any noticeable indication of being under the influence of narcotic substances.30By a decision of 20 December 2012, the Regierungspräsidium Tübingen (Regional Administration, Tübingen, Germany) dismissed Ms Aykul’s complaint against the decision of the Landratsamt Ravensburg of 17 September 2012. It stated, inter alia, that inaction by the German authorities in cases of driving under the influence of narcotic substances was not compatible with the objective pursued by Directive 91/439, which is to ensure road safety. The Regierungspräsidium Tübingen added that, contrary to what Ms Aykul maintained, Article 8(2) of that directive did not preclude the withdrawal of her driving licence, and stated that that was one of the measures that can be taken by a Member State on the basis of the first subparagraph of Article 8(4) of the directive.31On 25 January 2013, Ms Aykul brought an action against the decision of the Landratsamt Ravensburg of 17 September 2012 before the Verwaltungsgericht Sigmaringen (Administrative Court, Sigmaringen, Germany), reiterating the arguments she had previously put forward. She also argued that the second subparagraph of Article 11(4) of Directive 2006/126 did not authorise the Federal Republic of Germany to refuse to recognise the validity of her driving licence, since it had been issued by the Republic of Austria, and that she continued to have her normal residence in the territory of the latter State. Thus, according to Ms Aykul, the Austrian authorities alone were competent to determine whether she was still fit to drive motor vehicles.32The Land Baden-Württemberg contends that the action brought by Ms Aykul should be dismissed. It maintains that account should, in particular, be taken of the fact that the ground for the refusal to recognise Ms Aykul’s driving licence did not arise until after that licence had been issued. Facts arising after a driving licence has been issued entitle the Member States of the European Union concerned to refuse to recognise the right to drive in their national territory.33The Land Baden-Württemberg submits that that possibility is covered by Article 8(4) of Directive 91/439. Unlike the wording of Article 8(2) of Directive 91/439, the wording of Article 8(4) of that directive allows not only the Member State of normal residence but also any other Member State to refuse to recognise the right to drive in its national territory. A driving ban imposed under criminal legislation or under legislation on administrative offences is a measure for the ‘restriction’ of the driving licence that is covered by the exemption of criminal or administrative measures, subject to the principle of territoriality, under Article 8(2) of Directive 91/439. The refusal to recognise the right to use the driving licence in Germany pursuant to Paragraph 46(5) of the FeV merely constitutes the non-recognition, in the Member State concerned, of the validity of a driving licence issued by another Member State, within the meaning of Article 8(4) of Directive 91/439.34In reply to a request by the referring court of 13 March 2013, the Bezirkshauptmannschaft Bregenz stated that the Austrian authorities would take action under Austrian legislation on driving licences only if it was medically certified that the person concerned was incapable of driving motor vehicles owing to the consumption of narcotic substances or if there were indications of drug addiction. The Bezirkshauptmannschaft Bregenz confirmed that, in the case at issue in the main proceedings, Ms Aykul was still considered by the Austrian authorities to be fit to drive motor vehicles, and that she therefore retained her driving licence.35The referring court states that the action brought by Ms Aykul would be destined to fail if German law were to be applied. Under the combined provisions of Paragraph 3(1) of the StVG and Paragraph 46(1) of the FeV, the competent driving licence authority must withdraw a driving licence if the holder of that licence proves to be unfit to drive motor vehicles. Under Paragraph 46(5) of the FeV, in the case of a foreign driving licence, that withdrawal has the effect of a refusal to recognise the right to use that licence in Germany. In the present case, Ms Aykul’s unfitness to drive motor vehicles is a product of the combined provisions of the second sentence of Paragraph 11(1) of the FeV and point 9.2.2 of Annex 4 to Paragraph 11 of the FeV. Under those provisions, any person who, being an occasional consumer of cannabis, is unable to dissociate his driving from that consumption is, as a general rule, unfit to drive motor vehicles. In the case at issue in the main proceedings, there are, according to the referring court, sufficient indicia of that unfitness in Ms Aykul’s case.36The referring court states, moreover, that, in German law, there are three different levels of response to road traffic offences and to indications of unfitness to drive: criminal law, legislation on administrative offences and legislation on driving licences. The present case is consistent with the practice under driving licence legislation. The competent driving licence authorities and the police proceed on the basis that the German authorities are entitled to withdraw a foreign driving licence where, in the case of a road traffic offence committed in Germany, there are signs of unfitness to drive.37In view of its doubts regarding the compatibility of German legislation and administrative practice with the obligation of mutual recognition of driving licences issued by Member States, the Verwaltungsgericht Sigmaringen decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Does the obligation concerning the mutual recognition of driving licences issued by Member States which is laid down in Article 2(1) of Directive 2006/126 preclude national legislation of the Federal Republic of Germany under which the right to use a foreign driving licence in Germany must be revoked ex post facto by the administrative authorities if the holder of the foreign driving licence drives a motor vehicle on that licence in Germany while under the influence of illegal drugs and thereafter under the relevant German provisions is no longer fit to drive?(2)If the answer to question 1 is in the affirmative, is this also the case where the issuing State is aware of the person in question driving while under the influence of drugs but takes no action and the risk represented by the holder of the foreign driving licence therefore persists?(3)If the answer to question 1 is in the negative, can the Federal Republic of Germany make reinstatement of the right to use a foreign driving licence in Germany subject to compliance with the national conditions applicable to such reinstatement?(4)(a) Can the reservation with respect to observance of the principle of territoriality of criminal and police laws laid down in Article 11(2) of Directive 2006/126 justify action under its driving licence legislation by a Member State other than the issuing State? For example, does that reservation allow the right to use a foreign driving licence in Germany to be revoked ex post facto by means of a preventive measure under criminal law?If the answer to question 4(a) is in the affirmative, does the competence to reinstate the right to use the foreign driving licence in Germany, taking into account the obligation of recognition, lie with the Member State which imposed the preventive measure or with the issuing State?’ Consideration of the questions referred Preliminary observations 38Since the questions put by the referring court concern the interpretation of Articles 2(1) and 11(2) of Directive 2006/126, which repealed and replaced Directive 91/439, it is necessary first to determine which provisions of EU law apply ratione temporis to the facts at issue in the main proceedings.39It is evident from the order for reference that Ms Aykul’s driving licence was issued to her by the Austrian authorities on 19 October 2007, and that the Landratsamt Ravensburg refused, by its decision of 17 September 2012, to recognise the validity of that driving licence within Germany on account of events that took place on 11 May 2012.40In that regard, it must be noted that while Directive 91/439 was repealed with effect from 19 January 2013 pursuant to the first paragraph of Article 17 of Directive 2006/126, a number of provisions of Directive 2006/126, such as Articles 2(1) and 11(4) thereof, became applicable from 19 January 2009 in accordance with the second paragraph of Article 18 of Directive 2006/126 (see, to that effect, judgment in Akyüz, C‑467/10, EU:C:2012:112, paragraph 31). That is not, however, the case as regards Article 11(2) of Directive 2006/126, which is not among the provisions mentioned in the second paragraph of Article 18 of that directive.41It follows that, on the one hand, Articles 2(1) and 11(4) of Directive 2006/126 and, on the other, Article 8(2) of Directive 91/439, the content of which was reproduced verbatim in Article 11(2) of Directive 2006/126, are applicable ratione temporis to the facts at issue in the main proceedings. The first and second questions and part (a) of the fourth question 42It should be noted that, in the context of the procedure established by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court may have to reformulate the questions referred to it (see judgment in Le Rayon d’Or, C‑151/13, EU:C:2014:185, paragraph 25 and the case-law cited).43To that end, the Court may extract from all the information provided by the national court, in particular from the grounds of the decision to make the reference, the legislation and the principles of EU law that require interpretation in view of the subject-matter of the dispute in the main proceedings (see judgment in Le Rayon d’Or, C‑151/13, EU:C:2014:185, paragraph 26 and the case-law cited).44In the present case, it is apparent from the order for reference that, by its first and second questions and by part (a) of the fourth question, which it is appropriate to consider together, the referring court asks, in essence, whether Article 2(1) and the second subparagraph of Article 11(4) of Directive 2006/126 and Article 8(2) of Directive 91/439 must be interpreted as meaning that a Member State in whose territory the holder of a driving licence issued by another Member State is staying temporarily is precluded from refusing to recognise the validity of that driving licence on account of unlawful conduct on the part of its holder in the territory of the first Member State after that driving licence has been issued that results, under the national law of the first Member State, in unfitness to drive motor vehicles.45It must be noted that, according to settled case-law, Article 2(1) of Directive 2006/126 provides for the mutual recognition, without any formality, of driving licences issued by Member States. That provision imposes on those Member States a clear and precise obligation which leaves no room for discretion as to the measures to be adopted in order to comply with it (see, to that effect, judgments in Akyüz, C‑467/10, EU:C:2012:112, paragraph 40, and Hofmann, C‑419/10, EU:C:2012:240, paragraphs 43 and 44).46Moreover, it is apparent from the case-law of the Court that it is for the issuing Member State to investigate whether the minimum conditions imposed by EU law, particularly those relating to residence and fitness to drive laid down in Article 7(1) of Directive 2006/126, have been satisfied and, therefore, whether the issuing of a driving licence is justified (see, to that effect, judgment in Hofmann, C‑419/10, EU:C:2012:240, paragraphs 45 and 47).47Once the authorities of one Member State have issued a driving licence in accordance with Article 1(1) of Directive 2006/126, the other Member States are not entitled to investigate whether the conditions for issue laid down by that directive have been met. The possession of a driving licence issued by one Member State has to be regarded as constituting proof that its holder satisfied those conditions on the day on which that licence was issued (see, to that effect, judgment in Hofmann, C‑419/10, EU:C:2012:240, paragraphs 46 and 47).48In the present case, it must be noted that the German authorities called into question the conditions for possession of Ms Aykul’s driving licence not on the day on which that licence was issued but following Ms Aykul’s unlawful conduct in Germany after that licence had been issued.49Ms Aykul, whose normal residence is in Austria, did not obtain her Austrian driving licence after the restriction, suspension or withdrawal of a driving licence in Germany. Having driven a vehicle in Germany under the influence of narcotic substances, her Austrian driving licence was withdrawn in German territory by the German authorities, even though she did not have her normal residence in Germany. It is apparent from the order for reference that the effect of that measure, as regards a driving licence issued by a Member State other than the Federal Republic of Germany, was that of a refusal to recognise that Ms Aykul was entitled to use her driving licence in Germany.50It is necessary to determine whether such a refusal by one Member State to recognise the validity of a driving licence issued by another Member State can be covered by the permitted limitations of the principle of mutual recognition of driving licences referred to in Article 2(1) of Directive 2006/126.51In that regard, as the Advocate General noted in point 65 of his Opinion, the limitation of that principle provided for in Article 8(2) of Directive 91/439 does not apply in the case in the main proceedings.52It is apparent from the actual wording of Article 8(2) of Directive 91/439, read in conjunction with the first and tenth recitals in the preamble to that directive, that that limitation covers the situation in which the holder of a driving licence has his normal residence in a Member State other than the Member State which issued that licence. In that situation, subject to observance of the principle of territoriality of criminal and police laws, the Member State of normal residence may apply its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive to the holder of that driving licence and, if necessary, exchange the licence for that purpose.53In the present case, however, Ms Aykul’s normal residence was, at the material time, in the territory of the Member State which had issued her driving licence, that is the Republic of Austria, and not in Germany. Ms Aykul was staying in Germany only on a temporary basis when, on 11 May 2012, she committed a driving offence under the influence of narcotic substances.54A situation such as that at issue in the main proceedings does, however, fall within the scope of the second subparagraph of Article 11(4) of Directive 2006/126. That provision which, as is clear from paragraphs 40 and 41 of the present judgment, applies ratione temporis to the facts of the case in the main proceedings, provides that a Member State is to refuse to recognise, in the case of a person whose driving licence is restricted, suspended or withdrawn in its territory, the validity of any driving licence issued by another Member State, irrespective of whether or not that licence had been issued before the date on which that provision became applicable (see, to that effect, judgment in Akyüz, C‑467/10, EU:C:2012:112, paragraph 32).55Whereas, according to the wording of Article 8(2) of Directive 91/439, only the Member State of normal residence of the holder of a driving licence has the power to apply to that holder its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive, the wording of the second subparagraph of Article 11(4) of Directive 2006/126 permits any Member State, and not only the Member State of normal residence, to refuse to recognise the validity of a driving licence issued by another Member State.56Admittedly, the Commission argued at the hearing that the second subparagraph of Article 11(4) of Directive 2006/126 should be interpreted as meaning that the possibility of refusing to recognise the validity of a driving licence should be reserved only to the Member State in which the holder of that licence has his normal residence. According to the Commission, the first subparagraph of Article 8(4) of Directive 91/439, the content of which is reproduced in the second subparagraph of Article 11(4) of Directive 2006/126, refers to Article 8(2) of Directive 91/439, which mentions ‘the Member State of normal residence’. The Member State referred to in the second subparagraph of Article 11(4) of Directive 2006/126 could therefore only be the Member State in which the holder of the driving licence at issue has his normal residence.57That interpretation cannot be accepted, however. Both the first and second subparagraphs of Article 11(4) of that directive refer to the restriction, the suspension and the withdrawal of a driving licence, but are not limited to decisions taken in that respect by the Member State of normal residence. The third subparagraph of that provision, which refers to the cancellation of a driving licence, also does not relate to decisions taken by the Member State of normal residence. In those circumstances, as the Advocate General noted in points 79 to 82 of his Opinion, the provisions of the second subparagraph of Article 11(4) of Directive 2006/126 apply independently as regards both Article 11(2) of that directive and Article 8(2) of Directive 91/439.58Next, while the Court has principally interpreted the first subparagraph of Article 8(4) of Directive 91/439 and the second subparagraph of Article 11(4) of Directive 2006/126 (which reproduced the content of the former provision) in the context of cases concerning the possibility, for a person whose driving licence had been subject to a measure of restriction, suspension or withdrawal in the territory of one Member State, of the validity of a driving licence issued by another Member State after the adoption of that measure being recognised by that first Member State (see, in particular, judgments in Wiedemann and Funk, C‑329/06 and C‑343/06, EU:C:2008:366; Zerche and Others, C‑334/06 to C‑336/06, EU:C:2008:367; and Hofmann, C‑419/10, EU:C:2012:240), the wording of those provisions also covers situations such as that at issue in the main proceedings in which the first Member State is refusing to recognise the validity of a driving licence issued by another Member State prior to the decision to restrict, suspend or withdraw that licence.59Lastly, it must be observed that Article 8(2) of Directive 91/439 permits the Member State of normal residence of the holder of a driving licence issued by another Member State to exchange the licence if necessary, in order that the first Member State may apply to that holder its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive. It follows from that provision that the Member State of normal residence is entitled to take measures restricting, suspending, withdrawing or cancelling a driving licence issued by another Member State that take effect in all the Member States.60It should be noted, however, that the second subparagraph of Article 11(4) of Directive 2006/126, which does not provide for the possibility of exchanging a driving licence, merely allows a Member State that is not the Member State of normal residence to take measures in accordance with its national legislation and as a result of unlawful conduct in its territory by the holder of a driving licence previously obtained in another Member State, the scope of those measures being limited to that territory and the effect limited to the refusal to recognise the validity of that licence within that territory.61As the Advocate General noted in point 83 of his Opinion, the second subparagraph of Article 11(4) of Directive 2006/126 is thus an illustration of the principle of the territoriality of criminal law and police laws which is expressly mentioned in Article 8(2) of Directive 91/439 and in Article 11(2) of Directive 2006/126. The second subparagraph of Article 11(4) of Directive 2006/126 concerns measures taken pursuant to the criminal and police laws of one Member State which affect the validity, in the territory of that Member State, of a driving licence issued by another Member State.62It must be noted in that regard that the Court has already held that a Member State in whose territory an offence is committed has sole competence to punish that offence by ordering, as necessary, withdrawal of the driving licence or of the right to drive, with or without an order that no application may be made for the issue of a new driving licence during a particular period (see judgment in Weber, C‑1/07, EU:C:2008:640, paragraph 38).63In the case in the main proceedings, it must be noted that the fact that Ms Aykul drove a motor vehicle under the influence of a narcotic substance on 11 May 2012 resulted, first of all, in criminal investigation proceedings being opened against her by the Public Prosecutor’s Office of Ravensburg, those proceedings ultimately being closed without further action being taken.64Next, it is apparent from the order for reference that the town of Leutkirch fined Ms Aykul for driving a vehicle under the influence of narcotic substances and banned her from driving for one month. Lastly, the Landratsamt Ravensburg, the competent driving licence authority, withdrew her driving licence on the basis of German driving licence legislation. Where there are doubts as to a driving licence holder’s fitness to drive, that legislation provides for such fitness to be verified and, if it is established that that fitness is lacking, the competent authority is obliged to withdraw the driving licence in question. In accordance with practice under that legislation, the German authorities consider themselves competent to withdraw a foreign driving licence where, in the case of a road traffic offence committed in Germany, there are signs of unfitness to drive.65Referring to the reservation with respect to observance of the principle of territoriality of criminal and police laws in Article 8(2) of Directive 91/439 and in Article 11(2) of Directive 2006/126, the Commission is of the view that the withdrawal of a driving licence due to the holder’s unfitness to drive motor vehicles cannot therefore be regarded as a precautionary measure of a criminal nature and, consequently, as falling within the scope of criminal law covered by that reservation.66Suffice it to note in that regard that the provisions to which the Commission refers do not relate only to criminal laws but also to police laws. Nor, moreover, is the possibility, referred to in paragraphs 60 and 61 of the present judgment, that is conferred on a Member State by the second subparagraph of Article 11(4) of Directive 2006/126, of refusing to recognise the validity of a driving licence previously obtained in another Member State, on account of the unlawful conduct of the holder of that licence in its territory, limited to measures taken pursuant to the criminal law of the first Member State. The penalty for an offence committed in the territory of a Member State can take various forms, depending on the nature and seriousness of the offence, and the organisation of the courts in that State, in which there may or may not be a distinction between administrative measures and judicial measures.67As the Advocate General noted in point 104 of his Opinion, while the offence committed by Ms Aykul was punishable both criminally and administratively, the prosecuting judicial authority chose to close the criminal investigation proceedings initially opened against her without taking any further action. By contrast, that same offence led the administrative authority responsible for driving licences, the Landratsamt Ravensburg, to withdraw Ms Aykul’s driving licence.68It follows from this that a decision such as the Landratsamt Ravensburg’s decision of 17 September 2012 withdrawing Ms Aykul’s driving licence is among the measures a Member State may adopt on the basis of the second subparagraph of Article 11(4) of Directive 2006/126.69Furthermore, it must be held that to compel a Member State to recognise unconditionally the validity of a driving licence in a situation such as that at issue in the main proceedings would be contrary to the EU objective of general interest that is the improvement of road safety and which is precisely what Directive 2006/126 seeks to achieve (see, to that effect, judgment in Glatzel, C‑356/12, EU:C:2014:350, paragraph 51 and the case-law cited).70The option whereby a Member State can withdraw the authorisation to drive in its territory from a holder of a driving licence because of an offence committed in that territory does indeed constitute a limitation of the principle of mutual recognition of driving licences. However, that limitation, which allows the risk of traffic accidents to be reduced, reinforces road safety, which is in the interests of all citizens.71Having regard to all the foregoing considerations, the answer to the first and second questions and to part (a) of the fourth question is that Article 2(1) and the second subparagraph of Article 11(4) of Directive 2006/126 must be interpreted as meaning that a Member State in whose territory the holder of a driving licence issued by another Member State is staying temporarily is not precluded from refusing to recognise the validity of that driving licence on account of unlawful conduct on the part of its holder in the territory of the first Member State after that driving licence has been issued that results, under the national law of the first Member State, in unfitness to drive motor vehicles. The third question and part (b) of the fourth question 72By its third question and part (b) of its fourth question, which it is appropriate to consider together, the referring court asks, in essence, whether a Member State which refuses to recognise the validity of a driving licence in a situation such as that at issue in the main proceedings is competent to lay down the conditions with which the holder of that driving licence must comply in order to recover the right to drive in that Member State’s territory.73In that regard, while the Court has repeatedly found, as is apparent from paragraph 46 of the present judgment, that it is for the issuing Member State alone to investigate whether the minimum conditions imposed by EU law, particularly those relating to fitness to drive, have been satisfied (see, to that effect, judgment in Hofmann, C‑419/10, EU:C:2012:240, paragraph 45), it must be borne in mind that, in the case in the main proceedings, the fitness to drive was challenged not at the stage at which the driving licence was issued but following an offence committed by the holder of that licence after it had been issued, the penalty for which took effect only in the territory of the Member State in which that offence had been committed.74It must therefore be held that it is for the authorities of the Member State in whose territory the offence has been committed to determine whether the holder of a driving licence issued by another Member State is once again fit to drive in its territory.75As the Polish Government submits, in essence, in so far as the refusal by one Member State to recognise the validity of a driving licence issued by another Member State is based on national rules which may not necessarily exist in the legislation of the issuing Member State, it seems unlikely that the legislation of the latter Member State would itself lay down the conditions with which the holder of a driving licence would have to comply in order to recover the right to drive in the territory of another Member State.76It must be pointed out, however, that it follows from the case-law of the Court that the second subparagraph of Article 11(4) of Directive 2006/126 may not be used by a Member State as a basis for refusing indefinitely to recognise the validity of a driving licence issued by another Member State where the holder of that licence has been subject to a restrictive measure in the territory of the first Member State (see, to that effect, judgment in Hofmann, C‑419/10, EU:C:2012:240, paragraph 50 and the case-law cited).77Acknowledgment that a Member State is entitled to rely on its national provisions in order to refuse indefinitely to recognise a driving licence issued in another Member State would be fundamentally incompatible with the principle of mutual recognition of driving licences which is the linchpin of the system established by Directive 2006/126 (see, to that effect, judgment in Kapper, C‑476/01, EU:C:2004:261, paragraph 77; order in Kremer, C‑340/05, EU:C:2006:620, paragraph 30; and judgments in Akyüz, C‑467/10, EU:C:2012:112, paragraph 57, and Hofmann, C‑419/10, EU:C:2012:240, paragraph 78).78It is ultimately a matter for the referring court, which alone has jurisdiction to assess the facts in the main proceedings and interpret national legislation, to examine whether in this instance, in applying its own rules, the Federal Republic of Germany is not in fact refusing indefinitely to recognise Ms Aykul’s driving licence. In that context, it is also for the referring court to ascertain whether the conditions subject to which, under German legislation, a person in Ms Aykul’s situation may recover the right to drive in German territory comply with the principle of proportionality and, in particular, do not exceed the limits of what is appropriate and necessary in order to attain the objective of Directive 2006/126, which is to improve road safety.79However, the Court of Justice, which is called on to provide answers of use to the referring court, may provide guidance based on the documents relating to the main proceedings and on the written and oral observations which have been submitted to it, in order to enable that court to give judgment (see, to that effect, judgment in Wiering, C‑347/12, EU:C:2014:300, paragraph 63 and the case-law cited).80In the present case, it is evident from the order for reference that it is open to Ms Aykul, whose Austrian driving licence was withdrawn in German territory, to apply for renewed authorisation to drive motor vehicles in Germany using her Austrian driving licence. In the annex to its decision of 17 September 2012, the Landratsamt Ravensburg informed her that her fitness to drive motor vehicles could be recognised on the basis of a medical-psychological expert’s report by a driving fitness test centre with official recognition in Germany, and stated that the production of a report of that nature was, as a general rule, conditional on proof of one year’s abstinence by the person concerned from any consumption of narcotic substances.81Furthermore, it is apparent from the written answer of the German Government to a question raised by the Court that, even in the absence of such a medical-psychological expert’s report, the right to use a driving licence in Germany that has been issued by another Member State is recovered automatically when, at the end of a specified period, the entry recording unfitness to drive is removed from the driving fitness register referred to in Paragraph 29(1) of the StVG. In Ms Aykul’s case, it is evident from the information provided by the German Government that the deadline for removal should be five years under that provision, given the nature of the offence committed. Thus, at the end of that period, Ms Aykul will again be able to use her driving licence in Germany, without having to produce a medical-psychological expert’s report.82In the light of those indications, which it is for the referring court to investigate, it must be held that the German provisions do not appear to constitute an indefinite refusal to recognise Ms Aykul’s driving licence.83In addition, the fact that Ms Aykul’s recovery of her right to drive a motor vehicle in Germany is subject either to submission of a medical-psychological expert’s report the production of which presupposes that there is proof of one year’s abstinence from any consumption of narcotic substances, or to a period of five years elapsing, appears to be an effective means of prevention that is proportionate to the objective of improving road safety.84Having regard to the foregoing, the answer to the third question and to part (b) of the fourth question is that a Member State which refuses to recognise the validity of a driving licence in a situation such as that at issue in the main proceedings is competent to lay down the conditions with which the holder of a driving licence must comply in order to recover the right to drive in that Member State’s territory. It is for the referring court to examine whether, in applying its own rules, the Member State in question is not in fact refusing indefinitely to recognise a driving licence issued by another Member State. In that context, it is for the referring court to ascertain whether the conditions laid down by the legislation of the first Member State, in accordance with the principle of proportionality, do not exceed the limits of what is appropriate and necessary in order to attain the objective of Directive 2006/126, which is to improve road safety. Costs 85Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: 1. Article 2(1) and the second subparagraph of Article 11(4) of Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences must be interpreted as meaning that a Member State in whose territory the holder of a driving licence issued by another Member State is staying temporarily is not precluded from refusing to recognise the validity of that driving licence on account of unlawful conduct on the part of its holder in the territory of the first Member State after that driving licence has been issued that results, under the national law of the first Member State, in unfitness to drive motor vehicles. 2. A Member State which refuses to recognise the validity of a driving licence in a situation such as that at issue in the main proceedings is competent to lay down the conditions with which the holder of a driving licence must comply in order to recover the right to drive in that Member State’s territory. It is for the referring court to examine whether, in applying its own rules, the Member State in question is not in fact refusing indefinitely to recognise a driving licence issued by another Member State. In that context, it is for the referring court to ascertain whether the conditions laid down by the legislation of the first Member State, in accordance with the principle of proportionality, do not exceed the limits of what is appropriate and necessary in order to attain the objective of Directive 2006/126, which is to improve road safety. [Signatures]( *1 ) Language of the case: German. | fcfaa-2552d39-434b | EN |
The General Court annuls the entry of a Greek company in the Early Warning System put in place by the Commission to protect the EU’s financial interests | 22 April 2015 ( *1 )‛Protection of the financial interests of the Union — Early warning system (EWS) enabling identification of the level of risk associated with contractors — OLAF enquiry into the performance of a public contract concerning an institutional modernisation project in Syria — Decisions to activate W1a and W1b warnings — Legal basis — Fundamental rights — Obligation to state reasons’In Case T‑320/09, Planet AE Anonymi Etairia Parochis Simvouleftikon Ipiresion, established in Athens (Greece), represented by V. Christianos, lawyer,applicant,v European Commission, represented by D. Triantafyllou and F. Dintilhac, acting as Agents,defendant,APPLICATION for annulment of the decisions of the European Anti-Fraud Office (OLAF) requesting the applicant’s registration in the early warning system (‘EWS’), by activation initially of a W1a warning and subsequently of a W1b warning,THE GENERAL COURT (Eighth Chamber),composed of M. Kancheva, acting as President, C. Wetter (Rapporteur) and E. Bieliūnas, Judges,Registrar: S. Spyropoulos, Administrator,having regard to the written procedure and further to the hearing on 26 September 2014,gives the following Judgment Background to the dispute 1The applicant, Planet AE Anonymi Etairia Parochis Simvouleftikon Ipiresion, is a Greek company which provides advisory services in the field of the administration of companies. Since 2006, it has been engaged, in its capacity as a member of three consortiums, in three projects in Syria financed by the European Commission. Since 16 October 2007, it has been the subject of an enquiry carried out by the European Anti-Fraud Office (OLAF) into suspected irregularities within the framework of these three projects.2Following a tendering procedure launched within the framework of the seventh Framework Programme for Research and Technological Development, the applicant was invited by the Commission, by a letter dated 18 April 2008, to enter into negotiations with the aim of determining the definitive terms of a contract for a grant regarding its proposal to assume the role of coordinator of a consortium concerning the project ‘Advancing knowledge — intensive entrepreneurship and innovation for growth and social well-being in Europe’. The Commission’s letter stated that any possible grant from the Community could not exceed an amount of EUR 3 300 000 and that negotiations had to be concluded before 30 June 2008.3The findings emerging in the enquiry mentioned in paragraph 1 above led OLAF to request the applicant’s registration in the early warning system (‘EWS’) instituted by Commission Decision 2008/969/EC, Euratom of 16 December 2008 on the [EWS] for the use of authorising officers of the Commission and the executive agencies. On 26 February 2009, it requested the activation of a W1a warning and, on 19 May 2009, it requested the activation of a W1b warning. The registrations were made on 10 March and 25 May 2009 (‘the contested measures’).4On 27 February 2009, the Commission sent the applicant the negotiated contract for a grant (‘the contract’) so that the applicant and the other members of the consortium to which it belonged could sign it. On 11 March 2009, the applicant returned the signed contract to the Commission so that the latter, in turn, could sign it.5On 4 June 2009, the Commission informed the applicant by e-mail that the process of signing the contract had been suspended until a further condition had been satisfied, namely the opening by the applicant of a blocked bank account, through which the applicant would have access only to the part of the advance payment which it was due under the contract, whereas the rest of the advance payment would be transferred directly by the bank to the other members of the consortium. The e-mail stated that this new condition was required because of an unexpected event, namely the registration of the applicant in the EWS by the activation, first, of a W1a warning, and then of a W1b warning.6After the applicant had agreed with its bank that the bank undertook to transfer, following the receipt of the advance to be paid by the Commission, to each member of the consortium the amount which it was due, the Commission signed the contract on 3 July 2009. Procedure and the forms of order sought by the parties 7By application lodged at the Registry of the General Court on 14 August 2009 the applicant brought the present action.8By separate document, lodged at the Registry of the Court on 9 November 2009, the Commission raised a plea of inadmissibility in accordance with Article 114(1) of the Rules of Procedure of the General Court.9By order of 13 April 2011 in Planet v Commission (T‑320/09, ECR, EU:T:2011:172), the General Court (Sixth Chamber) dismissed the plea of inadmissibility.10By measure of organisation of the procedure of 19 April 2011, the Court requested the Commission to comment on the legal basis of its powers, in particular, to take the measures provided for in Decision 2008/969. The Commission did so within the prescribed time-limit. The applicant’s observations were filed at the Registry of the General Court on 28 June 2011.11The defence was filed at the Registry of the Court on 27 May 2011.12By order of the President of the Sixth Chamber of the General Court of 12 July 2011, the proceedings in the present case, at the request of the Commission, were stayed pending a decision of the Court of Justice closing the appeal proceedings registered under reference C‑314/11 P, brought by the Commission against the order in Planet v Commission, paragraph 9 above, (EU:T:2011:172).13By judgment of 19 December 2012 in Commission v Planet (C‑314/11 P, ECR, EU:C:2012:823), the appeal brought against the order in Planet v Commission, point 9 above (EU:T:2011:172), was dismissed. Subsequently, the proceedings before the General Court recommenced.14On 19 February 2013, the Commission filed an application for a declaration that there is no need to adjudicate, since the competent services of the Commission, at the request of OLAF, had deleted the warnings concerning the applicant, so that the action had become devoid of purpose.15The reply was lodged at the Registry of the General Court on 20 February 2013.16By order of the General Court (Sixth Chamber) of 18 July 2013, the application for a declaration that there is no need to adjudicate was reserved for the final judgment.17By letter of 22 July 2013, the Commission waived its right to file a rejoinder and, in its place, sent the communication from one of its Members concerning certain provisional measures for application of the EWS. According to the Commission, that document deals with the measures provisionally adopted to comply with the judgment in Commission v Planet, paragraph 13 above (EU:C:2012:823), until Decision 2008/969 is ‘definitively amended’.18Following a change in the composition of the Chambers of the General Court, the Judge-Rapporteur was assigned to the Eighth Chamber and the present case was therefore reallocated to that Chamber.19As the President of the Chamber was prevented from attending, the President of the General Court designated, in accordance with the order of precedence laid down in Article 6 of the Rules of Procedure, a first judge to replace the President of the Chamber and, pursuant to Article 32(3) of the Rules of Procedure, a second judge to complete the Chamber.20On 29 January 2014, the applicant requested the adoption of a measure of organisation of the procedure, under Article 64 of the Rules of Procedure, so that a time-limit could be fixed for the Commission to issue the new decision on the EWS for publication in the Official Journal of the European Union.21Upon hearing the report of the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral procedure.22The applicant and the Commission presented oral argument and answered oral questions put by the Court at the hearing on 26 September 2014.23The applicant claims that the Court should:—annul the contested measures;dismiss the application for an order that there is no need to adjudicate;order the Commission to pay the costs.24The Commission contends that the Court should:declare that it is not necessary to rule on the action;dismiss the action as unfounded;order the applicant to pay the costs. Law The application for a declaration that there is no need to adjudicate 25The Commission alleges that, following the judgment of the Court of Justice in Commission v Planet, paragraph 13 above (EU:C:2012:823), its competent services, at the request of OLAF, deleted the warnings concerning the applicant. Taking account of the fact that the applicant is no longer subject to warnings to the users of the EWS and, accordingly, the contested warnings no longer exist, the Commission is of the opinion that the action has become devoid of purpose.26The applicant disputes that the action has become devoid of purpose. In that regard, firstly, it submits that the question of the legal basis of the Commission’s power to adopt the measures provided for in Decision 2008/969 remains the objective of the dispute and a live question, since it was not settled in the judgment in Commission v Planet, paragraph 13 above (EU:C:2012:823). Secondly, the applicant claims that, although the Commission deleted the entry in the EWS (ex nunc deletion), the applicant still has an interest in the proceedings and in having an order made that, without any legal basis and, accordingly, the Commission having no power, the entry is void ab initio (ex tunc), namely from the date of the warnings. It cannot be excluded that the Commission may reverse its decision after the ruling that there is no need to adjudicate and reinstate the entry on the basis of the same grounds.27It must be borne in mind that the applicant’s interest in bringing proceedings must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which the action will be inadmissible. That objective of the dispute must, like the interest in bringing proceedings, persist until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage for the party bringing it. If the applicant’s interest in bringing proceedings disappears in the course of proceedings, a decision of the General Court on the merits cannot bring him any benefit (see judgments of 7 June 2007, Wunenburger v Commission, C‑362/05 P, ECR, EU:C:2007:322, paragraphs 42 and 43, and of 10 April 2013, GRP Security v Court of Auditors, T‑87/11, EU:T:2013:161, paragraph 45).28It follows from the case-law of the Court of Justice that an applicant may retain an interest in seeking the annulment of an act of an institution of the European Union in order to prevent its alleged unlawfulness recurring in the future (see judgment in Wunenburger v Commission, paragraph 27 above, EU:C:2007:322, paragraph 50 and the case-law cited). Similarly, an applicant may retain an interest in seeking the annulment of an act which directly affects him in order to obtain a finding, by the EU judicature, that an unlawful act has been committed against him, so that such a finding can then be the basis for any action for damages aimed at properly restoring the damage caused by the contested act (see judgment in GRP Security v Court of Auditors, paragraph 27 above, EU:T:2013:161, paragraph 47 and the case-law cited).29In the light of that case-law, it is necessary to examine whether the applicant is likely actually to benefit from the proceedings before the General Court.30It is appropriate to note that the repeal of an act of an institution of the European Union does not amount to recognition of its illegality and takes effect ex nunc, by contrast with a judgment annulling an act, by virtue of which the act annulled is removed retroactively from the legal order of the European Union and deemed never to have existed (see, to that effect, judgment of 6 June 2013, Ayadi v Commission, C‑183/12 P, EU:C:2013:369, paragraph 66). Thus, if the Commission lacks power or if the action must be upheld on other grounds, the entry of the applicant in the present case will be void ab initio.31In the present case, it is necessary to avoid acts adopted by the institutions whose temporal effects are limited and which will expire after an action for annulment has been brought but before the General Court is able to give the relevant judgment being excluded from review by the Court of Justice, since such a situation is incompatible with the spirit of Article 263 TFEU (judgment of 18 March 2009, Shanghai Excell M&E Enterprise and Shanghai Adeptech Precision v Council, T‑299/05, ECR, EU:T:2009:72, paragraphs 56 and 57).32In addition, although the entry of the applicant in the EWS was deleted (ex nunc deletion), it follows from the case-law above that there is an interest in the proceedings, in particular since the entry of the applicant was likely to harm its image, and only an annulment can provide a remedy and serve as the basis for any action for compensation. For those reasons, the application for a decision that there is no longer any need to adjudicate must be rejected. The Commission’s power to adopt the measures at issue 33In support of the action, the applicant puts forward two pleas in law, the first alleging, in essence, infringement of essential procedural requirements of Decision 2008/969 and the second alleging infringement of basic principles and fundamental rights of EU law, in particular of the principle of sound administration, the right to be heard, the rights of the defence and the duty to state reasons.34In the order in Planet v Commission, paragraph 9 above (EU:T:2011:172), the General Court found that Decision 2008/969, on which the contested measures are based, makes no reference to primary or secondary law expressly conferring on the Commission the power to create, carry out and manage a database relating to legal or natural persons suspected of representing a risk to the financial interests of the European Union.35Furthermore, in accordance with settled case-law, lack of jurisdiction on the part of the institution which adopted the contested measure represents a ground for annulment as a matter of public policy, which should be raised by the EU Court of its own motion, whereas neither party has requested it to do so (see, to that effect, judgments of 17 December 1959 in Société des fonderies de Pont-à-Mousson v High Authority, 14/59, ECR, EU:C:1959:31, at p. 473; of 10 May 1960 in Germany v High Authority, 19/58, ECR, EU:C:1960:19, at p. 488; of 13 July 2000 in Salzgitter v Commission, C‑210/98 P, ECR, EU:C:2000:397, paragraph 56). As regards whether the lack of power of the institutions which adopted the measure on the basis of which the contested measure was taken, it must be noted that although the EU Court is not obliged to raise that question of its own motion, it may be called upon to do so. That may be the case on the basis of the information in the file or if there is a manifest defect, in other words if the EU Court can easily detect it and identify it as such (see, to that effect, Opinion of Advocate General Mengozzi in Common Market Fertilizers v Commission, C‑443/05 P, ECR, EU:C:2007:127, paragraph 104).36In the present case, having regard to the progress of the proceedings and the information in the file and in the light of the finding made in paragraph 40 of the order in Planet v Commission, paragraph 9 above, (EU:T:2011:172), the question of the legal basis of the Commission’s power to adopt the measures provided for in Decision 2008/969 is a live question.37Accordingly, before examining the two pleas in law, it is appropriate to examine the Commission’s power to adopt Decision 2008/969 and, in consequence, to take the contested measures.38On that subject, the Commission has submitted, relying on Article 27 of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, as amended, (OJ 2002 L 248, p. 1; ‘the Financial Regulation’), that that decision was adopted in the context of the principle of sound financial management and for the purposes thereof. In its view, the Commission, as sole and initial authorising institution, is to delegate, in accordance with Articles 51 and 59(2) of the Financial Regulation, powers with a view to the implementation of the budget by staff to whom it delegates or subdelegates in compliance with the conditions in its applicable internal rules. It also states that, as such, that decision is based on the primary prerogative which each institution and institutional body has autonomously to regulate the internal organisation of its services.39The applicant disputes the Commission’s arguments. No power has been conferred on the Commission, whether by virtue of primary or secondary law, to create, carry out and manage a database relating to legal or natural persons on the sole ground that they were suspected of representing a risk to the financial interests of the European Union. The principle of sound financial management, referred to in Article 27 of the Financial Regulation, is an objective and cannot constitute the legal basis of the entries made in the EWS.40It is appropriate to note that the Commission’s budgetary responsibility is based on Article 274 EC. Under that article, the Commission is to implement the EU budget, in accordance with the provisions of the regulations made pursuant to Article 279 EC, on its own responsibility and within the limits of the appropriations, having regard to the principles of sound financial management.41The Financial Regulation states the principles and basic rules governing the EU budget, in particular the principle of sound financial management. It also lays down the rules concerning the award of contracts, including the grounds for exclusion of a candidate or tenderer, and the creation of a central database containing the details of those persons.42Article 93(1) of the Financial Regulation refers, in particular, to the exclusion from participation in a procurement procedure if candidates or tenderers are bankrupt or being wound up, have been convicted of an offence concerning their professional conduct by a judgment which has the force of res judicata or concerning fraud or corruption or if they have not fulfilled obligations relating to the payment of social security contributions or the payment of taxes. Article 94 of that regulation refers to the exclusion of candidates or tenderers which are subject to a conflict of interest or are guilty of misrepresentation in the context of participation in the contract procedure and the grounds for exclusion referred to in Article 93(1) of the Financial Regulation. Article 96 of the Financial Regulation concerns the administrative or financial penalties which the awarding authority may impose on candidates or tenderers in the event of the misrepresentation referred to in Article 94 of that regulation and on contractors which have been declared to be in serious breach of contract for failure to comply with their contractual obligations under contracts financed by the budget.43Article 95(1) of the Financial Regulation reads as follows:‘A central database shall be set up and operated by the Commission in compliance with Community rules on the protection of personal data. The database shall contain details of candidates and tenderers which are in one of the situations referred to in Articles 93, 94, 96(1)(b) and (2)(a). It shall be common to the institutions, executive agencies and the bodies referred to in Article 185.’44The central exclusion database referred to in Article 95 of the Financial Regulation was implemented by Commission Regulation (EC, Euratom) No 1302/2008 of 17 December 2008 on the central exclusion database (OJ 2008 L 344, p. 12). The database is to be administered by the Commission’s accounting officer or his subordinate staff (Article 4 of Regulation No 1302/2008). That regulation also lays down the entity, manner and conditions which authorise access to the content of the exclusion database (Article 5 of Regulation No 1302/2008).45In order to counter fraud and any other illegal activities affecting the financial interests of the European Union, on 16 December 2008 the Commission also adopted Decision 2008/969 on the EWS. That decision replaces Commission Decision C(2004) 193/3 on the EWS.46Under recital 4 in the preamble to Decision 2008/969, ‘[t]he purpose of the [EWS] is to ensure the circulation within the Commission and its executive agencies of restricted information concerning third parties who could represent a threat to the Communities’ financial interests and reputation or to any other fund administered by the Communities’.47In accordance with recitals 5 to 7 in the preamble to that decision, OLAF, which has access to the EWS in the pursuit of its tasks in the area of the conduct of investigations and the collection of information for the prevention of fraud, is responsible, together with the authorising officers responsible and the Internal Audit Service, for requesting the entry, modification or removal of EWS warnings, under the administration of the Commission’s accounting officer or his subordinate staff.48In that regard, the second subparagraph of Article 4(1) of Decision 2008/969 provides that ‘[t]he accounting officer [of the Commission or his subordinate staff] shall enter, modify or remove EWS warnings pursuant to requests by the authorising officer by delegation responsible, [by] OLAF and the Internal Audit Service’.49Under the first subparagraph of Article 5(1) of that decision, ‘[a]ll requests for registration of warnings, their modification or removal shall be addressed to the accounting officer’.50Under the third subparagraph of Article 6(2) of that decision, ‘[i]n the case of procurement or grant award procedures the authorising officer by delegation responsible or his staff shall verify whether there is a warning in the EWS at the latest before the award decision’.51It follows from Article 9 of Decision 2008/969 that the EWS relies on warnings allowing the identification of the level of risk associated with an entity according to categories ranging from W1, corresponding to the lowest level of risk, to W5, corresponding to the highest level of risk.52Articles 10 to 14 of Decision 2008/969 define the warnings. Thus, a W1a warning means that, at an early stage of OLAF’s investigations, there is sufficient reason to believe that findings of serious administrative errors or fraud are likely to be recorded in the EWS. Similarly, a W1b warning means that OLAF’s ongoing investigations and those of the IAS give sufficient reason to believe that final findings of serious administrative errors or fraud are likely to be recorded in the EWS. A W2 warning means that serious administrative errors or fraud have been found. A W3 warning means that the accounting officer has been notified of an attachment order in certain situations or that judicial proceedings for serious administrative errors or fraud have been commenced. A W4 warning means that recovery orders, exceeding a certain amount and on which payment is significantly overdue, have been issued by the Commission. Finally, a W5 warning is issued in respect of persons in an exclusion situation, either because of an exclusion warning referred to in Article 10(1) to (3) of Regulation No 1302/2008 (a W5a warning), or because those persons are subject to financial restrictions related to the common foreign and security policy (CFSP) (a W5b warning) (Article 14(1) and (2) of Decision 2008/969).53Articles 10 to 14 of Decision 2008/969 also define the period during which a warning remains valid, which will vary according to the type of warning.54The consequences of entries in the EWS vary according to the level of the warnings. These effects, which appear in Articles 16 to 22 of Decision 2008/969, range from a W1 warning, which is for information purposes only and may entail no consequence other than reinforced monitoring measures, to a W5 warning, which entails exclusion from participation in a contract or grant award procedure, as regards contract or grant award procedures, or, for example, the suspension of payments, performance of the contract or a grant, as regards ongoing contracts or grants, and the direct or indirect blocking of funds and economic resources (in the context of the CFSP). The W2, W3b and W4 warnings may have the consequence, apart from the reinforcement of monitoring measures, that the authorising officer by delegation responsible may award the contract to another tenderer or close the procedure without awarding any contract. In the case of an ongoing contract, the authorising officer by delegation may suspend the time-limit for payments, suspend performance of the contract or terminate the contract or grant where it contains a provision to this effect.55Under Article 14(3) of Decision 2008/969, there is a duty to inform a third party concerned of an entry in the EWS and to give the third party the opportunity to express its views in writing. That duty is restricted to a W5a warning, thus to situations in which the authorising officer by delegation responsible envisages to exclude a third party in application of Article 93(1)(a) to (e) of the Financial Regulation.56Article 27 of Decision 2008/969 provides that that decision is published for information purposes in the Official Journal of the European Union and annexed to the Internal Rules for the implementation of the general budget of the European Union.57In the present case, it must first be borne in mind that, by virtue of Article 5 EC, in accordance with the principle of allocation of powers, each institution is to act within the limits of the powers conferred upon it by the Treaty. Respect for the principle of legal certainty requires that the binding nature of any act intended to have legal effects must be derived from a provision of EU law which must be expressly indicated therein as its legal basis (judgments of 16 June 1993, France v Commission, C‑325/91, ECR, EU:C:1993:245, paragraph 26, and of 17 September 2007, France v Commission, T‑240/04, ECR, EU:T:2007:290, paragraph 31).58It is clear that it does not follow either from the provisions of Article 274 EC or those of the Financial Regulation that the Commission has the express power to adopt a decision such as Decision 2008/969.59Article 274 EC does indeed provide that the Commission is to implement the budget, in accordance with the provisions of the regulations made pursuant to Article 279 EC. That article provides for recourse to the ordinary legislative procedure. However, the Financial Regulation, the legal basis of which is Article 279 EC, does not make reference to a system such as the EWS. That regulation solely provides, as has already been noted in paragraph 43 above, the institution of a central database relating to mandatory exclusions.60In that regard, it must be noted that EU law does not make it possible to conclude as to the existence of an implicit power. It is clear from the case-law that the existence of an implicit power, which constitutes a derogation from the principle of allocation of powers stated in the first paragraph of Article 5 EC, must be appraised strictly. It is only exceptionally that such implicit powers are recognised by case-law and in order to be so recognised, they must be necessary to ensure the practical effect of the provisions of the Treaty or the basic regulation at issue (see judgment of 17 November 2009 in MTZ Polyfilms v Council, T‑143/06, ECR, EU:T:2009:441, paragraph 47 and the case-law cited).61In the present case, it must be held that, notwithstanding the fact that a warning system may be a tool useful to the Commission’s tasks as guardian and executive of the EU budget, the Commission has neither submitted nor shown that the EWS meets the condition referred to in the preceding paragraph to make it possible to conclude as to the existence of an implicit power.62The Commission has merely stated that it was a measure of internal organisation, a prerogative available to all EU institutions. It must be noted that, although the Commission is authorised to organise its internal functioning in order to ensure the greatest efficiency possible, in accordance with Articles 51 and 59(2) of the Financial Regulation as relied on by the Commission, the fact remains that its power of self-regulation are limited by the powers conferred on it.63Moreover, it must be observed in that regard that, in principle, internal measures have legal effects only within the internal sphere of the administration and do not create any right or obligation for the benefit of third parties (see judgment in France v Commission, paragraph 57 above, EU:T:2007:290, paragraph 43 and the case-law cited, and Opinion of Advocate General Tesauro in France v Commission, C‑366/88, EU:C:1990:304, paragraph 22). In the present case, it is clear that Decision 2008/969 is intended to have external legal effects. The fact that the agents concerned must consult the EWS and draw certain consequences in the light of the entries therein and the publication of Decision 2008/969 in the Official Journal of the European Union are important indications in that regard.64In addition, while the EU legislature created a legal basis for the exclusion warnings, it did not consider it appropriate to do so for the other warnings set out in Decision 2008/969. Moreover, contrary to the W5 warnings which are based on objective and, to a certain extent, proven factors, the entry of W1a or W1b warnings is the consequence of an OLAF investigation despite the fact that findings of fraud or administrative errors have not yet been established. Finally, it cannot be denied that there may be binding consequences, as has been shown in the present case.65Furthermore, it cannot be accepted, without disregarded the fundamental rights, which include the presumption of innocence, the adage qui potest majus potest et minus.66The presumption of innocence enshrined in Article 48(1) of the Charter of Fundamental Rights of the European Union (which corresponds to Article 6(2) and (3) of the European Convention on Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950), is intended to ensure that no-one is declared guilty, or treated as being guilty, of an offence before his guilt has been established by a court of law.67Unlike the exclusion warnings (see paragraphs 43 and 64 above), it cannot be disputed that the W1a and W1b warnings concern a situation where the investigations are still ongoing and thus in which no judge has yet established such guilt. Accordingly, if the Commission considers it necessary to take preventive measures at an early stage, it needs, all the more so for that reason, a legal basis permitting the creation of such a warning system and the taking of the relevant measures, a system which respects the rights of the defence, the principle of proportionality and the principle of legal certainty, the latter meaning that the rules of law must be clear and precise and predictable in their effect, in particular where they can have adverse consequences for individuals and undertakings.68Accordingly, it must be held that there is a legal basis for the exclusion warnings referred to in Articles 93, namely the W5a warning, and 94, namely the W5b warning, of the Financial Regulation, that legal basis being set out in Article 95 of the Financial Regulation. Similarly, it is possible to find a legal basis for the W5b warning in a regulation or implementing measure adopted under the CFSP. However, it is not possible to refer to any legal basis for the W1a and W1b warnings, or for the other warnings, namely the W1c and W2 to W4 warnings and their consequences. Decision 2008/969 makes no reference to any provision of primary or secondary law expressly conferring on the Commission the power to create, implement and manage a database concerning the natural or legal persons suspected of constituting a risk to the financial interests of the European Union. The fact that Decision 2008/969 makes a general reference to the Financial Regulation, without, however, referring to a specific article, is not sufficient in that regard.69The fact that the Commission, by provisional measures, in order better to meet the requirements which follow from the fundamental rights, has adapted its practice until such time as Decision 2008/969 is formally ‘amended’ (see paragraph 17 above) so that it is possible henceforth for the entities which are subject to an application for a level W1 to W4 warning to express their point of view, that is to say, to submit their written observations prior to the entry of the warning does not alter the finding made in paragraph 68 above.70Thus, in the absence of any specific provision authorising the Commission to adopt such a decision, if the adoption of such a measure was necessary or useful, the Commission ought to have followed the procedure laid down in Article 279 EC, that is to say, submitting a proposal to the European Parliament and the Council of the European Union in order to create the necessary legal basis. Furthermore, at the hearing, the Commission stated that it had recently submitted a proposal to the EU legislature to amend the Financial Regulation in that respect.71Consequently, it must be held that, without a legal basis authorising the Commission to adopt Decision 2008/969, the contested measures, adopted on the basis of that decision, are accordingly also devoid of legal basis, so that they must be annulled. The second plea in law 72In any event, even if the Commission had the power to adopt Decision 2008/969, the General Court considers that the contested measures must be annulled on the basis of the second plea in law.73As part of this plea in law, the applicant alleges an infringement of fundamental rights, such as the principle of sound administration, the right to ‘a prior hearing’, the rights of the defence and the presumption of innocence. It also alleges an infringement of the duty to state reasons.74More particularly, the applicant criticises the absence of any opportunity of expressing its views on the contested measures which have binding effects, since the Commission failed validly to notify it within the relevant period, in breach of Article 8 of Decision 2008/969, which fails to have regard to the right to a prior hearing and the presumption of innocence.75The Commission disputes the alleged infringement of fundamental rights. In addition, it is of the opinion that the applicant was well aware of the reasons for its entry in the EWS and could deduce from all the facts and documents sent to it the reasons for its designation by the Commission as an entity requiring a certain circumspection.76It must be borne in mind, in that regard, that it follows from settled case-law that respect for the rights of the defence in all proceedings which are initiated against a person and are liable to culminate in a measure adversely affecting that person is a fundamental principle of Community law which must be guaranteed, even in the absence of any specific rules concerning the proceedings in question (see judgments of 13 February 1979 in Hoffmann-La Roche v Commission, 85/76, ECR, EU:C:1979:36, paragraphs 9 and 11, and of 1 October 2009, Foshan Shunde Yongjian Housewares & Hardware v Council, C‑141/08 P, ECR, EU:C:2009:598, paragraph 83 and the case-law cited).77It must also be recalled that, in accordance with a consistent body of case-law, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the European Union judicature and, second, to enable that judicature to review the legality of that act (see judgments of 2 October 2003 in Corus UK v Commission, C‑199/99 P, ECR, EU:C:2003:531, paragraph 145; of 28 June 2005 in Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, ECR, EU:C:2005:408, paragraph 462; and of 29 September 2011 in Elf Aquitaine v Commission, C‑521/09 P, ECR, EU:C:2011:620, paragraph 148).78The statement of reasons required by Article 253 TFEU must, however, be appropriate to the act at issue and the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, ECR, EU:C:1998:154, paragraph 63; Elf Aquitaine v Commission, paragraph 78 above, EU:C:2011:620, paragraph 150, and of 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, ECR, EU:C:2012:711, paragraphs 139 and 140).79In the present case, it must be held that the contested acts were not notified to the applicant. Accordingly, the applicant did not have the opportunity of expressing its views in that regard and nor was it aware of the grounds justifying its entry in the EWS.80Indeed, Article 8(1) of Decision 2008/969 states that third parties, such as candidates, tenderers, contractors, suppliers, service providers and their respective subcontractors, are to be informed, in the calls for tender and calls for proposals and, in the absence of calls, before awarding contracts or grants, of the data concerning them that may be included in the EWS and, where third parties are legal entities, the persons who have powers of representation, decision-making or control within these entities are also to be informed. However, that communication from the authorising officer by delegation responsible that data may be entered in the EWS concerns only a possibility and does not constitute an obligation to inform the third party concerned when the entry in the EWS is actually made.81Article 8(2) of Decision 2008/969 provides that the service that requested the registration of an EWS warning is to be responsible for informing the natural or legal person concerned of the request for activation, updating and removal of any exclusion warning W5a directly concerning it and state the reasons thereof. That obligation to inform the person concerned is linked to a right for that person to express its views on the exclusion warning, which right follows from Article 14(3) of that decision.82It is appropriate to point out that Article 8(2) and Article 14(3) of Decision 2008/969 are the only provisions which provide for a right to be informed of an entry in the EWS. Such a right to be informed in advance and to express views is not provided for in respect of the other warnings.83Nevertheless, in accordance with the case-law referred to in paragraph 76 above, the rights of the defence must always be guaranteed, even in the absence of any specific rules concerning the proceedings in question. The same applies as regards the duty to state reasons.84In that regard, it must be noted that the fact that OLAF, by letter of 6 February 2009, informed the applicant of the investigations commenced and the reasons for their commencement is not sufficient alone and does not mean that the applicant should not have been informed of the contested acts in the context of the application of Decision 2008/969.85It is true that an investigation can, in accordance with Decision 2008/969, be the ground for a request by OLAF for a person to be entered in the EWS. It follows from Article 10 of that decision that OLAF is to request such activation of a W1a warning where its investigations at an early stage give sufficient reason to believe that findings of serious administrative errors or fraud are likely to be recorded in the EWS. In the present case, it is not in dispute that the applicant was informed only on 6 February 2009 of the fact that it was the subject of investigations and that, as part of those investigations, an on-site check was to be carried out between 22 and 26 February 2009. The Commission cannot therefore rely on that information alone given by OLAF to the applicant as part of those investigations and claim, in essence, that the applicant was able to ‘deduce’ from the facts and documents concerned the reasons for its being subject to monitoring measures. Furthermore, it is not apparent either from the file before the General Court that OLAF informed the applicant that those investigations could also result in a request for its registration in the EWS.86It must also be noted that the applicant was not informed either before or after its registration in the EWS. Although the objective pursued is to protect the EU budget by prudent measures, that in no way justifies that lack of communication. It is only incidentally, because the Commission suspended the contractual process and required an additional guarantee in respect of the ‘Advancing knowledge — intensive entrepreneurship and innovation for growth and social well-being in Europe’ project that the applicant discovered its registration in the EWS.87Even if the EWS was developed as an internal tool, the fact remains that an entry in the EWS has legal consequences for the registered person concerned, meaning that the rights of the defence, including the duty to state reasons, must be upheld.88Consequently, the plea in law alleging failure to state reasons and infringement of the rights of the defence must be accepted and the contested acts must also be annulled on that basis, without it being necessary to rule on the first plea in the action or on the request for a measure of organisation of the procedure referred to in paragraph 20 above. Costs 89Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Commission has been unsuccessful, it must be ordered to bear its own costs and also to pay those incurred by the applicant.On those grounds,THE GENERAL COURT (Eighth Chamber)hereby: 1. Annuls the decisions of the European Anti-Fraud Office (OLAF) requesting the registration of Planet AE Anonymi Etairia Parochis Simvouleftikon Ipiresion in the early warning system (EWS), and those of the European Commission concerning the activation of a W1a warning and a W1b warning concerning that undertaking; 2. Orders the Commission to pay the costs. KanchevaWetterBieliūnasDelivered in open court in Luxembourg on 22 April 2015.[Signatures]( *1 ) Language of the case: Greek. | f546d-ea1457e-466b | EN |
The General Court confirms the restrictive measures imposed on Mr Johannes Tomana, the Attorney-General of Zimbabwe, and 120 other individuals and companies in that country | 22 April 2015 ( *1 )‛Common foreign and security policy — Restrictive measures imposed on certain persons and entities in view of the situation in Zimbabwe — Restrictions on entry into and transit through the European Union — Freezing of funds — Legal basis — Manifest error of assessment — Obligation to state reasons — Rights of the defence — Fundamental rights — Proportionality’In Case T‑190/12, Johannes Tomana, residing in Harare (Zimbabwe), and the 120 other applicants named in the annex hereto, represented initially by D. Vaughan QC, M. Lester and R. Lööf, Barristers, and by M. O’Kane, Solicitor, and subsequently by D. Vaughan, M. Lester and M. O’Kane,applicants,v Council of the European Union, represented by B. Driessen, M. Veiga and A. Vitro, acting as Agents,and European Commission, represented by M. Konstantinidis, T. Scharf and E. Georgieva, acting as Agents,defendants,supported by United Kingdom of Great Britain and Northern Ireland, represented by E. Jenkinson, C. Murrell and M. Holt, acting as Agents, and by S. Lee, Barrister,intervener,APPLICATION for annulment of Council Decision 2012/97/CFSP of 17 February 2012 amending Decision 2011/101/CFSP concerning restrictive measures against Zimbabwe (OJ 2012 L 47, p. 50), Commission Implementing Regulation (EU) No 151/2012 of 21 February 2012 amending Council Regulation (EC) No 314/2004 concerning certain restrictive measures against Zimbabwe (OJ 2012 L 49, p. 2), and Council Implementing Decision 2012/124/CFSP of 27 February 2012 implementing Decision 2011/101/CFSP concerning restrictive measures against Zimbabwe (OJ 2012 L 54, p. 20), in so far as those acts concern the applicants,THE GENERAL COURT (Eighth Chamber),composed of D. Gratsias (Rapporteur), President, M. Kancheva and C. Wetter, Judges,Registrar: C. Kristensen, Administrator,having regard to the written procedure and further to the hearing on 10 June 2014,gives the following Judgment Background to the dispute 1In Common Position 2002/145/CFSP of 18 February 2002 concerning restrictive measures against Zimbabwe (OJ 2002 L 50, p. 1), adopted under Article 15 of the EU Treaty, prior to its amendment by the Treaty of Lisbon, the Council of the European Union expressed its deep concern about the situation in Zimbabwe, in particular with regard to the serious infringements of human rights — notably the right to freedom of speech, association and peaceful assembly — committed by the Government of Zimbabwe. It therefore imposed restrictive measures for a renewable 12-month period, which would be subject to annual review. Those measures included, in particular, the obligation on Member States to prevent the entry into, or transit through, their territories of the natural persons listed in the Annex to that common position, as well as the freezing of funds and economic resources of the persons and entities listed in that annex. Common Position 2002/145 was amended and extended for a period of 12 months, that is to say until 20 February 2004, by Council Common Position 2003/115/CFSP of 18 February 2003 amending and extending Common Position 2002/145 (OJ 2003 L 46, p. 30).2The freezing of assets and economic resources provided for in Common Position 2002/145 was implemented by Council Regulation (EC) No 310/2002 of 18 February 2002 concerning certain restrictive measures in respect of Zimbabwe (OJ 2002 L 50, p. 4). The period of application of that regulation was limited to 12 months from the date of its publication in the Official Journal of the European Union. It was extended for a further period of 12 months, that is to say until 20 February 2004, by Council Regulation (EC) No 313/2003 of 18 February 2003 extending Regulation No 310/2002 (OJ 2003 L 46, p. 6).3Council Common Position 2004/161/CFSP of 19 February 2004 renewing restrictive measures against Zimbabwe (OJ 2004 L 50, p. 66) made provision for the renewal of the restrictive measures established by Common Position 2002/145. In accordance with the second paragraph of Article 8 thereof, Common Position 2004/161 applied as from 21 February 2004. Article 9 thereof provided that it would apply for a period of 12 months and would be kept under constant review. That article also provided that the common position had to be ‘renewed, or amended as appropriate, if the Council deem[ed] that its objectives ha[d] not been met’.4Council Regulation (EC) No 314/2004 of 19 February 2004 concerning certain restrictive measures in respect of Zimbabwe (OJ 2004 L 55, p. 1) was adopted, in accordance with recital 5 in the preamble thereof, in order to implement the restrictive measures provided for in Common Position 2004/161. Article 6(1) of Regulation No 314/2004 provides, inter alia, that all funds and economic resources belonging to members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them, as listed in Annex III to that regulation, are to be frozen. Article 11(b) of that regulation states that the Commission is to be empowered to amend Annex III to that regulation on the basis of decisions taken in respect of the Annex to Common Position 2004/161.5The period of validity of Common Position 2004/161 was extended on several occasions, most recently until 20 February 2011 by Council Decision 2010/92/CFSP of 15 February 2010 extending restrictive measures against Zimbabwe (OJ 2010 L 41, p. 6).6Council Decision 2011/101/CFSP of 15 February 2011 concerning restrictive measures against Zimbabwe (OJ 2011 L 42, p. 6) repealed Common Position 2004/161. That decision made provision for the imposition, on the persons whose names appeared in the Annex thereto, of restrictive measures similar to those provided for in Common Position 2004/161.7In particular, Article 4(1) of Decision 2011/101 provides:‘Member States shall take the measures necessary to prevent the entry into, or transit through, their territories of members of the Government of Zimbabwe and of natural persons associated with them, as well as of other natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe. The individuals referred to in this paragraph are listed in the Annex.’8Article 5(1) of Decision 2011/101 provides:‘All funds and economic resources belonging to individual members of the Government of Zimbabwe or to any natural or legal persons, entities or bodies associated with them, or belonging to any other natural or legal person whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe, shall be frozen. The persons and entities referred to in this paragraph are listed in the Annex.’9Article 6(1) of that decision provides:‘The Council, acting upon a proposal by a Member State or the High Representative of the Union for Foreign Affairs and Security Policy, shall adopt modifications to the list contained in the Annex as required by political developments in Zimbabwe.’10Further, Article 7 of Decision 2011/101 provides:‘1. The Annex shall include the grounds for listing the natural or legal persons and entities.2. The Annex shall also contain, where available, the information necessary to identify the natural or legal persons or entities concerned. With regard to natural persons, such information may include names, including aliases, date and place of birth, nationality, passport and ID card numbers, gender, address, and function or profession. With regard to legal persons or entities, such information may include names, place and date of registration, registration number and place of business.’11Lastly, as provided for in Article 10(2), Decision 2011/101 was to apply until 20 February 2012. Under that same article, the decision was to be kept under constant review and was to be renewed, or amended as appropriate, if the Council deemed that its objectives had not been met.12Article 1(1) of Council Decision 2012/97/CFSP of 17 February 2012 amending Decision 2011/101 (OJ 2012 L 47, p. 50), which is the first act against which this action is directed, replaced Article 10 of Decision 2011/101 with the following provision:‘1. This Decision shall enter into force on the date of its adoption.2. This Decision shall apply until 20 February 2013.3. The measures referred to in Article 4(1), in so far as they apply to persons listed in Annex II, shall be suspended until 20 February 2013.4. This Decision shall be kept under constant review and shall be renewed, or amended as appropriate, if the Council deems that its objectives have not been met.’13In addition, Article 1(2) of Decision 2012/97 provides that the term ‘Annex’ used in Decision 2011/101 is to be replaced by the term ‘Annex I’ and that the text of that annex is to be replaced by the text set out in Annex I to Decision 2012/97. Last, Article 1(3) of Decision 2012/97 provides that Annex II thereto is to be added as Annex II to Decision 2011/101.14Recitals 1 to 5 in the preamble of Decision 2012/97 are worded as follows:‘(1)On 15 February 2011, the Council adopted Decision 2011/101 …(2)On the basis of a review of Decision 2011/101 … the restrictive measures should be extended until 20 February 2013.(3)However, there are no longer grounds for keeping certain persons and entities on the list of persons and entities to which the restrictive measures provided for in Decision 2011/101 … apply.(4)In order to facilitate further the dialogue between the EU and the Government of Zimbabwe, the travel ban imposed on the two members of the re-engagement team of the Zimbabwe Government listed under Decision 2011/101 … should be suspended.(5)The information relating to certain persons and entities included on the list in the Annex to Decision 2011/101 … should be updated.’15Annex I to Decision 2011/101, as replaced by Decision 2012/97, includes the names of Mr Johannes Tomana and the 120 other applicants, as listed in Annex A.4 to the application. The names of the same persons and entities also appeared in the Annex to Decision 2011/101 before the amendments made by Decision 2012/97.16Article 1 of Commission Implementing Regulation (EU) No 151/2012 of 21 February 2012 amending Regulation No 314/2004 (OJ 2012 L 49, p. 2), which is the second act against which this action is directed, replaced Annex III to Regulation No 314/2004 with a new annex containing the names of all the applicants. Further, recital 2 in the preamble of that regulation is worded as follows:‘… Decision 2011/101 … identifies the natural and legal persons to whom restrictions are to apply as provided for in Article 5 of that Decision, and Regulation … No 314/2004 gives effect to that Decision to the extent that action at Union level is required. Annex III to Regulation … No 314/2004 should, therefore, be amended to ensure consistency with this Council Decision.’17It should also be noted that the names of all the applicants also appeared in Annex III to Regulation No 314/2004, as in force before being replaced pursuant to Article 1 of Implementing Regulation No 151/2012.18Council Implementing Decision 2012/124/CFSP of 27 February 2012 implementing Decision 2011/101 (OJ 2012 L 54, p. 20), which is the third act against which this action is directed, amended the entry relating to applicant No 60, Mr Cephas George Msipa, whose name is listed in the Annex to Decision 2011/101. In particular, the following wording was added regarding that individual in the previously empty column relating to the grounds for his inclusion in the list of persons subject to the restrictive measures imposed by that decision:‘Former Provincial Governor associated with the ZANU-PF faction of the Government.’19On 20 April 2012 the applicants asked the Council to provide them with ‘all of the evidence and information’ on which it had relied in making its decision to apply restrictive measures to them. Procedure and forms of order sought by the parties 20By application lodged at the General Court Registry on 25 April 2012, the applicants brought the present action.21By document entitled ‘Plea of inadmissibility’ lodged at the Court Registry on 4 July 2012, the Council asked the Court:—to verify that the applicants No 2 to No 109, all natural persons, indeed support the action;to the extent that it turns out that they do not, to dismiss the action as manifestly inadmissible as far as these applicants are concerned, and to order the remaining applicants to pay the costs.22In so far as the Council essentially requested, by means of that document, the adoption of a measure of organisation of procedure, within the meaning of Article 64 of the Rules of Procedure of the General Court, the applicants and the Commission were invited to submit written observations on that request, which they did on 29 and 25 October 2012 respectively.23By document lodged at the Court Registry on 16 August 2012, the United Kingdom of Great Britain and Northern Ireland sought leave to intervene in support of the form of order sought by the defendants. By order of 25 October 2012, the President of the Third Chamber of the General Court granted leave to intervene. The United Kingdom lodged its statement in intervention on 14 December 2012. The applicants, the Council and the Commission submitted written observations on that statement in intervention on 16 January, 24 January and 20 February 2013 respectively.24By letter of 7 November 2012, a copy of which was lodged at the Court Registry on the same date, the applicants informed the Council that applicant No 66, Mr Isack Stanislaus Gorerazvo Mudenge, had died.25By letter lodged at the Court Registry on 19 November 2012, the applicants asked the Court to invite the Council to confirm that the material in Annex B.19 to the defence did not constitute the evidence on which the Council had relied in deciding to designate the persons affected by the restrictive measures at issue. Since this was, in essence, a request to adopt a measure of organisation of procedure, within the meaning of Article 64 of the Rules of Procedure, the Court invited the Council, the Commission and the United Kingdom to submit their observations on that request, which they all did, on 10, 11 and 7 December 2012 respectively. In its observations, the Council also informed the Court that it had replied, by letter of 27 November 2012, to the applicants’ request mentioned in paragraph 19 above and the Council produced a copy of that letter and its annexes.26Furthermore, since the applicants had asked the Court in the above-mentioned letter of 19 November 2012 (paragraph 26 above) to indicate that any additional material relied on by the Council at that stage of the procedure would be disregarded and would not form part of the case file, the applicants were reminded, by letter of 26 November 2012, that Article 48(1) of the Rules of Procedure applied as regards offers of further evidence.27In their reply, which was lodged at the Court Registry on 31 January 2013, the applicants informed the Court that applicant No 83, Mr John Landa Nkomo, had died.28By letter lodged at the Court Registry on 25 February 2013, the Council notified the Court of the adoption of Council Decision 2013/89/CFSP of 18 February 2013 amending Decision 2011/101 (OJ 2013 L 46, p. 37). That decision amended Annex I to Decision 2011/101 so as to remove from the list of persons and entities subject to the restrictive measures at issue the names of applicant No 6, Mr David Chapfika; applicant No 9, Mr Tinaye Chigudu; applicant No 16, Mr Tongesai Shadreck Chipanga; applicant No 32, Mr R. Kwenda; applicant No 38, Mr Shuvai Ben Mahofa; applicant No 42, Mr G. Mashava; applicant No 54, Mr Gilbert Moyo; applicant No 58, Mr S. Mpabanga; applicant No 60, Mr Cephas George Msipa; applicant No 64, Mr C. Muchono; applicant No 66, Mr Isack Stanislaus Gorerazvo Mudenge; applicant No 67, Mr Columbus Mudonhi; applicant No 68, Mr Bothwell Mugariri; applicant No 70, Mr Isaac Mumba; applicant No 78, Mr S. Mutsvunguma; applicant No 83, Mr John Landa Nkomo; applicant No 84, Mr Michael Reuben Nyambuya; applicant No 88, Mr David Pagwese Parirenyatwa; applicant No 89, Mr Dani Rangwani; applicant No 92, Mr Richard Ruwodo; applicant No 109, Mr Patrick Zhuwao, and applicant No 113, Divine Homes (Private) Ltd.29Commission Implementing Regulation (EU) No 145/2013 of 19 February 2013 amending Regulation No 314/2004 (OJ 2013 L 47, p. 63) amended Annex III to the latter regulation so as to remove the references in that annex to the persons and entities mentioned in paragraph 28 above.30The applicants were invited to submit observations on the Council’s letter mentioned in paragraph 28 above, but they did not comply with that request.31Article 1(1) of Decision 2013/160/CFSP of 27 March 2013 amending Decision 2011/101 (OJ 2013 L 90, p. 95), replaced the text of Article 10(3) of Decision 2011/101, the new text reading as follows: ‘[t]he measures referred to in Article 4(1) and Article 5(1) and (2), in so far as they apply to persons and entities listed in Annex II, shall be suspended until 20 February 2014. The suspension shall be reviewed every three months’. Article 1(2) of Decision 2013/160 further provided that Annex II to Decision 2011/101 was to be replaced by the text set out in the Annex to Decision 2013/160.32The names of the majority of the applicants, both natural persons and entities, appear in Annex II to Decision 2011/101, as replaced by Decision 2013/160. The names of the following applicants are not listed there: applicant No 3, Mr Happyton Mabhuya Bonyongwe; applicant No 12, Ms Augustine Chihuri; applicant No 18, Mr Constantine Chiwenga; applicant No 75, Mr Didymus Noel Edwin Mutasa; applicant No 86, Mr Douglas Nyikayaramba; applicant No 99, Mr Perence Samson Chikerema Shiri; applicant No 102, Mr Jabulani Sibanda; applicant No 104, Mr Philip Valerio Sibanda; applicant No 120, Zimbabwe Defence Industries (Private) Ltd, and applicant No 121, Zimbabwe Mining Development Corp.33Article 1 of Council Regulation (EU) No 298/2013 of 27 March 2013 amending Regulation No 314/2004 (OJ 2013 L 90, p. 48) provides that ‘the application of Article 6 of Regulation … No 314/2004 is suspended until 20 February 2014 in so far as it applies to the persons and entities listed in the Annex to this Regulation’ and that ‘[t]he suspension shall be reviewed every three months’. The Annex to Regulation No 298/2013 contains the names of the same natural persons and entities as those listed in Annex II to Decision 2011/101, as replaced by Decision 2013/160 (see paragraph 32 above).34After a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Eighth Chamber, to which the present case was, consequently, allocated.35By letter lodged at the Court Registry on 26 September 2013, the Council notified the Court of the adoption of Council Implementing Decision 2013/469/CFSP of 23 September 2013 implementing Decision 2011/101 (OJ 2013 L 252, p. 31). The former decision amended Annex I to Decision 2011/101 so as to de-list applicant No 121, Zimbabwe Mining Development.36Furthermore, Commission Implementing Regulation (EU) No 915/2013 of 23 September 2013 amending Regulation No 314/2004 (OJ 2013 L 252, p. 23) amended Annex III to the latter regulation so as to remove the entry in that annex relating to applicant No 121.37By letter lodged at the Court Registry on 20 February 2014, the Council notified the Court of the adoption of Council Decision 2014/98/CFSP of 17 February 2014 amending Decision 2011/101 (OJ 2014 L 50, p. 20), and of Council Regulation (EU) No 153/2014 of 17 February 2014 amending Regulation No 314/2004 and repealing Regulation No 298/2013 (OJ 2014 L 50, p. 1)38Article 1(2) of Decision 2014/98 replaced Article 10 of Decision 2011/101 with the following text:2. This Decision shall apply until 20 February 2015.3. The measures referred to in Article 4(1) and Article 5(1) and (2), in so far as they apply to persons and entities listed in Annex II, shall be suspended until 20 February 2015.The suspension shall be reviewed every three months.39Further, Article 2 of Decision 2014/98 provides that ‘[t]he persons set out in Annex I to Decision 2011/101/CFSP listed in the Annex to this Decision shall be added to Annex II to Decision 2011/101/CFSP’. The Annex to Decision 2014/98 contains the names of the applicants No 3, No 12, No 18, No 75, No 86, No 99, No 102 and No 104.40For its part, Regulation No 153/2014 provides as follows:‘Article 1 Regulation … No 314/2004 is amended as follows:(1)in Article 6, the following paragraph is added:“4. The measures in paragraphs 1 and 2 shall be suspended in so far as they concern persons and entities listed in Annex IV.”the Annex to this Regulation is added as Annex IV. Article 2 Regulation … No 298/2013 is repealed. Article 3 This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.This Regulation shall be binding in its entirety and directly applicable in all Member States.’41Annex IV to Regulation No 314/2004, as added by Regulation No 153/2014, includes the names of all the applicants — natural persons and entities — who were still listed in Annex III to that regulation, with the sole exception of applicant No 120, Zimbabwe Defence Industries, being the only applicant in respect of whom the freezing of funds and economic resources provided for in that regulation still applies and has not been suspended.42The Court invited the other parties to submit observations on the Council’s letter referred to in paragraph 37 above. The applicants and the Commission complied with that request on 21 and 4 March 2014 respectively.43On hearing the report of the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure provided for under Article 64 of its Rules of Procedure, invited the parties to reply in writing to certain questions and to lodge certain documents. The parties complied with that request within the prescribed period.44With the exception of the United Kingdom, which was absent, the parties presented oral arguments and their answers to the questions put by the Court at the hearing of 10 June 2014.45At the hearing, the Council added to the court file a number of press articles, which indicate that applicant No 68, Mr Bothwell Mugariri, applicant No 96, Mr Lovemore Sekeremayi and applicant No 98, Mr Nathan Marwirakuwa Shamuyarira, had died. The applicants’ representatives confirmed that the latter two individuals had died, but stated that, as far as they knew, the report of the death of Mr Mugariri was inaccurate. Further, in reply to a question from the Court, the applicants’ representatives confirmed that they regarded themselves as instructed by all the applicants and offered to produce written authorities to act (‘powers of attorney’) signed by each applicant in respect of whom no such authority to act had been annexed to the application. The Court took note of the lodging of the abovementioned documents and statements in the written record of the hearing.46At the hearing, the Court invited the applicants and the Council to reply in writing to certain questions and to produce certain documents, including the authorities to act required. The parties complied with the Court’s request within the time allowed, following which the written procedure was closed by decision of the President of the Eighth Chamber.47The applicants claim that the Court should:annul Decision 2012/97, Implementing Regulation No 151/2012 and Implementing Decision 2012/124, in so far as they concern the applicants;order the Council and the Commission to pay the costs.48The Council and the Commission contend that the Court should:dismiss the action;order the applicants to pay the costs.49The United Kingdom supports the form of order sought by the Council and the Commission seeking dismissal of the action. Law 1. The applicants who have died 50It is recognised in the case-law that an action for annulment brought by the addressee of a measure can be pursued by the addressee’s successor, particularly in the case of the death of a natural person (Joined Cases T-67/00, T-68/00, T-71/00 and T-78/00 JFE Engineering and Others v Commission [2004] ECR II-2501, paragraph 46; see also, to that effect, Case 92/82 Gutmann v Commission [1983] ECR 3127, paragraph 2).51In this case, as stated in paragraphs 24 and 27 above, applicant No 66, Mr I. S. G. Mudenge, and applicant No 93, Mr J. L. Nkomo, have died in the course of proceedings. Further, in reply to one of the questions put to them at the hearing for response in writing, the applicants’ representatives have confirmed that applicant No 96, Mr Lovemore Sekeremayi, and applicant No 98, Mr Nathan Marwirakuwa Shamuyarira, have died in the course of proceedings. Last, the applicants’ representatives took the opportunity to state that applicant No 32, Mr R. Kwenda, has also died in the course of proceedings.52With regard to all the abovementioned deceased applicants, the applicants’ representatives have stated that their successors, who are in all cases their widows, wished to continue proceedings and they lodged written statements from the widows to that effect, certified by a notary. In the remainder of this judgment, the term ‘the applicants’, in so far as it refers to the abovementioned deceased applicants, refers to their successors who have lodged a written statement expressing their wish to continue these proceedings.2. Whether the lawyers who signed the application were instructed by all the applicants who are natural persons 53As stated in paragraph 21 above, the Council, by a separate document, requested that the Court verify that all the applicants who are natural persons ‘indeed support the current court proceeding’. In that context, the Council argued that the applicants’ representatives had not annexed to their application any mandate (‘power of attorney’) or any other evidence capable of showing that they were duly authorised to act by the applicants No 2 to No 110 inclusive, who are natural persons.54The Council therefore submitted that the action had to be declared to be inadmissible in so far as it concerned those applicants, unless their representatives produced, from each of them, evidence that they wished to bring the action. The Council relied, in that context, on the judgment in Case 14/64 Barge v High Authority [1965] English Special Edition p. 51, 57. The Council’s claim was also supported by the Commission.55It must be recalled that, under, first, the third and fourth paragraphs of Article 19 and the first paragraph of Article 21 of the Protocol on the Statute of the Court of Justice of the European Union, applicable to the procedure before the General Court pursuant to the first paragraph of Article 53 of that Statute, and, second, the first subparagraph of Article 43(1) of the [General Court’s] Rules of Procedure, the parties, other than the Member States and institutions of the European Union, the EFTA Surveillance Authority or the States which are parties to the Agreement on the European Economic Area (EEA), must be represented by a lawyer who is authorised to practise before a court of a Member State or of another State which is party to the EEA Agreement. Further, the application must contain the applicant’s name and permanent address and a statement of the signatory’s capacity. Last, the original of every pleading must be signed by the party’s agent or lawyer.56However, it is only with respect to legal persons that Article 44(5)(b) of the Rules of Procedure provides for the obligation to attach to the application ‘proof that the authority granted to the applicant’s lawyer has been properly conferred on him by someone authorised for the purpose’. The Rules of Procedure therefore allow natural persons to be represented by a lawyer without the lawyer being required to produce evidence of instructions to act, as is necessary in the case of legal persons (Case T-34/02 Le Levant 001 and Others v Commission [2006] ECR II-267, paragraph 64).57The reason why lawyers representing a natural person are not obliged to lodge evidence of instructions to act signed by their client is doubtless to be found in the fact that, if a member of the bar of one of the Member States, subject as such to a code of professional ethics, declares that he has been duly instructed by his client, that declaration is, as a general rule, deemed to be sufficiently reliable (see, to that effect, the judgment in Case C-229/05 P PKK and KNK v Council [2007] ECR I-439, paragraph 119).58However, if account is also taken of the provisions mentioned in paragraph 55 above, it must be concluded that, before commencing the examination of an action brought before it, the Court must satisfy itself that the lawyer who has signed the application has indeed been appointed by the person in whose name the action has been brought as that person’s representative. In the light of what is stated in paragraph 57 above, it must be concluded that, normally, the Court regards the fact that a lawyer has signed and lodged an application in the name of a natural person as an implicit declaration on the part of that lawyer that he has been duly instructed by the natural person concerned, and the Court regards that form of declaration as being sufficient. However, if there are specific factors which are capable of casting doubt on the reality of that implicit declaration, the Court may justifiably request the lawyer concerned to prove that he is in fact instructed.59It is in that light that the statement in Barge v High Authority, paragraph 54 above (p. 57), that the lawyer is not ‘required to produce a duly executed authority to act in the lodging of an application, subject to proof if challenged that he is so authorised’, should be understood. That statement must be placed in the context of that case, as is apparent from the Opinion of Advocate General Roemer with respect to the judgment in Barge v High Authority, paragraph 54 above (pp. 61 to 63).60That Opinion reveals that, at the time, it was standard practice at the Court of Justice to require a written authority to act even for applicants who were natural persons, even though the relevant provision of the Rules of Procedure of the Court of Justice did not require it, no more than do today the General Court’s Rules of Procedure. The lawyer acting for the applicant in the case which gave rise to the judgment in Barge v High Authority, paragraph 54 above, had produced such an authority to act when lodging the application, but the authority to act which was produced referred to a different case. Subsequent to the lodging of the application, the lawyer had produced a further authority to act, covering the case concerned, and consequently the issue which had to be decided by the Court of Justice was whether that subsequent production was sufficient or whether the failure to produce a duly executed authority to act at the same time as the bringing of the action meant that the action was inadmissible. The Court of Justice decided that the former proposition should be upheld.61Contrary therefore to the view apparently held by the Council, it does not follow from that judgment that the other party to proceedings is entitled to request, without putting forward particular factors in support of such a request, that the lawyer of an applicant who is a natural person should produce an authority to act signed by his client, failing which the action should be dismissed as being inadmissible. If it were admitted that the other party to proceedings had such a right, that would to a great extent nullify the rule that natural persons may be represented by a lawyer without that lawyer having to produce authority to act, and would be likely to complicate and prolong proceedings unduly, particularly in cases, such as the present, where the action is brought by a large number of natural persons who, moreover, reside outside the European Union. The requirements stemming from the right to effective judicial protection, set out in Article 47 of the Charter of Fundamental Rights of the European Union, and the considerations stated in paragraph 57 above are also conducive to the finding that the production of such an authority to act should not be required except where there are specific factors which cast doubt on the reality of its existence (see paragraph 58 above).62In this case, at the hearing, the applicants’ representatives formally confirmed, in response to a question from the Court, that they considered themselves to be duly instructed by all the applicants. Further, they offered to produce, from all the applicants for whom they had not done so, a written authority to act. Within the period granted to them for that purpose by the Court, they did in fact produce such authorities to act, certified by a notary, for the applicants No 2 to No 110, with the exception of the deceased applicants mentioned in paragraph 51 above. It should be noted, in that regard, that they also produced such an authority to act in the name of applicant No 68, Mr Bothwell Mugariri. It thus emerged that the reporting of his death, mentioned in press articles lodged in the court file at the hearing by the Council, was inaccurate. Further, it must be observed that, in the light of what is stated in paragraph 60 above, the fact that the signing of the authorities to act produced post-dated the lodging of the action is of no importance.63It must therefore be concluded that the reality of the authority to act given by each of the applicants to their representatives before the Court cannot reasonably be doubted.3. Whether the applicants continue to have an interest in bringing proceedings 64In accordance with settled case-law, the purpose of the action must, like the interest in bringing proceedings, continue until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage for the party bringing it (see Case C-362/05 P Wunenburger v Commission [2007] ECR I-4333, paragraph 42 and case-law cited, and Joined Cases C-373/06 P, C-379/06 P and C-382/06 P Flaherty and Others v Commission [2008] ECR I-2649, paragraph 25).65It must be observed that, with regard to some of the applicants, the restrictive measures at issue have been repealed (see paragraphs 28, 29, 35 and 36 above). Further, with regard to all the applicants whose names continue to be listed as persons and entities subject to those measures, with one exception, the application of the measures has been suspended (see paragraphs 32, 33 and 37 to 41 above).66However, in the judgment in Case C‑239/12 P Abdulrahim v Council and Commission [2013] ECR, relating to the situation of a person affected by restrictive measures which were adopted because of his alleged links with terrorist organisations and were repealed in the course of proceedings, the Court of Justice stated that such measures have substantial negative consequences and a considerable impact on the rights and freedoms of the persons affected. The Court of Justice held that, apart from the freezing of funds as such which, through its broad scope, seriously disrupts both the working and the family life of the persons affected and impedes the conclusion of numerous legal acts, account must be taken of the opprobrium and suspicion that accompany the public designation of the persons affected as being associated with a terrorist organisation. The Court of Justice also held that the interest of such an applicant in bringing proceedings is retained, despite the removal of his name from the list at issue, for the purpose of having the Courts of the European Union recognise that he should never have been included on the list or that he should not have been included under the procedure which was adopted by the EU institutions. The Court of Justice further stated that whilst recognition of the illegality of a contested act cannot, as such, compensate for material harm or for interference with one’s private life, it is nevertheless capable of restoring the reputation of the person concerned or constituting a form of reparation for the non-material harm which he has suffered by reason of that illegality, and of thereby establishing that he retains his interest in bringing proceedings. Last, the Court of Justice held that the fact that the repeal of the restrictive measures concerned was definitive does not prevent an interest in bringing proceedings from continuing to exist so far as concerns the effects of the acts which imposed those measures between the date of their entry into force and that of their repeal (the judgment in Abdulrahim v Council and Commission, paragraphs 70 to 72 and 82).67Although restrictive measures were imposed on the applicants in this case not because of their links with terrorist organisations, but because they were either members of a government which, according to the authors of the contested acts, committed serious infringements of human rights, were associated with those government members, or were persons whose activities seriously undermined democracy, respect for human rights and the rule of law in Zimbabwe, the reasoning of the Court of Justice in Abdulrahim v Council and Commission, paragraph 66 above (paragraphs 70 to 72 and 82), is also applicable, mutatis mutandis, to their situation, and accordingly it must be concluded that their interest in bringing proceedings continues to exist notwithstanding the repeal, with respect to some of them, and the suspension, with respect to others, of the restrictive measures at issue.4. Arguments put forward by the Commission challenging the admissibility of the action 68First, the Commission disputes the admissibility of the claim for annulment of the Council’s measures in so far as the claim concerns the Commission, as it lacks the capacity to be sued with respect to the Council’s acts.69However, in so far as the action seeks the annulment both of two acts adopted by the Council and an act adopted by the Commission, the applicants have properly referred, in the application, to those two institutions as being the defendants in this case.70Secondly, the Commission states that, in its opinion, the claim for the annulment of Implementing Decision 2012/124 should be regarded as having been brought solely in the name of applicant No 60, Mr Cephas George Msipa, who is the only person concerned by that decision. The Commission has doubts about the admissibility of such a claim, as the decision in question amends Decision 2011/101 only in so far as concerns the grounds for inclusion of that applicant in the list of persons subject to the restrictive measures at issue and, therefore, does not alter his legal situation. The Commission adds that, should the Court consider the claim for the annulment of that decision to have been brought by all applicants, it should dismiss that claim as inadmissible ‘since none of the Applicants has legal interest in challenging this Council act’.71That argument cannot be accepted. It must be observed that, after the amendment of Decision 2011/101 by means of Decision 2012/97, which, inter alia, replaced Annex I to the former decision with a new annex, Implementing Decision 2012/124 again amended Annex I to Decision 2011/101 with regard to applicant No 60, in order to add in the column relating to grounds for designation, previously empty, the text mentioned in paragraph 18 above. It follows that, like Decision 2012/97, Implementing Decision 2012/124 is of direct and individual concern to applicant No 60 and alters his legal situation, in that it adds to Annex I to Decision 2011/101, as replaced by Decision 2012/97, grounds to justify the imposition on him of the restrictive measures at issue.72Consequently, applicant No 60 may competently seek the annulment of Implementing Decision 2012/124. Where one and the same action is involved, and it is found that the bringing of the action by one applicant is admissible, there is no need to consider whether the other applicants are entitled to bring proceedings (Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraph 31, and Joined Cases T-374/94, T-375/94, T-384/94 and T-388/94 European Night Services and Others v Commission [1998] ECR II-3141, paragraph 61). The action seeks the annulment of the contested acts, in so far as they concern the applicants. Since Implementing Decision 2012/124 refers by name only to applicant No 60, it is obvious that if the action is upheld, that decision will be annulled only with regard to him.5. Substance 73In support of their action, the applicants rely on five pleas in law, claiming, first, that there was no proper legal basis for including persons or entities who are neither leaders of Zimbabwe nor their associates in the list of persons subject to the restrictive measures at issue, second, a manifest error of assessment, third, infringement of the obligation to state reasons, fourth, infringement of the applicants’ rights of defence and, fifth, infringement of the principle of proportionality.74The Court will examine, initially, the first plea in law, on the legal basis for the contested acts, then the third and fourth pleas in law, which raise questions of procedure and, last, the second and fifth pleas in law, which relate to the substance of the case. The first plea in law: there was no adequate legal basis for including persons or entities who are neither leaders of Zimbabwe nor their associates in the list of persons subject to the restrictive measures at issue 75By the first plea in law, the applicants claim, in essence, that there is no adequate legal basis to justify the inclusion, in the list of persons subject to the restrictive measures at issue, of numerous persons who are not even alleged to be leaders of Zimbabwe or individuals or entities associated with those leaders. According to the applicants, the mere allegation of past criminal conduct or other misconduct against the persons concerned is not sufficient to warrant their inclusion in the list of persons subject to the restrictive measures in question.76It must be observed, in that regard, that the first of the acts against which this action is brought, namely Decision 2012/97, was adopted on the basis of Article 29 TEU, which states the following:‘The Council shall adopt decisions which shall define the approach of the Union to a particular matter of a geographical or thematic nature. Member States shall ensure that their national policies conform to the Union positions.’77Article 29 TEU is also the basis of Decision 2011/101, as amended by Decision 2012/97.78Article 29 TEU is part of Title V of the EU Treaty, headed ‘General provisions on the Union’s external action and specific provisions on the common foreign and security policy’. Article 21 TEU, which is also part of Title V, provides:‘1 The Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.…2. The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in all fields of international relations, in order to:(a)safeguard its values, fundamental interests, security, independence and integrity;(b)consolidate and support democracy, the rule of law, human rights and the principles of international law;(c)preserve peace, prevent conflicts and strengthen international security, in accordance with the purposes and principles of the United Nations Charter, with the principles of the Helsinki Final Act and with the aims of the Charter of Paris, including those relating to external borders;(d)foster the sustainable economic, social and environmental development of developing countries, with the primary aim of eradicating poverty; …3. The Union shall respect the principles and pursue the objectives set out in paragraphs 1 and 2 in the development and implementation of the different areas of the Union’s external action covered by this Title and by Part Five of [the FEU] Treaty, and of the external aspects of its other policies. …’79The third act the annulment of which is sought by the action, namely Implementing Decision 2012/124, constitutes a ‘decision implementing a decision defining a Union action or position’, in this case Decision 2012/97. Implementing Decision 2012/124 was adopted on the basis of Article 6(1) of Decision 2011/101 (see paragraph 9 above), in accordance with the procedure laid down in Article 31(2) TEU.80Last, the second act against which this action is directed, namely Implementing Regulation No 151/2012, was adopted on the basis of Article 11(b) of Regulation No 314/2004 (see paragraph 4 above). As regards Regulation No 314/2004, it was itself adopted on the basis of Articles 60 EC and 301 EC. Those articles were amended by the Treaty of Lisbon and are now Article 75 TFEU and Article 215 TFEU respectively.81According to the applicants, the contested acts broaden the scope of the restrictive measures adopted against Zimbabwe, so that they include not only natural and legal persons who are alleged to be members of the government or their associates, but also individuals who are not alleged to be associated with the government but who are alleged to have been engaged in activities that undermine democracy, respect for human rights and the rule of law in Zimbabwe. With regard to that latter category of individuals, it is not alleged that they have any link with the leaders of Zimbabwe. A large number of persons have, according to the applicants, been included among those subject to the contested acts on the basis of unsupported accusations of serious criminal acts and other offences. No evidence or material justifying the assertions relating to those persons to be found in the contested acts, and not even any particular information in that regard, has been adduced. In many cases, the crimes or offences referred to in the contested acts were committed before the formation of the Government of National Unity which was in power in Zimbabwe at the time when the contested acts were adopted.82First, the Court must reject as being of no relevance to this plea in law, which concerns the absence of an adequate legal basis for the adoption of the contested acts, the applicants’ arguments that, in essence, the matters of fact referred to with regard to a number of the persons affected by the restrictive measures established by those acts are not proved or are lacking in detail. That is because such arguments are solely of relevance to show either that an error of fact was committed by the authors of the contested acts, or that reasons for those acts were not adequately stated. Such errors do not affect the existence of an adequate legal basis justifying the adoption of the acts concerned, which issue is the only subject matter of this plea in law. Plainly, if it happens to be the case, contrary to what is asserted by the applicants, that such a legal basis exists, it would still be necessary to examine, first, whether the authors of those acts did not commit a manifest error of assessment in considering that the facts of this case justified recourse to that legal basis for the adoption of those acts and, secondly, whether the authors of those acts provided in that regard a sufficient statement of reasons. Those questions might perhaps be of relevance only in the context of examination of the second and third pleas in law.83Second, it must be recalled that (i) the first of the contested acts (Decision 2012/97) essentially extended the duration of the validity of Decision 2011/101 and replaced the Annex to the latter decision containing the names of persons and entities subject to the restrictive measures which that decision established, (ii) the second of the contested acts (Implementing Regulation No 151/2012) replaced Annex III to Regulation No 314/2004 containing the names of persons and entities subject to the freezing of funds and economic resources established by that regulation and (iii) the third of the contested acts (Implementing Decision 2012/124) amended the entry relating to applicant No 60, Mr Cephas George Msipa, as it appeared in the Annex to Decision 2011/101 as replaced by Decision 2012/97. In other words, each of the three acts at issue is an act which amends an earlier act.84In that regard, it must be noted that the wording of ‘natural or legal persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’, as referred to by the applicants in their arguments as summarised in paragraph 81 above, is to be found only in the text of Decision 2011/101 (see paragraphs 7 and 8 above). In contrast, as stated in paragraph 4 above, the freezing of funds and economic resources established by Regulation No 314/2004 concerns, as stated in Article 6(1) of that regulation, only the ‘funds and economic resources belonging to members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them’.85It follows that the issues raised by this plea differ according to whether it relates to, on the one hand, the first and third contested acts, which amend Decision 2011/101 and, on the other, the second contested act, which amends Regulation No 314/2004.86In the first case, the question which arises is, essentially, whether Article 29 EU, which is stated to be the legal basis of Decision 2012/97 (and of Decision 2011/101 which it amended), constitutes an adequate legal basis to justify the adoption of the restrictive measures mentioned in Decision 2012/97 against ‘natural or legal persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. In that regard, it must be observed that, if the answer to that question is in the negative, it would logically follow that Decision 2011/101 would also lack a legal basis, with regard to persons falling in the abovementioned category. It must therefore be concluded that, by this plea, the applicants are also raising, implicitly but clearly, a plea of illegality against Decision 2011/101. It follows from Article 277 TFEU that the applicants are entitled to raise such a plea, even where they could have competently sought the annulment of Decision 2011/101 and failed to do so (see, to that effect and by analogy, Case C-11/00 Commission v ECB [2003] ECR I-7147, paragraphs 74 to 78; Case C-442/04 Spain v Council [2008] ECR I-3517, paragraph 22, and Case C-91/05 Commission v Council [2008] ECR I-3651, paragraphs 29 to 34).87In the second case, namely that of Implementing Regulation No 151/2012, the question which arises is whether there is a legal basis justifying the amendment of Regulation No 314/2004 in order to list in Annex III thereto, containing the names of persons and entities whose funds and economic resources are to be frozen, the names of persons or entities who were listed in the Annex to Decision 2011/101, as amended by Decision 2012/97, on the ground that they were engaged in activities seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe, although, as stated in Article 6(1) of Regulation No 314/2004, that regulation provides for solely the freezing of funds and economic resources belonging to members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them.88The Court will therefore examine both those questions in turn.The legal basis of Decisions 2011/101 and 2012/97 and Implementing Decision 2012/12489The applicants put forward three closely linked arguments which cannot be understood other than as calling into question the competence of the Council to adopt, on the basis of Article 29 EU, Decisions 2011/101 and 2012/97 against persons who were engaged in activities seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe.90First, the applicants claim that, while supporting democracy, the rule of law and human rights (in addition to combating terrorism) are legitimate objectives of the Common Foreign and Security Policy (CFSP), the Council and Commission do not have competence to legislate generally in the areas of criminal law or civil law. Their competence in that field is strictly limited and set out in Articles 82 TFEU to 86 TFEU, and it is stated in Article 40 TEU that they must not exceed their powers. Thus, according to the applicants, while the European Union may adopt minimum rules concerning the definition of criminal offences in areas of serious cross-border crime, and may approximate national laws in order to ensure effective implementation of a European Union policy, neither the Council nor the Commission has competence to use the Common Foreign and Security Policy in order to impose a freezing of funds or a travel ban on individuals simply on the basis that they are alleged to have been involved in the past in crimes or serious misconduct.91Secondly, according to the applicants, it is necessary that there should be a clear and obvious link between individuals subject to restrictive measures and the legitimate CFSP objectives of the European Union as regards a third country. Yet there is no link between individuals accused of criminal or serious misconduct in the past and any legitimate objective of the CFSP Policy. There is no explanation of how the imposition of a freezing of funds or a travel ban on those individuals, who are not said be associated with the current Government of Zimbabwe, can achieve any legitimate objective. The applicants who fall within that category are not terrorists who could use their finds and economic resources to further international terrorist activities, nor are they people who are responsible for or have any control over any policy implemented by the Government of Zimbabwe.92Third, the Council is obliged, when adopting restrictive measures, to explain how the measures are appropriate and proportionate to achieving a legitimate objective. Yet in this case, no legitimate foreign policy justification has been provided for imposing restrictive measures on non-State actors in Zimbabwe on the basis of allegations that they have committed crimes or serious offences in the past. Nor is there any explanation of how the application of a fund freezing measure or a travel ban on individuals who have no responsibility for nor influence over the policy of the Government of National Unity in Zimbabwe at the time of adoption of the contested acts is an appropriate and proportionate way of achieving any legitimate CFSP objective.93It must be observed that it is clear from a reading of Article 21 TEU in conjunction with Article 29 TEU, the wording of which articles is stated in paragraphs 78 and 76 respectively above, that the adoption of measures intended to advance, in the rest of the world and, consequently, in Zimbabwe, democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, may be the subject of a decision based on Article 29 TEU (see, to that effect, the judgment of 28 May 2013 in Case T‑200/11 Al Matri v Council, paragraph 46). In their arguments, as summarised above, the applicants do not in a general sense dispute that conclusion, but claim solely that restrictive measures, such as those at issue in this case, imposed on persons or entities solely on the basis of their conduct, alleged to constitute either a crime or serious misconduct, cannot qualify as measures which may be adopted on the basis of Article 29 TEU. The applicants further maintain that such conduct may, at most, be covered by measures adopted on the basis of provisions relating to judicial cooperation in criminal matters, which is the subject of Articles 82 TFEU to 86 TFEU.94Those arguments of the applicants disregard however the background of the activities seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe in which the persons whose names are listed in Annex I to Decision 2011/101 are said to have engaged. It is necessary therefore to recall that background, as it emerges from the recitals in the preambles of Decision 2011/101 and the preceding acts.95Thus, recital 1 in the preamble of Common Position 2002/145, namely the first Common Position adopted with regard to Zimbabwe (see paragraph 1 above), reads as follows:‘On 28 January 2002, the Council expressed its serious concern about the situation in Zimbabwe, in particular the recent escalation of violence and intimidation of political opponents and the harassment of the independent press. It noted that the Government of Zimbabwe has not taken effective measures to improve the situation as called for by the European Council in Laeken last December.’96Common Position 2002/145 was amended and extended by Common Position 2003/115. Recital 2 in the preamble of the latter is worded as follows:‘There has been further degradation in the situation in Zimbabwe, where the serious infringements of human rights and of the freedom of opinion, of association and of peaceful assembly continue to occur.’97Common Position 2004/161, which repealed and replaced Common Position 2002/145, also refers, in recital 6, to ‘the continuing deterioration in the human rights situation in Zimbabwe’, which justified the renewal of restrictive measures adopted by the Union with regard to that country for a further period of 12 months. According to recital 7 of the same Common Position, ‘[t]he objective of these restrictive measures is to encourage the persons targeted to reject policies that lead to the suppression of human rights, of the freedom of expression and of good governance’.98It is plain to see that the Council considered that the situation in Zimbabwe had not improved since, as stated in paragraph 3 above, the Council successively extended the duration of validity of Common Position 2004/161 until 20 February 2009‘in view of the situation in Zimbabwe’, the standard wording used in the various common positions which effected those extensions.99In 2008 elections took place in Zimbabwe. As stated by the Council, the EU High Representative for the CFSP referred, in a statement of 22 June 2008, to the ‘unacceptable systematic campaign of violence, obstruction and intimidation led by the Zimbabwean authorities, which has continued for several weeks’ and he considered that ‘[u]nder those conditions, the elections have become a travesty of democracy’.100As the Council also states, without contradiction from the applicants, following agreement between the party in power in Zimbabwe, ZANU-PF, and the opposition, a ‘Global Political Agreement’ (‘the GPA’) was entered into by them on 15 September 2008, with provision for, inter alia, the formation of a new government of national unity containing not only members proposed by ZANU-PF, already in power before the formation of that government, but also members proposed by the opposition. Mr Robert Mugabe remained President of Zimbabwe. That government was finally formed on 9 February 2009, but, according to the Council, the years which followed were marked by a power struggle between ZANU-PF and the opposition parties. In that struggle, Mr Robert Mugabe retained the support of the Zimbabwean security apparatus, comprising the country’s army, intelligence services, police and prison system. According to the Council, the body which co-ordinates that apparatus, namely the Joint Operations Command is, to a large extent, responsible for the violence during the 2008 elections, and the individuals who were members of that body in 2008 continue as such.101Council Common Position 2009/68/CFSP of 26 January 2009, renewing restrictive measures against Zimbabwe (OJ 2009 L 23, p. 43), extended the period of validity of Common Position 2004/161 for an additional year, until 20 February 2010. Recital 3 in the preamble of Common Position 2009/68 states that the reason for that extension was ‘[i]n view of the situation in Zimbabwe, in particular given the violence organised and committed by the Zimbabwean authorities and the continued blocking of the implementation of the political agreement signed on 15 September 2008’. Likewise, Decision 2010/92, which extended the period of validity of Common Position 2004/161 until 20 February 2011, refers, in its recital 3, to ‘the lack of progress in the implementation of [the GPA]’.102It is against that background that the Court must set the reference made, in Articles 4 and 5 of Decision 2011/101 (see paragraphs 7 and 8 above), to persons ‘whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. It is apparent that that reference is not to any conduct which might constitute a crime or an offence under ordinary criminal law or civil law. The reference relates, patently, to the conduct of the persons who perpetrated the acts which led the Council to assert that the leaders of Zimbabwe were responsible for an ‘escalation of violence’, ‘intimidation of political opponents and the harassment of the independent press’ (see paragraph 95 above), ‘serious infringements of human rights and of the freedom of opinion, of association and of peaceful assembly’ in the country (paragraph 96 above) or again a ‘systematic campaign of violence, obstruction and intimidation led by the Zimbabwean authorities’ (paragraph 99 above).103Those findings are confirmed by the wording of Articles 4 and 5 of Decision 2011/101. While, clearly, conduct which constitutes a crime or an offence may seriously harm the rights of the individuals who are its victims, it is difficult to imagine that such conduct might harm democracy itself or the rule of law, where there is no collusion between the persons directly implicated in that conduct and some, at least, of the leaders of the country concerned.104It must also be observed that the effect of the GPA and the formation of the so-called Government of National Unity was not wholly to remove from power the leaders of Zimbabwe against whom the accusations summarised above were made (see also, in that regard, paragraph 109 below). At most, the result was a sharing of power between those same leaders and the former opposition parties.105In those circumstances, the Court holds that Article 29 TEU constitutes an adequate legal basis for the adoption of decisions such as Decisions 2011/101 and 2012/97, with regard to the persons referred to in paragraph 102 above. Contrary to what is claimed by the applicants, the restrictive measures concerned by those two decisions were not imposed on those persons on the ground of their alleged implication in any conduct whatsoever which might constitute a crime or an offence, but because of the alleged conduct on their part which, while also falling in all probability within the scope of criminal or, at the least, civil law, was part of a strategy of intimidation and systematic violation of the fundamental rights of the Zimbabwean people, responsibility for which the Council assigned to the leaders of that country. It is precisely on that last ground that the persons who were accused of such conduct could legitimately be the subject of a measure such as the two abovementioned decisions, adopted on the basis of Article 29 TEU.106It is also because of that last ground that there is a link, of the kind referred to by the applicants in their arguments summarised in paragraph 91 above, between the conduct of those persons and the legitimate objectives of the CFSP, as set out in Article 21 TEU. When account is taken of the objective of the restrictive measures concerned, renewed by Decision 2011/101 (see paragraph 97 above), it was absolutely reasonable to include, among the persons subject to such measures, the alleged perpetrators of the violence and intimidation for which the leaders of Zimbabwe had, in the view of the Council, to assume political responsibility, and not those leaders alone. Regardless of whether any action could be taken under criminal, or civil, law against the persons allegedly involved in the alleged violence, it was legitimate and compatible with the objectives of the CFSP to adopt measures intended to encourage those individuals, and others, to ‘reject policies that lead to the suppression of human rights, of the freedom of expression and of good governance’, which, in their case, would mean that they should not engage in any similar conduct in the future.107As regards the applicants’ argument summarised in paragraph 92 above, it must be observed that that argument does not, in fact, relate to the legal basis for the contested acts, but involves a claim that the statement of reasons for those acts is insufficient. Even if that finding is set aside, suffice it to state that, as is apparent from the recital of the considerations for the various acts which established and extended the restrictive measures at issue, as set out in paragraphs 95 to 101 above, and as will be argued as part of the analysis of the third plea in law below, the Council provided a sufficient statement of the reasons which led it to include, among the persons subject to those measures, the persons who are concerned by this plea in law.108The applicants also claim that, in any event, the restrictive measures at issue are not an appropriate means to achieving any legitimate objective in a proportionate manner. They put forward five arguments in this regard. First, although those measures purport to be aimed at members of the current government, they focus entirely on issues relating to the former Government of Zimbabwe, and not the government which is in power following the implementation of the GPA. Further, the current government (‘the Government of National Unity’) is supported by the European Union, with which it is engaged in dialogue. Second, the activities and misconduct alleged against the applicants relate, in a certain number of cases, to a period before the formation of the Government of National Unity. Third, the imposition of a fund freezing measure and a travel ban on individuals who have no association with the government or who are not involved with or in control of the policies that government is implementing cannot in any event achieve any legitimate CFSP objective. Fourth, the United Kingdom, which proposed that individuals be added to the list of persons affected by the restrictive measures at issue, applies a strategy which seeks to maintain pressure on ‘hardliners’. That is not a stated objective of the CFSP and cannot justify the extension of restrictive measures to non-State actors in Zimbabwe who are alleged to have engaged in criminal conduct in the past. Fifth, even if the contested measures were appropriate, they remain disproportionate for the reasons set out with regard to the fifth plea in law.109The last of those five arguments consists of no more than a reference to arguments put forward by the applicants in support of their fifth plea in law, examined in paragraphs 285 to 302 below. As regard the other four, they start, very obviously, from the premise that the formation of the so-called Government of National Unity, as provided for by the GPA, resulted in the complete replacement of all the leaders of Zimbabwe. However, as has been pointed out in paragraph 100 above, that was not the case. While, admittedly, the Government of National Unity contained representatives of the opposition, it also contained representatives of ZANU-PF, namely the party which was in power when the violence, intimidation and infringements of fundamental rights, alleged by the Council in the various common positions and decisions relating to Zimbabwe, as mentioned above, took place. As is apparent from the Council’s answer to one of the questions put to it by the Court as a measure of organisation of procedure, essentially the members of the Government of National Unity proposed by ZANU-PF were previously members of the former government. Further, the President of Zimbabwe, Mr Robert Mugabe, continued to hold that office.110In those circumstances, contrary to what the applicants appear to believe, there is no question of a radical and comprehensive change in the Zimbabwean leadership, following the formation of the Government of National Unity, pursuant to the GPA. It was therefore open to the Council, even after the formation of that government, to adopt, on the basis of Article 29 TEU, a decision providing for restrictive measures against both those of the Zimbabwean leadership who had previously been part of the leadership of that country in the past or their associates and also persons who had, in the past, engaged in activities which seriously undermined democracy, respect for human rights and the rule of law in Zimbabwe. That applies a fortiori when, as is clear from the recitals of Common Position 2009/68 and Decision 2010/92, referred to in paragraph 101 above, the Council considered that the implementation of the GPA was subject to ‘continued blocking’ and was characterised by a ‘lack of progress’.111Moreover, as regards, more specifically, the fourth argument, which refers to an alleged distinct strategy of the United Kingdom, that argument is based on a report of a House of Commons committee, produced by the applicants as an annex to their application. Suffice it to state in that regard that, as pointed out, in essence, by the Council, the legality of the contested acts must be assessed on the basis of the grounds set out in those acts themselves and not on matters allegedly taken into consideration by the United Kingdom Government which led it to support those acts. That is even more the case, as again stated by the Council, where those acts were plainly not adopted by the United Kingdom alone, but by all the representatives of the Member States, meeting within the Council.112Taking into account all the foregoing, it must be concluded that Article 29 TEU constituted an adequate legal basis for the adoption of Decision 2012/97 and, moreover, for Decision 2011/101 which was amended by it. Further, Implementing Decision 2012/124 was also adopted on an adequate legal basis, namely Article 6(1) of Decision 2011/101.The legal basis of Implementing Regulation No 151/2012113As stated above (see paragraph 80 above), the Commission adopted Implementing Regulation No 151/2012 on the basis of Article 11(b) of Regulation No 314/2004.114First, it is clear that, on its own wording (see paragraph 4 above), the provision in question concerns ‘decisions taken in respect of the Annex to Common Position 2004/161’. Yet, as observed in paragraph 6 above, Common Position 2004/161 was repealed by Decision 2011/101.115Admittedly, it would have been preferable if the wording of Article 11(b) of Regulation No 314/2004 had been updated, to substitute for the reference to the repealed Common Position 2004/161 a reference to Decision 2011/101 which replaced it. However, even in the absence of such updating, it is obvious that the provision concerned must be interpreted as also covering any decision relating to a measure, such as in this case Decision 2011/101, which, repealing Common Position 2004/161, took the place of that common position and essentially contains identical provisions.116A comparative examination of the provisions of the two acts concerned reveals that Articles 1 to 5 of Decision 2011/101 are, with the exception of some ad hoc amendments of an ancillary nature, identical to the corresponding articles of Common Position 2004/161, in the version in force at the time of its repeal. Article 6 of Decision 2011/101 reproduces, in paragraph 1, the text of Article 6 of Common Position 2004/161, but also contains two further paragraphs designed to safeguard the rights of defence of persons affected by the restrictive measures that are imposed. A new Article 7, containing information on the Annex to Decision 2011/101, plainly to guarantee compliance with the obligation to state reasons, is placed between Article 6 of that decision and Article 8 thereof, the text of the latter being identical to that of Article 7 of Common Position 2004/161. Article 9 of Decision 2011/101 consists of one sentence repealing Common Position 2004/161 while, essentially, the last article (Article 10) of Decision 2011/101 corresponds to Article 9 of Common Position 2004/161. Decision 2011/101 does not contain any article comparable to Article 10 of Common Position 2004/161, but the latter article provides for no more than the publication of the Common Position concerned in the Official Journal. The absence of a comparable provision in the text of Decision 2011/101 is without doubt due to the fact that its publication in the Official Journal is directly provided for by the second subparagraph of Article 297(2) TFEU.117The interpretation of Article 11(b) of Regulation No 314/2004 as also referring to decisions taken in respect of the Annex to Decision 2011/101 is confirmed by recital 5 in the preamble of that decision, adopted, it should be recalled, by the Council, which is also the author of Regulation No 314/2004. That recital states that the ‘Union implementing measures [of Decision 2011/101] are set out in … Regulation … No 314/2004...’.118It must therefore be concluded that Article 11(b) of Regulation No 314/2004 constitutes an adequate legal basis for the adoption of an implementing regulation, such as Regulation No 151/2012, on the basis of a decision amending Annex I to Decision 2011/101. The Court must then examine the question mentioned in paragraph 87 above, namely whether such an amendment can have the effect of imposing the restrictive measures laid down by Regulation No 314/2004 on persons who are alleged to have engaged in activities seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe, although, under Article 6(1) of Regulation No 314/2004, that regulation provides solely for the freezing of funds and economic resources of members of the Government of Zimbabwe and of any natural or legal person, entities or bodies associated with them.119It must be borne in mind that Regulation No 314/2004 was adopted on the basis of Articles 60 EC and 301 EC. The applicants refer to the case-law of the Court of Justice, according to which, if measures against natural persons are to be adopted on the basis of Articles 60 EC and 301 EC as restrictive measures striking third countries, those measures must be targeted at solely the leaders of those countries and persons who are associated with those leaders (Joined Cases C-402/05 P and C-415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I-6351, paragraph 166, and Case C‑376/10 P Tay Za v Council [2012] ECR, paragraph 63).120The applicants further claim that, in its Proposal for a Council Regulation COM (2009) 395 final of 29 July 2009, amending Regulation No 314/2004, the Commission expressly recognised that Articles 60 EC and 301 EC were not sufficient to impose restrictive measures on people unconnected with the government and that it would need to amend Regulation No 314/2004 if it wished to impose restrictive measures on individuals and entities not alleged to be members of the Government of Zimbabwe or associated with it. That proposal was however never adopted and the restrictive measures established by Regulation No 314/2004 continued to be based on Articles 60 EC and 301 EC.121The Council’s response is that Decision 2011/101 was adopted after the entry into force of the Treaty of Lisbon and that it is now permissible to adopt, on the basis of Article 215(2) TFEU, restrictive measures against natural or legal persons, groups or non-State entities, not linked to the governing regime of a third country. The change effected by the entry into force of the Treaty of Lisbon means that the Commission’s Proposal, relied on by the applicants, was overtaken by events. The Commission for its part also refers to Article 215(2) TFEU in its arguments and contends that that provision constitutes an adequate legal basis for the imposition of restrictive measures on persons or entities other than the leaders of third countries and those associated with those leaders.122It is certainly true that, as stated by the Court of Justice in the judgment in Case C‑130/10 Parliament v Council [2012] ECR, paragraph 51, as a result of the amendments made to primary law after the Treaty of Lisbon entered into force, the content of Article 60 EC, relating to restrictive measures with regard to capital movements and payments, and Article 301 EC, on the interruption or reduction, in part or completely, of economic relations with one or more third countries, is mirrored in Article 215 TFEU. As the Court of Justice has also confirmed, Article 215(2) TFEU allows the Council to adopt restrictive measures against natural or legal persons and groups or non-State entities, namely, measures that, before the Treaty of Lisbon entered into force, required Article 308 EC also to be included in their legal basis if their addressees were not linked to the governing regime of a third country (Parliament v Council, paragraph 53).123However, those considerations demonstrate only that, after the entry into force of the Treaty of Lisbon, the Council had available to it an adequate legal basis, constituted by Article 215(2) TFEU, to allow it to adopt a regulation imposing restrictive measures on natural or legal persons in Zimbabwe not linked to the leaders of that third country. Yet it is clear that no regulation of that kind was adopted. Regulation No 314/2004 continues to refer, in Article 6(1) thereof, to ‘individual members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them as listed in Annex III’.124Further, Article 11(b) of Regulation No 314/2004 must be interpreted in such a way as to be compatible with the abovementioned provision in Article 6(1) of the same regulation and it must therefore be concluded that the Commission could, by means of an implementing regulation, amend Annex III to Regulation No 314/2004 only if the persons who were to be listed in that annex could be characterised as either individual members of the Government of Zimbabwe or persons associated with them.125It is therefore necessary to examine, in particular, the question whether the persons listed in Annex I to Decision 2011/101 on the ground that they had engaged in activities seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe can be considered to fall within the category of persons associated with the members of the Government of Zimbabwe. Obviously, if one or more of those individuals are at the same time members of the Government of Zimbabwe, there is nothing to prevent their names being listed, pursuant to an Implementing Regulation adopted on the basis of Article 11(b) of Regulation No 314/2004, in Annex III to the latter regulation, since their status as members of the government is already sufficient ground for that listing.126In order best to appreciate the concept of an ‘associate’ of the leaders of a third country, as it is used in the case-law of the Court of Justice cited in paragraph 119 above, some elucidation of the cases which have given rise to that case-law is necessary. In the cases which gave rise to the judgment in Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 119 above, the restrictive measures at issue were, as the Court of Justice held in paragraph 167 of that judgment, notable for the absence of any link to the governing regime of a third country. Specifically, the restrictive measures were directed directly against Usama bin Laden, the Al-Qaeda network, and the persons and entities associated with them, following the collapse of the Taliban regime in Afghanistan.127In the case which gave rise to the judgment in Tay Za v Council, paragraph 119 above, the person subject to restrictive measures was a family member of a businessman in Myanmar. The Court of Justice held that the possibility could not be ruled out that those in charge of certain businesses might be subject to restrictive measures adopted on the basis of Articles 60 EC and 301 EC, provided it was established that they were associated with the leaders of the Republic of the Union of Myanmar or that the activities of those businesses were dependent on those leaders (Tay Za v Council, paragraph 119 above, paragraph 55). However, the Court of Justice excluded the application of such measures to natural persons on the sole ground of their family connection with persons associated with the leaders of the third country concerned and irrespective of their personal conduct (Tay Za v Council, paragraph 119 above, paragraph 66).128Neither of those two cases is however directly comparable to the circumstances of this case. Unlike the situation in the cases which gave rise to the judgment in Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 119 above, in this case, with respect to the grounds set out in paragraph 109 above, there is no question of a ‘collapse’ of the regime which was in power in Zimbabwe at the time when there took place the violence, intimidation and infringements of the fundamental rights of the Zimbabwean people which are relied on by the Council to justify the adoption of the restrictive measures at issue. As regards the judgment in Tay Za v Council, paragraph 119 above, suffice it to state that, in this case, there is no question of restrictive measures being imposed on persons on the sole ground that they are family members of associates of the leaders of a third country.129It follows that there is nothing, in the case-law of the Court of Justice examined above, to preclude the persons whose names were listed in Annex I to Decision 2012/97, on the ground that their activities allegedly seriously undermined democracy, respect for human rights and the rule of law in Zimbabwe, from being regarded as falling within the category of persons ‘associated with individual members of the Government of Zimbabwe’, for the purposes of Article 6(1) of Regulation No 314/2004. That is indeed how they should be characterised, having regard to the findings and considerations in paragraphs 105, 106, 109 and 110 above.130In other words, it has to be concluded that, in the particular circumstances of Zimbabwe, as they emerge from the findings in paragraphs 95 to 104 above, the ‘natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’ and the legal persons, entities or bodies belonging to those natural persons, all referred to in Articles 4 and 5 of Decision 2011/101, should not be regarded as other than persons associated with the members of the Government of Zimbabwe and the legal persons, entities or bodies belonging to such associates, but constitute, in fact, a particular category of those associates.131It is admittedly true that, at first sight, the wording of the abovementioned Articles 4 and 5, by employing the terms ‘as well as’ and ‘other … persons’, seems conducive to a conclusion to the contrary. However, when account is taken of the background which led to the adoption and extension, over a very long period, of restrictive measures against Zimbabwe, as that background is described in paragraphs 95 to 104 above, an interpretation of Article 6(1) of Regulation No 314/2004 which would permit the conclusion that the restrictive measures laid down in that regulation cannot be imposed on the persons referred to in paragraph 129 above cannot be accepted.132That is because it would be paradoxical to accept that the restrictive measures laid down by Regulation No 314/2004 might be adopted against family members of the leaders of Zimbabwe (see, to that effect, the judgment in Tay Za v Council, paragraph 119 above, paragraph 63 and case-law cited) on the sole ground that they are persons associated with those leaders, where they need not be accused of any specific conduct undermining democracy, respect for human rights and the rule of law, and to exclude, at the same time, the adoption of such measures against persons who were the true instruments for the implementation of the policy of violence, intimidation and infringement of fundamental rights which the European Union imputes to those leaders. The characterisation of the latter persons as ‘associates’ of the leaders of Zimbabwe is even more justified than the characterisation of the family members of those leaders as such.133It follows that Article 11(b) of Regulation No 314/2004 constituted an adequate legal basis for the adoption of Implementing Regulation No 151/2012, with regard to all the persons concerned by the latter regulation.134All the foregoing considerations are confirmed when an examination is made of the grounds stated in connection with the listing in Annex I to Decision 2011/101, as amended by Decision 2012/97, of the applicants to whom reference is made in footnote No 33 of the application. It must be observed, in that regard, that, as correctly stated by the Council, the majority of the applicants concerned occupied positions which makes it possible to characterise them as leaders of Zimbabwe or associates of those leaders and to justify, accordingly, on that ground alone, their listing in that annex. Irrespective of that observation however, it is clear that, in all those cases, the brief description of the conduct which is imputed to them indicates that that conduct constitutes activity which is plainly linked to the policy of violence, intimidation and infringement of the fundamental rights of the Zimbabwean people which the European Union imputes to the leaders of that State.135Thus, for example, in the cases of Mr Joseph Chinotimba (applicant No 15) and Mr Gilbert Moyo (applicant No 54), it is alleged that they took part in acts of violence during the 2008 elections. As regards applicant No 30, Mr Nolbert Kunonga, the entry relating to him in Annex I to Decision 2011/101, as amended by Decision 2012/97, is as follows: ‘Self-appointed Anglican Bishop. Vociferous supporter of the regime. His followers were backed by the police in committing acts of violence against church supporters in 2011’. The grounds given for the listing of all the other applicants to whom reference is made in footnote No 33 in the application are broadly comparable in content.136In the light of all the foregoing, the first plea in law must be rejected as being unfounded. The third plea in law: infringement of the obligation to state reasons 137The applicants claim that, although until 2007 no reasons were stated for the restrictive measures imposed in relation to the situation in Zimbabwe, the Council and the Commission have latterly begun to provide some reasons. However, in so far as the applicants are concerned, the reasons stated in the contested acts do not comply with the principles to be found in the case-law and they consist of general assertions, which do not disclose in a clear and unequivocal fashion the actual and specific reasons why the view was taken that the restrictive measures at issue should be imposed on each of the persons and entities concerned. It is, according to the applicants, impossible for a person or entity concerned to ascertain why they have been retained on the list of persons and entities subject to those restrictive measures, while the names of other persons and entities have been removed, or to find out how they could become eligible for delisting in the future. In their reply, the applicants refer ‘for example’ to the ‘too vague and general’ entries relating to 39 of the applicants which are to be found in Annex I to Decision 2011/101, as replaced by Decision 2012/97.138The applicants also argue that, according to the case-law, a decision to renew restrictive measures imposed previously must set out the actual and specific reasons why the relevant authority considers, following re-examination, that the freezing of the funds of the party concerned remains justified. In the present case, the defendant institutions did not comply with that obligation. The defendants have never stated whether and on what basis they consider that the activities of any of the applicants seriously undermine democracy, respect for human rights or the rule of law in Zimbabwe, even though they added entirely new allegations of serious criminal conduct in respect of the applicants, allegations which had never been put forward before.139The above-mentioned obligations are particularly relevant in the present case, since the defendant institutions have sought to justify the renewal of the restrictive measures in question as regards the applicants by reference to their past conduct, thereby applying an ‘undisclosed presumption’ as to the conduct of those persons in the future. The applicants refer, in that context, to the judgment in Case T-362/04 Minin v Commission [2007] ECR II-2003, paragraph 72, and claim that, as in the case which gave rise to that judgment, the defendant institutions ought to have explained why the application to them of the restrictive measures at issue remained necessary.140Last, the applicants claim that the defendant institutions adopted the decision to renew the restrictive measures at issue against them on the basis of undisclosed reasons. Those reasons, disclosed for the first time in the defences, consist, first, in a previously unstated definition of what the defendant institutions regard as ‘association’ with the Government of Zimbabwe, second, a description of criteria according to which the applicants could be considered to be either obstructive of or supportive of the implementation of the GPA or to be in a position to influence government policy in Zimbabwe and, third, the assumption that each of the applicants was about to engage in violence during the elections which were to take place in Zimbabwe in 2013. According to the applicants, the defendant institutions have made generalised assumptions based on unsupported allegations as regards past misconduct and their membership of a political party, ZANU-PF, to which they of course had the right to belong.The relevant case-law141According to settled case-law, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the Courts of the European Union and, secondly, to enable those Courts to review the legality of that act (see Case C‑417/11 P Council v Bamba [2012] ECR, paragraph 49 and case-law cited).142The statement of reasons required by Article 296 TFEU must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the person concerned to ascertain the reasons for the measures and to enable the court having jurisdiction to exercise its power of review (see Council v Bamba, paragraph 141 above, paragraph 50 and case-law cited). In particular, the statement of reasons for an act which imposes a freezing of funds must identify the actual and specific reasons why the author of that act considers, in the exercise of its discretion, that that measure must be adopted in respect of the person concerned (Council v Bamba, paragraph 141 above, paragraph 52).143The statement of reasons required by Article 296 TFEU must, however, be appropriate to the act at issue and the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the statement of reasons to specify all the relevant matters of fact and law, since the question whether the statement of reasons is adequate must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. In particular, the reasons given for a decision are sufficient if it was adopted in circumstances known to the party concerned which enable him to understand the scope of the measure concerning him (see Council v Bamba, paragraph 141 above, paragraphs 53 and 54, and case-law cited).144In order to determine whether or not the statement of reasons in the contested acts is sufficient with regard to each of the applicants concerned by those measures, the Court must examine, first, whether those acts contain reasons that are sufficient in general terms, so as to justify the adoption and renewal of restrictive measures in view of the situation in Zimbabwe. If that requirement was respected, it would then be necessary to examine whether the contested acts contain reasons that are sufficient in the specific case of each applicant, so as to justify the imposition or renewal of the measures at issue with regard to the person or entity concerned.The grounds for the adoption and renewal of restrictive measures against Zimbabwe145It must be observed that the contested acts did no more than renew, against all the applicants, restrictive measures which had been previously imposed by other acts (see paragraph 15 above). It necessarily follows that those acts were adopted in circumstances known to the applicants. Those circumstances include, in particular, the considerations and events recalled in paragraphs 95 to 104 above, and those referred to in paragraphs 109 and 110 above, of which the applicants could not have been unaware. It follows that, on a reading of the contested acts and the acts preceding them as referred to above, the applicants were in a position to understand the reasons why the Council established restrictive measures against the categories of persons referred to in Article 4(1) and Article 5(1) of Decision 2011/101 and in Article 6(1) of Regulation No 314/2004. Those reasons enable the applicants to challenge, as may be necessary, the merits of the decision to establish such measures in view of the situation in Zimbabwe, and the Court to review the legality of such measures.146The same is true of the reasons justifying the subsequent decisions which extended the period of validity of the measures in question. In particular, the events and considerations recalled in paragraphs 109 and 110 above, as set out in the contested acts and the preceding acts, make it possible to understand why it was decided, notwithstanding the signing of the GPA and the subsequent formation of what was called the Government of National Unity, to maintain in force the restrictive measures against persons and entities linked to ZANU-PF, which previously had monopolised power, although comparable measures were not established against members of the Government of National Unity who had not been members of the former government.The specific grounds justifying the adoption and renewal of the restrictive measures at issue against each of the applicants147The Court must examine whether the contested acts contain a statement of reasons which is sufficient so far as concerns the particular reasons which led the defendant institutions to consider that each of the applicants fell within one or more of the categories of persons on whom it had been decided to impose restrictive measures.148In that regard, the Court must, at the outset, disregard as of no relevance to this case the argument which the applicants base on the judgment in Minin v Commission, paragraph 139 above (paragraph 72). The passage in that judgment relied on by the applicants concerns not the reasons stated in the regulations at issue in that case, but the legal basis for those regulations. More specifically, the issue in that case was whether Articles 60 EC and 301 EC could constitute an adequate legal basis for the adoption of those regulations and, in that context, the determination whether the restrictive measures imposed on the applicant in the case concerned, in his capacity as an associate of the former President of Liberia, Charles Taylor, were actually intended to interrupt or reduce, wholly or in part, economic relations with a third country, given that Charles Taylor had ceased to hold power as President in Liberia after August 2003, in other words before the adoption of those regulations in that case (Minin v Commission, paragraph 139 above, paragraphs 70 and 71). That is the background to the consideration relied on by the applicants, in paragraph 72 of that judgment, that ‘the restrictive measures taken against Charles Taylor and his associates remain necessary to prevent them from using misappropriated funds and property to interfere in the restoration of peace and stability in Liberia and the region’.149Yet in this case, President Mugabe and ZANU-PF did not cease to hold power in Zimbabwe. As stated above, in particular in paragraphs 109 and 110, they merely agreed to share power with the MDC party, which had previously been in opposition, and, moreover, according to the authors of the contested acts, the implementation of that power-sharing agreement, that is the GPA, was hindered by ZANU-PF. Further, it has already been observed that the reasons stated for the contested acts meet the requisite legal standard, as reasons in general terms justifying the renewal of the restrictive measures at issue notwithstanding the signing of the GPA and the formation of what was called the Government of National Unity.150As regards, next, the assertion that the defendant institutions attempted to justify the renewal of the restrictive measures at issue by referring to the applicants’ past conduct, it must be observed that it is not inconceivable that the past conduct of one or other of the applicants might justify the imposition or renewal of restrictive measures against him or her. That is even more the case where, as has been stated, the individuals and the political party, namely ZANU-PF, who were in power in Zimbabwe when the violence and infringements of fundamental rights referred to in the contested acts occurred, were still in power when those acts were adopted, albeit under a power-sharing agreement. Accordingly, as regards compliance with the obligation to state reasons, which is the sole subject-matter of this plea in law, it must be observed that the reference to the past conduct of one or other applicant cannot demonstrate that the statement of reasons in the acts at issue is lacking or insufficient. Whether, having regard to the alleged past conduct, the imposition or renewal of the restrictive measures at issue against the persons or entity concerned is justified is a matter which relates to the question of whether the contested acts are well founded and must be examined as part of the analysis of the pleas relating to the substantive legality of the acts at issue, in particular the second plea in law (see paragraph 235 below).151As regards the applicants’ argument that the grounds for the renewal of the restrictive measures at issue against them were disclosed only in the defences to this action (see paragraph 140 above), it is necessary to recall the settled case-law that a decision of an institution must be self-sufficient and the reasons on which it is based may not be stated in written or oral explanations given subsequently when the decision in question is already the subject of proceedings brought before the Courts of the European Union (the judgment in Case T-16/91 RV Rendo and Others v Commission [1996] ECR II-1827, paragraph 45, and the judgment of 7 July 2011 in Case T‑161/04 Valero Jordana v Commission, paragraph 107). While a statement of reasons which has begun to be expressed in a contested act may be enlarged upon and clarified during the proceedings, the institution which is the author of that act is not entitled to substitute an entirely new statement of reasons in place of the initial statement of reasons (Valero Jordana v Commission, paragraph 107; see also, to that effect, the judgments in Rendo and Others v Commission, paragraph 55, and in Case T-4/01 Renco v Council [2003] ECR II-171, paragraph 96).152It is apparent from that case-law that the Court’s assessment whether or not the statement of reasons in the contested acts is sufficient must be based solely on the reasons to be found in those acts, set in their context as it derives from, inter alia, previous acts which imposed or renewed restrictive measures against Zimbabwe. Consequently, reasons which are entirely new, disclosed by the defendant institutions in the course of proceedings, cannot compensate for any lack of or insufficiency of reasons stated in the contested acts. It was however open to those institutions to enlarge upon and clarify, before the Court, the reasons for the contested acts as they are found in those acts.153That said, the Court cannot fail to point out that, in order to comply with the obligation to state reasons, the authors of the contested acts were not obliged to set out in those acts their own interpretation of the concept of ‘association’ with the Government of Zimbabwe or, more generally, their interpretation of the relevant provisions and case-law. The question whether those acts are based on an incorrect or erroneous interpretation of that concept and, more generally, of the relevant provisions and case-law goes to the substance of the case and does not concern the issue of compliance with the obligation to state reasons. It follows that any observations on those subjects, put forward by the defendant institutions in their written pleadings before the Court, do not constitute a statement of reasons for the contested acts which is disclosed in the course of proceedings.154All those arguments having been rejected, the Court must examine the sufficiency of the reasons stated by the authors of the contested acts to justify the listing, in the list of persons and entities subject to the restrictive measures at issue, of each of the applicants.155In that regard, it must first be observed that both Annexes I and II to Decision 2012/97 (which became Annexes I and II to Decision 2011/101, following its amendment by Decision 2012/97) and Annex I to Regulation No 151/2012 (which became Annex III to Regulation No 314/2004) take the form of tables. Those tables comprise a first column containing the name of the person or entity concerned, a second column headed ‘Identifying information’ and a third column headed ‘Grounds for designation’. As regards natural persons, the latter two columns indicate, inter alia, the governmental or administrative post which the person concerned occupies or, as it may be, occupied, or, in the cases of some individuals who had not occupied such posts, the status of those persons considered to be relevant by the authors of the contested acts. In a good number of cases there is also information that the individual concerned is a member of ZANU-PF, which alone held power before the signing of the GPA, and, where appropriate, a brief description of the acts of violence and intimidation or infringements of fundamental rights of the Zimbabwean people imputed to the individual concerned by the Council.156As regards legal persons and entities, the column relating to ‘[g]rounds’ indicates either that they belong to one or other of the natural persons referred to in Part I of the corresponding Annex or that they are associated with ‘the ZANU-PF faction of the Government’ and, in the case of applicant No 117, the company OSLEG (Private) Ltd, that it is ‘controlled by the Zimbabwean army’.157Next, it must be observed that, under Article 6(1) of Regulation No 314/2004, the freezing of funds and economic resources established by that regulation applies to members of the Government of Zimbabwe and to their associates, both natural and legal persons, entities or bodies. Further, under Article 4(1) and Article 5(1) of Decision 2011/101, the restrictive measures established by that decision apply to members of the Government of Zimbabwe and to their associates, both natural and legal persons, including [any other] ‘natural or legal person whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’, who, as stated in paragraph 146 above, must be regarded as constituting a particular category of such associates.158It follows that, if the statements of reasons in the contested acts are to meet the requisite legal standard, those acts must include, with respect to each applicant, a clear and specific indication of the facts which serve to justify the person concerned being characterised as a member of the Government of Zimbabwe or as a person associated with such a member.159With regard to applicant No 1, Mr Johannes Tomana; applicant No 4, Ms Flora Buka; applicant No 11, Mr Phineas Chihota; applicant No 13, Mr Patrick Anthony Chinamasa; applicant No 19, Mr Ignatius Morgan Chiminya Chombo; applicant No 21, Mr Nicholas Tasunungurwa Goche; applicant No 27, Mr Saviour Kasukuwere; applicant No 33, Mr Andrew Langa; applicant No 36, Mr Joseph Mtakwese Made; applicant No 40, Mr Paul Munyaradzi Mangwana; applicant No 41, Mr Reuben Marumahoko; applicant No 52, Mr Emmerson Dambudzo Mnangagwa; applicant No 53, Mr Kembo Campbell Dugishi Mohadi; applicant No 59, Mr Obert Moses Mpofu; applicant No 62, Ms Olivia Nyembesi Muchena; applicant No 66, Mr Isack Stanislaus Gorerazvo Mudenge; applicant No 69, Mrs Joyce Teurai Ropa Mujuru; applicant No 70, Mr Isaac Mumba; applicant No 72, Mr Herbert Muchemwa Murerwa; applicant No 75, Mr Didymus Noel Edwin Mutasa; applicant No 79, Mr Walter Mzembi; applicant No 81, Mr Sylvester Nguni; applicant No 82, Mr Francis Chenayimoyo Dunstan Nhema; applicant No 83, Mr John Landa Nkomo; applicant No 85, Mr Magadzire Hubert Nyanhongo; applicant No 87, Ms Sithembiso Gile Glad Nyoni; applicant No 95, Mr S. T. Sekeramayi, and applicant No 97, Mr Webster Kotiwani Shamu, the grounds stated in Decision 2012/97 and Implementing Regulation No 151/2012 clearly indicate the posts which those persons occupied when those acts were adopted. The posts indicated fully justify the characterisation of those applicants as members of the Government of Zimbabwe. Consequently, the abovementioned contested acts must be regarded as containing statements of reasons to the requisite legal standard in so far as they concern those applicants.160As regards the other applicants who are natural persons, other than the applicants referred to in paragraph 159 above and applicant No 15, Mr Joseph Chinotimba, applicant No 30, Mr Nolbert Kunonga and applicant No 54, Mr Gilbert Moyo (whose situations are examined in paragraphs 170 and 171 below), it must be observed that with regard to the other applicants there is considerable variation in status held or posts occupied. More specifically, there are: army or air force officers; the Director-General of the Central Intelligence Organisation; police officers; high ranking civil servants, namely applicant No 7, Mr George Charamba, who is the Permanent Secretary, Department for Information and Publicity, applicant No 65, Mr Tobaiwa Mudede, who is ‘Registrar General’, that is, the person responsible for, inter alia, maintaining the electoral roll, applicant No 96, Mr Lovemore Sekeremayi, who is the ‘Chief Elections Officer’ and applicant No 110, Mr Paradzai Willings Zimondi, who is the Prisons Director; provincial governors; the Governor of the Reserve Bank of Zimbabwe (the Zimbabwe central bank); Members of Parliament, namely applicant No 25, Mr Newton Kachepa, who is the member of parliament for the constituency of Mudzi Nord, and applicant No 37, Ms Edna Madzongwe, who is the ‘President of Senate’; ZANU-PF officials, namely again applicant No 37 (member of the Politburo in addition to being President of the Senate of Zimbabwe), applicant No 57, Mr Simon Khaya Moyo, who is Chairman of the Politburo, applicant No 63, Ms Oppah Chamu Zvipange Muchinguri, and applicant No 98, Mr Nathan Marwirakuwa Shamuyarira, who are Politburo Secretaries, and applicants No 93, Mr Stanley Urayayi Sakupwanya, and No 94, Mr Tendai Savanhu, who are Politburo Deputy Secretaries, and applicant No 103, Mr Mishek Julius Mpande Sibanda, who is ‘Cabinet secretary’.161Mention must also be made of applicant No 28, Mr Jawet Kazangarare, of whom it is stated, in the annexes to Decision 2012/97 and Implementing Regulation No 151/2012, that he is a ‘ZANU-PF Councillor in Hurungwe North and war veteran’, and of applicant No 102, Mr Jabulani Sibanda, of whom it is stated in the same acts that he is ‘Former Chair, National War Veterans Association’.162Last, among the other natural persons affected by the contested acts are former members of the government, two former provincial governors, namely applicant No 9, Mr Tinaye Chigudu, and applicant No 60, Mr Cephas George Msipa, and a former ‘Senior Assistant Police Commissioner’, namely applicant No 68, Mr Bothwell Mugariri.163With respect to the majority of applicants referred to in paragraphs 160 to 162 above, in others words all the applicants other than those referred to in paragraph 169 below, the Court considers that the reference to the posts which they were occupying when the contested acts were adopted, or which they had occupied in the past, is, in itself, sufficient to justify their being listed in the list of persons subject to the restrictive measures at issue. The persons concerned include high ranking officials or civil servants (including provincial governors) and police and military officers. The individuals occupying such posts are people who work closely with the government of a country and can legitimately be characterised as ‘associates’ of the members of that government, and no additional justification is necessary. The same is true of the members of the ZANU-PF Politburo, which is the governing body of the political party which held power alone in Zimbabwe from the date of the country’s independence until the signing of the GPA.164Further, the Court also considers that, in circumstances such as those of this case, reference to the fact that a person occupied in the past a post on the basis of which he can be characterised, while occupying that post, as a member of the government of the country concerned or as an associate of such a member, constitutes sufficient justification of his being characterised, after leaving that post, as an associate of members of the government of the country concerned. Where, as in this case, there has not been in the interim any collapse in the country concerned of the regime which was in power when the person concerned was a member of its government or an associate of such a member, it is legitimate to infer, in the absence of evidence or indications to the contrary, that, after leaving his or her post, that person is an associate of members of the government of that country who are former colleagues or persons whom that person worked with or worked under.165As regards any argument that it is possible that those persons may have been removed from their former posts because they did not support the repressive policy of the regime, on which assumption their inclusion among the persons subject to the restrictive measures at issue would not be justified, reference must be made to the purpose of the obligation to state reasons, as stated in the case-law quoted in paragraph 141 above, and it must be recalled that the question of the statement of reasons, which concerns an essential procedural requirement, is separate from that of evidence of the alleged facts, since the latter question relates to the substantive legality of the act at issue and involves assessing the truth of the facts set out in that act and the characterisation of those facts as evidence justifying the use of restrictive measures against the person concerned (Council v Bamba, paragraph 141 above, paragraph 60).166A person whose name has been listed in the list of persons subject to the restrictive measures at issue on the ground that he was formerly a member of the government or formerly a high ranking member of the Zimbabwean authorities has available to him, on reading that information, the essential material to permit him to challenge that listing, by claiming, as the case may be, that he had severed all links with the regime considered to be repressive by the authors of the contested acts and that, for precisely that reason, he was removed from his post. The Courts of the European Union also have the material required to carry out their review, in so far as the grounds stated in the act at issue indicate that it is necessary, in order to examine the merits of those grounds, to investigate whether, having regard to the post formerly occupied by the person concerned, the links between that person and the regime persisted or, on the contrary, were severed.167It must be emphasised that the foregoing considerations, which relate to an analysis of whether the defendant institutions have complied with the obligation to state reasons, do not, in the circumstances of this case and in view of the particular situation in Zimbabwe (see paragraph 130 above), involve either the creation of a presumption or a reversal in the burden of proof to the detriment of the parties concerned. Their significance is simply that the reference, in the grounds of the contested acts, to posts formerly occupied by some applicants, discloses that the authors of those acts considered that, for that reason, the applicants concerned remained associates of the Zimbabwean leadership and that they were not aware of anything to call into question that proposition. In the event of challenge, it is the task of the authors of the contested acts to establish, before the Courts of the European Union, the truth of the link with the government by reason of the posts formerly occupied by the parties concerned, the latter also having the right to submit, for purposes of rebuttal, any evidence in their possession to the contrary.168It follows that the reference, in the contested acts, to the posts formerly occupied by the applicants mentioned in paragraph 162 above constitutes a reason which is sufficient to justify the inclusion of those applicants among the persons subject to the restrictive measures at issue.169On the other hand, with regard to the applicants mentioned below, the Court considers that the mere reference to their status or to the post which they occupied is not, in itself, sufficient to justify their being listed in the list of persons subject to the restrictive measures at issue. Included in this category are the military officers with the rank of colonel or below, namely applicant No 24, Mr Stephen Gwekwerere, applicant No 32, Mr R. Kwenda, applicant No 42, Mr G. Mashava, applicant No 49, Mr Cairo Mhandu, applicant No 50, Mr Fidellis Mhonda, applicant No 58, Mr S. Mpabanga, applicant No 64, Mr C. Muchono, applicant No 78, Mr S. Mutsvunguma, applicant No 80, Mr Morgan S. Mzilikazi, applicant No 91, Mr Victor Tapiwe Chashe Rungani, and applicant No 101, Mr Chris Sibanda; the police officers of lower rank than those mentioned in paragraph 160 above, namely applicant No 67, Mr Columbus Mudonhi (‘Assistant Inspector’), applicant No 70, Mr Isaac Mumba (‘Superintendent’), applicant No 99, Mr Dani Rangwani (‘Police Detective Inspector’); applicant No 25, Mr N. Kachepa (Member of Parliament), and, last, the two applicants mentioned in paragraph 161 above.170As regards applicants No 15, No 30 and No 54, namely Mr Joseph Chinotimba, Mr Nolbert Kunonga and Mr Gilbert Moyo respectively, in its defence the Council considered that they formed a special category of persons on whom the imposition of the restrictive measures at issue was justified by the specific conduct of which they were accused in the grounds stated in Decision 2012/97 and Implementing Regulation No 151/2012. That applies however only to applicant No 30, Mr Nolbert Kunonga, who is described, in the second column of the annexes to those two acts, as a ‘Self-appointed Anglican Bishop’. That status alone is plainly not sufficient to justify the imposition of restrictive measures on the person concerned.171On the other hand, as regards the applicants No 15 and No 54, it is clearly stated in the same column of those annexes, in particular, that each man was a ‘leader of ZANU-PF militia’. That status, if proved, is sufficient ground to characterise them as associates of the members of the Government of Zimbabwe appointed by ZANU-PF and, accordingly, to justify their inclusion among the persons subject to the restrictive measures at issue, irrespective of the specific conduct which is imputed to them in the third column of those annexes.172It can be concluded, at this point, from the foregoing that the reasons stated for the contested acts meet the requisite legal standard with regard to all the applicants who are natural persons, with the exception of the applicants referred to in paragraph 169 above and applicant No 30, Mr Nolbert Kunonga. In order to assess whether or not the statement of reasons for Decision 2012/97 and Implementing Regulation No 151/2012 with regard to the latter applicants is sufficient, it is necessary to look at the conduct imputed to those persons by the authors of those two acts.173It must be observed that the contested acts contain additional references to the specific conduct of the majority of the other applicants who are natural persons. The Council contends that, with regard to those other applicants, it has ‘gone the extra mile’ by providing information on their actual involvement in the policies which were undermining fundamental rights, the rule of law and democracy in Zimbabwe. The applicants challenge that assertion, but that challenge is based on a mistaken premise, since the applicants consider that the status of a person, as a member of the Government of Zimbabwe or as an associate of such a member, is not sufficient to justify that person being listed in the list of persons subject to the restrictive measures at issue. Yet it is apparent from the considerations set out in the analysis of the first plea in law that, with respect to the members of the government who held that status before the formation of the Government of National Unity and with respect to their associates, such status is indeed sufficient to justify the adoption of such measures (see, in particular, paragraph 105 above). The same holds good with respect to former members of the government or former high ranking civil servants (see paragraph 168 above). Accordingly, that argument of the applicants must be rejected.174As regards the applicants for whom a reference to the specific conduct imputed to them in the contested acts is required (see paragraph 172 above), it is apparent from reading those acts that what they are alleged to have done is, in essence, to have directly taken part in the violence and intimidation, and moreover as leaders and instigators. In all cases other than those of the applicants No 30 and No 89, Mr Nolbert Kunonga and Mr Dani Rangwani (with respect to whom the alleged conduct dates from 2011 and 2007 respectively), the violence or intimidation in question occurred during the 2008 election campaign. In all cases, with the exception of that of applicant No 30, Mr Nolbert Kunonga, and that of applicant No 89, Mr Dani Rangwani, the precise location where the person concerned is alleged to have been active is stated. In the case of applicant No 30, it is stated that he was a vociferous supporter of the regime’ and it is added that ‘[h]is followers were backed by the police in committing acts of violence against church supporters in 2011’. In the case of applicant No 89, it is stated that he was ‘involved in group of 50 men paid directly by ZANU-PF to locate and torture MDC supporters in April 2007’.175The information stated with regard to the applicants referred to in paragraph 174 above and, more generally, all the grounds inserted by the contested acts in the third column of Annex III to Regulation No 314/2004 and the table headed ‘Persons’ in the Annex to Decision 2011/101 with regard to all applicants, has a scope which is comparable to that considered to be sufficient by the Court of Justice in Council v Bamba, paragraph 141 above (paragraphs 57 to 59). As applied in the case which gave rise to that judgment, that statement of reasons identifies actual and specific factors, in terms of the status held or post occupied and the kinds of conduct mentioned, which show, according to the authors of the contested acts, that the parties concerned were involved in the violence, intimidation and infringements of fundamental rights in Zimbabwe.176Contrary to what is claimed by the applicants, it is clear that the grounds in the third column of the abovementioned annexes are not too vague or general, neither with regard to the 39 applicants who are discussed in paragraph 137 above, nor as regards the other natural persons concerned. It must also be stated that, as is also indicated in the recitals of the contested acts, to which reference is made above in the examination of the first plea in law, the accusations made against the regime of President Robert Mugabe with regard to violence, intimidation and infringements of fundamental rights in Zimbabwe, both generally and more particularly during the 2008 election, were matters of international public knowledge, of which the applicants could not have been unaware. Those accusations, whether they are true or false, are accordingly part of the background to the contested acts which, as is apparent from the case-law cited in paragraph 143 above, is of relevance to the examination of whether the obligation to state reasons has been complied with.177With knowledge of that background, the applicants concerned could readily understand what they were accused of and, as necessary, challenge those allegations in general or more specifically with regard to the location where they were alleged to have been active or, at the least, claim that if the alleged violence, intimidation or infringements of fundamental rights actually took place, they took no part (see, to that effect, Council v Bamba, paragraph 141 above, paragraph 59).178It must also be stated that the Council annexed to its defence, inter alia, a document of 1046 pages (Annex B.19), which contains, according to the description in the summary list of annexes, ‘Elements … of public knowledge corroborating the information given in the contested [restrictive] measures’. According to the Council, what is stated in the annexes to the contested acts, with regard to the conduct of the applicants undermining fundamental rights, the rule of law and democracy in Zimbabwe, is public knowledge, as is shown, in detail, in the various documents submitted in Annex B.19.179In the light of the foregoing, that annex need not be taken into consideration in order to assess whether the statement of reasons for the contested acts is sufficient. The Court considers, accordingly, that there is no need to adopt the measure of organisation of the procedure proposed by the applicants with regard to that annex (see paragraph 25 above).180Having regard to the Council’s explanation, as summarised in paragraph 178 above, it is plain that the documents in Annex B.19 to the Council’s defence must be distinguished from the documents requested by the applicants in their request mentioned in paragraph 19 above. As stated previously, shortly after the submission of the applicants’ request for the adoption of a measure of organisation of the procedure as mentioned in paragraph 25 above, the Council sent to the applicants the documents sought in their request mentioned in paragraph 19 above. It follows that the documents in Annex B.19 to the Council’s defence are not, as such, documents on which the Council relied when adopting Decision 2012/97 and Implementing Decision 2012/124.181The purpose of Annex B.19 to the Council’s defence must, rather, be considered to have been not to state reasons ex post for the contested acts, but to show that, having regard to the background to the adoption of those acts, the statement of reasons for those acts was sufficient (see, to that effect, Council v Bamba, paragraph 141 above, paragraph 62).182Last, the Court also considers that the specific grounds, as they are set out in the annexes to Decision 2012/97 and Implementing Regulation No 151/2012 with regard to the applicants who are legal persons, in order to justify their being listed in the list of persons and entities subject to the restrictive measures at issue, are likewise sufficient. With respect to each of the entities concerned, it is stated that the entity is either owned by one or other of the natural persons who are subject, under the same acts, to restrictive measures, or that it is associated with the Zimbabwean Government, an agency of the government or the ‘ZANU-PF faction’ in the Zimbabwean Government. Those reasons are sufficient to enable the entities concerned to challenge their merits and to enable the Court to carry out its review.183In conclusion, the Court must hold that the reasons stated in the contested acts meet the requisite legal standard with regard to all the applicants and the third plea in law must therefore be rejected as being unfounded. The fourth plea in law: infringement of the rights of the defence 184The applicants claim that the principle of respect for the rights of the defence in the context of this case requires the institutions of the European Union to meet two main obligations. First, they must inform the person or entity concerned of the case and the evidence adduced against it to justify the imposition of restrictive measures. Second, the person or entity concerned must be afforded the opportunity effectively to make known its point of view on that evidence. Further, the applicants state that, in the event of the renewal of a restrictive measure previously decided on with respect to a person or entity, the need to protect the rights of the defence and the right to be heard make it necessary that the person or entity is provided with the incriminating evidence and that the person or entity is able to submit its observations on that evidence before any decision on the renewal of the measure at issue.185Yet in this case, according to the applicants, none of them were provided, either before the adoption of the contested acts or after it, with evidence capable of justifying with regard to each of them the acts at issue. Nor did they have the opportunity to submit observations on that evidence. The contested acts do not contain any safeguards in that respect. Furthermore, those acts include allegations of serious criminal misconduct, without giving any indication of the source of those allegations and without taking account of the data protection concerns identified by the Commission and the European Data Protection Supervisor (EDPS) which may arise where the Council or the Commission processes data concerning criminal offences or convictions.186As the Court of Justice has stated, in a review of restrictive measures the Courts of the European Union must, in accordance with the powers conferred on them, ensure the review, in principle the full review, of the lawfulness of all Union acts in the light of the fundamental rights forming an integral part of the EU legal order. That obligation is expressly laid down by the second paragraph of Article 275 TFEU (see the judgment of 28 November 2013 in Case C‑280/12 P Council v Fulmen and Mahmoudian [2013] ECR, paragraph 58 and case-law cited).187One of those fundamental rights is respect for the rights of the defence, which is affirmed in Article 41(2) of the Charter of Fundamental Rights and includes the right to be heard and the right to have access to the file, subject to legitimate interests in maintaining confidentiality (see Council v Fulmen and Mahmoudian, paragraph 186 above, paragraphs 59 and 60, and case-law cited).188According to the same case-law, the question whether there is an infringement of the rights of the defence must be examined in relation to the specific circumstances of each particular case, including the nature of the act at issue, the context of its adoption and the legal rules governing the matter in question (see Council v Fulmen and Mahmoudian, paragraph 186 above, paragraph 63 and case-law cited).189In this case, it is clear that, although the applicants have narrated, in their application, the provisions, general principles and case-law applicable in this area, their specific complaint, as summarised in paragraph 185 above, is that the Council failed to disclose to them, before the adoption of the contested acts, the evidence for the conduct which is imputed to them by those acts and which constitutes the justification for the measures adopted with respect to them, and failed to give them the opportunity to submit their observations on that evidence.190Yet it is not appparent from the file and, it may be added, the applicants do not claim, that, prior to the request for the disclosure of evidence which they sent to the Council five days before the bringing of the action (see paragraph 19 above), the applicants had made a request to the Council for disclosure of the evidence on which the Council relied as justification for the imposition on them of the restrictive measures at issue.191It follows that the applicants start from the premise that if the Council was to respect their rights of defence, it ought to have disclosed to them that evidence on its own initiative and without any request having been made to it. That premise is however incorrect.192As the Court held in its judgment in Case T-390/08 Bank Melli Iran v Council [2009] ECR II-3967, paragraph 97, when sufficiently precise information has been disclosed, enabling the entity concerned effectively to state its point of view on the evidence adduced against it by the Council, the principle of respect for the rights of the defence does not mean that the institution is obliged spontaneously to grant access to the documents in its file. It is only on the request of the party concerned that the Council is required to provide access to all non-confidential official documents concerning the measure at issue. It would in fact be excessive to require spontaneous disclosure of the material in the file, given that when a fund-freezing measure is adopted it is not certain that the person concerned intends to check, by means of access to the file, the matters of fact supporting the allegations made against it by the Council.193Yet following the analysis of the third plea in law, it has been concluded that the reasons stated in the contested acts meet the requisite legal standard (see paragraph 183 above). In other words, the Court must hold that the applicants had in their possession information which was sufficiently precise, as required by the case-law concerned, and that, accordingly, it was the responsibility of the applicants themselves to request, if they wished, disclosure of the evidence concerning them on which the Council had relied. As has been stated, the applicants made such a request only five days before the lodging of the initiating application.194There is nothing in the file to suggest that the applicants could not, had they wished, have submitted such a request earlier. On the contrary, there is material which indicates that the applicants were aware of the possibility of contacting the Council on the subject of the restrictive measures imposed on them and, in that context, of requesting disclosure of the evidence concerning them.195In particular, it must be observed that the Council lodged in the file a letter dated 1 September 2011, which applicant No 1, Mr Johannes Tomana, had sent to the President of the European Council, ‘on behalf of all the natural and legal persons and legal entities’ listed in the Annex to Decision 2011/101. In that letter, Mr Johannes Tomana disputed that the grounds stated in that annex to justify the imposition of restrictive measures on all those persons were either sufficient or well founded. On the other hand, Mr Johannes Tomana made no request for the disclosure of the evidence for the claims made in the annex concerned.196It must also be observed that, in their response to a written question from the Court, the applicants, with the exception of Mr Johannes Tomana, have not stated that they had not authorised Mr Tomana to write the letter concerned also on their behalf. They merely denied that Mr Johannes Tomana acted on their behalf ‘for the purposes of being notified of their designations’.197It may be added that it is not only by means of sending the abovementioned letter that Mr Johannes Tomana asserted that he also acted on behalf of the other applicants. With their initiating application, the applicants lodged a letter sent to their representatives by Mr Johannes Tomana, in which the latter asserts that he represents all the other applicants and, on their behalf and his own, gives instructions to those representatives to initiate proceedings.198It must also be observed that a reply was given to Mr Johannes Tomana’s letter dated 1 September 2011 by a letter dated 20 September 2011 from the Head of Cabinet of the President of the European Council, in which it was stated that the grounds for the imposition of restrictive measures on the persons and entities concerned were set out in the Annex to Decision 2011/101 and reference was made, in addition, to the Council Notice of 16 February 2011 for the attention of the persons, entities and bodies to which restrictive measures provided for in Decision 2011/101 apply (OJ 2011 C 49, p. 4). That notice mentioned, inter alia, that the persons, entities and bodies concerned by the restrictive measures at issue could ‘submit a request to the Council … that the decision to include them on the [list concerned] should be reconsidered’ and indicated the address to which such a request was to be sent. A similar notice was moreover published in the Official Journal on 18 February 2012 (OJ 2012 C 48, p. 13), following the adoption of Decision 2012/97.199Irrespective of whether those factors justified the Council’s decision to notify Mr Johannes Tomana of the adoption of Decision 2012/97 and thereby notify the other natural persons mentioned in that decision, as the Council asserts that it did, those factors confirm that the applicants could have contacted the Council earlier in order to obtain the evidence which they requested and obtained following the request made by them which is referred to in paragraph 19 above.200As regards the latter request, the Council’s response to it, by sending the evidence requested (in a non-confidential version), was somewhat delayed, by around seven months, a period justified according to the Council by the need to obtain the ‘declassification’ of many of the documents concerned. In the absence of any reason to suggest otherwise, one can imagine that the Council’s response to any earlier request by the applicants on the same subject would have been the same, in other words the Council would have sent to them a non-confidential version of the evidence requested.201It must be added that the fact that the Council did not send to the applicants the evidence requested by their letter mentioned in paragraph 19 above until 27 November 2012 had no effect on whether the applicants had the opportunity to present their point of view before the Court. The applicants requested and obtained from the Court an extension, on two occasions, of the period for the lodging of their reply and they therefore had the opportunity of commenting on that evidence in their reply. Their arguments concerning those documents are examined below, as part of the analysis of the second plea in law.202In their reply, after repeating the complaint summarised in paragraph 185 above, the applicants also claimed that, following the disclosure by the Council of the evidence on which it had relied to adopt the contested acts, they were seriously prejudiced by the fact that only in 2013 were they called on to respond to allegations relating to alleged conduct dating from around five years earlier.203An assertion which is so succinct and general cannot however be sufficient ground for the annulment of the contested acts on the basis of an infringement of the applicants’ rights of defence. The applicants do not identify either the specific allegations the rebuttal of which caused them difficulties, or the nature and causes of the difficulties they experienced. Further, the applicants do not explain why their first request for the disclosure of that evidence was made only five days before the bringing of these proceedings.204Even if this plea in law is to be understood as meaning that the applicants claim that, prior to the adoption of the contested acts, the defendant institutions did not make it possible for them effectively to make known their point of view on the grounds adduced against them in those acts, it must be observed that, according to the case-law, the right of a person or entity, with respect to whom restrictive measures previously imposed are renewed by a further act, to be heard prior to the adoption of that act must be respected where the author of the act concerned has adduced new evidence against those persons or entities and not where the renewal is based, in essence, on grounds which are the same as those which justified the adoption of the original act imposing the restrictive measures concerned (judgments in Case T-383/11 Makhlouf v Council [2013] ECR, paragraph 43, and Joined Cases T-174/12 and T-80/13 Syrian Lebanese Commercial Bank v Council [2014] ECR, paragraph 149; see also, to that effect, the judgment in Case C-27/09 P France v People’s Mojahedin Organization of Iran [2011] ECR I-13427, paragraph 62).205Yet in this case the grounds set out in the contested acts as justification for the imposition of the restrictive measures at issue on the applicants are not essentially different from those set out in the earlier acts, namely Decision 2011/101, in the version prior to its amendment by Decision 2012/97, and in Regulation No 314/2004, before its amendment by Implementing Regulation No 151/2012.206While the grounds in the contested acts contain further detail on the conduct imputed to many of the applicants, or a more detailed description of that conduct, the grounds justifying the listing of the applicants in the list of persons and entities subject to the restrictive measures at issue remain essentially the same as those set out in the earlier acts. In no instance is it apparent that, when the restrictive measures at issue were renewed, the grounds mentioned in the earlier acts were abandoned in order to be replaced by different grounds, as was the situation in the case which gave rise to the judgment in France v People’s Mojahedin Organization of Iran, paragraph 204 above.207As regards, in particular, persons named in the list of persons and entities subject to the restrictive measures at issue by reason of the posts which they held or had held in the past, in other words all the applicants with the exception of those referred to in paragraph 169 above, it has already been observed (see paragraph 163 above) that reference to the posts which they held when the contested acts were adopted, or which they had held earlier, is, in itself, sufficient ground for their being listed in the list of persons subject to the restrictive measures at issue. Both the earlier acts and the contested acts refer, with respect to each of those persons, to the same posts.208It follows that, if the applicants are also putting forward a complaint such as that envisaged in paragraph 204 above, that complaint cannot be accepted.209The other arguments put forward by the applicants within this plea in law do not relate to an alleged infringement of their rights of defence. The applicants claim, in essence, that the defendant institutions had no solid evidence to support the imposition on them of the restrictive measures at issue. They state, in that context, that if they had been brought before a criminal court with respect to the conduct imputed to them in contested acts, relevant and robust evidence would have had to be presented to secure their conviction. Further, according to the applicants, the United Kingdom has recognised that there is no evidence against some of the applicants of their alleged conduct as described in the contested acts.210Yet those arguments are of no relevance to the question of whether there was any infringement of the applicants’ rights of defence. Where appropriate, those arguments might be of relevance if it were disputed that the contested acts are well founded and that the facts on which those acts are based are true and accurate. The question of whether the applicants have actually made such a challenge is examined in paragraphs 261 to 266 below.211The applicants further claim that, in its proposal for a regulation mentioned in paragraph 120 above, the Commission provided for a number of safeguards designed to ensure respect for their rights of defence, which have not been respected in this case. Yet the Commission’s proposal alluded to by the applicants was never adopted, and consequently the question of whether the safeguards which it provided for were respected in this case is of no relevance. For the same reason, there is no need to analyse the opinion of the EDPS on various legislative proposals imposing certain specific restrictive measures in respect of Somalia, Zimbabwe, the Democratic Republic of Korea and Guinea (OJ 2010 C 73, p. 1), also alluded to by the applicants (see paragraph 185 above). That opinion also concerns the Commission proposal referred to above, which was not followed by the Council.212In their reply, the applicants also claimed that the defendant institutions had never written to them to inform them that their names had been entered on the list of names of persons subject to the restrictive measures at issue. According to the applicants, publication of a notice relating to that information in the Official Journal cannot be regarded as sufficient.213Yet that is an argument which relates to the question of service of the contested acts on the applicants, which is of no relevance in the context of examination of whether their rights of defence were respected prior to the adoption of those acts. Service of those acts necessarily follows their adoption. The question of whether the Council ought to have served the contested acts by post on each of the applicants concerned by those acts and, in particular, whether service by post on Mr Johannes Tomana is also equivalent to service on all the other applicants, as contended by the Council (see paragraph 199 above) is relevant to the identification of the starting point for the period for initiating proceedings. However, in this case, and in any event, there is no question but that the action was brought in time, and it may be added that this point has not been disputed by the defendant institutions.214Since none of the complaints submitted by the applicants within the fourth plea in law can be accepted, that plea must be rejected. The second plea in law: manifest error of assessment 215By the second plea in law, the applicants claim that the Council and the Commission committed a manifest error of assessment in considering that the criteria for including the applicants in the list of persons and entities subject to the restrictive measures at issue were met.Preliminary observations216The Court has previously held, in Bank Melli Iran v Council, paragraph 192 above (paragraph 36), that, so far as the general rules defining the procedures for giving effect to restrictive measures are concerned, the Council has broad discretion as to what to take into consideration for the purpose of adopting economic and financial sanctions on the basis of Articles 60 EC and 301 EC, consistent with a common position adopted on the basis of the CFSP. Because the Courts of the European Union may not, in particular, substitute their assessment of the evidence, facts and circumstances justifying the adoption of such measures for that of the Council, the review carried out by the General Court must be restricted to checking that the rules governing procedure and the statement of reasons have been complied with, that the facts have been made out, and that there has been no manifest error of assessment of the facts or misuse of power. That limited review applies, especially, to the Council’s assessment of the considerations of appropriateness on which such measures are based.217Those considerations are equally applicable to restrictive measures adopted under Article 215 TFEU, the content of which reflects that of Articles 60 and 301 EC (see paragraph 122 above).218It is however clear from that case-law that the discretion enjoyed in this area by the Council does not prevent the courts of the European Union from determining, when carrying out the review of lawfulness, whether the facts on which the Council has relied are true and accurate. The effectiveness of the judicial review guaranteed by Article 47 of the Charter of Fundamental Rights also requires that the Courts of the European Union should ensure that a decision which affects the person or entity concerned individually is taken on a sufficiently solid factual basis. That entails a verification of the factual allegations in the summary of reasons underpinning that decision, with the consequence that judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on, but must concern whether those reasons, or, at the very least, one of those reasons, deemed sufficient in itself to support that decision, is substantiated (see Council v Fulmen and Mahmoudian, paragraph 186 above, paragraph 64 and case-law cited).219To that end, it is for the Courts of the European Union, in order to carry out that examination, to request the competent European Union authority, when necessary, to produce information or evidence, confidential or not, relevant to such an examination. That is because it is the task of the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded. There is no requirement that that authority produce before the Courts of the European Union all the information and evidence underlying the reasons alleged in the act annulment of which is sought. It is however necessary that the information or evidence produced should support the reasons relied on against the person concerned (see Council v Fulmen and Mahmoudian, paragraph 186 above, paragraphs 65 to 67, and case-law cited).220If the competent European Union authority finds itself unable to comply with the request by the Courts of the European Union, it is then the duty of those Courts to base their decision solely on the material which has been disclosed to them, namely the statement of reasons in the contested measure, the observations and exculpatory evidence that may have been produced by the person concerned and the response of the competent European Union authority to those observations. If that material is insufficient to allow a finding that a reason is well founded, the Courts of the European Union shall disregard that reason as a possible basis for the contested decision to list or maintain a listing. If, on the other hand, the competent European Union authority provides relevant information or evidence, the Courts of the European Union must then determine whether the facts alleged are made out in the light of that information or evidence and assess the probative value of that information or evidence in the circumstances of the particular case and in the light of any observations submitted in relation to them by, among others, the person concerned (see Council v Fulmen and Mahmoudian, paragraph 186 above, paragraphs 68 and 69, and case-law cited).221It must however be emphasised that, as stated moreover in the case-law cited in paragraph 219 above, the Courts of the European Union must determine whether the facts relied on to justify the adoption of restrictive measures are made out solely where the persons affected by those measures challenge those facts before those courts. Such a determination is part of the analysis of the question whether the contested acts are well founded, which it is not for the Courts of the European Union to examine of their own motion.222Further, in circumstances where the Council defines abstractly the criteria which may justify the listing of a person, or an entity, in the list of persons or entities subject to restrictive measures, it is the task of the Courts of the European Union to determine, on the basis of pleas in law raised by the person or entity concerned or, where appropriate, raised by the courts of their own motion, whether the situation of the person or entity concerned corresponds to the abstract criteria defined by the Council. That review extends to the assessment of the facts and circumstances relied on as justifying the listing of the person or entity concerned in the list of those who are subject to restrictive measures, and to the verification of the evidence and information on which that assessment is based (see, to that effect, Bank Melli Iran v Council, paragraph 192 above, paragraph 37).223Those are the considerations which must be taken into account when the Court undertakes an analysis of the complaints and arguments put forward by the applicants within this plea in law. In that regard, the Court will first examine the complaints and arguments presented in the application, before proceeding to an examination of the question whether the complaints and arguments put forward in the reply are admissible, and if so, well founded.The complaints and arguments presented in the application224The applicants claim that the restrictive measures at issue, like those which preceded them, target, under Articles 4 and 5 of Decision 2011/101, the persons and entities ‘whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. It follows, according to the applicants, that the Council and the Commission could impose those measures solely on persons and entities with respect to whom there existed evidence that they were currently engaged in activities which seriously undermined democracy, respect for human rights and the rule of law in Zimbabwe. Further, that involvement should be continuing.225Yet the conclusion of the Council and the Commission, that each of the applicants satisfies that criterion is, according to the applicants, in error, for several reasons. First, some of the applicants were subject to the restrictive measures at issue on the ground that they were ‘member[s] of the ZANU-PF government’ or belonged to the ‘ZANU-PF faction’. That ground is, according to the applicants, not sufficient since it does not represent an allegation of wrongdoing. Further, to be a member of a political party is a right guaranteed by the Constitution of Zimbabwe. Moreover, the restrictive measures at issue target the members of the former government of Zimbabwe. They do not target either the Government of National Unity, which was in power in Zimbabwe when the contested acts were adopted, or ZANU-PF. What is more, the European Union expressly supports the Government of National Unity.226Second, some applicants were, it is claimed, listed as persons and entities subject to the restrictive measures at issue on the ground that they were associated with, or had ties with, a ZANU-PF member of the government or the ZANU-PF faction in the government. That ground is, it is claimed, insufficient. In the first place, those applicants are not alleged to have engaged in any wrongdoing, let alone to have actually participated in activities that can genuinely be described as seriously undermining democracy, respect for human rights and the rule of law in Zimbabwe. In the second place, in the judgment Tay Za v Council, paragraph 119 above, the Court of Justice clearly stated that the mere claim that a person or entity is associated with the leaders of a third country is not sufficient ground for the imposition of restrictive measures on that person or entity.227Third, with regard to a large number of the applicants, the grounds relied on to justify their listing as persons or entities subject to the restrictive measures at issue refer, according to the applicants, to conduct which allegedly took place in the past, and, in many cases, several years before the adoption of the measures at issue and even before the formation of the Government of National Unity. Such grounds are insufficient in the light of the objective of the restrictive measures at issue, which is to encourage the persons concerned to ‘reject policies that lead to the suppression of human rights, of the freedom of expression and of good governance’. Targeting individuals that have no involvement in or influence over government policy on the basis of their past conduct alone cannot conceivably encourage them to reject these policies. In that regard, the applicants consider, referring also to the recitals of Common Position 2002/145 and to a statement of the High Representative of the European Union for Foreign Affairs and Security Policy, that the conduct of persons concerned which occurred solely in the past is not sufficient ground for their being named in the list of persons and entities subject to restrictive measures such as those at issue in this case.228It is clear that those arguments of the applicants are based on a mistaken premise, in that the applicants seem to take the view that the restrictive measures at issue could affect only the persons or entities whose activities seriously undermined democracy, respect for human rights and the rule of law in Zimbabwe. Such a claim is incorrect.229As has already been stated as part of the analysis of the first and third pleas in law, it is clear from the wording of Articles 4 and 5 of Decision 2011/101 (see paragraphs 7 and 8 above) that that is but one of three categories of persons on whom the restrictive measures envisaged by that decision can be imposed. The other two categories consist, respectively, of the ‘members of the Government of Zimbabwe’ and ‘any natural or legal persons, entities or bodies associated with them’. In other words, the status of a person or an entity, the fact of being a member of the Government of Zimbabwe or associated with such a member is, in itself, sufficient ground for the imposition on that person or entity of the restrictive measures laid down by Decision 2011/101.230Moreover, it is apparent, in essence, from the considerations set out in paragraphs 129 to 133 above, that the persons and entities whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe constitute only one particular category of associates of the leaders of that country. That is why their listing in Annex III to Regulation No 314/2004 is justified, even though the text of that regulation does not specifically mention that category of persons and entities.231In the light of those considerations, the applicants’ arguments summarised in paragraphs 225 and 226 above cannot be accepted. It is very clear from the judgment in Tay Za v Council, paragraph 119 above (paragraph 63), that, on the basis of Articles 60 EC and 301 EC or of Article 215 TFEU, restrictive measures can be imposed on members of the Government of Zimbabwe, who are undoubtedly to be categorised as among the leaders of that country, and on their associates. Any reference to specific conduct of the latter category of persons serves, ultimately, only as evidence of their status as associates of members of the government of that country. It follows that such references are not essential either with respect to members of the government, nor even with respect to their associates where, in the case of the latter, their status as associates of members of the government can be inferred from other circumstances, such as the posts which they hold or held in the past.232Further, the reference to the fact that the members of the government concerned are members of ZANU-PF does not mean, as the applicants appear to claim, that the persons concerned (and the entities associated with them) are subject to sanctions for the sole reason that they are members of a political party. It must be recalled that ZANU-PF is not just any political party, but the party which monopolised power during the period of violence, intimidation and infringements of the fundamental rights of the Zimbabwean people relied on by the authors of the contested acts and the other acts which preceded them to justify their adoption. It must also be recalled that the Government of National Unity, which was in power in Zimbabwe when the contested acts were adopted, was composed of (i) individuals who were members of the ZANU-PF party, and who were moreover, in the majority of cases, previous members of the government of Zimbabwe prior to the formation of the Government of National Unity, that is to say during the period of violence, intimidation and infringements of fundamental rights justifying the adoption of the restrictive measures at issue and (ii) individuals proposed by the opposition parties (see, also, paragraphs 104, 109 and 110 above).233In those circumstances, it is evident that the reference, in the grounds for the contested acts, to the fact that a member of the government targeted by those acts was a member of ZANU-PF, or of ‘the ZANU-PF faction’ in the government, serves to explain why that member of the government was the target of restrictive measures, whereas comparable measures were not imposed on other members of the same government that were proposed by the former opposition parties.234Further, it follows from what has been stated in paragraph 110 above that, even after the formation of the Government of National Unity, it was legitimate to impose restrictive measures on the members of that government who had previously been among the leaders of Zimbabwe before its formation, and on their associates. Accordingly, as regards those persons, the issue of a manifest error of assessment can arise only in the event that the authors of the contested acts erred in taking the view that one or other of the persons or entities subject to the restrictive measures at issue was a member of the Government of Zimbabwe who was proposed by ZANU-PF or associated with such a member, when that was not the case. Yet in the application the applicants make no such claim.235It must further be observed that the applicants misinterpret the judgment in Tay Za v Council, paragraph 119 above, when they assert that the Court of Justice confirmed there that the mere association of a person or entity with the leaders of a third country is not sufficient ground for the imposition on that person or entity of restrictive measures. In paragraph 63 of that judgment, the Court of Justice expressly stated that, ‘in order for it to be possible for them to be adopted on the basis of Articles 60 EC and 301 EC as restrictive measures imposed on third countries, the measures in respect of natural persons must be directed only against the leaders of such countries and the persons associated with those leaders’. It is only family members of persons associated with the leaders of a third county who were excluded by the Court of Justice from the application of such measures, where those measures are imposed for the sole reason that the persons concerned have a family link with associates of the leaders of the country concerned, irrespective of the personal conduct of the persons concerned (see paragraph 128 above).236Nor can the Court accept the applicants’ argument that, for a large number of them, the grounds for the contested acts referred to their conduct in the past, indeed to a rather distant past in some cases. Plainly, since the authors of the contested acts had decided to refer to the specific conduct of one or other of the persons or entities targeted by the contested acts, there could be no question of conduct other than in the past. Such a reference cannot be deemed to be of no relevance solely because the conduct in question dates from the more or less remote past. In the absence of arguments and evidence to the contrary, the view can properly be taken that individuals who, in the past, were personally involved in the acts of violence and in the infringements of fundamental rights which the authors of the contested acts impute to those who alone formed the leadership of Zimbabwe before the formation of the Government of National Unity, and to the political party of which they were members, namely ZANU-PF, remain, for the purposes of the case-law mentioned in paragraph 235 above, ‘associates’ of the leaders of that country, and consequently the imposition on them of restrictive measures is, according to that same case-law, legitimate.237As regard the applicants’ argument that, in essence, the restrictive measures at issue targeted, solely on the basis of their conduct in the past, individuals who were not involved in the policy-making of the Government of Zimbabwe and were without influence on that policy, that argument can only be understood as meaning that the applicants claim that the contested acts target, at least in part, persons or entities who were neither leaders of Zimbabwe nor associates of those leaders.238As part of the analysis of the third plea in law, the Court examined the question whether the grounds set out in the contested acts were sufficient to justify the imposition of those measures on all the applicants and concluded that they were (see paragraphs 155 to 182 above). It must also be stated that the applicants have not made clear which of them were concerned by that argument. Further, it must be observed that those who are to be categorised as ‘associates’ of the members of governments of a third country are not only those who are involved in the formulation of the policies of that government and who exercise an influence on those policies, but also individuals involved in the implementation of those policies, particularly where the policies in question consist in the perpetration of violence, intimidation and infringements of the fundamental rights of the people. For all the above reasons, that argument must be rejected.239The applicants also state that the names of some persons were removed from the list of persons subject to the restrictive measures at issue. The applicants mention, by way of example, Mr Charumbira, Mr Gambe and Mr Kuruneri, who had been subject to the restrictive measures imposed on Zimbabwe until 2011, but with respect to whom those measures have not, thereafter, been renewed. According to the applicants, the individuals with respect to whom the restrictive measures at issue were repealed had originally been listed because of their conduct in the past. The applicants claim that the position of the Council and the Commission as regards the individuals maintained on the list in question is arbitrary and is in breach of the principles of legal certainty and equal treatment. Further, the United Kingdom authorities have confirmed that individuals no longer associated with ZANU-PF had been removed from the list in question. The applicants claim that it is therefore difficult to understand why some individuals who are alleged to have been involved in misconduct in the past should be maintained on the list in question, while others are removed from it.240The ground for the listing, in the list of persons subject to the restrictive measures at issue, of the three persons mentioned by the applicants in the context of that argument are stated in Annex III to Regulation No 314/2004, in the version amended by Commission Regulation (EC) No 77/2009 of 26 January 2009 amending Regulation No 314/2004 (OJ 2009 L 23, p. 5), and in the Annex to Common Position 2004/161, as amended by Council Common Position 2009/68/CFSP of 26 January 2009 renewing restrictive measures against Zimbabwe (OJ 2009 L 23, p. 43). In the case of Mr Charumbira, it is stated in the grounds that he is ‘Former Deputy Minister for Local Government, Public Works and National Housing [and] Former member of the Government with ongoing ties’. In the case of Mr Gambe, it is stated that he is ‘Chairman, Electoral Supervisory Commission [and that he] Shares responsibility for fraudulent elections in 2005’. Last, as regards Mr Kuruneri, the abovementioned two texts state that he is ‘Former Minister of Finance and Economic Development [and] Former member of the Government with ongoing ties’.241In response to a question put to the Council, as a measure of organisation of procedure, on why it had decided not to renew the restrictive measures imposed on those three individuals, the Council stated, in essence, that it ‘wanted to relax the pressure on Zimbabwe somewhat, in order to acknowledge the improvement in the state of the country’.242The Court observes that it is indicated in Article 6(1) of Regulation No 314/2004, and in Article 4(1) and Article 5(1) of Decision 2011/101, that the restrictive measures at issue are to be imposed on members of the Government of Zimbabwe and their associates, the latter category also including ‘natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’.243However, it does not follow from those provisions that the Council and the Commission are required to list on the list of persons subject to those measures all members of the Government of Zimbabwe and all associates of such members. If the case-law cited in paragraph 216 above is also taken into account, the Court can, on the contrary take the view that those provisions are to be interpreted as meaning that a person who is neither a member of the Government of Zimbabwe nor a person associated with such a member cannot be subject to those measures but that, as far as the members of the Government of Zimbabwe and their associates are concerned, the Council has a broad discretion enabling it, when appropriate, not to impose those measures on such a person, where the Council considers that, in the light of the objectives of those measures, it would not be appropriate to do so.244In this case, the reasons why the restrictive measures at issue were not renewed with respect to other persons are of no relevance to the situation of the applicants.245Before it can be concluded that the contested acts are vitiated by a manifest error of assessment with regard to the applicants, it must be demonstrated either that those acts are founded on an incorrect factual basis, or that, while the facts adduced with regard to the applicants are true and accurate, the Council committed a manifest error of assessment when it held that was necessary to maintain in force the restrictive measures at issue with respect to the applicants. Yet as regards the first possibility, the applicants do not deny, in the application, that the facts adduced against them in the contested acts are true and accurate (see also paragraphs 261 to 263 below). As regards the second possibility, the applicants offer no explanation as to why the Council ought to have taken the view that the restrictive measures to which they were subject ought not to have been renewed against them.246Pleading, in vague and general terms, the principles of equal treatment and legal certainty cannot fill those gaps in the applicants’ arguments.247According to settled case-law, the principle of equal treatment or non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (see Bank Melli Iran v Council, paragraph 192 above, paragraph 56 and case-law cited). Yet in this case the applicants do not explain how their situation is comparable to that of the persons with respect to whom the restrictive measures were not renewed.248It must be observed, in that regard, that if the non-renewal with respect to those other persons is justified on valid grounds, the applicants had to indicate what those grounds were and why they would also be applicable to their situation. In that event, a comparison with the situation of other persons and, consequently, recourse to the principle of equal treatment would have been redundant. If there are valid reasons why the restrictive measures at issue ought not to have been renewed with respect to the applicants, that in itself is sufficient to justify the annulment of contested acts, irrespective of how the Council has chosen to treat other persons previously subject to the same restrictive measures.249On the other hand, if, hypothetically, the non-renewal of the restrictive measures at issue with respect to other persons was not justified on any valid ground, the Council would have committed an illegal act, which cannot be used by the applicants to their advantage. It is a matter of settled case-law that the principle of equal treatment must be reconciled with the principle of legality, that no person may seek to rely, in his own favour, on an illegal act in favour of others (see Bank Melli Iran v Council, paragraph 192 above, paragraph 59 and case-law cited).250Likewise, as regards the applicants’ reference to the principle of legal certainty, suffice it to state that the applicants offer no explanation as to how that principle was infringed by reason of the renewal of the restrictive measures at issue with respect to them. In particular, they do not even claim that, having regard to the provisions applicable at the time of adoption of contested acts, they were entitled to expect, as far as they were concerned, the non-renewal of the restrictive measures at issue.251In conclusion, there is nothing in the arguments set out in the application in support of the second plea in law to show that the contested acts are vitiated by any form of illegality, or that the contested acts are based on a manifest error of assessment.The complaints and arguments presented in the reply252In order to dispute the grounds relied on by the authors of the contested acts to justify the imposition of restrictive measures at issue are well founded, the applicants put forward, in their reply, different arguments. The Court must examine first whether those arguments are admissible, and then, if they are, whether they are well founded. In that regard, a distinction will be made between the arguments relating to the applicants who are natural persons and those relating to the applicants who are legal persons.– The applicants who are natural persons253In a section of the reply headed ‘The procedure followed by the defendants’, it is stated that the Council and the Commission ‘incorrectly assume that the applicants do not challenge the truthfulness of the reasons provided’ for their listing on the list of persons subject to the restrictive measures at issue. The applicants produced, as an annex to their reply, ‘witness statements’ drawn up by 40 of them. The applicants maintain that those statements were ‘the … first chance to have their say on the grounds for their designation in the contested [acts], and on the documents in Annex B19’ to the Council’s defence. In those statements, the applicants concerned dispute the allegations made with regard to each of them in the grounds for the contested acts. Some of those statements are accompanied by annexes.254The applicants add that many of those of their number who have provided such a statement say that they have never before seen the material which served as the basis for their listing in the list of persons subject to the restrictive measures at issue, or the documents to be found in Annex B19 to the Council’s defence. The same applicants say that they do not know the ‘sources or the dates’ of the documents included in that annex, many of which seem to have been produced by their political opponents. In any event, the applicants declare that the allegations against them ‘are seriously damaging and completely unfounded’. They ‘rebut the allegations in the strongest terms possible, given the vagueness of the allegations’.255According to the applicants, in some cases, those of their number who have provided statements also explain that they were working closely with the MDC party within the Government of National Unity and that, consequently, they could not understand why the restrictive measures at issue had been imposed on them, when not imposed on their MDC counterparts occupying comparable government posts.256Next, in the section of their reply devoted to ‘manifest errors of assessment’, the applicants claim that the Council and the Commission failed to prove that their listing in the list of persons and entities subject to the restrictive measures at issue was justified. Further, that section of the reply repeats, in essence, the same arguments as those put forward in support of the second plea in law in the application, which have already been examined above (see paragraphs 228 to 251 above).257It is therefore plain that, in their reply, the applicants dispute the truth and accuracy of the facts relied on in the contested acts to justify the imposition on them of the restrictive measures at issue. Yet it is no less plain that the arguments put forward in the application in support of the second plea in law, as summarised in paragraphs 224 to 227 above, contain no challenge of that kind.258That is, in essence, why the Council challenges the admissibility of that section of the applicants’ arguments. For its part, the Commission, while emphasising the fact that only in their reply did the applicants challenge, for the first time, the truth and accuracy of the facts adduced against them in the grounds for the contested acts, does not raise an objection that that section of the applicants’ argument is inadmissible.259When invited, in the context of a measure of organisation of procedure, to reply to the arguments summarised in paragraph 258 above, the applicants stated that they had raised, in their application, a plea in law alleging a manifest error of assessment and that they had clearly stated, again in the application, that the allegations made in the contested acts were vague and unsupported, with the result that they were unable to provide a substantive response. The applicants added that they cannot be criticised, since, with the exception of applicant No 1, Mr Johannes Tomana, none of them were notified of the restrictive measures at issue. The applicants further stated that they had requested from the Council the material on which the allegations against them in the contested acts were based and that they had provided a substantive response to those allegations, once they had knowledge of the explanations provided by the Council in its defence and in the supporting documents produced by the Council.260The Court recalls that, under the first paragraph of Article 48(2) of the Rules of Procedure, no new plea in law may be introduced in the course of the proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. However, a plea in law which constitutes an amplification of a plea made previously, whether directly or by implication, in the original application, and which is closely connected therewith, must be declared to be admissible. Moreover, arguments which in substance have a close connection with a plea raised in the application initiating the proceedings cannot be considered new pleas and they may be raised at the stage of the reply or the hearing (see the judgment of 12 September 2012 in Case T‑394/06 Italy v Commission, paragraph 48 and case-law cited).261In this case, the Court finds that the applicants did not assert, in the application, that the facts relied on in the grounds for the contested acts as regards each of them were inaccurate. In other words, the applicants did not dispute, in the application, the truth and accuracy of those facts, which, as was stated in paragraph 221 above, is a prerequisite of their truth and accuracy being reviewed by the Courts of the European Union. The essence of the second plea in law, as presented in the application, is that the authors of the contested acts committed a manifest error, in so far as they considered that the grounds stated with respect to each of the applicants in those acts justified the imposition of the restrictive measures at issue on the applicant concerned. A plea claiming such an error, whether it is characterised as an error in law or as a manifest error of assessment, must be distinguished from a plea which calls into question the truth and accuracy of the grounds concerned. It does not constitute an amplification of such a plea and has no close connection with it.262Further, it is not possible to link the arguments put forward by the applicants in their reply, as they are described above, to some of the claims put forward by them in the application, with regard to the first and fourth pleas in law (see paragraphs 81, 82, 90, 108 and 185 above). It must be stated that those two pleas are not designed to claim that the contested acts are not well founded and, more specifically, to challenge the truth and accuracy of their grounds, but rather to claim, respectively, that there is no adequate legal basis to justify the adoption of the contested acts and that the rights of the defence were not respected. Moreover, even if that consideration is set aside, it is clear that while, in the sections of the application devoted to the arguments summarised in paragraphs 81 and 185 above, the applicants refer to the absence of proof of the ‘allegations’ within the grounds of the contested acts, they do not assert that those ‘allegations’ are either inaccurate or untrue, far less undertake a full and detailed refutation of them. Such a full refutation is even more necessary when there are a large number of applicants and various grounds are stated in the contested acts.263It follows that the arguments put forward for the first time in the reply to call into question the truth and accuracy of the grounds in the contested acts constitute a new plea in law. The Court cannot hold that this plea is based on matters of law or of fact which came to light in the course of the procedure, since, when the application was lodged, the applicants were aware of the grounds stated in the contested acts with respect to each one of them and had ample opportunity to dispute the truth and accuracy of those grounds.264Contrary to what is claimed by the applicants, the production in the course of proceedings by the Council of, first, Annex B.19 to its defence and, second, its response to the applicants’ request mentioned in paragraph 19 above, cannot permit any other conclusion. It is clear that, by the arguments which they put forward for the first time in their reply, the applicants are not disputing the reliability or relevance of one or other piece of evidence supporting the grounds in the contested acts, but the truth and accuracy of those grounds as such. However, since the applicants had already become acquainted with those acts before the bringing of proceedings, it was undoubtedly possible for them to challenge, as early as in the application, the truth and accuracy of those grounds, even though they were not then aware of the evidence supporting those grounds. As is apparent from the case-law mentioned in paragraph 219 above, had there been such a challenge, it would have been the task of the Courts of the European Union to request from the competent authority the production of the evidence concerned and to examine whether the evidence produced supported those grounds. Yet the applicants made no such challenge in their application.265The consideration that the applicants could have challenged in the application the truth and accuracy of the grounds in the contested acts concerning them is even more apposite if account is taken of the fact that those grounds relate to either to posts, in the Zimbabwean government or public authorities, held by the applicants, or to their alleged conduct. Even if each of the applicants was unaware of the evidence which supported the grounds stated with respect to them in the contested acts, each of them was undoubtedly capable of determining, merely on reading the grounds relating to them, whether those grounds were or were not true and, if not, of challenging their truth and accuracy, already in the application.266It follows that the arguments put forward in the reply by the applicants who are natural persons, in order to challenge the truth and accuracy of the grounds justifying the imposition of the restrictive measures at issue on them, are inadmissible and must be disregarded as such, there being no need to examine the substance of those arguments.– The applicants who are legal persons267While the assertions made by the applicants in the reply and summarised in paragraph 253 above make no distinction between natural persons and legal persons, it is plain that the truth and accuracy of the grounds justifying the listing, in the list of entities subject to the restrictive measures at issue, of the legal persons named among the applicants is again challenged in the reply. For the reasons stated above (see paragraphs 260 to 266 above), those arguments must be rejected as being inadmissible, since they are out of time.268The applicants also put forward in their reply a number of other arguments relating to the legality of the imposition of the restrictive measures at issue on legal persons.269The applicants state that Article 6(1) of Regulation No 314/2004 and Article 5 of Decision 2011/101 provide for the freezing of funds and economic resources belonging to legal persons who are associated with members of the Government of Zimbabwe or ‘whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. Accordingly, the authors of the contested measures were not entitled, according to the applicants, to freeze the funds of entities allegedly associated with government associates, with the government generally, or with one faction of the government.270On that basis, the applicants call into question, first, the freezing of funds of applicant No 113, Divine Homes. That applicant is allegedly associated with an alleged associate of the government, namely applicant No 6, Mr David Chapfika. According to the applicants, even if it is accepted that Mr David Chapfika is an associate of the government, which they deny, that status alone is insufficient to justify freezing the funds of applicant No 113.271Second, no member of the government is mentioned, in the contested acts, as being associated with the applicants No 115 to No 121 inclusive, Jongwe Printing, M & S Syndicate (Private) Ltd, Osleg, Swift Investments (Private) Ltd, Zidco Holdings (Private) Ltd, Zimbabwe Defence Industries or Zimbabwe Mining Development. The essential prerequisite of those entities being included among those subject to the restrictive measures at issue is not therefore present.272Third, it is clear from the case-law of the Court that the grounds put forward in the contested acts to justify the freezing of funds and economic resources of the entities in question are insufficient. The authors of the contested acts ought to have carried out a case-by-case analysis in order to assess the degree to which each entity was owned or controlled, the nature of the control alleged, and its relevance to the restrictive measures at issue. No analysis of that kind was carried out with respect to those entities.273Fourth and last, according to the applicants, the proposal was made to the Council that the name of Zimbabwe Mining Development should be removed from the list of entities subject to the restrictive measures at issue and the Council and the Commission have given no explanation of why that proposal was not ultimately acted upon.274In response to a question, as part of a measure of organisation of procedure, as to the plea in law in the application to which those arguments relate and, as the case may be, as to whether there were matters of fact and law which came to light in the course of proceedings which justified the presentation of those arguments for the first time in the reply, the applicants stated that those arguments related to the first three pleas in law of the action and that, in addition, they were in response to certain arguments put forward by the Council in its defence.275The Court finds that the arguments summarised in paragraphs 272 and 273 above raise, in essence, an issue which relates to the sufficiency of the reasons stated in the contested acts, which the Court must, when necessary, review on its own motion (see the judgment in Case C-367/95 P Commission v Sytraval and Brink’s France [1998] ECR I-1719, paragraph 67 and case-law cited). It follows that the substance of those arguments must be examined.276To support their argument summarised in paragraph 272 above, the applicants refer to the judgments in Joined Cases T-246/08 and T-332/08 Melli Bank v Council [2009] ECR II-2629, Case T-562/10 HTTS v Council [2011] ECR II-8087 and in Case T‑53/12 CF Sharp Shipping Agencies v Council [2012] ECR. Yet none of those cases supports the applicants’ arguments.277It is admittedly true that, in Melli Bank v Council, paragraph 276 above (paragraph 146), the Court stated that the provision at issue in that case required an assessment on a case-by-case basis, as regards the entity concerned, of the status of an entity which is ‘owned or controlled’ and that, in addition to indicating the legal basis of the measure adopted, the obligation to state reasons incumbent on the author of that measure relates to that very circumstance. However, even if the fact that that judgment concerns the interpretation and application of a provision other than those at issue in this case is disregarded, it is in any event clear that, in this case, the authors of the contested acts did in fact carry out an analysis on a case-by-case basis and stated reasons in the contested acts on the basis of the results of that analysis.278As stated in the context of analysis of the third plea in law, the contested acts state to the requisite legal standard the grounds which justified the listing, in the list of persons and entities subject to the restrictive measures at issue, of all the applicants, including applicant No 121, Zimbabwe Mining Development. The contested acts state, with respect to each applicant, whether a natural person or a legal person, the specific and particular grounds which justify the imposition on them of the restrictive measures at issue. Further, the authors of the contested acts were not required to offer a specific explanation of why they did not decide to act on a proposal to withdraw, from that list, the name of applicant No 121.279Further, it must be observed that the Court referred to the abovementioned consideration in Melli Bank v Council, paragraph 276 above (paragraph 146), in order to reject an argument of the Council that there was no need to state, in the decisions at issue in that case, the names of entities which were owned or controlled and to which fund freezing measures applied. That consideration is therefore of no relevance to this case, where the names of all the entities to which the restrictive measures at issue apply are clearly stated in the contested acts.280In the other two judgments relied on by the applicants, the Court annulled the contested acts because of infringements of the obligation to state reasons. Yet in this case it has already been held, in the analysis of the third plea in law, that the statement of reasons in the contested acts met the requisite legal standard with respect to all the applicants. Consequently, the other two judgments relied on by the applicants are also of no relevance to this case.281As regards the arguments summarised in paragraphs 269 and 270 above, they are linked to the argument put forward as part of the second plea in law and summarised in paragraph 237 above, with the result that they constitute an amplification of the second plea in law and must be held to be admissible.282As regards the substance, the arguments concerned cannot be accepted. The applicants’ position is, in essence, that only entities belonging to, or controlled by, the members of the Government of Zimbabwe can be considered to be associated with them, for the purposes of Article 6(1) of Regulation No 314/2004 and Article 5 of Decision 2011/101. That position cannot be accepted. An interpretation of the two provisions at issue that the entities belonging to, or controlled by, natural persons (or, as may be, legal persons) associated with members of the Government of Zimbabwe may also be subject to the restrictive measures laid down by those provisions is wholly compatible with their wording. The same is true of the interpretation that the entities belonging to, or controlled by, the Government of Zimbabwe itself must be considered to be associated, within the meaning of those two provisions, with the members of that government.283Moreover, that interpretation of the abovementioned provisions is the only one which is compatible with the objective of the restrictive measures at issue (see paragraph 97 above). The interpretation suggested by applicants would be likely to result in those measures losing a large part, if not all, of their effectiveness. It would be paradoxical if a natural person associated with members of the Government of Zimbabwe were to be subject to a freezing of his funds and economic resources, without it being possible to extend that freezing to the entities which that natural person controls, directly or indirectly. In that event, it would be very simple for the natural person concerned to evade the freezing of funds established by the restrictive measures at issue, by making use for that purpose of legal persons or other entities controlled by him. That would also apply if it was accepted that the abovementioned provisions do not permit the implementation of freezing of funds and economic resources with respect to entities directly controlled by the Government of Zimbabwe or the State of Zimbabwe.284In the light of all the foregoing, the second plea in law must be rejected. The fifth plea in law: infringement of the applicants ’ fundamental rights and the principle of proportionality 285The greater part of the applicants’ arguments in support of this plea in law consists of references to case-law and to various texts, namely the Charter of Fundamental Rights, the United Nations Charter, Council Document 15114/05 of 2 December 2005 titled ‘Guidelines on implementation and evaluation of restrictive measures (sanctions) in the framework of EU Common Foreign and Security Policy’, the opinion of the EDPS mentioned in paragraph 210 above and a report of the Independent Reviewer of Terrorism Legislation in the United Kingdom.286Essentially, the applicants plead, rather succinctly, an infringement of their fundamental rights and of the principle of proportionality. They repeat their arguments, examined above in the analysis of the first plea in law, particularly in paragraph 106 above, that the restrictive measures at issue do not pursue any legitimate objective of the CFSP. However, according to the applicants, even if those measures do pursue such an objective, they are disproportionate to that objective. In support of that complaint, the applicants refer in a lapidary fashion to certain arguments which have already been examined and rejected above. In particular, the applicants claim that, with respect to some of their number, it is not even claimed in the contested acts that they were responsible, at the time when the measures at issue were adopted, for the policies of the government of Zimbabwe or that they had any influence on those policies. The applicants also claim, in essence, that the statement of reasons in the contested acts is inadequate, in that the authors of those acts failed to explain how the restrictive measures at issue could contribute to the realisation of any legitimate objective of the CFSP. They also state that the Global Political Agreement (GPA) calls for the restrictive measures to be lifted. There is no need for further analysis of those arguments, since they broadly overlap with the arguments, much more fully stated, put forward with respect to the first three pleas in law. For the reasons set out above in the analysis of those pleas, the Court must again reject those arguments, which, it may be added, have no connection with the principle of proportionality.287The applicants also refer, in support of their complaint that the restrictive measures at issue are ‘disproportionate’, to the alleged ‘far-reaching nature’ of these measures, their ‘severe negative economic and reputational impact’, and the ‘nature of the allegations’ made against them in the grounds of the contested acts.288Since, in their arguments, the applicants also refer, if only by citation, to other texts, to respect for private and family life, to the freedom to conduct a business and the right to property, it must be recalled that, under Article 7 of the Charter of Fundamental Rights, ‘[e]veryone has the right to respect for his or her private and family life, home and communications’. Further, under Article 16 of the Charter, ‘[t]he freedom to conduct a business in accordance with Union law and national laws and practices is recognised’. Last, Article 17(1) of the Charter provides:‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’289In this case, there is no doubt that the restrictive measures contained in the contested acts entail restrictions on the exercise by the applicants of their fundamental rights as described above (see, to that effect, Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 119 above, paragraph 358, and the judgment in Case T‑187/11 Trabelsi and Others v Council [2013] ECR, paragraph 76).290However, according to settled case-law, those fundamental rights do not enjoy, in EU law, absolute protection, but must be viewed in relation to their social function (see, to that effect, the judgment in Case C‑348/12 P Council v Manufacturing Support & Procurement Kala Naft [2013] ECR, paragraph 121, and Makhlouf v Council, paragraph 204 above, paragraph 99 and case-law cited). Consequently, the exercise of those rights may be restricted, provided that those restrictions in fact correspond to objectives of public interest pursued by the European Union and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the rights so guaranteed (see Makhlouf v Council, paragraph 204 above, paragraph 97 and case-law cited).291In particular, Article 52(1) of the Charter of Fundamental Rights provides, first, that ‘[an]y limitation on the exercise of the rights and freedoms recognised by [the Charter of Fundamental Rights] must be provided for by law and respect the essence of those rights and freedoms’, and, second, that ‘[s]ubject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.’292Yet the restriction on the exercise of the fundamental rights described above to which the applicants are entitled must be regarded as having been ‘provided for by law’ since, as is clear from what is stated above in relation to the first and second pleas in law, the criteria laid down in Article 6(1) of Regulation No 314/2004 and in Article 4(1) and Article 5(1) of Decision 2011/101 were respected.293Further, it is clear from the analysis of the first plea in law that the measures concerned do in fact contribute to the achievement of objectives of general interest recognised by the Union or to the need to protect the rights and freedoms of others (see paragraph 93 above).294That being the case, this plea in law can only be understood as meaning that the applicants plead a breach of the principle of proportionality, with which Article 52(1) of the Charter of Fundamental Rights requires compliance.295In that regard, it must be recalled that the principle of proportionality, as one of the general principles of EU law, requires that measures adopted by the EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued by the legislation in question. Consequently, when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (the judgment in Case C-189/01 Jippes and Others [2001] ECR I-5689, paragraph 81, and the judgment of 6 May 2010 in Case T‑388/07 Comune di Napoli v Commission, paragraph 143).296It must however also be recalled that, with regard to judicial review of compliance with the principle of proportionality, the Court of Justice has held that the EU legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. The Court of Justice concluded that the legality of a measure adopted in such spheres can be affected only if the measure is manifestly inappropriate with regard to the objective which the competent institution is seeking to pursue (see Council v Manufacturing Support & Procurement Kala Naft, paragraph 290 above, paragraph 120 and case-law cited).297In this case, it must be recalled that, as was stated in paragraph 97 above, the objective of the restrictive measures at issue is to encourage the persons and entities affected by them to reject policies that lead to the suppression of human rights and freedom of expression and the hindrance of good governance. Admittedly, those measures are supposed to act indirectly, the underlying idea being that those targeted by them will reject the abovementioned policies in order to have the restrictions imposed on them revoked as far as they are concerned. None the less, in the case of a sovereign third country, such as Zimbabwe, it is self-evident that the Union can influence its policies only indirectly.298It must also be recalled that the contested acts are the product of the deep concern felt by the European Union authorities as regards the situation in Zimbabwe, that concern being first expressed ten years earlier (see paragraph 1 above). Yet that concern, which the applicants have not in these proceedings claimed to be unjustified, was still present when the contested acts were adopted. The competent EU authorities cannot therefore be accused of an infringement of the principle of proportionality by reason of having maintained in force the previously imposed restrictive measures and of having extended their scope, with the intention of bringing to an end a situation of deep concern of such long standing (see, to that effect, Council v Manufacturing Support & Procurement Kala Naft, paragraph 290 above, paragraph 126).299Moreover, it is clear that the applicants have not suggested any specific less onerous measure which would have had an effect comparable to that of the measures at issue and which might have achieved the same objectives.300It must also be noted that the restrictive measures at issue are inherently temporary and reversible and therefore do not impair the ‘essential content’ of the fundamental rights relied on by the applicants. That is even more the case when all the applicants are natural or legal persons established in Zimbabwe and not within the European Union, which means that the disadvantages arising from those measures, although undeniably significant, are not as onerous as in the case of natural or legal persons established within the European Union.301Last, it must be observed that both Regulation No 314/2004 and Decision 2011/101 provide for exceptions to the restrictive measures which they establish. Thus, under Article 7(1) of Regulation No 314/2004, the competent authorities may authorise the release of funds or economic resources ‘necessary for basic expenses, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums and public utility charges’ or ‘intended exclusively for payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services’. Further, Article 4(3) to (5) of Decision 2011/101 provides for derogations from the prohibition on entry into or transit through the territory of the Member States, inter alia ‘where travel is justified on urgent and imperative humaritarian grounds’.302In the light of all the foregoing, and taking into account, in particular, the case-law cited in paragraph 298 above, the Court considers it to be established that the restrictive measures are proportionate. Accordingly the fifth plea in law must be rejected, and this action must therefore be dismissed in its entirety. Costs 303Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered to pay the costs of the Council and the Commission, as applied for by the latter. The United Kingdom must bear its own costs, in accordance with Article 87(4) of the Rules of Procedure.On those grounds,THE GENERAL COURT (Eighth Chamber)Hereby: 1. Dismisses the action; 2. Orders Mr Johannes Tomana and the 120 other applicants listed in the annex hereto to bear their own costs and to pay the costs incurred by the Council of the European Union and the European Commission; 3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs. GratsiasKanchevaWetterDelivered in open court in Luxembourg on 22 April 2015.[Signatures] Annex List of applicants Johannes Tomana, residing in Harare (Zimbabwe), Titus Mehliswa Johna Abu Basutu, residing in Harare, Happyton Mabhuya Bonyongwe, residing in Harare, Flora Buka, residing in Harare, Wayne Bvudzijena, residing in Harare, David Chapfika, residing in Harare, George Charamba, residing in Harare, Faber Edmund Chidarikire, residing in Harare, Tinaye Chigudu, residing in Harare, Aeneas Soko Chigwedere, residing in Harare, Phineas Chihota, residing in Harare, Augustine Chihuri, residing in Harare, Patrick Anthony Chinamasa, residing in Harare, Edward Takaruza Chindori-Chininga, residing in Harare, Joseph Chinotimba, residing in Harare, Tongesai Shadreck Chipanga, residing in Harare, Augustine Chipwere, residing in Harare, Constantine Chiwenga, residing in Harare, Ignatius Morgan Chiminya Chombo, residing in Harare, Martin Dinha, residing in Harare, Nicholas Tasunungurwa Goche, residing in Harare, Gideon Gono, residing in Harare, Cephas T. Gurira, residing in Harare, Stephen Gwekwerere, residing in Harare, Newton Kachepa, residing in Harare, Mike Tichafa Karakadzai, residing in Harare, Saviour Kasukuwere, residing in Harare, Jawet Kazangarare, residing in Harare, Sibangumuzi Khumalo, residing in Harare, Nolbert Kunonga, residing in Harare, Martin Kwainona, residing in Harare, R. Kwenda, residing in Harare, Andrew Langa, residing in Harare, Musarashana Mabunda, residing in Harare, Jason Max Kokerai Machaya, residing in Harare, Joseph Mtakwese Made, residing in Harare, Edna Madzongwe, residing in Harare, Shuvai Ben Mahofa, residing in Harare, Titus Maluleke, residing in Harare, Paul Munyaradzi Mangwana, residing in Harare, Reuben Marumahoko, residing in Harare, G. Mashava, residing in Harare, Angeline Masuku, residing in Harare, Cain Ginyilitshe Ndabazekhaya Mathema, residing in Harare, Thokozile Mathuthu, residing in Harare, Innocent Tonderai Matibiri, residing in Harare, Joel Biggie Matiza, residing in Harare, Brighton Matonga, residing in Harare, Cairo Mhandu, residing in Harare, Fidellis Mhonda, residing in Harare, Amos Bernard Midzi, residing in Harare, Emmerson Dambudzo Mnangagwa, residing in Harare, Kembo Campbell Dugishi Mohadi, residing in Harare, Gilbert Moyo, residing in Harare, Jonathan Nathaniel Moyo, residing in Harare, Sibusio Bussie Moyo, residing in Harare, Simon Khaya Moyo, residing in Harare, S. Mpabanga, residing in Harare, Obert Moses Mpofu, residing in Harare, Cephas George Msipa, residing in Harare, Henry Muchena, residing in Harare, Olivia Nyembesi Muchena, residing in Harare, Oppah Chamu Zvipange Muchinguri, residing in Harare, C. Muchono, residing in Harare, Tobaiwa Mudede, residing in Harare, Isack Stanislaus Gorerazvo Mudenge, residing in Harare, Columbus Mudonhi, residing in Harare, Bothwell Mugariri, residing in Harare, Joyce Teurai Ropa Mujuru, residing in Harare, Isaac Mumba, residing in Harare, Simbarashe Simbanenduku Mumbengegwi, residing in Harare, Herbert Muchemwa Murerwa, residing in Harare, Munyaradzi Musariri, residing in Harare, Christopher Chindoti Mushohwe, residing in Harare, Didymus Noel Edwin Mutasa, residing in Harare, Munacho Thomas Alvar Mutezo, residing in Harare, Ambros Mutinhiri, residing in Harare, S. Mutsvunguma, residing in Harare, Walter Mzembi, residing in Harare, Morgan S. Mzilikazi, residing in Harare, Sylvester Nguni, residing in Harare, Francis Chenayimoyo Dunstan Nhema, residing in Harare, John Landa Nkomo, residing in Harare, Michael Reuben Nyambuya, residing in Harare, Magadzire Hubert Nyanhongo, residing in Harare, Douglas Nyikayaramba, residing in Harare, Sithembiso Gile Glad Nyoni, residing in Harare, David Pagwese Parirenyatwa, residing in Harare, Dani Rangwani, residing in Harare, Engelbert Abel Rugeje, residing in Harare, Victor Tapiwe Chashe Rungani, residing in Harare, Richard Ruwodo, residing in Harare, Stanley Urayayi Sakupwanya, residing in Harare, Tendai Savanhu, residing in Harare, Sydney Tigere Sekeramayi, residing in Harare, Lovemore Sekeremayi, residing in Harare, Webster Kotiwani Shamu, residing in Harare, Nathan Marwirakuwa Shamuyarira, residing in Harare, Perence Samson Chikerema Shiri, residing in Harare, Etherton Shungu, residing in Harare, Chris Sibanda, residing in Harare, Jabulani Sibanda, residing in Harare, Misheck Julius Mpande Sibanda, residing in Harare, Phillip Valerio Sibanda, residing in Harare, David Sigauke, residing in Harare, Absolom Sikosana, residing in Harare, Nathaniel Charles Tarumbwa, residing in Harare, Edmore Veterai, residing in Harare, Patrick Zhuwao, residing in Harare, Paradzai Willings Zimondi, residing in Harare, Cold Comfort Farm Cooperative Trust, established in Harare, Comoil (Private) Ltd, established in Harare, Divine Homes (Private) Ltd, established in Harare, Famba Safaris (Private) Ltd, established in Harare, Jongwe Printing and Publishing Company (Private) Ltd, established in Harare, M & S Syndicate (Private) Ltd, established in Harare, Osleg (Private) Ltd, established in Harare, Swift Investments (Private) Ltd, established in Harare, Zidco Holdings (Private) Ltd, established in Harare, Zimbabwe Defence Industries (Private) Ltd, established in Harare, Zimbabwe Mining Development Corp., established in Harare.Table of contentsBackground to the disputeProcedure and forms of order sought by the partiesLaw1. The applicants who have died2. Whether the lawyers who signed the application were instructed by all the applicants who are natural persons3. Whether the applicants continue to have an interest in bringing proceedings4. Arguments put forward by the Commission challenging the admissibility of the action5. SubstanceThe first plea in law: there was no adequate legal basis for including persons or entities who are neither leaders of Zimbabwe nor their associates in the list of persons subject to the restrictive measures at issueThe third plea in law: infringement of the obligation to state reasonsThe fourth plea in law: infringement of the rights of the defenceThe second plea in law: manifest error of assessmentThe fifth plea in law: infringement of the applicants’ fundamental rights and the principle of proportionalityCosts( *1 ) Language of the case: English. | 768d2-4af45da-494d | EN |
According to Advocate General Kokott, family reunification in the case of married couples who are third-country nationals may in principle be made contingent on the spouse who is intending to join the family passing an examination that tests knowledge of the country and of its language | 9 July 2015 ( *1 )‛Reference for a preliminary ruling — Directive 2003/86/EC — Article 7(2) — Family reunification — Integration measures — National legislation requiring the family members of a third country national residing lawfully in that Member State to pass a civic integration exam in order to enter the territory of that Member State — Cost of such an exam — Compatibility’In Case C‑153/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Raad van State (Netherlands), made by decision of 1 April 2014, received at the Court on 3 April 2014, in the proceedings Minister van Buitenlandse Zaken v K, A, THE COURT (Second Chamber),composed of R. Silva de Lapuerta (Rapporteur), President of the Chamber, J.-C. Bonichot, A. Arabadjiev, J.L. da Cruz Vilaça and C. Lycourgos, Judges,Advocate General: J. Kokott,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 5 February 2015,after considering the observations submitted on behalf of:—K, by G.J. Dijkman, advocaat,A, by W.P.R Peeters, advocaat,the Netherlands Government, by M. Gijzen, M. Bulterman, B. Koopman and J. Langer, acting as Agents,the German Government, by T. Henze and B. Beutler, acting as Agents,the Austrian Government, by G. Eberhard, acting as Agent,the European Commission, by M. Condou-Durande and G. Wils, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 19 March 2015,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of the first subparagraph of Article 7(2) of Council Directive 2003/86/EC of 22 September 2003 on the right to family reunification (OJ 2003 L 251, p. 12).2The request has been made in the course of two proceedings between the Minister van Buitenlandse Zaken (Netherlands Minister for Foreign Affairs) and K and A respectively, concerning the applications by the latter for temporary residence permits in the Netherlands for the purposes of family reunification with their spouses residing in that Member State. Legal context EU law 3Article 1 of Directive 2003/86 states:‘The purpose of this Directive is to determine the conditions for the exercise of the right to family reunification by third country nationals residing lawfully in the territory of the Member States.’4Article 4(1) of that directive provides:‘The Member States shall authorise the entry and residence, pursuant to this Directive and subject to compliance with the conditions laid down in Chapter IV, as well as in Article 16, of the following family members:(a)the sponsor’s spouse;...’5Chapter IV of Directive 2003/86, entitled ‘Requirements for the exercise of the right to family reunification’, contains Articles 6 to 8 of the directive. Under Article 6(1) of that directive:‘The Member States may reject an application for entry and residence of family members on grounds of public policy, public security or public health.’6Article 7 of Directive 2003/86 is worded as follows:‘1. When the application for family reunification is submitted, the Member State concerned may require the person who has submitted the application to provide evidence that the sponsor has:accommodation regarded as normal for a comparable family in the same region and which meets the general health and safety standards in force in the Member State concerned;(b)sickness insurance in respect of all risks normally covered for its own nationals in the Member State concerned for himself/herself and the members of his/her family;(c)has stable and regular resources which are sufficient to maintain himself and the members of his family, without recourse to the social assistance of the Member State concerned. Member States shall evaluate these resources by reference to their nature and regularity and may take into account the level of minimum national wages and pensions as well as the number of family members.2. Member States may require third country nationals to comply with integration measures, in accordance with national law.With regard to the refugees and/or family members of refugees referred to in Article 12 the integration measures referred to in the first subparagraph may only be applied once the persons concerned have been granted family reunification.’7Article 17 of that directive states:‘Member States shall take due account of the nature and solidity of the person’s family relationships and the duration of his residence in the Member State and of the existence of family, cultural and social ties with his/her country of origin where they reject an application, withdraw or refuse to renew a residence permit or decide to order the removal of the sponsor or members of his family.’ Netherlands law 8According to the order for reference, Articles 4(1) and 7(2) of Directive 2003/86 were transposed by Article 14, the introductory sentence to Article 16(1) and Article 16(1)(h) of the Law on foreign nationals of 2000 (Vreemdelingenwet 2000; ‘the Vw 2000’) and by Articles 3.71a, 3.98a and 3.98b of the Decree on foreign nationals of 2000 (Vreemdelingenbesluit 2000; ‘the Vb 2000’).9The policy adopted by the Secretary of State in the implementation of those provisions is detailed in paragraph B1/4.7.1.2 of the Circular on Foreign Nationals of 2000 (Vreemdelingencirculaire 2000) under the wording applicable to the case in the main proceedings (‘the Vc 2000’).10Regard must also be had to the Law on Civic Integration (Wet inburgering; ‘the Wi’), the Regulation on foreigners of 2000 (Voorschrift Vreemdelingen 2000; ‘the regulation of 2000’) and the Immigration and Naturalisation Service’s Public Work Instruction No 2011/7 (‘the work instruction’).The Vw 200011Article 1(h) of the Vw 2000 is worded as follows:‘Within the meaning of the present law and of the provisions adopted on the basis thereof:...(h)“temporary residence permit” shall mean a visa for a stay of more than three months applied for in person by the foreign national at, and issued by, a diplomatic mission or consulate of the [the Kingdom of the] Netherlands in the country of origin or of permanent residence, or failing that, the nearest country in which a mission is established ... after prior authorisation has been obtained from the Minister for Foreign Affairs ...’12Under Article 8 of the Vw 2000:‘A foreign national is lawfully resident in the Netherlands:if he holds a residence permit of limited duration as referred to in Article 14;if he holds a residence permit of indefinite duration as referred to in Article 20;if he holds a residence permit of limited duration as referred to in Article 28;(d)if he holds a residence permit of indefinite duration as referred to in Article 33.13In accordance with Article 14(1)(a) of the Vw 2000, the Minister is authorised to approve, to reject or not to consider an application for a residence permit of limited duration.14Under Article 16(1)(h) of the Vw 2000, an application for a residence permit of limited duration, referred to in Article 14 of that law, may be rejected if the third country national, who does not belong to one of the categories referred to in Article 17(1) of that law, after acquiring a permit for legal residence in the Netherlands, is subject to the civic integration requirement pursuant to Articles 3 and 5 of the Wi and does not have a basic knowledge of the Dutch language and Netherlands society.15Article 17(1) of the Vw 2000 lists several categories of third country nationals whose application for residence of limited duration, within the meaning of Article 14 of that law, cannot be rejected on the ground of the lack of a temporary residence permit.The Wi16Article 3(1)(a) of the Wi provides:‘A foreign national who is lawfully resident within the meaning of Article 8(a) to (e) or (l) of the Vw 2000 is required to meet the civic integration requirement if he:a.resides in the Netherlands other than for a temporary purpose ...’17Article 5 of the Wi lists several categories of third country nationals who are not subject to the civic integration requirement.The Vb 200018Article 3.71(1) of the Vb 2000 is worded as follows:‘The application for a residence permit of limited duration, referred to in Article 14 of the [Vw 2000], shall be rejected if the foreign national does not hold a valid temporary residence permit ...’19Under Article 3.71a of the Vb 2000:‘1. A foreign national has basic knowledge of the Dutch language and of Netherlands society within the meaning of Article 16(1)(h) of the [Vw 2000] if, during the year immediately preceding the application for the temporary residence permit, he has passed the basic civic integration examination referred to in Article 3.98a.2. The application for a residence permit of limited duration referred to in Article 14 of the [Vw 2000] may not be rejected on the basis of Article 16(1)(h) of [that law] if the foreign national:c.has sufficiently demonstrated to the Minister voor Wonen, Wijken en Integratie [“the Minister for Housing, Districts and Integration”] that, due to a mental or physical disability, he is permanently unable to take the civic integration examination referred to in Article 3.98a;d.has not passed the basic civic integration examination referred to in Article 3.98a and rejection of that application would, according to the Minister for Housing, Districts and Integration, lead to a manifestly and gravely unjust situation.20Article 3.98a of the Vb 2000 is worded as follows:‘1. The Minister for Housing, Districts and Integration shall establish a basic civic integration examination to assess knowledge of the Dutch language and of Netherlands society as referred to in Article 16(1)(h) of the [Vw 2000] by means of an automated system.2. The basic civic integration examination shall involve an assessment of the foreign national’s reading, listening and speaking skills in Dutch.3. The Minister for Housing, Districts and Integration shall draw up an examination programme to assess reading, listening and speaking skills. The programme shall aim to ensure that a foreign national who has successfully passed the examination has the following skills in Dutch at A1 level of the Common European framework of reference for modern foreign languages:reading;b.listening;speaking.4. The reading, listening and speaking skills in the basic civic integration examination shall be tested in accordance with one of the levels of the Common European framework for modern foreign languages.5. The basic civic integration examination shall also involve an assessment of knowledge of Netherlands society.6. The Minister for Housing, Districts and Integration shall set an examination programme to assess the required knowledge of Netherlands society. The examination programme shall ensure that a foreign national who has successfully passed the basic civic integration examination has elementary practical knowledge of:the [Kingdom of the] Netherlands, including its topography, history and political system;housing, education, work, health care and civic integration in the Netherlands;his rights and obligations after his arrival in the Netherlands;the rights and obligations of others in the Netherlands;e.accepted rules of conduct in the Netherlands.7. The basic civic integration examination shall be taken in Dutch at a level which is not higher than the level referred to in paragraph (3).8. The examination programmes referred to in paragraphs (3) and (6) shall be made available in accordance with rules which shall be laid down and set at a price determined by the Minister for Housing, Districts and Integration.’21Article 3.98b of the Vb 2000 is worded as follows:‘1. A foreign national will not be allowed to sit the examination if:he has not paid the costs of the civic integration examination in accordance with rules which shall be laid down by the Minister for Housing, Districts and Integration ...2. The costs referred to in paragraph (1)(a) shall amount to EUR 350. ...’The regulation of 200022Article 3.11 of the regulation of 2000 states:‘1. The examination programmes referred to in Article 3.98a(3) and (6) [of the Vb 2000] which shall be reproduced in the self-study pack Naar Nederland shall be made available in all authorised bookshops and online bookshops.2. The recommended retail price of the self-study pack shall amount to EUR 110.’The Vc 200023In accordance with paragraph B1/4.7.1.2 of the Vc 2000, an application for a residence permit of limited duration may not be rejected pursuant to Article 3.71a(2)(d) of the Vb 2000 if a third country national has not passed the basic civic integration examination and the rejection of the application would lead to a manifestly and gravely unjust situation. This is to be the case if a combination of very special individual circumstances were to result in a third country national being permanently unable to pass the basic civic integration examination. According to the Vc 2000, the mere fact of having attempted the examination once or several times does not mean that the hardship clause provided for in Article 3.71a(2)(d) of the Vb 2000 can be successfully invoked.The work instruction24According to the referring court, the work instruction states that the civic integration requirement applies to those third country nationals who must be in possession of a temporary residence permit prior to their arrival in the Netherlands, who are coming to the Netherlands for a non-temporary residence purpose within the meaning of the Wi and who are not exempt from the civic integration requirement pursuant to Articles 3 and 5 of the Wi.25The basic civic integration examination referred to in Article 3.98a of the Vb 2000 comprises a spoken Dutch test, a test of knowledge of Netherlands society and a reading comprehension test. The examination is to be taken at an embassy or consulate general in the country of origin or permanent residence of the sponsor’s family member and is to be taken using a telephone directly connected to a talking computer.26The spoken Dutch test consists of the following components: repeating sentences, answering short questions, giving opposites and retelling a short story twice. The required language level is level A1 of the Common European Framework of Reference for Languages. The part of the examination on knowledge of Netherlands society consists of questions concerning the film To the Netherlands, which the family member must view at home. The questions which may be asked concern, in particular, whether men and women have the same rights, where the Netherlands Government is located, whether there is a separation of Church and State in the Kingdom of the Netherlands, which country occupied the Netherlands during the Second World War, whether health insurance is compulsory and the age up to which education is compulsory. All the questions and answers can be studied at home with the help of a self-study pack. That pack is available in 18 languages and contains, inter alia, DVDs, a photograph album, an exercise book, audio CDs, a self-study textbook and practice papers. Since March 2011, the pack also contains a literacy module so that the reading comprehension test can be prepared for. That test assesses whether the family member is able to read Dutch at A1 level of the Common European Framework of Reference for Languages.27As far as the hardship clause under Article 3.71a(2)(d) of the Vb 2000 is concerned, according to the referring court, the work instruction provides that there are grounds for applying the hardship clause if, as a result of a set of very special individual circumstances, a third country national is permanently unable to pass the basic civic integration examination. That third country national must demonstrate that he has made every effort to pass the examination that he could reasonably be expected to make. This could be shown, inter alia, by having taken the civic integration examination once or several times and having, for example, passed the spoken Dutch test and the knowledge of Netherlands society test, but not the reading comprehension test. The work instruction states that the mere fact that a candidate does not have sufficient financial or technical means to prepare for the examination and to take the examination, or that he is experiencing travel-related problems or other similar obstacles, does not by itself mean that the hardship clause can be successfully invoked. Furthermore, the work instruction states that the mere fact that the course material is not available in a language of which the candidate has a command, that he does not have appropriate support in preparing for the examination or that he is illiterate also does not mean that the hardship clause can be successfully invoked. The actions in the main proceedings and the questions referred for a preliminary ruling The case of K 28K is an Azerbaijani national who, on 22 February 2011, lodged an application at the Embassy of the Kingdom of the Netherlands in Ankara (Turkey) for a temporary residence permit on grounds of family reunification so that she could reside in the Netherlands with her spouse, who is residing in that Member State. For that purpose, she submitted a medical certificate stating that, due to health problems indicated by that certificate, she was unable to take the civic integration examination outside the territory of the Kingdom of the Netherlands.29By decision of 30 May 2011, the Minister for Foreign Affairs rejected K’s application for a temporary residence permit.30By decision of 28 February 2012, the Minister for Foreign Affairs declared the challenge that K had lodged against the decision of 30 May 2011 unfounded on the basis that K’s health problems did not justify dispensation from the requirement to pass the civic integration examination. According to the Minister for Foreign Affairs, requiring K to pass the civic integration examination before authorising entry and residence is, in any event, not precluded by Directive 2003/86.31By judgment of 23 November 2012, the Rechtbank ’s-Gravenhage (District Court, the Hague) declared the appeal lodged by K against the decision of the Minister for Foreign Affairs of 28 February 2012 well founded and, consequently, set that decision aside and ruled that the Minister should grant K a temporary residence permit.32The Minister for Foreign Affairs has appealed against the judgment of the Rechtbank ’s-Gravenhage of 23 November 2012 before the referring court. The case of A 33A is a Nigerian national who, on 18 June 2008, lodged an application at the mission of the Kingdom of the Netherlands in Abuja (Nigeria) for a temporary residence permit on grounds of family reunification so that she could reside in the Netherlands with her spouse, who is residing in that Member State. For that purpose, she submitted medical documents indicating that she suffers from psychological problems for which she takes medication.34By decision of 18 August 2009, the Netherlands Minister for Foreign Affairs rejected A’s application for a temporary residence permit.35By decision of 30 July 2012, the Minister for Foreign Affairs declared the challenge that A had lodged against the decision of 18 August 2009 unfounded on the basis that A’s psychological problems did not justify dispensation from the requirement to pass the civic integration examination and that she could also not rely on the hardship clause provided for in Article 3.71a(2)(d) of the Vb 2000, since she had not provided sufficient evidence of having made every reasonable effort to pass the civic integration examination. According to the Minister for Foreign Affairs, the claim that A was unable to travel to the Netherlands mission because of her psychological problems could not be accepted since that statement had not been substantiated. In any event, the Minister for Foreign Affairs considers that the civic integration requirement is not precluded by Directive 2003/86.36According to the order for reference, A’s three children have also lodged an application for a temporary residence permit so that they could reside in the Netherlands with their father and, in contrast to the decision concerning A, by the same decision of 30 July 2012, the Minister for Foreign Affairs declared the challenge lodged by A’s three children against the rejection of their application for a temporary residence permit to be well founded.37By judgment of 12 December 2012, the Rechtbank ’s-Gravenhage declared A’s appeal against the decision of the Minister for Foreign Affairs of 30 July 2012 to be well founded and, consequently, set aside that decision and ruled that the Minister grant A a temporary residence permit.38The Minister for Foreign Affairs has brought an appeal before the referring court against the judgment of the Rechtbank ’s-Gravenhage of 12 December 2012. Considerations common to both cases 39It is common ground that both the sponsors and K and A are third country nationals, that the sponsors are the spouses of K and A and that the sponsors are lawfully resident within the meaning of Article 8(a) or (b) of the Vw 2000. Furthermore, it is not in dispute that K and A do not belong to one of the categories referred to in the Netherlands legislation for which the application for a residence permit of limited duration within the meaning of Article 14 of the Vw 2000 cannot be rejected on the ground of the absence of a temporary residence permit and that they are subject to the civic integration requirement under Article 16(1)(h) of the Vw 2000.40In both cases in the main proceedings, the Rechtbank ’s-Gravenhage has ruled that it is contrary to Article 7(2) of Directive 2003/86 to require a third country national who, from outside of the European Union, lodges an application for a temporary residence permit in the context of family reunification to satisfy the civic integration requirement before being allowed into the Netherlands. The Rechtbank ’s-Gravenhage considered it to be decisive in that regard that, in its written observations in the proceedings of the case giving rise to the order in Mohammad Imran (C‑155/11 PPU, EU:C:2011:387) which were included in K’s file before the Rechtbank ’s-Gravenhage, the Commission took the view that Article 7(2) of the Directive 2003/86 precludes a Member State from refusing the spouse of a third country national living lawfully in that Member State entry and residence exclusively on the ground that that spouse has not, outside the European Union, passed the civic integration examination provided for in the legislation of that Member State.41However, in the course of the appeals lodged against the judgments of the Rechtbank ’s-Gravenhage, the Minister for Foreign Affairs submitted that it appears from the Green Paper on the right to family reunification of third country nationals living in the European Union (Directive 2003/86) (COM(2011) 735 final) (‘the Green Paper’), which postdates the Commission’s written observations mentioned in the previous paragraph, that the Commission does not consider the requirement for the spouses of sponsors to pass a civic integration examination prior to the granting of authorisation of entry into and residence in the territory of the Member State concerned to be contrary to Article 7(2) of the directive in every case.42The referring court refers to the fact that, in fact, in paragraph II, 2.1, of the Green Paper, entitled ‘integration measures’, the Commission states that whether or not integration measures are permissible depends on whether they serve the purpose of facilitating integration and whether they respect the principles of proportionality and subsidiarity.43Given that neither Directive 2003/86 nor the criterion of proportionality as defined in the Green Paper states what leeway is available to the Member States in imposing integration measures within the meaning Article 7(2) of that directive, and having regard to the fact that the Court has never ruled on the concept of ‘integration measures’ within the meaning of that provision, and thus the scope of that notion has not been clarified, the Raad van State (Council of State) has decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Can the term “integration measures” contained in Article 7(2) of Directive No 2003/86 be interpreted as meaning that the competent authorities of the Member States may require a member of a sponsor’s family to demonstrate that he or she has knowledge of the official language of the Member State concerned at a level corresponding to level A1 of the Common European Framework of Reference for Languages, as well as a basic knowledge of the society of that Member State, before those authorities authorise that family member’s entry and residence?Is it relevant to the answer to that question that, also in the context of the proportionality test as described in the Green Paper, the national legislation containing the requirement referred to in Question 1(a) provides that, leaving aside the case in which the family member has shown that, due to a mental or physical disability, he or she is permanently unable to take the civic integration examination, it is only in the case where there is a combination of very special individual circumstances which justifies the assumption that the family member will be permanently unable to comply with the integration measures that the request for authorisation of entry and residence cannot be rejected?(2)Does the purpose of Directive 2003/86, and in particular Article 7(2) thereof, given the proportionality test as described in the abovementioned Green Paper, preclude costs of EUR 350 per attempt for the examination which assesses whether the family member complies with the aforementioned integration measures, and costs of EUR 110 as a single payment for the pack to prepare for the examination?’ Consideration of the questions referred 44By its questions, which it is appropriate to examine together, the referring court asks, in essence, whether the first subparagraph of Article 7(2) of Directive 2003/86 must be interpreted as meaning that Member States may require third country nationals to pass a civic integration examination, such as the one at issue in the main proceedings, which consists in an assessment of basic knowledge both of the language of the Member State concerned and of its society and which entails the payment of various costs, before authorising that national’s entry into and residence in the territory of the Member State for the purposes of family reunification.45Under Article 4(1) of Directive 2003/86, the Member States are to authorise the entry and residence of the sponsor’s spouse for the purposes of family reunification, provided that the conditions laid down in Chapter IV of that directive, entitled ‘Requirements for the exercise of the right to family reunification’, are complied with.46The Court has already held that that provision imposes specific positive obligations, with corresponding clearly defined individual rights, on the Member States, since it requires them, in the cases determined by that directive, to authorise family reunification of certain members of the sponsor’s family, without being left a margin of appreciation (judgment in Chakroun, C‑578/08, EU:C:2010:117, paragraph 41).47Amongst the requirements referred to in Chapter IV of Directive 2003/86, the first subparagraph of Article 7(2)(1) of that directive provides that a Member State may require third country nationals to comply with integration measures, in accordance with national law.48Furthermore, the second subparagraph of Article 7(2) of Directive 2003/86 provides that with regard to refugees and/or family members of refugees the integration measures referred to in the first subparagraph of Article 7(2) of that directive may be applied only once the persons concerned have been granted family reunification.49Consequently, in the context of family reunification other than that of refugees and their family members, the first subparagraph of Article 7(2) of Directive 2003/86 does not preclude Member States from subjecting the granting of authorisation of entry into the territory for the sponsor’s family members to the observance by those family members of certain integration measures prior to entry.50However, since authorisation of family reunification is the general rule, the first subparagraph of Article 7(2) of Directive 2003/86 must be interpreted strictly. Furthermore, the leeway given to the Member States must not be used by them in a manner which would undermine the objective and effectiveness of that directive, which is to promote family reunification (see, to that effect, judgment in Chakroun, C‑578/08, EU:C:2010:117, paragraph 43).51In that regard, in accordance with the principle of proportionality, which is one of the general principles of EU law, the measures implemented by the national legislation transposing the first subparagraph of Article 7(2) of Directive 2003/86 must be suitable for achieving the objectives of that legislation and must not go beyond what is necessary to attain them (see, by analogy, judgment in Commission v Netherlands, C‑508/10, EU:C:2012:243, paragraph 75).52Accordingly, in so far as the first subparagraph of Article 7(2) of Directive 2003/86 concerns only measures of ‘integration’, it is clear that the measures which the Member States may require on the basis of that provision can be considered legitimate only if they are capable of facilitating the integration of the sponsor’s family members.53Against that background, it cannot be disputed that the acquisition of knowledge of the language and society of the host Member State greatly facilitates communication between third country nationals and nationals of the Member State concerned and, moreover, encourages interaction and the development of social relations between them. Nor can it be contested that the acquisition of knowledge of the language of the host Member State makes it less difficult for third country nationals to access the labour market and vocational training (see, concerning the interpretation of Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who are long-term residents (OJ 2004 L 16, p. 44), judgment in P and S (C‑579/13, EU:C:2015:369, paragraph 47)).54From that perspective, the requirement to pass a civic integration examination at a basic level is capable of ensuring that the nationals of third countries acquire knowledge which is undeniably useful for establishing connections with the host Member State.55Furthermore, in the light of the level of knowledge required to pass the civic integration examination at issue in the main proceedings, it must be considered, in principle, that the requirement to pass such an examination does not undermine the aims of family reunification pursued by Directive 2003/86.56However, in any event, the principle of proportionality requires the conditions of application of such a requirement not to exceed what is necessary to achieve those aims. That would, in particular, be the case if the application of that requirement were systematically to prevent family reunification of a sponsor’s family members where, despite having failed the integration examination, they have demonstrated their willingness to pass the examination and they have made every effort to achieve that objective.57The integration measures referred to in the first subparagraph of Article 7(2) of Directive 2003/86 must be aimed not at filtering those persons who will be able to exercise their right to family reunification, but at facilitating the integration of such persons within the Member States.58Moreover, specific individual circumstances, such as the age, illiteracy, level of education, economic situation or health of a sponsor’s relevant family members must be taken into consideration in order to dispense those family members from the requirement to pass an examination such as the one at issue in the main proceedings when, due to those circumstances, they are unable to take or pass that examination.59Were that not the case, in such circumstances such a requirement could form a difficult obstacle to overcome in making the right to family reunification recognised by Directive 2003/86 exercisable.60That interpretation is supported by Article 17 of Directive 2003/86, which requires applications for family reunification to be examined on a case-by-case basis.61However, in this case, according to the order for reference, leaving aside the case in which a family member shows that, due to a mental or physical disability, he is permanently unable to take the civic integration examination at issue in the main proceedings, it is only in the case where the hardship clause provided for in Article 3.71a(2)(d) of the Vb 2000 applies that the request for authorisation of entry and residence cannot be rejected.62Also according to the order for reference, it is only if, as a result of a set of very special individual circumstances, the third country national is permanently unable to pass that examination that the hardship clause is to apply.63It therefore appears that the hardship clause provided for in Article 3.71a(2)(d) of the Vb 2000 is not capable of dispensing the members of the sponsors’ family concerned, in the light of the individual circumstances of their situations, from the requirement to pass the civic integration examination in all possible cases where maintaining that requirement would make family reunification impossible or excessively difficult.64Finally, concerning in particular the various costs relating to the civic integration examination at issue in the main proceedings, it must be pointed out that, whilst the Member States are free to require third country nationals to pay various fees related to integration measures adopted under Article 7(2) of Directive 2003/86 as well as to determine the amount of those fees, the fact remains that, in accordance with the principle of proportionality, the level at which those costs are determined must not aim, nor have the effect of, making family reunification impossible or excessively difficult if it is not to undermine the objective of Directive 2003/86 and render it redundant.65That would in particular be the case if the amount of the fees required to be paid to take the civic integration examination at issue in the main proceedings were excessive in the light of its significant financial impact on the third country nationals concerned (see, by analogy, judgment in Commission v Netherlands, C‑508/10, EU:C:2012:243, paragraph 74).66In that regard, it must be noted that, as is clear from the order for reference, under the national legislation at issue in the main proceedings, both the course fees for taking the civic integration examination at issue in the main proceedings and the fees relating to its preparation must be paid by the relevant family members of the sponsor.67It must also be noted that the cost of the examination preparation pack, charged as a single payment, is EUR 110 and the course fees are EUR 350. The relevant family members of the sponsor incur the course fees every time that they take the examination.68It is also clear from the order for reference that a relevant family member of the sponsor who has not paid the course fees is not allowed to take the civic integration examination at issue in the main proceedings.69In those circumstances, as the Advocate General stated in point 53 of her Opinion, the inevitable conclusion is that the amount of the fees relating to the civic integration examination at issue in the main proceedings is, in circumstances such as those at issue in the main proceedings, capable of making family reunification impossible or extremely difficult.70It is a fortiori thus where the course fees must be paid every time the examination is taken and by each of the sponsor’s family members wishing to join the sponsor in the host Member State and, in addition to those fees, there are those costs which the relevant family members of the sponsor must incur in order to travel to the closest Netherlands mission to take the examination.71Having regard to the above considerations, the answer to the questions referred is that the first subparagraph of Article 7(2) of Directive 2003/86 must be interpreted as meaning that Member States may require third country nationals to pass a civic integration examination, such as the one at issue in the main proceedings, which consists in an assessment of basic knowledge both of the language of the Member State concerned and of its society and which entails the payment of various costs, before authorising that national’s entry into and residence in the territory of the Member State for the purposes of family reunification, provided that the conditions of application of such a requirement do not make it impossible or excessively difficult to exercise the right to family reunification. In circumstances such as those of the cases in the main proceedings, in so far as they do not allow regard to be had to special circumstances objectively forming an obstacle to the applicants passing the examination and in so far as they set the fees relating to such an examination at too high a level, those conditions make the exercise of the right to family reunification impossible or excessively difficult. Costs 72Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: The first subparagraph of Article 7(2) of Council Directive 2003/86/EC of 22 September 2003 on the right to family reunification must be interpreted as meaning that Member States may require third country nationals to pass a civic integration examination, such as the one at issue in the main proceedings, which consists in an assessment of basic knowledge both of the language of the Member State concerned and of its society and which entails the payment of various costs, before authorising that national’s entry into and residence in the territory of the Member State for the purposes of family reunification, provided that the conditions of application of such a requirement do not make it impossible or excessively difficult to exercise the right to family reunification. In circumstances such as those of the cases in the main proceedings, in so far as they do not allow regard to be had to special circumstances objectively forming an obstacle to the applicants passing the examination and in so far as they set the fees relating to such an examination at too high a level, those conditions make the exercise of the right to family reunification impossible or excessively difficult. [Signatures]( *1 ) Language of the case: Dutch. | b369d-03d5e5e-42cc | EN |
In order to prevent insider dealing, information must be made public even if the holder of the information does not know how precisely it will influence the price of financial instruments | 11 March 2015 ( *1 )‛Reference for a preliminary ruling — Approximation of laws — Directive 2003/6/EC — Article 1, point (1) — Directive 2003/124/EC — Article 1(1) — Inside information — Concept of ‘information of a precise nature’ — Potential effect in a particular direction on the prices of financial instruments’In Case C‑628/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (France), made by decision of 26 November 2013, received at the Court on 2 December 2013, in the proceedings Jean-Bernard Lafonta v Autorité des marchés financiers, THE COURT (Second Chamber),composed of R. Silva de Lapuerta, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as a Judge of the Second Chamber, J.-C. Bonichot, A. Arabadjiev and J.L. da Cruz Vilaça (Rapporteur), Judges,Advocate General: M. Wathelet,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 13 November 2014,after considering the observations submitted on behalf of:—Mr Lafonta, by E. Piwnica, avocat,the French Government, by D. Colas, S. Menez and S. Ghiandoni, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the German Government, by T. Henze and A. Wiedmann, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, and P. Gentili, avvocato dello Stato,the Polish Government, by B. Majczyna, K. Maćkowska and K. Pawłowska, acting as Agents,the European Commission, by J. Hottiaux and I. Rogalski, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 18 December 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of point (1) of Article 1 of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) (OJ 2003 L 96, p. 16) and Article 1(1) of Commission Directive 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation (OJ 2003 L 339, p. 70).2The request has been made in proceedings between Mr Lafonta and the Autorité des marchés financiers (French Financial Markets Authority; ‘the AMF’) concerning the decision of 13 December 2010 by which the Penalties Commission of the AMF ordered Mr Lafonta to pay a financial penalty for failing to make public, inter alia, information relating to a financial operation which enabled Wendel SA to acquire a significant shareholding in the Saint-Gobain group (‘Saint-Gobain’). Legal context EU law Directive 2003/63Recitals 2, 12 and 24 in the preamble to Directive 2003/6 state:‘(2)An integrated and efficient financial market requires market integrity. The smooth functioning of securities markets and public confidence in markets are prerequisites for economic growth and wealth. Market abuse harms the integrity of financial markets and public confidence in securities and derivatives....(12)Market abuse consists of insider dealing and market manipulation. The objective of legislation against insider dealing is the same as that of legislation against market manipulation: to ensure the integrity of Community financial markets and to enhance investor confidence in those markets.(24)Prompt and fair disclosure of information to the public enhances market integrity, whereas selective disclosure by issuers can lead to a loss of investor confidence in the integrity of financial markets....’4The first paragraph of point (1) of Article 1 of Directive 2003/6 defines ‘inside information’, for the purposes of that directive, as ‘information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments’.5The first subparagraph of Article 2(1) of that directive provides:‘Member States shall prohibit any person referred to in the second subparagraph who possesses inside information from using that information by acquiring or disposing of, or by trying to acquire or dispose of, for his own account or for the account of a third party, either directly or indirectly, financial instruments to which that information relates.’6The first subparagraph of Article 6(1) of that directive provides:‘Member States shall ensure that issuers of financial instruments inform the public as soon as possible of inside information which directly concerns the said issuers.’Directive 2003/1247Recitals 1 and 3 in the preamble to Directive 2003/124 state:‘(1)Reasonable investors base their investment decisions on information already available to them, that is to say, on ex ante available information. Therefore, the question whether, in making an investment decision, a reasonable investor would be likely to take into account a particular piece of information should be appraised on the basis of the ex ante available information. Such an assessment has to take into consideration the anticipated impact of the information in light of the totality of the related issuer’s activity, the reliability of the source of information and any other market variables likely to affect the related financial instrument or derivative financial instrument related thereto in the given circumstances.(3)Legal certainty for market participants should be enhanced through a closer definition of two of the elements essential to the definition of inside information, namely the precise nature of that information and the significance of its potential effect on the prices of financial instruments or related derivative financial instruments.’8Article 1 of that directive, entitled ‘Inside information’, provides:‘1. For the purposes of applying point 1 of Article 1 of Directive 2003/6/EC, information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or may reasonably be expected to come into existence or an event which has occurred or may reasonably be expected to do so and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of financial instruments or related derivative financial instruments.2. For the purposes of applying point 1 of Article 1 of Directive 2003/6/EC, “information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments or related derivative financial instruments” shall mean information a reasonable investor would be likely to use as part of the basis of his investment decisions.’ French law 9By order of 12 November 2004 (JORF of 24 November 2004, p. 19749), Books II to VI of the General Regulation of the AMF were approved. Book II is entitled ‘Émetteurs et information financière’ (Issuers and Financial Reporting) and Book VI is entitled ‘Abus de marché: Opérations d’initiés et manipulations de marché’ (Market abuse: insider dealing and market manipulation).10In Book II of that General Regulation, Article 223-2, as laid down by order of 4 January 2007 (JORF of 20 January 2007, p. 1204), provides:‘I. — Every issuer of financial instruments must inform the public as soon as possible of any inside information, as defined in Article 621-1, which directly concerns that issuer.11In Book VI of the General Regulation, the first and second subparagraphs of Article 621-1 provide:‘Inside information shall mean information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the price of those financial instruments or on the price of related financial instruments.Information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or may reasonably be expected to come into existence or an event which has occurred or may reasonably be expected to do so and if it enables a conclusion to be drawn from it as to the possible effect of that set of circumstances or event on the price of financial instruments or related financial instruments.’ The dispute in the main proceedings and the question referred for a preliminary ruling 12The order for reference relates that, between December 2006 and June 2007, Wendel — a company of which Mr Lafonta was chairman of the Board of Directors — concluded with four credit institutions ‘total return swap agreements’ (‘the TRSs’), the underlying assets of which were shares in Saint-Gobain. In order to hedge their positions, those institutions acquired a total of 85 million shares in Saint-Gobain. At the same time as its entry into the TRSs, Wendel obtained financing, from the banks and another credit institution, for a total amount close to that of the TRSs.13After deciding on 3 September 2007 to phase out the TRSs progressively, Wendel acquired, between that date and 27 November 2007, more than 66 million shares, representing 17.6% of the share capital of Saint-Gobain. Between 26 September 2007 and 26 March 2008, Wendel informed the AMF that it had exceeded the thresholds of 5%, 10%, 15% and 20% of Saint-Gobain’s share capital.14Following an inquiry into the increase in the capital of Saint-Gobain, the AMF found that, although Wendel had officially taken the decision on 3 September 2007 to transform the economic exposure to Saint-Gobain into an actual shareholding in that company, the evidence contained in the inquiry report, and the simultaneous nature of the signing of the TRS agreements and Wendel’s acquisition of financing enabling it subsequently to acquire the Saint-Gobain shares sold by the banks in the context of the phasing out of the TRSs, show that Wendel had intended from the outset to acquire a significant shareholding in Saint-Gobain’s capital and that it was primarily for that purpose that the operation in question had been carried out.15Accordingly, the AMF accused Wendel and Mr Lafonta of failing to make public the principal characteristics of the financial operation, prepared by Wendel and designed to enable it to acquire a significant shareholding in Saint-Gobain’s capital — and of failing to make that information public by 21 June 2007 at the latest, at which date all the TRSs had been concluded — and of failing to make public, before Wendel incurred the obligation to report the passing of the 5% threshold, the inside information as to Wendel’s implementation of that financial operation for the purposes of acquiring a substantial shareholding in Saint-Gobain’s capital.16By decision of 13 December 2010, the Penalties Commission of the AMF held those complaints to be well founded and imposed a financial penalty on Wendel and Mr Lafonta in the amount of EUR 1.5 million.17Mr Lafonta brought an action before the Cour d’appel de Paris (Court of Appeal, Paris) for the annulment of that decision to the extent that it imposed a financial penalty on him. By judgment of 31 May 2012, the Cour d’appel de Paris dismissed the action.18Mr Lafonta lodged an appeal in cassation against that judgment. As grounds for that appeal, Mr Lafonta submits that information is precise for the purposes of the second subparagraph of Article 621-1 of the General Regulation of the AMF, to which Article 223-2 of that regulation refers, only ‘if it indicates a set of circumstances which exists or may reasonably be expected to come into existence or an event which has occurred or may reasonably be expected to do so and if it enables a conclusion to be drawn from it as to the possible effect of that set of circumstances or event on the price of financial instruments or related financial instruments’. It follows, according to Mr Lafonta, that information is precise, for the purposes of that provision, only if it allows the person in possession of that information to anticipate how the price of the security concerned will change when that information is made public. He argues that only information that enables the person in possession of it to predict whether the price of the security concerned is going to increase or decrease allows that person to know whether he should buy or sell and, accordingly, grants him an advantage as compared with all the other actors on the market, who are unaware of that information. Mr Lafonta adds that, in the circumstances, it was impossible to predict whether the disclosure of the information concerning Wendel’s acquisition of a shareholding in Saint-Gobain would result in an increase or a decrease in Wendel’s share price.19The AMF responds that such a requirement goes beyond the wording of Directive 2003/6 and Directive 2003/124, in which no reference is made to the direction of the possible effect on the prices of the financial instruments concerned. According to the AMF, any information in respect of which it may be concluded that, if it were known, it would be likely to bring about a change in prices, constitutes, for that reason alone, precise information, as the distinction between precise information and imprecise information is the likelihood of its having an effect on the market.20In those circumstances, the Cour de cassation decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Must point (1) of Article 1 of Directive 2003/6 and Article 1(1) of Directive 2003/124 be interpreted as meaning that only information in respect of which it may be determined, with a sufficient degree of probability, that, once it is made public, its potential effect on the prices of the financial instruments concerned will be in a particular direction may constitute inside information?’ Consideration of the question referred for a preliminary ruling 21The first point to note is that, according to recitals 2 and 12 to Directive 2003/6, the purpose of that directive is to protect the integrity of the EU financial markets and to enhance investor confidence in those markets. That confidence depends on, inter alia, investors being placed on an equal footing and protected against the improper use of insider information (see, to that effect, judgments in Spector Photo Group and Van Raemdonck, C‑45/08, EU:C:2009:806, paragraph 47; IMC Securities, C‑445/09, EU:C:2011:459, paragraph 27; and Geltl, C‑19/11, EU:C:2012:397, paragraph 33).22To that end, whereas Article 2(1) of Directive 2003/6 prohibits insider dealing, Article 6(1) of that directive places issuers of financial instruments under an obligation to inform the public as soon as possible of inside information which directly concerns those issuers. As recital 24 to Directive 2003/6 states, prompt and fair disclosure of information to the public enhances market integrity, whereas selective disclosure by issuers can lead to a loss of investor confidence in the integrity of financial markets.23Under the first paragraph of point (1) of Article 1 of Directive 2003/6, ‘inside information’ is defined as ‘information of a precise nature which has not been made public’, which relates to one or more issuers of financial instruments or to one or more financial instruments and which, ‘if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments’.24Thus, the definition of ‘inside information’ under that provision comprises four essential elements: (i) the information must be of a precise nature; (ii) the information must not have been made public; (iii) it must relate, directly or indirectly, to one or more financial instruments or their issuers; and (iv) it must be information which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments. (see, to that effect, judgment in Geltl, EU:C:2012:397, paragraph 25).25The Court has pointed out that, owing to its non-public and precise nature and its ability to influence significantly the prices of the financial instruments concerned, inside information grants the insider in possession of such information an advantage in relation to all the other actors on the market, who are unaware of it (see judgment in Spector Photo Group and Van Raemdonck, EU:C:2009:806, paragraph 52).26It is also important to note that, in order to enhance legal certainty for market participants, Directive 2003/124 was intended — as is apparent from recital 3 thereto — to define more closely the first and fourth elements essential to the definition of ‘inside information’, as set out in paragraph 24 of the present judgment.27Accordingly, as regards the first element, Article 1(1) of Directive 2003/124 provides that information ‘shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or may reasonably be expected to come into existence or an event which has occurred or may reasonably be expected to do so and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of financial instruments or related derivative financial instruments’. As regards the fourth element, Article 1(2) of that directive states that information likely to have a significant effect on the price of financial instruments is information which ‘a reasonable investor would be likely to use as part of the basis of his investment decisions’.28The Court has held that those two elements, essential to the definition of ‘inside information’ and defined more closely in Article 1 of Directive 2003/124, are mutually independent and constitute minimum conditions, each of which must be met if information is to be regarded as ‘inside’ information for the purposes of point (1) of Article 1 of Directive 2003/6 (see, to that effect, judgment in Geltl, EU:C:2012:397, paragraphs 52 and 53).29It should be noted that, by its question, the referring court seeks solely to obtain clarification regarding the first element essential to the definition of ‘inside information’, that is to say, regarding the ‘precise’ nature of that information.30It should be noted in that connection that, as the Advocate General noted in point 37 of his Opinion, it is not apparent from the wording of Article 1 of Directive 2003/124 that ‘precise’ information covers only information which makes it possible to determine the likely direction of a change in the prices of the financial instruments concerned, or the prices of related derivative financial instruments.31If the terms used in Article 1(1) of Directive 2003/124 are given their plain and ordinary meaning, it must be held that, for the condition in question to be satisfied, it is enough that the information be sufficiently exact or specific to constitute a basis on which to assess whether the set of circumstances or the event in question is likely to have a significant effect on the price of the financial instruments to which it relates. Consequently, the only information excluded from the concept of ‘inside information’ by virtue of that provision is information that is vague or general, from which it is impossible to draw a conclusion as regards its possible effect on the prices of the financial instruments concerned.32That interpretation is borne out both by the general scheme of Article 1 of Directive 2003/124 and by the purpose of Directive 2003/6.33As regards the general scheme of Article 1 of Directive 2003/124, Mr Lafonta submits that information cannot be regarded as precise unless it enables the holder of that information to anticipate the direction of a change in the prices of the financial instrument concerned, since only information that meets that condition would enable the holder to determine whether that financial instrument should be acquired or disposed of and, as a result, gives the holder of that information an advantage over all the other actors on the market.34It should be pointed out in that connection that, in common with Article 1(1) of Directive 2003/124, Article 1(2) of that directive does not require that the information make it possible to determine the direction of change in the prices of the financial instruments concerned. A particular item of information can be used by a reasonable investor as one of the grounds for his investment decision and, accordingly, satisfy the condition laid down in Article 1(2) of that directive, even though it does not make it possible to determine the movement in a given direction of the prices of the financial instruments concerned.35As regards the purpose of Directive 2003/6, it should be observed that — as the Advocate General noted in point 39 of his Opinion — to confine the scope of point (1) of Article 1 of Directive 2003/6 and Article 1(1) of Directive 2003/124 solely to information which makes it possible to anticipate the direction of a change in the prices of those instruments risks undermining the objectives referred to in paragraph 21 above.36The increased complexity of the financial markets makes it particularly difficult to evaluate accurately the direction of a change in the prices of those instruments, as was stated in recital 1 to Directive 2003/124, which refers to several factors likely to affect those prices in a given situation. In those circumstances — which can lead to widely differing assessments, depending on the investor — if it were accepted that information is to be regarded as precise only if it makes it possible to anticipate the direction of a change in the prices of the instruments concerned, it would follow that the holder of that information could use an uncertainty in that regard as a pretext for refraining from making certain information public and thus profit from that information to the detriment of the other actors on the market.37It should also be noted in that context that the travaux préparatoires for Directive 2003/124 disclose that a reference to the possibility of drawing a conclusion as regards the ‘direction’ of the effect of the information on the price of the financial instruments concerned, made in the version, subject to public consultation, of technical advice CESR/02-089d issued in December 2002 by the Committee of European Securities Regulators (CESR), for the European Commission and entitled ‘CESR’s Advice on Level 2 Implementing Measures for the proposed Market Abuse Directive’, was later deleted precisely in order to avoid such a reference being used as a pretext for not making information public.38In the light of all the foregoing, the answer to the question referred is that, on a proper construction of point (1) of Article 1 of Directive 2003/6 and Article 1(1) of Directive 2003/124, in order for information to be regarded as being of a precise nature for the purposes of those provisions, it need not be possible to infer from that information, with a sufficient degree of probability, that, once it is made public, its potential effect on the prices of the financial instruments concerned will be in a particular direction. Costs 39Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: On a proper construction of point (1) of Article 1 of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) and Article 1(1) of Commission Directive 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation, in order for information to be regarded as being of a precise nature for the purposes of those provisions, it need not be possible to infer from that information, with a sufficient degree of probability, that, once it is made public, its potential effect on the prices of the financial instruments concerned will be in a particular direction. [Signatures]( *1 ) Language of the case: French. | 88aeb-7ae3f68-41b2 | EN |
Where a medical device has a potential defect, all products of the same model may be classified as defective | 5 March 2015 ( *1 )‛Reference for a preliminary ruling — Consumer protection — Liability for damage caused by defective products — Directive 85/374/EEC — Articles 1, 6(1) and section (a) of the first paragraph of Article 9 — Pacemakers and implantable cardioverter defibrillators — Risk of product failure — Personal injury — Removal of the allegedly defective product and replacement with another product — Reimbursement of the costs of the operation’In Joined Cases C‑503/13 and C‑504/13,REQUESTS for a preliminary ruling under Article 267 TFEU from the Bundesgerichtshof (Germany), made by decisions of 30 July 2013, received at the Court on 19 September 2013, in the proceedings Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt — Die Gesundheitskasse (C‑503/13), Betriebskrankenkasse RWE (C‑504/13),THE COURT (Fourth Chamber),composed of L. Bay Larsen, President of the Chamber, K. Jürimäe, J. Malenovský, M. Safjan (Rapporteur) and A. Prechal, Judges,Advocate General: Y. Bot,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 3 September 2014,after considering the observations submitted on behalf of:—Boston Scientific Medizintechnik GmbH, by C. Wagner, Rechtsanwalt,AOK Sachsen-Anhalt — Die Gesundheitskasse, by R. Schultze-Zeu and H. Rien, Rechtsanwälte,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the French Government, by D. Colas and S. Menez, acting as Agents,the Austrian Government, by C. Pesendorfer, acting as Agent,the European Commission, by P. Mihaylova and G. Wilms, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 21 October 2014,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Articles 1, 6(1) and section (a) of the first paragraph of Article 9 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ 1985 L 210, p. 29).2The requests have been made in an appeal on a point of law between Boston Scientific Medizintechnik GmbH (‘Boston Scientific Medizintechnik’), the defendant in the main proceedings, and AOK Sachsen-Anhalt — Die Gesundheitskasse (C‑503/13) (‘AOK’) and Betriebskrankenkasse RWE (C‑504/13), compulsory health insurance organisations, concerning requests for reimbursement of the costs relating to the implantation of pacemakers and an implantable cardioverter defibrillator imported and marketed in the European Union by G. GmbH (‘G.’), a company which subsequently merged with Boston Scientific Medizintechnik. Legal framework EU law 3The first, second, sixth, seventh and ninth recitals in the preamble to Directive 85/374 are worded as follows:‘Whereas approximation of the laws of the Member States concerning the liability of the producer for damage caused by the defectiveness of his products is necessary because the existing divergences may … entail a differing degree of protection of the consumer against damage caused by a defective product to his health or property;Whereas liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production;...Whereas, to protect the physical well-being and property of the consumer, the defectiveness of the product should be determined by reference not to its fitness for use but to the lack of the safety which the public at large is entitled to expect; whereas the safety is assessed by excluding any misuse of the product not reasonable under the circumstances;Whereas a fair apportionment of risk between the injured person and the producer implies that the producer should be able to free himself from liability if he furnishes proof as to the existence of certain exonerating circumstances;Whereas the protection of the consumer requires compensation for death and personal injury as well as compensation for damage to property …’4Article 1 of Directive 85/374 provides as follows:‘The producer shall be liable for damage caused by a defect in his product.’5Article 3(1) and (2) of Directive 85/374 is worded as follows:‘1. “Producer” means the manufacturer of a finished product, the producer of any raw material or the manufacturer of a component part and any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer.2. Without prejudice to the liability of the producer, any person who imports into the Community a product for sale, hire, leasing or any form of distribution in the course of his business shall be deemed to be a producer within the meaning of this Directive and shall be responsible as a producer.’6Article 4 of Directive 85/374 states as follows:‘The injured person shall be required to prove the damage, the defect and the causal relationship between defect and damage.’7Article 6(1) of Directive 85/374 provides as follows:‘A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including:(a)the presentation of the product;(b)the use to which it could reasonably be expected that the product would be put;(c)the time when the product was put into circulation.’8The first paragraph of Article 9 of Directive 85/374 is worded as follows:‘For the purpose of Article 1, “damage” means:damage caused by death or by personal injuries;damage to, or destruction of, any item of property other than the defective product itself …...’ German law 9Paragraph 1(1) and (4) of the Gesetz über die Haftung für fehlerhafte Produkte (Law on liability for defective products) of 15 December 1989 (BGBl. 1989 I, p. 2198) provides as follows:‘1. If, due to a defect in a product, a person dies, is injured or his health is impaired or there is damage to an item of property, the producer of the product shall compensate the injured person for the damage which arises as a result thereof. In the case of damage to an item of property, this shall apply only if an item of property other than the defective product is damaged and this other item of property is of a type ordinarily intended for private use or consumption and was used by the injured person mainly for private use or consumption.4. The burden of proving the defect, the damage and the causal relationship between defect and damage shall lie with the injured person. …’10Paragraph 3(1) of that law is worded as follows:‘A product has a defect when it does not provide the safety which may reasonably be expected, taking all circumstances into account, including:its presentation,the use to which it could reasonably be expected to be put,the time when it was put into circulation.’11Paragraph 8 of that law provides as follows:‘Where a person has been injured or his health impaired, compensation shall be made in respect of the costs incurred in restoring the injured person’s health and also the pecuniary loss which the injured person suffers because, as a result of the injury, his earning capacity is permanently or temporarily brought to an end or reduced or his needs are increased on a temporary or permanent basis.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 12G. Corporation, now B. S. Corporation, a company established in Saint Paul (United States), manufactures and sells pacemakers and implantable cardioverter defibrillators.13G. imported and marketed in Germany ‘Guidant Pulsar 470’ and ‘Guidant Meridian 976’ pacemakers, which are manufactured in the United States by G. Corporation, and ‘G. Contak Renewal 4 AVT 6’ implantable cardioverter defibrillators, manufactured by the latter in Europe. G. ’s recommendations of 22 July 2005 concerning pacemakers and the subsequent events in Case C‑503/13 14In a letter of 22 July 2005 sent, inter alia, to treating physicians, G. indicated that its quality control system had established that a component utilised to hermetically seal the pacemakers which it marketed may experience a gradual degradation. That defect could lead to premature battery depletion, resulting in loss of telemetry and/or loss of pacing output without warning.15As a consequence, G. recommended physicians to consider, inter alia, replacing such pacemakers for the patients affected. Notwithstanding the fact that the warranty for the pacemakers may have expired, G. undertook to make replacement devices available free of charge for pacemaker-dependent patients and those deemed by their physicians to be best served by replacement.16Following that recommendation, the pacemakers previously implanted in B and W, who both had medical insurance cover with AOK, were replaced in September and November 2005, respectively, by other pacemakers provided free of charge by the manufacturer. The pacemakers that had been removed were destroyed without any expert opinion being obtained on their functioning.17AOK, on the basis of the devolved rights of B and W, brought proceedings before the Amstgericht Stendal (Local Court, Stendal) seeking an order that Boston Scientific Medizintechnik pay compensation in respect of the costs relating to the implantation of the original pacemakers, updated to the dates on which those pacemakers were replaced. Those costs were EUR 2 655.38 in respect of B and EUR 5 914.07 in respect of W.18The Amstgericht Stendal upheld that claim by judgment of 25 May 2011. As Boston Scientific Medizintechnik’s appeal against that decision was dismissed by the Landgericht Stendal (Regional Court, Stendal), that company lodged on appeal on a point of law before the referring court. G. ’s recommendations of June 2005 concerning implantable cardioverter defibrillators and the subsequent events in Case C‑504/13 19By letter of June 2005, G. informed treating physicians that its quality control system had established that the functioning of implantable ‘G. Contak Renewal 4 AVT 6’ defibrillators might be affected by a defect in one of its components which could limit the device’s therapeutic efficacy. It was apparent from the scientific analysis carried out that a magnetic switch in those defibrillators might remain stuck in the closed position.20As is apparent from the order for reference in Case C‑504/13, if the ‘enable magnet use’ mode was activated and the magnetic switch became stuck in the closed position, treatment of ventricular or atrial arrhythmias would be inhibited. As a consequence, any cardiac dysrhythmia that could be fatal would not be recognised by the defibrillators and no life-saving shock would be given to the patient.21In those circumstances, G. recommended treating physicians to deactivate the magnetic switch in the defibrillators concerned.22On 2 March 2006, as a result of the information referred to at paragraph 19 above being disseminated, the implantable cardioverter defibrillator implanted in F, who was covered for insurance purposes by Betriebskrankenkasse RWE, was replaced prematurely.23By letter of 31 August 2009, Betriebskrankenkasse RWE requested Boston Scientific Medizintechnik to reimburse the costs incurred in respect of F’s treatment, amounting to EUR 20 315.01 and EUR 122.50, in connection with the operation to replace the defibrillator.24An action was brought by Betriebskrankenkasse RWE for an order that Boston Scientific Medizintechnik reimburse the sums in question before the Landgericht Düsseldorf (Regional Court, Düsseldorf), which upheld that claim by judgment of 3 February 2011. After Boston Scientific Medizintechnik appealed against that judgment, the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf) varied that decision in part, ordering that company to pay the sum of EUR 5 952.80, together with interest. Boston Scientific Medizintechnik lodged an appeal on a point of law before the referring court, contending that Betriebskrankenkasse RWE’s claim should be dismissed in its entirety. The considerations set out by the Bundesgerichtshof in Cases C‑503/13 and C‑504/13 25The Bundesgerichtshof states that the outcome of the disputes in the main proceedings depends on whether the pacemakers and the cardioverter defibrillator implanted in the insured persons concerned are defective products within the meaning of Article 6(1) of Directive 85/374. In that regard, it has not yet been determined whether, as those devices form part of a group of products that pose a risk of failure, they are themselves defective.26That court considers that, in that context, it is of little consequence that it is accepted in specialist medical circles that it is not possible for a pacemaker or a cardioverter defibrillator that has been implanted to be 100% safe. In view of the life-threatening risk presented by a defective device, the patient may, in principle, reasonably expect the implanted device to have a failure rate of close to zero.27With regard to implantable cardioverter defibrillators, it is apparent from the order for reference that the fact that the therapeutic benefit of the ‘enable magnet use’ function is lost if it is deactivated does not constitute a danger to the patient’s life or physical well-being. If that function is deactivated, the patient monitor feature remains unaffected. The fact that temporary suspension of tachyarrhythmia treatment may be performed only with the aid of a programmer in such a case does not result in a health risk but simply a restriction of the functions which such defibrillators can perform.28In those circumstances, the Bundesgerichsthof decided to stay the proceedings and to refer to the Court of Justice for a preliminary ruling the following questions, which are formulated in a similar manner in both Case C‑503/13 and Case C‑504/13:‘(1)Is Article 6(1) of Directive 85/374 to be interpreted as meaning that a product in the form of a medical device implanted in the human body (in this case, a pacemaker [and an implantable cardioverter defibrillator]) is already defective if [pacemakers] in the same product group have a significantly increased risk of failure [or where a malfunction has occurred in a significant number of defibrillators in the same series], but a defect has not been detected in the device which has been implanted in the specific case in point?(2)If the answer to the first question is in the affirmative:Do the costs of the operation to remove the product and to implant another pacemaker [or another defibrillator] constitute damage caused by personal injury for the purposes of Article 1 and section (a) of the first paragraph of Article 9 of Directive 85/374?’29By decision of the President of the Court of 2 October 2013, Cases C‑503/13 and C‑504/13 were joined for the purposes of the written and oral procedure and judgment. The request to have the oral procedure reopened 30The oral procedure was concluded on 21 October 2014, following the presentation of the Advocate General’s Opinion.31By letter of 10 November 2014, received at the Court the same day, Boston Scientific Medizintechnik requested the Court to order that the oral procedure be reopened.32In support of that request, it submitted, in particular, that the Advocate General’s Opinion is based on legal considerations on which the parties to the proceedings have not had the opportunity to exchange views, namely the considerations relating to Article 168 TFEU and Article 35 of the Charter of Fundamental Rights of the European Union. Boston Scientific Medizintechnik also contends that the Advocate General’s Opinion is vitiated by a number of errors.33It should be noted in that regard that the Court may, at any time, after hearing the Advocate General, order that the oral procedure be reopened, in accordance with Article 83 of its Rules of Procedure, in particular if it considers that it lacks sufficient information or that the case must be dealt with on the basis of an argument that has not been debated by the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.34In the present case, the Court, having heard the Advocate General, considers that it has all the information necessary to answer the questions referred and that that information has been the subject of debate before it.35Accordingly, Boston Scientific Medizintechnik’s request that the oral procedure be reopened must be rejected. Consideration of the questions referred Question 1 36By its first question, the referring court is asking, in essence, whether Article 6(1) of Directive 85/374 is to be interpreted as meaning that, where it is found that products belonging to the same group or forming part of the same production series, such as pacemakers or implantable cardioverter defibrillators, have a potential defect, it is possible to classify such a product as defective, without there being any need to establish that the product in question has such a defect.37For the purposes of answering that question, it should be recalled that, as is apparent from Article 6(1) of Directive 85/374, a product is defective when it does not provide the safety which a person is entitled to expect, taking all the circumstances into account, including the presentation of the product, the use to which it could reasonably be expected that it would be put and the time when the product was put into circulation. Moreover, according to the sixth recital in the preamble to that directive, that assessment must be carried out having regard to the reasonable expectations of the public at large.38The safety which the public at large is entitled to expect, in accordance with that provision, must therefore be assessed by taking into account, inter alia, the intended purpose, the objective characteristics and properties of the product in question and the specific requirements of the group of users for whom the product is intended.39With regard to medical devices such as the pacemakers and implantable cardioverter defibrillators at issue in the main proceedings, it is clear that, in the light of their function and the particularly vulnerable situation of patients using such devices, the safety requirements for those devices which such patients are entitled to expect are particularly high.40Moreover, as observed, in essence, by the Advocate General at point 30 of his Opinion, the potential lack of safety which would give rise to liability on the part of the producer under Directive 85/374 stems, for products such as those at issue in the main proceedings, from the abnormal potential for damage which those products might cause to the person concerned.41Accordingly, where it is found that such products belonging to the same group or forming part of the same production series have a potential defect, it is possible to classify as defective all the products in that group or series, without there being any need to show that the product in question is defective.42Moreover, such an interpretation is consistent with the objectives pursued by the EU legislature, seeking to ensure, in particular, as is apparent from the second and seventh recitals in the preamble to Directive 85/374, a fair apportionment of the risks inherent in modern technological production between the injured person and the producer.43It follows from all the foregoing considerations that the answer to Question 1 is that Article 6(1) of Directive 85/374 must be interpreted as meaning that, where it is found that products belonging to the same group or forming part of the same production series, such as pacemakers and implantable cardioverter defibrillators, have a potential defect, such a product may be classified as defective without there being any need to establish that that product has such a defect. Question 2 44By its second question, the referring court is asking, in essence, whether Article 1 and section (a) of the first paragraph of Article 9 of Directive 85/374 are to be interpreted as meaning that the damage caused by a surgical operation for the replacement of a defective product, such as a pacemaker or an implantable cardioverter defibrillator, constitutes ‘damage caused by death or by personal injuries’ for which the producer is liable.45First, it should be noted that it is apparent from a reading of Article 1 in conjunction with section (a) of the first paragraph of Article 9 of Directive 85/374 that the producer is liable for damage caused by death or personal injuries which are the result of his product being defective.46It is apparent from the Court’s case-law that full and proper compensation for persons injured by a defective product must be available for the kind of damage referred to in the preceding paragraph (see judgment in Veedfald, C‑203/99, EU:C:2001:258, paragraph 27).47As observed by the Advocate General at points 61 to 63 of his Opinion, the notion of ‘damage caused by death or personal injuries’ within the meaning of section (a) of the first paragraph of Article 9 of Directive 85/374 must, having regard to the objective of protecting consumer health and safety pursued by that directive in accordance with the first and sixth recitals in the preamble thereto, be given a broad interpretation.48In order for a producer to incur liability for the damage caused by a defective product, it is necessary to prove, as stated in Article 4 of Directive 85/374, that there is a causal relationship between the defect and the damage suffered.49Compensation for damage thus relates to all that is necessary to eliminate harmful consequences and to restore the level of safety which a person is entitled to expect, in accordance with Article 6(1) of Directive 85/374.50As a consequence, in the case of medical devices, such as pacemakers and implantable cardioverter defibrillators, which are defective within the meaning of Article 6(1) of Directive 85/374, compensation for damage must cover, inter alia, the costs relating to the replacement of the defective product.51In the present case, as is apparent from the order for reference in Case C‑503/13, G. recommended to surgeons that they should consider replacing the pacemakers in question.52In that case, the Court finds that the costs relating to the replacement of such pacemakers, including the costs of the surgical operations, constitute damage within the meaning of section (a) of the first paragraph of Article 9 of Directive 85/374, for which the producer is liable in accordance with Article 1 of that directive.53That finding may be different in the case of implantable cardioverter defibrillators, as G. recommended, as is apparent from the order for reference in Case C‑504/13, that the magnetic switch of those medical devices should simply be deactivated.54In that regard, it is for the national court to determine whether, having regard to the particularly vulnerable situation of patients using an implantable cardioverter defibrillator, the deactivation of the magnetic switch is sufficient for the purpose of overcoming the defect in that product, bearing in mind the abnormal risk of damage to which it subjects the patients concerned, or whether it is necessary to replace that product in order to overcome the defect.55It follows from the foregoing that the answer to Question 2 is that Article 1 and section (a) of the first paragraph of Article 9 of Directive 85/374 are to be interpreted as meaning that the damage caused by a surgical operation for the replacement of a defective product, such as a pacemaker or an implantable cardioverter defibrillator, constitutes ‘damage caused by death or personal injuries’ for which the producer is liable, if such an operation is necessary to overcome the defect in the product in question. It is for the national court to verify whether that condition is satisfied in the main proceedings. Costs 56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fourth Chamber) hereby rules: 1. Article 6(1) of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products must be interpreted as meaning that, where it is found that products belonging to the same group or forming part of the same production series, such as pacemakers and implantable cardioverter defibrillators, have a potential defect, such a product may be classified as defective without there being any need to establish that that product has such a defect. 2. Article 1 and section (a) of the first paragraph of Article 9 of Directive 85/374 are to be interpreted as meaning that the damage caused by a surgical operation for the replacement of a defective product, such as a pacemaker or an implantable cardioverter defibrillator, constitutes ‘damage caused by death or personal injuries’ for which the producer is liable, if such an operation is necessary to overcome the defect in the product in question. It is for the national court to verify whether that condition is satisfied in the main proceedings. [Signatures]( *1 ) Language of the case: German. | 161b5-aa71bab-4f69 | EN |
France and Luxembourg cannot apply a reduced rate of VAT to the supply of electronic books, in contrast with paper books | 5 March 2015 ( *1 )‛Failure of a Member State to fulfil obligations — Taxation — VAT — Application of a reduced rate — Supply of digital books or electronic books’In Case C‑479/13,ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 6 September 2013, European Commission, represented by C. Soulay and F. Dintilhac, acting as Agents, with an address for service in Luxembourg,applicant,v French Republic, represented by D. Colas and J.-S. Pilczer, acting as Agents,defendant,supported by: Kingdom of Belgium, represented by M. Jacobs and J.-C. Halleux, acting as Agents,intervener,THE COURT (Fourth Chamber),composed of L. Bay Larsen, President of the Chamber, K. Jürimäe, J. Malenovský, M. Safjan and A. Prechal (Rapporteur), Judges,Advocate General: P. Mengozzi,Registrar: A. Calot Escobar,having regard to the written procedure,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1By its application, the European Commission asks the Court to declare that, by applying a reduced rate of value added tax (‘VAT’) to the supply of digital (or electronic) books, the French Republic has failed to fulfil its obligations under Articles 96 and 98 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2010/88/EU of 7 December 2010 (OJ 2010 L 326, p. 1; the ‘VAT Directive’), read in conjunction with Annexes II and III to that directive and Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112 (OJ 2011 L 77, p. 1). Legal context EU law 2Article 14(1) of the VAT Directive provides:‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’3Article 24(1) of the VAT Directive provides:‘“Supply of services” shall mean any transaction which does not constitute a supply of goods.’4Article 96 of the VAT Directive provides:‘Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.’5Article 98(1) and (2) of the VAT Directive provides:‘1. Member States may apply either one or two reduced rates.2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.The reduced rates shall not apply to electronically supplied services.’6Annex II to the VAT Directive, which includes an ‘[i]ndicative list of the electronically supplied services referred to in Article 58 and point (k) of the first paragraph of Article 59’, both of which articles deal with the determination of the place of supply of services provided to non-taxable persons, refers, at point 3 thereof, to the:‘supply of images, text and information and making available of databases’.7Annex III to Directive 2006/112, in its original version, which contained a list of the supplies of goods and services to which the reduced rates referred to in Article 98 of that directive may be applied, referred, at point 6 thereof, to the:‘supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising’.8Council Directive 2009/47/EC of 5 May 2009 (OJ 2009 L 116, p. 18) amended Directive 2006/112. Recital 4 in the preamble to Directive 2009/47 states:‘Directive 2006/112/EC should furthermore be amended in order to allow for the application of reduced rates or an exemption respectively in a limited number of specific situations for social or health reasons and in order to clarify and update to technical progress the reference to books in its Annex III.’9Since 1 June 2009, the date of entry into force of Directive 2009/47, point 6 of Annex III to the VAT Directive reads as follows:‘supply, including on loan by libraries, of books on all physical means of support (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising’.10Article 7(1) and (2) of Implementing Regulation No 282/2011 provides:‘1. “Electronically supplied services” as referred to in [the VAT Directive] shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.2. Paragraph 1 shall cover, in particular, the following:...(f)the services listed in Annex I.’11Annex I to Implementing Regulation No 282/2011, entitled ‘Article 7 of this Regulation’, states, at point 3 thereof:‘Point (3) of Annex II to [the VAT Directive](c)the digitised content of books and other electronic publications;...’ French law 12Article 278-0a of the General Tax Code (‘CGI’), in the version in force when the period laid down in the reasoned opinion issued on 25 October 2012 to the French Republic expired, provides:‘[VAT] is levied at the reduced rate of 5.50% as regards:A. —The purchase, import, intra-Community acquisition, sale, supply, commission, brokerage or any similar transaction concerning:(3)Books, including their rental. This subparagaph applies to books on all physical means of support, including those supplied by download. The pre-litigation procedure and the proceedings before the Court 13The Commission took the view that it was contrary to the VAT Directive to extend the reduced VAT rate to transactions on books supplied by download where the chargeable event took place on or after 1 January 2012. Consequently, it sent to the French Republic a letter of formal notice on 4 July 2012. That Member State responded to that letter of formal notice by letter dated 3 August 2012.14On 25 October 2012, the Commission issued a reasoned opinion calling on that Member State to take the measures necessary to comply with the opinion within one month of its receipt. That Member State responded to that opinion by letter dated 23 November 2012.15Since it was not satisfied with the explanations provided by the French Republic, the Commission brought the present action.16By order of the President of the Court of 6 February 2014, the Kingdom of Belgium was granted leave to intervene in support of the form of order sought by the French Republic. The action Preliminary observations 17The Commission states that the supply of digital or electronic books should be understood as the supply, for consideration, by download or web streaming (‘streaming’), from a website, of books in electronic format that can be viewed on a computer, a smartphone, electronic book readers or other reading system (the ‘supply of electronic books’).18The French Republic argues that the definition of digital or electronic books to which a reduced rate of VAT under Article 278-0a of the CGI can be applied is stricter than that adopted by the Commission. According to the French Republic, the reduced rate of VAT applies, under that provision, only to ‘homothetic’ books, namely, books which are analogous to printed books or books supplied on a physical support which are only different from the latter in respect of a few elements inherent to their format.19In that regard, it must be held that the argument that Article 278-0a of the CGI applies only, in relation to digital or electronic books, to homothetic books give no grounds, in itself, for concluding that the Commission necessarily intends, by its action, to designate a category of digital or electronic books broader than that to which the reduced rate of VAT applies pursuant to that provision. Digital or electronic books, referred to by the Commission in its application, are defined by the manner by which they are supplied. The French Republic does not dispute that, in the light of that criterion, homothetic books constitute books as designated by the Commission in its application.20Furthermore, even if Article 278-0a of the CGI uses the term ‘download’, that Member State does not claim that the supply of books by streaming is excluded from the scope of that provision.21In those circumstances, there is no need to limit the examination of the action to a more restricted category of digital or electronic books than that referred to by the Commission in its application. Substance 22The Commission claims that the application, by the French Republic, of a reduced rate of VAT to the supply of electronic books is incompatible with Articles 96 and 98 of the VAT Directive, read in conjunction with Annexes II and III to that directive and Implementing Regulation No 282/2011.23The Commission observes that, under the first subparagraph of Article 98(2) of the VAT Directive, the reduced rates of VAT may apply only to supplies of goods and services referred to in Annex III to that directive. The supply of electronic books does not fall within the scope of that annex and a reduced VAT rate could not therefore apply to it. That interpretation is borne out by the second subparagraph of Article 98(2) of the VAT Directive which excludes the application of a reduced rate of VAT to electronically supplied services.24The French Republic, supported by the Kingdom of Belgium, disputes the interpretation adopted by the Commission of the relevant provisions of the VAT Directive. According to those Member States, the supply of electronic books is covered by point 6 of Annex III to the VAT Directive and a reduced rate of VAT can therefore be applied to that supply.25In that regard, it should be noted that Article 96 of the VAT Directive provides that the same rate of VAT, namely, the standard rate, is applicable to supplies of goods and services. As an exception to that principle, Article 98(1) of the VAT Directive gives the Member States the option of applying either one or two reduced rates of VAT. In accordance with the first subparagraph of Article 98(2), the reduced rates of VAT can apply only to supplies of goods and services in the categories set out in Annex III to the VAT Directive (judgment in K, C‑219/13, EU:C:2014:2207, paragraphs 21 and 22).26As regards the argument raised by the French Republic and the Kingdom of Belgium that the supply of electronic books is covered by point 6 of Annex III to the VAT Directive, it should be borne in mind that, in determining the scope of a provision of EU law, its wording, context and objectives must all be taken into account (see, inter alia, judgment in NCC Construction Danmark, C‑174/08, EU:C:2009:669, paragraph 23 and the case-law cited).27It should be noted that point 6 of Annex III to the VAT Directive expressly refers, in the category of services that may be subject to reduced rates of VAT, to the ‘supply of books ... on all physical means of support’. It is thus clear from the terms of that point that the reduced VAT rate is applicable to a transaction consisting of the supply of a book on a physical medium. As the Commission rightly points out, any other interpretation would render the words ‘on all physical means of support’, found in that point, meaningless.28Admittedly, in order to be able to read an electronic book, physical support, such as a computer, is required. However such support is not included in the supply of electronic books.29In the light of the terms of point 6 of Annex III, it follows that that provision does not include in its scope the supply of electronic books.30That interpretation is supported by the context of that provision. That provision is an exception to the principle that Member States are to apply a standard rate of VAT to transactions subject to VAT and must therefore be interpreted strictly (see, inter alia, judgment in Commission v Spain, C‑360/11, EU:C:2013:17, paragraph 18 and the case-law cited).31It is true, as the French Republic and the Kingdom of Belgium rightly point out, that by expanding the scope of point 6 of Annex III to the VAT Directive to encompass the ‘supply of books on all physical means of support’, via the amendment introduced by Directive 2009/47, the EU legislature intended, as is apparent from recital 4 of the preamble to Directive 2009/47, to clarify and update to technical progress the reference to the notion of ‘books’ referred to in that point.32Similarly, as the French Republic rightly argued, by drawing up Annex III to Directive 2006/112, the EU legislature intended that essential commodities and goods and services having social or cultural objectives may be subject to a reduced rate of VAT, provided that those goods or services pose no or little risk of distortion to competition (see, to that effect, judgment in Commission v Netherlands, C‑41/09, EU:C:2011:108, paragraph 52).33However, the fact remains that, as is clear from the second subparagraph of Article 98(2) of the VAT Directive, the EU legislature decided to exclude any possibility of a reduced rate of VAT being applied to ‘electronically supplied services’.34The supply of electronic books is an ‘electronically supplied service ...’ within the meaning of the second subparagraph of Article 98(2).35First, under Article 24(1) of the VAT Directive, a ‘supply of services’ means any transaction which does not constitute a supply of goods, whereas, under Article 14(1) of that directive, a ‘supply of goods’ means the transfer of the right to dispose of tangible property as owner. Contrary to what the French Republic argues, the supply of electronic books cannot be regarded as a ‘supply of goods’ within the meaning of that provision, since an electronic book cannot qualify as tangible property. As is clear from paragraph 28 above, the physical support enabling an electronic book to be read, which could qualify as ‘tangible property’, is not part of that supply. It follows that, pursuant to Article 24(1) thereof, the supply of electronic books must be classified as a supply of services.36Second, according to Article 7(1) of Implementing Regulation No 282/2011, electronically supplied services, within the meaning of the VAT Directive, are to include ‘services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology’. The supply of electronic books clearly meets that definition.37That interpretation is confirmed by point 3 of Annex II to the VAT Directive, read in conjunction with Article 7(1) and (2) of Implementing Regulation No 282/2011 and point 3 of Annex I to that regulation, from which it follows that the supply of digitised content of books constitutes such a service.38The fact that Annex II to the VAT Directive contains an indicative list of the electronically supplied services referred to in Article 58 and point (k) of the first paragraph of Article 59 of the VAT Directive is not at odds with that interpretation. The fact that that annex lists only the electronically supplied services which are relevant to the application of those two provisions has no bearing on those services’ very nature.39Moreover, as is clear from the wording of Article 7(1) of Implementing Regulation No 282/2011, the purpose of referring, in the context of that provision, to the services listed in point 3 of Annex II to the VAT Directive is to determine the electronically supplied services which are covered by the VAT Directive generally and not only by certain provisions of that directive.40Consequently, since the supply of electronic books is an electronically supplied service within the meaning of the second subparagraph of Article 98(2) of the VAT Directive, and since that provision precludes the possibility of applying a reduced rate of VAT to such services, it is not possible to interpret point 6 of Annex III to the VAT Directive to include within its scope the supply of electronic books without failing to have regard to the EU legislature’s intention that a reduced rate of VAT should not apply to those services.41It follows that, taking into account both the terms of point 6 of Annex III to the VAT Directive and its context and the purpose of the legislation of which that provision forms a part, that point cannot be interpreted as including the supply of electronic books within its scope.42Contrary to what the French Republic and the Kingdom of Belgium argue, that interpretation is not undermined by the principle of fiscal neutrality, which was intended by the EU legislature to reflect, in matters relating to VAT, the general principle of equal treatment (judgment in NCC Construction Danmark, EU:C:2009:669, paragraph 41 and the case-law cited).43The principle of fiscal neutrality cannot extend the scope of reduced rates of VAT to the supply of electronic books (see, to that effect, judgment in Zimmermann, C‑174/11, EU:C:2012:716, paragraph 50 and the case-law cited). Point 6 of Annex III to the VAT Directive is not a provision which, unequivocally, extends the scope of reduced rates of VAT to the supply of electronic books. On the contrary, as is clear from paragraph 49 above, such a supply is not covered by that provision.44Since it is also undisputed that the supply of electronic books does not fall within any other category of services referred to in Annex III to the VAT Directive, the application of a reduced rate of VAT to such a supply is not in accordance with Article 98(2) of the VAT Directive.45It follows that the Commission’s application is well founded.46Consequently, it must be held that, by applying a reduced rate of VAT on the supply of digital books (or electronic books), the French Republic has failed to fulfil its obligations under Articles 96 and 98 of the VAT Directive, read in conjunction with Annexes II and III to that directive and Implementing Regulation No 282/2011. Costs 47Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has asked for the French Republic to be ordered to pay the costs, and the latter has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission.48Article 140(1) of the Rules of Procedure provides that the Member States which intervened in the proceedings are to bear their own costs. The Kingdom of Belgium must therefore bear its own costs.On those grounds, the Court (Fourth Chamber) hereby: 1. Declares that, by applying a reduced rate of value added tax to the supply of digital or electronic books, the French Republic has failed to fulfil its obligations under Articles 96 and 98 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax as amended by Council Directive 2010/88/EU of 7 December 2010, read in conjunction with Annexes II and III to that directive and Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC; 2. Orders the French Republic to bear its own costs and to pay those incurred by the European Commission; 3. Orders the Kingdom of Belgium to bear its own costs. [Signatures]( *1 ) Language of the case: French. | 2b185-b98e179-4eaa | EN |
Italian legislation under which owners of land who are not polluters are not required to adopt preventive and remedial measures is compatible with EU law | 4 March 2015 ( *1 )‛Reference for a preliminary ruling — Article 191(2) TFEU — Directive 2004/35/EC — Environmental liability — National legislation under which no provision is made for the administrative authorities to require owners of polluted land who have not contributed to that pollution to carry out preventive and remedial measures, and the sole obligation imposed concerns the reimbursement of the measures undertaken by those authorities — Whether compatible with the ‘polluter pays’ principle, the precautionary principle and the principles that preventive action should be taken and that environmental damage should be rectified at source as a matter of priority’In Case C‑534/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Italy), made by decision of 8 July 2013, received at the Court on 10 October 2013, in the proceedings Ministero dell’Ambiente e della Tutela del Territorio e del Mare, Ministero della Salute, Ispra — Istituto Superiore per la Protezione e la Ricerca Ambientale v Fipa Group Srl, intervening parties: Comune di Massa, Regione Toscana, Provincia di Massa Carrara, Comune di Carrara, Arpat — Agenzia regionale per la protezione ambientale della Toscana, Ediltecnica Srl, Versalis SpA, and Tws Automation Srl, intervening parties: Ivan Srl, Edison SpA, THE COURT (Third Chamber),composed of M. Ilešič, President of the Chamber, A. Ó Caoimh, C. Toader (Rapporteur), E. Jarašiūnas and C.G. Fernlund, Judges,Advocate General: J. Kokott,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 5 November 2014,after considering the observations submitted on behalf of:—Tws Automation Srl, by R. Lazzini and S. Prosperi Mangili, avvocati,Ivan Srl, by G.C. Di Gioia, F. Massa, L. Acquarone and G. Acquarone, avvocati,Edison SpA, by M.S. Masini, W. Troise Mangoni and G.L. Conti, avvocati,Versalis SpA, by S. Grassi, G.M. Roberti and I. Perego, avvocati,the Italian Government, by G. Palmieri, acting as Agent, and C. Gerardis, avvocato dello Stato,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by L. Pignataro-Nolin and E. White, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 20 November 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of the principles of EU environmental law, namely, the ‘polluter pays’ principle, the precautionary principle and the principles that preventive action should be taken and that environmental damage should be rectified at source as a matter of priority, as laid down in Article 191(2) TFEU, and in Articles 1 and 8(3) of Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage (OJ 2004 L 143, p. 56), reflecting recitals 13 and 24 of the preamble thereto.2The request has been made in three sets of proceedings, respectively between: (i) the Ministero dell’Ambiente e della Tutela del Territorio e del Mare (Ministry of the Environment and the Protection of the Land and the Sea; ‘the Environment Ministry’), the Ministero della Salute (Ministry of Health; ‘the Health Ministry’) and Ispra — Istituto Superiore per la Protezione e la Ricerca Ambientale (‘Ispra’), on the one hand, and Fipa Group Srl, on the other; (ii) the Environment Ministry, the Health Ministry and Ispra, on the one hand, and Tws Automation Srl, on the other; and (iii) the Environment Ministry and the Health Ministry, on the one hand, and Ivan Srl, on the other. All three sets of proceedings concern specific emergency safety measures relating to properties contaminated by various chemical substances. Legal context EU law 3The first subparagraph of Article 191(2) states:‘Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.’4Recitals 1, 2, 13, 18, 20, 24 and 30 to Directive 2004/35 are worded as follows:‘(1)There are currently many contaminated sites in the Community, posing significant health risks, and the loss of biodiversity has dramatically accelerated over the last decades. Failure to act could result in increased site contamination and greater loss of biodiversity in the future. Preventing and remedying, insofar as is possible, environmental damage contributes to implementing the objectives and principles of the Community’s environment policy as set out in the Treaty. Local conditions should be taken into account when deciding how to remedy damage.(2)The prevention and remedying of environmental damage should be implemented through the furtherance of the “polluter pays” principle, as indicated in the Treaty and in line with the principle of sustainable development. The fundamental principle of this Directive should therefore be that an operator whose activity has caused the environmental damage or the imminent threat of such damage is to be held financially liable, in order to induce operators to adopt measures and develop practices to minimise the risks of environmental damage so that their exposure to financial liabilities is reduced.…(13)Not all forms of environmental damage can be remedied by means of the liability mechanism. For the latter to be effective, there need to be one or more identifiable polluters, the damage should be concrete and quantifiable, and a causal link should be established between the damage and the identified polluter(s). Liability is therefore not a suitable instrument for dealing with pollution of a widespread, diffuse character, where it is impossible to link the negative environmental effects with acts or failure to act of certain individual actors.(18)According to the “polluter-pays” principle, an operator causing environmental damage or creating an imminent threat of such damage should, in principle, bear the cost of the necessary preventive or remedial measures. In cases where a competent authority acts, itself or through a third party, in the place of an operator, that authority should ensure that the cost incurred by it is recovered from the operator. It is also appropriate that the operators should ultimately bear the cost of assessing environmental damage and, as the case may be, assessing an imminent threat of such damage occurring.(20)An operator should not be required to bear the costs of preventive or remedial actions taken pursuant to this Directive in situations where the damage in question or imminent threat thereof is the result of certain events beyond the operator’s control. Member States may allow that operators who are not at fault or negligent shall not bear the cost of remedial measures, in situations where the damage in question is the result of emissions or events explicitly authorised or where the potential for damage could not have been known when the event or emission took place.(24)It is necessary to ensure that effective means of implementation and enforcement are available, while ensuring that the legitimate interests of the relevant operators and other interested parties are adequately safeguarded. Competent authorities should be in charge of specific tasks entailing appropriate administrative discretion, namely the duty to assess the significance of the damage and to determine which remedial measures should be taken.(30)Damage caused before the expiry of the deadline for implementation of this Directive should not be covered by its provisions.’5In accordance with Article 1 thereof, Directive 2004/35 establishes a framework of environmental liability based on the ‘polluter pays’ principle.6Point (6) of Article 2 of that directive defines ‘operator’ as ‘any natural or legal, private or public person who operates or controls the occupational activity or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of such an activity has been delegated, including the holder of a permit or authorisation for such an activity or the person registering or notifying such an activity’.7In point (7) of Article 2 of Directive 2004/35, ‘occupational activity’ is defined as any ‘activity carried out in the course of an economic activity, a business or an undertaking, irrespectively of its private or public, profit or non-profit character’.8Points (10) and (11) of Article 2 of the directive lay down the following definitions:‘(10) “preventive measures” means any measures taken in response to an event, act or omission that has created an imminent threat of environmental damage, with a view to preventing or minimising that damage;(11) “remedial measures” means any action, or combination of actions, including mitigating or interim measures to restore, rehabilitate or replace damaged natural resources and/or impaired services, or to provide an equivalent alternative to those resources or services as foreseen in Annex II’.9Paragraph 1 of Article 3 of Directive 2004/35, entitled ‘Scope’, states:‘This Directive shall apply to:(a)environmental damage caused by any of the occupational activities listed in Annex III, and to any imminent threat of such damage occurring by reason of any of those activities;(b)damage to protected species and natural habitats caused by any occupational activities other than those listed in Annex III, and to any imminent threat of such damage occurring by reason of any of those activities, whenever the operator has been at fault or negligent.’10Under Article 4(5) of Directive 2004/35, that directive ‘shall only apply to environmental damage or to an imminent threat of such damage caused by pollution of a diffuse character, where it is possible to establish a causal link between the damage and the activities of individual operators’.11Article 5 of the directive, entitled ‘Preventive action’, is worded as follows:‘1. Where environmental damage has not yet occurred but there is an imminent threat of such damage occurring, the operator shall, without delay, take the necessary preventive measures.3. The competent authority may, at any time:require the operator to take the necessary preventive measures;(d)itself take the necessary preventive measures.4. The competent authority shall require that the preventive measures are taken by the operator. If the operator fails to comply with the obligations laid down in paragraph 1 or 3(b) or (c), cannot be identified or is not required to bear the costs under this Directive, the competent authority may take these measures itself.’12Article 6 of Directive 2004/35, entitled ‘Remedial action’, provides:‘1. Where environmental damage has occurred the operator shall, without delay, inform the competent authority of all relevant aspects of the situation and take:all practicable steps to immediately control, contain, remove or otherwise manage the relevant contaminants and/or any other damage factors in order to limit or to prevent further environmental damage and adverse effects on human health or further impairment of services andthe necessary remedial measures …2. The competent authority may, at any time:(c)require the operator to take the necessary remedial measures;(e)itself take the necessary remedial measures.3. The competent authority shall require that the remedial measures are taken by the operator. If the operator fails to comply with the obligations laid down in paragraph 1 or 2(b), (c) or (d), cannot be identified or is not required to bear the costs under this Directive, the competent authority may take these measures itself, as a means of last resort.’13Under Article 8(1) and (3) of that directive:‘1. The operator shall bear the costs for the preventive and remedial actions taken pursuant to this Directive.3. An operator shall not be required to bear the cost of preventive or remedial actions taken pursuant to this Directive when he can prove that the environmental damage or imminent threat of such damage:was caused by a third party and occurred despite the fact that appropriate safety measures were in place; orresulted from compliance with a compulsory order or instruction emanating from a public authority other than an order or instruction consequent upon an emission or incident caused by the operator’s own activities.In such cases Member States shall take the appropriate measures to enable the operator to recover the costs incurred.’14Article 11(2) of Directive 2004/35 is worded as follows:‘The duty to establish which operator has caused the damage or the imminent threat of damage, to assess the significance of the damage and to determine which remedial measures should be taken with reference to Annex II shall rest with the competent authority. …’15Paragraph 1 of Article 16 of Directive 2004/35, which is entitled ‘Relationship with national law’, specifies that the directive ‘shall not prevent Member States from maintaining or adopting more stringent provisions in relation to the prevention and remedying of environmental damage, including the identification of additional activities to be subject to the prevention and remediation requirements of this Directive and the identification of additional responsible parties’.16Under Article 17 of Directive 2004/35, read in conjunction with Article 19 of that directive, the directive is to apply to damage caused by an emission, event or incident which took place after 30 April 2007 only if the damage derives from an activity which took place after the date in question or from an activity which took place, but did not finish, before that date.17Annex III to Directive 2004/35 lists 12 activities considered by the legislature to be dangerous for the purposes of Article 3(1) of the directive. Italian law 18Article 240(1)(m) and (p) of Legislative Decree No 152 of 3 April 2006 on environmental standards (ordinary supplement to GURI No 88 of 14 April 2006), in the version in force at the material time (‘the Environmental Code’), is to be found in Title V of Part IV of that decree and defines emergency safety measures and measures for the rehabilitation of sites.19Article 242 of the Environmental Code, entitled ‘Operational and administrative procedures’, governs in some detail the obligations of the polluter, whether the pollution is recent or historic, as regards adoption of the necessary preventive, restoration and emergency safety measures, notification of the competent public authorities and implementation of rehabilitation work.20Article 244 of the Environmental Code, entitled ‘Orders’, governs situations in which the actual pollution has exceeded contamination threshold concentrations. In such a situation, the province is to put the polluter on notice by reasoned order to adopt the measures set out in Article 240 et seq. of the code. Article 244(3) of the code provides that, in any event, the order is also to be notified to the owner of the site. Moreover, Article 244(4) of the code states that, if the polluter cannot be identified or fails to adopt the necessary measures, and neither the owner of the site nor any other interested party adopts those measures, they are to be adopted by the competent administrative authorities.21Paragraph 1 of Article 245 of the code, entitled ‘Intervention and notification obligations incumbent upon persons not responsible for the potential contamination’, provides:‘The procedures relating to the safety, rehabilitation and environmental restoration measures governed by this Title may, in any event, be implemented on the initiative of interested parties who are not responsible.’22Under Article 245(2) of the Environmental Code:‘Without prejudice to the obligations incumbent upon the person responsible for the potential contamination, as referred to in Article 242, the owner or the administrator of the land who finds that the contamination threshold concentrations (CTCs) have been exceeded, or are specifically and genuinely at risk of being exceeded, is required to inform accordingly the region, province or municipality with territorial competence and to implement preventive measures in accordance with the procedure set out in Article 242. After receiving such information and after consulting the municipality, the province shall identify the polluter with a view to the implementation of rehabilitation measures. The owner or any other interested person may, however, intervene on a voluntary basis at any time in order to undertake the requisite rehabilitation measures for the site of which he is the owner or has the use.’23Article 250 of the Environmental Code, entitled ‘Rehabilitation by the administrative authorities’, provides:‘If the persons responsible for the contamination do not immediately adopt the measures provided for under the present Title or if they cannot be identified, and if neither the owner of the site nor any interested party adopts those measures, the procedures and measures referred to in Article 242 shall be implemented on its own initiative by the municipality that is territorially competent and, if that municipality does not adopt those measures, by the region, in accordance with the order of priority set by the regional plan for the rehabilitation of polluted land, which may also call upon other public or private persons, appointed following a specific public tendering procedure …’24Paragraphs 1 to 4 of Article 253 of the code, entitled ‘Encumbrances and special security interests’, state:‘1. The measures referred to in the present Title constitute encumbrances [‘oneri reali’] on contaminated sites where they are implemented by the competent authority on its own initiative in accordance with Article 250. …2. The costs incurred for the measures referred to in paragraph 1 shall be coupled with a special security interest in the same land, under the terms and for the purposes of the second paragraph of Article 2748 of the Civil Code. That security interest may also be asserted to the detriment of the rights acquired by third parties over the property.3. The security interest and the recovery of costs may not be claimed vis-à-vis the owner of the site where that person is in no way connected with the pollution or the risk of pollution, except by reasoned decision of the competent authority attesting, inter alia, to the impossibility of identifying the person responsible or of bringing an action for damages against that person, or to the unsuccessful outcome of such an action.4. In any event, owners not responsible for the pollution may be required to reimburse … the costs relating to the measures adopted by the competent authority only within the limits of the market value of the land, determined after the implementation of those measures. If an owner who is not responsible for the pollution has rehabilitated the polluted site on a voluntary basis, that person shall be entitled to bring an action for damages against the person responsible for the pollution in respect of costs incurred and any additional damage suffered.’ The dispute in the main proceedings and the question referred for a preliminary ruling 25From the 1960s to the 1980s, according to the documents before the Court, Farmoplant SpA and Cersam Srl — two companies belonging to the industrial group Montedison SpA (now Edison SpA) — operated an industrial site for the manufacture of insecticide and herbicide in a municipality of the Province of Massa Carrara, in Tuscany (Italy). As the land covered by that site had been seriously contaminated by various chemical substances, including dichloroethane and ammonia, some of that land was decontaminated in 1995. Since the ‘decontamination’ proved to be inadequate, the land was classed in 1998 as the ‘Massa Carrara Site of National Interest’ for the purposes of its rehabilitation.26In 2006 and 2008, Tws Automation and Ivan, two private companies, became the owners of various plots of land on the site. Tws Automation’s corporate purpose is the sale of electronic devices. Ivan is a real estate agency.27In 2011, a private company called Nasco Srl (‘the Fipa Group’) merged with LCA Lavorazione Compositi Apuana Srl, thereby becoming the owner of another plot of land on the same site. Fipa Group is active in the construction and boat repair business.28By administrative acts of 18 May 2007 and 16 September and 7 November 2011, respectively, the competent directorates of the Environment Ministry, the Health Ministry and Ispra ordered Tws Automation, Ivan and Fipa Group to adopt specific ‘emergency safety’ measures, for the purposes of the Environmental Code, consisting in the erection of a hydraulic capture barrier in order to protect the groundwater table and the submission of an amendment to a project, dating back to 1995, for the rehabilitation of the land. Those decisions were addressed to the three undertakings, in their capacity as ‘guardian[s] of the land’.29Relying on the fact that they were not responsible for the pollution, those companies brought proceedings before the Tribunale amministrativo regionale per la Toscana (Regional Administrative Court of Tuscany), which, by three separate judgments, annulled the acts in question on the ground that, by virtue of the ‘polluter pays’ principle, specific to EU law and the national environmental legislation, the administration could not, on the basis of Title V of Part IV of the Environmental Code, impose the measures at issue on undertakings which bear no direct responsibility for the contamination observed on the site.30The Environment Ministry, the Health Ministry and Ispra brought an appeal against those judgments before the Consiglio di Stato.31The Environment Ministry, the Health Ministry and Ispra submit that, on a proper construction of Title V of Part IV of the Environmental Code in the light of the ‘polluter pays’ principle and the precautionary principle, the owner of a polluted site may be compelled to adopt emergency safety measures.32The chamber of the Consiglio di Stato hearing the case referred to the plenary assembly of that court the question whether, on the basis of the ‘polluter pays’ principle, the national administrative authorities may impose on owners of polluted land who are not responsible for pollution the obligation to implement the emergency safety measures referred to in Article 240(1)(m) of the Environmental Code or whether, in such circumstances, the owner is bound only by the encumbrances expressly provided for in Article 253 of that code.33By act of 21 November 2013, Versalis SpA, which also owns land on the site at issue, acquired from Edison SpA, intervened in support of an order dismissing the appeal.34In its order for reference, the plenary assembly of the Consiglio di Stato observes that the Italian administrative courts are divided on the question of how to interpret the provisions laid down in Part IV of the Environmental Code and, more generally, of how to construe those relating to the obligations of the owner of a contaminated site.35Accordingly, whereas one line of authority — based, inter alia, on the precautionary principle, the principle that preventive action should be taken and the ‘polluter pays’ principle, all of which are specific to EU law — considers the owner to be under an obligation to adopt emergency safety measures and rehabilitation measures even where that owner is not the polluter, other Italian courts rule out the possibility that owners not responsible for the pollution should incur any liability and, consequently, refuse to accept that the administrative authorities are competent to require such owners to adopt those measures. The plenary assembly of the Consiglio di Stato takes the latter view, which marks the prevalent approach in Italian administrative case-law.36In that regard, the referring court, citing the judgments of the Court in ERG and Others (C‑378/08, EU:C:2010:126) and ERG and Others (C‑379/08 and C‑380/08, EU:C:2010:127), bases its approach on a literal interpretation of the Environmental Code and on the principles of civil liability, which require a causal link between the act and the damage. The existence of such a link is necessary to establish either fault-based or strict liability in respect of the damage concerned. That link is missing if the owner is not the polluter. Consequently, the liability of an owner in those circumstances would be based solely on that person’s status as owner, given that the pollution cannot be attributed to that person either for reasons relating to the individual or on the basis of objective criteria.37In those circumstances, the Consiglio di Stato decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Do the European Union principles relating to the environment, laid down in Article 191(2) TFEU and in Articles 1 and 8(3) of Directive 2004/35 and recitals 13 and 24 thereto — specifically, the ‘polluter pays’ principle, the precautionary principle and the principles that preventive action should be taken and that environmental damage should be rectified at source as a matter of priority — preclude national legislation, such as the rules set out in Articles 244, 245 and 253 of [the Environmental Code], which, in circumstances in which it is established that a site is contaminated and in which it is impossible to identify the polluter or to have that person adopt remedial measures, do not permit the administrative authority to require the owner (who is not responsible for the pollution) to implement emergency safety and rehabilitation measures, merely attributing to that person financial liability limited to the value of the site once the rehabilitation measures have been carried out?’ Consideration of the question referred for a preliminary ruling 38By its question, the referring court is essentially asking whether the EU principles of environmental law, as set out in Article 191(2) TFEU and in Directive 2004/35, in particular the ‘polluter pays’ principle, must be interpreted as precluding national legislation such as that at issue in the main proceedings, which, in cases where it is impossible to identify the polluter of a plot of land or to have that person adopt remedial measures, does not permit the competent authority to require the owner of the land (who is not responsible for the pollution) to adopt preventive and remedial measures, that person being required merely to reimburse the costs relating to the measures undertaken by the competent authority within the limit of the market value of the site, determined after those measures have been carried out. Applicability of Article 191(2) TFEU 39Article 191(2) TFEU provides that EU policy on the environment is to aim at a high level of protection and is to be based, inter alia, on the ‘polluter pays’ principle. That provision thus does no more than define the general environmental objectives of the European Union, since Article 192 TFEU confers on the European Parliament and the Council of the European Union, acting in accordance with the ordinary legislative procedure, responsibility for deciding what action is to be taken in order to attain those objectives (see judgments in ERG and Others, EU:C:2010:126, paragraph 45; ERG and Others, EU:C:2010:127, paragraph 38; and order in Buzzi Unicem and Others, C‑478/08 and C‑479/08, EU:C:2010:129, paragraph 35).40Consequently, since Article 191(2) TFEU, which establishes the ‘polluter pays’ principle, is directed at action at EU level, that provision cannot be relied on as such by individuals in order to exclude the application of national legislation — such as that at issue in the main proceedings — in an area covered by environmental policy for which there is no EU legislation adopted on the basis of Article 192 TFEU that specifically covers the situation in question (see judgments in ERG and Others, EU:C:2010:126, paragraph 46; ERG and Others, EU:C:2010:127, paragraph 39; and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 36).41Similarly, the competent environmental authorities cannot rely on Article 191(2) TFEU, in the absence of any national legal basis, for the purposes of imposing preventive and remedial measures.42It should be noted, however, that the ‘polluter pays’ principle is capable of applying in the main proceedings to the extent that it is implemented by Directive 2004/35. According to the third sentence of recital 1 to that directive, the aim of Directive 2004/35, which was adopted on the basis of Article 175 EC, now Article 192 TFEU, is to ‘[implement] the objectives and principles of the [European Union’s] environment policy as set out in the Treaty’ and, in that context, to further the application of the ‘polluter pays’ principle, in accordance with recital 2 to that directive. Temporal applicability of Directive 2004/35 43Given that, according to the facts described in the documents before the Court, the historic environmental damage at issue in the main proceedings stems from economic activities undertaken by former owners of the land currently held by Fipa Group, Tws Automation and Ivan, respectively, it is unlikely that Directive 2004/35 is applicable ratione temporis in the main proceedings.44It follows from the first and second indents of Article 17 of Directive 2004/35, read in conjunction with recital 30 thereto, that the directive applies only to damage caused by an emission, event or incident which took place on or after 30 April 2007, where the damage derives from activities which took place on or after that date or from activities which took place before that date, but were not brought to completion before that date (see, to that effect, judgments in ERG and Others, EU:C:2010:126, paragraphs 40 and 41; ERG and Others, EU:C:2010:127, paragraph 34; and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 32).45It is important that the referring court ascertain, on the basis of the facts, which it alone is in a position to assess, whether, in the cases before it, the damage in respect of which preventive and remedial measures were imposed by the competent national authorities falls within the scope of Directive 2004/35 as delimited in Article 17 thereof (see, to that effect, judgment in ERG and Others, EU:C:2010:126, paragraph 43).46If that court reaches the conclusion that Directive 2004/35 is not applicable in the cases pending before it, such a situation will be governed by national law, with due observance of the rules of the Treaty and without prejudice to other secondary legislation (see judgments in ERG and Others, EU:C:2010:126, paragraph 44; ERG and Others, EU:C:2010:127, paragraph 37; and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 34).47In case the referring court concludes that Directive 2004/35 is applicable ratione temporis in the cases before the referring court, it is necessary to consider the question referred. The concept of ‘operator ’ 48It follows from Article 3(1) of Directive 2004/35, read together with Article 2(6) and (7) and Articles 5, 6, 8 and 11(2) of that directive and recitals 2 and 18 thereto, that one of the essential conditions for the application of the liability arrangements laid down therein is the identification of an operator who may be deemed responsible.49The second sentence of recital 2 to Directive 2004/35 states that the fundamental principle of that directive should be that an operator whose activity has caused the environmental damage or the imminent threat of such damage is to be held financially liable.50As the Court has held, under the system provided for in Articles 6 and 7 of Directive 2004/35, it is as a rule for the operator who caused the damage to put forward proposals for the remedial measures which it considers appropriate to the situation (see judgment in ERG and Others, EU:C:2010:127, paragraph 46). By the same token, it is that operator on whom the competent authority may impose the adoption of the necessary measures.51Similarly, paragraph 1 of Article 8 of Directive 2004/35, entitled ‘Prevention and remediation costs’, provides that it is that operator who is to bear the costs for the preventive and remedial actions taken pursuant to the directive. Under Article 11(2) of the directive, the competent authorities are required to determine which operator caused the damage.52On the other hand, persons other than those defined in point (6) of Article 2 of Directive 2004/35 — namely, those who do not carry out an occupational activity, within the meaning of point (7) of Article 2 of that directive — fall outside the scope of the directive as defined in Article 3(1)(a) and (b) thereof.53In the present case, it is apparent from the facts as set out by the referring court, and confirmed at the hearing by all the parties to the main proceedings, that none of the respondents in the cases before the referring court currently engages in any of the activities listed in Annex III to Directive 2004/35. In those circumstances, it must be determined to what extent those respondents may be covered by the directive pursuant to Article 3(1)(b) thereof, which concerns damage caused by activities other than those listed in that annex, where the operator has been at fault or negligent. Conditions for incurring environmental liability 54As follows from Articles 4(5) and 11(2) of Directive 2004/35, read in conjunction with recital 13 thereto, in order for the environmental liability mechanism to be effective and for remedial measures to be required of an operator, the competent authority must establish a causal link between the activity of one or more identifiable operators and concrete and quantifiable damage, irrespective of the type of pollution at issue (see, to that effect, judgment in ERG and Others, EU:C:2010:126, paragraphs 52 and 53, and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 39).55In construing Article 3(1)(a) of Directive 2004/35, the Court has held that the competent authority’s obligation to establish a causal link applies in the context of the system of strict environmental liability of operators (see judgment in ERG and Others, EU:C:2010:126, paragraphs 63 to 65, and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 45).56As is clear from Article 4(5) of Directive 2004/35, that obligation also applies in the context of the fault-based liability system — under which liability arises from fault or negligence on the part of the operator — provided for in Article 3(1)(b) of that directive in respect of occupational activities other than those listed in Annex III thereto.57The particular importance for the application of the ‘polluter pays’ principle, hence for the liability mechanism provided for in Directive 2004/35, of the condition relating to a relationship of causality between the operator’s activity and the environmental damage is also apparent from the provisions of that directive which relate to the inferences to be drawn from the fact that the operator did not contribute to the pollution or to the risk of pollution.58In that regard, it should be borne in mind that, under Article 8(3)(a) of Directive 2004/35, read in conjunction with recital 20 thereto, the operator is not required to bear the costs of preventive or remedial action taken pursuant to that directive if he can prove that the environmental damage was caused by a third party, and occurred despite the fact that appropriate safety measures were in place, or resulted from an order or instruction emanating from a public authority (see, to that effect, judgment in ERG and Others, EU:C:2010:126, paragraph 67 and the case-law cited, and order in Buzzi Unicem and Others, EU:C:2010:129, paragraph 46).59Where no causal link can be established between the environmental damage and the activity of the operator, the situation falls to be governed by national law in accordance with the conditions referred to in paragraph 46 above (see, to that effect, judgment in ERG and Others, EU:C:2010:126, paragraph 59, and order in Buzzi Unicem and Others, EU:C:2010:129, paragraphs 43 and 48).60In the present case, it can be seen from the documents before the Court and from the very wording of the question referred that the respondents in the main proceedings did not contribute to the occurrence of the environmental damage at issue, which is a matter for the referring court to confirm.61Admittedly, Article 16 of Directive 2004/35 allows Member States, in accordance with Article 193 TFEU, to maintain and to adopt more stringent measures in relation to the prevention and remedying of environmental damage, including the identification of additional responsible parties, provided that such measures are compatible with the Treaties.62In the present case, however, it is common ground that, according to the referring court, the legislation at issue in the main proceedings does not permit the competent authority to compel owners who are not responsible for pollution to adopt remedial measures, merely providing in that regard that an owner may, in those circumstances, be required to reimburse the costs relating to the actions undertaken by the competent authority, within the limit of the value of the land, determined after those measures have been carried out.63In the light of all the foregoing considerations, the answer to the question referred is that Directive 2004/35 must be interpreted as not precluding national legislation such as that at issue in the main proceedings, which, in cases where it is impossible to identify the polluter of a plot of land or to have that person adopt remedial measures, does not permit the competent authority to require the owner of the land (who is not responsible for the pollution) to adopt preventive and remedial measures, that person being required merely to reimburse the costs relating to the measures undertaken by the competent authority within the limit of the market value of the site, determined after those measures have been carried out. Costs 64Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage must be interpreted as not precluding national legislation such as that at issue in the main proceedings, which, in cases where it is impossible to identify the polluter of a plot of land or to have that person adopt remedial measures, does not permit the competent authority to require the owner of the land (who is not responsible for the pollution) to adopt preventive and remedial measures, that person being required merely to reimburse the costs relating to the measures undertaken by the competent authority within the limit of the market value of the site, determined after those measures have been carried out. [Signatures]( *1 ) Language of the case: Italian. | 31573-8eea58d-4b91 | EN |
EU law precludes a Czech tax on the acquisition free of charge of greenhouse gas emission allowances by electricity producers to the extent that the tax applies to more than 10% of those allowances | 26 February 2015 ( *1 )‛Reference for a preliminary ruling — Protection of the ozone layer — Scheme for greenhouse gas emission allowance trading within the European Union — Method of allocating allowances — Allocation of allowances free of charge — Application of gift tax to such an allocation’In Case C‑43/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Nejvyšší správní soud (Supreme Administrative Court of the Czech Republic), made by decision of 18 December 2013, received at the Court on 27 January 2014, in the proceedings ŠKO-Energo s. r. o. v Odvolací finanční ředitelství, THE COURT (Second Chamber),composed of R. Silva de Lapuerta, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as a Judge of the Second Chamber, J.-C. Bonichot (Rapporteur), A. Arabadjiev and J.L. da Cruz Vilaça, Judges,Advocate General: J. Kokott,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 19 November 2014,after considering the observations submitted on behalf of:—ŠKO-Energo s.r.o., by T. Zatloukal, adviser,Odvolací finanční ředitelství, by D. Jeroušek and E. Nedorostková, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the European Commission, by E. Kružíková, P. Němečková and K. Mifsud-Bonnici, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 11 December 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 10 of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32).2The request has been made in proceedings between ŠKO-Energo s. r. o. (‘ŠKO-Energo’) and Odvolací finanční ředitelství (Tax Appeal Board), concerning the payment of a tax on the allocation of greenhouse gas emission allowances for the years 2011 and 2012. Legal context EU law 3According to recital 5 of Directive 2003/87, the directive aims to contribute to fulfilling the commitments of the European Community and its Member States to reduce anthropogenic greenhouse gas emissions effectively, in accordance with Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder (OJ 2002 L 130, p. 1), through an efficient European market in greenhouse gas emission allowances, with the least possible diminution of economic development and employment.4Recital 7 of Directive 2003/87 states:‘Community provisions relating to allocation of allowances by the Member States are necessary to contribute to preserving the integrity of the internal market and to avoid distortions of competition.’5Article 1 of Directive 2003/87 (‘Subject matter’) provides:‘This Directive establishes a scheme for greenhouse gas emission allowance trading within the Community … in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.’6Article 10 of Directive 2003/87 (‘Method of allocation’) provides:‘For the three-year period beginning 1 January 2005 Member States shall allocate at least 95% of the allowances free of charge. For the five-year period beginning 1 January 2008, Member States shall allocate at least 90% of the allowances free of charge.’ Czech law 7Law No 357/1992 on inheritance tax, gift tax and tax on transfers of immovable property was amended by Law No 402/2010 (‘Law No 357/1992’), which for the first time imposed gift tax upon the acquisition free of charge of emission allowances in 2011 and 2012.8Paragraph 6(8) of Law No 357/1992 provides:‘Gift tax shall be charged on the acquisition free of charge of greenhouse gas emission allowances in 2011 and 2012 for the production of electricity in an installation which on or after 1 January 2005 produced electricity for sale to third parties and in which no activity to which greenhouse gas emission allowance trading relates is carried out other than the combustion of fuels … by an electricity producer.’9Paragraph 7a of that law, entitled ‘Basis of assessment of allowances acquired free of charge’, provides:‘(1) In the case of allowances acquired free of charge, the basis of assessment to gift tax shall be the average market value of the greenhouse gas emission allowance on 28 February of the relevant calendar year multiplied by the number of allowances acquired free of charge for the production of electricity for the relevant calendar year.(2) The average market value of a greenhouse gas emission allowance on 28 February of the relevant calendar year shall be ascertained by the Ministry of the Environment by a method enabling distance access.’10Paragraph 14a of that law, entitled ‘Rate of gift tax in the case of allowances acquired free of charge’, provides:‘The rate of gift tax in the case of allowances acquired free of charge shall be 32%.’11Paragraph 20(1) and (15) of Law No 357/1992 reads as follows:‘(1) The following shall be free from inheritance tax and gift tax: the acquisition of property free of charge(a)by the Czech Republic or another Member State of the European Union, Norway or Iceland (‘another European State’), as well as the transfer of property free of charge by the Czech Republic, with the exception of allowances acquired free of charge, and the acquisition of property from another European State ......(15) The following shall be free from gift tax: the acquisition of a number of allowances acquired free of charge which corresponds to the proportion of the quantity of electricity produced from cogeneration of electricity and heat to the total quantity of electricity produced in 2005 and 2006.’ The dispute in the main proceedings and the question referred for a preliminary ruling 12ŠKO-Energo acquired free of charge, for 2011 and 2012, greenhouse gas emission allowances for the production of electricity for which the Finanční ředitelství (Tax Office) is claiming CZK 20473152 in gift tax.13ŠKO-Energo lodged an objection to the assessment with the Finančního úřad but it was unsuccessful. It then brought the matter before the Krajský soud v Praze (Prague Regional Court) claiming that this tax infringed Article 10 of Directive 2003/87.14The Krajský soud granted its application.15Hearing an appeal, the Nejvyšší správní soud expressed doubts as to whether this tax was compatible with EU law, particularly Article 10 of Directive 2003/87, which provides that at least 90% of emission allowances are to be allocated free of charge during the period 2008-2012.16In those circumstances, the Nejvyšší správní soud decided to stay proceedings and refer the following question to the Court for a preliminary ruling:‘Must Article 10 of [Directive 2003/87] be interpreted as preventing the application of provisions of national law which make the allocation free of charge of emission allowances in the relevant period subject to gift tax?’ The question referred for a preliminary ruling 17By its question, the referring court asks, in essence, whether Article 10 of Directive 2003/87 must be interpreted as precluding the imposition of gift tax such as that at issue in the main proceedings since that article requires Member States to allocate at least 90% of greenhouse gas emission allowances free of charge for the period 2008-2012.18As is apparent from its wording — according to which, during the period at issue, Member States are to allocate at least 90% of the emission allowances free of charge — Article 10 of Directive 2003/87 precludes charges imposed in respect of the allocation of allowances themselves (judgment in Iberdrola and Others, C‑566/11, C‑567/11, C‑580/11, C‑591/11, C‑620/11 and C‑640/11, EU:C:2013:660, paragraph 27).19However, the Court stated that neither Article 10 of Directive 2003/87 nor any other provision of the directive concerns the use of those emission allowances or expressly restricts the right of Member States to adopt measures which may affect the economic implications of using such allowances (judgment in Iberdrola and Others, EU:C:2013:660, paragraph 28).20Consequently, Member States are free, as a rule, to adopt economic policy measures, such as price controls on the markets for certain essential goods or resources, determining the manner in which the value of the emission allowances allocated free of charge to producers is to be passed on to consumers (judgment in Iberdrola and Others, EU:C:2013:660, paragraph 29).21Nevertheless, the adoption of such measures must not neutralise the principle that emission allowances are allocated free of charge; nor may it undermine the objectives pursued by Directive 2003/87 (judgment in Iberdrola and Others, EU:C:2013:660, paragraph 30).22In this regard, the allocation ‘free of charge’ under Article 10 of Directive 2003/87 precludes not only the direct fixing of a price for the allocation of emission allowances but also the subsequent levying of a charge in respect of their allocation (judgment in Iberdrola and Others, EU:C:2013:660, paragraph 31).23In the present case, it is apparent from the documents before the Court that the gift tax at issue in the main proceedings is levied at a rate of 32% on greenhouse gas emission allowances acquired free of charge for electricity production obtained by the combustion of fuels, with the exception of cogeneration.24Thus a measure such as that at issue in the main proceedings, which applies only to the allocation of emission allowances and not to their use, and in a specific sector, and during a limited period corresponding in part to that during which the EU legislature has temporarily established the principle that allowances should be allocated almost entirely free of charge, constitutes a charge in respect of the allocation free of charge of greenhouse gas emission allowances which is incompatible with the requirement laid down by Directive 2003/87 that allowances should be allocated free of charge.25Furthermore, such a measure, which, as indicated in the decision to refer, was intended to obtain additional revenue for operators of photovoltaic power stations, pursues objectives different from those of Directive 2003/87. Consequently, it cannot be regarded as a more stringent protective measure for the purposes of Article 193 TFEU (see, by analogy, the judgments in Deponiezweckverband Eiterköpfe, C‑6/03, EU:C:2005:222, paragraphs 49 and 52, and Azienda Agro-Zootecnica Franchini and Eolica di Altamura, C‑2/10, EU:C:2011:502, paragraph 50).26However, the Czech Government has argued that Article 10 of Directive 2003/87 does not preclude a gift tax such as that at issue in the main proceedings, since this tax, in practice, is levied on less than 10% of the total value of the greenhouse gas emission allowances allocated by that Member State.27In this context, it should, however, be noted that the second sentence of that article lays down, for the period concerned, the principle that at least 90% of the allowances should be allocated free of charge, and does not refer to their value.28It should also be observed that the interpretation advocated by the Czech Government would be contrary to the objective of Article 10 of Directive 2003/87 of temporarily reducing the economic impact of the introduction by the European Union of a greenhouse gas emission allowances market by preventing a loss of competitiveness in certain production sectors covered by that directive (judgment in Iberdrola and Others, EU:C:2013:660, paragraph 39). With a view to compliance with the principle of equality, such an objective implies that the limitation to 10% of the number of allowances which may be allocated for consideration should be assessed from the point of view of operators in each of the sectors concerned and not in relation to all the allowances allocated by the Member State.29It is for the referring court to determine, in the light of those considerations, whether the gift tax at issue in the main proceedings may be regarded as complying with the ceiling of 10% applicable to the allocation of emission allowances for consideration laid down in Article 10 of Directive 2003/87.30Accordingly, the answer to the question referred is that Article 10 of Directive 2003/87 must be interpreted as precluding the imposition of a gift tax such as that at issue in the main proceedings if it does not respect the 10% ceiling on the allocation of emission allowances for consideration laid down in that article, which is a matter for the referring court to determine. Costs 31Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Article 10 of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC must be interpreted as precluding the imposition of a gift tax such as that at issue in the main proceedings if it does not respect the 10% ceiling on the allocation of emission allowances for consideration laid down in that article, which is a matter for the referring court to determine. [Signatures]( *1 ) Language of the case: Czech. | f7931-7bd9e9a-4318 | EN |
The income from assets of French residents who work in another Member State cannot be made subject to French social contributions | 26 February 2015 ( *1 )‛Reference for a preliminary ruling — Social security — Regulation (EEC) No 1408/71 — Article 4 — Substantive scope — Levies on income from assets — General social contribution — Social debt repayment contribution — Social levy — Additional contribution to the social levy — Participation in the financing of compulsory social security schemes — Direct and sufficiently relevant link with some branches of social security’In Case C‑623/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Conseil d’État (France), made by decision of 17 July 2013, received at the Court on 28 November 2013, in the proceedings Ministre de l’Économie et des Finances v Gérard de Ruyter, THE COURT (First Chamber),composed of A. Tizzano, President of the Chamber, S. Rodin, A. Borg Barthet, E. Levits and F. Biltgen (Rapporteur), Judges,Advocate General: E. Sharpston,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Mr de Ruyter, by J. Molinié, avocat,the French Government, by D. Colas and R. Coesme, acting as Agents,the European Commission, by D. Martin and W. Roels, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 21 October 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 4 of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996 (OJ 1997 L 28, p. 1) and as amended by Council Regulation (EC) No 1606/98 of 29 June 1998 (OJ 1998 L 209, p. 1) (‘Regulation No 1408/71’).2The request has been made in proceedings between the ministre de l’Économie et des Finances (Minister for Economic Affairs and Finance) and Mr de Ruyter concerning the payment of several social contributions for the years 1997 to 2004 relating to life annuities purchased in the Netherlands. Legal context EU law 3Article 4 of Regulation No 1408/71, entitled ‘Substantive scope’, is worded as follows:‘1. This Regulation shall apply to all legislation concerning the following branches of social security:(a)sickness and maternity benefits;(b)invalidity benefits, including those intended for the maintenance or improvement of earning capacity;(c)old-age benefits;(d)survivors’ benefits;(e)benefits in respect of accidents at work and occupational diseases;(f)death grants;(g)unemployment benefits;(h)family benefits.2. This Regulation shall apply to all general and special social security schemes, whether contributory or non-contributory, and to schemes concerning the liability of an employer or ship owner in respect of the benefits referred to in paragraph 1.’4Under Article 13 of Regulation No 1408/71:‘1. Subject to Articles 14c and 14f, persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. That legislation shall be determined in accordance with the provisions of this Title.2. Subject to Articles 14 to 17:a person employed in the territory of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State or if the registered office or place of business of the undertaking or individual employing him is situated in the territory of another Member State;a person who is self-employed in the territory of one Member State shall be subjected to the legislation of that State even if he resides in the territory of another Member State;…’ French law 5Pursuant to Article L. 136-6 of the Social Security Code (code de la sécurité sociale), in the version applicable to the facts in the main proceedings, natural persons who are resident for tax purposes in France, within the meaning Article 4 B of the General Tax Code (code général des impôts), are subject to a contribution in respect of income from assets that is based on the net amount adopted for the assessment of income tax on, inter alia, ‘revenus fonciers’ (real estate income), ‘rentes viagères constituées à titre onéreux’ (purchased life annuities) and ‘revenus de capitaux mobiliers’ (investment income).6In accordance with Article 1600-0 C of the General Tax Code, which is one of the provisions of that code relating to the ‘contribution sociale généralisée perçue au profit de la Caisse nationale des allocations familiales, du fonds de solidarité vieillesse et des régimes obligatoires d’assurance maladie’ (General social contribution levied for the benefit of the National Family Allowances Fund, the Old-Age Solidarity Fund and the compulsory sickness insurance schemes; ‘the CSG’), in the version applicable to the facts in the main proceedings, natural persons who are resident for tax purposes in France, within the meaning Article 4 B, are, as stated in Article L. 136-6 of the Social Security Code, subject to a contribution in respect of income from assets that is based on the net amount adopted for the assessment of income tax on, inter alia, real estate income, purchased life annuities and investment income.7Pursuant to Articles 1600-0 G and 1600-0 H of the General Tax Code, in the versions applicable to the facts in the main proceedings, those persons are also subject to a ‘contribution pour le remboursement de la dette sociale’ (social debt repayment contribution; ‘the CRDS’), based on the same income.8In accordance with Article 1600-0 F bis of the General Tax Code, in the version applicable to the facts in the main proceedings, those persons are also subject to a ‘prélèvement social’ (social levy) of 2% on that income and, from 1 July 2004, to an additional contribution of 0.3% pursuant to Article L. 14-10-4 of the Social Assistance and Family Rights Code (code de l’action sociale et des familles). The dispute in the main proceedings and the question referred for a preliminary ruling 9Mr de Ruyter, a Netherlands national resident in France, is employed by Vermeer Verenigde Bedrijven BV, a Netherlands company.10In respect of the years from 1997 to 2004, Mr de Ruyter declared in France his income from Netherlands sources. That income was made up of his salary, income from investment capital, industrial and commercial profits and income from purchased life annuities paid by two Netherlands insurance companies.11The French tax authorities took the view that Mr de Ruyter’s income from purchased life annuities constituted income from assets and declared him subject, in relation to those annuities, to the CSG, the CRDS, the social levy of 2% and the additional contribution of 0.3% to that levy.12Mr de Ruyter lodged complaints with those authorities challenging the merits of those levies, submitting that the obligation imposed on him to contribute, on the basis of the same income, to two separate social security schemes was contrary to the principle, pursuant to Article 13 of Regulation No 1408/71, that the legislation of a single Member State is to apply in matters of social security, since that income had already been subject to similar levies in the Netherlands. Following the dismissal both of those complaints and of the subsequent actions brought before the administrative courts of Marseilles and Nîmes, Mr de Ruyter appealed against the judgments delivered by those courts to the cour administrative d’appel de Marseille (Administrative Court of Appeal of Marseilles).13By judgments of 15 October 2009 and 1 July 2010, the cour administrative d’appel de Marseille released Mr de Ruyter from the contributions in respect of the life annuities which he had received between 1997 and 2000 and between 2001 and 2004 respectively, holding that the levying of the contested taxes on the life annuities disregarded the principle of free movement of workers established by Article 39 EC.14The ministre du Budget, des Comptes publics, de la Fonction publique et de la Réforme de l’État (Minister for the Budget, Public Accounts, the Civil Service and State Reform) appealed against those judgments on a point of law to the Conseil d’État (Council of State).15By judgment of 17 July 2013, the Conseil d’État set aside the judgment of the cour administrative d’appel de Marseille of 15 October 2009 in part and set aside that court’s judgment of 1 July 2010 in its entirety. It held that the mere fact that the life annuities at issue had been subject to the same type of taxation in the Netherlands as they were in France was not enough to find an infringement of the freedom of movement for workers, since the EC Treaty which was then applicable did not lay down any general criteria for the attribution of areas of competence between the Member States in relation to double taxation within the European Union.16Since the Conseil d’État decided to rule on the merits of the two cases before it and Mr de Ruyter claimed that the levies at issue in the main proceedings were contrary to Article 13 of Regulation No 1408/71, it held that — in order to assess the scope of the principle, laid down by that article, that the legislation of a single Member State is to apply — it was necessary to ascertain whether those levies have a direct and relevant link with some of the branches of social security listed in Article 4 of Regulation No 1408/71 and thus fall within the scope of that regulation.17In that regard, the Conseil d’État noted, first, that those levies contribute to the financing of compulsory French social security schemes.18Secondly, and unlike the situations giving rise to the judgments in Commission v France (C‑34/98, EU:C:2000:84) and Commission v France (C‑169/98, EU:C:2000:85), the Conseil d’État observed that the levies at issue in the main proceedings are not imposed on employment income and substitute income, thus operating in part as a substitute for social security contributions, but are imposed only on income from the assets of the taxpayer concerned, irrespective of pursuit of a professional activity by that person.19The Conseil d’État also observed that those levies do not have any link at all with the acquisition of a right to a benefit or an advantage provided by a social security scheme and are, for that reason, regarded as having the nature of taxation and not that of social security contributions, within the meaning of the national constitutional and legislative provisions.20It was on that basis that the Conseil d’État decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Do the tax levies on income from assets, such as the social contribution on income from assets, the social debt repayment contribution based on that same income, the social levy of 2% and the additional contribution to that levy, have, by virtue of the mere fact that they contribute to the financing of compulsory French social security schemes, a direct and relevant link with some of the branches of social security listed in Article 4 of Regulation [No 1408/71], and do they thus fall within the scope of that regulation?’ Consideration of the question referred 21By its question, the referring court asks, in essence, whether levies on income from assets, such as those at issue in the main proceedings, which contribute to the financing of compulsory social security schemes have a direct and relevant link with some of the branches of social security listed in Article 4 of Regulation No 1408/71 and thus fall within the scope of that regulation, even though those levies are imposed on the income from assets of taxable persons, irrespective of the pursuit by them of a professional activity.22In order to answer this question, it must be recalled that Article 4 of Regulation No 1408/71 determines the matters covered by the regulation in terms which make it clear that social security schemes are subject in their entirety to the application of the rules of EU law (judgments in Jansen, 104/76, EU:C:1977:72, paragraph 7, and Rheinhold & Mahla, C‑327/92, EU:C:1995:144, paragraph 15).23The Court has stated that the decisive factor for the purposes of the application of Regulation No 1408/71 is that there must be a direct and sufficiently relevant link between the provision in question and the legislation governing the branches of social security listed in Article 4 of Regulation No 1408/71 (judgments in Rheinhold & Mahla, EU:C:1995:144, paragraph 23; Commission v France, EU:C:2000:84, paragraph 35; and Commission v France, EU:C:2000:85, paragraph 33).24The fact that a levy is categorised as a tax under national legislation does not mean that, in respect of Regulation No 1408/71, that same levy cannot be regarded as falling within the scope of that regulation (judgments in Commission v France, EU:C:2000:84, paragraph 34, and Commission v France, EU:C:2000:85, paragraph 32).25Nor can that conclusion be undermined by the fact that the levy at issue is, in part, designed to discharge a debt of the social security scheme caused by the financing of benefits paid out in the past (judgment in Commission v France, EU:C:2000:84, paragraph 39) or, as also noted by the Advocate General in point 31 of her Opinion, the fact that that levy is not intended to replace previously existing social security contributions.26Similarly, whether benefits are obtained or not in return is irrelevant for the purposes of the application of Regulation No 1408/71 as the decisive criterion is that of the specific allocation of a contribution to the funding of the social security scheme of a Member State (see, to that effect, judgments in Commission v France, EU:C:2000:84, paragraphs 39 and 40, and Commission v France, EU:C:2000:85, paragraphs 37 and 38).27Accordingly, in cases which concerned tax levies imposed by the French tax authorities on employment income and substitute income received by employed and self-employed persons residing in France who were subject to the tax regime of the French Republic, but who worked in another Member State, the Court found that those levies were allocated specifically and directly to financing social security in France and concluded from this that they had a direct and sufficiently relevant link with the legislation governing the branches of social security listed in Article 4 of Regulation No 1408/71 (judgments in Commission v France, EU:C:2000:84, paragraphs 36 and 37, and Commission v France, EU:C:2000:85, paragraphs 34 and 35).28The same conclusion must follow with regard to the levies at issue in the main proceedings, which are not imposed on the employment income and substitute income of workers, but which are imposed on income from assets, since it is not in dispute that the proceeds of those levies are allocated specifically and directly to the financing of certain branches of social security in France or to the discharge of their debts.29Those levies therefore have a direct and sufficiently relevant link with the legislation governing the branches of social security listed in Article 4 of Regulation No 1408/71, irrespective of the absence of a link between the income from assets of taxable persons and the pursuit of a professional activity by them.30In that regard, as the Advocate General observed in point 41 of her Opinion, the application of the provisions of Regulation No 1408/71 is not conditional on the pursuit of a professional activity.31According to settled case-law, the existence of an employment relationship is irrelevant for the purposes of the application of Regulation No 1408/71, as the determining factor in this regard is the fact that a person is insured, compulsorily or on an optional basis, for one or more of the contingencies covered by a general or special social security scheme mentioned in Article 1(a) of that regulation (see, to that effect, judgments in Martínez Sala, C‑85/96, EU:C:1998:217, paragraph 36, and Borger, C‑516/09, EU:C:2011:136, paragraphs 26 and 28).32Furthermore, the concept of ‘legislation’ within the meaning of Article 1(j) of Regulation No 1408/71 is broad, including all the types of legislative, regulatory and administrative measures adopted by the Member States, and must be taken to cover all the national measures applicable in the matter (judgment in Bozzone, 87/76, EU:C:1977:60, paragraph 10).33That interpretation is also borne out by the objective pursued by Regulation No 1408/71 and by the principles on which that regulation is based.34In order to ensure free movement of employed and self-employed persons within the European Union, while upholding the principle of equal treatment of those persons under the various measures of national legislation, Title II of Regulation No 1408/71 has established a system of coordination concerning, inter alia, the determination of the legislation applicable to employed and self-employed persons who make use, under various circumstances, of their right to freedom of movement (see, to that effect, judgments in Derouin, C‑103/06, EU:C:2008:185, paragraph 20, and Tomaszewska, C‑440/09, EU:C:2011:114, paragraphs 25 and 28).35The completeness of that system of conflict rules has the effect of divesting the legislature of each Member State of the power to determine at its discretion the ambit and the conditions for the application of its national legislation so far as the persons who are subject thereto and the territory within which the provisions of national law take effect are concerned (judgments in Luijten, 60/85, EU:C:1986:307, paragraph 14, and Somova, C‑103/13, EU:C:2014:2334, paragraph 54).36In that regard, Article 13(1) of Regulation No 1408/71 provides that the persons to whom that regulation applies are to be subject to the legislation of a single Member State only, which therefore excludes — subject to the cases provided for in Articles 14c and 14f — any possibility of the overlapping of the national legislation of several Member States in respect of one and the same period (see, to that effect, judgment in Perenboom, 102/76, EU:C:1977:71, paragraph 11).37That principle that the legislation of a single Member State applies in matters of social security is aimed at avoiding the complications which may ensue from the simultaneous application of a number of national legislative systems and at eliminating the unequal treatment which, for persons moving within the European Union, would be the consequence of a partial or total overlapping of the applicable legislation (see, to that effect, judgments in Commission v France, EU:C:2000:84, paragraph 46; Commission v France, EU:C:2000:85, paragraph 43; and Allard, C‑249/04, EU:C:2005:329, paragraph 28).38It follows from the foregoing that the application of the provisions of Regulation No 1408/71 cannot be limited to the income that those persons derive from their employment relationships, as otherwise disparities would be created in the application of Article 13 of that regulation depending on the source of their income.39To require those who, among the residents of a Member State, are insured under the social security scheme of another Member State to finance, in addition, even if only partially, the social security scheme of the Member State of residence would give rise to unequal treatment under Article 13 of Regulation No 1408/71, since all other residents of the latter Member State are required to contribute only to its social security scheme (see, to that effect, judgments in Commission v France, EU:C:2000:84, paragraphs 45 to 48, and Commission v France, EU:C:2000:85, paragraphs 42 to 45).40In the present case, given that Mr de Ruyter, as a migrant worker, is subject to the social security scheme of the Member State of employment, namely the Netherlands, and that he falls within neither of the exceptions provided for in Articles 14c and 14f of Regulation No 1408/71 authorising the overlapping of the national legislation of several Member States regarding social security, he cannot be made subject by the Member State of residence, in respect of both income from an employment relationship and that from his assets, to legal provisions imposing levies which have a direct and sufficiently relevant link with the legislation governing the branches of social security listed in Article 4 of Regulation No 1408/71.41Furthermore, as the Advocate General observed in point 57 of her Opinion, due to the principle laid down by Article 13(1) of Regulation No 1408/71 that the legislation of a single Member State applies, those findings cannot be undermined by the fact that Mr de Ruyter’s income from assets may not yet have been subject to a levy in the form of social security contributions in the Member State of employment.42In the light of all the foregoing considerations, the answer to the question referred is that Regulation No 1408/71 must be interpreted as meaning that levies on income from assets, such as those at issue in the main proceedings, have, when they contribute to the financing of compulsory social security schemes, a direct and relevant link with some of the branches of social security listed in Article 4 of that regulation and thus fall within the scope of the regulation, even though those levies are imposed on the income from assets of taxable persons, irrespective of the pursuit by them of any professional activity. Costs 43Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996 and as amended by Council Regulation (EC) No 1606/98 of 29 June 1998, must be interpreted as meaning that levies on income from assets, such as those at issue in the main proceedings, have, when they contribute to the financing of compulsory social security schemes, a direct and relevant link with some of the branches of social security listed in Article 4 of that regulation and thus fall within the scope of the regulation, even though those levies are imposed on the income from assets of taxable persons, irrespective of the pursuit by them of any professional activity. [Signatures]( *1 ) Language of the case: French. | 15679-7ddd851-43d8 | EN |
The Court of Justice clarifies the conditions in which a third-country national who has deserted may be granted asylum in the EU | 26 February 2015 ( *1 )‛Reference for a preliminary ruling — Area of freedom, security and justice — Asylum — Directive 2004/83/EC — Article 9(2)(b), (c), and (e) — Minimum standards for the qualification and status of third-country nationals or stateless persons as refugees — Conditions for obtaining refugee status — Acts of persecution — Criminal penalties for a member of the armed forces of the United States for refusing to serve in Iraq’In Case C‑472/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Bayerisches Verwaltungsgericht München (Germany), made by decision of 20 August 2013, received at the Court on 2 September 2013, in the proceedings Andre Lawrence Shepherd v Bundesrepublik Deutschland, THE COURT (Second Chamber),composed of R. Silva de Lapuerta, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as a Judge of the Second Chamber, J.-C. Bonichot (Rapporteur), A. Arabadjiev and J. L. da Cruz Vilaça, Judges,Advocate General: E. Sharpston,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 25 June 2014,after considering the observations submitted on behalf of:—Mr Shepherd, by R. Marx, Rechtsanwalt,the German Government, by T. Henze, A. Wiedmann and K. Petersen, acting as Agents,the Greek Government, by M. Michelogiannaki, acting as Agent,the Netherlands Government, by M. Bulterman and B. Koopman, acting as Agents,the United Kingdom Government, by M. Holt, acting as Agent, and S. Fatima, Barrister,the European Commission, by M. Condou-Durande and W. Bogensberger, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 11 November 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 9(2)(b), (c) and (e) of Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted (OJ 2004 L 304, p. 12).2The request has been made in proceedings between Mr Shepherd, a national of the United States of America, and the Federal Republic of Germany concerning the latter’s decision refusing to grant him refugee status. Legal context The Geneva Convention relating to the Status of Refugees 3Under the first subparagraph of Article 1(A)(2) of the Convention relating to the Status of Refugees, signed at Geneva on 28 July 1951 (United Nations Treaty Series, Vol. 189, p. 150, No 2545 (1954)), which entered into force on 22 April 1954 (‘the Geneva Convention’), as supplemented by the Protocol relating to the Status of Refugees, concluded in New York on 31 January 1967, which entered into force on 4 October 1967, the term ‘refugee’ is to apply to any person who ‘owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it’. Directive 2004/83 4Directive 2004/83 contains the following recitals:‘(1)A common policy on asylum, including a Common European Asylum System, is a constituent part of the European Union’s objective of progressively establishing an area of freedom, security and justice open to those who, forced by circumstances, legitimately seek protection in the [European Union]....(3)The Geneva Convention … [constitutes] the cornerstone of the international legal regime for the protection of refugees.(6)The main objective of this Directive is, on the one hand, to ensure that Member States apply common criteria for the identification of persons genuinely in need of international protection, and, on the other hand, to ensure that a minimum level of benefits is available for these persons in all Member States.(16)Minimum standards for the definition and content of refugee status should be laid down to guide the competent national bodies of Member States in the application of the Geneva Convention.(17)It is necessary to introduce common criteria for recognising applicants for asylum as refugees within the meaning of Article 1 of the Geneva Convention.’5In accordance with Article 1 of Directive 2004/83, the purpose of that directive is to lay down minimum standards as regards, first, the requirements to be met by third-country nationals or stateless persons in order to receive international protection and, secondly, the content of the protection granted.6According to Article 2(c), for the purposes of that directive, ‘“refugee” means a third country national who, owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, political opinion or membership of a particular social group, is outside the country of nationality and is unable or, owing to such fear, is unwilling to avail himself or herself of the protection of that country ...’.7Article 4 of Directive 2004/83 sets out the conditions for the assessment of the relevant facts and circumstances which the applicant must submit in order to substantiate his application for international protection. Article 4(3) provides:‘The assessment of an application for international protection is to be carried out on an individual basis and includes taking into account:(a)all relevant facts as they relate to the country of origin at the time of taking a decision on the application; including laws and regulations of the country of origin and the manner in which they are applied;(b)the relevant statements and documentation presented by the applicant including information on whether the applicant has been or may be subject to persecution ...;(c)the individual position and personal circumstances of the applicant, including factors such as background, gender and age, so as to assess whether, on the basis of the applicant’s personal circumstances, the acts to which the applicant has been or could be exposed would amount to persecution or serious harm;...’8Article 9 of that directive, entitled ‘Acts of persecution’, defines those acts, in its first and second paragraphs, as follows:‘1. Acts of persecution within the meaning of [Article 1(A)] of the Geneva Convention must:be sufficiently serious by their nature or repetition as to constitute a severe violation of basic human rights, in particular the rights from which derogation cannot be made under Article 15(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms [signed at Rome on 4 November 1950]; orbe an accumulation of various measures, including violations of human rights which is sufficiently severe as to affect an individual in a similar manner as mentioned in (a).2. Acts of persecution as qualified in paragraph 1, can, inter alia, take the form of:legal, administrative, police, and/or judicial measures which are in themselves discriminatory or which are implemented in a discriminatory manner;prosecution or punishment, which is disproportionate or discriminatory;(e)prosecution or punishment for refusal to perform military service in a conflict, where performing military service would include crimes or acts falling under the exclusion clauses as set out in Article 12(2);9In accordance with Article 9(3) of Directive 2004/83, there must be a connection between the reasons for persecution mentioned in Article 10 and the acts of persecution.10Article 12 of that directive, entitled ‘Exclusion’, provides in its second and third paragraphs:‘2. A third country national or a stateless person is excluded from being a refugee where there are serious reasons for considering that:he or she has committed a crime against peace, a war crime, or a crime against humanity, as defined in the international instruments drawn up to make provision in respect of such crimes;he or she has committed a serious non-political crime outside the country of refuge prior to his or her admission as a refugee; which means the time of issuing a residence permit based on the granting of refugee status; particularly cruel actions, even if committed with an allegedly political objective, may be classified as serious non-political crimes;he or she has been guilty of acts contrary to the purposes and principles of the United Nations as set out in the Preamble and Articles 1 and 2 of the Charter of the United Nations.3. Paragraph 2 applies to persons who instigate or otherwise participate in the commission of the crimes or acts mentioned therein.’11Under Article 13 of Directive 2004/83, a Member State is to grant the applicant refugee status if that person meets, inter alia, the requirements laid down in Articles 9 and 10 of the directive. German law 12Under Paragraph 3(1) and (2) of the Law on asylum procedure (Asylverfahrensgesetz) of 27 July 1993 (BGBl 1993 I, p. 1361) as published on 2 September 2008 (BGBl 2008 I, p. 1798; ‘the AsylVfG’), to which the national court refers:‘1. A foreigner is a refugee within the meaning of the [Geneva Convention] if, in the country of his nationality or of his former habitual residence as a stateless person, he is exposed to the threats listed in Paragraph 60(1) of the Law on the residence, employment and integration of foreign nationals in the Federal Territory [Gesetz über den Aufenthalt, die Erwerbstätigkeit und die Integration von Ausländern im Bundesgebiet] of 30 July 2004 (BGBl. 2004 I, p. 1950; ‘the Aufenthaltsgesetz’).2. A foreigner is not a refugee under (1) where there are serious reasons for considering that:(1)he has committed a crime against peace, a war crime, or a crime against humanity, as defined in the international instruments drawn up to make provision in respect of such crimes,(2)he has committed a serious non-political crime outside Federal Territory prior to his admission as a refugee, particularly a cruel action, even if it was committed with an allegedly political objective, orhe has acted contrary to the purposes and principles of the United Nations.The first sentence shall apply also to foreigners who have instigated or otherwise participated in the commission of the crimes or acts mentioned therein.’13Paragraph 60(1) of the Aufenthaltsgesetz, in the version published on 25 February 2008 (BGBl. 2008 I, p. 162):‘1. Pursuant to the [Geneva Convention] ... a foreigner may not be deported to a State in which his life or freedom is threatened on account of his race, religion, nationality, membership of a particular social group or political opinion. … Persecution for the purposes of the first sentence may emanate fromthe State,parties or organisations controlling the State or substantial parts of the territory of the State, ornon-State actors, if it can be demonstrated that the actors mentioned in (a) and (b), including international organisations, are unable or unwilling to provide protection against persecution, irrespective of whether or not a power exercising State rule exists in the country,unless an alternative means of escape is available within the State concerned. Article 4(4) and Articles 7 to 10 of Council Directive 2004/83/EC … shall additionally be applied in determining whether there is persecution for the purposes of the first sentence. Where the foreigner invokes the prohibition of deportation under this subparagraph, the Bundesamt für Migration und Flüchtlinge [Federal Office for Migration and Refugees] shall establish in an asylum procedure whether the conditions set out in the first sentence apply and the foreigner is to be granted refugee status … The decision of the Bundesamt für Migration und Flüchtlinge is subject to appeal only in accordance with the provisions of the AsylVfG.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 14In December 2003 Mr Shepherd, a national of the United States of America, enlisted for service in that country’s army, for a period of active service of 15 months. He was trained as a helicopter maintenance mechanic and, in September 2004, was transferred to an air support battalion in Katterbach (Germany). His unit was at that time deployed in Iraq and he was accordingly sent on to Camp Speicher, near Tikrit (Iraq).15He worked in helicopter maintenance from September 2004 to February 2005 and did not directly participate in either military action or combat operations.16In February 2005 his unit returned to Germany. He extended the term of his contract.17On 1 April 2007, he received a travel order to return to Iraq. Before his planned departure from Germany, he left the army on 11 April 2007, believing that he must no longer play any part in a war in Iraq he considered illegal, and in the war crimes that were, in his view, committed there. He stayed with an acquaintance until applying to the competent German authorities for asylum in August 2008. In support of his application, he submitted, in essence, that because of his refusal to perform military service in Iraq, he was at risk of criminal prosecution and that, desertion being a serious offence in the United States, it affected his life by putting him at risk of social ostracism in his country.18On 31 March 2011, the Bundesamt für Migration und Flüchtlinge rejected the asylum application.19Mr Shepherd asked the referring court to annul that decision and to order that he be granted refugee status. He relied on Article 3(1) and (4) of the AsylVfG in conjunction with Article 60(1) of the Aufenthaltsgesetz.20For the referring court, beyond the issue of whether Mr Shepherd will in future face persecution in his country of origin because of his desertion, it is necessary, in particular, to determine the level of involvement of a member of the armed forces in military operations necessary in order for the penalties which arise from his desertion to constitute ‘acts of persecution’ within the meaning of Article 9(2)(e) of Directive 2004/83, given that the phrase ‘military service which would include crimes or acts falling under the exclusion clauses as set out in Article 12(2)’ used in that provision is not clearly defined.21It was in those circumstances that the Bayerisches Verwaltungsgericht München (Bavarian Administrative Court, Munich) decided to stay the proceedings before it and to refer the following questions to the Court of Justice for a preliminary ruling:Is Article 9(2)(e) of Directive 2004/83/EC to be interpreted as meaning that the protection afforded extends only to those persons whose specific military duties include direct participation in combat, that is armed operations, and/or who have the authority to order such operations (first alternative), or can other members of the armed forces also fall within the scope of the protection afforded by that legislation if their duties are confined to logistical, technical support for the unit outwith actual combat and have only an indirect effect on the actual fighting (second alternative)?If the answer to Question 1 is that the second alternative applies:Is Article 9(2)(e) of Directive 2004/83/EC to be interpreted as meaning that military service in a conflict (international or domestic) must predominantly or systematically call for or require the commission of crimes or acts as defined in Article 12(2) of Directive 2004/83/EC (first alternative), or is it sufficient if the applicant for asylum states that, in individual cases, crimes, as defined in Article 12(2)(a) of Directive 2004/83/EC, were committed by the armed forces to which he belongs in the area of operations in which they were deployed, either because individual operational orders have proved to be criminal in that sense, or as a result of the excesses of individuals (second alternative)?If the answer to Question 2 is that the second alternative applies:Is refugee protection granted only if it is significantly likely, beyond reasonable doubt, that infringements of international humanitarian law can be expected to occur in the future also, or is it sufficient if the applicant for asylum sets out facts which indicate that such crimes are (necessarily or probably) occurring in that particular conflict, and the possibility of his becoming involved in them therefore cannot be ruled out?(4)Does the intolerance of or prosecution by military service courts of infringements of international humanitarian law preclude refugee protection pursuant to Article 9(2)(e) of Directive 2004/83/EC, or is that aspect immaterial?Must there even have been a prosecution before the International Criminal Court?(5)Does the fact that the deployment of troops and/or the occupation is sanctioned by the international community or is based on a mandate from the United Nations Security Council preclude refugee protection?Is it necessary, in order for refugee protection to be granted pursuant to Article 9(2)(e) of Directive 2004/83/EC, that the applicant for asylum could, if he performed his duties, be convicted under the statutes of the International Criminal Court (first alternative), or is refugee protection afforded even before that threshold is reached and the applicant for asylum thus has no criminal prosecution to fear but is nevertheless unable to reconcile the performance of the military service with his conscience (second alternative)?(7)If the answer to Question 6 is that the second alternative applies:Does the fact that the applicant for asylum has not availed himself of the ordinary conscientious objection procedure — even though he would have had the opportunity to do so — preclude refugee protection pursuant to the abovementioned provisions, or is refugee protection also a possibility in the case of a particular decision based on conscience?(8)Does dishonourable discharge from the army, the imposition of a prison sentence and the social ostracism and disadvantages associated therewith constitute an act of persecution within the meaning of Article 9(2)(b) or (c) of Directive 2004/83/EC?’ Consideration of the questions referred Preliminary observations 22It must be noted, first of all, that it is apparent from recitals 3, 16 and 17 in the preamble to Directive 2004/83 that the Geneva Convention constitutes the cornerstone of the international legal regime for the protection of refugees and that the provisions of that directive for determining who qualifies for refugee status and the content thereof were adopted to guide the competent authorities of the Member States in the application of that convention on the basis of common concepts and criteria (judgment in X and Others, C‑199/12 to C‑201/12, EU:C:2013:720, paragraph 39 and the case-law cited).23Directive 2004/83 must, for that reason, be interpreted in the light of its general scheme and purpose, and in a manner consistent with the Geneva Convention and the other relevant treaties referred to in Article 78(1) TFEU. As is apparent from recital 10 in the preamble thereto, the directive must also be interpreted in a manner consistent with the rights recognised by the Charter of Fundamental Rights of the European Union (judgment in X and Others, EU:C:2013:720, paragraph 40).24Secondly, it must be noted that, under Article 2(c) of Directive 2004/83, the term ‘refugee’ refers, in particular, to a third-country national who is outside the country of his nationality ‘owing to a well-founded fear of being persecuted’ for reasons of race, religion, nationality, political opinion or membership of a particular social group and is unable or, ‘owing to such fear’, unwilling to avail himself of the ‘protection’ of that country. The national concerned must therefore, on account of circumstances existing in his country of origin, have a well-founded fear of being personally the subject of persecution for at least one of the five reasons listed in that directive and the Geneva Convention (judgment in Salahadin Abdulla and Others, C‑175/08, C‑176/08, C‑178/08 and C‑179/08, EU:C:2010:105, paragraphs 56 and 57).25Thirdly, it must be emphasised that Article 9 of Directive 2004/83 sets out the factors which support a finding that acts constitute persecution within the meaning of Article 1(A) of the Geneva Convention. In that regard, Article 9(1)(a) of that directive states that the relevant acts must be sufficiently serious by their nature or repetition to constitute a severe violation of basic human rights, in particular the unconditional rights from which there can be no derogation, in accordance with Article 15(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms. Moreover, Article 9(1)(b) of Directive 2004/83 states that an accumulation of various measures, including violations of human rights, which is sufficiently severe to affect an individual in a manner similar to that referred to in Article 9(1)(a) of that directive, must also be regarded as amounting to persecution. It is clear from those provisions that, for an infringement of fundamental rights to constitute persecution within the meaning of Article 1(A) of the Geneva Convention, it must be sufficiently serious (judgment in X and Others, EU:C:2013:720, paragraphs 51 to 53).26Fourthly, it must be pointed out that, under Article 4(3)(a), (b) and (c) of Directive 2004/83, in the individual assessment of an application for international protection, account must be taken of all the relevant facts as they relate to the country of origin at the time of taking a decision on the application, of the relevant statements and documentation presented by the applicant, and of his individual position and his personal circumstances.27It is in the light of those considerations that Article 9(2)(e) of Directive 2004/83, to which the national court refers in its first seven questions, and Article 9(2)(b) and (c), referred to in its eighth question, must be interpreted.28From that point of view, it must also be recalled that, according to Article 9(2) of Directive 2004/83, ‘[a]cts of persecution as qualified in paragraph 1, can, inter alia, take the form of: ... (b) legal, administrative, police, and/or judicial measures which are in themselves discriminatory or which are implemented in a discriminatory manner; (c) prosecution or punishment, which is disproportionate or discriminatory; ... (e) prosecution or punishment for refusal to perform military service in a conflict, where performing military service would include crimes or acts falling under the exclusion clauses as set out in Article 12(2)’.29In addition, with respect to Article 12(2) of Directive 2004/83, as the Advocate General pointed out in points 39 to 43 of her Opinion, only the reference to ‘war crimes’ in Article 12(2)(a) is relevant to the case before the referring court. Questions 1 to 7 30By these questions, which may appropriately be examined together, the referring court asks, in essence, whether Article 9(2)(e) of Directive 2004/83 must be interpreted as meaning that certain circumstances, relating in particular to the nature of the tasks performed by the soldier concerned, the nature of his refusal to perform military service, the nature of the conflict in question and the nature of the crimes which that conflict is alleged to involve, have a decisive influence in the assessment which must be carried out by the national authorities in order to verify whether a situation such as that at issue in the main proceedings falls within the scope of that provision.31Before assessing the significance of those circumstances, it must first be pointed out that it is undisputed that, in the case in the main proceedings, the national seeking refugee status faces prosecution and punishment in his country of origin for refusing to perform military service in a conflict. Consequently, the present questions, as can, moreover, be seen from the order for reference, do not concern the reasons for the persecution, dealt with in Article 10 of Directive 2004/83, but only the circumstances that are necessary in order for that prosecution and punishment to constitute ‘acts of persecution’ as referred to in Article 9(2)(e) of that directive.32Secondly, it must be noted that the objective of Directive 2004/83, as can be seen, inter alia, from recitals 1 to 6 in the preamble thereto, is to identify persons who, forced by circumstances, genuinely and legitimately need international protection in the European Union. The context of that directive is essentially humanitarian (see, to that effect, judgment in B and D, C‑57/09 and C‑101/09, EU:C:2010:661, paragraph 93).33In that context, it must be pointed out that Article 9(2)(e) of Directive 2004/83, in that it refers to the refusal to perform military service in a conflict, where performing military service would include war crimes, is in no way restrictive as regards the persons concerned by such service. It must therefore be acknowledged that the EU legislature, in adopting that provision, did not mean to restrict its scope to certain personnel performing such service on the basis, inter alia, of their rank in the military hierarchy, the circumstances in which they were recruited or even the nature of their tasks. As the Advocate General pointed out in point 32 of her Opinion, that provision covers all military personnel, including, therefore, logistical or support staff.34However, given that the objective of Directive 2004/83, recalled in paragraph 32 of the present judgment, is to identify persons who, forced by circumstances, genuinely and legitimately need international protection in the European Union, being a member of the military is a necessary but not sufficient condition for being eligible for the protection provided for in Article 9(2)(e) of that directive.35As regards, in the first place, the conditions for the application of Article 9(2)(e) of Directive 2004/83, it must be pointed out, first, that that provision refers to a conflict situation. It follows that, outwith such a conflict situation, any refusal to perform military service, irrespective of the motive, could not fall within the ambit of that provision. The circumstances whose significance the Court is asked to assess in order to define that ambit must therefore relate directly to a particular conflict.36Secondly, it can be seen from the very wording of Article 9(2)(e) of Directive 2004/83 that it is the military service itself that would involve war crimes. That provision does not refer solely to the situation in which the applicant would be led to commit such crimes personally.37It follows that the EU legislature intended the general context in which that service is performed to be taken into account objectively. Accordingly, situations in which the applicant would participate only indirectly in the commission of such crimes, because, inter alia, he is not a member of the combat troops but rather, for example, serves in a unit providing logistical or technical support, are not, as a matter of principle, excluded. Consequently, the fact that the person concerned, because of the merely indirect nature of that participation, could not be prosecuted under criminal law, in particular before the International Criminal Court, cannot preclude protection arising from Article 9(2)(e) of Directive 2004/83.38However, although the enjoyment of international protection is not limited to those who could be led to commit acts which constitute war crimes personally, such as combat troops, that protection can be extended only to those other persons whose tasks could, sufficiently directly and reasonably plausibly, lead them to participate in such acts.39Thirdly, Article 9(2)(e) of Directive 2004/83 is intended to protect the applicant who opposes military service because he does not wish to run the risk of committing, in the future, acts of the nature of those referred to in Article 12(2) of that directive. The person concerned can therefore invoke only the likelihood of such acts being committed. It follows that Article 9(2)(e) of that directive cannot be interpreted as covering exclusively situations in which it is established that the applicant’s unit has already committed war crimes. Nor can it be required that the acts of that unit should already have been penalised by the International Criminal Court, even if the latter had jurisdiction do so.40Fourthly and lastly, while in the assessment of the facts which, under Article 4(3) of Directive 2004/83, it is for the national authorities alone to carry out, acting under the supervision of the courts, in order to determine the situation of the military service concerned, certain events such as, inter alia, the past conduct of the applicant’s unit or criminal sentences passed on members of that unit may constitute indicia that it is probable the unit will commit further war crimes, such events cannot by themselves automatically establish, at the time of the applicant for refugee status’s refusal to serve, that it is likely that such crimes will be committed. Against that background, the assessment which the national authorities must carry out can be based only on a body of evidence which alone is capable of establishing, in view of the circumstances in question, that the situation of that military service makes it credible that such acts will be committed.41As regards, in the second place, the importance to be attached to the possibility that the State concerned prosecutes war crimes or that the armed intervention was engaged upon on the basis of a mandate of the United Nations Security Council or yet on the basis of a consensus on the part of the international community, it must be noted, first, that an armed intervention engaged upon on the basis of a resolution adopted by that Security Council offers, in principle, every guarantee that no war crimes will be committed and that the same applies, in principle, to an operation which gives rise to an international consensus. Accordingly, although the possibility can never be excluded that acts contrary to the very principles of the Charter of the United Nations will be committed in war operations, the fact that the armed intervention takes place in such a context must be taken into account.42It must be pointed out, secondly, that, in accordance with Article 4(3)(a) of Directive 2004/83, importance must also be attached to the possibility that the State or States which conduct the operations prosecute war crimes. The existence, in the legal system of those States, of legislation penalising war crimes and of courts which ensure the effective punishment of those who commit such crimes is liable to render implausible the hypothesis that a soldier of one of those States could be led to commit such crimes and, accordingly, may in no case be disregarded.43It follows that, in those circumstances, it is for the person seeking refugee status under Article 9(2)(e) of Directive 2004/83 to establish with sufficient plausibility that his unit carries out operations assigned to it, or has carried them out in the past, in such conditions that it is highly likely that acts such as those referred to in that provision will be committed.44Thirdly, since the acts of persecution invoked by the applicant for refugee status must, in accordance with those provisions of Directive 2004/83, arise from his refusal to perform military service, that refusal must constitute the only means by which that applicant could avoid participating in the alleged war crimes. In that respect, the assessment that has to be carried out by the national authorities must take into account, in accordance with Article 4(3)(c) of Directive 2004/83, the fact, inter alia, that, in the present case, the applicant not only enlisted voluntarily in the armed forces at a time when they were already involved in the conflict in Iraq but also, after carrying out one tour of duty in that country, re-enlisted in those forces.45It follows that the fact, invoked by the referring court in its seventh question, that the applicant for refugee status did not avail himself of a procedure for obtaining conscientious objector status excludes any protection under Article 9(2)(e) of Directive 2004/83, unless that applicant proves that no procedure of that nature would have been available to him in his specific situation.46Having regard to all of the foregoing, the answer to the first to seventh questions is that Article 9(2)(e) of Directive 2004/83 must be interpreted as meaning that:it covers all military personnel, including logistical or support personnel;it concerns the situation in which the military service performed would itself include, in a particular conflict, the commission of war crimes, including situations in which the applicant for refugee status would participate only indirectly in the commission of such crimes if it is reasonably likely that, by the performance of his tasks, he would provide indispensable support to the preparation or execution of those crimes;it does not exclusively concern situations in which it is established that war crimes have already been committed or are such as to fall within the scope of the International Criminal Court’s jurisdiction, but also those in which the applicant for refugee status can establish that it is highly likely that such crimes will be committed;the factual assessment which it is for the national authorities alone to carry out, under the supervision of the courts, in order to determine the situation of the military service concerned, must be based on a body of evidence capable of establishing, in view of all the circumstances of the case, particularly those concerning the relevant facts as they relate to the country of origin at the time of taking a decision on the application and to the individual position and personal circumstances of the applicant, that the situation in question makes it credible that the alleged war crimes would be committed;the possibility that military intervention was engaged upon pursuant to a mandate of the United Nations Security Council or on the basis of a consensus on the part of the international community or that the State or States conducting the operations prosecute war crimes are circumstances which have to be taken into account in the assessment that must be carried out by the national authorities; andthe refusal to perform military service must constitute the only means by which the applicant for refugee status could avoid participating in the alleged war crimes, and, consequently, if he did not avail himself of a procedure for obtaining conscientious objector status, any protection under Article 9(2)(e) of Directive 2004/83 is excluded, unless that applicant proves that no procedure of that nature would have been available to him in his specific situation. Question 8 47By its eighth question, the referring court asks, in essence, whether Article 9(2)(b) and (c) of Directive 2004/83 must be interpreted as meaning that the measures incurred by a solider as a result of his refusal to perform military service, such as the imposition of a prison sentence, dishonourable discharge from the army, and the ostracism and disadvantages associated therewith constitute acts of persecution for the purpose of those provisions.48In the light of the considerations set out in support of its previous questions, the referring court must be regarded as linking the present question only to the hypothesis that the national authorities responsible for examining the application for refugee status of the applicant in the main proceedings consider that it is not established that the military service he refuses to perform would include the commission of war crimes.49It is necessary, in those circumstances, to point out, first of all, that the provisions of Article 9(2)(b) and (c) of Directive 2004/83 refer to measures taken by the public authorities whose discriminatory or disproportionate nature must, according to the first paragraph of that article, be sufficiently serious, as recalled in paragraph 25 of the present judgment, in order to be considered an infringement of fundamental rights constituting persecution within the meaning of Article 1(A) of the Geneva Convention.50As the Advocate General pointed out, in point 80 of her Opinion, in assessing whether the prosecution and penalties that might be incurred by the applicant in the main proceedings in his country of origin, because of his refusal to perform military service, are disproportionate, it is necessary to consider whether such acts go beyond what is necessary for the State concerned in order to exercise its legitimate right to maintain an armed force.51Even though the assessment of what is necessary in that respect entails taking into account various factors, of, in particular, a political and strategic nature, on which the legitimacy of that right and the conditions for its exercise are based, nothing in the file before the Court suggests that such a right should, in the context of the case before the referring court, be called into question, that its exercise does not justify the imposition of criminal penalties on soldiers who intend to evade their service, or that they should not, in that case, be discharged from the army.52Although it can be seen from the information provided by the referring court that the applicant in the main proceedings runs the risk of a custodial sentence for desertion of 100 days to 15 months, or even of five years, nothing in the file submitted to the Court suggests that such measures clearly go beyond which is necessary for the State concerned to exercise its legitimate right to maintain an armed force.53It is, however, for the national authorities to carry out, in that respect, an examination of all the relevant facts concerning the country of origin of the applicant for refugee status, including, as laid down in Article 4(3)(a) of Directive 2004/83, the laws and regulations of that country and the manner in which they are applied.54Next, assessment of the discriminatory nature of the acts in question would entail ascertaining whether, regard being had to the objectives of legislation arising from the legitimate exercise of the right to maintain an armed force, the situation of soldiers refusing to perform military service may be compared to that of other persons, in order to assess whether the penalties imposed on the former are of a clearly discriminatory nature. Nothing in the file before the Court suggests that such a comparable situation exists in the present case. It is in any event for the national authorities to ascertain whether that is indeed the case.55Lastly, ‘the social ostracism and disadvantages associated therewith’ invoked in the referring court’s question seem only to be the consequences of the measures, prosecution or punishment referred to in Article 9(2)(b) and (c) of Directive 2004/83 and cannot, therefore, be regarded as acts of persecution for the purpose of those provisions.56Having regards to the foregoing, the answer to the eighth question is that Article 9(2)(b) and (c) of Directive 2004/83 must be interpreted as meaning that, in circumstances such as those in the main proceedings, it does not appear that the measures incurred by a soldier because of his refusal to perform military service, such as the imposition of a prison sentence or discharge from the army, may be considered, having regard to the legitimate exercise, by that State, of its right to maintain an armed force, so disproportionate or discriminatory as to amount to acts of persecution for the purpose of those provisions. It is, however, for the national authorities to ascertain whether that is indeed the case. Costs 57Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. Article 9(2)(e) of Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted must be interpreted as meaning that: it covers all military personnel, including logistical or support personnel; it concerns the situation in which the military service performed would itself include, in a particular conflict, the commission of war crimes, including situations in which the applicant for refugee status would participate only indirectly in the commission of such crimes if it is reasonably likely that, by the performance of his tasks, he would provide indispensable support to the preparation or execution of those crimes; it does not exclusively concern situations in which it is established that war crimes have already been committed or are such as to fall within the scope of the International Criminal Court’s jurisdiction, but also those in which the applicant for refugee status can establish that it is highly likely that such crimes will be committed; the factual assessment which it is for the national authorities alone to carry out, under the supervision of the courts, in order to determine the situation of the military service concerned, must be based on a body of evidence capable of establishing, in view of all the circumstances of the case, particularly those concerning the relevant facts as they relate to the country of origin at the time of taking a decision on the application and to the individual position and personal circumstances of the applicant, that the situation in question makes it credible that the alleged war crimes would be committed; the possibility that military intervention was engaged upon pursuant to a mandate of the United Nations Security Council or on the basis of a consensus on the part of the international community or that the State or States conducting the operations prosecute war crimes are circumstances which have to be taken into account in the assessment that must be carried out by the national authorities; and the refusal to perform military service must constitute the only means by which the applicant for refugee status could avoid participating in the alleged war crimes, and, consequently, if he did not avail himself of a procedure for obtaining conscientious objector status, any protection under Article 9(2)(e) of Directive 2004/83 is excluded, unless that applicant proves that no procedure of that nature would have been available to him in his specific situation. 2. Article 9(2)(b) and (c) of Directive 2004/83 must be interpreted as meaning that, in circumstances such as those in the main proceedings, it does not appear that the measures incurred by a soldier because of his refusal to perform military service, such as the imposition of a prison sentence or discharge from the army, may be considered, having regard to the legitimate exercise, by that State, of its right to maintain an armed force, so disproportionate or discriminatory as to amount to acts of persecution for the purpose of those provisions. It is, however, for the national authorities to ascertain whether that is indeed the case. [Signatures]( *1 ) Language of the case: German. | 1a57d-d643b09-461c | EN |
The General Court partially annuls the Commission decision ordering Ireland to recover the sum of €8 per passenger from the beneficiary airlines | 5 February 2015 ( *1 )‛State aid — Irish tax on air passengers — Lower rate for destinations no more than 300 km from Dublin — Decision declaring the aid incompatible with the internal market and ordering its recovery — Advantage — Selective nature — Identification of the beneficiaries of the aid — Article 14 of Regulation (EC) No 659/1999 — Obligation to state reasons’In Case T‑473/12, Aer Lingus Ltd, established in Dublin (Ireland), represented by K. Bacon, D. Scannell, D. Bailey, Barristers, and A. Burnside, Solicitor,applicant,v European Commission, represented by L. Flynn, D. Grespan and T. Maxian Rusche, acting as Agents,defendant,supported by Ireland, represented by E. Creedon, A. Joyce and J. Quaney, acting as Agents, assisted by E. Regan SC, and B. Doherty, Barrister,intervener,APPLICATION for annulment of Commission Decision 2013/199/EU of 25 July 2012 on State aid Case SA.29064 (11/C, ex 11/NN) — Differentiated air travel tax rates implemented by Ireland (OJ 2013 L 119, p. 30),THE GENERAL COURT (Ninth Chamber),composed of G. Berardis (Rapporteur), President, O. Czúcz and A. Popescu, Judges,Registrar: J. Plingers, Administrator,having regard to the written procedure and further to the hearing on 4 June 2014,gives the following Judgment ( 1 ) Background to the dispute 1The applicant, Aer Lingus Ltd, is an airline established in Ireland, with bases in Ireland (Dublin, Cork and Shannon airports) and in the United Kingdom (London Gatwick, London Heathrow and Belfast airports). It operates domestic flights within Ireland and international flights from Ireland and the United Kingdom to 70 destinations in Ireland, the United Kingdom, Continental Europe and the United States.2Section 55 of the Finance Act (No 2) 2008 (‘the Finance Act’) introduced an excise duty, known as the air travel tax (‘ATT’), payable as from 30 March 2009, the date on which the Finance Act came into force.3The Finance Act provides that the ATT is to be charged directly to airline operators in respect of every departure of a passenger on an aircraft from an airport situated in Ireland (with the exception of airports carrying fewer than 10000 passengers a year, and subsequently, as from 3 June 2009, 50000 passengers a year) and becomes due when a passenger departs from an airport on an aircraft capable of carrying more than 20 passengers and not used for State or military purposes. While the tax is intended ultimately to be passed on to passengers through the ticket price, it is the airline operators that are accountable for it and liable to pay it.4When it was introduced, the ATT was levied on the basis of the distance between the airport of departure and the airport of arrival, at the rate of EUR 2 in the case of a flight from an airport to a destination no more than 300 km from Dublin airport and EUR 10 in all other cases.5On 21 July 2009, the European Commission registered two separate complaints, lodged by a competitor of the applicant, one pursuant to Article 20(2) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1), the other pursuant to Article 56 TFEU and Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (Recast) (OJ 2008 L 293, p. 3), concerning several aspects of the ATT implemented by Ireland.6In response to the second complaint, the Commission first initiated an investigation regarding possible infringement of Article 56 TFEU on freedom to provide services, and of Regulation No 1008/2008. A letter of formal notice was issued by the Commission to the Irish authorities on that basis on 18 March 2010 (‘the letter of formal notice’). Following that letter of formal notice, the tax rates were changed, so that, from 1 March 2011, a single tax rate of EUR 3 was applied to all departures regardless of the distance travelled. The Commission’s investigation relating to Article 56 TFEU and to Regulation No 1008/2008 was therefore concluded.7The first complaint, concerning the application of the State aid rules, objected to, inter alia, the fact that the lower rate (EUR 2 instead of EUR 10) mainly benefited domestic airlines such as Aer Arann, which operated the majority of their flights to destinations no more than 300 km from Dublin airport. That complaint also stated that the flat-rate amount of the tax was discriminatory since it represented a significantly higher proportion of the ticket price for low-fare airlines than for traditional airlines. Lastly, it was alleged that the non-application of the ATT to transit and transfer passengers constituted unlawful State aid to the advantage of the airlines Aer Lingus and Aer Arann, because those companies had a relatively high proportion of passengers and flights in those categories.8By letter of 13 July 2011, the Commission notified Ireland of its decision to open the formal investigation procedure laid down in Article 108(2) TFEU in respect of the lower national rate of ATT for the period between 30 March 2009 and 1 March 2011. The Commission asked the Irish authorities to forward a copy of the decision to the beneficiaries.9By a decision of 13 July 2011, a summary of which was published in the Official Journal of the European Union (OJ 2011 C 306, p.10), adopted at the end of the preliminary examination, the Commission found, inter alia, that non-application of the ATT to transfer and transit passengers and the use of a flat‑rate tax did not constitute State aid within the meaning of Article 107(1) TFEU. However, it considered that the application of a lower national rate between 30 March 2009 and 1 March 2011 appeared to constitute State aid, raising questions as to compatibility with the internal market, inasmuch as it unlawfully benefited domestic flights as opposed to cross-border flights. It therefore opened the formal investigation procedure in respect of this latter measure, inviting the parties concerned to submit their observations on the measure at issue.10The Irish authorities submitted their observations on 15 September 2011. The applicant did not submit observations at that stage of the procedure.11On 25 July 2012, the Commission adopted Decision 2013/199/EU concerning State aid case SA.29064 (11/C, ex 11/NN) — Differentiated air travel tax rates implemented by Ireland (OJ 2013 L 119, p. 30) (‘the contested decision’). That decision was also notified to the applicant by letter of 23 August 2012 from the Irish Department of Finance, received by the applicant on 6 September 2012.12The Commission concluded, in Article 1 of that decision, that the State aid which, in accordance with the Finance Act, took in the present case the form of a lower air travel tax rate applicable to all flights operated by an aircraft capable of carrying more than 20 passengers and not used for State or military purposes, departing from an airport with more than 10000 passengers per year to a destination no more than 300 km from Dublin airport, unlawfully put into effect by Ireland between 30 March 2009 and 1 March 2011 (‘the period concerned’), in breach of Article 108(3) TFEU, was incompatible with the internal market.13Article 4 of that decision provides that Ireland is to recover the incompatible aid granted under the scheme referred to in Article 1 from the beneficiaries. Those beneficiaries are identified in recital 70 of the contested decision as being Ryanair, the applicant, Aer Arann and other air carriers to be identified by Ireland. Recital 70 also states that the amount of the State aid amounts to the difference between the lower rate of the air travel tax and the standard rate of EUR 10 — that is to say, EUR 8 — levied on each passenger. Procedure and forms of order sought by the parties 14By application lodged at the Court Registry on 1 November 2012, the applicant brought the present action.15By document lodged at the Court Registry on 6 March 2013, Ireland sought leave to intervene in support of the Commission. By order of 17 April 2013, the President of the Sixth Chamber of the General Court granted Ireland leave to intervene.16Ireland submitted its statement in intervention on 4 June 2013. By letter of 17 June 2013, the Commission notified the Registry that it had no observations to make. The applicant filed its observations on that statement on 24 July 2013.17The composition of the chambers of the Court having been altered, the Judge-Rapporteur was assigned to the Ninth Chamber, to which this case was, consequently, assigned.18The applicant claims that the Court should:—annul or, in the alternative, annul in part the contested decision;order the Commission to pay the costs.19The Commission, supported by Ireland, contends that the Court should:dismiss the action;order the applicant to pay the costs. Law [omissis] The third and fourth pleas in law, alleging an error of law and a manifest error of assessment in the classification and quantification of the aid, resulting from the failure to take into account the passing on of the ATT to passengers, and infringement of Article 14 of Regulation No 659/1999 and the principles of proportionality and equal treatment by the order for recovery of the aid 78By its third plea, the applicant claims that the Commission erred in law and committed a manifest error of assessment by identifying the air carriers subject to the lower rate tax as the beneficiaries of the alleged aid in the amount of EUR 8 per passenger, and ordering recovery of the aid on that basis, when the Commission acknowledged that the burden of the tax could have been passed on to the passengers, who were therefore the primary beneficiaries of the lower rate.79According to the applicant, the Commission ought to have taken that point into consideration in defining and quantifying the aid, and have assessed the advantage actually retained by the airlines which paid the ATT at the lower rate of EUR 2 and, to a large extent, passed it on to their passengers. Insofar as any part of the EUR 8 saving represented by the lower tax was passed on to passengers and not retained by the airlines, the Commission’s decision requiring recovery of EUR 8 per passenger has the effect of requiring the airlines subject to the lower rate tax to repay more than they have actually received, and is therefore unlawful.80By its fourth plea, the applicant also maintains that, it being impossible to recoup the EUR 8 per passenger retrospectively from the passengers who benefited from the lower rate tax, the recovery order operates as an additional tax on the relevant airlines, and consequently amounts to unlawfully penalising those airlines rather than restoring the situation as it was before the grant of the alleged aid. That is disproportionate and constitutes infringement of the principle of equal treatment, and therefore an infringement of Article 14 of Regulation No 659/1999.81As regards the third plea in law, the Commission contests the applicant’s arguments. It submits, in the first place, that there was, under the relevant legislation, no obligation to pass the tax on to passengers. On the contrary, it was left open to each airline to decide whether the cost of the tax should be fully or partly passed on to the passengers. In the second place, the Commission maintains that even if the tax savings had been passed on in full, that would also have resulted in an advantage for the airlines concerned, in that they could have offered more attractive prices to their customers than if they had been taxed at the normal rate of EUR 10. It is therefore irrelevant whether the beneficiary has chosen to pass on the advantage to its customers and thus obtain higher sales volumes, or has chosen to absorb the advantage directly by charging a higher price. The logical consequence was therefore to recover the amount of the aid in full, that is to say, EUR 8 per passenger, for the flights subject to the lower rate of EUR 2.82As regards the fourth plea in law, the Commission contends that, because recovery of aid is intended to restore the previous situation, it cannot, in principle, be regarded as a disproportionate measure. Moreover, since repayment of the aid is designed only to restore the previous situation, it cannot in principle be regarded as a penalty. There is, therefore, no breach of the principle of equal treatment, inasmuch as all the beneficiaries of the aid are required to repay the illegal, incompatible aid.83As a preliminary point, it must be recalled that the objective of the obligation on a State to abolish aid found by the Commission to be incompatible with the internal market is to restore the previous situation. That objective is accomplished when the recipients have repaid the sum paid by way of unlawful aid, thereby forfeiting the advantage which they had enjoyed over their competitors on the market, and when the situation prior to payment of the aid is restored (see judgments of 17 June 1999 in Belgium v Commission, C‑75/97, ECR, EU:C:1999:311, paragraphs 64 and 65 and the case-law cited, and 13 February 2012 in Budapesti Erőmű v Commission, T‑80/06 and T‑182/09, EU:T:2012:65, paragraph 107).84It must also be recalled that no provision of EU law requires the Commission, when ordering the recovery of aid declared incompatible with the internal market, to fix the exact amount of the aid to be recovered. It is sufficient for the Commission’s decision to include information enabling the recipient itself to work out that amount without overmuch difficulty (judgments of 12 October 2000 in Spain v Commission, C‑480/98, ECR, EU:C:2000:559, paragraph 25, and 12 May 2005 in Commission v Greece, C‑415/03, ECR, EU:C:2005:287, paragraph 39). Moreover, the operative part of an act is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption (judgments of 15 May 1997 in TWD v Commission, C‑355/95 P, ECR, EU:C:1997:241, paragraph 21, and 29 April 2004 in Italy v Commission, C‑298/00 P, ECR, EU:C:2004:240, paragraph 97).85However, if the Commission decides to order the recovery of a specific amount, it must — pursuant to its obligation to conduct a diligent and impartial examination of the case under Article 108 TFEU — assess, as accurately as the circumstances of the case will allow, the actual value of the benefit received from the aid by the beneficiary (see judgment of 29 March 2007 in Scott v Commission, T‑366/00, ECR, EU:T:2007:99, paragraph 95 and the case-law cited).86In restoring the situation existing prior to the payment of the aid, the Commission is, on the one hand, obliged to ensure that the real advantage resulting from the aid is eliminated and thus to order recovery of the aid in full. The Commission may not, out of sympathy with the beneficiary, order recovery of an amount which is less than the value of the aid received by the latter. On the other hand, the Commission is not entitled to mark its disapproval of the serious character of the illegality by ordering recovery of an amount in excess of the value of the aid received by the beneficiary (judgment in Scott v Commission, paragraph 85 above, EU:T:2007:99, paragraph 95).87The applicant does not dispute that, even had the ATT been entirely passed on to the passengers, the application of a tax at a reduced rate could confer an advantage on the undertaking required to pay that tax. Nevertheless, it contests the extent of that advantage, which was evaluated at EUR 8 per passenger in the contested decision.88In that regard, first of all, it must be noted that Section 55 of the Finance Act refers to the ATT as an excise duty to be charged, levied and paid in respect of every departure of a passenger on an aircraft from an airport located in Ireland, which Ireland also confirmed at the hearing.89An excise duty is, by definition, an indirect tax levied on the consumption of a particular good or service, by contrast with direct taxes such as taxes on income or on profits, which are paid directly by the undertakings.90In the present case, it is undisputed that the airlines were required, under the Finance Act, to apply the ATT at the rate of EUR 2 in respect of all flights subject to that rate. It is also common ground between the parties that pursuant to Article 23 of Regulation No 1008/2008, airlines were required to indicate the amount of ATT separately in the price of each ticket sold to their passengers. Thus, the ATT was formally intended to be passed on through the price of the flight ticket bought by the passenger, as indicated in recital 8 of the contested decision.91As the applicant notes, it is therefore necessary to make a distinction between the formal or legal passing on, concerning the manner in which the tax is lawfully levied and applied, and the economic passing on, which consists in determining to what extent the airline bore the economic cost of the ATT by possibly adjusting the ticket price exclusive of the ATT according to the rate of the ATT actually applicable, or, in the case of application of the ATT at the reduced rate of EUR 2, to what extent they actually retained the economic advantage arising from the application of that lower rate.92The Commission explained, in recital 53 of the contested decision, that the airlines which paid the tax at the reduced rate of EUR 2 had a smaller cost to pass on to their customers or to bear themselves. It then stated that that smaller cost represented financial resources that the airlines were able to economise and therefore improve their financial situation vis-à-vis other airlines.93In recital 57 of the contested decision, the Commission responded to the arguments of the Irish authorities, according to which no advantage existed for the airlines, since the tax was essentially a tax on consumption intended to be passed on to the passengers. The Commission considered, relying on the judgment in Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, paragraph 45 above (EU:C:2001:598), that, even in situations where there is a legal requirement to pass the tax in question on to the customers, a reduction from the normal rate of tax can confer a selective advantage on the airlines which must pay that tax at the reduced rate.94The Commission acknowledged, in the same recital of the contested decision, that, in the present case, the cost of the tax could be passed on to the customers, even though there was no mechanism which ensured that the tax was actually passed on, and that it was a choice left to each airline.95In a similar situation, the Court of Justice has itself held that since airport taxes directly and automatically influence the price of the journey, differences in the taxes to be paid by passengers will automatically be reflected in the transport cost (Stylianakis, paragraph 59 above, EU:C:2003:72, paragraph 28).96The Commission nevertheless submits that, even if the ATT was passed on, the airlines also enjoyed an advantage, since they could offer more attractive prices to their customers, which would have resulted in a higher turnover.97It must therefore be held that, in a situation such as that in the present case, where the ATT was intended to be passed on to the passengers and where the economic advantage arising from the application of the reduced tax could also have been passed on to the passengers, the Commission cannot presume that the advantage actually obtained and retained by the airlines amounted, in all cases, to EUR 8 per passenger.98In such a case, the advantage actually obtained by the airlines does not necessarily consist in the difference between the two rates, but rather in the possibility of offering more attractive prices to their customers and thereby increasing their turnover, as the Commission itself acknowledged in recital 57 of the contested decision.99Accordingly, for airlines such as the applicant which paid the ATT at the lower rate of EUR 2, the Commission should have determined the extent to which they had actually passed on to their passengers the economic benefit resulting from the application of the ATT at the lower rate, in order to be able to quantify precisely the advantage which the airlines actually enjoyed, unless it decided to confer that task to the national authorities and provided the necessary information in that respect.100Thus, it is only if the applicant had systematically increased the price of its tickets excluding tax by EUR 8 per ticket for flights subject to the ATT at the rate of EUR 2 that it would have been possible to consider that the economic advantage resulting from the application of the differentiated rates amounted to EUR 8 per passenger for the applicant, since that advantage could not have been passed on, even partially, to the passengers.101It must be found however that the Commission did not, at any point in the contested decision or in the present proceedings, explain why that situation would be the normal one, rather than a situation in which the airlines passed on the advantage to their passengers in accordance with the stated objective of the ATT, and despite having acknowledged that such passing on of the advantage was possible (see paragraph 94 above).102In addition, the Commission did not take sufficient account of the particular situation of the market in the present case and of its competitive constraints, in so far as all the airlines operating flights of less than 300 km (calculated from Dublin airport) departing from an airport located in Ireland were subject to the ATT at the rate of EUR 2 per passenger. Thus, the Commission has not established how, in those circumstances, the airlines whose flights were subject to the ATT at the reduced rate of EUR 2 per passenger enjoyed an advantage corresponding to the difference between the two rates of ATT, namely EUR 8 per passenger.103In so doing, the Commission committed an error of assessment and an error of law.104As the applicant rightly points out, the recovery of aid must be limited to the financial advantages actually arising from the placing of the aid at the disposal of the beneficiary, and be proportionate to them (see, to that effect, judgment of 22 January 2013 in Salzgitter v Commission, T‑308/00 RENV, ECR, EU:T:2013:30, paragraph 138).105Accordingly, although the advantage resulting from the application of a lower rate could consist in the improvement of the competitive position of airlines, because they could offer more competitive prices, the Commission should have merely ordered the recovery of the amounts actually corresponding to that advantage or, if it proved impossible to determine those amounts accurately in the decision, to confer that task to the national authorities and provide the necessary information in that respect, in accordance with the case-law cited in paragraph 84 above.106According to the Commission, if the applicant’s line of argument were accepted, it would lead to a situation in which the Commission or the national authorities would be required to evaluate, in each individual case, the effects of the aid on the beneficiaries on the basis of their individual choices, which would run counter to the case-law referred to in paragraph 43 above, and the judgment of 15 December 2005 in Unicredito Italiano (C‑148/04, ECR, EU:C:2005:774).107In the case that gave rise to that judgment, the Court of Justice recalled that the withdrawal of unlawful aid through its recovery is the logical consequence of the finding that it is unlawful. That recovery for the purpose of re-establishing the previously existing situation cannot, in principle, be regarded as disproportionate to the objectives of the Treaty provisions on State aid. By repaying the aid, the recipient forfeits the advantage which it had enjoyed over its competitors on the market, and the situation prior to payment of the aid is restored (see the judgment in Unicredito Italiano, paragraph 106 above, EU:C:2005:774, paragraph 113 and the case-law cited).108The Court of Justice held, therefore, that it would not be right to determine the amounts to be repaid in the light of various operations which could have been implemented by the undertakings if they had not opted for the type of operation which was coupled with the aid. That choice was made in the knowledge of the risk of recovery of aid granted contrary to the procedure laid down in Article 108(3) TFEU. Those undertakings could have avoided that risk by opting immediately for operations structured in other ways. In addition, re-establishing the status quo ante means returning, as far as possible, to the situation which would have prevailed if the operations at issue had been carried out without the tax reduction (see, to that effect, judgment in Unicredito Italiano, paragraph 106 above, EU:C:2005:774, paragraphs 114 to 117).109According to the Court of Justice, that does not imply reconstructing past events differently on the basis of hypothetical elements such as the choices, often numerous, which could have been made by the operators concerned, since the choices actually made with the aid might prove to be irreversible. Re-establishing the status quo ante merely enables account to be taken, at the stage of recovery of the aid by the national authorities, of tax treatment which may be more favourable than the ordinary treatment which, in the absence of unlawful aid and in accordance with domestic rules which are compatible with EU law, would have been granted on the basis of the operation actually carried out (judgment in Unicredito Italiano, paragraph 106 above, EU:C:2005:774, paragraphs 118 to 119).110It must be pointed out however, that, in contrast to the case that gave rise to the judgment in Unicredito Italiano, paragraph 106 above (EU:C:2005:774), invoked by the Commission, the beneficiary undertakings in the present case could not have opted for an operation other than that which was coupled with the aid. They were required, under the national legislation applicable during the period concerned, to apply the ATT at the rate of EUR 2 per passenger for all flights of less than 300 km, calculated from Dublin airport, departing from an airport located in Ireland. For the same reasons, it was legally impossible to levy the ATT at the rate of EUR 10 from passengers on those flights.111It was indeed possible for them to increase the ticket price excluding tax in order to absorb the advantage resulting from the application of the ATT at the rate of EUR 2. However, the Commission could not determine the advantage actually obtained by the airlines without taking into account the circumstances of the particular case. Having regard to the operation of the ATT and the competitive constraints faced by airlines as regards the flights to which the ATT at the rate of EUR 2 was applicable (see paragraph 102 above), the Commission could not presume that the economic advantage resulting from the application of the reduced rate of ATT had not been passed on to the passengers at all.112Accordingly, the requirement — arising from the case-law referred to in paragraph 85 above — to assess, as accurately as the circumstances of the case will allow, the advantage actually enjoyed by the airlines in the present case because of the application of the reduced rate of ATT is not the same as reconstructing past events on the basis of hypothetical elements such as the choices, often numerous, which could have been made by the operators concerned, as the Commission maintains; on the contrary, that requirement is intended to ensure that the beneficiary forfeits the advantage which it had over its competitors in the market, nothing more and nothing less, and to restore the situation prior to payment of the aid.113In addition, the aid in the case that gave rise to the judgment in Unicredito Italiano, paragraph 106 above (EU:C:2005:774), consisted in a tax advantage in the form of a reduction to 12.5% of the rate of income tax for banks which merged or engaged in similar restructuring, for five consecutive tax years, subject to certain conditions. It is not disputed that income tax constitutes a charge which is actually and exclusively borne by the undertakings subject to it, unlike the ATT in the present case which, as an excise duty, was levied and collected by the airlines alone but which, ultimately, was actually paid and — at least partially if not totally — borne by the passengers.114Lastly, the Commission has not established to the requisite legal standard, in its decision, that the recovery of EUR 8 per passenger was necessary in order to ensure the re-establishment of the status quo ante, that is to say the restoration, as far as possible, of the situation which would have prevailed if the operations in question had been carried out without the tax reduction or, in other words, if the flights subject to the rate of EUR 2 per passenger had been subject to the rate of EUR 10 per passenger.115The recovery of an amount of EUR 8 per passenger from the airlines could not ensure the re-establishment of the situation which would have prevailed if the operations in question had been carried out without the grant of the aid concerned, since it is not possible, for the airlines, to recover retroactively from their customers the EUR 8 per passenger which should have been collected. The recovery of an amount of EUR 8 per passenger from the airlines is therefore not necessary in order to eliminate the distortion of competition caused by the competitive advantage which such aid affords (see, to that effect, judgment of 8 December 2011 in Residex Capital IV, C‑275/10, ECR, EU:C:2011:814, paragraph 34 and the case-law cited). On the contrary, the recovery of such an amount would be liable to create additional distortions of competition, as the applicant rightly notes, since it could lead to the recovery of more from the airlines than the advantage they actually enjoyed.116The Commission should, therefore, have taken into account the particular features of the ATT as an excise duty intended to be passed on to passengers by the airlines as regards all flights subject to the rate of EUR 2 during the period concerned. Inasmuch as the economic advantage resulting from the application of that reduced rate could have been, even only partially, passed on to the passengers, the Commission was not entitled to consider that the advantage enjoyed by the airlines amounted automatically, in all cases, to EUR 8 per passenger.117In that regard, the Commission invokes its established practice in its decision in relation to tax aids involving excise duties, according to which exemptions from such charges grant an advantage to undertakings required to pay the tax, even if that advantage could have been passed on to consumers.118It must be recalled, however, that the question whether a measure constitutes State aid must be assessed solely in the context of the relevant provisions of the Treaty and the measures taken to implement it, and not in the light of any earlier practice of the Commission in its decisions (judgments of 30 September 2003 in Freistaat Sachsen and Others v Commission, C‑57/00 P and C‑61/00 P, ECR, EU:C:2003:510, paragraphs 52 and 53, and 15 June 2005 in Regione autonoma della Sardegna v Commission, T‑171/02, ECR, EU:T:2005:219, paragraph 177).119In any event, the decisions invoked by the Commission, which are also referred to in a footnote to recital 57 of the contested decision, do not concern taxes borne by airlines, as indicated by the Commission, but rather energy taxes, providing for a reduced tax or exemptions for certain categories of undertakings. In all those cases, the taxes were not intended to be passed on by the beneficiary undertakings to their customers. The excise duties were imposed on inputs (energy) that they consumed themselves, and not on products or services intended to be sold to their customers, as in the present case. Lastly, it must be noted that the Commission did not order the recovery of the aid from the beneficiaries in any of those cases, but rather, on the contrary, it declared the aid in question compatible with the internal market on the basis of Article 107(3)(c) TFEU.120It must be noted, furthermore, that although the judgment in Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, paragraph 45 above (EU:C:2001:598), mentioned by the Commission in recital 57 of the contested decision, indeed supports the argument that the application of a reduced tax may grant a selective advantage to the undertakings subject to that tax, even if they are legally obliged to pass that tax on to their customers, it does not establish that, where there are multiple beneficiaries, all of the aid must be imputed to the undertakings which pass that tax on to their customers.121Moreover, in the case that gave rise to that judgment, the Court of Justice did not find that the aid should be recovered from the energy providers, which were directly responsible for paying the tax and passing it on to their customers, like the airlines in the present case, but rather from the undertakings which were the customers of those providers, whose principal activity was the manufacture of goods and which were entitled to the rebate of energy taxes.122The fact that in the present case the customers of the airlines subject to the ATT are not undertakings, within the meaning of EU law, with the result that no aid can be recovered from them, cannot call into question the Commission’s obligation to identify precisely who were the beneficiaries of an aid, that is to say the undertakings which actually benefited from it (judgment of 3 July 2003 in Belgium v Commission, C‑457/00, ECR, EU:C:2003:387, paragraph 55) and to limit the recovery of the aid to the financial advantages actually arising from the placing of the aid at the disposal of those undertakings (see, to that effect, Salzgitter v Commission, paragraph 104 above, EU:T:2013:30, paragraph 138).123It must be held, therefore, that the Commission committed an error of assessment and an error of law by setting the amount of the aid to be recovered from the airlines at EUR 8 per passenger, and infringed Article 14 of Regulation No 659/1999 by ordering the recovery of that amount from those airlines.124Accordingly, without it being necessary to rule on any infringement of the principles of proportionality and of equal treatment invoked by the applicant, the applicant’s third and fourth pleas in law must be upheld and the contested decision must be annulled inasmuch as the aid to be recovered from the airlines is evaluated at EUR 8 per passenger, and the order for recovery of the aid is therefore also vitiated by illegality.125In that respect, it must be noted that Article 4 of the contested decision provides for the recovery of the aid from the beneficiaries, which are identified in recital 70 of that decision, for an amount of EUR 8 per passenger, an amount which is also fixed in that recital.126According to settled case-law, the statement of reasons for a decision on State aid must be taken into account when interpreting the operative part of that decision (see judgment of 20 March 2014 in Rousse Industry v Commission, C‑271/13 P, EU:C:2014:175, paragraph 69 and the case-law cited).127It is therefore necessary to annul Article 4 of the contested decision, read in the light of recital 70 of that decision, in so far as it orders the recovery of the aid, evaluated at EUR 8 per passenger, from the airlines which operated flights subject to the ATT at the lower rate of EUR 2 during the period concerned, and the action must be dismissed as to the remainder.On those grounds,THE GENERAL COURT (Ninth Chamber)hereby: 1. Annuls Article 4 of Commission Decision 2013/199/EU of 25 July 2012 on State aid Case SA.29064 (11/C, ex 11/NN) — Differentiated air travel tax rates implemented by Ireland, in so far as it orders the recovery of the aid from the beneficiaries for an amount which is set at EUR 8 per passenger in recital 70 of that decision; 2. Dismisses the action as to the remainder; 3. Orders the European Commission to pay its own costs, as well as half of the costs incurred by Aer Lingus Ltd; 4. Orders Aer Lingus to pay half of its own costs; 5. Orders Ireland to pay its own costs. BerardisCzúczPopescuDelivered in open court in Luxembourg on 5 February 2015.[Signatures]( *1 ) Language of the case: English.( 1 ) Only the paragraphs of the present judgment which the Court considers it appropriate to publish are reproduced here. | 56504-99ebec3-405c | EN |
In the view of Advocate General Maciej Szpunar, an integration obligation imposed on long-term residents is not contrary to EU law, provided that it does not constitute a condition for the maintenance of that status | 4 June 2015 ( *1 )‛Reference for a preliminary ruling — Status of third-country nationals who are long-term residents — Directive 2003/109/EC — Article 5(2) and Article 11(1) — National legislation imposing on third-country nationals with long-term resident status a civic integration obligation, attested by an examination, under pain of a fine’In Case C‑579/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Centrale Raad van Beroep (Netherlands), made by decision of 13 November 2013, received at the Court on 15 November 2013, in the proceedings P, S v Commissie Sociale Zekerheid Breda, College van Burgemeester en Wethouders van de gemeente Amstelveen, THE COURT (Second Chamber),composed of R. Silva de Lapuerta (Rapporteur), President of the Chamber, J.C. Bonichot, A. Arabadjiev, J.L. da Cruz Vilaça and C. Lycourgos, Judges,Advocate General: M. Szpunar,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 5 November 2014,after considering the observations submitted on behalf of:—P and S, by J.B. Bierbach, advocaat,the Netherlands Government, by M. Bulterman, M. de Ree and B. Koopman, and by J. Langer, acting as Agents,the Portuguese Government, by L. Inez Fernandes and N. Piçarra, acting as Agents,the European Commission, by M. Condou-Durande and G. Wils, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 28 January 2015,gives the following, Judgment 1This request for a preliminary ruling concerns the interpretation of Article 5(2) and Article 11(1) of Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who are long-term residents (OJ 2004 L 16, p. 44).2The request has been made in proceedings between P and S, on the one hand, and the Commissie Sociale Zekerheid Breda (Social Security Commission, Breda; ‘Commissie Sociale Zekerheid’) and the College van Burgemeester en Wethouders van de gemeente Amstelveen (Municipal executive of Amstelveen), on the other, concerning the imposition of a civic integration obligation. Legal context EU law 3Recitals 2, 4, 6 and 12 in the preamble to Directive 2003/109 state:‘(2)The European Council, at its special meeting in Tampere on 15 and 16 October 1999, stated that the legal status of third-country nationals should be approximated to that of Member States’ nationals and that a person who has resided legally in a Member State for a period of time to be determined and who holds a long-term residence permit should be granted in that Member State a set of uniform rights which are as near as possible to those enjoyed by citizens of the European Union....(4)The integration of third-country nationals who are long-term residents in the Member States is a key element in promoting economic and social cohesion, a fundamental objective of the Community stated in the Treaty.(6)The main criterion for acquiring the status of long-term resident should be the duration of residence in the territory of a Member State. Residence should be both legal and continuous in order to show that the person has put down roots in the country. Provision should be made for a degree of flexibility so that account can be taken of circumstances in which a person might have to leave the territory on a temporary basis.(12)In order to constitute a genuine instrument for the integration of long-term residents into society in which they live, long-term residents should enjoy equality of treatment with citizens of the Member State in a wide range of economic and social matters, under the relevant conditions defined by this Directive.’4Article 1 of Directive 2003/109, entitled ‘Subject matter’, provides:‘This Directive determines:(a)the terms for conferring and withdrawing long-term resident status granted by a Member State in relation to third-country nationals legally residing in its territory, and the rights pertaining thereto; …’5Article 4(1) of Directive 2003/109 provides:‘Member States shall grant long-term resident status to third-country nationals who have resided legally and continuously within its territory for five years immediately prior to the submission of the relevant application.’6Article 5 of Directive 2003/109, entitled ‘Conditions for acquiring long-term resident status’, provides:‘1. Member States shall require third-country nationals to provide evidence that they have, for themselves and for dependent family members:stable and regular resources which are sufficient to maintain himself/herself and the members of his/her family, without recourse to the social assistance system of the Member State concerned. Member States shall evaluate these resources by reference to their nature and regularity and may take into account the level of minimum wages and pensions prior to the application for long-term resident status;(b)sickness insurance in respect of all risks normally covered for his/her own nationals in the Member State concerned.2. Member States may require third-country nationals to comply with integration conditions, in accordance with national law.’7Article 11 of Directive 2003/109, entitled ‘Equal treatment’, provides, in paragraph 1:‘Long-term residents shall enjoy equal treatment with nationals as regards:access to employment and self-employed activity, provided such activities do not entail even occasional involvement in the exercise of public authority, and conditions of employment and working conditions, including conditions regarding dismissal and remuneration;education and vocational training, including study grants in accordance with national law;(c)recognition of professional diplomas, certificates and other qualifications, in accordance with the relevant national procedures;(d)social security, social assistance and social protection as defined by national law;(e)tax benefits;(f)access to goods and services and the supply of goods and services made available to the public and to procedures for obtaining housing;(g)freedom of association and affiliation and membership of an organisation representing workers or employers or of any organisation whose members are engaged in a specific occupation, including the benefits conferred by such organisations, without prejudice to the national provisions on public policy and public security;(h)free access to the entire territory of the Member State concerned, within the limits provided for by the national legislation for reasons of security....’ Netherlands law 8Article 1(p) of the Law on Foreign Nationals 2000 (Vreemdelingenwet 2000), in the version applicable to the case in the main proceedings (‘the Vw 2000’), provides:‘In this law and the provisions based on it:(p)long-term resident shall mean: the holder of a residence permit of indefinite duration as referred to in Article 20, implementing Article 8(2) of Directive 2003/109, or of a long-term resident’s EC residence permit issued by another State which is party to the Treaty ...’9Article 20(1) of the Vw 2000 provides:‘The Minister shall be authorised:a.to approve, to reject or not to consider applications for the granting or the amendment of residence permits of indefinite duration;b.to withdraw or to amend a residence permit of indefinite duration.’10Under Article 21(1) of the Vw 2000:‘Pursuant to Article 8(2) of Council Directive 2003/109, an application for the granting or amendment of a residence permit of indefinite duration within the meaning of Article 20 can be refused only where the foreign national:has not been legally resident, within the meaning of Article 8, for a continuous period of five years immediately prior to that application;k.has not passed the integration examination provided for in Article 7(2)(a) of the Law on civic integration [(Wet inburgering), in the version applicable to the main proceedings (‘the Wi’)], or obtained a diploma, certificate or other document referred to in Article 5(1)(c), of that law.’11It can be seen from the order for reference that the Wi regulates the civic integration in Netherlands society of all migrants residing in the Netherlands. Civic integration involves the acquisition of oral and written proficiency in the Dutch language and knowledge of Netherlands society. Language proficiency and knowledge of Netherlands society are tested in an examination. Both migrants who, at the date of entry into force of the Wi, namely 1 January 2007, had already resided legally in the Netherlands for a long time, and migrants who arrived in the Netherlands after that date are, in principle, required to comply with the civic integration obligation as of 1 January 2007 or the date from which they resided legally in the Netherlands after 1 January 2007.12Article 3 of the Wi provides:‘1. A foreign national who is legally resident within the meaning of Article 8(a) to (e) or (l) of the Vreemdelingenwet 2000 is required to fulfil the civic integration obligation if he:resides in the Netherlands other than for a temporary purpose,4. The civic integration obligation referred to in paragraph 1 shall not be established retroactively.’13Article 5 of the Wi provides:‘1. Notwithstanding Article 3, the following persons shall not be required to fulfil the civic integration obligation:persons under the age of 16 or aged 65 and over;persons who resided in the Netherlands for at least eight years during the school-age period;c.persons who have acquired a diploma, certificate or other document laid down by or in accordance with a general administrative order;d.persons who are under an obligation to study or to obtain a qualification;e.persons who, after the obligation to study or to obtain a qualification, are following an educational course the completion of which will result in the award of a diploma, certificate or other document pursuant to subparagraph c;f.persons who have demonstrated that they have adequate oral and written skills in the Netherlands language and obvious knowledge of Netherlands society.2. The following persons are also not required to fulfil the civic integration obligation:foreign nationals who, under the legislation of a Member State of the European Union or another State party to the Agreement on the European Economic Area, have fulfilled a civic integration obligation in order to be granted long-term resident status within the meaning of Directive 2003/109;3. Persons required to fulfil the civic integration obligation who have acquired a diploma, certificate or other document laid down by or in accordance with a general administrative order, showing that they have already acquired some of the knowledge and skills referred to in Article 7, are exempt from the obligation to acquire that part of the knowledge or skills and to pass the relevant part of the civic integration examination.4. By or in accordance with a general administrative order, rules may be laid down in respect of:further total or partial exemption from the civic integration obligation;the residence referred to in paragraph 1, subparagraph b, andthe application of paragraph 1, subparagraph f.5. The Minister can lay down policy rules regarding the application of paragraph 2, subparagraph d.’14Article 31 of the Wi provides:‘1. The College van Burgemeester en Wethouders shall impose an administrative fine on persons required to fulfil the civic integration obligation who do not pass the civic integration examination within the period referred to in Article 7(1) or the extended period under Article 7(2)(a).2. Notwithstanding paragraph 1:the College van Burgemeester en Wethouders shall extend the period referred to in Article 7(1) if the person required to fulfil the civic integration obligation makes a reasonable case that he is in no way to blame for not passing the civic integration examination, orthe College van Burgemeester en Wethouders shall grant exemption from the civic integration obligation if, on the basis of the demonstrable efforts of the person under the civic integration obligation, the College comes to the view that it is not reasonably possible for that person to pass the civic integration examination.3. By or in accordance with a general administrative order, rules may be laid down in respect of paragraph 2.’15It can be seen from the order for reference that the Wi entered into force on 1 January 2007. With the entry into force of the Wi, Article 21(1)(k) was added to the Vw 2000. However that provision was not actually applied until 1 January 2010.16The Netherlands government states, in that respect, that the obligation to pass the civic integration examination is a condition for the acquisition of long-term resident status both for third-country nationals who became legally resident in the Netherlands after the entry into force of the Wi and for third-country nationals who, although they were already legally resident in the Netherlands at the date of entry into force of the Wi, applied for long-term resident status after 1 January 2010. Article 21(1)(k) of the Vw 2000 therefore applies to those two categories of third-country nationals.17By contrast, third-country nationals who, at the date of entry into force of the Wi, were already legally resident in the Netherlands and who applied for long-term resident status during the period between 1 January 2007 and 1 January 2010, such as the applicants in the main proceedings, are not required to pass the civic integration examination in order to acquire that status. Article 21(1)(k) of the Vw 2000 therefore does not apply to that category of third-country nationals.18However, third-country nationals in that category are required to pass the civic integration examination by a date set by a decision of the College van Burgemeester en Wethouders of the municipality in which those persons are resident, on pain of a fine. If the examination is not passed by that date, a new date is set, the amount of the fine being increased each time.19Thus, the civic integration obligation to which that category of third-country nationals is subject does not affect either the acquisition or maintenance of long-term resident status. The dispute in the main proceedings and the questions referred for a preliminary ruling 20P and S are third-country nationals who possess since, respectively, 14 November 2008 and 8 June 2007, long-term resident’s residence permits of indefinite duration, on the basis of Directive 2003/109.21By a decision of 1 August 2008, the Commissie Sociale Zekerheid informed P that she was required to fulfil a civic integration obligation, as referred to in the Wi, and that she should pass the civic integration examination by 30 June 2013. Following that decision, P started a civic integration programme offered by the Commissie Sociale Zekerheid. As of 25 August 2008, P temporarily interrupted that programme on medical grounds. She did not subsequently continue with that programme. By a decision of 4 August 2009, the Commissie Sociale Zekerheid again stated that P was required to fulfil that obligation and that she should pass that examination by 30 June 2013. On 25 February 2010, the Commissie Sociale Zekerheid upheld its decision of 4 August 2009.22By a decision of 24 February 2010, the College van Burgemeester en Wethouders van de gemeente Amstelveen informed S that she was required to comply with the civic integration obligation referred to in the Wi, and that she should pass the civic integration examination by 24 August 2013.23In the context of the appeals lodged by P and S against the dismissal of their actions brought against the decisions obliging them to pass the civic integration examination, the Centrale Raad van Beroep (Higher Social Security Court) expresses doubts as to whether the civic integration obligation complies with Directive 2003/109.24In particular, while the referring court considers that the imposition of such an obligation is based on Article 5(2) of Directive 2003/109, it questions whether, after the grant of long-term resident status, Member States may subsequently impose integration conditions in the form of a civic integration examination, with penalties in the form of a system of fines.25In addition, the referring court considers that the civic integration obligation may in fact be covered by Article 11(1)(a) and (b) of Directive 2003/109. If that is the case, since that obligation is not imposed on nationals, it should not be imposed on third-country nationals who are long-term residents either, if the principle of equal treatment referred to in that provision is not to be infringed.26Furthermore, according to the referring court, although integration conditions may indeed be laid down in national law, they cannot however be such that they render impossible or excessively difficult the acquisition or maintenance of long-term resident status. The referring court does not exclude that the civic integration obligation does not comply with that criterion.27Lastly, the referring court questions whether the fact that a third-country national is informed, after obtaining long-term resident status, that a civic integration obligation must be fulfilled subsequently, as in S’s case, is relevant to the assessment of whether that obligation complies with Directive 2003/109.28In those circumstances, the Centrale Raad van Beroep decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Must the aim and scope of Directive 2003/109/EC, or of Article 5(2) and/or of Article 11(1) thereof, be interpreted as meaning that the imposition of the civic integration obligation, under national law, on third-country nationals who have acquired long-term resident status, with penalties in the form of a system of fines, cannot be reconciled therewith?(2)In answering the first question, is it relevant whether the civic integration obligation was imposed before long-term resident status was granted?’ Consideration of the questions referred 29By those questions, which it is appropriate to examine together, the referring court asks, in essence, whether Directive 2003/109 and, in particular, Article 5(2) and Article 11(1) thereof, preclude national legislation, such as that at issue in the main proceedings, which imposes on third-country nationals who already possess long-term resident status the obligation to pass a civic integration examination, under pain of a fine, and whether the fact that that status was acquired before or after that obligation was imposed is relevant in that respect.30As a preliminary, it must be noted that the questions referred concern only third-country nationals who were residing legally in the Netherlands at the date of entry into force of the Wi, namely 1 January 2007, and who applied for long-term resident status between 1 January 2007 and 1 January 2010, such as P and S.31For that category of third-country nationals, the civic integration obligation at issue in the main proceedings, which consists in passing an examination in order to demonstrate the acquisition of oral and written proficiency in the Dutch language and sufficient knowledge of Netherlands society, is not a condition for acquiring or conserving long-term resident status, but gives rise only to the imposition of a fine on those who have not passed that examination within the prescribed period.32In addition, it is necessary to point out the importance which the EU legislature attaches to integration measures, as can be seen inter alia from recital 4 in the preamble to Directive 2003/109, which states that the integration of third-country nationals who are long-term residents in the Member States is a key element in promoting economic and social cohesion, a fundamental objective of the European Union stated in the Treaty.33The questions referred must be examined in the light of those considerations.34As regards, in the first place, Article 5(2) of Directive 2003/109, entitled ‘Conditions for acquiring long-term resident status’, that provision provides that the Member States may require that third-country nationals comply with integration conditions, in accordance with national law.35Accordingly, it is clear from both the wording of that provision and its context that it allows Member States to make the acquisition of long-term resident status subject to prior fulfilment of certain integration conditions.36Article 5(2) of Directive 2003/109 therefore concerns integration conditions the fulfilment of which may be required before long-term resident status is granted.37As noted in paragraph 31 above, the civic integration obligation at issue in the main proceedings is not a condition for either acquiring or maintaining long-term resident status for third-country nationals who applied for that status between 1 January 2007 and 1 January 2010. It follows that, as regards that category of third-country nationals, such an obligation cannot be regarded as an integration condition within the meaning of Article 5(2) of Directive 2003/109.38Accordingly, since Article 5(2) of Directive 2003/109 neither requires that Member States impose integration obligations on third-country nationals after they have obtained long-term resident status nor precludes them from doing so, that provision does not preclude an integration measure such as that at issue in the main proceedings.39As regards Article 11(1) of Directive 2003/109, it must be pointed out that, as stated in recital 12 in the preamble to that directive, that provision guarantees third-country nationals who have acquired long-term resident status equal treatment with nationals of the Member State concerned, in the areas listed in paragraphs (a) to (h) of that provision.40Given the fact that the civic integration obligation at issue in the main proceedings is not imposed on nationals, it must be examined whether such an obligation could be contrary to the principle of equal treatment laid down in Article 11(1) of Directive 2003/109, in the various fields to which that provision relates.41It must be noted, in that regard, that according to settled case-law, the principle of equal treatment requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgment in S.P.C.M. and Others, C‑558/07, EU:C:2009:430, paragraph 74 and the case-law cited).42In that context, it must be noted that the integration measures at issue consist, in essence, in the obligation to acquire and/or demonstrate oral and written proficiency in the Dutch language and knowledge of Netherlands society. Whereas it may be presumed that nationals have such proficiency and knowledge, that is not the case as regards third-country nationals. Accordingly, as the Advocate General noted in point 52 of his opinion, the situation of third-country nationals is not comparable to that of nationals as regards the usefulness of integration measures such as the acquisition of knowledge of the language and society of the country.43Therefore, since those situations are not comparable, the fact that the civic integration obligation at issue in the main proceedings is not imposed on nationals does not infringe the right of third-country nationals who are long-term residents to equal treatment with nationals, in accordance with Article 11(1) of Directive 2003/109.44However, the means of implementing that civic integration obligation must not undermine the principle of non-discrimination, in the areas listed in Article 11(1) of Directive 2003/109.45In any event, it must be added that the Member States may not apply national rules which are liable to jeopardise the achievement of the objectives pursued by that directive and, therefore, deprive it of its effectiveness (see judgment in Commission v Netherlands, C‑508/10, EU:C:2012:243, paragraph 65).46In that regard, as is apparent from recitals 4, 6 and 12 in the preamble to Directive 2003/109, the principal purpose of that directive is the integration of third-country nationals who are settled on a long-term basis in the Member States (see judgment in Commission v Netherlands, C‑508/10, EU:C:2012:243, point 66).47That being said, as regards, first of all, the obligation to pass the civic integration examination at issue in the main proceedings, it cannot be disputed that the acquisition of knowledge of the language and society of the host Member State greatly facilitates communication between third-country nationals and nationals of the Member State concerned and, moreover, encourages interaction and the development of social relations between them. Nor can it be contested that the acquisition of knowledge of the language of the host Member State makes it less difficult for third-country nationals to access the labour market and vocational training.48With that in mind, since the obligation to pass an examination, such as that at issue in the main proceedings, ensures that the third-country nationals concerned acquire knowledge which is undeniably useful for establishing connections with the host Member State, it must be held that such an obligation does not, by itself, jeopardise the achievement of the objectives pursued by Directive 2003/109, but may on the contrary contribute to their achievement.49However, the means of implementing that obligation also must not be liable to jeopardise those objectives, having regard, in particular, to the level of knowledge required to pass the civic integration examination, to the accessibility of the courses and material necessary to prepare for that examination, to the amount of fees applicable to third-country nationals as registration fees to sit that examination, or to the consideration of specific individual circumstances, such as age, illiteracy or level of education.50As regards, next, the system of fines at issue in the main proceedings, it must be noted that the imposition of a fine on third-country nationals who are long-term residents and who have not passed the civic integration examination at the expiry of the prescribed period, as a means of ensuring the effectiveness of the civic integration obligation to which they are subject, does not, by itself, jeopardise the achievement of the objectives pursued by Directive 2003/109 and, accordingly, does not deprive it of its effectiveness.51However, account must be taken of the fact that the maximum amount of the fine at issue in the main proceedings is relatively high, namely EUR 1 000, and that that fine may, moreover, be imposed each time that the period prescribed for the third-country national to pass the civic integration examination expires without that examination having been passed, without any limit, until the third-country national concerned has passed that examination.52It must also be pointed out that the fine is imposed on third-country nationals who, upon the expiry of prescribed period, have not passed the civic integration examination, irrespective of whether, during that period, those third-country nationals never sat that examination, or sat it several times.53Moreover, the registration fees to sit the civic integration examination and any costs incurred in preparing for that examination are borne by the third-country nationals concerned. It must also be noted that, at the hearing, the Netherlands government indicated that the registration fees amount to EUR 230, that the third-country nationals concerned must pay those costs each time that they sit the civic integration examination during the prescribed period and that those fees are not reimbursed to the third-country nationals who do not pass that examination. It follows, therefore, that the imposition of a fine is not the only negative effect suffered by third-country nationals who do not pass that examination within the prescribed period.54In those circumstances, which it is for the referring court to verify, the payment of a fine penalising failure to comply with the obligation to pass the civic integration examination, in addition to payment of the costs incurred in relation to the examinations sat, is liable to jeopardise the achievement of the objectives pursued by Directive 2003/109 and, therefore, deprive it of its effectiveness.55Lastly, since the civic integration obligation laid down in the national legislation at issue in the main proceedings has no influence on the acquisition or maintenance of long-term resident status by third-country nationals who applied for that status during the period from 1 January 2007 to 1 January 2010, as noted in paragraph 31 of the present judgment, it must be held that whether the long-term resident status was acquired before or after that obligation was imposed is, in the present case, irrelevant to the answer to be given to the referring court.56Having regard to the foregoing, the answer to the questions referred is that Directive 2003/109 and, in particular, Article 5(2) and Article 11(1) thereof do not preclude national legislation, such as that at issue in the main proceedings, which imposes on third-country nationals who already possess long-term resident status the obligation to pass a civic integration examination, under pain of a fine, provided that the means of implementing that obligation are not liable to jeopardise the achievement of the objectives pursued by that directive, which it is for the referring court to determine. Whether the long-term resident status was acquired before or after the obligation to pass a civic integration examination was imposed is irrelevant in that respect. Costs 57Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who are long-term residents and, in particular, Article 5(2) and Article 11(1) thereof do not preclude national legislation, such as that at issue in the main proceedings, which imposes on third-country nationals who already possess long-term resident status the obligation to pass a civic integration examination, under pain of a fine, provided that the means of implementing that obligation are not liable to jeopardise the achievement of the objectives pursued by that directive, which it is for the referring court to determine. Whether the long-term resident status was acquired before or after the obligation to pass a civic integration examination was imposed is irrelevant in that respect. [Signatures]( *1 ) Language of the case: Dutch | b69a3-8f254a9-4118 | EN |
EU law does not preclude the organisation in Italy of a new call for tenders for the award of gambling and betting licences whose period of validity is shorter than that of licences awarded previously | 22 January 2015 ( *1 )‛Reference for a preliminary ruling — Articles 49 TFEU and 56 TFEU — Freedom of establishment — Freedom to provide services — Betting and gambling — National rules — Reorganisation of the licensing system through the alignment of licence expiry dates — New call for tenders — Licences with a period of validity shorter than that of previous licences — Restriction — Overriding reasons in the public interest — Proportionality’In Case C‑463/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Italy), made by decision of 2 July 2013, received at the Court on 23 August 2013, in the proceedings Stanley International Betting Ltd, Stanleybet Malta Ltd v Ministero dell’Economia e delle Finanze, Agenzia delle Dogane e dei Monopoli di Stato, intervening parties: Intralot Italia SpA, SNAI SpA, Galassia Game Srl, Eurobet Italia Srl unipersonale, Lottomatica Scommesse Srl, Sisal Match Point SpA, Cogetech Gaming Srl THE COURT (Third Chamber),composed of M. Ilešič, President of the Chamber, A. Ó Caoimh, C. Toader (Rapporteur), E. Jarašiūnas and C.G. Fernlund, Judges,Advocate General: N. Wahl,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 22 October 2014,after considering the observations submitted on behalf of:—Stanley International Betting Ltd, by D. Agnello and M. Mura, avvocati,Stanleybet Malta Ltd, by F. Ferraro, R.A. Jacchia, A. Terranova and D. Agnello, avvocati,SNAI SpA, by A. Fratini and F. Filpo, avvocati,Lottomatica Scommesse Srl, by A. Vergerio di Cesana, C. Benelli and G. Fraccastoro, avvocati,Sisal Match Point Spa, by L. Medugno, A. Auteri, G. Fraccastoro and F. Vetrò, avvocati,the Italian Government, by G. Palmieri, acting as Agent, assisted by S. Fiorentino, avvocato dello Stato, and by I. Volpe, expert,the Belgian Government, by J.-C. Halleux and L. Van den Broeck, acting as Agents, assisted by P. Vlaemminck, advocaat,the Portuguese Government, by L. Inez Fernandes, acting as Agent,the European Commission, by E. Montaguti and H. Tserepa-Lacombe, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 49 TFEU and 56 TFEU and the principles of equal treatment and effectiveness.2The request has been made in proceedings between Stanley International Betting Ltd (‘Stanley International Betting’) and Stanleybet Malta Ltd (‘Stanleybet Malta’), on the one hand, and, the Ministero dell’Economia e delle Finanze (the Ministry for the Economy and Finances) and the Agenzia delle Dogane e dei Monopoli di Stato (the Customs and State Monopolies Authority), on the other, concerning the organisation of a fresh call for tenders for the award of licences with a period of validity shorter than that of licences awarded previously. Legal context 3Italian legislation essentially provides that participation in the organising of betting and gambling, including the collection of bets, is subject to possession of a licence and a police authorisation.4Until amendments were made to the relevant legislation in 2002, operators constituted in the form of limited liability companies whose shares were quoted on the regulated markets could not obtain a betting or gambling licence. As a consequence, those operators were excluded from the tendering procedures for the award of licences which were held in 1999. In the judgment in Placanica and Others (C‑338/04, C‑359/04 and C‑360/04, EU:C:2007:133), inter alia, the Court declared that exclusion incompatible with Articles 43 EC and 49 EC.5Decree-Law No 223 of 4 July 2006 laying down urgent measures for economic and social revival, for the control and rationalisation of public expenditure, and providing for initiatives in relation to tax revenue and the combating of tax evasion, converted into statute by Law No 248 of 4 August 2006 (GURI No 18 of 11 August 2006) reformed the betting and gambling sector in Italy, with the aim of bringing it into line with the requirements under European Union (‘EU’) law.6Following, inter alia, the judgment in Costa and Cifone (C‑72/10 and C‑77/10, EU:C:2012:80), the betting and gambling sector was reformed by Decree-Law No 16 of 2 March 2012 laying down urgent provisions related to fiscal simplification, improving effectiveness and reinforcing monitoring procedures (GURI No 52 of 2 March 2012, p. 1), converted, after amendment, into statute by Law No 44 of 26 April 2012 (GURI No 99 of 28 April 2012, Ordinary Supplement No 85, p. 1 et seq.; consolidated text, p. 23 et seq., ‘Decree-Law No 16’).7Article 10(9g) and (9h) of Decree-Law No provides:‘9g As part of a reform of the legislation relating to public gambling, including that relating to the collection of bets on sporting events, including horse racing, and non-sporting events, the provisions of the present paragraph have the aim of promoting that reorganisation, through an initial alignment of the expiry dates of the licences for the collection of the bets in question, while observing the requirement that the national rules on the selection of persons who, on behalf of the State, collect bets on sporting events, including horse racing, and non-sporting events, are adjusted to the principles laid down by the judgment [in Costa and Cifone, EU:C:2012:80]. To that end, in view of the impending expiry of a group of licences for the collection of those bets, the Independent Authority for the Administration of State Monopolies shall immediately initiate, and in any event by 31 July 2012 at the latest, a call for tenders for the selection of persons who are to collect such bets with due regard, at the very least, to the following criteria:(a)the possibility of participation for persons already carrying out an activity related to the collection of bets in one of the States of the European Economic Area, as a result of having their legal and operational seat there, on the basis of a valid and effective authorisation issued under the provisions in force in the law of that State and who fulfil the requirements as to reputation, reliability and financial capacity specified by the Independent Authority for the Administration of State Monopolies …;(b)the award of a licence, expiring on 30 June 2016, for the collection, exclusively in a physical network, of bets on sporting events, including horse racing, and non-sporting events, from agencies, up to a maximum of 2000, whose sole activity is the marketing of public gambling products, without restriction as to the minimum distances between those agencies or with respect to other collection points, which are already active, for identical bets;(c)provision, as a price component, for a basic contract value of EUR 11 000 for each agency;(d)the conclusion of a licence contract whose content is consistent with any other principle laid down by the judgment [in Costa and Cifone, EU:C:2012:80] and with the compatible national provisions in force regarding public gambling;(e)the possibility of managing agencies in any municipality or province, without numerical limits on a territorial basis or more favourable conditions compared to licensees who are already authorised to collect identical bets or which may, in any event, be favourable to those licensees;(f)the lodging of deposits …;9h The licensees who are to collect bets referred to in paragraph 9g, whose contracts expire on 30 June 2012, shall continue their collection activities until the date of the conclusion of the licence contracts awarded in accordance with the above paragraph. …’ The dispute in the main proceedings and the questions referred for a preliminary ruling 8Stanley International Betting and Stanleybet Malta brought an appeal before the Consiglio di Stato (Council of State) seeking variation of the judgment of the Tribunale amministrativo regionale del Lazio (Lazio Regional Administrative Court) No 1884/2013.9That judgment concerned a call for tenders for the award of 2000 licences for the joint conduct of public gambling activities by means of the establishment and management of a physical network of betting shops, under Article 10(9g) and (9h) of Decree-Law No 16 (‘the call for tenders’).10Stanley International Betting, a company registered in the United Kingdom, and its Maltese subsidiary, Stanleybet Malta, are active in Italy, through agents known as ‘Data Transmission Centres’ (‘DTCs’), which are located in premises open to the public and in which the owners of the DTCs place a computer link at the disposal of gamblers and transmit the data relating to each bet to the appellants in the main proceedings.11That activity has been carried out in Italy through the DTC owners for about 15 years on the contractual basis of a mandate without any licence or police authorisation.12As they consider that they were excluded from previous calls for tenders in 1999 and 2006, the appellants in the main proceedings seek annulment of the new call for tenders on the ground that it is discriminatory and contrary to the judgments in Placanica and Others (EU:C:2007:133) and Costa and Cifone (EU:C:2012:80) and request the organisation of a fresh call for tenders.13The appellants in the main proceedings complain, in particular, of discrimination as a result of the validity period of the new licences which is 40 months and therefore significantly shorter than the validity period of between 9 and 12 years of previous licences, and as a result of the exclusive nature of the marketing of public gambling products and the prohibition on the transfer of licences.14They claim in particular that those restrictive conditions do not allow them to participate effectively in the call for tenders, in particular in the light of the penalties associated with the grounds for revocation, suspension and withdrawal of licences, such as the loss of the deposit in the event of a withdrawal and the transfer, without charge, upon expiry of the licence, of the right to use the tangible and intangible assets which they own and which constitute their network for the management and collection of bets.15The appellants in the main proceedings submitted that they are at significant risk of the withdrawal or revocation of any licences acquired owing to the litigation involving the DTCs through which they operate in Italy. Accordingly, they take the view that they were placed in the position of having to choose between abandoning their activity in Italy or running the risk of the withdrawal of the licences which they may have acquired and the loss of the deposits paid.16The Tribunale amministrativo regionale del Lazio dismissed the action, which it deemed inadmissible because the appellants in the main proceedings had not taken part in the call for tenders which they were seeking to annul. Following that judgment, they lodged an appeal with the Consiglio di Stato.17The Consiglio di Stato states that, whilst it is true that the contested provisions relating to the new licences are stricter and more detailed than those provided for previously, they are, however, no longer unclear, are directed at all participants, including past licence holders, and also apply to existing relationships, so that it is difficult to understand what the alleged ‘benefit’ favouring past licence holders is.18Furthermore, about 120 other participants in the call for tenders in question, including major foreign groups which are not part of existing operators and which have a similar operational structure to that of the appellants in the main proceedings, make no criticism of that call for tenders.19In addition, according to that court, although the new licences have a shorter period of validity than those previously awarded, they are, however, also less onerous and less economically restrictive for the aspiring licence holder.20Accordingly, while expressing its view that Articles 49 TFEU and 56 TFEU do not preclude the national provisions at issue, the referring court nevertheless considers it necessary to refer questions to the Court for a preliminary ruling in that regard.21In those circumstances, the Consiglio di Stato decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘1.Are Article 49 TFEU et seq. and Article 56 TFEU et seq. and the principles laid down by the Court … in the judgment [in Costa and Cifone (EU:C:2012:80)] to be interpreted as precluding a call for tenders for the award of licences with a period of validity shorter than that of licences awarded in the past, where that tendering procedure has been launched in order to remedy the consequences of the unlawful exclusion of a certain number of operators from earlier tendering procedures?2.Are Article 49 TFEU et seq. and Article 56 TFEU et seq. and the principles laid down by the Court … in the judgment [in Costa and Cifone (EU:C:2012:80)] to be interpreted as precluding the possibility that sufficient justification for the shorter period of validity of licences offered for tender, as compared with licences awarded in the past, can be found in the requirement for the licensing system to be reorganised through the alignment of licence expiry dates?’ Consideration of the questions referred for a preliminary ruling The jurisdiction of the Court 22Lottomatica Scommesse Srl essentially disputes the jurisdiction of the Court. It submits that, in the light of the discretion enjoyed by Member States, it is not for the Court to rule on whether the determination of a shorter or longer period of validity for licences with respect to betting and gambling is compatible with Articles 49 TFEU and 56 TFEU. The question of that compatibility falls within the jurisdiction of national courts and not that of the Court.23In that regard, it is clear that that company does not dispute that the Italian legislation at issue must comply with Articles 49 TFEU and 56 TFEU. However, the scope of Articles 49 TFEU and 56 TFEU is a matter for the Court to assess and the referring court specifically seeks an interpretation of those articles in order to determine whether the period of validity of those licences is consistent with those articles.24Consequently, it must be held that the Court has jurisdiction to answer the questions referred for a preliminary ruling. Admissibility 25The Italian Government considers that the request for a preliminary ruling must be declared inadmissible, since the order for reference does not set out the factual context sufficiently to allow the Court to provide a useful answer.26In that regard, it should be noted that, according to settled case-law, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment in Melki and Abdeli, C‑188/10 and C‑189/10, EU:C:2010:363, paragraph 27 and the case-law cited).27It is also settled case-law that the need to provide an interpretation of EU law which will be of use to the national court makes it necessary for that court to define the factual and legal context of the questions it is asking or, at the very least, to explain the factual circumstances on which those questions are based. The order for reference must also set out the precise reasons why the national court is unsure as to the interpretation of EU law and considers it necessary to refer a question to the Court for a preliminary ruling (judgment in Mulders, C‑548/11, EU:C:2013:249, paragraph 28 and the case-law cited).28The order for reference sets out in sufficient detail the legal and factual context of the disputes in the main proceedings and the information provided by that court makes it possible to determine the scope of the questions referred.29In those circumstances, the request for a preliminary ruling must be held to be admissible. Substance 30By its first and second questions, which it is appropriate to examine together, the referring court essentially asks whether Articles 49 TFEU and 56 TFEU and the principles of equal treatment and effectiveness must be interpreted as precluding national legislation in the field of betting and gambling which provides for the organisation of a fresh call for tenders for the award of licences with a period of validity shorter than that of licences awarded previously because of the reorganisation of the system by way of an alignment of licence expiry dates.31First, it is necessary to consider whether the national legislation at issue in the main proceedings, by setting a shorter period of validity for the new licences than for previous licences, is consistent with the principles of equal treatment and effectiveness.32In that regard it should be noted that, although in the judgment in Costa and Cifone (EU:C:2012:80), the Court also examined the Italian legislation’s compliance with the obligation of transparency and the principle of legal certainty, such an examination is not necessary in the present case because, according to the referring court, the provisions at issue in the main proceedings are sufficiently clear and it can no longer be alleged that they were not drawn up in a clear, precise and unequivocal manner.33Secondly, it is appropriate to assess whether the reason given by the national authorities in order to justify the shorter period of validity of the new licences, in particular the reorganisation of the licensing system through the alignment of licence expiry dates, is capable of justifying a possible restriction on the freedoms guaranteed by the Treaties.Compliance with the principles of equal treatment and effectiveness34In the case at issue in the main proceedings, the applicants are seeking the revocation of existing licences, the annulment of the last call for tenders and the organisation of another call for tenders on a non-discriminatory basis. They submit that the Italian authorities had no right to make the choice between the revocation and redistribution of existing licences and the award by public tender of an adequate number of new licences and that, in any event, the choice made infringes the principles of equal treatment and effectiveness.35However, as the Court has already held, both the revocation and redistribution of the old licences and the award by public tender of an adequate number of new licences could be appropriate courses of action. In principle, those courses of action are both capable of remedying, at least as regards the future, the unlawful exclusion of certain operators, by allowing them to engage in their activity on the market under the same conditions as existing operators (judgment in Costa and Cifone, EU:C:2012:80, paragraph 52).36It follows that national authorities are entitled to choose between those approaches by reason of the discretion enjoyed by Member States in a non-harmonised area such as betting and gambling, a discretion which is, however, circumscribed by the principles of equivalence and effectiveness.37In accordance with the established case law of the Court, it is for the national legal order to lay down detailed procedural rules to ensure the protection of the rights that operators derive from the direct effect of EU law, provided, however, that those detailed rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by EU law (principle of effectiveness) (judgments in Placanica and Others, EU:C:2007:13, paragraph 63, and Costa and Cifone, EU:C:2012:80, paragraph 51).38In addition, in order to be consistent with the principle of equal treatment and to meet the obligation of transparency which flows from that principle, an authorisation scheme for betting and gambling must be based on objective, non-discriminatory criteria known in advance, in such a way as to circumscribe the exercise by the authorities of their discretion so that it is not used arbitrarily (judgment in Garkalns, C‑470/11, EU:C:2012:505, paragraph 42).39As the Court has already held, the very fact that the existing operators were able to commence their activities several years earlier than the operators which were unlawfully excluded, and have accordingly been able to establish themselves on the market with a certain reputation and a measure of customer loyalty, confers on them an unfair competitive advantage. To grant the existing operators ‘even greater’ competitive advantages over the new licence holders has the consequence of entrenching and exacerbating the effects of the unlawful exclusion of the latter from the tendering procedures, and accordingly constitutes a breach of the principle of equal treatment. Such a measure also makes it excessively difficult to exercise the rights conferred by EU law on operators unlawfully excluded from the last call for tenders and, as a consequence, is inconsistent with the principle of effectiveness (see judgment in Costa and Cifone, EU:C:2012:80, paragraph 53).40It follows that, in order to be consistent with the principles of equal treatment and effectiveness, national legislation should not give the existing operators ‘even greater’ competitive advantages over the new licence holders.41As regards compliance with the principle of equal treatment, it should be noted that, according to the referring court, the provisions at issue in the case in the main proceedings are no longer unclear, apply to all participants, including past licence holders, and also apply to existing licences without giving existing operators ‘even greater’ competitive advantages. While it is true that that assessment is not shared by the appellants in the main proceedings, it should in that regard be noted that it is not for the Court, in the context of a reference for a preliminary ruling, to give a ruling on the interpretation of provisions of national law or to decide whether the interpretation given by the referring court of those provisions is correct (see, inter alia, judgment in Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 48 and the case-law cited).42Furthermore, account should also be taken of the fact that, as is apparent from the order for reference, the appellants in the main proceedings have been conducting their operations in Italy through DTCs for approximately 15 years without holding any licence or police authorisation, with the result that they may not truly be described as ‘new entrants on the market’.43As regards the principle of effectiveness, it should be pointed out that, according to the referring court, although the new licences have a shorter period of validity than those previously awarded, they are, however, also less onerous and less economically restrictive for the aspiring licence holder.44It therefore appears that in the case at issue in the main proceedings, compliance with the principles of equal treatment and effectiveness is assured.The justification for a restriction of the freedoms guaranteed by Articles 49 TFEU and 56 TFEU45It is settled case-law that all measures which prohibit, impede or render less attractive the exercise of the freedoms guaranteed by Articles 49 TFEU and 56 TFEU must be regarded as restrictions on the freedom of establishment and/or the freedom to provide services (see, inter alia, judgment in Duomo Gpa and Others, C‑357/10 to C‑359/10, EU:C:2012:283, paragraphs 35 and 36 and the case-law cited).46Consequently, legislation of a Member State, such as that at issue in the main proceedings, which makes the exercise of an economic activity subject to a licensing requirement and which specifies situations in which the licence is to be withdrawn, constitutes an obstacle to the freedoms thus guaranteed by Articles 49 TFEU and 56 TFEU (see judgment in Costa and Cifone, EU:C:2012:80, paragraph 70).47It is necessary, however, to determine whether such a restriction may be allowed as a derogation, on grounds of public policy, public security or public health, as expressly provided for under Articles 51 TFEU and Article 52 TFEU, which are also applicable in the area of freedom to provide services by virtue of Article 62 TFEU, or justified, in accordance with the case-law of the Court, by overriding reasons in the public interest (judgment in Digibet and Albers, C‑156/13, EU:C:2014:1756, paragraph 22 and the case-law cited).48Thus, it is settled case-law that restrictions on betting and gambling may be justified by overriding reasons in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling (judgment in Digibet and Albers, EU:C:2014:1756, paragraph 23 and the case-law cited).49Moreover, as regards the Italian legislation relating to betting and gambling, the Court has held previously that the objective of combating criminality linked to betting and gambling is capable of justifying restrictions on fundamental freedoms under those rules (see judgment in Biasci and Others, C‑660/11 and C‑8/12, EU:C:2013:550, paragraph 23).50In the present case, as regards the classification as an ‘overriding reason in the public interest’ of the reason given by the national authorities in order to justify the shorter period of validity of the new licences, namely the reorganisation of the licensing system through the alignment of licence expiry dates, it is true that, according to settled case-law, considerations of an administrative nature cannot justify derogation by a Member State from the rules of EU law. That principle applies with even greater force where the derogation in question amounts to preventing or restricting the exercise of one of the fundamental freedoms of EU law (see judgment in Arblade and Others, C‑369/96 and C‑376/96, EU:C:1999:575, paragraph 37 and the case-law cited).51However, it is appropriate to bear in mind the specific nature of legislation on betting and gambling, which is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of harmonisation on the issue at EU level, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected, since the identification of the objectives which are in fact pursued by the national legislation falls, in the context of a case referred to the Court under Article 267 TFEU, within the jurisdiction of the national court (judgment in Digibet and Albers, EU:C:2014:1756, paragraph 24 and the case-law cited).52Accordingly, in that specific field, national authorities enjoy a wide measure of discretion when determining what is required in order to ensure consumer protection and the preservation of order in society and — provided that the conditions laid down in the Court’s case-law are in fact met — it is for each Member State to assess whether, in the context of the legitimate aims which it pursues, it is necessary to prohibit, wholly or in part, betting and gambling or only to restrict them and, to that end, to lay down more or less strict supervisory rules (see judgment in Digibet and Albers, EU:C:2014:1756, paragraph 32 and the case-law cited).53It follows that, in this particular context, the reorganisation of the licensing system through the alignment of licence expiry dates may, by providing for a shorter period of validity for the new licences than that for the licences awarded previously, contribute to a coherent pursuit of the legitimate objectives of reducing gambling opportunities or combating criminality linked to betting and gambling and may also satisfy the proportionality requirements.54If, in future, the national authorities wanted to reduce the number of licences granted or exercise stricter control over activities in the field of betting and gambling, such measures would be facilitated if all the licences were awarded for the same duration and expired at the same time.55In the light of all the foregoing considerations, the answer to the questions referred is that Articles 49 TFEU and 56 TFEU and the principles of equal treatment and effectiveness must be interpreted as not precluding national legislation such as that at issue in the main proceedings which provides for the organisation of a fresh call for tenders for the award of licences with a period of validity shorter than that of licences awarded previously because of the reorganisation of the system by way of an alignment of licence expiry dates. Costs 56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: Articles 49 TFEU and 56 TFEU and the principles of equal treatment and effectiveness must be interpreted as not precluding national legislation such as that at issue in the main proceedings which provides for the organisation of a fresh call for tenders for the award of licences with a period of validity shorter than that of licences awarded previously because of the reorganisation of the system by way of an alignment of licence expiry dates. [Signatures]( *1 ) Language of the case: Italian. | 14372-c922d4a-454b | EN |
Spanish legislation according to which the national court is required to recalculate default interest whose rate is more than three times greater than the statutory rate is compatible with EU law | 21 January 2015 ( *1 )‛Reference for a preliminary ruling — Directive 93/13/EEC — Contracts concluded between sellers or suppliers and consumers — Mortgage contracts — Default interest clauses — Unfair terms — Mortgage enforcement proceedings — Moderation of the amount of interest — Powers of the national court’In Joined Cases C‑482/13, C‑484/13, C‑485/13 and C‑487/13,REQUESTS for a preliminary ruling under Article 267 TFEU from the Juzgado de Primera Instancia e Instrucción de Marchena (Spain), made by decisions of 12 August 2013, received at the Court on 10 September 2013, in the proceedings Unicaja Banco, SA v José Hidalgo Rueda, María del Carmen Vega Martín, Gestión Patrimonial Hive SL, Francisco Antonio López Reina, Rosa María Hidalgo Vega (C‑482/13),and Caixabank SA Manuel María Rueda Ledesma (C‑484/13), Rosario Mesa Mesa (C‑484/13), José Labella Crespo (C‑485/13), Rosario Márquez Rodríguez (C‑485/13), Rafael Gallardo Salvat (C‑485/13), Manuela Márquez Rodríguez (C‑485/13), Alberto Galán Luna (C‑487/13), Domingo Galán Luna (C‑487/13),THE COURT (First Chamber),composed of A. Tizzano, President of the Chamber, S. Rodin, E. Levits (Rapporteur), M. Berger and F. Biltgen (Judges),Advocate General: N. Wahl,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 10 September 2014,after considering the observations submitted on behalf of:—Unicaja Banco, SA, by J. Almoguera Valencia, abogado,Caixabank SA, by J. Rodríguez Cárcamo, abogados and B. García Gómez, abogados,the Spanish Government, by A. Rubio González and S. Centeno Huerta, acting as Agents,the European Commission, by J. Rius, M. van Beek and G. Valero Jordana, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 16 October 2014,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 6 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).2The requests have been made in proceedings between, (i), on the one hand, Unicaja Banco SA, and, on the other, Mr Hidalgo Rueda, Ms del Carmen Vega Martín, Gestión Patrimonial Hive SL, Mr López Reina and Ms Hidalgo Vega, (ii), Caixabank SA, and, firstly, Mr Rueda Ledesma and Mr Mesa Mesa, secondly, Mr Labella Crespo, Mr Márquez Rodríguez, Mr Gallardo Salvat and Ms Márquez Rodríguez, and, thirdly, Mr A. Galán Luna and Mr D. Galán Luna, concerning the recovery of unpaid debts arising from mortgage-loan contracts concluded between those parties in the main proceedings. Legal context Directive 93/13 3Article 1(2) of Directive 90/13 provides:‘The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive.’4Article 3(1) of that directive reads as follows:‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’5Article 4(1) of that directive provides:‘… the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.’6Article 6(1) of Directive 93/13 provides:‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’7Pursuant to Article 7(1) of that directive:‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’ Spanish law 8Under Spanish law, consumers were initially protected against unfair terms by General Law 26/1984 for the protection of consumers and users (Ley General 26/1984 para la Defensa de los Consumidores y Usuarios) of 19 July 1984 (BOE No 176 of 24 July 1984, p. 21686).9General Law 26/1984 was subsequently amended by Law 7/1998 on general contractual conditions (Ley 7/1998 sobre condiciones generales de la contratación) of 13 April 1998 (BOE No 89 of 14 April 1998, p. 12304), which transposed Directive 93/13 into Spanish national law.10Those provisions were codified by Royal Legislative Decree 1/2007 approving the consolidated text of the General Law for the protection of consumers and users and other supplementary laws (Real Decreto Legislativo 1/2007 por el que se aprueba el texto refundido de la Ley General para la Defensa de los Consumidores y Usarios y otras leyes complementarias) of 16 November 2007 (BOE No 287 of 30 November 2007, p. 49181).11Under Article 83 of Royal Legislative Decree No 1/2007:‘1. Unfair contract terms shall automatically be void and deemed not to have formed part of the contract.2. That part of the contract deemed void shall be adjusted in accordance with the provisions of Article 1258 of the Civil Code and with the principle of objective good faith.To that end, the court which rules that such terms are void shall remedy the contract and enjoy moderating powers with regard to the rights and obligations of the parties, where the contract continues in existence, and to the consequences of its being ruled ineffective in the event of significant loss or damage to the consumer or user. Only where the remaining contract terms result in an imbalance in the respective positions of the parties which cannot be remedied may the court rule that the contract is ineffective.’12Following the judgment in Aziz (C‑415/11, EU:C:2013:164), the Spanish legislation on consumer protection was amended by Law 1/2013 laying down measures for the strengthening of the protection of mortgagors, the restructuring of debt and social rent (Ley de medidas para reforzar la protección a los deudores hipotecarios, reestructuración de deuda y alquiler social) of 14 May 2013 (BOE No. 116 of 15 May 2013, p. 36373). That law amends, inter alia, certain provisions of Law 1/2000 on the Code of Civil Procedure (Ley 1/2000 de Enjuiciamiento Civil) of 7 January 2000 (BOE No. 7 of 8 January 2000, p. 575).13Accordingly, Article 552(1) of the Law on Civil Procedure, as amended by Article 7(1) of Law No 1/2013, provides:‘When the court considers that any of the terms included in an enforceable instrument within the categories referred to in Article 557(1) can be deemed unfair, it shall allow a period of five [now 15] days for the parties to be heard. After hearing the parties, it shall make an appropriate order within the next five days, in accordance with the third subparagraph of Article 561(1).’14Article 7(3) of Law 1/2013 added subparagraph 3 to Article 561(1) of the Law on Civil Procedure, worded as follows:‘When one or more terms are deemed unfair, the order to be made shall determine the consequences of such unfairness, directing either that enforcement is unavailable or ordering enforcement without application of the terms considered unfair.’15Article 7(14) of Law 1/2013 amends Article 695 of the Law on Civil Procedure by stating that the existence of unfair terms constitutes grounds for objection in the following terms:‘1. In the proceedings referred to in this chapter, an application objecting to enforcement by the party against whom enforcement is sought may be admitted only if it is based on the following grounds:...4. The unfairness of a contractual term relied on as a basis for enforcement or determining the sum due.’16Article 3(2) of Law No 1/2013 also amends Article 114 of the Law on Mortgages (Ley Hipotecaria) through the addition of a third subparagraph worded as follows:‘Default interest on loans or credits for the purchase of a habitual dwelling, secured by mortgages charged on the dwelling in question, may not be more than three times the statutory rate of interest and may accrue only on the outstanding principal. Such default interest may not in any circumstances be capitalised, except in the case provided for in Article 579(2)(a) of the Law on Civil Procedure.’17Finally, the Second Transitional Provision of Law No 1/2013 adds:‘The limitation of default interest on mortgages on habitual dwellings, provided for in Article 3(2), shall apply to mortgages created after the entry into force of this Law.Likewise, that limitation shall apply to default interest, provided for in mortgage loans secured on habitual dwellings and created before the entry into force of the Law, which falls due subsequently, and to any interest which, having accrued and fallen due by that date, has not been paid.In proceedings for enforcement or extra-judicial sale commenced and not concluded by the time of the entry into force of this Law, and in proceedings in which the sum in respect of which an enforcement order or order for extrajudicial sale is sought has already been fixed, the Judicial Officer [Secretario judicial] or the notary shall allow the party seeking enforcement a period of 10 days in order to recalculate that sum in accordance with the preceding paragraph.’ The actions in the main proceedings and the questions referred for a preliminary ruling 18The cases in the main proceedings concern mortgage enforcement proceedings initiated by Unicaja Banco and Caixabank for the enforcement of several mortgages arranged between 5 January 2007 and 20 August 2010 for amounts of between EUR 47 000 and EUR 249 000.19In Case C‑482/13, the mortgage loan was subject to a default interest rate of 18%, which could be increased if the addition of four percentage points to the adjusted interest rate resulted in a higher interest rate, subject to a maximum nominal rate of 25% per annum. In Cases C‑484/13, C‑485/13 and C‑487/13, the mortgage loans were subject to a default interest rate of 22.5%.20In addition, all the loan contracts in the cases in the main proceedings contain a clause authorising the lender, if the borrower fails to meet his payment obligations, to bring forward the maturity date initially agreed and require payment of all the outstanding capital debt, together with the interest, default interest, commission, expenses and costs agreed.21Between 21 March 2012 and 3 April 2013 Unicaja Banco and Caixabank brought enforcement proceedings before the referring court for the amounts due after application of the default interest rates laid down by the mortgage contracts at issue. As part of those actions, that court focused on the question of the ‘unfair’ nature, within the meaning of Article 3(1) of Directive 93/13, of the clauses relating to the default interest rates and the application of those rates to the capital whose early repayment is triggered by the delay in payment.22In that regard, the referring court nevertheless expresses doubt about the inferences which it must draw regarding the unfairness of those clauses under the Second Transitional Provision of Law 1/2013. Accordingly, if it were to apply that provision, it would fall to that court to adjust the default interest under the third subparagraph of that provision.23In those circumstances, the Juzgado de Primera Instancia e Instrucción de Marchena decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Under Directive 93/13 …, and in particular Article 6(1) thereof, and in order to ensure the protection of consumers and users in accordance with the principles of equivalence and effectiveness, must a national court, when it finds there to be an unfair default-interest clause in mortgage loans, declare the clause void and not binding or, on the contrary, must it moderate the interest clause, referring the matter back to the party seeking enforcement, or to the lender, for adjustment of the interest?(2)Is the Second Transitional Provision of Law No 1/2013 … nothing more than a clear limitation on the protection of consumer interests, in that it implicitly imposes upon the court the obligation to moderate a default-interest clause that could be considered to be unfair, adjusting the interest stipulated and maintaining in force a stipulation which was unfair, instead of declaring the clause to be void and not binding upon the consumer?(3)Does the Second Transitional Provision of Law No 1/2013 … contravene Directive 93/13 …, and in particular Article 6(1) thereof, by preventing application of the principles of equivalence and effectiveness in relation to consumer protection and avoiding application of the penalty of nullity and lack of binding force in respect of default-interest clauses tainted by unfairness and stipulated in mortgage loans entered into before the entry into force of Law No 1/2013 …?’24By order of the President of the Court of 10 October 2013, Cases C‑482/13 to C‑487/13 were joined for the purposes of the written and oral procedure and of the judgment.25Cases C‑486/13 and C‑483/13 were disjoined, respectively, by orders of the President of the Court of 13 March and 3 October 2014, owing to their removal from the register. Consideration of the questions referred 26By its questions, which should be considered together, the referring court asks, in essence, whether Article 6(1) of Directive 93/13 must be interpreted as precluding a national provision under which the national court hearing mortgage enforcement proceedings is required to adjust the amounts due under the clause in a mortgage-loan contract providing for default interest at a rate more than three times greater than the statutory rate by applying a default interest rate which does not exceed that threshold.27In that regard, it should be noted at the outset that, according to the referring court, the clauses relating to default interest in the mortgage-loan contracts for which enforcement proceedings have been brought before it are unfair within the meaning of Article 3 of Directive 93/13.28In that context, it should be borne in mind that, as regards the inferences to be drawn from the finding of unfairness of a contract provision between a consumer and a professional, it follows from the wording of Article 6(1) of Directive 93/13 that national courts are merely required to exclude the application of an unfair contractual term in order that it may not produce binding effects with regard to the consumer, without being empowered to revise the content of that term. That contract must continue in existence, in principle, without any amendment other than that resulting from the deletion of the unfair terms, in so far as, in accordance with the rules of domestic law, such continuity of the contract is legally possible (judgments in Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 65, and in Asbeek Brusse and de Man Garabito, C‑488/11, EU:C:2013:341, paragraph 57).29In particular, that provision may not be interpreted as allowing the national court, if it establishes that a penalty clause in a contract concluded between a seller or supplier and a consumer is unfair, to reduce the amount of the penalty imposed on the consumer instead of excluding the application of that clause in its entirety with regard to that consumer (judgment in Asbeek Brusse and de Man Garabito, EU:C:2013:341, paragraph 59).30Moreover, given the nature and significance of the public interest constituted by the protection of consumers, who are in a position of weakness vis-à-vis sellers or suppliers, Directive 93/13, as is apparent from Article 7(1) thereof, read in conjunction with its twenty-fourth recital, requires the Member States to provide for adequate and effective means to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers (judgments in Banco Español de Crédito, EU:C:2012:349, paragraph 68, and in Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 78).31In fact, if it were open to the national court to revise the content of unfair terms, such a power would be liable to compromise attainment of the long-term objective of Article 7 of Directive 93/13. That power would contribute to eliminating the dissuasive effect for sellers or suppliers of the straightforward non-application with regard to the consumer of those unfair terms, in so far as those sellers or suppliers would still be tempted to use those terms in the knowledge that, even if they were declared invalid, the contract could nevertheless be adjusted, to the extent necessary, by the national court in such a way as to safeguard the interest of those sellers or suppliers (judgments in Banco Español de Crédito, EU:C:2012:349, paragraph 69, and in Kásler and Káslerné Rábai, EU:C:2014:282, paragraph 79).32In the light of the foregoing considerations, the Court has held that Article 6(1) of Directive 93/13 precludes a rule of national law which allows a national court, if it finds that an unfair term in a contract concluded between a seller or supplier and a consumer is void, to adjust the contract by revising the content of that term (judgments in Banco Español de Crédito, EU:C:2012:349, paragraph 73, and in Kásler and Káslerné Rábai, EU:C:2014:282, paragraph 77).33It is true that the Court has also recognised the possibility for the national court of substituting a supplementary provision of national law for an unfair term, provided that that substitution is consistent with the objective of Article 6(1) of Directive 93/13 and enables real balance between the rights and obligations of the parties to be restored. However, that possibility is limited to cases in which the invalidity of the unfair term would require the court to annul the contract in its entirety, thereby exposing the consumer to disadvantageous consequences (see, to that effect, Kásler and Káslerné Rábai, EU:C:2014:282, paragraphs 82 to 84).34However, in the case in the main proceedings, and subject to the checks to be made in this regard by the referring court, the annulment of the contractual clauses at issue could not have adverse consequences for the consumer, inasmuch as the amounts for which the mortgage enforcement proceedings have been brought will necessarily be lower in the absence of an increase by applying default interest laid down by those clauses.35Those principles having been reiterated, it is clear from the order for reference that the Second Transitional Provision of Law 1/2013 requires a moderation of default interest for loans or credit for the purchase of a principal residence and guaranteed by mortgages on the dwelling at issue. Accordingly, it is laid down that in proceedings for enforcement or extra-judicial sale commenced and not concluded by the time of the entry into force of that law, that is, on 15 May 2013, and in proceedings in which the sum in respect of which an enforcement order or order for extrajudicial sale is sought has already been fixed, that amount must be adjusted by applying default interest at a rate at most equal to three times the statutory rate, if the rate of default interest under the mortgage contract is higher than that rate.36As was pointed out by the Spanish Government, in its pleadings and at the hearing and by the Advocate General in points 38 and 39 of his Opinion as well, the application of the Second Transitional Provision of Law 1/2013 extends to any mortgage-loan contract and is thus distinguished from that of Directive 93/13 which concerns only unfair terms included in contracts concluded between a seller or supplier and a consumer. It follows that the obligation to respect the threshold corresponding to the default interest rate equal to three times the statutory interest rate, as it was intended by the legislature, is without prejudice to the assessment, by the court, of the unfairness of a term setting default interest.37In those circumstances, it must be borne in mind that, pursuant to Article 4(1) of Directive 93/13, the unfairness of a contractual term must be assessed taking into account the nature of the goods or services for which the contract was concluded and by referring, on the date of conclusion of the contract, to all the circumstances attending its conclusion. It therefore follows that the consequences of the term under the law applicable to the contract must also be taken into account. This requires consideration to be given to national law (see order in Sebestyén, C‑342/13, EU:C:2014:1857, paragraph 29 and the case-law cited).38In that connection, it must be recalled, furthermore, that a national court, when hearing a case between individuals, is required, when applying the provisions of domestic law, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive (Kásler and Káslerné Rábai, EU:C:2014:282, paragraph 64).39Therefore, it is important to consider that, inasmuch as the Second Transitional Provision of Law 1/2013 does not prevent the national court, faced with an unfair term, performing its duties by removing that clause, Directive 93/13 does not preclude the application of such a national provision.40That implies, in particular, first, that when the national court is faced with a contractual term relating to default interest at a rate less than that provided by the Second Transitional Provision of Law 1/2013, the setting of that legislative ceiling does not prevent that court from assessing the possible unfairness of that clause, within the meaning of Article 3 of Directive 93/13. Accordingly, a default interest rate less than three times the statutory rate is not necessarily to be considered to be fair within the meaning of that directive.41Second, when the default interest rate laid down in a term in a mortgage-loan contract is higher than that provided by the Second Transitional Provision of Law 1/2013 and must, in accordance with that provision, be subject to a limitation, such a fact must not preclude the national court from, above and beyond that measure of moderation, drawing all the inferences of possible unfairness — in the light of Directive 93/13 — of the term which contains that rate, if necessary by annulling it.42Therefore, it follows from all the foregoing considerations that Article 6(1) of Directive 93/13 must be interpreted as not precluding a national provision under which the national court hearing mortgage enforcement proceedings is required to adjust the amounts due under a term in a mortgage-loan contract providing for default interest at a rate more than three times greater than the statutory rate in order that the amount of that interest may not exceed that threshold, provided that the application of that national provision:is without prejudice to the assessment by that national court of the unfairness of such a term anddoes not prevent that court removing that clause if it were to find the latter to be ‘unfair’, within the meaning of Article 3(1) of that directive. Costs 43Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: Article 6 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as not precluding a national provision under which the national court hearing mortgage enforcement proceedings is required to adjust the amounts due under a term in a mortgage-loan contract providing for default interest at a rate more than three times greater than the statutory rate in order that the amount of that interest may not exceed that threshold, provided that the application of that national provision: is without prejudice to the assessment by that national court of the unfairness of such a term and does not prevent that court removing that term if it were to find the latter to be ‘unfair’, within the meaning of Article 3(1) of that directive. [Signatures]( *1 ) Language of the cases: Spanish. | 9f1b3-ca7d3b7-4282 | EN |
The General Court provides clarification as to the functioning of the European Network of Competition Authorities | 21 January 2015 ( *1 )‛Competition — Abuse of a dominant position — Airport services market — Decision rejecting a complaint — Article 13(2) of Regulation (EC) No 1/2003 — Case dealt with by a competition authority of a Member State — Rejection of the complaint on priority grounds — Decision of the competition authority drawing conclusions, in competition law, from an investigation conducted under national legislation applicable to the sector in question — Obligation to state reasons’In Case T‑355/13, easyJet Airline Co. Ltd, established in Luton (United Kingdom), represented by M. Werner and R. Marian, lawyers,applicant,v European Commission, represented by A. Biolan and F. Ronkes Agerbeek, acting as Agents,defendant,supported by Luchthaven Schiphol NV, established in Schiphol (Netherlands), represented by J. de Pree, G. Hakopian and S. Molin, lawyers,intervener,APPLICATION for annulment of Commission Decision C(2013) 2727 final of 3 May 2013 rejecting the complaint lodged by the applicant against Luchthaven Schiphol NV in relation to alleged anti-competitive conduct in the airport services market (Case COMP/39.869 — easyJet/Schiphol),THE GENERAL COURT (Second Chamber),composed of M.E. Martins Ribeiro, President, S. Gervasoni (Rapporteur) and L. Madise, Judges,Registrar: C. Kristensen, Administrator,having regard to the written procedure and further to the hearing on 26 September 2014,gives the following Judgment Facts 1The applicant — easyJet Airline Co. Ltd — is a British air carrier that is highly active within the European Union, operating, inter alia, to and from Schiphol Airport, Amsterdam (Netherlands).2On 11 September 2008, the applicant lodged two initial complaints with the Nederlandse Mededingingsautoriteit (the Netherlands competition authority; ‘the NMa’) against Luchthaven Schiphol NV (the operator of Amsterdam-Schiphol airport; ‘Schiphol’), in relation to the security and passenger service charges to be applied from 1 November 2008. The first complaint was based on Article 8.25f(1) of the Wet Luchtvaart (Law on Aviation; ‘the WL’), and the second on Article 24 of the Mededingingswet (Law on Competition; ‘the MW’) and Article 102 TFEU.3On 20 November 2008, the applicant lodged a new complaint with the NMa, on the basis of Article 8.25f(1) of the WL, in relation to the security and passenger service charges to be applied by Schiphol from 1 April 2009 (‘the third complaint’).4On 19 December 2008, the NMa rejected the applicant’s first complaint on the ground that it had been brought out of time. It also informed the applicant that it was suspending the review of the second complaint pending the outcome of its assessment of the third complaint.5By decision of 14 July 2009, the NMa rejected the third complaint on the grounds that the applicant had failed to prove that the charges applied by Schiphol from 1 April 2009 were in breach of the WL and, in particular, contrary to the principles that charges must be cost-orientated, non-discriminatory and reasonable. The applicant brought an action contesting that decision, which was dismissed by judgment of the Rechtbank Rotterdam (District Court of Rotterdam) of 25 November 2010. The applicant then lodged an appeal against that judgment before the College van beroep voor het bedrijfsleven (Administrative Court for Trade and Industry), which it subsequently withdrew.6By decision of 16 December 2009, the NMa rejected the second complaint. It found that the various complaints lodged by the applicant had features in common and that the charges scheduled to enter into force in April 2009 were not fundamentally different from those which had entered into force in November 2008. In addition, the NMa found that the concepts of non-discrimination and reasonableness, as referred to in Article 8.25d(2) and (3) of the WL, were similar to those concepts as referred to in European competition law (Article 102 TFEU) and national competition law (Article 24 MW). The NMa also noted that, in its decision of 14 July 2009, it had construed the provisions of the WL in accordance with the case-law of the Courts of the European Union in relation to Article 102 TFEU. It further stated that a definition of the relevant market, which it would have given as one of the steps in an investigation conducted on the basis of competition law, was not necessary in the circumstances, since it had assumed that Schiphol was in a position of economic strength. The NMa concluded that a review of the charges introduced in November 2008 in the light of Article 102 TFEU would have the same outcome as the review of the third complaint, and it consequently rejected the second complaint in accordance with its priority policy. The applicant did not appeal against this decision.7On 14 January 2011, the applicant lodged a complaint with the Commission pursuant to Article 7 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC] (OJ 2003 L 1, p. 1). The applicant submitted that the charges set by Schiphol were discriminatory and excessive and amounted to an infringement of Article 102 TFEU. The applicant mentioned, moreover, that it had lodged a number of complaints with the NMa but that, in its view, that authority had not taken any final decision on the merits of a complaint relating to competition.8On 18 December 2012, the Commission informed the applicant of its intention to reject the applicant’s complaint on the basis of Article 13(2) of Regulation No 1/2003, on the ground that a competition authority of a Member State had already dealt with the case. The applicant replied to the Commission by letter of 31 January 2013.9On 3 May 2013, the Commission adopted Decision C(2013) 2727 final rejecting the applicant’s complaint on the basis of Article 13(2) of Regulation No 1/2003 (‘the contested decision’). In addition, the Commission found that, in any event, the complaint could also be rejected because the European Union lacked a legal interest, given that, in the light of the NMa’s findings, there was very little likelihood of being able to establish an infringement of Article 102 TFEU. Procedure and forms of order sought 10The applicant brought the present action by application lodged at the Registry of the General Court on 4 July 2013.11The applicant claims that the Court should:—annul the contested decision;order the Commission to pay the costs.12The Commission contends that the Court should:dismiss the action;order the applicant to pay the costs.13By document lodged on 4 October 2013, Schiphol applied for leave to intervene in the proceedings in support of the form of order sought by the Commission, pursuant to Article 115 of the General Court’s Rules of Procedure. By order of the President of the Second Chamber of the General Court of 10 December 2013, Schiphol was granted leave to intervene in the case in support of the form of order sought by the Commission.14Schiphol claims that the Court should: Substance 15The applicant relies on two pleas in law in support of its action, alleging respectively that: (i) the Commission erred in law, and made a manifest error of assessment, in finding that the applicant’s complaint could be rejected on the basis of Article 13(2) of Regulation No 1/2003; and (ii) the contested decision contains an inadequate statement of reasons. The first plea: error of law, and manifest error of assessment, in the application of Article 13(2) of Regulation No 1/2003 16The applicant submits, first, that the Commission erred in law in finding that the NMa had dealt with its complaint within the meaning of Article 13(2) of Regulation No 1/2003, even though that complaint had been rejected on priority grounds. Secondly, the applicant submits that the Commission erred in law and made a manifest error of assessment in basing itself on a decision of the NMa relating to a complaint which was not subject to an investigation conducted under European Union competition law, but rather under national air navigation law.17As a preliminary point, it should be borne in mind that the Commission, which is entrusted by Article 105(1) TFEU with the task of ensuring the application of Articles 101 TFEU and 102 TFEU, is responsible for defining and implementing the competition policy of the European Union and for that purpose has a discretion as to how it deals with complaints (see judgment of 16 October 2013 in Vivendi v Commission, T‑432/10, EU:T:2013:538, paragraph 22 and the case-law cited). The Court of Justice has also pointed out that Article 13 of and recital 18 in the preamble to Regulation No 1/2003 reflect the broad discretion which the national authorities joined together in the network of competition authorities have in order to ensure an optimal attribution of cases within the latter (judgment of 14 February 2012 in Toshiba Corporation and Others, C‑17/10, ECR, EU:C:2012:72, paragraph 90). Given the role assigned to the Commission by the TFEU in defining and implementing competition policy, the Commission, a fortiori, also has a broad discretion when applying Article 13 of Regulation No 1/2003.18The case-law relating to the assessment of the European Union’s interest has, however, drawn attention to the fact that the Commission’s discretion is not unlimited. The Commission must take into consideration all the relevant matters of law and of fact in order to decide on what action to take in response to a complaint. More particularly, it must consider attentively all the matters of fact and of law which the complainant brings to its attention (see judgment of 17 May 2001 in IECC v Commission, C‑450/98 P, ECR, EU:C:2001:276, paragraph 57 and the case-law cited).19In that regard, it follows from settled case-law that, where the institutions have a broad discretion, respect for the rights guaranteed by the legal order of the European Union in administrative procedures is of even more fundamental importance; those guarantees include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (see judgment of 17 December 2008 in HEG and Graphite India v Council, T‑462/04, ECR, EU:T:2008:586, paragraph 68 and the case-law cited). However, review by the Courts of the European Union of the Commission’s exercise of the discretion conferred on it in this regard must not lead them to substitute their assessment of the European Union interest for that of the Commission, but must focus on whether the contested decision is based on materially incorrect facts, or is vitiated by an error of law, manifest error of appraisal or misuse of powers (see judgment of 15 December 2010 in CEAHR v Commission, T‑427/08, ECR, EU:T:2010:517, paragraph 65 and the case-law cited).20With regard to the judicial review of a Commission decision based on Article 13(2) of Regulation No 1/2003, the purpose of that review is to verify that the contested decision is not based on materially incorrect facts and that the Commission has not erred in law, made a manifest error of assessment or misused its powers in finding that a competition authority of a Member State has already dealt with a complaint. It is necessary, by contrast, to bear in mind that review of decisions of the competition authorities of Member States is a matter for national courts alone, which perform an essential function in the application of EU competition rules.The first limb of the first plea, alleging an error of law21The applicant submits that the concept of a case having been dealt with by a competition authority of a Member State within the meaning of Article 13(2) of Regulation No 1/2003 — whereupon the Commission may, under that provision, reject a complaint — must be construed in the light of Article 5 of that regulation, which refers to the different types of decision that may be taken by that authority. Consequently, in the applicant’s view, a case may be considered to have been dealt with by a national authority only if that authority has at least decided that there are no grounds for action, following a preliminary investigation. By contrast, that authority cannot be regarded as having dealt with the case, within the meaning of Article 13(2) of that regulation, where it has merely rejected it on priority grounds. That interpretation, the applicant submits, is borne out by paragraph 20 of the Commission Notice on Cooperation within the Network of Competition Authorities (OJ 2004 C 101, p. 43) (‘the notice on cooperation within the network of competition authorities’).22The Commission and the intervener dispute the applicant’s arguments.23Under Article 13(2) of Regulation No 1/2003, ‘[w]here a competition authority of a Member State or the Commission has received a complaint against an agreement, decision of an association or practice which has already been dealt with by another competition authority, it may reject it’.24In accordance with settled case-law, it is necessary, in interpreting a provision of EU law, 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 judgments of 7 June 2005 in VEMW and Others, C‑17/03, ECR, EU:C:2005:362, paragraph 41 and the case-law cited, and of 26 October 2010 in Germany v Commission, T‑236/07, ECR, EU:T:2010:451, paragraph 44 and the case-law cited).25It is in the light of those principles that is appropriate to consider whether the expression ‘complaint … which has already been dealt with by another competition authority’ contained in Article 13(2) of Regulation No 1/2003 must be understood as allowing the Commission to reject a complaint in a case where the competition authority of a Member State has previously rejected the same complaint on priority grounds.26First of all, it appears that the answer to the question whether the Commission may reject a complaint which has previously been rejected by a competition authority of a Member State on priority grounds may be inferred from a literal interpretation of Article 13(2) of Regulation No 1/2003, in the light of the plain meaning of the expression ‘complaint … which has already been dealt with by another competition authority’. It should, in that regard, be noted that that expression is broad in scope in that it is capable of including all cases of complaints which have been examined by another competition authority, whatever may have been the outcome. The legislature has thus chosen not to limit the scope of that article solely to cases of complaints which have already been the subject of a decision by another competition authority.27Secondly, the interpretation set out in paragraph 26 above also appears to be consistent with the general scheme of Regulation No 1/2003. It is important to read Article 13(2) of the regulation in the light of paragraph (1) of that article, which provides that the Commission may reject a complaint in the case where another competition authority of a Member State is dealing with it. It therefore appears that what matters is not the outcome of the review of the complaint by that competition authority, but the fact that it has been reviewed by that authority.28The interpretation set out in paragraph 26 above is also supported by recital 18 in the preamble to Regulation No 1/2003, which relates to Article 13 thereof (judgment in Toshiba Corporation and Others, paragraph 17 above, EU:C:2012:72, paragraph 90) and which states that ‘[t]his provision should not prevent the Commission from rejecting a complaint for lack of Community interest, as the case-law of the Court of Justice has acknowledged it may do, even if no other competition authority has indicated its intention of dealing with the case’. Since the Commission may decide to dismiss a complaint for lack of Community interest, even though it has not been dealt with by a competition authority of a Member State, the Commission may, a fortiori, reject a complaint reviewed by that authority which has been rejected by the latter on priority grounds.29The notice on cooperation within the network of competition authorities, which is designed to implement the provisions of Regulation No 1/2003, and on which the applicant relies, also supports the interpretation set out in paragraph 26 above. Paragraph 20 of the notice states that, ‘[i]n Article 13 of [that regulation], “dealing with the case” does not merely mean that a complaint has been lodged with another authority. It means that the other authority is investigating or has investigated the case on its own behalf’. It does not, however, give any indication as to the finding reached by the competition authority of a Member State. Paragraph 22 of that notice expressly contemplates the case in which a complaint has been reviewed by a competition authority but rejected for reasons other than the investigation of the substance of the case; it gives the example of a case in which the authority was unable to collect the evidence necessary to prove the infringement, and states that it is important to be flexible in allowing another authority to carry out its own investigation and to deal with the case itself. The Court of Justice has, moreover, recognised the broad discretion which competition authorities enjoy in order to ensure optimal allocation of cases, stating, with regard to Article 13(1) of that regulation, that each authority has the possibility, but is not under any obligation, to reject a complaint which it has received, where another authority is already dealing with the same case (judgment in Toshiba Corporation and Others, paragraph 17 above, EU:C:2012:72, paragraph 90).30As for the applicant’s arguments derived from Article 5 of Regulation No 1/2003, these do not make it possible to call into question the interpretation set out in paragraph 26 above.31The applicant claims that Article 13(2) of Regulation No 1/2003 must be read in the light of Article 5 of that regulation, relating to the powers of the Member States’ competition authorities to apply Articles 101 TFEU and 102 TFEU in individual cases. According to the applicant, the Commission is prohibited from rejecting a complaint in the case where that complaint has not been the subject of a decision of a competition authority of a Member State under Article 5 of that regulation. The applicant submits that, in this case, the decision of the NMa of 16 December 2009 does not constitute a decision taken on the basis of that article, since it ‘represents even less than the maximum allowed for [a national competition authority], which is to establish that there are no grounds for action on its part’, as the NMa has not established whether the conditions for a prohibition were met.32Article 5 of Regulation No 1/2003 comes under Chapter II relating to powers and sets out the decisions which may be taken by the competition authorities of the Member States when applying Articles 101 TFEU et 102 TFEU in individual cases. The first paragraph of Article 5 of the regulation thus provides that those authorities, ruling on the substance, may, acting on their own initiative or on a complaint, take the following decisions, namely require that an infringement be brought to an end, order interim measures, accept commitments and impose fines, periodic penalty payments or any other penalty provided for in their national law. According to the second paragraph of Article 5 of that regulation, ‘[w]here on the basis of the information in their possession the conditions for prohibition are not met [national competition authorities] may likewise decide that there are no grounds for action on their part’. In answer to the question whether national competition authorities were entitled to take a decision finding that there had been no breach of Articles 101 TFEU or 102 TFEU, the Court of Justice has stated that Article 5 of that regulation is to be interpreted as restrictively defining the decisions which those authorities may take (judgment of 3 May 2011 in Tele2 Polska, C‑375/09, ECR, EU:C:2011:270, paragraphs 19 to 30).33Article 13(2) of Regulation No 1/2003, which comes under Chapter IV on cooperation, provides, however, only that the complaint must have been dealt with by another competition authority, but not necessarily that a decision must have been reached in relation to that complaint (see paragraph 26 above). Accordingly, as noted by the Commission in the contested decision, that provision does not necessarily require that a decision must have been taken by the competition authority of a Member State that has already rejected the complaint. Consequently, even if it were to be supposed that the rejection of a complaint by a competition authority of a Member State on priority grounds does not constitute a decision within the meaning of Article 5, the Commission could apply, in such a case, the provisions of Article 13(2).34In the alternative, in any event, the decision of the NMa of 16 December 2009 may be considered to be a decision based on the second paragraph of Article 5 of Regulation No 1/2003. As submitted by the Commission, that provision covers all cases in which the competition authority of a Member State finds that the information in its possession does not allow it to conclude that the conditions for prohibition are met, without it being necessary for it to have ordered any preliminary measures of inquiry. In the present case, in finding, in its decision of 16 December 2009, that a review under Article 102 TFEU of the charges applied from April 2009 would have the same outcome as the review of the third complaint and in rejecting, consequently, the second complaint in accordance with its priority policy, the NMa necessarily took the view that the conditions for prohibition had not been satisfied. Moreover, a finding that a decision by a competition authority of a Member State to reject a complaint on priority grounds constitutes a decision taken on the basis of the second paragraph of Article 5 of that regulation is consistent with the judgment in Tele2 Polska, paragraph 32 above (EU:C:2011:270), in which the Court of Justice found that that article restrictively listed the type of decisions which could be taken by a national authority. Any different interpretation would have the effect of depriving the competition authorities of Member States of the possibility of taking decisions to reject complaints on priority grounds, even though competition authorities do rely on such grounds when taking closure decisions which are more or less formal. Consequently, the interpretation set out in paragraph 26 above is consistent with Article 5 of that regulation, since the Commission may reject a complaint on the ground that it has already been rejected by decision of a competition authority of a Member State on priority grounds.35Finally, the interpretation set out in paragraph 26 above is consistent with the mechanism of Article 13(2), which also provides that a competition authority of a Member State may reject a complaint where it has already been dealt with by the Commission. As the case-law has consistently recognised the Commission’s power to take decisions rejecting a complaint on priority grounds (see, for example, the judgment in Vivendi v Commission, paragraph 17 above, paragraphs 22 to 25 and the case-law cited), the competition authority of a Member State may also reject a complaint which has been the subject of a prior rejection by the Commission on such a ground.36Thirdly, the interpretation set out in paragraph 26 above appears to be in keeping with one of the main objectives of Regulation No 1/2003, which is to establish an effective decentralised scheme for the application of EU competition law rules. It is apparent from recital 6 in the preamble to that regulation that, ‘[i]n order to ensure that the Community competition rules are applied effectively, the competition authorities of the Member States should be associated more closely with their application’. Recital 15 in the preamble to that regulation states, moreover, that ‘[t]he Commission and the competition authorities of the Member States should form together a network of public authorities applying the Community competition rules in close cooperation’. That regulation thus put an end to the previous centralised regime and, in accordance with the principle of subsidiarity, established a wider association of Member States’ competition authorities, authorising them to implement EU competition law (judgment of 8 March 2007 in France Télécom v Commission, T‑339/04, ECR, EU:T:2007:80, paragraph 79). ‘To ensure that cases are dealt with by the most appropriate authorities within the network’, recital 18 in the preamble to Regulation No 1/2003 states that ‘a general provision should be laid down allowing a competition authority to suspend or close a case on the ground that another authority is dealing with it or has already dealt with it, the objective being that each case should be handled by a single authority’.37By contrast, the interpretation put forward by the applicant, the effect of which would be to require the Commission to review a complaint systematically each time a competition authority of a Member State has investigated a complaint but has not taken one of the decisions provided for in Article 5 of Regulation No 1/2003 or taken a decision to reject the complaint on priority grounds, would not be compatible with the objective of Article 13(2) of that regulation, which is to establish, with a view to ensuring effectiveness, an optimal allocation of resources within the European competition network.38Furthermore, as noted by the intervener, the interpretation proposed by the applicant appears to be at variance with the drafting history of Regulation No 1/2003. The explanatory memorandum relating to Commission proposal COM (2000) 582 final for a Council regulation on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty indicates that the purpose of Article 13 was to remove the risk of duplication of work and the incentive for multiple complaints.39Finally, as noted by the Commission, the interpretation put forward by the applicant runs contrary to Article 6 of Regulation No 1/2003, pursuant to which national courts have the power to apply Articles 101 TFEU and 102 TFEU. Requiring the Commission to review, as a matter of course, complaints rejected on priority grounds by competition authorities of Member States would be tantamount to transferring to the Commission the power to review the decisions of those authorities, which is a matter for national courts alone. It is true that Regulation No 1/2003 created a cooperation mechanism between the Commission and those authorities (judgment in Tele2 Polska, paragraph 32 above, EU:C:2011:270, paragraph 26), but it did not provide for a mechanism by which the Commission would be substituted for national courts, which have an essential part to play in applying EU competition rules (see recital 7 in the preamble to Commission proposal COM (2000) 582 final for a Council regulation on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty).40It is thus apparent from both the wording and the scheme of Regulation No 1/2003, on the one hand, and the objective pursued by that regulation, on the other, that the Commission may, in order to reject a complaint, properly rely on the ground that a competition authority of a Member State has previously rejected that complaint on priority grounds. Accordingly, the circumstance — even on the assumption that it is proved — that, in the present dispute, the NMa did not close the complaint which had been brought before it by taking a decision within the meaning of Article 5 of that regulation and that it relied on priority grounds did not preclude the Commission from finding, pursuant to Article 13(2) of that regulation, that that complaint had been dealt with by a competition authority of a Member State and from rejecting it on that ground.The second limb of the first plea, alleging an error of law and a manifest error of assessment41The applicant asserts that the Commission erred in law and made a manifest error of assessment in relying on a decision of the NMa relating to a complaint which was not the subject of an investigation conducted under European Union competition law, but rather under national air navigation law.42The Commission and the intervener take issue with the applicant’s arguments.43It is true that Article 13(2) of Regulation No 1/2003, as is the case for all of the provisions of that regulation, refers to the situations in which Articles 101 TFEU and 102 TFEU are implemented. In particular, Article 3(1) of that regulation provides that, where the competition authorities of Member States apply national competition law to an abusive practice by an undertaking having a dominant position on the market which may affect trade between Member States, they must also apply Article 102 TFEU.44Consequently, the Commission may reject a complaint on the basis of Article 13(2) of Regulation No 1/2003 only where it has been the subject of a review carried out in the light of EU competition law rules.45None the less, no provision of that regulation prohibits a competition authority of a Member State from relying, in the investigations which it carries out with a view to ascertaining whether there has been compliance with EU competition law rules, on conclusions which it reached as part of the investigation carried out under different national legislation. Paragraph 21 of the notice on cooperation within the network of competition authorities, moreover, merely states that ‘Article 13 of [Regulation No 1/2003] can be invoked when the agreement or practice involves the same infringement(s) on the same relevant geographic and product markets’.46It follows from the foregoing that the Commission may, in order to reject a complaint on the basis of Article 13(2) of Regulation No 1/2003, properly rely on the ground that a competition authority of a Member State has previously rejected that complaint following a review based on conclusions reached by that authority in the course of an investigation conducted under separate provisions of national law, on condition that that review was conducted in the light of the rules of EU competition law.47In the present case, it is apparent from the contested decision that the Commission found that the NMa had dealt with the applicant’s complaint on the basis of Article 102 TFEU. It noted that the NMa had in particular indicated the extent to which the findings of the investigation conducted under air navigation law were relevant to its review based on competition law, by describing the similarities between the two sets of rules, comparing the equivalence of the relevant services and ascertaining the competitive disadvantage caused by Schiphol’s pricing. The Commission found that the NMa had thus examined whether the charges were proportionate to the costs, had compared those charges with those of other international airports and had assessed them in the light of the quality of service received by the applicant. Finally, the Commission held that it was not its task to rule on the arguments and findings set out by the NMa or on the methodology used by the latter.48Moreover, it is apparent from the NMa’s decision of 16 December 2009 that the applicant’s complaint was reviewed in the light of the provisions of Article 24 of the MW and of Article 102 TFEU. The NMa in particular held therein, as noted by the Commission in the contested decision, that the assessment of the concepts of non-discrimination and reasonableness set out in Articles 8.25d(2) and (3) of the WL was similar to that carried out under EU competition law. The NMa also pointed out that, in its decision of 14 July 2009, it had interpreted the provisions of the WL in accordance with the case-law of the Courts of the European Union relating to Article 102 TFEU. It further noted that a definition of the relevant market, which was to be carried out as part of an investigation conducted on the basis of the provisions of competition law, was not necessary in this case, since it had assumed that Schiphol was in a position of economic strength.49It follows from the foregoing that the Commission did not err in law in rejecting the applicant’s complaint on the basis of Article 13(2) of Regulation No 1/2003, since the Commission found that the competition authority of a Member State had dealt with that complaint on the basis of Article 102 TFEU.50While acknowledging that the provisions of the WL at issue refer in part to concepts derived from EU competition law, the applicant puts forward five arguments designed to establish that the Commission made a manifest error of assessment in finding that the NMa had dealt with its complaint on the basis of Article 102 TFEU.51It is apparent from paragraph 20 above that, in order to respond to the applicant’s arguments, the Court must confine itself to establishing that, in rejecting the complaint on the basis of Article 13(2) of Regulation No 1/2003, the Commission did not err in law or make a manifest error of assessment in forming the view that the NMa had already dealt with the applicant’s complaint in the light of EU competition law. It was for the Commission, in that context, to establish that the NMa had not rejected the applicant’s complaint without having first conducted its examination in the light of EU competition law rules. However, the Court’s review must not lead to an appraisal of the merits of the NMa’s decision or of the procedure or methodology used by the latter, which assessment the Commission did not itself carry out, moreover, and which is a matter for the national courts.52First, the applicant states that the NMa did not define the relevant market, which, in its view, is an essential element of any examination of compliance with Article 102 TFEU, and that the Commission could not, therefore, conclude that the complaint had been dealt with by the NMa on the basis of that provision. Such an argument must, however, be rejected as irrelevant in the light of the scope and purpose of the review carried out by the Court, referred to in paragraph 51 above. That argument relates to the methodology and merits of the analysis applied by the NMa for the purpose of processing the applicant’s complaint.53For the sake of completeness, it must be held that, in the present case, the NMa was not required to define the relevant market.54It is true that, according to the case-law, the determination of the relevant market is of critical importance for the purpose of establishing whether a company is in a dominant position, since the possibilities of competition can be judged only in relation to the characteristics of the goods or services in question, as a result of which characteristics those goods or services are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products or services (judgments of 21 February 1973 in Europemballage and Continental Can v Commission, 6/72, ECR, EU:C:1973:22, paragraph 32, and of 30 January 2007 in France Télécom v Commission, T‑340/03, ECR, EU:T:2007:22, paragraph 78). Furthermore, according to settled case-law, a dominant position is demonstrated by the fact that the undertaking concerned is in a position of economic strength which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers (judgments of 14 February 1978 in United Brands and United Brands Continentaal v Commission, 27/76, ECR, EU:C:1978:22, paragraph 65; of 13 February 1979 in Hoffmann-La Roche v Commission, 85/76, ECR, EU:C:1979:36, paragraph 38; and in France Télécom v Commission, EU:T:2007:22, paragraph 99).55In the present case, however, it is clear from the decision of the NMa of 14 July 2009 that it was assumed that the intervener was in a position of economic strength and that, consequently, as the NMa has noted in paragraph 16 of its decision of 16 December 2009, since the intervener was in a dominant position, it was not necessary to proceed with the determination of the relevant market. The Commission has therefore not, on any view, marred its decision with a manifest error by forming the view that the applicant’s complaint had been dealt with in compliance with the rules for assessment laid down by EU competition law.56Secondly, the applicant contends that a review carried out under Article 102 TFEU would have led the NMa to a different conclusion, with regard to the intervener’s abusive conduct in relation to price discrimination.57It should be noted at the outset that it is not for the Court to review the legality of the decision of the NMa (see paragraph 51 above). It is, by contrast, the Court’s task to verify that the Commission has not erred in law or made a manifest error of assessment in finding that the NMa had already dealt with the applicant’s complaint by using the definition of the concept of discrimination contained in Article 102 TFEU.58In that regard, it is apparent from the contested decision that, in the analysis that led to its decision of 14 July 2009, the NMa took account of the definition of discrimination contained in Article 102 TFEU. As noted by the Commission in the contested decision, the NMa, in its decision of 14 July 2009, both examined the equivalence of the services offered by the intervener to various airlines and assessed the competitive disadvantage caused by the prices charged (paragraphs 113 to 156). In order to carry out that review, the NMa explicitly stated that it was using the definition of discrimination contained in Article 102 TFEU, as interpreted by the Court of Justice (paragraph 33).59The applicant submits, thirdly, that the NMa stated in another decision that, although the concepts contained in the WL could be interpreted with the aid of competition law, the overall assessment of a case under the WL did not take place within the framework of competition law and that any question relating to a breach of competition rules could not be resolved as part of an investigation conducted under the WL. That matter, however, even if it is not disputed, has no bearing on the lawfulness of the contested decision, since here, on the one hand, the Commission was not bound by the assessments made by the NMa in a separate case and, on the other, it is clear from the foregoing that the Commission did indeed check that the NMa had investigated, in the light of Article 102 TFEU, the complaint which had been brought before it.60The applicant maintains, fourthly, that the review of a complaint under the WL is carried out exclusively by the aviation control department, which has separate powers and duties from those of the competition directorate, and does not take account of the general objectives of EU competition policy. That argument must be rejected, however, since the aviation control department was part of the Netherlands competition authority and the decision of the NMa on which the Commission relied in rejecting the applicant’s complaint was adopted by its single board. It is important to bear in mind that Article 13(2) of Regulation No 1/2003, and indeed the provisions of that regulation as a whole, refers to the ‘competition authority of a Member State’ without distinguishing between the different departments of that authority. Consequently, it is unnecessary to establish the composition of the teams which investigated the applicant’s complaint on the basis of the WL, since the NMa conducted a review of the applicant’s complaint in the light of competition law and it is apparent from the foregoing that the NMa was properly entitled to rely on the analysis carried out in connection with the complaint based on the WL.61Finally, the applicant’s argument that the contested decision has the effect of enabling a large class of potential abuses to avoid the scrutiny of competition authorities, in breach of Article 102 TFEU, must be rejected. It is clear from the foregoing that the contested decision specifically did not have the effect of enabling the intervener to avoid application of Article 102 TFEU.62It follows from all of the foregoing that the applicant has not established that the Commission made a manifest error of assessment in finding that the NMa had dealt with the applicant’s complaint on the basis of Article 102 TFEU.63Consequently, the Commission did not err in law or make a manifest error of assessment in holding that the NMa had dealt with the applicant’s complaint in the light of EU competition law.64The first plea in law must therefore be rejected in its entirety. The second plea, alleging infringement of the obligation to state reasons 65The applicant submits that, inasmuch as it rejects, on a subsidiary basis, the applicant’s complaint for lack of European Union interest, the contested decision is inadequately reasoned.66The Commission contends that the second plea in law, which is necessarily subsidiary in nature, must be rejected, since the contested decision, supplemented by the decision of the NMa of 16 December 2009, sets out clearly the reasons why the case did not present a sufficient European Union interest.67It is apparent from the contested decision that the Commission, which founded that decision on Article 13(2) of Regulation No 1/2003, further indicated that it was of the opinion, in any event, that the complaint could be rejected for lack of European Union interest by reason of the limited prospect of establishing an infringement, given the similar conclusion reached by the NMa at the end of its investigation.68As a preliminary point, it is important to note that, since it was merely on a subsidiary basis that the Commission rejected the applicant’s complaint for lack of European Union interest, the second plea in law, even if it were to be upheld, could not lead to annulment of the contested decision (see, to that effect, judgment of 27 February 1997 in FFSA and Others v Commission, T‑106/95, ECR, EU:T:1997:23, paragraph 199).69In any event, the contested decision does appear to be sufficiently reasoned. It should be recalled that, according to settled case-law, Article 7 of Regulation No 1/2003 does not give a complainant the right to insist that the Commission take a final decision as to the existence or non-existence of the alleged infringement and does not oblige the Commission to continue the proceedings, whatever the circumstances, right up to the stage of a final decision (judgments of 18 October 1979 in GEMA v Commission, 125/78, ECR, EU:C:1979:237, paragraph 18, and of 17 May 2001 in IECC v Commission, C‑449/98 P, EU:C:2001:275, paragraph 35). By contrast, the Commission is required to consider attentively all the matters of fact and of law which the complainant brings to its attention (judgments of 11 October 1983 in Schmidt v Commission, 210/81, ECR, EU:C:1983:277, paragraph 19, and of 17 November 1987 in British American Tobacco and Reynolds Industries v Commission, 142/84 and 156/84, ECR, EU:C:1987:490, paragraph 20). Complainants are entitled to have the fate of their complaint settled by a decision of the Commission against which an action may be brought (judgment of 18 March 1997 in Guérin automobiles v Commission, C‑282/95 P, ECR, EU:C:1997:159, paragraph 36, and IECC v Commission, EU:C:2001:275, paragraph 35).70In that regard, the Commission is under an obligation to state reasons if it declines to continue with the examination of a complaint. Since the reasons stated must be sufficiently precise and detailed to enable the General Court to review effectively the Commission’s use of its discretion to define priorities, the Commission must set out the facts justifying the decision and the legal considerations on the basis of which it was adopted (order of 31 March 2011 in EMC Development v Commission, C‑367/10 P, EU:C:2011:203, paragraph 75).71In the present case, it is apparent from the contested decision that the Commission found that the likelihood of establishing an infringement of Article 102 TFEU was limited, given the conclusions reached by the NMa. It should, however, be recalled that, under Articles 4 and 5 of Regulation No 1/2003, the Commission and the competition authorities of the Member States have parallel powers to apply Articles 101 TFEU and 102 TFEU, and that the scheme of that regulation is based on close cooperation between them. Accordingly, in its assessment, the Commission may also take account of the steps taken by those national authorities (judgment in Vivendi v Commission, paragraph 17 above, EU:T:2013:538, paragraph 26).72It follows from the foregoing that the Commission fulfilled its obligation to state reasons by setting out, clearly and unequivocally, the factual and legal considerations which led it to conclude that the likelihood of establishing the existence of an infringement of Article 102 TFEU was no more than very limited. Since those details enable the Court to review effectively the Commission’s exercise of its discretion in the contested decision, it must be concluded that the contested decision is sufficiently reasoned in that regard.73The second plea in law can therefore be rejected as being unfounded and, consequently, the action must be dismissed in its entirety. Costs 74Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the Commission’s costs and those of Schiphol, in accordance with the forms of order sought by those parties.On those grounds,THE GENERAL COURT (Second Chamber)hereby: 1. Dismisses the action; 2. Orders easyJet Airline Co. Ltd to pay the costs. Martins RibeiroGervasoniMadiseDelivered in open court in Luxembourg on 21 January 2015.[Signatures]( *1 ) Language of the case: English. | 474b8-2352dfa-439d | EN |
The Principality of Monaco cannot benefit from the protection of the trade mark MONACO in the EU in respect of certain goods and services | 15 January 2015 ( *1 )‛Community trade mark — International registration designating the European Community — Word mark MONACO — Absolute grounds for refusal — Descriptive character — Lack of distinctive character — Article 151(1) and Article 154(1) of Regulation (EC) No 207/2009 — Article 7(1)(b) and (c) and Article 7(2) of Regulation No 207/2009 — Partial refusal of protection’In Case T‑197/13, Marques de l’État de Monaco (MEM), established in Monaco (Monaco), represented by S. Arnaud, lawyer,applicant,v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), represented by V. Melgar, acting as Agent,defendant,ACTION brought against the decision of the Fourth Board of Appeal of OHIM of 29 January 2013 (Case R 113/2012-4), concerning the international registration, designating the European Community, of the word mark MONACO,THE GENERAL COURT (Eighth Chamber),composed of D. Gratsias, President, M. Kancheva and C. Wetter (Rapporteur), Judges,Registrar: E. Coulon,having regard to the application lodged at the Registry of the General Court on 1 April 2013,having regard to the response lodged at the Registry of the General Court on 7 August 2013,having regard to the decision of 5 November 2013 permitting a letter from the applicant of 22 October 2013 to be lodged at the Registry of the General Court,having regard to the observations of OHIM as to that letter, lodged at the Registry of the General Court on 21 November 2013,having regard to the change in composition of the Chambers of the General Court,having regard to the fact that no request for a hearing to be listed was submitted by either party within the period of one month from notification of closure of the written procedure, and having therefore decided, upon the report of the Judge-Rapporteur and pursuant to Article 135a of the Rules of Procedure of the General Court, to rule on the appeal without an oral procedure,gives the following Judgment Background to the dispute 1On 1 December 2010, the Government of the Principality of Monaco obtained, from the World Intellectual Property Organisation (WIPO), an international registration designating the European Community of the word mark MONACO (‘the contested mark’). This registration reached the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (‘OHIM’) on 24 March 2011.2The goods and services in respect of which registration was sought are in Classes 9, 12, 14, 16, 18, 25, 28, 35, 38, 39, 41 and 43 of the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended.3On 1 April 2011, OHIM notified the Monaco Government of an ex officio provisional refusal of protection for the contested mark in the EU, pursuant to Article 5 of the Protocol relating to the Madrid Agreement concerning the international registration of marks, adopted at Madrid on 27 June 1989 (OJ 2003 L 296, p. 22) (‘the Madrid Protocol’) and to Rule 113 of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark (OJ 1995 L 303, p. 1), as amended, for some of the goods covered by the international registration designating the European Community (‘the products and services concerned’). These are in Classes 9, 16, 39, 41 and 43 and correspond, for each of those classes, to the following description:—Class 9: ‘Magnetic data carriers’;Class 16: ‘Goods made from these materials [paper and cardboard], not included in other classes; printed matter; photographs’;Class 39: ‘Transport; travel arrangement’;Class 41: ‘Entertainment, sporting activities’;Class 43: ‘Temporary accommodation’.4The grounds stated in support of that refusal were that, in relation to the products and services concerned, the contested mark was devoid of distinctive character and had a descriptive character, within the meaning of Article 7(1)(b) and (c) of Council Regulation No 207/2009 of 26 February 2009 on the Community trade mark (OJ 2009 L 78, p. 1).5By decision of 18 November 2011, after the Monaco Government had responded to the objections raised in the notice of provisional refusal, the examiner confirmed the partial refusal of protection for the contested mark within the EU, in relation to the products and services concerned and on the same grounds as previously. On the other hand, she discharged the objections set out in the provisional refusal in relation to ‘apparatus for recording, transmission or reproduction of sound or images’ in Class 9.6On 13 January 2012, the Government of the Principality of Monaco brought an appeal against that decision at OHIM, pursuant to Articles 58 to 64 of Regulation No 207/2009.7On 17 April 2012 the applicant, Marques de l’État de Monaco (MEM), a limited company incorporated under the law of Monaco, succeeded the Government of the Principality of Monaco as owner of the contested mark.8By decision of 29 January 2013 (‘the contested decision’), the Fourth Board of Appeal of OHIM dismissed the appeal. It held that the applicant had no special entitlement to use the contested mark in relation to the products and services concerned, such that the only issue of significance was whether it could be registered under Article 7(1)(b) and (c) of Regulation No 207/2009. It based its decision, first, on Article 7(1)(c) of that regulation, which requires registration to be refused in respect of descriptive marks, such as those consisting exclusively of signs or indications which may serve, in trade, to designate geographical origin. In that regard, it referred to the case-law which requires a sufficiently direct and concrete link to exist between such signs and the products and services covered by the marks in question. It considered that case-law to be applicable to the present case, as the word ‘monaco’ designates the geographical area of the same name and can, therefore, be understood in any language within the EU as designating the geographical origin or destination of the products and services concerned. It further considered that the contested mark was clearly devoid of distinctive character in relation to the products and services concerned, within the meaning of Article 7(1)(b) of Regulation No 207/2009. Finally, it stated that those grounds applied equally to Article 7(2) of the same regulation. Forms of order sought by the parties 9The applicant contends that the Court should:annul the contested decision;as an ancillary matter, ‘in so far as necessary’, refer questions to the Court of Justice as to the applicability of Article 7(1)(c) and Article 7(2) of Regulation No 207/2009 to a non-member State;order OHIM to pay the costs.10OHIM contends that the Court should:dismiss the action as being in part inadmissible and in part unfounded;order the applicant to pay the costs. Law 11In support of its application to annul the contested decision, the applicant presents five formal pleas in law, but in substance they amount to three: first, failure to state any or any sufficient reasons, secondly, failure to apply Article 7(1)(b) and Article 7(2) of Regulation No 207/2009 correctly, and thirdly, failure to apply Article 7(1)(c) and Article 7(2) of that regulation correctly.12OHIM challenges the pleas and arguments advanced by the applicant.13Under Article 151(1) of Regulation No 207/2009, an international registration designating the European Community is, from the date of its registration pursuant to Article 3(4) of the Madrid Protocol, to have the same effect as an application for a Community trade mark. Article 154(1) of that Regulation provides for international registrations designating the European Community to be subject to examination as to absolute grounds for refusal in the same way as applications for Community trade marks (judgment of 13 April 2011 in Deichmann v OHIM (Representation of a curved band with dotted lines), T‑202/09, EU:T:2011:168, paragraph 24).14Under Article 7(1)(b) of Regulation No 207/2009, trade marks which are devoid of any distinctive character are not to be registered. Article 7(1)(c) of that regulation prevents registration of ‘trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service’. Article 7(2) of the regulation provides that paragraph 1 is to apply notwithstanding that the grounds of non-registrability obtain in only part of the EU.15It is against that background that the first issue, that of whether the Board of Appeal complied with its obligation to state reasons, should be considered. As to the plea based on failure to state any or any sufficient reasons 16Under Article 75 of Regulation No 207/2009, OHIM is required to state reasons for its decisions. This duty to state reasons has the same scope as that under Article 296 TFEU, pursuant to which the reasoning of the author of the act must be shown clearly and unequivocally. It has two purposes: to allow interested parties to know the justification for the measure taken so as to enable them to protect their rights and to enable the Courts of the European Union to exercise their power to review the legality of the decision (judgments of 19 May 2010 in Zeta Europe v OHIM (Superleggera), T‑464/08, EU:T:2010:212, paragraph 47, and 21 May 2014Eni v OHIM — Emi (IP) (ENI), T‑599/11, EU:T:2014:269, paragraph 29).17The applicant maintains that the Board of Appeal failed to comply with Article 75 of Regulation No 207/2009, Article 296 TFEU and Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, in that it did not give sufficient reasons for the contested decision.18It considers, first, that the Board of Appeal limited itself to citing the relevant provisions of Regulation No 207/2009 and the case-law relating to them, without setting out its findings of fact explicitly, and thus deprived it of any explanation for the partial refusal of its application. Secondly, it considers that reasons for the refusal of protection for the Class 9 products concerned are entirely absent, or at least are insufficient, if not contradictory.19In relation to the first complaint, to the effect that the Board of Appeal did not set out, in the contested decision, the factual basis for that decision, it should be noted at the outset that the duty to state reasons does not require the Boards of Appeal to provide an account that follows exhaustively and one by one all the lines of reasoning articulated by the parties before them (see judgment of 12 July 2012 in Gucci v OHIM — Chang Qing Qing (GUDDY), T‑389/11, EU:T:2012:378, paragraph 16 and the case-law cited). It is therefore sufficient if the institution concerned sets out the facts and the legal considerations having decisive importance in the context of the decision (ENI, cited in paragraph 16 above, EU:T:2014:269, paragraph 30; see also to that effect, judgment of 14 February 1990Delacre and Others v Commission, C‑350/88, ECR, EU:C:1990:71, paragraph 16).20It should be pointed out in this respect that, contrary to the applicant’s assertions, the Board of Appeal, after listing the products and services concerned in paragraph 2 of the contested decision, and setting out the reasons for the examiner’s decision (paragraphs 8 to 13 of the contested decision), stated that the word ‘monaco’ would be ‘immediately perceived as a purely informative expression indicating the geographical origin or destination’ of the products and services concerned, namely Monaco (paragraph 25 of the contested decision). In paragraphs 26 to 29 of the contested decision, it explained the link between each of the products and services concerned and the territory of Monaco, indicating, in respect of ‘magnetic data carriers’ in Class 9, and ‘goods made from these materials [paper and cardboard], not included in other classes; printed matter; photographs’ in Class 16, that the contested mark could ‘correspond to an indication of the subject matter of those products, such as books, tourist guides, photographs, etc., all of which relate to the Principality of Monaco’ (paragraph 26 of the contested decision). Furthermore, it considered that the contested mark, in so far as it concerned services of ‘transport; travel arrangement’ in Class 39, could ‘clearly correspond to an indication of the destination or origin of these services’ (paragraph 27 of the contested decision), that the services of ‘entertainment; sporting activities’ in Class 41 would clearly take place in Monaco (paragraph 28 of the contested decision) and that the services of ‘temporary accommodation’ in Class 43 would be offered within the territory of the Principality of Monaco (paragraph 29 of the contested decision). On that basis, the Board of Appeal concluded that the contested mark would be perceived, in relation to the products and services concerned, as having its intrinsic meaning and not as a mark, and thus that it had a descriptive character within the meaning of Article 7(1)(c), of Regulation No 207/2009 (paragraphs 30 and 31 of the contested decision).21It will be apparent from the foregoing that the first complaint, based on an alleged failure to set out the factual basis for the contested decision, is itself lacking in any factual basis and must accordingly be dismissed.22In relation to the second complaint, the applicant maintains that the Board of Appeal limited itself to confirming the examiner’s decision, which, given that the reasons stated in that earlier decision were insufficient or contradictory, obstructed it in understanding the exact scope of the refusal in relation to the products in Class 9.23It is true that the examiner’s decision (it should be emphasised that that decision is not subject to the jurisdiction of the General Court, which only hears actions brought against decisions of the OHIM Boards of Appeal) gives rise to some confusion. At the top of page 6 of the decision, it states that ‘the objection relating to “... apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers” is discharged’, and that it ‘is upheld in so far as it concerns ... “magnetic data carriers”’. However, the ambiguity is resolved at the foot of page 10 and the top of page 11 of the examiner’s decision, where ‘magnetic data carriers’ are listed among the products in relation to which the protection of the contested mark is refused, in Class 9, while the list of accepted products includes ’scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; recording discs; mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment, computers; fire-extinguishing apparatus’, also in Class 9.24The applicant is thus wrong to argue that the examiner’s decision is tainted by a failure to give sufficient reasons which is in some way propagated to the contested decision. Upon reading the earlier decision, there is no doubt as to which of the products in Class 9 are accepted and which refused. In any event, it is only the contested decision whose legality is subject to review by the General Court.25As stated in paragraph 20 above, the Board of Appeal specified the products and services concerned in paragraph 2 of the contested decision. The only products in Class 9 to be mentioned were ‘[m]agnetic data carriers’. As that paragraph of the judgment also makes clear, the Board of Appeal adopted that same nomenclature when it examined the direct and concrete link between the products in question and the Principality of Monaco (paragraph 26 of the contested decision). Therefore, contrary to the applicant’s assertions, the Board of Appeal duly stated reasons for the contested decision concerning products in Class 9 and provided the applicant with an effective opportunity to challenge its analysis before the General Court.26Consequently, the second complaint must be rejected, and with it the plea in law as a whole. As to the plea based on failure to apply Article 7(1)(c) and Article 7(2) of Regulation No 207/2009 correctly 27In reality this plea is made up of four parts. The first is based on the assertion that the Board of Appeal misconstrued the scope of Article 7(1)(c) of Regulation No 207/2009, read in conjunction with Article 5 thereof, and, consequently, that of Article 7(2) thereof, in that it failed to take into account the fact that the original owner of the contested mark was a third State. The second is concerned with an error of law the Board of Appeal is said to have made in determining the general interest protected by Article 7(1)(c) of Regulation No 207/2009. The third relates to a manifest error of assessment which the Board of Appeal is said to have made in defining the relevant public, and the fourth is based partly on an assertion that there is no link between the geographical place in question and the products and services concerned, and partly on a manifest error which the Board of Appeal is said to have made in its assessment of the geographical criterion. Although the arguments relating to these last two parts are dealt with under the heading of distinctive character, or in other words the alleged failure to apply Article 7(1)(b) of Regulation No 207/2009 correctly, in content they relate essentially to the applicant’s challenge to the refusal in so far as it was based on Article 7(1)(c) of that regulation, as appears more particularly from paragraph 70 of the application.As to the first part, based on the assertion that the Board of Appeal misconstrued the scope of Article 7(1)(c) of Regulation No 207/2009, read in conjunction with Article 5 of that regulation28It should again be emphasised, as stated in paragraph 13 above, that under Article 3(4) of the Madrid Protocol and the provisions of Article 151(1) and Article 154(1) of Regulation No 207/2009, all international registrations designating the European Community are to be regarded, as from the date of registration, as being governed by the provisions applicable to an application for a Community trade mark.29Under Article 5 of Regulation No 207/2009, ‘[a]ny natural or legal person, including authorities established under public law, may be the proprietor of a Community trade mark’.30It follows from the express wording of this provision, which defines the scope ratione personae of Regulation No 207/2009, that any legal person, including a public law entity, may seek the protection of a Community trade mark. Clearly, that applies to a company established in a third State; but it also applies to the State itself, which, while a subject of international law, is nevertheless a legal person established under public law for the purposes of EU law.31It follows that, when the Monaco State, acting through its government, made an application seeking to designate the EU in connection with an international registration of the contested mark, it placed itself, through its own conduct, within the scope of Regulation No 207/2009. Consequently it became subject to the absolute grounds for refusal laid down in Article 7 of that regulation.32In other words, contrary to the contentions of the applicant, which has referred to certain international agreements made in fields other than that of Community trade marks, it is not a matter of the scope of EU law being extended to the Principality of Monaco, but of the Principality of Monaco voluntarily seeking the benefit of EU law (see, by analogy, judgments of 24 November 1992 in Poulsen and Diva Navigation, C‑286/90, ECR, EU:C:1992:453, paragraphs 21 to 28, and 21 December 2011Air Transport Association of America and Others, C‑366/10, ECR, EU:C:2011:864, paragraphs 121 to 127), initially as a legal person established under public law within the meaning of Article 5 of Regulation No 207/2009, and then, indirectly, by transferring the rights attaching to the contested mark to the applicant.33The Board of Appeal was thus correct in stating that ‘a public or government body [had] no special entitlement to a trade mark, arising as a matter of principle’ (paragraph 20 of the contested decision). Furthermore, this shows that, contrary to what is maintained by OHIM in paragraphs 12 to 15 of the response, the issue had indeed been raised before the Board of Appeal.34In connection with this first part of the plea in question, the applicant has also sought ancillary forms of order, ‘in so far as necessary’, with a view to the General Court putting the following preliminary questions before the Court of Justice:Does Article 7(1)(c) of Regulation No 207/2009 apply to all economic operators, regardless of whether they are third States?Should Article 7(1)(c), read in conjunction with Article 7(2), of Regulation No 207/2009, be interpreted as extending the general interest attaching to the territory of the EU to the territory of a third State, thus directly or indirectly affecting the general interest of that State, having regard to the fact that the partial refusal to register the trade mark applied for limits the protection it offers within the territory of the third State, in this case the Principality of Monaco?35OHIM makes a plea of inadmissibility in respect of the claim to those forms of order.36Having regard to the matters set out in paragraphs 28 to 33 above, as well as the fact that the applicant has claimed those forms of order only ‘in so far as necessary’, it is open to the General Court to dispense with the examination of this claim.37In any event, it should be remembered, first, that the procedure laid down by Article 267 TFEU is an instrument of cooperation between the Court and the national courts. Accordingly, it is solely for a national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances in each case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (judgment of 7 July 2011 in Agafiţei and Others, C‑310/10, ECR, EU:C:2011:467, paragraph 25).38Secondly, the powers of the General Court are those set out in Article 256 TFEU, read subject to Article 51 of the Statute of the Court of Justice of the European Union and Article 1 of the Annex to the Statute. Under those provisions, the General Court has no power to refer questions to the Court, pursuant to Article 267 TFEU, for a preliminary ruling. It would not therefore be appropriate to refer this action to the Court under Article 112 of the Rules of Procedure of the General Court and the second paragraph of Article 54 of the Statute of the Court, on the ground that it falls exclusively within the Court’s jurisdiction.39Thirdly, while Article 256(3) TFEU provides that the General Court has jurisdiction to hear and determine questions referred for a preliminary ruling under Article 267 TFEU in specific areas laid down by the Statute, the Statute does not in fact specify any such areas. Thus, at present, it does not provide for any jurisdiction in that regard.40In the present case, it is in the context of an action for annulment brought against a decision of OHIM that the General Court is asked, without any case being pending before a court of a Member State, and solely on the initiative of the applicant, to refer questions to the Court for a preliminary ruling. Accordingly, its claim in that regard must be dismissed as inadmissible in any event.41It is therefore appropriate, in the light of the matters set out in paragraphs 28 to 40 above, to reject the first part of this plea.As to the second part, relating to an alleged error of law in determining the general interest to be protected42Under the second part of this plea, the applicant maintains that the general interest pursued by Article 7(1)(c) of Regulation No 207/2009, namely that which requires that signs or indications which may serve, in trade, to designate the characteristics of the goods or services to which a trade mark application relates can be freely used by all (see, in this regard, judgment of 12 January 2006 in Deutsche SiSi-Werke v OHIM, C‑173/04 P, ECR, EU:C:2006:20, paragraph 62), is different from that which can be invoked by a third State such as the Principality of Monaco.43This second part of the plea is based on the same false premise as the first. It is not a matter of imposing EU law within the territory of Monaco, but of the Principality of Monaco, by means of an international agreement, seeking the benefit of EU law in order to take advantage of the contested mark throughout the territory of the EU. The Principality of Monaco, and subsequently the applicant, were thus subject, in seeking to act within and outside the internal market with the protection of a mark which is acknowledged to be identical, in its effect, to a Community mark, to the same requirements of general interest as any economic operator applying to register such a mark, or finding such a mark relied on against it.44Those considerations, which apply to the entire territory of the Union, apply with even greater force to a part of that territory, within the meaning of Article 7(2) of Regulation No 207/2009.45Accordingly, the second part of this plea must also be dismissed.As to the third part, relating to an alleged manifest error of assessment in determining the relevant public46The applicant complains that the Board of Appeal identified the relevant public as the ‘Community public’ (paragraph 24 of the contested decision) and held that that consisted, depending on the product or service concerned, in part of average consumers and in part of a specialised public. It considered that ‘the profile of the relevant consumer’ (paragraph 73 of the application) had not been defined, particularly with regard to the assertion that the word ‘monaco’‘also alludes to notions of renown and luxury’ (also paragraph 73 of the application).47As a preliminary matter, it should be emphasised that as regards signs or indications which may serve to designate the geographical origin or destination of the categories of goods, or the place of performance of the categories of services, in respect of which the protection of an international registration designating the European Community is sought, especially geographical names, it is in the public interest that they remain available, not least because they may be an indication of the quality and other characteristics of the categories of goods or services concerned, and may also, in various ways, influence consumer tastes by, for instance, associating the goods or services with a place that may give rise to a favourable response (see, to this effect, judgment of 25 October 2005 in Peek & Cloppenburg v OHIM (Cloppenburg), T‑379/03, ECR, EU:T:2005:373, paragraph 33 and the case-law cited).48Furthermore, it should be pointed out, first, that the registration of geographical names as trade marks solely where they designate specified geographical locations which are already famous, or are known for the category of goods or services concerned, and which are therefore associated with those goods or services in the mind of the relevant class of persons, is excluded as, secondly, is the registration of geographical names which are liable to be used by undertakings and must remain available to such undertakings as indications of the geographical origin of the category of goods or services concerned (see Cloppenburg, cited in paragraph 47 above, EU:T:2005:373, paragraph 34 and the case-law cited).49However, in principle Article 7(1)(c) of Regulation No 207/2009 does not preclude the registration of geographical names which are unknown to the relevant class of persons — or at least unknown as the designation of a geographical location — or of names in respect of which, because of the type of place they designate, such persons are unlikely to believe that the category of goods or services concerned originates there or was conceived of there (see Cloppenburg, cited in paragraph 47 above, EU:T:2005:373, paragraph 36 and the case-law cited).50In the light of all the foregoing, a sign’s descriptiveness cannot be assessed other than by reference to the goods or services concerned, on the one hand, and by reference to the understanding which the relevant persons have of it, on the other (see Cloppenburg, cited in paragraph 47 above, EU:T:2005:373, paragraph 37 and the case-law cited).51In making that assessment, OHIM is bound to establish that the geographical name is known to the relevant class of persons as the designation of a place. What is more, the name in question must suggest a current association, in the mind of the relevant class of persons, with the category of goods or services in question, or else it must be reasonable to assume that such a name may, in the view of those persons, designate the geographical origin of that category of goods or services. In turn, in making that assessment, particular consideration should be given to the relevant class of persons’ degree of familiarity with the geographical name in question, with the characteristics of the place designated by that name, and with the category of goods or services concerned (see Cloppenburg, cited in paragraph 47 above, EU:T:2005:373, paragraph 38 and the case-law cited).52In this case, the General Court’s examination must be confined to the question whether, for the relevant public, the contested mark consists exclusively of an indication that may serve, in trade, to designate the geographical origin of the goods and services concerned. In this regard, it is clear that ‘monaco’ is the name of a principality which is known across the world, despite its area of about 2 km2 and its population of no more than 40000, not least because of the fame of its royal family and the fact that a Formula 1 grand prix and a circus festival are held there. There is an even greater degree of familiarity with the Principality of Monaco among citizens of the EU, due especially to its frontier with a Member State, France, its proximity to another Member State, Italy, and the fact that the principality — a third State — uses the same currency as 19 of the 28 Member States, the euro.53Consequently, the situation in the present case is unlike that considered in Cloppenburg (cited in paragraph 47 above, EU:T:2005:373). In that case, the Court of First Instance (as it then was) held that it had not been established that, for the relevant public, namely the average consumer in Germany, the word ‘cloppenburg’ made definite reference to a small town in that country. However, in the present case, regardless of the language spoken by the relevant public, there is no doubt that the word ‘monaco’ will evoke the geographical territory of the same name.54The applicant nevertheless disputes that the relevant public is the EU public, and furthermore that there is any need to distinguish between the average consumer and a specialised public, according to the particular products or services concerned.55However, the Board of Appeal was right to hold, in relation to an international registration designating the entire European Community, that the relevant public was the Community public, and was also right to distinguish, in paragraph 24 of the contested decision, between products for mass consumption and services provided to the general public, in relation to which the relevant public was the average consumer, and specialised products and services provided to a specific public, in relation to which the relevant public was the specialised public. Accordingly, it did not make any error in defining the relevant public or in attributing to it a degree of attention which was sometimes average, sometimes high, according to the particular products or services concerned.56Consequently, the third part of this plea must be dismissed.As to the fourth part, based partly on an assertion that there is no link between the geographical place in question and the products and services concerned, and partly on a manifest error said to have been made in the Board of Appeal’s assessment of the geographical criterion57The applicant argues that the Board of Appeal did not establish that, in the mind of the relevant public, there was a link between the Principality of Monaco and the production of magnetic data carriers, transport or temporary accommodation. In relation to sport and entertainment, it objects that only the Formula 1 races and circus performances, whose organisers own trade marks which are quite separate from the contested mark, are well known.58For the reasons correctly advanced by the Board of Appeal and restated in paragraph 20 of this judgment, and contrary to the applicant’s contentions, it must be held that the Board of Appeal established, to the requisite legal standard, in respect of each of the products and services concerned, a sufficiently direct and concrete link between those products and services and the contested mark to justify it in holding that the word ‘monaco’ was capable of serving, in trade, to designate the geographical origin or destination of the goods, or the place of performance of the services, and consequently, that that mark had a descriptive character in relation to the products and services concerned.59As to the allegation of a manifest error in the assessment of the geographical criterion, the applicant’s argument that a distinction should be drawn between the full name of the State (‘Principality of Monaco’) and the shortened name (‘Monaco’) cannot possibly be accepted. Drawing this distinction does not prevent the link between the products and services concerned and the geographical area in question from being identified. In this regard, the applicant’s argument based on word marks identical to the contested mark having previously been accepted by OHIM runs into two obstacles. First, while OHIM is required to take previous decisions into account under the principles of equal treatment and sound administration, and to take particular care in considering whether to decide the issue before it in the same way, those principles must be nevertheless be applied in a manner consistent with the principle of legality (see judgment of 17 July 2014 in Reber Holding v OHIM, C‑141/13 P, EU:C:2014:2089, paragraph 45 and the case-law cited). In the present case, as is apparent from paragraphs 47 to 58 above, the Board of Appeal rightly held that the ground for refusal laid down in Article 7(1)(c) of Regulation No 207/2009 applied to the trade mark applied for, so that the applicant cannot successfully rely on the previous decisions of OHIM to invalidate that conclusion. Secondly, OHIM’s reasoning in relation to numerous other products and services, described in paragraph 23 above and henceforth protected by the contested mark, was favourable to the applicant.60Accordingly, the fourth part of this plea must be dismissed, and with it the plea as a whole. As to the plea based on failure to apply Article 7(1)(b) and Article 7(2) of Regulation No 207/2009 correctly 61As regards the concept of distinctive character of trade marks, the applicant maintains that the Board of Appeal made an error of law, and also a manifest error of assessment. It is appropriate to consider both of these points, which appear under two separate pleas in the application, but which the General Court considers to be linked in that they depend on the interpretation of Article 7(1)(b) of Regulation No 207/2009.As to the alleged error of law62The applicant considers that, in stating that there was an overlap in scope between the absolute grounds for refusal set out, respectively, in Articles 7(1)(b) and 7(1)(c) of Regulation No 207/2009, the Board of Appeal failed to have regard to either the previous practice of OHIM or the case-law.63In that regard, it should first be stated that, under the case-law cited in paragraph 59 above, the previous practice of OHIM cannot affect the legality of the contested decision.64Furthermore, it should be noted that, in contrast to what the applicant itself has done in the application, the Board of Appeal did not undertake a single, combined analysis of the two absolute grounds for refusal set out in Article 7 of Regulation No 207/2009. Rather, it first, and correctly, considered Article 7(1)(c) of that regulation, precisely because the word ‘monaco’ evoked the geographical area of the same name, and thus made it appropriate to begin by considering whether the products and services concerned had a sufficiently direct and concrete link with the geographical designation of the Principality of Monaco (paragraphs 21 to 31 of the contested decision). It was only later in the decision (in a passage being introduced by ‘furthermore’) that the Board of Appeal stated that the second absolute ground for refusal, based on Article 7(1)(b) of Regulation No 207/2009, also applied (paragraphs 32 and 33 of the contested decision), before going on to conclude that there was an overlap in the respective scopes of those absolute grounds for refusal (paragraph 34 of the contested decision). Indeed, the existence of such an overlap has been recognised in settled case-law (see, in this regard, judgment of 10 June 2008 in Novartis v OHIM (BLUE SOFT), T‑330/06, EU:T:2008:185, paragraph 30, and 7 October 2010Deutsche Behindertenhilfe — Aktion Mensch v OHIM (diegesellschafter.de), T‑47/09, EU:T:2010:428, paragraph 24).65The applicant is thus wrong to argue that the Board of Appeal made an error of law in applying the provisions referred to above.As to the alleged manifest error of assessment66As set out in paragraph 27 above, this argument relates mainly to the plea based on failure to apply Article 7(1)(c) of Regulation No 207/2009 correctly. None the less, the applicant maintains, in addition, that the Board of Appeal made a manifest error of assessment in holding that the contested mark was devoid of distinctive character, particularly in that it alluded to notions of renown and luxury and, more specifically, to ‘a particular conception of luxury’ (paragraph 77 of the application).67It should be emphasised here that a word mark which is descriptive of the characteristics of goods or services for the purposes of Article 7(1)(c) of Regulation No 207/2009 is, on that account, necessarily devoid of any distinctive character in relation to those goods or services within the meaning of Article 7(1)(b) of that regulation (see judgments of 11 February 2010 in Deutsche BKK v OHIM (Deutsche BKK), T‑289/08, EU:T:2010:36, paragraph 53, and 29 March 2012Kaltenbach & Voigt v OHIM (3D eXam), T‑242/11, EU:T:2012:179, paragraph 39 and the case-law cited).68As has been held in paragraphs 47 to 60 above, the Board of Appeal did not make any error of law in deciding that the contested mark was descriptive of the products and services concerned. Accordingly, it cannot have any distinctive character within the meaning of Article 7(1)(b) of Regulation No 207/2009 or, consequently (and following the reasoning of paragraph 44 above) Article 7(2) of that regulation.69Furthermore, as has been pointed out, in substance, in paragraph 64 above, the Board of Appeal also stated that the contested mark would essentially be perceived by the relevant consumer as conveying information, rather than indicating the commercial origin of the goods and services concerned (paragraph 33 of the contested decision). The General Court adopts this analysis, and it follows that the contested mark has no distinctive character in relation to those goods and services.70As to the allegation that the Board of Appeal failed to observe the principles of equal treatment, sound administration and legal certainty, this must be rejected as completely unfounded, as there is no material on the file which could support such an assertion. In particular, the way in which OHIM segregated product from product and service from service, so as to consider the link between them and the contested mark, is testament to a detailed and careful examination in accordance with the principle of sound administration and legal certainty. As to the principle of equal treatment, it is clear that the mere fact that some of the products concerned by the contested mark are protected, while others are not, cannot amount to a breach of that principle. That fact simply illustrates that in order for there to be a failure to observe the principle, the situations concerned must be comparable, having regard to all of the features which characterise them. However, that is not the case here.71Consequently this plea and, accordingly, the entire action must be dismissed. Costs 72Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.73Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with form of order sought by OHIM.On those grounds,THE GENERAL COURT (Eighth Chamber)hereby: 1. Dismisses the action; 2. Orders Marques de l’État de Monaco (MEM) to pay the costs. GratsiasKanchevaWetterDelivered in open court in Luxembourg on 15 January 2015.[Signatures]( *1 ) Language of the case: French. | 9348b-a51c06d-477f | EN |
A computerised booking system must, from the outset, indicate the final price to be paid for each flight from an EU airport in respect of which the fare is shown | 15 January 2015 ( *1 )‛Reference for a preliminary ruling — Regulation (EC) No 1008/2008 — Air services — Second sentence of Article 23(1) — Price transparency — Computerised booking system — Air fares — Indication at all times of the final price’In Case C‑573/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesgerichtshof (Germany), made by decision of 18 September 2013, received at the Court on 12 November 2013, in the proceedings Air Berlin plc & Co. Luftverkehrs KG v Bundesverband der Verbraucherzentralen und Verbraucherverbände — Verbraucherzentrale Bundesverband e. V., THE COURT (Fifth Chamber),composed of T. von Danwitz, President of the Chamber, C. Vajda (Rapporteur), A. Rosas, E. Juhász and D. Šváby, Judges,Advocate General: Y. Bot,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Air Berlin plc & Co. Luftverkehrs KG, by M. Knospe and A. Walz, Rechtsanwälte,the Bundesverband der Verbraucherzentralen und Verbraucherverbände — Verbraucherzentrale Bundesverband e. V., by P. Wassermann, Rechtsanwalt,the German Government, by T. Henze and K. Petersen, acting as Agents,the Belgian Government, by J.-C. Halleux and T. Materne, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, and by W. Ferrante, avvocato dello Stato,the Netherlands Government, by M. Bulterman and J. Langer, acting as Agents,the Austrian Government, by C. Pesendorfer, acting as Agent,the European Commission, by W. Mölls and F. Wilman, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of the second sentence of Article 23(1) of Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (OJ 2008 L 293, p. 3).2The request has been made in proceedings between Air Berlin plc & Co. Luftverkehrs KG (‘Air Berlin’), an air carrier, and the Bundesverband der Verbraucherzentralen und Verbraucherverbände — Verbraucherzentrale Bundesverband e. V. (Federal Union of Consumer Organisations and Associations; ‘the Bundesverband’) concerning the way in which air fares are presented in the computerised booking system of Air Berlin. Legal context 3Recital 16 in the preamble to Regulation No 1008/2008 is worded as follows:‘Customers should be able to compare effectively the prices for air services of different airlines. Therefore the final price to be paid by the customer for air services originating in the Community should at all times be indicated, inclusive of all taxes, charges and fees. Community air carriers are also encouraged to indicate the final price for their air services from third countries to the Community.’4According to Article 1(1), Regulation No 1008/2008 regulates the licensing of EU air carriers, the right of EU air carriers to operate air services within the EU and the pricing of air services within the EU.5Article 2 of Regulation No 1008/2008, headed ‘Definitions’, provides:‘For the purposes of this Regulation:…4.“air service” means a flight or a series of flights carrying passengers, cargo and/or mail for remuneration and/or hire;18.“air fares” means the prices expressed in euro or in local currency to be paid to air carriers or their agents or other ticket sellers for the carriage of passengers on air services and any conditions under which those prices apply, including remuneration and conditions offered to agency and other auxiliary services;…’6Article 23 of Regulation No 1008/2008, headed ‘Information and non-discrimination’, provides in paragraph 1:‘Air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the Internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. In addition to the indication of the final price, at least the following shall be specified:(a)air fare or air rate;(b)taxes;(c)airport charges; and(d)other charges, surcharges or fees, such as those related to security or fuel;where the items listed under (b), (c) and (d) have been added to the air fare or air rate. Optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the customer shall be on an “opt-in” basis.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 7Until the end of 2008, Air Berlin’s booking system was organised in such a way that, having selected a journey and a date, the customer would find, as a second step, a table listing the possible flight connections for the chosen date, and showing departure and arrival times and two fares for each flight. A box below that table showed the taxes and charges applicable to the air service selected and the fuel surcharge, while the ‘price per person’ including all those elements was set within a border. A double asterisk next to the box explained, with reference to the conditions applicable, that a service charge not yet included in the final price might apply. After entering the necessary personal details as a third step, the customer could, in the fourth step, establish the final price of travel, including the service charge.8As a result of the entry into force of Regulation No 1008/2008 on 1 November 2008, Air Berlin modified the second step of its booking system so that the air fare for the selected air service was displayed in the table together with the departure and arrival times and, separately, taxes and charges, the fuel surcharge and the total amount of those separately indicated elements. A box below the table showed the price calculated on the basis of those figures, the service charge and, below that, the final price per person for the selected flight.9The Bundesverband took the view that this presentation of prices did not meet the requirements laid down by the second sentence of Article 23(1) of Regulation No 1008/2008, and brought an action against Air Berlin by which it sought an order requiring Air Berlin to discontinue this practice, and reimbursement of the costs incurred in connection with a warning notice relating to that action. The application of the Bundesverband having been granted by the court of first instance, whose judgment was upheld on appeal, Air Berlin brought an appeal on a point of law before the referring court.10According to the referring court, the outcome of this appeal on a point of law depends on the interpretation of the second sentence of Article 23(1) of Regulation No 1008/2008.11The referring court considers, as does the appeal court, that a service charge such as that levied by Air Berlin constitutes remuneration that is unavoidable and foreseeable at the time of publication, within the meaning of the second sentence of Article 23(1) of Regulation No 1008/2008, and must therefore be included in the final price indicated.12Nevertheless, in the case of computerised booking systems such as that at issue in the main proceedings, the referring court identifies two distinct problems in the interpretation of the second sentence of Article 23(1) of Regulation No 1008/2008, concerning, respectively, the precise point in time at which the final price for air services must be indicated during the booking process, and the way in which that final price is to be shown.13As regards, in the first place, the precise moment in time at which the final price for air services must be indicated during the booking process, the referring court notes that the appeal court held that, taking into account the way in which the air fare was indicated in Air Berlin’s booking system, Air Berlin had infringed the second sentence of Article 23(1) of Regulation No 1008/2008. The appeal court considered that that provision, which provides that the final price to be paid is ‘at all times’ to be indicated, must be understood as meaning that the final price must appear whenever a price is indicated. The appeal court therefore held that that condition is not met if a table merely indicates the prices of the various flights corresponding to the selection criteria entered by the customer, without including the service charge, or indicating such charges separately.14According to the referring court, it is necessary to take account of the consumer protection objective of Article 23(1) of Regulation No 1008/2008, which is apparent from recital 16 to that regulation as well as from the wording of Article 23 and its title, and which is to ensure that there is information and transparency with regard to the prices for air services (judgment in ebookers.com Deutschland, C‑112/11, EU:C:2012:487, paragraph 13). According to recital 16, that price transparency must enable customers to compare effectively the prices for air services of different air carriers. The referring court states that Article 23 was introduced in order to combat the former practice of air service providers of publishing fares that excluded taxes, charges and fuel surcharges (see page 10 of the Proposal for a Regulation COM(2006) 396 final of the European Parliament and of the Council on common rules for the operation of air transport services in the Community (recast), presented by the European Commission, and points 8.1 and 8.4 of the Opinion of the European Economic and Social Committee of 31 May 2007 on that proposal (OJ 2007 C 175, p. 85)).15The referring court also notes that neither Article 23(1) of Regulation No 1008/2008 nor any other provision of that regulation contains a precise statement as to the point in time at which the final price must be indicated. Nevertheless, the fourth sentence of Article 23(1) of that regulation provides that optional price supplements must be communicated ‘at the start of any booking process’. However, the referring court considers that the EU legislature’s declared intention of ensuring that prices can be compared effectively suggests that the expression ‘at all times’ in the second sentence of Article 23(1) of Regulation No 1008/2008 should be interpreted in conjunction with the expression ‘at all times’ as used in recital 16 to the regulation. From that perspective, the final price referred to in that provision would have to be indicated at an earlier stage than is required in the case of the optional price supplements mentioned in the fourth sentence of Article 23(1) of the regulation. Construed in this way, the obligation to show the final price of air services at an early stage in the booking process could mean that the price must be indicated in the first read-out of the air service corresponding to the customer’s requirements as to destinations and dates.16As regards, in the second place, the way in which the final price of air services is presented, the referring court notes that that issue too is not precisely regulated by the second sentence of Article 23(1) of Regulation No 1008/2008. The fourth sentence of Article 23(1) merely states that optional price supplements are to be communicated in a clear, transparent and unambiguous way.17Like the court of first instance, the appeal court concluded from the second and fourth sentences of Article 23(1) of Regulation No 1008/2008 that the final price of air services must be stated always or whenever prices are shown, and therefore, in the case of a booking system consisting of several steps, the final price must be indicated when air fares are shown for the first time and on every page on which prices are shown. In the present case, the final price should have been shown in the immediate context of every single air service indicated in the table, and not only for the air services pre-selected by Air Berlin or clicked on by the customer.18The referring court takes the view, however, that the second sentence of Article 23(1) of Regulation No 1008/2008 could be interpreted less strictly as meaning that indicating the final price at an early stage, as Air Berlin does for any specifically selected air service, and not only on completion of the booking process, also enables an effective comparison to be made with the prices of other air carriers, and, therefore, the need for consumer protection to be met, even if such comparisons may well be less convenient for the consumer.19In those circumstances the Bundesgerichtshof (Federal Court of Justice) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is the second sentence of Article 23(1) of Regulation No 1008/2008 to be interpreted as meaning that the final price to be paid must, in the context of a computerised booking system, be indicated when the prices of air services are shown for the first time?(2)Is the second sentence of Article 23(1) of Regulation No 1008/2008 to be interpreted as meaning that the final price to be paid must, in the context of a computerised booking system, be indicated only for the air service specifically selected by the customer or for each air service shown?’ Consideration of the questions referred The first question 20By its first question, the referring court asks the Court of Justice whether the second sentence of Article 23(1) of Regulation No 1008/2008 must be interpreted as meaning that the final price to be paid must be indicated whenever prices of air services are shown, including when they are shown for the first time.21According to Air Berlin, the answer to the first question depends on the interpretation of the words ‘at all times’ in the second sentence of Article 23(1) of Regulation No 1008/2008. Air Berlin submits that those words do not require that the final price to be paid be indicated when the prices of air services are shown for the first time, but only that it be indicated after a particular flight has been selected by the customer and before the booking contract is finally concluded.22Air Berlin states in that regard that, within the table displayed in the second step of the computerised booking process it has set up, the least expensive connection is automatically pre-selected and the system indicates the final price within the meaning of Article 23(1) of Regulation No 1008/2008, including the price for the selected flight, taxes and charges, the fuel surcharge and the service charge. If the customer chooses an alternative connection, one that is necessarily more expensive, the system would then indicate the final price for that connection.23As the Bundesverband, the German, Belgian, Italian, Netherlands and Austrian Governments and the European Commission note, that interpretation is incompatible with the wording of the second sentence of Article 23(1) of Regulation No 1008/2008.24The second sentence of Article 23(1) of Regulation No 1008/2008 provides that the final price to be paid is at all times to be indicated and is to include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication.25It follows from the actual wording of that provision that the final price to be paid must be indicated ‘at all times’, without any distinction being made between the moment when that price is indicated for the first time, the moment when the customer selects a particular flight, or the moment when the contract is finally concluded.26Consequently, the obligation laid down by that provision — to indicate at all times the final price to be paid — means that, in the context of a computerised booking system such as that at issue in the main proceedings, the final price to be paid must be indicated whenever the prices of air services are shown, including when they are shown for the first time.27That interpretation is supported by a systematic reading of Article 23(1) of Regulation No 1008/2008 and by the ratio legis of the second sentence of that provision.28As pointed out by the Bundesverband, the German and Austrian Governments and the Commission, it should not be inferred from the expression ‘at the start of any booking process’ used in the fourth sentence of Article 23(1) of Regulation No 1008/2008 that the expression ‘at all times’ in the second sentence of Article 23(1) of that regulation must be interpreted as meaning that the final price must be indicated only at the start of the booking process.29The expression ‘at the start of any booking process’ used in the fourth sentence of Article 23(1) means that optional price supplements must be indicated at the start of the booking process itself, enabling customers to decide whether they do in fact wish to avail themselves of the supplementary service concerned (see, to that effect, judgment in ebookers.com Deutschland, EU:C:2012:487, paragraph 15).30Conversely, the obligation laid down in the second sentence of Article 23(1) of Regulation No 1008/2008 to indicate the final price ‘at all times’, which includes unavoidable and foreseeable costs, arises from the moment the air fares are published in any form, even before the start of the booking process.31The Bundesverband, the German, Belgian, Italian, Netherlands and Austrian Governments and the Commission rightly note that that interpretation is consistent with the ratio legis of the second sentence of Article 23(1) of Regulation No 1008/2008, as evidenced by recital 16 to that regulation.32According to recital 16 to Regulation No 1008/2008, customers should be able to compare effectively the prices for air services of different air carriers, and therefore, the final price to be paid by the customer for air services originating at an airport located in the territory of the EU should at all times be indicated, inclusive of all taxes, charges and fees.33The Court has already had occasion to point out that it is evident from both the title of Article 23 of Regulation No 1008/2008 and the wording of paragraph 1 thereof that that provision seeks to ensure that there is information and transparency with regard to the prices for air services and that, consequently, it contributes to safeguarding protection of customers having recourse to those services (judgments in ebookers.com Deutschland, EU:C:2012:487, paragraph 13, and Vueling Airlines, C‑487/12, EU:C:2014:2232, paragraph 32).34It thus follows from recital 16 to Regulation No 1008/2008 that the obligation imposed on air carriers ‘at all times’ to indicate the final price to be paid is necessary in order to enable customers to compare effectively the prices for air services of different air carriers, in accordance with the objective that it should be possible effectively to compare prices for air services, pursued by Article 23(1) of that regulation (see, to that effect, judgment in Vueling Airlines, EU:C:2014:2232, paragraph 33).35In the light of the foregoing, the answer to the first question is that the second sentence of Article 23(1) of Regulation No 1008/2008 must be interpreted as meaning that, in the context of a computerised booking system such as that at issue in the main proceedings, the final price to be paid must be indicated whenever the prices of air services are shown, including when they are shown for the first time. The second question 36By its second question, the referring court asks the Court of Justice whether the second sentence of Article 23(1) of Regulation No 1008/2008 must be interpreted as meaning that the final price to be paid must be indicated only for the air service specifically selected by the customer or for each air service shown.37Air Berlin maintains that the second sentence of Article 23(1) of Regulation No 1008/2008 requires only that the final price be indicated for the flight selected by the customer, not for each flight shown. According to Air Berlin, an effective comparison, for the purposes of recital 16 to that regulation, can be made only if the customer has selected a particular flight linking the airport of departure to the airport of arrival at a specific time. Consequently, the obligation to indicate the final price, laid down in the second sentence of Article 23(1) of Regulation No 1008/2008, would apply only where the customer has selected a particular flight, and only in respect of that flight.38That interpretation cannot be accepted.39As the Bundesverband, the German, Belgian, Netherlands and Austrian Governments and the Commission correctly submit, the obligation laid down in the second sentence of Article 23(1) of Regulation No 1008/2008 to indicate the final price ‘at all times’ applies to all forms of publication of air fares, including fares proposed for a series of air services presented in the form of a table. Consequently, indicating the final price for the only flight specifically selected is not sufficient to satisfy the obligation laid down by that provision.40That interpretation is supported by the ratio legis of the second sentence of Article 23(1) of Regulation No 1008/2008, which is recalled in paragraphs 31 to 34 of the present judgment.41The obligation to indicate the final price to be paid for each flight in respect of which the fare is displayed, and not for the only flight specifically selected, enables customers to compare effectively the prices for air services of different air carriers, in accordance with the general objective of transparency of prices for air services, pursued by Article 23(1) of Regulation No 1008/2008.42According to Air Berlin, to interpret the second sentence of Article 23(1) as meaning that the final price to be paid must be indicated for each flight shown would mean that only the final price may be indicated and, therefore, that indicating the ‘flight-only’ price would be generally prohibited. Yet the third sentence of that provision requires the ‘flight-only’ price to be indicated separately alongside the final price.43That argument must, however, be rejected as being entirely unfounded, since it does not in any way follow from the obligation to indicate the final price to be paid for each flight shown that is laid down in the second sentence of Article 23(1) that indicating the air fare or air rate for each of those flights, as provided in the third sentence of that provision, is prohibited.44On the contrary, it is evident from the actual wording of the third sentence of Article 23(1) of Regulation No 1008/2008 that the obligation to specify at least the air fare or air rate, as well as the taxes, airport charges and other charges, surcharges or fees, where these items have been added to the air fare or air rate, is in addition to the obligation under the second sentence of Article 23(1) to indicate the final price.45In the light of the foregoing, the answer to the second question is that the second sentence of Article 23(1) of Regulation No 1008/2008 must be interpreted as meaning that, in the context of a computerised booking system such as that at issue in the main proceedings, the final price to be paid must be indicated not only for the air service specifically selected by the customer, but also for each air service in respect of which the fare is shown. Costs 46Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: 1. The second sentence of Article 23(1) of Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community must be interpreted as meaning that, in the context of a computerised booking system such as that at issue in the main proceedings, the final price to be paid must be indicated whenever the prices of air services are shown, including when they are shown for the first time. 2. The second sentence of Article 23(1) of Regulation No 1008/2008 must be interpreted as meaning that, in the context of a computerised booking system such as that at issue in the main proceedings, the final price to be paid must be indicated not only for the air service specifically selected by the customer, but also for each air service in respect of which the fare is shown. [Signatures]( *1 ) Language of the case: German. | d6eee-1c937cc-4ed8 | EN |
Allowing London taxis to use bus lanes while prohibiting private hire vehicles from doing so does not appear to involve State aid | 14 January 2015 ( *1 )‛Reference for a preliminary ruling — Competition — State aid — Article 107(1) TFEU — Practice of permitting London taxis to use bus lanes while prohibiting private hire vehicles from doing so — Concept of State aid — State resources — Economic advantage — Selective advantage — Effect on trade between Member States’In Case C‑518/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Court of Appeal (England & Wales) (Civil Division) (United Kingdom), made by decision of 24 September 2013, received at the Court on 26 September 2013, in the proceedings The Queen, on the application of: Eventech Ltd, v The Parking Adjudicator, intervening parties: London Borough of Camden, Transport for London, THE COURT (Second Chamber),composed of R. Silva de Lapuerta, President of the Chamber, K. Lenaerts, Vice-President of the Court and acting Judge of the Second Chamber, J.-C. Bonichot, A. Arabadjiev (Rapporteur) and J.L. da Cruz Vilaça, Judges,Advocate General: N. Wahl,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 3 July 2014,after considering the observations submitted on behalf of:—Eventech Ltd, by K. Bacon, Barrister, instructed by J. Maitland-Walker, Solicitor,Transport for London, by C. Moore, acting as Agent, and by M. Chamberlain QC and S. Love, Barrister,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by L. Flynn and P.-J. Loewenthal, acting as Agents,the EFTA Surveillance Authority, by X. Lewis, C. Perrin and A. Steinarsdóttir, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 24 September 2014,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 107(1) TFEU.2The request has been made in proceedings between Eventech Ltd (‘Eventech’) and the Parking Adjudicator concerning the lawfulness of a policy implemented by Transport for London (‘TfL’) and by the majority of London Boroughs which consists in permitting London taxis (‘Black Cabs’) to use most London bus lanes during the hours when the bus lane restrictions are operational, while prohibiting private hire vehicles (‘minicabs’) from using those bus lanes, except for the purpose of picking up and setting down passengers who have pre-booked such a vehicle (‘the bus lanes policy’). Legal context Black Cabs and minicabs 3In London, both Black Cabs and minicabs are vehicles which carry passengers for consideration. Both require licences issued by London Taxi and Private Hire, which is part of TfL. Those licences are issued under different statutory provisions and are subject to different conditions according to whether they are issued to Black Cabs or to minicabs.4A licence to operate Black Cabs is issued under the provisions set out in the London Cab Order 1934. That order was made pursuant to the power conferred by section 6 of the Metropolitan Carriage Act 1869, section 8(2) of which provides that a taxi is permitted to ‘ply for hire’ in London only when the driver holds a licence issued by TfL under section 8 of that Act.5It follows that only a taxi which is licensed in accordance with the London Cab Order is permitted to ‘ply for hire’ in London, a concept which is defined as soliciting or waiting for passengers without any pre-booking. According to the referring court, a survey carried out in 2009 indicates that 8% of the journeys made by Black Cabs are subject to pre-booking, 52% are due to a passenger hailing the taxi in the street and the majority of other journeys result from a passenger being picked up at a taxi rank. Eventech however disputes those figures and claims that approximately 60% of Black Cabs now use an application, called ‘Hailo’, which allows customers to book a taxi from their mobile phone.6A licence for minicabs is issued in accordance with the provisions of the Private Hire Vehicles (London) Act 1998. Minicabs are not permitted to ‘ply for hire’ in London and accordingly can pick up only people who have pre-booked their services. As regards people who have pre-booked, it is common ground that minicabs are in competition with Black Cabs.7Further, it is apparent from the file that, since the London Hackney Carriage Acts 1831 and 1853, Black Cabs are subject to the rule of ‘compellability’, which requires that where a taxi has agreed to pick up a passenger at a taxi rank or in the street, the taxi must take the passenger where he wishes to go, within a prescribed distance or up to a prescribed journey time. No such obligation is imposed on minicabs.8Black Cabs are instantly recognised by reason of their shape and size and the illuminated ‘Taxi’ sign, since they must comply with conditions of fitness which contain a number of standards with which currently only two vehicle makes comply. Minicabs, on the other hand, can be of any colour and any design, and consequently some 700 different makes and models of minicabs are currently licensed.9The fares of Black Cabs are strictly regulated and can be charged only by reference to a taxi meter. The drivers of minicabs are, for their part, free to set their own fares and minicabs do not have a meter, the fare to be paid being quoted when the minicab is booked, irrespective of the duration of the journey, whereas Black Cab fares vary depending upon that duration.10Black Cabs must be adapted for wheelchair access. There are no accessibility requirements for minicabs.11Before being licensed, Black Cab drivers must undertake an examination known as the ‘Knowledge of London’, which may require two to four years of preparation. Minicab drivers must before being licensed undertake a topographical test, which generally takes a day. Black Cab drivers must also take the Driving Standards Agency Advanced Driving Assessment, whereas there is no similar requirement for minicab drivers. Traffic regulation powers and the bus lane policy 12Section 121A of the Road Traffic Regulation Act 1984 (‘the 1984 Act’) designates which body is the traffic authority in respect of all public roads in England, Wales and Scotland. Subsection (1A) of that section designates TfL as the traffic authority for certain roads in Greater London known as ‘Greater London Authority (GLA) roads’. Those roads, subject to the Greater London Authority, extend to 580 km and are, generally speaking, the most important roads in Greater London. Under section 121A(2) of the 1984 Act, the traffic authorities responsible for almost all other roads in London and Greater London are the London Boroughs.13The power of a traffic authority responsible for a particular road to restrict traffic on that road (or part of it) to certain types of vehicles is conferred by section 6 of the 1984 Act, which in the version applicable to the main proceedings provides:‘1. The traffic authority for a road in Greater London may make an order under this section for controlling or regulating vehicular and other traffic (including pedestrians). Provision may, in particular, be made:(a)for any of the purposes, or with respect to any of the matters, mentioned in Schedule 1 to this Act, and(b)for any other purposes which is a purpose mentioned in any of paragraphs (a) to (g) of section 1(1) of this Act.2. In the case of a road for which the Secretary of State is the traffic authority, the power to make an order under this section is also exercisable, with his consent, by the local traffic authority.3. Any order under this section may be made so as to apply:to the whole area of a local authority, or to particular parts of that area, or to particular places or streets or parts of streets in that area;throughout the day, or during particular periods;(c)on special occasions only, or at special times only;(d)to traffic of any class;(e)subject to such exceptions as may be specified in the order or determined in a manner provided for by it.’14The purposes specified in Schedule 1 to the 1984 Act include, in paragraph 3 thereof, the objective of ‘regulating the relative position in the roadway of traffic of differing speeds or types’. The purposes mentioned in section 1(1) of that Act include ‘for avoiding danger to persons or other traffic using the road [in Greater London] or any other road or for preventing the likelihood of any such danger arising’ and ‘for facilitating the passage on the road or any other road of any class of traffic (including pedestrians)’.15Section 6 of the 1984 Act is thus the provision that enables bus lanes to be designated by the various London Boroughs and by TfL in respect of the roads for which they are the traffic authority.16In exercise of its powers under section 6 of the 1984 Act, TfL has designated bus lanes in a number of GLA roads. TfL has, in addition, adopted the bus lanes policy of permitting Black Cabs to use the bus lanes that are managed by TfL, but prohibiting licensed minicabs from using those bus lanes, during the hours when the bus lane restrictions are operational. Minicabs are, however, permitted to use the bus lanes for the purposes of picking up and setting down passengers. That policy has been applied since at least 2000.17In accordance with the bus lanes policy applied by TfL, most London Boroughs have also adopted a policy of allowing the bus lanes operated by them to be used by Black Cabs but not minicabs, while the restrictions are operational. This is, in particular, the case for the Southampton Row bus lane operated by the London Borough of Camden. Penalties 18The power of traffic authorities to issue penalty charge notices in respect of breaches of orders made under Section 6 of the 1984 Act is contained in section 4 of the London Local Authorities Act 1996, which provides:‘1. Where-in relation to any GLA road or GLA side road, [TfL] …on the basis of information provided by the use of a prescribed device, have reason to believe that a penalty charge is payable … with respect to a vehicle by the owner of the vehicle, ... [TfL] may serve a penalty charge notice on the person appearing to them to be the owner of the vehicle.2. … [A] penalty charge is payable with respect to a vehicle, by the owner of the vehicle, if the person in charge of the vehicle acts in contravention of or fails to comply with an order under section 6 or 9 or regulations under section 12 of [the 1984 Act] in so far as provision is made thereby for the reservation of all or part of a carriageway of a road as a bus lane and the penalty charge shall be paid,where the contravention or failure is in respect of a GLA road or a GLA side road, to [TfL] …’19Orders made under section 6 of the 1984 Act may also be enforced by the Police, as section 8(1) of the 1984 Act provides that it is a criminal offence to act in contravention of, or to fail to comply with, an order made under that section. However, in practice, the vast majority of infringements of such orders are dealt with by civil enforcement procedures: in other words, by the issue of penalty charge notices by the traffic authorities. The dispute in the main proceedings and the questions referred for a preliminary ruling 20Eventech is a wholly-owned subsidiary of Addison Lee plc (‘Addison Lee’), which is the operator of a fleet of minicabs in Greater London. Eventech is the registered keeper of all Addison Lee’s minicabs, which are leased under contract by Addison Lee to self-employed drivers.21Eventech submits that, in the main proceedings, it produced evidence of several instances of advertising by Black Cab operators referring to the advantages of booking a taxi rather than a minicab, in that taxis can use the bus lanes in the peak periods. According to Eventech, that evidence is not disputed and it is for that reason that TfL does not dispute that its bus lanes policy confers on the operators of taxis an economic advantage imputable to the State.22TfL states that the Chairman of Addison Lee issued a notice to its drivers informing them that they were entitled to use the London bus lanes which Black Cabs are permitted to use and offering to indemnify them in respect of any fines or other liabilities incurred for doing so. TfL adds, in that regard, that an injunction to restrain a breach of the criminal law was obtained as an interim measure.23Eventech has stated that, in a period of 16 months, from the end of July 2011 to early December 2012, TfL and various London Boroughs imposed on it fines to an amount exceeding 180000 Pounds Sterling (GBP), or approximately EUR 215 166, for having used London bus lanes.24In particular, the London Borough of Camden served two penalty charge notices on Eventech due to the fact that, on 6 and 13 October 2010 respectively, two drivers of Addison Lee minicabs had used the Southampton Row bus lane in central London. Eventech challenged those charges before the Parking Adjudicator. The action was dismissed by the latter’s decision of 16 August 2011.25The action brought by Eventech against that decision was dismissed by a judgment of 13 July 2012 of the High Court of Justice (England & Wales), Queen’s Bench Division (Administrative Court). After Eventech obtained permission to bring an appeal against the judgment of the High Court, the case was examined by the Court of Appeal on 23 and 24 April 2013.26Eventech claims, inter alia, that the bus lanes policy constitutes un-notified State aid to the operators of Black Cabs, which is contrary to Article 108(3) TFEU and Article 107(1) TFEU.27In that regard, the referring court considers that it is common ground that the bus lane policy confers an economic advantage on Black Cabs, that the policy is attributable to the State, and that it is liable to distort competition between Black Cabs and minicabs, in that it allows the former to travel faster than minicabs on those roads covered by the policy, thereby giving them (in particular) a competitive advantage in attracting potential customers. However, the referring court considers that the other conditions inherent in the concept of State aid are not necessarily satisfied.28TfL submits that the economic advantage granted to Black Cabs by the bus lane policy is not granted through State resources, since it does not have any effect on such resources. Further, nor is the bus lane policy selective, as Black Cabs and minicabs are not in a comparable legal or factual situation in the light of the objective pursued by that policy. In any event, the differentiation caused by the policy is justified by the nature and general scheme of the system. Last, the bus lane policy is not liable to affect trade between Member States, since it is a local measure, applying solely to London.29Eventech contends, on the contrary, that there are two reasons why the economic advantage at issue is conferred through State resources: first, Black Cabs are provided with preferential access to a State asset and, second, the bus lanes policy exempts Black Cabs from liability to pay fines or other penalties for the use of those lanes. The policy is selective in that it confers an advantage on Black Cabs over their competitors, namely minicabs. Last, since the policy concerns a sector which is open to undertakings from any Member State, an effect on trade between Member States cannot be ruled out.30In those circumstances, the Court of Appeal (England & Wales) (Civil Division) decided to stay proceedings and refer the following questions to the Court of Justice for a preliminary ruling:‘1.Does making a bus lane on a public road available to Black Cabs but not minicabs, during the hours of operation of that bus lane, involve the use of “State resources” within the meaning of Article 107(1) TFEU, in the circumstances of the present case?2.(a) In determining whether making a bus lane on a public road available to Black Cabs but not minicabs, during the hours of operation of that bus lane, is selective for the purposes of Article 107(1) TFEU, what is the relevant objective by reference to which the question whether Black Cabs and minicabs are in a comparable legal and factual situation should be assessed?If it can be shown that the relevant objective, for the purposes of question 2(a), is at least in part to create a safe and efficient transport system, and that there are safety and/or efficiency considerations that justify allowing Black Cabs to drive in bus lanes and that do not apply in the same way to minicabs, can it be said that the measure is not selective within the meaning of Article 107(1) TFEU?In answering question 2(b), is it necessary to consider whether the Member State relying on that justification has demonstrated, in addition, that the favourable treatment of Black Cabs by comparison with minicabs is proportionate and does not go beyond what is necessary?3.Is making a bus lane on a public road available to Black Cabs but not to minicabs, during the hours of operation of that bus lane, liable to affect trade between Member States for the purposes of Article 107(1) TFEU, in circumstances where the road in question is located in central London, and there is no bar to citizens from any Member State owning or driving either Black Cabs or minicabs?’ Consideration of the questions referred for a preliminary ruling The first and second questions 31By its first and second questions, which can be examined together, the referring court seeks, in essence, to ascertain whether the practice of permitting Black Cabs to use bus lanes on public roads during the hours when traffic restrictions with respect to those lanes are operational, in the interests of establishing a safe and efficient transport system, while prohibiting minicabs from using those lanes, except for picking up and setting down their pre-booked passengers, involves a commitment of State resources and confers on taxis a selective economic advantage for the purposes of Article 107(1) TFEU. The referring court also asks whether consideration need be given, in order to answer that question, to whether that measure is proportionate and does not go beyond what is necessary.32Article 107(1) TFEU provides that ‘[s]ave as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market’.33As regards the condition relating to the commitment of State resources, it must be recalled that the concept of aid embraces not only positive benefits, such as subsidies, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, therefore, without being subsidies in the strict sense of the word, are similar in character and have the same effect (the judgment in Frucona Košice v Commission, C‑73/11 P, EU:C:2013:32, paragraph 69 and case-law cited).34Consequently, for the purposes of determining the existence of State aid, it is necessary to establish a sufficiently direct link between, on the one hand, the advantage given to the beneficiary and, on the other, a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget (see, to that effect, the judgment in Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others, C‑399/10 P and C‑401/10 P, EU:C:2013:175, paragraph 109).35In this case, it is clear from the file before the Court that the referring court doubts the merits of the argument, put forward by Eventech before the referring court and repeated before the Court, that the bus lanes policy entails such budgetary burdens as a consequence of, on the one hand, the preferential access of Black Cabs to infrastructure belonging to the State, namely the London bus lanes, for the use of which those taxis are not charged and, on the other, the fact that those taxis are exempted from any liability to pay fines when they use those bus lanes.36As regards the second of the arguments mentioned in the preceding paragraph, which can be examined first, it must be stated at the outset that it is inherent in any legal system that conduct previously defined as being lawful and permitted does not expose individuals to penalties.37In the main proceedings, it is undisputed that the fact that Black Cabs can use the London bus lanes without being subject to fines is the result of those taxis being permitted, under the bus lanes policy, to use those bus lanes during the hours when the traffic restrictions are operational.38To the extent that Eventech bases its argument on the alleged similarity of the factual and legal circumstances of this case to those of the case which gave rise to the judgment in Commission v Netherlands (C‑279/08 P, EU:C:2011:551), it is clear that the circumstances of that case are distinguishable from those of the main proceedings.39In paragraph 106 of the judgment in Commission v Netherlands (EU:C:2011:551), the Court held that the measure at issue could entail an additional burden for the public authorities in the form of an exemption from the obligation to pay fines or other pecuniary penalties because the Kingdom of the Netherlands had given to the undertakings covered by the measure in question the possibility of buying emission allowances in order to avoid the payment of fines which, if such allowances had not been available, would have been payable because the undertaking concerned had exceeded the statutory limits on their emissions of nitrogen oxide.40However, in the main proceedings, it is undisputed that each unauthorised use of the bus lanes constitutes an offence punishable by a fine and that the competent public authorities have not put in place any means of evading payment of such fines. Further, it follows from the finding made in paragraph 37 of this judgment that the reason why Black Cabs can use those bus lanes without being subject to fines is not that the public authorities have made a decision not to collect fines which are payable, but that taxis are permitted to use those bus lanes.41Accordingly, the fact that Black Cabs are not obliged to pay fines because of their use of bus lanes does not involve additional burdens on the public authorities which might entail a commitment of State resources.42As regards the first argument relied on by Eventech, that there is preferential access to State-funded transport infrastructure for the use of which no payment is sought from Black Cabs, it is certainly true that, as stated by that company, the Court has held that the financing, by means of capital contributions made by the public authorities as a shareholder, to the construction of infrastructure which is to be commercially operated may involve the grant of State aid (see, to that effect, the judgment in Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C‑288/11 P, EU:C:2012:821, paragraphs 43 and 44).43However, in the main proceedings, first, it is undisputed that the traffic routes at issue, in general, and the bus lanes which are part of them, in particular, are not operated commercially by the public authorities. As was confirmed at the hearing before the Court, both by Eventech and by TfL, use of those routes and those lanes is free of charge.44It follows that the public authorities are not, under the bus lanes policy, forgoing revenue which they would have received in the absence of that policy.45Second, it must be noted that the measure at issue in the main proceedings concerns not the financing as such of the construction of bus lanes, but preferential access to them. It must be added that it is unequivocally stated in the file before the Court that the bus lanes were not constructed for the benefit of any specific undertaking or any particular category of undertakings, such as Black Cabs, or the suppliers of bus services, and were not allocated to them after their construction, but that they were constructed as part of the London road network and, primarily, with a view to facilitating public transportation by bus, irrespective of whether the organisation of that public service fell to either the public sector or the private sector.46In the light of the foregoing, the question raised by Eventech’s argument, as summarised in paragraph 35 of this judgment, is, as stated by the Advocate General in point 24 of his Opinion, whether, in circumstances such as those of the main proceedings, the competent public authorities are obliged, pursuant to Article 107(1) TFEU, to impose on users entitled to privileged access to public infrastructure a charge which corresponds to the economic value of that privilege.47It must however be stated that that question does not, as such, pertain to the criterion of commitment of State resources, but concerns whether the bus lanes policy, by which TfL pursues the objective laid down by the State legislation, namely to ensure a safe and efficient transport system, must be regarded as conferring on its beneficiaries an economic advantage, for the purposes of Article 107(1) TFEU, which falls within the scope of EU law on State aid and which has an economic value which must be paid for by those beneficiaries.48In that regard, as stated by the European Commission and the EFTA Surveillance Authority, it must be held that where the State, in order to pursue the realisation of an objective laid down by that State’s legislation, grants a right of privileged access to public infrastructure which is not operated commercially by the public authorities to users of that infrastructure, the State does not necessarily confer an economic advantage for the purposes of Article 107(1) TFEU.49Further, it must be stated that the identification of the objective pursued is, in principle, a matter within the prerogative of the competent national public authorities alone and they must have a degree of discretion both as regards whether it is necessary, in order to achieve the regulatory objective pursued, to forgo possible revenue and also as regards how the appropriate criteria for the granting of the right, which must be determined in advance in a transparent and non-discriminatory manner, are to be identified.50In the main proceedings, it is common ground that the right of privileged access is the right to use bus lanes; that that right has an economic value; that the right is granted by the competent traffic authority; that it is stated in the relevant road traffic legislation that the objective pursued by the legislation at issue is that of ensuring a safe and efficient transport system; that neither the road network concerned nor the bus lanes are operated commercially; that the criterion for granting that right is that of providing taxi services in London; that that criterion was established in advance and in a transparent manner and, last, that all the providers of such services are treated equally.51As regards whether there is a link between the realisation of the regulatory objective of ensuring a safe and efficient transport system and the decision to forgo, under the bus lanes policy, possible revenue, as rightly stated by the Advocate General in point 30 of his Opinion, it is conceivable that if a charge was imposed on Black Cabs corresponding to the economic value of their right of access to the bus lanes, that might jeopardise, at least in part, the realisation of that objective, since it might deter some Black Cabs from using the bus lanes.52Further, having regard to the characteristics of Black Cabs, as described in paragraphs 4 to 11 of this judgment, the competent national authorities could reasonably take the view that the access of those taxis to bus lanes is liable to enhance the efficiency of the London road transport system and that, consequently, the criterion for the granting of the right at issue, namely the provision of taxi services in London, is liable to achieve the realisation of the objective concerned.53In the light of the foregoing, it remains to be determined whether the criterion adopted by the competent authority for the granting of the right of access is applied to the economic operators concerned in a non-discriminatory manner. As stated however by the Advocate General in point 35 of his Opinion, that examination is subsumed, in essence, in the issue of whether the bus lanes policy confers on Black Cabs a selective economic advantage. Consequently, that issue will be dealt with in examining the existence of such an advantage.54In that regard, it must be recalled that Article 107(1) TFEU prohibits State aid ‘favouring certain undertakings or the production of certain goods’, that is to say, selective aid (the judgment in Mediaset v Commission, C‑403/10 P, EU:C:2011:533, paragraph 36).55It follows from the Court’s settled case-law that Article 107(1) TFEU requires an assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation (the judgment in Mediaset v Commission, EU:C:2011:533, paragraph 36).56By its question 2(b), the referring court asks the Court, in essence, to assess, in order to determine whether there is any selectivity in the advantage granted, whether the measure at issue introduces distinctions between operators who are, in the light of the objective pursued, in a comparable factual and legal situation.57In that regard, it must be emphasised that the identification of the respective situations of Black Cabs and minicabs and the assessment of whether those situations may be comparable is an issue which falls within the jurisdiction of the referring court, which alone has available to it all the relevant matters of fact and law.58Nonetheless, on the basis of the material in the file before it, the Court can provide the referring court with guidance which may assist that court in the assessment which it must carry out.59In that regard, it must be stated, first, that the identification of the factual and legal situation of Black Cabs and minicabs cannot be confined to that prevailing in the market sector in which those two categories of conveyors of passengers are in direct competition, namely the pre-booking sector. It cannot seriously be doubted that all the journeys made by Black Cabs and minicabs are liable to affect the safety and efficiency of the transport system on all the road traffic routes in London.60Secondly, it must be taken into consideration that, by virtue of their legal status, only Black Cabs can ply for hire; they are subject to the rule of ‘compellability’; they must be recognisable and capable of conveying persons in wheelchairs, and their drivers must set the fares for their services by means of a taxi meter and have a particularly thorough knowledge of the city of London.61It follows that Black Cabs and minicabs are in factual and legal situations which are sufficiently distinct to permit the view that they are not comparable and that the bus lanes policy therefore does not confer a selective economic advantage on Black Cabs.62In those circumstances, there is no need to answer question 2(c).63In the light of all the foregoing, the answer to the first and second questions is that the practice of permitting, in order to establish a safe and efficient transport system, Black Cabs to use bus lanes on public roads during the hours when traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on Black Cabs a selective economic advantage for the purpose of Article 107(1) TFEU. The third question 64By its third question, the referring court seeks, in essence, to ascertain whether the practice of authorising Black Cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, is such as to affect trade between Member States within the meaning of Article 107(1) TFEU.65In that regard, it should be borne in mind that, in accordance with the Court’s settled case-law, for the purpose of categorising a national measure as State aid, it is necessary, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (the judgment in Libert and Others, C‑197/11 and C‑203/11, EU:C:2013:288, paragraph 76 and case-law cited).66In particular, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, the latter must be regarded as affected by that aid (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 77 and case-law cited).67In that regard, it is not necessary that the beneficiary undertakings are themselves involved in intra-Community trade. Where a Member State grants aid to undertakings, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are thereby reduced (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 78 and case-law cited).68Further, according to the Court’s case-law, there is no threshold or percentage below which it may be considered that trade between Member States is not affected. The relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraph 81).69Consequently, the condition that the aid must be capable of affecting trade between Member States does not depend on the local or regional character of the transport services supplied or on the scale of the field of activity concerned (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, paragraph 82).70In the main proceedings, the view must be taken, in particular, that it is conceivable that the effect of the bus lanes policy is to render less attractive the provision of minicab services in London, with the result that the opportunities for undertakings established in other Member States to penetrate that market are thereby reduced, which it is for the referring court to determine.71It follows that the answer to the third question is that it is conceivable that the practice of permitting Black Cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up or set down passengers who have pre-booked such vehicles, may be such as to affect trade between Member States within the meaning of Article 107(1) TFEU, which it is for the referring court to determine. Costs 72Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. The practice of permitting, in order to establish a safe and efficient transport system, Black Cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on Black Cabs a selective economic advantage for the purpose of Article 107(1) TFEU. 2. It is conceivable that the practice of permitting Black Cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up or set down passengers who have pre-booked such vehicles, may be such as to affect trade between Member States within the meaning of Article 107(1) TFEU, which it is for the referring court to determine. [Signatures]( *1 ) Language of the case: English. | 892e1-f8f9316-4936 | EN |
According to Advocate General Cruz Villalón, the ECB’s Outright Monetary Transactions programme is compatible, in principle, with the TFEU | 16 June 2015 ( *1 )‛Reference for a preliminary ruling — Economic and monetary policy — Decisions of the Governing Council of the European Central Bank (ECB) on a number of technical features regarding the Eurosystem’s outright monetary transactions in secondary sovereign bond markets — Articles 119 TFEU and 127 TFEU — Powers conferred on the ECB and the European System of Central Banks — Monetary policy transmission mechanism — Maintenance of price stability — Proportionality — Article 123 TFEU — Prohibition of monetary financing of Member States in the euro area’In Case C‑62/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesverfassungsgericht (Germany), made by decision of 14 January 2014, received at the Court on 10 February 2014, in the proceedings Peter Gauweiler, Bruno Bandulet and Others, Roman Huber and Others, Johann Heinrich von Stein and Others, Fraktion DIE LINKE im Deutschen Bundestag v Deutscher Bundestag, intervener: Bundesregierung, THE COURT (Grand Chamber),composed of V. Skouris, President, K. Lenaerts, Vice-President, A. Tizzano, L. Bay Larsen (Rapporteur), T. von Danwitz, A. Ó Caoimh and J.-C. Bonichot, Presidents of Chambers, J. Malenovský, E. Levits, A. Arabadjiev, M. Berger, A. Prechal, E. Jarašiūnas, C.G. Fernlund and J.L. da Cruz Vilaça, Judges,Advocate General: P. Cruz Villalón,Registrar: K. Malacek, Administrator,having regard to the written procedure and further to the hearing on 14 October 2014,after considering the observations submitted on behalf of:—Mr Gauweiler, by W.-R. Bub, Rechtsanwalt, and D. Murswiek,Mr Bandulet and Others, by K.A. Schachtschneider,Mr Huber and Others, by H. Däubler-Gmelin, Rechtsanwältin, and by C. Degenhart and B. Kempen,Mr von Stein and Others, by M.C. Kerber, Rechtsanwalt,Fraktion DIE LINKE im Deutschen Bundestag, by H.-P. Schneider and A. Fisahn and by G. Gysi, Rechtsanwalt,the Deutscher Bundestag, by C. Calliess,the German Government, by T. Henze and J. Möller, acting as Agents, and by U. Häde,Ireland, by E. Creedon, G. Hodge and T. Joyce, acting as Agents, and by M. Cush and N.J. Travers, Senior Counsels, and M.J. Dunne and D. Moloney, Barristers-at-Law,the Greek Government, by S. Charitaki, S. Lekkou and M. Skorila, acting as Agents,the Spanish Government, by A. Rubio González, A. Sampol Pucurull and E. Chamizo Llatas, acting as Agents,the French Government, by F. Alabrune, G. de Bergues, D. Colas and F. Fize, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, and by P. Gentili, avvocato dello Stato,the Cypriot Government, by K.K. Kleanthous and N. Ioannou, acting as Agents,the Netherlands Government, by M. Bulterman and J. Langer, acting as Agents,the Polish Government, by B. Majczyna, C. Herma and K. Maćkowska, acting as Agents,the Portuguese Government, by L. Inez Fernandes, P. Machado and M.L. Duarte, acting as Agents,the Finnish Government, by J. Heliskoski and H. Leppo, acting as Agents,the European Parliament, by A. Neergaard, U. Rösslein and E. Waldherr, acting as Agents,the European Commission, by B. Martenczuk, C. Ladenburger, B. Smulders and J.-P. Keppenne, acting as Agents,the European Central Bank (ECB), by C. Zilioli and C. Kroppenstedt, acting as Agents, and H.-G. Kamann, Rechtsanwalt,after hearing the Opinion of the Advocate General at the sitting on 14 January 2015,gives the following Judgment 1This request for a preliminary ruling concerns the validity of the decisions of the Governing Council of the European Central Bank (ECB) of 6 September 2012 on a number of technical features regarding the Eurosystem’s outright monetary transactions in secondary sovereign bond markets (‘the OMT decisions’) and the interpretation of Articles 119 TFEU, 123 TFEU and 127 TFEU and of Articles 17 to 24 of Protocol (No 4) on the Statute of the European System of Central Banks and of the European Central Bank (OJ 2012, C 326, p. 230; ‘the Protocol on the ESCB and the ECB’).2The request has been made in the context of a series of constitutional actions and dispute resolution proceedings between constitutional bodies, which concern the participation of the Deutsche Bundesbank (German Central Bank) in the implementation of the OMT decisions and the alleged failure, of the Bundesregierung (Federal Government) and the Deutscher Bundestag (Lower House of the German Federal Parliament), to act with regard to those decisions. The dispute in the main proceedings and the questions referred for a preliminary ruling The OMT decisions 3According to the minutes of the 340th meeting of the Governing Council of the ECB (‘the Governing Council’) on 5 and 6 September 2012, that body ‘approved the main parameters of Outright Monetary Transactions (OMT), which would be set out in a press release [(“the press release”)] to be published after the meeting’.4The press release is worded as follows:‘As announced on 2 August 2012, the [Governing Council] has today taken decisions on a number of technical features regarding the Eurosystem’s [OMTs] in secondary sovereign bond markets that aim at safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy. These will be known as [OMTs] and will be conducted within the following framework:ConditionalityA necessary condition for [OMTs] is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme (Enhanced Conditions Credit Line), provided that they include the possibility of EFSF/ESM primary market purchases. The involvement of the IMF shall also be sought for the design of the country-specific conditionality and the monitoring of such a programme.The Governing Council will consider [OMTs] to the extent that they are warranted from a monetary policy perspective as long as programme conditionality is fully respected, and terminate them once their objectives are achieved or when there is non-compliance with the macroeconomic adjustment or precautionary programme.Following a thorough assessment, the Governing Council will decide on the start, continuation and suspension of [OMTs] in full discretion and acting in accordance with its monetary policy mandate.Coverage[OMTs] will be considered for future cases of EFSF/ESM macroeconomic adjustment programmes or precautionary programmes as specified above. They may also be considered for Member States currently under a macroeconomic adjustment programme when they will be regaining bond market access.Transactions will be focused on the shorter part of the yield curve, and in particular on sovereign bonds with a maturity of between one and three years.No ex ante quantitative limits are set on the size of [OMTs].Creditor treatmentThe Eurosystem intends to clarify in the legal act concerning [OMTs] that it accepts the same (pari passu) treatment as private or other creditors with respect to bonds issued by euro area countries and purchased by the Eurosystem through [OMTs], in accordance with the terms of such bonds.SterilisationThe liquidity created through [OMTs] will be fully sterilised.TransparencyAggregate [OMT] holdings and their market values will be published on a weekly basis. Publication of the average duration of [OMT] holdings and the breakdown by country will take place on a monthly basis.Securities Markets ProgrammeFollowing today’s decision on [OMTs], the Securities Markets Programme (SMP) is herewith terminated. The liquidity injected through the SMP will continue to be absorbed as in the past, and the existing securities in the SMP portfolio will be held to maturity.’ The main proceedings and the order for reference 5Several groups of individuals, including a group supported by more than 11000 signatories, have brought various constitutional actions concerning the OMT decisions and the alleged failure of the Bundesregierung and the Deutscher Bundestag to act with regard to those decisions. In addition the Fraktion DIE LINKE im Deutschen Bundestag (The Left Party Parliamentary Group in the German Bundestag) has made an application, in dispute resolution proceedings between constitutional bodies, for a declaration that the Deutscher Bundestag is under certain obligations with regard to the OMT decisions.6In support of those actions, the applicants in the main proceedings submit (i) that the OMT decisions form, overall, an ultra vires act inasmuch as they are not covered by the mandate of the ECB and infringe Article 123 TFEU and (ii) that those decisions breach the principle of democracy entrenched in the German Basic Law (Grundgesetz) and thereby impair German constitutional identity.7The Bundesverfassungsgericht (Federal Constitutional Court) states that if the OMT decisions exceed the mandate of the ECB or infringe Article 123 TFEU it will have to uphold these various actions.8In that regard the referring court observes in particular, alluding to the principle of conferral of powers provided for in Article 5(1) and (2) TEU, that the mandate assigned to the ESCB must be strictly limited in order to meet democratic requirements and that compliance with the limits concerned must be subject to comprehensive judicial review. The referring court observes that the Court of Justice has held that the independence of the ECB does not preclude such review since that independence relates only to the powers that the Treaties confer on the ECB, but not to the definition of the extent and scope of its mandate.9The referring court further observes that even if it were established that the OMT decisions are to be regarded as merely an announcement of the adoption of future acts, that would not of itself render the proceedings brought before it inadmissible, since preventive legal protection may be necessary, pursuant to national procedural rules, in order to avoid irreparable consequences.10In those circumstances, the Bundesverfassungsgericht decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)(a)Is the decision of the Governing Council of the ECB of 6 September 2012 on Technical features of Outright Monetary Transactions incompatible with Article 119 TFEU and Article 127(1) and (2) TFEU and with Articles 17 to 24 of the Protocol on the ESCB and the ECB because it exceeds the monetary policy mandate of the ECB laid down in the abovementioned provisions and encroaches upon the competence of the Member States?Is the mandate of the ECB exceeded in particular because the decision of the Governing Council of the ECB of 6 September 2012:(i)is linked to economic assistance programmes of the EFSF or of the ESM (conditionality)?(ii)provides for the purchase of government bonds of selected Member States only (selectivity)?(iii)provides for the purchase of government bonds of programme countries in addition to assistance programmes of the EFSF or of the ESM (parallelism)?(iv)could undermine the limits and conditions laid down by assistance programmes of the EFSF or of the ESM (circumvention)?(b)Is the decision of the Governing Council of the ECB of 6 September 2012 on Technical features of Outright Monetary Transactions incompatible with the prohibition of monetary financing enshrined in Article 123 TFEU?Is compatibility with Article 123 TFEU precluded in particular by the fact that the decision of the Governing Council of the ECB of 6 September 2012:does not provide for quantitative limits for government bond purchases (volume)?does not provide for a time gap between the issue of government bonds on the primary market and their purchase by the European System of Central Banks (ESCB) on the secondary market (market pricing)?allows all purchased government bonds to be held to maturity (interference with market logic)?does not contain any specific requirements for the credit standing of the government bonds to be purchased (default risk)?(v)provides for the same treatment of the ESCB as private or other holders of government bonds (debt cut)?(2)In the alternative, in the event that the Court does not consider the decision of the Governing Council of the ECB of 6 September 2012 on Technical features of Outright Monetary Transactions, qua act of an EU institution, to be an appropriate object for a request pursuant to point (b) of the first paragraph of Article 267 TFEU:Are Article 119 TFEU and Article 127 TFEU and Articles 17 to 24 of the Protocol on the ESCB and the ECB to be interpreted as permitting the Eurosystem, alternatively or cumulatively,to make government bond purchases conditional on the existence of and compliance with economic assistance programmes of the EFSF or of the ESM (conditionality)?to purchase government bonds of selected Member States only (selectivity)?to purchase government bonds of programme countries in addition to assistance programmes of the EFSF or of the ESM (parallelism)?to undermine the limits and conditions laid down by assistance programmes of the EFSF or of the ESM (circumvention)?Having regard to the prohibition of monetary financing, is Article 123 TFEU to be interpreted as permitting the Eurosystem, alternatively or cumulatively,to purchase government bonds without quantitative limits (volume)?to purchase government bonds without a minimum time gap from their issue on the primary market (market pricing)?to hold all purchased government bonds to maturity (interference with market logic)?to purchase government bonds without minimum credit standing requirements (default risk)?to accept the same treatment of the ESCB as private and other holders of government bonds (debt cut)?(vi)to influence pricing, by communicating the intention to purchase or otherwise, coinciding with the issue of government bonds by Member States of the euro area (encouragement to purchase newly issued bonds)?’ Consideration of the questions referred for a preliminary ruling Preliminary observations 11The Italian Government submits that the present request for a preliminary ruling may not be examined by the Court of Justice, since the referring court does not accept the binding and definitive interpretative value that the answer given by the Court in response to that request has. It argues that the referring court considers that it has ultimate responsibility for ruling on the validity of the decisions in question in the light of the conditions and limits imposed by the German Basic Law.12It may be observed in this regard that in Kleinwort Benson (C‑346/93, EU:C:1995:85) the Court declared that it does not have jurisdiction to give a ruling where the court making the reference is not bound by the Court’s interpretation. Indeed, the Court does not have jurisdiction to provide, in preliminary ruling proceedings, answers which are purely advisory (see, to that effect, judgment in Kleinwort Benson, C‑346/93, EU:C:1995:85, paragraphs 23 and 24).13However, in that case an interpretation of EU law was not called for because the Court was asked to interpret an act of EU law in order to enable the national court to decide on the application of national law in a situation where the national law contained no direct and unconditional renvoi to EU law but was limited to taking an act of EU law as a model and only partially reproduced the terms thereof (see, to that effect, judgments in Confederación Española de Empresarios de Estaciones de Servicio, C‑217/05, EU:C:2006:784, paragraph 21, and Les Vergers du Vieux Tauves, C‑48/07, EU:C:2008:758, paragraph 24).14It must be stated that the circumstances of the present case differ significantly from those of the case that gave rise to the judgment in Kleinwort Benson (C‑346/93, EU:C:1995:85), since, here, the request for a preliminary ruling concerns directly the interpretation and application of EU law, which means that the present judgment will have definitive consequences as regards the resolution of the main proceedings.15In that regard, it should be observed that, according to settled case-law of the Court of Justice, Article 267 TFEU establishes a procedure for direct cooperation between the Court and the courts of the Member States (see, inter alia, judgments in SAT Fluggesellschaft, C‑364/92, EU:C:1994:7, paragraph 9, and ATB and Others, C‑402/98, EU:C:2000:366, paragraph 29). In that procedure, which is based on a clear separation of functions between the national courts and the Court, any assessment of the facts of the case is a matter for the national court, which must determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (see, to that effect, inter alia, judgments in WWF and Others, C‑435/97, EU:C:1999:418, paragraph 31, and Lucchini, C‑119/05, EU:C:2007:434, paragraph 43), whilst the Court is empowered to give rulings on the interpretation or the validity of an EU provision only on the basis of the facts which the national court puts before it (judgment in Eckelkamp and Others, C‑11/07, EU:C:2008:489, paragraph 52).16It must also be borne in mind that it is settled case-law of the Court that a judgment in which the latter gives a preliminary ruling is binding on the national court, as regards the interpretation or the validity of the acts of the EU institutions in question, for the purposes of the decision to be given in the main proceedings (see, inter alia, judgments in Fazenda Pública, C‑446/98, EU:C:2000:691, paragraph 49, and Elchinov, C‑173/09, EU:C:2010:581, paragraph 29).17It follows that the Court must reply to the referring court’s request for a preliminary ruling. Admissibility 18Ireland, the Greek, Spanish, French, Italian, Netherlands, Portuguese and Finnish Governments, the European Parliament, the European Commission and the ECB challenge, on various grounds, the admissibility of the request for a preliminary ruling or of certain of the questions it includes.19First, the Italian Government maintains that the dispute in the main proceedings is contrived and artificial. The actions before the referring court are, in its submission, devoid of purpose since it has not been shown that the applicants in the main proceedings are in need of preventive protection or at risk of damage, but also because the alleged lack of action on the part of the Deutscher Bundestag is not per se amenable to any form of legal classification. Those actions should, moreover, have been declared inadmissible by the referring court since they concern EU measures that are not legal acts. The Italian Government further submits that the case in the main proceedings does not actually give rise to a question of obviously ultra vires acts which is connected to German constitutional identity.20The Italian Government also argues that the questions are abstract and hypothetical inasmuch as they are based on a series of assumptions, in particular with regard to the links between purchases of government bonds and compliance with economic assistance programmes, the lack of any quantitative limit on the volume of those purchases or the failure to take account of the risk of losses for the ECB.21The Greek Government also maintains that the questions raised are hypothetical, basing its argument on the fact that the ECB has not, in its view, adopted any measure which directly affects the rights conferred by EU law on the applicants in the main proceedings. The Finnish Government submits that the second question is inadmissible given that it relates to hypothetical actions on the part of the ECB and the national central banks of the euro area.22Next, although it does not expressly raise an objection to admissibility, the Spanish Government asserts that the national proceedings which have given rise to the reference for a preliminary ruling are not compatible with the system for reviewing the validity of EU acts established by Articles 263 TFEU and 267 TFEU given that they create a direct action against the validity of an EU act without complying with the conditions for admissibility laid down by Article 263 TFEU in respect of actions for annulment.23Finally, Ireland, the Greek, Spanish, French, Italian, Netherlands and Portuguese Governments, the Parliament, the Commission and the ECB submit that the first question is inadmissible since a question concerning validity cannot, in their submission, be directed at an act which, like the OMT decisions, is preparatory or does not have legal effects.24In the first place, as regards the argument that the dispute in the main proceedings is contrived and artificial and that the questions referred are hypothetical, it should be observed that, as is apparent from paragraph 15 of this judgment, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation or the validity of a rule of EU law, the Court is in principle bound to give a ruling (see, to that effect, judgment in Melloni, C‑399/11, EU:C:2013:107, paragraph 28 and the case-law cited).25Accordingly, questions concerning EU law enjoy a presumption of relevance. The Court may refuse to give a ruling on a question referred by a national court only where it is quite obvious that the interpretation, or the determination of validity, of a rule of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where 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, to that effect, judgment in Melloni, C‑399/11, EU:C:2013:107, paragraph 29 and the case-law cited).26In the present case, the arguments which the Italian Government puts forward to establish the contrived and artificial nature of the dispute in the main proceedings and the hypothetical nature of the questions raised are based on a critical analysis of the admissibility of the actions at issue in the main proceedings and of the assessment of the facts undertaken by the referring court for the purpose of applying the criteria laid down by national law. It is not, however, for the Court to call that assessment into question since it falls, in the framework of these proceedings, within the jurisdiction of the national court (see, to that effect, judgment in Lucchini, C‑119/05, EU:C:2007:434, paragraph 43); nor is it for the Court to determine whether a decision whereby a matter is brought before it was taken in accordance with the rules of national law governing the organisation of the courts and legal proceedings (judgment in Schnorbus, C‑79/99, EU:C:2000:676, paragraph 22 and the case-law cited). Those arguments are therefore not sufficient to rebut the presumption of relevance mentioned in the previous paragraph.27As to the fact, to which the Greek and Finnish Governments draw attention, that the programme for purchasing government bonds announced in the press release has not been implemented and that its implementation will be possible only after further legal acts have been adopted, it does not — as the referring court states — render the actions in the main proceedings devoid of purpose since under German law preventive legal protection may be granted in such a situation if certain conditions are met.28Although the main actions — since they seek to avoid the infringement of rights that are under threat — must necessarily be based on hypotheses which are by their nature uncertain, they are, according to the referring court, none the less permitted under German law. Since, in proceedings of the kind provided for in Article 267 TFEU, the interpretation of national law falls exclusively to the referring court (judgment in Križan and Others, C‑416/10, EU:C:2013:8, paragraph 58), the fact that the OMT decisions have not yet been implemented and that their implementation will be possible only after further legal acts have been adopted is not a ground for denying that the request for a preliminary ruling meets an objective need for resolving the cases brought before that court (see, by analogy, judgment in Bosman, C‑415/93, EU:C:1995:463, paragraph 65).29In the second place, as regards the alleged incompatibility between the national proceedings and the system established by Articles 263 TFEU and 267 TFEU, the Court has, on a number of occasions, ruled on the admissibility of requests for a preliminary ruling concerning the validity of secondary legislation which have been made in judicial review proceedings brought under United Kingdom law. The Court, relying on the fact that, under national law, the persons concerned were able to make an application for judicial review of the legality of the intention or obligation of the United Kingdom Government to comply with EU legislation, has concluded that the opportunity open to individuals to plead the invalidity of an EU act of general application before national courts is not conditional upon that act actually having been the subject of implementing measures adopted pursuant to national law. In that respect, it is sufficient if the national court is seised of a genuine dispute in which the question of the validity of such an act is raised on indirect grounds (see, to that effect, judgments in British American Tobacco (Investments) and Imperial Tobacco, C‑491/01, EU:C:2002:741, paragraphs 36 and 40, and Intertanko and Others, C‑308/06, EU:C:2008:312, paragraphs 33 and 34). It is clear from the order for reference that that is indeed the case here.30As regards, in the third place, the arguments, set out in paragraph 23 of this judgment, which relate specifically to the first question, it should be observed that, in the present case, the referring court has brought the matter before the Court in order that the latter determine whether Articles 119 TFEU, 123(1) TFEU and 127(1) and (2) TFEU and Articles 17 to 24 of the Protocol on the ESCB and the ECB must be interpreted as permitting the ESCB to adopt a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release.31In the light of the foregoing, the request for a preliminary ruling must be declared admissible. Substance 32By its questions, which it is appropriate to consider together, the referring court asks, in essence, whether Articles 119 TFEU, 123(1) TFEU and 127(1) and (2) TFEU and Articles 17 to 24 of the Protocol on the ESCB and the ECB must be interpreted as permitting the ESCB to adopt a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release.Articles 119 TFEU and 127(1) and (2) TFEU, and Articles 17 to 24 of the Protocol on the ESCB and the ECB33The referring court raises the question of whether a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release, can be covered by the powers of the ESCB, as defined by primary law.– Powers of the ESCB34It should be noted as a preliminary point that under Article 119(2) TFEU, the activities of the Member States and the Union are to include a single currency, the euro, as well as the definition and conduct of a single monetary policy and exchange-rate policy (judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 48).35As regards more particularly monetary policy, Article 3(1)(c) TFEU states that the Union is to have exclusive competence in that area for the Member States whose currency is the euro (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 50).36Under Article 282(1) TFEU, the ECB and the central banks of the Member States whose currency is the euro, which constitute the Eurosystem, are to conduct the monetary policy of the Union (judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 49). Under Article 282(4) TFEU, the ECB is to adopt such measures as are necessary to carry out its tasks in accordance with Articles 127 TFEU to 133 TFEU, with Article 138 TFEU and with the conditions laid down in the Statute of the ESCB and of the ECB.37Within that framework, it is for the ESCB, pursuant to Article 127(2) TFEU, to define and implement that policy.38More specifically, it follows from Article 129(1) TFEU, read in conjunction with Article 12.l of the Protocol on the ESCB and the ECB, that the Governing Council is to formulate the monetary policy of the Union and that the Executive Board of the ECB is to implement that policy in accordance with the guidelines and decisions laid down by the Governing Council.39It also follows, from the third subparagraph of Article 12.1 of the Protocol that, to the extent deemed possible and appropriate, the ECB is to have recourse to the national central banks to carry out operations which form part of the tasks of the ESCB, those banks being obliged, under Article 14.3 of the Protocol, to act in accordance with the guidelines and instructions of the ECB.40Furthermore, it is apparent from Article 130 TFEU that the ESCB is to be independent when carrying out its task of formulating and implementing the Union’s monetary policy. It can be seen from the wording of that Article that it is intended to shield the ESCB and its decision-making bodies from external influences which would be likely to interfere with the performance of the tasks which the FEU Treaty and the Protocol on the ESCB and the ECB assign to the ESCB. Thus, Article 130 TFEU is, in essence, intended to shield the ESCB from all political pressure in order to enable it effectively to pursue the objectives attributed to its tasks, through the independent exercise of the specific powers conferred on it for that purpose by primary law (see, to that effect, judgment in Commission v ECB, C‑11/00, EU:C:2003:395, paragraph 134).41In accordance with the principle of conferral of powers set out in Article 5(2) TEU, the ESCB must act within the limits of the powers conferred upon it by primary law and it cannot therefore validly adopt and implement a programme which is outside the area assigned to monetary policy by primary law. In order to ensure that the principle of conferral is complied with, the acts of the ESCB are, on the conditions laid down by the Treaties, subject to review by the Court (see, to that effect, judgment in Commission v ECB, C‑11/00, EU:C:2003:395, paragraph 135).42It must be pointed out in this regard that the FEU Treaty contains no precise definition of monetary policy but defines both the objectives of monetary policy and the instruments which are available to the ESCB for the purpose of implementing that policy (see, to that effect, Pringle, C‑370/12, EU:C:2012:756, paragraph 53).43Thus, under Articles 127(1) TFEU and 282(2) TFEU, the primary objective of the Union’s monetary policy is to maintain price stability. The same provisions further stipulate that, without prejudice to that objective, the ESCB is to support the general economic policies in the Union, with a view to contributing to the achievement of its objectives, as laid down in Article 3 TEU (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 54).44The Protocol on the ESCB and the ECB is thus characterised by a clear mandate, which is directed primarily at the objective of ensuring price stability. The tightly drawn nature of that mandate is further reinforced by the procedures for amending certain parts of the Statute of the ESCB and of the ECB.45As to the means assigned to the ESCB by primary law for the purpose of achieving those objectives, Chapter IV of the Protocol on the ESCB and the ECB, which describes the monetary functions and operations assured by the ESCB, sets out the instruments to which the ESCB may have recourse in the framework of monetary policy.– The delimitation of monetary policy46The Court has held that in order to determine whether a measure falls within the area of monetary policy it is appropriate to refer principally to the objectives of that measure. The instruments which the measure employs in order to attain those objectives are also relevant (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraphs 53 and 55).47In the first place, as regards the objectives of a programme such as that at issue in the main proceedings, it can be seen from the press release that the aim of the programme is to safeguard both ‘an appropriate monetary policy transmission and the singleness of the monetary policy’.48First, the objective of safeguarding the singleness of monetary policy contributes to achieving the objectives of that policy inasmuch as, under Article 119(2) TFEU, monetary policy must be ‘single’.49Secondly, the objective of safeguarding an appropriate transmission of monetary policy is likely both to preserve the singleness of monetary policy and to contribute to its primary objective, which is to maintain price stability.50The ability of the ESCB to influence price developments by means of its monetary policy decisions in fact depends, to a great extent, on the transmission of the ‘impulses’ which the ESCB sends out across the money market to the various sectors of the economy. Consequently, if the monetary policy transmission mechanism is disrupted, that is likely to render the ESCB’s decisions ineffective in a part of the euro area and, accordingly, to undermine the singleness of monetary policy. Moreover, since disruption of the transmission mechanism undermines the effectiveness of the measures adopted by the ESCB, that necessarily affects the ESCB’s ability to guarantee price stability. Accordingly, measures that are intended to preserve that transmission mechanism may be regarded as pertaining to the primary objective laid down in Article 127(1) TFEU.51The fact that a programme such as that announced in the press release might also be capable of contributing to the stability of the euro area, which is a matter of economic policy (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 56), does not call that assessment into question.52Indeed, a monetary policy measure cannot be treated as equivalent to an economic policy measure merely because it may have indirect effects on the stability of the euro area (see, by analogy, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 56).53In the second place, as regards the means to be used for achieving the objectives sought by a programme such as that announced in the press release, it is not disputed that the implementation of such a programme will entail outright monetary transactions on secondary sovereign debt markets.54It is clear from Article 18.1 of the Protocol on the ESCB and the ECB, which forms part of Chapter IV thereof, that in order to achieve the objectives of the ESCB and to carry out its tasks, as provided for in primary law, the ECB and the national central banks may, in principle, operate in the financial markets by buying and selling outright marketable instruments in euro. Accordingly, the transactions which the Governing Council has in mind in the press release use one of the monetary policy instruments provided for by primary law.55As regards the selective nature of the programme announced in the press release, it should be borne in mind that the programme is intended to rectify the disruption to the monetary policy transmission mechanism caused by the specific situation of government bonds issued by certain Member States. In those circumstances, the mere fact that the programme is specifically limited to those government bonds is thus not of a nature to imply, of itself, that the instruments used by the ESCB fall outside the realm of monetary policy. Moreover, no provision of the FEU Treaty requires the ESCB to operate in the financial markets by means of general measures that would necessarily be applicable to all the States of the euro area.56In the light of those considerations, it is apparent that a programme such as that announced in the press release, in view of its objectives and the instruments provided for achieving them, falls within the area of monetary policy.57The fact that the implementation of such a programme is made conditional upon full compliance with EFSF or ESM macroeconomic adjustment programmes does not alter that conclusion.58It is, of course, possible that a government bond-buying programme may, indirectly, increase the impetus to comply with those adjustment programmes and thus, to some extent, further the economic-policy objectives of those programmes.59However, such indirect effects do not mean that such a programme must be treated as equivalent to an economic policy measure, since it is apparent from Articles 119(2) TFEU, 127(1) TFEU and 282(2) TFEU that, without prejudice to the objective of price stability, the ESCB is to support the general economic policies in the Union.60The point should also be made that the ESCB, in a wholly independent manner, made implementation of the programme announced in the press release conditional upon full compliance with EFSF or ESM macroeconomic adjustment programmes, thereby ensuring that its monetary policy will not give the Member States whose sovereign bonds it purchases financing opportunities which would enable them to depart from the adjustment programmes to which they have subscribed. The ESCB thus ensures that the monetary policy measures it has adopted will not work against the effectiveness of the economic policies followed by the Member States.61Furthermore, since the ESCB is obliged, under Article 127(1) TFEU, read in conjunction with Article 119(3) TFEU, to comply with the guiding principle that public finances must be sound, the conditions included in a programme such as that announced in the press release, which prevent that programme from acting as an incentive to Member States to allow their financial situation to deteriorate, cannot be regarded as taking the programme beyond the confines of the monetary policy framework laid down by primary law.62It should be added that full compliance of the Member State concerned with the obligations arising under an adjustment programme to which it has subscribed is not, in any event, a sufficient condition to trigger intervention by the ESCB in the framework of a programme such as that announced in the press release, since such intervention is made strictly conditional upon there being disruptions of the monetary policy transmission mechanism or the singleness of monetary policy.63Accordingly, the fact that the purchase of government bonds on the secondary market subject to a condition of compliance with a macroeconomic adjustment programme could be regarded as falling within economic policy when the purchase is undertaken by the ESM (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 60) does not mean that this should equally be the case when that instrument is used by the ESCB in the framework of a programme such as that announced in the press release.64In that regard, the difference between the objectives of the ESM and those of the ESCB is decisive. Whilst it can be seen from paragraphs 48 to 52 of this judgment that a programme such as that at issue in the main proceedings may be implemented only in so far as is necessary for the maintenance of price stability, the ESM’s intervention is intended to safeguard the stability of the euro area, that objective not falling within monetary policy (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 56).65That analysis also leads the Court to exclude the possibility that a programme such as that announced in the press release may serve to circumvent the conditions circumscribing the ESM’s activity on the secondary market, since the ESCB’s intervention is not intended to take the place of that of the ESM in order to achieve the latter’s objectives but must, on the contrary, be implemented independently on the basis of the objectives particular to monetary policy.– Proportionality66It follows from Articles 119(2) TFEU and 127(1) TFEU, read in conjunction with Article 5(4) TEU, that a bond-buying programme forming part of monetary policy may be validly adopted and implemented only in so far as the measures that it entails are proportionate to the objectives of that policy.67In that regard, it should be borne in mind that, according to the settled case-law of the Court, the principle of proportionality requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives (see, to that effect, judgment in Association Kokopelli, C‑59/11, EU:C:2012:447, paragraph 38 and the case-law cited).68As regards judicial review of compliance with those conditions, since the ESCB is required, when it prepares and implements an open market operations programme of the kind announced in the press release, to make choices of a technical nature and to undertake forecasts and complex assessments, it must be allowed, in that context, a broad discretion (see, by analogy, judgments in Afton Chemical, C‑343/09, EU:C:2010:419, paragraph 28, and Billerud Karlsborg and Billerud Skärblacka, C‑203/12, EU:C:2013:664, paragraph 35).69Nevertheless, where an EU institution enjoys broad discretion, a review of compliance with certain procedural guarantees is of fundamental importance. Those guarantees include the obligation for the ESCB to examine carefully and impartially all the relevant elements of the situation in question and to give an adequate statement of the reasons for its decisions.70In that regard, the Court has consistently held that, although the statement of reasons for an EU measure, which is required by Article 296(2) TFEU, must show clearly and unequivocally the reasoning of the author of the measure in question, so as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its power of review, it is not required to go into every relevant point of fact and law. In addition, the question whether the obligation to provide a statement of reasons has been satisfied must be assessed with reference not only to the wording of the measure but also to its context and the whole body of legal rules governing the matter in question (see, to that effect, judgment in Commission v Council, C‑63/12, EU:C:2013:752, paragraphs 98 and 99 and the case-law cited).71Although an examination of whether the obligation to provide a statement of reasons has been satisfied may be undertaken only on the basis of a decision that has been formally adopted, in this case it must none the less be found that the press release, together with draft legal acts considered during the meeting of the Governing Council at which the press release was approved, make known the essential elements of a programme such as that announced in the press release and are such as to enable the Court to exercise its power of review.72As regards, in the first place, the appropriateness of a programme such as that announced in the press release for achieving the ESCB’s objectives, it is apparent from the press release and from the explanations provided by the ECB that the programme is based on an analysis of the economic situation of the euro area, according to which, at the date of the programme’s announcement, interest rates on the government bonds of various States of the euro area were characterised by high volatility and extreme spreads. According to the ECB, those spreads were not accounted for solely by macroeconomic differences between the States concerned but were caused, in part, by the demand for excessive risk premia for the bonds issued by certain Member States, such premia being intended to guard against the risk of a break-up of the euro area.73According to the ECB, that special situation severely undermined the ESCB’s monetary policy transmission mechanism in that it gave rise to fragmentation as regards bank refinancing conditions and credit costs, which greatly limited the effects of the impulses transmitted by the ESCB to the economy in a significant part of the euro area.74Having regard to the information placed before the Court in the present proceedings, it does not appear that that analysis of the economic situation of the euro area as at the date of the announcement of the programme in question is vitiated by a manifest error of assessment.75In that regard, the fact, mentioned by the referring court, that that reasoned analysis has been subject to challenge does not, in itself, suffice to call that conclusion into question, since, given that questions of monetary policy are usually of a controversial nature and in view of the ESCB’s broad discretion, nothing more can be required of the ESCB apart from that it use its economic expertise and the necessary technical means at its disposal to carry out that analysis with all care and accuracy.76In the situation described in paragraphs 72 and 73 of this judgment, the purchase, on secondary markets, of government bonds of the Member States affected by interest rates considered by the ECB to be excessive is likely to contribute to reducing those rates by dispelling unjustified fears about the break-up of the euro area and thus to play a part in bringing about a fall in — or even the elimination of — excessive risk premia.77In those circumstances, the ESCB was entitled to take the view that such a development in interest rates is likely to facilitate the ESCB’s monetary policy transmission and to safeguard the singleness of monetary policy.78Thus, it is undisputed that interest rates for the government bonds of a given State play a decisive role in the setting of the interest rates applicable to the various economic actors in that State, in the value of the portfolios of financial institutions holding such bonds and in the ability of those institutions to obtain liquidity. Therefore, eliminating or reducing the excessive risk premia demanded in respect of the government bonds of a Member State is likely to avoid the volatility and level of those premia from hindering the transmission of the effects of the ESCB’s monetary policy decisions to the economy of that State and from jeopardising the singleness of monetary policy.79Moreover, the ECB’s assertion that the mere announcement of the programme at issue in the main proceedings was sufficient to achieve the effect sought — namely to restore the monetary policy transmission mechanism and the singleness of monetary policy — has not been challenged in these proceedings.80It follows from the foregoing that, in economic conditions such as those described by the ECB at the date of the press release, the ESCB could legitimately take the view that a programme such as that announced in the press release is appropriate for the purpose of contributing to the ESCB’s objectives and, therefore, to maintaining price stability.81Accordingly, it should, in the second place, be established whether such a programme does not go manifestly beyond what is necessary to achieve those objectives.82It must be noted in that regard that the wording of the press release makes quite clear that, under the programme at issue in the main proceedings, the purchase of government bonds on secondary markets is permitted only in so far as it is necessary to achieve the objectives of that programme and that such purchases will cease as soon as those objectives have been achieved.83It should also be noted that the announcement made in the press release about the programme at issue in the main proceedings will be followed, if necessary, by a second phase, namely implementation of the programme, which will be dependent upon an in-depth assessment of the requirements of monetary policy.84Moreover, more than two years after the programme at issue in the main proceedings was announced, that programme has not been implemented, the Governing Council taking the view that its activation was not justified by the economic situation of the euro area.85In addition to the fact that implementation of a programme such as that announced in the press release is strictly subject to the objectives of that programme, the Court notes that the potential scale of the programme is limited in a number of ways.86It is thus apparent that, in the context of such a programme, the ESCB may purchase only the government bonds of Member States which are undergoing a macroeconomic adjustment programme and which have access to the bond market again. Furthermore, a programme such as that at issue in the main proceedings is concentrated on government bonds with a maturity of up to three years, the ESCB reserving the right to sell at any time the bonds it has purchased.87It follows from those considerations, first, that a programme such as that announced in the press release ultimately concerns only a limited part of the government bonds issued by the States of the euro area, so that the commitments which the ECB is liable to enter into when such a programme is implemented are, in fact, circumscribed and limited. Secondly, such a programme can be put into effect only when the situation of certain of those States has already justified EMS intervention which is still under way.88In those circumstances, a programme whose volume is thus restricted could legitimately be adopted by the ESCB without a quantitative limit being set prior to its implementation, such a limit being likely, moreover, to reduce the programme’s effectiveness.89Furthermore, in so far as the referring court raises the question of the selectivity of such a programme, it should be recalled that this programme is intended to rectify the disruption of the ESCB’s monetary policy which arose as a result of the particular situation of government bonds issued by certain Member States. In those circumstances, the ESCB was fully entitled to take the view that a selective bond-buying programme may prove necessary in order to rectify that disruption, concentrating the ESCB’s activity on the parts of the euro area which are particularly affected by that disruption and thereby preventing the scale of that programme from being needlessly increased, beyond what is necessary to achieve its objectives, or the programme’s effectiveness from being diminished.90It must also be stated that a programme such as that announced in the press release identifies the Member States whose bonds may be purchased on the basis of criteria linked to the objectives pursued and not by means of an arbitrary selection.91In the third place, the ESCB weighed up the various interests in play so as to actually prevent disadvantages from arising, when the programme in question is implemented, which are manifestly disproportionate to the programme’s objectives.92It follows from the foregoing considerations that a programme such as that announced in the press release does not infringe the principle of proportionality.Article 123(1) TFEU93The referring court raises the issue of the compatibility with Article 123(1) TFEU of a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release.94It is clear from its wording that Article 123(1) TFEU prohibits the ECB and the central banks of the Member States from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Union and of Member States and from purchasing directly from them their debt instruments (judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 123).95It follows that that provision prohibits all financial assistance from the ESCB to a Member State (see, to that effect, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 132), but does not preclude, generally, the possibility of the ESCB purchasing from the creditors of such a State, bonds previously issued by that State.96Thus, Article 18.1 of the Protocol on the ESCB and the ECB permits the ESCB, in order to achieve its objectives and to carry out its tasks, to operate in the financial markets, inter alia, by buying and selling outright marketable instruments, which include government bonds, and does not make that authorisation subject to particular conditions as long as the nature of open market operations is not disregarded.97Nevertheless, the ESCB does not have authority to purchase government bonds on secondary markets under conditions which would, in practice, mean that its action has an effect equivalent to that of a direct purchase of government bonds from the public authorities and bodies of the Member States, thereby undermining the effectiveness of the prohibition in Article 123(1) TFEU.98In addition, in order to determine which forms of purchases of government bonds are compatible with Article 123(1) TFEU, it is necessary to take account of the objective pursued by that provision (see, by analogy, judgment in Pringle, C‑370/12, EU:C:2012:756, paragraph 133).99To that end, it must be recalled that the origin of the prohibition laid down in Article 123 TFEU is to be found in Article 104 of the EC Treaty (which became Article 101 EC), which was inserted in the EC Treaty by the Treaty of Maastricht.100It is apparent from the preparatory work relating to the Treaty of Maastricht that the aim of Article 123 TFEU is to encourage the Member States to follow a sound budgetary policy, not allowing monetary financing of public deficits or privileged access by public authorities to the financial markets to lead to excessively high levels of debt or excessive Member State deficits (see the Draft Treaty amending the Treaty establishing the European Economic Community with a view to achieving economic and monetary union, Bulletin of the European Communities, Supplement 2/91, pp. 24 and 54).101Thus, as is stated in the seventh recital in the preamble to Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles [123 TFEU] and [125(1) TFEU] (OJ 1993 L 332, p. 1), purchases made on the secondary market may not be used to circumvent the objective of Article 123 TFEU.102It follows that, as the Advocate General has observed in point 227 of his Opinion, when the ECB purchases government bonds on secondary markets, sufficient safeguards must be built into its intervention to ensure that the latter does not fall foul of the prohibition of monetary financing in Article 123(1) TFEU.103As regards a programme such as that announced in the press release, it must in the first place be stated that, in the framework of such a programme, the ESCB is entitled to purchase government bonds — not directly, from public authorities or bodies of the Member States — but only indirectly, on secondary markets. Intervention by the ESCB of the kind provided for by a programme such as that at issue in the main proceedings thus cannot be treated as equivalent to a measure granting financial assistance to a Member State.104That said, the point should be made, in the second place, that the ESCB’s intervention could, in practice, have an effect equivalent to that of a direct purchase of government bonds from public authorities and bodies of the Member States if the potential purchasers of government bonds on the primary market knew for certain that the ESCB was going to purchase those bonds within a certain period and under conditions allowing those market operators to act, de facto, as intermediaries for the ESCB for the direct purchase of those bonds from the public authorities and bodies of the Member State concerned.105However, the explanations provided by the ECB in these proceedings have made clear that the implementation of a programme such as that announced in the press release must be subject to conditions intended to ensure that the ESCB’s intervention on secondary markets does not have an effect equivalent to that of a direct purchase of government bonds on the primary market.106In this respect, the draft decision and draft guideline produced by the ECB in these proceedings indicate that the Governing Council is to be responsible for deciding on the scope, the start, the continuation and the suspension of the intervention on the secondary market envisaged by such a programme. The ECB has also made clear before the Court that the ESCB intends, first, to ensure that a minimum period is observed between the issue of a security on the primary market and its purchase on the secondary market and, secondly, to refrain from making any prior announcement concerning either its decision to carry out such purchases or the volume of purchases envisaged.107Inasmuch as those safeguards prevent the conditions of issue of government bonds from being distorted by the certainty that those bonds will be purchased by the ESCB after their issue, they ensure that implementation of a programme such as that announced in the press release will not, in practice, have an effect equivalent to that of a direct purchase of government bonds from public authorities and bodies of the Member States.108It is true that, despite those safeguards, the ESCB’s intervention remains capable of having, as the referring court points out, some influence on the functioning of the primary and secondary sovereign debt markets. However, that fact is not decisive since such influence constitutes, as the Advocate General has observed in point 259 of his Opinion, an inherent effect in purchases on the secondary market which are authorised by the FEU Treaty. That effect is, moreover, essential if those purchases are to be used effectively in the framework of monetary policy.109In the third place, a programme such as that announced in the press release would circumvent the objective of Article 123(1) TFEU, recalled in paragraph 100 of this judgment, if that programme were such as to lessen the impetus of the Member States concerned to follow a sound budgetary policy. In fact, since it follows from Articles 119(2) TFUE, 127(1) TFEU and 282(2) TFEU that, without prejudice to the objective of price stability, the ESCB is to support the general economic policies in the Union, the action taken by the ESCB on the basis of Article 123 TFEU cannot be such as to contravene the effectiveness of those polices by lessening the impetus of the Member States concerned to follow a sound budgetary policy.110Moreover, the conduct of monetary policy will always entail an impact on interest rates and bank refinancing conditions, which necessarily has consequences for the financing conditions of the public deficit of the Member States.111In any event, the Court finds that the features of a programme such as that announced in the press release exclude the possibility of that programme being considered of such a kind as to lessen the impetus of the Member States to follow a sound budgetary policy.112In that regard, it must be borne in mind, first, that the programme provides for the purchase of government bonds only in so far as is necessary for safeguarding the monetary policy transmission mechanism and the singleness of monetary policy and that those purchases will cease as soon as those objectives are achieved.113That limitation on the ESCB’s intervention means (i) that the Member States cannot, in determining their budgetary policy, rely on the certainty that the ESCB will at a future point purchase their government bonds on secondary markets and (ii) that the programme in question cannot be implemented in a way which would bring about a harmonisation of the interest rates applied to the government bonds of the Member States of the euro area regardless of the differences arising from their macroeconomic or budgetary situation.114The adoption and implementation of such a programme thus do not permit the Member States to adopt a budgetary policy which fails to take account of the fact that they will be compelled, in the event of a deficit, to seek financing on the markets, or result in them being protected against the consequences which a change in their macroeconomic or budgetary situation may have in that regard.115Secondly, a programme such as that at issue in the main proceedings is accompanied by a series of guarantees that are intended to limit its impact on the impetus to follow a sound budgetary policy.116Thus, by limiting that programme to certain types of bonds issued only by those Member States which are undergoing a structural adjustment programme and which have access to the bond market again, the ECB has, de facto, restricted the volume of government bonds eligible to be purchased in the framework of the programme and, accordingly, has limited the scale of the programme’s impact on the financing conditions of the States of the euro area.117Moreover, the impact of a programme such as that announced in the press release on the impetus to follow a sound budgetary policy is also limited by the fact that the ESCB has the option of selling the purchased bonds at any time. It follows that the consequences of withdrawing those bonds from the markets may be temporary. That option also means that the ESCB is able to adapt its programme in the light of the attitude of the Member States concerned, in particular with a view to limiting or suspending purchases of government bonds if a Member State changes its issuance behaviour by issuing more short-maturity bonds in order to finance its budget by means of bonds that are eligible for ESCB intervention.118The fact that the ESCB also has the possibility of holding the bonds it has purchased until maturity does not play a decisive role in this regard, since that possibility depends on such action being necessary to achieve the objectives sought and, in any event, the market operators involved cannot be certain that the ESCB will make use of that option. It should also be observed that such a practice is in no way precluded by Article 18.1 of the Protocol on the ESCB and the ECB and that it does not imply that the ESCB waives its right to payment of the debt, by the issuing Member State, once the bond matures.119In addition, by providing only for the purchase of government bonds issued by Member States that have access to the bond market again, the ESCB in practice excludes from the programme it intends to implement the Member States whose financial situation has deteriorated so far that they are no longer in a position to secure financing on the market.120Finally, the fact that the purchase of government bonds is conditional upon full compliance with the structural adjustment programmes to which the Member States concerned are subject precludes the possibility of a programme, such as that announced in the press release, acting as an incentive to those States to dispense with fiscal consolidation, relying on the financing opportunities to which the implementation of such a programme could give rise.121It follows from the foregoing that a programme such as that announced in the press release does not lessen the impetus of the Member States concerned to follow a sound budgetary policy. Accordingly, Article 123(1) TFEU does not prevent the ESCB from adopting such a programme and implementing it under conditions which do not result in the ESCB’s intervention having an effect equivalent to that of a direct purchase of government bonds from the public authorities and bodies of the Member States.122The features of such a programme to which the referring court has specifically drawn attention and which have not been mentioned in the analysis in the previous paragraphs do not call that conclusion into question.123Thus, even if it were established that that programme could expose the ECB to a significant risk of losses, that would in no way weaken the guarantees which are built into the programme in order to ensure that the Member States’ impetus to follow a sound budgetary policy is not lessened.124In this regard, the Court observes that those guarantees are also likely to reduce the risk of losses to which the ECB is exposed.125It should also be borne in mind that a central bank, such as the ECB, is obliged to take decisions which, like open market operations, inevitably expose it to a risk of losses and that Article 33 of the Protocol on the ESCB and the ECB duly provides for the way in which the losses of the ECB must be allocated, without specifically delimiting the risks which the Bank may take in order to achieve the objectives of monetary policy.126Furthermore, although the lack of privileged creditor status may mean that the ECB is exposed to the risk of a debt cut decided upon by the other creditors of the Member State concerned, it must be stated that such a risk is inherent in a purchase of bonds on the secondary markets, an operation which was authorised by the authors of the Treaties, without being conditional upon the ECB having privileged creditor status.127In view of all the foregoing considerations, the answer to the questions referred is that Articles 119 TFEU, 123(1) TFEU and 127(1) and (2) TFEU and Articles 17 to 24 of the Protocol on the ESCB and the ECB must be interpreted as permitting the ESCB to adopt a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release. Costs 128Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Articles 119 TFEU, 123(1) TFEU and 127(1) and (2) TFEU and Articles 17 to 24 of Protocol (No 4) on the Statute of the European System of Central Banks and of the European Central Bank must be interpreted as permitting the European System of Central Banks (ESCB) to adopt a programme for the purchase of government bonds on secondary markets, such as the programme announced in the press release to which reference is made in the minutes of the 340th meeting of the Governing Council of the European Central Bank (ECB) on 5 and 6 September 2012. [Signatures]( *1 ) Language of the case: German. | e2d64-4298ae1-4bdf | EN |
The Association and Liberalisation Agreements concluded between the EU and Morocco are not applicable to Western Sahara | 21 December 2016 ( *1 )‛Appeal — External relations — Agreement between the European Union and the Kingdom of Morocco concerning liberalisation measures on agricultural and fishery products — Decision approving the conclusion of an international agreement — Action for annulment — Admissibility — Locus standi — Territorial scope of the agreement — Interpretation of the agreement — Principle of self-determination — Principle of the relative effect of treaties’In Case C‑104/16 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 19 February 2016, Council of the European Union, represented by H. Legal, A. de Elera-San Miguel Hurtado and A. Westerhof Löfflerová, acting as Agents,appellant,supported by: Kingdom of Belgium, represented by C. Pochet and J.-C. Halleux, acting as Agents, Federal Republic of Germany, represented by T. Henze, acting as Agent, Kingdom of Spain, represented by M. Sampol Pucurull and S. Centeno Huerta, acting as Agents, French Republic, represented by F. Alabrune, G. de Bergues, D. Colas, F. Fize and B. Fodda, acting as Agents, Portuguese Republic, represented by L. Inez Fernandes and M. Figueiredo, acting as Agents, Confédération marocaine de l’agriculture et du développement rural (Comader), represented by J.-F. Bellis, M. Struys, A. Bailleux, L. Eskenazi and R. Hicheri, avocats,interveners in the appeal,the other parties to the proceedings being: Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario), represented by G. Devers, avocat,applicant at first instance, European Commission, represented by F. Castillo de la Torre, E. Paasivirta and B. Eggers, acting as Agents,intervener at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič and J.L. da Cruz Vilaça, Presidents of Chambers, J. Malenovský (Rapporteur), E. Levits, J.-C. Bonichot, A. Arabadjiev, C. Toader, C.G. Fernlund, C. Vajda, S. Rodin, F. Biltgen and K. Jürimäe, Judges,Advocate General: M. Wathelet,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 19 July 2016,after hearing the Opinion of the Advocate General at the sitting on 13 September 2016,gives the following Judgment 1By its appeal the Council of the European Union is seeking to have set aside the judgment of the General Court of the European Union of 10 December 2015, Front Polisario v Council (T‑512/12, ‘the judgment under appeal’, EU:T:2015:953), by which the General Court upheld the action brought by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) for the partial annulment of Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2012 L 241, p. 2) (‘the decision at issue’). Legal context International law The Charter of the United Nations2Article 1 of the Charter of the United Nations, signed at San Francisco on 26 June 1945, states:‘The Purposes of the United Nations are:…2.To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, and to take other appropriate measures to strengthen universal peace;…’3Chapter XI of the Charter of the United Nations, entitled ‘Declaration Regarding Non-Self-Governing Territories’, includes Article 73 thereof, which states:‘Members of the United Nations which have or assume responsibilities for the administration of territories whose peoples have not yet attained a full measure of self-government recognise the principle that the interests of the inhabitants of these territories are paramount, and accept as a sacred trust the obligation to promote to the utmost, within the system of international peace and security established by the present Charter, the well-being of the inhabitants of these territories …The Vienna Convention on the Law of Treaties4Under the final paragraph of the preamble to the Vienna Convention on the Law of Treaties, concluded in Vienna on 23 May 1969 (United Nations Treaty Series, Vol. 1155, p. 331; ‘the Vienna Convention’), the parties to that convention ‘affirm that the rules of customary international law will continue to govern questions not regulated by the provisions of [that] convention’.5Article 3 of the Vienna Convention, which is entitled ‘International agreements not within the scope of the present Convention’, provides:‘The fact that the present Convention does not apply to international agreements concluded between States and other subjects of international law or between such other subjects of international law, or to international agreements not in written form, shall not affect:(b)the application to [such agreements] of any of the rules set forth in the present Convention to which they would be subject under international law independently of the Convention;6According to Article 26 of that convention, entitled ‘Pacta sunt servanda’:‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith.’7Article 29 of the Convention, entitled ‘Territorial scope of treaties’, provides:‘Unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.’8Article 30 of the Vienna Convention, entitled ‘Application of successive treaties to the same subject-matter’, provides in paragraph 2 thereof:‘When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.’9Under Article 31 of the Vienna Convention, entitled ‘General rule of interpretation’:‘1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:(a)any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty;any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.3. There shall be taken into account, together with the context:any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;(c)any relevant rules of international law applicable in the relations between the parties.4. A special meaning shall be given to a term if it is established that the parties so intended.’10Article 34 of the Vienna Convention, entitled ‘General rule regarding third States’, provides:‘A treaty does not create either obligations or rights for a third State without its consent.’ EU law The Association Agreement11The Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, was signed in Brussels on 26 February 1996 (OJ 2000 L 70, p. 2; ‘the Association Agreement’) and approved on behalf of the Communities by Council and Commission Decision 2000/204/EC, ECSC of 24 January 2000 (OJ 2000 L 70, p. 1). Pursuant to Article 96 of the Agreement, it entered into force on 1 March 2000, as is apparent from the information published in the Official Journal of the European Communities (OJ 2000 L 70, p. 228).12Article 1(1) of the Association Agreement provides:‘An association is hereby established between the Community and its Member States, of the one part, and Morocco, of the other part.’13Title II of that agreement, entitled ‘Free Movement of Goods’, includes Articles 6 to 30 thereof.14Article 16 of the Association Agreement provides:‘The Community and Morocco shall gradually implement greater liberalisation of their reciprocal trade in agricultural and fishery products.’15Article 17(1) of that agreement provided in its initial version:‘Agricultural and fishery products originating in Morocco shall benefit on import into the Community from the provisions set out in Protocols 1 and 2 respectively.’16Title VIII of the Association Agreement, entitled ‘Institutional, General and Final Provisions’, includes in particular Article 94 thereof, which states:‘This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Community and the European Coal And Steel Community are applied and under the conditions laid down in those Treaties and, on the other hand, to the territory of the Kingdom of Morocco.’The Liberalisation Agreement17The Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols No 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, was signed in Brussels on 13 December 2010 (OJ 2012 L 241, p. 4, ‘the Liberalisation Agreement’), before being approved on behalf of the European Union by the decision at issue. In accordance with the terms thereof, it entered into force on 1 October 2012, as is apparent from the notice published in the Official Journal of the European Union (OJ 2012 L 255, p. 1).18As is apparent from the Liberalisation Agreement and recitals 1 to 3 of the decision at issue, the purpose of that agreement is to implement the progressive liberalisation of trade in agricultural and fishery products provided for in Article 16 of the Association Agreement, by way of the amendment of some of the stipulations of the Association Agreement as well as of some of the accompanying protocols.19To that end, the Liberalisation Agreement in particular amended Article 17(1) of the Association Agreement, which now provides that:‘Agricultural products, processed agricultural products, fish and fishery products originating in Morocco listed in Protocol No 1 shall be subject to the arrangements set out in that Protocol on importation into the European Union.20The Liberalisation Agreement also amended Protocol No 1 of the Association Agreement, which now provides, in essence, that ad valorem and specific customs duties applicable to agricultural products, processed agricultural products, fish and fishery products originating in Morocco and covered by those two agreements are eliminated or reduced to specified levels. Background to the dispute 21According to Article 1 of its constituting document, the Front Polisario is ‘a national liberation movement, the fruit of the long resistance of the Sahrawi people against the various forms of foreign occupation’, created on 10 May 1973.22The historical and international context in which it was created and subsequent developments in the situation in Western Sahara, as they emerge in essence from paragraphs 1 to 16 of the judgment under appeal, may be summarised as follows.23Western Sahara is a territory in north-west Africa which was colonised by the Kingdom of Spain at the end of the 19th century before becoming a province of Spain; it was then added by the United Nations (UN) to the list of non-self-governing territories for the purposes of Article 73 of the United Nations Charter, on which it still appears to this day.24On 14 December 1960, the General Assembly of the UN adopted Resolution 1514 (XV), entitled ‘Declaration on the granting of independence to colonial countries and peoples’ (‘Resolution 1514 (XV) of the General Assembly of the UN’), which states, inter alia, that ‘all peoples have the right to self-determination[,] by virtue of [which] they freely determine their political status’, that ‘immediate steps shall be taken, in Trust and Non-Self-Governing Territories or all other territories which have not yet attained independence, to transfer all powers to the peoples of those territories, without any conditions or reservations, in accordance with their freely expressed will and desire’, and that ‘all States shall observe faithfully and strictly the provisions of the Charter of the United Nations … on the basis of respect for the sovereign rights of all peoples and their territorial integrity’.25On 20 December 1966, the General Assembly of the UN adopted Resolution 2229 (XXI) on the question of Ifni and Spanish Sahara, in which it ‘reaffirm[ed] the inalienable right of the peopl[e] … of Spanish Sahara to self-determination’ and invited the Kingdom of Spain, in its capacity as administering Power, to determine at the earliest possible date, ‘the procedures for the holding of a referendum under [UN] auspices with a view to enabling the indigenous population of the Territory to exercise freely its right to self-determination’.26On 24 October 1970, the General Assembly of the UN adopted Resolution 2625 (XXV), entitled ‘Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations’, by which it approved that declaration, the wording of which is appended to that resolution. That declaration states in particular that ‘every State has the duty to promote [the right to self-determination of peoples] in accordance with the provisions of the Charter’ and that ‘the territory of a colony or other Non-Self-Governing Territory has, under the Charter, a status separate and distinct from the territory of the State administering it; and such separate and distinct status under the Charter shall exist until the people of the colony or Non-Self-Governing Territory have exercised their right of self-determination in accordance with the Charter, and particularly its purposes and principles’.27On 20 August 1974, the Kingdom of Spain informed the UN that it proposed to organise a referendum in Western Sahara under the auspices of the UN.28On 16 October 1975, the International Court of Justice, in its capacity as the principal legal body of the UN, and following an application submitted by the General Assembly of the UN as part of its work on the decolonisation of the Western Sahara, handed down an Advisory Opinion (Western Sahara, Advisory Opinion, ICJ Reports 1975, p. 12; ‘the Advisory Opinion on Western Sahara’), in paragraph 162 of which it found as follows:‘The materials and information presented to the Court show the existence, at the time of Spanish colonisation, of legal ties of allegiance between the Sultan of Morocco and some of the tribes living in the territory of Western Sahara. They equally show the existence of rights, including some rights relating to the land, which constituted legal ties between the Mauritanian entity, as understood by the Court, and the territory of Western Sahara. On the other hand, the Court’s conclusion is that the materials and information presented to it do not establish any tie of territorial sovereignty between the territory of Western Sahara and the Kingdom of Morocco or the Mauritanian entity. Thus the Court has not found legal ties of such a nature as might affect the application of resolution 1514 (XV) [of the UN General Assembly] in the decolonisation of Western Sahara and, in particular, of the principle of self-determination through the free and genuine expression of the will of the peoples of the Territory. ...’29At the conclusion of its assessment, the International Court of Justice answered as follows, in that advisory opinion, the questions which had been put to it by the General Assembly of the UN:‘The Court decides,that Western Sahara (Rio de Oro and Sakiet El Hamra) at the time of colonisation by Spain was not a territory belonging to no-one (terra nullius).that there were legal ties between this territory and the Kingdom of Morocco of the kinds indicated in paragraph 162 of this Opinion;30In a speech delivered on the day of the publication of the Advisory Opinion, the King of Morocco took the view that ‘the whole world [had] recognised that [Western] Sahara belonged’ to the Kingdom of Morocco and that it only remained for the Kingdom ‘to peacefully occupy that territory’; he called, to that end, for the organisation of a march, in which 350000 persons took part.31On 6 November 1975, the UN Security Council adopted Resolution 380 (1975) on the Western Sahara, in which it ‘deplor[ed] the holding of the [announced] march’ and ‘call[ed] upon [the Kingdom of] Morocco immediately to withdraw from the territory of Western Sahara all the participants in [that] march’.32On 26 February 1976, the Kingdom of Spain informed the UN Secretary-General that as of that date it was withdrawing its presence from Western Sahara and considered itself exempt from any responsibility of any international nature in connection with the administration of that territory.33In the meantime, an armed conflict had begun in the region between the Kingdom of Morocco, the Islamic Republic of Mauritania and the Front Polisario.34On 10 August 1979, the Islamic Republic of Mauritania concluded a peace agreement with the Front Polisario under which it renounced any territorial claim to Western Sahara.35On 21 November 1979, the General Assembly of the UN adopted Resolution 34/37 on the question of Western Sahara, in which it ‘reaffirm[ed] the inalienable right of all peoples of the people of Western Sahara to self-determination and independence, in accordance with the Charter of the [UN] … and the objectives of [its] resolution 1514 (XV)’, ‘deeply deplore[d] the aggravation of the situation resulting from the continued occupation of Western Sahara by Morocco’, ‘urge[d] Morocco to join in the peace process and to terminate the occupation of the Territory of Western Sahara’ and ‘recommend[ed] to that end that the [Front Polisario], the representative of the people of Western Sahara, should participate fully in any search for a just, lasting and definitive political solution of the question of Western Sahara, in accordance with the resolutions and declarations of the [UN]’.36The conflict between the Kingdom of Morocco and the Front Polisario continued until, on 30 August 1988, the parties accepted, in principle, the proposals for settlement put forward, in particular, by the UN Secretary-General and providing, in particular, for the proclamation of a ceasefire and the organisation of a referendum on self-determination under UN supervision.37To the present day, that referendum has still not been held and the Kingdom of Morocco controls the majority of the territory of Western Sahara, which a wall of sand constructed and guarded by the Moroccan army separates from the rest of the territory, controlled by the Front Polisario. The procedure before the General Court and the judgment under appeal 38By application lodged at the Registry of the General Court on 19 November 2012, the Front Polisario brought an action for annulment of the decision at issue.39In support of its action, the Front Polisario relied on 11 pleas in law.40In defence, the Council contended that the action should be dismissed as inadmissible or, in the alternative, as unfounded, and that the Front Polisario should be ordered to pay the costs.41By order of the President of the Eighth Chamber of the General Court of 6 November 2013, the European Commission was granted leave to intervene in support of the form of order sought by the Council.42In the judgment under appeal, the General Court examined, first, the arguments put forward by the Council and the Commission claiming that the action was inadmissible on the ground that, on the one hand, the Front Polisario had not proved the existence of its legal personality or its capacity to institute proceedings and, on the other, that the decision at issue was of neither direct nor individual concern to it. The General Court rejected those two pleas of inadmissibility in paragraphs 34 to 60 and 61 to 114 of the judgment under appeal respectively.43As regards the standing of the Front Polisario, the General Court noted, in paragraphs 73 to 103 of the judgment under appeal, that the purpose of the decision at issue was to approve the conclusion of the Liberalisation Agreement, before holding that that agreement ‘also appl[ied]’ to Western Sahara. Then, by ‘taking account of that finding’, as stated in paragraph 104 of that judgment, it held, in paragraphs 105 to 110 and 111 to 114 respectively of that judgment, that the Front Polisario was to be regarded as being concerned both directly and individually by that decision.44Secondly, the General Court commenced its assessment of the 11 pleas for annulment relied on by the Front Polisario in support of its heads of claim by setting out the following, in paragraphs 116 and 117 of the judgment under appeal:‘116As a preliminary point, it is clear from the arguments put forward by the Front Polisario in support of all of its pleas that its action seeks the annulment of the decision [at issue] in so far as it approves the application to Western Sahara of the agreement to which it refers. As appears from the finding set out above, concerning the fact that the Front Polisario is directly and individually concerned by the decision [at issue], it is precisely [because of] the fact that that agreement also applies to Western Sahara that the Front Polisario is directly and individually concerned by the decision [at issue].117It must also be stated that the Front Polisario relies on several pleas, among which the first two concern the external legality of the decision [at issue], while the others concern its internal legality. In substance the applicant relies on the unlawfulness of the decision [at issue] on the ground that it infringes European Union and international law. In reality, all the pleas in law in the application concern the question as to whether there is an absolute prohibition against concluding an international agreement on behalf of the European Union which may be applied to a territory in fact controlled by a non-member State, without the sovereignty of that State over that territory being recognised by the European Union and its Member States or, more generally, by all other States (“the disputed territory”) and, where relevant, the existence of discretion of the EU institutions in that regard, the limits of that discretion and the conditions for its exercise.’45The General Court then examined and rejected each of those pleas, noting in particular that none of them made it possible to establish the existence of an absolute prohibition for the European Union to conclude an agreement with a third State capable of being applied to a ‘disputed territory’.46In that context, however, the General Court reserved a number of arguments relating, in its view, to the subsidiary question of the conditions under which the institutions of the European Union may approve the conclusion of such an agreement.47Lastly, the General Court examined that question in paragraphs 223 to 247 of the judgment under appeal. In that regard, it held, in essence, that, whilst enjoying a wide discretion in connection with the conduct of the European Union’s external relations, the Council had an obligation, where it intended to approve an agreement which was applicable to a ‘disputed territory’ such as Western Sahara and sought to facilitate the export to the European Union of products originating in that territory, to examine in advance all the relevant facts of the individual case, and in particular to ensure that the production of those products was not carried out in a manner detrimental to the population of that territory and did not entail infringements of fundamental rights of the persons concerned. The General Court also held that in the present case the Council had failed to fulfil that obligation.48On the basis of those considerations, the General Court held in paragraph 247 of the judgment under appeal that ‘the Council [had] failed to fulfil its obligation to examine all the elements of the case before the adoption of the decision [at issue]’ and, accordingly, that the decision should be annulled ‘in so far as it approves the application of the [Liberalisation Agreement] to Western Sahara’. Procedure before the Court and forms of order sought 49By separate document submitted at the Court Registry at the time when its appeal was lodged, the Council requested that the case be dealt with under the expedited procedure provided for in Articles 133 to 136 of the Rules of Procedure of the Court of Justice.50By order of 7 April 2016, the Court granted that application.51By decisions of 2, 13, 18 and 24 May 2016, the President of the Court respectively granted the Kingdom of Spain, the Portuguese Republic, the French Republic, the Federal Republic of Germany and the Kingdom of Belgium leave to intervene in the dispute in support of the form of order sought by the Council. However, the Federal Republic of Germany did not subsequently take part in any phase of the present proceedings, while the Kingdom of Belgium did not take part in the oral phase of the proceedings.52By order of 9 June 2016, the President of the Court of Justice granted the Moroccan Confederation for Agriculture and Rural Development (Comader) leave to intervene in the dispute in support of the form of order sought by the Council.53The Council claims that the Court should:—set aside the judgment under appeal;give final judgment in the dispute by dismissing the action; andorder the Front Polisario to pay the costs incurred by the Council both at first instance and on appeal.54The Front Polisario contends that the Court should:primarily, dismiss the appeal as inadmissible;in the alternative, dismiss the appeal as unfounded;in the further alternative, should the Court grant the form of order sought by the Council and set aside the judgment under appeal, give final judgment in the dispute by annulling the decision at issue on the basis of the pleas in law rejected at first instance; andorder the Council to pay the costs incurred by the Front Polisario both at first instance and on appeal.55The Commission contends that the Court should grant the appeal.56The Kingdom of Belgium, the Kingdom of Spain, the French Republic, the Portuguese Republic and Comader also contend that the Court should grant the appeal. The requests to have the oral procedure reopened 57In accordance with Article 82(2) of the Rules of Procedure, the oral part of the procedure was closed following the delivery of the Opinion of the Advocate General on 13 September 2016.58By a document lodged at the Registry of the Court of Justice on 15 September 2016, the Council indicated to the Court that that Opinion, in its view, addressed a question of law which had not been raised in its appeal or raised by any other party, namely that of the application of the Liberalisation Agreement to Western Sahara. It also proposed that the Court order the reopening of the oral phase of the procedure in the event that the case should be decided on the basis of that question.59By a document lodged at the Court Registry on 22 September 2016, Comader applied to have the oral phase of the procedure reopened on grounds analogous to those invoked by the Council.60In that regard, it follows from the second paragraph of Article 252 TFEU that it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which require his involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (see judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 57, and of 6 October 2015, Commission v Andersen, C‑303/13 P, EU:C:2015:647, paragraph 33).61Consequently, a party’s disagreement with the Opinion of the Advocate General, irrespective of the questions examined in that Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (see judgments of 22 November 2012, E.ON Energie v Commission, C‑89/11 P, EU:C:2012:738, paragraph 62, and of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraph 26).62That said, Article 83 of the Rules of Procedure allows the Court at any time, after hearing the Advocate General, to order the reopening of the oral part of the procedure, in particular where the case is to be decided on the basis of an argument which has not been debated between the parties.63In the present case, however, it should be noted that the legal arguments to which the Council and Comader refer were raised by the Commission in its defence, in support of the ground of appeal in which the Council and the Commission challenge the General Court’s assessment of the Front Polisario’s standing.64Moreover, those legal arguments were raised at the hearing and extensively debated by all parties.65In those circumstances, the Court, after hearing the Advocate General, considers that there is no need to order that the oral part of the procedure be reopened. The appeal Admissibility Arguments of the parties66The Front Polisario submits that the appeal is inadmissible on the ground that the European Union lacks the required competence to conclude an international agreement that is legally applicable to Western Sahara and that a challenge to the judgment under appeal, which merely annuls the decision at issue ‘in so far as it approves the application of the [Liberalisation Agreement] to Western Sahara’, is therefore of no interest to the Council.67The Council and the Commission dispute the merits of that plea of inadmissibility by stating, principally, that an institution of the European Union such as the Council may lodge an appeal without having to demonstrate an interest in bringing proceedings. In the alternative, they maintain that that requirement is in any event fulfilled in the present case since the Council has an interest in having the judgment under appeal set aside in so far as that judgment constitutes a partial annulment by the General Court of the decision at issue.Findings of the Court68Under the second paragraph of Article 56 of the Statute of the Court of Justice of the European Union, an appeal may be brought before the Court by any party which has been unsuccessful, in whole or in part, in its submissions before the General Court.69Moreover, it is apparent from the third paragraph of Article 56 of that statute that, in order to bring an appeal against a judgment of the General Court, in a case not relating to a dispute between the European Union and its servants, Member States and EU institutions do not have to show any interest (see judgments of 22 February 2005, Commission v max.mobil, C‑141/02 P, EU:C:2005:98, paragraph 48, and of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 45).70In the present case, it follows that the Council, which was unsuccessful in its submissions before the General Court, does not have to show any interest in order to be able to bring the present appeal.71Accordingly, the plea of inadmissibility raised by the Front Polisario in respect of that appeal must be rejected. Substance 72In support of its appeal, the Council, supported by the Commission, relies on six grounds, the first and second of which allege an error of law on the part of the General Court in the analysis of the Front Polisario’s capacity to institute proceedings and of its standing. The third ground of appeal alleges that the General Court misconstrued the extent to which it was able judicially to review the Council’s discretion in the field of the European Union’s external economic relations and the conditions under which it could exercise that discretion. The fourth ground of appeal alleges infringement of the principle ne ultra petita. The fifth ground of appeal relates to the misinterpretation and incorrect application of the Charter of Fundamental Rights of the European Union and of certain rules of international law. Finally, the sixth ground of appeal relates to the breach of the requirements applicable to the partial annulment of an act of the European Union.73It is necessary to examine, at the outset, the second ground of appeal, which calls into question the General Court’s analysis of the Front Polisario’s standing, and more particularly, within that ground of appeal, the Council and Commission’s arguments relating to the reasoning that the General Court devoted, in paragraphs 73 to 103 of the judgment under appeal, to the preliminary question of whether or not the Liberalisation Agreement applied to Western Sahara.The judgment under appeal74In that regard, the General Court first stated, in essence, in paragraphs 72 and 73 of the judgment under appeal that, in view of the arguments put forward by the Front Polisario in order to establish its standing, the assessment of that standing required a preliminary determination of whether or not the Liberalisation Agreement applied to Western Sahara.75Next, the General Court held, in paragraphs 74 to 88 of the judgment under appeal, that that question itself entailed, in the light of the arguments of the Council, the Commission and the Front Polisario in that regard, an interpretation of that agreement. It also held, in paragraphs 89 to 94 and 98 of the judgment under appeal, that such an interpretation had to be carried out in accordance with the rules of general international customary law recalled in Article 31 of the Vienna Convention. By contrast, the General Court essentially held, in paragraphs 95 to 98 of the judgment under appeal, that the general international law principle of the relative effect of treaties, of which Article 34 of the Vienna Convention is a particular expression, was not relevant for the purposes of the interpretation of the Liberalisation Agreement, having regard to the particular circumstances of the action before it, in contrast to what the Court had held in the judgment of 25 February 2010 in Brita (C‑386/08, EU:C:2010:91).76Finally, in paragraphs 99 to 102 of the judgment under appeal, the General Court interpreted the territorial scope of the Liberalisation Agreement as follows:‘99In accordance with [A]rticle [31 of the Vienna Convention], account must be taken in particular of the context in which an international treaty appears, such as the [Liberalisation Agreement]. All the factors mentioned in paragraphs 77 to 87 above are part of that context and show that the EU institutions were aware that the Moroccan authorities also applied the provisions of the Association Agreement with Morocco to the part of Western Sahara it controlled and did not oppose that application. To the contrary, the Commission cooperated to a certain extent with the Moroccan authorities with a view to that application and recognised the results of its application, by including undertakings established in Western Sahara among those included on the list mentioned in paragraph 74 above.100It must also be recalled that there is a divergence between the respective views of the European Union and the Kingdom of Morocco as to the international status of Western Sahara. If the European Union’s view is adequately and correctly summarised by the Council and the Commission (see paragraphs 74 and 75 above), it is common ground that the Kingdom of Morocco has a totally different view. In its opinion, Western Sahara is an integral part of its territory.101Thus, in Article 94 of the Association Agreement …, the reference to the territory of the Kingdom of Morocco may have been understood by the Moroccan authorities as including Western Sahara or, at least, the larger part controlled by it. Although, as stated, the EU institutions were aware that the Kingdom of Morocco took that view, the Association Agreement … does not include any interpretation clause and no other provision which would have the result of excluding the territory of Western Sahara from its scope.102Account should also be taken of the fact that the [Liberalisation Agreement] was concluded 12 years after the approval of the Association Agreement … and although the latter agreement had been implemented for the whole of that period. If the EU institutions wished to oppose the application to Western Sahara of the Association Agreement, as amended by the decision [at issue], they could have insisted on including a clause excluding such application into the text of the [Liberalisation Agreement]. Their failure to do so shows that they accept, at least implicitly, the interpretation of the Association Agreement … and the [Liberalisation Agreement], according to which those agreements also apply to the part of Western Sahara controlled by the Kingdom of Morocco.’77In the light of that interpretation, the General Court held, in paragraph 103 of the judgment under appeal, that the Liberalisation Agreement, when placed in context, should be interpreted as meaning that it ‘also appl[ied] to Western Sahara’.78The Council criticises the General Court for having assumed, in paragraph 73 of the judgment under appeal, that, if the Liberalisation Agreement applied to Western Sahara, the Front Polisario may automatically be directly and individually concerned by the decision at issue. Such a presumption, the Council submits, is erroneous in law. As the General Court itself previously held in the order of 3 July 2007, Commune de Champagne and Others v Council and Commission (T‑212/02, EU:T:2007:194, paragraphs 90 to 94), a Council decision relating to the conclusion of an international agreement between the European Union and a third State has no legal effect in the territory of the other party to that agreement. Thus, the situation of such a territory is governed solely by the provisions adopted by that other party in the exercise of its sovereign powers. Moreover, the sole cause of the effects which that agreement produces on that territory is the fact that, in deciding to ratify that agreement, that other party has agreed to be bound by it and has undertaken to take the steps necessary to ensure the fulfilment of the obligations arising from it. Accordingly, allowing that an action for annulment of the Council decision on the conclusion of an international agreement is admissible in so far as that action concerns the effects of the international agreement on the territory of the other party would lead the Court of the European Union to exceed its jurisdiction by ruling on the legality, under EU law, of the rights or obligations resulting, for a third State, from an agreement to which the latter has subscribed freely and at its absolute discretion. That, the Council submits, is precisely what the General Court did in the present case, by making the application of the Liberalisation Agreement to Western Sahara a prerequisite for the Front Polisario’s standing. Finally, the Council notes that the fact that Western Sahara is a ‘disputed territory’ in international law has no bearing on the reasoning of the General Court in that order, to which it subscribes in its entirety.79The Commission submits that the fact, referred to in, inter alia, paragraph 87 of the judgment under appeal, that the Liberalisation Agreement is applied ‘de facto’, in certain cases, to Western Sahara cannot be regarded either as a contextual element or as a subsequent practice within the meaning of Article 31(2) and (3)(b) of the Vienna Convention, justifying the interpretation of Article 94 of the Association Agreement as meaning that those two agreements apply to that non-self-governing territory. Moreover, although no clause expressly excluding Western Sahara from their scope had been inserted into that agreement, in view of the disagreement between the European Union and the Kingdom of Morocco as to the status of that non-self-governing territory, referred to by the General Court in paragraph 100 of the judgment under appeal, that fact does not justify the view that those agreements apply to that territory, taking account of Article 31(3)(c) of the Vienna Convention, of the principle of the relative effect of treaties codified in Article 34 of that convention and recalled by the Court in the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), of the right to self-determination of the people of Western Sahara, repeatedly recalled by the European Union in its positions on the subject, as well as of the relevant international practice in respect of the territorial application of treaties.80In response, the Front Polisario notes that the General Court examined the question of the application of the Liberalisation Agreement to Western Sahara, not with the aim of deriving from it any presumption regarding the admissibility of the action, but in order to ascertain the factual and legal context in which its standing to bring proceedings should be addressed. The Council and the Commission argued at length that that agreement was not applicable to that territory, before acknowledging, in reply to the written questions put by the General Court and subsequently at the hearing before the General Court, that the tariff preferences contained in it were in fact applied in certain cases to the products originating in that territory. That element fundamentally distinguishes that agreement from the two comparable agreements concluded by the Kingdom of Morocco with the United States of America and the European Free Trade Association (EFTA).81As is apparent from paragraphs 73, 88 and 98 to 102 of the judgment under appeal, the conclusion of the General Court in paragraph 103 of that judgment that the Liberalisation Agreement ‘also applies to the territory of Western Sahara’ is based, not on a finding of fact, but on a legal interpretation of that agreement made by the General Court on the basis of Article 31 of the Vienna Convention.82The positions of the Council and the Commission before the Court on that point ultimately converge, in so far as the General Court’s conclusion lies at the very heart of the respective arguments of those two institutions. The Commission argues that the Liberalisation Agreement could not be interpreted as meaning that it was legally applicable to the territory of Western Sahara. The Council, for its part, submits that the General Court erred in law in ruling on the lawfulness of the rights or obligations resulting, for the other party, from that agreement to which it subscribed freely and at its absolute discretion. The analysis of that alleged error of law entails, in any event, a preliminary examination of the merits of the conclusion reached by the General Court, in paragraph 103 of the judgment under appeal, as to the application of the Liberalisation Agreement to the territory of Western Sahara. Failing that, any rights and obligations of the other party to that agreement in respect of that territory are not likely to have been affected.83It is therefore necessary to verify the merits of the reasoning by which the General Court, after describing in paragraphs 99 and 100 of the judgment under appeal the context in which the Liberalisation Agreement had been concluded, successively determined the scope of that agreement in the light of the terms of the Association Agreement in paragraph 101 of that judgment, and then examined the Liberalisation Agreement itself in paragraph 102 of that judgment, before reaching the conclusion expressed in paragraph 103 thereof.84In that respect, as regards, first, paragraph 101 of the judgment under appeal, it must be held that the General Court interpreted the territorial scope of the Liberalisation Agreement in the light of Article 94 of the Association Agreement, under which that agreement applies ‘to the territory of the Kingdom of Morocco’. More specifically, the General Court stated that the reference to the territory of the Kingdom of Morocco may have been understood by the Moroccan authorities as including Western Sahara and that, although the Council and the Commission were aware of that position, the Association Agreement did not include any interpretation clause or any other provision which would have the consequence of excluding that territory from its scope.85In so doing, the General Court took the view that, having regard, first, to the position of the Kingdom of Morocco that Western Sahara was an integral part of its territory, secondly, to the fact that the Council and the Commission were aware of that position at the time of the conclusion of the Association Agreement, and thirdly, to the absence of any stipulation excluding Western Sahara from the territorial scope of that agreement, the parties to the Association Agreement had to be regarded as having tacitly agreed to interpret the words ‘territory of the Kingdom of Morocco’ in Article 94 thereof as meaning that that article also included the territory of Western Sahara.86It must be pointed out that, in order to be able to draw correct legal conclusions from the absence of a stipulation excluding Western Sahara from the territorial scope of the Association Agreement, in interpreting that agreement, the General Court was bound not only to observe the rules of good faith interpretation laid down in Article 31(1) of the Vienna Convention but also that laid down in Article 31(3)(c) of that convention, pursuant to which the interpretation of a treaty must be carried out by taking account of any relevant rules of international law applicable in the relations between the parties (judgment of 25 February 2010, Brita, C‑386/08, EU:C:2010:91, paragraph 43; see also, to that effect, judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 291 and the case-law cited).87Although the scope of the various relevant rules of international law applicable in the present case — namely the principle of self-determination, the rule codified in Article 29 of the Vienna Convention and the principle of the relative effect of treaties — overlap in part, each of those rules has its autonomy, with the result that it is necessary to examine them all in succession.88In that regard, it should be noted, first of all, that the customary principle of self-determination referred to in particular in Article 1 of the Charter of the United Nations is, as the International Court of Justice stated in paragraphs 54 to 56 of its Advisory Opinion on Western Sahara, a principle of international law applicable to all non-self-governing territories and to all peoples who have not yet achieved independence. It is, moreover, a legally enforceable right erga omnes and one of the essential principles of international law (East Timor, (Portugal v Australia), judgment, ICJ Reports 1995, p. 90, paragraph 29 and the case-law cited).89As such, that principle forms part of the rules of international law applicable to relations between the European Union and the Kingdom of Morocco, which the General Court was obliged to take into account.90In accordance with that principle, as specified by United Nations General Assembly Resolution 2625 (XXV), referred to in paragraph 26 of the present judgment, ‘the territory of a colony or other Non-Self-Governing Territory has, under the [UN] Charter, a … separate and distinct [status]’.91In particular, the UN General Assembly, in its various resolutions on Western Sahara, repeatedly expressed its concern in respect of ‘enabling the indigenous population of the Territory to exercise freely its right to self-determination’, as the International Court of Justice noted in paragraphs 62, 64 and 68 of its Advisory Opinion on Western Sahara.92In view of the separate and distinct status accorded to the territory of Western Sahara by virtue of the principle of self-determination, in relation to that of any State, including the Kingdom of Morocco, the words ‘territory of the Kingdom of Morocco’ set out in Article 94 of the Association Agreement cannot, as the Commission maintains and as the Advocate General essentially pointed out in points 71 and 75 of his Opinion, be interpreted in such a way that Western Sahara is included within the territorial scope of that agreement.93In the present case, although the General Court found, in paragraph 3 of the judgment under appeal, that Western Sahara had been included since 1963 on the list of non-self-governing territories within the meaning of Article 73 of the UN Charter, it did not, however, draw the consequences of the status of Western Sahara under international law as regards the inapplicability of the Association Agreement to that territory.94Next, it should be pointed out that the customary rule codified in Article 29 of the Vienna Convention provides that, unless a different intention appears from the treaty or is otherwise established, that treaty is binding upon each party in respect of its entire ‘territory’.95It thus follows from that rule, placed in the context of the interpretation of Article 94 of the Association Agreement, that a treaty is generally binding on a State in the ordinary meaning to be given to the term ‘territory’, combined with the possessive adjective ‘its’ preceding it, in respect of the geographical space over which that State exercises the fullness of the powers granted to sovereign entities by international law, to the exclusion of any other territory, such as a territory likely to be under the sole jurisdiction or the sole international responsibility of that State.96In that regard, and as the Commission correctly argues, it follows from international practice that, where a treaty is intended to apply not only to the territory of a State but also beyond that territory, that treaty expressly provides for it, whether it is a territory ‘under [the] jurisdiction’ of that State, as set out, for example, in Article 2(1) of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, concluded in New York on 10 December 1984, or in any territory ‘for whose international relations [that State] is responsible’, as stipulated for example by Article 56(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950.97The customary rule codified in Article 29 of the Vienna Convention thus also, a priori, precluded Western Sahara from being regarded as coming within the territorial scope of the Association Agreement.98However, it also follows from that customary rule that a treaty may, by way of derogation from the general rule set out in paragraph 94 of the present judgment, bind a State in respect of another territory if such an intention is apparent from that treaty or is otherwise established.99In the present case, the General Court incorrectly assumed that, in so far as the Council and the Commission were aware of the position of the Kingdom of Morocco that the Association Agreement might apply to Western Sahara, those institutions had tacitly accepted that position, as has been explained in paragraph 85 of the present judgment.Finally, under the general international-law principle of the relative effect of treaties, of which the rule contained in Article 34 of the Vienna Convention is a specific expression, treaties do not impose any obligations, or confer any rights, on third States without their consent (see judgment of 25 February 2010, Brita, C‑386/08, EU:C:2010:91, paragraphs 44 and 52).In the present case, as has been noted in paragraph 75 of the present judgment, the General Court essentially held, in paragraphs 95 to 97 of the judgment under appeal, that that principle was not relevant for the purposes of assessing the action before it, in contrast to what the Court held in the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), because the circumstances specific to that action differed from those in the case which had given rise to the judgment in Brita.In particular, the General Court noted, in paragraphs 96 and 97 of the judgment under appeal, that the European Union had not concluded any Association Agreement relating to products originating in Western Sahara other than with the Kingdom of Morocco, whereas in the case giving rise to the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), the European Union had concluded an Association Agreement not only with the State of Israel, but also with the Palestine Liberation Organisation (PLO) acting in the name and on behalf of the Palestinian Authority of the West Bank and the Gaza Strip.103However, contrary to what the General Court held, the principle of the relative effect of treaties had to be taken into account in the context of such an interpretation, since the application to Western Sahara of the Association Agreement, concluded between the European Union and the Kingdom of Morocco, would have led to that agreement affecting a ‘third party’.104It should be recalled that in its Advisory Opinion on Western Sahara, to which the General Court itself referred in paragraph 8 of the judgment under appeal, the International Court of Justice considered that, on the one hand, Western Sahara ‘at the time of colonisation by [the Kingdom of] Spain was not a territory belonging to no-one (terra nullius)’, and, on the other, that the elements and information brought to its knowledge ‘[did] not establish any tie of territorial sovereignty’ between that territory and the Kingdom of Morocco.105More specifically, in that regard, the International Court of Justice noted, in its Advisory Opinion on Western Sahara, that the population of that territory enjoyed the right to self-determination under general international law, as set out in paragraphs 90 and 91 of the present judgment, it being understood that the General Assembly of the UN, in paragraph 7 of its Resolution 34/37 on the question of Western Sahara, cited in paragraph 35 of the present judgment, recommended that the Front Polisario, ‘the representative of the people of Western Sahara, should participate fully in any search for a just, lasting and definitive political solution of the question of Western Sahara’, as noted by the General Court in paragraph 14 of the judgment under appeal and recalled by the Commission before the Court.106In the light of that information, the people of Western Sahara must be regarded as a ‘third party’ within the meaning of the principle of the relative effect of treaties, as stated in substance by the Advocate General in point 105 of his Opinion. As such, that third party may be affected by the implementation of the Association Agreement in the event that the territory of Western Sahara comes within the scope of that agreement, without it being necessary to determine whether such implementation is likely to harm it or, on the contrary, to benefit it. It is sufficient to point out that, in either case, that implementation must receive the consent of such a third party. In the present case, however, the judgment under appeal does not show that the people of Western Sahara have expressed any such consent.107In those circumstances, it is contrary to the principle of international law of the relative effect of treaties to take the view that the territory of Western Sahara comes within the scope of the Association Agreement, which is applicable to relations between the European Union and the Kingdom of Morocco.108In the light of the foregoing, the General Court erred in law in holding, in paragraphs 101 and 103 of the judgment under appeal, that the European Union and the Kingdom of Morocco should be regarded as having tacitly agreed to interpret the words ‘territory of the Kingdom of Morocco’ in Article 94 of the Association Agreement as meaning that they included the territory of Western Sahara.109As regards, secondly, paragraph 102 of the judgment under appeal, it should be noted that the General Court held that, if the Council and the Commission had wished to oppose the application of the Liberalisation Agreement to the territory of Western Sahara, they could have asked for a clause excluding its application to be inserted into the agreement, before adding that their ‘omission’ on that point showed that they had implicitly accepted that that agreement, like the Association Agreement, was applicable to that territory.110In that regard, Article 30(2) of the Vienna Convention codifies the rule that, when a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.111The Liberalisation Agreement, as is apparent from paragraphs 18, 20 and 21 of the judgment under appeal, is an agreement designed to amend an earlier agreement between the European Union and the Kingdom of Morocco, namely the Association Agreement, and more specifically, the provisions of that previous agreement on the liberalisation of trade in agricultural and fisheries products. To that end, as is apparent from those same paragraphs of the judgment under appeal, the Liberalisation Agreement amended 4 of the 96 articles of the Association Agreement, which do not include Article 94 thereof, and replaced 3 of the 5 protocols accompanying that agreement. Those amendments are exhaustive, as is confirmed by the exchange of letters between the European Union and the Kingdom of Morocco in the form of which the Liberalisation Agreement took effect.112It follows that the Association Agreement and the Liberalisation Agreement constitute successive treaties concluded between the same parties and that the Liberalisation Agreement, as a later treaty relating to specific and limited aspects of a subject already governed in large part by an earlier agreement, must be regarded as subordinate to the latter.113In the light of such a special connection, which is not called into question before the Court, it must be held, in accordance with the rule codified in Article 30(2) of the Vienna Convention, that the provisions of the Association Agreement which have not been explicitly amended by the Liberalisation Agreement must prevail for the purpose of applying the latter agreement, in order to prevent any incompatibility between them.114It follows that the Liberalisation Agreement could not be understood at the time of its conclusion as meaning that its territorial scope included the territory of Western Sahara, and that there was no need to include therein a clause expressly excluding that territory from that scope.115The General Court therefore erred in law in holding that the Council and the Commission had to be regarded as having accepted that the Association Agreement and the Liberalisation Agreement apply to the territory of Western Sahara on the ground that they had omitted to include in the latter agreement a clause precluding such an application.116In the light of the foregoing, the General Court erred in holding, in paragraph 103 of the judgment under appeal, that the Liberalisation Agreement was to be interpreted as applying to the territory of Western Sahara, and more specifically to that part of the territory controlled by the Kingdom of Morocco, since such an interpretation could not be justified either by the wording of the Association Agreement or by that of the Liberalisation Agreement, nor, finally, by the circumstances surrounding the conclusion of those two agreements, as set out in paragraphs 101 and 102 of the judgment under appeal.That assessment is not called into question by the analysis carried out by the General Court in paragraph 99 of the judgment under appeal, on the basis of the facts set out in paragraphs 77 to 87 of that judgment.118The findings and assessments made by the General Court in those paragraphs show, first of all, that the Council and the Commission were aware, when the Liberalisation Agreement was concluded, that the Moroccan authorities had been applying the provisions of the Association Agreement to Western Sahara for many years. Next, those two institutions never opposed the application of that agreement, and the Commission to some extent cooperated therein. Finally, the system of tariff preferences introduced by the Association Agreement and amended by the Liberalisation Agreement is, in some cases, applied ‘de facto’ to products originating in Western Sahara since the conclusion of the second of those agreements, as the Council and the Commission pointed out in their pleadings and at the hearing.119As is also apparent from paragraph 102 of the judgment under appeal, the General Court held that that practice subsequent to the conclusion of the Association Agreement justified an interpretation of that agreement and the Liberalisation Agreement as meaning that the territory of Western Sahara came within the scope of those agreements.120In that regard, it should be noted that, under Article 31(3)(b) of the Vienna Convention, for the purposes of the interpretation of a treaty, account must be taken, inter alia and together with the context thereof, of any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation.121In the present case, as is apparent from paragraphs 77, 83 and 87 of the judgment under appeal, the Council and the Commission had pointed out, like the Front Polisario, that although the system of tariff preferences provided for in the Association and Liberalisation Agreements was applied in some cases to products originating in Western Sahara, that application had occurred ‘de facto’.122It must be held that, contrary to the requirements of Article 31(3)(b) of the Vienna Convention, the General Court did not pursue the question whether, in certain cases, that application reflected the existence of an agreement between the parties to amend the interpretation of Article 94 of the Association Agreement.123Moreover, the purported intention of the European Union, reflected in subsequent practice and consisting in considering the Association and Liberalisation Agreements to be legally applicable to the territory of Western Sahara, would necessarily have entailed conceding that the European Union intended to implement those agreements in a manner incompatible with the principles of self-determination and of the relative effect of treaties, even though the European Union repeatedly reiterated the need to comply with those principles, as the Commission points out.124Such implementation would necessarily be incompatible with the principle that Treaty obligations must be performed in good faith, which nevertheless constitutes a binding principle of general international law applicable to subjects of that law who are contracting parties to a treaty (see, to that effect, judgments of 16 June 1998, Racke, C‑162/96, EU:C:1998:293, paragraph 49, and of 23 January 2014, Manzi and Compagnia Naviera Orchestra, C‑537/11, EU:C:2014:19, paragraph 38).125It follows that the General Court also erred in law in holding that the subsequent practice referred to in paragraphs 99 and 102 of the judgment under appeal justified an interpretation of those agreements as meaning that they were legally applicable to the territory of Western Sahara.126Since the General Court therefore incorrectly held that the Liberalisation Agreement had to be interpreted as applying to the territory of Western Sahara, before taking that conclusion as a starting point for its analysis of the standing of the Front Polisario, as has been pointed out in paragraphs 43, 44 and 74 of the present judgment, the appeal must be allowed, without it being necessary to examine in addition the other pleas and arguments of the Council and the Commission.127Accordingly, the judgment under appeal must be set aside. The action 128The first paragraph of Article 61 of the Statute of the Court of Justice of the European Union provides that if the appeal is well founded and the Court of Justice quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.129In the present case, it is appropriate for the Court to give a final ruling on the dispute, as the state of proceedings so permits.130In that regard, the fourth paragraph of Article 263 TFEU provides for two situations in which natural or legal persons are accorded standing to institute proceedings against an act which is not addressed to them. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Secondly, they may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them.131In the present case, it must be stated at the outset that the line of argument put forward by the Front Polisario in order to establish that it has standing to seek the annulment of the decision at issue is based on the assertion that the Liberalisation Agreement, the conclusion of which was approved by that decision, is applied in practice, in certain cases, to Western Sahara even though the latter is not part of the territory of the Kingdom of Morocco.132As is apparent from the grounds set out in paragraphs 83 to 125 of the present judgment, the Liberalisation Agreement must, however, be interpreted, in accordance with the relevant rules of international law applicable to relations between the European Union and the Kingdom of Morocco, as meaning that it does not apply to the territory of Western Sahara.133Therefore, without it being necessary to examine the remainder of the argument by which the Council and the Commission dispute the admissibility of the action, it must be held that the Front Polisario cannot, in any event, be regarded, in the light of the arguments on which it relies, as having standing to seek annulment of the decision at issue.134Consequently, the action must be dismissed as inadmissible. Costs 135Under Article 184(2) of the Rules of Procedure, where the appeal is well founded and the Court itself gives final judgment in the case, it is to make a decision as to costs.136Article 138(1) of those rules, applicable to appeal proceedings pursuant to Article 184(1) thereof, provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.137In the present case, since the Council has applied for costs and the Front Polisario has been unsuccessful, the Front Polisario must be ordered to pay the costs incurred by the Council.138Under Article 140(1) of the Rules of Procedure, which is also applicable to appeal proceedings by virtue of Article 184(1) thereof, the Member States and institutions which intervene in the proceedings are to bear their own costs.139In the present case, the Kingdom of Belgium, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Portuguese Republic and the Commission, which was an intervener at first instance, shall bear their own costs.140Finally, Article 140(3) of the Rules of Procedure, which is also applicable to appeal proceedings by virtue of Article 184(1) of the Rules of Procedure, provides in particular that the Court may order interveners other than Member States or institutions to bear their own costs.141In the present case, it is appropriate to decide that Comader shall bear its own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 10 December 2015, Front Polisario v Council (T‑512/12, EU:T:2015:953); 2. Dismisses the action brought by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) as inadmissible; 3. Orders the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) to bear its own costs and to pay those incurred by the Council of the European Union; 4. Orders the Kingdom of Belgium, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Portuguese Republic, the European Commission and the Confédération marocaine de l’agriculture et du développement rural (Comader) to bear their own respective costs. [Signatures]( *1 ) * Language of the case: French. | f9665-31aa287-47cf | EN |
The Members States may not impose a general obligation to retain data on providers of electronic communications services | 21 December 2016 ( *1 )[Text rectified by order of 16 March 2017](Reference for a preliminary ruling — Electronic communications — Processing of personal data — Confidentiality of electronic communications — Protection — Directive 2002/58/EC — Articles 5, 6 and 9 and Article 15(1) — Charter of Fundamental Rights of the European Union — Articles 7, 8 and 11 and Article 52(1) — National legislation — Providers of electronic communications services — Obligation relating to the general and indiscriminate retention of traffic and location data — National authorities — Access to data — No prior review by a court or independent administrative authority — Compatibility with EU law)In Joined Cases C‑203/15 and C‑698/15,REQUESTS for a preliminary ruling under Article 267 TFEU, made by the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm, Sweden) and the Court of Appeal (England & Wales) (Civil Division) (United Kingdom), by decisions, respectively, of 29 April 2015 and 9 December 2015, received at the Court on 4 May 2015 and 28 December 2015, in the proceedings Tele2 Sverige AB (C‑203/15)v Post- och telestyrelsen, and Secretary of State for the Home Department (C‑698/15) Tom Watson, Peter Brice, Geoffrey Lewis, interveners: Open Rights Group, Privacy International, The Law Society of England and Wales, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz (Rapporteur), J.L. da Cruz Vilaça, E. Juhász and M. Vilaras, Presidents of the Chamber, A. Borg Barthet, J. Malenovský, E. Levits, J.-C. Bonichot, A. Arabadjiev, S. Rodin, F. Biltgen and C. Lycourgos, Judges,Advocate General: H. Saugmandsgaard Øe,Registrar: C. Strömholm, Administrator,having regard to the decision of the President of the Court of 1 February 2016 that Case C‑698/15 should be determined pursuant to the expedited procedure provided for in Article 105(1) of the Rules of Procedure of the Court,having regard to the written procedure and further to the hearing on 12 April 2016,after considering the observations submitted on behalf of:–Tele2 Sverige AB, by M. Johansson and N. Torgerzon, advokater, and by E. Lagerlöf and S. Backman,Mr Watson, by J. Welch and E. Norton, Solicitors, I. Steele, Advocate, B. Jaffey, Barrister, and D. Rose QC,Mr Brice and Mr Lewis, by A. Suterwalla and R. de Mello, Barristers, R. Drabble QC, and S. Luke, Solicitor,Open Rights Group and Privacy International, by D. Carey, Solicitor, and by R. Mehta and J. Simor, Barristers,The Law Society of England and Wales, by T. Hickman, Barrister, and by N. Turner,the Swedish Government, by A. Falk, C. Meyer-Seitz, U. Persson, N. Otte Widgren and L. Swedenborg, acting as Agents,the United Kingdom Government, by S. Brandon, L. Christie and V. Kaye, acting as Agents, and by D. Beard QC, G. Facenna QC, J. Eadie QC and S. Ford, Barrister,the Belgian Government, by J.-C. Halleux, S. Vanrie and C. Pochet, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the Danish Government, by C. Thorning and M. Wolff, acting as Agents,the German Government, by T. Henze, M. Hellmann and J. Kemper, acting as Agents, and by M. Kottmann and U. Karpenstein, Rechtsanwalte,the Estonian Government, by K. Kraavi-Käerdi, acting as Agent,Ireland, by E. Creedon, L. Williams and A. Joyce, acting as Agents, and by D. Fennelly BL,the Spanish Government, by A. Rubio González, acting as Agent,the French Government, by G. de Bergues, D. Colas, F.-X. Bréchot and C. David, acting as Agents,the Cypriot Government, by K. Kleanthous, acting as Agent,the Hungarian Government, by M. Fehér and G. Koós, acting as Agents,the Netherlands Government, by M. Bulterman, M. Gijzen and. J. Langer, acting as Agents,the Polish Government, by B. Majczyna, acting as Agent,the Finnish Government, by J. Heliskoski, acting as Agent,the European Commission, by H. Krämer, K. Simonsson, H. Kranenborg, D. Nardi, P. Costa de Oliveira and J. Vondung, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 19 July 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 15(1) of Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ 2002 L 201, p. 37), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 11) (‘Directive 2002/58’), read in the light of Articles 7 and 8 and Article 52(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’).2The requests have been made in two proceedings between (i) Tele2 Sverige AB and Post- och telestyrelsen (the Swedish Post and Telecom Authority; ‘PTS’), concerning an order sent by PTS to Tele2 Sverige requiring the latter to retain traffic and location data in relation to its subscribers and registered users (Case C‑203/15), and (ii) Mr Tom Watson, Mr Peter Brice and Mr Geoffrey Lewis, on the one hand, and the Secretary of State for the Home Department (United Kingdom of Great Britain and Northern Ireland), on the other, concerning the conformity with EU law of Section 1 of the Data Retention and Investigatory Powers Act 2014 (‘DRIPA’) (Case C‑698/15). Legal context EU law Directive 2002/58 3Recitals 2, 6, 7, 11, 21, 22, 26 and 30 of Directive 2002/58 state:‘(2)This Directive seeks to respect the fundamental rights and observes the principles recognised in particular by [the Charter]. In particular, this Directive seeks to ensure full respect for the rights set out in Articles 7 and 8 of that Charter....(6)The Internet is overturning traditional market structures by providing a common, global infrastructure for the delivery of a wide range of electronic communications services. Publicly available electronic communications services over the Internet open new possibilities for users but also new risks for their personal data and privacy.(7)In the case of public communications networks, specific legal, regulatory and technical provisions should be made in order to protect fundamental rights and freedoms of natural persons and legitimate interests of legal persons, in particular with regard to the increasing capacity for automated storage and processing of data relating to subscribers and users.(11)Like Directive 95/46/EC [of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ 1995 L 281, p. 31)], this Directive does not address issues of protection of fundamental rights and freedoms related to activities which are not governed by Community law. Therefore it does not alter the existing balance between the individual’s right to privacy and the possibility for Member States to take the measures referred to in Article 15(1) of this Directive, necessary for the protection of public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the enforcement of criminal law. Consequently, this Directive does not affect the ability of Member States to carry out lawful interception of electronic communications, or take other measures, if necessary for any of these purposes and in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms, as interpreted by the rulings of the European Court of Human Rights. Such measures must be appropriate, strictly proportionate to the intended purpose and necessary within a democratic society and should be subject to adequate safeguards in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms.(21)Measures should be taken to prevent unauthorised access to communications in order to protect the confidentiality of communications, including both the contents and any data related to such communications, by means of public communications networks and publicly available electronic communications services. National legislation in some Member States only prohibits intentional unauthorised access to communications.(22)The prohibition of storage of communications and the related traffic data by persons other than the users or without their consent is not intended to prohibit any automatic, intermediate and transient storage of this information in so far as this takes place for the sole purpose of carrying out the transmission in the electronic communications network and provided that the information is not stored for any period longer than is necessary for the transmission and for traffic management purposes, and that during the period of storage the confidentiality remains guaranteed. ...(26)The data relating to subscribers processed within electronic communications networks to establish connections and to transmit information contain information on the private life of natural persons and concern the right to respect for their correspondence or concern the legitimate interests of legal persons. Such data may only be stored to the extent that is necessary for the provision of the service for the purpose of billing and for interconnection payments, and for a limited time. Any further processing of such data … may only be allowed if the subscriber has agreed to this on the basis of accurate and full information given by the provider of the publicly available electronic communications services about the types of further processing it intends to perform and about the subscriber’s right not to give or to withdraw his/her consent to such processing. ...(30)Systems for the provision of electronic communications networks and services should be designed to limit the amount of personal data necessary to a strict minimum. ...’4Article 1 of Directive 2002/58, headed ‘Scope and aim’, provides:‘1. This Directive provides for the harmonisation of the national provisions required to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy and confidentiality, with respect to the processing of personal data in the electronic communication sector and to ensure the free movement of such data and of electronic communication equipment and services in the Community.2. The provisions of this Directive particularise and complement Directive [95/46] for the purposes mentioned in paragraph 1. Moreover, they provide for protection of the legitimate interests of subscribers who are legal persons.3. This Directive shall not apply to activities which fall outside the scope of the Treaty establishing the European Community, such as those covered by Titles V and VI of the Treaty on European Union, and in any case to activities concerning public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the activities of the State in areas of criminal law.’5Article 2 of Directive 2002/58, headed ‘Definitions’, provides:‘Save as otherwise provided, the definitions in Directive [95/46] and in Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) [(OJ 2002 L 108, p. 33)] shall apply.The following definitions shall also apply:(b)“traffic data” means any data processed for the purpose of the conveyance of a communication on an electronic communications network or for the billing thereof;(c)“location data” means any data processed in an electronic communications network or by an electronic communications service, indicating the geographic position of the terminal equipment of a user of a publicly available electronic communications service;(d)“communication” means any information exchanged or conveyed between a finite number of parties by means of a publicly available electronic communications service. This does not include any information conveyed as part of a broadcasting service to the public over an electronic communications network except to the extent that the information can be related to the identifiable subscriber or user receiving the information;...’6Article 3 of Directive 2002/58, headed ‘Services concerned’, provides:‘This Directive shall apply to the processing of personal data in connection with the provision of publicly available electronic communications services in public communications networks in the Community, including public communications networks supporting data collection and identification devices.’7Article 4 of that directive, headed ‘Security of processing’, is worded as follows:‘1. The provider of a publicly available electronic communications service must take appropriate technical and organisational measures to safeguard security of its services, if necessary in conjunction with the provider of the public communications network with respect to network security. Having regard to the state of the art and the cost of their implementation, these measures shall ensure a level of security appropriate to the risk presented.1a. Without prejudice to Directive [95/46], the measures referred to in paragraph 1 shall at least:ensure that personal data can be accessed only by authorised personnel for legally authorised purposes,protect personal data stored or transmitted against accidental or unlawful destruction, accidental loss or alteration, and unauthorised or unlawful storage, processing, access or disclosure, andensure the implementation of a security policy with respect to the processing of personal data.8Article 5 of Directive 2002/58, headed ‘Confidentiality of the communications’, provides:‘1. Member States shall ensure the confidentiality of communications and the related traffic data by means of a public communications network and publicly available electronic communications services, through national legislation. In particular, they shall prohibit listening, tapping, storage or other kinds of interception or surveillance of communications and the related traffic data by persons other than users, without the consent of the users concerned, except when legally authorised to do so in accordance with Article 15(1). This paragraph shall not prevent technical storage which is necessary for the conveyance of a communication without prejudice to the principle of confidentiality.3. Member States shall ensure that the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user is only allowed on condition that the subscriber or user concerned has given his or her consent, having been provided with clear and comprehensive information, in accordance with Directive [95/46], inter alia, about the purposes of the processing. This shall not prevent any technical storage or access for the sole purpose of carrying out the transmission of a communication over an electronic communications network, or as strictly necessary in order for the provider of an information society service explicitly requested by the subscriber or user to provide the service.’9Article 6 of Directive 2002/58, headed ‘Traffic data’, provides:‘1. Traffic data relating to subscribers and users processed and stored by the provider of a public communications network or publicly available electronic communications service must be erased or made anonymous when it is no longer needed for the purpose of the transmission of a communication without prejudice to paragraphs 2, 3 and 5 of this Article and Article 15(1).2. Traffic data necessary for the purposes of subscriber billing and interconnection payments may be processed. Such processing is permissible only up to the end of the period during which the bill may lawfully be challenged or payment pursued.3. For the purpose of marketing electronic communications services or for the provision of value added services, the provider of a publicly available electronic communications service may process the data referred to in paragraph 1 to the extent and for the duration necessary for such services or marketing, if the subscriber or user to whom the data relate has given his or her prior consent. Users or subscribers shall be given the possibility to withdraw their consent for the processing of traffic data at any time.5. Processing of traffic data, in accordance with paragraphs 1, 2, 3 and 4, must be restricted to persons acting under the authority of providers of the public communications networks and publicly available electronic communications services handling billing or traffic management, customer enquiries, fraud detection, marketing electronic communications services or providing a value added service, and must be restricted to what is necessary for the purposes of such activities.’10Article 9(1) of that directive, that article being headed ‘Location data other than traffic data’, provides:‘Where location data other than traffic data, relating to users or subscribers of public communications networks or publicly available electronic communications services, can be processed, such data may only be processed when they are made anonymous, or with the consent of the users or subscribers to the extent and for the duration necessary for the provision of a value added service. The service provider must inform the users or subscribers, prior to obtaining their consent, of the type of location data other than traffic data which will be processed, of the purposes and duration of the processing and whether the data will be transmitted to a third party for the purpose of providing the value added service. …’11Article 15 of that directive, headed ‘Application of certain provisions of Directive [95/46]’, states:‘1. Member States may adopt legislative measures to restrict the scope of the rights and obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9 of this Directive when such restriction constitutes a necessary, appropriate and proportionate measure within a democratic society to safeguard national security (i.e. State security), defence, public security, and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communication system, as referred to in Article 13(1) of Directive [95/46]. To this end, Member States may, inter alia, adopt legislative measures providing for the retention of data for a limited period justified on the grounds laid down in this paragraph. All the measures referred to in this paragraph shall be in accordance with the general principles of Community law, including those referred to in Article 6(1) and (2) of the Treaty on European Union.1b. Providers shall establish internal procedures for responding to requests for access to users’ personal data based on national provisions adopted pursuant to paragraph 1. They shall provide the competent national authority, on demand, with information about those procedures, the number of requests received, the legal justification invoked and their response.2. The provisions of Chapter III on judicial remedies, liability and sanctions of Directive [95/46] shall apply with regard to national provisions adopted pursuant to this Directive and with regard to the individual rights derived from this Directive. Directive 95/46 12Article 22 of Directive 95/46, which is in Chapter III of that directive, is worded as follows:‘Without prejudice to any administrative remedy for which provision may be made, inter alia before the supervisory authority referred to in Article 28, prior to referral to the judicial authority, Member States shall provide for the right of every person to a judicial remedy for any breach of the rights guaranteed him by the national law applicable to the processing in question.’ Directive 2006/24/EC 13Article 1(2) of Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC (OJ 2006 L 105, p. 54), that article being headed ‘Subject matter and scope’, provided:‘This Directive shall apply to traffic and location data on both legal entities and natural persons and to the related data necessary to identify the subscriber or registered user. It shall not apply to the content of electronic communications, including information consulted using an electronic communications network.’14Article 3 of that directive, headed ‘Obligation to retain data’, provided:‘1. By way of derogation from Articles 5, 6 and 9 of [Directive 2002/58], Member States shall adopt measures to ensure that the data specified in Article 5 of this Directive are retained in accordance with the provisions thereof, to the extent that those data are generated or processed by providers of publicly available electronic communications services or of a public communications network within their jurisdiction in the process of supplying the communications services concerned.2. The obligation to retain data provided for in paragraph 1 shall include the retention of the data specified in Article 5 relating to unsuccessful call attempts where those data are generated or processed, and stored (as regards telephony data) or logged (as regards Internet data), by providers of publicly available electronic communications services or of a public communications network within the jurisdiction of the Member State concerned in the process of supplying the communication services concerned. This Directive shall not require data relating to unconnected calls to be retained.’ Swedish law 15It is apparent from the order for reference in Case C‑203/15 that the Swedish legislature, in order to transpose Directive 2006/24 into national law, amended the lagen (2003:389) om elektronisk kommunikation [Law (2003:389) on electronic communications; ‘the LEK’] and the förordningen (2003:396) om elektronisk kommunikation [Regulation (2003:396) on electronic communications]. Both of those texts, in the versions applicable to the dispute in the main proceedings, contain rules on the retention of electronic communications data and on access to that data by the national authorities.16Access to that data is, in addition, regulated by the lagen (2012:278) om inhämtning av uppgifter om elektronisk kommunikation i de brottsbekämpande myndigheternas underrättelseverksamhet (Law (2012:278) on gathering of data relating to electronic communications as part of intelligence gathering by law enforcement authorities: ‘Law 2012:278’) and by the rättegångsbalken (Code of Judicial Procedure; ‘the RB’). The obligation to retain electronic communications data 17According to the information provided by the referring court in Case C‑203/15, the provisions of Paragraph 16a of Chapter 6 of the LEK, read together with Paragraph 1 of Chapter 2 of that law, impose an obligation on providers of electronic communications services to retain data the retention of which was required by Directive 2006/24. The data concerned is that relating to subscriptions and all electronic communications necessary to trace and identify the source and destination of a communication; to determine its date, time, and type; to identify the communications equipment used and to establish the location of mobile communication equipment used at the start and end of each communication. The data which there is an obligation to retain is data generated or processed in the context of telephony services, telephony services which use a mobile connection, electronic messaging systems, internet access services and internet access capacity (connection mode) provision services. The obligation extends to data relating to unsuccessful communications. The obligation does not however extend to the content of communications.18Articles 38 to 43 of Regulation (2003:396) on electronic communications specify the categories of data that must be retained. As regards telephony services, there is the obligation to retain data relating to calls and numbers called and the identifiable dates and times of the start and end of the communication. As regards telephony services which use a mobile connection, additional obligations are imposed, covering, for example, the retention of location data at the start and end of the communication. As regards telephony services using an IP packet, data to be retained includes, in addition to data mentioned above, data relating to the IP addresses of the caller and the person called. As regards electronic messaging systems, data to be retained includes data relating to the numbers of senders and recipients, IP addresses or other messaging addresses. As regards internet access services, data to be retained includes, for example, data relating to the IP addresses of users and the traceable dates and times of logging into and out of the internet access service. Data retention period 19In accordance with Paragraph 16d of Chapter 6 of the LEK, the data covered by Paragraph 16a of that Chapter must be retained by the providers of electronic communications services for six months from the date of the end of communication. The data must then be immediately erased, unless otherwise provided in the second subparagraph of Paragraph 16d of that Chapter. Access to retained data 20Access to retained data by the national authorities is governed by the provisions of Law 2012:278, the LEK and the RB.– Law 2012:278 21In the context of intelligence gathering, the national police, the Säkerhetspolisen (the Swedish Security Service), and the Tullverket (the Swedish Customs Authority) may, on the basis of Paragraph 1 of Law 2012:278, on the conditions prescribed by that law and without informing the provider of an electronic communications network or a provider of an electronic communications service authorised under the LEK, undertake the collection of data relating to messages transmitted by an electronic communications network, the electronic communications equipment located in a specified geographical area and the geographical areas(s) where electronic communications equipment is or was located.22In accordance with Paragraphs 2 and 3 of Law 2012:278, data may, as a general rule, be collected if, depending on the circumstances, the measure is particularly necessary in order to avert, prevent or detect criminal activity involving one or more offences punishable by a term of imprisonment of at least two years, or one of the acts listed in Paragraph 3 of that law, referring to offences punishable by a term of imprisonment of less than two years. Any grounds supporting that measure must outweigh considerations relating to the harm or prejudice that may be caused to the person affected by that measure or to an interest opposing that measure. In accordance with Paragraph 5 of that law, the duration of the measure must not exceed one month.23The decision to implement such a measure is to be taken by the director of the authority concerned or by a person to whom that responsibility is delegated. The decision is not subject to prior review by a judicial authority or an independent administrative authority.24Under Paragraph 6 of Law 2012:278, the Säkerhets och integritetsskyddsnämnden (the Swedish Commission on Security and Integrity Protection) must be informed of any decision authorising the collection of data. In accordance with Paragraph 1 of Lagen (2007:980) om tillsyn över viss brottsbekämpande verksamhet (Law (2007:980) on the supervision of certain law enforcement activities), that authority is to oversee the application of the legislation by the law enforcement authorities.– The LEK 25Under Paragraph 22, first subparagraph, point 2, of Chapter 6 of the LEK, all providers of electronic communications services must disclose data relating to a subscription at the request of the prosecution authority, the national police, the Security Service or any other public law enforcement authority, if that data is connected with a presumed criminal offence. On the information provided by the referring court in Case C‑203/15, it is not necessary that the offence be a serious crime.– The RB 26The RB governs the disclosure of retained data to the national authorities within the framework of preliminary investigations. In accordance with Paragraph 19 of Chapter 27 of the RB, ‘placing electronic communications under surveillance’ without the knowledge of third parties is, as a general rule, permitted within the framework of preliminary investigations that relate to, inter alia, offences punishable by a sentence of imprisonment of at least six months. The expression ‘placing electronic communications under surveillance’, under Paragraph 19 of Chapter 27 of the RB, means obtaining data without the knowledge of third parties that relates to a message transmitted by an electronic communications network, the electronic communications equipment located or having been located in a specific geographical area, and the geographical area(s) where specific electronic communications equipment is or has been located.27According to what is stated by the referring court in Case C‑203/15, information on the content of a message may not be obtained on the basis of Paragraph 19 of Chapter 27 of the RB. As a general rule, placing electronic communications under surveillance may be ordered, under Paragraph 20 of Chapter 27 of the RB, only where there are reasonable grounds for suspicion that an individual has committed an offence and that the measure is particularly necessary for the purposes of the investigation: the subject of that investigation must moreover be an offence punishable by a sentence of imprisonment of at least two years, or attempts, preparation or conspiracy to commit such an offence. In accordance with Paragraph 21 of Chapter 27 of the RB, the prosecutor must, other than in cases of urgency, request from the court with jurisdiction authority to place electronic communications under surveillance. The security and protection of retained data 28Under Paragraph 3a of Chapter 6 of the LEK, providers of electronic communications services who are subject to an obligation to retain data must take appropriate technical and organisational measures to ensure the protection of data during processing. On the information provided by the referring court in Case C‑203/15, Swedish law does not, however, make any provision as to where the data is to be retained. United Kingdom law DRIPA 29Section 1 of DRIPA, headed ‘Powers for retention of relevant communications data subject to safeguards’, provides:‘(1)The Secretary of State may by notice (a “retention notice”) require a public telecommunications operator to retain relevant communications data if the Secretary of State considers that the requirement is necessary and proportionate for one or more of the purposes falling within paragraphs (a) to (h) of section 22(2) of the Regulation of Investigatory Powers Act 2000 (purposes for which communications data may be obtained).(2)A retention notice may:(a)relate to a particular operator or any description of operators;require the retention of all data or any description of data;specify the period or periods for which data is to be retained;contain other requirements, or restrictions, in relation to the retention of data;(e)make different provision for different purposes;(f)relate to data whether or not in existence at the time of the giving, or coming into force, of the notice.(3)The Secretary of State may by regulations make further provision about the retention of relevant communications data.(4)Such provision may, in particular, include provision about:requirements before giving a retention notice;the maximum period for which data is to be retained under a retention notice;the content, giving, coming into force, review, variation or revocation of a retention notice;the integrity, security or protection of, access to, or the disclosure or destruction of, data retained by virtue of this section;the enforcement of, or auditing compliance with, relevant requirements or restrictions;a code of practice in relation to relevant requirements or restrictions or relevant power;(g)the reimbursement by the Secretary of State (with or without conditions) of expenses incurred by public telecommunications operators in complying with relevant requirements or restrictions;(h)the [Data Retention (EC Directive) Regulations 2009] ceasing to have effect and the transition to the retention of data by virtue of this section.(5)The maximum period provided for by virtue of subsection (4)(b) must not exceed 12 months beginning with such day as is specified in relation to the data concerned by regulations under subsection (3).30Section 2 of DRIPA defines the expression ‘relevant communications data’ as meaning ‘communications data of the kind mentioned in the Schedule to the [Data Retention (EC Directive) Regulations 2009] so far as such data is generated or processed in the United Kingdom by public telecommunications operators in the process of supplying the telecommunications services concerned’. RIPA 31Section 21(4) of the Regulation of Investigatory Powers Act 2000 (‘RIPA’), that section being in Chapter II of that act and headed ‘Lawful acquisition and disclosure of communications data’, states:‘In this Chapter “communications data” means any of the following:any traffic data comprised in or attached to a communication (whether by the sender or otherwise) for the purposes of any postal service or telecommunication system by means of which it is being or may be transmitted;any information which includes none of the contents of a communication (apart from any information falling within paragraph (a)) and is about the use made by any person:(i)of any postal service or telecommunications service; or(ii)in connection with the provision to or use by any person of any telecommunications service, of any part of a telecommunication system;any information not falling within paragraph (a) or (b) that is held or obtained, in relation to persons to whom he provides the service, by a person providing a postal service or telecommunications service’.32On the information provided in the order for reference in Case C‑698/15, that data includes ‘user location data’, but not data relating to the content of a communication.33As regards access to retained data, Section 22 of RIPA provides:This section applies where a person designated for the purposes of this Chapter believes that it is necessary on grounds falling within subsection (2) to obtain any communications data.It is necessary on grounds falling within this subsection to obtain communications data if it is necessary:in the interests of national security;for the purpose of preventing or detecting crime or of preventing disorder;in the interests of the economic well-being of the United Kingdom;in the interests of public safety;for the purpose of protecting public health;for the purpose of assessing or collecting any tax, duty, levy or other imposition, contribution or charge payable to a government department;or the purpose, in an emergency, of preventing death or injury or any damage to a person’s physical or mental health, or of mitigating any injury or damage to a person’s physical or mental health; oror any purpose (not falling within paragraphs (a) to (g)) which is specified for the purposes of this subsection by an order made by the Secretary of State.…Subject to subsection (5), where it appears to the designated person that a postal or telecommunications operator is or may be in possession of, or be capable of obtaining, any communications data, the designated person may, by notice to the postal or telecommunications operator, require the operator:if the operator is not already in possession of the data, to obtain the data; andin any case, to disclose all of the data in his possession or subsequently obtained by him.The designated person shall not grant an authorisation under subsection (3) or give a notice under subsection (4), unless he believes that obtaining the data in question by the conduct authorised or required by the authorisation or notice is proportionate to what is sought to be achieved by so obtaining the data.’34Under Section 65 of RIPA, complaints may be made to the Investigatory Powers Tribunal (United Kingdom) if there is reason to believe that data has been acquired inappropriately. The Data Retention Regulations 2014 35The Data Retention Regulations 2014 (‘the 2014 Regulations’), adopted on the basis of DRIPA, are divided into three parts, Part 2 containing regulations 2 to 14 of that legislation. Regulation 4, headed ‘Retention notices’, provides:A retention notice must specify:the public telecommunications operator (or description of operators) to whom it relates,the relevant communications data which is to be retained,the period or periods for which the data is to be retained,any other requirements, or any restrictions, in relation to the retention of the data.A retention notice must not require any data to be retained for more than 12 months beginning with:in the case of traffic data or service use data, the day of the communication concerned, andin the case of subscriber data, the day on which the person concerned leaves the telecommunications service concerned or (if earlier) the day on which the data is changed.36Regulation 7 of the 2014 Regulations, headed ‘Data integrity and security’, provides:A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must:secure that the data is of the same integrity and subject to at least the same security and protection as the data on any system from which it is derived,secure, by appropriate technical and organisational measures, that the data can be accessed only by specially authorised personnel, andprotect, by appropriate technical and organisational measures, the data against accidental or unlawful destruction, accidental loss or alteration, or unauthorised or unlawful retention, processing, access or disclosure.A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must destroy the data if the retention of the data ceases to be authorised by virtue of that section and is not otherwise authorised by law.The requirement in paragraph (2) to destroy the data is a requirement to delete the data in such a way as to make access to the data impossible.It is sufficient for the operator to make arrangements for the deletion of the data to take place at such monthly or shorter intervals as appear to the operator to be practicable.’37Regulation 8 of the 2014 Regulations, headed Disclosure of retained data’, provides:A public telecommunications operator must put in place adequate security systems (including technical and organisational measures) governing access to communications data retained by virtue of section 1 of [DRIPA] in order to protect against any disclosure of a kind which does not fall within section 1(6)(a) of [DRIPA].A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must retain the data in such a way that it can be transmitted without undue delay in response to requests.’38Regulation 9 of the 2014 Regulations, headed ‘Oversight by the Information Commissioner’, states:‘The Information Commissioner must audit compliance with requirements or restrictions imposed by this Part in relation to the integrity, security or destruction of data retained by virtue of section 1 of [DRIPA].’ The Code of Practice 39The Acquisition and Disclosure of Communications Data Code of Practice (‘the Code of Practice’) contains, in paragraphs 2.5 to 2.9 and 2.36 to 2.45, guidance on the necessity for and proportionality of obtaining communications data. As explained by the referring court in Case C‑698/15, particular attention must, in accordance with paragraphs 3.72 to 3.77 of that code, be paid to necessity and proportionality where the communications data sought relates to a person who is a member of a profession that handles privileged or otherwise confidential information.40Under paragraph 3.78 to 3.84 of that code, a court order is required in the specific case of an application for communications data that is made in order to identify a journalist’s source. Under paragraphs 3.85 to 3.87 of that code, judicial approval is required when an application for access is made by local authorities. No authorisation, on the other hand, need be obtained from a court or any independent body with respect to access to communications data protected by legal professional privilege or relating to doctors of medicine, Members of Parliament or ministers of religion.41Paragraph 7.1 of the Code of Practice provides that communications data acquired or obtained under the provisions of RIPA, and all copies, extracts and summaries of that data, must be handled and stored securely. In additions, the requirements of the Data Protection Act must be adhered to.42In accordance with paragraph 7.18 of the Code of Practice, where a United Kingdom public authority is considering the possible disclosure to overseas authorities of communications data, it must, inter alia, consider whether that data will be adequately protected. However, it is stated in paragraph 7.22 of that code that a transfer of data to a third country may take place where that transfer is necessary for reasons of substantial public interest, even where the third country does not provide an adequate level of protection. On the information given by the referring court in Case C‑698/15, the Secretary of State for the Home Department may issue a national security certificate that exempts certain data from the provisions of the legislation.43In paragraph 8.1 of that code, it is stated that RIPA established the Interception of Communications Commissioner (United Kingdom), whose remit is, inter alia, to provide independent oversight of the exercise and performance of the powers and duties contained in Chapter II of Part I of RIPA. As is stated in paragraph 8.3 of the code, the Commissioner may, where he can ‘establish that an individual has been adversely affected by any wilful or reckless failure’, inform that individual of suspected unlawful use of powers. The disputes in the main proceedings and the questions referred for a preliminary ruling Case C‑203/15 44On 9 April 2014, Tele2 Sverige, a provider of electronic communications services established in Sweden, informed the PTS that, following the ruling in the judgment of 8 April 2014, Digital Rights Ireland and Others (C‑293/12 and C‑594/12; ‘the Digital Rights judgment’, EU:C:2014:238) that Directive 2006/24 was invalid, it would cease, as from 14 April 2014, to retain electronic communications data, covered by the LEK, and that it would erase data retained prior to that date.45On 15 April 2014, the Rikspolisstyrelsen (the Swedish National Police Authority, Sweden) sent to the PTS a complaint to the effect that Tele2 Sverige had ceased to send to it the data concerned.46On 29 April 2014, the justitieminister (Swedish Minister for Justice) appointed a special reporter to examine the Swedish legislation at issue in the light of the Digital Rights judgment. In a report dated 13 June 2014, entitled ‘Datalagring, EU-rätten och svensk rätt, Ds 2014:23’ (Data retention, EU law and Swedish law; ‘the 2014 report’), the special reporter concluded that the national legislation on the retention of data, as set out in Paragraphs 16a to 16f of the LEK, was not incompatible with either EU law or the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’). The special reporter emphasised that the Digital Rights judgment could not be interpreted as meaning that the general and indiscriminate retention of data was to be condemned as a matter of principle. From his perspective, neither should the Digital Rights judgment be understood as meaning that the Court had established, in that judgment, a set of criteria all of which had to be satisfied if legislation was to be able to be regarded as proportionate. He considered that it was necessary to assess all the circumstances in order to determine the compatibility of the Swedish legislation with EU law, such as the extent of data retention in the light of the provisions on access to data, on the duration of retention, and on the protection and the security of data.47On that basis, on 19 June 2014 the PTS informed Tele2 Sverige that it was in breach of its obligations under the national legislation in failing to retain the data covered by the LEK for six months, for the purpose of combating crime. By an order of 27 June 2014, the PTS ordered Tele2 Sverige to commence, by no later than 25 July 2014, the retention of that data.48Tele2 Sverige considered that the 2014 report was based on a misinterpretation of the Digital Rights judgment and that the obligation to retain data was in breach of the fundamental rights guaranteed by the Charter, and therefore brought an action before the Förvaltningsrätten i Stockholm (Administrative Court, Stockholm) challenging the order of 27 June 2014. Since that court dismissed the action, by judgment of 13 October 2014, Tele2 Sverige brought an appeal against that judgment before the referring court.49In the opinion of the referring court, the compatibility of the Swedish legislation with EU law should be assessed with regard to Article 15(1) of Directive 2002/58. While that directive establishes the general rule that traffic and location data should be erased or made anonymous when no longer required for the transmission of a communication, Article 15(1) of that directive introduces a derogation from that general rule since it permits the Member States, where justified on one of the specified grounds, to restrict that obligation to erase or render anonymous, or even to make provision for the retention of data. Accordingly, EU law allows, in certain situations, the retention of electronic communications data.50The referring court nonetheless seeks to ascertain whether a general and indiscriminate obligation to retain electronic communications data, such as that at issue in the main proceedings, is compatible, taking into consideration the Digital Rights judgment, with Article 15(1) of Directive 2002/58, read in the light of Articles 7 and 8 and Article 52(1) of the Charter. Given that the opinions of the parties differ on that point, it is necessary that the Court give an unequivocal ruling on whether, as maintained by Tele2 Sverige, the general and indiscriminate retention of electronic communications data is per se incompatible with Articles 7 and 8 and Article 52(1) of the Charter, or whether, as stated in the 2014 Report, the compatibility of such retention of data is to be assessed in the light of provisions relating to access to the data, the protection and security of the data and the duration of retention.51In those circumstances the Kammarrätten i Stockholm (Administrative Court of Appeal of Stockholm, Sweden) decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:Is a general obligation to retain traffic data covering all persons, all means of electronic communication and all traffic data without any distinctions, limitations or exceptions for the purpose of combating crime … compatible with Article 15(1) of Directive 2002/58/EC, taking account of Articles 7 and 8 and Article 52(1) of the Charter?If the answer to question 1 is in the negative, may the retention nevertheless be permitted where:access by the national authorities to the retained data is determined as [described in paragraphs 19 to 36 of the order for reference], anddata protection and security requirements are regulated as [described in paragraphs 38 to 43 of the order for reference], andall relevant data is to be retained for six months, calculated as from the day when the communication is ended, and subsequently erased as [described in paragraph 37 of the order for reference]?’ Case C‑698/15 52Mr Watson, Mr Brice and Mr Lewis each lodged, before the High Court of Justice (England & Wales), Queen’s Bench Division (Divisional Court) (United Kingdom), applications for judicial review of the legality of Section 1 of DRIPA, claiming, inter alia, that that section is incompatible with Articles 7 and 8 of the Charter and Article 8 of the ECHR.53By judgment of 17 July 2015, the High Court of Justice (England & Wales), Queen’s Bench Division (Divisional Court) held that the Digital Rights judgment laid down ‘mandatory requirements of EU law’ applicable to the legislation of Member States on the retention of communications data and access to such data. According to the High Court of Justice, since the Court, in that judgment, held that Directive 2006/24 was incompatible with the principle of proportionality, national legislation containing the same provisions as that directive could, equally, not be compatible with that principle. It follows from the underlying logic of the Digital Rights judgment that legislation that establishes a general body of rules for the retention of communications data is in breach of the rights guaranteed in Articles 7 and 8 of the Charter, unless that legislation is complemented by a body of rules for access to the data, defined by national law, which provides sufficient safeguards to protect those rights. Accordingly, Section 1 of DRIPA is not compatible with Articles 7 and 8 of the Charter in so far as it does not lay down clear and precise rules providing for access to and use of retained data and in so far as access to that data is not made dependent on prior review by a court or an independent administrative body.54The Secretary of State for the Home Department brought an appeal against that judgment before the Court of Appeal (England & Wales) (Civil Division) (United Kingdom).55That court states that Section 1(1) of DRIPA empowers the Secretary of State for the Home Department to adopt, without any prior authorisation from a court or an independent administrative body, a general regime requiring public telecommunications operators to retain all data relating to any postal service or any telecommunications service for a maximum period of 12 months if he/she considers that such a requirement is necessary and proportionate to achieve the purposes stated in the United Kingdom legislation. Even though that data does not include the content of a communication, it could be highly intrusive into the privacy of users of communications services.56In the order for reference and in its judgment of 20 November 2015, delivered in the appeal procedure, wherein it decided to send to the Court this request for a preliminary ruling, the referring court considers that the national rules on the retention of data necessarily fall within the scope of Article 15(1) of Directive 2002/58 and must therefore conform to the requirements of the Charter. However, as stated in Article 1(3) of that directive, the EU legislature did not harmonise the rules relating to access to retained data.57As regards the effect of the Digital Rights judgment on the issues raised in the main proceedings, the referring court states that, in the case that gave rise to that judgment, the Court was considering the validity of Directive 2006/24 and not the validity of any national legislation. Having regard, inter alia, to the close relationship between the retention of data and access to that data, it was essential that that directive should incorporate a set of safeguards and that the Digital Rights judgment should analyse, when examining the lawfulness of the data retention regime established by that directive, the rules relating to access to that data. The Court had not therefore intended to lay down, in that judgment, mandatory requirements applicable to national legislation on access to data that does not implement EU law. Further, the reasoning of the Court was closely linked to the objective pursued by Directive 2006/24. National legislation should, however, be assessed in the light of the objectives pursued by that legislation and its context.58As regards the need to refer questions to the Court for a preliminary ruling, the referring court draws attention to the fact that, when the order for reference was issued, six courts in other Member States, five of those courts being courts of last resort, had declared national legislation to be invalid on the basis of the Digital Rights judgment. The answer to the questions referred is therefore not obvious, although the answer is required to give a ruling on the cases brought before that court.59In those circumstances, the Court of Appeal (England & Wales) (Civil Division) decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:Does [the Digital Rights judgment] (including, in particular, paragraphs 60 to 62 thereof) lay down mandatory requirements of EU law applicable to a Member State’s domestic regime governing access to data retained in accordance with national legislation, in order to comply with Articles 7 and 8 of [the Charter]?Does [the Digital Rights judgment] expand the scope of Articles 7 and/or 8 of [the Charter] beyond that of Article 8 of the European Convention of Human Rights … as established in the jurisprudence of the European Court of Human Rights …?’ The procedure before the Court 60By order of 1 February 2016, Davis and Others (C‑698/15, not published, EU:C:2016:70), the President of the Court decided to grant the request of the Court of Appeal (England & Wales) (Civil Division) that Case C‑698/15 should be dealt with under the expedited procedure provided for in Article 105(1) of the Court’s Rules of Procedure.61By decision of the President of the Court of 10 March 2016, Cases C‑203/15 and C‑698/15 were joined for the purposes of the oral part of the procedure and the judgment. Consideration of the questions referred for a preliminary ruling The first question in Case C‑203/15 62By the first question in Case C‑203/15, the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm) seeks, in essence, to ascertain whether Article 15(1) of Directive 2002/58, read in the light of Articles 7 and 8 and Article 52(1) of the Charter, must be interpreted as precluding national legislation such as that at issue in the main proceedings that provides, for the purpose of fighting crime, for general and indiscriminate retention of all traffic and location data of all subscribers and registered users with respect to all means of electronic communications.63That question arises, in particular, from the fact that Directive 2006/24, which the national legislation at issue in the main proceedings was intended to transpose, was declared to be invalid by the Digital Rights judgment, though the parties disagree on the scope of that judgment and its effect on that legislation, given that it governs the retention of traffic and location data and access to that data by the national authorities.64It is necessary first to examine whether national legislation such as that at issue in the main proceeding falls within the scope of EU law. The scope of Directive 2002/58 65The Member States that have submitted written observations to the Court have differed in their opinions as to whether and to what extent national legislation on the retention of traffic and location data and access to that data by the national authorities, for the purpose of combating crime, falls within the scope of Directive 2002/58. Whereas, in particular, the Belgian, Danish, German and Estonian Governments, Ireland and the Netherlands Government have expressed the opinion that the answer is that it does, the Czech Government has proposed that the answer is that it does not, since the sole objective of such legislation is to combat crime. The United Kingdom Government, for its part, argues that only legislation relating to the retention of data, but not legislation relating to the access to that data by the competent national law enforcement authorities, falls within the scope of that directive.66As regards, finally, the Commission, while it maintained, in its written observations submitted to the Court in Case C‑203/15, that the national legislation at issue in the main proceedings falls within the scope of Directive 2002/58, the Commission argues, in its written observations in Case C‑698/15, that only national rules relating to the retention of data, and not those relating to the access of the national authorities to that data, fall within the scope of that directive. The latter rules should, however, according to the Commission, be taken into consideration in order to assess whether national legislation governing the retention of data by providers of electronic communications services constitutes a proportionate interference in the fundamental rights guaranteed in Articles 7 and 8 of the Charter.67In that regard, it must be observed that a determination of the scope of Directive 2002/58 must take into consideration, inter alia, the general structure of that directive.68Article 1(1) of Directive 2002/58 indicates that the directive provides, inter alia, for the harmonisation of the provisions of national law required to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy and confidentiality, with respect to the processing of personal data in the electronic communications sector.69Article 1(3) of that directive excludes from its scope ‘activities of the State’ in specified fields, including the activities of the State in areas of criminal law and in the areas of public security, defence and State security, including the economic well-being of the State when the activities relate to State security matters (see, by analogy, with respect to the first indent of Article 3(2) of Directive 95/46, judgments of 6 November 2003, Lindqvist, C‑101/01, EU:C:2003:596, paragraph 43, and of 16 December 2008, Satakunnan Markkinapörssi and Satamedia, C‑73/07, EU:C:2008:727, paragraph 41).70Article 3 of Directive 2002/58 states that the directive is to apply to the processing of personal data in connection with the provision of publicly available electronic communications services in public communications networks in the European Union, including public communications networks supporting data collection and identification devices (‘electronic communications services’). Consequently, that directive must be regarded as regulating the activities of the providers of such services.71Article 15(1) of Directive 2002/58 states that Member States may adopt, subject to the conditions laid down, ‘legislative measures to restrict the scope of the rights and obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9 [of that directive]’. The second sentence of Article 15(1) of that directive identifies, as an example of measures that may thus be adopted by Member States, measures ‘providing for the retention of data’.72Admittedly, the legislative measures that are referred to in Article 15(1) of Directive 2002/58 concern activities characteristic of States or State authorities, and are unrelated to fields in which individuals are active (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 51). Moreover, the objectives which, under that provision, such measures must pursue, such as safeguarding national security, defence and public security and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communications system, overlap substantially with the objectives pursued by the activities referred to in Article 1(3) of that directive.73However, having regard to the general structure of Directive 2002/58, the factors identified in the preceding paragraph of this judgment do not permit the conclusion that the legislative measures referred to in Article 15(1) of Directive 2002/58 are excluded from the scope of that directive, for otherwise that provision would be deprived of any purpose. Indeed, Article 15(1) necessarily presupposes that the national measures referred to therein, such as those relating to the retention of data for the purpose of combating crime, fall within the scope of that directive, since it expressly authorises the Member States to adopt them only if the conditions laid down in the directive are met.74Further, the legislative measures referred to in Article 15(1) of Directive 2002/58 govern, for the purposes mentioned in that provision, the activity of providers of electronic communications services. Accordingly, Article 15(1), read together with Article 3 of that directive, must be interpreted as meaning that such legislative measures fall within the scope of that directive.75The scope of that directive extends, in particular, to a legislative measure, such as that at issue in the main proceedings, that requires such providers to retain traffic and location data, since to do so necessarily involves the processing, by those providers, of personal data.76The scope of that directive also extends to a legislative measure relating, as in the main proceedings, to the access of the national authorities to the data retained by the providers of electronic communications services.77The protection of the confidentiality of electronic communications and related traffic data, guaranteed in Article 5(1) of Directive 2002/58, applies to the measures taken by all persons other than users, whether private persons or bodies or State bodies. As confirmed in recital 21 of that directive, the aim of the directive is to prevent unauthorised access to communications, including ‘any data related to such communications’, in order to protect the confidentiality of electronic communications.78In those circumstances, a legislative measure whereby a Member State, on the basis of Article 15(1) of Directive 2002/58, requires providers of electronic communications services, for the purposes set out in that provision, to grant national authorities, on the conditions laid down in such a measure, access to the data retained by those providers, concerns the processing of personal data by those providers, and that processing falls within the scope of that directive.79Further, since data is retained only for the purpose, when necessary, of making that data accessible to the competent national authorities, national legislation that imposes the retention of data necessarily entails, in principle, the existence of provisions relating to access by the competent national authorities to the data retained by the providers of electronic communications services.80That interpretation is confirmed by Article 15(1b) of Directive 2002/58, which provides that providers are to establish internal procedures for responding to requests for access to users’ personal data, based on provisions of national law adopted pursuant to Article 15(1) of that directive.81It follows from the foregoing that national legislation, such as that at issue in the main proceedings in Cases C‑203/15 and C‑698/15, falls within the scope of Directive 2002/58. The interpretation of Article 15(1) of Directive 2002/58, in the light of Articles 7, 8, 11 and Article 52(1) of the Charter 82It must be observed that, according to Article 1(2) of Directive 2002/58, the provisions of that directive ‘particularise and complement’ Directive 95/46. As stated in its recital 2, Directive 2002/58 seeks to ensure, in particular, full respect for the rights set out in Articles 7 and 8 of the Charter. In that regard, it is clear from the explanatory memorandum of the Proposal for a Directive of the European Parliament and of the Council concerning the processing of personal data and the protection of privacy in the electronic communications sector (COM(2000) 385 final), which led to Directive 2002/58, that the EU legislature sought ‘to ensure that a high level of protection of personal data and privacy will continue to be guaranteed for all electronic communications services regardless of the technology used’.83To that end, Directive 2002/58 contains specific provisions designed, as is apparent from, in particular, recitals 6 and 7 of that directive, to offer to the users of electronic communications services protection against risks to their personal data and privacy that arise from new technology and the increasing capacity for automated storage and processing of data.84In particular, Article 5(1) of that directive provides that the Member States must ensure, by means of their national legislation, the confidentiality of communications effected by means of a public communications network and publicly available electronic communications services, and the confidentiality of the related traffic data.85The principle of confidentiality of communications established by Directive 2002/58 implies, inter alia, as stated in the second sentence of Article 5(1) of that directive, that, as a general rule, any person other than the users is prohibited from storing, without the consent of the users concerned, the traffic data related to electronic communications. The only exceptions relate to persons lawfully authorised in accordance with Article 15(1) of that directive and to the technical storage necessary for conveyance of a communication (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 47).86Accordingly, as confirmed by recitals 22 and 26 of Directive 2002/58, under Article 6 of that directive, the processing and storage of traffic data are permitted only to the extent necessary and for the time necessary for the billing and marketing of services and the provision of value added services (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraphs 47 and 48). As regards, in particular, the billing of services, that processing is permitted only up to the end of the period during which the bill may be lawfully challenged or legal proceedings brought to obtain payment. Once that period has elapsed, the data processed and stored must be erased or made anonymous. As regards location data other than traffic data, Article 9(1) of that directive provides that that data may be processed only subject to certain conditions and after it has been made anonymous or the consent of the users or subscribers obtained.87The scope of Article 5, Article 6 and Article 9(1) of Directive 2002/58, which seek to ensure the confidentiality of communications and related data, and to minimise the risks of misuse, must moreover be assessed in the light of recital 30 of that directive, which states: ‘Systems for the provision of electronic communications networks and services should be designed to limit the amount of personal data necessary to a strict minimum’.88Admittedly, Article 15(1) of Directive 2002/58 enables the Member States to introduce exceptions to the obligation of principle, laid down in Article 5(1) of that directive, to ensure the confidentiality of personal data, and to the corresponding obligations, referred to in Articles 6 and 9 of that directive (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 50).89Nonetheless, in so far as Article 15(1) of Directive 2002/58 enables Member States to restrict the scope of the obligation of principle to ensure the confidentiality of communications and related traffic data, that provision must, in accordance with the Court’s settled case-law, be interpreted strictly (see, by analogy, judgment of 22 November 2012, Probst, C‑119/12, EU:C:2012:748, paragraph 23). That provision cannot, therefore, permit the exception to that obligation of principle and, in particular, to the prohibition on storage of data, laid down in Article 5 of Directive 2002/58, to become the rule, if the latter provision is not to be rendered largely meaningless.90It must, in that regard, be observed that the first sentence of Article 15(1) of Directive 2002/58 provides that the objectives pursued by the legislative measures that it covers, which derogate from the principle of confidentiality of communications and related traffic data, must be ‘to safeguard national security — that is, State security — defence, public security, and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communication system’, or one of the other objectives specified in Article 13(1) of Directive 95/46, to which the first sentence of Article 15(1) of Directive 2002/58 refers (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 53). That list of objectives is exhaustive, as is apparent from the second sentence of Article 15(1) of Directive 2002/58, which states that the legislative measures must be justified on ‘the grounds laid down’ in the first sentence of Article 15(1) of that directive. Accordingly, the Member States cannot adopt such measures for purposes other than those listed in that latter provision.91Further, the third sentence of Article 15(1) of Directive 2002/58 provides that ‘[a]ll the measures referred to [in Article 15(1)] shall be in accordance with the general principles of [European Union] law, including those referred to in Article 6(1) and (2) [EU]’, which include the general principles and fundamental rights now guaranteed by the Charter. Article 15(1) of Directive 2002/58 must, therefore, be interpreted in the light of the fundamental rights guaranteed by the Charter (see, by analogy, in relation to Directive 95/46, judgments of 20 May 2003, Österreichischer Rundfunk and Others, C‑465/00, C‑138/01 and C‑139/01, EU:C:2003:294, paragraph 68; of 13 May 2014, Google Spain and Google, C‑131/12, EU:C:2014:317, paragraph 68, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 38).92In that regard, it must be emphasised that the obligation imposed on providers of electronic communications services, by national legislation such as that at issue in the main proceedings, to retain traffic data in order, when necessary, to make that data available to the competent national authorities, raises questions relating to compatibility not only with Articles 7 and 8 of the Charter, which are expressly referred to in the questions referred for a preliminary ruling, but also with the freedom of expression guaranteed in Article 11 of the Charter (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 25 and 70).93Accordingly, the importance both of the right to privacy, guaranteed in Article 7 of the Charter, and of the right to protection of personal data, guaranteed in Article 8 of the Charter, as derived from the Court’s case-law (see, to that effect, judgment of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 39 and the case-law cited), must be taken into consideration in interpreting Article 15(1) of Directive 2002/58. The same is true of the right to freedom of expression in the light of the particular importance accorded to that freedom in any democratic society. That fundamental right, guaranteed in Article 11 of the Charter, constitutes one of the essential foundations of a pluralist, democratic society, and is one of the values on which, under Article 2 TEU, the Union is founded (see, to that effect, judgments of 12 June 2003, Schmidberger, C‑112/00, EU:C:2003:333, paragraph 79, and of 6 September 2011, Patriciello, C‑163/10, EU:C:2011:543, paragraph 31).94In that regard, it must be recalled that, under Article 52(1) of the Charter, any limitation on the exercise of the rights and freedoms recognised by the Charter must be provided for by law and must respect the essence of those rights and freedoms. With due regard to the principle of proportionality, limitations may be imposed on the exercise of those rights and freedoms only if they are necessary and if they genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others (judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 50).95With respect to that last issue, the first sentence of Article 15(1) of Directive 2002/58 provides that Member States may adopt a measure that derogates from the principle of confidentiality of communications and related traffic data where it is a ‘necessary, appropriate and proportionate measure within a democratic society’, in view of the objectives laid down in that provision. As regards recital 11 of that directive, it states that a measure of that kind must be ‘strictly’ proportionate to the intended purpose. In relation to, in particular, the retention of data, the requirement laid down in the second sentence of Article 15(1) of that directive is that data should be retained ‘for a limited period’ and be ‘justified’ by reference to one of the objectives stated in the first sentence of Article 15(1) of that directive.96Due regard to the principle of proportionality also derives from the Court’s settled case-law to the effect that the protection of the fundamental right to respect for private life at EU level requires that derogations from and limitations on the protection of personal data should apply only in so far as is strictly necessary (judgments of 16 December 2008, Satakunnan Markkinapörssi and Satamedia, C‑73/07, EU:C:2008:727, paragraph 56; of 9 November 2010, Volker und Markus Schecke and Eifert, C‑92/09 and C‑93/09, EU:C:2010:662, paragraph 77; the Digital Rights judgment, paragraph 52, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 92).97As regards whether national legislation, such as that at issue in Case C‑203/15, satisfies those conditions, it must be observed that that legislation provides for a general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication, and that it imposes on providers of electronic communications services an obligation to retain that data systematically and continuously, with no exceptions. As stated in the order for reference, the categories of data covered by that legislation correspond, in essence, to the data whose retention was required by Directive 2006/24.98The data which providers of electronic communications services must therefore retain makes it possible to trace and identify the source of a communication and its destination, to identify the date, time, duration and type of a communication, to identify users’ communication equipment, and to establish the location of mobile communication equipment. That data includes, inter alia, the name and address of the subscriber or registered user, the telephone number of the caller, the number called and an IP address for internet services. That data makes it possible, in particular, to identify the person with whom a subscriber or registered user has communicated and by what means, and to identify the time of the communication as well as the place from which that communication took place. Further, that data makes it possible to know how often the subscriber or registered user communicated with certain persons in a given period (see, by analogy, with respect to Directive 2006/24, the Digital Rights judgment, paragraph 26).99That data, taken as a whole, is liable to allow very precise conclusions to be drawn concerning the private lives of the persons whose data has been retained, such as everyday habits, permanent or temporary places of residence, daily or other movements, the activities carried out, the social relationships of those persons and the social environments frequented by them (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 27). In particular, that data provides the means, as observed by the Advocate General in points 253, 254 and 257 to 259 of his Opinion, of establishing a profile of the individuals concerned, information that is no less sensitive, having regard to the right to privacy, than the actual content of communications.100The interference entailed by such legislation in the fundamental rights enshrined in Articles 7 and 8 of the Charter is very far-reaching and must be considered to be particularly serious. The fact that the data is retained without the subscriber or registered user being informed is likely to cause the persons concerned to feel that their private lives are the subject of constant surveillance (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 37).101Even if such legislation does not permit retention of the content of a communication and is not, therefore, such as to affect adversely the essence of those rights (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 39), the retention of traffic and location data could nonetheless have an effect on the use of means of electronic communication and, consequently, on the exercise by the users thereof of their freedom of expression, guaranteed in Article 11 of the Charter (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 28).102Given the seriousness of the interference in the fundamental rights concerned represented by national legislation which, for the purpose of fighting crime, provides for the retention of traffic and location data, only the objective of fighting serious crime is capable of justifying such a measure (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 60).103Further, while the effectiveness of the fight against serious crime, in particular organised crime and terrorism, may depend to a great extent on the use of modern investigation techniques, such an objective of general interest, however fundamental it may be, cannot in itself justify that national legislation providing for the general and indiscriminate retention of all traffic and location data should be considered to be necessary for the purposes of that fight (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 51).104In that regard, it must be observed, first, that the effect of such legislation, in the light of its characteristic features as described in paragraph 97 of the present judgment, is that the retention of traffic and location data is the rule, whereas the system put in place by Directive 2002/58 requires the retention of data to be the exception.105Second, national legislation such as that at issue in the main proceedings, which covers, in a generalised manner, all subscribers and registered users and all means of electronic communication as well as all traffic data, provides for no differentiation, limitation or exception according to the objective pursued. It is comprehensive in that it affects all persons using electronic communication services, even though those persons are not, even indirectly, in a situation that is liable to give rise to criminal proceedings. It therefore applies even to persons for whom there is no evidence capable of suggesting that their conduct might have a link, even an indirect or remote one, with serious criminal offences. Further, it does not provide for any exception, and consequently it applies even to persons whose communications are subject, according to rules of national law, to the obligation of professional secrecy (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 57 and 58).106Such legislation does not require there to be any relationship between the data which must be retained and a threat to public security. In particular, it is not restricted to retention in relation to (i) data pertaining to a particular time period and/or geographical area and/or a group of persons likely to be involved, in one way or another, in a serious crime, or (ii) persons who could, for other reasons, contribute, through their data being retained, to fighting crime (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 59).107National legislation such as that at issue in the main proceedings therefore exceeds the limits of what is strictly necessary and cannot be considered to be justified, within a democratic society, as required by Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter.108However, Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, does not prevent a Member State from adopting legislation permitting, as a preventive measure, the targeted retention of traffic and location data, for the purpose of fighting serious crime, provided that the retention of data is limited, with respect to the categories of data to be retained, the means of communication affected, the persons concerned and the retention period adopted, to what is strictly necessary.109In order to satisfy the requirements set out in the preceding paragraph of the present judgment, that national legislation must, first, lay down clear and precise rules governing the scope and application of such a data retention measure and imposing minimum safeguards, so that the persons whose data has been retained have sufficient guarantees of the effective protection of their personal data against the risk of misuse. That legislation must, in particular, indicate in what circumstances and under which conditions a data retention measure may, as a preventive measure, be adopted, thereby ensuring that such a measure is limited to what is strictly necessary (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 54 and the case-law cited).110Second, as regards the substantive conditions which must be satisfied by national legislation that authorises, in the context of fighting crime, the retention, as a preventive measure, of traffic and location data, if it is to be ensured that data retention is limited to what is strictly necessary, it must be observed that, while those conditions may vary according to the nature of the measures taken for the purposes of prevention, investigation, detection and prosecution of serious crime, the retention of data must continue nonetheless to meet objective criteria, that establish a connection between the data to be retained and the objective pursued. In particular, such conditions must be shown to be such as actually to circumscribe, in practice, the extent of that measure and, thus, the public affected.111[Text rectified by order of 16 March 2017] As regards the setting of limits on such a measure with respect to the public and the situations that may potentially be affected, the national legislation must be based on objective evidence which makes it possible to identify a public whose data is likely to reveal a link, at least an indirect one, with serious criminal offences, to contribute in one way or another to fighting serious crime or to prevent a serious risk to public security. Such limits may be set by using a geographical criterion where the competent national authorities consider, on the basis of objective evidence, that there exists, in one or more geographical areas, a high risk of preparation for or commission of such offences.112Having regard to all of the foregoing, the answer to the first question referred in Case C‑203/15 is that Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, must be interpreted as precluding national legislation which, for the purpose of fighting crime, provides for the general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication. The second question in Case C‑203/15 and the first question in Case C‑698/15 113It must, at the outset, be noted that the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm) referred the second question in Case C‑203/15 only in the event that the answer to the first question in that case was negative. That second question, however, arises irrespective of whether retention of data is generalised or targeted, as set out in paragraphs 108 to 111 of this judgment. Accordingly, the Court must answer the second question in Case C‑203/15 together with the first question in Case C‑698/15, which is referred regardless of the extent of the obligation to retain data that is imposed on providers of electronic communications services.114By the second question in Case C‑203/15 and the first question in Case C‑698/15, the referring courts seek, in essence, to ascertain whether Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and Article 52(1) of the Charter, must be interpreted as precluding national legislation governing the protection and security of traffic and location data, and more particularly, the access of the competent national authorities to retained data, where that legislation does not restrict that access solely to the objective of fighting serious crime, where that access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union.115As regards objectives that are capable of justifying national legislation that derogates from the principle of confidentiality of electronic communications, it must be borne in mind that, since, as stated in paragraphs 90 and 102 of this judgment, the list of objectives set out in the first sentence of Article 15(1) of Directive 2002/58 is exhaustive, access to the retained data must correspond, genuinely and strictly, to one of those objectives. Further, since the objective pursued by that legislation must be proportionate to the seriousness of the interference in fundamental rights that that access entails, it follows that, in the area of prevention, investigation, detection and prosecution of criminal offences, only the objective of fighting serious crime is capable of justifying such access to the retained data.116As regards compatibility with the principle of proportionality, national legislation governing the conditions under which the providers of electronic communications services must grant the competent national authorities access to the retained data must ensure, in accordance with what was stated in paragraphs 95 and 96 of this judgment, that such access does not exceed the limits of what is strictly necessary.117Further, since the legislative measures referred to in Article 15(1) of Directive 2002/58 must, in accordance with recital 11 of that directive, ‘be subject to adequate safeguards’, a data retention measure must, as follows from the case-law cited in paragraph 109 of this judgment, lay down clear and precise rules indicating in what circumstances and under which conditions the providers of electronic communications services must grant the competent national authorities access to the data. Likewise, a measure of that kind must be legally binding under domestic law.118In order to ensure that access of the competent national authorities to retained data is limited to what is strictly necessary, it is, indeed, for national law to determine the conditions under which the providers of electronic communications services must grant such access. However, the national legislation concerned cannot be limited to requiring that access should be for one of the objectives referred to in Article 15(1) of Directive 2002/58, even if that objective is to fight serious crime. That national legislation must also lay down the substantive and procedural conditions governing the access of the competent national authorities to the retained data (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 61).119Accordingly, and since general access to all retained data, regardless of whether there is any link, at least indirect, with the intended purpose, cannot be regarded as limited to what is strictly necessary, the national legislation concerned must be based on objective criteria in order to define the circumstances and conditions under which the competent national authorities are to be granted access to the data of subscribers or registered users. In that regard, access can, as a general rule, be granted, in relation to the objective of fighting crime, only to the data of individuals suspected of planning, committing or having committed a serious crime or of being implicated in one way or another in such a crime (see, by analogy, ECtHR, 4 December 2015, Zakharov v. Russia, CE:ECHR:2015:1204JUD004714306, § 260). However, in particular situations, where for example vital national security, defence or public security interests are threatened by terrorist activities, access to the data of other persons might also be granted where there is objective evidence from which it can be deduced that that data might, in a specific case, make an effective contribution to combating such activities.120In order to ensure, in practice, that those conditions are fully respected, it is essential that access of the competent national authorities to retained data should, as a general rule, except in cases of validly established urgency, be subject to a prior review carried out either by a court or by an independent administrative body, and that the decision of that court or body should be made following a reasoned request by those authorities submitted, inter alia, within the framework of procedures for the prevention, detection or prosecution of crime (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 62; see also, by analogy, in relation to Article 8 of the ECHR, ECtHR, 12 January 2016, Szabó and Vissy v. Hungary, CE:ECHR:2016:0112JUD003713814, §§ 77 and 80).121Likewise, the competent national authorities to whom access to the retained data has been granted must notify the persons affected, under the applicable national procedures, as soon as that notification is no longer liable to jeopardise the investigations being undertaken by those authorities. That notification is, in fact, necessary to enable the persons affected to exercise, inter alia, their right to a legal remedy, expressly provided for in Article 15(2) of Directive 2002/58, read together with Article 22 of Directive 95/46, where their rights have been infringed (see, by analogy, judgments of 7 May 2009, Rijkeboer, C‑553/07, EU:C:2009:293, paragraph 52, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 95).122With respect to the rules relating to the security and protection of data retained by providers of electronic communications services, it must be noted that Article 15(1) of Directive 2002/58 does not allow Member States to derogate from Article 4(1) and Article 4(1a) of that directive. Those provisions require those providers to take appropriate technical and organisational measures to ensure the effective protection of retained data against risks of misuse and against any unlawful access to that data. Given the quantity of retained data, the sensitivity of that data and the risk of unlawful access to it, the providers of electronic communications services must, in order to ensure the full integrity and confidentiality of that data, guarantee a particularly high level of protection and security by means of appropriate technical and organisational measures. In particular, the national legislation must make provision for the data to be retained within the European Union and for the irreversible destruction of the data at the end of the data retention period (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 66 to 68).123In any event, the Member States must ensure review, by an independent authority, of compliance with the level of protection guaranteed by EU law with respect to the protection of individuals in relation to the processing of personal data, that control being expressly required by Article 8(3) of the Charter and constituting, in accordance with the Court’s settled case-law, an essential element of respect for the protection of individuals in relation to the processing of personal data. If that were not so, persons whose personal data was retained would be deprived of the right, guaranteed in Article 8(1) and (3) of the Charter, to lodge with the national supervisory authorities a claim seeking the protection of their data (see, to that effect, the Digital Rights judgment, paragraph 68, and the judgment of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraphs 41 and 58).124It is the task of the referring courts to determine whether and to what extent the national legislation at issue in the main proceedings satisfies the requirements stemming from Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, as set out in paragraphs 115 to 123 of this judgment, with respect to both the access of the competent national authorities to the retained data and the protection and level of security of that data.125Having regard to all of the foregoing, the answer to the second question in Case C‑203/15 and to the first question in Case C‑698/15 is that Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, must be interpreted as precluding national legislation governing the protection and security of traffic and location data and, in particular, access of the competent national authorities to the retained data, where the objective pursued by that access, in the context of fighting crime, is not restricted solely to fighting serious crime, where access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union. The second question in Case C‑698/15 126By the second question in Case C‑698/15, the Court of Appeal (England & Wales) (Civil Division) seeks in essence to ascertain whether, in the Digital Rights judgment, the Court interpreted Articles 7 and/or 8 of the Charter in such a way as to expand the scope conferred on Article 8 ECHR by the European Court of Human Rights.127As a preliminary point, it should be recalled that, whilst, as Article 6(3) TEU confirms, fundamental rights recognised by the ECHR constitute general principles of EU law, the ECHR does not constitute, as long as the European Union has not acceded to it, a legal instrument which has been formally incorporated into EU law (see, to that effect, judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 45 and the case-law cited).128Accordingly, the interpretation of Directive 2002/58, which is at issue in this case, must be undertaken solely in the light of the fundamental rights guaranteed by the Charter (see, to that effect, judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 46 and the case-law cited).129Further, it must be borne in mind that the explanation on Article 52 of the Charter indicates that paragraph 3 of that article is intended to ensure the necessary consistency between the Charter and the ECHR, ‘without thereby adversely affecting the autonomy of Union law and … that of the Court of Justice of the European Union’ (judgment of 15 February 2016, N., C‑601/15 PPU,EU:C:2016:84, paragraph 47). In particular, as expressly stated in the second sentence of Article 52(3) of the Charter, the first sentence of Article 52(3) does not preclude Union law from providing protection that is more extensive then the ECHR. It should be added, finally, that Article 8 of the Charter concerns a fundamental right which is distinct from that enshrined in Article 7 of the Charter and which has no equivalent in the ECHR.130However, in accordance with the Court’s settled case-law, the justification for making a request for a preliminary ruling is not for advisory opinions to be delivered on general or hypothetical questions, but rather that it is necessary for the effective resolution of a dispute concerning EU law (see, to that effect, judgments of 24 April 2012, Kamberaj, C‑571/10, EU:C:2012:233, paragraph 41; of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraph 42, and of 27 February 2014, Pohotovosť, C‑470/12, EU:C:2014:101 paragraph 29).131In this case, in view of the considerations set out, in particular, in paragraphs 128 and 129 of the present judgment, the question whether the protection conferred by Articles 7 and 8 of the Charter is wider than that guaranteed in Article 8 of the ECHR is not such as to affect the interpretation of Directive 2002/58, read in the light of the Charter, which is the matter in dispute in the proceedings in Case C‑698/15.132Accordingly, it does not appear that an answer to the second question in Case C‑698/15 can provide any interpretation of points of EU law that is required for the resolution, in the light of that law, of that dispute.133It follows that the second question in Case C‑698/15 is inadmissible. Costs 134Since these proceedings are, for the parties to the main proceedings, a step in the actions pending before the national courts, the decision on costs is a matter for those courts. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. Article 15(1) of Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter of Fundamental Rights of the European Union, must be interpreted as precluding national legislation which, for the purpose of fighting crime, provides for general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication. 2. Article 15(1) of Directive 2002/58, as amended by Directive 2009/136, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter of Fundamental Rights, must be interpreted as precluding national legislation governing the protection and security of traffic and location data and, in particular, access of the competent national authorities to the retained data, where the objective pursued by that access, in the context of fighting crime, is not restricted solely to fighting serious crime, where access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union. 3. The second question referred by the Court of Appeal (England & Wales) (Civil Division) is inadmissible. LenaertsTizzanoSilva de Lapuertavon DanwitzDa Cruz VilaçaJuhászVilarasBorg BarthetMalenovskýLevitsBonichotArabadjievRodinBiltgenLycourgosDelivered in open court in Luxembourg on 21 December 2016.A. Calot EscobarRegistrarK. LenaertsPresident( *1 ) Languages of the case: English and Swedish. | d1981-d1905f5-43df | EN |
Spanish case-law placing a temporal limitation on the effects of the invalidity of ‘floor clauses’ included in mortgage loan contracts in Spain is incompatible with EU law | 21 December 2016 ( *1 )(References for a preliminary ruling — Directive 93/13/EEC — Consumer contracts — Mortgage loans — Unfair terms — Article 4(2) — Article 6(1) — Declaration of nullity — Limitation by the national court of the temporal effects of the declaration of nullity of an unfair term)In Joined Cases C‑154/15, C‑307/15 and C‑308/15,REQUESTS for a preliminary ruling under Article 267 TFEU from the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada, Spain) (C‑154/15), made by decision of 25 March 2015, received at the Court on 1 April 2015, and from the Audiencia Provincial de Alicante (Provincial Court, Alicante, Spain) (C‑307/15 and C‑308/15), made by decisions of 15 June 2015, received at the Court on 1 July 2015, in the proceedings Francisco Gutiérrez Naranjo v Cajasur Banco SAU (C‑154/15), Ana María Palacios Martínez Banco Bilbao Vizcaya Argentaria SA (BBVA) (C‑307/15), Banco Popular Español, SA Emilio Irles López Teresa Torres Andreu (C‑308/15),THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta and M. Ilešič, Presidents of Chambers, J. Malenovský, E. Levits (Rapporteur), J.-C. Bonichot, A. Arabadjiev, C.G. Fernlund, C. Vajda, S. Rodin, F. Biltgen and K. Jürimäe, Judges,Advocate General: P. Mengozzi,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 26 April 2016,after considering the observations submitted on behalf of:–Mr Gutiérrez Naranjo, by A. Navarro Vidal, A. Martínez Muriel, D. Pineda Cuadrado and L. Pineda Salido, abogados,Ms Palacios Martínez, by F.J. Zambudio Nicolas, abogado, and R. López Coloma, procuradora,Banco Popular Español SA, by C. Fernández Vicién, I. Moreno-Tapia Rivas and J. Capell, abogados,Cajasur Banco SAU, by J. Remón Peñalver and D. Sarmiento Ramirez-Escudero, abogados,Banco Bilbao Vizcaya Argentaria SA (BBVA), by J. Rodríguez Cárcamo and A. Rodríguez Conde, abogados,Mr Irles López and Ms Torres Andreu, by Y. Sánchez Orts, procuradora and F. García Cerrillo, abogado,the Spanish Government, by A. Gavela Llopis and M. Sampol Pucurull, acting as Agents,the Czech Government, by S. Šindelková and by M. Smolek and J. Vláčil, acting as Agents,the Polish Government, by B. Majczyna, acting as Agent,the United Kingdom Government, by S. Simmons and L. Christie, acting as Agents, and by S. Ford, Barrister, K. Smith and B. Kennelly, QC,the European Commission, by D. Roussanov, N. Ruiz García and J. Baquero Cruz, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 13 July 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of, in particular, Article 6 and 7 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).2These requests have been made in proceedings between persons having taken out mortgage loans and credit institutions, concerning the right to repayment of amounts paid on the basis of contractual clauses that have been held by a court to be unfair. Legal context EU law 3Recital 10 of Directive 93/13 provides:‘… more effective protection of the consumer can be achieved by adopting uniform rules of law in the matter of unfair terms ...’4Recital 12 of that directive states:‘… Member States should have the option, with due regard for the Treaty, to afford consumers a higher level of protection through national provisions that are more stringent than those of this Directive.’5Under Recital 24 of Directive 93/13:‘… the courts or administrative authorities of the Member States must have at their disposal adequate and effective means of preventing the continued application of unfair terms in consumer contracts.’6According to Article 3(1) of Directive 93/13:‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’7Under the first subparagraph of Article 3(2) of that directive:‘A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.’8Article 4 of that directive reads as follows:‘1. Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.2. Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other, in so far as these terms are in plain intelligible language.’9Article 5 of the directive states:‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. ...’10Article 6(1) of Directive 93/13 provides:‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’11Under Article 7(1) of that Directive:‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’ The relevant provisions of Spanish law Legislation 12Article 1303 of the Código Civil (Civil Code) provides that:‘When an obligation has been declared void, the contracting parties must restore to one another those things that formed the subject-matter of the contract, together with the profits derived therefrom, and the price together with interest, without prejudice to the following articles.’13Article 82(1) of the texto refundido de la Ley General para la Defensa de los Consumidores y Usuarios y otras leyes complementarias (recast text of the General Law for the protection of consumers and users and other supplementary laws), approved by the Real Decreto Legislativo 1/2007 (Royal Legislative Decree 1/2007) of 16 November 2007 (BOE No 287 of 30 November 2007), in the version applicable to the main proceedings (‘the LGDCU’), provides:‘All stipulations not negotiated individually and all practices not expressly allowed that, contravening the requirements of good faith, give rise, in a manner detrimental to the consumer and user, to a significant imbalance of the rights and obligations of the parties under the contract, shall be regarded as unfair terms.’14Article 83 of the LGDCU provides:‘Unfair contractual terms shall automatically be void and deemed not to have formed part of the contract. For those purposes, having heard the parties, the court shall rule that the unfair terms included in the contract are invalid, though the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’15Article 5(5) of Ley 7/1998 sobre Condiciones Generales de la Contratación (Law 7/1998 on General Contractual Conditions) of 13 April 1998 (BOE No 89 of 14 April 1998), in the version applicable to the cases in the main proceedings (‘the LCGC’), provides:‘The drafting of general terms shall comply with the criteria of clarity, accuracy and simplicity.’16Article 7 of the LCGC provides:‘The following general terms shall be deemed not to be included in the contract:(a)those of which the consumer has not had genuine opportunity to take full cognisance before the conclusion of the contract or that have not been signed, where appropriate, as provided in Article 5;(b)terms that are illegible, ambiguous, obscure or incomprehensible, except in the case of the latter, if the contracting party has expressly accepted them in writing and they comply with the specific rules concerning transparency of contractual clauses in that sector.’17Pursuant to Article 8 of the LCGC:‘1. General conditions that infringe the provisions of this Law or any other rule ordering or prohibiting certain conduct, to the detriment of a party to the contract, shall automatically be void, save in so far as they make separate provision for cases of breach.2. In particular, where a contract has been concluded with a consumer, general conditions that are unfair shall be void ...’ The case-law of the Tribunal Supremo (Supreme Court, Spain) – Judgment No 241/2013 of 9 May 2013 18Hearing a collective action for an injunction brought by a consumer association against several credit institutions, the Tribunal Supremo (Supreme Court), in Judgment No 241/2013 of 9 May 2013, after making a finding of unfairness in respect of the clauses establishing a minimum rate below which the variable rate of interest could not fall (‘floor clauses’) contained in the general conditions of mortgage loan agreements concluded with consumers, declared those clauses void.19That court held that those clauses, which related to the definition of the main subject-matter of the contract, were grammatically intelligible for consumers and satisfied, therefore, the requirement under Article 4(2) of Directive 93/13 that they be drafted in plain, intelligible language. Accordingly, there were no grounds for that court to find they were unfair, in accordance with the case-law developed by the Court in the judgment of 3 June 2010, Caja de Ahorros y Monte de Piedad de Madrid, (C‑484/08, EU:C:2010:309).20However, relying inter alia upon the principles laid down by the Court of Justice in its judgment of 21 March 2013, RWE Vertrieb (C‑92/11, EU:C:2013:180), that court held that the requirement of transparency, laid down in Article 4(2) of Directive 93/13, must be construed as involving not only formal but also substantive compliance, that requirement having the same scope as the requirement referred to in Article 5 of that directive, and relating to the adequacy of the information given to consumers at the time the contract is concluded as to the legal and financial consequences for them of the application of the terms relating, in particular, to the main subject-matter of the contract.21However, according to the Tribunal Supremo (Supreme Court), in the case which gave rise to the judgment of 9 May 2013 the requirement of substantive transparency was not satisfied, in that the banking institutions concerned had not provided such information to the consumers when the loan agreements containing the ‘floor clauses’ were concluded. Therefore, the Tribunal Supremo (Supreme Court) assessed whether those clauses were unfair in the light of the general criteria of good faith, balance and transparency set out in Articles 3(1), 4(1) and 5 of Directive 93/13 and declared that those clauses were void because of their lack of transparency due to insufficient information for the borrowers as to the material consequences of their application in practice.22Nevertheless, the Tribunal Supremo (Supreme Court) held that the mortgage loan agreements in question were capable of continuing in existence and, furthermore, limited the retroactive effect of the declaration of nullity in respect of the ‘floor clauses’.23In that regard, after recalling that, in accordance with the Court’s case-law on the invalidity of unfair terms, the clauses in question must be considered to be without effect, the Tribunal Supremo (Supreme Court) indicated that, notwithstanding the general rule as to the retroactive effect of a declaration of invalidity, that effect could not be impervious to the general principles of law, especially the principle of legal certainty.24The Tribunal Supremo (Supreme Court) held that the ‘floor clauses’ were in themselves lawful, that the reasons for them were objective, that they were neither unusual or extravagant, that their use had long been tolerated on the market for credit agreements for immovable property, that their invalidity was based on a lack of transparency due to insufficient information for borrowers, that the banking institutions had complied with the regulatory requirement for information, that the fixing of a minimum interest rate responded to the necessity of maintaining a minimum return on the mortgage loans in question in order to enable the banking institutions to cover the costs of production involved and continue to provide such financing, that the ‘floor clauses’ were calculated in such a way as not to involve significant changes to the initial amounts to be paid, sums which borrowers take into account when deciding their financial behaviour, that the Spanish legislation provides for the replacement of a creditor and that retroactive effect of the invalidity of the clauses at issue would give rise to serious economic repercussions.25Therefore, in the light of those considerations, the Tribunal Supremo (Supreme Court), on the basis of the principle of legal certainty, limited the effects of its judgment to after the date of its publication, deciding that the invalidity of the ‘floor clauses’ in question did not affect situations in which final decisions had been made in judgments with the force of res judicata or payments made before 9 May 2013, so that only the amounts overpaid on the basis of those clauses after that date had to be repaid.– Judgment No 139/2015 of 25 March 2015 26In its judgment of 25 March 2015 (‘the judgment of 25 March 2015’), the Tribunal Supremo (Supreme Court) upheld the limitation of the retroactive effect of the declaration that a ‘floor clause’ was void in an individual action by a consumer who claimed repayment of amounts overpaid on the basis of such a clause. In so doing, that court extended to individual actions for redress the approach previously upheld in the judgment of 9 May 2013 in respect of collective actions for an injunction. Thus, in the case which gave rise to the judgment of 25 March 2015, the obligation to provide restitution was limited to amounts overpaid after the delivery of the judgment of 9 May 2013. The facts of the cases in the main proceedings and the questions referred for a preliminary ruling Case C‑154/15 27Mr Francisco Gutiérrez Naranjo concluded with Cajasur Banco SAU a mortgage loan containing a ‘floor clause’.28Mr Gutiérrez Naranjo brought proceedings before the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada, Spain) for a declaration of nullity in respect of that ‘floor clause’ and for an order for the recovery of amounts overpaid on the basis of that clause, relying upon Directive 93/13 and the case-law of the Tribunal Supremo (Supreme Court).29The referring court is uncertain whether limiting the effects of the declaration of nullity of a contractual term on the basis of unfairness to the period after that declaration alone is compatible with Article 6(1) of Directive 93/13.30Therefore, the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada) decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:‘(1)In such cases, is an interpretation according to which an unfair term declared void nonetheless produces effects until that declaration is made compatible with the interpretation of “non-binding” in Article 6(1) of Directive 93/13/EEC? Therefore, even though the term has been declared void, will the effects produced by that term while it was in force be considered not to be invalidated or ineffective?(2)Is an injunction that may be issued to desist from using a particular term (in accordance with Articles 6(1) and 7(1)) in an individual action brought by a consumer when such a declaration is made compatible with a limitation of the effects of a declaration of nullity? May (the courts) alter the reimbursement of any sums paid by the consumer — which the seller or supplier is obliged to reimburse — under the term subsequently declared void ex tunc, for want of information and/or of transparency?’ Case C‑307/15 31On 28 July 2006, Ms Ana María Palacios Martínez concluded a mortgage loan agreement with Banco Bilbao Vizcaya Argentaria SA (BBVA) which contained a ‘floor clause’.32On 6 March 2014, the borrower brought an action before the Juzgado de lo Mercantil No 1 de Alicante (Commercial Court No 1, Alicante, Spain) in order to have the floor clause declared void on the ground that it is unfair and to obtain reimbursement of the amounts received improperly by the bank.33At first instance, that court found, relying upon the approach adopted by the Tribunal Supremo (Supreme Court) in its judgment of 9 May 2013, that the action had become devoid of purpose, without prejudice to the repayment to the applicant of the amounts which the bank could have recovered under the clause in question from the date on which that judgment was delivered.34On appeal, the Audiencia Provincial de Alicante (Provincial Court, Alicante, Spain) has doubts as to the compatibility of the approach adopted at first instance with Article 6(1) of Directive 93/13.35According to that court, the non-retroactivity of the declaration of nullity in respect of an unfair term would be liable to be inconsistent with both the objectives of that directive and with the prohibition of modification by the courts of terms found to be unfair. Furthermore, that court doubts whether the conditions required by the Court for the effects of the declaration of nullity in respect of an unfair term to be limited in time were satisfied in the case giving rise to the judgment of 9 May 2013.36Therefore, the Audiencia Provincial de Alicante (Provincial Court, Alicante) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:Is it compatible with the principle that unfair terms are not binding, laid down in Article 6(1) of … Directive 93/13 …, for the restitutory effects derived from a declaration on grounds of unfairness of the nullity of a “floor clause” included in a loan agreement not to be applied retroactively from the date of conclusion of the agreement but rather from a later date?Is the criterion that those concerned must act in good faith, which operates as a basis for limiting the retroactive effect derived from an unfair term, an autonomous concept of EU law that must be interpreted uniformly throughout the Member States?(3)If so, what circumstances must be taken into account in order for it to be determined whether those concerned acted in good faith?(4)At all events, is it compatible with the criterion of good faith for the actions of a seller or supplier, in creating the agreement, to have been the cause of a lack of transparency making the term unfair?(5)Is the risk of serious difficulties, which operates as a basis for limitation of the retroactive effect derived from an unfair term, an autonomous concept of EU law that must be interpreted uniformly throughout the Member States?(6)If so, what criteria ought to be taken into account?(7)Must the risk of serious difficulties be assessed by taking account solely of the risk which may arise for the seller or supplier or must account also be taken of the loss caused to a consumer by the failure to reimburse in full the sums paid under that “floor clause”?’ Case C‑308/15 37On 1 June 2001, Mr Emilio Irles López and Ms Teresa Torres Andreu concluded with Banco Popular Español SA (‘BPE’) a mortgage loan contract containing a ‘floor clause’. By amendments on 2 May 2007 and 14 June 2007, the parties agreed two increases to the principal sum lent, each containing a ‘floor clause’.38Taking the view that the way in which their consent was obtained to the ‘floor clauses’ lacked transparency, the borrowers brought proceedings before the Juzgado de lo Mercantil No 3 de Alicante (Commercial Court No 3, Alicante, Spain) for a declaration that those clauses were void and for repayment of the amounts overpaid on the basis of those clauses.39The action was upheld at first instance by that court, which also ordered BPE to repay the borrowers the sums overpaid under those clauses as from the date of conclusion of the loan agreement and the amendments to that agreement.40BPE lodged an appeal before the Audiencia Provincial de Alicante (Provincial Court, Alicante) on the basis of the judgments of 9 May 2013 and of 25 March 2015.41The referring court expresses doubts, on the one hand, as to the compatibility of the limitation of the effects of the declaration of nullity of an unfair contract term with Article 6 of Directive 93/13. On the other hand, according to that court, the fact that the Tribunal Supremo (Supreme Court) has, by its judgment of 25 March 2015, extended to individual actions the approach taken in its judgment of 9 May 2013, in the context of a collective action, could have the effect of restricting the right of individual borrowers to effective judicial protection, in so far as the specific circumstances of each case would not be taken into consideration in order to determine the starting point for the repayment obligation incumbent upon the bank that has benefited from the effects of an unfair term.42Therefore, the Audiencia Provincial de Alicante (Provincial Court, Alicante) decided to stay the proceedings and to refer to the Court, in addition to the same questions referred for preliminary ruling as those in Case C‑307/15, an eighth question which reads as follows:‘(8)Is it compatible with the principle that consumers are not bound by unfair terms, laid down in Article 6(1) of Council Directive 93/13/EEC, and with the right to effective judicial protection affirmed in Article 47 of the Charter of Fundamental Rights of the European Union, for the limitation of the restitutory effects deriving from the nullity of a “floor clause”, declared in proceedings brought by a consumers’ association against financial bodies, to be automatically extended to individual actions for a declaration that a “floor clause” is void because unfair brought by consumer customers who have concluded a mortgage loan with other financial bodies?’43By decision of the President of the Court of 10 July 2015, Cases C‑307/15 and C‑308/15 were joined for the purposes of the written and oral procedure and the judgment.44By order of the President of the Court of 14 August 2015, the requests of the Audiencia Provincial de Alicante (Provincial Court, Alicante) that Cases C‑307/15 and C‑308/15 be determined under the expedited procedure provided for in Article 23a of the Statute of the Court of Justice of the European Union and in Article 105 of the Rules of Procedure of the Court were rejected.45By decision of the President of the Court of 21 October 2015, Case C‑154/15 was joined with Cases C‑307/15 and C‑308/15 for the purposes of the oral procedure and of the judgment. Consideration of the questions referred The first and second questions in Case C‑154/15 and the first questions in Cases C‑307/15 and C‑308/15 46By the two questions in Case C‑154/15 and by the first questions in Cases C‑307/15 and C‑308/15, which may appropriately be examined together, the referring courts ask, in essence, whether Article 6(1) of Directive 93/13 must be interpreted as precluding national case-law that temporally limits the restitutory effects of the judicial declaration of unfairness, in accordance with Article 3(1) of that directive, of a clause in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under that clause after the judicial decision in which a finding of unfairness was made.47In the first place, it is necessary to examine the argument of the Spanish Government, Cajasur Banco and BPE that the question of the effects of the finding of unfairness in respect of a clause, of the same kind as those at issue in the main proceedings, does not fall within the scope of Directive 93/13, given that in making such a finding, the Tribunal Supremo (Supreme Court) afforded a higher level of consumer protection than that guaranteed by that directive.48In that regard, it is clear from the decisions to refer that, in its judgment of 9 May 2013, the Tribunal Supremo (Supreme Court), in order to justify a determination of the unfairness of the ‘floor clauses’ in question concerning the main subject-matter of the contracts at issue, interpreted the requirement of transparency, referred to in Article 4(2) of the directive, as not being limited to the requirement for formal transparency of contractual clauses in relation to the plain and intelligible nature of their drafting, but as extending to their substantive transparency linked to the adequacy of the information supplied to the consumer concerning the extent, both legal and economic, of the consumer’s contractual commitment.49However, as the Advocate General stated at points 46 to 50 of his Opinion, the review of the substantive transparency of the clauses relating to the main subject-matter of the contract derives from what is laid down in Article 4(2) of Directive 93/13. It provides, in the same words as those appearing in Article 5 of that directive, that contractual clauses must be ‘drafted in plain, intelligible language’.50In that regard, the Court has already held that information, before concluding a contract, on the terms of the contract and the consequences of concluding it is of fundamental importance for a consumer. It is on the basis of that information in particular that the consumer decides whether he wishes to be bound by the terms previously drawn up by the seller or supplier (judgment of 21 March 2013, RWE Vertrieb, C‑92/11, EU:C:2013:180, paragraph 44).51Therefore, the assessment of the unfairness, in accordance with Article 3(1) of Directive 93/13, of a contractual clause relating to the definition of the main subject-matter of a contract, where the consumer did not have, before the conclusion of that contract, the necessary information on the contractual conditions and the consequences of entering into that contract, falls within the scope of that directive in general and of Article 6(1) of that directive, in particular.52Thus, and in so far as the national courts refer to the judgment of 9 May 2013 limiting the restitutory effect of the finding that the ‘floor clauses’ were unfair, it is necessary to examine whether Article 6(1) of Directive 93/13 must be interpreted as authorising such a limitation by a national court.53Under Article 6(1) of Directive 93/13, Member States are to lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier are, as provided for under their national law, not to be binding on the consumer.54That provision must be regarded as a provision of equal standing to that of national rules that have, within the domestic legal system, the character of rules of public policy (see, to that effect, judgment of 30 May 2013, Asbeek Brusse and de Man Garabito, C‑488/11, EU:C:2013:341, paragraph 44).55In addition, this is a mandatory provision that is intended to replace the formal balance established by the contract between the rights and obligations of the parties with an effective balance that re-establishes equality between them (judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 63, and the case-law cited).56Given the nature and significance of the public interest constituted by the protection of consumers, who are in a position of weakness vis-à-vis sellers or suppliers, Directive 93/13, as is apparent from Article 7(1) thereof, read in conjunction with its twenty-fourth recital, obliges the Member States to provide for adequate and effective means ‘to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers’ (judgment of 30 April, Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 78).57To this end, it is for the national court purely and simply to exclude the application of an unfair contractual term in order for it not to produce binding effects with regard to the consumer, without being authorised to revise its content (see, to that effect, judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 65).58In that context, on the one hand, a national court is bound to assess, of its own motion, whether a contractual term falling within the scope of Directive 93/13 is unfair and by so doing to compensate for the imbalance existing between the consumer and the seller or supplier, when it has available to it the legal and factual elements necessary to that end.59The full effectiveness of the protection provided for by the directive requires the national court that has found of its own motion that a term is unfair to be able to establish all the consequences of that finding, without expecting the consumer, who has been fully informed of his rights, to submit a statement requesting that that term be declared invalid (judgment of 30 May 2013, Jőrös, C‑397/11, EU:C:2013:340, paragraph 42).60On the other hand, the national court may not revise the content of unfair terms, lest it contribute to eliminating the dissuasive effect for sellers or suppliers of the straightforward non-application with regard to the consumer of those unfair terms (see, to that effect, judgment of 21 January 2015, Unicaja Banco and Caixabank, C‑482/13, C‑484/13, C‑485/13 et C‑487/13, EU:C:2015:21, paragraph 31 and the case-law cited).61It follows from the foregoing considerations that Article 6(1) of Directive 93/13 must be interpreted as meaning that a contractual term held to be unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer. Therefore, the determination by a court that such a term is unfair must, in principle, have the consequence of restoring the consumer to the legal and factual situation that he would have been in if that term had not existed.62It follows that the obligation for the national court to exclude an unfair contract term imposing the payment of amounts that prove not to be due entails, in principle, a corresponding restitutory effect in respect of those same amounts.63The absence of such restitutory effect would be liable to call into question the dissuasive effect that Article 6(1) of Directive 93/13, read in conjunction with Article 7(1) of that directive, is designed to attach to a finding of unfairness in respect of terms in contracts concluded between consumers and sellers or suppliers.64It is true that Article 6(1) of Directive 93/13 requires the Member States to lay down that unfair terms are not to be binding on the consumer, ‘as provided for under their national law’ (judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 57).65However, the regulation by national law of the protection guaranteed to consumers by Directive 93/13 may not alter the scope and, therefore, the substance of that protection and thus affect the strengthening of the effectiveness of that protection by the adoption of uniform rules of law in respect of unfair terms, which was the intention of the EU legislature, as stated in recital 10 of Directive 93/13.66Consequently, while it is for the Member States, by means of their national legislation, to define the detailed rules under which the unfairness of a contractual clause is established and the actual legal effects of that finding are produced, the fact remains that such a finding must allow the restoration of the legal and factual situation that the consumer would have been in if that unfair term had not existed, by inter alia, creating a right to restitution of advantages wrongly obtained, to the consumer’s detriment, by the seller or supplier on the basis of that unfair term.67In the present case, in its judgment of 9 May 2013, to which the national courts refer, the Tribunal Supremo (Supreme Court) held that the finding that the ‘floor clauses’ in question were unfair affected neither situations in respect of which a judgment with the force of res judicata had been given nor payments made before the date of delivery of that judgment and that, consequently, the consequences stemming from that finding, inter alia the consumer’s right to a restitution, were limited, in the light of the principle of legal certainty, to the amounts overpaid after that date.68In that regard, it is true that the Court has also recognised that consumer protection is not absolute. In particular, it has ruled to the effect that EU law does not require a national court to disapply domestic rules of procedure conferring finality on a decision, even if to do so would make it possible to remedy an infringement of a provision, regardless of its nature, contained in Directive 93/13 (see, to that effect, judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 37). It follows that the Tribunal Supremo (Supreme Court) was entitled to hold, in its judgment of 9 May 2013, that the latter did not affect situations in respect of which a judgment with the force of res judicata had been given.69Likewise, the Court has previously held that in the interests of legal certainty it is compatible with EU law to lay down reasonable time-limits for bringing proceedings (judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 41).70Nevertheless, the application of a procedural rule, such as a reasonable limitation period, is to be distinguished from a temporal limitation of the effects of an interpretation of a rule of EU law (see, to that effect, judgment of 15 April 2010, Barth, C‑542/08, EU:C:2010:193, paragraph 30 and the case-law cited). In that regard, it must be recalled that it is for the Court alone, in the light of the fundamental requirement of a general and uniform application of EU law, to decide upon the temporal limitations to be placed on the interpretation it lays down in respect of such a rule (see, to that effect, judgment of 2 February 1988, Barra and Others, 309/85, EU:C:1988:42, paragraph 13).71So, the provisions of national law to which Article 6(1) of Directive 93/13 refers may not adversely affect the substance of the right that consumers acquire under that provision, as interpreted by the case-law of the Court referred to at paragraphs 54 to 61 of the present judgment, not to be bound by a term deemed to be unfair.72However, the temporal limitation of the legal effects stemming from the declaration of nullity in respect of ‘floor clauses’ made by the Tribunal Supremo (Supreme Court) in its judgment of 9 May 2013 is tantamount to depriving, in general, any consumer having concluded, before that date, a mortgage loan contract containing such a clause of the right to obtain repayment in full of the amounts overpaid by the consumer to the bank on the basis of that clause during the period before 9 May 2013.73It follows that national case-law, such as that following from the judgment of 9 May 2013, concerning the temporal limitation of the legal effects resulting, in accordance with Article 6(1) of Directive 93/13, from the finding that a contractual term is unfair, ensures only limited protection for consumers who have concluded a mortgage loan contract containing a ‘floor clause’ before the date of the judgment in which the finding of unfairness was made. Such protection is, therefore, incomplete and insufficient and does not constitute either an adequate or effective means of preventing the continued use of that type of term, contrary to Article 7(1) of Directive 93/13 (see, to that effect, judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164, paragraph 60).74In those circumstances, the referring courts, being bound for the purposes of the decisions to be given in the main proceedings by the interpretation of EU law given by the Court, must disapply, of their own motion, the temporal limitation which the Tribunal Supremo (Supreme Court) applied in its judgment of 9 May 2013, because that limitation does not appear to be compatible with that law (see, to that effect, judgments of 5 October 2010, Elchinov, C‑173/09, EU:C:2010:581, paragraphs 29 to 32; of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraphs 33 and 34; of 5 July 2016, Ognyanov, C‑614/14, EU:C:2016:514, paragraph 36, and of 8 November 2016, Ognyanov, C‑554/14, EU:C:2016:835, paragraphs 67 to 70).75It follows from all the foregoing considerations that Article 6(1) of Directive 93/13 must be interpreted as precluding national case-law that temporally limits the restitutory effects connected with a finding of unfairness by a court, in accordance with Article 3(1) of that directive, in respect of a clause contained in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under such a clause after the delivery of the decision in which the finding of unfairness is made. The other questions 76In view of the reply to the first and second questions in Case C‑154/15 and to the first questions in Cases C‑307/15 and C‑308/15, it is unnecessary to reply to the other questions referred for a preliminary ruling. Costs 77Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as precluding national case-law that temporally limits the restitutory effects connected with a finding of unfairness by a court, in accordance with Article 3(1) of that directive, in respect of a clause contained in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under such a clause after the delivery of the decision in which the finding of unfairness is made. [Signatures]( *1 ) Language of the case: English. | 28972-ce5fda1-4f94 | EN |
The Court confirms that Ireland must recover the sum of €8 per passenger from airlines benefiting from unlawful State aid | 21 December 2016 ( 1 )‛Appeal — State aid — National tax on air transport– Application of differentiated rates — Lower rate for flights to destinations no more than 300 km from the national airport — Advantage — Selective nature — Assessment where the fiscal measure is likely to constitute a restriction on the freedom to provide services — Recovery — Excise duty’In Joined Cases C‑164/15 P and C‑165/15 P,APPEALS under Article 56 of the Statute of the Court of Justice of the European Union, lodged on 9 April 2015, European Commission, represented by L. Flynn, D. Grespan, T. Maxian Rusche and B. Stromsky, acting as Agents, with an address for service in Luxembourg,appellant,the other parties to the proceedings being: Aer Lingus Ltd, established in Dublin (Ireland), represented by K. Bacon and A. Robertson QC, and by D. Bailey, Barrister, instructed by A. Burnside, Solicitor,applicant at first instance (C‑164/15 P) and intervener at first instance (C‑165/15 P), Ryanair Designated Activity Company, formerly Ryanair Ltd, established in Dublin (Ireland), represented by B. Kennelly QC, I.-G. Metaxas-Maragkidis, dikigoros, and E. Vahida, avocat,applicant at first instance (C‑165/15 P), Ireland, represented by E. Creedon, J. Quaney, and A. Joyce, acting as Agents, and by E. Regan, Senior Counsel, and B. Doherty, Barrister-at-Lawintervener at first instance (C‑164/15 P and C‑165/15 P),THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, M. Vilaras (Rapporteur), J. Malenovský, M. Safjan and D. Šváby, Judges,Advocate General: P. Mengozzi,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 7 April 2016,after hearing the Opinion of the Advocate General at the sitting on 5 July 2016,gives the following Judgment 1By its appeals, the European Commission seeks to have set aside, first, in Case C‑164/15 P, the judgment of the General Court of the European Union of 5 February 2015, Aer Lingus v Commission (T‑473/12, not published, ‘the Aer Lingus judgment’, EU:T:2015:78) and, second, in Case C‑165/15 P, the judgment of the General Court of the European Union of 5 February 2015, Ryanair v Commission (T‑500/12, not published, ‘the Ryanair judgment’, EU:T:2015:73) (together, ‘the judgments under appeal’), by which that court allowed in part the actions brought by Aer Lingus Ltd and Ryanair Designated Activity Company, formerly Ryanair Ltd (‘Ryanair’), respectively, and annulled Article 4 of Commission Decision 2013/199/EU of 25 July 2012 on State aid Case SA.29064 (11/C, ex 11/NN) — Differentiated air travel rates implemented by Ireland (OJ 2013 L 119, p. 30) (‘the decision at issue’), in so far as that article ordered that the aid be recovered from the beneficiaries in an amount which was set at EUR 8 per passenger in recital 70 of that decision.2By their cross-appeals, Aer Lingus and Ryanair also seek, respectively, the setting aside of the Aer Lingus judgment and the Ryanair judgment. Legal context Regulation (EC) No 659/1999 3Article 14 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of [Article 108 TFEU] (OJ 1999 L 83, p.1), entitled ‘Recovery of aid’, is worded as follows:‘1. Where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary (hereinafter referred to as a “recovery decision”). The Commission shall not require recovery of the aid if this would be contrary to a general principle of [EU] law.2. The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery.3. Without prejudice to any order of the Court of Justice [of the European Union] pursuant to Article [278 TFEU], recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to [EU] law.’ Regulation (EC) No 1008/2008 4Article 15(1) of Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the [European Union] (OJ 2008 L 293, p. 3) provides as follows:‘[EU] air carriers shall be entitled to operate intra-Community air services.’5Article 23 of Regulation No 1008/2008, headed ‘Information and non-discrimination’, provides in paragraph 1 thereof as follows:‘Air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. In addition to the indication of the final price, at least the following shall be specified:(a)air fare or air rate;(b)taxes;(c)airport charges; and(d)other charges, surcharges or fees, such as those related to security or fuel;where the items listed under (b), (c) and (d) have been added to the air fare or air rate. Optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the customer shall be on an “opt-in” basis.’ Directive 2010/104/EU 6Recitals 3 and 4 of Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (OJ 2014 L 349, p. 1) are worded as follows:‘(3)… The full effectiveness of Articles 101 and 102 TFEU, and in particular the practical effect of the prohibitions laid down therein, requires that anyone — be they an individual, including consumers and undertakings, or a public authority — can claim compensation before national courts for the harm caused to them by an infringement of those provisions. …(4)The right in Union law to compensation for harm resulting from infringements of Union and national competition law requires each Member State to have procedural rules ensuring the effective exercise of that right. …’7Article 13 of Directive 2014/104, headed ‘Passing-on defence’, provides as follows:‘Member States shall ensure that the defendant in an action for damages can invoke as a defence against a claim for damages the fact that the claimant passed on the whole or part of the overcharge resulting from the infringement of competition law. The burden of proving that the overcharge was passed on shall be on the defendant, who may reasonably require disclosure from the claimant or from third parties.’ Background to the dispute 8The background to the dispute, as set out in paragraphs 1 to 13 of the judgments under appeal, may be summarised as follows.9As of 30 March 2009, Ireland introduced an excise duty, known as the air travel tax (‘ATT’), payable by every passenger embarking on an aircraft departing from an airport situated in Ireland, with a few exceptions that are irrelevant to the present proceedings, and collected directly from the airline operators. The airline operators were accountable for ATT and liable to pay it, although they were free to pass the tax on to passengers by including it in the ticket price.10At the time of its introduction, ATT was calculated on the basis of the distance between the departure and the arrival airports and imposed two separate rates on airline operators, namely EUR 2 per passenger in the case of a flight to an airport located no more than 300 km from Dublin airport (‘the lower rate of ATT’) and EUR 10 per passenger in all other cases (‘the higher rate of ATT’).11On 21 July 2009, Ryanair lodged two separate complaints with the Commission regarding ATT, one alleging a breach of the State aid rules and the other based on Article 56 TFEU and on Regulation No 1008/2008. In response to the second complaint, the Commission launched an investigation regarding possible infringement of the provisions on freedom to provide services and, on 18 March 2010, sent the Irish authorities a letter of formal notice. Ireland then amended, as of 1 March 2011, the rules on calculating ATT and introduced a single rate of EUR 3 per passenger, applicable to all flights regardless of the distance travelled. The Commission then concluded its investigation.12In response to Ryanair’s first complaint, on 13 July 2011 the Commission opened a formal investigation procedure, pursuant to Article 108(2) TFEU, in respect of the lower rate of ATT. The Commission adopted the decision at issue at the conclusion of that procedure.13Article 1 of that decision found that the State aid in the form of a lower air travel tax rate applicable to all flights operated by aircraft capable of carrying more than 20 passengers and not used for State or military purposes, departing from an airport handling more than 10000 passengers per year to a destination located no more than 300 km from Dublin airport between 30 March 2009 and 1 March 2011, unlawfully put into effect by Ireland in breach of Article 108(3) TFEU, was incompatible with the internal market.14Article 4(1) of the decision at issue required Ireland to recover the unlawful aid. Recital 70 of that decision stated that the amount of aid to be recovered was the difference between the lower rate of ATT and the higher rate, namely EUR 8 per passenger carried. That recital also identified Aer Lingus and Ryanair among the aid beneficiaries. The proceedings before the General Court and the judgments under appeal 15By applications lodged with the Registry of the General Court on 1 November 2012 (Case T‑473/12) and 15 November 2012 (Case T‑500/12), respectively, both Aer Lingus and Ryanair brought actions for the annulment of the decision at issue.16In Case T‑473/12, Aer Lingus relied, in support of its action, on five pleas in law, alleging: (i) that the Commission erred in law in so far as, in the decision at issue, it classified the lower rate of ATT as ‘State aid’; (ii) breach of the principles of legal certainty, effectiveness and sound administration, due to the fact that the decision at issue ordered that the aid be recovered; (iii) an error of law and a manifest error of assessment on the part of the Commission, as it failed to take account of the fact that ATT was passed on to passengers in classifying the measure as aid and quantifying the advantage; (iv) breach of Article 14 of Regulation No 659/1999 and of the principles of proportionality and equal treatment, as a result of the order for recovery in the decision at issue; and (v) breach of the duty to state reasons.17In Case T‑500/12, Ryanair relied on five pleas in law in support of its action, alleging: (i) an error in law vitiating the Commission’s decision that the higher rate of ATT was the ‘normal’ or ‘legitimate standard’ rate; (ii) an error in law and manifest errors of assessment on the part of the Commission when evaluating the advantage granted by ATT; (iii) an error in law and manifest errors of assessment on the part of the Commission in relation to the recovery decision; (iv) failure to give notice of the Commission’s recovery decision; and (v) that the statement of reasons for the decision at issue was inadequate.18In the judgments under appeal, the General Court, first, examined and rejected the fifth pleas in both applications, alleging breach of the duty to state reasons. Neither the appeal nor the cross-appeal are concerned with those aspects of the judgments under appeal.19Second, with regard in particular to the action brought by Ryanair, the General Court examined and rejected, in paragraphs 42 to 56 of the Ryanair judgment, that company’s fourth plea in law. Neither the Commission’s appeal in Case C‑165/15 P nor Ryanair’s cross-appeal in that case is concerned with that aspect of that judgment.20Third, the General Court examined and rejected the first pleas in law in the actions brought by Aer Lingus and Ryanair. In essence, that court concluded that the Commission had not erred in law in classifying the higher rate of ATT as the ‘reference rate’ for the purpose of establishing whether there was a selective advantage and in concluding that the application of differentiated rates in the present cases constituted State aid benefiting the airlines whose flights were subject to the lower rate of ATT during the relevant period.21Fourth, the General Court examined in detail Aer Lingus’ third and fourth pleas and Ryanair’s second and third pleas and upheld them in part.22In carrying out that examination, the General Court concluded that the Commission had committed ‘an error of assessment and an error of law’ in so far as it set the amount of aid to be recovered from the beneficiaries, including Aer Lingus and Ryanair, at EUR 8 for each passenger having taken flights benefiting from the lower rate of ATT, namely the difference between that rate and the higher rate. According to the General Court, as it was possible for the economic advantage obtained from the application of the lower rate of ATT to be passed on, be it only in part, to passengers, the Commission was not justified in taking the view that the advantage enjoyed by the airlines concerned was automatically, in all cases, EUR 8 per passenger.23In paragraph 124 of the Aer Lingus judgment, the General Court therefore concluded that, ‘without it being necessary to rule on any infringement of the principles of proportionality and of equal treatment invoked’ by Aer Lingus, the third and fourth pleas in its application had to be upheld.24Similarly, in paragraph 150 of the Ryanair judgment, the General Court considered that it was necessary to uphold Ryanair’s second and third pleas in law ‘without it being necessary to examine the second part of the third plea in law and the additional arguments raised’ by Aer Lingus, intervener in that case in support of Ryanair.25Accordingly, in paragraph 1 of the operative part of the judgments under appeal, the General Court annulled Article 4 of the decision at issue ‘in so far as it orders the recovery of the aid from the beneficiaries for an amount which is set at EUR 8 per passenger in recital 70 of that decision’. In paragraph 2 of the operative part of those judgments, the General Court dismissed the actions as to the remainder. Forms of order sought by the parties before the Court of Justice 26The Commission claims that the Court should:—set aside paragraph 1 of the operative part of the judgments under appeal;dismiss the actions before the General Court in their entirety or, in the alternative, refer the cases back to the General Court;dismiss the cross-appeals; andorder the applicants at first instance to pay the costs or, in the alternative, reserve the costs of the two sets of proceedings.27Aer Lingus and Ryanair contend that the Court should:set aside paragraph 2 of the operative part of the judgments under appeal;annul the contested decision;dismiss the appeals; andorder the Commission to pay the costs.28Ireland claims that the Court should:grant the Commission’s appeals and dismiss the actions before the General Court; anddismiss the cross-appeals. The requests seeking the reopening of the oral part of the procedure 29By letter lodged at the Court Registry on 19 July 2016, Aer Lingus requested the Court to order that the oral procedure be reopened, pursuant to Article 83 of the Court’s Rules of Procedure. In support of its request, Aer Lingus claims that it is necessary to define its position on the Advocate General’s Opinion, in particular the arguments set out and the case-law cited in points 79, 80, 83 and 88 to 89 of the Opinion. Aer Lingus is also of the view that it should be given the opportunity to submit its observations on the pleas and arguments that were not considered before the General Court, in the event that the Court of Justice should set aside the Aer Lingus judgment and consider that the state of the proceedings permits it to give final judgment.30By letter lodged at the Court Registry on 18 August 2016, Ryanair indicated that it supported Aer Lingus’ request that the oral procedure be reopened and also submitted a request that the oral procedure be reopened, essentially on the same grounds as those put forward by Aer Lingus.31It must be borne in mind that the Statute of the Court of Justice of the European Union and the Rules of Procedure of the Court make no provision for parties to submit observations in response to the Advocate General’s Opinion (judgment of 4 September 2014, Vnuk, C‑162/13, EU:C:2014:2146, paragraph 30 and the case-law cited).32Under the second paragraph of Article 252 TFEU, it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice, require the Advocate General’s involvement. The Court is not bound either by the conclusion reached by the Advocate General or by the reasoning which led to that conclusion. As a consequence, the fact that a party disagrees with the Advocate General’s Opinion, irrespective of the questions examined in the Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraphs 27 and 28 and the case-law cited).33However, the Court may, under Article 83 of its Rules of Procedure, at any time, after hearing the Advocate General, order the opening or reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where, after the close of that part of the procedure, a party has submitted a new fact which is of such a nature as to be a decisive factor for the decision of the Court.34That is not the position in the present cases. The Court, after hearing the Advocate General, considers that it has all the information necessary to give a ruling and that the case does not have to be examined in the light of a new fact which is of such a nature as to be a decisive factor for its decision or of an argument which has not been debated before it.35With regard, in particular, to the requests made by Aer Lingus and Ryanair to submit their observations on the pleas and arguments that were not examined by the General Court, in the event that this Court should set aside the judgments under appeal and consider that the state of the proceedings permits it to give final judgment, it follows from a reading of Article 168(1)(d), in conjunction with Article 173(1)(c) and Article 170(1) of the Court’s Rules of Procedure, that the parties to an appeal are invited, in their appeal and in their reply, to submit any relevant plea in law or argument, in particular in the event that the Court, pursuant to the first paragraph of Article 61 of the Statute of the Court of Justice, decides to dispose of the case where the appeal is upheld. Accordingly, the parties have been given the opportunity, during both the written and the oral procedure, to submit their observations on all aspects of the case which they consider relevant. Therefore, the claim made by Aer Lingus and Ryanair that it is necessary to submit observations on the pleas in law and arguments that were not examined by the General Court cannot justify the reopening of the oral procedure.36In the light of the foregoing, the Court considers that there is no need to reopen the oral part of the procedure. The cross-appeals 37In support of their respective cross-appeals, which must be examined first as they dispute the very existence of State aid in the present cases, Aer Lingus and Ryanair both put forward a single ground of appeal, alleging that the General Court erred in law in rejecting the first pleas in their respective actions for annulment, by which they disputed the classification of the lower rate of ATT as State aid.38Each of those grounds of appeal may be divided into four parts, by which Aer Lingus and Ryanair dispute the legality of the Commission’s decision, endorsed by the General Court, to take the higher rate of ATT, namely EUR 10 per passenger, as the ‘normal’ or reference rate in its assessment of the selective nature of the advantage deriving from the fact that certain flights were taxed at the lower rate of EUR 2 per passenger. Preliminary observations 39It should be recalled that, according to Article 107(1) TFEU, save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the internal market.40According to settled case-law, the definition of ‘aid’ is more general than that of a ‘subsidy’, because it includes not only positive benefits, such as subsidies themselves, but also State measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect (judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 71 and the case-law cited).41Consequently, a measure whereby public authorities grant certain undertakings favourable tax treatment which, although not involving the transfer of State resources, places the recipients in a more favourable financial position than other taxpayers amounts to State aid within the meaning of Article 107(1) TFEU. On the other hand, advantages resulting from a general measure applicable without distinction to all economic operators, which is not therefore selective, do not constitute State aid within the meaning of Article 107 TFEU (judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 72 and 73 and the case-law cited).42In the present cases, it is apparent from paragraphs 54 and 55 of the Aer Lingus judgment and paragraphs 79 and 80 of the Ryanair judgment that the Commission took the view, in the decision at issue, that in order to establish whether ATT was selective, it had to identify a ‘reference’ system and to determine whether that measure constituted a derogation from that system. Having established that the lower rate of ATT applied, essentially, only to domestic destinations and only to approximately 10% to 15% of all flights subject to ATT, the Commission concluded that the higher rate of ATT had to be considered the normal rate of the reference system, while the lower rate constituted an exception.43With regard to those considerations, before the General Court Aer Lingus and Ryanair merely criticised the use of the higher rate as the reference rate for the purpose of determining whether ATT was selective.44After examining and rejecting the arguments put forward in that regard by Aer Lingus and Ryanair, the General Court concluded, in paragraphs 76 and 90, respectively, of the Aer Lingus and Ryanair judgments, that the Commission did not err in law by characterising the higher rate of ATT as the ‘reference rate’ and, as a consequence, considering that the application of the different rates constituted State aid, within the meaning of Article 107(1) TFEU, in favour of airlines whose flights were subject to the lower rate of ATT during the period covered by the decision at issue.45It is that finding by the General Court which, according to Aer Lingus and Ryanair, is vitiated by an error of law on the grounds put forward in the various parts of their respective single grounds of appeal.46That is the context in which the Court is required to analyse the various parts of the single grounds of appeal of Ryanair and Aer Lingus, which seek to show that the General Court’s reasoning is vitiated by an error of law, in that it endorsed the use of the higher rate of ATT as the reference rate and did not take into account the possibility that operators subject to the higher rate might be reimbursed in respect of part of that tax. The first part of Ryanair’s single ground of appeal will be examined first, followed by the fourth part of that ground and, lastly, together, all the parts of Aer Lingus’ single ground of appeal and the second and third parts of Ryanair’s single ground of appeal. The first part of Ryanair’s single ground of appeal Arguments of the parties47Ryanair takes issue with the General Court’s rejection, in paragraphs 74 to 76 of the Ryanair judgment, of its argument that, for the purpose of determining whether ATT at the reduced rate constituted State aid, the appropriate reference rate was EUR 3, which was adopted by the Irish authorities in March 2011. According to Ryanair, the fact that the EUR 3 rate was not applied during the period covered by the decision at issue does not preclude its adoption as the reference rate. The EUR 10 rate never existed independently of the lower rate and the two rates were introduced and abolished at the same time. As a consequence, Ryanair submits that there was never a ‘normal’ or ‘reference’ rate in the present cases.48The Commission and the Irish Government maintain, as their principal argument, that the first part of the single ground of appeal under consideration is ineffective, as Ryanair simply takes issue with paragraph 74 of the Ryanair judgment and does not criticise the reasoning elaborated by the General Court in paragraphs 75 and 76 of that judgment, which are sufficient in themselves to justify the dismissal of Ryanair’s argument before the General Court. In the alternative, the Commission and the Irish Government contend that Ryanair’s arguments are unfounded.Findings of the Court49Contrary to what the Commission and the Irish Government claim, the first part of Ryanair’s single ground of appeal is not ineffective. Ryanair stated, in its appeal, that that part concerns not only paragraph 74 but also paragraphs 75 and 76 of the Ryanair judgment. Moreover, those three paragraphs develop, essentially, one and the same line of reasoning, based on the fact that, during the period covered by the decision at issue, the EUR 3 rate did not apply and could not therefore be used as the reference rate.50However, as regards the substance, Ryanair’s arguments cannot succeed.51It is the Court’s established case-law that, when appraising the requirement of selectivity, Article 107(1) TFEU requires assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation (judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 75 and the case-law cited).52As the Advocate General observed, in essence, in point 41 of his Opinion, that assessment cannot be carried out by comparing the amount which the airlines subject to the lower rate of ATT were required to pay with a hypothetical tax amount, calculated on the basis or a rate which, as Ryanair itself accepts, did not apply to any flight or any airline during the period covered by the decision at issue. Thus, the General Court was correct to state, in paragraph 75 of the Ryanair judgment, that fixing a reference rate other than that actually applied during the period in question would not allow all the effects of ATT to be fully apprehended.53It follows that paragraphs 74 to 76 of the Ryanair judgment are not vitiated by the error of law alleged by Ryanair and that the first part of its single ground of appeal must be rejected. The fourth part of Ryanair’s single ground of appeal 54By the fourth part of its single ground of appeal, Ryanair submits that, contrary to the view taken by the General Court in paragraph 89 of the Ryanair judgment, the fact that both rates of ATT were introduced at the same time was relevant for the purpose of determining whether the lower rate of ATT constituted ‘State aid’. The simultaneous introduction of the two rates is not a question of a ‘technique of intervention’, as suggested by the General Court. Indeed, Ireland could not have envisaged a single rate of EUR 10 per passenger and it is for that reason that it subsequently chose to replace the two rates of ATT by a single rate of EUR 3 per passenger. Ryanair adds that the fact that the lower rate of ATT was applied less frequently is not sufficient for it to be possible to rule out the use of that rate as the reference rate, the frequency of taxable events subject to a given rate of tax being but one factor among others to be taken into consideration.55The Commission maintains that the fourth part of the single ground of appeal is unfounded, while the Irish Government submits that it is inadmissible because it is not sufficiently developed and, in the alternative, that it is unfounded.56Contrary to what is submitted by the Irish Government, Ryanair has set out to the requisite legal standard the reasons why it considers that paragraph 89 of the Ryanair judgment is vitiated by an error of law.57The fact nonetheless remains that those reasons are not such as to call into question the grounds of the General Court’s rejection of Ryanair’s argument, so that this part of Ryanair’s single ground of appeal must also be discounted.58As the General Court observed, in essence, in paragraph 89 of the Ryanair judgment, if the Court were to find that the lower rate of ATT did not procure a selective advantage for the undertakings liable to pay that rate on the sole ground that that rate was introduced at the same time as the rate of EUR 10 per passenger, that would be tantamount to a finding that the decision whether a State intervention measure constituted State aid depended on the technique used. As is apparent from the Court’s established case-law, Article 107(1) TFEU does not draw a distinction between measures of State intervention on the basis of the techniques used by the national authorities (see, to that effect, judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 87 and the case-law cited).59Accordingly, the fourth part of Ryanair’s single ground of appeal must also be rejected. The single ground of appeal of Aer Lingus and the second and third parts of Ryanair’s single ground of appeal 60Aer Lingus’ single ground of appeal may be divided into four parts. In the first part, Aer Lingus submits that, if paragraph 43 of the Aer Lingus judgment is to be interpreted as meaning that the examination of whether a particular measure constitutes State aid should always disregard the fact that the measure may be at odds with the provisions of EU law other than Articles 107 and 108 TFEU, then it is vitiated by an error of law. According to Aer Lingus, the pertinence of that question was recognised by the Court in paragraphs 31 and 32 of its judgment of 27 March 1980, Denkavit italiana (61/79, EU:C:1980:100), and paragraphs 14 to 16 of its judgment of 10 July 1980, Ariete (811/79, EU:C:1980:195). Moreover, it is apparent from paragraphs 23 and 24 of the judgment of 27 September 1988, Asteris and Others (106/87 to 120/87, EU:C:1988:457), and paragraph 60 of the judgment of 1 July 2010, ThyssenKrupp Acciai Speciali Terni v Commission (T‑62/08, EU:T:2010:268) that a payment made by the State as compensation for damage caused by it does not constitute State aid.61In that context, Aer Lingus recalls that it argued before the General Court that the levying of ATT at the rate of EUR 10 per passenger was unlawful, as it was contrary to Article 56 TFEU and Regulation No 1008/2008, and that ATT collected at that rate was liable to be repaid to the companies concerned. The fact that ATT at that rate was unlawful means that the lower rate of ATT cannot be characterised as State aid.62By the second part of its single ground of appeal, Aer Lingus submits that the General Court erred in law by concluding, in paragraph 63 of the Aer Lingus judgment, that the Commission was entitled to classify the rate of EUR 10 per passenger as the ‘normal’ rate of taxation, even though it was unlawful. Paragraph 58 of that judgment, according to which Aer Lingus’ argument was based on an erroneous premiss, is contradictory and vitiated by an error, as the Commission simply found in the decision at issue that it was the existence of different rates of ATT which constituted a restriction on freedom to provide services, not the higher rate per se.63In the third part of its single plea in law, Aer Lingus takes issue with paragraph 60 of the Aer Lingus judgment, which asserts that, as it would be possible to remedy tax discrimination, such as that arising from the existence of two different rates of ATT, by raising the lower rate to the level of the higher rate or, conversely, by reducing the higher rate to the level of the lower rate, or by introducing a new single rate, it is incorrect to claim that the higher rate of ATT is unlawful. According to Aer Lingus, that paragraph confuses the question of the action that the Member State must take to bring the discrimination to an end in the future with the question of the action that the Member State must take to remedy the ‘historic’ unlawfulness of the discriminatory tax rates.64Lastly, in the fourth part of its single plea in law, Aer Lingus takes issue with paragraph 61 of the Aer Lingus judgment, which states that ‘a right to reimbursement [of ATT paid at the rate of EUR 10 per passenger], even if it were proved, would not be automatic and would depend on a number of factors such as the applicable limitation periods for bringing such an action in national law, and the observance of general principles such as the absence of unjust enrichment’. Aer Lingus claims that the inherent unlawfulness of the higher rate of ATT or the differentiated rates, and the fact that Ireland was in principle liable to repay to the companies that had paid ATT at the higher rate the difference between that rate and the lower rate meant that the higher rate could not be described as the ‘normal’ tax rate.65By the second part of its single ground of appeal, Ryanair argues that the ATT rate of EUR 10 per passenger cannot constitute the ‘reference’ rate for the purpose of determining whether the lower rate of ATT may be characterised as State aid because, by analogy with the Court’s finding in its judgment of 6 February 2003, Stylianakis (C‑92/01, EU:C:2003:72), the rate of EUR 10 per passenger was at odds with Article 56 TFEU and Regulation No 1008/2008. To take the higher rate as the reference rate would undermine the consistency of EU law.66In the third part of its single ground of appeal, Ryanair submits that the General Court was incorrect to refer, in paragraph 88 of the Ryanair judgment, to ‘hypothetical reimbursement claims’ of ATT paid at the higher rate. In its view, the imposition of ATT at that rate was contrary to EU law and the excess tax charged should be repaid to the undertakings concerned.67The Commission and the Irish Government contest the arguments put forward by Aer Lingus and Ryanair and contend that they should be rejected as unfounded.68As regards, first, the first part of Aer Lingus’ single ground of appeal, it should be noted that the only decisive factor for determining whether a tax measure is to be classified as State aid and, in particular, for ascertaining whether that measure gives rise to more favourable tax treatment for its beneficiaries by comparison with other taxpayers, is the effects produced by the measure (see, to that effect, judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 87 and the case-law cited).69Accordingly, the fact that a tax measure is contrary to provisions of EU law other than Articles 107 and 108 TFEU does not mean that the exemption from that measure enjoyed by certain taxpayers cannot be classified as State aid, as long as the measure in question produces effects vis-à-vis other taxpayers and has not been either repealed or declared unlawful and, therefore, inapplicable (see, to that effect, judgment of 30 March 2005, Heiser, C‑172/03, EU:C:2005:130, paragraph 38).70That is, in essence, what the General Court stated in paragraph 43 of the Aer Lingus judgment and in paragraph 65 of the Ryanair judgment. Accordingly, contrary to what is claimed by Aer Lingus in the first part of its single ground of appeal, paragraph 43 of the Aer Lingus judgment is not vitiated by any error of law.71That conclusion is not called into question by the case-law relied on by Aer Lingus and cited in paragraph 60 above.72The effect of that case-law is simply that the reimbursement to an undertaking of an amount of tax which it was required to pay in breach of EU law or the damages which national authorities are ordered to pay to undertakings to compensate for the damage they have caused them does not constitute State aid.73The State aid with which the decision at issue is concerned derives neither from the reimbursement of a tax contrary to the provisions of EU law other than Articles 107 and 108 TFEU that was paid by Aer Lingus and Ryanair, nor from the payment of compensation to those two undertakings. That case-law is therefore irrelevant for the purposes of the present cases.74It follows that the first part of the Aer Lingus’ single ground of appeal must be rejected.75Next, the second to fourth parts of Aer Lingus’ single ground of appeal and the second and third parts of Ryanair’s single ground of appeal are based on the premiss that the fact that ATT is totally or partially at odds with provisions of EU law other than Articles 107 and 108 TFEU is likely to have a bearing on whether the total or partial exemption from that tax enjoyed by certain operators may be described as State aid within the meaning of Article 107(1) TFEU, in so far as, in particular, the unlawfulness of that measure could give rise, in proceedings before the national courts, to the repayment of all or part of the tax in question to other operators who were not entitled to the exemption in question.76It is common ground that, when the Commission carried out its assessment and adopted the decision at issue, the tax measure in question was producing its effects, in the sense that certain airlines were paying ATT at the reduced rate, whereas others — which, according to the Commission’s assessment that went unchallenged by Aer Lingus and Ryanair, were in a comparable legal and factual situation in the light of the objectives of the tax measure at issue — were paying the same tax at the higher rate.77It follows from the considerations set out in paragraphs 68 and 69 above that the Commission was obliged to take account of those effects and could not ignore them simply on the basis that the airlines subject to less favourable tax treatment might obtain reimbursement of the excess tax which they had paid by commencing proceedings before the national courts, where appropriate on the basis of provisions of EU law other than Articles 107 and 108 TFEU.78It should be noted that it is not for the Commission but for the national courts to give a definitive decision on any claim for reimbursement of a tax alleged to be unlawful in the light of the law of the Member State concerned or contrary to the provisions of EU law other than Articles 107 and 108 TFEU, if necessary after those court have obtained from the Court of Justice, by way of a reference for a preliminary ruling, such clarification as may be necessary on the scope and interpretation of EU law. The effectiveness of Article 107 TFEU would be substantially diminished if the Commission were required, before classifying a measure as State aid within the meaning of that provision, to wait for the decision of the courts with jurisdiction regarding any reimbursement of excess tax or tax paid by certain taxpayers.79In the light of all the foregoing considerations, the second, third and fourth parts of Aer Lingus’s single ground of appeal and the second and third parts of Ryanair’s single ground of appeal must be rejected and, accordingly, the cross-appeals dismissed in their entirety as unfounded. The main appeals 80In support of each of its appeals, the Commission, on the basis of identical arguments, relies on a single ground of appeal, alleging breach of Article 108(3) TFEU and Article 14 of Regulation No 659/1999. The appeals are directed against paragraphs 88 to 127 of the Aer Lingus judgment and paragraphs 119 to 152 of the Ryanair judgment. Arguments of the parties 81The Commission claims that the General Court erred in law and infringed Article 108(3) TFEU and Article 14 of Regulation No 659/1999 in so far as, by finding that the Commission should have taken account of the extent to which the beneficiary airlines had passed on to passengers the advantage gained from the application of ATT at the lower rate, it created a new economic test for determining the amounts of State aid to be recovered, such as the aid at issue in the present cases.82Aer Lingus disputes the Commission’s arguments, which, it claims, are based on a misreading of the Aer Lingus judgment. It observes that the General Court found that ATT is an excise duty, that is, in other words, an indirect tax levied on passengers, who are the beneficiaries of the lower rate of ATT. The tax measure at issue cannot, therefore, be compared with a State subsidy or a measure enabling undertakings to make cost savings. Aer Lingus adds that it was not allowed to charge passengers on flights subject to the lower rate an amount in excess of that rate and that, if it was required to repay the EUR 8 per ticket demanded by the Commission, it would not be able to recover that sum retroactively from passengers who purchased the relevant ticket at the reduced rate.83Ryanair submits that the Commission’s single ground of appeal is ineffective. It contends that the General Court justified the annulment of Article 4 of the decision at issue on the basis of three distinct grounds, in paragraphs 120 to 133, 134 to 144 and 145 to 149, respectively, of the Ryanair judgment. The Commission’s appeal addresses only the first of those grounds, concerning the extent to which ATT was passed on to passengers, whereas the other two grounds, relating, respectively, to (i) the particular situation and competitive constraints of the market in question and (ii) the lack of any justification for the alleged need to recover the difference between the higher and lower rates of ATT in order to re-establish the status quo ante, are not contested by the Commission.84In the alternative, Ryanair maintains that the Commission’s single ground of appeal is unfounded. In its view, the General Court simply applied the principle that it is necessary to determine the actual value of the advantage gained as a result of the aid. Moreover, the Commission exaggerated the difficulties entailed in establishing a precise amount for that purpose if the solution advocated by the General Court were to be followed. Lastly, Ryanair observes that it would be illogical not to take account of the effect on customers of the advantage obtained by the aid beneficiary, bearing in mind that Article 13 of Directive 2014/104 allows the party responsible for an infringement of the competition rules to avoid payment, in a claim for damages, of the overcharge resulting from the infringement if it was passed on to the claimant’s customers. Findings of the Court 85As a preliminary point, it should be noted that, contrary to what is claimed by Ryanair, the Commission’s single ground of appeal is not ineffective.86According to the Court’s well-established case-law, in an appeal, complaints directed against a ground included in a judgment of the General Court purely for the sake of completeness must be immediately dismissed as ineffective, since they cannot lead to the judgment under appeal being set aside (see, to that effect, judgment of 2 September 2010, Commission v Deutsche Post, C‑399/08 P, EU:C:2010:481, paragraph 75 and the case-law cited).87However, in the present cases, contrary to Ryanair’s assertions, paragraphs 120 to 149 of the Ryanair judgment do not put forward three distinct grounds, each of which would be sufficient in itself to justify the annulment of Article 4 of the decision at issue. Those paragraphs, in the same way as paragraphs 104 to 123 of the Aer Lingus judgment, which are worded in very similar terms, develop different aspects of the General Court’s single line of reasoning justifying its decision — given in paragraph 123 of the Aer Lingus judgment and paragraph 119 of the Ryanair judgment — that the Commission had committed ‘an error of assessment and an error of law’ by setting the amount of aid to be recovered from the airlines at EUR 8 per passenger. Those different aspects of the reasoning are interlinked and Ryanair’s separation of them into three allegedly separate grounds is artificial and fails to have regard to their internal cohesion.88Furthermore, the arguments relied on by the Commission call into question the General Court’s entire line of reasoning, not simply a part of that reasoning, as claimed by Ryanair.89That said, as regards the analysis of the substance of the Commission’s single ground of appeal, it should be noted, first, that the obligation on the Member State concerned to abolish, through recovery, aid considered by the Commission to be incompatible with the single market has as its purpose, according to the Court’s established case-law, to restore the situation as it was before the aid was granted (see, to that effect, judgment of 4 April 1995, Commission v Italy, C‑350/93, EU:C:1995:96, paragraph 21 and the case-law cited).90That objective is attained once the aid in question, together, where appropriate, with default interest, has been repaid by the recipient, or, in other words, by the undertakings which actually enjoyed the benefit of it. By repaying the aid, the recipient forfeits the advantage which it had enjoyed over its competitors on the market, and the situation prior to payment of the aid is restored (judgment of 29 April 2004, Germany v Commission, C‑277/00, EU:C:2004:238, paragraph 75 and the case-law cited).91Second, the recovery of unlawful aid with a view to re-establishing the status quo ante does not imply reconstructing past events differently on the basis of hypothetical elements such as the choices, often numerous, which could have been made by the operators concerned, since the choices actually made with the aid might prove to be irreversible (judgment of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774, paragraph 118).92It follows, as the Advocate General observed, in essence, in point 62 of his Opinion, that recovery of such aid entails the restitution of the advantage procured by the aid for the recipient, not the restitution of any economic benefit the recipient may have enjoyed as a result of exploiting the advantage. That benefit may not be the same as the advantage constituting the aid and there may indeed be no such benefit, but that cannot justify any failure to recover that aid or the recovery of a different sum from that constituting the advantage procured by the unlawful aid in question.93With regard, in particular, to unlawful aid granted in the form of a tax advantage, it is also the Court’s settled case-law that recovery of aid means that the transactions actually carried out by the recipients of the aid in question must be subject to the tax treatment which the recipients would have received in the absence of the unlawful aid (see, to that effect, judgment of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774, paragraph 119).94In the present cases, the tax advantage conferred by ATT consisted, according to the decision at issue, in the application during the period in question of different tax rates, which had the effect of conferring a benefit on airlines in Ireland that had to pay the EUR 2 tax rate by comparison with other airlines that had to pay EUR 10 per passenger during the same period. Aer Lingus and Ryanair have failed to demonstrate that, in so far as it establishes the existence of State aid within the meaning of Article 107(1) TFEU, that decision is vitiated by unlawfulness.95In those circumstances, in the light of the considerations set out in paragraphs 89 to 93 above, it must be concluded that restitution of the advantage procured by the aid measure, as identified by the decision at issue, required the Irish tax authorities to recover from the beneficiaries of the lower rate of ATT the difference between the amount of ATT which, in the absence of unlawful aid, should have been paid in respect of each of the flights in question, namely the amount of ATT at the higher rate, and the amount of ATT actually paid — in other words, the amount calculated on the basis of the lower rate of ATT.96Accordingly, it must be found that, in the present cases, repayment of the aid called for the recovery of a sum of EUR 8 per passenger for each of the flights concerned, as the Commission stated in Article 4 of the decision at issue.97The considerations set out in paragraphs 104 to 123 of the Aer Lingus judgment and paragraphs 120 to 149 of the Ryanair judgment cannot justify, contrary to the view reached by the General Court, any different conclusion.98In so far as, under the applicable Irish legislation, airlines were directly liable for ATT, it is of little consequence, in the circumstances of the present cases, that that tax was classified under Irish law as ‘excise duty’. For the same reason, the question whether, from a technical point of view, ATT is to be classified as a direct or indirect tax is irrelevant.99Equally irrelevant, as regards the question of the recovery of the aid, is the notion of ‘economic passing on’ referred to in paragraph 91 of the Aer Lingus judgment and paragraph 123 of the Ryanair judgment, respectively. The General Court stated in that connection, as regards flights subject to the lower rate of EUR 2 per passenger, that for the purpose of assessing the ‘economic passing on’, it was necessary to determine to what extent the airlines concerned actually retained the economic advantage arising from the application of the lower rate.100As is apparent from paragraphs 92 and 93 above, the recovery of aid entails the restitution of the advantage procured by the aid for the beneficiary, not the restitution of the economic benefit that may have been conferred by the aid as a result of the exploitation of the advantage. There is therefore no need to examine whether and to what extent those airlines actually utilised the economic advantage arising from the application of the lower rate.101The considerations of the General Court set out in paragraphs 92 to 105 of the Aer Lingus judgment and paragraphs 124 to 136 of the Ryanair judgment disclose the same confusion between the advantage obtained as a result of the effect of the lower rate of ATT and the benefit which the aid recipients derived or could have derived from that advantage.102Indeed, contrary to the view expressed by the General Court in paragraph 105 of the Aer Lingus judgment and paragraph 136 of the Ryanair judgment, the advantage, as identified by the Commission in the decision at issue, did not consist in the fact that the airlines subject to the lower rate were able to ‘offer more competitive prices’. It consisted, quite simply, in the fact that those companies had to pay a lower rate of ATT than they would have had to pay if their flights had been subject to the higher rate of ATT. The question whether that advantage enabled them to offer more competitive ticket prices, or whether they exploited that advantage differently, relates to the assessment of any benefit they were able to accrue from the exploitation of the advantage granted; that assessment is irrelevant to the recovery of the aid.103The General Court was also incorrect in stating, in paragraph 110 of the Aer Lingus judgment and paragraph 141 of the Ryanair judgment, respectively, that the circumstances of the cases before it were different from those of the case giving rise to the judgment of 15 December 2005, Unicredito Italiano (C‑148/04, EU:C:2005:774) as the airlines benefiting from the lower rate of ATT ‘could not have opted for an operation other than that which was coupled with the aid’.104As the General Court acknowledged, in essence, in paragraph 111 of the Aer Lingus judgment and paragraph 142 of the Ryanair judgment, there was nothing to prevent those airlines from increasing by EUR 8 the ticket price, excluding tax, of flights subject to the lower rate of ATT. The fact that, pursuant to Article 23(1) of Regulation No 1008/2008, they could add to the ticket price, excluding tax, only EUR 2, corresponding to ATT calculated at the reduced rate, does not lead to any different conclusion, as the amount corresponding to the difference between the two rates of ATT, namely EUR 8, could have been included previously in the price of the ticket, excluding tax.105The considerations set out above are not called into question by Ryanair’s argument based on Article 13 of Directive 2014/104. As is apparent from the Court’s case-law cited in paragraphs 89 and 90 above, the recovery of unlawful aid had a different purpose from that of Directive 2014/104. In particular, that directive, as is made clear in recitals 3 and 4 thereof, seeks to ensure that any person who considers that he has been adversely affected by an infringement of the competition rules laid down in Articles 101 and 102 TFEU may effectively exercise his right to claim compensation for the harm which he believes he has suffered. On the other hand, the purpose of aid recovery is not to seek compensation for individual harm of any kind, but to re-establish, on the market in question, the situation as it was before the aid was granted.106It is apparent from all the foregoing considerations that, by finding, in paragraph 123 of the Aer Lingus judgment and paragraph 119 of the Ryanair judgment, respectively, that the Commission had committed ‘an error of assessment and an error of law’, by setting the amount of aid to be recovered from the beneficiaries of the lower rate of ATT at EUR 8 per passenger in respect of the flights to which that rate applied, the General Court’s decision was vitiated by an error of law.107As a consequence, the Commission’s appeals must be upheld and paragraph 1 of the operative part of the Aer Lingus judgment and of the Ryanair judgment must be set aside. The action before the General Court 108In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice, if the Court quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits. That is so in the present cases.109As the judgments under appeal are to be set aside only in so far as concerns paragraph 1 of their respective operative parts and not in so far as concerns paragraph 2 thereof, the Court is not setting aside the General Court’s rejection of Aer Lingus’ first and fifth pleas in law or the first, fourth and fifth pleas in law put forward by Ryanair. Accordingly, it is necessary to examine only the second to fourth pleas in law relied on by Aer Lingus in its action before the General Court and the second and third pleas relied on by Ryanair. The third and fourth pleas in law relied on by Aer Lingus in its action before the General Court and the first part of the third plea in law relied on by Ryanair before that court 110Aer Lingus and Ryanair maintain, in essence, that the Commission committed an error in law and an error of assessment by setting the amount of aid to be recovered at EUR 8 per passenger in respect of each flight subject to the lower rate of ATT.111Those arguments must be rejected for the reasons set out in paragraphs 85 to 106 above.112Aer Lingus and Ryanair also contend that, as the airlines no longer have the option of recovering the EUR 8 they have to repay from each of the passengers on flights subject to the lower rate of ATT, the obligation to pay that sum, imposed by Article 4 of the decision at issue, is equivalent to the imposition of an additional tax or a penalty, in breach of the principles of proportionality and equal treatment, and fails to have due regard for the Court’s case-law that repayment of aid cannot be regarded as a penalty.113Those arguments must also be rejected.114As the Advocate General observed in point 83 of his Opinion, the recovery of an amount equal to the difference between the tax that would have been payable in the absence of an unlawful aid measure and the lesser amount paid pursuant to that measure does not constitute a new tax imposed retroactively (see, to that effect, judgment of 10 June 1993, Commission v Greece, C‑183/91, EU:C:1999:233, paragraph 17). What is at issue is the recovery of the part of the original tax which was not paid due to the availability of an unlawful exemption. The recovery of such an amount does not constitute a penalty (judgment of 17 June 1999, Belgium v Commission, C‑75/97, EU:C:1999:311, paragraph 65).115Similarly, with regard to the argument that the airlines affected by the recovery requirement are not in a position to recover from their own customers the additional tax which they are required repay, it is sufficient to point out that, as the unlawful aid identified by the Commission in the decision at issue consisted in the application of the lower rate of ATT, that is, a partial exemption from a tax borne not by the customers of those airlines but by those airlines themselves, the recovery of that aid necessarily entails the repayment of the difference between the two rates applicable. As is apparent from paragraphs 99 and 100 above, that is also the case even where the recipients of the aid have derived no benefit from the advantage in question, either because they have passed that advantage on to their customers, or for some other reason.116Lastly, the imposition of the obligation to recover that aid infringes neither the principle of proportionality nor the principle of equal treatment. First, it is the Court’s settled case-law that abolishing unlawful aid by means of recovery is the logical consequence of a finding that it is unlawful. Accordingly, the recovery of such aid, for the purpose of restoring the previously existing situation, cannot in principle be regarded as disproportionate to the objectives of the provisions of the FEU Treaty relating to State aid (judgments of 11 March 2010, CELF and Ministre de la Culture et de la Communication, C‑1/09, EU:C:2010:136, paragraph 54, and of 28 July 2011, Diputación Foral de Vizcaya and Others v Commission, C‑471/09 P to C‑473/09 P, not published, EU:C:2011:521, paragraph 100).117On the other hand, the aid recipients, which are required to repay the aid, are obviously not in the same situation as airlines which did not receive the aid and are not affected by the recovery, so that there can be no question of different treatment of similar situations, in breach of the principle of equal treatment.118It follows from the foregoing considerations that the third and fourth pleas in law relied on by Aer Lingus and the first part of the third plea in law relied on by Ryanair before the General Court must be rejected. The second plea relied on by Aer Lingus and the second part of the third plea relied on by Ryanair before the General Court 119Aer Lingus and Ryanair submit that the airlines subject to the higher rate of ATT are entitled to reimbursement of the excess tax paid, both on the ground that the introduction of two different rates constitutes a breach of freedom to provide services enshrined in Article 56 TFEU and on the basis of the case-law deriving from the judgment of 7 September 2006, Laboratoires Boiron (C‑526/04, EU:C:2006:528). As a consequence, the recovery, from the recipients that enjoyed the benefit of the lower rate of ATT, of the difference between that rate and the higher rate would amount to a breach of Article 14(1) of Regulation No 659/1999 and of the principles of legal certainty, effectiveness and sound administration. Moreover, such recovery would give rise to serious distortion of competition. As a result of such recovery, it is the airlines on which the recovery measure was imposed that would be placed in a disadvantageous position, as they would then have to pay a total sum of EUR 10 per passenger, whereas the other airlines, which were reimbursed EUR 8 out of the EUR 10 per passenger originally paid, would have to pay tax at the rate of only EUR 2 per passenger.120It should be noted in that regard that the nature of the measure concerned by the decision at issue is in no way analogous to that which was the subject of the judgment of 7 September 2006, Laboratoires Boiron (C‑526/04, EU:C:2006:528).121ATT was a tax of general application and, in the decision at issue, the Commission reached the conclusion that the lower rate of ATT was equivalent to a partial exemption which, in itself, constituted an aid measure. In those circumstances, those liable to pay the tax in question cannot claim that the exemption enjoyed by other businesses constitutes State aid in order to avoid payment of that tax or to obtain reimbursement (judgment of 7 September 2006, Laboratoires Boiron, C‑526/04, EU:C:2006:528, paragraphs 30 and 32 and the case-law cited).122That said, it should be observed that, as is apparent from paragraphs 78 and 79 above, in circumstances such as those of the present cases, the Commission cannot refrain from finding that a case involves State aid on the sole ground that it is possible that the national courts with jurisdiction may order the airlines which did not have the benefit of the lower rate of ATT to repay the excess ATT. As it was under a duty to establish the existence of State aid, the Commission was also under a duty to order the recovery of that aid.123In those circumstances, it is for the Member State concerned, in this case Ireland, to ensure, by all appropriate means and in accordance with both domestic and EU legislation, that any national measures which have the effect of reimbursing certain undertakings in respect of a tax does not give rise to new aid incompatible with the FEU Treaty, to the benefit of the undertakings receiving such reimbursement.124It is clear from the foregoing considerations that the second plea relied on by Aer Lingus and the second part of the third plea relied on by Ryanair before the General Court must be rejected. Ryanair’s second plea in law 125In its second plea before the General Court, Ryanair argued that the Commission should have taken account of the proportionate impact of ATT on the various competing undertakings when assessing the advantage conferred by ATT, as, first, a much higher percentage of the flights of certain airlines, in particular Aer Arann, benefited from the reduced rate of ATT and, second, the impact of ATT, calculated at the higher rate, was considerably less on business class and long-haul flights, offered mainly by Aer Lingus.126Aer Lingus, in its capacity as intervener in Case T‑500/12, does not support Ryanair’s claims in so far as concerns Ryanair’s second plea in law and considers that the relative extent of the advantage conferred on the various recipients may be relevant for the purpose of determining the amount of aid to be recovered. However, as the only purpose of intervention is to support, in whole or in part, the claims of one of the parties, Aer Lingus’ argument on this point is inadmissible.127Ryanair’s argument cannot succeed. The fact that certain beneficiaries of an aid measure might derive from the advantage which the aid represents a proportionately greater benefit than that enjoyed by the other beneficiaries of the same measure does not preclude the Commission from either classifying the measure in question as State aid incompatible with the single market or ordering the recovery of the advantage derived from the use of the aid.128It follows that Ryanair’s second plea in law before the General Court is unfounded and must be rejected.129Accordingly, first, as Aer Lingus’ first and fifth pleas before the General Court and the first, fourth and fifth pleas relied on by Ryanair before that court were rejected by the General Court, and the pleas raised by Aer Lingus and Ryanair, in their respective cross-appeals, challenging the grounds of the judgments under appeal supporting the dismissal of their applications have not been successful, paragraph 2 of the operative part of the judgments under appeal is now final and, second, as it is apparent from all the foregoing considerations that the other pleas put forward by Aer Lingus and Ryanair before the General Court seeking the annulment of the decision at issue must also be rejected, their respective actions for annulment must be dismissed in their entirety. Costs 130Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs.131Under Article 138(1) of those rules, applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.132As Aer Lingus and Ryanair have been unsuccessful both in their cross-appeals and in their actions before the General Court and the Commission has applied for costs, they must be ordered to bear their own costs and to pay the costs incurred by the Commission both before the General Court and before the Court of Justice.133In accordance with Article 140(1) of the Court’s Rules of Procedure, applicable to appeal proceedings by virtue of Article 184(1) thereof, Member States which have intervened in the proceedings are to bear their own costs. It follows that Ireland is to bear its own costs.On those grounds, the Court (Third Chamber) hereby: 1. Sets aside the judgments of the General Court of the European Union of 5 February 2015, Aer Lingus v Commission (T‑473/12, not published, EU:T:2015:78), and Ryanair v Commission (T‑500/12, not published, EU:T:2015:73), in so far as they annul Article 4 of Commission Decision 2013/199/EU of 25 July 2012 on State aid Case SA.29064 (11/C, ex 11/NN) — Differentiated air travel rates implemented by Ireland, in so far as that article ordered that the aid be recovered from the beneficiaries in an amount which is set at EUR 8 per passenger in recital 70 of that decision; 2. Dismisses the cross-appeals; 3. Dismisses the actions brought by Aer Lingus Ltd and Ryanair Designated Activity Company for annulment of Decision 2013/199; 4. Orders Aer Lingus Ltd and Ryanair Designated Activity Company to bear their own costs and to pay the costs incurred by the European Commission both before the General Court of the European Union and in the proceedings before the Court of Justice of the European Union; 5. Orders Ireland to bear its own costs. Bay LarsenVilarasMalenovskýSafjanŠvábyDelivered in open court in Luxembourg on 21 December 2016.A. Calot EscobarRegistrarL. Bay LarsenPresident of the Third Chamber( 1 ) Language of the case: English. | dc5d9-8ccb23a-4bfa | EN |
Advocate General Bobek proposes broader access to Court documents | 18 July 2017 ( *1 )Appeal — Access to documents of the institutions — Article 15(3) TFEU — Regulation (EC) No 1049/2001 — Scope — Application for access to written submissions filed by the Republic of Austria in the case in which judgment was given on 29 July 2010, Commission v Austria (C‑189/09, not published, EU:C:2010:455) — Documents in the possession of the European Commission — Protection of court proceedingsIn Case C‑213/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 8 May 2015, European Commission, represented by P. Van Nuffel and H. Krämer, acting as Agents,appellant,supported by: Kingdom of Spain, represented by M.J. García-Valdecasas Dorrego and S. Centeno Huerta, acting as Agents, French Republic, represented by G. de Bergues, D. Colas, R. Coesme and F. Fize, acting as Agents,interveners in the appeal,the other parties to the proceedings being: Patrick Breyer, residing in Wald-Michelbach (Germany), represented by M. Starostik, Rechtsanwalt,applicant at first instance, Republic of Finland, represented by H. Leppo, acting as Agent, Kingdom of Sweden, represented by A. Falk, C. Meyer-Seitz, E. Karlsson and L. Swedenborg, acting as Agents,interveners at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, L. Bay Larsen, T. von Danwitz, E. Juhász, M. Berger, A. Prechal and M. Vilaras, Presidents of Chambers, A. Rosas (Rapporteur), A. Borg Barthet, D. Šváby and E. Jarašiūnas, Judges,Advocate General: M. Bobek,Registrar: T. Millett, Deputy Registrar,having regard to the written procedure and further to the hearing on 26 September 2016,after hearing the Opinion of the Advocate General at the sitting on 21 December 2016,gives the followingJudgment1By its appeal the European Commission seeks to have set aside the judgment of the General Court of the European Union of 27 February 2015, Breyer v Commission (T‑188/12, EU:T:2015:124, ‘the judgment under appeal’), annulling the Commission’s decision of 3 April 2012 to refuse Mr Patrick Breyer full access to the documents relating to the transposition by the Republic of Austria of Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC (OJ 2006 L 105, p. 54) and the documents relating to the case in which judgment was given on 29 July 2010, Commission v Austria (C‑189/09, not published, EU:C:2010:455), in so far as the decision refused access to the written submissions lodged by the Republic of Austria in that case.Legal context2Part Five of the EC Treaty, ‘Institutions of the Community’, included Title I, ‘Provisions governing the institutions’. In Chapter 2, ‘Provisions common to several institutions’, of that title, Article 255(2) EC provided:‘General principles and limits on grounds of public or private interest governing the right of access to [European Parliament, Council and Commission] documents shall be determined by the Council, acting in accordance with the procedure referred to in Article 251 [EC, known as the co-decision procedure,] within two years of the entry into force of the Treaty of Amsterdam.’3Part One of the FEU Treaty, ‘Principles’, includes Title II, ‘Provisions having general application’, comprising Articles 7 to 17 TFEU. The first to fourth subparagraphs of Article 15(3) TFEU provide:‘Any citizen of the Union, and any natural or legal person residing or having its registered office in a Member State, shall have a right of access to documents of the Union’s institutions, bodies, offices and agencies, whatever their medium, subject to the principles and the conditions to be defined in accordance with this paragraph.General principles and limits on grounds of public or private interest governing this right of access to documents shall be determined by the European Parliament and the Council, by means of regulations, acting in accordance with the ordinary legislative procedure.Each institution, body, office or agency shall ensure that its proceedings are transparent and shall elaborate in its own Rules of Procedure specific provisions regarding access to its documents, in accordance with the regulations referred to in the second subparagraph.The Court of Justice of the European Union, the European Central Bank and the European Investment Bank shall be subject to this paragraph only when exercising their administrative tasks.’4Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ 2001 L 145, p. 43) was adopted on the basis of Article 255(2) EC.5In accordance with Article 1(a) of that regulation:‘The purpose of this Regulation is:(a)to define the principles, conditions and limits on grounds of public or private interest governing the right of access to European Parliament, Council and Commission (hereinafter referred to as “the institutions”) documents provided for in Article 255 [EC] in such a way as to ensure the widest possible access to documents’.6Article 2 of that regulation, ‘Beneficiaries and scope’, provides in paragraph 3:‘This Regulation shall apply to all documents held by [the European Parliament, the Council or the Commission], that is to say, documents drawn up or received by [those institutions] and in [their] possession, in all areas of activity of the European Union.’7Article 3 of the regulation, ‘Definitions’, provides:‘For the purpose of this Regulation:“document” shall mean any content whatever its medium (written on paper or stored in electronic form or as a sound, visual or audiovisual recording) concerning a matter relating to the policies, activities and decisions falling within the institution’s sphere of responsibility;(b)“third party” shall mean any natural or legal person, or any entity outside the institution concerned, including the Member States, other Community or non-Community institutions and bodies and third countries.’8In accordance with Article 4 of the regulation, ‘Exceptions’:‘…2. The institutions shall refuse access to a document where disclosure would undermine the protection of:–…court proceedings and legal advice,unless there is an overriding public interest in disclosure.4. As regards third-party documents, the institution shall consult the third party with a view to assessing whether an exception in paragraph … 2 is applicable, unless it is clear that the document shall or shall not be disclosed.5. A Member State may request the institution not to disclose a document originating from that Member State without its prior agreement.7. The exceptions as laid down in [paragraph 2] shall only apply for the period during which protection is justified on the basis of the content of the document. …’9Article 6 of the regulation, ‘Applications’, lays down rules for making applications for access to documents under the regulation.10Article 7 of the regulation, ‘Processing of initial applications’, provides in paragraph 2 that ‘in the event of a total or partial refusal, the applicant may, within 15 working days of receiving the institution’s reply, make a confirmatory application asking the institution to reconsider its position.’Background to the dispute11The background to the dispute was set out in paragraphs 6 to 10 and 15 of the judgment under appeal, in the following terms:‘6By letter of 30 March 2011, … Patrick Breyer, submitted to the … Commission an application for access to documents pursuant to Article 6 of Regulation No 1049/2001.The requested documents related to infringement proceedings brought in 2007 by the Commission against the Federal Republic of Germany and the Republic of Austria concerning the transposition of Directive [2006/24]. More precisely, [Mr Breyer] applied for access to all documents relating to the administrative procedures conducted by the Commission and to all documents relating to the court proceedings in Case C‑189/09Commission v Austria (EU:C:2010:455).On 11 July 2011, the Commission rejected the application submitted by [Mr Breyer] on 30 March 2011.On 13 July 2011, [Mr Breyer] made a confirmatory application pursuant to Article 7(2) of Regulation No 1049/2001.By decisions of 5 October and 12 December 2011, the Commission granted [Mr Breyer] access to some of the requested documents concerning the infringement proceedings brought against the Federal Republic of Germany. In those decisions, the Commission also informed [Mr Breyer] of its intention to adopt a separate decision in respect of the documents relating to Commission v Austria … (EU:C:2010:455).15On 3 April 2012, in response to [Mr Breyer’s] confirmatory application of 13 July 2011, the Commission adopted the decision bearing reference Ares (2012) 399467 (“the decision of 3 April 2012”). By that decision, the Commission ruled on access by [Mr Breyer], on the one hand, to documents in the administrative file relating to the infringement proceedings, referred to in paragraph 7 above, brought against the Republic of Austria and, on the other, to documents relating to the court proceedings in Commission v Austria … (EU:C:2010:455). In respect of the latter, the Commission inter alia refused access to the written submissions lodged by the Republic of Austria in those court proceedings (“the written submissions at issue”) on the ground that those submissions did not fall within the scope of Regulation No 1049/2001. First of all, according to the Commission, under Article 15(3) TFEU the Court of Justice of the European Union, in its capacity as an institution, is subject to the rules on access to documents only when exercising its administrative tasks. Second, the Commission states that the written submissions at issue were made to the Court, whereas the Commission, as a party to the proceedings in Commission v Austria … (EU:C:2010:455), received only copies. Third, the Commission considers that Article 20 of the Statute of the Court of Justice of the European Union provides for the communication of written pleadings relating to court proceedings only to the parties to those proceedings and to institutions whose decisions are in dispute. Fourth, according to the Commission, in [the judgment of 21 September 2010,] Sweden and Others v API and Commission (C‑514/07 P, C‑528/07 P and C‑532/07 P, … EU:C:2010:541), the Court did not address the question whether the institutions should grant access to the written submissions of another party to court proceedings. Consequently, with regard to written submissions lodged in court proceedings, only written submissions submitted by the institutions, and not those lodged by other parties, fall within the scope of Regulation No 1049/2001, it being understood that if a different interpretation were adopted, the provisions of Article 15 TFEU and specific rules stemming from the Statute of the Court of Justice and the Rules of Procedure of the Court of Justice would be circumvented.’The procedure before the General Court and the judgment under appeal12By application lodged at the Registry of the General Court on 30 April 2012, Mr Breyer brought an action seeking inter alia the annulment of the decision of 3 April 2012, in so far as by that decision the Commission had refused him access to the written submissions at issue. In support of his action, he put forward a single plea in law, alleging infringement by the Commission of Article 2(3) of Regulation No 1049/2001. He argued that the ground stated in that decision, namely that the written submissions at issue did not fall within the scope of the regulation, was not correct.13By the judgment under appeal, the General Court upheld that plea and consequently annulled the decision of 3 April 2012.14As a first step, in paragraphs 35 to 61 of the judgment under appeal, the General Court considered whether the written submissions at issue were documents ‘held by an institution’ within the meaning of Article 2(3) in conjunction with Article 3(a) of Regulation No 1049/2001.To that end, the General Court found in paragraphs 40 to 48 of the judgment under appeal that, in accordance with Article 2(3) and Article 3(b) of Regulation No 1049/2001, the right of access to documents held by an institution of the EU covers those received inter alia from Member States, and that the broad definition of the concept of a ‘document’ in Article 3(a) of the regulation ‘is … based on the existence of content that is saved and that may be copied or consulted after it has been generated, it being understood [inter alia] … that … [the content] must relate to the policies, activities or decisions of the institution in question’. Observing that, in the present case, first, the Commission did not dispute that copies of the written submissions at issue were in its possession, and, second, the Commission had received those documents in the exercise of its powers in respect of its litigious activities, the General Court concluded that the submissions were to be classified as documents held by an institution within the meaning of Article 2(3) in conjunction with Article 3(a) of the regulation.16The General Court went on to reject, in paragraphs 50 to 61 of the judgment under appeal, the various arguments put forward by the Commission to contest the classification of the written submissions at issue as documents held by it within the meaning of Article 2(3) in conjunction with Article 3(a) of Regulation No 1049/2001. The basis of those arguments was that the written submissions had been addressed to the Court of Justice, had been sent to the Commission only in the form of copies, and, as documents in court proceedings, did not fall within the Commission’s administrative activities and were not therefore within its competence, given that Regulation No 1049/2001 did not concern the Commission’s litigious activities.17In paragraph 51 of the judgment under appeal, the General Court observed, to begin with, that Article 2(3) of Regulation No 1049/2001 did not make the application of the regulation contingent on the document ‘received’ by the institution in question having been addressed to it and sent directly by its author. Next, in paragraphs 53 and 54 of the judgment under appeal, the General Court, pointing out that the concept of a ‘document’ within the meaning of Article 3(a) of the regulation is given a broad definition, found that it was irrelevant in this respect that the written submissions at issue had been sent to the Commission in the form of copies rather than originals. Furthermore, in paragraph 57 of the judgment under appeal, the General Court found that it followed from the regulation’s objectives of openness, which are apparent in particular from recital 2 of the regulation, the broad definition of the concept of a ‘document’ within the meaning of Article 3(a) of the regulation, and the wording and very existence, in the second indent of Article 4(2) of the regulation, of an exception relating to the protection of court proceedings, that the EU legislature did not intend to exclude the institutions’ litigious activities from the scope of the right of access to documents held by them.18Finally, in paragraphs 60 and 61 of the judgment under appeal, the General Court found that the written submissions at issue had been sent to the Commission in the context of an action for failure to fulfil obligations which it had brought in the exercise of its powers under Article 226 EC (now Article 258 TFEU), and that the Commission was therefore wrong to submit that it had not received them in the exercise of its powers.19As a second step, in paragraphs 63 to 112 of the judgment under appeal, the General Court considered the effect of the fourth subparagraph of Article 15(3) TFEU on the application of Regulation No 1049/2001.20The General Court started by recalling, in paragraphs 67 to 73 of the judgment under appeal, that it follows both from Article 15 TFEU and from the broad logic of Regulation No 1049/2001 and the objectives of the relevant EU rules that judicial activities are as such excluded from the scope of the right of access to documents established by those rules. Moreover, according to the General Court, written submissions lodged by the Commission with the EU judicature in legal proceedings and those lodged by a Member State in an action for failure to fulfil obligations are inherently a part of the judicial activities of that judicature.21The General Court concluded, in paragraphs 75 to 80 of the judgment under appeal, both from its own case-law (judgments of 6 July 2006, Franchet and Byk v Commission, T‑391/03 and T‑70/04, EU:T:2006:190, paragraphs 88 to 90; of 12 September 2007, API v Commission, T‑36/04, EU:T:2007:258, paragraph 60; and of 3 October 2012, Jurašinović v Council, T‑63/10, EU:T:2012:516, paragraphs 66 and 67) and from that of the Court of Justice (judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraph 94), that, even though they are a part of the judicial activities of the EU judicature, those submissions are not excluded, by virtue of the fourth subparagraph of Article 15(3) TFEU, from the right of access to documents. In this connection, in paragraph 82 of the judgment under appeal, the General Court found that ‘a distinction should be made between the exclusion under the fourth subparagraph of Article 15(3) TFEU of the judicial activities of the Court of Justice from [the] right of access to documents and written submissions drawn up for proceedings, which, although they are a part of those judicial activities, are nevertheless not covered by the exclusion established by that provision and are instead subject to the right of access to documents’.22It therefore held, in paragraph 83 of the judgment under appeal, that ‘the fourth subparagraph of Article 15(3) TFEU [did] not preclude the inclusion of the written submissions at issue within the scope of Regulation No 1049/2001’, and went on to reject the arguments put forward by the Commission to the effect that, first, a distinction should be drawn for the purpose of this analysis between its own written submissions and those of a Member State and, secondly, the specific rules relating to access to court documents would be rendered meaningless and circumvented if access under that regulation were allowed to written submissions drawn up by a Member State for court proceedings.23As regards those arguments, the General Court considered, first, in paragraph 92 of the judgment under appeal, that, in view of the different contexts of the case in which judgment was given on 21 September 2010, Sweden and Others v API and Commission (C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541), which concerned a dispute over the disclosure of written submissions of the Commission relating to pending court proceedings, and the present case, the considerations regarding equality of arms set out in paragraphs 86 and 87 of that judgment were not relevant here.24The General Court observed, secondly, in paragraph 102 of the judgment under appeal, that by interpreting the exception for the protection of court proceedings in the second indent of Article 4(2) of Regulation No 1049/2001 in its judgment of 21 September 2010, Sweden and Others v API and Commission (C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541) the Court of Justice had implicitly accepted that that regulation applied to written submissions of the Commission. The General Court also observed, in paragraphs 103 to 105 of the judgment under appeal, that including the written submissions at issue within the scope of the regulation did not undermine the objective of the specific rules relating to access to documents concerning court proceedings, in so far as the protection of court proceedings could, if necessary, be ensured by the application of the exception to access laid down in the second indent of Article 4(2) of the regulation.25Finally, with respect to costs, the General Court considered that the publication on the internet by Mr Breyer of the Commission’s defence and of the exchange of letters between him and the Commission concerning that publication constituted misuse of the pleadings, justifying the sharing half and half between Mr Breyer and the Commission of the costs incurred by him.Procedure before the Court and forms of order sought26By decisions of the President of the Court of 3 September and 6 October 2015, the Kingdom of Spain and the French Republic were granted leave to intervene in support of the form of order sought by the Commission.27By its appeal the Commission asks the Court to set aside the judgment under appeal, give final judgment on the dispute by dismissing Mr Breyer’s action, and order him to pay the costs.28Mr Breyer, the Republic of Finland and the Kingdom of Sweden ask the Court to dismiss the appeal and order the Commission to pay the costs.The appeal Arguments of the parties 29By its single ground of appeal, the Commission submits that the General Court erred in law by holding that the fourth subparagraph of Article 15(3) TFEU did not preclude the application of Regulation No 1049/2001 to an application for access to documents drawn up by a Member State for the purpose of court proceedings and in the possession of the Commission, such as the written submissions at issue, having regard to the particular nature of those documents.30According to the Commission, written submissions lodged by an EU institution with the EU judicature are of a ‘dual nature’ in that they fall at the same time within the general right of access to documents of the institutions, laid down in the first subparagraph of Article 15(3) TFEU, and within the exception for documents relating to the judicial activity of the Court of Justice of the European Union, laid down in the fourth subparagraph of that provision. The Court took that ‘dual nature’ into account when it ruled, from the point of view of Regulation No 1049/2001, on access to the written submissions of the Commission at issue in the case in which judgment was given on 21 September 2010, Sweden and Others v API and Commission (C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541). The Commission submits that, by contrast, documents relating to the judicial activity of the Court of Justice of the European Union that have not been drawn up by an institution are not of such a ‘dual nature’, and that the present case has a different context from the case in which that judgment was given, both factually, in that it relates to written submissions drawn up by a Member State, and legally, since the legal context changed with the entry into force of the Treaty of Lisbon.31The Commission submits, as regards the latter point, that the fourth subparagraph of Article 15(3) TFEU prohibits the EU legislature from extending, by means of a regulation based on the second subparagraph of that provision, the right of access to documents of the institutions to documents relating to the judicial activity of the Court of Justice of the European Union. Although not arguing that Regulation No 1049/2001 is invalid, the Commission, while accepting that the validity of EU acts must be assessed by reference to the factual and legal elements existing at the time of their adoption, nonetheless considers that, having regard to the fourth subparagraph of Article 15(3) TFEU, the General Court should have interpreted Article 2(3) of Regulation No 1049/2001 restrictively. It should thus have considered that that regulation does not apply to documents connected with that judicial activity, in so far as they have not been drawn up by an institution.32The Kingdom of Spain and the French Republic support the Commission’s argument, whereas Mr Breyer, supported by the Republic of Finland and the Kingdom of Sweden, interveners at first instance, puts forward the contrary view. Findings of the Court 33It must be observed, as a preliminary point, that by its single ground of appeal the Commission disputes the General Court’s assessment of whether Regulation No 1049/2001 applies at all to Mr Breyer’s application to the Commission for access to the written submissions at issue, without raising the different issue, not before the Court in the context of this appeal, of whether access to those submissions should be granted or refused, as the case may be, pursuant to the provisions of that regulation.34The single ground of appeal relates to the effect of the fourth subparagraph of Article 15(3) TFEU on the interpretation of the scope of Regulation No 1049/2001. Before assessing whether the Commission’s arguments on this point are well founded, an examination must be made, in the first place, of the scope of that regulation, as it follows from the wording of the regulation.35In accordance with Article 2(3) in conjunction with Article 1(a) of Regulation No 1049/2001, the regulation is to apply to all documents held by the Parliament, the Council and the Commission, that is to say, documents drawn up or received by those institutions and in their possession, in all areas of activity of the European Union. In accordance with Article 3(a) of the regulation, ‘document’ means ‘any content whatever its medium … concerning a matter relating to the policies, activities and decisions falling within the institution’s sphere of responsibility’.36It should be added that Article 3(b) of Regulation No 1049/2001 expressly provides that the right of access to documents held by the Parliament, the Council and the Commission extends not only to documents drawn up by those institutions themselves but also to documents they have received from third parties, including the other EU institutions as well as the Member States (see, to that effect, judgment of 18 December 2007, Sweden v Commission, C‑64/05 P, EU:C:2007:802, paragraph 55).37The scope of Regulation No 1049/2001 is thus defined by reference to the institutions listed in the regulation, not by reference to particular categories of documents or, as the Court has previously observed (see, to that effect, judgment of 18 December 2007, Sweden v Commission, C‑64/05 P, EU:C:2007:802, paragraph 56), the author of the document held by one of those institutions.38In this context, the fact that documents held by one of the institutions referred to in Regulation No 1049/2001 were drawn up by a Member State and are linked to court proceedings cannot exclude such documents from the scope of the regulation. First, the fact that Regulation No 1049/2001 does not apply to applications for access to documents in the possession of the Court of Justice of the European Union does not mean that documents linked to that institution’s judicial activity are, as a matter of principle, outside the scope of the regulation where they are in the possession of the EU institutions listed in the regulation, such as the Commission.39Secondly, the Court has previously held that the legitimate interests of the Member States regarding such documents can be protected on the basis of the exceptions laid down in Regulation No 1049/2001 to the principle of the right of access to documents (see, to that effect, judgment of 18 December 2007, Sweden v Commission, C‑64/05 P, EU:C:2007:802, paragraph 83).40Regulation No 1049/2001 lays down provisions which take care to define the objective limits of public or private interest that are capable of justifying a refusal to disclose documents (judgment of 18 December 2007, Sweden v Commission, C‑64/05 P, EU:C:2007:802, paragraph 57), including in particular the second indent of Article 4(2) of the regulation, according to which the institutions are to refuse access to a document inter alia where disclosure would undermine the protection of court proceedings, unless there is an overriding public interest in disclosure.41It should be recalled in this connection that in its judgment of 21 September 2010, Sweden and Others v API and Commission (C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541), the Court accepted the existence of a general presumption that disclosure of the written submissions lodged by an institution in court proceedings would undermine the protection of court proceedings within the meaning of the second indent of Article 4(2) of Regulation No 1049/2001, as long as those proceedings remain pending. That general presumption of confidentiality applies also to written submissions lodged by a Member State in such proceedings.42However, as the Court has stated, the existence of such a presumption does not exclude the right of the person concerned to demonstrate that a document whose disclosure has been requested is not covered by that presumption (see, to that effect, judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraph 103).43Moreover, in the case of written submissions drawn up by a Member State, it should be observed, as the General Court did in paragraph 97 of the judgment under appeal on the basis of the relevant case-law, that Article 4(5) of Regulation No 1049/2001, which provides that a Member State may request an institution not to disclose a document originating from that State without its prior agreement, gives the Member State concerned the opportunity to participate in the taking of the decision which the institution is required to adopt, and to that end establishes a decision-making process for determining whether the substantive exceptions listed in Article 4(1) to (3) of the regulation preclude access being given to the document in question, including where written submissions drawn up for the purpose of court proceedings are concerned. However, Article 4(5) of Regulation No 1049/2001 does not confer on that Member State a general and unconditional right of veto enabling it to oppose, in a discretionary manner, the disclosure of documents originating from it and held by an institution.44In the present case, it is common ground that the written submissions at issue are in the possession of the Commission. In addition, as the General Court rightly held in paragraphs 51 and 52 of the judgment under appeal, the fact that the Commission received those submissions from the Court of Justice of the European Union, not from the Member State concerned, has no effect on the determination of whether Regulation No 1049/2001 is applicable at all.45As to the fact, relied on by the Commission, that neither the Statute of the Court of Justice of the European Union nor the rules of procedure of the EU Courts provide for a right of access by third parties to written submissions filed in court proceedings, while that fact is indeed to be taken into account for the purpose of interpreting the exception laid down in Article 4(2) of Regulation No 1049/2001 (see judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraph 100), it cannot, on the other hand, have the consequence that the regulation does not apply to applications for access to written submissions that have been drawn up by a Member State for the purpose of court proceedings before the EU judicature and are in the possession of the Commission.46In those circumstances, in accordance with the wording of Regulation No 1049/2001, the written submissions at issue fall within the scope of that regulation, as ‘documents held by an institution’ within the meaning of Article 2(3) of the regulation.47In the second place, as regards the Commission’s argument that the fourth subparagraph of Article 15(3) TFEU, introduced into primary law following the entry into force of the Treaty of Lisbon, prevents the EU legislature from providing for a right of access in relation to documents linked to the judicial activity of the Court of Justice of the European Union that have not been drawn up by an institution, so that the only permissible interpretation of Article 2(3) of Regulation No 1049/2001 is to exclude such documents from the scope of that regulation, an examination must be made of the general scheme and objectives of Article 15(3) TFEU.48In accordance with the fourth subparagraph of Article 15(3) TFEU, the Court of Justice of the European Union is subject to the system of access to documents of the institutions, laid down in the first subparagraph of that provision, only when exercising its administrative tasks. It follows that the conditions of access to documents held by that institution which relate to its judicial activity cannot be laid down by regulations adopted on the basis of the second subparagraph of Article 15(3) TFEU, while access to its documents of an administrative nature is governed by its decision of 11 December 2012 concerning public access to documents held by the Court of Justice of the European Union in the exercise of its administrative functions (OJ 2013 C 38, p. 2), replaced by decision of 11 October 2016 (OJ 2016 C 445, p. 3).49However, the non-applicability of the system of access to documents laid down in the first subparagraph of Article 15(3) TFEU to the Court of Justice of the European Union when it exercises judicial functions does not preclude the application of that system to an institution to which the provisions of Article 15(3) TFEU and Regulation No 1049/2001 are fully applicable, such as the Commission, where that institution holds documents drawn up by a Member State, such as the written submissions at issue, relating to court proceedings.50It should be recalled here that the Court has explained, following the entry into force of the Treaty of Lisbon, that the introduction of Article 15 TFEU, which replaced Article 255 EC, extended the scope of the principle of transparency in EU law (see, to that effect, judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraph 81).51Unlike Article 255 EC, whose scope was limited to documents of the Parliament, the Council and the Commission, Article 15(3) TFEU now provides for a right of access to documents of the institutions, bodies, offices and agencies of the EU, including the Court of Justice of the European Union, the European Central Bank and the European Investment Bank, where they exercise administrative functions. Contrary to what the Commission essentially submits, there are no grounds for maintaining that the extension of that right to cover those administrative activities goes hand in hand with the introduction of any restriction whatsoever of the scope of Regulation No 1049/2001 with respect to documents originating from a Member State, such as the written submissions at issue, that are held by the Commission in connection with proceedings before the Court of Justice of the European Union.52That broad interpretation of the principle of access to documents of the EU institutions is, moreover, borne out by Article 15(1) TFEU, which provides that the institutions, bodies, offices and agencies of the EU are to conduct their work as openly as possible, that principle of openness also being expressed in the second paragraph of Article 1 TEU and Article 298 TFEU, and by the enshrining of the right of access to documents in Article 42 of the Charter of Fundamental Rights of the European Union. Having regard to those provisions of primary law laying down the objective of an open European administration, the fourth subparagraph of Article 15(3) TFEU cannot, contrary to the Commission’s submissions, be interpreted as requiring a restrictive reading of the scope of Regulation No 1049/2001 with the consequence that documents drawn up by a Member State, such as the written submissions at issue, do not fall within the scope of that regulation where they are held by the Commission.53As to the risk asserted by the Commission that the procedural rules mentioned in paragraph 45 above might be circumvented, it must be recalled that the limitations of access to documents relating to court proceedings, whether provided for under Article 255 EC, which was succeeded by Article 15 TFEU, or under Regulation No 1049/2001, pursue the same objective, namely to ensure that the right of access to documents of the institutions is exercised without undermining the protection of court proceedings, and that protection means in particular that compliance with the principles of equality of arms and the sound administration of justice must be ensured (see, to that effect, judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraphs 84 and 85).54Since Regulation No 1049/2001 allows for the disclosure of documents connected with proceedings before the EU judicature to be refused if appropriate, and for the protection of such court proceedings to be ensured on that basis, as follows from paragraphs 40 to 42 above, it must be considered, contrary to what the Commission essentially submits, that the fourth subparagraph of Article 15(3) TFEU need not be interpreted as meaning that submissions drawn up by a Member State and held by the Commission, such as the written submissions at issue, must necessarily be excluded from the scope of that regulation. In so far as the protection of court proceedings is thus ensured, in accordance with the purpose of the fourth subparagraph of Article 15(3) TFEU, the effectiveness of that provision is not liable to be compromised.55In those circumstances, the General Court was right to consider, in particular in paragraph 80 of the judgment under appeal, that the written submissions at issue were not excluded, any more than those drawn up by the Commission itself, from the right of access to documents in the fourth subparagraph of Article 15(3) TFEU.56Consequently, the General Court did not err in law in finding, in paragraph 113 of the judgment under appeal, that the written submissions at issue fell within the scope of Article 2(3) of Regulation No 1049/2001 and, accordingly, annulling the Commission’s decision of 3 April 2012 to refuse Mr Breyer access to those submissions.57It follows that the Commission’s appeal must be dismissed.Costs58Under Article 184(2) of the Rules of Procedure of the Court, where the appeal is unfounded, the Court is to make a decision as to costs.59Under Article 138(1) of those rules, which applies to the procedure on appeal by virtue of Article 184(1) of those rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.60Under Article 138(3) of those rules, where each party succeeds on some and fails on other heads, the parties are to be ordered to bear their own costs. However, if it appears justified in the circumstances of the case, the Court may order that one party, in addition to bearing its own costs, pay a proportion of the costs of the other party.61In the present case, while the Commission’s appeal has not been allowed, it is not disputed that Mr Breyer, who applied for the Commission to be ordered to pay the costs, published on the internet anonymised versions of the pleadings exchanged in the present appeal proceedings.62As follows from Article 171(1) of the Rules of Procedure, the appeal is to be served on the other parties to the relevant case before the General Court. The procedural documents thus communicated to the parties to the case before the Court of Justice are not available to the public. Consequently, Mr Breyer’s publication on the internet of the pleadings in the present proceedings, without being authorised to do so, constitutes misuse of the pleadings liable to harm the sound administration of justice, which should be taken into account when sharing the costs incurred in the present proceedings (see, to that effect, judgment of 21 September 2010, Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, EU:C:2010:541, paragraphs 92, 93 and 97 to 99).63In those circumstances, the Commission must be ordered to bear its own costs and to pay half of the costs incurred by Mr Breyer in connection with the present appeal, the other half being borne by Mr Breyer.64Moreover, in so far as Mr Breyer, in his response to the appeal, contests the General Court’s reasoning on the award of costs at first instance in paragraph 119 of the judgment under appeal, in particular in so far as the General Court considered that a party who is granted access to the procedural documents of the other parties is entitled to use those documents only for the purpose of pursuing his own case and not for any other purpose, such as inciting criticism on the part of the public in relation to arguments raised by the other parties in the case, it suffices to recall that, in accordance with Article 174 of the Rules of Procedure, the form of order sought in the response must be for the appeal to be allowed or disallowed in whole or in part.65Since the form of order sought in the Commission’s appeal does not address the question of the sharing of costs in the judgment under appeal, this part of the form of order sought by Mr Breyer is inadmissible.66Finally, Article 140(1) of the Rules of Procedure, which applies to the procedure on appeal by virtue of Article 184(1) of those rules, provides that the Member States and institutions which have intervened in the proceedings are to bear their own costs. In the present case, the Kingdom of Spain, the French Republic, the Republic of Finland and the Kingdom of Sweden must be ordered to bear their own costs of the present appeal.On those grounds, the Court (Grand Chamber) hereby: 1. Dismisses the appeal; 2. Orders the Commission to bear its own costs and to pay half of the costs incurred by Mr Breyer; 3. Orders the Kingdom of Spain, the French Republic, the Republic of Finland and the Kingdom of Sweden to bear their own costs. [Signatures]( *1 ) Language of the case: German. | 000fb-1316fa8-4cc9 | EN |
The guarantee granted by Belgium to the ARCO Group financial cooperatives infringes EU law | 21 December 2016 ( *1 )‛Reference for a preliminary ruling — State aid — Aid implemented by the Kingdom of Belgium in favour of ARCO Group financial cooperatives — Deposit guarantee schemes — Directive 94/19/EC — Scope — Guarantee scheme protecting the shares of individual members, being natural persons, of cooperatives operating in the financial sector — Not included — Articles 107 and 108 TFEU — Commission decision declaring the aid incompatible with the internal market’In Case C‑76/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Grondwettelijk Hof (Constitutional Court, Belgium), made by decision of 5 February 2015, received at the Court on 19 February 2015, in the proceedings Paul Vervloet, Marc De Wit, Edgard Timperman, Godelieve Van Braekel, Patrick Beckx, Marc De Schryver, Guy Deneire, Steve Van Hoof, Organisme voor de financiering van pensioenen Ogeo Fund, Gemeente Schaarbeek, Frédéric Ensch Famenne v Ministerraad, intervening parties: Arcofin CVBA, Arcopar CVBA, Arcoplus CVBA, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas (Rapporteur), C. Toader and E. Jarašiūnas, Judges,Advocate General: J. Kokott,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 6 April 2016,after considering the observations submitted on behalf of:—Mr Vervloet, Mr De Wit, Mr Timperman, Ms Van Braekel, Mr Beckx, Mr De Schryver, Mr Deneire and Mr Van Hoof, by K. Geelen, E. Monard and W. Moonen, advocaten,the Organisme voor de financiering van pensioenen Ogeo Fund, by J. Bourtembourg and F. Belleflamme, avocats,Arcofin CVBA, Arcopar CVBA and Arcoplus CVBA, by A. Verlinden, R. Martens and C. Maczkovics, advocaten,the Belgian Government, by J.-C. Halleux and C. Pochet, acting as Agents, and by S. Ryelandt and P. De Bock, advocatenthe European Commission, by P.-J. Loewenthal, L. Flynn and A. Nijenhuis, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 2 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns, first, the interpretation of Articles 2 and 3 of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ 1994 L 135, p. 5), as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 (OJ 2005 L 79, p. 9) (‘Directive 94/19’), and, secondly, the validity of Commission Decision 2014/686/EU of 3 July 2014 on State aid SA.33927 (12/C) (ex 11/NN) implemented by Belgium — Guarantee scheme protecting the shares of individual members of financial cooperatives (OJ 2014 L 284, p. 53) (‘the decision of 3 July 2014’), as well as the interpretation of Article 108(3) TFEU.2The request has been made in proceedings between, on the one hand, Mr Paul Vervloet, Mr Marc De Wit, Mr Edgard Timperman, Ms Godelieve Van Braekel, Mr Patrick Beckx, Mr Marc De Schryver, Mr Guy Deneire and Mr Steve Van Hoof, the Organisme voor de financiering van pensioenen Ogeo Fund (the Ogeo Fund pension fund body), the Gemeente Schaarbeek (the commune of Schaerbeek, Belgium) and Mr Frédéric Ensch Famenne and, on the other hand, the Ministerraad (Council of Ministers, Belgium) concerning the compatibility of the scheme to guarantee the shares of recognised cooperatives operating in the financial sector, established under the first subparagraph of Article 36/24(1), point 3, of the wet tot vaststelling van het organiek statuut van de Nationale Bank van België (Belgian National Bank Law) of 22 February 1998 (Belgisch Staatsblad, 28 March 1998, p. 9377), as amended by the koninklijk besluit betreffende de evolutie van de toezichtsarchitectuur voor de financiële sector (Royal Decree implementing the development of financial supervisory structures) of 3 March 2011 (Belgisch Staatsblad, 9 March 2011, p. 15623) (‘the Law of 22 February 1998’), with the principle of equality guaranteed by the Belgian Constitution. Legal context EU law Directive 94/193Directive 94/19 was repealed by Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ 2014 L 173, p. 149). Since that repeal took effect on 4 July 2015, Directive 94/19 remains applicable to the case in the main proceedings.4Recitals 1, 8, 16 and 17 of Directive 94/19 stated:‘Whereas, in accordance with the objectives of the [EC] Treaty, the harmonious development of the activities of credit institutions throughout the Community should be promoted through the elimination of all restrictions on the right of establishment and the freedom to provide services, while increasing the stability of the banking system and protection for savers;…Whereas harmonisation must be confined to the main elements of deposit-guarantee schemes and, within a very short period, ensure payments under a guarantee calculated on the basis of a harmonised minimum level;Whereas, on the one hand, the minimum guarantee level prescribed in this Directive should not leave too great a proportion of deposits without protection in the interest both of consumer protection and of the stability of the financial system; whereas, on the other hand, it would not be appropriate to impose throughout the Community a level of protection which might in certain cases have the effect of encouraging the unsound management of credit institutions; whereas the cost of funding schemes should be taken into account; whereas it would appear reasonable to set the harmonised minimum guarantee level at EUR 20000; whereas limited transitional arrangements might be necessary to enable schemes to comply with that figure;Whereas some Member States offer depositors cover for their deposits which is higher than the harmonised minimum guarantee level provided for in this Directive; whereas it does not seem appropriate to require that such schemes, certain of which have been introduced only recently pursuant to [Commission Recommendation 87/63/EEC of 22 December 1986 concerning the introduction of deposit-guarantee schemes in the Community (OJ 1987 L 33, p. 16)], be amended on this point’.5Article 1(1) and (4) of that directive provided:‘For the purposes of this Directive:(1)“deposit” shall mean any credit balance which results from funds left in an account or from temporary situations deriving from normal banking transactions and which a credit institution must repay under the legal and contractual conditions applicable, and any debt evidenced by a certificate issued by a credit institution.Shares in United Kingdom and Irish building societies apart from those of a capital nature covered in Article 2 shall be treated as deposits.Bonds which satisfy the conditions prescribed in Article 22(4) of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (Ucits) [(OJ 1985 L 375, p. 3)] shall not be considered deposits.(4)“credit institution” shall mean an undertaking the business of which is to receive deposits or other repayable funds from the public and to grant credits for its own account’.6Article 2 of Directive 94/19 provided:‘The following shall be excluded from any repayment by guarantee schemes:all instruments which would fall within the definition of “own funds” in Article 2 of Council Directive 89/299/EEC of 17 April 1989 on the own funds of credit institutions [(OJ 1989 L 124, p. 16)].…’7The first subparagraph of Article 3(1) of Directive 94/19 provided:‘Each Member State shall ensure that within its territory one or more deposit-guarantee schemes are introduced and officially recognised. Except in the circumstances envisaged in the second subparagraph and in paragraph 4, no credit institution authorised in that Member State pursuant to Article 3 of [First Council Directive 77/780/EEC of 12 December 1977 on the coordination of the laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions (OJ 1977 L 322, p. 30)] may take deposits unless it is a member of such a scheme.’Directives 77/780 and 89/2998Directives 77/780 and 89/299 were repealed and replaced by Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (OJ 2000 L 126, p. 1), which was repealed and replaced by Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (OJ 2006 L 177, p. 1), itself repealed and replaced, with effect from 1 January 2014, by Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338).9Article 1 of Directive 77/780 was worded as follows:“credit institution” means an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account,10Article 1(2) of Directive 89/299 provided:‘For the purposes of this Directive, “credit institutions” shall mean the institutions to which Directive [77/780, as last amended by Council Directive 86/524/EEC of 27 October 1986 (OJ 1986 L 309, p. 15)], applies.’11Article 2 of Directive 89/299 provided:‘(1) Subject to the limits imposed in Article 6, the unconsolidated own funds of credit institutions shall consist of the following items:capital within the meaning of Article 22 of [Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ 1986 L 372, p. 1)], in so far as it has been paid up, plus share premium accounts but excluding cumulative preferential shares;Directive 2006/4812Article 4 of Directive 2006/48, as amended, with effect from 7 December 2009, by Directive 2009/111/EC of the European Parliament and of the Council of 16 September 2009 (OJ 2009 L 302, p. 97) (‘Directive 2006/48’), provided:‘For the purposes of this Directive, the following definitions shall apply:“credit institution” means: … an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account;13The first paragraph of Article 57 of Directive 2006/48 provided:‘Subject to the limits imposed in Article 66, the unconsolidated own funds of credit institutions shall consist of the following items:(a)capital within the meaning of Article 22 of Directive 86/635/EEC, in so far as it has been paid up, plus the related share premium accounts, it fully absorbs losses in going concern situations, and in the event of bankruptcy or liquidation ranks after all other claims;Directive 86/63514Article 22 of Directive 86/635, entitled ‘Liabilities: Item 9 — Subscribed capital’, is worded as follows:‘This item shall comprise all amounts, regardless of their actual designations, which, in accordance with the legal structure of the institution concerned, are regarded under national law as equity capital subscribed by the shareholders or other proprietors.’ Belgian law 15Article 36/24(1) of the Law of 22 February 1998 provides:‘In the event of a sudden crisis on the financial markets or in the event of a serious threat of a systemic crisis, the King, with a view to limiting the extent or the consequences of that crisis, may, after obtaining the opinion of the bank:adopt complementary regulations or regulations overriding the Law of 9 July 1975 on the supervision of insurance undertakings, the Law of 2 January 1991 on the sovereign debt securities market and monetary policy instruments, the Law of 22 March 1993 relating to the status and control of credit institutions, the Law of 6 April 1995 relating to the status and supervision of investment undertakings, the Law of 2 August 2002 on supervision of the financial sector and financial services, Book VIII, Title III, Chapter II, Section III, of the Companies Code, and Royal Decree No 62 on the deposit of fungible financial instruments and the winding up of those instruments, coordinated by the Royal Decree of 27 January 2004;(2)put in place a system for granting a State guarantee in respect of commitments entered into by the institutions, subject to the supervision prescribed by the aforementioned laws, that He shall determine, or grant the State guarantee in respect of certain claims held by those institutions;(3)put in place, if necessary by means of regulations adopted in accordance with subparagraph 1, a system for granting the State guarantee with a view to refunding to members who are natural persons their share of the capital of cooperatives, recognised in accordance with the Royal Decree of 8 January 1962 laying down the conditions governing the recognition of national cooperative groupings and cooperatives, which are institutions subject to the supervision prescribed by the aforementioned laws or at least half of the assets of which are invested in such institutions;16Article 3 of the koninklijk besluit tot uitvoering van de wet van 15 oktober 2008 houdende maatregelen ter bevordering van de financiële stabiliteit en inzonderheid tot instelling van een staatsgarantie voor verstrekte kredieten en andere verrichtingen in het kader van de financiële stabiliteit, voor wat betreft de bescherming van de deposito’s, de levensverzekeringen en het kapitaal van erkende coöperatieve vennootschappen, en tot wijziging van de wet van 2 augustus 2002 betreffende het toezicht op de financiële sector en de financiële diensten (Royal Decree implementing the Law of 15 October 2008 on measures to promote financial stability and introducing in particular a State guarantee on credits granted and other operations conducted in the context of financial stability, concerning deposit protection, life assurance and the capital of recognised cooperatives, and amending the Law of 2 August 2002 on supervision of the financial sector and financial services), of 14 November 2008 (Belgisch Staatsblad, 17 November 2008, p. 61285), as amended by the koninklijk besluit (Royal Decree) of 10 October 2011 (Belgisch Staatsblad, 12 October 2011, p. 62641) (‘Royal Decree of 14 November 2008’) provides:‘A fund called “Special protection fund for deposits, life assurance and the capital of recognised cooperatives” shall be set up in the Belgian Caisse des Dépôts et Consignations (Deposit and Consignment Office).The King shall regulate the organisation and functioning of the fund referred to in paragraph 1.’17Article 4(3) of the Royal Decree of 14 November 2008 provides:‘Cooperatives, recognised in accordance with the Royal Decree of 8 January 1962 laying down the conditions governing the recognition of national cooperative groupings and cooperatives, which are institutions subject to the supervision referred to in Article 36/24(2) of the Law of 22 February 1998 or at least half of the assets of which are invested directly or indirectly in such institutions, may participate at their request.The request referred to in the first paragraph must be sent by registered letter to the Minister of Finance.18Article 1(1) of the koninklijk besluit tot toekenning van een garantie tot bescherming van het kapitaal van erkende coöperatieve vennootschapen (Royal Decree granting a guarantee to protect the capital of recognised cooperatives) of 7 November 2011 (Belgisch Staatsblad, 18 November 2011, p. 68640) (‘Royal Decree of 7 November 2011’) provides:‘In accordance with Article 4(3) of the Royal Decree of 14 November 2008, the request for protection of the capital of the following recognised cooperatives shall be granted:[Arcopar][Arcofin][Arcoplus]19In accordance with Article 3 of the Royal Decree of 7 November 2011, the latter entered into force on 14 October 2011. The decision of 3 July 2014 20In recital 1 of the decision of 3 July 2014, the European Commission states that, by letter of 7 November 2011, ‘the Belgian State notified the Commission that it had put in place a guarantee scheme … to cover the shares of individual shareholders in those recognised cooperatives which are either under prudential supervision of the National Bank of Belgium … or have invested at least half of their assets in an institution subject to such supervision (“financial cooperatives”)’.21Recital 8 of that decision is part of the Commission’s introduction to the description of the ‘Genesis of the notified measure’. It states:‘On 30 September 2008, Dexia announced a capital increase of EUR 6.4 billion, subscribed by its existing shareholders (one of which was ARCO) and by the authorities of Belgium, France and Luxembourg. Before a Special Commission of the Belgian Parliament investigating the circumstances of the dismantlement of Dexia …, the Belgian Minister of Finance at the time State aid was granted to Dexia in 2008 explained that, following requests to intervene in favour of ARCO, there had already been in September/October 2008 a political decision to put the cooperative guarantee scheme in place. He explained that, in order to reach an agreement on Dexia, the government had to take at the same time a decision [in particular] on ARCO … It is also clear from the statements of the current Belgian Minister of Finance that the commitment was made in 2008 in order to ensure that ARCO agreed to take part in the rescue of Dexia …’22In recital 9 of that decision, the Commission states that, on 10 October 2008, the Belgian Government announced by way of press release from the services of the Minister of Finance that it had decided inter alia to make available a similar scheme to other financial products, in particular, shares in financial cooperatives.23Recital 10 of that decision is worded as follows:‘On 21 January 2009, the Prime Minister and the Minister of Finance confirmed in a joint press release the commitment given by the previous government to introduce a cooperative guarantee scheme. On the same day, ARCO put that press release of the Belgian Government on its website. By contrast, other financial cooperatives distanced themselves from the analogy between deposits and shares in financial cooperatives which underlies the cooperative guarantee scheme.’24In recitals 11 to 15 of the decision of 3 July 2014, the Commission describes the legislative process which led to the adoption of the notified measure as follows:‘(11)On 15 October 2008, the Belgian Parliament approved a law allowing the Belgian Government to take measures to preserve financial stability. On 14 November 2008, the Belgian State published a Royal Decree increasing the level of coverage under the Deposit Guarantee Scheme for credit institutions to EUR 100000, while also introducing an insurance guarantee scheme for “branch 21” life [as]surance products. …(12)On 14 April 2009, the Belgian State amended the Law of 15 October 2008, allowing the government to put in place by Royal Decree a system to guarantee the paid-up capital of individual shareholders in financial cooperatives. By Royal Decree of 10 October 2011 the Belgian authorities modified the Royal Decree of 14 November 2008. The Royal Decree of 10 October 2011 contains further details on the cooperative guarantee scheme.(14)On 13 October 2011, the three cooperative undertakings of ARCO … applied to participate in the cooperative guarantee scheme. The Belgian Government approved that request by a Royal Decree of 7 November 2011. …25In recital 80 et seq. of that decision, the Commission sets out its assessment of the measure notified.26As regards the determination of the beneficiary of that measure, the Commission notes, in recital 81 of that decision, that there is an important difference between the ARCO Group, including the recognised cooperatives Arcopar, Arcoplus and Arcofin (together ‘the ARCO Group cooperatives’), which in 2001 became the main shareholder of Dexia, and the other financial cooperatives which are potentially eligible to participate in the cooperative guarantee scheme.27Recitals 82 to 84 of the decision of 3 July 2014 state:‘(82)From the description of the facts, it is clear that the cooperative guarantee scheme was from the beginning tailor-made for ARCO, which had run into trouble because of its investments in Dexia. ARCO was ultimately the only financial cooperative that applied to participate in the measure.(83)In relation to the other financial cooperatives, the Commission notes that the cooperative guarantee scheme is a voluntary scheme, that the Council of Ministers had discretion over whether and if so on what conditions to admit an applicant financial cooperative to the cooperative guarantee scheme, that none of the other financial cooperatives applied to join the cooperative guarantee scheme and that some of them actively distanced themselves from it. The Commission also observes that no other financial cooperative had problems with its investments to the same extent as ARCO had with Dexia.(84)Therefore, the Commission concludes that the only real beneficiary with economic activities from the cooperative guarantee scheme is ARCO.’28In recital 90 of that decision, the Commission concludes that the announcement and the implementation of the cooperative guarantee scheme have to be dealt with as a single measure, for the reasons set out in recitals 85 to 89 of that decision, as follows:‘(85)The Commission observes that the measure was decided and announced by the government on 10 October 2008. It is clear that the Belgian Government had made the decision to offer ARCO the benefit of a cooperative guarantee scheme at the same time as the measure in favour of Dexia was designed in 2008. Another press release of 21 January 2009 further detailed the measure and after that the legal transposition of the government’s commitment began.(86)The Commission takes note of the binding and unambiguous language in the press releases of 10 October 2008 and 21 January 2009, which used terms such as ‘décidé’ and ‘l’engagement’, thus creating a legitimate expectation as to their fulfilment.(87)The press releases were also sent out via the official channels: the press release of 10 October 2008 was sent out by the services of the Minister of Finance, while the press release of 10 January 2009 was sent on behalf of the Prime Minister and the Minister of Finance. The repeated nature of the press communication strengthened the underlying message.(88)The Commission notes that it was clear already at the time of the press release of 10 October 2008 that the cooperative guarantee scheme would be designed as an extension of the deposit guarantee scheme. The press release of 21 January 2009 contains further technical details. As soon as the press release of 21 January 2009 was published, ARCO put it on its website. The latter step was clearly taken with a view to reassuring its individual shareholders. Moreover the Commission notes the consistency of the measure over time given that the measure has not materially changed between the initial announcement on 10 October 2008 and the final Royal Decree.(89)In its judgment [of 19 March 2013, Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others, (C‑399/10 P and C‑401/10 P, EU:C:2013:175)], the Court of Justice held that the announcement of a measure and the effective implementation can be analysed as one single intervention, if to do so is justified by the chronology and purpose of the announcement and the implementation and by the circumstances of the undertaking at the time of such intervention. In a similar manner, in the case of this measure the Belgian State decided and announced a measure on 10 October 2008, which was later implemented for the same purpose in respect of the originally intended beneficiary. Moreover, in its own decisions, the Commission has considered an announcement and an implementation to be one measure and considered an advantage to have been created as of the date of the announcement. Indeed, the current Belgian Minister of Finance qualified the measure in question as a commitment made in 2008.’29The examination of the existence of State aid, within the meaning of Article 107(1) TFEU, is set out in recitals 91 to 110 of the decision of 3 July 2014. Recital 99 thereof, relating to the condition of commitment of State resources, is worded as follows:‘(99)As regards the imputability of the measure to the Belgian State, it is clear that the cooperative guarantee scheme cannot be seen as a transposition of … Directive [94/19]. [That directive] only obliges Member States to introduce a deposit guarantee scheme for deposits of credit institutions and Article 2 of that Directive explicitly provides that all instruments that fall within the definition of own funds of credit institutions are excluded from repayment by deposit guarantee schemes. If a Member State decides to establish other repayment schemes guaranteeing other financial products, such a decision does not stem from Union law but is an initiative from the Member State itself …’30Recitals 101 to 107 of that decision, relating to the existence of a selective advantage, state:‘(101)The measure is also clearly selective. In the first place, it only applies to holders of financial cooperative shares and not to persons holding investment products issued by competing undertakings. Thus financial players which offered conservative bond or money market funds or capital-guaranteed mutual funds could not offer their clients a similar guarantee. The Belgian State argues that individual shares of financial cooperatives are in essence similar to deposits. However, a number of the elements which the Belgian State invoked refer to cooperatives in general not to financial cooperatives. In addition, the description of financial cooperative shares offered by the Belgian State does not contain references to relevant information, such as the risks of investing in those instruments, which are not characteristic of deposits.(102)The selective nature of the measure can also be seen when the treatment of financial cooperatives is compared to other recognised cooperatives that are non-financial. The Belgian State relied on [the judgment of 8 September 2011, Paint Graphos and Others (C‑78/08 to C‑80/08, EU:C:2011:550),] to plead in favour of special treatment for individual shareholders of financial cooperatives. …(103)The Commission considers that the argument of the Belgian State cannot succeed because the nature of the advantage conferred by the measure is qualitatively different from that which was examined by the Court in Paint Graphos [and Others (C‑78/08 to C‑80/08)]. The measure put in place by Belgium involves the creation of a positive benefit and not relief from a fiscal burden or from an obligation to pay a charge. As such, the standard three-part analysis which the Union courts have endorsed when examining whether a fiscal advantage or exemption from a levy is selective cannot be applied to the measure.(104)In any event, even if the Paint Graphos [and Others (C‑78/08 to C‑80/08)] analysis could be applied to the measure, the latter’s specific features are such that its selective nature would remain.(105)First the Commission observes that Paint Graphos [and Others (C‑78/08 to C‑80/08)] refers to all producers’ and workers’ cooperatives, not to a relatively small subsector such as financial cooperatives. If, as Belgium claims, there should be special treatment for “genuine” cooperatives, that special treatment should apply to all recognised cooperatives. The limited focus of the measure on financial cooperatives only is therefore sufficient in itself to establish the selective nature of the measure.(106)Second, the Commission observes that in the view of the Belgian State, financial cooperatives seemed to deserve additional privileges as of 10 October 2008. The Commission observes that prior to that date recognised cooperatives got a form of favourable treatment as a result of their special status in the form of a withholding tax exemption. The Commission does not take a view in the present Decision on whether that tax advantage is proportionate but it believes that there was no reason to introduce suddenly on 10 October 2008 additional compensation for, or protection of, companies which have the status of financial cooperatives.(107)Finally, even if the Commission were to enter into a Paint Graphos and Others (C‑78/08 to C‑80/08, EU:C:2011:550)] analysis as proposed by Belgium, it believes that there is no justification for providing a 100% guarantee to individual shareholders of ARCO …, whose entities were limited liability companies. Because of the nature of such companies as determined by Belgium’s general rules on company law, individual shareholders of ARCO should have been aware that they could lose their entire capital in case of a liquidation. Moreover, protecting 100% of all capital subscribed by the individual shareholders of financial cooperatives is not a proportionate measure … as those shareholders would be shielded from any risk, which would create an undue advantage for the undertakings of which they are shareholders.’31The examination of the distortion of competition and the fact that trade between Member States was affected is set out in recitals 108 and 109 of the decision of 3 July 2014. Those recitals are worded as follows:‘(108)The cooperative guarantee scheme provides financial cooperatives with an advantage that other players offering retail investment products and other non-financial recognised cooperatives do not have. Thanks to the measure ARCO has been able to preserve market share for a longer period of time. ARCO did not suffer from capital outflows, or they only occurred later and at a lower level than would have been the case in the absence of the measure. As a result, capital that would otherwise have been available for investment did not become available to those other players, which had to compete on their merits and could not rely on the cooperative guarantee scheme. Therefore, the cooperative guarantee scheme distorts competition.(109)Where a Member State grants aid to an undertaking, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to (further) penetrate the market are thereby reduced. As there are many international providers of investment products active on the Belgian market, the measure most definitely has an effect on Union-wide trade.’32On the basis of the analysis carried out in recitals 91 to 109 of that decision, the Commission concludes, in recital 110 of that decision, that the scheme to guarantee recognised cooperatives operating in the financial sector at issue in the main proceedings ‘involves State resources, represents a selective advantage to ARCO, distorts competition and affects intra-Union trade’ and that ‘it therefore meets all the State aid criteria’. The Commission considers, also, that ‘all of those elements were in place at the latest when the Royal Decree of 10 October 2011 was adopted but the advantage created by the measure was already in existence as from the announcement by the Belgian authorities on 10 October 2008 that such a measure would be created’.33In recitals 111 to 128 of the decision of 3 July 2014, the Commission assesses the compatibility of that aid with the internal market. It concludes, in recital 129 of that decision, that that aid ‘cannot be considered compatible with the internal market because it is neither appropriate nor necessary nor proportionate for the purposes of Article 107(3)(b) [TFEU] and it does not come within the scope of any other provision governing compatibility of State aid’.34In conclusion, the Commission notes, in recital 143 of that decision, that ‘the cooperative guarantee scheme constitutes State aid in favour of Arcopar, Arcofin and Arcoplus that Belgium has unlawfully implemented in breach of Article 108(3) [TFEU]’. In the same recital, it considers that ‘the Belgian State should withdraw the legislation underlying the cooperative guarantee scheme (in particular the Law of 14 April 2009 and the Royal Decree of 10 October 2011) and should recover the advantage from Arcopar, Arcofin and Arcoplus’.35Article 1 of the decision of 3 July 2014 declares ‘the guarantee scheme unlawfully adopted by Belgium for the financial cooperatives of [the] ARCO [Group], … in breach of Article 108(3) [TFEU] … incompatible with the internal market’.36Article 2(1) of that decision requires the Kingdom of Belgium to recover that aid from the beneficiaries, according to the calculations provided by the Commission. Article 2(4) of that decision provides that ‘Belgium shall continue to refrain from making any payments under the scheme referred to in Article 1 with effect from the date of notification of this decision’. The dispute in the main proceedings and the questions referred for a preliminary ruling 37In the context of the financial crisis and in particular as part of the recapitalisation of the Belgian-French Dexia Bank, the Belgian authorities established, in accordance with Article 36/24 of the Law of 22 February 1998, a guarantee scheme providing for the repayment, by means of a Special protection fund for deposits, up to a maximum of EUR 100000, of funds invested by natural persons in shares issued by financial cooperatives which were admitted to that guarantee scheme in the event of default on the part of those cooperatives. Pursuant to the Royal Decree of 14 November 2008, as amended by the Royal Decree of 10 October 2011, the cooperatives of the ARCO Group, one of Dexia’s main shareholders, were admitted, by the Royal Decree of 7 November 2011, to that scheme.38Between December 2011 and January 2012, Mr Vervloet, Mr De Wit, Mr Timperman, Ms Van Braekel, Mr Beckx, Mr De Schryver, Mr Deneire and Mr Van Hoof, the Ogeo Fund pension fund body, the municipality of Schaarbeek and Mr Ensch Famenne brought actions before the Raad van State (Belgian Council of State) seeking to have the Royal Decrees of 10 October and 7 November 2011 annulled. To that end, they claimed, in essence, that those royal decrees infringe the principle of equality enshrined in the Belgian Constitution, in so far as they create a difference in treatment between the shareholders, being natural persons, of cooperatives, who are able to benefit from the guarantee scheme established in particular by those royal decrees, and the shareholders, being natural persons, of companies close to the financial sector, who are excluded from that scheme.39Since it considers that those royal decrees have their basis in Article 36/24 of the Law of 22 February 1998, that, therefore, they are part of the limitations which the Belgian legislature itself established and that the difference in treatment invoked results from a legislative norm, the Raad van State (Council of State) referred several preliminary questions to the Grondwettelijk Hof (Constitutional Court, Belgium) concerning the compatibility of that article with the Belgian Constitution.40The Grondwettelijk Hof (Constitutional Court) states, in the first place, that the Council of Ministers maintains, in order to justify that difference in treatment, that the shares of a recognised cooperative operating in the financial sector are similar to bank deposits in respect of which Directive 94/19 requires Member States to provide for a guarantee scheme. The ARCO Group cooperatives, which are intervening parties in the proceedings before the Raad van State (Council of State), claim that the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998 constitutes a transposition of that directive, in so far as the shares of cooperatives possess the characteristics of a savings product.41In those circumstances, the referring court considers that, in order to assess whether the Belgian legislature could, without infringing the principle of equality enshrined in the Belgian Constitution, empower the King to establish a scheme intended to guarantee, in addition to bank deposits, the value of shares held by a natural person, as a member, in a recognised cooperative operating in the financial sector, it is necessary to determine whether that legislature was empowered, or even required, to act in that manner in accordance with Article 2 of Directive 94/19, read in the light, as the case may be, of Articles 20 and 21 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and of the general principle of equal treatment.42As regards, in the second place, the Commission decision of 3 July 2014, the Grondwettelijk Hof (Constitutional Court) notes that the assessment of the potentially selective nature of a measure, for the purposes of the application of Article 107 TFEU, presents certain similarities with the assessment of respect for the principle of equal treatment and non-discrimination guaranteed by the Belgian Constitution. That court states that the Belgian State and the ARCO Group cooperatives, which contest, before it, the validity of that decision, brought actions for annulment of that decision before the General Court of the European Union. The referring court points out that the arguments advanced before it by those companies are reaffirmed and developed in the context of the action for annulment brought by them before the General Court, to which those companies referred.43In that regard, those companies complain, according to the Grondwettelijk Hof (Constitutional Court), that the Commission infringes, in particular, Article 107(1), Article 108(2) and the second paragraph of Article 296 TFEU as well as the procedural rules governing the burden of proof and taking of evidence, by invoking two pleas relating to the validity of the part of the decision of 3 July 2014 which classifies the measure at issue as new State aid. They claim, first, that they did not benefit from a selective advantage and, secondly, that that measure is not capable of distorting or threatening to distort competition, or of affecting trade between Member States.44In the context of their first plea, those companies contest, first, the Commission’s conclusion that they are beneficiaries of the State aid declared in the decision of 3 July 2014. The direct beneficiaries of the measure at issue are the natural persons, who are members of cooperatives operating in the financial sector and Dexia, in which the ARCO Group cooperatives invested. The aid granted to Dexia was authorised by the Commission.45The ARCO Group cooperatives contest, secondly, the Commission’s conclusion that the statements of 10 October 2008 and 21 January 2009 and the Royal Decree of 7 November 2011 constitute a single intervention by the State. They note, in that regard, that the press release of 10 October 2008 does not specifically name them.46Those companies contest, thirdly, the Commission’s conclusion that those companies obtain an advantage resulting from the fact that their members, being natural persons, had assurance, from 10 October 2008, that their shares would be protected by the Belgian State. The Commission has not adduced evidence substantiating that conclusion. The measure at issue did not grant the ARCO Group cooperatives a better access to the capital market. The statements made by the Belgian Government in 2008 and 2009 had no effect on the competitive position of those companies. Furthermore, the Commission cannot rely on presumption as to the existence of an advantage, since the guarantee granted by the Belgian State is neither unlimited nor free.47The ARCO Group cooperatives claim, fourthly, that the measure at issue is in no way selective. The Commission does not provide any justification for the comparison it makes between financial cooperatives, on the one hand, and non-financial cooperatives and other financial companies, on the other hand. It does not show a difference in treatment between undertakings in a comparable legal and factual situation and it infringed its duty to state reasons. The situation of financial cooperatives is specific in the light, in particular, of their shareholding structure, 99% of which consists of small investors, of the existence of an authorisation which eliminates any speculative endeavour, of the limitations on dividends capable of being received and of the tax treatment of those dividends, which is similar to that of income generated by savings deposits. In any event, a possible difference in treatment is justified by the nature or general scheme of the scheme at issue. In that regard, the ARCO Group cooperatives refer to the judgment of 8 September 2011, Paint Graphos and Others (C‑78/08 to C‑80/08, EU:C:2011:550).48Those companies claim, fifthly, that the decision of 3 July 2014 is inadequately reasoned. The Commission failed to give adequate reasons regarding the existence of an advantage.49In support of their second plea, the ARCO Group cooperatives contest, first, the Commission’s conclusion that the measure at issue is capable of distorting competition. The Commission was not justified in considering that the capital of recognised cooperatives operating in the financial sector was available for providers of investment products or for recognised non-financial cooperatives. Secondly, those companies claim that the Commission did not substantiate its conclusion to the effect that trade between Member States is liable to be threatened.50Having regard to those arguments, the referring court questions the validity of the decision of 3 July 2014, in the light of Articles 107 and 296 TFEU.51That court considers, in the third place, that, in the event of the Court holding that that decision is invalid due to the Commission’s failure to properly justify the classification of the scheme provided for in the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998 as new State aid, it is necessary to ensure that there is no other reasoning allowing that scheme to be classified as new State aid, which should have been notified to the Commission in accordance with Article 108(3) TFEU.52In the fourth place, the referring court considers that, in the event that the Court holds the decision of 3 July 2014 to be valid, it would be necessary to determine the date from which the State aid at issue was put into effect. That decision does not expressly identify that date. In that regard, that court notes, first, that it follows from that decision that the guarantee scheme at issue was notified to the Commission by letter of 7 November 2011 and, secondly, that the Royal Decree of 3 March 2011, under which the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998 was given force of law, entered into force on 1 April 2011. Although that State aid could not be regarded as having been put into effect on the date the Royal Decree of 3 March 2011 was adopted or entered into force, there is doubt as to whether the Belgian State failed to fulfil an obligation under Article 108(3) TFEU. The first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998 only empowers the King to establish the guarantee scheme at issue at it is only by the Royal Decree of 7 November 2011 that such a guarantee was actually granted, on the basis of the Royal Decree of 10 October 2011. Moreover, there are doubts as to whether the Commission could conclude, in recital 110 of the decision of 3 July 2014, that all the elements constituting State aid were in place at the latest when the Royal Decree of 10 October 2011 was adopted, but that the advantage created by the measure at issue was already in existence as from the announcement made on 10 October 2008.53Finally, according to the Grondwettelijk Hof (Constitutional Court), it is not clear from the decision of 3 July 2014 that the Commission considered that the State aid at issue was put into effect on the date the Royal Decree of 3 March 2011 was adopted, the date on which it entered into force or on a date prior to that adoption or entry into force, or indeed that that institution considered that that aid was put into effect on a date later than those events. In the first of those cases, it would be necessary to confirm that Article 108(3) TFEU precluded the adoption of that royal decree. In the second of those cases, it would be necessary to determine whether, in the light of the time which has elapsed between the entry into force of that royal decree and the adoption of the royal decrees implementing that royal decree, Article 108(3) TFEU precluded the adoption of the Royal Decree of 3 March 2011, in so far as that provision requires that the Commission be informed ‘in sufficient time’.54In those circumstances, the Grondwettelijk Hof (Constitutional Court) decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:‘(1)Must Articles 2 and 3 of Directive 94/19 …, where appropriate read in conjunction with Articles 20 and 21 of the Charter … and with the general principle of equality, be interpreted as meaning that:they impose an obligation on the Member States to guarantee the shares of recognised cooperatives operating in the financial sector in the same way as deposits;(b)they preclude a Member State from entrusting to the body which is partially responsible for guaranteeing the deposits referred to in that directive the task of also guaranteeing, in an amount up to EUR 100000, the value of the shares of the members, being natural persons, of a recognised cooperative operating in the financial sector?Is [the decision of 3 July 2014] compatible with Articles 107 and 296 TFEU in so far as it classifies the guarantee scheme which forms the subject of that decision as new State aid?In the event of a negative answer to the second question, must Article 107 TFEU be interpreted as meaning that a scheme concerning the State guarantee granted to the members, being natural persons, of recognised cooperatives operating in the financial sector, within the meaning of the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998, constitutes new State aid which must be notified to the … Commission?In the event of an affirmative answer to the second question, is Decision 2014/686 compatible with Article 108(3) TFEU if it is interpreted as holding that the State aid at issue was put into effect before 3 March 2011 or 1 April 2011 or on one or other of those dates, or, conversely, if it is interpreted as holding that the State aid at issue was put into effect at a later date?(5)Must Article 108(3) TFEU be interpreted as precluding a Member State from adopting a measure, such as that contained in Article 36/24(1), point 3, of the Law of 22 February 1998, if that measure puts State aid into effect or constitutes State aid which has already been put into effect and that State aid has not yet been notified to the … Commission?(6)Must Article 108(3) TFEU be interpreted as precluding a Member State from adopting, without prior notification to the European Commission, a measure, such as that contained in Article 36/24(1), point 3, of the Law of 22 February 1998, if that measure constitutes State aid which has not yet been put into effect?’ Consideration of the questions referred for a preliminary ruling Admissibility of the questions referred 55Some of the interested parties referred to in Article 23 of the Statute of the Court of Justice of the European Union who submitted observations to the Court have expressed doubts relating to the admissibility of the questions posed by the referring court, on the ground that those questions are not connected with the issue of the main proceedings. Since that dispute concerns only Belgian constitutional law, Directive 94/19 and Articles 107 and 108 TFEU do not relate to it.56In that regard, it must be borne in mind that, according to the Court’s settled case-law, in the context of the cooperation between the Court and the national courts provided for in Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle required to give a ruling (judgments of 15 January 2013, Križan and Others, C‑416/10, EU:C:2013:8, paragraph 53, and of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 34 and the case-law cited).57It follows that questions relating to EU law enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgments of 15 January 2013, Križan and Others, C‑416/10, EU:C:2013:8, paragraph 54, and of 30 May 2013, Halaf, C‑528/11, EU:C:2013:342, paragraph 29 and the case-law cited).58In this case, it is apparent from the order for reference that the Grondwettelijk Hof (Constitutional Court) is ruling on the question whether the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998 infringes the principle of equality and non-discrimination guaranteed by Articles 10 and 11 of the Belgian Constitution, in so far as it establishes a difference in treatment between the shareholders, being natural persons, of recognised cooperatives operating in the financial sector, and the shareholders, being natural persons, of other companies operating in that sector.59As pointed out, in essence, by the Advocate General in points 30 and 31 of her Opinion, it follows both from that decision and from the answer given by the referring court in response to the request for clarification sent to it by the Court under Article 101 of its Rules of Procedure, that that court considers that, before ruling on the compatibility with the Belgian Constitution of the guarantee of shares of individual members of recognised cooperatives operating in the financial sector, authorised by the first subparagraph of Article 36/24(1), point 3, of the Law of 22 February 1998, it must determine whether that provision is compatible with EU law. Therefore, should it prove that the guarantee scheme at issue in the main proceedings was imposed by Directive 94/19, a difference in treatment between the shareholders, being natural persons, of recognised cooperatives operating in the financial sector, on the one hand, and the shareholders, being natural persons, of other companies operating in that sector, on the other hand, could be justified. If, on the other hand, it should prove the case that EU law precludes such a guarantee scheme, on the ground that it is not compatible with the provisions of Directive 94/19 or with Articles 107 and 108 TFEU, a difference in treatment between those shareholders could not be justified.60In those circumstances, it is not obvious that the interpretation of EU law sought by the referring court bears no relation to the actual facts of the main action or its purpose.61Therefore, the referring court’s questions must be declared admissible. The first question 62By its first question, the referring court asks, in essence, whether Articles 2 and 3 of Directive 94/19, read, as the case may be, in conjunction with Articles 20 and 21 of the Charter and the general principle of equal treatment, must be interpreted as requiring Member States to adopt a scheme to guarantee the shares of recognised cooperatives operating in the financial sector, such as that at issue in the main proceedings, and, in the event of an answer in the negative, whether they preclude a Member State from adopting such a scheme.63Under the first subparagraph of Article 3(1) of Directive 94/19, Member States are to ensure that within their territory one or more deposit-guarantee schemes are introduced and officially recognised.64In order to assess the scope of the obligation imposed by that provision on Member States so as to determine whether that obligation involves adopting a scheme to guarantee the shares of recognised cooperatives operating in the financial sector, such as that at issue in the main proceedings, it is necessary to examine whether such shares come within the material and personal scope of application of Directive 94/19.65As regards, in the first place, the material scope of application of Directive 94/19, it is apparent from the very title of that directive that it relates to ‘deposit’ guarantee schemes. Under the first subparagraph of Article 1(1) of that directive, ‘deposit’ means, for the purposes of that directive, first, any credit balance which results from funds left in an account or from temporary situations deriving from normal banking transactions and which a credit institution must repay under the legal and contractual conditions applicable, and, secondly, any debt evidenced by a certificate issued by that credit institution.66It is apparent from the file available to the Court that the shares of companies such as recognised cooperatives operating in the financial sector at issue in the main proceedings do not fall within that definition. As the Advocate General stated in point 40 of her Opinion, it appears that such shares are essentially participations in the own capital of the undertaking concerned, whereas the deposits referred to in Directive 94/19 are distinguished by the fact that they form part of the borrowed capital of a credit institution.67Moreover, although the deposits must, in accordance with the definition in the first subparagraph of Article 1 of Directive 94/19, be repaid to their depositors under the legal and contractual conditions applicable, the amount received, in the case of withdrawal, by the holder of shares in recognised cooperatives operating in the financial sector at issue in the main proceedings, reflects those undertakings’ performance. The acquisition of such shares is thus more comparable to the acquisition of shares in companies, with respect to which no guarantees are provided by Directive 94/19, than to a payment made into a bank account.68Moreover, contrary to the apparent views of the Belgian Government, shares of recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, cannot be equated with the shares of British or Irish building societies, which are regarded as deposits for the purposes of the second subparagraph of Article 1(1) of Directive 94/19.69First, that special extension of the concept of ‘deposit’ relates by its very wording only to shares in British and Irish building societies, and not shares in recognised Belgian cooperatives operating in the financial sector. Nothing in the wording or in the origin of the second subparagraph of Article 1(1) of Directive 94/19 suggests that that provision is not intended to cover instruments other than those which are expressly referred to therein. Secondly, that provision expressly excludes from that extension shares in those building societies which are of a capital nature. Shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, constitute, as is apparent from paragraph 66 of the present judgment, a participation in the own capital of a company.70As regards, in the second place, the personal scope of application of Directive 94/19, it should be noted that both types of deposit referred to in the first subparagraph of Article 1(1) of that directive have in common the fact that they were made with a credit institution. Therefore, in order for it to be possible to regard the shares in recognised cooperatives operating in the financial sector as being ‘deposits’, within the meaning of Directive 94/19, it is, in any event, necessary that those undertakings can be regarded as ‘credit institutions’, within the meaning of that directive.71In that regard, Article 1(4) of Directive 94/19 defines the concept of ‘credit institution’ as covering undertakings the business of which is to receive deposits or other repayable funds from the public and to grant credits for their own account. It is not apparent either from the order for reference or from the observations submitted before the Court that those undertakings’ activity consists in granting credits for their own account. It does not appear that such undertakings receive deposits from the public or grant regularly, like banks, credits for their own account.72It follows that shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, come within neither the material nor the personal scope of application of Directive 94/19. Consequently, it cannot be concluded that the first subparagraph of Article 3(1) of Directive 94/19 imposes on Member States the obligation to adopt a scheme to guarantee shares in recognised cooperatives operating in the financial sector such as that at issue in the main proceedings.73That conclusion is not called into question in the light of the general principle of equal treatment, also raised by the referring court in its first question.74In that regard, the Court has already held that the principle of equal treatment is a general principle of EU law, enshrined in Articles 20 and 21 of the Charter, which requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (see, inter alia, the judgment of 14 September 2010, Akzo Nobel Chemicals and Akcros Chemicals v Commission and Others, C‑550/07 P, EU:C:2010:512, paragraphs 54 and 55 and the case-law cited).75As is apparent from paragraphs 65 to 72 of the present judgment and as the Advocate General pointed out in point 49 of her Opinion, from the point of view of the subject matter of the EU-law deposit guarantee scheme, shares of recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, are different from deposits made with credit institutions, and that is so even though they may resemble traditional savings products in many respects, in particular due to their taxation, their regulation by the State and their popularity with the public.76It is therefore necessary to examine the question whether Directive 94/19 precludes Member States from adopting a guarantee scheme as regards shares in recognised cooperatives operating in the financial sector such as those at issue in the main proceedings.77In that regard, it must be noted that, in accordance with the second indent of Article 2 of Directive 94/19, all instruments which fall within the definition of ‘own funds’, as set out in Article 2 of Directive 89/299, are excluded from any repayment by guarantee schemes.78Article 2 of Directive 89/299 covers only the unconsolidated own funds ‘of credit institutions’, which are defined, in accordance with Article 1(2) of that directive, referring to Article 1 of Directive 77/780, as amended by Directive 86/524, as undertakings whose business is to receive deposits or other repayable funds from the public and to grant credits for their own account. That definition is, moreover, the same as that in Article 1(4) of Directive 94/19.79However, as is apparent from paragraph 71 of the present judgment, recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, do not come within that definition of credit institutions.80In that context, it should be noted that Article 57 of Directive 2006/48, which replaces Directive 89/299, covers also the unconsolidated own funds of ‘credit institutions’, which are also defined, in Article 4(1) of the first of those directives, in the same way as the credit institutions covered by Directive 94/19.81In those circumstances, the extension of a deposit guarantee scheme, such as that provided for under Belgian law, to shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, does not appear, in itself, to be incompatible with the second indent of Article 2 of Directive 94/19.82That interpretation is supported by the fact that Directive 94/19, as is apparent from recitals 8, 16 and 17 thereof, merely provides for a minimum level of harmonisation in matters relating to deposit guarantees.83Although the provisions of Directive 94/19 do not, therefore, prevent Member States from extending to shares in recognised cooperatives operating in the financial sector the deposit-guarantee scheme provided for by their national legislation in accordance with those provisions, such an extension must not undermine the practical effectiveness of the deposit-guarantee scheme that that directive requires them to establish (see, to that effect, judgment of 23 November 2006, Lidl Italia, C‑315/05, EU:C:2006:736, paragraph 48) or infringe the provisions of the FEU Treaty, in particular Articles 107 and 108 TFEU.84As was, in essence, stated by the Advocate General in point 58 of her Opinion, it cannot be ruled out that the practical effectiveness of the deposit-guarantee imposed by EU law is undermined where a Member State considerably encumbered its national deposit-guarantee scheme predominantly with risks not directly related to the purpose of that scheme. The higher the risks to be secured are, the more the deposit guarantee is watered down and the less the deposit-guarantee scheme is able, from the same resources, to contribute towards the attainment of the objective pursued by Directive 94/19, which, as is apparent from recital 1 thereof, is to protect savers in the event of the unavailability of deposits made in credit institutions and of increasing the stability of the banking system (see, to that effect, judgment of 2 September 2015, Surmačs, C‑127/14, EU:C:2015:522, paragraph 21).85It is therefore for the referring court to determine whether the adoption of a guarantee scheme concerning shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, is liable to undermine the practical effectiveness of the deposit-guarantee scheme provided for by Belgian legislation in accordance with Directive 94/19.86In that regard, the referring court must in particular take into account the fact that the adoption of such a scheme concerning shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings, benefit, in this case, a large number of small investors of the Belgian deposit-guarantee scheme, and the fact that the ARCO Group cooperatives, which were admitted to that guarantee scheme a short time before the guarantee provided for by that scheme was invoked, did not make any contribution in the past towards the financing of the scheme.87In the light of all the above considerations, the answer to the first question is that Articles 2 and 3 of Directive 94/19 must be interpreted as not requiring Member States to adopt a scheme to guarantee shares in recognised cooperatives operating in the financial sector, such as that at issue in the main proceedings, and as not precluding Member States from adopting such a scheme, in so far as that scheme does not undermine the practical effectiveness of the deposit-guarantee scheme that that directive requires Member States to establish, which is a matter to be determined by the referring court, and provided that it complies with the FEU Treaty, in particular with Articles 107 and 108 TFEU. The second question 88By its second question, the referring court asks, in essence, whether the decision of 3 July 2014 infringes Article 107 TFEU, first, and Article 296 TFEU, secondly, in so far as that decision classifies the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings as new State aid.89As regards, first, Article 107 TFEU, it is settled case-law that classification as State aid, for the purposes of that provision, requires all the following conditions to be fulfilled. First, there must be intervention by the State or through State resources. Secondly, the intervention must be liable to affect trade between Member States. Thirdly, it must confer an advantage on the recipient. Fourthly, it must distort or threaten to distort competition (see, inter alia, judgments of 10 June 2010, Fallimento Traghetti del Mediterraneo, C‑140/09, EU:C:2010:335, paragraph 31, and of 29 March 2012, 3M Italia, C‑417/10, EU:C:2012:184, paragraph 37).90Although the fact that the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings is the responsibility of the State and that that scheme involves State resources is not contested in itself, the ARCO Group cooperatives and the Belgian Government consider, on the contrary, that the other three conditions allowing that guarantee scheme to be classified as ‘State aid’, are not satisfied. They contest the fact that that scheme confers a selective advantage on the ARCO Group cooperatives, that it affects trade between Member States and that it distorts competition. It is therefore necessary to examine whether those three conditions are satisfied, in order to determine whether the Commission could validly classify that scheme as ‘State aid’ in the decision of 3 July 2014.91As regards the condition relating to the advantage conferred by the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings on the ARCO Group cooperatives, it should be noted, first, that, in recitals 82 to 84 of the decision of 3 July 2014, the Commission considered that ARCO was the only real beneficiary of the scheme.92According to the ARCO Group cooperatives, that scheme does not however benefit them, but seeks to confer an advantage on the individual members of recognised cooperatives operating in the financial sector and on the Dexia Bank, of which that group was one of the main shareholders and which the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings was intended to help rescue.93In that regard, it must be observed that measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions are regarded as aid (see, inter alia, judgments of 8 May 2013, Libert and Others, C‑197/11 and C‑203/11, EU:C:2013:288, paragraph 83, and of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 94 and the case-law cited).94As noted by the Advocate General in points 74 to 76 of her Opinion, there is no doubt that the ARCO Group benefits from the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings, which the ARCO Group cooperatives moreover, unlike the other recognised cooperatives operating in the financial sector, themselves applied to join and, subsequently, derived the benefit thereof. It was that guarantee scheme alone which protected the ARCO Group from the imminent flight of private investors in that group and was thus able, at the same time, to participate, as main shareholder, in the recapitalisation of Dexia Bank.95The fact that other interested parties, namely the individual shareholders of the ARCO Group cooperatives and the Dexia Bank, were also able to benefit from certain advantages under that guarantee scheme does not mean that that group must not be regarded as the beneficiary thereof.96Secondly, it should be noted that Article 107(1) TFEU prohibits State aid ‘favouring certain undertakings or the production of certain goods’, that is to say, selective aid (judgments of 28 July 2011, Mediaset v Commission, C‑403/10 P, not published, EU:C:2011:533, paragraph 36, and of 14 January 2015, Eventech, C‑518/13, EU:C:2015:9, paragraph 54).97In the present case, although the Commission considered, in recital 101 of the decision of 3 July 2014, that the scheme to guarantee shares in recognised cooperatives operating in the financial sector at issue in the main proceedings is a ‘clearly selective’ measure, the ARCO Group cooperatives contest the selective character of that guarantee scheme.98In that regard, it follows from the Court’s settled case-law that Article 107(1) TFEU requires an assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation (judgments of 28 July 2011, Mediaset v Commission, C‑403/10 P, not published, EU:C:2011:533, paragraph 36, and of 14 January 2015, Eventech, C‑518/13, EU:C:2015:9, paragraph 55; of this date, Commission v Hansestadt Lübeck, C‑524/14 P, paragraph 41, and of this date, Commission v World Duty Free Group and Others, C‑20/15 P and C‑21/15 P, paragraph 54).99As is apparent from paragraphs 65 to 83 of the present judgment, the Kingdom of Belgium extended the deposit-guarantee scheme provided for by Belgian legislation to shares in recognised cooperatives operating in the financial sector, such as those at issue in the main proceedings. The benefit of that guarantee scheme confers an economic advantage on those cooperatives in relation to other economic operators which offer for sale participations in their ownership in the form of shares without benefiting from such a guarantee scheme.100As pointed out by the Advocate General in point 81 of her Opinion, the recognised cooperatives operating in the financial sector, such as the ARCO Group cooperatives, are, in the light of the objective pursued by the deposit-guarantee scheme and consisting, as is apparent from recital 1 of Directive 94/19, in protecting savers in the event of the unavailability of deposits made in credit institutions and in increasing the stability of the banking system, in a factual and legal situation comparable, despite certain specificities resulting from the legal form of those cooperatives, to that of other economic operators, whether or not they are cooperatives, which offer for sale participations in their ownership in the form of shares, by making available to the public a form of capital investment which is not covered by the deposit-guarantee regime.101Consequently, the extension of the guarantee scheme provided for by Belgian legislation to shares in cooperatives operating in the financial sector has the effect of conferring an economic advantage on those cooperatives in relation to other economic operators which are, in the light of the objective pursued by that scheme, in a factual and legal situation comparable to that of those cooperatives and, therefore, has a selective character.102As regards the conditions relating to the effect of the scheme to guarantee the shares of recognised cooperatives operating in the financial sector at issue in the main proceedings on trade between Member States and the distortion of competition capable of being caused by that scheme, it should be noted that, for the purpose of categorising a national measure as State aid, it is not necessary to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, it being necessary only to examine whether that aid is liable to affect such trade and distort competition (judgments of 29 April 2004, Italy v Commission, C‑372/97, EU:C:2004:234, paragraph 44; of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774, paragraph 54; and of 19 March 2015, OTP Bank, C‑672/13, EU:C:2015:185, paragraph 54).103In this case, it appears, first, that the Commission could consider, in paragraph 108 of the decision of 3 July 2014, that, as a result of the guarantee scheme at issue in the main proceedings, the ARCO Group was able to maintain its market share over a longer period and did not suffer from capital outflows, or they only occurred later and at a lower level than would have been the case if it had not benefited from that scheme and that, consequently, the other actors, which had to compete on their merits and could not rely on that guarantee scheme, were not able to benefit from capital that would otherwise have been available for investment.104Secondly, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in trade between Member States, that undertaking must be regarded as affected by that aid (see, inter alia, judgments of 10 January 2006, Cassa di Risparmio di Firenze and Others, C‑222/04, EU:C:2006:8, paragraph 141, and of 8 May 2013, Libert and Others, C‑197/11 and C‑203/11, EU:C:2013:288, paragraph 77). In that regard, it is not necessary that the beneficiary undertaking itself be involved in trade between Member States. Where a Member State grants aid to an undertaking, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are thereby reduced (judgment of 8 May 2013, Libert and Others, C‑197/11 and C‑203/11, EU:C:2013:288, paragraph 78 and the case-law cited).105The Court has also held that the fact that an economic sector, such as that of financial services, has been involved in a significant liberalisation process at EU level, enhancing the competition that may already have resulted from the free movement of capital provided for in the Treaty, may serve to determine that the aid has a real or potential effect on competition and affects trade between Member States (see, to that effect, judgments of 10 January 2006, Cassa di Risparmio di Firenze and Others, C‑222/04, EU:C:2006:8, paragraphs 142 and 145, and of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 51).106The fact, invoked by the Belgian Government and the ARCO Group cooperatives, that the value of shares held by individual members of cooperatives operating in the financial sector is generally low is not capable of ruling out that the guarantee scheme at issue in the main proceedings distorts competition and affects trade between Member States.107The effects of the guarantee scheme at issue in the main proceedings on trade between Member States must be assessed by reference to all of the shares of recognised cooperatives operating in the financial sector which it covers and not by reference to the protected capital of an individual private member of a cooperative. In any event, according to the Court’s case-law, the relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected (judgments of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraph 81, and of 14 January 2015, Eventech, C‑518/13, EU:C:2015:9, paragraph 68).108It follows that the Commission was entitled to consider that the conditions relating to the distortion of competition and the fact that trade between Member States is affected were satisfied in the present case.109As regards, in the second place, Article 296 TFEU, the referring court asks, in essence, whether the classification of the guarantee scheme at issue in the main proceedings as ‘State aid’, within the meaning of Article 107(1) TFEU, is sufficiently reasoned in the decision of 3 July 2014.110It is clear from the settled case-law of the Court that the statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review (judgments of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 79, and of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 44).111Since, in order for a measure to be categorised as ‘State aid’ for the purposes of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled, a Commission decision categorising a national measure as State aid must set out the reasons why that institution takes the view that the State measure in question fulfils all of those conditions (judgment of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 45 and the case-law cited).112In the present case, the decision of 3 July 2014 fulfils those requirements.113It must be concluded that that decision is reasoned to the requisite degree in that it sets out clearly and unequivocally, in recitals 91 to 110 thereof, the reasons why the Commission concluded that each of the conditions referred to in Article 107(1) TFEU was fulfilled in this case.114In that context, it should be noted that it is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see, to that effect, judgments of 24 November 2005, Italy v Commission, C‑138/03, C‑324/03 and C‑431/03, EU:C:2005:714, paragraph 55, and of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission, C‑286/13 P, EU:C:2015:184, paragraph 94).115Moreover, as the Commission noted, it seems that some of the arguments raised by the ARCO Group cooperatives in support of an alleged failure to provide adequate reasons, such as they are set out in the order for reference, seek to challenge the merits of the decision of 3 July 2014 rather than the reasoning thereof. The same applies to the argument invoked by those cooperatives against the case-law cited by the Commission in support of the existence of an advantage, and to those presented by those cooperatives concerning the conditions relating to the distortion of competition and to the fact that trade between Member States is affected.116The Court has held that the obligation laid down in the second paragraph of Article 296 TFEU to state reasons is an essential procedural requirement that must be distinguished from the question whether the reasoning is well founded, which goes to the substantive legality of the measure at issue (see judgment of 17 September 2015, Total v Commission, C‑597/13 P, EU:C:2015:613, paragraph 18 and the case-law cited).117It follows that examination of the second question has disclosed nothing capable of affecting the validity of the decision of 3 July 2014. The third question 118In view of the answer to the second question, there is no need to answer the third question. The fourth to sixth questions 119By its fourth to sixth questions, which should be considered together, the referring court asks, in essence, first, whether Article 108(3) TFEU must be interpreted as precluding the implementation of the guarantee scheme at issue in the main proceedings and, secondly, whether the decision of 3 July 2014 infringes that provision concerning the date on which the Commission considers that the State aid declared by it was put into effect.120It must be noted that the first sentence of Article 108(3) TFEU imposes on the Member States an obligation to inform the Commission of any plans to grant or alter aid. According to the last sentence of Article 108(3) TFEU, a Member State planning to grant aid may not put its proposed measures into effect until that procedure has resulted in a final decision by the Commission. The prohibition laid down by that provision is designed to ensure that aid cannot become operational before the Commission has had a reasonable period in which to study the proposed measures in detail and, if necessary, to initiate the procedure provided for in Article 108(2) TFEU (judgment of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 57 and the case-law cited).121Article 108(3) TFEU thus establishes a prior control of plans to grant new aid (see judgments of 11 December 1973, Lorenz, 120/73, EU:C:1973:152, paragraph 2; of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 25; and of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 58).122It follows from the settled case-law of the Court that an aid measure which is put into effect in infringement of the obligations arising from Article 108(3) TFEU is unlawful (judgment of 5 March 2015, Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 59 and the case-law cited).123In this case, it is apparent from recital 1 of the decision of 3 July 2014 that the guarantee scheme at issue in the main proceedings was notified to the Commission only on 7 November 2011, that is to say on the date the application for capital protection by that guarantee scheme made by the ARCO Group cooperatives was accepted by the Royal Decree of that date.124A notification made at such a late stage cannot be regarded as being ‘in sufficient time’ within the meaning of Article 108(3) TFEU.125It is true that recital 110 of the decision of 3 July 2014, which states that the elements constituting State aid were in place at the latest when the Royal Decree of 10 October 2011 was adopted, but that the advantage created by the guarantee scheme at issue in the main proceedings was already in existence as from the announcement by the Belgian Government on 10 October 2008 that such a measure would be created, does not allow the date on which the Commission considers that the guarantee scheme at issue in the main proceedings was put into effect to be determined unequivocally.126However, without it being necessary to determine whether the State aid declared by the decision of 3 July 2014 was implemented immediately upon the announcement by the Belgian Government in a press release, on 10 October 2008, only by the Royal Decree of 7 November 2011 or, alternatively, on one of the days between those two dates mentioned by the referring court, it must be stated that, in so far as the beneficiaries of the guarantee scheme at issue in the main proceedings acquired the right to be admitted to that scheme at the latest in accordance with the Royal Decree of 7 November 2011, the notification of that scheme on that date took place, in any event, when that scheme was no longer in ‘draft form’ within the meaning of Article 108(3) TFEU. Consequently, as was stated by the Advocate General in point 118 of her Opinion, the principle of preliminary review by the Commission was infringed.127It follows that the Commission was entitled, in any event, to conclude, in recital 143 of the decision of 3 July 2014, that ‘[the Kingdom of] Belgium ha[d] unlawfully implemented [the guarantee scheme at issue in the main proceedings] in breach of Article 108(3) [TFEU]’.128In the light of all the above considerations, the answer to the fourth to sixth questions is that Article 108(3) TFEU must be interpreted as precluding a guarantee scheme such as that at issue in the main proceedings, in so far as the latter was put into effect in infringement of the obligations arising from that provision.129The examination of those questions has disclosed no factor of such a kind as to affect the validity of the decision of 3 July 2014. Costs 130Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. Articles 2 and 3 of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes, as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005, must be interpreted as not requiring Member States to adopt a scheme to guarantee shares in recognised cooperatives operating in the financial sector, such as that at issue in the main proceedings, and as not precluding Member States from adopting such a scheme, in so far as that scheme does not undermine the practical effectiveness of the deposit-guarantee scheme that that directive requires Member States to establish, which is a matter to be determined by the referring court, and provided that it complies with the FEU Treaty, in particular with Articles 107 and 108 TFEU. 2. The examination of the questions referred for a preliminary ruling by the Grondwettelijk Hof (Constitutional Court, Belgium) has disclosed nothing capable of affecting the validity of Commission Decision 2014/686/EU of 3 July 2014 on State aid SA.33927 (12/C) (ex 11/NN) implemented by Belgium — Guarantee scheme protecting the shares of individual members of financial cooperatives. 3. Article 108(3) TFEU must be interpreted as precluding a guarantee scheme such as that at issue in the main proceedings, in so far as the latter was put into effect in infringement of the obligations arising from that provision. [Signatures]( *1 ) Language of the case: Dutch. | ca8bb-04e1680-4b56 | EN |
The Court states that the General Court of the EU erred in law in setting aside the Commission decisions declaring a Spanish tax scheme incompatible with the internal market | 21 December 2016 ( *1 )‛Appeal — State aid — Article 107(1) TFEU — Tax system — Corporation tax — Deduction — Amortisation of goodwill resulting from acquisitions by undertakings resident for tax purposes in Spain of shareholdings of at least 5% in undertakings resident for tax purposes outside Spain — Concept of ‘State aid’ — Condition relating to selectivity’In Joined Cases C‑20/15 P and C‑21/15 P,TWO APPEALS under Article 56 of the Statute of the Court of Justice of the European Union, brought on 19 January 2015, European Commission, represented by R. Lyal, B. Stromsky, C. Urraca Caviedes and P. Němečková, acting as Agents,appellant,the other parties to proceedings being: World Duty Free Group SA, formerly Autogrill España SA, established in Madrid (Spain) (C‑20/15 P), Banco Santander SA, established in Santander (Spain) (C‑21/15 P), Santusa Holding SL, established in Boadilla del Monte (Spain) (C‑21/15 P),represented by J.L. Buendía Sierra, E. Abad Valdenebro and R. Calvo Salinero, abogados,applicants at first instance,supported by: Federal Republic of Germany, represented by T. Henze and K. Petersen, acting as Agents, Ireland, represented by G. Hodge and E. Creedon, acting as Agents, and by B. Doherty, Barrister, and by A. Goodman, Barrister, Kingdom of Spain, represented by M.A. Sampol Pucurull, acting as Agent,interveners in the appeal,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz, J.L. da Cruz Vilaça, E. Juhász and A. Prechal (Rapporteur), Presidents of Chambers, A. Borg Barthet, J. Malenovský, E. Jarašiūnas, F. Biltgen, K. Jürimäe and C. Lycourgos, Judges,Advocate General: M. Wathelet,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 31 May 2016,after hearing the Opinion of the Advocate General at the sitting on 28 July 2016,gives the following Judgment 1By its appeal in Case C‑20/15 P, the European Commission asks the Court to set aside the judgment of the General Court of the European Union of 7 November 2014, Autogrill España v Commission (T‑219/10, EU:T:2014:939; ‘the judgment under appeal Autogrill España v Commission’), whereby the General Court annulled Article 1(1) and Article 4 of Commission Decision 2011/5/EC of 28 October 2009 on the tax amortisation of financial goodwill for foreign shareholding acquisitions C 45/07 (ex NN 51/07, ex CP 9/07) implemented by Spain (OJ 2011 L 7, p. 48; ‘the first contested decision’).2By its appeal in Case C‑21/15 P, the Commission asks the Court to set aside the judgment of the General Court of the European Union of 7 November 2014, Banco Santander and Santusa v Commission (T‑399/11, EU:T:2014:938; ‘the judgment under appeal Banco Santander and Santusa v Commission’), whereby the General Court annulled Article 1(1) and Article 4 of Commission Decision 2011/282/EU of 12 January 2011 on the tax amortisation of financial goodwill for foreign shareholding acquisitions C 45/07 (ex NN 51/07, ex CP 9/07) implemented by Spain (OJ 2011 L 135, p. 1; ‘the second contested decision’). Background to the proceedings 3The background to the proceedings, as set out in the judgments under appeal, may be summarised as follows.4On 10 October 2007, after a number of written questions had been sent to the Commission in 2005 and 2006 by Members of the European Parliament and after a private operator had submitted a complaint to it in 2007, the Commission decided to initiate the formal investigation procedure with respect to an arrangement laid down in a provision of Spanish corporate tax law introduced by Ley 24/2001, de Medidas Fiscales, Administrativas y del Orden Social (Law 24/2001 on fiscal, administrative and social measures) of 27 December 2001 (BOE No 313, of 31 December 2001, p. 50493), and reproduced in Real Decreto Legislativo 4/2004, por el que se aprueba el texto refundido de la Ley del Impuesto sobre Sociedades (Royal Legislative Decree 4/2004 approving the recast text of the Corporate Tax Law; ‘TRLIS’) of 5 March 2004 (BOE No 61, of 11 March 2004, p. 10951), namely Article 12(5) TRLIS (‘the measure at issue’).5The measure at issue provides that, in the event that an undertaking taxable in Spain acquires a shareholding in a ‘foreign company’ equal to at least 5% of that company’s capital and retains that shareholding for an uninterrupted period of at least one year, the goodwill resulting from that shareholding, as recorded in the undertaking’s accounts as a separate intangible asset, may be deducted, in the form of an amortisation, from the basis of assessment for the corporation tax for which the undertaking is liable. The measure at issue states that, to be classified as a ‘foreign company’, a company must be liable to pay a tax that is identical to the tax applicable in Spain and its income must derive mainly from business activities carried out abroad.6In paragraphs 10 to 13 of the judgment under appeal Autogrill España v Commission, which are identical to paragraphs 15 to 18 of the judgment under appeal Banco Santander and Santusa v Commission, the General Court added the following:‘10It follows from the [first] contested decision that, under Spanish law, a business combination is an operation whereby one or more companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing company or to a company that they form in exchange for the issue to their shareholders of securities representing the capital of that other company (recital 23 of the [first] contested decision [, identical to recital 32 of the second contested decision]).11In the [first] contested decision, share acquisition is to mean an operation whereby one company acquires a shareholding in the capital of another company without obtaining a majority or the control of the voting rights of the target company (recital 23 of the [first] contested decision [, identical to recital 32 of the second contested decision]).12Furthermore, it is stated in the [first] contested decision that, according to the measure at issue, the financial goodwill is determined by deducting the market value of the tangible and intangible assets of the acquired company from the acquisition price paid for the shareholding. It is also stated that the concept of financial goodwill, as referred to in the measure at issue, introduces into the field of share acquisitions a concept that is usually used in transfers of assets or business combination transactions (recital 20 of the [first] contested decision [, identical to recital 29 of the second contested decision]).13Finally, it should be noted that under Spanish tax law, the acquisition by an undertaking which is taxable in Spain of a shareholding in a company established in Spain does not allow the goodwill resulting from that acquisition to be recorded separately for tax purposes. However, again according to Spanish tax law, goodwill can be amortised [only in the case of] a business combination (recital 19 of the [first] contested decision[, identical to recital 28 of the second contested decision]).’7By the first contested decision, the Commission concluded the procedure with respect to shareholding acquisitions within the European Union.8In Article 1(1) of that decision, the Commission declared incompatible with the common market the scheme introduced by the measure at issue (‘the scheme at issue’), whereby a tax advantage was granted to undertakings taxable in Spain in order to enable them to amortise the goodwill resulting from acquisitions of shareholdings in foreign undertakings, where it was applied to acquisitions of shareholdings in undertakings established within the European Union. In Article 4 of that decision, the Commission ordered the Kingdom of Spain to recover the aid granted under that scheme.9The Commission maintained open, however, the procedure as regards acquisitions of shareholdings outside the European Union, the Spanish authorities having given an undertaking that they would provide further details concerning the obstacles to cross-border mergers outside the European Union.10By the second contested decision, the Commission declared incompatible with the common market the scheme at issue, whereby a tax advantage was granted to undertakings taxable in Spain in order to enable them to amortise the goodwill resulting from acquisitions of shareholdings in foreign undertakings, where it applied to acquisitions of shareholdings in undertakings established outside the European Union (Article 1(1) of that decision), and ordered the Kingdom of Spain to recover the aid granted under that scheme (Article 4 of that decision). The procedure before the General Court and the judgments under appeal By an application lodged at the Registry of the General Court on 14 May 2010, Autogrill España SA, now World Duty Free Group SA (‘WDFG’), brought an action seeking the annulment of Article 1(1) and Article 4 of the first contested decision.In support of its action in so far as it is directed against Article 1(1) of that decision, WDFG relied on four pleas in law: (i) an error of law in the Commission’s application of the condition relating to selectivity; (ii) the measure at issue is not selective in so far as the differentiation that it introduces flows from the nature or general structure of the system of which it is part; (iii) the measure provides no advantage to companies to which the scheme at issue applies; and (iv) with respect to both the criterion relating to selectivity and that relating to the existence of an advantage, a failure to state adequate reasons for that decision.By an application lodged at the Registry of the General Court on 29 July 2011, Banco Santander SA and Santusa Holding SL (‘Santusa’) brought an action seeking the annulment of Article 1(1) and Article 4 of the second contested decision.14In support of their action in so far as directed against Article 1(1) of that decision, Banco Santander and Santusa relied on five pleas in law: (i) an error of law in the Commission’s application of the condition relating to selectivity; (ii) an error in identifying the reference system; (iii) the measure at issue is not selective in so far as the differentiation that it introduces is a result of the nature or general structure of the system of which it is part; (iv) the measure provides no advantage to the companies to which the scheme at issue applies; and (v) with respect to both the criterion relating to selectivity and that relating to the existence of an advantage, a failure to state adequate reasons for the contested decision.15In the judgments under appeal, the General Court, on essentially identical grounds, upheld the first plea of law in each of the two actions, namely that Article 107(1) TFEU had been misapplied with respect to the condition relating to selectivity, and consequently annulled Article 1(1) and Article 4 of the contested decisions, without examining the other pleas raised in those actions. Form of order sought by the parties and procedures before the Court 16The Commission claims that the Court should:—set aside the judgments under appeal;refer the respective cases back to the General Court; andreserve the costs.17WDFG, in Case C‑20/15 P, and Banco Santander and Santusa, in Case C‑21/15 P, contend that the Court should dismiss the appeals, uphold the judgments under appeal and order the Commission to pay the costs.18By decisions of the President of the Court of 19 May 2015, the Federal Republic of Germany, Ireland and the Kingdom of Spain were granted leave to intervene in support of the forms of order sought by WDFG, in Case C‑20/15 P, and by Banco Santander and Santusa, in Case C‑21/15 P.19On the other hand, by orders of the President of the Court of 6 October 2015, the applications of Telefónica SA and Iberdrola SA for leave to intervene in support of the forms of order sought by WDFG, in Case C‑20/15 P, and by Banco Santander and Santusa, in Case C‑21/15 P, were refused. The appeals 20In support of its appeals, the Commission relies on a single ground of appeal, which has two parts, consisting of the claim that the General Court erred in law in the interpretation of the condition relating to selectivity as laid down in Article 107(1) TFEU. The first part of the single ground of appeal Arguments of the parties21By the first part of its single ground of appeal, the Commission claims that the General Court erred in law by holding that the Commission was obliged, in order to demonstrate that a measure is selective, to identify a group of undertakings with specific characteristics.22The Commission maintains that, in the contested decisions, it rigorously followed the method for the analysis of selectivity in tax matters, as that method is set out in the Court’s settled case-law. The Commission accordingly established that the measure at issue constituted a derogation from a reference system, in that the effect of the measure was that the tax treatment of undertakings taxable in Spain acquiring shareholdings of at least 5% in companies established outside Spain differed from that applicable to undertakings taxable in Spain making identical acquisitions in companies established in Spain, although those two categories of undertakings were in comparable situations in the light of the objective pursued by the general Spanish system for the taxation of companies.23The Commission considers that the General Court, by imposing on it the additional obligation of demonstrating that the measure at issue favours certain undertakings capable of identification by reason of characteristics specific to them that other undertakings do not possess, in other words ex ante identifiable features that are characteristic of them, erred in law, since, in so doing, the General Court attributed a meaning to the condition relating to selectivity that is more restrictive than that defined by the Court.24The Commission maintains, in particular, that, contrary to what was held by the General Court in paragraphs 57 and 58 of the judgment under appeal Autogrill España v Commission and in paragraphs 61 and 62 of the judgment under appeal Banco Santander and Santusa v Commission, measures can be classified as selective even if those measures are to be applied regardless of the nature of the activities of the beneficiary and create a tax advantage for certain investment transactions without setting a minimum investment amount.25According to the Commission, in that context, the General Court erred in inferring from the judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), that a national measure which is to be applied regardless of the nature of the activity of undertakings is not, a priori, selective. The statement in paragraph 36 of that judgment, that ‘national measures such as those at issue in the main proceedings do not constitute State aid … if they apply to all undertakings in national territory, regardless of their activity’ should be understood to mean that the reason why there is no selectivity is that the national measure applies indiscriminately to all undertakings in the Member State concerned.26The Commission also claims that the General Court erred in law in holding, in paragraphs 59 to 62 of the judgment under appeal Autogrill España v Commission and in paragraphs 63 to 66 of the judgment under appeal Banco Santander and Santusa v Commission, that a measure such as the measure at issue is not selective where it is linked to the purchase of particular financial assets, namely shareholdings in foreign companies, and where no category of undertakings is, a priori, excluded from benefiting from it.27The Commission submits that the General Court wrongly relied in this regard on the judgment of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467). It follows from paragraphs 22 and 23 of that judgment that, in the case which gave rise to it, the Commission had classified the measure concerned as selective only in relation to certain geographically defined undertakings in which private investors had reinvested the profits from the sale of economic assets and not in relation to those investors themselves, for whom it had held that that measure did not constitute aid.28In addition, the Commission criticises the General Court for having held, in paragraphs 66 to 68 of the judgment under appeal Autogrill España v Commission and in paragraphs 70 to 72 of the judgment under appeal Banco Santander and Santusa v Commission, that it would be contrary to the case-law of the Court of Justice to regard as selective a national tax measure the benefit of which is subject to certain conditions, even though the beneficiary undertakings do not share any feature characteristic of them that distinguishes them from other undertakings, apart from the fact that they are capable of satisfying the conditions governing the application of the measure.29The Commission submits that the General Court relies in that regard on an erroneous analysis of the case-law concerned.30With respect to the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), the Commission argues that it is clear from paragraphs 90 and 91 of that judgment that that case concerned a particular situation in which the Court considered the reference tax system itself to be selective, in that it favoured ‘offshore’ undertakings as such, rather than any derogation from it. The reference made in that judgment to the ‘specific properties’ of a category of undertakings should therefore be understood as referring to the characteristics by reason of which those undertakings were favoured for tax purposes under a reference system that was inherently selective and cannot be extrapolated beyond that particular context.31As regards paragraph 42 of the judgment of 29 March 2012, 3M Italia (C‑417/10, EU:C:2012:184), the General Court failed to take into account the second sentence of that paragraph, which sets out the principle, enshrined in the Court’s settled case-law, that a measure is selective if it is such as to favour ‘certain undertakings or the production of certain goods’ over other undertakings, who are, in the light of the objective pursued by the scheme, in a comparable factual and legal situation.32WDFG and Banco Santander and Santusa submit, first, that the Commission did not maintain, in the contested decisions, that the measure at issue was de facto selective, and, consequently, the present appeals are concerned only with examining the criticisms directed against the judgments under appeal to the effect that the General Court held that the grounds relied on by the Commission in those decisions did not support the conclusion that that measure was de jure selective.33They contend that it follows from the judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), that a measure from which all undertakings can benefit cannot be considered to be selective. That judgment does not however permit the inference, as claimed by the Commission, that a national measure is not selective where it applies to all the undertakings in a Member State without exception, since, if that argument were valid, almost all tax rules would have to be considered to be selective.34WDFG and Banco Santander and Santusa also dispute the Commission’s argument that national tax measures have on many occasions previously been classified as selective even though they set no minimum investment amount and applied regardless of the nature of the beneficiary’s activities. In any event, the measure at issue, in that it confers a tax advantage on any undertaking that wishes to benefit from it, irrespective of which category it falls into, for that reason alone cannot be deemed to be prima facie and de jure selective.35The General Court was correct to rely on the judgment of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467), since, in the decision that was at issue in that judgment, the Commission had expressly accepted that the national measure was not selective as regards the investors concerned, a position confirmed by the Court.36In its decision-making practice, moreover, the Commission has on many occasions previously found tax measures not to be selective on the basis of the same criterion, in other words that general measures which are applicable to all undertakings without distinction and of which all taxable persons may take advantage are not selective.37What is more, the application of that criterion would not lead to a finding that measures relating to the purchase of certain assets as referred to by the Commission were not selective. Such measures could be classified as selective if it were shown that they do in fact benefit certain undertakings to the exclusion of others. In any event, their selectivity would follow not from the nature of the assets acquired but from the fact that it is legitimate to hold that the purchasers concerned form a particular category.38With regard to the judgment of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), WDFG and Banco Santander and Santusa take the view that the General Court was right to consider that the measure at issue in the case which gave rise to that judgment differs from that in the present case, since it was intended to confer an advantage on a distinct and identifiable category of undertakings, that is to say those engaged in exporting.39WDFG and Banco Santander and Santusa further submit that it follows clearly from the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), and in particular paragraph 104 thereof, that a measure can be classified as selective only if it benefits a category of undertakings sharing ‘properties’ which are ‘specific’ to them. It follows moreover from that judgment that the identification of a derogation from an ordinary system is not an end in itself. All that matters is the actual effect of the measure, namely the fact that it does or does not benefit specific undertakings or the production of specific goods.40WDFG and Banco Santander and Santusa argue that the interpretation of the judgment of 29 March 2012, 3M Italia (C‑417/10, EU:C:2012:184), advocated by the Commission, can again not be accepted. First, in that judgment, the Court did not uphold the definition of a reference system and a derogation from that system. Second, that judgment does not permit a conclusion that a measure is selective by reason of the fact that the undertakings which satisfy the conditions to benefit from that measure form a distinct category.41Last, the General Court was correct to hold that a measure cannot be classified as selective, within the meaning of Article 107 TFEU, if the benefit of that measure depends on conduct that is prima facie open to any undertaking, irrespective of an undertaking’s sector of activity. That follows from the finding, in the judgment of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467), that a national measure was not selective as regards investors.42The Kingdom of Spain submits that the judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598) confirms the position taken by the Spanish authorities during the administrative procedure before the Commission, to the effect that an economic advantage can be classified as aid only if it is capable of favouring ‘certain undertakings or the production of certain goods’, within the meaning of Article 107(1) TFEU.43In the course of that administrative procedure, the Spanish authorities demonstrated that the measure at issue was generally accessible, on the ground that it was applied to undertakings active in very different business sectors, thereby supporting the analysis set out in the judgments under appeal and the fact that the Commission had failed in the contested decisions to demonstrate that that measure was selective.44Ireland submits that, contrary to what is argued by the Commission, the General Court did not infer from the judgment of the Court of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), and the judgments of the General Court of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑92/00 and T‑103/00, EU:T:2002:61), and of 9 September 2009, Diputación Foral de Álava and Others v Commission (T‑227/01 to T‑229/01, T‑265/01, T‑266/01 and T‑270/01, EU:T:2009:315), that only measures the application of which was linked to the nature of the undertaking’s activities or the application of which was dependent on a minimum amount were selective, but held that selectivity could not be established with respect to a measure from which all undertakings resident for tax purposes in Spain and making acquisitions of at least 5% shareholdings in foreign undertakings could benefit, regardless of the nature of their activities and the amounts invested.45The General Court was correct to rely on the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), in order to hold that it was necessary, if different tax treatment was to be classified as aid, that a particular category of undertakings capable of benefiting should be identified, by reason of their specific properties. The condition relating to selectivity as laid down in Article 107(1) TFEU should moreover be defined in the same way in all cases concerning alleged State aid of a fiscal nature. Accordingly, the principle expressly stated in paragraph 104 of that judgment cannot be limited to a situation in which a tax system taken as a whole is selective.46Ireland considers that measures such as the measure at issue, which do not a priori exclude any undertaking or any particular economic sector from the ambit of its recipients, cannot be regarded as being selective. The Commission has on several occasions previously relied on that ground in order to determine that certain national measures are not selective.47The Federal Republic of Germany submits that the existence, even if it were established, of a derogation from or exception to the reference framework identified by the Commission is not, in itself, sufficient to conclude that the measure at issue favours ‘certain undertakings or the production of certain goods’ within the meaning of Article 107(1) TFEU.48On the contrary, it follows only that that measure is similar to a subsidy. Consequently, after an examination designed to determine that the measure has the nature of a derogation, it is appropriate, in accordance with the case-law and, in particular, the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), and as the General Court correctly held in the judgments under appeal, thereafter to determine whether the category of taxpayers favoured by a tax measure involves sufficiently specific undertakings or the production of sufficiently specific goods within the meaning of Article 107(1) TFEU.49It follows accordingly from the Court’s case-law that the category of undertakings which receive a tax advantage is sufficiently specified where the Commission has been able to demonstrate that the advantage concerned was for the benefit of only undertakings belonging to a single economic sector and carrying out particular transactions (judgment of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774), only undertakings that have a particular legal form (judgment of 10 January 2006, Cassa di Risparmio di Firenze and Others, C‑222/04, EU:C:2006:8), only undertakings of a certain size (judgment of 13 February 2003, Spain v Commission, C‑409/00, EU:C:2003:92) or only undertakings resident for tax purposes outside the territory of a region (judgment of 17 November 2009Presidente del Consiglio dei Ministri, C‑169/08, EU:C:2009:709).50The Federal Republic of Germany recalls that the Court has previously held that a tax concession in favour of taxpayers who sell certain financial assets and can offset the resulting profit when they acquire other financial assets confers on them an advantage which, as a general measure applicable without distinction to all economic operators, cannot be classified as State aid (judgment of 19 September 2000, Germany v Commission, C‑156/98, EU:C:2000:467, paragraph 22).51A fortiori, therefore, a tax measure such as that at issue, the application of which is generally linked to a certain category of transactions falling within the scope of company law, in this instance the acquisition of shareholdings, regardless of the object and business activities of the undertaking, should not be considered to be selective.52Last, the Member States intervening in these cases submit that, if the selectivity of a national measure as a condition for its classification as State aid, within the meaning of Article 107(1) TFEU, were to be understood in the broad sense advocated by the Commission in its appeals, the consequence would be an undermining of the division of powers within the European Union. If such scope were to be conferred on the selectivity condition, the Commission could review almost all direct tax measures by virtue of its powers in the field of State aid, although direct taxation falls, as a general rule, within the legislative competence of the Member States.Findings of the Court53First, it must be recalled that, according to the Court’s settled case-law, classification of a national measure as ‘State aid’, within the meaning of Article 107(1) TFEU, requires all the following conditions to be fulfilled. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between the Member States. Third, it must confer a selective advantage on the recipient. Fourth, it must distort or threaten to distort competition (see, inter alia, judgment of 16 July 2015, BVVG, C‑39/14, EU:C:2015:470, paragraph 24).54So far as concerns the condition relating to the selectivity of the advantage, which is a constituent factor in the concept of ‘State aid’, within the meaning of Article 107(1) TFEU, it is clear from equally settled case-law of the Court that the assessment of that condition requires a determination whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ over other undertakings which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation and who accordingly suffer different treatment that can, in essence, be classified as discriminatory (see, inter alia, judgments of 28 July 2011, Mediaset v Commission, C‑403/10 P, not published, EU:C:2011:533, paragraph 36; of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 75 and 101; and of 14 January 2015, Eventech, C‑518/13, EU:C:2015:9, paragraphs 53 to 55; and of 4 June 2015, Commission v MOL, C‑15/14 P, EU:C:2015:362, paragraph 59).55Further, where the measure at issue is conceived as an aid scheme and not as individual aid, it is for the Commission to establish that that measure, although it confers an advantage of general application, confers the benefit of that advantage exclusively on certain undertakings or certain sectors of activity (see, to that effect, inter alia, judgment of 30 June 2016, Belgium v Commission, C‑270/15 P, EU:C:2016:489, paragraphs 49 and 50).56As regards, in particular, national measures that confer a tax advantage, it must be recalled that a measure of that nature which, although not involving the transfer of State resources, places the recipients in a more favourable position than other taxpayers is capable of procuring a selective advantage for the recipients and, consequently, of constituting State aid, within the meaning of Article 107(1) TFEU. On the other hand, a tax advantage resulting from a general measure applicable without distinction to all economic operators does not constitute such aid (see to that effect, inter alia, judgment of 18 July 2013, P,C‑6/12, EU:C:2013:525, paragraph 18).57In that context, in order to classify a national tax measure as ‘selective’, the Commission must begin by identifying the ordinary or ‘normal’ tax system applicable in the Member State concerned, and thereafter demonstrate that the tax measure at issue is a derogation from that ordinary system, in so far as it differentiates between operators who, in the light of the objective pursued by that ordinary tax system, are in a comparable factual and legal situation (see to that effect, inter alia, judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49).58The concept of ‘State aid’ does not, however, cover measures that differentiate between undertakings which, in the light of the objective pursued by the legal regime concerned, are in a comparable factual and legal situation, and are, therefore, a priori selective, where the Member State concerned is able to demonstrate that that differentiation is justified since it flows from the nature or general structure of the system of which the measures form part (see, to that effect, inter alia, judgments of 29 April 2004, Netherlands v Commission, C‑159/01, EU:C:2004:246, paragraphs 42 and 43; of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraphs 64 and 65; and of 29 March 2012, 3M Italia, C‑417/10, EU:C:2012:184, paragraph 40).59Further, it must be recalled that the fact that only taxpayers satisfying the conditions for the application of a measure can benefit from the measure cannot, in itself, make it into a selective measure (judgment of 29 March 2012, 3M Italia, C‑417/10, EU:C:2012:184, paragraph 42).60It follows from all the foregoing that the appropriate criterion for establishing the selectivity of the measure at issue consists in determining whether that measure introduces, between operators that are, in the light of the objective pursued by the general tax system concerned, in a comparable factual and legal situation, a distinction that is not justified by the nature and general structure of that system (see, to that effect, judgment of 4 June 2015, Commission v MOL, C‑15/14 P, EU:C:2015:362, paragraph 61).61Those are the factors that must guide the Court’s examination of whether, in this case, the General Court misconstrued Article 107(1) TFEU, as interpreted by the Court, by holding that the Commission had not, in the contested decisions, demonstrated to the requisite legal standard that the measure at issue conferred a selective advantage on ‘certain undertakings or the production of certain goods’.62In this case, the measure at issue confers a tax advantage that consists in a deduction from the taxable base for corporation tax in the form of an amortisation of the goodwill resulting from the acquisition by undertakings resident for tax purposes in Spain of at least 5% shareholdings in undertakings resident for tax purposes outside that Member State. That measure must, since it is capable of conferring an advantage on all such undertakings which carry out such transactions, be regarded as capable of constituting an aid scheme. It was therefore for the Commission to establish that that measure, notwithstanding that it confers an advantage of general application, confers the benefit of that advantage exclusively on certain undertakings or on certain sectors of activity.63In that regard, the General Court stated, in paragraph 50 of the judgment under appeal Autogrill España v Commission and in paragraph 54 of the judgment under appeal Banco Santander and Santusa v Commission, that the Commission, in order to establish that the measure at issue was selective, had primarily relied, in the contested decisions, on the ground that that measure constitutes a derogation from a reference system, in that the effect of that measure was the application to undertakings taxable in Spain, acquiring shareholdings in companies established outside Spain, of a tax treatment that differed from that applied to undertakings taxable in Spain making such acquisitions in companies established in Spain, although those two categories of undertakings were in comparable situations in the light of the objective pursued by that reference system, namely the general Spanish system for the taxation of companies and, more specifically, the rules relating to the tax treatment of financial goodwill within that tax system.64The General Court held, in paragraph 51 of the judgment under appeal Autogrill España v Commission and in paragraph 55 of the judgment under appeal Banco Santander and Santusa v Commission, that the Commission had thereby applied the analytical method that may be deduced from the case-law of the Court and of the General Court cited, respectively, in paragraphs 29 to 33 of the judgment under appeal Autogrill España v Commission and in paragraphs 33 to 37 of the judgment under appeal Banco Santander and Santusa v Commission, which essentially corresponds to the Court’s case-law cited in paragraphs 53 to 60 of this judgment.65However, in paragraphs 44, 45, 52 and 53 of the judgment under appeal Autogrill España v Commission and in paragraphs 48, 49, 56 and 57 of the judgment under appeal Banco Santander and Santusa v Commission, the General Court held that the existence, were it to be established, of a derogation or an exception to the reference system identified by the Commission was not sufficient, in itself, to establish that the measure at issue favoured ‘certain undertakings or the production of certain goods’, within the meaning of Article 107(1) TFEU, since that measure was accessible, a priori, to any undertaking and it was directed not to a particular category of undertakings, which would have been the only undertakings favoured by that measure, but to a category of economic transactions.66It is, however, clear that that reasoning is based on a misapplication of the selectivity condition laid down in Article 107(1) TFEU, as described in this judgment.67As is apparent from paragraphs 53 to 60 of this judgment, with respect to a national measure conferring a tax advantage of general application, such as the measure at issue, that condition is satisfied where the Commission is able to demonstrate that that measure is a derogation from the ordinary or ‘normal’ tax system applicable in the Member State concerned, thereby introducing, through its actual effects, differences in the treatment of operators, although the operators who qualify for the tax advantage and those who do not are, in the light of the objective pursued by that Member State’s tax system, in a comparable factual and legal situation.68It is apparent from the judgments under appeal that the Commission relied, in the contested decisions, in order to establish that the measure at issue was selective, on the fact that the consequence of that measure was that resident undertakings were not treated equally. Pursuant to that measure, only resident undertakings who acquired at least 5% shareholdings in foreign companies could, under certain conditions, qualify for the tax advantage at issue, whereas resident undertakings making the acquisition of such a shareholding in undertakings taxable in Spain could not obtain that advantage, notwithstanding the fact that, according to the Commission, they were in a comparable situation in the light of the objective pursued by the ordinary Spanish tax system.69However, the General Court considered that the measure at issue, on the grounds that it did not affect any particular category of undertakings or the production of any particular category of goods, that it was applicable regardless of the nature of an undertaking’s activity and that it was accessible, a priori or potentially, to all undertakings that wanted to acquire shareholdings of at least 5% in foreign companies and that held those shareholdings without interruption for at least one year, had to be regarded not as a selective measure but as a general measure within the meaning of the case-law cited in paragraph 56 of this judgment. In so doing, the General Court erred in law.70Thus, in paragraphs 41, 45, 67 and 68 of the judgment under appeal Autogrill España v Commission and in paragraphs 45, 49, 71 and 72 of the judgment under appeal Banco Santander and Santusa v Commission, the General Court held that, if the condition relating to the selectivity of a national measure relevant to the recognition of State aid, in respect of a measure that is a priori accessible to any undertaking, is to be satisfied, it is always necessary that a particular category of undertakings, who are exclusively favoured by the measure concerned and who can be distinguished by reason of specific properties, common to them and characteristic of them, be identified.71However, the imposition of such a supplementary requirement to identify a particular category of undertakings, additional to the analytical method applicable to selectivity in tax matters that may be deduced from the Court’s settled case-law, which essentially involves ascertaining whether the exclusion of certain operators from the benefit of a tax advantage that arises from a measure derogating from an ordinary tax system constitutes discrimination with respect to those operators, cannot be inferred from the Court’s case-law and, in particular, from the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732).72It is true that, in paragraph 104 of that judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), the Court held that, in order to be capable of being recognised as conferring selective advantages, the criteria forming the basis of assessment which are adopted by a tax system must be such as to characterise the recipient undertakings, by virtue of properties which are specific to them, as a privileged category, thus permitting such a regime to be described as favouring ‘certain’ undertakings or the production of ‘certain’ goods, within the meaning of Article 107(1) TFEU.73However, that ground of the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), must be read in the context of the set of grounds of which it forms part, set out in paragraphs 87 to 108 of that judgment.74It follows from a reading of all those grounds that the measure at issue in that judgment did not take the form of a tax advantage that derogated from an ordinary tax system, but rather involved the application of a ‘general’ tax scheme based on criteria that were, in themselves, also general. The Court held that the nature of that scheme did not preclude a finding that the measure concerned was selective, contrary to the ruling of the General Court, since the condition relating to selectivity has a broader scope that extends to measures which, by their effects, favour certain undertakings, in that case ‘offshore’ companies, on account of the specific features characteristic of those undertakings. That measure accordingly operated de facto discrimination against undertakings that were in a comparable situation in the light of the objective pursued by that regime, in that case the objective of putting in place generalised taxation of all resident companies.75By contrast, as stated above in paragraph 63 of this judgment, in the contested decisions, the Commission, in order to establish the selectivity of the measure at issue, relied primarily on the ground that the consequence of that measure is discrimination, in that it confers a tax advantage on certain resident undertakings and not on others who are subject to the same ordinary tax system from which the measure at issue is a derogation.76While it therefore follows from the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), that the selectivity of a tax measure can be established even if that measure does not constitute a derogation from an ordinary tax system, but is an integral part of that system, the fact remains that that judgment is consistent with the Court’s settled case-law, cited in paragraph 57 of this judgment, to the effect that it is sufficient, in order to establish the selectivity of a measure that derogates from an ordinary tax system, to demonstrate that that measure benefits certain operators and not others, although all those operators are in an objectively comparable situation in the light of the objective pursued by the ordinary tax system.77Indeed, while it is not always necessary that a tax measure, in order for it to be established that it is selective, should derogate from an ordinary tax system, the fact that it can be so characterised is highly relevant in that regard where the effect of that measure is that two categories of operators are distinguished and are subject, a priori, to different treatment, namely those who fall within the scope of the derogating measure and those who continue to fall within the scope of the ordinary tax system, although those two categories are in a comparable situation in the light of the objective pursued by that system.78Contrary to what was held by the General Court in the judgments under appeal, neither can it be required of the Commission, in order to establish the selectivity of such a measure, that it should identify certain specific features that are characteristic of and common to the undertakings that are the recipients of the tax advantage, by which they can be distinguished from those undertakings that are excluded from the advantage.79All that matters in that regard is the fact that the measure, irrespective of its form or the legislative means used, should have the effect of placing the recipient undertakings in a position that is more favourable than that of other undertakings, although all those undertakings are in a comparable factual and legal situation in the light of the objective pursued by the tax system concerned.80Further, according to the Court’s settled case-law, the fact that the number of undertakings able to claim entitlement under a national measure is very large, or that those undertakings belong to various economic sectors, is not sufficient to call into question the selective nature of that measure and, therefore, to rule out its classification as State aid (see, inter alia, judgments of 13 February 2003, Spain v Commission, C‑409/00, EU:C:2003:92, paragraph 48, and of 8 September 2011, Commission v Netherlands, C‑279/08 P, EU:C:2011:551, paragraph 50).81Accordingly, contrary to what was held by the General Court in paragraphs 53 to 58 of the judgment under appeal Autogrill España v Commission and in paragraphs 57 to 62 of the judgment under appeal Banco Santander and Santusa v Commission, the potentially selective nature of the measure at issue is in no way called into question by the fact that the essential condition for obtaining the tax advantage conferred by that measure is that there should be an economic transaction, more particularly an ‘entirely financial’ transaction, for which no minimum investment is required and which is available regardless of the nature of the business of the recipient undertakings.82In that context, contrary to what was held by the General Court in paragraph 57 of the judgment under appeal Autogrill España v Commission and in paragraph 61 of the judgment under appeal Banco Santander and Santusa v Commission, it cannot be inferred from paragraph 36 of the judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), according to which measures are not selective where they apply to all the undertakings in the national territory, ‘regardless of their activity’, that a measure whose application does not depend on the nature of the undertakings’ activity is, a priori, not selective.83It is apparent from reading all the grounds of that judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), that, in paragraph 36, read in the light of paragraph 35 of that judgment, the Court held that national measures, such as those at issue in that case, were not selective where they applied indiscriminately to all undertakings in the Member State concerned and constituted, for that reason, a general measure within the meaning of the case-law cited in paragraph 56 of the present judgment.84It must also be made clear that while the Court, in paragraph 36 of the judgment of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke (C‑143/99, EU:C:2001:598), referred to the activity of undertakings benefiting from the national measures, that reference is explained by the wording of the second question submitted by the referring court in the case that gave rise to that judgment. That is confirmed by the fact that no such reference is made in the subsequent judgments of the Court which restate that principle (see, inter alia, judgments of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 73, and of 29 March 2012, 3M Italia, C‑417/10, EU:C:2012:184, paragraph 39).85Moreover, it is true, as stated by the General Court in paragraph 66 of the judgment under appeal Autogrill España v Commission and in paragraph 70 of the judgment under appeal Banco Santander and Santusa v Commission, that the Court held, in paragraph 42 of the judgment of 29 March 2012, 3M Italia (C‑417/10, EU:C:2012:184), that the fact that only taxpayers satisfying the conditions for application of the measure concerned in that case could benefit from that measure could not, in itself, make it a selective measure. However, it must be noted that, in that same paragraph, the Court expressly stated that the absence of selectivity was due to the finding that persons who were not eligible for the measure concerned were not in a factual and legal situation comparable to that of taxpayers who were eligible, in the light of the objective pursued by the national legislature.86It follows that a condition for the application or the receipt of tax aid may be grounds for a finding that that aid is selective, if that condition leads to a distinction being made between undertakings despite the fact that they are, in the light of the objective pursued by the tax system concerned, in a comparable factual and legal situation, and if, therefore, it represents discrimination against undertakings which are excluded from it.87Further, while, as stated by the General Court in the judgments under appeal, the tax advantage conferred by the measure at issue can be obtained without any minimum investment requirement and without, consequently, the benefit of that measure being reserved to undertakings having sufficient financial resources, those factors do not preclude the possibility of that measure being classified as selective for other reasons, such as the fact that resident undertakings making acquisitions of shareholdings in companies resident for tax purposes in Spain could not obtain that advantage.88In that regard, it may be added that the Court has previously ruled that a tax measure from which solely undertakings that carried out specified transactions benefited, and not undertakings in the same sector that did not carry out those transactions, could be classified as selective, there being no need to assess whether that measure was of greater benefit to large undertakings (see, to that effect, judgment of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774, paragraphs 47 to 50).89Contrary to the General Court’s assertion in paragraphs 59 to 62 of the judgment under appeal Autogrill España v Commission and in paragraphs 63 to 66 of the judgment under appeal Banco Santander and Santusa v Commission, no indication to the contrary as regards the analysis of the condition relating to the selectivity of a tax measure may be deduced from the judgment of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467).90It follows from paragraphs 22 and 23 of the judgment of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467), that, in the case that gave rise to that judgment, the Commission had classified the measure concerned as selective in relation to certain geographically defined undertakings in which private investors had reinvested the profits derived from sales of financial assets and not in relation to those investors themselves, with respect to whom the Commission had considered that that measure did not constitute aid, since, as a general measure, it benefited all operators indiscriminately, an assessment that was, moreover, not challenged before the Court and on which the Court therefore did not have to give a ruling.91In any event, the situation of those private investors cannot be treated as equivalent to that of the resident undertakings that can benefit from the measure at issue.92In the contested decisions, the Commission, in order to classify the measure at issue as a selective measure, relied on the fact that the tax advantage conferred by that measure did not indiscriminately benefit all economic operators who were objectively in a comparable situation, in the light of the objective pursued by the ordinary Spanish tax system, since resident undertakings acquiring shareholdings of the same kind in companies resident for tax purposes in Spain could not obtain that advantage. The Commission then considered that the justification of that distinction between operators, relied on by the Kingdom of Spain, based on the nature or general structure of the system of which that measure formed part, could not be accepted.93It follows from all the foregoing that the General Court erred in law, in annulling the contested decisions, in part, on the ground that the Commission had failed to define a particular category of undertakings favoured by the tax measure at issue, while omitting to determine whether the Commission, in applying the method of examination, described in paragraphs 29 to 33 of the judgment under appeal Autogrill España v Commission and in paragraphs 33 to 37 of the judgment under appeal Banco Santander and Santusa v Commission, which must be used in order to examine the condition relating to the selectivity of the measure at issue, had in fact analysed the question and had established that that measure was discriminatory.94While, indeed, that examination must be carried out rigorously and while sufficient reasons must be stated to permit full judicial review, in particular of the question whether the situation of operators benefiting from the measure is comparable with that of operators excluded from it and, where appropriate, of the justification for discrimination relied on by the Member State concerned, the fact remains that the General Court erred in law by not undertaking such a review, and by ruling, in the judgments under appeal, that the examination method applied by the Commission in the contested decisions, in failing to define a particular category of undertakings which were exclusively favoured by the tax measure at issue, was based on a misinterpretation of the condition relating to selectivity as laid down by Article 107(1) TFEU.95Consequently, the first part of the Commission’s single ground of appeal is well founded. The second part of the single ground of appeal 96By the second part of its single ground of appeal, the Commission claims that the General Court erred in law in applying the case-law relating to aid for exports and introduced an artificial distinction between aid for exports of goods and aid for exports of capital.97As regards, first, the case-law relating to aid for exports relied on in the contested decisions, in particular the judgments of 10 December 1969, Commission v France (6/69 and 11/69, not published, EU:C:1969:68), of 7 June 1988, Greece v Commission (57/86, EU:C:1988:284), and of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), the Commission claims that the General Court erred in law, in holding in paragraphs 69 to 76 of the judgment under appeal Autogrill España v Commission and in paragraphs 73 to 80 of the judgment under appeal Banco Santander and Santusa v Commission, that that case-law concerns not the condition relating to the selectivity of a national measure, but only the condition relating to the effect on competition and trade.98According to the Commission, it is apparent from the judgments cited in the preceding paragraph that the Court considered that the tax measures concerned were selective, on the ground that the benefit of them was reserved to undertakings that carried out transactions abroad, such as investments, and not to undertakings carrying out similar transactions domestically. The Commission maintains that it follows that any measure that is to the benefit of cross-border transactions, but excludes the same domestic transactions, is selective.99Second, the Commission claims that General Court was wrong to introduce, in paragraphs 79 to 81 of the judgment under appeal Autogrill España v Commission and in paragraphs 83 to 85 of the judgment under appeal Banco Santander and Santusa v Commission, an artificial distinction between aid for exports and aid for export of capital in holding that it followed from the case-law relating to aid for exports relied on in the contested decisions, in particular the judgments of 10 December 1969, Commission v France (6/69 and 11/69, not published, EU:C:1969:68), of 7 June 1988, Greece v Commission (57/86, EU:C:1988:284), and of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), that ‘the category of recipient undertakings allowing a finding that the measure at issue was selective was made up of [exporting] undertakings’, a category bringing together undertakings which could be distinguished by reason of their common characteristics linked to their export activity.100According to the Commission, the undertakings affected by the measure at issue constitute a distinct category of undertakings, namely that of undertakings that export capital, since they share specific common characteristics linked to their activity of exporting capital.101The Commission considers that, since, with respect to the condition relating to selectivity, there is no difference between the export of goods and the export of capital, the measure at issue was selective to the same degree as the measures concerned in the case-law relating to aid for exports relied on in the contested decisions.102The Commission maintains that a category of exporting undertakings does not exist, as something separate from the group of undertakings that carry out cross-border transactions. Any undertaking within a Member State can carry out a cross-border transaction and, thereby, qualify for an export aid scheme. The Commission considers that a national measure may become selective because of the advantage granted to the beneficiary of the measure, as a result of carrying out an export transaction, of goods, services or capital, and not by reason of the fact that the undertakings concerned are members of an alleged export sector.103Accordingly, as the Court ruled in the judgment of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), in a situation comparable to that in this case, the General Court ought to have held that the Commission had properly established the selectivity of the measure at issue by reason of the fact that the benefit of that measure was reserved to certain undertakings, namely those which were engaged in the activity of exporting capital.104Last, the approach adopted the General Court ignores the role and purpose of the body of State aid rules in relation to the protection of the internal market. That body of rules is intended in particular to ensure that Member States do not grant economic advantages specifically linked to the export of goods or capital. The act of specifically favouring exports of capital could give rise to distortions in the internal market in the same way as the act of specifically favouring exports of goods.105WDFG and Banco Santander and Santusa contend that the General Court was correct to hold that the judgments of the Court relied on in the contested decisions concerned not the condition relating to selectivity, but the conditions relating to the effect on trade.106Further, the General Court was correct to hold that, in the case-law relating to aid for exports relied on in the contested decisions, in particular the judgments of 10 December 1969, Commission v France (6/69 and 11/69, not published, EU:C:1969:68), of 7 June 1988, Greece v Commission (57/86, EU:C:1988:284), and of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), the Court considered that the measures concerned were selective, the principal ground being that the recipient undertakings shared certain characteristics, a factor that allowed the conclusion that those undertakings belonged to a particular sector of the economy, namely the export sector, more specifically the goods exporting sector. The measures at issue in the cases that gave rise those judgments favoured undertakings of which it was a characteristic feature that they exported a more or less significant part of their goods or services.107WDFG and Banco Santander and Santusa argue that the measure at issue cannot, moreover, be considered to be selective on the ground that it applies to the category of undertakings described as ‘exporters of capital’.108Such a category does not exist, and the Commission referred to it neither in the contested decisions nor before the General Court. That argument is inadmissible in an appeal, since it concerns a question of fact that is moreover raised out of time. It may be added that the argument contradicts the Commission’s main line of argument, that the Commission was not obliged to identify a category of undertakings that were affected by a measure in order to establish the selectivity of that measure.109In any event, WDFG and Banco Santander and Santusa contend that the selectivity of a national measure cannot be ascertained on the basis of characteristics such as the capital of an undertaking or its capacity to invest, since such characteristics are inherent in any undertaking.110In addition, the rules governing the free movement of capital do not preclude a measure such as the measure at issue. While that measure involved different treatment that favours acquisitions of shareholdings abroad, that is at most reverse discrimination which is compatible with the fundamental freedoms.111The Kingdom of Spain restates its position, previously argued in the administrative procedure before the Commission, that there is no economic activity that consists of exporting capital. The measure at issue does not favour certain undertakings or the production of certain goods since it is not concerned with the supply of goods and services on the market.112Ireland maintains that the judgments relied on by the Commission in the contested decisions concerned measures which favoured a readily identifiable category of undertakings or the production of a readily identifiable category of goods, namely those involved in the export sector. However, there is no coherent category of undertakings that ‘export capital’, since any undertaking that makes an acquisition abroad ‘exports capital’.113The Federal Republic of Germany argues that the Commission’s submission in the alternative that the measure at issue is comparable to a measure granting aid for the export of goods and is therefore also aimed at the sufficiently delimited category of exporting undertakings has to be regarded as a retrospective addition of grounds to the contested decisions. The Federal Republic of Germany considers that that argument must be declared to be inadmissible on appeal.114The Federal Republic of Germany contends that the category of exporting undertakings at issue in the case-law relied on by the Commission in the contested decisions is distinct from other undertakings because of common characteristics linked to their exporting activity, which, in some cases, was connected to the making of specific investments.115As regards the case-law relating to aid for exports relied on in the contested decisions, in particular the judgments of 10 December 1969, Commission v France (6/69 and 11/69, not published, EU:C:1969:68), of 7 June 1988, Greece v Commission (57/86, EU:C:1988:284), and of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), it is clear that, as stated, in essence, by the Advocate General in points 126 to 130 of his Opinion, the General Court erred in law, in holding, in paragraphs 69 to 76 of the judgment under appeal Autogrill España v Commission and in paragraphs 73 to 80 of the judgment under appeal Banco Santander and Santusa v Commission, that that case-law did not concern the condition relating to the selectivity of a national measure, but only the condition relating to the question whether competition and trade were affected.116In paragraph 20 of the judgment of 10 December 1969, Commission v France (6/69 and 11/69, not published, EU:C:1969:68), and in paragraph 8 of the judgment of 7 June 1988, Greece v Commission (57/86, EU:C:1988:284), the Court, in finding that there was State aid, necessarily held that all the conditions laid down on that subject in Article 107(1) TFEU, including the condition relating to selectivity, were satisfied. Further, in paragraph 120 of the judgment of 15 July 2004, Spain v Commission (C‑501/00, EU:C:2004:438), the Court, referring, inter alia, to the two abovementioned judgments, expressly stated its position on the selectivity of the national measure under examination, holding that, in that case, selectivity followed from the fact that only undertakings engaged in export activities and carrying out certain investment transactions abroad qualified for the tax advantage conferred by that measure.117The General Court also erred in law in holding, in paragraphs 77 to 82 of the judgment under appeal Autogrill España v Commission and in paragraphs 81 to 86 of the judgment under appeal Banco Santander and Santusa v Commission, that the case-law relating to aid for exports relied on in the contested decisions had to be understood as meaning that the category of recipient undertakings with respect to whom the selectivity of export aid schemes must be examined was that constituted by ‘export undertakings’, which had to be defined as a category, which, while admittedly extremely broad, is nevertheless defined, comprising undertakings that could be distinguished by reason of specific, shared characteristics linked to their exporting activity.118As observed, in essence, by the Advocate General in points 133 to 136 of his Opinion, that case-law cannot be understood as meaning that a national measure must necessarily be classified as selective where that measure benefits exclusively undertakings that export goods or services, even if, in fact, that may have been the case with respect to the particular tax measures at issue in the judgments concerned.119On the contrary, taking into consideration the principles enshrined in the Court’s settled case-law, as set out above in paragraphs 53 to 60 of this judgment, which are entirely applicable to tax aid for exports, a measure such as the measure at issue, designed to facilitate exports, may be regarded as selective if it benefits undertakings carrying out cross-border transactions, in particular investment transactions, and is to the disadvantage of other undertakings which, while in a comparable factual and legal situation, in the light of the objective pursued by the tax system concerned, carry out other transactions of the same kind within the national territory.120That being the case, the second part of the single ground of appeal is also well founded.121Consequently, since both parts of the Commission’s single ground of appeal are well founded, the judgments under appeal must be set aside. The actions before the General Court 122In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, if the Court quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits.123That is not the case here, since the General Court upheld the two actions for annulment but did not examine three of the four pleas in law relied on in each of those actions, pleas which only partly overlap, and did not examine, within its examination of the first pleas in law in those actions, whether those undertakings that did not meet the conditions for obtaining the tax advantage conferred by the measure at issue were, in the light of the objective pursued by the tax system concerned, in a factual and legal situation comparable to that of the undertakings favoured by that measure. Further, examination of those pleas may involve assessment of matters of fact. The cases must therefore be referred back to the General Court. Costs 124Since the cases are being referred back to the General Court, it is appropriate to reserve the costs.125Pursuant to Article 140(1) of the Rules of Procedure of the Court, the Federal Republic of Germany, Ireland and the Kingdom of Spain, as interveners, must bear their own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Sets aside the judgments of the General Court of the European Union of 7 November 2014, Autogrill España v Commission (T‑219/10, EU:T:2014:939), and of 7 November 2014, Banco Santander and Santusa v Commission (T‑399/11, EU:T:2014:938); 2. Refers the cases back to the General Court of the European Union; 3. Reserves the costs; 4. Orders the Federal Republic of Germany, Ireland and the Kingdom of Spain to bear their own costs. [Signatures]( *1 ) Language of the case: Spanish. | 62f1b-bb29148-4f4a | EN |
A child in a reconstituted family may be regarded as the child of a step-parent for the purposes of a cross-frontier social advantage | 15 December 2016 ( *1 )‛Reference for a preliminary ruling — Freedom of movement of persons — Worker’s rights — Equal treatment — Social advantages — Financial aid for the pursuit of higher education studies — Requirement of a parent-child relationship — Concept of ‘child’ — Child of a spouse or registered partner — Contribution towards the maintenance of that child’In Joined Cases C‑401/15 to C‑403/15,THREE REQUESTS for a preliminary ruling under Article 267 TFEU from the Cour administrative (Higher Administrative Court, Luxembourg), made by decisions of 22 July 2015, received at the Court on 24 July 2015, in the proceedings Noémie Depesme (C‑401/15), Saïd Kerrou (C‑401/15), Adrien Kauffmann (C‑402/15), Maxime Lefort (C‑403/15)v Ministre de l’Enseignement supérieur et de la Recherche, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas (Rapporteur), C. Toader and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: A. Calot Escobar,after considering the observations submitted on behalf of:—Ms Depesme and Mr Kerrou, by P. Peuvrel, avocat,Mr Kauffmann, by S. Jacquet, avocat,Mr Lefort, by S. Coï, avocat,the Luxembourg Government, by D. Holderer, acting as Agent, and P. Kinsch, avocat,the European Commission, by D. Martin and M. Kellerbauer, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 9 June 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 45 TFEU and Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1).2The requests have been made in three sets of proceedings between Ms Noémie Depesme and Mr Saïd Kerrou, Mr Adrien Kauffman, and Mr Maxime Lefort, and the Ministre de l’Enseignement supérieur et de la Recherche (Minister for Higher Education and Research, Luxembourg; ‘the Minister’), concerning the Minister’s refusal to grant Ms Depesme, Mr Kauffman and Mr Lefort State financial aid for the pursuit of higher education studies for the academic year 2013/2014. Legal context EU law 3Under Article 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475):‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and, should he become unemployed, reinstatement or re-employment.2. He shall enjoy the same social and tax advantages as national workers.…’4Article 10 of Regulation No 1612/68 provided:‘1. The following shall, irrespective of their nationality, have the right to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State:(a)his spouse and their descendants who are under the age of 21 years or are dependants;5Article 10 of Regulation No 1612/68 was repealed by Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda in OJ 2004 L 229, p. 35, and OJ 2005 L 197, p. 34).6Recitals 3 and 5 to Directive 2004/38 state:‘(3)Union citizenship should be the fundamental status of nationals of the Member States when they exercise their right of free movement and residence. It is therefore necessary to codify and review the existing Community instruments dealing separately with workers, self-employed persons, as well as students and other inactive persons in order to simplify and strengthen the right of free movement and residence of all Union citizens.…(5)The right of all Union citizens to move and reside freely within the territory of the Member States should, if it is to be exercised under objective conditions of freedom and dignity, be also granted to their family members, irrespective of nationality. For the purposes of this Directive, the definition of “family member” should also include the registered partner if the legislation of the host Member State treats registered partnership as equivalent to marriage.’7Article 2 of that directive provides:‘For the purposes of this Directive:(2)“family member” means:the spouse;(b)the partner with whom the Union citizen has contracted a registered partnership, on the basis of the legislation of a Member State, if the legislation of the host Member State treats registered partnerships as equivalent to marriage and in accordance with the conditions laid down in the relevant legislation of the host Member State;(c)the direct descendants who are under the age of 21 or are dependants and those of the spouse or partner as defined in point (b);8Regulation No 1612/68 was repealed and replaced, with effect from 16 June 2011, by Regulation No 492/2011. Article 7 of Regulation No 492/2011 reproduced the wording of Article 7 of Regulation No 1612/68.9Recital 1 of Directive 2014/54/EU of the European Parliament and of the Council of 16 April 2014 on measures facilitating the exercise of rights conferred on workers in the context of freedom of movement for workers (OJ 2014 L 128, p. 8) is worded as follows:‘The free movement of workers is a fundamental freedom of Union citizens and one of the pillars of the internal market in the Union enshrined in Article 45 of the Treaty on the Functioning of the European Union (TFEU). Its implementation is further developed by Union law aiming to guarantee the full exercise of rights conferred on Union citizens and the members of their family. “Members of their family” should be understood as having the same meaning as the term defined in point (2) of Article 2 of Directive [2004/38/EC], which applies also to family members of frontier workers.’10Article 1 of that directive provides:‘This Directive lays down provisions which facilitate the uniform application and enforcement in practice of the rights conferred by Article 45 TFEU and by Articles 1 to 10 of Regulation [No 492/2011]. This Directive applies to Union citizens exercising those rights and to members of their family (“Union workers and members of their family”).’11According to Article 2 of that directive:‘1. This Directive applies to the following matters, as referred to in Articles 1 to 10 of Regulation [No 492/2011], in the area of freedom of movement for workers:access to social and tax advantages;2. The scope of this Directive is identical to that of Regulation [No 492/2011].’ Luxembourg law 12State financial aid for higher education studies was governed, at the time of the facts in the main proceedings, by the loi du 22 juin 2000 concernant l’aide financière de l’État pour études supérieures (Law of 22 June 2000 on State financial aid for higher education studies) (Mémorial A 2000, p. 1106), as amended by the Law of 19 July 2013 (Mémorial A 2013, p. 3214) (‘the amended Law of 22 June 2000’).13The Law of 19 July 2013, which was adopted to give effect to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411) and which made amendments to the Law of 22 June 2000 relating solely to the academic year 2013/2014, inserted Article 2 bis into the Law of 22 June 2000.14Article 2 bis of the amended Law of 22 June 2000 was worded as follows:‘A student not residing in the Grand Duchy of Luxembourg may also receive financial aid for higher education studies where that student is the child of an employed or self-employed person who is a Luxembourg national or a national of the European Union or of another State party to the Agreement on the European Economic Area[, of 2 May 1992 (OJ 1992 L 1, p. 3)] or of the Swiss Confederation, is employed or pursuing an activity in Luxembourg, and has been employed or has pursued an activity in Luxembourg for a continuous period of at least five years at the time the student makes the application for financial aid for higher education studies. Employment in Luxembourg must be for at least half the normal working hours applicable within the undertaking, under statute or by virtue of any collective labour agreement that may be in force. A self-employed worker is required to have been affiliated to the social security system in the Grand Duchy of Luxembourg under Article 1(4) of the Social Security Code for a continuous period of five years prior to the application for financial aid for higher education studies.’15The amended Law of 22 June 2000 was repealed by the loi du 24 juillet 2014 concernant l’aide financière de l’État pour études supérieures (Law of 24 July 2014 on State financial aid for higher education studies) (Mémorial A 2014, p. 2188).16Article 3 of the Law of 24 July 2014 provides:‘A student or pupil, as defined in Article 2, hereinafter referred to as a “student”, who fulfils one of the following conditions may benefit from State financial aid for higher education studies:a student not resident in the Grand Duchy of Luxembourg who:is the child of a worker who is a Luxembourg national or a national of the European Union or of another State party to the Agreement on the European Economic Area or of the Swiss Confederation employed or pursuing an activity in the Grand Duchy of Luxembourg at the time when the student’s application for financial aid for higher education studies is made, provided that the worker is continuing to contribute to the maintenance of the student and that the worker has been employed or has pursued an activity in the Grand Duchy of Luxembourg for at least five years at the time of the student’s application for financial aid for higher education studies, within a reference period of seven years counting back from the date of the application for financial aid for higher education studies or, by way of derogation, the person retaining worker status met the aforementioned criterion of five years out of seven when he or she finished work. The disputes in the main proceedings and the question referred for a preliminary ruling 17The disputes in the main proceedings concern the conditions for the granting of financial aid from the Luxembourg State, for the academic year 2013/2014, to non-Luxembourg-resident students for the pursuit of higher education studies, laid down by the amended Law of 22 June 2000.18In accordance with that law, the financial aid in question is granted to students who are not resident in Luxembourg on the condition, first, that the student is the child of a worker, whether employed or self-employed, who is a Luxembourg national or an EU national and, second, that the worker has been employed or pursuing an activity in Luxembourg for a continuous period of at least five years at the time the application for financial aid is made.19It is common ground that Ms Depesme and Mr Kauffmann, French nationals residing in France, and Mr Lefort, a Belgian national living in Belgium, applied to the Luxembourg authorities for State financial aid for higher education studies – in France in the case of Ms Depesme and Mr Kauffmann, and in Belgium in the case of Mr Lefort – for the academic year 2013/2014.20By letters dated, respectively, 26 September, 17 October and 12 November 2013, the Minister rejected those applications on the ground that Ms Depesme, Mr Kauffmann and Mr Lefort did not satisfy the conditions laid down by the amended Law of 22 June 2000.21It is clear from the three orders for reference that the students in question each lodged an application for aid asserting, in this connection, only their stepfathers’ status as an employed person in Luxembourg. The Minister then took the view that Ms Depesme, Mr Kauffmann and Mr Lefort could not be regarded as ‘children’ of a frontier worker, in accordance with the condition laid down in Article 2 bis of the amended Law of 22 June 2000, given that only their stepfathers worked in Luxembourg.22On 20 December 2013, Ms Depesme brought an action before the tribunal administratif de Luxembourg (Administrative Court, Luxembourg) for annulment of the Minister’s decision refusing her application. Her stepfather, Mr Kerrou, relying on his status as an employed person in Luxembourg and claiming to provide maintenance for Ms Depesme, intervened voluntarily in the proceedings brought by her.23On 29 January and 25 April 2014, Mr Lefort and Mr Kauffmann each brought a similar action against the decisions refusing their applications before the same court.24By judgments of 5 January 2015, the tribunal administratif (Administrative Court) declared the applications of Ms Depesme, Mr Kauffmann and Mr Lefort admissible but unfounded.25Ms Depesme, Mr Kerrou, Mr Kauffmann and Mr Lefort lodged appeals against those judgments before the referring court.26Ms Depesme and Mr Kerrou state, inter alia, that Mr Kerrou, who has been a frontier worker in Luxembourg for 14 years, married Ms Depesme’s mother on 24 May 2006 and that, since then, all three have lived together in the same household. Mr Kerrou contributes to the maintenance of his spouse’s child, including in relation to her higher education studies, and was also in receipt of Luxembourg family benefits for his stepdaughter prior to the commencement of her higher education studies.27Mr Kauffmann states that his parents have been separated since 2003, they divorced on 20 June 2005, and his mother was awarded sole custody of the couple’s children. He indicates that, on 10 March 2007, his mother married Mr Kiefer, a frontier worker in Luxembourg, and Mr Kauffmann has lived with him under the same roof since that time. Mr Kiefer has provided for Mr Kauffmann’s maintenance and education, and has received Luxembourg family benefits in respect of Mr Kauffmann.28Mr Lefort states that his father is deceased, that his mother married Mr Terwoigne, a frontier worker in Luxembourg for over five years, and that, since that marriage, he has lived with his mother and stepfather in the same household. Mr Terwoigne contributes to the financial cost of running the household and also contributes to Mr Lefort’s higher education costs.29The Luxembourg State contends that the judgments of the tribunal administratif (Administrative Court) of 5 January 2015 should be upheld and submits that Ms Depesme, Mr Kauffmann and Mr Lefort are not the children of their stepfathers within the legal meaning of the term.30The Cour administrative (Higher Administrative Court, Luxembourg) notes that the requirement of a parent-child relationship, laid down by Article 2 bis of the amended Law of 22 June 2000, was introduced in order to take account of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411).31According to the referring court, the resolution of the three disputes pending before it depends on the interpretation of the concept of ‘child’ of a frontier worker, as referred to in Article 2 bis of the amended Law of 22 June 2000, in the light of that judgment and the observance of the principle of non-discrimination provided for under Article 7(2) of Regulation No 492/2011. The referring court accordingly states that ‘the relevant criterion highlighted by [that judgment] is the actual degree of attachment of the non-resident student, who has applied for financial aid for higher education studies from the Grand Duchy of Luxembourg, with the society or the labour market of Luxembourg’. In a situation where that connection does not directly originate from the student, on the ground that he is not resident, but from the frontier worker of reference, the referring court is uncertain as to whether a strictly legal or a more economic concept of the parent-child relationship between the student seeking State financial aid for higher education studies and the frontier worker is to be adopted. According to the referring court, those two interpretations are a priori conceivable. If the concept of a ‘child’ for the purposes of the amended Law of 22 June 2000 refers to that of a dependent child, the further question would then arise as to whether the extent to which the frontier worker provides for the student has any impact. The Cour administrative (Higher Administrative Court) specifies that that question relates to a comparison of the level of provision for the student by the frontier worker, on the one hand, and by his parent(s) on the other. Finally, the referring court is uncertain as regards the significance of intensity of the relationship between the frontier worker and one of the parents of the student.32In those circumstances, the Cour administrative (Higher Administrative Court) decided to stay the proceedings and to refer the following question, which is worded in identical terms in Cases C‑401/15 to C‑403/15, apart from an addition in Case C‑403/15 which is noted in brackets, to the Court for a preliminary ruling:‘In order properly to meet the requirements of non-discrimination under Article 7(2) of [Regulation No 492/2011], together with Article 45(2) TFEU [Case C‑403/15: “against the background of Article 33(1) of the Charter of Fundamental Rights of the European Union together with, if appropriate, Article 7 of the Charter”], when taking into account the actual degree of attachment of a non-resident student, who has applied for financial aid for higher education studies, with the society and with the labour market of Luxembourg, being the Member State in which a frontier worker has been employed or has carried out his activity in the conditions referred to in Article 2 bis of the [amended Law of 22 June 2000], in direct consequence of the judgment of the Court of Justice of 20 June 2013 [Giersch and Others, C‑20/12, EU:C:2013:411],should the requirement that the student be the “child” of that frontier worker be taken to mean that he must be the frontier worker’s “direct descendant in the first degree whose relationship with his parent is legally established”, with the emphasis being placed on the child-parent relationship established between the student and the frontier worker, which is supposed to underlie the abovementioned attachment, orshould the emphasis be placed on the fact that the frontier worker “continues to provide for the student’s maintenance” without necessarily being connected to the student through a legal child-parent relationship, in particular where a sufficient link of communal life can be identified, of such a kind as to establish a connection between the frontier worker and the student’s parent with whom the child-parent relationship is legally established?From the latter perspective, where the contribution, by definition non-compulsory, of the frontier worker is not exclusive but made in parallel with that of the parent or parents connected with the student through a legal child-parent relationship, and therefore in principle under a legal duty to maintain the student, must that contribution satisfy certain criteria as regards its substance?’ Consideration of the question referred 33By its question, the referring court asks, in essence, whether Article 45 TFEU and Article 7(2) of Regulation No 492/2011 must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in Article 7(2) of Regulation No 492/2011, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means only a child who has a child-parent relationship with that worker or also a child of the spouse or registered partner of that worker. In the latter case, the referring court is uncertain, in essence, about the impact of the extent of the contribution by the frontier worker to the maintenance of that child on that child’s right to receive financial aid with a view to pursuing higher education studies, such as the financial aid at issue in the main proceedings.34As a preliminary point, it must be recalled that Article 45(2) TFEU provides that freedom of movement for workers is to entail the abolition of any discrimination based on nationality as regards employment, remuneration and other conditions of work and employment (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 34).35The Court has held that Article 7(2) of Regulation No 1612/68, the wording of which was reproduced in Article 7(2) of Regulation No 492/2011, is the particular expression, in the specific area of the grant of social advantages, of the principle of equal treatment enshrined in Article 45(2) TFEU, and must be accorded the same interpretation as that provision (see judgments of 23 February 2006, Commission v Spain, C‑205/04, not published, EU:C:2006:137, paragraph 15; of 11 September 2007, Hendrix, C‑287/05, EU:C:2007:494, paragraph 53; and of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 35).36According to Article 7(2) of Regulation No 1612/68 and Article 7(2) of Regulation No 492/2011, a worker who is a national of a Member State is to enjoy, in the territory of another Member State, the same social and tax advantages as national workers.37The Court has repeatedly held that, in relation to Article 7(2) of Regulation No 1612/68, that provision equally benefits both migrant workers resident in a host Member State and frontier workers employed in that Member State while residing in another Member State (see judgments of 18 July 2007, Geven, C‑213/05, EU:C:2007:438, paragraph 15; of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 33; of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 37; and of 14 December 2016, Bragança Linares Verruga and Others, C‑238/15, EU:C:2016:949, paragraph 39).38Furthermore, according to settled case-law, assistance granted for maintenance and education in order to pursue university studies evidenced by a professional qualification constitutes a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 (judgments of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 38, and of 14 December 2016, Bragança Linares Verruga and Others, C‑238/15, EU:C:2016:949, paragraph 40 and the case-law cited).39The Court has also found that study finance granted by a Member State to the children of workers constitutes, for the migrant worker, a social advantage within the meaning of Article 7(2) of Regulation No 1612/68, where the worker continues to support the child (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 39 and the case-law cited).40Moreover, according to the case-law of the Court, the members of a migrant worker’s family are the indirect recipients of the equal treatment granted to the worker under Article 7(2) of Regulation No 1612/68. Since the grant of funding for studies to a child of a migrant worker constitutes a social advantage for the migrant worker, that child may himself rely on that provision in order to obtain that funding if, under national law, such funding is granted directly to the student (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 40 and the case-law cited).41In the cases in the main proceedings, actions have been brought before the referring court by non-Luxembourg-resident students to the refusal by that Member State to grant those students State financial aid for higher education studies. Those students submit that they qualify for that aid on account of their family ties to a frontier worker who, while not being their father, has become the spouse of their mother after their parents’ divorce or, in the case of Mr Lefort, after the death of his father.42It is therefore necessary to examine whether the term ‘child of a migrant worker’ in the sense in which it is used in the case-law of the Court relating to Article 7(2) of Regulation No 1612/68, which is applicable to Article 7(2) of Regulation No 492/2011, and in particular in the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), includes the children of the spouse or recognised partner under national law of that worker.43In that regard, it is important to note that Article 10(1)(a) of Regulation No 1612/68, repealed by Directive 2004/38, provided that the spouse of that worker ‘and their descendants who are under the age of 21 years or are dependants’, irrespective of their nationality, had the right to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State.44The Court interpreted that provision as meaning that both the descendants of that worker and those of his spouse had the right to install themselves with that worker. To give a restrictive interpretation to that provision, to the effect that only the children common to the migrant worker and his spouse enjoyed that right, would have failed to have regard to the aim of integration of members of the families of migrant workers pursued by Regulation No 1612/68 (see, to that effect, judgment of 17 September 2002, Baumbast and R, C‑413/99, EU:C:2002:493, paragraph 57).45Furthermore, the Court has previously held that the members of a worker’s family, who qualify indirectly for the equal treatment accorded to migrant workers by Article 7 of Regulation No 1612/68, were family members within the meaning of Article 10 of Regulation No 1612/68 (see, to that effect, judgment of 18 June 1987, Lebon, 316/85, EU:C:1987:302, paragraph 12).46It must be stated that Article 10 of Regulation No 1612/68 was repealed by Directive 2004/38 on the ground that the EU legislature wished to codify, in one legislative text, the right to family reunification for workers, self-employed persons, students and other inactive persons, in order to simplify and strengthen that right.47In the context of that reform, the legislature again restated, in Article 2(2)(c) of that directive, the concept of ‘family member’, as it has been defined by the Court in relation to Regulation No 1612/68, specifying that it is to mean the direct descendants of that citizen who are under the age of 21 years or are dependants, ‘and the direct descendants of his spouse or partner’ recognised under national law.48As the Advocate General observed in point 43 of his Opinion, the judgment of 20 June 2013, Giersch and Others, (C‑20/12, EU:C:2013:411) and the term ‘child’ used therein are part of the jurisprudential and legislative context set out in paragraphs 42 to 47 above.49It is therefore clear that the term ‘child of a migrant worker’ in the sense used in the case-law of the Court in relation to Article 7(2) of Regulation No 1612/68 must be interpreted as including the children of the spouse or recognised partner under national law of that worker.50The Luxembourg Government’s argument that Directive 2004/38 relates only to the right of Union citizens and members of their family freely to move about and reside in Member States, and not to the right of frontier workers to benefit from the same social advantages as national workers provided for in Article 7(2) of Regulation No 492/2011, does not cast doubt on that interpretation.51It follows from the development of EU legislation, as set out in paragraphs 46 and 47 above, and from the fact that Article 7(2) of Regulation No 492/2011 simply reproduced the wording of Article 7(2) of Regulation No 1612/68 without amendment, that the family members able to benefit indirectly from equal treatment under Regulation No 492/2011 are those family members within the meaning of Directive 2004/38. There is nothing to suggest that the EU legislature intended to establish, as regards family members, a watertight distinction between the scope of Directive 2004/38 and the scope of Regulation No 492/2011, under which family members of a Union citizen, within the meaning of Directive 2004/38, would not necessarily be the same persons as the family members of that citizen when he is considered in his capacity as a worker.52Moreover, the fact that the term ‘child of a frontier worker’, who is able to benefit indirectly from the principle of equality enshrined in Article 7(2) of Regulation No 492/2011, should be interpreted in the light of the concept of ‘family members’ as defined by the case-law of the Court in relation to Regulation No 1612/68 and restated in Article 2 of Directive 2004/38, is borne out by Directive 2014/54, the deadline for transposition into national law of which expired on 21 May 2016.53It is clear from recital 1 of Directive 2014/54, under which the free movement of workers ‘is further developed by Union law aiming to guarantee the full exercise of rights conferred on Union citizens and the members of their family’, that the expression ‘“members of their family” should be understood as having the same meaning as the term defined in point (2) of Article 2 of Directive [2004/38], which applies also to family members of frontier workers’.54Under Article 2(2) of Directive 2014/54, the scope of that directive is identical to that of Regulation No 492/2011. Under to Article 1 of Directive 2014/54, the subject matter of that directive moreover consists of provisions to facilitate the uniform application and enforcement in practice of the rights conferred by Article 45 TFEU and by Articles 1 to 10 of Regulation No 492/2011.55As long as they meet the definition of ‘family member’, within the meaning of Article 2(2)(c) of Directive 2004/38, of a frontier worker who himself has sufficient links with the society of the host Member State, it is therefore clear that the children of the spouse or partner recognised by the host Member State of that frontier worker may also be considered to be the children of that frontier worker for the purposes of qualifying for the right to receive financial aid for the pursuit of higher education studies, which is considered to be a social advantage within the meaning of Article 7(2) of Regulation No 492/2011.56The referring court also asks, in essence, what impact the extent of the contribution, by the frontier worker, to the maintenance of his spouse’s child, has on the right of that child to receive financial aid such as that at issue in the main proceedings.57In that regard, it is clear from the case-law referred to in paragraph 39 above that, where the migrant worker continues to support the child, the study finance granted by the Member State to that child constitutes a social advantage for that worker within the meaning of Article 7(2) of Regulation No 1612/68. It should be noted further that Article 10 of Regulation No 1612/68, repealed by Directive 2004/38, provided that a worker’s ’spouse and their descendants who are under the age of 21 years or are dependants’ had a right, irrespective of their nationality, to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State. The EU legislature, by Directive 2004/38, also takes the view that ‘direct descendants [of a Union citizen] who are under the age of 21 or are dependants and those of the spouse or [recognised] partner’ are to be regarded as being ‘family members’ within the meaning of Article 2(2)(c) of that directive.58The Court took the view that the status of dependent member of a family, within the meaning of Article 10 of Regulation No 1612/68, did not presuppose a right to maintenance. If that were the case, the composition of the family that Article 10 provided for would depend on national legislation, which varies from one State to another, and that would lead to a lack of uniformity in the application of EU law. The Court therefore interpreted Article 10(1) and (2) of Regulation No 1612/68 as meaning that the status of dependent member of a family is the result of a factual situation. The person having that status is a member of the family who is supported by the worker and there is no need to determine the reasons for recourse to the worker’s support or to raise the question whether the person concerned is able to support himself by taking up paid employment. That interpretation is dictated by the principle that the provisions establishing the free movement of workers, which constitutes one of the foundations of the Union, must be construed broadly (see, to that effect, judgment of 18 June 1987, Lebon, 316/85, EU:C:1987:302, paragraphs 21 to 23).59However, as the Advocate General noted in point 67 of his Opinion, such an interpretation applies also where the contribution of a frontier worker to the maintenance of the children of his spouse or recognised partner is at issue.60It must therefore be held, in the present case, that the status of dependent member of a family is the result of a factual situation, which it is for the Member State and, if appropriate, the national courts to assess. The status of a family member of a frontier worker who is dependent on that worker may, when it relates to the case of a child of a spouse or recognised partner of that worker, be evidenced by objective factors, such as a joint household shared by that worker and the student, and it is not necessary to determine the reasons for the frontier worker’s contribution to the maintenance of the student or make a precise estimation of its amount.61However, the Luxembourg Government submits that it would be difficult to require the competent authorities to find out, in each case, whether and to what extent the frontier worker, who is the step-parent of a student applying for the financial aid at issue in the main proceedings, contributes to the maintenance of that student.62First, it must be stated that the EU legislature takes the view that the children are, in any case, presumed to be dependent until the age of 21 years, as is apparent, in particular, from Article 2(2)(c) of Directive 2004/38.63Second, it is apparent from the documents before the Court that the Luxembourg legislature itself made the grant of State financial aid for higher education studies, pursuant to Article 3 of the Law of 24 July 2014, which is applicable from the academic year 2014/2015, subject to the condition that the worker ‘is continuing to contribute to the maintenance of the student’. The Luxembourg Government cannot therefore reasonably maintain that a condition of contribution to the maintenance of the student cannot be verified by the authorities.64In the light of all the above considerations, the answer to the question referred is that Article 45 TFEU and Article 7(2) of Regulation No 492/2011 must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in the latter provision, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means not only a child who has a child-parent relationship with that worker, but also a child of the spouse or registered partner of that worker, where that worker supports that child. The latter requirement is the result of a factual situation, which it is for the national authorities and, if appropriate, the national courts, to assess, and it is not necessary for them to determine the reasons for that contribution or make a precise estimation of its amount. Costs 65Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Article 45 TFEU and Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in the latter provision, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means not only a child who has a child-parent relationship with that worker, but also a child of the spouse or registered partner of that worker, where that worker supports that child. The latter requirement is the result of a factual situation, which it is for the national authorities and, if appropriate, the national courts, to assess, and it is not necessary for them to determine the reasons for that contribution or make a precise estimation of its amount. [Signatures]( *1 ) * Language of the case: French. | 7d21d-be40dad-4526 | EN |
By making the receipt of a study grant by the child of a frontier worker conditional on the frontier worker having worked in Luxembourg for a continuous period of five years at the time the application for the grant is made, Luxembourg has infringed EU law | 14 December 2016 ( *1 )‛Reference for a preliminary ruling — Freedom of movement of persons — Equal treatment — Social advantages — Regulation (EU) No 492/2011 — Article 7(2) — Financial aid for higher education studies — Students not residing in the territory of the Member State concerned subject to the condition that they be the children of workers who have been employed or who have pursued their professional activity in that Member State for a continuous period of at least five years — Indirect discrimination — Justification — Objective of increasing the proportion of residents with a higher education degree — Whether appropriate — Proportionality’In Case C‑238/15,REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal administratif (Administrative Court, Luxembourg), made by decision of 20 May 2015, received at the Court on 22 May 2015, in the proceedings Maria Do Céu Bragança Linares Verruga, Jacinto Manuel Sousa Verruga, André Angelo Linares Verruga v Ministre de l’Enseignement supérieur et de la Recherche, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas (Rapporteur), C. Toader and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 14 April 2016,after considering the observations submitted on behalf of:—Mrs Bragança Linares Verruga and others, by G. Thomas and L. Urbany, avocats,the Luxembourg Government, by D. Holderer, acting as Agent, and P. Kinsch, avocat,the Danish Government, by M. Wolff and C. Thorning, acting as Agents,the Norwegian Government, by I. Jansen, C. Anker and M. Schei, acting as Agents,the European Commission, by M. Van Hoof, M. Kellerbauer and D. Martin, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 2 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1).2The request has been made in proceedings between Mrs Maria do Céu Bragança Linares Verruga, Mr Jacinto Manuel Sousa Verruga and Mr André Angelo Linares Verruga and the ministre de l’Enseignement supérieur et de la Recherche (Minister for Higher Education and Research, Luxembourg) concerning the Minister’s refusal to grant Mr Linares Verruga financial aid from the State for higher education studies. Legal context European Union law 3Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968(II), p. 475), as amended by Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 (OJ 2004 L 158, p. 77 and corrigenda OJ 2004 L 229, p. 35 and OJ 2005 L 197, p. 34) (‘Regulation No 1612/68’) was repealed, with effect from 16 June 2011, by Regulation No 492/2011.4Under the second paragraph of Article 41 of Regulation No 492/2011, references to Regulation No 1612/68 are to be construed as references to Regulation No 492/2011.5Article 7 of Regulation No 492/2011, which reproduced the wording of Article 7 of Regulation No 1612/68, provides:‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and, should he become unemployed, reinstatement or re-employment.2. He shall enjoy the same social and tax advantages as national workers.…’6Under the first sentence of Article 16(1) of Directive 2004/38, ‘Union citizens who have resided legally for a continuous period of five years in the host Member State shall have the right of permanent residence there’.7Article 24 of that directive provides:‘1. Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a Member State and who have the right of residence or permanent residence.2. By way of derogation from paragraph 1, the host Member State shall not be obliged to confer entitlement to social assistance during the first three months of residence or, where appropriate, the longer period provided for in Article 14(4)(b), nor shall it be obliged, prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training, consisting in student grants or student loans to persons other than workers, self-employed persons, persons who retain such status and members of their families.’ Luxembourg law 8Financial aid from the State for higher education studies is governed by the Law of 22 June 2000 on State financial aid for higher education studies (Mémorial A 2000, p. 1106, ‘the Law on State financial aid for higher education studies’), which has been amended several times.9That financial aid is granted in the form of a grant and a loan and may be applied for irrespective of the State in which the applicant proposes to pursue his higher education studies.10Following the amendments introduced by Article 1(2) of the Law of 26 July 2010 (Mémorial A 2010, p. 2040), Article 2 of the Law on State financial aid for higher education studies defined the persons entitled to that aid in the following terms:‘A student admitted to higher education studies shall be entitled to receive financial aid from the State for higher education studies where he or she satisfies one of the following conditions:(a)he or she is a Luxembourg national or a member of the family of a Luxembourg national and is domiciled in the Grand Duchy of Luxembourg, or(b)he or she is a national of another Member State of the European Union or of one of the other States which is a party to the Agreement on the European Economic Area[, of 2 May 1992 (OJ 1994 L 1, p. 3),] or of the Swiss Confederation and resides, in accordance with Chapter 2 of the amended Law of 29 August 2008 on the free movement of persons and on immigration, in the Grand Duchy of Luxembourg as an employed person, a self-employed person, a person who retains that status, or a family member of one of the categories of persons above, or as a person who has acquired the right of permanent residence …11The legislation applicable at the material time in the main proceedings is that resulting from the amendment of the Law on State financial aid for higher education studies by the Law of 19 July 2013 (Mémorial A 2013, p. 3214) (‘the amended Law of 22 June 2000’).12Article 2 bis of the amended Law of 22 June 2000, as inserted by Article 1(1) of the Law of 19 July 2013, provides:‘A student not residing in the Grand Duchy of Luxembourg may also receive financial aid for higher education studies where that student is the child of an employed or self-employed person who is a Luxembourg national or a national of the European Union or of another State party to the Agreement on the European Economic Area or of the Swiss Confederation, is employed or pursuing an activity in Luxembourg, and has been employed or has pursued an activity in Luxembourg for a continuous period of at least five years at the time the student makes the application for financial aid for higher education studies. Employment in Luxembourg must be for at least half the normal working hours applicable within the undertaking, under statute or by virtue of any collective labour agreement that may be in force. A self-employed worker is required to have been affiliated to the social security system in the Grand Duchy of Luxembourg under Article 1(4) of the Social Security Code for a continuous period of five years prior to the application for financial aid for higher education studies.’13The amended Law of 22 June 2000 was subsequently repealed by the Law of 24 July 2014 on State financial aid for higher education studies (Mémorial A 2014, p. 2188), which was not in force at the material time in the main proceedings. In particular, the condition that the parent of the non-resident student must have worked for a continuous period of five years at the time the application for financial aid is made was abandoned in favour of a condition that the parent of the non-resident student must have worked for a period of at least five years during a reference period of seven years prior to the date of the application for the financial aid. The dispute in the main proceedings and the question referred for a preliminary ruling 14Mr Linares Verruga, a student at the University of Liège (Belgium), resides with his parents, Mrs Bragança Linares Verruga and Mr Sousa Verruga, in Longwy (France). Mrs Bragança Linares Verruga has been working in Luxembourg as an employee since 15 May 2004, with a single break between 1 November 2011 and 15 January 2012. Mr Sousa Verruga worked in that Member State as an employee between 1 April 2004 and 30 September 2011 and between 4 December 2013 and 6 January 2014. Having set up a business in Luxembourg on 1 February 2014, Mr Sousa Verruga has worked there on a self-employed basis since that date.15Mr Linares Verruga applied, as a student, for the winter semester of the 2013/2014 academic year, for financial aid from the Luxembourg State for higher education studies in connection with the preparation of his degree.16By decision of 28 November 2013, the Minister for Higher Education and Research rejected that application for financial aid on the ground that the conditions laid down in Article 2 bis of the amended Law of 22 June 2000 were not satisfied.17On 23 December 2013, Mr Linares Verruga and his parents brought an administrative appeal against that decision. By decision of 14 January 2014, the Minister for Higher Education and Research dismissed that appeal.18Mr Linares Verruga also applied for financial aid from the Luxembourg State for higher education studies for the summer semester of the 2013/2014 academic year. By decision of 24 March 2014, the Minister for Higher Education and Research rejected that application for financial aid on grounds identical to those set out in his decision of 28 November 2013.19On 15 April 2014, Mr Linares Verruga and his parents then brought an action before the tribunal administratif (Administrative Court, Luxembourg) seeking alteration or annulment of the decisions of the Minister for Higher Education and Research of 28 November 2013, 14 January 2014 and 24 March 2014.20Before that court, Mr Linares Verruga and his parents have claimed that financial aid from the State for higher education studies constitutes a family benefit within the meaning of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1, and corrigendum OJ 2004 L 200, p. 1), to which every worker is entitled. In the alternative, they submit that that aid constitutes a social advantage, within the meaning of Article 7(2) of Regulation No 1612/68, so that the grant of that aid is subject to the principle of equal treatment set out in that provision.21The Luxembourg Government contends that the aid in question does not constitute a family benefit within the meaning of Regulation No 883/2004 and disputes the applicability of Regulation No 1612/68 to the dispute in the main proceedings. The Luxembourg Government also contends that the status of ‘worker’ of one of the parents of a student who does not reside in Luxembourg does not on its own suffice to confer on that student an entitlement to financial aid from the State for higher education studies. According to the Luxembourg Government, the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), allowed the national legislature to make the grant of such aid conditional on the frontier worker having worked in the Member State concerned for a significant period. It is contended that, in the case in the main proceedings, the Verrugas do not satisfy that condition.22The tribunal administratif (Administrative Court) rejects, in the first place, the argument of Mr Linares Verruga and his parents that the financial aid from the State for higher education studies constitutes a family benefit within the meaning of Regulation No 883/2004. In this connection, it observes that that regulation concerns benefits linked to the compulsory contributions of employed and self-employed persons and that a benefit falls within the scope of that regulation only if it covers a social risk. The tribunal administratif (Administrative Court) considers that financial aid from the State for higher education studies is not intended to cover such a risk.23According to that court, the financial aid in question cannot be regarded as compensation for the removal of family allowances for students over 18 years of age. In designating the students as the persons entitled to the financial aid from the State for higher education studies, the Luxembourg legislature wished to affirm the concept of the ‘autonomy of the student’, namely the right of the student to pursue the higher education studies of his choosing, irrespective of the financial situation and wishes of his parents, in particular, with the aim of encouraging an increase in the proportion of persons with a higher education degree in the resident population of Luxembourg. The tribunal administratif (Administrative Court) states, in this connection, that the financial aid from the State for higher education studies is subject to academic conditions only and that it is granted in the form of a grant or a loan, the amounts of which vary only according to the student’s personal financial and social situation and the enrolment fees to be borne by him.24As regards, in the second place, the arguments of Mr Linares Verruga and of his parents that the amended Law of 22 June 2000 is incompatible with Regulation No 1612/68, the tribunal administratif (Administrative Court) considers that, in so far as study finance granted by a Member State to the children of workers constitutes, for a migrant worker, a social advantage within the meaning of Article 7(2) of that regulation, that provision is applicable to the dispute in the main proceedings.25That court observes, furthermore, that, in the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the Court held that the condition of residence laid down in Article 2(b) of the Law on State financial aid for higher education studies, as amended by the Law of 26 July 2010, constitutes indirect discrimination on the ground of nationality between persons residing in Luxembourg and those who, without residing in that Member State, are the children of frontier workers pursuing an activity there.26According to the tribunal administratif (Administrative Court), although, in that judgment, the Court stated that it was open to the Luxembourg legislature to require, for the purposes of granting the aid in question, that the frontier worker, the parent of the student, have worked in Luxembourg for a certain minimum period, the Court nevertheless did not rule that such a requirement had to constitute an exclusive condition and that a period of work of five years in that Member State had to be the only acceptable criterion. On the contrary, in that same judgment, the Court emphasised the overly exclusive nature of a rule favouring only one criterion for the purposes of assessing the degree of attachment of the frontier worker to Luxembourg society and emphasised the relevance of and justification for criteria that make it possible to identify a reasonable probability of the student returning to Luxembourg after completing his studies.27The tribunal administratif (Administrative Court) notes, next, that Mr Linares Verruga was refused the grant of financial aid from the State for higher education studies because of a break of two and a half months in his mother’s employment in Luxembourg, notwithstanding the fact that she has been pursuing such an activity for an overall period of almost eight years, whereas, in the same circumstances, a worker resident in the Member State in question would not have met with such a refusal.28In those circumstances, the tribunal administratif (Administrative Court) is uncertain whether the condition laid down in Article 2 bis of the amended Law of 22 June 2000 is excessive. It observes that indirect discrimination is in principle prohibited, unless it is objectively justified, that is to say, it is appropriate for ensuring the attainment of a legitimate objective and does not go beyond what is necessary to attain that objective. In this connection, the court notes that the Luxembourg Government puts forward as justification the need to ensure that a link exists between the frontier worker and Luxembourg society that makes it possible to assume that, having received the aid from the State in order to finance his studies, the student, the child of such a worker, will return to Luxembourg in order to apply the knowledge acquired for the benefit of that Member State’s economic development.29According to the tribunal administratif (Administrative Court), the Luxembourg Government is aware of the excessive and discriminatory nature of the requirement laid down in Article 2 bis of the amended Law of 22 June 2000, since the Law of 24 July 2014 on State financial aid for higher education studies replaced the condition of a continuous period of work of five years with the condition of a total period of work of five years during a reference period of seven years, with a view to making it possible for breaks in work due, inter alia, to periods of unemployment, to be taken into account. That court considers, however, that, despite that amendment to the conditions for the grant of such aid, the question of the compatibility of the amended Law of 22 June 2000 with Regulation No 1612/68 is still relevant to the decision as to how the decisions of the Minister for Higher Education and Research at issue in the main proceedings are to be treated.30In those circumstances, the tribunal administratif (Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Is the condition, imposed on students not residing in the Grand Duchy of Luxembourg by Article 2 bis of the amended Law of 22 June 2000, which does not take into account any other connecting factor, namely that they must be the children of workers who have been employed or have carried out their activity in Luxembourg for a continuous period of at least five years at the time the application for financial aid is made, justified by the considerations relating to education policy and budgetary policy put forward by the Luxembourg State, and appropriate and proportionate in each case in relation to the objective pursued, namely of bringing about an increase in the proportion of persons with a higher education degree while seeking to ensure that those persons, having benefited from the possibility offered by the system of aid concerned in order to finance their studies — undertaken as the case may be abroad — will return to Luxembourg in order to apply their knowledge for the benefit of the economic development of that Member State?’ Consideration of the question referred 31By its question, the referring court asks, in essence, whether Article 7(2) of Regulation No 492/2011 must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which, with the aim of encouraging an increase in the proportion of residents with a higher education degree, makes the grant of financial aid for higher education studies to a non-resident student conditional on at least one of that student’s parents having worked in that Member State for a minimum and continuous period of five years at the time the application for financial aid is made, but which does not lay down such a condition in respect of a student residing in the territory of that Member State. Preliminary observations 32In the case that gave rise to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the Court has already had to consider the Luxembourg legislation on State financial aid for higher education studies then resulting from the Law on State financial aid for higher education studies, as amended by the Law of 26 July 2010.33The Court was thus asked about the compatibility with Article 7(2) of Regulation No 1612/68 of national legislation which made the grant of financial aid for higher education studies conditional on residence by the student and thereby gave rise to a difference in treatment between persons who reside in Luxembourg and those who, not being residents of that Member State, are the children of frontier workers pursuing an activity in that Member State.34The Court held that the difference in treatment which arose from the fact that a condition of residence was imposed on students who are the children of frontier workers constituted indirect discrimination on the ground of nationality, which is in principle prohibited, unless it is objectively justified (see, to that effect, judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 46).35In this connection, the Court held that the condition of residence laid down in the Law on State financial aid for higher education studies, as amended by the Law of 26 July 2010, was appropriate for attaining the objective in the public interest, acknowledged at the level of the European Union, of promoting higher education and of significantly increasing the proportion of Luxembourg residents who hold a higher education degree (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraphs 53, 56 and 68).36By contrast, in its analysis of whether the residence condition was necessary, the Court held that it went beyond what was necessary in order to attain the objective of increasing the proportion of residents with a higher education degree, to the extent that it precluded the taking into account of other elements potentially representative of the actual degree of attachment of the applicant for the financial aid in question with the society or with the labour market of the Member State concerned, such as the fact that one of the parents, who continues to support the student, is a frontier worker who has stable employment in that Member State and has already worked there for a significant period of time (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 83).37Following the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the Law of 19 July 2013 amended the Law on State financial aid for higher education studies so as to extend the benefit of that aid to the student who does not reside in Luxembourg provided that that student is the child of an employed or self-employed person who is a Luxembourg national or a national of the European Union employed or pursuing an activity in Luxembourg, and that that worker has been employed or has pursued an activity in Luxembourg for a continuous period of at least five years at the time the student makes the application for financial aid for higher education studies.38In order to answer the question referred by the referring court, it is necessary to examine whether legislation such as that resulting from that amendment gives rise to possible discrimination and, if so, whether it is objectively justified. The existence of discrimination 39Under Article 7(2) of Regulation No 492/2011, the wording of which is the same as that in Article 7(2) of Regulation No 1612/68, a worker who is a national of a Member State is to enjoy, in the territory of another Member State, the same social and tax advantages as national workers. That provision equally benefits both migrant workers resident in a host Member State and frontier workers employed in that Member State while residing in another Member State (see, to that effect, judgments of 27 November 1997, Meints, C‑57/96, EU:C:1997:564, paragraph 50, and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 37).40It follows from settled case-law that assistance granted for maintenance and education in order to pursue university studies evidenced by a professional qualification constitutes, for the migrant worker, a social advantage, within the meaning of Article 7(2) of Regulation No 1612/68 (judgments of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 34, and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 38), on which provision the child of the migrant worker may himself rely if, under national law, that assistance is granted directly to the student (see, to that effect, judgments of 26 February 1992, Bernini, C‑3/90, EU:C:1992:89, paragraph 26; 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 48; and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 40).41The principle of equal treatment laid down in Article 45 TFEU and in Article 7 of Regulation No 1612/68 prohibits not only direct discrimination on grounds of nationality but also all indirect forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result (see judgment of 13 April 2010, Bressol and Others, C‑73/08, EU:C:2010:181, paragraph 40).42The national legislation at issue in the main proceedings makes the grant of financial aid for higher education studies conditional on residence by the student in the territory of Luxembourg or, in the case of students not residing in Luxembourg, on their being the children of workers who have been employed or have pursued a professional activity in Luxembourg for a continuous period of at least five years at the time the application for financial aid is made. Even if it applies equally to Luxembourg nationals and to nationals of other Member States, such a condition of a minimum and continuous period of work is not laid down in respect of students who reside in the territory of Luxembourg.43Such a distinction based on residence is liable to operate mainly to the detriment of nationals of other Member States, as non-residents are in the majority of cases foreign nationals (see, to that effect, judgments of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 38, and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 44).44It therefore constitutes indirect discrimination on the ground of nationality which is permissible only if it is objectively justified. In order to be justified, it must be appropriate for securing the attainment of a legitimate objective and must not go beyond what is necessary to attain that objective. The existence of a legitimate objective 45In its written observations, the Luxembourg Government contends that the objective pursued by the amended Law of 22 June 2000 is identical to the social objective that was relied on in order to justify the legislation applicable in the case that gave rise to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411). That objective is to significantly increase in Luxembourg the proportion of residents with a higher education degree.46In paragraphs 53 and 56 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the Court held that the social objective relied on by the Luxembourg Government in order to justify the legislation applicable in the case that gave rise to that judgment and aiming to promote higher education is an objective in the public interest acknowledged at the level of the European Union. Thus, an action undertaken by a Member State in order to ensure that its resident population is highly educated pursues a legitimate objective which can justify indirect discrimination on grounds of nationality.47There remains to be examined whether the condition of a continuous period of work of five years at the time the application for the study grant is made is appropriate and necessary in order to attain that objective. The appropriateness of the condition of the minimum and continuous period of work 48According to the Luxembourg Government, whose opinion is endorsed in essence by the Danish and Norwegian Governments, the condition of the minimum and continuous period of work in Luxembourg of five years is intended to ensure that the financial aid is granted only to students who have a connection with Luxembourg society such that there is a high probability that they will settle in Luxembourg and become integrated in the Luxembourg labour market after completing their higher education studies. That objective will be attained if the parent, a frontier worker, has stable employment in Luxembourg and has already worked there for a significant period, as this is an element representative of the actual degree of attachment to the society or labour market of Luxembourg. Such circumstances give grounds for assuming that the example of the parent will be such as to influence, with a sufficient degree of probability, the career choice of the student.49In the first place, it should be recalled that, according to settled case-law, the fact that migrant and frontier workers have participated in the labour market of a Member State creates, in principle, a sufficient link of integration with the society of that State, allowing them to benefit from the principle of equal treatment, as compared with national workers, as regards social advantages (see, to that effect, judgments of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 65, and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 63).50The link of integration arises, in particular, from the fact that migrant workers contribute to the financing of the social policies of the host Member State through the taxes and social contributions which they pay in that State by virtue of their employment there. They must, therefore, be able to benefit from them under the same conditions as national workers (see, to that effect, judgments of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 66, and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 63).51However, the Court has already accepted that indirectly discriminatory national legislation restricting the grant to frontier workers of social advantages within the meaning of Article 7(2) of Regulation No 1612/68 where there is not a sufficient connection to the society in which they are pursuing their activities without residing there may be objectively justified and proportionate to the objective pursued (see, to that effect, judgments of 18 July 2007, Hartmann, C‑212/05, EU:C:2007:437, paragraphs 30 to 35 and 37; 18 July 2007, Geven, C‑213/05, EU:C:2007:438, paragraph 26; 11 September 2007, Hendrix, C‑287/05, EU:C:2007:494, paragraphs 54 and 55; and 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 64).52Thus, in paragraphs 26 and 28 to 30 of the judgment of 18 July 2007, Geven (C‑213/05, EU:C:2007:438), the Court held that Article 7(2) of Regulation No 1612/68 did not preclude legislation of a Member State which provided that only workers who, by their choice of residence, had established a real link with the society of that Member State and, in the case of frontier workers who carried on an occupation in that Member State while residing in another Member State, who carried on an occupation exceeding the threshold of minor employment, would be able to claim a social advantage within the meaning of that provision, because an objective contribution to the national labour market was also found to constitute a valid factor of integration into the society of the Member State concerned.53In the legislation applicable in the case that gave rise to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the condition of prior residence of the student in Luxembourg was considered to be the only condition capable of establishing the connection to that Member State.54The Court held that such a residence condition was appropriate for attaining the objective of promoting higher education and of significantly increasing the proportion of Luxembourg residents who hold a higher education degree, but that it was too exclusive in nature (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 76). The existence of a reasonable probability that the recipients of the aid will return to settle in Luxembourg and make themselves available to the labour market of that Member State, in order to contribute to its economic development, could be established on the basis of elements other than such a condition (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 77).55Amongst those elements, the Court indicated that the fact that the parents of the student concerned have been employed for a significant period in the Member State providing the aid applied for might be appropriate for the purposes of showing the actual degree of attachment with the society or labour market of that State (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 78).56In the main proceedings, as in the case that gave rise to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), first, the recipients of the financial aid are not the workers themselves but their non-Luxembourg-resident children who wish to pursue studies, whether in Luxembourg or elsewhere, and, second, the link with Luxembourg society may, in this respect, be less apparent in the case of the children of frontier workers than in the case of the children of migrant workers resident in Luxembourg.57Accordingly, it seems legitimate that the State providing the aid would seek to ensure that the frontier worker does in fact have a link of integration with Luxembourg society, by requiring a sufficient attachment in order to combat the risk of ’study grant forum shopping’, referred to by the governments which submitted observations.58In this connection, the condition of a minimum period of work in Luxembourg on the part of the frontier worker parent, required by the amended Law of 22 June 2000, in order for the children of frontier workers to be able claim financial aid from the State for higher education studies, is, admittedly, of such a kind as to establish such a connection on the part of those workers to Luxembourg society and a reasonable probability that the student will return to Luxembourg after completing his studies. The necessity of the condition of the minimum and continuous period of work 59In order to comply with EU law, the condition relating to the minimum and continuous period of work at the time the application for financial aid is made must not go beyond what is necessary to attain the objective pursued.60At paragraph 76 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the Court held that, by imposing a condition of residence such as that at issue in the case that gave rise to that judgment, the Grand Duchy of Luxembourg had favoured an element which was not necessarily the sole representative element of the actual degree of attachment of the party concerned to that Member State.61The Court thus indicated that a sufficient attachment of the student in question to the Grand Duchy of Luxembourg, such as to make it possible to conclude that there is a reasonable probability that he will return to settle in and make himself available to the labour market of that Member State, may also be derived from the fact that that student resides alone or with his parents in a Member State which borders upon the Grand Duchy of Luxembourg and that, for a significant period of time, his parents have worked in Luxembourg and live near to that Member State (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 78).62With regard to the possibilities open to the Luxembourg legislature, the Court indicated that, where the aid granted consists in, for example, a loan, a system of financing which made the grant of that loan, or even the outstanding balance thereof, or its non-reimbursement, conditional on the student who receives it returning to Luxembourg after his studies abroad in order to work and reside there, could attain the objective pursued, without adversely affecting the children of frontier workers (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 79).63Furthermore, in order to avoid the risk of ‘study grant forum shopping’ and to ensure that the frontier worker has a sufficient link with Luxembourg society, the Court mentioned, at paragraph 80 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), the possibility of making the grant of the financial aid conditional on the frontier worker, the parent of the student who does not reside in Luxembourg, having worked in that Member State for a certain minimum period of time.64In that regard, the Luxembourg government submits that the national legislature used the possibility afforded it under paragraph 80 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), drawing inspiration, by analogy, from Article 24(2) of Directive 2004/38, which refers to the conditions for the acquisition of a right of permanent residence, set out in Article 16(1) of that directive. Article 16(1) expressly provides for the acquisition of a right of permanent residence by ‘Union citizens who have resided legally for a continuous period of five years in the host Member State’.65However, as the Advocate General has observed in points 83 to 85 of his Opinion, the analogy with Article 16(1) and Article 24(2) of Directive 2004/38, suggested by the Luxembourg Government, is not relevant for the purposes of justifying the requirement for a continuous period of work of five years imposed by the national legislation at issue in the main proceedings.66Article 16 of Directive 2004/38, which lays down a condition of a minimum continuous period of residence in order to ensure the grant of the right of permanent residence to persons settled on a long-term basis in the host Member State, concerns, as the Court has expressly noted in paragraph 80 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), a context other than that of equal treatment of national workers and migrant workers. Furthermore, Article 24(2) of Directive 2004/38 states expressly that the possibility afforded by that provision of refusing, prior to the acquisition of a right of permanent residence, the grant of maintenance aid for studies, including vocational training, consisting in student grants or student loans, applies only to persons other than workers, self-employed persons, persons who retain such status and members of their families.67It is therefore only in order to illustrate how EU law makes it possible, in the context of economically inactive Union citizens, to avoid the risk of ‘study grant forum shopping’, that the Court referred, in paragraph 80 of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), to Article 16(1) and to Article 24(2) of Directive 2004/38.68It should be noted that, in the case in the main proceedings, Mr Linares Verruga was refused the financial aid from the State for higher education studies even though his parents had worked in Luxembourg for a total period exceeding five years, with only a few short breaks during the five years preceding the application for financial aid.69A rule such as that laid down in the national legislation at issue in the main proceedings, which makes the grant of financial aid for higher education studies to non-resident students conditional on a parent having worked in Luxembourg for a minimum continuous period of five years at the time the application for financial aid is made, without permitting the competent authorities to grant that aid where, as in the main proceedings, the parents, notwithstanding a few short breaks, have worked in Luxembourg for a significant period of time, in this case for almost eight years, in the period preceding that application, involves a restriction that goes beyond what is necessary in order to attain the legitimate objective of increasing the number of residents holding a higher education degree, inasmuch as such breaks are not liable to sever the connection between the applicant for financial aid and the Grand Duchy of Luxembourg.70It follows from all the foregoing considerations that the answer to the question referred is that Article 7(2) of Regulation No 492/2011 must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which, with the aim of encouraging an increase in the proportion of residents with a higher education degree, makes the grant of financial aid for higher education studies to a non-resident student conditional on at least one of that student’s parents having worked in that Member State for a minimum and continuous period of five years at the time the application for financial aid is made, but which does not lay down such a condition in respect of a student residing in the territory of that Member State. Costs 71Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which, with the aim of encouraging an increase in the proportion of residents with a higher education degree, makes the grant of financial aid for higher education studies to a non-resident student conditional on at least one of that student’s parents having worked in that Member State for a minimum and continuous period of five years at the time the application for financial aid is made, but which does not lay down such a condition in respect of a student residing in the territory of that Member State. [Signatures]( *1 ) * Language of the case: French. | db8a9-1c66fab-4ca9 | EN |
Under the Services Directive, applicants for a licence cannot be required to pay costs relating to the management and enforcement of the licencing regime when submitting their application | 16 November 2016 ( *1 )‛Reference for a preliminary ruling — Freedom to provide services — Directive 2006/123/EC — Article 13(2) — Authorisation procedures — Concept of charges which may be incurred’In Case C‑316/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Supreme Court of the United Kingdom, made by decision of 22 June 2015, received at the Court on 26 June 2015, in the proceedings The Queen, on the application of: Timothy Martin Hemming, trading as ‘Simply Pleasure Ltd’, James Alan Poulton, Harmony Ltd, Gatisle Ltd, trading as ‘Janus’, Winart Publications Ltd, Darker Enterprises Ltd, Swish Publications Ltd, v Westminster City Council, interveners: The Architects’ Registration Board, The Solicitors’ Regulation Authority, The Bar Standards Board, The Care Quality Commission, The Farriers’ Registration Council, The Law Society, The Bar Council, The Local Government Association, Her Majesty’s Treasury, THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, M. Vilaras, J. Malenovský, M. Safjan (Rapporteur) and D. Švaby, Judges,Advocate General: M. Wathelet,Registrar: L. Hewlett, Administrator,having regard to the written procedure and further to the hearing on 1 June 2016,after considering the observations submitted on behalf of:—Mr Hemming, trading as ‘Simply Pleasure Ltd’, Mr Poulton, Harmony Ltd, Gatisle Ltd, trading as ‘Janus’, Winart Publications Ltd, Darker Enterprises Ltd and Swish Publications Ltd, by P. Kolvin, QC, T. Johnston, M. Hutchings, V. Wakefield, Barristers, A. Milner and S. Dillon, Solicitors,Westminster City Council, by H. Davies, acting as Agent, and D. Matthias, QC, N. Lieven, QC, J. Lean and C. Streeten, Barristers,the Netherlands Government, by M. Bulterman, B. Koopman and M. Gijzen, acting as Agents,the European Commission, by H. Tserepa-Lacombe and T. Scharf, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 28 July 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 13(2) of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ 2006 L 376 p. 36, ‘the Services Directive’).2The request has been made in proceedings between Mr Timothy Martin Hemming, trading as ‘Simply Pleasure Ltd’, Mr James Alan Poulton, Harmony Ltd, Gatisle Ltd, trading as ‘Janus’, Winart Publications Ltd, Darker Enterprises Ltd and Swish Publications Ltd (‘Mr Hemming and others’) and Westminster City Council concerning the fee to be paid at the time of submitting an application for the grant or renewal of a sex establishment licence. Legal context EU law 3Recitals 39, 42, 43 and 49 of the Services Directive are worded as follows:‘(39)The concept of “authorisation scheme” should cover, inter alia, the administrative procedures for granting authorisations, licences, approvals or concessions, and also the obligation, in order to be eligible to exercise the activity, to be registered as a member of a profession or entered in a register, roll or database, to be officially appointed to a body or to obtain a card attesting to membership of a particular profession. Authorisation may be granted not only by a formal decision but also by an implicit decision arising, for example, from the silence of the competent authority or from the fact that the interested party must await acknowledgement of receipt of a declaration in order to commence the activity in question or for the latter to become lawful.…(42)The rules relating to administrative procedures should not aim at harmonising administrative procedures but at removing overly burdensome authorisation schemes, procedures and formalities that hinder the freedom of establishment and the creation of new service undertakings therefrom.(43)One of the fundamental difficulties faced, in particular by SMEs, in accessing service activities and exercising them is the complexity, length and legal uncertainty of administrative procedures. For this reason, following the example of certain modernising and good administrative practice initiatives undertaken at Community and national level, it is necessary to establish principles of administrative simplification, inter alia through the limitation of the obligation of prior authorisation to cases in which it is essential and the introduction of the principle of tacit authorisation by the competent authorities after a certain period of time elapsed. Such modernising action, while maintaining the requirements on transparency and the updating of information relating to operators, is intended to eliminate the delays, costs and dissuasive effects which arise, for example, from unnecessary or excessively complex and burdensome procedures, the duplication of procedures, the ‘red tape’ involved in submitting documents, the arbitrary use of powers by the competent authorities, indeterminate or excessively long periods before a response is given, the limited duration of validity of authorisations granted and disproportionate fees and penalties. Such practices have particularly significant dissuasive effects on providers wishing to develop their activities in other Member States and require coordinated modernisation within an enlarged internal market of twenty-five Member States.(49)The fee which may be charged by points of single contact should be proportionate to the cost of the procedures and formalities with which they deal. This should not prevent Member States from entrusting the points of single contact with the collection of other administrative fees, such as the fee of supervisory bodies.’4Article 1(1) of that directive provides:‘This Directive establishes general provisions facilitating the exercise of the freedom of establishment for service providers and the free movement of services, while maintaining a high quality of services.’5Article 4(6) of the Services Directive defines the ‘authorisation scheme’ as ‘any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof’.6Article 9 of that directive, entitled ‘Authorisation schemes’, provides in paragraph 1:‘Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied:(a)the authorisation scheme does not discriminate against the provider in question;(b)the need for an authorisation scheme is justified by an overriding reason relating to the public interest;(c)the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective.’7Article 10 of the Services Directive, entitled ‘Conditions for the granting of authorisation’, provides:‘1. Authorisation schemes shall be based on criteria which preclude the competent authorities from exercising their power of assessment in an arbitrary manner.2. The criteria referred to in paragraph 1 shall be:non-discriminatory;justified by an overriding reason relating to the public interest;proportionate to that public interest objective;(d)clear and unambiguous;(e)objective;(f)made public in advance;(g)transparent and accessible....’.8Article 11 of that directive, entitled ‘Duration of authorisation’, provides:‘1. An authorisation granted to a provider shall not be for a limited period, except where:the authorisation is being automatically renewed or is subject only to the continued fulfilment of requirements;the number of available authorisations is limited by an overriding reason relating to the public interest;ora limited authorisation period can be justified by an overriding reason relating to the public interest....4. This Article shall be without prejudice to the Member States’ ability to revoke authorisations, when the conditions for authorisation are no longer met.’9Article 13 of the Services Directive, entitled ‘Authorisation procedures’, provides in paragraph 2:‘Authorisation procedures and formalities shall not be dissuasive and shall not unduly complicate or delay the provision of the service. They shall be easily accessible and any charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures.’10Article 14 of that directive, entitled ‘Prohibited requirements’, provides:‘Member States shall not make access to, or the exercise of, a service activity in their territory subject to compliance with any of the following:(6)the direct or indirect involvement of competing operators, including within consultative bodies, in the granting of authorisations or in the adoption of other decisions of the competent authorities, with the exception of professional bodies and associations or other organisations acting as the competent authority; this prohibition shall not concern the consultation of organisations, such as chambers of commerce or social partners, on matters other than individual applications for authorisation, or a consultation of the public at large;(7)an obligation to provide or participate in a financial guarantee or to take out insurance from a provider or body established in their territory. This shall not affect the possibility for Member States to require insurance or financial guarantees as such, nor shall it affect requirements relating to the participation in a collective compensation fund, for instance for members of professional bodies or organisations; The law of the United Kingdom 11Regulation 4 of the Provision of Services Regulations 2009 implementing the Services Directive provides:‘“authorisation scheme” means any arrangement which in effect requires the provider or recipient of a service to obtain the authorisation of, or to notify, a competent authority in order to have access to, or to exercise, a service activity …’.12Regulation 18(2) to (4) of those regulations provides:‘(2)Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must not —be dissuasive, orunduly complicate or delay the provision of the service.(3)Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must be easily accessible.(4)Any charges provided for by a competent authority which applicants may incur under an authorisation scheme must be reasonable and proportionate to the cost of the procedures and formalities under the scheme and must not exceed the cost of those procedures and formalities.’13Paragraph 19 of Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982 provides that an applicant for the grant or renewal of a licence must pay a reasonable fee determined by the appropriate authority. The dispute in the main proceedings and the questions referred for a preliminary ruling 14Westminster City Council is the authority with responsibility for issuing licences for sex establishments, including sex shops, in Westminster. Mr Hemming and others were, for the whole of the period at issue in the main proceedings, holders of sex shop licences in Westminster.15It is apparent from the order for reference that during that period a fee could be charged under Paragraph 19 of Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982 to cover the cost not only of the processing of applications for the grant or renewal of a sex establishment licence, but also of inspecting premises after the grant of licences for the purposes of ‘vigilant policing’ in order to detect and prosecute those who operate sex establishments without licences.16Consequently, an applicant for the grant or renewal of a sex establishment licence for any year had to pay a fee made up of two parts, one related to the administration of the application and non-refundable, and the other (considerably larger) for the management of the licensing regime and refundable if the application was refused. By way of example, for the year 2011-12, the total fee was GBP 29102 (approximately EUR 37700) for each applicant, of which GBP 2667 (approximately EUR 3455) related to the administration of the licence and was non-refundable, while the remaining GBP 26435 (approximately EUR 34245) related to the management of the licensing regime and was refundable if the application was refused.17Mr Hemming and others submit that Westminster City Council was not entitled to charge the second part of the fee. The corresponding sums, although refundable in the case of unsuccessful applicants, were payable on account of the costs of enforcing the licensing regime, which were unrelated to the costs of processing applications, and should have been borne out of Westminster City Council’s general funds or required only from operators whose applications had been successful.18Mr Hemming and others succeeded in their actions before the United Kingdom courts. Those courts regarded Article 13(2) of the Services Directive as encompassing charges made to both successful and unsuccessful applicants, and as preventing a licensing authority from charging those granted licences as well as unsuccessful applicants, without distinction, the cost of investigating and prosecuting those operating sex establishments in Westminster without a licence.19Consequently, unsuccessful applicants could only be charged with the costs of dealing with their application, including investigating their suitability to operate a sex establishment, while successful applicants could only be charged with similar costs, and, on any renewal, with the costs of monitoring and enforcing their compliance with the obligations related to their licence in the past.20Seised of an appeal against the judgment of the Court of Appeal (England & Wales) (Civil Division) (United Kingdom), the referring court found that the approach challenged before it would result in the licensing authority having to bear the costs of operating the scheme in question for the benefit of the operators obtaining licences, since the authority could not require an applicant to contribute to the costs of enforcing that scheme against the operators of unlicensed sex establishments, even though such enforcement was for the benefit of the licensed establishments. To that end, the authority would have to have recourse to its general funds.21The referring court is uncertain as to what the remedy would be for other regulatory or professional bodies having recourse to similar regimes, which might have no general funds and no ability to raise funds in any such way.22Although the referring court is convinced that a regime under which an applicant must pay a further fee to cover the costs of the running and enforcement of the licensing regime when the application is successful is consistent with Article 13(2) of the Services Directive, it is uncertain whether the regime applied by Westminster City Council is compatible with that article.23That said, the referring court notes that it has no evidence before it to conclude that the requirement to accompany an application with a payment which is refundable if the application fails would be likely to dissuade operators from making any application for a sex establishment licence.24Lastly, the referring court asks whether having to advance a sum, in order to await a decision to grant or refuse a licence, is in fact a charge for a licence applicant.25In those circumstances the Supreme Court of the United Kingdom decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘Where an applicant for the grant or renewal of a sex establishment licence has to pay a fee made up of two parts, one related to the administration of the application and non-returnable, the other for the management of the licensing regime and refundable if the application is refused:(1)does the requirement to pay a fee including the second refundable part mean, as a matter of European law and without more, that the respondents incurred a charge from their applications which was contrary to article 13(2) of [the Services Directive] in so far as it exceeded any cost … of processing the application?(2)does a conclusion that such a requirement should be regarded as involving a charge — or, if it is so to be regarded, a charge exceeding the cost … of processing the application — depend on the effect of further (and if so what) circumstances, for example:evidence establishing that the payment of the second refundable part involved or would be likely to involve an applicant in some cost or loss,the size of the second refundable part and the length of time for which it is held before being refunded, orany saving in the costs … of processing applications (and so in their non-refundable cost) that results from requiring an up-front fee consisting of both parts to be paid by all applicants?’ Consideration of the questions referred 26By its questions, which must be examined together, the referring court asks, in essence, whether Article 13(2) of the Services Directive must be interpreted as precluding, in circumstances such as those at issue in the main proceedings, the requirement for the payment of a fee, at the time of submitting an application for the grant or renewal of authorisation, part of which corresponds to the costs relating to the management and enforcement of the authorisation scheme concerned, even if that part is refundable if the application is refused.27According to the Court’s settled case-law, for the purpose of interpreting a provision of EU 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, in particular, judgment of 14 July 2016, Verband Sozialer Wettbewerb, C‑19/15, EU:C:2016:563, paragraph 23).28In that regard, it must be noted at the outset that whether the fee payable by an applicant is refundable when his licence application is rejected has no bearing on ascertaining whether there is a charge within the meaning of Article 13(2) of the Services Directive. The fact that a fee must be paid constitutes a financial obligation, and therefore a charge, which the applicant must pay in order for his application to be considered, notwithstanding the fact that the amount may subsequently be refunded if that application is rejected. That is true all the more so given that the objective of Article 13(2), read in the light of recitals 39, 42 and 43 of that directive, is to preclude certain aspects of the authorisation procedures and formalities from discouraging access to services activities.29In order to comply with Article 13(2) of the Services Directive, the charges referred to must, in the words of that provision, be reasonable and proportionate to the cost of the authorisation procedures and not exceed the cost of those procedures.30Since the amount of such charges may, in the light of those requirements, in no case exceed the cost of the authorisation procedure in question, it must be examined whether the costs relating to the management and enforcement of the authorisation scheme as a whole may be covered by the concept of the ‘cost of the procedures’.31While the Court has not yet had occasion to interpret that concept in the context of the Services Directive, it has clarified, in another context, that in calculating the amount of duties paid by way of fees or dues, the Member States are entitled to take account, not only of the material and salary costs which are directly related to the effecting of the transactions in respect of which they are incurred, but also of the proportion of the overheads of the competent authority which can be attributed to those transactions (judgment of 2 December 1997, Fantask and Others, C‑188/95, EU:C:1997:580, paragraph 30).32In addition, the Court has clarified — indeed, in relation to a provision of EU law expressly allowing the costs relating to the implementation, management and monitoring of a regime for issuing individual licences to be taken into account in calculating administrative costs — that the costs taken into account may not include the expenditure linked to the authority in question’s general supervisory activities (see, to that effect, judgment of 19 September 2006, i-21 Germany and Arcor, C‑392/04 and C‑422/04, EU:C:2006:586, paragraphs 34 and 35).33That consideration applies a fortiori as regards Article 13(2) of the Services Directive which, first, is directed only at the ‘cost of the procedures’ and, secondly, pursues the aim of facilitating access to service activities. That aim would not be served by a requirement to prefinance the costs of the management and enforcement of the authorisation scheme concerned, including, inter alia, the costs of detecting and prosecuting unauthorised activities.34Consequently, the answer to the questions referred is that Article 13(2) of the Services Directive must be interpreted as precluding, in circumstances such as those at issue in the main proceedings, the requirement for the payment of a fee, at the time of submitting an application for the grant or renewal of authorisation, part of which corresponds to the costs relating to the management and enforcement of the authorisation scheme concerned, even if that part is refundable if that application is refused. Costs 35Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: Article 13(2) of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market must be interpreted as precluding, in circumstances such as those at issue in the main proceedings, the requirement for the payment of a fee, at the time of submitting an application for the grant or renewal of authorisation, part of which corresponds to the costs relating to the management and enforcement of the authorisation scheme concerned, even if that part is refundable if that application is refused. Bay LarsenVilarasMalenovskýSafjanŠvabyDelivered in open court in Luxembourg on 16 November 2016.A. Calot EscobarRegistrarL. Bay LarsenPresident of the Third Chamber( *1 ) Language of the case: English. | 0af9b-da215e6-4c50 | EN |
The exclusion of candidates more than 35 years of age from a competition for the recruitment of police officers required to perform operational duties is compatible with EU law | 15 November 2016 ( *1 )‛Reference for a preliminary ruling — Equal treatment in employment and occupation — Directive 2000/78/EC — Article 2(2) and Article 4(1) — Discrimination on grounds of age — Recruitment of police officers of the Autonomous Community of the Basque Country restricted to candidates under 35 years of age — Concept of ‘genuine and determining occupational requirement’ — Objective pursued — Proportionality’In Case C‑258/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Superior de Justicia de la Comunidad Autónoma del País Vasco (High Court of Justice of the Autonomous Community of the Basque Country, Spain), made by decision of 20 May 2015, received at the Court on 1 June 2015, in the proceedings Gorka Salaberria Sorondo v Academia Vasca de Policía y Emergencias, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, L. Bay Larsen, J.L. da Cruz Vilaça (Rapporteur), E. Juhász, M. Berger and A. Prechal, Presidents of Chambers, A. Rosas, C. Toader and D. Šváby, E. Jarašiūnas, C.G. Fernlund and C. Vajda, Judges,Advocate General: P. Mengozzi,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 30 May 2016,after considering the observations submitted on behalf of:—Mr Salaberria Sorondo, by I. Jiménez Echevarría, Procuradora, and by J.‑C. Pérez Cuesta, F.J. González Madariaga and A. Martínez Gutierrez, abogados,the Academia Vasca de Policía y Emergencias, by J.L. Iparragirre Mujika and A. Saiz Garitaonandia, abogados,the Spanish Government, by M.J. García-Valdecasas Dorrego, V. Ester Casas and L. Banciella Rodríguez-Miñón, acting as Agents,Ireland, by E. Creedon, L. Williams and T. Joyce, acting as Agents, and by D. Fennelly BL,the French Government, by D. Colas and R. Coesme, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, and by G.M. De Socio and de E. De Bonis, avvocati dello Stato,the European Commission, by N. Ruiz García and D. Martin, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 21 July 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 2(2), Article 4(1), and Article 6(1)(c) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (OJ 2000 L 303, p. 16).2The request has been made in proceedings between Mr Gorka Salaberria Sorondo and the Academia Vasca de Policía y Emergencias (Basque Police and Emergency Services Academy, Spain; ‘the Academy’) on the latter’s decision to issue a notice of competition containing the requirement that candidates for posts as police officers in the Autonomous Community of the Basque Country should be under 35 years old. Legal context European Union law 3Recitals 18, 23 and 25 of Directive 2000/78 state:‘(18)This Directive does not require, in particular, the armed forces and the police, prison or emergency services to recruit or maintain in employment persons who do not have the required capacity to carry out the range of functions that they may be called upon to perform with regard to the legitimate objective of preserving the operational capacity of those services.…(23)In very limited circumstances, a difference of treatment may be justified where a characteristic related to … age … constitutes a genuine and determining occupational requirement, when the objective is legitimate and the requirement is proportionate.(25)The prohibition of age discrimination is an essential part of meeting the aims set out in the Employment Guidelines and encouraging diversity in the workforce. However, differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States. It is therefore essential to distinguish between differences in treatment which are justified, in particular by legitimate employment policy, labour market and vocational training objectives, and discrimination which must be prohibited.’4Article 1 of Directive 2000/78 states that the purpose of that directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.5Article 2 of that directive provides:‘1. For the purposes of this Directive, the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination on any of the grounds referred to in Article 1.2. For the purposes of paragraph 1:(a)direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in Article 1;…’6Article 3 of that directive provides:‘1. Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to:conditions for access to employment, to self-employment or to occupation, including selection criteria and recruitment conditions, whatever the branch of activity and at all levels of the professional hierarchy, including promotion;7Article 4(1) of Directive 2000/78, that article being headed ‘Occupational requirements’, provides:‘Notwithstanding Article 2(1) and (2), Member States may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in Article 1 shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.’8Article 6 of Directive 2000/78, headed ‘Justification of differences of treatment on grounds of age’, provides:‘1. Notwithstanding Article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary.Such differences of treatment may include, among others:(c)the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement. Spanish law 9Ley Orgánica 2/1986 de Fuerzas y Cuerpos de Seguridad (Organic Law No 2/1986 on State security forces and services) of 13 March 1986 (BOE No 63 of 14 March 1986), sets out the duties of the State security forces and services, the police forces of the Autonomous Communities and the local police forces.10As regards the police forces of the Autonomous Communities, Article 38(1) to (3) of that legislation sets out the following duties:‘1. Within the scope of their powers:ensuring compliance with general regulations and individual orders issued by bodies of the Autonomous Community;(b)guarding and protecting persons, institutions, buildings, offices and premises of the Autonomous Community and its administrative authorities, ensuring the normal operation of facilities and the safety of users of their services;the inspection of activities subject to the legislation of the Autonomous Community, reporting any unlawful activity;(d)the use of force for the enforcement of measures or provisions adopted by the Autonomous Community.2. In cooperation with the State security forces and services:ensuring compliance with State laws and regulations and the operation of essential public services;participating in the tasks of the criminal investigation services as specified in Article 29(2) of this Law;guarding public spaces, protecting demonstrations and maintaining order at large gatherings of people.The performance of this duty shall primarily be the responsibility of the police forces of the Autonomous Communities, without prejudice to action by the State security forces and services where, either at the request of the authorities of the Autonomous Community or on their own initiative, the competent State authorities deem it to be necessary.3. As part of action with the State security forces and services conducted in parallel and without distinction:assisting in the settlement of private disputes when requested;providing assistance in the event of accidents, disasters or public emergencies, by participating in the implementation of civil protection plans as provided for by statute;ensuring compliance with provisions concerned with the conservation of nature and the environment, water resources, as well as game, fish or forestry stocks or other natural resources.’11Article 53 of Organic Law No 2/1986, which determines the duties of local police forces, provides:‘1. Local police forces shall have the following duties:protecting the local authorities and guarding their buildings and premises;ensuring the direction and control of traffic in the city centre, and signalling, in accordance with road traffic regulations;drawing up reports on traffic accidents in the city centre;performing administrative police duties regarding orders, notices and other acts adopted by the municipalities within their powers;(e)participating in the functions of the criminal investigation services …;(f)(g)implementing prevention programmes and making every effort to prevent the commission of criminal acts …;(h)guarding public areas and cooperating with the State security forces and services and with the police of the autonomous communities to protect demonstrations and maintain order at large gatherings when their assistance is requested;(i)assisting in the settlement of private disputes when requested to do so.’12As regards admission into the national police force, Article 7(b) of Real Decreto 614/1995 por el que se aprueba el Reglamento de los Procesos selectivos y de formación del Cuerpo Nacional de Policía (Royal Decree 614/1995 approving the regulation on procedures for selection and training in the national police force) of 21 April 1995 (BOE No 118 of 18 May 1995), provides that candidates must be between 18 and 35 years old.13Article 26(1) of Ley 4/1992 de Policía del País Vasco (Law 4/1992 on the police in the Basque Country) of 17 July 1992 (Boletin Oficial del Pais Vasco No 155, of 11 August 1992), provides:‘Within the powers exercised by the Autonomous Community of the Basque Country, the essential mission of the Ertzaintza [the autonomous Basque police] is to protect people and property, to ensure that individuals can freely exercise their rights and freedoms and to ensure the safety of citizens throughout the territory of the Autonomous Community. To that end, the Ertzaintza will perform the duties conferred by [Spanish law] on the State security forces.’14The eighth additional provision of Law 4/1992 confers on the Basque Government the power to determine, ‘by means of regulation, the range of medical exclusions applying to recruitment to the ranks and categories of officers comprising the Basque Country police force, and also the age and height requirements’.15Article 4(b) of Decreto 315/1994 por el que se aprueba el reglamento de selección y formación de la policía del País Vasco (Decree 315/1994 approving the regulation on determining arrangements for the selection and training of the police of the Basque Country) of 19 July 1994 (Boletin Oficial del Pais Vasco No 157, of 19 August 1994), as amended by Decreto 120/2010 (Decree 120/2010) of 20 April 2010 (‘Decree 315/1994’), lays down the following age requirement:‘A candidate for recruitment as a police officer must be aged 18 or over and under 35. However, with respect to recruitment to local police forces, the upper age limit may be revised taking into account services provided within the local administration, in the local police forces.’ The main proceedings and question referred for a preliminary ruling 16Mr Salaberria Sorondo brought an action before the Tribunal Superior de Justicia de la Comunidad Autónoma del País Vasco (High Court of Justice of the Autonomous Community of the Basque Country) against the decision of 1 April 2014 of the Directora General de la Academia Vasca de Policía y Emergencias (Director-General of the Basque Police and Emergency Services Academy, Spain) determining the specific conditions laid down in a notice of competition for the recruitment of police officers in the Autonomous Community of the Basque Country (Boletin Oficial del Pais Vasco No 82, of 1 April 2014).17Mr Salaberria Solondo disputes the legality of section 2, point 1(c), of that notice of competition, which imposes as a condition of participation in that competition the requirement that candidates should be under 35 years old. Mr Salaberria Solondo, who is more than 35 years old, argues that that requirement is contrary to Directive 2000/78 and to Articles 20 and 21 of the Charter of Fundamental Rights of the European Union. He claims, inter alia, that there is no justification for the age limit imposed, in that it restricts access to public service posts without reasonable grounds for doing so.18The referring court states that it has previously given a ruling that the upper age limit of 32 years for the recruitment of police officers in the Autonomous Community of the Basque Country complied with the requirements of proportionality deriving both from the Constitution and national legislation and also from Directive 2000/78. The referring court states that it took into consideration the fact that, in the judgment of 12 January 2010, Wolf (C‑229/08, EU:C:2010:3), the Court held that Article 4(1) of that directive did not preclude national legislation that set the maximum age for recruitment to intermediate career posts in the fire service at 30 years.19The referring court also mentions the judgment of 13 November 2014, Vital Pérez (C‑416/13, EU:C:2014:2371), where the Court held that Article 2(2), Article 4(1) and Article 6(1)(c) of Directive 2000/78 precluded national legislation that set the maximum age for recruitment of local police officers at 30 years.20In that regard, the referring court states, however, that the duties reserved by Spanish law to local police officers are not the same as those which are assigned to members of the State security forces and services. The latter duties correspond to those that are allocated to an ‘integrated’ police force, which has the duty of ensuring the preservation of public order and the safety of citizens in all respects. Since the duties of the police officers of the Autonomous Community of the Basque Country do not correspond to those allocated to the local police forces, but extend to those of the State security forces, the judgment of 13 November 2014, Vital Pérez (C‑416/13, EU:C:2014:2371), is not relevant to the resolution of the dispute in the main proceedings.21The referring court considers that, taking into consideration the high level of the requirements inherent in the tasks allocated to the State security forces and services, the setting of 35 years as an upper age limit for admission to a police force that carries out all the duties required for the maintenance of public order and public safety could be considered to be proportionate and reasonable, and, consequently, be held to be compatible with Article 2(2), Article 4(1) and Article 6(1)(c) of Directive 2000/78.22In those circumstance the Tribunal Superior de Justicia de la Comunidad Autónoma del País Vasco (High Court of Justice of the Autonomous Community of the Basque Country) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Is the setting of a maximum age of 35 years as a condition for participation in the selection process for recruitment to the post of officer of the police force of the Autonomous Community of the Basque Country compatible with the interpretation of Article 2(2), Article 4(1) and Article 6(1)(c) of Council Directive 2000/78 …?’ The question referred for a preliminary ruling 23By its question, the referring court seeks, in essence, to ascertain whether Article 2(2) of Directive 2000/78, read together with Article 4(1) and Article 6(1)(c) of that directive, must be interpreted as precluding legislation, such as that at issue in the main proceedings, which provides that candidates applying for posts as police officers must be under 35 years of age.24It must, first, be determined whether the legislation at issue in the main proceedings falls within the scope of Directive 2000/78.25In that regard, by providing that persons who are aged 35 or more may not be recruited to the police forces of the Autonomous Community of the Basque Country, Article 4(b) of Decree 315/1994 affects those workers’ recruitment conditions. Such legislation must therefore be regarded as laying down rules relating to access to employment in the public sector within the meaning of Article 3(1)(a) of Directive 2000/78 (see, to that effect, judgment of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraph 30)26It follows that a situation such as the one which gave rise to the dispute before the referring court falls within the scope of Directive 2000/7827Further, it must be recalled that, as stated in Article 1 of Directive 2000/78, the purpose of that directive is to lay down a general framework for combating discrimination on the grounds of, inter alia, age, as regards employment and occupation, with a view to putting into effect, in the Member States, the principle of equal treatment.28Article 2(1) of Directive 2000/78 states that ‘the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1’ of that directive. Article 2(2)(a) of that directive states that, for the purposes of Article 2(1) thereof, direct discrimination is to be taken to occur when a person is treated less favourably than another in a comparable situation, on any of the grounds referred to in Article 1 of that directive.29In this case, the effect of the requirement laid down in Article 4(b) of Decree 315/1994 is that some individuals are treated less favourably than other individuals in comparable situations, on the sole ground that they are 35 years of age or more.30That legislation therefore introduces a difference of treatment based directly on age, as referred to in Articles 1 and 2(2)(a) of Directive 2000/78, read together (see, to that effect, judgment of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraph 33)31That being the case, the Court must, finally, examine whether, nonetheless, such a difference of treatment does not constitute discrimination, under Article 4(1) or Article 6(1) of Directive 2000/78.32In particular, Article 4(1) of Directive 2000/78 provides that ‘a difference of treatment which is based on a characteristic related to any of the grounds referred to in Article 1 [of that directive] shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate’.33It is clear from that provision that it is not the ground on which the difference of treatment is based but a characteristic related to that ground which must constitute a genuine and determining occupational requirement (judgment of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraph 36 and case-law cited).34The possession of particular physical capacities is one characteristic relating to age and the duties relating to protection of people and property, the arrest and guarding of offenders and preventive patrolling may require the use of physical force (judgments of 12 January 2010, Wolf, C‑229/08, EU:C:2010:3, paragraph 41; 13 September 2011, Prigge and Others, C‑447/09, EU:C:2011:573, paragraph 67, and of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraphs 37 and 39 and the case-law cited).35The nature of those duties requires a particular level of physical capability in so far as physical inadequacies in the exercise of those duties may have significant consequences not only for the police officers themselves and third parties but also for the maintenance of public order (judgment of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraph 40).36It follows that the possession of particular physical capacities in order to be able to perform the three essential duties of the police of the Autonomous Community of the Basque Country described in Article 26(1) of Law 4/1992, namely ensuring the protection of people and property, ensuring that each individual can freely exercise his or her rights and freedoms, and ensuring the safety of citizens, may be considered to be a genuine and determining occupational requirement, within the meaning of Article 4(1) of Directive 2000/78, for the pursuit of the profession at issue in the main proceedings.37As regards the objective pursued by Decree 315/1994, the Academy and the Spanish Government maintain that, by setting an upper age limit of 35 years for admission to the police forces of the Autonomous Community of the Basque Country, the aim of that decree is to preserve the operational capacity of that police service and that to ensure that it functions properly, by ensuring that newly recruited officials are capable of carrying out the most physically demanding tasks over a relatively long period of their careers.38In that regard, in paragraphs 43 and 44 of the judgment of 13 November 2014, Vital Pérez (C‑416/13, EU:C:2014:2371), after observing that recital 18 of Directive 2000/78 states that the directive does not require police services to recruit or maintain in employment persons who do not have the required capacity to carry out the range of functions that they may be called upon to perform with regard to the legitimate objective of preserving the operational capacity of those services, the Court held that the concern to ensure the operational capacity and proper functioning of police services constitutes a legitimate objective within the meaning of Article 4(1) of that directive.39It is admittedly true that the Court held, in paragraph 57 of Vital Pérez, that national legislation that set an upper age limit of 30 years on the recruitment of local police officers in the Ayuntamiento de Oviedo (municipality of Oviedo, Spain) imposed a disproportionate requirement, contrary to Article 4(1) of Directive 2000/78.40However, the duties performed by the police forces of Autonomous Communities differ from those carried out by the local police, the latter being at issue in the case that gave rise to the judgment of 13 November 2014, Vital Pérez (C‑416/13, EU:C:2014:2371). Accordingly, it must be recalled that local police officers are responsible, in particular, under Article 53 of Organic Law 2/1986, for ensuring protection of the authorities of local municipalities and guarding of their buildings, controlling and directing traffic in city centres, erecting road signs, and performing administrative police tasks. However, it is clear from Article 26(1) of Law 4/1992 that the police of the Autonomous Community of the Basque Country ‘has [as its] essential mission … to protect people and property, to ensure that individuals can freely exercise their rights and freedoms and to ensure the safety of citizens throughout the territory of the Autonomous Community’.41As the Academy stated at the hearing before the Court, a police officer of the lowest rank in the Autonomous Community of the Basque Country, the rank for which the competition at issue in the main proceedings was organised, does not carry out administrative duties, but performs essentially operational duties, which, as also observed by the Advocate General in point 35 of his Opinion, may imply recourse to physical force and the performance of tasks in conditions where taking action is difficult, if not extremely difficult. For the performance of purely administrative duties, members of staff are, based on the information provided by the Academy, recruited by means of specific competitions, which do not lay down any age limit.42The Academy maintained before the Court that, as is apparent from the reports annexed to its written observations, from the age of 40 onwards, the operational performance of police officers of the Autonomous Community of the Basque Country declines, as reflected by reduced recovery capacity after sustained effort and an inability to perform any other similarly demanding task until a period of time has passed. Further, according to the same reports, a police officer who is more than 55 years old can no longer be considered to be in full possession of the capabilities necessary for the proper performance of his duties, without any risk to himself and to third parties.43Further, the Academy explained that police officers of the Autonomous Community of the Basque Country qualify for a statutory reduction in annual time worked, as from the age of 56 years, and are not required to work at night or to undertake patrols outside police stations (‘modified active service’), and a police officer who qualifies for such arrangements undertakes, on a voluntary basis, to retire at the age of 60 or, in some cases, at the age of 59.44It must, last, be stated that, according to the data submitted by the Academy, in 2009, that is, just before the introduction, in Decree 315/1994, of the age limit at issue in the main proceedings, the police forces of the Autonomous Community of the Basque Country consisted of 8000 police officers. At that time, 59 of those police officers were between 60 and 65 years old and 1399 were between 50 and 59 years old. The Academy added that, according to forecasts made in 2009, in 2018, 1135 police officers will be between 60 and 65 years old, and 4660 police officers, in other words more than half of the staff, will be between 50 and 59 years old. In 2025 more than 50% of police officers will be between 55 and 65 years old. On the basis of that data it can accordingly be anticipated that the average age of staff of that police force will rise significantly.45In the light of such data, the Academy emphasised the necessity of planning, by means of competitions, a gradual replacement of older agents through the recruitment of younger staff, better equipped to take on physically demanding tasks. In this respect, this case can again be distinguished from the case that gave rise to the judgment of 13 November 2014, Vital Pérez (C‑416/13, EU:C:2014:2371), where, as is stated in paragraph 56 of that judgment, it had not been established that the objective of safeguarding the operational capacity and proper functioning of the local police service made it necessary to maintain within it a particular age structure, which would have required the recruitment exclusively of public servants under 30 years of age.46It follows from all the foregoing that the duties incumbent on the lowest rank of police officers of the Autonomous Community of the Basque Country include tasks that are physically demanding. The Academy has also argued that the age at which a police officer of the Autonomous Community of the Basque Country is recruited determines the length of time over which he is capable of performing such tasks. A police officer recruited at the age of 34, when he will, it should be added, have to undergo training over a period of around two years, will be suitable for assignment to those tasks for a maximum period of 19 years, that is, until he reaches the age of 55. That being the case, recruitment at a higher age would jeopardise the possibility of assigning a sufficient number of agents to the most physically demanding tasks. Likewise, such recruitment would mean that officers thus recruited could not be assigned for a sufficiently long period to those tasks. Last, as explained by the Academy, the rational organisation of the police service of the Autonomous Community of the Basque Country requires that a balance is struck between the number of physically demanding posts, not suitable for older police officers, and the number of posts that are less physically demanding, which can be occupied by older police officers (see, by analogy, judgment of 12 January 2010, Wolf, C‑229/08, EU:C:2010:3, paragraph 43).47Moreover, as the Advocate General stated in point 38 of his Opinion, the inadequacies to be feared in the operation of the police service of the Autonomous Community of the Basque Country are such that it is not conceivable that, as part of a recruitment competition, the organisation of demanding, eliminatory physical tests might constitute a less restrictive alternative. Since the objective is to maintain the operational capacity and proper functioning of the police service of the Autonomous Community of the Basque Country, that objective requires that, with a view to re-establishing a satisfactory age pyramid, the possession of particular physical capacities should be envisaged not statically, at the time of recruitment competition tests, but dynamically, taking into consideration the years of service that can be accomplished by a police officer after he or she has been recruited.48It follows that legislation such as that at issue in the main proceedings, which provides that candidates for posts of police officers of the Autonomous Community of the Basque Country must be under 35 years of age, may, subject to the qualification that the referring court should satisfy itself that the assorted information to be obtained from the observations and documents submitted to the Court by the Academy and described above is accurate, be regarded, first, as being appropriate to the objective of ensuring the operational capacity and proper functioning of the police service concerned and, second, as not going beyond what is necessary for the attainment of that objective.49Since the difference of treatment based on age stemming from that legislation does not constitute discrimination under Article 4(1) of Directive 2000/78, there is no need to examine whether it might be justified in the light of Article 6(1)(c) of that directive.50It follows from all the foregoing that the answer to the question referred is that Article 2(2) of Directive 2000/78, read together with Article 4(1) of that directive, must be interpreted as not precluding legislation, such as that at issue in the main proceedings, which provides that candidates for posts as police officers who are to perform all the operational duties incumbent on police officers must be under 35 years of age. Costs 51Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 2(2) of Council Directive 2000/78/EC of 27 November 2000, establishing a general framework for equal treatment in employment and occupation, read together with Article 4(1) of that directive, must be interpreted as not precluding legislation, such as that at issue in the main proceedings, which provides that candidates for posts as police officers who are to perform all the operational duties incumbent on police officers must be under 35 years of age. [Signatures]( *1 ) Language of the case: Spanish. | 81b0d-f7746bd-4824 | EN |
According to Advocate General Szpunar, the cost of a call to an after-sales telephone number must not exceed the cost of a standard call | 2 March 2017 ( 1 )‛Reference for a preliminary ruling — Consumer protection — Directive 2011/83/EU — Article 21 — Communication by telephone — Operation of a telephone line by a trader to enable consumers to contact him in relation to a contract concluded — Prohibition on applying a rate higher than the basic rate — Concept of ‘basic rate’’In Case C‑568/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Landgericht Stuttgart (Regional Court, Stuttgart (Germany)), made by decision of 15 October 2015, received at the Court on 5 November 2015, in the proceedings Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV v comtech GmbH, THE COURT (Seventh Chamber),composed of A. Prechal (Rapporteur), President of the Chamber, C. Toader and E. Jarašiūnas, Judges,Advocate General: M. Szpunar,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV, by M. Ross and M. Hammer, Rechtsanwälte,the Estonian Government, by K. Kraavi-Käerdi, acting as Agent,the Lithuanian Government, by D. Kriaučiūnas and K. Mickutė, acting as Agents,the Netherlands Government, by J. Langer and M. Bulterman, acting as Agents,the Finnish Government, by S. Hartikainen, acting as Agent,the European Commission, by D. Roussanov and S. Grünheid, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 10 November 2016,gives the following Judgment 1This reference for a preliminary ruling concerns the interpretation of Article 21 of Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council (OJ 2011 L 304, p. 64).2The reference was made in the context of a dispute between Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV, an association for combatting unfair commercial practices, and comtech GmbH, a German company selling electronic and electrical equipment, concerning the telephone call rate applied by that company for its after-sales service. Legal context EU law 3Article 1 of Directive 2011/83 defines its object as follows:‘The purpose of this Directive is, through the achievement of a high level of consumer protection, to contribute to the proper functioning of the internal market by approximating certain aspects of the laws, regulations and administrative provisions of the Member States concerning contracts concluded between consumers and traders.’4Article 6(1) of that directive, entitled ‘Information requirements for distance and off-premises contracts’, provides:‘Before the consumer is bound by a distance or off-premises contract, or any corresponding offer, the trader shall provide the consumer with the following information in a clear and comprehensible manner:…(f)the cost of using the means of distance communication for the conclusion of the contract where that cost is calculated other than at the basic rate;…’5Under the first paragraph of Article 13(1) of the directive:‘The trader shall reimburse all payments received from the consumer, including, if applicable, the costs of delivery without undue delay and in any event not later than 14 days from the day on which he is informed of the consumer’s decision to withdraw from the contract in accordance with Article 11.’6Article 19 of Directive 2011/83 provides:‘Member States shall prohibit traders from charging consumers, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of such means.’7Article 21 of that directive, entitled ‘Communication by telephone’, is worded as follows:‘Member States shall ensure that where the trader operates a telephone line for the purpose of contacting him by telephone in relation to the contract concluded, the consumer, when contacting the trader is not bound to pay more than the basic rate.The first subparagraph shall be without prejudice to the right of telecommunication services providers to charge for such calls.’ German law 8Paragraph 312a of the Bürgerliches Gesetzbuch (Civil Code, ‘the BGB’), entitled ‘General obligations and principles applying to consumer contracts; limits to agreements on charges’, states:‘…(5)An agreement under which a consumer is obliged to pay a charge for contacting the trader for the purpose of answering questions or providing explanations in relation to a contract concluded between them, via a telephone line that the trader provides for such purposes, shall be ineffective if the charges agreed upon exceed the charges for the mere use of the telecommunications service. Where an agreement is ineffective under the first sentence, the consumer shall also not be obliged to pay charges for the call to the telecommunications service provider. The telecommunications service provider shall be entitled to claim the charges for the use merely of the telecommunications service as such from the trader who concluded the ineffective agreement with the consumer. The dispute in the main proceedings and the questions referred for a preliminary ruling 9On its website, comtech displays the telephone number of a support service, inter alia, for customers who have already concluded a sales contract and wish to obtain information or make a complaint. That telephone number begins with the prefix 0180, which is generally used in Germany for support services at a national rate. Call charges to such a ‘non-geographic’ number are higher than those for a standard call to a ‘geographic’ landline or mobile phone number. According to the order for reference, call charges to comtech’s number with the prefix 0180 are EUR 0.14 per minute from a landline telephone network and EUR 0.42 per minute from a mobile telephone network.10Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main claims that the provision of a telephone helpline at a rate higher than that charged for standard calls is an unfair commercial practice contrary to Paragraph 312a(5) of the BGB. On that basis, it called on comtech to discontinue the practice at issue and brought an action against comtech before the Landgericht Stuttgart (Regional Court, Stuttgart, Germany).11Before that court, comtech claims that Paragraph 312a(5) of the BGB, read in the light of Article 21 of Directive 2011/83, stipulates that the trader in question cannot make a profit through a telephone helpline. Those provisions do not therefore preclude the rate for calls to a helpline from exceeding that for ‘standard calls’, thereby allowing the trader to off-set the cost incurred in providing such a helpline, providing that he does not derive a profit as a result.12The referring court states that, in order to rule on the dispute in the main proceedings, an interpretation is required of the concept of ‘charges for the mere use of the telecommunications service’ set out in Paragraph 312a(5) of the BGB. Since telephone helpline rates such as the one at issue in the main proceedings have been harmonised at European level under Article 21 of Directive 2011/83, that provision must also be interpreted. However, according to the referring court, that provision provides that the consumer is not bound to pay more than the basic rate for telephone calls following the conclusion of a contract.13According to that court, the German legislature’s objective was to prevent the trader from making a profit from the provision of a non-geographic helpline. Such an interpretation of Article 21 of Directive 2011/83, and thus of Paragraph 312a(5) of the BGB, would not preclude the consumer from paying more for a call to a non-geographic line than for a standard call, provided that the sums thereby received do not exceed the cost of providing such a line.14However, the referring court is uncertain as to whether a more restrictive interpretation of the concept of ‘basic rate’ than that stated in the previous paragraph should be adopted in order to ensure a higher level of consumer protection. If so, the absence of profit would not suffice in so far as calls to a line such as that at issue in the main proceedings are always capable of being more expensive than those to standard lines. The wording of Article 21 of the directive and its purpose support such an interpretation.15Under those circumstances, the Landgericht Stuttgart (Regional Court, Stuttgart) decided to stay its proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is the first paragraph of Article 21 of Directive [2011/83] to be interpreted as meaning that, where a trader operates a telephone line for the purpose of consumers contacting the trader by telephone in relation to contracts concluded with the trader, a consumer contacting the trader by telephone must not incur higher charges than those that the consumer would incur for calling a standard (geographic) landline or mobile number?(2)Does the first paragraph of Article 21 of Directive [2011/83] preclude national legislation according to which, where a trader operates a shared-cost service on an 0180 number for the purpose of consumers contacting the trader by telephone in relation to contracts concluded with the trader, a consumer must pay that which the telecommunications service provider charges the consumer for the use of that telecommunications service, even where those charges exceed those which the consumer would incur for calling a standard (geographic) landline or mobile number?Does the first paragraph of Article 21 of Directive [2011/83] not preclude such national legislation where the telecommunications service provider does not pass on to the trader part of the charges that he receives from the consumer for contacting the trader on the 0180 number?’ Consideration of the questions referred 16By its questions, which it is appropriate to consider together, the referring court asks, in essence, whether the concept of ‘basic rate’, referred to in Article 21 of Directive 2011/83, must be interpreted as meaning that charges, for a call relating to a contract concluded with a trader, to a telephone helpline operated by the trader may not exceed call charges to a standard geographic landline or mobile telephone line, and if it is relevant, in that regard, whether or not the trader makes a profit through that telephone helpline.17Under the first paragraph of Article 21 of Directive 2011/83, the Member States are to ensure that where the trader operates a telephone line for the purpose of contacting him by telephone in relation to the contract concluded, the consumer, when contacting the trader, is not to be bound to pay more than the basic rate.18However, the concept of a ‘basic rate’, referred to in that article, is not defined by Directive 2011/83.19In those circumstances, the meaning and scope of that concept must be determined by considering its usual meaning in everyday language, while also taking into account the context in which it occurs and the purposes of the rules of which it is part (see, to that effect, judgment of 5 October 2016, TMD, C‑412/15, EU:C:2016:738, paragraph 26 and the case-law cited).20As regards its usual meaning, the concept of ‘basic rate’ suggests the rate set for a standard call. It must be ascertained whether the context and aim of Article 21 of Directive 2011/83 permit the finding that the concept is being used in that article in that ordinary sense of the term.21As regards the context in which that article occurs, the Court notes that the concept of ‘basic rate’ is also referred to in Article 6(1)(f) of the directive. That provision provides that the trader must inform the consumer if the cost of the means of distance communication for the conclusion of the contract is calculated other than at the basic rate.22Failing indications to the contrary, it follows from that provision that the basic rate referred to in that provision corresponds to the standard cost of an ordinary call that a consumer would expect to incur and for which a trader is not required to inform the consumer of its amount.23Even though Article 6 of Directive 2011/83 refers to the pre-contractual stage, the fact remains that that interpretation of the concept of ‘basic rate’ is of guidance for the interpretation of the same concept, referred to in Article 21 of that directive, relating to the post-contractual stage of the contract. It is important for the consumer to be able to use a telephone line made available by the trader and incur ordinary charges, a fortiori after the conclusion of the contract, so that he may assert his rights.24In addition, it appears from several articles in Directive 2011/83 that, in principle, it is not for the consumer to bear charges other than ordinary charges if he exercises rights provided for by that directive, and that potential additional costs are therefore to be borne by the trader.25Thus, Article 19 of that directive provides, in respect of the use of a given means of payment, that ‘Member States shall prohibit traders from charging consumers … fees that exceed the cost borne by the trader for the use of such means.’26Article 13(1) of the directive provides, in turn, that, where the consumer exercises his right of withdrawal, all payments made by the consumer, including the costs of delivery, are to be reimbursed to him by the trader. The Court has previously held, with regard to the right of withdrawal as provided for in Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ 1997 L 144, p. 19), which preceded Directive 2011/83, that, in principle, in the case of withdrawal by a consumer within the withdrawal period, the seller may not claim compensation from the consumer for the value of the use of the consumer goods acquired under a distance contract (see, to that effect, judgment of 3 September 2009, Messner, C‑489/07, EU:C:2009:502, paragraph 29). In addition, a trader is not permitted to charge the costs of delivering the goods to the consumer where the latter exercises his right of withdrawal (see, to that effect, judgment of 15 April 2010, Heinrich Heine, C‑511/08, EU:C:2010:189, paragraph 59).27Thus, it follows from the context in which Article 21 of Directive 2011/83 occurs that the concept of ‘basic rate’ refers to an ordinary rate for a telephone call at no additional cost for the consumer.28As the Advocate General stated in paragraph 32 of his Opinion, such an interpretation also mirrors the aim pursued by Directive 2011/83 of achieving a high level of consumer protection, as referred to in recitals 3 to 5 and 7 and in Article 1 of that directive. In addition, consumer protection is enshrined in EU policies by Article 169 TFEU and Article 38 of the Charter of Fundamental Rights of the European Union.29An interpretation of the concept of ‘basic rate’ to the effect that traders are permitted to charge rates higher than that of a standard call to a geographic landline or mobile telephone line would be liable to discourage consumers from using a telephone helpline in order to obtain information in relation to the contract concluded with the trader or from asserting their rights relating to, inter alia, a guarantee or withdrawal.30The fact that, under the second paragraph of Article 21 of Directive 2011/83, telephone service providers are permitted to charge consumers for telephone calls is irrelevant to the previous considerations, provided that the amounts charged do not exceed the ordinary charges which consumers would incur for a standard call.31It follows that a trader may charge a consumer only up to the cost of a standard telephone call. Thus, provided that that limit is respected, the fact that a trader may or not make a profit through a non-geographic helpline is irrelevant.32It follows from all the foregoing considerations that the answer to the questions referred is that the concept of ‘basic rate’, referred to in Article 21 of Directive 2011/83, must be interpreted as meaning that charges for a call, relating to a contract concluded with a trader, to a telephone helpline operated by the trader may not exceed the cost of a call to a standard geographic landline or mobile telephone line. Provided that that limit is respected, the fact that the relevant trader makes or does not make a profit through that telephone helpline is irrelevant. Costs 33Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Seventh Chamber) hereby rules: The concept of ‘basic rate’ referred to in Article 21 of Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, must be interpreted as meaning that call charges relating to a contract concluded with a trader to a telephone helpline operated by the trader may not exceed the cost of a call to a standard geographic landline or mobile telephone line. Provided that that limit is respected, the fact that the relevant trader makes or does not make a profit through that telephone helpline is irrelevant. [Signatures]( 1 ) Language of the case: German. | 77579-f0b9a7a-47c1 | EN |
The lending of an electronic book (e-book) may, under certain conditions, be treated in the same way as the lending of a traditional book | 10 November 2016 ( *1 )‛Reference for a preliminary ruling — Copyright and related rights — Rental right and lending right in respect of copyright works — Directive 2006/115/EC — Article 1(1) — Lending of copies of works — Article 2(1) — Lending of objects — Lending of a digital copy of a book — Public libraries’In Case C‑174/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Rechtbank Den Haag (District Court, The Hague, Netherlands), made by decision of 1 April 2015, received at the Court on 17 April 2015, in the proceedings Vereniging Openbare Bibliotheken v Stichting Leenrecht, intervening parties: Vereniging Nederlands Uitgeversverbond, Stichting LIRA, Stichting Pictoright, THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, M. Vilaras, J. Malenovský (Rapporteur), M. Safjan and D. Šváby, Judges,Advocate General: M. Szpunar,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 9 March 2016,after considering the observations submitted on behalf of:—Vereniging Openbare Bibliotheken, by P. de Leeuwe and D. Visser, advocaten,Vereniging Nederlands Uitgeversverbond, by C. Alberdingk Thijm and C. de Vries, advocaten,Stichting LIRA and Stichting Pictoright, by J. Seignette, M. van Heezik, G. van der Wal and M. Kingma, advocaten,the Czech Government, by S. Šindelková, D. Hadroušek and M. Smolek, acting as Agents,the German Government, by T. Henze, J. Möller and D. Kuon, acting as Agents,the Greek Government, by G. Alexaki, acting as Agent,the French Government, by D. Segoin, G. de Bergues and D. Colas, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, assisted by S. Fiorentino and A. Collabolletta, avvocati dello Stato,the Latvian Government, by I. Kalniņš and D. Pelše, acting as Agents,the Portuguese Government, by L. Inez Fernandes and T. Rendas, acting as Agents,the United Kingdom Government, by J. Kraehling, acting as Agent, and N. Saunders, Barrister,the European Commission, by F. Wilman, T. Scharf and J. Samnadda, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 16 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 4(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), and of Article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28).2The request has been made in proceedings between Vereniging Openbare Bibliotheken (Public library association; ‘the VOB’) and Stichting Leenrecht (Lending right foundation; ‘the Stichting’), concerning a possible infringement of the exclusive lending right referred to in Article 1(1) of Directive 2006/115. Legal context International law 3The World Intellectual Property Organisation (WIPO) adopted the WIPO Copyright Treaty in Geneva on 20 December 1996 (‘the WIPO Treaty’). That Treaty was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).4Article 7(1) of that treaty states:‘Authors of:(i)computer programs;(ii)cinematographic works; and(iii)works embodied in phonograms, as determined in the national law of Contracting Parties;shall enjoy the exclusive right of authorising commercial rental to the public of the originals or copies of their works.’5The diplomatic conference that adopted the WIPO Treaty also adopted, among other documents, the ‘Agreed statement concerning Articles 6 and 7’, which is annexed to that treaty (‘the agreed statement annexed to the WIPO Treaty’) and is worded as follows:‘As used in these Articles, the expressions “copies” and “original and copies” being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects.’ EU law Directive 2001/296Recitals 2 and 9 of Directive 2001/29 state:‘(2)The European Council, meeting at Corfu on 24 and 25 June 1994, stressed the need to create a general and flexible legal framework at Community level in order to foster the development of the information society in Europe. This requires, inter alia, the existence of an internal market for new products and services. Important Community legislation to ensure such a regulatory framework is already in place or its adoption is well under way. Copyright and related rights play an important role in this context as they protect and stimulate the development and marketing of new products and services and the creation and exploitation of their creative content.…(9)Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.’7Article 1(2)(b) of that directive provides:‘Except in the cases referred to in Article 11, this Directive shall leave intact and shall in no way affect existing Community provisions relating to:(b)rental right, lending right and certain rights related to copyright in the field of intellectual property;…’8Article 4 of that directive, entitled ‘Distribution right’, provides:‘1. Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.2. The distribution right shall not be exhausted within the [European Union] in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the [European Union] of that object is made by the rightholder or with his consent.’Directive 2006/1159Directive 2006/115 codified and repealed Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61).10Recitals 2 to 5, 7, 8 and 14 of Directive 2006/115 are worded as follows:Rental and lending of copyright works and the subject matter of related rights protection is playing an increasingly important role in particular for authors, performers and producers of phonograms and films. Piracy is becoming an increasing threat.(3)The adequate protection of copyright works and subject matter of related rights protection by rental and lending rights as well as the protection of the subject matter of related rights protection by the fixation right, distribution right, right to broadcast and communication to the public can accordingly be considered as being of fundamental importance for the economic and cultural development of the [European Union].(4)Copyright and related rights protection must adapt to new economic developments such as new forms of exploitation.(5)The creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky. The possibility of securing that income and recouping that investment can be effectively guaranteed only through adequate legal protection of the rightholders concerned.(7)The legislation of the Member States should be approximated in such a way as not to conflict with the international conventions on which the copyright and related rights laws of many Member States are based.(8)The legal framework of the [European Union] on the rental right and lending right and on certain rights related to copyright can be limited to establishing that Member States provide rights with respect to rental and lending for certain groups of rightholders and further to establishing the rights of fixation, distribution, broadcasting and communication to the public for certain groups of rightholders in the field of related rights protection.(14)It is also necessary to protect the rights at least of authors as regards public lending by providing for specific arrangements. However, any measures taken by way of derogation from the exclusive public lending right should comply in particular with Article 12 of the Treaty.’11Article 1 of that directive provides:‘1. In accordance with the provisions of this Chapter, Member States shall provide, subject to Article 6, a right to authorise or prohibit the rental and lending of originals and copies of copyright works, and other subject matter as set out in Article 3(1).2. The rights referred to in paragraph 1 shall not be exhausted by any sale or other act of distribution of originals and copies of copyright works and other subject matter as set out in Article 3(1).’12Article 2(1) of Directive 2006/115 provides:‘For the purposes of this Directive the following definitions shall apply:(a)“rental” means making available for use, for a limited period of time and for direct or indirect economic or commercial advantage;“lending” means making available for use, for a limited period of time and not for direct or indirect economic or commercial advantage, when it is made through establishments which are accessible to the public;13Article 6(1) of Directive 2006/115 provides:‘Member States may derogate from the exclusive right provided for in Article 1 in respect of public lending, provided that at least authors obtain a remuneration for such lending. Member States shall be free to determine this remuneration taking account of their cultural promotion objectives.’ Netherlands law 14Article 10(1) of the Auteurswet (Law on Copyright) of 23 September 1912 (‘the Aw’) provides:‘For the purposes of this Law, “literary, scientific or artistic works” shall mean:1°.books, brochures, newspapers, periodicals and other written material;and, in general, any product in the literary, scientific or artistic domain, expressed by any means and in any form.’15Article 12 of the Aw provides:‘1. The disclosure of a literary, scientific or artistic work shall include:3°The rental or lending of all or part of a copy of a work, with the exception of works of architecture and works of applied arts, or a reproduction thereof, put into circulation by the rightholder or with his consent;3. “lending”, within the meaning of paragraph 1(3°), means making available for use, for a limited period of time and not for direct or indirect economic or commercial advantage, when it is made through establishments which are accessible to the public.16Under Article 15c(1) of the Aw:‘Lending, as defined in Article 12(1)(3°), of all or part of a copy of a literary, scientific or artistic work, or a reproduction thereof, put into circulation by the rightholder or with his consent, shall not constitute an infringement of the copyright in that work, provided that fair remuneration is paid by the person who carries out that lending or arranges for it to be carried out. …’ The dispute in the main proceedings and the questions referred for a preliminary ruling 17The VOB represents the interests of all public libraries in the Netherlands.18Those libraries lend out books in physical format and, in return, pay a lump sum to the Stichting, which is the foundation designated by the Minister for Justice (Netherlands) to collect lending right payments.19The Stichting distributes the lending right payments which it collects to rightholders through collective management organisations, such as the Stichting LIRA, which is responsible for the management of rights relating to literary, dramatic and dramatico-musical works, and the Stichting Pictoright, which is responsible for the management of rights relating to visual works such as works created by plastic artists, photographers, illustrators, designers and architects.20Under the Netherlands legislation, the amount of the lending right payment is set by the Stichting Onderhandelingen Leenvergoedingen (‘the StOL’), a foundation designated for that purpose by the Minster for Justice.21While the question as to whether or not the digital lending of an electronic book comes within the scope of Article 15c of the Aw had been discussed within the StOL since 2004, the StOL’s management board finally decided, in a meeting held on 24 March 2010, to answer that question in the negative.22In addition, at the request of the Ministry of Education, Culture and Science (Netherlands), the Instituut voor Informatierecht van de Universiteit van Amsterdam (Institute for information law of the University of Amsterdam, Netherlands) and the consultancy firm SEO drafted a report which also concluded that the digital lending of electronic books by libraries did not come within the scope of that exception.23On the basis of that report, the Netherlands Government drew up draft legislation on libraries providing for the creation of a national digital library for the remote digital lending of electronic books. That draft legislation is based on the premiss that the digital lending of electronic books does not come within the scope of that exception.24At present, public libraries make electronic books available via the internet, on the basis of licensing agreements with rightholders.25The VOB is challenging that draft legislation and has therefore brought proceedings before the referring court in which it seeks a declaration that, essentially, the current Law on Copyright already covers digital lending.26In those circumstances, the Rechtbank Den Haag (District Court, The Hague) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Are Articles 1(1), 2(1)(b) and 6(1) of Directive 2006/115 to be construed as meaning that “lending” as referred to in those provisions also means making copyright-protected novels, collections of short stories, biographies, travelogues, children’s books and youth literature available for use, not for direct or indirect economic or commercial advantage, via a publicly accessible establishmentby placing a digital copy (reproduction A) on the server of the establishment and enabling a user to reproduce that copy by downloading it on to his/her own computer (reproduction B),in such a way that the copy made by the user when downloading (reproduction B) is no longer usable after a limited period, andin such a way that other users cannot download the copy (reproduction A) on to their computers during that period?(2)If Question 1 is to be answered in the affirmative: does Article 6 of Directive 2006/115 and/or any other provision of EU law preclude Member States from imposing on the application of the restriction on the lending right included in Article 6 of Directive 2006/115 a condition that the copy of the work made available by the establishment (reproduction A) must have been brought into circulation by an initial sale or other transfer of ownership of that copy within the European Union by the rightholder or with his consent within the meaning of Article 4(2) of Directive 2001/29?If Question 2 is to be answered in the negative: does Article 6 of Directive 2006/115 lay down other requirements for the source of the copy (reproduction A) provided by the establishment, for instance the requirement that the copy was obtained from a lawful source?If Question 2 is to be answered in the affirmative: is Article 4(2) of Directive 2001/29 to be construed as meaning that the initial sale or other transfer of ownership of material as referred to in that provision also means making available remotely by downloading, for use for an unlimited period, a digital copy of copyright-protected novels, collections of short stories, biographies, travelogues, children’s books and youth literature?’ Consideration of the questions referred The first question 27By its first question, the referring court asks, in essence, whether Article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115 must be interpreted as meaning that the concept of ‘lending’, within the meaning of those provisions, covers the lending of a digital copy of a book, where that lending is carried out by placing that copy on the server of a public library and allowing the user concerned to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user.28It must be noted that Article 1(1) of Directive 2006/115, which provides that ‘Member States shall provide … a right to authorise or prohibit the … lending of originals and copies of copyright works, and other subject matter’, does not specify whether the concept of ‘copies of copyright works’, within the meaning of that provision, also covers copies which are not fixed in a physical medium, such as digital copies.29In addition, Article 2(1)(b) of that directive defines ‘lending’ as making available for use, for a limited period of time and not for direct or indirect economic or commercial advantage, when that lending is made through establishments which are accessible to the public. However, it does not follow from that provision that the subject matter referred to in Article 1(1) of that directive must also include intangible objects, such as those of a digital nature.30In those circumstances, it is appropriate, first of all, to examine whether that are grounds to justify the exclusion, in all cases, of the lending of digital copies and intangible objects from the scope of Directive 2006/115.31In that regard, in the first place, it follows from recital 7 of Directive 2006/115 that ‘the legislation of the Member States should be approximated in such a way as not to conflict with the international conventions on which the copyright and related rights laws of many Member States are based’.32The conventions which that directive must respect include, in particular, the WIPO Treaty, to which the European Union and all the Member States are parties.33Consequently, it is necessary to interpret the concepts of ‘objects’ and ‘copies’, for the purposes of Directive 2006/115, in the light of the equivalent concepts in the WIPO Treaty (see, by analogy, judgment of 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 55).34According to the agreed statement annexed to the WIPO Treaty, the concepts of ‘original’ and ‘copies’, in Article 7 of that treaty, in relation to the right of rental, refer ‘exclusively to fixed copies that can be put into circulation as tangible objects’. It follows that intangible objects and non-fixed copies, such as digital copies, are excluded from the right of rental.35It is therefore necessary to interpret the concept of ‘rental’, in Article 2(1)(a) of Directive 2006/115, as referring exclusively to tangible objects, and to interpret the concept of ‘copies’, in Article 1(1) of that directive, as referring, as regards rental, exclusively to copies fixed in a physical medium.36That said, although the title of Directive 2006/115 refers, in certain language versions, to the ‘rental and lending right’, in the singular, and although, as a rule, that directive governs jointly the various aspects of that right which constitute the systems of rental and lending, it nevertheless does not follow that the EU legislature necessarily intended to give the same meaning to the concepts of ‘objects’ and ‘copies’, whether with regard to the rental system or to the lending system, including public lending within the meaning of Article 6 of that directive.37First, recitals 3 and 8 of that directive, in certain language versions, do not refer to the ‘rental and lending right’ in the singular, but rather to the rental and lending ‘rights’, in the plural.38Secondly, as can be seen from Article 2(1)(a) and (b) of Directive 2006/115, the EU legislature sought to define the concepts of ‘rental’ and ‘lending’ separately. Thus the subject matter of ‘rental’ is not necessarily identical to that of ‘lending’.39It follows from the foregoing that although, as can be seen from paragraph 35 of the present judgment, intangible objects and non-fixed copies, such as digital copies, must be excluded from the rental right, governed by Directive 2006/115, so as not to be in breach of the agreed statement annexed to the WIPO Treaty, neither that treaty nor that agreed statement preclude the concept of ‘lending’, within the meaning of that directive, from being interpreted, where appropriate, as also including certain lending carried out digitally.40In the second place, it must be recalled, as mentioned in paragraph 9 of the present judgment, that Directive 2006/115 codifies and reproduces, in substantially identical terms, the provisions of Directive 92/100. The preparatory work preceding the adoption of Directive 92/100 does not support the conclusion that lending carried out in digital form should be excluded, in all cases, from the scope of that directive.41It is true that the explanatory memorandum on the Proposal for a Council Directive on rental right, lending right, and on certain rights related to copyright (COM(90) 586 final) mentions the European Commission’s desire to exclude the making available by way of electronic data transmission from the scope of Directive 92/100.42However, it must be noted, in the first place, that it is not evident that the Commission intended to apply such an exclusion to digital copies of books. The examples mentioned in that explanatory memorandum related exclusively to the electronic transmission of films. Moreover, at the time when that explanatory memorandum was drawn up, digital copies of books were not used to such an extent that it can validly be presumed that they had implicitly been taken into account by the Commission.43In the second place, it must be noted that the desire voiced by the Commission in that explanatory memorandum finds no direct expression in the actual text of the proposal which led to the adoption of Directive 92/100 or in that directive.44It follows from the foregoing considerations that there is no decisive ground allowing for the exclusion, in all cases, of the lending of digital copies and intangible objects from the scope of Directive 2006/115.45That conclusion is, moreover, borne out by the objective pursued by Directive 2006/115. Recital 4 of that directive states, inter alia, that copyright must adapt to new economic developments such as new forms of exploitation. Lending carried out digitally indisputably forms part of those new forms of exploitation and, accordingly, makes necessary an adaptation of copyright to new economic developments.46In addition, to exclude digital lending entirely from the scope of Directive 2006/115 would run counter to the general principle requiring a high level of protection for authors.47While it is true that that general principle appears only implicitly in recital 5 of Directive 2006/115, it is nevertheless emphasised in Directive 2001/29, recital 9 of which states that any harmonisation of copyright must take as its basis ‘a high level of protection’.48Thus, such a general principle must be taken into account in interpreting directives which, like Directive 2006/115, are intended to harmonise the various aspects of copyright while having a more limited aim than that of Directive 2001/29.49In view of the conclusion set out in paragraph 44 of the present judgment, it must next be verified whether the public lending of a digital copy of a book, carried out in conditions such as those indicated in the question referred, is capable of coming within the scope of Article 6(1) of Directive 2006/115.50In that respect, it must be noted that, although Article 6(1) of Directive 2006/115 — as a derogation from the exclusive lending right laid down in Article 1 of that directive — must, according to the Court’s settled case-law, be interpreted strictly, the fact remains that the interpretation given must also enable the effectiveness of the exception thereby established to be safeguarded and its purpose to be observed (see, to that effect, judgments of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 162 and 163, and of 1 December 2011, Painer, C‑145/10, EU:C:2011:798, paragraph 133).51Given the importance of the public lending of digital books, and in order to safeguard both the effectiveness of the derogation for public lending referred to in Article 6(1) of Directive 2006/115 (‘the public lending exception’) and the contribution of that exception to cultural promotion, it cannot therefore be ruled out that Article 6(1) of Directive 2006/115 may apply where the operation carried out by a publicly accessible library, in view of, inter alia, the conditions set out in Article 2(1)(b) of that directive, has essentially similar characteristics to the lending of printed works.52In the present case, as can be seen from the wording of the question referred, the dispute in the main proceedings concerns the lending of a digital copy of a book, carried out by placing it on the server of the public library and allowing the user concerned to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user.53Such an operation must be regarded as having — in view, inter alia, of the conditions established in Article 2(1)(b) of Directive 20016/115 — essentially similar characteristics to the lending of printed works, since, first, the limitation of simultaneous downloads to a single copy implies that the lending capacity of the library concerned does not exceed that which it would have as regards a printed work and, secondly, that lending is made for only a limited period.54In view of all the foregoing considerations, the answer to the first question is that Article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115 must be interpreted as meaning that the concept of ‘lending’, within the meaning of those provisions, covers the lending of a digital copy of a book, where that lending is carried out by placing that copy on the server of a public library and allowing a user to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user. The second question 55By its second question, the referring court asks, in essence, whether Article 6 of Directive 2006/115 and/or any other provision of EU law must be interpreted as precluding a Member State from making the application of Article 6(1) of Directive 2006/115 subject to the condition that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29.56In that regard, first of all, although it follows from the very wording of Article 4(1) and (2) of Directive 2001/29 that Member States are to provide for authors the exclusive right to authorise or prohibit any form of distribution to the public, by sale or otherwise, of the original of their works or of copies thereof, and that that distribution right is exhausted within the European Union only where the first sale or other transfer of ownership in the European Union of that object is made by the rightholder or with his consent, it follows from Article 1(2)(b) of that directive that the latter leaves intact and in no way affects the provisions of EU law relating to the lending right.57It follows that Article 4(2) of Directive 2001/29 is not relevant to the interpretation of Article 6(1) of Directive 2006/115.58Next, Article 1(2) of Directive 2006/115 provides that the exclusive lending right, laid down in Article 1(1) of that directive, is not exhausted by any sale or other act of distribution of originals and copies of copyright works.59The Court has already held that forms of exploitation of a protected work, such as public lending, are different in nature from a sale or any other lawful form of distribution, since the lending right remains one of the prerogatives of the author notwithstanding the sale of the physical medium containing the work. Consequently, the lending right is not exhausted by the sale or any other act of distribution, whereas the distribution right may be exhausted, but only and specifically upon the first sale in the European Union by the rightholder or with his consent (see, to that effect, judgment of 6 July 2006, Commission v Portugal, C‑53/05, EU:C:2006:448, paragraph 34 and the case-law cited).60It should be noted, lastly, that Article 6(1) of Directive 2006/115 is intended to balance the interests of authors, on the one hand, and cultural promotion — which is an objective of general interest underlying the public lending exception and justifying the possibility for Member States to derogate, under that provision, from the exclusive right laid down in Article 1 of that directive as regards public lending — on the other hand. In that context, at least the authors must receive remuneration for that lending.61Article 6(1) of Directive 2006/115, read in conjunction with recital 14 of that directive, which indicates that it is necessary to protect authors’ rights as regards public lending, and in view of the requirements flowing from the general principle imposing a high level of protection for authors, mentioned in paragraphs 47 and 48 above, must be regarded as laying down only a minimum threshold of protection for authors required when the public lending exception is being implemented. It follows that the Member States cannot be prevented from setting, where appropriate, additional conditions such as to improve the protection of authors’ rights beyond what is expressly laid down in that provision.62In the present case, the national legislation lays down an additional condition for the application of the public lending exception, referred to in Article 6(1) of Directive 2006/115. That condition requires that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29.63As the Advocate General has rightly pointed out, in point 85 of his Opinion, unlike the case where a lending right is acquired with the consent of the author, in the case where the lending right arises under the exception laid down in Article 6(1) of Directive 2006/115, by way of derogation from that consent requirement, its application to some works could prejudice the legitimate interests of authors.64Consequently, a condition, such as that at issue in the main proceedings — according to which, in the context of the public lending exception, the Member States may require that a digital copy of a book subject to such lending must have first been put into circulation by the rightholder or with his consent — is capable of reducing the risks referred to in the previous paragraph and therefore of improving the protection of authors’ rights in the implementation of that exception. Consequently, such an additional condition must be considered to be in accordance with Article 6(1) of Directive 2006/115.65In view of the foregoing, the answer to the second question is that EU law, and in particular Article 6 of Directive 2006/115, must be interpreted as not precluding a Member State from making the application of Article 6(1) of Directive 2006/115 subject to the condition that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29. The third question 66By its third question, the referring court asks, in essence, whether Article 6(1) of Directive 2006/115 must be interpreted as precluding the public lending exception laid down therein from applying to the making available by a public library of a digital copy of a book in the case where that copy was obtained from an unlawful source.67In that regard, first of all, although the wording of Article 6(1) of Directive 2006/115 does not expressly set out any requirement that the source of the copy made available by the public library must be lawful, nevertheless one of the objectives of that directive is to combat piracy, as can be seen from recital 2 thereof.68To accept that a copy lent out by a public library may be obtained from an unlawful source would amount to tolerating, or even encouraging, the circulation of counterfeit or pirated works and would therefore clearly run counter to that objective.69Next, the Court has already held, with regard to the private copying exception laid down in Article 5(2)(b) of Directive 2001/29, that that exception does not cover the case of copies made from an unlawful source (judgment of 10 April 2014, ACI Adam and Others, C‑435/12, EU:C:2014:254, paragraph 41).70In that respect, the Court has held that copyright holders cannot be required to tolerate infringements of their rights which may accompany the making of private copies. If the Member States had the option of adopting legislation which also allowed reproductions for private use to be made from an unlawful source, it would clearly be detrimental to the proper functioning of the internal market. The application of such national legislation might unreasonably prejudice copyright holders (see, to that effect, judgment of 10 April 2014, ACI Adam and Others, C‑435/12, EU:C:2014:254, paragraphs 31, 35 and 40).71All of those arguments relating to the private copying exception appear relevant to the application of the public lending exception and may therefore be transposed, by analogy, to the context of Article 6(1) of Directive 2006/115.72In view of the foregoing, the answer to the third question is that Article 6(1) of Directive 2006/115 must be interpreted as meaning that it precludes the public lending exception laid down therein from applying to the making available by a public library of a digital copy of a book in the case where that copy was obtained from an unlawful source. The fourth question 73In view of the answer given to the second question, it is not necessary to answer the fourth question, since the latter was submitted only in the event of a negative answer to the second question. Costs 74Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: 1. Article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property must be interpreted as meaning that the concept of ‘lending’, within the meaning of those provisions, covers the lending of a digital copy of a book, where that lending is carried out by placing that copy on the server of a public library and allowing a user to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user. 2. EU law, and in particular Article 6 of Directive 2006/115, must be interpreted as not precluding a Member State from making the application of Article 6(1) of Directive 2006/115 subject to the condition that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. 3. Article 6(1) of Directive 2006/115 must be interpreted as meaning that it precludes the public lending exception laid down therein from applying to the making available by a public library of a digital copy of a book in the case where that copy was obtained from an illegal source. [Signatures]( *1 ) Language of the case: Dutch. | 074ae-d9fa775-455f | EN |
The Court sets aside the judgment of the General Court and annuls the EUIPO decision which confirmed registration of the shape of the Rubik’s Cube as an EU trade mark | 10 November 2016 ( *1 )‛Appeal — European Union trade mark — Three-dimensional mark in the shape of a cube with surfaces having a grid structure — Application for a declaration of invalidity — Rejection of the application for a declaration of invalidity’In Case C‑30/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 January 2015, Simba Toys GmbH & Co. KG, established in Fürth (Germany), represented by O. Ruhl, Rechtsanwalt,appellant,the other parties to the proceedings being: European Union Intellectual Property Office (EUIPO), represented by D. Botis and A. Folliard-Monguiral, acting as Agents,defendant at first instance, Seven Towns Ltd, established in London (United Kingdom), represented by K. Szamosi and M. Borbás, ügyvédek,intervener at first instance,THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, E. Regan, J.‑C. Bonichot, A. Arabadjiev and S. Rodin (Rapporteur), Judges,Advocate General: M. Szpunar,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 2 March 2016,after hearing the Opinion of the Advocate General at the sitting on 25 May 2016,gives the following Judgment 1By its appeal, Simba Toys GmbH & Co. KG seeks to have set aside the judgment of the General Court of the European Union of 25 November 2014, Simba Toys v OHIM — Seven Towns (Shape of a cube with surfaces having a grid structure) (T‑450/09, EU:T:2014:983, ‘the judgment under appeal’), by which the General Court dismissed its action for annulment of the decision of the Second Board of Appeal of the European Union Intellectual Property Office (EUIPO) (‘the Board of Appeal’) of 1 September 2009 (Case R 1526/2008-2), relating to cancellation proceedings between the appellant and Seven Towns Ltd (‘the decision at issue’). Legal context 2Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) was repealed and replaced by Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), which entered into force on 13 April 2009.3However, given the timeframe of the facts, the present dispute remains governed by Regulation No 40/94, at least with regard to those provisions which are not strictly procedural.4Article 7 of Regulation No 40/94, entitled ‘Absolute grounds for refusal’, provides:‘1. The following shall not be registered:…(b)trade marks which are devoid of any distinctive character;(c)trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;(e)signs which consist exclusively of:(i)the shape which results from the nature of the goods themselves; or(ii)the shape of goods which is necessary to obtain a technical result; or(iii)the shape which gives substantial value to the goods;…’5Under Article 74(1) of Regulation No 40/94:‘In proceedings before it the Office shall examine the facts of its own motion; however, in proceedings relating to relative grounds for refusal of registration, the Office shall be restricted in this examination to the facts, evidence and arguments provided by the parties and the relief sought.’ Background to the dispute 6The background to the dispute, as set out in paragraphs 1 to 12 of the judgment under appeal, may be summarised as follows.7On 1 April 1996, Seven Towns filed an application for registration of a Community trade mark with EUIPO, relating to the three-dimensional sign reproduced below:8The goods in respect of which registration was sought are in Class 28 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond to the following description: ‘three-dimensional puzzles’.9On 6 April 1999, the mark at issue was registered as a Community trade mark under No 162784. It was renewed on 10 November 2006.10On 15 November 2006 Simba Toys filed an application for a declaration of invalidity of that mark pursuant to Article 51(1)(a) of Regulation No 40/94, read in conjunction with Article 7(1)(a) to (c) and (e) thereof.11By decision of 14 October 2008, the Cancellation Division of EUIPO rejected that application in its entirety.12On 23 October 2008, the appellant filed a notice of appeal with EUIPO, pursuant to Articles 57 to 62 of Regulation No 40/94 (now Articles 58 to 64 of Regulation No 207/2009), against that decision. In support of its action it alleged infringement of Article 7(1)(a) to (c) and (e) of Regulation No 40/94.13By the decision at issue, the Board of Appeal confirmed the decision of the Opposition Division of 14 October 2008 and dismissed the action. The proceedings before the General Court and the judgment under appeal 14By application lodged at the Registry of the General Court on 6 November 2009, Simba Toys brought an action seeking annulment of the decision at issue.15In support of its action, it relied on eight pleas in law, alleging infringement of the first sentence of Article 75 and of the first sentence of Article 76(1) of Regulation No 207/2009, and infringement of Article 7(1)(b), Article 7(1)(c), Article 7(1)(e)(i) to (iii) and Article 7(3) of Regulation No 40/94.16By the judgment under appeal, the General Court dismissed that action as unfounded. Forms of order sought 17Simba Toys claims that the Court should:—set aside the judgment under appeal;annul the decision at issue; andorder Seven Towns and EUIPO to pay the costs.18Seven Towns and EUIPO contend that the Court should:dismiss the appeal; andorder Simba Toys to pay the costs. The request for the reopening of the oral part of the procedure 19By letter of 7 July 2016, Seven Towns requested the reopening of the oral part of the procedure.20That company claims, in essence, that the Advocate General, in his Opinion, relied on facts and raised arguments which had not been debated between the parties or before the General Court or the Court of Justice, so far as concerns, inter alia, the definition of the function of the goods at issue, the identification of the essential characteristics of the sign and the assessment of the functionality of the shape of a cube.21It that respect, it must be recalled that the Court may at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure under Article 83 of its Rules of Procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not been debated between the interested parties (see, to that effect, judgment of 7 April 2016, Marchon Germany, C‑315/14, EU:C:2016:211, paragraph 19).22That is not the case here. The Court, after hearing the Advocate General, considers that it has all the information necessary to enable it to give a ruling and that the case does not have to be examined in the light of any new fact which is of such a nature as to be a decisive factor for its decision or in the light of any argument which has not been debated before it.23In those circumstances, it is not appropriate to accede to the request of Seven Towns that the oral part of the procedure be reopened. The appeal Arguments of the parties 24In support of its appeal, Simba Toys puts forward six grounds. By its first ground of appeal, it submits that the General Court, in paragraphs 50 to 77 of the judgment under appeal, infringed Article 7(1)(e)(ii) of Regulation No 40/94, which provides that signs which consist exclusively of the shape of goods which is necessary to obtain a technical result are not to be registered.25In that respect, Simba Toys claims, in the first place, that the General Court, in paragraph 72 of the judgment under appeal, erred in making the application of Article 7(1)(e)(ii) of Regulation No 40/94 subject to the requirement that a technical result may at least be ‘inferred with sufficient certainty’ from the representation of the mark concerned. According to the appellant, no such requirement to ‘fathom precisely’ can be inferred from either the wording of that provision or from the case-law and, in addition, such a requirement goes against the objective thereof.26The appellant maintains, in the second place, that the General Court interpreted the notion of ‘technical function’ too narrowly by taking the view, in paragraph 60 of the judgment under appeal, that the grid structure on the surfaces of the cube did not perform that function. The appellant claims that the General Court failed to take into consideration the fact that that structure and the general shape of the cube are no arbitrary features and must therefore necessarily be technical features.27In the third place, the appellant claims that the General Court, in paragraph 53 of the judgment under appeal, erred in law by making the refusal to register a sign on the basis of the ground mentioned in Article 7(1)(e)(ii) of Regulation No 40/94 subject to the condition that the essential characteristics of the mark at issue themselves perform the technical function of the goods that it covers, and not that they are the result thereof.28In the fourth place, the appellant criticises the General Court for dismissing the head of claim alleging the lack of alternative shapes for the representation of that mark which might perform the same technical function. In any event, it submits that the availability of alternative shapes would not preclude the application of Article 7(1)(e)(ii). As regards, in particular, the black lines that criss-cross the surfaces of the cube, even if it were possible to produce a magic cube without those elements, such a cube would still be protected by the contested mark, as it is within the range of similarity. In those circumstances, the appellant claims that the General Court misconstrued the public interest underlying that provision, which is to prevent the granting of a permanent monopoly on technical solutions.29In the fifth place, the appellant submits that the General Court, when assessing the technicality of the essential characteristics of the goods at issue, failed to take into consideration the existence of goods that were already on the market before the application for registration of the mark at issue was lodged — in particular, the ‘Rubik’s Cube’ produced by the intervener — and have the essential characteristics of the contested mark, including a rotating capability which is well known to consumers.30In the sixth place, Simba Toys criticises the General Court on the ground that it held, in paragraph 55 of the judgment under appeal, after concluding that the mark at issue was registered for ‘three-dimensional puzzles’ in general without being restricted to those that have a rotating capability, that registration of a mark may be refused only if the ground referred to in Article 7(1)(e)(ii) of Regulation No 40/94 applies with regard to all or at least many of the goods which it covers.31According to Seven Towns and EUIPO, the first ground of appeal must be rejected as inadmissible, at least in part, due to the fact that it is seeking to call into question findings of fact.32In any event, according to those parties, that ground must be rejected as unfounded. They claim, in essence, that the Court should confirm the grounds in the judgment under appeal which are challenged by this ground of appeal. In that respect, they submit that the General Court, far from introducing new requirements, merely applied the existing case-law which requires, inter alia, that any technical function is to be determined on the basis of the graphic representation of the mark concerned. Sevens Towns and EUIPO also draw attention to the fact that the goods at issue include all three-dimensional puzzles, of which magic cubes do not form an autonomous subcategory. Findings of the Court 33By its first ground of appeal, Simba Toys claims that the General Court misapplied Article 7(1)(e)(ii) of Regulation No 40/94 by relying, inter alia, in paragraphs 56 to 77 of the judgment under appeal, on an interpretation of that provision that is too narrow in regard to the functional character of the shape at issue. Consequently, according to the appellant, the General Court erred in taking the view that the essential characteristics of that shape do not perform a technical function of the goods at issue.34In that regard, while it is true that, in so far as it includes findings of a factual nature, the assessment of the functionality of the essential characteristics of a sign cannot, as such, be subject to review by the Court on appeal, save in the case of a distortion (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 74, and of 17 March 2016, Naazneen Investments v OHIM, C‑252/15 P, not published,EU:C:2016:178, paragraph 59), the position is different with regard to the questions of law raised by an examination of the relevance of the legal criteria applied when carrying out that assessment and, in particular, of the factors taken into consideration to that end (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraphs 84 and 85, and of 6 March 2014, Pi‑Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 61).35The first ground of appeal is therefore admissible because it seeks to challenge the General Court’s application, in the judgment under appeal, of the criteria and factors stemming, inter alia, from the case-law of the Court of Justice for the purpose of assessing the functional nature of the sign at issue within the meaning of Article 7(1)(e)(ii) of Regulation No 40/94.36As regards the merits of that ground of appeal, the first point to be noted here is that trade mark law constitutes an essential element in the system of competition in the European Union. In that system, each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin (judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 38 and the case-law cited).37Moreover, as is apparent from Article 4 of Regulation No 40/94, a sign representing the shape of a product is one of the signs that may constitute a mark provided that, first, it is capable of being represented graphically and, secondly, it is capable of distinguishing the goods or services of one undertaking from those of other undertakings (see, to that effect, judgments of 29 April 2004, Henkel v OHIM, C‑456/01 P and C‑457/01 P, EU:C:2004:258, paragraphs 30 and 31, and of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 39).38It is also apparent from the Court’s case-law that each of the grounds for refusal to register listed in Article 7(1) of Regulation No 40/94 must be interpreted in the light of the underlying public interest (judgments of 29 April 2004, Henkel v OHIM, C‑456/01 P and C‑457/01 P, EU:C:2004:258, paragraph 45, and of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 43).39In that context, the Court has pointed out that Article 7(1)(e)(ii) of Regulation No 40/94 seeks to prevent trade mark law from granting an undertaking a monopoly on technical solutions or functional characteristics of a product (judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 43).40Furthermore, it must, first of all, be recalled that a correct application of that provision requires that the essential characteristics of the three-dimensional sign at issue be properly identified (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 68, and of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 46).41In the present case, the General Court, in paragraph 47 of the judgment under appeal, confirmed the Board of Appeal’s finding that the essential characteristics of the sign at issue are a cube and a grid structure on each surface of the cube. That finding is not challenged in the present appeal.42Next, as to the question of whether such essential characteristics perform a technical function of the product, the General Court answered that question in the negative by rejecting, inter alia in paragraphs 56 to 61 of the judgment under appeal, the appellant’s argument that the black lines and, more generally, the grid structure on each surface of the cube perform a technical function.43In that respect, the General Court rejected the appellant’s arguments relating to the rotating capability of the individual elements of the cube at issue, which, according to the appellant, are reflected by those black lines, by pointing out, in particular in paragraphs 58 and 59 of the judgment under appeal, that those arguments were essentially based on knowledge of the rotating capability of the vertical and horizontal lattices of the ‘Rubik’s Cube’ and that that capability cannot result from the characteristics of the shape presented but, at most, from an invisible mechanism internal to that cube. The General Court held that the Board of Appeal was right not to include that invisible element in its analysis of the functionality of the essential characteristics of the contested mark. In that context, the General Court took the view that inferring the existence of an internal rotating mechanism from the graphic representations of that mark would not have been consistent with the requirement that any inference must be drawn as objectively as possible from the shape in question, as represented graphically, and with sufficient certainty.44The General Court, in paragraph 60 of the judgment under appeal, therefore took the view, as did the Board of Appeal, that the grid structure on each surface of the cube at issue did not perform any technical function since the fact that that structure had the effect of dividing visually each surface of that cube into nine equal square elements could not constitute a technical function for the purposes of the relevant case-law.45However, as the Advocate General has noted, inter alia in point 99 of his Opinion, that line of reasoning is vitiated by an error of law.46In order to analyse the functionality of a sign for the purposes of Article 7(1)(e)(ii) of Regulation No 40/94, which concerns only signs which consist of the shape of the actual goods, the essential characteristics of a shape must be assessed in the light of the technical function of the actual goods concerned (see, to that effect, judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 72).47Thus, and since it is not disputed that the sign at issue consists of the shape of actual goods and not of an abstract shape, the General Court should have defined the technical function of the actual goods at issue, namely a three-dimensional puzzle, and it should have taken this into account when assessing the functionality of the essential characteristics of that sign.48While it was necessary, as the General Court indeed pointed out in paragraph 59 of the judgment under appeal, for the purpose of that analysis, to proceed on the basis of the shape at issue, as represented graphically, that analysis could not be made without taking into consideration, where appropriate, the additional elements relating to the function of the actual goods at issue.49First, it follows from the case-law of the Court that, when examining the functional characteristics of a sign, the competent authority may carry out a detailed examination that takes into account material relevant to identifying appropriately the essential characteristics of a sign, in addition to the graphic representation and any descriptions filed at the time of application for registration (judgment of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 54).50Secondly, as the Advocate General has noted in points 86 and 91 to 93 of his Opinion, in each of the cases which gave rise to the Court’s judgments of 18 June 2002, Philips (C‑299/99, EU:C:2002:377), of 14 September 2010, Lego Juris v OHIM (C‑48/09 P, EU:C:2010:516), and of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry (C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129), the competent authority would not have been able to analyse the shape concerned solely on the basis of its graphic representation without using additional information on the actual goods.51It follows that the General Court interpreted the criteria for assessing Article 7(1)(e)(ii) of Regulation No 40/94 too narrowly, in that it took the view, inter alia in paragraphs 57 to 59 of the judgment under appeal, that for the purpose of examining the functionality of the essential characteristics of the sign concerned, in particular the grid structure on each surface of the cube, the shape at issue, as represented graphically, should have been taken as a basis, without necessarily having to take into consideration any additional circumstances which an objective observer would not have been able to ‘fathom precisely’ on the basis of the graphic representations of the contested mark, such as the rotating capability of individual elements in a three-dimensional ‘Rubik’s Cube’-type puzzle.52Furthermore, the fact, as set out in paragraph 55 of the judgment under appeal, that the contested mark was registered for ‘three-dimensional puzzles’ in general, that is to say, without being restricted to those that have a rotating capability, and that the proprietor of that mark did not append to its application for registration a description specifying that the shape at issue had such a rotating capability, cannot preclude account from being taken of the technical function of the actual goods represented by the sign at issue for the purpose of examining the functionality of the essential characteristics of that sign, as the proprietor of that mark would otherwise be allowed to broaden the scope of the protection arising from the registration thereof to cover every type of puzzle with a similar shape, namely any three-dimensional puzzle with cube-shaped elements, regardless of the principles by which it functions.53However, that last option would be contrary to the objective pursued by Article 7(1)(e)(ii) of Regulation No 40/94, which is, as has been recalled in paragraph 39 of the present judgment, to prevent an undertaking from being granted a monopoly on technical solutions or functional characteristics of a product.54In the light of all of those considerations, the first ground of appeal must be upheld and, consequently, the judgment under appeal must be set aside, without it being necessary for the Court to examine the other arguments under that ground of appeal or the other grounds of appeal. The dispute at first instance 55In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, the Court may, where it has quashed the decision of the General Court, either itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.56In the present case, the Court has the necessary information to enable it to give final judgment on the second plea of the action at first instance, alleging infringement of Article 7(1)(e)(ii) of Regulation No 40/94.57It follows from paragraphs 42 to 53 of the present judgment that that ground of appeal is well founded.58The decision at issue must therefore be annulled on the ground of an infringement of Article 7(1)(e)(ii) of Regulation No 40/94. Costs 59As provided in Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to the costs.60Under Article 138(1) of those rules, which applies to appeal proceedings pursuant to Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.61Since the appellant has applied for costs to be awarded against EUIPO and Seven Towns, and since the latter have been unsuccessful, EUIPO and Seven Towns must be ordered to pay the costs relating both to the proceedings at first instance in Case T‑450/09 and to the appeal.On those grounds, the Court (First Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 25 November 2014, Simba Toys v OHIM — Seven Towns (Shape of a cube with surfaces having a grid structure) ( T‑450/09, EU:T:2014:983 ); 2. Annuls the decision of the Second Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 1 September 2009 (Case R 1526/2008-2) relating to cancellation proceedings between Simba Toys GmbH & Co. KG and Seven Towns Ltd; 3. Orders Seven Towns Ltd and the European Union Intellectual Property Office to bear their own costs and to pay the costs of Simba Toys GmbH & Co. KG relating both to the proceedings at first instance in Case T‑450/09 and to the appeal. Silva de LapuertaReganBonichotArabadjievRodinDelivered in open court in Luxembourg on 10 November 2016.A. Calot EscobarRegistrarR. Silva de LapuertaPresident of the First Chamber( *1 ) Language of the case: English. | ccd8d-f6c8450-45d0 | EN |
The Court finds that Greece has failed to fulfil its obligation to protect the sea turtle Caretta caretta in the Bay of Kyparissia | 10 November 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Environment — Nature conservation — Directive 92/43/EEC — Article 6(2) and (3) and Article 12(1)(b) and (d) — Wild fauna and flora — Conservation of natural habitats — Sea turtle Caretta caretta — Protection of sea turtles in the Gulf of Kyparissia — ‘Dunes of Kyparissia’ Site of Community importance — Protection of species’In Case C‑504/14,ACTION under Article 258 TFEU for failure to fulfil obligations, brought on 11 November 2014, European Commission, represented by M. Patakia and C. Hermes, acting as Agents, with an address for service in Luxembourg,applicant,v Hellenic Republic, represented by E. Skandalou, acting as Agent,defendant,THE COURT (Fourth Chamber),composed of T. von Danwitz, President of the Chamber, E. Juhász (Rapporteur), C. Vajda, K. Jürimäe and C. Lycourgos, Judges,Advocate General: J. Kokott,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 13 January 2016,after hearing the Opinion of the Advocate General at the sitting on 18 February 2016,gives the following Judgment 1By its action, the European Commission requests the Court to declare that:—by failing to take the measures referred to in Article 6(2) of Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2006/105/EC of 20 November 2006 (OJ 2006 L 363, p. 368), so as to prevent deterioration of natural habitats and the habitats of species as well as disturbance of the species for which the area has been designated,by permitting (without carrying out any assessment of the implications as referred to in Article 6(3) of Directive 92/43) activities which, either individually or in combination with other plans or projects, are likely to have a significant effect on the site at issue, reducing and destroying the nesting area of the priority species Caretta caretta, which is present there, causing disturbance to the species concerned and, ultimately, reducing and destroying the sand dune habitats 2110, 2220 and the priority habitat 2250, andby failing to take the measures required by Article 12(1)(b) and (d) of Directive 92/43 to establish and implement an effective system of strict protection for the sea turtle Caretta caretta (a priority species) in the Gulf of Kyparissia (Greece) so as to avoid any disturbance of the species concerned during its breeding period and any activity which can cause deterioration or destruction of its breeding sites,the Hellenic Republic has failed to fulfil its obligations under those provisions of Directive 92/43. Legal context European Union law 2Article 2 of Directive 92/43 provides:‘1. The aim of this Directive shall be to contribute towards ensuring bio-diversity through the conservation of natural habitats and of wild fauna and flora in the European territory of the Member States to which the Treaty applies.2. Measures taken pursuant to this Directive shall be designed to maintain or restore, at favourable conservation status, natural habitats and species of wild fauna and flora of Community interest.3. Measures taken pursuant to this Directive shall take account of economic, social and cultural requirements and regional and local characteristics.’3Annex I to Directive 92/43, which is entitled ‘Natural habitat types of Community interest whose conservation requires the designation of special areas of conservation’, lists various types of dune habitat. In particular, point 22 of Annex I, which is headed ‘Sea dunes of the Mediterranean coast’, mentions, at point 2220, ‘Dunes with Euphorbia terracina’ and, at point 2250 *, ‘Coastal dunes with Juniperus spp.’.4In accordance with the third subparagraph of Article 4(2) of Directive 92/43, ‘the list of sites selected as sites of Community importance, identifying those which host one or more priority natural habitat types or priority species, shall be adopted by the Commission in accordance with the procedure laid down in Article 21’. Article 4(5) provides that as soon as a site is placed on the list referred to in the third subparagraph of Article 4(2), it is to be subject to Article 6(2) to (4) of Directive 92/43.5Commission Decision 2006/613/EC of 19 July 2006 adopting, pursuant to Directive 92/43, the list of sites of Community importance for the Mediterranean biogeographical region (OJ 2006 L 259, p. 1), included on the list of sites of Community importance (SCIs) set out in Annex I thereto the Dunes of Kyparissia (Thines Kyparissias (Neochori-Kyparissia)), under the SCI code GR 25 50005, with ‘C’ marked against it, which indicates the presence on the site in question of at least one priority natural habitat type and/or priority species within the meaning of Article 1 of Directive 92/43.6Article 6 of Directive 92/43 provides:‘1. For special areas of conservation, Member States shall establish the necessary conservation measures involving, if need be, appropriate management plans specifically designed for the sites or integrated into other development plans, and appropriate statutory, administrative or contractual measures which correspond to the ecological requirements of the natural habitat types in Annex I and the species in Annex II present on the sites.2. Member States shall take appropriate steps to avoid, in the special areas of conservation, the deterioration of natural habitats and the habitats of species as well as disturbance of the species for which the areas have been designated, in so far as such disturbance could be significant in relation to the objectives of this Directive.3. Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.4. If, in spite of a negative assessment of the implications for the site and in the absence of alternative solutions, a plan or project must nevertheless be carried out for imperative reasons of overriding public interest, including those of a social or economic nature, the Member State shall take all compensatory measures necessary to ensure that the overall coherence of Natura 2000 is protected. It shall inform the Commission of the compensatory measures adopted.Where the site concerned hosts a priority natural habitat type and/or a priority species, the only considerations which may be raised are those relating to human health or public safety, to beneficial consequences of primary importance for the environment or, further to an opinion from the Commission, to other imperative reasons of overriding public interest.’7Annex II to Directive 92/43, which is entitled ‘Animal and plant species of Community interest whose conservation requires the designation of special areas of conservation’, mentions, under animal species, the Caretta caretta sea turtle as a priority species.8Article 12 of Directive 92/43 provides:‘1. Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:(a)all forms of deliberate capture or killing of specimens of these species in the wild;(b)deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;(c)deliberate destruction or taking of eggs from the wild;(d)deterioration or destruction of breeding sites or resting places.2. For these species, Member States shall prohibit the keeping, transport and sale or exchange, and offering for sale or exchange, of specimens taken from the wild, except for those taken legally before this Directive is implemented.3. The prohibition referred to in paragraph 1(a) and (b) and paragraph 2 shall apply to all stages of life of the animals to which this Article applies.4. Member States shall establish a system to monitor the incidental capture and killing of the animal species listed in Annex IV(a). In the light of the information gathered, Member States shall take further research or conservation measures as required to ensure that incidental capture and killing does not have a significant negative impact on the species concerned.’9Annex IV to Directive 92/43, which lists the animal and plant species of Community interest in need of strict protection, includes, in respect of animal species, the Caretta caretta sea turtle. Greek law 10By Law No 3937/2011 the Hellenic Republic declared the ‘Dunes of Kyparissia’ to be a ‘special area of conservation’. Pre-litigation procedure 11The Commission, by letters of 9 August and 19 November 2010, asked the Hellenic Republic to provide it with information concerning the arrangements for implementing the provisions of Articles 6 and 12 of Directive 92/43 in the Natura 2000 area concerned, namely the Dunes of Kyparissia, which are included on the list of SCIs under code number GR 25 50005 (‘the Kyparissia area’).12Having regard to the answers provided by the Hellenic Republic on 29 September 2010 and 26 January 2011, the Commission took the view that the Member State had failed to fulfil its obligations under Article 6(2) and (3) and Article 12(1)(b) and (d) of Directive 92/43.13On 28 October 2011, the Commission therefore sent the Hellenic Republic a letter of formal notice calling on it to submit its observations on those complaints within a period of two months.14The Hellenic Republic replied to the letter of formal notice by letters of 27 December 2011 and 17 April 2012.15After analysing the replies set out in those letters and taking account of the results of the visit carried out by its agents in the Kyparissia area on 17 July 2012, the Commission issued a reasoned opinion on 1 October 2012 calling on the Hellenic Republic to comply with that opinion by 1 December 2012.16The Hellenic Republic replied to the reasoned opinion by letter of 27 November 2012 which it supplemented, following a letter from the Commission of 14 May 2013, with communications dated 13 June and 26 November 2013 and 28 March, 23 June and 17 September 2014.17Since the Commission was not satisfied with the Hellenic Republic’s response, it brought the present action on 11 November 2014. The request to produce evidence after the close of the written part of the procedure 18Following the close of the written part of the procedure on 29 April 2015, the Commission, on 16 June 2015, sought leave under Article 128(2) of the Rules of Procedure of the Court to produce further evidence, namely Opinion No 32/2015 of the Symvoulio tis Epikrateias (Council of State, Greece) concerning a draft presidential decree concerning the designation of a regional park in Kyparissia Bay (‘the presidential decree’).19The Hellenic Republic requests that the Court reject the Commission’s application for such leave.20Under the first and second sentences of Article 128(2) of the Rules of Procedure, the parties may, exceptionally, produce or offer further evidence after the close of the written procedure and must give reasons for the delay in submitting such evidence.21It is common ground between the parties that the opinion in question was issued on 8 April 2015 and that the Hellenic Republic referred to it in its rejoinder, the lodging of which before the Court on 29 April 2015 brought the written part of the procedure to a close.22The Commission maintains that it became aware of the opinion’s existence only after the close of the written part of the procedure and gives this as the reason for the delay in submitting the opinion.23The Hellenic Republic, which does not challenge the Commission’s assertion, asks the Court to reject the Commission’s offer of evidence on the grounds (i) that Opinion No 32/2015 of the Symvoulio tis Epikrateias (Council of State) forms part of the adoption procedure for the presidential decree, which has not yet been concluded and (ii) that the opinion contains nothing new.24As regards the objections raised by the Hellenic Republic, it must be noted, first, that the opinion at issue is final and will not in principle be subject to further alteration, irrespective of the fact that the Symvoulio tis Epikrateias (Council of State) may issue a subsequent opinion on an amended draft of the presidential decree.25Secondly, the argument that the opinion does not contain anything new does not call its admissibility into question from the perspective of Article 128(2) of the Rules of Procedure, since the content of evidence falls to be assessed when the substance of the case is examined.26Accordingly, Opinion No 32/2015 of the Symvoulio tis Epikrateias (Council of State) is admissible in the present proceedings as evidence in so far as it concerns the factual and legal situation that existed at the time of expiry of the period prescribed in the reasoned opinion, namely 1 December 2012. The action The first complaint, alleging infringement of Article 6(2) of Directive 92/43 by reason of the failure to take the measures necessary to prevent deterioration of natural habitats and the habitats of species and disturbance of the species Caretta caretta 27In the context of its first complaint, the Commission, putting forward a number of concrete situations, claims that the Hellenic Republic has infringed the general prohibition on deterioration and disturbance laid down in Article 6(2) of Directive 92/43.28The Court observes in that regard that an activity can be considered to comply with Article 6(2) of Directive 92/43 only if it is guaranteed that it will not cause any disturbance that is likely significantly to affect the objectives of the directive, in particular its objectives concerning the conservation of natural habitats and of wild fauna and flora. In order to find an infringement of Article 6(2) of Directive 92/43, the Commission must demonstrate to a sufficient legal standard that the Member State concerned has not taken the appropriate protective measures to prevent the operational activities of projects — in so far as these took place after designation of the site in question — from giving rise to deterioration of the habitats of the species concerned and disturbance of those species likely to have significant effects in view of the directive’s objective of ensuring the conservation of those species (see, by analogy, judgment of 14 January 2016, Commission v Bulgaria, C‑141/14, EU:C:2016:8, paragraphs 56 and 57 and the case-law cited).29Nonetheless, in order to establish an infringement of Article 6(2) of Directive 92/43, the Commission does not have to establish the existence of a cause-and-effect relationship between the operation of installations resulting from a project and significant disturbance caused to the species concerned. It is sufficient for the Commission to establish that there is a probability or risk that that operation might cause such disturbance (judgment of 14 January 2016, Commission v Bulgaria, C‑141/14, EU:C:2016:8, paragraph 58 and the case-law cited).30However, the fact that the Commission proves that there is such a probability or risk does not mean that it is impossible for the Member State concerned to establish that the measure in question meets the conditions laid down by Article 6(4) of Directive 92/43 and that its implications for the conservation objectives of the protected site have been assessed (see, to that effect, judgment of 14 January 2016, Grüne Liga Sachsen and Others, C‑399/14, EU:C:2016:10, paragraphs 56 and 57).31The merits of the specific arguments advanced in the Commission’s first complaint in the present action must be examined in the light of those considerations.The first complaint: the allegation that the Hellenic Republic authorised or tolerated building projects in the Kyparissia area– Arguments of the parties32The matters in respect of which the Commission has raised complaints against the Hellenic Republic are:the construction of buildings in Agiannaki (Greece) in 2006 and 2010;the authorisation to build three holiday houses in Vounaki (Greece) in 2012 and their actual construction in 2013;the commencement of work with a view to implementing a planned property development involving the construction of around 50 dwellings located between Agiannaki and Elaia (Greece), andthe fact that a permit was to be issued for the construction of four holiday houses in Elaia (together ‘the infrastructure at issue’).33The Commission takes the view that the infrastructure at issue is detrimental to the dune habitats located in the Kyparissia area and disturbs the Caretta caretta sea turtle, since it gives rise to pollution, vibrations, increased human presence and noise and light pollution. It adds that the construction work is taking place in close proximity to the turtles’ nesting area.34The Hellenic Republic admits that the region in which the Kyparissia area is located has, in particular, been subject to some demand for land but it maintains that activity in the construction sector was stronger in the past and that, as a result of the financial crisis, all such activities in that area have, in practice, ceased. The Hellenic Republic also asserts that all construction without a prior building permit is prohibited and that no new permits will be issued until the presidential decree has been adopted.– Findings of the Court35The Court finds that the infrastructure at issue, more specifically the development of building projects and the construction of dwellings, and its subsequent use, which are called in question by the Commission, are liable to have a significant effect on the habitats in the Kyparissia area. Likewise, the construction and use of that infrastructure, particularly on account of the noise, light and human presence entailed, are likely significantly to disturb the Caretta caretta sea turtle in the breeding period.36However, according to Article 4(5) of Directive 92/43, a site is subject to Article 6(2) to (4) of the directive only when it is placed on the list referred to in the third subparagraph of Article 4(2) thereof. The Dunes of Kyparissia were placed on the list of SCIs on 19 July 2006 by Decision 2006/613.37Moreover, the question whether a Member State has failed to fulfil its Treaty obligations must — except where the Commission, by reducing the scope of its application, accepts a later date — be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and the Court cannot take account of any subsequent changes. In the present case, the period within which the Hellenic Republic was to comply with the Commission’s reasoned opinion expired on 1 December 2012.38That being so, the relevant period, in respect of which a finding of infringement of Article 6(2) of Directive 92/43 may be made in the present action, runs only from 19 July 2006 to 1 December 2012.39First, as regards the complaint concerning the construction of buildings in Agiannaki in the course of 2006, it should be noted that the Commission has not demonstrated that the work concerned was authorised and carried out during the relevant period, that is to say, after 19 July 2006, and it is therefore not possible to establish that the work constitutes an infringement on the part of the Hellenic Republic.40In view of the findings made in paragraph 35 of this judgment, an infringement of Article 6(2) of Directive 92/43 must thus be found solely on account of the building work carried out in 2010.41Nevertheless, as regards the buildings completed before the relevant period, namely before 19 July 2006, in view of the findings made in paragraph 35 of this judgment, an infringement of Article 6(2) of Directive 92/43 must be found, as the Advocate General has observed in points 55 and 58 of her Opinion, because the Hellenic Republic has not sufficiently circumscribed the use of those buildings (see, by analogy, judgment of 24 November 2011, Commission v Spain, C‑404/09, EU:C:2011:768, paragraphs 124, 125 and 128). Whilst that use might be justified by the principle of legal certainty, by applying the derogation laid down in Article 6(4) of Directive 92/43 mutatis mutandis, the Hellenic Republic has not advanced such a justification — which would require inter alia an examination of whether there are other, less detrimental solutions and a weighing up of the interests concerned, based on an assessment under Article 6(3) of the implications for the conservation objectives of the protected site (see judgment of 14 January 2016, Grüne Liga Sachsen and Others, C‑399/14, EU:C:2016:10, paragraph 57 and the case-law cited).42Secondly, as regards the authorisation given in 2012 to build three holiday houses in Vounaki and their construction in 2013, whilst only the authorisation to build those houses comes within the relevant period for the purpose of assessing the alleged infringement, it is likely to cause appreciable damage to the dune habitats located in the Kyparissia area and to result in significant disturbance of the Caretta caretta sea turtle. That authorisation therefore constitutes an infringement of Article 6(2) of Directive 92/43.43Thirdly, as regards the commencement of work relating to the construction of around 50 dwellings located between Agiannaki and Elaia, it is true that the Commission has stated that the Greek authorities did not issue a permit for that purpose. However, there is no merit in the Hellenic Republic’s argument that, since that building work was prohibited unless a permit was first obtained, the commencement of the work cannot be attributed to it and does not prove that it has infringed Article 6(2) of Directive 92/43. In fact, as the Commission submits, the Hellenic Republic has not established an appropriate system of protection and has not enforced the prohibition on construction, with the result that unregulated, unplanned building works are commenced.44Fourthly, as regards the assertion that a permit was to be issued for the construction of four holiday houses in Elaia, it is sufficient to state that an allegation that such an intention exists, without production of the necessary proof that a permit will actually be issued, is not a sufficient basis for a finding of a failure to fulfil obligations under Article 6(2) of Directive 92/43.45Consequently, it must be found that (i) by tolerating the construction of houses in Agiannaki in 2010, the use, without a sufficient regulatory framework, of other houses in Agiannaki which were built in 2006 and the commencement of building works relating to around 50 dwellings located between Agiannaki and Elaia and (ii) by authorising in 2012 the construction of three holiday houses in Vounaki, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43. The remainder of the present part of the first complaint should be rejected.The first complaint: the allegation that the Hellenic Republic authorised the development of access routes to beaches in the Kyparissia area46The Commission complains that the Hellenic Republic tolerated, within the Kyparissia area:the opening up of five new roads to Agiannaki beach;the construction of a road link between the beach at Kalo Nero and Elaia that runs alongside the existing railway line, andthe asphalting of certain existing roads.47The Commission argues that the opening up of roads to the beach has destructive effects on that area. It submits that, despite the imposition of fines and the rehabilitation called for by the Greek authorities, those roads have remained operational. As a result, vehicles easily gain access to the beach and there is noise and pollution.48Similarly, the Commission considers that the asphalting of certain existing roads and the construction of a road link between the beach at Kalo Nero and Elaia that runs alongside the railway line are detrimental to the dune habitats and disturb the Caretta caretta sea turtle.49The Hellenic Republic contends that because of the morphology of the land, which is flat, and the fact that the Kyparissia area has been inhabited since very early times, access to the beach has always been easy. It maintains that there have long been a number of other thoroughfares in that area which arrive at right angles to the beach.50As regards the alleged opening up of five new roads to Agiannaki beach, the Hellenic Republic submits that those roads have existed since the early 1970s and that their existence and the fact that they are for common use are confirmed by a court ruling. In any event, since no prior environmental authorisation was obtained either for construction of four of the five roads or for the work carried out on the fifth road, fines were imposed on the construction company in question in 2012. The Hellenic Republic argues that several sets of criminal proceedings have been brought by the authorities and that a number of court cases are also pending which are concerned with those fines and the lawfulness of the roads.51As regards the road under construction alongside the railway line which would link the beach at Kalo Nero with Elaia, the Hellenic Republic maintains that Directive 92/43 does not require that an area which has been inhabited since very early times should become inaccessible and that, under Article 2(3) of the directive, measures taken pursuant to the directive must take account of economic, social and cultural requirements and regional and local characteristics. It submits that the railway line and the thoroughfare parallel to it are a long way from the beach and that the thoroughfare is necessary in order to gain access to each of the properties.52As to the complaint that parts of certain existing coastal roads have been asphalted, the Hellenic Republic maintains that that has reduced dust and noise. It argues that access to the beach depends on whether the road is passable rather than on whether the road is asphalted and that changing the road surface has no effect at all on the egg-laying ability of the Caretta caretta sea turtle.53First, the opening up of new roads to the sea facilitates vehicle access to the beach and is therefore a factor in increasing motor traffic. In fact, according to Opinion No 32/2015 of the Symvoulio tis Epikrateias (Council of State), which the Commission has put forward, the unregulated parking of cars at the ends and on the verges of the access roads causes damage to the dune habitats of the species listed for the Kyparissia area. As a result of that easier access and the increased number of motor vehicles, there is an escalation in noise and light, which disturbs the Caretta caretta sea turtle during egg-laying and the hatching of young turtles. The Hellenic Republic itself has, moreover, found that the opening up and construction of those roads was unlawful and has had damaging effects, as is apparent from the file before the Court, and more particularly from the documents in Annexes 17h and 17i to the application initiating these proceedings.54Although the Hellenic Republic neither authorised nor carried out the opening up of those roads in the Kyparissia area, it does not challenge the Commission’s complaint that the roads are operational despite the fact that criminal proceedings have been brought and various court cases are pending.55By confining itself (i) to bringing criminal proceedings against the executives of the company that built the roads in question and imposing administrative penalties on that company and (ii) to claiming, before the national courts, that the roads concerned are illegal and must be removed, the Hellenic Republic has failed to fulfil the specific obligation imposed on it by Article 6(2) of Directive 92/43 (see, by analogy, judgment of 9 November 1999, Commission v Italy, C‑365/97, EU:C:1999:544, paragraph 109).56As the Commission submits, the Hellenic Republic should have acted to ensure that those thoroughfares did not remain operational and that use of them did not significantly disturb the Caretta caretta sea turtle or impair the dune habitats located in the Kyparissia area.57By failing to take provisional measures for the protection of that area in order to restrict use of the thoroughfares at issue until the conclusion of the above-mentioned court proceedings concerning the legality and possible closure of those thoroughfares, when, as the Advocate General has noted at point 77 of her Opinion, there is nothing to suggest that such measures would not be possible either for practical reasons or for reasons relating to EU law, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.58Secondly, as regards the road under construction alongside the railway line which would connect the beach at Kalo Nero with Elaia, it should be noted that it follows the existing railway line and that the Hellenic Republic has not been challenged by the Commission as to the fact that, with the exception of two places, that road is located at a distance of over 200 metres from the coast and is not linked to thoroughfares giving access to the beach. In those circumstances, the Commission has not demonstrated that there is a sufficient likelihood that the road under construction alongside the railway line which would connect the beach at Kalo Nero with Elaia will have a significant effect on the dune habitats and the Caretta caretta sea turtle.59Thirdly, as regards the asphalting of certain coastal roads, the paving of sandy tracks facilitates their use, especially by motor vehicles; that is likely to have a significant effect on the dune habitats located in the Kyparissia area and to increase appreciably disturbance of the Caretta caretta sea turtle. The Hellenic Republic, by tolerating the asphalting of roads within the site, has thus infringed Article 6(2) of Directive 92/43.60Consequently, the Court finds that, by having tolerated the opening up of five new roads to Agiannaki beach and the asphalting of certain existing roads and thoroughfares, the Hellenic Republic has not prevented the development of access routes to that beach, which is located in the Kyparissia area, and has therefore failed to fulfil its obligations under Article 6(2) of Directive 92/43. This complaint must, however, be rejected in so far as it concerns the construction of a road link between the beach at Kalo Nero and Elaia alongside the existing railway line.The first complaint: the allegation that the Hellenic Republic tolerated illegal wild camping in the Kyparissia area61The Commission complains that the Hellenic Republic has tolerated:the road behind Kalo Nero beach being used as a camping area for caravans, and‘wild camping’ in a pine forest in the dune land at Elaia beach.62According to the Commission, wild camping is problematic from the point of view of dune conservation and the conservation of forest habitats. It also disturbs the Caretta caretta sea turtle.63The Hellenic Republic, while stating that wild camping is prohibited throughout the country, acknowledges that, despite the prohibition and police patrols, the practice still goes on. It maintains that there has been wild camping in the Kyparissia area for at least 30 or 40 years but that it has gradually been reduced.64It is common ground that the Hellenic Republic does not dispute that it has failed to take adequate measures to enforce the prohibition on wild camping in the Kyparissia area. It is also common ground that wild camping within that area is likely to cause appreciable damage to the dune habitats concerned and to entail significant disturbance of the Caretta caretta sea turtle.65Consequently, the Court finds that, by failing to take adequate measures to enforce the prohibition on wild camping close to the beaches at Kalo Nero and Elaia, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.The first complaint: the allegation that the Hellenic Republic tolerated the operation of beach bars in the Kyparissia area66The Commission complains that the Hellenic Republic has tolerated the operation of at least three bars between Elaia and Kalo Nero. It submits that at night those bars are noisy and lit up and consequently disturb the Caretta caretta sea turtle during egg-laying and are a danger to the young, newly hatched turtles.67The Commission claims that there was a beach party at Kalo Nero on 13 August 2011. Whilst accepting that the Greek authorities have stated that they intend to close these bars, the Commission asserts that when its agents carried out their visit on 17 July 2012, the bars were still in existence. According to the Commission, the bars were not in operation in 2013 but the structures were still there.68The Hellenic Republic contends that, during 2013 and 2014, no outlet operated on the beach in question and all the illegal bars and their fixtures had been removed. It states that the only exception is the beach at Kalo Nero where wooden structures of that kind will only subsequently be removed.69Given that the question whether a Member State has failed to fulfil obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and that the Court cannot take account of any subsequent changes, the various matters of fact put forward by the parties which post-date 1 December 2012, the date by which the Hellenic Republic was to comply with the Commission’s reasoned opinion, will not be taken into account in the Court’s assessment of the alleged failure to fulfil obligations.70The Court finds that the Hellenic Republic has not produced any evidence to show that, before the expiry of the period prescribed in the reasoned opinion, it had taken the measures necessary to prevent the breeding of the Caretta caretta sea turtle from being disturbed by the operation of the bars at issue.71Consequently, by failing to take the measures necessary to restrict the operation of bars between Elaia and Kalo Nero, on the breeding beaches of the Caretta caretta sea turtle, and to ensure that the various forms of pollution caused by those bars do not disturb that species, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.The first complaint: the allegation that the Hellenic Republic allowed beach furniture and structures to remain on the beaches in the Kyparissia area72The Commission complains that the Hellenic Republic tolerated, within the Kyparissia area, an excessive amount of beach furniture, namely umbrellas and sunbeds. It also maintains that although the Greek authorities issued an order for the demolition of a number of platforms put up on the beaches in that area, that demolition never took place and authorisation was even given, on 28 July 2011, for the installation of a platform for use by the Messina Mare Hotel.73According to the Commission, these beach facilities, inasmuch as they are fixed on the beach or left there at night, have a negative impact on the breeding areas of the Caretta caretta sea turtle, since they reduce the space available for nests and make it difficult for the turtles to move around.74The Hellenic Republic argues that, in 2013 and 2014, there were no umbrellas or sunbeds on the beaches at Vounaki, Elaia and Agiannaki. There were still some umbrellas and sunbeds on the beach at Kalo Nero but they were outside the breeding area of the Caretta caretta sea turtle. As regards the platform near the Messina Mare Hotel, the Hellenic Republic asserts that it is a ramp for the assistance of disabled persons visiting the hotel.75First, so far as umbrellas and sunbeds are concerned, the Hellenic Republic merely states that, since 2013, in other words after the expiry of the period prescribed by the reasoned opinion, such beach furniture has been present solely on the beach at Kalo Nero, away from the breeding area of the Caretta caretta sea turtle. The Hellenic Republic thus implicitly accepts that it had not previously reduced the amount of beach furniture in the turtles’ breeding area.76Secondly, as regards the platforms constructed on the beaches within the Kyparissia area, the Hellenic Republic — which disputes neither their presence at the end of the period set in the Commission’s reasoned opinion nor the likelihood of them causing appreciable damage to the dune habitats in the Kyparissia area and entailing significant disturbance of the Caretta caretta sea turtle — merely asserts that the platform near the Messina Mare Hotel for which authorisation was given is a ramp for the use of disabled persons.77The Commission does not dispute that the platform is intended for that purpose. Whilst the construction of a platform designed to facilitate the movement of disabled persons may, in principle, be regarded as having been carried out for imperative reasons of overriding public interest relating to human health, for the purposes of Article 6(4) of Directive 92/43, such a justification requires there to be inter alia an examination of whether there are other, less detrimental solutions and a weighing up of the interests concerned, based on an assessment under Article 6(3) of the directive of the implications for the conservation objectives of the protected site (see, to that effect, judgment of 14 January 2016, Grüne Liga Sachsen and Others, C‑399/14, EU:C:2016:10, paragraph 57 and the case-law cited). As the Hellenic Republic has failed to provide any explanation in that regard, the platform near the Messina Mare Hotel for which authorisation was given must be considered also to constitute an infringement of Article 6(2) of Directive 92/43.78Consequently, the Court finds that, by failing to take the measures necessary to reduce, within the Kyparissia area, the furniture and various structures on the breeding beaches of the Caretta caretta sea turtle and by authorising the construction of a platform near the Messina Mare Hotel, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.The first complaint: the allegation that the Hellenic Republic tolerated the use of heavy vehicles for beach cleaning in the Kyparissia area79The Commission complains that the Hellenic Republic has tolerated the use of heavy vehicles, by the Municipality of Avlona (Greece), for beach cleaning: it submits that the weight of the vehicles compacts the sand and that vibration destroys the nests of the Caretta caretta sea turtle.80The Hellenic Republic contends that this is not a permanent practice but an isolated case and that no further cases have been observed since the letter of formal notice was sent. Furthermore, the national rules adopted in July 2013 and May 2014 by the Ministry of the Environment are intended to prevent such incidents and provide that, during the turtles’ breeding period, beach cleaning must be carried out manually.81Although the national rules relied on by the Hellenic Republic were adopted after the expiry of the period set in the reasoned opinion and cannot be taken into account by the Court for the purpose of assessing the alleged infringement, this complaint cannot be accepted. Not only does the Commission fail to challenge the Hellenic Republic’s statement that the case in question was an isolated case but it also fails to put forward any evidence to show that there was a repetition of such incidents or a need to take specific measures in order to prevent them.The first complaint: the allegation that the Hellenic Republic tolerated unlawful sand extraction on the beaches in the Kyparissia area82The Commission complains that the Hellenic Republic tolerated unregulated sand extraction on the beaches in the Kyparissia area.83The Hellenic Republic contends that the Commission has failed to produce any evidence concerning any such sand extraction.84The Commission reproduces, however, in its reply a table that allegedly shows that the Hellenic Republic itself acknowledges that there is a likelihood of significant damage to the Kyparissia area as a result of sand extraction.85Article 128(1) of the Rules of Procedure provides that, in reply or rejoinder, a party may produce or offer further evidence in support of his arguments and that he must give reasons for the delay in submitting such evidence.86As the Commission has not given reasons for the delay in submitting the table concerned, the latter cannot be taken into account, as evidence, when the Court determines whether the Hellenic Republic has failed to fulfil its obligations as alleged by the Commission.87Since the Commission puts forward no other material capable of substantiating the complaint in question, the action must be dismissed so far as this point is concerned.The first complaint: the allegation that the Hellenic Republic tolerated the extension of agricultural activities in the Kyparissia area88extended agricultural use of the dunes;ploughing of the dunes between Elaia and Agiannaki, andsheep herding on the breeding beaches of the Caretta caretta sea turtle.89The Commission argues that the extended agricultural use of the dunes destroys the dune land where the turtles breed and that water from irrigation is liable to affect their nearby nests. The increase in humidity caused by that cultivation changes the underground temperature, which results in a greater number of young male hatchlings and is thus likely to bring about an imbalance in the Caretta caretta sea turtle population.90The Commission asserts that, between Agiannaki and Elaia, ploughing of the dunes took place from 20 February to 3 March 2013, which destroyed a number of the habitats of the Caretta caretta sea turtle, no remedial action having been taken.91The Commission submits that sheep herding on the beaches where those turtles breed results in the direct and indirect destruction of nests. The nests are trampled on and the eggs are destroyed by the ground vibrations that ensue.92The Hellenic Republic submits that agricultural activity has considerably decreased over the last 20 years and that, up to 2001, the reduction in cultivated land was around 25% to 30% depending on the places concerned. In the Kyparissia area, there has, in its submission, been no extension of land cultivation to the dunes, given that the sandy substratum is not suitable for that purpose and that the region beyond that area is particularly fertile.93The Hellenic Republic maintains that the ploughing to which the Commission refers was carried out on agricultural land.94Sheep herding on the beaches where the Caretta caretta sea turtle breeds is, in its view, impossible, given that no plants grow on the beach. In any event, according to the Hellenic Republic, the turtles bury their eggs at a depth that is such that the nests cannot be destroyed because of the trampling of sheep and the ensuing ground vibrations.95In the first place, as regards the alleged extended agricultural use of the dunes, it should be stated that, as the Advocate General has observed at point 105 of her Opinion, the Commission has adduced no evidence capable of rebutting the Hellenic Republic’s claim that no such extension of agricultural usage is to be found in the Kyparissia area. It follows that the Commission’s complaint cannot be accepted so far as this point is concerned.96In the second place, since the Commission places the alleged ploughing of the dunes at a date following the expiry of the period that it set in its reasoned opinion, nor may that objection be raised against the Hellenic Republic, with the result that the Commission’s complaint must also be rejected so far as this point is concerned.97In the third place, the Court notes that the Commission does not dispute the Hellenic Republic’s assertion that no plants grow on the beach where the Caretta caretta sea turtle breeds and that the photographs produced by the Commission merely show the presence of a few sheep on that beach rather than any sheep-herding activity. In any event, the Commission has not produced any evidence establishing that the presence of sheep, as shown in those photographs, would be likely to damage turtle nests buried at a depth of between 40 cm and 60 cm in the sand. In those circumstances, the Commission’s complaint must also be rejected as far as this point is concerned.The first complaint: the allegation that the Hellenic Republic tolerated light pollution in the Kyparissia area98The Commission complains that the Hellenic Republic has failed to take appropriate steps to prevent municipal street lighting and lighting near the beach, as well as light from restaurants, hotels and shops close to the Kyparissia area, from disturbing the Caretta caretta sea turtle during egg-laying and, above all, from affecting the newly hatched turtles as they move towards the sea. It maintains that those phenomena were observed when its agents conducted their on-the-spot visit on 17 July 2012.99According to the Hellenic Republic, the street lighting has been in place for many years and was installed before national rules were adopted requiring there to be an appropriate assessment, as provided for in Directive 92/43. It contends that, in order to address this problem, rules were adopted in 2014, which apply to the beaches where the turtles breed and lay down, in particular, an obligation to make sure that light emanating from private and public sources does not reach the beach, thereby ensuring that the young turtles are not disorientated. Similarly, beach-front businesses and hotels are prohibited from using spotlights. There is also a plan to install shading panels and to use special lamps.100As regards the Hellenic Republic’s argument that street lighting was in place before such facilities were subject to an appropriate assessment pursuant to Directive 92/43, it is sufficient to note that, under that directive, the prohibition on deterioration laid down therein is not limited to an obligation, on the part of the Member State concerned, to prohibit or bring to an end only ‘new’ harmful activities.101It must therefore be found that, by failing to take the appropriate protective measures in order to prevent, as of 19 July 2006 when the Kyparissia area was placed on the list of SCIs, existing street lighting from disturbing the Caretta caretta sea turtle, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43 (see, by analogy, judgment of 24 November 2011, Commission v Spain, C‑404/09, EU:C:2011:768, paragraphs 127 and 128).102The Court also upholds the Commission’s complaint in so far as it concerns the disturbance of the Caretta caretta sea turtle caused by the lights from restaurants, hotels and shops around the Kyparissia area.103Indeed, the Hellenic Republic merely states in that regard that in 2014 — that is, after the expiry of the period prescribed by the Commission in its reasoned opinion — it adopted rules to address this problem, which tends, by implication, to show that that Member State had not previously taken the requisite measures to deal with the disturbance of the Caretta caretta sea turtle to which such light pollution gave rise.104Consequently, by failing to take the measures necessary so as to ensure that the light pollution affecting the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.The first complaint: the allegation that the Hellenic Republic has allowed fishing in close proximity to the Kyparissia area105The Commission submits that fishing in close proximity to the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is a source of disturbance for the species since turtles which are on the way to lay eggs or are returning from nests may be caught up in the nets or collide with the fishing vessels. The Commission relies in this regard on a report annexed to its application, according to which there is fishing directly off the beach using bottom-set gillnets and, sometimes, vessels fishing with trawl nets at barely one kilometre from the beach.106The Hellenic Republic contends that since the system of protection was established in this area, fishing has decreased and various EU instruments have also played a part in reducing fishing in the region. There are very few fishing vessels and an information campaign is designed to prevent turtles being caught accidentally.107A general statement of that kind relating to a reduction in fishing and to information given to fishermen does not call in question the Commission’s contentions, which are supported by the findings in the report annexed to its application.108Consequently, by failing to take the measures necessary so as to ensure that fishing in the waters off the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed, the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43.The first complaint: the allegation that the Hellenic Republic has tolerated the use of pleasure craft and pedalos off the beaches in the Kyparissia area109According to the Commission, the use of pleasure craft and pedalos in close proximity to the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is a source of disturbance for the turtles. Some of them have even been killed following collisions with these craft. The Commission considers that the material put forward in Annexes 18 and 21 to its application substantiate this complaint.110In the Hellenic Republic’s submission, that material does not prove the Commission’s case and the latter has not established that the turtles have died as a result of injuries caused by pleasure craft and pedalos.111In proceedings for a declaration of failure to fulfil obligations, it is for the Commission to prove the existence of the alleged infringement and to provide the Court with the information necessary for it to determine whether the infringement is made out (judgment of 9 July 2015, Commission v Ireland, C‑87/14, EU:C:2015:449, paragraph 22 and the case-law cited).112However, it must be stated (i) that the Commission, in referring in its application to annexes thereto, without providing any specific explanations that might be relevant in that regard, does not produce the information necessary for the Court to determine whether the alleged infringement has been made out and, in any event, (ii) that those annexes do not clearly identify such information.113The first complaint raised by the Commission in support of this action must therefore be rejected so far as this point is concerned.114That being the case, it should be declared that:by tolerating the construction of houses in Agiannaki in 2010, the use, without a sufficient regulatory framework, of other houses in Agiannaki which were built in 2006 and the commencement of building works relating to around 50 dwellings located between Agiannaki and Elaia, and by authorising in 2012 the construction of three holiday houses in Vounaki;by tolerating the development of access routes to the beach in the Kyparissia area, namely the opening up of five new roads to Agiannaki beach and the asphalting of certain existing roads and thoroughfares;by failing to take adequate measures to enforce the prohibition on wild camping close to the beaches at Kalo Nero and Elaia;by failing to take the measures necessary to restrict the operation of bars between Elaia and Kalo Nero, on the breeding beaches of the Caretta caretta sea turtle, and by failing to ensure that the various forms of pollution caused by those bars do not disturb that species;by failing to take the measures necessary to reduce, within the Kyparissia area, the furniture and various structures found on the breeding beaches of the Caretta caretta sea turtle and by authorising the construction of a platform near the Messina Mare Hotel;by failing to take the measures necessary so as to ensure that the light pollution affecting the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed; andby failing to take the measures necessary so as to ensure that fishing in the waters off the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed,the Hellenic Republic has failed to fulfil its obligations under Article 6(2) of Directive 92/43. The second complaint alleging infringement of Article 6(3) of Directive 92/43 Arguments of the parties115By the second complaint in support of its action the Commission alleges that the Hellenic Republic has infringed Article 6(3) of Directive 92/43.116The Commission complains that the Hellenic Republic has failed to fulfil its obligations under that provision by omitting to undertake an appropriate assessment of the implications of projects not directly connected with or necessary to the management of the Kyparissia area but likely to have a significant effect thereon. According to the Commission such an assessment of the implications should in particular have been carried out before:the grant of a building permit and the construction of various dwellings within the Kyparissia area;the opening up of new roads and the asphalting of certain existing roads within that area;the construction of new bars on breeding beaches of the Caretta caretta sea turtle in that area;the installation of street lighting along the beach in the Kyparissia area, andthe increase in the land under cultivation in the sand dune system in the Kyparissia area.117According to the Commission, those actions were undertaken without any prior assessment, whether that be an assessment of the individual implications for each of those actions or an assessment of the cumulative implications as a whole. It submits that none of those actions is directly connected with or necessary to the management of the Kyparissia area and maintains that they are likely to have a significant impact on that area given its importance for the Caretta caretta sea turtle and for the natural habitat concerned.118The Hellenic Republic contends that all the plans or projects that have been implemented in the region without an ‘appropriate assessment’ concerned construction activities that were completed before the introduction of the obligation to carry out such an assessment. It maintains, with regard to the plans and projects implemented after that date, that either the requirements of Article 6(3) of Directive 92/43 have been complied with or, when that was not the case, administrative and criminal proceedings have been commenced.119The Hellenic Republic asserts that the requirements and procedures laid down in Article 6(3) of Directive 92/43 have been implemented under national law and that the issue of building permits and the carrying out of construction work have been suspended until the presidential decree is adopted. Thus it has not failed to fulfil its obligations under Article 6(3) of Directive 92/43.Findings of the Court120Article 6(3) of Directive 92/43 establishes an assessment procedure intended to ensure, by means of a prior examination, that a plan or project not directly connected with or necessary to the management of the site concerned but likely to have a significant effect on it is authorised only to the extent that it will not adversely affect the integrity of that site (judgment of 11 September 2012, Nomarchiaki Aftodioikisi Aitoloakarnanias and Others, C‑43/10, EU:C:2012:560, paragraph 110).121Accordingly, that provision is relevant only when the competent national authorities grant authorisation for a project, as that authorisation must in such a case be preceded by an appropriate assessment of the implications of the project for the site concerned.122Consequently, Article 6(3) of Directive 92/43 does not apply in respect of any action whose implementation was subject to authorisation but which was carried out without authorisation and thus unlawfully. That being the case, there can in this regard be no finding of failure to fulfil obligations on account of an infringement of Article 6(3).123By contrast, that provision does apply to actions which were undertaken with a prior authorisation, namely (i) the houses in Agiannaki work on which was carried out in 2010, (ii) the three holiday houses in Vounaki in 2012 and (iii) the platform near the Messina Mare Hotel.124Since those actions were likely to entail a loss of dune surface and also to disturb the Caretta caretta sea turtle, a prior assessment of their implications should have been carried out prior to their authorisation.125In those circumstances, given that the Hellenic Republic does not maintain that those authorisations were granted before 19 July 2006, the date on which the Kyparissia site was placed on the list of SCIs, or that they were preceded by assessments of their implications for the site in accordance with Article 6(3) of Directive 92/43, the Court finds that, by issuing permits for houses built in 2010 in Agiannaki, for three holiday houses in Vounaki in 2012 and for the construction of a platform near the Messina Mare Hotel, the Hellenic Republic has failed to fulfil its obligations under that provision.126The complaint is rejected as to the remainder. The third complaint, alleging failure to comply with Article 12(1)(b) and (d) of Directive 92/43 127The Commission alleges that the Hellenic Republic has failed to fulfil its obligations under Article 12(1)(b) and (d) of Directive 92/43 by not taking the requisite measures to establish and apply an effective system of strict protection for the Caretta caretta sea turtle in the Kyparissia area so as to prevent any disturbance to that species during its breeding period and any activity likely to degrade or damage its breeding sites.128The Commission recalls that, under that provision, a system of strict protection for the animal species listed in Annex IV(a) of Directive 92/43 must be established in order to prohibit deliberate disturbance of these species, particularly during the period of breeding, and deterioration or destruction of breeding sites or resting places. That system of strict protection requires the establishment of a comprehensive legal framework as well as the adoption and implementation of concrete and specific protection measures.129The Hellenic Republic contends that it has not infringed Article 12(1)(b) and (d) of Directive 92/43.The third complaint: the allegation that the Hellenic Republic has failed to establish a comprehensive and coherent legal framework130The Commission maintains that a system of strict protection, as provided for in Article 12(1) of Directive 92/43, presupposes the adoption of coherent and coordinated measures of a preventive nature. It states that the Hellenic Republic has acknowledged that such a comprehensive and coherent legal framework has not yet been adopted but is currently being developed.131The Commission submits that, overall, the legal instruments concerning this area that are in force in the Member State are insufficient for the purposes of the protection provided for in Article 12(1)(b) and (d) of Directive 92/43. It submits that the first mention of the existence of those legal instruments was made by the Hellenic Republic in the defence. Furthermore, some of those instruments predate the entry into force of Directive 92/43 and therefore do not include specific provisions capable of meeting the requirements of Article 12 of the directive.132The Commission maintains that, in the absence of an integrated and coherent national legislative framework, the strict protection of the Caretta caretta sea turtle and its breeding sites cannot be ensured. A system of protection cannot be established by a piecemeal set of isolated measures which concern environmental protection in general but are not designed to prevent, by specific means, all deliberate disturbance of the species concerned during the period of breeding and all activity likely to cause the deterioration or destruction of its breeding sites.133The Commission stresses that the fact that there does not appear to have been a drop in the number of nests of the Caretta caretta sea turtle within the Kyparissia area cannot, in itself, call in question the finding that the Hellenic Republic has not adopted measures for effective protection. It argues that the high number of nests that have recently been observed is accounted for by the fact that the Caretta caretta sea turtle has been protected since 1992 and that, as a general rule, the effects on that species become apparent 20 years later. In addition, it is apparent from the judgments of 30 January 2002, Commission v Greece (C‑103/00, EU:C:2002:60), and of 16 March 2006, Commission v Greece (C‑518/04, not published, EU:C:2006:183) that a decline in the number of nests is not necessary in order for there to be a finding of disturbance of such a kind as to constitute an infringement of Article 12 of Directive 92/43.134The Hellenic Republic contends that the Commission is incorrect in maintaining that the Hellenic Republic has not adopted an adequate legislative system of protection and that it has not succeeded in implementing specific and efficient protective measures. It submits that the Commission cannot claim that deterioration of habitats and disturbances having a significant impact on species are occurring in the Kyparissia area when an appropriate assessment of the implications of the activities carried out in that area has not even been undertaken.135According to the Hellenic Republic, since the Caretta caretta sea turtle population is steadily increasing and there is no risk of its natural range being reduced, there is no ground for invoking an infringement of Article 12(1)(b) and (d) of Directive 92/43.136The Hellenic Republic considers that the Greek legal order contains a broad, coherent institutional framework, which is particularly strict and extremely efficient so far as protection of the Caretta caretta sea turtle is concerned. It refers in that regard to the various legislative and regulatory measures which together will provide an adequate legal framework until the presidential decree is adopted.137The Hellenic Republic contends that it has never maintained that that set of measures was adopted specifically for the Kyparissia area and the species in question but that the measures protect them effectively and thus ensure a system of sufficient and strict protection for the purposes of Article 12 of Directive 92/43. That provision does not require that the system of strict protection be set out in a single piece of legislation.138Lastly, the Hellenic Republic describes the main features, measures and effects of the draft presidential decree and indicates that it will be adopted shortly, once the Symvoulio tis Epikrateias (Council of State) has issued an opinion. It nevertheless points out that the existence of this draft presidential decree does not mean that there was not previously a system of strict and effective protection in the Greek legal order.139It should be recalled that Article 12(1)(b) and (d) of Directive 92/43 requires Member States to take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) to the directive, in their natural range, prohibiting deliberate disturbance of specimens of those species, particularly during the periods of breeding, rearing, hibernation and migration, and deterioration or destruction of breeding sites or resting places.140The Court has already held that the transposition of that provision requires the Member States not only to adopt a comprehensive legislative framework but also to implement practical and specific protection measures in that regard and that the system of strict protection presupposes the adoption of coherent and coordinated measures of a preventive nature (judgment of 15 March 2012, Commission v Cyprus, C‑340/10, EU:C:2012:143, paragraphs 60 and 61 and the case-law cited).141A collection of legal instruments does not constitute a comprehensive legislative and regulatory framework when those instruments do not prevent breaches of the prohibition on deterioration laid down in Article 6(2) of Directive 92/43 or when the instruments must regularly be supplemented so that the protection required by Article 12 of the directive can be ensured.142The fact that the Court has found, in paragraph 114 of this judgment, a number of breaches of the prohibition on deterioration laid down in Article 6(2) of Directive 92/43 gives reason to suppose that a comprehensive and coherent legislative framework is lacking so far as protection of the Kyparissia area is concerned.143That supposition is confirmed by the fact that the Hellenic Republic has adopted various ministerial orders, including on 23 May 2013, 23 July 2013, 14 February 2014 and 8 May 2014, concerning in particular appropriate use of the beaches, the cessation of certain agricultural activities, the restriction of light emanating from private beach establishments, suspension of the issue of building permits, a ban on certain building activities and a ban on the opening up and asphalting of roads in the Kyparissia area.144The fact that legal instruments of that kind were adopted after the expiry of the period prescribed in the reasoned opinion sufficiently demonstrates that, before that deadline, the national legislative framework was incomplete.145The Hellenic Republic is thus not justified in maintaining that the presidential decree, currently under adoption, for the protection of that area, is solely intended to gather together and consolidate legislation which was already in force at the end of that period.146On the contrary, it is apparent from the opinion of the Symvoulio tis Epikrateias (Council of State) that the Hellenic Republic’s obligations arising under EU law demand new regulations for the protection of the Kyparissia area and require that a new draft decree be lodged before that body as soon as possible.147Similarly, there is no merit in the Hellenic Republic’s claim that, given that the Caretta caretta sea turtle population is steadily increasing, an allegation that it has failed to fulfil its obligations under Article 12(1)(b) and (d) of Directive 92/43 cannot be made against it.148As the Commission has argued, a factor such as the stability of the population of the species cannot, in itself, call in question a finding that the relevant national legislative framework is incomplete (see, by analogy, judgment of 16 March 2006, Commission v Greece, C‑518/04, EU:C:2006:183, paragraph 21).149In those circumstances, the Court finds that, by failing to adopt a comprehensive, coherent and strict legislative and regulatory framework for the protection of the Caretta caretta sea turtle in the Kyparissia area, the Hellenic Republic has failed to fulfil its obligations under Article 12(1)(b) and (d) of Directive 92/43.The third complaint: the allegation that the Hellenic Republic has failed to implement concrete, specific and effective protection measures150According to the Commission, the Hellenic Republic does not apply any specific, effective measures so as to prevent, on the one hand, disturbance of the Caretta caretta sea turtle during the breeding period and, on the other, activities likely to cause deterioration or destruction of its breeding areas.151It submits that Article 12(1)(d) of Directive 92/43 provides for stricter protection than the protection envisaged in points (a) to (c) of Article 12(1) and that point (d) does not limit the prohibition to deliberate acts.152Accordingly, in order to assess to what extent a given activity is ‘of such a kind as to cause deterioration or destruction of breeding sites’, the Commission submits that account must be taken of the fact that the Caretta caretta sea turtle only lays eggs every two or three years and that it is particularly sensitive and vulnerable to noise and light pollution throughout its breeding process, that is to say, during the incubation period and when the young turtles head towards the sea.153The Commission maintains that, in the Kyparissia area, the breeding sites of the Caretta caretta sea turtle are likely to be degraded or destroyed by various human activities that it mentions in its action, which create obstacles impairing access to breeding sites and cause light and noise pollution.154According to the Hellenic Republic, its institutional and legal framework regulating activities within the Kyparissia area prohibits activities that are likely to affect the breeding sites of the Caretta caretta sea turtle deliberately or to harm the species.155It contends that, in accordance with the Commission’s guidelines, the deterioration of an area is assessed on the basis of the conservation status of each of the species and habitats; the conservation status is evaluated by reference to the initial conditions at the time when the proposal to classify the area concerned as a protected area was made.156Moreover, the assessment of the possible implications for the integrity of the area, so far as its ecological functions are concerned, must be undertaken at the level of the protected area as a whole rather than on a more reduced scale by isolating small areas of the beach in order to be able to establish significant disturbance.157As regards the alleged infringement of the prohibition on disturbance of protected species, laid down in Article 12(1)(b) of Directive 92/43, it should be stated that the infringements of Article 6(2) of the directive, as found in paragraph 114 of this judgment, all constitute prohibited disturbances of the Caretta caretta sea turtle.158As the Advocate General has stated in point 143 of her Opinion, the same is true so far as the construction of buildings in Agiannaki in 2006 is concerned. Unlike the general prohibition on deterioration and disturbance laid down in Article 6(2) of Directive 92/43, the protection of species referred to in Article 12 of the directive is not, by virtue of Article 4(5) thereof, conditional upon the Dunes of Kyparissia being placed on the list referred to in the third subparagraph of Article 4(2) of the directive. As is clear from Article 23(1) of the directive, that protection has been applicable since 1994.159Given that those responsible for those disturbances at least accepted the possibility of the Caretta caretta sea turtle being disturbed during the breeding period, the condition as to deliberate action in Article 12(1)(b) of Directive 92/43 is met (see, to that effect, judgment of 18 May 2006, Commission v Spain, C‑221/04, EU:C:2006:329, paragraph 71).160Accordingly, the Court finds that, by failing to take, within the prescribed period, all the specific measures necessary to prevent the deliberate disturbance of the Caretta caretta sea turtle during its breeding period, the Hellenic Republic has failed to fulfil its obligations under Article 12(1)(b) of Directive 92/43.161The Commission’s action must also be upheld in so far as it complains that the Member State has failed to take the measures necessary to enforce the prohibition on deterioration or destruction of breeding sites, as referred to in Article 12(1)(d) of Directive 92/43.162A number of infringements of Article 6(2) of Directive 92/43, as found in paragraph 114 of this judgment, constitute, in themselves, activities which necessarily cause deterioration of the breeding sites of the Caretta caretta sea turtle.163It follows from the foregoing considerations that the Hellenic Republic:by failing to adopt a comprehensive, coherent and strict legislative and regulatory framework for the protection of the Caretta caretta sea turtle within the Kyparissia area;by failing to take, within the prescribed period, all the specific measures necessary to prevent the deliberate disturbance of the Caretta caretta sea turtle during its breeding period; andby failing to take the measures necessary to enforce the prohibition on deterioration or destruction of the breeding sites of that species,has failed to fulfil its obligations under Article 12(1)(b) and (d) of Directive 92/43. Costs 164Under Article 138(3) of the Rules of Procedure, the parties are to bear their own costs where each party succeeds on some and fails on other heads.165Since the Commission and the Hellenic Republic have each succeeded on some and failed on other heads, they must be ordered to bear their own costs.On those grounds, the Court (Fourth Chamber) hereby: 1. Declares that the Hellenic Republic, by tolerating the construction of houses in Agiannaki (Greece) in 2010, the use, without a sufficient regulatory framework, of other houses in Agiannaki which were built in 2006 and the commencement of building works relating to around 50 dwellings located between Agiannaki and Elaia (Greece), and by authorising in 2012 the construction of three holiday houses in Vounaki (Greece); by tolerating the development of access routes to the beach in the Dunes of Kyparissia area (Greece), namely the opening up of five new roads to Agiannaki beach and the asphalting of certain existing roads and thoroughfares; by failing to take adequate measures to enforce the prohibition on wild camping close to the beaches at Kalo Nero (Greece) and Elaia; by failing to take the measures necessary to restrict the operation of bars between Elaia and Kalo Nero, on the breeding beaches of the Caretta caretta sea turtle, and by failing to ensure that the various forms of pollution caused by those bars do not disturb that species; by failing to take the measures necessary to reduce, within the Kyparissia area, the furniture and various structures found on the breeding beaches of the Caretta caretta sea turtle and by authorising the construction of a platform near the Messina Mare Hotel; by failing to take the measures necessary so as to ensure that the light pollution affecting the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed; and by failing to take the measures necessary to ensure that fishing in the waters off the breeding beaches of the Caretta caretta sea turtle in the Kyparissia area is adequately curtailed, has failed to fulfil its obligations under Article 6(2) of Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, as amended by Council Directive 2006/105/EC of 20 November 2006; 2. Declares that, by issuing permits for houses built in 2010 in Agiannaki, for three holiday houses in Vounaki in 2012 and for the construction of a platform near the Messina Mare Hotel, the Hellenic Republic has failed to fulfil its obligations under Article 6(3) of Directive 92/43; 3. by failing to adopt a comprehensive, coherent and strict legislative and regulatory framework for the protection of the Caretta caretta sea turtle in the Kyparissia area; by failing to take, within the prescribed period, all the specific measures necessary to prevent the deliberate disturbance of the Caretta caretta sea turtle during its breeding period; and by failing to take the measures necessary to enforce the prohibition on deterioration or destruction of the breeding sites of that species, has failed to fulfil its obligations under Article 12(1)(b) and (d) of Directive 92/43; 4. Dismisses the remainder of the action; 5. Orders the European Commission and the Hellenic Republic to bear their own costs. [Signatures]( *1 ) Language of the case: Greek. | 734e5-8251039-4626 | EN |
The failure by a lender granting consumer credit to include in the agreement certain essential information may be penalised by depriving the lender of entitlement to interest and charges | 9 November 2016 ( *1 )‛Reference for a preliminary ruling — Directive 2008/48/EC — Consumer protection — Consumer credit — Article 1, Article 3(m), Article 10(1) and (2), Article 22(1) and Article 23 — Interpretation of the expressions ‘on paper’ and ‘on another durable medium’ — Contract referring to another document — Requirement for the agreement to be in ‘written form’ within the meaning of national law — Indication of information required by reference to objective criteria — Information to be included in a fixed-term credit agreement — Effect of failure to include mandatory information — Proportionality’In Case C‑42/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Okresný súd Dunajská Streda (District Court, Dunajská Streda, Slovakia), made by decision of 19 December 2014, received at the Court on 2 February 2015, in the proceedings Home Credit Slovakia, a.s. v Klára Bíróová, THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, M. Vilaras, J. Malenovský, M. Safjan (Rapporteur) and D. Šváby, Judges,Advocate General: E. Sharpston,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 24 February 2016,after considering the observations submitted on behalf of:—the Slovak Government, by B. Ricziová, acting as Agent,the German Government, by T. Henze and J. Kemper, acting as Agents,the European Commission, by G. Goddin and A. Tokár, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 9 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 1, Article 3(m), Article 10(1) and (2), Article 22(1) and Article 23 of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC (OJ 2008 L 133, p. 66; corrigenda OJ 2009 L 207, p. 14; OJ 2010 L 199, p. 40; OJ 2011 L 234, p. 46, and OJ 2015 L 36, p. 15).2The request has been made in proceedings between Home Credit Slovakia, a.s. and Ms Klára Bíróová concerning a claim for payment of the outstanding amount of credit that that company had granted to Ms Bíróová in respect of which she was in default of payment. Legal context EU law 3Recitals 7, 9, 10, 19, 30, 31 and 47 of Directive 2008/48 state:‘(7)In order to facilitate the emergence of a well-functioning internal market in consumer credit, it is necessary to make provision for a harmonised Community framework in a number of core areas. ……(9)Full harmonisation is necessary in order to ensure that all consumers in the Community enjoy a high and equivalent level of protection of their interests and to create a genuine internal market. Member States should therefore not be allowed to maintain or introduce national provisions other than those laid down in this Directive. However, such restriction should only apply where there are provisions harmonised in this Directive. Where no such harmonised provisions exist, Member States should remain free to maintain or introduce national legislation. …(10)The definitions contained in this Directive determine the scope of harmonisation. The obligation on Member States to implement the provisions of this Directive should therefore be limited to its scope as determined by those definitions. …(19)In order to enable consumers to make their decisions in full knowledge of the facts, they should receive adequate information, which the consumer may take away and consider, prior to the conclusion of the credit agreement, on the conditions and cost of the credit and on their obligations. …(30)This Directive does not regulate contract law issues related to the validity of credit agreements. Therefore, in that area, the Member States may maintain or introduce national provisions which are in conformity with Community law. Member States may regulate the legal regime governing the offer to conclude the credit agreement, in particular when it is to be given and the period during which it is to be binding on the creditor. If such an offer is made at the same time as the pre-contractual information provided for by this Directive is given, it should, like any additional information the creditor may wish to give to the consumer, be provided in a separate document which may be annexed to the Standard European Consumer Credit Information.(31)In order to enable the consumer to know his rights and obligations under the credit agreement, it should contain all necessary information in a clear and concise manner.(47)Member States should lay down rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and ensure that they are implemented. While the choice of penalties remains within the discretion of the Member States, the penalties provided for should be effective, proportionate and dissuasive.’4Under Article 1 of that directive, headed ‘Subject matter’:‘The purpose of this Directive is to harmonise certain aspects of the laws, regulations and administrative provisions of the Member States concerning agreements covering credit for consumers.’5Article 3 of the directive, headed ‘Definitions’, states in paragraph (m) thereof:‘For the purposes of this Directive, the following definitions shall apply:(m)“durable medium”: means any instrument which enables the consumer to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;…’6Article 10 of the directive, headed ‘Information to be included in credit agreements’, provides:‘1. Credit agreements shall be drawn up on paper or on another durable medium.All the contracting parties shall receive a copy of the credit agreement. This Article shall be without prejudice to any national rules regarding the validity of the conclusion of credit agreements which are in conformity with Community law.2. The credit agreement shall specify in a clear and concise manner:(a)the type of credit;(b)the identities and geographical addresses of the contracting parties as well as, if applicable, the identity and geographical address of the credit intermediary involved;(c)the duration of the credit agreement;(d)the total amount of the credit and the conditions governing the drawdown;(e)in case of a credit in the form of deferred payment for a specific good or service or in the case of linked credit agreements, that good or service and its cash price;(f)the borrowing rate, the conditions governing the application of that rate and, where available, any index or reference rate applicable to the initial borrowing rate, as well as the periods, conditions and procedures for changing the borrowing rate and, if different borrowing rates apply in different circumstances, the abovementioned information in respect of all the applicable rates;(g)the annual percentage rate of charge and the total amount payable by the consumer, calculated at the time the credit agreement is concluded; all the assumptions used in order to calculate that rate shall be mentioned;(h)the amount, number and frequency of payments to be made by the consumer and, where appropriate, the order in which payments will be allocated to different outstanding balances charged at different borrowing rates for the purposes of reimbursement;(i)where capital amortisation of a credit agreement with a fixed duration is involved, the right of the consumer to receive, on request and free of charge, at any time throughout the duration of the credit agreement, a statement of account in the form of an amortisation table.The amortisation table shall indicate the payments owing and the periods and conditions relating to the payment of such amounts; the table shall contain a breakdown of each repayment showing capital amortisation, the interest calculated on the basis of the borrowing rate and, where applicable, any additional costs; where the interest rate is not fixed or the additional costs may be changed under the credit agreement, the amortisation table shall indicate, clearly and concisely, that the data contained in the table will remain valid only until such time as the borrowing rate or the additional costs are changed in accordance with the credit agreement;(j)if charges and interest are to be paid without capital amortisation, a statement showing the periods and conditions for the payment of the interest and of any associated recurrent and non-recurrent charges;(k)where applicable, the charges for maintaining one or several accounts recording both payment transactions and drawdowns, unless the opening of an account is optional, together with the charges for using a means of payment for both payment transactions and drawdowns, and any other charges deriving from the credit agreement and the conditions under which those charges may be changed;(l)the interest rate applicable in the case of late payments as applicable at the time of the conclusion of the credit agreement and the arrangements for its adjustment and, where applicable, any charges payable for default;a warning regarding the consequences of missing payments;(n)where applicable, a statement, that notarial fees will be payable;(o)the sureties and insurance required, if any;(p)the existence or absence of a right of withdrawal, the period during which that right may be exercised and other conditions governing the exercise thereof, including information concerning the obligation of the consumer to pay the capital drawn down and the interest in accordance with Article 14(3)(b) and the amount of interest payable per day;(q)information concerning the rights resulting from Article 15 as well as the conditions for the exercise of those rights;(r)the right of early repayment, the procedure for early repayment, as well as, where applicable, information concerning the creditor’s right to compensation and the way in which that compensation will be determined;(s)the procedure to be followed in exercising the right of termination of the credit agreement;(t)whether or not there is an out-of-court complaint and redress mechanism for the consumer and, if so, the methods for having access to it;(u)where applicable, other contractual terms and conditions;(v)where applicable, the name and address of the competent supervisory authority.3. Where paragraph 2(i) applies, the creditor shall make available to the consumer, free of charge and at any time throughout the duration of the credit agreement, a statement of account in the form of an amortisation table.4. In the case of a credit agreement under which payments made by the consumer do not give rise to an immediate corresponding amortisation of the total amount of credit, but are used to constitute capital during periods and under conditions laid down in the credit agreement or in an ancillary agreement, the information required under paragraph 2 shall include a clear and concise statement that such credit agreements do not provide for a guarantee of repayment of the total amount of credit drawn down under the credit agreement, unless such a guarantee is given.7Article 14(1) of Directive 2008/48, headed ‘Right of withdrawal’, provides:‘The consumer shall have a period of 14 calendar days in which to withdraw from the credit agreement without giving any reason.That period of withdrawal shall begineither from the day of the conclusion of the credit agreement, orfrom the day on which the consumer receives the contractual terms and conditions and information in accordance with Article 10, if that day is later than the date referred to in point (a) of this subparagraph.’8Article 22 of that directive, headed ‘Harmonisation and imperative nature of this Directive’, is worded as follows:‘1. Insofar as this Directive contains harmonised provisions, Member States may not maintain or introduce in their national law provisions diverging from those laid down in this Directive.3. Member States shall further ensure that the provisions they adopt in implementation of this Directive cannot be circumvented as a result of the way in which agreements are formulated, in particular by integrating drawdowns or credit agreements falling within the scope of this Directive into credit agreements the character or purpose of which would make it possible to avoid its application.9Article 23 of the directive, headed ‘Penalties’, provides:‘Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are implemented. The penalties provided for must be effective, proportionate and dissuasive.’10In Annex II of Directive 2008/48, concerning the ‘Standard European Consumer Credit Information’, section 2, entitled ‘Description of the main features of the credit product’, contains the heading ‘Instalments and, where appropriate, the order in which instalments will be allocated’. The following description is given under that heading:‘You will have to pay the following:(The amount, number and frequency of payments to be made by the consumer)Interest and/or charges will be payable in the following manner: …’ Slovak law 11The Zákon č. 129/2010 Z. z. o spotrebiteľských úveroch a o iných úveroch a pôžičkách pre spotrebiteľov a o zmene a doplnení niektorých zákonov (Law No 129/2010 on consumer credit and other forms of credit and loans for consumers, amending certain other laws, in the version applicable in the main proceedings) (‘Law No 129/2010’) was intended to transpose Directive 2008/48 into Slovak law.12Under Paragraph 9 of that law:‘1. A consumer credit agreement must be drawn up in written form. Every party to the agreement shall receive at least one copy in documentary form or on another durable medium accessible to the consumer.2. A consumer credit agreement must, in addition to the general requirements set out in the Civil Code …, contain the following:the amount, number and frequency of repayments of capital, interest and other charges and, if appropriate, the order in which payments will be allocated to individual outstanding balances charged at different borrowing rates for the purposes of reimbursement,where capital amortisation of a consumer credit agreement with a fixed duration is involved, the right of the consumer to request, free of charge, at any time throughout the duration of the credit agreement, a statement of account in the form of an amortisation table in accordance with paragraph 5.13Paragraph 11(1) of that law provides:‘Consumer credit granted shall be deemed to be interest-free and free of any charges if:the consumer credit agreement is not in writing in accordance with Paragraph 9(1) and does not contain the information specified in Paragraph 9(2)(a) to (k), (r) and (y) and Paragraph 10(1),the annual percentage rate of charge is stated incorrectly, to the detriment of the consumer, in the consumer credit agreement.’14Paragraph 40 of the Občiansky zákonník (Civil code) provides:‘1. A legal act shall be invalid if it is not drawn up in the form required by law or by agreement between the parties.3. Any legal act in writing shall be valid if it is signed by the person responsible for drawing it up; where several persons are involved in drawing up a legal act, the signature of all those persons does not necessarily have to appear on the same document, unless otherwise required by law. A signature may be replaced by electronic means where such usage is permitted.4. The requirement that the legal act be in writing shall be complied with if the legal act is communicated by telefax, telegram or by electronic means which make it possible to determine the content of the legal act and to identify the person who is responsible for it. The requirement that the legal act be in writing shall always be complied with where the act communicated by electronic means bears an advanced electronic signature.15Paragraph 46(2) of the Civil code states as follows:‘For the conclusion of a contract in written form, it is sufficient for there to be a written offer and a written acceptance. …’16Paragraph 273 of the Obchodný zákonník (Commercial code) is worded as follows:‘1. Part of the terms of a contract may be determined by reference to general terms and conditions drawn up by professional organisations or interest groups or by reference to other terms and conditions which are known to the parties concluding the contract or submitted as proposals annexed to the offer.3. Standard form contracts used in commercial practice may be employed for the conclusion of a contract.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 17On 29 June 2011, Home Credit Slovakia, as lender, concluded a credit agreement with Ms Bíróová, the borrower, drawn up on the basis of a standard form completed on the date on which the loan was granted.18It is apparent from the order for reference that that form contained information concerning, inter alia, personal data relating to the borrower and her employment, including her income. In addition, information concerning the loan itself and its drawdown were specified, namely, inter alia, the total amount of the loan and the total amount payable by the consumer, the amount of the monthly instalments, the number of monthly payments and the dates when the instalments for reimbursement of the loan were payable, the borrowing rate, and the date for the reimbursement of the loan in full, namely 36 months after it was granted. Since the estimated annual percentage rate of charge ranged between 35% and 37.5%, its exact amount was to be specified after the loan was granted.19The total amount of credit in question being EUR 700, the total amount payable by the borrower was set under the contract at EUR 1087.56.20In addition, the credit agreement provided that the document headed ‘Credit agreement terms of Home Credit Slovakia, a.s. — cash credit’ (‘the general terms and conditions’) was incorporated into the agreement.21The credit agreement thereby drawn up was signed by Home Credit Slovakia and Ms Bíróová. Furthermore, under that agreement, Ms Bíróová confirmed, by her signature, that she had received the general terms and conditions, that she had read them, that those general terms and conditions were comprehensible and sufficiently precise and that she agreed to be bound by them.22As to the actual general terms and conditions themselves, they were not signed by the parties to the credit agreement.23Under those general terms and conditions, the borrower could request the lender to make available, free of charge at any time throughout the duration of the credit agreement, a statement of account in the form of an amortisation table setting out the payments owing and the periods and conditions of re-payment, including a breakdown of each repayment showing capital amortisation, interest and, where applicable, any additional costs.24However, the general terms and conditions did not state the proportion of each monthly instalment paid by the borrower in repayment of the loan that was to be used to pay interest and charges and the proportion to be used to repay capital.25After paying two monthly instalments, Ms Bíróová stopped repaying the loan granted. Consequently, Home Credit Slovakia demanded early payment of the loan in full and requested Ms Bíróová to re-pay the capital, default interest and default penalties provided for in the credit agreement.26Not having obtained the payment sought, Home Credit Slovakia brought an action before the referring court seeking to recover the debt. In that regard, harbouring doubts as to the validity of the credit agreement in so far as its general terms and conditions were not signed by the parties, that court considers that the outcome of the proceedings before it depends on the interpretation of Directive 2008/48.27In those circumstances, the Okresný súd Dunajská Streda (District Court, Dunajská Streda, Slovakia) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Must the terms “on paper” and “another durable medium” in Article 10(1), read in conjunction with Article 3(m), of Directive 2008/48, be interpreted as extending to: not only the text (physical, “hard copy”) of the document signed by the parties to the agreement, which contains the details (information) required by Article 10(2)(a) to (v) of that directive, but also any other document to which that provision refers and which, under national law, forms an integral part of the agreement (for instance, a document containing the “general terms and conditions”, “lending terms”, “scale of charges” and “schedule of instalments” drawn up by the lender), even if such a document does not itself fulfil the requirement that it should be in “written form” within the meaning of the national law concerned (for example, because it has not been signed by the parties to the contract)?(2)Following the answer to Question 1:Must Article 10(1) and (2), read in conjunction with Article 1 of Directive 2008/48, in accordance with which the directive seeks full harmonisation in the relevant field, be interpreted as precluding national legislation or practice which requires that all the information specified in Article 10(2)(a) to (v) be contained in a single document which will fulfil the requirement of “written form” in accordance with the law of the relevant Member State (that is, in principle in a document signed by the parties to the agreement), and does not endow a consumer credit agreement with full legal effect merely because some of the information required is not contained in the signed document, even though all or part of that information is contained in a separate document (containing, for instance, the “general terms and conditions”, “lending terms”, “scale of charges” and “schedule of instalments” drawn up by the lender), where the written agreement itself refers to that document, the conditions for the incorporation of that document as part of the agreement in accordance with national law are fulfilled and the consumer credit agreement thus concluded complies as a whole with the requirement that an agreement be drawn up on “another durable medium” within the meaning of Article 10(1) of Directive 2008/48?(3)Must Article 10(2)(h) of Directive 2008/48 be interpreted as meaning that the information required by that provision (specifically the “frequency of payments”)must be individually tailored to show the terms of the specific agreement in question (in principle, by stating the precise dates (day, month, year) on which the individual instalments are due), oris it sufficient that the agreement contains general reference to objectively ascertainable criteria from which it is possible to ascertain that information (for example, by providing that “monthly instalments are due at the latest by the 15th day of each calendar month”, “the first instalment is due one month from signature of the agreement and each subsequent instalment is always payable one month after the payment of the previous instalment” or by another similar form of words)?(4)If the interpretation in the second indent of Question 3 is correct, must Article 10(2)(h) of Directive 2008/48 be interpreted as meaning that the information required by that provision (specifically the “frequency of payments”) may also be contained in a separate document to which the agreement complying with the requirement that it should be in written form (within the meaning of Article 10(1) of the directive) refers, but which does not itself have to fulfil that requirement (that is, in principle it does not have to be signed by the parties to the agreement; it may, for example, be a document setting out the “general terms and conditions”, “lending terms”, “scale of charges” and “schedule of instalments” drawn up by the creditor)?(5)Must Article 10(2)(i) read in conjunction with Article 10(2)(h) of Directive 2008/48, be interpreted as meaning thata credit agreement for a fixed period under which the capital is repaid/amortised by individual instalments does not necessarily have to state precisely, at the time of its conclusion, the part of each individual instalment that is to be used to repay capital and the part that is to be used to pay contractual interest and charges (that is, a precise schedule of instalments/amortisation table does not have to be incorporated into the agreement), and that information may instead be contained in a schedule of instalments/amortisation table which the lender provides to the borrower on request, orArticle 10(2)(h) of the directive guarantees the borrower an additional right to demand an extract from the amortisation table at any time throughout the duration of the credit agreement, but that right does not relieve the parties to the agreement of the obligation to indicate in the agreement itself how the individual instalments (which, under the credit agreement, must be paid throughout the term of the agreement) are to be allocated to repayment of capital and payment of contractual interest and charges, by a method individually tailored to the specific agreement concerned?(6)If the interpretation in the first indent of Question 5 is correct, does that question fall within the field of full harmonisation pursued by Directive 2008/48, so that, in accordance with Article 22(1) thereof, a Member State may not require that a credit agreement should state precisely the part of each individual instalment that is to be used to repay capital and the part that is to be used to pay contractual interest and charges (that is, it cannot be required that a precise schedule of instalments/amortisation table be incorporated into the agreement)?(7)Must the provisions of Article 1 of Directive 2008/48, under which the directive seeks full harmonisation in the field concerned, or Article 23 of the directive, which requires that penalties be proportionate, be interpreted as precluding provisions of national law under which failure to provide most of the information required in a credit agreement by Article 10(2) of the directive has the consequence that the loan granted is deemed to be interest-free and free of charges, so that the borrower is obliged to repay the lender only the capital sum received under the agreement?’ Consideration of the questions referred The first and second questions 28By its first and second questions, which it is appropriate to consider together, the referring court asks, in essence, whether Article 10(1) and (2) of Directive 2008/48, read in conjunction with Article 3(m) of the directive, must be interpreted as meaning that (i) all the information relating to a credit agreement referred to in Article 10(2) of the directive must be contained in a single document, (ii) a credit agreement drawn up on paper must be signed by the parties and (iii) the requirement that the agreement be signed applies to all the information that must be provided in connection with such an agreement.29In that regard, it must, in the first place, be borne in mind that, under the first subparagraph of Article 10(1) of Directive 2008/48, credit agreements are to be drawn up on paper or on another durable medium.30There is, however, nothing in the directive to indicate that the credit agreements referred to in that provision must be drawn up in a single document.31As is apparent from Article 10(2) of Directive 2008/48, read in the light of recital 31 of that directive, the requirement to include the information referred to in that provision in a credit agreement drawn up on paper or on another durable medium in a clear and concise manner is necessary in order to ensure that the consumer is aware of his rights and obligations.32That requirement contributes to attaining the objective pursued by Directive 2008/48, which consists in providing, as regards consumer credit, full and mandatory harmonisation in a number of key areas, which is regarded as necessary in order to ensure that all consumers in the European Union enjoy a high and equivalent level of protection of their interests and to facilitate the emergence of a well-functioning internal market in consumer credit (see, to that effect, judgment of 21 April 2016, Radlinger and Radlingerová, C‑377/14, EU:C:2016:283, paragraph 61).33Although, in the light of that objective, all the information referred to in Article 10(2) of Directive 2008/48 need not necessarily be included in a single document, attention must, nonetheless, be drawn to the fact that, having regard to Article 10(1) of the directive, all the information listed in Article 10(2) must be set out on paper or on another durable medium and be incorporated into the credit agreement.34In so far as the information referred to in Article 10(2) of Directive 2008/48 must be included in a clear and concise manner, a credit agreement must, as the Advocate General stated, in essence, in point 52 of her Opinion, contain a clear and precise cross-reference to other paper, or other durable, media containing the information that was actually given to the consumer prior to the conclusion of the agreement so as to give him the opportunity to be genuinely apprised of all his rights and obligations.35Referring, inter alia, to the definition of ‘durable medium’ in Article 3(m) of Directive 2008/48, the Court has held that that medium must enable the consumer, in a similar way to paper form, to be in possession of the relevant information to enable him to exercise his rights, where necessary. What is relevant for the consumer is that he should be able to store the information which has been addressed to him personally, to rest assured that its content will not be altered, that the information will be accessible for an adequate period and that it will be possible to reproduce it unchanged (see, to that effect, as regards Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ 1997 L 144, p. 19), judgment of 5 July 2012, Content Services, C‑49/11, EU:C:2012:419, paragraphs 42 to 44).36As regards, in the second place, whether a credit agreement drawn up on paper must be signed by the parties in accordance with detailed rules laid down in the law of the particular Member State concerned, it should be noted that the first subparagraph of Article 10(1) of Directive 2008/48 makes no reference to national law and that, therefore, the terms ‘paper’ and ‘durable medium’ in that provision have an autonomous meaning. Those terms cannot be interpreted by reference to national law governing the form in which credit agreements must be drawn up.37Whereas the term ‘paper’ is not defined by that directive, Article 3(m) thereof provides that ‘durable medium’ means any instrument which enables the consumer to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows for the unchanged reproduction of the information stored.38It is apparent from the wording of Article 10(1) of Directive 2008/48 that the term ‘paper’ refers to the medium on which a credit agreement is drawn up, without any requirement that such a medium be signed. That being the case, the referring court seeks to ascertain, more specifically, whether that directive precludes a Member State from imposing such a requirement under national law.39In that regard, it should be noted that, under the second subparagraph of Article 10(1) of Directive 2008/48, that article applies without prejudice to any national rules regarding the validity of the conclusion of credit agreements which are in conformity with EU law.40The requirement for a credit agreement drawn up on paper to be signed by the parties, imposed, as is apparent from, inter alia, paragraph 26 above, by the national legislation at issue in the main proceedings as a condition of the validity of the agreement, forms part of a national rule regarding the validity of the conclusion of credit agreements within the meaning of Article 10(1) of Directive 2008/48.41Neither Directive 2008/48, which aims to provide, as regards consumer credit, for full and mandatory harmonisation in a number of key areas, which is considered to be necessary in order to ensure that all consumers in the European Union enjoy a high and equivalent level of protection of their interests and to facilitate the emergence of a well-functioning internal market in consumer credit (see, to that effect, judgments of 27 March 2014, LCL Le Crédit Lyonnais, C‑565/12, EU:C:2014:190, paragraph 42; 18 December 2014, CA Consumer Finance, C‑449/13, EU:C:2014:2464, paragraph 21, and 21 April 2016, Radlinger and Radlingerová, C‑377/14, EU:C:2016:283, paragraph 61), nor EU law in general preclude such a requirement.42As regards, in the third place, whether the requirement that the credit agreement be signed, laid down in national legislation, may apply to all the details of such agreements, it should be noted that a ‘credit agreement’, within the meaning of Article 3(c) of Directive 2008/48, drawn up, in accordance with Article 10(1) of the directive, on paper or on another durable medium must include, in a clear and precise manner, the information referred to in Article 10(2) of the directive.43Accordingly, as the Advocate General stated in point 35 of her Opinion, all that information must necessarily be included in such an agreement.44In those circumstances, where a Member State provides in its national legislation that the requirement that a credit agreement be signed applies to all the information to be provided in such an agreement, which is a matter for the referring court to ascertain, neither Directive 2008/48 nor EU law in general precludes such a requirement.45Having regard to all of the foregoing considerations, the answer to the first and second questions is that Article 10(1) and (2) of Directive 2008/48, read in conjunction with Article 3(m) of that directive, must be interpreted as meaning that:a credit agreement need not necessarily be drawn up in a single document, but all the information referred to in Article 10(2) of the directive must be set out on paper or on another durable medium;it does not preclude a Member State from providing in its national legislation, first, that a credit agreement falling within the scope of Directive 2008/48 which is drawn up on paper must be signed by the parties and, second, that the requirement that the agreement be signed applies to all the details of the agreement referred to in Article 10(2) of that directive. The third and fourth questions 46By its third and fourth questions, which it is appropriate to consider together, the referring court asks, in essence, whether Article 10(2)(h) of Directive 2008/48 must be interpreted as meaning that it is necessary for a credit agreement to indicate each payment to be made by the consumer by reference to a specific date, or whether a general reference in the agreement enabling the consumer to identify the payment dates is sufficient.47In that regard, it should be noted that, under that provision, a credit agreement is to include, in a clear and concise manner, the amount, number and frequency of payments to be made by the consumer and, where appropriate, the order in which payments will be allocated to different outstanding balances charged at different borrowing rates for the purposes of reimbursement.48As the Advocate General observed in point 55 of her Opinion, the objective of that provision is to ensure that the consumer knows the date on which each payment to be made falls due.49Accordingly, where the terms of the agreement allow the consumer to ascertain the dates of those payments without difficulty and with certainty, that objective is attained.50In those circumstances, the answer to the third and fourth questions is that Article 10(2)(h) of Directive 2008/48 must be interpreted as meaning that a credit agreement need not indicate the specific date on which every payment to be made by the consumer falls due, provided that the terms of the agreement allow the consumer to ascertain the dates of those payments without difficulty and with certainty. The fifth and sixth questions 51By its fifth and sixth questions, which it is appropriate to consider together, the referring court asks, in essence, whether Article 10(2)(h) and (i) of Directive 2008/48 must be interpreted as meaning that a fixed-term credit agreement providing for amortisation of the capital in consecutive instalments must state, in the form of an amortisation table, the part of each instalment that will be allocated to repayment of the capital and, if not, whether, in the light of Article 22(1) of the directive, those provisions preclude a Member State from imposing such an obligation under national law.52For the purpose of answering those questions, it should be noted that, as stated in paragraph 47 above, Article 10(2)(h) of that directive provides that a credit agreement need include only the amount, number and frequency of the payments to be made by the consumer and, where appropriate, the order in which payments will be allocated different outstanding balances charged at different borrowing rates for the purposes of reimbursement.53It is apparent from Article 10(2)(i) and (3) of the directive that only on request by the consumer made at any time throughout the duration of the agreement is the creditor under an obligation to provide him, free of charge, with a statement of account in the form of an amortisation table.54In view of the clear wording of those provisions, it must be found that Directive 2008/48 does not impose an obligation to include in the credit agreement such a statement of account in the form of an amortisation table.55As regards the Member States’ discretion to impose such an obligation in their national legislation, it must be noted that, so far as concerns credit agreements which fall within the scope of Directive 2008/48, Member States may not adopt obligations for the parties to the agreement which are not provided for in that directive where the directive contains provisions harmonised in the area covered by those obligations (see, by analogy, judgment of 12 July 2012, SC Volksbank România, C‑602/10, EU:C:2012:443, paragraphs 63 and 64).56Article 10(2) of Directive 2008/48 provides for such harmonisation as regards the information which must imperatively be included in a credit agreement.57It is true that, under Article 10(2)(u) of that directive, a credit agreement must include, in a clear and concise manner, where applicable, the other contractual terms and conditions. However, the aim of that provision is to impose the obligation to include in a credit agreement, drawn up on paper or on another durable medium, every term and condition which has been agreed between the parties in the course of their contractual relationship concerning the credit.58That provision cannot, however, be interpreted as permitting the Member States to impose in their national legislation an obligation to include information in a credit agreement other than that required under Article 10(2) of Directive 2008/48.59Consequently, the answer to the fifth and sixth questions referred is that Article 10(2)(h) and (i) of Directive 2008/48 must be interpreted as meaning that a fixed-term credit agreement providing for amortisation of the capital in consecutive instalments need not state, in the form of an amortisation table, the part of each instalment that will be allocated to repayment of capital. Those provisions, read in conjunction with Article 22(1) of that directive, preclude a Member State from imposing such an obligation under national law. The seventh question 60By its seventh question, the referring court asks, in essence, whether Article 23 of Directive 2008/48 must be interpreted as not precluding a Member State from providing, under national law, that, where a credit agreement does not include all the information required under Article 10(2) of the directive, the agreement is to be deemed interest-free and free of charges.61In that regard, it is appropriate to bear in mind from the outset that, under Article 23 of Directive 2008/48, Member States are to lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to that directive and take all measures necessary to ensure that they are implemented.62However, it is apparent from recital 47 of the directive that, while the choice of penalties remains within the discretion of the Member States, such penalties must be effective, proportionate and dissuasive (see, to that effect, judgment of 27 March 2014, LCL Le Crédit Lyonnais, C‑565/12, EU:C:2014:190, paragraph 43).63The Court has previously held that the severity of penalties must be commensurate with the seriousness of the infringements for which they are imposed, in particular by ensuring a genuinely deterrent effect, while respecting the general principle of proportionality (see judgment of 27 March 2014, LCL Le Crédit Lyonnais, C‑565/12, EU:C:2014:190, paragraph 45 and the case-law cited).64In that regard, in its judgment of 27 March 2014, LCL Le Crédit Lyonnais (C‑565/12, EU:C:2014:190), the Court previously considered whether the rules on penalties laid down by a Member State had due regard for those limits, the penalty in that case being forfeiture by the creditor of his entitlement to interest, in principle in its entirety, in the event of breach of the creditor’s obligation, prior to the conclusion of the agreement, to carry out an assessment of the consumer’s creditworthiness, as provided for in Article 8 of Directive 2008/48.65Given the importance of the objective of consumer protection inherent in the lender’s obligation to assess the borrower’s creditworthiness, the Court has held that if the penalty of forfeiture of entitlement to interest were weakened, or even entirely undermined, it would necessarily follow that the penalty is not genuinely dissuasive (see, to that effect, judgment of 27 March 2014, LCL Le Crédit Lyonnais, C‑565/12, EU:C:2014:190, paragraphs 52 and 53).66As regards the failure, in a credit agreement, to include certain information relating to the terms of repayment and charges linked to that credit, the Court has also held that, in the light of the objective pursued by Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48), as amended by Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998 (OJ 1998 L 101, p. 17) (‘Directive 87/102’), of protecting the consumer against unfair credit terms and of enabling him to have full knowledge of the terms of the future performance of the agreement entered into at the time of concluding such an agreement, Article 4 of that directive, required that the borrower must have to hand all information which could have a bearing on the extent of his liability (see judgment of 9 July 2015, Bucura, C‑348/14, not published, EU:C:2015:447, paragraph 57).67Thus, the inclusion of the annual percentage rate of charge in a credit agreement was held to be essential information in the context of Directive 87/102, in particular, in so far as it enables the consumer to assess the extent of his liability (see, to that effect, order of 16 November 2010, Pohotovosť, C‑76/10, EU:C:2010:685, paragraphs 70 and 71).68Directive 87/102 has been interpreted as allowing national courts to apply of their own motion the provisions transposing Article 4 of that directive into national law and providing that failure to mention the annual percentage rate of charge in a consumer credit agreement meant that the credit granted was deemed to be interest-free and free of charges (see, to that effect, order of 16 November 2010, Pohotovosť, C‑76/10, EU:C:2010:685, paragraph 76).69In the light of the case-law referred to in paragraphs 63 to 68 above, it must be found that a creditor’s breach of a vitally important obligation in the context of Directive 2008/48 may be penalised, under national law, by the creditor’s forfeiture of entitlement to interest and charges.70The obligation to include, in a credit agreement, inter alia, information such as the annual percentage rate of charge, referred to in Article 10(2)(g) of Directive 2008/48, the number and frequency of payments, in accordance with Article 10(2)(h) of that directive, and, where applicable, a statement that notarial fees will be payable and the sureties and insurance required, as provided for in Article 10(2)(n) and (o) of the directive, constitutes such a vitally important obligation.71In so far as failure to include such information in a credit agreement may compromise the ability of a consumer to assess the extent of his liability, the penalty laid down under national law of forfeiture by the creditor of entitlement to interest and charges must be considered to be proportionate within the meaning of Article 23 of Directive 2008/48 and the case-law cited in paragraph 63 above.72However, the imposition, in accordance with national law, of such a penalty, having serious consequences for the creditor in the event of failure to include those items of information referred to in Article 10(2) of Directive 2008/48 which, by their nature, cannot have a bearing on the consumer’s ability to assess the extent of his liability, such as, inter alia, the name and address of the competent supervisory authority referred to in Article 10(2)(v) of that directive, cannot be considered to be proportionate.73In those circumstances, the answer to the seventh question referred is that Article 23 of Directive 2008/48 must be interpreted as not precluding a Member State from providing, under national law, that, where a credit agreement does not include all the information required under Article 10(2) of the directive, the agreement is deemed to be interest-free and free of charges, provided that the information covers matters which, if not included, may compromise the ability of the consumer to assess the extent of his liability. Costs 74Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: 1. Article 10(1) and (2) of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, read in conjunction with Article 3(m), thereof, must be interpreted as meaning that: a credit agreement need not necessarily be drawn up in a single document, but all the information referred to in Article 10(2) of the directive must be set out on paper or on another durable medium; it does not preclude a Member State from providing in its national legislation, first, that a credit agreement falling within the scope of Directive 2008/48 which is drawn up on paper must be signed by the parties and, second, that the requirement that the agreement be signed applies to all the details of that agreement referred to in Article 10(2) of that directive. 2. Article 10(2)(h) of Directive 2008/48 must be interpreted as meaning that a credit agreement need not indicate the specific date on which every payment to be made by the consumer falls due, provided that the terms of the agreement allow the consumer to ascertain the dates of those payments without difficulty and with certainty. 3. Article 10(2)(h) and (i) of Directive 2008/48 must be interpreted as meaning that a fixed-term credit agreement, providing for amortisation of the capital in consecutive instalments, need not state, in the form of an amortisation table, the part of each instalment that will be allocated to repayment of capital. Those provisions, read in conjunction with Article 22(1) of that directive, preclude a Member State from imposing such an obligation under national law. 4. Article 23 of Directive 2008/48 must be interpreted as not precluding a Member State from providing, under national law, that, where a credit agreement does not include all the information required under Article 10(2) of the directive, the agreement is deemed to be interest-free and free of charges, provided that the information covers matters which, if not included, may compromise the ability of the consumer to assess the extent of his liability. [Signatures]( *1 ) Language of the case: Slovak. | bdf18-cd91eb9-4d1e | EN |
EU law does not preclude an increase in the share capital of a bank without the agreement of the general meeting of the shareholders in a situation where there is a serious disturbance of the economy and the financial system of a Member State | 8 November 2016 ( *1 )‛Regulation (EU) No 407/2010 — European Financial Stabilisation Mechanism — Implementing Decision 2011/77/EU — European Union financial assistance to Ireland — Recapitalisation of national banks — Company law — Second Directive 77/91/EEC — Articles 8, 25 and 29 — Recapitalisation of a bank by means of judicial direction order — Increase in share capital without general meeting decision and without the shares issued being offered on a pre-emptive basis to existing shareholders — Issue of new shares at a price lower than their nominal value’In Case C‑41/15,REQUEST for a preliminary ruling under Article 267 TFEU from the High Court (Ireland), made by decision of 2 December 2014, received at the Court on 2 February 2015, in the proceedings Gerard Dowling, Padraig McManus, Piotr Skoczylas, Scotchstone Capital Fund Limited v Minister for Finance, intervening parties: Permanent TSB Group Holdings plc, formerly Irish Life and Permanent Group Holdings plc, Permanent TSB plc, formerly Irish Life and Permanent plc,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič and T. von Danwitz (Rapporteur), Presidents of Chambers, J. Malenovský, J.-C. Bonichot, A. Arabadjiev, C. Toader, M. Safjan, C.G. Fernlund, C. Vajda and S. Rodin, Judges,Advocate General: N. Wahl,Registrar: C. Strömholm, Administrator,having regard to the written procedure and further to the hearing on 19 April 2016,after considering the observations submitted on behalf of:—G. Dowling, by himself, and by G. Rudden, Solicitor, and N. Travers SC,P. McManus, by himself, and by G. Rudden, Solicitor, and N. Travers SC,P. Skoczylas, by himself,Scotchstone Capital Fund Limited, by S. O’Donnell and J. Flynn, Solicitors,Permanent TSB Group Holdings plc, formerly Irish Life and Permanent Group Holdings plc, and Permanent TSB plc, formerly Irish Life and Permanent plc, by C. MacCarthy and A. Walsh, Solicitors, P. Gallagher SC, and C. Geoghegan, Barrister,Ireland, by A. Joyce, L. Williams and E. Creedon, acting as Agents, and by A. O’Neill, Barrister-at-Law and E. McCullough SC,the Italian Government, by G. Palmieri, acting as Agent, and by P. Gentili, avvocato dello Stato,the Cypriot Government, by E. Zachariadou and D. Kalli, acting as Agents,the European Commission, by J.-P. Keppenne, H. Støvlbæk, L. Flynn and A. Steiblytė, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 22 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 8, 25 and 29 of the Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of [the second paragraph of Article 54 TFEU], in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ 1977 L 26, p. 1; ‘the Second Directive’).2The request has been made in the course of proceedings between, on the one hand, Mr Gerard Dowling, Mr Padraig McManus, Mr Piotr Skoczylas and Scotchstone Capital Fund Limited (‘Scotchstone’) and, on the other, the Minister for Finance (‘the Minister’), where the former seek the setting aside of the direction order made by the High Court on 26 July 2011 (‘the Direction Order’), directing a company, of which the applicants in the main proceedings are members and shareholders, to increase its share capital and to issue, in favour of the Minister, new shares at a price lower than their nominal value. Legal context EU law The Second Directive3The second recital of the Second Directive reads as follows:‘… in order to ensure minimum equivalent protection for both shareholders and creditors of public limited liability companies, the coordination of national provisions relating to their formation and to the maintenance, increase or reduction of their capital is particularly important’.4Article 8(1) of the Second Directive provides:‘Shares may not be issued at a price lower than their nominal value, or, where there is no nominal value, their accountable par.’5Article 25 of that directive provides :‘1. Any increase in capital must be decided upon by the general meeting. Both this decision and the increase in the subscribed capital shall be published ...2. Nevertheless, the statutes or instrument of incorporation or the general meeting, the decision of which must be published in accordance with the rules referred to in paragraph 1, may authorize an increase in the subscribed capital up to a maximum amount which they shall fix with due regard for any maximum amount provided for by law. Where appropriate, the increase in the subscribed capital shall be decided on within the limits of the amount fixed, by the company body empowered to do so. The power of such body in this respect shall be for a maximum period of five years and may be renewed one or more times by the general meeting, each time for a period not exceeding five years.3. Where there are several classes of shares, the decision by the general meeting concerning the increase in capital referred to in paragraph 1 or the authorization to increase the capital referred to in paragraph 2, shall be subject to a separate vote at least for each class of shareholder whose rights are affected by the transaction.4. This Article shall apply to the issue of all securities which are convertible into shares or which carry the right to subscribe for shares, but not to the conversion of such securities, nor to the exercise of the right to subscribe.’6Article 29 of the Second Directive provides:‘1. Whenever the capital is increased by consideration in cash, the shares must be offered on a pre-emptive basis to shareholders in proportion to the capital represented by their shares....4. The right of pre-emption may not be restricted or withdrawn by the statutes or instrument of incorporation. This may, however, be done by decision of the general meeting. The administrative or management body shall be required to present to such a meeting a written report indicating the reasons for restriction or withdrawal of the right of pre-emption, and justifying the proposed issue price. The general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 40. Its decision shall be published ...5. The laws of a Member State may provide that the statutes, the instrument of incorporation or the general meeting, acting in accordance with the rules for a quorum, a majority and publication set out in paragraph 4, may give the power to restrict or withdraw the right of pre-emption to the company body which is empowered to decide on an increase in subscribed capital within the limits of the authorized capital. This power may not be granted for a longer period than the power for which provision is made in Article 25 (2).6. Paragraphs 1 to 5 shall apply to the issue of all securities which are convertible into shares or which carry the right to subscribe for shares, but not to the conversion of such securities, nor to the exercise of the right to subscribe.’Directive 2001/24/EC7An objective of Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ 2001 L 125, p. 15), as stated in recital 6 thereof, is to establish mutual recognition by the Member States of the measures taken by each of them to restore to viability the credit institutions which it has authorised. To that end, Articles 3, 9 and 10 of that directive provide that the reorganisation measures and winding-up proceedings decided on by the authorities of the home Member State are, as a general rule, to have in all other Member States the effects determined by the law of the home Member State.Regulation (EU) No 407/20108Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism (OJ 2010 L 118, p. 1) is based on Article 122(2) TFEU. Recitals 4 and 5 of that regulation state:‘(4)The deepening of the financial crisis has led to a severe deterioration of the borrowing conditions of several Member States beyond what can be explained by economic fundamentals. At this point, this situation, if not addressed as a matter of urgency, could present a serious threat to the financial stability of the European Union as a whole.(5)In order to address this exceptional situation beyond the control of the Member States, it appears necessary to put in place immediately a Union stabilisation mechanism to preserve financial stability in the European Union. Such a mechanism should allow the Union to respond in a coordinated, rapid and effective manner to acute difficulties in a particular Member State. Its activation will be in the context of a joint EU / International Monetary Fund (IMF) support.’9Article 1 of that regulation provides:‘With a view to preserving the financial stability of the European Union, this Regulation establishes the conditions and procedures under which Union financial assistance may be granted to a Member State which is experiencing, or is seriously threatened with, a severe economic or financial disturbance caused by exceptional occurrences beyond its control, taking into account the possible application of the existing facility providing medium-term financial assistance for non-euro-area Member States’ balances of payments, as established by [Council] Regulation (EC) No 332/2002 [of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States’ balances of payments (OJ 2002 L 53, p. 1)].’10Article 3 of Regulation No 407/2010 reads as follows:‘1. The Member State seeking Union financial assistance shall discuss with the Commission, in liaison with the European Central Bank (ECB), an assessment of its financial needs and submit a draft economic and financial adjustment programme to the Commission and the Economic and Financial Committee.2. Union financial assistance shall be granted by a decision adopted by the Council, acting by a qualified majority on a proposal from the Commission.3. The decision to grant a loan shall contain:(a)the amount, the average maturity, the pricing formula, the maximum number of instalments, the availability period of the Union financial assistance and the other detailed rules needed for the implementation of the assistance;(b)the general economic policy conditions which are attached to the Union financial assistance with a view to re-establishing a sound economic or financial situation in the beneficiary Member State and to restoring its capacity to finance itself on the financial markets; these conditions will be defined by the Commission, in consultation with the ECB; and(c)an approval of the adjustment programme prepared by the beneficiary Member State to meet the economic conditions attached to the Union financial assistance.…5. The Commission and the beneficiary Member State shall conclude a Memorandum of Understanding detailing the general economic policy conditions laid down by the Council. The Commission shall communicate the Memorandum of Understanding to the European Parliament and to the Council.’Implementing Decision 2011/77/EU11Council Implementing Decision 2011/77/EU of 7 December 2010 on granting Union financial assistance to Ireland (OJ 2011 L 30, p. 34), as amended by Council Implementing Decision 2011/326/EU of 30 May 2011 (OJ 2011 L 147, p. 17) (‘Implementing Decision 2011/77’), is based on, inter alia, Article 3(3) of Regulation No 407/2010. Recitals 1 to 3 of that decision read as follows:‘(1)Ireland has recently come under increasing pressure in financial markets, reflecting rising concerns about the sustainability of the Irish public finances in view of comprehensive public support measures to the weakened financial sector. Due to its excessive exposure to real estate and construction projects, the domestic banking system has experienced large losses in the aftermath of the collapse of those sectors. The current crisis in the economic and banking sectors has also had a dramatic impact on Ireland’s public finances, compounding the impact of the recession. … Support measures for the banking sector, including significant capital injections, have added greatly to the deterioration in the public finance position. Current market concerns primarily reflect the fact that the solvency of the Irish sovereign and the banking system have become inextricably linked in the crisis; they have led to a steep increase in Irish sovereign bond yields, while the domestic banking system is effectively cut off from international market funding.(2)In view of this severe economic and financial disturbance caused by exceptional occurrences beyond the control of the government, the Irish authorities officially requested financial assistance from the European Union, the Member States whose currency is the euro and the International Monetary Fund (IMF) on 21 November 2010 with a view to supporting the return of the economy to sustainable growth, ensuring a properly-functioning banking system and safeguarding financial stability in the Union and in the euro zone. On 28 November 2010, an agreement at technical level was reached in respect of a comprehensive policy package for the period 2010-2013.(3)The draft economic and financial adjustment programme … submitted to the Council and the Commission aims at restoring financial market confidence in the Irish banking sector and the sovereign, enabling the economy to return to sustainable growth. To achieve these goals, the Programme contains three main elements. First, a financial sector strategy which comprises fundamental downsizing, deleveraging and reorganisation of the banking sector, complemented by appropriate recapitalisation to the extent needed. ...’12Article 1 of that decision provides:‘1. The Union shall make available to Ireland a loan amounting to a maximum of EUR 22.5 billion, with a maximum average maturity of 7½ years.4. The first instalment shall be released subject to the entry into force of the Loan Agreement and the Memorandum of Understanding [on specific economic policy conditionality concluded by the Commission and Ireland]. Any subsequent loan releases shall be conditional upon a favourable quarterly assessment by the Commission, in consultation with the [European Central Bank (ECB)], of Ireland’s compliance with the general economic policy conditions as defined by this Decision and the Memorandum of Understanding.’13Article 3 of Implementing Decision 2011/77 provides:‘1. The economic and financial adjustment programme ... prepared by the Irish authorities is hereby approved.2. The disbursement of each further instalment shall be made on the basis of a satisfactory implementation of the Programme to be included in the Stability Programme of Ireland, in the National Reform Programme and, more particularly, the specific economic policy conditions laid down in the Memorandum of Understanding. These shall include, inter alia, the measures provided for in paragraphs 4 to 9 of this Article.4. Ireland shall adopt the measures specified in paragraphs 7 to 9 before the end of the indicated year, with exact deadlines for the years 2011-2013 being specified in the Memorandum of Understanding ...5. With a view to restoring confidence in the financial sector, Ireland shall adequately recapitalise, rapidly deleverage and thoroughly restructure the banking system as set out in the Memorandum of Understanding. In that regard, Ireland shall develop and agree with the European Commission, the ECB and the IMF a strategy for the future structure, functioning and viability of the Irish credit institutions which will identify how to ensure that they are able to operate without further state support. …7. Ireland shall adopt the following measures during 2011, in line with specifications in the Memorandum of Understanding:(g)the recapitalisation of the domestic banks by the end of July 2011 (subject to appropriate adjustment for expected asset sales in the case of Irish Life & Permanent), in line with the findings of the 2011 PLAR and PCAR [the 2011 Prudential Liquidity Assessment Review and Prudential Capital Assessment Review] as announced by the Central Bank of Ireland on 31 March 2011;...’ Irish law 14The purposes of the Credit Institutions (Stabilisation) Act 2010 (‘the 2010 Act’), as set out in Section 4 thereof, include:to address the serious and continuing disruption to the economy and the financial systems and the continuing serious threat to the stability of certain credit institutions in the State and the financial system generally,to implement the reorganisation of credit institutions in [Ireland] to achieve the financial stabilisation of those credit institutions and their restructuring (consistently with the State Aid rules of the European Union) in the context of the National Recovery Plan 2011-2014 and the European Union / International Monetary Fund Programme of Financial Support for Ireland,15Section 7 of the 2010 Act provides:‘(1) Subject to subsections (2) and (4), the Minister may make a proposed direction order proposing that a relevant institution be directed to take (within a specified period) or refrain from taking (during a specified period) any action, or any series of actions that are together designed to achieve a specified objective including, in particular, and without limiting the generality of the foregoing, any one or more of the following:notwithstanding any statutory or contractual pre-emption rights, … issuing shares to the Minister or to another person nominated by the Minister on terms and conditions that the Minister specifies in the proposed direction order at a consideration that the Minister sets;increasing the authorised share capital (including by the creation of new classes of shares) of the relevant institution to permit it to issue shares to the Minister or to any other person nominated by the Minister;(d)making a specified alteration to the relevant institution’s memorandum of association and articles of association ... ;(2) The Minister may make a proposed direction order only if the Minister, having consulted with the Governor [of the Central Bank], is of the opinion that making a direction order in the terms of the proposed direction order is necessary to secure the achievement of a purpose of this Act specified in the proposed direction order.16Section Article 9(1) and (2) of the 2010 Act provides:‘(1) As soon as may be after completion in relation to a proposed direction order of the procedures required by section 7, the Minister shall apply ex parte to the Court for an order (in this Act called a “direction order”) in the terms of the relevant proposed direction order.(2) The [High] Court, when hearing an ex parte application under subsection (1), shall, if satisfied that the requirements of section 7 have been complied with and that the opinion of the Minister under that section was reasonable and was not vitiated by any error of law, make a direction order in the terms of the proposed direction order ...’17Section 11 of the 2010 Act provides that the relevant institution in question, or any of its members, may apply to the High Court of Ireland to have a direction order set aside. That court may set a direction order aside only if it is of the opinion that there has been non-compliance with any of the requirements of Section 7 of that act or that the opinion of the Minister under Section 7(2) of the act was unreasonable or vitiated by an error of law.18Section 47 of the 2010 Act provides for the inclusion in a direction order of a provision to the effect that any power exercisable by the members of the relevant institution concerned in general meeting may be exercised instead by the Minister. The dispute in the main proceedings and the questions referred for a preliminary ruling 19Permanent TSB plc, formerly Irish Life and Permanent plc, (‘ILP’) is a credit institution operating in Ireland.20Permanent TSB Group Holdings plc, formerly Irish Life and Permanent Group Holdings plc, (‘ILPGH’) is a company incorporated with limited liability in Ireland. ILPGH is not a credit institution. During the period at issue in the main proceedings, ILPGH owned the entire share capital of ILP.21The applicants in the main proceedings are members and shareholders of ILPGH.22The economic and financial crisis, faced by Ireland in 2008, had serious effects on the financial stability both of the Irish banks and of Ireland, the two being particularly strongly linked because of the relative size of the banking sector compared to the size of the national economy and the significant guarantees of bank liabilities that Ireland had granted to those national banks in 2008.23Notwithstanding the measures taken by Ireland to support the banking sector, the markets continued to lose faith in the Irish banks and the financial situation of Ireland continued to deteriorate. In those circumstances, the Irish authorities produced an economic and financial adjustment programme, for which, on 21 November 2010, they sought inter alia, European Union financial assistance. In that programme, Ireland undertook to reorganise and recapitalise the banking sector.24By Implementing Decision 2011/77, the Council approved that programme and made available to Ireland European Union financial assistance under the European financial stabilisation mechanism, established by Regulation No 407/2010. On 16 December 2010 Ireland and the Commission entered into a Memorandum of Understanding on the basis of Article 1(4) of that decision (‘the Memorandum of Understanding’). In accordance with the commitments made in that Memorandum of Understanding and with Article 3(4), (5) and 7(g) of that decision, Ireland was to ensure the recapitalisation of the national banks by the end of July 2011, on the basis of the results of a Prudential Capital Assessment Review and a Prudential Liquidity Assessment Review published by the Central Bank of Ireland.25The Central Bank of Ireland published the results of its reviews on 31 March 2011. On the basis of those results, the Governor of the Central Bank of Ireland ordered ILP, by a decision adopted on that date, to raise additional capital of EUR 4 billion.26In July 2011 the Minister submitted to the shareholders of ILPGH a proposal designed to facilitate the recapitalisation of ILP by means of, inter alia, a capital injection of EUR 2.7 billion. That proposal was rejected by the extraordinary general meeting of ILPGH held on 20 July 2011, which meeting mandated the directors of that company to examine other recapitalisation options and to request, for that purpose, an extension of the recapitalisation deadline laid down in Implementing Decision 2011/77.27Pursuant to Sections 7 and 9 of the 2010 Act, in order to recapitalise ILP the Minister prepared a Proposed Direction Order, which he submitted to the High Court. The Direction Order was adopted by the High Court in the terms sought, directing ILPGH to issue, in return for the capital injection of EUR 2.7 billion, new shares to the Minister at a share price dictated by him, that is at a price 10% below the quoted share price of 23 June 2011. Consequently, the Minister obtained, without any decision having been made by the general meeting of shareholders of ILPGH, 99.2% of the shares of that company. In addition, the delisting of the company on the Irish and London Stock Exchanges was ordered.28The applicants in the main proceedings brought before the High Court, on the basis of Section 11 of the 2010 Act, an application for the setting aside of the Direction Order. Before that court, they claimed that the increase in share capital resulting from that order is incompatible with Articles 8, 25 and 29 of the Second Directive, since it was effected without the approval of the general meeting of ILPGH.29The Minister and both ILPGH and ILP rejected that argument, relying on Directive 2001/24, Regulation No 407/2010, Implementing Decision 2011/77, Articles 49, 65, 107, 119, 120 and 126 TFEU and on the provisions in Title VIII of Part III of the FEU Treaty. In their opinion, those provisions of EU law authorised Ireland to take measures necessary to defend the integrity of its own financial system notwithstanding the provisions of the Second Directive. Pursuant to its obligations under Title VIII of Part III of the FEU Treaty and, in particular, Articles 119 and 120 thereof, Ireland was required to take those measures in order to secure the safety of an institution of systemic importance for Ireland and the European Union.30The referring court concluded, on the balance of probabilities, that ILP could not have raised the required amount of capital of EUR 4 billion either from private investors or from existing shareholders, after the extraordinary general meeting of ILPGH had rejected, on 20 July 2011, the Minister’s recapitalisation proposal. In the opinion of that court, if ILP had not been recapitalised by the deadline laid down in Implementing Decision 2011/77, that would have led to the failure of ILP, due to a number of possible developments, such as a run on deposits held with ILP, a call for repayment of various notes or a cessation of funding under the emergency liquidity assistance scheme, or a combination of some or all of those possibilities.31Further, the High Court considers that ILP’s failure would not only have led to the complete loss of value of the shares to the shareholders, but would also have had adverse consequences for Ireland. The court refers to, inter alia, the possibility of a run on deposits held with the national banks, the subsequent call on the guarantee granted to ILP by the Irish State and the possibility of full or partial withdrawal of funding to Ireland under the economic and financial adjustment programme for non-compliance with the terms of that programme. In the opinion of the referring court, those adverse consequences for Ireland would probably have worsened the threat to the financial stability of other Member States and of the European Union.32In those circumstances, the High Court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘Having regard to:(i)The [Second Directive];(ii)Directive [2001/24];(iii)the obligations of the Irish State under the provisions of the [FEU Treaty] and in particular Articles 49, 65, 107, 120 and Title VIII of Part III thereof ;(iv)the obligations of the Irish State under the EU/IMF Programme of Support;(v)the terms of the Council Implementing Decision 2011/77, made pursuant to [Regulation No 407/2010],(1)Does the Second Directive preclude in all circumstances, including the circumstances of this case, the making of a Direction Order pursuant to Section 9 of the 2010 Act, on foot of the opinion of the Minister that it is necessary, where such an order has the effect of increasing a company’s capital without the consent of the general meeting; allotting new shares without offering them on a pre-emptive basis to existing shareholders, without the consent of the general meeting; lowering the nominal value of the company’s shares without the consent of the general meeting and, to that end, altering the company’s memorandum and articles of association without the consent of the general meeting?Was the Direction Order made by the High Court pursuant to Section 9 of the 2010 Act in relation to ILPGH and ILP in breach of European Union Law?’ The request to reopen the oral procedure and the request for measures of inquiry 33After the delivery of the opinion of the Advocate General, Mr Skoczylas lodged, on 25 August 2016, a request that the oral procedure be reopened, under Article 83 of the Court’s Rules of Procedure. By means of a letter received at the Court’s Registry on the same date, Scotchstone made a similar request and further requested measures of inquiry on the basis of Article 64 of the Court’s Rules of Procedure.34In support of their requests, those applicants in the main proceedings argue, in essence, that the judgment of 19 July 2016, Kotnik and Others (C‑526/14, EU:C:2016:570), and the factors which distinguish the case that gave rise to that judgment from the case in the main proceedings, have not been debated by the parties to this case.35In a letter that was received at the Court’s Registry on 6 September 2016, Scotchstone extended its argument in favour of reopening the oral procedure by referring to the Commission’s decision of 30 August 2016 finding that tax advantages amounting to EUR 13 billion granted by Ireland to Apple in the period from 2003 to 2014 did not comply with the EU rules on State aid. In the light of that decision, Scotchstone considers that, at the material time in the main proceedings, Ireland had available to it financial resources other than those obtained by European Union financial assistance to remedy the serious disturbance of its economy. Those other financial resources would have given that Member State the possibility of recapitalising ILP with the approval of the general meeting of ILPGH and in accordance with the provisions of the Second Directive.36It should be noted in that regard that the Court may, at any time, after hearing the Advocate General, order that the oral procedure be reopened, in accordance with Article 83 of its Rules of Procedure, in particular if it considers that it lacks sufficient information or that the case must be dealt with on the basis of an argument that has not been debated by the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.37Under Article 64(1) of the Court’s Rules of Procedure, the Court, after hearing the Advocate General, is to prescribe the measures of inquiry that it considers appropriate by means of an order setting out the facts to be proved.38In this case, the Court considers, after hearing the views of the Advocate General, that it has all the material necessary to enable it to give a decision on the reference for a preliminary ruling before it and that the case does not have to be examined in the light of an argument that has not been debated before it.39Consequently, the requests of Mr Skoczylas and Scotchstone must be rejected. Consideration of the questions referred for a preliminary ruling 40As a preliminary point, it must be observed that although it is clear from the request for a preliminary ruling that an interpretation of Article 8(1) and Articles 25 and 29 of the Second Directive is sought, that request does not identify which other provisions of EU law could, in the view of the referring court, preclude a measure such as the Direction Order.41Article 8 of the Second Directive prohibits shares being issued at a price lower than their nominal value, or, where there is no nominal value, their accountable par. Article 25 of that directive provides that, as a general rule, any increase in the share capital of a public limited liability company must be decided by the general meeting of its shareholders. Article 29 of that directive provides, in essence, that, in the event of such an increase in share capital, the shares must be offered on a pre-emptive basis to the existing shareholders.42As regards the Direction Order, it is clear from the file submitted to the Court that the effect of that order was that shares in ILPGH were issued at a price lower than their nominal value and that the share capital of that company was increased, while the pre-emptive right to subscribe was denied, without the agreement of the general meeting of that company. It is therefore common ground that the requirements set out in the preceding paragraph were not applied in this case.43That being the case, the two questions referred, which can be examined together, must be understood as meaning that the referring court is seeking, in essence, to ascertain whether Article 8(1), together with Articles 25 and 29 of the Second Directive, must be interpreted as precluding a measure, such as the Direction Order at issue in the main proceedings, adopted where there is a serious disturbance of the economy and financial system of a Member State that threatens the financial stability of the European Union, the effect of that measure being to increase the share capital of a public limited liability company, without the approval of the general meeting of that company, new shares being issued at a price lower than their nominal value and the existing shareholders being denied any pre-emptive right to subscribe.44In that regard, it is clear from the information provided by the referring court that the Direction Order was adopted in the context of the financial and economic crisis which led Ireland, in 2008, to grant significant guarantees to the national banks affected by that crisis and, in late 2010, when the financial situation of those banks was continuing to deteriorate and was also threatening the financial stability of that Member State, to request financial assistance from the European Union and to undertake to restructure and recapitalise the national banking sector.45According to the referring court, that situation of serious disturbance of the national economy made it essential, because of the fact that it was impossible for ILP itself to achieve the recapitalisation by the end of July 2011, as required in particular by the Memorandum of Understanding, that the Irish State take action in order to avoid a failure of ILP that would threaten both the financial stability of Ireland and that of other Member States and of the European Union.46The recapitalisation of national banks, including ILP, by 31 July 2011 was also laid down by Article 1(4) and Article 3(2), (4), (5) and (7)(g) of Implementing Decision 2011/77, as a condition for the payment of European Union financial assistance to Ireland. That financial assistance constituted, in accordance with recitals 4 and 5 and Article 1 of Regulation No 407/2010 — itself adopted on the basis of Article 122(2) TFEU which is designed to allow action to be taken to deal with ‘exceptional occurrences’ — a measure taken as a matter of urgency with a view to maintaining the financial stability of the European Union.47Admittedly, in order to recapitalise ILP, the Direction Order required an increase in the share capital of ILPGH. However, Article 3(7)(g) of Implementing Decision 2011/77 provides for the recapitalisation of national banks, one such being ILP, but does not specify how that was to be achieved. Consequently, the Irish authorities were not obliged to make a direct injection of capital into the share capital of ILP, but could carry out that recapitalisation by means of increasing the share capital of ILPGH.48Further, as stated in paragraphs 30 and 31 of this judgment, the referring court, after weighing the competing interests, came to the conclusion that, once the decision of ILPGH’s extraordinary general meeting of 20 July 2011 was made to reject the Minister’s proposed recapitalisation, the Direction Order was the only means of ensuring, within the time limit laid down by Implementing Decision 2011/77, the recapitalisation of ILP that was necessary to prevent the failure of that financial institution and thereby to forestall a serious threat to the financial stability of the European Union.49The aim of the Second Directive is to achieve, as stated in its second recital, minimum equivalent protection for both shareholders and creditors of public limited liability companies. Accordingly, as ILPGH and ILP and also Ireland have stated in their observations submitted to the Court, the measures provided for by that directive relating to the formation of public limited liability companies and to the maintenance, increase or reduction of their capital guarantee such protection against acts taken by the governing bodies of those companies and relate, therefore, to their normal operation (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 86 and 87).50However, as is clear from paragraphs 44 to 48 of this judgment, the Direction Order is not a measure taken by a governing body of a public limited liability company as part of its normal operation, but is an exceptional measure taken by the national authorities intended to prevent, by means of an increase in share capital, the failure of such a company, which failure, in the opinion of the referring court, would threaten the financial stability of the European Union. The protection conferred by the Second Directive on the shareholders and creditors of a public limited liability company, with respect to its share capital, does not extend to a national measure of that kind that is adopted in a situation where there is a serious disturbance of the economy and financial system of a Member State and that is designed to overcome a systemic threat to the financial stability of the European Union, due to a capital shortfall in the company concerned.51The provisions of the Second Directive do not therefore preclude an exceptional measure affecting the share capital of a public limited liability company, such as the Direction Order, taken by the national authorities where there is a serious disturbance of the economy and financial system of a Member State, without the approval of the general meeting of that company, with the objective of preventing a systemic risk and ensuring the financial stability of the European Union (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 88 to 90).52That conclusion cannot be called into question by the fact that the Direction Order could be classified, as claimed by the applicants in the main proceedings, not as a ‘judicial measure’, but a ‘provisional administrative act’. It follows from the two preceding paragraphs that the Second Directive does not preclude, in circumstances such as those at issue in the main proceedings, the adoption of a measure such as the Direction Order, the nature of the national authority which issued that order being of no relevance in that regard.53The above interpretation is in no way irreconcilable with the interpretation adopted by the Court in the judgment of 12 March 1996, Pafitis and Others (C‑441/93, EU:C:1996:92), contrary to what is claimed by the applicants in the main proceedings. The factors set out in paragraphs 44 to 48 of this judgment distinguish the situation at issue in the main proceedings from the case that gave rise to the judgment of 12 March 1996, Pafitis and Others (C‑441/93, EU:C:1996:92), the feature of that case being that it concerned the insolvency of a single bank. While the Court held that the Second Directive continues to apply in the case of ‘ordinary reorganisation measures’ (judgment of 12 March 1996, Pafitis and Others, C‑441/93, EU:C:1996:92, paragraph 57), the Court did not, however, give a ruling, as the Advocate General observed in point 45 of his Opinion, on extraordinary reorganisation measures, such as a direction order designed to avoid, in a situation where there is a serious disturbance of the national economy and of the financial system of a Member State, the failure of a bank and thereby to maintain the financial stability of the European Union.54Further, as ILPGH and ILP and also Ireland have stated in their observations submitted to the Court, the national measures contested in the Pafitis and Others case (C‑441/93, EU:C:1996:92) had been adopted in the 1986-1990 period and the Court delivered its judgment on 12 March 1996, thus well before the start of the third stage for the implementation of the Economic and Monetary Union, with the introduction of the euro, the establishment of the Eurosystem and the related amendments to the EU Treaties. Although there is a clear public interest in ensuring, throughout the European Union, a strong and consistent protection of shareholders and creditors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system established by those amendments (see, to that effect, judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 91).55In the light of the foregoing, the answer to the questions referred is that Article 8(1) and Articles 25 and 29 of the Second Directive must be interpreted as not precluding a measure, such as the Direction Order at issue in the main proceedings, adopted in a situation where there is a serious disturbance of the economy and the financial system of a Member State threatening the financial stability of the European Union, the effect of that measure being to increase the share capital of a public limited liability company, without the agreement of the general meeting of that company, new shares being issued at a price lower than their nominal value and the existing shareholders being denied a pre-emptive right to subscribe. Costs 56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 8(1) and Articles 25 and 29 of the Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of [the second paragraph of Article 54 TFEU], in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, must be interpreted as not precluding a measure, such as the Direction Order at issue in the main proceedings, adopted in a situation where there is a serious disturbance of the economy and the financial system of a Member State threatening the financial stability of the European Union, the effect of that measure being to increase the share capital of a public limited liability company, without the agreement of the general meeting of that company, new shares being issued at a price lower than their nominal value and the existing shareholders being denied any pre-emptive subscription right. LenaertsTizzanoSilva de LapuertaIlešičvon DanwitzMalenovskýBonichotArabadjievToaderSafjanFernlundVajdaRodinDelivered in open court in Luxembourg on 8 November 2016.A. Calot EscobarRegistrarK. LenaertsPresident( *1 ) Language of the case: English. | 78054-2120cb3-4195 | EN |
The custodial sentence of a prisoner may not be reduced, when he is transferred from one Member State to another, by reason of time spent working in prison in the first Member State if that Member State has not, under its national law, granted such a reduction in sentence | 8 November 2016 ( *1 )‛Reference for a preliminary ruling — Judicial cooperation in criminal matters — Framework Decision 2008/909/JHA — Article 17 — Law governing the enforcement of a sentence — Interpretation of a national rule of the executing State providing for reduction of a custodial sentence on account of work carried out by the sentenced person while detained in the issuing State — Legal effects of framework decisions — Obligation to interpret national law in conformity with EU law’In Case C‑554/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Sofiyski gradski sad (Sofia City Court, Bulgaria), made by decision of 25 November 2014, received at the Court on 3 December 2014, supplemented on 15 December 2014, in the criminal proceedings against Atanas Ognyanov intervening party: Sofiyska gradska prokuratura, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič, J.L. da Cruz Vilaça, M. Berger (Rapporteur), Presidents of Chambers, J.-C. Bonichot, A. Arabadjiev, C. Toader, M. Safjan, E. Jarašiūnas, C.G. Fernlund, C. Vajda and S. Rodin and F. Biltgen, Judges,Advocate General: Y. Bot,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 12 January 2016,after considering the observations submitted on behalf of:—the German Government, by T. Henze and J. Kemper, acting as Agents,the Spanish Government, by A. Rubio González, acting as Agent,the Netherlands Government, by M. Bulterman and M. Gijzen, acting as Agents,the Austrian Government, by G. Eberhard, acting as Agent,the United Kingdom Government, by D. Blundell and L. Barfoot, acting as Agents,the European Commission, by R. Troosters, W. Bogensberger and V. Soloveytchik, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 3 May 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 17(1) and (2) of Council Framework Decision 2008/909/JHA of 27 November 2008 on the application of the principle of mutual recognition to judgments in criminal matters imposing custodial sentences or measures involving deprivation of liberty for the purpose of their enforcement in the European Union (OJ 2008 L 327, p. 27), as amended by Council Framework Decision 2009/299/JHA of 26 February 2009 (OJ 2009 L 81, p. 24) (‘Framework Decision 2008/909’).2The request has been made in proceedings relating to the recognition of a judgment in a criminal case and the enforcement, in Bulgaria, of a custodial sentence imposed on Mr Atanas Ognyanov by a Danish court. Legal context EU law 3Framework Decision 2008/909 replaced, for the majority of Member States, as from 5 December 2011, the corresponding provisions of the Convention of the Council of Europe of 21 March 1983 on the transfer of sentenced persons and its additional protocol of 18 December 1997.4Recital 5 of Framework Decision 2008/909 is worded as follows:‘Procedural rights in criminal proceedings are a crucial element for ensuring mutual confidence among the Member States in judicial cooperation. Relations between the Member States, which are characterised by special mutual confidence in other Member States’ legal systems, enable recognition by the executing State of decisions taken by the issuing State’s authorities. Therefore, a further development of the cooperation provided for in the Council of Europe instruments concerning the enforcement of criminal judgments should be envisaged, in particular where citizens of the Union were the subject of a criminal judgment and were sentenced to a custodial sentence or a measure involving deprivation of liberty in another Member State. ...’5Article 3 of that Framework Decision, that article being headed ‘Purpose and scope’, provides:‘1. The purpose of this Framework Decision is to establish the rules under which a Member State, with a view to facilitating the social rehabilitation of the sentenced person, is to recognise a judgment and enforce the sentence.…3. This Framework Decision shall apply only to the recognition of judgments and the enforcement of sentences within the meaning of this Framework Decision. ……’6Article 8 of Framework Decision 2008/909, headed ‘Recognition of the judgment and enforcement of the sentence’, provides:‘1. The competent authority of the executing State shall recognise a judgment which has been forwarded …, and shall forthwith take all the necessary measures for the enforcement of the sentence, unless it decides to invoke one of the grounds for non-recognition and non-enforcement provided for in Article 9.2. Where the sentence is incompatible with the law of the executing State in terms of its duration, the competent authority of the executing State may decide to adapt the sentence only where that sentence exceeds the maximum penalty provided for similar offences under its national law. The adapted sentence shall not be less than the maximum penalty provided for similar offences under the law of the executing State.3. Where the sentence is incompatible with the law of the executing State in terms of its nature, the competent authority of the executing State may adapt it to the punishment or measure provided for under its own law for similar offences. Such a punishment or measure shall correspond as closely as possible to the sentence imposed in the issuing State and therefore the sentence shall not be converted into a pecuniary punishment.4. The adapted sentence shall not aggravate the sentence passed in the issuing State in terms of its nature or duration.’7Article 10(1) of that Framework Decision, that article being headed ‘Partial recognition and enforcement’, provides:‘If the competent authority of the executing State could consider recognition of the judgment and enforcement of the sentence in part, it may, before deciding to refuse recognition of the judgment and enforcement of the sentence in whole, consult the competent authority of the issuing State with a view to finding an agreement ...’8Article 13 of that Framework Decision provides:‘As long as the enforcement of the sentence in the executing State has not begun, the issuing State may withdraw the certificate from that State, giving reasons for doing so. Upon withdrawal of the certificate, the executing State shall no longer enforce the sentence.’9Article 17 of Framework Decision 2008/909, headed ‘Law governing enforcement’ provides:‘1. The enforcement of a sentence shall be governed by the law of the executing State. The authorities of the executing State alone shall, subject to paragraphs 2 and 3, be competent to decide on the procedures for enforcement and to determine all the measures relating thereto, including the grounds for early or conditional release.2. The competent authority of the executing State shall deduct the full period of deprivation of liberty already served in connection with the sentence in respect of which the judgment was issued from the total duration of the deprivation of liberty to be served.3. The competent authority of the executing State shall, upon request, inform the competent authority of the issuing State of the applicable provisions on possible early or conditional release. The issuing State may agree to the application of such provisions or it may withdraw the certificate.4. Member States may provide that any decision on early or conditional release may take account of those provisions of national law, indicated by the issuing State, under which the person is entitled to early or conditional release at a specified point in time.’10The judgment delivered by the issuing State and sent to the executing State must be accompanied by a certificate. A template of that certificate is to be found in Annex I to Framework Decision 2008/909.11Section (i)2 of that template relates to ‘[d]etails of the length of the sentence’. Accordingly, the issuing State must provide information on, first, the total length of the sentence, in days (Section (i)2.1 of the certificate), second, the full period of deprivation of liberty already served in connection with the sentence in respect of which the judgment was issued, in days (Section (i)2.2 of that certificate), and, third, the number of days to be deducted from the total length of the sentence for reasons other than that referred to under Section 2.2 (Section (i)2.3 of the certificate). Bulgarian law 12It is stated in the order for reference that, on the date of that order, Framework Decision 2008/909 had not yet been transposed into Bulgarian law.13Article 41(3) of the Nakazatelen kodeks (Bulgarian Criminal Code) provides:‘Work done by a sentenced person is to be taken into account for the purposes of reducing the length of the sentence in that two days of work equate to three days of deprivation of liberty.’14Article 457(4) to (6) of the Nakazatelno protsesualen kodeks (Bulgarian Code of Criminal Procedure; ‘the NPK’), on issues relating to enforcement of a sentence in cases of transfer of sentenced persons, provide:‘4. Where the maximum term of imprisonment provided for under the law of the Republic of Bulgaria for the offence committed is less than the term imposed in the judgment, the court shall reduce the sentence imposed to that term. Where the law of the Republic of Bulgaria does not provide for a custodial sentence for the offence committed, it shall determine a punishment that corresponds as far as possible to that imposed in the judgment.5. The period of remand in custody pending trial and any part of the sentence already served in the issuing State shall be deducted and, in the event that the convictions are different, taken into account for the purposes of determining the term of imprisonment.6. Additional punishments imposed in the judgment shall be enforced if they are provided for in the corresponding provisions of the legislation of the Republic of Bulgaria and have not been enforced in the issuing State.’15In accordance with an interpretative judgment No 3/13 of 12 November 2013 (‘the interpretative judgment’), delivered by the Varhoven kasatsionen sad (Supreme Court of Appeal, Bulgaria), Article 457(5) of the NPK, read together with Article 41(3) of the Criminal Code, must be interpreted as meaning that work that is in the general interest, undertaken in the issuing State by a Bulgarian national convicted of an offence who is transferred, must be taken into account by the competent authorities of the executing State for the purposes of reducing the length of the sentence, in that two days of work are to be treated as equivalent to three days of deprivation of liberty, unless the issuing State had already made a corresponding reduction in that sentence.16In its request for a preliminary ruling, the referring court states that it is bound by that interpretative judgment.17The referring court adds that neither the legislation nor that interpretative judgment identify any obligation to inform the issuing State or to obtain its observations and its consent to the application of such a reduction in the sentence by the competent Bulgarian authorities. The dispute in the main proceedings and the questions referred for a preliminary ruling 18By judgment of 28 November 2012, Mr Ognyanov, a Bulgarian national, was sentenced to a total period of 15 years’ imprisonment for murder and aggravated robbery by the Retten i Glostrup (Court of Glostrup, Denmark).19Mr Ognyanov was initially remanded in custody in Denmark from 10 January until 28 November 2012, the date when his conviction and the sentence imposed on him became res judicata.20He then served part of his period of imprisonment in Denmark, from 28 November 2012 until 1 October 2013, when he was transferred to the Bulgarian authorities.21While imprisoned in Denmark, Mr Ognyanov worked from 23 January 2012 until 30 September 2013.22It is stated in the order for reference that, for the purposes of transferring Mr Ognyanov to the Bulgarian authorities, the Danish authorities relied on Framework Decision 2008/909. They sent to the Bulgarian authorities a request for information concerning the sentence that the latter anticipated being able to enforce and the rules applicable in Bulgaria on early release. Further, the Danish authorities expressly stated that Danish legislation did not permit any reduction in a custodial sentence on the ground that work was carried in the course of the enforcement of that sentence.23On a date that is not specified in the order for reference, the Sofiyska gradska prokuratura (Public Prosecutor’s Office of the City of Sofia, Bulgaria) brought an action before the referring court, under Article 457 of the NPK, seeking a ruling on issues related to the enforcement of the judgment delivered by the Danish court with respect to Mr Ognyanov.24In the light of the approach in the interpretative judgment, the referring court has doubts as to whether, in order to determine the length of the sentence still to be served by Mr Ognyanov, it ought to take account of the period that he worked in a Danish prison. If it were to do so, Mr Ognyanov would qualify for a reduction in sentence not of one year, eight months and 20 days, but of two years, six months and 24 days, which would result in his being released earlier. The referring court adds that Framework Decision 2008/909 makes no provision for such a reduction in sentence.25The referring court sets out, in its order, the reasons why it has concluded that Bulgarian law does not comply with the relevant provisions of Framework Decision 2008/909.26The referring court considers, first, that Article 17(1) of Framework Decision 2008/909 empowers the competent authorities of the executing State to decide how a custodial sentence ‘shall’ be enforced, but not to undertake a further legal assessment of the sentence already enforced in the issuing State. Accordingly, in the view of that court, the competent authorities of the executing State cannot grant a reduction in sentence with respect to the balance of sentence still to be served, on the ground that work was carried out by the sentenced person in a prison of the issuing State.27The referring court considers, second, that Article 17(2) of Framework Decision 2008/909 obliges the executing State to deduct the full period of the custodial sentence already served by the sentenced person in the issuing State on the date of transfer, and that such an objective cannot be achieved if the competent authorities of that executing State deduct a period that is either shorter or longer than the sentence enforced in accordance with the law of the issuing State. That court considers that the deduction of a period longer than the actual period of deprivation of liberty would be contrary to that provision.28Further, in the view of that court, the other two provisions of Framework Decision 2008/909 that provide for the possibility of a reduction in sentence, namely Article 8(2) and Article 10(1) thereof, are manifestly not applicable in the case pending before it.29In those circumstances the Sofiyski gradski sad (Sofia City Court) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Do the provisions of Framework Decision 2008/909 preclude the executing State, in the course of the transfer procedure, from reducing the duration of the custodial sentence imposed by the issuing State, on account of work undertaken while that sentence was being served in the issuing State, as follows:(a)the sentence is reduced by the application, in accordance with Article 17(1) of [Framework Decision 2008/909], of the law of the executing State to the enforcement of the sentence. Does that provision permit the laws of the executing State on the enforcement of the sentence to be applied even at the stage of the transfer procedure in respect of matters (work undertaken in prison in the issuing State) which occurred while the sentenced person was under the jurisdiction of the issuing State?(b)the sentence is reduced by the application of a deduction in accordance with Article 17(2) of [Framework Decision 2008/909]. Does that provision permit the deduction of a period that is longer than the period of deprivation of liberty determined in accordance with the law of the issuing State, where the law of the executing State is applied and, as a result, a fresh legal assessment is made of matters which occurred in the issuing State (work undertaken in prison in the issuing State)?(2)In the event that these or other provisions of [Framework Decision 2008/909] are applicable to the reduction in sentence at issue, must the issuing State be notified if it has made a specific request to that effect and is the transfer procedure to be discontinued if the issuing State objects? If there is a notification requirement, what should the nature of that notification be: should it be in general and abstract terms as regards the applicable law, or should it relate to the specific reduction in sentence which the court will impose on a particular sentenced person?(3)In the event that the Court rules that the provisions of Article 17(1) and (2) of [Framework Decision 2008/909] preclude the executing State from reducing the sentence on the basis of its domestic law (on account of work undertaken in the issuing State), is a decision by the national court nevertheless to apply its national law — because it is more lenient than Article 17 of [Framework Decision 2008/909] — compatible with EU law?’ Consideration of the questions referred for a preliminary ruling The first question 30By its first question, the referring court seeks, in essence, to ascertain whether Article 17(1) and (2) of Framework Decision 2008/909 must be interpreted as precluding a national rule being interpreted in such a way that it permits the executing State to grant to a sentenced person a reduction in the sentence by reason of work which he carried out during his detention in the issuing State, although the competent authorities of the issuing State did not, in accordance with the law of that State, grant such a reduction in the sentence.31In order to answer that question, it must be recalled that the Court has consistently held that, in interpreting a provision of EU 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 (judgment of 16 July 2015, Lanigan, C‑237/15 PPU, EU:C:2015:474, paragraph 35).32As regards the wording of Article 17(1) and (2) of Framework Decision 2008/909, it must be observed that, while Article 17(1) provides that ‘the enforcement of a sentence shall be governed by the law of the executing State’, it does not however clarify, as noted by the Advocate General in point 63 of his Opinion, whether that means the enforcement of the sentence from the moment the judgment is delivered in the issuing State or merely from the moment the person concerned is transferred to the executing State.33As regards Article 17(2) of Framework Decision 2008/909, it provides that ‘the competent authority of the executing State shall deduct the full period of deprivation of liberty already served in connection with the sentence in respect of which the judgment was issued from the total duration of the deprivation of liberty to be served’. That provision, which starts from the premise that a sentenced person is liable to serve part of his sentence in the issuing State before his transfer, does not answer the question whether the executing State can apply a reduction in the sentence which takes account of work carried out by the sentenced person during his period of imprisonment in the issuing State.34The background to Article 17 of Framework Decision 2008/909 must therefore be taken into consideration. In that regard, it must be observed that Article 17 is to be found in Chapter II of Framework Decision 2008/909, that chapter being headed ‘Recognition of judgments and enforcement of sentences’. That chapter, containing Articles 4 to 25, sets out a series of general rules in a chronological order.35As stated by the Advocate General in point 100 of his Opinion, Articles 4 to 14 of Framework Decision 2008/909 begin by establishing the rules which the Member States must follow in order to effect the transfer of a sentenced person. Accordingly, Articles 4 to 6 of that Framework Decision define, first, the procedures for the forwarding of the judgment and the certificate to the executing State. Articles 7 to 14 of that Framework Decision then establish the general rules applicable to decisions recognising a judgment and decisions enforcing a sentence.36In particular, Article 8 of Framework Decision 2008/909 lays down strict conditions governing the adaptation, by the competent authority of the executing State, of the sentence imposed in the issuing State, those conditions being the sole exceptions to the obligation imposed on that authority, in principle, to recognise the judgment forwarded to it and to enforce the sentence, which is to correspond in its length and nature to the sentence imposed in the judgment delivered in the issuing State.37Further, it is stated in Article 13 of Framework Decision 2008/909 that the issuing State is to retain its competence with respect to the enforcement of a sentence for as long as ‘the enforcement of the sentence in the executing State has not begun’.38Article 15 of Framework Decision 2008/909 then goes on to establish the procedures applicable to the transfer of the sentenced person and Article 16 thereof lays down specific provisions in the event of the transit of the sentenced person through the territory of another Member State.39Article 17 of Framework Decision 2008/909 follows on from the provisions that precede it, in that it establishes the general rules applicable to the enforcement of the sentence once the sentenced person has been transferred to the competent authority of the executing State.40It follows that Article 17 of Framework Decision 2008/909 must be interpreted as meaning that only the law of the issuing State is applicable, not least on the question of any grant of a reduction in sentence, to the part of the sentence served by the person concerned on the territory of that State until his transfer to the executing State. The law of the executing State can apply only to the part of the sentence that remains to be served by that person, after that transfer, on the territory of the executing State.41That interpretation is also indicated by the template certificate, to be found in Annex I to Framework Decision 2008/909.42In that regard, it must be observed that the template certificate constitutes a standard form that has to be completed by the competent authority of the issuing State, then forwarded, with the judgment passing sentence, to the competent authority of the executing State. In accordance with Article 8(1) of Framework Decision 2008/909, the competent authority of the executing State is to recognise the judgment passing sentence and to rely on the information provided, in that certificate, by the competent authority of the issuing State.43It is clear from Section (i)2.2 of the template certificate, on the information to be provided on the length of the sentence, that the issuing State is required to state, in days, the full period of deprivation of liberty already served in connection with the sentence in respect of which the judgment was issued. In Section (i)2.3 of that template, the issuing State must state the number of days to be deducted from the total length of the sentence for reasons other than that referred to in Section (i)2.2 of that template. A non-exhaustive list of those other reasons is also to be found in Section (i)2.3 thereof, those reasons including a pardon or clemency decision already granted with respect to the sentence. Accordingly, as stated by the Advocate General in point 116 of his Opinion, Section (i)2.3 enables the issuing State to supply additional information when particular circumstances, such as for example work carried out in detention by the sentenced person, have already brought about a reduction in sentence.44It follows from all the foregoing that, before the recognition of the judgment passing sentence by the executing State and the transfer of the sentenced person to the executing State, it falls to the issuing State to determine the reductions in sentence that pertain to the period of detention served on its territory. The issuing State alone is competent to grant a reduction in sentence for work carried out before the transfer and, where appropriate, to inform the executing State of that reduction in the certificate referred to in Article 4 of Framework Decision 2008/909. Consequently, the executing State cannot, retroactively, substitute its law on the enforcement of sentences and, in particular, its rules on reductions in sentence, for the law of the issuing State with respect to that part of the sentence which has already been served by the person concerned on the territory of the issuing State.45In this case, it is clear from the documents submitted to the Court that, when Mr Ognyanov was transferred to the competent Bulgarian authorities, the Danish authorities expressly stated that Danish legislation did not permit any reduction in a custodial sentence on the ground that work was carried out by the sentenced person during the period of his detention. Consequently, an authority in the executing State that is competent with respect to matters concerning enforcement of the sentence, such as the referring court, cannot grant a reduction in sentence that relates to the part of the sentence that has already been served by the sentenced person on the territory of the issuing State, when no such reduction in sentence was granted by the authorities of the issuing State, in accordance with their national law.46An interpretation to the contrary would be likely, last, to undermine the objectives pursued by Framework Decision 2008/909, those objectives including respect for the principle of mutual recognition, which constitutes, as stated in recital 1 of Framework Decision 2008/909, read in the light of Article 82(1) TFEU, the ‘cornerstone’ of judicial cooperation in criminal matters within the European Union (see, to that effect, judgment of 5 April 2016, Aranyosi and Căldăraru, C‑404/15 and C‑659/15 PPU, EU:C:2016:198, paragraph 79).47In that regard, recital 5 of Framework Decision 2008/909 states that that cooperation is founded on a special mutual confidence of the Member States in their respective legal systems.48Yet were it to occur that a national court of the executing State granted, in accordance with its national law, after it had recognised the judgment passing sentence delivered by a court of the issuing State and after the sentenced person had been transferred to the authorities of the executing State, a reduction in sentence that related to the part of the sentence served by that person on the territory of the issuing State, although no such reduction in sentence was granted by the competent authorities of the issuing State, on the basis of its national law, that would jeopardise the special mutual confidence of Member States in their respective legal systems.49In such a situation, the national court of the executing State would then be applying, retroactively, its national law to the part of the sentence served on territory subject to the jurisdiction of the court of the issuing State. The former court would thus be re-examining the period of detention served on the territory of the issuing State, which would be in breach of the principle of mutual recognition.50Moreover, it follows from Article 3(1) of Framework Decision 2008/909 that recognition of a judgment and enforcement of a sentence by a Member State other than that where that judgment was delivered is intended to facilitate the social rehabilitation of the sentenced person. Accordingly, to disregard the principle of mutual recognition would also jeopardise that objective.51In the light of all the foregoing, the answer to the first question is that Article 17(1) and (2) of Framework Decision 2008/909 must be interpreted as precluding a national rule being interpreted in such a way that it permits the executing State to grant to the sentenced person a reduction in sentence by reason of work that he carried out during the period of his detention in the issuing State, although no such reduction in sentence was granted by the competent authorities of the issuing State, in accordance with the law of the issuing State. The second question 52By its second question, the referring court seeks, in essence, to ascertain whether, in the event that Article 17 of Framework Decision 2008/909 permits the competent authority of the executing State to apply a reduction in sentence, such as that in the main proceedings, that relates to the part of the sentence already served by the sentenced person on the territory of the issuing State, the executing State is required to inform the issuing State, which made an explicit request for such information, of the application of a reduction. If the answer to that question is that it is so required, the referring court has doubts as to the nature of the information that should then be sent.53In view of the reply given to the first question, there is no need to examine the second question. The third question 54By its third question, the referring court seeks, in essence, to ascertain, whether EU law must be interpreted as precluding a national court from applying a national rule, such as that at issue in the main proceedings, even though that rule is in breach of Article 17(1) and (2) of Framework Decision 2008/909, on the ground that the national rule is more lenient than that provision of EU law.55It must be stated immediately that the allusion by the referring court to the principle of the retroactive application of the more lenient criminal law rests on the premise that Bulgarian law — in particular the provisions of that law relating to reduction in sentence — is capable of also applying to the period of detention served by Mr Ognyanov in Denmark before his transfer to Bulgaria. However, as is clear from the answer given to the first question, that premise is mistaken.56That said, it must further be observed that, contrary to what seems to be suggested by both the referring court and the European Commission, Framework Decision 2008/909 has no direct effect. That is because that Framework Decision was adopted on the basis of the former third pillar of the European Union, in particular, under Article 34(2)(b) EU. That provision states, first, that framework decisions are binding on the Member States as to the result to be achieved, but leave to the national authorities the choice of form and methods, and, second, that framework decisions are not to entail direct effect.57In that regard, it is important to point out that, in accordance with Article 9 of Protocol (No 36) on transitional provisions, annexed to the treaties, the legal effects of the acts of the institutions, bodies, offices and agencies of the Union adopted on the basis of the Treaty on European Union prior to the entry into force of the Treaty of Lisbon are to be preserved until those acts are repealed, annulled or amended in implementation of the treaties. Since Framework Decision 2008/909 has not been subject to any such repeal, annulment or amendment, it continues therefore to have the legal effect attributed to it under Article 34(2)(b) EU.58It is also settled case-law that although framework decisions may not entail direct effect, as laid down in Article 34(2)(b) EU, their binding character nevertheless places on national authorities, and in particular on national courts, an obligation to interpret national law in conformity with EU law (see judgment of 5 September 2012, Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraph 53 and the case-law cited).59When national courts apply domestic law they are therefore bound to interpret it, so far as possible, in the light of the wording and the purpose of the framework decision concerned in order to achieve the result sought by it. This obligation to interpret national law in conformity with EU law is inherent in the system of the FEU Treaty, since it permits national courts, for the matters within their jurisdiction, to ensure the full effectiveness of EU law when they rule on the disputes before them (see judgment of 5 September 2012, Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraph 54 and the case-law cited).60Further, it is stated in the order for reference that, on the date of that order, Framework Decision 2008/909 had not yet been transposed into Bulgarian law, although, in accordance with Article 29 of that framework decision, that transposition should have taken place before 5 December 2011.61In that regard, it must be observed that the referring court is bound to respect the principle of interpreting national law in conformity with EU law as from the date of expiry of the period for the transposition of that Framework Decision (see, by analogy, judgment of 4 July 2006, Adeneler and Others, C‑212/04, EU:C:2006:443, paragraphs 115 and 124).62However, it must be borne in mind that the principle of interpreting national law in conformity with EU law has certain limitations.63Thus, the obligation on a national court to refer to the content of a framework decision when it interprets and applies the relevant rules of its national law is limited by the general principles of law, in particular, the principles of legal certainty and non-retroactivity (see judgments of 16 June 2005, Pupino, C‑105/03, EU:C:2005:386, paragraph 44, and 5 September 2012, Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraph 55).64In particular, those principles preclude that obligation from leading to the criminal liability of individuals being determined or aggravated, on the basis of a framework decision alone, absent any legislation implementing its provisions, where they are in breach of those provisions (see judgment of 16 June 2005, Pupino, C‑105/03, EU:C:2005:386, paragraph 45).65However, in this case, the obligation to interpret national law in conformity with EU law would mean that Mr Ognyanov cannot qualify, under Bulgarian law, for a reduction in sentence by reason of work carried out during his period of detention in Denmark, because that matter is wholly within the competence of Denmark. That obligation would not, however, cause the criminal liability of Mr Ognyanov to be determined or aggravated, or alter, to his disadvantage, the length of the sentence imposed on him in the judgment delivered on 28 November 2012 by the Retten i Glostrup (Court of Glostrup).66The obligation to interpret national law in conformity with EU law ceases, moreover, when the former cannot be applied in a way that would lead to a result compatible with that envisaged by that framework decision. In other words, that principle cannot serve as the basis for an interpretation of national law contra legem. That principle does, however, require that the national court consider, where necessary, the whole body of national law in order to assess how far it can be applied in such a way as not to produce a result contrary to that envisaged by the framework decision (see judgments of 16 June 2005, Pupino, C‑105/03, EU:C:2005:386, paragraph 47, and of 5 September 2012, Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraphs 55 and 56).67Against that background, it must be made clear that the requirement to interpret national law in conformity with EU law includes the obligation, on national courts, including those ruling as courts of last instance, to alter, where necessary, settled case-law if that case-law is based on an interpretation of national law that is incompatible with the objectives of a framework decision (see, by analogy, judgments of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraph 33, and 5 July 2016, Ognyanov, C‑614/14, EU:C:2016:514, paragraph 35).68In this case, it is apparent from the documents submitted to the Court that the national rules at issue in the main proceedings, to the effect that work in the general interest carried out, in the issuing State, by the Bulgarian prisoner who was sentenced and transferred must be taken into account by the competent authority of the executing State with a view to reduction in the sentence, stems from an interpretation of Article 457(5) of the NPK, read together with Article 41(3) of the Criminal Code, adopted by the Varhoven kasatsionen sad (Supreme Court of Appeal) in its interpretative judgment.69Consequently, the referring court cannot, in the main proceedings, validly claim that it is impossible for it to interpret the provision of national law at issue in a manner that is compatible with EU law, for the sole reason that that provision has been interpreted, by Varhoven kasatsionen sad (Supreme Court of Appeal), in a way that is not compatible with EU law (see, to that effect, judgment of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraph 34).70In those circumstances, it is for the referring court to ensure that Framework Decision 2008/909 is given full effect, and if necessary to disapply, on its own authority, the interpretation adopted by the Varhoven kasatsionen sad (Supreme Court of Appeal), since that interpretation is not compatible with EU law (see, to that effect, judgment of 5 July 2016, Ognyanov, C‑614/14, EU:C:2016:514, paragraph 36).71In the light of all the foregoing, the answer to the third question is that EU law must be interpreted as meaning that a national court is bound to take into consideration the whole body of rules of national law and to interpret them, so far as possible, in accordance with Framework Decision 2008/909, in order to achieve the result sought by that framework decision, and if necessary to disapply, on its own authority, the interpretation adopted by the national court of last resort, if that interpretation is not compatible with EU law. Costs 72Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. Article 17(1) and (2) of Council Framework Decision 2008/909/JHA of 27 November 2008 on the application of the principle of mutual recognition to judgments in criminal matters imposing custodial sentences or measures involving deprivation of liberty for the purpose of their enforcement in the European Union, as amended by Council Framework Decision 2009/299/JHA of 26 February 2009, must be interpreted as precluding a national rule being interpreted in such a way that it permits the executing State to grant to the sentenced person a reduction in sentence by reason of work he carried out during the period of his detention in the issuing State, although no such reduction in sentence was granted by the competent authorities of the issuing State, in accordance with the law of the issuing State. 2. EU law must be interpreted as meaning that a national court is bound to take into consideration the whole body of rules of national law and to interpret them, so far as possible, in accordance with Framework Decision 2008/909, as amended by Framework Decision 2009/299, in order to achieve the result sought by that framework decision, and if necessary to disapply, on its own authority, the interpretation adopted by the national court of last resort, if that interpretation is not compatible with EU law. [Signatures]( *1 ) Language of the case: Bulgarian | b18b9-cbfe62b-4b81 | EN |
The extension of the period of validity of existing State aid must be regarded as the alteration of that aid and, therefore, as new aid | 26 October 2016 ( *1 )‛Appeal — State aid — Production of aluminium — Preferential electricity tariff granted by a contract — Decision declaring the aid compatible with the internal market — Termination of the contract — Judicial suspension of the effects of termination of the contract — Decision declaring the aid unlawful — Article 108(3) TFEU — Concepts of ‘existing aid’ and ‘new aid’ — Distinction’In Case C‑590/14 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 18 December 2014, Dimosia Epicheirisi Ilektrismou AE (DEI), established in Athens (Greece), represented by E. Bourtzalas, avocat, and by E. Salaka, C. Synodinos, C. Tagaras and A. Oikonomou, dikigoroi,appellant,the other party to the proceedings being: Alouminion tis Ellados VEAE, previously Alouminion AE, established in Maroussi (Greece), represented by G. Dellis, N. Korogiannakis, E. Chrysafis, D. Diakopoulos and N. Keramidas, dikigoroi,applicant at first instance European Commission, represented by E. Gippini Fournier and A. Bouchagiar, acting as Agents,defendant at first instance,THE COURT (Tenth Chamber),composed of A. Borg Barthet, acting as President of the Chamber, E. Levits and F. Biltgen (Rapporteur), Judges,Advocate General: M. Wathelet,Registrar: A. Calot Escobar,having regard to the written procedure,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1By its appeal, Dimosia Epicheirisi Ilektrismou AE (DEI) seeks to have set aside the judgment of the General Court of the European Union of 8 October 2014, Alouminion v Commission (T‑542/11, ‘the judgment under appeal’, EU:T:2014:859), by which that court annulled Commission Decision 2012/339/EU of 13 July 2011 on the State aid No SA.26117 — C 2/10 (ex NN 62/09) implemented by Greece in favour of Alouminion tis Ellados AE (OJ 2012 L 166, p. 83, ‘the contested decision’). Background to the dispute 2In 1960, Alouminion tis Ellados AE (‘AtE’), to which Alouminion AE and Alouminion tis Ellados VEAE (‘Alouminion’) became the successors in July 2007 and May 2015, respectively, in the production of aluminium in Greece, entered into a contract (‘the 1960 contract’) with the public electricity company DEI, under which it was granted a preferential tariff for the supply of electricity.3Article 2(3) of the 1960 contract made provision for that contract to be renewed automatically every five years, unless terminated by one of the parties, giving two years’ notice to the other party by registered letter with acknowledgement of receipt.4Under an agreement between AtE and the Greek State, formalised by a legislative decree of 1969, the 1960 contract was due to end on 31 March 2006, unless it was extended in accordance with its provisions.5By decision of 23 January 1992, the European Commission held that the preferential tariff granted to AtE constituted State aid compatible with the internal market.6In February 2004, DEI informed AtE of its intention to terminate the 1960 contract and, in accordance with the contractual provisions, ceased to charge it the preferential tariff as of 1 April 2006.7AtE challenged that termination before the competent national courts.8By order of 5 January 2007 (‘the first order for interim measures’), the Monomeles Protodikeio Athinon (Single-member Court of First Instance, Athens, Greece), in interlocutory proceedings, suspended, as an interim measure and ex nunc, the effects of the termination. That court held that that termination was not consistent with the provisions of the 1960 contract and the applicable domestic legal framework.9DEI challenged the first order for interim measures before the Polymeles Protodikeio Athinon (Multi-member Court of First Instance, Athens), which, also in interlocutory proceedings, granted, ex nunc, DEI’s application for the termination of the 1960 contract and the preferential tariff, by order of 6 of March 2008.10Thus, during the period from 5 January 2007 to 6 March 2008 (‘the period at issue’), AtE and, subsequently, Alouminion, continued to benefit from the preferential tariff.11In July 2008, the Commission received complaints. By letter dated 27 January 2010, it notified the Hellenic Republic of its decision to initiate the procedure laid down in Article 108(2) TFEU and invited the interested parties to submit their comments within one month of the date of publication of that letter.12That decision was published in the Official Journal of the European Union on 16 April 2010 (OJ 2007 C 96, p. 7).13The Commission in particular expressed doubts in that decision as to whether the preferential tariff charged by DEI to AtE, and subsequently Alouminion, during the period at issue, was at the same rate as the tariff charged to other large industrial consumers of high voltage electricity, since the preferential tariff was due to end on 31 March 2006 but had been extended by the first order for interim measures.14The Hellenic Republic, Alouminion and DEI sent their respective observations to the Commission.15By the contested decision, the Commission considered that the Hellenic Republic had unlawfully granted AtE and Alouminion State aid of an amount of EUR 17.4 million by applying the preferential tariff during the period in question. Given that that aid had been granted in contravention of Article 108(3) TFEU and was, accordingly, incompatible with the internal market, the Commission ordered the Hellenic Republic to recover the aid from Alouminion. The procedure before the General Court and the judgment under appeal 16By application lodged at the Registry of the General Court on 6 October 2011, Alouminion brought an action for annulment of the contested decision and for the Commission to be ordered to pay the costs.17Alouminion relied on ten pleas in law in support of its action, by means of which it disputed, principally, the classification of the measure at issue as new aid or, in the alternative, the classification of the preferential tariff as State aid or, in the further alternative, the obligation to recover the new aid resulting from the measure at issue.18The General Court upheld the first plea in law in the action and annulled the contested decision without ruling on the other pleas in law in that action. The appeal Admissibility Arguments of the parties19Alouminion considers that the present appeal is inadmissible.20DEI states that, at first instance, the General Court granted its request for leave to intervene in support of the forms of order sought by the Commission. The second paragraph of Article 56 of the Statute of the Court of Justice of the European Union provides that interveners in the proceedings at first instance may bring an appeal where the decision of the General Court directly affects them.21DEI claims that, in order to comply with the contested decision, it recovered the State aid at issue, with interest, namely, EUR 21276766.43. Inasmuch as the judgment under appeal annulled the contested decision, that recovery no longer has any legal basis.22DEI submits that it is thus liable to have to refund the sum recovered and that, in the light of the settled-case law of the Court, it must, therefore, be regarded as being directly affected by the judgment under appeal.Findings of the Court23It must be stated that, according to Article 56 of the Statute of the Court of Justice of the European Union, interveners other than the Member States and institutions of the Union can bring an appeal against a decision of the General Court only if that decision directly affects them.24It follows from the settled case-law of the Court, in that respect, that an appellant who is likely to have to refund a sum pursuant to the judgment of the General Court must be considered to be directly affected by that judgment (see to that effect, in particular, judgments of 24 September 2002, Falck and Acciaierie di Bolzano v Commission, C‑74/00 P and C‑75/00 P, EU:C:2002:524, paragraphs 46 to 58; and of 2 October 2003, International Power and Others v NALOO, C‑172/01 P, C‑175/01 P, C‑176/01 P and C‑180/01 P, EU:C:2003:534, paragraphs 52 and 53).25In the circumstances of this case, DEI would, in implementing the judgment under appeal, be bound to reimburse the sum it recovered in order to comply with the contested decision, that is to say EUR 21276766.43, which corresponds to the difference between the preferential tariff of electricity supply wrongly applied to Alouminion and the normal tariff.26It follows that the judgment under appeal is such as directly to affect the financial situation of DEI, in accordance with Article 56 of the Statute of the Court of Justice of the European Union. Consequently, the appeal is admissible. Substance 27DEI puts forward five pleas in law in support of its appeal.28By its first plea in law, divided into three parts, DEI, supported by the Commission, complains that the General Court infringed Article 108(3) TFEU and Article 1(b) and (c) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1).First part of the first plea in law– Arguments of the parties29By the first part of the first plea in law, DEI, supported by the Commission, complains that the General Court held that the extension of existing aid does not constitute, ipso facto, new aid.30DEI and the Commission argue that, after having recalled, in paragraph 53 of the judgment under appeal, the settled case-law of the Court according to which the extension of existing aid creates new aid distinct from the aid that was extended and the amendment of the duration of existing aid must also be regarded as new aid (judgment of 4 December 2013, Commission v Council, C‑121/10, EU:C:2013:784, paragraph 59 and case-law cited, and judgment of 4 December 2013, Commission v Council, C‑111/10, EU:C:2013:785, paragraph 58), the General Court attempted, in paragraph 54 of the judgment under appeal, to temper that case-law by interpreting the judgments of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311); and of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), as meaning that it is only if the aid scheme is substantially amended that it must be considered to be new aid.31Nevertheless, it does not follow from the judgments of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311); and of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), that the extension of the period of validity of an existing aid does not, in itself, lead to the grant of new aid, and, in any event, the judgment of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311), is not capable of being applied to the present case.32DEI and the Commission submit that the fact that the extension of the period of validity of existing aid creates new aid is the obvious corollary to Articles 107 and 108 TFEU.33According to DEI and the Commission, the State aid control system introduced by those provisions lays down a different procedure depending on whether the aid in question is existing or new. If it were to be accepted that the extension of existing aid did not constitute, ipso facto, new aid, a Member State could circumvent that difference in procedure by extending indefinitely such an aid, or by extending it over a short period of time.34DEI and the Commission consider that the concept of ‘existing aid’ must therefore be interpreted restrictively in order not to prejudice the obligation to notify and suspend laid down in Article 108(3) TFEU, which the Court has moreover already acknowledged in the judgments of 5 October 1994, Italy v Commission (C‑47/91, EU:C:1994:358, paragraphs 24 to 26); and of 21 March 2002, Spain v Commission (C‑36/00, EU:C:2002:196, paragraph 24).35By contrast, the concept of ‘new aid’ must be interpreted widely since, in accordance with Article 1(c) of Regulation No 659/1999, it includes ‘all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid’.36DEI and the Commission emphasise, moreover, that Article 4(1) of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 (OJ 2004 L 140, p. 1, and corrigendum OJ 2005 L 25, p. 74) provides that, ‘For the purposes of Article 1(c) of Regulation (EC) No 659/1999, an alteration to existing aid shall mean any change, other than modifications of a purely formal or administrative nature which cannot affect the evaluation of the compatibility of the aid measure with the [internal] market’.37Given those elements and the fact that the assessment, by the Commission, of the compatibility of aid with the internal market is based on the examination of economic data and the circumstances in the market at issue at the date of adoption of its decision and for the duration of the period over which it is envisaged the aid will be granted, DEI and the Commission claim that the extension of the period of validity of an aid cannot be regarded as a modification ‘of a purely formal or administrative nature’, within the meaning of Article 4(1) of Regulation No 794/2004, but constitutes the alteration of existing aid.38According to DEI, the settled case-law of the Court, referred to in paragraph 53 of the judgment under appeal, follows the same logic.39Alouminion considers that the first part of the first plea must be rejected.40In its opinion, in paragraph 54 of the judgment under appeal, the General Court explained the interpretation method to be adopted in order to establish whether there is in actual fact an alteration to an existing aid scheme and did not therefore attempt to qualify the settled case-law referred to in paragraph 53 of that judgment.41Alouminion argues that the judgment of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311), is relevant here, for in that judgment the Court found that the measure at issue had not amended the legislation introducing the contested privileges, as regards both their nature and the activities of the public institution to which they applied, and concluded that that measure was not capable of being considered the grant or alteration of existing aid. The same conclusion ought to be reached in the present case since, according to Alouminion, the first order for interim measures neither amended nor replaced the legal and contractual basis of the existing aid.42Alouminion submits that the General Court was fully entitled to refer to the judgment of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), for, even if the Court held, in paragraphs 46 and 47 of that judgment, that situations in which amendment of the legislative framework leads to an increase in the budget allocated to the aid scheme and to the extension of its duration constitute unlawful aid, it found, by contrast, that this is not true of situations amending the legislative framework, but not affecting the amount of the aid.43Alouminion concludes that, taking into account those judgments, the General Court has not erred in law by ruling, in paragraph 55 of the judgment under appeal, that the first order for interim measures could not be considered the grant or alteration of existing aid.44As for the argument according to which the extension of existing aid constitutes, ipso facto, new aid, Alouminion argues that the case-law relied on by DEI and the Commission in that respect is not relevant in the present case, because it concerns the strict assessment of the concept of ‘existing aid’, and not the assessment of the concept of ‘extension’.– Findings of the Court45As a preliminary point, it must be stressed that, in the context of the State aid control system, introduced by Articles 107 and 108 TFEU, the procedure differs according to whether the aid is existing or new. Whereas existing aid may, in accordance with Article 108(1) TFEU, be lawfully implemented so long as the Commission has made no finding of incompatibility, Article 108(3) TFEU provides that plans to grant or alter existing aid must be notified, in due time, to the Commission and may not be implemented until the procedure has led to a final decision (see, to that effect, judgments of 18 July 2013, P, C‑6/12, EU:C:2013:525, paragraph 36 and case-law cited; and of 19 March 2015, OTP Bank, C‑672/13, EU:C:2015:185, paragraph 35).46It must also be recalled, on the one hand, that, under Article 1(c) of Regulation (EC) No 659/1999, new aid is defined as ‘all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid’.47On the other hand, Article 4(1) of Regulation No 794/2004 provides that ‘For the purposes of Article 1(c) of Regulation (EC) No 659/1999, an alteration to existing aid shall mean any change, other than modifications of a purely formal or administrative nature which cannot affect the evaluation of the compatibility of the aid measure with the [internal] market’.48Furthermore, it follows from settled case-law that the concept of ‘State aid’ must be applied to an objective situation, which falls to be appraised on the date on which the Commission takes its decision (see, to that effect, judgments of 10 July 1986, Belgium v Commission, 234/84, EU:C:1986:302, paragraph 16, of 11 September 2003, Belgium v Commission, C‑197/99 P, EU:C:2003:444, paragraph 86, as well as of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 144).49It follows that the evaluation, by the Commission, of the compatibility of aid with the internal market is based on the assessment of the economic data and of the circumstances on the market at issue at the date on which the Commission makes its decision and takes into account, in particular, the period over which the grant of that aid is provided for. Consequently, the period of validity of existing aid is a factor likely to influence the evaluation, by the Commission, of the compatibility of that aid with the internal market.50In those circumstances, and as held by the Court in the judgments of 4 December 2013, Commission v Council (C‑121/10, EU:C:2013:784, paragraph 59) and of 4 December 2013, Commission v Council (C‑111/10, EU:C:2013:785, paragraph 58), extension of the duration of existing aid must be considered to be an alteration of existing aid and therefore, in accordance with Article 1(c) of Regulation No 659/1999, constitutes new aid.51It is in the light of those considerations as a whole that the merits of the first part of the first plea in law should be examined.52In the context of that first part, DEI, supported by the Commission, complains, in essence, that the General Court held that the extension of an existing aid does not constitute, ipso facto, new aid.53DEI and the Commission submit that, in paragraph 54 of the judgment under appeal, the General Court misinterpreted the judgments of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311), and of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), in order to qualify the case-law cited in paragraph 53 of the judgment under appeal, namely, the judgments of 4 December 2013, Commission v Council (C‑121/10, EU:C:2013:784, paragraph 59), and Commission v Council (C‑111/10, EU:C:2013:785, paragraph 58).54In that respect, it must be noted that, in paragraph 54 of the judgment under appeal, the General Court relied, on the one hand, upon the judgment of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311), to hold that for Article 108(1) and (3) TFEU to apply, ‘the emergence of new aid or the alteration of existing aid must be determined by reference to the provisions providing for it’, its detailed rules and its limits.55On the other hand, in that paragraph, the Court referred to paragraphs 46 and 47 of the judgment of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), to add that ‘it is … only where the alteration affects the actual substance of the original scheme that the latter is transformed into a new aid scheme’.56That interpretation is based on an erroneous reading of that last judgment. Indeed, paragraphs 46 and 47 merely show that the Court held that, by planning both an increase to the budget allocated to the aid scheme at issue and an extension of two years to the period of application of that scheme, the Member State concerned had created new aid, distinct from the aid authorised by the Commission.57It follows that, as DEI argues, the case-law settled by the judgments of 4 December 2013, Commission v Council (C‑121/10, EU:C:2013:784, paragraph 59); and of 4 December 2013, Commission v Council (C‑111/10, EU:C:2013:785, paragraph 58), according to which extension of the existing aid scheme creates new aid, follows the same logic as the judgments of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311); and of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291). It must, moreover, be emphasised that, in those judgments of 4 December 2013, the Court expressly referred to paragraphs 46 and 47 of the latter judgment.58It must, furthermore, be noted that, in this case, it follows from the facts as established by the Court and described in paragraphs 2 to 10 of the present judgment that the 1960 contract was to end on 31 March 2006, unless it was extended in accordance with its provisions. In February 2004, DEI informed AtE of its intention of terminating that contract and ceased, as of 1 April 2006, to apply the preferential tariff to AtE. Nevertheless, the first order for interim measures suspended, provisionally, the effects of that termination so that, during the period at issue, AtE and, subsequently, Alouminion continued to take advantage of the preferential tariff.59Therefore, contrary to the General Court’s findings in paragraphs 55 to 57 of the judgment under appeal, by reinstating the application of the preferential tariff during the period at issue, the first order for interim measures had the effect of altering the time limits of application of that tariff, as agreed in the 1960 contract, and therefore the time limits of the aid scheme, as authorised by the Commission in its decision of 23 January 1992. The first order for interim measures must, consequently, be regarded as constituting alteration of existing aid.60In the light of the aforementioned developments as a whole, it must be noted that, in paragraphs 54 to 56 of the judgment under appeal, the General Court misinterpreted and misapplied the case-law of the Court established by the judgments of 9 August 1994, Namur-Les assurances du crédit (C‑44/93, EU:C:1994:311), of 20 May 2010, Todaro Nunziatina & C. (C‑138/09, EU:C:2010:291), and confirmed by the judgments of 4 December 2013, Commission v Council (C‑121/10, EU:C:2013:784, paragraph 59), and of 4 December 2013, Commission v Council (C‑111/10, EU:C:2013:785, paragraph 58), and that, by ruling, in paragraph 57 of the judgment under appeal, that the first order for interim measures was not to be regarded as the grant or alteration of aid, as provided for in Article 108(3) TFEU, the General Court erred in law.61Accordingly, the first part of the first plea must be upheld.Second part of the first plea in law62By the second part of the first plea in law, DEI, supported by the Commission, submits that the arguments formulated by the General Court in paragraphs 61 to 68 of the judgment under appeal are erroneous.63In the first place, DEI and the Commission argue that, by referring, in paragraphs 53 and 61 to 63 of the judgment under appeal, to the judgments of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59); and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), to assert that only the extension of the duration of existing aid by a legislative intervention can result in the grant of new aid, the General Court misinterpreted those judgments.64In that respect, DEI and the Commission state that, if, according to the settled case-law of the Court, an omission attributed to a Member State may result in the emergence of State aid (judgment of 19 mars 2013, Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others, C‑399/10 P and C‑401/10 P, EU:C:2013:175, paragraphs 100 to 103), such would, a fortiori, be the case of a measure taken by an organ of the State, even when it is not a legislative measure.65In the second place, DEI and the Commission submit that the General Court was wrong to draw a distinction, in paragraph 63 of the judgment under appeal, between the judgments of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59); and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), and the present case on the ground that, in the cases giving rise to those judgments, the extension of the period of validity of the aid at issue was not automatic. It is, indeed, common ground that, in the present case, the extension of the application of the preferential tariff did not flow automatically from the 1960 contract, but stemmed from the first order for interim measures.66In the third place, DEI and the Commission note that, contrary to the General Court’s findings in paragraphs 65 to 67 of the judgment under appeal, it does not follow from the judgment of 20 September 2011, Regione autonoma della Sardegna and Others v Commission (T‑394/08, T‑408/08, T‑453/08 and T‑454/08, EU:T:2011:493), that a measure, such as the first order for interim measures, must, to constitute new aid, amend the legal framework of the existing aid and consequently alter the substance of that aid. It follows, in fact, from that judgment that the consequence of even a non-material alteration of existing aid is the grant of new aid.67Furthermore, the Commission argues that the legal basis of the aid during the period at issue was the first order for interim measures and that the General Court therefore wrongly held, in paragraphs 64, 67 and 68 of the judgment under appeal, that the first order for interim measures did not amend the legal framework of the 1960 contract, but merely provisionally interpreted its contents.68In doing so, the General Court found that that contract alone produced legal effects. According to the Commission, orders for interim measures do not interpret or decide the case provisionally, but produce independent legal effects, by recognising existing rights and obligations and constituting new rights and new obligations as well. The national court may, in particular, order interim measures when, a right must be protected or a situation resolved and, second, an imminent risk urgently or of necessity must be prevented. Thus, those measures could provide for the protection of a right that is connected to the main proceedings but is not necessarily the same right as that for which the main proceedings seek permanent judicial protection.69Alouminion argues that the first order for interim measures amended neither the original national legal framework nor the preferential tariff’s legal framework and that, therefore, the second part of the first plea in law must be rejected.70First of all, Alouminion submits that DEI was wrong to refer to the judgment of 20 September 2011, Regione autonoma della Sardegna and Others v Commission (T‑394/08, T‑408/08, T‑453/08 and T‑454/08, EU:T:2011:493), to argue that even a non-substantial alteration of existing aid results in the grant of new aid. Indeed, it is apparent from the Italian version of that judgment that such an alteration is merely ‘liable’ to lead to new aid.71Next, Alouminion submits that it follows from the judgments of 6 mars 2002, Diputación Foral de Álava v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59); and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), that, if the General Court found that the aid at issue in the cases giving rise to those judgments constituted new aid, that was because there had been intervention by the legislature.72Finally, Alouminion submits that the case-law cited by DEI, according to which even an omission attributed to a Member State may result in the grant of aid is not relevant in the present case.73As regards, in the first place, paragraphs 61 to 64 of the judgment under appeal, it must be noted, first, that, in paragraph 63 of that judgment, the General Court stated that, in the cases giving rise to the judgments of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59); and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), the extensions at issue were regarded as not constituting new aid ‘only because those extensions, far from being automatic, had required legislative intervention in order to adjust the privilege initially fixed’.74Even if it appears from the facts in paragraphs 1 to 9 of the judgment of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59), and in paragraphs 1 to 11 of the judgment of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), that the extensions at issue stemmed from a legislative intervention, the fact remains that there is nothing factor to indicate that it is because of that situation that, in those judgments, the General Court held that those extensions constituted new aid.75It follows, in particular, from paragraphs 174 and 175 of the judgment of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59), that the aid at issue had been granted on the basis of a legal instrument, namely, a legislative intervention, adopted when the Kingdom of Spain was already a Member State and that, even if the privilege provided in that legal instrument constituted only the extension of an earlier measure, the fact remained that, because of the alteration of the duration of the aid at issue, it had to be regarded as new aid. It follows that the extensions at issue were considered to be new aid, not because they stemmed from a legislative intervention, but because of their effects.76Second, in paragraphs 63 and 64 of the judgment under appeal, the General Court distinguished the judgments of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59), and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267), from the present case on the grounds that, in the cases giving rise to those judgments, the extension of the period of validity of the aid at issue had not been automatic.77It should be noted that it is clear from the facts as determined by the General Court and described in paragraphs 8 to 10 of the present judgment that, here, the extension of the application of the preferential tariff did not automatically stem from the 1960 contract, but resulted from the first order for interim measures.78Consequently, the arguments in paragraphs 61 to 64 of the judgment under appeal are based on an erroneous interpretation and application of the judgments of 6 March 2002, Diputación Foral de Álava and Others v Commission (T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59); and of 1 July 2010, Italy v Commission (T‑53/08, EU:T:2010:267).79As regards, in the second place, paragraphs 65 to 68 of the judgment under appeal, it must be noted that, in paragraphs 65 and 66 of that judgment, the General Court stated that if, in the judgment of 20 September 2011, Regione autonoma della Sardegna and Others v Commission (T‑394/08, T‑408/08, T‑453/08 and T‑454/08, EU:T:2011:493), it was indeed held that the aid granted on a legal basis substantively different from that of the scheme approved by the approval decision had to be considered new aid, the original aid, in the case which gave rise to that judgment, had nevertheless been approved by the Commission and the new aid had been granted by a new legislative measure conflicting with the Commission’s approval decision.80Then, after noting, in paragraph 67 of the judgment under appeal, that, in the present case, it was not the purpose of the first order for interim measures to amend the legal framework of the preferential tariff in relation to that approved by the Commission, the General Court concluded therefrom, in paragraph 68 of that judgment, that the legal basis of the aid at issue was not the first order for interim measures, but the 1960 contract and the relevant national law, as interpreted, provisionally, by the first order for interim measures.81It must be observed, in that respect, that, in so far as it follows from paragraph 59 of the present judgment that, by extending the application of the preferential tariff during the period at issue, the first order for interim measures had the effect of altering the time limits of the 1960 contract, and accordingly the time limits of the preferential tariff as described in paragraph 4 of the present judgment, the legal basis of the aid during the period at issue was the first order for interim measures.82Consequently, paragraphs 67 and 68 of the judgment under appeal are vitiated by an error of law.83The second part of the first plea in law too must therefore be upheld in part.Third part of the first plea in law84By the third part of its first plea in law, DEI claims that the General Court erred in law by ruling, in paragraph 58 of the judgment under appeal, that a national court’s decision on interim measures of a national court cannot result in the grant of aid.85DEI states, in that respect, that it follows from the Court’s settled case-law that national courts are competent to adopt interim measures in order to prevent the distortion of competition stemming from the grant of aid in infringement of the standstill obligation provided for in Article 108(3) TFEU and that the national courts’ decisions adopting such measures are, therefore, part of the State aid preventive control system.86According to DEI, it follows that any national court, including a national court ruling in interlocutory proceedings, must assess whether a measure it has itself prescribed can have consequences that could render it incompatible with the internal market because it generates the grant of an illegal competitive advantage for the future.87In this case, that would mean that the national court’s provisional assessment in the first order for interim measures regarding the termination of the 1960 contract could not permanently dispel the uncertainty concerning the legal nature and the effects of the application of the preferential tariff after the expiry of its initial period of validity and that that order ought to have been subject to the preliminary examination provided for in Article 108(3) TFEU.88The Commission states, like DEI, that the circumstance that a new aid was created by an order for interim measures of the national court is not relevant for the purpose of the assessment of compatibility of that aid with the internal market.89According to the Commission, the opposite conclusion would amount to interpreting the concept of aid subjectively, depending on the body that adopts the measure introducing the aid, and would therefore be contrary to the Court’s case-law and, in particular, the judgment of 8 December 2011, France Télécom v Commission (C‑81/10 P, EU:C:2011:811, paragraph 17 and case-law cited), in which it was held that the concept of State aid has a legal character and must be interpreted on the basis of objective factors and according to the effects of that aid.90The Commission adds that DEI’s argument that it is for the national court, in the context of interlocutory proceedings, to notify the Commission and to subject to its preventive review any new measure granting new aid or altering existing aid is borne out by the judgment of 18 July 2007, Lucchini (C‑119/05, EU:C:2007:434, paragraphs 59 to 63), from which it is apparent that exclusive competence of the Commission and the primacy of EU law preclude the national court from applying a national measure where its application would be an obstacle to the recovery of the State aid.91The Commission notes also that, in accordance with paragraph 58 of its Notice on the enforcement of State aid law by national courts (OJ 2009 C 85, p. 1), where there is a risk that the payment of unlawful aid will be made during the course of national court proceedings, the national court’s duty to prevent infringements of Article 108(3) of the Treaty can require it to issue an interim order preventing the illegal disbursement until it has ruled on the substance of the matter. It concludes that, logically, such aid cannot originate from a national court itself.92Alouminion submits that the third branch of the first plea in law is based on an erroneous reading of the judgment under appeal and must, therefore, be rejected.93Alouminion argues that, in actual fact, in paragraph 58 of the judgment under appeal, the General Court held that the first order for interim measures does not have the effect of granting a new privilege, distinct from the existing aid. The General Court has not, therefore, excluded the situation in which a State aid is granted by means of a national court’s decision granting a new privilege distinct from existing aid, but merely found that such was not the case here.94In any event, Alouminion claims, first, that paragraph 58 of the judgment under appeal is superfluous in that it confirms, by converse inference, the reasoning developed in paragraphs 55 to 57 of that judgment and, second, that the assessment, by the Tribunal, of the contents of the first order for interim measures amounts to a factual assessment, which falls outside the review by the Court in the context of the appeal.95It should be noted, first of all, that, in accordance with settled case-law, implementation of the State aid control system is a matter, first, for the Commission and, second, for the national courts, each of which fulfil complementary and separate roles (judgments of 9 August 1994, Namur-Les assurances du crédit, C‑44/93, EU:C:1994:311, paragraph 14; and of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 27 and case-law cited, as well as of 19 March 2015, OTP Bank, C‑672/13, EU:C:2015:185, paragraph 36).96National courts do not have jurisdiction to rule on a State aid’s compatibility with the internal market, that supervision falling within the exclusive competence of the Commission (see, to that effect, judgments of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraph 27, of 18 July 2013, P, C‑6/12, EU:C:2013:525, paragraph 38 and case-law cited, and of 19 March 2015, OTP Bank, C‑672/13, EU:C:2015:185, paragraph 37).97By contrast, it is for the national courts to ensure the safeguarding, until the final decision of the Commission, of the rights of individuals when the obligation to give prior notice to the Commission under Article 108(3) TFEU has been infringed (judgments of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraph 27 and case-law cited, of 18 July 2013, P, C‑6/12, EU:C:2013:525, paragraph 39, as well as 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 28).98For this purpose, proceedings concerning State aid may be brought before national courts, requiring them to interpret and apply the concept of ‘State aid’ in Article 107(1) TFEU, in particular in order to determine whether a measure introduced without observance of the preliminary examination procedure provided for in Article 108(3) EC ought to have been subject to this procedure (judgments of 18 July 2007, Lucchini, C‑119/05, EU:C:2007:434, paragraph 50 and case-law cited, as well as of 18 July 2013, P, C‑6/12, EU:C:2013:525, paragraph 38).99If the national courts reach the conclusion that the measure at issue should have in fact been notified to the Commission, they must ascertain whether the Member State concerned has fulfilled that obligation and, if that is not the case, declare that measure unlawful (judgment of 19 March 2015, OTP Bank, C‑672/13, EU:C:2015:185, paragraph 68).100It is for those courts to draw all the necessary inferences from the infringement of Article 108(3) TFEU, in accordance with domestic law, with regard both to the validity of the acts giving effect to the aid and the recovery of financial support granted in disregard of that provision (judgment of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraph 29 and case-law cited).101National courts are, in particular, competent to adopt interim measures in order to prevent the distortion of competition stemming from the grant of an aid in contravention of the standstill obligation provided for in Article 108(3) TFEU (see judgments of 21 November 1991, Fédération nationale du commerce extérieur des produits alimentaires et Syndicat national des négociants et transformateurs de saumon, C‑354/90, EU:C:1991:440, paragraph 11, of 11 July 1996, SFEI and Others, C‑39/94, EU:C:1996:285, paragraphs 39, 40 and 53, and of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 34). Thus, in accordance with paragraph 58 of the Commission’s Notice on the enforcement of State aid law by national courts (OJ 2009 C 85, p. 1), where there is a risk that the payment of unlawful aid will be made during the course of national court proceedings, the court may find it necessary to issue an interim order preventing the illegal disbursement until the substance of the matter is resolved.102It is in the light of all these considerations that the merits of the third part of the first plea in law, by which DEI complains that the General Court ruled, in paragraph 58 of the judgment under appeal, that a national court’s decision on interim measures cannot have as a consequence the grant of a State aid, must be assessed.103It should be noted in this regard that, in paragraph 58 of the judgment under appeal, the General Court held that the act of accepting that the first order for interim measures constitutes the grant or alteration of aid, in accordance with Article 108(3) TFEU, ‘would ... be tantamount to requiring, in law and in fact, the national court hearing the application for interim measures in a dispute relating to a contract, as in the present case, to notify to the Commission and submit for its preventive review not only new aid or alterations of aid properly so-called granted to an undertaking in receipt of existing aid but also all measures which affect the interpretation and implementation of that contract that may have an impact on the functioning of the internal market, on competition or simply on the actual duration, over a specific period, of aid which continues to exist in principle although the Commission has not taken any decision with regard to approval or incompatibility’.104Thus, in paragraph 58 of the judgment under appeal, the General Court differentiated between ‘new aid or alterations of aid properly so-called’ and measures that affect the interpretation and implementation of a contract approved by the Commission as a State aid compatible with the internal market, in other words, measures such as the first order for interim measures, and concluded that the national court hearing the application for interim measures is not subject to the obligations falling upon, in general, the national court in accordance with Articles 107 and 108 TFEU.105It must be borne in mind that the application of the EU State aid rules is based on a duty of sincere cooperation between the national courts, on the one hand, and the Commission and the European Union courts, on the other, in the context of which each acts on the basis of the role assigned to it by the FEU Treaty. In the context of that cooperation, national courts must take all the measures, whether general or specific, necessary to ensure fulfilment of the obligations under EU law and must refrain from those that may jeopardise the attainment of the objectives of the Treaty, as follows from Article 4(3) TEU. Accordingly, national courts must, in particular, refrain from taking decisions that conflict with a decision of the Commission (judgment of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 41).106Furthermore, the Court held, in paragraphs 46 and 47 of the judgment of 18 July 2013, P (C‑6/12, EU:C:2013:525), that it is for the national courts to verify whether the detailed arrangements for the implementation of an aid regime have been amended and, if it were to transpire that any amendments had had the effect of extending the scope of the regime, it could be necessary to consider that the aid was new, with the consequence that the notification procedure set out in Article 108(3) TFEU would be applicable.107Accordingly, it is important to declare that the General Court erred in law by holding, in paragraph 58 of the judgment under appeal, that, because it is ruling in interlocutory proceedings, a national court seised of a dispute relating to a contract does not have to notify to the Commission, in accordance with Article 108(3) TFEU, ‘all measures which affect the interpretation and implementation of that contract that may have an impact on the functioning of the internal market, on competition or simply on the actual duration, over a specific period, of aid which continues to exist’.108Indeed, to make it possible for national courts hearing an application for interim measures to escape the obligations incumbent upon them in the context of the control of State aids introduced by Articles 107 and 108 TFEU would lead those courts to disregard the limits of their own jurisdiction, intended to guarantee the observance of EU State aid law, and also to infringe their duty of sincere cooperation with the institutions of the Union, referred to in paragraph 105 of the present judgment, and would, therefore, undeniably prejudice the effectiveness of those articles.109Accordingly, the third part of the first plea must be [upheld].110In these circumstances, the first plea must be upheld in its entirety and, without there being any need to examine the other grounds of appeal, the judgment under appeal must be set aside. Referral of the case back to the General Court 111According to the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, the latter may, where the decision of the General Court has been annulled, either itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.112In the present case, since the General Court examined only one of the pleas in law put forward by the parties, the Court considers that the state of the proceedings does not permit it to give final judgment. Accordingly, the case must be referred back to the General Court. Costs 113Since the case has been referred back to the General Court, the costs relating to the present appeal proceedings must be reserved.On those grounds, the Court (Tenth Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 8 October 2014 in Alouminion v Commission (T‑542/11, EU:T:2014:859); 2. Refers Case T‑542/11 back to the General Court of the European Union; 3. Reserves the costs. [Signatures]( *1 ) Language of the case: Greek. | 7c85c-a36c2b7-49b7 | EN |
The Court rejects France Télécom’s appeal in the case involving the reform of the arrangements for financing the pensions of civil servants working for that company | 26 October 2016 ( *1 )‛Appeal — Competition — State aid — Aid granted by the French Republic to France Télécom — Reform of the arrangements for financing the retirement pensions of civil servants working for France Télécom — Reduction of the compensation to be paid to the State by France Télécom — Decision declaring the aid compatible with the internal market under certain conditions — Definition of aid — Definition of economic advantage — Selective nature — Adverse effect on competition — Distortion of the facts — No statement of reasons — Substitution of grounds’In Case C‑211/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 6 May 2015, Orange, formerly France Télécom, established in Paris (France), represented by S. Hautbourg and S. Cochard-Quesson, avocats,appellant,the other party to the proceedings being: European Commission, represented by B. Stromsky and L. Flynn, acting as Agents,defendant at first instance,THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, E. Regan, A. Arabadjiev (Rapporteur), C.G. Fernlund and S. Rodin, Judges,Advocate General: N. Wahl,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 3 December 2015,after hearing the Opinion of the Advocate General at the sitting on 4 February 2016,gives the following Judgment 1By its appeal, Orange seeks to have set aside the judgment of the General Court of the European Union of 26 February 2015, Orange v Commission (T‑385/12, not published, ‘the judgment under appeal’, EU:T:2015:117), by which that court dismissed its application for annulment of Commission Decision 2012/540/EU of 20 December 2011 on State aid C 25/08 (ex NN 23/08) — reform of the arrangements for financing the retirement pensions of civil servants working for France Télécom implemented by the French Republic in favour of France Télécom (OJ 2012 L 279, p. 1) (‘the decision at issue’). Background to the dispute 2The background to the dispute is summarised as follows in paragraphs 1 to 19 of the judgment under appeal:‘1.The measures covered by the present case are the changes introduced in 1996 to the scheme of contributions borne by the applicant, Orange, then called France Télécom, with regard to the payment of the retirement pensions of its staff members with civil servant status.That scheme, which had been established at the time of the foundation, in 1990, of France Télécom as an undertaking distinct from the State administration, by Law No 90-568 of 2 July 1990 on the organisation of the public postal and telecommunications service (JORF of 8 July 1990, p. 8069, “the 1990 Law”), was modified by Law No 96-660 of 26 July 1996 on the national company France Télécom (JORF of 26 July 1996, p. 11398, “the 1996 Law”). The new scheme was introduced at a time when France Télécom was set up as a public limited company, listed on the stock exchange and had an increasing share of its capital opened up to private investment, and also when the markets in which it operated, in France and in other Member States of the European Union, were fully opened up to competition.3As to responsibilities concerning the financing of social security benefits for staff members with civil servant status, the 1996 Law changed the amount which Article 30 of the 1990 Law required France Télécom to pay to the Public Treasury in return for the payment and servicing of the pensions of its civil servants effected by the State (“the contested measure”).4The 1990 Law provided that France Télécom was required to pay to the Public Treasury, in return for the payment and servicing of the pensions granted to its civil servants, the amount of the deduction made from the salary of the civil servant, the level of which was fixed by Article L. 61 of the French Civilian and Military Retirement Pensions Code, and an additional contribution sufficient to fund, in full, the pensions that had been and were to be granted to their retired civil servants.5France Télécom also participated in the so-called “compensation” and “over-compensation” schemes, which provided for transfers in order to ensure equilibrium with the pension schemes for civil servants of other public entities.6The 1996 Law changed the compensation payable under Article 30 of the 1990 Law as follows. First, France Télécom was required to pay the amount deducted from the salary of the civil servants, this amount remaining the same as under the 1990 Law. Secondly, it was subjected to an “employer’s contribution in full discharge of liabilities”, which replaced the previous employer’s contribution. This new contribution was based on a “competitively fair rate” which, in turn, was based on equalisation of the levels of wage-related mandatory social security contributions and tax payments between France Télécom and the other undertakings in the telecommunications sector subject to the ordinary social security arrangements, in respect of risks which are common to ordinary employees and civil servants, and excluding risks which are not common to ordinary employees and civil servants (in particular, unemployment and the claims of employees in the event of the undertaking going into administration or liquidation). Thirdly, France Télécom was subjected to an “exceptional flat-rate contribution”, the amount of which was fixed by the Finance Law for 1997 (Law No 96-1181 of 31 December 1996, JORF of 31 December 1996, p. 19490) at FRF 37.5 billion (equivalent to EUR 5.7 billion). This contribution included the amount of the annual provisions (EUR 3.6 billion) that France Télécom had set aside, up to 1996, against the cost of the future civil servant pensions which were anticipated at that time, as well as an additional amount (EUR 2.1 billion).7The 1996 Law also excluded France Télécom from the scope of the compensation and over-compensation schemes.…9By letter of 20 May 2008, the Commission informed the French Republic of its decision to initiate the procedure laid down in Article 108(2) TFEU (“the decision to initiate the investigation procedure”) in respect of the aid at issue. The French Republic submitted its observations on 18 July 2008.12On 20 December 2011, the Commission adopted the [decision at issue], which declares the aid at issue to be compatible with the internal market on certain conditions.13In the [decision at issue], the Commission concluded that the contested measure constituted State aid within the meaning of Article 107(1) TFEU.14In relation particularly to the assessment of economic advantage, the Commission established that the contested measure conferred an economic advantage on France Télécom, in that it imposed a new and substantial burden on the State in relation to the payment and servicing of the pensions granted to the civil servants of France Télécom, while reducing the compensation payable by France Télécom.15In this regard, the Commission, first, in recital 105 of the [decision at issue], calculated the amount of the aid in question as the annual difference between the contribution in full discharge of liabilities paid by France Télécom pursuant to the 1996 Law and the costs that it would have paid pursuant to the 1990 Law, and, secondly, in recital 113 of the [decision at issue], indicated its view that the payment of the exceptional flat-rate contribution had reduced the amount of aid from which France Télécom benefited.16The Commission also established that the contested measure was selective in that it concerned only France Télécom, and that it distorted or threatened to distort competition, as the balance sheet of France Télécom was relieved of liabilities and costs, which enabled it to develop on the markets for telecommunications which were gradually opened to competition, in France and in other Member States.17The Commission proceeded to assess the compatibility of the contested measure with the internal market, within the meaning of Article 107(3)(c) TFEU, concluding that it did not comply with the principle of proportionality, in that it did not allow a level playing field. According to the Commission, the compensation paid by France Télécom to the State was not equal to all the social security costs to which the budgets of its competitors were subject.18Accordingly, the Commission established that, in order to fulfill the criterion of common interest under Article 107(3) TFEU, for the aid at issue to be compatible with the internal market it was necessary for the employer’s contribution in full discharge of liabilities payable by France Télécom to be calculated and levied so as to equalise the levels of all the wage-based mandatory social security contributions and tax payments between France Télécom and the other undertakings of the telecommunications sector covered by the ordinary social security arrangements, taking into account not only the risks common to ordinary employees and civil servants, but also the non-common risks. This contribution was to be levied on France Télécom from the day on which the amount of the exceptional flat-rate contribution, capitalised at the discount rate resulting from the application of the Commission notice on the method for setting the reference and discount rates (OJ 1996 C 232, p. 10, “the notice on reference rates”), equaled the amount of the contributions and costs that France Télécom would have been required to pay under Article 30 of the 1990 Law.19The operative part of the [decision at issue] is worded as follows:“Article 1The State aid resulting from the reduction of the compensation to be paid to the State for the payment and servicing of the pensions granted, pursuant to the Civilian and Military Retirement Pensions Code, to the civil servants of France Télécom pursuant to [the 1996 Law] amending [the 1990 Law] shall be compatible with the internal market on the conditions provided for in Article 2.Article 2The employer’s contribution in full discharge of liabilities, payable by France Télécom under Article 30, point (c) of [the 1990 Law], shall be calculated and levied so as to equalise the levels of all the wage-based social security contributions and tax payments between France Télécom and the other undertakings of the telecommunications sector covered by the ordinary social security arrangements.To fulfil this condition, no later than within seven months of the notification of the present decision, the French Republic:(a)shall amend Article 30 of [the 1990 Law] and the regulatory or other texts adopted to implement it so that the bases for calculating and levying the employer’s contribution in full discharge of liabilities, payable by France Télécom, are not confined solely to the risks common to ordinary employees and civil servants, but also include the non-common risks;(b)shall levy on France Télécom, from the day on which the amounts of the exceptional contribution introduced by [the 1996 Law] capitalised at the discount rate resulting from the application of the [notice on reference rates] applicable in this case equal the amount of the contributions and costs that France Télécom would have continued to pay under Article 30 of [the 1990 Law] in its initial wording, an employer’s contribution with full discharge of liabilities calculated according to the terms specified in point (a), taking into account the risks that are common and not common to ordinary employees and civil servants.…”’ Procedure before the General Court and the judgment under appeal By application lodged at the Registry of the General Court on 22 August 2012, Orange brought an action for the annulment of the decision at issue.In support of its action, Orange put forward four pleas in law, the first alleging errors of law, manifest errors of assessment and infringement of the obligation to state reasons, in so far as the Commission took the view that the measure at issue constituted State aid within the meaning of Article 107(1) TFEU.By the judgment under appeal, the General Court dismissed the application in its entirety and ordered Orange to pay the costs. Forms of order sought by the parties Orange claims that the Court should:—set aside the judgment under appeal and annul the decision at issue;in the alternative, set aside the judgment under appeal and refer the case back to the General Court;order the Commission to pay the costs.The Commission contends that the Court should:dismiss the appeal; andorder Orange to pay the costs. The request to reopen the oral procedure 8After judgment was delivered by the General Court on 14 July 2016 in Germany v Commission (T‑143/12, EU:T:2016:406), Orange requested, by document lodged at the Registry of the Court of Justice on 26 July 2016, that the oral stage of the procedure be reopened.In support of that request, Orange maintains, in essence, that the conclusion reached by the General Court in the judgment under appeal concerning the existence of a selective economic advantage is irreconcilable with the conclusion reached in the judgment of 14 July 2016 and that the legal considerations relating to that judgment were directly relevant to the assessment of the first and second grounds of appeal in the present case.10In that regard, it must be recalled that, under Article 83 of the Court’s Rules of Procedure, the Court may at any time, after hearing the Advocate General, order the opening or reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where a party has, after the close of that part of the procedure, submitted a new fact which is of such a nature as to be a decisive factor for the decision of the Court (judgment of 22 June 2016, DK Recycling und Roheisen v Commission, C‑540/14 P, EU:C:2016:469, paragraph 28).11That is not the position in the present case. The Court, after hearing the Advocate General, considers that it has all the information necessary to give a ruling and that the case does not have to be examined in the light of a new fact which is of such a nature as to be a decisive factor for its decision or of an argument which has not been debated before it.In the light of the foregoing, the Court considers that there is no need to order that the oral part of the procedure be reopened. The appeal First ground of appeal, alleging that the General Court erred in law in its assessment as to whether the contested measure was to be classified as State aid First part of the first ground of appeal, alleging that the General Court erred in law in its assessment regarding the existence of an advantage– Arguments of the partiesIn the first place, Orange submits that the General Court erred in law by holding, in paragraphs 42 and 43 of the judgment under appeal, that the allegedly compensatory nature of the contested measure did not preclude it being categorised as State aid on the ground that it is only in so far as a State measure must be regarded as compensation for services provided in fulfillment of public service obligations, in accordance with the criteria established by the Court in the judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415), that such a measure falls outside Article 107(1) TFEU.Contrary to the view taken by the General Court, the Court of Justice did not rule out the possibility, in paragraph 97 of the judgment of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission (C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368), that the compensatory nature of measures other than those connected with services provided in performance of public service obligations might preclude their categorisation as State aid.In the second place, Orange contends that the General Court’s assessment is at odds with the judgment of 23 March 2006, Enirisorse (C‑237/04, EU:C:2006:197), in which the Court of Justice held that a derogation from general Italian law did not fall within the definition of State aid, on the ground that a law which merely prevents an undertaking’s budget being burdened with a charge which, in a normal situation, would not have existed, does not confer an advantage on that undertaking for the purpose of Article 107(1) TFEU.First, contrary to what the General Court stated in paragraphs 39 to 41 of the judgment under appeal, there is nothing in the judgment of 23 March 2006, Enirisorse (C‑237/04, EU:C:2006:197), to suggest that the applicability of that case-law is confined to what are referred to as ‘dual derogation’ arrangements, that is to say arrangements whereby, in order to prevent the budget of the beneficiary of the measure being burdened with a charge which, in a normal situation, would not have existed, provision is made for a derogation intended to neutralise a previous derogation from the general system in place.Second, Orange contends that the 1990 Law imposed an obligation on France Télécom to which its competitors were not subject, thus creating an abnormal burden within the meaning of the case-law cited above, for which the 1996 Law provided a remedy.In the third place, Orange states that, in paragraph 41 of the judgment under appeal, the General Court took as its reference framework, for the purpose of determining whether the 1996 Law conferred an advantage, the original scheme applicable to France Télécom civil servants under the 1990 Law.Orange submits that the objective of the 1996 Law was to place France Télécom in a situation governed by general law as regards the arrangements for financing the retirement pensions of civil servants working for France Télécom and that, in the light of that objective, the relevant reference framework was that applicable to competing undertakings in respect of employers’ contributions to the retirement pensions of their staff.20Therefore, according to Orange, the General Court erred in law by endorsing the Commission’s choice of reference framework.21The Commission disputes Orange’s arguments.– Findings of the Court22It should be noted at the outset that, by the second and third arguments of the first part of the first ground of appeal, as summarised in paragraphs 15 to 20 above, Orange contends that the French State did not confer any economic advantage on it when it adopted the 1996 Law. By the first argument of the first part, summarised in paragraphs 13 and 14 above, that company maintains that, even if that law had conferred such an advantage, it would simply have compensated for the structural disadvantage to which it was subject under the arrangements introduced by the 1990 Law by comparison with its competitors, so that such an advantage could not justify a finding of State aid.23As regards the arguments alleging that it did not enjoy an economic advantage, Orange submitted before the General Court that it was apparent from the judgment of 23 March 2006, Enirisorse (C‑237/04, EU:C:2006:197), that a law which merely prevents an undertaking’s budget being burdened with a charge which, in a normal situation, would not have existed, does not confer an advantage on that undertaking for the purpose of Article 107(1) TFEU.24Moreover, Orange argued before the General Court that the Commission’s choice of reference framework for the purpose of determining whether it enjoyed an economic advantage, that is the scheme applicable to France Télécom under the 1990 Law, as opposed to the scheme applicable to competing undertakings, was incorrect in law and vitiated by manifest errors of assessment.25In paragraphs 38 to 41 of the judgment under appeal, the General Court dismissed the argument based on the judgment of 23 March 2006Enirisorse (C‑237/04, EU:C:2006:197), taking the view that that case-law was applicable only in cases involving ‘dual derogation’ arrangements, that is to say arrangements whereby, in order to prevent the budget of the beneficiary of the measure being burdened with a charge which, in a normal situation, would not have existed, provision is made for a derogation intended to neutralise a previous derogation from the general system in place, which was not the case here.26That assessment is not vitiated by the errors of law alleged by Orange in the second argument of the first part of the first ground of appeal.27It should be noted in that regard that, in paragraphs 46 to 48 of the judgment of 23 March 2016, Enirisorse (C‑237/04, EU:C:2006:197), the Court held that national legislation which offers an advantage neither to shareholders of a company nor to the company itself, in so far as it merely prevents its budget being burdened with a charge which, in a normal situation, would not have existed and therefore simply regulates an exceptional right and without seeking to reduce a charge which that company would normally have had to bear cannot be regarded as an advantage within the meaning of Article 107(1) TFEU.28It should be noted, as observed by the Advocate General in point 42 of his Opinion, that a particular feature of the situation which gave rise to the judgment of 23 March 2006, Enirisorse (C‑237/04, EU:C:2006:197), was that it concerned a national measure which had the effect of neutralising the effects of a system which derogated from the general system in place.29In the present case, the General Court found, in its assessment of the facts in paragraph 41 of the judgment under appeal, against which there is no appeal, that the arrangements for the retirement pensions of France Télécom civil servants were legally distinct and clearly separate from the arrangements applicable to ordinary employees. It inferred from this that the latter arrangements were not the arrangements normally applicable to France Télécom civil servants, so that the 1996 Law had not removed an abnormal burden borne by the budget of that undertaking or reverted to the normal arrangements.30In those circumstances, the General Court did not err in law in finding, in paragraph 41 of the judgment under appeal, that ‘it [was] not possible to conclude, as [did] the applicant, that the measure at issue was intended to prevent France Télécom being subject to a charge which, in a normal situation, should not be borne by its budget within the meaning of the judgment [of 23 March 2006, Enirisorse (C‑237/04, EU:C:2006:197)]’.31As a consequence, the second argument of the first part of the first ground of appeal must be rejected as unfounded.32With regard to the third argument of the first part of the first ground of appeal, concerning the choice of reference framework, it should be noted that the General Court held, in paragraph 37 of the judgment under appeal, that by reducing the social security contributions introduced by the 1990 Law, the 1996 Law conferred, in principle, an advantage on France Télécom.33Moreover, as noted in paragraph 29 above, the General Court held in paragraph 41 of the judgment under appeal that the arrangements for the retirement pensions of civil servants derive from a regime that is legally distinct and clearly separate from the regime applicable to ordinary employees, such as the employees of France Télécom’s competitors, and that the 1990 Law did not introduce derogating arrangements, as the contributions to the pensions of civil servants had not previously been subject to the ordinary arrangements for pension contributions.34The General Court thus dismissed Orange’s argument that, for the purpose of determining whether or not France Télécom enjoyed an economic advantage, the Commission had used an incorrect reference framework.35By the third argument of the first part of the first ground of appeal, as summarised in paragraphs 18 to 20 above, Orange does not dispute, as the Commission was correct to observe, the assessment set out in paragraph 37 of the judgment under appeal and simply takes issue with the General Court for failing to take into account, in identifying the correct reference framework, the French State’s objectives when it adopted the 1996 Law.36Orange maintains, in essence, that the objective of the 1996 Law was to restore the general law conditions as regards the arrangements for financing the retirement pensions of civil servants working for France Télécom and thus place the company in the same situation as that of its competitors. Accordingly, and in the light of the objectives of the 1996 Law, the ‘standard’ situation to be adopted for the purpose of determining whether that law had the effect of eliminating a normal or an abnormal cost would be that of a private operator.37Accordingly, Orange’s line of argument does not enable the Court to ascertain whether, when it rejected that company’s objection that the Commission had chosen the incorrect reference framework, the General Court committed other errors of law than the error based on failure to take account of the French State’s objectives.38In that regard, it is the Court’s established case-law that Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects (judgment of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 94 and the case-law cited).39It follows that the third argument of the first part of the first ground of appeal must be rejected as manifestly unfounded.40As regards the first argument of the first part of the first ground of appeal, concerning compensation for a structural disadvantage, Orange relied at first instance on the judgments of the General Court of 16 March 2004, Danske Busvognmænd v Commission (T‑157/01, EU:T:2004:76), and of 28 November 2008, Hotel Cipriani and Others v Commission (T‑254/00, T‑270/00 and T‑277/00, EU:T:2008:537), in support of its claim that an advantage eliminating additional burdens which were imposed by derogating arrangements and were not borne by competing undertakings does not constitute State aid. Indeed, according to Orange, compensation for a structural disadvantage may preclude the categorisation of a measure as State aid in certain specific situations, not merely in cases involving services of general public interest.41The General Court rejected that argument in paragraphs 42 and 43 of the judgment under appeal, stating that, even on the assumption that it were established, the compensatory nature of the costs reduction granted in the present case would not make it possible to preclude the categorisation of that measure as State aid.42The General Court stated in that regard that it is apparent from the case-law of the Court of Justice, in particular paragraphs 90 to 92 of the judgment of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission (C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368), that it is only in so far as a State measure must be regarded as compensation for the services provided by undertakings entrusted with performing a service in the general public interest in order to discharge public service obligations in accordance with the criteria established in the judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415), that such a measure falls outside Article 107(1) TFEU.43Those findings are not vitiated by any of the error of law alleged by Orange in its first argument in the first part of the first plea in law.44Indeed, it is clear that, to date, the only situation recognised by the Court’s case-law in which the finding that an economic advantage has been granted does not lead to the measure at issue being categorised as State aid within the meaning of Article 107(1) TFEU is that in which a State measure represents the compensation for the services provided by undertakings entrusted with performing a service in the general public interest in order to discharge public service obligations, in accordance with the criteria established in the judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415).45The General Court was therefore entitled to take the view that Orange could not derive valid arguments from the judgments of the General Court cited in paragraph 40 above in order to establish that compensation for a structural disadvantage may preclude a measure being categorised as State aid.46It follows that the first argument of the first part of the first ground of appeal must be rejected as unfounded.47In the light of the foregoing, the first part of the first ground of appeal must be rejected.The second part of the first ground of appeal, alleging that the General Court erred in law in its assessment of the selective nature of the contested measure48Orange submits that the General Court erred in law in finding, in paragraphs 52 and 53 of the judgment under appeal, that the contested measure is selective because it concerns only Orange.49According to Orange, an individual measure is selective only if it favours a specific undertaking in comparison with others which are in a comparable legal and factual situation. Orange cites, in that connection, the judgments of 29 March 2012, 3M Italia (C‑417/10, EU:C:2012:184, paragraph 40), and of 16 April 2015, Trapeza Eurobank Ergasias (C‑690/13, EU:C:2015:235, paragraph 28).50Given that, if a measure is selective, that involves an unequal distribution of advantages as between undertakings in a comparable factual and legal situation, it is not possible to carry out an assessment without comparing the operators in such a situation.51As the Commission concluded that there were no other undertakings that came within the reference framework defined by it, Orange submits that the General Court was not entitled simply to presume that the selectivity criterion was met in view of the ad hoc nature of the contested measure.5253The General Court stated in paragraphs 52 and 53 of the judgment under appeal that the 1996 Law affected only France Télécom and that, as a result, it was selective. According to the General Court, the test requiring a comparison of the beneficiary with other operators in a comparable factual and legal situation in the light of the aim pursued by the measure in question is based on, and justified by, the assessment of whether measures of potentially general application are selective and that test is therefore irrelevant where, as in the present case, it would amount to assessing the selective nature of an ad hoc measure which concerns just one undertaking and is intended to modify certain competitive constraints which are specific to the undertaking.54As those findings are, as observed by the Advocate General in points 66 to 72 of his Opinion, consistent with the Court’s case-law in this field (see, to that effect, judgment of 4 June 2015, Commission v MOL, C‑15/14 P, EU:C:2015:362, paragraph 60), they are not vitiated by any error of law and, as a result, the second part of the first ground of appeal must be rejected as unfounded.The third part of the first ground of appeal, alleging that the General Court erred in law in its assessment of whether competition was affected55Orange claims that the General Court erred in law and failed in its duty to state reasons in holding, in paragraphs 63 and 64 of the judgment under appeal, that the requirement that competition be affected was satisfied as the financial resources which were freed by the measure at issue were capable of being used to promote the development of Orange’s activities on markets which had been newly opened up to competition, and that that company had itself acknowledged that that measure had been indispensable in enabling Orange to play a part in the development of competition.56According to Orange, while those two factors might establish that, by ensuring merit-based competition, the contested measure had a positive impact on competition, they are not sufficient to justify the General Court’s conclusion that that measure was indeed such as to distort or threaten to distort competition.57If the General Court had carried out a thorough review of the assessments made by the Commission in reaching the conclusion that the requirement that competition be affected was satisfied, it may have concluded that the existence of such an anticompetitive effect had not been properly established, since the reference framework established included Orange alone, and that the Commission had acknowledged that the measure at issue was necessary in order to ensure merit-based competition in a market which was being opened up to competition.5859In paragraphs 63 and 64 of the judgment under appeal, the General Court rejected Orange’s arguments summarised in paragraph 57 above by stating, first of all, that the financial resources released by the measure at issue were capable of being used to promote the development of France Télécom’s activities on markets which had been newly opened up to competition in France and in other Member States.60Next, the General Court observed that Orange had itself acknowledged that the contested measure had had a significant impact on competition in that it had been indispensable in enabling it to play a part in the development of competition.61Lastly, the General Court considered that the question whether the contested measure was necessary to enable France Télécom to deal with its alleged competitive disadvantage was relevant, not to the requirement that competition be distorted, but to the requirement that there should be an advantage, and that this had been examined in connection with the first part of the first plea in law at first instance.62Accordingly, first, as the Advocate General observed in point 75 of his Opinion, the judgment under appeal clearly sets out the reasons why the General Court endorsed the Commission’s assessment regarding the distortion of competition test.63As the reasoning adopted therefore enabled, as required by the Court’s established case law, the interested parties to know the grounds upon which the General Court relied and provided the Court with sufficient material for it to exercise its powers of review on appeal, the complaint alleging that the judgment under appeal fails to state adequate reasons must be rejected.64Second, it should be recalled that the Commission is required, not to establish that aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether the aid is liable to affect such trade and distort competition (judgment of 8 September 2011, Commission v Netherlands, C‑279/08 P, EU:C:2011:551, paragraph 13 and the case-law cited).65In that regard, the fact that an economic sector has been the subject of liberalisation at EU level may serve to determine that the aid in question has a real or potential effect on competition and affects trade between Member States (judgment of 30 April 2009, Commission v Italy and Wam, C‑494/06 P, EU:C:2009:272, paragraph 53 and the case-law cited).66With regard to the requirement that competition should be distorted, it must be borne in mind in that regard that, in principle, aid intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities distorts the conditions of competition (judgment of 30 April 2009, Commission v Italy and Wam, C‑494/06 P, EU:C:2009:272, paragraph 54 and the case-law cited).67In the present case, the General Court found, in paragraph 61 of the judgment under appeal, that it is apparent from recitals 114 to 116 of the decision at issue that the 1996 Law made and makes available to Orange greater financial resources to operate on the markets on which it is active, that the telecommunications services market on which Orange operated and operates throughout France and in other Member States was gradually opened up to competition and that those two factors enabled it to develop more easily on the markets of other Member States newly opened up to competition.68Bearing in mind those findings, which are not challenged by Orange, the General Court was entitled, without erring in law, to endorse the Commission’s assessment that the contested measure was liable to distort competition.69In the light of the foregoing considerations, the third part of the first ground of appeal and, therefore, that ground in its entirety must be rejected. The second ground of appeal, alleging that the General Court erred in law in its assessment as to whether the contested measure was compatible with the internal market First part of the second ground of appeal, alleging that the General Court distorted the facts and failed to have regard to its duty to state reasons in its assessment of the purpose of the exceptional flat-rate contribution70Orange contends that the General Court distorted the facts before it and failed to have regard to its duty to state reasons when it held, in paragraphs 93 and 94 of the judgment under appeal, that the wording of the 1996 Law did not militate against the Commission’s interpretation that the exceptional flat-rate contribution was not a social security cost, but pursued other objectives, and that, accordingly, the Commission had not erred in law in taking the view that the fact that the non-common risks were not taken into account in the employer’s contribution in full discharge of liabilities could not be compensated for by that contribution.71Orange maintains that, contrary to the General Court’s assertion, the exceptional flat-rate contribution was a social security cost for Orange as Article 30 of the 1996 Law provided that it was to be paid ‘in return for the payment and servicing by the State of the pensions granted to its civil servant staff’.7273The General Court stated, in paragraphs 93 and 94 of the judgment under appeal, that the wording of the 1996 Law did not militate against the Commission’s interpretation that the exceptional flat-rate contribution was not a social security cost like the employer’s contribution in full discharge of liabilities, but pursued other objectives, deducing from this that the Commission had not erred in law or exceeded the bounds of its discretion by taking the view that the fact that the non-common risks had not been taken into account in the employer’s contribution in full discharge of liabilities could not be compensated for by the flat-rate exceptional contribution.74That assessment is based on the finding in paragraph 92 of that judgment that ‘it is apparent from a reading of subparagraph (c) in conjunction with subparagraph (d) of Article 30 of the 1990 Law, as amended by the 1996 Law, that the employer’s contribution in full discharge of liabilities was designed “to equalise the levels of wage-based social security contributions and tax payments” between France Télécom and its competitors, whereas those provisions were silent as to the purpose of the exceptional flat-rate contribution’.75Accordingly, first, as the Advocate General observed in point 86 of his Opinion, the judgment under appeal sets out clearly the reasons why the General Court rejected Orange’s claims.76As the reasons given therefore enabled, in accordance with the Court’s established case-law, the interested parties to know the grounds upon which the General Court relied and provided the Court with sufficient material for it to exercise its powers of review on appeal, the complaint alleging that the judgment under appeal failed to give adequate reasons must be rejected.77Second, as the Advocate General observed in point 85 of his Opinion, the argument summarised in paragraph 71 above cannot invalidate the finding set out in paragraph 92 of the judgment under appeal. Accordingly, it is clear that the distortion alleged is not manifestly apparent from the documents before the Court, and that, by its arguments, Orange is in fact asking the Court to carry out a fresh assessment of the facts and evidence, which falls outside the Court’s jurisdiction.78It follows that the argument alleging that the 1996 Law was distorted must be rejected as manifestly unfounded.79The first part of the second ground of appeal must therefore be rejected as unfounded.The second part of the second ground of appeal, alleging that the General Court failed to have regard to its duty to state reasons in its assessment of the ‘La Poste precedent’80By the second part of the second ground of appeal, Orange contends that the General Court failed to have regard to its duty to state reasons in that it went no further, in paragraphs 99 to 101 of the judgment under appeal, than to adopt the assessments of the Commission, and did not analyse the arguments put forward by Orange to demonstrate that those assessments were incorrect. Furthermore, it is said that the General Court did not examine the other arguments put forward by Orange with a view to demonstrating that the Commission was not justified in treating the reform of the pensions of civil servants working for France Télécom differently from that of civil servants working for La Poste.8182As the Advocate General noted in points 90 to 93 of his Opinion, the observations made by the General Court in paragraphs 99 to 101 of the judgment under appeal were made purely for the sake of completeness. Therefore, the arguments put forward by Orange in the appeal are ineffective as, even if they were well founded, they could not result in the judgment under appeal being set aside.83It follows that the second part of the second ground of appeal and, therefore, that ground in its entirety must be dismissed as wholly unfounded. The third ground of appeal, alleging that the General Court erred in law in its assessment of the period during which the aid was neutralised by the exceptional flat-rate contribution Arguments of the parties84Orange maintains that the General Court distorted the facts and made a substitution of grounds in holding, in paragraphs 107 and 108 of the judgment under appeal, that the elimination of the compensation and over-compensation charges formed part of the aid defined in Article 1 of the [decision at issue], in spite of the fact that, in recital 119 of that decision, the Commission merely concluded that that aid consisted in the reduction of the compensation in the form of the employer’s contribution, with no mention of the compensation and over-compensation charges.85Orange adds that compensation and over-compensation charges are normally borne by pension funds alone, not directly by undertakings. The General Court was not entitled to conclude that the arrangements introduced by the 1990 Law consisted of normal costs and that the 1996 Law therefore relieved the undertaking of costs normally borne by its budget.86Findings of the Court87The General Court stated, in paragraph 107 of the judgment under appeal, that ‘regrettably, recital 119 of the [decision at issue], which contains the conclusion on the existence of aid within the meaning of Article 107(1) TFEU, was limited to stating that the aid consisted in the reduction of “the compensation consisting of the employer’s contribution”, without mentioning the compensation or over-compensation charges’.88Nevertheless, the General Court observed, in paragraph 108 of that judgment, that ‘it is apparent both from the background to the [decision at issue] and from Article 1 of that decision that the aid consists, in the Commission’s view, in the reduction of the compensation previously paid by the applicant, which necessarily includes all charges borne by the applicant before the contested measure came into force’.89That finding was based on the following considerations, to be found in paragraphs 104 to 106 of the judgment under appeal:‘104In the present case, it should be noted that State aid is defined in Article 1 of the [decision at issue] as aid “resulting from the reduction of the compensation to be paid to the State for the payment and servicing of the pensions granted, pursuant to the Civilian and Military Retirement Pensions Code, to the civil servants of France Télécom pursuant to [the 1996 Law] amending [the 1990 Law]”.105In recital 105 of the [decision at issue], the Commission explains that the amount of aid in question may be calculated as “the annual difference between the contribution in full discharge of liabilities paid by France Télécom to the State and the costs that it would have paid pursuant to the 1990 Law, indicated in Table No 1, if these had remained unchanged, after deducting the total flat-rate contribution paid in 1997”. It is apparent from Table No 1 in recital 18 of the [decision at issue] that the compensation and over-compensation charges are included in the charges paid by the applicant to the State between 1991 and 1996.106The Commission therefore indicated that the compensation and over-compensation charges were included in the calculation of the contribution paid pursuant to the 1990 Law and that the State aid was defined and calculated as the reduction in that contribution made by the 1996 Law.’90Thus, it is clear that, following that line of reasoning, the General Court did not substitute its own grounds for those in the decision at issue but simply interpreted that decision in the light of its actual content. Furthermore, contrary to what is claimed by Orange, that interpretation faithfully reflects the inconsistencies in that decision without distorting them.91Accordingly, the third ground of appeal must be rejected as unfounded.92Having regard to all the foregoing considerations, the appeal must be dismissed. Costs 93Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to costs.94Under Article 138(1) of those rules, which apply to the procedure on appeal by virtue of Article 184(1) thereof, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party’s pleadings.95Since Orange has been unsuccessful and the Commission has applied for costs, Orange must be ordered to pay the costs.On those grounds, the Court (First Chamber) hereby: 1. Dismisses the appeal; 2. Orders Orange to pay the costs. [Signatures]( *1 ) Language of the case: French. | 79d9b-52db7aa-43cc | EN |
Advocate General Wahl considers that Intel’s appeal against the imposition of a €1.06 billion fine for abuse of its dominant position should be upheld | 6 September 2017 ( *1 )[Text rectified by orders of 19 September and 24 October 2017](Appeal — Article 102 TFEU — Abuse of a dominant position — Loyalty rebates — Commission’s jurisdiction — Regulation (EC) No 1/2003 — Article 19)In Case C‑413/14 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 August 2014, Intel Corporation Inc., established in Wilmington (United States), represented by D.M. Beard QC, and by A. Parr and R. Mackenzie, Solicitors,appellant,the other parties to the proceedings being: European Commission, represented by T. Christoforou, V. Di Bucci, M. Kellerbauer and N. Khan, acting as Agents,defendant at first instance, Association for Competitive Technology Inc., established in Washington (United States), represented by J.-F. Bellis, avocat, Union fédérale des consommateurs — Que choisir (UFC — Que choisir), interveners at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič, J.L. da Cruz Vilaça (Rapporteur), E. Juhász, M. Berger, M. Vilaras and E. Regan, Presidents of Chambers, A. Rosas, J. Malenovský, E. Levits, F. Biltgen, K. Jürimäe and C. Lycourgos, Judges,Advocate General: N. Wahl,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 21 June 2016,after hearing the Opinion of the Advocate General at the sitting on 20 October 2016,gives the followingJudgment1By its appeal, Intel Corporation Inc. (‘Intel’) asks the Court to set aside the judgment of the General Court of the European Union of 12 June 2014, Intel v Commission (T‑286/09, ‘the judgment under appeal’, EU:T:2014:547) by which the General Court dismissed its action for annulment of Commission Decision C(2009) 3726 final of 13 May 2009 relating to a proceeding under Article 82 [EC] and Article 54 of the EEA Agreement (Case COMP/C‑3/37.990 — Intel) (‘the decision at issue’).Legal context2Recital 25 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 [EC] (OJ 2003 L 1, p. 1) states:‘The detection of infringements of the competition rules is growing ever more difficult, and, in order to protect competition effectively, the Commission’s powers of investigation need to be supplemented. The Commission should in particular be empowered to interview any persons who may be in possession of useful information and to record the statements made. ... Officials authorised by the Commission should also be empowered to ask for any information relevant to the subject matter and purpose of the inspection.’3According to recital 32 of that regulation:‘The undertakings concerned should be accorded the right to be heard by the Commission, third parties whose interests may be affected by a decision should be given the opportunity of submitting their observations beforehand, and the decisions taken should be widely publicised. While ensuring the rights of defence of the undertakings concerned, in particular, the right of access to the file, it is essential that business secrets be protected. The confidentiality of information exchanged in the network should likewise be safeguarded.’4Article 19 of Regulation No 1/2003, entitled ‘Power to take statements’, provides:‘1. In order to carry out the duties assigned to it by this Regulation, the Commission may interview any natural or legal person who consents to be interviewed for the purpose of collecting information relating to the subject matter of an investigation.2. Where an interview pursuant to paragraph 1 is conducted in the premises of an undertaking, the Commission shall inform the competition authority of the Member State in whose territory the interview takes place. If so requested by the competition authority of that Member State, its officials may assist the officials and other accompanying persons authorised by the Commission to conduct the interview.’5Article 3 of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 [EC] (OJ 2004 L 123, p. 18), entitled ‘Power to take statements’, provides:‘1. Where the Commission interviews a person with his consent in accordance with Article 19 of Regulation (EC) No 1/2003, it shall, at the beginning of the interview, state the legal basis and the purpose of the interview, and recall its voluntary nature. It shall also inform the person interviewed of its intention to make a record of the interview.2. The interview may be conducted by any means including by telephone or electronic means.3. The Commission may record the statements made by the persons interviewed in any form. A copy of any recording shall be made available to the person interviewed for approval. Where necessary, the Commission shall set a time-limit within which the person interviewed may communicate to it any correction to be made to the statement.’Background to the dispute and the decision at issue6Intel is a US-based company that designs, develops, manufactures, and markets central processing units (‘CPUs’), chipsets, and other semiconductor components, as well as platform solutions for data processing and communications devices.7The present case concerns the market for processors, in particular x86 CPUs. The x86 architecture is a standard designed by Intel for its CPUs and can run both the Windows and Linux operating systems.8Following a formal complaint submitted on 18 October 2000 by Advanced Micro Devices Inc. (‘AMD’), supplemented on 26 November 2003, the Commission launched a round of investigations in May 2004 and, in July 2005, carried out inspections at several Intel premises, inter alia in Germany, Spain, Italy and the United Kingdom, as well as at the premises of several Intel customers, in Germany, Spain, France, Italy and the United Kingdom.9On 26 July 2007, the Commission sent Intel a statement of objections concerning its conduct vis-à-vis five major original equipment manufacturers (‘OEMs’), namely Dell Inc., Hewlett-Packard Company (HP), Acer Inc., NEC Corp. and International Business Machines Corp. (IBM). Intel replied to that statement of objections on 7 January 2008, and an oral hearing was held on 11 and 12 March 2008.10On 17 July 2008, the Commission sent Intel a supplementary statement of objections concerning its conduct in respect of Media-Saturn-Holding GmbH (‘MSH’), a retailer of electronic devices and the largest desktop computer distributor in Europe, and Lenovo Group Ltd. (‘Lenovo’), another OEM. That supplementary statement included new evidence on Intel’s conduct vis-à-vis some of the OEMs covered by the Statement of Objections of 26 July 2007. Intel did not reply within the prescribed period.11The Commission, in the decision at issue, described two types of conduct by Intel vis-à-vis its trading partners, namely conditional rebates and so-called ‘naked restrictions’, intended to exclude a competitor, AMD, from the market for x86 CPUs. The first type of conduct consisted in the grant of rebates to four OEMs, namely Dell, Lenovo, HP and NEC, which were conditioned on these OEMs purchasing all or almost all of their x86 CPUs from Intel. The second type of conduct consisted in making payments to OEMs so that they would delay, cancel or restrict the marketing of certain products equipped with AMD CPUs.12In the light of those considerations, the Commission found that Intel had committed a single and continuous infringement of Article 102 TFEU and Article 54 of the Agreement on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3), from October 2002 until December 2007, and therefore imposed on it a fine of EUR 1.06 billion.The procedure before the General Court and the judgment under appeal13By application lodged at the Registry of the General Court on 22 July 2009, Intel brought an action for the annulment of the decision at issue, relying on nine pleas in law.14By document lodged at the Registry of the General Court on 2 November 2009, Association for Competitive Technology Inc. (‘ACT’) sought leave to intervene in the proceedings in support of Intel. It was granted leave to intervene by decision of 7 June 2010.15In support of its first plea in law, in relation to horizontal issues concerning the legal assessments carried out by the Commission, Intel disputed the allocation of the burden of proof and the standard of proof required, the legal characterisation of the rebates and payments granted in consideration of exclusive supply as well as the legal characterisation of the payments, which the Commission referred to as ‘naked restrictions’, made to OEMs so that they would delay, cancel or restrict the marketing of products equipped with AMD CPUs.16The General Court held, in essence, in paragraph 79 of the judgment under appeal, that the rebates granted to Dell, HP, NEC and Lenovo were exclusivity rebates, since they were conditional upon customers’ purchasing either all their x86 CPU requirements or most of their requirements from Intel. In addition, the General Court explained, in paragraphs 80 to 89 of the judgment under appeal, that the question whether such a rebate can be categorised as abusive does not depend on an analysis of the circumstances of the case aimed at establishing the capability of that rebate to restrict competition.17For the sake of completeness, the General Court considered, in paragraphs 172 to 197 of the judgment under appeal, that the Commission established, to the requisite legal standard and on the basis of an analysis of the circumstances of the case, that the exclusivity rebates and payments that Intel granted to Dell, HP, NEC, Lenovo and MSH were capable of restricting competition.18As regards the second plea in law, alleging that the Commission did not establish its territorial jurisdiction to apply Articles 101 and 102 TFEU to the practices implemented in relation to Acer and Lenovo, the General Court first of all considered, in paragraph 244 of the judgment under appeal, that in order to justify the Commission’s jurisdiction under public international law, it was sufficient to establish either the qualified effects of the practice in the European Union or that it was implemented in the European Union. It then held, in paragraph 296 of the judgment under appeal, that the substantial, immediate and foreseeable effect that Intel’s conduct was capable of having within the European Economic Area (EEA) justified the Commission’s jurisdiction. Lastly, for the sake of completeness, the General Court held, in paragraph 314 of the judgment under appeal, that that jurisdiction was also justified on account of the implementation of the conduct in question in the territory of the European Union and the EEA.19In support of its third plea in law, alleging that the Commission committed procedural irregularities, Intel submitted, inter alia, that its rights of defence had been breached because of the absence of a record transcribing the meeting with Mr D 1, arguing that some of the evidence provided in that meeting could have been used as exculpatory evidence. Intel also maintained that the Commission wrongly refused to hold a second hearing and to send Intel certain AMD documents which could have been relevant for its defence.20First, the General Court considered, in paragraph 618 of the judgment under appeal, that the meeting in question did not constitute formal questioning for the purposes of Article 19 of Regulation No 1/2003 and that the Commission was not required to carry out such questioning. It therefore concluded, in that paragraph, that Article 3 of Regulation No 773/2004 was not applicable, with the result that the argument alleging an infringement of the formal requirements laid down in that provision was ineffective.21Secondly, the General Court held, in paragraphs 621 and 622 of the judgment under appeal, that, even though the Commission had infringed the principle of good administration by failing to draw up a document containing a brief summary of the subjects addressed at that meeting, as well as the names of the participants, it nevertheless remedied that initial omission by making the non-confidential version of an internal note relating to that meeting available to Intel.22As regards the fourth plea in law, alleging errors of assessment concerning the practices relating to the various OEMs and MSH, the General Court rejected all of the complaints raised by Intel in relation to Dell, HP, NEC, Lenovo, Acer and MSH in paragraphs 665, 894, 1032, 1221, 1371 and 1463 of the judgment under appeal.23As regards the fifth plea in law, by which Intel disputed the existence of an overall strategy aimed at foreclosing AMD’s access to the most important sales channels, the General Court held, in paragraphs 1551 and 1552 of the judgment under appeal, that the Commission had, in essence, demonstrated to the requisite legal standard that Intel had attempted to conceal the anticompetitive nature of its practices and had implemented a long-term comprehensive strategy to foreclose AMD from those sales channels.24As regards the sixth plea in law, alleging that the Commission incorrectly applied the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2), the General Court considered, inter alia, in paragraph 1598 of the judgment under appeal, that neither the principle of legal certainty nor the principle that offences and punishments are to be strictly defined by law precludes the Commission from deciding to adopt and apply new guidelines on the method of setting fines, even after the infringement has been committed. In addition, the General Court considered, in that paragraph, that the interest in effective enforcement of the competition rules justifies that an undertaking must take account of the possibility of a modification to the general competition policy of the Commission as regards fines with respect both to the method of calculation and the level of fines.25As regards the seventh plea in law, alleging the absence of an intentional or negligent infringement of Article 102 TFEU, the General Court held, in essence, in paragraphs 1602 and 1603 of the judgment under appeal, that Intel could not have been unaware of the anticompetitive nature of its conduct and that the evidence relied on in the decision at issue demonstrated to the requisite legal standard that Intel had implemented a long-term comprehensive strategy to foreclose AMD from the strategically most important sales channels and that it had attempted to conceal the anticompetitive nature of its conduct.26As regards the eighth plea in law, concerning the allegedly disproportionate nature of the fine, the General Court held, in paragraphs 1614 to 1616 of the judgment under appeal, that the Commission’s practice in previous decisions could not serve as a legal framework for the fines imposed in competition matters and that, in any event, the decisions relied on in that respect by Intel were not relevant as regards observance of the principle of equal treatment. Furthermore, contrary to Intel’s assertions, the General Court pointed out, in paragraphs 1627 and 1628 of the judgment under appeal, that the Commission did not take into consideration the actual impact of the infringement on the market in order to determine its gravity.27As regards, lastly, the ninth plea in law, which sought a reduction of the fine by the General Court in the exercise of its unlimited jurisdiction, the General Court held, inter alia, in paragraph 1647 of the judgment under appeal, that there was nothing in the complaints, arguments or matters of law and of fact put forward by Intel from which it might be concluded that the fine imposed was disproportionate. The General Court considered, in that paragraph, that the fine was appropriate to the circumstances of the case and emphasised that it was well below the 10% ceiling set in Article 23(2) of Regulation No 1/2003.Forms of order sought by the parties before the Court of Justice28Intel claims that the Court should:–set aside the judgment under appeal in whole or in part;annul the decision at issue in whole or in part;cancel or substantially reduce the fine imposed;in the alternative, refer the case back to the General Court for determination in accordance with the judgment of the Court of Justice; andorder the Commission to pay the costs of these proceedings and of the proceedings before the General Court.29The Commission contends that the Court should:dismiss the appeal; andorder Intel to pay the costs.30ACT claims that the Court should:allow Intel’s appeal in its entirety; andorder the Commission to pay the costs incurred by ACT in the context of the appeal and in that of the action for annulment.The appeal31Intel puts forward six grounds in support of its appeal. By the first ground of appeal, Intel submits that the General Court erred in law by failing to examine the rebates at issue in the light of all the relevant circumstances. By the second ground of appeal, Intel submits that the General Court erred in law in assessing the finding of an infringement in 2006 and 2007, inter alia as regards the assessment of the market coverage of the rebates at issue in those two years. By the third ground of appeal, Intel argues that the General Court erred in law as regards the legal characterisation of the exclusivity rebates which Intel concluded with HP and Lenovo. By the fourth ground of appeal, Intel submits that the General Court wrongly concluded that there was no material procedural irregularity affecting Intel’s rights of defence in the Commission’s treatment of the interview with Mr D 1. By the fifth ground of appeal, Intel argues that the General Court misapplied the tests in relation to the Commission’s jurisdiction over the agreements concluded between Intel and Lenovo in 2006 and 2007. Lastly, by the sixth ground of appeal, Intel asks the Court to annul or to reduce substantially the fine imposed, having regard to the principle of proportionality and the principle that the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 should not be applied retroactively.The fifth ground of appeal, alleging that the General Court misapplied the tests relating to the Commission’s jurisdiction over the agreements concluded between Intel and Lenovo in 2006 and 2007Arguments of the parties32By its fifth ground of appeal, which it is appropriate to examine in the first place since it concerns the Commission’s jurisdiction, Intel submits, first of all, that the General Court wrongly held that the Commission had jurisdiction to apply Article 102 TFEU as regards the agreements concluded between Intel and Lenovo, a Chinese company, in 2006 and 2007. Neither the test based on the place in which anticompetitive practices are implemented (‘the implementation test’) nor the test based on the qualified effects of those practices in the European Union (‘the qualified effects test’) could establish a basis for the Commission’s jurisdiction in the present case.33Thus, according to Intel, the General Court wrongly held, in paragraph 311 of the judgment under appeal, that the implementation of those agreements could be established on the basis of practices affecting the plans of customers to sell downstream products anywhere in the world, including in the EEA. That circumstance could not justify a finding that the Commission had jurisdiction on the basis of the implementation test, since the conduct at issue was not implemented in the EEA and Intel did not sell products to Lenovo in the EEA.34In addition, the General Court erred in law by accepting the qualified effects test in order to determine the Commission’s jurisdiction. According to Intel, the implementation test is the only test allowed by the case-law.35Intel then submits that, even if the qualified effects test were indeed applicable, it could not justify the Commission’s jurisdiction in the present case. It refers, in that respect, to paragraph 87 of the judgment of 27 February 2014, InnoLux v Commission (T‑91/11, EU:T:2014:92), in which the General Court considered that, in circumstances in which components are first sold outside of the EEA to unrelated purchasers, the link between the internal market and the infringement would be too weak. Intel infers from this that it was not foreseeable that the agreements with Lenovo regarding CPUs for delivery in China would have an immediate and substantial effect within the EEA. Furthermore, even if indirect effects could be sufficient to establish jurisdiction, the 2006 and 2007 agreements with Lenovo could not have had a substantial effect within the EEA.36In addition, according to Intel, the General Court unlawfully reversed the burden of proof, in paragraph 289 of the judgment under appeal, by requiring Intel to prove that all the planned sales concerned parts of the Europe, Middle-East and Africa region outside the EEA.37Lastly, Intel argues that the Commission’s approach would give rise to jurisdictional conflict with other competition authorities and create a real risk of double jeopardy.38ACT agrees, in essence, with Intel’s arguments. It submits, inter alia, that, according to the wording of Article 102 TFEU and the case-law arising from the judgment of 27 September 1988, Ahlström Osakeyhtiö and Others v Commission (89/85, 104/85, 114/85, 116/85, 117/85 and 125/85 to 129/85, EU:C:1988:447), it is necessary to demonstrate that the conduct in question restricts competition within the common market.39The Commission contends that the fifth ground of appeal must be rejected.Findings of the Court40The General Court, in paragraph 244 of the judgment under appeal, held that the Commission’s jurisdiction under public international law to find and punish conduct adopted outside the European Union may be established on the basis of either the implementation test or the qualified effects test, before assessing the Commission’s jurisdiction in the present case in the light of the qualified effects test and then, in the alternative, in the light of the implementation test.41In that context, it is appropriate to examine, in the first place, the argument put forward by Intel and ACT that the General Court wrongly accepted that the qualified effects test may serve as a basis for the Commission’s jurisdiction.42In that respect, it must be borne in mind that, as the Advocate General noted in point 288 of his Opinion, the EU competition rules set out in Articles 101 and 102 TFEU are intended to prevent collective or unilateral conduct of undertakings limiting competition within the internal market. While Article 101 TFEU prohibits agreements and practices which have as their object or effect the prevention, restriction or distortion of competition ‘within the internal market’, Article 102 TFEU prohibits the abuse of a dominant position ‘within the internal market or in a substantial part of it’.43Thus, the Court has held, as regards the application of Article 101 TFEU, that the fact that an undertaking participating in an agreement is situated in a third country does not prevent the application of that provision if that agreement is operative on the territory of the internal market (judgment of 25 November 1971, Béguelin Import, 22/71, EU:C:1971:113, paragraph 11).44Moreover, it must be noted that, in order to justify the application of the implementation test, the Court has emphasised that if the applicability of prohibitions laid down under competition law were made to depend on the place where the agreement, decision or concerted practice was formed, the result would obviously be to give undertakings an easy means of evading those prohibitions (see, by analogy, judgment of 27 September 1988, Ahlström Osakeyhtiö and Others v Commission, 89/85, 104/85, 114/85, 116/85, 117/85 and 125/85 to 129/85, EU:C:1988:447, paragraph 16).45The qualified effects test pursues the same objective, namely preventing conduct which, while not adopted within the EU, has anticompetitive effects liable to have an impact on the EU market.46The argument put forward by Intel, supported by ACT, that the qualified effects test cannot serve as a basis for the Commission’s jurisdiction is therefore incorrect.47Accordingly, that argument must be rejected as unfounded.48In the second place, it is necessary to examine the argument put forward in the alternative by Intel, according to which, even if the qualified effects test were applicable in the present case, the General Court wrongly considered that the agreements concluded with Lenovo in 2006 and 2007 would have foreseeable, immediate and substantial effects in the EEA. Intel emphasises, in that respect, the allegedly limited number of products affected.49It must be noted, first of all, that, as the General Court held, in paragraphs 233 and 258 of the judgment under appeal, the qualified effects test allows the application of EU competition law to be justified under public international law when it is foreseeable that the conduct in question will have an immediate and substantial effect in the European Union.50It must be pointed out, as the General Court did in paragraphs 268 and 280 of the judgment under appeal, that it is necessary to examine the conduct of the undertaking or undertakings in question, viewed as a whole, in order to determine whether the Commission has the necessary jurisdiction to apply, in each case, EU competition law.51Next, in so far as Intel criticises the General Court for considering that it was foreseeable that the agreements concluded with Lenovo concerning CPUs for delivery in China would have an immediate effect in the EEA, it must be pointed out, first, that the General Court rightly held, in paragraphs 251, 252 and 257 of the judgment under appeal, that it is sufficient to take account of the probable effects of conduct on competition in order for the foreseeability criterion to be satisfied.52Secondly, since in paragraph 255 of the judgment under appeal, the General Court found, in essence, that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy intended to ensure that no Lenovo notebook equipped with an AMD CPU would be available on the market, including in the EEA, the General Court did not err in considering, in paragraph 277 of the judgment under appeal, that Intel’s conduct was capable of producing an immediate effect in the EEA.53That argument must therefore be rejected as unfounded.54Lastly, Intel submits that the General Court wrongly considered that the agreements concluded with Lenovo concerning CPUs for delivery in China could have a substantial effect on the EEA market even though the effects of those agreements were negligible.55It suffices, in that respect, to note that the General Court held that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy aimed at foreclosing AMD’s access to the most important sales channels, which, moreover, Intel does not dispute in its appeal.56Accordingly, in view of the considerations set out in paragraph 50 above, the General Court did not err in law in holding that, faced with a strategy such as that adopted by Intel, it was appropriate to take into consideration the conduct of the undertaking viewed as a whole in order to assess the substantial nature of its effects on the market of the EU and of the EEA.57As the Commission emphasises, to do otherwise would lead to an artificial fragmentation of comprehensive anticompetitive conduct, capable of affecting the market structure within the EEA, into a collection of separate forms of conduct which might escape the European Union’s jurisdiction.58Consequently, the argument mentioned in paragraph 54 of the present judgment must be rejected as unfounded.59In the third place, as regards Intel’s argument that the General Court, in paragraph 289 of the judgment under appeal, unlawfully reversed the burden of proof, it suffices to note that this argument is based on a misinterpretation of the judgment under appeal. As can be seen from paragraphs 286 to 289 of that judgment, the General Court noted, as regards the postponement of the worldwide launch of certain computer models, that it was apparent from the evidence before it that sales of those computers were planned in the Europe, Middle East and Africa region, of which the EEA is a very important part, which was sufficient for a finding that there were at least potential effects in the EEA.60In that context, the General Court indeed referred to the absence of specific indicia which might suggest that all the planned sales concerned parts of that region other than the EEA. However, that statement must be read in the light of paragraphs 287 and 288 of the judgment under appeal, from which it is clear that the General Court considered that the suggestion, made at the hearing, that all of those computers were intended for areas other than the EEA was mere speculation on Intel’s part, in support of which it had not put forward any argument.61Accordingly, that argument is unfounded.62In the fourth place, and lastly, as regards Intel’s arguments relating to the General Court’s application of the implementation test, it suffices to note that the General Court specified, in paragraph 297 of the judgment under appeal, that it examined that test for the sake of completeness.63Complaints directed against grounds of the judgment under appeal included purely for the sake of completeness cannot lead to the judgment’s being set aside (see, to that effect, judgment of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 79 and the case-law cited).64Those arguments must therefore be rejected as ineffective.65It follows that the fifth ground of appeal must be rejected in its entirety.The fourth ground of appeal, alleging a material procedural irregularity affecting Intel’s rights of defence66The fourth ground of appeal, which it is appropriate to examine in the second place since it concerns the administrative procedure before the Commission, relates to the procedural treatment of the Commission’s interview with Mr D 1. It is divided into three parts.67In the first place, Intel submits that the General Court erred in law by considering, in paragraph 612 of the judgment under appeal, that the Commission had not infringed Article 19 of Regulation No 1/2003, read in conjunction with Article 3 of Regulation No 773/2004.68First, the General Court thus made, in paragraph 614 of the judgment under appeal, an artificial distinction between ‘formal’ interviews and ‘informal’ interviews. Relying on the decision of the European Ombudsman of 14 July 2009, Intel submits that any meeting with a third party to collect information relating to the subject matter of an investigation is an interview within the meaning of Article 19 of Regulation No 1/2003 and must therefore be recorded.69Secondly, and in the alternative, in the event that Regulation No 1/2003 were to be interpreted as meaning that there is a category of ‘informal’ interviews which do not need to be recorded, Intel submits that the interview with Mr D 1 did not fall within that category, with the result that the Commission was required to record the content of that five-hour interview since it concerned very important matters bearing an objective link to the subject matter of the investigation.70In the second place, Intel argues that the General Court wrongly considered that the procedural defect resulting from the breach of Article 19 of Regulation No 1/2003, read in conjunction with Article 3 of Regulation No 773/2004, could be cured by sending Intel the non-confidential version of a note listing the agenda items for the key parts of the interview in question, but lacking a summary of the content of Mr D 1’s testimony. Intel submits, in that respect, that that note does not contain a brief summary of the subjects addressed, as the General Court indicated in paragraph 622 of the judgment under appeal; rather, it merely lists the topics addressed during the interview.71In addition, Intel submits that the Commission’s argument, put forward in its response, that the belated disclosure of the aide-memoire note cured the breach of Intel’s rights of defence cannot be reconciled with the glaring omission in the note in question of the content of Mr D 1’s testimony or with the Commission’s admission that that note was not designed to accurately or fully reflect the content of the meeting concerned.72In the third place, Intel argues that the General Court erred in law by failing to apply the test established by the judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686). By asserting, in paragraph 630 of the judgment under appeal, that the content of the interview in question could be reconstituted to the requisite legal standard even though Intel had not attended that interview, the General Court placed the burden upon Intel to prove the content of matters which were never disclosed to it.73ACT agrees with Intel’s arguments in support of the fourth ground of appeal and emphasises, inter alia, that it cannot be ruled out that the views expressed by Mr D 1 would have been useful to Intel’s defence given that that individual had provided exculpatory evidence in proceedings before the United States Federal Trade Commission in 2003.74Besides its contention that the fourth ground of appeal is ineffective, the Commission submits, in the first place, that the European Ombudsman’s decision, on which Intel relies, cannot be invoked in order to demonstrate an error of law, since Intel does not challenge paragraph 617 of the judgment under appeal, according to which the meeting at issue was not aimed at collecting evidence in the form of countersigned minutes or statements under Article 19 of Regulation No 1/2003. The Commission adds that the General Court, in paragraphs 614 to 616 of the judgment under appeal, equated the nature of information that might be obtained pursuant to Article 19 of Regulation No 1/2003 with that which might be obtained under Article 18 of that regulation before concluding that that meeting was not an interview within the meaning of Article 19.75The Commission submits, in the second place, that the disclosure of the internal note sufficiently cured the alleged procedural irregularity. It adds that the fact that Intel was not present during the interview in question does not demonstrate any error in the finding, in paragraph 631 of the judgment under appeal, that that evidence could be reconstituted. Intel effectively repudiates its own arguments at first instance, whereby it submitted that Mr D 1’s statements could be reconstituted, at least to the extent of finding that those statements were necessarily exculpatory.76The Commission argues, in the third place, that the circumstances of the present case are far removed from those of the case that gave rise to the judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686), where the infringement of the rights of defence was raised in relation to the finding that Solvay SA held a dominant position on the relevant market, which was based on a rebuttable presumption.77The Commission also maintains that the General Court did not err in law by applying the case-law established in the judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686) to the circumstances of the present case in order to conclude that there had been no breach of the rights of defence.78Since all of Dell’s statements denying the existence of exclusivity rebates were considered, in paragraph 582 of the judgment under appeal, not credible in the face of the other evidence adduced, the Commission submits that a verbatim record of even the most emphatic denial by Mr D 1 would not have been of any use to Intel.79As a preliminary point, the Commission submits that the fourth ground of appeal is ineffective since the conclusion in the judgment under appeal that Intel granted exclusivity rebates to Dell is not disputed.80That argument must be rejected however since, by this ground of appeal, the appellant specifically seeks, first, a reduction in the amount of the fine imposed and, secondly, the annulment of the decision at issue in so far as it relates to Dell, arguing that the Commission, by failing to record the interview with Mr D 1, deprived the appellant of evidence and thus adversely affected its rights of defence.81Accordingly, it is appropriate to examine the substance of this ground of appeal.82By this ground of appeal, Intel submits, inter alia, that the General Court erred in law by considering, in paragraph 612 of the judgment under appeal, that the Commission had not infringed Article 19 of Regulation No 1/2003, read in conjunction with Article 3 of Regulation No 773/2004.83In that respect, it should be noted, first of all, that, as the General Court pointed out in paragraph 621 of the judgment under appeal, it is apparent inter alia from the Commission’s internal note on the interview with Mr D 1 that the subjects addressed at that meeting, which lasted for more than five hours, concerned questions bearing an objective link with the substance of the investigation. In addition, Mr D 1 was one of the most senior executives of Intel’s largest customer and, as Intel emphasised without being contradicted in that respect, he was, more specifically, responsible for overseeing his company’s relationship with Intel. It follows that the Commission’s interview with Mr D 1 was aimed at the collection of information relating to the subject matter of its investigation concerning Intel, within the meaning of Article 19(1) of Regulation No 1/2003, which, moreover, the Commission has not disputed.84In the first place, as regards the criticised distinction made by the General Court between formal and informal interviews, in paragraph 614 of the judgment under appeal, it is apparent from the wording of Article 19(1) of Regulation No 1/2003 that that provision is intended to apply to any interview conducted for the purpose of collecting information relating to the subject matter of an investigation.85Recital 25 of Regulation No 1/2003 states, in that respect, that that regulation is intended to supplement the Commission’s powers of investigation by, inter alia, empowering the latter to interview any persons who may be in possession of useful information and to record the statements made.86Article 19(1) of Regulation No 1/2003 therefore constitutes a legal basis empowering the Commission to interview a person in the context of an investigation, which is confirmed by the travaux préparatoires for that regulation (see the Proposal for a Council Regulation on the implementation of the rules on competition laid down in Articles 81 and 82 [EC] and amending Regulations (EEC) No 1017/68, (EEC) No 2988/74, (EEC) No 4056/86 and (EEC) No 3975/87 (COM(2000) 582 final, OJ 2000 C 365E, p. 284)).87There is nothing in the wording of that provision or in the objective that it pursues to suggest that the legislature intended to establish a distinction between two categories of interview relating to the subject matter of an investigation or to exclude certain of those interviews from the scope of that provision.88The General Court therefore erred in considering, in paragraphs 614 to 618 of the judgment under appeal, that a distinction had to be made, among the interviews conducted by the Commission in the context of an investigation, between formal interviews subject to Article 19(1) of Regulation No 1/2003 in conjunction with Article 3 of Regulation No 773/2004, and informal interviews falling outside the scope of those provisions.89In the second place, as regards Intel’s submission that the Commission is required to record any interview conducted on the basis of Article 19(1) of Regulation No 1/2003, it must be noted, first of all, that Article 3(1) of Regulation No 773/2004, which provides that the Commission ‘shall also inform the person interviewed of its intention to make a record of the interview’, must be understood as meaning, not that the recording of the interview is optional, but that the Commission is required to warn the person concerned of its intention to record it.90Next, Article 3(3) of Regulation No 773/2003, which states that ‘[t]he Commission may record the statements made by the persons interviewed in any form’, implies, as the General Court correctly held in paragraph 617 of the judgment under appeal, that, if the Commission decides, with the consent of the person interviewed, to carry out such an interview on the basis of Article 19(1) of Regulation No 1/2003, it must record the interview in full, without prejudice to the fact that the Commission is free to decide on the type of recording.91It follows that the Commission is required to record, in a form of its choosing, any interview which it conducts, under Article 19 of Regulation No 1/2003, for the purpose of collecting information relating to the subject matter of an investigation.92As to whether the General Court was entitled to hold, in paragraph 622 of the judgment under appeal, that by making available to Intel, during the administrative procedure, the non-confidential version of an internal note drawn up by the Commission concerning its meeting with Mr D 1, the Commission had remedied the omission resulting from the lack of a record of the interview conducted during that meeting, it must be pointed out that, although, as the General Court noted in paragraphs 635 and 636 of the judgment under appeal, that internal note contains a brief summary of the subjects addressed during the interview in question, it does not, however, contain any indication of the content of the discussions that took place during that interview, in particular as regards the nature of the information that Mr D 1 provided during that interview on the subjects raised. In those circumstances, the General Court erred in concluding that the disclosure of that internal note to Intel during the administrative procedure had remedied the initial omission in that procedure resulting from the lack of a record of the interview in question.93It follows from the foregoing considerations that the General Court erred in law, first, by making a distinction, among interviews relating to the subject matter of a Commission investigation, between formal interviews, subject to Article 19(1) of Regulation No 1/2003 in conjunction with Article 3 of Regulation No 773/2004, and informal interviews, falling outside the scope of those provisions, secondly, by considering that the meeting between the Commission’s services and Mr D 1, concerning a Commission investigation, did not fall within the scope of those provisions, on the ground that it did not constitute a formal interview and, thirdly, by considering, in the alternative, that the disclosure, during the administrative procedure, of a non-confidential version of the internal note drawn up by the Commission in relation to that meeting had remedied the lack of a record of that meeting.94However, if the grounds of a judgment of the General Court disclose an infringement of EU law but its operative part is shown to be well founded on other legal grounds, such an infringement is not capable of bringing about the annulment of that judgment, and a substitution of grounds must be made (judgment of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 118 and the case-law cited).95In the present case, it must be noted that the General Court emphasised, in paragraph 611 of the judgment under appeal, that it is undisputed between the parties that the Commission, in the decision at issue, did not make use of the information obtained during the interview with Mr D 1 to inculpate Intel.96That being said, in so far as Intel argued that Mr D 1 had provided exculpatory evidence to the Commission which the latter should have properly recorded and disclosed to Intel, it must be borne in mind that, as regards failure to disclose an exculpatory document, it is for the undertaking concerned to establish that the non-disclosure was able to influence, to its detriment, the course of the procedure and the content of the Commission’s decision (see, to that effect, judgment of 1 July 2010, Knauf Gips v Commission, C‑407/08 P, EU:C:2010:389, paragraph 23 and the case-law cited).97The undertaking must thus show that it would have been able to use that exculpatory document for its defence, in the sense that, had it been able to rely on it during the administrative procedure, it would have been able to invoke evidence which was not consistent with the inferences made at that stage by the Commission and therefore could have had an influence, in any way at all, on the assessments made by the Commission in its decision (see, to that effect, judgment of 1 July 2010, Knauf Gips v Commission, C‑407/08 P, EU:C:2010:389, paragraph 23 and the case-law cited).98It follows that the undertaking concerned must establish, first, that it did not have access to certain exculpatory evidence and, secondly, that it could have used that evidence for its defence (see, to that effect, judgment of 1 July 2010, Knauf Gips v Commission, C‑407/08 P, EU:C:2010:389, paragraph 24).99In the present case, it is apparent from the detailed analysis carried out by the General Court in paragraphs 629 to 659 of the judgment under appeal that, during the administrative procedure, Intel was provided with not only the non-confidential version of the internal note drawn up by the Commission in relation to the interview with Mr D 1, but also a ‘follow-up document’ containing Dell’s written responses to the oral questions put to Mr D 1 during that interview.100In addition, as indicated in paragraphs 44 to 49 and 628 of the judgment under appeal, although Intel was able to submit, during the proceedings before the General Court, its observations in the light of the confidential version of that internal note, which contained indications as to the content of the discussions, it has not however adduced any evidence to suggest that the Commission failed to record, during that interview, exculpatory evidence which could have been useful for its defence in that it would have been such as to cast a different light on the direct documentary evidence relied on in the decision at issue in order to establish the conditionality of the practices at issue.101In particular, as the Commission submits, Intel did not make use of the possibility open to it under Articles 68 to 76 of the Rules of Procedure of the General Court, in the version applicable when the judgment under appeal was delivered, to request that Mr D 1 be summoned before the General Court. It did not even demonstrate before the General Court that it had attempted to contact Mr D 1 so that he could confirm that he had provided, during his interview, exculpatory evidence which might have been useful to Intel’s defence.102In those circumstances, the errors of law, identified in paragraph 93 of the present judgment, which vitiate the judgment under appeal are not such as to invalidate the conclusion, in paragraph 625 of the judgment under appeal, that the administrative procedure was not vitiated by an irregularity, in breach of Intel’s rights of defence, capable of leading to the annulment of the decision at issue (see, to that effect, judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 164).103The first and second parts of the fourth ground of appeal must, consequently, be rejected as ineffective (see, to that effect, judgment of 12 February 2015, Commission v IPK International, C‑336/13 P, EU:C:2015:83, paragraph 66).104In so far as the third part of the fourth ground of appeal concerns the application of the judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686), to the present case, it should be noted that the General Court ruled on that issue in the context of its examination, for the sake of completeness, of the consequences of a hypothetical irregularity in the administrative procedure.105Complaints directed against grounds of a judgment of the General Court included purely for the sake of completeness cannot lead to the judgment’s being set aside and are therefore ineffective (see, to that effect, judgment of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 79 and the case-law cited).106It follows that the third part of the fourth ground of appeal must be rejected as ineffective.107It follows that the fourth ground of appeal must be rejected in its entirety.The first ground of appeal, alleging that the General Court erred in law by failing to examine the rebates at issue in the light of all the relevant circumstances108The first ground of appeal, which it is appropriate to examine in the third place, since it relates to the finding of an abuse of a dominant position, within the meaning of Article 102 TFEU, is subdivided into three parts.109By the first part of the first ground of appeal, Intel submits that loyalty rebates may be found abusive only after an examination of all the relevant circumstances in order to assess whether the rebates are capable of restricting competition. Intel relies, inter alia, on paragraphs 70 and 71 of the judgment of 19 April 2012, Tomra Systems and Others v Commission (C‑549/10 P, EU:C:2012:221), inferring from them that an analysis of all of the circumstances applies equally to exclusivity rebates and to other rebates that have a fidelity-building effect.110Intel adds that neither the wording nor the structure of Article 102 TFEU suggests that some types of conduct, when undertaken by an undertaking in a dominant position, must be treated as inherently anticompetitive.111Intel submits that the settled case-law of the Court requires, in order to find an abuse of a dominant position within the meaning of Article 102 TFEU, an examination of all the circumstances, including the level of the rebates in question, their duration, the market shares concerned, the needs of customers and the capability of the rebates to foreclose an as efficient competitor (as efficient competitor test, ‘the AEC test’), in order to establish that those rebates are capable of restricting competition and, accordingly, constitute an abuse of a dominant position within the meaning of Article 102 TFEU.112Moreover, the General Court’s assertion, in paragraph 94 of the judgment under appeal, that it is open to the dominant undertaking to show that its conduct is objectively justified, is an empty possibility, since, in paragraph 89 of that judgment, the General Court stated that the beneficial effects of such conduct cannot be accepted. Likewise, the Commission’s position effectively reverses the burden of proof, since Intel must justify its conduct before the Commission has even established that the conduct is likely to restrict competition.113By the second part of the first ground of appeal, Intel submits that the General Court failed to assess the likelihood of a restriction of competition. Thus, the fact that the rebates at issue were classified or assessed in the judgment under appeal as exclusivity rebates should not exclude an examination of their capability to restrict competition.114By the third part of the first ground of appeal, Intel submits that the General Court’s analysis, in paragraphs 172 to 197 of the judgment under appeal, concerning the capability of the rebates to restrict competition and intended to show that the conduct in question vis-à-vis the recipients of the discounts was capable of restricting competition, is insufficient and does not cure the errors of law identified above.115According to Intel, the General Court wrongly failed to consider highly relevant circumstances such as the insufficient market coverage of the rebates at issue, the short duration of the practices at issue, the lack of foreclosure and a rapid decline in prices as well as the prior ‘as efficient competitor’ analysis.116As regards the market coverage of the rebates at issue, the General Court incorrectly considered that the share of the market covered by the conduct at issue was significant. The coverage in question, of 14% on average, is not comparable to the foreclosure of 39% of the market concerned in the case that gave rise to the judgment of 19 April 2012, Tomra Systems and Others v Commission (C‑549/10 P, EU:C:2012:221), and of 40% in the case that gave rise to the judgment of 23 October 2003, Van den Bergh Foods v Commission (T‑65/98, EU:T:2003:281). Intel contests, in that respect, the Commission’s argument that the market coverage of the practices at issue is irrelevant, because it relates only to actual effects. Intel contends that substantial market coverage is a necessary element in order to find an abuse.117As regards the duration of the practices at issue, Intel submits that arrangements of short duration have no actual or potential adverse effects. Intel adds that the General Court’s assertion, in paragraph 113 of the judgment under appeal, that the duration of the agreements was not short, was based not on the duration of individual agreements, but on the cumulation of multiple agreements, with the result that it was not able to take into consideration the fact that Intel’s customers could frequently walk away from their agreements. Intel disputes, in that respect, the Commission’s assertion that its OEM customers could not walk away from their agreements with Intel despite their short-term nature. The uncontroverted fact that Dell switched supplier to AMD at a time when its rebates from Intel were at an all-time high demonstrates that the ability to switch was real.118As regards its argument that the rebates at issue did not have a foreclosure effect, Intel submits that the General Court did not taken account of the capacity constraints with which AMD was faced and which prevented it from satisfying demand for its CPUs, with the result that Dell and Lenovo sourced solely from Intel during the periods concerned.119As regards the relevance of the AEC test, the General Court erred in law by failing to regard the analysis carried out by the Commission in the decision at issue as relevant and as forming part of the review that the General Court must perform in order to comply with the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950. According to Intel, whether the Commission was required to carry out that test is not the issue. Rather, since the Commission carried out that test, the properly assessed results should have been taken into account among all the circumstances relevant to demonstrating the likelihood of restricting competition.120ACT agrees, in essence, with Intel’s position.121The Commission contends that the first ground of appeal is based on an unsubstantiated premiss that the exclusivity rebates were merely a type of pricing practice. The Court therefore need not examine this ground of appeal.122In the alternative, the Commission submits that the exclusivity rebates have anticompetitive features such that it is generally unnecessary to demonstrate that they are capable of restricting competition. Thus, those rebates have a dissuasive effect on customers caused by the prospect of losing the rebates over the non-contestable share of the market. It follows that they generally restrict the customer’s freedom to choose the supplier with the most attractive offer.123In addition, Intel misinterpreted paragraphs 70 and 71 of the judgment of 19 April 2012, Tomra Systems and Others v Commission (C‑549/10 P, EU:C:2012:221), by stating that those paragraphs relate to exclusivity rebates.124The Commission submits that the line of argument put forward by Intel in the second place is inadmissible since it does not refer to any error of law.125In any event, that line of argument is ineffective since, in paragraphs 172 to 197 of the judgment under appeal, the General Court considered that Intel’s conduct was capable of restricting competition.126The Commission adds, in the alternative, that the legal test set out in the case-law on predatory pricing practices is not applicable to exclusivity rebates. It explains, in that respect, that the Court could have transposed the legal test for assessing the abusive nature of pricing practices to rebate schemes in the judgment of 19 April 2012, Tomra Systems and Others v Commission (C‑549/10 P, EU:C:2012:221), but, in that judgment, it expressly reiterated that an undertaking in a dominant position abuses that position when it makes use of such a rebate scheme.127The Commission submits, lastly, that it is unnecessary for the Court to examine the arguments raised by Intel concerning paragraphs 172 to 197 of the judgment under appeal, since it was for the sake of completeness that the General Court examined whether the Commission had established in the decision at issue that Intel’s conduct was capable of restricting competition.128In the alternative, the Commission submits that the judgment under appeal demonstrates the existence of an overall strategy to the requisite legal standard and that Intel’s arguments in that respect are inadmissible since they seek a reassessment of the findings of fact. It also responds to Intel’s arguments concerning the relevance of the market coverage and the duration of the practices.129In the first place, by the first two parts of its first ground of appeal, Intel, supported by ACT, argues, in essence, that the General Court accepted that the practices at issue could be considered an abuse of a dominant position within the meaning of Article 102 TFEU without first examining all of the circumstances of the present case and without assessing the likelihood of that conduct restricting competition.130In the second place, by the third part of its first ground of appeal, Intel criticises the General Court’s analysis, carried out for the sake of completeness, inter alia in paragraphs 172 to 197 of the judgment under appeal, concerning the capacity of the rebates and payments granted to Dell, HP, NEC, Lenovo and MSH to restrict competition in the circumstances of the case.131In that context, Intel challenges, inter alia, the General Court’s assessment of the relevance of the AEC test applied by the Commission in the present case.132It submits, in particular, that, since the Commission applied that test, the General Court should have examined Intel’s line of argument alleging that the application of that test was badly flawed and that, had it been correctly applied, it would have led to the conclusion contrary to that which the Commission reached, namely that the rebates at issue were not capable of restricting competition.133In that respect, it must be borne in mind that it is in no way the purpose of Article 102 TFEU to prevent an undertaking from acquiring, on its own merits, the dominant position on a market. Nor does that provision seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market (see, inter alia, judgment of 27 March 2012, Post Danmark, C‑209/10, EU:C:2012:172, paragraph 21 and the case-law cited).134Thus, not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation (see, inter alia, judgment of 27 March 2012, Post Danmark, C‑209/10, EU:C:2012:172, paragraph 22 and the case-law cited).135However, a dominant undertaking has a special responsibility not to allow its behaviour to impair genuine, undistorted competition on the internal market (see, inter alia, judgments of 9 November 1983, Nederlandsche Banden-Industrie-Michelin v Commission, 322/81, EU:C:1983:313, paragraph 57, and of 27 March 2012, Post Danmark, C‑209/10, EU:C:2012:172, paragraph 23 and the case-law cited).136That is why Article 102 TFEU prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as efficient as it is itself and strengthening its dominant position by using methods other than those that are part of competition on the merits. Accordingly, in that light, not all competition by means of price may be regarded as legitimate (see, to that effect, judgment of 27 March 2012, Post Danmark, C‑209/10, EU:C:2012:172, paragraph 25).137In that regard, the Court has already held that an undertaking which is in a dominant position on a market and ties purchasers — even if it does so at their request — by an obligation or promise on their part to obtain all or most of their requirements exclusively from that undertaking abuses its dominant position within the meaning of Article 102 TFEU, whether the obligation is stipulated without further qualification or whether it is undertaken in consideration of the grant of a rebate. The same applies if the undertaking in question, without tying the purchasers by a formal obligation, applies, either under the terms of agreements concluded with these purchasers or unilaterally, a system of loyalty rebates, that is to say, discounts conditional on the customer’s obtaining all or most of its requirements — whether the quantity of its purchases be large or small — from the undertaking in a dominant position (see judgment of 13 February 1979, Hoffmann-La Roche v Commission, 85/76, EU:C:1979:36, paragraph 89).138However, that case-law must be further clarified in the case where the undertaking concerned submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects.139[As rectified by order of 19 September 2017] In that case, the Commission is not only required to analyse, first, the extent of the undertaking’s dominant position on the relevant market and, secondly, the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also required to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market (see, by analogy, judgment of 27 March 2012, Post Danmark, C‑209/10, EU:C:2012:172, paragraph 29).140[As rectified by order of 24 October 2017] The analysis of the capacity to foreclose is also relevant in assessing whether a system of rebates which, in principle, falls within the scope of the prohibition laid down in Article 102 TFEU, may be objectively justified. In addition, the exclusionary effect arising from such a system, which is disadvantageous for competition, may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer (judgment of 15 March 2007,British Airways v Commission, C‑95/04 P, EU:C:2007:166, paragraph 86). That balancing of the favourable and unfavourable effects of the practice in question on competition can be carried out in the Commission’s decision only after an analysis of the intrinsic capacity of that practice to foreclose competitors which are at least as efficient as the dominant undertaking.141If, in a decision finding a rebate scheme abusive, the Commission carries out such an analysis, the General Court must examine all of the applicant’s arguments seeking to call into question the validity of the Commission’s findings concerning the foreclosure capability of the rebate concerned.142In this case, while the Commission emphasised, in the decision at issue, that the rebates at issue were by their very nature capable of restricting competition such that an analysis of all the circumstances of the case and, in particular, an AEC test were not necessary in order to find an abuse of a dominant position (see, inter alia, paragraphs 925 and 1760 of that decision), it nevertheless carried out an in-depth examination of those circumstances, setting out, in paragraphs 1002 to 1576 of that decision, a very detailed analysis of the AEC test, which led it to conclude, in paragraphs 1574 and 1575 of that decision, that an as efficient competitor would have had to offer prices which would not have been viable and that, accordingly, the rebate scheme at issue was capable of having foreclosure effects on such a competitor.143It follows that, in the decision at issue, the AEC test played an important role in the Commission’s assessment of whether the rebate scheme at issue was capable of having foreclosure effects on as efficient competitors.144In those circumstances, the General Court was required to examine all of Intel’s arguments concerning that test.145It held, however, in paragraphs 151 and 166 of the judgment under appeal, that it was not necessary to consider whether the Commission had carried out the AEC test in accordance with the applicable rules and without making any errors, and that it was also not necessary to examine the question whether the alternative calculations proposed by Intel had been carried out correctly.146In its examination of the circumstances of the case, carried out for the sake of completeness, the General Court therefore attached no importance, in paragraphs 172 to 175 of the judgment under appeal, to the AEC test carried out by the Commission and, accordingly, did not address Intel’s criticisms of that test.147Consequently, without it being necessary to rule on the second, third and sixth ground of appeal, the judgment of the General Court must be set aside, since, in its analysis of whether the rebates at issue were capable of restricting competition, the General Court wrongly failed to take into consideration Intel’s line of argument seeking to expose alleged errors committed by the Commission in the AEC test.Referral of the case back to the General Court148In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, if the Court quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits. However, that is not the case here.149The review by the General Court, in the light of the arguments put forward by Intel, of whether the rebates at issue are capable of restricting competition involves the examination of factual and economic evidence which it is for that Court to carry out.150Accordingly, the case must be referred back to the General Court.Costs151Since the case has been referred back to the General Court, the costs relating to the present appeal proceedings must be reserved.On those grounds, the Court (Grand Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 12 June 2014, Intel v Commission (T‑286/09, EU:T:2014:547); 2. Refers the case back to the General Court of the European Union; 3. Orders that the costs be reserved. LenaertsTizzanoSilva de LapuertaIlešičDa Cruz VilaçaJuhászBergerVilarasReganRosasMalenovskýLevitsBiltgenJürimäeLycourgosDelivered in open court in Luxembourg on 6 September 2017.A. Calot EscobarRegistrarK. LenaertsPresident( *1 ) Language of the case: English. | 5572d-d281de8-40e6 | EN |
Fixed prices set in Germany for prescription-only medicinal products are contrary to EU law | 19 October 2016 ( *1 )‛Reference for a preliminary ruling — Articles 34 TFEU and 36 TFEU — Free movement of goods — National legislation — Prescription-only medicinal products for human use — Sale by pharmacies — Setting of fixed prices — Quantitative restriction on imports — Measure having equivalent effect — Justification — Protection of the health and life of humans’In Case C‑148/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf, Germany), made by decision of 24 March 2015, received at the Court on 30 March 2015, in the proceedings Deutsche Parkinson Vereinigung eV v Zentrale zur Bekämpfung unlauteren Wettbewerbs eV, THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, E. Regan (Rapporteur), A. Arabadjiev, C.G. Fernlund and S. Rodin, Judges,Advocate General: M. Szpunar,Registrar: K. Malacek, Administrator,having regard to the written procedure and further to the hearing on 17 March 2016,after considering the observations submitted on behalf of:—Deutsche Parkinson Vereinigung eV, by T. Diekmann, Rechtsanwalt, K. Nordlander, advokat, M. Meulenbelt, advocaat, and D. Costesec, Solicitor,Zentrale zur Bekämpfung unlauteren Wettbewerbs eV, by C. Dechamps, Rechtsanwalt, and J. Schwarze,the German Government, by T. Henze and A. Lippstreu, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, assisted by M. Russo, avvocato dello Stato,the Netherlands Government, by M. Bulterman and M. de Ree, acting as Agents,the Swedish Government, by A. Falk, C. Meyer-Seitz, U. Persson, N. Otte Widgren, E. Karlsson and L. Swedenborg, acting as Agents,the European Commission, by E. Manhaeve, J. Herkommer and A. Sipos, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 2 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 34 TFEU and 36 TFEU.2The request has been made in proceedings between Deutsche Parkinson Vereinigung eV (‘DPV’) and the Zentrale zur Bekämpfung unlauteren Wettbewerbs eV (Association for Protection Against Unfair Competition, ‘the ZBUW’) concerning the setting, in German law, of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use. German law Law on medicinal products 3The first sentence of Paragraph 78(1) of the Gesetz über den Verkehr mit Arzneimitteln (Arzneimittelgesetz) (Law on medicinal products) provides:‘The Federal Minister for Economics and Technology shall be authorised … to establish1.price margins for medicinal products which are supplied for re-sale by wholesalers, pharmacies or veterinary surgeons.’4By the Law of 19 October 2012 (BGBl. I, p. 2192), the following sentence was added to Paragraph 78(1) of the Law on medicinal products:‘The Regulation on the pricing of medicinal products, adopted on the basis of the first sentence, shall also apply to medicinal products brought within the scope of the present Law pursuant to point 1a of the first sentence of Paragraph 73(1).’5Point 1a of the first sentence of Paragraph 73(1) of the Law on medicinal products, to which Paragraph 78(1) of that law refers, concerns the sale, by mail order, of medicinal products supplied in Germany to end consumers by pharmacies established in another Member State of the European Union. The Joint Chamber of the Superior Federal Courts in Germany ruled, by order of 22 August 2012, that, in the same way as the amended version of the Law on medicinal products, it was appropriate to interpret the previous wording of that law to the effect that the Arzneimittelpreisverordnung (Regulation on the pricing of medicinal products) also applies to such sales.6Paragraph 78(2) of the Law on medicinal products provides:‘Prices and price margins shall take account of the legitimate interests of consumers of medicinal products, veterinary surgeons, pharmacies and wholesale traders. A uniform pharmacy retail price shall be guaranteed for medicinal products that may not be sold other than through pharmacies …’ Regulation on the pricing of medicinal products 7Paragraph 1 of the Regulation on the pricing of medicinal products provides that the manufacturer must establish a price for its medicinal product to which, under Paragraph 2 of that regulation, wholesaler additions and, under Paragraph 3 thereof, pharmacy additions must be added. That regulation does not apply to medicinal products which do not require a prescription. Law on the advertising of medicinal products 8It is apparent from the documents before the Court that Paragraph 7(1)(2) of the Heilmittelwerbegesetz (Law on the advertising of medicinal products) prohibits monetary advantages, such as discounts and bonuses, and promotional gifts for prescription-only medicinal products. The facts in the main proceedings and the questions referred for a preliminary ruling 9DPV is a self-help organisation which has as its objective to improve the lives of patients suffering from Parkinson’s disease and those of their families. By letter of July 2009, promoting a cooperative venture between DPV and the Dutch mail-order pharmacy DocMorris, DPV informed its members of a bonus system under which various bonuses would be provided to members of DPV when purchasing from DocMorris prescription-only medicinal products for Parkinson’s disease available only from pharmacies (‘the bonus system’).10The ZBUW takes the view, inter alia, that the bonus system infringes German legislation which provides for a system of fixed prices for the supply by pharmacies of prescription-only medicinal products.11According to the documents in the case file submitted to the Court, the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany) upheld the application for an injunction brought by the ZBUW and ordered DPV not to recommend the bonus system in any manner similar to that of the letter sent in July 2009. DPV appealed against the judgment of the Landgericht Düsseldorf (Regional Court, Düsseldorf) to the referring court.12The referring court takes the view that the bonus system infringes the relevant national legislation not only in the case where a pharmacist supplies a medicinal product at a price differing from that which must be charged under the Regulation on the pricing of medicinal products, but also in the case where, in parallel to the purchase of a medicinal product at the fixed price, the customer is afforded a benefit which makes the purchase appear more economically advantageous to him.13The referring court is unsure whether, in a situation such as that at issue in the present case, Paragraph 78(1) of the Law on medicinal products, in its original version and also following amendment, constitutes a restriction prohibited under Article 34 TFEU.14In the event that the conditions laid down by that article are satisfied, the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf, Germany) asks whether a system of fixed prices may be justified on the basis of Article 36 TFEU in order to protect the health and life of humans. According to that court, in assessing whether there is justification, the issue arises, in particular, as to whether the recent possibility for the rural population to obtain medicinal products through mail order could at least qualify the case-law of the Court in the light, inter alia, most recently, of the judgment of 13 February 2014, Sokoll-Seebacher (C‑367/12, EU:C:2014:68).15The referring court takes the view that the assessment as to whether a system of fixed prices for prescription-only medicinal products alone can ensure a uniform supply to the population of prescription-only medicinal products across all parts of the country will, in all probability, be decisive in resolving the case at issue in the main proceedings. That court notes that, up to the present, the ZBUW has not made submissions addressing that issue in detail or presented evidence supporting such a line of argument. The explanatory memorandum to the national legislation at issue in the main proceedings also merely refers to the alleged risks that the fixed-price system at issue in the main proceedings seeks to counteract.16In that regard, the referring court also harbours doubts as to whether, as regards the possibility of a mail-order supply, it would be appropriate, where relevant, to tolerate potential threats to traditional pharmacies, particularly in rural areas.17To the extent that the explanatory memorandum to the Law of 19 October 2012 sets out further arguments, the referring court considers these to be insufficient, from the outset, to justify a restriction on the free movement of goods.18In those circumstances, the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Must Article 34 TFEU be interpreted as meaning that a system of fixed prices for prescription-only medicinal products laid down by national law constitutes a measure having equivalent effect within the meaning of Article 34 TFEU?(2)If the Court answers the first question in the affirmative: is the system of fixed prices for prescription-only medicinal products justified under Article 36 TFEU on grounds of the protection of health and life of humans if that system is the only means of ensuring a consistent supply of medicinal products to the population across all parts of the country, in particular in rural areas?(3)If the Court also answers the second question in the affirmative: what is the degree of judicial scrutiny required when determining whether the condition mentioned in the second question is in fact satisfied?’ Consideration of the questions referred The first question 19By its first question, the referring court asks, in essence, whether Article 34 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, constitutes a measure having equivalent effect to a quantitative restriction on imports within the meaning of Article 34 TFEU.20As a preliminary matter, it should be pointed out that the free movement of goods is a fundamental principle of the FEU Treaty which is expressed in the prohibition, set out in Article 34 TFEU, of quantitative restrictions on imports between Member States and all measures having equivalent effect (judgment of 5 June 2007, Rosengren and Others, C‑170/04, EU:C:2007:313, paragraph 31).21In the case in the main proceedings, it is common ground that the system of fixed prices applies both to pharmacies established in Germany and to those established in other Member States. It is thus necessary to consider whether that system may be characterised as ‘a measure having equivalent effect to a quantitative restriction’ for the purposes of Article 34 TFEU.22In that regard, it must be borne in mind that the Court has consistently held that the prohibition, laid down in Article 34 TFEU, of measures having equivalent effect to quantitative restrictions covers any measure of the Member States that is capable of hindering, directly or indirectly, actually or potentially, imports between Member States (see judgment of 11 September 2008, Commission v Germany, C‑141/07, EU:C:2008:492, paragraph 28 and the case-law cited).23The Court has also held, in relation to a prohibition under German law of mail-order sales of medicinal products the sale of which is, in the Member State concerned, restricted to pharmacies, that such a prohibition is more of an obstacle to pharmacies outside Germany than to those within Germany. Although there is little doubt that, as a result of the prohibition, pharmacies in Germany cannot use an extra or alternative method of gaining access to the German market consisting of end consumers of medicinal products, they are nonetheless able to sell the products in their dispensaries. By contrast, for pharmacies not established in Germany, the internet provides a more significant way by which to gain direct access to the German market. A prohibition which has a greater impact on pharmacies established outside German territory could impede access to the market for products from other Member States more than it impedes access for domestic products, and therefore constitutes a measure having equivalent effect to a quantitative restriction within the meaning of Article 34 TFEU (see, to that effect, judgment of 11 December 2003, Deutscher Apothekerverband, C‑322/01, EU:C:2003:664, paragraphs 74 to 76).24In the present case, it must be found that, as the ZBUW and the German and Swedish Governments have each noted, traditional pharmacies are, in principle, better placed than mail-order pharmacies to provide patients with individually-tailored advice given by the staff of the dispensary and to ensure a supply of medicinal products in cases of emergency. In so far as mail-order pharmacies cannot, given the limited services that they offer, adequately replace such services, it must be held that price competition is capable of providing a more important factor of competition for mail-order pharmacies than for traditional pharmacies, since price competition lays the basis for their potential to access the German market directly and to continue to be competitive in it.25Consequently, and in so far as sales by mail order constitute a more important means of accessing the German market directly for pharmacies established in Member States other than Germany, if not, given the particular characteristics of the German market evidenced in the documents in the case file submitted to the Court, potentially the only means of accessing that market directly, the national legislation at issue in the main proceedings does not affect the sale of national medicinal products in the same way as it affects the sale of medicinal products originating in other Member States.26In the light of the foregoing, it must be held that a system of fixed sales prices, such as that laid down in the German legislation, has a greater impact on pharmacies established in a Member State other than the Federal Republic of Germany than on those which are established within German territory, a fact which could impede market access for products from other Member States more than it impedes such access for domestic products.27Consequently, the answer to the first question is that Article 34 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, constitutes a measure having equivalent effect to a quantitative restriction on imports, within the meaning of that article, since that legislation has a greater impact on the sale of prescription-only medicinal products by pharmacies established in other Member States than on the sale of the same medicinal products by pharmacies established within the national territory. The second and third questions 28By its second and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 36 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, may be justified on grounds of the protection of health and life of humans within the meaning of that article.29As a preliminary matter, it is appropriate to recall the settled case-law of the Court according to which Article 36 TFEU, as an exception to the rule of the free movement of goods within the European Union, must be strictly interpreted (see, to that effect, judgments of 10 January 1985, Association des Centres distributeurs Leclerc and Thouars Distribution, 229/83, EU:C:1985:1, paragraph 30; of 11 September 2008, Commission v Germany, C‑141/07, EU:C:2008:492, paragraph 50, and of 9 December 2010, Humanplasma, C‑421/09, EU:C:2010:760, paragraph 38).30As regards a national measure coming within the field of public health, the Court has on numerous occasions held that the health and life of humans rank foremost among the assets and interests protected by the Treaty and that it is for the Member States to determine the level of protection which they wish to afford to public health and the way in which that level is to be achieved. Since that level may vary from one Member State to another, Member States should be allowed a measure of discretion (see judgment of 12 November 2015, Visnapuu, C‑198/14, EU:C:2015:751, paragraph 118 and the case-law cited).31In particular, the need to ensure that the country has reliable supplies for essential medical purposes may, so far as Article 36 TFEU is concerned, justify a barrier to trade between Member States if that objective is one of protecting the health and life of humans (see judgment of 28 March 1995, Evans Medical and Macfarlan Smith, C‑324/93, EU:C:1995:84, paragraph 37).32Although it is common ground, in the case in the main proceedings, that the sale by mail order of prescription-only medicinal products is no longer prohibited in Germany, the ZBUW and the German and Swedish Governments argue that a system of fixed prices which applies to the sale of such medicinal products is justified in order to ensure a safe and high-quality supply of medicinal products to the German population.33In particular, according to the German Government, that system seeks to ensure that mail-order pharmacies do not engage in ruinous price competition which would result in the closure of traditional pharmacies, especially in rural or underpopulated areas which are less attractive areas for traditional pharmacies to set up business. The German Government insists that such pharmacies alone are capable of ensuring safe and high-quality supplies, especially in cases of emergency, tailored advice and effective checks on the medicinal products supplied.34Although the objective of ensuring a safe and high-quality supply of medicinal products throughout a Member State comes, in principle, within the ambit of Article 36 TFEU, the fact remains that legislation which is capable of restricting a fundamental freedom guaranteed by the Treaty, such as the free movement of goods, can be properly justified only if it is appropriate for securing the attainment of that objective and does not go beyond what is necessary in order to attain it (see, to that effect, judgments of 9 December 2010, Humanplasma, C‑421/09, EU:C:2010:760, paragraph 34, and of 23 December 2015, Scotch Whisky Association and Others, C‑333/14, EU:C:2015:845, paragraph 33).35As the Court has previously held, it is, in each case, for the national authorities to provide the necessary evidence to that effect. The reasons which may be invoked by a Member State by way of justification must thus be accompanied by an analysis of the appropriateness and proportionality of the measure adopted by that State, and by specific evidence substantiating its arguments (see, to that effect, judgment of 23 December 2015, The Scotch Whisky Association and Others, C‑333/14, EU:C:2015:845, paragraph 54 and the case-law cited).36It follows that, where a national court examines national legislation in the light of the justification relating to protection of the health and life of humans under Article 36 TFEU, that court must examine objectively, through statistical or ad hoc data or by other means, whether it may reasonably be concluded from the evidence submitted by the Member State concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods (see, to that effect, judgment of 23 December 2015, The Scotch Whisky Association and Others, C‑333/14, EU:C:2015:845, paragraph 59).37As to whether the national legislation at issue in the main proceedings is appropriate for attaining the objectives invoked, it must be stated that there is no evidence to substantiate the contention that it is necessary to ensure a uniform supply of prescription-only medicinal products for essential medical purposes throughout Germany that satisfies the conditions set out in paragraph 35 above. In particular, by the general nature of the contentions made in the present case in that regard, it has not been demonstrated, as the Advocate General has, in essence, noted in point 51 of his Opinion, how setting fixed prices for such medicinal products allows for a better geographical allocation of traditional pharmacies in Germany.38Quite to the contrary, certain factors on which the Commission relies tend to suggest that increased price competition between pharmacies would be conducive to a uniform supply of medicinal products by encouraging the establishment of pharmacies in regions where the scarcity of dispensaries allows for higher prices to be charged.39As regards the argument based on a high-quality supply of prescription-only medicinal products, it must be found that, contrary to what the German Government claims, no factor has been laid before the Court that is capable of establishing that, in the absence of a system such as that at issue in the main proceedings, mail-order pharmacies would be able to compete in terms of price in such a way that essential services, such as emergency care, could no longer be ensured in Germany due to a consequential fall in the number of dispensing pharmacies. In that regard, it must be reiterated that competition factors other than price, such as those set out in paragraph 24 above, could potentially allow traditional pharmacies, faced with competition from mail-order sales, to remain competitive in the German market.40Similarly, the elements laid before the Court in the present case do not suffice to show that price competition for prescription-only medicinal products would adversely affect traditional pharmacies in performing certain activities in the general interest, such as producing prescription medicinal products or maintaining a given stock and selection of medicinal products. On the contrary, as the Advocate General stated, in essence, in point 47 in his Opinion, it may be that, faced with price competition from mail-order pharmacies, traditional pharmacies will be encouraged to improve such activities.41Nor has the alleged relationship between the fixed sales price in the case in the main proceedings and a consequential reduction of the risk that patients might attempt to pressurise doctors in order to obtain prescriptions of convenience been established in compliance with the conditions cited in paragraph 35 above.42As regards the argument put forward by the ZBUW and the German Government that a patient in poor health ought not to be required to carry out a market analysis in order to determine which pharmacy offers the medicinal product sought at the most attractive price, it should be noted that the existence of a genuine risk to human health must be measured, not according to the yardstick of general conjecture, but on the basis of relevant scientific research (see, to that effect, judgment of14 July 1994, van der Veldt, C‑17/93, EU:C:1994:299, paragraph 17). Such general conjecture made in that regard does not in any way suffice to prove that the possibility for the consumer to seek to acquire prescription-only medicinal products at lower prices poses an actual risk to public health.43Moreover, the Court notes, as did DPV and the Netherlands Government, that, in the present case, price competition could be capable of benefiting the patient in so far as it would allow, where relevant, for prescription-only medicinal products to be offered in Germany at more attractive prices than those currently imposed by that Member State. As the Court has previously held, the effective protection of health and life of humans demands, inter alia, that medicinal products be sold at reasonable prices (see judgment of 20 May 1976, de Peijper, 104/75, EU:C:1976:67, paragraph 25).44Finally, it should be added that the fact that there are other national measures, such as the rule excluding non-pharmacists from the right to own and operate pharmacies, which have the objective, according to the documents before the Court, of supplying safe and high-quality prescription-only medicinal products in Germany, does not affect the Court’s assessment of the fixed-price system at issue in the case in the main proceedings.45Having regard to all of the foregoing considerations, it must be found that a restriction such as that resulting from the legislation at issue in the main proceedings has not been shown to be an appropriate means of attaining the objectives relied on and cannot therefore be regarded as justified by the attainment of those objectives.46Consequently, the answer to the second and third questions referred is that Article 36 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, cannot be justified on grounds of the protection of health and life of humans, within the meaning of that article, inasmuch as that legislation is not appropriate for attaining the objectives pursued. Costs 47Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: 1. Article 34 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, constitutes a measure having equivalent effect to a quantitative restriction on imports, within the meaning of that article, since that legislation has a greater impact on the sale of prescription-only medicinal products by pharmacies established in other Member States than on the sale of the same medicinal products by pharmacies established within the national territory. 2. Article 36 TFEU must be interpreted as meaning that national legislation, such as that at issue in the main proceedings, which provides for a system of fixed prices for the sale by pharmacies of prescription-only medicinal products for human use, cannot be justified on grounds of the protection of health and life of humans, within the meaning of that article, inasmuch as that legislation is not appropriate for attaining the objectives pursued. [Signatures]( *1 ) Language of the case: German. | 956b3-5633cf4-43bf | EN |
The operator of a website may have a legitimate interest in storing certain personal data relating to visitors to that website in order to protect itself against cyberattacks | 19 October 2016 ( *1 )‛Reference for a preliminary ruling — Processing of personal data — Directive 95/46/EC — Article 2(a) — Article 7(f) — Definition of ‘personal data’ — Internet protocol addresses — Storage of data by an online media services provider — National legislation not permitting the legitimate interest pursued by the controller to be taken into account’In Case C‑582/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesgerichtshof (Federal Court of Justice, Germany), made by decision of 28 October 2014, received at the Court on 17 December 2014, in the proceedings Patrick Breyer v Bundesrepublik Deutschland, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas (Rapporteur), C. Toader and E. Jarašiūnas, Judges,Advocate General: M. Campos Sánchez-Bordona,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 25 February 2016,after considering the observations submitted on behalf of:—Mr Breyer, by M. Starostik, Rechtsanwalt,the German Government, by A. Lippstreu and T. Henze, acting as Agents,the Austrian Government, by G. Eberhard, acting as Agent,the Portuguese Government, by L. Inez Fernandes and C. Vieira Guerra, acting as Agents,the European Commission, by P.J.O. Van Nuffel and H. Krämer, and P. Costa de Oliveira and J. Vondung, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 12 May 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 2(a) and 7(f) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ 1995 L 281, p. 31).2The request has been made in proceedings between Mr Patrick Breyer and the Bundesrepublik Deutschland (Federal Republic of Germany) concerning the registration and storage by the latter of the internet protocol address (‘IP address’) allocated to Mr Breyer when he accessed several internet sites run by German Federal institutions. Legal context EU law 3Recital 26 of Directive 95/46 reads as follows:‘Whereas the principles of protection must apply to any information concerning an identified or identifiable person; whereas, to determine whether a person is identifiable, account should be taken of all the means likely reasonably to be used either by the controller or by any other person to identify the said person; whereas the principles of protection shall not apply to data rendered anonymous in such a way that the data subject is no longer identifiable; whereas codes of conduct within the meaning of Article 27 may be a useful instrument for providing guidance as to the ways in which data may be rendered anonymous and retained in a form in which identification of the data subject is no longer possible.’4Article 1 of that directive provides:‘1. In accordance with this Directive, Member States shall protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data.2. Member States shall neither restrict nor prohibit the free flow of personal data between Member States for reasons connected with the protection afforded under paragraph 1.’5Article 2 of the same directive provides:‘For the purpose of this Directive:(a)“Personal data” shall mean any information relating to an identified or identifiable natural person (“data subject”); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity;(b)“processing of personal data” (“processing”) shall mean any operation or set of operations which is performed upon personal data, whether or not by automatic means, such as collection, recording, organisation, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction;…(d)“controller” shall mean the natural or legal person, public authority, agency or any other body which alone or jointly with others determines the purposes and means of the processing of personal data; where the purposes and means of processing are determined by national or Community laws or regulations, the controller or the specific criteria for his nomination may be designated by national or Community law;(f)“third party” shall mean any natural or legal person, public authority, agency or any other body other than the data subject, the controller, the processor and the persons who, under the direct authority of the controller or the processor, are authorised to process the data;…’6Article 3 of Directive 95/46, entitled ‘Scope’, provides:‘1. This Directive applies to the processing of personal data wholly or partly by automated means, and to the processing other than by automated means of personal data which form part of a filing system or are intended to form part of a filing system.2. This Directive shall not apply to the processing of personal data:in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union and in any case to processing operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law,7Article 5 of that directive reads as follows:‘Member States shall, within the limits of the provisions of this Chapter, determine more precisely the conditions under which the processing of personal data is lawful.’8Article 7 of the directive is worded as follows:‘Member States shall provide that personal data may be processed only if:the data subject has unambiguously given his consent; orprocessing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract; or(c)processing is necessary for compliance with a legal obligation to which the controller is subject; orprocessing is necessary in order to protect the vital interests of the data subject; or(e)processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller or in a third party to whom the data are disclosed; orprocessing is necessary for the purposes of the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed, except where such interests are overridden by the interests for fundamental rights and freedoms of the data subject which require protection under Article 1(1).’9Article 13(1) of Directive 95/46 provides:‘Member States may adopt legislative measures to restrict the scope of the obligations and rights provided for in Articles 6(1), 10, 11(1), 12 and 21 when such a restriction constitutes a necessary measures to safeguard:the prevention, investigation, detection and prosecution of criminal offences, or of breaches of ethics for regulated professions; German law 10Paragraph 12 of the Telemediengesetz (Law on telemedia) of 26 February 2007 (BGBl. 2007 I, p. 179, ‘TMG’), provides:‘(1) A service provider may collect and use personal data to make telemedia available only in so far as this law or another legislative provision expressly relating to telemedia so permits or the user has consented to it.(2) Where personal data have been supplied in order for telemedia to be made available, a service provider may use them for other purposes only in so far as this law or another legislative provision expressly relating to telemedia so permits or the user has consented to it.(3) Except as otherwise provided, the provisions concerning the protection of personal data which are applicable in the case in question shall apply even if the data are not processed automatically.’11Paragraph 15 of the TMG provides:‘(1) A service provider may collect and use the personal data of a user only to the extent necessary in order to facilitate, and charge for, the use of telemedia (data concerning use). Data concerning use include, in particular:1.particulars for the identification of the user,2.information about the beginning, end and extent of the particular use, and3.information about the telemedia used by the user.(2) A service provider may combine the data concerning use of a user relating to the use of different telemedia to the extent that this is necessary for purposes of charging the user.(4) A service provider may use data concerning use after the end of the use to the extent that they are required for purposes of charging the user (invoicing data). The service provider may block the data in order to comply with existing limits on storage periods laid down by law, statutes or contract.’12Under Paragraph 3(1) of the Bundesdatenschutzgesetz (Federal Data Protection Law) of 20 December 1990 (BGBl. 1990 I, p. 2954, ‘personal data are individual indications concerning the personal or factual circumstances of an identified or identifiable natural person (data subject). …’. The dispute in the main proceedings and the questions referred for a preliminary ruling 13Mr Breyer has accessed several websites operated by German Federal institutions. On the websites, which are accessible to the public, those institutions provide topical information.14With the aim of preventing attacks and making it possible to prosecute ‘pirates’, most of those websites store information on all access operations in logfiles. The information retained in the logfiles after those sites have been accessed include the name of the web page or file to which access was sought, the terms entered in the search fields, the time of access, the quantity of data transferred, an indication of whether access was successful, and the IP address of the computer from which access was sought.15IP addresses are series of digits assigned to networked computers to facilitate their communication over the internet. When a website is accessed, the IP address of the computer seeking access is communicated to the server on which the website consulted is stored. That connection is necessary so that the data accessed maybe transferred to the correct recipient.16Furthermore, it is clear from the order for the reference and the documents before the Court that internet service providers allocate to the computers of internet users either a ‘static’ IP address or a ‘dynamic’ IP address, that is to say an IP address which changes each time there is a new connection to the internet. Unlike static IP addresses, dynamic IP addresses do not enable a link to be established, through files accessible to the public, between a given computer and the physical connection to the network used by the internet service provider.17Mr Breyer brought an action before the German administrative courts seeking an order restraining the Federal Republic of Germany from storing, or arranging for third parties to store, after consultation of the websites accessible to the public run by the German Federal institutions’ online media services, the IP address of the applicant’s host system except in so far as its storage is unnecessary in order to restore the availability of those media in the event of a fault occurring.18Since Mr Breyer’s action at first instance was dismissed, he brought an appeal against that decision.19The court of appeal varied that decision in part. It ordered the Federal Republic of Germany to refrain from storing or arranging for third parties to store, at the end of each consultation period, the IP address of the host system from which Mr Breyer sought access, which was transmitted when he consulted publicly accessible websites of the German Federal institutions’ online media, where that address is stored together with the date of the consultation period to which it relates and where Mr Breyer has revealed his identity during that use, including in the form of an electronic address mentioning his identity, except in so far as that storage is not necessary in order to restore the dissemination of those media in the event of a fault occurring.20According to the court of appeal, a dynamic IP address, together with the date on which the website was accessed to which that address relates constitutes, if the user of the website concerned has revealed his identity during that consultation period, personal data, because the operator of that website is able to identify the user by linking his name to his computer’s IP address.21However, the court of appeal held that Mr Breyer’s action could not be upheld in other situations. If Mr Breyer does not reveal his identity during a consultation period, only the internet service provider could connect the IP address to an identified subscriber. However, in the hands of the Federal Republic of Germany, in its capacity as provider of online media services, the IP address is not personal data, even in combination with the date of the consultation period to which it relates, because the user of the websites concerned is not identifiable by that Member State.22Mr Breyer and the Federal Republic of Germany each brought an appeal on a point of law before the Bundesgerichtshof (Federal Court of Justice, Germany) against the decision of the appeal court. Mr Breyer sought to have his application for an injunction upheld in its entirety. The Federal Republic of Germany sought to have it dismissed.23The referring court states that the dynamic IP addresses of Mr Breyer’s computer stored by the Federal Republic of Germany, acting in its capacity as an online media services provider, are, at least in the context of other data stored in daily files, specific data on Mr Breyer’s factual circumstances, given that they provide information relating to his use of certain websites or certain internet files on certain dates.24Nevertheless, the data stored does not enable Mr Breyer to be directly identified. The operators of the websites at issue in the main proceedings can identify Mr Breyer only if the information relating to his identity is communicated to them by his internet service provider. The classification of those data as ‘personal data’ thus depends on whether Mr Breyer is identifiable.25The Bundesgerichtshof (Federal Court of Justice) refers to the academic disagreement relating to whether, in order to determine whether someone is identifiable, an ‘objective’ or ‘relative’ criterion must be used. The application of an ‘objective’ criterion would have the consequence that data such as the IP addresses at issue in the main proceedings may be regarded, at the end of the period of use of the websites at issue, as being personal data even if only a third party is able to determine the identity of the data subject, that third party being, in the present case, Mr Breyer’s internet service provider, which stored the additional data enabling his identification by means of those IP addresses. According to a ‘relative’ criterion, such data may be regarded as personal data in relation to an entity such as Mr Breyer’s internet service provider because they allow the user to be precisely identified (see, in that connection, judgment of 24 November 2011, Scarlet Extended, C‑70/10, EU:C:2011:771, paragraph 51), but not being regarded as such with respect to another entity, since that operator does not have, if Mr Breyer has not disclosed his identity during the consultation of those websites, the information necessary to identify him without disproportionate effort.26If the dynamic IP addresses of Mr Breyer’s computer, together with the date of the relevant consultation period, were to be considered as constituting personal data, the referring court asks whether the storage of those IP addresses at the end of that consultation period is authorised by Article 7(f) of that directive.27In that connection, the Bundesgerichtshof (Federal Court of Justice) states, first, that under Paragraph 15(1) of the TMG, online media services providers may collect and use the personal data of a user only to the extent that that is necessary to facilitate and charge for the use of those media. Second, the referring court states that, according to the Federal Republic of Germany, storage of those data is necessary to guarantee the security and continued proper functioning of the online media services that it makes accessible to the public, in particular, enabling cyber attacks known as‘denial-of-service’ attacks, which aim to paralyse the functioning of the sites by the targeted and coordinated saturation of certain web servers with huge numbers of requests, to be identified and combated.28According to the referring court, if and to the extent it is necessary for the online media services provider to take measures to combat such attacks, those measures may be regarded as necessary to ‘facilitate … the use of telemedia’ pursuant to Paragraph 15 of the TMG. However, academic opinion mostly supports the view, first, that the collection and use of personal data relating to the user of a website is authorised only in order to facilitate the specific use of that website and, second, that those data must be deleted at the end of period of consultation concerned if they are not data required for billing purposes. Such a restrictive reading of Paragraph 15(1) of the TMG would prevent the storage of IP addresses from being authorised in order to guarantee in a general manner the security and continued proper functioning of online media.29The referring court asks whether that interpretation, which is the interpretation advocated by the court of appeal, is in accordance with Article 7(f) of Directive 95/46, having regard, in particular with the criteria laid down by the Court in paragraph 29 et seq. of the judgment of 24 November 2011, ASNEF and FECEMD (C‑468/10 and C‑469/10, EU:C:2011:777).30In those circumstances the Bundesgerichtshof (Federal Court of Justice) decided to stay the proceedings before it and to refer the following questions to the Court for a preliminary ruling:‘(1)Must Article 2(a) of Directive 95/46 … be interpreted as meaning that an internet protocol address (IP address) which an [online media] service provider stores when his website is accessed already constitutes personal data for the service provider if a third party (an access provider) has the additional knowledge required in order to identify the data subject?(2)Does Article 7(f) of [that directive] preclude a provision in national law under which a service provider may collect and use a user’s personal data without his consent only to the extent necessary in order to facilitate, and charge for, the specific use of the telemedium by the user concerned, and under which the purpose of ensuring the general operability of the telemedium cannot justify use of the data beyond the end of the particular use of the telemedium?’ Consideration of the questions referred for a preliminary ruling The first question 31By its first question, the referring court asks essentially whether Article 2(a) of Directive 95/46 must be interpreted as meaning that a dynamic IP address registered by an online media services provider when a person accesses a website that that provider makes accessible to the public constitutes, with regard to that service provider, personal data within the meaning of that provision, where, only a third party, in the present case the internet service provider, has the additional data necessary to identify him.32According to that provision, ‘personal data’‘mean any information relating to an identified or identifiable natural person (“data subject”)’. Pursuant to that provision, an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his or her physical, physiological, mental, economic, cultural or social identity.33As a preliminary point, it must be noted that, in paragraph 51 of the judgment of 24 November 2011, Scarlet Extended (C‑70/10, EU:C:2011:771), which concerned inter alia the interpretation of the same directive, the Court held essentially that the IP addresses of internet users were protected personal data because they allow users to be precisely identified.34However, that finding by the Court related to the situation in which the collection and identification of the IP addresses of internet users is carried out by internet service providers.35In the present case, the first question concerns the situation in which it is the online media services provider, namely the Federal Republic of Germany, which registers IP addresses of the users of a website that it makes accessible to the public, without having the additional data necessary in order to identify those users.36Furthermore, it is common ground that the IP addresses to which the national court refers are ‘dynamic’ IP addresses, that is to say provisional addresses which are assigned for each internet connection and replaced when subsequent connections are made, and not ‘static’ IP addresses, which are invariable and allow continuous identification of the device connected to the network.37The referring court’s first question is based therefore on the premiss, first, that data consisting in a dynamic IP address and the date and time that a website was accessed from that IP address registered by an online media services provider do not, without more, give the service provider the possibility to identify the user who consulted that website during that period of use and, second, the internet services provider has additional data which, if combined with the IP address would enable the user to be identified.38In that connection, it must be noted, first of all, that it is common ground that a dynamic IP address does not constitute information relating to an ‘identified natural person’, since such an address does not directly reveal the identity of the natural person who owns the computer from which a website was accessed, or that of another person who might use that computer.39Next, in order to determine whether, in the situation described in paragraph 37 of the present judgment, a dynamic IP address constitutes personal data within the meaning of Article 2(a) of Directive 96/45 in relation to an online media services provider, it must be ascertained whether such an IP address, registered by such a provider, may be treated as data relating to an ‘identifiable natural person’ where the additional data necessary in order to identify the user of a website that the services provider makes accessible to the public are held by that user’s internet service provider.40In that connection, it is clear from the wording of Article 2(a) of Directive 95/46 that an identifiable person is one who can be identified, directly or indirectly.41The use by the EU legislature of the word ‘indirectly’ suggests that, in order to treat information as personal data, it is not necessary that that information alone allows the data subject to be identified.42Furthermore, recital 26 of Directive 95/46 states that, to determine whether a person is identifiable, account should be taken of all the means likely reasonably to be used either by the controller or by any other person to identify the said person.43In so far as that recital refers to the means likely reasonably to be used by both the controller and by ‘any other person’, its wording suggests that, for information to be treated as ‘personal data’ within the meaning of Article 2(a) of that directive, it is not required that all the information enabling the identification of the data subject must be in the hands of one person.44The fact that the additional data necessary to identify the user of a website are held not by the online media services provider, but by that user’s internet service provider does not appear to be such as to exclude that dynamic IP addresses registered by the online media services provider constitute personal data within the meaning of Article 2(a) of Directive 95/46.45However, it must be determined whether the possibility to combine a dynamic IP address with the additional data held by the internet service provider constitutes a means likely reasonably to be used to identify the data subject.46Thus, as the Advocate General stated essentially in point 68 of his Opinion, that would not be the case if the identification of the data subject was prohibited by law or practically impossible on account of the fact that it requires a disproportionate effort in terms of time, cost and man-power, so that the risk of identification appears in reality to be insignificant.47Although the referring court states in its order for reference that German law does not allow the internet service provider to transmit directly to the online media services provider the additional data necessary for the identification of the data subject, it seems however, subject to verifications to be made in that regard by the referring court that, in particular, in the event of cyber attacks legal channels exist so that the online media services provider is able to contact the competent authority, so that the latter can take the steps necessary to obtain that information from the internet service provider and to bring criminal proceedings.48Thus, it appears that the online media services provider has the means which may likely reasonably be used in order to identify the data subject, with the assistance of other persons, namely the competent authority and the internet service provider, on the basis of the IP addresses stored.49Having regard to all the foregoing considerations, the answer to the first question is that Article 2(a) of Directive 95/46 must be interpreted as meaning that a dynamic IP address registered by an online media services provider when a person accesses a website that the provider makes accessible to the public constitutes personal data within the meaning of that provision, in relation to that provider, where the latter has the legal means which enable it to identify the data subject with additional data which the internet service provider has about that person. The second question 50By its second question, the referring court asks essentially whether Article 7(f) of Directive 95/46 must be interpreted as precluding the legislation of a Member State under which an online media services provider may collect and use a user’s personal data without his consent only to the extent necessary in order to facilitate, and charge for, the specific use of those services by the user concerned, and under which the purpose of ensuring the general operability of those services cannot justify use of the data beyond the end of the particular use of them.51Before answering that question, it must be determined whether the processing of personal data at issue in the main proceedings, that is dynamic IP addresses of users of certain websites of the German Federal institutions, is excluded from the scope of Directive 95/46 under Article 3(2), first indent thereof, pursuant to which that directive does not apply to personal data processing operations concerning, in particular, the activities of the State in areas of criminal law.52In that connection, it must be recalled that the activities mentioned by way of examples by that provision are, in any event, activities of the State or of State authorities and unrelated to the fields of activity of individuals (see judgments of 6 November 2003, Lindqvist, C‑101/01, EU:C:2003:596, paragraph 43, and of 16 December 2008, Satakunnan Markkinapörssi and Satamedia, C‑73/07, EU:C:2008:727, paragraph 41).53In the present case, subject to verifications to be made in that regard by the referring court, it appears that the German Federal institutions, which provide the online media services and which are responsible for the processing of dynamic IP addresses act, in spite of their status as public authorities, as individuals and outside the activities of the State in the area of criminal law.54Therefore, it must be determined whether the legislation of a Member State, such as that at issue in the main proceedings, is compatible with Article 7(f) of Directive 95/46.55To that end, it is important to recall that the national legislation at issue in the main proceedings, as interpreted in the restrictive sense described by the referring court, authorises the collection and use of personal data relating to a user of those services, without his consent, only to the extent that is necessary to facilitate and charge for the specific use of online media by the user concerned, even though the objective aiming to ensure the general capacity relating to the functioning of the online media may justify the use of those data at the end of that period of use of such media.56Pursuant to Article 7(f) of Directive 95/46, personal data may be processed if ‘processing is necessary for the purposes of the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection under Article 1(1)’ of the Directive.57The Court has held that Article 7 of Directive 95/46 sets out an exhaustive and restrictive list of cases in which the processing of personal data can be regarded as being lawful and that the Member States cannot add new principles relating to the lawfulness of the processing of personal data or impose additional requirements that have the effect of amending the scope of one of the six principles provided for in that article (see, to that effect, judgment of 24 November 2011, ASNEF and FECEMD, C‑468/10 and C‑469/10, EU:C:2011:777, paragraphs 30 and 32).58Article 5 of Directive 95/46 authorises Member States to specify, within the limits of Chapter II of that directive and, accordingly, Article 7 thereof, the conditions under which the processing of personal data is lawful, the margin of discretion which Member States have pursuant to Article 5 can therefore be used only in accordance with the objective pursued by that directive of maintaining a balance between the free movement of personal data and the protection of private life. Under Article 5 of Directive 95/46, Member States also cannot introduce principles relating to the lawfulness of the processing of personal data other than those listed in Article 7 thereof, nor can they amend, by additional requirements, the scope of the six principles provided for in Article 7 (see, to that effect, judgment of 24 November 2011, ASNEF and FECEMD, C‑468/10 and C‑469/10, EU:C:2011:777, paragraphs 33, 34 and 36).59In the present case, it appears that Paragraph 15 of the TMG, if it were interpreted in the strict manner mentioned in paragraph 55 of the present judgment, has a more restrictive scope than that of the principle laid down in Article 7(f) of Directive 95/46.60Whereas Article 7(f) of that directive refers, in a general manner, to ‘the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed’, Paragraph 15 of the TMG authorises the service provider to collect and use personal data of a user only in so far as that is necessary in order to facilitate, and charge for, the particular use of electronic media. Therefore, Paragraph 15 of the TMG precludes the storage of personal data, after the consultation of online media, in a general manner in order to guarantee the use of those media. The German Federal institutions, which provide online media services, may also have a legitimate interest in ensuring, in addition to the specific use of their publicly accessible websites, the continued functioning of those websites.61Thus, as the Advocate General pointed out, in points 100 and 101 of his Opinion, such national legislation goes further than defining the notion of ‘legitimate interests’ in Article 7(f) of Directive 95/46, in accordance with Article 5 of Directive 95/46.62Article 7(f) of that directive precludes Member States from excluding, categorically and in general, the possibility of processing certain categories of personal data without allowing the opposing rights and interests at issue to be balanced against each other in a particular case. Thus, Member States cannot definitively prescribe, for certain categories of personal data, the result of the balancing of the opposing rights and interests, without allowing a different result by virtue of the particular circumstances of an individual case (see, to that effect, judgment of 24 November 2011, ASNEF and FECEMD, C‑468/10 and C‑469/10, EU:C:2011:777, paragraphs 47 and 48).63As regards the processing of personal data of the users of online media websites, legislation, such as that at issue in the main proceedings, reduces the scope of the principle laid down in Article 7(f) of Directive 95/46 by excluding the possibility to balance the objective of ensuring the general operability of the online media against the interests or fundamental rights and freedoms of those users which, in accordance with that provision, calls for protection under Article 1(1) of that directive.64It follows from all of the foregoing considerations that the answer to the second question is that Article 7(f) of Directive 95/46 must be interpreted as meaning that it precludes the legislation of a Member State under which an online media services provider may collect and use personal data relating to a user of those service, without his consent, only in so far as the collection and use of that information are necessary to facilitate and charge for the specific use of those services by that user, even though the objective aiming to ensure the general operability of those services may justify the use of those data after consultation of those websites. Costs 65Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. Article 2(a) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data must be interpreted as meaning that a dynamic IP address registered by an online media services provider when a person accesses a website that the provider makes accessible to the public constitutes personal data within the meaning of that provision, in relation to that provider, where the latter has the legal means which enable it to identify the data subject with additional data which the internet service provider has about that person. 2. Article 7(f) of Directive 95/46 must be interpreted as precluding the legislation of a Member State, pursuant to which an online media services provider may collect and use personal data relating to a user of those services, without his consent, only in so far as that the collection and use of that data are necessary to facilitate and charge for the specific use of those services by that user, even though the objective aiming to ensure the general operability of those services may justify the use of those data after a consultation period of those websites. [Signatures]( *1 ) Language of the case: German. | 1fa85-a5be6d7-47a3 | EN |
EU law applies to an action for annulment of marriage brought by a third party following the death of one of the spouses | 13 October 2016 ( *1 )‛Reference for a preliminary ruling — Judicial cooperation in civil matters — Jurisdiction and the recognition and enforcement of judgments in matrimonial matters and matters of parental responsibility — Regulation (EC) No 2201/2003 — Article 1(1)(a) — Material scope — Action for annulment of marriage brought by a third party after the death of one of the spouses — Article 3(1) — Jurisdiction of the courts of the Member State of residence of the ‘applicant’ — Scope’In Case C‑294/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland), made by decision of 20 March 2015, received at the Court on 17 June 2015, in the proceedings Edyta Mikołajczyk v Marie Louise Czarnecka, Stefan Czarnecki, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas, C. Toader (Rapporteur) and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: A. Calot Escobar,after considering the observations submitted on behalf of:—the Polish Government, by B. Majczyna, acting as Agent,the Italian Government, by G. Palmieri, acting as Agent, and by P. Pucciariello, avvocato dello Stato,the European Commission, by M. Wilderspin and A. Stobiecka-Kuik, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 26 May 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 1(1)(a) and the fifth and sixth indents of Article (3)(1)(a) of Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000 (OJ 2003 L 338, p. 1).2The request has been made in proceedings between Edyta Mikołajczyk, the applicant, and Stefan Czarnecki (deceased; represented in the main proceedings by an executor) and Marie Louise Czarnecka, the defendants, concerning an application for annulment of the marriage between the two defendants. Legal context EU law 3Recitals 1 and 8 of Regulation No 2201/2003 state:‘(1)The European Community has set the objective of creating an area of freedom, security and justice, in which the free movement of persons is ensured. To this end, the Community is to adopt, among others, measures in the field of judicial cooperation in civil matters that are necessary for the proper functioning of the internal market....(8)As regards judgments on divorce, legal separation or marriage annulment, this Regulation should apply only to the dissolution of matrimonial ties and should not deal with issues such as the grounds for divorce, property consequences of the marriage or any other ancillary measures.’4Article 1 of that regulation provides:‘1. This Regulation shall apply, whatever the nature of the court or tribunal, in civil matters relating to:(a)divorce, legal separation or marriage annulment;3. This Regulation shall not apply to:the establishment or contesting of a parent-child relationship;(b)decisions on adoption, measures preparatory to adoption, or the annulment or revocation of adoption;(c)the name and forenames of the child;(d)emancipation;(e)maintenance obligations;(f)trusts or succession;(g)measures taken as a result of criminal offences committed by children.’5Article 3(1) of that regulation is worded as follows:‘In matters relating to divorce, legal separation or marriage annulment, jurisdiction shall lie with the courts of the Member Statein whose territory:the spouses are habitually resident, orthe spouses were last habitually resident, in so far as one of them still resides there, orthe respondent is habitually resident, orin the event of a joint application, either of the spouses is habitually resident, orthe applicant is habitually resident if he or she resided there for at least a year immediately before the application was made, orthe applicant is habitually resident if he or she resided there for at least six months immediately before the application was made and is either a national of the Member State in question or, in the case of the United Kingdom and Ireland, has his or her “domicile” there;...’6Article 17 of the regulation, entitled ‘Examination as to jurisdiction’, provides:‘Where a court of a Member State is seised of a case over which it has no jurisdiction under this Regulation and over which a court of another Member State has jurisdiction by virtue of this Regulation, it shall declare of its own motion that it has no jurisdiction.’ Polish law 7It is apparent from the order for reference that, under Article 13(1) of the kodeks rodzinny i opiekuńczy (Law of 25 February 1964 on the Family and Guardianship Code) (Dz. U. No 9, item 59, as amended), a person who is already married may not contract another marriage.8Article 13(2) of that law provides that annulment of a marriage on the ground that one of the spouses is still married to another person may be requested by any person who has a legal interest in the matter.9Article 13(3) of the law then provides that a marriage cannot be annulled on the ground that one of the spouses is still married to another person if the previous marriage has been dissolved or annulled, unless the dissolution of that marriage resulted from the death of the person who contracted a new marriage while remaining party to a marriage contracted previously.10Pursuant to Article 1099 of the kodeks postępowania cywilnego (Law of 17 November 1964 on the Code of Civil Procedure) (Dz. U. No 43, item 296, as amended), the court seised is required to consider, of its own motion and at all stages of the proceedings, whether the national courts have jurisdiction, and is required to declare the application inadmissible should it find the national courts do not have jurisdiction. A finding that national courts do not have jurisdiction constitutes a ground of invalidity of the proceedings. The facts of the dispute in the main proceedings and the questions referred for a preliminary ruling 11On 20 November 2012, Edyta Mikołajczyk brought an action before the Sąd Okręgowy w Warszawie (Regional Court, Warsaw, Poland) seeking annulment of the marriage of Stefan Czarnecki to Marie Louise Czarnecka (née Cuenin), entered into on 4 July 1956 in Paris (France). The applicant stated that she was the heir to the estate of Zdzisława Czarnecka, Stefan Czarnecki’s first wife, who died on 15 June 1999.12According to the applicant, the marriage of Stefan Czarnecki to Zdzisława Czarnecka, contracted on 13 July 1937 in Poznań (Poland), had not been dissolved at the time the marriage between Stefan Czarnecki and Marie Louise Czarnecka was contracted. Consequently, that second marriage was a bigamous union which should therefore be annulled.13Marie Louise Czarnecka contended that the action for annulment was inadmissible because the Polish courts did not have jurisdiction. She submitted that, pursuant to the second and third indents of Article 3(1)(a) of Regulation No 2201/2003, that action should have been addressed to a court of the Member State in which the spouses were last habitually resident, in so far as one of them is still habitually resident in that State, or to a court of the State where the respondent is habitually resident, namely, in both cases, France. The executor representing, in the main proceedings, Stefan Czarnecki, who died on 3 March 1971 in France, supported the view of Marie Louise Czarnecka.14By order of 9 September 2013, which became definitive in the absence of any challenge by the parties, the Sąd Okręgowy w Warszawie (Regional Court, Warsaw) dismissed the plea of inadmissibility and held that, pursuant to the fifth indent of Article 3(1)(a) of Regulation No 2201/2003, it had jurisdiction to hear the action for annulment of the marriage.15By judgment of 13 February 2014, that court held that the action for annulment was unfounded, as the applicant had not proved that the first marriage of Stefan Czarnecki had not been dissolved at the time the marriage between Stefan Czarnecki and Marie Louise Czarnecka was contracted. To the contrary, it was apparent from the facts, as established by that court, that the first marriage had been dissolved by divorce on 29 May 1940.16Edyta Mikołajczyk brought an appeal against that judgment before the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw), the referring court.17The referring court considers that it is required, under Article 17 of Regulation No 2201/2003 and Article 1099 of the Code of Civil Procedure to consider of its own motion whether it has international jurisdiction to hear the main proceedings, notwithstanding the fact that the court of first instance has already ruled on that point.18In that regard, the referring court has expressed doubts concerning the interpretation, in particular, of Articles 1 and 3 of Regulation No 2201/2003, and seeks clarification on the material scope of that regulation. It thus asks, first, whether an action for annulment of a marriage brought following the death of one of the spouses falls within the scope of the regulation. In that context, it observes that Regulation No 2201/2003 repealed Council Regulation (EC) No 1347/2000 of 29 May 2000 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility for children of both spouses (OJ 2000 L 160, p. 19), the contents of which largely reproduced that of the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Matrimonial Matters, drawn up by Council Act of 28 May 1998 (OJ 1998 C 221, p. 1). The explanatory report on that Convention, written by Alegria Borrás and approved by the Council (OJ 1998 C 221, p. 27), stated that the scope of the Convention does not extend to cases where the validity of a marriage is considered on the basis of a petition for its annulment following the death of one or both spouses.19Secondly, again in relation to the material scope of Regulation No 2201/2003, and in the event of an affirmative answer to its first question, the referring court asks whether an action for annulment of marriage brought by a person other than one of the spouses falls under that regulation.20Should the second question be answered in the affirmative, the referring court requests clarification as to whether the jurisdiction of the courts of a Member State to hear an action for annulment of marriage brought by a third party may be based on the grounds provided for in the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 so that the courts of the Member State in which that third party is habitually resident could assume jurisdiction without there being a link between the court seised and the place in which the spouses or one of the spouses was habitually resident.21In those circumstances, the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:Do actions for annulment of a marriage following the death of one of the spouses fall within the scope of Regulation No 2201/2003?(2)In the event of an affirmative answer to Question 1, does the scope of that regulation extend to an action for annulment of marriage brought by a person other than one of the spouses?(3)In the event of an affirmative answer to Question 2, in actions for annulment of marriage brought by a person other than one of the spouses, may the jurisdiction of the court be based on the grounds set out in the fifth and sixth indents of Article 3(1)(a) of the regulation?’ Consideration of the questions referred The first and second questions 22By its first and second questions, which should be examined together, the referring court asks, in essence, whether an action for annulment of marriage brought by a third party following the death of one of the spouses falls within the scope of Regulation No 2201/2003.23Under Article 1(1)(a) of Regulation No 2201/2003, the regulation is to apply, whatever the nature of the court or tribunal, in civil matters relating to divorce, legal separation or marriage annulment.24To determine whether an application falls within the scope of that regulation, the focus must be on the object of the application (judgment of 21 October 2015, Gogova, C‑215/15, EU:C:2015:710, paragraph 28 and the case-law cited). In the present case, it is apparent from the order for reference that the referring court has been requested to rule on an application for annulment of the marriage contracted on 4 July 1956 in Paris between Marie Louise Czarnecka and Stefan Czarnecki, an application based on the alleged existence of a previous marriage contracted between Zdzisława Czarnecka and Stefan Czarnecki. In principle, the object of that action is therefore ‘marriage annulment’ within the meaning of Article 1(1)(a) of Regulation No 2201/2003.25Nevertheless, the referring court is uncertain whether such an action falls within the scope of that regulation when brought by a third party following the death of one of the spouses.26In that regard, it follows from the Court’s settled case-law that in interpreting a provision of EU law, it is necessary to consider not only its wording but also its context and the aims pursued by the legislation of which it forms part (judgments of 19 September 2013, Van Buggenhout and Van de Mierop, C‑251/12, EU:C:2013:566, paragraph 26, and of 26 March 2015, Litaksa, C‑556/13, EU:C:2015:202, paragraph 23).27As regards, first, the terms of Article 1(1)(a) of Regulation No 2201/2003, it should be noted that that provision states, inter alia, that marriage annulment is one of the matters which fall within the scope of that regulation, without making any distinction on the basis of the date on which such an action is brought in relation to the death of one of the spouses or the identity of the person entitled to bring such an action. Consequently, if account is taken only of the wording of that provision, an action for annulment of marriage brought by a third party following the death of one of the spouses would appear to fall within the scope of Regulation No 2201/2003.28Such an interpretation of Article 1(1)(a) of Regulation No 2201/2003 is, in the second place, supported by the context of that provision.29In that regard, it should be noted that Article 1(3) of Regulation No 2201/2003 provides an exhaustive list of matters excluded from the scope of the regulation, including, inter alia, maintenance obligations as well as trusts and successions. Recital 8 of that regulation also states that the regulation should apply only to the dissolution of matrimonial ties and should not deal with issues such as the property consequences of the marriage.30On the other hand, an action for annulment of marriage brought by a third party following the death of one of the spouses is not included in the list, set out in Article 1(3) of Regulation No 2201/2003, of matters excluded from the scope of that regulation.31In addition, while it is true that, according to the referring court, Edyta Mikołajczyk’s legal interest in bringing the action in the main proceedings is linked to her status as the heir to the estate of Zdzisława Czarnecka, that court states that the dispute relates only to the annulment of the marriage between Marie Louise Czarnecka and Stefan Czarnecki and cannot therefore come within Article 1(3)(f) of Regulation No 2201/2003 relating to trusts and successions, which fall outside the scope of the regulation.32Third , the interpretation of Article 1(1)(a) of Regulation No 2201/2003 to the effect that an action for annulment of marriage brought by a third party following the death of one of the spouses falls within the scope of that regulation is also borne out by the objective pursued by that regulation.33In that regard, it should be noted that, according to recital 1 of Regulation No 2201/2003, that regulation is to contribute to the creation of an area of freedom, security and justice, in which the free movement of persons is ensured. Accordingly, with the objective of ensuring legal certainty, Chapters II and III of the regulation lay down rules on jurisdiction and on recognition and enforcement of judgments concerning the dissolution of matrimonial ties (judgment of 16 July 2009, Hadadi, C‑168/08, EU:C:2009:474, paragraphs 47 and 48).34Excluding an action such as that in the main proceedings from the scope of Regulation No 2201/2003 would undermine the attainment of that objective, in so far as that exclusion would be liable to increase legal uncertainty as a result of there being no uniform regulatory framework in this area, especially since Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (OJ 2012 L 201, p. 107), does not cover matters relating to the status of natural persons or family relationships.35Furthermore, as the Advocate General stated in point 27 of his Opinion, the fact that the action for annulment at issue in the main proceedings relates to a marriage previously dissolved by the death of one of the spouses does not mean that the action falls outside the scope of Regulation No 2201/2003. Indeed, it cannot be excluded that a person may have an interest in having a marriage annulled, even after the death of one of the spouses.36While such an interest must be assessed in the light of the applicable national legislation, there is no reason to deprive a third party who has brought an action for annulment of marriage following the death of one of the spouses of the benefit of the uniform conflict of law rules laid down by Regulation No 2201/2003.37In the light of the foregoing considerations, the answer to the first and second questions referred is that Article 1(1)(a) of Regulation No 2201/2003 must be interpreted as meaning that an action for annulment of marriage brought by a third party following the death of one of the spouses falls within the scope of Regulation No 2201/2003. The third question 38By its third question, the referring court asks, in essence, whether the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 must be interpreted as meaning that a person other than one of the spouses who brings an action for annulment of marriage may rely on the grounds of jurisdiction provided for in those provisions.39The referring court has doubts regarding the answer to that question, in so far as, in the event of an affirmative answer, a court with no connection to the habitual place of residence of the spouses or one of the spouses could hear an action for annulment of marriage brought by a third party.40In that regard, it should be noted that Article 3 of Regulation No 2201/2003 lays down the general criteria of jurisdiction with respect to divorce, legal separation and marriage annulment. These criteria, which are objective, alternative and exclusive, meet the need for rules that address the specific requirements of conflicts relating to the dissolution of matrimonial ties.41While the first to fourth indents of Article 3(1)(a) of Regulation No 2201/2003 expressly refer to the habitual residence of the spouses and of the respondent as criteria, the fifth and sixth indents of Article 3(1)(a) permit the application of the jurisdiction rules of the forum actoris.42The latter provisions recognise, under certain conditions, the jurisdiction of the courts of the Member State in whose territory the applicant is habitually resident to rule on the dissolution of matrimonial ties. Thus, the fifth indent of Article 3(1)(a) of Regulation No 2201/2003 establishes such jurisdiction where the applicant has resided there for at least a year immediately before the application was made, while the sixth indent of Article 3(1)(a) of that regulation also confers jurisdiction where the applicant has resided there for at least six months immediately before the application was made and is a national of the Member State in question or, in certain cases, is domiciled there.43In those circumstances, it is appropriate, for the purposes of answering the question referred by the national court, to determine the precise scope of the term ‘applicant’ within the meaning of those provisions, in order to determine whether that term is limited to spouses, or whether it also extends to third parties.44The Court of Justice has consistently held that the need for a uniform application of EU law and the principle of equality require that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union, which must take into account the context of that provision and the purpose of the legislation in question (see, to that effect, judgments of 2 April 2009, A, C‑523/07, EU:C:2009:225, paragraph 34, and of 16 July 2009, Hadadi, C‑168/08, EU:C:2009:474, paragraph 38).45Since the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 make no express reference to the law of the Member States for the purpose of determining the scope of the term ‘applicant’, that scope must be determined in the light of the context of those provisions and the purpose of the regulation.46As regards the context of the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003, it is apparent from the case-law of the Court that that article provides for a number of grounds of jurisdiction, without establishing any hierarchy, since the objective criteria set out in that article are alternatives (see, to that effect, judgment of 16 July 2009, Hadadi, C‑168/08, EU:C:2009:474, paragraph 48).47It follows that the system for sharing jurisdiction established by Regulation No 2201/2003 concerning the dissolution of matrimonial ties is not intended to preclude the courts of several States having jurisdiction. Rather, the coexistence of several courts having jurisdiction is expressly provided for, without any hierarchy being established between them (judgment of 16 July 2009, Hadadi, C‑168/08, EU:C:2009:474, paragraph 49).48As regards the criteria listed in Article 3(1)(a) of that regulation, the Court has held that they are based in various respects on the habitual residence of the spouses (judgment of 16 July 2009, Hadadi, C‑168/08, EU:C:2009:474, paragraph 50).49It follows from the foregoing that the jurisdiction rules laid down in Article 3 of Regulation No 2201/2003, including those referred to in the fifth and sixth indents of Article 3(1)(a), are designed to protect the interests of spouses.50Such an interpretation is consonant with the objective pursued by that regulation, which established flexible conflict of law rules to reflect the mobility of individuals and to protect the rights of a spouse who has left the country of common habitual residence, while ensuring there is a genuine link between the party concerned and the Member State exercising jurisdiction (see, to that effect, judgment of 29 November 2007, Sundelind Lopez, C‑68/07, EU:C:2007:740, paragraph 26).51It follows that, while an action for annulment of marriage brought by a third party falls within the scope of Regulation No 2201/2003, the third party must be bound by the jurisdiction rules set out for the benefit of spouses. That interpretation does not, moreover, deprive that third party of access to the courts, since the third party may rely on other grounds of jurisdiction provided for in Article 3 of that regulation.52Accordingly, the term ‘applicant’ within the meaning of the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 does not extend to persons other than spouses.53In the light of the foregoing considerations, the answer to the third question is that the fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 must be interpreted as meaning that a person other than one of the spouses who brings an action for annulment of marriage may not rely on the grounds of jurisdiction set out in those provisions. Costs 54Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. Article 1(1)(a) of Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000, must be interpreted as meaning that an action for annulment of marriage brought by a third party following the death of one of the spouses falls within the scope of Regulation No 2201/2003. 2. The fifth and sixth indents of Article 3(1)(a) of Regulation No 2201/2003 must be interpreted as meaning that a person other than one of the spouses who brings an action for annulment of marriage may not rely on the grounds of jurisdiction set out in those provisions. [Signatures]( *1 ) * Language of the case: Polish. | ad3a9-e088415-4c4a | EN |
The initial acquirer of a copy of a computer program, accompanied by an unlimited user licence, may resell that copy and his licence to a new acquirer | 12 October 2016 ( *1 )‛Reference for a preliminary ruling — Intellectual property — Copyright and related rights — Directive 91/250/EEC — Article 4(a) and (c) — Article 5(1) and (2) — Directive 2009/24/EC — Article 4(1) and (2) — Article 5(1) and (2) — Legal protection of computer programs — Resale of ‘used’ licensed copies of computer programs on non-original material media — Exhaustion of the distribution right — Exclusive right of reproduction’In Case C‑166/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Rīgas apgabaltiesas Krimināllietu tiesu kolēģija (Criminal Law Division of the Riga Regional Court, Latvia), made by decision of 18 March 2015, received at the Court on 13 April 2015, in the criminal proceedings against Aleksandrs Ranks, Jurijs Vasiļevičs, the other parties to the proceedings being: Finanšu un ekonomisko noziegumu izmeklēšanas prokoratūra, Microsoft Corp., THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, M. Vilaras (Rapporteur), J. Malenovský, M. Safjan and D. Šváby, Judges,Advocate General: H. Saugmandsgaard Øe,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 16 March 2016,after considering the observations submitted on behalf of:—Mr Ranks and Mr Vasiļevičs, by M. Krūmiņš, advokāts,Microsoft Corp., by I. Veikša, I. Krodere and N. Tuominen, advokātes,the Latvian Government, by I. Kalniņš and J. Treijs-Gigulis, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, assisted by F. Varrone, avvocato dello Stato,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by J. Samnadda and A. Sauka, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 1 June 2016,gives the following Judgment 1This request for a preliminary ruling concerns, formally, the interpretation of Article 4(2) and Article 5(1) and (2) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ 2009 L 111, p. 16).2The request has been made in the context of criminal proceedings brought by the Finanšu un ekonomisko noziegumu izmeklēšanas prokoratūra (Department for the Prosecution of Economic and Financial Offences, Latvia) against Mr Aleksandrs Ranks and Mr Jurijs Vasiļevičs, charged with the unlawful sale, as part of a criminal organisation, of objects protected by copyright, intentional unlawful use of another person’s trade mark, thereby causing serious harm to the lawfully protected rights and interests of that person, and carrying on unregistered economic activities, by reason of having sold, through an online marketplace, used copies of computer programs stored on non-original media. Legal context EU law Directive 2009/243Article 4(1)(a) and (2) of Directive 2009/24 provides as follows:‘1. Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder within the meaning of Article 2 shall include the right to do or to authorise:(a)the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole; in so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder;…2. The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.’4Under Article 5(1) and (2) of that directive:‘1. In the absence of specific contractual provisions, the acts referred to in points (a) and (b) of Article 4(1) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.2. The making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use.’Directive 91/250/EEC5Article 4 of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ 1991 L 122, p. 42) provided:‘Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder, within the meaning of Article 2, shall include the right to do or to authorise:the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole. In so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder;(c)any form of distribution to the public, including the rental, of the original computer program or of copies thereof. The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.’6‘1. In the absence of specific contractual provisions, the acts referred to in Article 4(a) and (b) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.7Article 7(1) of that directive provided as follows:‘Without prejudice to the provisions of Articles 4, 5 and 6, Member States shall provide, in accordance with their national legislation, appropriate remedies against a person committing any of the acts listed in subparagraphs (a), (b) and (c) below:any act of putting into circulation a copy of a computer program knowing, or having reason to believe, that it is an infringing copy;(b)the possession, for commercial purposes, of a copy of a computer program knowing, or having reason to believe, that it is an infringing copy;…’8Directive 91/250 was repealed by Directive 2009/24. Latvian law 9Article 32 of the Autortiesību likums (Law on copyright), entitled ‘Exhaustion of distribution rights’, provides that the right to distribute a work is exhausted from the moment at which that work is sold or otherwise transferred for the first time in the European Union, if this is done by the author himself or with his consent. That provision applies only to works in tangible form or copies thereof. The dispute in the main proceedings and the questions referred for a preliminary ruling 10Mr Ranks and Mr Vasiļevičs are charged with having sold various copyright-protected computer programs published by Microsoft Corp., such as versions of the Microsoft Windows software and the Microsoft Office suite, on an online marketplace between 28 December 2001 and 22 December 2004.11The number of copies of computer programs sold, estimated at more than 3000, could not be precisely determined in the course of the investigation, nor could the total amount obtained from those sales be precisely determined. The amount of material damage caused to Microsoft by the activities of Mr Ranks and Mr Vasiļevičs was, however, evaluated, on the basis of the sums credited to their PayPal accounts, at 293548.40 United States dollars (USD) (approximately EUR 265514).12Mr Ranks and Mr Vasiļevičs are charged with several infringements of Latvian criminal law and, specifically, with (i) the unlawful sale, as part of a criminal organisation, of objects protected by copyright, (ii) intentional unlawful use of another person’s trade mark and (iii) carrying on unregistered economic activities.13By judgment of 3 January 2012, they were found guilty, at first instance, of the unlawful sale, as part of a criminal organisation, of objects protected by copyright, and intentional unlawful use of another person’s trade mark, offences defined and penalised, respectively, by Article 149(3) and Article 206(2) of the Latvian Criminal Code, and were ordered to pay partial compensation to Microsoft for the damage suffered by it and to bear all the legal costs incurred in the proceedings.14The public prosecutor, Mr Ranks and Mr Vasiļevičs, as well as Microsoft, appealed against that judgment to the Rīgas apgabaltiesas Krimināllietu tiesu kolēģija (Criminal Law Division of the Riga Regional Court, Latvia), which, by judgment of 22 March 2013, set aside that judgment in so far as it found Mr Ranks and Mr Vasiļevičs guilty of the unlawful sale, as part of a criminal organisation, of objects protected by copyright, and in so far as it imposed a penalty on them.15The public prosecutor, Mr Ranks and Mr Vasiļevičs each lodged an appeal on a point of law before the Augstākās tiesas Senāts (Senate of the Supreme Court, Latvia), which, by order of 13 October 2013, set aside the judgment of the Rīgas apgabaltiesas Krimināllietu tiesu kolēģija (Criminal Law Division of the Riga Regional Court) in its entirety and referred the case back to the appeal court for re-examination.16In the course of the re-examination of the case, Mr Ranks and Mr Vasiļevičs asked the Rīgas apgabaltiesas Krimināllietu tiesu kolēģija (Criminal Law Division of the Riga Regional Court) to submit a request for a preliminary ruling to the Court of Justice on the interpretation of Article 4(2) and Article 5(1) and (2) of Directive 2009/24.17In those circumstances, the Rīgas apgabaltiesas Krimināllietu tiesu kolēģija (Criminal Law Division of the Riga Regional Court) decided to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Under Article 5(1) and Article 4(2) of Directive 2009/24, may a person who has acquired a computer program with a “used” licence on a non-original disk, which works and is not used by any other user, rely upon the exhaustion of the right to distribute a copy of that computer program, the first purchaser of which acquired it from the rightholder with the original disk, [where that disk] has been damaged, if the first purchaser has erased his copy and no longer uses it?(2)If the answer to the first question is in the affirmative, then, does a person who may rely upon the exhaustion of the right to distribute a copy of the computer program have the right to resell that computer program on a non-original disk to a third person, in accordance with Article 4(2) and Article 5(2) of Directive 2009/24?’ Consideration of the questions referred 18As a preliminary point, it must be noted that, as the Advocate General pointed out in point 4 of his Opinion, Directive 2009/24 — Article 10 of which repealed Directive 91/250 — entered into force, pursuant to Article 11 thereof, on 25 May 2009. It is apparent from the order for reference that Mr Ranks and Mr Vasiļevičs are charged with offences allegedly committed between 28 December 2001 and 22 December 2004. It follows that the dispute in the main proceedings is covered by Directive 91/250 and not by Directive 2009/24.19Consequently, the two questions referred, which concern the interpretation of Article 4(2) of Directive 2009/24, establishing the rule of exhaustion of the copyright holder’s distribution right, and of Article 5(1) and (2) of that directive, laying down exceptions to that rightholder’s exclusive right of reproduction, must be interpreted as referring to the equivalent provisions of Directive 91/250, namely Article 4(c) thereof, on the one hand, and Article 4(a) and Article 5(1) and (2) thereof, on the other. Admissibility 20The Latvian Government has expressed doubts as to the admissibility of the questions, submitting that the referring court appears to take the view that Mr Ranks and Mr Vasiļevičs lawfully acquired objects protected by copyright, even though, as is evident from the order for reference, the computer programs in question are counterfeits.21As to those submissions, it should be borne in mind that, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is, in principle, bound to give a ruling (see judgment of 12 October 2010, Rosenbladt, C‑45/09, EU:C:2010:601, paragraph 32 and the case-law cited).22It is settled case-law that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred for a preliminary ruling from a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where 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 judgment of 12 October 2010, Rosenbladt, C‑45/09, EU:C:2010:601, paragraph 33 and the case-law cited).23In the present case, the main proceedings concern the question whether the resale of used copies of computer programs carried out by Mr Ranks and Mr Vasiļevičs is lawful in the light of the requirements of Directive 91/250. The answer to that question therefore depends directly on the interpretation of Article 4(c) of that directive, establishing the rule of exhaustion of the copyright holder’s distribution right, and of Article 4(a) and Article 5(1) and (2) of that directive, granting that rightholder an exclusive right of reproduction and laying down exceptions to that right.24It follows that the questions referred are admissible. Substance 25By its two questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 4(a) and (c), and Article 5(1) and (2), of Directive 91/250 must be interpreted as meaning that the acquirer of a used copy of a computer program, stored on a non-original material medium, may, under the rule of exhaustion of the rightholder’s distribution right, resell that copy where (i) the original material medium of that program, acquired by the initial acquirer, has been damaged and (ii) that initial acquirer has erased his copy or ceased to use it.26In that respect, it must be noted, first of all, that, under Article 4(c) of Directive 91/250, the first sale in the European Union of a copy of a computer program by the rightholder or with his consent exhausts the right to distribute that copy within the European Union.27It follows from that provision that the exhaustion of the right to distribute the copy of a computer program is subject to two conditions: (i) the copy must have been placed on the market and, more specifically, sold by the rightholder or with his consent, and (ii) it must have been placed on the market in the European Union (see, by analogy, with regard to Article 4 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), judgments of 12 September 2006, Laserdisken, C‑479/04, EU:C:2006:549, paragraph 21, and of 22 January 2015, Art & Allposters International, C‑419/13, EU:C:2015:27, paragraph 31).28The Court has already held that the term ‘sale’ in that provision, which must be given a broad interpretation, encompasses all forms of marketing of a copy of a computer program characterised by the grant of a right to use that copy, for an unlimited period, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of that copy (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 49).29It is common ground that the first marketing in the European Union, by the copyright holder, of a copy of his computer program stored on a material medium such as floppy discs, CD-ROMs or DVD-ROMs, constitutes a first sale of that copy within the meaning of Article 4(c) of Directive 91/250. In addition, it must be considered that, in the absence of any indication to the contrary in the order for reference, that sale is accompanied by an unlimited licence to use that copy.30It follows from the foregoing that, under Article 4(c) of Directive 91/250, the holder of the copyright in a computer program who has sold, in the European Union, a copy of that program on a material medium, such as a CD-ROM or a DVD-ROM, accompanied by an unlimited licence for the use of that program, can no longer oppose the resale of that copy by the initial acquirer or subsequent acquirers of that copy, notwithstanding the existence of contractual terms prohibiting any further transfer (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 77).31However, the questions referred do not concern the resale of the used copy of a computer program, stored on an original material medium, by its initial acquirer, but rather the resale of the used copy of a computer program, stored on a non-original material medium, by a person who acquired it from the initial acquirer or from a subsequent acquirer.32In their observations, Microsoft, the Italian and Polish Governments and the European Commission submit, in that respect, that the rule of exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250 applies only to the original material medium (floppy disc, CD-ROM or DVD-ROM), sold to the first acquirer, containing the copy of the computer program placed on the market by the rightholder or with his consent, and not to the non-original material medium of that copy.33That line of argument cannot be accepted as such.34The exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250 concerns the copy of the computer program itself and the accompanying user licence, and not the material medium on which that copy has, as the case may be, been first offered for sale in the European Union by the copyright holder or with his consent.35In that respect, it follows from the Court’s case-law that Article 4(2) of Directive 2009/24, which reproduces the content of Article 4(c) of Directive 91/250, refers, without further specification, to the ‘sale … of a copy of a program’ and thus makes no distinction according to the tangible or intangible form of the copy in question (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 55).36The Court concluded from this, in particular, that the exhaustion of the distribution right laid down in Article 4(2) of Directive 2009/24 takes effect after the first sale of a copy of a computer program in the European Union by the copyright holder or with his consent, regardless of whether the sale relates to a tangible or an intangible copy of that program (judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraphs 55 and 61).37However, Article 4(a) of Directive 91/250 also grants the holder of the copyright in a computer program the exclusive right to do or to authorise the permanent or temporary reproduction of that program by any means and in any form, in part or in whole, subject to the exceptions laid down in Articles 5 and 6 of that directive.38The lawful acquirer of a copy of a computer program, placed on the market by the rightholder or with his consent, may, consequently, resell that program, under the rule of exhaustion of the distribution right laid down in Article 4(c) of Directive 91/250, provided that that sale does not adversely affect the rightholder’s exclusive reproduction right under Article 4(a) of that directive and therefore subject to the condition that any acts of reproduction of that program must be authorised by that rightholder or be covered by the exceptions laid down in Articles 5 and 6 of that directive.39Mr Ranks, Mr Vasiļevičs and the Commission submit in their observations that the rule of exhaustion allows the resale of a copy of a computer program stored on a non-original material medium if the original material medium has been damaged, subject to the conditions set out by the Court in its judgment of 3 July 2012, UsedSoft (C‑128/11, EU:C:2012:407). According to those conditions, the initial acquirer of the copy of a program stored on an original material medium must have an unlimited licence for the use of that program and must make any copy of that program remaining in his possession unusable at the time of its resale. Making a copy of a computer program on a non-original material medium would, in that case, be authorised under the exceptions to the exclusive reproduction right laid down in Article 5(1) and (2) of that directive.40In that respect, it must be recalled, in the first place, that Article 5(2) of Directive 91/250 provides that the making of a back-up copy by a person having a right to use the computer program may not be prevented by contract in so far as it is necessary for that use. Article 9(1) of that directive provides that any contractual provisions contrary to Article 5(2) are to be null and void.41As is apparent from Article 5(2) of that directive, the making of a back-up copy of a computer program is therefore subject to two conditions. That copy must (i) be made by a person having a right to use that program and (ii) be necessary for that use.42That provision, laying down an exception to the exclusive reproduction right of the holder of the copyright in a computer program must, in accordance with the settled case-law of the Court, be interpreted strictly (see, by analogy, judgment of 1 December 2011, Painer, C‑145/10, EU:C:2011:798, paragraph 109).43It follows that a back-up copy of a computer program may be made and used only to meet the sole needs of the person having the right to use that program and that, accordingly, that person cannot — even though he may have damaged, destroyed or lost the original material medium — use that copy in order to resell that program to a third party.44Consequently, as Microsoft and the Italian and Polish Governments submit in their observations, the lawful acquirer of a copy of a computer program accompanied by an unlimited licence for the use of that program, who seeks to resell it, after the exhaustion of the copyright holder’s exclusive distribution rights under Article 4(c) of Directive 91/250, cannot, without the authorisation of that rightholder, transfer to the new acquirer the back-up copy of that program made under Article 5(2) of that directive, on the ground that he has damaged, destroyed or lost the original material medium sold to him by or with the consent of that rightholder.45In the present case, although it is apparent from the order for reference that Mr Ranks and Mr Vasiļevičs resold copies of computer programs stored on non-original material media, it is not indicated whether they themselves made the copies resold, as the initial acquirers of those programs, or whether those copies were made by the persons from which they acquired those programs, whether those persons were initial lawful acquirers or not.46It must be noted, however, that, whatever may be the circumstances in which Mr Ranks and Mr Vasiļevičs acquired the copies of computer programs that they resold, they come within the ambit of Article 7(1)(a) and (b) of Directive 91/250 if it is established that they put into circulation and possessed for commercial purposes infringing copies of computer programs.47It is, however, for the referring court alone to determine, in view of the evidence which it has identified, as regards each computer program copy resold by Mr Ranks and Mr Vasiļevičs, whether it is an infringing copy within the meaning of Article 7(1) of that directive and to draw, as appropriate, the necessary conclusions.48In the second place, it must be recalled that, under Article 5(1) of Directive 91/250, where the reproduction is necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, he does not require the rightholder’s authorisation, in the absence of specific contractual provisions.49In that respect, it follows from the case-law of the Court that when an acquirer of a copy of a computer program purchases and downloads that copy from the rightholder’s website, this constitutes a reproduction which is authorised under Article 5(1) of Directive 91/250, since it is necessary for the use of the program by the lawful acquirer in accordance with its intended purpose (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 75).50The Court has also held that, in the event of a resale of the copy of the computer program purchased and downloaded by the first acquirer from the rightholder’s website, the new acquirer of that copy, who is a lawful acquirer within the meaning of Article 5(1) of Directive 91/250, is also entitled, under that provision, to download that copy onto his computer, since that download constitutes a reproduction that is necessary to enable him to use that program in accordance with its intended purpose (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraphs 80 and 81).51It must, however, be noted that the circumstances of the case before the referring court differ from those of the case that gave rise to the judgment of 3 July 2012, UsedSoft (C‑128/11, EU:C:2012:407). It is apparent from the documents before the Court that Mr Ranks and Mr Vasiļevičs sold, on the internet, copies of computer programs on non-original material media and there is nothing to suggest that they initially purchased and downloaded those copies from the rightholder’s website.52Nevertheless, the situation of the lawful acquirer of a copy of a computer program, sold stored on a material medium which has been damaged, destroyed or lost, and that of the lawful acquirer of a copy of a computer program purchased and downloaded on the internet are comparable with regard to the rule of exhaustion of the distribution right and the exclusive reproduction right granted to the rightholder.53The lawful acquirer of the copy of a computer program, who holds an unlimited licence to use that program but who no longer has that original material medium on which that copy was initially delivered to him, because he has destroyed, damaged or lost it, cannot, for that reason alone, be deprived of any possibility of reselling that copy to a third party, since this would render ineffective the exhaustion of the distribution right under Article 4(c) of Directive 91/250 (see, to that effect, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 83).54Thus, as Microsoft acknowledged in its written reply to the questions put to it by the Court, the lawful acquirer of an unlimited licence for the use of a used copy of a computer program must be able to download that program from the copyright holder’s website, since that downloading constitutes a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose, as the Court held in the judgment of 3 July 2012, UsedSoft (C‑128/11, EU:C:2012:407, paragraph 85).55It must be borne in mind, however, that the initial acquirer of a copy of a computer program — in respect of which the copyright holder’s distribution right is exhausted in accordance with Article 4(c) of Directive 91/250 — who resells that copy must, in order to avoid infringing that rightholder’s exclusive right of reproduction of his computer program, laid down in Article 4(a) of that directive, make any copy in his possession unusable at the time of its resale (see, by analogy, judgment of 3 July 2012, UsedSoft, C‑128/11, EU:C:2012:407, paragraph 70 and 78).56It should also be specified that it is for the acquirer of an unlimited licence for the use of a used copy of a computer program who, relying on the rule of exhaustion of the distribution right, downloads a copy of that program onto his computer from the rightholder’s website to establish, by any available evidence, that he acquired that licence in a lawful manner.57It follows from all of the foregoing that Article 4(a) and (c) and Article 5(1) and (2) of Directive 91/250 must be interpreted as meaning that, although the initial acquirer of a copy of a computer program accompanied by an unlimited user licence is entitled to resell that copy and his licence to a new acquirer, he may not, however, in the case where the original material medium of the copy that was initially delivered to him has been damaged, destroyed or lost, provide his back-up copy of that program to that new acquirer without the authorisation of the rightholder. Costs 58Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: Article 4(a) and (c) and Article 5(1) and (2) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs must be interpreted as meaning that, although the initial acquirer of a copy of a computer program accompanied by an unlimited user licence is entitled to resell that copy and his licence to a new acquirer, he may not, however, in the case where the original material medium of the copy that was initially delivered to him has been damaged, destroyed or lost, provide his back-up copy of that program to that new acquirer without the authorisation of the rightholder. [Signatures]( *1 ) Language of the case: Latvian. | e9632-af9e107-4419 | EN |
By failing to guarantee just and appropriate compensation for victims of all violent intentional crimes committed in cross-border situations, Italy has failed to fulfil its obligations under EU law | 11 October 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Directive 2004/80/EC — Article 12(2) — National compensation schemes for victims of violent intentional crime guaranteeing fair and appropriate compensation — National scheme not covering all violent intentional crimes committed on the national territory)’In Case C‑601/14,ACTION under Article 258 TFEU for failure to fulfil obligations, brought on 22 December 2014, European Commission, represented by E. Traversa and F. Moro, acting as Agents, with an address for service in Luxembourg,applicant,supported by Council of the European Union, represented by E. Moro, M. Chavrier and K. Pleśniak, acting as Agents,intervener,v Italian Republic, represented by G. Palmieri, acting as Agent, and by G. Palatiello and E. De Bonis, avvocati dello Stato, with an address for service in Luxembourg,defendant,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, L. Bay Larsen, T. von Danwitz, J.L. da Cruz Vilaça, E. Juhász, M. Berger (Rapporteur), A. Prechal, M. Vilaras, E. Regan, Presidents of Chambers, A. Rosas, A. Borg Barthet, J. Malenovský, D. Šváby and C. Lycourgos, Judges,Advocate General: Y. Bot,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 29 February 2016,after hearing the Opinion of the Advocate General at the sitting on 12 April 2016,gives the following Judgment 1By its application, the European Commission asks the Court to declare that, by failing to adopt all the measures necessary to guarantee the existence of a compensation scheme for victims of all violent intentional crimes committed on its territory, the Italian Republic has failed to fulfil its obligations under Article 12(2) of Council Directive 2004/80/EC of 29 April 2004 relating to compensation to crime victims (OJ 2004 L 261, p. 15). Legal context EU law 2Recitals 1 to 3, 6 and 7 of Directive 2004/80 are worded as follows:‘(1)One of the objectives of the European [Union] is to abolish, as between Member States, obstacles to the free movement of persons and services.(2)The Court of Justice held in the [judgment of 2 February 1989, Cowan (C‑186/87, EU:C:1989:47)] that, when [European Union] law guarantees to a natural person the freedom to go to another Member State, the protection of that person from harm in the Member State in question, on the same basis as that of nationals and persons residing there, is a corollary of that freedom of movement. Measures to facilitate compensation to victims of crimes should form part of the realisation of this objective.(3)At its meeting in Tampere on 15 and 16 October 1999, the European Council called for the drawing-up of minimum standards on the protection of the victims of crime, in particular on crime victims’ access to justice and their rights to compensation for damages, including legal costs....(6)Crime victims in the European Union should be entitled to fair and appropriate compensation for the injuries they have suffered, regardless of where in the European [Union] the crime was committed.(7)This Directive sets up a system of cooperation to facilitate access to compensation to victims of crimes in cross-border situations, which should operate on the basis of Member States’ schemes on compensation to victims of violent intentional crime, committed in their respective territories. Therefore, a compensation mechanism should be in place in all Member States.’3Article 1 of Directive 2004/80, which is set out in Chapter I entitled ‘Access to compensation in cross-border situations’, provides:‘Member States shall ensure that where a violent intentional crime has been committed in a Member State other than the Member State where the applicant for compensation is habitually resident, the applicant shall have the right to submit the application to an authority or any other body in the latter Member State.’4Under Article 2 of that directive, entitled ‘Responsibility for paying compensation’:‘Compensation shall be paid by the competent authority of the Member State on whose territory the crime was committed.’5Under Article 3 of that directive, entitled ‘Responsible authorities and administrative procedures’:‘1. Member States shall establish or designate one or several authorities or any other bodies, hereinafter referred to as “assisting authority or authorities”, to be responsible for applying Article 1.2. Member States shall establish or designate one or several authorities or any other bodies to be responsible for deciding upon applications for compensation, hereinafter referred to as “deciding authority or authorities”....’6Article 12 of Directive 2004/80, which is set out in Chapter II entitled ‘National schemes on compensation’, provides:‘1. The rules on access to compensation in cross-border situations drawn up by this Directive shall operate on the basis of Member States’ schemes on compensation to victims of violent intentional crime committed in their respective territories.2. All Member States shall ensure that their national rules provide for the existence of a scheme on compensation to victims of violent intentional crimes committed in their respective territories, which guarantees fair and appropriate compensation to victims.’7Article 18(1) of Directive 2004/80 provides:‘Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 1 January 2006 at the latest, with the exception of Article 12(2), in which case the date of compliance shall be 1 July 2005. They shall forthwith inform the Commission thereof.’ Italian law 8Directive 2004/80 was transposed into Italian law by Decreto legislativo n. 204 — attuazione della direttiva 2004/80/CE relativa all’indennizzo delle vittime di reato (Legislative Decree No 204 on the application of Directive 2004/80/EC relating to compensation to crime victims) of 6 November 2007 (Ordinary Supplement to GURI No 261 of 9 November 2007; ‘Legislative Decree No 204/2007’), and by Decreto ministeriale n. 222 — regolamento ai sensi dell’articolo 7 del decreto legislativo n. 204/2007 (Ministerial Decree No 222 laying down rules in accordance with Article 7 of Legislative Decree No 204/2007) of 23 December 2008 (GURI No 108 of 12 May 2009).9Ministerial Decree No 222 of 23 December 2008 concerns, inter alia, the practical aspects of activities coming under the jurisdiction of the public prosecutors’ department at the courts of appeal.10Several special laws provide for the grant of compensation, under certain conditions, payable by the Italian State, to victims of certain types of violent intentional crimes, including those linked to terrorism and to organised crime. Legislative Decree No 204/2007 refers, as regards the substantive conditions governing the grant of compensation, to those special laws, which lay down the forms of compensation for victims of crimes committed on the national territory. Pre-litigation procedure 11Following unproductive discussions with the Italian Republic, the Commission sent it a letter of formal notice, on 25 November 2011, in which it complained that that Member State did not provide in its legislation for a general compensation scheme for victims of violent intentional crime, contrary to the requirements arising, according to that institution, from Article 12(2) of Directive 2004/80, and in which it invited the Italian Republic to submit its observations on that point.12In its reply of 14 May 2012, the Italian Republic submitted draft legislative measures designed to establish a general compensation scheme. As no legislative timetable was submitted for implementing those draft measures, the Commission continued the pre-litigation procedure.13By letter of 12 July 2013, the Italian Republic informed the Commission that the Tribunale ordinario di Firenze (District Court, Florence, Italy) had referred a question for a preliminary ruling to the Court concerning the interpretation of Article 12 of Directive 2004/80 and proposed that the Commission await the Court’s decision in that case before continuing the procedure it had initiated.14On 18 October 2013, the Commission nevertheless sent the Italian Republic a reasoned opinion in which it called on the Italian authorities to take the measures necessary to comply with Article 12 of Directive 2004/80 within two months of that date.15In its reply, received by the Commission on 18 December 2013, the Italian Republic reiterated its view that it was expedient to await the Court’s response to the question referred by the Tribunale ordinario di Firenze (District Court, Florence). By order of 30 January 2014, C. (C‑122/13, EU:C:2014:59), the Court declared however that it clearly had no jurisdiction to answer that question.16In those circumstances, the Commission decided to bring the present action for failure to fulfil obligations before the Court under the second paragraph of Article 258 TFEU.17By decision of the President of the Court of 22 May 2015, the Council of the European Union was granted leave to intervene in the present case in support of the form of order sought by the Commission. The action Arguments of the parties 18The Commission claims that Article 12 of Directive 2004/80 requires the Member States to introduce a national compensation scheme for victims of violent intentional crime.19That institution submits that Article 12(2) of that directive, although it does not define the concept of ‘violent intentional crime’, leaves no discretion to the Member States as to the scope of the national compensation scheme, since the scope of that scheme must cover all violent intentional crimes, defined as such in the substantive criminal law of each Member State. Consequently, Member States do not have the right to exclude some of those crimes from the scope of the national legislation intended to transpose Directive 2004/80.20According to the Commission, the Italian Republic transposed only the provisions of Chapter I of Directive 2004/80, which relate to access to compensation in cross-border situations. By contrast, as regards Chapter II of that directive, it is only in respect of victims of certain specific crimes, such as acts of terrorism or organised crime, that the Italian Republic has, by means of several special laws, provided for a compensation scheme, whereas no compensation scheme has been established in respect of violent intentional crimes that are not covered by those special laws, inter alia, rape or other serious sexual assaults.21In those circumstances, the Commission submits that the Italian Republic failed to fulfil its obligations under Article 12(2) of Directive 2004/80.22The Italian Republic contends, first of all, that the action brought by the Commission does not correspond to the complaints contained in the reasoned opinion of 18 October 2013. That reasoned opinion related solely to ‘crimes of homicide and serious assault and battery which are not among the cases provided for by the “special laws”’ and ‘rape and other serious sexual assaults’. In the present action, the Commission complains that the Italian Republic did not introduce a general compensation system for victims of any act of violent crime committed on its territory, thereby broadening the subject matter of the action for failure to fulfil obligations. The Italian Republic submits that the action is therefore inadmissible.23In the alternative, the Italian Republic recalls that Directive 2004/80 was adopted on the basis of Article 308 EC. It submits that the European Union is not competent to legislate on combating criminal acts of violence falling within the scope of the general law of each Member State, whether from a procedural or substantive standpoint, nor is it competent to regulate the civil consequences of those acts. In view of the legal basis of Directive 2004/80, that directive merely requires the Member States to enable Union citizens residing in another Member State to have access to the compensation systems already provided for in the legislation of each Member State for their nationals who are victims of violent intentional crime. The Italian Republic complied with that obligation by means of the procedural provisions of Legislative Decree No 204/2007 and Ministerial Decree No 222 of 23 December 2008.24In the further alternative, the Italian Republic contends that the Member States retain a broad discretion for the purposes of determining the various cases of ‘violent intentional crime’ for which a form of compensation must be provided. The Member States may therefore identify the situations that qualify for compensation.25Furthermore, the Italian Republic refers to the legislative procedure which led to the adoption of Directive 2004/80, in which it had initially been envisaged that specific rules would be laid down relating to, inter alia, the setting of minimum standards for compensation for victims of crime. However, that initial objective was abandoned. Consequently, Article 12 of that directive concerns only the compensation systems already provided for by the Member States at the time of the adoption of that directive, and Article 12(2) merely requires Member States which do not have such a system to make provision for one. The Italian Republic already provides for numerous forms of compensation for various types of violent intentional crime.26Lastly, the Italian Republic submits that if Article 12(2) of Directive 2004/80 is to be interpreted in the manner suggested by the Commission that provision is invalid, since Article 308 EC cannot, in accordance with the principle of proportionality, confer on the EU competence to adopt measures concerning, in particular, purely internal matters.27The Council claims that the plea of illegality raised by the Italian Republic is inadmissible. According to that institution, a Member State cannot properly plead the unlawfulness of a directive as a defence in an action for a declaration that it has failed to fulfil its obligations arising out of its failure to implement that directive, and the Italian Republic has not put forward any evidence to show that Article 12(2) of Directive 2004/80, as interpreted by the Commission, is vitiated by an irregularity the seriousness of which is so obvious that it ought to be deemed to have produced no legal effects.28In the alternative, the Council submits that the plea of illegality as regards Article 12(2) of Directive 2004/80 cannot be upheld. Article 308 EC makes it possible to fill the gap where no specific provisions of the Treaties confer powers to act on the institutions of the European Union in circumstances where, in order to achieve one of the objectives under those Treaties, the action envisaged is necessary. In this case, the Italian Republic has not contended that those conditions were not fulfilled. Findings of the Court Admissibility29As regards the plea of inadmissibility raised by the Italian Republic that, by the present action, the Commission has broadened the subject matter of the failure to fulfil obligations alleged in the reasoned opinion of 18 October 2013, it is clear from the wording of that reasoned opinion that the Commission complained that the Italian Republic had ‘not adopted the measures necessary to comply with Article 12(1) and (2) of Directive 2004/80 ... for the purposes of guaranteeing the existence of a compensation scheme for victims of all violent intentional crimes committed on its territory’.30It is true that, in that reasoned opinion, the Commission also referred to the fact that the Italian legislation did not include a compensation scheme for, ‘in particular’, victims of the crimes of homicide and serious assault and battery which are not among the cases provided for by the special laws, or for victims of rape and other serious sexual assaults, and also to the fact that that legislation excluded certain crimes ‘such as’ homicide and sexual violence from any compensation scheme. However, it is clear from the express wording used by that institution in referring to that legislation that its intention was merely better to illustrate the specific consequences of the fact, not disputed by the Italian Republic, that not all violent intentional crimes were covered by a compensation scheme in force in Italy, without thereby limiting the scope of the alleged failure to fulfil obligations solely to the examples mentioned.31Consequently, in the present action, the Commission has not broadened the subject matter of the alleged failure to fulfil obligations in so far as it seeks a declaration from the Court that, ‘by failing to adopt all the measures necessary to guarantee the existence of a compensation scheme for victims of all violent intentional crimes committed on its territory, the Italian Republic has failed to fulfil its obligations under Article 12(2) of Directive 2004/80’.32Therefore, the present action must be declared admissible.Substance33As regards, in the first place, the Italian Republic’s argument that Article 12(2) of Directive 2004/80, as interpreted by the Commission, is invalid on the ground that, in essence, the European Union is not competent to adopt, on the basis of Article 308 EC, a provision governing, in particular, purely internal situations, suffice it to recall that, according to the Court’s settled case-law, in the absence of a provision of the FEU Treaty expressly permitting it to do so, a Member State cannot properly plead the unlawfulness of a directive addressed to it as a defence in an action for a declaration that it has failed to fulfil its obligations arising out of its failure to implement that directive. The position could be different only if the act in question contained such particularly serious and manifest defects that it could be categorised as a non-existent act (see, inter alia, judgments of 29 July 2010, Commission v Austria, C‑189/09, not published, EU:C:2010:455, paragraphs 15 and 16 and the case-law cited, and 5 March 2015, Commission v Luxembourg, C‑502/13, EU:C:2015:143, paragraph 56).34Without it being necessary to examine more thoroughly the arguments advanced by the Italian Republic in support of the contention that Article 12(2) of Directive 2004/80 is unlawful, it must be stated that the Italian Republic has not provided any evidence to show that that provision is vitiated by a defect such as to call into question its very existence, within the meaning of the case-law cited in paragraph 33 of this judgment.35It follows that it is to no avail that the Italian Republic relies on the unlawfulness of Article 12(2) of Directive 2004/80 in the present action.36As regards, in the second place, the obligations on Member States under Article 12(2) of Directive 2004/80, account should be taken not only of the wording of that provision, but also of the objectives pursued by that directive, and the system established by that directive of which it is part.37Under Article 12(2) of Directive 2004/80, ‘[a]ll Member States shall ensure that their national rules provide for the existence of a scheme on compensation to victims of violent intentional crimes committed in their respective territories, which guarantees fair and appropriate compensation to victims’.38That provision does not provide that the Member States may limit the application of the compensation scheme which they are required to establish under Directive 2004/80 only to some violent intentional crimes committed in their respective territories.39As to the objectives pursued by Directive 2004/80, recital 1 in the preamble to that directive refers to the intention of the European Union to abolish, as between Member States, obstacles to the free movement of persons.40In this connection, the Court has held that, when EU law guarantees a natural person the freedom to go to another Member State, the protection of that person from harm in the Member State in question, on the same basis as that of nationals and persons residing there, is a corollary of that freedom of movement (judgment of 2 February 1989, Cowan, C‑186/87, EU:C:1989:47, paragraph 17). In that context, recital 2 of Directive 2004/80 states that measures to facilitate compensation to victims of crimes should form part of the realisation of that objective.41Moreover, recital 3 of that directive states that, at its meeting in Tampere on 15 and 16 October 1999, the European Council called for the drawing-up of minimum standards on the protection of the victims of crime, in particular on crime victims’ access to justice and their rights to compensation for damage.42Furthermore, it is clear from recital 6 of that directive that victims of crime in the European Union should be entitled to fair and appropriate compensation for the injuries they have suffered, regardless of where in the European Union the crime was committed. Lastly, recital 7 of that directive states, inter alia, that a compensation mechanism should, consequently, be in place in all Member States.43As regards the system established by Directive 2004/80, Article 1 of that directive, which article is part of Chapter I relating to access to compensation in cross-border situations, provides that where a violent intentional crime has been committed in a Member State other than the Member State where the applicant for compensation is habitually resident, the Member States are to ensure that the applicant has the right to submit the application to an authority or any other body in the Member State of residence. Article 2 of that directive, entitled ‘Responsibility for paying compensation’, which is also in Chapter I, provides that compensation is to be paid by the competent authority of the Member State on whose territory the crime was committed.44Moreover, paragraph 1 of Article 12 of Directive 2004/80, which article constitutes Chapter II of that directive and relates to national compensation schemes, provides that the rules on access to compensation in cross-border situations laid down in that directive are to operate ‘on the basis of Member States’ schemes on compensation to victims of violent intentional crime committed in their respective territories’.45It is clear from the foregoing considerations that Directive 2004/80 establishes a system to facilitate access for victims of crimes to compensation in cross-border situations, which system is to operate on the basis of Member States’ schemes on compensation for victims of violent intentional crime committed in their respective territories. Consequently, Article 12(2) of that directive must be interpreted as meaning that it is intended to guarantee to Union citizens the right to fair and appropriate compensation for the injuries they suffer on the territory of the Member State in which they find themselves in exercising their right to free movement, by requiring each Member State to introduce a compensation scheme for victims of any violent intentional crime committed on its territory.46As regards, in that context, the determination of the intentional and violent nature of a crime, as the Advocate General has stated in points 69 and 83 of his Opinion, although the Member States have, in principle, the competence to define the scope of that concept in their domestic law, that competence does not, however, permit them to limit the scope of the compensation scheme for victims to only certain violent intentional crimes, lest it render redundant Article 12(2) of Directive 2004/80.47That interpretation is in no way called into question by the argument advanced by the Italian Republic that, in the course of the legislative procedure which led to the adoption of Directive 2004/80, the EU legislature abandoned the initial objective of laying down specific standards on compensation for victims of crime.48The Italian Republic’s argument that, in the judgment of 2 February 1989, Cowan (186/87, EU:C:1989:47), referred to in recital 2 of Directive 2004/80, the Court required that the principle of the prohibition of discrimination on the basis of nationality be observed merely as regards access to compensation for victims of crime in cross-border situations and did not set out an obligation on the Member States to provide in their domestic law for a compensation scheme for victims of all types of violent intentional crime, which it is contended was confirmed in the order of 30 January 2014, C. (C‑122/13, EU:C:2014:59), must also be rejected.49It is true that the Court has held that Directive 2004/80 provides for compensation only where a violent intentional crime has been committed in a Member State in which the victim finds himself in exercising his right to free movement, so that a purely internal situation does not fall within the scope of that directive (see, to that effect, judgments of 28 June 2007, Dell’Orto, C‑467/05, EU:C:2007:395, paragraph 59, and 12 July 2012, Giovanardi and Others, C‑79/11, EU:C:2012:448, paragraph 37, and order of 30 January 2014, C., C‑122/13, EU:C:2014:59, paragraph 12). The fact remains that, in so doing, the Court merely stated that the system of cooperation established by Directive 2004/80 solely concerns access to compensation in cross-border situations, without however excluding that Article 12(2) of that directive requires each Member State, for the purposes of securing the objective pursued by it in such situations, to adopt a national scheme guaranteeing compensation for victims of any violent intentional crime on its territory.50Such an interpretation of Article 12(2) of Directive 2004/80 is, moreover, consistent with the objective of that directive of abolishing, as between Member States, obstacles to the free movement of persons and services for the purposes of improving the functioning of the internal market.51In the present case, it is apparent from the documents before the Court that not all violent intentional crimes, as defined by Italian law, are covered by the compensation scheme in force in Italy, a point which, moreover, the Italian Republic does not dispute. Since that Member State has therefore not fully implemented Article 12(2) of Directive 2004/80, it must be held that the action brought by the Commission is well founded.52Consequently, it must be held that, by failing to adopt all the measures necessary to guarantee the existence, in cross-border situations, of a compensation scheme for victims of all violent intentional crimes committed on its territory, the Italian Republic has failed to fulfil its obligations under Article 12(2) of Directive 2004/80. Costs 53Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has asked for the Italian Republic to be ordered to pay the costs, and the latter has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission.54Under Article 140(1) of the Rules of Procedure, institutions which have intervened in the proceedings are to bear their own costs. The Council is, consequently, to bear its own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Declares that, by failing to adopt all the measures necessary to guarantee the existence, in cross-border situations, of a compensation scheme for victims of all violent intentional crimes committed on its territory, the Italian Republic has failed to fulfil its obligations under Article 12(2) of Council Directive 2004/80/EC of 29 April 2004 relating to compensation to crime victims; 2. Orders the Italian Republic to bear its own costs and to pay those incurred by the European Commission; 3. Orders the Council of the European Union to bear its own costs. [Signatures]( *1 ) Language of the case: Italian. | 4cd84-d3290d2-474a | EN |
Advocate General Sharpston considers that the Court should annul the measures maintaining Hamas and LTTE on the EU list of terrorist organisations on procedural grounds | 26 July 2017 ( *1 )(Appeal — Common foreign and security policy — Fight against terrorism — Restrictive measures against certain persons and entities — Freezing of funds — Common Position 2001/931/CFSP — Article 1(4) and (6) — Regulation (EC) No 2580/2001 — Article 2(3) — Retention of an organisation on the list of persons, groups and entities involved in terrorist acts — Conditions — Factual basis of the decisions to freeze funds — Decision taken by a competent authority — Obligation to state reasons)In Case C‑599/14 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 19 December 2014, Council of the European Union, represented by E. Finnegan, G. Étienne and B. Driessen, acting as Agents,appellant,supported by: French Republic, represented by G. de Bergues, F. Fize, D. Colas and B. Fodda, acting as Agents,intervener in the appeal,the other parties to the proceedings being: Liberation Tigers of Tamil Eelam (LTTE), established in Herning (Denmark), represented by T. Buruma and A.M. van Eik, advocaten,applicant at first instance, Kingdom of the Netherlands, represented by M.K. Bulterman and J. Langer, acting as Agents, United Kingdom of Great Britain and Northern Ireland, represented by S. Brandon, C. Crane, J. Kraehling and V. Kaye, acting as Agents, and by M. Gray, Barrister, European Commission, represented by D. Gauci and F. Castillo de la Torre, acting as Agents,interveners at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, L. Bay Larsen, T. von Danwitz (Rapporteur), J.L. da Cruz Vilaça and M. Vilaras, Presidents of Chambers, J. Malenovský, E. Levits, J.-C. Bonichot, A. Arabadjiev, C. Vajda, S. Rodin, F. Biltgen, K. Jürimäe and C. Lycourgos, Judges,Advocate General: E. Sharpston,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 3 May 2016,after hearing the Opinion of the Advocate General at the sitting on 22 September 2016,gives the followingJudgment1By its appeal, the Council of the European Union asks the Court to set aside the judgment of the General Court of the European Union of 16 October 2014, LTTE v Council (T‑208/11 and T‑508/11, ‘the judgment under appeal’, EU:T:2014:885), by which the General Court annulled:—Council Implementing Regulation (EU) No 83/2011 of 31 January 2011 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism and repealing Implementing Regulation (EU) No 610/2010 (OJ 2011 L 28, p. 14);Council Implementing Regulation (EU) No 687/2011 of 18 July 2011 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, and repealing Implementing Regulations (EU) No 610/2010 and (EU) No 83/2011 (OJ 2011 L 188, p. 2);Council Implementing Regulation (EU) No 1375/2011 of 22 December 2011 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism and repealing Implementing Regulation (EU) No 687/2011 (OJ 2011 L 343, p. 10);Council Implementing Regulation (EU) No 542/2012 of 25 June 2012 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism and repealing Implementing Regulation (EU) No 1375/2011 (OJ 2012 L 165, p. 12);Council Implementing Regulation (EU) No 1169/2012 of 10 December 2012 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism and repealing Implementing Regulation (EU) No 542/2012 (OJ 2012 L 337, p. 2);Council Implementing Regulation (EU) No 714/2013 of 25 July 2013 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, and repealing Implementing Regulation (EU) No 1169/2012 (OJ 2013 L 201, p. 10);Council Implementing Regulation (EU) No 125/2014 of 10 February 2014 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism and repealing Implementing Regulation (EU) No 714/2013 (OJ 2014 L 40, p. 9);Council Implementing Regulation (EU) No 790/2014 of 22 July 2014 implementing Article 2(3) of Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, and repealing Implementing Regulation (EU) No 125/2014 (OJ 2014 L 217, p. 1);(together ‘the acts at issue’), in so far as those acts concern the Liberation Tigers of Tamil Eelam (LTTE).Legal contextUnited Nations Security Council Resolution 1373 (2001)2On 28 September 2001, the United Nations Security Council adopted Resolution 1373 (2001) laying out wide-ranging strategies to combat terrorism and in particular the financing of terrorism. Point 1(c) of that resolution provides, inter alia, that all States are to freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities.3The resolution does not provide a list of persons to whom those restrictive measures must be applied.EU lawCommon Position 2001/931/CFSP4In order to implement Resolution 1373 (2001), the Council adopted, on 27 December 2001, Common Position 2001/931/CFSP on the application of specific measures to combat terrorism (OJ 2001 L 344, p. 93).5Article 1 of Common Position 2001/931 provides:‘1. This Common Position applies in accordance with the provisions of the following Articles to persons, groups and entities involved in terrorist acts and listed in the Annex....4. The list in the Annex shall be drawn up on the basis of precise information or material in the relevant file which indicates that a decision has been taken by a competent authority in respect of the persons, groups and entities concerned, irrespective of whether it concerns the instigation of investigations or prosecution for a terrorist act, an attempt to perpetrate, participate in or facilitate such an act based on serious and credible evidence or clues, or condemnation for such deeds. Persons, groups and entities identified by the Security Council of the United Nations as being related to terrorism and against whom it has ordered sanctions may be included in the list.For the purposes of this paragraph “competent authority” shall mean a judicial authority, or, where judicial authorities have no competence in the area covered by this paragraph, an equivalent competent authority in that area.6. The names of persons and entities on the list in the Annex shall be reviewed at regular intervals and at least once every six months to ensure that there are grounds for keeping them on the list.’Regulation (EC) No 2580/20016The Council considered that a regulation was necessary to implement at Community level the measures set out in Common Position 2001/931, and adopted Regulation (EC) No 2580/2001 of 27 December 2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism (OJ 2001 L 344, p. 70).7Article 2 of that regulation provides:‘1. Except as permitted under Articles 5 and 6:(a)all funds, other financial assets and economic resources belonging to, or owned or held by, a natural or legal person, group or entity included in the list referred to in paragraph 3 shall be frozen;(b)no funds, other financial assets and economic resources shall be made available, directly or indirectly, to, or for the benefit of, a natural or legal person, group or entity included in the list referred to in paragraph 3.2. Except as permitted under Articles 5 and 6, it shall be prohibited to provide financial services to, or for the benefit of, a natural or legal person, group or entity included in the list referred to in paragraph 3.3. The Council, acting by unanimity, shall establish, review and amend the list of persons, groups and entities to which this Regulation applies, in accordance with the provisions laid down in Article 1(4), (5) and (6) of Common Position 2001/931/CFSP; such list shall consist of:(i)natural persons committing, or attempting to commit, participating in or facilitating the commission of any act of terrorism;(ii)legal persons, groups or entities committing, or attempting to commit, participating in or facilitating the commission of any act of terrorism;(iii)legal persons, groups or entities owned or controlled by one or more natural or legal persons, groups or entities referred to in points (i) and (ii); or(iv)natural legal persons, groups or entities acting on behalf of or at the direction of one or more natural or legal persons, groups or entities referred to in points (i) and (ii).’Background to the dispute and the acts at issue8On 29 May 2006, the Council adopted Decision 2006/379/EC implementing Article 2(3) of Regulation No 2580/2001 and repealing Decision 2005/930/EC (OJ 2006 L 144, p. 21). By that decision, the Council placed the LTTE on the list provided for in Article 2(3) of Regulation No 2580/2001 (‘the list at issue’).9The LTTE’s entry on that list was maintained by subsequent acts of the Council, including by the acts at issue.10In the statements of reasons relating to those acts, the Council described the LTTE as a terrorist group and referred to a number of terrorist acts which the LTTE is said to have carried out from 2005 onwards. It found that, ‘while the recent military defeat of the LTTE has significantly weakened its structure, the likely intention of the organisation is to continue terrorist attacks in Sri Lanka’. In addition, the Council referred, in particular, to two 2001 decisions of the United Kingdom of Great Britain and Northern Ireland, proscribing the LTTE and freezing their funds (together ‘the UK decisions’), and a decision proscribing the LTTE which was adopted by the Indian authorities in 1992 and confirmed in 2004 (‘the decision of the Indian authorities’). Having noted, with regard to the UK decisions and — only in the grounds for Implementing Regulation No 790/2014 — the decision of the Indian authorities, that these were reviewed regularly or were subject to judicial review or appeal, the Council found that those decisions had been adopted by competent authorities within the meaning of Article 1(4) of Common Position 2001/931. Lastly, the Council noted that those decisions still remained in force and indicated that the reasons for including the LTTE on the list at issue remained valid.The procedure before the General Court and the judgment under appeal11By an application lodged at the General Court Registry on 11 April 2011, the LTTE brought an action, registered as Case T‑208/11, for annulment of Implementing Regulation No 83/2011 in so far as that measure concerned them.12By a document lodged at the General Court Registry on 28 September 2011 and regularised on 19 October 2011, the LTTE brought an action, registered as Case T‑508/11, for annulment of Implementing Regulation No 687/2011 in so far as that measure concerned them.13In the course of the proceedings, the Council adopted Regulations No 1375/2011, No 542/2012, No 1169/2012, No 714/2013, No 125/2014 and No 790/2014 repealing and replacing, respectively, the prior implementing regulations; the LTTE therefore made a series of modifications to the original form of order sought so that their action also covered annulment of these regulations, in so far as they concerned the LTTE.14In support of their claims, the LTTE relied, in essence, on seven pleas in law, six of which were common to Cases T‑208/11 and T‑508/11, and the seventh of which was raised in Case T‑508/11. The six pleas common to both cases alleged, respectively: (i) the inapplicability of Regulation No 2580/2001 to the conflict between the LTTE and the Government of Sri Lanka; (ii) the wrongful categorisation of the LTTE as a terrorist organisation for the purposes of Article 1(3) of Common Position 2001/931; (iii) the lack of any decision taken by a competent authority; (iv) failure to undertake the review required under Article 1(6) of Common Position 2001/931; (v) breach of the obligation to state reasons; and (vi) infringement of the applicant entity’s rights of defence and right to effective judicial protection. The seventh plea, raised only in Case T‑508/11, alleged breach of the principles of proportionality and subsidiarity.15Having rejected the first of those pleas, the General Court upheld the fourth to sixth pleas and, in part, the third plea, and, on that basis, annulled the acts at issue in so far as they concerned the LTTE.Forms of order sought and procedure before the Court of Justice16The Council claims that the Court should:set aside the judgment under appeal;give final judgment in the matters that are the subject of this appeal and dismiss the actions brought by the LTTE; andorder the LTTE to pay the costs incurred by the Council at first instance and in the present appeal.17The LTTE contend that the Court should:dismiss the Council’s appeal;uphold the judgment under appeal; andorder the Council to pay the costs relating to the present appeal and uphold the judgment under appeal in so far as the Council was ordered to pay the costs relating to the proceedings before the General Court.18The French Republic, the Kingdom of the Netherlands, the United Kingdom and the European Commission have intervened in support of the form of order sought by the Council.The appealThe first ground of appealArguments of the parties19By its first ground of appeal, the Council, supported by the United Kingdom Government, complains that the General Court held, in paragraphs 141 and 146 to 148 of the judgment under appeal, that the Council should have demonstrated, in the statements of reasons relating to the acts at issue, that it had verified the existence in the Indian legal order of protection of the rights of the defence and of the right to effective judicial protection equivalent to that guaranteed at EU level. Whilst acknowledging that it must verify the existence of such protection if it relies, as in the present case, on a decision emanating from an authority of a third State, the Council submits that Common Position 2001/931 does not require it to include any reasoning in respect of that verification.20According to the Council, even if it is assumed that the Council is required to demonstrate that procedures in place in a third State provide guarantees in respect of the rights of the defence and the right to effective judicial protection equivalent to those provided for by EU law, the Council maintains that it cannot be criticised for having demonstrated this in the defence rather than in the statements of reasons relating to the acts at issue. In so far as the third State might regard a comment in those statements of reasons on whether or not it complies with the rights of the defence and the right to effective judicial protection as amounting to interference in its internal affairs, the reasoning required by the General Court would prevent the Council from relying on the decisions of third States. The position would be different if the Council were permitted to make its observations on the legal system of the third State concerned in its written pleadings before the Courts of the European Union, where such pleadings would be subject to a certain measure of confidentiality.21The LTTE dispute those arguments.Findings of the Court22In order to rule on this ground of appeal, it must be noted as a preliminary point that, in paragraphs 125 to 136 of the judgment under appeal, the General Court correctly interpreted the term ‘competent authority’, within the meaning of Article 1(4) of Common Position 2001/931, as not being limited to the authorities of Member States but as being capable, in principle, of also including the authorities of third States.23That interpretation, with which, moreover, the parties do not take issue in the present appeal, is justified, first, in the light of the wording of Article 1(4) of Common Position 2001/931, which does not limit the concept of ‘competent authorities’ to the authorities of the Member States, and, second, in the light of the objective of that common position, which was adopted in order to implement United Nations Security Council Resolution 1373 (2001), which seeks to intensify the global fight against terrorism through the systematic and close cooperation of all States.24That being the case, the General Court was also right to rule, in essence, in paragraph 139 of the judgment under appeal, that the Council must, before acting on the basis of a decision of an authority of a third State, verify whether that decision was adopted in accordance with the rights of the defence and the right to effective judicial protection.25The Court has repeatedly held that the Council is obliged, when adopting restrictive measures, to respect the fundamental rights that form an integral part of the EU legal order, which include, in particular, respect for the rights of the defence and the right to effective judicial protection (see, to that effect, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 97 and 98, and of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraphs 65 and 66).26The need for the verification described in paragraph 24 of the present judgment, which is expressly acknowledged by the Council in this appeal, arises, inter alia, from the purpose of the requirement, laid down in Article 1(4) of Common Position 2001/931, that the initial entry of a person or entity on the list at issue be based on a decision adopted by a competent authority. That requirement is designed to protect the persons or entities concerned by ensuring that they are first included on that list only on a sufficiently solid factual basis (see, to that effect, judgment 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraph 68). That objective cannot be attained unless the decisions of third States on which the Council bases initial listings of persons or entities are adopted in accordance with the rights of the defence and the right to effective judicial protection.27That conclusion is, moreover, corroborated by paragraph 4 of the document entitled ‘Working methods of the Working Party on implementation of Common Position 2001/931 on the application of specific measures to combat terrorism’ in Annex II to Council document 10826/1/07 REV 1 of 28 June 2007, from which it is apparent that when the Council relies on a proposal of a third State to justify the listing of a person or an entity it will check whether that proposal respects human rights, inter alia the right to an effective remedy and to a fair trial.28In so far as the Council challenges the need for reasoning, in the statements of reasons relating to the acts at issue, that confirms that it verified whether the decision of the Indian authorities had been adopted in accordance with the rights of the defence and the right to effective judicial protection, it must be borne in mind that the assessment by the General Court as to whether the statement of reasons is or is not sufficient is subject to review by the Court on an appeal (judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 140 and the case-law cited).29The purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the Courts of the European Union and, second, to enable those Courts to review the legality of that act (judgments of 18 February 2016, Council v Bank Mellat, C‑176/13 P, EU:C:2016:96, paragraph 74, and of 21 April 2016, Council v Bank Saderat Iran, C‑200/13 P, EU:C:2016:284, paragraph 70).30The statement of reasons for such an act must therefore, in any event, set out the facts and the legal considerations that have decisive importance in the context of that act (see, to that effect, judgments of 11 January 2007, Technische Glaswerke Ilmenau v Commission, C‑404/04 P, not published, EU:C:2007:6, paragraph 30; of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 96; and of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 169).31Having regard to the purpose, referred to in paragraph 26 of the present judgment, of the requirement that the initial entry of a person or entity on the list at issue be based on a decision adopted by a competent authority, it must be held that, when the Council bases that listing on a decision by a third State, the guarantee that that decision has been taken in accordance with the rights of the defence and the right to effective judicial protection has decisive importance in the context of that listing and of subsequent fund-freezing decisions. The Council is, therefore, required to provide, in the statements of reasons relating to those decisions, the particulars from which it may be concluded that it has ascertained that those rights were respected.32That finding is not called in question by the Council’s arguments as set out in paragraph 20 of the present judgment.33The purpose of the obligation to state reasons is to enable the person concerned to decide, with full knowledge of the relevant facts, whether there is any point in his applying to the court having jurisdiction (see, to that effect, judgments of 4 June 2013, ZZ, C‑300/11, EU:C:2013:363, paragraph 53, and of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 100). It is sufficient, for that purpose, that the Council briefly refer in the statement of reasons relating to a decision to freeze funds to the reasons why it considers the decision of the third State on which it intends to rely to have been adopted in accordance with the rights of the defence and the right to effective judicial protection.34Since the Council can only rely on a decision of a third State that respects the rights of the defence and the right to effective judicial protection, a statement of reasons such as that described in the preceding paragraph cannot amount to interference in the internal affairs of the third State concerned.35Nor, furthermore, in the light of the case-law cited in paragraph 33 of the present judgment, can the Court accept the Council’s argument that it must be permitted to make its observations on the legal system of the third State concerned not in the statements of reasons relating to decisions to freeze funds but in its pleadings before the Courts of the European Union.36In the present case, as the General Court indicated in paragraphs 141 and 145 of the judgment under appeal, the statements of reasons relating to Implementing Regulations No 83/2011, No 687/2011, No 1375/2011, No 542/2012, No 1169/2012, No 714/2013 and No 125/2014 merely state that the Indian Government proscribed the LTTE in 1992 under the Unlawful Activities Act 1967 and subsequently included them in the list of terrorist organisations in the schedule to the Unlawful Activities Prevention (Amendment) Act 2004. The summary of reasons for Implementing Regulation No 790/2014 merely supplements that statement by mentioning that sections 36 and 37 of the Unlawful Activities Act 1967 include provisions concerning the review and revision of the Indian list of persons and entities subject to restrictive measures, that the decision proscribing the LTTE as an unlawful association is periodically reviewed by the Indian Home Affairs Minister, that the last revision took place on 14 May 2012, and that, following a revision by the tribunal established under the Unlawful Activities Act 1967, the designation of the LTTE as an entity involved in terrorist acts was confirmed by the Indian Home Affairs Minister on 11 December 2012.37Neither Implementing Regulations No 83/2011, No 687/2011, No 1375/2011, No 542/2012, No 1169/2012, No 714/2013 and No 125/2014 nor Implementing Regulation No 790/2014 refer to anything that might suggest that the Council verified whether the decision of the Indian authorities was adopted in accordance with the rights of the defence and the right to effective judicial protection. The statements of reasons for those regulations do not, therefore, disclose whether the Council fulfilled its verification obligation in that regard.38Consequently, the General Court correctly held, notably in paragraphs 142, 146, 147 and 149 of the judgment under appeal, that the acts at issue were vitiated by a failure to give sufficient reasons.39The first ground of appeal must, therefore, be rejected.The second ground of appeal40By its second ground of appeal, which relates in particular to paragraphs 173, 175, 186 to 189, 198, 202 to 204, 212, 213 and 225 of the judgment under appeal, the Council submits, first, that that judgment is based on the mistaken premiss that the Council must regularly provide new reasons for retaining the LTTE on the list at issue. In the absence of any annulment or withdrawal of the national decisions on which the initial entry of the LTTE on that list was based, and in the absence of other material that might support the withdrawal of the LTTE from that list, the Council was, it claims, entitled to maintain the LTTE on the list at issue solely on the basis of the national decisions that justified that entity’s initial listing.41Second, the Council maintains that the General Court was wrong to reject the use of open source material for the purposes of periodic reviews. The Council contends that it must be able to rely to that end on material other than national decisions, since in many cases there are no national decisions taken after the initial entry of a person or entity on the list at issue. The General Court’s reasoning is, it argues, contrary to the objective of combating terrorism to which Common Position 2001/931 refers.42The Commission and the Member States that are parties to the proceedings before the Court support the Council’s arguments, underlining in particular the distinction which Common Position 2001/931 draws between, on the one hand, the initial entry of an entity on the list at issue, referred to in Article 1(4) of that common position, and, on the other hand, the subsequent reviews provided for in Article 1(6) thereof.43By contrast, according to the LTTE, the General Court was right to find that if the Council chooses to provide new reasons for their retention on the list at issue, those reasons must be derived from national decisions within the meaning of Article 1(4) of Common Position 2001/931, and not from the press or the internet. The Council’s assertion that it may use open source material to justify maintaining a listing is at odds with the two-tier system established by Common Position 2001/931 and the judgment of 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa (C‑539/10 P and C‑550/10 P, EU:C:2012:711).44The second ground of appeal concerns the conditions under which the Council may, when reviewing the entry of a person or entity on the list at issue, as it is required to do under Article 1(6) of Common Position 2001/931, retain that person or entity on that list. In order to determine those conditions, it is necessary to interpret Article 1(6) of Common Position 2001/931, taking into account in particular its relationship with Article 1(4), which governs the conditions for the initial listing of the person or entity concerned.45The Court has ruled, with regard to initial decisions on the freezing of funds, that the wording of Article 1(4) of Common Position 2001/931 refers to the decision taken by a national authority by requiring that precise information or evidence in the file exists which shows that such a decision has been taken. That requirement seeks to ensure that, in the absence of any means at the disposal of the European Union that would enable it to carry out its own investigations regarding the involvement of a person or entity in terrorist acts, the Council’s decision on the initial listing is taken on a sufficient factual basis enabling the Council to conclude that there is a danger that, if preventive measures are not taken, the person or entity concerned may continue to be involved in terrorist activities (see, to that effect, judgment of 15 November 2012, Al-Aqsa v Council and Netherlands v Al‑Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraphs 69, 79 and 81).46As regards, on the other hand, subsequent fund-freezing decisions, it is apparent from the case-law of the Court that the essential question when reviewing whether to continue to include a person or entity on the list at issue is whether, since the inclusion of that person or that entity on that list or since the last review, the factual situation has changed in such a way that it is no longer possible to draw the same conclusion in relation to the involvement of that person or entity in terrorist activities (judgment of 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraph 82).47In the present case, the General Court held, in paragraphs 173 and 202 of the judgment under appeal, that the list of terrorist acts which the LTTE was said to have committed since 2005, set out in the statements of reasons relating to the acts at issue, played a decisive role in the Council’s decision to continue to freeze the LTTE’s funds. In paragraphs 187 and 204 of the judgment under appeal, the General Court held that the reference to any new terrorist act which the Council inserts in its statement of reasons during a review pursuant to Article 1(6) of Common Position 2001/931 must have been the subject of an examination and a national decision by a competent authority. Having found, notably in paragraphs 186 and 207 of the judgment under appeal, that the Council had based its allegations concerning terrorist acts which the LTTE is said to have committed from 2005 onwards not on such decisions but on information which it obtained from articles in the press and on the internet, the General Court accordingly annulled the acts at issue.– The first part of the second ground of appeal48By the first part of its second ground of appeal, the Council maintains that the General Court erred in law by finding that the Council was required regularly to provide new reasons justifying the LTTE’s retention on the list at issue and that it could not, in the absence of material supporting the LTTE’s removal from that list, retain the LTTE on the list solely on the basis of the national decisions on which their initial listing was based.49It follows from the examination of the first ground of appeal that the General Court was right to find that the acts at issue are vitiated by a failure to give sufficient reasons with respect to a guarantee that the decision of the Indian authorities was taken in accordance with the rights of the defence and the right to effective judicial protection. The first part of the second ground of appeal is, therefore, ineffective in so far as it concerns the decision of the Indian authorities.50In so far as the first part of the second ground of appeal concerns the UK decisions, it must be held that, as is apparent in particular from paragraph 196 of the judgment under appeal, the General Court, at least implicitly, considered that those decisions did not in themselves constitute a sufficient basis for maintaining the LTTE on the list at issue.51It must be recalled, in that regard, that it is apparent from the case-law cited in paragraph 46 of the present judgment that, in the context of a review pursuant to Article 1(6) of Common Position 2001/931, the Council may maintain the person or entity concerned on the list at issue if it concludes that there is an ongoing risk of that person or entity being involved in the terrorist activities which justified their initial listing. The retention of a person or entity on the list at issue is, therefore, in essence, an extension of the original listing.52In the process of verifying whether the risk of the person or entity concerned being involved in terrorist activities is ongoing, the subsequent fate of the national decision that served as the basis for the original entry of that person or entity on the list at issue must be duly taken into consideration, in particular the repeal or withdrawal of that national decision as a result of new facts or material or any modification of the competent national authority’s assessment.53That said, the question that arises in this case is whether the fact that the national decision that served as the basis for the original listing is still in force can, in itself, be considered sufficient for the purpose of maintaining the person or entity concerned on the list at issue.54In that regard, if, in view of the passage of time and in the light of changes in the circumstances of the case, the mere fact that the national decision that served as the basis for the original listing remains in force no longer supports the conclusion that there is an ongoing risk of the person or entity concerned being involved in terrorist activities, the Council is obliged to base the retention of that person or entity on the list on an up-to-date assessment of the situation, and to take into account more recent facts which demonstrate that that risk still exists (see, by analogy, judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 156).55In the present case, a significant period of time elapsed between the adoption in 2001 of the UK decisions which served as the basis for the original entry of the LTTE on the list at issue, the listing itself, which occurred in 2006, and the adoption of the acts at issue in the period from 2011 to 2014. In addition, as the Council mentioned in the statements of reasons relating to the acts at issue, the LTTE incurred a military defeat, announced by the Sri Lankan Government in May 2009, which significantly weakened that organisation. The Council was therefore obliged to base the retention of the LTTE on that list on more recent material demonstrating that there was still a risk that the LTTE were involved in terrorist activities. Consequently, contrary to what is claimed by the Council, the General Court did not err in law in considering, at least implicitly, that the UK decisions did not in themselves constitute a sufficient basis for the acts at issue.56The first part of the second ground of appeal must therefore be rejected.– The second part of the second ground of appeal57In the second part of the second ground of appeal, the Council submits that the General Court erred in law in ruling, notably in paragraphs 187 to 189, 202 to 204 and 225 of the judgment under appeal, that the Council was required to rely exclusively on material contained in the national decisions of competent authorities in order to maintain a person or entity on the list at issue, and that the Council had infringed both Article 1 of Common Position 2001/931 and its obligation to state reasons by relying in this instance on information obtained from the press and the internet.58As regards, in the first place, Article 1 of Common Position 2001/931, it must be noted first of all that that article draws a distinction between the initial entry of a person or entity on the list at issue, referred to in paragraph 4 thereof, and the retention on that list of a person or entity already listed, referred to in paragraph 6 thereof.59Under Article 1(4) of Common Position 2001/931, the initial entry of a person or entity on the list at issue presupposes the existence of a national decision by a competent authority or of a decision of the United Nations Security Council imposing a sanction.60No such condition is laid down in Article 1(6) of Common Position 2001/931, however, according to which ‘the names of persons and entities on the list in the Annex shall be reviewed at regular intervals and at least once every six months to ensure that there are grounds for keeping them on the list’.61That distinction is attributable to the fact that, as has been stated in paragraph 51 of the present judgment, the retention of a person or entity on the list at issue is, in essence, an extension of the original listing and presupposes, therefore, that there is an ongoing risk of the person or entity concerned being involved in terrorist activities, as initially established by the Council on the basis of the national decision on which that original listing was based.62Thus, although Article 1(6) of Common Position 2001/931 requires the Council to carry out at least once every six months a ‘review’ to ensure that there continue to be grounds for ‘keeping’ on that list a person or entity already listed on the basis of a national decision taken by a competent authority, it does not require any new material on which the Council may rely in order to justify the retention of the person or entity concerned on the list at issue to have been the subject of a national decision taken by a competent authority after the decision on which the initial listing was based. By imposing such a requirement, the General Court transposed the condition concerning the existence of such a decision, which is laid down in Article 1(4) of Common Position 2001/931 solely in relation to the initial entry of a person or entity on that list, to the reviews which the Council is required to carry out under Article 1(6) of that common position. In so doing, the General Court failed to have regard to the distinction between the original decision placing a person or entity on the list at issue and the subsequent decision maintaining the person or entity concerned on that list.63Next, it must be noted that the General Court’s interpretation of Article 1 of Common Position 2001/931 is based, at least implicitly, on the consideration that either the competent national authorities regularly adopt decisions on which the reviews the Council is required to carry out under Article 1(6) of Common Position 2001/931 may be based, or the Council has the option, if necessary, of asking those authorities to adopt such decisions.64However, that consideration has no basis in EU law.65It must be made clear in that regard that the fact, noted by the General Court in paragraphs 210 and 211 of the judgment under appeal, that the Member States are to inform the Council of decisions adopted by their competent authorities and to transmit those decisions to it does not mean that those authorities are obliged to adopt decisions that may serve as a basis for those reviews either regularly or, indeed, when required.66Moreover, contrary to the General Court’s ruling in paragraph 213 of the judgment under appeal, in the absence of any specific basis in the restrictive measures regime established by Common Position 2001/931, the principle of sincere cooperation enshrined in Article 4(3) TEU does not permit the Council to require the competent authorities of the Member States to adopt, if necessary, national decisions that may serve as the basis for the reviews the Council is required to carry out pursuant to Article 1(6) of that common position.67On the contrary, it must be noted that that regime does not provide any mechanism that would enable the Council to be provided, if necessary, with national decisions adopted after the initial listing of the person or entity concerned, in order to carry out the reviews it is required to carry out pursuant to Article 1(6) of that common position and in the context of which it is required to verify that there is still a risk that that person or entity is involved in terrorist activities. Without such a mechanism, it cannot be held that that regime requires the Council to carry out those reviews entirely on the basis of such national decisions, if the means that are to be available to the Council for that purpose are not to be restricted unduly.68Lastly, it should be noted that, contrary to what the General Court found, notably in paragraphs 187 and 210 of the judgment under appeal, its interpretation of Article 1 of Common Position 2001/931 is also not justified by the need to protect the persons or entities concerned.69It must be stated that, as regards the initial listing, the person or entity concerned is protected, in particular by the possibility of challenging both the national decisions that served as the basis for that listing, before the national courts, and the listing itself, before the Courts of the European Union.70In the case of subsequent fund-freezing decisions, the person or entity concerned is protected, inter alia, by the possibility of bringing an action against such decisions before the Courts of the European Union. These are required to determine, in particular, first, whether the obligation to state reasons laid down in Article 296 TFEU has been complied with and, therefore, whether the reasons relied on are sufficiently detailed and specific, and, second, whether those reasons are substantiated (see, by analogy, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 118 and 119, and of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 64).71In that context, it must be made clear that the person or entity concerned may, in the action challenging their retention on the list at issue, dispute all the material relied on by the Council to demonstrate that the risk of their involvement in terrorist activities is ongoing, irrespective of whether that material is derived from a national decision adopted by a competent authority or from other sources. In the event of challenge, it is for the Council to establish that the facts alleged are well founded and for the Courts of the European Union to determine whether they are made out (see, by analogy, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 121 and 124, and of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraphs 66 and 69).72It follows that the General Court erred in law when it ruled that the Council had infringed Article 1 of Common Position 2001/931 by relying, in the statements of reasons relating to the acts at issue, on material from sources other than national decisions adopted by competent authorities.73As regards, in the second place, the infringement of the obligation to state reasons identified by the General Court, it is apparent in particular from paragraph 225 of the judgment under appeal that the General Court relied solely on the absence of any reference — as regards the list of terrorist acts allegedly committed by the LTTE from 2005 — in the statements of reasons relating to the acts at issue to national decisions by competent authorities. The General Court’s finding of an infringement of the obligation to state reasons is thus the direct consequence of the finding of an infringement of Article 1 of Common Position 2001/931, in respect of which it has been established that it is vitiated by an error of law.74Consequently, the General Court’s error of law in its interpretation of Article 1 has the effect that its finding of an infringement by the Council of the obligation to state reasons is also vitiated by an error of law.75It must be borne in mind, however, that if the grounds of a decision of the General Court reveal an infringement of EU law, but the operative part of the judgment under appeal can be seen to be well founded on other legal grounds, that infringement is not capable of leading to the annulment of that decision and a substitution of grounds must be made (see, to that effect, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 150, and of 5 March 2015, Commission and Others v Versalis and Others, C‑93/13 P and C‑123/13 P, EU:C:2015:150, paragraph 102 and the case-law cited).76That is the case here.77As the General Court indicated in paragraph 167 of the judgment under appeal, the Council refers, in the statements of reasons relating to the acts at issue, to the military defeat of the LTTE announced by the Sri Lankan Government in May 2009, stating that ‘while [that] military defeat ... has significantly weakened [the] structure [of the LTTE], the likely intention of the organisation is to continue terrorist attacks in Sri Lanka’.78As regards the material on which the Council based that assessment, the only material referred to by the General Court in the judgment under appeal is a list of terrorist acts allegedly committed by the LTTE from 2005, in the statements of reasons relating to the acts at issue. As is apparent from paragraph 168 of that judgment, the period covered by that list extends, according to the contested regulations, to April 2009 or June 2010. It is evident from the documents submitted to the Court of Justice that, while the statements of reasons relating to the first and second implementing regulations at issue, that is to say, Implementing Regulations No 83/2011 and No 687/2011 (together ‘the first and second implementing regulations at issue’), mentioned three alleged terrorist acts which it is claimed the LTTE committed between 27 April and 12 June 2010 and thus after their military defeat in May 2009, the Council subsequently amended the statement of reasons for the acts at issue by removing any reference to those three acts in the statements of reasons relating to the third to eighth implementing regulations at issue, that is to say, Implementing Regulations No 1375/2011, No 542/2012, No 1169/2012, No 714/2013, No 125/2014 and No 790/2014 (together ‘the third to eighth implementing regulations at issue’). The last terrorist act referred to in the statements of reasons relating to the third to eighth implementing regulations at issue dates from 12 April 2009 and thus pre-dates that military defeat. In its written replies to the questions put by the General Court, the Council explained that that amendment was an ‘update’ of the statements of reasons relating to the acts at issue, which had to be made because new information was obtained.79Thus, in the absence of any other relevant information, the statements of reasons relating to the third to eighth implementing regulations at issue do not refer to anything that might justify the Council’s assessment that, notwithstanding that military defeat, the likely intention of the LTTE was to continue terrorist attacks in Sri Lanka. In view of the fact that that military defeat represented a significant change in circumstances, one that was capable of calling in question the ongoing nature of the risk of the LTTE’s involvement in terrorist activities, the Council should have referred to the evidence supporting that assessment in those statements of reasons. Consequently, the third to eighth implementing regulations at issue are vitiated by a failure to give sufficient reasons that is capable of leading to their annulment.80As regards the first and second implementing regulations at issue, it must be noted that the Council repealed them and replaced them with the subsequent implementing regulations at issue, while at the same time updating the grounds given in the statements of reasons because new information had been obtained. That update resulted in the removal of references to the three alleged terrorist acts which it is claimed the LTTE committed between 27 April and 12 June 2010 and thus after the LTTE’s military defeat. Nor, moreover, has the Council referred to those three alleged terrorist acts in the context of the present appeal, despite a question from this Court as to whether the grounds for the acts at issue are sufficient as regards the likely intention of the LTTE to continue terrorist attacks in Sri Lanka, notwithstanding their military defeat in May 2009. Consequently, it is clear that mention of those three alleged terrorist acts cannot, in any event, lead to the conclusion that the first and second implementing regulations at issue are well founded.81In those circumstances, the operative part of the judgment under appeal must be considered to be well founded in respect of all the acts at issue. The second part of the second ground of appeal must therefore be rejected.The third ground of appeal82By its third ground of appeal, the Council, supported by the United Kingdom and the Commission, submits that, in paragraphs 177 and 205 to 208 of the judgment under appeal, the General Court erred in law by not concluding that the UK decision in 2001 to proscribe the LTTE was a sufficient basis for maintaining the LTTE’s listing. According to the Council, the General Court was wrong to find that the absence of any indication, in the statements of reasons relating to the acts at issue, of the matters on which the decision was based precluded the Council from relying on that decision. Contrary to what was held by the General Court, the General Court was not required to ascertain the reasons on which that decision was based, in so far as those reasons are not subject to review by the Courts of the European Union.8384It must be observed that, in so far as the third ground of appeal concerns an error of law allegedly made by the General Court in finding that the UK decision in 2001 to proscribe the LTTE alone did not constitute a sufficient basis for the acts at issue, this ground of appeal and the first part of the second ground of appeal partially overlap.85Irrespective of the validity of the argument put forward by the Council in the context of its third ground of appeal, by which it claims that the General Court was wrong to find that the absence of any indication, in the statements of reasons relating to the acts at issue, of the matters on which the decision was based precluded the Council from relying on that decision, it should be borne in mind that, in any event, it is apparent from the examination of the first part of the second ground of appeal that, because of (1) the considerable amount of time that elapsed between the adoption of the UK decisions that served as the basis for the LTTE’s initial listing, the listing itself, and the adoption of the acts at issue, and (2) the military defeat in May 2009, the UK decision in 2001 to proscribe the LTTE did not constitute a sufficient basis for the acts at issue.86Consequently, the third ground of appeal is ineffective.87Since all the grounds of appeal have been rejected, the appeal must be dismissed.Costs88Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs. Article 138 of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1) thereof, provides in paragraph 1 that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.89Since the Council’s appeal has been dismissed, it is appropriate, in accordance with the form of order sought by the LTTE, to order the Council to bear its own costs and to pay those incurred by the LTTE.90Article 140(1) of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1) thereof, provides that the Member States and institutions which have intervened in the proceedings are to bear their own costs.91In accordance with those provisions, the French Republic, the Kingdom of the Netherlands, the United Kingdom and the Commission are to bear their own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Dismisses the appeal; 2. Orders the Council of the European Union to bear its own costs and to pay those incurred by the Liberation Tigers of Tamil Eelam (LTTE); 3. Orders the French Republic, the Kingdom of the Netherlands, the United Kingdom of Great Britain and Northern Ireland and the European Commission to bear their own costs. LenaertsTizzanoBay Larsenvon DanwitzDa Cruz VilaçaVilarasMalenovskýLevitsBonichotArabadjievVajdaRodinBiltgenJürimäeLycourgosDelivered in open court in Luxembourg on 26 July 2017.A. Calot EscobarRegistrarK. LenaertsPresident( *1 ) Language of the case: English. | cf500-0757c57-4762 | EN |
By refusing to recognise hallmarks for precious metals affixed by WaarborgHolland, a Netherlands assay office, the Czech Republic has infringed EU law | 22 September 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Free movement of goods — Article 34 TFEU — Quantitative restrictions on imports — Measures having equivalent effect — Precious metals hallmarked in a third country in accordance with Netherlands legislation — Import into the Czech Republic after being put into free circulation — Refusal to recognise the hallmark — Consumer protection — Proportionality — Admissibility’In Case C‑525/14,ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 20 November 2014, European Commission, represented by P. Němečková, E. Manhaeve and G. Wilms, acting as Agents, with an address for service in Luxembourg,applicant,v Czech Republic, represented by M. Smolek, T. Müller, J. Vláčil and J. Očková, acting as Agents,defendant,supported by: French Republic, represented by D. Colas and R. Coesme, acting as Agents,intervener,THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, C. Toader, A. Rosas, A. Prechal and E. Jarašiūnas (Rapporteur), Judges,Advocate General: M. Campos Sánchez-Bordona,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 17 February 2016,after hearing the Opinion of the Advocate General at the sitting on 3 May 2016,gives the following Judgment 1By its application, the European Commission claims that the Court should declare that, by refusing to recognise certain Netherlands hallmarks, in particular hallmarks of the WaarborgHolland assay office (‘WaarborgHolland hallmarks’), the Czech Republic has failed to fulfil its obligations under Article 34 TFEU. Pre-litigation procedure and procedure before the Court 2Since it considered that the practice of the Puncovní úřad (Assay Office, Czech Republic, ‘the Czech assay office’) of refusing to recognise the hallmarks of WaarborgHolland, an independent assay office established in the Netherlands with branches in third countries, and consequently of requiring the precious metals in question to be marked with an additional Czech hallmark, was contrary to Article 34 TFEU, the Commission by letter of 30 September 2011 gave the Czech Republic formal notice to submit observations.3In its reply of 30 November 2011, the Czech Republic did not dispute that it did not recognise those hallmarks. It submitted, however, that the present case concerned the free movement of services, not of goods, and that the refusal of recognition was justified by the fact that it was not possible to distinguish, among those hallmarks, those affixed outside the territory of the EU from those affixed within EU territory.4After considering the arguments of the Czech Republic in that letter, the Commission on 30 May 2013 sent the Czech Republic a reasoned opinion, in which it maintained in particular that the provisions of the FEU Treaty on the free movement of goods apply to products in free circulation in the EU, and thus also to products originating in third countries that have been regularly imported into a Member State in accordance with the requirements of Article 29 TFEU. The Commission requested the Czech Republic to take the necessary measures to comply with Article 34 TFEU within two months from the date of receipt of the reasoned opinion.5In its reply of 23 July 2013, the Czech Republic maintained its position, claiming in particular that the refusal to recognise the WaarborgHolland hallmarks was justified by the need to protect consumers. Since it was not satisfied by that answer, the Commission decided to bring the present action.6By application lodged at the Court Registry on 26 February 2015, the French Republic sought leave to intervene in the present case in support of the form of order sought by the Czech Republic. By decision of 24 March 2015, the President of the Court granted leave. The request to reopen the oral procedure 7Following the delivery of the Advocate General’s Opinion, the Czech Republic, by document lodged at the Court Registry on 18 May 2016, asked the Court to reopen the oral procedure, submitting essentially that ‘a substantial part [of the Opinion] is based on several incorrect assumptions’.8It should, however, be recalled, first, that the Statute of the Court of Justice of the European Union and the Rules of Procedure of the Court of Justice make no provision for the parties to submit observations in response to the Advocate General’s Opinion (judgments of 17 July 2014, Commission v Portugal, C‑335/12, EU:C:2014:2084, paragraph 45, and of 4 May 2016, Commission v Austria, C‑346/14, EU:C:2016:322, paragraph 23).9Secondly, in accordance with Article 83 of the Rules of Procedure, the Court may at any time, after hearing the Advocate General, order the oral part of the procedure to be reopened, in particular if it considers that it lacks sufficient information, or where a party, after the close of that part of the procedure, has submitted a new fact which is of such a nature as to be a decisive factor for the decision of the Court, or where the case must be decided on the basis of an argument which has not been debated between the parties.10In the present case the Court, after hearing the Advocate General, considers that it has all the information necessary to give judgment and that the case does not have to be examined in the light of a new fact which is of such a nature as to be a decisive factor for its decision or of an argument which has not been debated before it.11Consequently, there is no need to order the oral part of the procedure to be reopened. The action Admissibility Arguments of the parties12The Czech Republic submits that the action is inadmissible in so far as it alleges a breach of Article 34 TFEU with reference to ‘certain Netherlands hallmarks’. That expression and the words ‘in particular’ in the form of order sought by the Commission show that the subject matter of the dispute concerns other Netherlands hallmarks as well as those of WaarborgHolland. In the pre-litigation procedure and in the application the Commission sought to prove the alleged failure to fulfil obligations only as regards the WaarborgHolland hallmarks. It is not material that the dispute concerns, in the abstract, the non-recognition of precious metals for which it is not possible to determine whether they have been hallmarked in a third country or in the territory of the EU. It must therefore be found that the application lacks clarity and precision and that the action is therefore admissible only in so far as it concerns the WaarborgHolland hallmarks.13The Commission submits that its action is admissible in its entirety. In the letter of formal notice it informed the Czech Republic in general terms that it was obliged under Article 34 TFEU to accept goods which had been controlled and hallmarked in accordance with the legislation of a Member State of the European Economic Area (EEA) and lawfully marketed in any Member State of the EEA. In the reasoned opinion it claimed, in addition, that the Czech Republic was failing to fulfil its obligations under Article 34 TFEU on the ground that it ‘does not recognise certain Netherlands hallmarks’. That wording was repeated in the form of order sought in the application and was not challenged by the Czech Republic.Findings of the Court14Since the Court can examine of its own motion whether the conditions laid down in Article 258 TFEU for bringing an action for failure to fulfil obligations are satisfied (judgment of 14 January 2010, Commission v Czech Republic, C‑343/08, EU:C:2010:14, paragraph 25 and the case-law cited) and the action is directed not against a national law or regulation but against a practice of the Czech assay office, it should be recalled, as a preliminary point, that an administrative practice of a Member State can be made the object of an action for failure to fulfil obligations when it is, to some degree, of a consistent and general nature (judgments of 29 April 2004, Commission v Germany, C‑387/99, EU:C:2004:235, paragraph 42 and the case-law cited, and of 5 March 2009, Commission v Spain, C‑88/07, EU:C:2009:123, paragraph 54).15In the present case, the Czech Republic does not deny that the practice of the Czech assay office referred to by the Commission, whose existence the Commission has shown by producing as annexes to its application two communications from the president of that office, satisfies those criteria. Nor does the Czech Republic dispute that the practice may be attributed to it. On the other hand, it contests the admissibility of the action, in that it lacks clarity and precision.16In accordance with Article 120(c) of the Rules of Procedure and the related case-law, an application initiating proceedings must state the subject matter of the proceedings, the pleas in law and arguments relied on and a summary of those pleas in law. That statement must be sufficiently clear and precise to enable the defendant to prepare his defence and the Court to rule on the application. It is therefore necessary for the essential points of fact and of law on which a case is based to be indicated coherently and intelligibly in the application itself and for the form of order to be set out unambiguously so that the Court does not rule ultra petita or fail to rule on a complaint (judgments of 11 July 2013, Commission v Czech Republic, C‑545/10, EU:C:2013:509, paragraph 108 and the case-law cited, and of 23 February 2016, Commission v Hungary, C‑179/14, EU:C:2016:108, paragraph 141).17It is also settled case-law that, in an action under Article 258 TFEU, the letter of formal notice sent by the Commission to the Member State and the reasoned opinion issued by the Commission delimit the subject matter of the dispute, so that it cannot afterwards be extended. The opportunity for the Member State concerned to submit its observations, even if it chooses not to make use of it, is an essential guarantee intended by the Treaty, adherence to which is an essential formal requirement of the procedure for finding that a Member State has failed to fulfil its obligations. Consequently, the reasoned opinion and the action brought by the Commission must be based on the same complaints as those in the letter of formal notice initiating the pre-litigation procedure (judgments of 29 September 1998, Commission v Germany, C‑191/95, EU:C:1998:441, paragraph 55, and of 10 September 2009, Commission v Portugal, C‑457/07, EU:C:2009:531, paragraph 55 and the case-law cited).18The reasoned opinion and the action brought under Article 258 TFEU must therefore set out the complaints coherently and precisely, in order for the Member State and the Court to be able to appreciate exactly the scope of the breach of EU law complained of, a condition which is necessary to enable the Member State to put forward its defence and the Court to determine whether there is a breach of obligations as alleged (judgments of 14 October 2010, Commission v Austria, C‑535/07, EU:C:2010:602, paragraph 42, and of 3 March 2011, Commission v Ireland, C‑50/09, EU:C:2011:109, paragraph 64 and the case-law cited).19In the present case, in so far as, by using the words ‘certain Netherlands hallmarks’ in the form of order sought in its application, the Commission seeks to include in its action Netherlands hallmarks other than those explicitly mentioned in the application, namely the WaarborgHolland hallmarks, the application does not satisfy the requirements of the Rules of Procedure and the case-law cited in paragraph 16 above, as the identity of those other hallmarks is not specified in the application and the use of the word ‘certain’ means that the action cannot be directed against all Netherlands hallmarks.20Moreover, while the letter of formal notice referred generally to the application to precious metals of Article 34 TFEU and the related case-law, it referred expressly only to the WaarborgHolland hallmarks. As to the form of order sought in the application, while, like the operative part of the reasoned opinion, it refers to ‘certain Netherlands hallmarks’, the reasons in the opinion related only to the WaarborgHolland hallmarks. Consequently, the requirements defined by the case-law cited in paragraphs 17 and 18 above cannot be regarded as satisfied either.21In those circumstances, the Commission’s action must be dismissed as inadmissible in so far as it relates to the alleged refusal to recognise Netherlands hallmarks other than those affixed by WaarborgHolland. Substance 22The Commission submits that the affixing in the Czech Republic to certain precious metals imported from other Member States of an additional hallmark, despite the fact that those precious metals have already been hallmarked in accordance with Netherlands legislation and marketed in the EU, constitutes an unjustified restriction of the free movement of goods.23It argues that the Czech Republic is wrong to submit that, to benefit from the principle of mutual recognition, precious metals originating in third countries must not only have been put into free circulation in the EU but also then been marketed in a Member State, which must furthermore be the Member State under whose legislation the hallmark has been affixed, in this case the Kingdom of the Netherlands. It follows from the Court’s case-law that, where goods coming from a third country have been put into free circulation in the EU, they must be treated in the same way as goods originating in the EU. Free movement of goods therefore applies to precious metals hallmarked in a third country by a subsidiary of an assay office established in a Member State, in this case the Kingdom of the Netherlands, and in free circulation in the EU.24Marketing in accordance with the law in force is one of the requirements of putting into free circulation, and thus a condition for obtaining the status of EU goods, not an additional stage necessary for the principle of mutual recognition to apply. Moreover, the Member State of putting into free circulation may be different from the State whose legislation governed the hallmarking of the metals concerned. That position is borne out in particular by Regulation (EC) No 764/2008 of the European Parliament and of the Council of 9 July 2008 laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State and repealing Decision No 3052/95/EC (OJ 2008 L 218, p. 21) and Regulation (EC) No 765/2008 of the European Parliament and of the Council of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93 (OJ 2008 L 218, p. 30).25Where, therefore, precious metals have been put into free circulation, the fact that they were not hallmarked in EU territory is immaterial.26Further, the Commission observes that, according to the case-law of the Court, the Member States may not require a fresh hallmark to be affixed to goods imported from another Member State in which they were lawfully marketed and hallmarked in accordance with the legislation of that State, where the information provided by the hallmark is equivalent to that prescribed by the Member State of import and intelligible to consumers of that State. In the present case, the WaarborgHolland hallmarks, even if applied in a third country, comply with Netherlands legislation and the information they provide is equivalent to that prescribed by the Czech Republic and intelligible to consumers of that State.27In addition, the Czech Republic has not shown that the restriction in question is appropriate for attaining the objective of consumer protection it pursues and does not go beyond what is necessary to attain it. The Commission submits that WaarborgHolland is an assay office subject to Netherlands law and supervision by the Netherlands public authorities and accredited by the Netherlands accreditation body within the meaning of Regulation No 765/2008, and those public authorities exercise control over the branches of their assay offices both in the Member States and in third countries.28The Czech Republic submits that, in so far as the action is admissible, it is not well founded. In the first place, after specifying that the hallmarks referred to in its observations are the WaarborgHolland ones only, it submits that precious metals hallmarked in a third country do not benefit from the free movement of goods guaranteed by Article 34 TFEU even if they have been hallmarked in accordance with the legislation of a Member State.29For the principle of mutual recognition to be applicable, two consecutive stages have to be followed, namely the putting of the goods into free circulation in the EU within the meaning of Article 29 TFEU, which involves compliance with the import formalities and the levying of any customs duties or charges having equivalent effect which are payable in the Member State concerned, and then the marketing of the goods in the market of that Member State in accordance with its non-tariff legislation. In the present case, that sequence has not been followed, since, although the precious metals in question were indeed hallmarked in accordance with Netherlands legislation, that was done in a third country and they were not marketed in Netherlands territory.30In the second place, as regards the restriction of the free movement of precious metals hallmarked in the Netherlands, the Czech Republic argues that this is justified by the need to protect consumers and is proportionate to that objective. The Czech Republic submits that it is not possible to distinguish those precious metals from those to which the same hallmarks have been affixed in a third country. The affixing of an additional Czech hallmark is thus the only means by which the Czech Republic can monitor the entry into the EU market of goods hallmarked in third countries. The possibility of the Netherlands authorities monitoring hallmarking in third countries is insufficient, as is the monitoring of samples and hallmarking in those third countries. The Czech Republic also observes that, as regards the hallmarking of articles made from precious metals, there is no system of recognition in the EU of the conformity assessment bodies of third countries.31The French Republic, intervening in support of the Czech Republic, argues primarily that the application to hallmarked precious metals of the principle of mutual recognition is subject to an additional condition that does not apply to other kinds of products, namely the condition that the hallmarking is performed in the territory of the Member State of export by an independent body established in that Member State. That condition may be explained by the particular nature of hallmarking, which derives from the regalian prerogative of guaranteeing fineness. Consequently, an article hallmarked in the territory of a Member State other than the Member State of export or in the territory of a third country, as with the WaarborgHolland hallmarks in the present case, does not benefit from the principle of mutual recognition. Merely putting such an article into free circulation in a Member State is not sufficient. The alleged breach of Article 34 TFEU has not therefore been established.32In the alternative, the French Republic submits that, assuming that the principle of mutual recognition does apply, the restriction of the free movement of goods deriving from the Czech authorities’ refusal to recognise the WaarborgHolland hallmarks is consistent with Article 34 TFEU, as it is justified by the objective of protecting consumers and ensuring fair trading and is proportionate to that objective.33In reply, the Commission submits in particular that it does not appear from the case-law of the Court that, to benefit from the principle of mutual recognition, the hallmarking must physically take place in the territory of the Member State under whose legislation the hallmark is affixed. Moreover, in accordance with Regulation No 765/2008, the Member States are obliged to recognise the equivalence of the services supplied by an assay office accredited under that regulation, even if the branch of the accredited assay office which has affixed the hallmark is not situated in the territory of the Member State concerned or in that of the EU. The Commission points out that the independence of the Netherlands assay offices or of the Netherlands accreditation body is not contested, and that the guarantees of independence provided by the control office accredited by the Member State of export need not necessarily be the same as those laid down by the Member State of import.34According to settled case-law of the Court, all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, trade within the EU must be considered to be measures having an effect equivalent to quantitative restrictions on imports within the meaning of Article 34 TFEU (judgments of 11 July 1974, Dassonville, 8/74, EU:C:1974:82, paragraph 5, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraph 16).35Obstacles to the free movement of goods resulting, in the absence of harmonisation of national legislations, from the application by a Member State to goods coming from other Member States, in which they are lawfully manufactured and marketed, of rules relating to conditions with which those goods must comply, even if those rules apply without distinction to all products, therefore constitute measures having equivalent effect prohibited by Article 34 TFEU, unless their application can be justified by an objective of public interest capable of taking precedence over the free movement of goods (see, to that effect, judgments of 20 February 1979, Rewe-Zentral (‘Cassis de Dijon’), 120/78, EU:C:1979:42, paragraph 8; of 15 September 1994, Houtwipper, C‑293/93, EU:C:1994:330, paragraph 11; and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraph 17).36It should also be recalled that, in accordance with Article 28(2) TFEU, the prohibition of quantitative restrictions between Member States provided for in Articles 34 to 37 TFEU is to apply to products originating in the Member States and to products coming from third countries which are in free circulation in the Member States. Under Article 29 TFEU, products coming from a third country are to be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member State, and if they have not benefited from a total or partial drawback of such duties or charges.37The Court has concluded that, as regards free movement of goods within the EU, goods in free circulation are definitively and wholly assimilated to goods originating in the Member States and that the provisions of Article 34 TFEU consequently apply without distinction to products originating in the EU and products put into free circulation in any of the Member States, whatever the real origin of the products (see, to that effect, judgments of 15 December 1976, Donckerwolcke and Schou, 41/76, EU:C:1976:182, paragraphs 17 and 18; of 18 November 2003, Budějovický Budvar, C‑216/01, EU:C:2003:618, paragraph 95, and of 16 July 2015, UNIC and Uni.co.pel, C‑95/14, paragraph 41).38However, it also follows from the Court’s case-law that placing on the market is a stage subsequent to import. Just as a product lawfully manufactured within the EU may not be placed on the market on that ground alone, the lawful import of a product does not mean that it will automatically be allowed onto the market. A product coming from a third country which is in free circulation is thus assimilated to products originating in the Member States as regards the elimination of customs duties and quantitative restrictions between Member States. Where, however, there is no EU legislation harmonising the conditions of marketing of the products concerned, the Member State in which they are put into free circulation may prevent their being placed on the market if they do not satisfy the conditions laid down for that purpose under national law in compliance with EU law (judgments of 30 May 2002, Expo Casa Manta, C‑296/00, EU:C:2002:316, paragraphs 31 and 32, and of 12 July 2005, Alliance for Natural Health and Others, C‑154/04 and C‑155/04, EU:C:2005:449, paragraph 95).39As the Advocate General observes, in essence, in points 57 and 58 of his Opinion, it follows from the above that, contrary to the Commission’s argument, the principle of mutual recognition established by the case-law cited in paragraph 35 above cannot apply to trade within the EU in goods originating in third countries and in free circulation where they have not, before being exported to a Member State other than that in which they are in free circulation, been lawfully marketed in the territory of a Member State.40In the present case, it is common ground that the action does not concern the refusal by the Czech Republic to recognise the WaarborgHolland hallmarks, and the additional hallmarking which could be required as a consequence, in the case of the direct import into its territory of precious metals marked with WaarborgHolland hallmarks affixed outside the territory of the EU. Nor does the action concern hallmarks covered by the Convention on the Control and Marking of Articles of Precious Metals, signed in Vienna on 15 November 1972 and amended on 18 May 1988, or hallmarks covered by bilateral treaties on the mutual recognition of hallmarks applied to articles of precious metals concluded between certain Member States and third countries, such as those mentioned by the Advocate General in point 30 of his Opinion.41On the other hand, by this action the Commission contests the compatibility with Article 34 TFEU of the Czech practice of not recognising the WaarborgHolland hallmarks, which are assay marks, and consequently of requiring an additional hallmarking of the precious metals concerned, on the import into the Czech Republic of precious metals marked with those hallmarks which have either been lawfully both hallmarked and marketed in the territory of the Netherlands or the territory of another Member State or else have been hallmarked in the territory of a third country in accordance with Netherlands legislation and are in free circulation in a Member State other than the Czech Republic, whether this is the Kingdom of the Netherlands or another Member State.42The Court has previously held that national legislation that requires articles of precious metal imported from other Member States, in which they are lawfully marketed and hallmarked in accordance with the legislation of those States, to be given an additional hallmark in the Member State of import has the effect of rendering imports more difficult and costly, and thus constitutes a measure having an effect equivalent to a quantitative restriction on imports within the meaning of Article 34 TFEU (see, to that effect, judgments of 21 June 2001, Commission v Ireland, C‑30/99, EU:C:2001:346, paragraph 27, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraphs 18 and 20).43That is also the case of the practice at issue. By virtue of that practice, precious metals marked with the WaarborgHolland hallmarks from a Netherlands assay office, whether they have been lawfully both hallmarked and marketed in the territory of the Netherlands or in that of another Member State or have been hallmarked in the territory of a third country in accordance with Netherlands legislation and put into free circulation in a Member State, and whether or not they have been lawfully marketed in the territory of a Member State, may be marketed in the territory of the Czech Republic only after they have been the object of an additional control and hallmarking in the Czech Republic, which is liable to make the import of those products into the territory of the Czech Republic from other Member States more difficult and costly.44That practice is therefore prohibited by Article 34 TFEU unless it can be objectively justified.45It follows from consistent case-law of the Court that national legislation which constitutes a measure having equivalent effect to a quantitative restriction on imports within the meaning of Article 34 TFEU may be justified on one of the public interest grounds set out in Article 36 TFEU or in order to meet imperative requirements (judgments of 10 February 2009, Commission v Italy, C‑110/05, EU:C:2009:66, paragraph 59 and the case-law cited, and of 6 September 2012, Commission v Belgium, C‑150/11, EU:C:2012:539, paragraph 53).46In the present case, the Czech Republic relies on an imperative requirement of the need to ensure protection of consumers.47On this point, the Court has previously held that the requirement that an importer must have articles of precious metals marked with a hallmark indicating their fineness is in principle such as to ensure effective protection for consumers and to promote fair trading (judgments of 21 June 2001, Commission v Ireland, C‑30/99, EU:C:2001:346, paragraph 29, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraph 21).48However, in that context, the Court has also held that a Member State may not require a fresh hallmark to be affixed to products imported from another Member State in which they have been lawfully marketed and hallmarked in accordance with the legislation of that State, where the information provided by the hallmark, in whatever form, is equivalent to that prescribed by the Member State of import and intelligible to consumers of that State (judgments of 21 June 2001, Commission v Ireland, C‑30/99, EU:C:2001:346, paragraph 30, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraph 22).49In the present case, there is no issue as to the equivalence between the information provided by the WaarborgHolland hallmarks and that prescribed by the Czech Republic for its own hallmarks or as to its intelligibility to consumers in that State, which the Czech Republic does not contest, but there is an issue as to the level of guarantee provided by hallmarking in the territory of third countries by the branches of a Netherlands assay office, in this case WaarborgHolland, which is authorised under Netherlands law to exercise at least some of its hallmarking activities outside the territory of the EU.50The Czech Republic, supported by the French Republic, submits that such a hallmark affixed outside EU territory, even if the hallmarking is done by the branches of an independent assay office which is authorised under the law of its own Member State to carry on part of its activities in the territory of third countries, does not provide sufficient guarantees to be regarded as equivalent to a hallmark affixed by an independent body of a Member State in the territory of that Member State. According to the Czech Republic and the French Republic, the reliability of such hallmarking outside EU territory cannot be guaranteed, in view of the obstacles to the exercise by that body’s own Member State of sufficient control over its activities carried on in the territory of third States.51It must be recalled that, as regards the requirement that a hallmark must be affixed by a legal person satisfying certain requirements as to competence and independence, the Court has indeed previously held that a Member State cannot, by arguing that the guarantee function of the hallmark can be ensured only by action by the competent body of the Member State of import, prevent the marketing in its territory of articles of precious metals hallmarked in the Member State of export by an independent body. The existence of double controls in the Member State of export and the Member State of import cannot be justified if the results of the control carried out in the Member State of origin satisfy the requirements of the Member State of import. The Court has also held that the hallmark’s guarantee function is satisfied if it is affixed by an independent body in the Member State of export (see, to that effect, judgment of 15 September 1994, Houtwipper, C‑293/93, EU:C:1994:330, paragraphs 17 to 19).52However, on account of the risk of fraud on the market for articles of precious metals, where small changes in the quantity of precious metal may have a very great impact on the manufacturer’s profit margin, the Court has acknowledged that in the absence of EU legislation the choice of appropriate measures to deal with that risk is for the Member States, who have a wide discretion (see, to that effect, judgment of 15 September 1994, Houtwipper, C‑293/93, EU:C:1994:330, paragraphs 21 and 22).53In this context, the Court has taken the view that, while the choice between prior control by an independent body and a scheme allowing manufacturers in the Member State of export to hallmark the goods in question themselves is within the discretion of each Member State, a Member State whose legislation requires the hallmark to be affixed by an independent body cannot prevent the marketing in its territory of articles of precious metals imported from other Member States where those articles have in fact been hallmarked by an independent body in the Member State of export. The Court has also stated that the guarantees of independence provided by the body of the Member State of export need not necessarily coincide with those laid down in the national legislation of the Member State of import (see, to that effect, judgments of 15 September 1994, Houtwipper, C‑293/93, EU:C:1994:330, paragraphs 20, 22, 23 and 27, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraphs 36 and 37).54The Court has not yet ruled, however, on hallmarks affixed in the territory of third countries. In this respect, having regard to the risk of fraud in the market for precious metals and the wide discretion which the Court has acknowledged that the Member States enjoy in the choice of appropriate measures for dealing with that risk, it must be accepted that, in the absence of EU legislation in the matter, a Member State is entitled, in connection with the fight against fraud undertaken in order to ensure the protection of consumers in its territory, not to allow its own assay office or offices, or other bodies which that Member State may authorise to affix its hallmarks to precious metals, to affix those hallmarks in the territory of third countries.55It follows that, in the present state of EU law and apart from the cases that may be governed by an international agreement, which as noted in paragraph 40 above are not the subject of the present action, a Member State is in principle entitled, in accordance with the case-law cited in paragraph 52 above, not to consider that hallmarks affixed in the territory of third countries offer a level of protection of consumers equivalent to the hallmarks affixed by independent bodies in the territory of the Member States.56The Commission cannot rely to any purpose on Regulation No 765/2008 to submit that, since WaarborgHolland is a conformity assessment body accredited by the Netherlands accreditation body under that regulation, the Czech Republic is required in all cases to accept in its territory the precious metals hallmarked by that assessment body where they are imported from another Member State, without being entitled to carry out a control or an additional hallmarking.57First, while Article 7(1) of Regulation No 765/2008 provides that, where a conformity assessment body requests accreditation, it must in principle do so with the national accreditation body of the Member State in which it is established, the regulation is silent as to the question of the territory in which the conformity assessment bodies may or must exercise their activities and as to the extent to which the accreditation issued to them by the national accreditation body under the regulation may or may not, or must or must not, cover also the activities of conformity assessment bodies exercised by their branches in the territory of third countries. Secondly, moreover, whether or not the Czech practice contested by the Commission complies with Regulation No 765/2008 is not the subject of the present action.58It must be stated, however, that the exercise of the power recognised in paragraph 55 above as belonging to the Member States cannot be justified if, in accordance with the case-law cited in paragraph 51 above, the results of the control carried out in the Member State from which the precious metals are exported meet the requirements of the Member State of import.59That is necessarily so in the present case with the precious metals hallmarked by WaarborgHolland in Netherlands territory and lawfully marketed there or in the territory of another Member State, in accordance with the settled case-law of the Court referred to in paragraph 53 above.60That is also so with the precious metals bearing WaarborgHolland hallmarks affixed in a third country which have been put into free circulation in the EU and, before being exported to the Czech Republic, were lawfully marketed in the territory of a Member State which, like the Czech Republic, has chosen not to allow its own assay office or offices, or other bodies it may authorise to affix its hallmarks to precious metals, to affix those hallmarks in the territory of third countries. In that case, the control exercised by such a Member State when the precious metals concerned are marketed in its territory must be regarded as satisfying the requirements of the Czech Republic, since in that case the two Member States are pursuing equivalent levels of consumer protection.61The conclusion must be that, in the cases identified in paragraphs 59 and 60 above, the Czech Republic’s refusal to recognise the WaarborgHolland hallmarks cannot be justified, and the alleged failure to fulfil obligations is therefore made out.62On the other hand, it follows from the above considerations that, with respect to precious metals marked with a WaarborgHolland hallmark in the territory of a third country which have been put into free circulation in the EU and are exported to the Czech Republic without first having been lawfully marketed in a Member State, and with respect to such goods which after being put into free circulation have been lawfully marketed in a Member State which does not require precious metals to be hallmarked by an independent body, or in a Member State which requires such hallmarking but allows it to be done in the territory of third countries, the results of the control exercised by the Member State from which the precious metals are exported cannot satisfy the requirements of the Czech Republic.63While, however, the Czech practice at issue is thus capable of being justified in part, in particular because the precious metals concerned may not correspond to the conditions of lawful marketing in a Member State, for that justification to be accepted it is also necessary that the practice is appropriate for attaining that objective and does not go beyond what is necessary to attain it (see, to that effect, judgments of 10 February 2009, Commission v Italy, C‑110/05, EU:C:2009:66, paragraph 59 and the case-law cited, and of 16 January 2014, Juvelta, C‑481/12, EU:C:2014:11, paragraph 29).64It is common ground that the Czech practice at issue concerns precious metals bearing WaarborgHolland hallmarks generally, not only precious metals bearing WaarborgHolland hallmarks affixed in the territory of third countries, without distinguishing according to the circumstances in which the precious metals are exported to the Czech Republic, in particular whether they are exported to the Czech Republic after merely being put into free circulation in another Member State or after also being lawfully marketed in another Member State.65The Czech Republic claims that it is impossible to distinguish among the WaarborgHolland hallmarks between those which have been affixed in the territory of third countries and those which have been affixed in the EU, since the hallmarks are identical wherever they have been affixed. That circumstance is not, however, such as to allow it to be considered that, in so far as that practice is capable of being justified, it is proportionate to the objective pursued.66It would be possible, for instance by requiring from the importer into the Czech Republic documentary evidence to show the place where the hallmark in question was affixed and, as the case may be, the place where the precious metals concerned were put into free circulation and lawfully marketed in the EU, to limit the refusal to recognise the WaarborgHolland hallmarks solely to circumstances in which an additional control of the precious metals by the Czech authorities is actually justified by the protection of consumers, which would be a measure less prejudicial to the free movement of goods than the general refusal to recognise those hallmarks and the additional hallmarking of all precious metals marked with those hallmarks.67The fact that in such a case the final consumer would not himself be able to ascertain whether the WaarborgHolland hallmark affixed to precious metal had been affixed in the territory of a third country or in the EU, and could consequently be led into error as to its quality, cannot, contrary to the submissions of the Czech Republic, establish that the practice at issue is proportionate, unless it were supposed that such a consumer could not rely on the competent authorities of the Member State of consumption as regards their control of the quality of the products that that State admits to its market, which cannot be accepted.68It must therefore be found that, because of its general and systematic nature, in so far as the Czech practice at issue is capable of being justified by the protection of consumers, it is not proportionate to the objectives it pursues.69In the light of all the above considerations, it must be held that, by refusing to recognise the WaarborgHolland hallmarks, the Czech Republic has failed to fulfil its obligations under Article 34 TFEU, and the remainder of the action must be dismissed. Costs 70Under Article 138(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Under the first sentence of Article 138(3), the parties are to bear their own costs where each party succeeds on some and fails on other heads. Since the Commission’s action is inadmissible in part, it must be decided that the Commission and the Czech Republic are to bear their own costs.71Pursuant to Article 140(1) of those Rules, which provides that Member States which have intervened in the proceedings are to bear their own costs, the French Republic is to be ordered to bear its own costs.On those grounds, the Court (Second Chamber) hereby: 1. Declares that, by refusing to recognise the hallmarks of the WaarborgHolland assay office, the Czech Republic has failed to fulfil its obligations under Article 34 TFEU; 2. Dismisses the action as to the remainder; 3. Orders the European Commission, the Czech Republic and the French Republic to bear their own costs. [Signatures]( *1 ) Language of the case: Czech. | 39500-53bda8e-474f | EN |
EU law protects the EU market from cosmetic products containing ingredients which have been tested on animals | 21 September 2016 ( *1 )‛Reference for a preliminary ruling — Approximation of laws — Cosmetic products — Regulation (EC) No 1223/2009 — Article 18(1)(b) — Cosmetic products containing ingredients, or a combination of ingredients, which have been the subject of animal testing ‘in order to meet the requirements of this Regulation’ — Prohibition of marketing within the European Union — Scope’In Case C‑592/14,REQUEST for a preliminary ruling under Article 267 TFEU from the High Court of Justice (England & Wales), Queen’s Bench Division (Administrative Court) (United Kingdom), made by decision of 15 December 2014, received at the Court on 19 December 2014, in the proceedings European Federation for Cosmetic Ingredients v Secretary of State for Business, Innovation and Skills, Attorney General intervening parties: Cruelty Free International, formerly British Union for the Abolition of Vivisection, European Coalition to End Animal Experiments, THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, A. Arabadjiev, J.-C. Bonichot, C.G. Fernlund (Rapporteur) and E. Regan, Judges,Advocate General: M. Bobek,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 9 December 2015,after considering the observations submitted on behalf of:—European Federation for Cosmetic Ingredients, by D. Abrahams, Barrister, and by R. Cana, and I. de Seze, avocats,Cruelty Free International, and European Coalition to End Animal Experiments, by D. Thomas, Solicitor and A. Bates, Barrister,the United Kingdom Government, by L. Barfoot, acting as Agent, and by G. Facenna QC, and J. Holmes, Barrister,the Greek Government, by S. Charitaki and A. Magrippi, acting as Agents,the French Government, by D. Colas and J. Traband, acting as Agents,the European Commission, by L. Flynn and P. Mihaylova, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 17 March 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 18(1)(b) of Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products (OJ 2009, L 342, p. 59).2The request has been made in proceedings between the European Federation for Cosmetic Ingredients (‘EFfCI’), on the one hand, and the Secretary of State for Business, Innovation and Skills (‘Secretary of State for Business’) and the Attorney General, on the other, with Cruelty Free International, formerly the British Union for the Abolition of Vivisection and the European Coalition to End Animal Experiments intervening, concerning the scope of the prohibition of marketing laid down in that provision. Legal context EU law 3Recitals 4, 38 to 42, and 45 and 50 of Regulation No 1223/2009 state:‘(4)This Regulation comprehensively harmonises the rules in the Community in order to achieve an internal market for cosmetic products while ensuring a high level of protection of human health....(38)The Protocol on protection and welfare of animals annexed to the Treaty provides that the Community and the Member States are to pay full regard to the welfare requirements of animals in the implementation of Community policies, in particular with regard to the internal market.(39)Council Directive 86/609/EEC of 24 November 1986 on the approximation of laws, regulations and administrative provisions of the Member States regarding the protection of animals used for experimental and other scientific purposes [OJ 1986 L 358, p. 1] established common rules for the use of animals for experimental purposes within the Community and laid down the conditions under which such experiments must be carried out in the territory of the Member States. In particular, Article 7 of that Directive requires that animal experiments be replaced by alternative methods, where such methods exist and are scientifically satisfactory.(40)The safety of cosmetic products and their ingredients may be ensured through the use of alternative methods which are not necessarily applicable to all uses of chemical ingredients. Therefore, the use of such methods by the whole cosmetic industry should be promoted and their adoption at Community level ensured, where such methods offer an equivalent level of protection to consumers.(41)The safety of finished cosmetic products can already be ensured on the basis of knowledge of the safety of the ingredients that they contain. Provisions prohibiting animal testing of finished cosmetic products should therefore be laid down. …(42)It will gradually become possible to ensure the safety of ingredients used in cosmetic products by using non-animal alternative methods validated at Community level, or approved as being scientifically validated, by the European Centre for the Validation of Alternative Methods (ECVAM) and with due regard to the development of validation within the Organisation for Economic Cooperation and Development (OECD). After consulting the [Scientific Committee for Consumer Safety (SCCS)] as regards the applicability of the validated alternative methods to the field of cosmetic products, the Commission should immediately publish the validated or approved methods recognised as being applicable to such ingredients. In order to achieve the highest possible degree of animal protection, a deadline should be set for the introduction of a definitive prohibition.(45)The recognition by third countries of alternative methods developed in the Community should be encouraged. In order to achieve this objective, the Commission and the Member States should take all appropriate steps to facilitate acceptance of such methods by the OECD. The Commission should also endeavour, within the framework of European Community cooperation agreements, to obtain recognition of the results of safety tests carried out in the Community using alternative methods so as to ensure that the export of cosmetic products for which such methods have been used is not hindered and to prevent or avoid third countries requiring the repetition of such tests using animals.(50)In the safety assessment of a cosmetic product it should be possible to take into account results of risk assessments that have been carried out in other relevant areas. The use of such data should be duly substantiated and justified.’4Under Article 1 of Regulation No 1223/2009, headed ‘Scope and objective’, that ‘Regulation establishes rules to be complied with by any cosmetic product made available on the market, in order to ensure the functioning of the internal market and a high level of protection of human health.’5Article 3 of that regulation, headed ‘Safety’, provides:‘A cosmetic product made available on the market shall be safe for human health when used under normal or reasonably foreseeable conditions of use, …’6Article 10 of that regulation, headed ‘Safety assessment’, lays down:‘1. In order to demonstrate that a cosmetic product complies with Article 3, the responsible person shall, prior to placing a cosmetic product on the market, ensure that the cosmetic product has undergone a safety assessment on the basis of the relevant information and that a cosmetic product safety report is set up in accordance with Annex I.The responsible person shall ensure that:(a)the intended use of the cosmetic product and the anticipated systemic exposure to individual ingredients in a final formulation are taken into account in the safety assessment;(b)an appropriate weight-of-evidence approach is used in the safety assessment for reviewing data from all existing sources;(c)the cosmetic product safety report is kept up to date in view of additional relevant information generated subsequent to placing the product on the market....’7Article 11 of Regulation No 1223/2009, headed ‘Product information file’, provides that ‘[w]hen a cosmetic product is placed on the market, the responsible person shall keep a product information file for it’ and that that file is to contain inter alia ‘the cosmetic product safety report referred to in Article 10(1)’ and ‘data on any animal testing performed by the manufacturer, his agents or suppliers, relating to the development or safety assessment of the cosmetic product or its ingredients, including any animal testing performed to meet the legislative or regulatory requirements of third countries’.8Article 18 of that regulation, headed ‘Animal testing’, reads as follows:‘1. Without prejudice to the general obligations deriving from Article 3, the following shall be prohibited:the placing on the market of cosmetic products where the final formulation, in order to meet the requirements of this Regulation, has been the subject of animal testing using a method other than an alternative method after such alternative method has been validated and adopted at Community level with due regard to the development of validation within the OECD;the placing on the market of cosmetic products containing ingredients or combinations of ingredients which, in order to meet the requirements of this Regulation, have been the subject of animal testing using a method other than an alternative method after such alternative method has been validated and adopted at Community level with due regard to the development of validation within the OECD;the performance within the Community of animal testing of finished cosmetic products in order to meet the requirements of this Regulation;(d)the performance within the Community of animal testing of ingredients or combinations of ingredients in order to meet the requirements of this Regulation, after the date on which such tests are required to be replaced by one or more validated alternative methods listed in Commission Regulation (EC) No 440/2008 of 30 May 2008 laying down test methods pursuant to Regulation (EC) No. 1907/2206 of the European Parliament and of the Council on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) [OJ 2008 L 142, p. 1] or in Annex VIII to this Regulation.2. The Commission, after consulting the [Scientific Committee for Consumer Safety (SCCS)] and the European Centre for the Validation of Alternative Methods (ECVAM) and with due regard to the development of validation within the OECD, has established timetables for the implementation of the provisions under points (a), (b) and (d) of paragraph 1, including deadlines for the phasing-out of the various tests. The timetables were made available to the public on 1 October 2004 and sent to the European Parliament and the Council. The period for implementation was limited to 11 March 2009 in relation to points (a), (b) and (d) of paragraph 1.In relation to the tests concerning repeated-dose toxicity, reproductive toxicity and toxicokinetics, for which there are no alternatives yet under consideration, the period for implementation of paragraph 1(a) and (b) shall be limited to 11 March 2013.In exceptional circumstances, where serious concerns arise as regards the safety of an existing cosmetic ingredient, a Member State may request the Commission to grant a derogation from paragraph 1. The request shall contain an evaluation of the situation and indicate the measures necessary. On this basis, the Commission may, after consulting the [Scientific Committee for Consumer Safety (SCCS)] and by means of a reasoned decision, authorise the derogation. That authorisation shall lay down the conditions associated with this derogation in terms of specific objectives, duration and reporting of the results.A derogation shall only be granted if:the ingredient is in wide use and cannot be replaced by another ingredient able to perform a similar function;the specific human health problem is substantiated and the need to conduct animal tests is justified and is supported by a detailed research protocol proposed as the basis for the evaluation.9Annex I to that regulation lists the items which must appear in the cosmetic product safety report and paragraph 8 thereof, which is included in Part A of that annex, entitled, ‘Cosmetic product safety information’, provides:‘Without prejudice to Article 18, the toxicological profile of substance contained in the cosmetic product for all relevant toxicological endpoints. …’ UK law 10Regulation 12 of the Cosmetic Products Enforcement Regulations 2013 (SI 2013/1478) provides, inter alia, that it is a criminal offence for a person to contravene the prohibitions of Article 18 of Regulation No 1223/2009.11Regulation 6 of the 2013 Regulations provides that it is the duty of the enforcement authority, in the present case the Secretary of State for Business, to enforce Regulation No 1223/2009 and provides that authority with powers to investigate and prosecute an alleged contravention of the obligations imposed by Regulation No 1223/2009. The dispute in the main proceedings and the questions referred for a preliminary ruling 12The EFfCI is a trade association representing the manufacturers within the European Union of ingredients for use in cosmetic products.13Members of that association have conducted animal testing outside the EU in order to test the safety to human health of certain cosmetic ingredients. The data from those tests was required for the use of those ingredients in cosmetic products intended to be sold in Japan and China.14Those ingredients have not yet been incorporated in the cosmetic products placed on the EU market, since the scope of the prohibition on animal testing laid down in Article 18(l)(b) of Regulation No 1223/2009 was uncertain.15Therefore, the EFfCI brought an action for judicial review before the referring court on the scope of that prohibition in order to determine the possible exposure of the three companies concerned to criminal penalties if they were to place on the UK market cosmetic products containing ingredients that have been the subject of animal testing outside the Union.16Before that court, the EFfCI claimed that the prohibition set out in Article 18(1)(b) of Regulation No 1223/2009 applies only where the animal testing at issue was carried out in order to meet one or more of the requirements of that regulation. Accordingly, where those tests have been performed outside the EU in order to meet the legislative or regulatory requirements of a third country, it cannot be considered that the ingredients have been tested ‘in order to meet the requirements of [Regulation No 1223/2009].’17In contrast, the Secretary of State for Business and the Attorney General contended that Article 18(1)(b) of Regulation No 1223/2009 must be interpreted as being a prohibition of placing on the market also cosmetic products containing ingredients that have been tested on animals outside the EU in order to meet the requirements of legislation of a third country where the latter is analogous to Regulation No 1223/2009.18Cruelty Free International and the European Coalition to End Animal Experiments maintained, referring in particular to points 84 to 86 of Advocate General Geelhoed’s Opinion in France v Parliament and Council (C‑244/03, EU:C:2005:178), that that provision is intended to prohibit the marketing of cosmetic products containing any ingredient that has been the subject of animal testing, regardless of whether or not it is necessary to use the data obtained from that testing in third countries in order to prove that the product is safe for human health in accordance with Regulation No 1223/2009.19The referring court considers that the scope of Article 18(1)(b) of Regulation No 1223/2009, and in particular of the words ‘in order to meet the requirements of this Regulation’, raises a real issue of law.20In those circumstances, the High Court of Justice (England and Wales), Queen’s Bench Division (Administrative Court) (United Kingdom), decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is Article 18(l)(b) of Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products to be interpreted as prohibiting the placing on the Community market of cosmetic products containing ingredients, or a combination of ingredients, which have been the subject of animal testing where that testing was performed outside the Union to meet the legislative or regulatory requirements of third countries in order to market cosmetic products containing those ingredients in those countries?(2)Does the answer to question (1) depend on:whether the safety assessment carried out by Article 10 of that Regulation to demonstrate that the cosmetic product is safe for human health prior to it being made available on the Community market would involve the use of data resulting from the animal testing performed outside the Union;whether the legislative or regulatory requirements of the third countries relate to the safety of cosmetic products;whether it was reasonably foreseeable, at the time that the testing of an ingredient on animals was performed outside the Union, that any person might seek to place a cosmetic product including that ingredient at some stage on the Community market; and/orany other factor, and if so, what factor?’ The requests to reopen the oral procedure 21By letters received at the Court Registry on 28 April and 6 June 2016, respectively, the EFfCI and the French Government requested the reopening of the oral procedure, on the grounds that the Advocate General’s Opinion is based on considerations that have not been debated between the parties. In addition, the Opinion went beyond the scope of the questions referred, given that the referring court had expressly held that the animal testing carried out for the purposes of Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC (OJ 2006 L 396, p. 1), did not warrant a reference for a preliminary ruling.22It should be borne in mind that the Statute of the Court of Justice of the European Union and the Rules of Procedure of the Court of Justice make no provision for the interested parties referred to in Article 23 of that Statute to submit observations in response to the Advocate General’s Opinion (see, inter alia, judgment of 9 June 2016, Pesce and Others, C‑78/16 and C‑79/16, EU:C:2016:428, paragraph 24).23Under the second paragraph of Article 252 TFEU, it is to be the duty of the Advocate-General, acting with complete impartiality and independence, to make reasoned submissions on cases which, in accordance with the Statute of the Court of Justice of the European Union, require his involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (judgment of 9 June 2016, Pesce and Others, C‑78/16 and C‑79/16, EU:C:2016:428, paragraph 24).24Consequently, a party’s disagreement with the Opinion of the Advocate General, irrespective of the questions which he examines in his Opinion, cannot in itself constitute a ground justifying the reopening of the oral procedure (judgment of 9 June 2016, Pesce and Others, C‑78/16 and C‑79/16, EU:C:2016:428, paragraph 24).25That said, it should be recalled that the Court, in accordance with Article 83 of its Rules of Procedure, may at any time, after hearing the Advocate General, order the reopening of the oral procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument that has not been debated between the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.26In the present case, the Court, having heard the Advocate General, takes the view that it has all the information necessary to answer the questions referred and that that information has been debated between the parties, in particular during the hearing on 9 December 2015.27Therefore, the Court refuses the requests to reopen the oral procedure. Consideration of the questions referred 28By its two questions, which should be examined together, the referring court asks, in essence, whether and, if so, in what circumstances Article 18(1)(b) of Regulation No 1223/2009 must be interpreted as prohibiting the placing on the EU market of cosmetic products containing some ingredients that have been tested on animals outside the EU in order to market cosmetic products in third countries.29In order to answer those questions, it is appropriate, in particular, to examine whether the words ‘in order to meet the requirements of [Regulation No 1223/2009]’, appearing in Article 18(1)(b) of that regulation, may cover such animal testing as that at issue in the main proceedings.30In that regard, it should be noted that, according to their usual meaning in everyday language, those words suggest a reference to the intention of complying with the requirements of Regulation No 1223/2009, which would have been a reason for the testing at issue. From a purely literal point of view, those words may accordingly be interpreted as requiring evidence to be established that the person responsible for that testing, during the period when it was carried out, was motivated by the intention of meeting the requirements of that regulation. According to such an interpretation, animal testing allegedly motivated by a desire to comply with the regulatory requirements of third countries concerning the safety of cosmetic products, such as those at issue in the main proceedings, does not bring into play the prohibition set out in that provision.31However, it is settled case-law that, when a provision of EU law is interpreted, 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, judgment of 10 July 2014, D. and G., C‑358/13 and C‑181/14, EU:C:2014:2060, paragraph 32 and the case-law cited).32In that regard, it should be recalled that, according to recital 4 of Regulation No 1223/2009, the latter is intended comprehensively to harmonise the rules in the European Union in order to achieve an internal market for cosmetic products while ensuring a high level of protection of human health. Accordingly, it follows from Article 1 of that regulation that it establishes rules that must be met by any cosmetic product placed on the EU market.33As regards the rules ensuring a high level of protection of human health, it is clear from Articles 3, 10 and 11 of that regulation that such a product is to be safe for human health, that its safety must be assessed on the basis of the relevant information and that the safety report must be drafted and included in the cosmetic product information file.34Regulation No 1223/2009 also contains rules which intend to establish a level of animal protection in the cosmetics sector exceeding that applicable to other sectors. In fact, it follows from an overall reading of recitals 38 to 42, and 45 and 50 thereof that the EU legislature sought to take into account the welfare requirements of animals under that regulation, in particular by actively promoting use of non-animal alternative methods to ensure the safety of products in the cosmetics sector, which is more extensive than in other sectors. In particular, it follows from recital 42 to that regulation that it will gradually become possible to ensure the safety of ingredients used in cosmetic products by using such methods, and that, ‘[i]n order to achieve the highest possible degree of animal protection, a deadline should be set for the introduction of a definitive prohibition’ of other methods.35Accordingly, Regulation No 1223/2009 having the objective of establishing the conditions for access to the EU market for cosmetics products and ensuring a high level of protection of human health, whilst ensuring the well-being of animals by prohibiting animal testing in the sector of those products, Article 18(1)(b) of that regulation must be understood to make that access conditional upon compliance with the prohibition of animal testing.36In that regard, it should be noted, first, that it is in the context of the safety assessment of a cosmetic product required by Article 10 of Regulation No 1223/2009 that animal testing may be considered. Under Article 10(1)(b), the safety assessment of a cosmetic product is to be ensured using an appropriate weight-of-evidence approach for reviewing data from all existing sources. However, paragraph 8 of Annex I to that regulation provides that the toxicological profile, integral to the cosmetic product safety report, must be established without prejudice to Article 18 of that regulation.37The results of animal tests that are not included in that report cannot, therefore, be regarded as having been carried out ‘in order to meet the requirements of [Regulation No 1223/2009]’, within the meaning of Article 18(1)(b) of that regulation. In fact, where the cosmetic product safety assessment can be ensured without those results, access to EU market for that product is not dependent on such testing.38It should also be stated that, as the Advocate General noted in points 94, 95 and 98 of his Opinion, the mere inclusion in the cosmetic product information file of data resulting from animal testing is insufficient to trigger the prohibition laid down in Article 18(1)(b) of Regulation No 1223/2009. In fact, it follows from Article 11 of that regulation that the data on any animal testing performed inter alia by the manufacturer to meet the legislative or regulatory requirements of third countries must be included in that file.39By contrast, the fact of having relied, in the cosmetic product safety report, upon the results of animal testing concerning a cosmetic ingredient in order to demonstrate the safety of that ingredient to human health must be regarded as sufficient to establish that that testing had been carried out to meet the requirements of Regulation No 1223/2009 for obtaining access to the EU market.40It is irrelevant in that regard that the animal testing was required in order to market cosmetic products in third countries.41Second, it should be noted that Article 18(1)(b) of Regulation No 1223/2009 makes no distinction depending on where the animal testing at issue was carried out. The introduction, by interpretation, of such a distinction would be contrary to the objective relating to animal protection pursued by Regulation No 1223/2009 in general and by Article 18 thereof in particular.42In fact, as has been noted in paragraph 34 of the present judgment, that regulation seeks actively to promote the use of non-animal alternative methods to ensure the safety of products in the cosmetics sector, which is broader than in other sectors, in particular by phasing out animal testing in the cosmetics sector. In that regard, it should be noted that the attainment of that objective would be seriously compromised if it were possible to circumvent the prohibitions laid down in Article 18(1) of Regulation No 1223/2009, by carrying out the prohibited animal testing outside the European Union.43Therefore, read in the light of its context and objectives, that provision must be interpreted as meaning the results of animal tests, carried out outside the European Union in order to market cosmetic products in third countries, the results of which are used to prove the safety of those products for the purpose of their being placed on the EU market, must be regarded as having been carried out ‘in order to meet the requirements [of that regulation]’.44The prohibition of marketing laid down in Article 18(1)(b) of Regulation No 1223/2009 may thus apply, provided that the animal testing at issue in the main proceedings has been carried out after the deadlines for the phasing out of the various tests, provided for in Article 18(2) of that regulation, which it is for the referring court to determine.45It follows from all the foregoing considerations that the answer to the questions referred is that Article 18(1)(b) of Regulation No 1223/2009 must be interpreted as meaning that it may prohibit the placing on the EU market of cosmetic products containing some ingredients that have been tested on animals outside the EU, in order to market cosmetic products in third countries, if the resulting data is used to prove the safety of those products for the purposes of placing them on the EU market. Costs 46Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: Article 18(1)(b) of Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products must be interpreted as meaning that it may prohibit the placing on the European Union market of cosmetic products containing some ingredients that have been tested on animals outside the European Union, in order to market cosmetic products in third countries, if the resulting data is used to prove the safety of those products for the purposes of placing them on the EU market. [Signatures]( *1 ) Language of the case: English. | 6d307-44027af-4b8e | EN |
The Court of Justice confirms the dismissal of the actions for annulment and dismisses on the merits the actions for compensation concerning the restructuring of the Cypriot banking sector | 20 September 2016 ( *1 )[Text rectified by order of 20 December 2017](Appeals — Stability support programme for the Republic of Cyprus — Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) — Duties of the European Commission and the European Central Bank — Non-contractual liability of the European Union — Second paragraph of Article 340 TFEU — Conditions — Obligation to ensure that the Memorandum of Understanding is consistent with EU law)In Joined Cases C‑8/15 P to C‑10/15 P,THREE APPEALS under Article 56 of the Statute of the Court of Justice of the European, lodged on 9 January 2015, Ledra Advertising Ltd, established in Nicosia (Cyprus) (C‑8/15 P), Andreas Eleftheriou, residing in Limassol (Cyprus) (C‑9/15 P), Eleni Eleftheriou, residing in Limassol (C‑9/15 P), Lilia Papachristofi, residing in Limassol (C‑9/15 P), Christos Theophilou, residing in Nicosia (C‑10/15 P), Eleni Theophilou, residing in Nicosia (C‑10/15 P),represented by A. Paschalides, dikigoros, A. Paschalidou, Barrister, and A. Riza QC, instructed by C. Paschalides, Solicitor,appellants,the other parties to the proceedings being: European Commission, represented by J.-P. Keppenne and M. Konstantinidis, acting as Agents, with an address for service in Luxembourg,and[As rectified by order of 20 December 2017] European Central Bank (ECB), represented by G. Várhelyi, K. Laurinavičius and O. Heinz, acting as Agents, and H.-G. Kamann, Rechtsanwalt,defendants at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz, J.L. da Cruz Vilaça, A. Arabadjiev (Rapporteur) and D. Šváby, Presidents of Chambers, A. Rosas, E. Juhász, M. Berger, A. Prechal, E. Jarašiūnas, C.G. Fernlund, M. Vilaras and E. Regan, Judges,Advocate General: N. Wahl,Registrar: I. Illéssy, Administrator,having regard to the written procedure and further to the hearing on 2 February 2016,after hearing the Opinion of the Advocate General at the sitting on 21 April 2016,gives the following Judgment 1By their appeals, Ledra Advertising Ltd, in Case C‑8/15 P, Andreas Eleftheriou, Eleni Eleftheriou and Lilia Papachristofi, in Case C‑9/15 P, and Christos Theophilou and Eleni Theophilou, in Case C‑10/15 P, ask the Court to set aside, respectively, the orders of the General Court of the European Union of 10 November 2014, Ledra Advertising v Commission and ECB (T‑289/13, EU:T:2014:981), of 10 November 2014, Eleftheriou and Papachristofi v Commission and ECB (T‑291/13, not published, EU:T:2014:978), and of 10 November 2014, Theophilou v Commission and ECB (T‑293/13, not published, EU:T:2014:979) (collectively, ‘the orders under appeal’), by which the General Court declared in part inadmissible and in part unfounded their actions seeking, first, annulment of paragraphs 1.23 to 1.27 of the Memorandum of Understanding on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) on 26 April 2013 (‘the Memorandum of Understanding of 26 April 2013’) and, secondly, compensation for the damage pleaded by the appellants resulting from the inclusion of those paragraphs in the Memorandum of Understanding and an infringement of the European Commission’s supervisory obligation. Legal context ESM Treaty 2On 2 February 2012, the Treaty establishing the European Stability Mechanism was concluded in Brussels (Belgium) between the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Cyprus, the Grand Duchy of Luxembourg, Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland (‘the ESM Treaty’). The ESM Treaty entered into force on 27 September 2012.3Recital 1 of the ESM Treaty is worded as follows:‘The European Council agreed on 17 December 2010 on the need for euro area Member States to establish a permanent stability mechanism. This European Stability Mechanism (“ESM”) will assume the tasks currently fulfilled by the European Financial Stability Facility (“EFSF”) and the European Financial Stabilisation Mechanism (“EFSM”) in providing, where needed, financial assistance to euro area Member States.’4Under Articles 1, 2 and 32(2) of the ESM Treaty, the Contracting Parties, that is to say, the Member States whose currency is the euro, established among themselves an international financial institution, the European Stability Mechanism (ESM), which has legal personality.5Article 4(1), (3) and (4), first subparagraph, of the ESM Treaty states:‘1. The ESM shall have a Board of Governors and a Board of Directors, as well as a Managing Director and other dedicated staff as may be considered necessary.…3. The adoption of a decision by mutual agreement requires the unanimity of the members participating in the vote. Abstentions do not prevent the adoption of a decision by mutual agreement.4. By way of derogation from paragraph 3, an emergency voting procedure shall be used where the Commission and the [European Central Bank (ECB)] both conclude that a failure to urgently adopt a decision to grant or implement financial assistance, as defined in Articles 13 to 18, would threaten the economic and financial sustainability of the euro area. …’6Article 5(3) of the ESM Treaty provides that ‘the Member of the European Commission in charge of economic and monetary affairs and the President of the [European Central Bank], as well as the President of the Eurogroup (if he or she is not the Chairperson or a Governor) may participate in the meetings of the Board of Governors [of the ESM] as observers’.7Article 6(2) of the ESM Treaty states that ‘the Member of the European Commission in charge of economic and monetary affairs and the President of the ECB may appoint one observer each [to the ESM’s Board of Directors]’.8Article 12 of the ESM Treaty defines the principles governing the provision of stability support and states in paragraph 1 as follows:‘If indispensable to safeguard the financial stability of the euro area as a whole and of its Member States, the ESM may provide stability support to an ESM Member subject to strict conditionality, appropriate to the financial assistance instrument chosen. Such conditionality may range from a macro-economic adjustment programme to continuous respect of pre-established eligibility conditions.’9The procedure for granting stability support to an ESM Member is described in Article 13 of the ESM Treaty as follows:‘1. An ESM Member may address a request for stability support to the Chairperson of the Board of Governors. Such a request shall indicate the financial assistance instrument(s) to be considered. On receipt of such a request, the Chairperson of the Board of Governors shall entrust the European Commission, in liaison with the ECB, with the following tasks:(a)to assess the existence of a risk to the financial stability of the euro area as a whole or of its Member States, unless the ECB has already submitted an analysis under Article 18(2);(b)to assess whether public debt is sustainable. Wherever appropriate and possible, such an assessment is expected to be conducted together with the [International Monetary Fund (IMF)];(c)to assess the actual or potential financing needs of the ESM Member concerned.2. On the basis of the request of the ESM Member and the assessment referred to in paragraph 1, the Board of Governors may decide to grant, in principle, stability support to the ESM Member concerned in the form of a financial assistance facility.3. If a decision pursuant to paragraph 2 is adopted, the Board of Governors shall entrust the European Commission — in liaison with the ECB and, wherever possible, together with the IMF — with the task of negotiating, with the ESM Member concerned, a memorandum of understanding (an “MoU”) detailing the conditionality attached to the financial assistance facility. The content of the MoU shall reflect the severity of the weaknesses to be addressed and the financial assistance instrument chosen. In parallel, the Managing Director of the ESM shall prepare a proposal for a financial assistance facility agreement, including the financial terms and conditions and the choice of instruments, to be adopted by the Board of Governors.The MoU shall be fully consistent with the measures of economic policy coordination provided for in the [FEU Treaty], in particular with any act of [EU] law, including any opinion, warning, recommendation or decision addressed to the ESM Member concerned.4. The European Commission shall sign the MoU on behalf of the ESM, subject to prior compliance with the conditions set out in paragraph 3 and approval by the Board of Governors.5. The Board of Directors shall approve the financial assistance facility agreement detailing the financial aspects of the stability support to be granted and, where applicable, the disbursement of the first tranche of the assistance.7. The European Commission — in liaison with the ECB and, wherever possible, together with the IMF — shall be entrusted with monitoring compliance with the conditionality attached to the financial assistance facility.’ The Memorandum of Understanding of 26 April 2013 10Under the heading ‘Restructuring and resolution of Cyprus Popular Bank and Bank of Cyprus’, paragraphs 1.23 to 1.27 of the Memorandum of Understanding of 26 April 2013 (‘the disputed paragraphs’) are worded as follows:‘1.23. The accounting and economic value assessment mentioned has revealed that the two largest banks of Cyprus were insolvent. To address this situation the government has implemented a far reaching resolution and restructuring plan. In order to prevent the build-up of future imbalances and to restore the viability of the sector, while preserving competition, a fourfold strategy has been adopted which does not involve taxpayers’ money.1.24. First, all Greek-related assets (including shipping loans) and liabilities were carved-out, estimated in the adverse scenario respectively at EUR 16.4 and 15.0 billion. The Greek assets and liabilities were acquired by Piraeus Bank, the restructuring of which will be dealt with by the Greek authorities. The carve-out was based on an agreement signed on 26 March 2013. With the book value of the assets at EUR 19.2 billion, the carve-out has substantially reduced the cross exposures between Greece and Cyprus.1.25. With respect to the [United Kingdom] branch of [Cyprus Popular Bank Public Co. Ltd; “Cyprus Popular Bank”], all the deposits were transferred to the [United Kingdom] subsidiary of [Trapeza Kyprou Dimosia Etaireia Ltd; “Bank of Cyprus”]. The associated assets were folded into … Bank of Cyprus.1.26. Second, Bank of Cyprus is taking over via a purchase and assumption procedure the Cypriot assets of Cyprus Popular Bank at fair value, as well as the insured deposits and Emergency Liquidity Assistance exposure at nominal value. The uninsured deposits of Cyprus Popular Bank will remain in the legacy entity. The value of the transferred assets will be higher than the transferred liabilities with the difference corresponding to the recapitalisation of Bank of Cyprus by Cyprus Popular Bank amounting to 9% of the risk weighted assets transferred. Bank of Cyprus is recapitalised to reach a core tier one ratio of 9% under the adverse scenario of the stress test by the end of the programme which should help restoring confidence and normalising funding conditions. The conversion of 37.5% of the uninsured deposits in Bank of Cyprus into class A shares with full voting and dividend rights provides the largest part of the capital needs with additional equity contributions from the legacy entity of Cyprus Popular Bank. Part of the remaining uninsured deposits of Bank of Cyprus will be temporarily frozen.1.27. Third, to ensure that the capitalisation targets are met, a more detailed and updated independent valuation of the assets of Bank of Cyprus and Cyprus Popular Bank will be completed, as required by the bank resolution framework, by end June 2013. To this end, no later than mid-April 2013, the terms of reference of the independent valuation exercise will be agreed in consultation with the [European Commission], ECB, and IMF. Following that valuation, and if required, an additional conversion of uninsured deposits into class A shares will be undertaken to ensure that the core tier one target of 9% under stress by end-programme can be met. Should the bank be found to be overcapitalised relative to the target, a share-reversal process will be undertaken to refund depositors by the amount of over-capitalisation.’ National law 11Under Articles 3(1) and 5(1) of the Peri exiyiansis pistotikon kai allon idrimaton nomos (Law on the resolution of credit and other institutions) of 22 March 2013 (EE, Annex I(I), No 4379, 22.3.2013; ‘the Law of 22 March 2013’), the Kentriki Trapeza tis Kyprou (Central Bank of Cyprus; ‘the CBC’) was entrusted, together with the Ypourgeio Oikonomikon (Ministry of Finance), with the resolution of the institutions covered by that law. To that end, Article 12(1) of the Law of 22 March 2013 provides that the CBC may, by decree, restructure the debts and obligations of an institution under resolution, including by means of the reduction, modification, rescheduling or novation of the principal or outstanding amount of any type of claim, existing or future, against that institution, or by means of a conversion of debt instruments or obligations into equity. In addition, Article 12(1) provides that ‘insured deposits’, within the meaning of the fifth paragraph of Article 2 of the Law of 22 March 2013, are to be excluded from those measures. It is common ground between the parties that the deposits in question are deposits of up to EUR 100000.12The Peri diasosis me idia mesa tis Trapezas Kyprou Dimosias Etaireias Ltd Diatagma tou 2013, Kanonistiki Dioikitiki Praxi No. 103 (Decree of 2013 on the bailing-in of Trapeza Kyprou Dimosia Etaireia Ltd, Regulatory Administrative Act No 103) (EE, Annex III(I), No 4645, 29.3.2013, p. 769; ‘Decree No 103’) provides for the recapitalisation of Bank of Cyprus — at the expense, in particular, of its uninsured depositors, its shareholders and its bondholders — in order to enable it to continue to provide banking services. Accordingly, uninsured deposits were converted into Bank of Cyprus shares (37.5% of each uninsured deposit), into securities which were convertible by Bank of Cyprus either into shares or into deposits (22.5% of each uninsured deposit), and into securities which were convertible into deposits by the CBC (40% of each uninsured deposit). Decree No 103 entered into force at 6.00 a.m. on 29 March 2013, in accordance with Article 10 thereof.13Article 2, in conjunction with Article 5, of the Peri tis Polisis Orismenon Ergasion tis Cyprus Popular Bank Public Co. Ltd Diatagma tou 2013, Kanonistiki Dioikitiki Praxi No. 104 (Decree of 2013 on the sale of certain operations of Cyprus Popular Bank Public Co. Ltd, Regulatory Administrative Act No 104) (EE, Annex III(I), No 4645, 29.3.2013, p. 781; ‘Decree No 104’) provides for the transfer, at 6.10 a.m. on 29 March 2013, of certain assets and liabilities from Cyprus Popular Bank to Bank of Cyprus, including deposits of up to EUR 100000. Deposits over EUR 100000 remained with Cyprus Popular Bank, pending its liquidation. Background to the disputes 14During the first few months of 2012, certain banks established in Cyprus, including Cyprus Popular Bank and Bank of Cyprus, encountered financial difficulties. The Republic of Cyprus thus considered it necessary for them to be recapitalised and submitted a request to the President of the Eurogroup for financial assistance from the EFSF or the ESM.15By a statement of 27 June 2012, the Eurogroup indicated that the financial assistance requested would be provided by the EFSF or the ESM in the framework of a macro-economic adjustment programme to be set out in the form of a memorandum of understanding which would be negotiated by the Commission, together with the ECB and the IMF, on the one hand, and by the Cypriot authorities, on the other.16The Republic of Cyprus and the other Member States whose currency is the euro reached a political agreement on a draft memorandum of understanding in March 2013. By a statement of 16 March 2013, the Eurogroup welcomed that agreement and referred to some of the adjustment measures envisaged, including the introduction of a levy on bank deposits. The Eurogroup indicated that, against that background, it considered that — in principle — financial assistance was warranted in order to safeguard financial stability in Cyprus and the euro area, and called upon the relevant parties to accelerate the ongoing negotiations.17On 18 March 2013, the Republic of Cyprus declared a bank holiday on 19 and 20 March 2013. The Cypriot authorities decided to extend the bank holiday until 28 March 2013 in order to avoid a run on the banks.18On 19 March 2013, the Cypriot Parliament rejected the Cypriot Government’s bill relating to the introduction of a levy on all bank deposits in Cyprus. The Cypriot Parliament then adopted the Law of 22 March 2013.19By a statement of 25 March 2013, the Eurogroup indicated that it had reached an agreement with the Cypriot authorities on the key elements of a future macro-economic adjustment programme, which was supported by all the Member States whose currency is the euro, as well as by the Commission, the ECB and the IMF. In addition, the Eurogroup welcomed the plans for the restructuring of the financial sector that were mentioned in the annex to that statement.20On 25 March 2013, the Governor of the CBC put Bank of Cyprus and Cyprus Popular Bank into resolution. On 29 March 2013, Decrees No 103 and No 104 were published for that purpose on the basis of the Law of 22 March 2013.21When Decrees No 103 and No 104 entered into force, the appellants had funds on deposit at Bank of Cyprus or Cyprus Popular Bank. The application of the measures laid down by those decrees resulted in a substantial reduction in the value of those deposits, the precise figures for which were supplied by the appellants.22At its meeting on 24 April 2013, the ESM’s Board of Governors:–decided to grant stability support to the Republic of Cyprus in the form of a financial assistance facility, in accordance with the proposal by the Managing Director of the ESM;approved the draft memorandum of understanding negotiated by the Commission, in liaison with the ECB and the IMF, and by the Republic of Cyprus;mandated the Commission to sign that memorandum on behalf of the ESM.23The Memorandum of Understanding of 26 April 2013 was signed by the Minister for Finance of the Republic of Cyprus, by the Governor of the CBC and by O. Rehn, Vice-President of the Commission, on behalf of the ESM.24On 8 May 2013, the ESM’s Board of Directors approved the agreement relating to the financial assistance facility and a proposal concerning the terms of payment of a first tranche of aid to the Republic of Cyprus. That tranche was divided into two disbursements, paid on 13 May 2013 (EUR 2 billion) and 26 June 2013 (EUR 1 billion), respectively. A second tranche of aid, amounting to roughly EUR 1.5 billion, was disbursed on 27 September 2013. The proceedings before the General Court and the orders under appeal 25By applications lodged at the Registry of the General Court on 24 May 2013, the applicants brought three actions claiming that the General Court should:order the Commission and the ECB to pay them compensation equivalent to the diminution in value of their respective deposits;‘further and/or alternatively’ annul the disputed paragraphs;consider the actions as a matter of urgency and, pending such consideration, adopt the ‘interim measures … necessary under Article [279 TFEU] to preserve [their] position without in any way affecting the stabilisation assistance provided to [the Republic of Cyprus]’.26By separate documents, lodged at the Court Registry on 24 September and 1 October 2013 respectively, the Commission and the ECB raised objections of inadmissibility under Article 114 of the Rules of Procedure of the General Court.27By the orders under appeal, the General Court dismissed the actions in their entirety as in part inadmissible and in part manifestly lacking any foundation in law. Forms of order sought 28The appellants claim that the Court should:set aside the orders under appeal in respect of the first two heads of claim at first instance, namely the claim for payment of compensation and/or the claim seeking annulment of the disputed paragraphs;refer the cases back to the General Court.29The Commission and the ECB contend that the Court should:dismiss the appeals;order the appellants to pay the costs.30By decision of the President of the Court of 21 August 2015, Cases C‑8/15 P to C‑10/15 P were joined for the purposes of the oral procedure and judgment. The appeals 31The appellants put forward in support of their appeals a plea alleging errors committed by the General Court when assessing the conditions under which the European Union may incur non-contractual liability.32The Commission and the ECB contend that the appeals are inadmissible and that, in any event, the plea relied upon in support of the appeals must be dismissed as unfounded. Admissibility 33The Commission and the ECB plead that the appeals are inadmissible on the grounds that the appellants confine themselves essentially to reproducing the pleas and arguments which they have already submitted to the General Court and that the appellants contest the factual assessments made by the General Court regarding the various pieces of evidence adduced.34In that regard, it must be borne in mind that, under Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, an appeal is limited to points of law and must be based on the grounds of lack of competence of the General Court, of a breach of procedure before it which adversely affects the interests of the appellant, or of infringement of EU law by the General Court (see, inter alia, judgment of 4 September 2014, Spain v Commission, C‑192/13 P, EU:C:2014:2156, paragraph 42 and the case-law cited).35Furthermore, it follows from Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice and also from Articles 168(1)(d) and 169(2) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal (see, inter alia, judgments of 4 July 2000, Bergaderm and Goupil v Commission, C‑352/98 P, EU:C:2000:361, paragraph 34, and of 4 September 2014, Spain v Commission, C‑192/13 P, EU:C:2014:2156, paragraph 43).36In particular, under Article 169(2) of the Rules of Procedure of the Court of Justice, the pleas in law and legal arguments relied on must identify precisely those points in the grounds of the decision of the General Court which are contested.37Thus, where an appeal merely repeats or reproduces verbatim the pleas in law and arguments submitted to the General Court, including those based on facts expressly rejected by that Court, it fails to satisfy the requirement to state reasons under those provisions. Such an appeal amounts in reality to no more than a request for re-examination of the application submitted to the General Court, a matter which falls outside the jurisdiction of the Court of Justice (see judgment of 4 September 2014, Spain v Commission, C‑192/13 P, EU:C:2014:2156, paragraph 44 and the case-law cited).38However, provided that an appellant challenges the interpretation or application of EU law by the General Court, the points of law examined at first instance may be discussed again in the course of an appeal. If an appellant could not thus base his appeal on pleas in law and arguments already relied on before the General Court, an appeal would be deprived of part of its purpose (see judgment of 4 September 2014, Spain v Commission, C‑192/13 P, EU:C:2014:2156, paragraph 45 and the case-law cited).39Here, the appellants seek, by their plea, to demonstrate that the orders under appeal fail to state grounds, or state insufficient grounds, and to put in issue the answer which the General Court expressly gave to questions of law, questions which can be the subject matter of review by the Court of Justice on appeal.40Furthermore, whilst it is true that the structure of the arguments set out by the appellants in their appeals lacks rigour, it must, however, be found that, in accordance with Article 169(2) of the Rules of Procedure of the Court of Justice, the points in the grounds of the orders under appeal which are contested and the legal arguments enabling the Court to carry out its review of legality are identified there.41It follows that the appeals are admissible. Substance Arguments of the appellants 42The appellants complain that the General Court erred in law in simply holding, in paragraph 45 of the orders under appeal, that the duties conferred on the Commission and the ECB do not entail the exercise of any power to make decisions of their own. In so doing, the General Court failed to apply Article 13(4) of the ESM Treaty by disregarding the fact that the Commission signed the Memorandum of Understanding of 26 April 2013 although it contains an unlawful condition. Thus, it is the Commission and the ECB that are truly responsible for the bail-in of the Cypriot banks concerned.43In this connection, the appellants state that they had contended before the General Court that the effective cause of the diminution in value of their deposits was the conditions attached to the financial assistance facility provided to the Republic of Cyprus and the process by which those conditions were required by the Commission and the ECB. The Republic of Cyprus was compelled by the Commission and the ECB to adopt Decrees No 103 and No 104, under the aegis of officials from those institutions who intervened as a matter of urgency for that purpose. The appellants explain in this regard that the Republic of Cyprus had submitted a request for a financial assistance facility in order to recapitalise Cyprus Popular Bank and Bank of Cyprus and not to put them into resolution by means of the premature use of a bail-in tool. According to the appellants, the primary position of the Commission and the ECB was, by contrast, that recourse should be had to that tool.44The appellants complain that the General Court did not reply to their arguments seeking to demonstrate the decisive role played by those institutions in the context of the adoption of the Memorandum of Understanding of 26 April 2013 and, therefore, in the bringing about of the financial loss linked to the recapitalisation of Bank of Cyprus and the resolution of Cyprus Popular Bank.45The appellants also submit that the General Court erred in law when examining their argument that the Commission failed to ensure that the Memorandum of Understanding of 26 April 2013 was in conformity with EU law.46The appellants thus complain that the General Court did not take appropriate account of the Commission’s alleged inaction when, according to paragraph 164 of the judgment of 27 November 2012, Pringle (C‑370/12, EU:C:2012:756), the tasks allocated to the Commission by the ESM Treaty enable it, as provided in Article 13(3) and (4) thereof, to ensure that the memoranda of understanding concluded by the ESM are consistent with EU law and, according to paragraph 174 of that judgment, under Article 13(3) of the ESM Treaty the memorandum of understanding which is to be negotiated with the Member State requesting stability support must be fully consistent with EU law. Thus, the Court of Justice stated that the conditionality attached to the financial assistance facility must be consistent with EU law.47Application of a bail-in such as that set out in the disputed paragraphs constitutes a flagrant breach of the right to property, contrary to Article 17(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’) and Article 1 of Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950.48The Commission and the ECB dispute the merits of the appellants’ arguments. Findings of the Court 49By their plea, the appellants call into question the General Court’s assessment concerning the role of the Commission and the ECB in the adoption of the Memorandum of Understanding of 26 April 2013. They submit in particular that those institutions are the true authors of the bail-in implemented in Cyprus and that the General Court erred in law when examining their argument that the Commission failed to ensure that the Memorandum of Understanding of 26 April 2013 was in conformity with EU law.50This plea relates, first, to paragraphs 44 to 47 of the orders under appeal, in which the General Court stated that the adoption of the Memorandum of Understanding of 26 April 2013 did not originate with the Commission and the ECB, and therefore declared that it did not have jurisdiction to rule on the actions for compensation in so far as they were based on the illegality of the disputed paragraphs. The plea relates, secondly, to paragraphs 48 to 54 of the orders under appeal, in which the General Court held, in essence, that the appellants had not established that the damage they claim to have suffered was caused by the infringement by the Commission of an alleged obligation to ensure that the Memorandum of Understanding of 26 April 2013 was in conformity with EU law.51The General Court noted, in paragraph 44 of the orders under appeal, that the Memorandum of Understanding of 26 April 2013 was adopted jointly by the ESM and the Republic of Cyprus and that, as is apparent from Article 13(4) of the ESM Treaty, the Commission signed it only on behalf of the ESM. Then, in reliance upon paragraph 161 of the judgment of 27 November 2012, Pringle (C‑370/12, EU:C:2012:756), the General Court pointed out, in paragraph 45 of the orders, that, whilst the ESM Treaty entrusts the Commission and the ECB with certain tasks relating to the implementation of the objectives of that Treaty, the duties conferred on the Commission and the ECB within the ESM Treaty do not entail any power to make decisions of their own and, moreover, the activities pursued by those two institutions within the ESM Treaty commit the ESM alone.52It should be recalled that, as is apparent from the statement by the Eurogroup of 27 June 2012, the Commission and the ECB were entrusted with the task of negotiating with the Cypriot authorities a macro-economic adjustment programme to be set out in the form of a memorandum of understanding. When the Commission and the ECB participated in the negotiations with the Cypriot authorities, provided their technical expertise, gave advice and provided guidance, they acted within the limits of the powers granted to them by Article 13(3) of the ESM Treaty. Participation of the Commission and the ECB, as envisaged by that provision, in the procedure resulting in the signature of the Memorandum of Understanding of 26 April 2013 does not enable the latter to be classified as an act that can be imputed to them.53As the Court pointed out in paragraph 161 of the judgment of 27 November 2012, Pringle (C‑370/12, EU:C:2012:756), the duties conferred on the Commission and the ECB within the ESM Treaty, important as they are, do not entail any power to make decisions of their own. Furthermore, the activities pursued by those two institutions within the ESM Treaty commit the ESM alone.54In addition, as the Advocate General has observed in point 53 of his Opinion, the fact that one or more institutions of the European Union may play a certain role within the ESM framework does not alter the nature of the acts of the ESM, which fall outside the EU legal order.55However, whilst such a finding is liable to have an effect in relation to the conditions governing the admissibility of an action for annulment that may be brought on the basis of Article 263 TFEU, it cannot prevent unlawful conduct linked, as the case may be, to the adoption of a memorandum of understanding on behalf of the ESM from being raised against the Commission and the ECB in an action for compensation under Article 268 TFEU and the second and third paragraphs of Article 340 TFEU.56In this connection, it should be pointed out that the tasks conferred on the Commission and the ECB within the ESM Treaty do not alter the essential character of the powers conferred on those institutions by the EU and FEU Treaties (judgment of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraph 162).57As regards the Commission in particular, it is stated in Article 17(1) TEU that the Commission ‘shall promote the general interest of the Union’ and ‘shall oversee the application of Union law’ (judgment of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraph 163).58Furthermore, the tasks allocated to the Commission by the ESM Treaty oblige it, as provided in Article 13(3) and (4) thereof, to ensure that the memoranda of understanding concluded by the ESM are consistent with EU law (see, to that effect, judgment of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraph 164).59Consequently, the Commission, as it itself acknowledged in reply to a question asked at the hearing, retains, within the framework of the ESM Treaty, its role of guardian of the Treaties as resulting from Article 17(1) TEU, so that it should refrain from signing a memorandum of understanding whose consistency with EU law it doubts.60It follows that the General Court erred in law in the interpretation and application of Article 268 TFEU and the second and third paragraphs of Article 340 TFEU by holding, in paragraphs 46 and 47 of the orders under appeal, on the basis merely of the finding that the adoption of the disputed paragraphs could not formally be imputed to the Commission or the ECB, that it did not have jurisdiction to consider an action for compensation based on the illegality of those paragraphs.61The appeals should therefore be upheld and the orders under appeal set aside. The actions before the General Court 62In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, if the Court sets aside the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits. That is so in this instance.63The Court is in a position to rule on the appellants’ claims, under Article 268 TFEU and the second and third paragraphs of Article 340 TFEU, relating to compensation for the damage allegedly suffered as a result of, first, the inclusion by the Commission and the ECB of the disputed paragraphs in the Memorandum of Understanding of 26 April 2013 and, secondly, the Commission’s inaction in breach of the obligation to ensure, in the context of the adoption of the Memorandum of Understanding, that the latter was in conformity with EU law.64In accordance with settled case-law, the European Union may incur non-contractual liability under the second paragraph of Article 340 TFEU only if a number of conditions are fulfilled, namely the unlawfulness of the conduct alleged against the EU institution, the fact of damage and the existence of a causal link between the conduct of the institution and the damage complained of (judgment of 14 October 2014, Giordano v Commission, C‑611/12 P, EU:C:2014:2282, paragraph 35 and the case-law cited).65As regards the first condition, the Court has already stated on many occasions that a sufficiently serious breach of a rule of law intended to confer rights on individuals must be established (see, inter alia, judgments of 4 July 2000, Bergaderm and Goupil v Commission, C‑352/98 P, EU:C:2000:361, paragraph 42, and of 10 July 2014, Nikolaou v Court of Auditors, C‑220/13 P, EU:C:2014:2057, paragraph 53).66In the present instance, the rule of law compliance with which the appellants criticise the Commission for not having ensured in the context of the adoption of the Memorandum of Understanding of 26 April 2013 is Article 17(1) of the Charter. That provision, which states that everyone has the right to own his or her lawfully acquired possessions, is a rule of law intended to confer rights on individuals.67Furthermore, whilst the Member States do not implement EU law in the context of the ESM Treaty, so that the Charter is not addressed to them in that context (see, to that effect, judgment of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraphs 178 to 181), on the other hand the Charter is addressed to the EU institutions, including, as the Advocate General has noted in point 85 of his Opinion, when they act outside the EU legal framework. Moreover, in the context of the adoption of a memorandum of understanding such as that of 26 April 2013, the Commission is bound, under both Article 17(1) TEU, which confers upon it the general task of overseeing the application of EU law, and Article 13(3) and (4) of the ESM Treaty, which requires it to ensure that the memoranda of understanding concluded by the ESM are consistent with EU law (see, to that effect, judgment of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraphs 163 and 164), to ensure that such a memorandum of understanding is consistent with the fundamental rights guaranteed by the Charter.68It should therefore be examined whether the Commission contributed to a sufficiently serious breach of the appellants’ right to property, within the meaning of Article 17(1) of the Charter, in the context of the adoption of the Memorandum of Understanding of 26 April 2013.69It must be remembered that the right to property guaranteed by that provision of the Charter is not absolute and that its exercise may be subject to restrictions justified by objectives of general interest pursued by the European Union (see judgments of 16 November 2011, Bank Melli Iran v Council, C‑548/09 P, EU:C:2011:735, paragraph 113, and of 12 May 2016, Bank of Industry and Mine v Council, C‑358/15 P, EU:C:2016:338, paragraph 55).70Consequently, as is apparent from Article 52(1) of the Charter, restrictions may be imposed on the exercise of the right to property, provided that the restrictions genuinely meet objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the right guaranteed (see, to that effect, judgments of 16 November 2011, Bank Melli Iran v Council, C‑548/09 P, EU:C:2011:735, paragraph 114, and of 12 May 2016, Bank of Industry and Mine v Council, C‑358/15 P, EU:C:2016:338, paragraph 56).71As is apparent from Article 12 of the ESM Treaty, the adoption of a memorandum of understanding such as that resulting from the negotiations between the Cypriot authorities and, in particular, the Commission corresponds to an objective of general interest pursued by the European Union, namely the objective of ensuring the stability of the banking system of the euro area as a whole.72Indeed, financial services play a central role in the economy of the European Union. Banks and credit institutions are an essential source of funding for businesses that are active in the various markets. In addition, the banks are often interconnected and certain of their number operate internationally. That is why the failure of one or more banks is liable to spread rapidly to other banks, either in the Member State concerned or in other Member States. That is liable, in turn, to produce negative spill-over effects in other sectors of the economy (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 50).73In this instance, the measures identified in the disputed paragraphs provide in particular for the taking over, by Bank of Cyprus, of Cyprus Popular Bank’s insured deposits, for the conversion of 37.5% of Bank of Cyprus’s uninsured deposits into shares with full voting and dividend rights, and for the temporary freezing of another part of those uninsured deposits, whilst it is stated that, should Bank of Cyprus be found to be overcapitalised relative to the core tier one target of 9% under stress, a buy-back of shares will be undertaken to refund holders of uninsured deposits by the amount of the over-capitalisation.74In view of the objective of ensuring the stability of the banking system in the euro area, and having regard to the imminent risk of financial losses to which depositors with the two banks concerned would have been exposed if the latter had failed, such measures do not constitute a disproportionate and intolerable interference impairing the very substance of the appellants’ right to property. Consequently, they cannot be regarded as unjustified restrictions on that right (see, by analogy, judgment of 10 July 2003, Booker Aquaculture and Hydro Seafood, C‑20/00 and C‑64/00, EU:C:2003:397, paragraphs 79 to 86).75In the light of those factors, the Commission cannot be considered, by dint of having permitted the adoption of the disputed paragraphs, to have contributed to a breach of the appellants’ right to property guaranteed by Article 17(1) of the Charter.76It follows that the first condition for establishing non-contractual liability of the European Union is not satisfied in this instance, so that the appellants’ claims for compensation must be dismissed as lacking any foundation in law. Costs 77Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. Under Article 138(2) of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1) thereof, where there is more than one unsuccessful party, the Court is to decide how the costs are to be shared.78As the appeals are upheld but the actions are dismissed, Ledra Advertising Ltd, Mr Eleftheriou, Ms Eleftheriou, Ms Papachristofi, Mr Theophilou and Ms Theophilou, and also the Commission and the ECB, are to bear their own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Sets aside the orders of the General Court of the European Union of 10 November 2014, Ledra Advertising v Commission and ECB (T‑289/13, EU:T:2014:981), of 10 November 2014, Eleftheriou and Papachristofi v Commission and ECB (T‑291/13, not published, EU:T:2014:978), and of 10 November 2014, Theophilou v Commission and ECB (T‑293/13, not published, EU:T:2014:979 ); 2. Dismisses the actions brought before the General Court in Cases T‑289/13, T‑291/13 and T‑293/13; 3. Orders Ledra Advertising Ltd, Andreas Eleftheriou, Eleni Eleftheriou, Lilia Papachristofi, Christos Theophilou, Eleni Theophilou, the European Commission and the European Central Bank (ECB) each to bear their own costs incurred both at first instance and on appeal. [Signatures]( *1 ) Language of the case: English. | 19290-a365a1d-442f | EN |
The General Court of the European Union confirms the Commission’s decision to accept the commitments of Thomson Reuters intended to remedy its abuse of a dominant position in the market for consolidated real-time datafeeds | 15 September 2016 ( *1 )‛Competition — Abuse of a dominant position — Worldwide market for consolidated real-time datafeeds — Decision making the commitments offered by the dominant undertaking binding — Article 9 of Regulation (EC) No 1/2003’In Case T‑76/14, Morningstar, Inc., established in Chicago, Illinois (United States of America), represented by S. Kinsella, K. Daly, P. Harrison, Solicitors, and M. Abenhaïm, lawyer,applicant,v European Commission, represented by F. Castilla Contreras, A. Dawes and F. Ronkes Agerbeek, acting as Agents,defendant,supported by Thomson Reuters Corp., established in Toronto (Canada),and Reuters Ltd, established in London (United Kingdom),represented by A. Nourry, G. Olsen and C. Ghosh, Solicitors,interveners,APPLICATION under Article 263 TFEU seeking annulment of Commission Decision C(2012) 9635 final of 20 December 2012 relating to a proceeding under Article 102 TFEU and Article 54 of the EEA Agreement (Case COMP/D2/39.654 — Reuters Instrument Codes (RICs)),THE GENERAL COURT (Eighth Chamber),composed of D. Gratsias, President, M. Kancheva and C. Wetter (Rapporteur), Judges,Registrar: L. Grzegorczyk, Administrator,having regard to the written procedure and further to the hearing on 3 March 2016,gives the following Judgment Background to the dispute 1On 30 October 2009, the Commission of the European Communities decided to open proceedings against Thomson Reuters Corporation and companies under its direct or indirect control, including Reuters Limited (‘TR’), for alleged abuse of a dominant position in the worldwide market for consolidated real-time datafeeds.2On 19 September 2011, the Commission adopted a preliminary assessment, pursuant to Article 9(1) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 TFEU] and [102 TFEU] (OJ 2003 L 1, p. 1), which it notified to TR on 20 September 2011.3According to the preliminary assessment, TR occupies a dominant position in the worldwide market for consolidated real-time datafeeds. It may have abused its dominant position by imposing certain restrictions regarding the use of Reuters Instrument Codes (‘RICs’). RICs are short, alphanumerical codes developed by TR that identify securities and their trading locations.4TR prohibits its customers from using RICs to retrieve data from the consolidated real-time datafeeds of other providers and prevents third parties and competing providers from developing and maintaining mapping tables incorporating RICs that would allow its customers’ systems to interoperate with the consolidated real-time datafeeds of other providers. In its preliminary assessment, the Commission reached the conclusion that those practices created substantial barriers to switching datafeed providers and constituted abuse of a dominant position within the meaning of Article 102 TFEU and Article 54 of the Agreement on the European Economic Area (EEA).5On 8 November 2011, pursuant to Article 9(1) of Regulation No 1/2003, TR submitted to the Commission a commitments proposal designed to address the concerns raised by the latter in its preliminary assessment.6In that commitments proposal, TR proposed, inter alia:—to allow its customers to enter into an extended licence agreement concerning RICs (‘ERL’). The ERL allows the customer, upon payment of a monthly licence fee, to use RICs to retrieve real-time data from the consolidated real-time datafeeds of competing providers and, in this way, to change one or more of their applications;to provide the information necessary to allow its customers to establish mapping between the RICs and the coding systems of competing providers in order to switch provider.7On 14 December 2011, the Commission published a notice in the Official Journal of the European Union in accordance with Article 27(4) of Regulation No 1/2003, summarising the case and the commitments, and invited interested third parties to submit observations on TR’s proposal.8On 7 March 2012, the Commission informed TR of the observations which it had received from interested third parties, following the publication of the market test notice.9On 27 June 2012, in response to the observations received, TR submitted a revised commitments proposal. The main changes were as follows:the level of the fee for the ERL was reduced;the fee structure for the ERL was no longer linked to any existing rebates for consolidated real-time datafeeds of TR. It was also made less complex and more transparent;the ERL could be used worldwide by customers with genuine business operations in the European Economic Area (EEA);the ERL covered RICs of single source over-the-counter instruments, subject to the consent of the relevant contributor (unless TR is the sole provider of the over-the-counter data at the time of the switch);the ERL covered human interfaces to server-based applications (at no additional cost);in addition to the initial five-year period during which the ERL was available for subscription, there was an option for customers to extend the subscription window for a nominal fee by a further two years;the provision of a separate supplementary licence, in the present case a licence aimed at third-party developers (‘TPDL’), to enable them to develop mapping tables which allow TR’s customers easily to switch providers.10On 12 July 2012, the Commission launched a second market test and published the amended commitments, pursuant to Article 27(4) of Regulation No 1/2003.11On 25 September 2012, the Commission informed TR of the observations which it had received from interested third parties, following the publication of the second market test notice.12On 7 November 2012, TR provided a third set of commitments (‘final commitments’) which contain the following provisions:the clause in paragraph 7.1 of the final commitments contains a revised definition of the term ‘third-party developer’ which allows third-party developers to enter into agreements with other consolidated real-time datafeed providers for the development of mapping tables, allowing TR’s customers to switch provider;third-party developers are allowed not only to ‘develop’ mapping tables but also to ‘maintain and update’ them (clause in paragraph 1.8 of the TPDL);the TPDL annexed to the final commitments no longer contains the clause in paragraph 3.5 of the TPDL annexed to the revised commitments. That clause contained the provisions under which a third-party developer could not ‘represent that using Eligible RICs to retrieve third-party data [would be] practical or feasible in all circumstances or that it [could] give rise to issues of data integrity or other functionality issues’;the clauses in paragraph 3.2.8 of the final commitments and paragraph 1.3(c) of the TDPL authorise third-party developers and other consolidated real-time datafeed providers to cooperate in the development, maintenance, and marketing of mapping tables;the clause in paragraph 3.2.9 of the final commitments and those in paragraphs 1.3(d) and 1.4 of the TPDL increase the level of information that third-party developers and other consolidated real-time datafeed providers may exchange. It follows from this that third-party developers may provide other consolidated real-time datafeed providers with descriptive reference data relating to RICs (but not the RICs themselves) in situations where the third-party developer has not been able to perform the mapping of a competing real-time datafeed provider’s coding system.13TR’s final commitments also provide, in Annex V, for the appointment of an independent trustee responsible for monitoring them. The role of the trustee is to monitor compliance with those commitments and to make a report to the Commission on a regular basis and, where appropriate, to propose to the Commission measures to be taken in order to ensure compliance with those commitments, as well as to report the results of the dispute resolution procedure provided for in Annex IV to the final commitments.14The Commission took the view that those commitments were sufficient to address the competition concerns identified. Accordingly, on 20 December 2012, it adopted, pursuant to Article 9(1) of Regulation No 1/2003, the decision relating to a proceeding under Article 102 TFEU and Article 54 of the EEA Agreement (Case COMP/D2/39.654 — Reuters Instrument Codes (RICs)) (OJ 2013 C 326, p. 4; ‘the contested decision’), a summary of which was published in the Official Journal of the European Union, making binding the commitments proposed by TR. In that decision the Commission also found that, in view of the commitments, it no longer had grounds for action. Procedure and forms of order sought 15By application lodged at the Court Registry on 4 February 2014, the applicant, Morningstar, Inc., brought the present action.16On 16 May 2014, the Commission filed its defence.17The reply was lodged at the Court Registry on 5 August 2014.18By a measure of organisation of procedure of 27 August 2014, the Court (Eighth Chamber) requested the Commission to submit the preliminary assessment, in a non-confidential version, which it had undertaken pursuant to Article 9(1) of Regulation No 1/2003 in the present case. The Commission complied with that request within the prescribed period.19The rejoinder was lodged at the Court Registry on 16 October 2014.20By order of 21 October 2014, the President of the Eighth Chamber of the Court granted TR’s application to intervene, lodged at the Court Registry on 22 May 2014.21On 2 January 2015, TR lodged its statement in intervention.22The observations of the main parties on TR’s statement in intervention were received at the Court Registry within the prescribed period.23Acting on a proposal from the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral part of the procedure and, by way of measures of organisation of procedure under Article 89(3)(d) of its Rules of Procedure, asked the Commission to lodge the responses received from market participants, in their non-confidential versions, to the market tests published in the Official Journal of the European Union on 14 December 2011 and 12 July 2012. The Commission complied with that request within the prescribed period.24At the hearing on 3 March 2016, the parties presented oral arguments and replied to oral questions put by the Court.25The applicant claims that the Court should:declare the action admissible;annul the contested decision in its entirety, or in so far as it relates to real-time datafeed providers, or in so far as it relates to the applicant;grant such other relief as the Court considers appropriate; andorder the Commission to pay the costs.26The Commission and the intervener contend that the Court should:dismiss the action;order the applicant to pay the costs. Admissibility 27The applicant submits that it has standing to bring the present action as the contested decision concerns it directly and individually, within the meaning of the fourth paragraph of Article 263 TFEU. It was directly affected by the contested decision, which reduces the scope for it to contract with TR regarding RICs, in so far as that decision explicitly excludes competing consolidated real-time datafeed providers from the scope of the relevant licences. As regards individual concern, it claims that it was actively involved in the administrative procedure that led to the adoption of the contested decision. Furthermore, it was part of a closed and identifiable group of persons that participated in the administrative procedure. Moreover, the contested decision authorises a business conduct of its main competitor, thereby affecting its position on the relevant market.28The Commission disputes the applicant’s arguments and contends, without formally raising an objection of inadmissibility within the meaning of Article 130(1) of the Rules of Procedure, that the action is inadmissible.29It should be borne in mind that the fourth paragraph of Article 263 TFEU allows a person other than the person to whom the act is addressed to institute proceedings for annulment of that act if that act is of individual and direct concern to him.30According to the case-law, the question of whether an applicant has locus standi is to be assessed by reference to the effects that the contested act has on its legal situation in so far as that applicant is, first, directly concerned by the contested act, in that the direct concern requires that the measure at issue must directly affect the legal situation and that the act must leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from the EU rules alone without the application of other intermediate rules (judgments of 5 May 1998, Glencore Grain v Commission, C‑404/96 P, EU:C:1998:196, paragraph 42, and of 24 March 1994, Air France v Commission, T‑3/93, EU:T:1994:36, paragraph 80), and, second, individually concerned by that act in that it affects the applicant by reason of certain attributes particular to him or by reason of circumstances in which he is differentiated from all other persons and by virtue of those factors the decision distinguishes him individually just as in the case of the person addressed (see, to that effect, judgment of 15 July 1963, Plaumann v Commission, 25/62, EU:C:1963:17, at p. 107).31In the present case, in accordance with Article 9(1) of Regulation No 1/2003, the contested decision makes TR’s final commitments of 7 November 2012 binding. The Commission examined the effects of the restrictions imposed by TR as regards the RICs and concluded that those restrictions were detrimental to competition, in that they hindered TR’s customers from switching provider and, as a result, reduced the ability of competitors to enter the market or to compete on the basis of the merits of their services. The final commitments, which seek to facilitate the switch of TR’s customers to competing consolidated real-time datafeed providers, explicitly exclude those competing providers from being eligible to enter into either an ERL agreement or a TPDL agreement. In so far as it limits the possibility for the applicant to conclude such contracts, the contested decision directly affects its legal situation.32As regards the question of whether the applicant is individually concerned, it must be recalled that it requested meetings with the Commission in its letters of 5 March and 16 June 2010. Following those requests, a first meeting was organised for 27 July 2010. Subsequently, at the request of both the Commission and the applicant, other meetings and telephone conversations took place between 2010 and 2012. Similarly, following a request by the Commission of 18 April 2012, the applicant produced a non-confidential version of the minutes of the telephone conversations and meetings in question. The applicant also responded and provided its observations in relation to the commitments proposed by TR, through telephone conversations, meetings, emails and responses to the Commission’s formal requests for information.33Furthermore, even though the applicant’s name does not explicitly feature in the contested decision, it is clear from the administrative procedure which resulted in that decision that the Commission took into account the observations made by the applicant.34It should be noted that the applicant participated actively in the procedure not only on its own initiative but also at the invitation of the Commission, which, in particular, requested it to submit its observations on various aspects of the market as well as on the proposed commitments, and outside the framework of the market tests in accordance with Article 27(4) of Regulation No 1/2003, to which the applicant also contributed. It follows that the applicant participated actively in the procedure. Although mere participation in the procedure is, admittedly, insufficient on its own to establish that the contested decision is of individual concern to the applicant, the fact nevertheless remains that its active participation in the administrative procedure is a factor taken into account in the case-law relating to matters of competition, including in the more specific area of commitments under Article 9 of Regulation No 1/2003, to establish, in conjunction with other specific circumstances, whether its action is admissible (see, to that effect and by analogy, judgments of 28 January 1986, Cofaz and Others v Commission, 169/84, EU:C:1986:42, paragraphs 24 and 25; of 31 March 1998, France and Others v Commission (Kali & Salz), C‑68/94 and C‑30/95, EU:C:1998:148, paragraphs 54 to 56; and of 3 April 2003, BaByliss v Commission, T‑114/02, EU:T:2003:100, paragraph 95).35In that regard, such a specific circumstance is constituted, in the present case, by the manner in which the applicant’s position on the market at issue is affected. It is apparent from the case file before the Court that the applicant operates, like TR, in the consolidated real-time datafeed market, a market which is characterised by a limited number of competitors and in which TR occupies a dominant position. It can be inferred that restrictive measures on the part of TR, as the dominant undertaking, such as those forming the subject matter of the Commission’s preliminary assessment, are liable to have significant negative effects on the applicant’s business.36It follows from all of the foregoing that the applicant is also individually concerned. Consequently, the present action is admissible. Substance 37In support of the action, the applicant relies on four pleas in law:the first plea alleges a manifest error of assessment in that the Commission accepted commitments which did not address the competition concerns about which it had notified TR in its preliminary assessment;the second plea alleges a breach of Article 9(1) of Regulation No 1/2003 in that the Commission, by accepting commitments which were not such as to address the competition concerns, acted beyond the scope of the powers available to it under that article and therefore acted ultra vires;the third plea alleges a breach of the principle of proportionality;the fourth plea alleges an infringement of the obligation to state reasons in so far as the Commission failed to explain how the final commitments addressed the competition concerns which had been identified.38As a preliminary point, it should be borne in mind that it follows from Article 9 of Regulation No 1/2003 that the Commission may, in cases where it intends to adopt a decision requiring that an infringement be brought to an end, make the commitments offered by the undertakings concerned binding, where they address the competition concerns expressed by the Commission in its preliminary assessment.39The mechanism introduced by Article 9 of Regulation No 1/2003 seeks to ensure that the competition rules in force in the European Union are applied effectively, by means of the adoption of decisions making commitments proposed by the parties and considered appropriate by the Commission binding, in order to provide a more rapid solution to the competition problems identified by the Commission, instead of proceeding by making a formal finding of an infringement. More particularly, Article 9 of that regulation is based on considerations of procedural economy and enables undertakings to participate fully in the procedure by putting forward the solutions which appear to them to be the most appropriate and capable of addressing the Commission’s concerns (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 35).40In that context, as regards the acceptance or rejection of the commitments, the Commission enjoys a wide discretion (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 94).41Furthermore, it should be noted that, in so far as the Commission is called upon to carry out an analysis that requires numerous economic factors to be taken into account, such as a forward-looking analysis in order to assess the adequacy of the commitments offered by the undertaking concerned, it also enjoys a degree of discretion in this which the Court must take into account when carrying out its review. It follows that, in the exercise of their restricted review of such complex economic situations, the EU Courts cannot substitute their own economic assessment for that of the Commission (judgments of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 67, and of 11 September 2014, CB v Commission, C‑67/13 P, EU:C:2014:2204, paragraph 46).42However, as the Court has repeatedly held in the context of areas giving rise to complex economic assessments, such as competition law, the discretion enjoyed by the Commission does not mean that the EU Courts must refrain from reviewing the EU institutions’ interpretation of information of an economic nature (judgments of 15 February 2005, Commission v Tetra Laval, C‑12/03 P, EU:C:2005:87, paragraph 39; of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 145; and of 11 September 2014, CB v Commission, C‑67/13 P, EU:C:2014:2204, paragraph 46). According to the principles established by that case-law, the EU Courts must, in particular, not only establish whether the evidence relied on is factually accurate, reliable and consistent, but also review whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (see judgments of 11 September 2014, CB v Commission, C‑67/13 P, EU:C:2014:2204, paragraph 46 and the case-law cited; of 11 December 2013, Cisco Systems and Messagenet v Commission, T‑79/12, EU:T:2013:635, paragraph 50 and the case-law cited; and of 13 May 2015, Niki Luftfahrt v Commission, T‑162/10, EU:T:2015:283, paragraph 86 and the case-law cited).43Moreover, it is also clear from the case-law that, even though decisions made under Articles 7 and 9 of Regulation No 1/2003 are subject to the principle of proportionality, the application of that principle nonetheless differs according to which of those provisions is concerned.44Those provisions in fact pursue different objectives. Article 9 of Regulation No 1/2003 aims to address the concerns that the Commission may have raised during its preliminary assessment, while Article 7 of that regulation aims to put an end to the infringement that has been found to exist (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 46).45It follows that, as regards the proportionality of the commitments, the test which the Commission must use in proceedings under Article 9 of Regulation No 1/2003 lies in whether the commitments are ‘sufficient’ and can respond ‘adequately’ to the concerns, by taking account of the circumstances of the case, that is to say the seriousness of the concerns, their extent and the interests of third parties (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraphs 41 and 61).46It follows from all of the foregoing that the review by the EU Courts is limited to establishing whether the Commission’s assessment is manifestly wrong, by applying the principles recalled in paragraphs 40 to 45 above. First plea in law, alleging a manifest error of assessment 47In the context of the first plea, the applicant submits that the final commitments do not have the effect of either terminating or significantly limiting the identified abuse, and that they also do not address the concerns raised. The contested decision is therefore, in the applicant’s view, vitiated by a manifest error of assessment.48The applicant observes that both the definition of ‘eligible customer’ and that of ‘third-party developers’ contained, respectively, in the ERL and the TPDL, exclude competing providers. In addition, under the commitments, competing consolidated real-time datafeed providers cannot themselves handle RICs on behalf of eligible licensees. Thus, companies which, like the applicant, have the capacity, knowledge and incentive needed to offer a competing service are directly excluded from doing so. With regard to the terms of the licence agreement at issue, it envisages granting licences only to customers who can use RICs to build, on their own, or through third-party developers, the means to avail of a service that could compete with TR’s offering.49In that regard, firstly, the applicant takes the view that consolidated real-time datafeed providers are incapable of providing an effective change of service provider to TR’s customers because, by excluding them from the ERL and TPDL licence terms, they cannot offer a fully integrated competing service. Secondly, the likelihood of third parties developing mapping tables is theoretical and extremely remote. Thirdly, the entire burden and cost of switching provider fall upon TR’s customers, even though it is manifestly unlikely that they will switch provider due to the cost and complexity entailed in such a switch, the modification of their systems and the additional negotiations with third parties that the modification would entail, the nature of the market for consolidated real-time datafeeds, and the cost and complexity related to using a third party’s mapping table. Fourthly, TR’s customers are unlikely to work with a conversion tool developed by a third party, rather than a competitor, since these tools require a high degree of speed and reliability. The reliance on a third party would in fact be a risk for the integrity and accuracy of the code mapping. Furthermore, possible collaboration with a third-party developer in the design of a mapping table would be ineffective, given the impossibility of exchanging the required information regarding RICs. Fifthly, the reason why competing consolidated real-time datafeed providers cannot offer a comparable service is also connected to the fact that ‘chain RICs’ (a method of accessing a group of instruments by using a single identifier) are excluded from the licences offered by TR, while banks and financial institutions need access to chain RICs since they are one of the key methods of accessing data. As a result of the fact that, in accordance with the commitments, only the most basic data are available, it would be impossible for an alternative provider to rebuild or map to these chains without being able to access the underlying data. Finally, the applicant submits that, to its knowledge, none of TR’s customers have used a competing consolidated real-time datafeed provider. In a situation where a large number of companies seek to obtain and use the licences, there would be proof of that fact on the market. However, according to the applicant, this is not the case, and for that reason it reiterates, as already indicated during the administrative procedure, that such transitions to another provider are very unlikely.50In the first place, the Commission submits that an ERL, authorising TR’s customers to use RICs to retrieve data in the datafeeds of other providers without being obliged to rewrite their applications, is sufficient to address the concerns relating to the restrictions on the use of RICs when switching provider. Second, it takes the view that a TPDL which authorises third-party developers to develop and maintain mapping tables between RICs and the coding systems of other providers is also sufficient to respond to the concerns relating to the restrictions on the use of RICs to develop such tables. The Commission emphasises, by way of example, various terms and conditions contained respectively in the ERL and TPDL that seek to facilitate switching provider. In that context, it notes that an ERL is granted globally to an eligible customer if it undertakes genuine business operations within the EEA, that an ERL is granted in perpetuity on condition that it has been requested during the five years following the commencement date by the eligible customer, that the eligible customer can increase or decrease the eligible number of RICs at any time as required by its business operations, and that TR will provide eligible customers with regular updates of the eligible RICs, as well as with the cross-referencing information required to identify uniquely the underlying real-time market data.51Finally, the Commission submits that none of the arguments raised by the applicant alters the conclusion that the final commitments are sufficient to address the applicant’s concerns.52The Commission argues, in this regard, that a competitor can establish a partnership with a third-party developer to offer TR’s customers a personalised and fully integrated service for switching provider; that, since the IT architecture of each of TR’s customers is generally specific to it, it is inevitable that each customer will carry out rebuilding work and thus incur some costs if it decides to switch consolidated real-time datafeed provider; that TR’s major customers are global financial institutions with the expertise and the financial means necessary to switch providers if they consider that it is in their commercial interest; that cooperation between consolidated real-time datafeed providers and third-party developers could lead to economies of scale; that there is no reason to believe that the mapping tables developed by third-party developers would not be reliable, or would be slower, when compared to using TR’s service, and that the allegations relating to chain RICs are set out for the first time in the reply and are not based upon matters of law or fact which have arisen during the administrative procedure and the proceeding before the Court; and that they therefore must be rejected as inadmissible since, in any event, they are unfounded. Finally, the Commission notes that, since the ERL and TPDL were only introduced on 20 June 2013 and switching provider is a long and complex process, it is unsurprising that there have not yet been many switches during the introductory period of these licences, on the one hand, and the lodging of the application, on the other.53First, as regards the admissibility of the argument relating to chain RICs and the argument relating to the limitations in the descriptive data provided for each RIC, it must be recalled that it is clear from the provisions of Article 44(1)(c), in conjunction with Article 48(2), of the Rules of Procedure of the General Court of 2 May 1991, that the application initiating proceedings must state the subject matter of the proceedings and contain a summary of the pleas in law, and that the introduction of new pleas in law in the course of proceedings is not permitted unless those pleas are based on matters of law or fact which came to light in the course of the procedure.54However, according to settled case-law, a plea which may be regarded as amplifying a previously made plea, whether directly or by implication, in the original application, and which is closely connected to it, must be declared admissible (judgments of 19 September 2000, Dürbeck v Commission, T‑252/97, EU:T:2000:210, paragraph 39, and of 30 September 2003, Cableuropa and Others v Commission, T‑346/02 and T‑347/02, EU:T:2003:256, paragraph 111).55In the present case, it should be noted that, contrary to the Commission’s submission, that plea is an amplification of the first plea, as set out in the application, namely the plea alleging a manifest error of assessment of the final commitments. It should be recalled, in that regard, that the application contains lengthy arguments on the inappropriateness of the final commitments. Consequently, the argument in the reply calling into question the adequacy of the final commitments to address the Commission’s concerns due to the gaps in those commitments, such as those connected to the lack of a rule relating to chain RICs, is admissible.56Next, with regard to the substance of the first plea, as has already been pointed out in paragraph 41 above, and taking into account the discretion enjoyed by the Commission when assessing the appropriateness of the proposed commitments, the role of the Court is limited to establishing that the Commission has not committed a manifest error of assessment. More precisely, its role, in the context of that judicial review, is to determine whether a balance has been struck between the concerns raised by the Commission in its preliminary assessment and the commitments proposed by TR, which must, once again, address those concerns in an adequate manner.57Additionally, the review of the lawfulness of the decision making those commitments binding must be assessed in the light of the Commission’s concerns and not of the demands put forward by competitors in relation to the content of those commitments.58Consequently, the appropriate test to be applied in relation to the Commission’s concerns, as expressed in its preliminary assessment, is to determine whether the commitments are sufficient to address adequately those concerns, which seek, in the present case, to make it easier for customers to switch provider.59Furthermore, the fact that those concerns could be addressed by including TR’s competitors in the licence terms, as the applicant suggests, does not establish in itself that the contested decision is vitiated by a manifest error of assessment. The fact that other commitments could also have been accepted, or might even have been more favourable to competition, cannot justify annulment of the contested decision, in so far as the Commission was reasonably entitled to conclude that the commitments set out in the contested decision served to dispel the concerns which had been identified in the preliminary assessment.60It must be recalled that the contested decision implements a set of commitments proposed by TR, the activities of which gave rise to competition concerns, and that, in essence, the applicant takes the view that the Commission committed a manifest error of assessment by making commitments binding which fail adequately to address those concerns.61The applicant’s claim that competitors are incapable of providing an effective change of service provider on the ground that they cannot offer a fully integrated competing service due to their being excluded from the licence terms at issue must be rejected.62It should be borne in mind that the concerns raised by the Commission related to the restrictions imposed on TR’s customers and the prevention of third parties from establishing mapping between different codes, thus creating substantial barriers to switching provider. The commitments accepted by the Commission therefore focus, essentially, on the opportunities available to customers to switch provider, either on their own or by collaborating with a third-party developer. In that sense, the Commission took the view that the competition concerns could be resolved by requiring behavioural remedies not vis-à-vis its competitors, but rather vis-à-vis its customers and third parties. That finding, that the commitments are proposed in the first instance to customers and third-party developers, is supported by the possibilities offered to third-party developers to collaborate and mutually to assist each other in the development of mapping tables on the basis of the licences proposed by TR. TR’s customers may also opt for third-party developers who have entered into partnerships with competing providers, those partnerships consisting of a cooperation relating to the design, production, maintenance, advertising and aftersales services of mapping tables. Various options are therefore open to TR’s customers for the purpose of switching providers, whether they are internal or external to their infrastructure.63Thus, by accepting those commitments, the Commission took the view that, in order to address the concerns that it had raised, it was not necessary to include TR’s competitors in the licence terms. Furthermore, as is clear from the contested decision, the Commission found that granting TR’s competitors access to RICs would go beyond what was necessary to address its concerns. With regard to the findings of the Court set out in paragraph 62 above, the Commission did not commit a manifest error of assessment in that regard.64The arguments that the likelihood of a third-party developer designing mapping tables is remote and theoretical — mapping tables which, according to the applicant, would not offer the reliability and speed required given that they were designed by third parties — must also be rejected.65Although it is unnecessary to recall the different solutions available to third-party developers in the development of mapping tables, which increase the likelihood of such a design, it may be held, with regard to the alleged lack of reliability and speed of those mapping tables, that the applicant does not present any specific arguments in relation to those assertions. For that reason, those arguments may be rejected at this point.66Moreover, in the event that a customer might require a guarantee as to reliability, a third-party developer and a competing provider could agree to provide that guarantee to that customer, a possibility which has not been excluded by the commitments, in accordance with the clause in paragraph 1.3(c)(iii) of the TPDL. To that extent, it is entirely possible to address the potential misgivings of a customer who will be reassured by a prospective switch of provider. Furthermore, apart from the fact that TR’s customers can enter into an ERL agreement in order to switch consolidated real-time datafeed provider in relation to all of their applications, they may opt, for a period of at least 12 months, for a partial switch. Such a partial switch may allow a customer to assess the reliability of a competing data source by using applications which use TR’s data source and other applications which use a competing data source in parallel, a possibility which facilitates a switch of provider for the customer.67Similarly, the argument that the entire burden and cost of switching provider would be borne by TR’s customers cannot be accepted. It must be recalled that the Commission’s concerns essentially related to the restrictions imposed on TR’s customers in the use of RICs. Those restrictions prohibited them from retrieving data from the feeds of competing providers by using RIC codes, and even by means of mapping tables. Due to the integration of RIC codes into customers’ IT applications, a rewriting of those applications was necessary when those customers wished to switch provider, that switch of provider de facto leading to, under the restrictions imposed by TR, a modification of the symbol system used. That process of modifying applications is considered, according to customers, to be long and costly. It is clear from the market tests carried out by the Commission, the findings of which were included in the preliminary assessment, that the main part of the costs of switching relates to the conversion of the codes. Those costs are at times difficult to quantify, in particular due to the fact that the IT architecture of each customer is specific to that customer. However, the Commission indicated in its preliminary assessment that, for customers who have carried out an extensive assessment of the costs of switching, those costs were considered to be prohibitive and could discourage customers from switching provider. In response to those concerns, TR therefore offered its customers, as well as third-party developers, the possibility to set up mapping tables between the RIC codes and the symbol system used by the new provider, in such a way that a modification of the applications would no longer be necessary. Those commitments therefore represent a genuine improvement for TR’s customers, who no longer face prohibitive costs for the ability to switch provider, in the absence of the need extensively to modify IT applications. Although the creation of a mapping table by the customer, whether internally or by a third-party developer, is also likely to lead to costs, it should be recalled that the commitments do not seek a total elimination of the costs, but seek rather to make switching of providers more accessible with reasonable costs.68Furthermore, it must be stated that a modification of IT systems and applications is liable, in any event, to lead to costs which must be borne by the customer, especially in view of the particularities of each customer’s own IT architecture. Additionally, those customers are normally global institutions or companies and are likely to have the financial wherewithal to meet such costs.69It is also important to state, as the Commission did, that the collaborations between consolidated real-time datafeed providers and third-party developers may lead to economies of scale. Those economies are such as to lower the costs of switching provider, which might represent an additional incentive for customers, including small-sized customers, to switch provider.70Finally, the arguments linked to the lack of data relating to chain RICs and to the limitations on the descriptive data provided for each RIC preventing competing providers from offering an equivalent service are also unfounded. First, it should be noted in that regard that it appears that, throughout the administrative procedure, neither the applicant nor any other third party appeared to express any concerns as regards the exclusion of particular chain RICs from the scope of the licences offered by TR. The only chain RICs about which concerns were expressed during the administrative procedure were the indices and, in accordance with the clause in paragraph 2.8 of the final commitments and in paragraph 1.6 of the ERL, TR is required to provide data relating to indices. Second, it is clear from the case file that the reason why the data provided by TR may, in certain cases, not indicate the mnemonic designation attributed by the Stock Exchange is that that code is not the only sure way to identify an instrument upstream from its source. Relatively simple financial instruments, such as values listed on the Stock Exchange, may be identified through the trading platform concerned, the currency or the official code, or through the trading platform concerned, the currency and their description. TR is required to provide that information to ERL holders in accordance with the clause in paragraph 2.12 of the final commitments. The same is true for more complex financial instruments, such as those traded over-the-counter, for which TR is required to provide the mnemonic code assigned by the Stock Exchange if it is the only way of uniquely identifying them.71Furthermore, apart from a dispute settlement procedure, referred to in paragraph 13 above, in which the trustee responsible for monitoring the commitments plays a particular role, the clause in paragraph 6(f) of Annex V to the final commitments expressly provides that that trustee will assist in resolving any disagreements concerning data queries in respect of the cross-referencing information provided by TR. Thus, if the mnemonic code assigned by the Stock Exchange is essentially the only way of uniquely identifying the underlying real-time market data, the trustee responsible for monitoring will be able to inform TR to that effect.72In conclusion, the question of whether the commitments proposed by TR have been correctly assessed, in the contested decision, as being capable of resolving the Commission’s concerns must be answered in the affirmative. The plea that the decision is vitiated by a manifest error of assessment must therefore be rejected.73Moreover, as regards the applicant’s claim that, up to the present, no switch of provider has taken place, this therefore being an indication that the commitments are not effective, it must be noted that the Commission’s assessment, as is the case with respect to merger control proceedings, is a prospective assessment. It is called upon to make a decision which is a forecast and which leads it to assess how the market will behave once the commitments have been implemented. As has already been stated, the Commission did not commit a manifest error when it took the view that the final commitments are appropriate to address the concerns raised. Regardless of the answer to the question whether the final commitments have, in the meantime, produced a concrete effect on the market concerned, it cannot change the fact that, at the point in time at which the contested decision was adopted, they were in themselves sufficient to remove the competition concerns which had been identified.74In that regard, it must be noted that the final commitments as accepted by the Commission facilitate a switch of provider if that is desired by one of TR’s customers. However, that facility does not imply that a customer must necessarily switch provider if that customer is satisfied, for example, with the services and conditions offered by TR.75It follows from the foregoing that the first plea must be rejected. The second plea in law, alleging infringement of Article 9(1) of Regulation No 1/2003 76The applicant acknowledges that Article 9 of Regulation No 1/2003 authorises the Commission to accept commitments where they address the concerns which it has raised. However, the Commission is not, it argues, authorised to accept commitments which manifestly do not resolve — or appreciably reduce — the concerns raised. By accepting commitments which manifestly do not resolve the concerns raised, the Commission, in the applicant’s view, acted beyond the scope of the powers conferred on it under Article 9 of that regulation and therefore acted ultra vires.77The Commission and the intervener contend that this plea should be rejected.78As has already been noted in paragraph 40 above, the Commission enjoys a wide discretion in the assessment of the commitments. In proceedings under Article 9 of Regulation No 1/2003, as follows from recital 13 of that regulation, the Commission is not required to make a finding of the infringement at issue, its task being confined to examining, and possibly accepting, the commitments offered by the undertakings concerned in the light of the concerns which it identified in its preliminary assessment and having regard to the aims pursued. It is for the Commission, in the exercise of its discretion, to accept the commitments, after verifying whether they address the concerns raised. In that regard, it has already been held that the Commission did not commit any manifest error in its assessment concerning the adequacy of the commitments at issue, with the result that the argument that, by accepting those commitments, it exceeded its powers and, on that basis, acted ultra vires, must be rejected. The rejection of the first plea also results in the rejection of the second plea. The third plea in law, alleging an infringement of the principle of proportionality 79The applicant argues that the contested decision infringes the principle of proportionality given that, first, the Commission accepted inappropriate commitments and, second, it did not take account of third-party interests.80Referring to the judgment of 11 July 2007, Alrosa v Commission (T‑170/06, EU:T:2007:220), and to the judgment, delivered on appeal, of 29 June 2010, Commission v Alrosa (C‑441/07 P, EU:C:2010:377), the applicant submits that the obligation to respect the principle of proportionality when the Commission decides to accept binding commitments offered pursuant to Article 9(1) of Regulation No 1/2003 implies that the measure which it adopts must be appropriate and necessary for achieving the objective pursued. By accepting inappropriate commitments, it submits, the Commission therefore infringed this principle.81The principle of proportionality was, in its view, also infringed by the fact that the Commission disregarded the predictable and predicted ineffectiveness of the commitments, notwithstanding the concerns expressed by third parties, as has already been explained in connection with the first plea.8283It must be stated that it follows from the reply to the first two pleas that the third plea must also be rejected.84The principle of proportionality requires that the measures adopted by EU institutions must not exceed what is appropriate and necessary to attain the objective pursued. When there is a choice between several appropriate measures, the least onerous measure must be used (judgments of 17 May 1984, Denkavit Nederland, 15/83, EU:C:1984:183, paragraph 25, and of 11 July 1989, Schräder HS Kraftfutter, 265/87, EU:C:1989:303, paragraph 21).85The principle of proportionality, as a general principle of EU law, is nonetheless a criterion for the lawfulness of any act of the institutions of the European Union. That being so, in the examination of acts of the Commission, the questions always arise, first, of the precise extent and limits of the obligations which flow from the observance of that principle and, second, of the limits of judicial review (see, to that effect, judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraphs 36 and 37).86As is clear from the case-law cited above, application of the principle of proportionality by the Commission in the context of Article 9 of Regulation No 1/2003 is confined to verifying, first, that the commitments in question address the concerns which it expressed to the undertakings concerned and, second, that the latter have not offered less onerous commitments that also address those concerns adequately.87Likewise, judicial review relates solely to whether the Commission’s assessment is manifestly erroneous.88Thus, in the context of the first plea, it has already been observed that the Commission did not commit a manifest error of assessment in finding that the final commitments proposed by TR were appropriate to address the concerns identified by the Commission in its preliminary assessment.89Moreover, if undertakings offer commitments on the basis of Article 9 of Regulation No 1/2003 which go beyond that which the Commission itself could have imposed on them in a decision that it adopted in accordance with Article 7 of that regulation following a thorough review, the Commission can accept those commitments and make them binding. However, it is not entitled to require them under Article 9 of Regulation No 1/2003.90It follows that the third plea in law must be rejected. The fourth plea in law, alleging a breach of the obligation to state reasons 91The applicant submits that the contested decision does not explain how the final commitments adequately address the competition concerns expressed to TR in the preliminary assessment, in so far as those commitments do not authorise competing real-time datafeed providers to enter into a TPDL contract.92The applicant states that it repeatedly pointed out to the Commission, during the procedure leading to the contested decision, that excluding competitors from the licences envisaged in the commitments would render those commitments ineffective. In paragraph 6.3 of the contested decision, the Commission notes that such concerns had been raised, but it does not explain the reasons why those criticisms were not taken into consideration.93The Commission and the intervener take issue with the applicant’s arguments.94It should be noted that, according to the applicant, the contested decision’s statement of reasons does not make it possible for it to understand the grounds on which the Commission found that the exclusion of competitors from the scope of the commitments did not call into question the adequacy of those commitments.95According to settled case-law, the statement of reasons required under Article 296 TFEU must be appropriate to the measure in question and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure, in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent EU Court to carry out its review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question (see judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 63 and the case-law cited, and of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraphs 166 and 178 and the case-law cited).96The Commission is not obliged to adopt a position on all the arguments relied on by the parties concerned; it is sufficient if it sets out the facts and the legal considerations having decisive importance in the context of the decision. In particular, it is not required to define its position on matters which are manifestly irrelevant or insignificant or plainly of secondary importance (judgments of 15 June 2005, Corsica Ferries France v Commission, T‑349/03, EU:T:2005:221, paragraph 64, and of 16 June 2011, Air liquide v Commission, T‑185/06, EU:T:2011:275, paragraph 64).97In relation to decisions making commitments taken pursuant to Article 9 of Regulation No 1/2003 binding, the Commission fulfils its obligation to state reasons by setting out the elements of fact and law which led it to conclude that the commitments offered addressed adequately the competition concerns which it had identified in such a way that it was no longer necessary for it to act.98In the present case, recitals 48 to 90 (paragraphs 5.1 to 6.7) of the contested decision deal with the commitments proposed by TR and with the reactions of third parties to those commitments.99It follows from this that the Commission explained, first, the reasons why the commitments addressed the concerns raised and, second, by addressing observations made by third parties, why the issues raised in those observations went beyond the competition concerns set out in the preliminary assessment (recitals 77, 84, 86 and 89 of the contested decision). As regards more specifically the complaint made by the applicant, it must be stated that recital 77 of the contested decision referred to the fact that a number of third parties believed that competitors should have access to RICs since they would be in the best position to provide mapping tables and technical assistance. It is clear from recital 78 of the contested decision that the Commission considered that granting TR’s competitors access to RICs would go beyond what was necessary to remedy the competition concerns. In recital 79 of the contested decision, the Commission added that, ‘under the Proposed Commitments, third-party developers will be allowed to provide competing market data vendors with descriptive reference data related to RICs (although not the RICs themselves) when the third-party developers have themselves been unable to successfully complete mapping’ and that ‘this exchange of information will allow the competing market data vendors to map their own symbology for the same reference data in a way that permits the third-party developers to undertake accurate and efficient mapping’.100It follows from the foregoing that the Commission fulfilled its obligation to state reasons by setting out, clearly and unequivocally, the factual elements and legal considerations which led it to conclude that the commitments were sufficient to address the competition concerns which had been raised. Since those details enable the Court to review effectively the Commission’s exercise of its discretion in the contested decision, it must be concluded that the contested decision is sufficiently reasoned in that regard.101It may be added that, although the Commission is required to provide reasons for the decision which it adopts, it is not obliged to explain why it refrained from adopting a different decision (see, to that effect, the case-law cited in paragraphs 95 and 96).102Moreover, in so far as the applicant’s arguments may be understood as seeking to criticise the appropriateness of the final commitments, it must be recalled that such a question does not go to the issue of infringement of essential procedural requirements, capable of rendering the contested decision unlawful, but to that of the soundness of the Commission’s assessment of the commitments offered in order to address its competition concerns (see, to that effect, judgment of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 67), an issue which has already been addressed in the context of the first, second and third pleas of the present action.103It follows that the fourth plea in law must be rejected and, consequently, the action dismissed in its entirety. Costs 104Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.105Since the applicant has been unsuccessful, and since the Commission and the intervener have applied for costs, the applicant must be ordered to pay the costs.On those grounds,THE GENERAL COURT (Eighth Chamber)hereby: 1. Dismisses the action; 2. Orders Morningstar, Inc. to pay the costs. GratsiasKanchevaWetterDelivered in open court in Luxembourg on 15 September 2016.[Signatures]( *1 ) Language of the case: English. | e8792-5c7a059-4a0f | EN |
The operator of a shop who offers a Wi-Fi network free of charge to the public is not liable for copyright infringements committed by users of that network | 15 September 2016 ( *1 )‛Reference for a preliminary ruling — Information society — Free movement of services — Commercial wireless local area network (WLAN) — Made available to the general public free of charge — Liability of intermediary service providers — Mere conduit — Directive 2000/31/EC — Article 12 — Limitation of liability — Unknown user of the network — Infringement of rights of rightholders over a protected work — Duty to secure the network — Tortious liability of the trader’In Case C‑484/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Landgericht München I (Regional Court, Munich I, Germany), made by decision of 18 September 2014, received at the Court on 3 November 2014, in the proceedings Tobias Mc Fadden v Sony Music Entertainment Germany GmbH, THE COURT (Third Chamber),composed of L. Bay Larsen, President of the Chamber, D. Šváby, J. Malenovský (Rapporteur), M. Safjan and M. Vilaras, Judges,Advocate General: M. Szpunar,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 9 December 2015,after considering the observations submitted on behalf of:—Mr Mc Fadden, by A. Hufschmid and C. Fritz, Rechtsanwälte,Sony Music Entertainment Germany GmbH, by B. Frommer, R. Bisle, M. Hügel, Rechtsanwälte,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by K.-P. Wojcik and F. Wilman, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 16 March 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 12(1) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (‘Directive on electronic commerce’) (OJ 2000 L 178, p. 1).2The request has been made in proceedings between Mr Tobias Mc Fadden and Sony Music Entertainment Germany GmbH (‘Sony Music’) concerning the potential liability of Mr Mc Fadden for the use by a third party of the wireless local area network (WLAN) operated by Mr Mc Fadden in order to make a phonogram produced by Sony Music available to the general public without authorisation. Legal context EU law Directive 98/343On 22 June 1998, the European Parliament and the Council adopted Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on information society services (OJ 1998 L 204, p. 37), as amended by Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998 (OJ 1998 L 217, p. 18, ‘Directive 98/34’).4Recitals 2 and 19 of Directive 98/48 state:‘(2)Whereas a wide variety of services within the meaning of Articles 59 and 60 [TEC, now Articles 46 and 57 TFEU,] will benefit by the opportunities afforded by the Information Society of being provided at a distance, electronically and at the individual request of a recipient of services;…(19)Whereas, under Article 60 [EC, now Article 57 TFEU,] as interpreted by the case-law of the Court of Justice, “services” means those normally provided for remuneration; whereas that characteristic is absent in the case of activities which a State carries out without economic consideration in the context of its duties in particular in the social, cultural, educational and judicial fields …’5Article 1 of Directive 98/34 provides:‘For the purposes of this Directive, the following meanings shall apply:(2)“service”, any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.…’Directive 2000/316Recitals 18, 41, 42 and 50 of Directive 2000/31 are worded as follows:‘(18)Information Society services span a wide range of economic activities which take place online …; Information Society services are not solely restricted to services giving rise to online contracting but also, in so far as they represent an economic activity, extend to services which are not remunerated by those who receive them, such as those offering online information or commercial communications, or those providing tools allowing for search, access and retrieval of data; Information Society services also include services consisting … in providing access to a communication network ...(41)This Directive strikes a balance between the different interests at stake and establishes principles upon which industry agreements and standards can be based.(42)The exemptions from liability established in this Directive cover only cases where the activity of the Information Society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the Information Society service provider has neither knowledge of nor control over the information which is transmitted or stored.(50)It is important that the proposed directive on the harmonisation of certain aspects of copyright and related rights in the Information Society and this Directive come into force within a similar time scale with a view to establishing a clear framework of rules relevant to the issue of liability of intermediaries for copyright and relating rights infringements at Community level.’7Article 2 of that directive, headed ‘Definitions’, provides:‘For the purpose of this Directive, the following terms shall bear the following meanings:(a)“Information Society services”: services within the meaning of Article 1(2) of Directive 98/34;(b)“service provider”: any natural or legal person providing an Information Society service;8Section 4, headed ‘Liability of intermediary service providers’, of Chapter II of the directive is comprised of Articles 12 to 15.9Article 12 of Directive 2000/31, headed ‘Mere conduit’, provides:‘1. Where an Information Society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted, on condition that the provider:does not initiate the transmission;does not select the receiver of the transmission; and(c)does not select or modify the information contained in the transmission.3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement.’10Article 13 of Directive 2000/31, headed ‘Caching’, provides:‘1. Where an Information Society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information’s onward transmission to other recipients of the service upon their request, on condition that:the provider does not modify the information;the provider complies with conditions on access to the information;the provider complies with rules regarding the updating of the information, specified in a manner widely recognised and used by industry;(d)the provider does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information; and(e)the provider acts expeditiously to remove or to disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered such removal or disablement.’11Article 1 of that directive, headed ‘Beneficiaries’, provides:‘1. Where an Information Society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that:the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; orthe provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.2. Paragraph 1 shall not apply when the recipient of the service is acting under the authority or the control of the provider.3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for Member States of establishing procedures governing the removal or disabling of access to information.’12Article 15(1) of Directive 2000/31, headed ‘No general obligation to monitor’, provides:‘Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.’Directive 2001/29/EC13Recital 16 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10) states:‘Liability for activities in the network environment concerns not only copyright and related rights but also other areas, such as defamation, misleading advertising, or infringement of trademarks, and is addressed horizontally in Directive [2000/31], which clarifies and harmonises various legal issues relating to Information Society services including electronic commerce. This Directive should be implemented within a timescale similar to that for the implementation of the Directive on electronic commerce, since that Directive provides a harmonised framework of principles and provisions relevant inter alia to important parts of this Directive. This Directive is without prejudice to provisions relating to liability in that Directive.’Directive 2004/48/EC14Article 2 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45, and corrigendum in OJ 2004 L 195, p. 16), headed ‘Damages’, provides:‘…3. This Directive shall not affect:… Directive [2000/31], in general, and Articles 12 to 15 of Directive 2000/31/EC in particular; German law 15Paragraphs 7 to 10 of the Telemediengesetz (Law on electronic media) of 26 February 2007 (BGBl. I, p. 179), as last amended by the Law of 31 March 2010 (BGBl. I, p. 692) (‘Law on electronic media’), transpose Articles 12 to 15 of Directive 2000/31 into national law.16Paragraph 7 of the Law on electronic media is worded as follows:‘(1) Service providers shall be liable for their own information which they make available for use in accordance with the general law.(2) Service providers within the meaning of Paragraphs 8 to 10 shall be under no duty to monitor the information which they transmit or store, or actively to seek facts or circumstances indicating illegal activity. The absence of liability on the part of the service provider under Paragraphs 8 to 10 shall be without prejudice to general statutory obligations to remove, or disable the use of, information. …’17Paragraph 8(1) of the Law on electronic media provides:‘Service providers shall not be liable for information which they transmit over a communication network or to which they provide access for use provided that service providers:1.do not initiate the transmission;2.do not select the receiver of the transmission; and3.do not select or modify the information contained in the transmission.The first sentence shall not apply where a service provider intentionally collaborates with a user of its service in order to undertake illegal activity.’18Paragraph 97 of the Gesetz über Urheberrecht und verwandte Schutzrechte (Urheberrechtsgesetz) (Law on copyright and related rights) of 9 September 1965 (BGBl. I, p. 1273), as last amended by the Law of 1 October 2013 (BGBl. I, p. 3728) (‘the Law on copyright and related rights’), provides:‘(1) Any person who unlawfully infringes copyright or any other right protected under this law may be the subject of an action by the injured party for an injunction ordering the termination of the infringement or, where there is a risk of recurrence, for an injunction prohibiting any further commission of the infringement. The right to seek a prohibitory injunction shall exist even where the risk of infringement arises for the first time.(2) Any person who intentionally or negligently commits such an infringement shall be obliged to indemnify the injured party for the harm arising therefrom. …’19Paragraph 97a of the Law on copyright and related rights provides:‘(1) Before instituting judicial proceedings for a prohibitory injunction, the injured party shall give formal notice to the infringer, allowing him an opportunity to settle the dispute by giving an undertaking to refrain from further commission of the infringement, coupled with an appropriate contractual penalty.(3) Provided that the formal notice is justified, … reimbursement of the costs necessarily so incurred may be sought. …’ National case-law on the indirect liability of information society service providers (Störerhaftung) 20It appears from the order for reference that in German law a person may be held liable in the case of infringement of copyright or related rights for acts committed either directly (Täterhaftung) or indirectly (Störerhaftung). Paragraph 97 of the Law on copyright and related rights is interpreted by the German courts as meaning that liability for an infringement may be incurred by a person who, without being the author of the infringement or complicit in it, contributes to the infringement intentionally (the Störer).21In this connection, the Bundesgerichtshof (Federal Court of Justice, Germany) held, in a judgment of 12 May 2010, Sommer unseres Lebens (I ZR 121/08), that a private person operating a Wi-Fi network with internet access may be regarded as a Störer where he has failed to make his network secure by means of a password and thus enabled a third party to infringe a copyright or related right. According to that judgment, it is reasonable for such a network operator to take measures to secure the network, such as a system for identification by means of a password. Facts of the main proceedings and the questions referred for a preliminary ruling 22Mr Mc Fadden runs a business selling and leasing lighting and sound systems.23He operates an anonymous access to a wireless local area network free of charge in the vicinity of his business. In order to provide such internet access, Mr Mc Fadden uses the services of a telecommunications business. Access to that network was intentionally not protected in order to draw the attention of customers of near-by shops, of passers-by and of neighbours to his company.24Around 4 September 2010, Mr Mc Fadden changed the name of his network from ‘mcfadden.de’ to ‘freiheitstattangst.de’ in reference to a demonstration in favour of the protection of personal data and against excessive State surveillance.25At the same time, by means of the wireless local area network operated by Mr Mc Fadden, a musical work was made available on the internet free of charge to the general public without the consent of the rightholders. Mr Mc Fadden asserts that he did not commit the infringement alleged, but does not rule out the possibility that it was committed by one of the users of his network.26Sony Music is the producer of the phonogram of that work.27By letter of 29 October 2010, Sony Music gave formal notice to Mr Mc Fadden to respect its rights over the phonogram.28Following the giving of formal notice, Mr Mc Fadden brought an action for a negative declaration (‘negative Feststellungsklage’) before the referring court. In reply, Sony Music made several counterclaims seeking to obtain from Mr Mc Fadden, first, payment of damages on the ground of his direct liability for the infringement of its rights over the phonogram, second, an injunction against the infringement of its rights on pain of a penalty and, third, reimbursement of the costs of giving formal notice and court costs.29In a judgement of 16 January 2014, entered in default of Mr Mc Fadden’s appearance, the referring court dismissed Mr Mc Fadden’s action and upheld the counterclaims of Sony Music.30Mr Mc Fadden appealed against that judgment on the ground that he is exempt from liability under the provisions of German law transposing Article 12(1) of Directive 2000/31.31In the appeal, Sony Music claims that the referring court should uphold the judgment at first instance and, in the alternative, in the event that that court should not hold Mr Mc Fadden directly liable, order Mr Mc Fadden, in accordance with the case-law on the indirect liability (Störerhaftung) of wireless local area network operators, to pay damages for not having taken measures to protect his wireless local area network and for having thereby allowed third parties to infringe Sony Music’s rights.32In the order for reference, the referring court states that it is inclined to regard the infringement of Sony Music’s rights as not having been committed by Mr Mc Fadden personally, but by an unknown user of his wireless local area network. However, the referring court is considering holding Mr Mc Fadden indirectly liable (Störerhaftung) for failing to have secured the network from which its rights were infringed anonymously. Nevertheless, the referring court wishes to know whether the exemption from liability laid down in Article 12(1) of Directive 2000/31, which has been transposed into German law by the first sentence of Paragraph 8(1) of the Law on electronic media, might preclude it from finding Mr Mc Fadden liable in any form.33In those circumstances, the Landgericht München I (Regional Court, Munich I, Germany) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘1.Is the first half-sentence of Article 12(1) of Directive 2000/31, read in conjunction with Article 2(a) of that directive and Article 1(2) of Directive 98/34, to be interpreted as meaning that the expression “normally provided for remuneration” means that the national court must establish:a.whether the person specifically concerned, who claims the status of service provider, normally provides that specific service for remuneration,b.whether there are on the market any providers at all who provide that service or similar services for remuneration, orc.whether the majority of these or similar services are provided for remuneration?Is the first half-sentence of Article 12(1) of Directive 2000/31 to be interpreted as meaning that the expression “provision of access to a communication network” means that the only criterion for provision in conformity with the directive is that access to a communication network (for example, the internet) should be successfully provided?Is the first half-sentence of Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive, to be interpreted as meaning that, for the purposes of “anbieten” (“provision”) within the meaning of Article 2(b) [of that directive], it is sufficient for the Information Society service to be made available, that being, in this case, the making available of an open [wireless local area network] WLAN, or is “advertising”, for example, also necessary?4.Is the first half-sentence of Article 12(1) of Directive 2000/31 to be interpreted as meaning that the expression “not liable for the information transmitted” precludes as a matter of principle, or in any event in relation to a first established copyright infringement, any claims for injunctive relief, damages or the payment of the costs of giving formal notice or court costs which a person affected by a copyright infringement might make against the access provider?5.Is the first half-sentence of Article 12(1) of Directive 2000/31, read in conjunction with Article 12(3) of that directive, to be interpreted as meaning that the Member States may not permit a national court, in substantive proceedings, to make an order requiring an access provider to refrain in future from enabling third parties to make a particular copyright-protected work available for electronic retrieval from an online exchange platform via a specific internet connection?6.Is the first half-sentence of Article 12(1) of Directive 2000/31 to be interpreted as meaning that, in circumstances such as those in the main proceedings, the rule contained in Article 14(1)(b) of Directive 2000/31 is to be applied mutatis mutandis to an application for a prohibitory injunction?7.Is the first half-sentence of Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive to be interpreted as meaning that the requirements applicable to a service provider are limited to the condition that the service provider be any natural or legal person providing an Information Society service?8.If the seventh question is answered in the negative, what additional requirements must be imposed on a service provider for the purposes of interpreting Article 2(b) of Directive 2000/31?9.Is the first half-sentence of Article 12(1) of Directive 2000/31, taking into account the existing protection of intellectual property as a fundamental right forming part of the right to property (Article 17(2) of the Charter of Fundamental Rights of the European Union) and the provisions of Directives 2001/29 and 2004/48, and taking into account the freedom of information and the fundamental right under EU law of the freedom to conduct a business (Article 16 of the Charter of Fundamental Rights of the European Union), to be interpreted as not precluding a national court from deciding, in … proceedings in which an access provider is ordered, on pain of payment of a fine, to refrain in the future from enabling third parties to make a particular copyright-protected work or parts thereof available for electronic retrieval from an online (peer-to-peer) exchange platform via a specific internet connection, that it may be left to the access provider to determine what specific technical measures to take in order to comply with that order?[10.]Does this also apply where the access provider is in fact able to comply with the court prohibition only by terminating or password-protecting the internet connection or examining all communications passing through it in order to ascertain whether the particular copyright-protected work is unlawfully transmitted again, and this fact is apparent from the outset rather than coming to light only in the course of enforcement or penalty proceedings?’ Consideration of the questions referred The first question 34It appears from the order for reference that, by its first question, the referring court seeks to determine whether a service, such as that provided by the applicant in the main proceedings, consisting in making available to the general public an open wireless communication network free of charge may fall within the scope of Article 12(1) of Directive 2000/31.35In those circumstances, it must be understood that, by its first question, the referring court is asking, in essence, whether Article 12(1) of Directive 2000/31, read in conjunction with Article 2(a) of that directive and with Article 1(2) of Directive 98/34, must be interpreted as meaning that a service, such as that at issue in the main proceedings, provided by a communication network operator and consisting in making that network available to the general public free of charge constitutes an ‘information society service’ within the meaning of Article 12(1) of Directive 2000/31.36From the outset, it is important to note that neither Article 12(1) of Directive 2000/31 nor Article 2 of that directive defines the concept of an ‘information society service’. However, the latter article refers for such purposes to Directive 98/34.37In that regard, it follows, first, from recitals 2 and 19 to Directive 98/48 that the concept of a ‘service’ used in Directive 98/34 must be understood as having the same meaning as that used in Article 57 TFEU. Under Article 57 TFEU, ‘services’ are to be considered to be services normally provided for remuneration.38Second, Article 1(2) of Directive 98/34 provides that the concept of an ‘information society service’ covers any service normally provided for remuneration, by electronic means and at the individual request of a recipient of services.39Under those conditions, the Court finds that the information society services referred to in Article 12(1) of Directive 2000/31 cover only those services normally provided for remuneration.40That conclusion is borne out by recital 18 of Directive 2000/31 which states that, although information society services are not solely restricted to services giving rise to online contracting but extend to other services, those services must represent an economic activity.41Nonetheless, it does not follow that a service of an economic nature performed free of charge may under no circumstances constitute an ‘information society service’ within the meaning of Article 12(1) of Directive 2000/31. The remuneration of a service supplied by a service provider within the course of its economic activity does not require the service to be paid for by those for whom it is performed (see, to that effect, judgment of 11 September 2014, Papasavvas, C‑291/13, EU:C:2014:2209, paragraphs 28 and 29).42That is the case, inter alia, where the performance of a service free of charge is provided by a service provider for the purposes of advertising the goods sold and services provided by that service provider, since the cost of that activity is incorporated into the price of those goods or services (judgment of 26 April 1988, Bond van Adverteerders and Others, 352/85, EU:C:1988:196, paragraph 16, and of 11 April 2000, Deliège, C‑51/96 and C‑191/97, EU:C:2000:199, paragraph 56).43In the light of the foregoing, the answer to the first question referred is that Article 12(1) of Directive 2000/31, read in conjunction with Article 2(a) of that directive and with Article 1(2) of Directive 98/34, must be interpreted as meaning that a service such as that at issue in the main proceedings, provided by a communication network operator and consisting in making that network available to the general public free of charge constitutes an ‘information society service’ within the meaning of Article 12(1) of Directive 2000/31 where the activity is performed by the service provider in question for the purposes of advertising the goods sold or services supplied by that service provider. The second and third questions 44By its second and third questions, which it is appropriate to consider together, the referring court asks, in essence, whether Article 12(1) of Directive 2000/31 must be interpreted as meaning that, in order for the service referred to in that article, consisting in providing access to a communication network, to be considered to have been provided, that access must only be made available or whether further conditions must be satisfied.45In particular, the referring court wishes to know whether, in addition to providing access to a communication network, it is necessary, first, for there to be a contractual relationship between the recipient and provider of the service and, second, for the service provider to advertise the service.46In that regard, in the first place, it is clear from the wording of Article 12 of Directive 2000/31, headed ‘Mere conduit’, that the provision of the service referred to in that article must involve the transmission in a communication network of information.47Furthermore, the provision states that the exemption from liability laid down in that provision applies only with regard to information transmitted.48Finally, according to recital 42 of Directive 2000/31, the activity of ‘mere conduit’ is of a mere technical, automatic and passive nature.49It follows that providing access to a communication network must not go beyond the boundaries of such a technical, automatic and passive process for the transmission of the required information.50In the second place, it does not appear either from the other provisions of Directive 2000/31 or the objectives pursued thereunder that providing access to a communication network must satisfy further conditions, such as a condition that there be a contractual relationship between the recipient and provider of that service or that the service provider use advertising to promote that service.51The Court recognises that it may appear from the use in Article 2(b) of Directive 2000/31 of the verb anbieten in its German language version that that article refers to the idea of an “offer”, and thus to a certain form of advertising.52However, the need for uniform application and accordingly a uniform interpretation of the provisions of EU law makes it impossible for one version of the text of a provision to be considered, in case of doubt, in isolation, but requires, on the contrary, that it be interpreted and applied in the light of the versions existing in the other official languages (judgment of 9 June 2011, Eleftheri tileorasi and Giannikos, C‑52/10, EU:C:2011:374, paragraph 23).53The other language versions of the Article 2(b), inter alia those in Spanish, Czech, English, French, Italian, Polish or Slovak, use verbs which do not imply the idea of an ‘offer’ or of advertising.54In the light of the foregoing, the answer to the second and third questions is that Article 12(1) of Directive 2000/31 must be interpreted as meaning that, in order for the service referred to in that article, consisting in providing access to a communication network, to be considered to have been provided, that access must not go beyond the boundaries of a technical, automatic and passive process for the transmission of the required information, there being no further conditions to be satisfied. The sixth question 55By its sixth question, which it is appropriate to consider in the third place, the referring court asks, in essence, whether Article 12(1) of Directive 2000/31 must be interpreted as meaning that the condition laid down in Article 14(1)(b) of that directive applies mutatis mutandis to Article 12(1) of the directive.56In that regard, it follows from the very structure of Directive 2000/31 that the EU legislature wished to distinguish between the regimes applicable to the activities of mere conduit, of the storage of information taking the form of ‘caching’ and of hosting in so far as those activities are governed by different provisions of that directive.57Against that background, it appears from a comparison of Article 12(1), Article 13(1) and Article 14(1) of the directive that the exemptions from liability provided for in those provisions are governed by different conditions of application depending on the type of activity concerned.58In particular, Article 14(1) of Directive 2000/31, headed ‘Hosting’, provides, inter alia, that, in order to benefit from the exemption from liability laid down in that provision in favour of internet website hosts, such hosts must act expeditiously upon obtaining knowledge of illegal information to remove or to disable access to it.59However, Article 12(1) of Directive 2000/31 does not subject the exemption from liability that it lays down in favour of providers of access to a communication network to compliance with such a condition.60Moreover, as the Advocate General has stated in paragraph 100 of his Opinion, the position of an internet website host on the one hand and of a communication network access provider on the other are not similar as regards the condition laid down in Article 14(1) of Directive 2000/31.61It appears from recital 42 of Directive 2000/31 that the exemptions from liability established therein were provided for in the light of the fact that the activities engaged in by the various categories of service providers referred to, inter alia providers of access to a communication network and internet website hosts, are all of a mere technical, automatic and passive nature and that, accordingly, such service providers have neither knowledge of, nor control over, the information which is thereby transmitted or stored.62Nevertheless, the service provided by an internet website host, which consists in the storage of information, is of a more permanent nature. Accordingly, such a host may obtain knowledge of the illegal character of certain information that it stores at a time subsequent to that when the storage was processed and when it is still capable of taking action to remove or disable access to it.63However, as regards a communication network access provider, the service of transmitting information that it supplies is not normally continued over any length of time, so that, after having transmitted the information, it no longer has any control over that information. In those circumstances, a communication network access provider, in contrast to an internet website host, is often not in a position to take action to remove certain information or disable access to it at a later time.64In any event, it follows from paragraph 54 above that Article 12(1) of Directive 2000/31 does not provide for any further condition other than for the service at issue to provide access to a communication network which does not go beyond the boundaries of a technical, automatic and passive process for the transmission of the required information.65In the light of the foregoing, the answer to the sixth question is that Article 12(1) of Directive 2000/31 must be interpreted as meaning that the condition laid down in Article 14(1)(b) of that directive does not apply mutatis mutandis to Article 12(1). The seventh and eighth questions 66By its seventh and eighth questions, which it is appropriate to consider together and in the fourth place, the referring court asks, in essence, whether Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive, must be interpreted as meaning that there are conditions other than the one mentioned in that provision to which a service provider providing access to a communication network is subject.67In that regard, Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive, expressly provides for only one condition as regards such a service provider, namely that of being a natural or legal person providing an information society service.68In that regard, it appears from recital 41 to Directive 2000/31 that, by adopting that directive, the EU legislature struck a balance between the various interests at stake. It follows that that directive as a whole, and in particular Article 12(1) read in conjunction with Article 2(b) thereof must be regarded as giving effect to the balance struck by the legislature.69In those circumstances, it is not for the Court to take the place of the EU legislature by subjecting the application of that provision to conditions which the legislature has not laid down.70To subject the exemption laid down in Article 12(1) of Directive 2000/31 to compliance with conditions that the EU legislature has not expressly envisaged could call that balance into question.71In the light of the foregoing, the answer to the seventh and eighth questions is that Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive, must be interpreted as meaning that there are no conditions, other than the one mentioned in that provision, to which a service provider supplying access to a communication network is subject. The fourth question 72By its fourth question, which it is appropriate to consider in the fifth place, the referring court asks, in essence, whether Article 12(1) of Directive 2000/31 must be interpreted as meaning that it does not preclude a person harmed by the infringement of its rights over a work from claiming injunctive relief against the recurrence of that infringement, compensation and the payment of costs of giving formal notice and court costs from a communication network access provider whose services were used in that infringement.73In that regard, it should be noted that Article 12(1) of Directive 2000/31 states that the Member States must ensure that service providers supplying access to a communication network are not held liable for information transmitted to them by the recipients of that service on the threefold condition laid down in that provision that such providers do not initiate such a transmission, that they do not select the receiver of that transmission and that they do not select or modify the information contained in the transmission.74It follows that, where those conditions are satisfied, a service provider supplying access to a communication network may not be held liable and therefore a copyright holder is, in any event, precluded from claiming compensation from that service provider on the ground that the connection to that network was used by third parties to infringe its rights.75As a result, a copyright holder is also, in any event, precluded from claiming the reimbursement of the costs of giving formal notice or court costs incurred in relation to its claim for compensation. In order to be well founded, such an ancilliary claim requires that the principal claim is also well founded, which is precluded by Article 12(1) of Directive 2000/31.76Nevertheless, Article 12(3) of Directive 2000/31 states that that article is not to affect the possibility, for a national court or administrative authority, of requiring a service provider to terminate or prevent an infringement of copyright.77Thus, where an infringement is perpetrated by a third party by means of an internet connection which was made available to him by a communication network access provider, Article 12(1) of the directive does not preclude the person harmed by that infringement from seeking before a national authority or court to have the service provider prevented from allowing that infringement to continue.78Consequently, the Court considers that, taken in isolation, Article 12(1) of Directive 2000/31 does not prevent that same person from claiming the reimbursement of the costs of giving formal notice and court costs incurred in a claim such as that outlined in the preceding paragraphs.79In the light of the foregoing, the answer to the fourth question is that Article 12(1) of Directive 2000/31 must be interpreted as precluding a person harmed by the infringement of its rights over a work from claiming compensation from a provider of access to a communication network on the ground that such access was used by a third party to infringe its rights and the reimbursement of the costs of giving formal notice or court costs incurred in relation to its claim for compensation. However, that article must be interpreted as meaning that it does not preclude such a person from claiming injunctive relief against the continuation of that infringement and the payment of the costs of giving formal notice and court costs from a communication network access provider whose services were used in that infringement where such claims are made for the purposes of obtaining, or follow the grant of injunctive relief by a national authority or court to prevent that service provider from allowing the infringement to continue. The fifth, sixth and seventh questions 80By its fifth, ninth and tenth questions, which it is appropriate to consider together and in the sixth place, the referring court asks, in essence, whether, having regard to the requirements deriving from the protection of fundamental rights and to the rules laid down in Directives 2001/29 and 2004/48, Article 12(1) of Directive 2000/31, read in conjunction with Article 12(3) of that directive, must be interpreted as precluding the grant of an injunction such as that at issue in the main proceedings, which requires, on pain of payment of a fine, a provider of access to a communication network allowing the public to connect to the internet to prevent third parties from making a particular copyright-protected work or parts thereof available to the general public from an online (peer-to-peer) exchange platform via an internet connection available in that network, where, although that provider may determine which technical measures to take in order to comply with the injunction, it has already been established that the only measures which the provider may in practice adopt consist in terminating or password-protecting the internet connection or in examining all communications passing through it.81As a preliminary matter, it is common ground that an injunction, such as that envisaged by the referring court in the case at issue in the main proceedings, in so far as it would require the communication network access provider in question to prevent the recurrence of an infringement of a right related to copyright, falls within the scope of the protection of the fundamental right to the protection of intellectual property laid down in Article 17(2) of the Charter of Fundamental Rights of the European Union (‘the Charter’).82In addition, in so far as such an injunction, first, places a burden on the access provider capable of affecting his economic activity and, second, is capable of restricting the freedom available to recipients of such a service from benefiting from access to the internet, the Court finds that the injunction infringes the former’s right of freedom to conduct a business, protected under Article 16 of the Charter, and the right of others to freedom of information, the protection of which is provided for by Article 11 of the Charter.83Where several fundamental rights protected under EU law are at stake, it is for the national authorities or courts concerned to ensure that a fair balance is struck between those rights (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraphs 68 and 70).84In that regard, the Court has previously held that an injunction which leaves a communication network access provider to determine the specific measures to be taken in order to achieve the result sought is capable, under certain conditions, of leading to such a fair balance (see, to that effect, judgment of 27 March 2014, UPC Telekabel Wien, C‑314/12, EU:C:2014:192, paragraphs 62 and 63).85In the present case, it appears from the order for reference that the referring court envisages a situation in which there are, in practice, only three measures that the addressee of the injunction may take, namely examining all communications passing through an internet connection, terminating that connection or password-protecting it.86It is therefore on the sole basis of those three measures envisaged by the referring court that the Court will examine the compatibility of the envisaged injunction with EU law.87As regards, first, monitoring all of the information transmitted, such a measure must be excluded from the outset as contrary to Article 15(1) of Directive 2000/31, which excludes the imposition of a general obligation on, inter alia, communication network access providers to monitor the information that they transmit.88As regards, second, the measure consisting in terminating the internet connection completely, it must be found that so doing would cause a serious infringement of the freedom to conduct a business of a person who pursues an economic activity, albeit of a secondary nature, consisting in providing internet access by categorically preventing that provider from pursuing the activity in practice in order to remedy a limited infringement of copyright without considering the adoption of measures less restrictive of that freedom.89In those circumstances, such a measure cannot be regarded as complying with the requirements of ensuring a fair balance is struck between the fundamental rights which must be reconciled (see, to that effect, as regards an injunction, judgment of 24 November 2011, Scarlet Extended, C‑70/10, EU:C:2011:771, paragraph 49, and, by analogy, judgment of 16 July 2015, Coty Germany, C‑580/13, EU:C:2015:485, paragraphs 35 and 41).90As regards, third, the measure consisting in password-protecting an internet connection, it should be noted that such a measure is capable of restricting both the freedom to conduct a business of the provider supplying the service of access to a communication network and the right to freedom of information of the recipients of that service.91Nonetheless, it must be found, in the first place, that such a measure does not damage the essence of the right to freedom to conduct its business of a communication network access provider in so far as the measure is limited to marginally adjusting one of the technical options open to the provider in exercising its activity.92In the second place, a measure consisting in securing an internet connection does not appear to be such as to undermine the essence of the right to freedom of information of the recipients of an internet network access service, in so far as it is limited to requiring such recipients to request a password, it being clear furthermore that that connection constitutes only one of several means of accessing the internet.93In the third place, it is true that, according to case-law, the measure adopted must be strictly targeted, in the sense that it must serve to bring an end to a third party’s infringement of copyright or of a related right but without thereby affecting the possibility of internet users lawfully accessing information using the provider’s services. Failing that, the provider’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued (judgment of 27 March 2014, UPC Telekabel Wien, C‑314/12, EU:C:2014:192, paragraph 56).94However, a measure adopted by a communication network access provider consisting in securing the connection to that network does not appear to be capable of affecting the possibility made available to internet users using the services of that provider to access information lawfully, in so far as the measure does not block any internet site.95In the fourth place, the Court has previously held that measures which are taken by the addressee of an injunction such as that at issue in the main proceedings when complying with that injunction must be sufficiently effective to ensure genuine protection of the fundamental right at issue, that is to say that they must have the effect of preventing unauthorised access to the protected subject matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject matter made available to them in breach of that fundamental right (judgment of 27 March 2014, UPC Telekabel Wien, C‑314/12, EU:C:2014:192, paragraph 62).96In that regard, the Court finds that a measure consisting in password-protecting an internet connection may dissuade the users of that connection from infringing copyright or related rights, provided that those users are required to reveal their identity in order to obtain the required password and may not therefore act anonymously, a matter which it is for the referring court to ascertain.97In the fifth place, it should be recalled that, according to the referring court, there is no measure, other than the three measures that it referred to, that a communication network access provider, such as the applicant in the main proceedings, could, in practice, take in order to comply with an injunction such as that at issue in the main proceedings.98Since the two other measures have been rejected by the Court, to consider that a communication network access provider need not secure its internet connection would thus be to deprive the fundamental right to intellectual property of any protection, which would be contrary to the idea of a fair balance (see, by analogy, judgment of 16 July 2015, Coty Germany, C‑580/13, EU:C:2015:485, paragraphs 37 and 38).99In those circumstances, a measure intended to secure an internet connection by means of a password must be considered to be necessary in order to ensure the effective protection of the fundamental right to protection of intellectual property.100It follows from the foregoing that, under the conditions set out in this judgment, a measure consisting in securing a connection must be considered to be capable of striking a fair balance between, first, the fundamental right to protection of intellectual property and, second, the right to freedom to conduct the business of a provider supplying the service of access to a communication network and the right to freedom of information of the recipients of that service.101Consequently, the answer to the fifth, ninth and tenth questions referred is that, having regard to the requirements deriving from the protection of fundamental rights and to the rules laid down in Directives 2001/29 and 2004/48, Article 12(1) of Directive 2000/31, read in conjunction with Article 12(3) of that directive, must be interpreted as, in principle, not precluding the grant of an injunction such as that at issue in the main proceedings, which requires, on pain of payment of a fine, a communication network access provider to prevent third parties from making a particular copyright-protected work or parts thereof available to the general public from an online (peer-to-peer) exchange platform via the internet connection available in that network, where that provider may choose which technical measures to take in order to comply with the injunction even if such a choice is limited to a single measure consisting in password-protecting the internet connection, provided that those users are required to reveal their identity in order to obtain the required password and may not therefore act anonymously, a matter which it is for the referring court to ascertain. Costs 102Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Third Chamber) hereby rules: 1. Article 12(1) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (‘Directive on electronic commerce’), read in conjunction with Article 2(a) of that directive and with Article 1(2) of Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on information society services, as amended by Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998, must be interpreted as meaning that a service such as that at issue in the main proceedings, provided by a communication network operator and consisting in making that network available to the general public free of charge constitutes an ‘information society service’ within the meaning of Article 12(1) of Directive 2000/31 where the activity is performed by the service provider in question for the purposes of advertising the goods sold or services supplied by that service provider. 2. Article 12(1) of Directive 2000/31 must be interpreted as meaning that, in order for the service referred to in that article, consisting in providing access to a communication network, to be considered to have been provided, that access must not go beyond the boundaries of a technical, automatic and passive process for the transmission of the required information, there being no further conditions to be satisfied. 3. Article 12(1) of Directive 2000/31 must be interpreted as meaning that the condition laid down in Article 14(1)(b) of that directive does not apply mutatis mutandis to Article 12(1) of Directive 2000/31. 4. Article 12(1) of Directive 2000/31, read in conjunction with Article 2(b) of that directive, must be interpreted as meaning that there are no conditions, other than the one mentioned in that provision, to which a service provider supplying access to a communication network is subject. 5. Article 12(1) of Directive 2000/31 must be interpreted as meaning that a person harmed by the infringement of its rights over a work is precluded from claiming compensation from an access provider on the ground that the connection to that network was used by a third party to infringe its rights and the reimbursement of the costs of giving formal notice or court costs incurred in relation to its claim for compensation. However, that article must be interpreted as meaning that it does not preclude such a person from claiming injunctive relief against the continuation of that infringement and the payment of the costs of giving formal notice and court costs from a communication network access provider whose services were used in that infringement where such claims are made for the purposes of obtaining, or follow the grant of injunctive relief by a national authority or court to prevent that service provider from allowing the infringement to continue. 6. Having regard to the requirements deriving from the protection of fundamental rights and to the rules laid down in Directives 2001/29 and 2004/48, Article 12(1) of Directive 2000/31, read in conjunction with Article 12(3) of that directive, must be interpreted as, in principle, not precluding the grant of an injunction such as that at issue in the main proceedings, which requires, on pain of payment of a fine, a provider of access to a communication network allowing the public to connect to the internet to prevent third parties from making a particular copyright-protected work or parts thereof available to the general public from an online (peer-to-peer) exchange platform via an internet connection, where that provider may choose which technical measures to take in order to comply with the injunction even if such a choice is limited to a single measure consisting in password-protecting the internet connection, provided that those users are required to reveal their identity in order to obtain the required password and may not therefore act anonymously, a matter which it is for the referring court to ascertain. [Signatures]( *1 ) Language of the case: German. | 4f0e5-753622b-4b67 | EN |
Advocate General Sharpston considers that bodies monitoring the quality system of manufacturers of medical devices may be liable to patients for failure to fulfil their duties arising from EU product safety rules | 16 February 2017 ( *1 )‛Reference for a preliminary ruling — Approximation of laws — Industrial policy — Directive 93/42/EEC — Checks on the conformity of medical devices — Notified body appointed by the manufacturer — Obligations of that body — Defective breast implants — Implants manufactured using silicone — Liability of the notified body’In Case C‑219/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesgerichtshof (Federal Court of Justice, Germany), made by decision of 9 April 2015, received at the Court on 13 May 2015, in the proceedings Elisabeth Schmitt v TÜV Rheinland LGA Products GmbH, THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, E. Regan, J.-C. Bonichot, C.G. Fernlund (Rapporteur) and S. Rodin, Judges,Advocate General : E. Sharpston,Registrar: C. Strömholm, Administrator,having regard to the written procedure and further to the hearing on 26 May 2016,after considering the observations submitted on behalf of:—Mrs Schmitt, by R. Schultze-Zeu, Rechtsanwältin, and H. Riehn, Rechtsanwalt,TÜV Rheinland LGA Products GmbH, by I. Brock, Rechtsanwältin, M. Schweiger, Rechtsanwalt, and D. Anderson QC,the German Government, by T. Henze, J. Möller and K. Petersen, acting as Agents,Ireland, by E. Creedon, L. Williams and A. Joyce, acting as Agents, and C. Toland, Barrister-at-Law,the French Government, by G. de Bergues, D. Colas, F. Gloaguen and J. Traband, acting as Agents,the European Commission, by M. Kellerbauer and P. Mihaylova, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 15 September 2016,gives the following Judgment 1This reference for a preliminary ruling concerns the interpretation of Article 11(1)(a) of Council Directive 93/42/EEC of 14 June 1993 concerning medical devices (OJ 1993 L 169, p. 1), as amended by Regulation (EC) No 1882/2003 of the European Parliament and of the Council of 29 September 2003 (OJ 2003 L 284, p. 1) (‘Directive 93/42’), and sections 3.3, 4.3, 5.3 and 5.4 of Annex II to the directive.2The request has been made in proceedings between Mrs Elisabeth Schmitt and TÜV Rheinland LGA Products GmbH (‘TÜV Rheinland’) concerning the latter’s liability, as notified body, for the harm caused to Mrs Schmitt by defective breast implants made of silicone. Legal context EU law Directive 93/423Directive 93/42 was amended by Directive 2007/47/EC of the European Parliament and of the Council of 5 September 2007 (OJ 2007 L 247, p. 21). However, those amendments relate to provisions that were to be applied from 21 March 2010 and are therefore irrelevant for the purpose of the present proceedings.4The third recital of Directive 93/42 states that ‘national provisions for the safety and health protection of patients, users and, where appropriate, other persons, with regard to the use of medical devices should be harmonised in order to guarantee the free movement of such devices within the internal market’.5The fifth recital of Directive 93/42 states that ‘medical devices should provide patients, users and third parties with a high level of protection and attain the performance levels attributed to them by the manufacturer; … therefore, the maintenance or improvement of the level of protection attained in the Member States is one of the essential objectives of this Directive’.6Article 2 of Directive 93/42 provides that ‘Member States shall take all necessary steps to ensure that devices may be placed on the market and/or put into service only if they comply with the requirements laid down in this Directive when duly supplied and properly installed, maintained and used in accordance with their intended purpose’.7Article 11(1)(a) of Directive 93/42 sets out one of the alternatives for the conformity assessment procedure for Class III devices, other than custom-made devices and those intended for clinical investigations, which the manufacturer must choose in order to affix the CE marking. In practice, that alternative entails following the procedure relating to the EC declaration of conformity set out in Annex II (full quality assurance).8It is apparent from Article 11(9) of Directive 93/42 that, where the conformity assessment procedure requires the involvement of a notified body, the manufacturer may apply to a body of its choice within the framework of the tasks for which the body has been notified. Article 11(10) provides that that body may require, where duly justified, any information or data which is necessary for establishing and maintaining the attestation of conformity in view of the chosen procedure.9Article 16(6) of Directive 93/42 is worded as follows:‘Where a notified body finds that pertinent requirements of this Directive have not been met or are no longer met by the manufacturer or where a certificate should not have been issued, it shall, taking account of the principle of proportionality, suspend or withdraw the certificate issued or place any restrictions on it unless compliance with such requirements is ensured by the implementation of appropriate corrective measures by the manufacturer. In the case of suspension or withdrawal of the certificate or of any restriction placed on it or in cases where an intervention of the competent authority may become necessary, the notified body shall inform its competent authority thereof. The Member State shall inform the other Member States and the Commission.’10Annex II to Directive 93/42, headed ‘EC declaration of conformity’, provides in Section 1 thereof that ‘the manufacturer must ensure application of the quality system approved for the design, manufacture and final inspection of the products concerned, as specified in Section 3, and is subject to audit, as laid down in Sections 3.3 and 4, and to Community surveillance, as specified in Section 5.’11Section 3.2 of that annex states as follows:‘Application of the quality system must ensure that the products conform to the provisions of this Directive which apply to them at every stage, from design to final inspection. All the elements, requirements and provisions adopted by the manufacturer for his quality system must be documented in a systematic and orderly manner in the form of written policies and procedures such as quality programmes, quality plans, quality manuals and quality records.…’12Section 3.3 of that annex is worded as follows:‘The notified body must audit the quality system to determine whether it meets the requirements referred to in section 3.2. It must presume that quality systems which implement the relevant harmonized standards conform to these requirements.The assessment team must include at least one number with past experience of assessments of the technology concerned. The assessment procedure must include an inspection on the manufacturer’s premises and, in duly substantiated cases, on the premises of the manufacturer’s suppliers and/or subcontractors to inspect the manufacturing processes.The manufacturer shall be notified of the decision. It must contain the conclusions of the inspection and a reasoned assessment.’13Section 4.1 of Annex II to Directive 93/42 provides as follows:‘In addition to the obligations imposed by Section 3, the manufacturer must lodge with the notified body an application for examination of the design dossier relating to the product which he plans to manufacture …’14Section 4.2 of that annex states as follows:‘The application must describe the design, manufacture and performances of the product in question. It must include the documents needed to assess whether the product conforms to the requirements of this Directive …’15Section 4.3 of the annex provides as follows:‘The notified body must examine the application and, if the product conforms to the relevant provisions of this Directive, issue the application with an EC design-examination certificate. The notified body may require the application to be completed by further tests or proof to allow assessment of conformity with the requirements of the Directive. The certificate shall contain the conclusions of the examination, the conditions of validity, the data needed for identification of the approved design and, where appropriate, a description of the intended purpose of the product.16Section 5.1 of Annex II to Directive 93/42 is worded as follows:‘The aim of surveillance is to ensure that the manufacturer duly fulfils the obligations imposed by the approved quality system.’17Section 5.2 of that annex provides as follows:‘The manufacturer must authorise the notified body to carry out all the necessary inspections and supply it with all relevant information, in particular:the documentation on the quality system,the data stipulated in the part of the quality system relating to design, such as the results of analyses, calculation, tests, etc.,- the data stipulated in the part of the quality system relating to manufacture, such as inspection reports and test data, calibration data, qualification reports of the personnel concerned, etc.’18According to Section 5.3 of the annex, the notified body ‘must periodically carry out appropriate inspections and assessments to make sure that the manufacturer applies the approved quality system and must supply the manufacturer with an assessment report’. In addition, Section 5.4 provides that that body ‘may pay unannounced visits to the manufacturer [during which it] may, where necessary, carry out or ask for tests in order to check that the quality system is working properly’.19Annex XI to Directive 93/42 lays down ‘Criteria to be met for the designation of notified bodies’, including those relating to greater independence and scientific expertise. In particular, it is apparent from Section 3 of the annex that a notified body must have ‘sufficient scientific staff … who possess experience and knowledge sufficient to assess the medical functionality and performance of devices for which it has been notified, having regard to the requirements of this Directive’. Moreover, Section 6 of that annex states that such a body ‘must take out civil liability insurance, unless liability is assumed by the State under domestic legislation or the Member State itself carries out the inspections directly.’Directive 2003/12/EC20Under Article 1 of Commission Directive 2003/12/EC of 3 February 2003 on the reclassification of breast implants in the framework of Directive 93/42 (OJ 2003 L 28, p. 43), such implants are to be classified as Class III medical devices.21That directive entered into force on 1 September 2003. It is apparent from Articles 2 and 3 of the directive that breast implants placed on the market before that date were to be subject to a conformity reassessment procedure as Class III medical devices before 1 March 2004. German law 22It is apparent from the order for reference that Directive 93/42 was transposed into German law by the Medizinproduktegesetz (Law on medical devices) (‘the MPG’) and the Medizinprodukt-Verordnung (the Order on medical devices).23In accordance with the first sentence of Paragraph 6(2) and Paragraph 37(1) of the MPG and point 1 of Paragraph 7(1) of the Order on medical devices, Class III medical devices may be placed on the market only if the requirements of the conformity assessment procedure laid down in Annex II to Directive 93/42 are met.24It is clear from various provisions of the Bürgereliches Gesetzbuch (German Civil Code), as interpreted in German case-law, first, that civil liability may be incurred for breach of a rule conferring legal protection and, second, that the scope of the duty to exercise due diligence and take all due care under a contract may, in certain cases, extend to third parties. The dispute in the main proceedings and the questions referred for a preliminary ruling 25On 1 December 2008, Mrs Schmitt had breast implants manufactured in France fitted in Germany.26The manufacturer of those implants, which became insolvent after that date, had appointed TÜV Rheinland to assess its quality system. It is apparent from the order for reference that, in the course of its involvement during the period 1998 to 2008, that notified body made eight visits to the manufacturer’s premises, all of which were announced in advance. During that period, TÜV Rheinland never inspected business records or ordered that the devices be inspected.27In 2010, the competent French authority established that the manufacturer in question had produced breast implants using industrial silicone which did not comply with quality standards. Accordingly, Mrs Schmitt had the implants removed in 2012.28Taking the view that TÜV Rheinland had not fulfilled its obligations satisfactorily, Mrs Schmitt claimed EUR 40000 by way of compensation for non-material damage from that notified body before the German courts. She also sought a declaration that that body was liable for any future material damage. In support of her claims, Mrs Schmitt argued that an inspection of the delivery notes and invoices would have enabled TÜV Rheinland to ascertain that the manufacturer had not used an approved form of silicone.29Those claims were rejected at first instance and also by the appeal court.30First, the appeal court found that there could be no liability on the part of TÜV Rheinland for infringement of an obligation under a contract for the benefit of third parties, as the contract concluded between the notified body and the manufacturer fell to be assessed exclusively by reference to private law and did not include Mrs Schmitt. According to that court, it is neither the purpose nor the intention of TÜV Rheinland’s involvement to protect third parties, as the activities connected with certification serve only to ensure compliance with the requirements for placing medical devices on the market. The inclusion of a third party within the scope of the contract, contrary to the intention of the parties to the contract and in the absence of any legitimate interest in that regard, would have the effect of extending the notified body’s liability indefinitely.31Second, the appeal court found that TÜV Rheinland was not liable under civil liability law either, as the purpose of that notified body’s activity was not to protect patients. Moreover, that court found that no fault could be established as TÜV Rheinland had made regular announced visits, which must be deemed sufficient in the absence of any suspicion of improper production practices.32Mrs Schmitt brought an appeal on a point of law before the referring court.33In the view of the referring court, how the dispute will be resolved under German law depends, essentially, on the purpose of the involvement of a notified body in the conformity assessment procedure and on that body’s obligations under that procedure.34The referring court has indicated that the answer to the question whether the first sentence of Paragraph 6(2) of the MPG is to be regarded as a provision conferring legal protection on individual interests depends essentially on the content and purpose of Directive 93/42 in general, and Annex II thereto in particular. Under German law, a provision should be regarded as conferring legal protection where, having regard to its purpose and content, it is intended to protect individuals or certain groups of persons against the infringement of a particular legal interest. It would be helpful in that regard to ascertain whether the legislature which adopted the provision in question specifically intended, if only as a secondary aim, to afford to certain groups of individuals the legal protection sought on account of the infringement alleged. It is also appropriate to ascertain, as part of a comprehensive assessment of the legislative context in which the provision in question applies, whether the legislature might have intended to make infringement of the protected interest result in the tortious liability of the party infringing that interest.35Furthermore, the referring court explains, with regard to any benefit that may accrue to a third party to the contract concluded between the manufacturer in question and TÜV Rheinland, that such benefits may arise where certain conditions are met, inter alia where the manufacturer has a protectable interest in the scope of the contractual obligations of the notified body being extended to a third party, such as Mrs Schmitt. In interpreting that contract in accordance with German law, the objectives pursued by Directive 93/42 in general through the conformity assessment procedure and, in particular, through the involvement of the notified body via that contract are of crucial importance.36In any event, in order for TÜV Rheinland to incur liability, that notified body must have infringed either a rule conferring legal protection or a contractual obligation. In order to establish whether there was such an infringement, the referring court would like to ascertain the specific content of the obligations arising under Sections 3.3, 4.3, 5.3 and 5.4 of Annex II to Directive 93/42. That court entertains doubts as to the precise nature of the obligations which a body such as TÜV Rheinland is under, in particular with regard to the level of supervision and scrutiny required of that body when it carries out inspection visits at the manufacturer’s premises.37In those circumstances, the Bundesgerichtshof (Federal Court of Justice, Germany) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Is it the purpose and intention of Directive 93/42 that, in the case of Class III medical devices, the notified body responsible for auditing the quality system, examining the design of the product and surveillance acts in order to protect all potential patients and may therefore, in the event of a culpable infringement of an obligation, have direct and unrestricted liability towards the patients concerned?(2)Does it follow from Sections [3.3, 4.3, 5.3 and 5.4] of Annex II to Directive 93/42 that, in the case of Class III medical devices, the notified body responsible for auditing the quality system, examining the design of the product and surveillance is subject to a general obligation to examine devices, or at least to examine them where there is due cause?(3)Does it follow from the aforementioned sections of Annex II to Directive 93/42 that, in the case of Class III medical devices, the notified body responsible for auditing the quality system, examining the design of the product and surveillance is subject to a general obligation to examine the manufacturer’s business records and/or to carry out unannounced inspections, or at least to do so where there is due cause?’ Consideration of the questions referred The second and third questions 38By its second and third questions, which it is appropriate to answer first and together, the referring court seeks to ascertain, in essence, whether the provisions of Annex II to Directive 93/42 are to be interpreted as meaning that the notified body is required in general, or at least where there is due cause, to carry out unannounced inspections, to examine devices and/or to examine the manufacturer’s business records.39It should be noted in that regard that some of the obligations the notified body is under pursuant to Annex II to Directive 93/42 are undoubtedly specific in terms of specific action to be taken. Thus, in auditing the manufacturer’s quality system, the notified body is required to carry out an inspection on the manufacturer’s premises, in accordance with Section 3.3 of that annex. Moreover, in carrying out ‘surveillance’ of the manufacturer’s activities, the notified body must periodically undertake appropriate inspections and assessments, in accordance with Section 5.3 of the annex.40However, the provisions of Annex II to Directive 93/42 do not impose a general obligation on the notified body to carry out unannounced inspections, to examine devices and/or to examine the manufacturer’s business records.41That being so, it should be recalled that the notified body is under an obligation, pursuant to Sections 3.2, 3.3 and 4.1 to 4.3 of Annex II to Directive 93/42, first, to analyse the application for examination of the design dossier lodged by the manufacturer, which must describe the design, manufacture and performance of the product in question and, second, to ascertain whether the application of the quality system contemplated by the manufacturer ensures that the products fulfil the relevant requirements under that directive. Moreover, it is apparent from Section 5.1 of that annex that the notified body must satisfy itself that the manufacturer duly fulfils the obligations imposed by the approved quality system.42Annex II to Directive 93/42 expressly lays down various measures enabling the notified body to fulfil its surveillance obligations. It is apparent from Section 5.4 of the annex that the notified body may pay unannounced visits to the manufacturer during which it may, where necessary, carry out or ask for tests in order to check that the quality system is working properly.43Moreover, it is clear from Article 11(10) of Directive 93/42 that the notified body may require, where duly justified, any information or data which is necessary for establishing and maintaining the attestation of conformity in view of the chosen procedure. Accordingly, in the procedure relating to the EC declaration of conformity, the manufacturer must allow that body to carry out all the inspections necessary and provide it with all relevant information, in accordance with Section 5.2 of Annex II to the directive.44Several of the interested parties which have submitted observations to the Court have argued that it follows from the wording and overall scheme of Directive 93/42 that all the above measures are optional and that notified bodies should be allowed a broad degree of discretion in that regard.45It is true, as the Advocate General observed in point 44 of her Opinion, that those bodies must be allowed an appropriate degree of discretion, in view of the stringent requirements which they must satisfy under Annex XI to Directive 93/42 as regards their independence and scientific expertise. However, the obligations laid down in Article 16(6) of the directive and those set out in paragraph 41 above would be a dead letter if the degree of discretion knew no limits. The notified body would not be able to fulfil its function under the procedure relating to the EC declaration of conformity if it were free not to take any steps in the face of evidence indicating that a medical device might not comply with the requirements laid down in Directive 93/42.46Consequently, as they are required to establish whether EU certification may be maintained pursuant to Article 16(6) of Directive 93/42, notified bodies are under a general obligation to act with all due diligence when engaged in a procedure relating to the EC declaration of conformity.47It follows, as the Advocate General observed in point 54 of her Opinion, that a notified body is under a duty to be alert, with the result that, in the face of evidence indicating that a medical device may not comply with the requirements laid down in Directive 93/42, that body must take all steps necessary to ensure that it fulfils its obligations under Article 16(6) of the directive, as well as those set out in paragraph 41 above.48In the light of the foregoing considerations, the answer to the second and third questions is that the provisions of Annex II to Directive 93/42, read in the light of Article 11(1) and (10) and Article 16(6) of the directive, are to be interpreted as meaning that the notified body is not under a general obligation to carry out unannounced inspections, to examine devices and/or to examine the manufacturer’s business records. However, in the face of evidence indicating that a medical device may not comply with the requirements laid down in Directive 93/42, the notified body must take all the steps necessary to ensure that it fulfils its obligations under Article 16(6) of the directive and Sections 3.2, 3.3, 4.1 to 4.3 and 5.1 of Annex II to the directive. The first question 49By its first question, the referring court seeks to ascertain, in essence, whether Directive 93/42 is to be interpreted as meaning, first, that in the procedure relating to the EC declaration of conformity, the purpose of the notified body’s involvement is to protect the end users of medical devices and, second, that a culpable failure by that body to comply with its obligations is therefore liable to give rise to liability on its part vis-à-vis such users.50It should be observed that the Court has previously held, on the basis of, inter alia, the third and fifth recitals of Directive 93/42, that the aim of the directive is not only the protection of health stricto sensu, but also the safety of persons and that it does not concern only patients and users of medical devices but, more generally, ‘third parties’ or ‘other persons’ (judgment of 19 November 2009, Nordiska Dental, C‑288/08, EU:C:2009:718, paragraph 29). It follows that the actual aim of that directive is to protect the end users of medical devices.51While it is incumbent on the manufacturer, in the first place, to ensure that the medical device complies with the requirements laid down in Directive 93/42, it is clear that that directive also imposes obligations to that end on the Member States and notified bodies.52In that regard, it should be noted, first, that in addition to the obligation on Member States under Article 2 of Directive 93/42 to take all necessary steps to ensure that devices may be placed on the market and/or put into service only if they comply with the requirements laid down in the directive, the latter imposes specific obligations on the Member States as regards surveillance of the market. As the Court held in paragraphs 35 to 38 of its judgment of 24 November 2016, Lohmann & Rauscher International (C‑662/15, EU:C:2016:903), the combination of those obligations in connection with the procedures for safeguarding, vigilance and health surveillance, all of which are laid down by the directive, ensures protection for the health and safety of persons.53Second, with regard to the involvement of the notified body in the procedure relating to the EC declaration of conformity, it is apparent from the wording and overall scheme of Directive 93/42 that the purpose of that procedure is to ensure protection for the health and safety of persons.54In the light of the foregoing, it is necessary to determine whether, under Directive 93/42, a culpable infringement of its obligations by a notified body in the course of its involvement in the procedure in question may render it liable vis-à-vis the end users of medical devices.55It should be noted at the outset that the Court has previously stated that it does not necessarily follow from the fact that a directive imposes surveillance obligations on certain bodies or the fact that one of the objectives of the directive is to protect injured parties that the directive seeks to confer rights on such parties in the event that those bodies fail to fulfil their obligations, and that is the case especially if the directive does not contain any express rule granting such rights (see, to that effect, judgment of 12 October 2004, Paul and Others, C‑222/02, EU:C:2004:606, paragraphs 38 to 40).56Similarly, it should be noted that, in the absence of any mention in Directive 93/42 of the manner in which the civil liability of notified bodies may be incurred, it cannot be maintained that the purpose of the directive is to govern the conditions under which the end users of medical devices may be able to obtain compensation for culpable failure by those bodies to fulfil their obligations.57In any event, the mere fact that Section 6 of Annex XI to Directive 93/42 requires notified bodies to take out civil liability insurance is not sufficient, in the absence of any further detail in that regard, for it to be concluded that the directive requires Member States to confer on the end users of medical devices who have suffered injury as a result of culpable failure on the part of notified bodies to fulfil their obligations a right to look to those bodies for compensation.58It is established case-law that the system of rules put in place by Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ 1985 L 210, p. 29) does not preclude the application of other systems of contractual or non-contractual liability based on other grounds, such as fault (see, to that effect, judgment of 10 January 2006, Skov and Bilka, C‑402/03, EU:C:2006:6, paragraph 47).59It follows that, under EU law as it currently stands, the conditions under which culpable failure on the part of a notified body to fulfil its obligations under the procedure relating to the EC declaration of conformity laid down by Directive 93/42 may give rise to liability on its part vis-à-vis the end users of medical devices are governed by national law, subject to the principles of equivalence and effectiveness.60In the light of the foregoing considerations, the answer to the first question is that Directive 93/42 is to be interpreted as meaning that in the procedure relating to the EC declaration of conformity, the purpose of the notified body’s involvement is to protect the end users of medical devices. The conditions under which culpable failure by that body to fulfil its obligations under the directive in connection with that procedure may give rise to liability on its part vis-à-vis those end users are governed by national law, subject to the principles of equivalence and effectiveness. The request that the effects of the present judgment be limited in time 61In its observations, Ireland has requested the Court to limit the temporal effects of the present judgment, if the Court were to conclude that Directive 93/42 provides that, in the event of culpable failure to comply with its obligations in connection with a Class III medical device, the notified body has direct and unrestricted liability towards the users of the device.62It is sufficient to observe that it follows from the answer to the first question that Directive 93/42 does not impose such liability.63Accordingly, there is no need to limit the temporal effects of the present judgment. Costs 64Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: 1. The provisions of Annex II to Council Directive 93/42/EEC of 14 June 1993 concerning medical devices, as amended by Regulation (EC) No 1882/2003 of the European Parliament and of the Council of 29 September 2003, read in the light of Article 11(1) and (10) and Article 16(6) of the directive, are to be interpreted as meaning that the notified body is not under a general obligation to carry out unannounced inspections, to examine devices and/or to examine the manufacturer’s business records. However, in the face of evidence indicating that a medical device may not comply with the requirements laid down in Directive 93/42, as amended by Regulation No 1882/2003, the notified body must take all the steps necessary to ensure that it fulfils its obligations under Article 16(6) of the directive and Sections 3.2, 3.3, 4.1 to 4.3 and 5.1 of Annex II to the directive. 2. Directive 93/42, as amended by Regulation No 1882/2003, is to be interpreted as meaning that, in the procedure relating to the EC declaration of conformity, the purpose of the notified body’s involvement is to protect the end users of medical devices. The conditions under which culpable failure by that body to fulfil its obligations under the directive in connection with that procedure may give rise to liability on its part vis-à-vis those end users are governed by national law, subject to the principles of equivalence and effectiveness. [Signatures]( *1 ) Language of the case: German. | 9ed85-50144fe-47ac | EN |
The General Court of the EU confirms the freezing of funds of three Ukrainians, one being Viktor Yanukovych, former President of Ukraine, for the period from 6 March 2015 until 6 March 2016 | 15 September 2016 ( *1 )‛Common foreign and security policy — Restrictive measures taken in view of the situation in Ukraine — Freezing of funds — List of persons, entities and bodies subject to the freezing of funds and economic resources — Inclusion of the applicant’s name — Rights of the defence — Obligation to state reasons — Legal basis — Right to effective judicial protection — Failure to comply with the listing criteria — Manifest error of assessment — Right to property — Right to reputation’In Case T‑340/14, Andriy Klyuyev, residing in Donetsk (Ukraine), represented by B. Kennelly and J. Pobjoy, Barristers, and by R. Gherson and T. Garner, Solicitors,applicant,v Council of the European Union, represented by Á. De Elera-San Miguel Hurtado and J.-P. Hix, acting as Agents,defendant,supported by European Commission, represented by D. Gauci and T. Scharf, acting as Agents,intervener,APPLICATION under Article 263 TFEU seeking the annulment of (i) Council Decision 2014/119/CFSP of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 26) and Council Regulation (EU) No 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 1), and (ii) Council Decision (CFSP) 2015/364 of 5 March 2015 amending Decision 2014/119 (OJ 2015 L 62, p. 25) and Council Implementing Regulation (EU) 2015/357 of 5 March 2015 implementing Regulation No 208/2014 (OJ 2015 L 62, p. 1), in so far as the applicant’s name was included or maintained in the list of persons, entities and bodies subject to those restrictive measures, and, in the alternative, a declaration that Article 1(1) of Decision 2014/119 as amended by Council Decision (CFSP) 2015/143 of 29 January 2015 (OJ 2015 L 24, p. 16), and Article 3(1) of Regulation No 208/2014, as amended by Council Regulation (EU) 2015/138 of 29 January 2015 (OJ 2015 L 24, p. 1) do not apply to the applicant,THE GENERAL COURT (Ninth Chamber, extended composition),composed of G. Berardis (Rapporteur), President, O. Czúcz, I. Pelikánová, A. Popescu and E. Buttigieg, Judges,Registrar: G. Predonzani, Administrator,having regard to the written procedure and further to the hearing on 27 April 2016,gives the following Judgment Background to the proceedings 1The applicant, Mr Andriy Klyuyev, is the former Head of Administration of the President of Ukraine.2The present case has been brought against the background of the restrictive measures adopted in view of the situation in Ukraine following the suppression of demonstrations in Independence Square in Kiev (Ukraine) in February 2014.3On 5 March 2014 the Council of the European Union adopted, on the basis of Article 29 TEU, Decision 2014/119/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 26). On the same date, the Council adopted, on the basis of Article 215(2) TFEU, Regulation (EU) No 208/2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 1).4Recital (2) in the preamble of Decision 2014/119 states:‘On 3 March 2014, the Council agreed to focus restrictive measures on the freezing and recovery of assets of persons identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations, with a view to consolidating and supporting the rule of law and respect for human rights in Ukraine.’5Article 1(1) and (2) of Decision 2014/119 provide:‘1. All funds and economic resources belonging to, owned, held or controlled by persons having been identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them, as listed in the Annex, shall be frozen.2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of, natural or legal persons, entities or bodies listed in the Annex.’6The detailed rules for that freezing of funds are set out in the subsequent paragraphs of Article 1.7In accordance with Decision 2014/119, Regulation No 208/2014 requires the adoption of measures for the freezing of funds and lays down the detailed rules governing that freezing in terms essentially identical to those of that decision.8The persons affected by Decision 2014/119 and Regulation No 208/2014 (together: ‘the March 2014 acts’) are named in the Annex to Decision 2014/119 and in Annex I to Regulation No 208/2014, each of which contains an identical list (‘the list’), together with, inter alia, a statement of reasons for their inclusion in the list.9The applicant was listed with the identifying information ‘former Head of Administration of President of Ukraine’, and the following reasons were stated:‘Person subject to criminal proceedings in Ukraine to investigate crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine.’10On 6 March 2014 the Council published in the Official Journal of the European Union a notice for the attention of the persons subject to the restrictive measures provided for in the March 2014 acts (OJ 2014 C 66, p. 1). According to that notice, ‘[t]he persons concerned may submit a request to the Council, together with supporting documentation, that the decision to include them on the ... list should be reconsidered’.11In correspondence in the course of 2014, the applicant contended that his listing was not well founded and requested that the Council should reconsider. He also requested access to the information and evidence supporting that listing.12The Council replied to the applicant’s request that it reconsider. The Council maintained that, in its view, the restrictive measures relating to the applicant were still justified for the reasons given in the statement of reasons in the March 2014 acts. As regards the request for access to the applicant’s file, the Council sent to him a number of documents from its file, including documents from the Ukrainian authorities of 3 March 2014 (‘the letter of 3 March 2014’), 8 July 2014 (‘the letter of 8 July 2014’) and 10 October 2014 (‘the letter of 10 October 2014’).13On 29 January 2015 the Council adopted Decision (CFSP) 2015/143, amending Decision 2014/119 (OJ 2015 L 24, p. 16) and Regulation (EU) 2015/138, amending Regulation No 208/2014 (OJ 2015 L 24, p. 1) (together: ‘the January 2015 acts’).14Decision 2015/143 clarified, with effect from 31 January 2015, the criteria for the designation of the persons subject to the freezing of funds. In particular, Article 1(1) of Decision 2014/119 was replaced by the following:For the purpose of this Decision, persons identified as responsible for the misappropriation of Ukrainian State funds include persons subject to investigation by the Ukrainian authorities:(a)for the misappropriation of Ukrainian public funds or assets, or being an accomplice thereto; or(b)for the abuse of office as a public office-holder in order to procure an unjustified advantage for him- or herself or for a third party, and thereby causing a loss to Ukrainian public funds or assets, or being an accomplice thereto.’15Regulation 2015/138 amended Regulation No 208/2014 to conform to Decision 2015/143.16By letter of 2 February 2015, the Council informed the applicant that it intended to maintain the imposition on him of restrictive measures and sent to him a document from the Ukrainian authorities of 30 December 2014 (‘the letter of 30 December 2014’), and informed him that it was open to him to submit observations. By letter of 17 February 2015, the applicant asked the Council to review its position and to provide to him any other material that might justify the Council’s position.17On 5 March 2015 the Council adopted Decision (CFSP) 2015/364, amending Decision 2014/119 (OJ 2015 L 62, p. 25), and Implementing Regulation (EU) 2015/357, implementing Regulation No 208/2014 (OJ 2015 L 62, p. 1) (together: ‘the March 2015 acts’).18Decision 2015/364 amended Article 5 of Decision 2014/119, by extending the application of the restrictive measures in respect of the applicant until 6 March 2016. Consequently, Decision 2015/364 and Implementing Regulation 2015/357 replaced the list.19Following those amendments, the applicant’s name was maintained on the list with the identifying information ‘former Head of Administration of President of Ukraine’ and the following new statement of reasons:‘Person subject to criminal proceedings by the Ukrainian authorities for the misappropriation of public funds or assets and in connection with the misuse of office by a public office-holder to procure an unjustified advantage for himself or a third party thereby causing a loss to the Ukrainian public budget or assets.’20Decision 2014/119 and Regulation No 208/2014 were subsequently amended, respectively, by Council Decision (CFSP) 2016/318 of 4 March 2016 amending Decision 2014/119 (OJ 2016 L 60, p. 76) and Council Implementing Regulation (EU) 2016/311 of 4 March 2016 implementing Regulation No 208/2014 (OJ 2016 L 60, p. 1).21Decision 2016/318 amended Article 5 of Decision 2014/119 by extending the application of the restrictive measures in respect of the applicant until 6 March 2017. Procedure and forms of order sought by the parties 22By application lodged at the Registry of the General Court on 15 May 2014, the applicant brought the present action.23On 12 August 2014 the Council lodged its defence. On the same date, the Council submitted an application for confidential treatment requesting that the content of an annex not be disclosed in the documents relating to the case to which the public has access.24By a document lodged at the Court Registry on 18 September 2014, the European Commission applied for leave to intervene in the present proceedings in support of the form of order sought by the Council. By order of 6 November 2014, the President of the Ninth Chamber of the Court granted that leave to intervene. By document lodged on 17 December 2014, the Commission waived its right to submit a statement in intervention.25By document lodged at the Court Registry on 30 September 2014, Ukraine applied for leave to intervene in the present proceedings in support of the form of order sought by the Council. By letter lodged at the Court Registry on 24 December 2014, Ukraine informed the Court that it was withdrawing its application to intervene. By order of 11 March 2015, the President of the Ninth Chamber of the General Court ordered that Ukraine be removed from the register as an applicant to intervene.26The reply and the rejoinder were lodged, respectively, by the applicant on 31 October 2014 and by the Council on 18 December 2014. On 18 December 2014 the Council also submitted an application for confidential treatment requesting that the content of a particular annex should not be disclosed in the documents relating to the case to which the public has access.27By document lodged at the Court Registry on 15 May 2015 the applicant modified his form of order, so that his action should also be directed to the annulment of Decision 2015/364 and Implementing Regulation 2015/357, in so far as those acts concern him. The Council submitted its observations within the period prescribed. On 14 September 2015 the Council also lodged an application for confidential treatment, requesting that the content of certain annexes to the statement of modification not be disclosed in the documents relating to the case to which the public has access.28On the proposal of the Ninth Chamber, the Court decided, pursuant to Article 28 of the Court’s Rules of Procedure, to refer the case to a formation sitting with a greater number of Judges.29On hearing the report of the Judge-Rapporteur, the Court (Ninth Chamber, extended composition) decided to open the oral stage of the procedure.30The parties presented oral argument and replied to questions put by the Court at the hearing on 27 April 2016.31The applicant claims that the Court should:—annul (i) Decision 2014/119 and Regulation No 208/2014, and (ii) Decision 2015/364 and Implementing Regulation 2015/357, in so far as they concern him;in the alternative, declare that Article 1(1) of Decision 2014/119, as amended by Decision 2015/143, and Article 3(1) of Regulation No 208/2014, as amended by Regulation 2015/138 are not applicable to him;order the Council to pay the costs.32The Council, supported by the Commission, contends that the Court should:dismiss the action;in the alternative, should the March 2014 acts be partly annulled, order that the effects of Decision 2014/119 be maintained as regards the applicant until the partial annulment of Regulation No 208/2014 takes effect and, should the March 2015 acts be partly annulled, order that the effects of Decision 2014/119, as amended, be maintained as regards the applicant until the partial annulment of Regulation No 208/2014, as amended by Implementing Regulation 2015/357, takes effect;order the applicant to pay the costs. Law The claims for annulment of the March 2014 acts, as initially worded, in so far as they concern the applicant 33In support of his action seeking the annulment of the March 2014 acts as initially worded, the applicant relies on six pleas in law. The first claims lack of a legal basis. The second claims breach of the rights of the defence and of the right to effective judicial protection. The third claims a failure to state sufficient reasons. The fourth claims a breach of the rights to property and reputation. The fifth claims factual inaccuracy and a manifest error of assessment. The sixth claims the absence of evidence.34By the fifth and sixth pleas in law, which the Court will examine first, the applicant claims, in essence, that the decision to impose restrictive measures was not adopted on a sufficiently solid factual basis and that the Council therefore committed a manifest error of assessment.35The Council contends that the letter of 3 March 2014 indicated that an investigation into the applicant’s involvement in the embezzlement of State funds in sizeable amounts and their subsequent illegal transfer outside the territory of Ukraine was ongoing, which corresponded to the statement of reasons set out in the March 2014 acts. In addition, the document of 8 July 2014 (see paragraph 12 above) confirms that a pre-trial investigation had been opened in Ukraine in respect of the applicant, who was suspected, inter alia, of embezzlement of sizeable amounts of State funds.36It should be noted that, although the Council has a broad discretion as regards the general criteria to be taken into consideration for the purpose of adopting restrictive measures, the effectiveness of the judicial review guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union requires that, as part of the review of the lawfulness of the grounds which form the basis of the decision to include or to maintain a person’s name on the list of persons subject to restrictive measures, the Courts of the European Union must ensure that that decision, which affects that person individually, is taken on a sufficiently solid factual basis. That entails a verification of the factual allegations in the summary of reasons underpinning that decision, with the consequence that judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on, but must concern whether those reasons, or, at the very least, one of those reasons, deemed sufficient in itself to support that decision, are substantiated by sufficiently specific and concrete evidence (see judgment of 21 April 2015 in Anbouba v Council, C‑605/13 P, EU:C:2015:248, paragraphs 41 and 45 and the case-law cited).37In the present case, the criterion laid down in Article 1(1) of Decision 2014/119 provides that restrictive measures are to be imposed on persons who have been identified as responsible for the misappropriation of public funds. Furthermore, it is clear from Recital (2) of that decision that the Council adopted those measures ‘with a view to consolidating and supporting the rule of law ... in Ukraine’.38The reason stated for the listing of the applicant was that he was a person ‘subject to criminal proceedings in Ukraine to investigate crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine’.39In support of the reason stated for the applicant’s listing, the Council relies on the letter of 3 March 2014. The first part of that letter states that the ‘law-enforcement agencies of Ukraine’ had launched a number of criminal proceedings to investigate criminal acts committed by former senior officials, one of those named being the applicant. The letter thereafter states, in general terms, that the investigation concerned had ‘made it possible to establish the misappropriation of State funds in sizeable amounts and their further illegal transfer outside the territory of Ukraine’.40It is not disputed that the applicant was identified on that basis alone ‘as responsible for the misappropriation of Ukrainian State funds’ within the meaning of Article 1(1) of Decision 2014/119. The letter of 3 March 2014 is, within the body of evidence lodged by the Council in these proceedings, the only evidence that precedes the March 2014 acts and, therefore, the lawfulness of those acts must be assessed solely with regard to that evidence.41The Court must hold that, while that letter emanates from a high judicial authority of a third country, the letter contains no more than a vague and general statement linking the name of the applicant, among other former senior officials, to an investigation which, in essence, had established the fact that State funds had been embezzled. The letter does not provide any details as to the establishment of the acts which the investigation conducted by the Ukrainian authorities was in the process of determining and, still less, as to the applicant’s individual liability, even presumed, in respect of those acts (see, to that effect, judgment of 28 January 2016, Azarov v Council, T‑332/14, not published, EU:T:2016:48, paragraph 46; see also, by analogy, judgment of 26 October 2015, Portnov v Council, T‑290/14, EU:T:2015:806, paragraphs 43 and 44).42It should further be noted that, in contrast to the case that gave rise to the judgment of 27 February 2014, Ezz and Others v Council (T‑256/11, EU:T:2014:93, paragraphs 57 to 61), upheld on appeal by the judgment of 5 March 2015, Ezz and Others v Council (C‑220/14 P, EU:C:2015:147), relied on by the Council, in the present case the Council did not have any information regarding the acts or conduct specifically imputed to the applicant by the Ukrainian authorities and, moreover, the letter of 3 March 2014, even if it is examined in its context, cannot constitute a sufficiently solid factual basis, within the meaning of the case-law cited in paragraph 36 above, for including the applicant’s name on the list on the ground that he was identified ‘as responsible’ for the misappropriation of State funds (see, to that effect, judgment of 26 October 2015, Portnov v Council (T‑290/14, EU:T:2015:806, paragraphs 46 to 48).43Irrespective of the stage reached in the proceedings to which the applicant was deemed to be subject, the Council could not adopt restrictive measures against him without knowing the acts of misappropriation of public funds which the Ukrainian authorities specifically alleged that he had committed. Only with knowledge of such acts would the Council have been in a position to determine that they were capable, first, of being classified as misappropriation of State funds and, secondly, of undermining the rule of law in Ukraine, the consolidation and support of which, as recalled in paragraph 37 above, constitutes the objective pursued by the adoption of the restrictive measures at issue (judgments of 28 January 2016, Klyuyev v Council, T‑341/14, EU:T:2016:47, paragraph 50, and of 28 January 2016, Azarov v Council, T‑331/14, EU:T:2016:49, paragraph 55).44Moreover, it is for the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 120 and 121, and of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraphs 65 and 66).45In the light of all the foregoing, the Court must conclude that the inclusion of the applicant’s name on the list does not rest on a factual basis that is sufficient to guarantee compliance with the criteria for the designation of persons to be subject to the restrictive measures at issue laid down by Decision 2014/119.46Further, it is clear that that illegality persisted until the entry into force of the March 2015 acts, whereby the list was replaced and the reasons stated for the applicant’s listing were amended.47In the light of that conclusion, there is no need to give a ruling on the applicant’s claim that the listing of his name by the March 2014 acts should be declared to be illegal for the period from 31 January to 6 March 2015, that is to say from the entry into force of the January 2015 acts and until the entry into force of the March 2015 acts. Given the annulment of the March 2014 acts, in so far as they concern the applicant, he is deemed not to have been subject to the restrictive measures in that period.48Consequently, the fifth and sixth pleas in law must be upheld and Decision 2014/119 as initially worded must be annulled, in so far as it concerns the applicant, and there is no need to give a ruling on the other pleas in law.49As a consequence of the annulment of Decision 2014/119, the Court must also annul, in so far as it concerns the applicant, Regulation No 208/2014, as initially worded, given that, under Article 215(2) TFEU, that regulation presupposes the adoption of a decision in accordance with Chapter 2 of Title V of the EU Treaty. The claims for annulment of the March 2014 acts, as amended by the January 2015 acts and the March 2015 acts, in so far as they concern the applicant 50By his statement of modification of his form of order, the applicant sought to extend the scope of his action so that it should be directed to the annulment of the March 2015 acts, in so far as they concern him.51In support of his application for annulment of the March 2014 acts, as amended by the January 2015 acts and the March 2015 acts, the applicant relies on seven pleas in law. The first claims the lack of a legal basis. The second claims an infringement of the listing criteria. The third claims infringement of the rights of the defence and of the right to effective judicial protection. The fourth claims that the reasons stated were insufficient. The fifth claims breach of his rights to property and reputation. The sixth claims a manifest error of assessment and the seventh claims that the listing criteria are unlawful.52The Court will examine, in the first place, the third plea in law, in the second place, the fourth plea in law, in the third place, the first and seventh pleas in law, taken together, in the fourth place, the second and sixth pleas in law, taken together, and, last, the fifth plea in law.The third plea in law: infringement of the rights of the defence and of the right to effective judicial protection53By the third plea in his statement of modification, the applicant claims that his rights of defence and his right to effective judicial protection were infringed, in that the Council did not provide evidence and information in support of his designation and did not carry out a careful and impartial examination of the alleged reasons for his designation in the light of the representations made by the applicant in his letter of 17 February 2015.54The Council, supported by the Commission, disputes the applicant’s arguments.55First, it must be recalled that respect for the rights of the defence, which is affirmed in Article 41(2)(a) of the Charter of Fundamental Rights of the European Union, to which the EU Treaty attaches the same legal value as the treaties, includes the right to be heard and the right to have access to the file, whereas the right to effective judicial protection, which is affirmed in Article 47 of the Charter, requires that the person concerned must be able to ascertain the reasons upon which the decision taken in relation to him is based (see, to that effect, judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 98 to 100).56It follows that, in the context of the adoption of a decision maintaining a person, entity or body in a list of persons, entities or bodies subject to restrictive measures, the Council must respect the right of that person, entity or body to a prior hearing where new evidence, namely evidence which was not included in the initial listing decision, is admitted against him or it, in the decision maintaining his or its listing (judgment of 4 June 2014, Sina Bank v Council, T‑67/12, not published, EU:T:2014:348, paragraph 68 and the case-law cited; see, to that effect, judgment of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 62).57In this case, it must be observed that the maintenance of the applicant’s name on the list following the March 2015 acts is based on the letter of 30 December 2014.58In that regard, it must also be recalled that, before adopting the decision to maintain the applicant’s listing, the Council sent to the applicant the letter of 30 December 2014 (see paragraph 16 above). Further, by letter of 2 February 2015, the Council informed the applicant of its intention to maintain the restrictive measures against him, and informed him that it was open to him to submit observations (see paragraph 16 above).59It follows that the applicant had access to the information and evidence that led the Council to maintain the restrictive measures against him and that he was in a position to formulate, in good time, observations (see paragraph 16 above).60Moreover, the applicant has failed to demonstrate that the alleged difficulties concerning the information received and the time available to respond to the Council’s claims prevented him from modifying his form of order in good time or from developing arguments in support of his defence.61It follows from the foregoing that the disclosure of evidence in the course of the procedure was sufficient to ensure that the applicant could exercise his rights of defence and his right to effective judicial protection.62The third plea in law must therefore be rejected.The fourth plea in law: breach of the duty to state reasons63By his fourth plea in law, the applicant argues that (i) the reasons stated for maintaining his listing fail to specify the nature or subject matter of the criminal proceedings, or how those proceedings relate to the misappropriation of public funds or assets or to an abuse of office by a holder of public office; (ii) in stating those reasons the Council has simply replicated the language of the designation criteria set out in the decision and the regulation; (iii) neither the Council’s letter of 2 February 2015, nor the letter of 30 December 2014, nor the Council’s letter of 6 March 2015, can cure that defect, and (iv) the failure to state adequate reasons is particularly striking given the complaints made by the applicant in the course of the procedure, the significant period of time available to the Council since the applicant was initially listed to formulate reasons and the complete absence of any urgency and/or risk of dissipation of assets, since the applicant’s assets were already frozen.6465First, it must be recalled that the statement of reasons required by Article 296 TFEU and Article 41(2)(c) of the Charter of Fundamental Rights must be appropriate to the nature of the contested act and to the context in which it was adopted. It must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the person concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case (see judgment of 14 April 2016, Ben Ali v Council, T‑200/14, not published, EU:T:2016:216, paragraph 94 and the case-law cited).66It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU and Article 41(2)(c) of the Charter of Fundamental Rights must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. Accordingly, the reasons given for a measure adversely affecting a person are sufficient if that measure was adopted in a context which was known to that person and which enables him to understand the scope of the measure concerning him. Moreover, the degree of precision of the statement of the reasons for a measure must be weighed against practical realities and the time and technical facilities available for taking the measure (see judgment of 14 April 2016, Ben Ali v Council, T‑200/14, not published, EU:T:2016:216, paragraph 95 and the case-law cited).67In particular, the statement of reasons for an asset-freezing measure cannot, in principle, consist merely of a general, stereotypical formulation. Subject to the qualifications stated in paragraph 66 above, such a measure must, on the contrary, indicate the actual and specific reasons why the Council considers that the relevant legislation is applicable to the person concerned (see judgment of 14 April 2016, Ben Ali v Council, T‑200/14, not published, EU:T:2016:216, paragraph 96 and the case-law cited).68In this case, first, it must be observed that, following the model of the initial statement of reasons for listing, the statement of reasons as amended by the March 2015 acts (see paragraph 19 above) sets out the factors on which the applicant’s listing is based, namely, in essence, the fact that he is subject to criminal proceedings by the Ukrainian authorities for the misappropriation of public funds or assets69Further, the decision to maintain the measures against the applicant was made in a context that was known to him, in that he had been acquainted, in the course of the correspondence relating to this case, with the letter of 30 December 2014, on which the Council relied as justification for maintaining the imposition on him of restrictive measures, the Council providing by means of that letter details concerning his listing (see, to that effect, judgments of 15 November 2012, Council v Bamba, C‑417/11 P, EU:C:2012:718, paragraphs 53 and 54 and the case-law cited, and of 6 September 2013, Bank Melli Iran v Council, T‑35/10 and T‑7/11, EU:T:2013:397, paragraph 88), and in particular a detailed description of what he was alleged to have done.70Second, as regards the claim that the statement of reasons for listing is stereotypical, it must be observed that, while the considerations within that statement of reasons are the same as those on the basis of which restrictive measures were imposed on the other natural persons who are listed, they are designed nonetheless to describe the particular situation of the applicant, who, no less than other individuals, has been, according to the Council, subject to judicial proceedings linked to investigations concerning the misappropriation of Ukrainian State funds (see, to that effect, judgment of 27 February 2014, Ezz and Others v Council, T‑256/11, EU:T:2014:93, paragraph 115).71In the light of all the foregoing, it must be concluded that the March 2014 acts, as amended by the January 2015 and March 2015 acts, state to the requisite legal standard the matters of fact and law on which, according to the Council, those acts are based.72The fourth plea in law must therefore be rejected.The first and seventh pleas in law: absence of legal basis and plea of illegality with regard to the listing criterion73By his first plea in law, the applicant argues that Article 29 TEU was not a proper legal basis for the adoption of the decision, because the Council failed to prove that he had undermined the rule of law or violated human rights in Ukraine. On the contrary, the applicant had worked to bring about a peaceful settlement between those on opposite sides in the events of February 2014 in Kiev and had assumed responsibility for the negotiations on the Association Agreement between Ukraine and the European Union.74In addition, he claims, recent developments in Ukraine, in relation to a failure to ensure that the applicant will have a fair trial and the lack of respect for fundamental rights more generally, confirm that the new regime in Ukraine is itself undermining democracy and the rule of law, and is flagrantly and systematically violating human rights.75The applicant’s final claim is that since Decision 2014/119 is illegal, there is no basis for enacting a regulation under Article 215 TFEU.76By his seventh plea in law, submitted, in essence, in support of his second head of claim, the applicant raises a plea of illegality and argues that, if the listing criterion is to be interpreted broadly, so as to take into account either any investigation by the Ukrainian authorities, irrespective of whether that investigation is underpinned, controlled or overseen by any judicial decision or proceedings, or any abuse of office by a holder of public office in order to procure an unjustified advantage, irrespective of whether there is an allegation of misappropriation of public funds, that listing criterion is arbitrary and lacks a proper legal basis or is disproportionate in relation to the objectives of the March 2014 acts.7778The Court must therefore examine whether the listing criterion stated in Article 1(1) of Decision 2014/119, as amended by Decision 2015/143, is compatible with the objectives of the Common Foreign and Security Policy (CFSP) and, more specifically, whether that criterion is proportionate to the abovementioned objectives.79First, it must be recalled that the objectives of the EU Treaty concerning the CFSP are stated, in particular, in Article 21(2)(b) TEU, as follows:‘The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in all fields of international relations in order to: … consolidate and support democracy, the rule of law, human rights and the principles of international law’..80Next, it must be observed that recital (2) of Decision 2014/119 is worded as follows:81On that basis, the listing criterion stated in Article 1(1)(a) of Decision 2014/119, as amended by Decision 2015/143, is as follows:‘All funds and economic resources belonging to, owned, held or controlled by persons having been identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them, as listed in the Annex, shall be frozen.for the misappropriation of Ukrainian public funds or assets or being an accomplice thereto …’82Last, it must be observed that the reason stated for the applicant’s listing, following the March 2015 acts, is as follows:83As a preliminary point, it is evident, as acknowledged by the Council in its written pleadings, that the restrictive measures against the applicant were adopted solely with the objective of consolidating and supporting the rule of law in Ukraine. Accordingly, the applicant’s arguments that the listing criterion stated by Decision 2014/119 does not achieve other CFSP objectives are ineffective.84The Court must therefore determine whether the listing criterion laid down in Decision 2014/119 and amended by Decision 2015/143, referring to persons identified as responsible for the misappropriation of Ukrainian State funds, corresponds to the objective, stated in that decision, of consolidating and supporting the rule of law in Ukraine.85In that regard, it must be recalled that the case-law developed with respect to restrictive measures in view of the situations in Tunisia and in Egypt has established that objectives such as those mentioned in Article 21(2)(b) and (d) TEU were intended to be achieved by an asset-freeze the scope of which was, as in this case, restricted to the persons identified as being responsible for misappropriation of public funds and to persons, entities or bodies associated with them, that is to say, to the persons whose actions are liable to have jeopardised the proper functioning of public institutions and bodies linked to them (see, to that effect, judgments of 28 May 2013, Trabelsi and Others v Council, T‑187/11, EU:T:2013:273, paragraph 92; 27 February 2014, Ezz and Others v Council, T‑256/11, EU:T:2014:93, paragraph 44, and 14 April 2016, Ben Ali v Council, T‑200/14, not published, EU:T:2016:216, paragraph 68).86In this case, it is evident, first, that the listing criterion relies, as far as the applicant is concerned, on offences consisting of ‘misappropriation of public funds’ and, second, that that criterion exists within a legal framework that is clearly circumscribed by Decision 2014/119 and the pursuit of the relevant objective of the EU Treaty to which it refers, stated in recital (2) of that decision, namely that of consolidating and supporting the rule of law in Ukraine.87In that regard, it must be recalled that respect for the rule of law is one of the primary values on which the European Union is founded, as is stated in Article 2 TEU, and in the preambles of the EU Treaty and of the Charter of Fundamental Rights. Respect for the rule of law constitutes, moreover, a prerequisite of accession to the European Union, pursuant to Article 49 TEU. The concept of the rule of law is also enshrined in the preamble of the Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950.88The case-law of the Court and of the European Court of Human Rights, and the work of the Council of Europe, by means of the European Commission for Democracy through Law, provide a non-exhaustive list of principles and standards which may fall within the concept of the rule of law. That list includes: the principles of legality and legal certainty and the prohibition of arbitrary exercise of power by the executive; independent and impartial courts; effective judicial review, extending to respect for fundamental rights and equality before the law (see, in that regard, the rule of law checklist adopted by the European Commission for Democracy through Law at its 106th Plenary Session (Venice, 11-12 March 2016)). Further, in the context of European Union external action, a number of legal instruments include reference to the fight against corruption as a principle within the scope of the concept of the rule of law (see, for example, Regulation (EC) No 1638/2006 of the European Parliament and of the Council of 24 October 2006 laying down general provisions establishing a European Neighbourhood and Partnership Instrument (OJ 2006 L 310, p. 1)).89However, while it is conceivable that certain conduct pertaining to acts classifiable as misappropriation of public funds may be capable of undermining the rule of law, it cannot be accepted that any act classifiable as misappropriation of public funds, committed in a third country, justifies European Union action with the objective of consolidating and supporting the rule of law in that country, using the powers of the Union under the CFSP. Before it can be established that a misappropriation of public funds is capable of justifying European Union action under the CFSP, based on the objective of consolidating and supporting the rule of law, it is, at the very least, necessary that the disputed acts should be such as to undermine the legal and institutional foundations of the country concerned.90In that context, the listing criterion can be considered to be compatible with the European Union legal order only to the extent that it is possible to attribute to it a meaning that is compatible with the requirements of the higher rules with which it must comply, and more specifically with the objective of consolidating and supporting the rule of law in Ukraine. Further, a consequence of that interpretation is that the broad discretion enjoyed by the Council in relation to the definition of the general listing criteria can be respected, while review, in principle full review, of the lawfulness of European Union acts in the light of fundamental rights is ensured (see, to that effect, judgment of 16 July 2014, National Iranian Oil Company v Council, T‑578/12, not published, EU:T:2014:678, paragraph 108 and the case-law cited, confirmed on appeal by judgment of 1 March 2016, National Iranian Oil Company v Council, C‑440/14 P, EU:C:2016:128).91Consequently, that criterion must be interpreted as meaning that it does not concern, in abstract terms, any act classifiable as misappropriation of State funds, but rather that it concerns acts classifiable as misappropriation of State funds or public assets which, having regard to the amount or the type of funds or assets misappropriated or to the context in which the offence took place, are, at the very least, such as to undermine the legal and institutional foundations of Ukraine, and in particular the principles of legality, prohibition of arbitrary exercise of power by the executive, effective judicial review and equality before the law and, ultimately, to undermine respect for the rule of law in that country (see paragraph 89 above). As thus interpreted, the listing criterion is compatible with and proportionate to the relevant objectives of the EU Treaty.92That conclusion is not called into question by the applicant’s argument with respect to recent developments in Ukraine, in relation to a failure to ensure that the applicant will have a fair trial and the lack of respect for his fundamental rights.93In that regard, it must be borne in mind that Ukraine has been a Member State of the Council of Europe since 1995 and has ratified the Convention for the Protection of Human Rights and Fundamental Freedoms, and that the new Ukrainian regime has been recognised as legitimate by both the European Union and the international community. The Council therefore did not err in relying on evidence provided to it by a high judicial authority of that country as to the existence of criminal proceedings relating to allegations that the applicant had embezzled public funds or assets, and in not challenging the legality and legitimacy of the regime and the Ukrainian judicial system.94Admittedly, it cannot be ruled out that, where an applicant produces evidence capable of demonstrating that allegations of what he has done are manifestly false or distorted, it will be the duty of the Council to verify the information that has been submitted to it.95However, in this case, the applicant suggests that there is no genuine judicial procedure and, more generally, he questions the legitimacy of the new Ukrainian regime and the impartiality of the Ukrainian judicial system.96Those factors were not however either capable of calling into question the cogency of the charges made against the applicant, a matter which is examined in relation to the second and sixth pleas in law below, or sufficient to demonstrate that the applicant’s particular situation was affected by the problems he identifies in the Ukrainian judicial system, in the course of the proceedings concerning him that were the basis of the imposition on him of restrictive measures. Accordingly, in the circumstances of this case, the Council was not obliged to undertake an additional verification of the evidence submitted to it by the Ukrainian authorities.97Moreover, in so far as an examination of the applicant’s arguments would require the Court to give a ruling on the lawfulness of the interim regime in Ukraine and to examine the merits of the assessments made by various international bodies in that regard, including the Council’s political assessments, it is clear that such an examination is not within the scope of the review to be carried out by the Court of the acts which are the subject matter of this case (see, to that effect, judgment of 25 April 2013, Gbagbo v Council, T‑119/11, EU:T:2013:216, paragraph 75).98Nor can the conclusion stated in paragraph 91 above be called into question by the argument, raised in the form of a plea of illegality, that the listing criterion cannot be interpreted in such a way as to take account of investigations that are not overseen by judicial proceedings.99In that regard, it must be recalled that, while the Courts of the European Union have determined that the identification of a person as being responsible for an offence does not necessarily require that person to be convicted of the offence (see, to that effect, judgment of 5 March 2015, Ezz and Others v Council, C‑220/14 P, EU:C:2015:147, paragraphs 71 and 72), the fact remains that it is for the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, ECR, EU:C:2013:518, paragraphs 120 and 121, and of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, ECR, EU:C:2013:775, paragraphs 65 and 66).100In this case, the listing criterion stated in the March 2014 acts, as amended by the January 2015 acts, simply enables the Council, in accordance with the judgment of 27 February 2014, Ezz and Others v Council (T‑256/11, EU:T:2014:93), to take into account an investigation with respect to acts classifiable as misappropriation of public funds as a factor which may justify, in some cases, the adoption of restrictive measures, without prejudice to the fact that, in the light of the case-law cited in paragraph 99 above and the interpretation of the listing criterion in paragraphs 78 to 91 above, the mere fact of being the subject of an investigation relating to offences consisting of embezzlement of funds cannot, in itself, justify action by the Council under Articles 21 and 29 TEU.101In the light of all the foregoing, it must be concluded that the listing criterion stated in Article 1(1) of Decision 2014/119 is compatible with the objectives of the CFSP, as stated in Article 21 TEU, to the extent that it covers persons identified as responsible for a misappropriation of Ukrainian State funds that is capable of undermining the rule of law in Ukraine.102The same conclusion must be reached with respect to the form of order seeking the annulment of Regulation No 208/2014. That regulation imposes a fund-freezing measure provided for by a decision adopted in accordance with Chapter 2 of Title V of the EU Treaty and therefore complies with Article 215 TFEU, since there exists a valid decision for the purposes of that article.103The first and seventh pleas in law must therefore be rejected.The second and sixth pleas in law, taken together: failure to comply with the listing criterion and manifest error of assessment, respectively104By his second and sixth pleas in law, the applicant raises, in essence, two arguments.105By his first argument, that his listing did not comply with the listing criteria, the applicant claims that, in accordance with the judgment of 27 February 2014, Ezz and Others v Council (T‑256/11, EU:T:2014:93), he could not be ‘identified as responsible’ for the offences he was alleged to have committed, since he was not the subject of any judicial proceedings or an investigation linked to any such judicial proceedings.106By his second argument, that his listing was not on a sufficiently solid factual basis, the applicant claims that the only evidence relied on by the Council in support of the March 2014 acts, as amended, namely the letter of 30 December 2014, does not constitute a sufficiently solid factual basis in the light of the relevant case-law.107108First, it must be observed that, as from 7 March 2015, the applicant was subject to further restrictive measures introduced by the March 2015 acts on the basis of the listing criterion stated in Article 1(1) of Decision 2014/119 and as ‘clarified’ by the January 2015 acts. Decision 2015/364 is not merely a confirmatory act, but is an autonomous decision, adopted by the Council following the regular review provided for in the third subparagraph of Article 5 of Decision 2014/119.109The Court must therefore examine the lawfulness of the inclusion of the applicant’s name on the list, by means of the March 2015 acts, taking into consideration, first, the listing criterion, as clarified by the January 2015 acts, second, the reasons stated for the listing and, last, the evidence on which that listing is based.110As regards, first, the listing criterion, it must be recalled that that criterion, as amended by the January 2015 acts, provides that the restrictive measures in question are to be imposed on, among others, persons ‘identified as responsible’ for the misappropriation of Ukrainian State funds, that category including persons ‘subject to investigation by the Ukrainian authorities’ for the misappropriation of Ukrainian public funds or assets (see paragraph 14 above). Further, as was explained in relation to the first plea in law, that criterion must be interpreted as meaning that it does not cover, in general, any act of misappropriation of public funds, but rather acts classifiable as misappropriation of public funds or assets that are such as to undermine respect for the rule of law in Ukraine (see paragraph 91 above).111As regards, second, the reasons stated for the applicant’s listing, it must be recalled that, as from 7 March 2015, the applicant was listed for the reason that he was subject to ‘criminal proceedings by the Ukrainian authorities for the misappropriation of public funds or assets and for the abuse of office as a public office-holder in order to procure an unjustified advantage for himself or for a third party and thereby causing a loss to Ukrainian public funds or assets’ (see paragraph 19 above).112As regards, last, the evidence on which the listing of the applicant was based, it must be observed, as recognised by the Council, that the lawfulness of the reasons stated for the applicant’s listing, as amended, must be assessed primarily in the light of the letter of 30 December 2014 (see paragraph 16 above), which gives an account of progress in the various investigations concerning the applicant.113That letter records, inter alia, that a pre-trial investigation was taking place as part of criminal proceedings opened with respect to the applicant in relation to acts classifiable as misappropriation of public funds. That investigation related, more specifically, to the misappropriation of company shares and the misappropriation of public funds.114That being the case, in the first place, it must be stated that that letter, which is the evidence on the basis of which the Council adopted the March 2015 acts, provides sufficient proof of the fact that, on the date of adoption of the March 2015 acts, the applicant was subject to criminal proceedings for misappropriation of public funds or assets.115In the second place, the Court must therefore determine whether maintaining the applicant’s listing following the March 2015 acts by reason of the fact that he was subject to criminal proceedings for such offences satisfies the listing criterion, as clarified by the January 2015 acts and as interpreted in relation to the first plea in law (see paragraph 110 above).116Taking into consideration the offences the applicant is alleged to have committed, as described in the letter of 30 December 2014, it must be observed that the prosecution of economic crimes, such as misappropriation of public funds, is an important means of combating corruption, and that the fight against corruption constitutes, in the context of the external action of the European Union, a principle within the scope of the rule of law (see paragraph 88 above).117It must further be observed that the offences that the applicant is alleged to have committed have a wider context, in that a significant part of the former Ukrainian leadership is suspected of having committed serious crimes in the management of public resources, thereby seriously threatening the legal and institutional foundations of the country and undermining, inter alia, the principles of legality, prohibition on arbitrary exercise of power by the executive, effective judicial review and equality before the law (see paragraphs 89 to 91 above). That is all the more evident in this case, since the acts at issue were allegedly carried out by the former Head of Administration of the President of Ukraine.118It follows that, taken as a whole and taking into consideration the role occupied by the applicant within the former Ukrainian leadership, the restrictive measures in question contribute, in an effective manner, to facilitating the prosecution of crimes of misappropriation of public funds that were to the detriment of the Ukrainian institutions and ensure that the Ukrainian authorities can more easily secure restitution of the profits of such misappropriation. That facilitates, in the event that the prosecutions are successful, the punishment, through the courts of law, of alleged acts of corruption committed by members of the former regime, and thereby contributes to the support of the rule of law in that country (see, to that effect, the case-law referred to in paragraph 85 above).119Further, it was the task of the Council to verify that the reasons adopted with respect to the person concerned were well founded, relying on a sufficient factual basis, within the meaning of the case-law cited in paragraph 36 above, irrespective of the stage reached in the proceedings, under the Ukrainian Code of Criminal Procedure, and the possible adoption by the Ukrainian authorities of interim measures.120Admittedly, the opening of judicial proceedings under the Ukrainian Code of Criminal Procedure and the possible adoption of interim measures at national level may constitute significant evidence to establish the existence of facts that justify the adoption of restrictive measures at Union level and to allow an assessment of the need to adopt such measures in order to ensure that action taken by the national authorities is effective. The fact remains that it is the Council that is responsible for the adoption of restrictive measures, and that the Council must decide independently whether it is necessary and appropriate to adopt such measures, in the light of the CFSP objectives, irrespective of whether a request for such measures is made by the authorities of the third country concerned and irrespective of other measures taken by those authorities at national level, provided that the Council relies on a solid factual basis, within the meaning of the relevant case-law (see paragraph 36 above).121Moreover, the arguments raised by the applicant do not challenge the existence of the investigation undertaken by the Ukrainian authorities, or the reality of the acts that are the subject matter of that investigation and that led the Council to adopt the restrictive measures at issue. Those arguments seek rather to challenge procedural aspects, namely the fact that that investigation was not part of genuine ‘judicial proceedings’, or to rebut charges brought by those authorities with respect to the applicant under Ukrainian criminal law, claiming, inter alia, that the conduct that was the subject of those charges was neither fraudulent nor improper, matters which pertain to the question of whether the allegations were well founded.122In that regard, it was the task of the Council not to verify whether the investigations to which the applicant was subject were well founded, but only to verify whether the decision to freeze funds was well founded in the light of the evidence submitted to it (see, to that effect, judgment of 5 March 2015, Ezz and Others v Council, C‑220/14 P, EU:C:2015:147, paragraph 77).123Last, as regards more specifically the applicant’s argument that there are discrepancies between the letter of 30 December 2014 and the ‘notification of suspicion’ sent by the Ukrainian authorities to the applicant on 23 December 2014, it is clear that the letter of 30 December 2014 scrupulously describes the acts that were the subject matter of the various investigations opened with respect to the applicant. It must be observed that the differences identified by the applicant between the two documents are mainly to do with the legal classification of the acts described, such as, in particular, the use of the misappropriated funds for personal purposes, which does not call into question the reality of the acts classifiable as misappropriation of public funds. Knowledge of those acts, the existence of which has not been seriously challenged, could provide the Council with sufficient grounds to maintain the applicant’s listing.124It must therefore be concluded that the inclusion of the applicant’s name on the lists, by means of the March 2015 acts, on the basis of the evidence provided in the letter of 30 December 2014, is compatible with the listing criterion, as amended by the January 2015 acts and interpreted in the light of the objective on which it is based, namely that of consolidating and supporting the rule of law in Ukraine.125The second and sixth pleas in law must therefore be rejected.The fifth plea in law: breach of the right to property and reputation126By his fifth plea in law, the applicant argues, first, that the inclusion of his name on the list was without due regard to there being adequate safeguards to enable him to state a defence before the Council and, second, that the restrictive measures were disproportionate. In that regard, he states that the statement of reasons for his listing no longer mentions the offence of illegal transfer of Ukrainian State funds outside Ukraine and that the Council failed to demonstrate that the complete freeze of his assets, as distinct from a partial freeze, was proportionate in this case, since the freezing of funds is only justified up to the value of the assets allegedly misappropriated.127128It is clear, first, that the applicant’s argument concerning his rights of defence has been rejected in the context of the third plea in law (see paragraphs 53 to 62 above).129The Court must also reject the applicant’s argument that the reasons stated for his listing no longer include the offence of illegal transfer of Ukrainian State funds outside Ukraine. Although the illegal transfer of State funds is no longer included in the reasons stated for the listing, as amended by the March 2015 acts, it remains the case that the reference to the misappropriation of public funds, if it is well founded, is sufficient, in itself, to justify the restrictive measures against the applicant.130As regards the argument that the restrictive measures are disproportionate, it must be recalled that the principle of proportionality, as one of the general principles of European Union law, requires that measures adopted by the EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued by the legislation in question. Consequently, when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see judgment of 27 February 2014, Ezz and Others v Council, T‑256/11, EU:T:2014:93, paragraph 205 and the case-law cited).131In this case, it is true that the applicant’s right to property is restricted, since he cannot, inter alia, make use of his funds situated within the European Union, unless he obtains specific authorisation, and that no funds or other economic resources can be made available, directly or indirectly, to him.132However, it must, first, be recalled, as has been established in relation to the first, second, sixth and seventh pleas in law, that, on the one hand, the listing criterion, stated in Article 1(1) of Decision 2014/119, as amended by Decision 2015/143, is compatible with the CFSP objectives and, on the other, that the applicant’s listing is compatible with the listing criterion (see paragraphs 79 to 103 and 109 to 124 above).133Further, it is also clear that, as regards the applicant’s argument that a freezing of funds is justified only up to the value of the assets allegedly misappropriated, as that value emerges from the information available to the Council, on the one hand, the figures mentioned in the letter of 30 December 2014 are merely indicative of the value of the assets alleged to have been misappropriated and, further, any attempt to circumscribe the amount of the funds frozen would be extremely difficult, if not impossible, to implement in practice.134Moreover, the disadvantages caused by the restrictive measures are not disproportionate to the objectives pursued, taking into consideration, first, the fact that those measures are inherently temporary and reversible and do not therefore infringe the ‘essential content’ of the right to property, and, second, that they may be derogated from in order to cover basic needs, legal costs or even the extraordinary expenses of the persons concerned (see, to that effect, judgment of 27 February 2014, Ezz and Others v Council, T‑256/11, EU:T:2014:93, paragraph 209).135Last, as regards more specifically the arguments in relation to a breach of the right to reputation, it must be added that the imposition, by the Council, of restrictive measures on the applicant does not involve any view being taken of his culpability with respect to the acts of which he is accused. In any event, in so far as the adoption of those measures may cause the applicant to become the object of opprobrium and suspicion and, therefore, to affect his reputation, it must be stated that such effects are not clearly disproportionate in comparison with the objectives pursued, as is apparent from paragraph 118 above.136The Court must therefore reject the fifth plea in law and, consequently, dismiss the action in its entirety, in so far as it seeks the annulment of the decision to maintain the applicant’s listing by means of the March 2015 acts. Maintaining the effects of Decision 2014/119 137In the alternative, in the event of the annulment in part of the March 2014 acts, the Council asks the Court, for reasons of legal certainty, to declare that the effects of Decision 2014/119 be maintained until the annulment in part of Regulation No 208/2014 takes effect. The Council also requests that, in the event of the annulment in part of the March 2015 acts, the effects of Decision 2014/119, as amended, be maintained until the annulment in part of Regulation No 208/2014, as amended by Implementing Regulation 2015/357, takes effect.138The applicant contests the Council’s request.139It must be recalled that the Court has, on the one hand, annulled Decision 2014/119 and Regulation No 208/2014, in their initial versions, in so far as they concern the applicant, and, on the other, has dismissed the action in so far as it is directed against the March 2015 acts, in so far as they concern the applicant.140In that regard, it must be observed that, as was stated in paragraph 108 above, Decision 2015/364 is not a mere confirmatory act but constitutes an autonomous decision, adopted by the Council following a regular review, as provided for in the third paragraph of Article 5 of Decision 2014/119. That being the case, while the annulment of the March 2014 acts, in so far as they concern the applicant, entails the annulment of the applicant’s listing for the period prior to the entry into force of the March 2015 acts, it is not, on the other hand, capable of calling into question the lawfulness of that listing for the period subsequent to that entry into force.141Consequently, there is no need to give a ruling on the Council’s request that the effects of Decision 2014/119 be maintained. Costs 142Under Article 134(2) of the Rules of Procedure, where there is more than one unsuccessful party the Court is to decide how the costs are to be shared.143In the present case, since the Council has been unsuccessful in relation to the claim for annulment made in the application, it must be ordered to pay the costs relating to that claim, in accordance with the form of order sought by the applicant. Since the applicant has been unsuccessful in relation to the claim for annulment made in the statement modifying the form of order sought, he must be ordered to pay the costs relating to that claim, in accordance with the form of order sought by the Council.144In addition, under Article 138(1) of the Rules of Procedure, the Member States and institutions which intervene in the proceedings are to bear their own costs. The Commission must therefore bear its own costs.On those grounds,THE GENERAL COURT (Ninth Chamber, extended composition)hereby: 1. Annuls — until the entry into force of Council Decision (CFSP) 2015/364 of 5 March 2015 amending Decision 2014/119 and Council Implementing Regulation (EU) 2015/357 of 5 March 2015 implementing Regulation No 208/2014 — Council Decision 2014/119/CFSP of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine and Council Regulation (EU) No 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine, in their initial versions, in so far as Mr Andriy Klyuyev was named in the list of persons, entities and bodies subject to those restrictive measures; 2. Dismisses the action as to the remainder; 3. Orders the Council of the European Union to bear its own costs and to pay the costs incurred by Mr Klyuyev, with respect to the claim for annulment stated in the application; 4. Orders Mr Klyuyev to bear his own costs and to pay the costs incurred by the Council, with respect to the claim for annulment stated in the statement of modification of the form of order sought; 5. Orders the European Commission to bear its own costs. BerardisCzúczPelikánováPopescuButtigiegDelivered in open court in Luxembourg on 15 September 2016.[Signatures]Table of contentsBackground to the proceedingsProcedure and forms of order sought by the partiesLawThe claims for annulment of the March 2014 acts, as initially worded, in so far as they concern the applicantThe claims for annulment of the March 2014 acts, as amended by the January 2015 acts and the March 2015 acts, in so far as they concern the applicantMaintaining the effects of Decision 2014/119Costs( *1 ) Language of the case: English. | ad450-1648a15-4c5d | EN |
Recourse to successive fixed-term contracts to cover permanent needs in the healthcare sector is contrary to EU law | 14 September 2016 ( *1 )‛Reference for a preliminary ruling — Social policy — Directive 1999/70/EC — Framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP — Clauses 3 to 5 — Successive fixed-term employment contracts within the public health service — Measures to prevent the abusive use of successive fixed-term employment relationships — Penalties — Reclassification of the employment relationship — Right to compensation’In Case C‑16/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Juzgado de lo Contencioso-Administrativo No 4 de Madrid (Administrative Court No 4, Madrid, Spain), made by decision of 16 January 2015, received at the Court on 19 January 2015, María Elena Pérez López v Servicio Madrileño de Salud (Comunidad de Madrid), THE COURT (Tenth Chamber),composed of F. Biltgen (Rapporteur), President of the Chamber, A. Borg Barthet and M. Berger, Judges,Advocate General: M. Bobek,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Pérez López, by L. García Botella, abogado,the Spanish Government, by A. Gavela Llopis, acting as Agent,the European Commission, by M. van Beek and J. Guillem Carrau, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Clauses 3 to 5 of the framework agreement on fixed-term work, concluded on 18 March 1999 (‘the framework agreement’) set out in the Annex to Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (OJ 1999 L 175, p. 43).2The request has been made in proceedings between María Elena Pérez López and the Servicio Madrileño de Salud, Comunidad de Madrid (Madrid Health Service, Spain) concerning the classification of her employment relationship that took the form of successive appointments as a member of the occasional regulated staff. Legal context EU law 3Article 1 of Directive 1999/70 states that the purpose of the directive is ‘to put into effect the framework agreement ... concluded … between the general cross-industry organisations (ETUC, UNICE and CEEP)’.4Paragraphs 6, 7 and 8 of the general considerations of the framework agreement are worded as follows:‘6.Whereas employment contracts of an indefinite duration are the general form of employment relationships and contribute to the quality of life of the workers concerned and improve performance;7.Whereas the use of fixed-term employment contracts based on objective reasons is a way to prevent abuse;8.Whereas fixed-term employment contracts are a feature of employment in certain sectors, occupations and activities which can suit both employers and workers’.5According to clause 1 of the framework agreement, the purpose of that agreement is, first, to improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination and, secondly, to establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships.6Clause 2(1) of the framework agreement, entitled ‘Scope’, provides:‘This agreement applies to fixed-term workers who have an employment contract or employment relationship as defined in law, collective agreements or practice in each Member State.’7Clause 3 of the framework agreement, entitled ‘Definitions’, provides:‘1.For the purpose of this agreement the term “fixed-term worker” means a person having an employment contract or relationship entered into directly between an employer and a worker where the end of the employment contract or relationship is determined by objective conditions such as reaching a specific date, completing a specific task, or the occurrence of a specific event.2.For the purpose of this agreement, the term “comparable permanent worker” means a worker with an employment contract or relationship of indefinite duration, in the same establishment, engaged in the same or similar work/occupation, due regard being given to qualifications/skills ...’8Clause 4 of the framework agreement, headed ‘Principle of non-discrimination’, provides, in paragraph 1:‘In respect of employment conditions, fixed-term workers shall not be treated in a less favourable manner than comparable permanent workers solely because they have a fixed-term contract or relation unless different treatment is justified on objective grounds.’9Clause 5 of the framework agreement, entitled ‘Measures to prevent abuse’, provides, in paragraph 1:‘To prevent abuse arising from the use of successive fixed-term employment contracts or relationships, Member States, after consultation with social partners in accordance with national law, collective agreements or practice, and/or the social partners, shall, where there are no equivalent legal measures to prevent abuse, introduce in a manner which takes account of the needs of specific sectors and/or categories of workers, one or more of the following measures:(a)objective reasons justifying the renewal of such contracts or relationships;(b)the maximum total duration of successive fixed-term employment contracts or relationships;(c)the number of renewals of such contracts or relationships.’ The relevant provisions of Spanish law 10Article 9 of Ley 55/2003 del Estatuto Marco del Personal Estatutario de los Servicios de Salud (State Law 55/2003 on the framework regulations for health service staff regulated under administrative law) of 16 December (BOE No 301 of 17 December 2003, p. 44742, ‘the framework regulations’), provides as follows:‘1. On grounds of need, urgency or for the development of programmes of a temporary, auxiliary or extraordinary nature, the health services may appoint temporary regulated staff.Temporary regulated staff may be appointed on an interim, occasional or replacement basis.2. Appointment on an interim (or ‘temporary replacement’) basis may be used to temporarily cover a vacant post in the healthcare institutions or services where it is necessary to ensure performance of the duties pertaining to that post.The interim regulated staff member’s service shall be terminated if a permanent staff member is appointed, through the procedure laid down in law or regulation, to the post occupied by that interim regulated staff member, or if that post is abolished.3. Appointment on an occasional basis shall be made in the following situations:when it concerns the provision of certain services of a temporary, auxiliary or extraordinary nature;when it is necessary in order to ensure the permanent and continuous operation of the healthcare institutions;for the provision of additional services in order to compensate for a reduction of normal working hours.The occasional regulated staff member’s service shall be terminated when the purpose of the appointment has been accomplished, when the period expressly set out in his notice of appointment has expired, or when the duties for which the appointment was made are abolished.If more than two appointments are made for the provision of the same services for a total period of 12 months or more in a period of two years, the reasons for this shall be examined, in order to assess, if necessary, whether it is appropriate to create a permanent post in the healthcare institution concerned.…’11Under Article 15(3) of the Texto Refundido de la Ley del Estatuto de los Trabajadores, aprobado por el Real Decreto Legislativo 1/1995 (consolidated text of the Workers’ Statute, adopted by Royal Legislative Decree 1/1995)) of 24 March 1995 (BOE No 75 of 29 March 1995, p. 9654), in the version applicable at the material time (‘the Workers’ Statute’), ‘fixed-term contracts concluded in breach of the law are deemed to be concluded for an indefinite period.’12In accordance with Article 3 of Real Decreto 2720/1998 por el que se desarrolla el artículo 15 del Estatuto de los Trabajadores en materia de contratos de duración determinada (Royal Decree 2720/1998, implementing Article 15 of the Workers’ Statute on fixed-term contracts), of 18 December 1998 (BOE No 7 of 8 January 1999, p. 568), the contract for occasional employment, included in the category of fixed-term contracts, is intended to meet auxiliary needs.13Article 49(1)(c) of the Workers’ Statute provides that, when the employment contract is terminated, except in cases of interim contracts and training contracts, the worker is entitled to receive compensation in an amount equivalent to the proportionate part of the amount corresponding to the receipt of twelve days of salary per year of service. The facts of the dispute in the main proceedings and the questions referred for a preliminary ruling 14Ms Pérez López was recruited as a nurse and a member of the occasional regulated staff at the University Hospital of Madrid from 5 February to 31 July 2009. In accordance with the provisions of Article 9(3) of the framework regulations, the appointment notice described the reason for that appointment as the ‘provision of certain services of a temporary, auxiliary or extraordinary nature’ and described the employment as ‘carrying out activities in this hospital in order to ensure the provision of nursing care’.15After that first employment contract, the appointment of Ms. Pérez López was renewed seven times under fixed-term contracts of three, six or nine months, worded identically each time, so that Pérez López was employed without interruption during the period from 5 February 2009 until 31 March 2013.16During the last of the abovementioned employment contracts, from 1 January to 31 March 2013, the Consejería de Economia y Hacienda de la Comunidad de Madrid (Regional Ministry of Economic Affairs and Finance of Madrid, Spain) issued an order of 28 January 2013 imposing, with the objective of reducing public spending, the termination of the employment relationship of occasional staff at the end of the appointment period and the payment of all outstanding remuneration corresponding to the period of services provided, including those cases in which the person concerned was subsequently to be reappointed.17Under that order, Ms Peréz López was notified, on 8 March 2013, of the termination of the employment relationships linking her to the Madrid Health Service, with effect from 31 March 2013. On 21 March 2013, however, she was notified of her new appointment, in terms identical to those of the previous appointments and without a break in continuity, covering the period from 1 April to 30 June 2013.18On 30 April 2013 Ms Peréz López brought an administrative appeal against that notice of termination of the employment relationship and against her new appointment as an occasional regulated staff member. Upon expiry of the legally prescribed period necessary to consider that the administrative appeal had been tacitly rejected by the competent administrative authority, she brought an action before the Contencioso-Administrativo No 4 de Madrid (Administrative Court No 4, Madrid, Spain) in which she argued, in essence, that her successive appointments were not intended to meet an auxiliary or extraordinary need of the health services, but corresponded in reality to a permanent activity. Accordingly, the succession of fixed-term contracts, it is claimed, constitutes a breach of the law and should result in reclassification of her employment relationship.19According to the referring court, the national legislation at issue, and particularly Article 9 of the framework regulations, contains no measures that effectively limit the use of successive fixed-term contracts. Although a maximum duration of the working relationship of occasional staff is retained, it is for the administration to freely assess the reasons justifying the use of fixed-term contracts and whether to create a permanent position to meet the needs of the health services. If such a position were to be created, the precarious situation of the workers would be maintained, given that the administration could fill those positions by hiring temporary replacement staff, without limitations as to the duration or number of renewals of fixed-term employment contracts for those workers.20The referring court also expressed doubts regarding the compatibility of the national provisions at issue with the principle of non-discrimination set out in clause 4 of the framework agreement. It notes that occasional regulated staff of the health services who are subject to the framework regulations and employees bound by a contract for occasional employment, which is governed by the Workers’ Statute, constitute comparable fixed-term working relationships. However, unlike the provisions applicable to occasional regulated staff, the Workers’ Statute, it is claimed, not only provides that fixed-term workers are to receive compensation equivalent to twelve days of salary for each year of service or fraction thereof, but also includes a guarantee clause favouring employment stability, consisting of the presumption that temporary contracts concluded in breach of the law are deemed to be concluded for an indefinite period.21In those circumstances, the Juzgado de la Contencioso-Administrativo No 4 de Madrid (Administrative Court No 4, Madrid) decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:‘(1)Does Article 9.3 of the framework regulations infringe the framework agreement, and is it therefore inapplicable, because it encourages abuse arising from the use of successive appointments of occasional regulated staff, in that it:does not fix a maximum total duration of successive appointments of occasional regulated staff, nor a maximum number of renewals of those appointments;leaves to the discretion of the authorities the decision whether to create permanent posts where more than two appointments are made for the provision of the same services for a total period of 12 months or more in a period of two years; andallows appointments of occasional regulated staff to be made without requiring that the notices of appointment indicate the specific objective reasons of a temporary, auxiliary or extraordinary nature justifying those appointments?(2)Does Article 11.7 of the order of the Regional Ministry of Economic Affairs and Finance of Madrid of 28 January 2013 infringe the framework agreement, and is it therefore inapplicable, in so far as it provides that, ‘at the end of the appointment period, there must be termination of service and payment of all outstanding remuneration corresponding to the period of services provided in all cases, including those in which the person concerned is subsequently to be reappointed’, irrespective, therefore, of whether or not the specific, objective reasons justifying the appointment have come to an end, as required under clause 3.1 of the framework agreement?(3)Does an interpretation of the third subparagraph of Article 9.3 of the framework regulations, to the effect that, if more than two appointments are made for the provision of the same services for a total period of 12 months or more in a period of two years, a permanent post must be created in the heath-care institution, so that the worker appointed on an occasional basis becomes appointed to cover that post on a replacement basis, comply with the intended purpose of the framework agreement?(4)Does the application to occasional regulated staff of the same compensation provided for workers employed under contracts for occasional employment comply with the principle of non-discrimination provided for in the framework agreement, given that the two situations are substantially identical, since it would not make sense for workers in the same occupational category, providing services in the same entity (the Madrid Health Service), carrying out the same tasks and meeting the same auxiliary needs, to be treated differently upon the termination of their employment relationship, in the absence of any apparent reason that would prevent comparisons being made between fixed-term contracts in order to avoid discriminatory situations?’22The referring court also requested the Court of Justice to apply the expedited procedure to the case pursuant to Article 105(1) of the Rules of Procedure of the Court of Justice. That application was dismissed by order of the President of the Court of 24 April 2015. Consideration of the questions referred The first and third questions 23By its first and third questions, which must be considered together, the referring court asks, in essence, whether clause 5 of the framework agreement must be interpreted as precluding the application of national legislation, such as that at issue in the main proceedings, by the authorities of the Member State concerned in such a way that the renewal of successive fixed-term employment contracts in the public health sector is deemed to be justified by ‘objective grounds’, within the meaning of that clause, on the ground that those contracts are founded on legal provisions allowing them to be renewed in order to meet certain temporary, auxiliary or extraordinary needs and that the authorities have a certain discretion in the decision whether to create permanent posts that bring an end to the employment of occasional regulated staff.The scope of the framework agreement24At the outset, it should be recalled that it is apparent from the wording of clause 2(1) of the framework agreement that the scope of that agreement is conceived in broad terms, as it covers generally ‘fixed-term workers who have an employment contract or employment relationship as defined in law, collective agreements or practice in each Member State’. Furthermore, the definition of the concept of ‘fixed-term workers’ within the meaning of the framework agreement, set out in clause 3(1) thereof, encompasses all workers without drawing a distinction according to whether their employer is in the public or private sector and regardless of the classification of their contract under domestic law (judgments of 4 July 2006, Adeneler and Others, C‑212/04, EU:C:2006:443, paragraph 56; of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 38; of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraphs 28 and 29, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 67).25In so far as the framework agreement does not exclude any particular sector, a worker such as the applicant in the main proceedings, who is employed as a nurse as part of the occasional regulated staff of the public health service, falls within the scope of the framework agreement.The interpretation of clause 5(1) of the framework agreement26As regards the interpretation of clause 5 of the framework agreement, it should be noted that the purpose of that agreement is to implement one of the objectives of that agreement, namely to place limits on successive recourse to fixed-term employment contracts or relationships, regarded as a potential source of abuse to the detriment of workers, by laying down as a minimum a number of protective provisions designed to prevent the status of employees from being insecure (judgments of 4 July 2006, Adeneler and Others, C‑212/04, EU:C:2006:443, paragraph 63; of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 73; of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 25; of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 41; of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 54, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 72).27As is apparent from the second paragraph of the preamble to the framework agreement and from paragraphs 6 and 8 of its general considerations, the benefit of stable employment is viewed as a major element in the protection of workers, whereas it is only in certain circumstances that fixed-term employment contracts can respond to the needs of both employers and workers (judgments of 4 July 2006, Adeneler and Others, C‑212/04, EU:C:2006:443, paragraph 62; of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 55, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 73).28Accordingly, clause 5(1) of the framework agreement requires, with a view to preventing abuse of successive fixed-term employment contracts or relationships, the effective and binding adoption by Member States of at least one of the measures listed in that provision, where their domestic law does not already include equivalent legal measures. The measures listed in clause 5(1)(a) to (c), of which there are three, relate, respectively, to objective reasons justifying the renewal of such contracts or relationships, the maximum total duration of successive fixed-term employment contracts or relationships, and the number of renewals of such contracts or relationships (see, inter alia, judgments of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 74; 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 26; of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 42, of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 56, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 74).29The Member States enjoy a certain discretion in that regard since they have the choice of relying on one or more of the measures listed in clause 5(1)(a) to (c) of the framework agreement, or on existing equivalent legal measures, while taking account of the needs of specific sectors and/or categories of workers (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 59 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 75).30In that way, clause 5(1) of the framework agreement assigns to the Member States the general objective of preventing such abuse, while leaving to them the choice as to how to achieve it, provided that they do not compromise the objective or the practical effect of the framework agreement (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 60, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 76).31Furthermore, where, as in the present case, EU law does not lay down any specific penalties in the event that instances of abuse are nevertheless established, it is incumbent on the national authorities to adopt measures that are not only proportionate, but also sufficiently effective and a sufficient deterrent to ensure that the measures taken pursuant to the framework agreement are fully effective (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 62 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 77).32Whereas, in the absence of relevant EU rules, the detailed rules for implementing such measures are a matter for the domestic legal order of the Member States under the principle of their procedural autonomy, they must not, however, be less favourable than those governing similar domestic situations (principle of equivalence) or render impossible in practice or excessively difficult the exercise of rights conferred by EU law (principle of effectiveness) (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 63 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 78).33Therefore, where abusive use of successive fixed-term contracts or relationships has taken place, a measure offering effective and equivalent guarantees for the protection of workers must be capable of being applied in order duly to penalise that abuse and nullify the consequences of the breach of EU law (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 64 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 79).34Moreover, it must be pointed out that it is not for the Court to rule on the interpretation of provisions of national law, that being exclusively for the referring court or, as the case may be, the national courts having jurisdiction, which must determine whether the requirements set out in clause 5 of the framework agreement are met by the provisions of the applicable national legislation (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 66 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 81).35It is therefore, in principle, for the referring court to determine to what extent the conditions for application and the actual implementation of the relevant provisions of national law render the latter an appropriate measure for preventing and, where necessary, penalising the abusive use of successive fixed-term employment contracts or relationships (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 67 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 82).36However, the Court, when giving a preliminary ruling, may, where appropriate, provide clarification designed to give the referring court guidance in its assessment (judgments of 3 July 2014, Fiamingo and Others, C‑362/13, C‑363/13 and C‑407/13, EU:C:2014:2044, paragraph 68 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 83).37It is in this context that it is necessary to determine whether the provisions of the national legislation at issue in the main proceedings, that allow the renewal of fixed-term employment contracts in the field of health services, may constitute the measures set out in clause 5(1) of the framework agreement, and, more specifically, objective grounds justifying the renewal of fixed-term contracts or employment relationships.38As regards the existence of an ‘objective ground’, it follows from the case-law that that concept must be understood as referring to precise and concrete circumstances characterising a given activity, which are therefore capable, in that particular context, of justifying the use of successive fixed-term employment contracts. Those circumstances may result, in particular, from the specific nature of the tasks for the performance of which such contracts have been concluded and from the inherent characteristics of those tasks or, as the case may be, from pursuit of a legitimate social policy objective of a Member State (judgments of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 96 and the case-law cited; of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 27, and of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 45).39On the other hand, a national provision which merely authorises recourse to successive fixed-term contracts, in a general and abstract manner, by a rule of statute or secondary legislation, does not accord with the requirements stated in the previous paragraph of the present judgment (judgments of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 97 and the case-law cited; of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 28, and of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 46).40Such a purely formal provision does not permit objective and transparent criteria to be identified in order to verify whether the renewal of such contracts actually responds to a genuine need, is capable of achieving the objective pursued and is necessary for that purpose. That provision therefore carries a real risk that it will result in abusive use of that type of contract and, accordingly, is not compatible with the objective of the framework agreement and the requirement that it have practical effect (see, to that effect, judgments of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraphs 98 and 100 and the case-law cited; of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 29, and of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 47).41In relation to the case at issue in the main proceedings, it should be noted that the relevant national legislation determines precisely the conditions under which successive fixed-term contracts or employment relationships may be entered. The use of such contracts is permitted, under Article 9(3) of the framework regulations, as appropriate, when it concerns the provision of certain services of a temporary, auxiliary or extraordinary nature, when it is necessary in order to ensure the permanent and continuous operation of the healthcare institutions or when it concerns the provision of additional services in order to compensate for a reduction of normal working hours.42That provision also provides that, where more than two appointments are made for the provision of the same services for a total period of 12 months or more in a period of two years, the competent authority shall examine the reasons for those appointments and decide whether to create an additional permanent post.43It follows that the national legislation at issue in the main proceedings does not lay down a general and abstract obligation to have recourse to successive fixed-term employment contracts, but limits the conclusion of such contracts for the purposes of satisfying, in essence, temporary requirements.44In that regard, it should be noted that a temporary replacement of a worker in order to satisfy the employer’s temporary staffing requirements may, in principle, constitute an ‘objective ground’ within the meaning of clause 5(1)(a) of the framework agreement (see, to that effect, judgments of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraphs 101 and 102; of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 30, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 91).45It should be pointed out that, in a sector of the public services with a large workforce, such as the public health sector, it is inevitable that temporary replacements will be necessary due, inter alia, to the unavailability of members of staff on sick, maternity, parental or other leave. The temporary replacement of workers in those circumstances may constitute an objective ground within the meaning of clause 5(1)(a) of the framework agreement, justifying fixed-term contracts being concluded with the replacement staff and the renewal of those contracts as new needs arise, subject to compliance with the relevant requirements laid down in the framework agreement (see, to that effect, judgments of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 31, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 92).46Furthermore, it must be pointed out that the obligation to organise the health services in such a way as to ensure that healthcare worker-patient ratios are constantly appropriate rests with the public authorities and is dependent on many factors that may reflect a particular need for flexibility which, in accordance with the case-law recalled in paragraph 40 of the present judgment, is capable, in that specific sector, of providing an objective justification, under clause 5(1)(a) of the framework agreement, for recourse to successive fixed-term employment contracts.47By contrast, it cannot be accepted that fixed-term employment contracts may be renewed for the purpose of the performance, in a fixed and permanent manner, of tasks in the health service which normally come under the activity of the ordinary hospital staff (see, by analogy, judgment of 13 March 2014, Márquez Samohano, C‑190/13, EU:C:2014:146, paragraph 58).48The renewal of fixed-term employment contracts or relationships in order to cover needs which, in fact, are not temporary in nature but, on the contrary, fixed and permanent is not justified for the purposes of clause 5(1)(a) of the framework agreement, in so far as such use of fixed-term employment contracts or relationships conflicts directly with the premise on which the framework agreement is founded, namely that employment contracts of indefinite duration are the general form of employment relationship, even though fixed-term employment contracts are a feature of employment in certain sectors or in respect of certain occupations and activities (see, to that effect, judgments of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraphs 36 and 37, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 100).49In order for clause 5(1)(a) of the framework agreement to be complied with, it must therefore be specifically verified that the renewal of successive fixed-term employment contracts or relationships is intended to cover temporary needs and that a national provision such as that at issue in the main proceedings is not, in fact, being used to meet fixed and permanent staffing needs of the employer (see, to that effect, judgments of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 39 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 101).50In that regard, it follows from the situation of the applicant in the main proceedings, as described in the decision to refer, that the successive appointments of Ms Pérez López to ensure hospital health services did not appear to be covered by the simple temporary needs of the employer.51That is corroborated by the assessment of the referring court, which describes the coverage of posts in the healthcare sector by means of temporary regulated staff appointments as ‘endemic’ and which estimates that approximately 25% of the 50000 medical and healthcare staff posts in the Madrid region are occupied by staff employed on a temporary basis for an average period of between five and six years, some of whom, however, have been providing services continuously for over 15 years.52In those circumstances, clause 5(1)(a) of the framework agreement on fixed-term work must be interpreted as precluding the application of national legislation, such as that at issue in the main proceedings, by the authorities of the Member State concerned in such a way that the renewal of successive fixed-term employment contracts in the public health sector is deemed to be justified by ‘objective grounds’ within the meaning of that clause on the ground that those contracts are founded on legal provisions allowing them to be renewed in order to ensure the provision of certain services of a temporary, auxiliary or extraordinary nature when, in fact, those needs are fixed and permanent.53As regards, moreover, the discretion of the administration concerning the creation of permanent posts, it should be noted that the existence of such a procedure, allowing the creation of a fixed post, like that consisting of converting a fixed-term contract into a permanent employment relationship, may constitute an effective remedy against the abusive use of temporary contracts (see, to that effect, judgment of 23 April 2009, Angelidaki and Others, C‑378/07 to C‑380/07, EU:C:2009:250, paragraph 170).54Even if national legislation permitting the renewal of successive fixed-term contracts to replace staff while waiting to fill permanent posts that have been created can, in principle, be justified by an objective ground, the actual application of that ground must, however, comply with the requirements of the framework agreement, having regard to the particular features of the activity concerned and to the conditions under which it is carried out (see, to that effect, judgments of 26 January 2012, Kücük, C‑586/10, EU:C:2012:39, paragraph 34 and the case-law cited, and of 26 November 2014, Mascolo and Others, C‑22/13, C‑61/13, C‑63/13 and C‑418/13, EU:C:2014:2401, paragraph 99).55In the present case, it should be noted that the national legislation at issue in the main proceedings includes no obligation for the competent authority to create additional permanent posts in order to bring an end to the employment of occasional regulated staff. However, it appears from the findings made by the referring court that the permanent posts created are filled by the appointment of ‘temporary’ replacement staff, without there being any limitation as to the duration of the replacement contracts or the number of renewals thereof, so that the precarious situation of workers is, in fact, perpetuated. Legislation of that kind is such as to permit, in breach of clause 5(1)(a) of the framework agreement, the renewal of fixed-term employment contracts in order to cover needs which are fixed and permanent, whereas it is clear from the findings made in paragraph 52 of the present judgment that there is a structural deficit of regulated staff posts in the Member State concerned.56In the light of all the foregoing considerations, the answer to the first and third questions raised is that clause 5(1)(a) of the framework agreement must be interpreted as precluding the application of national legislation, such as that at issue in the main proceedings, by the authorities of the Member State concerned in such a way that:the renewal of successive fixed-term employment contracts in the public health sector is deemed to be justified by ‘objective grounds’, within the meaning of that clause, on the ground that those contracts are founded on legal provisions allowing them to be renewed in order to ensure the provision of certain services of a temporary, auxiliary or extraordinary nature when, in fact, those needs are fixed and permanent;there is no obligation on the competent authority to create additional permanent posts in order to bring an end to the employment of occasional regulated staff and it is permitted to fill the permanent posts created by hiring ‘temporary’ staff, so that the precarious situation of workers is perpetuated, whereas there is a structural deficit of regulated staff posts in that sector in the Member State concerned. The second question 57By its second question, the referring court asks, in essence, whether clause 5 of the framework agreement must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which requires that contractual relationship to terminate on the date provided by the fixed-term contract and that all outstanding remuneration is to be paid, without prejudice to a possible reappointment.58In that regard, it should be borne in mind that the framework agreement does not specify the conditions under which employment contracts of indefinite duration may be used and is not intended to harmonise all national rules relating to fixed-term employment contracts. That framework agreement simply aims, by determining general principles and minimum requirements, to establish a general framework for ensuring equal treatment for fixed-term workers by protecting them against discrimination and to prevent abuse arising from the use of successive fixed-term work agreements or contracts (judgment of 18 October 2012, Valenza and Others, C‑302/11 to C‑305/11, EU:C:2012:646, paragraph 63 and the case-law cited, and order of 7 March 2013, Bertazzi and Others, C‑393/11, not published, EU:C:2013:143, paragraph 48).59However, the power of the Member States to determine the content of their national laws relating to employment contracts cannot go so far as to allow them to compromise the objective or the practical effect of the framework agreement (judgment of 18 October 2012, Valenza and Others, C‑302/11 to C‑305/11, EU:C:2012:646, paragraph 64 and the case-law cited, and order of 7 March 2013, Bertazzi and Others, C‑393/11, not published, EU:C:2013:143, paragraph 49).60The objective pursued by clause 5 of the framework agreement, which consists of placing limits on successive recourse to fixed-term employment contracts or relationships, would be devoid of all content if, under national law, the new nature of an employment relationship, in itself, were able to constitute an ‘objective ground’ for the purposes of that clause, capable of authorising a renewal of a fixed-term employment contract.61Consequently, the answer to the second question is that clause 5 of the framework agreement must be interpreted as meaning that it does not preclude, in principle, national legislation which requires that the contractual relationship is to terminate on the date provided by the fixed-term contract and that all outstanding remuneration is to be paid, without prejudice to a possible reappointment, provided that that legislation is not such as to compromise the objective and the practical effect of the framework agreement, which is a matter to be determined by the referring court. The fourth question 62By its fourth question, the referring court asks, in essence, whether clause 4 of the framework agreement is to be interpreted as precluding national legislation, such as that at issue in the main proceedings, which fails to provide any compensation for termination of a contract of employment to occasional regulated staff while such compensation is granted to comparable workers employed under contracts for occasional employment.63In that regard, it should be borne in mind that clause 4(1) of the framework agreement prohibits, with regard to employment conditions, less favourable treatment of fixed-term workers as compared with permanent workers, solely because they are employed for a fixed term, unless different treatment is justified on objective grounds.64According to settled case-law, the principle of non-discrimination requires that comparable situations must not be treated differently and different situations must not be treated alike unless such treatment is objectively justified (judgment of 8 September 2011, Rosado Santana, C‑177/10, EU:C:2011:557, paragraph 65 and the case-law cited).65In that regard, it is important to note that the principle of non-discrimination has been implemented and put into effect by the framework agreement solely as regards differences in treatment as between fixed-term workers and permanent workers in a comparable situation (orders of 11 November 2010, Vino, C‑20/10, not published, EU:C:2010:677, paragraph 56; of 22 June 2011, Vino, C‑161/11, not published, EU:C:2011:420, paragraph 28, and of 7 March 2013, Rivas Montes, C‑178/12, not published, EU:C:2013:150, paragraph 43).66However, any differences in treatment between specific categories of fixed-term workers, such as that reported by the referring court, which is not based on the fixed-term or permanent nature of the employment relationship, but on whether it is statutory or contractual, is not covered by the principle of non-discrimination established by the framework agreement (see, to that effect, orders of 11 November 2010, Vino, C‑20/10, not published, EU:C:2010:677, paragraph 57, and of 7 March 2013, Rivas Montes, C‑178/12, not published, EU:C:2013:150, paragraphs 44 and 45).67It is only in the event that the referring court should find that workers employed under an employment contract of indefinite duration and doing comparable work are paid compensation for termination of a contract of employment, whereas such compensation is not provided for occasional regulated staff, that that difference of treatment could be covered by the principle of non-discrimination established in clause 4 of the framework agreement (see, to that effect, judgment of same date, De Diego Porras, paragraphs 37 and 38).68However, in so far as it is not apparent from any of the documents in the file submitted to the Court that there is, in the main proceedings, a difference in treatment between the occasional regulated staff and the permanent staff, the difference of treatment which is the subject of the fourth question referred by the referring court is not a matter of EU law (orders of 11 November 2010, Vino, C‑20/10, not published, EU:C:2010:677, paragraph 64; of 22 June 2011, Vino, C‑161/11, not published, EU:C:2011:420, paragraph 30, and of 7 March 2013, Rivas Montes, C‑178/12, not published, EU:C:2013:150, paragraph 52). Accordingly, that difference of treatment is exclusively a matter of national law, the interpretation of which is the exclusive role of the referring court (orders of 22 June 2011, Vino, C‑161/11, not published, EU:C:2011:420, paragraph 35, and of 7 March 2013, Rivas Montes, C‑178/12, not published, EU:C:2013:150, paragraph 53).69In those circumstances, it should be held that the Court clearly has no jurisdiction to rule on the fourth question referred. Costs 70Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Tenth Chamber) hereby rules: 1. Clause 5(1)(a) of the framework agreement on fixed-term work, concluded on 18 March 1999, set out in the Annex to Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP, must be interpreted as precluding the application of national legislation, such as that at issue in the main proceedings, by the authorities of the Member State concerned in such a way that: the renewal of successive fixed-term employment contracts in the public health sector is deemed to be justified by ‘objective grounds’, within the meaning of that clause, on the ground that those contracts are founded on legal provisions allowing them to be renewed in order to ensure the provision of certain services of a temporary, auxiliary or extraordinary nature when, in fact, those needs are fixed and permanent; there is no obligation on the competent authority to create additional permanent posts in order to bring an end to the employment of occasional regulated staff and it is permitted to fill the permanent posts created by hiring ‘temporary’ staff, so that the precarious situation of workers is perpetuated, where there is a structural deficit of regulated staff posts in that sector in the Member State concerned. 2. Clause 5 of the framework agreement on fixed-term work set out in the Annex to Directive 1999/70 must be interpreted as meaning that it does not preclude, in principle, national legislation which requires that the contractual relationship is to terminate on the date provided by the fixed-term contract and that all outstanding remuneration is to be paid, without prejudice to a possible reappointment, provided that that legislation does not compromise the objective and practical effect of that framework agreement, which is a matter to be determined by the referring court. 3. The Court of Justice of the European Union manifestly lacks jurisdiction to answer the fourth question referred for a preliminary ruling by the Juzgado de lo Contencioso-Administrativo No 4 de Madrid (Administrative Court No 4, Madrid, Spain). [Signatures]( *1 ) Language of the case: Spanish. | d2dc7-7c2f8b1-48b5 | EN |
EU law does not permit a national of a non-EU country who has the sole care of an EU citizen who is a minor to be automatically refused a residence permit or to be expelled from the territory of the European Union on the sole ground that he has a criminal record | 13 September 2016 ( *1 )‛Reference for a preliminary ruling — Citizenship of the Union — Articles 20 and 21 TFEU — Directive 2004/38/EC — Right of a third-country national with a criminal record to reside in a Member State — Parent having sole care of two minor children, who are Union citizens — First child possessing the nationality of the Member State of residence — Second child possessing the nationality of another Member State — National legislation precluding grant of a residence permit to the father because of his criminal record — Refusal of residence capable of resulting in the children being obliged to leave the territory of the European Union’In Case C‑165/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 20 March 2014, received at the Court on 7 April 2014, in the proceedings Alfredo Rendón Marín v Administración del Estado, THE COURT (Grand Chamber),composed of K. Lenaerts, President, R. Silva de Lapuerta, M. Ilešič, L. Bay Larsen, C. Toader, D. Šváby, F. Biltgen and C. Lycourgos, Presidents of Chambers, A. Rosas (Rapporteur), E. Juhász, A. Borg Barthet, M. Safjan, M. Berger, A. Prechal and K. Jürimäe, Judges,Advocate General: M. Szpunar,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 30 June 2015,after considering the observations submitted on behalf of:—Mr Rendón Marín, by I. Aránzazu Triguero Hernández and L. De Rossi, abogadas,the Spanish Government, by A. Rubio González and L. Banciella Rodríguez-Miñón, acting as Agents,the Danish Government, by C. Thorning and M. Wolff, acting as Agents,the Greek Government, by T. Papadopoulou, acting as Agent,the French Government, by D. Colas and R. Coesme, acting as Agents,the Italian Government, by G. Palmieri, acting as Agent, and L. D’Ascia, avvocato dello Stato,the Netherlands Government, by M. Bulterman and B. Koopman, acting as Agents,the Polish Government, by B. Majczyna, K. Pawłowska and M. Pawlicka, acting as Agents,the United Kingdom Government, by M. Holt and J. Beeko, acting as Agents, and D. Blundell, Barrister,the European Commission, by I. Martínez del Peral, C. Tufvesson, F. Castillo de la Torre and M. Wilderspin, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 4 February 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 20 TFEU.2The request has been made in proceedings between Alfredo Rendón Marín — a third-country national and the father of Union citizens who are minors in his sole care who have been resident in Spain since birth — and Administración del Estado (State Administration, Spain) concerning the refusal of the Director General de Inmigración del Ministerio de Trabajo e Inmigración (Director-General of Immigration of the Ministry of Labour and Immigration), on account of Mr Rendón Marín’s criminal record, to grant him a residence permit on the basis of exceptional circumstances. Legal context EU law 3As stated in recitals 23 and 24 of Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda at OJ 2004 L 229, p. 35, OJ 2005 L 30, p. 27, and OJ 2005 L 197, p. 34):‘(23)Expulsion of Union citizens and their family members on grounds of public policy or public security is a measure that can seriously harm persons who, having availed themselves of the rights and freedoms conferred on them by the [EC] Treaty, have become genuinely integrated into the host Member State. The scope for such measures should therefore be limited in accordance with the principle of proportionality to take account of the degree of integration of the persons concerned, the length of their residence in the host Member State, their age, state of health, family and economic situation and the links with their country of origin.(24)Accordingly, the greater the degree of integration of Union citizens and their family members in the host Member State, the greater the degree of protection against expulsion should be. Only in exceptional circumstances, where there are imperative grounds of public security, should an expulsion measure be taken against Union citizens who have resided for many years in the territory of the host Member State, in particular when they were born and have resided there throughout their life. In addition, such exceptional circumstances should also apply to an expulsion measure taken against minors, in order to protect their links with their family, in accordance with the United Nations Convention on the Rights of the Child, of 20 November 1989.’4Article 2 of Directive 2004/38, headed ‘Definitions’, states:‘For the purpose of this Directive:1.“Union citizen” means any person having the nationality of a Member State;2.“family member” means:...(d)the dependent direct relatives in the ascending line and those of the spouse or partner as defined in point (b);3.“host Member State” means the Member State to which a Union citizen moves in order to exercise his/her right of free movement and residence.’5Article 3 of Directive 2004/38, headed ‘Beneficiaries’, provides:‘1. This Directive shall apply to all Union citizens who move to or reside in a Member State other than that of which they are a national, and to their family members as defined in point 2 of Article 2 who accompany or join them.2. Without prejudice to any right to free movement and residence the persons concerned may have in their own right, the host Member State shall, in accordance with its national legislation, facilitate entry and residence for the following persons:(a)any other family members, irrespective of their nationality, not falling under the definition in point 2 of Article 2 who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence ...;The host Member State shall undertake an extensive examination of the personal circumstances and shall justify any denial of entry or residence to these people.’6Article 7 of Directive 2004/38, headed ‘Right of residence for more than three months’, provides in paragraphs 1 and 2:‘1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they:are workers or self-employed persons in the host Member State; or(b)have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State; orare family members accompanying or joining a Union citizen who satisfies the conditions referred to in points (a), (b) or (c).2. The right of residence provided for in paragraph 1 shall extend to family members who are not nationals of a Member State, accompanying or joining the Union citizen in the host Member State, provided that such Union citizen satisfies the conditions referred to in paragraph 1(a), (b) or (c).’7In Chapter IV of Directive 2004/38, headed ‘Right of permanent residence’, Article 16, itself headed ‘General rule for Union citizens and their family members’, provides in paragraphs 1 and 2:‘1. Union citizens who have resided legally for a continuous period of five years in the host Member State shall have the right of permanent residence there. This right shall not be subject to the conditions provided for in Chapter III.2. Paragraph 1 shall apply also to family members who are not nationals of a Member State and have legally resided with the Union citizen in the host Member State for a continuous period of five years.’8In Chapter VI of Directive 2004/38, which is headed ‘Restrictions on the right of entry and the right of residence on grounds of public policy, public security or public health’, Article 27(1) and (2) provides:‘1. Subject to the provisions of this Chapter, Member States may restrict the freedom of movement and residence of Union citizens and their family members, irrespective of nationality, on grounds of public policy, public security or public health. These grounds shall not be invoked to serve economic ends.2. Measures taken on grounds of public policy or public security shall comply with the principle of proportionality and shall be based exclusively on the personal conduct of the individual concerned. Previous criminal convictions shall not in themselves constitute grounds for taking such measures.The personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. Justifications that are isolated from the particulars of the case or that rely on considerations of general prevention shall not be accepted.’9Article 28 of Directive 2004/38, headed ‘Protection against expulsion’, provides:‘1. Before taking an expulsion decision on grounds of public policy or public security, the host Member State shall take account of considerations such as how long the individual concerned has resided on its territory, his/her age, state of health, family and economic situation, social and cultural integration into the host Member State and the extent of his/her links with the country of origin.2. The host Member State may not take an expulsion decision against Union citizens or their family members, irrespective of nationality, who have the right of permanent residence on its territory, except on serious grounds of public policy or public security.3. An expulsion decision may not be taken against Union citizens, except if the decision is based on imperative grounds of public security, as defined by Member States, if they:have resided in the host Member State for the previous 10 years; orare a minor, except if the expulsion is necessary for the best interests of the child, as provided for in the United Nations Convention on the Rights of the Child of 20 November 1989.’ Spanish law 10Article 31(3) of Ley Orgánica 4/2000 sobre derechos y libertades de los extranjeros en España y su integración social (Basic Law 4/2000 on the rights and freedoms of foreign nationals in Spain and their social integration) of 11 January 2000 (BOE No 10 of 12 January 2000, p. 1139) provides for the possibility of granting a temporary residence permit for exceptional reasons, without it being necessary for the third-country national first to be in possession of a visa.11Article 31(5) and (7) of that law provides:‘5. In order for a foreign national to be granted temporary residence, he must have no criminal record in Spain or in countries in which he has previously resided, relating to offences which exist in Spanish law, and must not have been proscribed from the territory of any State with which Spain has concluded an agreement to that effect.7. In order for a temporary residence permit to be renewed, the following shall be assessed, where appropriate:any criminal record, account being taken of any pardon, conditional remission of a sentence or suspension of a custodial sentence;any failure on the foreign national’s part to fulfil obligations in matters of taxation or social security.For the purposes of such renewal, particular account shall be taken of any efforts at integration which the foreign national has made which militate in favour of renewal, such efforts to be demonstrated by means of a positive report from the autonomous community confirming the individual’s attendance at the training sessions referred to in Article 2 ter of this law.’12Real Decreto 2393/2004 por el que se aprueba el Reglamento de la Ley Orgánica 4/2000 (Royal Decree 2393/2004 approving the rules for the implementation of Basic Law 4/2000) of 30 December 2004 (BOE No 6 of 7 January 2005, p. 485) provided, in paragraph 4 of its First Additional Provision:‘… the Secretary of State for Immigration and Emigration may, acting on a report from the Secretary of State for Security, issue an individual temporary residence permit where exceptional circumstances not provided for in these rules obtain.’13Articles 124 and 128 of Real Decreto 557/2011 por el que se aprueba el Reglamento de la Ley Orgánica 4/2000, tras su reforma por Ley Orgánica 2/2009 (Royal Decree 557/2011 approving the rules for the implementation of Basic Law 4/2000, following its amendment by Basic Law 2/2009) of 20 April 2011 (BOE No 103 of 30 April 2011, p. 43821) provide for the possibility of applying for a temporary residence permit on the basis of exceptional circumstances on account of family ties (arraigo familiar), provided that the applicant does not have a criminal record in Spain or in countries in which he has previously resided, relating to offences which exist in Spanish law. The dispute in the main proceedings and the question referred for a preliminary ruling 14Mr Rendón Marín, a Colombian national, is the father of two minor children born in Malaga (Spain), namely a boy of Spanish nationality and a girl of Polish nationality. The children have always resided in Spain.15It is apparent from the documents before the Court that, by decision of the Juzgado de Primera Instancia de Málaga (Court of First Instance, Malaga, Spain) of 13 May 2009, Mr Rendón Marín was granted sole care and custody of his children. The whereabouts of the children’s mother, a Polish national, are unknown. According to the order for reference, the two children are receiving appropriate care and schooling.16Mr Rendón Marín has a criminal record. In particular, he was sentenced in Spain to a term of nine months’ imprisonment. However, he was granted a provisional two-year suspension of that sentence with effect from 13 February 2009. On the date of the order for reference, namely 20 March 2014, he was awaiting a decision on an application for mention of his criminal record to be removed from the register (cancelación).17On 18 February 2010, Mr Rendόn Marín lodged an application with the Director-General of Immigration of the Ministry of Labour and Immigration for a temporary residence permit on the basis of exceptional circumstances, pursuant to paragraph 4 of the First Additional Provision of Royal Decree 2393/2004.18By decision of 13 July 2010, Mr Rendόn Marín’s application was rejected pursuant to Article 31(5) of Law 4/2000 because he had a criminal record.19Mr Rendón Marín’s appeal against that decision was dismissed by judgment of the Audiencia Nacional (National High Court (Spain)) of 21 March 2012, whereupon he brought an appeal against that judgment before the Tribunal Supremo (Supreme Court, Spain).20Mr Rendón Marín based his appeal against the judgment on a single plea in law, alleging (i) misinterpretation of the judgments of 19 October 2004, Zhu and Chen (C‑200/02, EU:C:2004:639), and of 8 March 2011, Ruiz Zambrano (C‑34/09, EU:C:2011:124), since the case-law resulting from those judgments should, in his submission, have led to him being granted the residence permit sought, and (ii) infringement of Article 31(3) and (7) of Law 4/2000.21The referring court states that, leaving aside the specific circumstances of the main proceedings, in this case, as in the cases which gave rise to the judgments of 19 October 2004, Zhu and Chen (C‑200/02, EU:C:2004:639), and of 8 March 2011, Ruiz Zambrano (C‑34/09, EU:C:2011:124), the refusal in Spain to grant Mr Rendón Marín a residence permit would result in his removal from Spanish territory and, therefore, from the territory of the European Union, which the two minor children, his dependants, would leave as a consequence. That court observes, however, that, in contrast to the situations examined in the judgments of 19 October 2004, Zhu and Chen (C‑200/02, EU:C:2004:639), and of 8 March 2011, Ruiz Zambrano (C‑34/09, EU:C:2011:124), the applicable national legislation lays down a prohibition on the grant of a residence permit when the applicant has a criminal record in Spain.22Consequently, the referring court is uncertain whether national law, which prohibits, without any possibility of derogation, the grant of a residence permit when the applicant has a criminal record in the country where the permit is applied for, even though that has the unavoidable consequence of depriving a minor, a Union citizen who is a dependant of the applicant for a residence permit, of his right to reside in the European Union, is consistent with the Court’s case-law, relied on in the case, relating to Article 20 TFEU.23It was in those circumstances that the Tribunal Supremo (Supreme Court) decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Is national legislation which excludes the possibility of granting a residence permit to the parent of a Union citizen who is a minor and a dependant of that parent on the ground that the parent has a criminal record in the country in which the application is made consistent with Article 20 TFEU, interpreted in the light of the judgments of 19 October 2004, Zhu and Chen (C‑200/02, EU:C:2004:639), and of 8 March 2011, Ruiz Zambrano (C‑34/09, EU:C:2011:124), even if this results in the removal of the child from the territory of the European Union, inasmuch as the child will have to leave with its parent?’ Continuance of the dispute in the main proceedings 24It is clear from both the wording and the scheme of Article 267 TFEU that the preliminary ruling procedure presupposes that a dispute is actually pending before the national courts in which they are called upon to give a decision which is capable of taking account of the preliminary ruling (judgment of 11 September 2008, UGT-Rioja and Others, C‑428/06 to C‑434/06, EU:C:2008:488, paragraph 39 and the case-law cited). Therefore, the Court may verify of its own motion that the dispute in the main proceedings is continuing.25Here, the dispute relates to the refusal to grant Mr Rendón Marín a temporary residence permit in Spain, an appeal having been brought before the Tribunal Supremo (Supreme Court) against the judgment of the Audiencia Nacional (National High Court) of 21 March 2012, which had dismissed Mr Rendón Marín’s appeal against the decision rejecting his application for a residence permit.26It is apparent from the documents before the Court and the submissions of Mr Rendón Marín and the Spanish Government at the hearing that, after the Tribunal Supremo (Supreme Court) made the present request for a preliminary ruling, the appellant in the main proceedings lodged with the government office in Malaga two fresh applications for a temporary residence permit on grounds of exceptional circumstances, the second of which was granted.27At the hearing, the Spanish Government indeed stated that Mr Rendón Marín was granted a temporary residence permit on 18 February 2015 by the Subdelegación del Gobierno en Málaga (Government Office in the Province of Malaga, Spain). It is apparent from Mr Rendón Marín’s oral submissions that he obtained that temporary residence permit on grounds of exceptional circumstances founded on family ties to the country of residence, under Articles 124 and 128 of Royal Decree 557/2011, as a result of the removal by the competent Spanish authority of the mention of his criminal record from the register (cancelación).28In those circumstances, the referring court was requested to inform the Court whether it still needed a reply from the Court in order to give judgment.29By letter of 9 March 2016, the referring court stated that the claim set out in the administrative appeal seeking a temporary residence permit had been satisfied by the decision made by the Government Office in the Province of Malaga on 18 February 2015, but that it wished to maintain its request for a preliminary ruling.30According to the referring court, the grant of a residence permit to Mr Rendón Marín in February 2015 does not amount to full satisfaction of the claims set out in the context of the main action. It considers that, if the administrative appeal had been upheld, the contested decision of 13 July 2010 rejecting his application for a residence permit would have been declared unlawful and the grant of the resulting residence permit would have produced effects from that date. The nullity of that decision and the grant of a residence permit as at that date could have consequences for the appellant in the main proceedings going beyond the grant itself, such as compensation for the loss of employment contracts, of social benefits or of social security contributions or even, as the case may be, conferral of the right to acquire Spanish nationality.31It must thus be found that the dispute in the main proceedings is still pending before the referring court and that a reply from the Court to the question asked remains useful for deciding that dispute.32An answer should therefore be given in response to the request for a preliminary ruling. Consideration of the question referred 33In the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court may have to reformulate the questions referred to it. The Court has a duty to interpret all provisions of EU law which national courts require in order to decide the actions pending before them, even if those provisions are not expressly indicated in the questions referred to the Court by those courts (see, inter alia, judgments of 14 October 2010, Fuß, C‑243/09, EU:C:2010:609, paragraph 39; of 30 May 2013, Worten, C‑342/12, EU:C:2013:355, paragraph 30; and of 19 September 2013, Betriu Montull, C‑5/12, EU:C:2013:571, paragraph 40).34Consequently, even though the referring court has limited its question to the interpretation of Article 20 TFEU, that does not prevent the Court from providing it with all the elements of interpretation of EU law that may be of assistance in adjudicating in the case pending before it, whether or not the referring court has referred to them in the wording of its question. It is, in this regard, for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation in view of the subject matter of the dispute (see, inter alia, judgments of 14 October 2010, Fuß, C‑243/09, EU:C:2010:609, paragraph 40; of 30 May 2013, Worten, C‑342/12, EU:C:2013:355, paragraph 31; and of 19 September 2013, Betriu Montull, C‑5/12, EU:C:2013:571, paragraph 41).35In the light of that case-law and given the information in the order for reference, it is appropriate to reformulate the question submitted, as meaning that the referring court asks, in essence, whether, first, Article 21 TFEU and Directive 2004/38 and, secondly, Article 20 TFEU must be interpreted as precluding national legislation which requires a third-country national to be automatically refused the grant of a permit authorising him to reside on the territory of the Member State concerned when he has a criminal record, even though he has sole responsibility for two minor children who are Union citizens and have been residing with him in that Member State since their birth, without having exercised their right of freedom of movement, and that refusal has the consequence of requiring the children to leave the territory of the European Union.36In this connection, it should be noted at the outset that any rights which are granted to third-country nationals by provisions of EU law on citizenship of the Union are not autonomous rights of those nationals, but rights derived from the exercise of freedom of movement and residence by a Union citizen (see, to this effect, judgments of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 35; of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 22; and of 12 March 2014, O. and B., C‑456/12, EU:C:2014:135, paragraph 36 and the case-law cited). Thus, a derived right of residence of a third-country national exists, in principle, only when it is necessary in order to ensure that a Union citizen can exercise effectively his rights to move and reside freely in the European Union.37In that context, it must be examined whether a third-country national such as Mr Rendón Marín may enjoy a derived right of residence, founded either on Article 21 TFEU and Directive 2004/38 or on Article 20 TFEU, and, should that be the case, whether his criminal record is capable of justifying a limitation of that right. Article 21 TFEU and Directive 2004/38 The existence of a derived right of residence founded on Article 21 TFEU and Directive 2004/3838Article 3(1) of Directive 2004/38 defines as ‘beneficiaries’ of the rights conferred by the directive ‘all Union citizens who move to or reside in a Member State other than that of which they are a national, and to their family members as defined in point 2 of Article 2 who accompany or join them’.39In the present instance, Mr Rendón Marín is a third-country national and the father of Union citizens who are minors in his sole care who have always resided in the same Member State, namely the Kingdom of Spain.40As Mr Rendón Marín’s son, who is a minor, has never made use of his right of freedom of movement and has always resided in the Member State of which he is a national, that child is not covered by the concept of ‘beneficiary’ within the meaning of Article 3(1) of Directive 2004/38, so that that directive is not applicable to him (judgments of 15 November 2011, Dereci and Others, C‑256/11, EU:C:2011:734, paragraph 57, and of 6 December 2012, O and Others, C‑356/11 and C‑357/11, EU:C:2012:776, paragraph 42).41On the other hand, as the Spanish, Greek, Italian and Polish Governments and the Commission have submitted, Mr Rendón Marín’s daughter, a child who is a minor of Polish nationality resident in Spain since birth, is covered by the concept of ‘beneficiary’ within the meaning of Article 3(1) of Directive 2004/38.42Indeed, the Court has pointed out that the situation, in the host Member State, of a national of another Member State who was born in the host Member State and has not made use of the right to freedom of movement cannot, for that reason alone, be assimilated to a purely internal situation, depriving that national of the benefit, in the host Member State, of the provisions of EU law on freedom of movement and of residence (see, to this effect, judgment of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 19).43It follows that Mr Rendón Marín’s daughter is entitled to rely on Article 21(1) TFEU and the measures adopted to give it effect (see, to this effect, judgment of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 26).44Accordingly, Article 21(1) TFEU and Directive 2004/38 in principle confer a right to reside in Spain on Mr Rendón Marín’s daughter.45However, according to the Court, that right of citizens of the Union to reside in a Member State other than that of which they are a national is recognised subject to the limitations and conditions imposed by the FEU Treaty and by the measures adopted to give it effect (judgment of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 26). Those limitations and conditions must be applied in compliance with the limits imposed by EU law and in accordance with the general principles of EU law, in particular the principle of proportionality (see to this effect, in particular, judgments of 17 September 2002, Baumbast and R, C‑413/99, EU:C:2002:493, paragraph 91, and of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 32).46As regards those conditions, all Union citizens have the right of residence for a period of longer than three months on the territory of a Member State other than that of which they are a national if, in particular, they have, in accordance with Article 7(1)(b) of Directive 2004/38, sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State.47Unless Mr Rendón Marín’s daughter has acquired a right of permanent residence in Spain, by virtue of Article 16(1) of Directive 2004/38, in which case her right of residence would not be subject to the conditions provided for in Chapter III of the directive, in particular those laid down in Article 7(1)(b), she can be granted a right of residence only if she fulfils the conditions prescribed in Article 7(1)(b).48In that regard, the Court has already held that, while the Union citizen must have sufficient resources, EU law does not, however, lay down any requirement whatsoever as to their origin, and they may be provided, inter alia, by a third-country national who is a parent of the citizens who are minors (see, to this effect, judgments of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 30, and of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 27).49In the present instance, it is apparent from the order for reference that Mr Rendón Marín’s children are receiving appropriate care and schooling. The Spanish Government stated in addition at the hearing that, pursuant to Spanish law, Mr Rendón Marín is entitled to sickness insurance for himself and his children. Nevertheless, it is for the referring court to establish whether Mr Rendón Marín’s daughter has, herself or through her father, sufficient resources and comprehensive sickness insurance cover, within the meaning of Article 7(1)(b) of Directive 2004/38.50As regards whether Mr Rendón Marín, a third-country national, may, as a direct ascendant of a Union citizen having a right of residence under Directive 2004/38, rely on a derived right of residence, it is clear from the case-law of the Court that the status of ‘dependent’ family member of a Union citizen holding a right of residence is the result of a factual situation characterised by the fact that material support for the family member is provided by the holder of the right of residence, so that, when, as in the present instance, the converse situation occurs and the holder of the right of residence is dependent on a third-country national, the third-country national cannot rely on being a ‘dependent’ relative in the ascending line of that right-holder, within the meaning of Directive 2004/38, with a view to having the benefit of a right of residence in the host Member State (see, to this effect, judgment of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 25).51However, a refusal to allow a parent, a third-country national, who is the carer of a minor child who is a Union citizen to reside with that child in the host Member State would deprive the child’s right of residence of any useful effect, since enjoyment by a child who is a minor of a right of residence necessarily implies that the child is entitled to be accompanied by the person who is his primary carer and accordingly that the carer must be in a position to reside with the child in the host Member State for the duration of such residence (see judgments of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 45, and of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 28).52Thus, while Article 21 TFEU and Directive 2004/38 grant a right to reside in the host Member State to a minor who is a national of another Member State and who satisfies the conditions laid down in Article 7(1)(b) of that directive, the same provisions allow a parent who is that minor’s primary carer to reside with him in the host Member State (judgments of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraphs 46 and 47, and of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 29).53Leaving aside the situation contemplated in paragraph 47 above, if — a matter which, as has been pointed out in paragraph 49 above, is for the referring court to establish — Mr Rendón Marín’s daughter fulfils the conditions laid down in Article 7(1) of Directive 2004/38 for having a right to reside in Spain on the basis of Article 21 TFEU and of that directive, the latter have to be interpreted as precluding, in principle, Mr Rendón Marín being refused a derived right to reside on the territory of that Member State.The effect of a criminal record on recognition of a derived right of residence, in the light of Articles 27 and 28 of Directive 2004/3854It should now be examined whether any derived right of residence of M. Rendón Marín may be limited by national legislation such as that at issue in the main proceedings.55It must be pointed out that the right of Union citizens and their family members to reside in the European Union is not unconditional but may be subject to the limitations and conditions imposed by the Treaty and by the measures adopted to give it effect (see, inter alia, judgment of 10 July 2008, Jipa, C‑33/07, EU:C:2008:396, paragraph 21 and the case-law cited).56It should also be noted that, according to recital 23 of Directive 2004/38, expulsion of Union citizens and their family members on grounds of public policy or public security is a measure that can seriously harm persons who, having availed themselves of the rights and freedoms conferred on them by the Treaty, have become genuinely integrated into the host Member State. For that reason, as follows from recital 24, Directive 2004/38 establishes a system of protection against expulsion measures which is based on the degree of integration of the persons concerned in the host Member State, so that the greater the degree of integration of Union citizens and their family members in the host Member State, the greater the degree of protection against expulsion should be (judgment of 23 November 2010, Tsakouridis, C‑145/09, EU:C:2010:708, paragraphs 24 and 25).57So far as concerns the main proceedings, the limitations on the right of residence derive in particular from Article 27(1) of Directive 2004/38, which provides that Member States may restrict the right of residence of Union citizens and their family members, irrespective of nationality, on grounds, in particular, of public policy or public security (see, to this effect, judgment of 10 July 2008, Jipa, C‑33/07, EU:C:2008:396, paragraph 22).58It is settled case-law that the public policy exception constitutes a derogation from the right of residence of Union citizens and their family members, which must be interpreted strictly and the scope of which cannot be determined unilaterally by the Member States (see, to this effect, judgments of 4 December 1974, van Duyn, 41/74, EU:C:1974:133, paragraph 18; of 27 October 1977, Bouchereau, 30/77, EU:C:1977:172, paragraph 33; of 29 April 2004, Orfanopoulos and Oliveri, C‑482/01 and C‑493/01, EU:C:2004:262, paragraph 65; of 27 April 2006, Commission v Germany, C‑441/02, EU:C:2006:253, paragraph 34; and of 7 June 2007, Commission v Netherlands, C‑50/06, EU:C:2007:325, paragraph 42).59As is apparent from the first subparagraph of Article 27(2) of Directive 2004/38, in order to be justified, measures restricting the right of residence of a Union citizen or a member of his family, including measures taken on grounds of public policy, must comply with the principle of proportionality and be based exclusively on the personal conduct of the individual concerned.60It should be added that Article 27(2) of the directive makes clear that previous criminal convictions cannot in themselves constitute grounds for taking public policy or public security measures, that the personal conduct of the individual concerned must represent a genuine and present threat affecting one of the fundamental interests of society or of the Member State concerned, and that justifications that are isolated from the particulars of the case or that rely on considerations of general prevention cannot be accepted (see, to this effect, judgments of 10 July 2008, Jipa, C‑33/07, EU:C:2008:396, paragraph 23 and 24, and of 23 November 2010, Tsakouridis, C‑145/09, EU:C:2010:708, paragraph 48).61It follows that EU law precludes a limitation on the right of residence that is founded on grounds of a general preventive nature and ordered for the purpose of deterring other foreign nationals, in particular where that measure has been adopted automatically following a criminal conviction, without any account being taken of the personal conduct of the offender or of the danger which that person represents for the requirements of public policy (see, to this effect, judgment of 27 April 2006, Commission v Germany, C‑441/02, EU:C:2006:253 paragraph 93 and the case-law cited).62Thus, in order to determine whether an expulsion measure is proportionate to the legitimate aim pursued, in the present instance protection of the requirements of public policy or public security, account should be taken of the criteria set out in Article 28(1) of Directive 2004/38, namely how long the individual concerned has resided on the territory of the host Member State, his age, his state of health, his family and economic situation, his social and cultural integration into the host Member State and the extent of his links with his country of origin. The degree of gravity of the offence must also be taken into consideration in the context of the principle of proportionality.63However, the legislation at issue in the main proceedings makes the grant of an initial residence permit automatically conditional — with no possibility of derogation — on the person concerned having no criminal record in Spain or in the countries in which he has previously resided.64In the present instance, the order for reference indicates that, pursuant to this legislation, the application for a temporary residence permit on the basis of exceptional circumstances which Mr Rendón Marín submitted on 18 February 2010 was rejected because he had a criminal record. The residence permit applied for was thus refused automatically, without account being taken of the specific situation of the appellant in the main proceedings, that is to say, without assessment of his personal conduct or of any present danger that he could represent for the requirements of public policy or public security.65As regards assessment of the circumstances that are relevant in the present instance, it is apparent from the documents before the Court that Mr Rendón Marín was convicted of an offence committed in 2005. That previous criminal conviction cannot in itself constitute grounds for refusing a residence permit. While the personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society and the Court has pointed out that the condition relating to the existence of a present threat must, in principle, be fulfilled at the time when the measure at issue is adopted (see, inter alia, judgment of 27 October 1977, Bouchereau, 30/77, EU:C:1977:172, paragraph 28), that does not seem to be the case here as the custodial sentence imposed on Mr Rendón Marín was suspended and does not appear to have been enforced.66As regards, moreover, the possible expulsion of Mr Rendón Marín, it is necessary, first, to take account of the fundamental rights whose observance the Court ensures, in particular the right to respect for private and family life, as laid down in Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’) (see, to this effect, judgment of 23 November 2010, Tsakouridis, C‑145/09, EU:C:2010:708, paragraph 52) and, secondly, to observe the principle of proportionality. Article 7 of the Charter must be read in conjunction with the obligation to take into consideration the child’s best interests, recognised in Article 24(2) thereof (see, to this effect, judgment of 23 December 2009, Detiček, C‑403/09 PPU, EU:C:2009:810, paragraphs 53 and 54).67Having regard to all the foregoing considerations, Article 21 TFEU and Directive 2004/38 must be interpreted as precluding national legislation which requires a third-country national to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record where he is the parent of a minor child who is a Union citizen and who is his dependant and resides with him in the host Member State. Article 20 TFEU The existence of a derived right of residence pursuant to Article 20 TFEU68In the event that the referring court, when reviewing the conditions laid down in Article 7(1) of Directive 2004/38, comes to the conclusion that those conditions are not fulfilled and, in any event, so far as concerns Mr Rendón Marín’s son, a minor, who has always resided in the Member State of which he is a national, it should be examined whether a derived right of residence for Mr Rendón Marín may, where appropriate, be founded on Article 20 TFEU.69It must be recalled first of all that, in accordance with the Court’s settled case-law, Article 20 TFEU confers on every individual who is a national of a Member State citizenship of the Union, which is intended to be the fundamental status of nationals of the Member States (see judgment of 30 June 2016, NA, C‑115/15, EU:C:2016:487, paragraph 70 and the case-law cited).70Citizenship of the Union confers on each Union citizen a primary and individual right to move and reside freely within the territory of the Member States, subject to the limitations and restrictions laid down by the Treaty and the measures adopted for their implementation (see, to this effect, judgments of 7 October 2010, Lassal, C‑162/09, EU:C:2010:592, paragraph 29, and of 16 October 2012, Hungary v Slovakia, C‑364/10, EU:C:2012:630, paragraph 43).71As the Court held in paragraph 42 of the judgment of 8 March 2011, Ruiz Zambrano (C‑34/09, EU:C:2011:124), Article 20 TFEU precludes national measures which have the effect of depriving Union citizens of the genuine enjoyment of the substance of the rights conferred by virtue of their status as Union citizens.72On the other hand, the Treaty provisions on citizenship of the Union do not confer any autonomous right on third-country nationals (judgments of 8 November 2012, Iida, C‑40/11, EU:C:2012:691, paragraph 66, and of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 34).73As has been noted in paragraph 36 above, any rights conferred on third-country nationals by the Treaty provisions on citizenship of the Union are not autonomous rights of those nationals but rights derived from those enjoyed by the Union citizen. The purpose and justification of those derived rights are based on the fact that a refusal to allow them would be such as to interfere, in particular, with the Union citizen’s freedom of movement (judgments of 8 November 2012, Iida, C‑40/11, EU:C:2012:691, paragraphs 67 and 68, and of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 35).74In this connection, the Court has already held that there are very specific situations in which, despite the fact that the secondary law on the right of residence of third-country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third-country national who is a family member of his since the effectiveness of citizenship of the Union would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the European Union as a whole, thus denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status (see, to this effect, judgments of 8 March 2011, Ruiz Zambrano, C‑34/09, EU:C:2011:124, paragraphs 43 and 44; of 15 November 2011, Dereci and Others, C‑256/11,EU:C:2011:734, paragraphs 66 and 67; of 8 November 2012, Iida, C‑40/11, EU:C:2012:691, paragraph 71; of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 36; and of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 32).75The above situations have the common feature that, although they are governed by legislation which falls, a priori, within the competence of the Member States, namely legislation on the right of entry and residence of third-country nationals outside the scope of provisions of secondary legislation which provide for the grant of such a right under certain conditions, they nonetheless have an intrinsic connection with the freedom of movement and residence of a Union citizen, which prevents the right of entry and residence being refused to those nationals in the Member State of residence of that citizen, in order not to interfere with that freedom (see, to this effect, judgments of 8 November 2012, Iida, C‑40/11, EU:C:2012:691, paragraph 72, and of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 37).76In the present instance, as Mr Rendón Marín’s children possess the nationality of a Member State, namely Spanish and Polish nationality respectively, they enjoy the status of Union citizen (see, to this effect, judgments of 2 October 2003, Garcia Avello, C‑148/02, EU:C:2003:539, paragraph 21, and of 19 October 2004, Zhu and Chen, C‑200/02, EU:C:2004:639, paragraph 25).77Therefore, as Union citizens, Mr Rendón Marín’s children have the right to move and reside freely within the territory of the European Union, and any limitation of that right falls within the scope of EU law.78Thus, if — a matter which is for the referring court to check — the refusal to grant residence to Mr Rendón Marín, a third-country national, to whose sole care those children have been entrusted, were to mean that he had to leave the territory of the European Union, that could result in a restriction of that right, in particular the right of residence, as the children could be compelled to go with him, and therefore to leave the territory of the European Union as a whole. Any obligation on their father to leave the territory of the European Union would thus deprive them of the genuine enjoyment of the substance of the rights which the status of Union citizen nevertheless confers upon them (see, to this effect, judgments of 15 November 2011, Dereci and Others, C‑256/11, EU:C:2011:734, paragraph 67; of 8 November 2012, Iida, C‑40/11, EU:C:2012:691, paragraph 71; of 8 May 2013, Ymeraga and Others, C‑87/12, EU:C:2013:291, paragraph 36; and of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraph 32).79Several Member States which have submitted observations have contended that Mr Rendón Marín and his children could move to Poland, the Member State of which his daughter is a national. Mr Rendón Marín, for his part, stated at the hearing that he maintains no ties with the family of his daughter’s mother, who, according to him, does not reside in Poland, and that neither he nor his children know the Polish language. In this regard, it is for the referring court to check whether, in the light of all the circumstances of the main proceedings, Mr Rendón Marín, as the parent who is the sole carer of his children, may in fact enjoy the derived right to go with them to Poland and reside with them there, so that a refusal of the Spanish authorities to grant him a right of residence would not result in his children being obliged to leave the territory of the European Union as a whole (see, to this effect, judgment of 10 October 2013, Alokpa and Moudoulou, C‑86/12, EU:C:2013:645, paragraphs 34 and 35).80Subject to the checks referred to in paragraphs 78 and 79 above, it seems to be clear from the information before the Court that the situation at issue in the main proceedings is capable of resulting, for Mr Rendón Marin’s children, in their being deprived of the genuine enjoyment of the substance of the rights which the status of Union citizen confers upon them, and that it therefore falls within the scope of EU law.The possibility of limiting a derived right of residence flowing from Article 20 TFEU81Article 20 TFEU does not affect the possibility of Member States relying on an exception linked, in particular, to upholding the requirements of public policy and safeguarding public security. However, in so far as Mr Rendón Marin’s situation falls within the scope of EU law, assessment of his situation must take account of the right to respect for private and family life, as laid down in Article 7 of the Charter, an article which, as has been pointed out in paragraph 66 above, must be read in conjunction with the obligation to take into consideration the child’s best interests, recognised in Article 24(2) of the Charter.82Furthermore, as a justification for derogating from the right of residence of Union citizens or members of their families, the concepts of ‘public policy’ and ‘public security’ must, as has been noted in paragraph 58 above, be interpreted strictly, so that their scope cannot be determined unilaterally by the Member States without being subject to control by the EU institutions.83The Court has thus held that the concept of ‘public policy’ presupposes, in any event, the existence, in addition to the disturbance of the social order which any infringement of the law involves, of a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. As regards ‘public security’, it is apparent from the Court’s case-law that this concept covers both the internal security of a Member State and its external security and that, consequently, a threat to the functioning of institutions and essential public services and the survival of the population, as well as the risk of a serious disturbance to foreign relations or to peaceful coexistence of nations, or a risk to military interests, may affect public security (see, to this effect, judgments of 23 November 2010, Tsakouridis, C‑145/09, EU:C:2010:708, paragraphs 43 and 44, and of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraphs 65 and 66).84In this context, it must be held that, where refusal of the right of residence is founded on the existence of a genuine, present and sufficiently serious threat to the requirements of public policy or of public security, in view of the criminal offences committed by a third-country national who is the sole carer of children who are Union citizens, such refusal would be consistent with EU law.85On the other hand, that conclusion cannot be drawn automatically on the basis solely of the criminal record of the person concerned. It can result, where appropriate, only from a specific assessment by the referring court of all the current and relevant circumstances of the case, in the light of the principle of proportionality, of the child’s best interests and of the fundamental rights whose observance the Court ensures.86That assessment must therefore take account, in particular, of the personal conduct of the individual concerned, the length and legality of his residence on the territory of the Member State concerned, the nature and gravity of the offence committed, the extent to which the person concerned is currently a danger to society, the age of the children at issue and their state of health, as well as their economic and family situation.87It follows that Article 20 TFEU must be interpreted as precluding national legislation which requires a third-country national who is a parent of minor children who are Union citizens in his sole care to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record, where that refusal has the consequence of requiring those children to leave the territory of the European Union.88In the light of all the foregoing considerations, the answer to the question referred is as follows:Article 21 TFEU and Directive 2004/38 must be interpreted as precluding national legislation which requires a third-country national to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record where he is the parent of a minor child who is a Union citizen and a national of a Member State other than the host Member State and who is his dependant and resides with him in the host Member State;Article 20 TFEU must be interpreted as precluding the same national legislation which requires a third-country national who is a parent of minor children who are Union citizens in his sole care to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record, where that refusal has the consequence of requiring those children to leave the territory of the European Union. Costs 89Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 21 TFEU and Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC must be interpreted as precluding national legislation which requires a third-country national to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record where he is the parent of a minor child who is a Union citizen and a national of a Member State other than the host Member State and who is his dependant and resides with him in the host Member State. Article 20 TFEU must be interpreted as precluding the same national legislation which requires a third-country national who is a parent of minor children who are Union citizens in his sole care to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record, where that refusal has the consequence of requiring those children to leave the territory of the European Union. [Signatures]( *1 ) Language of the case: Spanish. | e8b9b-83a04ee-49b9 | EN |
According to Advocate General Wathelet, neither the EU-Morocco Association Agreement nor the EU-Morocco Agreement on the liberalisation of trade in agricultural and fishery products apply to Western Sahara | 21 December 2016 ( *1 )‛Appeal — External relations — Agreement between the European Union and the Kingdom of Morocco concerning liberalisation measures on agricultural and fishery products — Decision approving the conclusion of an international agreement — Action for annulment — Admissibility — Locus standi — Territorial scope of the agreement — Interpretation of the agreement — Principle of self-determination — Principle of the relative effect of treaties’In Case C‑104/16 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 19 February 2016, Council of the European Union, represented by H. Legal, A. de Elera-San Miguel Hurtado and A. Westerhof Löfflerová, acting as Agents,appellant,supported by: Kingdom of Belgium, represented by C. Pochet and J.-C. Halleux, acting as Agents, Federal Republic of Germany, represented by T. Henze, acting as Agent, Kingdom of Spain, represented by M. Sampol Pucurull and S. Centeno Huerta, acting as Agents, French Republic, represented by F. Alabrune, G. de Bergues, D. Colas, F. Fize and B. Fodda, acting as Agents, Portuguese Republic, represented by L. Inez Fernandes and M. Figueiredo, acting as Agents, Confédération marocaine de l’agriculture et du développement rural (Comader), represented by J.-F. Bellis, M. Struys, A. Bailleux, L. Eskenazi and R. Hicheri, avocats,interveners in the appeal,the other parties to the proceedings being: Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario), represented by G. Devers, avocat,applicant at first instance, European Commission, represented by F. Castillo de la Torre, E. Paasivirta and B. Eggers, acting as Agents,intervener at first instance,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič and J.L. da Cruz Vilaça, Presidents of Chambers, J. Malenovský (Rapporteur), E. Levits, J.-C. Bonichot, A. Arabadjiev, C. Toader, C.G. Fernlund, C. Vajda, S. Rodin, F. Biltgen and K. Jürimäe, Judges,Advocate General: M. Wathelet,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 19 July 2016,after hearing the Opinion of the Advocate General at the sitting on 13 September 2016,gives the following Judgment 1By its appeal the Council of the European Union is seeking to have set aside the judgment of the General Court of the European Union of 10 December 2015, Front Polisario v Council (T‑512/12, ‘the judgment under appeal’, EU:T:2015:953), by which the General Court upheld the action brought by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) for the partial annulment of Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2012 L 241, p. 2) (‘the decision at issue’). Legal context International law The Charter of the United Nations2Article 1 of the Charter of the United Nations, signed at San Francisco on 26 June 1945, states:‘The Purposes of the United Nations are:…2.To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, and to take other appropriate measures to strengthen universal peace;…’3Chapter XI of the Charter of the United Nations, entitled ‘Declaration Regarding Non-Self-Governing Territories’, includes Article 73 thereof, which states:‘Members of the United Nations which have or assume responsibilities for the administration of territories whose peoples have not yet attained a full measure of self-government recognise the principle that the interests of the inhabitants of these territories are paramount, and accept as a sacred trust the obligation to promote to the utmost, within the system of international peace and security established by the present Charter, the well-being of the inhabitants of these territories …The Vienna Convention on the Law of Treaties4Under the final paragraph of the preamble to the Vienna Convention on the Law of Treaties, concluded in Vienna on 23 May 1969 (United Nations Treaty Series, Vol. 1155, p. 331; ‘the Vienna Convention’), the parties to that convention ‘affirm that the rules of customary international law will continue to govern questions not regulated by the provisions of [that] convention’.5Article 3 of the Vienna Convention, which is entitled ‘International agreements not within the scope of the present Convention’, provides:‘The fact that the present Convention does not apply to international agreements concluded between States and other subjects of international law or between such other subjects of international law, or to international agreements not in written form, shall not affect:(b)the application to [such agreements] of any of the rules set forth in the present Convention to which they would be subject under international law independently of the Convention;6According to Article 26 of that convention, entitled ‘Pacta sunt servanda’:‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith.’7Article 29 of the Convention, entitled ‘Territorial scope of treaties’, provides:‘Unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.’8Article 30 of the Vienna Convention, entitled ‘Application of successive treaties to the same subject-matter’, provides in paragraph 2 thereof:‘When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.’9Under Article 31 of the Vienna Convention, entitled ‘General rule of interpretation’:‘1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:(a)any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty;any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.3. There shall be taken into account, together with the context:any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;(c)any relevant rules of international law applicable in the relations between the parties.4. A special meaning shall be given to a term if it is established that the parties so intended.’10Article 34 of the Vienna Convention, entitled ‘General rule regarding third States’, provides:‘A treaty does not create either obligations or rights for a third State without its consent.’ EU law The Association Agreement11The Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, was signed in Brussels on 26 February 1996 (OJ 2000 L 70, p. 2; ‘the Association Agreement’) and approved on behalf of the Communities by Council and Commission Decision 2000/204/EC, ECSC of 24 January 2000 (OJ 2000 L 70, p. 1). Pursuant to Article 96 of the Agreement, it entered into force on 1 March 2000, as is apparent from the information published in the Official Journal of the European Communities (OJ 2000 L 70, p. 228).12Article 1(1) of the Association Agreement provides:‘An association is hereby established between the Community and its Member States, of the one part, and Morocco, of the other part.’13Title II of that agreement, entitled ‘Free Movement of Goods’, includes Articles 6 to 30 thereof.14Article 16 of the Association Agreement provides:‘The Community and Morocco shall gradually implement greater liberalisation of their reciprocal trade in agricultural and fishery products.’15Article 17(1) of that agreement provided in its initial version:‘Agricultural and fishery products originating in Morocco shall benefit on import into the Community from the provisions set out in Protocols 1 and 2 respectively.’16Title VIII of the Association Agreement, entitled ‘Institutional, General and Final Provisions’, includes in particular Article 94 thereof, which states:‘This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Community and the European Coal And Steel Community are applied and under the conditions laid down in those Treaties and, on the other hand, to the territory of the Kingdom of Morocco.’The Liberalisation Agreement17The Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols No 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, was signed in Brussels on 13 December 2010 (OJ 2012 L 241, p. 4, ‘the Liberalisation Agreement’), before being approved on behalf of the European Union by the decision at issue. In accordance with the terms thereof, it entered into force on 1 October 2012, as is apparent from the notice published in the Official Journal of the European Union (OJ 2012 L 255, p. 1).18As is apparent from the Liberalisation Agreement and recitals 1 to 3 of the decision at issue, the purpose of that agreement is to implement the progressive liberalisation of trade in agricultural and fishery products provided for in Article 16 of the Association Agreement, by way of the amendment of some of the stipulations of the Association Agreement as well as of some of the accompanying protocols.19To that end, the Liberalisation Agreement in particular amended Article 17(1) of the Association Agreement, which now provides that:‘Agricultural products, processed agricultural products, fish and fishery products originating in Morocco listed in Protocol No 1 shall be subject to the arrangements set out in that Protocol on importation into the European Union.20The Liberalisation Agreement also amended Protocol No 1 of the Association Agreement, which now provides, in essence, that ad valorem and specific customs duties applicable to agricultural products, processed agricultural products, fish and fishery products originating in Morocco and covered by those two agreements are eliminated or reduced to specified levels. Background to the dispute 21According to Article 1 of its constituting document, the Front Polisario is ‘a national liberation movement, the fruit of the long resistance of the Sahrawi people against the various forms of foreign occupation’, created on 10 May 1973.22The historical and international context in which it was created and subsequent developments in the situation in Western Sahara, as they emerge in essence from paragraphs 1 to 16 of the judgment under appeal, may be summarised as follows.23Western Sahara is a territory in north-west Africa which was colonised by the Kingdom of Spain at the end of the 19th century before becoming a province of Spain; it was then added by the United Nations (UN) to the list of non-self-governing territories for the purposes of Article 73 of the United Nations Charter, on which it still appears to this day.24On 14 December 1960, the General Assembly of the UN adopted Resolution 1514 (XV), entitled ‘Declaration on the granting of independence to colonial countries and peoples’ (‘Resolution 1514 (XV) of the General Assembly of the UN’), which states, inter alia, that ‘all peoples have the right to self-determination[,] by virtue of [which] they freely determine their political status’, that ‘immediate steps shall be taken, in Trust and Non-Self-Governing Territories or all other territories which have not yet attained independence, to transfer all powers to the peoples of those territories, without any conditions or reservations, in accordance with their freely expressed will and desire’, and that ‘all States shall observe faithfully and strictly the provisions of the Charter of the United Nations … on the basis of respect for the sovereign rights of all peoples and their territorial integrity’.25On 20 December 1966, the General Assembly of the UN adopted Resolution 2229 (XXI) on the question of Ifni and Spanish Sahara, in which it ‘reaffirm[ed] the inalienable right of the peopl[e] … of Spanish Sahara to self-determination’ and invited the Kingdom of Spain, in its capacity as administering Power, to determine at the earliest possible date, ‘the procedures for the holding of a referendum under [UN] auspices with a view to enabling the indigenous population of the Territory to exercise freely its right to self-determination’.26On 24 October 1970, the General Assembly of the UN adopted Resolution 2625 (XXV), entitled ‘Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations’, by which it approved that declaration, the wording of which is appended to that resolution. That declaration states in particular that ‘every State has the duty to promote [the right to self-determination of peoples] in accordance with the provisions of the Charter’ and that ‘the territory of a colony or other Non-Self-Governing Territory has, under the Charter, a status separate and distinct from the territory of the State administering it; and such separate and distinct status under the Charter shall exist until the people of the colony or Non-Self-Governing Territory have exercised their right of self-determination in accordance with the Charter, and particularly its purposes and principles’.27On 20 August 1974, the Kingdom of Spain informed the UN that it proposed to organise a referendum in Western Sahara under the auspices of the UN.28On 16 October 1975, the International Court of Justice, in its capacity as the principal legal body of the UN, and following an application submitted by the General Assembly of the UN as part of its work on the decolonisation of the Western Sahara, handed down an Advisory Opinion (Western Sahara, Advisory Opinion, ICJ Reports 1975, p. 12; ‘the Advisory Opinion on Western Sahara’), in paragraph 162 of which it found as follows:‘The materials and information presented to the Court show the existence, at the time of Spanish colonisation, of legal ties of allegiance between the Sultan of Morocco and some of the tribes living in the territory of Western Sahara. They equally show the existence of rights, including some rights relating to the land, which constituted legal ties between the Mauritanian entity, as understood by the Court, and the territory of Western Sahara. On the other hand, the Court’s conclusion is that the materials and information presented to it do not establish any tie of territorial sovereignty between the territory of Western Sahara and the Kingdom of Morocco or the Mauritanian entity. Thus the Court has not found legal ties of such a nature as might affect the application of resolution 1514 (XV) [of the UN General Assembly] in the decolonisation of Western Sahara and, in particular, of the principle of self-determination through the free and genuine expression of the will of the peoples of the Territory. ...’29At the conclusion of its assessment, the International Court of Justice answered as follows, in that advisory opinion, the questions which had been put to it by the General Assembly of the UN:‘The Court decides,that Western Sahara (Rio de Oro and Sakiet El Hamra) at the time of colonisation by Spain was not a territory belonging to no-one (terra nullius).that there were legal ties between this territory and the Kingdom of Morocco of the kinds indicated in paragraph 162 of this Opinion;30In a speech delivered on the day of the publication of the Advisory Opinion, the King of Morocco took the view that ‘the whole world [had] recognised that [Western] Sahara belonged’ to the Kingdom of Morocco and that it only remained for the Kingdom ‘to peacefully occupy that territory’; he called, to that end, for the organisation of a march, in which 350000 persons took part.31On 6 November 1975, the UN Security Council adopted Resolution 380 (1975) on the Western Sahara, in which it ‘deplor[ed] the holding of the [announced] march’ and ‘call[ed] upon [the Kingdom of] Morocco immediately to withdraw from the territory of Western Sahara all the participants in [that] march’.32On 26 February 1976, the Kingdom of Spain informed the UN Secretary-General that as of that date it was withdrawing its presence from Western Sahara and considered itself exempt from any responsibility of any international nature in connection with the administration of that territory.33In the meantime, an armed conflict had begun in the region between the Kingdom of Morocco, the Islamic Republic of Mauritania and the Front Polisario.34On 10 August 1979, the Islamic Republic of Mauritania concluded a peace agreement with the Front Polisario under which it renounced any territorial claim to Western Sahara.35On 21 November 1979, the General Assembly of the UN adopted Resolution 34/37 on the question of Western Sahara, in which it ‘reaffirm[ed] the inalienable right of all peoples of the people of Western Sahara to self-determination and independence, in accordance with the Charter of the [UN] … and the objectives of [its] resolution 1514 (XV)’, ‘deeply deplore[d] the aggravation of the situation resulting from the continued occupation of Western Sahara by Morocco’, ‘urge[d] Morocco to join in the peace process and to terminate the occupation of the Territory of Western Sahara’ and ‘recommend[ed] to that end that the [Front Polisario], the representative of the people of Western Sahara, should participate fully in any search for a just, lasting and definitive political solution of the question of Western Sahara, in accordance with the resolutions and declarations of the [UN]’.36The conflict between the Kingdom of Morocco and the Front Polisario continued until, on 30 August 1988, the parties accepted, in principle, the proposals for settlement put forward, in particular, by the UN Secretary-General and providing, in particular, for the proclamation of a ceasefire and the organisation of a referendum on self-determination under UN supervision.37To the present day, that referendum has still not been held and the Kingdom of Morocco controls the majority of the territory of Western Sahara, which a wall of sand constructed and guarded by the Moroccan army separates from the rest of the territory, controlled by the Front Polisario. The procedure before the General Court and the judgment under appeal 38By application lodged at the Registry of the General Court on 19 November 2012, the Front Polisario brought an action for annulment of the decision at issue.39In support of its action, the Front Polisario relied on 11 pleas in law.40In defence, the Council contended that the action should be dismissed as inadmissible or, in the alternative, as unfounded, and that the Front Polisario should be ordered to pay the costs.41By order of the President of the Eighth Chamber of the General Court of 6 November 2013, the European Commission was granted leave to intervene in support of the form of order sought by the Council.42In the judgment under appeal, the General Court examined, first, the arguments put forward by the Council and the Commission claiming that the action was inadmissible on the ground that, on the one hand, the Front Polisario had not proved the existence of its legal personality or its capacity to institute proceedings and, on the other, that the decision at issue was of neither direct nor individual concern to it. The General Court rejected those two pleas of inadmissibility in paragraphs 34 to 60 and 61 to 114 of the judgment under appeal respectively.43As regards the standing of the Front Polisario, the General Court noted, in paragraphs 73 to 103 of the judgment under appeal, that the purpose of the decision at issue was to approve the conclusion of the Liberalisation Agreement, before holding that that agreement ‘also appl[ied]’ to Western Sahara. Then, by ‘taking account of that finding’, as stated in paragraph 104 of that judgment, it held, in paragraphs 105 to 110 and 111 to 114 respectively of that judgment, that the Front Polisario was to be regarded as being concerned both directly and individually by that decision.44Secondly, the General Court commenced its assessment of the 11 pleas for annulment relied on by the Front Polisario in support of its heads of claim by setting out the following, in paragraphs 116 and 117 of the judgment under appeal:‘116As a preliminary point, it is clear from the arguments put forward by the Front Polisario in support of all of its pleas that its action seeks the annulment of the decision [at issue] in so far as it approves the application to Western Sahara of the agreement to which it refers. As appears from the finding set out above, concerning the fact that the Front Polisario is directly and individually concerned by the decision [at issue], it is precisely [because of] the fact that that agreement also applies to Western Sahara that the Front Polisario is directly and individually concerned by the decision [at issue].117It must also be stated that the Front Polisario relies on several pleas, among which the first two concern the external legality of the decision [at issue], while the others concern its internal legality. In substance the applicant relies on the unlawfulness of the decision [at issue] on the ground that it infringes European Union and international law. In reality, all the pleas in law in the application concern the question as to whether there is an absolute prohibition against concluding an international agreement on behalf of the European Union which may be applied to a territory in fact controlled by a non-member State, without the sovereignty of that State over that territory being recognised by the European Union and its Member States or, more generally, by all other States (“the disputed territory”) and, where relevant, the existence of discretion of the EU institutions in that regard, the limits of that discretion and the conditions for its exercise.’45The General Court then examined and rejected each of those pleas, noting in particular that none of them made it possible to establish the existence of an absolute prohibition for the European Union to conclude an agreement with a third State capable of being applied to a ‘disputed territory’.46In that context, however, the General Court reserved a number of arguments relating, in its view, to the subsidiary question of the conditions under which the institutions of the European Union may approve the conclusion of such an agreement.47Lastly, the General Court examined that question in paragraphs 223 to 247 of the judgment under appeal. In that regard, it held, in essence, that, whilst enjoying a wide discretion in connection with the conduct of the European Union’s external relations, the Council had an obligation, where it intended to approve an agreement which was applicable to a ‘disputed territory’ such as Western Sahara and sought to facilitate the export to the European Union of products originating in that territory, to examine in advance all the relevant facts of the individual case, and in particular to ensure that the production of those products was not carried out in a manner detrimental to the population of that territory and did not entail infringements of fundamental rights of the persons concerned. The General Court also held that in the present case the Council had failed to fulfil that obligation.48On the basis of those considerations, the General Court held in paragraph 247 of the judgment under appeal that ‘the Council [had] failed to fulfil its obligation to examine all the elements of the case before the adoption of the decision [at issue]’ and, accordingly, that the decision should be annulled ‘in so far as it approves the application of the [Liberalisation Agreement] to Western Sahara’. Procedure before the Court and forms of order sought 49By separate document submitted at the Court Registry at the time when its appeal was lodged, the Council requested that the case be dealt with under the expedited procedure provided for in Articles 133 to 136 of the Rules of Procedure of the Court of Justice.50By order of 7 April 2016, the Court granted that application.51By decisions of 2, 13, 18 and 24 May 2016, the President of the Court respectively granted the Kingdom of Spain, the Portuguese Republic, the French Republic, the Federal Republic of Germany and the Kingdom of Belgium leave to intervene in the dispute in support of the form of order sought by the Council. However, the Federal Republic of Germany did not subsequently take part in any phase of the present proceedings, while the Kingdom of Belgium did not take part in the oral phase of the proceedings.52By order of 9 June 2016, the President of the Court of Justice granted the Moroccan Confederation for Agriculture and Rural Development (Comader) leave to intervene in the dispute in support of the form of order sought by the Council.53The Council claims that the Court should:—set aside the judgment under appeal;give final judgment in the dispute by dismissing the action; andorder the Front Polisario to pay the costs incurred by the Council both at first instance and on appeal.54The Front Polisario contends that the Court should:primarily, dismiss the appeal as inadmissible;in the alternative, dismiss the appeal as unfounded;in the further alternative, should the Court grant the form of order sought by the Council and set aside the judgment under appeal, give final judgment in the dispute by annulling the decision at issue on the basis of the pleas in law rejected at first instance; andorder the Council to pay the costs incurred by the Front Polisario both at first instance and on appeal.55The Commission contends that the Court should grant the appeal.56The Kingdom of Belgium, the Kingdom of Spain, the French Republic, the Portuguese Republic and Comader also contend that the Court should grant the appeal. The requests to have the oral procedure reopened 57In accordance with Article 82(2) of the Rules of Procedure, the oral part of the procedure was closed following the delivery of the Opinion of the Advocate General on 13 September 2016.58By a document lodged at the Registry of the Court of Justice on 15 September 2016, the Council indicated to the Court that that Opinion, in its view, addressed a question of law which had not been raised in its appeal or raised by any other party, namely that of the application of the Liberalisation Agreement to Western Sahara. It also proposed that the Court order the reopening of the oral phase of the procedure in the event that the case should be decided on the basis of that question.59By a document lodged at the Court Registry on 22 September 2016, Comader applied to have the oral phase of the procedure reopened on grounds analogous to those invoked by the Council.60In that regard, it follows from the second paragraph of Article 252 TFEU that it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which require his involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (see judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 57, and of 6 October 2015, Commission v Andersen, C‑303/13 P, EU:C:2015:647, paragraph 33).61Consequently, a party’s disagreement with the Opinion of the Advocate General, irrespective of the questions examined in that Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (see judgments of 22 November 2012, E.ON Energie v Commission, C‑89/11 P, EU:C:2012:738, paragraph 62, and of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraph 26).62That said, Article 83 of the Rules of Procedure allows the Court at any time, after hearing the Advocate General, to order the reopening of the oral part of the procedure, in particular where the case is to be decided on the basis of an argument which has not been debated between the parties.63In the present case, however, it should be noted that the legal arguments to which the Council and Comader refer were raised by the Commission in its defence, in support of the ground of appeal in which the Council and the Commission challenge the General Court’s assessment of the Front Polisario’s standing.64Moreover, those legal arguments were raised at the hearing and extensively debated by all parties.65In those circumstances, the Court, after hearing the Advocate General, considers that there is no need to order that the oral part of the procedure be reopened. The appeal Admissibility Arguments of the parties66The Front Polisario submits that the appeal is inadmissible on the ground that the European Union lacks the required competence to conclude an international agreement that is legally applicable to Western Sahara and that a challenge to the judgment under appeal, which merely annuls the decision at issue ‘in so far as it approves the application of the [Liberalisation Agreement] to Western Sahara’, is therefore of no interest to the Council.67The Council and the Commission dispute the merits of that plea of inadmissibility by stating, principally, that an institution of the European Union such as the Council may lodge an appeal without having to demonstrate an interest in bringing proceedings. In the alternative, they maintain that that requirement is in any event fulfilled in the present case since the Council has an interest in having the judgment under appeal set aside in so far as that judgment constitutes a partial annulment by the General Court of the decision at issue.Findings of the Court68Under the second paragraph of Article 56 of the Statute of the Court of Justice of the European Union, an appeal may be brought before the Court by any party which has been unsuccessful, in whole or in part, in its submissions before the General Court.69Moreover, it is apparent from the third paragraph of Article 56 of that statute that, in order to bring an appeal against a judgment of the General Court, in a case not relating to a dispute between the European Union and its servants, Member States and EU institutions do not have to show any interest (see judgments of 22 February 2005, Commission v max.mobil, C‑141/02 P, EU:C:2005:98, paragraph 48, and of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 45).70In the present case, it follows that the Council, which was unsuccessful in its submissions before the General Court, does not have to show any interest in order to be able to bring the present appeal.71Accordingly, the plea of inadmissibility raised by the Front Polisario in respect of that appeal must be rejected. Substance 72In support of its appeal, the Council, supported by the Commission, relies on six grounds, the first and second of which allege an error of law on the part of the General Court in the analysis of the Front Polisario’s capacity to institute proceedings and of its standing. The third ground of appeal alleges that the General Court misconstrued the extent to which it was able judicially to review the Council’s discretion in the field of the European Union’s external economic relations and the conditions under which it could exercise that discretion. The fourth ground of appeal alleges infringement of the principle ne ultra petita. The fifth ground of appeal relates to the misinterpretation and incorrect application of the Charter of Fundamental Rights of the European Union and of certain rules of international law. Finally, the sixth ground of appeal relates to the breach of the requirements applicable to the partial annulment of an act of the European Union.73It is necessary to examine, at the outset, the second ground of appeal, which calls into question the General Court’s analysis of the Front Polisario’s standing, and more particularly, within that ground of appeal, the Council and Commission’s arguments relating to the reasoning that the General Court devoted, in paragraphs 73 to 103 of the judgment under appeal, to the preliminary question of whether or not the Liberalisation Agreement applied to Western Sahara.The judgment under appeal74In that regard, the General Court first stated, in essence, in paragraphs 72 and 73 of the judgment under appeal that, in view of the arguments put forward by the Front Polisario in order to establish its standing, the assessment of that standing required a preliminary determination of whether or not the Liberalisation Agreement applied to Western Sahara.75Next, the General Court held, in paragraphs 74 to 88 of the judgment under appeal, that that question itself entailed, in the light of the arguments of the Council, the Commission and the Front Polisario in that regard, an interpretation of that agreement. It also held, in paragraphs 89 to 94 and 98 of the judgment under appeal, that such an interpretation had to be carried out in accordance with the rules of general international customary law recalled in Article 31 of the Vienna Convention. By contrast, the General Court essentially held, in paragraphs 95 to 98 of the judgment under appeal, that the general international law principle of the relative effect of treaties, of which Article 34 of the Vienna Convention is a particular expression, was not relevant for the purposes of the interpretation of the Liberalisation Agreement, having regard to the particular circumstances of the action before it, in contrast to what the Court had held in the judgment of 25 February 2010 in Brita (C‑386/08, EU:C:2010:91).76Finally, in paragraphs 99 to 102 of the judgment under appeal, the General Court interpreted the territorial scope of the Liberalisation Agreement as follows:‘99In accordance with [A]rticle [31 of the Vienna Convention], account must be taken in particular of the context in which an international treaty appears, such as the [Liberalisation Agreement]. All the factors mentioned in paragraphs 77 to 87 above are part of that context and show that the EU institutions were aware that the Moroccan authorities also applied the provisions of the Association Agreement with Morocco to the part of Western Sahara it controlled and did not oppose that application. To the contrary, the Commission cooperated to a certain extent with the Moroccan authorities with a view to that application and recognised the results of its application, by including undertakings established in Western Sahara among those included on the list mentioned in paragraph 74 above.100It must also be recalled that there is a divergence between the respective views of the European Union and the Kingdom of Morocco as to the international status of Western Sahara. If the European Union’s view is adequately and correctly summarised by the Council and the Commission (see paragraphs 74 and 75 above), it is common ground that the Kingdom of Morocco has a totally different view. In its opinion, Western Sahara is an integral part of its territory.101Thus, in Article 94 of the Association Agreement …, the reference to the territory of the Kingdom of Morocco may have been understood by the Moroccan authorities as including Western Sahara or, at least, the larger part controlled by it. Although, as stated, the EU institutions were aware that the Kingdom of Morocco took that view, the Association Agreement … does not include any interpretation clause and no other provision which would have the result of excluding the territory of Western Sahara from its scope.102Account should also be taken of the fact that the [Liberalisation Agreement] was concluded 12 years after the approval of the Association Agreement … and although the latter agreement had been implemented for the whole of that period. If the EU institutions wished to oppose the application to Western Sahara of the Association Agreement, as amended by the decision [at issue], they could have insisted on including a clause excluding such application into the text of the [Liberalisation Agreement]. Their failure to do so shows that they accept, at least implicitly, the interpretation of the Association Agreement … and the [Liberalisation Agreement], according to which those agreements also apply to the part of Western Sahara controlled by the Kingdom of Morocco.’77In the light of that interpretation, the General Court held, in paragraph 103 of the judgment under appeal, that the Liberalisation Agreement, when placed in context, should be interpreted as meaning that it ‘also appl[ied] to Western Sahara’.78The Council criticises the General Court for having assumed, in paragraph 73 of the judgment under appeal, that, if the Liberalisation Agreement applied to Western Sahara, the Front Polisario may automatically be directly and individually concerned by the decision at issue. Such a presumption, the Council submits, is erroneous in law. As the General Court itself previously held in the order of 3 July 2007, Commune de Champagne and Others v Council and Commission (T‑212/02, EU:T:2007:194, paragraphs 90 to 94), a Council decision relating to the conclusion of an international agreement between the European Union and a third State has no legal effect in the territory of the other party to that agreement. Thus, the situation of such a territory is governed solely by the provisions adopted by that other party in the exercise of its sovereign powers. Moreover, the sole cause of the effects which that agreement produces on that territory is the fact that, in deciding to ratify that agreement, that other party has agreed to be bound by it and has undertaken to take the steps necessary to ensure the fulfilment of the obligations arising from it. Accordingly, allowing that an action for annulment of the Council decision on the conclusion of an international agreement is admissible in so far as that action concerns the effects of the international agreement on the territory of the other party would lead the Court of the European Union to exceed its jurisdiction by ruling on the legality, under EU law, of the rights or obligations resulting, for a third State, from an agreement to which the latter has subscribed freely and at its absolute discretion. That, the Council submits, is precisely what the General Court did in the present case, by making the application of the Liberalisation Agreement to Western Sahara a prerequisite for the Front Polisario’s standing. Finally, the Council notes that the fact that Western Sahara is a ‘disputed territory’ in international law has no bearing on the reasoning of the General Court in that order, to which it subscribes in its entirety.79The Commission submits that the fact, referred to in, inter alia, paragraph 87 of the judgment under appeal, that the Liberalisation Agreement is applied ‘de facto’, in certain cases, to Western Sahara cannot be regarded either as a contextual element or as a subsequent practice within the meaning of Article 31(2) and (3)(b) of the Vienna Convention, justifying the interpretation of Article 94 of the Association Agreement as meaning that those two agreements apply to that non-self-governing territory. Moreover, although no clause expressly excluding Western Sahara from their scope had been inserted into that agreement, in view of the disagreement between the European Union and the Kingdom of Morocco as to the status of that non-self-governing territory, referred to by the General Court in paragraph 100 of the judgment under appeal, that fact does not justify the view that those agreements apply to that territory, taking account of Article 31(3)(c) of the Vienna Convention, of the principle of the relative effect of treaties codified in Article 34 of that convention and recalled by the Court in the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), of the right to self-determination of the people of Western Sahara, repeatedly recalled by the European Union in its positions on the subject, as well as of the relevant international practice in respect of the territorial application of treaties.80In response, the Front Polisario notes that the General Court examined the question of the application of the Liberalisation Agreement to Western Sahara, not with the aim of deriving from it any presumption regarding the admissibility of the action, but in order to ascertain the factual and legal context in which its standing to bring proceedings should be addressed. The Council and the Commission argued at length that that agreement was not applicable to that territory, before acknowledging, in reply to the written questions put by the General Court and subsequently at the hearing before the General Court, that the tariff preferences contained in it were in fact applied in certain cases to the products originating in that territory. That element fundamentally distinguishes that agreement from the two comparable agreements concluded by the Kingdom of Morocco with the United States of America and the European Free Trade Association (EFTA).81As is apparent from paragraphs 73, 88 and 98 to 102 of the judgment under appeal, the conclusion of the General Court in paragraph 103 of that judgment that the Liberalisation Agreement ‘also applies to the territory of Western Sahara’ is based, not on a finding of fact, but on a legal interpretation of that agreement made by the General Court on the basis of Article 31 of the Vienna Convention.82The positions of the Council and the Commission before the Court on that point ultimately converge, in so far as the General Court’s conclusion lies at the very heart of the respective arguments of those two institutions. The Commission argues that the Liberalisation Agreement could not be interpreted as meaning that it was legally applicable to the territory of Western Sahara. The Council, for its part, submits that the General Court erred in law in ruling on the lawfulness of the rights or obligations resulting, for the other party, from that agreement to which it subscribed freely and at its absolute discretion. The analysis of that alleged error of law entails, in any event, a preliminary examination of the merits of the conclusion reached by the General Court, in paragraph 103 of the judgment under appeal, as to the application of the Liberalisation Agreement to the territory of Western Sahara. Failing that, any rights and obligations of the other party to that agreement in respect of that territory are not likely to have been affected.83It is therefore necessary to verify the merits of the reasoning by which the General Court, after describing in paragraphs 99 and 100 of the judgment under appeal the context in which the Liberalisation Agreement had been concluded, successively determined the scope of that agreement in the light of the terms of the Association Agreement in paragraph 101 of that judgment, and then examined the Liberalisation Agreement itself in paragraph 102 of that judgment, before reaching the conclusion expressed in paragraph 103 thereof.84In that respect, as regards, first, paragraph 101 of the judgment under appeal, it must be held that the General Court interpreted the territorial scope of the Liberalisation Agreement in the light of Article 94 of the Association Agreement, under which that agreement applies ‘to the territory of the Kingdom of Morocco’. More specifically, the General Court stated that the reference to the territory of the Kingdom of Morocco may have been understood by the Moroccan authorities as including Western Sahara and that, although the Council and the Commission were aware of that position, the Association Agreement did not include any interpretation clause or any other provision which would have the consequence of excluding that territory from its scope.85In so doing, the General Court took the view that, having regard, first, to the position of the Kingdom of Morocco that Western Sahara was an integral part of its territory, secondly, to the fact that the Council and the Commission were aware of that position at the time of the conclusion of the Association Agreement, and thirdly, to the absence of any stipulation excluding Western Sahara from the territorial scope of that agreement, the parties to the Association Agreement had to be regarded as having tacitly agreed to interpret the words ‘territory of the Kingdom of Morocco’ in Article 94 thereof as meaning that that article also included the territory of Western Sahara.86It must be pointed out that, in order to be able to draw correct legal conclusions from the absence of a stipulation excluding Western Sahara from the territorial scope of the Association Agreement, in interpreting that agreement, the General Court was bound not only to observe the rules of good faith interpretation laid down in Article 31(1) of the Vienna Convention but also that laid down in Article 31(3)(c) of that convention, pursuant to which the interpretation of a treaty must be carried out by taking account of any relevant rules of international law applicable in the relations between the parties (judgment of 25 February 2010, Brita, C‑386/08, EU:C:2010:91, paragraph 43; see also, to that effect, judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 291 and the case-law cited).87Although the scope of the various relevant rules of international law applicable in the present case — namely the principle of self-determination, the rule codified in Article 29 of the Vienna Convention and the principle of the relative effect of treaties — overlap in part, each of those rules has its autonomy, with the result that it is necessary to examine them all in succession.88In that regard, it should be noted, first of all, that the customary principle of self-determination referred to in particular in Article 1 of the Charter of the United Nations is, as the International Court of Justice stated in paragraphs 54 to 56 of its Advisory Opinion on Western Sahara, a principle of international law applicable to all non-self-governing territories and to all peoples who have not yet achieved independence. It is, moreover, a legally enforceable right erga omnes and one of the essential principles of international law (East Timor, (Portugal v Australia), judgment, ICJ Reports 1995, p. 90, paragraph 29 and the case-law cited).89As such, that principle forms part of the rules of international law applicable to relations between the European Union and the Kingdom of Morocco, which the General Court was obliged to take into account.90In accordance with that principle, as specified by United Nations General Assembly Resolution 2625 (XXV), referred to in paragraph 26 of the present judgment, ‘the territory of a colony or other Non-Self-Governing Territory has, under the [UN] Charter, a … separate and distinct [status]’.91In particular, the UN General Assembly, in its various resolutions on Western Sahara, repeatedly expressed its concern in respect of ‘enabling the indigenous population of the Territory to exercise freely its right to self-determination’, as the International Court of Justice noted in paragraphs 62, 64 and 68 of its Advisory Opinion on Western Sahara.92In view of the separate and distinct status accorded to the territory of Western Sahara by virtue of the principle of self-determination, in relation to that of any State, including the Kingdom of Morocco, the words ‘territory of the Kingdom of Morocco’ set out in Article 94 of the Association Agreement cannot, as the Commission maintains and as the Advocate General essentially pointed out in points 71 and 75 of his Opinion, be interpreted in such a way that Western Sahara is included within the territorial scope of that agreement.93In the present case, although the General Court found, in paragraph 3 of the judgment under appeal, that Western Sahara had been included since 1963 on the list of non-self-governing territories within the meaning of Article 73 of the UN Charter, it did not, however, draw the consequences of the status of Western Sahara under international law as regards the inapplicability of the Association Agreement to that territory.94Next, it should be pointed out that the customary rule codified in Article 29 of the Vienna Convention provides that, unless a different intention appears from the treaty or is otherwise established, that treaty is binding upon each party in respect of its entire ‘territory’.95It thus follows from that rule, placed in the context of the interpretation of Article 94 of the Association Agreement, that a treaty is generally binding on a State in the ordinary meaning to be given to the term ‘territory’, combined with the possessive adjective ‘its’ preceding it, in respect of the geographical space over which that State exercises the fullness of the powers granted to sovereign entities by international law, to the exclusion of any other territory, such as a territory likely to be under the sole jurisdiction or the sole international responsibility of that State.96In that regard, and as the Commission correctly argues, it follows from international practice that, where a treaty is intended to apply not only to the territory of a State but also beyond that territory, that treaty expressly provides for it, whether it is a territory ‘under [the] jurisdiction’ of that State, as set out, for example, in Article 2(1) of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, concluded in New York on 10 December 1984, or in any territory ‘for whose international relations [that State] is responsible’, as stipulated for example by Article 56(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950.97The customary rule codified in Article 29 of the Vienna Convention thus also, a priori, precluded Western Sahara from being regarded as coming within the territorial scope of the Association Agreement.98However, it also follows from that customary rule that a treaty may, by way of derogation from the general rule set out in paragraph 94 of the present judgment, bind a State in respect of another territory if such an intention is apparent from that treaty or is otherwise established.99In the present case, the General Court incorrectly assumed that, in so far as the Council and the Commission were aware of the position of the Kingdom of Morocco that the Association Agreement might apply to Western Sahara, those institutions had tacitly accepted that position, as has been explained in paragraph 85 of the present judgment.Finally, under the general international-law principle of the relative effect of treaties, of which the rule contained in Article 34 of the Vienna Convention is a specific expression, treaties do not impose any obligations, or confer any rights, on third States without their consent (see judgment of 25 February 2010, Brita, C‑386/08, EU:C:2010:91, paragraphs 44 and 52).In the present case, as has been noted in paragraph 75 of the present judgment, the General Court essentially held, in paragraphs 95 to 97 of the judgment under appeal, that that principle was not relevant for the purposes of assessing the action before it, in contrast to what the Court held in the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), because the circumstances specific to that action differed from those in the case which had given rise to the judgment in Brita.In particular, the General Court noted, in paragraphs 96 and 97 of the judgment under appeal, that the European Union had not concluded any Association Agreement relating to products originating in Western Sahara other than with the Kingdom of Morocco, whereas in the case giving rise to the judgment of 25 February 2010, Brita (C‑386/08, EU:C:2010:91), the European Union had concluded an Association Agreement not only with the State of Israel, but also with the Palestine Liberation Organisation (PLO) acting in the name and on behalf of the Palestinian Authority of the West Bank and the Gaza Strip.103However, contrary to what the General Court held, the principle of the relative effect of treaties had to be taken into account in the context of such an interpretation, since the application to Western Sahara of the Association Agreement, concluded between the European Union and the Kingdom of Morocco, would have led to that agreement affecting a ‘third party’.104It should be recalled that in its Advisory Opinion on Western Sahara, to which the General Court itself referred in paragraph 8 of the judgment under appeal, the International Court of Justice considered that, on the one hand, Western Sahara ‘at the time of colonisation by [the Kingdom of] Spain was not a territory belonging to no-one (terra nullius)’, and, on the other, that the elements and information brought to its knowledge ‘[did] not establish any tie of territorial sovereignty’ between that territory and the Kingdom of Morocco.105More specifically, in that regard, the International Court of Justice noted, in its Advisory Opinion on Western Sahara, that the population of that territory enjoyed the right to self-determination under general international law, as set out in paragraphs 90 and 91 of the present judgment, it being understood that the General Assembly of the UN, in paragraph 7 of its Resolution 34/37 on the question of Western Sahara, cited in paragraph 35 of the present judgment, recommended that the Front Polisario, ‘the representative of the people of Western Sahara, should participate fully in any search for a just, lasting and definitive political solution of the question of Western Sahara’, as noted by the General Court in paragraph 14 of the judgment under appeal and recalled by the Commission before the Court.106In the light of that information, the people of Western Sahara must be regarded as a ‘third party’ within the meaning of the principle of the relative effect of treaties, as stated in substance by the Advocate General in point 105 of his Opinion. As such, that third party may be affected by the implementation of the Association Agreement in the event that the territory of Western Sahara comes within the scope of that agreement, without it being necessary to determine whether such implementation is likely to harm it or, on the contrary, to benefit it. It is sufficient to point out that, in either case, that implementation must receive the consent of such a third party. In the present case, however, the judgment under appeal does not show that the people of Western Sahara have expressed any such consent.107In those circumstances, it is contrary to the principle of international law of the relative effect of treaties to take the view that the territory of Western Sahara comes within the scope of the Association Agreement, which is applicable to relations between the European Union and the Kingdom of Morocco.108In the light of the foregoing, the General Court erred in law in holding, in paragraphs 101 and 103 of the judgment under appeal, that the European Union and the Kingdom of Morocco should be regarded as having tacitly agreed to interpret the words ‘territory of the Kingdom of Morocco’ in Article 94 of the Association Agreement as meaning that they included the territory of Western Sahara.109As regards, secondly, paragraph 102 of the judgment under appeal, it should be noted that the General Court held that, if the Council and the Commission had wished to oppose the application of the Liberalisation Agreement to the territory of Western Sahara, they could have asked for a clause excluding its application to be inserted into the agreement, before adding that their ‘omission’ on that point showed that they had implicitly accepted that that agreement, like the Association Agreement, was applicable to that territory.110In that regard, Article 30(2) of the Vienna Convention codifies the rule that, when a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.111The Liberalisation Agreement, as is apparent from paragraphs 18, 20 and 21 of the judgment under appeal, is an agreement designed to amend an earlier agreement between the European Union and the Kingdom of Morocco, namely the Association Agreement, and more specifically, the provisions of that previous agreement on the liberalisation of trade in agricultural and fisheries products. To that end, as is apparent from those same paragraphs of the judgment under appeal, the Liberalisation Agreement amended 4 of the 96 articles of the Association Agreement, which do not include Article 94 thereof, and replaced 3 of the 5 protocols accompanying that agreement. Those amendments are exhaustive, as is confirmed by the exchange of letters between the European Union and the Kingdom of Morocco in the form of which the Liberalisation Agreement took effect.112It follows that the Association Agreement and the Liberalisation Agreement constitute successive treaties concluded between the same parties and that the Liberalisation Agreement, as a later treaty relating to specific and limited aspects of a subject already governed in large part by an earlier agreement, must be regarded as subordinate to the latter.113In the light of such a special connection, which is not called into question before the Court, it must be held, in accordance with the rule codified in Article 30(2) of the Vienna Convention, that the provisions of the Association Agreement which have not been explicitly amended by the Liberalisation Agreement must prevail for the purpose of applying the latter agreement, in order to prevent any incompatibility between them.114It follows that the Liberalisation Agreement could not be understood at the time of its conclusion as meaning that its territorial scope included the territory of Western Sahara, and that there was no need to include therein a clause expressly excluding that territory from that scope.115The General Court therefore erred in law in holding that the Council and the Commission had to be regarded as having accepted that the Association Agreement and the Liberalisation Agreement apply to the territory of Western Sahara on the ground that they had omitted to include in the latter agreement a clause precluding such an application.116In the light of the foregoing, the General Court erred in holding, in paragraph 103 of the judgment under appeal, that the Liberalisation Agreement was to be interpreted as applying to the territory of Western Sahara, and more specifically to that part of the territory controlled by the Kingdom of Morocco, since such an interpretation could not be justified either by the wording of the Association Agreement or by that of the Liberalisation Agreement, nor, finally, by the circumstances surrounding the conclusion of those two agreements, as set out in paragraphs 101 and 102 of the judgment under appeal.That assessment is not called into question by the analysis carried out by the General Court in paragraph 99 of the judgment under appeal, on the basis of the facts set out in paragraphs 77 to 87 of that judgment.118The findings and assessments made by the General Court in those paragraphs show, first of all, that the Council and the Commission were aware, when the Liberalisation Agreement was concluded, that the Moroccan authorities had been applying the provisions of the Association Agreement to Western Sahara for many years. Next, those two institutions never opposed the application of that agreement, and the Commission to some extent cooperated therein. Finally, the system of tariff preferences introduced by the Association Agreement and amended by the Liberalisation Agreement is, in some cases, applied ‘de facto’ to products originating in Western Sahara since the conclusion of the second of those agreements, as the Council and the Commission pointed out in their pleadings and at the hearing.119As is also apparent from paragraph 102 of the judgment under appeal, the General Court held that that practice subsequent to the conclusion of the Association Agreement justified an interpretation of that agreement and the Liberalisation Agreement as meaning that the territory of Western Sahara came within the scope of those agreements.120In that regard, it should be noted that, under Article 31(3)(b) of the Vienna Convention, for the purposes of the interpretation of a treaty, account must be taken, inter alia and together with the context thereof, of any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation.121In the present case, as is apparent from paragraphs 77, 83 and 87 of the judgment under appeal, the Council and the Commission had pointed out, like the Front Polisario, that although the system of tariff preferences provided for in the Association and Liberalisation Agreements was applied in some cases to products originating in Western Sahara, that application had occurred ‘de facto’.122It must be held that, contrary to the requirements of Article 31(3)(b) of the Vienna Convention, the General Court did not pursue the question whether, in certain cases, that application reflected the existence of an agreement between the parties to amend the interpretation of Article 94 of the Association Agreement.123Moreover, the purported intention of the European Union, reflected in subsequent practice and consisting in considering the Association and Liberalisation Agreements to be legally applicable to the territory of Western Sahara, would necessarily have entailed conceding that the European Union intended to implement those agreements in a manner incompatible with the principles of self-determination and of the relative effect of treaties, even though the European Union repeatedly reiterated the need to comply with those principles, as the Commission points out.124Such implementation would necessarily be incompatible with the principle that Treaty obligations must be performed in good faith, which nevertheless constitutes a binding principle of general international law applicable to subjects of that law who are contracting parties to a treaty (see, to that effect, judgments of 16 June 1998, Racke, C‑162/96, EU:C:1998:293, paragraph 49, and of 23 January 2014, Manzi and Compagnia Naviera Orchestra, C‑537/11, EU:C:2014:19, paragraph 38).125It follows that the General Court also erred in law in holding that the subsequent practice referred to in paragraphs 99 and 102 of the judgment under appeal justified an interpretation of those agreements as meaning that they were legally applicable to the territory of Western Sahara.126Since the General Court therefore incorrectly held that the Liberalisation Agreement had to be interpreted as applying to the territory of Western Sahara, before taking that conclusion as a starting point for its analysis of the standing of the Front Polisario, as has been pointed out in paragraphs 43, 44 and 74 of the present judgment, the appeal must be allowed, without it being necessary to examine in addition the other pleas and arguments of the Council and the Commission.127Accordingly, the judgment under appeal must be set aside. The action 128The first paragraph of Article 61 of the Statute of the Court of Justice of the European Union provides that if the appeal is well founded and the Court of Justice quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.129In the present case, it is appropriate for the Court to give a final ruling on the dispute, as the state of proceedings so permits.130In that regard, the fourth paragraph of Article 263 TFEU provides for two situations in which natural or legal persons are accorded standing to institute proceedings against an act which is not addressed to them. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Secondly, they may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them.131In the present case, it must be stated at the outset that the line of argument put forward by the Front Polisario in order to establish that it has standing to seek the annulment of the decision at issue is based on the assertion that the Liberalisation Agreement, the conclusion of which was approved by that decision, is applied in practice, in certain cases, to Western Sahara even though the latter is not part of the territory of the Kingdom of Morocco.132As is apparent from the grounds set out in paragraphs 83 to 125 of the present judgment, the Liberalisation Agreement must, however, be interpreted, in accordance with the relevant rules of international law applicable to relations between the European Union and the Kingdom of Morocco, as meaning that it does not apply to the territory of Western Sahara.133Therefore, without it being necessary to examine the remainder of the argument by which the Council and the Commission dispute the admissibility of the action, it must be held that the Front Polisario cannot, in any event, be regarded, in the light of the arguments on which it relies, as having standing to seek annulment of the decision at issue.134Consequently, the action must be dismissed as inadmissible. Costs 135Under Article 184(2) of the Rules of Procedure, where the appeal is well founded and the Court itself gives final judgment in the case, it is to make a decision as to costs.136Article 138(1) of those rules, applicable to appeal proceedings pursuant to Article 184(1) thereof, provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.137In the present case, since the Council has applied for costs and the Front Polisario has been unsuccessful, the Front Polisario must be ordered to pay the costs incurred by the Council.138Under Article 140(1) of the Rules of Procedure, which is also applicable to appeal proceedings by virtue of Article 184(1) thereof, the Member States and institutions which intervene in the proceedings are to bear their own costs.139In the present case, the Kingdom of Belgium, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Portuguese Republic and the Commission, which was an intervener at first instance, shall bear their own costs.140Finally, Article 140(3) of the Rules of Procedure, which is also applicable to appeal proceedings by virtue of Article 184(1) of the Rules of Procedure, provides in particular that the Court may order interveners other than Member States or institutions to bear their own costs.141In the present case, it is appropriate to decide that Comader shall bear its own costs.On those grounds, the Court (Grand Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 10 December 2015, Front Polisario v Council (T‑512/12, EU:T:2015:953); 2. Dismisses the action brought by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) as inadmissible; 3. Orders the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) to bear its own costs and to pay those incurred by the Council of the European Union; 4. Orders the Kingdom of Belgium, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Portuguese Republic, the European Commission and the Confédération marocaine de l’agriculture et du développement rural (Comader) to bear their own respective costs. [Signatures]( *1 ) * Language of the case: French. | 9d04b-ae38902-48f9 | EN |
According to the General Court of the European Union, the standard ringing of an alarm or a telephone may not be registered as an EU trade mark on account of its banality | 13 September 2016 ( 1 )‛EU trade mark — Application for a sound mark — Absolute ground for refusal — No distinctive character — Article 7(1)(b) of Regulation (EC) No 207/2009 — Obligation to state reasons — Article 75 of Regulation No 207/2009’In Case T‑408/15, Globo Comunicação e Participações S/A, established in Rio de Janeiro (Brazil), represented by E. Gaspar and M.-E. De Moro-Giafferri, lawyers,applicant,v European Union Intellectual Property Office (EUIPO), represented by A. Folliard-Monguiral, acting as Agent,defendant,ACTION brought against the decision of the Fifth Board of Appeal of EUIPO of 18 March 2015 (Case R 2945/2014-5), concerning an application for registration of a sound mark as an EU trade mark,THE GENERAL COURT (Second Chamber),composed of M.E. Martins Ribeiro (Rapporteur), President, S. Gervasoni and L. Madise, Judges,Registrar: M. Marescaux, Administrator,having regard to the application lodged at the Court Registry on 24 July 2015,having regard to the response lodged at the Court Registry on 5 October 2015,further to the hearing on 15 March 2016,gives the following Judgment Background to the dispute 1On 28 April 2014, the applicant, Globo Comunicação e Participações S/A, filed an application for registration of an EU trade mark with the European Union Intellectual Property Office (EUIPO) pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1).2Registration as a mark was sought for the sound sign as represented graphically below:3The goods and services in respect of which registration was sought are, following the restriction made in the course of the proceedings before EUIPO, in Classes 9, 16, 38 and 41 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond, for each of those classes, to the following description:—Class 9: ‘Magnetic data carriers; recording discs; compact discs, DVDs and other digital recording media; computer software; applications for tablets and smartphones’;Class 16: ‘Paper, cardboard (raw, semi-worked or for stationery); printed matter; bookbinding material; photographs; stationery; adhesives for stationery or household purposes; artists’ materials; paintbrushes; typewriters and office requisites (except furniture); instructional and teaching material (except apparatus); plastic materials for packaging, namely sacks, bags, film and sheets; printers’ type; printing blocks, publications; books; magazines’;Class 38: ‘Television broadcasting services’;Class 41: ‘Education; providing of training; entertainment; sporting and cultural activities; entertainment services in the form of television programmes; production of television entertainment features[; e]ntertainment services, namely television news, educational, sports and comedy programmes, television soaps, television variety shows; production of television programmes; production of online entertainment’.4By letter of 15 May 2014, the examiner informed the applicant that the mark applied for could not be registered, on the ground that it did not satisfy the conditions set out in Article 7(1)(b) of Regulation No 207/2009. She stated, in particular, that that mark consisted of a simple and banal ringing sound and that it could not be perceived as an indicator of the commercial origin of the goods. The examiner therefore requested that the applicant submit its observations to her within a period of two months.5By letter of 11 July 2014, the applicant replied, in essence, that although the mark applied for was short, it was not, however, simple and had to be regarded as a short melody which would be perceived as an indicator which referred to its own goods and services.6By decision of 19 September 2014, the examiner rejected that application, taking the view that the mark applied for came within the scope of the ground for refusal set out in Article 7(1)(b) of Regulation No 207/2009 since it was devoid of any distinctive character.7On 19 November 2014, the applicant filed a notice of appeal with EUIPO, pursuant to Articles 58 to 64 of Regulation No 207/2009, against the examiner’s decision.8By decision of 18 May 2015 (‘the contested decision’), the Fifth Board of Appeal of EUIPO, first, dismissed the appeal as regards the alleged distinctive character of the mark applied for under Article 7(1)(b) of Regulation No 207/2009 and, secondly, referred back to the examiner the examination of the question raised by the applicant as to whether that mark had acquired distinctive character through use under Article 7(3) of that regulation in relation to the television broadcasting services in Class 38 and entertainment services in Class 41.9The Board of Appeal found, in paragraph 17 of the contested decision, that the goods and services at issue were aimed at both the general public and professionals, with the result that the level of attention varied from average to high.10The Board of Appeal stated, in paragraphs 18 and 19 of the contested decision, that, in order to be capable of indicating to the consumer the commercial origin of the goods or services at issue, the mark applied for had to have characteristics which enabled it to be easily remembered by him. It pointed out that, although it is not necessary for the sign to be original or fanciful, the fact remains that it should not be banal or totally insignificant.11The Board of Appeal added, in paragraph 20 of the contested decision, that a trade mark consisting of sounds resembling a ringing sound could perform an identifying function only if it included elements capable of distinguishing it from other marks. However, in the present case, the Board of Appeal found, in paragraph 21 of that decision, that the mark applied for consisted of the repetition of a sound that resembled a ringtone which was banal in every respect, notwithstanding the fact that the mark consisted of a stave with a treble clef with a tempo of 147 crotchets per minute, repeating two G sharps. The Board of Appeal found, in paragraph 22 of the contested decision, that such nuances in relation to the classic form of a ringing sound were not sufficient to reject the objection based on Article 7(1)(b) of Regulation No 207/2009 because they were liable to escape the target consumer’s attention and, in paragraph 23 of that decision, that it was also inaccurate to claim that the mark applied for was characterised by many specific elements which were immediately perceptible to the target consumer.12The Board of Appeal took the view, in paragraph 24 of the contested decision, that the mark applied for was a very simple sound motif, that is to say, in essence, a banal and commonplace ringing sound which would generally go unnoticed and would not be remembered by the target consumer.13The Board of Appeal therefore concluded, in paragraph 28 of the contested decision, that the mark applied for was devoid of any distinctive character as regards all the goods and services covered by the application for registration.14Following the contested decision, the applicant made a further restriction on 22 July 2015 by withdrawing, first, the ‘[m]agnetic data carriers ; recording discs; compact discs’ in Class 9 and, secondly, all of the goods in Class 16.15The list of goods and services covered by the application for registration is thus, at the stage of the action, the following:Class 9: ‘DVDs and other digital recording media; computer software; applications for tablets and smartphones’; Forms of order sought 16The applicant claims that the Court should:declare the action admissible;declare that the contested mark is valid for the purpose of designating the list of goods and services referred to in paragraph 15 above;annul the contested decision in part, in so far as it rejected the trade mark application on the basis of Article 7(1)(b) of Regulation No 207/2009;order EUIPO to pay the costs.17EUIPO contends that the Court should:dismiss the action;order the applicant to pay the costs. Law The admissibility of documents produced for the first time before the General Court 18EUIPO submits that Annexes A 29, A 29 bis, A 29 ter, A 50, A 51 bis, A 52, A 52 bis, A 53, A 53 bis, A 54, A 54 bis, A 55, A 55 bis, A 56, A 56 bis, A 57, A 58, A 58 bis, A 59, A 59 bis, A 60 and A 60 bis to the application are inadmissible on the ground that they were not produced in the course of the administrative proceedings.19In that regard, it should be recalled that the purpose of an action brought before the General Court is to review the legality of the decisions of the Boards of Appeal of EUIPO in accordance with Article 65 of Regulation No 207/2009. It is therefore not the General Court’s function to re-evaluate the factual circumstances in the light of evidence adduced for the first time before it (judgments of 18 December 2008, Les Éditions Albert René v OHIM, C‑16/06 P, EU:C:2008:739, paragraphs 136 and 138, and 10 November 2004, Storck v OHIM (Shape of a sweet), T‑396/02, EU:T:2004:329, paragraph 24).20Consequently, the review of the legality of the contested decision will be carried out in the light solely of the evidence which was produced during the administrative proceedings and appears in EUIPO’s case file (see, to that effect, judgment of 15 July 2014, Łaszkiewicz v OHIM — Capital Safety Group EMEA (PROTEKT), T‑576/12, not published, EU:T:2014:667, paragraph 25). Substance 21In support of its action, the applicant puts forward, in essence, two pleas in law, alleging, first, infringement of the obligation to state reasons and, secondly, infringement of Article 7(1)(b) of Regulation No 207/2009.The first plea, alleging infringement of the obligation to state reasons22The applicant complains that the Board of Appeal infringed its obligation to state reasons, which is set out in Article 75 of Regulation No 207/2009, by not examining the distinctive character of the mark applied for in relation to each of the goods and services covered by that application, a point which it specifically elaborated on at the hearing.23In that regard, it must be borne in mind that the duty upon EUIPO to state reasons for refusing to register a trade mark in relation to each of the goods or services for which such registration is sought also arises from the essential requirement for any decision of EUIPO refusing the benefit of a right conferred by EU law to be subject to judicial review which is designed to secure effective protection for that right and which, accordingly, must cover the legality of the reasons for the decision (see, by analogy, judgment of 15 February 2007, BVBA Management, Training en Consultancy, C‑239/05, EU:C:2007:99, paragraph 36 and the case-law cited).24However, where the same ground of refusal is given for a category or group of goods or services, EUIPO may use only general reasoning for all of the goods and services concerned (see, to that effect, order of 11 December 2014, FTI Touristik v OHIM, C‑253/14 P, not published, EU:C:2014:2445, paragraph 48; see also, by analogy, judgment of 15 February 2007, BVBA Management, Training en Consultancy, C‑239/05, EU:C:2007:99, paragraph 37).25Accordingly, the competent authority may use only general reasoning where the ground of refusal is given for a category or group of goods or services that have a sufficiently direct and specific link to each other to the extent that they form a sufficiently homogeneous category or group of goods or services (judgments of 2 April 2009, Zuffa v OHIM (ULTIMATE FIGHTING CHAMPIONSHIP), T‑118/06, EU:T:2009:100, paragraph 28, and 23 September 2015, Reed Exhibitions v OHIM (INFOSECURITY), T‑633/13, not published, EU:T:2015:674, paragraph 46; see also, to that effect, order of 11 December 2014, FTI Touristik v OHIM, C‑253/14 P, not published, EU:C:2014:2445, paragraph 48).26In the present case, first, it must be stated that the Board of Appeal gave the same ground of refusal for all the goods and services in respect of which registration of the mark applied for was refused, namely the banality of the sign with regard to goods or services which might or might not be associated with telephone ringtones or the ringing of an alarm clock and the fact that it appears difficult to conceive of a sound mark being used in relation to silent goods (see paragraphs 26 and 27 of the contested decision).27Secondly, there is, as EUIPO has correctly stated, a sufficiently direct and specific link between the goods and services at issue, which are media for the dissemination of information electronically (‘DVDs and other digital recording media; computer software; applications for tablets and smartphones’ in Class 9; ‘production of online entertainment’ in Class 41), orally (‘[e]ducation; providing of training’ in Class 41) or by means of television (‘[t]elevision broadcasting services’ in Class 38; ‘entertainment; sporting and cultural activities; entertainment services in the form of television programmes; production of television entertainment features[; e]ntertainment services, namely television news, educational, sports and comedy programmes, television soaps, television variety shows; production of television programmes’ in Class 41) (see, to that effect, judgment of 23 September 2015, INFOSECURITY, T‑633/13, not published, EU:T:2015:674, paragraph 47).28Accordingly, it must be held that the Board of Appeal could, after carrying out an overall examination covering all the goods and services at issue, formulate a single conclusion based on the same ground for refusal covering all the goods and services concerned, without infringing its obligation to state reasons.29It follows from all of the foregoing that the first plea must be rejected.30It will still be necessary, in the context of the second plea, to ascertain whether the Board of Appeal was right in finding that the mark applied for was devoid of any distinctive character in relation to all the goods and services at issue.The second plea, alleging infringement of Article 7(1)(b) of Regulation No 207/200931The applicant complains that the Board of Appeal made an error of assessment as regards the distinctive character of the mark applied for by refusing to register that mark pursuant to Article 7(1)(b) of Regulation No 207/2009. Taking the view that, in the context of the examination of their distinctive character, sound marks should be subject to the same criteria as word or figurative marks, the applicant claims, in essence, that the brevity of the sound mark applied for cannot deprive it of its distinctive character and that that mark, albeit short, is not, however, simple, but is characterised by a sequence of notes resulting in the repetition of a specific sound, which is longer when it is repeated and which makes it easier for the consumer to identify and remember the mark. It adds that the mark applied for consists of a sound jingle which is neither ordinary nor normal.32First, it must be borne in mind that sound signs are not by nature incapable of distinguishing the goods or services of one undertaking from those of another undertaking (see, by analogy, judgment of 27 November 2003, Shield Mark, C‑283/01, EU:C:2003:641, paragraph 36).33In those circumstances, Article 4 of Regulation No 207/2009 must be interpreted as meaning that sounds may constitute a trade mark, provided that they may also be represented graphically (see, by analogy, judgment of 27 November 2003, Shield Mark, C‑283/01, EU:C:2003:641, paragraph 37).34It is not disputed that the notation of musical notes on a stave, accompanied by a clef, rests and accidentals, constitutes a ‘graphical representation’ for the purposes of Article 4 of Regulation No 207/2009.35Even if such a representation is not immediately intelligible, the fact remains that it may be easily intelligible, thus allowing the competent authorities and the public, in particular traders, to know precisely the sign in respect of which registration as a trade mark is sought (see, by analogy, judgment of 27 November 2003, Shield Mark, C‑283/01, EU:C:2003:641, paragraphs 62 and 63; see also Rule 3(6) of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark (OJ 1995, L 303, p. 1), as amended).36Secondly, it must borne in mind that, under Article 7(1)(b) of Regulation No 207/2009, trade marks which are devoid of any distinctive character must not be registered.37For a trade mark to possess distinctive character within the meaning of Article 7(1)(b) of Regulation No 207/2009, it must serve to identify the goods in respect of which registration has been applied for as coming from a particular undertaking, and thus to distinguish those goods from those which come from other undertakings (judgments of 29 April 2004, Henkel v OHIM, C‑456/01 P and C‑457/01 P, EU:C:2004:258, paragraph 34, and 7 October 2004, Mag Instrument v OHIM, C‑136/02 P, EU:C:2004:592, paragraph 29).38According to settled case-law, the trade marks covered by Article 7(1)(b) of Regulation No 207/2009 are those which are considered to be incapable of performing the essential function of a trade mark, namely that of identifying the commercial origin of the goods or services in question, thus enabling the consumer who acquired the goods or services designated by the mark to choose to acquire them again if it was a positive experience, or to avoid doing so, if it was negative (judgments of 16 September 2004, SAT.1 v OHIM, C‑329/02 P, EU:C:2004:532, paragraph 23; 15 September 2005, BioID v OHIM, C‑37/03 P, EU:C:2005:547, paragraph 60, and 8 May 2008, Eurohypo v OHIM, C‑304/06 P, EU:C:2008:261, paragraph 56; see also judgment of 13 April 2011, Air France v OHIM (Shape of a parallelogram), T‑159/10, not published, EU:T:2011:176, paragraph 13 and the case-law cited).39The distinctive character of a mark must be assessed, first, by reference to the goods or services in respect of which registration of the mark is sought and, secondly, by reference to the relevant public’s perception of that mark (see judgments of 12 February 2004, Henkel, C‑218/01, EU:C:2004:88, paragraph 50 and the case-law cited, and 9 September 2010, OHIM v Borco-Marken-Import Matthiesen, C‑265/09 P, EU:C:2010:508, paragraph 32 and the case-law cited; judgments of 13 April 2011, Shape of a parallelogram, T‑159/10, not published, EU:T:2011:176, paragraph 14, and 28 April 2015, Volkswagen v OHIM (EXTRA), T‑216/14, not published, EU:T:2015:230, paragraph 15).40A minimum degree of distinctive character is, however, sufficient to render the absolute ground for refusal set out in Article 7(1)(b) of Regulation No 207/2009 inapplicable (judgments of 13 June 2007, IVG Immobilien v OHIM (I), T‑441/05, EU:T:2007:178, paragraph 42; 29 September 2009, The Smiley Company v OHIM (Representation of half a smiley smile), T‑139/08, EU:T:2009:364, paragraph 30, and 13 April 2011, Shape of a parallelogram, T‑159/10, not published, EU:T:2011:176, paragraph 15).41However, it must be borne in mind that the Court of Justice has held in its case-law that, whilst the criteria for assessing distinctiveness are the same for the various categories of trade mark, it may become apparent, when applying those criteria, that the relevant public’s perception is not necessarily the same in relation to each of those categories and that, therefore, it may prove more difficult to establish the distinctiveness of the marks in certain categories than of those in other categories (see order of 28 June 2004, Glaverbel v OHIM, C‑445/02 P, EU:C:2004:393, paragraph 23 and the case-law cited).42In that regard, it must be pointed out that, although the public is used to perceiving word or figurative marks as signs which identify the commercial origin of goods and services, the same is not necessarily true when the sign consists solely of a sound element.43It must, however, be held that, as regards certain goods or services, it may not be unusual for the consumer to identify them by means of a sound element. Accordingly, it must, in particular, be held that, as EUIPO correctly stated at the hearing, in certain economic sectors such as that of television broadcasting, it is not only not unusual, but also even common for the consumer to identify a product or service in that sector as a result of a sound element which makes it possible to distinguish that product or service as coming from a particular undertaking.44Similarly, it must be held that, as regards certain goods and services linked, in particular, first, to tools for communicating or entertaining by means of television broadcasting or radio broadcasting and to telephony and, secondly, to IT media, computer software or to the media sector in general, sound elements, such as jingles or melodies, are used in order to enable the product or service at issue to be identified aurally as coming from a particular undertaking.45Furthermore and in any event, it is necessary for the sound sign in respect of which registration is sought to have a certain resonance which enables the target consumer to perceive and regard it as a trade mark and not as a functional element or as an indicator without any inherent characteristics. That consumer must thus regard the sound sign as having the ability to identify, in the sense that it will be identifiable as a trade mark.46Consequently, a sound sign which did not have the capacity to mean more than the mere banal combination of notes of which it consists would not enable the target consumer to perceive it as functioning to identify the goods and services at issue, since it would be reduced to a straightforward ‘mirror effect’, in the sense that, as EUIPO correctly stated at the hearing, it would refer only to itself and to nothing else. It would not therefore be capable of engendering in the target consumer a certain form of attention which would enable him to perceive that sign’s necessary identifying function.47It is in the light of those considerations that the applicant’s arguments that the mark applied for has distinctive character must be examined.48In the present case, the applicant does not dispute the Board of Appeal’s assessment, in paragraph 17 of the contested decision, that the goods and services at issue are aimed at both the general public and professionals, the level of attention of which thus varies from average to high. That assessment must be accepted.49As regards the assessment of the distinctive character of the mark applied for, the Board of Appeal found, in paragraph 21 of the contested decision, that the mark applied for consisted of the repetition of a sound which resembled a ringtone.50By stating, in the application, that the mark applied for could be described as ‘a sound which resembles a telephone ringtone’ or as ‘a particular electronic ringing sound evoking sonar equipment, which consists of the repetition of two notes’, the applicant does not, as EUIPO correctly points out, dispute the abovementioned description of the mark applied for given by the Board of Appeal.51It is important to point out, in that regard, that a sound sign which is characterised by excessive simplicity and is no more than the simple repetition of two identical notes is not, as such, capable of conveying a message that can be remembered by consumers, with the result that consumers will not regard it as a trade mark, unless it has acquired distinctive character through use (see, to that effect, judgment of 12 September 2007, Cain Cellars v OHIM (Representation of a pentagon), T‑304/05, not published, EU:T:2007:271, paragraph 22).52Accordingly, the mark applied for will be perceived by the relevant public only as a mere function of the goods and services covered and not as an indication of their commercial origin. As the Board of Appeal correctly pointed out in paragraph 24 of the contested decision, the mark applied for will generally go unnoticed and will not be remembered by the relevant consumer.53The mark applied for therefore amounts to the ringing of an alarm or telephone regardless of the context in which it is used and regardless of the medium used and that ringing sound does not have any inherent characteristic which is separate from the repetition of the note of which it consists and would serve to identify anything other than that ringing of an alarm or telephone.54The applicant repeated, at the hearing, that the unusual nature of a telephone ringtone as an identifier of the origin of a service gave the mark applied for its distinctive character.55In that regard, it is sufficient to point out that the allegedly unusual use of a telephone ringtone as an indicator of the origin of goods and services is not sufficient for it to be held that the sign is capable of identifying such an origin where, as in the present case, its excessive simplicity makes that sign incapable of identifying the origin of the goods or services, since, as EUIPO correctly observed in reply to a question put by the Court, that sign is monotonal and can refer only to itself.56The applicant also claims that, inasmuch as it is apparent from the score that it is a stave with a treble clef with a tempo of 147 crotchets per minute, repeating two G sharps, namely a first G crotchet with an accent (one beat), followed by a second G (dotted minim) (three beats) tied to a semibreve (four beats), the Board of Appeal could not find that those nuances were liable to escape the target consumer’s attention. It must, however, be held that, notwithstanding that description, the mark applied for, the sound of which was also played to the Court at the hearing, amounts to the repetition of two identical notes and, contrary to what the applicant claims, no nuances may be heard.57As the Board of Appeal correctly pointed out in paragraph 20 of the contested decision, a trade mark consisting of sounds resembling a ringing sound cannot perform an identifying function unless it includes elements capable of distinguishing it from other sound marks; it should, however, be pointed out that it is not necessary for that mark to be original or fanciful.58The mark in respect of which registration is sought must therefore make it possible for the target public to identify it as an indicator of the origin of the goods or services at issue, a condition that is not, in the present case, satisfied by the mark applied for, which may be equated with the ‘standard’ ringing sound with which all electronic devices equipped with a timer and all telephony apparatus are provided, with the result that that public will be unable, without prior knowledge, to identify that ringing sound as an indicator of goods and services which come from the applicant.59It follows that, contrary to what the applicant claims, the mark applied for cannot be equated with a jingle which is unusual on the ground that it includes two rings.60Furthermore, the applicant observes that the mark applied for is widely known in Brazil and within the Brazilian communities residing in a number of Member States, which identify that mark as a distinctive sign of the Globo television channel.61In that regard, it is sufficient to point out that, by that line of argument, the applicant is submitting that the mark applied for has acquired distinctive character as a result of the prolonged use which has been made of it, a line of argument which is admittedly relevant in the context of Article 7(3) of Regulation No 207/2009, a matter which is before the examiner (see paragraphs 29 and 30 of the contested decision and paragraph 8 above), but not in the context of Article 7(1)(b) of that regulation.62The applicant also claims that the mark applied for is not devoid of any distinctive character inasmuch as it and other similar sound marks have been registered in France and the United States.63In that regard, it must be borne in mind that, according to settled case-law, the EU trade mark regime is an autonomous system with its own set of objectives and rules peculiar to it; it applies independently of any national system. Consequently, the registrability of a sign as an EU trade mark must be assessed by reference only to the relevant EU rules (judgments of 12 June 2007, MacLean-Fogg v OHIM (LOKTHREAD), T‑339/05, not published, EU:T:2007:172, paragraph 57, and 10 May 2012, Amador López v OHIM (AUTOCOACHING), T‑325/11, not published, EU:T:2012:230, paragraph 45).64Furthermore, as regards the assessment of whether the mark applied for lacks distinctive character with regard to the goods and services at issue, the Board of Appeal found, in paragraph 26 of the contested decision, that the same ground of refusal of registration, namely the fact that the mark applied for could not be perceived as an indication of commercial origin, applied to all of those goods and services, since the banality of the sign remained the same, whether the mark was associated with goods or services which might be associated with telephone ringtones or the ringing of an alarm clock or not.65The Board of Appeal added in paragraph 27 of the contested decision:‘In addition, with regard to the goods in Class 16 which are, by definition, silent (except, perhaps, for musical greeting cards) as well [as to] the following services in Class 41 ‘Education; providing of training; sporting and cultural activities’, the Board adds that it appears difficult to conceive of using the trade mark at issue in relation to those goods or services. How could a sound mark be associated with the sale of paper for example? Furthermore, from practical experience, the Board finds that, in any event, with regard to the goods in Class 16, the consumer is not used to recognising the origin of those goods on the basis of a sound or melody. The same is true of the providing of training and education activities in Class 41.’66In that regard, as is apparent from paragraph 52 above, the mark applied for will be perceived by the relevant public only as a mere function of the goods and services covered and not as an indication of their commercial origin.67Consequently, it must be held that, even though the goods in Class 9 are not expressly referred to in paragraph 27 of the contested decision, they are covered by the Board of Appeal’s finding in paragraph 25 of the contested decision, that the mark applied for will not be perceived as an indication of the origin of the goods. As EUIPO has correctly stated, the mark applied for will be understood as indicating merely that the data carrier, computer program or application for electronic devices is being started.68As regards the television broadcasting services in Class 38 and all the services which may be provided in the form of television programmes and are in Class 41, the sound mark, owing to its banality, will be perceived by the target public rather as indicating the beginning or end of a television programme.69It follows that the Board of Appeal did not err as regards the examination of the distinctive character of the mark applied for in relation to the goods and services at issue.70The applicant claims, lastly, that EUIPO has registered similar sound marks, namely the sound of a bell or a xylophone, with the result that the fact that the mark applied for is simple does not, in the present case, constitute a sufficient reason for refusing registration on the ground of an alleged lack of distinctive character.71In that regard, first, it must be pointed out that, in accordance with settled case-law, decisions concerning registration of a sign as an EU trade mark which the Boards of Appeal take under Regulation No 207/2009 are adopted in the exercise of circumscribed powers and are not a matter of discretion. Accordingly, the registrability of a sign as an EU trade mark must be assessed solely on the basis of that regulation, as interpreted by the EU judicature, and not on the basis of any previous practice of the Boards of Appeal (judgments of 15 September 2005, BioID v OHIM, C‑37/03 P, EU:C:2005:547, paragraph 47, and judgment of 27 February 2015, Universal Utility International v OHIM (Greenworld), T‑106/14, not published, EU:T:2015:123, paragraph 36).72Secondly, it has indeed been held that EUIPO must, when examining an application for registration of an EU trade mark, take into account the decisions already taken in respect of similar applications and consider with especial care whether it should decide in the same way or not (judgments of 10 March 2011, Agencja Wydawnicza Technopol v OHIM, C‑51/10 P, EU:C:2011:139, paragraph 74, and 28 April 2015, EXTRA, T‑216/14, not published, EU:T:2015:230, paragraph 30).73However, the principles of equal treatment and of sound administration must be consistent with respect for legality. Consequently, a person who files an application for registration of a sign as a trade mark cannot rely, to his advantage and in order to secure an identical decision, on a possibly unlawful act committed to the benefit of someone else (judgments of 10 March 2011, Agencja Wydawnicza Technopol v OHIM, C‑51/10 P, EU:C:2011:139, paragraphs 75 and 76, and 28 April 2015, EXTRA, T‑216/14, not published, EU:T:2015:230, paragraph 31).74Moreover, for reasons of legal certainty and sound administration, the examination of any trade mark application must be stringent and full, in order to prevent trade marks from being improperly registered. That examination must be undertaken in each individual case. The registration of a sign as a mark depends on specific criteria, which are applicable in the factual circumstances of the particular case and the purpose of which is to ascertain whether the sign at issue is caught by a ground for refusal (judgments of 10 March 2011, Agencja Wydawnicza Technopol v OHIM, C‑51/10 P, EU:C:2011:139, paragraph 77, and 28 April 2015, EXTRA, T‑216/14, not published, EU:T:2015:230, paragraph 32).75In this case, it is apparent from the contested decision that the Board of Appeal carried out a full and specific examination of the mark applied for before refusing to register it. In addition, it is apparent from the examination of the applicant’s complaints that that examination led the Board of Appeal, correctly, to oppose registration of the mark applied for on the basis of the absolute ground for refusal referred to in Article 7(1)(b) of Regulation No 207/2009. Since the examination of the mark applied for in the light of that provision could not, in itself, lead to a different conclusion, the applicant’s claims relating to the registration of other sound marks cannot succeed. The applicant may not therefore reasonably rely on previous decisions of EUIPO in order to cast doubt on the conclusion that the registration of the mark applied for is incompatible with Regulation No 207/2009.76It follows from all of the foregoing that the second plea must be rejected and that the action must be dismissed in its entirety. Costs 77It must be borne in mind that, under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by EUIPO.On those grounds,THE GENERAL COURT (Second Chamber)hereby: 1. Dismisses the action; 2. Orders Globo Comunicação e Participações S/A to pay the costs. Martins RibeiroGervasoniMadiseDelivered in open court in Luxembourg on 13 September 2016.[Signatures]( 1 ) Language of the case: French. | 36b59-bfb3b01-4b5b | EN |
The posting of a hyperlink on a website to works protected by copyright and published without the author’s consent on another website does not constitute a ‘communication to the public’ when the person who posts that link does not seek financial gain and acts without knowledge that those works have been published illegally | 8 September 2016 ( *1 )‛Reference for a preliminary ruling — Copyright and related rights — Directive 2001/29/EC — Information society — Harmonisation of certain aspects of copyright and related rights — Article 3(1) — Communication to the public — Definition — Internet — Hyperlinks giving access to protected works, made accessible on another website without the rightholder’s consent — Works not yet published by the rightholder — Posting of such links for a profit’In Case C‑160/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 3 April 2015, received at the Court on 7 April 2015, in the proceedings GS Media BV v Sanoma Media Netherlands BV, Playboy Enterprises International Inc., Britt Geertruida Dekker, THE COURT (Second Chamber),composed of M. Ilešič (Rapporteur), President of the Chamber, C. Toader, A. Rosas, A. Prechal, and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 3 February 2016,after considering the observations submitted on behalf of:—GS Media BV, by R. Chavannes and D. Verhulst, advocaten,Sanoma Media Netherlands BV, Playboy Enterprises International Inc. and Ms Dekker, by C. Alberdingk Thijm and C. de Vries, advocaten,the German Government, by T. Henze and D. Kuon, acting as Agents,the French Government, by D. Segoin, D. Colas and G. de Bergues, acting as Agents,the Portuguese Government, by L. Inez Fernandes and T. Rendas, acting as Agents,the Slovak Government, by B. Ricziová, acting as Agent,the European Commission, by F. Wilman and T. Scharf and by J. Samnadda, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 7 April 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).2The request has been made in proceedings between GS Media BV and Sanoma Media Netherlands BV (‘Sanoma’), Playboy Enterprises International Inc. and Ms Britt Geertruida Dekker (together, ‘Sanoma and Others’), concerning, inter alia, the posting on the GeenStijl.nl website (‘the GeenStijl website’), operated by GS Media, of hyperlinks to other websites enabling photographs of Ms Dekker, taken for Playboy magazine (‘the photos at issue’), to be viewed. Legal context 3Recitals 3, 4, 9, 10, 23 and 31 of Directive 2001/29 state:‘(3)The proposed harmonisation will help to implement the four freedoms of the internal market and relates to compliance with the fundamental principles of law and especially of property, including intellectual property, and freedom of expression and the public interest.(4)A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. ……(9)Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. …(10)If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work, as must producers in order to be able to finance this work. … Adequate legal protection of intellectual property rights is necessary in order to guarantee the availability of such a reward and provide the opportunity for satisfactory returns on this investment.(23)This Directive should harmonise further the author's right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. …(31)A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. …’4Article 3 of that directive provides:‘1. Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.3. The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’5According to Article 5(3) and (5) of that directive:‘3. Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases:c)reproduction by the press, communication to the public or making available of published articles on current economic, political or religious topics or of broadcast works or other subject-matter of the same character, in cases where such use is not expressly reserved, and as long as the source, including the author's name, is indicated, or use of works or other subject-matter in connection with the reporting of current events, to the extent justified by the informatory purpose and as long as the source, including the author’s name, is indicated, unless this turns out to be impossible;5. The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 6At the request of Sanoma, which is the publisher of Playboy magazine, on 13 and 14 October 2011 the photographer, Mr C. Hermès, took the photos at issue, which were to be published in the December 2011 edition of that magazine. In that context, Mr Hermès granted Sanoma authorisation, on an exclusive basis, to publish those photos. He also granted Sanoma authorisation to exercise the rights and powers arising from his copyright.7GS Media operates the website GeenStijl, which includes, according to information provided by that website, ‘news, scandalous revelations and investigative journalism with lighthearted items and wacky nonsense’ and which is viewed daily by more than 230000 visitors, making it one of the 10 most visited websites in the area of news in the Netherlands.8On 26 October 2011, the editors of the GeenStijl website received a message from a person using a pseudonym, which included a hyperlink to an electronic file hosted on the website Filefactory.com (‘the Filefactory website’), located in Australia and dedicated to data storage. That electronic file contained the photos at issue.9On the same day, Sanoma asked GS Media’s parent company to prevent the photos at issue being published on the GeenStijl website.10On 27 October 2011, an article relating to those photos of Ms Dekker, entitled ‘…! Nude photos of … [Ms] Dekker’, was published on the GeenStijl website, which included part of one of the photos at issue, and which ended with the following words: ‘And now the link with the pics you’ve been waiting for.’ By clicking on a hyperlink accompanying that text, users were directed to the Filefactory website, on which another hyperlink allowed them to download 11 electronic files each containing one of those photos.11On the same day, Sanoma sent GS Media’s parent company an email demanding that it confirm that the hyperlink to the photos at issue had been removed from the GeenStijl website. GS Media failed to respond to that demand.12However, at Sanoma’s request, the photos at issue appearing on the Filefactory website were removed.13By letter of 7 November 2011, counsel for Sanoma and Others demanded that GS Media remove from the GeenStijl website the article of 27 October 2011, including the hyperlink, the photographs it contained and the reactions of users published on the same page of that website.14On the same day, an article about the dispute between GS Media and Sanoma and Others about the photos at issue was published on the GeenStijl website. That article ended with the following sentence: ‘Update: Not yet seen the nude pics of [Ms. Dekker]? They are HERE.’ That announcement was, once again, accompanied by a hyperlink to access the website Imageshack.us where one or more of the relevant photographs could be viewed. The operator of that website, however, also subsequently complied with Sanoma’s request to remove them.15A third article, entitled ‘Bye Bye Wave Wave Playboy’, again contained a hyperlink to the photos at issue, appeared on 17 November 2011 on the GeenStijl website. Forum users of that website then posted new links to other websites where the photos at issue could be viewed.16In December 2011, the photos at issue were published in Playboy magazine.17Sanoma and Others brought an action before the rechtbank Amsterdam (Amsterdam District Court, Netherlands), claiming, in particular, that by posting hyperlinks and a cutout of one of the photos at issue on the GeenStijl website, GS Media had infringed Mr Hermès’ copyright and acted unlawfully towards Sanoma and Others. The rechtbank Amsterdam (Amsterdam District Court) largely upheld that action.18The Gerechtshof Amsterdam (Amsterdam Court of Appeal, the Netherlands) set aside that decision, finding that, by posting the hyperlinks on the GeenStijl website, GS Media had not infringed Mr Hermès’ copyright, since the photos at issue had already been made public before they were posted on the Filefactory website. In contrast, it found that, by posting those links, GS Media acted unlawfully toward Sanoma and Others, as visitors to that website accordingly were encouraged to view the photos at issue which were illegally posted on the Filefactory website. Without those hyperlinks, those photos would not have been easy to find. In addition, the Gerechtshof Amsterdam (Amsterdam Court of Appeal) held that, by posting a cutout of one of the photos at issue on the GeenStijl website, GS Media had infringed Mr Hermès’ copyright.19GS Media brought an appeal against that judgment before the referring court, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands).20Sanoma and Others brought a cross-appeal, in which they refer in particular to the judgment of 13 February 2014, Svensson and Others, (C‑466/12, EU:C:2014:76), claiming that the fact of making a hyperlink available to internet users to a website on which a work has been posted without the consent of the latter’s copyright holder constitutes a communication to the public. Sanoma and Others submit, moreover, that access to the photos at issue on the Filefactory website was protected by restrictions within the meaning of that judgment which internet users could circumvent through the intervention of GS Media and its GeenStijl website, so that those photos have been made available to a wider public than the public which would normally have accessed those photos on the Filefactory website.21In the context of examining that cross-appeal, the referring court considers that it cannot be inferred with sufficient certainty either from the judgment of 13 February 2014, Svensson and Others, (C‑466/12, EU:C:2014:76) or from the order of 21 October 2014, BestWater, (C‑348/13, not published, EU:C:2014:2315) whether there is a ‘communication to the public’ if the work has in fact previously been published, but without the consent of the copyright holder.22On the one hand, it follows from that case-law of the Court that it must be established whether the intervention at issue enables a public to be reached which cannot be considered to have been included in the public for which the rightholder had previously given his consent, which is consistent with his exclusive right to exploit the work. On the other hand, if a work is already available on the internet for the general public, posting a hyperlink to the website on which the work is already posted will result in virtually no new public being reached. Furthermore, the fact that there are many works on the internet that have been communicated to the public without the rightholder’s consent must also be taken into account. For the operator of a website it will not always be easy to check, if he intends to post a hyperlink to a website on which a work appears, that the rightholder has consented to the earlier posting of that work.23The referring court further observes, moreover, that the cross-appeal also raises the question of the conditions that must be met if they are to constitute ‘restrictions’ within the meaning of the judgment of 13 February 2014, Svensson and Others, (C‑466/12, EU:C:2014:76). That court points out, in that regard, that the photos at issue were not impossible to find on the internet before GS Media posted the hyperlink on the GeenStijl website, without however being easy to find, so the fact of posting that link on its site greatly facilitated access to those photos.24In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘1.(a)If anyone other than the copyright holder refers by means of a hyperlink on a website controlled by him to a website which is managed by a third party and is accessible to the general internet public, on which the work has been made available without the consent of the rightholder, does that constitute a “communication to the public” within the meaning of Article 3(1) of Directive 2001/29?(b)Does it make any difference if the work was also not previously communicated, with the rightholder’s consent, to the public in some other way?(c)Is it important whether the ‘hyperlinker’ is or ought to be aware of the lack of consent by the rightholder for the placement of the work on the third party’s website mentioned in 1(a) above and, as the case may be, of the fact that the work has also not previously been communicated, with the rightholder’s consent, to the public in some other way?2.If Question 1 is answered in the negative: If the answer to question 1(a) is in the negative: in that case, is there, or could there be deemed to be, a communication to the public if the website to which the hyperlink refers, and thus the work, is indeed findable for the general internet public, but not easily so, with the result that the publication of the hyperlink greatly facilitates the finding of the work?In answering question 2(a), is it important whether the “hyperlinker” is or ought to be aware of the fact that the website to which the hyperlink refers is not easily findable by the general internet public?3.Are there other circumstances which should be taken into account when answering the question whether there is deemed to be a communication to the public if, by means of a hyperlink, access is provided to a work which has not previously been communicated to the public with the consent of the rightholder?’ Consideration of the questions referred 25By its three questions, which should be examined together, the referring court asks, in essence, whether, and in what possible circumstances, the fact of posting, on a website, a hyperlink to protected works, freely available on another website without the consent of the copyright holder, constitutes a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29.26In that context, it raises the question of the relevance of the fact that the works in question have not yet been published in another way with the consent of that rightholder, that providing those hyperlinks makes it much easier to find those works, given that the website on which they are available is not easily findable by the general internet public, and that whoever posts those links knew or ought to have been aware of those facts and the fact that that rightholder did not consent to the publication of the works in question on that latter website.27It follows from Article 3(1) of Directive 2001/29 that Member States are to provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.28Under that provision, authors thus have a right which is preventive in nature and allows them to intervene, between possible users of their work and the communication to the public which such users might contemplate making, in order to prohibit such use (see, to that effect, judgments of 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 75, and 31 May 2016, Reha Training, C‑117/15, EU:C:2016:379, paragraph 30).29As Article 3(1) of Directive 2001/29 does not define the concept of ‘communication to the public’, its meaning and its scope must be determined in light of the objectives pursued by that directive and of the context in which the provision being interpreted is set (see, to that effect, judgments of 7 December 2006, SGAE, C‑306/05, EU:C:2006:764, paragraphs 33 and 34, and 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 184 and 185).30In that regard, it should be borne in mind that it follows from recitals 9 and 10 of Directive 2001/29 that the latter’s objective is to establish a high level of protection of authors, allowing them to obtain an appropriate reward for the use of their works, including on the occasion of communication to the public. It follows that ‘communication to the public’ must be interpreted broadly, as recital 23 of the directive indeed expressly states (see, to that effect, judgments of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 186, and 7 March 2013, ITV Broadcasting and Others, C‑607/11, EU:C:2013:147, paragraph 20).31At the same time, it follows from recitals 3 and 31 of Directive 2001/29 that the harmonisation effected by it is to maintain, in particular in the electronic environment, a fair balance between, on one hand, the interests of copyright holders and related rights in protecting their intellectual property rights, safeguarded by Article 17(2) of the Charter of Fundamental Rights of the European Union (‘the Charter’) and, on the other, the protection of the interests and fundamental rights of users of protected objects, in particular their freedom of expression and of information, safeguarded by Article 11 of the Charter, and of the general interest.32As the Court has previously held, the concept of ‘communication to the public’ includes two cumulative criteria, namely, an ‘act of communication’ of a work and the communication of that work to a ‘public’ (judgments of 13 February 2014, Svensson and Others, C‑466/12, EU:C:2014:76, paragraph 16; 19 November 2015, SBS Belgium, C‑325/14, EU:C:2015:764, paragraph 15; and 31 May 2016, Reha Training, C‑117/15, EU:C:2016:379, paragraph 37).33The Court has, moreover, specified that the concept of ‘communication to the public’ requires an individual assessment (see judgment of 15 March 2012, Phonographic Performance (Ireland), C‑162/10, EU:C:2012:141, paragraph 29 and the case-law cited, relating to the concept of ‘communication to the public’, for the purposes of Article 8(2) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28), it having the same scope in that directive as in Directive 2001/29 (see, to that effect, judgment of 31 May 2016, Reha Training, C‑117/15, EU:C:2016:379, paragraph 33)).34For the purposes of such an assessment, account has to be taken of several complementary criteria, which are not autonomous and are interdependent. Since those criteria may, in different situations, be present to widely varying degrees, they must be applied both individually and in their interaction with one another (judgments of 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 79; 15 March 2012, Phonographic Performance (Ireland), C‑162/10, EU:C:2012:141, paragraph 30; and 31 May 2016, Reha Training, C‑117/15, EU:C:2016:379, paragraph 35).35Of those criteria, the Court emphasised, in the first place, the indispensable role played by the user and the deliberate nature of its intervention. The user makes an act of communication when it intervenes, in full knowledge of the consequences of its action, to give access to a protected work to its customers, and does so, in particular, where, in the absence of that intervention, its customers would not, in principle, be able to enjoy the broadcast work (see, to that effect, judgments of 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 82 and the case-law cited, and 15 March 2012, Phonographic Performance (Ireland), C‑162/10, EU:C:2012:141, paragraph 31).36In the second place, it specified that the concept of the ‘public’ refers to an indeterminate number of potential viewers and implies, moreover, a fairly large number of people (see, to that effect, judgments of 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 84 and the case-law cited, and 15 March 2012, Phonographic Performance (Ireland), C‑162/10, EU:C:2012:141, paragraph 33).37Moreover, it is settled case-law of the Court that, to be categorised as a ‘communication to the public’, a protected work must be communicated using specific technical means, different from those previously used or, failing that, to a ‘new public’, that is to say, to a public that was not already taken into account by the copyright holders when they authorised the initial communication to the public of their work (judgment of 13 February 2014, Svensson and Others, C‑466/12, ECLI:EU:C:2014:76, paragraph 24, and order of 21 October 2014, BestWater International, C‑348/13, not published, EU:C:2014:2315, paragraph 14 and the case-law cited).38In the third place, the Court has held that it is relevant that a ‘communication’, within the meaning of Article 3(1) of Directive 2001/29, is of a profit-making nature (see, to that effect, judgments of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 204; 15 March 2012, SCF, C‑135/10, EU:C:2012:140, paragraph 88; and 15 March 2012, Phonographic Performance (Ireland), C‑162/10, EU:C:2012:141, paragraph 36).39It is in the light, in particular, of those criteria that it is to be assessed whether, in a situation such as that at issue in the main proceedings, the fact of posting, on a website, a hyperlink to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29.40In that regard, it should be recalled that, in the judgment of 13 February 2014, Svensson and Others, (C‑466/12, EU:C:2014:76), the Court interpreted Article 3(1) of Directive 2001/29 as meaning that posting hyperlinks on a website to works freely available on another website does not constitute a ‘communication to the public’ as covered by that provision. That interpretation was also adopted in the order of 21 October 2014, BestWater International, (C‑348/13, not published, EU:C:2014:2315) about such links using the technique known as ‘transclusion’ (‘framing’).41However, it follows from the reasoning of those decisions that, by them, the Court intended to refer only to the posting of hyperlinks to works which have been made freely available on another website with the consent of the rightholder, the Court having concluded that there was no communication to the public on the ground that the act of communication in question was not made to a new public.42In that context, it noted that, given that the hyperlink and the website to which it refers give access to the protected work using the same technical means, namely the internet, such a link must be directed to a new public. Where that is not the case, in particular, due to the fact that the work is already freely available to all internet users on another website with the authorisation of the copyright holders, that act cannot be categorised as a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29. Indeed, as soon as and as long as that work is freely available on the website to which the hyperlink allows access, it must be considered that, where the copyright holders of that work have consented to such a communication, they have included all internet users as the public (see, to that effect, judgment of 13 February 2014, Svensson and Others, EU:C:2014:76, paragraphs 24 to 28, and order of 21 October 2014, BestWater International, C‑348/13, not published, EU:C:2014:2315, paragraphs 15, 16 and 18).43Accordingly, it cannot be inferred either from the judgment of 13 February 2014, Svensson and Others, (C‑466/12, EU:C:2014:76) or from the order of 21 October 2014, BestWater International, (C‑348/13, not published, EU:C:2014:2315) that posting, on a website, hyperlinks to protected works which have been made freely available on another website, but without the consent of the copyright holders of those works, would be excluded, as a matter of principle, from the concept of ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29. Rather, those decisions confirm the importance of such consent under that provision, as the latter specifically provides that every act of communication of a work to the public is to be authorised by the copyright holder.44GS Media, the German, Portuguese and Slovak Governments and the European Commission claim, however, that the fact of automatically categorising all posting of such links to works published on other websites as ‘communication to the public’, since the copyright holders of those works have not consented to that publication on the internet, would have highly restrictive consequences for freedom of expression and of information and would not be consistent with the right balance which Directive 2001/29 seeks to establish between that freedom and the public interest on the one hand, and the interests of copyright holders in an effective protection of their intellectual property, on the other.45In that regard, it should be noted that the internet is in fact of particular importance to freedom of expression and of information, safeguarded by Article 11 of the Charter, and that hyperlinks contribute to its sound operation as well as to the exchange of opinions and information in that network characterised by the availability of immense amounts of information.46Furthermore, it may be difficult, in particular for individuals who wish to post such links, to ascertain whether website to which those links are expected to lead, provides access to works which are protected and, if necessary, whether the copyright holders of those works have consented to their posting on the internet. Such ascertaining is all the more difficult where those rights have been the subject of sub-licenses. Moreover, the content of a website to which a hyperlink enables access may be changed after the creation of that link, including the protected works, without the person who created that link necessarily being aware of it.47For the purposes of the individualised assessment of the existence of a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29, it is accordingly necessary, when the posting of a hyperlink to a work freely available on another website is carried out by a person who, in so doing, does not pursue a profit, to take account of the fact that that person does not know and cannot reasonably know, that that work had been published on the internet without the consent of the copyright holder.48Indeed, such a person, by making that work available to the public by providing other internet users with direct access to it (see, to that effect, judgment of 13 February 2014, Svensson and Others, C‑466/12, EU:C:2014:76, paragraphs 18 to 23) does not, as a general rule, intervene in full knowledge of the consequences of his conduct in order to give customers access to a work illegally posted on the internet. In addition, where the work in question was already available with unrestricted access on the website to which the hyperlink provides access, all internet users could, in principle, already have access to it even the absence of that intervention.49In contrast, where it is established that such a person knew or ought to have known that the hyperlink he posted provides access to a work illegally placed on the internet, for example owing to the fact that he was notified thereof by the copyright holders, it is necessary to consider that the provision of that link constitutes a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29.50The same applies in the event that that link allows users of the website on which it is posted to circumvent the restrictions taken by the site where the protected work is posted in order to restrict the public’s access to its own subscribers, the posting of such a link then constituting a deliberate intervention without which those users could not benefit from the works broadcast (see, by analogy, judgment of 13 February 2014, Svensson and Others, C‑466/12, EU:C:2014:76, paragraphs 27 and 31).51Furthermore, when the posting of hyperlinks is carried out for profit, it can be expected that the person who posted such a link carries out the necessary checks to ensure that the work concerned is not illegally published on the website to which those hyperlinks lead, so that it must be presumed that that posting has occurred with the full knowledge of the protected nature of that work and the possible lack of consent to publication on the internet by the copyright holder. In such circumstances, and in so far as that rebuttable presumption is not rebutted, the act of posting a hyperlink to a work which was illegally placed on the internet constitutes a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29.52However, if there is no new public, there will be no communication to the ‘public’ within the meaning of that provision in the event that, referred to in paragraphs 40 to 42 of the present judgment, the works to which those hyperlinks allow access have been made freely available on another website with the consent of the rightholder.53Such an interpretation of Article 3(1) of Directive 2001/29 provides the high level of protection for authors sought by that directive. Indeed, under that directive and within the limits set by Article 5(3) thereof, copyright holders may act not only against the initial publication of their work on a website, but also against any person posting for profit a hyperlink to the work illegally published on that website and, under the conditions set out in paragraphs 49 and 50 of the present judgment, against persons having posted such links without pursuing financial gain. In that regard, it should in particular be noted that those rightholders, in all cases, have the possibility of informing such persons of the illegal nature of the publication of their work on the internet and of taking action against them if they refuse to remove that link, and those persons may not rely upon one of the exceptions listed in Article 5(3).54As regards the case in the main proceedings, it is undisputed that GS Media operates the GeenStijl website and that it provided the hyperlinks to the files containing the photos at issue, hosted on the Filefactory website, for profit. It is also undisputed that Sanoma had not authorised the publication of those photos on the internet. Moreover, it appears to follow from the presentation of the facts, as they result from the order for reference, that GS Media was aware of that latter fact and that it cannot therefore rebut the presumption that the posting of those links occurred in full knowledge of the illegal nature of that publication. In those circumstances, it appears that, subject to the checks to be made by the referring court, by posting those links, GS Media effected a ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, and it is unnecessary to assess in that context the other circumstances referred to by that court, referred to in paragraph 26 of the present judgment.55Having regard to the foregoing considerations, the answer to the questions raised is that Article 3(1) of Directive 2001/29 must be interpreted as meaning that, in order to establish whether the fact of posting, on a website, hyperlinks to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a ‘communication to the public’ within the meaning of that provision, it is to be determined whether those links are provided without the pursuit of financial gain by a person who did not know or could not reasonably have known the illegal nature of the publication of those works on that other website or whether, on the contrary, those links are provided for such a purpose, a situation in which that knowledge must be presumed. Costs 56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that, in order to establish whether the fact of posting, on a website, hyperlinks to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a ‘communication to the public’ within the meaning of that provision, it is to be determined whether those links are provided without the pursuit of financial gain by a person who did not know or could not reasonably have known the illegal nature of the publication of those works on that other website or whether, on the contrary, those links are provided for such a purpose, a situation in which that knowledge must be presumed. [Signatures]( *1 ) Language of the case: Dutch. | 8b09d-8e23744-416b | EN |
In the view of Advocate General Kokott, the exclusion of electronically supplied digital books, newspapers and periodicals from the reduced rate of value added tax is compatible with the principle of equal treatment | 7 March 2017 ( *1 )‛Reference for a preliminary ruling — Taxation — Value added tax (VAT) — Directive 2006/112/EC — Point 6 of Annex III — Validity — Procedure — Amendment of a proposal for a Council directive after the Parliament has given an opinion — No fresh consultation of the Parliament — Article 98(2) — Validity — Reduced rate of VAT precluded from being applied to the supply of digital books electronically — Principle of equal treatment — Comparability of two situations — Supply of digital books electronically and on all physical means of support’In Case C‑390/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Trybunał Konstytucyjny (Constitutional Court, Poland), made by decision of 7 July 2015, received at the Court on 20 July 2015, in proceedings brought by Rzecznik Praw Obywatelskich (RPO) other parties: Marszałek Sejmu Rzeczypospolitej Polskiej, Prokurator Generalny, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta and L. Bay Larsen, Presidents of Chambers, J. Malenovský (Rapporteur), J.-C. Bonichot, A. Arabadjiev, C. Toader, M. Safjan, E. Jarašiūnas, C.G. Fernlund, C. Vajda and S. Rodin, Judges,Advocate General: J. Kokott,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 14 June 2016,after considering the observations submitted on behalf of:—the Rzecznik Praw Obywatelskich (RPO), by A. Bodnar, Rzecznik Praw Obywatelskich, and M. Wróblewski and A. Grzelak, acting as Agents,the Prokurator Generalny, by R. Hernand, acting as Agent,the Polish Government, by B. Majczyna, A. Miłkowska and K. Maćkowska, acting as Agents,the Greek Government, by K. Georgiadis and S. Papaïoannou, acting as Agents,the Council of the European Union, by E. Moro, E. Chatziioakeimidou and K. Pleśniak, acting as Agents,the European Commission, by L. Lozano Palacios and M. Owsiany-Hornung, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 8 September 2016,gives the following Judgment 1This request for a preliminary ruling concerns the validity of Article 98(2) of, and point 6 of Annex III to, Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2009/47/EC of 5 May 2009 (OJ 2009 L 116, p. 18) (‘Directive 2006/112 as amended’).2The request has been made following the lodging by the Rzecznik Praw Obywatelskich (Commissioner for Civic Rights, Poland) of an application for a ruling that national provisions precluding the application of a reduced rate of value added tax (VAT) to the supply of books and other digital publications electronically do not comply with the Polish constitution. Legal context EU law The Sixth Directive 3Article 12(3)(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’), as amended by Council Directive 2001/4/EC of 19 January 2001 (OJ 2001 L 22, p. 17), provided:‘The standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. From 1 January 2001 to 31 December 2005, this percentage may not be less than 15%.…Member States may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount, which may not be less than 5%, and shall apply only to supplies of the categories of goods and services specified in Annex H.’4Article 1 of Council Directive 2002/38/EC of 7 May 2002 amending and amending temporarily Directive 77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services (OJ 2002 L 128, p. 41) provided:‘Directive 77/388/EEC is hereby temporarily amended as follows:1.in Article 9:(a)in paragraph (2)(e), a comma shall replace the final full stop and the following indents shall be added:“…electronically supplied services, inter alia, those described in Annex L.”2.in Article 12(3)(a), the following fourth subparagraph shall be added:“The third subparagraph shall not apply to the services referred to in the last indent of Article 9(2)(e).”’5The Sixth Directive was repealed and replaced by Directive 2006/112, which entered into force on 1 January 2007. Directive 2006/112 6Article 14(1) of Directive 2006/112 as amended provides:‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’7Article 24(1) of Directive 2006/112 as amended states:‘“Supply of services” shall mean any transaction which does not constitute a supply of goods.’8Article 25 of Directive 2006/112 as amended states:‘A supply of services may consist, inter alia, in one of the following transactions:the assignment of intangible property, whether or not the subject of a document establishing title;…’9Article 96 of Directive 2006/112 as amended provides:‘Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.’10Article 98(1) and (2) of Directive 2006/112 as amended is worded as follows:‘1. Member States may apply either one or two reduced rates.2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.The reduced rates shall not apply to electronically supplied services.’11Point 6 of Annex III to Directive 2006/112, in the version before Directive 2009/47 entered into force, referred to:‘Supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising.’12On 7 July 2008, the European Commission presented a proposal for a Council Directive amending Directive 2006/112 as regards reduced rates of value added tax (COM(2008) 428 final; ‘the proposal for a directive’), which provided for the replacement of point 6 of Annex III to Directive 2006/112, in the version before Directive 2009/47 entered into force, by the following:‘Supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts, as well as audio books, CD, CD-ROMs or any similar physical support that predominantly reproduce the same information content as printed books), newspapers and periodicals, other than material wholly or predominantly devoted to advertising.’13By a legislative resolution of 19 February 2009, the European Parliament, after amending the proposal for a directive, approved that proposal. None of the amendments adopted by the Parliament related to the text proposed by the Commission to replace point 6 of Annex III to Directive 2006/112, in the version before Directive 2009/47 entered into force.14On 5 May 2009, the Council approved the final text of Directive 2009/47. Point 6 of Annex III to Directive 2006/112 as amended was from then on worded as follows:‘Supply, including on loan by libraries, of books on all physical means of support (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising.’ Polish law 15Under Article 146 and Article 41(2) and (2a) of the ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004, in the version applicable at the material time (Dz. U. of 2011, No 177, heading 1054; ‘the Law on VAT’), read in conjunction with items 72 to 75 of Annex 3 to that law and items 32 to 35 of Annex 10 thereto, supplies of publications that are printed or on a physical support are subject to a reduced rate of VAT. On the other hand, a reduced rate of VAT does not apply to the electronic transmission of publications. The dispute in the main proceedings and the questions referred for a preliminary ruling 16By application lodged on 6 December 2013, the Commissioner for Civic Rights requested the Trybunał Konstytucyjny (Constitutional Court, Poland) to rule that (i) items 72 to 75 of Annex 3 to the Law on VAT, read in conjunction with Article 41(2) thereof, and (ii) items 32 to 35 of Annex 10 to that law, read in conjunction with Article 41(2a) thereof, do not comply with the Polish constitution in that those provisions lay down that the reduced rates of VAT are to apply only to publications made available on a physical support, to the exclusion of publications transmitted electronically.17In the course of the main proceedings, the Marszałek Sejmu Rzeczypospolitej Polskiej (Speaker of the Lower House of the Parliament of the Republic of Poland) and the Prokurator Generalny (General Public Prosecutor, Poland) stated that, since the provisions of Polish law at issue were adopted in order to transpose Article 98(2) of Directive 2006/112 as amended and point 6 of Annex III thereto into domestic law, the Polish legislature could not depart from those provisions without infringing its obligations under EU law. The same view was taken by the members of the Polish Government invited by the national court to express their opinion in the case.18The national court considers that there are, however, reasons to doubt that those two provisions of Directive 2006/112 as amended are valid.19First, that court observes that Directive 2009/47, from which point 6 of Annex III to Directive 2006/112 as amended stems, could be vitiated by a procedural defect, since that point differs in its wording from the text of the proposal for a directive which had been submitted to the Parliament.20Secondly, it considers that Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, could be contrary to the principle of fiscal neutrality. Whilst digital books made available on a physical support and those transmitted electronically have similar properties and meet the same consumer needs, Article 98(2) permits a reduced rate of VAT to be applied only to the supply of digital books on a physical support.21Consequently, the Trybunał Konstytucyjny (Constitutional Court) decided to stay proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is point 6 of Annex III to Directive 2006/112 as amended invalid on the ground that, during the legislative procedure, the essential formal requirement of consultation with the European Parliament was not complied with?(2)Is Article 98(2) of Directive 2006/112/EC as amended, in conjunction with point 6 of Annex III to that directive, invalid on the ground that it infringes the principle of fiscal neutrality to the extent to which it excludes the application of reduced tax rates to electronic books and other electronic publications?’ Consideration of the questions referred Question 1 22By its first question, the national court asks, in essence, whether point 6 of Annex III to Directive 2006/112 as amended is invalid on the ground that the legislative procedure that led to its adoption was vitiated by infringement of an essential procedural requirement. Since the wording of point 6 of Annex III to Directive 2006/112 as amended differs from the text which was set out in the proposal for a directive on the basis of which the Parliament was consulted, the national court wonders whether the Parliament should have been consulted afresh.23In this instance, it should be noted that, in accordance with Article 93 EC, now Article 113 TFEU, which prescribes a special legislative procedure, the Parliament had to be consulted before Directive 2009/47 was adopted and, consequently, before the replacement by that directive of point 6 of Annex III to Directive 2006/112.24Due consultation of the Parliament in the cases provided for by the EC Treaty, now the FEU Treaty, constitutes an essential formal requirement disregard of which means that the measure concerned is void (judgment of 10 May 1995, Parliament v Council, C‑417/93, EU:C:1995:127, paragraph 9).25Effective participation of the Parliament in the legislative process, in accordance with the procedures laid down by the Treaty, indeed represents an essential factor in the institutional balance intended by the Treaty, since the Parliament’s function reflects the fundamental democratic principle that the people should take part in the exercise of power through the intermediary of a representative assembly (see, to that effect, judgments of 5 July 1995, Parliament v Council, C‑21/94, EU:C:1995:220, paragraph 17, and of 10 June 1997, Parliament v Council, C‑392/95, EU:C:1997:289, paragraph 14).26The obligation to consult the Parliament during the legislative procedure in the cases laid down by the Treaty means that the Parliament is consulted afresh whenever the text finally adopted, taken as a whole, differs in essence from the text on which the Parliament has already been consulted, except in cases where the amendments substantially correspond to a wish of the Parliament itself (see, to that effect, judgment of 5 October 1994, Germany v Council, C‑280/93, EU:C:1994:367, paragraph 38 and the case-law cited).27Accordingly, it is necessary to examine whether point 6 of Annex III to Directive 2006/112 as amended differs in essence from the text that was set out in the proposal for a directive on the basis of which the Parliament was consulted.28The proposal for a directive envisaged that point 6 of Annex III to Directive 2006/112 would henceforth mention, among the supplies of goods and services to which the reduced rates of VAT may be applied, the ‘supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts, as well as audio books, CD, CD-ROMs or any similar physical support that predominantly reproduce the same information content as printed books), newspapers and periodicals, other than material wholly or predominantly devoted to advertising’.29However, point 6 of Annex III to Directive 2006/112 as amended refers to the ‘supply, including on loan by libraries, of books on all physical means of support (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising’.30It is thus apparent on comparing the respective wording of the proposal for a directive and of point 6 of Annex III to Directive 2006/112 as amended that point 6 differs from the proposal inasmuch as it does not mention, as physical means of support that can give rise to the application of a reduced rate of VAT, ‘audio books, CDs [and] CD-ROMs’, which are listed by the proposal, or expressly relate, unlike the proposal, to books ‘that predominantly reproduce the same information content as printed books’, but makes reference to the supply of books on ‘all physical means of support’.31Nonetheless, it cannot be concluded from those differences that point 6 of Annex III to Directive 2006/112 as amended differs in essence from the text that was set out in the proposal for a directive.32Given that that proposal indicated that it also covered books supplied on ‘any … physical support [similar]’ to printed books, audio books, CDs and CD-ROMs, the list in the proposal must be regarded as not being exhaustive, but as being intended to illustrate the fact that all feasible physical means of support were covered, in line with what the Council finally decided upon in point 6 of Annex III to Directive 2006/112 as amended.33It is true that point 6 of Annex III to Directive 2006/112 as amended does not expressly specify that, in order for a reduced rate of VAT to be applied, the physical supports concerned must predominantly reproduce the same information content as printed books. However, since the wording indicates that only ‘books’ are concerned, a term which, in its ordinary meaning, refers to a printed work, it follows that, in order to fall within the scope of that provision, the physical supports concerned must predominantly reproduce the same information content as printed books.34Consequently, as the Court found in paragraph 53 of the judgment of 5 March 2015, Commission v Luxembourg (C‑502/13, EU:C:2015:143), the text of point 6 of Annex III to Directive 2006/112 as amended is nothing other than a simplification of the drafting of the text which was set out in the proposal for a directive and the substance of which has been fully preserved.35Accordingly, the Council was not required to consult the Parliament afresh.36It follows from the foregoing that point 6 of Annex III to Directive 2006/112 as amended is not invalid on the ground that the legislative procedure that led to its adoption was vitiated by infringement of an essential procedural requirement. Question 2 37By its second question, the national court asks whether Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, is invalid on the ground that it infringes the principle of fiscal neutrality by precluding the application of the reduced rates of VAT to the supply of electronic books and other electronic publications. Preliminary remarks 38First, although the national court refers in the wording of its question to the principle of fiscal neutrality, it is apparent from the order for reference that it raises in essence the question of the validity of Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, in the light of the principle of equal treatment as set out in Article 20 of the Charter of Fundamental Rights of the European Union (‘the Charter’).39Secondly, whilst in the wording of its question the national court mentions, in addition to electronic books, ‘other electronic publications’, it is also apparent from the order for reference that the doubts expressed by the national court relate only to whether there is any unequal treatment by Directive 2006/112 as amended of the supply of digital books according to whether they are transmitted using a physical support or electronically.40Accordingly, the national court asks, in essence, whether Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, is invalid on the ground that, by ruling out any possibility for the Member States of applying a reduced rate of VAT to the supply of digital books electronically, that article infringes the principle of equal treatment as set out in Article 20 of the Charter. Findings of the Court 41It should be recalled at the outset that the Court has consistently held that the principle of equal treatment requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified (judgments of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 51, and of 4 May 2016, Pillbox 38, C‑477/14, EU:C:2016:324, paragraph 35).– Treatment of comparable situations 42In accordance with settled case-law of the Court, the factors which distinguish different situations, and the question whether those situations are comparable, must be determined and assessed in the light of the subject matter of the provisions in question and of the aim pursued by them, whilst account must be taken for that purpose of the principles and objectives of the field in question (see, to that effect, judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 26 and the case-law cited).43In the present instance, the different treatment referred to by the national court results from it not being possible for the Member States to provide that a reduced rate of VAT is to be applied to the supply of digital books electronically, although the application of a reduced rate is permitted in the case of the supply of digital books on all physical means of support. Consequently, the factors which characterise those two situations, and the question whether the situations are comparable, must be determined and assessed in the light of the objectives pursued by the legislature when it permitted the Member States to apply a reduced rate of VAT to the supply of digital books on all physical means of support.44In that regard, it should be pointed out that the power of the Member States to apply a reduced rate of VAT to the supply of printed books was laid down for the first time by Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) (OJ 1992 L 316, p. 1). Article 1 of that directive inserted into the Sixth Directive Annex H relating to the list of supplies of goods and services which may be subject to reduced rates of VAT, point 6 of which was reproduced in point 6 of Annex III to Directive 2006/112, in the version before Directive 2009/47 entered into force. That power was extended by Directive 2009/47 to the supply of books on ‘all physical means of support’.45As the Advocate General has observed in point 56 of her Opinion, the objective underlying the application of a reduced rate of VAT to the supply of books consists in the promotion of reading, whether of literature, non-fiction, newspapers or periodicals.46Thus, by permitting the Member States to apply reduced rates of VAT to the supply of books on all physical means of support, Directive 2006/112 as amended must be regarded as pursuing such an objective.47That conclusion is, moreover, supported by the fact that point 6 of Annex III to Directive 2006/112 as amended rules out the possibility of applying a reduced rate of VAT to the supply of ‘material wholly or predominantly devoted to advertising’. A feature of such material is that it does not in any way pursue the objective referred to in paragraph 45 of this judgment.48That said, in order that such an objective may be achieved, what matters is that citizens of the Union can have access to the content of books effectively, and the manner in which the books are supplied does not play a decisive role in that regard.49Consequently, it must be found that, in the light of the objective pursued by Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, the supply of digital books on all physical means of support and the supply of digital books electronically amount to comparable situations.50That conclusion is not called into question by the fact that, in accordance with Article 14(1) of Directive 2006/112 as amended, the supply of a digital book on a physical support constitutes, in principle, a supply of goods whereas, by virtue of Articles 24(1) and 25 of that directive, the supply of a digital book electronically constitutes a supply of services. As the rules on VAT are intended, in principle, to tax the consumption of goods and the consumption of services in the same way, that different classification does not appear decisive in the light of the objective, noted in paragraph 45 of this judgment, that is pursued by Article 98(2) of that directive, read in conjunction with point 6 of Annex III thereto.51Consequently, since Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, has the effect of precluding the application of a reduced rate of VAT to the supply of digital books electronically although application of a reduced rate is permitted for the supply of digital books on all physical means of support, those provisions must be regarded as establishing a difference in treatment between two situations that are, however, comparable in the light of the objective pursued by the EU legislature.– Justification 52Where a difference in treatment between two comparable situations is found, the principle of equal treatment is not infringed in so far as that difference is duly justified (see, to that effect, judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 46).53That is the case, according to settled case-law of the Court, where the difference in treatment relates to a legally permitted objective pursued by the measure having the effect of giving rise to such a difference and is proportionate to that objective (see, to that effect, judgments of 17 October 2013, Schaible, C‑101/12, EU:C:2013:661, paragraph 77, and of 22 May 2014, Glatzel, C‑356/12, EU:C:2014:350, paragraph 43).54In that respect, it is understood that, when the EU legislature adopts a tax measure, it is called upon to make political, economic and social choices, and to rank divergent interests or to undertake complex assessments. Consequently, it should, in that context, be accorded a broad discretion, so that judicial review of compliance with the conditions set out in the previous paragraph of this judgment must be limited to review as to manifest error (see, to that effect, judgments of 10 December 2002, British American Tobacco (Investments) and Imperial Tobacco, C‑491/01, EU:C:2002:741, paragraph 123, and of 17 October 2013, Billerud Karlsborg and Billerud Skärblacka, C‑203/12, EU:C:2013:664, paragraph 35).55In the present instance, it should be noted that the difference in treatment found in paragraph 51 of this judgment results from Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, which precludes the application of a reduced rate of VAT to the supply of all electronic services and, consequently, to the supply of digital books electronically, unlike the supply of books — which may be digital — on all physical means of support.56It is apparent from the preparatory documents for Directive 2002/38 that the amendments proposed by the Commission constituted, as regards the taxation of electronically supplied services, a first step in implementing a new policy on VAT, intended to simplify and strengthen the VAT system in order to encourage legitimate commercial transactions within the internal market. Indeed, according to the preparatory documents, e-commerce offers considerable potential for creating wealth and employment in the European Union, and the provision of a clear and definite regulatory environment is an essential prerequisite for creating the climate of confidence in which business will invest and trade.57As the Council and the Commission explained in reply to a written question asked by the Court and at the hearing, the ruling out, in Article 98(2) of Directive 2006/112 as amended, of the application of a reduced rate of VAT to the supply of digital books electronically must be viewed as forming part of a specific VAT regime for e-commerce. Indeed, it is apparent from their explanations that it was considered necessary to make electronically supplied services subject to clear, simple and uniform rules in order that the VAT rate applicable to those services may be established with certainty and, thus, that the administration of VAT by taxable persons and national tax authorities is facilitated.58Doubt cannot reasonably be cast on the fact that such an objective is legally permitted.59Indeed, the principle of legal certainty, which underlies that objective, requires that EU rules enable those concerned to know unequivocally the extent of their rights and obligations so that they are in a position to order their affairs with the benefit of full information (see, to that effect, judgment of 15 July 2010, Commission v United Kingdom, C‑582/08, EU:C:2010:429, paragraph 49 and the case-law cited).60Furthermore, the Court has already acknowledged the legitimacy of the objective consisting in the laying down by a legislature of general rules which can be easily applied by economic operators and are easily verified by the competent national authorities (see, to that effect, judgment of 24 February 2015, Sopora, C‑512/13, EU:C:2015:108, paragraph 33).61As regards whether the measure set out in Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, is appropriate for achieving the objective pursued, as specified in paragraphs 56 and 57 of this judgment, it does not appear that the assessment which the EU legislature carried out exceeded the discretion that it enjoys.62By precluding the application of a reduced rate of VAT to electronically supplied services, the EU legislature spares taxable persons and national tax authorities from an obligation to examine, for each type of electronic service that is supplied, whether it falls within one of the categories of services that qualify for such a rate under Annex III to Directive 2006/112 as amended.63Thus, the measure at issue must be regarded as being appropriate for achieving the objective of establishing with certainty the VAT rate applicable to electronically supplied services and thus of facilitating the administration of VAT by taxable persons and national tax authorities.64So far as concerns the requirement, associated with the proportionality condition, that the measure chosen must be the least restrictive among the appropriate measures that may be envisaged and that the disadvantages caused must not be disproportionate to the objectives pursued, it should be noted that the EU legislature might possibly have separated the supply of digital books electronically from electronic services as a whole and, accordingly, have permitted the application of a reduced rate of VAT to those books.65However, such a solution would be liable to run counter to the objective pursued by the EU legislature relating to the need to remedy the lack of legal certainty resulting from the constant developments to which all electronic services are subject, for which reason the EU legislature excluded all of those services from the list of transactions qualifying for a reduced rate of VAT under Annex III to Directive 2006/112 as amended.66To accept that the Member States are able to apply a reduced rate of VAT to the supply of digital books electronically, as is permitted for the supply of such books on all physical means of support, would effectively compromise the overall coherence of the measure intended by the EU legislature, consisting in the exclusion of all electronic services from the possibility of a reduced rate of VAT being applied.67As to the option of extending the possibility of applying a reduced rate of VAT to all electronic services, it should be pointed out that the adoption of such a measure would have introduced, generally, unequal treatment between non-electronic services, to which a reduced rate of VAT does not, as a rule, apply, and electronic services.68Consequently, the EU legislature was able to take the view, within the bounds of the discretion that it enjoys, that neither of those two theoretically feasible measures was appropriate for achieving the various objectives pursued by it.69It should be added that it is apparent from Articles 4 and 5 of Directive 2002/38 and Article 6 of Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112 as regards the place of supply of services (OJ 2008 L 44, p. 11) that the Council envisaged re-examining the specific taxation system for electronically supplied services, in the light of experience acquired. Moreover, in a communication to the European Parliament, the Council and the European Economic and Social Committee on an action plan on VAT (COM(2016) 148 final), the Commission announced its intention to consider the drawing up of a proposal for a directive amending Directive 2006/112 as amended.70Accordingly, the difference in treatment — resulting from Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto — between the supply of digital books electronically and the supply of books on all physical means of support must be regarded as duly justified.71It must, therefore, be held that Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, which has the effect of ruling out the possibility for the Member States of applying a reduced rate of VAT to the supply of digital books electronically, while permitting them to apply a reduced rate of VAT to the supply of digital books on all physical means of support, does not infringe the principle of equal treatment as set out in Article 20 of the Charter.72It follows from the foregoing considerations that examination of the questions referred for a preliminary ruling has disclosed no factor of such a kind as to affect the validity of point 6 of Annex III to Directive 2006/112 as amended or of Article 98(2) of that directive, read in conjunction with point 6 of Annex III thereto. Costs 73Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Examination of the questions referred for a preliminary ruling has disclosed no factor of such a kind as to affect the validity of point 6 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2009/47/EC of 5 May 2009, or of Article 98(2) of that directive, read in conjunction with point 6 of Annex III thereto. [Signatures]( *1 ) * Language of the case: Polish | d2b7b-0ff2f9e-4813 | EN |
Security of supply and territorial cohesion are objectives of general interest which may justify State intervention in fixing the price of supply of natural gas | 7 September 2016 ( *1 )‛Reference for a preliminary ruling — Approximation of laws — Directive 2009/73/EC — Energy — Gas sector — Fixing of prices for supplying natural gas to final customers — Regulated tariffs — Obstacle — Compatibility — Criteria of assessment — Objectives of security of supply and territorial cohesion’In Case C‑121/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Conseil d’État (France), made by decision of 15 December 2014, received at the Court on 10 March 2015, in the proceedings Association nationale des opérateurs détaillants en énergie (ANODE) v Premier ministre, Ministre de l’Économie, de l’Industrie et du Numérique, Commission de régulation de l’énergie, ENGIE, formerly GDF Suez,THE COURT (Fifth Chamber),composed of J.L. da Cruz Vilaça, President of the Chamber, F. Biltgen, A. Borg Barthet (Rapporteur), E. Levits and M. Berger, Judges,Advocate General: P. Mengozzi,Registrar: A. Calot Escobar,after considering the observations submitted on behalf of:—Association nationale des opérateurs détaillants en énergie (ANODE), by O. Fréget and R. Lazerges, avocats,ENGIE, by C. Barthélemy, avocat,the French Government, by G. de Bergues, D. Colas and J. Bousin, acting as Agents,the Hungarian Government, by M. Fehér, acting as Agent,the Polish Government, by B. Majczyna, acting as Agent,the European Commission, by C. Giolito and O. Beynet, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 12 April 2016,gives the following Judgment 1This reference for a preliminary ruling concerns the interpretation of Article 3(1) and (2) of Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ 2009 L 211, p. 94).2The reference has been made in proceedings between the Association nationale des opérateurs détaillants en énergie (National Association of Energy Retailers) (ANODE) and the Premier ministre (Prime Minister), the Ministre de l’Économie, de l’Industrie et du Numérique (Minister for Economic Affairs, Industry and the Digital Economy), the Commission de régulation de l’énergie (Energy Regulatory Commission) (France) and ENGIE, formerly GDF Suez, concerning regulated tariffs for the sale of natural gas. Legal context EU law 3According to recitals 44 and 47 of Directive 2009/73:‘(44)Respect for the public service requirements is a fundamental requirement of this Directive, and it is important that common minimum standards, respected by all Member States, are specified in this Directive, which take into account the objectives of common protection, security of supply, environmental protection and equivalent levels of competition in all Member States. It is important that the public service requirements can be interpreted on a national basis, taking into account national circumstances and subject to the respect of Community law.…(47)The public service requirements and the common minimum standards that follow from them need to be further strengthened to make sure that all consumers, especially vulnerable ones, can benefit from competition and fair prices. The public service requirements should be defined at national level, taking into account national circumstances; Community law should, however, be respected by the Member States. …’4Article 3(1) and (2) of Directive 2009/73 states:‘1. Member States shall ensure, on the basis of their institutional organisation and with due regard to the principle of subsidiarity, that, without prejudice to paragraph 2, natural gas undertakings are operated in accordance with the principles of this Directive with a view to achieving a competitive, secure and environmentally sustainable market in natural gas, and shall not discriminate between those undertakings as regards their rights or obligations.2. Having full regard to the relevant provisions of the Treaty, in particular Article [106] thereof, Member States may impose on undertakings operating in the gas sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency, energy from renewable sources and climate protection. Such obligations shall be clearly defined, transparent, non-discriminatory, verifiable and shall guarantee equality of access for natural gas undertakings of the Community to national consumers. In relation to security of supply, energy efficiency/demand-side management and for the fulfilment of environmental goals and goals for energy from renewable sources, as referred to in this paragraph, Member States may introduce the implementation of long-term planning, taking into account the possibility of third parties seeking access to the system.’5Article 2(28) of Directive 2009/73 defines ‘eligible customer’ as a customer who is free to purchase gas from the supplier of his choice, within the meaning of Article 37 of the directive.6Article 37(1) of Directive 2009/73 provides:‘Member States shall ensure that the eligible customers comprise:(a)until 1 July 2004, eligible customers as specified in Article 18 of Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas [(OJ 1998 L 204, p. 1)]. Member States shall publish, by 31 January each year, the criteria for the definition of those eligible customers;(b)from 1 July 2004, all non-household customers;(c)from 1 July 2007, all customers.’ French law 7In accordance with Article L. 100‑1 of the Code de l’énergie (Energy Code):‘Energy policy shall ensure the strategic independence of the nation and promote its economic competitiveness. That policy shall seek to:ensure security of supply;maintain a competitive energy price; …guarantee social and territorial cohesion by ensuring universal access to energy.’8Article L. 121‑32 of that code provides that public service obligations are to be assigned to natural gas suppliers and are to relate inter alia to security of supply and the quality and price of the goods and services supplied.9Article L. 121‑46 of that code provides:‘I. —The objectives and detailed rules for ensuring implementation of the public service missions defined in sections 1 and 2 of this Chapter shall be laid down in contracts between the State of the one part and … GDF-Suez … of the other part … on the basis of the public service missions assigned to the latter …II. —The contracts provided for in point I shall relate inter alia to:(1)The public service requirements regarding security of supply and the regularity and quality of service to consumers;(2)Ways of ensuring access to the public service;(4)The multiannual development of the regulated tariffs for the sale … of gas;…’10Article L. 410‑2 of the Code de commerce (Commercial Code) states:‘Except in cases where the law specifies otherwise, the prices of goods, products and services … shall be determined by the free play of competition.However, in sectors or areas in which price competition is limited by monopoly situations or long-term supply problems, or by laws or regulations, a decree after consultation of the Conseil d’État may regulate the prices after the Autorité de la concurrence (Competition Authority) has been consulted.’11Articles L. 445‑1 to L. 445‑4 of the Code de l’énergie, headed ‘Regulated tariffs of sale’, provide:‘Article L. 445‑1The provisions of the second paragraph of Article L. 410‑2 of the Code de commerce shall apply to the regulated tariffs for the sale of natural gas referred to in Article L. 445‑3.Article L. 445‑2Decisions on the tariffs mentioned in Article L. 445‑3 shall be taken jointly by the ministers responsible for economic affairs and energy, after obtaining the opinion of the Commission de régulation de l’énergie.The Commission de régulation de l’énergie shall draw up its proposals and opinions, which must state reasons, after carrying out any consultations it considers useful of the actors in the energy market.Article L. 445‑3The regulated tariffs for the sale of natural gas shall be defined in accordance with the intrinsic characteristics of the supply of gas and the costs linked to supply. They shall cover all of those costs other than subsidies for customers who have exercised their right under Article L. 441‑1. …Article L. 445‑4A final consumer of natural gas may not benefit from the regulated tariffs for the sale of natural gas mentioned in Article L. 445‑3 except in relation to a place of consumption which is still subject to those tariffs.However, a final consumer of natural gas who consumes less than 30000 kilowatt hours a year may benefit, at any place of consumption, from the regulated tariffs for the sale of natural gas mentioned in Article L. 445‑3.’12Article L. 441‑1 of the Code de l’énergie provides:‘Any customer who consumes the gas he purchases or who purchases gas with a view to reselling it has the right, as the case may be through his agent, to choose his natural gas supplier.’13The rules on how regulated tariffs are to be calculated are laid down by Décret No 2009‑1603 relatif aux tarifs réglementés de vente de gaz naturel (Decree No 2009‑1603 on regulated tariffs for the sale of natural gas) of 18 December 2009 (JORF, 22 December 2009, p. 22082), as amended by Decree No 2013‑400 of 16 May 2013 (JORF, 17 May 2013, p. 8189) (‘Decree No 2009‑1603’).14Decree No 2009‑1603 provides that regulated prices for the sale of gas are to be fixed by the ministers responsible for economic affairs and energy, after obtaining the opinion of the Commission de régulation de l’énergie. In the first place, a decision is taken by those two ministers, who determine a price formula for each supplier, reflecting the entire costs of supplying natural gas and the methodology for evaluating costs other than those of supply. In the second place, a decree adopted by those ministers, after the Commission de régulation de l’énergie has made an analysis and issued an opinion, fixes the regulated prices for the sale of natural gas. Those prices are reviewed at least once a year and revised if need be, according to the development of the price formula. A supplier offering prices lower than the regulated prices can propose a change to the regulated price to the Commission de régulation de l’énergie, which must make sure that the change sought does indeed follow from the application of the price formula. Those provisions were amended with effect from 1 January 2016, a larger role being given to the Commission de régulation de l’énergie, which proposes regulated prices to the ministers responsible for economic affairs and energy. Those proposals are deemed to be accepted if the ministers do not object within a period of three months.15As regards the costs covered by the regulated prices, Decree No 2009‑1603 requires the supplier’s costs to be completely covered by the regulated prices. Articles 3 and 4 of the decree thus provide:‘Article 3Regulated tariffs for the sale of natural gas shall cover the costs of supplying natural gas and the costs other than those of supply.They shall consist of a variable portion linked to actual consumption and a flat-rate portion calculated from the fixed costs of supply of natural gas, which may also take account of the quantity consumed, subscribed or reserved by the customer and the circumstances of use, including the division of the quantities asked for over the year.Article 4For each supplier a tariff formula shall be defined which reflects the entire cost of supplying natural gas. The tariff formula and the costs other than those of supply shall make it possible to determine the average cost of supplying natural gas, on the basis of which the regulated tariffs for the sale of gas are fixed, according to the detailed conditions of serving the customers concerned.Costs other than those of supply shall include in particular:the costs of using networks for the transmission of natural gas and, as the case may be, public distribution networks for natural gas, resulting from the application of the tariffs fixed by the Commission de régulation de l’énergie for the use of gas infrastructure;the costs of using storage facilities for natural gas, if appropriate;the costs of marketing the services supplied, including a reasonable commercial margin.16The costs other than those of supply thus cover elements corresponding to transmission, storage, distribution, charges and profits, and the supply costs reflect the costs of supplying and are based mainly on long-term contracts between the supplier and foreign producers, since nearly all consumption in France comes from imports. Those long-term contracts are as a rule indexed to oil prices. The dispute in the main proceedings and the questions referred for a preliminary ruling 17By application submitted on 17 July 2013, ANODE brought an action before the Conseil d’État (France) seeking for Decree No 2013‑400 to be annulled as ultra vires.18In its action ANODE submits inter alia that Articles L. 445‑1 to L. 445‑4 of the Code de l’énergie, implemented by that decree, disregard the objectives of Directive 2009/73.19ANODE argues in particular that the provisions in question of national law are not in accordance with the principle of application stated in the judgment of 20 April 2010 in Federutility and Others (C‑265/08, EU:C:2010:205).20The Conseil d’État is uncertain, first, whether State intervention in prices such as that provided for by the French legislation must be regarded as leading to determining the level of prices for the supply of natural gas to the final consumer independently of the free play of the market, thus constituting by its very nature an obstacle to the achievement of a competitive market in natural gas, contrary to Article 3(1) of Directive 2009/73.21Should that be the case, the Conseil d’État is uncertain, secondly, as to the criteria by which the compatibility of such legislation with Directive 2009/73 should be assessed, in particular whether Article 106(2) TFEU in conjunction with Article 3(2) of that directive allows the Member States, by establishing regulated prices, to pursue objectives such as security of supply and territorial cohesion. The Conseil d’État also raises the questions of the possibility of State intervention in the setting of the price on the basis of the principle of covering all the costs of the incumbent supplier, and of the cost components which may be taken into consideration in determining the regulated tariffs.22In those circumstances, the Conseil d’État decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Must the intervention of a Member State consisting in requiring the incumbent operator to offer to supply final consumers with natural gas at regulated tariffs, but not precluding competing offers from being made at prices lower than those tariffs by the incumbent supplier or alternative suppliers, be regarded as leading to determining the level of prices for the supply of natural gas to final consumers independently of the free play of the market, and does it constitute by its very nature an interference with the achievement of a competitive market in natural gas, as mentioned in Article 3(1) of Directive 2009/73?If so, in the light of which criteria should the compatibility with Directive 2009/73 of such State intervention in the price of the supply of natural gas to final consumers be assessed?In particular:To what extent and under what conditions does Article 106(2) TFEU in conjunction with Article 3(2) of Directive 2009/73 allow the Member States, by intervening in prices for the supply of natural gas to final consumers, to pursue objectives other than maintaining the price of supply at a reasonable level, such as security of supply and territorial cohesion?Having regard in particular to the objectives of security of supply and territorial cohesion, does Article 3(2) of Directive 2009/73 allow a Member State to intervene in fixing the price of the supply of natural gas on the basis of the principle that the incumbent supplier’s costs are covered in full, and may the costs intended to be covered by the tariffs include components other than the portion representing long-term supply?’ Consideration of the questions referred 23By its questions the referring court essentially asks whether a system of regulated tariffs for the sale of natural gas such as that at issue in the main proceedings is compatible with Directive 2009/73 and Article 106(2) TFEU.24As a preliminary point, it should be noted that the Court has previously had occasion, in its judgment of 20 April 2010 in Federutility and Others (C‑265/08, EU:C:2010:205), to outline a framework for analysis enabling the relevant national court to assess the compatibility with EU law of State intervention in prices, specifically in the natural gas sector. In that judgment and the subsequent case-law the Court gave some guidance as to the criteria on which such an assessment must be based, and it is in line with that case-law that the questions raised by the referring court should be examined (see judgments of 21 December 2011, Enel Produzione, C‑242/10, EU:C:2011:861, and 10 September 2015, Commission v Poland, C‑36/14, not published, EU:C:2015:570). Question 1 25By its first question the referring court essentially asks whether Article 3(1) of Directive 2009/73 must be interpreted as meaning that intervention by a Member State consisting in requiring certain suppliers, including the incumbent supplier, to offer to supply natural gas to final consumers at regulated tariffs, but not precluding competing offers from being made at lower prices than those tariffs by any supplier in the market, constitutes by its very nature an obstacle to the achievement of a competitive market in natural gas as provided for in that provision.26Although it does not follow from any provision of Directive 2009/73 that the price of supply of natural gas must be fixed exclusively by the play of supply and demand, that requirement follows from the very purpose and general scheme of the directive, the aim of which is to pursue the achievement of an internal market in natural gas that is entirely and effectually open and competitive and in which all consumers can freely choose their suppliers and all suppliers can freely supply their products to their customers (see, to that effect, judgment of 10 September 2015, Commission v Poland, C‑36/14, not published, EU:C:2015:570, paragraph 45).27It should be recalled here that a public measure of intervention in sale prices of natural gas is a measure which by its very nature constitutes an obstacle to the achievement of an operational internal market in gas (see judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 35).28In the present case, the French legislation at issue in the main proceedings provides for State intervention consisting in requiring certain undertakings to offer natural gas in the market, to certain categories of customers, at prices that derive from a calculation performed in accordance with criteria and with the use of tables drawn up by the public authorities.29The tariffs established pursuant to that legislation are regulated prices which are not in any way the result of a free determination deriving from the play of supply and demand in the market. Quite the contrary, those tariffs are the result of a determination made on the basis of criteria imposed by the public authorities, which is thus outside the dynamics of market forces.30As the Advocate General observes in point 31 of his Opinion, a measure which requires a product or service to be offered on the market at a determined price necessarily influences the freedom of the undertakings concerned to act in the market in question and hence the process of competition in that market. Such a measure is by its very nature contrary to the objective of achieving an open and competitive market.31It follows that a determination of tariffs resulting from intervention by the public authorities necessarily affects the play of competition and that legislation such as that at issue in the main proceedings is therefore contrary to the achievement of an open, competitive market in natural gas as provided for in Article 3(1) of Directive 2009/73.32Moreover, as the Advocate General observes in point 35 of his Opinion, the fact that the undertakings concerned by the regulated tariffs can also freely determine what they offer in the market cannot call into question the finding that the State intervention at issue in the main proceedings affects the play of competition. The mere existence of two segments of the market, namely the segment in which prices are established outside the play of competition and the segment in which their determination is left to market forces, is incompatible with the creation of an internal market in natural gas that is open and competitive. It should be added that the French Government’s argument that the regulated tariffs play the part of a reference ceiling for fixing the prices of the other suppliers who are not concerned by the legislation at issue in the main proceedings supports the view that those tariffs actually affect the free determination of prices in the whole of the French natural gas market.33In the light of the foregoing, the answer to Question 1 is that Article 3(1) of Directive 2009/73 must be interpreted as meaning that intervention by a Member State consisting in requiring certain suppliers, including the incumbent supplier, to offer to supply natural gas to final consumers at regulated tariffs constitutes by its very nature an obstacle to the achievement of a competitive market in natural gas as provided for in that provision, and that obstacle exists even though the intervention does not preclude competing offers from being made at lower prices than those tariffs by any supplier in the market. Question 2 34By its second question the referring court essentially seeks clarification of the criteria to be taken into account for assessing whether the legislation at issue in the main proceedings is compatible with Article 3(2) of Directive 2009/73.35It should be noted, as a preliminary point, that the guidelines on the permissibility of State intervention consisting in the regulation of prices, set out in the judgment of 20 April 2010 in Federutility and Others (C‑265/08, EU:C:2010:205), with respect to Article 3(2) of Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC (OJ 2003 L 176, p. 57), are also valid with respect to Article 3(2) of Directive 2009/73, as that provision has not been amended in so far as it applies to the main proceedings (see judgment of 10 September 2015, Commission v Poland, C‑36/14, not published, EU:C:2015:570, paragraph 53).36Thus although State intervention in the fixing of the price of supply of natural gas to the final consumer constitutes an obstacle to the achievement of a competitive natural gas market, that intervention may none the less be accepted within the framework of Directive 2009/73 if three conditions are satisfied. First, the intervention must pursue an objective of general economic interest, secondly, it must comply with the principle of proportionality, and, thirdly, it must lay down public service obligations that are clearly defined, transparent, non-discriminatory and verifiable, and guarantee equal access of EU gas undertakings to consumers (see, to that effect, judgments of20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraphs 20 to 22 and 47, and 10 September 2015, Commission v Poland, C‑36/14, not published, EU:C:2015:570, paragraphs 51 to 53).37As regards the first condition, the existence of a general economic interest, the referring court asks to what extent and on what conditions a Member State may pursue objectives of general economic interest other than that of maintaining the price of supply at a reasonable level, accepted by the Court in the judgment of 20 April 2010 in Federutility and Others (C‑265/08, EU:C:2010:205).38Directive 2009/73 gives no definition of the condition relating to general economic interest, but the reference in Article 3(2) of that directive both to that condition and to Article 106 TFEU, which concerns undertakings entrusted with the management of a service of general economic interest, means that that condition should be interpreted in the light of that provision of the Treaty (see, to that effect, judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 26).39The Court has pointed out that Article 106(2) TFEU provides, first, that undertakings entrusted with the operation of services of general economic interest are subject to the rules on competition in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them, and, secondly, that the development of trade must not be affected to an extent contrary to the interests of the Union (judgment of 20 April 2010 in Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 27).40As the Advocate General observes in point 44 of his Opinion, the interpretation of the condition relating to general economic interest must be set in the new context following from the entry into force of the Treaty of Lisbon, which includes, as well as Article 106 TFEU, Article 14 TFEU, Protocol (No 26) on services of general interest, annexed to the EU Treaty, as amended by the Treaty of Lisbon, and the FEU Treaty (‘Protocol No 26’), and the Charter of Fundamental Rights of the European Union, which has acquired the same legal value as the Treaties, in particular Article 36 of the Charter on access to services of general economic interest.41In particular, Protocol No 26 expressly recognises the essential role and the wide discretion of the authorities of the Member States in providing, commissioning and organising services of general economic interest.42With respect specifically to the natural gas sector, the second sentence of recital 47 of Directive 2009/73 states that public service obligations should be defined at national level, taking into account national circumstances, while EU law must, however, be respected by the Member States.43In that context, Article 106(2) TFEU aims to reconcile the Member States’ interest in using certain undertakings as an instrument of economic or social policy with the EU’s interest in ensuring compliance with the rules on competition and preserving the unity of the internal market (see, to that effect, judgments of 21 September 1999, Albany, C‑67/96, EU:C:1999:430, paragraph 103, and 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 28).44The Court has explained that the Member States are entitled, while complying with EU law, to define the scope and organisation of their services of general economic interest. They may in particular take account of objectives pertaining to their national policy (see, to that effect, judgments of 21 September 1999, Albany, C‑67/96, EU:C:1999:430, paragraph 104, and 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 29).45In this respect, the Court has stated that, in the assessment which the Member States must carry out, in accordance with Directive 2009/73, to determine whether, in the general economic interest, public service obligations should be imposed on undertakings operating in the gas sector, it is for the Member States to reconcile the objective of liberalisation with the other objectives pursued by the directive (see, to that effect, judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 32).46In the present case, the referring court specifically mentions the objectives of security of supply and territorial cohesion, as relied on by the French Government, as objectives of general economic interest pursued by the legislation at issue in the main proceedings.47As regards security of supply, that objective is expressly envisaged at the level of primary EU law and by Directive 2009/73.48As the Advocate General observes in point 56 of his Opinion, Article 194(1)(b) TFEU identifies security of energy supply in the EU as one of the fundamental objectives of EU policy in the field of energy. As regards specifically the field of natural gas, it may be seen from several recitals and articles of Directive 2009/73 that the directive expressly envisages security of energy supply as one of its basic purposes.49By contrast, territorial cohesion is not expressly envisaged by Directive 2009/73 as an objective of general economic interest which could justify imposing public service obligations in the field of natural gas.50However, it should be noted, first, as the Advocate General states in points 52 to 54 of his Opinion, that Article 3(2) of Directive 2009/73 contains a non-exhaustive list of things which may the subject of public service obligations, and that the Member States remain free, in compliance with EU law, to define which objectives of general economic interest they wish to pursue by imposing public service obligations. Those obligations must, however, always be aimed at attaining one or more objectives of general economic interest.51Secondly, as the Advocate General states in point 57 of his Opinion, Article 14 TFEU expressly recognises the role of services of general economic interest in promoting the territorial cohesion of the EU. Moreover, Article 36 of the Charter of Fundamental Rights of the European Union expressly mentions territorial cohesion in connection with the right of access to services of general economic interest.52It follows that EU law, in particular Article 3(2) of Directive 2009/73, read in the light of Articles 14 TFEU and 106 TFEU, allows the Member States to assess whether, in the general economic interest, public service obligations relating to the price of supply of natural gas should be imposed on undertakings operating in the gas sector, in particular in order to ensure security of supply and territorial cohesion, provided that the other conditions laid down by that directive are satisfied.53As regards the second condition mentioned in paragraph 36 above, compliance with the principle of proportionality, it follows from the very wording of Article 106 TFEU that the public service obligations which Article 3(2) of Directive 2009/73 allows to be imposed on undertakings must comply with the principle of proportionality and, therefore, that those obligations may, from 1 July 2007, compromise the freedom to determine the price of supply of natural gas only in so far as is necessary to achieve the objective of general economic interest which they pursue and, consequently, for a period that is necessarily limited in time (see, to that effect, judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 33).54While it is for the referring court to assess in the main proceedings whether that requirement of proportionality is satisfied, it is, however, for the Court to provide that court, on the basis of the information available, with all the necessary indications for that purpose from the point of view of EU law (see, to that effect, judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 34).55Compliance with the principle of proportionality means, first, that the measure in question must be appropriate for securing the objective of general economic interest which it pursues (judgment of 21 December 2011, Enel Produzione, C‑242/10, EU:C:2011:861, paragraph 55).56On this point, the referring court provides very little information for assessing why the imposition of gas prices should be necessary for the achievement of very general objectives such as those relied on by the French Government.57In particular, as regards the objective of security of supply, the referring court essentially refers to the French Government’s argument that the incumbent supplier’s supply contracts, which are long-term contracts indexed to prices of oil products, ensure greater security of supply than the alternative suppliers’ contracts, which are affected by the instability of the price of gas on the wholesale market.58While it cannot be ruled out that legislation introducing an obligation to offer and supply natural gas at a determined price may be regarded as capable of ensuring security of supply, it is for the referring court, in the absence of precise elements of analysis put before the Court, to determine whether that is the case with respect to the legislation at issue in the main proceedings.59As regards the objective of territorial cohesion, while it does not appear to be ruled out that such an objective may be pursued by the imposition of regulated tariffs throughout national territory, it will be for the referring court to assess, in its analysis of whether the measure at issue in the main proceedings is capable of ensuring that objective, whether measures exist that also enable the objective to be attained but are less of a hindrance to the establishment of an open internal market in natural gas, such as the imposition of a price that applies only to certain categories of customers in remote areas identified according to objective geographical criteria.60Secondly, the Court has held that the duration of State intervention in prices must be limited to what is strictly necessary for achieving the objective pursued (judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraphs 33 and 35).61According to the information available to the Court, the legislation at issue in the main proceedings does not lay down any limit on the duration of the obligation to offer final customers a supply of natural gas at regulated prices, which makes that obligation a permanent one.62Fixing a maximum duration for the tariffs adopted cannot constitute such a limit, in so far as that mechanism relates only to a periodical review of the level of those tariffs and does not concern the need for and terms of the public intervention in prices according to developments in the gas market.63In any event, it is for the referring court to assess, in the light of the precise elements available to it, whether the imposition of an obligation such as that laid down in Article L. 410‑2 of the Code du commerce, which is essentially permanent, satisfies the requirement referred to in paragraph 55 above.64Thirdly, the method of intervention used must not go beyond what is necessary to achieve the objective of general economic interest being pursued (judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 36).65According to the order for reference, the intervention at issue in the main proceedings is based on the principle of covering all the costs of the incumbent supplier by applying a formula representing its costs of supply and a methodology for assessing its costs other than those of supply, drawn up following an annual analysis of the development of costs by the regulatory authority.66In this connection, the requirement of necessity means in principle that the component of the gas price must be identified in which intervention is necessary in order to achieve the objective pursued by the State intervention (see, by analogy, judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraphs 36 and 38). It is for the referring court to assess whether the method of intervention in prices used does not go beyond what is necessary for achieving the objectives of general economic interest pursued and whether there are no appropriate measures that are less restrictive.67Fourthly, the requirement of necessity must also be assessed with regard to the scope ratione personae of the measure in question and, more particularly, its beneficiaries (judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 39).68In this respect, it must be examined to what extent the State intervention at issue in the main proceedings benefits individuals and undertakings respectively as final consumers of gas.69In the present case, the legislation at issue in the main proceedings provides that from 1 January 2016 the beneficiaries of supplies at regulated prices are to be households and undertakings consuming less than 30000 kWh/year. It is for the referring court to ascertain whether such a system, which appears to benefit domestic customers and small- and medium-sized undertakings in the same way, complies with the requirement of proportionality with respect to the scope ratione personae of the measure, having regard to the objectives of security of supply and territorial cohesion.70As regards, finally, the third condition mentioned in paragraph 36 above, namely that the State intervention must lay down public service obligations that are clearly defined, transparent, non-discriminatory and verifiable, and guarantee equal access of EU gas undertakings to consumers, the referring court has provided no elements of analysis in this respect.71With respect in particular to whether the legislation at issue in the main proceedings is non-discriminatory, as the Advocate General observes in point 82 of his Opinion, Article 3(2) of Directive 2009/73 allows public service obligations to be imposed generally ‘on undertakings operating in the gas sector’, not on certain undertakings specifically. Moreover, Article 3(1) of the directive provides that the Member States ‘shall not discriminate’ between natural gas undertakings ‘as regards their rights or obligations’. In this framework, the system of designating undertakings responsible for public service obligations may not exclude a priori any of the undertakings operating in the gas distribution sector (see, to that effect, judgment of 19 June 2008 in Commission v France, C‑220/07, not published, EU:C:2008:354, paragraph 31).72It is for the referring court to assess whether that requirement and the other conditions mentioned in paragraph 66 above are satisfied by the application of the system of tariffs at issue in the main proceedings.73The answer to Question 2 is therefore that:Article 3(2) of Directive 2009/73, read in the light of Articles 14 TFEU and 106 TFEU and Protocol No 26, must be interpreted as allowing the Member States to assess whether, in the general economic interest, public service obligations relating to the price of supply of natural gas should be imposed on undertakings operating in the gas sector, in order in particular to ensure security of supply and territorial cohesion, provided that, first, all the conditions set out in Article 3(2) of the directive are satisfied, specifically the non-discriminatory nature of such obligations, and, secondly, that the imposition of those obligations complies with the principle of proportionality.Article 3(2) of Directive 2009/73 must be interpreted as not precluding a method of determination of prices based on taking costs into consideration, provided that the application of the method does not have the consequence that the State intervention goes beyond what is necessary for achieving the objectives of general economic interest pursued. Costs 74Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: 1. Article 3(1) of Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC must be interpreted as meaning that intervention by a Member State consisting in requiring certain suppliers, including the incumbent supplier, to offer to supply natural gas to final consumers at regulated tariffs constitutes by its very nature an obstacle to the achievement of a competitive market in natural gas as provided for in that provision, and that obstacle exists even though the intervention does not preclude competing offers from being made at lower prices than those tariffs by any supplier in the market. 2. Article 3(2) of Directive 2009/73, read in the light of Articles 14 TFEU and 106 TFEU and Protocol (No 26) on services of general interest, annexed to the EU Treaty, as amended by the Treaty of Lisbon, and the FEU Treaty, must be interpreted as allowing the Member States to assess whether, in the general economic interest, public service obligations relating to the price of supply of natural gas should be imposed on undertakings operating in the gas sector, in order in particular to ensure security of supply and territorial cohesion, provided that, first, all the conditions set out in Article 3(2) of the directive are satisfied, specifically the non-discriminatory nature of such obligations, and, secondly, that the imposition of those obligations complies with the principle of proportionality. Article 3(2) of Directive 2009/73 must be interpreted as not precluding a method of determination of prices based on taking costs into consideration, provided that the application of the method does not have the consequence that the State intervention goes beyond what is necessary for achieving the objectives of general economic interest pursued. [Signatures]( *1 ) Language of the case: French. | 20b19-aea7c02-415f | EN |
Since it delayed implementing the EU law relating to waste, Greece is ordered to pay a lump sum of €10 million and a penalty payment of €30 000 per day of delay | 7 September 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Environment — Directive 2006/12/EC — Directive 91/689/EEC — Directive 1999/31/EC — Waste management — Judgment of the Court establishing a failure to fulfil obligations — Non-implementation — Article 260(2) TFEU — Pecuniary penalties — Periodic penalty payment — Lump sum’In Case C‑584/14,ACTION under Article 260(2) TFEU for failure to fulfil obligations, brought on 18 December 2014, European Commission, represented by M. Patakia and E. Sanfrutos Cano and by D. Loma-Osorio Lerena, acting as Agents, with an address for service in Luxembourg,applicant,v Hellenic Republic, represented by E. Skandalou, acting as Agent, with an address for service in Luxembourg,defendant,THE COURT (Fifth Chamber),composed of J.L. da Cruz Vilaça, President of the Chamber, F. Biltgen, A. Borg Barthet (Rapporteur), E. Levits and M. Berger, Judges,Advocate General: E. Sharpston,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 25 February 2016,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1By its action, the European Commission claims that the Court should:—declare that, by failing to adopt the measures necessary to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), the Hellenic Republic has failed to fulfil its obligations under Article 260(1) TFEU,order the Hellenic Republic to pay the Commission a penalty payment of EUR 72864 per day of delay in complying with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), from the date of delivery of the present judgment until the date of full compliance with the judgment 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543),order the Hellenic Republic to pay the Commission a lump sum payment of EUR 8 096 per day, from the date of delivery of the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), until that of the present judgment or until that of full compliance with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), if the latter is implemented earlier,order the Hellenic Republic to pay the costs. Legal context Directive 75/442/EEC 2The essential objective of Council Directive 75/442/EEC of 15 July 1975 on waste (OJ 1975 L 194, p. 39), as amended by Council Directive 91/156/EEC of 18 March 1991 (OJ 1991 L 78, p. 32) (‘Directive 75/442’) was the protection of human health and the environment against harmful effects caused by the collection, transport, treatment, storage and tipping of waste.3According to Article 3(1) of Directive 75/442:‘Member States shall take appropriate measures to encourage:(a)first, the prevention or reduction of waste production and its harmfulness ……(b)secondly:the recovery of waste by means of recycling, re-use or reclamation or any other process with a view to extracting secondary raw materialsorthe use of waste as a source of energy.’4Article 4 of Directive 75/442 provided:‘Member States shall take the necessary measures to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods which could harm the environment, and in particular:without risk to water, air, soil and plants and animals,without causing a nuisance through noise or odours,without adversely affecting the countryside or places of special interest.Member States shall also take the necessary measures to prohibit the abandonment, dumping or uncontrolled disposal of waste.’5Article 5 of Directive 75/442 provided:‘(1) Member States shall take appropriate measures, in cooperation with other Member States where this is necessary or advisable, to establish an integrated and adequate network of disposal installations, taking account of the best available technology not involving excessive costs. The network must enable the Community as a whole to become self‐sufficient in waste disposal and the Member States to move towards that aim individually, taking into account geographical circumstances or the need for specialised installations for certain types of waste.(2) The network must also enable waste to be disposed of in one of the nearest appropriate installations, by means of the most appropriate methods and technologies in order to ensure a high level of protection for the environment and public health.’6Under the first paragraph of Article 7(1) of Directive 75/442:‘In order to attain the objectives referred to in Articles 3, 4 and 5, the competent authority or authorities referred to in Article 6 shall be required to draw up as soon as possible one or more waste management plans. Such plans shall relate in particular to:the type, quantity and origin of waste to be recovered or disposed of,general technical requirements,any special arrangements for particular wastes,suitable disposal sites or installations.’7Article 8 of Directive 75/442 was worded as follows:‘Member States shall take the necessary measures to ensure that any holder of waste:has it handled by a private or public waste collector or by an undertaking which carries out the operations listed in Annex II A or II B;recovers or disposes of it himself in accordance with the provisions of this Directive.’8The repeal of Directive 75/442 by Directive 2006/12/EC of the European Parliament and of the Council of 5 April 2006 on waste (OJ 2006 L 114, p. 9), which entered into force on 17 May 2006, has no effect on the present action for failure to fulfil obligations. The latter directive, which, in order to clarify matters, codifies Directive 75/442, reproduces the provisions referred to in paragraphs 3 to 7 of the present judgment. Moreover, the first paragraph of Article 20 of Directive 2006/12 provides that Directive 75/442 ‘is hereby repealed, without prejudice to Member States’ obligations relating to the time‐limits for transposition into national law set out in Annex III, Part B’. Directive 91/689/EEC 9Council Directive 91/689/EEC of 12 December 1991 on hazardous waste (OJ 1991 L 377, p. 20) was intended, according to Article 1 thereof, to approximate the laws of the Member States on the controlled management of hazardous waste.10Under Article 1(2) of that directive:‘Subject to … Directive [91/689], Directive 75/442 … shall apply to hazardous waste.’11Article 6(1) of that directive provided:‘As provided in Article 7 of Directive 75/442/EEC, the competent authorities shall draw up, either separately or in the framework of their general waste management plans, plans for the management of hazardous waste and shall make these plans public.’12Directive 91/689 was repealed by Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (OJ 2008 L 312, p. 3). Article 6(1) of Directive 91/689 is reproduced, in essence, by Article 28 of Directive 2008/98. Directive 1999/31/EC 13In accordance with Article 1(1) thereof, the aim of Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste (OJ 1999 L 182, p. 1) is to provide for measures, procedures and guidance to prevent or reduce as far as possible negative effects on the environment during the whole life-cycle of the landfill.14Under Article 2(g) of that directive:‘For the purposes of this Directive:(g)“landfill” means a waste disposal site for the deposit of the waste onto or into land (i.e. underground), including:… a permanent site (i.e. more than one year) which is used for temporary storage of waste…’15Article 3(1) of that directive provides:‘Member States shall apply … Directive [1999/31] to any landfill as defined in Article 2(g).’16Article 6 of Directive 1999/31 is worded as follows:‘Member States shall take measures in order that:only waste that has been subject to treatment is landfilled. This provision may not apply to inert waste for which treatment is not technically feasible, nor to any other waste for which such treatment does not contribute to the objectives of this Directive, as set out in Article 1, by reducing the quantity of the waste or the hazards to human health or the environment;only hazardous waste that fulfils the criteria set out in accordance with Annex II is assigned to a hazardous landfill;(c)landfill for non-hazardous waste may be used for:(i)municipal waste;(ii)non-hazardous waste of any other origin, which fulfil the criteria for the acceptance of waste at landfill for non-hazardous waste set out in accordance with Annex II;(iii)stable, non-reactive hazardous wastes (e.g. solidified, vitrified), with leaching behaviour equivalent to those of the non-hazardous wastes referred to in point (ii), which fulfil the relevant acceptance criteria set out in accordance with Annex II. These hazardous wastes shall not be deposited in cells destined for biodegradable non-hazardous waste,(d)inert waste landfill sites shall be used only for inert waste.17According to Article 7 of that directive:‘Member States shall take measures in order that the application for a landfill permit must contain at least particulars of the following:the identity of the applicant and of the operator when they are different entities;the description of the types and total quantity of waste to be deposited;the proposed capacity of the disposal site;the description of the site, including its hydrogeological and geological characteristics;(e)the proposed methods for pollution prevention and abatement;(f)the proposed operation, monitoring and control plan;the proposed plan for the closure and after-care procedures;(h)where an impact assessment is required under Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment [(OJ 1985 L 175, p. 40)], the information provided by the developer in accordance with Article 5 of that Directive;the financial security by the applicant, or any other equivalent provision, as required under Article 8(a)(iv) of this Directive.Following a successful application for a permit, this information shall be made available to the competent national and Community statistical authorities when requested for statistical purposes.’18Article 8 of that directive provides:the competent authority does not issue a landfill permit unless it is satisfied that:without prejudice to Article 3(4) and (5), the landfill project complies with all the relevant requirements of this Directive, including the Annexes;the management of the landfill site will be in the hands of a natural person who is technically competent to manage the site; professional and technical development and training of landfill operators and staff are provided;the landfill shall be operated in such a manner that the necessary measures are taken to prevent accidents and limit their consequences;(iv)adequate provisions, by way of a financial security or any other equivalent, on the basis of modalities to be decided by Member States, has been or will be made by the applicant prior to the commencement of disposal operations to ensure that the obligations (including after-care provisions) arising under the permit issued under the provisions of this Directive are discharged and that the closure procedures required by Article 13 are followed. This security or its equivalent shall be kept as long as required by maintenance and after-care operation of the site in accordance with Article 13(d). Member States may declare, at their own option, that this point does not apply to landfills for inert waste;the landfill project is in line with the relevant waste management plan or plans referred to in Article 7 of Directive 75/442/EEC;prior to the commencement of disposal operations, the competent authority shall inspect the site in order to ensure that it complies with the relevant conditions of the permit. This will not reduce in any way the responsibility of the operator under the conditions of the permit.’19Article 9 of Directive 1999/31 states:‘Specifying and supplementing the provisions set out in Article 9 of Directive 75/442/EEC and Article 9 of Directive 96/61/EC, the landfill permit shall state at least the following:the class of the landfill;the list of defined types and the total quantity of waste which are authorised to be deposited in the landfill;requirements for the landfill preparations, landfilling operations and monitoring and control procedures, including contingency plans (Annex III, point 4.B), as well as provisional requirements for the closure and after-care operations;the obligation on the applicant to report at least annually to the competent authority on the types and quantities of waste disposed of and on the results of the monitoring programme as required in Articles 12 and 13 and Annex III.’20Article 13 of Directive 1999/31 provides:‘Member States shall take measures in order that, in accordance, where appropriate, with the permit:a landfill or part of it shall start the closure procedure:when the relevant conditions stated in the permit are met;under the authorisation of the competent authority, at the request of the operator;by reasoned decision of the competent authority;a landfill or part of it may only be considered as definitely closed after the competent authority has carried out a final on-site inspection, has assessed all the reports submitted by the operator and has communicated to the operator its approval for the closure. This shall not in any way reduce the responsibility of the operator under the conditions of the permit;after a landfill has been definitely closed, the operator shall be responsible for its maintenance, monitoring and control in the after-care phase for as long as may be required by the competent authority, taking into account the time during which the landfill could present hazards.The operator shall notify the competent authority of any significant adverse environmental effects revealed by the control procedures and shall follow the decision of the competent authority on the nature and timing of the corrective measures to be taken;for as long as the competent authority considers that a landfill is likely to cause a hazard to the environment and without prejudice to any Community or national legislation as regards liability of the waste holder, the operator of the site shall be responsible for monitoring and analysing landfill gas and leachate from the site and the groundwater regime in the vicinity of the site in accordance with Annex III.’21In accordance with Article 14 of Directive 1999/31:‘Member States shall take measures in order that landfills which have been granted a permit, or which are already in operation at the time of transposition of this Directive, may not continue to operate unless the steps outlined below are accomplished as soon as possible and within eight years after the date laid down in Article 18(1) at the latest:with a period of one year after the date laid down in Article 18(1), the operator of a landfill shall prepare and present to the competent authorities, for their approval, a conditioning plan for the site including the particulars listed in Article 8 and any corrective measures which the operator considers will be needed in order to comply with the requirements of this Directive with the exception of the requirements in Annex I, point 1;following the presentation of the conditioning plan, the competent authorities shall take a definite decision on whether operations may continue on the basis of the said conditioning plan and this Directive. Member States shall take the necessary measures to close down as soon as possible, in accordance with Article 7(g) and 13, sites which have not been granted, in accordance with Article 8, a permit to continue to operate;on the basis of the approved site-conditioning plan, the competent authority shall authorise the necessary work and shall lay down a transitional period for the completion of the plan. Any existing landfill shall comply with the requirements of this Directive with the exception of the requirements in Annex I, point 1 within eight years after the date laid down in Article 18(1);within one year after the date laid down in Article 18(1), Articles 4, 5, and 11 and Annex II shall apply to landfills for hazardous waste;within three years after the date laid down in Article 18(1), Article 6 shall apply to landfills for hazardous waste.’ The judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published,EU:C:2009:543) 22In the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), the Court upheld the infringement proceedings brought by the Commission under Article 226 EC, now Article 258 TFEU, and held that:‘by failing to draw up and adopt within a reasonable period a hazardous-waste management plan that accords with the requirements of the relevant Community legislation, and by failing to establish an integrated and adequate network of disposal installations for hazardous waste characterised by the most appropriate methods in order to ensure a high level of protection for the environment and public health.by failing to take all the necessary measures to ensure, as regards the management of hazardous waste, compliance with Articles 4 and 8 of Directive 2006/12, and Articles 3(1), 6 to 9, 13 and 14 of Directive 1999/31,the Hellenic Republic has failed to fulfil its obligations under, first, Articles 1(2) and 6 of Council Directive 91/689, read in conjunction with Articles 5(1) and (2) and 7(1) of Directive 2006/12, second, Article 1(2) of Directive 91/689, read in conjunction with the provisions of Articles 4 and 8 of Directive 2006/12, and, third, Articles 3(1), 6 to 9, 13 and 14 of Directive 1999/31.’ The pre-litigation procedure under Article 260(2) TFEU 23In the course of monitoring compliance with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), on 5 October 2009, the services of the Commission requested from the Greek authorities information about the measures taken for its implementation. On 22 June 2011, the Commission requested those authorities to inform it every six months about the progress made in the implementation of that judgment and to accompany that information with a complete and up-dated calendar.24The Greek authorities responded to the Commission with letters of 24 November 2009, 2 March 2010, 16 May and 22 December 2011 and 3 July 2012.25After examining all the information provided by the Greek authorities, the Commission, since it considered that the Hellenic Republic had not yet taken all the measures necessary in order to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), requested that Member State, by letter of formal notice of 25 January 2013, to submit its observations in that regard within two months.26The Hellenic Republic replied to that letter of formal notice by letters of 22 March and 19 August 2013.27Since it considers that the Hellenic Republic failed to take, within the time limit prescribed, all the necessary measures to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), the Commission brought the present action. The failure to fulfil obligations Arguments of the parties 28The Commission invokes three heads of claim in support of its action.29Concerning the first head of claim relating to the preparation and adoption of a plan for the management of hazardous waste, in accordance with Article 1(2) and Article 6(1) of Directive 91/689, read in conjunction with Article 7(1) of Directive 2006/12, the Commission notes that, despite the fact that some of the criteria set out in the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), appear to have been reproduced in the Greek legislation, in particular in circular 18/2011, and that maps allow the different hazardous waste treatment installations to be clearly located, the plan has still, for various reasons, not been approved and the Greek authorities have not yet set out a timetable in that regard.30The Commission also points out that 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 to transpose a directive (judgment of 10 September 2009 in Commission v Greece, C‑286/08, not published, EU:C:2009:543, paragraph 51 and the case-law cited). Accordingly, a circular cannot replace a ministerial decree.31Concerning the second head of claim relating to the lack of an adequate integrated network of hazardous waste disposal installations, which use the most appropriate methods in order to ensure a high level of protection of the environment and public health, in accordance with Article 1(2) of Directive 91/689, read in conjunction with Article 5 of Directive 2006/12, the Commission claims that, despite the existence of certain hazardous waste treatment installations and of certain decisions to grant authorisations for the others, the network cannot be regarded as ‘adequate and integrated’ within the meaning of those provisions.32The Commission notes, first, that the Greek authorities acknowledge that 33% of the hazardous waste is not managed appropriately.33It states, secondly, that the national hazardous waste management plan was not approved by a joint ministerial decree and that, therefore, the medium-term measures have not yet been communicated to it.34The Commission notes moreover that, given that the difficult economic environment not permitting waste producers or other investors to invest in the creation of hazardous waste management facilities, the obligation on the part of those producers and investors to create those installations is not respected. In that regard, the Commission points out that the Greek authorities consider that another solution is applicable, namely the recognition of a public entity which can be entrusted with the construction of landfills for hazardous waste.35As regards, finally, the third head of claim relating to the measures which must be taken in order to ensure, concerning hazardous waste management, compliance with Articles 4 and 8 of Directive 2006/12 and with Article 3(1) and Articles 6 to 9, 13 and 14 of Directive 1999/31, the Commission claims that since the Hellenic Republic has not yet established the integrated and adequate network of installations for the disposal of hazardous waste, it cannot, consequently, be in a position to correctly manage that type of waste.36According to the Commission, that is apparent not only from the fact that a significant proportion of the waste, namely 33% of it, is still not treated, but also from the existence of ‘historical waste’.37The Commission also notes that the Hellenic Republic could help alleviate the problem of the presence of ‘historical waste’ or even of the production of new waste if it exported, for a transitional period, hazardous waste to installations located in the territory of other Member States. However, it seems that the total production of hazardous waste for 2011 amounts to 184863.50 tonnes, that the ‘historical waste’ represents approximately 323452.40 tonnes and that exports are limited to 5147.40 tonnes.38The Hellenic Republic contends that the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), has for the most part been implemented.39In that regard, the study of the revised national waste management plan was completed and published on the internet site of the Ministry of Productive Reconstruction, Environment and Energy (Ypapen). That plan defines the policy, strategies and objectives of national waste management and determines the appropriate measures and actions necessary in order to comply with the provisions of Directive 2008/98. In the context of that plan, the national hazardous waste management plan was updated.40The Hellenic Republic notes that, for the purposes of assessing the impact of the national waste management plan on the environment, a strategic environmental assessment is currently being carried out. Once that strategic environmental assessment is completed, the revised national waste management plan and, consequently, the updated national hazardous waste management plan will be adopted and immediately sent to the Commission.41As regards the 33% proportion of the total waste products which is not subject to integrated and appropriate management, the Hellenic Republic states that, in accordance with the updated national hazardous waste management plan, that proportion concerns ‘unregistered management covering the remainder of the annual production of waste as evaluated at the final stage of the treatment, a proportion in respect of which there is no sufficient data’. It is apparent from the management data that, in the case of hazardous industrial waste, 30% of that waste is stored in production installations pending further treatment, whereas a similar quantity of waste, approximately 37%, was subject to valuation.42Concerning the hazardous waste management infrastructure, the Hellenic Republic contends that there are currently in operation three systems relating to waste batteries and vehicle batteries and to industrial waste, one system relating to waste oils and one system relating to end-of-life vehicles. It states that, on its territory, all of the waste oils collected are sent to regeneration installations, of which there were nine in 2013, and that waste oils are imported so as to cover the needs of those installations. Moreover, during that year, seven installations for the recycling of batteries and lead-acid batteries were identified, those installations broadly covering the needs of the country, and waste is also imported in that case. As regards the decontamination/dismantling of end-of-life vehicle installations, there were 120 of them in 2013. Furthermore, five sterilisation units and one unit for the incineration of hazardous waste from health units were in operation in Greece.43Regarding the recent data on the environmental authorisation granted to hazardous waste management installations, the Hellenic Republic states that the following are currently under examination: the project file concerning the construction and the financing of a landfill site for hazardous asbestos waste, the file relating to a unit for the incineration of hazardous waste from health units in the industrial area of Tripoli (Greece), the revision file relating to the construction of a unit for the neutralisation of lead slag and the file on the construction and operation of a landfill site for waste (sludge from units for the physico-chemical treatment of waste water, namely an estimated 130000 tonnes of ‘historical waste’ in 2010), on the land of the industrial unit of the company Anonymi Elliniki Etaireia Halyva (AEEX) which operates in Ionia (Greece) (as a support project of the industrial unit).44As regards the landfill sites for hazardous waste and/or the landfill sites for hazardous waste containing a pre-treatment of hazardous waste installation, a protocol for cooperation between and the Ypapen and the Ministry of National Defence was signed, in order to put in place different measures.45As regards the management of ‘historical waste’, the Hellenic Republic states that the implementation of a project involving the inventory and classification of contaminated sites, the assessment of the effect on receptors, the guide for the identification, registration and assessment of risks presented by the sites and the compilation of a database of contaminated sites is currently ongoing. It notes that the sites examined include the areas for disposal of hazardous ‘historical waste’.46It states that the actions provided for in the revised national hazardous waste management plan include several categories of measures such as organisational and administrative measures, projects for the development of management infrastructure, improvements of/extensions to and development of networks for the collection, transhipment and transport of waste, financial measures and information, awareness and educational measures, implementation of which will allow full compliance with the requirements of Directives 2008/98 and 1999/31. Findings of the Court 47The first point to be noted is that, since the TFEU abolished the reasoned opinion stage in infringement proceedings under Article 260(2) TFEU, the reference date for assessing whether there has been such an infringement is the deadline set in the letter of formal notice issued in accordance with the first subparagraph of Article 260(2) TFEU (judgment of 2 December 2014 in Commission v Italy, C‑196/13, EU:C:2014:2407, paragraph 45 and the case-law cited).48In the present case, since the Commission issued a letter of formal notice on 25 January 2013, the reference date for assessing whether there has been a failure to fulfil obligations is the expiry of the deadline prescribed in that letter, namely 25 March 2013.49It is not contested that, on that date, the Hellenic Republic had not implemented the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543).50In the first place, concerning the Commission’s head of claim alleging an infringement of Article 1(2) and Article 6(1) of Directive 91/689, read in conjunction with Article 7(1) of Directive 2006/12, the Hellenic Republic itself acknowledged at the hearing that, although the plan for the management of hazardous waste had been approved, it had however not yet been adopted. Therefore, on the reference date for the finding of a failure to fulfil obligations, namely 25 March 2013, it is not disputed that the Hellenic Republic had not adopted the plan for the management of hazardous waste, in accordance with Article 1(2) and Article 6(1) of Directive 91/689, read in conjunction with Article 7(1) of Directive 2006/12. Therefore, the first head of claim is well founded.51Concerning, in the second place, the head of claim alleging a failure to comply with Article 5 of Directive 2006/12, according to which the integrated and adequate network of installations for the disposal of hazardous waste established by the Member States, in cooperation with other Member States, ‘must enable the [Union] as a whole to become self‐sufficient in waste disposal and the Member States to move towards that aim individually’, the Hellenic Republic acknowledges that the projects for hazardous waste management infrastructure within the country are still being considered. In those circumstances, the second head of claim is also well founded.52Concerning, in the third place, the head of claim relating to the measures which need to be taken in order to ensure, as regards the management of hazardous waste, compliance with Articles 4 and 8 of Directive 2006/12 and with Article 3(1) and Articles 6 to 9, 13 and 14 of Directive 1999/31, the Hellenic Republic merely draws attention to the measures which are currently being implemented in order to comply with those provisions. It is however not disputed that, at the expiry of the deadline set in the letter of formal notice, the Hellenic Republic failed to manage the hazardous waste and also the ‘historical waste’, in accordance with the requirements of Directives 1999/31 and 2006/12. Therefore, the third head of claim is well founded.53As regards the Hellenic Republic’s argument concerning the difficulties it had been facing in complying with the obligations at issue, it should be noted that, since a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations arising under EU law, that argument cannot be accepted (judgment of 15 October 2015 in Commission v Greece, C‑167/14, not published, EU:C:2015:684, paragraph 35 and the case-law cited).54In those circumstances, it must be stated that, by failing to take all the measures necessary to comply with the judgment in Commission v Greece (C‑286/08, not published, EU:C:2009:543), the Hellenic Republic has failed to fulfil its obligations under Article 260(1) TFEU. The financial penalties 55The Commission claims that the payment of both a penalty payment and a lump sum should be ordered, on the ground that the imposition of a penalty payment alone, under Article 260 TFEU, is not a sufficient inducement to Member States to comply with their obligations without delay following the establishment of a failure to fulfil obligations under Article 258 TFEU.56As regards the amount of the penalty payment and the lump sum, the Commission bases its approach on its Communication of 13 December 2005, entitled ‘Application of Article [260 TFEU]’ (SEC(2005) 1658), as updated by the Commission Communication C(2014) 6767 final of 17 September 2014, entitled ‘Updating of data used to calculate lump sum and penalty payments to be proposed by the Commission to the Court of Justice in infringement proceedings’ (‘the Commission Communication of 13 December 2005’). The penalty payment Arguments of the parties57Under point 6 of the Commission Communication of 13 December 2005, the amount of the penalty payment to be proposed is based on three basic criteria, namely the seriousness of the infringement, the duration thereof and the need to ensure that the penalty itself is a deterrent.58The Commission states that the amount of the daily penalty payment which it proposes is calculated by multiplying a standard flat-rate amount by coefficients for seriousness and duration, the result obtained being multiplied by a fixed factor per country taking into account both the capacity of the Member State concerned to pay and the number of voting rights it has in the Council of the European Union.59Concerning the seriousness of the infringement found, the Commission claims that, in the light of, in the first place, the importance of the rules of EU law which have been infringed, in the second place, the consequences of that infringement for public and private interests, such as, in particular, the high risk environmental pollution, the detrimental effects for health and the proper functioning of economic activity of the country, in the third place, the attenuating circumstance consisting in the creation of specific criteria for the selection of appropriate sites and of the annual inventory of hazardous waste, but also of the aggravating circumstance relating to the small amount of progress made so far and to the hazardousness of the waste, in the fourth place, the clarity of the provisions infringed and, in the last place, the repeated unlawful conduct of the Hellenic Republic concerning compliance with EU rules in the area of waste, a coefficient for seriousness of 10 is appropriate.60As regards the duration of the infringement, the Commission claims that the decision to initiate the proceedings was taken on 25 September 2014, that is to say 60 months after the delivery of the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), which justifies the application of the maximum coefficient for duration of 3.61As regards the coefficient relating to the defendant Member State’s ability to pay, known as the ‘n’ factor, the Commission states that its communication of 13 December 2005 fixes that coefficient at 3.68 for the Hellenic Republic.62The Commission notes that, according to the formula set out in paragraph 58 of the present judgment, the daily periodic penalty payment is to be equal to the standard flat-rate amount of EUR 660 multiplied by the coefficient for seriousness, the coefficient for duration and the ‘n’ factor. Accordingly, in the present case, it proposes the imposition of a daily penalty payment of EUR 72864 (660 x 10 x 3 x 3.68).63However, that institution proposes a decreasing daily penalty payment, calculated every six months, in order to take account of the progress made in complying with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543). Therefore, in order to ensure the degressivity of the penalty payment, it proposes to review compliance in relation to the three heads of claim put forward, namely the approval of the management plan, the development of appropriate infrastructure and the proper management of historical waste provisionally stored in sites not designated for that purpose. Therefore, the amount of the daily penalty payment is divided into three categories corresponding to the Commission’s three heads of claim, which amounts, in respect of the first category, to 30% of the total amount of the penalty payment, namely EUR 21859.20, and, in respect of the second and third categories, to 35% each, of the total amount thereof, namely EUR 25502.40 in respect of each category.64In accordance with that method of calculation, the daily penalty payment is thus reduced by an amount of EUR 21859.20 when the new national management plan will have been approved, subject to the condition that it complies with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543). As regards the creation of appropriate networks for hazardous waste, the Commission proposes to spread the sum of EUR 25502.40 over the total volume of hazardous waste to be treated in the installations to be constructed and to deduct from the amount of the daily penalty payment, at the time of each commissioning of a hazardous waste treatment installation, the sum corresponding to the volume of waste that that new installation will be able to treat. As regards ‘historical waste’, the Commission intends to distribute the sum of EUR 25502.40 on the basis of the volumes of that waste defined in the new draft.65The Hellenic Republic contends that, taking into account the seriousness and duration of the infringement, the co-operation and the diligence which it has demonstrated throughout the proceedings and the progress made in complying with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), there are no grounds for imposing a penalty payment and lump sum in the present case. In the alternative, the Hellenic Republic contests the method used to calculate the amounts proposed.66That Member State considers that the amount of EUR 72864 claimed by the Commission as a penalty payment is excessively high and disproportionate to the seriousness of the infringement, the consequences of which for the environment and human health, which have not been concretely evaluated, are hypothetical.67Concerning the seriousness and duration of the infringement, the Commission’s proposal to apply a coefficient of 10 does not take account of the practical difficulties involved in complying with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543) or the fact that that judgment has already been partially implemented.68Moreover, in the light of the circumstances of the case, that penalty payment is disproportionate in relation to the duration of the infringement, and the reduced capacity to pay of the Hellenic Republic as a result of the economic crisis suffered by that Member State. The Hellenic Republic disputes also the Commission’s claims that it failed in the past, repeatedly, to fulfil its obligations in relation to the treatment of waste.69If the Court had to impose such a penalty payment, the Hellenic Republic requests that the part of the penalty payment attributed to each type of infringement be modified. That Member State proposes thereby that 70% of the amount of the penalty payment, namely EUR 51004.80, be allocated to the first category of infringements and 15% of the amount thereof, namely EUR 10929.60, respectively to the second and third categories of infringements.Findings of the Court70According to settled case-law, the imposition of a penalty payment is, in principle, justified only in so far as the failure to comply with an earlier judgment of the Court continues up to the time of the Court’s examination of the facts (judgment of 15 October 2015 in Commission v Greece, C‑167/14, not published, EU:C:2015:684, paragraph 47).71In the present case, it is not disputed that, on the date of the hearing, the Hellenic Republic had not yet adopted a specific plan for the management of hazardous waste, established an integrated and adequate network of installations for the disposal of hazardous waste or implemented a management of ‘historical waste’ which complies with the provisions of EU law.72In those circumstances, the Court considers that the imposition of a penalty payment on the Hellenic Republic constitutes an appropriate financial means to ensure full compliance with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543) (judgment of 17 October 2013 in Commission v Belgium, C‑533/11, EU:C:2013:659, paragraph 66).73According to settled case law, the penalty payment must be decided upon according to the degree of persuasion needed in order for the Member State which has failed to comply with a judgment establishing a breach of obligations to alter its conduct and bring to an end the infringement established (judgment of 7 July 2009 in Commission v Greece, C‑369/07, EU:C:2009:428, paragraph 113 and the case-law cited).74In exercising its discretion, it is for the Court to set the penalty payment so that it is both appropriate to the circumstances and proportionate to the infringement established and the ability to pay of the Member State concerned (judgments of 17 October 2013 in Commission v Belgium, C‑533/11, EU:C:2013:659, paragraph 68, and of 4 December 2014, Commission v Sweden, C‑243/13, not published, EU:C:2014:2413, paragraph 50).75The Commission’s proposals concerning the penalty payment cannot bind the Court and constitute merely a useful point of reference. Similarly, guidelines such as those set out in the communications of the Commission are not binding on the Court but contribute to ensuring that the Commission’s own actions are transparent, foreseeable and consistent with legal certainty when that institution makes proposals to the Court. In proceedings under Article 260(2) TFEU relating to a failure to fulfil obligations on the part of a Member State that has persisted notwithstanding the fact that that same failure to fulfil obligations has already been established in a first judgment delivered under Article 226 EC or Article 258 TFEU, the Court must remain free to set the penalty payment to be imposed in an amount and in a form that the Court considers appropriate for the purposes of inducing that Member State to bring to an end its failure to comply with the obligations arising under that first judgment of the Court (judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 52).76For the purposes of determining the amount of penalty payments, the basic criteria which must be taken into consideration in order to ensure that penalty payments have coercive effect and that EU law is applied uniformly and effectively are, in principle, the seriousness of the infringement, its duration and the capacity of the Member State concerned to pay. In applying those criteria, regard must be had, in particular, to the effects on public and private interests of the failure to comply and to the urgency of compliance by the Member State concerned with its obligations (judgment of 15 October 2015 in Commission v Greece, C‑167/14, not published, EU:C:2015:684, paragraph 54 and the case-law cited).77As regards, in the first place, the seriousness of the infringement, it should be borne in mind, as the Court has held, that the obligation to dispose of waste without endangering human health and without harming the environment is inherent in the key objectives of EU environmental policy as set out in Article 191 TFEU. The failure to comply with the obligation under Article 4 of Directive 2006/12 could, by the very nature of that obligation, endanger human health directly and harm the environment and must be regarded as particularly serious (see judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 54).78It must be noted that the situation has however slightly improved in relation to the situation found in the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), in so far as the Hellenic Republic confirmed, during the hearing, that, although the hazardous waste management plan had not yet been adopted, it had however been developed and then approved. It is apparent also from the file submitted to the Court that the Hellenic Republic agreed to substantial investments in order to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), and cooperated with the Commission.79However, it is not disputed that the Hellenic Republic, at the time of the examination of the facts by the Court, has not yet established an integrated and adequate network of disposal installations and that, consequently, it is not able to properly manage the hazardous waste. In particular, as is clear from the information communicated to the Court during the hearing, the construction of several installations and three landfills for the treatment of hazardous waste had not yet begun. In those circumstances, despite minor reported improvements, it must be noted that the damage to human health and the environment as a result of the original infringement remains particularly serious.80As regards, in the second place, the duration of the infringement since delivery of the initial judgment establishing a failure to fulfil obligations, it should be recalled that that must be assessed by reference not to the date on which the infringement proceedings were brought under Article 260(2) by the Commission, but the date on which the Court assesses the facts in the context of those proceedings (see the judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 57 and the case-law cited). In the present case, the duration of the infringement, namely more than six years from the date of delivery of the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), is considerable.81In the third place, as regards the capacity of the Member State concerned to pay, it is appropriate to take account of the Hellenic Republic’s argument that its gross domestic product (GDP) has declined since 2012. The Court has held that it is necessary to take account of recent trends in the GDP of a Member State at the time of the Court’s examination of the facts (judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 58).82In addition, the Commission has proposed that the Court gradually reduce the penalty payment in accordance with the progress made in complying with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543).83It should be noted in this connection that, even if, in order to ensure full compliance with the Court’s judgment, the penalty payment should be payable in its entirety until such time as the Member State has taken all the measures necessary to bring to an end the failure to fulfil obligations established, nevertheless, in certain specific cases, a penalty which takes account of the progress that the Member State may have made in complying with its obligations may be envisaged (judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 60 and the case-law cited).84In the present case, the Commission proposes to take into consideration, for the purposes of the calculation of the amount of the penalty payment, the progress achieved in the implementation of the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), in relation to the three heads of claim put forward, namely approval of the management plan, the establishment of appropriate infrastructure for the treatment of hazardous waste and the sound management of historical waste stored provisionally in sites which are not designed for that purpose.85In the circumstances of the present case and in the light, in particular, of the information provided by the parties, the Court considers that it is necessary to fix a penalty payment containing a continuous component and a degressive component. Therefore, it is necessary to determine the rules for calculating that penalty payment and the frequency of the degressive element thereof.86As regards the methods of calculation of the penalty payment, it should be noted, as follows from paragraphs 50 to 52 of the present judgment, that the Hellenic Republic failed to comply with three different obligations.87In order to take into consideration the measures adopted by the Hellenic Republic relating to those individual obligations, it is necessary to reduce the amount of the penalty payment on the basis of the degree to which those obligations have been fulfilled.88In the light of all the circumstances of the present case and taking account of the need to encourage the Member State concerned to put an end to the alleged infringement, the Court considers it appropriate, in the exercise of its discretion, to fix a daily penalty payment of EUR 30000. That amount is divided into three parts, corresponding to the three heads of claim invoked by the Commission and equivalent, with respect to the first head of claim, to 10% of the total amount of the penalty payment, that is to say EUR 3000, and, with respect to the second and third heads of claim, to 45% each of that amount, that is to say EUR 13500 for each head of claim.89The part of the penalty payment relating to the first two heads of claim contains only one continuous component. Therefore, the penalty payment will be reduced by the total amount corresponding to the first and second heads of claim when the Hellenic Republic takes all the measures necessary to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543).90By contrast, regarding the third part of the penalty payment, relating to the head of claim concerning the management of so-called ‘historical’ waste, it is necessary to progressively reduce the amount of the penalty payment in proportion to the compliance of the management thereof, that calculation taking place on the basis of the volume of so-called ‘historical’ waste which will be established by the new hazardous waste management plan. However, the degressivity of the penalty payment with respect to that head of claim should be capped, since that payment can no longer be degressive where the amount of the penalty payment remaining to be paid reaches 50% of the amount of the penalty payment corresponding to that head of claim, that is to say EUR 6750. Beyond that amount, the penalty payment will be reduced only when the failure to fulfil obligations characterised by the third head of claim is completely brought to an end.91As regards the frequency of the penalty payment, the degressive component thereof is set on a biannual basis so as to allow the Commission to review the progress of the compliant management of ‘historical’ waste.92In the light of all the above considerations, it is necessary to order the Hellenic Republic to pay the Commission, into the ‘European Union own resources’ account, a penalty payment of EUR 30000 for each day of delay in adopting the measures necessary to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), from the date of delivery of the present judgment until full compliance with the judgment of 10 September 2009 in Commission v Greece (C 286/08, not published, EU:C:2009:543). That amount is divided into three parts, corresponding to the three heads of claim invoked by the Commission and is the equivalent, with respect to the first head of claim, to 10% of the total amount of the penalty payment, namely EUR 3000, with respect to the second head of claim, to 45% of that amount, namely EUR 13500, as well as with respect to the third head of claim, which, as regards the proper management of so-called ‘historical’ waste, will be subject to a six-monthly reduction as a pro rata of the volume of that waste the management of which was in compliance. That reduction is limited to 50% of the amount of the penalty payment corresponding to that head of claim, that is to say EUR 6750. The lump sum payment 93The Commission requests the Court to order the Hellenic Republic to pay a daily lump sum of EUR 8096, the amount of which is based on multiplying the uniform basic flat-rate amount, fixed at EUR 220, by the coefficient for seriousness of 10 and by the ‘n’ factor of 3.68, from the date of delivery of the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), until the date of the present judgment or until the date of compliance with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), if that judgment is implemented before those dates.94The Hellenic Republic contends that it has already undertaken all the steps necessary in order to fully comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543) by systematically and loyally cooperating with the Commission services, with the result that, to date, a small proportion of that judgment has not been implemented. Therefore, it is not required to pay the lump sum proposed by the Commission.95In any event, it is for the Court to assess whether, in extremely difficult economic circumstances, the objective conditions allow the imposition of a lump sum payment such as that proposed by the Commission to be ordered or whether, on the contrary, those circumstances call for a complete exemption on the part of the Hellenic Republic.96Moreover, the Hellenic Republic considers that, if such an order is made, the date to be taken into consideration for the calculation of the lump sum cannot coincide with the date of delivery of the judgment declaring the first infringement, since compliance with that judgment could only take place after that date, after a reasonable period.97The first point to note is that, in exercising the discretion conferred on it in such matters, the Court is empowered to impose a penalty payment and a lump sum payment cumulatively (judgment of 2 December 2014 in Commission v Greece, C‑378/13, EU:C:2014:2405, paragraph 71).98An order to pay a lump sum is based essentially on the assessment of the effects on public and private interests of the failure of the Member State concerned to comply with its obligations, in particular where the breach has persisted for a long period after the judgment initially establishing it was delivered (judgment of 13 May 2014 in Commission v Spain, C‑184/11, EU:C:2014:316, paragraph 59 and the case-law cited).99The imposition of a lump sum payment and the fixing of that sum must depend in each individual case on all the relevant factors relating both to the characteristics of the failure to fulfil obligations established and to the conduct of the Member State involved in the procedure initiated under Article 260 TFEU. That provision confers a wide discretion on the Court in deciding whether to impose such a penalty and, if it decides to do so, in determining the amount (judgment of 2 December 2014 in Commission v Italy, C‑196/13, EU:C:2014:2407, paragraph 114).100In the present case, all the legal and factual circumstances which led to the infringement established, in particular the fact that the hazardous waste management plan has not yet been adopted, that an integrated and adequate network of installations for the disposal of hazardous waste has not been established and that the management of historical waste had not yet been carried out, although it presents a high level of danger to human health and the environment, is an indication that effective prevention of future repetition of similar infringements of EU law may require the adoption of a dissuasive measure, such as the imposition of a lump sum payment.101In those circumstances, it is for the Court, in the exercise of its discretion, to fix the amount of that lump sum so that it is, first, appropriate to the circumstances and, second, proportionate to the infringement (judgment of 7 July 2009 in Commission v Greece, C‑369/07, EU:C:2009:428, paragraph 146).102The relevant factors in this respect include matters such as the length of time for which the breach of obligations has persisted since the judgment establishing it was delivered and the seriousness of the infringement (judgment of 17 November 2011 in Commission v Italy, C‑496/09, EU:C:2011:740, paragraph 94).103As regards those factors, the circumstances which must be taken into account are clear, inter alia, from the considerations set out in paragraphs 77 to 81 of the present judgment. In that regard, it should, in particular, be noted that the hazardous waste management plan has not been adopted, that the integrated and adequate network of installations for the disposal of hazardous waste has not been established and that sites contain untreated hazardous and historical waste, which presents a high level of danger to human health and the environment.104In the light of the foregoing, the Court considers that proper account of the circumstances of the present case will be taken by setting the amount of the lump sum which the Hellenic Republic will have to pay at EUR 10 million.105The Hellenic Republic must therefore be ordered to pay to the Commission, into the ‘European Union own resources’ account, a lump sum of EUR 10 million. Costs 106Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party must be ordered to pay the costs if they have been applied for in the other party’s pleadings. Since the Commission applied for costs and the Hellenic Republic’s failure to fulfil its obligations has been established, the latter must be ordered to pay the costs.On those grounds, the Court (Fifth Chamber) hereby: 1. Declares that, by failing to adopt the measures necessary to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), the Hellenic Republic has failed to fulfil its obligations under Article 260(1) TFEU; 2. Orders the Hellenic Republic to pay the European Commission, into the ‘European Union own resources’ account, a penalty payment of EUR 30000 for each day of delay in adopting the measures necessary to comply with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543), from the date of delivery of the present judgment until full compliance with the judgment of 10 September 2009 in Commission v Greece (C‑286/08, not published, EU:C:2009:543). That amount is divided into three parts, corresponding to the three heads of claim invoked by the European Commission and is the equivalent, with respect to the first head of claim, to 10% of the total amount of the penalty payment, namely EUR 3000, with respect to the second head of claim, to 45% of that amount, namely EUR 13500, as well as with respect to the third head of claim, which, as regards the proper management of so-called ‘historical’ waste, will be subject to a six-monthly reduction as a pro rata of the volume of that waste the management of which was in compliance. That reduction is limited to 50% of the amount of the penalty payment corresponding to that head of claim, that is to say EUR 6750; 3. Orders the Hellenic Republic to pay the European Commission, into the ‘European Union own resources’ account, a lump sum of EUR 10 million; 4. Orders the Hellenic Republic to pay the costs. [Signatures]( *1 ) Language of the case: Greek. | cf4ae-fdcaf7c-4e9a | EN |
The sale of a computer equipped with pre-installed software does not constitute, in itself, an unfair commercial practice | 7 September 2016 ( *1 )‛Reference for a preliminary ruling — Consumer protection — Unfair commercial practices — Directive 2005/29/EC — Articles 5 and 7 — Combined offer — Sale of a computer equipped with pre-installed software — Material information relating to the price — Misleading omission — Consumer unable to obtain the same model of computer not equipped with software’In Case C‑310/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (Court of Cassation, France), made by decision of 17 June 2015, received at the Court on 25 June 2015, in the proceedings Vincent Deroo-Blanquart v Sony Europe Limited, successor in law to Sony France SA,THE COURT (Eighth Chamber),composed of D. Šváby, President of the Chamber, J. Malenovský and M. Safjan (Rapporteur), Judges,Advocate General: H. Saugmandsgaard Øe,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Deroo-Blanquart, by P. Rémy-Corlay, avocat,Sony Europe Limited, successor in law to Sony France SA, by P. Spinosi, avocat,the French Government, by D. Colas and J. Traband, and by S. Ghiandoni, acting as Agents,the Belgian Government, by J.-C. Halleux and J. Van Holm, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, and by S. Šindelková, acting as Agents,the European Commission, by D. Roussanov, M. Van Hoof and K. Herbout-Borczak, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 5 and 7 of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) (OJ 2005 L 149, p. 22).2The request has been made in proceedings between Mr Vincent Deroo-Blanquart, domiciled in France, and Sony Europe Limited (‘Sony’), successor in law to Sony France SA, established in France, regarding a commercial practice consisting of the sale of a computer equipped with pre-installed software. Legal context EU law 3Recitals 13, 14, 17 and 18 of Directive 2005/29 state:‘(13)… The single, common general prohibition established by this Directive … covers unfair commercial practices distorting consumers’ economic behaviour. … The general prohibition is elaborated by rules on the two types of commercial practices which are by far the most common, namely misleading commercial practices and aggressive commercial practices.(14)It is desirable that misleading commercial practices cover those practices, including misleading advertising, which by deceiving the consumer prevent him from making an informed and thus efficient choice. In conformity with the laws and practices of Member States on misleading advertising, this Directive classifies misleading practices into misleading actions and misleading omissions. In respect of omissions, this Directive sets out a limited number of key items of information which the consumer needs to make an informed transactional decision. ……(17)It is desirable that those commercial practices which are in all circumstances unfair be identified to provide greater legal certainty. Annex I therefore contains the full list of all such practices. These are the only commercial practices which can be deemed to be unfair without a case-by-case assessment against the provisions of Articles 5 to 9. …(18)… In line with the principle of proportionality, and to permit the effective application of the protections contained in it, this Directive takes as a benchmark the average consumer, who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors, as interpreted by the Court of Justice …’4Article 2 of that directive, headed ‘Definitions’, provides:‘For the purposes of this Directive:(c)“product” means any good or service ...(d)“business-to-consumer commercial practices” (hereinafter also referred to as commercial practices) means any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers;(e)“to materially distort the economic behaviour of consumers” means using a commercial practice to appreciably impair the consumer’s ability to make an informed decision, thereby causing the consumer to take a transactional decision that he would not have taken otherwise;(h)“professional diligence” means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity;(i)“invitation to purchase” means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase;(k)“transactional decision” means any decision taken by a consumer concerning whether, how and on what terms to purchase, make payment in whole or in part for, retain or dispose of a product or to exercise a contractual right in relation to the product, whether the consumer decides to act or to refrain from acting;…’5Article 3 of that directive, entitled ‘Scope’, states in paragraph 1:‘This Directive shall apply to unfair business-to-consumer commercial practices, as laid down in Article 5, before, during and after a commercial transaction in relation to a product.’6Article 4 of the same directive, entitled ‘Internal market’, provides:‘Member States shall neither restrict the freedom to provide services nor restrict the free movement of goods for reasons falling within the field approximated by this Directive.’7Article 5 of Directive 2005/29, which is entitled ‘Prohibition of unfair commercial practices’, is worded as follows:‘1. Unfair commercial practices shall be prohibited.2. A commercial practice shall be unfair if:(a)it is contrary to the requirements of professional diligence,and(b)it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers.4. In particular, commercial practices shall be unfair which:are misleading as set out in Articles 6 and 7,orare aggressive as set out in Articles 8 and 9.5. Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. …’8Article 6 of that directive, entitled ‘Misleading actions’, states in paragraph 1:‘A commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise:9Article 7 of that directive, entitled ‘Misleading omissions’, states:‘1. A commercial practice shall be regarded as misleading if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.2. It shall also be regarded as a misleading omission when, taking account of the matters described in paragraph 1, a trader hides or provides in an unclear, unintelligible, ambiguous or untimely manner such material information as referred to in that paragraph or fails to identify the commercial intent of the commercial practice if not already apparent from the context, and where, in either case, this causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.4. In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context:the main characteristics of the product, to an extent appropriate to the medium and the product;the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;10Annex I to Directive 2005/29, which contains a list of commercial practices which are considered unfair in all circumstances, includes, in point 29, among aggressive commercial practices, the following practice:‘Demanding immediate or deferred payment … of products supplied by the trader, but not solicited by the consumer … (inertia selling)’. French law 11Article L. 111-1 of the Consumer Code, in the version applicable to the main proceedings, provided:‘All business suppliers of goods or services must, prior to conclusion of the contract, ensure that the consumer is made aware of the essential characteristics of the goods or services.’12The first paragraph of Article L. 113-3 of that code, in the version applicable to the main proceedings, provided:‘Any seller of goods and any supplier of services must, by marking, labelling, notice or any other appropriate method, provide the consumer with information on prices, on any limitation of contractual liability and on special terms of sale, in accordance with the procedures laid down by decrees of the Minister …’13Article L. 120-1 of the Consumer Code, in the version applicable to the main proceedings, stated:‘Unfair commercial practices shall be prohibited. A commercial practice is unfair when it is contrary to the requirements of professional diligence and when it materially distorts or is likely to materially distort the economic behaviour of a reasonably well-informed and reasonably observant and circumspect consumer in respect of a product or service.II. —The misleading commercial practices defined in Articles L. 121-1 and L. 121-1-1 and the aggressive commercial practices defined in Articles L. 122-11 and L. 122-11-1, in particular, shall constitute unfair commercial practices.’14Article L. 121-1 of that code, in the version applicable in the main proceedings, was worded as follows:‘I. —A commercial practice is misleading if it is undertaken in one of the following circumstances:When it is based on false allegations, information or presentations or is likely to mislead …A commercial practice is also misleading where, taking account of the limitations of the communication medium and surrounding circumstances, it omits, hides or provides material information in an unintelligible, ambiguous or untimely manner, or fails to identify its true commercial purpose where it is not already apparent from the context.In all commercial communications constituting an invitation to purchase and aimed at the consumer which mention the price and the characteristics of the good or service offered, the following are considered to constitute material information:The main characteristics of the goods or services;The price inclusive of taxes and the cost of delivery to the consumer, or the manner in which such cost is calculated, where it cannot be established in advance;III.Section I is applicable to practices aimed at traders.’15The first paragraph of Article L. 122-1 of the Consumer Code, in the version applicable in the main proceedings, provided:‘It is prohibited to refuse to sell a product or to provide a service to a consumer without a legitimate reason or to make the sale of one product conditional upon the purchase of a set quantity or upon the accompanying purchase of another product or another service or to make the provision of a service conditional upon the provision of another service or the purchase of a product.’16The first paragraph of Article L. 122-1 of the Consumer Code, in the version applicable from 19 May 2011 to 30 June 2016, provided:‘It is prohibited to refuse to sell a product or to provide a service to a consumer without a legitimate reason or to make the sale of one product conditional upon the purchase of a set quantity or upon the accompanying purchase of another product or another service or to make the provision of a service conditional upon the provision of another service or the purchase of a product where such conditions constitute unfair commercial practices within the meaning of Article L. 120-1.’17The first paragraph of Article L. 122-3 of that code, in the version applicable in the main proceedings, was worded as follows:‘The supply of goods and services not previously solicited by the consumer where it involves a demand for payment is prohibited. No obligation may be imposed on a consumer to whom goods or services are supplied in breach of that prohibition.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 18It is apparent from the case-file in the main proceedings that, on 27 December 2008, Mr Deroo-Blanquart acquired a Sony laptop in France – model VAIO VGN-NR38E – which was equipped with pre-installed software including Windows Vista Home Premium operating system and various other software applications.19When using that computer for the first time, Mr Deroo-Blanquart refused to subscribe to the operating system’s ‘end-user licence agreement’ (EULA), displayed on that computer’s screen, and requested, on 30 December 2008, reimbursement from Sony of the part of the purchase price of the computer corresponding to the cost of the pre-installed software.20By letter of 8 January 2009, Sony refused to process that reimbursement, submitting that the VAIO computers with pre-installed software form part of a single and non-separable offer. Following discussions, Sony offered, on 15 April 2009, to cancel the sale and to reimburse Mr Deroo-Blanquart the entirety of the sale price, namely EUR 549, subject to the return of the equipment purchased.21Mr Deroo-Blanquart declined that offer and, by a document lodged on 17 February 2011, issued proceedings against Sony before the tribunal d'instance d’Asnières (District Court, Asnières, France) for payment, inter alia, of EUR 450 as a lump sum for the pre-installed software, and of EUR 2500 for the damage suffered as a result of unfair commercial practices.22By judgment of 13 September 2012, the tribunal d'instance d’Asnières (District Court, Asnières) dismissed all of Mr Deroo-Blanquart’s claims.23Mr Deroo-Blanquart appealed against that judgment before the Cour d’Appel de Versailles (Court of Appeal, Versailles, France).24By judgment of 5 November 2013, the Cour d’Appel de Versailles (Court of Appeal, Versailles) upheld the judgment under appeal, holding that the sale at issue did not constitute the unfair commercial practice of coercive selling, which is not permitted under any circumstances, an unfair commercial tying practice, or a misleading or aggressive commercial practice.25Mr Deroo-Blanquart brought an appeal against the judgment of the Cour d’Appel de Versailles (Court of Appeal, Versailles) before the Cour de cassation (Court of Cassation, France).26After noting that the applicable provisions of national law fall within the scope of Directive 2005/29, the Cour de cassation (Court of Cassation) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Must Articles 5 and 7 of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2006 concerning unfair business-to-consumer commercial practices in the internal market be interpreted as meaning that a combined offer consisting of the sale of a computer equipped with pre-installed software constitutes a misleading unfair commercial practice where the manufacturer of the computer has, via its retailer, provided information on each item of pre-installed software, but has not specified the cost of each individual component?(2)Must Article 5 of Directive 2005/29 be interpreted as meaning that a combined offer consisting of the sale of a computer equipped with pre-installed software constitutes an unfair commercial practice where the manufacturer leaves the consumer no choice other than to accept the software or cancel the sale?(3)Must Article 5 of Directive 2005/29 be interpreted as meaning that a combined offer consisting of the sale of a computer equipped with pre-installed software constitutes an unfair commercial practice where the consumer is unable to obtain a computer which is not equipped with software from the computer manufacturer?’ Consideration of the questions referred for a preliminary ruling The second and third questions 27By its second and third questions, which it is appropriate to examine first and together, the referring court asks, in essence, whether a commercial practice consisting of the sale of a computer equipped with pre-installed software without any option for the consumer to purchase the same model of computer not equipped with pre-installed software constitutes an unfair commercial practice within the meaning of Article 5(2) of Directive 2005/29.28In that regard, it must be recalled, as a preliminary point, that combined offers, which are based on the linking together of at least two different offers of products or services into a single offer, constitute commercial acts which clearly form part of an operator’s commercial strategy and relate directly to the promotion thereof and its sales development. It follows that they do indeed constitute commercial practices within the meaning of Article 2(d) of Directive 2005/29 and, consequently, come within its scope (see, to that effect, judgment of 23 April 2009, VTB-VAB and Galatea, C‑261/07 and C‑299/07, EU:C:2009:244, paragraph 50).29Furthermore, as recital 17 of Directive 2005/29 expressly states, only those commercial practices contained in the closed list set out in Annex I to that directive are in all circumstances regarded as unfair without a case-by-case assessment against the provisions of Articles 5 to 9 of that directive (judgment of 19 September 2013, CHS Tour Services, C‑435/11, EU:C:2013:574, paragraph 38 and the case-law cited).30However, the Court has held in that respect that combined offers are not included among the commercial practices listed in Annex I of Directive 2005/29 and that that directive precludes a general and pre-emptive prohibition of combined offers without any verification of their unfairness in the light of the criteria laid down in Articles 5 to 9 of that directive (judgment of 23 April 2009, VTB-VAB and Galatea, C‑261/07 and C‑299/07, EU:C:2009:244, paragraphs 57 and 62).31It is therefore in the light of the content and the general scheme of Articles 5 to 9 of that directive that the possible unfairness of commercial practices such as those at issue in the main proceedings must be examined (see, to that effect, judgment of 23 April 2009, VTB-VAB and Galatea, C‑261/07 and C‑299/07, EU:C:2009:244, paragraph 58).32In that regard, a commercial practice can be found to be unfair within the meaning of Article 5(2) of Directive 2005/29 only on the dual condition that, first, it is contrary to the requirements of professional diligence and, second, where it materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product (see judgment of 19 December 2013, Trento Sviluppo and Centrale Adriatica, C‑281/12, EU:C:2013:859, paragraph 28). In that context, it should be noted that, in accordance with recital 18, that directive takes as a benchmark the average consumer, who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors.33This raises, initially, the question of whether a trader who, in circumstances such as those at issue in the main proceedings, offers for sale only computers equipped with pre-installed software contravenes the requirements of professional diligence, which is defined under Article 2(h) of Directive 2005/29 as the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity.34It must therefore be ascertained whether the behaviour of the trader entails a possible violation of honest market practices or of the principle of good faith in the trader’s field of activity, which in the present case is the manufacturing of computer equipment for the general public, in the light of the legitimate expectations of the average consumer.35In the present case, it is clear from the order for reference that, inter alia, the sale by Sony of computers with pre-installed software meets the expectations, as revealed by an analysis of the market concerned, of a significant proportion of consumers who prefer to purchase a computer already equipped and ready for immediate use, rather than to purchase a computer and software separately. Moreover, as is also apparent from the order for reference, prior to the purchase of the computer at issue in the main proceedings, Mr Deroo-Blanquart, as a consumer, was duly informed via Sony’s retailer of the existence of pre-installed software on that computer and the specific nature of each of those items of software. Finally, subsequent to the purchase, when using that computer for the first time, Sony offered Mr Deroo-Blanquart the possibility of either subscribing to the ‘end-user licence agreement’ in order to be able to use that software or cancelling the sale.36In that regard, the Court has already stated that, particularly if correct information is provided to consumers, a combined offer of different products or services can satisfy the requirements of fairness laid down in Directive 2005/29 (see, to that effect judgment of 23 April 2009, VTB-VAB and Galatea, C‑261/07 and C‑299/07, EU:C:2009:244, paragraph 66).37In that context, it should be recalled that circumstances such as those set out in paragraph 35 above, namely, inter alia, the facts that the consumer was correctly informed, that the combined offer met the expectations of a significant proportion of consumers and that it was possible for the consumer to accept all the elements of that offer or to cancel the sale, are likely to satisfy the requirements of honest market practices or of the principle of good faith in the field of the manufacturing of computer equipment for the general public, the trader thereby demonstrating care towards the consumer. Consequently, it is for the national court to take them into account in the context of its overall assessment of all the circumstances of the case in the main proceedings in light of the respect for the requirements of professional diligence.38Secondly, it is necessary to examine whether a commercial practice consisting of the sale of a computer equipped with pre-installed software without any option for the consumer to purchase the same model of computer not equipped with pre-installed software causes or is likely to cause a material distortion of the economic behaviour of the average consumer with regard to the product, namely, pursuant to Article 2(e) of Directive 2005/29, to significantly undermine his ability to make an informed decision and to cause him consequently to take a transactional decision that he would not have taken otherwise.39In that regard, it is clear from the order for reference, as was noted in paragraph 35 above, that the consumer was duly informed, prior to the purchase, that the model of computer at issue in the main proceedings was not marketed without pre-installed software.40As regards the clarification provided to the consumer, it must be highlighted that the information, before concluding a contract, on the terms of the contract and the consequences of concluding it is of fundamental importance for a consumer. It is on the basis of that information in particular that the consumer decides whether he wishes to be bound by the terms previously drawn up by the seller or supplier (judgment of 30 April 2014, Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 70).41Thus, when examining the second condition laid down in Article 5(2) of Directive 2005/29, it is for the referring court to determine whether, in circumstances such as those at issue in the main proceedings, namely when a consumer has been duly informed, prior to the purchase, that the model of computer that is the subject matter of the sale was not marketed without pre-installed software and that he was therefore, in principle, free to choose another model of computer, or another brand, with similar technical specifications, sold without software or used with different software, the ability of that consumer to make an informed transactional decision was appreciably impaired.42In light of the above observations, the answer to the second and third questions is that a commercial practice consisting of the sale of a computer equipped with pre-installed software without any option for the consumer to purchase the same model of computer not equipped with pre-installed software does not in itself constitute an unfair commercial practice within the meaning of Article 5(2) of Directive 2005/29, unless such a practice is contrary to the requirements of professional diligence and materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product, a matter which is for the national court to determine by taking account of the specific circumstances of the case in the main proceedings. The first question 43By its first question, the referring court asks, in essence, whether, in the context of a combined offer consisting of the sale of a computer equipped with pre-installed software, the failure to indicate the price of each of those items of software constitutes a misleading commercial practice within the meaning of Article 5(4)(a) and Article 7 of Directive 2005/29.44In that regard, it must be recalled that Article 5(4)(a) of that directive provides that misleading commercial practices can take the form of misleading actions within the meaning of Article 6 of that directive or misleading omissions within the meaning of Article 7 thereof.45Therefore, pursuant to Article 7(1) of Directive 2005/29, a commercial practice is to be regarded as misleading if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs in order to make an informed transactional decision and thereby causes or is likely to cause the average consumer to make a transactional decision that he would not have taken otherwise. Article 7(4)(c) of that directive provides that information relative to the price inclusive of tax is considered to be material.46It is therefore clear from the wording of that provision that the price of a product offered for sale, that is to say the overall price of the product, and not the price of each individual component, is considered to be material information. It follows that that provision obliges the trader to indicate to the consumer the overall price of the product concerned.47In the present case, as is apparent from the order for reference, the overall price of the whole package, consisting of a computer equipped with pre-installed software, was communicated to Mr Deroo-Blanquart. However, the referring court seeks to ascertain whether, in the specific case of a combined offer relating to a computer and several pre-installed pieces of software, the prices of the various individual components making up the whole package that is the subject matter of such an offer are also likely to constitute material information.48In that regard, independently of the fact that information on the constituent elements of the overall price does not feature among the information that Article 7(4) of Directive 2005/29 considers to be material, it is important to highlight that, in accordance with recital 14 of that directive, key items of information which the consumer needs to make an informed transactional decision constitute material information.49Furthermore, it follows from Article 7(1) of that directive that the material nature of a piece of information must be assessed against the background of which a commercial practice forms part and taking account of all of its characteristics.50In the present case, as is clear from the order for reference, the computer that was the subject matter of the sale at issue in the main proceedings was, in any case, only offered for sale equipped with the pre-installed software. In view of the answer given to the second and third questions, such a commercial practice does not constitute, in itself, an unfair commercial practice within the meaning of Article 5(2) of Directive 2005/29.51Consequently, with regard to the context of a combined offer consisting of the sale of a computer equipped with pre-installed software, failure to indicate the price of each of those items of software is not such as to prevent the consumer from taking an informed transactional decision or likely to cause the average consumer to make a transactional decision that he would not have taken otherwise. Thus, the price of each of those items of software does not constitute material information within the meaning of Article 7(4) of Directive 2005/29.52In light of the foregoing observations, the answer to the first question is that, in the context of a combined offer consisting of the sale of a computer equipped with pre-installed software, the failure to indicate the price of each of those items of software does not constitute a misleading commercial practice within the meaning of Article 5(4)(a) and Article 7 of Directive 2005/29. Costs 53Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Eighth Chamber) hereby rules: 1. A commercial practice consisting of the sale of a computer equipped with pre-installed software without any option for the consumer to purchase the same model of computer not equipped with pre-installed software does not in itself constitute an unfair commercial practice within the meaning of Article 5(2) of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), unless such a practice is contrary to the requirements of professional diligence and materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product, a matter which is for the national court to determine by taking account of the specific circumstances of the case in the main proceedings. 2. In the context of a combined offer consisting of the sale of a computer equipped with pre-installed software, the failure to indicate the price of each of those items of pre-installed software does not constitute a misleading commercial practice within the meaning of Article 5(4)(a) and Article 7 of Directive 2005/29. [Signatures]( *1 ) Language of the case: French. | a1eb3-43c73c3-4273 | EN |
The Court of Justice confirms the fine of €357 million imposed by the Commission on Pilkington Group for its participation in the ‘car glass’ cartel | 7 September 2016 ( *1 )‛Appeal — Agreements, decisions and concerted practices — Article 101 TFEU — Article 53 of the Agreement on the European Economic Area of 2 May 1992 — European market for automotive glass — Market-sharing agreements and exchanges of commercially sensitive information — Fines — 2006 Guidelines on the method of setting fines — Point 13 — Value of sales — Regulation (EC) No 1/2003 — Second subparagraph of Article 23(2) — Statutory ceiling of the fine — Exchange rate for the calculation of the ceiling of the fine — Amount of the fine — Unlimited jurisdiction — Mono-product undertakings — Proportionality — Equal treatment’In Case C‑101/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 27 February 2015, Pilkington Group Ltd, established in Lathom (United Kingdom), Pilkington Automotive Ltd, established in Lathom, Pilkington Automotive Deutschland GmbH, established in Witten (Germany), Pilkington Holding GmbH, established in Gelsenkirchen (Germany), Pilkington Italia SpA, established in San Salvo (Italy),represented by S. Wisking and K. Fountoukakos-Kyriakakos, Solicitors, and by C. Puech Baron, avocat,appellants,the other party to the proceedings being: European Commission, represented by A. Biolan, M. Kellerbauer and H. Leupold, acting as Agents,defendant at first instance,THE COURT (Fourth Chamber),composed of T. von Danwitz, President of the Chamber, C. Lycourgos, E. Juhász, C. Vajda and K. Jürimäe (Rapporteur), Judges,Advocate General: J. Kokott,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 2 March 2016,after hearing the Opinion of the Advocate General at the sitting on 14 April 2016,gives the following Judgment 1By their appeal, Pilkington Group Ltd, Pilkington Automotive Ltd, Pilkington Automotive Deutschland GmbH, Pilkington Holding GmbH and Pilkington Italia SpA (‘the appellants’) ask the Court to set aside the judgment of the General Court of the European Union of 17 December 2014, Pilkington Group and Others v Commission (T‑72/09, not published, EU:T:2014:1094) (‘the judgment under appeal’), by which the latter dismissed their action, primarily, for annulment of Commission Decision C(2008) 6815 final of 12 November 2008 relating to a proceeding pursuant to Article [81 EC] and Article 53 of the EEA Agreement (COMP/39.125 — Carglass), as amended by Commission Decision C(2009) 863 final of 11 February 2009 and by Commission Decision C(2013) 1119 final of 28 February 2013 (‘the decision at issue’), in so far as it concerns the appellants, and, in the alternative, for annulment of Article 2 of that decision in that it imposes a fine on the appellants, or, in the further alternative, for a reduction of that fine. Legal context Regulation (EC) No 1/2003 2Under the heading ‘Fines’, Article 23(2) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [81 EC and 82 EC] (OJ 2003 L 1, p. 1) provides:‘The Commission may by decision impose fines on undertakings and associations of undertakings where, either intentionally or negligently:(a)they infringe [Articles 81 EC or 82 EC]; ……For each undertaking and association of undertakings participating in the infringement, the fine shall not exceed 10% of its total turnover in the preceding business year.…’ The 2006 Guidelines 3Points 4 to 6, 13 and 35 of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2) (‘the 2006 Guidelines’) state as follows:‘4.… Fines should have a sufficiently deterrent effect, not only in order to sanction the undertakings concerned (specific deterrence) but also in order to deter other undertakings from engaging in, or continuing, behaviour that is contrary to Articles [81 EC and 82 EC] (general deterrence).5.In order to achieve these objectives, it is appropriate for the Commission to refer to the value of the sales of goods or services to which the infringement relates as a basis for setting the fine. The duration of the infringement should also play a significant role in the setting of the appropriate amount of the fine. …6.The combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement. …13.In determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly relates [such will be the case for instance for horizontal price fixing arrangements on a given product, where the price of that product then serves as a basis for the price of lower or higher quality products)] in the relevant geographic area within the [European Economic Area (EEA)]. …35.In exceptional cases, the Commission may, upon request, take account of the undertaking’s inability to pay in a specific social and economic context. It will not base any reduction granted for this reason in the fine on the mere finding of an adverse or loss-making financial situation. A reduction could be granted solely on the basis of objective evidence that imposition of the fine as provided for in these Guidelines would irretrievably jeopardise the economic viability of the undertaking concerned and cause its assets to lose all their value.’ Background to the dispute and the decision at issue 4As is apparent from paragraphs 1 to 12 and 36 of the judgment under appeal, the Commission, in the decision at issue, found that a number of undertakings, including the appellants, had participated in a single and continuous infringement of Article 81(1) EC, consisting in the concerted allocation, in the automotive glass sector, of contracts concerning the supply of carglass pieces and/or carsets, generally consisting of a windscreen, sidelights and backlights, to the major car manufacturers in the EEA. With regard to the appellants, the Commission found that there had been an infringement over the period from 10 March 1998 to 3 September 2002 and for that reason imposed on them, jointly and severally, a fine of EUR 370 million (Article 2(c) of the decision at issue).5On 28 February 2013, the Commission adopted Decision C(2013) 1119 final, amending Decision C(2008) 6815 final with respect to, inter alia, the calculation of the fine imposed on the appellants. By that decision, the Commission essentially sought to correct two errors which it believed it had made in that calculation. As a result of that decision, the new amount of the fine imposed on the appellants was set at EUR 357 million instead of the original amount of EUR 370 million. The procedure before the General Court and the judgment under appeal 6By application lodged at the Registry of the General Court on 18 February 2009, as modified by a letter received at the Registry of the General Court on 15 March 2013, the appellants lodged an application for annulment of the decision at issue, raising six pleas in law in support. Only the third, fifth and sixth pleas in law, relating to the calculation of the fine imposed on the appellants, are relevant for the purposes of the present appeal. The appellants also requested the General Court, independently of those grounds of annulment, where applicable, to exercise its unlimited jurisdiction by reducing the fine imposed on them.7By the judgment under appeal, the General Court dismissed the action in its entirety. Forms of order sought by the parties to the appeal 8By their appeal, the appellants claim that the Court should:—set aside the judgment under appeal, to the extent that it dismisses the action brought against Article 2(c) of the decision at issue;reduce the fine imposed on them in Article 2(c) of the decision at issue; andorder the Commission to pay the costs.9The Commission contends that the Court should dismiss the appeal and order the appellants to pay the costs. The appeal 10The appellants put forward three grounds in support of their appeal. The first ground of appeal, alleging an error of law in the interpretation of point 13 of the 2006 Guidelines Arguments of the parties11By their first ground of appeal, directed against paragraphs 217 to 227 of the judgment under appeal, the appellants criticise the General Court for finding that the Commission was fully entitled, when determining the basic amount of the fine imposed on them, to take into account sales made pursuant to contracts that pre-dated the infringement period and that were not renegotiated during the infringement period (‘the sales at issue’).12The appellants submit that the General Court thus relied on an incorrect interpretation of the concept of ‘the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly relates’ within the meaning of point 13 of the 2006 Guidelines. According to the appellants, this concept does not entitle the Commission to take into account the sales at issue, in so far as it is obvious, in the appellants’ opinion, that these could not in any way have formed part of the infringement, even though the objective of the latter was the overall stabilisation of the infringement market. Therefore, the appellants claim that taking those sales into account does not serve as an ‘appropriate proxy’, within the meaning of point 6 of the 2006 Guidelines, because it overestimates the economic importance of the infringement, the relative weight of the undertaking that achieved such sales in the context of the infringement, and the harm caused by the infringement.13The appellants emphasise that none of the reasons given by the General Court in paragraph 225 of the judgment under appeal, relating to the mode of operation of the infringement and the objective which it pursues, can prove that the sales at issue formed part of the infringement.14The Commission contends that the appellants’ arguments should be rejected as unfounded.Findings of the Court15By their first ground of appeal, the appellants submit, in essence, that the General Court erred in law in finding that, under ‘the undertaking’s sales of goods or services to which the infringement directly or indirectly relates’, within the meaning of point 13 of the 2006 Guidelines, the Commission could include the sales at issue in the sales to be taken into account when determining the amount of the fine imposed on them.16With regard to the imposition of a fine pursuant to Article 23(2) of Regulation No 1/2003, the Court has held that the Commission must assess, in each specific case and having regard to both the context and the objectives pursued by the scheme of penalties created by that regulation, the intended impact on the undertaking concerned, in particular by taking into account a turnover which reflects the undertaking’s real economic situation during the period in which the infringement was committed (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 46 and the case-law cited).17In that context, it is permissible, for the purpose of setting the amount of the fine, to have regard both to the overall turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of its size and of its economic power, and to the proportion of that turnover accounted for by the goods in respect of which the infringement was committed, which gives an indication of the scale of the infringement (judgment of 9 July 2015 in InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 47 and the case-law cited).18As provided in point 13 of the 2006 Guidelines: ‘in determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly ... relates in the relevant geographic area within the EEA’. In the introductory section of the 2006 Guidelines, point 6 specifies that ‘the combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement’.19It follows that point 13 of the 2006 Guidelines pursues the objective of adopting, as the starting point for the calculation of the fine imposed on an undertaking, an amount which reflects the economic significance of the infringement and the size of the undertaking’s contribution to it. Consequently, while the concept of the ‘value of sales’ referred to in point 13 of the Guidelines admittedly cannot extend to encompassing sales made by the undertaking in question which do not come within the scope of the alleged cartel, it would, however, be contrary to the goal pursued by that provision if that concept were to be understood as applying only to turnover achieved by the sales in respect of which it is established that they were actually affected by that cartel (judgments of 11 July 2013, Team Relocations and Others v Commission, C‑444/11 P, not published, EU:C:2013:464, paragraph 76, and of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 57).20However, while, as the appellants argue, the sales at issue were made pursuant to contracts which pre-date the infringement period, the fact remains that the General Court was correct in finding, in paragraph 226 of the judgment under appeal, that the Commission was entitled to include those sales in the value of the sales calculated in accordance with point 13 of the 2006 Guidelines, for the purpose of determining the basic amount of the fine, on the same basis as the sales made pursuant to supply contracts concluded during the infringement period but which were not shown to have specifically been the subject of collusion.21As is apparent from paragraphs 222 to 225 of the judgment under appeal, the General Court approved the method of calculation used by the Commission, by examining the grounds relating to the mode of operation of the infringement and its objectives, which formed the basis for that institution’s finding that taking the sales at issue into account was justified in so far as those sales were capable of reflecting the economic importance of the infringement.22The General Court thus held, inter alia, in paragraphs 224 and 225 of the judgment under appeal, that taking the sales at issue into account was justified in view of the scope of the cartel, its mode of operation and its overall objective of stabilising market shares, with the result that it was not necessary to collude on each supply contract in order to achieve that objective. In that regard, the General Court rightly found that, in those circumstances, the need for collusion on a given supply contract depended on the allocation of supplies, the perceived need to take measures to maintain the respective market shares, and the ability of each individual contract to bring about an appreciable change in the share of the overall supplies envisaged by each cartel participant.23Contrary to the appellants’ claims, those considerations are not irrelevant. The cartel’s overall plan was to allocate supplies of automotive glass between the cartel participants, with respect to both existing supply contracts and new contracts. As is apparent from the finding of fact made by the General Court in paragraph 24 of the judgment under appeal, the allocation affected the whole activity of the cartel participants on the relevant market, which is confirmed, inter alia, by the mode of operation of the cartel, which included correcting measures which took existing supply contracts into account. It follows that the sales made pursuant to contracts predating the infringement period and not renegotiated during that period were to be regarded as falling within the scope of the cartel, for the purposes of the case-law cited in paragraph 19 above. Consequently, it must be held that, if the Commission were not entitled to include those sales in the value of the sales calculated in accordance with point 13 of the 2006 Guidelines, the amount of the resulting fine would not reflect the economic significance of the infringement. The General Court therefore did not err in law in finding that the sales at issue were covered by that infringement.24The first ground of appeal must therefore be rejected as unfounded. The second ground of appeal, alleging an error of law in the interpretation of the second subparagraph of Article 23(2) of Directive No 1/2003 25By their second ground of appeal, directed against paragraphs 410 to 423 of the judgment under appeal, the appellants criticise the General Court for finding that the final amount of the fine imposed on them by the Commission did not exceed the ceiling of 10% of the total turnover in the business year preceding the adoption of the decision at issue, referred to in the second subparagraph of Article 23(2) of Regulation No 1/2003 (‘the statutory ceiling of the fine’).26According to the appellants, the General Court erred in law in finding that the Commission was justified, for the purpose of converting that total turnover — which, for the appellants, is denominated in pounds sterling — in using the average exchange rate of the European Central Bank (ECB) applicable in the period between 1 April 2007 and 31 March 2008, and not the exchange rate applicable at the date on which the decision at issue was adopted, namely on 12 November 2008. In the appellants’ opinion, the maximum amount that the Commission was entitled to impose on them was capped at EUR 317547860, that is to say, EUR 39452140 less than the fine ultimately imposed on them.27First, the appellants submit that the General Court’s interpretation is not consistent with the purpose of the statutory ceiling of the fine set out in Article 23(2) of Regulation No 1/2003, which is designed to offer protection against currency fluctuations preceding the adoption of the Commission decision, in other words, the date on which the fine becomes payable.28In that regard, the appellants claim that the General Court wrongly relied on the case-law relating to the applicable exchange rate for the calculation of the basic amount of the fine, which, they maintain, cannot be transposed to the context of determining the statutory ceiling of the fine because, by setting that ceiling, the EU legislature pursues an objective that is distinct and autonomous by comparison with the criteria of the gravity and duration of the infringement. According to the appellants, the purpose of that ceiling is precisely to offer absolute protection against the harmful consequences of the monetary fluctuations that may occur up to the date of adoption of the Commission decision, as they claim is apparent from the case-law of the Court and, in particular, from paragraph 59 of the judgment of 16 November 2000, Enso Española v Commission (C‑282/98 P, EU:C:2000:628), from paragraph 89 of the judgment of 16 November 2000, Sarrió v Commission (C‑291/98 P, EU:C:2000:631), from paragraph 606 of the judgment of 15 October 2002, Limburgse Vinyl Maatschappij and Others v Commission (C‑238/99 P, C‑244/99 P, C‑245/99 P, C‑247/99 P, C‑250/99 P to C‑252/99 P and C‑254/99 P, EU:C:2002:582), and from paragraph 63 of the judgment of 4 September 2014, YKK and Others v Commission (C‑408/12 P, EU:C:2014:2153).29Secondly, the appellants dispute the finding of the General Court in paragraph 418 of the judgment under appeal that undertakings have to bear the risk of currency fluctuations between the preceding business year and the date on which the Commission decision is adopted, which, they claim, entails significant costs for those undertakings. The appellants argue that that finding is not consistent with the objective of Article 23(2) of Regulation No 1/2003 and has no basis in the case-law of the Court.30Thirdly, according to the appellants, the approach of the General Court fails to ensure equal treatment between undertakings which keep their accounts in currencies other than the euro and those which keep their accounts in euros, since the former are exposed to the risk that the level of the statutory ceiling of the fine may vary substantially depending on currency fluctuations, while the latter are not exposed to that risk.31Fourthly, the appellants claim that the General Court’s approach fails to ensure legal certainty, since it creates uncertainty with regard to the maximum financial risk borne by undertakings with an accounting currency other than the euro.32The Commission contends that this ground of appeal must be rejected as unfounded.33By their second ground of appeal, the appellants essentially criticise the General Court for having found that the Commission was entitled to determine the statutory ceiling of the fine by reference to the average exchange rate applicable in the business year preceding the adoption of the decision at issue, rather than by reference to the exchange rate applicable at the time when the decision was adopted. The appellants submit that, in doing so, the General Court misinterpreted the purpose of the statutory ceiling and the case-law of the Court, and failed to have regard for the principles of equal treatment and legal certainty.34The second subparagraph of Article 23(2) of Regulation No 1/2003 provides that, for each undertaking and association of undertakings participating in the infringement, the fine may not exceed 10% of its total turnover in the preceding business year.35The appellants, the total turnover of which in the preceding business year is denominated in pounds sterling, do not dispute the Commission’s right to set in euros the fines which it imposes under Article 23 of Regulation No 1/2003. That provision does not, however, contain any indication as to the exchange rate to be used when determining the statutory ceiling of the fine, in the case where the total turnover referred to in the second subparagraph of Article 23(2) of Regulation No 1/2003 is denominated in a currency other than the euro.36In that regard, for the purpose of assessing the merits of the method of conversion used by the Commission, it must be noted that the General Court, without being challenged by the appellants on that point, referred to the objective pursued by the statutory ceiling of the fine, as the Court specified in paragraphs 281 and 282 of the judgment of 28 June 2005, Dansk Rørindustri and Others v Commission (C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408) and as the General Court recalled in paragraph 414 of the judgment under appeal. That objective is to avoid the imposition of fines in respect of which it is foreseeable that the undertakings, owing to their size, as determined — albeit approximately and imperfectly — by their total turnover, will be unable to pay them.37As is apparent from the case-law of the Court, the amount of the fine that may be imposed on an undertaking is subject to a quantifiable and absolute ceiling, with the result that the maximum amount of the fine that can be imposed on a given undertaking can be determined in advance (see, to that effect, judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 48 and the case-law cited).38Therefore, in the light of that objective, the General Court cannot be criticised for finding, in paragraph 415 of the judgment under appeal, that the upper limit derived from the second subparagraph of Article 23(2) of Regulation No 1/2003 must be determined, as a rule, by reference to the economic reality as it appeared in the business year preceding the adoption of the decision penalising an infringement of Article 81 EC.39As the Advocate General emphasised in point 51 of her Opinion, that finding is consistent with the choice made by the EU legislature to take, as a rule, the turnover figures for the last full business year preceding the adoption of the decision setting the amount of the fine as the reference value, ascertainable in advance, that is most likely to reflect the financial capacity of an undertaking at the time when the undertaking is identified as responsible for the infringement and a financial penalty is imposed on it by the Commission.40However, contrary to the appellants’ assertions, the choice made by the EU legislature also justifies the use of the exchange rate applicable during that period to convert the reference value in the case where that value is expressed in a currency other than the euro.41The Court notes, first, that, with regard to the assessment of an undertaking’s financial capacity, it is consistent with the choice of the EU legislature to refer, for that purpose, not to the exchange rate applicable at the time of the decision imposing the fine but to the average exchange rate in the business year preceding the adoption of that decision, since the latter is more likely to reflect the economic reality as it appeared in the course of that business year.42In that regard, contrary to the assertions of the appellants, it cannot be inferred from the case-law of the Court that, with regard to the conversion of the maximum amount of the fine, it has held it necessary to refer to the exchange rate applicable at the time when the decision imposing the fine was adopted. On the contrary, the Court notes that that line of case-law confirms the finding of the General Court, in paragraph 415 of the judgment under appeal, that, in essence, where the economic reality is to be assessed as it appeared at a given time, it is reasonable to refer to the exchange rates applicable during that period. Otherwise, the assessment of the economic reality would necessarily be distorted by extrinsic and uncertain factors, such as the changes in exchange rates over a period subsequent to that business year (see, by analogy, judgement of 16 November 2000, Sarrió v Commission, C‑291/98 P, EU:C:2000:631, paragraphs 86 and 88).43Secondly, the method of conversion endorsed by the General Court in paragraph 416 of the judgment under appeal meets the requirement of predictability for the statutory ceiling of the fine, referred to in paragraph 37 above, in so far as that method is based on an exchange rate ascertainable prior to the adoption of the decision of the Commission imposing the fine, and according to which the upper limit of the fine can be determined in advance.44Thirdly, the Court must reject the appellants’ argument that the General Court misinterpreted the purpose of the statutory ceiling in that, they claim, it is designed to ensure absolute protection against monetary fluctuations up to the date on which the decision imposing the fine is adopted.45As the Advocate General observed in point 55 of her Opinion, such protection is not an independent purpose of the statutory ceiling of the fine, but rather a feature of the protection offered by that ceiling against excessive and disproportionate fines (see, by analogy, judgment of 28 June 2005, Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408, paragraph 281). Thus, as regards the purpose of the statutory ceiling of the fine, the appellants cannot rely on the case-law cited in paragraph 28 above to support their claim. While that case-law relating to the conversion of the value of sales in the context of determining the basic amount of the fine acknowledges that the statutory ceiling limits the possible harmful consequences of monetary fluctuations, it does not follow from that line of authority that that ceiling constitutes an absolute protection against such fluctuations, nor that the relevant exchange rate for determining that ceiling is that applicable at the time when the decision imposing the fine is adopted.46As regards the alleged impact of monetary fluctuations on the level of the statutory ceiling of the fine, converted into euros, the Court notes that the appellants have failed to provide any particulars capable of demonstrating that the General Court erred in finding, in paragraph 415 of the judgment under appeal, that the method for calculating the statutory ceiling of the fine chosen by the Commission limits the possible harmful consequences of those monetary fluctuations. As is apparent from paragraph 42 of the present judgment, that method, which is based on the average historical rates applicable over the course of the business year preceding the adoption of the decision imposing the fine, rather than on the exchange rate applicable at the time of the decision, tends, by its very nature, to neutralise the effect which those fluctuations have on the level of the statutory ceiling of the fine up to the date on which that decision is adopted. The Court cannot accept the appellants’ arguments in that respect, since a method of conversion based on a daily exchange rate is bound to be uncertain and unpredictable, unlike the method chosen by the General Court.47The Court consequently finds that the General Court did not err in law in holding, in paragraph 416 of the judgment under appeal, that the method of conversion used by the Commission to determine the statutory ceiling of the fine was consistent with the purpose of that ceiling.48Furthermore, the appellants cannot argue that undertakings which keep their accounts in a currency other than the euro face unequal treatment as against undertakings which keep their accounts in euros, as a result of the former being exposed to currency risk. Since the appellants do not dispute that the fine imposed on them may be set in euros, they are inevitably exposed to currency fluctuations. In that context, the General Court was fully entitled to find, in paragraph 418 of the judgment under appeal, that currency fluctuations are an element of chance which may produce advantages and disadvantages which undertakings realising part of their sales on export markets have to deal with regularly in the course of their business activities and the very existence of which is not such as to render inappropriate the amount of a fine lawfully fixed on the basis of the gravity and the duration of the infringement.49Moreover, the appellants’ contention alleging infringement by the General Court of the principle of legal certainty is based, as established in paragraph 46 above, on the false premise that the method of calculation approved by the General Court exposed them to the risk of changes in the level of the statutory ceiling of the fine depending on currency fluctuations between the end of the previous business year and the date of the decision at issue.50Those arguments must therefore be rejected as unfounded.51In the light of all of the foregoing, the General Court did not err in law in finding, in paragraph 421 of the judgment under appeal, that the Commission was entitled to calculate the statutory ceiling of the fine by reference to the appellants’ total turnover in the preceding business year, which was converted into euros by application of the average exchange rate applicable in that business year.52The appellants’ second ground of appeal must therefore be rejected as unfounded. The third ground of appeal, alleging infringement of the principles of equal treatment and proportionality and also failure by the General Court to exercise its unlimited jurisdiction 53The appellants’ third ground of appeal, directed against paragraphs 396 to 402, 434, 438 and 440 to 444 of the judgment under appeal, is divided into two parts.54By the first part of this ground of appeal, the appellants claim that the General Court erred in law by misapplying the principles of equal treatment and proportionality when it rejected their plea in law alleging that the fine imposed on them by the Commission was proportionally higher than that imposed on other cartel participants by reason of the less diversified nature of the appellants’ activity.55According to the appellants, the General Court thus ignored their argument that, when the harmful consequences of a fine on an undertaking are disproportionate in comparison with the fine imposed on the other addressees of the decision, as illustrated by the proportion of the amount of the fine in relation to the total annual turnover of those undertakings, the Commission must ensure that there is compliance with the principles of proportionality and equal treatment. In the present case, the appellants submit, that state of affairs was predictable at the time when the decision at issue was adopted, as is indicated in the report of the consulting firm submitted to the General Court. In that regard, the appellants claim that the General Court misinterpreted the purpose of that report, which was submitted not as evidence of facts that occurred after the decision at issue had been adopted but as evidence of the fact that the imposition of a large fine on the appellants would have a disproportionate impact and would lead to a serious deterioration of their financial situation in comparison with the other participants in the infringement.56The appellants also maintain that the General Court misinterpreted their argument alleging that the Commission should have taken into account not the possible financial losses of undertakings that are less well adapted to market conditions but the impact that a large fine might have on the financial situation of the undertakings and, in particular, of those with the least diversified activity.57Lastly, in the appellants’ opinion, the General Court overlooked the fact that arguments similar to those which they raised have been taken into account by the Commission in previous decisions, and by the General Court, inter alia, in the judgment of 12 December 2012, Novácke chemické závody v Commission (T‑352/09, EU:T:2012:673).58By the second part of their third ground of appeal, the appellants allege that the General Court erred in law in failing to exercise its unlimited jurisdiction with the intensity required in order to remedy the unequal treatment to which they were subject as against the other participants in the infringement that resulted in the decision at issue. The appellants submit that the General Court, when exercising its unlimited jurisdiction, should have taken into account the financial difficulties which the payment of that fine might entail for them, without those difficulties having necessarily to amount to exceptional circumstances, as the General Court held in paragraph 443 of the judgment under appeal. According to the appellants, in order for the amount of the fine to be rectified, it suffices that those difficulties might have a significant impact on the appellants, resulting in unequal treatment in comparison with the other cartel participants.5960By the first part of this ground of appeal, the appellants essentially claim that, in the context of reviewing the legality of the decision at issue under Article 263 TFEU, the General Court misapplied the principles of equal treatment and proportionality. The appellants are of the opinion that those principles required the General Court to hold that, when determining the amount of the fines, the Commission ought to have taken into consideration that the impact of the fine imposed on the appellants would evidently be more detrimental than the impact on the other cartel participants because their activity was less diversified, as reflected by the difference in the proportion represented by the fine in relation to the total turnover of the undertakings concerned.61With regard to the information contained in the consulting firm’s report referred to in paragraph 400 of the judgment under appeal, it is apparent from paragraph 401 of that judgement that it was, in essence, for the reasons set out in paragraphs 274 and 275 of the judgment under appeal, namely that the report concerned the development of the appellants’ financial situation after the decision at issue had been adopted and that it could therefore not have had any effect on the legality of that decision in the context of the review carried out under Article 263 TFEU, that the General Court held that there was no need to take this information into account when assessing the legality of the fine.62While it is indeed true that the appellants implicitly invoked a distortion of that evidence, in particular by claiming that the General Court misinterpreted the purpose of that report, a mere allusion to such a distortion does not satisfy the requirements laid down by the case-law of the Court under which an appellant must indicate precisely the evidence alleged to have been distorted and must show the errors of appraisal which, in that appellant’s view, led the General Court to make that distortion (see, to that effect, judgment of 7 January 2004, Aalborg Portland and Others v Commission, C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 50).63Next, with regard to the argument concerning the failure to take account of the proportion represented by the amount of the fine imposed on the appellants in relation to their overall turnover in comparison with the other addressees of the decision at issue, and the alleged resulting unequal treatment, the Court finds that, contrary to the appellants’ assertions, the General Court did address that issue, in paragraphs 397 to 399 of the judgment under appeal.64In particular, the General Court was fully entitled to hold, in paragraph 398 of the judgment under appeal, that it is not contrary to the principles of proportionality and equal treatment that, through the application of the method of calculation of the basic amount of fines set out in point 13 of the 2006 Guidelines, an undertaking, the activities of which are more focused than others on the sale of goods or services connected directly or indirectly to the infringement, may receive a fine which represents a proportion of its overall turnover that is greater than that represented by the fines imposed respectively on each of the other undertakings. The General Court found that it is inherent in that method of calculation, which is not based on the overall turnover of the undertakings concerned, that disparities may appear between those undertakings as to the relationship between their overall turnover and the amount of the fines imposed on them.65As the General Court found in paragraph 397 of the judgment under appeal, it is apparent from the case-law of the Court that the Commission is not required, when determining the amount of fines, to ensure, where such fines are imposed on a number of undertakings involved in the same infringement, that the final amounts of the fines reflect any distinction between the undertakings concerned in terms of their overall turnover (judgment of 28 June 2005, Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408, paragraph 312).66With regard to the alleged infringement of the principle of equal treatment invoked by the appellants, on the assumption that this ground of appeal seeks to demonstrate that the Commission ought to have departed from that method by deciding, as regards the appellants, to reduce the amount of the fine because of the less diversified nature of their activity, the Court notes, as did the Advocate General in point 100 of her Opinion, that the difference in the proportion represented by the fine in relation to the total turnover of the undertakings concerned does not, as such, constitute a sufficient justification for departing from the method of calculation that the Commission imposed on itself. That would be tantamount to conferring an advantage on the least diversified undertakings on the basis of criteria that are irrelevant in the light of the gravity and the duration of the infringement. When the amount of the fine is determined, there cannot, by the application of different methods of calculation, be any discrimination between the undertakings which have participated in an agreement or a concerted practice contrary to Article 101(1) TFEU (see, to that effect, judgment of 19 July 2012, Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, C‑628/10 P and C‑14/11 P, EU:C:2012:479, paragraph 58 and the case-law cited).67With regard to the appellants’ argument based on the alleged impact that a large fine would have on their financial situation, it must be noted that the Court has repeatedly held that the Commission is not required, when determining the amount of the fine, to take account of the economic situation of the undertaking concerned, and, in particular, of its financial capacity, since recognition of such an obligation would be tantamount to conferring unfair competitive advantages on the undertakings least well adapted to market conditions (judgment of 10 May 2007, SGL Carbon v Commission, C‑328/05 P, EU:C:2007:277, paragraph 100 and the case-law cited).68Lastly, the appellants cannot reasonably argue that account was taken of such considerations in other decisions of the Commission, given that, according to the Court’s settled case-law, the Commission’s practice in previous decisions does not serve as a legal framework for the fines imposed in competition matters (judgement of 23 April 2015, LG Display and LG Display Taiwan v Commission, C‑227/14 P, EU:C:2015:258, paragraph 67 and the case-law cited).69In those circumstances, the first part of the third ground of appeal cannot be accepted.70By the second part of the third ground of appeal, the appellants claim that the General Court failed adequately to exercise its unlimited jurisdiction under Article 261 TFEU, read in combination with Article 31 of Regulation No 1/2003, by not reducing the amount of the fine in order to ensure equal treatment between the cartel participants.71It must be borne in mind that, in accordance with the provisions referred to in the previous paragraph, the General Court is empowered, in addition to the mere review of the legality of the fines imposed by the Commission, to substitute its own assessment for that of the Commission, and, consequently, to cancel, reduce or increase the fine or penalty payment imposed (see, to that effect, judgment of 21 January 2016, Galp Energía España and Others v Commission, C‑603/13 P, EU:C:2016:38, paragraph 75 and the case-law cited).72By contrast, it is not for the Court of Justice, when ruling on questions of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the General Court exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of EU law (judgment of 18 July 2013, Schindler Holding and Others v Commission, C‑501/11 P, EU:C:2013:522, paragraph 164 and the case-law cited).73It is only in so far as the Court of Justice considers that the level of the penalty is not merely inappropriate, but also excessive to the point of being disproportionate, that it would have to find that the General Court erred in law, due to the inappropriateness of the amount of a fine (judgment of 18 July 2013, Schindler Holding and Others v Commission, C‑501/11 P, EU:C:2013:522, paragraph 165 and the case-law cited).74In that respect, as is apparent from paragraphs 433, 438 and 441 of the judgment under appeal, with regard to the allegedly disproportionate nature of the fine imposed on the appellants, the General Court, under its unlimited jurisdiction, examined the appellants’ arguments alleging, in the first place, that, due to the less diversified nature of their activity, the amount of the fine would have a greater impact on their financial situation in comparison with the fine imposed on the other undertakings concerned, and, in the second place, that the fine would lead to a deterioration of their financial situation. In that context, the General Court took into account the information contained in the consulting firm’s report referred to in paragraph 55 above.75With regard to the first argument, as is apparent from paragraph 64 above, the General Court was fully entitled to find, in paragraph 438 of the judgment under appeal, that the circumstances invoked by the appellants, were they established, would not have been relevant for the purpose of assessing whether the fine was proportionate.76As for the second argument, it is apparent from paragraphs 441 and 442 of the judgment under appeal that the General Court acted correctly in taking the view that the existence of possible financial difficulties is capable of justifying, as such, a reduction of the fine only in exceptional circumstances, where justified by an overriding interest. As the General Court observed, in essence, in paragraph 441 of the judgment under appeal, the fines imposed on undertakings by the Commission pursuant to Article 23(2) of Regulation No 1/2003 would be deprived of their deterrent effect if such difficulties were automatically to be taken into account.77Thus, contrary to what the appellants contend, the finding of the General Court was not that its unlimited jurisdiction may be exercised only in exceptional circumstances but that the reduction of a fine based on the existence of alleged financial difficulties may be carried out only if those difficulties are exceptional in nature. In paragraphs 434 and 443 of the judgment under appeal, the General Court found that, on the basis of the available information, that was not the position in the case before it.78Therefore, the second part of the third ground of appeal must be rejected to the extent to which, on the one hand, it is based on a misinterpretation of the judgment under appeal and, on the other hand, its objective is to secure a re-examination of the appraisal of the facts by the General Court, something which the Court of Justice cannot do in the context of an appeal.79In the light of all of the foregoing, the third ground of appeal must be rejected as being in part inadmissible and in part unfounded.80Since none of the three grounds of appeal raised by the appellants in support of their appeal can be upheld, the appeal must be dismissed in its entirety. Costs 81Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs. Under Article 138(1) of those rules, which applies to the procedure on appeal by virtue of Article 184(1) thereof, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the appellants have been unsuccessful and the Commission has applied for costs to be awarded against them, the appellants must be ordered to pay the costs relating to the present appeal proceedings.On those grounds, the Court (Fourth Chamber) hereby: 1. Dismisses the appeal; 2. Orders Pilkington Group Ltd, Pilkington Automotive Ltd, Pilkington Automotive Deutschland GmbH, Pilkington Holding GmbH and Pilkington Italia SpA to pay the costs. [Signatures]( *1 ) Language of the case: English. | 804ca-6cc60d0-40c6 | EN |
A Member State is not required to grant every Union citizen who has moved within its territory the same protection against extradition as that granted to its own nationals | 6 September 2016 ( *1 )‛Reference for a preliminary ruling — Citizenship of the Union — Extradition to a third State of a national of a Member State who has exercised his right to freedom of movement — Scope of EU law — Protection of a Member State’s nationals against extradition — No protection for nationals of the other Member States — Restriction of freedom of movement — Justification based on the prevention of impunity — Proportionality — Verification of the guarantees provided for in Article 19 of the Charter of Fundamental Rights of the European Union’In Case C‑182/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Augstākā tiesa (Supreme Court, Latvia), made by decision of 26 March 2015, received at the Court on 22 April 2015, in the proceedings relating to the extradition of Aleksei Petruhhin THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič, L. Bay Larsen, A. Arabadjiev, C. Toader and F. Biltgen, Presidents of Chambers, E. Levits, J.‑C. Bonichot, M. Safjan, C.G. Fernlund (Rapporteur) and S. Rodin, Judges,Advocate General: Y. Bot,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 1 March 2016,after considering the observations submitted on behalf of:—the Latvian Government, by I. Kalniņš, acting as Agent,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the German Government, by T. Henze, J. Möller, M. Hellmann and J. Kemper, acting as Agents,Ireland, by E. Creedon, L. Williams and T. Joyce, acting as Agents, C. Toland, Barrister-at-Law, and D. Kelly, Advisory Counsel,the French Government, by G. de Bergues, D. Colas and F.-X. Bréchot, acting as Agents,the Austrian Government, by G. Eberhard, acting as Agent,the Polish Government, by B. Majczyna, acting as Agent,the United Kingdom Government, by V. Kaye, acting as Agent, and J. Holmes, Barrister,the European Commission, by S. Grünheid, E. Kalniņš and W. Bogensberger, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 10 May 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of the first paragraph of Article 18 TFEU, Article 21(1) TFEU and Article 19 of the Charter of Fundamental Rights of the European Union (‘the Charter’).2The request has been made in the context of an extradition request issued by the Russian authorities to the Latvian authorities in relation to Mr Aleksei Petruhhin, an Estonian national, in connection with a drug-trafficking offence. Legal context EU law 3Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (OJ 2002 L 190, p. 1), as amended by Council Framework Decision 2009/299/JHA of 26 February 2009 (OJ 2009 L 81, p. 24) (‘Framework Decision 2002/584’), provides in Article 1(1) and (2):‘1. The European arrest warrant is a judicial decision issued by a Member State with a view to the arrest and surrender by another Member State of a requested person, for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order.2. Member States shall execute any European arrest warrant on the basis of the principle of mutual recognition and in accordance with the provisions of this Framework Decision.’ Latvian law 4The Latvian Constitution provides in the third sentence of Article 98:‘A citizen of Latvia may not be extradited to a foreign country, except in the cases provided for in international agreements ratified by the Saeima (Latvian Parliament) if by the extradition the basic human rights specified in the Constitution are not violated.’5Chapter 66 of the Code of Criminal Procedure is entitled ‘Extradition of a person to a foreign State’. It includes Article 696, paragraphs 1 and 2 of which provide:‘(1) A person who is present in the territory of the Republic of Latvia may be extradited for the purpose of criminal proceedings, trial, or the execution of a judgment, if a request has been received from a foreign State for the temporary detention or the extradition of that person and the facts are characterised as a criminal offence under Latvian law and the law of the foreign State.(2) A person may be extradited for the purpose of criminal proceedings or trial in respect of an offence the commission of which is punished by imprisonment for a maximum term of not less than one year or by a more severe penalty, unless an international treaty provides otherwise.’6Article 697(2)(1), (2) and (7) of that code is worded as follows:‘Extradition shall not be granted if:(1)the person concerned is a Latvian citizen;(2)the request for the extradition of the person concerned has been made with the aim of commencing criminal proceedings against him or punishing him on the ground of race, religious beliefs, nationality or political views, or if there are sufficient grounds for believing that his rights may be infringed on the abovementioned grounds;...(7)the person concerned may be tortured in the foreign State.’7The Agreement of 3 February 1993 between the Republic of Latvia and the Russian Federation on Judicial Assistance and Judicial Relations in Civil, Family and Criminal Matters provides, in Article 1:‘1. The personal and economic rights of the nationals of one of the Contracting Parties present in the territory of the other Contracting Party shall enjoy in that territory the same legal protection as [the rights of] the nationals of the other Contracting Party.2. The nationals of one of the Contracting Parties shall be entitled to access freely and without hindrance the courts, the office of the Public Prosecutor and notarial offices … and other institutions of the other Contracting Party with competence for civil, family and criminal matters, they may bring proceedings, submit requests, lodge appeals and carry out other procedural acts before those bodies on the same terms as nationals of that other Contracting Party.’8Article 62 of that agreement provides:‘Extradition shall not be granted if … the person whose extradition is requested is a national of the Contracting Party to which the request is addressed or if he has obtained refugee status in that State’.9The Agreement of 11 November 1992 between the Republic of Estonia, the Republic of Latvia and the Republic of Lithuania on Judicial Assistance and Judicial Relations provides in Article 1(1):‘The personal and economic rights of the nationals of one of the Contracting Parties present in the territory of the other Contracting Party shall enjoy in that territory the same legal protection as [the rights of] the nationals of the other Contracting Party.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 10Mr Petruhhin, an Estonian national, was made the subject of a priority Red Notice on Interpol’s website on 22 July 2010.11He was arrested on 30 September 2014 in the town of Bauska (Latvia), then placed in provisional custody on 3 October 2014.12On 21 October 2014, the Latvian authorities received an extradition request from the Office of the Prosecutor-General of the Russian Federation. That request stated that criminal proceedings were initiated against Mr Petruhhin following a decision of 9 February 2009 and that he had to be placed in custody. Mr Petruhhin was accused of attempted large-scale, organised drug-trafficking. Under Russian law, that offence is punishable with a term of imprisonment of between 8 and 20 years.13The Latvijas Republikas Ģenerālprokuratūra (Public Prosecutor’s Office of the Republic of Latvia) authorised Mr Petruhhin’s extradition to Russia.14However, on 4 December 2014 Mr Petruhhin filed an appeal against the extradition decision, on the ground that, under Article 1 of the treaty between the Republic of Estonia, the Republic of Latvia and the Republic of Lithuania on judicial assistance and judicial relations, he enjoyed the same rights in Latvia as a Latvian national and that, consequently, the Latvian State was required to protect him against unjustified extradition.15The referring court observes that neither Latvian national law nor any of the international agreements signed by the Republic of Latvia with, in particular, the Russian Federation or the other Baltic countries restrict the extradition of an Estonian national to Russia. Under those international agreements, protection against such extradition is conferred only on Latvian nationals.16However, according to the referring court, the lack of protection of Union citizens against extradition, when they have moved to a Member State other than the one of which they are nationals, is contrary to the essence of citizenship of the Union, that is to say, the right of Union citizens to protection equivalent to that of a Member State’s own nationals.17In those circumstances, on 26 March 2015 the Augstākā tiesa (Supreme Court, Latvia) annulled the decision to detain Mr Petruhhin and decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Are the first paragraph of Article 18 TFEU and Article 21(1) TFEU to be interpreted as meaning that, in the event of extradition of a citizen of any Member State of the European Union to a non-Member State under an extradition agreement concluded between a Member State and a third country, the same level of protection must be guaranteed as is guaranteed to a citizen of the Member State in question?In those circumstances, must the court of the Member State to which the request for extradition has been made apply the conditions for extradition of the Member State of which the person concerned is a citizen or that in which he has his habitual residence?(3)In cases in which extradition must be carried out without taking into consideration the specific level of protection established for the citizens of the State to which the request for extradition has been made, must the Member State to which the request for extradition has been made verify compliance with the safeguards established in Article 19 of the Charter, that is, that no one may be extradited to a State where there is a serious risk that he or she would be subjected to the death penalty, torture or other inhuman or degrading treatment or punishment? May such verification be limited to checking that the State requesting extradition is a party to the Convention against Torture or is it necessary to check the factual situation by taking into consideration the evaluation of that State carried out by the bodies of the Council of Europe?’ Consideration of the questions referred The admissibility of the questions referred for a preliminary ruling 18According to settled case-law, the procedure provided for by Article 267 TFEU is an instrument of cooperation between the Court of Justice and the national courts, by means of which the Court provides the national courts with the points of interpretation of EU law which they need in order to decide the disputes before them (see, in particular, judgment of 6 October 2015 in Capoda Import-Export, C‑354/14, EU:C:2015:658, paragraph 23 and the case-law cited).19In the context of that cooperation, it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is, in principle, bound to give a ruling (see, in particular, judgment of 6 October 2015 in Capoda Import-Export, C-354/14, EU:C:2015:658, paragraph 24 and the case-law cited).20It follows that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its object, where the problem is hypothetical, or where 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, in particular, judgment of 6 October 2015 in Capoda Import-Export, C-354/14, EU:C:2015:658, paragraph 25 and the case-law cited).21In the present case, the Latvian Government informed the Court at the hearing that, following his release on 26 March 2015, Mr Petruhhin had left Latvia, probably in order to re-enter Estonia.22The Latvian Government added, however, that the extradition proceedings were still pending before the Latvian courts. It stated that the Public Prosecutor’s Office of the Republic of Latvia had not withdrawn its decision authorising Mr Petruhhin’s extradition and that that decision remained subject to review by the Augstākā tiesa (Supreme Court). It was for that court to accept or refuse the extradition, or to request further inquiry before adjudicating.23It is clear from that information that, even if Mr Petruhhin is no longer in Latvia, it is still necessary for the referring court to rule on the lawfulness of the extradition decision, since, if it is not annulled by the referring court, it may be executed at any time, if necessary, following Mr Petruhhin’s arrest on Latvian territory. It is not, therefore, apparent that the questions raised, which seek to determine whether national rules on the basis of which such an extradition decision has been adopted are consistent with EU law, are devoid of interest in order to decide the dispute in the main proceedings.24In those circumstances, the questions referred must be held to be admissible. The first and second questions 25By its first two questions, which should be examined together, the referring court asks, in essence, whether Article 18 TFEU and Article 21 TFEU must be interpreted as meaning that, for the purposes of applying an extradition agreement concluded between a Member State and a third State, nationals of another Member State must benefit from the rule which prohibits the extradition by the first Member State of its own nationals.26In that regard, it is true, as the majority of the Member States which have submitted observations to the Court have argued, that, in the absence of an international agreement between the European Union and the third country concerned, the rules on extradition fall within the competence of the Member States.27Nonetheless, in situations covered by EU law, the national rules concerned must have due regard to the latter (see judgment of 2 March 2010 in Rottmann, C‑135/08, EU:C:2010:104, paragraph 41 and the case-law cited).28By its first two questions, the referring court seeks specifically to ascertain whether national rules on extradition such as those at issue in the main proceedings are compatible with Article 18 TFEU and Article 21 TFEU.29By prohibiting ‘any discrimination on grounds of nationality’, Article 18 TFEU requires that persons in a situation falling within the scope of application of the Treaties be treated equally (see, to that effect, judgment of 2 February 1989 in Cowan, 186/87, EU:C:1989:47, paragraph 10).30In the present case, although, as has been stated in paragraph 26 above, the rules on extradition fall within the competence of the Member States where there is no international agreement between the European Union and the third country concerned, it must, however, be recalled that, in order to determine the scope of application of the Treaties within the meaning of Article 18 TFEU, that article must be read in conjunction with the provisions of the FEU Treaty on citizenship of the Union. The situations falling within their scope of application include, therefore, those involving the exercise of the freedom to move and reside within the territory of the Member States, as conferred by Article 21 TFEU (see, to that effect, judgment of 15 March 2005 in Bidar, C‑209/03, EU:C:2005:169, paragraphs 31 to 33 and the case-law cited).31In the main proceedings, Mr Petruhhin, an Estonian national, made use, in his capacity as a Union citizen, of his right to move freely within the European Union by moving to Latvia, so that the situation at issue in the main proceedings falls within the scope of application of the Treaties, within the meaning of Article 18 TFEU, which sets out the principle of non-discrimination on grounds of nationality (see, to that effect, judgment of 2 February 1989 in Cowan, 186/87, EU:C:1989:47, paragraphs 17 to 19).32However, national rules on extradition such as those at issue in the main proceedings give rise to a difference in treatment depending on whether the person concerned is a national of the Member State in question or a national of another Member State, in that they result in nationals of other Member States, such as Mr Petruhhin, not being granted the protection against extradition enjoyed by nationals of the Member State in question. In so doing, such rules are liable to affect the freedom of nationals of other Member States to move within the European Union.33It follows that, in a situation such as that at issue in the main proceedings, the unequal treatment which allows the extradition of a Union citizen who is a national of another Member State, such as Mr Petruhhin, gives rise to a restriction of freedom of movement, within the meaning of Article 21 TFEU.34Such a restriction can be justified only where it is based on objective considerations and is proportionate to the legitimate objective of the national provisions (see, in particular, judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 83 and the case-law cited).35Several governments which have submitted observations to the Court put forward as a justification that the measure providing for the extradition was adopted in the context of international criminal cooperation, in accordance with an extradition agreement, and seeks to prevent the risk of impunity.36In that respect, it must be noted that, under Article 3(2) TEU, the European Union offers its citizens an area of freedom, security and justice without internal frontiers, in which the free movement of persons is ensured in conjunction with appropriate measures with respect to external border controls and the prevention and combating of crime.37The objective of preventing the risk of impunity for persons who have committed an offence is to be seen in that context (see, to that effect, judgment of 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraphs 63 and 65) and, as the Advocate General has observed in point 55 of his Opinion, must be considered a legitimate objective in EU law.38However, measures which restrict a fundamental freedom, such as that laid down in Article 21 TFEU, may be justified by objective considerations only if they are necessary for the protection of the interests which they are intended to secure and only in so far as those objectives cannot be attained by less restrictive measures (see judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 88 and the case-law cited).39As the Advocate General has observed in point 56 of his Opinion, extradition is a procedure whose aim is to combat the impunity of a person who is present in a territory other than that in which he has allegedly committed an offence. As several national governments have noted in their observations to the Court, although, in the light of the maxim ‘aut dedere, aut judicare’ (either extradite or prosecute), the non-extradition of its own nationals is generally counterbalanced by the possibility for the requested Member State to prosecute such nationals for serious offences committed outside its territory, that Member State as a general rule has no jurisdiction to try cases concerning such acts when neither the perpetrator nor the victim of the alleged offence is a national of that Member State. Extradition thus allows offences committed in the territory of a State by persons who have fled that territory not to remain unpunished.40In that context, national rules, such as those at issue in the main proceedings, which allow an extradition request to be granted for the purposes of prosecution and judgment in the third State where the offence is alleged to have been committed appear appropriate to achieve the objective pursued.41It must, however, be ascertained whether there is an alternative measure less prejudicial to the exercise of the rights conferred by Article 21 TFEU which would be equally effective in achieving the objective of preventing the risk of impunity for a person alleged to have committed a criminal offence.42In that regard, it should be noted that, in accordance with the principle of sincere cooperation set out in the first subparagraph of Article 4(3) TEU, the European Union and the Member States are, in full mutual respect, to assist each other in carrying out tasks which flow from the Treaties.43In the criminal law context, the EU legislature has, inter alia, adopted Framework Decision 2002/584 which seeks to facilitate judicial cooperation by introducing the European arrest warrant. That warrant is the first concrete measure in the field of criminal law implementing the principle of mutual recognition, which the European Council has referred to as the ‘cornerstone’ of judicial cooperation (judgment of 1 December 2008 in Leymann and Pustovarov, C‑388/08 PPU, EU:C:2008:669, paragraph 49). In addition to that judicial cooperation mechanism which the European arrest warrant constitutes, there are also numerous instruments of mutual assistance intended to facilitate such cooperation (see, to that effect, judgment of 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraphs 65 to 68).44Furthermore, in its relations with the wider world, the European Union is to uphold and promote its values and interests and contribute to the protection of its citizens, in accordance with Article 3(5) TEU.45That protection is being built up gradually by means of cooperation instruments such as extradition agreements concluded between the European Union and third countries.46However, at present, such an agreement does not exist between the European Union and the third country at issue in the main proceedings.47In the absence of rules of EU law governing extradition between the Member States and a third State, it is necessary, in order to safeguard EU nationals from measures liable to deprive them of the rights of free movement and residence provided for in Article 21 TFEU, while combatting impunity in respect of criminal offences, to apply all the cooperation and mutual assistance mechanisms provided for in the criminal field under EU law.48Consequently, in a case such as that at issue in the main proceedings, the exchange of information with the Member State of which the person concerned is a national must be given priority in order to afford the authorities of that Member State, in so far as they have jurisdiction, pursuant to their national law, to prosecute that person for offences committed outside national territory, the opportunity to issue a European arrest warrant for the purposes of prosecution. Article 1(1) and (2) of Framework Decision 2002/584 does not preclude, in such a case, the possibility for the Member State of which the alleged offender is a national of issuing a European arrest warrant with a view to the surrender of that person for the purposes of prosecution.49In cooperating accordingly with the Member State of which the person concerned is a national and giving priority to that potential arrest warrant over the extradition request, the host Member State acts in a manner which is less prejudicial to the exercise of the right to freedom of movement while avoiding, as far as possible, the risk that the offence prosecuted will remain unpunished.50The answer to the first two questions is, therefore, that Article 18 TFEU and Article 21 TFEU must be interpreted as meaning that, when a Member State to which a Union citizen, a national of another Member State, has moved receives an extradition request from a third State with which the first Member State has concluded an extradition agreement, it must inform the Member State of which the citizen in question is a national and, should that Member State so request, surrender that citizen to it, in accordance with the provisions of Framework Decision 2002/584, provided that that Member State has jurisdiction, pursuant to its national law, to prosecute that person for offences committed outside its national territory. The third question 51By its third question, the referring court asks in essence whether, where the requested Member State intends to extradite a national of another Member State at the request of a third State, that first Member State must verify that the extradition will not prejudice the rights referred to in Article 19 of the Charter and, as the case may be, which criteria must be taken into account for the purposes of that verification.52As is apparent from the answer to the first two questions, the decision of a Member State to extradite a Union citizen, in a situation such as that of the main proceedings, comes within the scope of Article 18 TFEU and Article 21 TFEU and, therefore, of EU law for the purposes of Article 51(1) of the Charter (see, to that effect, by analogy, judgment of 26 February 2013 in Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraphs 25 to 27).53It follows that the provisions of the Charter and in particular Article 19 thereof are applicable to such a decision.54Under Article 19 of the Charter, no one may be removed, expelled or extradited to a State where there is a serious risk that he or she would be subjected to the death penalty, torture or other inhuman or degrading treatment or punishment.55In order to assess whether that provision has been infringed, the referring court asks, in particular, whether a Member State may simply check that the requesting State is a party to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, which prohibits torture, or whether the situation which obtains in that State must be specifically examined taking into account the Council of Europe’s assessment of it.56In that regard, reference must be made to Article 4 of the Charter which prohibits inhuman or degrading treatment or punishment and it should be noted that that prohibition is absolute in that it is closely linked to respect for human dignity, the subject of Article 1 of the Charter (see judgment of 5 April 2016 in Aranyosi and Căldăraru, C‑404/15 and C‑659/15 PPU, EU:C:2016:198, paragraph 85).57The existence of declarations and accession to international treaties guaranteeing respect for fundamental rights in principle are not in themselves sufficient to ensure adequate protection against the risk of ill-treatment where reliable sources have reported practices resorted to or tolerated by the authorities which are manifestly contrary to the principles of the European Convention for the Protection of Human Rights and Fundamental Freedoms (judgment of the European Court of Human Rights (‘ECtHR’) of 28 February 2008 in Saadi v. Italy, CE:ECHR:2008:0228JUD003720106, § 147).58It follows that, in so far as the competent authority of the requested Member State is in possession of evidence of a real risk of inhuman or degrading treatment of individuals in the requesting third State, it is bound to assess the existence of that risk when it is called upon to decide on the extradition of a person to that State (see, to that effect, as regards Article 4 of the Charter, judgment of 5 April 2016 in Aranyosi and Căldăraru, C‑404/15 and C‑659/15 PPU, EU:C:2016:198, paragraph 88).59To that end, the competent authority of the requested Member State must rely on information that is objective, reliable, specific and properly updated. That information may be obtained from, inter alia, judgments of international courts, such as judgments of the ECtHR, judgments of courts of the requesting third State, and also decisions, reports and other documents produced by bodies of the Council of Europe or under the aegis of the United Nations (see, to that effect, judgment of 5 April 2016 in Aranyosi and Căldăraru, C‑404/15 and C‑659/15 PPU, EU:C:2016:198, paragraph 89).60The answer to the third question is, therefore, that where a Member State receives a request from a third State seeking the extradition of a national of another Member State, that first Member State must verify that the extradition will not prejudice the rights referred to in Article 19 of the Charter. Costs 61Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. Article 18 TFEU and Article 21 TFEU must be interpreted as meaning that, when a Member State to which a Union citizen, a national of another Member State, has moved receives an extradition request from a third State with which the first Member State has concluded an extradition agreement, it must inform the Member State of which the citizen in question is a national and, should that Member State so request, surrender that citizen to it, in accordance with the provisions of Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States, as amended by Council Framework Decision 2009/299/JHA of 26 February 2009, provided that that Member State has jurisdiction, pursuant to its national law, to prosecute that person for offences committed outside its national territory. 2. Where a Member State receives a request from a third State seeking the extradition of a national of another Member State, that first Member State must verify that the extradition will not prejudice the rights referred to in Article 19 of the Charter of Fundamental Rights of the European Union. [Signatures]( *1 ) Language of the case: Latvian. | 15ee1-39ebeb5-4278 | EN |
The Member State that issued a European arrest warrant is required to consider, for the purposes of deducting the period of detention served in the executing Member State, whether the measures taken against the person concerned in the executing State have the effect of depriving a person of liberty | 28 July 2016 ( *1 )‛Reference for a preliminary ruling — Urgent preliminary ruling procedure — Police and judicial cooperation in criminal matters — Framework Decision 2002/584/JHA — Article 26(1) — European arrest warrant — Effects of the surrender — Deduction of the period of detention served in the executing Member State — Concept of ‘detention’ — Measures involving a restriction of liberty other than imprisonment — Curfew in conjunction with the wearing of an electronic tag — Charter of Fundamental Rights of the European Union — Articles 6 and 49’In Case C‑294/16 PPU,REQUEST for a preliminary ruling under Article 267 TFEU from the Sąd Rejonowy dla Łodzi — Śródmieścia w Łodzi (Poland), made by decision of 24 May 2016, received at the Court on 25 May 2016, in the proceedings JZ v Prokuratura Rejonowa Łódź — Śródmieście, THE COURT (Fourth Chamber),composed of T. von Danwitz, President of the Chamber, C. Lycourgos (Rapporteur), E. Juhász, C. Vajda and K. Jürimäe, Judges,Advocate General: M. Campos Sánchez-Bordona,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 4 July 2016,after considering the observations submitted on behalf of:—the Polish Government, by B. Majczyna and J. Sawicka, acting as Agents,the German Government, by T. Henze and M. Hellmann, acting as Agents,the United Kingdom Government, by C.R. Brodie, acting as Agent, and by D. Blundell, Barrister,the European Commission, by M. Owsiany-Hornung and S. Grünheid, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 19 July 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 26(1) of Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (OJ 2002 L 190, p. 1), as amended by Council Framework Decision 2009/299/JHA of 26 February 2009 (OJ 2009 L 81, p. 24) (‘Framework Decision 2002/584’).2The request has been made in proceedings between JZ and the Prokuratura Rejonowa Łódź — Śródmieście (Prosecutor for the District of Łódź, Poland) concerning the request by JZ for the deduction, from the total period of the custodial sentence imposed on him in Poland, of the period during which he was made subject, by the Member State which executed the European arrest warrant, namely the United Kingdom of Great Britain and Northern Ireland, to the electronic monitoring of his place of residence, in conjunction with a curfew. Legal context The ECHR 3Article 5 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), entitled ‘Right to liberty and security’, provides in paragraph 1 that ‘everyone has the right to liberty and security of person’. The Charter 4In accordance with Article 6 of the Charter of Fundamental Rights of the European Union (‘the Charter’), which is entitled ‘Right to liberty and security’, ‘everyone has the right to liberty and security of person’.5Article 49 of the Charter, entitled ‘Principles of legality and proportionality of criminal offences and penalties’, provides in paragraph 3 that ‘the severity of penalties must not be disproportionate to the criminal offence’.6Article 52 of the Charter, entitled ‘Scope and interpretation of rights and principles’, provides, in paragraphs 3 and 7:‘3. In so far as this Charter contains rights which correspond to rights guaranteed by the [ECHR], the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection....7. The explanations drawn up as a way of providing guidance in the interpretation of this Charter shall be given due regard by the courts of the Union and of the Member States.’ Framework Decision 2002/584 7Recital 12 of Framework Decision 2002/584 states that that decision respects fundamental rights and observes the principles recognised by Article 6 EU and reflected in the Charter, in particular Chapter VI thereof.8As provided in Article 1(3) of that framework decision:‘This Framework Decision shall not have the effect of modifying the obligation to respect fundamental rights and fundamental legal principles as enshrined in Article 6 [EU].’9Article 12 of that framework decision, entitled ‘Keeping the person in detention’, provides:‘When a person is arrested on the basis of a European arrest warrant, the executing judicial authority shall take a decision on whether the requested person should remain in detention, in accordance with the law of the executing Member State. The person may be released provisionally at any time in conformity with the domestic law of the executing Member State, provided that the competent authority of the said Member State takes all the measures it deems necessary to prevent the person absconding.’10Article 26, which is in Chapter 3 of Framework Decision 2002/584 and is entitled ‘Deduction of the period of detention served in the executing Member State’, provides:‘1. The issuing Member State shall deduct all periods of detention arising from the execution of a European arrest warrant from the total period of detention to be served in the issuing Member State as a result of a custodial sentence or detention order being passed.2. To that end, all information concerning the duration of the detention of the requested person on the basis of the European arrest warrant shall be transmitted by the executing judicial authority or the central authority designated under Article 7 to the issuing judicial authority at the time of the surrender.’ Polish law 11Article 63(1) of the Criminal Code (kodeks karny) of 6 June 1997 (Dziennik Ustaw 1997 No 88, item 553) provides that periods of de facto deprivation of liberty are to be deducted from the sentence, rounded up to a full day, with one day of de facto deprivation of liberty being equal to one day of deprivation of liberty, two days of restriction of liberty or two day-fines. For the purposes of Article 63(1), a day means a period of 24 hours calculated from the time of the de facto deprivation of liberty.12Under Article 607f of the Code of Criminal Procedure (kodeks postępowania karnego) of 6 June 1997 (Dziennik Ustaw 1997 No 89, item 555), which transposes Article 26(1) of Framework Decision 2002/584 into Polish law, the periods of de facto deprivation of liberty served in the Member State executing the arrest warrant for the purpose of the surrender are to be deducted from the sentence which has been handed down or is being served. The dispute in the main proceedings and the question referred for a preliminary ruling 13By judgment of 27 March 2007, the Sąd Rejonowy dla Łodzi — Śródmieścia w Łodzi (District Court for Central Łódź, Łódź, Poland) imposed a custodial sentence of three years and two months on JZ.14JZ absconded and a European arrest warrant was therefore issued for him. On 18 June 2014, JZ was arrested by the United Kingdom authorities under that European arrest warrant, and was held in custody until 19 June 2014. By a decision of 25 June 2015, the Polish court credited that period towards the custodial sentence which JZ was required to serve in Poland.15From 19 June 2014 to 14 May 2015, JZ, who was released on bail of GBP 2000, was required to stay at the address he had given, between the hours of 22.00 and 7.00, and his compliance with that requirement was subject to electronic monitoring. In addition, JZ was obliged to report to a police station between the hours of 10.00 and 12.00, initially daily, then, after three months, three times a week, was prohibited from applying for foreign travel documents and was required to keep his mobile telephone switched on and charged at all times. Those measures were applied until 14 May 2015, the date on which he was surrendered to the Polish authorities.16In the referring court, JZ has requested that the period during which he was subject to a curfew in the United Kingdom and to electronic monitoring be credited towards his custodial sentence. He submits, in particular, that, under Article 26(1) of Framework Decision 2002/584, the decision on giving credit for the detention order in the sentence passed must be taken on the basis of the provisions in force in the United Kingdom, under which a detention order consisting in the person concerned being made subject to electronic monitoring for eight or more hours a day must, in his opinion, be regarded as a custodial sentence.17The referring court indicates in that regard that it is possible under United Kingdom law to deduct curfew periods in conjunction with electronic monitoring of the place of residence from the sentence passed only where the curfew is applied for not less than nine hours a day, and that, as a general rule, half of the period during which the measure is applied, rounded up to a full day, can be credited.18The referring court notes that the requirement that JZ remain at home at night had resulted in his losing his job, since it was a temporary job and his employer was not obliged to adjust his working hours to suit his availability. Moreover, during the first three months of the curfew period, JZ had been obliged to report every day, between 10.00 and 12.00, to a police station approximately 16 km from his place of residence. It was only after those three months that the frequency of those appearances was reduced to three times a week and JZ was able to report to a police station closer to his place of residence. During that period, JZ was unable to find a job that was suited to his availability. He therefore stayed at home with his children and only his wife worked.19The referring court considers that the interpretation of the term ‘detention’ in Article 26(1) of Framework Decision 2002/584 is crucial to the correct interpretation and application of the provisions of national law governing the reduction of the term of a custodial sentence, including Article 607f of the Code of Criminal Procedure, which was introduced into Polish law for the purpose of transposing Framework Decision 2002/584.20The referring court notes in that regard that the interpretation of the concept of ‘deprivation of liberty’, in Article 607f of the Code of Criminal Procedure, gives rise to differences in the case-law of the courts and in the legal literature.21The referring court considers that, in the light of recital 12 of Framework Decision 2002/584 and Article 6 TEU, Article 26(1) of that framework decision must be interpreted in the light of Article 5 of the ECHR and the interpretation of that article by the European Court of Human Rights.22It follows, according to the referring court, that the national court should have the opportunity of assessing whether, in the case before it, all the measures applied to the person sentenced and the duration of those measures permit the inference that those measures constitute deprivation of liberty, and, accordingly, on the basis of all the legal rules concerned and applying the principle that national law is to be interpreted in conformity with EU law, possibly of deducting from the length of the custodial sentence passed the period during which those measures were applied.23Furthermore, adopting a strict interpretation of ‘detention’, thereby restricting the application of Article 26(1) of Framework Decision 2002/584 to conventional forms of deprivation of liberty, such as imprisonment or pre-trial detention, could, according to the referring court, lead to a breach of the principle of proportionality laid down in Article 49(3) of the Charter.24The referring court states that the case in the main proceedings is characterised by the application of a series of different measures which, taken together, could be regarded as a deprivation of liberty. The application of those measures over several months could ultimately be regarded as an additional penalty for the same offence as that for which the person sentenced has already been given a long custodial sentence. The referring court notes in that regard that, during the curfew period, JZ was unable to find gainful employment compatible with the time constraints to which he was subject and that his wife bore the entire burden of maintaining the household.25In those circumstances, the Sąd Rejonowy dla Łodzi — Śródmieścia w Łodzi (District Court for Central Łódź, Łódź) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Must Article 26(1) of [Framework Decision 2002/584], in conjunction with Article 6(1) and (3) [TEU] and Article 49(3) of the [Charter], be interpreted as meaning that the term “detention” also covers measures applied by the executing Member State consisting in the electronic monitoring of the place of residence of the person to whom the arrest warrant applies, in conjunction with a curfew?’ The urgent procedure 26The referring court has requested that the present reference for a preliminary ruling be dealt with under the urgent preliminary ruling procedure provided for in Article 107 of the Rules of Procedure of the Court of Justice.27In support of that request, the referring court states that JZ is being held in custody, as his custodial sentence runs until 9 March 2017. It considers, moreover, that, should it prove necessary to credit the entire period during which JZ was subject to a curfew and electronic monitoring, that is the period from 19 June 2014 to 14 May 2015, towards that custodial sentence, the individual concerned would have to be released from the detention facility immediately. Consequently, the referring court considers that the possible date of JZ’s release depends directly on the date on which the Court of Justice rules on the request for a preliminary ruling that is before it.28It must be pointed out, in the first place, that this reference for a preliminary ruling concerns the interpretation of Framework Decision 2002/584, which comes within the field covered by Part Three, Title V, of the FEU Treaty, relating to the area of freedom, security and justice. It may therefore be dealt with under the urgent preliminary ruling procedure.29In the second place, as regards the test for urgency, it is necessary, according to the case-law of the Court, to take into consideration the fact that the person involved in the main proceedings is currently deprived of his liberty and that the question as to whether he may continue to be held in custody depends on the outcome of the dispute in the main proceedings (see, to that effect, judgment of 24 May 2016 in Dworzecki, C‑108/16 PPU, EU:C:2016:346, paragraph 22 and the case-law cited). In the present case, it is apparent from the information supplied by the referring court and recalled in paragraph 27 of this judgment that JZ is currently deprived of his liberty and that the question as to whether he may continue to be held in custody depends on the decision of the Court, in so far as an affirmative answer by the Court to the question referred could result in his immediate release.30In those circumstances, on 6 June 2016, the Fourth Chamber of the Court of Justice, acting on a proposal from the Judge-Rapporteur and after hearing the Advocate General, decided to accede to the referring court’s request that the present reference for a preliminary ruling be dealt with under the urgent preliminary ruling procedure. Consideration of the question referred 31By its question, the referring court asks, in essence, whether Article 26(1) of Framework Decision 2002/584 must be interpreted as meaning that measures such as a nine-hour night-time curfew, in conjunction with the monitoring of the person concerned by means of an electronic tag, an obligation to report to a police station at fixed times on a daily basis or several times a week, and a ban on applying for foreign travel documents, may be classified as ‘detention’ within the meaning of Article 26(1).32As a preliminary point, it must be noted that the binding character of Framework Decision 2002/584 places on the judicial authority of the Member State issuing the European arrest warrant an obligation to interpret national law in conformity with EU law. That authority is therefore bound to interpret domestic law, so far as possible, in the light of the wording and the purpose of that framework decision in order to achieve the result sought by it (see, to that effect, judgment of 5 September 2012 in Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraphs 53 and 54 and the case-law cited).33Admittedly, the obligation to interpret national law in conformity with EU law is limited by general principles of law and cannot serve as the basis for an interpretation of national law contra legem. The fact remains, however, that the principle that national law must be interpreted in conformity with EU law requires national courts to do whatever lies within their jurisdiction, taking the whole body of domestic law into consideration and applying the interpretative methods recognised by it, with a view to ensuring that the framework decision in question is fully effective and to achieving an outcome consistent with the objective pursued by it (see, to that effect, judgment of 5 September 2012 in Lopes Da Silva Jorge, C‑42/11, EU:C:2012:517, paragraphs 55 and 56 and the case-law cited).34Under Article 26(1) of Framework Decision 2002/584, the issuing Member State is to deduct all periods of detention arising from the execution of a European arrest warrant from the total period of detention to be served in that Member State as a result of a custodial sentence or detention order being passed.35The Court has consistently held that it follows from the need for a uniform application of EU law, and from the principle of equality, that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union (see, to that effect, judgments of 17 July 2008 in Kozłowski, C‑66/08, EU:C:2008:437, paragraph 42, and of 24 May 2016 in Dworzecki, C‑108/16 PPU, EU:C:2016:346, paragraph 28).36However, that provision makes no express reference to the law of the Member States for the purpose of determining its meaning and scope.37Accordingly, it must be held that the concept of ‘detention’, which features in Article 26(1) of Framework Decision 2002/584, is an autonomous concept of EU law that must be given an autonomous and uniform interpretation throughout the European Union, which must take into account the terms of that provision, its context and the objectives of the legislation of which it forms part (see, to that effect, judgment of 29 October 2015 in Saudaçor, C‑174/14, EU:C:2015:733, paragraph 52).38As regards, in the first place, the wording of Article 26(1) of Framework Decision 2002/584, it must be borne in mind that the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision or be made to override the other language versions in that regard. Provisions of EU law must be interpreted and applied uniformly in the light of the versions existing in all EU languages (see, to that effect, judgment of 29 April 2015 in Léger, C‑528/13, EU:C:2015:288, paragraph 35).39It must be noted in that regard that the various language versions of Article 26(1) of Framework Decision 2002/584 differ. For example, whereas the German-, Greek- and French-language versions use the terms ‘Freiheitsentzug’, ‘στέρηση της ελευθερίας’ and ‘privation de liberté’ to refer to the treatment of the person concerned in the issuing Member State, and the words ‘Haft’, ‘κράτηση’ and ‘détention’ in relation to the period to be deducted from the sentence passed, the English- and Polish-language versions use only the word ‘detention’ and ‘zatrzymania’ in Article 26(1). On the other hand, the Dutch-language version of that provision uses only the word ‘vrijheidsbeneming’, which corresponds to the expression ‘deprivation of liberty’.40It must be noted that the terms ‘detention’ and ‘deprivation of liberty’ are used interchangeably in the various language versions of Article 26(1) of Framework Decision 2002/584, and, moreover, that these are similar concepts, the ordinary meaning of which evokes a situation of confinement or imprisonment, and not merely a restriction of the freedom of movement.41As regards, in the second place, the context of Article 26(1) of Framework Decision 2002/584, it must be noted that Article 12 of that framework decision provides that when a person is arrested on the basis of a European arrest warrant, the executing judicial authority is to take a decision, in accordance with the law of the executing Member State, on whether the requested person should remain in detention, while making clear that, at any time in conformity with the law of that Member State, it may be decided that the person concerned may be released provisionally, provided that the competent authority takes all the measures it deems necessary to prevent that person absconding. That provision thus envisages an alternative to ‘detention’, namely provisional release in conjunction with measures to prevent the person concerned from absconding.42As regards, in the third place, the objective pursued by Article 26(1) of Framework Decision 2002/584, it must be stated, as the Advocate General noted, in essence, at point 60 of his Opinion, that the obligation under that article to deduct the period of detention arising from the execution of the European arrest warrant from the total period of detention which the person concerned would be required to serve in the issuing Member State is designed to meet the general objective of respecting fundamental rights, as referred to in recital 12, and recalled in Article 1(3), of Framework Decision 2002/584, by preserving the right to liberty of the person concerned, enshrined in Article 6 of the Charter, and the practical effect of the principle of proportionality in the application of penalties, as provided for in Article 49(3) of the Charter.43In so far as it requires account to be taken of any period during which the person sentenced was detained in the executing Member State, Article 26(1) of Framework Decision 2002/584 ensures that that person is not required to serve a period of detention the total length of which — both in the executing Member State and in the issuing Member State — would ultimately exceed the length of the custodial sentence imposed on him in the issuing Member State.44As the Polish Government and the European Commission indicated both in their written observations and at the hearing, the deprivation of liberty, which is a constituent of detention, can characterise both imprisonment and, in exceptional cases, other measures which, while not constituting imprisonment in the strict sense, are nevertheless so restrictive as to require them to be treated in the same way as imprisonment. That would be the case if the measures concerned were, on account of the type, duration, effects and manner of implementation of the measures in question, of such a severity as to deprive the person concerned of his liberty in a way that is comparable to imprisonment.45It follows from this that Article 26(1) of Framework Decision 2002/584 cannot be interpreted as merely requiring the Member State which issued the European arrest warrant to deduct only periods of imprisonment in the executing Member State, excluding periods during which other measures were applied that involve a deprivation of liberty with effects comparable to those of imprisonment.46It thus follows from the wording, the context and the objective of Article 26(1) of Framework Decision 2002/584 that the concept of ‘detention’, within the meaning of that provision, refers not to a measure that restricts liberty but to one that deprives a person of it, and which does not necessarily have to be in the form of imprisonment.47In view of the foregoing considerations and, in particular, the distinction to be drawn between measures that restrict liberty, on the one hand, and those which deprive a person of liberty, on the other, the concept of ‘detention’ within the meaning of Article 26(1) of Framework Decision 2002/584 must be interpreted as covering not only imprisonment but also any measure or set of measures imposed on the person concerned which, on account of the type, duration, effects and manner of implementation of the measure(s) in question deprive the person concerned of his liberty in a way that is comparable to imprisonment.48It should be noted in that regard that the case-law of the European Court of Human Rights in relation to the ‘right to liberty’ provided for in Article 5(1) of the ECHR, which corresponds to Article 6 of the Charter, supports that interpretation.49It will be recalled in that context that Article 52(3) of the Charter provides that, in so far as the Charter contains rights which correspond to rights guaranteed by the ECHR, the meaning and scope of those rights are to be the same as those laid down by the ECHR.50It is clear from the explanations relating to Article 52(3) of the Charter, which, in accordance with the third subparagraph of Article 6(1) TEU and Article 52(7) of the Charter, have to be taken into consideration for the purpose of interpreting it (see, to that effect, judgments of 26 February 2013 in Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraph 20, and of 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraph 54), that Article 52(3) of the Charter is intended to ensure the necessary consistency between the rights contained in the Charter and the corresponding rights guaranteed by the ECHR, without thereby adversely affecting the autonomy of EU law and that of the Court of Justice of the European Union (see, to that effect, judgment of 15 February 2016 in N., C‑601/15 PPU, EU:C:2016:84, paragraph 47).51According to the European Court of Human Rights, the ‘right to liberty’ enshrined in Article 5(1) of the ECHR is not concerned with mere restrictions on liberty of movement, since only measures involving deprivation of liberty are covered by that article. In order to determine whether someone has been ‘deprived of his liberty’ within the meaning of Article 5 of the ECHR, the European Court of Human Rights has ruled that the starting point must be his concrete situation and that account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question (see, to that effect, ECtHR, 6 November 1980, Guzzardi v Italy, ECLI:CE:ECHR:1980:1106JUD000736776, § 92, and 5 July 2016 in Buzadji v Republic of Moldova, ECLI:CE:ECHR:2016:0705JUD002375507, § 103).52In its judgment of 20 April 2010 in Villa v Italy (ECLI:CE:ECHR:2010:0420JUD001967506, § 43 and 44), the European Court of Human Rights held that measures requiring the person concerned to report once a month to the monitoring police authority, to maintain contact with the psychiatric centre of the relevant hospital, to live in a specified place, not to leave the district in which he was residing, and to stay at home between the hours of 22.00 and 7.00, did not constitute deprivation of liberty within the meaning of Article 5(1) of the ECHR.53When applying Article 26(1) of Framework Decision 2002/584, the judicial authority of the Member State which issued the European arrest warrant is required to consider whether the measures taken against the person concerned in the executing Member State are to be treated in the same way as a deprivation of liberty, as referred to in paragraph 47 of the present judgment, and therefore constitute detention within the meaning of Article 26(1). If, in carrying out that examination, the judicial authority comes to the conclusion that that is the case, Article 26(1) of Framework Decision 2002/584 requires that the whole of the period during which those measures were applied be deducted from the period of detention which that person would be required to serve in the Member State which issued the European arrest warrant.54It must be pointed out in that regard that, while measures such as a nine-hour night-time curfew, together with the monitoring of the person concerned by means of an electronic tag, an obligation to report to a police station at fixed times on a daily basis or several times a week, and a ban on applying for foreign travel documents, certainly restrict that person’s liberty of movement, they are not, in principle, so restrictive as to have the effect of depriving him of his liberty and thus to be classified as ‘detention’ within the meaning of Article 26(1) of Framework Decision 2002/584.55However, in so far as Article 26(1) of that framework decision merely imposes a minimum level of protection of the fundamental rights of the person subject to the European arrest warrant, it cannot be interpreted, as the Advocate General stated at point 72 of his Opinion, as preventing the judicial authority of the Member State that issued that arrest warrant from being able, on the basis of domestic law alone, to deduct from the total period of detention which the person concerned would have to serve in that Member State all or part of the period during which that person was subject, in the executing Member State, to measures involving not a deprivation of liberty but a restriction of it.56It must, lastly, be borne in mind that, in the course of the examination referred to in paragraph 53 of the present judgment, the judicial authority of the Member State which issued the European arrest warrant may, under Article 26(2) of Framework Decision 2002/584, ask the competent authority of the executing Member State to transmit any information it considers necessary.57It follows from all the foregoing considerations that the answer to the question referred is that Article 26(1) of Framework Decision 2002/584 must be interpreted as meaning that measures such as a nine-hour night-time curfew, in conjunction with the monitoring of the person concerned by means of an electronic tag, an obligation to report to a police station at fixed times on a daily basis or several times a week, and a ban on applying for foreign travel documents, are not, in principle, having regard to the type, duration, effects and manner of implementation of all those measures, so restrictive as to give rise to a deprivation of liberty comparable to that arising from imprisonment and thus to be classified as ‘detention’ within the meaning of that provision, which it is nevertheless for the referring court to ascertain. Costs 58Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fourth Chamber) hereby rules: Article 26(1) of Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States, as amended by Council Framework Decision 2009/299/JHA of 26 February 2009, must be interpreted as meaning that measures such as a nine-hour night-time curfew, in conjunction with the monitoring of the person concerned by means of an electronic tag, an obligation to report to a police station at fixed times on a daily basis or several times a week, and a ban on applying for foreign travel documents, are not, in principle, having regard to the type, duration, effects and manner of implementation of all those measures, so restrictive as to give rise to a deprivation of liberty comparable to that arising from imprisonment and thus to be classified as ‘detention’ within the meaning of that provision, which it is nevertheless for the referring court to ascertain. [Signatures]( *1 ) Language of the case: Polish. | 9d6bf-88efd40-4e40 | EN |
The Court of Justice confirms the restrictive measures imposed on Johannes Tomana, Attorney-General of Zimbabwe, and 120 other individuals and companies in Zimbabwe | JUDGMENT OF THE COURT (First Chamber)28 July 2016 (*) (Appeal — Restrictive measures imposed on certain persons and entities forming part of the Government of Zimbabwe or linked to it — List of persons, groups and entities covered by the freezing of funds and economic resources — Inclusion of the appellants’ names)In Case C‑330/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 3 July 2015,Johannes Tomana and Others, represented by M. O’Kane, Solicitor, and by M. Lester and Z. Al-Rikabi, Barristers, appellants,the other parties to the proceedings being:Council of the European Union, represented by B. Driessen and A. Vitro, acting as Agents, European Commission, represented by E. Georgieva, M. Konstantinidis and T. Scharf, acting as Agents, defendants at first instance,United Kingdom of Great Britain and Northern Ireland, represented by M. Holt, acting as Agent, and by S. Lee, Barrister, intervener at first instance,THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, A. Arabadjiev, J.-C. Bonichot, S. Rodin (Rapporteur) and E. Regan, Judges, Advocate General: P. Mengozzi,Registrar: A. Calot Escobar,having regard to the written procedure,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the followingJudgment1 By their appeal, Mr Johannes Tomana and the 120 other appellants whose names are listed in the annex to the present judgment seek to have set aside the judgment of the General Court of the European Union of 22 April 2015 in Tomana and Others v Council and Commission (T‑190/12, ‘the judgment under appeal’, EU:T:2015:222), by which the General Court dismissed their action for annulment of Council Decision 2012/97/CFSP of 17 February 2012 amending Decision 2011/101/CFSP concerning restrictive measures against Zimbabwe (OJ 2012 L 47, p. 50), Commission Implementing Regulation (EU) No 151/2012 of 21 February 2012 amending Council Regulation (EC) No 314/2004 concerning certain restrictive measures in respect of Zimbabwe (OJ 2012 L 49, p. 2), and Council Implementing Decision 2012/124/CFSP of 27 February 2012 implementing Decision 2011/101/CFSP concerning restrictive measures against Zimbabwe (OJ 2012 L 54, p. 20) (together ‘the contested measures’), in so far as those measures relate to the appellants. Background to the dispute 2 On 18 February 2002, the Council of the European Union adopted, under Article 15 EU (now Article 29 TEU), Common Position 2002/145/CFSP concerning restrictive measures against Zimbabwe (OJ 2002 L 50, p. 1), in which it expressed its concerns about the situation in Zimbabwe. Its attention was focused on serious violations of human rights committed by the Government of Zimbabwe in relation, in particular, to the freedom of opinion, freedom of association and freedom of peaceful assembly. 3 By Articles 3 and 4 of Common Position 2002/145, the Council imposed a travel ban in the territory of the European Union and froze the funds of the persons listed in the annex to that common position ‘who are engaged in activities that seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. In addition, under Article 7, the Council determined that that common position was to apply for a renewable 12-month period from the date of its entry into force and was to be kept under constant review. 4 Council Common Position 2004/161/CFSP of 19 February 2004 renewing restrictive measures against Zimbabwe (OJ 2004 L 50, p. 66) provided for the renewal of the restrictive measures imposed by Common Position 2002/145. 5 Council Regulation (EC) No 314/2004 of 19 February 2004 concerning certain restrictive measures in respect of Zimbabwe (OJ 2004 L 55, p. 1) was adopted, as stated in recital 5 thereof, in order to implement the restrictive measures provided for by Common Position 2004/161. 6 Recital 2 of that regulation states: ‘The Council continues to consider that the Government of Zimbabwe is still engaging in serious violations of human rights. Therefore, for as long as the violations occur, the Council deems it necessary to maintain restrictive measures against the Government of Zimbabwe and those who bear prime responsibility for such violations.’ 7 Article 6(1) of the regulation is worded as follows: ‘All funds and economic resources belonging to individual members of the Government of Zimbabwe and to any natural or legal persons, entities or bodies associated with them as listed in Annex III shall be frozen.’ 8 Article 11(b) of the regulation provides: ‘The Commission shall be empowered to:...(b) amend Annex III on the basis of decisions taken in respect of the Annex to Common Position 2004/161/CFSP.’9 It should be noted that the names of the majority of the appellants appear in Annex III to Regulation No 314/2004. 10 Implementing Regulation No 151/2012 amended Regulation No 314/2004. Article 1 of that implementing regulation replaced Annex III to Regulation No 314/2004 with a new annex containing the names of all the appellants. Articles 6 and 11 of Regulation No 314/2004 remain unchanged. 11 Council Decision 2011/101/CFSP of 15 February 2011 concerning restrictive measures against Zimbabwe (OJ 2011 L 42, p. 6, and corrigendum OJ 2011 L 100, p. 74) repealed Common Position 2004/161. That decision provides for the imposition, on the persons whose names appear in the annex thereto, of restrictive measures similar to those provided for in Common Position 2004/161. 12 Article 4(1) of Decision 2011/101 provides: ‘Member States shall take the measures necessary to prevent the entry into, or transit through, their territories of members of the Government of Zimbabwe and of natural persons associated with them, as well as of other natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe. The individuals referred to in this paragraph are listed in the Annex.’ 13 Article 5(1) of that decision is worded as follows: ‘All funds and economic resources belonging to individual members of the Government of Zimbabwe or to any natural or legal persons, entities or bodies associated with them, or belonging to any other natural or legal person whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe, shall be frozen. The persons and entities referred to in this paragraph are listed in the Annex.’ 14 Article 6(1) of the decision provides: ‘The Council, acting upon a proposal by a Member State or the High Representative of the Union for Foreign Affairs and Security Policy, shall adopt modifications to the list contained in the Annex as required by political developments in Zimbabwe.’ 15 Article 7 of the decision provides: ‘1. The Annex shall include the grounds for listing the natural or legal persons and entities.2. The Annex shall also contain, where available, the information necessary to identify the natural or legal persons or entities concerned. With regard to natural persons, such information may include names, including aliases, date and place of birth, nationality, passport and ID card numbers, gender, address, and function or profession. With regard to legal persons or entities, such information may include names, place and date of registration, registration number and place of business.’ 16 Decision 2012/97 amends Decision 2011/101. Decision 2012/97 replaces Annex I to Decision 2011/101, but the appellants’ names continue to be listed in it. 17 Implementing Decision 2012/124 amends the listing of one of the appellants in Annex I to Decision 2011/101. The amendment concerns the grounds for that listing. 18 On 20 April 2012, the appellants asked the Council to provide them with ‘all of the evidence and information’ on which it had relied in making its decision to apply restrictive measures to them. The procedure before the General Court and the judgment under appeal19 By application lodged at the General Court Registry on 25 April 2012, the appellants brought an action for annulment of the contested measures. 20 In support of their action, the appellants relied on five pleas in law, alleging, first, that there was no proper legal basis for including persons or entities who are neither leaders of the Republic of Zimbabwe nor their associates in the list of persons subject to the restrictive measures in question; secondly, a manifest error of assessment; thirdly, infringement of the obligation to state reasons; fourthly, infringement of their rights of defence; and, fifthly, breach of the principle of proportionality. 21 After the action was brought, the Council notified the General Court of the adoption of other acts concerning the appellants. These include: – Council Decision 2013/160/CFSP of 27 March 2013 amending Decision 2011/101/CFSP (OJ 2013 L 90, p. 95), which replaced Annex II to Decision 2011/101. The names of most of the appellants, both natural persons and entities, appear in that list; – Council Regulation (EU) No 298/2013 of 27 March 2013 amending Regulation No 314/2004 (OJ 2013 L 90, p. 48), which contains the same names of natural persons and entities as those listed in Annex II to Decision 2011/101, as replaced by Decision 2013/160; – Council Implementing Decision 2013/469/CFSP of 23 September 2013 implementing Decision 2011/101 (OJ 2013 L 252, p. 31), which amended Annex I to Decision 2011/101 so as to remove one of the appellants; – Commission Implementing Regulation (EU) No 915/2013 of 23 September 2013 amending Regulation No 314/2004 (OJ 2013 L 252, p. 23), which amended Annex III to the latter regulation so as to remove the reference in that annex to one of the appellants; – Council Decision 2014/98/CFSP of 17 February 2014, which amends Decision 2011/101 (OJ 2014 L 50, p. 20). The annex to Decision 2014/98 includes the names of several appellants; and – Council Regulation (EU) No 153/2014 of 17 February 2014 amending Regulation No 314/2004 and repealing Regulation No 298/2013 (OJ 2014 L 50, p. 1). Annex IV to Regulation No 314/2004, as added by Regulation No 153/2014, includes the names of all the appellants — natural persons and entities — who were still listed in Annex III to Regulation No 314/2004, save for one in respect of whom the freezing of funds and economic resources provided for in that regulation still applies and has not been suspended. 22 The General Court rejected the five pleas put forward and, therefore, dismissed the action in its entirety. Forms of order sought and procedure before the Court of Justice23 By their appeal, the appellants claim that the Court should: – set aside the judgment under appeal;– annul the contested measures in so far as they apply to the appellants; and– order the respondent institutions to pay the costs of the proceedings at first instance and of the appeal.24 The Council contends that the Court should: – dismiss the appeal; and– order the appellants to pay the costs of the appeal and of the procedure before the General Court.25 The Commission contends that the Court should: – in so far as it is admissible, dismiss the appeal; and – order the appellants to pay the costs of the proceedings.26 The United Kingdom of Great Britain and Northern Ireland contends that the Court should dismiss the appeal. The appeal27 The appellants put forward seven grounds of appeal. It is appropriate to examine together the first and fifth grounds of appeal, relating to the legal basis of the contested measures, then the fourth ground of appeal, concerning respect for the rights of the defence in the procedure before the institutions, then the second and sixth grounds of appeal together, as to whether the contested measures are well founded, and, lastly, the third and seventh grounds of appeal, concerning the General Court’s obligation to state reasons. The first and fifth grounds of appeal Arguments of the parties28 By their first ground of appeal, the appellants claim that the only legal basis for Implementing Regulation No 151/2012 is Article 11(b) of Regulation No 314/2004, according to which the Commission is to be empowered to amend Annex III on the basis of decisions taken in respect of the annex to Common Position 2004/161. 29 They submit that, at the time of the adoption of Implementing Regulation No 151/2012, Common Position 2004/161 had been repealed by Decision 2011/101. Yet Article 11(b) of Regulation No 314/2004 continues to refer to Common Position 2004/161. Invoking Article 291 TFEU, they state that the Commission is empowered to adopt implementing regulations only where the act in question confers such a power on it, and there is nothing in the wording of Article 11(b) to suggest this conclusion. 30 By their fifth ground of appeal, the appellants maintain that, where the Commission lacks a legal basis for imposing restrictive measures on non-State actors — that is people who are neither members of the Government nor their associates —, it is not open to the General Court to re-characterise listing decisions taken under them so that they no longer purport to apply to non-State actors, despite the fact that the respondent institutions understood them to extend to non-State actors and applied them in that way. 31 The Council, supported by the Commission and by the United Kingdom, contends that the first and fifth grounds of appeal should be rejected as unfounded. 32 The Commission submits that the first ground of appeal is a new plea and is therefore inadmissible. In addition, it maintains that the lack of clarity with regard to the fifth ground of appeal renders it inadmissible. Findings of the Court– Admissibility33 It should be noted that, according to the case-law of the Court, to allow a party to put forward for the first time before the Court of Justice a plea in law which it did not raise before the General Court would in effect allow that party to bring before the Court a wider case than that heard by the General Court. In an appeal, the Court’s jurisdiction is, as a general rule, confined to a review of the assessment by the General Court of the pleas argued before it. However, an argument which was not raised at first instance does not constitute a new plea that is inadmissible at the appeal stage if it is simply an amplification of an argument already developed in the context of a plea set out in the application before the General Court (judgment of 10 April 2014 in Areva and Others v Commission, C‑247/11 P and C‑253/11 P, EU:C:2014:257, paragraphs 113 and 114). 34 Furthermore, according to settled case-law, it follows from the second subparagraph of Article 256(1) TFEU, the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union and Article 168(1)(d) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal (see, in particular, judgments of 4 September 2014 in Spain v Commission, C‑197/13 P, EU:C:2014:2157, paragraph 43, and of 5 March 2015 in Ezz and Others v Council, C‑220/14 P, EU:C:2015:147, paragraph 111). In this regard, Article 169(2) of the Rules of Procedure of the Court of Justice specifies that the pleas in law and legal arguments relied on must identify precisely those points in the grounds of the decision of the General Court which are contested. 35 In the present case, the General Court, in paragraphs 118 and 133 of the judgment under appeal, addressed the issues relating to the legal basis of Implementing Regulation No 151/2012 in the context of the first plea in law raised before it. Consequently, the first ground of appeal is not a new plea in law. Moreover, as regards the fifth ground of appeal, it is clear that it concerns the same issues, and it must therefore be considered admissible. 36 The first and fifth grounds of appeal must accordingly be held to be admissible. – Substance37 It should be borne in mind that review of the legal basis of an act enables the procedure for the adoption of that act to be checked as to whether it was vitiated by any irregularity (judgment of 6 December 2005 in ABNA and Others, C‑453/03, C‑11/04, C‑12/04 and C‑194/04, EU:C:2005:741, paragraph 53). According to settled case-law, the choice of the legal basis for an EU measure must rest on objective factors amenable to judicial review, which include the aim and content of that measure (see, in particular, judgment of 19 July 2012 in Parliament v Council, C‑130/10, EU:C:2012:472, paragraph 42). 38 Article 29 TEU, which replaced Article 15 EU, enables the Council to adopt decisions which define the approach of the Union to a particular matter of a geographical or thematic nature. Member States are to ensure that their national policies conform to the Union positions. Furthermore, Article 215(2) TFEU allows the Council to adopt restrictive measures against natural or legal persons and groups or non-State entities, namely, measures that, before the Treaty of Lisbon entered into force, required Article 308 EC too to be included in their legal basis if their addressees were not linked to the governing regime of a third country (see, to that effect, judgment of 3 September 2008 in Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 216). 39 In the present case, Common Position 2002/145 was adopted on the basis of Article 15 EU by the Council, which expressed its concerns about the situation in Zimbabwe. The Council thus imposed, for a renewable 12-month period, restrictive measures which were to be subject to annual review. Common Position 2004/161 provided for those measures to be renewed. 40 Regulation No 314/2004, amended by Implementing Regulation No 151/2012, was adopted on the basis of Articles 60 EC and 301 EC (now Articles 75 TFEU and 215 TFEU). 41 In adopting Decisions 2012/97 and 2012/124, the Council relied on Article 29 TEU and Article 31(2) TEU, respectively. As regards the legal basis for Implementing Regulation No 151/2012, it must be noted that that amends Regulation No 314/2004, the latter having as its basis Common Position 2004/161. There is continuity between Common Position 2004/161 and Decision 2011/101, given that the latter not only repealed the former but also replaced it. 42 It is evident that the wording of Article 11(b) of Regulation No 314/2004, according to which the Commission is empowered to amend Annex III to that regulation on the basis of decisions taken in respect of the annex to Common Position 2004/161, covers not only Common Position 2004/161 but also any decision, like Decision 2011/101, that is substituted for that common position and contains essentially identical provisions. 43 Accordingly, the appellants’ argument that, at the time of the adoption of Implementing Regulation No 151/2012, Common Position 2004/161 had been repealed by Decision 2011/101 does not establish that that regulation has no legal basis. 44 The General Court therefore correctly held, in paragraphs 118 and 133 of the judgment under appeal, that Article 11(b) of Regulation No 314/2004 constitutes an adequate legal basis for the adoption of a Commission implementing regulation, such as Implementing Regulation No 151/2012. 45 As regards the plea that it is not open to the General Court to re-characterise listing decisions where the Commission does not have a legal basis on which to impose restrictive measures on non-State actors — that is to say, in this instance, on persons who are neither ‘members of the Government of Zimbabwe’ nor ‘natural persons associated with them’ — it must be noted that, as the General Court recalled in paragraph 122 of the judgment under appeal, the Court of Justice, in its judgment of 19 July 2012 in Parliament v Council (C‑130/10, EU:C:2012:472), observed that, as a result of the amendments made to primary law after the Treaty of Lisbon entered into force, the content of Article 60 EC, relating to restrictive measures with regard to capital movements and payments, and Article 301 EC, on the interruption or reduction, in part or completely, of economic relations with one or more third countries, is mirrored in Article 215 TFEU. As the Court of Justice has also confirmed, Article 215(2) TFEU allows the Council to adopt restrictive measures against natural or legal persons and groups or non-State entities (paragraph 51 of that judgment). 46 Furthermore, in paragraphs 63 and 64 of the judgment of 13 March 2012 in Tay Za v Council (C‑376/10 P, EU:C:2012:138), the Court stated that, in order for it to be possible for them to be adopted on the basis of Articles 60 EC and 301 EC as restrictive measures imposed on third States, the measures in respect of natural persons must be directed only against the leaders of such States and the persons associated with those leaders (judgment of 3 September 2008 in Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 166). That requirement ensures that there is a sufficient link between the persons concerned and the third State targeted by the restrictive measures adopted by the Union, precluding too broad an interpretation of Articles 60 EC and 301 EC which would therefore be contrary to the case-law of the Court. 47 In examining the precise links of those non-State actors in terms of support for the regime, the General Court related the contested measures to the legal basis that is Article 4(1) of Decision 2011/101, according to which the ‘Member States shall take the measures necessary to prevent the entry into, or transit through, their territories of members of the Government of Zimbabwe and of natural persons associated with them, as well as of other natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe’. 48 The General Court correctly held, in paragraph 130 of the judgment under appeal, that, in the particular circumstances of Zimbabwe, the natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe and the legal persons, entities or bodies belonging to those natural persons, referred to in Articles 4 and 5 of Decision 2011/101, should not be regarded as other than persons associated with the members of the Government of Zimbabwe and the legal persons, entities or bodies belonging to such associates, but constitute, in fact, a particular category of those associates. 49 In conclusion, the General Court, in ruling as outlined above, did not re-characterise listing decisions, but specifically ascertained whether the contested measures were covered by the legal bases relied on in those acts. 50 In the light of all of the foregoing, the first and fifth grounds of appeal must be rejected as unfounded. The fourth ground of appeal51 The appellants maintain that the General Court departed from settled case-law on rights of defence by holding that the respondent institutions were not required to communicate evidence or the basis for maintaining a listing, or to give the appellants an opportunity to make observations, prior to a decision to re-list them. The appellants claim, in essence, that the Council did not notify them before adopting the contested measures. 52 The appellants submit that the Court of Justice held, in paragraph 62 of the judgment of 21 December 2011 in France v People’s Mojahedin Organization of Iran (C‑27/09 P, EU:C:2011:853), that the adoption of a decision renewing a fund-freezing measure previously adopted must be preceded by notification of the incriminating evidence and by the person or entity concerned being allowed an opportunity of being heard. 53 Lastly, the appellants state that they were not provided with any evidence in advance of the contested measures being readopted, to support the grounds on which each of them was included within the scope of those measures. The General Court should therefore have found that the respondent institutions had infringed the appellants’ rights of defence. 54 The Council, supported by the Commission and by the United Kingdom, contends that the fourth ground of appeal should be rejected as unfounded. 55 As a preliminary point, a distinction must be drawn between the initial fund-freezing measure, and a subsequent fund-freezing measure concerning a person or entity already covered by that initial measure. 56 In paragraph 61 of the judgment of 21 December 2011 in France v People’s Mojahedin Organization of Iran (C‑27/09 P, EU:C:2011:853), the Court held that, in the case of an initial decision to freeze funds, the Council is not obliged to inform the person or entity concerned beforehand of the grounds on which that institution intends to rely in order to include that person or entity’s name in the list of persons or entities referred to in a fund-freezing measure. So that its effectiveness may not be jeopardised, such a decision must, by its very nature, be able to take advantage of a surprise effect and to apply immediately. In such a case, it is as a rule enough if the institution notifies the person or entity concerned of the grounds of that decision and affords it the right to be heard at the same time as, or immediately after, the decision is adopted. 57 In the present case, the appellants first established contact with the European institutions by means of the letter of 1 September 2011 sent by Mr Tomana to the President of the Council ‘on behalf of all the natural and legal persons and legal entities listed in the Annex to Decision 2011/101’. In that letter, Mr Tomana disputed that the grounds given to justify the imposition of restrictive measures on all those persons were well founded, but did not request disclosure of the evidence of the claims made in that annex. 58 In its reply of 20 September 2011, the Council stated that the grounds for the imposition of restrictive measures on the persons and entities concerned were set out in the annex to Decision 2011/101 and otherwise referred to the Council’s Notice of 16 February 2011 for the attention of the persons, entities and bodies to which restrictive measures provided for in Decision 2011/101 apply (OJ 2011 C 49, p. 4). That notice mentioned, inter alia, that the persons, entities and bodies concerned by the restrictive measures at issue could submit a request to the Council that the decision to include them on the list in that annex should be reconsidered, and indicated the address to which such a request was to be sent. A similar notice was, moreover, published in the Official Journal of the European Union on 18 February 2012 (OJ 2012 C 48, p. 13), following the adoption of Decision 2012/97. 59 In addition, the General Court issued a written question asking the appellants to state, in the event that they did not accept that the letter of 20 February 2012 addressed to Mr Tomana constituted notification of the restrictive measures at issue to all the appellants, on what date and by what means the other appellants had become aware of the adoption of those measures and of their content. The representatives of the appellants replied that they were unable, in the time available, to ascertain the precise date on and means by which each appellant became aware of the fact of their inclusion in those measures. 60 According to the appellants, the publication in the Official Journal of the European Union of a notice relating to the contested measures cannot be regarded as sufficient. The Council and the Commission contend that, when the contested measures were adopted, they did not have the appellants’ addresses. 61 It is for the purpose of complying with the principle of effective judicial protection that the Council is required to communicate to the natural or legal person, entity or body concerned its decision to include them on a list of persons or entities subject to restrictive measures, including the grounds for listing, either directly, if the address is known, or through the publication of a notice, providing such natural or legal person, entity or body with an opportunity to present observations (see, to that effect, order of 10 December 2015 in NICO v Council, C‑153/15 P, not published, EU:C:2015:811, paragraphs 44 and 45). 62 In paragraph 213 of the judgment under appeal, the General Court found the appellants’ argument in relation to the service of the contested acts to be of no relevance in the context of examination of whether their rights of defence were respected prior to the adoption of the contested measures. It must be added that service of those measures necessarily follows their adoption and determines the starting point for the period allowed for bringing proceedings. 63 In the present case, it is common ground that the appellants were aware of the contested measures. Moreover, it must be noted that the action at first instance was brought in time, and this point has not been disputed by the respondent institutions. Thus, notwithstanding the absence of an address for individual notification, mere publication in the Official Journal of the European Union did not prevent an action for annulment from being brought before the General Court. 64 It follows from this that the General Court correctly held, in paragraphs 193 and 194 of the judgment under appeal, that the appellants had in their possession information which was sufficiently precise, and that it was the responsibility of the appellants themselves to request, if they wished, disclosure of the evidence concerning them on which the Council had relied. Accordingly, it must be noted that the respondent institutions did not infringe the appellants’ rights of defence as regards the initial decision adopting the restrictive measures to which they are subject. 65 Furthermore, as to the case of a decision to maintain the name of a person or entity already appearing in the list of persons or entities covered by a fund-freezing measure, in paragraph 204 of the judgment under appeal, the General Court recalled the judgment of 21 December 2011 in France v People’s Mojahedin Organization of Iran (C‑27/09 P, EU:C:2011:853), which, in paragraph 62, established the principle that surprise effect is no longer necessary in order to ensure that such a measure is effective, with the result that the adoption of such a decision must, in principle, be preceded by notification of the incriminating evidence and by the person or entity concerned being allowed an opportunity of being heard. 66 In that regard, it must be noted that, according to the case-law of the Court of Justice, when sufficiently precise information has been disclosed, enabling the person concerned properly to state his point of view on the evidence adduced against him by the Council, the principle of respect for the rights of the defence does not mean that that institution is obliged spontaneously to grant access to the documents in its file. It is only on the request of the party concerned that the Council is required to provide access to all non-confidential official documents concerning the measure at issue (see, to that effect, judgment of 16 November 2011 in Bank Melli Iran v Council, C‑548/09 P, EU:C:2011:735, paragraph 92). 67 It must also be stated that, according to the case-law of the Court of Justice, the right to be heard prior to the adoption of acts which maintain restrictive measures against persons already subject to those measures applies where the Council has admitted new evidence against those persons and not where those measures are maintained on the basis of the same grounds as those that justified the adoption of the initial act imposing the restrictive measures in question (see, to that effect, judgment of 21 December 2011 in France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 63). 68 In the present case, the General Court did not err in law in ruling, in paragraph 205 of the judgment under appeal, that the grounds set out in the contested measures as justification for the imposition on the applicants of the restrictive measures at issue are not essentially different from those set out in the earlier acts, namely Decision 2011/101 and Regulation No 314/2004, the statement of reasons having been amended in certain cases to update details of the post held by the appellant concerned. 69 In the light of all of the foregoing, the fourth ground of appeal must be rejected as unfounded. The second and sixth grounds of appeal70 By their second ground of appeal, the appellants submit that the Council was entitled to target only persons whose activities seriously undermine democracy, respect for human rights and the rule of law. In their submission, being a member of the Government of Zimbabwe or associated with it is not sufficient ground for being listed. Furthermore, in their view, the General Court interpreted the words ‘persons associated’ too broadly. 71 By their sixth ground of appeal, the appellants maintain that, in characterising certain persons as being ‘associates’ of members of the Government on the basis of past conduct, the General Court created a presumption not stated in the contested measures or in the grounds for their listing, and with no evidential support, that those individuals colluded with the leaders to whom the Council has attributed responsibility for policies of violence and intimidation. 72 The appellants state that, as the General Court recognised in paragraph 103 of the judgment under appeal, there must be collusion between the persons directly implicated in conduct which constitutes a crime or an offence and some, at least, of the leaders of the third country concerned in order for such conduct to be capable of harming democracy itself or the rule of law. However, they argue that there is no indication in the contested measures or in the statement of reasons for them that the respondent institutions alleged, still less proved, that there was collusion between the appellants and the leaders of the Republic of Zimbabwe or that the appellants were the ‘true instruments’ of the policy of violence which the Union imputes to the leaders of that third country. 73 According to the appellants, the General Court wrongly justified the characterisation of those accused of misconduct as ‘associates’ of members of the Government on the basis that such misconduct involved collusion with at least some of the leaders of the Republic of Zimbabwe, that the individuals concerned were the ‘true instruments’ of the policy of violence and intimidation, and that they were directly involved in such violence and intimidation as ‘leaders and instigators’. 74 The Council, supported by the Commission and by the United Kingdom, contends that the second and sixth grounds of appeal should be rejected as unfounded. 75 In the present case, Article 4(1) of Decision 2011/101 provides for three categories of persons who may be subject to restrictive measures, namely members of the Government of Zimbabwe, natural persons associated with them and other natural persons whose activities seriously undermine democracy, respect for human rights and the rule of law in Zimbabwe. 76 As is apparent from the case-law of the Court, the concept of a third country, within the meaning of Articles 60 EC and 301 EC, may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them (judgment of 13 March 2012 in Tay Za v Council, C‑376/10 P, EU:C:2012:138, paragraph 43 and the case-law cited). 77 It must be noted that the grounds for the restrictive measures adopted against the Government of Zimbabwe are clear from the common positions and decisions taken under the common foreign and security policy and regulations adopted since 2002. It is apparent in particular from recital 4 of Common Position 2002/145 that the Council had assessed that that government was continuing to engage in serious violations of human rights and of the freedom of opinion, of association and of peaceful assembly. Therefore, for as long as the violations occurred, it was necessary to introduce restrictive measures against that government and those who bore a wide responsibility for such violations (order of 1 December 2015 in Georgias and Others v Council and Commission, C‑545/14 P, not published, EU:C:2015:791, paragraph 35). 78 In addition, it is clear from both recital 7 of Common Position 2004/161 and recital 2 of Regulation No 314/2004 that the Council’s objective was to adopt restrictive measures targeted at members of the Government of Zimbabwe and thereby exert pressure on those persons to reject policies that undermine human rights, freedom of expression and good governance (order of 1 December 2015 in Georgias and Others v Council and Commission, C‑545/14 P, not published, EU:C:2015:791, paragraph 39). 79 As regards the second category of persons covered by the restrictive measures at issue, the contested measures do not contain any definitions of the concept of ‘association’ with the members of the Government of Zimbabwe to whom the Council has imputed responsibility for policies of violence and intimidation. Nor do they contain any details as to how those matters are to be proved. 80 It must, however, be determined whether, in the light of the review which the General Court carried out regarding the grounds on the basis of which the appellants were included on the list of persons subject to restrictive measures, it made an error of law which should result in the judgment under appeal being set aside (see, to that effect, judgment of 21 April 2015 in Anbouba v Council, C‑605/13 P, EU:C:2015:248, paragraph 44). 81 It must be concluded that, in reviewing whether the appellants’ inclusion on the list of persons subject to restrictive measures is well founded, it is necessary to assess whether their situation constitutes sufficient proof of collusion between them and the leaders of the Republic of Zimbabwe. Such an appraisal must be carried out by examining the evidence not in isolation but in its context. 82 In view of the situation in Zimbabwe, the Council discharges the burden of proof borne by it if it presents to the Courts of the European Union a set of indicia sufficiently specific, precise and consistent to establish that there is a sufficient link between the person subject to a measure freezing his funds and the regime (see, to that effect, judgment of 21 April 2015 in Anbouba v Council, C‑605/13 P, EU:C:2015:248, paragraph 52). 83 In that regard, the situation in Zimbabwe must be considered as described in the contested measures and as taken into account by the General Court. In the present case, in paragraph 232 of the judgment under appeal, the General Court found that ZANU-PF is not just any political party, but the party which monopolised power during the period of violence, intimidation and infringements of the fundamental rights of the Zimbabwean people. In addition, in paragraph 164 of the judgment under appeal, the General Court noted that there had not been in the interim any collapse in the country concerned of the regime in power. 84 Consequently, those who hold senior posts, such as the individuals involved in military, police or security operations, must be regarded as being fully associated with the Government of Zimbabwe, unless they have taken specific action demonstrating their rejection of the government’s practices. In those circumstances, referring to the capacity of those individuals or to the posts they occupy is sufficient, as the contested measures themselves expressly provide. It must be noted that no presumption has been applied, the interpretation of EU legislation in the light of the context in which it was adopted supporting the conclusion that the persons concerned should be made subject to restrictive measures. 85 As the General Court ruled in paragraph 105 of the judgment under appeal, the restrictive measures concerned by Decisions 2011/101 and 2012/97 were imposed on the appellants not on the ground of their alleged implication in certain conduct which might constitute a crime or an offence, but because of the alleged conduct on their part which, while also falling in all probability within the scope of criminal law or, at the least, civil law, was part of a strategy of intimidation and systematic violation of the fundamental rights of the Zimbabwean people, responsibility for which the Council assigned to the leaders of the Republic of Zimbabwe. It is precisely on that last ground that the persons who were accused of such conduct could legitimately be made subject to the restrictive measures referred to by the two abovementioned decisions, adopted on the basis of Article 29 TEU. 86 The reference, in the grounds of the contested measures, to posts formerly occupied by some appellants, reveals that the authors of those measures considered that, for that reason, the appellants concerned remained associates of the leaders of the Republic of Zimbabwe and that they were not aware of anything to call into question that view. The General Court correctly held, in paragraph 164 of the judgment under appeal, that, in circumstances such as those of this case, recalled in paragraph 83 of the present judgment, reference to the fact that a person occupied in the past a post on the basis of which he can be characterised, while occupying that post, as a member of the government of the country concerned or as an associate of such a member, constitutes sufficient justification for his being characterised, after leaving that post, as an associate of members of the government of the country concerned. 87 It follows from all the foregoing considerations that the General Court reviewed whether the appellants’ inclusion on the lists of persons subject to restrictive measures was well founded on the basis of a set of indicia relating to the situation, functions and relations of those individuals in the context of the Zimbabwean regime. 88 Moreover, as is apparent from the established case-law of the Court of Justice, the General Court has exclusive jurisdiction to find the facts, save where a substantive inaccuracy in its findings is attributable to the documents submitted to it, and to appraise those facts. The appraisal of the facts therefore does not, save where the clear sense of the evidence has been distorted, constitute a point of law which is subject, as such, to review by the Court of Justice (judgment of 10 July 2014 in Telefónica and Telefónica de España v Commission, C‑295/12 P, EU:C:2014:2062, paragraph 84). 89 In the present case, the appellants maintain that it is not clear to them on what basis the General Court differentiated between the occupations it deemed sufficient to establish association with the Government of Zimbabwe and those deemed insufficient to establish such association. In addition, they complain that the General Court described high-ranking officials or civil servants, including provincial governors, and police and military officers as working closely with members of that government and on that basis considered that they could legitimately be characterised as associates of members of that government, no additional justification being necessary. 90 By their arguments, the appellants are in fact criticising the General Court’s assessment, as such, of the facts and of the evidence relating to them. Accordingly, the appellants are trying to obtain from the Court of Justice a fresh assessment of the facts found by the General Court and of the evidence put forward, which, in accordance with the case-law cited in paragraph 88 of the present judgment, is outside the scope of the Court of Justice’s review. 91 In the light of all of the foregoing, the second and sixth grounds of appeal must be rejected as being in part inadmissible and in part unfounded. The third and seventh grounds of appeal92 By their third ground of appeal, the appellants submit that the General Court departed from settled case-law on the obligation to state reasons by permitting reliance on vague reasons that were not particularised, and/or supplementing those reasons with additional reasons not stated anywhere in the contested measures. 93 The General Court’s reasoning, in paragraph 103 of the judgment under appeal, according to which collusion between persons directly implicated in conduct which constitutes a crime or an offence and some, at least, of the leaders of the third country concerned cannot be inferred, according to the appellants, from the reasons set out in the grounds for the inclusion of the persons concerned in the list of persons or entities subject to the restrictive measures at issue, and should therefore be treated as constituting a new reason. 94 The appellants, by their seventh ground of appeal, claim that the General Court failed to test its conclusions in relation to each appellant, or to treat each as having an application that merited separate consideration. The General Court failed to give any consideration to whether the respondent institutions had discharged their burden of proving that the contested measures were taken on a sufficiently solid factual basis in respect of each appellant. It proceeded on the incorrect premiss that the appellants were not challenging the factual basis of their inclusion on the list of persons or entities subject to the restrictive measures at issue. 95 The appellants submit that the General Court failed, however, to consider whether the contested measures were proportionate in relation to each appellant, instead making the general statement, in paragraph 298 of the judgment under appeal, that those measures were proportionate in the light of the deep concern felt by the EU authorities as regards the situation in Zimbabwe. According to the appellants, the General Court should have found that the contested measures were disproportionate in so far as they applied to the appellants. 96 The Council, supported by the Commission and by the United Kingdom, contends that the third and seventh grounds of appeal should be rejected as unfounded. 97 It will be recalled that the obligation to state the reasons on which a judgment is based arises under Article 36 of the Statute of the Court of Justice of the European Union, which applies to the General Court by virtue of the first paragraph of Article 53 of the Statute, and Article 81 of the Rules of Procedure of the General Court. It has consistently been held that the statement of the reasons on which a judgment of the General Court is based must clearly and unequivocally disclose that court’s reasoning in such a way as to enable the persons concerned to ascertain the reasons for the decision taken and the Court of Justice to exercise its power of review (see, to that effect, judgment of 19 December 2012 in Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C‑288/11 P, EU:C:2012:821, paragraph 83 and the case-law cited). 98 With regard to restrictive measures, the Courts of the European Union must determine whether the competent EU authority has complied with the procedural safeguards and the obligation to state reasons laid down in Article 296 TFEU, in particular, whether the reasons relied on are sufficiently detailed and specific (see, to that effect, judgment of 18 July 2013 in Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 118). 99 It must also be stated that, by their third and seventh grounds of appeal, the appellants are challenging not the reasons given in the contested measures but the findings of the General Court on account, respectively, of the reliance on additional reasons to justify the contested measures and the failure to consider each ground for annulment in relation to the particular circumstances of each appellant. 100 In the present case, as regards the appellants’ argument that the General Court relied on additional grounds not stated anywhere in the contested measures, it must be noted that the annexes to those measures which contain the appellants’ names are in the form of tables. The third column in those tables is headed ‘Grounds for designation’. In the case of natural persons, the last two columns of those annexes indicate, inter alia, the governmental or administrative post which the person concerned occupies or occupied, or, in the case of individuals who have not occupied such posts, what the authors of the contested measures considered to be the relevant status of those persons. In a good number of cases there is also information that the individual concerned is a member of ZANU-PF, which alone held power, and, where appropriate, a brief description of the acts of violence and intimidation or infringements of fundamental rights of the Zimbabwean people imputed to the individual concerned by the Council. 101 Consequently, the grounds set out in the third column of the annexes to the contested measures are such that the posts giving the appellants the status of members of the Government of Zimbabwe or associating them with it, and certainly associating them with the leaders of the Republic of Zimbabwe within the meaning of the case-law of the Court, can be clearly inferred. 102 In that respect, the General Court did not err in law in the judgment under appeal by analysing, first, in paragraph 134 of that judgment, whether the listings at issue contained sufficient reasons in general terms to justify the adoption and renewal of those measures in the light of the situation in Zimbabwe and, secondly, by considering whether the contested measures contained reasons that were sufficient in the specific case of each appellant so as to justify the imposition or renewal of the restrictive measures at issue with regard to the person or entity concerned. 103 Furthermore, as regards the appellants’ argument that, when they submitted their observations, the General Court wrongly considered their evidence to be inadmissible, it must be noted that the General Court, in paragraph 263 of the judgment under appeal, found that the arguments put forward for the first time in the reply to call into question the truth and accuracy of the grounds in the contested measures constituted a new plea. 104 The General Court considered that, since the appellants had already become acquainted with the contested measures before the proceedings were brought, it was possible for them to challenge, in the application, the truth and accuracy of those grounds. In that respect, the General Court correctly held that the arguments which the appellants put forward in the reply in order to challenge the truth and accuracy of the grounds for the contested measures against them were inadmissible. 105 With regard to the statement of reasons for including each appellant on the list of persons or entities subject to the restrictive measures at issue, the appellants submit that the General Court failed to analyse whether the occupations or former occupations of each appellant were capable of influencing government policy of the Government of Zimbabwe or whether the appellant concerned was in a position to reject such policy. 106 In the present case, the General Court examined in the judgment under appeal, notably in paragraphs 159 to 162 and 169 to 174 thereof, for each person or entity included on the list of persons or entities subject to the restrictive measures at issue, by reference to the column relating to the ‘Grounds for designation’ annexed to the contested measures, the precise reasons justifying the adoption or continuation of the restrictive measures at issue with regard to each appellant. 107 In the light of all of the foregoing, the third and seventh grounds of appeal must be rejected as unfounded. 108 It follows from all these considerations that the appeal must be dismissed. Costs109 In accordance with Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs. 110 Under Article 138(1) of those rules, which applies to the procedure on an appeal by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 111 Since the Council and the Commission have applied for costs and the appellants have been unsuccessful, the latter must be ordered to bear their own costs and to pay those incurred by the Council and the Commission. 112 In accordance with Article 140(1) of the Rules of Procedure of the Court of Justice, which applies to the procedure on an appeal by virtue of Article 184(1) thereof, the United Kingdom, which has intervened in the proceedings, is to bear its own costs. On those grounds, the Court (First Chamber) hereby:1. Dismisses the appeal;2. Orders Mr Johannes Tomana and the 120 other appellants whose names are listed in the annex to the present judgment to bear their own costs and to pay those incurred by the Council of the European Union and the European Commission;3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs.[Signatures]AnnexList of appellantsJohannes Tomana, residing in Harare (Zimbabwe), Titus Mehliswa Johna Abu Basutu, residing in Harare, Happyton Mabhuya Bonyongwe, residing in Harare, Flora Buka, residing in Harare, Wayne Bvudzijena, residing in Harare, David Chapfika, residing in Harare George Charamba, residing in Harare, Faber Edmund Chidarikire, residing in Harare, Tinaye Chigudu, residing in Harare, Aeneas Soko Chigwedere, residing in Harare, Phineas Chihota, residing in Harare, Augustine Chihuri, residing in Harare, Patrick Anthony Chinamasa, residing in Harare, Edward Takaruza Chindori-Chininga (deceased), Joseph Chinotimba, residing in Harare, Tongesai Shadreck Chipanga, residing in Harare, Augustine Chipwere, residing in Harare, Constantine Chiwenga, residing in Harare, Ignatius Morgan Chiminya Chombo, residing in Harare, Martin Dinha, residing in Harare, Nicholas Tasunungurwa Goche, residing in Harare, Gideon Gono, residing in Harare, Cephas T. Gurira, residing in Harare, Stephen Gwekwerere, residing in Harare, Newton Kachepa, residing in Harare, Mike Tichafa Karakadzai (deceased), Saviour Kasukuwere, residing in Harare, Jawet Kazangarare, residing in Harare, Sibangumuzi Khumalo, residing in Harare, Nolbert Kunonga, residing in Harare, Martin Kwainona, residing in Harare, R. Kwenda (deceased), Andrew Langa, residing in Harare, Musarashana Mabunda, residing in Harare, Jason Max Kokerai Machaya, residing in Harare, Joseph Mtakwese Made, residing in Harare, Edna Madzongwe, residing in Harare, Shuvai Ben Mahofa, residing in Harare, Titus Maluleke, residing in Harare, Paul Munyaradzi Mangwana, residing in Harare, Reuben Marumahoko, residing in Harare, Mashava G. Mashava, residing in Harare, Angeline Masuku, residing in Harare, Cain Ginyilitshe Ndabazekhaya Mathema, residing in Harare, Thokozile Mathuthu, residing in Harare, Innocent Tonderai Matibiri, residing in Harare, Joel Biggie Matiza, residing in Harare, Brighton Matonga, residing in Harare, Cairo Mhandu, residing in Harare, Fidellis Mhonda, residing in Harare, Amos Bernard Midzi (deceased), Emmerson Dambudzo Mnangagwa, residing in Harare, Kembo Campbell Dugishi Mohadi, residing in Harare, Gilbert Moyo, residing in Harare, Jonathan Nathaniel Moyo, residing in Harare, Sibusio Bussie Moyo, residing in Harare, Simon Khaya Moyo, residing in Harare, S. Mpabanga, residing in Harare, Obert Moses Mpofu, residing in Harare, Cephas George Msipa, residing in Harare, Henry Muchena, residing in Harare, Olivia Nyembesi Muchena, residing in Harare, Oppah Chamu Zvipange Muchinguri, residing in Harare, C. Muchono, residing in Harare, Tobaiwa Mudede, residing in Harare, Isack Stanislaus Gorerazvo Mudenge (deceased), Columbus Mudonhi, residing in Harare, Bothwell Mugariri, residing in Harare, Joyce Teurai Ropa Mujuru, residing in Harare, Isaac Mumba, residing in Harare, Simbarashe Simbanenduku Mumbengegwi, residing in Harare, Herbert Muchemwa Murerwa, residing in Harare, Munyaradzi Musariri, residing in Harare, Christopher Chindoti Mushohwe, residing in Harare, Didymus Noel Edwin Mutasa, residing in Harare, Munacho Thomas Alvar Mutezo, residing in Harare, Ambros Mutinhiri, residing in Harare, S. Mutsvunguma, residing in Harare, Walter Mzembi, residing in Harare, Morgan S. Mzilikazi, residing in Harare, Sylvester Nguni, residing in Harare, Francis Chenayimoyo Dunstan Nhema, residing in Harare, John Landa Nkomo (deceased), Michael Reuben Nyambuya, residing in Harare, Magadzire Hubert Nyanhongo, residing in Harare, Douglas Nyikayaramba, residing in Harare, Sithembiso Gile Glad Nyoni, residing in Harare, David Pagwese Parirenyatwa, residing in Harare, Dani Rangwani, residing in Harare, Engelbert Abel Rugeje, residing in Harare, Victor Tapiwe Chashe Rungani, residing in Harare, Richard Ruwodo, residing in Harare, Stanley Urayayi Sakupwanya (deceased), Tendai Savanhu, residing in Harare, Sydney Tigere Sekeramayi, residing in Harare, Lovemore Sekeremayi (deceased), Webster Kotiwani Shamu, residing in Harare, Nathan Marwirakuwa Shamuyarira (deceased), Perence Samson Chikerema Shiri, residing in Harare, Etherton Shungu, residing in Harare, Chris Sibanda, residing in Harare, Jabulani Sibanda, residing in Harare, Misheck Julius Mpande Sibanda, residing in Harare, Phillip Valerio Sibanda, residing in Harare, David Sigauke, residing in Harare, Absolom Sikosana, residing in Harare, Nathaniel Charles Tarumbwa, residing in Harare, Edmore Veterai, residing in Harare, Patrick Zhuwao, residing in Harare, Paradzai Willings Zimondi, residing in Harare, Cold Comfort Farm Cooperative Trust, established in Harare, Comoil (Private) Ltd, established in Harare, Divine Homes (Private) Ltd, established in Harare, Famba Safaris (Private) Ltd, established in Harare, Jongwe Printing and Publishing Company (Private) Ltd, established in Harare, M & S Syndicate (Private) Ltd, established in Harare, OSLEG (Private) Ltd, established in Harare, Swift Investments (Private) Ltd, established in Harare, Zidco Holdings (Private) Ltd, established in Harare, Zimbabwe Defence Industries (Private) Ltd, established in Harare, Zimbabwe Mining Development Corp., established in Harare. * Language of the case: English. | cd8ea-aec60a6-43aa | EN |
When he himself puts an end to his employment relationship, a worker is entitled to an allowance if he could not use up all or part of his right to paid annual leave | 20 July 2016 ( *1 )‛Reference for a preliminary ruling — Social policy — Directive 2003/88/EC — Article 7 — Right to paid annual — Retirement at the request of the party concerned — Worker failing to use up all his entitlement to annual paid leave before the termination of his work relations — National legislation excluding allowance in lieu of paid annual leave not taken — Sick leave — Public servants’In Case C‑341/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgericht Wien (Administrative Court of Vienna, Austria), made by decision of 22 June 2015, received at the Court on 8 July 2015, in the proceedings Hans Maschek v Magistratsdirektion der Stadt Wien — Personalstelle Wiener Stadtwerke, THE COURT (Tenth Chamber),composed of F. Biltgen (Rapporteur), President of the Chamber, A. Borg Barthet and E. Levits, Judges,Advocate General: E. Sharpston,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—the Austrian Government, by G. Eberhard, acting as Agent,the European Commission, by M. Kellerbauer and M. van Beek, acting as Agents,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (OJ 2003 L 299, p. 9).2The request has been made in proceedings between Mr Hans Maschek and the Magistratsdirektion der Stadt Wien — Personalstelle Wiener Stadtwerke (Municipal administration of the city of Vienna — Personnel department of the municipal services of Vienna, Austria), his employer, regarding allowance in lieu of paid annual leave not taken by Mr Maschek before the end of his employment relationship. Legal context EU law Directive 2003/883Article 7 of Directive 2003/88, headed ‘Annual leave’, is worded as follows:‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’ Austrian law 4Directive 2003/88 was transposed into Austrian law, and specifically, as regards public servants of the city of Vienna, by Article 41a of the Gesetz über das Besoldungsrecht der Beamten der Bundeshauptstadt Wien — Besoldungsordnung 1994 (Law on the remuneration of public servants of the federal capital of Vienna; ‘the Wiener Besoldungsordnung 1994), as amended in 2014 (‘BO’):‘(1) Unless reemployed immediately within another department of the city of Vienna, a public servant shall, when he leaves the service or when the employment relationship ends, be entitled to an allowance in lieu of the portion of annual leave that he has not yet used (allowance [for paid annual leave not taken]). He shall be entitled to this allowance only where he did not, by his own actions, use up his entitlement to annual leave.(2) The public servant shall be responsible for not having used up his entitlement to annual leave in particular where he leaves the service in cases of1.termination […] in so far as the public servant was dismissed on the ground of fault;2.dissolution of the employment relationship under Paragraphs 33(1) [unexcused absence from work], 73 [resignation] or 74 [dismissal] [of the Gesetz über das Dienstrecht der Beamten der Bundeshauptstadt Wien (Law on the rules relating to public servants of the federal capital of Vienna — Rules on the services 1994) (‘DO’)] or3.entry into retirement at his request under Paragraph 68b(1)(1), Paragraph 68c(1) or Paragraph 115i of the [DO].…(3) The [allowance in lieu of paid annual leave not taken] shall be calculated separately for each calendar year for which the entitlement to annual leave has not been used up and has not been forfeited.(4) The public servant shall be entitled to [allowance in lieu of paid annual leave not taken] for the balance of his recoverable rights which remain after subtracting the days actually used during the calendar year....’5Paragraph 68c(1) of the DO provides that a public servant who has reached the age of 60 may, at his request, be granted retirement where his departure is compatible with the interests of the service.6In accordance with Paragraph 68b(1) of the DO, a public servant who requests it must be granted retirement:‘(1) when he has completed a career which has lasted 540 months(2) when the public servant is unable to work due to being unfit for work within the meaning of Paragraph 68a(2) of the DO.’7Paragraph 115i(1) of the DO provides that a public servant who requests it must be granted retirement if he has reached an age between 720 and 776 months and has completed, before his retirement, a sufficient number of periods of work which can be taken into account for the purposes of calculating his pension. The dispute in the main proceedings and the questions referred for a preliminary ruling 8Mr Maschek, born on 17 January 1949, was a public servant with the city of Vienna from 3 January 1978.9Between 15 November 2010 and 30 June 2012, the date of his retirement, he did not report to his place of work.10The referring court states that it is apparent from Mr Maschek’s administrative file that his employer, in its records, classified as an absence due to illness only the period between 15 November and 31 December 2010.11Mr Maschek’s employer apparently did not object to Mr Maschek’s other absences, in period from 1 January 2011 to 30 June 2012, due to it having concluded with him two agreements relating to those absences and their consequences.12The first agreement, concluded on 20 October 2010, states as follows:‘1. GeneralThe situation does not allow in any case in the city of Vienna to continue to avail of the services of Mr Maschek as head of unit beyond the period specified below.Given the retirement of Mr Maschek scheduled for 1 October 2011, the city of Vienna agreed with him the following:2. Retirement request on 1 October 2011Mr Maschek shall present by the end of the year a written request for retirement with effect from 1 October 2011.3. Head of unit positionIn order to ensure a smooth transition, Mr Maschek shall keep his position as head of unit until 31 December 2010. Until that date, he shall use 5 to 6 weeks of his annual leave. The division of the leave will be carried out by the end of October in accordance with the Wiener Linien [city of Vienna guidelines].On 1 January 2011, Mr Maschek shall be relieved of his position as head of unit.4. Waiver of serviceFrom 1 January 2011, the Magistratsdirektion-Personalstelle Wiener Stadtwerke shall waive the services of Mr Maschek, who shall keep his salary.’13The second agreement, signed on 21 July 2011, which replaced the first one, is worded as follows:GeneralThe parties to this agreement agree that the services of Mr Maschek in the head of unit position may not be availed of beyond the period specified below.Given the retirement of Mr Maschek scheduled for 1 July 2012, the city of Vienna agreed with him the following:2. Pension request on 1 July 2012Mr Maschek shall present a written request for retirement with effect from 1 July 2012. The retirement decision concerning Mr Maschek will be delivered to him personally [...] Mr Maschek declares in writing that he will bring no legal action against this decision.Mr Maschek served as head of unit until 31 December 2010. He was relieved of this position with effect from 1 January 2011.From 1 January 2011, the Magistratsdirektion-Personalstelle Wiener Stadtwerke, in agreement with Wiener Linien GmbH & Co KG, shall dispense with the services of Mr Maschek, who shall keep his salary …...7. Suspensive conditionThis agreement is subject to the condition that the full legal effects of the waiver of 21 July 2011 shall occur and that Mr Maschek makes the legally binding declaration to waive any legal action as provided for in Article 2 of this agreement.’14At the time of the conclusion of the second agreement, Mr Maschek also filed a request for retirement. His employer accordingly adopted, on 21 July 2011, a decision by which Mr Maschek retired with effect from 1 July 2012, on the basis of Paragraph 115i(1) of the DO. Mr Maschek then made a commitment to waive any legal action against that decision.15According to the referring court, it is thus established, first, that from 15 November 2010 to 31 December 2010, the absence of Mr Maschek from his place of work was justified as sick leave and, second, that from 1 January 2011 to 30 June 2012, namely until the end of his employment relationship due to retirement, Mr Maschek was required not to report to his place of work due to the instructions of the service, resulting from the application of the second agreement.16Mr Maschek claims nevertheless that he fell ill a little before 30 June 2012. He is of the opinion, therefore, that he is entitled to an allowance in lieu of paid annual leave not taken and submitted a request in that regard to his employer.17By decision of 1 July 2014, his employer rejected his request on the basis of Paragraph 41a(2)(3) of the BO.18The Verwaltungsgericht Wien (Administrative Court of Vienna), before which Mr Maschek brought an action against that decision, expresses, first, doubts about the compatibility of Paragraph 41a(2) of BO with Article 7(2) of Directive 2003/88.19Paragraph 41a(2) of the BO, in its view, might deprive the public servant ‘responsible for not having used up his entitlement to annual leave’ of the entitlement to an allowance in lieu of paid annual leave not taken, including, where he retires on the basis of Paragraph 115i(1) of the DO, as is the case at issue in the main proceedings.20Thus, the referring court considers, with regard to a situation such as that in the main proceedings, that Paragraph 41a(2) of the BO is likely to be at odds with the Court’s case-law relating to Article 7 of Directive 2003/88, to the extent that the public servant, who retired at his own request, is deprived of the right to an allowance in lieu of paid annual leave not taken, even though, shortly before his retirement, that public servant was sick and presented a medical certificate to that end.21Second, the referring court questions the conditions for granting an allowance in lieu of paid annual leave not taken by a worker who, as is the case in the main proceedings, could not, due to illness, have used up his rights to paid annual leave before the end of his employment relationship. It considers in particular that the grant of such an allowance should be conditional on such a worker being required to notify his employer in good time of his illness and to provide it with a medical certificate proving that illness.22Third, the referring court raises the question whether, in the event that the Court considers Paragraph 41a(1) and (2) of the BO to be at odds with EU law, national law may provide, in favour of the workers who are excluded from entitlement to an allowance in lieu of paid annual leave not taken under that provision, the detailed rules on the exercise of that entitlement which are more favourable than those provided by the directive, particularly concerning the amount of the allowance to be granted to workers.23‘In those circumstances, the Verwaltungsgericht Wien (Administrative Court of Vienna) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is national legislation, such as the provision at issue of Paragraph 41a(2) of the [BO], which does not allow an employee who has, at his own request, terminated the employment relationship with effect from a particular date an entitlement to an [allowance in lieu of paid annual leave not taken] within the meaning of Article 7 of Directive No 2003/88/EC compatible with Article 7 of Directive 2003/88/EC?If not, is a provision of national law which lays down that every employee who, at his own request, terminates an employment contract must make every effort to use up any outstanding entitlement to annual leave by the end of the employment relationship and that, in the event of termination of the employment relationship at the request of the employee, an entitlement to an [allowance in lieu of paid annual leave not taken] arises only if, also in the event of request being made for annual leave beginning on the day of the application to terminate the employment relationship, the employee was unable to take a period of leave corresponding to the full extent of an entitlement to an allowance in lieu of leave compatible with Article 7 of Directive 2003/88/EC?(2)Is it to be assumed that there is only to be an entitlement to an [allowance in lieu of paid annual leave not taken] if the employee who was unable due to incapacity to work to use up his leave entitlement immediately before the termination of his employment relationship (a) without unnecessary delay (and therefore in principle before the date of termination of the employment relationship) made his employer aware of his incapacity to work (for example due to illness) and (b) without unnecessary delay (and therefore in principle before the date of termination of the employment relationship) provided proof (e.g. through a doctor’s sick note) of his incapacity to work (e.g. due to illness)?If not, is a provision of national law which lays down that there is only to be an entitlement to an [allowance in lieu of paid annual leave not taken] if the employee who was unable due to incapacity to work to use up his leave entitlement immediately before the termination of his employment relationship (a) without unnecessary delay (and therefore in principle before the date of termination of the employment relationship) made his employer aware of his incapacity to work (e.g. due to illness) and (b) without unnecessary delay (and therefore in principle before the date of termination of the employment relationship) provided proof (e.g. through a doctor’s sick note) of his incapacity to work (e.g. due to illness) compatible with Article 7 of Directive 2003/88/EC?(3)According to the case-law of the Court of Justice of the European Union (see judgments of the Court of Justice of 18 March 2004 in Merino Gomez, C‑342/01, paragraph 31; 24 January 2012 in Dominguez, C‑282/10, paragraphs 47 to 50; 3 May 2012 in Neidei, C‑337/10, paragraph 37) the Member States are free to grant an employee a statutory entitlement to leave or to an allowance in lieu of leave above the minimum entitlement guaranteed by Article 7 of Directive 2003/88. In addition, the entitlements laid down by Article 7 of Directive No 2003/88 have direct effect (see judgments of the Court of Justice of 24 January 2012 in Dominguez, C‑282/10, paragraphs 34 to 36 and 12 June 2014 in Bollacke, C‑118/13, paragraph 28).In the light of that interpretation given to Article 7 of Directive 2003/88/EC, does a situation in which the national legislature allows a certain class of persons an entitlement to an allowance in lieu of leave significantly above the requirements of that provision of the directive have the effect that, as a result of the direct effect of Article 7 of Directive 2003/88/EC, those persons who were, contrary to the terms of [that] directive, refused an entitlement to an allowance in lieu of leave by that national legislation are also entitled to an [allowance in lieu of paid annual leave not taken] to the extent significantly above the requirements of that provision of [that] directive, and which is allowed by the national legislation to the persons favoured by that provision?’ The questions referred for a preliminary ruling 24By its three questions, which should be considered together, the referring court asks, in essence, whether Article 7(2) of Directive 2003/88 must be interpreted as precluding national legislation such as that at issue, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has not been able to use up his rights to paid annual leave before the end of his employment relationship. If so, the referring court asks whether national legislation may provide, in respect of a worker who, in breach of Article 7(2) of Directive 2003/88, is not entitled to an allowance in lieu of paid annual leave not taken, for detailed rules on the exercise of that entitlement which are more favourable than those resulting from Directive 2003/88, in particular as regards the amount of allowance to be granted to that worker.25In order to provide an answer which will be of use to the referring court, it must, in the first place, be recalled, as is apparent from the very wording of Article 7(1) of Directive 2003/88, a provision from which that directive allows no derogation, that every worker is entitled to paid annual leave of at least four weeks. That right to paid annual leave which, according to settled case-law, must be regarded as a particularly important principle of EU social law, is therefore granted to every worker, whatever his state of health (judgments in Schultz-Hoff and Others, C‑350/06 and C‑520/06, EU:C:2009:18, paragraph 54, and Neidel, C‑337/10, EU:C:2012:263, paragraph 28).26On termination of the employment relationship and when therefore it is no longer possible to take paid annual leave, Article 7(2) of Directive 2003/88 provides that the worker is entitled to an allowance in lieu in order to prevent this impossibility leading to a situation in which the worker loses all enjoyment of that right, even in pecuniary form (see judgments of 20 January 2009 in Schultz-Hoff and Others, C‑350/06 and C‑520/06, EU:C:2009:18, paragraph 56; 3 May 2012 in Neidel, C‑337/10, EU:C:2012:263, paragraph 29, and 12 June 2014 in Bollacke, C‑118/13, EU:C:2014:1755, paragraph 17).27It should also be noted that Article 7(2) of Directive 2003/88, as interpreted by the Court, lays down no condition for entitlement to an allowance in lieu other than that relating to the fact, first, that the employment relationship has ended and, second, that the worker has not taken all annual leave to which he was entitled on the date that that relationship ended (judgment of 12 June 2014 in Bollacke, C‑118/13, EU:C:2014:1755, paragraph 23).28It follows, in accordance with Article 7(2) of Directive 2003/88, that a worker who has not been able to take all his entitlement to paid annual leave before his employment relationship has ended, is entitled to allowance in lieu of paid annual leave not taken. In that respect, the reason for which the employment relationship has ended is not relevant.29Therefore, the fact that a worker terminates, at his own request, his employment relationship has no bearing on his entitlement to receive, where appropriate, an allowance in lieu of paid annual leave which he has not been able to use up before the end of his employment relationship.30In view of the foregoing, it must be held that Article 7(2) of Directive 2003/88 must be interpreted as precluding national legislation such as that at issue, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has not been able to use up his entitlement to paid annual leave before the end of that employment relationship.31In the second place, concerning a situation such as that at issue in the main proceedings, it must be recalled that Article 7(2) of Directive 2003/88 must be interpreted as precluding national legislation or practices which provide that, on termination of the employment relationship, no allowance in lieu of paid annual leave not taken is to be paid to a worker who has been on sick leave for the whole or part of the leave year and/or of a carry-over period, which was the reason why he could not exercise his right to paid annual leave (judgments in Schultz-Hoff and Others, C‑350/06 and C‑520/06, EU:C:2009:18, paragraph 62, and Neidel, C‑337/10, EU:C:2012:263, paragraph 30).32Consequently, Article 7(2) of Directive 2003/88 must be interpreted as meaning that an employee is entitled, on retirement, to an allowance in lieu of paid annual leave not taken because he was prevented from working by sickness (see, to that effect, judgment of 3 May 2012 in Neidel, C‑337/10, EU:C:2012:263, paragraph 32).33It follows that, as regards the period between 15 November and 31 December 2010, in which it is established that Mr Maschek was on sick leave and was not able, for that reason, to use up, during that period, his entitlement to the annual paid leave which he had acquired, Mr Maschek is entitled, pursuant to Article 7(2) of Directive 2003/88, to an allowance in lieu of paid annual leave not taken.34In addition, the right to paid annual leave, according to settled case-law, as laid down in Article 7 of Directive 2003/88, has the dual purpose of enabling the worker both to rest from carrying out the work he is required to do under his contract of employment and to enjoy a period of relaxation and leisure (judgments in Schultz-Hoff and Others, C‑350/06 and C‑520/06, EU:C:2009:18, paragraph 25, and 22 November 2011 in KHS, C‑214/10, EU:C:2011:761, paragraph 31).35In those circumstances, and in order to ensure the effectiveness of the right to annual leave, it must be held that a worker whose employment relationship has ended and who, pursuant to an agreement with his employer, while continuing to receive his salary, was required not to report to his place of work during a specified period preceding his retirement, is not entitled to an allowance in lieu of paid annual leave not taken during this period, unless he was not able to use up that entitlement due to illness.36Consequently, it is for the referring court to examine whether, pursuant to the second agreement between Mr Maschek and his employer, dated 21 July 2011, as set out in paragraph 13 above, Mr. Maschek was actually required not to report to his place of work during the period 1 January 2011 to 30 June 2012, and continued to receive his salary. If so, Mr Maschek will not be entitled to an allowance in lieu of paid annual leave which he was not able to use up during the period.37If, on the contrary, during that period, Mr Maschek was not able to use up his entitlement to paid annual leave due to illness, which it is for the referring court to verify, he will be entitled under Article 7(2) of Directive 2003/88, to an allowance in lieu of paid annual leave not taken.38As regards, in the third place, the question whether national legislation may provide, in respect of a worker who, in breach of Article 7(2) of Directive 2003/88, is not entitled to an allowance in lieu of paid annual leave not taken, for detailed rules on the exercise of that entitlement which are more favourable than those provided for by Directive 2003/88, in particular as regards the amount of allowance to be granted to that worker, it should be recalled that although the purpose of Directive 2003/88 is to lay down minimum health and safety requirements for the organisation of working time, which Member States must respect, they have, in accordance with Article 15 of that directive, the right to introduce more favourable provisions for workers. Thus, Directive 2003/88 does not preclude domestic provisions giving entitlement to more than the minimum period of four weeks’ paid annual leave, guaranteed by Article 7 of that directive, granted under the conditions for entitlement to, and granting of, the right to paid annual leave laid down by national law (see, inter alia, judgments of 24 January 2012 in Dominguez, C‑282/10, EU:C:2012:33, paragraph 47, and 3 May 2012 in Neidel, C‑337/10, EU:C:2012:263, paragraphs 34 and 35).39Accordingly, it is, on the one hand, for the Member States to decide whether to grant workers additional paid annual leave in addition to the minimum annual paid leave of four weeks provided for in Article 7 of Directive 2003/88. In that case, the Member States may grant to a worker who, because of illness, could not use up all of his additional paid annual leave before the end of his employment relationship, an entitlement to an allowance in lieu of that additional period. It is, on the other hand, for the Member States to determine the conditions for granting that entitlement (see, judgment of 3 May 2012 in Neidel, C‑337/10, EU:C:2012:263, paragraph 36).40In view of all the foregoing considerations, the answer to the questions posed by the national court is that Article 7(2) of Directive 2003/88 must be interpreted:as precluding national legislation such as that at issue in the main proceedings, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has not been able to use up his rights to paid annual leave before the end of that employment relationship;as meaning that a worker is entitled, on retirement, to an allowance in lieu of paid annual leave not taken because he was prevented from working by sickness;as meaning that a worker whose employment relationship has ended and who, pursuant to an agreement with his employer, while continuing to receive his salary, was required not to report to his place of work during a specified period preceding his retirement, is not entitled to an allowance in lieu of paid annual leave not taken during this period, unless he was not able to use up that entitlement due to illness;as meaning that it is, on the one hand, for the Member States to decide whether to grant workers additional paid leave in addition to the minimum annual paid leave of four weeks provided for in Article 7 of Directive 2003/88. In that case, the Member States may grant to a worker who, because of illness, could not use up all of his additional paid annual leave before the end of his employment relationship, an entitlement to an allowance in lieu of that additional period. It is, on the other hand, for the Member States to determine the conditions for granting that entitlement. Costs 41Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (tenth chamber) hereby rules: Article 7(2) of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time, must be interpreted: as precluding national legislation such as that at issue in the main proceedings, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has not been able to use up his rights to paid annual leave before the end of that employment relationship; as meaning that a worker is entitled, on retirement, to an allowance in lieu of paid annual leave not taken because he was prevented from working by sickness; as meaning that a worker whose employment relationship has ended and who, pursuant to an agreement with his employer, while continuing to receive his salary, was required not to report to his place of work during a specified period preceding his retirement, is not entitled to an allowance in lieu of paid annual leave not taken during this period, unless he was not able to use up that entitlement due to illness; as meaning that it is, on the one hand, for the Member States to decide whether to grant workers additional paid leave in addition to the minimum annual paid leave of four weeks provided for in Article 7 of Directive 2003/88. In that case, the Member States may grant to a worker who, because of illness, could not use up all of his additional paid annual leave before the end of his employment relationship, an entitlement to an allowance in lieu of that additional period. It is, on the other hand, for the Member States to determine the conditions for granting that entitlement. [Signatures]( *1 ) Language of the case: German. | 99159-d2d0563-42cc | EN |
The Communication from the Commission on aid to the banking sector is valid | 19 July 2016 ( *1 ) ( 1 )[Text rectified by order of 30 September 2016](Reference for a preliminary ruling — Validity and interpretation of the Banking Communication from the Commission — Interpretation of Directives 2001/24/EC and 2012/30/EU — State aid to banks in the context of the financial crisis — Burden-sharing — Writing off equity capital, hybrid capital and subordinated debt — Principle of protection of legitimate expectations — Right to property — Protection of the interests of shareholders and others — Reorganisation and winding up of credit institutions)In Case C‑526/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Ustavno sodišče (Constitutional Court, Slovenia), made by decision of 6 November 2014, received at the Court on 20 November 2014, in the proceedings Tadej Kotnik and Others, Jože Sedonja and Others, Fondazione cassa di risparmio di Imola, Andrej Pipuš and Others, Tomaž Štrukelj, Luka Jukič, Angel Jaromil, Franc Marušič and Others, Stajka Skrbinšek, Janez Forte and Others, Državni svet Republike Slovenije, Varuh človekovih pravic Republike Slovenije, Igor Karlovšek, Marija Karlovšek, Janez Gosar v Državni zbor Republike Slovenije, intervening parties: Vlada Republike Slovenije, Banka Slovenije, Okrožno sodišče v Ljubljani, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz, J.L. da Cruz Vilaça (Rapporteur), A. Arabadjiev, C. Toader and D. Šváby, Presidents of Chambers, M. Safjan, M. Berger, E. Jarašiūnas, C.G. Fernlund and C. Vajda, Judges,Advocate General: N. Wahl,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 1 December 2015,after considering the observations submitted on behalf of:–Mr Kotnik and Others, by M. Kunič and J. Sladič, odvetniki,Mr Sedonja and Others, by T. Kek, odvetnica,the Fondazione cassa di risparmio di Imola, by U. Ilić, M. Jan, B. Ilić, A. Arko, odvetniki, P. Trifoni, C.G. Sinatra and G. Altomare, avvocati,Mr Pipuš and Others, by Mr Pipus himself, avocat,Mr Jukič, by himself,Mr Marušič and Others, by B. Rejc, odvetnik,Mrs Skrbinšek, by T. Bromše, odvetnik,Mr Forte and Others, by Z. Fritz,the Državni svet Republike Slovenije, by M. Bervar, H. Butolen, odvetnica, and B. Kekec, J. Slivšek and D. Štrus,Mr and Mrs Karlovšek, by Mr I. Karlovšek, odvetnik,Mr Gosar, by Mr Gosar himself,the Državni zbor Republike Slovenije, by M. Brglez,the Banka Slovenije, by B. Jazbec, R. Grilc, odvetnik, and T. Lübbig, Rechtsanwalt,the Slovenian Government, by V. Klemenc, T. Mihelič Žitko, acting as Agents,[as rectified by order of 30 September 2016] Ireland, by E. Creedon, L. Williams and A. Joyce, acting as Agents, and by E. McCullough, Senior Counsel, and A. O’Neill, Barrister-at-Law,the Spanish Government, by A. Rubio González, acting as Agent,the Italian Government, by G. Palmieri, acting as Agent, and by P. Gentili, avvocato dello Stato,the European Commission, by L. Flynn, P.J. Loewenthal, K.-Ph. Wojcik and M. Žebre, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 18 February 2016,gives the following Judgment 1This request for a preliminary ruling concerns the validity and interpretation of points 40 to 46 of the Communication from the Commission on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’) (OJ 2013, C 216, p. 1), and the interpretation of Articles 29, 34, 35 and 40 to 42 of Directive 2012/30/EU of the European Parliament and of the Council of 25 October 2012 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 54 of the Treaty on the Functioning of the European Union, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ 2012 L 315, p. 74), and of the seventh indent of Article 2 of Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ 2001 L 125, p. 15).2The request has been made in proceedings for review of the constitutionality of certain provisions of the Zakon o bančništvu (law on the banking sector) of 23 November 2006), in the version applicable to the main proceedings (Uradni list RS, No 99/10) (‘the law on the banking sector’), which provide for exceptional measures designed to ensure the recovery of the banking system. Legal context EU law Directive 2001/24 3Recitals 5 and 6 in the preamble to Directive 2001/24 read as follows:‘(5)The adoption of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes [(OJ 1994, L 135, p. 5)], which introduced the principle of compulsory membership by credit institutions of a guarantee scheme in their home Member State, brings out even more clearly the need for mutual recognition of reorganisation measures and winding-up proceedings.(6)The administrative or judicial authorities of the home Member State must have sole power to decide upon and to implement the reorganisation measures provided for in the law and practices in force in that Member State. Owing to the difficulty of harmonising Member States’ laws and practices, it is necessary to establish mutual recognition by the Member States of the measures taken by each of them to restore to viability the credit institutions which it has authorised.’4Under the seventh indent of Article 2 of Directive 2001/24, ‘reorganisation measures’ are to mean ‘measures which are intended to preserve or restore the financial situation of a credit institution and which could affect third parties’ pre-existing rights, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims.’ Directive 2012/30 5Recitals 3 and 5 in the preamble to Directive 2012/30 are worded as follows:‘(3)… in order to ensure minimum equivalent protection for both shareholders and creditors of public limited liability companies, the coordination of national provisions relating to their formation and to the maintenance, increase or reduction of their capital is particularly important;…(5)Union provisions are necessary for maintaining the capital, which constitutes the creditors’ security, in particular by prohibiting any reduction thereof by distribution to shareholders where the latter are not entitled to it and by imposing limits on the company’s right to acquire its own shares.’6Article 29(1) of that directive provides:‘Any increase in capital must be decided upon by the general meeting ...’7The first paragraph of Article 34 of that directive states:‘Any reduction in the subscribed capital, except under a court order, must be subject at least to a decision of the general meeting …’8Article 35 of Directive 2012/30 provides: ‘Where there are several classes of shares, the decision by the general meeting concerning a reduction in the subscribed capital shall be subject to a separate vote, at least for each class of shareholders whose rights are affected by the transaction.’9Article 40(1) of that directive provides:‘Where the laws of a Member State may allow companies to reduce their subscribed capital by compulsory withdrawal of shares, they shall require that at least the following conditions are observed:...(b)where the compulsory withdrawal is merely authorised by the statutes or instrument of incorporation, it shall be decided upon by the general meeting unless it has been unanimously approved by the shareholders concerned.’10Article 41(1) of that directive states:‘In the case of a reduction in the subscribed capital by the withdrawal of shares acquired by the company itself or by a person acting in his own name but on behalf of the company, the withdrawal must always be decided on by the general meeting.’11Article 42 of that directive provides:‘In the cases covered by …, point (b) of Article 40(1) …, when there are several classes of shares, the decision by the general meeting concerning redemption of the subscribed capital or its reduction by withdrawal of shares shall be subject to a separate vote, at least for each class of shareholders whose rights are affected by the transaction.’ Directive 2014/59/EU 12Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190) was adopted on 15 May 2014.13Article 117 of Directive 2014/59 amended, inter alia, the definition of ‘reorganisation measures’ set out in the seventh indent of Article 2 of Directive 2001/24. As amended, ‘reorganisation measures’ are to mean ‘measures which are intended to preserve or restore the financial situation of a credit institution or an investment firm as defined in Article 4(1), point (2) of Regulation (EU) No 575/2013 and which could affect third parties’ pre-existing rights, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims; those measures include the application of the resolution tools and the exercise of resolution powers provided for in Directive 2014/59/EU’.14Article 130(1) of Directive 2014/59 provides:‘Member States shall adopt and publish by 31 December 2014 the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those measures.Member States shall apply those measures from 1 January 2015.However, Member States shall apply provisions adopted in order to comply with Section 5 of Chapter IV of Title IV from 1 January 2016 at the latest.’ The Banking Communication 15Points 2 and 3 of the Banking Communication state:‘2.The Crisis Communications provide a comprehensive framework for coordinated action in support of the financial sector so as to ensure financial stability while minimising distortions of competition between banks and across Member States in the single market. They spell out the conditions for access to State aid and the requirements which need to be ensured to find such aid compatible with the internal market in light of State aid principles set out in the Treaty. Through the Crisis Communications, State aid rules governing public assistance to the financial sector have been regularly updated where necessary to adapt to the evolution of the crisis. Recent developments require a further update of the Crisis Communications.3.The Crisis Communications, as well as all individual decisions on aid measures and schemes falling within the scope of those Communications, were adopted on the basis of Article 107(3)(b) of the Treaty, which exceptionally allows for aid to remedy a serious disturbance in the economy of a Member State.’16Point 15 of that communication reads as follows:‘The Crisis Communications clearly spell out that even during the crisis the general principles of State aid control remain applicable. In particular, in order to limit distortions of competition between banks and across Member States in the single market and address moral hazard, aid should be limited to the minimum necessary and an appropriate own contribution to restructuring costs should be provided by the aid beneficiary. The bank and its capital holders should contribute to the restructuring as much as possible with their own resources. State support should be granted on terms which represent an adequate burden-sharing by those who invested in the bank.’17Point 17 of that communication states:‘In the first phases of the crisis, Member States did not generally go beyond the minimum requirements set by State aid rules with regard to burden-sharing ex ante, and creditors were not required to contribute to rescuing credit institutions for reasons of financial stability.’18Part 3 of the Banking Communication relates to recapitalisation and impaired asset measures. Section 3.1.2. of Part 3, headed ‘Burden-sharing by the shareholders and the subordinated creditors’ contains points 40 to 46 of that notice.19Points 40 to 46 of that communication state:‘40.State support can create moral hazard and undermine market discipline. To reduce moral hazard, aid should only be granted on terms which involve adequate burden-sharing by existing investors.41.Adequate burden-sharing will normally entail, after losses are first absorbed by equity, contributions by hybrid capital holders and subordinated debt holders. Hybrid capital and subordinated debt holders must contribute to reducing the capital shortfall to the maximum extent. Such contributions can take the form of either a conversion into Common Equity Tier 1 … or a write-down of the principal of the instruments. In any case, cash outflows from the beneficiary to the holders of such securities must be prevented to the extent legally possible.42.The Commission will not require contribution from senior debt holders (in particular from insured deposits, uninsured deposits, bonds and all other senior debt) as a mandatory component of burden-sharing under State aid rules whether by conversion into capital or by write-down of the instruments.43.Where the capital ratio of the bank that has the identified capital shortfall remains above the [European Union] regulatory minimum, the bank should normally be able to restore the capital position on its own, in particular through capital raising measures as set out in point 35. If there are no other possibilities, including any other supervisory action such as early intervention measures or other remedial actions to overcome the shortfall as confirmed by the competent supervisory or resolution authority, then subordinated debt must be converted into equity, in principle before State aid is granted.44.In cases where the bank no longer meets the minimum regulatory capital requirements, subordinated debt must be converted or written down, in principle before State aid is granted. State aid must not be granted before equity, hybrid capital and subordinated debt have fully contributed to offset any losses.45.An exception to the requirements in points 43 and 44 can be made where implementing such measures would endanger financial stability or lead to disproportionate results. This exception could cover cases where the aid amount to be received is small in comparison to the bank’s risk weighted assets and the capital shortfall has been reduced significantly in particular through capital raising measures as set out in point 35. Disproportionate results or a risk to financial stability could also be addressed by reconsidering the sequencing of measures to address the capital shortfall.46.In the context of implementing points 43 and 44, the “no creditor worse off principle” … should be adhered to. Thus, subordinated creditors should not receive less in economic terms than what their instrument would have been worth if no State aid were to be granted.’ Slovenian law 20Article 253(3) of the law on the banking sector provides that ‘the exceptional measures shall form part of the reorganisation measures provided for by Directive 2001/24/EC.’21Article 261a of that law states:‘(1) By its decision requiring exceptional measures, the Bank of Slovenia shall provide that:1.eligible liabilities shall be written off or written down, or2.a bank’s eligible liabilities … shall be converted in whole or in part into new ordinary shares in the bank following an increase of that bank’s share capital by means of the transfer of consideration in kind in the form of the claims of creditors, which claims shall constitute eligible liabilities.(5) In writing off or converting a bank’s eligible liabilities, the Bank of Slovenia must satisfy itself that individual creditors do not incur, as a result of the writing off or conversion of the bank’s eligible liabilities, greater losses than they would have done in the event of the bank’s insolvency.(6) A bank’s eligible liabilities are represented by:the bank’s share capital (Class I liabilities),liabilities in relation to holders of hybrid capital ... (Class II liabilities),liabilities in relation to holders of financial instruments, which, …, must be taken into account in calculating the bank’s additional capital, unless such liabilities are already included in the definitions set out at points 1 or 2 of this paragraph (Class III liabilities),4.liabilities not included in the definitions set out in points 1, 2 or 3 of this paragraph, which, in the event of insolvency proceedings in respect of the bank, would be paid after the payment of ordinary debentures (Class IV liabilities).’22Article 261c of the law on the banking sector provides:‘(1) In its decision concerning the writing off of eligible liabilities …, the Bank of Slovenia shall require the bank’s eligible liabilities to be written off to the extent necessary to cover the bank’s losses, in the light of the valuation of the net assets as referred to in the preceding article ...’ The dispute in the main proceedings and the questions referred for a preliminary ruling 23After the global financial crisis, which began in 2007 and which deepened in the years that followed, the Banka Slovenije (the Bank of Slovenia) determined, in September 2013, that five Slovenian banks, namely Nova Ljubljanska banka d.d., Nova Kreditna banka Maribor d.d., Abanka Vipa d.d., Probanka d.d. and Factor banka d.d., were showing capital shortfalls. Given the scale of those shortfalls, those banks did not have sufficient assets to satisfy their creditors and to cover the value of deposits.24On 17 December 2013 the Bank of Slovenia adopted decisions putting in place exceptional measures to effect the recapitalisation of the first two banks, the rescue of the third, and the winding up of the last two banks (‘the contested measures’).25On 18 December 2013 the Commission authorised the granting of State aid to the five banks concerned, prior notice of that aid having been given by the Slovenian authorities.26The contested measures, which were adopted on the basis of the law on the banking sector, in particular Article 261a to 261c and Article 261e of that law, included writing off equity capital, as well as hybrid capital and subordinated debt (together: ‘subordinated rights’).27It is apparent from the file submitted to the Court that subordinated rights are constituted by financial instruments which share certain characteristics with debt products and certain characteristics with shares in equity capital. In the event of the insolvency or winding up of the issuing entity, the holders of subordinated rights (‘subordinated creditors’) are paid after the holders of ordinary debentures, but before shareholders. In exchange for the financial risk thus assumed by their holders, those financial instruments offer a higher rate of return.28A number of applications for review of constitutionality were brought before the Ustavno sodišče (Constitutional Court, Slovenia) by, on the one hand, private individuals and, on the other, by the Državni svet Republike Slovenije (the National Council, Slovenia) and the Varuh človekovih pravic Republike Slovenije (the Slovenian Ombudsman). Those applications related to whether provisions of the law on the banking sector, on the basis of which the contested measures were adopted, were compatible with the Slovenian Constitution, and in particular with the principle of non-retroactivity, the principles of protection of legitimate expectations and proportionality, and the right to property.29It is stated in the order for reference that the objective of the provisions of the law on the banking sector was to transpose the Banking Communication into national law, in order to enable the national authorities to grant to undertakings in that sector State aid that was compatible with the internal market. Consequently, according to the referring court, while the objections of the applicants in the main proceedings are directed against those provisions, their actual target is the Banking Communication. Those applicants consider that that communication is contrary not only to the Slovenian Constitution, but also to Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and to Directives 2012/30 and 2001/24. The referring court considers that it has jurisdiction to assess the constitutionality of provisions of national law which implement a directive. However, the referring court believes that it does not have jurisdiction when a question is raised as to the interpretation or validity of a rule of EU law which represents the legal basis for the provision of national law whose constitutionality is challenged. In that situation, it considers that the Court has exclusive jurisdiction to answer questions as to the validity and interpretation of that rule, so that it can thereafter assess, in the case pending before it, the constitutionality of the provisions at issue of the national legislation.30In those circumstances, the Ustavno sodišče (Constitutional Court) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Having regard to the legal effects actually produced by the Banking Communication, and given that the European Union has exclusive competence in relation to State aid, in accordance with Article 3(1)(b) [TFEU], and the Commission has competence to give decisions relating to State aid, pursuant to Article 108 [TFEU], must the Banking Communication be regarded as binding on Member States seeking to remedy a serious disturbance in the economy by granting State aid to credit institutions, where such aid is intended to be permanent and cannot be easily revoked?(2)Are points 40 to 46 of the Banking Communication — which make the possibility of granting State aid intended to remedy a serious disturbance in the national economy conditional upon compliance with the requirement to write off equity capital, [and subordinated rights] and/or to convert [subordinated rights] into equity, in order to limit the amount of aid to the minimum necessary in the light of the need to take account of moral hazard — incompatible with Articles 107 to 109 [TFEU], in so far as they exceed the Commission’s competence, as defined in the provisions of the [FEU] Treaty relating to State aid?(3)If Question 2 is answered in the negative, are points 40 to 46 of the Banking Communication — which make the possibility of granting State aid conditional on the requirement of writing off and/or converting into equity capital, in so far as that requirement relates to shares (equity capital), and [subordinated rights] issued before the publication of the Banking Communication and which, at the time of issue, could have been written off or written down without full compensation only in the event of the bank’s insolvency — compatible with the principle of the protection of legitimate expectations enshrined in EU law?(4)If Question 2 is answered in the negative and Question 3 in the affirmative, are points 40 to 46 of the Banking Communication — which make the possibility of granting State aid conditional on the requirement to write off equity capital, [and subordinated rights] and/or to convert [subordinated rights] into equity, without the initiation and conclusion of an insolvency procedure by which the debtor’s assets may be liquidated by means of judicial proceedings in which the holders of subordinated financial instruments would have the opportunity to participate as parties to the proceedings — compatible with the right to property enshrined in Article 17(1) of the Charter?If Question 2 is answered in the negative and Questions 3 and 4 in the affirmative, are points 40 to 46 of the Banking Communication — which make the possibility of granting State aid conditional on the requirement to write off equity capital, and/or to convert [subordinated rights] into equity, in so far as the implementation of those measures calls for a reduction and/or increase in the share capital of a public limited liability company on the basis of the decision of a competent administrative body, not that of the general meeting of shareholders of that company — contrary to Articles 29, 34, 35 and 40 to 42 of Directive 2012/30 …?With regard to point 19 of the Banking Communication, in particular the requirement laid down in that provision to respect fundamental rights, to point 20, and to the affirmation of the requirement, as a matter of principle, laid down in points 43 and 44 of the communication, to convert or write down [subordinated rights] before granting State aid, may the Banking Communication be interpreted as meaning that those measures do not compel Member States that seek to remedy a serious disturbance in their economy by granting State aid to credit institutions to impose an obligation to adopt such conversion and writing down measures as a condition for the grant of State aid on the basis of Article 107(3)(b) [TFEU], or as meaning that, in order to be able to grant State aid, it is sufficient that the conversion or writing down measure should merely operate in a manner that is proportionate?(7)May the seventh indent of Article 2 of [Directive 2001/24] be interpreted as meaning that the measures requiring burden-sharing by shareholders and subordinated creditors provided for in points 40 to 46 of the Banking Communication (write-down of equity capital [and subordinated rights] and the conversion into equity of [subordinated rights] may also be classified as reorganisation measures?’ Consideration of the questions referred for a preliminary ruling Preliminary observation 31The Slovenian Government and the Commission express doubts as to whether the second, third, fourth and fifth questions referred for a preliminary ruling, on the validity of points 40 to 46 of the Banking Communication, are admissible, since that communication produces no legal effects directly on third parties.32It must be observed that what lies behind this case is, in essence, the fact that State aid was granted by the Slovenian Government with the objective of ensuring the recovery of the national banking system.33More specifically, this case concerns the compatibility, with a number of provisions of EU law, of the condition laid down by the Commission that there must be burden-sharing by shareholders and subordinated creditors, if it is to be able to find, under Article 107(3)(b) TFEU, that the State aid granted in the banking sector is compatible with the internal market. The validity of such a condition must be capable of being reviewed by the Court in the procedure provided for by Article 267 TFEU, and that is precisely the subject-matter of the second, third, fourth and fifth questions referred.34Consequently, those questions are admissible. The first question referred 35By its first question, the referring court seeks, in essence, to ascertain whether the Banking Communication must be interpreted as meaning that it is binding on the Member States.36Article 108(3) TFEU establishes a prior control of alterations to existing aid and of plans to grant new aid. The aim of that system of prior control is that only aid that is compatible with the internal market may be implemented (see judgment of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraphs 25 and 26).37The assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union (see judgment of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 28).38In that regard, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments (see, to that effect, judgments of 11 September 2008, Germany and Others v Kronofrance, C‑75/05 P and C‑80/05 P, EU:C:2008:482, paragraph 59, and of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 68).39In the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility, with the internal market, of aid measures envisaged by the Member States.40In accordance with settled case-law, in adopting such guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (judgment of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraphs 69 and 70 and the case-law cited).41That said, the Commission cannot waive, by the adoption of guidelines, the exercise of the discretion that Article 107(3)(b) TFEU confers on it (see, to that effect, judgment of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 71). The adoption of a communication such as the Banking Communication does not therefore relieve the Commission of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU, and to provide reasons for its refusal to grant such a request (judgment of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 72).42In this case, it is apparent from points 41, 43 and 44 of the Banking Communication that the adequate burden-sharing which is stated by that communication to be a prerequisite for the grant of State aid entails, first, that losses are absorbed by equity, then, as a general rule, by a contribution from subordinated creditors. An exception to the requirements stated in points 43 and 44 of that communication may be made, under point 45 thereof, where such a contribution ‘might endanger financial stability or lead to disproportionate results’.43It follows from the foregoing, on the one hand, that the effect of the adoption of the guidelines contained in that communication is equivalent to the effect of a limitation imposed by the Commission on itself in the exercise of its discretion, so that, if a Member State notifies the Commission of proposed State aid which complies with those guidelines, the Commission must, as a general rule, authorise that proposed aid. On the other hand, the Member States retain the right to notify the Commission of proposed State aid which does not meet the criteria laid down by that communication and the Commission may authorise such proposed aid in exceptional circumstances.44It follows that the Banking Communication is not capable of imposing independent obligations on the Member States, but does no more than establish conditions, designed to ensure that State aid granted to the banks in the context of the financial crisis is compatible with the internal market, which the Commission must take into account in the exercise of the wide discretion that it enjoys under Article 107(3)(b) TFEU.45In the light of the foregoing, the answer to the first question referred is that the Banking Communication must be interpreted as meaning that it is not binding on the Member States. The second question referred 46By its second question, the referring court seeks, in essence, to ascertain whether Articles 107 to 109 TFEU must be interpreted as precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid.47The Banking Communication was adopted on the basis of Article 107(3)(b) TFEU.48It is apparent from that provision that the Commission may consider to be compatible with the internal market aid that is designed to remedy a serious disturbance in the economy of a Member State.49Within the discretion conferred on it by Article 107(3)(b) TFEU, the Commission is entitled to refuse the grant of aid where that aid does not induce the recipient undertakings to adopt conduct likely to assist attainment of one of the objectives referred to in that provision. Such aid must be necessary for the attainment of the objectives specified in that provision, in the sense that, without it, market forces alone would not succeed in getting the recipient undertakings to adopt conduct likely to assist attainment of those objectives. Aid which improves the financial situation of the recipient undertaking but is not necessary for the attainment of the objectives specified in Article 107(3) TFEU cannot be considered to be compatible with the internal market (judgment of 13 June 2013, HGA and Others v Commission, C‑630/11 P to C‑633/11 P, EU:C:2013:387, paragraph 104 and the case-law cited).50As regards the adoption of points 40 to 46 of the Banking Communication on the basis of that provision, it must be observed that financial services play a central role in the economy of the European Union. Banks and credit institutions are an essential source of funding for businesses that are active in the various markets. In addition, the banks are often interconnected and a number of them operate internationally. That is why the failure of one or more banks is liable to spread rapidly to other banks, either in the Member State concerned or in other Member States. That is likely, in its turn, to produce negative spill-over effects in other sectors of the economy.51As the Advocate General stated, in point 56 of his Opinion, recourse to the legal basis of Article 107(3)(b) TFEU is all the more justified by the fact that, in the context of the global financial crisis, which led to the adoption of that communication, the economies of many Member States were subject to serious disturbances.52In this case, it is apparent from point 2 of the Banking Communication that the Commission’s aim, by means of that communication, was to spell out the conditions for access to State aid designed to provide assistance to the financial sectors of Member States and the requirements which that aid must satisfy if it is to be found to be compatible with the internal market.53One of those requirements, stated in points 40 to 46 of the Banking Communication, is the condition of burden-sharing: both shareholders and subordinated creditors must be involved in meeting the costs of restructuring distressed banks in order to reduce their capital shortfalls. As a consequence, after losses are absorbed by equity capital, subordinated creditors are also called upon to contribute to the attainment of that objective either by the conversion of their claims into equity, or a write-down of the principal of those claims.54When reviewing the compatibility of State aid measures with the internal market, the Commission could take the view that, as stated in point 15 of the Banking Communication, burden-sharing measures were essential in order that State aid in the banking sector should be limited to the minimum necessary and that any distortions of competition in the internal market should be limited.55First, such burden-sharing measures can be understood as being designed to prevent recourse to State aid merely as a tool to overcome the financial difficulties of the banks concerned.56Second, the burden-sharing measures are designed to ensure that, prior to the grant of any State aid, the banks which show a capital shortfall take steps, with their investors, to reduce that shortfall, in particular by raising equity capital and by obtaining a contribution from subordinated creditors, since such measures are likely to limit the amount of the State aid granted.57To act otherwise would be liable to cause distortions of competition, since banks whose shareholders and subordinated creditors had not contributed to the reduction of the capital shortfall would receive State aid of an amount greater than that which would have been sufficient to overcome the residual capital shortfall. In those circumstances, such aid would not, as a general rule, be compatible with EU law.58Moreover, in order to overcome the problem of ‘moral hazard’, which is linked to the fact that individuals are inclined to engage in risk-taking when the possible negative consequences of so doing are borne by the community as a whole, it is important to ensure that banks are not encouraged by the possibility of obtaining State aid to have recourse to financial instruments that carry greater risk and are more likely to cause significant losses, the effect of which would be to create serious distortions of competition and to jeopardise the integrity of the internal market.59Last, it must be observed that, in adopting the Banking Communication, the Commission did not encroach on the competences conferred on the Council of the European Union by Articles 108 and 109 TFEU. Since that communication does no more than establish guidelines whose effect is to limit the Commission in the exercise of the discretion conferred on it by Article 107(3)(b) TFEU, it does not impinge on the power granted to the Council, in the third subparagraph of Article 108(2) TFEU, to declare, on application by a Member State, State aid to be compatible with the internal market in exceptional circumstances, and does not constitute a regulation of the kind referred to in Article 109 TFEU, which is, pursuant to the second paragraph of Article 288 TFEU, binding and of general application.60In the light of all the foregoing, the answer to the second question is that Articles 107 to 109 TFEU must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid. The third and fourth questions referred 61By its third and fourth questions, which can be examined together, the referring court seeks, in essence, to ascertain whether the principle of protection of legitimate expectations and the right to property must be interpreted as precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid.62As regards, first, the principle of protection of legitimate expectations, in accordance with settled case-law, the right to rely on that principle presupposes that precise, unconditional and consistent assurances, originating from authorised, reliable sources, have been given to the person concerned by the competent authorities of the European Union. That right applies to any individual in a situation in which an institution, body or agency of the European Union, by giving that person precise assurances, has led him to entertain well-founded expectations (judgments of 16 December 2010, Kahla Thüringen Porzellan v Commission, C‑537/08 P, EU:C:2010:769, paragraph 63, and of 13 June 2013, HGA and Others v Commission, C‑630/11 P to C‑633/11 P, EU:C:2013:387, paragraph 132).63However, the shareholders and subordinated creditors of banks who are subject to burden-sharing measures, laid down in points 40 to 46 of the Banking Communication, such as those at issue in the main proceedings, cannot rely on the principle of protection of legitimate expectations as a ground of objection to implementation of the contested measures.64The reason is that, on the one hand, the shareholders and the subordinated creditors of the banks concerned were given no guarantee from the Commission to the effect that it would approve State aid designed to overcome the capital shortfall of those banks. On the other hand, those investors received no assurance that, with respect to measures designed to deal with the capital shortfalls of banks who were the recipients of the State aid authorised by the Commission, some of those measures would not be liable to be prejudicial to their investments.65Further, the fact that, in the first phases of the international financial crisis, the subordinated creditors were not called upon to contribute to the rescue of credit institutions, as noted by the Commission in point 17 of the Banking Communication, does not put the creditors concerned in the main proceedings in a position to rely on the principle of protection of legitimate expectations.66Indeed, such a circumstance cannot be regarded as a precise, unconditional and consistent assurance capable of engendering a legitimate expectation on the part of the shareholders and the subordinated creditors that they would not be subject to burden-sharing measures in the future. As the Court has previously held, while the principle of protection of legitimate expectations is one of the fundamental principles of the European Union, economic operators are not justified in having a legitimate expectation that an existing situation which is capable of being altered by the EU institutions in the exercise of their discretion will be maintained, particularly in a field such as State aid in the banking sector, whose subject matter involves constant adjustment to reflect changes in the economic situation (see, by analogy, judgment of 26 June 2012, Poland v Commission, C‑335/09 P, EU:C:2012:385, paragraph 180).67The referring court raises the question, further, whether it is necessary that the Member States should be allowed, in any event, a transitional period in order to adjust to the Commission’s new requirements in relation to burden-sharing by the shareholders and the subordinated creditors.68In that regard, the Court has previously held that, even if the European Union were first to have created a situation capable of giving rise to legitimate expectations, which it has not in this case, an overriding public interest may preclude transitional measures from being adopted in respect of situations which arose before the new rules came into force but which are still subject to change (see judgments of 17 July 1997, Affish, C‑183/95, EU:C:1997:373, paragraph 57, and of 17 September 2009, Commission v Koninklijke FrieslandCampina, C‑519/07 P, EU:C:2009:556, paragraph 85).69As the Advocate General stated in point 70 of his Opinion, the objective of ensuring the stability of the financial system while avoiding excessive public spending and minimising distortions of competition constitutes an overriding public interest of that kind.70As regards, in the second place, the right to property enshrined in Article 17(1) of the Charter, it must be recalled that, as stated in point 44 of this judgment, the Banking Communication is not capable of imposing an obligation on Member States to adopt burden-sharing measures such as those laid down in points 40 to 46 of that communication.71It is apparent from point 15 of the Banking Communication that the burden-sharing by the shareholders and the subordinated creditors is no more than a criterion governing the Commission’s authorisation of State aid granted to banks that show a significant capital shortfall, the result being that aid can be limited to the minimum necessary and that the recipient of that aid will contribute appropriately to the costs of restructuring.72As the Advocate General stated in point 71 of his Opinion, the Banking Communication does not require any particular form or procedure for the adoption of the burden-sharing measures referred to in points 40 to 46 of that communication. Such measures can accordingly be adopted voluntarily by the shareholders and by means of an agreement between the credit institution concerned and its subordinated creditors, which cannot be regarded as interference with their right to property.73Further, as regards the shareholders of the banks, it must be recalled that, in accordance with the general rules applicable to the status of shareholders of public limited liability companies, they must fully bear the risk of their investments. It follows from recital 5 of the preamble to Directive 2012/30 that the aim of that directive is to maintain the share capital that constitutes the creditors’ security.74Since shareholders are liable for the debts of the bank up to the amount of its share capital, the fact that points 40 to 46 of the Banking Communication require that, in order to overcome a bank’s capital shortfall, prior to the grant of State aid, those shareholders should contribute to the absorption of the losses suffered by that bank to the same extent as if there were no State aid, cannot be regarded as adversely affecting their right to property.75The scale of losses suffered by shareholders of distressed banks will, in any event, be the same, regardless of whether those losses are caused by a court insolvency order because no State aid is granted or by a procedure for the granting of State aid which is subject to the prerequisite of burden-sharing.76As regards the subordinated creditors, as the Court has stated in paragraph 27 of this judgment, subordinated rights are constituted by financial instruments which share certain characteristics with debt products and certain characteristics with equity capital, which entails that, in the event of the issuer of such instruments becoming insolvent, the holders of those instruments are paid after the holders of ordinary debentures, but before shareholders.77However, it is apparent from points 41, 43 and 44 of the Banking Communication that those creditors are to contribute to reducing the capital shortfall (i) only after losses are first absorbed by equity and (ii) only ‘if there are no other possibilities’ available to overcome any capital shortfall in the bank concerned or where that bank no longer meets the minimum regulatory capital requirements. Further, point 46 of that communication provides that ‘the “no creditor worse off principle” should be adhered to. Thus, subordinated creditors should therefore not receive less, in economic terms, than what their instrument would have been worth if no State aid were to be granted.’78It follows from point 46 that the burden-sharing measures on which the grant of State aid in favour of a bank showing a shortfall is dependent cannot cause any detriment to the right to property of subordinated creditors that those creditors would not have suffered within insolvency proceedings that followed such aid not being granted.79That being the case, it cannot reasonably be maintained that the burden-sharing measures, such as those laid down by the Banking Communication, constitute interference in the right to property of the shareholders and the subordinated creditors.80The answer, therefore, to the third and fourth questions is that the principle of protection of legitimate expectations and the right to property must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid. The fifth question 81By its fifth question, the referring court seeks, in essence, to ascertain whether Articles 29, 34, 35 and 40 to 42 of Directive 2012/30 must be interpreted as precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid.82Articles 29, 34, 35 and 40 to 42 of Directive 2012/30 provide, in essence, that any increase or reduction in the capital of a public limited liability company must be subject to a decision by the general meeting of the company.83According to the referring court, to the extent that the Banking Communication provides that certain alterations to the share capital of banks do not have to be decided upon or approved by the general meeting, that communication is incompatible with that directive.84However, as stated in paragraph 72 of this judgment, the Banking Communication contains no specific provision on the legal procedures whereby the burden-sharing measures set out in points 40 to 46 of that communication are to be implemented.85Consequently, while the Member States may possibly find it necessary, in a particular situation, to adopt such burden-sharing measures without the agreement of the general meeting of the company, that circumstance cannot however call into question the validity of the Banking Communication in the light of the provisions of Directive 2012/30.86Further, it must be observed that, according to recital 3 in the preamble of Directive 2012/30, the aim of that directive is to ensure minimum equivalent protection for both shareholders and creditors of public limited liability companies. To that end, that directive coordinates the national provisions relating to the formation of such companies, and to the maintenance, increase and reduction of their capital.87The background to Directive 2012/30 is the attainment of freedom of establishment in the internal market, and its principal objective is the protection of the interests of shareholders and others. The directive is intended to reassure investors that their rights will be respected throughout the internal market by the governing bodies of the companies in which they have invested, particularly when a company is formed and when its share capital is increased and reduced. Consequently, the measures provided for by Directive 2012/30 in order to guarantee that protection relate to the normal operation of public limited liability companies.88By contrast, the burden-sharing measures involving both shareholders and subordinated creditors constitute, when they are imposed by the national authorities, exceptional measures. They can be adopted only in the context of there being a serious disturbance of the economy of a Member State and with the objective of preventing a systemic risk and ensuring the stability of the financial system.89Contrary to what is claimed by the applicants in the main proceedings, Directive 2010/30 does not preclude measures relating to share capital being adopted, in certain specific circumstances, such as those mentioned in the Banking Communication, without the approval of the company general meeting. That interpretation cannot, moreover, be called into question by the judgment of 12 March 1993, Pafitis and Others (C‑441/93, EU:C:1996:92).90In that judgment, the Court interpreted Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ 1977 L 26, p. 1), in the context of a dispute characterised by the insolvency of a single bank, whereas, in the main proceedings, the burden-sharing measures that are the subject of points 40 to 46 of the Banking Communication are envisaged as a prerequisite for the grant, to banks faced with a capital shortfall, of State aid intended, in an exceptional context of a national economy being affected by a serious disturbance, to overcome a systemic financial crisis capable of adversely affecting the national financial system as a whole and the financial stability of the European Union.91It must be emphasised, in that regard, that, as the Advocate General stated in points 105 and 107 of his Opinion, the national measures that were challenged in Pafitis and Others (C‑441/93, EU:C:1996:92) had been adopted in the 1986-1990 period and the Court delivered its judgment in 1996, thus well before the start of the third stage for the implementation of the Economic and Monetary Union, with the introduction of the euro, the establishment of the Eurosystem and the related amendments to the EU Treaties. Although there is a clear public interest in ensuring throughout the European Union a strong and consistent protection of investors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system.92The referring court considers, however, that the provisions of Directive 2014/59 may lead to a finding that the Banking Communication is incompatible with Directive 2012/30.93However, in addition to what was stated in paragraphs 72 and 84 of this judgment, the fact that, under Article 123 of Directive 2014/59, from 1 January 2016, Articles 29, 34 and 35, and 40 to 42 of Directive 2012/30 do not apply in the case of use of the resolution mechanisms provided for by Directive 2014/59, does not permit the conclusion that, before that date, derogations of that kind were prohibited.94In the light of the foregoing, the answer to the fifth question is that Articles 29, 34, 35 and 40 to 42 of Directive 2012/30 must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and subordinated creditors as a prerequisite to the authorisation of State aid. The sixth question 95By its sixth question, the referring court seeks, in essence, to ascertain whether the Banking Communication must be interpreted as meaning that the measures for conversion of subordinated rights or write-down of the principal thereof, as provided for in point 44 of that communication, constitute a necessary and sufficient condition for State aid falling within the scope of that communication to be declared to be compatible with the internal market or whether it is sufficient, for that aid to be authorised, that the subordinated rights are converted or written down in a proportionate manner.96It is apparent from the order for reference that, by that question, the Ustavno sodišče (Constitutional Court) wants to know whether, in the event that a bank does not meet the minimum regulatory capital requirements, within the meaning of point 44 of the Banking Communication, measures to ensure the writing down of subordinated rights are to be undertaken in such a way that they offset in full all the identified losses of the bank or whether those measures may be applied partially, in a proportionate manner.97Under point 44 of that communication, in the event that a bank does not meet the minimum capital requirements, which means that its capital is not sufficient, in itself, to absorb the bank’s losses, subordinated debt must be converted, or the principal thereof must be written down, as a general rule, before the grant of State aid to that bank. Further, again under point 44, State aid must not be granted before equity and subordinate debt have fully contributed to offset any losses of the bank.98As stated in paragraphs 40 and 41 of this judgment, in adopting guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of its discretion and cannot depart from those guidelines, if it is not to be found, where appropriate, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations. Further, the adoption of such guidelines does not relieve the Commission of its obligation to examine specific exceptional circumstances that are relied on by a Member State.99It follows that the fact that a measure of State aid meets the criteria set out in point 44 of the Banking Communication constitutes a condition that is, as a general rule, sufficient ground for the Commission to declare that measure to be compatible with the internal market, but is not strictly necessary to that end.100A Member State is not therefore compelled to impose on banks in distress, prior to the grant of any State aid, an obligation to convert subordinated rights into equity or to effect a write-down of the principal thereof, or an obligation to ensure that those rights contribute fully to the absorption of losses. In such circumstances, it will not however be possible for the contemplated State aid to be regarded as having been limited to what is strictly necessary, as required by point 15 of the Banking Communication. The Member State, and the banks who are to be the recipients of the contemplated State aid, take the risk that a Commission decision declaring the aid incompatible with the internal market will stand in its way.101It may be added that the Banking Communication provides, in point 45 thereof, that an exception to the requirements of, inter alia, point 44 of that communication may be made where the implementation of measures for converting debt or writing down its principal ‘would endanger financial stability or lead to disproportionate results’. Accordingly, an obligation to effect the conversion, or write-down, of subordinate rights in their entirety before the granting of State aid cannot be imposed on a bank if, inter alia, the conversion, or write-down, of a part of the subordinate rights would have been sufficient to overcome the capital shortfall of the bank concerned.102In the light of all the foregoing, the answer to the sixth question is that the Banking Communication must be interpreted as meaning that the measures for converting subordinate rights or writing down their value, as provided for in point 44 of that communication, must not exceed what is necessary to overcome the capital shortfall of the bank concerned. The seventh question 103By its seventh question, the referring court seeks, in essence, to ascertain whether the seventh indent of Article 2 of Directive 2001/24 must be interpreted as meaning that the burden-sharing measures involving both shareholders and subordinated creditors, as provided for in points 40 to 46 of the Banking Communication, fall within the scope of the concept of ‘reorganisation measures’, within the meaning of that provision of Directive 2001/24.104It must be observed that Directive 2001/24, as is apparent from recital 6 of its preamble, has the objective of putting in place a system for the mutual recognition of reorganisation measures, but does not seek to harmonise national legislation in that field (see judgment of 24 October 2013, LBI, C‑85/12, EU:C:2013:697, paragraph 39).105That objective entails that the reorganisation measures taken by the administrative or judicial authorities of the home Member State, that is, the Member State in which a credit institution has been authorised, must have, in all the other Member States, the effects which the law of the home Member State confers on them (see, to that effect, judgment of 24 October 2013, LBI, C‑85/12, EU:C:2013:697, paragraph 22).106In accordance with the seventh indent of Article 2 of Directive 2001/24, the concept of ‘reorganisation measures’ is to be regarded as meaning measures ‘which are intended to preserve or restore the financial situation of a credit institution and which could affect third parties’ pre-existing rights, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims’.107As argued by all the parties to the main proceedings who have expressed a view on this question, it follows from the very wording of that provision, and from the broad definition of the concept of ‘reorganisation measures’ stated therein, that burden-sharing measures such as those provided for in points 40 to 46 of the Banking Communication can be included within the concept of ‘reorganisation measures’, within the meaning of Directive 2001/24.108First, given that the aim of the burden-sharing measures is to restore the financial position of credit institutions and to overcome their capital shortfall, as set out in point 43 of the Banking Communication, the purpose of those measures is to preserve or re-establish the financial situation of a credit institution.109Second, the burden-sharing measures, in particular the conversion of the principal of subordinated rights into equity or the write-down of the principal, are, by their very nature, likely adversely to affect the pre-existing rights of third parties and, accordingly, to lead to a reduction of creditors’ claims.110To fall within the scope of the concept of ‘reorganisation measures’, within the meaning of Directive 2001/24, it is however necessary, as is apparent from, inter alia, recital 6 and Article 3(1) of that directive, that the burden-sharing measures should be adopted by an administrative or judicial authority. In contrast, where the burden-sharing measures are decided upon and implemented by the shareholders or the subordinated creditors, without any action on the part of the administrative or judicial authorities, those measures cannot constitute reorganisation measures, within the meaning of Directive 2001/24.111In addition, the referring court has doubts as to whether the fact that the seventh indent of Article 2 of Directive 2001/24 was amended by Article 117 of Directive 2014/59, so as expressly to include, in the concept of ‘reorganisation measures’, the resolution instruments provided for by Directive 2014/59 — which are comparable to the burden-sharing measures involving both shareholders and subordinated creditors –, allows the inference that, at the material time, those latter measures did not fall within the scope of the concept of ‘reorganisation measures’, within the meaning of Directive 2001/24.112Such an interpretation cannot be accepted.113As the Advocate General stated in point 143 of his Opinion, that amendment must be read in the light of the fact that the aim of Directive 2001/24 was not to harmonise the relevant legislation of the Member States, but solely to provide a system of mutual recognition. However, Directive 2014/59 now imposes on the Member States the obligation to introduce certain measures designed to reorganise banks, which necessitates that those measures should be expressly identified in order to guarantee the uniform application of Directive 2014/59 in the European Union. That does not, however, imply that similar public measures were not covered previously by the definition of reorganisation measures.114The answer therefore to the seventh question is that the seventh indent of Article 2 of Directive 2001/24 must be interpreted as meaning that burden-sharing measures such as those provided for in points 40 to 46 of the Banking Communication fall within the scope of the concept of ‘reorganisation measures’, within the meaning of that provision of that directive. Costs 115Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. The Communication from the Commission on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’) must be interpreted as meaning that it is not binding on the Member States. 2. Articles 107 to 109 TFEU must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and holders of subordinated rights as a prerequisite to the authorisation of State aid. 3. The principle of the protection of legitimate expectations and the right to property must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and holders of subordinated rights as a prerequisite to the authorisation of State aid. 4. Articles 29, 34, 35 and 40 to 42 of Directive 2012/30/EU of the European Parliament and of the Council of 25 October 2012 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 54 of the Treaty on the Functioning of the European Union, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, must be interpreted as not precluding points 40 to 46 of the Banking Communication in so far as those points lay down a condition of burden-sharing by shareholders and holders of subordinated rights as a prerequisite to the authorisation of State aid. 5. The Banking Communication must be interpreted as meaning that the measures for converting hybrid capital and subordinate debt or writing down their principal, as provided for in point 44 of that communication, must not exceed what is necessary to overcome the capital short-fall of the bank concerned. 6. The seventh indent of Article 2 of Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions must be interpreted as meaning that burden-sharing measures such as those provided for in points 40 to 46 of the Banking Communication fall within the scope of the concept of ‘reorganisation measures’, within the meaning of that provision of that directive. [Signatures]( *1 ) Language of the case: Slovenian.( 1 ) The wording of paragraph 28 of this document has been modified after it was first put online. | be0f7-4cb97ec-4e61 | EN |
According to Advocate General Saugmandsgaard Øe, a general obligation to retain data imposed by a Member State on providers of electronic communication services may be compatible with EU law | 21 December 2016 ( *1 )[Text rectified by order of 16 March 2017](Reference for a preliminary ruling — Electronic communications — Processing of personal data — Confidentiality of electronic communications — Protection — Directive 2002/58/EC — Articles 5, 6 and 9 and Article 15(1) — Charter of Fundamental Rights of the European Union — Articles 7, 8 and 11 and Article 52(1) — National legislation — Providers of electronic communications services — Obligation relating to the general and indiscriminate retention of traffic and location data — National authorities — Access to data — No prior review by a court or independent administrative authority — Compatibility with EU law)In Joined Cases C‑203/15 and C‑698/15,REQUESTS for a preliminary ruling under Article 267 TFEU, made by the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm, Sweden) and the Court of Appeal (England & Wales) (Civil Division) (United Kingdom), by decisions, respectively, of 29 April 2015 and 9 December 2015, received at the Court on 4 May 2015 and 28 December 2015, in the proceedings Tele2 Sverige AB (C‑203/15)v Post- och telestyrelsen, and Secretary of State for the Home Department (C‑698/15) Tom Watson, Peter Brice, Geoffrey Lewis, interveners: Open Rights Group, Privacy International, The Law Society of England and Wales, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz (Rapporteur), J.L. da Cruz Vilaça, E. Juhász and M. Vilaras, Presidents of the Chamber, A. Borg Barthet, J. Malenovský, E. Levits, J.-C. Bonichot, A. Arabadjiev, S. Rodin, F. Biltgen and C. Lycourgos, Judges,Advocate General: H. Saugmandsgaard Øe,Registrar: C. Strömholm, Administrator,having regard to the decision of the President of the Court of 1 February 2016 that Case C‑698/15 should be determined pursuant to the expedited procedure provided for in Article 105(1) of the Rules of Procedure of the Court,having regard to the written procedure and further to the hearing on 12 April 2016,after considering the observations submitted on behalf of:–Tele2 Sverige AB, by M. Johansson and N. Torgerzon, advokater, and by E. Lagerlöf and S. Backman,Mr Watson, by J. Welch and E. Norton, Solicitors, I. Steele, Advocate, B. Jaffey, Barrister, and D. Rose QC,Mr Brice and Mr Lewis, by A. Suterwalla and R. de Mello, Barristers, R. Drabble QC, and S. Luke, Solicitor,Open Rights Group and Privacy International, by D. Carey, Solicitor, and by R. Mehta and J. Simor, Barristers,The Law Society of England and Wales, by T. Hickman, Barrister, and by N. Turner,the Swedish Government, by A. Falk, C. Meyer-Seitz, U. Persson, N. Otte Widgren and L. Swedenborg, acting as Agents,the United Kingdom Government, by S. Brandon, L. Christie and V. Kaye, acting as Agents, and by D. Beard QC, G. Facenna QC, J. Eadie QC and S. Ford, Barrister,the Belgian Government, by J.-C. Halleux, S. Vanrie and C. Pochet, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the Danish Government, by C. Thorning and M. Wolff, acting as Agents,the German Government, by T. Henze, M. Hellmann and J. Kemper, acting as Agents, and by M. Kottmann and U. Karpenstein, Rechtsanwalte,the Estonian Government, by K. Kraavi-Käerdi, acting as Agent,Ireland, by E. Creedon, L. Williams and A. Joyce, acting as Agents, and by D. Fennelly BL,the Spanish Government, by A. Rubio González, acting as Agent,the French Government, by G. de Bergues, D. Colas, F.-X. Bréchot and C. David, acting as Agents,the Cypriot Government, by K. Kleanthous, acting as Agent,the Hungarian Government, by M. Fehér and G. Koós, acting as Agents,the Netherlands Government, by M. Bulterman, M. Gijzen and. J. Langer, acting as Agents,the Polish Government, by B. Majczyna, acting as Agent,the Finnish Government, by J. Heliskoski, acting as Agent,the European Commission, by H. Krämer, K. Simonsson, H. Kranenborg, D. Nardi, P. Costa de Oliveira and J. Vondung, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 19 July 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 15(1) of Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ 2002 L 201, p. 37), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 11) (‘Directive 2002/58’), read in the light of Articles 7 and 8 and Article 52(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’).2The requests have been made in two proceedings between (i) Tele2 Sverige AB and Post- och telestyrelsen (the Swedish Post and Telecom Authority; ‘PTS’), concerning an order sent by PTS to Tele2 Sverige requiring the latter to retain traffic and location data in relation to its subscribers and registered users (Case C‑203/15), and (ii) Mr Tom Watson, Mr Peter Brice and Mr Geoffrey Lewis, on the one hand, and the Secretary of State for the Home Department (United Kingdom of Great Britain and Northern Ireland), on the other, concerning the conformity with EU law of Section 1 of the Data Retention and Investigatory Powers Act 2014 (‘DRIPA’) (Case C‑698/15). Legal context EU law Directive 2002/58 3Recitals 2, 6, 7, 11, 21, 22, 26 and 30 of Directive 2002/58 state:‘(2)This Directive seeks to respect the fundamental rights and observes the principles recognised in particular by [the Charter]. In particular, this Directive seeks to ensure full respect for the rights set out in Articles 7 and 8 of that Charter....(6)The Internet is overturning traditional market structures by providing a common, global infrastructure for the delivery of a wide range of electronic communications services. Publicly available electronic communications services over the Internet open new possibilities for users but also new risks for their personal data and privacy.(7)In the case of public communications networks, specific legal, regulatory and technical provisions should be made in order to protect fundamental rights and freedoms of natural persons and legitimate interests of legal persons, in particular with regard to the increasing capacity for automated storage and processing of data relating to subscribers and users.(11)Like Directive 95/46/EC [of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ 1995 L 281, p. 31)], this Directive does not address issues of protection of fundamental rights and freedoms related to activities which are not governed by Community law. Therefore it does not alter the existing balance between the individual’s right to privacy and the possibility for Member States to take the measures referred to in Article 15(1) of this Directive, necessary for the protection of public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the enforcement of criminal law. Consequently, this Directive does not affect the ability of Member States to carry out lawful interception of electronic communications, or take other measures, if necessary for any of these purposes and in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms, as interpreted by the rulings of the European Court of Human Rights. Such measures must be appropriate, strictly proportionate to the intended purpose and necessary within a democratic society and should be subject to adequate safeguards in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms.(21)Measures should be taken to prevent unauthorised access to communications in order to protect the confidentiality of communications, including both the contents and any data related to such communications, by means of public communications networks and publicly available electronic communications services. National legislation in some Member States only prohibits intentional unauthorised access to communications.(22)The prohibition of storage of communications and the related traffic data by persons other than the users or without their consent is not intended to prohibit any automatic, intermediate and transient storage of this information in so far as this takes place for the sole purpose of carrying out the transmission in the electronic communications network and provided that the information is not stored for any period longer than is necessary for the transmission and for traffic management purposes, and that during the period of storage the confidentiality remains guaranteed. ...(26)The data relating to subscribers processed within electronic communications networks to establish connections and to transmit information contain information on the private life of natural persons and concern the right to respect for their correspondence or concern the legitimate interests of legal persons. Such data may only be stored to the extent that is necessary for the provision of the service for the purpose of billing and for interconnection payments, and for a limited time. Any further processing of such data … may only be allowed if the subscriber has agreed to this on the basis of accurate and full information given by the provider of the publicly available electronic communications services about the types of further processing it intends to perform and about the subscriber’s right not to give or to withdraw his/her consent to such processing. ...(30)Systems for the provision of electronic communications networks and services should be designed to limit the amount of personal data necessary to a strict minimum. ...’4Article 1 of Directive 2002/58, headed ‘Scope and aim’, provides:‘1. This Directive provides for the harmonisation of the national provisions required to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy and confidentiality, with respect to the processing of personal data in the electronic communication sector and to ensure the free movement of such data and of electronic communication equipment and services in the Community.2. The provisions of this Directive particularise and complement Directive [95/46] for the purposes mentioned in paragraph 1. Moreover, they provide for protection of the legitimate interests of subscribers who are legal persons.3. This Directive shall not apply to activities which fall outside the scope of the Treaty establishing the European Community, such as those covered by Titles V and VI of the Treaty on European Union, and in any case to activities concerning public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the activities of the State in areas of criminal law.’5Article 2 of Directive 2002/58, headed ‘Definitions’, provides:‘Save as otherwise provided, the definitions in Directive [95/46] and in Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) [(OJ 2002 L 108, p. 33)] shall apply.The following definitions shall also apply:(b)“traffic data” means any data processed for the purpose of the conveyance of a communication on an electronic communications network or for the billing thereof;(c)“location data” means any data processed in an electronic communications network or by an electronic communications service, indicating the geographic position of the terminal equipment of a user of a publicly available electronic communications service;(d)“communication” means any information exchanged or conveyed between a finite number of parties by means of a publicly available electronic communications service. This does not include any information conveyed as part of a broadcasting service to the public over an electronic communications network except to the extent that the information can be related to the identifiable subscriber or user receiving the information;...’6Article 3 of Directive 2002/58, headed ‘Services concerned’, provides:‘This Directive shall apply to the processing of personal data in connection with the provision of publicly available electronic communications services in public communications networks in the Community, including public communications networks supporting data collection and identification devices.’7Article 4 of that directive, headed ‘Security of processing’, is worded as follows:‘1. The provider of a publicly available electronic communications service must take appropriate technical and organisational measures to safeguard security of its services, if necessary in conjunction with the provider of the public communications network with respect to network security. Having regard to the state of the art and the cost of their implementation, these measures shall ensure a level of security appropriate to the risk presented.1a. Without prejudice to Directive [95/46], the measures referred to in paragraph 1 shall at least:ensure that personal data can be accessed only by authorised personnel for legally authorised purposes,protect personal data stored or transmitted against accidental or unlawful destruction, accidental loss or alteration, and unauthorised or unlawful storage, processing, access or disclosure, andensure the implementation of a security policy with respect to the processing of personal data.8Article 5 of Directive 2002/58, headed ‘Confidentiality of the communications’, provides:‘1. Member States shall ensure the confidentiality of communications and the related traffic data by means of a public communications network and publicly available electronic communications services, through national legislation. In particular, they shall prohibit listening, tapping, storage or other kinds of interception or surveillance of communications and the related traffic data by persons other than users, without the consent of the users concerned, except when legally authorised to do so in accordance with Article 15(1). This paragraph shall not prevent technical storage which is necessary for the conveyance of a communication without prejudice to the principle of confidentiality.3. Member States shall ensure that the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user is only allowed on condition that the subscriber or user concerned has given his or her consent, having been provided with clear and comprehensive information, in accordance with Directive [95/46], inter alia, about the purposes of the processing. This shall not prevent any technical storage or access for the sole purpose of carrying out the transmission of a communication over an electronic communications network, or as strictly necessary in order for the provider of an information society service explicitly requested by the subscriber or user to provide the service.’9Article 6 of Directive 2002/58, headed ‘Traffic data’, provides:‘1. Traffic data relating to subscribers and users processed and stored by the provider of a public communications network or publicly available electronic communications service must be erased or made anonymous when it is no longer needed for the purpose of the transmission of a communication without prejudice to paragraphs 2, 3 and 5 of this Article and Article 15(1).2. Traffic data necessary for the purposes of subscriber billing and interconnection payments may be processed. Such processing is permissible only up to the end of the period during which the bill may lawfully be challenged or payment pursued.3. For the purpose of marketing electronic communications services or for the provision of value added services, the provider of a publicly available electronic communications service may process the data referred to in paragraph 1 to the extent and for the duration necessary for such services or marketing, if the subscriber or user to whom the data relate has given his or her prior consent. Users or subscribers shall be given the possibility to withdraw their consent for the processing of traffic data at any time.5. Processing of traffic data, in accordance with paragraphs 1, 2, 3 and 4, must be restricted to persons acting under the authority of providers of the public communications networks and publicly available electronic communications services handling billing or traffic management, customer enquiries, fraud detection, marketing electronic communications services or providing a value added service, and must be restricted to what is necessary for the purposes of such activities.’10Article 9(1) of that directive, that article being headed ‘Location data other than traffic data’, provides:‘Where location data other than traffic data, relating to users or subscribers of public communications networks or publicly available electronic communications services, can be processed, such data may only be processed when they are made anonymous, or with the consent of the users or subscribers to the extent and for the duration necessary for the provision of a value added service. The service provider must inform the users or subscribers, prior to obtaining their consent, of the type of location data other than traffic data which will be processed, of the purposes and duration of the processing and whether the data will be transmitted to a third party for the purpose of providing the value added service. …’11Article 15 of that directive, headed ‘Application of certain provisions of Directive [95/46]’, states:‘1. Member States may adopt legislative measures to restrict the scope of the rights and obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9 of this Directive when such restriction constitutes a necessary, appropriate and proportionate measure within a democratic society to safeguard national security (i.e. State security), defence, public security, and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communication system, as referred to in Article 13(1) of Directive [95/46]. To this end, Member States may, inter alia, adopt legislative measures providing for the retention of data for a limited period justified on the grounds laid down in this paragraph. All the measures referred to in this paragraph shall be in accordance with the general principles of Community law, including those referred to in Article 6(1) and (2) of the Treaty on European Union.1b. Providers shall establish internal procedures for responding to requests for access to users’ personal data based on national provisions adopted pursuant to paragraph 1. They shall provide the competent national authority, on demand, with information about those procedures, the number of requests received, the legal justification invoked and their response.2. The provisions of Chapter III on judicial remedies, liability and sanctions of Directive [95/46] shall apply with regard to national provisions adopted pursuant to this Directive and with regard to the individual rights derived from this Directive. Directive 95/46 12Article 22 of Directive 95/46, which is in Chapter III of that directive, is worded as follows:‘Without prejudice to any administrative remedy for which provision may be made, inter alia before the supervisory authority referred to in Article 28, prior to referral to the judicial authority, Member States shall provide for the right of every person to a judicial remedy for any breach of the rights guaranteed him by the national law applicable to the processing in question.’ Directive 2006/24/EC 13Article 1(2) of Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC (OJ 2006 L 105, p. 54), that article being headed ‘Subject matter and scope’, provided:‘This Directive shall apply to traffic and location data on both legal entities and natural persons and to the related data necessary to identify the subscriber or registered user. It shall not apply to the content of electronic communications, including information consulted using an electronic communications network.’14Article 3 of that directive, headed ‘Obligation to retain data’, provided:‘1. By way of derogation from Articles 5, 6 and 9 of [Directive 2002/58], Member States shall adopt measures to ensure that the data specified in Article 5 of this Directive are retained in accordance with the provisions thereof, to the extent that those data are generated or processed by providers of publicly available electronic communications services or of a public communications network within their jurisdiction in the process of supplying the communications services concerned.2. The obligation to retain data provided for in paragraph 1 shall include the retention of the data specified in Article 5 relating to unsuccessful call attempts where those data are generated or processed, and stored (as regards telephony data) or logged (as regards Internet data), by providers of publicly available electronic communications services or of a public communications network within the jurisdiction of the Member State concerned in the process of supplying the communication services concerned. This Directive shall not require data relating to unconnected calls to be retained.’ Swedish law 15It is apparent from the order for reference in Case C‑203/15 that the Swedish legislature, in order to transpose Directive 2006/24 into national law, amended the lagen (2003:389) om elektronisk kommunikation [Law (2003:389) on electronic communications; ‘the LEK’] and the förordningen (2003:396) om elektronisk kommunikation [Regulation (2003:396) on electronic communications]. Both of those texts, in the versions applicable to the dispute in the main proceedings, contain rules on the retention of electronic communications data and on access to that data by the national authorities.16Access to that data is, in addition, regulated by the lagen (2012:278) om inhämtning av uppgifter om elektronisk kommunikation i de brottsbekämpande myndigheternas underrättelseverksamhet (Law (2012:278) on gathering of data relating to electronic communications as part of intelligence gathering by law enforcement authorities: ‘Law 2012:278’) and by the rättegångsbalken (Code of Judicial Procedure; ‘the RB’). The obligation to retain electronic communications data 17According to the information provided by the referring court in Case C‑203/15, the provisions of Paragraph 16a of Chapter 6 of the LEK, read together with Paragraph 1 of Chapter 2 of that law, impose an obligation on providers of electronic communications services to retain data the retention of which was required by Directive 2006/24. The data concerned is that relating to subscriptions and all electronic communications necessary to trace and identify the source and destination of a communication; to determine its date, time, and type; to identify the communications equipment used and to establish the location of mobile communication equipment used at the start and end of each communication. The data which there is an obligation to retain is data generated or processed in the context of telephony services, telephony services which use a mobile connection, electronic messaging systems, internet access services and internet access capacity (connection mode) provision services. The obligation extends to data relating to unsuccessful communications. The obligation does not however extend to the content of communications.18Articles 38 to 43 of Regulation (2003:396) on electronic communications specify the categories of data that must be retained. As regards telephony services, there is the obligation to retain data relating to calls and numbers called and the identifiable dates and times of the start and end of the communication. As regards telephony services which use a mobile connection, additional obligations are imposed, covering, for example, the retention of location data at the start and end of the communication. As regards telephony services using an IP packet, data to be retained includes, in addition to data mentioned above, data relating to the IP addresses of the caller and the person called. As regards electronic messaging systems, data to be retained includes data relating to the numbers of senders and recipients, IP addresses or other messaging addresses. As regards internet access services, data to be retained includes, for example, data relating to the IP addresses of users and the traceable dates and times of logging into and out of the internet access service. Data retention period 19In accordance with Paragraph 16d of Chapter 6 of the LEK, the data covered by Paragraph 16a of that Chapter must be retained by the providers of electronic communications services for six months from the date of the end of communication. The data must then be immediately erased, unless otherwise provided in the second subparagraph of Paragraph 16d of that Chapter. Access to retained data 20Access to retained data by the national authorities is governed by the provisions of Law 2012:278, the LEK and the RB.– Law 2012:278 21In the context of intelligence gathering, the national police, the Säkerhetspolisen (the Swedish Security Service), and the Tullverket (the Swedish Customs Authority) may, on the basis of Paragraph 1 of Law 2012:278, on the conditions prescribed by that law and without informing the provider of an electronic communications network or a provider of an electronic communications service authorised under the LEK, undertake the collection of data relating to messages transmitted by an electronic communications network, the electronic communications equipment located in a specified geographical area and the geographical areas(s) where electronic communications equipment is or was located.22In accordance with Paragraphs 2 and 3 of Law 2012:278, data may, as a general rule, be collected if, depending on the circumstances, the measure is particularly necessary in order to avert, prevent or detect criminal activity involving one or more offences punishable by a term of imprisonment of at least two years, or one of the acts listed in Paragraph 3 of that law, referring to offences punishable by a term of imprisonment of less than two years. Any grounds supporting that measure must outweigh considerations relating to the harm or prejudice that may be caused to the person affected by that measure or to an interest opposing that measure. In accordance with Paragraph 5 of that law, the duration of the measure must not exceed one month.23The decision to implement such a measure is to be taken by the director of the authority concerned or by a person to whom that responsibility is delegated. The decision is not subject to prior review by a judicial authority or an independent administrative authority.24Under Paragraph 6 of Law 2012:278, the Säkerhets och integritetsskyddsnämnden (the Swedish Commission on Security and Integrity Protection) must be informed of any decision authorising the collection of data. In accordance with Paragraph 1 of Lagen (2007:980) om tillsyn över viss brottsbekämpande verksamhet (Law (2007:980) on the supervision of certain law enforcement activities), that authority is to oversee the application of the legislation by the law enforcement authorities.– The LEK 25Under Paragraph 22, first subparagraph, point 2, of Chapter 6 of the LEK, all providers of electronic communications services must disclose data relating to a subscription at the request of the prosecution authority, the national police, the Security Service or any other public law enforcement authority, if that data is connected with a presumed criminal offence. On the information provided by the referring court in Case C‑203/15, it is not necessary that the offence be a serious crime.– The RB 26The RB governs the disclosure of retained data to the national authorities within the framework of preliminary investigations. In accordance with Paragraph 19 of Chapter 27 of the RB, ‘placing electronic communications under surveillance’ without the knowledge of third parties is, as a general rule, permitted within the framework of preliminary investigations that relate to, inter alia, offences punishable by a sentence of imprisonment of at least six months. The expression ‘placing electronic communications under surveillance’, under Paragraph 19 of Chapter 27 of the RB, means obtaining data without the knowledge of third parties that relates to a message transmitted by an electronic communications network, the electronic communications equipment located or having been located in a specific geographical area, and the geographical area(s) where specific electronic communications equipment is or has been located.27According to what is stated by the referring court in Case C‑203/15, information on the content of a message may not be obtained on the basis of Paragraph 19 of Chapter 27 of the RB. As a general rule, placing electronic communications under surveillance may be ordered, under Paragraph 20 of Chapter 27 of the RB, only where there are reasonable grounds for suspicion that an individual has committed an offence and that the measure is particularly necessary for the purposes of the investigation: the subject of that investigation must moreover be an offence punishable by a sentence of imprisonment of at least two years, or attempts, preparation or conspiracy to commit such an offence. In accordance with Paragraph 21 of Chapter 27 of the RB, the prosecutor must, other than in cases of urgency, request from the court with jurisdiction authority to place electronic communications under surveillance. The security and protection of retained data 28Under Paragraph 3a of Chapter 6 of the LEK, providers of electronic communications services who are subject to an obligation to retain data must take appropriate technical and organisational measures to ensure the protection of data during processing. On the information provided by the referring court in Case C‑203/15, Swedish law does not, however, make any provision as to where the data is to be retained. United Kingdom law DRIPA 29Section 1 of DRIPA, headed ‘Powers for retention of relevant communications data subject to safeguards’, provides:‘(1)The Secretary of State may by notice (a “retention notice”) require a public telecommunications operator to retain relevant communications data if the Secretary of State considers that the requirement is necessary and proportionate for one or more of the purposes falling within paragraphs (a) to (h) of section 22(2) of the Regulation of Investigatory Powers Act 2000 (purposes for which communications data may be obtained).(2)A retention notice may:(a)relate to a particular operator or any description of operators;require the retention of all data or any description of data;specify the period or periods for which data is to be retained;contain other requirements, or restrictions, in relation to the retention of data;(e)make different provision for different purposes;(f)relate to data whether or not in existence at the time of the giving, or coming into force, of the notice.(3)The Secretary of State may by regulations make further provision about the retention of relevant communications data.(4)Such provision may, in particular, include provision about:requirements before giving a retention notice;the maximum period for which data is to be retained under a retention notice;the content, giving, coming into force, review, variation or revocation of a retention notice;the integrity, security or protection of, access to, or the disclosure or destruction of, data retained by virtue of this section;the enforcement of, or auditing compliance with, relevant requirements or restrictions;a code of practice in relation to relevant requirements or restrictions or relevant power;(g)the reimbursement by the Secretary of State (with or without conditions) of expenses incurred by public telecommunications operators in complying with relevant requirements or restrictions;(h)the [Data Retention (EC Directive) Regulations 2009] ceasing to have effect and the transition to the retention of data by virtue of this section.(5)The maximum period provided for by virtue of subsection (4)(b) must not exceed 12 months beginning with such day as is specified in relation to the data concerned by regulations under subsection (3).30Section 2 of DRIPA defines the expression ‘relevant communications data’ as meaning ‘communications data of the kind mentioned in the Schedule to the [Data Retention (EC Directive) Regulations 2009] so far as such data is generated or processed in the United Kingdom by public telecommunications operators in the process of supplying the telecommunications services concerned’. RIPA 31Section 21(4) of the Regulation of Investigatory Powers Act 2000 (‘RIPA’), that section being in Chapter II of that act and headed ‘Lawful acquisition and disclosure of communications data’, states:‘In this Chapter “communications data” means any of the following:any traffic data comprised in or attached to a communication (whether by the sender or otherwise) for the purposes of any postal service or telecommunication system by means of which it is being or may be transmitted;any information which includes none of the contents of a communication (apart from any information falling within paragraph (a)) and is about the use made by any person:(i)of any postal service or telecommunications service; or(ii)in connection with the provision to or use by any person of any telecommunications service, of any part of a telecommunication system;any information not falling within paragraph (a) or (b) that is held or obtained, in relation to persons to whom he provides the service, by a person providing a postal service or telecommunications service’.32On the information provided in the order for reference in Case C‑698/15, that data includes ‘user location data’, but not data relating to the content of a communication.33As regards access to retained data, Section 22 of RIPA provides:This section applies where a person designated for the purposes of this Chapter believes that it is necessary on grounds falling within subsection (2) to obtain any communications data.It is necessary on grounds falling within this subsection to obtain communications data if it is necessary:in the interests of national security;for the purpose of preventing or detecting crime or of preventing disorder;in the interests of the economic well-being of the United Kingdom;in the interests of public safety;for the purpose of protecting public health;for the purpose of assessing or collecting any tax, duty, levy or other imposition, contribution or charge payable to a government department;or the purpose, in an emergency, of preventing death or injury or any damage to a person’s physical or mental health, or of mitigating any injury or damage to a person’s physical or mental health; oror any purpose (not falling within paragraphs (a) to (g)) which is specified for the purposes of this subsection by an order made by the Secretary of State.…Subject to subsection (5), where it appears to the designated person that a postal or telecommunications operator is or may be in possession of, or be capable of obtaining, any communications data, the designated person may, by notice to the postal or telecommunications operator, require the operator:if the operator is not already in possession of the data, to obtain the data; andin any case, to disclose all of the data in his possession or subsequently obtained by him.The designated person shall not grant an authorisation under subsection (3) or give a notice under subsection (4), unless he believes that obtaining the data in question by the conduct authorised or required by the authorisation or notice is proportionate to what is sought to be achieved by so obtaining the data.’34Under Section 65 of RIPA, complaints may be made to the Investigatory Powers Tribunal (United Kingdom) if there is reason to believe that data has been acquired inappropriately. The Data Retention Regulations 2014 35The Data Retention Regulations 2014 (‘the 2014 Regulations’), adopted on the basis of DRIPA, are divided into three parts, Part 2 containing regulations 2 to 14 of that legislation. Regulation 4, headed ‘Retention notices’, provides:A retention notice must specify:the public telecommunications operator (or description of operators) to whom it relates,the relevant communications data which is to be retained,the period or periods for which the data is to be retained,any other requirements, or any restrictions, in relation to the retention of the data.A retention notice must not require any data to be retained for more than 12 months beginning with:in the case of traffic data or service use data, the day of the communication concerned, andin the case of subscriber data, the day on which the person concerned leaves the telecommunications service concerned or (if earlier) the day on which the data is changed.36Regulation 7 of the 2014 Regulations, headed ‘Data integrity and security’, provides:A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must:secure that the data is of the same integrity and subject to at least the same security and protection as the data on any system from which it is derived,secure, by appropriate technical and organisational measures, that the data can be accessed only by specially authorised personnel, andprotect, by appropriate technical and organisational measures, the data against accidental or unlawful destruction, accidental loss or alteration, or unauthorised or unlawful retention, processing, access or disclosure.A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must destroy the data if the retention of the data ceases to be authorised by virtue of that section and is not otherwise authorised by law.The requirement in paragraph (2) to destroy the data is a requirement to delete the data in such a way as to make access to the data impossible.It is sufficient for the operator to make arrangements for the deletion of the data to take place at such monthly or shorter intervals as appear to the operator to be practicable.’37Regulation 8 of the 2014 Regulations, headed Disclosure of retained data’, provides:A public telecommunications operator must put in place adequate security systems (including technical and organisational measures) governing access to communications data retained by virtue of section 1 of [DRIPA] in order to protect against any disclosure of a kind which does not fall within section 1(6)(a) of [DRIPA].A public telecommunications operator who retains communications data by virtue of section 1 of [DRIPA] must retain the data in such a way that it can be transmitted without undue delay in response to requests.’38Regulation 9 of the 2014 Regulations, headed ‘Oversight by the Information Commissioner’, states:‘The Information Commissioner must audit compliance with requirements or restrictions imposed by this Part in relation to the integrity, security or destruction of data retained by virtue of section 1 of [DRIPA].’ The Code of Practice 39The Acquisition and Disclosure of Communications Data Code of Practice (‘the Code of Practice’) contains, in paragraphs 2.5 to 2.9 and 2.36 to 2.45, guidance on the necessity for and proportionality of obtaining communications data. As explained by the referring court in Case C‑698/15, particular attention must, in accordance with paragraphs 3.72 to 3.77 of that code, be paid to necessity and proportionality where the communications data sought relates to a person who is a member of a profession that handles privileged or otherwise confidential information.40Under paragraph 3.78 to 3.84 of that code, a court order is required in the specific case of an application for communications data that is made in order to identify a journalist’s source. Under paragraphs 3.85 to 3.87 of that code, judicial approval is required when an application for access is made by local authorities. No authorisation, on the other hand, need be obtained from a court or any independent body with respect to access to communications data protected by legal professional privilege or relating to doctors of medicine, Members of Parliament or ministers of religion.41Paragraph 7.1 of the Code of Practice provides that communications data acquired or obtained under the provisions of RIPA, and all copies, extracts and summaries of that data, must be handled and stored securely. In additions, the requirements of the Data Protection Act must be adhered to.42In accordance with paragraph 7.18 of the Code of Practice, where a United Kingdom public authority is considering the possible disclosure to overseas authorities of communications data, it must, inter alia, consider whether that data will be adequately protected. However, it is stated in paragraph 7.22 of that code that a transfer of data to a third country may take place where that transfer is necessary for reasons of substantial public interest, even where the third country does not provide an adequate level of protection. On the information given by the referring court in Case C‑698/15, the Secretary of State for the Home Department may issue a national security certificate that exempts certain data from the provisions of the legislation.43In paragraph 8.1 of that code, it is stated that RIPA established the Interception of Communications Commissioner (United Kingdom), whose remit is, inter alia, to provide independent oversight of the exercise and performance of the powers and duties contained in Chapter II of Part I of RIPA. As is stated in paragraph 8.3 of the code, the Commissioner may, where he can ‘establish that an individual has been adversely affected by any wilful or reckless failure’, inform that individual of suspected unlawful use of powers. The disputes in the main proceedings and the questions referred for a preliminary ruling Case C‑203/15 44On 9 April 2014, Tele2 Sverige, a provider of electronic communications services established in Sweden, informed the PTS that, following the ruling in the judgment of 8 April 2014, Digital Rights Ireland and Others (C‑293/12 and C‑594/12; ‘the Digital Rights judgment’, EU:C:2014:238) that Directive 2006/24 was invalid, it would cease, as from 14 April 2014, to retain electronic communications data, covered by the LEK, and that it would erase data retained prior to that date.45On 15 April 2014, the Rikspolisstyrelsen (the Swedish National Police Authority, Sweden) sent to the PTS a complaint to the effect that Tele2 Sverige had ceased to send to it the data concerned.46On 29 April 2014, the justitieminister (Swedish Minister for Justice) appointed a special reporter to examine the Swedish legislation at issue in the light of the Digital Rights judgment. In a report dated 13 June 2014, entitled ‘Datalagring, EU-rätten och svensk rätt, Ds 2014:23’ (Data retention, EU law and Swedish law; ‘the 2014 report’), the special reporter concluded that the national legislation on the retention of data, as set out in Paragraphs 16a to 16f of the LEK, was not incompatible with either EU law or the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’). The special reporter emphasised that the Digital Rights judgment could not be interpreted as meaning that the general and indiscriminate retention of data was to be condemned as a matter of principle. From his perspective, neither should the Digital Rights judgment be understood as meaning that the Court had established, in that judgment, a set of criteria all of which had to be satisfied if legislation was to be able to be regarded as proportionate. He considered that it was necessary to assess all the circumstances in order to determine the compatibility of the Swedish legislation with EU law, such as the extent of data retention in the light of the provisions on access to data, on the duration of retention, and on the protection and the security of data.47On that basis, on 19 June 2014 the PTS informed Tele2 Sverige that it was in breach of its obligations under the national legislation in failing to retain the data covered by the LEK for six months, for the purpose of combating crime. By an order of 27 June 2014, the PTS ordered Tele2 Sverige to commence, by no later than 25 July 2014, the retention of that data.48Tele2 Sverige considered that the 2014 report was based on a misinterpretation of the Digital Rights judgment and that the obligation to retain data was in breach of the fundamental rights guaranteed by the Charter, and therefore brought an action before the Förvaltningsrätten i Stockholm (Administrative Court, Stockholm) challenging the order of 27 June 2014. Since that court dismissed the action, by judgment of 13 October 2014, Tele2 Sverige brought an appeal against that judgment before the referring court.49In the opinion of the referring court, the compatibility of the Swedish legislation with EU law should be assessed with regard to Article 15(1) of Directive 2002/58. While that directive establishes the general rule that traffic and location data should be erased or made anonymous when no longer required for the transmission of a communication, Article 15(1) of that directive introduces a derogation from that general rule since it permits the Member States, where justified on one of the specified grounds, to restrict that obligation to erase or render anonymous, or even to make provision for the retention of data. Accordingly, EU law allows, in certain situations, the retention of electronic communications data.50The referring court nonetheless seeks to ascertain whether a general and indiscriminate obligation to retain electronic communications data, such as that at issue in the main proceedings, is compatible, taking into consideration the Digital Rights judgment, with Article 15(1) of Directive 2002/58, read in the light of Articles 7 and 8 and Article 52(1) of the Charter. Given that the opinions of the parties differ on that point, it is necessary that the Court give an unequivocal ruling on whether, as maintained by Tele2 Sverige, the general and indiscriminate retention of electronic communications data is per se incompatible with Articles 7 and 8 and Article 52(1) of the Charter, or whether, as stated in the 2014 Report, the compatibility of such retention of data is to be assessed in the light of provisions relating to access to the data, the protection and security of the data and the duration of retention.51In those circumstances the Kammarrätten i Stockholm (Administrative Court of Appeal of Stockholm, Sweden) decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:Is a general obligation to retain traffic data covering all persons, all means of electronic communication and all traffic data without any distinctions, limitations or exceptions for the purpose of combating crime … compatible with Article 15(1) of Directive 2002/58/EC, taking account of Articles 7 and 8 and Article 52(1) of the Charter?If the answer to question 1 is in the negative, may the retention nevertheless be permitted where:access by the national authorities to the retained data is determined as [described in paragraphs 19 to 36 of the order for reference], anddata protection and security requirements are regulated as [described in paragraphs 38 to 43 of the order for reference], andall relevant data is to be retained for six months, calculated as from the day when the communication is ended, and subsequently erased as [described in paragraph 37 of the order for reference]?’ Case C‑698/15 52Mr Watson, Mr Brice and Mr Lewis each lodged, before the High Court of Justice (England & Wales), Queen’s Bench Division (Divisional Court) (United Kingdom), applications for judicial review of the legality of Section 1 of DRIPA, claiming, inter alia, that that section is incompatible with Articles 7 and 8 of the Charter and Article 8 of the ECHR.53By judgment of 17 July 2015, the High Court of Justice (England & Wales), Queen’s Bench Division (Divisional Court) held that the Digital Rights judgment laid down ‘mandatory requirements of EU law’ applicable to the legislation of Member States on the retention of communications data and access to such data. According to the High Court of Justice, since the Court, in that judgment, held that Directive 2006/24 was incompatible with the principle of proportionality, national legislation containing the same provisions as that directive could, equally, not be compatible with that principle. It follows from the underlying logic of the Digital Rights judgment that legislation that establishes a general body of rules for the retention of communications data is in breach of the rights guaranteed in Articles 7 and 8 of the Charter, unless that legislation is complemented by a body of rules for access to the data, defined by national law, which provides sufficient safeguards to protect those rights. Accordingly, Section 1 of DRIPA is not compatible with Articles 7 and 8 of the Charter in so far as it does not lay down clear and precise rules providing for access to and use of retained data and in so far as access to that data is not made dependent on prior review by a court or an independent administrative body.54The Secretary of State for the Home Department brought an appeal against that judgment before the Court of Appeal (England & Wales) (Civil Division) (United Kingdom).55That court states that Section 1(1) of DRIPA empowers the Secretary of State for the Home Department to adopt, without any prior authorisation from a court or an independent administrative body, a general regime requiring public telecommunications operators to retain all data relating to any postal service or any telecommunications service for a maximum period of 12 months if he/she considers that such a requirement is necessary and proportionate to achieve the purposes stated in the United Kingdom legislation. Even though that data does not include the content of a communication, it could be highly intrusive into the privacy of users of communications services.56In the order for reference and in its judgment of 20 November 2015, delivered in the appeal procedure, wherein it decided to send to the Court this request for a preliminary ruling, the referring court considers that the national rules on the retention of data necessarily fall within the scope of Article 15(1) of Directive 2002/58 and must therefore conform to the requirements of the Charter. However, as stated in Article 1(3) of that directive, the EU legislature did not harmonise the rules relating to access to retained data.57As regards the effect of the Digital Rights judgment on the issues raised in the main proceedings, the referring court states that, in the case that gave rise to that judgment, the Court was considering the validity of Directive 2006/24 and not the validity of any national legislation. Having regard, inter alia, to the close relationship between the retention of data and access to that data, it was essential that that directive should incorporate a set of safeguards and that the Digital Rights judgment should analyse, when examining the lawfulness of the data retention regime established by that directive, the rules relating to access to that data. The Court had not therefore intended to lay down, in that judgment, mandatory requirements applicable to national legislation on access to data that does not implement EU law. Further, the reasoning of the Court was closely linked to the objective pursued by Directive 2006/24. National legislation should, however, be assessed in the light of the objectives pursued by that legislation and its context.58As regards the need to refer questions to the Court for a preliminary ruling, the referring court draws attention to the fact that, when the order for reference was issued, six courts in other Member States, five of those courts being courts of last resort, had declared national legislation to be invalid on the basis of the Digital Rights judgment. The answer to the questions referred is therefore not obvious, although the answer is required to give a ruling on the cases brought before that court.59In those circumstances, the Court of Appeal (England & Wales) (Civil Division) decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:Does [the Digital Rights judgment] (including, in particular, paragraphs 60 to 62 thereof) lay down mandatory requirements of EU law applicable to a Member State’s domestic regime governing access to data retained in accordance with national legislation, in order to comply with Articles 7 and 8 of [the Charter]?Does [the Digital Rights judgment] expand the scope of Articles 7 and/or 8 of [the Charter] beyond that of Article 8 of the European Convention of Human Rights … as established in the jurisprudence of the European Court of Human Rights …?’ The procedure before the Court 60By order of 1 February 2016, Davis and Others (C‑698/15, not published, EU:C:2016:70), the President of the Court decided to grant the request of the Court of Appeal (England & Wales) (Civil Division) that Case C‑698/15 should be dealt with under the expedited procedure provided for in Article 105(1) of the Court’s Rules of Procedure.61By decision of the President of the Court of 10 March 2016, Cases C‑203/15 and C‑698/15 were joined for the purposes of the oral part of the procedure and the judgment. Consideration of the questions referred for a preliminary ruling The first question in Case C‑203/15 62By the first question in Case C‑203/15, the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm) seeks, in essence, to ascertain whether Article 15(1) of Directive 2002/58, read in the light of Articles 7 and 8 and Article 52(1) of the Charter, must be interpreted as precluding national legislation such as that at issue in the main proceedings that provides, for the purpose of fighting crime, for general and indiscriminate retention of all traffic and location data of all subscribers and registered users with respect to all means of electronic communications.63That question arises, in particular, from the fact that Directive 2006/24, which the national legislation at issue in the main proceedings was intended to transpose, was declared to be invalid by the Digital Rights judgment, though the parties disagree on the scope of that judgment and its effect on that legislation, given that it governs the retention of traffic and location data and access to that data by the national authorities.64It is necessary first to examine whether national legislation such as that at issue in the main proceeding falls within the scope of EU law. The scope of Directive 2002/58 65The Member States that have submitted written observations to the Court have differed in their opinions as to whether and to what extent national legislation on the retention of traffic and location data and access to that data by the national authorities, for the purpose of combating crime, falls within the scope of Directive 2002/58. Whereas, in particular, the Belgian, Danish, German and Estonian Governments, Ireland and the Netherlands Government have expressed the opinion that the answer is that it does, the Czech Government has proposed that the answer is that it does not, since the sole objective of such legislation is to combat crime. The United Kingdom Government, for its part, argues that only legislation relating to the retention of data, but not legislation relating to the access to that data by the competent national law enforcement authorities, falls within the scope of that directive.66As regards, finally, the Commission, while it maintained, in its written observations submitted to the Court in Case C‑203/15, that the national legislation at issue in the main proceedings falls within the scope of Directive 2002/58, the Commission argues, in its written observations in Case C‑698/15, that only national rules relating to the retention of data, and not those relating to the access of the national authorities to that data, fall within the scope of that directive. The latter rules should, however, according to the Commission, be taken into consideration in order to assess whether national legislation governing the retention of data by providers of electronic communications services constitutes a proportionate interference in the fundamental rights guaranteed in Articles 7 and 8 of the Charter.67In that regard, it must be observed that a determination of the scope of Directive 2002/58 must take into consideration, inter alia, the general structure of that directive.68Article 1(1) of Directive 2002/58 indicates that the directive provides, inter alia, for the harmonisation of the provisions of national law required to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy and confidentiality, with respect to the processing of personal data in the electronic communications sector.69Article 1(3) of that directive excludes from its scope ‘activities of the State’ in specified fields, including the activities of the State in areas of criminal law and in the areas of public security, defence and State security, including the economic well-being of the State when the activities relate to State security matters (see, by analogy, with respect to the first indent of Article 3(2) of Directive 95/46, judgments of 6 November 2003, Lindqvist, C‑101/01, EU:C:2003:596, paragraph 43, and of 16 December 2008, Satakunnan Markkinapörssi and Satamedia, C‑73/07, EU:C:2008:727, paragraph 41).70Article 3 of Directive 2002/58 states that the directive is to apply to the processing of personal data in connection with the provision of publicly available electronic communications services in public communications networks in the European Union, including public communications networks supporting data collection and identification devices (‘electronic communications services’). Consequently, that directive must be regarded as regulating the activities of the providers of such services.71Article 15(1) of Directive 2002/58 states that Member States may adopt, subject to the conditions laid down, ‘legislative measures to restrict the scope of the rights and obligations provided for in Article 5, Article 6, Article 8(1), (2), (3) and (4), and Article 9 [of that directive]’. The second sentence of Article 15(1) of that directive identifies, as an example of measures that may thus be adopted by Member States, measures ‘providing for the retention of data’.72Admittedly, the legislative measures that are referred to in Article 15(1) of Directive 2002/58 concern activities characteristic of States or State authorities, and are unrelated to fields in which individuals are active (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 51). Moreover, the objectives which, under that provision, such measures must pursue, such as safeguarding national security, defence and public security and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communications system, overlap substantially with the objectives pursued by the activities referred to in Article 1(3) of that directive.73However, having regard to the general structure of Directive 2002/58, the factors identified in the preceding paragraph of this judgment do not permit the conclusion that the legislative measures referred to in Article 15(1) of Directive 2002/58 are excluded from the scope of that directive, for otherwise that provision would be deprived of any purpose. Indeed, Article 15(1) necessarily presupposes that the national measures referred to therein, such as those relating to the retention of data for the purpose of combating crime, fall within the scope of that directive, since it expressly authorises the Member States to adopt them only if the conditions laid down in the directive are met.74Further, the legislative measures referred to in Article 15(1) of Directive 2002/58 govern, for the purposes mentioned in that provision, the activity of providers of electronic communications services. Accordingly, Article 15(1), read together with Article 3 of that directive, must be interpreted as meaning that such legislative measures fall within the scope of that directive.75The scope of that directive extends, in particular, to a legislative measure, such as that at issue in the main proceedings, that requires such providers to retain traffic and location data, since to do so necessarily involves the processing, by those providers, of personal data.76The scope of that directive also extends to a legislative measure relating, as in the main proceedings, to the access of the national authorities to the data retained by the providers of electronic communications services.77The protection of the confidentiality of electronic communications and related traffic data, guaranteed in Article 5(1) of Directive 2002/58, applies to the measures taken by all persons other than users, whether private persons or bodies or State bodies. As confirmed in recital 21 of that directive, the aim of the directive is to prevent unauthorised access to communications, including ‘any data related to such communications’, in order to protect the confidentiality of electronic communications.78In those circumstances, a legislative measure whereby a Member State, on the basis of Article 15(1) of Directive 2002/58, requires providers of electronic communications services, for the purposes set out in that provision, to grant national authorities, on the conditions laid down in such a measure, access to the data retained by those providers, concerns the processing of personal data by those providers, and that processing falls within the scope of that directive.79Further, since data is retained only for the purpose, when necessary, of making that data accessible to the competent national authorities, national legislation that imposes the retention of data necessarily entails, in principle, the existence of provisions relating to access by the competent national authorities to the data retained by the providers of electronic communications services.80That interpretation is confirmed by Article 15(1b) of Directive 2002/58, which provides that providers are to establish internal procedures for responding to requests for access to users’ personal data, based on provisions of national law adopted pursuant to Article 15(1) of that directive.81It follows from the foregoing that national legislation, such as that at issue in the main proceedings in Cases C‑203/15 and C‑698/15, falls within the scope of Directive 2002/58. The interpretation of Article 15(1) of Directive 2002/58, in the light of Articles 7, 8, 11 and Article 52(1) of the Charter 82It must be observed that, according to Article 1(2) of Directive 2002/58, the provisions of that directive ‘particularise and complement’ Directive 95/46. As stated in its recital 2, Directive 2002/58 seeks to ensure, in particular, full respect for the rights set out in Articles 7 and 8 of the Charter. In that regard, it is clear from the explanatory memorandum of the Proposal for a Directive of the European Parliament and of the Council concerning the processing of personal data and the protection of privacy in the electronic communications sector (COM(2000) 385 final), which led to Directive 2002/58, that the EU legislature sought ‘to ensure that a high level of protection of personal data and privacy will continue to be guaranteed for all electronic communications services regardless of the technology used’.83To that end, Directive 2002/58 contains specific provisions designed, as is apparent from, in particular, recitals 6 and 7 of that directive, to offer to the users of electronic communications services protection against risks to their personal data and privacy that arise from new technology and the increasing capacity for automated storage and processing of data.84In particular, Article 5(1) of that directive provides that the Member States must ensure, by means of their national legislation, the confidentiality of communications effected by means of a public communications network and publicly available electronic communications services, and the confidentiality of the related traffic data.85The principle of confidentiality of communications established by Directive 2002/58 implies, inter alia, as stated in the second sentence of Article 5(1) of that directive, that, as a general rule, any person other than the users is prohibited from storing, without the consent of the users concerned, the traffic data related to electronic communications. The only exceptions relate to persons lawfully authorised in accordance with Article 15(1) of that directive and to the technical storage necessary for conveyance of a communication (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 47).86Accordingly, as confirmed by recitals 22 and 26 of Directive 2002/58, under Article 6 of that directive, the processing and storage of traffic data are permitted only to the extent necessary and for the time necessary for the billing and marketing of services and the provision of value added services (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraphs 47 and 48). As regards, in particular, the billing of services, that processing is permitted only up to the end of the period during which the bill may be lawfully challenged or legal proceedings brought to obtain payment. Once that period has elapsed, the data processed and stored must be erased or made anonymous. As regards location data other than traffic data, Article 9(1) of that directive provides that that data may be processed only subject to certain conditions and after it has been made anonymous or the consent of the users or subscribers obtained.87The scope of Article 5, Article 6 and Article 9(1) of Directive 2002/58, which seek to ensure the confidentiality of communications and related data, and to minimise the risks of misuse, must moreover be assessed in the light of recital 30 of that directive, which states: ‘Systems for the provision of electronic communications networks and services should be designed to limit the amount of personal data necessary to a strict minimum’.88Admittedly, Article 15(1) of Directive 2002/58 enables the Member States to introduce exceptions to the obligation of principle, laid down in Article 5(1) of that directive, to ensure the confidentiality of personal data, and to the corresponding obligations, referred to in Articles 6 and 9 of that directive (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 50).89Nonetheless, in so far as Article 15(1) of Directive 2002/58 enables Member States to restrict the scope of the obligation of principle to ensure the confidentiality of communications and related traffic data, that provision must, in accordance with the Court’s settled case-law, be interpreted strictly (see, by analogy, judgment of 22 November 2012, Probst, C‑119/12, EU:C:2012:748, paragraph 23). That provision cannot, therefore, permit the exception to that obligation of principle and, in particular, to the prohibition on storage of data, laid down in Article 5 of Directive 2002/58, to become the rule, if the latter provision is not to be rendered largely meaningless.90It must, in that regard, be observed that the first sentence of Article 15(1) of Directive 2002/58 provides that the objectives pursued by the legislative measures that it covers, which derogate from the principle of confidentiality of communications and related traffic data, must be ‘to safeguard national security — that is, State security — defence, public security, and the prevention, investigation, detection and prosecution of criminal offences or of unauthorised use of the electronic communication system’, or one of the other objectives specified in Article 13(1) of Directive 95/46, to which the first sentence of Article 15(1) of Directive 2002/58 refers (see, to that effect, judgment of 29 January 2008, Promusicae, C‑275/06, EU:C:2008:54, paragraph 53). That list of objectives is exhaustive, as is apparent from the second sentence of Article 15(1) of Directive 2002/58, which states that the legislative measures must be justified on ‘the grounds laid down’ in the first sentence of Article 15(1) of that directive. Accordingly, the Member States cannot adopt such measures for purposes other than those listed in that latter provision.91Further, the third sentence of Article 15(1) of Directive 2002/58 provides that ‘[a]ll the measures referred to [in Article 15(1)] shall be in accordance with the general principles of [European Union] law, including those referred to in Article 6(1) and (2) [EU]’, which include the general principles and fundamental rights now guaranteed by the Charter. Article 15(1) of Directive 2002/58 must, therefore, be interpreted in the light of the fundamental rights guaranteed by the Charter (see, by analogy, in relation to Directive 95/46, judgments of 20 May 2003, Österreichischer Rundfunk and Others, C‑465/00, C‑138/01 and C‑139/01, EU:C:2003:294, paragraph 68; of 13 May 2014, Google Spain and Google, C‑131/12, EU:C:2014:317, paragraph 68, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 38).92In that regard, it must be emphasised that the obligation imposed on providers of electronic communications services, by national legislation such as that at issue in the main proceedings, to retain traffic data in order, when necessary, to make that data available to the competent national authorities, raises questions relating to compatibility not only with Articles 7 and 8 of the Charter, which are expressly referred to in the questions referred for a preliminary ruling, but also with the freedom of expression guaranteed in Article 11 of the Charter (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 25 and 70).93Accordingly, the importance both of the right to privacy, guaranteed in Article 7 of the Charter, and of the right to protection of personal data, guaranteed in Article 8 of the Charter, as derived from the Court’s case-law (see, to that effect, judgment of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 39 and the case-law cited), must be taken into consideration in interpreting Article 15(1) of Directive 2002/58. The same is true of the right to freedom of expression in the light of the particular importance accorded to that freedom in any democratic society. That fundamental right, guaranteed in Article 11 of the Charter, constitutes one of the essential foundations of a pluralist, democratic society, and is one of the values on which, under Article 2 TEU, the Union is founded (see, to that effect, judgments of 12 June 2003, Schmidberger, C‑112/00, EU:C:2003:333, paragraph 79, and of 6 September 2011, Patriciello, C‑163/10, EU:C:2011:543, paragraph 31).94In that regard, it must be recalled that, under Article 52(1) of the Charter, any limitation on the exercise of the rights and freedoms recognised by the Charter must be provided for by law and must respect the essence of those rights and freedoms. With due regard to the principle of proportionality, limitations may be imposed on the exercise of those rights and freedoms only if they are necessary and if they genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others (judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 50).95With respect to that last issue, the first sentence of Article 15(1) of Directive 2002/58 provides that Member States may adopt a measure that derogates from the principle of confidentiality of communications and related traffic data where it is a ‘necessary, appropriate and proportionate measure within a democratic society’, in view of the objectives laid down in that provision. As regards recital 11 of that directive, it states that a measure of that kind must be ‘strictly’ proportionate to the intended purpose. In relation to, in particular, the retention of data, the requirement laid down in the second sentence of Article 15(1) of that directive is that data should be retained ‘for a limited period’ and be ‘justified’ by reference to one of the objectives stated in the first sentence of Article 15(1) of that directive.96Due regard to the principle of proportionality also derives from the Court’s settled case-law to the effect that the protection of the fundamental right to respect for private life at EU level requires that derogations from and limitations on the protection of personal data should apply only in so far as is strictly necessary (judgments of 16 December 2008, Satakunnan Markkinapörssi and Satamedia, C‑73/07, EU:C:2008:727, paragraph 56; of 9 November 2010, Volker und Markus Schecke and Eifert, C‑92/09 and C‑93/09, EU:C:2010:662, paragraph 77; the Digital Rights judgment, paragraph 52, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 92).97As regards whether national legislation, such as that at issue in Case C‑203/15, satisfies those conditions, it must be observed that that legislation provides for a general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication, and that it imposes on providers of electronic communications services an obligation to retain that data systematically and continuously, with no exceptions. As stated in the order for reference, the categories of data covered by that legislation correspond, in essence, to the data whose retention was required by Directive 2006/24.98The data which providers of electronic communications services must therefore retain makes it possible to trace and identify the source of a communication and its destination, to identify the date, time, duration and type of a communication, to identify users’ communication equipment, and to establish the location of mobile communication equipment. That data includes, inter alia, the name and address of the subscriber or registered user, the telephone number of the caller, the number called and an IP address for internet services. That data makes it possible, in particular, to identify the person with whom a subscriber or registered user has communicated and by what means, and to identify the time of the communication as well as the place from which that communication took place. Further, that data makes it possible to know how often the subscriber or registered user communicated with certain persons in a given period (see, by analogy, with respect to Directive 2006/24, the Digital Rights judgment, paragraph 26).99That data, taken as a whole, is liable to allow very precise conclusions to be drawn concerning the private lives of the persons whose data has been retained, such as everyday habits, permanent or temporary places of residence, daily or other movements, the activities carried out, the social relationships of those persons and the social environments frequented by them (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 27). In particular, that data provides the means, as observed by the Advocate General in points 253, 254 and 257 to 259 of his Opinion, of establishing a profile of the individuals concerned, information that is no less sensitive, having regard to the right to privacy, than the actual content of communications.100The interference entailed by such legislation in the fundamental rights enshrined in Articles 7 and 8 of the Charter is very far-reaching and must be considered to be particularly serious. The fact that the data is retained without the subscriber or registered user being informed is likely to cause the persons concerned to feel that their private lives are the subject of constant surveillance (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 37).101Even if such legislation does not permit retention of the content of a communication and is not, therefore, such as to affect adversely the essence of those rights (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 39), the retention of traffic and location data could nonetheless have an effect on the use of means of electronic communication and, consequently, on the exercise by the users thereof of their freedom of expression, guaranteed in Article 11 of the Charter (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 28).102Given the seriousness of the interference in the fundamental rights concerned represented by national legislation which, for the purpose of fighting crime, provides for the retention of traffic and location data, only the objective of fighting serious crime is capable of justifying such a measure (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 60).103Further, while the effectiveness of the fight against serious crime, in particular organised crime and terrorism, may depend to a great extent on the use of modern investigation techniques, such an objective of general interest, however fundamental it may be, cannot in itself justify that national legislation providing for the general and indiscriminate retention of all traffic and location data should be considered to be necessary for the purposes of that fight (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 51).104In that regard, it must be observed, first, that the effect of such legislation, in the light of its characteristic features as described in paragraph 97 of the present judgment, is that the retention of traffic and location data is the rule, whereas the system put in place by Directive 2002/58 requires the retention of data to be the exception.105Second, national legislation such as that at issue in the main proceedings, which covers, in a generalised manner, all subscribers and registered users and all means of electronic communication as well as all traffic data, provides for no differentiation, limitation or exception according to the objective pursued. It is comprehensive in that it affects all persons using electronic communication services, even though those persons are not, even indirectly, in a situation that is liable to give rise to criminal proceedings. It therefore applies even to persons for whom there is no evidence capable of suggesting that their conduct might have a link, even an indirect or remote one, with serious criminal offences. Further, it does not provide for any exception, and consequently it applies even to persons whose communications are subject, according to rules of national law, to the obligation of professional secrecy (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 57 and 58).106Such legislation does not require there to be any relationship between the data which must be retained and a threat to public security. In particular, it is not restricted to retention in relation to (i) data pertaining to a particular time period and/or geographical area and/or a group of persons likely to be involved, in one way or another, in a serious crime, or (ii) persons who could, for other reasons, contribute, through their data being retained, to fighting crime (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 59).107National legislation such as that at issue in the main proceedings therefore exceeds the limits of what is strictly necessary and cannot be considered to be justified, within a democratic society, as required by Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter.108However, Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, does not prevent a Member State from adopting legislation permitting, as a preventive measure, the targeted retention of traffic and location data, for the purpose of fighting serious crime, provided that the retention of data is limited, with respect to the categories of data to be retained, the means of communication affected, the persons concerned and the retention period adopted, to what is strictly necessary.109In order to satisfy the requirements set out in the preceding paragraph of the present judgment, that national legislation must, first, lay down clear and precise rules governing the scope and application of such a data retention measure and imposing minimum safeguards, so that the persons whose data has been retained have sufficient guarantees of the effective protection of their personal data against the risk of misuse. That legislation must, in particular, indicate in what circumstances and under which conditions a data retention measure may, as a preventive measure, be adopted, thereby ensuring that such a measure is limited to what is strictly necessary (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 54 and the case-law cited).110Second, as regards the substantive conditions which must be satisfied by national legislation that authorises, in the context of fighting crime, the retention, as a preventive measure, of traffic and location data, if it is to be ensured that data retention is limited to what is strictly necessary, it must be observed that, while those conditions may vary according to the nature of the measures taken for the purposes of prevention, investigation, detection and prosecution of serious crime, the retention of data must continue nonetheless to meet objective criteria, that establish a connection between the data to be retained and the objective pursued. In particular, such conditions must be shown to be such as actually to circumscribe, in practice, the extent of that measure and, thus, the public affected.111[Text rectified by order of 16 March 2017] As regards the setting of limits on such a measure with respect to the public and the situations that may potentially be affected, the national legislation must be based on objective evidence which makes it possible to identify a public whose data is likely to reveal a link, at least an indirect one, with serious criminal offences, to contribute in one way or another to fighting serious crime or to prevent a serious risk to public security. Such limits may be set by using a geographical criterion where the competent national authorities consider, on the basis of objective evidence, that there exists, in one or more geographical areas, a high risk of preparation for or commission of such offences.112Having regard to all of the foregoing, the answer to the first question referred in Case C‑203/15 is that Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, must be interpreted as precluding national legislation which, for the purpose of fighting crime, provides for the general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication. The second question in Case C‑203/15 and the first question in Case C‑698/15 113It must, at the outset, be noted that the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm) referred the second question in Case C‑203/15 only in the event that the answer to the first question in that case was negative. That second question, however, arises irrespective of whether retention of data is generalised or targeted, as set out in paragraphs 108 to 111 of this judgment. Accordingly, the Court must answer the second question in Case C‑203/15 together with the first question in Case C‑698/15, which is referred regardless of the extent of the obligation to retain data that is imposed on providers of electronic communications services.114By the second question in Case C‑203/15 and the first question in Case C‑698/15, the referring courts seek, in essence, to ascertain whether Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and Article 52(1) of the Charter, must be interpreted as precluding national legislation governing the protection and security of traffic and location data, and more particularly, the access of the competent national authorities to retained data, where that legislation does not restrict that access solely to the objective of fighting serious crime, where that access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union.115As regards objectives that are capable of justifying national legislation that derogates from the principle of confidentiality of electronic communications, it must be borne in mind that, since, as stated in paragraphs 90 and 102 of this judgment, the list of objectives set out in the first sentence of Article 15(1) of Directive 2002/58 is exhaustive, access to the retained data must correspond, genuinely and strictly, to one of those objectives. Further, since the objective pursued by that legislation must be proportionate to the seriousness of the interference in fundamental rights that that access entails, it follows that, in the area of prevention, investigation, detection and prosecution of criminal offences, only the objective of fighting serious crime is capable of justifying such access to the retained data.116As regards compatibility with the principle of proportionality, national legislation governing the conditions under which the providers of electronic communications services must grant the competent national authorities access to the retained data must ensure, in accordance with what was stated in paragraphs 95 and 96 of this judgment, that such access does not exceed the limits of what is strictly necessary.117Further, since the legislative measures referred to in Article 15(1) of Directive 2002/58 must, in accordance with recital 11 of that directive, ‘be subject to adequate safeguards’, a data retention measure must, as follows from the case-law cited in paragraph 109 of this judgment, lay down clear and precise rules indicating in what circumstances and under which conditions the providers of electronic communications services must grant the competent national authorities access to the data. Likewise, a measure of that kind must be legally binding under domestic law.118In order to ensure that access of the competent national authorities to retained data is limited to what is strictly necessary, it is, indeed, for national law to determine the conditions under which the providers of electronic communications services must grant such access. However, the national legislation concerned cannot be limited to requiring that access should be for one of the objectives referred to in Article 15(1) of Directive 2002/58, even if that objective is to fight serious crime. That national legislation must also lay down the substantive and procedural conditions governing the access of the competent national authorities to the retained data (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 61).119Accordingly, and since general access to all retained data, regardless of whether there is any link, at least indirect, with the intended purpose, cannot be regarded as limited to what is strictly necessary, the national legislation concerned must be based on objective criteria in order to define the circumstances and conditions under which the competent national authorities are to be granted access to the data of subscribers or registered users. In that regard, access can, as a general rule, be granted, in relation to the objective of fighting crime, only to the data of individuals suspected of planning, committing or having committed a serious crime or of being implicated in one way or another in such a crime (see, by analogy, ECtHR, 4 December 2015, Zakharov v. Russia, CE:ECHR:2015:1204JUD004714306, § 260). However, in particular situations, where for example vital national security, defence or public security interests are threatened by terrorist activities, access to the data of other persons might also be granted where there is objective evidence from which it can be deduced that that data might, in a specific case, make an effective contribution to combating such activities.120In order to ensure, in practice, that those conditions are fully respected, it is essential that access of the competent national authorities to retained data should, as a general rule, except in cases of validly established urgency, be subject to a prior review carried out either by a court or by an independent administrative body, and that the decision of that court or body should be made following a reasoned request by those authorities submitted, inter alia, within the framework of procedures for the prevention, detection or prosecution of crime (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraph 62; see also, by analogy, in relation to Article 8 of the ECHR, ECtHR, 12 January 2016, Szabó and Vissy v. Hungary, CE:ECHR:2016:0112JUD003713814, §§ 77 and 80).121Likewise, the competent national authorities to whom access to the retained data has been granted must notify the persons affected, under the applicable national procedures, as soon as that notification is no longer liable to jeopardise the investigations being undertaken by those authorities. That notification is, in fact, necessary to enable the persons affected to exercise, inter alia, their right to a legal remedy, expressly provided for in Article 15(2) of Directive 2002/58, read together with Article 22 of Directive 95/46, where their rights have been infringed (see, by analogy, judgments of 7 May 2009, Rijkeboer, C‑553/07, EU:C:2009:293, paragraph 52, and of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraph 95).122With respect to the rules relating to the security and protection of data retained by providers of electronic communications services, it must be noted that Article 15(1) of Directive 2002/58 does not allow Member States to derogate from Article 4(1) and Article 4(1a) of that directive. Those provisions require those providers to take appropriate technical and organisational measures to ensure the effective protection of retained data against risks of misuse and against any unlawful access to that data. Given the quantity of retained data, the sensitivity of that data and the risk of unlawful access to it, the providers of electronic communications services must, in order to ensure the full integrity and confidentiality of that data, guarantee a particularly high level of protection and security by means of appropriate technical and organisational measures. In particular, the national legislation must make provision for the data to be retained within the European Union and for the irreversible destruction of the data at the end of the data retention period (see, by analogy, in relation to Directive 2006/24, the Digital Rights judgment, paragraphs 66 to 68).123In any event, the Member States must ensure review, by an independent authority, of compliance with the level of protection guaranteed by EU law with respect to the protection of individuals in relation to the processing of personal data, that control being expressly required by Article 8(3) of the Charter and constituting, in accordance with the Court’s settled case-law, an essential element of respect for the protection of individuals in relation to the processing of personal data. If that were not so, persons whose personal data was retained would be deprived of the right, guaranteed in Article 8(1) and (3) of the Charter, to lodge with the national supervisory authorities a claim seeking the protection of their data (see, to that effect, the Digital Rights judgment, paragraph 68, and the judgment of 6 October 2015, Schrems, C‑362/14, EU:C:2015:650, paragraphs 41 and 58).124It is the task of the referring courts to determine whether and to what extent the national legislation at issue in the main proceedings satisfies the requirements stemming from Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, as set out in paragraphs 115 to 123 of this judgment, with respect to both the access of the competent national authorities to the retained data and the protection and level of security of that data.125Having regard to all of the foregoing, the answer to the second question in Case C‑203/15 and to the first question in Case C‑698/15 is that Article 15(1) of Directive 2002/58, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter, must be interpreted as precluding national legislation governing the protection and security of traffic and location data and, in particular, access of the competent national authorities to the retained data, where the objective pursued by that access, in the context of fighting crime, is not restricted solely to fighting serious crime, where access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union. The second question in Case C‑698/15 126By the second question in Case C‑698/15, the Court of Appeal (England & Wales) (Civil Division) seeks in essence to ascertain whether, in the Digital Rights judgment, the Court interpreted Articles 7 and/or 8 of the Charter in such a way as to expand the scope conferred on Article 8 ECHR by the European Court of Human Rights.127As a preliminary point, it should be recalled that, whilst, as Article 6(3) TEU confirms, fundamental rights recognised by the ECHR constitute general principles of EU law, the ECHR does not constitute, as long as the European Union has not acceded to it, a legal instrument which has been formally incorporated into EU law (see, to that effect, judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 45 and the case-law cited).128Accordingly, the interpretation of Directive 2002/58, which is at issue in this case, must be undertaken solely in the light of the fundamental rights guaranteed by the Charter (see, to that effect, judgment of 15 February 2016, N., C‑601/15 PPU, EU:C:2016:84, paragraph 46 and the case-law cited).129Further, it must be borne in mind that the explanation on Article 52 of the Charter indicates that paragraph 3 of that article is intended to ensure the necessary consistency between the Charter and the ECHR, ‘without thereby adversely affecting the autonomy of Union law and … that of the Court of Justice of the European Union’ (judgment of 15 February 2016, N., C‑601/15 PPU,EU:C:2016:84, paragraph 47). In particular, as expressly stated in the second sentence of Article 52(3) of the Charter, the first sentence of Article 52(3) does not preclude Union law from providing protection that is more extensive then the ECHR. It should be added, finally, that Article 8 of the Charter concerns a fundamental right which is distinct from that enshrined in Article 7 of the Charter and which has no equivalent in the ECHR.130However, in accordance with the Court’s settled case-law, the justification for making a request for a preliminary ruling is not for advisory opinions to be delivered on general or hypothetical questions, but rather that it is necessary for the effective resolution of a dispute concerning EU law (see, to that effect, judgments of 24 April 2012, Kamberaj, C‑571/10, EU:C:2012:233, paragraph 41; of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraph 42, and of 27 February 2014, Pohotovosť, C‑470/12, EU:C:2014:101 paragraph 29).131In this case, in view of the considerations set out, in particular, in paragraphs 128 and 129 of the present judgment, the question whether the protection conferred by Articles 7 and 8 of the Charter is wider than that guaranteed in Article 8 of the ECHR is not such as to affect the interpretation of Directive 2002/58, read in the light of the Charter, which is the matter in dispute in the proceedings in Case C‑698/15.132Accordingly, it does not appear that an answer to the second question in Case C‑698/15 can provide any interpretation of points of EU law that is required for the resolution, in the light of that law, of that dispute.133It follows that the second question in Case C‑698/15 is inadmissible. Costs 134Since these proceedings are, for the parties to the main proceedings, a step in the actions pending before the national courts, the decision on costs is a matter for those courts. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. Article 15(1) of Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter of Fundamental Rights of the European Union, must be interpreted as precluding national legislation which, for the purpose of fighting crime, provides for general and indiscriminate retention of all traffic and location data of all subscribers and registered users relating to all means of electronic communication. 2. Article 15(1) of Directive 2002/58, as amended by Directive 2009/136, read in the light of Articles 7, 8 and 11 and Article 52(1) of the Charter of Fundamental Rights, must be interpreted as precluding national legislation governing the protection and security of traffic and location data and, in particular, access of the competent national authorities to the retained data, where the objective pursued by that access, in the context of fighting crime, is not restricted solely to fighting serious crime, where access is not subject to prior review by a court or an independent administrative authority, and where there is no requirement that the data concerned should be retained within the European Union. 3. The second question referred by the Court of Appeal (England & Wales) (Civil Division) is inadmissible. LenaertsTizzanoSilva de Lapuertavon DanwitzDa Cruz VilaçaJuhászVilarasBorg BarthetMalenovskýLevitsBonichotArabadjievRodinBiltgenLycourgosDelivered in open court in Luxembourg on 21 December 2016.A. Calot EscobarRegistrarK. LenaertsPresident( *1 ) Languages of the case: English and Swedish. | 0916f-3992c8a-4432 | EN |
EU law precludes concessions for the exercise of tourist and leisure-orientated business activities on State-owned maritime and lakeside property from being extended automatically without any selection procedure for potential candidates | 14 July 2016 ( *1 )‛Reference for a preliminary ruling — Public contracts and freedom of establishment — Article 49 TFEU — Directive 2006/123/EC — Article 12 — Concessions of State-owned maritime, lakeside and waterway property of an economic interest — Automatic extension — Lack of tender procedure’In Joined Cases C‑458/14 and C‑67/15,REQUESTS for a preliminary ruling under Article 267 TFEU from the Tribunale amministrativo regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy) and the Tribunale amministrativo regionale per la Sardegna (Regional Administrative Court, Sardinia, Italy), made by decisions of 5 March 2014 and 28 January 2015 respectively, received at the Court on 3 October 2014 and 12 February 2015, in the proceedings Promoimpresa srl (Case C‑458/14)v Consorzio dei comuni della Sponda Bresciana del Lago di Garda e del Lago di Idro, Regione Lombardia, and Mario Melis and Others (C‑67/15) Comune di Loiri Porto San Paolo, Provincia di Olbia Tempio, intervening parties: Alessandro Piredda and Others, THE COURT (Fifth Chamber),composed of J.L. da Cruz Vilaça (Rapporteur), President of the Chamber, A. Tizzano, Vice-President of the Court, acting as Judge of the Fifth Chamber, A. Borg Barthet, E. Levits and M. Berger, Judges,Advocate General: M. Szpunar,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 3 December 2015,after considering the observations submitted on behalf of:—Promoimpresa srl, by E. Vaglio, R. Righi and E. Nesi, avvocati,the Consorzio dei comuni della Sponda Bresciana del Lago di Garda e del Lago di Idro, by M. Ballerini and C. Cerami, avvocati,the Regione Lombardia, by M. Tamborino, avvocato,Mario Melis and Others, by B. Ballero, A. Capacchione, F. Ballero and S. Ballero, avvocati,the Comune di Loiri Porto San Paolo, by G. Longheu, avvocato,the Provincia di Olbia Tempio, by G. Cosseddu and F. Melis, avvocati,Alessandro Piredda and Others, by S. Carboni and S. Dessy, avvocati,the Italian Government, by G. Palmieri, acting as Agent, and by P. Garofoli, avvocato dello Stato, and L. Serena-Rossi, acting as expert,the Czech Government, by M. Smolek, J. Vláčil and T. Müller, acting as Agents,the Greek Government, by K. Nasopoulou, acting as Agent,the Netherlands Government, by J. Langer, acting as Agent,the European Commission, by G. Conte, A. Tokár and E. Montaguti, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 25 February 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 12 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ 2006 L 376, p. 36) and Articles 49, 56 and 106 TFEU.2The references have been made in the course of two sets of proceedings. The first proceedings (Case C‑458/14) are between Promoimpresa srl and Consorzio dei comuni della Sponda Bresciana del Lago di Garda e del Lago di Idro (Consortium of councils of the Brescian shoreline by Lake Garda and Lake Idro, Italy, ‘the Consortium’) and the Regione Lombardia (Lombardy Region, Italy) concerning, first, the decision of the Consortium refusing to renew a concession held by Promoimpresa for the occupancy and management of State-owned land and, second, the decision of the Giunta Regionale Lombardia (Regional Executive Body, Lombardy) to subject the award of lakeside concessions to a comparative selection procedure. The second proceedings (Case C‑67/15) are between Mr Mario Melis and others and the Comune di Loiri Porto San Paolo (Municipality of Loiri Porto San Paolo, Italy, ‘the Comune’) and the Provincia di Olbia Tempio (Province of Olbia Tempio, Italy) concerning decisions relating to the approval of the plan for the use of the lakeside area, the award of concessions of State-owned maritime land and measures by which the municipal police ordered Mr Melis and others to remove certain equipment from that maritime land. Legal context EU law 3Recital 39 of Directive 2006/123 states:‘The concept of “authorisation scheme” should cover, inter alia, the administrative procedures for granting authorisations, licences, approvals or concessions, and also the obligation, in order to be eligible to exercise the activity, to be registered as a member of a profession or entered in a register, roll or database, to be officially appointed to a body or to obtain a card attesting to membership of a particular profession. Authorisation may be granted not only by a formal decision but also by an implicit decision arising, for example, from the silence of the competent authority or from the fact that the interested party must await acknowledgement of receipt of a declaration in order to commence the activity in question or for the latter to become lawful.’4Recital 57 of that directive states:‘The provisions of this Directive relating to authorisation schemes should concern cases where the access to or exercise of a service activity by operators requires a decision by a competent authority. This concerns neither decisions by competent authorities to set up a public or private entity for the provision of a particular service nor the conclusion of contracts by competent authorities for the provision of a particular service which is governed by rules on public procurement, since this Directive does not deal with rules on public procurement.’5Under Article 4(6) of the directive, an ‘authorisation scheme’ means ‘any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof’.6Article 12 of the directive, which concerns situations in which an authorisation scheme seeks to authorise the conduct of economic activities requiring the use of scarce natural resources, provides:‘1. Where the number of authorisations available for a given activity is limited because of the scarcity of available natural resources or technical capacity, Member States shall apply a selection procedure to potential candidates which provides full guarantees of impartiality and transparency, including, in particular, adequate publicity about the launch, conduct and completion of the procedure.2. In the cases referred to in paragraph 1, authorisation shall be granted for an appropriate limited period and may not be open to automatic renewal nor confer any other advantage on the provider whose authorisation has just expired or on any person having any particular links with that provider.3. Subject to paragraph 1 and to Articles 9 and 10, Member States may take into account, in establishing the rules for the selection procedure, considerations of public health, social policy objectives, the health and safety of employees or self-employed persons, the protection of the environment, the preservation of cultural heritage and other overriding reasons relating to the public interest, in conformity with [EU] law.’7According to Recital 15 of Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ 2014, L 94, p. 1):‘… Certain agreements having as their object the right of an economic operator to exploit certain public domains or resources under private or public law, such as land or any public property, in particular in the maritime, inland ports or airports sector, whereby the State or contracting authority or contracting entity establishes only general conditions for their use without procuring specific works or services, should not qualify as concessions within the meaning of this Directive. This is normally the case with public domain or land lease contracts which generally contain terms concerning entry into possession by the tenant, the use to which the property is to be put, the obligations of the landlord and tenant regarding the maintenance of the property, the duration of the lease and the giving up of possession to the landlord, the rent and the incidental charges to be paid by the tenant.’ Italian law 8Article 1(18) of decreto-legge n. 194 (Decree Law No 194) of 30 December 2009 (‘Decree Law No 194/2009’), converted into law by legge n. 25 (Law No 25) of 26 February 2010 (‘Law No 25/2010’), provides:‘Subject to the rules on the award of property to certain regions and local entities under Law No 42 of 5 May 2009 and their corresponding implementing rules, during the procedure for the review of the legal framework for the grant of concessions of State-owned maritime property used for touristic and recreational purposes, which must be carried out on the basis of criteria and detailed rules for the award of such concessions, on the basis of an agreement of the State-Regional Conference pursuant to Article 8(6) of Law No 131 of 5 June 2003, which shall be concluded in conformity with the principles of competition, freedom of establishment, the principle guaranteeing the exercise, development and exploitation of business activities and the protection of investments, and respecting the preferential right laid down in the second paragraph of Article 37(2) of the Shipping Code, the duration of concessions existing at the date of the entry into force of the present decree and due to expire at the latest on 31 December 2015 shall be extended until that date, …’9That provision was amended by Article 34k of decreto legge n. 179 (Decree Law No 179) of 18 October 2012 (‘Decree Law No 179/2012’), introduced at the time of its conversion into law by Law No 221 of 17 December 2012 (‘Law No 221’) as follows:‘Subject to the rules on the award of property to certain regions and local entities under Law No 42 of 5 May 2009 and their corresponding implementing rules, during the procedure for the review of the legal framework for the grant of concessions of State-owned maritime, lakeside and waterway property used for touristic and recreational purposes, fishing, fish-farming and related economic and sporting activities, and those used as marinas, berths and mooring spots for recreational boating activities, which must be carried out on the basis of criteria and detailed rules for the award of such concessions, on the basis of an agreement of the State-Regional Conference pursuant to Article 8(6) of Law No 131 of 5 June 2003, which shall be concluded in conformity with the principles of competition, freedom of establishment, the principle guaranteeing the exercise, development and exploitation of business activities and the protection of investments, and respecting the preferential right laid down in the second paragraph of Article 37(2) of the Shipping Code, the duration of concessions existing at the date of the entry into force of the present decree and due to expire at the latest on 31 December 2015 shall be extended until 31 December 2020, …’10Article 16 of Decree Law No 59 of 26 March 2010, transposing Directive 2006/123, provides:‘1. In the event that the number of authorisations available for a given activity involving the provision of services is limited for reasons connected with the scarcity of natural resources or technical capacity available, the competent authorities shall adopt a procedure for selection from among the potential candidates and ensure that the criteria and rules designed to guarantee that the procedure is impartial are determined in advance and published in accordance with the formal requirements laid down in their own rules.2. In establishing the rules for the selection procedure, the competent authorities may take into account considerations of public health, social policy objectives, the health and safety of employees or self-employed persons, the protection of the environment, the preservation of cultural heritage and other overriding reasons relating to the public interest, in conformity with [EU] law.3. Actual observance of the criteria and rules referred to in paragraph 1 must be apparent from the individual provisions relating to the grant of the authorisation.4. In the cases referred to in paragraph 1, the authorisation shall be granted for a limited period and cannot be renewed automatically or confer any advantage on a provider whose authorisation is about to expire or on any other person, even if justified by reason of particular links with the former.’ The actions in the main proceedings and the questions referred for a preliminary ruling Case C‑458/14 11By decisions of 16 June and 17 August 2006, the Consortium awarded Promoimpresa a concession for the operation of a lakeside area in order to set up a kiosk, veranda, bathing facilities, jetty and pontoon on the State-owned land around Lake Garda.12Article 3 of that concession provided that the concession would cease automatically on 31 December 2010, without it being necessary to give formal notice and without the concessionnaire being able to rely on customary practices to continue its enjoyment of the concession.13Contemporaneously, the European Commission expressed the view, in a letter of formal notice addressed to the Italian Republic on 2 February 2009, that Article 37 of the Italian Shipping Code was incompatible with Article 49 TFEU in so far as it established a preferential right in favour of the outgoing concessionnaire in procedures for the award of concessions of State-owned maritime property. The Italian legislature intervened in order to remove that preferential right. Subsequently, at the time of the conversion of Decree Law No 194/2009 into Law No 25/2010, the Italian legislature inserted a reference to another legislative text, thereby permitting the automatic renewal of six-year concessions for a further six years. By an additional letter of formal notice of 5 May 2010, the Commission took the view that that reference, first, neutralised the effects of the removal of the preferential right and, second, was incompatible with Article 12 of Directive 2006/123 and Article 49 TFEU. Since the Italian legislature decided to repeal the provision enabling that cross-reference, the Commission was satisfied that it could close the infringement procedure on 27 February 2012.14On 14 April 2010, Promoimpresa lodged an application to have its concession renewed, which the Consortium rejected by decision of 6 May 2011. That decision was based on the ground, first, that the new concession could not be obtained by a mere application for renewal, but solely following a public tendering procedure and, second, that the concession which had expired was limited to a five-year term precluding any form of automatic renewal.15Promoimpresa brought an action contesting the decision of the Consortium before the Tribunale amministrativo regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy) alleging, inter alia, infringement of Article 1(18) of Decree Law No 194/2009, converted into law by Law No 25/2010, since that provision had provided for the extension of the term of the concessions.16The referring court states that the legal relationship between Promoimpresa and the Consortium is in the nature of a ‘concession’, within the meaning of EU law, in so far as Promoimpresa has a right of use over State-owned property in return for the payment of a periodic fee to the public authority owning that property and that the commercial risks of operating that property are borne by Promoimpresa.17The referring court considers that, in so far as it provides for the repeated extension of the duration of those State concessions, the Italian legislation creates an unjustified restriction on freedom of establishment, in particular in so far as it makes it in practice impossible for any other competitor to gain access to concessions that have expired.18In those circumstances, the Tribunale amministrativo regionale per la Lombardia (Regional Administrative Court, Lombardy) decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Do the principles of freedom of establishment, non-discrimination and safeguarding competition, respectively laid down in Articles 49, 56 and 106 TFEU, and the precept of reasonableness implicit therein, preclude national legislation under which the validity of concessions of economically significant State-owned maritime, lakeside and waterway property is to be repeatedly extended through a succession of legislative acts, the duration of that validity being statutorily increased for at least 11 years, with the effect that the same concessionaire retains the exclusive right to exploit the asset economically, even though the period of validity under the concession awarded to that concessionaire has meanwhile expired, whereby interested economic operators are deprived of any opportunity of obtaining a concession for the asset on the basis of a public tendering procedure?’ Case C‑67/15 19For the most part, Mr Melis and others run tourist and leisure-oriented businesses in a number of areas on the shore of the Comune under concessions of State-owned maritime property awarded in 2004 for a term of six years, subsequently extended for a further year.20In 2012, Mr Melis and others submitted a request for formal extension by the Comune. That request remained unanswered. Mr Melis and others concluded from the lack of a response that they were legally entitled to continue their activities, from May 2012, in accordance with Article 1(18) of Decree Law No 194/2009, which provided for the automatic extension of the duration of concessions of State-owned maritime property for tourist and leisure-oriented business activities.21On 11 May 2012, after approving the coastal area use plan, the Comune published a notice for the award of seven new concessions of State-owned maritime property, some of which were for locations in areas where Mr Melis and others already held concessions.22On 5 June 2012, Mr Melis and others brought an action for the annulment of those decisions of the Comune before the Tribunale amministrativo regionale per la Sardegna (Regional Administrative Court, Sardinia, Italy). They subsequently submitted further pleas in law, notified on 11 June 2012, thereby extending their grounds of complaint to the decision by which the Comune had awarded the concessions referred to in the notice of 11 May 2012. Mr Melis and others also contested the measures by which the municipal police force of the Comune had ordered them to remove their equipment from the State-owned maritime property.23The referring court states that the legal relationship between Mr Melis and others and the Comune is in the nature of a ‘concession’, within the meaning of EU law, in so far as it concerns the provision of a service and the commercial risks are borne by the concessionnaires.24The referring court considers, in addition, that the automatic extension laid down by the national legislation undermines the application of EU law, in particular of Article 12 of Directive 2006/123 and the provisions of the TFEU on the freedom to provide services and the freedom of establishment.25In those circumstances, the Tribunale amministrativo regionale per la Sardegna (Regional Administrative Court, Sardinia) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Do the principles of freedom of establishment, non-discrimination and safeguarding competition, as laid down, respectively, in Articles 49 TFEU, 56 TFEU and 106 TFEU, preclude national legislation under which the period of validity of concessions of economically significant State-owned maritime property is repeatedly extended through a succession of legislative acts?(2)Does Article 12 of Directive 2006/123 preclude a national provision, such as Article 1(18) of Decree Law No 194 of 30 December 2009, converted into law by Law No 25 of 26 February 2010, as amended and supplemented, which permits the automatic extension of existing concessions of State-owned maritime property for tourist and leisure-oriented business activities to 31 December 2015, or to 31 December 2020, pursuant to Article 34k of Decree Law No 179 of 18 October 2012, inserted by Article 1(1) of Law No 221 of 17 December 2012 converting the aforesaid decree law into law?’26By decision of 27 October 2015, the cases were joined for the purposes of the oral procedure and the judgment. Consideration of the questions referred for a preliminary ruling Admissibility of the questions 27In the first place, the Italian Government claims that Article 1(18) of Decree Law No 194/2009, referred to in Case C‑458/14, concerned, at the time of the facts in the main proceedings, exclusively concessions of State property by the seashore. The application of that provision to lakeside and waterway concessions took place after the adoption of the acts contested before the referring court; as a result that provision is applicable neither ratione temporis nor ratione materiae to the concession at issue in the present case.28In that regard, it should be borne in mind that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance (judgment of 6 October 2015 in Târșia, C‑69/14, EU:C:2015:662, paragraph 12 and the case-law cited).29In particular, it is not for the Court of Justice, in the context of the judicial cooperation established by Article 267 TFEU, to call into question or to verify the accuracy of the interpretation of national law made by the national court, as such interpretation falls within the exclusive jurisdiction of that court. Thus, the Court, when a question is referred to it by a national court, must base itself on the interpretation of national law as described to it by that court (judgment of 6 October 2015 in Târșia, C‑69/14, EU:C:2015:662, paragraph 13 and the case-law cited).30Furthermore, the Court may refuse to rule on questions referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 6 October 2015 in Târșia, C‑69/14, EU:C:2015:662, paragraph 14 and the case-law cited).31It appears, in the present case, from the order for reference in Case C‑458/14 that Promoimpresa, in bringing its action before the Tribunale amministrativo regionale per la Lombardia (Regional Administrative Court, Lombardy), relied on Article 1(18) of Decree Law No 194/2009, as amended by Law No 25/2010, claiming that, although adopted for State-owned maritime property concessions, that provision should also apply to State-owned lakeside property.32The referring court in that case implicitly accepted that interpretation in so far as it considered that the resolution of the dispute in the main proceedings depends on whether that national provision should not be applied on the ground that it is incompatible with EU law.33In the second place, the Commission observes that, at the material time in each of the cases in the main proceedings, the concessions granted to the applicants in those cases did not fall ratione temporis within the scope of Article 34k of Decree Law No 179/2012. That provision, which extends until 31 December 2020 concessions relating to State-owned land which were initially to terminate on 31 August 2015, was adopted after the decisions contested in the main proceedings. That institution therefore concludes that the questions referred are admissible only in so far as they concern the renewal of the concessions until 31 December 2015.34In that regard, the Court notes, as did the Advocate-General in point 37 of his Opinion, that, by its questions, the referring court refers, generally, to the case of national legislation under which the date of the termination of concessions of State-owned maritime and lakeside property is automatically and repeatedly extended. Thus, the question of whether the applicable national provisions in the cases in the main proceedings are those extending that period to 31 December 2015 or to 31 December 2020 not only falls within the jurisdiction of the national court, but has no bearing in any event on the admissibility of the questions referred.35In view of the foregoing, the references for a preliminary ruling must be treated as being admissible. The second question in Case C‑67/15 36By its second question, which it is appropriate to consider first, the referring court asks, in essence, whether Article 12 of Directive 2006/123 must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which permits the automatic extension of existing concessions of State-owned maritime and lakeside property for tourist and leisure-oriented business activities.Conditions for the application of Article 12 of Directive 2006/12337Article 12 of Directive 2006/123 appears in Section 1 of Chapter III of that directive, relating to authorisations, and concerns the specific case in which the number of authorisations available for a given activity is limited because of the scarcity of available natural resources or technical capacity. In that section, Article 9 of the directive governs the option of the Member States to make access to a service activity or the exercise thereof subject to an authorisation scheme. Article 10 of the directive concerns the conditions for the granting of authorisations and Article 11 of the directive concerns their duration.38The Court notes, first, that, under Article 4(6) of that directive, an authorisation scheme means any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof.39Moreover, recital 39 of the directive states that the concept of an ‘authorisation scheme’ should cover, inter alia, the administrative procedures for granting concessions.40The cases in the main proceedings concern concessions granted by public authorities of State-owned maritime and lakeside property relating to the exploitation of State land for tourist and leisure-oriented business activities.41Those concessions may therefore be characterised as ‘authorisations’ within the meaning of the provisions of Directive 2006/123 in so far as they constitute formal decisions, irrespective of their characterisation in national law, which must be obtained by the service providers from the competent national authorities in order to be able to exercise their economic activities.42The Court notes, second, that the concessions at issue in the main proceedings concern natural resources, within the meaning of Article 12 of Directive 2006/123, since the State land at issue is located either by the shore of Lake Garda or on the Sardinian coastline.43As regards, more specifically, the question of whether those concessions are necessarily subject to a limited number of authorisations on account of the scarcity of natural resources, it is for the referring court to determine whether that condition is satisfied. In that regard, the fact that the concessions at issue in the main proceedings are not granted at national level but at a municipal level must, in particular, be taken into account in establishing whether such State land available for economic exploitation is scarce.44In addition, in so far as the referring courts consider that the concessions at issue in the main proceedings may constitute service concessions, it must be noted that, according to recital 57 of Directive 2006/123, the provisions of that directive relating to authorisation schemes do not concern the conclusion of contracts by competent authorities for the provision of a particular service which is governed by rules on public procurement.45It follows that the provisions of Directive 2006/123 relating to authorisation schemes cannot apply to concessions of public services capable, inter alia, of falling within the scope of Directive 2014/23.46In that regard, the Court notes that a services concession is characterised, inter alia, by a situation in which the right to operate a particular service is transferred by the contracting authority to the concessionaire and that the latter enjoys, in the framework of the contract which has been concluded, a certain economic freedom to determine the conditions under which that right is exercised and, in addition, is, to a large extent, exposed to the risks of operating the service (see, to that effect, judgment of 11 June 2009 in Hans & Christophorus Oymanns, C‑300/07, EU:C:2009:358, paragraph 71).47However, in the cases in the main proceedings, as the Commission notes, the concessions do not concern the provision of a particular service by the contracting entity, but an authorisation to exercise an economic activity on State-owned land. It follows that the concessions at issue in the main proceedings do not fall within the category of service concessions (see, by analogy, judgment of 14 November 2013 in Belgacom, C‑221/12, EU:C:2013:736, paragraphs 26 to 28).48Such an interpretation is, furthermore, supported by recital 15 of Directive 2014/23. That recital states that certain agreements having as their object the right of an economic operator to exploit certain public domains or resources under private or public law, such as land, whereby the State establishes only general conditions for their use without procuring specific works or services, should not qualify as ‘service concessions’ within the meaning of that directive.The application of Article 12 of Directive 2006/12349If the concessions at issue in the main proceedings fall within the scope of Article 12 of Directive 2006/123 — which it is for the referring court to establish, as stated in paragraph 43 above — it should be noted that, according to paragraph 1 of that provision, where the number of authorisations is limited because of the scarcity of natural resources, the grant of such authorisations must be subject to a selection procedure between potential candidates which must ensure full guarantees of impartiality and transparency, including, in particular, adequate publicity.50As the Advocate General notes in point 83 of his Opinion, national legislation, such as that at issue in the main proceedings, in so far as it provides for statutory extension of the date of termination of authorisations, amounts to automatic renewal of those concessions, which is expressly excluded by Article 12(2) of Directive 2006/123.51In addition, the automatic renewal of authorisations relating to the economic exploitation of State-owned maritime and lakeside property does not allow a selection procedure to be organised as described in paragraph 49 above.52However, the applicants in the cases in the main proceedings and the Italian Government claim that the automatic renewal of the authorisations is necessary in order to safeguard the legitimate expectations of the holders of those authorisations in so far as their renewal enables the cost of the investments made by those holders to be recouped.53In that regard, it must be noted that Article 12(3) of Directive 2006/123 provides expressly that Member States may take into account overriding reasons relating to the public interest in establishing the rules governing the selection procedure.54Nevertheless, such considerations may be taken into account only when establishing the rules for the selection procedure of potential candidates and subject, in particular, to Article 12(1) of that directive.55Consequently, Article 12(3) of the directive cannot be interpreted as enabling the automatic renewal of authorisations to be justified when no selection procedure referred to in paragraph 1 of that article was organised at the time of the initial grant of those authorisations.56Furthermore, as the Advocate General stated in points 92 and 93 of his Opinion, the protection of legitimate expectations as a justification entails an assessment on a case-by-case basis whether the holder of the authorisation could reasonably expect its authorisation to be renewed and made the corresponding investments. Such a justification cannot therefore be relied on in support of an automatic extension enacted by the national legislature and applied indiscriminately to all of the authorisations at issue.57It follows from the foregoing that Article 12(1) and (2) of Directive 2006/123 must be interpreted as precluding a national measure, such as that at issue in the main proceedings, which permits the automatic extension of existing authorisations of State-owned maritime and lakeside property for tourist and leisure-oriented business activities, without any selection procedure for potential candidates. The question in Case C‑458/14 and the first question in Case C‑67/15 58By their questions, which it is appropriate to consider together, the referring courts ask, in essence, whether Articles 49, 56 and 106 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which permits the automatic extension of existing concessions of State-owned property for tourist and leisure-oriented business activities.59As a preliminary point, the Court notes that a national measure in a sphere which has been the subject of full harmonisation at EU level must be assessed in the light of the provisions of the harmonising measure and not those of the Treaty (judgment of 30 April 2014 in UPC DTH, C‑475/12, EU:C:2014:285, paragraph 63 and the case-law cited).60As the Advocate General stated in points 41 to 43 of his Opinion, Articles 9 to 13 of Directive 2006/123 lay down a series of measures that Member States must comply with where access to a service activity is subject to the grant of authorisation.61As has already been held with regard to Article 14 of that directive, which establishes a list of requirements that are ‘prohibited’ within the framework of the exercise of freedom of establishment, the Court considers that Articles 9 to 13 of Directive 2006/123 provide for exhaustive harmonisation concerning the services falling within their scope (see, by analogy, judgment of 16 June 2015 in Rina Services and Others, C‑593/13, EU:C:2015:399, paragraphs 37 and 38).62Consequently, in so far as the questions referred for a preliminary ruling concern the interpretation of primary law, those questions arise for consideration only if Article 12 of Directive 2006/123 is not applicable to the cases at issue in the main proceedings, which it is for the referring courts to determine, as stated in paragraph 43 above. Accordingly, it is subject to that proviso that the Court answers the questions referred.63The Court also notes that the concessions at issue in the main proceedings concern a right of establishment on State-owned land with a view to conducting tourist and leisure-oriented business activities so that the situations at issue in the cases in the main proceedings fall, by their very nature, within the scope of Article 49 TFEU.64In that regard, it has been held that public authorities are bound, when they envisage granting a concession which is outside the scope of the directives on the various categories of public contracts, to comply with the fundamental rules of the TFEU, in general, and the principle of non-discrimination, in particular, (see, to that effect, judgment of 17 July 2008 in ASM Brescia, C‑347/06, EU:C:2008:416, paragraphs 57 and 58 and the case-law cited).65More particularly, since such a concession is of certain cross-border interest, its award, without any transparency, to an undertaking located in the Member State to which the contracting authority belongs, amounts to a difference in treatment to the detriment of undertakings which might be interested in that concession and which are located in other Member States. Such a difference in treatment is, in principle, prohibited by Article 49 TFEU (see, by analogy, judgments of 17 July 2008 in ASM Brescia, C‑347/06, EU:C:2008:416, paragraphs 59 and 60, and 14 November 2013 in Belgacom, C‑221/12, EU:C:2013:736, paragraph 37).66First of all, it should be noted that the existence of certain cross-border interest must be assessed on the basis of all the relevant factors, such as the financial value of the contract, the place where it is to be performed or its technical features, and having regard to the particular characteristics of the contract concerned (see, to that effect, judgments of 14 November 2013 in Belgacom, C‑221/12, EU:C:2013:736, paragraph 29 and the case-law cited, and 17 December 2015 in UNIS and Beaudout Père et Fils, C‑25/14 and C‑26/14, EU:C:2015:821, paragraph 30).67Thus, in Case C‑458/14, the information provided by the referring court allows the Court to find that the concession at issue in that case is of certain cross-border interest having regard, in particular, to the geographic location of the public property and the economic value of that concession.68However, in Case C‑67/15, the referring court has not provided the Court with the findings of fact needed to establish that there is certain cross-border interest. As is clear from Article 94 of the Rules of Procedure, a request for a preliminary ruling must contain a summary of the facts on which the questions are based and indicate the connection, inter alia, between those facts and the questions. Accordingly, the findings of fact enabling the Court to ascertain whether there is certain cross-border interest should be made by the referring court before the questions are referred to the Court (see, to that effect, judgment of 17 December 2015 in UNIS and Beaudout Père et Fils, C‑25/14 and C‑26/14, EU:C:2015:821, paragraph 28).69In those circumstances, the first question referred for a preliminary ruling in Case C‑67/15 is inadmissible.70As regards Case C‑458/14, the Court finds that legislation, such as that at issue in the main proceedings, in the light of the extension that it introduces, delays the award of the concessions through a transparent tender procedure to such an extent that it must be found that such legislation introduces a difference in treatment to the detriment of undertakings located in another Member State which might be interested in those concessions, which is prohibited, in principle, by Article 49 TFEU.71Lastly, in so far as the Italian Government claims that the renewals resulting from the operation of the national legislation aim to allow concessionaires to recoup the cost of their investments, it must be noted that such a difference in treatment may be justified by overriding reasons in the public interest, inter alia, by the need to comply with the principle of legal certainty (see, to that effect, judgments of 17 July 2008 in ASM Brescia, C‑347/06, EU:C:2008:416, paragraph 64, and 14 November 2013 in Belgacom, C‑221/12, EU:C:2013:736, paragraph 38).72It has therefore been held in relation to a concession awarded in 1984, although the Court had not established at that time that contracts with certain cross-border interest might be subject to a duty of transparency, that the principle of legal certainty requires that the termination of such a concession be coupled with a transitional period enabling the contracting parties to untie their contractual relations on acceptable terms, inter alia, from an economic point of view (see, to that effect, judgments of 17 July 2008 in ASM Brescia, C‑347/06, EU:C:2008:416, paragraphs 70 and 71, and 14 November 2013 in Belgacom, C‑221/12, EU:C:2013:736, paragraph 40).73However, the concessions at issue in the main proceedings were awarded when it had already been established that contracts with certain cross-border interest were subject to a duty of transparency, so that the principle of legal certainty cannot be relied on in order to justify a difference in treatment prohibited on the basis of Article 49 TFEU.74It follows from the foregoing considerations that Article 49 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which permits the automatic extension of existing concessions of State-owned property for tourist and leisure-oriented business activities, in so far as those concessions are of certain cross-border interest. Costs 75Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fifth Chamber) hereby rules: 1. Article 12(1) and (2) of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market must be interpreted as precluding a national measure, such as that at issue in the main proceedings, which permits the automatic extension of existing authorisations of State-owned maritime and lakeside property for tourist and leisure-oriented business activities, without any selection procedure for potential candidates. 2. Article 49 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which permits the automatic extension of existing concessions of State-owned property for tourist and leisure-oriented business activities, in so far as those concessions are of certain cross-border interest. [Signatures]( *1 ) Language of the case: Italian. | d886f-5dad3d4-447e | EN |
The General Court sets aside the Commission decision ordering Germany to recover from Deutsche Post part of the subsidies paid in respect of former civil servant postal workers’ pensions | 14 July 2016 ( *1 )‛State aid — Postal services — Funding of the additional salary and social costs relating to some of the staff of Deutsche Post by means of subsidies and revenue generated by remuneration for price-regulated services — Decision declaring the aid incompatible with the internal market — Concept of advantage — The ‘Combus’ judgment — Proof of the existence of an economic and selective advantage — None)’In Case T‑143/12, Federal Republic of Germany, represented initially by T. Henze and K. Petersen, and subsequently by T. Henze and K. Stranz, acting as Agents, and by U. Soltész, lawyer,applicant,v European Commission, represented by D. Grespan, T. Maxian Rusche and R. Sauer, acting as Agents,defendant,APPLICATION under Article 263 TFEU for annulment of Articles 1 and 4 to 6 of Commission Decision 2012/636/EU of 25 January 2012 Measures C 36/07 (ex NN 25/07) implemented by Germany for Deutsche Post AG (OJ 2012 L 289, p. 1),THE GENERAL COURT (Eighth Chamber),composed of D. Gratsias, President, M. Kancheva and C. Wetter (Rapporteur), Judges,Registrar: S. Bukšek Tomac, Administrator,Having regard to the written procedure and further to the hearing on 10 December 2015,gives the following Judgment Background to the dispute 1In 1950 the Federal Republic of Germany, the applicant in the present case, set up a postal institution, Deutsche Bundespost, with the status of ‘special asset of the State’; thus, under German administrative law it did not have legal personality but nonetheless had its own budget and was not liable for the general debts of the State. Article 15 of the Gesetz über die Verwaltung der Deutschen Bundespost (Law on the organisation of the German Federal Post) of 24 July 1953 (BGBl. 1953 I, p. 676) in principle prohibited the grant of subsidies to Deutsche Bundespost from the State budget.2Subsequently, the Haushaltsgrundsätzegesetz (Law on budgetary principles) of 19 August 1969 (BGBl. 1969 I, p. 1273) confirmed that Deutsche Bundespost had its own budget and its own accounting system.3In 1989, the Federal Republic of Germany undertook a first significant restructuring of Deutsche Bundespost. That restructuring was brought about by two laws, the Gesetz über die Unternehmensverfassung der Deutschen Bundespost (Law on the corporate governance of the German Federal Post Office) of 8 June 1989 (BGBl. 1989 I, p. 1026) and the Gesetz über das Postwesen (Law on the postal system) of 3 July 1989 (BGBl. 1989 I, p. 1450). That restructuring did not confer legal personality on Deutsche Bundespost, but it divided the special asset of the State which it constituted into three separate entities in its place, still with the status of special asset of the State; that is to say, in particular, they did not have legal personality, although they were classified as ‘public undertakings’. They were the Postdienst (postal activity), the Postbank (banking activity) and Telekom (telecommunications activity).4Under Article 37(2) and (3) of the Law on the corporate governance of the German Federal Post Office, each of those three entities was to fund from its own revenues all the services which it offered, but cross-funding between them was permitted if they incurred losses as a result of the universal service obligation. In addition, under Article 54(2) of the Law on the corporate governance of the German Federal Post Office Postdienst, Postbank and Telekom were required to fund the full amount of the pensions and the reimbursement of health costs of retired officials previously employed by Deutsche Bundespost. That charge was apportioned among the three entities on the basis of the nature of the former activities carried out by each retired official. As for officials still in service, that provision guaranteed them rights vis-à-vis against the Federal State, without prejudice to the possibility that the Federal State could require Postdienst, Postbank and Telekom to pay in full the amount corresponding to those rights.5On 7 July 1994, the Commission of the European Communities received a complaint from UPS Europe NV/SA (‘UPS’), which claimed that unlawful aid had been granted to Postdienst by the Federal Republic of Germany.61994 also saw the second significant restructuring of the German postal system, first of all by the Verordnung zur Regelung der Pflichtleistungen der Deutschen Bundespost Postdienst (Regulation on the compulsory contributions of the postal activity of the German Federal Post Office) of 12 January 1994 (BGBl. 1994 I, p. 86, ‘the regulation on compulsory contributions’), then by two laws adopted on the same date, the Gesetz zum Personalrecht der Beschäftigten der früheren Deutschen Bundespost (Law on the personal rights of employees of the former German Federal Post Office) of 14 September 1994 (BGBl. 1994 I, p. 2325, ‘the Law on the terms and conditions of post office employees’) and the Gesetz zur Umwandlung von Unternehmen der Deutschen Bundespost in die Rechtsform der Aktiengesellschaft (Law on the transformation of the undertaking of the German Federal Post Office into a joint stock company) of 14 September 1994 (BGBl. 1994 I, p. 2325).7The regulation on compulsory contributions allocated to Postdienst, in its capacity as a supplier of universal services, the task of transporting letters and parcels not exceeding 20 kg and providing the corresponding services throughout German territory, at uniform rates. That obligation remained unaltered when, in application of the Law on the transformation of the undertaking of the German Federal Post Office into a joint stock company, Postdienst became Deutsche Post AG, while Postbank and Telekom also acquired the legal form of joint stock companies, with effect from 1 January 1995.8Article 1(1) of the Law on the terms and conditions of post office employees provided that Deutsche Post was to assume all the rights and obligations of the Federal State as employer. In application of that principle, Article 2(1) of that law stated that officials who had been employed by Postdienst would be transferred to Deutsche Post, which would maintain their legal status and the economic rights attaching thereto (Article 2(3) of the Law on the terms and conditions of post office employees). As regards officials’ pensions and reimbursement of the health costs of retired officials, a pension fund was set up for officials of Deutsche Post, in accordance with Article 15 of that law. As regards the commitments entered into by Deutsche Bundespost, and then by each of the three entities that succeeded it as a special asset of the State, Article 2(2) of the Law on the transformation of the German Federal Post Office into a joint stock company transferred those commitments in full to Telekom. That provision also made it possible for Telekom to bring an action in indemnity against Postdienst and Postbank. However, Article 7 of that law, in derogation from Article 2(2), extinguished Telekom’s rights to exercise that action in respect of claims up to the amount of Postdienst’s accumulated losses on 31 December 1994. The extinction of those debts entailed a transfer of assets of the same amount to Deutsche Post.9The Law on the transformation of the German Federal Post Office into a joint stock company had also provided that the Federal State would guarantee all commitments entered into by Deutsche Bundespost before 1995 and subsequently transferred to Postdienst or to one of the other two entities created in 1989. On the other hand, the Federal State did not guarantee the securities issued by Deutsche Post as from 1 January 1995.10The Law on the terms and conditions of Post Office employees had also apportioned the charges between the Federal State and Deutsche Post as regards the sums to be allocated annually to the pension fund established by Article 15 of that law. Thus, Article 16 of that law provided, for the period from 1 January 1995 until 31 December 1999, for payment by Deutsche Post of an annual lump sum of EUR 2045 millions. From 1 January 2000, that annual lump sum was replaced by an amount corresponding to 33% of the total salaries of officials employed by Deutsche Post. In each case Article 16 provided that the balance of the costs of pensions would be borne by the Federal State (from 1 January 1995).11In 1997, the Postgesetz (Postal Law) of 22 December 1997 (BGBl. 1997 I, p. 3294) supplemented the regulation on compulsory contributions and, in particular, extended the tasks to be carried out by Deutsche Post in the context of the universal service. Article 11 of the Postal Law defined the universal service as consisting, in particular, in the carriage of letters, parcels of less than 20 kg, books, catalogues, newspapers and periodicals of a maximum weight of 200 g; Article 52 of that law extended Deutsche Post’s mandate to provide the universal service until 31 December 2007, that is to say, until the date of expiry of its exclusive licence to provide postal services. The weight limit applicable to letters and catalogues was gradually reduced between 1 January 1998, the date on which the Postal Law entered into force, and the date of expiry of the exclusive licence, eventually reaching 50 g.121997 also marks a turning point in Deutsche Post’s management of its staff, since members of the contract staff recruited before that date had the benefit not only of the compulsory social security scheme but also of the possibility of a supplementary retirement insurance that would allow them to attain a level of pension comparable to that of retired officials of Deutsche Post. Until 1997, the supplementary pension of members of the contract staff was funded by Deutsche Post on the basis of a contribution of between 5% and 10% of the gross salary of a serving member of the contract staff. From that date, Deutsche Post (i) made provisions to cover the latent commitments concerning payments to be made to the Provident Fund of Deutsche Post and (ii) agreed to a lower supplementary retirement insurance for newly-recruited members of the contract staff, which it funded on the basis of a contribution of between 0% and 5% of the gross salary of a serving member of the contract staff.13Following UPS’s complaint, the Commission decided to initiate, on 17 August 1999, a formal examination procedure against the Federal Republic of Germany concerning several types of aid granted to Postdienst, and then to Deutsche Post (‘the 1999 initiation decision’. Those measures included, first, State guarantees pursuant to which the Federal Republic of Germany guaranteed debts incurred by Deutsche Bundespost before its transformation into three joint stock companies; second, the existence of public funding of the pensions of employees of Postdienst and Deutsch Post (‘the public financing of the pensions’) and, third, possible State aid to Deutsche Post. By letter of 16 September 1999, the Federal Republic of Germany submitted its observations and provided the requested information. The 1999 initiation decision was published in the Official Journal of the European Communities on 23 October 1999.14In response to the publication of the 1999 initiation decision, 14 interested parties submitted observations, which the Commission forwarded to the Federal Republic of Germany on 15 December 1999. The Federal Republic of Germany replied by letter of 1 February 2000.15By Decision 2002/753/EC of 19 June 2002 on measures implemented by the Federal Republic of Germany for Deutsche Post AG (OJ 2002 L 247, p. 27), the Commission considered that that Member State had granted Deutsche Post aid incompatible with the common market totalling EUR 572 million, which had enabled it to cover the losses caused by a rebate policy on door-to-door parcel transport services open to competition.16As a result of Decision 2002/753, the German authorities recovered the sum of EUR 572 million from Deutsche Post. Deutsche Post brought an action before the General Court on 4 September 2002, seeking annulment of that decision (Case T‑266/02).17Between 1 January 2003 and 31 December 2007, the Bundesnetzagentur (Federal Networks Agency) set up by the Postal Law capped the prices of a basket of services corresponding to those to which the regulated postal prices applied.18On 13 May 2004, UPS lodged a further complaint with the Commission, claiming that the Commission had not examined in Decision 2002/753 all the measures listed in the complaint lodged on 7 July 1994 and that unlawful aid had been granted after that decision had been adopted.19On 16 July 2004, TNT Post AG & Co. KG also lodged a complaint with the Commission, on the ground that Deutsche Post was charging very low prices for the services provided for Postbank and that Postbank was paying only the variable costs for the services supplied.20In November 2004 and April 2005, the Commission sent requests for information, concerning both the complaint lodged on 13 May 2004 by UPS and that lodged on 16 July 2004 by TNT Post, to the Federal Republic of Germany, which replied in December 2004 and June 2005.21By letter of 12 September 2007, the Commission informed the Federal Republic of Germany of its decision to initiate the procedure laid down in Article 88(2) EC in respect of State aid granted by the German authorities to Deutsche Post AG (State aid C 36/07 (ex NN 25/07)) (‘the 2007 decision’). In that decision, which was published in the authentic language in the Official Journal of 19 October 2007 (OJ 2007 C 245, p. 21), the Commission referred to the procedure initiated in relation to postal matters against the Federal Republic of Germany pursuant to Article 87 EC since 1994 and, referring to the need to carry out a comprehensive investigation of all the distortions of competition resulting from the public funds granted to Deutsche Post, stated that the proceedings initiated by the 1999 initiation decision would be supplemented in order to incorporate the recently communicated information and to adopt a definitive position on the compatibility of those funds with the EC Treaty.22By application lodged on 22 November 2007, Deutsche Post asked the Court to annul the 2007 decision (Case T‑421/07).23By judgment of 1 July 2008, Deutsche Post v Commission (T‑266/02, EU:T:2008:235), the General Court annulled Decision 2002/753, on the ground that the Commission had not demonstrated that Deutsche Post had received an advantage, by failing, in particular, to carry out a detailed analysis of all transfers of State resources to Deutsche Post and of all the costs associated with the supply of the universal service which Deutsche Post was required to bear, in order to establish whether the transfers at issue corresponded to overcompensation or undercompensation to its advantage or disadvantage. In application of that judgment, against which an appeal was lodged by the Commission, the Federal Republic of Germany reimbursed to Deutsche Post the sum of EUR 572 million, plus interest.24On 30 October 2008, following numerous exchanges with the Federal Republic of Germany concerning the merits of the 2007 decision, the Commission enjoined that Member State to deliver all necessary accounting information for the whole period from 1990 until 2007. That injunction (‘the 2008 injunction’) was the subject of applications for annulment brought by both the Federal Republic of Germany (Case T‑571/08) and Deutsche Post (Case T‑570/08). Pending the General Court’s decision, the Federal Republic of Germany complied with the 2008 injunction and produced, first in November and December 2008, then in March 2009, the requested accounting information.25By orders of 14 July 2010, Deutsche Post v Commission (T‑570/08, not published, EU:T:2010:311) and Germany v Commission (T‑571/08, not published, EU:T:2010:312), the General Court dismissed the actions brought against the 2008 injunction as inadmissible. Appeals against those orders were lodged before the Court of Justice by the Federal Republic of Germany (Case C‑465/10 P) and by Deutsche Post (Case C‑463/10 P).26By judgment of 2 September 2010, Commission v Deutsche Post (C‑399/08 P, EU:C:2010:481), the Court of Justice dismissed the appeal against the judgment of 1 July 2008, Deutsche Post v Commission (T‑266/02, EU:T:2008:235).27By letter of 10 May 2011, the Commission notified the Federal Republic of Germany of its decision to ‘extend’ again the proceedings initiated in 1999 (‘the 2011 decision’), in order to conduct an in-depth investigation with regard to the pension subsidies that Deutsche Post had received since 1995. On 22 July 2011 the Federal Republic of Germany asked the Court to annul the 2011 decision (Case T‑388/11).28By judgment of 13 October 2011, Deutsche Post and Germany v Commission (C‑463/10 P and C‑465/10 P, EU:C:2011:656), the Court of Justice set aside the orders of 14 July 2010, Deutsche Post v Commission (T‑570/08, not published, EU:T:2010:311) and Germany v Commission (T‑571/08, not published, EU:T:2010:312), on the ground that the 2008 injunction was of direct and individual concern to Deutsche Post, and referred the cases back to the General Court (Cases T‑570/08 RENV and T‑571/08 RENV).29Pursuant to the 2011 decision, the Commission requested the Federal Republic of Germany, on 18 November 2011, for information concerning the public financing of pensions for the period after 2007; that information was supplied.30By judgment of 8 December 2011, Deutsche Post v Commission (T‑421/07, EU:T:2011:720), the General Court considered that Deutsche Post’s action against the 2007 decision was inadmissible, on the ground that that decision had not altered its legal position and was therefore not an act open to challenge.31By Decision 2012/636/EU of 25 January 2012, concerning Measure C 36/07 (ex NN 25/07) implemented by Germany for Deutsche Post AG (OJ 2012 L 289, p. 1) (‘the contested decision’), the Commission considered, in particular, that the public funding / financing of pensions constituted unlawful State aid incompatible with the internal market. On the other hand, it considered that certain public transfers to Deutsche Post were State aid compatible with the internal market and that the State guarantees whereby the Federal Republic of Germany guaranteed the debt obligations entered into by Deutsche Bundespost before it was transformed into three joint stock companies must be analysed as existing aid.32The contested decision was notified to the Federal Republic of Germany on the following day.33By letter lodged at the Court Registry on 4 April 2012, the Federal Republic of Germany informed the Court that it was withdrawing its action in Case T‑571/08 RENV, which was removed from the Court’s register (order of 10 May 2012, Germany v Commission, T‑571/08 RENV, not published, EU:T:2012:228).34By judgment of 24 October 2013, Deutsche Post v Commission (C‑77/12 P, not published, EU:C:2013:695), the Court of Justice set aside the judgment of 8 December 2011, Deutsche Post v Commission (T‑421/07, EU:T:2011:720), finding that the General Court had erred in law in holding that the 2007 decision was not an act open to challenge. It also referred the case back to the General Court for determination.35By judgment of 12 November 2013, Deutsche Post v Commission (T‑570/08 RENV, not published, EU:T:2013:589), the General Court dismissed the action brought by Deutsche Post against the 2008 injunction. That judgment was the subject of a rectification of a material error (order of 15 November 2013, Deutsche Post v Commission, T‑570/08 RENV, not published, EU:T:2013:606).36Last, by judgment of 18 September 2015, Deutsche Post v Commission (T‑421/07 RENV, EU:T:2015:654), the Court annulled the 2007 decision on the ground that its adoption had infringed Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1) and the principle of legal certainty, in that it had re-initiated a formal investigation procedure which had been terminated in order for a new decision to be taken without the termination decision being revoked or withdrawn. Procedure and forms of order sought 37By application lodged at the Court Registry Court on 30 March 2012, the Federal Republic of Germany brought the present action.38On 13 June 2012, the Commission lodged its defence.39By document lodged at the Court Registry on 27 July 2012, UPS and United Parcel Service Deutschland Inc. & Co. sought leave to intervene in the present proceedings in support of the form of order sought by the Commission.40On 24 August 2012, the Federal Republic of Germany lodged an application for confidential treatment of the application and the defence vis-à-vis UPS and United Parcel Service Deutschland and for that purpose produced a non-confidential version of the application and the defence.41By order of the President of the Sixth Chamber of the General Court of 11 September 2012, the application for leave to intervene submitted by UPS and United Parcel Service Deutschland was dismissed and the question relating to the confidential treatment of the application and the defence was thus settled by operation of law.42The Federal Republic of Germany’s reply was lodged at the Court Registry on 24 September 2012. The rejoinder was received at the Court Registry on 13 December 2012.43Subsequently, the present case was assigned to a new Judge-Rapporteur sitting in the same Chamber.44Following the partial renewal of the Court, the Judge-Rapporteur was assigned to the Eighth Chamber, to which the present case was therefore re-assigned.45The Court put a number of questions to the parties in the context of measures of organisation of procedure, pursuant to Article 64 of the Rules of Procedure of the General Court of 2 May 1991, which the parties answered within the prescribed period. The Court wished, in particular, in the interest of the smooth administration of justice and the optimum management of Cases T‑421/07 RENV, T‑388/11, T‑152/12, between Deutsche Post and the Commission, and also of the present case, to ascertain the parties’ views on what could or should be the priorities as regards the order in which those cases were dealt with and the possibility that one or more cases might be stayed pending judgment in the remaining cases.46Following receipt of the parties’ observations, by orders of 15 September 2014 of the President of the First Chamber of the Court in Case T‑388/11, Deutsche Post v Commission, and of the President of the Eighth Chamber of the Court in the present case and in Case T‑152/12, Deutsche Post v Commission, those three cases were stayed pending the final decision in Case T‑421/07 RENV, which was delivered on 18 September 2015, as stated in paragraph 36 above.47In the context of a measure of organisation of procedure, pursuant to Article 89 of the Rules of Procedure of the General Court, the parties were requested to inform the Court of the consequences which in their view the judgment of 18 September 2015, Deutsche Post v Commission (T‑421/07 RENV, EU:T:2015:654), might have on the way in which the present case was dealt with. On 3 and 30 November 2015, respectively, the Federal Republic of Germany and the Commission submitted their observations to the Court Registry.48On 1 December 2015, the Court invited the parties to submit any observations they might have on whether the hearing should be held partly in camera, in so far as certain data that might be addressed overlapped with the data which the main parties in Cases T‑388/11, Deutsche Post v Commission, and T‑152/12, Deutsche Post v Commission, had invoked and in respect of which Deutsche Post had requested confidential treatment vis-à-vis the interveners in those two cases.49On 4 December 2015, the Commission informed the Court Registry that it had no observations and on the same day the Federal Republic of Germany submitted its observations to the Court Registry, stating that it had no objection to the hearing taking place in camera, but that it reserved the right to submit new pleadings if any data not contained in the public version of the contested decision should be mentioned at the hearing.50The parties presented oral argument and answered the questions put by the Court at the hearing on 13 December 2005, which were held partly in camera.51The Federal Republic of Germany claims that the Court should:—annul Articles 1 and 4 to 6 of the contested decision;order the Commission to pay the costs.52The Commission contends that the Court should:primarily, dismiss the action as unfounded;in the alternative, in the event that one of the parts of the sixth plea, or one of the arguments set out therein, should be upheld, or in the event the seventh plea should be upheld, annul the contested decision only in part, according to the merits of those pleas, parts and arguments;order the Federal Republic of Germany to pay the costs. Law 53In support of its action, the Federal Republic of Germany, strictly speaking, puts forward 10 pleas in law.54The first plea alleges infringement of Article 107(1) TFEU and rests on the assertion that the public funding of the pensions did not favour Deutsche Post; the second plea alleges infringement of the same provision, on the ground that the public financing of the pensions did not compensate Deutsche Post’s costs; the third plea relates, primarily, to an infringement of Article 107(1) TFEU and, in the alternative, to an infringement of Article 107(3) TFEU, in so far as Deutsche Post’s revenues from price-regulated services were taken into account; the fourth plea alleges infringement of Articles 107 and 108 TFEU and of Regulation No 659/1999 and misuse of powers and of procedure owing to the taxing of revenues received by Deutsche Post in connection with those price-regulated services; the fifth plea also alleges infringement of Articles 107 and 108 TFEU and of Regulation No 659/1999 and misuse of powers and procedure owing to the attempt to find cross-subsidisation; the sixth plea relates, primarily, to infringement of Article 107(1) TFEU and, in the alternative, to infringement of Article 107(3) TFEU, owing to incorrect calculations in the comparison of Deutsche Post’s social costs with those of competing operators; the seventh plea rests, primarily, on infringement of Article 107(1) TFEU and, in the alternative, on infringement of Article 107(3) TFEU, owing to the characterisation of the funding in question as State aid incompatible with the internal market between 1995 and 2002; the eighth plea alleges infringement of Article 1(b)(1) of Regulation No 659/1999 owing to the characterisation of the funding in question as new aid; the ninth plea relates only to Article 4(1) and (4) of the contested decision, which, according to the Federal Republic of Germany, is contrary to Article 7(5) and Article 14(1) of Regulation No 659/1999; last, the 10th plea concerns the excessive length of the proceedings and the Commission’s failure to act, which, it is claimed, constitute an infringement of Article 6 TFEU, Article 41 of the Charter of Fundamental Rights of the European Union, Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, and Article 10(1) of Regulation No 659/1999.55However, in so far as the Federal Republic of Germany alleges, in support of the first, second and sixth pleas, that the contested decision is vitiated by a failure to state reasons, the arguments relating to that point will be examined separately from the substantive arguments and dealt with in a separate plea (see, to that effect, judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraphs 66 and 67, and of 5 December 2013, Commission v Edison, C‑446/11 P, not published, EU:C:2013:798, paragraph 20).56As failure to state reasons constitutes a breach of essential procedural requirements, the Court deems it appropriate to deal with the plea alleging such failure before addressing the pleas relating to the substance of the law. The failure to state reasons in the contested decision 57The Federal Republic of Germany submits that the contested decision is vitiated by a failure to state reasons, first, as regards the assertion that the public funding of the pensions constitutes a selective advantage in favour of Deutsche Post; second, as regards the claim that that funding corresponds to charges which are normally included in the budget of an undertaking; third, as regards the Commission’s failure to explain why the case-law resulting from the judgment of 16 March 2004, Danske Busvognmænd v Commission (T‑157/01, ‘the “Combus” judgment’, EU:T:2004:76), is not applicable in the present case; and, fourth, as regards the refusal to take into consideration the argument whereby the applicant sought to demonstrate that the reference index chosen by the Commission was incorrect.58The Commission disputes those assertions.59It must be remembered that, according to settled case-law, the statement of reasons required by Article 296 TFEU must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review (see judgment of 11 December 2013, Cisco Systems and Messagenet v Commission, T‑79/12, EU:T:2013:635, paragraph 108 and the case-law cited). In that regard, when stating the reasons for the decision which it is required to take in order to ensure the application of EU law on State aid, the Commission is not required to adopt a position on all the arguments relied on by the parties concerned in support of their request. It is sufficient if it sets out the facts and legal considerations of essential importance in the scheme of the decision (see, to that effect, judgments of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 96, and of 16 December 2010, Netherlands and NOS v Commission, T‑231/06 and T‑237/06, EU:T:2010:525, paragraphs 141 and 142 and the case-law cited).60The question as to whether the statement of reasons for a measure satisfies the requirements of Article 296 TFEU must be assessed by reference not only to its wording but also to its context and to the whole body of legal rules governing the matter in question (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 63; of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 88; and of 16 September 2013, Iliad and Others v Commission, T‑325/10, EU:T:2013:472, paragraph 260). Thus, the Commission does not breach its obligation to state reasons if, in its decision, it does not adopt a position on matters which in its view are manifestly irrelevant or insignificant or plainly of secondary importance (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 64; of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 89; and of 27 September 2012, Wam Industriale v Commission, T‑303/10, not published, EU:T:2012:505, paragraph 87).61It is in the light of those principles that the Court must ascertain whether the four points of the contested decision which the Federal Republic of Germany claims to be vitiated by a failure to state reasons are in fact so vitiated.62As regards the assertion that the public funding of the pensions constitutes a selective advantage in favour of Deutsche Post, it is clear from the contested decision (i) that in the Commission’s view the selectivity lies in the fact that ‘the pension subsidy has only been granted to the Pension fund to relieve Deutsche Post from the civil servants’ pension costs and therefore ultimately benefits Deutsche Post’ (recital 259 of the contested decision) and (ii), as regards the actual existence of an advantage, that the Commission set out, in section VII.1.1, entitled ‘Financial advantage from 1995 pension reform’, the reasons why in its view such an advantage was shown to exist in this instance (recitals 260 to 274 of the contested decision), taking care to rebut the arguments put forward by the Federal Republic of Germany. The statement of reasons in the contested decision is therefore of the requisite legal standard on that point.63As regards the applicant’s claim that the Commission failed to state reasons for its assertion that the public funding of the pensions corresponds to charges which are normally included in the budget of an undertaking, it must be held that the Commission made a mere assertion — the merits of which do not fall to be determined at the stage of examining compliance with the obligation to state reasons — that such a contribution by the employer was part of the normal operating procedures of an undertaking in a market economy. In that regard, it is stated, in recital 263 of the contested decision, ‘that the liabilities a company bears under employment legislation or collective agreements with trade unions, such as pension costs, are part of the normal costs of a business which a firm has to meet from its own resources’ and that ‘those costs are inherent to the economic activity of the undertaking’. It should further be noted that the Commission also referred to its practice in taking decisions and to the case-law of the General Court (footnotes 6 and 7 of the contested decision). Article 196 TFEU was therefore not infringed by the Commission in this respect either.64As regards the Commission’s alleged failure to explain why the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76) does not apply in the present case, the argument is factually incorrect, since the Commission expressly took a position in the contested decision on that aspect of the Federal Republic of Germany’s arguments. In recital 260 of the contested decision, the Commission refers to that argument and in recital 262 it rebuts it in detail. Furthermore, recital 115 of the contested decision refers to the 2011 decision, in which the Commission had also rejected that case-law as not being applicable in the present case. The contested decision therefore contains an adequate state of reasons in that regard.65As regards, last, the alleged absence of evidence that would justify the refusal to take into consideration the Federal Republic of Germany’s arguments relating to the determination of the reference rate of contribution, it should be observed (i) that the Commission clearly set out the reasons why it had taken the total contribution rates (employer’s and employee’s contributions) to the retirement and unemployment insurance and also the employer’s contribution to sickness and care insurance into account (recitals 301 to 306 of the contested decision) and (ii) that it analysed, and then rejected, the objections put forward by the Federal Republic of Germany (recitals 308 to 311 of the contested decision). Furthermore, it should be borne in mind that, pursuant to the case-law referred to in paragraph 59 above, the Commission is not required to comment on each of the arguments raised before it. As regards this fourth point, too, the contested decision contains an adequate statement of reasons.66The arguments alleging failure to state reasons in the contested decision must therefore be rejected in their entirety.67The Court will now examine together the fourth and fifth pleas, whereby the Federal Republic of Germany asks it to explain the precise scope of Articles 107 and 108 TFEU, and of Regulation No 659/1999, in the light of the powers conferred on the Commission to ascertain the existence of State aid. The fourth and fifth pleas, concerning the scope of Articles 107 and 108 TFEU, and of Regulation No 659/1999, in the light of the powers conferred on the Commission to ascertain the existence of State aid, and the existence of misuse of powers and of procedure 68In the context of its fourth plea, the Federal Republic of Germany maintains that the Commission, taking account of the recovery order in Article 4(4) of the contested decision, unlawfully taxed revenues received by Deutsche Post in connection with price-regulated services; in its fifth plea, it claims that both primary law and the relevant secondary law preclude any attempt to find cross-subsidisation.69The Commission objects to those assertions.70It must be borne in mind, first of all, that the only addressee of a decision such as the contested decision is the Member State concerned, that is to say, in this instance, the Federal Republic of Germany (see, to that effect, judgments of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraphs 16 and 18; of 25 June 1998, British Airways and Others v Commission, T‑371/94 and T‑394/94, EU:T:1998:140, paragraph 92; and of 11 March 2009, TF1 v Commission, T‑354/05, EU:T:2009:66, paragraph 31), as is explicitly stated, moreover, in Article 7 of the contested decision. It is for that Member State to adopt, against its own wishes, legally binding measures so as to comply with the obligations imposed on it by EU law (order of 21 January 2014, France v Commission, C‑574/13 P(R), EU:C:2014:36, paragraph 24), namely to recover from the beneficiary or beneficiaries the amount of the aid which the Commission considers to have been unlawfully granted.71It is therefore incorrect to maintain, as does the Federal Republic of Germany in the context of the fourth plea, that the Commission, albeit indirectly, taxed revenues achieved by means of price-regulated services: the Member State concerned, the only addressee of the contested decision, was merely required to recover from Deutsche Post, without designating for that purpose (and, a fortiori, without being required to designate) a particular item in Deutsche Post’s budget, the amount corresponding to a series of measures which the Commission had considered to constitute unlawful State aid. The fact that Deutsche Post might reimburse that amount by drawing on the profits achieved by means of price-regulated postal services or by other means can therefore have no impact on the lawfulness of the contested decision.72Nor can the Federal Republic of Germany properly rely, in the context of the fifth plea, on the prohibition, in the particular case, on attempting to find any cross-subsidisation.73It should be borne in mind that, so far as the principles laid down in the case-law are concerned, not only does Article 107(1) TFEU not preclude a check of the existence of such subsidies, but, on the contrary, it implies that a check of that nature is to be carried out.74The aim of Article 107 TFEU is to prevent trade between Member States from being affected by advantages granted by public authorities which, in various forms, distort or threaten to distort competition by favouring certain undertakings or the production of certain goods products (judgments of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 26, and of 15 March 1994, Banco Exterior de España, C‑387/92, EU:C:1994:100, paragraph 12). The concept of aid therefore embraces not only positive benefits, such as subsidies, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, therefore, without being subsidies in the strict sense of the word, are similar in character and have the same effect (judgments of 15 March 1994, Banco Exterior de España, C‑387/92, EU:C:1994:100, paragraph 13, and of 11 July 1996, SFEI and Others, C‑39/94, EU:C:1996:285, paragraph 58).75More specifically, the proper application of EU law assumes a determination of whether the revenue from a lawfully subsidised activity does not serve to finance other activities carried out by the same undertaking (see, to that effect, judgments of 10 June 2010, Fallimento Traghetti del Mediterraneo,C‑140/09, EU:C:2010:335, paragraph 50; of 27 February 1997, FFSA and Others v Commission, T‑106/95, EU:T:1997:23, paragraphs 187 to 190; and of 1 July 2010, M6 and TF1 v Commission, T‑568/08 and T‑573/08, EU:T:2010:272, paragraphs 118, 121, 126 and 135), as the Commission has a certain discretion in deciding on the most appropriate method for making sure that the competitive activities do not receive any cross-subsidy (judgment of 27 February 1997, FFSA and Others v Commission, T‑106/95, EU:T:1997:23, paragraph 187).76Although the title of its fifth plea (see paragraph 54 above) does not suggest it, the Federal Republic of Germany seems, in reality, to accept that the Commission is entitled to attempt to find cross-subsidisation, but denies that the necessary conditions for an attempt to do so are satisfied in the present case. The Federal Republic of Germany thus states in the application that ‘if only because there was no transfer of “State resources” within the meaning of Article 107(1) TFEU, the conditions of “cross-subsidisation” within the meaning of the legislation on aid are not satisfied’.77In any event, it is by no means apparent that, by having examined the compatibility of the aid supposedly resulting from Article 16 of the Law on the terms and conditions of post office employees in the light of the implementation of Article 20(2) of the Postal Law, the implementation of that provision allowed Deutsche Post to allocate a part of the revenue in respect of price-regulated services to the pension fund, the Commission attempted to find cross-subsidisation, which, by definition, is done at the stage of determining the actual existence of the aid and not at the stage of determining whether the aid is compatible with the internal market.78The Federal Republic of Germany maintains, moreover, that it was for the Commission to bring an action for failure to fulfil obligations, within the meaning of Article 258 TFEU, if it considered that the price regulation provided for in Article 20(2) of the Postal Law gave rise to cross-subsidisation. It thus claims that there has been a misuse of powers and of procedure.79That argument cannot be upheld. The Courts of the European Union have already rejected similar reasoning, pointing out, with regard to the Commission’s decision to initiate proceedings for abuse of a dominant position by a German legacy telephone service provider rather than bring an action against the Member State responsible for enacting the legislation which had made such an abuse possible, that even if the Commission could have initiated proceedings against the Federal Republic of Germany for failure to fulfil obligations, such a possibility could not affect the lawfulness of the contested decision (judgment of 10 April 2008, Deutsche Telekom v Commission, T‑271/03, EU:T:2008:101, paragraph 271) and, more widely, under the system laid down by Article 258 TFEU, the Commission has a discretion to bring an action for failure to fulfil obligations, which has the consequence that it is not for the Courts of the European Union to assess whether it was appropriate to do so (judgments of 26 June 2003, Commission v France, C‑233/00, EU:C:2003:371, paragraph 31, and of 14 October 2010, Deutsche Telekom v Commission, C‑280/08 P, EU:C:2010:603, paragraph 47).80A misuse of powers and of procedure is therefore not established under the fifth plea. Nor is it established under the fourth plea, where such misuse is also claimed.81The Federal Republic of Germany claims that, following a complaint lodged on 22 April 2004 by UPS on the basis of Article 102 TFEU (recital 46 of the contested decision), the Commission initiated proceedings with a view to establishing that Deutsche Post had abused its dominant position by overcharging for the regulated letter services, then that it decided on 25 March 2008 to close those proceedings because in its view it was unlikely to be able to prove such abuse (recital 48 of the contested decision).82In the Federal Republic of Germany’s submission, it was the inability to prove abuse of a dominant position that led the Commission to have recourse, in an artificial manner, to a different procedure, by initiating State aid proceedings.83It is sufficient here to point out that the mere fact that the Commission, in the course of evaluating the evidence before it for the purpose of imposing a sanction for an infringement of Article 102 TFEU, decides not to penalise an abuse of a dominant position which it considers it would be unable to establish to the requisite legal standard, constitutes an illustration of the principle of sound administration and actual respect for the principle of legality.84Furthermore, a decision is vitiated by misuse of powers or of procedure only if it appears, on the basis of objective, relevant and consistent factors, to have been taken for the purpose of achieving ends other than those stated (judgments of 12 November 1996, United Kingdom v Council, C‑84/94, EU:C:1996:431, paragraph 69, and of 16 September 1998, IECC v Commission, T‑133/95 and T‑204/95, EU:T:1998:215, paragraph 188). In addition, where more than one aim is pursued, even if the grounds of a decision include, in addition to proper grounds, an improper one, that would not make the decision invalid for misuse of powers, provided that the decision does not cease to pursue the main aim (judgments of 21 December 1954, Italy v High Authority, 2/54, EU:C:1954:8, p. 73, 103; of 8 July 1999, Vlaamse Televisie Maatschappij v Commission, T‑266/97, EU:T:1999:144, paragraph 131; and of 21 September 2005, EDP v Commission, T‑87/05, EU:T:2005:333, paragraph 87).85In the present case, there is no evidence that the contested decision was not adopted in order to penalise State aid that was incompatible with the internal market or, in any event, that it did not include such an aim.86It follows from the foregoing that the fourth and fifth pleas must be rejected.87It is now appropriate to examine the first and second pleas and the first part of the third, sixth and seventh pleas, relating to the existence, in the present case, of State aid. The first and second pleas and the first part of the third, sixth and seventh pleas, in so far as they relate to the existence of State aid 88It should be borne in mind at the outset that classification as State aid within the meaning of Article 107(1) TFEU requires that four conditions are satisfied, namely that there must be an intervention by the State or through State resources, the intervention must be liable to affect trade between Member States, it must confer a selective advantage on the recipient and it must distort or threaten to distort competition (see, to that effect, judgments of 17 March 1993, Sloman Neptun, C‑72/91 and C‑73/91, EU:C:1993:97, paragraph 18; of 19 December 2013, Association Vent de colère! and Others, C‑262/12, EU:C:2013:851, paragraph 15; and of 11 June 2009, Italy v Commission, T‑222/04, EU:T:2009:194, paragraph 39).89The measure which the Federal Republic of Germany seeks to have annulled is the classification as State aid incompatible with the internal market as referred to in Article 1 of the contested decision, concerning the ‘pension subsidy to Deutsche Post’. By that terminology the Commission refers very specifically to the public funding of the pensions of former officials of the postal services (recital 3 of the contested decision), to the exclusion, therefore, of the funding of the pensions of private employees recruited after 1 January 1995. That is therefore also the sense in which the expression ‘public funding of the pensions’ used in the present judgment must be interpreted. That funding is governed by Article 16 of the Law on the terms and conditions of employees of the post office, which therefore constitutes the subject matter of the contested decision. However, it should be observed that, at the stage of assessing the compatibility of the presumed aid with the internal market, the Commission emphasised that the effect of that law and that of Article 20(2) of the Postal Law combined to relieve Deutsche Post of the costs of the retirement pensions of its former officials (recitals 116 and 332 to 338 of the contested decision).90It is thus appropriate, when examining the various pleas put forward in that regard by the Federal Republic of Germany, to ascertain whether the public funding of the pensions could properly be classified as State aid in the light of the conditions referred to in paragraph 88 above.The first condition: intervention by the State or through State resources91It must be stated that, in the present case, intervention by the State and the use of State resources are not in doubt. They are obvious in the light of the mechanism put in place by Article 16 of the Law on the terms and conditions of employees of the post office, since, as stated in paragraph 10 above, the Federal State assumed responsibility, for the years 1995 to 1999, for the difference between the total costs of the retirement pensions of former officials of Deutsche Post and an annual lump sum of 4 billion German marks (DEM) (around EUR 2045 million) and then, from 2000, between the total costs of those former officials’ pensions and 33% of the gross salaries of Deutsche Post’s officials in active service.92The Federal Republic of Germany raises the objection, however, that those resources correspond only to revenue received by Deutsche Post in respect of price-regulated services, which cannot therefore be classified as State aid, since it corresponds to remuneration by its customers for services provided by Deutsche Post in the context of private economic relationships.93However, that argument does not stand up to analysis. It cannot be disputed that, owing to the intervention of the Federal State, Deutsche Post was relieved of part of the cost of the pensions payable to its retired officials, which it would have had to reflect in the unregulated prices for its services in the absence of such intervention. The Commission is therefore correct to state that the sum removed from the total amount of the costs associated with payment of those pensions corresponded to EUR 151 million in 1995 and reached EUR 3203 million in 2010. Over the period 1995 to 2010, the total amount for which the Federal State accepted responsibility thus assumed reached an amount corresponding to more than EUR 37 billion.94In addition, the fact that part of the revenue from the regulated prices approved by the Federal Network under Article 20(2) of the Postal Law was intended to reduce Deutsche Post’s contribution to the pension fund has the consequence that the amount for which the Federal State accepted responsibility, defined by reference to a lump sum, and then to the percentage, described in paragraph 91 above, was higher than it ought to have been. The amount of the public subsidies was therefore excessive, even if it is true that the revenues from the regulated prices are, considered intrinsically, of a private nature.95The first condition, relating to intervention by the State or the use of State resources, is therefore satisfied.The second and fourth conditions, relating to an effect on trade between Member States and the distortion or threat of distortion of competition96The application of these two conditions in the present case is not specifically disputed by the Federal Republic of Germany. It is appropriate, in any event, to find that the Commission did not err in law or make an error of assessment when it considered, in recitals 275 to 277 of the contested decision, since the markets for parcels, newspapers and periodicals had always been open to competition in Germany and, furthermore, that since following the opening of the market for letters to competition Deutsche Post had gradually lost its exclusive rights in that sector, in which new undertakings had begun to operate, that the conditions of an effect on trade between Member States and the distortion of competition were satisfied.The third criterion, relating to the existence of an advantage granted to an undertaking or a type of product97The Federal Republic of Germany maintains that this condition was not satisfied in either of its two components. It maintains, first, that, even on the assumption that there was a selective advantage in the present case, the beneficiary (or beneficiaries) is (or are) not an undertaking for the purposes of Article 107(1) TFEU and, second, that the public funding of the pensions did not give rise to such an advantage.98These two aspects should be examined in turn.– The identity of the beneficiary of the alleged advantage and its capacity as an undertaking99The Federal Republic of Germany states, in the context of its first plea, that the beneficiary of the measure at issue is not Deutsche Post but, directly, the pension fund of the former officials of the postal services or, indirectly, the pensioners themselves, that is to say, natural persons.100The Commission disputes that analysis.101The objections put forward by the Federal Republic of Germany concerning the identity and the nature of the beneficiary of the public funding of the pensions must be rejected. It is apparent from the documents in the file that Deutsche Post, whose capacity as an undertaking cannot be disputed, would, without that funding, have had to pay, in favour of the former officials of its legal predecessors, a certain additional sum related to the salaries paid, of which it was relieved in part. It is therefore indeed the beneficiary of the measure at issue.102It is therefore appropriate to ascertain whether that partial acceptance of responsibility, as defined in paragraph 10 above, could properly be classified as an advantage for the purposes of Article 107(1) TFEU.– The existence of an advantage for Deutsche Post for the purposes of Article 107(1) TFEU103It is appropriate, in the first place, to recall the way in which the Courts of the EU interpret the concept of advantage, before, in the second place, summarising the content of the contested decision in that regard, then, in the third place, determining, in the light of the pleas and arguments put forward by the Federal Republic of Germany, whether the Commission’s reasoning permitted the conclusion, in the present case, that there was an advantage for the purposes of Article 107(1) TFEU and then, as the other conditions are satisfied, as held in paragraphs 91 to 96 above, that there was State aid.104In the first place, State aid, as defined in the Treaty, is a legal concept which must be interpreted on the basis of objective factors. For that reason, the Courts of the European Union must in principle, having regard both to the specific features of the case before them and to the technical or complex nature of the Commission’s assessments, carry out a comprehensive review as to whether a measure falls within the scope of Article 107(1) TFEU (judgments of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 111, and of 16 September 2013, British Telecommunications and BT Pension Scheme Trustees v Commission, T‑226/09 and T‑230/09, not published, EU:T:2013:466, paragraph 39).105The question is therefore whether or not a measure confers an advantage on an undertaking.106That advantage must be economic in nature and it must be selective.107The advantage must be economic in nature: that is to say, the Commission is under an obligation to make a complete analysis of all factors that are relevant to the transaction at issue and its context, including the situation of the beneficiary undertaking and of the relevant market, in order to verify whether that undertaking is receiving an economic advantage which it would not have obtained under normal market conditions (see, to that effect, judgments of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission, T‑228/99 and T‑233/99, EU:T:2003:57, paragraphs 251 and 257, and of 3 March 2010, Bundesverband deutscher Banken v Commission, T‑163/05, EU:T:2010:59, paragraph 98).108In the context of that verification, the Commission must take into account, as factors of the relevant context, all the particular features of the legal scheme of which the national measure under consideration forms part. In that regard, it should be borne in mind, first, that Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects (judgment of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 94), and, second, that a measure of intervention which does not have the effect of putting the undertakings to which it applies in a more favourable competitive position than the undertakings competing with them is not caught by Article 107(1) TFEU (see, to that effect, judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraph 87).109In that connection, it has been held that compensation which represents the consideration for the services provided by the beneficiary undertakings for discharging public service obligations does not confer an advantage for the purposes of Article 107(1) TFEU and, consequently, does not fall within the scope of that provision when, in particular, it does not exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations. If that condition is satisfied, the funding in question does not strengthen the competitive position of the beneficiary undertaking (judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraph 92).110Furthermore, since the sole purpose of Article 107(1) TFEU is to prohibit advantages for certain undertakings, the concept of aid covers only measures which lighten the charges which are normally included in the budget of an undertaking and which are to be regarded as an economic advantage which the beneficiary undertaking would not have obtained under the normal market conditions referred to in paragraph 107 above (see, to that effect, judgments of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 26; of 15 March 1994, Banco Exterior de España, C‑387/92, EU:C:1994:100, paragraphs 12 and 13; and of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraph 84 and the case-law cited). Accordingly, a measure whereby a Member State relieves an undertaking, initially required by law to continue to employ the officials of its legal predecessor and to compensate that State in consideration of the salaries and pensions which it continued to pay, of the ‘structural disadvantage’ represented by the ‘privileged and costly status of [those] officials’ by comparison with that of employees of that undertaking’s private competitors does not, in principle, constitute a measure lightening the charges which are normally included in the budget of an undertaking and therefore aid (see, to that effect, the ‘Combus’ judgment of 16 March 2004, T‑157/01, EU:T:2004:76, paragraphs 6, 7, 56 and 57). Even in that situation, however, there must be a direct relationship between the additional costs actually borne and the amount of the aid (see, to that effect, judgments of 28 November 2008, Hôtel Cipriani and Others v Commission, T‑254/00, T‑270/00 and T‑277/00, EU:T:2008:537, paragraph 189, and of 16 September 2013, British Telecommunications and BT Pension Scheme Trustees v Commission, T‑226/09 and T‑230/09, not published, EU:T:2013:466, paragraph 72), which enables the net effect of the aid to be measured.111The advantage must also be selective. According to settled case-law, Article 107(1) TFEU prohibits State aid ‘favouring certain undertakings or the production of certain goods’, that is to say, selective aid (judgments of 15 December 2005, Italy v Commission, C‑66/02, EU:C:2005:768, paragraph 94, and of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 52). As regards appraisal of the condition of selectivity, Article 107(1) TFEU requires an assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ by comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation (see, to that effect, judgments of 8 November 2001, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, C‑143/99, EU:C:2001:598, paragraph 41; of 29 April 2004, GIL Insurance and Others, C‑308/01, EU:C:2004:252, paragraph 68; and of 3 March 2005, Heiser, C‑172/03, EU:C:2005:130, paragraph 40). In order to determine whether a measure is selective, it is therefore appropriate to examine whether, within the context of a particular legal regime, that measure constitutes an advantage for certain undertakings by comparison with others which are in a comparable legal and factual situation (judgments of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 56; and of 28 July 2011, Mediaset v Commission, C‑403/10 P, not published, EU:C:2011:533, paragraph 36).112It is therefore solely by comparison with the competitors of the undertaking in question that the advantage must be assessed (see, to that effect, judgment of 27 September 2012, Italy v Commission, T‑257/10, not published, EU:T:2012:504, paragraph 70). Furthermore, the logic behind the recovery of unlawful aid is that the beneficiary loses the advantage which it had enjoyed on the market by comparison with its competitors and that the situation existing before the grant of the aid is restored (see judgment of 29 April 2004, Italy v Commission, C‑372/97, EU:C:2004:234, paragraphs 103 and 104 and the case-law cited; judgment of 27 September 2012, Italy v Commission, T‑257/10, not published, EU:T:2012:504, paragraph 147).113In the second place, as stated in the context of the examination of the statement of reasons on which the contested decision is based, the Commission devoted recitals 260 to 274 of that decision, under the heading ‘Financial advantage from 1995 pension reform’, to showing how in its view Deutsche Post had benefited from an advantage.114The Commission began by observing, in recital 261 of the contested decision, that it was necessary to determine whether the public funding of the pensions had allowed Deutsche Post to avoid costs that would normally have had to be borne by the company and had thus prevented market forces from producing their normal effect.115In recital 262 of the contested decision, the Commission rejected the arguments whereby the Federal Republic of Germany claimed that the principle identified in the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76) is applicable in the present case.116In recital 263 of that decision, the Commission asserted, as the main premiss of its syllogism, that the costs resulting from the application of employment legislation or collective agreements are part of the normal costs which an undertaking has to meet from its own resources and, as the minor premiss, that pension costs, determined according to the employment legislation or collective agreements, are part of those costs. It concluded that Deutsche Post was facing, so far as the pensions of its former officials was concerned, a cost inherent in the economic activity of the undertaking, within the meaning of Article 107(1) TFEU.117Recitals 264 to 266 of the contested decision are devoted to the way in which the status of the German postal service developed between 1950 and 1995 (see, in that regard, paragraphs 1 to 12 above). The Commission inferred from those developments that Deutsche Bundespost, and then Postdienst, assumed in full a burden which Deutsche Post bears only in part, which gives rise to an advantage for Deutsche Post.118In recital 267 of the contested decision, the Commission stated that the arguments as to whether Deutsche Post supported higher pension costs than its private competitors ‘were irrelevant for the purpose of finding whether the pension subsidy constitute[d] a State aid’, but that, on the contrary, they would be examined ‘in the context of the analysis of the compatibility of [the aid]’. That idea is also expressed in recital 268 of the contested decision.119Last, in recitals 269 to 273 of the contested decision the Commission rejects various arguments put forward by the Federal Republic of Germany during the administrative procedure.120In the third place, it must be determined, in the light of the pleas and arguments put forward in that regard by the Federal Republic of Germany, whether the Commission was correct to conclude that that Member State had conferred an advantage on Deutsche Post.121As stated in paragraph 87 above, the Federal Republic of Germany devoted a number of pleas to disputing the existence of State aid in the present case. In the context of each of those pleas, it denied that Deutsche Post had the benefit of an advantage within the meaning of Article 107(1) TFEU.122It is appropriate to examine, first of all, the arguments whereby the Federal Republic of Germany seeks, in its first plea, to prove that the third condition, relating to the existence of a selective economic advantage, was not satisfied.123The Commission asks the Court to reject those arguments.124First of all, the Federal Republic of Germany claims that the public funding of the pensions does not constitute an advantage for Deutsche Post because the amount that it is required to pay ‘to the pension fund is determined by law’. However, such an argument must be rejected as inoperative, since the Commission was specifically required to determine, at that stage, whether, on account of Article 16 of the Law on the terms and conditions of employees of the postal service, Deutsche Post received an economic advantage by comparison with its competitors which it did not previously enjoy. It is quite immaterial, in that regard, that the advantage, if it is established, is the consequence of a legal obligation or State intervention in a different form, since both are subject to the provisions of Article 107(1) TFEU.125Next, the Federal Republic of Germany maintains that, in order to assess the existence of State aid, the Commission took into account factors relating to the German legal framework of social security and employment relationships. However, it should be observed that that argument is factually incorrect, since it was only at the stage of assessing the compatibility of the alleged aid with the internal market that considerations of that nature were put forward by the Commission in the contested decision.126Last, the Federal Republic of Germany relies on the Commission’s previous practice in adopting decisions, referring to Commission Decision 2009/945/EC of 13 July 2009 concerning the reform of the method by which the RATP pension scheme is financed (State aid C 42/07 (ex N 428/06) which France is planning to implement in respect of RATP (OJ 2009 L 327, p. 21). That argument must also be rejected. In fact, it must be borne in mind, without there being any need to consider whether the practice relied on is proved to exist, that it cannot affect the validity of the contested decision, which can be assessed only in the light of the objective rules of the Treaty (see, to that effect, judgments of 20 May 2010, Todaro Nunziatina & C., C‑138/09, EU:C:2010:291, paragraph 21, and of 27 September 2012, Wam Industriale v Commission, T‑303/10, not published, EU:T:2012:505, paragraph 82). Accordingly, it cannot depend on a subjective assessment by the Commission and must be determined independently of its previous practice (judgments of 27 September 2012, Wam Industriale v Commission, T‑303/10, not published, EU:T:2012:505, paragraph 82, and of 5 February 2015, Ryanair v Commission, T‑500/12, not published, EU:T:2015:73, paragraph 39).127The arguments in the Federal Republic of Germany’s first plea must therefore be rejected in that they relate to the actual existence of an advantage.128Since the part of the first plea relating to failure to state reasons in the contested decision has been rejected (see paragraphs 55 and 66 above) and since the objections in the same plea relating to the identity of the beneficiary of the alleged aid and disputing that the beneficiary was an undertaking have been rejected (see paragraph 101 above), the first plea must be rejected in its entirety.129In the context of its second plea, which is based on the fact that the public funding of the pensions did not compensate for the costs supported by Deutsche Post, the Federal Republic of Germany submits an argument consisting of three parts, the first two of which seek to contradict the assertion that the costs compensated for by the aid to the public funding of the pensions are normally included in the budget of an undertaking, while the third relates to the question of compensation for a structural disadvantage.130It should again be pointed out, by way of preliminary observation (see paragraph 110 above), that in the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76, paragraphs 6, 7, 56 and 57), this Court held that a measure whereby a Member State relieves an undertaking, initially required by law to continue to employ the officials of its legal predecessor and to compensate that State in respect of the salaries and pensions which the latter continued to pay, of the ‘structural disadvantage’ represented by the ‘privileged and costly status of [those] officials’ by comparison with that of employees of that undertaking’s private competitors did not in principle constitute a measure lightening the charges which are normally included in the budget of an undertaking and therefore aid. It cannot be maintained that the cost of a retirement scheme not covered by the general law and imposed by the legislation of a Member State forms part of the normal charges of an undertaking, whether, as in the case that gave rise to the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76), the legislation in question is applicable to Danish officials or, as in the present case, the legislation governs the pensions of officials who were historically recruited by Deutsche Bundespost to provide the postal public service, and are thus treated as officials of the German State.131It should be emphasised that, having reached that decision, the Court did not intend to take into consideration only the intention of the national legislature (namely to relieve the operator concerned of a structural disadvantage), independently of its effects. The Court thus expressly stated that the Danish State ‘could have obtained the same result’, that is to say, the same effect, ‘by reassigning those officials within the public administration, without paying any particular bonus’ (the ‘Combus’ judgment of 16 March 2004, T‑157/01, EU:T:2004:76, paragraph 57). The principle that emerges from that judgment therefore does not contradict the principle, referred to in paragraph 108 above, stating that Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effect (see, to that effect, judgments of 3 March 2005, Heiser, C‑172/03, EU:C:2005:130, paragraph 46; of 9 June 2011, Comitato Venezia vuole vivere and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraphs 94 and 95; and of 16 September 2013, British Telecommunications and BT Pension Scheme Trustees v Commission, T‑226/09 and T‑230/09, not published, EU:T:2013:466, paragraph 74).132Subsequently, following the same logic as that governing the case-law summarised in paragraphs 108 and 109 above, in order to determine whether the measure at issue confers an advantage within the meaning of Article 107(1) TFEU on Deutsche Post, it is appropriate to consider whether the measure has the effect of strengthening Deutsche Post’s position by comparison with undertakings competing with it. In that context, it will be appropriate to take into account any obligations imposed on Deutsche Post under the national legislation on the funding of pensions which are not imposed on its competitors. Just as the imposition of a public service obligation precludes payment of compensation not exceeding what is necessary to cover the costs entailed in implementing it being considered to confer an advantage for the purposes of Article 107(1) TFEU, the imposition, by an act of a public authority, of an obligation to bear the full cost of the pensions of the staff having the status of official instead of contributing to retirement insurance precludes the funding of that cost being classified as an advantage, on condition that that funding does not exceed what is necessary to place Deutsche Post’s obligations on an equal footing with the obligations of the undertakings competing with it. The existence of an advantage can therefore be accepted only if the funding in question exceeds that threshold.133As may be seen from the application and the reply, the Federal Republic of Germany maintains that the Commission did not carry out any specific examination in order to determine whether the costs assumed by the public funding of the pensions were among those which are normally included in the budget of an undertaking and it is only in the context of the examination of the compatibility of the measure at issue with the internal market that the Commission made the slightest comparison with the costs which an undertaking is normally required to discharge.134The Federal Republic of Germany further claims that the mere assertion that the costs linked with pensions constitute an undertaking’s normal operating costs cannot suffice in the case of the public funding of the pensions of former officials and that the Commission was required to make clear whether the comparison should be with an undertaking employing only private employees or whether it supposed that the undertaking included officials among its current or retired employees.135In that Member State’s submission, that omission constitutes an error of assessment that is in itself a ground for annulment of the contested decision: had a specific examination been carried out it would have been possible to establish that the social charges relating to officials of Deutsche Post were not part of the costs which are normally included in the budget of an undertaking.136The Federal Republic of Germany maintains that those costs correspond to a structural disadvantage within the meaning of the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76), which the Commission failed to take into consideration.137The Federal Republic of Germany submits, last, that the subsidies relating to pensions did not relieve Deutsche Post of payment, first of all of the annual lump sum of an amount equivalent to EUR 2045 million, then of an annual amount that representing 33% of the total gross salaries of Deutsche Post officials in active service, since Deutsche Post was never under such an obligation, which was borne solely by Deutsche Bundespost.138The Commission claimed, including at the hearing, that it did indeed carry out a specific examination of whether the costs of which Deutsche Post had been relieved by Article 16 of the Law on the terms and conditions of employees of the postal service were costs normally borne by an undertaking. It observed that, according to the case-law, the cost of employment was among an undertaking’s normal costs, which also included payment of the retirement pensions.139In the Commission’s submission, the fact that recruitments that took place during the years before 1995 were subject to different conditions from those applied after that date to new employees of Deutsche Post has no impact on Deutsche Post’s obligation to meet, for the staff members concerned, that is to say, the officials, the conditions which had been granted to them. For the same reasons, the form taken by the cost of the retirement pensions is immaterial in the present case, since the only issue to be determined is whether that cost forms part of the costs that an undertaking must normally assume.140The Commission contends that the methods proposed by the Federal Republic of Germany in order to determine the costs in question are not consistent with the case-law, and claims that the ‘Combus’ judgment of 16 March 2004 (T‑157/01, EU:T:2004:76) has not been confirmed either by the case-law or by the Commission’s practice in taking decisions.141The Commission concludes by recalling that, according to settled case-law, the existence of aid is to be assessed by reference to the effects of the State measures and not to their causes or objectives.142In that regard, it should be observed that, as the Commission confirmed in the defence and also in its answers to the questions put to it at the hearing, it merely considered, in recitals 262 and 263 of the contested decision, that an advantage existed solely because the Federal German State accepted responsibility for part of the cost of the former officials’ pensions, when, according to the Commission, responsibility for that cost had not been accepted in the past. However, even on the assumption that that assertion was correct, which is open to doubt, since, if there were no direct subsidies on the part of the Federal German State, there were nonetheless indirect compensations, that is to say, compensations from Postbank and Telekom of which Postdienst, Deutsche Post’s legal predecessor, was the recipient, in order to cover its losses, which again was established at the hearing, that assertion could not suffice to establish that Deutsche Post was placed at an advantage by comparison with its competitors.143It is perfectly possible, in fact, to infer from that development that, following the application of the measure at issue, Deutsche Post is less disadvantaged than before the measure was adopted, but that it continues to be disadvantaged by comparison with its competitors, or rather that it is on a par with them, without thus being the beneficiary of an advantage. In fact, as the Commission states in recitals 294 and 297 of the contested decision, the burden entailed by the full cost of the pensions imposed on Deutsche Post before 1995, in fact in a monopolistic environment, is such that the undertaking in question would have been unable to compete on its merits with its competitors and would therefore have had to leave the market in the absence of measures relieving it in part from that burden.144In that context, it follows from what is set out in paragraphs 108, 109 and 132 above that the concept of ‘charges which are normally included in the budget of an undertaking’ does not include the charges imposed on just one undertaking under legislative provisions which derogate from the rules generally applicable to competing undertakings and which have the effect on imposing on that undertaking obligations which are not imposed on those competing undertakings. On the contrary, ‘charges which are normally included in the budget of an undertaking’ are those which result from the general regime.145The position set out in recital 263 of the contested decision, that the only decisive element for the purpose of assessing the existence of an advantage is that ‘in one way or another, undertakings bear the full costs for pensions’ and that, in that regard, the burden borne by Deutsche Post was alleviated, is therefore vitiated by an error of law. In addition, if, as the Commission claims, the concept of ‘charges which are normally included in the budget of an undertaking’ must be defined by reference to the particular rules applicable to the undertaking that is the alleged beneficiary, there is nothing to prevent the view that the measure at issue which alleviates Deutsche Post’s burdens is part of those rules, which precludes the existence of an advantage.146The same applies, consequently, to the position explained in recitals 267 and 268 of the contested decision, namely that the fact that Deutsche Post was subject to more onerous legal obligations in relation to the funding of the pensions of its staff than those borne by its competitors is irrelevant from the aspect of the existence of an advantage, but would be relevant only in the context of the assessment of the compatibility of the measure with the internal market.147The Commission ought therefore, when assessing the concept of advantage, to have ascertained whether, by assuming responsibility for the difference between the lump sum fixed between 1995 and 1999 and the total amount of the costs of the pensions of former officials of Deutsche Post, and the difference between the sum representing 33% of the gross salaries of Deutsche Post’s officials in active service and that same total amount, the Federal State had conferred an economic advantage on Deutsche Post by comparison with its competitors.148It follows from the case-law, in accordance with what is set out in paragraphs 108, 109 and 132 above, that it is indeed at the stage of the application of Article 107(1) TFEU, namely at the stage of proving the existence of an advantage, that the Commission must demonstrate, for example, that the partial exemption from the obligation to contribute to the pension protection fund constitutes a selective advantage for a former legacy operator (see, to that effect, judgment of 16 September 2013, British Telecommunications and BT Pension Scheme Trustees v Commission, T‑226/09 and T‑230/09, not published, EU:T:2013:466, paragraph 46).149In the event of a succession of measures intended to compensate for the burdens imposed on a single undertaking under legislative provisions which derogate from the rules generally applicable to competing undertakings and which have the effect of imposing on that undertaking obligations which not imposed on its competitors, the Commission is clearly required, when examining one of those measures from the aspect of the law on State aid, to take into account the effects produced by the previous measures, in order to determine whether the last measure which it is required to examine, in the light of those which it had already analysed, constitutes overcompensation or not, which, consequently, allows that overcompensation, if it is established, to be regarded as constituting an economic advantage, bearing in mind that it is always open to the Member State, when a new measure is being examined, to demonstrate that that measure does not cross the threshold beyond which the undertaking that benefits from the measure is placed at an advantage by comparison with competing undertakings. It should be borne in mind, however, that the hypothesis of a succession of provisions, examined by the Commission as and when they are notified by the Member States concerned, does not correspond to the present case, as in this case the Commission analysed the public funding of the pensions only after receiving complaints from competing undertakings.150In the present case, although the Commission sought to establish the actual existence of a selective economic advantage, and not to accept it by mere supposition, it did so, as it itself acknowledges in the defence and as it confirmed at the hearing, only at the stage of examining the compatibility of the aid with the internal market, in recitals 288 to 410 of the contested decision. However, it is apparent from the foregoing that only the amounts in excess of what is necessary in order to align the cost of the pensions imposed on Deutsche Post before 1995 with the cost borne by its competitors were of such a kind to confer such an advantage on Deutsche Post and therefore to constitute State aid within the meaning of Article 107(1) TFEU.151As stated in paragraph 133 above, the Federal Republic of Germany, in emphasising that the Commission did not make ‘the slightest comparison with the burdens which an undertaking must “normally” pay with regard to private employees in accordance with German social law except in the context of the examination relating to the compatibility of the measure with the internal market’, therefore demonstrated to the requisite legal standard that the Commission had failed to have regard to the case-law cited in paragraph 148 above. It should be observed that that case-law, far from merely referring to a formal requirement, highlights the two stages which the analysis of a measure in the light of the provisions of Article 107 TFEU must entail, and to which highly significant consequences are attached.152In the first stage, as pointed out in paragraph 104 above, the Courts of the European Union carry out a comprehensive review as to whether a measure falls within the scope of Article 107(1) TFEU (judgments of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 111, and of 16 September 2013, British Telecommunications and BT Pension Scheme Trustees v Commission, T‑226/09 and T‑230/09, not published, EU:T:2013:466, paragraph 39). It follows that it is for the Courts of the European Union to check whether the facts relied on by the Commission are substantively accurate and whether they establish that all the conditions justifying the classification of ‘aid’ within the meaning of Article 107(1) TFEU are fulfilled (judgment of 1 July 2008, Chronopost and La Poste v UFEX and Others, C‑341/06 P and C‑342/06 P, EU:C:2008:375, paragraph 142). It has repeatedly been held, moreover, that Article 107(3)(c) TFEU conferred on the Commission a discretion the exercise of which entails assessments of an economic and social nature (judgments of 20 September 2007, Fachvereinigung Mineralfaserindustrie v Commission, T‑375/03, not published, EU:T:2007:293, paragraph 138, and of 27 September 2012, Italy v Commission, T‑257/10, not published, EU:T:2012:504, paragraph 133), from which it follows that the review of such assessments involves ascertaining that the rules of procedure have been complied with, that the reasoning is sufficient, that the facts are correct and that there is no manifest error of assessment or misuse of power (judgment of 13 September 1995, TWD v Commission, T‑244/93 and T‑486/93, EU:T:1995:160, paragraph 82).153In the second stage, the grant of unlawful aid may entail, in addition to the obligation for the beneficiary to reimburse the aid, the obligation to pay interest in respect of the period of unlawfulness or to pay compensation to its competitors (see, by analogy, judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 55).154It follows from all of the foregoing that the Federal Republic of Germany is correct to maintain that the mere assertion that the pension costs are part of the costs which are normally included in the budget of an undertaking was not sufficient to establish, in the present case, the existence of a real economic advantage in favour of Deutsche Post. The Commission, which bore the obligation to prove that advantage, did not discharge that obligation and thus erred in law.155The second plea must therefore be upheld, apart from the arguments which it contains in relation to compliance with the obligation to state reasons (see paragraph 66 above).156That finding alone is sufficient for Article 1 and Articles 4 to 6 of the contested decision to be annulled and the Federal Republic of Germany’s action to be upheld, without there being any need to adjudicate on the eighth to 10th pleas or the remainder of the third, sixth and seventh pleas. Costs 157Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. In the present case, as the Commission has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Federal Republic of Germany.On those grounds,THE GENERAL COURT (Eighth Chamber)hereby: 1. Annuls Articles 1 and 4 to 6 of Commission Decision 2012/636/EU Measures C 36/07 (ex NN 25/07) implemented by Germany for Deutsche Post AG; 2. Orders the European Commission to pay the costs. GratsiasKanchevaWetterDelivered in open court in Luxembourg on 14 July 2016.[Signatures]( *1 ) Language of the case: German. | e404d-a66c6e4-46e9 | EN |
According to Advocate General Mengozzi, the temporal limit on the effects of the invalidity of ‘floor’ clauses included in mortgage loan agreements in Spain is compatible with EU law | 21 December 2016 ( *1 )(References for a preliminary ruling — Directive 93/13/EEC — Consumer contracts — Mortgage loans — Unfair terms — Article 4(2) — Article 6(1) — Declaration of nullity — Limitation by the national court of the temporal effects of the declaration of nullity of an unfair term)In Joined Cases C‑154/15, C‑307/15 and C‑308/15,REQUESTS for a preliminary ruling under Article 267 TFEU from the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada, Spain) (C‑154/15), made by decision of 25 March 2015, received at the Court on 1 April 2015, and from the Audiencia Provincial de Alicante (Provincial Court, Alicante, Spain) (C‑307/15 and C‑308/15), made by decisions of 15 June 2015, received at the Court on 1 July 2015, in the proceedings Francisco Gutiérrez Naranjo v Cajasur Banco SAU (C‑154/15), Ana María Palacios Martínez Banco Bilbao Vizcaya Argentaria SA (BBVA) (C‑307/15), Banco Popular Español, SA Emilio Irles López Teresa Torres Andreu (C‑308/15),THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta and M. Ilešič, Presidents of Chambers, J. Malenovský, E. Levits (Rapporteur), J.-C. Bonichot, A. Arabadjiev, C.G. Fernlund, C. Vajda, S. Rodin, F. Biltgen and K. Jürimäe, Judges,Advocate General: P. Mengozzi,Registrar: L. Carrasco Marco, Administrator,having regard to the written procedure and further to the hearing on 26 April 2016,after considering the observations submitted on behalf of:–Mr Gutiérrez Naranjo, by A. Navarro Vidal, A. Martínez Muriel, D. Pineda Cuadrado and L. Pineda Salido, abogados,Ms Palacios Martínez, by F.J. Zambudio Nicolas, abogado, and R. López Coloma, procuradora,Banco Popular Español SA, by C. Fernández Vicién, I. Moreno-Tapia Rivas and J. Capell, abogados,Cajasur Banco SAU, by J. Remón Peñalver and D. Sarmiento Ramirez-Escudero, abogados,Banco Bilbao Vizcaya Argentaria SA (BBVA), by J. Rodríguez Cárcamo and A. Rodríguez Conde, abogados,Mr Irles López and Ms Torres Andreu, by Y. Sánchez Orts, procuradora and F. García Cerrillo, abogado,the Spanish Government, by A. Gavela Llopis and M. Sampol Pucurull, acting as Agents,the Czech Government, by S. Šindelková and by M. Smolek and J. Vláčil, acting as Agents,the Polish Government, by B. Majczyna, acting as Agent,the United Kingdom Government, by S. Simmons and L. Christie, acting as Agents, and by S. Ford, Barrister, K. Smith and B. Kennelly, QC,the European Commission, by D. Roussanov, N. Ruiz García and J. Baquero Cruz, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 13 July 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of, in particular, Article 6 and 7 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).2These requests have been made in proceedings between persons having taken out mortgage loans and credit institutions, concerning the right to repayment of amounts paid on the basis of contractual clauses that have been held by a court to be unfair. Legal context EU law 3Recital 10 of Directive 93/13 provides:‘… more effective protection of the consumer can be achieved by adopting uniform rules of law in the matter of unfair terms ...’4Recital 12 of that directive states:‘… Member States should have the option, with due regard for the Treaty, to afford consumers a higher level of protection through national provisions that are more stringent than those of this Directive.’5Under Recital 24 of Directive 93/13:‘… the courts or administrative authorities of the Member States must have at their disposal adequate and effective means of preventing the continued application of unfair terms in consumer contracts.’6According to Article 3(1) of Directive 93/13:‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’7Under the first subparagraph of Article 3(2) of that directive:‘A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.’8Article 4 of that directive reads as follows:‘1. Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.2. Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies in exchange, on the other, in so far as these terms are in plain intelligible language.’9Article 5 of the directive states:‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. ...’10Article 6(1) of Directive 93/13 provides:‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’11Under Article 7(1) of that Directive:‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’ The relevant provisions of Spanish law Legislation 12Article 1303 of the Código Civil (Civil Code) provides that:‘When an obligation has been declared void, the contracting parties must restore to one another those things that formed the subject-matter of the contract, together with the profits derived therefrom, and the price together with interest, without prejudice to the following articles.’13Article 82(1) of the texto refundido de la Ley General para la Defensa de los Consumidores y Usuarios y otras leyes complementarias (recast text of the General Law for the protection of consumers and users and other supplementary laws), approved by the Real Decreto Legislativo 1/2007 (Royal Legislative Decree 1/2007) of 16 November 2007 (BOE No 287 of 30 November 2007), in the version applicable to the main proceedings (‘the LGDCU’), provides:‘All stipulations not negotiated individually and all practices not expressly allowed that, contravening the requirements of good faith, give rise, in a manner detrimental to the consumer and user, to a significant imbalance of the rights and obligations of the parties under the contract, shall be regarded as unfair terms.’14Article 83 of the LGDCU provides:‘Unfair contractual terms shall automatically be void and deemed not to have formed part of the contract. For those purposes, having heard the parties, the court shall rule that the unfair terms included in the contract are invalid, though the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’15Article 5(5) of Ley 7/1998 sobre Condiciones Generales de la Contratación (Law 7/1998 on General Contractual Conditions) of 13 April 1998 (BOE No 89 of 14 April 1998), in the version applicable to the cases in the main proceedings (‘the LCGC’), provides:‘The drafting of general terms shall comply with the criteria of clarity, accuracy and simplicity.’16Article 7 of the LCGC provides:‘The following general terms shall be deemed not to be included in the contract:(a)those of which the consumer has not had genuine opportunity to take full cognisance before the conclusion of the contract or that have not been signed, where appropriate, as provided in Article 5;(b)terms that are illegible, ambiguous, obscure or incomprehensible, except in the case of the latter, if the contracting party has expressly accepted them in writing and they comply with the specific rules concerning transparency of contractual clauses in that sector.’17Pursuant to Article 8 of the LCGC:‘1. General conditions that infringe the provisions of this Law or any other rule ordering or prohibiting certain conduct, to the detriment of a party to the contract, shall automatically be void, save in so far as they make separate provision for cases of breach.2. In particular, where a contract has been concluded with a consumer, general conditions that are unfair shall be void ...’ The case-law of the Tribunal Supremo (Supreme Court, Spain) – Judgment No 241/2013 of 9 May 2013 18Hearing a collective action for an injunction brought by a consumer association against several credit institutions, the Tribunal Supremo (Supreme Court), in Judgment No 241/2013 of 9 May 2013, after making a finding of unfairness in respect of the clauses establishing a minimum rate below which the variable rate of interest could not fall (‘floor clauses’) contained in the general conditions of mortgage loan agreements concluded with consumers, declared those clauses void.19That court held that those clauses, which related to the definition of the main subject-matter of the contract, were grammatically intelligible for consumers and satisfied, therefore, the requirement under Article 4(2) of Directive 93/13 that they be drafted in plain, intelligible language. Accordingly, there were no grounds for that court to find they were unfair, in accordance with the case-law developed by the Court in the judgment of 3 June 2010, Caja de Ahorros y Monte de Piedad de Madrid, (C‑484/08, EU:C:2010:309).20However, relying inter alia upon the principles laid down by the Court of Justice in its judgment of 21 March 2013, RWE Vertrieb (C‑92/11, EU:C:2013:180), that court held that the requirement of transparency, laid down in Article 4(2) of Directive 93/13, must be construed as involving not only formal but also substantive compliance, that requirement having the same scope as the requirement referred to in Article 5 of that directive, and relating to the adequacy of the information given to consumers at the time the contract is concluded as to the legal and financial consequences for them of the application of the terms relating, in particular, to the main subject-matter of the contract.21However, according to the Tribunal Supremo (Supreme Court), in the case which gave rise to the judgment of 9 May 2013 the requirement of substantive transparency was not satisfied, in that the banking institutions concerned had not provided such information to the consumers when the loan agreements containing the ‘floor clauses’ were concluded. Therefore, the Tribunal Supremo (Supreme Court) assessed whether those clauses were unfair in the light of the general criteria of good faith, balance and transparency set out in Articles 3(1), 4(1) and 5 of Directive 93/13 and declared that those clauses were void because of their lack of transparency due to insufficient information for the borrowers as to the material consequences of their application in practice.22Nevertheless, the Tribunal Supremo (Supreme Court) held that the mortgage loan agreements in question were capable of continuing in existence and, furthermore, limited the retroactive effect of the declaration of nullity in respect of the ‘floor clauses’.23In that regard, after recalling that, in accordance with the Court’s case-law on the invalidity of unfair terms, the clauses in question must be considered to be without effect, the Tribunal Supremo (Supreme Court) indicated that, notwithstanding the general rule as to the retroactive effect of a declaration of invalidity, that effect could not be impervious to the general principles of law, especially the principle of legal certainty.24The Tribunal Supremo (Supreme Court) held that the ‘floor clauses’ were in themselves lawful, that the reasons for them were objective, that they were neither unusual or extravagant, that their use had long been tolerated on the market for credit agreements for immovable property, that their invalidity was based on a lack of transparency due to insufficient information for borrowers, that the banking institutions had complied with the regulatory requirement for information, that the fixing of a minimum interest rate responded to the necessity of maintaining a minimum return on the mortgage loans in question in order to enable the banking institutions to cover the costs of production involved and continue to provide such financing, that the ‘floor clauses’ were calculated in such a way as not to involve significant changes to the initial amounts to be paid, sums which borrowers take into account when deciding their financial behaviour, that the Spanish legislation provides for the replacement of a creditor and that retroactive effect of the invalidity of the clauses at issue would give rise to serious economic repercussions.25Therefore, in the light of those considerations, the Tribunal Supremo (Supreme Court), on the basis of the principle of legal certainty, limited the effects of its judgment to after the date of its publication, deciding that the invalidity of the ‘floor clauses’ in question did not affect situations in which final decisions had been made in judgments with the force of res judicata or payments made before 9 May 2013, so that only the amounts overpaid on the basis of those clauses after that date had to be repaid.– Judgment No 139/2015 of 25 March 2015 26In its judgment of 25 March 2015 (‘the judgment of 25 March 2015’), the Tribunal Supremo (Supreme Court) upheld the limitation of the retroactive effect of the declaration that a ‘floor clause’ was void in an individual action by a consumer who claimed repayment of amounts overpaid on the basis of such a clause. In so doing, that court extended to individual actions for redress the approach previously upheld in the judgment of 9 May 2013 in respect of collective actions for an injunction. Thus, in the case which gave rise to the judgment of 25 March 2015, the obligation to provide restitution was limited to amounts overpaid after the delivery of the judgment of 9 May 2013. The facts of the cases in the main proceedings and the questions referred for a preliminary ruling Case C‑154/15 27Mr Francisco Gutiérrez Naranjo concluded with Cajasur Banco SAU a mortgage loan containing a ‘floor clause’.28Mr Gutiérrez Naranjo brought proceedings before the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada, Spain) for a declaration of nullity in respect of that ‘floor clause’ and for an order for the recovery of amounts overpaid on the basis of that clause, relying upon Directive 93/13 and the case-law of the Tribunal Supremo (Supreme Court).29The referring court is uncertain whether limiting the effects of the declaration of nullity of a contractual term on the basis of unfairness to the period after that declaration alone is compatible with Article 6(1) of Directive 93/13.30Therefore, the Juzgado de lo Mercantil No 1 de Granada (Commercial Court No 1, Granada) decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:‘(1)In such cases, is an interpretation according to which an unfair term declared void nonetheless produces effects until that declaration is made compatible with the interpretation of “non-binding” in Article 6(1) of Directive 93/13/EEC? Therefore, even though the term has been declared void, will the effects produced by that term while it was in force be considered not to be invalidated or ineffective?(2)Is an injunction that may be issued to desist from using a particular term (in accordance with Articles 6(1) and 7(1)) in an individual action brought by a consumer when such a declaration is made compatible with a limitation of the effects of a declaration of nullity? May (the courts) alter the reimbursement of any sums paid by the consumer — which the seller or supplier is obliged to reimburse — under the term subsequently declared void ex tunc, for want of information and/or of transparency?’ Case C‑307/15 31On 28 July 2006, Ms Ana María Palacios Martínez concluded a mortgage loan agreement with Banco Bilbao Vizcaya Argentaria SA (BBVA) which contained a ‘floor clause’.32On 6 March 2014, the borrower brought an action before the Juzgado de lo Mercantil No 1 de Alicante (Commercial Court No 1, Alicante, Spain) in order to have the floor clause declared void on the ground that it is unfair and to obtain reimbursement of the amounts received improperly by the bank.33At first instance, that court found, relying upon the approach adopted by the Tribunal Supremo (Supreme Court) in its judgment of 9 May 2013, that the action had become devoid of purpose, without prejudice to the repayment to the applicant of the amounts which the bank could have recovered under the clause in question from the date on which that judgment was delivered.34On appeal, the Audiencia Provincial de Alicante (Provincial Court, Alicante, Spain) has doubts as to the compatibility of the approach adopted at first instance with Article 6(1) of Directive 93/13.35According to that court, the non-retroactivity of the declaration of nullity in respect of an unfair term would be liable to be inconsistent with both the objectives of that directive and with the prohibition of modification by the courts of terms found to be unfair. Furthermore, that court doubts whether the conditions required by the Court for the effects of the declaration of nullity in respect of an unfair term to be limited in time were satisfied in the case giving rise to the judgment of 9 May 2013.36Therefore, the Audiencia Provincial de Alicante (Provincial Court, Alicante) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:Is it compatible with the principle that unfair terms are not binding, laid down in Article 6(1) of … Directive 93/13 …, for the restitutory effects derived from a declaration on grounds of unfairness of the nullity of a “floor clause” included in a loan agreement not to be applied retroactively from the date of conclusion of the agreement but rather from a later date?Is the criterion that those concerned must act in good faith, which operates as a basis for limiting the retroactive effect derived from an unfair term, an autonomous concept of EU law that must be interpreted uniformly throughout the Member States?(3)If so, what circumstances must be taken into account in order for it to be determined whether those concerned acted in good faith?(4)At all events, is it compatible with the criterion of good faith for the actions of a seller or supplier, in creating the agreement, to have been the cause of a lack of transparency making the term unfair?(5)Is the risk of serious difficulties, which operates as a basis for limitation of the retroactive effect derived from an unfair term, an autonomous concept of EU law that must be interpreted uniformly throughout the Member States?(6)If so, what criteria ought to be taken into account?(7)Must the risk of serious difficulties be assessed by taking account solely of the risk which may arise for the seller or supplier or must account also be taken of the loss caused to a consumer by the failure to reimburse in full the sums paid under that “floor clause”?’ Case C‑308/15 37On 1 June 2001, Mr Emilio Irles López and Ms Teresa Torres Andreu concluded with Banco Popular Español SA (‘BPE’) a mortgage loan contract containing a ‘floor clause’. By amendments on 2 May 2007 and 14 June 2007, the parties agreed two increases to the principal sum lent, each containing a ‘floor clause’.38Taking the view that the way in which their consent was obtained to the ‘floor clauses’ lacked transparency, the borrowers brought proceedings before the Juzgado de lo Mercantil No 3 de Alicante (Commercial Court No 3, Alicante, Spain) for a declaration that those clauses were void and for repayment of the amounts overpaid on the basis of those clauses.39The action was upheld at first instance by that court, which also ordered BPE to repay the borrowers the sums overpaid under those clauses as from the date of conclusion of the loan agreement and the amendments to that agreement.40BPE lodged an appeal before the Audiencia Provincial de Alicante (Provincial Court, Alicante) on the basis of the judgments of 9 May 2013 and of 25 March 2015.41The referring court expresses doubts, on the one hand, as to the compatibility of the limitation of the effects of the declaration of nullity of an unfair contract term with Article 6 of Directive 93/13. On the other hand, according to that court, the fact that the Tribunal Supremo (Supreme Court) has, by its judgment of 25 March 2015, extended to individual actions the approach taken in its judgment of 9 May 2013, in the context of a collective action, could have the effect of restricting the right of individual borrowers to effective judicial protection, in so far as the specific circumstances of each case would not be taken into consideration in order to determine the starting point for the repayment obligation incumbent upon the bank that has benefited from the effects of an unfair term.42Therefore, the Audiencia Provincial de Alicante (Provincial Court, Alicante) decided to stay the proceedings and to refer to the Court, in addition to the same questions referred for preliminary ruling as those in Case C‑307/15, an eighth question which reads as follows:‘(8)Is it compatible with the principle that consumers are not bound by unfair terms, laid down in Article 6(1) of Council Directive 93/13/EEC, and with the right to effective judicial protection affirmed in Article 47 of the Charter of Fundamental Rights of the European Union, for the limitation of the restitutory effects deriving from the nullity of a “floor clause”, declared in proceedings brought by a consumers’ association against financial bodies, to be automatically extended to individual actions for a declaration that a “floor clause” is void because unfair brought by consumer customers who have concluded a mortgage loan with other financial bodies?’43By decision of the President of the Court of 10 July 2015, Cases C‑307/15 and C‑308/15 were joined for the purposes of the written and oral procedure and the judgment.44By order of the President of the Court of 14 August 2015, the requests of the Audiencia Provincial de Alicante (Provincial Court, Alicante) that Cases C‑307/15 and C‑308/15 be determined under the expedited procedure provided for in Article 23a of the Statute of the Court of Justice of the European Union and in Article 105 of the Rules of Procedure of the Court were rejected.45By decision of the President of the Court of 21 October 2015, Case C‑154/15 was joined with Cases C‑307/15 and C‑308/15 for the purposes of the oral procedure and of the judgment. Consideration of the questions referred The first and second questions in Case C‑154/15 and the first questions in Cases C‑307/15 and C‑308/15 46By the two questions in Case C‑154/15 and by the first questions in Cases C‑307/15 and C‑308/15, which may appropriately be examined together, the referring courts ask, in essence, whether Article 6(1) of Directive 93/13 must be interpreted as precluding national case-law that temporally limits the restitutory effects of the judicial declaration of unfairness, in accordance with Article 3(1) of that directive, of a clause in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under that clause after the judicial decision in which a finding of unfairness was made.47In the first place, it is necessary to examine the argument of the Spanish Government, Cajasur Banco and BPE that the question of the effects of the finding of unfairness in respect of a clause, of the same kind as those at issue in the main proceedings, does not fall within the scope of Directive 93/13, given that in making such a finding, the Tribunal Supremo (Supreme Court) afforded a higher level of consumer protection than that guaranteed by that directive.48In that regard, it is clear from the decisions to refer that, in its judgment of 9 May 2013, the Tribunal Supremo (Supreme Court), in order to justify a determination of the unfairness of the ‘floor clauses’ in question concerning the main subject-matter of the contracts at issue, interpreted the requirement of transparency, referred to in Article 4(2) of the directive, as not being limited to the requirement for formal transparency of contractual clauses in relation to the plain and intelligible nature of their drafting, but as extending to their substantive transparency linked to the adequacy of the information supplied to the consumer concerning the extent, both legal and economic, of the consumer’s contractual commitment.49However, as the Advocate General stated at points 46 to 50 of his Opinion, the review of the substantive transparency of the clauses relating to the main subject-matter of the contract derives from what is laid down in Article 4(2) of Directive 93/13. It provides, in the same words as those appearing in Article 5 of that directive, that contractual clauses must be ‘drafted in plain, intelligible language’.50In that regard, the Court has already held that information, before concluding a contract, on the terms of the contract and the consequences of concluding it is of fundamental importance for a consumer. It is on the basis of that information in particular that the consumer decides whether he wishes to be bound by the terms previously drawn up by the seller or supplier (judgment of 21 March 2013, RWE Vertrieb, C‑92/11, EU:C:2013:180, paragraph 44).51Therefore, the assessment of the unfairness, in accordance with Article 3(1) of Directive 93/13, of a contractual clause relating to the definition of the main subject-matter of a contract, where the consumer did not have, before the conclusion of that contract, the necessary information on the contractual conditions and the consequences of entering into that contract, falls within the scope of that directive in general and of Article 6(1) of that directive, in particular.52Thus, and in so far as the national courts refer to the judgment of 9 May 2013 limiting the restitutory effect of the finding that the ‘floor clauses’ were unfair, it is necessary to examine whether Article 6(1) of Directive 93/13 must be interpreted as authorising such a limitation by a national court.53Under Article 6(1) of Directive 93/13, Member States are to lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier are, as provided for under their national law, not to be binding on the consumer.54That provision must be regarded as a provision of equal standing to that of national rules that have, within the domestic legal system, the character of rules of public policy (see, to that effect, judgment of 30 May 2013, Asbeek Brusse and de Man Garabito, C‑488/11, EU:C:2013:341, paragraph 44).55In addition, this is a mandatory provision that is intended to replace the formal balance established by the contract between the rights and obligations of the parties with an effective balance that re-establishes equality between them (judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 63, and the case-law cited).56Given the nature and significance of the public interest constituted by the protection of consumers, who are in a position of weakness vis-à-vis sellers or suppliers, Directive 93/13, as is apparent from Article 7(1) thereof, read in conjunction with its twenty-fourth recital, obliges the Member States to provide for adequate and effective means ‘to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers’ (judgment of 30 April, Kásler and Káslerné Rábai, C‑26/13, EU:C:2014:282, paragraph 78).57To this end, it is for the national court purely and simply to exclude the application of an unfair contractual term in order for it not to produce binding effects with regard to the consumer, without being authorised to revise its content (see, to that effect, judgment of 14 June 2012, Banco Español de Crédito, C‑618/10, EU:C:2012:349, paragraph 65).58In that context, on the one hand, a national court is bound to assess, of its own motion, whether a contractual term falling within the scope of Directive 93/13 is unfair and by so doing to compensate for the imbalance existing between the consumer and the seller or supplier, when it has available to it the legal and factual elements necessary to that end.59The full effectiveness of the protection provided for by the directive requires the national court that has found of its own motion that a term is unfair to be able to establish all the consequences of that finding, without expecting the consumer, who has been fully informed of his rights, to submit a statement requesting that that term be declared invalid (judgment of 30 May 2013, Jőrös, C‑397/11, EU:C:2013:340, paragraph 42).60On the other hand, the national court may not revise the content of unfair terms, lest it contribute to eliminating the dissuasive effect for sellers or suppliers of the straightforward non-application with regard to the consumer of those unfair terms (see, to that effect, judgment of 21 January 2015, Unicaja Banco and Caixabank, C‑482/13, C‑484/13, C‑485/13 et C‑487/13, EU:C:2015:21, paragraph 31 and the case-law cited).61It follows from the foregoing considerations that Article 6(1) of Directive 93/13 must be interpreted as meaning that a contractual term held to be unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer. Therefore, the determination by a court that such a term is unfair must, in principle, have the consequence of restoring the consumer to the legal and factual situation that he would have been in if that term had not existed.62It follows that the obligation for the national court to exclude an unfair contract term imposing the payment of amounts that prove not to be due entails, in principle, a corresponding restitutory effect in respect of those same amounts.63The absence of such restitutory effect would be liable to call into question the dissuasive effect that Article 6(1) of Directive 93/13, read in conjunction with Article 7(1) of that directive, is designed to attach to a finding of unfairness in respect of terms in contracts concluded between consumers and sellers or suppliers.64It is true that Article 6(1) of Directive 93/13 requires the Member States to lay down that unfair terms are not to be binding on the consumer, ‘as provided for under their national law’ (judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 57).65However, the regulation by national law of the protection guaranteed to consumers by Directive 93/13 may not alter the scope and, therefore, the substance of that protection and thus affect the strengthening of the effectiveness of that protection by the adoption of uniform rules of law in respect of unfair terms, which was the intention of the EU legislature, as stated in recital 10 of Directive 93/13.66Consequently, while it is for the Member States, by means of their national legislation, to define the detailed rules under which the unfairness of a contractual clause is established and the actual legal effects of that finding are produced, the fact remains that such a finding must allow the restoration of the legal and factual situation that the consumer would have been in if that unfair term had not existed, by inter alia, creating a right to restitution of advantages wrongly obtained, to the consumer’s detriment, by the seller or supplier on the basis of that unfair term.67In the present case, in its judgment of 9 May 2013, to which the national courts refer, the Tribunal Supremo (Supreme Court) held that the finding that the ‘floor clauses’ in question were unfair affected neither situations in respect of which a judgment with the force of res judicata had been given nor payments made before the date of delivery of that judgment and that, consequently, the consequences stemming from that finding, inter alia the consumer’s right to a restitution, were limited, in the light of the principle of legal certainty, to the amounts overpaid after that date.68In that regard, it is true that the Court has also recognised that consumer protection is not absolute. In particular, it has ruled to the effect that EU law does not require a national court to disapply domestic rules of procedure conferring finality on a decision, even if to do so would make it possible to remedy an infringement of a provision, regardless of its nature, contained in Directive 93/13 (see, to that effect, judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 37). It follows that the Tribunal Supremo (Supreme Court) was entitled to hold, in its judgment of 9 May 2013, that the latter did not affect situations in respect of which a judgment with the force of res judicata had been given.69Likewise, the Court has previously held that in the interests of legal certainty it is compatible with EU law to lay down reasonable time-limits for bringing proceedings (judgment of 6 October 2009, Asturcom Telecomunicaciones, C‑40/08, EU:C:2009:615, paragraph 41).70Nevertheless, the application of a procedural rule, such as a reasonable limitation period, is to be distinguished from a temporal limitation of the effects of an interpretation of a rule of EU law (see, to that effect, judgment of 15 April 2010, Barth, C‑542/08, EU:C:2010:193, paragraph 30 and the case-law cited). In that regard, it must be recalled that it is for the Court alone, in the light of the fundamental requirement of a general and uniform application of EU law, to decide upon the temporal limitations to be placed on the interpretation it lays down in respect of such a rule (see, to that effect, judgment of 2 February 1988, Barra and Others, 309/85, EU:C:1988:42, paragraph 13).71So, the provisions of national law to which Article 6(1) of Directive 93/13 refers may not adversely affect the substance of the right that consumers acquire under that provision, as interpreted by the case-law of the Court referred to at paragraphs 54 to 61 of the present judgment, not to be bound by a term deemed to be unfair.72However, the temporal limitation of the legal effects stemming from the declaration of nullity in respect of ‘floor clauses’ made by the Tribunal Supremo (Supreme Court) in its judgment of 9 May 2013 is tantamount to depriving, in general, any consumer having concluded, before that date, a mortgage loan contract containing such a clause of the right to obtain repayment in full of the amounts overpaid by the consumer to the bank on the basis of that clause during the period before 9 May 2013.73It follows that national case-law, such as that following from the judgment of 9 May 2013, concerning the temporal limitation of the legal effects resulting, in accordance with Article 6(1) of Directive 93/13, from the finding that a contractual term is unfair, ensures only limited protection for consumers who have concluded a mortgage loan contract containing a ‘floor clause’ before the date of the judgment in which the finding of unfairness was made. Such protection is, therefore, incomplete and insufficient and does not constitute either an adequate or effective means of preventing the continued use of that type of term, contrary to Article 7(1) of Directive 93/13 (see, to that effect, judgment of 14 March 2013, Aziz, C‑415/11, EU:C:2013:164, paragraph 60).74In those circumstances, the referring courts, being bound for the purposes of the decisions to be given in the main proceedings by the interpretation of EU law given by the Court, must disapply, of their own motion, the temporal limitation which the Tribunal Supremo (Supreme Court) applied in its judgment of 9 May 2013, because that limitation does not appear to be compatible with that law (see, to that effect, judgments of 5 October 2010, Elchinov, C‑173/09, EU:C:2010:581, paragraphs 29 to 32; of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraphs 33 and 34; of 5 July 2016, Ognyanov, C‑614/14, EU:C:2016:514, paragraph 36, and of 8 November 2016, Ognyanov, C‑554/14, EU:C:2016:835, paragraphs 67 to 70).75It follows from all the foregoing considerations that Article 6(1) of Directive 93/13 must be interpreted as precluding national case-law that temporally limits the restitutory effects connected with a finding of unfairness by a court, in accordance with Article 3(1) of that directive, in respect of a clause contained in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under such a clause after the delivery of the decision in which the finding of unfairness is made. The other questions 76In view of the reply to the first and second questions in Case C‑154/15 and to the first questions in Cases C‑307/15 and C‑308/15, it is unnecessary to reply to the other questions referred for a preliminary ruling. Costs 77Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as precluding national case-law that temporally limits the restitutory effects connected with a finding of unfairness by a court, in accordance with Article 3(1) of that directive, in respect of a clause contained in a contract concluded between a consumer and a seller or supplier, to amounts overpaid under such a clause after the delivery of the decision in which the finding of unfairness is made. [Signatures]( *1 ) Language of the case: English. | 69eea-cf7d1a9-49de | EN |
Advocate General Sharpston considers that a company policy requiring an employee to remove her Islamic headscarf when in contact with clients constitutes unlawful direct discrimination | 14 March 2017 ( *1 )‛Reference for a preliminary ruling — Social policy — Directive 2000/78/EC — Equal treatment — Discrimination based on religion or belief — Genuine and determining occupational requirement — Meaning — Customer’s wish not to have services provided by a worker wearing an Islamic headscarf’In Case C‑188/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (Court of Cassation, France), made by decision of 9 April 2015, received at the Court on 24 April 2015, in the proceedings Asma Bougnaoui, Association de défense des droits de l’homme (ADDH) v Micropole SA, formerly Micropole Univers SA,THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič, L. Bay Larsen, M. Berger, M. Vilaras and E. Regan, Presidents of Chambers, A. Rosas, A. Borg Barthet, J. Malenovský, E. Levits, F. Biltgen (Rapporteur), K. Jürimäe and C. Lycourgos, Judges,Advocate General: E. Sharpston,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 15 March 2016,after considering the observations submitted on behalf of:—Ms Bougnaoui and the Association de défense des droits de l’homme (ADDH), by C. Waquet, avocate,Micropole SA, by D. Célice, avocat,the French Government, by G. de Bergues, D. Colas and R. Coesme, acting as Agents,the Swedish Government, by A. Falk, C. Meyer-Seitz, U. Persson, N. Otte Widgren, E. Karlsson and L. Swedenborg, acting as Agents,the United Kingdom Government, by S. Simmons, acting as Agent, and by A. Bates, Barrister,the European Commission, by D. Martin and M. Van Hoof, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 13 July 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 4(1) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (OJ 2000 L 303, p. 16).2The request has been made in proceedings between Ms Asma Bougnaoui and the Association de défense des droits de l’homme (Association for the protection of human rights) (ADDH), and Micropole SA, formerly Micropole Univers SA (‘Micropole’) concerning the latter’s dismissal of Ms Bougnaoui because of her refusal to remove her Islamic headscarf when sent on assignment to customers of Micropole. Legal context Directive 2000/78 3Recitals 1, 4 and 23 of Directive 2000/78 state:‘(1)In accordance with Article 6 of the Treaty on European Union, the European Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to all Member States and it respects fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, as general principles of Community law.…(4)The right of all persons to equality before the law and protection against discrimination constitutes a universal right recognised by the Universal Declaration of Human Rights, the United Nations Convention on the Elimination of All Forms of Discrimination against Women, United Nations Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights and by the European Convention for the Protection of Human Rights and Fundamental Freedoms, to which all Member States are signatories. Convention No 111 of the International Labour Organisation (ILO) prohibits discrimination in the field of employment and occupation.(23)In very limited circumstances, a difference of treatment may be justified where a characteristic related to religion or belief, disability, age or sexual orientation constitutes a genuine and determining occupational requirement, when the objective is legitimate and the requirement is proportionate. Such circumstances should be included in the information provided by the Member States to the Commission.’4Article 1 of Directive 2000/78 provides:‘The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.’5Article 2(1) and (2) of the directive provides:‘1. For the purposes of this Directive, the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1.2. For the purposes of paragraph 1:(a)direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in Article 1;(b)indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having a particular religion or belief, a particular disability, a particular age, or a particular sexual orientation at a particular disadvantage compared with other persons unless:(i)that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, ……’6Article 3(1) of the directive states:‘Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to:(c)employment and working conditions, including dismissals and pay;7Article 4(1) of Directive 2000/78 provides:‘Notwithstanding Article 2(1) and (2), Member States may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in Article 1 shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.’ French law 8The provisions of Directive 2000/78 were transposed into French law, notably Articles L. 1132-1 and L. 1133-1 of the code du travail (Labour Code), by Law No 2008-496 of 27 May 2008 laying down various provisions to bring anti-discrimination legislation into line with Community law (Journal officiel de la République française (JORF), 28 May 2008, p. 8801).9Article L. 1121-1 of the Labour Code states:‘No one may limit personal rights or individual or collective liberties by any restriction which is not justified by the nature of the task to be performed and proportionate to the aim sought.’10Article L. 1132-1 of the Labour Code, in the version in force at the material time, provided as follows:‘No person may be excluded from a recruitment procedure or from access to work experience or a period of training at an undertaking, no employee may be disciplined, dismissed or be subject to discriminatory treatment, whether direct or indirect, as defined in Article 1 of Law No 2008-496 of 27 May 2008 laying down various provisions to bring anti-discrimination legislation into line with Community law, in particular as regards remuneration, within the meaning of Article L. 3221-3, incentive or employee share schemes, training, reclassification, allocation, certification, classification, career promotion, transfer, or contract renewal by reason of his origin, his sex, his conduct, his sexual orientation, his age, … his political opinions, his trade union or works council activities, his religious beliefs, his physical appearance, his surname or by reason of his state of health or disability.’11Article L. 1133-1 of the Labour Code is worded as follows:‘Article L. 1132-1 shall not preclude differences of treatment arising from a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.’12Article L. 1321-3 of the Labour Code, in the version in force at the material time, provided as follows:‘Workplace regulations shall not contain:1°Provisions contrary to primary or secondary law or to the requirements laid down by the collective agreements and understandings as to working practices applicable in the undertaking or establishment;2°Provisions imposing restrictions on personal rights and on individual and collective freedoms which are not justified by the nature of the task to be undertaken or proportionate to the aim that is sought to be achieved;3°Provisions discriminating against employees in their employment or at their work, having the same professional ability, by reason of their origin, their sex, their conduct, their sexual orientation, their age … their political opinions, their trade union or works council activities, their religious beliefs, their physical appearance, their surname or by reason of their state of health or disability.’ The dispute in the main proceedings and the question referred for a preliminary ruling 13It is apparent from the material in the file available to the Court that Ms Bougnaoui met a representative of Micropole, a private undertaking, at a student fair in October 2007, prior to being recruited by Micropole, and that the representative informed her that the wearing of an Islamic headscarf might pose a problem when she was in contact with customers of the company. When Ms Bougnaoui arrived at Micropole on 4 February 2008 for an internship, she was wearing a simple bandana. She subsequently wore an Islamic headscarf in the workplace. At the end of her internship, Micropole employed her, from 15 July 2008, as a design engineer under a contract of employment of indefinite duration.14Having been called, on 15 June 2009, to an interview preliminary to possible dismissal, Ms Bougnaoui was dismissed by a letter of 22 June 2009 that stated as follows:‘... As part of your duties, you are called upon to take part in assignments for our customers.We asked you to work for the customer … on 15 May, at their site in .... Following that work, the customer told us that the wearing of a veil, which you in fact wear every day, had upset a number of its employees. It also requested that there should be “no veil next time”.When you were taken on by our company, in your interviews with your Operational Manager … and the Recruitment Manager …, the subject of wearing a veil had been addressed very clearly with you. We said to you that we entirely respect the principle of freedom of opinion and the religious beliefs of everyone, but that, since you would be in contact internally or externally with the company’s customers, you would not be able to wear the veil in all circumstances. In the interests of the business and for its development we are obliged, vis-à-vis our customers, to require that discretion is observed as regards the expression of the personal preferences of our employees.At our interview on 17 June, we reaffirmed that principle of the need for neutrality to you and we asked you to apply it as regards our customers. We asked you again whether you could accept those professional requirements by agreeing not to wear the veil, and you answered in the negative.We consider that those facts justify, for the aforementioned reasons, the termination of your contract of employment. Inasmuch as your position makes it impossible for you to carry out your functions on behalf of the company, since we cannot contemplate, given your stance, your continuing to provide services at our customers’ premises, you will not be able to work out your notice period. Since that failure to work during the notice period is attributable to you, you will not be remunerated for your notice period.We regret this situation as your professional competence and your potential had led us to hope for a long-term working relationship.’15Ms Bougnaoui considered that dismissal to be discriminatory and brought an action before the conseil de prud’hommes de Paris (Labour Tribunal, Paris, France) on 8 September 2009. On 4 May 2011, the conseil de prud’hommes de Paris (Labour Tribunal, Paris) ordered Micropole to pay compensation in respect of her period of notice because it had failed to indicate in its letter of dismissal the gravity of Ms Bougnaoui’s alleged misconduct, and dismissed the remainder of the action on the ground that the restriction of Ms Bougnaoui’s freedom to wear the Islamic headscarf was justified by her contact with customers of that company and proportionate to Micropole’s aim of protecting its image and of avoiding conflict with its customers’ beliefs.16Ms Bougnaoui, supported by the ADDH, appealed against that decision to the cour d’appel de Paris (Court of Appeal, Paris, France), which, by decision of 18 April 2013, upheld the decision of the conseil de prud’hommes de Paris (Labour Tribunal, Paris). In its decision, it ruled, in particular, that Ms Bougnaoui’s dismissal did not arise from discrimination connected with the religious beliefs of the employee, since she was permitted to continue to express them within the undertaking, and that it was justified by a legitimate restriction arising from the interests of the undertaking where the exercise by the employee of the freedom to manifest her religious beliefs went beyond the confines of the undertaking and was imposed on the latter’s customers without any consideration for their feelings, impinging on the rights of others.17Ms Bougnaoui and the ADDH brought an appeal against the decision of 18 April 2013 before the Cour de cassation (Court of Cassation). They claimed that the cour d’appel de Paris (Court of Appeal, Paris) had, inter alia, infringed Articles L. 1121-1, L. 1321-3 and L. 1132-1 of the Labour Code. Restrictions on religious freedom should be justified by the nature of the task to be undertaken and should arise from a genuine and determining occupational requirement, subject to the proviso that the objective be legitimate and the requirement proportionate. They argued that the wearing of the Islamic headscarf by an employee of a private undertaking when in contact with customers does not prejudice the rights or beliefs of others, and that the embarrassment or sensitivity of the customers of a commercial company, at the mere sight, allegedly, of a sign of religious affiliation, is neither a relevant nor legitimate criterion, free from any discrimination, that might justify the company’s economic or commercial interests being allowed to prevail over the fundamental freedom of religion of an employee.18The Social Chamber of the Cour de cassation (Court of Cassation), before which the appeal lodged by the appellants in the main proceedings was brought, notes that, in its judgment of 10 July 2008, Feryn (C‑54/07, EU:C:2008:397), the Court of Justice merely ruled that the fact that an employer states publicly that it will not recruit employees of a certain ethnic or racial origin constitutes direct discrimination in respect of recruitment within the meaning of Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin (OJ 2000 L 180, p. 22), but did not determine whether Article 4(1) of Directive 2000/78 must be interpreted as meaning that the wish of an employer’s customer no longer to have that employer’s services provided by a worker on one of the grounds to which that directive refers is a genuine and determining occupational requirement, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out.19In those circumstances, the Cour de cassation (Court of Cassation) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Must Article 4(1) of Directive 2000/78 be interpreted as meaning that the wish of a customer of an information technology consulting company no longer to have the information technology services of that company provided by an employee, a design engineer, wearing an Islamic headscarf, is a genuine and determining occupational requirement, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out?’ Request to reopen the oral procedure 20After delivery of the Advocate General’s opinion, Micropole lodged, on 18 November 2016, a request that the oral procedure be reopened pursuant to Article 83 of the Rules of Procedure of the Court of Justice.21Micropole argued in support of its request that the Court needed to be made aware of Micropole’s observations following the delivery of that opinion and that it wished to provide the Court with additional information.22It should be noted in that regard that the Court may at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure, in accordance with Article 83 of its Rules of Procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not been debated by the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.23In the present case, the Court considers, having heard the Advocate General, that it has all the information necessary to enable it to rule on the action before it, and that the action does not have to be decided on the basis of an argument which has not been debated before the Court.24Micropole’s request for the oral part of the procedure to be reopened must therefore be refused. Consideration of the question referred 25By its question, the referring court asks, in essence, whether Article 4(1) of Directive 2000/78 must be interpreted as meaning that the willingness of an employer to take account of the wishes of a customer no longer to have that employer’s services provided by a worker wearing an Islamic headscarf constitutes a genuine and determining occupational requirement within the meaning of that provision.26In the first place, it should be observed that, in accordance with Article 1 of Directive 2000/78, the purpose of that directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.27As regards the meaning of ‘religion’ in Article 1 of that directive, it should be noted that the directive does not include a definition of that term.28Nevertheless, the EU legislature referred, in recital 1 of Directive 2000/78, to fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), which provides, in Article 9, that everyone has the right to freedom of thought, conscience and religion, a right which includes, in particular, freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.29In the same recital, the EU legislature also referred to the constitutional traditions common to the Member States, as general principles of EU law. Among the rights resulting from those common traditions, which have been reaffirmed in the Charter of Fundamental Rights of the European Union (‘the Charter’), is the right to freedom of conscience and religion enshrined in Article 10(1) of the Charter. In accordance with that provision, that right includes freedom to change religion or belief and freedom, either alone or in community with others and in public or in private, to manifest religion or belief, in worship, teaching, practice and observance. As is apparent from the explanations relating to the Charter of Fundamental Rights (OJ 2007 C 303, p. 17), the right guaranteed in Article 10(1) of the Charter corresponds to the right guaranteed in Article 9 of the ECHR and, in accordance with Article 52(3) of the Charter, has the same meaning and scope.30In so far as the ECHR and, subsequently, the Charter use the term ‘religion’ in a broad sense, in that they include in it the freedom of persons to manifest their religion, the EU legislature must be considered to have intended to take the same approach when adopting Directive 2000/78, and therefore the concept of ‘religion’ in Article 1 of that directive should be interpreted as covering both the forum internum, that is the fact of having a belief, and the forum externum, that is the manifestation of religious faith in public.31In the second place, it should be noted that it is not clear from the order for reference whether the referring court’s question is based on a finding of a difference of treatment based directly on religion or belief, or on a finding of a difference of treatment based indirectly on those criteria.32If, which it is for the referring court to ascertain, Ms Bougnaoui’s dismissal was based on non-compliance with a rule in force within that undertaking, prohibiting the wearing of any visible sign of political, philosophical or religious beliefs, and if it were to transpire that that apparently neutral rule resulted, in fact, in persons adhering to a particular religion or belief, such as Ms Bougnaoui, being put at a particular disadvantage, it would have to be concluded that there was a difference of treatment indirectly based on religion or belief, as referred to in Article 2(2)(b) of Directive 2000/78 (see, to that effect, judgment of today’s date, G4S Secure Solutions, C‑157/15, paragraphs 30 and 34).33However, under Article 2(2)(b)(i) of the directive, such a difference of treatment does not amount to indirect discrimination if it is objectively justified by a legitimate aim, such as the implementation, by Micropole, of a policy of neutrality vis-à-vis its customers, and if the means of achieving that aim are appropriate and necessary (see, to that effect, judgment of today’s date, G4S Secure Solutions, C‑157/15, paragraphs 35 to 43).34By contrast, if the dismissal of Ms Bougnaoui was not based on the existence of an internal rule such as that referred to in paragraph 32 of the present judgment, it is necessary to consider, as this Court is invited to do by the question from the referring court, whether the willingness of an employer to take account of a customer’s wish no longer to have services provided by a worker who, like Ms Bougnaoui, has been assigned to that customer by the employer and who wears an Islamic headscarf constitutes a genuine and determining occupational requirement within the meaning of Article 4(1) of Directive 2000/78.35According to that provision, Member States may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in Article 1 of the directive is not to constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.36Thus, it is for the Member States to stipulate, should they choose to do so, that a difference of treatment which is based on a characteristic related to any of the grounds referred to in Article 1 of the directive does not constitute discrimination. That appears to be the case here, under Article L. 1133-1 of the Labour Code, which it is, however, for the referring court to ascertain.37That said, it should be borne in mind that the Court has repeatedly held that it is clear from Article 4(1) of Directive 2000/78 that it is not the ground on which the difference of treatment is based but a characteristic related to that ground which must constitute a genuine and determining occupational requirement (see judgments of 12 January 2010, Wolf, C‑229/08, EU:C:2010:3, paragraph 35; of 13 September 2011, Prigge and Others, C‑447/09, EU:C:2011:573, paragraph 66; of 13 November 2014, Vital Pérez, C‑416/13, EU:C:2014:2371, paragraph 36; and of 15 November 2016, Salaberria Sorondo, C‑258/15, EU:C:2016:873, paragraph 33).38It should, moreover, be pointed out that, in accordance with recital 23 of Directive 2000/78, it is only in very limited circumstances that a characteristic related, in particular, to religion may constitute a genuine and determining occupational requirement.39It must also be pointed out that, according to the actual wording of Article 4(1) of Directive 2000/78, such a characteristic may constitute such a requirement only ‘by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out’.40It follows from the information set out above that the concept of a ‘genuine and determining occupational requirement’, within the meaning of that provision, refers to a requirement that is objectively dictated by the nature of the occupational activities concerned or of the context in which they are carried out. It cannot, however, cover subjective considerations, such as the willingness of the employer to take account of the particular wishes of the customer.41Consequently, the answer to the question put by the referring court is that Article 4(1) of Directive 2000/78 must be interpreted as meaning that the willingness of an employer to take account of the wishes of a customer no longer to have the services of that employer provided by a worker wearing an Islamic headscarf cannot be considered a genuine and determining occupational requirement within the meaning of that provision. Costs 42Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 4(1) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation must be interpreted as meaning that the willingness of an employer to take account of the wishes of a customer no longer to have the services of that employer provided by a worker wearing an Islamic headscarf cannot be considered a genuine and determining occupational requirement within the meaning of that provision. [Signatures]( *1 ) Language of the case: French. | 4a5a8-e16f539-4cd4 | EN |
The beneficiary of a patent licence must pay the agreed royalty even if it does not infringe the patented technology | 7 July 2016 ( *1 )‛Reference for a preliminary ruling — Competition — Article 101 TFEU — Non-exclusive licence agreement — Patent — No infringement — Obligation to pay royalties’In Case C‑567/14,REQUEST for a preliminary ruling under Article 267 TFEU from the cour d’appel de Paris (France), made by decision of 23 September 2014, received at the Court on 9 December 2014, in the proceedings Genentech Inc. v Hoechst GmbH, Sanofi-Aventis Deutschland GmbH, THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, A. Arabadjiev, J.-C. Bonichot, C.G. Fernlund (Rapporteur) and E. Regan, Judges,Advocate General: M. Wathelet,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 20 January 2016,after considering the observations submitted on behalf of:—Genentech Inc., by E. Kleiman, S. Saleh, C. Ritz, L. De Maria, E. Gaillard, J. Philippe, avocats, and by P. Chrocziel and T. Lübbig, Rechtsanwälte,Hoechst GmbH and Sanofi-Aventis Deutschland GmbH, by A. Wachsmann, A. van Hooft, M. Barbier, A. Fisselier and T. Elkins, avocats,the French Government, by D. Colas, D. Segoin and J. Bousin, acting as Agents,the Spanish Government, by A. Rubio González, acting as Agent,the Netherlands Government, by M. Bulterman and M. de Ree, acting as Agents,the European Commission, by A. Dawes, B. Mongin and F. Castilla Contreras, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 17 March 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 101 TFEU.2The request was made in the context of proceedings between, on the one hand, Genentech Inc. and, on the other, Hoechst GmbH and Sanofi-Aventis Deutschland GmbH concerning the annulment of an arbitration award relating to the performance of a licence agreement concerning rights derived from patents. The dispute in the main proceedings and the question referred for a preliminary ruling 3On 6 August 1992, Behringwerke AG granted a worldwide non-exclusive licence to Genentech (‘the licence agreement’) for the use of a human cytomegalovirus enhancer (‘the HCMV enhancer’). This technology was the subject of European Patent No EP 0173 177 53, issued on 22 April 1992 and revoked on 12 January 1999, as well as of two patents, US 522 and US 140, issued in the United States on 15 December 1998 and 17 April 2001 respectively.4Genentech used the HCMV enhancer to facilitate the transcription of a deoxyribonucleic acid (DNA) sequence necessary for production of a biological medicinal product containing the active ingredient rituximab. Genentech markets that medicinal product, in the US, under the trade name Rituxan and, in the European Union, under the trade name MabThera.5The licence agreement was governed by German law.6Under Article 3.1 of that licence agreement, Genentech undertook to pay, as consideration for the right to use the HCMV enhancer:a one-off fee of 20000 Deutschmarks (DM) (approximately EUR 10225);a fixed annual research fee of DM 20000;a running royalty equivalent to 0.5% of the net sales of the finished products by the licensee and its affiliated companies and sub-licensees.7The licence agreement defines ‘finished products’ as ‘commercially marketable goods incorporating a licensed product, sold in a form enabling them to be administered to patients for therapeutic purposes or to be used in a diagnostic procedure, and which are not intended or marketed for reformulation, processing, repackaging or relabeling before use’. With regard to ‘licensed products’, these are defined by that agreement as ‘materials (including organisms) in respect of which the manufacture, use or sale would, in the absence of this agreement, infringe one or more unexpired claims included in the rights attached to the patents under licence’.8Genentech paid the one-off fee and the annual fee, but never paid the running royalty to Hoechst, the successor company to Behringwerke.9On 30 June 2008, Sanofi-Aventis Deutschland, a subsidiary of Hoechst, made enquiries of Genentech as to the finished products which it was marketing without paying the amount of the running royalty.10On 27 August 2008, Genentech notified Sanofi-Aventis Deutschland of the decisions to terminate the licence agreement with effect from 28 October 2008.11On 24 October 2008, Hoechst, taking the view that Genentech had used the HCMV enhancer without paying the running royalty, initiated arbitration proceedings against it pursuant to the arbitration clause set out in Article 11 of the licence agreement.12On 27 October 2008, Sanofi-Aventis Deutschland brought an action before the United States District Court for the Eastern District of Texas against Genentech and Biogen Idec Inc. for infringement of the licensed patents. On the same day, Genentech and Biogen brought an action for revocation of those patents before the United States District Court for the Northern District of California. Both of those actions were joined before the latter court, which dismissed them by decision of 11 March 2011.13By judgment of 22 March 2012, the United States Court of Appeals for the Federal Circuit dismissed the appeal brought by Sanofi-Aventis Deutschland against that decision.14By a third partial award of 5 September 2012 (‘the third partial award’), the sole arbitrator held Genentech liable for payment of the running royalty to Hoechst.15On 10 December 2012, Genentech brought an action before the cour d’appel de Paris (France) (Court of Appeal, Paris, France) seeking annulment of the third partial award.16On 25 February 2013, the sole arbitrator issued the final award and fourth partial award on the quantum and the costs, in which Genentech was ordered to pay to Hoechst, in addition to the arbitration and representation costs, the sum of EUR 108322850 in damages, plus simple interest. That final award was supplemented by an addendum of 22 May 2013.17By order of 3 October 2013, the cour d’appel de Paris (Court of Appeal, Paris) granted leave for enforcement of the third partial award and refused to join Genentech’s actions seeking annulment of that third partial award and of the final award of 25 February 2013 and the addendum thereto of 22 May 2013.18In the context of the proceedings for annulment of the third partial award, the referring court expresses uncertainty as to whether the licence agreement is compatible with Article 101 TFEU. It notes that the sole arbitrator took the view that, during the period of validity of the licence agreement, the licensee was required to pay the royalties stipulated in that agreement even though the revocation of the patents had retroactive effect. The referring court is unsure whether such an agreement contravenes the provisions of Article 101 TFEU, in so far as it requires the licensee to pay royalties which no longer serve any purpose because of the revocation of the patents attached to the rights granted and places the licensee at a ‘competitive disadvantage’.19In those circumstances, the cour d’appel de Paris (Court of Appeal, Paris) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:‘Must the provisions of Article 101 TFEU be interpreted as precluding effect being given, where patents are revoked, to a licence agreement which requires the licensee to pay royalties for the sole use of the rights attached to the licensed patent?’ The question referred for a preliminary ruling Admissibility 20Hoechst and Sanofi Aventis Deutschland (hereinafter referred to jointly as ‘Hoechst’) and the French Government argue that the request for a preliminary ruling is inadmissible, a contention which the European Commission disputes.21First, Hoechst contends, in essence, that the rules governing the national proceedings do not allow the referring court to ask such a question without being in breach of its own jurisdiction. Hoechst declares that, as a result, it brought an appeal before the Cour de cassation (France) (Court of Cassation, France) against the request for a preliminary ruling.22It should, however, be borne in mind, first, that, in the context of Article 267 TFEU, the Court has no jurisdiction to rule either on the interpretation of provisions of national laws or national regulations or on their conformity with EU law (see, inter alia, judgment of 11 March 2010 in Attanasio Group, C‑384/08, EU:C:2010:133, paragraph 16 and the case-law cited) and, second, that it is not for the Court to determine whether the decision whereby a matter is brought before it was taken in accordance with the rules of national law governing the organisation of the courts and their procedure (judgments of 14 January 1982 in Reina, 65/81, EU:C:1982:6, paragraph 8, and of 23 November 2006 in Asnef-Equifax and Administración del Estado, C‑238/05, EU:C:2006:734, paragraph 14).23The Court must abide by the decision from a court of a Member State requesting a preliminary ruling in so far as that decision has not been overturned in any appeal procedures provided for by national law (judgments of 12 February 1974 in Rheinmühlen-Düsseldorf, 146/73, EU:C:1974:12, paragraph 3, and of 1 December 2005 in Burtscher, C‑213/04, EU:C:2005:731, paragraph 32). In the present case, it is apparent from the evidence produced during the proceedings that, by order of 18 November 2015, the Cour de cassation dismissed the appeal brought by Hoechst against the decision requesting a preliminary ruling, with the result that the view cannot be taken that that decision has been overturned.24Second, Hoechst submits that no useful answer could be provided to the referring court. It argues that, in the case of an action seeking annulment of an international arbitral award, national courts are not entitled to check how competition issues were decided on by the arbitrator when he has taken the view, in the final award, that there was no breach of Article 101 TFEU.25The French Government adds that the request for a preliminary ruling does not contain the elements of fact and law necessary to enable a useful answer to be given to the question. In particular, it argues, the decision making the reference does not specify the actual conditions of the functioning and structure of the market or markets at issue. The referring court, in its view, failed to mention certain normative instruments relating to EU competition law, which are nonetheless relevant, or provide any information concerning the German law to which the licence agreement is subject.26It must be borne in mind in this regard that, in the context of the cooperation between the Court of Justice and the national courts provided for in Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the question put concerns the interpretation of a provision of EU law, the Court is, in principle, bound to give a ruling. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgments of 13 March 2001 in PreussenElektra, C‑379/98, EU:C:2001:160, paragraphs 38 and 39, and of 22 June 2010 in Melki and Abdeli, C‑188/10 and C‑189/10, EU:C:2010:363, paragraph 27).27In the present case, since the referring court raises the question whether Article 101 TFEU precludes the licence agreement from being implemented in accordance with the interpretation which was given to it by the sole arbitrator, it is not entirely obvious that the question referred to the Court as to the interpretation to be given to this provision of the TFEU is irrelevant for the purpose of resolving the dispute in the main proceedings. The order for reference sets out, briefly but precisely, the origin and nature of this dispute, the outcome of which it regards as dependent on the interpretation of Article 101 TFEU. It follows that the referring court has adequately defined the factual and legal framework within which it made its request for interpretation of EU law to enable the Court to provide a useful reply to that request.28Third, Hoechst and the French Government argue that the question posed by the referring court does not correspond to the facts at issue in the main proceedings, in so far as the US patents, which alone have relevance for the purposes of the main proceedings, have not been revoked.29In that regard, it must be noted that the referring court has, admittedly, formulated its question in terms that could be understood as referring to the particular situation in which the licensee would be required to pay royalties for the use of rights attached to the patents, notwithstanding the revocation of those patents.30However, as the Advocate General has observed in point 36 of his Opinion, it is clear from the terms of the request for a preliminary ruling, as reproduced, essentially, in paragraphs 12 and 13 above, that the referring court is aware that patent US 522, issued on 15 December 1998, and patent US 140, issued on 17 April 2001, which the parties agree are the only patents of relevance for the purposes of the main proceedings, have not been revoked. The reference to the revocation of the patents by the referring court merely repeats that set out in paragraphs 193 and 194 of the third partial award, the wording of which is clearly contradicted both by the rest of that award, in particular paragraphs 51 to 53 thereof, and by the evidence in the file made available to the Court.31It follows that the question referred is admissible. Substance 32It should be noted at the outset that it is apparent from the file before the Court that Genentech argued during the arbitration proceedings that it was not required to pay the running royalty, since, according to the terms of the licence agreement, the payment of that royalty was based on the supposition, first, that the HCMV enhancer was present in the finished product rituximab and, second, that the manufacture or use of that enhancer had, in the absence of that agreement, breached the rights attached to the licensed patents. The sole arbitrator, however, rejected those arguments, which he considered to be based on a literal interpretation of the licence agreement, which was contrary to the parties’ commercial objectives, namely to allow Genentech to use the HCMV enhancer for the production of proteins without incurring any risk of an infringement action brought by the holder of the rights to that technology.33Similarly, it also follows from the request for a preliminary ruling that, in the main proceedings, Genentech argued that, by requiring it to pay the running royalty in the absence of any infringement, even though, according to the terms of the licence agreement, that royalty was due only for products the manufacture, use or sale of which would, in the absence of that agreement, infringe the licensed patents, the third partial award imposes on it unjustified expenses, in breach of competition law.34Consequently, even if, in formal terms, the referring court appears, as has already been stated in paragraph 29 above, to have limited its question to the case of a revocation of the patents, that question should be understood as also referring to the case of non-infringement of the licensed patents.35In those circumstance, the question raised by the referring court must be understood as asking, in essence, whether Article 101(1) TFEU must be interpreted as precluding, under a licence agreement such as that at issue in the main proceedings, the imposition on the licensee of an obligation to pay a royalty for the use of a patented technology for the entire period during which that agreement was in effect, in the event of the revocation or non-infringement of patents protecting that technology.36Genentech and the Spanish Government consider that the answer to this question should be in the affirmative. Hoechst, the French Government, the Netherlands Government and the Commission take the opposite view.37Genentech claims that the sole arbitrator disregarded the clear terms of the licence agreement and of Article 101 TFEU by requiring it to pay royalties on sales of a product which does not infringe the patented technology. Genentech submits that it has been exposed to additional costs of approximately EUR 169 million as compared with its competitors due to that restriction, by object and effect, of Article 101 TFEU.38In that regard, it must be noted, as the Advocate General observed in point 75 of his Opinion, that it is not for the Court, in the context of the preliminary ruling procedure, to review the findings of the sole arbitrator or his interpretation of the licence agreement carried out in the light of German law, according to which Genentech is required to pay the running royalty fee notwithstanding the revocation or non-infringement of the patents at issue in the main proceedings.39It should further be recalled that the Court has already ruled, in the context of an exclusive licence agreement, that the obligation to pay a royalty, even after the expiry of the period of validity of the licensed patent, may reflect a commercial assessment of the value to be attributed to the possibilities of exploitation granted by the licence agreement, especially when that obligation to pay was embodied in a licence agreement entered into before the patent was granted (judgment of 12 May 1989 in Ottung, 320/87, ECR, EU:C:1989:195, paragraph 11). In such circumstances, where the licensee may freely terminate the agreement by giving reasonable notice, an obligation to pay a royalty throughout the validity of the agreement cannot come within the scope of the prohibition set out in Article 101(1) TFEU (judgment of 12 May 1989 in Ottung, 320/87, EU:C:1989:195, paragraph 13).40It thus follows from the judgment of 12 May 1989 in Ottung (320/87, EU:C:1989:195), that Article 101(1) TFEU does not prohibit the imposition of a contractual requirement providing for payment of a royalty for the exclusive use of a technology that is no longer covered by a patent, on condition that the licensee is free to terminate the contract. That assessment is based on the finding that that royalty is the price to be paid for commercial exploitation of the licensed technology with the guarantee that the licensor will not exercise its industrial-property rights. As long as the licence agreement at issue is still valid and can be freely terminated by the licensee, the royalty payment is due, even if the industrial-property rights derived from patents which are granted exclusively cannot be used against the licensee due to the fact that the period of their validity has expired. In the light of such circumstances, in particular the fact that the licence may be freely terminated by the licensee, the contention may be rejected that the payment of a royalty undermines competition by restricting the freedom of action of the licensee or by causing market foreclosure effects.41That solution, stemming from the judgment of 12 May 1989 in Ottung (320/87, EU:C:1989:195), applies a fortiori in a situation such as that at issue in the main proceedings. If, during the period in which a licence agreement is in effect, the payment of the royalty is still due even after the expiration of industrial property rights, the same applies, a fortiori, before the validity of those rights has expired.42The fact that the courts of the State issuing the patents at issue in the main proceedings have held, following the termination of the licence agreement, that Genentech’s use of the licensed technology did not infringe the rights derived from those patents has, according to the information provided by the referring court on the German law applicable to that agreement, no effect on the enforceability of the royalty for the period prior to that termination. As a result, since Genentech was free to terminate the agreement at any time, the obligation to pay the royalty during the period in when that agreement was in effect, during which the rights derived from the licensed patents which had been granted were in force, does not constitute a restriction of competition within the meaning of Article 101(1) TFEU.43In the light of the foregoing considerations, the answer to the question referred is that Article 101(1) TFEU must be interpreted as not precluding the imposition on the licensee, under a licence agreement such as that at issue in the main proceedings, of a requirement to pay a royalty for the use of a patented technology for the entire period in which that agreement was in effect, in the event of the revocation or non-infringement of a licenced patent, provided that the licensee was able freely to terminate that agreement by giving reasonable notice. Costs 44Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: Article 101(1) TFEU must be interpreted as not precluding the imposition on the licensee, under a licence agreement such as that at issue in the main proceedings, of a requirement to pay a royalty for the use of a patented technology for the entire period in which that agreement was in effect, in the event of the revocation or non-infringement of a licenced patent, provided that the licensee was able freely to terminate that agreement by giving reasonable notice. [Signatures]( *1 ) Language of the case: French. | ba552-6d85b88-4751 | EN |
The operator of a physical marketplace may be forced to put an end to trademark infringements committed by market-traders | 7 July 2016 ( *1 )‛Reference for a preliminary ruling — Approximation of laws — Directive 2004/48/EC — Enforcement of intellectual property rights — Notion of ‘intermediary whose services are being used by a third party to infringe an intellectual property right’ — Tenant of market halls subletting sales points — Possibility of an injunction against that tenant — Article 11’In Case C‑494/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Nejvyšší soud (Supreme Court, Czech Republic), made by decision of 25 August 2015, received at the Court on 21 September 2015, in the proceedings Tommy Hilfiger Licensing LLC, Urban Trends Trading BV, Rado Uhren AG, Facton Kft., Lacoste SA, Burberry Ltd v Delta Center a.s., THE COURT (Second Chamber),composed of M. Ilešič (Rapporteur), President of the Chamber, C. Toader, A. Rosas, A. Prechal and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:—Tommy Hilfiger Licensing LLC, Urban Trends Trading BV, Rado Uhren AG, Facton Kft., Lacoste SA and Burberry Ltd, by L. Neustupná, advokátka,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the French Government, by D. Colas and D. Segoin, acting as Agents,the European Commission, by F. Wilman and P. Němečková, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45, and corrigendum OJ 2004 L 195, p. 16).2The request has been made in proceedings between (i) Tommy Hilfiger Licensing LLC, Urban Trends Trading BV, Rado Uhren AG, Facton Kft., Lacoste SA and Burberry Ltd and (ii) Delta Center a.s. regarding injunctions which the applicants in the main proceedings want to see granted against Delta Center for the purposes of compliance with their intellectual property rights. Legal context EU law 3Recitals 10 and 23 of Directive 2004/48 state:‘(10)The objective of this Directive is to approximate [l]egislative systems [of the Member States] so as to ensure a high, equivalent and homogeneous level of protection in the internal market.…(23)… rightholders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the rightholder’s industrial property right. The conditions and procedures relating to such injunctions should be left to the national law of the Member States. As far as infringements of copyright and related rights are concerned, a comprehensive level of harmonisation is already provided for in Directive 2001/29/EC [of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10)]. Article 8(3) of Directive 2001/29/EC should therefore not be affected by this Directive.’4Article 2 of Directive 2004/48, which defines the scope of the directive, provides in paragraph 1:‘Without prejudice to the means which are or may be provided for in [European Union] or national legislation, in so far as those means may be more favourable for rightholders, the measures, procedures and remedies provided for by this Directive shall apply … to any infringement of intellectual property rights as provided for by [European Union] law and/or by the national law of the Member State concerned.’5Chapter II of Directive 2004/48, entitled ‘Measures, procedures and remedies’, contains six sections, the first of which, entitled ‘General provisions’, includes Article 3, which provides:‘1. Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.2. Those measures, procedures and remedies shall … be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade ...’6Section 5 of Chapter II of Directive 2004/48 is entitled ‘Measures resulting from a decision on the merits of the case’. It comprises Articles 10 to 12 entitled ‘Corrective measures’, ‘Injunctions’ and ‘Alternative measures’ respectively.7Under Article 11 of Directive 2004/48:‘Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by national law, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. Member States are also to ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC.’8Article 8(3) of Directive 2001/29, provides:‘Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.’ Czech law 9According to the documents before the Court that Article 11 of Directive 2004/48 was transposed into Czech law by Article 4 of zákon č. 221/2006 Sb., o vymáhání práv z průmyslového vlastnictví (Law No 221/2006 on the compliance with intellectual property rights; ‘Law No 221/2006’).10Article 4(1) of Law No 221/2006 provides:‘Where there is an unjustified infringement of [intellectual property] rights, the person injured may apply for a court order to force the infringer to refrain from the actions infringing or affecting the right and for the elimination of the consequences thereof …’11Under Article 4(3), injured parties may also apply for a court order to exercise the rights granted also ‘against any person whose means or services are used by a third party to infringe intellectual property rights’. The dispute in the main proceedings and the questions referred for a preliminary ruling 12Delta Center is the tenant of the marketplace named ‘Pražská tržnice’ (Prague market halls, Czech Republic). It sublets to market-traders the various sales areas situated in that marketplace. The rental contracts concluded with those market-traders impose on the latter the obligation to respect the regulations to which their activities are subject. Moreover, a brochure written in Czech and Vietnamese bearing the words ‘Warning for traders’ is distributed to them. That brochure states that the sale of counterfeits is forbidden and may lead to the termination of the contract for the rental of the sales area.13The applicants in the main proceedings manufacture and distribute brand products. Having established that counterfeits of their goods were sold in those Prague market halls, they brought the matter before the Městský soud v Praze (City Court, Prague), asking it inter alia to order Delta Center:to refrain from any conclusion or extension of contracts for the rental of sales areas in those halls with persons whose conduct was held by the judicial or administrative authorities with final effect to constitute an infringement or a risk of infringement of the rights conferred by the marks mentioned in the application;to refrain from any conclusion or extension of such contracts where the terms of those contracts do not include the obligation on market-traders to refrain from infringing the applicants’ intellectual property rights or the clause according to which Delta Center may terminate the contract in the event of the infringement or likelihood of infringement of those rights, andto submit, in some situations described by the applicants, its excuses in writing and to have a report published, at its own expense, in the Hospodářské noviny journal.14By judgment of 28 February 2012, the Městský soud v Praze (City Court, Prague) dismissed that application for an injunction. Whilst considering that Delta Center is a ‘person whose means or services are used by a third party’ within the meaning of Article 4(3) of Law No 221/2006, it held that there was no infringement or risk of infringement of the applicants’ rights given that it was evident for buyers that the goods at issue are counterfeits and are therefore neither produced nor distributed by the applicants.15The applicants brought an appeal against that judgment before the Vrchní soud v Praze (High Court, Prague).16By judgment of 5 December 2012, for reasons which are different than those upheld by the first court, that court confirmed the rejection of the request for an injunction. According to that court, a broad interpretation of the words ‘means or services … used by a third party to infringe’ set out in Article 4(3) of Law No 221/2006 and the words ‘the services … used by a third party to infringe an intellectual property right’ referred to in Article 11 of Directive 2004/48 would lead to absurd situations in which inter alia the supply of electricity or the grant of a commercial licence to a market-trader would be considered to constitute a means of enabling the infringement of intellectual property rights.17The applicants brought an appeal on a point of law before the Nejvyšší soud (Supreme Court).18The latter court observes that the wording of Article 4(3) of Law No 221/2006 corresponds to that of the third sentence of Article 11 of Directive 2004/48 and recalls that the national legislation which transposes a directive must, to the greatest extent possible, be interpreted in the light of the wording and the purpose of that text.19Taking the view therefore that the dispute pending before it will have to be resolved by taking account of the interpretation of the third sentence of Article 11 of Directive 2004/48 provided by the Court in the judgment of 12 July 2011 in L’Oréal and Others (C‑324/09, EU:C:2011:474), the Nejvyšší soud (Supreme Court) nevertheless states that the dispute which led to that interpretation concerned infringements of intellectual property rights in an online marketplace. The question arises whether that interpretation must also be followed when infringements of intellectual property rights took place in a physical marketplace.20In those circumstances, the Nejvyšší soud (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Is a person with a lease of premises in a market, who provides stalls and pitches on which stalls may be placed to individual market-traders for their use, an intermediary whose services are used by a third party to infringe an intellectual property right within the meaning of Article 11 of Directive 2004/48?(2)Is it possible to impose on a person with a lease of premises in a market, who provides stalls and pitches on which stalls may be placed to individual market-traders for their use, measures, as provided for in Article 11 of Directive 2004/48 under the same conditions as those formulated by the Court of Justice [in the judgment of 12 July 2011 in L’Oréal and Others, C‑324/09, EU:C:2011:474] with regard to the imposition of measures on the operators of an online marketplace?’ Consideration of the questions referred The first question 21By its first question, the referring court essentially asks whether the third sentence of Article 11 of Directive 2004/48 must be interpreted as meaning that the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit goods of branded products, falls within the concept of ‘an intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision.22It is settled case-law that the third sentence of Article 11 of Directive 2004/48, like Article 8(3) of Directive 2001/29 to which it refers, obliges Member States to ensure that an intermediary whose services are used by a third party in order to infringe an intellectual property right may, regardless of any liability of its own in relation to the facts at issue, be ordered to take measures aimed at bringing those infringements to an end and measures seeking to prevent further infringements (see to that effect, in particular, judgments of 12 July 2011 in L’Oréal and Others, C‑324/09, EU:C:2011:474, paragraphs 127 to 134, and 24 November 2011 in Scarlet Extended, C‑70/10, EU:C:2011:771, paragraphs 30 and 31).23For an economic operator to fall within the classification of ‘intermediary’ within the meaning of those provisions, it must be established that it provides a service capable of being used by one or more other persons in order to infringe one or more intellectual property rights, but it is not necessary that it maintain a specific relationship with that or those persons (see, to that effect, judgment of 27 March 2014 in UPC Telekabel Wien, C‑314/12, EU:C:2014:192, paragraphs 32 and 35).24Nor is such a classification subject to the condition that the economic operator provide a service other than the one which is used by the third party in order to infringe the intellectual property right.25Thus, as far as concerns electronic commerce, the Court held that an access provider which merely permits Internet access without proposing other services or exercising a review provides a service which is capable of being used by a third party to infringe intellectual property rights and must be classified as an ‘intermediary’ (see, to that effect, order of 19 February 2009 in LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten, C‑557/07, EU:C:2009:107, paragraph 43, and judgment of 27 March 2014 in UPC Telekabel Wien, C‑314/12, EU:C:2014:192, paragraph 32).26In the present case, it is not contested that Delta Center is the tenant of the ‘Pražská tržnice’ market halls and exercises an economic activity which consists in subletting the sales points situated in those market halls. Such an activity for reward constitutes a provision of services.27Nor is it contested that some of the market-traders to which Delta Center sublets those sales points use them in order to offer visitors to those market halls counterfeit goods of branded products.28Without there being a need to determine whether other service providers, such as those — mentioned as a hypothesis in the decision to refer — providing electricity to infringers, fall within the scope of the third sentence of Article 11 of Directive 2004/48, it should be stated that, in any event, an operator which provides to third parties a service relating to the letting or subletting of pitches in a marketplace, thanks to which they have access to that marketplace and offer for sale in that marketplace counterfeit branded products, must be classified as an ‘intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision.29The fact that the provision of sales points concerns an online marketplace or a physical marketplace such as market halls is irrelevant in that connection. It is not apparent from Directive 2004/48 that the scope of the directive is limited to electronic commerce. Moreover, the objective stated in recital 10 of that directive of ensuring a high, equivalent and homogeneous level of protection of intellectual property in the internal market would be substantially weakened if an operator which provides third parties with access to a physical marketplace such as that at issue in the main proceedings, on which those third parties offer in that marketplace the sale of counterfeit branded products, could not be the subject of the injunctions referred to in the third sentence of Article 11 of that directive.30Having regard to the foregoing, the answer to the first question is that the third sentence of Article 11 of Directive 2004/48 must be interpreted as meaning that the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit branded products, falls within the concept of ‘an intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision. The second question 31By its second question, the referring court asks, in essence, whether the third sentence of Article 11 of Directive 2004/48 must be interpreted as meaning that the conditions for an injunction within the meaning of that provision against an intermediary who provides a service relating to the letting of sales points in market halls are identical to those for injunctions which may be addressed to intermediaries in an online marketplace, set out by the Court in the judgment of 12 July 2011 in L’Oréal and Others (C‑324/09, EU:C:2011:474).32In paragraph 135 of that judgment, the Court first of all noted, referring to recital 23 of Directive 2004/48, that the rules for the operation of the injunctions for which the Member States must provide under the third sentence of Article 11 of the directive, such as those relating to the conditions to be met and to the procedure to be followed, are a matter for national law.33Next, it stated that those rules of national law must be constructed so as to achieve the objectives of Directive 2004/48. For that purpose, and in accordance with Article 3(2) of that directive, injunctions must be effective and dissuasive (judgment of 12 July 2011 in L’Oréal and Others, C‑324/09, EU:C:2011:474, paragraph 136).34Lastly, the Court held that injunctions must be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers. By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader from taking place (see, to that effect, judgment of 12 July 2011 in L’Oréal and Others, C‑324/09, EU:C:2011:474, paragraphs 138 to 141).35The Court thus took the view that any injunction within the meaning of the third sentence of Article 11 of Directive 2004/48 may be pronounced only if it ensures a fair balance between the protection of intellectual property and the absence of obstacles to legitimate trade (see, to that effect, judgment of 12 July 2011 in L’Oréal and Others, C‑324/09, EU:C:2011:474, paragraph 143).36While, admittedly, in the case which gave rise to the judgment of 12 July 2011 in L’Oréal and Others (C‑324/09, EU:C:2011:474), the Court had to interpret the third sentence of Article 11 of Directive 2004/48 in the context of injunctions which may be addressed to an intermediary in an online marketplace, it interpreted that article in the light of the general provisions formulated in Article 3 of that directive, without specific considerations relating to the nature of the marketplace at issue. Nor is it apparent from Article 3 of the directive that its scope is limited to situations which occur in online marketplaces. Moreover, it follows from the wording of Article 3 of the directive that it applies to any measure referred to by that directive, including those provided for in the third sentence of Article 11 of the directive.37Therefore, the answer to the second question is that the third sentence of Directive 2004/48 must be interpreted as meaning that the conditions for an injunction within the meaning of that provision against an intermediary who provides a service relating to the letting of sales points in market halls are identical to those for injunctions which may be addressed to intermediaries in an online marketplace, set out by the Court in the judgment of 12 July 2011 in L’Oréal and Others (C‑324/09, EU:C:2011:474). Costs 38Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as meaning that the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit branded products, falls within the concept of ‘an intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision. 2. The third sentence of Article 11 of Directive 2004/48 must be interpreted as meaning that the conditions for an injunction within the meaning of that provision against an intermediary who provides a service relating to the letting of sales points in market halls are identical to those for injunctions which may be addressed to intermediaries in an online marketplace, set out by the Court in the judgment of 12 July 2011 in L’Oréal and Others (C‑324/09, EU:C:2011:474). [Signatures]( *1 ) Language of the case: Czech. | 8caba-e2ad08a-4f5c | EN |
According to the General Court, the repute of McDonald’s trade marks makes it possible to prevent the registration, for foods or beverages, of trade marks combining the prefix ‘Mac’ or ‘Mc’ with the name of a foodstuff or beverage | 5 July 2016 ( *1 )‛European Union trade mark — Invalidity proceedings — European Union word mark MACCOFFEE — Earlier European Union word mark McDONALD’S — Article 53(1)(a) and Article 8(5) of Regulation (EC) No 207/2009 — Family of marks — Taking unfair advantage of the distinctive character or repute of the earlier mark — Declaration of invalidity)’In Case T‑518/13, Future Enterprises Pte Ltd, established in Singapore (Singapore), represented initially by B. Hitchens, J. Olsen, R. Sharma, M. Henshall, Solicitors, and R. Tritton, Barrister, and subsequently by B. Hitchens, J. Olsen, R. Tritton and E. Hughes-Jones, Solicitor,applicant,v European Union Intellectual Property Office (EUIPO), represented by L. Rampini, acting as Agent,defendant,the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the General Court, being: McDonald’s International Property Co. Ltd, established in Wilmington, Delaware (United States), represented by C. Eckhartt, lawyer,ACTION brought against the decision of the First Board of Appeal of EUIPO of 13 June 2013 (Case R 1178/2012-1) relating to cancellation proceedings between McDonald’s International Property Co. and Future Enterprises,THE GENERAL COURT (First Chamber),composed of H. Kanninen, President, I. Pelikánová (Rapporteur) and E. Buttigieg, Judges,Registrar: A. Lamote, Administrator,having regard to the application lodged at the Court Registry on 23 September 2013,having regard to the statements in response of EUIPO and the intervener lodged at the Court Registry on 22 January 2014,having regard to the reply lodged at the Court Registry on 1 July 2014,having regard to the rejoinder of the intervener lodged at the Court Registry on 24 November 2014,further to the hearing on 2 February 2016,gives the following Judgment Background to the dispute 1On 13 October 2008, the applicant, Future Enterprises Pte Ltd, filed an application for registration of a European Union trade mark at the European Union Intellectual Property Office (EUIPO), in accordance with Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1), as amended (replaced by Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1)).2The trade mark in respect of which registration was sought is the word sign MACCOFFEE.3The goods in respect of which registration was sought are in Classes 29, 30 and 32 of the Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond, for each of those classes, to the following description:—Class 29: ‘Meat, fish, poultry and game; meat extracts; preserved, frozen, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and milk products; edible oils and fats; dairy products; cream (dairy products); whipped cream; preparations for use in creaming beverages (dairy based); dairy puddings; yoghurt; foodstuffs in the form of snack foods; fruit-based snack foods; potato-based snack foods; potato crisps in the form of snack foods; beverages made from or containing milk; milk shakes’;Class 30: ‘Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice; cookies; breakfast cereal; frozen confections; crackers; frozen yoghurt; ice cream; pretzels; confectionery chips; sugar confectionery; candy; candy bars; candy mints; chocolate; chocolate confectionery; cakes; muffins; popcorn; cereal based snack foods; prepared savoury foodstuffs in the form of snack foods; corn chips; tortillas; pastries; bread; filled sandwiches; wraps (sandwiches); toasted sandwiches; dessert puddings; instant coffee; instant coffee mix; coffee beans; coffee in ground form; iced coffee; coffee beverages with milk; cocoa beverages with milk, chocolate-based beverages, coffee and coffee-based beverages, cocoa and cocoa-based beverages; tea-based beverages; tea, namely, ginseng tea, black tea, oolong tea, barley and barley-leaf tea; fruit teas; herbal tea (other than for medicinal use); iced tea’;Class 32: ‘Beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages; fruit-based soft drinks flavoured with tea or coffee (not included in other classes); non-alcoholic beverages with tea or coffee flavour (not included in other classes)’.4The European Union trade mark application was published in Community Trade Marks Bulletin No 1/2009 of 12 January 2009 and the word sign MACCOFFEE was registered as a European Union trade mark on 29 January 2010 under No 7307382 for all the goods listed in paragraph 3 above.5On 13 August 2010, the intervener, McDonald’s International Property Co. Ltd, brought an application for a declaration of invalidity of the contested trade mark, for all of the goods in respect of which that trade mark had been registered.6The application for a declaration of invalidity was based on the following earlier trade marks:European Union word mark McDONALD’S, lodged on 1 April 1996 and registered on 16 July 1999 under No 62497, for the goods and services in classes 29, 30, 32 and 42;European Union word mark McFISH, lodged on 18 April 2006 and registered on 20 July 2007 under No 5056429, for the goods in classes 29 and 30;European Union word mark McTOAST, lodged on 24 October 2005 and registered on 20 April 2007 under No 4699054, for the goods and services in classes 29, 30 and 43;European Union word mark McMUFFIN, lodged on 27 July 2005 and registered on 7 August 2006 under No 4562419, for the goods and services in classes 29, 30 and 43;European Union word mark McRIB, lodged on 19 November 1999 and registered on 11 June 2001 under No 1391663, for the goods in classes 29 and 30;European Union word mark McFLURRY, lodged on 30 June 1998 and registered on 8 September 1999 under No 864694, for the goods in class 29;European Union word mark CHICKEN McNUGGETS, lodged on 1 April 1996 and registered on 4 August 1998 under No 16196, for the goods in class 29;European Union word mark McCHICKEN, lodged on 1 April 1996 and registered on 2 February 1998 under No 16188, for the goods in class 30;European Union word mark EGG McMUFFIN, lodged on 1 April 1996 and registered on 19 December 1997 under No 15966, for the goods in class 30;European Union word mark McFEAST, lodged on 1 April 1996 and registered on 27 October 1999 under No 15941, for the goods in class 30;European Union word mark BIG MAC, lodged on 1 April 1996 and registered on 22 December 1998 under No 62638, for the goods and services in classes 29, 30 and 42;European Union word mark PITAMAC, lodged on 1 February 2005 and registered on 11 April 2006 under No 4264818, for the goods and services in classes 29, 30 and 42;the well-known German trademark McDonald’s, for the goods and services in classes 29, 30, 32 and 43.7The grounds relied on by the intervener were those referred to in Article 53(1)(a) of Regulation No 207/2009, read in conjunction with Article 8(1)(a) and (b), Article 8(2)(c) and Article 8(5) of that Regulation.8At the request of the applicant, proprietor of the contested trade mark, the intervener was asked to furnish proof of genuine use of the earlier trade marks on which the intervener based its application, in accordance with Article 57(2) and (3) of Regulation No 207/2009.9By decision of 27 April 2012, the Cancellation Division declared the contested trade mark to be invalid in its entirety, pursuant to Article 53(1)(a) of Regulation No 207/2009, read in conjunction with Article 8(5) of that regulation, and it did so solely on the basis of the earlier European Union word mark McDONALD’S, registered under No 62497, on the ground that, given the long-standing reputation acquired by the McDONALD’S trade mark and the establishment, on the part of the relevant public, of a link between that and the contested trade mark, there was a serious likelihood that use, without due cause, of the contested trade mark would take unfair advantage of the reputation of the McDONALD’S trade mark.10On 26 June 2012, the applicant filed an appeal with EUIPO, pursuant to Articles 58 to 64 of Regulation No 207/2009, against the decision of the Cancellation Division.11By decision of 13 June 2013 (‘the contested decision’), the First Board of Appeal of EUIPO dismissed the applicant’s appeal in its entirety, concurring, in essence, with the Cancellation Division’s argument that all the conditions for the application of Article 8(5) of Regulation No 207/2009 were, in the present case, fulfilled. In that regard, it noted that the McDONALD’S trade mark enjoyed a considerable reputation for fast-food restaurant services. In the context of the relevant factors that make it possible to assess whether the relevant public, namely the general public within the European Union, who also made use of the intervener’s fast-food restaurant services, could establish a link between the trade marks at issue, the Board of Appeal found (i) that the trade marks at issue were similar, (ii) that the considerable reputation acquired by the McDONALD’S trade mark also extended to the combination of the prefix ‘mc’ with the name of a menu item or foodstuff, (iii) that the intervener was the proprietor of a family of trade marks, which combined the prefix ‘mc’ with the name of a menu item or foodstuff (‘the “Mc” family of trade marks’), (iv) that the contested trade mark reproduced the structure common to the ‘Mc’ family of trademarks and (v) that the services and goods covered by the trade marks at issue had a certain degree of similarity owing to the close links existing between them. After assessing all of those factors, the Board of Appeal came to the conclusion that the relevant public could mentally establish a link between the conflicting trade marks and even, for a large part of that public, associate the contested trade mark with the ‘Mc’ family of trade marks. In the view of the Board of Appeal, the establishment of such a link, on the part of the relevant public, could entail a transfer of the image of the McDONALD’S trade mark or the characteristics associated with that trade mark to the goods covered by the contested trade mark, such that it was highly probable that the applicant took unfair advantage of the reputation of the McDONALD’S trade mark. Lastly, the Board of Appeal noted that the use of the contested trade mark was without due cause. Forms of order sought 12The applicant claims, in essence, that the Court should:annul the contested decision;order EUIPO to pay the costs.13EUIPO and the intervener contend that the Court should:dismiss the action;order the applicant to pay the costs. Law Preliminary remarks on the legal framework and the subject-matter of the proceedings 14Pursuant to Article 53(1)(a) of Regulation No 207/2009, a European Union trade mark is to be declared invalid, on application to EUIPO, inter alia where there is an earlier trade mark, within the meaning of Article 8(2) of that regulation, namely a trade mark with a date of application for registration which is earlier than that of the European Union trade mark whose cancellation is sought, and the conditions set out in Article 8(5) of that regulation are fulfilled. It follows from that provision that the cancellation of a European Union trade mark may be requested even if that mark was registered for goods or services which are not similar to those for which the earlier mark was registered.15For an earlier trade mark to be afforded that broader protection under Article 8(5) of Regulation No 207/2009, a number of conditions must be satisfied. First, the earlier European Union trade mark must have been lodged before that for which cancellation is sought and must be registered. Second, the earlier European Union trade mark and that for which cancellation is sought must be identical or similar. Third, the earlier European Union trade mark must have a reputation in the European Union. Fourth, the use without due cause of the European Union trade mark for which cancellation is sought must lead to the risk that unfair advantage might be taken of the distinctive character or the repute of the earlier European Union trade mark or that it might be detrimental to the distinctive character or the repute of that trade mark. As those conditions are cumulative, failure to satisfy one of them is sufficient to render Article 8(5) of Regulation No 207/2009 inapplicable (see judgment of 6 July 2012 in Jackson International v OHIM — Royal Shakespeare (ROYAL SHAKESPEARE), T‑60/10, not published, paragraph 18 and the case-law cited).16In the present case, the applicant does not contest either that the McDONALD’S trade mark was lodged before the contested mark, on 1 April 1996, and registered on 16 July 1999 (see paragraph 6 above), or that the McDONALD’S trade mark enjoys, in the European Union, a considerable reputation for fast-food restaurant services, so that compliance with the first and third conditions of application of Article 8(5) of Regulation No 207/2009, cited in paragraph 15 above, is not in issue.17However, the applicant disputes certain assessments which led the Board of Appeal, in the contested decision, to find that there was a certain degree of similarity between the marks at issue. According to the applicant, in view of (i) that similarity, (ii) the existence of the ‘Mc’ family of trade marks, (iii) the distinctive character acquired by the prefix ‘mc’, (iv) the considerable reputation enjoyed by the McDONALD’S trade mark, which extends to the prefix ‘mc’, used in combination with the name of a menu item or a foodstuff, and (v) a certain degree of similarity between the goods and services covered by the marks at issue, because of the close links between them, such a link could be established, by the relevant public, between the marks at issue. Consequently, it is highly probable, it is claimed, that the use without due cause of the contested trade mark takes unfair advantage of the reputation of the McDONALD’S trade mark. The subject matter of the proceedings is therefore limited to the question of whether the Board of Appeal was entitled to confirm, in the contested decision, the assessments of the Cancellation Division according to which the second and fourth conditions for the application of Article 8(5) of Regulation No 207/2009, referred to in paragraph 15 above, were satisfied in the present case. On whether there is a certain degree of similarity between the marks at issue 18The applicant claims that the Board of Appeal made an error of assessment, in the contested decision, by concluding that the trade marks at issue were similar overall, to a certain degree. It argues that, in accordance with the case-law, the visual similarity must prevail in the present case, in so far as foodstuffs and beverages are selected, first and foremost, visually. According to the applicant, the marks at issue are visually very different and the Board of Appeal found, wrongly, that the elements ‘mac’ and ‘mc’ were visually similar. It also argues that, phonetically, the marks at issue are very different. The prefixes ‘mac’ and ‘mc’ are not, it claims, pronounced in the same way. In English, the use of a double ‘c’ means that the contested trade mark is pronounced ‘mac coffi’, while the McDONALD’S trade mark, it is claimed, is pronounced ‘me don alds’, and that, as is clear from the English case-law placed on the file of the present proceedings, the accent is on the second syllable ‘don’, which means that, phonetically, the element ‘mc’ is a secondary element. Conceptually, the applicant argues that the McDONALD’S trade mark is understood as a surname, while the contested trade mark, although it contains the element ‘mac’, which is also a common prefix in surnames of Gaelic origin (Scottish and Irish), is not broadly speaking understood to be a such a name, in so far as that element is associated with the term ‘coffee’, which is understood as referring to coffee, namely an aromatic hot beverage. In that context, the element ‘mac’ in the contested trade mark is probably understood as referring to an American slang word used to address a stranger in a friendly manner, as in the phrase ‘Hey Mac, you want a coffee?’ In the absence of any similarity between the trade marks at issue, the applicant considers that the Board of Appeal should have dismissed the application for a declaration of invalidity and observes that, even if those trade marks are slightly similar, that does not make it possible, in the light of EUIPO’s practice, to arrive at a finding that the relevant public will establish a link between them.19EUIPO and the intervener dispute the applicant’s arguments and contend that the complaints put forward by it should be rejected, on the ground that the Board of Appeal did not commit any error of assessment, in the contested decision, by concluding that there was a certain degree of overall similarity between the trade marks at issue.20In that regard, it should be pointed out that the protection provided by Article 8(5) of Regulation No 207/2009 is not conditional on there being a degree of similarity between the marks at issue, such that there exists, on the part of the relevant public, a likelihood of confusion between them. It is sufficient for the degree of similarity between those marks to have the effect that the relevant public establishes a link between them (see, by analogy, judgments of 16 May 2007 in La Perla v OHIM — Worldgem Brands (NIMEI LA PERLA MODERN CLASSIC), T‑137/05, not published, EU:T:2007:142, paragraph 34 and the case-law cited, and of 16 December 2010 in Rubinstein and L’Oréal v OHIM — Allergan (BOTOLIST), not published, T‑345/08 and T‑357/08, EU:T:2010:529, paragraph 65 and the case-law cited).21The existence of such a degree of similarity, like the existence of a degree of similarity within the meaning of Article 8(1)(b) of Regulation No 207/2009, must be assessed globally, taking into account all factors relevant to the circumstances of the case. Accordingly, that global assessment must be based, in so far as the visual, phonetic and conceptual similarity of the marks at issue are concerned, on the overall impression given by the marks, account being taken, inter alia, of their distinctive and dominant elements (see, by analogy, judgment of 16 May 2007 in NIMEI LA PERLA MODERN CLASSIC, T‑137/05, not published, EU:T:2007:142, paragraph 35 and the case-law cited).22In the present case, the absence of a likelihood of confusion between the marks at issue is not contested. The dispute therefore centres on the issue of whether the assessments of the Board of Appeal, in the contested decision, make it possible to find that the condition relating to the existence of a minimal degree of similarity between the marks at issue, set out in Article 8(5) of Regulation No 207/2009, was fulfilled.23As regards, first, the visual similarity of the marks at issue, it should be noted that those marks are word marks.24As the applicant rightly points out, the marks at issue have substantial visual differences, in so far as, whereas the McDONALD’S mark consists of nine letters and a typographical sign and the contested mark consists of nine letters, they only have four letters in common, namely ‘m’, ‘c’, ‘o’ and ‘a’, three of which do not occupy the same position in the marks at issue. It is true that both of those marks start with the letter ‘m’ and their letters ‘c’ and ‘o’ are located respectively in the second and fourth positions in the McDONALD’S trade mark and in third and fifth positions in the contested mark. In addition, the letters ‘m’ and ‘c’ are included in the initial part of the marks at issue, namely the ‘mac’ and ‘mc’ elements. Further, a dissimilarity between the marks at issue cannot be deduced from the use of lower or upper case letters, because such a circumstance is immaterial, as the protection arising from the registration of a word mark relates to the word indicated in the application for registration and not to the particular graphic or stylistic aspects that that mark might possibly assume (see judgment of 29 April 2015, Chair Entertainment Group v OHIM — Libelle (SHADOW COMPLEX), T‑717/13, not published, EU:T:2015:242, paragraph 50 and the case-law cited). However, those findings are not sufficient to conclude that there is a visual similarity, even to a low degree, of the marks at issue.25The applicant is therefore correct to claim that the finding that the marks at issue were visually similar, to a low degree, which the Board of Appeal made in the paragraph 38 of the contested decision, is erroneous.26Next, with regard to the phonetic similarity of the marks at issue, it is necessary to confirm the assessment of the Board of Appeal, in paragraph 39 of the contested decision, that the initial parts of those marks, namely the elements ‘mac’ and ‘mc’ are both pronounced ‘mak’ or ‘mac’, the letter ‘a’ being a ‘schwa’ or murmured vowel, pronounced as in English word ‘ago’, at least by a part of the relevant public. It is true that certain items of evidence placed on the file in the present proceedings may cast doubt on the merits of the assessment thus made by the Board of Appeal when it clearly referred to the English-speaking part of that public. It follows from the second sentence of paragraph 44 of the judgment of the High Court of Justice (England & Wales), Chancery Division (United Kingdom) of 27 November 2001, in the case of Frank Yu Kwan Yuen v McDonald’s, submitted by the applicant, that ‘the first syllable of McCHINA ... is pronounced slightly differently from MAC’. Accordingly, it seems that all or part of the relevant English-speaking public would pronounce the initial part of the marks at issue slightly differently. However, such an error, if it exists, would not affect the legality of the contested decision, to the extent that, as EUIPO rightly points out, the part of the public that perceives the prefixes ‘mc’ and ‘mac’ as prefixes of Gaelic surnames pronounces them in the same way. Those prefixes are traditionally pronounced the same way, namely ‘mac’ (see, to that effect, judgments of 5 July 2012 in Comercial Losan v OHIM — McDonald’s International Property (Mc. Baby), T‑466/09, not published, EU:T:2012:346, paragraphs 37 and 41, and of 26 March 2015, Emsibeth v OHIM — Peek & Cloppenburg (Nael), T‑596/13, not published, EU:T:2015:193, paragraphs 48 and 50).27Moreover, even assuming, as the applicant contends, that all or part of the relevant public fully pronounce the vowel ‘a’, in the initial part of the contested mark, while it murmurs that vowel in the initial part of the McDONALD’S mark, the fact remains that the pronunciations of the initial parts of the marks at issue are highly similar. It is true that the final parts of those marks, namely the elements ‘donald’s’ and ‘coffee’, are phonetically different, since the mere fact that one letter in them, namely the letter ‘o’, is pronounced in the same way is, in that regard, negligible. These differences, however, do not mean that there is not a certain overall phonetic similarity between those marks, resulting from their identical or, at the very least, highly similar pronunciation of their initial part, namely the ‘mac’ and ‘mc’ elements, by the relevant public.28The Board of Appeal was therefore right to find, in paragraph 41 of the contested decision, that the marks at issue were phonetically similar, to a certain degree.29As regards the conceptual similarity of the marks at issue, it should be recalled that, according to case-law, marks are fairly similar when they evoke the same idea (see, to that effect, judgments of 16 May 2007 in Merant v OHIM — Focus Magazin verlag (FOCUS), T‑491/04, not published, EU:T:2007:141, paragraph 57, and of 11 December 2008 in Tomorrow Focus v OHIM — Information Builders (Tomorrow Focus), T‑90/06, not published, EU:T:2008:567, paragraph 35).30In the present case, first of all, it should be noted, as the Board of Appeal did in paragraphs 42 and 66 of the contested decision, that the elements ‘mc’ and ‘mac’ in the marks at issue are associated, by the relevant public, with the same idea, namely the prefix of a Gaelic surname, which the English-speaking part of the relevant public even identifies as meaning ‘son of’, and which carries no particular meaning for the rest of the relevant public (see, to that effect, judgment of 5 July 2012 in Mc. Baby, T‑466/09, not published, EU:T:2012:346, paragraph 41, and of 26 March 2015 in Nael, T‑596/13, not published, EU:T:2015:193, paragraph 41). As EUIPO correctly observes, it is common knowledge, for the part of the relevant public that knows the prefixes of Gaelic surnames, that they are written interchangeably as ‘mc’ or ‘mac’. Furthermore, the Board of Appeal was right to find, at least for the English-speaking part of the relevant public, that the final part of the contested mark, namely the element ‘coffee’, was understood as making reference to an aromatic drink, traditionally served hot, blended from the beans of the coffee plant. The part of the relevant public that knows the prefixes of Gaelic surnames and that understands the meaning of the English word ‘coffee’ is able to identify, in the contested mark, the association of those two elements, and particularly since, as EUIPO rightly points out, such an association of the prefix ‘mac’ or ‘mc’ with a word used in everyday language is not unusual (judgment of 5 July 2012, Mc. Baby, T‑466/09, not published, EU:T:2012:346). The association, in the contested mark, of a word referring to a Gaelic surname and of another word referring to the name of a drink is more probably understood by the relevant public as a reference to a beverage produced by a person of Scottish or Irish origin than, as the applicant submits, as referring to a familiar expression in which the word ‘mac’ is used as a friendly address to a stranger.31It follows from the above that the marks at issue have a certain conceptual similarity, in so far as they are both perceived, at least by a part of the relevant public, as referring to a surname of Gaelic origin. Consequently, the Board of Appeal was right to find, in paragraph 42 of the contested decision, that the marks at issue were conceptually similar, to a certain degree.32As regards, finally, the overall similarity existing between the marks at issue, which is sufficient for the relevant public to establish a link between them, even if it does not confuse them, it should be recalled that it must be determined taking into account the visual, phonetic and conceptual similarity of those marks and, if appropriate, the assessment of the relative importance that should be attached to those different elements, taking account of the category of goods or services in question and the circumstances in which they are marketed (see, to that effect and by analogy, concerning the assessment of the existence of a likelihood of confusion, judgment of 22 June 1999 in Lloyd Schuhfabrik Meyer, C‑342/97, EU:C:1999:323, paragraph 27).33In the present case, the marks at issue differ visually, but have a certain degree of phonetic and conceptual similarity, which stems from their respective initial part, namely the ‘mac’ and ‘mc’ elements. Those phonetic and conceptual similarities between the marks cannot be totally disregarded on the ground, alleged by the applicant, that the method of marketing the goods covered by the trade mark concerned is based on a selection that is primarily visual. It is true that it follows from the case-law that, where the goods covered by a mark are everyday consumer goods, usually sold in self-service stores, the relevant public, when purchasing, usually perceives the mark concerned visually, so that the visual aspect is more important in the overall assessment of the similarity between that mark and another mark, with which it is in conflict (see, to that effect and by analogy, concerning the assessment of the existence of a likelihood of confusion, judgments of 23 May 2007, Henkel v OHIM — SERCA (COR), T‑342/05, not published, EU:T:2007:152, paragraph 53 and the case-law cited, and of 13 December 2007 in Cabrera Sánchez v OHIM — Industrias Cárnicas Valle (el charcutero artesano), T‑242/06, not published, EU:T:2007:391, paragraph 80 and the case-law cited). However, even if, in such a case, the phonetic similarity is of less importance (judgment of 13 December 2007, el charcutero artesano, T‑242/06, not published, EU:T:2007:391, paragraph 81), in so far as the mark will usually not be pronounced by the consumer of the goods concerned, it does not thereby become negligible and indeed remains as important as ever, since it is not excluded that, in some cases, an oral communication concerning the goods and the mark concerned may have occurred prior to purchase (see, to that effect, judgments of 23 May 2007 in COR, T‑342/05, not published, EU:T:2007:152, paragraph 53, and of 23 September 2011 in NEC Display Solutions Europe v OHIM — C More Entertainment (see more), T‑501/08, not published, EU:T:2011:527, paragraph 53) or that those goods have been advertised orally, on radio or by other consumers (judgment of 23 September 2011, see more, T‑501/08, not published, EU:T:2011:527, paragraph 53). Similarly, while, in such a case, the importance of the conceptual similarity is reduced by the fact that, in self-service stores, consumers lose little time between successive purchases and often do not read all the information on the various products, letting themselves be guided more by the overall visual impression produced by the labels or packaging (judgment of 2 December 2008 in Ebro Puleva v OHIM — Berenguel (BRILLO’S), T‑275/07, not published, EU:T:2008:545, paragraph 24), it does not necessarily become insignificant, in particular where the marks at issue are word marks.34Taking phonetic and conceptual aspects into account, it can be concluded that, even if the marks at issue differ visually and also have conceptual and phonetic differences, because of their different final part, they nonetheless have a certain degree of overall similarity, due to the conceptual and phonetic similarity of their respective initial part, namely the elements ‘mc’ and ‘mac’.35Consequently, even if the Board of Appeal erred in deciding that the marks at issue had a low degree of visual similarity (see paragraph 25 above), it was right to find, in paragraph 48 of the contested decision, that the marks at issue were similar overall, to a certain degree. Accordingly, the error identified in the context of the assessment of the similarity between the marks at issue must not lead to the annulment of the contested decision.36It must therefore be held that the assessments of the Board of Appeal, in the contested decision, that the second condition for application of Article 8(5) of Regulation No 207/2009, referred to in paragraph 15 above, was satisfied in the present case are well founded and, therefore, all of the complaints regarding those assessments must be rejected. On whether the relevant public will establish a link between the marks at issue 37In the first place, it should be pointed out that the types of damage referred to in Article 8(5) of Regulation No 207/2009, where they occur, are the consequence of a connection that the relevant public makes between the marks at issue, that is to say, a link that it establishes between those marks, even though it does not confuse them (see, to that effect, judgment of 6 July 2012 in ROYAL SHAKESPEARE, T‑60/10, not published, EU:T:2012:348, paragraph 19 and the case-law cited). The establishment of such a link must be assessed globally, taking into account all factors relevant to the circumstances of the case (see judgment of 6 July 2012 in ROYAL SHAKESPEARE, T‑60/10, not published, EU:T:2012:348, paragraph 20 and the case-law cited). Those factors include the degree of similarity between the marks at issue, the nature of the goods or services covered by those marks, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public, the strength of the earlier mark’s reputation, the degree of the earlier mark’s distinctive character, whether inherent or acquired through use and the existence of a likelihood of confusion (see judgment of 6 July 2012, ROYAL SHAKESPEARE, T‑60/10, not published, EU:T:2012:348, paragraph 21 and the case-law cited).38In the present case, the applicant contests, in particular, the findings of the Board of Appeal, in the contested decision, according to which, first, the existence of the family of marks ‘Mc’ is a relevant factor in assessing whether the relevant public establish a link between the marks at issue and, secondly, there is a certain degree of similarity between the services and goods in question, due to the close links existing between them.On whether the existence of the family of trade marks ‘Mc’ is a relevant factor when assessing if the relevant public establish a link between the marks at issue39The applicant claims that the Board of Appeal made an error of assessment, in the contested decision, in concluding that, as a result of the element ‘mac’ in the contested mark, the relevant public could associate that trade mark with the ‘Mc’ family of trade marks, from the McDONALD’S trade mark. It considers, in that regard, that the case-law concerning the family of marks must be strictly interpreted, as it derogates from the general principle that any trade mark must be assessed globally. According to the applicant, the documents placed by the intervener on the case-file relating to the proceedings before EUIPO, namely menus from the intervener’s fast-food restaurants, an independent survey carried out in 1991 and in 1992 and the decisions of courts of the Member States, were insufficient to conclude that the prefix ‘mc’ was associated, on the part of the relevant public, with foodstuffs and beverages. Except for a document referring to the McDONALD’s trade mark, those documents all dated from 2010 and, therefore, after 13 October 2008, the date on which the application for registration of the contested trade mark was filed. Furthermore, it is claimed, the part of the independent survey carried out in 1991 reveals only that the persons surveyed would associate the prefix ‘mc’ with the McDONALD’S trade mark, while the part of that survey carried out in 1992, the results of which could have been distorted by a biased drafting of the question posed, only makes it possible to conclude that most of the persons surveyed knew that the prefix ‘mc’, combined with other words, was used in relation to fast-food or self-service restaurant services. According to the applicant, the Board of Appeal was not justified in suggesting that the conclusions of the independent survey continued to be relevant more than 16 years later, and that they were even more relevant. Lastly, the decisions of courts of the Member States examined by the Board of Appeal are not, it is claimed, convincing, since they are not binding on EUIPO and relate to specific situations. The applicant states that it is clear, by implication, from the case-law and from Part C, Section 2, Chapter 7, paragraph 2, p. 4 of the directives concerning proceedings before EUIPO (‘the EUIPO directives’) that the concept of a family of trade marks is not applicable in the present case, in so far as the element ‘mac’ in the contested trade mark is not identical to the element ‘mc’, common to the ‘Mc’ family of trade marks. The element ‘coffee’ in the contested trade mark and which refers to the name of a beverage, differentiates that trade mark from the intervener’s earlier trade marks combining the prefix ‘mc’ with the name of a menu item or a foodstuff, written principally in lower-case letters. The applicant relies on the fact that, within the European Union, the intervener does not sell beverages under a trade mark including the prefix ‘mc’. According to the applicant, the differences which exist between the contested trade mark and the intervener’s earlier trade marks are sufficiently significant to be perceived by the relevant public.40In the alternative, the applicant claims that the McDONALD’S trade mark does not have the same structure as the intervener’s other earlier trade marks, combining the prefix ‘mc’ with the name of a menu item or a foodstuff, such that it does not belong to the ‘Mc’ family of trade marks. Use of the element ‘mc’ and, a fortiori, of the element ‘mac’ is not, it is claimed, open to criticism as it is a common prefix in Gaelic surnames and is used in numerous ways, without raising any objections.41EUIPO and the intervener contest the applicant’s arguments and submit that the Board of Appeal rightly found, in the contested decision, that the existence of the ‘Mc’ family of trade marks was a factor to be taken into account when assessing whether the relevant public established a link between the trade marks at issue.42As has been observed in paragraph 37 above, the establishment, on the part of the public concerned, of a link between the trade marks at issue, must be assessed globally, taking into account all factors relevant to the circumstances of the case (see judgment of 6 July 2012 in ROYAL SHAKESPEARE, T‑60/10, not published, EU:T:2012:348, paragraph 20 and the case-law cited). One of the relevant factors in that regard is the existence of a family of earlier marks (see, to that effect, judgment of 26 September 2012 in IG Communications v OHIM — Citigroup and Citibank (CITIGATE), T‑301/09, not published, EU:T:2012:473, paragraph 106). Where an application for a declaration of invalidity of a mark is based on the existence of several previous marks possessing common characteristics which make it possible for them to be regarded as part of a family, the establishment, on the part of the public concerned, of a link between the mark in respect of which a declaration of invalidity is sought, and the earlier marks may result from the fact that the former has characteristics capable of associating it with the family consisting of the latter (see, to that effect and by analogy, judgment of 13 September 2007 in Il Ponte Finanziaria v OHIM, C‑234/06 P, EU:C:2007:514, paragraphs 62 and 63).43Several marks possessing common characteristics which make it possible for them to be regarded as part of a ‘family’ when, inter alia, they reproduce in full the same distinctive element with the addition of a graphic or word element differentiating them from one another, or when they are characterised by the repetition of a single prefix or suffix taken from an original mark (judgment of 23 February 2006 in Il Ponte Finanziaria v OHIM — Marine Enterprise Projects (BAINBRIDGE), T‑194/03, EU:T:2006:65, paragraph 123). The proprietor of the earlier marks did not provide evidence that those marks are perceived by the relevant public as constituting a family (judgment of 25 November 2014 in UniCredit v OHIM, T‑303/06 RENV and T‑337/06 RENV, EU:T:2014:988, paragraphs 65 to 67).44However, the relevant public cannot be expected, in the absence of use of a sufficient number of trade marks capable of constituting a family, to detect common characteristics in such a family and to establish a link between that family and another trade mark containing elements that are similar to those characteristics. Therefore, for the relevant public to establish a link between a trade mark in respect of which a declaration of invalidity is sought and a ‘family’ of earlier trade marks, the earlier marks forming part of that family must be present on the market (see, to that effect and by analogy, judgments of 13 September 2007 in Il Ponte Finanziaria v OHIM, C‑234/06 P, EU:C:2007:514, paragraph 64, and of 23 February 2006 in BAINBRIDGE, T‑194/03, EU:T:2006:65, paragraph 126).45It is therefore for the proprietor of the earlier marks, which is applying to have the later European Union trade mark declared invalid, to provide evidence of the effective use of a sufficient number of those marks as to be capable of constituting a ‘family’ of marks and, therefore, of demonstrating that such a family exists for the purposes of assessing whether the relevant public establishes a link between the mark in respect of which a declaration of invalidity is sought and the earlier marks which make up that ‘family’ (see, to that effect and by analogy, judgments of 13 September 2007 in Il Ponte Finanziaria v OHIM, C‑234/06 P, EU:C:2007:514, paragraphs 65 and 66, and of 23 February 2006 in BAINBRIDGE, T‑194/03, EU:T:2006:65, paragraph 126) or even simply between the mark in respect of which a declaration of invalidity is sought and the earlier mark originating from that ‘family’.46In view of the case-law cited in paragraphs 42 to 45 above, it must be determined, first, whether the intervener has provided evidence of the actual use of a sufficient number of its earlier marks to constitute, having regard to their common characteristics, a ‘family’ of marks and, secondly, whether the contested mark contains elements that connect with characteristics common to that ‘family’.– The actual use of a sufficient number of earlier marks to constitute a ‘family’ of marks47In paragraphs 57 and 86 of the contested decision, the Board of Appeal endorsed the findings of the Cancellation Division according to which the evidence provided by the intervener was sufficient to prove genuine use of the McDONALD’S mark for fast-food restaurant services. In that regard, it referred in particular to the evidence produced by the intervener that the mark occupied the sixth position in the world in the global analysis of trade marks carried out by a consultancy firm, and that the services sold under that mark generated an income of about EUR 32 billion, which was further supported by declarations, to which were appended product labels, menu displays and promotional material.48Furthermore, in paragraphs 58 to 60 of the contested decision, the Board of Appeal stated that the evidence provided by the intervener was sufficient for a finding of actual use on the market of marks combining the prefix ‘mc’ with another word, such as the marks McFISH, McTOAST, McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN, EGG McMUFFIN and McFEAST, for fast-food restaurant services and products in the menu of fast-food establishments, in a part of the territory of the European Union. In that regard, it referred in particular to the independent survey conducted in 1991 and 1992 and to the decisions of the national courts produced by the intervener.49In the present case, the applicant merely claims that the evidence produced by the intervener does not demonstrate that the actual use of the prefix ‘mc’, combined with another word, was sufficient, in the territory of the European Union, in the relevant periods, for that prefix to be associated, by the relevant public, to foodstuffs and beverages. Thus, the applicant does not dispute the actual use of the earlier marks, but the fact that that use was sufficient for the prefix ‘mc’, combined with another word, to acquire its own distinctive character for foodstuffs and beverages.50At the outset, it should be noted that, in paragraph 59 of the contested decision, the Board of Appeal merely found that the actual use of the prefix ‘mc’, combined with another word, had been, at least in part of the territory of the European Union, sufficient, in the relevant periods, for this prefix to be associated by the relevant public, to fast-food restaurant services and the goods on the menu of fast-food establishments.51In the present case, it is therefore necessary to determine whether the intervener provided the evidence of actual use of the trade marks referred to in paragraphs 47 and 48 above, such as to have conferred on the prefix ‘mc’, combined with another word, its own distinctive character in relation to fast-food restaurant services and the products on the menu of fast-food establishments, at least in part of the territory of the European Union.52In that regard, it should be noted that, to assess whether a trade mark has been put to actual use in a specific case, an overall assessment of the evidence produced must be carried out, taking account of all the relevant factors in the case. In such an assessment, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real, particularly whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark, the nature of those goods or services, the characteristics of the market and the scale and frequency of use of the mark (see, by analogy, judgment of 29 February 2012 in Certmedica International and Lehning entreprise v OHIM — Lehning entreprise and Certmedica International (L112), T‑77/10 and T‑78/10, not published, EU:T:2012:95, paragraph 40 and the case-law cited).53Actual use of a trade mark cannot be proved by means of probabilities or suppositions, but must be demonstrated by solid and objective evidence (see, by analogy, judgment of 23 September 2009 in Cohausz v OHIM — Izquierdo Faces (acopat), T‑409/07, not published, EU:T:2009:354, paragraph 36 and the case-law cited).54However, it follows from Rule 22(4) of Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Regulation No 40/94 (OJ 1995 L 303, p. 1), which applies mutatis mutandis in invalidity proceedings pursuant to Rule 40(6) of that regulation, that the evidence of use is, in principle, confined to the submission of supporting documents and items such as packages, labels, price lists, catalogues, invoices, photographs, newspaper advertisements, and statements in writing sworn or affirmed, as referred to in Article 78(1)(f) of Regulation No 207/2009.55Furthermore, it follows from Article 57(2) of Regulation No 207/2009, read in conjunction with Article 42(2) of that regulation, that the periods to be taken into account to establish genuine use of the McDONALD’S trade mark and, a fortiori, actual use of the other earlier marks, deriving from that mark and that may constitute, according to the intervener, a ‘family’ of trade marks are, on the one hand, the period from 12 January 2004 to 11 January 2009 and, on the other, the period from 13 August 2005 to 12 August 2010 (‘the relevant periods’). Admittedly, taking into consideration circumstances that are subsequent to, or even prior to, the periods thus defined by the applicable legislation is possible, but is necessarily subject to the presentation of documents showing use of the trade marks concerned during those periods (see, by analogy, the judgment of 27 September 2012 in El Corte Inglés v OHIM — Pucci International (PUCCI), T‑39/10, not published, EU:T:2012:502, paragraph 26). The Board of Appeal was therefore right, in paragraph 86 of the contested decision, to endorse the findings set out in paragraph 24 of the decision of the Cancellation Division, which define the relevant periods in the manner referred to above.56The evidence of use produced in the present case by the intervener is listed in paragraphs 29 and 30 of the decision of the Cancellation Division.57As the Board of Appeal was right to state in paragraphs 57 and 86 of the contested decision, the evidence produced relating to the relevant periods prove to the requisite legal standard, at least in part of the territory of the European Union, the genuine use of the McDONALD’S trade mark for fast-food restaurant services. Indeed, that evidence shows that, during the relevant periods, the McDONALD’S trade mark has remained one of the 10 most important marks worldwide and that it has been used intensively, over a substantial part of the territory of the European Union, to designate fast-food services and products on the menu of fast-food establishments.58Furthermore, as the Board of Appeal correctly found in paragraph 58 of the contested decision and as is apparent, moreover, from the evidence produced by the intervener, the intervener had already obtained registration or registered, during the relevant periods, many marks combining the prefix ‘mc’ with another word, such as the trade marks McFISH, McTOAST, McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN, EGG McMUFFIN and McFEAST, for fast-food services and goods on the menu of fast-food establishments. Furthermore, it used the marks McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN in Germany and the marks McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN in the United Kingdom, to designate goods on the menu of fast-food establishments and on advertising material. Even if, as the applicant noted, the intervener did not provide information on the turnover achieved for each of the goods in question, it placed on the case-file relating to the proceedings before EUIPO documents which establish that, in 2004 and 2009, during the relevant periods, it had, respectively, 1262 and 1361 establishments in Germany and 1250 and 1193 establishments in the United Kingdom. Furthermore, it is apparent from the 2009 annual report drawn up by the intervener for Germany, produced during the proceedings before EUIPO and included in the file of the present proceedings, that the intervener’s German establishments achieved a significant turnover in 2008 and 2009. Assessed globally, in accordance with the solution adopted in the judgment of 17 February 2011 in J & F Participações v OHIM — Plusfood Wrexham (Friboi) (T‑324/09, not published, EU:T:2011:47, paragraphs 27 and 31), that evidence makes it possible to find, in the present case, actual use by the intervener of the marks McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN in Germany and in the United Kingdom, namely in a substantial part of the territory of the European Union, during the relevant periods.59Moreover, as correctly observed by the Board of Appeal in paragraph 59 of the contested decision, the courts in Germany, Spain, Sweden and the United Kingdom found, during the relevant periods, that the prefix ‘mc’, combined with another word, had acquired its own distinctive character for fast-food services and goods on the menu of fast-food establishments. While EUIPO is not bound by decisions made by the authorities in the Member States and while, in so far as the application of EU trademark law is independent of any national system, the legality of EUIPO decisions cannot be called into question solely on the basis of assessments contained in earlier national decisions, those decisions may nevertheless be taken into consideration by EUIPO, as indicia, in the context of its assessment of the facts of the case (see, to that effect, judgments of 21 April 2004 in Concept v OHIM (ECA), T‑127/02, EU:T:2004:110, paragraphs 70 and 71; of 9 July 2008 in Reber v OHIM — Chocoladefabriken Lindt & Sprüngli (Mozart), T‑304/06, EU:T:2008:268, paragraph 45; and of 25 October 2012 in riha v OHIM — Lidl Stiftung (VITAL&FIT), T‑552/10, not published, EU:T:2012:576, paragraph 66). Thus, contrary to what the applicant claims, the Board of Appeal could, for purposes of its own assessment of the facts of the case, take into account in the contested decision, as indicia, the findings made by the national courts during the relevant periods, from which it was clear that, in the territory covered by their competence, the use of the prefix ‘mc’, combined with another word, was such that it enabled it to acquire its own distinctive character for fast-food restaurant services and the goods on the menu of fast-food establishments.60As the Board of Appeal rightly pointed out in paragraph 59 of the contested decision, the findings thus made by the national courts were, furthermore, supported by the independent survey carried out in 1991 and 1992, from which it is apparent that, in the mind of the relevant public, the prefix ‘mc’ was largely associated with the sign McDONALD’S and that that prefix, combined with another word, was widely associated with fast-food establishments belonging to the same group. According to the case-law cited in paragraph 55 above, those elements, prior to the relevant periods, could be used by the Board of Appeal. As regards the questions raised in the independent survey, it should be noted, contrary to what the applicant claims, that their formulation made it possible to verify, objectively, to what extent, in the mind of the relevant public, namely the German consumer of fast-food services, the prefix ‘mc’ was associated, on the one hand, with the sign McDONALD’S and, on the other, with fast-food restaurant services belonging to the same group. As regards the specific time frame of those results, it must be held that they do not make it possible to make links between the use of the McDONALD’S trade mark and the earlier marks McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN, the actual use of which was found in paragraph 58 above. Those marks were, moreover, all registered after the period covered by the independent survey. However, those results support the fact that, at the time when those marks were used, the prefix ‘mc’, combined with another word, had already acquired its own distinctive character in relation to fast-food restaurant services. As EUIPO rightly observed, there is no reason to conclude, in the circumstances of this case, that the findings made in the context of the independent survey had been subsequently invalidated, since, as the Board of Appeal noted in paragraph 86 of the contested decision, the evidence produced by the intervener demonstrates that, during the relevant periods, the intervener continued to register trade marks combining the prefix ‘mc’ with another word and that the McDONALD’S trade mark has remained one of the most important trade marks in the world. That proves that the intervener continued to invest to preserve the reputation of that mark for fast-food restaurant services.61The evidence produced by the intervener therefore demonstrates that the use by the latter of the marks McDONALD’S, McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN was sufficient to ensure that, in the relevant periods, the prefix ‘mc’, combined with the name of a menu item or foodstuff, retains its own distinctive character that it had previously acquired in relation to fast-food restaurant services and goods on the menu of fast-food establishments, at least in part of the territory of the European Union.62Consequently, the Board of Appeal was right to find, in paragraph 60 of the contested decision, that the intervener had provided sufficient indications that the earlier marks, referred to in paragraph 58 above, had actually been used during the relevant periods.63In addition, the Board of Appeal was right to find, in essence, in paragraphs 67 to 69, 73 and 74 of the contested decision, that the evidence produced by the intervener demonstrated to the requisite legal standard that, during the relevant periods, the prefix ‘mc’ combined with the name of a menu item or foodstuff, had acquired its own distinctive character in relation to fast-food restaurant services and goods on the menu of fast-food establishments, at least in part of the territory of the European Union, so that, according to the case-law cited in paragraph 43 above, that prefix was capable of characterising the existence of a family of marks.64Finally, it should be noted that the marks McMUFFIN, McRIB, McFLURRY, CHICKEN McNUGGETS, McCHICKEN and EGG McMUFFIN, derived from the McDONALD’S trade mark, fulfil all the conditions to form a ‘family’ of trade marks, within the meaning of the case-law cited in paragraph 43 above, in so far as they are sufficient in number and reproduce in full the same distinctive element, namely the element ‘mc’, with the addition of a word element that differentiates them from each other and that they are characterised by the repetition of the same prefix, ‘mc’, taken from the McDONALD’S trade mark. The fact that, in the latter mark, the second element refers to a surname whereas, in the marks constituting the family, it refers to the name of goods on the menu of fast-food establishments is irrelevant, contrary to what the applicant claims. As the Board of Appeal correctly observed in paragraph 81 of the contested decision, the McDONALD’S trade mark, with a reputation for fast-food restaurant services, is the original trade mark of the family, to which all the derived marks are connected by a common feature, namely the prefix ‘mc’, and from which they are all separated by the same type of final element, which refers to one of the foodstuffs on the menu of the intervener’s fast-food restaurants, as is pointed out in paragraph 61 of the contested decision.65The Board of Appeal was also right to find, therefore, in paragraphs 58 and 60 of the contested decision, that the earlier marks formed a ‘family of marks’ and had been used ‘as a “family of marks”’.– The presence, in the contested mark, of elements capable of associating it with the ‘Mc’ family of trade marks66In paragraphs 63 and 64 of the contested decision, the Board of Appeal held that the contested mark had characteristics capable of associating it with the ‘Mc’ family of marks, in so far as (i) that mark began with the prefix ‘mac’, which would probably be perceived as being almost identical to the prefix common to the ‘Mc’ family of marks, (ii) the structure of the mark at issue was very similar to that which was common to the ‘Mc’ family of marks and (iii) the prefixes ‘mc’ and ‘mac’ occupied, in the contested mark and in the ‘Mc’ family of marks, the same position and had the same semantic content.67In that regard, it must be held that the Board of Appeal was right to find, in the circumstances of the present case, that the contested mark had characteristics capable of associating it with the ‘Mc’ family of marks, for the reasons stated in paragraphs 30 and 64 above.68The arguments put forward by the applicant to contest the existence of characteristics capable of associating the contested mark with ‘Mc’ family of marks are not convincing.69As regards the argument that the initial element of the contested mark, namely the element ‘mac’ is simply similar to the prefix common to the ‘Mc’ family of marks, namely the prefix ‘mc’, whereas Part C, ‘Opposition’, Section 2, Chapter 7, paragraph 2, p. 4 of the EUIPO directives provides that the element common to the contested mark and to the family of marks must be ‘identical or very similar’, it suffices to note that, at least for the part of the relevant public that knows the prefixes of Gaelic surnames, the initial element of that mark, namely the element ‘mac’, is perceived as identical or equivalent to the initial element common to the ‘Mc’ family of marks, namely the element ‘mc’.70As regards, moreover, the arguments based on the visual comparison of the marks at issue, those are irrelevant in so far as it is the conceptual identity and, to a lesser extent, the phonetic identity of the initial elements of the contested mark and the ‘Mc’ family of marks, as well as the identical structure of the former and latter, which make it possible to associate the contested mark with that family of marks (see paragraph 69 above). In any event, the fact that, in their actual use, the contested mark and the earlier marks of that family of marks can be distinguished by the use of upper or lower case characters is irrelevant, according to the case-law already cited in paragraph 24 above.71Furthermore, the argument concerning the different structure of the contested mark and of the earlier marks of the ‘Mc’ family of marks, while relevant, cannot call into question the merits of the assessment of the Board of Appeal. The Board of Appeal was right to find, in paragraph 92 of the contested decision, that the goods for which the disputed mark was registered, and which covered both foodstuffs (including ice cream, muffins, filled sandwiches and toasted sandwiches) and beverages, were closely linked to services for which the McDONALD’S trade mark had a reputation, namely fast-food restaurant services, in the context of which foodstuffs and drinks were supplied to customers (see paragraph 76 et seq. below). Furthermore, in so far as the applicant states that it uses the contested mark only to market beverages, it should be noted that, according to the case-law, it is not the goods for which the mark at issue is actually used in the market that must be taken into account, but those goods for which the mark was registered (see, to that effect, judgment of 13 April 2005 in Gillette v OHIM — Wilkinson Sword (RIGHT GUARD XTREME sport), T‑286/03, not published, EU:T:2005:126, paragraph 33).72Finally, as regards the argument that the contested mark does not reproduce the same structure as that of the McDONALD’S trade mark, this is irrelevant. What matters is that the contested mark reproduces the common characteristics that connect the earlier marks of the ‘Mc’ family of marks and which differentiate them from the McDONALD’S trade mark, which is the original mark of that family of marks.73Ultimately, it should be noted that the Board of Appeal was justified, having regard to the case-law cited in paragraph 42 above, to consider, in paragraphs 99 and 100 of the contested decision, that the existence of the ‘Mc’ family of marks was, in the present case, a factor to be taken into account in assessing the establishment, on the part of the relevant public, of a link between the marks at issue.On whether there is a certain degree of similarity between the goods and services at issue74The applicant submits that the Board of Appeal made an error of assessment, in the contested decision, in finding that there is a certain degree of similarity between the services and the goods at issue, by reason of the close links existing between them. According to the applicant, the services and goods at issue are, for the McDONALD’S trade mark, fast-food restaurant services, in respect of which that trade mark has a reputation, and, for the contested trade mark, the goods for which the latter was registered, namely certain foodstuffs and certain beverages and, in particular, coffee, artificial coffee, instant coffee, instant coffee mix, coffee beans, coffee in ground form in class 30 (‘basic coffee goods’) which are sold under the trade mark concerned. The applicant claims that it is clear from EUIPO’s decision-making practice that restaurant services, on the one hand, and foodstuffs and beverages, on the other hand, are not similar. The fact that consumers of the services and goods at issue are, it is claimed, the same is irrelevant for assessing whether there is a similarity between those services and those goods, since the general public within the European Union purchases all types of services and goods, which could be very similar or very different. Basic coffee goods, it is claimed, are not at all similar to fast-food restaurant services, as they are sold in supermarkets and grocery stores and not in fast-food restaurant establishments and, if they were, consumers would not believe that those establishments were responsible for their manufacture. The fact that the restaurant establishments use raw foodstuffs and serve foodstuffs does not mean that the restaurant services are similar to food foodstuffs, as is apparent both from the case-law and from Part C.2, Chapter 2.B, Section 5.3.3, of the EUIPO directives, as in force at the material time. According to the applicant, the case-law cited by EUIPO is irrelevant because it relates to prepared foods. The applicant considers that the documents placed by the intervener on the case-file relating to the proceedings before EUIPO did not enable the Board of Appeal to claim, in paragraph 101 of the contested decision, that foodstuffs, such as ketchup, were sold under the McDONALD’S trade mark in German and Italian supermarkets75EUIPO and the intervener dispute the applicant’s arguments and submit that the Board of Appeal did not make an error of assessment, in the contested decision, in finding that there is a certain degree of similarity between the services and the goods at issue.76At the outset, it should be recalled that Article 8(5) of Regulation No 207/2009 must be interpreted as meaning that it may be relied on in support of an application for a declaration of invalidity, whether the goods and services covered by the earlier European Union mark and the goods and services for which a European Union trade mark has been registered are identical or similar, or are neither identical nor similar (see, to that effect, judgment of 22 March 2007 in Sigla v OHIM — Elleni Holding (VIPS), T‑215/03, EU:T:2007:93, paragraph 33).77According to case-law, the degree of closeness or dissimilarity of the goods or services concerned is only, in that context, a relevant factor when assessing the establishment, on the part of the public concerned, of a link between the trade marks at issue (see judgment of 6 July 2012 in ROYAL SHAKESPEARE, T‑60/10, not published, EU:T:2012:348, paragraph 21 and the case-law cited).78In assessing the similarity of the goods and services concerned, all the factors relating to those goods and services should be taken into account, including, inter alia, their nature, their intended purpose and their method of use and whether they are in competition with each other or are complementary (judgment of 29 September 1998 in Canon, C‑39/97, EU:C:1998:442, paragraph 23).79As was observed in paragraph 71 above, the goods and services to be compared in the present case are, first, the services for which the McDONALD’S trade mark has a reputation, namely fast-food restaurant services, in the context of which foodstuffs and drinks were supplied to customers and, secondly, the goods for which the contested mark is registered, which covers certain foodstuffs and beverages. For the reasons set out in paragraph 71 above, the applicant cannot validly claim that that comparison should focus, with regard to the contested mark, on drinks, in so far as, in practice, it uses that mark primarily to market drinks.80Admittedly, it is indisputable that foodstuffs and drinks, on the one hand, and restaurant services, on the other, do not have the same nature, the same intended purpose or the same method of use (see, to that effect, judgment of 12 December 2014 in Comptoir d’Épicure v OHIM — A-Rosa Akademie (da rosa), T‑405/13, not published, EU:T:2014:1072, paragraph 96). However, it follows from the case-law that foodstuffs, broadly speaking, including beverages, on the one hand, and restaurant services, on the other, have, despite their differences, a certain degree of similarity, since (i) the foodstuffs concerned are used and offered in the context of restaurant services, so that there is complementarity between those goods and services, (ii) the restaurant services can be offered in the same places as those in which the foodstuffs concerned are sold and (iii) the foodstuffs concerned may originate from the same undertakings or from economically-linked undertakings which market packaged goods, or from restaurants which sell ready-made food to take away (see, to that effect, judgments of 12 December 2014 in da rosa, T‑405/13, not published, EU:T:2014:1072, paragraphs 97 and 98 and the case-law cited, and of 4 June 2015 in Yoo Holdings v OHIM — Eckes-Granini Group (YOO), T‑562/14, not published, EU:T:2015:363, paragraphs 25 to 28).81The fact that the EUIPO directives cited by the applicant do not reflect exactly, in that regard, the case-law cited in paragraph 80 above is irrelevant, since those directives are not binding legal acts for the purpose of interpreting provisions of EU law (judgment of 19 December 2012 in Leno Merken, C‑149/11, EU:C:2012:816, paragraph 48).82In the present case, first of all, it should be noted that the foodstuffs, in the broad sense, covered by the contested mark may be used and offered in the context of the fast-food restaurant services provided by the intervener. Certain foodstuffs covered by the contested mark, such as ice cream, muffins, filled sandwiches and toasted sandwiches, are not, moreover, simple ingredients serving as the basis for dishes served in fast-food restaurants, but correspond to the goods offered, as such, on the menu of those establishments. Thus, as the Board of Appeal correctly observed in paragraph 95 of the contested decision, the foodstuffs and restaurant services in question are intended for the same consumers. There is, therefore, complementarity between those goods and services.83Secondly, as regards foodstuffs covered by the contested mark and corresponding to goods used or offered, as such, on the menu of fast-food establishments, it should be noted that those goods can be consumed on the spot, in the establishments themselves where the intervener’s fast-food restaurant services are offered.84Finally, as the intervener has stated, fast-food restaurant services, such as those which it provides, are also provided on a take-away basis. In such a case, the consumer tends to establish a link between the mark affixed to the packaging of the take-away goods and the commercial origin of those goods.85In the light of the observations set out in paragraphs 82 to 84 above, it should be noted that the assessments of the Board of Appeal in paragraphs 92, 95, 96 and 101 of the contested decision, according to which there is a certain degree of similarity between the services and goods in question, because of the close links between them, are well-founded.86Since those grounds are sufficient to justify the contested decision, there is no need to examine the applicant’s complaints against the superfluous ground set out in the second sentence of paragraph 102 of the contested decision, alleging that some of the intervener’s goods (ketchup) are sold in supermarkets in Germany and Italy. The Board of Appeal therefore correctly concluded, inter alia in paragraph 102 of the contested decision, that the relevant public could establish a mental link between the marks at issue. The risk of unfair advantage being taken from the reputation of the McDONALD’S trade mark by the use without due cause of the contested mark 87At the outset, it should be recalled that the establishment, on the part of the public concerned, of a link between the trade marks involved constitutes a condition which is necessary but not, of itself, sufficient to establish the existence of one of the types of injury against which Article 8(5) of Regulation No 207/2009 ensures protection for the benefit of marks with a reputation (see judgment of 7 December 2010 in Nute Partecipazioni and La Perla v OHIM — Worldgem Brands (NIMEI LA PERLA MODERN CLASSIC), T‑59/08, EU:T:2010:500, paragraph 30 and the case-law cited).88In order to benefit from the protection introduced by Article 8(5) of Regulation No 207/2009, the proprietor of the earlier European Union mark must adduce proof that the use without due cause of the mark, in respect of which a declaration of invalidity is sought, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the earlier European Union mark (see, by analogy, judgment of 7 December 2010 in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraph 31 and the case-law cited).89Just one of those three types of injury suffices for Article 8(5) of Regulation No 207/2009 to apply (see, by analogy, judgment of 7 December 2010 in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraph 32 and the case-law cited) it being noted that both the Cancellation Division and the Board of Appeal, in the contested decision, confined themselves to holding that there was an injury consisting of taking unfair advantage of the repute of the McDONALD’S trade mark.90The applicant submits that the Board of Appeal made an error of assessment, in the contested decision, in finding that the applicant could take unfair advantage of the reputation of the McDONALD’S trade mark through use without due cause of the contested trade mark. It states that the contested decision is based on the incorrect finding of the reputation acquired by the prefix ‘mc’ of the McDONALD’S trade mark, combined with the name of a menu item or a foodstuff. In those circumstances, it would be wrong to claim that the contested mark, combining the prefix ‘mac’ with the word ‘coffee’, would be perceived by the relevant public as reproducing the structure of the McDONALD’S trade mark. According to the applicant, the Board of Appeal erred, in paragraph 99 of the contested decision, in finding that, in so far as it only affixed the contested mark on coffee and coffee packaging, there was no doubt that the applicant was seeking to reproduce, identically, the structure common to the ‘Mc’ family of trade marks. In that regard, the applicant states that, in the present proceedings, EUIPO and the intervener do not claim, moreover, that it chose the contested mark in bad faith. Furthermore, the intervener has not brought any infringement proceedings against it. The applicant submits that a statement which it placed on the file of the proceedings before EUIPO confirms that the contested mark was chosen in good faith and that use of the mark to sell coffee is explained by the fact that the element ‘coffee’ refers to those goods.91Finally, the applicant complains that the Board of Appeal did not take market realities into account even though, when the marks concerned are actually used in that market, the proprietor of the earlier European Union mark must provide evidence that the proprietor of the trade mark in respect of which a declaration of invalidity is sought actually takes unfair advantage of the reputation of its mark. The Board of Appeal, it is claimed, overlooked the fact that, in Bulgaria, Estonia, Cyprus, Latvia, Hungary and Poland, at least since 1994, the marks at issue have coexisted peacefully, even when, as in Poland, the use of the contested mark has been intensive. According to the applicant, it must be assumed that the reality of the market is the same throughout the European Union. However, the fact that the proprietor of the earlier trade marks has brought actions against the proprietor of the trade mark in respect of which a declaration of invalidity is sought is not, it is claimed, a factor which makes it possible to find, on the part of the relevant public, that there is confusion, the establishment of a link or an image transfer between those trade marks. The applicant claims that the intensive, prolonged, peaceful use made in good faith, alongside the McDONALD’S trade mark, with a reputation for fast-food restaurant services, of the contested trade mark covering basic coffee goods constitutes due cause for use of that latter trade mark, for the purposes of Article 8(5) of Regulation No 207/2009.92EUIPO and the intervener dispute the applicant’s arguments and submit that the Board of Appeal did not make an error of assessment, in the contested decision, in concluding that the use without due cause of the trade mark contested by the applicant takes unfair advantage of the reputation of the McDONALD’S trade mark.93In that regard, it should be noted that the existence of injury consisting of unfair advantage taken of the distinctive character or the repute of the earlier mark, in so far as what is prohibited is the drawing of benefit from that mark by the proprietor of the later mark, must be assessed by reference to average consumers of the goods or services for which the later mark is registered, who are reasonably well informed and reasonably observant and circumspect (see, by analogy, judgment of 27 November 2008 in Intel Corporation, C‑252/07, EU:C:2008:655, paragraphs 35 and 36).94The existence of an ‘advantage [taken unfairly] of the repute of the earlier [European Union] trade mark’, within the meaning of Article 8(5) of Regulation No 207/2009, does not require that there be a likelihood of confusion or a likelihood of detriment to the repute of that mark or, more generally, to its proprietor (see, by analogy, judgment of 18 June 2009 in L’Oréal and Others, C‑487/07, EU:C:2009:378, paragraph 50). This arises from the use by a third party of a mark similar to the earlier European Union mark where, by that use, that third party attempts to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation, the marketing effort made by the proprietor of the European Union mark in order to create and maintain the image of that mark (see, to that effect, judgments of18 June 2009 in L’Oréal and Others, C‑487/07, EU:C:2009:378, paragraph 50, and of 7 December 2010 in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraph 44 and the case-law cited).95In order to determine whether the use of the mark in respect of which a declaration of invalidity is sought takes unfair advantage of the distinctive character or the repute of the earlier European Union mark, it is necessary to make a global assessment, taking into account all factors relevant to the circumstances of the case, which include the strength of the mark’s reputation and the degree of distinctive character of the earlier European Union mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned. As regards the strength of the reputation and the degree of distinctive character of the earlier European Union mark, the stronger that mark’s distinctive character and reputation are, the easier it is to accept that detriment has been caused to it. Furthermore, the more immediately and strongly the European Union mark is brought to mind by the mark in respect of which a declaration of invalidity is sought, the greater the likelihood that the current or future use of the sign is taking, or will take, unfair advantage of the repute of the earlier European Union mark (see judgment of 7 December 2010 in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraph 42 and the case-law cited).96The proprietor of the earlier European Union mark is not required to demonstrate actual and present injury to its mark for the purposes of Article 8(5) of Regulation No 207/2009. When it is foreseeable that such injury will ensue from the use which the proprietor of the mark, in respect of which a declaration of invalidity is sought, may be led to make of its mark, the proprietor of the earlier European Union mark cannot be required to wait for this actually to occur in order to be able to prohibit that use. The proprietor of the earlier European Union mark must, however, prove that there is a serious risk that such an injury will occur in the future (see judgment of 7 December 2010, in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraphs 33 and 54 and the case-law cited).97Where the proprietor of the earlier European Union mark has shown that there is either actual and present injury to its mark or, failing that, a serious risk that such injury will occur in the future, it is for the proprietor of the mark, in respect of which a declaration of invalidity is sought, to establish that there is due cause for the use of that mark (see judgment of 7 December 2010 in NIMEI LA PERLA MODERN CLASSIC, T‑59/08, EU:T:2010:500, paragraph 34 and the case-law cited).98In the light of the rules referred to in paragraphs 93 to 97 above, it is appropriate to consider the arguments of the parties directed against the grounds which led the Board of Appeal, in the contested decision, to endorse the findings of the Cancellation Division according to which the use without due cause of the contested mark unfairly took advantage of the repute of the McDONALD’S trade mark.99In the present case, the Board of Appeal concluded, in paragraph 90 of the contested decision, that the relevant public was the relevant public for the goods covered by the contested mark, namely the general public within the European Union, with an average level of attention. Furthermore, the Board of Appeal found, in paragraph 108 of the contested decision, that it was sufficiently established that the use without due cause of the contested mark took unfair advantage of the repute of the McDONALD’S trade mark. As is apparent in paragraphs 102 to 108 of that decision, it indeed felt it was highly likely that the contested mark rode on the coat-tails of the McDONALD’S trade mark, in order to benefit from its power of attraction, its reputation and its prestige, and exploited, without paying any financial compensation, the marketing effort made by the intervener in order to create and maintain the image of the McDONALD’S trade mark. According to the Board of Appeal, all the factors of the case made it possible to conclude that the relevant public or a substantial part of it, could establish a mental link between the marks at issue, in so far as, upon seeing the contested mark affixed to the goods closely linked to those of the intervener, it could be attracted by the fact that that mark had practically the same prefix and reproduced the same structure as the McDONALD’S trade mark and could associate that mark with the ‘Mc’ family of marks, of which the McDONALD’S trade mark was the original trade mark.100Therefore, the Board of Appeal concluded that the use of the contested mark could entail a transfer of the image of the McDONALD’S trade mark, or of the characteristics which it projects, to the goods covered by the contested mark. The relevant factors for its assessment were, as stated in paragraphs 99 to 101 of the contested decision (i) the considerable reputation of the McDONALD’S trade mark, (ii) the distinctive character acquired by the prefix ‘mc’, combined with the name of a menu item or foodstuff, for fast-food restaurant services and goods on the menu of fast-food establishments, (iii) the fact that the contested mark reproduced the same structure as ‘Mc’ family of marks and (iv) the fact that the goods and services in question had a certain degree of similarity, because of the close links between them.101As EUIPO rightly observes, the applicant does not dispute the assessment of the relevant public made by the Board of Appeal. Moreover, that definition is correct and must be upheld. The products covered by the contested mark are intended for the general public within the European Union, which has an average level of attention. Moreover, the McDONALD’S trade mark was registered on 16 July 1999, with a prior right on the 1st April 1996 and enjoyed, in the European Union, a considerable reputation for fast-food restaurant services which, furthermore, is not disputed by the applicant (see paragraph 16 above).102Regarding the applicant’s complaint that the Board of Appeal could not, in the contested decision, make a finding of the reputation acquired by the prefix ‘mc’, combined with the name of a menu item or a foodstuff, for fast-food restaurant services and goods on the menu of fast-food establishments, it must be observed that this complaint was rejected in paragraph 63 above. The Board of Appeal was right to conclude that the considerable reputation of the McDONALD’S trade mark extended to the characteristic elements of the ‘Mc’ family of trade marks, without having to determine, as submitted by the applicant, whether each of the marks constituting that family was a mark with a reputation.103As regards the applicant’s argument that it did not intend to reproduce the structure common to the ‘Mc’ family of marks in the contested mark, it was noted, in paragraph 67 above, that the Board of Appeal had rightly held, in paragraphs 61 and 99 of the contested decision, that the contested mark reproduced the ‘Mc’ family of marks. Whereas, for the reasons set out in paragraph 79 above, the Board of Appeal had no reason, in paragraph 99 of the contested decision, to rely on the argument that the applicant marketed, in practice, only coffee under the contested mark, nor to conclude from that that the contested mark sought to reproduce the ‘Mc’ family of marks, the fact remains that the error thus committed does not affect the legality of the contested decision. The grounds in question are superfluous in that decision and do not alter the conclusion, drawn in paragraph 61 of that decision, that the contested mark reproduces the structure common to the ‘Mc’ family of marks. The Board of Appeal was therefore right, in paragraph 99 of the contested decision, to find that the existence of a ‘Mc’ family of marks was a key factor to take into account when assessing whether there was an unfair advantage.104As regards the applicant’s complaint alleging the absence of a close link between the goods and services in question, it should be recalled, as already noted in paragraph 83 above, that, in paragraphs 92, 95, 96 and 101 of the contested decision, the Board of Appeal correctly held that there was a certain degree of similarity between the goods and services in question, because of the close links between them.105According to the case-law cited in paragraph 95 above and in view of the conclusions drawn, in paragraph 73 above, as to the relevance of the factor relating to the existence of an ‘Mc’ family of marks, all of the factors considered by the Board of Appeal were relevant for an overall assessment of whether unfair advantage was taken of the reputation of the McDONALD’S trade mark through the use of the contested mark.106In an overall assessment of all those factors, the Board of Appeal, as already noted in paragraph 99 above, found that it was highly likely that the contested mark rode on the coat-tails of the McDONALD’S trade mark, due to the possible transfer, by the relevant public, of the image of the latter or of the characteristics which it projects, to the goods covered by the former.107As regards the applicant’s complaint that the Board of Appeal did not take into account the reality of the market when making that assessment, it should be noted that the Board of Appeal only had to examine, in accordance with the case-law already cited in paragraph 96 above, whether the proprietor of the earlier European Union mark had adduced prima facie evidence of a future risk, which is not hypothetical, of unfair advantage. Such a conclusion could be established on the basis of logical deductions made from an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as any other circumstance of the case (judgment of 10 May 2012 in Rubinstein and L’Oréal v OHIM, C‑100/11 P, EU:C:2012:285, paragraph 95).108As is apparent from paragraph 99 above, the Board of Appeal concluded, after an overall analysis of the relevant factors in the present case, that there was a serious risk that the relevant public would be able to associate the contested trade mark with the ‘Mc’ family of trade marks and establish a mental link between the marks at issue, so that there was a serious likelihood that use of the contested trade mark would take unfair advantage of the reputation of the McDONALD’S trade mark.109In so far as the applicant complains, inter alia, that the Board of Appeal did not take into account the fact that the marks at issue had peacefully coexisted in Bulgaria, Estonia, Cyprus, Latvia, Hungary and Poland, at least since 1994, its arguments must be rejected. The marks at issue cannot be regarded as being or having been in peaceful coexistence for the precise reason that the intervener brought an application for cancellation of the contested mark, invoking the McDONALD’S trade mark. Furthermore, as that application was brought less than seven months after the registration of the contested mark, there could be no limitation in consequence of acquiescence, within the meaning of Article 54(1) of Regulation No 207/2009, in the present case. To the extent that, in the context of this complaint, the applicant invokes, in practice, the peaceful coexistence of the McDONALD’S trade mark, not with the contested mark, but with some of its national marks, identical to the contested mark, registered in Bulgaria, Estonia, Cyprus, Latvia, Hungary and Poland, at least since 1994, it should be noted, as the intervener correctly observed, that, even assuming that those marks have coexisted peacefully since the respective entry of the Member States concerned into the European Union, that does not demonstrate that that coexistence was general and related to all of the national marks, identical to the contested trade mark, registered by the applicant within the European Union. In the present case, the national decisions placed by the intervener on the case-file relating to the proceedings before EUIPO demonstrate, on the contrary, that the coexistence of the McDONALD’S trade mark and the applicant’s national marks, identical to the contested mark, has not been ‘peaceful’ in Germany, Spain, Sweden and the United Kingdom, the applicant’s national marks having been the subject of a number of disputes before the courts of those Member States (see, to that effect and by analogy, judgments of 3 September 2009, Aceites del Sur-Coosur v Koipe, C‑498/07 P, EU:C:2009:503, paragraph 83, and of 8 December 2005 in Castellblanch v OHIM — Champagne Roederer (CRISTAL CASTELLBLANCH), T‑29/04, EU:T:2005:438, paragraph 74).110In any event, as the intervener correctly observes, the absence of a serious risk that the relevant public in the Member States in question would be able to associate certain other national marks of the applicant, identical to the contested mark, with the ‘Mc’ family of marks and establish a mental link between those national marks and the McDONALD’S mark cannot be inferred from the mere fact that the intervener did not oppose the registration of those national marks or apply for a declaration that they were invalid (see, to that effect and by analogy, as regards the existence of a likelihood of confusion, judgment of 11 May 2005 in Grupo Sada v OHIM — Sadia (GRUPO SADA), T‑31/03, EU:T:2005:169, paragraphs 85 and 86), even where there has been considerable use of those marks, as was the case, according to the applicant, in Poland.111There may be many reasons for this absence of a challenge, which are not necessarily related to the objective perception that the relevant public, in the Member States concerned, will have regarding the marks concerned. In the present case, the applicant did not provide any evidence that would rule out, in any event, that the general public in Bulgaria, Estonia, Cyprus, Latvia, Hungary or Poland would be able to associate the applicant’s national marks, identical to the contested mark, with the ‘Mc’ family of marks and establish a mental link between those national marks and the McDONALD’S trade mark (see, to that effect and by analogy, judgment of 26 September 2012 in CITIGATE, T‑301/09, not published, EU:T:2012:473, paragraph 128 and the case-law cited).112The complaint that the applicant makes, in essence, against the Board of Appeal for failing to find, in paragraphs 114 to 116 of the contested decision, that the applicant had due cause to use the contested mark, remains to be examined.113It follows from Article 8(5) of Regulation No 207/2009 that the proprietor of a trade mark with a reputation may be obliged, pursuant to the concept of ‘due cause’ within the meaning of that provision, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith (see, to that effect and by analogy, judgment of 6 February 2014 in Leidseplein Beheer and de Vries, C‑65/12, EU:C:2014:49, paragraph 60).114In the present case, in so far as the sign relied on by the applicant in the present complaint corresponds to the contested mark, it should be noted that the case-law cited in paragraph 113 above is not applicable, for two reasons. On the one hand, as the intervener correctly observes, the contested mark has not been used before the McDONALD’S trade mark, the latter having been registered before the contested mark. Furthermore, as already noted in paragraph 109 above, it cannot be held that the marks at issue have coexisted peacefully precisely because the intervener defended its rights in the McDONALD’S trade mark by bringing an application for a declaration of invalidity of the contested trade mark within the required time limits.115In so far as the signs relied on by the applicant in this complaint correspond to national marks, identical to the contested mark, that it registered in Bulgaria, Estonia, Cyprus, Latvia, Hungary and Poland, at least since 1994, it should be noted that, even assuming that those marks have coexisted peacefully with the McDONALD’S trade mark in the national markets concerned, that does not mean, as noted in paragraph 109 above, that the applicant tolerates or should tolerate the use of the contested mark throughout the European Union market.116The Board of Appeal therefore correctly found, in paragraphs 114 to 116 of the contested decision, that the applicant did not have just cause to use the contested mark.117Since none of the complaints raised by the applicant have been upheld, the present action must be dismissed in its entirety. Costs 118Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.119Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the forms of order sought by EUIPO and the intervener.On those grounds,hereby: 1. Dismisses the action; 2. Orders Future Enterprises Pte Ltd to pay the costs. KanninenPelikánováButtigiegDelivered in open court in Luxembourg on 5 July 2016.[Signatures]Table of contentsBackground to the disputeForms of order soughtLawPreliminary remarks on the legal framework and the subject-matter of the proceedingsOn whether there is a certain degree of similarity between the marks at issueOn whether the relevant public will establish a link between the marks at issueThe risk of unfair advantage being taken from the reputation of the McDONALD’S trade mark by the use without due cause of the contested markCosts( *1 ) Language of the case: English. | 66638-d5028ae-4528 | EN |
Fresh proceedings may be brought against a suspect in a Schengen State where previous criminal proceedings in another Schengen State were terminated without a detailed investigation | 29 June 2016 ( *1 )‛Reference for a preliminary ruling — Convention Implementing the Schengen Agreement — Articles 54 and 55(1)(a) — Charter of Fundamental Rights of the European Union — Article 50 — Ne bis in idem principle — Whether an accused may be prosecuted in a Member State after criminal proceedings brought against him in another Member State have been terminated by the public prosecutor’s office without a detailed investigation — No examination of the merits of the case’In Case C‑486/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Hanseatisches Oberlandesgericht Hamburg (Higher Regional Court, Hamburg, Germany), made by decision of 23 October 2014, received at the Court on 10 November 2014, in the criminal proceedings against Piotr Kossowski, Other party: Generalstaatsanwaltschaft Hamburg, THE COURT (Grand Chamber),composed of K. Lenaerts, President, R. Silva de Lapuerta, M. Ilešič, L. Bay Larsen, J.L. da Cruz Vilaça and F. Biltgen, Presidents of Chambers, E. Juhász, A. Borg Barthet, J. Malenovský, E. Levits, J.-C. Bonichot, A. Prechal (Rapporteur), C. Vajda, S. Rodin and K. Jürimäe, Judges,Advocate General: Y. Bot,Registrar: M. Aleksejev, Administrator,having regard to the written procedure and further to the hearing on 29 September 2015,after considering the observations submitted on behalf of:—P. Kossowski, by I. Vogel, Rechtsanwältin,the Generalstaatsanwaltschaft Hamburg, by L. von Selle and C. Rinio, acting as Agents,the German Government, by T. Henze and J. Kemper, acting as Agents,the French Government, by F.X. Bréchot, D. Colas and C. David, acting as Agents,the Netherlands Government, by M. Bulterman and M. de Ree, acting as Agents,the Polish Government, by B. Majczyna, J. Sawicka and M. Szwarc, acting as Agents,the United Kingdom Government, by L. Christie, acting as Agent, and by J. Holmes, Barrister,the Swiss Government, by R. Balzaretti, acting as Agent,the European Commission, by W. Bogensberger and R. Troosters, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 15 December 2015,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 54 and 55 of the Convention Implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, which was signed in Schengen (Luxembourg) on 19 June 1990 and entered into force on 26 March 1995 (OJ 2000 L 239, p. 19; the ‘CISA’), and of Articles 50 and 52(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’).2The request has been made in criminal proceedings brought in Germany against Mr Piotr Kossowski (‘the accused’) who is alleged to have committed, in Germany on 2 October 2005, acts classified as extortion with aggravating factors. Legal context EU law The Charter3Article 50 of the Charter, entitled ‘Right not to be tried or punished twice in criminal proceedings for the same criminal offence’, is worded as follows:‘No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.’The CISA4The CISA was concluded in order to ensure the application of the Agreement between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, signed in Schengen on 14 June 1985 (OJ 2000 L 239, p. 13).5Articles 54 and 55 of the CISA are included in Chapter 3 of that convention, which is entitled ‘Application of the ne bis in idem principle’. Article 54 of the CISA provides:‘A person whose trial has been finally disposed of in one Contracting Party may not be prosecuted in another Contracting Party for the same acts provided that, if a penalty has been imposed, it has been enforced, is actually in the process of being enforced or can no longer be enforced under the laws of the sentencing Contracting Party.’6Article 55 of the CISA provides:‘1. A Contracting Party may, when ratifying, accepting or approving this Convention, declare that it is not bound by Article 54 in one or more of the following cases:(a)where the acts to which the foreign judgment relates took place in whole or in part in its own territory; in the latter case, however, this exception shall not apply if the acts took place in part in the territory of the Contracting Party where the judgment was delivered;…4. The exceptions which were the subject of a declaration under paragraph 1 shall not apply where the Contracting Party concerned has, in connection with the same acts, requested the other Contracting Party to bring the prosecution or has granted extradition of the person concerned.’7When the CISA was ratified, the Federal Republic of Germany made the following reservation in relation to Article 54 of the CISA, pursuant to Article 55(1) thereof (BGBl. 1994 II, p. 631):‘The Federal Republic of Germany is not bound by Article 54 of the [CISA]where the acts to which the foreign judgment relates took place in whole or in part in its own territory …’The Protocol integrating the Schengen acquis into the framework of the European Union8The CISA was integrated into EU law by Protocol (No 2) integrating the Schengen acquis into the framework of the European Union, annexed to the EU Treaty, in the version in force before the Treaty of Lisbon, and to the EC Treaty by the Treaty of Amsterdam (OJ 1997 C 340, p. 93), as part of ‘the Schengen acquis’, as defined in the annex to that protocol. The protocol authorised 13 Member States to establish closer cooperation among themselves within the scope of the Schengen acquis.Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union9Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union (OJ 2010 C 83, p. 290), annexed to the Treaty of Lisbon, authorised 25 Member States, within the institutional and legal framework of the European Union, to establish closer cooperation among themselves in areas covered by the Schengen acquis. Accordingly, under Article 2 of that protocol:‘The Schengen acquis shall apply to the Member States referred to in Article 1, without prejudice to Article 3 of the Act of Accession of 16 April 2003 or to Article 4 of the Act of Accession of 25 April 2005. The Council will substitute itself for the Executive Committee established by the Schengen agreements.’ Polish law 10Article 327 of the Kodeks postępowania karnego (Criminal Procedure Code) provides, at paragraph 2:‘An investigation procedure which has been finally closed may be reopened, by order of the Public Prosecutor’s Office, against a person who has been subject to such a procedure as a suspect, only where essential facts or evidence, which were not known during the previous procedure, come to light. …’11Article 328 of the Criminal Procedure Code provides:‘1. The Public Prosecutor’s Office may annul a final decision closing an investigation procedure against a person who has been subject to such a procedure as a suspect where it finds that closure of the investigation procedure was unfounded …2. After the expiry of six months from the date when closure of the investigation procedure has become final, the public prosecutor’s office may annul or vary the decision, or the reasons given for it, only in favour of the suspect.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 12According to the order for reference, the Staatsanwaltschaft Hamburg (Public Prosecutor’s Office, Hamburg, Germany) alleges that the accused, on 2 October 2005 in Hamburg (Germany), committed acts which, under German criminal law, are classified as extortion with aggravating factors. At the time of the crime, the accused fled in the vehicle belonging to the victim in the main proceedings. A criminal investigation was initiated against the accused in Hamburg.13On 20 October 2005 the Polish authorities stopped a car driven by the accused in the course of a roadside check in Kołobrzeg (Poland) and arrested him with a view to the enforcement of a term of imprisonment to which he had been sentenced in Poland in a different case. After making enquiries about the vehicle driven by the accused, the Prokuratura Rejonowa w Kołobrzegu (District Public Prosecutor’s Office, Kołobrzeg, Poland) opened an investigation procedure against him, accusing him of extortion with aggravating factors, as laid down in Article 282 of the Polish Criminal Code, on account of his actions in Hamburg on 2 October 2005.14As a matter of mutual legal assistance, the Prokuratura Okręgowa w Koszalinie (Regional Public Prosecutor’s Office, Koszalin, Poland) requested copies of the investigation file from the Hamburg Public Prosecutor’s Office. Those copies were provided in August 2006.15In December 2006, the Kołobrzeg District Public Prosecutor’s Office sent to the Hamburg Public Prosecutor’s Office its decision of 22 December 2006 terminating, for lack of sufficient evidence, the criminal proceedings against the accused.16It is common ground that the reasons for that decision were that the accused had refused to give a statement and that the victim in the main proceedings and a hearsay witness were living in Germany, so that it had not been possible to interview them in the course of the investigation and had therefore not been possible to verify the statements made by the victim, which were, in parts, vague and contradictory.17The referring court adds that, according to the appeal guidance enclosed with the decision terminating the criminal proceedings, the persons concerned had a right to appeal against that decision within a period of seven days from service of the decision. The victim in the main proceedings does not appear to have brought such an appeal.18On 24 July 2009 the Hamburg Public Prosecutor’s Office issued a European arrest warrant against the accused, having already obtained a national arrest warrant against him from the Amtsgericht Hamburg (District Court, Hamburg, Germany) on 9 January 2006. By letter dated 4 September 2009 the Republic of Poland was requested to surrender the accused to the Federal Republic of Germany. Execution of the European arrest warrant was refused by decision of the Sąd Okręgowy w Koszalinie (Regional Court, Koszalin, Poland) of 17 September 2009, in view of the decision of the Kołobrzeg District Public Prosecutor’s Office terminating the criminal proceedings, which that court classified as final for the purposes of the Polish Criminal Procedure Code.19On 7 February 2014, the accused, who was still wanted in Germany, was arrested in Berlin (Germany). The Hamburg Public Prosecutor’s Office brought charges against him on 17 March 2014. The Landgericht Hamburg (Regional Court, Hamburg, Germany) refused to open trial proceedings, basing its decision on the fact that further prosecution had been barred, for the purposes of Article 54 of the CISA, by the decision of the Kołobrzeg District Public Prosecutor’s Office terminating the criminal proceedings. Consequently, the Landgericht, by decision of 4 April 2014, discharged the arrest warrant and the accused, who had been remanded in custody, was then released.20The referring court, hearing an appeal brought by the Hamburg Public Prosecutor’s Office against that decision, takes the view that, under the German law applicable in this regard, the evidence against the accused is sufficient to justify the opening of trial proceedings before the Landgericht Hamburg (Regional Court, Hamburg) and the acceptance of the indictment for the purposes of those proceedings, unless the principle of ne bis in idem laid down in Article 54 of the CISA and Article 50 of the Charter is a bar to that.21In that regard, the referring court is uncertain whether the reservation made by the Federal Republic of Germany under Article 55(1)(a) of the CISA remains valid. If that were the case, the ne bis in idem principle would not apply in the present case as the acts which the accused is alleged to have committed took place on German territory and the German law enforcement authorities did not request the Polish authorities to bring the prosecution in accordance with Article 55(4) of the CISA.22In the event of that reservation not being valid, the referring court is uncertain whether, since the acts giving rise to prosecution in Germany and Poland are the same, the accused may, as a result of the decision of the Kołobrzeg District Public Prosecutor’s Office, be regarded as a person whose trial has been ‘finally disposed of’ within the meaning of Article 54 of the CISA or who has been ‘finally acquitted’ within the meaning of Article 50 of the Charter. It takes the view that the case before it can be distinguished from the case which gave rise to the judgment of 5 June 2014 in M (C‑398/12, EU:C:2014:1057), owing to the fact that no detailed investigation was carried out prior to the decision of 22 December 2006 terminating the criminal proceedings. The referring court also has doubts as to whether, for such a decision to be final, certain obligations imposed to penalise the unlawful conduct must have been performed.23In those circumstances, the Hanseatisches Oberlandesgericht Hamburg (Higher Regional Court, Hamburg, Germany) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Do the reservations declared at the time of ratification by the contracting parties to the CISA pursuant to Article 55(1)(a) of the CISA — specifically, the reservation [relating to Article 54 of the CISA] — continue in force following the integration of the Schengen acquis into the legal framework of the European Union by [Protocol (No 2) integrating the Schengen acquis into the framework of the European Union], as preserved by [Protocol (No 19) to the Schengen acquis integrated into the framework of the European Union]? Are these exceptions proportionate limitations on Article 50 of the Charter, within the meaning of Article 52(1) of the Charter?(2)If that is not the case, are the prohibitions on double punishment and double prosecution laid down by Article 54 of the CISA and Article 50 of the Charter to be interpreted as prohibiting prosecution of an accused person in one Member State — in the present case, Germany — where his prosecution in another Member State — in the present case, Poland — has been discontinued by the public prosecutor’s office, without any obligations imposed by way of penalty having been fulfilled and without any detailed investigation, for factual reasons in the absence of sufficient evidence for a probable conviction, and can be reopened only if essential circumstances previously unknown come to light, where such new circumstances have not in fact emerged?’ The jurisdiction of the Court 24It can be seen from the order for reference that the request for a preliminary ruling is based on Article 267 TFEU, whereas the questions referred concern the CISA, a convention adopted under Title VI of the EU Treaty, in the version in force before the Treaty of Lisbon.25It is undisputed in this regard that the system laid down in Article 267 TFEU applies to the Court’s jurisdiction to give preliminary rulings under Article 35 EU, itself applicable until 1 December 2014, subject to the conditions laid down by that latter provision (judgment of 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraph 43).26The Federal Republic of Germany made a declaration under Article 35(2) EU accepting the jurisdiction of the Court of Justice to give preliminary rulings in accordance with the arrangements laid down in Article 35(3)(b) EU, as can be seen from the information concerning the date of entry into force of the Treaty of Amsterdam, published in the Official Journal of the European Communities of 1 May 1999 (OJ 1999 L 114, p. 56).27In those circumstances, the fact that the order for reference does not mention Article 35 EU, but instead refers to Article 267 TFEU, cannot of itself mean that the Court does not have jurisdiction to answer the questions raised by the Hanseatisches Oberlandesgericht Hamburg (Higher Regional Court, Hamburg) (see, to that effect, judgment of 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraph 45).28It follows from the foregoing that the Court has jurisdiction to answer the questions referred. Consideration of the questions referred 29By its questions, the referring court asks, in essence (i) whether the declaration made by the Federal Republic of Germany under Article 55(1)(a) of the CISA remains valid and (ii) if Question 1 is answered in the negative, whether the accused’s case has been ‘finally disposed of’, for the purposes of Article 54 of the CISA and Article 50 of the Charter, in circumstances such as those at issue in the main proceedings.30Since the question of the possible applicability of the exception in Article 55(1)(a) of the CISA to the ne bis in idem rule will arise only when, in circumstances such as those in issue in the main proceedings, that rule applies because a person’s trial has been ‘finally disposed of’ within the meaning of Article 54 of the CISA, it is appropriate to start by answering Question 2. Question 2 31It should be recalled at the outset that the Court has already held — at paragraph 35 of the judgment of 5 June 2014 in M (C‑398/12, EU:C:2014:1057) — that, since the right not to be tried or punished twice in criminal proceedings for the same offence is set out both in Article 54 of the CISA and in Article 50 of the Charter, Article 54 must be interpreted in the light of Article 50.32The Court therefore considers that, by Question 2, the referring court is essentially asking whether the ne bis in idem principle laid down in Article 54 of the CISA, read in the light of Article 50 of the Charter, must be interpreted as meaning that a decision of the public prosecutor terminating criminal proceedings and finally closing the investigation procedure against a person — albeit with the possibility of its being reopened or annulled, without any penalties having been imposed, may be characterised as a final decision for the purposes of those articles, when that procedure was closed without a detailed investigation having been carried out.33As is clear from the wording of Article 54 of the CISA, no one may be prosecuted in a Contracting State for the same acts as those in respect of which his trial has been ‘finally disposed of’ in another Contracting State.34For a person to be regarded as someone whose trial has been ‘finally disposed of’ within the meaning of Article 54 of the CISA, in relation to the acts which he is alleged to have committed, it is necessary, in the first place, that further prosecution has been definitively barred (see, to that effect, judgment of 5 June 2014 in M, C‑398/12, EU:C:2014:1057, paragraph 31 and the case-law cited).35That first condition must be assessed on the basis of the law of the Contracting State in which the criminal-law decision in question has been taken. A decision which does not, under the law of the Contracting State which instituted criminal proceedings against a person, definitively bar further prosecution at national level cannot, in principle, constitute a procedural obstacle to the opening or continuation of criminal proceedings in respect of the same acts against that person in another Contracting State (see, to that effect, judgments of 22 December 2008 in Turanský, C‑491/07, EU:C:2008:768, paragraph 36, and 5 June 2014 in M, C‑398/12, EU:C:2014:1057, paragraphs 32 and 36).36The order for reference indicates that, in the case in the main proceedings, under Polish law the decision of the Kołobrzeg District Public Prosecutor’s Office terminating the criminal proceedings precludes any further prosecution in Poland.37It also appears from the documents before the Court that neither (i) the possibility, provided for in Article 327(2) of the Criminal Procedure Code, of reopening the investigation procedure where essential facts or evidence, which were not known during the previous procedure, come to light nor (ii) the right of the Principal Public Prosecutor, under Article 328 of that code, to annul a final decision closing the investigation procedure where he finds that the closure of the procedure was unfounded, calls into question, under Polish law, the fact that further prosecution is definitively precluded.38As regards the fact that (i) the decision at issue in the main proceedings was taken by the Kołobrzeg District Public Prosecutor’s Office in its capacity as a prosecuting authority and (ii) no penalty was enforced, neither of those factors is decisive for the purpose of ascertaining whether that decision definitively bars prosecution.39Article 54 of the CISA is also applicable where an authority responsible for administering criminal justice in the national legal system concerned, such as the Kołobrzeg District Public Prosecutor’s Office, issues decisions definitively discontinuing criminal proceedings in a Member State, although such decisions are adopted without the involvement of a court and do not take the form of a judicial decision (see, to that effect, judgment of 11 February 2003 in Gözütok and Brügge, C‑187/01 and C‑385/01, EU:C:2003:87, paragraphs 28 and 38).40As regards the absence of a penalty, the Court observes that it is only where a penalty has been imposed that Article 54 of the CISA lays down the condition that the penalty has been enforced, is actually in the process of being enforced or can no longer be enforced under the laws of the Contracting State of origin.41The reference to a penalty cannot therefore be interpreted in such a way that the application of Article 54 of the CISA is — other than in a case in which a penalty has been imposed — subject to an additional condition.42In order to determine whether a decision such as that at issue in the main proceedings constitutes a decision finally disposing of the case against a person for the purposes of Article 54 of the CISA, it is necessary, in the second place, to be satisfied that that decision was given after a determination had been made as to the merits of the case (see, to that effect, judgments of 10 March 2005 in Miraglia, C‑469/03, EU:C:2005:156, paragraph 30, and 5 June 2014 in M, C‑398/12, EU:C:2014:1057, paragraph 28).43It is necessary, for that purpose, to take into account both the objective of the rules of which Article 54 of the CISA forms part and the context in which it occurs (see, to that effect, judgment of 16 October 2014 in Welmory, C‑605/12, EU:C:2014:2298, paragraph 41 and the case-law cited).44In that regard, it is clear from the Court’s case-law that the ne bis in idem principle in Article 54 of the CISA is intended, on the one hand, to ensure, in the area of freedom, security and justice, that a person whose trial has been finally disposed of is not prosecuted in several Contracting States for the same acts on account of his having exercised his right to freedom of movement, the aim being to ensure legal certainty — in the absence of harmonisation or approximation of the criminal laws of the Member States — through respect for decisions of public bodies which have become final (see, to that effect, judgments of 28 September 2006 in Gasparini and Others, C‑467/04, EU:C:2006:610, paragraph 27; 22 December 2008 in Turanský, C‑491/07, EU:C:2008:768, paragraph 41; and 27 May 2014 in Spasic, C‑129/14 PPU, EU:C:2014:586, paragraph 77).45On the other hand, however, whilst Article 54 of the CISA aims to ensure that a person, once he has been found guilty and served his sentence, or, as the case may be, been acquitted by a final judgment in a Contracting State, may travel within the Schengen area without fear of being prosecuted in another Contracting State for the same acts, it is not intended to protect a suspect from having to submit to investigations that may be undertaken successively, in respect of the same acts, in several Contracting States (judgment of 22 December 2008 in Turanský, C‑491/07, EU:C:2008:768, paragraph 44).46Article 54 of the CISA should in this respect be interpreted in the light of Article 3(2) TEU, which states that the European Union is to offer its citizens an area of freedom, security and justice without internal frontiers, in which the free movement of persons is ensured in conjunction with appropriate measures with regard to, amongst other matters, the prevention and combating of crime.47Therefore, the interpretation of the final nature, for the purposes of Article 54 of the CISA, of a decision in criminal proceedings in a Member State must be undertaken in the light not only of the need to ensure the free movement of persons but also of the need to promote the prevention and combating of crime within the area of freedom, security and justice.48In view of the foregoing considerations, a decision terminating criminal proceedings, such as the decision in issue before the referring court — which was adopted in a situation in which the prosecuting authority, without a more detailed investigation having been undertaken for the purpose of gathering and examining evidence, did not proceed with the prosecution solely because the accused had refused to give a statement and the victim and a hearsay witness were living in Germany, so that it had not been possible to interview them in the course of the investigation and had therefore not been possible to verify statements made by the victim — does not constitute a decision given after a determination has been made as to the merits of the case.49The consequence of applying Article 54 of the CISA to such a decision would be to make it more difficult, indeed impossible, actually to penalise in the Member States concerned the unlawful conduct alleged against the accused. First, that decision to terminate proceedings was adopted by the judicial authorities of a Member State when there had been no detailed assessment whatsoever of the unlawful conduct alleged against the accused. Second, the bringing of criminal proceedings in another Member State in respect of the same acts would be jeopardised. Such a consequence would clearly run counter to the very purpose of Article 3(2) TEU (see, to that effect, judgment of 10 March 2005 in Miraglia, C‑469/03, EU:C:2005:156, paragraphs 33 and 34).50Finally, as the Court has already stated, Article 54 of the CISA necessarily implies that the Contracting States have mutual trust in their criminal justice systems and that each of them recognises the criminal law in force in the other Contracting States even when the outcome would be different if its own national law were applied (judgment of 11 December 2008 in Bourquain, C‑297/07, EU:C:2008:708, paragraph 37 and the case-law cited).51That mutual trust requires that the relevant competent authorities of the second Contracting State accept at face value a final decision communicated to them which has been given in the first Contracting State.52However, that mutual trust can prosper only if the second Contracting State is in a position to satisfy itself, on the basis of the documents provided by the first Contracting State, that the decision of the competent authorities of that first State does indeed constitute a final decision including a determination as to the merits of the case.53Therefore, as the Advocate General has observed at points 74 to 78 and 84 of his Opinion, a decision of the prosecuting authorities terminating criminal proceedings and closing the investigation procedure, such as the decision in issue in the main proceedings, cannot be held to have been given after a determination as to the merits of the case and, accordingly, cannot be characterised as a final decision for the purposes of Article 54 of the CISA when it is clear from the reasons actually stated in that decision that there was no detailed investigation, as otherwise the mutual trust between the Member States could be undermined. In that regard, the fact that neither the victim nor a potential witness was interviewed is an indication that no detailed investigation was undertaken in the case in the main proceedings.54In the light of the foregoing, the answer to Question 2 is that the principle of ne bis in idem laid down in Article 54 of the CISA, read in the light of Article 50 of the Charter, must be interpreted as meaning that a decision of the public prosecutor terminating criminal proceedings and finally closing the investigation procedure against a person, albeit with the possibility of its being reopened or annulled, without any penalties having been imposed, cannot be characterised as a final decision for the purposes of those articles when it is clear from the statement of reasons for that decision that the procedure was closed without a detailed investigation having been carried out; in that regard, the fact that neither the victim nor a potential witness was interviewed is an indication that no such investigation took place. Question 1 55In view of the answer to the second question, it is no longer necessary to reply to the first question. Costs 56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber), rules as follows: The principle of ne bis in idem laid down in Article 54 of the Convention Implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, which was signed in Schengen (Luxembourg) on 19 June 1990, read in the light of Article 50 of the Charter of Fundamental Rights of the European Union, must be interpreted as meaning that a decision of the public prosecutor terminating criminal proceedings and finally closing the investigation procedure against a person, albeit with the possibility of its being reopened or annulled, without any penalties having been imposed, cannot be characterised as a final decision for the purposes of those articles when it is clear from the statement of reasons for that decision that the procedure was closed without a detailed investigation having been carried out; in that regard, the fact that neither the victim nor a potential witness was interviewed is an indication that no such investigation took place. [Signatures]( *1 ) Language of the case: German. | 7196f-71951cb-4307 | EN |
The General Court confirms the unlawfulness of the clause relating to non-competition between Portugal Telecom and Telefónica in connection with Telefónica’s acquisition of the Brazilian mobile operator Vivo | 28 June 2016 ( *1 )‛Competition — Agreements, decisions and concerted practices — Portuguese and Spanish telecommunications markets — Non-compete clause with respect to the Iberian market inserted in the contract for the acquisition by Telefónica of Portugal Telecom’s share in the Brazilian mobile telephone operator Vivo — Legal safeguard ‘to the extent permitted by law’ — Obligation to state reasons — Infringement by object — Ancillary restriction — Potential competition — Infringement by effects — Calculation of the amount of the fine — Request for examination of witnesses’In Case T‑208/13, Portugal Telecom SGPS, SA, established in Lisbon (Portugal), represented by N. Mimoso Ruiz and R. Bordalo Junqueiro, lawyers,applicant,v European Commission, represented initially by C. Giolito, C. Urraca Caviedes and T. Christoforou, and subsequently by Giolito, C. Urraca Caviedes and P. Costa de Oliveira, acting as Agents, and by M. Marques Mendes, lawyer,defendant,APPLICATION for, primarily, annulment of Commission Decision C(2013) 306 final of 23 January 2013 relating to a proceeding under Article 101 [TFEU] (Case AT.39.839 — Telefónica/Portugal Telecom) and, in the alternative, reduction of the fine,THE GENERAL COURT (Second Chamber),composed of M.E. Martins Ribeiro (Rapporteur), President, S. Gervasoni and L. Madise, Judges,Registrar: J. Palacio González, Principal Administrator,having regard to the written procedure and further to the hearing on 22 May 2015,gives the following Judgment Background to the dispute 1The present dispute, which concerns Commission Decision C(2013) 306 final of 23 January 2013 relating to a proceeding under Article 101 [TFEU] (Case AT.39.839 — Telefónica/Portugal Telecom) (‘the contested decision’), originated in a clause (‘the clause’) inserted in Article 9 of the share purchase agreement (‘the agreement’) signed by Telefónica, SA (‘Telefónica’) and the applicant, Portugal Telecom SGPS, SA (‘PT’) on 28 July 2010, whereby Telefónica was to acquire exclusive control of the Brazilian mobile network operator Vivo Participações, SA (‘Vivo’). The clause is worded as follows (recital 1 of the contested decision):‘Ninth — Non-competeTo the extent permitted by law, each party shall refrain from engaging or investing, directly or indirectly through any affiliate, in any project in the telecommunication business (including fixed and mobile services, internet access and television services, but excluding any investment or activity currently held or performed as of the date hereof) that can be deemed to be in competition with the other within the Iberian market for a period starting on [the date of the definitive conclusion of the transaction of 27 September 2010] until [31 December] 2011.’2The European Commission considered, in accordance with its preliminary conclusion in the statement of objections of 21 October 2011, that, in the light of the clause and the circumstances (the economic and legal context of the case and the parties’ conduct), the clause amounted to a market-sharing agreement with the object of restricting competition in the internal market and thus infringed Article 101 TFEU (recitals 2 and 434 of the contested decision).A – Presentation of PT and Telefónica 3The Portugal Telecom group was formed in 1994 following the merger of three public companies and privatised in five phases between 1995 and 2000. Following the fifth and final privatisation phase, in 2000, the Portuguese State held 500 class-A shares (‘golden shares’) which conferred on it certain special rights, including a right of veto over amendments to the company’s by-laws and other important decisions. On 12 December 2000, Portugal Telecom, SA adopted the structure of a holding company and the denomination PT (recitals 21, 22 and 23 of the contested decision).4PT is the largest telecommunications operator in Portugal and has a strategic presence in other countries, notably in Brazil and in Sub-Saharan Africa. In Brazil, PT’s main shareholdings consisted in 50% of the shares in the joint venture controlling Vivo until Vivo was acquired by Telefónica. Following the sale of its stake in Vivo on 28 July 2010, PT entered into a strategic partnership with Oi, one of the main providers of electronic communications in Brazil (recitals 24 and 25 of the contested decision).5PT sold its 0.20% stake in Telefónica in 2010 and does not control any Spanish company. It provides telecommunications services to its Portuguese multinational customers active on the Spanish market by using other operators’ networks and, in particular, Telefónica’s network (recitals 27, 28 and 233 of the contested decision).6Telefónica is the Spanish State’s former telecommunications monopoly; it was fully privatised in 1997 and is the main telecommunications operator in Spain. It has developed an international presence in several countries in the European Union, Latin America and Africa and is one of the major European telecommunications groups (recitals 12 and 16 of the contested decision).7At the time of the adoption of the decision at issue in the present proceedings, Telefónica held 2% of PT’s share capital. At the time of the facts forming the subject matter of that decision, Telefónica held a minority stake in Zon Multimedia (‘Zon’), a competitor of PT in the electronic communications sector, resulting from the spin-off, in November 2007, of PT Multimedia from its parent company, PT. In addition to its shareholdings in a number of Portuguese companies, Telefónica began to develop a direct presence in Portugal through two of its subsidiaries and the Portuguese branch of one of those subsidiaries (recitals 18 to 20 and 215 of the contested decision).8In addition, Telefónica designated, depending on the date, one or two members of PT’s board of directors. At the time of the definitive conclusion of the transaction relating to the purchase of Vivo, namely on 27 September 2010 (see paragraph 25 below), two of the members of PT’s board of directors had been designated by Telefónica (footnote 67 of the contested decision).B – Negotiation and signature of the agreement 9Vivo is one of the major mobile telecommunications operators in Brazil. At the time when the agreement was signed (28 July 2010), Vivo was jointly controlled by Telefónica and PT through Brasilcel NV (‘Brasilcel’), an investment vehicle company incorporated in the Netherlands (recital 33 of the contested decision).10On 6 May 2010, Telefónica launched a hostile takeover offer of EUR 5.7 billion for the 50% shareholding in Brasilcel then owned by PT. That offer contained, inter alia, a provision that ‘Telefónica would not require any non-compete or non-solicitation commitment from Portugal Telecom’. That first offer was unanimously rejected by the members of PT’s board of directors (recitals 35 and 36 of the contested decision).11On 1 June 2010, at 2.53 am, following a meeting between the parties on 31 May 2010, PT sent Telefónica an email with a draft relating to a second offer to purchase its shareholding in Vivo. The clause was introduced for the first time in that draft (recital 38 of the contested decision).12The first draft of the clause was worded as follows (recital 39 of the contested decision):‘Non-competeEach party shall refrain from engaging or investing, directly or indirectly through any Affiliate, in any project in the telecommunication business (including fixed and mobile services, internet access and television services) that can be deemed to be in competition with the other within the Iberian market for a period starting on the date of Acceptance of the Offer until the latest of (i) 31 December 2011 or (ii) the date of consummation of the transfer of the last portion of Alternative B Put Shares’.13In an email sent to PT on 1 June 2010 at 12.21 pm, Telefónica suggested an amendment to the clause in the form of the addition of the phrase ‘excluding any investment or activity currently held or performed as of the date [of signature of the agreement]’, in order to exclude from the scope of the agreement the existing activities of each party in the other party’s national market. That amendment was incorporated in the second offer, dated 1 June 2010 (recital 40 of the contested decision).14In addition to the first draft of the clause, the second offer provided for an increased price of EUR 6.5 billion, a call option in favour of PT, under which PT could buy back its shares owned by Telefónica, and a commitment by Telefónica to buy PT’s shares in Dedic SA, a Brazilian call centre operator. Furthermore, the second offer still included Telefónica’s commitment not to require any ‘non-compete or non-solicitation commitments by Portugal Telecom’ that had already appeared in the first offer (recitals 41 and 42 of the contested decision).15On the evening of 1 June 2010, PT’s board of directors announced that it considered that Telefónica’s second offer did not reflect the real value of Vivo. However, it decided to submit its decision to the general assembly of the company on 30 June 2010 (recital 45 of the contested decision).16The second offer was made public by the parties by being posted on their respective websites and being notified to the Spanish and Portuguese Stock Exchange Authorities. In addition, the content of the clause inserted into the second offer was also made public in a brochure distributed by PT’s board of directors to its shareholders on 9 June 2010 in connection with the general shareholders’ meeting to be held on 30 June 2010 (recitals 128 and 129 of the contested decision).17On 29 June 2010, Telefónica presented a third offer of EUR 7.15 billion, containing the same terms and conditions as the second offer (recital 46 of the contested decision).18On 30 June 2010, PT’s ordinary general assembly approved Telefónica’s third offer. However, the Portuguese Government exercised the right attached to its golden shares in PT (see paragraph 3 above) to block the transaction and Telefónica extended the third offer until 16 July 2010 (recitals 47 and 48 of the contested decision).19In its judgment of 8 July 2010, Commission v Portugal (C‑171/08, ECR, EU:C:2010:412), the Court of Justice considered that, by maintaining special rights in PT such as those provided for in PT’s statutes in favour of the State and other public bodies, conferred in connection with the State’s golden shares in PT, the Portuguese Republic had failed to fulfil its obligations under Article 56 EC (recital 50 of the contested decision).20On 16 July 2010, PT asked Telefónica to extend its offer until 28 July 2010, but Telefónica refused to do so and the offer lapsed (recital 51 of the contested decision).21On 27 July 2010, a new meeting took place between PT and Telefónica and Telefónica proposed to PT that the words ‘to the extent permitted by law’ should be added at the beginning of the clause and that the duration of the clause should be from ‘the date [of the definitive conclusion of the transaction on 27 September 2010] until 31 December 2011’ (recitals 52 and 53 of the contested decision).22On 28 July 2010, Telefónica and PT entered into the agreement whereby Telefónica acquired exclusive control over Vivo by acquiring 50% of the share capital of Brasilcel for EUR 7.5 billion (recital 54 of the contested decision).23The agreement included, in clause 9, the following clause (recital 55 of the contested decision):24Unlike the second offer (paragraph 14 above), the agreement no longer included the call option in favour of PT, whereby PT could buy back the PT shares owned by Telefónica. On the other hand, the agreement made provision, in particular, for, in the first place, the resignation of the members of PT’s board of directors designated by Telefónica (Clause 3.6 of the agreement); in the second place, an industrial partnership programme between the two undertakings (Clause 6 of the agreement), on condition that they did not compete in Brazil (Clause 7 of the agreement); and, in the third place, the possible acquisition by Telefónica of the Brazilian company Dedic, which specialises in the provision of call centre services (Clause 10 of the agreement) (recitals 56 to 61 of the contested decision).25The transaction was definitively concluded on 27 September 2010, by means of a ‘deed of transfer of shares’ and a ‘confirmatory deed’ (recital 63 of the contested decision).26On the date of signature of the agreement, on 28 July 2010, PT had also announced that it had entered into, on the same date, a memorandum of understanding setting out the principles for the implementation of a strategic partnership with Oi (see paragraph 4 above) and that it expected to acquire 22.38% of the shares of the Oi group in order to have an important role in its management (recital 62 of the contested decision).27The Vivo transaction was notified, on 29 July and 18 August 2010, to the Agência National de Telecommunicações (Anatel, the Brazilian telecommunications regulatory authority) and the Conselho Administrativo de Defesa Econômica (CADE, the Brazilian competition authority) and, in an article published in the press on 23 August 2010, Telefónica confirmed that the agreement included a non-compete clause (recitals 103, 130 and 491 of the contested decision).C – Events following the conclusion of the agreement 28On 26 and 29 October 2010, two telephone conversations took place between Telefónica and PT (recitals 113 and 124 of the contested decision).29On 4 February 2011, after the Commission had initiated the proceedings on 19 January 2011 (see paragraph 31 below), Telefónica and PT signed an agreement deleting the clause (recital 125 of the contested decision), worded as follows:‘Recitals:Whereas [PT] and Telefónica entered into an agreement (the “Agreement”) on 28 July 2010 in relation to the sale from [PT] to Telefónica of 50% (fifty) percent of the outstanding share capital of the Dutch company [Brasilcel] (“Brasilcel” or “the Company”).Whereas Section Ninth of the Agreement included a Non-compete clause whereby, to the extent permitted by law, each Party would refrain from engaging in competition with the other in the Iberian market since Closing (as defined in the Agreement) until 31 December 2011.Whereas Section Ninth of the Agreement was first discussed between the parties in relation to PT’s right to call the shares held by Telefónica in PT and eventually kept in the final agreement despite the fact that the said right was dropped, subject therefore to its conformity with law.Whereas the Parties wish to confirm in writing their understanding that Section Ninth is not enforceable, and has not at any time been enforced, and therefore it has not affected their respective commercial decisions.Whereas Telefónica and PT were notified on 24 January and 21 January 2011 respectively of the opening by the European Commission of formal proceedings in relation to the aforesaid Section Ninth.In light of the above, the Parties agree as follows:First. Amendment of the Agreement and Withdrawal of RightsThe Agreement shall be amended by deleting Section Ninth in its entirety, which will be deemed not to have had content at any time.The Parties irrevocably and definitively confirm that Section Ninth has not and may not have conferred any rights or imposed any obligations on them or on any third party.Second. Governing LawThis Agreement, and any question or dispute related to it or to its performance or consequences of any breach of it, shall be governed by and construed in accordance with the laws of Portugal.’D – Procedure before the Commission 30The clause was detected in September 2010 by the Spanish Competition Authority, which informed the Portuguese Competition Authority and the Commission, and it was decided that the investigation should be entrusted to the Commission (recital 3 of the contested decision).31On 19 January 2011, the Commission initiated proceedings against Telefónica and PT pursuant to Article 11(6) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 TFEU] and [102 TFEU] (OJ 2003 L 1, p. 1) and Article 2(1) of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles [101 TFEU] and [102 TFEU] (OJ 2004 L 123, p. 18) (recital 5 of the contested decision).32In the context of the investigation, in application of Article 18(2) of Regulation No 1/2003, the Commission sent requests for information to the parties on 5 January, 1 April, 25 May, 10 and 24 June 2011 and 5 September 2012 and to certain of their multinational customers on 20 April 2011. In addition, meetings were held with PT on 17 March and 8 September 2011 and on 27 September 2012 and with Telefónica on 21 March and 7 September 2011 and on 27 September 2012 (recital 6 of the contested decision).33On 21 October 2011, the Commission adopted a statement of objections; on 4 November 2011, the parties had access to the file; and on 7 November 2011, they received the relevant documents. On 13 January 2012, Telefónica and PT replied to the statement of objections, but did not request an oral hearing (recitals 7, 8 and 9 of the contested decision).34On 23 January 2013, the Commission adopted the contested decision. Contested decision 35The Commission stated that the case giving rise to the contested decision concerned the clause in the agreement (paragraphs 1, 22 and 23 above) (recital 1 of the contested decision).36The Commission explained that it had considered in the statement of objections that, in the light of the clause and the circumstances (the economic and legal context of which the clause formed part and the behaviour of the parties), the clause amounted to a market-sharing agreement with the object of restricting competition in the internal market and constituted an infringement of Article 101 TFEU, and that it confirmed that conclusion in the contested decision (recital 2 of the contested decision).37In the first place, the Commission analysed the factual background to the negotiations between the parties that led to the introduction of the clause of the final version of the agreement, the events subsequent to the signature of the agreement (see paragraphs 10 to 29 above) and the parties’ arguments relating to that background and those events (recitals 29 to 130 of the contested decision).38In the second place, the Commission considered, in the light of the scope of the clause and the relevant markets, that, in view of its wording (paragraphs 1 and 23 above), the clause covered any project regarding electronic communications services, on condition that the other party rendered or might render that service. Consequently, and as is apparent from its wording, the clause referred to fixed and mobile telephone services, internet access and television services and also broadcasting transmission services, which are considered to be communications services although they are not mentioned in the clause. On the other hand, the Commission stated that, in accordance with the wording of the clause, any investment or activity carried out before the date of signature of the agreement, namely 28 July 2010, was excluded from the scope of the clause (recitals 132 to 136 and 185 of the contested decision).39In the latter regard, the Commission noted that global telecommunication services and wholesale international carrier services were excluded from the scope of the clause because each of the parties was present in the market for such services within the Iberian peninsular at the time of signature of the agreement (recitals 173, 174, 184 and 185 of the contested decision).40As regards the geographic scope of the clause, the Commission interpreted the expression ‘Iberian market’ as referring to the Spanish and Portuguese markets. Having regard to the parties’ commercial activities, which consisted of a presence on most of the electronic communications markets in the country of origin of each of them and little or no presence in the country of origin of the other party (paragraphs 3 to 7 above), the Commission considered that the geographic scope of the clause corresponded to Portugal for Telefónica and to Spain for PT (recitals 137 to 140 of the contested decision).41The Commission therefore concluded that the clause applied to all markets for electronic telecommunications services and television services in Spain and Portugal, with the exception of the markets for global telecommunication services and wholesale international carrier services (recital 185 of the contested decision).42In the third place, according to the Commission, there is no doubt that the clause constitutes an agreement within the meaning of Article 101(1) TFEU, since it is an agreement in written form, entered into and signed by the parties, the existence of which is undeniable and since, moreover, the clause was included in a public deed executed before a notary, the recitals to which state that a copy of the agreement is annexed to the deed (recital 237 of the contested decision).43First, in the light of the case-law on restriction of competition by object, the Commission, after analysing the parties’ arguments, considered that the clause constituted a restriction by object having regard to the content of the agreement, the objectives which the clause sought to attain, the legal and economic context of which the clause formed part, the actual conduct and behaviour of the parties and, last, their intention (recitals 238 to 242 and 243 to 356 of the contested decision).44The Commission thus concluded, as regards the object of the clause, that, taking into account its scope, the clause prevented PT from entering into any of the Spanish telecommunications markets and prevented Telefónica from expanding its limited presence in the Portuguese telecommunications markets while the clause was in force, so that, instead of competing with each other and behaving as rivals, as normally expected in an open and competitive market, Telefónica and PT had deliberately agreed to exclude or limit competition on their respective markets and the clause thus amounted to a market-sharing agreement (recital 353 of the contested decision).45In the latter regard, the Commission stated that the clause was, in addition, liable to delay integration in the electronic communications sector, since the market integration process would be seriously jeopardised if incumbents such as Telefónica and PT could reinforce their already very strong market position by participating in collusive practices with the aim of protecting their home markets and avoiding the entry of other operators to those markets (recitals 354 and 355 of the contested decision).46Second, after recalling that, according to the case-law, there was no need to take into account the actual effects of an agreement if it was shown that the agreement constituted a restriction of competition by object, which, according to the Commission, was the case here, the Commission nonetheless stated, in response to the parties’ arguments, that, first of all, the clause had been adopted by two competitors and was therefore capable of producing anticompetitive effects; that, next, even if the clause were considered to be incapable of producing any effects, that would not preclude its being regarded as constituting a restriction by object, since, if an agreement had as its object the restriction of competition, it was irrelevant, as regards the existence of the infringement, whether the agreement was or was not in the commercial interest of its participants, the fact that the clause having as its object the restriction of competition might have proved to be incapable of producing any effects in the commercial interest of Telefónica or PT thus being irrelevant; and that, last, the parties had wholly failed to show that they had engaged in new activities in Spain or Portugal that might disprove that the clause had been implemented, which did not in itself show that the clause had been implemented, but was a sign that it might have been implemented (recitals 240 and 357 to 365 of the contested decision).47The Commission considered that it must be concluded that, in this case, there was no need to show any negative effects on competition, since the anticompetitive object of the clause had been established and it was thus not necessary to carry out a detailed assessment of each telecommunications market concerned and of the effects of the clause within those markets (recital 366 of the contested decision).48Third, the Commission stated that the clause could not be analysed as a restriction ancillary to the Vivo transaction, since it related to the Iberian market whereas the Vivo transaction concerned an operator whose activity was confined to Brazil and the clause could not be considered to be necessary for the implementation of the operation (recitals 367 to 433 of the contested decision).49The Commission concluded that the clause imposed a non-compete obligation on the parties and constituted a market-sharing agreement with the object of restricting competition within the internal market and that it thereby infringed Article 101 TFEU, in view of the content of the agreement (and, in particular, the wording of the clause, which left little, if any, doubt as to its nature) and of the economic and legal context of which the agreement formed part (for example, the electronic communications markets, which were liberalised) and the actual conduct and behaviour of the parties (in particular, the fact that the agreement was terminated by the parties only on 4 February 2011, following the initiation of proceedings by the Commission on 19 January 2011 (and not as a result of the telephone conversations of October 2010, contrary to the parties’ claims) (recital 434 of the contested decision).50Fourth, the Commission stated that the clause did not fulfil the conditions laid down in Article 101(3) TFEU (recitals 436 to 446 of the contested decision) and that it might affect trade between Member States (recitals 447 to 453 of the contested decision).51Fifth, as regards the duration of the infringement, the Commission concluded that the infringement covered the period from the date of the definitive conclusion of the transaction, namely 27 September 2010 (see paragraph 25 above), until the date on which the clause had been terminated, namely 4 February 2011 (see paragraph 29 above) (recitals 454 to 465 of the contested decision).52Sixth, as regards the calculation of the amount of the fines, the Commission applied, in the contested decision, the provisions of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2; ‘the Guidelines’).53In order to determine the basic amount of the fine to be imposed, the Commission took into account the value of sales of the services covered by the clause as defined in section 5 of the contested decision (see paragraphs 38 to 40 above) and, in particular, for each party, only the value of its own sales in its country of origin (recitals 478 to 483 of the contested decision).54The Commission also recalled that it normally took into account the sales made by the undertakings during the last full business year of their participation in the infringement, but that, in this instance, the infringement had lasted for less than one year and had taken place between 2010 and 2011. Consequently, the Commission used the undertakings’ sales in 2011, which were lower than the sales recorded by the parties in 2010 (recital 484 of the contested decision).55As regards the gravity of the infringement, which determines the percentage of the value of sales to be taken into consideration when setting the basic amount of the fine, the Commission observed that the infringement consisted of an agreement not to compete and to share the Spanish and Portuguese electronic communications and television markets and that Telefónica and PT were the incumbent telecommunications operators in their respective countries. In addition, the Commission noted that it took into account the fact that the clause had not been kept secret by the parties (see paragraphs 16 and 27 above). In the light of those factors, the Commission considered that the value of sales to be taken into consideration should be 2% for the two undertakings concerned (recitals 489 to 491 and 493 of the contested decision).56So far as the duration of the infringement was concerned, the Commission took account of the fact that it had covered the period from 27 September 2010 (date of the notarised deed and thus of the definitive conclusion of the transaction) until 4 February 2011 (date of the agreement whereby the parties terminated the clause) (recital 492 of the contested decision).57The Commission did not take any aggravating circumstance into account and considered that the date of termination of the clause, 4 February 2011, constituted a mitigating circumstance, since the clause was terminated only 16 days after the Commission initiated the proceedings and 30 days after it sent the first request for information to the parties. As, moreover, the clause had not been kept secret, the Commission considered that the basic amount of the fines to be imposed on the parties should be reduced by 20% (recitals 496, 500 and 501 of the contested decision).58The final amount of the fines came to EUR 66894000 for Telefónica and EUR 12290000 for PT (recital 512 of the contested decision). The Commission pointed out that those amounts did not exceed 10% of the total turnover of each of the parties concerned (recitals 510 and 511 of the contested decision).59The operative part of the contested decision reads as follows:‘Article 1 [Telefónica] and [PT] have infringed Article 101 [TFEU] by participating in a non-compete agreement, included as clause nine of the Stock Purchase Agreement entered into by them on 28 July 2010.The duration of the infringement was from 27 September 2010 until 4 February 2011. Article 2 For the infringement referred to in Article 1, the following fines are imposed:(a)[Telefónica]: EUR 66894000(b)[PT]: EUR 12290000…’ Procedure and forms of order sought 60By application lodged at the Court Registry on 9 April 2013, the applicant brought the present action.61On a proposal from the Judge-Rapporteur, the Court (Second Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure provided for in Article 64 of the Rules of Procedure of the General Court of 2 May 1991, it requested the parties to produce certain documents. The parties complied with that request within the prescribed period.62The parties presented oral argument and replied to the Court’s oral questions at the hearing on 22 May 2015.63The applicant claims that the Court should:—hold that the present action for annulment was properly brought and is admissible under Article 263 TFEU and for the purposes of Article 264 TFEU;annul the contested decision;in the alternative, reduce the amount of the fine imposed on the applicant in Article 2 of the contested decision;order the Commission to pay the costs of the proceedings and the costs incurred by the applicant.64The Commission contends that the Court should:declare the action inadmissible;in the alternative, declare that the action is wholly unfounded in law and uphold the decision in its precise terms and the fine imposed in the same amount;order the applicant to pay the costs. Law A – Admissibility 65In support of the action, the applicant formally puts forward two pleas for annulment, the first alleging breach of essential procedural requirements, namely failure to state reasons and insufficiency of the evidence, and the second alleging infringement of the Treaty and of the law relating to its application, in that the decision is vitiated by a manifest error as to the facts, the evidence and the sufficiency of the evidence; an error in the interpretation of Article 101 TFEU and, consequently, an infringement of that provision; breach of the obligation to investigate and to make a determination; breach of the principle in dubio pro reo; breach of the principles with which the Commission must comply when imposing fines; and breach of the principle of proportionality.66Before setting out the actual pleas in law, the application contains three preliminary parts, entitled ‘The facts’, ‘The subject matter of the action’ and ‘Essential content of and main defects in the decision’.67The Commission maintains that, owing to its lack of clarity and intelligibility and to the way in which the pleas in law are presented, the application must be declared inadmissible pursuant to Article 44 of the Rules of Procedure of 2 May 1991. The Commission claims that it is very difficult to identify what the applicant wishes to put forward by way of pleas for annulment, as the statement of the actual pleas does not begin until paragraph 276 of the application, preceded by more than 250 paragraphs of argument in which the applicant does not specify what in its view constitutes one or more pleas for annulment of the contested decision. Furthermore, in the statement of the pleas for annulment, the applicant does not make clear to what extent that argument is relevant for the purpose of supporting those pleas for annulment.68It should be borne in mind that, under Article 21 of the Statute of the Court of Justice of the European Union and Article 44(1)(c) of the Rules of Procedure of 2 May 1991, each application is required to state the subject matter of the proceedings and a summary of the pleas in law on which the application is based. The information given must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to decide the case, if necessary without other supporting information (judgment of 30 January 2007, France Télécom v Commission, T‑340/03, ECR, EU:T:2007:22, paragraph 166). Furthermore, the Courts of the European Union have held that it must be accepted that the statement of pleas in the application need not match the terms and the order used in the Rules of Procedure and that the presentation of those pleas, in terms of their substance rather than their legal classification, might be sufficient if the applicant set them out with sufficient clarity (see order of 21 May 1999, Asia Motor France and Others v Commission, T‑154/98, ECR, EU:T:1999:109, paragraph 55 and the case-law cited).69Conversely, if that is not the case and if the application does not set out, in particular, precise criticisms of the contested decision, the action must be declared inadmissible (see, to that effect, order of 20 January 2012, Groupe Partouche v Commission, T‑315/10, EU:T:2012:21, paragraph 22 et seq.).70Thus, it cannot be acceptable that both the defendant institution and the Court should be reduced to speculating about the reasoning and precise observations, both in law and in fact, that could lie behind the applicant’s observations. It is precisely such a situation, which creates legal uncertainty and is anathema to the sound administration of justice, that Article 44(1) of the Rules of Procedure of 2 May 1991 is designed to avoid (see, to that effect, order of 19 May 2008, TF1 v Commission, T‑144/04, ECR, EU:T:2008:155, paragraph 57).71Last, it should be observed that material in an application for annulment under the headings ‘The facts’, ‘The subject matter of the action’ or ‘Essential content of and main defects in the decision’ is not, prima facie, intended to constitute independent pleas in law capable of resulting in the annulment of the contested decision, but rather to describe the facts and the act which is being challenged. However, it is not possible to preclude, a priori, that this part of the application may contain a statement setting out one or more pleas for annulment. Nonetheless, it is only where it emerges clearly and unambiguously from a passage contained under those headings that, in addition to providing a description, the passage is challenging the validity of the findings made in the contested decision that the passage can be regarded as a plea in law, notwithstanding the structure of the application and its position in the general scheme of that document (see, to that effect, judgments of 14 December 2005, Honeywell v Commission, T‑209/01, ECR, EU:T:2005:455, paragraph 106, and of 1 July 2008, Commission v D, T‑262/06 P, ECR-SC, EU:T:2008:239, paragraph 52).72In the present case, it must be stated that the application lacks clarity owing, in particular, to the fact that the applicant sets out, in more than 200 paragraphs, ‘[The] essential content of and [the] main defects in the decision’, before arriving at the actual ‘pleas’. As those ‘pleas’ are developed in a very succinct manner, it appears necessary to identify, in those 200 or so paragraphs, the complaints and arguments supporting the pleas in law.73That, moreover, appears to have been the applicant’s intention, since it so stated in paragraph 69 of the reply and so confirmed at the hearing. Contrary to the Commission’s contention, it is possible to identify, in the part relating to ‘[The essential content of and the main defects in the decision’, the applicant’s criticisms of the contested decision and the provisions which it claims to have been infringed. The Commission’s assertion that ‘the application reveals a total absence of legal conclusions capable of calling the legality of the [contested] decision in question’ cannot therefore be upheld. It should be noted, moreover, that the Commission was able to respond to the complaints put forward by the applicant.74It follows that the Commission’s plea of inadmissibility must be rejected and that the application must be declared admissible.75It should be observed, however, that while it is possible to identify, in the 200 or so paragraphs preceding the statement of the actual pleas in the application, the applicant’s criticisms of the contested decision and the provisions which it claims to have been infringed, its pleadings are characterised by the lack of correspondence between those criticisms and the pleas relied on and a certain lack of conciseness. In those circumstances, it is appropriate to bear in mind that the requirement that the Court give reasons for its decisions cannot be interpreted as meaning that it is obliged to respond in detail to every single argument advanced by a party, particularly if the argument was not sufficiently clear and precise and was not adequately supported by evidence (judgments of 11 September 2003, Belgium v Commission, C‑197/99 P, ECR, EU:C:2003:444, paragraph 81, and of 11 January 2007, Technische Glaswerke Ilmenau v Commission, C‑404/04 P, EU:C:2007:6, paragraph 90). It is clear from established case-law, moreover, that the obligation to state reasons does not require the Court to provide an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and that the reasoning may therefore be implicit on condition that it enables the persons concerned to know why this Court has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of review (see judgment of 16 July 2009, Commission v Schneider Electric, C‑440/07 P, ECR, EU:C:2009:459, paragraph 135 and the case-law cited).B – Substance 1. Claims for annulment of the contested decision 76In support of its claim for annulment of the contested decision, the applicant puts forward a plea alleging breach of essential procedural requirements and a plea alleging infringement of Article 101 TFEU and of the rules that must be observed in its application.a) The plea alleging breach of essential procedural requirements77The applicant claims, under the head of breach of essential procedural requirements, that the contested decision is vitiated by a failure to state reasons and by insufficiency of evidence; however, as the applicant confirmed at the hearing, the latter complaint should be dealt with when the Court examines the second plea for annulment, alleging infringement of Article 101 TFEU.78As regards the alleged failure to state reasons, it should be borne in mind that the obligation laid down in Article 296 TFEU to state adequate reasons is an essential procedural requirement that must be distinguished from the question whether the reasoning is well founded, which goes to the substantive legality of the measure at issue (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, ECR, EU:C:1998:154, paragraph 67; of 22 March 2001, France v Commission, C‑17/99, ECR, EU:C:2001:178, paragraph 35; and of 29 September 2011, Elf Aquitaine v Commission, C‑521/09 P, ECR, EU:C:2011:620, paragraph 146).79In the present case, first, it should be observed that the applicant addresses the failure to state reasons in the contested decision under the heading ‘Failure to state reasons’ in the part of its application entitled ‘Pleas for annulment’. The complaints set out under that heading will be examined below. Second, it is apparent that, throughout its application, the applicant puts forward criticisms which resemble complaints relating to the reasoning, but which, subject to the complaints examined in paragraphs 165 to 168, 220 to 224 and 254 to 256 below, actually relate to the question whether the contested decision is well founded, and that they should be examined when the substantive questions to which they relate are examined.80In the context of its criticisms that strictly relate to the plea alleging breach of the obligation to state reasons, the applicant, after observing that that obligation is laid down in Article 296 TFEU, merely claims that ‘the reasoning stated in the contested decision contains omissions, inaccuracies and errors on essential questions, which irreparably affects the conclusions which it reaches’, and refers, ‘by way of example’, to the Commission’s conclusions set out in recitals 264 et seq. and 353 et seq. of the contested decision. It is clear from its submissions, however, that in reality the applicant does not criticise the reasoning, but the merits of the considerations set out in those recitals, as, moreover, it confirmed at the hearing, which was recorded in the minutes.81It follows that, in that it does not relate to the complaints which in reality challenge the merits of the contested decision, and subject to paragraphs 165 to 168, 220 to 224 and 254 to 256 below, the plea alleging breach of essential procedural requirements must be rejected, without there being any need to examine the applicant’s arguments strictly relating to that plea from the viewpoint of the obligation to state reasons.b) The plea alleging infringement of Article 101 TFEU and of the law relating to the application of that provision82In the applicant’s submission, having regard to the nature of the clause and to the legal and economic circumstances and context of which it forms part, neither the clause nor the obligation requiring the parties to refrain from competing in the Iberian market must be regarded as a restriction of competition by object.83The applicant therefore takes issue with the Commission for having infringed Article 101 TFEU by characterising the clause as a restriction of competition by object. In that context, it claims that the Commission did not adduce proof of the infringement and that it made a manifest error of assessment with respect to the facts, the proof and the sufficiency of the proof, erred in the application of Article 101 TFEU and infringed the Treaty, breached the obligation to investigate and to make a determination and, last, breached the principle in dubio pro reo.84As the applicant confirmed at the hearing, it develops, in essence, the following legal and factual arguments in support of this plea: the clause had no connection with the Vivo transaction, but was linked to the option that enabled PT to buy back its shares that were held by Telefónica (‘the call option’), which was found in the second and third offers but no longer appeared in the final version of the agreement or to the resignation of the members of PT’s board of directors appointed by Telefónica, which was provided for in the agreement; the clause contained two separate obligations, a main ‘self-assessment’ obligation and a secondary non-compete obligation, the latter obligation becoming binding only if it was found to be legal when the first obligation was exercised; the clause could not constitute a restriction of competition by object, because the Commission did not show that Telefónica and PT were potential competitors and that the clause was therefore capable of restricting competition; and, last, since the clause did not constitute a restriction of competition by object, the Commission ought to have examined its effects.Preliminary observations85It should be borne in mind that, in order to be caught by the prohibition laid down in Article 101(1) TFEU, an agreement, a decision by an association of undertakings or a concerted practice must have ‘as [its] object or effect’ the prevention, restriction or distortion of competition in the internal market.86In that regard, it is apparent from the case-law of the Court of Justice that certain types of coordination between undertakings reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects (see judgment of 11 September 2014, CB v Commission, C‑67/13 P, ECR, EU:C:2014:2204, paragraph 49 and the case-law cited).87That case-law arises from the fact that certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition (see judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 50 and the case-law cited).88Consequently, it is established that certain collusive behaviour, such as that leading to horizontal price fixing by cartels, may be considered so likely to have negative effects, in particular on the price, quantity or quality of the goods and services, that it may be considered redundant, for the purposes of applying Article 101(1) TFEU, to prove that they have actual effects on the market. Experience shows that such behaviour leads to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers (judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 51).89Where the analysis of a type of coordination between undertakings does not reveal a sufficient degree of harm to competition, the effects of the coordination should, on the other hand, be considered and, for it to be caught by the prohibition, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent (see judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 52 and the case-law cited).90According to the case-law of the Court of Justice, in order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition that it may be considered a restriction of competition ‘by object’ within the meaning of Article 101(1) TFEU, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part. When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question (see judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 53 and the case-law cited).91In addition, although the parties’ intention is not a necessary factor in determining whether an agreement between undertakings is restrictive, there is nothing prohibiting the competition authorities, the national courts or the Courts of the European Union from taking that factor into account (see judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 54 and the case-law cited).92It is in the light of those principles that the arguments put forward by the applicant should be examined.The argument alleging that the clause was linked to the call option or to the resignation of the members of PT’s board of directors appointed by Telefónica93The applicant claims that the clause had no connection to the Vivo transaction, but that it was linked to the call option, which appeared in the second or third offers — the latter offer consisting solely in an increase in the price, without a new version of the terms of the agreement — and no longer appeared in the final version of the agreement, and to the resignation of the members of PT’s board of directors appointed by Telefónica, which was provided for in the agreement.94The applicant emphasises that the call option and the clause appeared at the same time in the second offer and claims that the non-compete obligation was typical of an asset acquisition such as the call option, entailing the risk that the acquirer would exploit the sector transferred, with which it is very familiar.95Because of the reduction of Telefónica’s shareholding in PT’s capital to around 2%, announced on 23 June 2010, the fourth offer no longer contained a call option, but required Telefónica to take steps to ensure that its two representatives on PT’s board of directors would resign. Owing to the difficulties in the negotiation procedure, certain provisions which came from the previous offers were not discussed again, however, and the clause was therefore retained, with the words ‘to the extent permitted by law’ being inserted.96The applicant stated at the hearing, in answer to a question from the Court, that it did not claim that the clause ought to have been characterised as a restriction ancillary to the departure of the members of PT’s board of directors appointed by Telefónica. However, it follows, in essence, from its assertions that it claims to have associated the non-compete commitment with (i) the option to purchase its shares held by Telefónica and (ii) the resignation of the members of its board of directors appointed by Telefónica. In addition, in the applicant’s submission, when the call option was deleted from the draft agreement at the time of the fourth offer, the words ‘to the extent permitted by law’ was inserted, thus changing the non-compete clause into a self-assessment clause. In those circumstances, and since, by that argument, the applicant claims to remove the clause from the application of Article 101 TFEU, the following observations must be made.97It follows from the case-law of the Court of Justice that if a given operation or activity is not covered by the prohibition rule laid down in Article 101(1) TFEU, owing to its neutrality or positive effect in terms of competition, a restriction of the commercial autonomy of one or more of the participants in that operation or activity is not covered by that prohibition rule either, if that restriction is objectively necessary to the implementation of that operation or that activity and proportionate to the objectives of one or the other (see judgment of 11 September 2014, MasterCard and Others v Commission, C‑382/12 P, ECR, EU:C:2014:2201, paragraph 89 and the case-law cited).98Where it is not possible to dissociate such a restriction from the main operation or activity without jeopardising its existence and aims, it is necessary to examine the compatibility of that restriction with Article 101 TFEU in conjunction with the compatibility of the main operation or activity to which it is ancillary, even though, taken in isolation, such a restriction may appear on the face of it to be covered by the prohibition rule in Article 101(1) TFEU (judgment in MasterCard and Others v Commission, cited in paragraph 97 above, EU:C:2014:2201, paragraph 90).99Accordingly, the concept of ‘ancillary restriction’ covers any restriction which is directly related and necessary to the implementation of a main operation (judgments of 18 September 2001, M6 and Others v Commission, T‑112/99, ECR, EU:T:2001:215, paragraph 104, and of 29 June 2012, E.ON Ruhrgas and E.ON v Commission, T‑360/09, ECR, EU:T:2012:332, paragraph 62).100A restriction ‘directly related’ to implementation of a main operation must be understood to be any restriction which is subordinate to the implementation of that operation and which has an evident link with it (judgments in M6 and Others v Commission, cited in paragraph 99 above, EU:T:2001:215, paragraph 105, and in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 63).101The condition that a restriction be necessary implies a two-fold examination. It is necessary to establish, first, whether the restriction is objectively necessary for the implementation of the main operation and, second, whether it is proportionate to it (judgments in M6 and Others v Commission, cited in paragraph 99 above, EU:T:2001:215, paragraph 106, and in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 64).102As regards the objective necessity of a restriction, it must be observed that inasmuch as the existence of a rule of reason in EU competition law cannot be upheld, it would be wrong, when classifying ancillary restrictions, to interpret the requirement for objective necessity as implying a need to weigh the pro- and anticompetitive effects of an agreement (judgments in M6 and Others v Commission, cited in paragraph 99 above, EU:T:2001:215, paragraph 107, and in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 65).103That approach is justified not merely so as to preserve the effectiveness of Article 101(3) TFEU, but also on grounds of consistency. As Article 101(1) TFEU does not require an analysis of the positive and negative effects on competition of a principal restriction, the same finding is necessary with regard to the analysis of accompanying restrictions (judgments in M6 and Others v Commission, cited in paragraph 99 above, EU:T:2001:215, paragraph 108, and in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 66).104Consequently, examination of the objective necessity of a restriction in relation to the main operation cannot but be relatively abstract. It is not a question of analysing whether, in the light of the competitive situation on the relevant market, the restriction is indispensable to the commercial success of the main operation but of determining whether, in the specific context of the main operation, the restriction is necessary for the implementation of that operation. If, without the restriction, the main operation is difficult, or even impossible, to implement, the restriction may be regarded as objectively necessary for its implementation (judgments in M6 and Others v Commission, cited in paragraph 99 above, EU:T:2001:215, paragraph 109, and in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 67).105Where a restriction is objectively necessary for the implementation of a main operation, it is still necessary to verify whether its duration and its material and geographic scope do not exceed what is necessary to implement that operation. If the duration or the scope of the restriction exceeds what is necessary in order to implement the operation, it must be assessed separately under Article 101(3) TFEU (judgment in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 68).106It must be observed that, inasmuch as the assessment of the ancillary nature of a particular agreement in relation to a main operation entails complex economic assessments by the Commission, judicial review of that assessment is limited to verifying whether the relevant procedural rules have been complied with, whether the statement of the reasons for the decision is adequate, whether the facts have been accurately stated and whether there has been a manifest error of assessment or misuse of powers (judgment in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 69).107If it is established that a restriction is directly related and necessary to achieving a main operation, the compatibility of that restriction with the competition rules must be examined with that of the main operation. Thus, if the main operation does not fall within the scope of the prohibition laid down in Article 101(1) TFEU, the same holds for the restrictions directly related to and necessary for that operation. If, on the other hand, the main operation is a restriction within the meaning of Article 101(1) TFEU but benefits from an exemption under Article 101(3) TFEU, that exemption also covers those ancillary restrictions (judgment in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 70).108It should also be noted that, in the judgment of 11 July 1985, Remia and Others v Commission (42/84, ECR, EU:C:1985:327, paragraphs 17 to 20), the Court of Justice examined a non-compete clause in a contract for the sale of an undertaking. After pointing out that the mere fact of being included in a contract for the sale of an undertaking was not of itself sufficient to remove non-compete clauses from the scope of Article 101(1) TFEU, the Court of Justice stated that, in order to determine whether or not such clauses come within the prohibition laid down in that article, it was necessary to examine what the state of competition would be if those clauses did not exist. The Court of Justice made clear that, if that were the case, should the vendor and purchaser remain competitors after the transfer, the agreement for the transfer of the undertaking could not be given effect, since the vendor, with his particularly detailed knowledge of the transferred undertaking, would still be in a position to win back his former customers, so that, in such a situation, the non-compete clauses had, in principle, the merit of ensuring that the transfer would be possible and have the effect intended, on the understanding that they must be necessary to the transfer of the undertaking concerned and that their duration and scope must be strictly limited to that purpose.109As regards the call option and the departure of the members of PT’s board of directors appointed by Telefónica, it should be noted that the applicant asserts, in paragraphs 20 and 76 of the application, that the clause had, in relation to those two factors, an objective comparable to that of the non-compete clauses in agreements for the transfer of undertakings, namely to prevent Telefónica from making use of the information gained through its presence on PT’s board of directors in order to compete with PT.110As regards the call option, it should be observed that that option no longer appeared in the final version of the agreement and could therefore no longer justify the clause, which, moreover, is the reason why the Commission did not examine whether the clause might be characterised as an ancillary restriction to the call option (see recital 390 of the contested decision). Furthermore, and in any event, it must be stated that the applicant merely (i) asserts that ‘the non-compete option was in PT’s interest and typical of an acquisition of shares with the characteristics of that resulting from the implementation of the call option, especially an acquisition entailing enhanced control, involving a significant investment and the risk that the seller might exploit the sector transferred, with which it is very familiar’; (ii) emphasises the size of the shareholding to which the call option was to apply (10%); and (iii) claims that ‘PT was in the habit of associating clauses of this type to agreements for the purchase and sale of shares, since they [were] limited in time and not harmful to current activities’ and that ‘PT had an interest in protecting itself in the short term following the exercise of the call option’.111However, the applicant does not explain why and how, in the present case, the sale by Telefónica of the shares in PT which it owned might have entailed an actual risk that the seller would continue to operate in the sector concerned with which it was very familiar or from what, specifically, it felt the need to protect itself because of the exercise of the call option.112Furthermore, although it asserts that the call option and the non-compete clause appeared at the same time in the second offer, which would suggest that they are connected, the applicant does not show that their introduction was connected. Thus, the applicant merely states that the fact that the clause was connected to the call option is apparent from the exchange of correspondence between Telefónica and PT on 1 June 2010 between 2.53 am and 5 pm, which resulted in an increase of the price of the second offer. That correspondence, produced by the Commission in answer to a question from the Court, consists of an exchange of emails between Telefónica and PT containing the successive revisions of the wording of the agreement with clear amendments. While those versions of the agreement do indeed include the call option and the non-compete clause, it cannot be inferred that the clause is dependent on the call option.113In those circumstances, it must be stated that it cannot be maintained that the clause might have been characterised as a restriction ancillary to the call option.114As regards, moreover, the departure of the members of PT’s board of directors appointed by Telefónica, the applicant asserts that they might have had access to sensitive information, but fails to demonstrate that there was a genuine risk that Telefónica would use the information obtained by the members of PT’s board of directors which it had appointed in a way that would be detrimental to PT after those members had left.115In addition, it must be stated that the applicant adduces no evidence capable of rebutting the Commission’s conclusions set out in recitals 391 to 401 of the contested decision, according to which the clause could not be justified as a restriction ancillary to the departure of the members of PT’s board of directors appointed by Telefónica.116The Commission thus asserted, in particular, that Portuguese company law and, more particularly, Articles 64, 254 and 398 of the Portuguese Commercial Code imposed a legal obligation on the members of a board of directors not to use the information to which they had had access for purposes other than ensuring the proper functioning of the company (recital 395 of the contested decision). The applicant does not explain why, given such a legal obligation, the clause was necessary in order to protect the information made available to the members of PT’s board of directors appointed by Telefónica after they had left the board.117Likewise, the Commission noted, as regards the alleged need to protect the confidential information to which the members of PT’s board of directors appointed by Telefónica had access, that that information had been made available to those members before the Vivo transaction, that no non-compete commitment had been deemed necessary at that time and that the parties had not shown why Telefónica’s departure from PT’s board of directors would have triggered a need to adopt a non-compete commitment (recitals 393 and 394 of the contested decision).118It follows from the foregoing considerations that the applicant has not shown that the clause had been a restriction ancillary to the departure of the members of PT’s board of directors appointed by Telefónica.119Nor, it should be noted, has the applicant contradicted the Commission’s considerations set out in recitals 402 to 404 of the contested decision, according to which, even on the assumption that a non-compete commitment was necessary for the implementation of the resignation from PT’s board of directors of the members appointed by Telefónica, in order to ensure the protection of the confidential information made available to that board, such a commitment ought to have been limited to what was strictly necessary, which is not the case for the clause, which is bilateral in nature and therefore not only prohibits Telefónica from competing with PT but also prohibits PT from competing with Telefónica.120Last, and in any event, it should be noted that, as the Commission correctly points out in recitals 386 and 387 of the contested decision, the question whether a restriction may be characterised as ancillary must be examined by reference to the main obligation. In this instance, the main operation by reference to which the non-compete clause should be assessed is neither the call option nor the departure of the members designated by Telefónica from PT’s board of directors, but the Vivo transaction. However, the applicant puts forward no evidence to show that the clause would have been necessary in order to permit the implementation of that operation.121It follows from the foregoing considerations that the applicant has failed to show that the clause ought to have been characterised as a restriction ancillary to the call option while that option appeared in the agreement, which in the applicant’s submission ought to have been taken into account in the assessment of the circumstances of the agreement. The applicant has likewise failed to show that the clause was a restriction ancillary to the departure of the members appointed by Telefónica from PT’s board of directors, provided for in the final version of the agreement, and that it ought therefore to have avoided on that basis being caught by the prohibition laid down in Article 101 TFEU.The argument alleging that the clause contained a self-assessment obligation122The applicant claims that the clause contained no non-compete obligation incompatible with Article 101 TFEU: the non-compete obligation in the clause was subject to the condition that it would be assessed and validated by both parties and, if that assessment had taken place and led to the conclusion that the non-compete obligation was not permissible, it would have been deleted without having ever produced any effects. That reading is, in all respects, the most plausible reading of the provision in question.123In the applicant’s submission, because of the words ‘to the extent permitted by law’, the clause actually contained two obligations, namely a secondary obligation not to compete and a primary self-assessment obligation, requiring the parties to assess the legality of the non-compete obligation and if the self-assessment exercise provided for in the clause should have the consequence that the non-compete obligation was not lawful, that obligation would automatically become void.124During the conference calls on 26 and 29 October 2010, the parties carried out the self-assessment exercise provided for in the clause and reached the conclusion that the restriction of competition was not permissible. They then considered whether it was necessary to delete the clause, but such a solution seemed to them to be incompatible with the existence of the self-assessment obligation then contained in the clause. PT therefore acknowledged that the obligation imposed by the clause was satisfied when the self-assessment exercise was carried out and that the competent authorities should be informed of the result of the exercise. It is in that context that the agreement entered into by the parties on 4 February 2011, which deleted the clause and confirmed that it had never imposed a non-compete obligation on either of the parties, must be understood.125Finally, the non-compete obligation was not capable of producing effects before it had been validated and could not therefore be characterised as a restriction by object. In any event, even if that had been the case, it would have become void on 29 October 2010, the date from which it was clear to both the parties that they could not rely on the agreement in order to refrain from competing with each other.126In the context of the present action, the applicant disputes certain of the Commission’s conclusions in the contested decision, but fails to produce specific evidence or, at least, relevant arguments of such a kind as to call those conclusions in question. The applicant addresses, in essence, the following points in the course of its argument: first, the conclusion in recital 255 of the contested decision that the wording of the clause shows its anticompetitive nature is incorrect: second, the parties were correct to have doubts as to the possibility that the clause might be legal as a restriction ancillary to the call option or to the departure of the members of the board of directors appointed by Telefónica; third, the conditions of the negotiation of the agreement justified deferring the examination of that possibility; fourth, the conference calls of October 2010 show that the self-assessment exercise provided for in the clause took place; fifth, the agreement to delete the clause, concluded on 4 February 2011, confirms that the self-assessment exercise took place and that the clause never had the slightest effect; sixth, the Commission misinterprets PT’s replies to the requests for information of 5 January 2011; and, seventh, and last, the parties in any event had sufficient arguments not to comply with the clause.127In the first place, the applicant’s assertion that the conclusion in recital 255 of the contested decision is incorrect relates to its argument that, contrary to the Commission’s contention, it does not analyse the clause as a mere self-assessment obligation, but maintains that the clause contained two obligations, one preliminary and the other final: the preliminary self-assessment obligation was to ascertain whether the non-compete obligation was possible, whereas the non-compete obligation could not be constituted without the parties having verified that it was possible. The insertion of the words ‘to the extent permitted by law’ meant that neither of the parties was entitled to require the other to refrain from competing without having first validated the legality of that conduct, since the obligation not to compete depended on compliance with the obligation to assess the legality of that restriction.128The non-compete obligation is therefore not to be confused with the self-assessment obligation and the outcome of the assessment, during the conference calls of October 2010, was that the non-compete obligation was not legal. The purpose of the termination agreement was to delete the clause in order to remove doubt and to dispel definitively the idea that there was any non-compete agreement between the parties, and not to put an end to the self-assessment obligation.129It should be noted that, as the Commission contends, the alleged difference which the applicant claims to exist between the assertion in recital 76 of the contested decision that ‘the parties submit … that, instead of providing for a non-compete obligation, the clause would merely provide for an obligation to self-assess the legality and scope of a non-compete commitment’ and the assertion that ‘the clause contained a non-compete obligation, the legality of which depended on its being validated by the parties’ is wholly irrelevant. The two assertions amount, in essence, to claiming that, because of the expression ‘to the extent permitted by law’, the non-compete obligation provided for in the clause could not take effect before its legality had been analysed by the parties. Contrary to the applicant’s apparent contention, moreover, the allegation that the clause did not contain a self-assessment obligation, but an initial self-assessment obligation and a subsequent non-compete obligation, does not rebut the Commission’s arguments in the contested decision.130As regards, thus, the Commission’s conclusion in recital 255 of the contested decision, the applicant’s contention that the clause did not in its view contain only a self-assessment obligation, but also a — secondary — non-compete obligation does not alter the fact that the wording of the clause clearly makes no reference to any self-assessment exercise and cannot therefore support the parties’ argument that the clause contained an obligation to carry out such an exercise.131In the second place, it must be stated that the applicant’s other arguments cannot be accepted either. It is clear upon examining the factors on which the applicant relies in the present action that it has failed to rebut the Commission’s analysis, according to which the idea that the clause contained a self-assessment obligation, that that self-assessment was carried out, and that the non-compete obligation never became effective, so that there cannot have been an infringement of Article 101 TFEU, cannot succeed. The applicant merely claims that the non-compete obligation was conditional upon verification that it was possible, but adduces no evidence capable of calling in question the evidence adduced by the Commission in order to show that there was nothing to indicate that the clause contained a self-assessment obligation on which the entry into force of the non-compete obligation was dependent.132First, the applicant puts forward evidence which is supposed to demonstrate that the interpretation according to which the clause contained a self-assessment obligation concerning the legality of the non-compete obligation is reinforced by the fact that there was a reasonable doubt as to the possibility that the non-compete obligation could be characterised as a restriction ancillary to the call option or the departure of the members of PT’s board of directors appointed by Telefónica. The applicant thus maintains that, in view of the context and the pressure of the negotiation, it seemed reasonable to the applicant to set aside the non-compete obligation until the consequences of the deletion of the call option and the maintenance of the obligation for the members of PT’s board of directors appointed by Telefónica to resign had been verified.133That argument must be rejected.134As regards the call option, it should be borne in mind that it was provided for in the second and third offers (recitals 41 and 46 of the contested decision) and that it no longer appeared in the fourth offer, since Telefónica had in the meantime sold most of its shares in PT, which had initially amounted to around 10% (recital 18 of the contested decision).135The applicant thus maintains that, owing to the short period between receipt of the fourth offer and the signing of the agreement, namely 24 hours, the parties did not have time to ascertain whether the clause might still be legal without the call option and therefore altered the clause to a self-assessment clause in order to defer the examination of its legality.136However, it follows from what was stated in paragraphs 110 to 113 above that the applicant has not succeeded in showing that the clause might have been characterised as a restriction ancillary to the call option at the time when it appeared in the agreement or that there might be any reasonable doubt in that respect, and any argument based on that notion cannot therefore succeed.137As regards, moreover, the departure of the members of PT’s board of directors appointed by Telefónica, provided for in the agreement, it was also stated in paragraphs 114 to 118 above that it was not established that the clause was a restriction ancillary to the departure of those board members, so that an alleged doubt in that respect cannot support the argument that the clause would in reality have imposed an obligation to self-assess the legality of such a restriction.138In that context, it should also be noted that, as the Commission observed in recital 376(b) of the contested decision, the applicant’s argument is contradictory, in so far as the considerations to the effect that the clause might be regarded as a restriction ancillary to the departure of the members of PT’s board of directors appointed by Telefónica, and the considerations to the effect that the self-assessment exercise would have made it possible to determine that the clause was not compatible with competition law, are incompatible, since if the clause had been legal as a restriction ancillary to the departure of the members of PT’s board of directors appointed by Telefónica the alleged self-assessment exercise could not have reached the conclusion that the clause was illegal.139Furthermore, it should be observed that, while emphasising the alleged difficulty of the legal question as to whether the clause might have been characterised as a restriction ancillary to the resignation of the members of PT’s board of directors appointed by Telefónica, the applicant, as the Commission correctly observes, never maintained that the alleged assessment of the legality of the clause during the conference calls of October 2010 was long or difficulty, but claimed, on the contrary, that two telephone calls were sufficient for the parties to reach agreement on the issue.140It follows from the foregoing that the alleged legal complexity of the questions linked with the possibility that the clause would be characterised as a restriction ancillary to the call option or to the resignation of the members of PT’s board of directors appointed by Telefónica cannot be accepted as a factor arguing in favour of the assertion that the phrase ‘to the extent permitted by law’ introduced an obligation to self-assess the legality of the non-compete obligation in the clause.141Second, the applicant maintains that the conditions of the negotiation of the agreement justified adding a self-evaluation obligation prior to the non-compete obligation. When examining the fourth offer, the parties took care not to re-examine the clauses coming from the earlier offers and amended them only if it proved necessary to do so in order to adapt the offer to the essential characteristics of the operation. The words ‘to the extent permitted by law’ were therefore inserted because the circumstances had changed when the call option was dropped, but it was not possible, given the many constraints of the negotiation, to validate beforehand the legality of the maintenance of the non-compete obligation in the terms initially provided for.142The applicant further claims that the agreement was signed less than 24 hours after receipt of the fourth offer. During that time, since the conclusion of the acquisition and Vivo and of Oi was at stake, the clause was the least of PT’s concerns, and there is nothing to prove that the parties discussed the final version of the clause and every indication that they did nothing about it.143That argument, too, is unconvincing.144First of all, as regards the dropping of the call option, it should be borne in mind that it was as early as 23 June 2010 that Telefónica announced that it had reduced its shareholding in PT to almost 2%, so that, as the Commission correctly points out, it was on that date — more than one month before the fourth offer was sent on 27 July and the agreement was signed on 28 July 2010 — that the parties were aware that any alleged link between the call option and the clause had ceased to exist. It follows that the applicant cannot maintain that the parties had only 24 hours within which to assess the consequences of the disappearance of the call option.145Next, it should be noted that the applicant does not disprove the evidence put forward by the Commission in order to demonstrate that the parties amended the terms of the agreement up until the outcome of the negotiations, namely the fact that clauses 6 and 7 of the agreement were amended between the submission of the fourth offer and the signature of the agreement and that the clause itself was the subject of discussion and amendments as regards its duration until just before the agreement was signed. It merely asserts that ‘there is nothing to prove that the parties discussed the final draft of [the clause] and every indication that they did nothing about it’. In addition, the applicant’s assertion in paragraph 34 of the reply that the amendment of the clause consisting in postponing the date on which it entered into force from ‘the date of signature of the present [agreement]’ to ‘the date [of the definitive conclusion of the transaction]’ is a purely logical amendment, or indeed an automatic correction, cannot be accepted. The expression ‘the date of signature of the present [agreement]’ would have meant that the clause took effect at the time of signature of the agreement, and therefore on 28 July 2010, whereas the expression ‘the date [of the definitive conclusion of the transaction]’ means that the clause took effect at the time of the definitive conclusion of the transaction, on 27 September 2010 (see paragraphs 22 and 25 above).146Last, and more generally, the argument which the applicant bases on the alleged difficulty of the negotiating conditions must be rejected. Thus, the Commission is correct to assert in recital 249 of the contested decision and in paragraph 49 of the defence that it is simply not credible that undertakings like Telefónica and PT, which have access and recourse to sophisticated legal advice, ‘botched up’ the discussion and amendment of the wording of the agreement and, in particular, of the clause. Nor does the applicant rebut that assertion; once again, it merely asserts that ‘the likelihood that the parties initially had access and recourse to sophisticated legal advice is, to say the least, uncertain and objectively low’.147Third, the applicant claims that the self-assessment exercise allegedly provided for in the clause was carried out during the conference calls on 26 and 29 October 2010. Since, however, the applicant does not again challenge the analysis carried out by the Commission, in particular, in recitals 102 to 124 of the contested decision, following which it concluded that the evidence put forward by the parties did not show that the clause was ‘exhausted’ from 29 October 2010, that the self-assessment was provided for in the clause or that that alleged self-assessment had any effect (recital 124 of the contested decision), its claims must once again be rejected. The applicant merely asserts that ‘proof of the contacts and proof of what was said [are the] same and [that they are] consistent’, that it ‘does not seem reasonable to believe that [the conference calls] had any purpose other than to discuss [the clause] and that [they provided confirmation] that the non-compete obligation was lawful’, that ‘there is no evidence to support such an absurd theory’ and that, ‘on the contrary, everything indicates that the common reflection could lead to only one conclusion, [namely] that the non-compete obligation was unlawful and ineffective’.148Likewise, the applicant does not disprove the Commission’s argument that if the clause had genuinely provided for a self-assessment obligation, it would have been logical not only for it to refer to that obligation but also for it to specify a date by which that self-assessment exercise was to be carried out rather than a fixed date on which the clause was to enter into force or, failing that, that the parties should at least carry out that self-assessment exercise as soon as possible after signing the agreement and, in any event, before the entry into force provided for in the agreement, namely the definitive conclusion of the transaction on 27 September 2010 (recitals 250 to 255 and 309 et seq. of the contested decision). In so far as the applicant merely states that ‘the parties may deem it necessary to set a deadline, just as they may choose not to do so’, that, since the non-compete obligation provided for in the clause was not binding so long as its legality had not been established, PT did not deem it urgent to clarify the issue, as the topic had ‘faded into the background’, and that, in the circumstances of the case, ‘it is understandable that the parties did not display excessive zeal in clarifying the issue’, it must be stated that the applicant has failed to explain either the lack of a date for carrying out the self-assessment exercise or the delay before that exercise was allegedly carried out.149The affidavit made by Ms M.R.S.S.N., the head of PT’s competition directorate at the time of the conclusion of the agreement and also of the agreement terminating the clause, which the Commission produces as Annex B.1 to the defence, does not alter that finding. Admittedly, Ms M.R.S.S.N. asserts in that statement that, during the conference calls between Telefónica and PT in October 2010, the question whether the clause was acceptable under competition law was assessed, that the parties concluded that they could not commit themselves in the terms initially set out and that it also follows from those conference calls that the obligation laid down in the clause might be considered to have been implemented from the time when the parties had examined its legality and concluded that its object was not possible (see also recital 117 of the contested decision). However, as the Commission observes (recitals 120 and 122 of the contested decision), that affidavit does not constitute contemporaneous evidence of what was said in the conversations of October 2010, which would confer higher probative value on it (see, to that effect, judgments of 11 March 1999, Ensidesa v Commission, T‑157/94, ECR, EU:T:1999:54, paragraph 312, and of 16 December 2003, Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied and Technische Unie v Commission, T‑5/00 and T‑6/00, ECR, EU:T:2003:342, paragraph 181). In addition, although testimony provided by a direct witness of the circumstances which he has described must in principle be characterised as evidence with a high probative value (judgment of 3 March 2011, Siemens v Commission, T‑110/07, ECR, EU:T:2011:68, paragraph 75), it is also necessary to take into account the fact that the affidavit at issue in the present case was made by a person who might have a direct interest in the case and who cannot be classified as independent of the applicant (see, to that effect, judgment in Siemens v Commission, EU:T:2011:68, paragraphs 69 and 70).150It follows that, in the light of all of the evidence produced, that affidavit, as the sole item of evidence, is not sufficient to demonstrate that the clause contained a self-assessment obligation, bearing in mind that, as regards the probative value to be placed on the various evidence, the only relevant criterion for assessing evidence freely produced lies in its credibility (see judgment of 8 July 2004, Mannesmannröhren-Werke v Commission, T‑44/00, ECR, EU:T:2004:218, paragraph 84 and the case-law cited; judgments of 8 July 2004, Dalmine v Commission, T‑50/00, ECR, EU:T:2004:220, paragraph 72, and JFE Engineering and Others v Commission, T‑67/00, T‑68/00, T‑71/00 and T‑78/00, ECR, EU:T:2004:221, paragraph 273) and that, according to the rules generally applicable in relation to evidence, the credibility and, accordingly, the probative value of a document depend on its origin, the circumstances in which it was drawn up, the person to whom it is addressed and its content (judgment of 15 March 2000, Cimenteries CBR and Others v Commission, T‑25/95, T‑26/95, T‑30/95 to T‑32/95, T‑34/95 to T‑39/95, T‑42/95 to T‑46/95, T‑48/95, T‑50/95 to T‑65/95, T‑68/95 to T‑71/95, T‑87/95, T‑88/95, T‑103/95 and T‑104/95, ECR, EU:T:2000:77, paragraph 1053).151Fourth, the applicant disputes the Commission’s assessment (recitals 313 at 323 of the contested decision) concerning the agreement to terminate the clause (see paragraph 29 above). According to the Commission, in essence, the termination agreement does not substantiate the argument that the clause contained a self-assessment obligation that was implemented during the conference calls of October 2010, in particular because no wording in the termination agreement shows a connection between the termination clause and a self-assessment obligation (recital 315 of the contested decision). The recitals to the termination agreement set out the circumstances in which the parties reached the decision to ‘delete’ the clause, but make no reference to the October telephone conversations (recital 316 of the contested decision), and the wording of the termination agreement contains a non-compete obligation and not a self-assessment obligation (recitals 317 to 322 of the contested decision).152The applicant claims that the Commission’s interpretation proceeds from the incorrect premiss that the parties maintained that the clause merely contained a self-assessment obligation, whereas PT has always maintained that the clause contained two obligations, an initial self-assessment obligation and a secondary non-compete obligation. When matters are viewed in that light, the termination agreement does not in any way contradict the idea that the clause established a self-assessment obligation.153That argument must be rejected. Even if the clause had to be interpreted as containing a self-assessment obligation and a non-compete obligation, it must be stated that the Commission’s argument summarised in paragraph 151 above remains valid. Furthermore, the applicant merely contends that the termination agreement ‘confirms’ the parties’ interpretation during the conference calls of October 2010 and that the assertion in that agreement that the clause ‘cannot be implemented and has at no time been implemented’ appears to be inconsistent only if the clause is confined to a self-assessment obligation, since it would be inconsistent to assert that the obligation cannot be implemented and has never been implemented when the parties specifically maintain that the self-assessment exercise allegedly provided for in the clause was carried out, but not if it is accepted that the clause contained a self-assessment obligation and a non-compete obligation, since, in that case, it would not be inconsistent to assert that the obligation provided for in the clause cannot be implemented and has never been implemented.154That argument does not alter the fact that the agreement makes no reference to the conference calls of October 2010, to an alleged interpretation of the clause arrived at during those conference calls, to the fact that it confirms an alleged result of those conferences or, generally, to the fact that the clause contains a self-assessment obligation. Even if the alleged difference which PT sees between the contention that the clause contained a self-assessment obligation and the contention that it contained a self-assessment obligation and a non-compete obligation is accepted, the terms of the termination agreement and, in particular, the assertion that the clause cannot be implemented and has never been implemented continue to be inconsistent in the light of such an interpretation.155Fifth, the applicant claims that the Commission is mistaken when it states, in recital 115 of the contested decision, that PT’s reply to the request for information dated 5 January 2011 does not mention that the clause should be interpreted as incorporating an obligation to carry out a self-assessment exercise and when it observes, in recital 303 of the contested decision, that, before their replies to the statement of objections, the parties did not allege that the clause provided for a self-assessment obligation.156It should be noted that, in paragraphs 30, 31 and 32 of its reply to the request for information, PT asserted that ‘the fact is that, although the existence of that provision was made public by [PT] on 9 June 2010 (see annex 10), it faded into the background, since [PT] did not feel bound by it and did not expect that it would be able to require Telefónica to act in any way in accordance with its provisions, at least not before the legality of the provision had been assessed’. The applicant added that ‘the subject became a source of concern again only with the news that appeared in the newspapers on 23 and 24 August and 19 [October] 2010’, that, ‘following the appearance of that news, [the applicant] instructed its lawyers to contact Telefónica’s lawyers in order to clarify the matter’ and that ‘two conference calls took place on 26 and 29 October 2010 and concluded that there was not sufficient justification for the non-compete clause and that it served no purpose and that it would therefore be preferable to terminate it’.157Although PT therefore did not expressly state that the main obligation established by the clause was a self-assessment obligation, it nonetheless asserted that it ‘did not feel bound [by the clause] and did not expect that it would be able to require Telefónica to act in any way in accordance with its provision, at least not before the legality of the provision had been assessed’, which implies that the legality of the clause would be assessed before it entered into force.158However, although the Commission’s assertion that before their replies to the statement of objections the parties did not allege that the clause would provide for a self-assessment obligation should be nuanced, not only do the statements in question not confirm that the clause would have become void following the alleged self-assessment exercise but, in addition, the fact that PT already gave to understand in its reply to the request for information dated 5 January 2011 that the legality of the clause must be validated before it entered into force does not alter the fact that the applicant has not shown, in the present proceedings before the Court, that the clause contained a self-assessment obligation or that the clause would have become void following the alleged self-assessment carried out in October 2010.159Sixth, and last, the applicant maintains that, in any event, the Commission ought to have considered that the clause was ineffective, because the parties had sufficient arguments not to comply with the non-compete obligation. Thus, in the applicant’s submission, it is clear on reading the clarifications provided by Telefónica and PT that the parties did not have the same interests with respect to the clause, since Telefónica claimed that it had agreed to the clause in order to enable the Vivo transaction to proceed, while PT’s interest was to protect itself because of the call option. Accordingly, the two parties disagreed as to what was permitted by law and therefore had sufficient arguments with each other not to comply with the non-compete obligation.160That argument must be rejected without there being any need to examine the reasons which allegedly support the argument that the parties had sufficient arguments not to comply with the non-compete obligation. It is sufficient in that regard to recall that, in accordance with Article 101(2) TFEU, agreements subject to the prohibition in that article are automatically void and that no undertaking can therefore be required to comply with them. Since the invalidity referred to in Article 101(2) TFEU is absolute, an agreement which is null and void by virtue of this provision has no effect as between the contracting parties and cannot be invoked against third parties (see, by analogy, judgment of 25 November 1971, Béguelin Import, 22/71, ECR, EU:C:1971:113, paragraph 29). The fact that the parties had ‘arguments not to comply with the non-compete obligation’ cannot therefore prevent an agreement from being caught by the prohibition in Article 101 TFEU.161It follows from all of the foregoing considerations that the argument that the clause contained a self-assessment obligation must be rejected.The argument alleging infringement of Article 101 TFEU owing to the failure to examine the conditions of potential competition162The applicant maintains that the Commission erred by failing to examine the conditions of potential competition in order to ascertain whether, in view of the structure of the relevant markets and the economic and legal context, there were real and genuine possibilities that Telefónica and PT would compete with each other on the relevant markets to which the clause allegedly related. It submits that whether or not a restriction of competition can be characterised as a ‘restriction by object’ also depends on whether it is capable of having restrictive effects.163In that regard, the applicant claims that, owing to the statutory and regulatory obstacles to entry into and expansion in the Portuguese electronic communications market and to the obstacles inherent in the actual structure, characteristics and specificities of the markets in question, the parties could not be characterised as potential competitors.164The applicant also takes issue with the Commission for having failed to have regard in the contested decision to the exhaustive analysis which the applicant undertook in its reply to the statement of objections of the electronic communications markets in Portugal and of the obstacles that made competition on those markets impossible, but merely satisfied itself with a general argument that failed to comply with the obligations resulting from the case-law and failed to rebut a large part of the arguments developed by the applicant.165In the first place, it follows from the applicant’s argument that it does not, strictly speaking, call in question the formal reasoning of the contested decision, but the fact that the Commission, wrongly in the applicant’s submission, failed to carry out a study of the structure of the affected markets and the genuine possibilities of competition in those markets.166In any event, it is apparent, in the light of recitals 265 to 278 of the contested decision, that the Commission explained the reasons why it had not considered it necessary to carry out a detailed analysis of the structure of the affected markets and that it answered the arguments which the parties set out in their replies to the statement of objections concerning the existence of potential competition between them, as summarised in recitals 268 to 270 of the contested decision. In so far as the applicant’s argument may be understood as a general criticism of an alleged lack of reasoning in the contested decision on that point, it cannot thus succeed.167More specifically, the applicant claims, in paragraphs 136 and 318 of the application, that the Commission failed to rebut, in the contested decision, the argument, set out in recital 169, maintaining that, if certain retail markets were excluded from the scope of the clause, the corresponding wholesale markets should also be excluded, since actual or potential competition in the retail markets determined competition in the wholesale markets and that, if the former were not covered by the non-compete obligation, then the latter were not either. However, it is clear upon reading recitals 153, 154 and 169 of the contested decision that the Commission considered that the parties should be regarded as potential competitors in all the markets for electronic communication services and television services and that, accordingly, since it did not accept the premiss that certain retail markets should be excluded from the scope of the clause, the argument that the wholesale markets corresponding to those retail markets, and complementary to them, should be excluded from the scope of the clause did not have to be rebutted.168Furthermore, the applicant takes issue with the fact that the contested decision contains little or no reflection on the question as to which markets could in fact be the subject of the agreement at issue. In so far as that criticism also relates to the Commission’s compliance with its obligation to state reasons, it must be rejected, since, in section 5.3 of the contested decision (recitals 186 to 197), the Commission defined the ‘relevant product markets’, referring, contrary to the applicant’s assertions, not only to the guidance in its Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (OJ 2002 L 344, p. 65), but also to its previous decisions and the case-law (recital 186 of the contested decision). In addition, in section 5.5 of the contested decision (recitals 200 to 233 of the contested decision), the Commission analysed ‘the parties’ presence in the relevant markets’. Last, it stated that, given the broad scope of the clause, the precise limits of the definition of each of the relevant markets could be left open.169In the second place, as regards the complaint alleging incorrect assessment of the ‘capacity’ of the clause to restrict competition between PT and Telefónica owing to the Commission’s position that in this case it was not required to carry out a detailed analysis of the structure of the relevant markets, it is appropriate, as is apparent from the contested decision, to point out three factors on which the Commission relied in order to conclude that no detailed analysis of potential competition was necessary with respect to each specific market for the purposes of assessing whether the agreement constituted a restriction of competition by object (recital 278 of the contested decision).170First of all, the Commission observed that entering into a non-compete agreement or envisaging the need to carry out a self-assessment of the lawfulness and scope of an ancillary non-compete commitment — if the interpretation of the clause proposed by the parties were to be followed — constituted recognition by the parties that they were at least potential competitors with respect to some services. In the absence of any potential competition, there would have been no need to conclude any non-compete agreement at all, or to consider carrying out a self-assessment of a non-compete agreement (recital 271 of the contested decision).171Next, the Commission observed that the clause was broad in scope, since it applied to all electronic communications services and to television services (recitals 141, 265 and 278 of the contested decision).172Last, the Commission stated that those services had been liberalised in accordance with the EU regulatory framework, which permitted and encouraged competition among operators (recital 265 of the contested decision), and that that liberalised context, in which competition was possible and encouraged, should be the point of departure for the assessment of the clause (recital 267 of the contested decision).173It should be borne in mind, moreover, that, in order for an agreement to be regarded as having an anticompetitive object, it must have the potential to have a negative impact on competition, that is to say, it must be capable in an individual case of resulting in the prevention, restriction or distortion of competition within the internal market (judgment of 14 March 2013, Allianz Hungária Biztosító and Others, C‑32/11, ECR, EU:C:2013:160, paragraph 38).174In addition, it should again be pointed out (see paragraph 90 above) that, in order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition that it may be considered a restriction of competition ‘by object’ within the meaning of Article 101(1) TFEU, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part. When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question (see judgment in CB v Commission, cited in paragraph 86 above, EU:C:2014:2204, paragraph 53 and the case-law cited).175However, although, when interpreting the context of an agreement, it is necessary to take into consideration the actual conditions of the functioning and the structure of the market or markets in question, the Commission is not always required to produce a precise definition of the markets concerned. The definition of the relevant market differs according to whether Article 101 TFEU or Article 102 TFEU is to be applied. For the purposes of Article 102 TFEU, the appropriate definition of the relevant market is a necessary precondition for any judgment concerning allegedly anticompetitive behaviour (judgments of 10 March 1992, SIV and Others v Commission, T‑68/89, T‑77/89 and T‑78/89, ECR, EU:T:1992:38, paragraph 159, and of 11 December 2003, Adriatica di Navigazione v Commission, T‑61/99, ECR, EU:T:2003:335, paragraph 27), since, before an abuse of a dominant position is ascertained, it is necessary to establish the existence of a dominant position in a given market, which presupposes that such a market has already been defined. On the other hand, it has consistently been held that, for the purposes of applying Article 101 TFEU, the reason for defining the relevant market is to determine whether the agreement in question is liable to affect trade between Member States and has as its object or effect the prevention, restriction or distortion of competition within the internal market (judgments of 21 February 1995, SPO and Others v Commission, T‑29/92, ECR, EU:T:1995:34, paragraph 74, and in Adriatica di Navigazione v Commission, EU:T:2003:335, paragraph 27; see also judgment of 12 September 2007, Prym and Prym Consumer v Commission, T‑30/05, EU:T:2007:267, paragraph 86 and the case-law cited).176Thus, for the purposes of applying Article 101(1) TFEU, a prior definition of the relevant market is not required where the agreement at issue has in itself an anticompetitive object, that is to say, where the Commission was able to conclude correctly, without first defining the market, that the agreement at issue distorted competition and was liable to have an appreciable effect on trade between Member States. That applies, in particular, to the case of the most serious restrictions, expressly prohibited by Article 101(1)(a) to (e) TFEU (Opinion of Advocate General Bot in Joined Cases Erste Group Bank and Others v Commission, C‑125/07 P, C‑133/07 P, C‑135/07 P and C‑137/07 P, ECR, EU:C:2009:192, points 168 to 175). If the actual object of an agreement is to restrict competition by ‘market sharing’, it is not necessary to define the markets in question precisely, provided that actual or potential competition was necessarily restricted (judgment in Mannesmannröhren-Werke v Commission, cited in paragraph 150 above, EU:T:2004:218, paragraph 132).177Accordingly, since in the present case the Commission found that the clause to which the Commission took exception in the contested decision had market sharing as its object, the applicant cannot maintain that a detailed analysis of the markets concerned was necessary in order to determine whether the clause constituted a restriction of competition by object.178Undertakings which conclude an agreement whose purpose is to restrict competition cannot, in principle, avoid the application of Article 101(1) TFEU by claiming that their agreement should not have an appreciable effect on competition (judgment in Mannesmannröhren-Werke v Commission, cited in paragraph 150 above, EU:T:2004:218, paragraph 130). The agreement impugned in the present case consisted of a non-compete clause, defined by the parties as applicable to ‘any project in the telecommunication business (including fixed and mobile services, internet access and television services, but excluding any investment or activity currently held or performed as of the date hereof) that can be deemed to be in competition with the other within the Iberian market’, its existence made sense only if there was competition to be restricted (judgments in Mannesmannröhren-Werke v Commission, cited in paragraph 150 above, EU:T:2004:218, paragraph 131, and of 21 May 2014, Toshiba v Commission, T‑519/09, EU:T:2014:263, paragraph 231).179Therefore, the applicant’s argument that the existence of an alleged non-compete agreement cannot constitute proof of the existence of potential competition between the parties is irrelevant.180It is clear from the case-law that entering into such an agreement is at least a strong indication that a potential competitive relationship existed (see, to that effect, judgment in Toshiba v Commission, cited in paragraph 178 above, EU:T:2014:263, paragraph 231). As the Commission correctly points out in recital 271 of the contested decision, entering into a non-compete agreement is a recognition by the parties that they are at least potential competitors regarding some services. In addition, the existence of the non-compete agreement is only one of the factors on which the Commission relied in order to conclude that potential competition existed between the parties (see paragraphs 169 to 172 above and paragraph 182 below).181In that regard, the case-law shows, in particular, that, where the relevant market has been liberalised, as in the present case, the Commission is not required to analyse the structure of the market and the question whether entry to that market would correspond to a viable economic strategy for each of the parties (see, to that effect, judgment in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraphs 89 to 93), but that it is required to examine whether there are insurmountable barriers to entry to the market that would rule out any potential competition (see, to that effect, judgment in Toshiba v Commission, cited in paragraph 178 above, EU:T:2014:263, paragraph 230).182In the present case, the Commission not only found that the market for telecommunications and television services in Spain and Portugal was fully liberalised (see paragraph 172 above), but also observed that, according to the parties themselves, they were present on the markets for the provision of global telecommunication services and wholesale international carrier services, on the whole of the Iberian market (recitals 173, 174 and 272 of the contested decision); that they had not proved that duration of the clause would have been insufficient to acquire an existing telecommunications operator, as a means of becoming the holder of certain networks without the need to deploy them (recital 273 of the contested decision); that the current situation of the Spanish and Portuguese markets could not be invoked to exclude the possibility of investing in the sector, since, in spite of the crisis, investment in the sector had increased or at least remained stable (recital 274 of the contested decision); and, last, that Telefónica itself had acknowledged that the launch of a takeover for a company such as PT was possible, during the negotiations relating to the Vivo transaction, so that the acquisition of a competitor of PT could also have been possible (recitals 37 and 275 to 277 of the contested decision).183The applicant does not put forward in the application anything to indicate that, in spite of those factors, a detailed analysis of the markets in question would have been necessary in order to determine whether the clause constituted a restriction of competition by object or in order to establish that no insurmountable obstacle prevented the parties from entering their respective neighbouring markets.184It should be noted that, in addition to the argument already dealt with in paragraphs 162 to 181 above, the applicant, in its pleadings, merely disputes the Commission’s argument summarised in paragraph 182 above, although its contention does not appear to be capable of calling in question the Commission’s conclusion that in this case it was not required to carry out a detailed analysis of potential competition between the parties on the markets to which the clause applied.185Likewise, the applicant’s additional argument, which consists in suggesting factors that are supposed to show that entry to the markets concerned would not have corresponded to the parties’ strategic priorities or would not have been economically advantageous or attractive, cannot be upheld.186In fact, without there being any need to examine that argument in detail, it is sufficient to observe that, while the intention of an undertaking to enter a market may be of relevance in order to determine whether it can be considered to be a potential competitor in that market, nonetheless the essential factor on which such a description must be based is whether it has the ability to enter that market (see judgment in E.ON Ruhrgas and E.ON v Commission, cited in paragraph 99 above, EU:T:2012:332, paragraph 87 and the case-law cited).187Last, as regards the argument whereby the applicant claims that there was clearly nothing the agreement to prevent Telefónica from increasing its presence in Zon and that it would have been very unlikely that Telefónica would again develop its own infrastructure on the Portuguese market, since that would have undermined Zon’s activity, it should be noted that, as the Commission asserted in recital 164 of the contested decision, the argument that the clause did not prevent Telefónica from increasing its presence in Zon could not be upheld, since the clause contained literally the prohibition on ‘engaging or investing, directly or indirectly through any affiliate, in any project in the telecommunication business’, which also includes any increase of Telefónica’s shareholding in Zon. Furthermore, the fact that Telefónica already has a minority shareholding in Zon, the increase of which was prohibited by the clause, is not such as to show that Telefónica was not a potential competitor in the Portuguese market, but indicates that, in the absence of the clause, Telefónica could have increased that shareholding or acquired other shares in other operators.188It follows from the foregoing considerations that it cannot be asserted that — in spite of the fact that the very existence of the clause is a strong indication of potential competition between the parties, that its object consisted in a market-sharing agreement, that it had a broad scope and that it formed part of a liberalised economic context — the Commission ought to have carried out a detailed analysis of the structure of the markets concerned and of potential competition between the parties on those markets in order to reach the conclusion that the clause constituted a restriction of competition by object. The argument whereby the applicant alleges that there has been an infringement of Article 101 TFEU owing to the failure to examine the conditions of potential competition must therefore be rejected.The argument alleging lack of effects189The applicant maintains that, as the clause contained no restriction of competition by object, the Commission also failed to show either that the clause had produced effects restrictive of competition or that it was capable of producing such effects.190In so far as it follows from the examination of the applicant’s arguments in paragraphs 93 to 188 above that the applicant has not succeeded in showing that the Commission’s conclusion that the clause constitutes a restriction of competition by object is incorrect, its argument summarised in paragraph 189 above relies on the false premiss that the conduct in question cannot be characterised as a restriction of competition by object and must therefore be rejected. It follows from the very wording of Article 101(1) TFEU that agreements between undertakings are prohibited, regardless of their effect, where they have an anticompetitive object. Consequently, it is not necessary to show actual anticompetitive effects where the anticompetitive object of the conduct in question is proved (see judgment of 3 March 2011, Siemens and VA Tech Transmission & Distribution v Commission, T‑122/07 to T‑124/07, ECR, EU:T:2011:70, paragraph 75 and the case-law cited).191For the purpose of applying Article 101(1) TFEU, there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition. That applies in particular in the case of obvious restrictions of competition such as price fixing and market sharing (judgment of 8 December 2011, KME Germany and Others v Commission, C‑389/10 P, ECR, EU:C:2011:816, paragraph 75).192Moreover, the Court must reject the applicant’s argument that, in asserting that the fact that the parties did not engage in new activities in Spain and Portugal is a non-conclusive sign that the clause may have been implemented (recital 365 of the contested decision), the Commission requires the parties to adduce the ‘probatio diabolica’ that the failure to engage in new activities was not attributable to the clause. Since the Commission does not rely on that factor in order to demonstrate that the clause constitutes an infringement of Article 101 TFEU, but relies on the fact that the clause is in the nature of an infringement by object, and in so far as, in addition, the Commission stated that the fact that the parties did not engage in new activities on the markets in question is a ‘non-conclusive sign’ that the clause may have been implemented, the applicant cannot take issue with the Commission for having required the parties to adduce a ‘probatio diabolica’.193According, the argument alleging that the Commission did not examine the effects of the clause must be rejected.2. The claims relating to the amount of the fine 194In the alternative, the applicant disputes the amount of the fine imposed on it and maintains that it must be reduced, since even if the clause had been capable of producing effects restrictive of competition, the Commission did not properly evaluate the extent of those effects or their duration when determining the amount of the fine and thus breached the principles applicable to the calculation of fines and the principle of proportionality.a) Preliminary observationsThe principles applicable to the calculation of the fines195It should be borne in mind that it is settled case-law that the Commission enjoys a broad discretion as regards the method for calculating fines. That method, which is defined in the Guidelines, displays flexibility in a number of ways, enabling the Commission to exercise its discretion in accordance with Article 23(2) of Regulation No 1/2003 (see, to that effect and by analogy, judgment of 3 September 2009, Papierfabrik August Koehler and Others v Commission, C‑322/07 P, C‑327/07 P and C‑338/07 P, ECR, EU:C:2009:500, paragraph 112 and the case-law cited).196The gravity of infringements of EU competition law must be determined by reference to numerous factors such as, in particular, the specific circumstances and context of the case and the deterrent effect of fines, although no binding or exhaustive list of the criteria to be applied has been drawn up (judgments of 19 March 2009, Archer Daniels Midland v Commission, C‑510/06 P, ECR, EU:C:2009:166, paragraph 72, and of 3 September 2009, Prym and Prym Consumer v Commission, C‑534/07 P, ECR, EU:C:2009:505, paragraph 54).197As stated in paragraph 52 above, the Commission, in the present case, determined the amounts of the fines by applying the method defined in the Guidelines.198Although the Guidelines may not be regarded as rules of law which the administration is always bound to observe, they nevertheless form a rule of practice from which the administration may not depart in an individual case without giving reasons that are compatible with the principle of equal treatment (see, by analogy, judgments of 28 June 2005, Dansk Rørindustri and Others v Commission, C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, ECR, EU:C:2005:408, paragraph 209 and the case-law cited, and of 8 October 2008, Carbone-Lorraine v Commission, T‑73/04, ECR, EU:T:2008:416, paragraph 70).199In adopting such rules of conduct and announcing through their publication that they will henceforth apply to the cases to which they relate, the Commission imposes a limit on the exercise of its discretion and cannot depart from those rules under pain of being found, where appropriate, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (see, by analogy, judgments in Dansk Rørindustri and Others v Commission, cited in paragraph 198 above, EU:C:2005:408, paragraph 211 and the case-law cited, and in Carbone-Lorraine v Commission, cited in paragraph 198 above, EU:T:2008:416, paragraph 71).200Furthermore, the Guidelines determine, generally and abstractly, the method which the Commission has bound itself to use in setting the amount of the fines and, consequently, ensure legal certainty on the part of the undertakings (see, by analogy, judgment in Dansk Rørindustri and Others v Commission, cited in paragraph 198 above, EU:C:2005:408, paragraphs 211 and 213).201Points 4 and 5 of the Guidelines read as follows:‘4.The Commission’s power to impose fines on undertakings or associations of undertakings which, intentionally or negligently, infringe Article [101 TFEU] or [102 TFEU] is one of the means conferred on it in order for it to carry out the task of supervision entrusted to it by the Treaty. That task not only includes the duty to investigate and sanction individual infringements, but it also encompasses the duty to pursue a general policy designed to apply, in competition matters, the principles laid down by the Treaty and to steer the conduct of undertakings in the light of those principles. For this purpose, the Commission must ensure that its action has the necessary deterrent effect. Accordingly, when the Commission discovers that Article [101 TFEU] or [102 TFEU] has been infringed, it may be necessary to impose a fine on those who have acted in breach of the law. Fines should have a sufficiently deterrent effect, not only in order to sanction the undertakings concerned (specific deterrence) but also in order to deter other undertakings from engaging in, or continuing, behaviour that is contrary to Articles 81 and 82 of the EC Treaty (general deterrence).5.In order to achieve these objectives, it is appropriate for the Commission to refer to the value of the sales of goods or services to which the infringement relates as a basis for setting the fine. The duration of the infringement should also play a significant role in the setting of the appropriate amount of the fine. It necessarily has an impact on the potential consequences of the infringement on the market. It is therefore considered important that the fine should also reflect the number of years during which an undertaking participated in the infringement.’202The Guidelines define a calculation method of consisting of two steps (point 9 of the Guidelines). They provide, by way of a first calculation step, for the determination by the Commission of a basic amount for each undertaking or association of undertakings concerned and include, in that regard, the following provisions:‘12.The basic amount will be set by reference to the value of sales and applying the following methodology.…13.In determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly relates in the relevant geographic area within the EEA. It will normally take the sales made by the undertaking during the last full business year of its participation in the infringement.19.The basic amount of the fine will be related to a proportion of the value of sales, depending on the degree of gravity of the infringement, multiplied by the number of years of infringement.20.The assessment of gravity will be made on a case-by-case basis for all types of infringement, taking account of all the relevant circumstances of the case.21.As a general rule, the proportion of the value of sales taken into account will be set at a level of up to 30% of the value of sales.22.In order to decide whether the proportion of the value of sales to be considered in a given case should be at the lower end or at the higher end of that scale, the Commission will have regard to a number of factors, such as the nature of the infringement, the combined market share of all the undertakings concerned, the geographic scope of the infringement and whether or not the infringement has been implemented.23.Horizontal price-fixing, market-sharing and output-limitation agreements, which are usually secret, are, by their very nature, among the most harmful restrictions of competition. As a matter of policy, they will be heavily fined. Therefore, the proportion of the value of sales taken into account for such infringements will generally be set at the higher end of the scale.24.In order to take fully into account the duration of the participation of each undertaking in the infringement, the amount determined on the basis of the value of sales (see paragraphs 20 to 23 above) will be multiplied by the number of years of participation in the infringement. Periods of less than six months will be counted as half a year; periods longer than six months but shorter than one year will be counted as a full year.25.In addition, irrespective of the duration of the undertaking’s participation in the infringement, the Commission will include in the basic amount a sum of between 15% and 25% of the value of sales as defined in Section A above in order to deter undertakings from even entering into horizontal price-fixing, market-sharing and output-limitation agreements. The Commission may also apply such an additional amount in the case of other infringements. For the purpose of deciding the proportion of the value of sales to be considered in a given case, the Commission will have regard to a number of factors, in particular those referred in point 22.203The Guidelines provide, by way of a second calculation step, that the Commission may adjust the basic amount upwards or downwards, on the basis of an overall assessment which takes account of all the relevant circumstances (points 11 and 27 of the Guidelines).204In respect of those circumstances, point 29 of the Guidelines states:‘The basic amount may be reduced where the Commission finds that mitigating circumstances exist, such as:where the undertaking concerned provides evidence that it terminated the infringement as soon as the Commission intervened: this will not apply to secret agreements or practices (in particular, cartels);where the undertaking provides evidence that the infringement has been committed as a result of negligence;where the undertaking provides evidence that its involvement in the infringement is substantially limited and thus demonstrates that, during the period in which it was party to the offending agreement, it actually avoided applying it by adopting competitive conduct in the market; the mere fact that an undertaking participated in an infringement for a shorter duration than others will not be regarded as a mitigating circumstance since this will already be reflected in the basic amount;where the undertaking concerned has effectively cooperated with the Commission outside the scope of the Leniency Notice and beyond its legal obligation to do so;where the anticompetitive conduct of the undertaking has been authorised or encouraged by public authorities or by legislation.’205Last, as the Court of Justice recalled in its judgments in KME Germany and Others v Commission, cited in paragraph 191 above (EU:C:2011:816, paragraph 129), and of 8 December 2011, KME Germany and Others v Commission (C‑272/09 P, ECR, EU:C:2011:810, paragraph 102), the Courts of the European Union must carry out the review of legality incumbent upon them on the basis of the evidence adduced by the applicant in support of the pleas in law put forward. In carrying out such a review, the Courts cannot use the Commission’s margin of discretion — either as regards the choice of factors taken into account in the application of the criteria mentioned in the Guidelines or as regards the assessment of those factors — as a basis for dispensing with the conduct of an in-depth review of the law and of the facts.206The review of legality is supplemented by the unlimited jurisdiction which the Courts of the EU were afforded by Article 17 of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81 EC] and [82 EC] (OJ, English Special Edition 1959 to 1962, p. 87) and which is now recognised by Article 31 of Regulation No 1/2003, in accordance with Article 261 TFEU. That jurisdiction empowers the Courts, in addition to carrying out a mere review of the lawfulness of the penalty, to substitute their own appraisal for the Commission’s and, consequently, to cancel, reduce or increase the fine or penalty payment imposed (judgment in KME Germany and Others v Commission, cited in paragraph 205 above, EU:C:2011:810, paragraph 103).Contested decision207The Commission considered that, on the basis of the facts described in the contested decision, the infringement had been committed intentionally and had consisted of a clearly unlawful agreement not to compete and to share the Spanish and Portuguese electronic communications markets between the parties. According to the Commission, with respect to this type of obvious infringement, the parties could not claim that they had not acted deliberately (recital 477 of the contested decision).208As regards the value of sales that would serve as a reference for the setting of the basic amount, the Commission found that the non-compete clause applied to all electronic communication services and also to television services supplied in Spain and Portugal, with the exception of global telecommunication services and wholesale international carrier services in the Iberian Peninsula, for which the parties competed with each other at the time of signature of the agreement and which were thus excluded from its application. Furthermore, in view of the fact that the clause excluded from its scope any investment and activity already current at the time of the agreement that could be deemed to be in competition with the activities and investments of the other party in the Iberian market, the Commission took into account for each party only the value of its own sales in its country of origin. It therefore did not take into consideration, in particular, the value of sales of each party in the country of origin of the other party, since those amounts corresponded, in principle, to pre-existing activities not covered by the clause. That means that, as regards Telefónica, the value of its sales was set by the Commission by reference to the value of its sales in Spain, while, as regards PT, the value of its sales was determined by reference to the value of its sales in Portugal (recitals 482 and 483 of the contested decision).209The Commission then stated that it normally took into account the sales made by the undertakings during the last full business year of their participation in the infringement. Taking into account that the infringement lasted for less than one year and that it took place in 2010 and 2011, the Commission used the undertakings’ sales in 2011, which were lower than the sales recorded by the parties in 2010 (recital 484 of the contested decision).210As regards the gravity of the infringement, which determines the percentage of the value of sales to be taken into consideration when setting the amount of the fine, the Commission stated that, in this instance, the infringement had consisted of an agreement not to compete and to share the Spanish and Portuguese electronic communications and television markets between the parties and that Telefónica and PT were the incumbent operators in their respective countries (recital 489 of the contested decision).211The Commission stated that it took into account that the clause had not been kept secret by the parties from the moment it was introduced for the first time in the offer dated 1 June 2010. As explained in recitals 128 to 130 of the contested decision, the second offer including the first version of the clause was uploaded by the parties on to their respective websites and communicated to the Spanish and Portuguese Stock Exchange Authorities, which also published it on their own websites. In addition, on 9 June 2010 PT distributed to its shareholders a brochure containing an explanation of the transaction and the clause. Furthermore, the agreement including the final version of the clause was part of the filings by Telefónica and PT to Anatel and CADE. Last, in a press article published by the Jornal de Negócios on 23 August 2010, Telefónica confirmed that the agreement included a non-compete clause (recital 491 of the contested decision).212As regards the duration of the infringement, the Commission took account of the fact that it had lasted from 27 September 2010, the date of the notarised declaration, and therefore, of the definitive conclusion of the transaction, until 4 February 2011, the date of the agreement whereby the parties terminated the clause (recital 492 of the contested decision).213On the basis of those factors, the size of the undertakings and the short duration of the restrictive agreement, the Commission considered that, in the specific circumstances of the present case, it was proportionate and sufficient in terms of deterrence to take a low proportion of the value of sales into account in setting the basic amount of the fines. The Commission therefore considered that the percentage of the value of sales to be taken into consideration should be 2% for the two undertakings concerned (recital 493 of the contested decision). The percentage of the value of sales taken for each undertaking was multiplied by the coefficient applied for duration, namely 0.33, corresponding to four months of a full year.214The Commission took the amounts as thus calculated as final basic amounts, and thus did not add a fixed amount for deterrence (entry fee) in this case, as provided for in point 25 of the Guidelines (see paragraph 202 above), which, moreover, it confirmed at the hearing.215As regards the adjustment of the basic amount, the Commission considered that no aggravating circumstance was to be applied in this case (recital 496 of the contested decision).216On the other hand, the Commission pointed out that the parties had decided to terminate the clause on 4 February 2011, thus putting an end to the anticompetitive practice in question. Taking into account the fact that the clause was terminated only 16 days after the Commission had initiated the proceedings and 30 days after it had sent the first request for information to the parties, and as the clause had not been secret, the termination of the clause must be regarded as a mitigating circumstance that should be applied to both parties (recital 500 of the contested decision).217In the light of those circumstances, the Commission considered that the basic amount of the fines to be imposed on the parties should be reduced by 20% (recital 501 of the contested decision) and rejected all the arguments put forward by the parties alleging other mitigating circumstances (recitals 502 to 507 of the contested decision).218The final amounts of the fines therefore came to EUR 66894400 for Telefónica and EUR 12290400 for PT.b) Sales taken into account for the purpose of calculating the fine219The applicant takes issue with the Commission’s findings with respect to the scope of the clause and claims that, in so far as the exclusion of certain activities from its scope meant that the turnover taken into account for the purposes of setting the fine should be reduced, the amount of the fine imposed on it must be reduced. The applicant maintains that the Commission failed to have regard to the exhaustive analysis of the electronic communications markets in Portugal carried out by the applicant in its reply to the statement of objections and failed to address or rebut a large part of the applicant’s arguments.The statement of reasons220In so far as that argument must be understood as taking issue with the Commission’s failure to fulfil its obligation to state reasons, it must be borne in mind that the statement of reasons must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure in such a way as to enable the persons concerned to ascertain the reasons for it and to enable the competent Court of the European Union to exercise its jurisdiction to review legality (see judgment in Elf Aquitaine v Commission, cited in paragraph 78 above, EU:C:2011:620, paragraph 147 and the case-law cited). It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment in Commission v Sytraval and Brink’s France, cited in paragraph 78 above, EU:C:1998:154, paragraph 63 and the case-law cited).221As regards the scope of the obligation to state reasons concerning the calculation of the amount of a fine imposed for infringement of the EU competition rules, it should be noted that Article 23(3) of Regulation No 1/2003 provides that ‘in fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement’. In this connection, the Guidelines and the Notice on immunity from fines and reduction of fines in cartel cases (OJ 2006 C 298, p. 17) contain rules that indicate what factors the Commission takes into consideration in measuring the gravity and duration of an (see, to that effect, judgment of 9 July 2003, Cheil Jedang v Commission, T‑220/00, ECR, EU:T:2003:193, paragraph 217 and the case-law cited).222That being so, the essential procedural requirement to state reasons is satisfied where the Commission indicates in its decision the factors which it took into account in accordance with the Guidelines and, where appropriate, the Notice on immunity from fines and reduction of fines in cartel cases and which enabled it to determine the gravity of the infringement and its duration for the purpose of calculating the amount of the fine (see, to that effect, judgment in Cheil Jedang v Commission, cited in paragraph 221 above, EU:T:2003:193, paragraph 218).223In the present case, in sections 5 and 6.3.3.2 of the contested decision, and especially in recitals 153, 184, 185 and 278, the Commission stated that the parties must be regarded at least as potential competitors in all markets for electronic communication services and television services in Spain and Portugal, that their arguments that certain activities should be excluded from the scope of the clause could not be accepted and that, since the parties’ arguments concerning the existence of potential competition between them must be rejected, and given the broad scope of the clause, there was no need in the present case for a detailed analysis of whether the parties were potential competitors with respect to each specific market for the purposes of analysing whether the agreement should be regarded as constituting a restriction by object. Next, the Commission noted, in recital 482 of the contested decision, under the heading ‘The value of sales’, that it found that the non-compete clause applied to all types of electronic communication services and television services, with the exception of global telecommunication services and wholesale international carrier services and that all services provided in Spain and Portugal and included in the markets listed in section 5.3, with the exception of the global telecommunication services and wholesale international carrier services, were directly or indirectly related to the infringement.224It follows that the Commission sufficiently explained the way in which it determined the value of sales to be taken into account for the purposes of calculating the fine and the reasons why it considered that there was no need to examine each of the services which the applicant had claimed in its reply to the statement of objections should be excluded for the purposes of calculating the fines. In so far as the applicant’s argument may be understood as alleging a breach of the obligation to state reasons, it must therefore be rejected.Substance225The applicant claims that the value of certain sales must be excluded from the calculation of the fine, namely sales on the markets in which the parties were not potential competitors, sales corresponding to current activities and sales made outside the Iberian Peninsula.– Sales corresponding to activities not capable of being subject to competition226So far as sales made in markets or with services which, in the applicant’s submission, were not subject to potential competition, are concerned, in the first place, it should be noted that, in recital 478 of the contested decision, the Commission referred to point 12 of the Guidelines, which states that the basic amount of the fine is to be set by reference to the value of sales according to the methodology set out in the following points. In that recital, the Commission also explained that the basic amount of the fine to be imposed on the undertakings would be set by reference to the value of the undertakings’ sales of goods or services to which the infringement directly or indirectly related in the relevant geographic area in the European Union. In recital 482 of the contested decision (see paragraph 208 above), the Commission stated that it found that the non-compete clause applied to every type of electronic communication services and television services, with the exception of global telecommunication services and wholesale international carrier services, and that, thus, all services provided in Spain and Portugal and included in the markets listed in section 5.3, with the exception of global telecommunication services and wholesale international carrier services, were directly or indirectly related to the infringement.227At the hearing, the Commission, in answer to the questions put by the Court, explained that, in the light of the very broad scope of the clause, it was not required to analyse potential competition between the parties for each of the services on which the applicant relied for the purposes of determining the value of sales to be taken into consideration when calculating the amount of the fine. The Commission submitted that, in the context of an infringement by object such as that in the present case, where such an exercise was not required for the purposes of establishing the infringement, it was also unnecessary to carry out that exercise for the purposes of determining the amount of the fine.228That argument cannot succeed.229In fact, the clause applied, according to its terms, to ‘any project in the telecommunication business (including fixed and mobile services, internet access and television services, but excluding any investment or activity currently held or performed as of the date hereof) that can be deemed to be in competition with the other within the Iberian market’. In addition, for the purposes of calculating the fine, the Commission used the value of sales of activities which in its view came within the scope of the clause and excluded sales corresponding to current activities, which, according to the terms of the clause, were excluded from its scope. Accordingly, sales corresponding to activities that could not be in competition with the other party during the period of application of the clause, which were also excluded from its scope according to its terms, also had to be excluded for the purposes of calculating the fine.230It follows that, even though the Commission was not required to evaluate potential competition with respect to each of the services on which the applicant relied for the purposes of establishing the infringement (see paragraphs 169 to 188 above), it ought nonetheless to have considered whether the applicant was correct to maintain that the value of the sales of the services in question should be excluded from the calculation of the fine on the ground that there was no potential competition between the parties with respect to those services.231In that regard, it should be borne in mind that, as the Court of Justice has already held, the Commission must assess, in each specific case and having regard both to the context and the objectives pursued by the scheme of penalties created by Regulation No 1/2003, the intended impact on the undertaking in question, taking into account in particular a turnover which reflects the undertaking’s real economic situation during the period in which the infringement was committed (judgments of 7 June 2007, Britannia Alloys & Chemicals v Commission, C‑76/06 P, ECR, EU:C:2007:326, paragraph 25; of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, ECR, EU:C:2014:2363, paragraph 53; and of 23 April 2015, LG Display and LG Display Taiwan v Commission, C‑227/14 P, ECR, EU:C:2015:258, paragraph 49).232It is permissible, for the purpose of fixing the fine, to have regard both to the total turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power, and to the proportion of that turnover accounted for by the goods in respect of which the infringement was committed, which therefore gives an indication of the scale of the infringement (judgments of 7 June 1983, Musique Diffusion française and Others v Commission, 100/80 to 103/80, ECR, EU:C:1983:158, paragraph 121; Guardian Industries and Guardian Europe v Commission, cited in paragraph 231 above, EU:C:2014:2363, paragraph 54; and LG Display and LG Display Taiwan v Commission, cited in paragraph 231 above, EU:C:2015:258, paragraph 50).233Although Article 23(2) of Regulation No 1/2003 leaves the Commission a margin of discretion, it nonetheless limits the exercise of that discretion by laying down objective criteria to which the Commission must adhere. Thus, the amount of the fine that may be imposed on an undertaking is subject to a quantifiable and absolute ceiling, so that the maximum amount of the fine that can be imposed on a given undertaking can be determined in advance. Furthermore, the exercise of that discretion is also limited by the rules of conduct which the Commission has imposed on itself, in particular in the Guidelines (judgments in Guardian Industries and Guardian Europe v Commission, cited in paragraph 231 above, EU:C:2014:2363, paragraph 55, and in LG Display and LG Display Taiwan v Commission, cited in paragraph 231 above, EU:C:2015:258, paragraph 51).234Thus, where, as in the present case, the Commission determines the basic amount of the fine in accordance with the methodology set out in the Guidelines, it must comply with that methodology.235In that regard, it should be borne in mind that, according to point 13 of the Guidelines, ‘in determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly … relates in the relevant geographic area within the EEA’. Those Guidelines state, in point 6, that ‘the combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement’.236It follows from the case-law, moreover, that the proportion of the turnover accounted for by the goods in respect of which the infringement was committed gives a proper indication of the scale of the infringement on the relevant market, while the turnover in the products which were the subject of a restrictive practice constitutes an objective criterion giving a proper measure of the harm which that practice does to normal competition (see, to that effect, judgments in Musique Diffusion française and Others v Commission, cited in paragraph 232 above, EU:C:1983:158, paragraph 121; of 11 March 1999, British Steel v Commission, T‑151/94, ECR, EU:T:1999:52, paragraph 643; and of 8 July 2008, Saint-Gobain Gyproc Belgium v Commission, T‑50/03, EU:T:2008:252, paragraph 84).237Point 13 of the Guidelines thus pursues the objective of adopting as the starting point for the setting of the fine imposed on an undertaking an amount which reflects the economic significance of the infringement and the relative size of the undertaking’s contribution to it (judgments of 11 July 2013, Team Relocations and Others v Commission, C‑444/11 P, EU:C:2013:464, paragraph 76; in Guardian Industries and Guardian Europe v Commission, cited in paragraph 231 above, EU:C:2014:2363, paragraph 57; and in LG Display and LG Display Taiwan v Commission, cited in paragraph 231 above, EU:C:2015:258, paragraph 53).238Consequently, the concept of value of sales referred to in point 13 of the Guidelines extends to sales made in the market to which the infringement relates in the EEA, without there being any need to determine whether those sales were actually affected by the infringement, as the proportion of turnover deriving from the sale of products in respect of which the infringement was committed is best able to reflect the economic importance of the infringement (see, to that effect, judgments in Team Relocations and Others v Commission, cited in paragraph 237 above, EU:C:2013:464, paragraphs 75 to 78; in Guardian Industries and Guardian Europe v Commission, cited in paragraph 231 above, EU:C:2014:2363, paragraphs 57 to 59; of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission, C‑286/13 P, ECR, EU:C:2015:184, paragraphs 148 and 149; and in LG Display and LG Display Taiwan v Commission, cited in paragraph 231 above, EU:C:2015:258, paragraphs 53 to 58 and 64).239Nonetheless, while it would, admittedly, be contrary to the goal pursued by that provision if the concept of value of sales to which it refers were understood as applying only to turnover achieved by the sales in respect of which it is established that they were actually affected by the impugned cartel, that concept cannot be extended to cover the undertaking’s sales which do not fall, directly or indirectly, within the scope of that cartel (see, to that effect, judgments in Team Relocations and Others v Commission, cited in paragraph 237 above, EU:C:2013:464, paragraph 76, and in Dole Food and Dole Fresh Fruit Europe v Commission, cited in paragraph 238 above, EU:C:2015:184, paragraph 148).240In that connection, it should be noted that the Commission cannot, admittedly, be required, when faced with a restriction by object such as that at issue in the present case, to carry out on its own initiative an examination of potential competition for all the markets and services concerned by the scope of the infringement, under pain of derogating from the principles established in the case-law cited in paragraphs 175, 176 and 178 above, and to introduce, by determining the value of sales to be taken into account when calculating the fine, the obligation to examine potential competition when such an exercise is not required in the case of a restriction of competition by object (see paragraph 177 above). In that regard, the Court of Justice has held, in a case governed by the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the [CS] Treaty (OJ 1998 C 9, p. 3), that, in the case of an infringement consisting of market sharing, an interpretation which would result in an obligation being imposed on the Commission in respect of the method of calculating fines to which it is not subject for the purposes of applying Article 101 TFEU where the infringement in question has an anticompetitive object cannot be upheld (judgment in Prym and Prym Consumer v Commission, cited in paragraph 196 above, EU:C:2009:505, paragraph 64).241The solution adopted in the present case does not consist in imposing on the Commission, when determining the amount of the fine, an obligation by which it is not bound for the purposes of applying Article 101 TFEU in the case of an infringement which has an anticompetitive object, but in drawing the inferences from the fact that the value of sales must be directly or indirectly related to the infringement within the meaning of point 13 of the Guidelines and cannot cover the sales which do not fall, directly or indirectly, within the scope of the infringement (see the case-law cited in paragraph 239 above). It follows that, from the time when the Commission chooses to rely, in order to determine the amount of the fine, on the value of sales directly or indirectly related to the infringement, it must determine that value precisely.242In that regard, it should be observed that, in the present case, in the light of the wording of the clause, which refers expressly to ‘any project in the telecommunication business (including fixed and mobile services, internet access and television services, but excluding any investment or activity currently held or performed as of the date hereof) that can be deemed to be in competition with the other within the Iberian market’, and of the fact that the applicant put forward, in its reply to the statement of objections, factual material in order to demonstrate that the value of the sales of certain services thus relied on should be excluded for the purposes of the calculation of the fine on the ground that there was no competition between the parties, the Commission ought to have examined that material in order to determine the value of the sales of products or services made by the undertaking that were directly or indirectly related to the infringement.243Thus, in the present case, in so far as the sales directly or indirectly related to the infringement are sales of services falling within the scope of the clause, namely sales of any project in the telecommunication business, with the exception of current activities, that could be deemed to be in competition with the other party within the Iberian market, the Commission ought, in order to determine the value of those sales, to have determined the services for which the parties were not in potential competition within the Iberian market, by examining the material put forward by them in their replies to the statement of objections in order to demonstrate the absence of potential competition between them with respect to certain services during the period of application of the clause. Only on the basis of such a factual and legal analysis would it have been possible to determine the sales directly or indirectly related to the infringement, the value of which ought to have served as the starting amount for the calculation of the basic amount of the fine.244It follows that the argument whereby the applicant maintains that the Commission ought to have determined, on the basis of the material put forward by the applicant concerning the absence of potential competition between Telefónica and PT with respect to certain services, the value of sales directly or indirectly related to the infringement must be upheld and Article 2 of the contested decision must be annulled, solely in so far as it fixes the amount of the fine on the basis of the value of sales taken into account by the Commission.245In the second place, it should be borne in mind that the system of judicial review of Commission decisions relating to proceedings under Articles 101 TFEU and 102 TFEU consists in a review of the legality of the acts of the institutions for which provision is made in Article 263 TFEU, which may be supplemented, pursuant to Article 261 TFEU and at the request of applicants, by the Court’s exercise of unlimited jurisdiction with regard to the penalties imposed in that regard by the Commission (judgment of 10 July 2014, Telefónica and Telefónica de España v Commission, C‑295/12 P, ECR, EU:C:2014:2062, paragraph 42). In that regard, it should be observed that, in the present case, the illegality found concerns the value of sales taken into consideration for the purposes of determining the amount of the fine imposed on the applicant and, therefore, the actual basis for the calculation of the fine.246In that context, it is appropriate to point out again that the Commission, in recital 482 of the contested decision, did not carry out an analysis of potential competition between the parties for the services to which the applicant refers. Furthermore, in answer to the questions put by the Court at the hearing with a view to obtaining a response from the Commission to the applicant’s arguments concerning the alleged absence of potential competition between Telefónica and PT with respect to certain services in Portugal, the Commission merely reiterated its position that it was not required to analyse potential competition between the parties for the purposes of determining the amount of the fine and, moreover, merely answered all the applicant’s arguments by stating that Telefónica was a potential competitor of PT with respect to the services in question, since it would have been able to participate in the calls for tenders or to buy an existing operator.247It follows from the foregoing that, in the present case, the Court does not have sufficient material in order to determine the final amount of the fine to be imposed on the applicant.248It is true that the unlimited jurisdiction which the Court enjoys under Article 31 of Regulation No 1/2003 empowers it, in addition to merely reviewing the lawfulness of the penalty, to substitute its own assessment for the Commission’s. However, in the present case, the Commission did not analyse the material put forward by the applicant in order to demonstrate the absence of potential competition between the parties with respect to certain services when determining the value of sales to be taken into consideration in the calculation of the amount of the fine. If the Court were to determine the value of those sales that would therefore mean that it was led to fill in a gap in the investigation of the file.249In fact, the exercise of unlimited jurisdiction cannot go so far as to lead the Court to carry out such an investigation, which would go beyond the substitution of the Court’s assessments for the Commission’s, since the Court’s assessment would be the only and the first assessment of the material that the Commission ought to have taken into account when determining the value of the sales directly or indirectly related to the infringement within the meaning of point 13 of the Guidelines and which it fell to the Commission to analyse.250It follows that, in the present case, it is not appropriate to exercise the Court’s unlimited jurisdiction and it is therefore for the Commission to draw all the inferences from the illegality found when it implements the present judgment and to make a new finding on the fixing of the amount of the fine. Furthermore, the Court considers that it must examine the other pleas relating to the amount of the fine.– Sales corresponding to pre-existing activities251The applicant claims that, in accordance with the wording of the clause, sales corresponding to pre-existing activities must be excluded for the purposes of calculating the fine.252In the first place, it should be borne in mind that it is apparent from recitals 482 and 483 of the contested decision that the value of sales of global telecommunication services and wholesale international carrier services for which the parties were actual competitors at the time of signature of the agreement was not taken into account in the calculation of the fine.253In the second place, the applicant maintains that the value of sales of PT’s services corresponding to the services provided by Zon, namely fixed-line telephone services, broadband internet and pay-per-view television, must be excluded from the scope of the clause, since, in so far as Telefónica held shares in that company, which was a competitor of PT active in the electronic communications sector (see paragraph 7 above), the services provided by Zon fall within the category ‘any investment or activity currently held or performed as of the date [of signature of the agreement’ (see paragraph 1 above), which are excluded from the scope of the clause.254First, the applicant notes that the contested decision provides little or no clarification with respect to certain criticisms made by its addressees and that, as regards Telefónica’s shareholding in Zon and the influence which that enabled it to wield, the Commission merely reiterates its argument that that shareholding did not confer any power of control on Telefónica. In so far as that observation may be taken to allege that the Commission was in breach of its obligation to state reasons, such an allegation should be rejected.255It is apparent that the Commission replied to the parties’ argument that the services provided by Zon should be excluded from the scope of the clause, pointing out that it did not accept the assertion that Zon’s activities must be excluded from the scope of the clause, since, if the parties had wished to show that they were in competition in Portugal, through Telefónica’s shareholding in Zon, they ought to have shown that Telefónica controlled Zon’s activities, which they did not do, whereas it is apparent from the 2011 annual accounts that Telefónica did not control the Portuguese operator. In doing so, the Commission clearly explained the reason why it considered that Zon’s activities should not be excluded from the scope of the clause and the reason why it concluded that Telefónica did not control that company, so that it cannot be found to have committed any breach of the obligation to state reasons.256In that regard, the Commission further explained in recitals 156 to 164 of the contested decision that, if the activity carried out by a company in which one of the parties held shares but which it did not control was not relevant to the determination of the scope of the clause, the clause ought to have stated that it was intended to apply to the activities of companies not controlled by the parties. Furthermore, if such activities were relevant to the determination of the scope of the clause, they should also have been relevant to compliance with the provisions of the clause, so that the commencement of a prohibited activity by a company in which one of the parties held a minority share but did not control would constitute a breach of the clause. The Commission continued on that point by asserting that the parties could not claim to have entered into any obligation whatsoever on behalf of the companies in which they held a minority shareholding, but which they did not control, since they would not be in a position to ensure compliance with such an obligation. Consequently, in order for an activity to be capable of being excluded from the scope of the clause, it must be carried out directly by one of the parties, or indirectly by one of the companies controlled by them.257Second, as regards the substance, the applicant does not dispute either the argument just set out or the Commission’s finding that Telefónica held, during the relevant period, only a minority shareholding (5.46%) in Zon (recital 19 of the contested decision) and therefore did not control that company, so that the services provided by Zon could not be considered to be services provided by Telefónica and, accordingly, as services for which Telefónica and PT were in competition and which should thus be excluded from the scope of the clause. It follows that the applicant has failed to show why, in its view, in spite of the fact that Telefónica held only a minority shareholding in Zon, the services provided by the latter company should be regarded as services provided by Telefónica and, therefore, excluded from the scope of the clause. In those circumstances, its argument must be rejected.– Sales corresponding to activities outside the Iberian Peninsula258The applicant disputes the geographic scope of the clause as determined by the Commission, claiming that, since the agreement refers expressly to the Iberian market and not to Portugal and Spain, it must be concluded that the parties intended to refer to the component territories of the Iberian Peninsula and not to the component territories of the Kingdom of Spain and the Portuguese Republic. Therefore, in the applicant’s submission, the territories corresponding to the autonomous regions of the Azores and Madeira, which in 2011 represented a turnover of EUR 36992000 and EUR 23492000 respectively, must be excluded from the geographic scope of the clause, with the consequence that the value of PT’s sales taken into account in calculating the fine and therefore the amount of the fine must be adjusted.259That assertion cannot be accepted. Contrary to the applicant’s contention, the wording of the clause does not refer literally to ‘the Iberian Peninsula’, but to ‘the Iberian market’. It is apparent that the reference to ‘the Iberian market’ must be understood not in a strictly geographical sense, as referring solely to the Iberian Peninsula, but as referring to the markets of Spain and Portugal, which include the markets in their territories not situated in the Iberian Peninsula. There is nothing to indicate, nor does the applicant put forward any arguments to show, that the territories of those States situated outside the Iberian Peninsula were excluded from the scope of the clause.260In that regard, it should be noted that the applicant merely criticises the Commission’s interpretation of the geographic scope of the clause, but puts forward no argument to challenge the Commission’s findings with respect to the geographic scope of the clause, set out in recitals 175 to 182 of the contested decision. In those circumstances, its claims cannot succeed.261It follows from all of the foregoing considerations that the applicant’s arguments relating to the sales taken into account for the purposes of calculating the fine must be upheld in that, in order to determine the value of the applicant’s sales to be taken into consideration for the purposes of calculating the amount of the fine, the Commission was required to examine the arguments whereby the applicant sought to show that there was no potential competition between Telefónica and PT with respect to certain services (see paragraphs 226 to 250 above) and rejected as to the remainder.c) Duration of the infringement262The applicant claims that the Commission erred in determining in duration of the infringement, since the non-compete obligation was not capable of producing effects before it was validated and could not therefore be characterised as a restriction by object intended to apply necessarily from the date of its entry into force, namely the date of the definitive conclusion of the transaction on 27 September 2010, and that, in any event, even if the express condition of validation were disregarded, the non-compete agreement expired on 29 October 2010 because of the conclusions to which the conference calls on 26 and 29 October 2010 led.263It should be borne in mind that, according to Article 23(3) of Regulation No 1/2003, the duration of the infringement is one of the factors to be taken into consideration when determining the amount of the fine to be imposed on undertakings which have infringed the competition rules.264In addition, as stated in paragraph 202 above, point 24 of the 2006 Guidelines provides that, in order to take fully into account the duration of the participation of each undertaking in the infringement, the amount determined on the basis of the value of sales is to be multiplied by the number of years of participation in the infringement and that periods of less than six months are to be counted as half a year, while periods longer than six months but shorter than one year are to be counted as a full year.265As regards the duration of the infringement at issue in the present case, the Commission concluded, in recitals 454 to 465 of the contested decision — as stated in paragraph point 51 above — that the duration of the infringement is equal to the duration of the period commencing on the date of definitive conclusion of the transaction, namely 27 September 2010 (see paragraph 25 above), and ending on the date on which the clause was terminated, namely 4 February 2011 (see paragraph 29 above).266By the present complaint, the applicant disputes, in essence, the lawfulness of the contested decision in that it finds, as stated in Article 1 of its operative part, that the infringement lasted over a period from the definitive conclusion of the transaction on 27 September 2010 until 4 February 2011. It should therefore be held that, by the present complaint relating to duration, the applicant seeks not only a reduction of the fine but also annulment in part of the contested decision and, in particular, of Article 1 of its operative part, in that the Commission wrongly held in that article that the infringement continued from 27 September 2010 until 4 February 2011.267However, it must be stated that the applicant puts forward no additional evidence relating specifically to the duration of the infringement, but merely refers to criticisms already made in the context of its plea alleging infringement of Article 101 TFEU and of the law relating to its application, which have already been examined and rejected in that context (see paragraphs 122 to 161 above). Since the applicant has not succeeded in demonstrating that the non-compete obligation was subject to a self-assessment obligation or that the October 2010 conference calls had resulted in the termination of the clause, its claim for a reduction of the duration of the infringement taken into account in the calculation of the amount of the fine must be rejected.d) Respect for the principle of proportionality268The applicant maintains that the setting of the amount of the fine imposed on it for the infringement at issue in the present case is vitiated by a breach of the principle of proportionality.269The Commission raises a plea of inadmissibility, claiming that this plea for annulment must be declared inadmissible in so far as the applicant, in the three lines of the application devoted to this plea, merely submits that ‘all things considered, [the applicant] is convinced that, in the light of all of the circumstances of the case and the criteria that must be followed for the purposes of imposing fines, the Commission did not respect the principle of proportionality’.270It should be borne in mind that, as already observed in paragraph 68 et seq. above, each application is required to state the subject matter of the proceedings and a summary of the pleas in law on which the application is based and that that information must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to decide the case, if necessary without other supporting information. In addition, it is necessary, in order to ensure legal certainty and the proper administration of justice, that the basic matters of fact and law relied on appear coherently and intelligibly in the text of the application itself (see order in TF1 v Commission, cited in paragraph 70 above, EU:T:2008:155, paragraph 29 and the case-law cited).271It must be stated that the plea alleging breach of the principle of proportionality set out by the applicant in the context of the present action does not satisfy the requirements as thus identified, and the plea of inadmissibility raised by the Commission is therefore well founded and the plea alleging breach of the principle of proportionality must be declared inadmissible.272Furthermore, its should be observed in that regard that, in EU competition law, the review of legality is supplemented by the unlimited jurisdiction which the Courts of the EU were afforded by Article 17 of Regulation No 17 and which is now recognised by Article 31 of Regulation No 1/2003, in accordance with Article 261 TFEU. That jurisdiction empowers the Courts, in addition to carrying out a mere review of the lawfulness of the penalty, to substitute their own appraisal for the Commission’s and, consequently, cancel, reduce or increase the fine or penalty payment imposed (see judgment of 8 December 2011, Chalkor v Commission, C‑386/10 P, ECR, EU:C:2011:815, paragraph 63 and the case-law cited).273It must, however, be pointed out that the exercise of unlimited jurisdiction does not amount to a review of the Court’s own motion, and that proceedings before the Courts of the European Union are inter partes. With the exception of pleas involving matters of public policy which the Courts are required to raise of their own motion, such as the failure to state reasons for a contested decision, it is for the applicant to raise pleas in law against that decision and to adduce evidence in support of those pleas (judgment in Chalkor v Commission, cited in paragraph 272 above, EU:C:2011:815, paragraph 64).274That requirement, which is procedural in nature, does not conflict with the rule that, in the case of infringements of the competition rules, it is for the Commission to prove the infringements found by it and to adduce evidence capable of demonstrating to the requisite legal standard the existence of the circumstances constituting an infringement. What the applicant is required to do in the context of a legal challenge is to identify the impugned elements of the contested decision, to formulate grounds of challenge in that regard and to adduce evidence to demonstrate that its objections are well founded (judgment in Chalkor v Commission, cited in paragraph 272 above, EU:C:2011:815, paragraph 65).275The failure to review the whole of the contested decision of the Court’s own motion does not contravene the principle of effective judicial protection. Compliance with that principle does not require that the Court — which is indeed obliged to respond to the pleas in law raised and to carry out a review of both the law and the facts — should be obliged to undertake of its own motion a new and comprehensive investigation of the file (judgment in Chalkor v Commission, cited in paragraph 272 above, EU:C:2011:815, paragraph 66).276The review provided for by the Treaties thus involves review by the Courts of the European Union of both the law and the facts, and means that they have the power to assess the evidence, to annul the contested decision and to alter the amount of a fine. The review of legality provided for under Article 263 TFEU, supplemented by the unlimited jurisdiction in respect of the amount of the fine, provided for under Article 31 of Regulation No 1/2003, is not therefore contrary to the requirements of the principle of effective judicial protection in Article 47 of the Charter of Fundamental Rights of the European Union (judgment in Chalkor v Commission, cited in paragraph 272 above, EU:C:2011:815, paragraph 67).277It follows from that case-law that, in the absence of arguments and evidence put forward by the applicant in support of its plea alleging breach of the principle of proportionality, the Court is not required to examine of its own motion, in the exercise of its unlimited jurisdiction, whether the Commission respected that principle when setting the amount of the fine.3. The request for the examination of witnesses 278The applicants asks the Court to hear as a witness Ms M.R.S.S.N., the officer in charge of PT’s competition directorate at the time of the conclusion of the agreement and at the time of the termination of the clause.279The Commission claims that the request must be rejected on the ground that it is unnecessary and otiose, since Ms M.R.S.S.N.’s statement on oath as to the facts of which she is aware is already in the file.280It must be pointed out that the Court is the sole judge of whether the information available to it concerning the cases before it needs to be supplemented (see order of 10 June 2010, Thomson Sales Europe v Commission, C‑498/09 P, EU:C:2010:338, paragraph 138 and the case-law cited).281As the Court of Justice has already held in a case concerning competition law, even where a request for the examination of witnesses, made in the application, states precisely about what facts and for what reasons the witness or witnesses should be examined, it falls to the General Court to assess the relevance of the application to the subject matter of the dispute and the need to examine the witnesses named (see judgment of 19 December 2013, Siemens v Commission, C‑239/11 P, C‑489/11 P and C‑498/11 P, EU:C:2013:866, paragraph 323 and the case-law cited).282The Court of Justice has also stated that the General Court’s discretion in that regard was in line with the fundamental right to a fair hearing and, in particular, Article 6(3)(d) of the Convention for the Protection of Human Rights and Fundamental Freedoms, singed in Rome on 4 November 1950 (ECHR). It is apparent from the case-law of the Court of Justice that that provision does not confer on the accused an absolute right to obtain the attendance of witnesses before a court and that it is in principle for the court hearing the case to determine whether it is necessary or appropriate to call a witness. Article 6(3) of the ECHR does not require that every witness be called but is aimed at full equality of arms, ensuring that the procedure in issue, considered in its entirety, gave the accused an adequate and proper opportunity to challenge the suspicions concerning him (see judgment in Siemens v Commission, cited in paragraph 281 above, EU:C:2013:866, paragraphs 324 and 325 and the case-law cited).283In that regard, this Court has already held that a request for the examination of witnesses submitted by an applicant undertaking could not be granted where the statements which the applicant sought to obtain by means of such testimony before the Court had already been made before the Commission, where they had been considered not to be supported by documentary evidence and had even been contradicted by certain information in the file (see, to that effect, judgment of 13 July 2011, ThyssenKrupp Liften Ascenseurs v Commission, T‑144/07, T‑147/07 to T‑150/07 and T‑154/07, ECR, EU:T:2011:364, paragraphs 152 and 154).284In addition, it should be noted that an application seeking that the Court should supplement the information available to it is inoperative where, even if the Court were to grant that application, the meaning of its decision would not be affected (see, to that effect, order in Thomson Sales Europe v Commission, cited in paragraph 280 above, EU:C:2010:338, paragraph 141).285If the Court is able to rule on the basis of the forms of order sought, the pleas in law and the arguments put forward in the course of both the written and the oral procedure and in the light of the documents produced, the applicant’s request for examination of a witness put forward by the applicant must be rejected without the Court being required to provide specific reasons for its finding that it is unnecessary to seek additional evidence (see, to that effect, order of 15 September 2005, Marlines v Commission, C‑112/04 P, EU:C:2005:554, paragraph 39, and judgment of 9 September 2009, Clearstream v Commission, T‑301/04, ECR, EU:T:2009:317, paragraph 218).286However, while it is true that a party is not entitled to require the Courts of the European Union to adopt a measure of organisation of procedure or a measure of inquiry, the fact nonetheless remains that the Court cannot draw conclusions from the fact that certain information is not in the file unless it has exhausted the means laid down in its Rules of Procedure for obtaining production of that information from the party concerned (see order of 8 October 2013, Michail v Commission, T‑597/11 P, ECR-FC, EU:T:2013:542, paragraph 40 and the case-law cited).287In this instance, since Ms M.R.S.S.N.’s statements concerning the facts of which she was aware is already in the file, there is no need to grant the applicant’s request for examination of a witness.288In that regard, it should be borne in mind, as already stated in paragraph 283 above, that this Court has held that a request for the examination of witnesses submitted by an applicant undertaking could not be granted where the statements which the applicant sought to obtain by means of such testimony before the Court had already been made before the Commission, where they had been considered not to be supported by documentary evidence and had even been contradicted by certain information in the file.289In the present case, it should be borne in mind that the Commission stated, as already noted in paragraphs 149 and 150 above, that it had taken the statement in question into account and that it had evaluated it in accordance with the principles applicable to the appraisal of evidence. The Commission thus took account of the fact that that statement had been produced by a person who might have a direct interest in the case (recital 122 of the contested decision) and in carrying out its appraisal it weighed that evidence against the rest of the evidence available (recitals 121, 124 and 308 of the contested decision). At no time did the Commission cast doubt on the fact that the person making that statement had actually expressed her views in the manner recorded in that statement.290In those circumstances, the request that the Court should order the person who made that statement to be examined before the Court must be rejected, as the information contained in the file is sufficient to enable the Court to rule on the October 2010 conference calls (see, to that effect, judgment in ThyssenKrupp Liften Ascenseurs v Commission, cited in paragraph 283 above, EU:T:2011:364, paragraph 152 and 154; see also, to that effect and by analogy, judgment of 7 October 2004, Mag Instrument v OHIM, C‑136/02 P, ECR, EU:C:2004:592, paragraph 77).291That conclusion cannot be called in question by the applicant’s assertion that, under the principle of proximity or immediacy, the examination of witnesses by the Court has undeniable added value by comparison with the taking into account of a statement recorded in writing. Since the content of the statement is not called in question and since all that is required is to appraise that item of evidence by reference to all the evidence, the arguments put forward by the applicant at the hearing cannot call in question the finding that the examination of the author of the statement in question before the Court is superfluous.292It follows from all of the foregoing considerations that the application for examination of witnesses must be rejected.293It follows from all of the foregoing considerations that the applicant’s arguments relating to the sales taken into account for the purposes of calculating the fine must be upheld in part in that, in order to determine the value of the applicant’s sales to be taken into consideration in the calculation of the amount of the fine, the Commission was required to examine the arguments whereby the applicant sought to show that there was no potential competition between Telefónica and PT concerning certain services. Accordingly, Article 2 of the contested decision must be annulled, solely in that it sets the amount of the fine on the basis of the value of sales taken into consideration by the Commission, and the action must be rejected for the remainder. Costs 294Under Article 134(3) of the Rules of Procedure of the General Court, where each party succeeds on some and fails on other heads, the parties are to bear their own costs. However, if it appears justified in the circumstances of the case, the Court may order that one party, in addition to bearing his own costs, pay a proportion of the costs of the other party.295Since the action has been only partly successful, the Court considers it fair, having regard to the circumstances of the case, to order the applicant to bear three quarters of its own costs and to pay one quarter of the Commission’s costs. The Commission will bear three quarters of its own costs and one quarter of the applicant’s costs.On those grounds,THE GENERAL COURT (Second Chamber)hereby: 1. Annuls Article 2 of Commission Decision C(2013) 306 final of 23 January 2013 relating to a proceeding under Article 101 [TFEU] (Case AT.39.839 — Telefónica/Portugal Telecom) in that it sets the amount of the fine imposed on Portugal Telecom SGPS, SA at EUR 12290000, in so far as that amount was set on the basis of the value of sales taken into account by the European Commission; 2. Dismisses the action as to the remainder; 3. Orders Portugal Telecom SGPS to bear three quarters of its own costs and to pay one quarter of the Commission’s costs, and the Commission to bear three quarters of its own costs and to pay one quarter of Portugal Telecom SGPS’s costs. Martins RibeiroGervasoniMadiseDelivered in open court in Luxembourg on 28 June 2016.[Signatures]Table of contentsBackground to the disputeA – Presentation of PT and TelefónicaB – Negotiation and signature of the agreementC – Events following the conclusion of the agreementD – Procedure before the CommissionProcedure and forms of order soughtLawA – AdmissibilityB – Substance1. Claims for annulment of the contested decision2. The claims relating to the amount of the fine3. The request for the examination of witnessesCosts( *1 ) Language of the case: Portuguese. | e85d5-15e63dc-4bdb | EN |
For having delayed in implementing the Urban Waste Water Directive, Portugal is ordered to pay a lump sum payment of € 3 000 000 and a penalty payment of € 8 000 per day of delay | 22 June 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Directive 91/271/EEC — Urban waste water treatment — Judgment of the Court establishing a failure to fulfil obligations — Non-compliance — Article 260(2) TFEU — Financial penalties — Lump sum payment and penalty payment’In Case C‑557/14,ACTION for failure to fulfil obligations under Article 260(2) TFEU, brought on 4 December 2014, European Commission, represented by G. Braga da Cruz and E. Manhaeve, acting as Agents, with an address for service in Luxembourg,applicant,v Portuguese Republic, represented by L. Inez Fernandes, J. Reis Silva and J. Brito e Silva, acting as Agents,defendant,THE COURT (Third Chamber),composed of L. Bay Larsen (Rapporteur), President of the Chamber, A. Tizzano, Vice-President of the Court, acting as a Judge of the Third Chamber, D. Šváby, J. Malenovský, and M. Vilaras, Judges,Advocate General: J. Kokott,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 21 January 2016,after hearing the Opinion of the Advocate General at the sitting on 25 February 2016,gives the following Judgment 1By its application, the European Commission claims that the Court should:—declare that, by failing to take all the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), the Portuguese Republic has failed to fulfil its obligations under Article 260(1) TFEU;order the Portuguese Republic to pay the Commission a penalty payment of EUR 20196 per day of delay in complying with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), from the day of delivery of the judgment in the present case until the date on which the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) is complied with;order the Portuguese Republic to pay the Commission a lump sum payment of EUR 2244 per day, from the day of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) until the day of delivery of the judgment in the present case or until the day on which the judgment of 7 May 2009 (C‑530/07, EU:C:2009:292) is complied with in full, whichever is sooner; andorder the Portuguese Republic to pay the costs. Legal context 2According to Article 1 thereof, Council Directive 91/271/EEC of 21 May 1991 concerning urban waste-water treatment (OJ 1991 L 135, p. 40) concerns the collection, treatment and discharge of urban waste water and the treatment and discharge of waste water from certain industrial sectors. It aims to protect the environment from the adverse effects of the discharge of urban waste water.3Article 2 of that directive defines ‘urban waste water’ as ‘domestic waste water or the mixture of domestic waste water with industrial waste water and/or run-off rain water’. That article also defines an ‘agglomeration’ as ‘an area where the population and/or economic activities are sufficiently concentrated for urban waste water to be collected and conducted to an urban waste water treatment plant or to a final discharge point’ and ‘1 p.e. (population equivalent)’ as ‘the organic biodegradable load having a five-day biochemical oxygen demand (BOD5) of 60 g of oxygen per day’.4Article 4 of that directive provides:‘1. Member States shall ensure that urban waste water entering collecting systems shall before discharge be subject to secondary treatment or an equivalent treatment as follows:at the latest by 31 December 2000 for all discharges from agglomerations of more than 15000 p.e.,...3. Discharges from urban waste water treatment plants described in paragraphs 1 and 2 shall satisfy the relevant requirements of Annex I.B. ...4. The load expressed in p.e. shall be calculated on the basis of the maximum average weekly load entering the treatment plant during the year, excluding unusual situations such as those due to heavy rain.’5According to Article 6(2) and (4) of the same directive:‘2. Urban waste water discharges from agglomerations of between 10000 and 150000 p.e. to coastal waters and those from agglomerations of between 2000 and 10000 p.e. to estuaries situated in areas described in paragraph 1 may be subjected to treatment less stringent than that prescribed in Article 4 providing that:such discharges receive at least primary treatment as defined in Article 2(7) in conformity with the control procedures laid down in Annex I D,comprehensive studies indicate that such discharges will not adversely affect the environment.Member States shall provide the Commission with all relevant information concerning the abovementioned studies.4. Member States shall ensure that the identification of less sensitive areas is reviewed at intervals of not more than four years.’6Article 8(5) of Directive 91/271 is worded as follows:‘In exceptional circumstances, when it can be demonstrated that more advanced treatment will not produce any environmental benefits, discharges into less sensitive areas of waste waters from agglomerations of more than 150000 p.e. may be subject to the treatment provided for in Article 6 for waste water from agglomerations of between 10000 and 150000 p.e.In such circumstances, Member States shall submit beforehand the relevant documentation to the Commission. The Commission will examine the case and take appropriate measures in accordance with the procedure laid down in Article 18.’7Annex I to that directive, entitled ‘Requirements for urban waste water’, is worded as follows:‘...B.Discharge from urban waste water treatment plants to receiving waters ...1.Waste water treatment plants shall be designed or modified so that representative samples of the incoming waste water and of treated effluent can be obtained before discharge to receiving waters.2.Discharges from urban waste water treatment plants subject to treatment in accordance with Articles 4 and 5 shall meet the requirements shown in Table 1....’8Point D of Annex I to Directive 91/271, entitled ‘Reference methods for monitoring and evaluation of results’, states:‘1.Member States shall ensure that a monitoring method is applied which corresponds at least with the level of requirements described below.Alternative methods to those mentioned in paragraphs 2, 3 and 4 may be used provided that it can be demonstrated that equivalent results are obtained.Flow-proportional or time-based 24-hour samples shall be collected at the same well-defined point in the outlet and if necessary in the inlet of the treatment plant in order to monitor compliance with the requirements for discharged waste water laid down in this Directive.3.The minimum annual number of samples shall be determined according to the size of the treatment plant and be collected at regular intervals during the year:10000 to 49999 p.e.: 12 samples.4.The treated waste water shall be assumed to conform to the relevant parameters if, for each relevant parameter considered individually, samples of the water show that it complies with the relevant parametric value in the following way:(a)for the parameters specified in Table 1 and Article 2(7), a maximum number of samples which are allowed to fail the requirements, expressed in concentrations and/or percentage reductions in Table 1 and Article 2(7), is specified in Table 3; Judgment in Commission v Portugal 9On 9 July 2004, the Commission sent the Portuguese Republic a letter of formal notice in which it stated that several agglomerations of more than 15000 p.e. located in the territory of that Member State were not equipped with urban waste water collecting systems meeting the requirements of Article 3 of Directive 91/271, nor were they equipped with urban waste water treatment systems satisfying the requirements of Article 4 of that directive.10Finding that the explanations provided by the Portuguese Republic were not satisfactory for 17 of those agglomerations, on 13 July 2005 the Commission sent that Member State a reasoned opinion, asking it to comply therewith within two months of its receipt.11The Portuguese Republic responded to that reasoned opinion by letter of 14 October 2005.12Finding, following that response, that certain agglomerations had to be excluded from the infringement proceedings, while, regarding certain other agglomerations mentioned in the annex to the letter of formal notice of 9 July 2004 but not in the reasoned opinion of 13 July 2005, infringement of Articles 3 and 4 of Directive 91/271 was still ongoing, on 4 July 2006 the Commission issued an additional reasoned opinion concerning, henceforth, 32 agglomerations. By that opinion, it asked the Portuguese Republic to take the measures necessary to comply with that opinion within two months of receipt thereof.13Taking the view, in spite of the explanations provided by that Member State in a letter dated 14 September 2006, that the situation of several agglomerations remained unsatisfactory with regard to the provisions of that directive, the Commission decided to bring an action for failure to fulfil obligations before the Court: that action was the subject of Case C‑530/07.14In the course of the proceedings before the Court, the Commission withdrew its action in so far as it concerned a failure to fulfil obligations under, first, Article 3 of Directive 91/271 regarding five of those agglomerations and, second, Article 4 of that directive regarding 11 of those agglomerations. The subject matter of the action for failure to fulfil obligations was therefore restricted to the remaining agglomerations.15In its judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), the Court found that, by failing to provide, in accordance with the provisions of Article 3 of Directive 91/271, the agglomerations of Bacia do Rio Uima (Fiães S. Jorge), Costa de Aveiro, Covilhã, Espinho/Feira, Ponta Delgada, Póvoa de Varzim/Vila do Conde and Santa Cita with collection systems, and by failing to subject to secondary treatment or an equivalent treatment, in accordance with Article 4 of that directive, the urban waste water from the agglomerations of Alverca, Bacio do Rio Uima (Fiães S. Jorge), Carvoeiro, Costa de Aveiro, Costa Oeste, Covilhã, Lisbon, Matosinhos, Milfontes, Nazaré/Famalicão, Ponta Delgada, Póvoa de Varzim/Vila do Conde, Santa Cita, Vila Franca de Xira and Vila Real de Santo António, the Portuguese Republic had failed to fulfil its obligations under Articles 3 and 4 of that directive. Pre-litigation procedure 16In the course of monitoring compliance with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), the Commission, by letter of 18 June 2009, asked the Portuguese Republic for information concerning the measures taken in order to comply with that judgment.17By letter of 24 July 2009, that Member State informed the Commission of the measures which it had adopted.18On 11 December 2009, the Commission asked that Member State to provide clarifications, to which the latter responded, through several letters and additional pieces of information, that, concerning the agglomeration of Vila Real de Santo António, the new treatment plant had been operational since 2009, but that 30% of the pollutant flow collected had not yet actually been connected to the treatment plant, the completion of the necessary works being forecast for the end of 2012. As regards the agglomeration of Matosinhos, completion of construction of the new treatment plant was initially forecast for the end of 2011, but the completion of that work was eventually postponed until April 2013.19In several letters and during a meeting with Commission staff, the Portuguese Republic informed that institution of developments in the situation in relation to those two agglomerations.20It is apparent from the letter sent by that Member State on 26 November 2013 concerning the agglomeration of Vila Real de Santo António that the completion of the works necessary to ensure connection of the entirety of that agglomeration’s pollutant flow to the new treatment plant was forecast for the first quarter of 2014. As regards the agglomeration of Matosinhos, it is apparent from that letter that, due to a lack of funding, construction of the new treatment plant had not yet begun, but that a new request for funding was to be submitted in 2014.21The Commission, considering that there had been a failure to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) for two of the 22 agglomerations concerned by that judgment, namely the agglomerations of Vila Real de Santo António and Matosinhos, brought the present action. Failure to fulfil obligations Arguments of the parties 22Concerning the agglomeration of Vila Real de Santo António, the Commission submits that, in spite of the efforts expended by the Portuguese Republic since the delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), on the reference date for assessing whether there had been a failure to fulfil obligations in the present case, namely 21 April 2014, the date of expiry of the period prescribed in the letter of formal notice sent to the Portuguese Republic by the Commission, that Member State had failed to subject the urban waste water from that agglomeration to secondary treatment or an equivalent treatment in accordance with Article 4 of Directive 91/271. Indeed, it is apparent from the Portuguese Republic’s letter of 23 April 2014 that the works necessary to connect the entirety of that agglomeration to the treatment plant were still ongoing at that later date.23Regarding the agglomeration of Matosinhos, the Commission submits that the current treatment plant only allows for primary treatment of its waste water, which is then discharged into the sea via an underwater outfall. It notes, in that regard, that, as is apparent from the Portuguese Republic’s letter of 23 April 2014, construction of a secondary treatment plant has not yet begun owing to alleged funding problems: completion of that work has been postponed until 2017.24Furthermore, the Commission submits that the arguments put forward by the Portuguese Republic in its statement of defence concerning the lack of effect of a primary treatment of urban waste water on the quality of the receiving waters and its assertion that such a treatment is sufficient to guarantee the quality of those waters and to avoid risks to the environment and human health, are unfounded, in so far as those arguments are in fact intended to call into question the Court’s findings in the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292).25The Portuguese Republic contends, generally, that it has complied with that judgment to a very large extent.26Regarding the agglomeration of Vila Real de Santo António, the Portuguese Republic states that three drainage network connection projects are involved. The first concerns the drainage network situated to the west of the municipality of Vila Nova de Cacela and the network for the transportation of waste water to the treatment plant: connection of those two networks was completed in November 2014. The second project relates to the connection of the drainage networks on the shores of that agglomeration to the capture system and the transportation of effluent to the waste water treatment plant, which was completed in February 2015. The third project concerns the connection of the drainage networks of the central area of the town in that agglomeration to the capture system and the transportation of effluent to the waste water treatment plant.27In its statement of defence, the Portuguese Republic had argued that that third project was at a highly advanced stage of fulfilment. That Member State indicated, in its rejoinder, that connection of effluent to the waste water treatment plant, in operation since 2009, was completed on 11 April 2015, a fact of which the Commission’s staff were duly informed.28Regarding the agglomeration of Matosinhos, first, the Portuguese Republic contends that the existing primary treatment is sufficient to guarantee the quality of the water and avoid risks to the environment and to human health, as the fact that there is no secondary treatment has no effect on the quality of the receiving waters. The waste water effluent treated in that agglomeration is discharged, not into lake or river water, but into sea water, which has high salinity and is stirred and crossed by strong sea currents.29That Member State maintains, in that regard, that the situation in the agglomeration of Matosinhos falls under Article 8(5) of Directive 91/271. According to that provision, in exceptional circumstances and in coastal agglomerations which are regarded as being less sensitive, discharges of urban waste water could be subject to less stringent treatment.30The Portuguese Republic argues that, through the existing primary treatment, the chemical oxygen demand and biochemical oxygen demand of the waste water has been reduced by, on average, 42% and 43% respectively, that is, by over twice the average rate of 20% laid down by that directive.31To that end, the Member State contends that the waste water treatment plant currently in operation is connected to an underwater outfall which conducts the water exiting primary treatment into the Atlantic Ocean around two kilometres from the coastline, with the result that the quality of the bathing water is not affected. There are only a few adjustments still to be made (adjustments which merely concern the installation of infrastructures) in order to guarantee that the quality of such water remains consistent.32The Portuguese Republic also makes reference to the analyses of bathing water regularly carried out on the territory of that agglomeration which confirm the ‘excellent’ quality of that water. In those circumstances, it argues that there is no reason to consider that there is any danger to residents’ health or to the tourism sector.33Second, that Member State contends that, although measures have been taken in order to comply with Article 4 of Directive 91/271, funding difficulties have hindered construction of the treatment plant. Furthermore, calls for tenders were made in 2008 and 2011 but circumstances constituting a situation of force majeure prevented continuation of the project for the construction of that plant.34The Portuguese Republic adds that, in any event, the conditions relating to the construction of a waste water treatment plant permitting secondary treatment of that water have now been met and that the funding required for that purpose has been made available, facts of which the Commission has been informed. In that regard, the Portuguese Republic submitted to that institution a timetable for the construction work which was due to begin in the first half of 2016: it is envisaged that the plant will become fully operational in the second half of 2019. Findings of the Court 35In order to ascertain whether the Portuguese Republic has adopted all the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), it is necessary to ascertain whether that Member State has fully complied with Article 4 of Directive 91/271, more specifically by equipping the agglomerations concerned with urban waste water treatment systems satisfying the requirements of that article.36Concerning infringement proceedings under Article 260(2) TFEU, the reference date which must be used for assessing whether there has been a failure to fulfil obligations is that of the expiry of the period prescribed in the letter of formal notice issued under that provision (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 29 and the case-law cited).37In the present case, as noted in paragraph 22 above, since the Commission sent the Portuguese Republic a letter of formal notice in accordance with the procedure laid down in Article 260(2) TFEU, the reference date mentioned in paragraph 36 above is the date of expiry of the period prescribed in that letter, namely 21 April 2014.38It is common ground that, on that date, the agglomerations of Vila Real de Santo António and Matosinhos were not yet equipped with urban waste water treatment systems in accordance with Article 4 of Directive 91/271.39Indeed, regarding the agglomeration of Vila Real de Santo António, it can be seen from the statements made by the Portuguese Republic that, on 21 April 2014, the urban waste water treatment system was not yet in place. As regards the agglomeration of Matosinhos, by letter of 23 April 2014 the Portuguese Republic informed the Commission that work on constructing a waste water treatment plant permitting secondary treatment of that water had not yet begun.40The Portuguese Republic’s arguments concerning that second agglomeration, regarding the lack of effect of a purely primary treatment of urban waste water on the quality of the receiving waters and its assertion that such a treatment is sufficient to guarantee the quality of those waters and to avoid risks to the environment and human health are in fact intended to call into question the decision made by the Court at the end of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) and, accordingly, cannot be accepted.41Regarding the Portuguese Republic’s argument based on the difficulties which that Member State has had in complying with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), it should be borne in mind that a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with obligations resulting from EU law, with the result that such an argument cannot succeed (see, to that effect, judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 35 and the case-law cited).42In those circumstances, it must be held that, by failing to take all the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), the Portuguese Republic has failed to fulfil its obligations under Article 260(1) TFEU. Financial penalties Penalty payment Arguments of the parties43Regarding the agglomeration of Vila Real de Santo António, the Commission claimed, during the hearing before the Court, that, contrary to the Portuguese Republic’s assertions that that Member State has taken all the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) in full, it cannot be guaranteed that the treatment plant in that agglomeration is operating in accordance with Article 4 of Directive 91/271 until proper analyses of the waste water are carried out, over the course of a year, on the basis of samples taken before the discharge of that waste water and when those analyses show, at the end of that year, that the secondary treatment of that water complies with the requirements of that directive. According to the Commission, those discharges must satisfy the requirements of point B of Annex I to that directive. In addition, the Commission submits that the reference methods for the monitoring and evaluation of results set out in point D of that annex, which establishes the minimum annual number of samples which must be taken in order to be regarded as representative depending on the size of the treatment plant, must be complied with.44However, in the present case, no such measures have been taken.45The Commission proposes that the Court, in accordance with Article 260(2) TFEU, and on the basis of the former’s communication of 13 December 2005, entitled ‘Application of Article [260 TFEU]’ (SEC(2005) 1658) (‘the communication of 2005’), as updated by its communication of 17 September 2014, entitled ‘Updating of data used to calculate lump sum and penalty payments to be proposed by the Commission to the Court of Justice in infringement proceeding[s]’ (C(2014) 6767 final), penalise the failure to comply at issue in the present case by imposing, inter alia, a penalty payment.46Under paragraph 6 of the Commission’s communication of 2005, that institution is to rely on three criteria in order to determine the amount of the penalty payment, namely the seriousness of the infringement, its duration, and the need to ensure that the penalty itself is a deterrent to future infringements.47Regarding the seriousness of the infringement established, the Commission emphasises, in the first place, the importance of the rules of EU law which have been infringed and, in the second place, the consequences of that infringement for public and private interests such as, inter alia, protecting human health and the environment, maintaining and improving the quality of receiving waters and the aquatic ecosystems associated therewith, or practising recreational activities connected with those ecosystems. In the third place, the Commission, while noting that there are mitigating circumstances connected with the progress made by that Member State, also highlights the aggravating circumstances resulting from: the failure, upon expiry of the period prescribed by the reasoned opinion, to comply with not only Article 4 of Directive 91/271 but also the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292); the clarity of the provisions infringed; the failure to comply with the successive timetables submitted by the Portuguese authorities in the correspondence sent to the Commission; and, lastly, the repeated unlawful conduct of that Member State as regards complying with EU law in a sector where the effects on human health and the environment are particularly significant.48Having regard to all of the foregoing, the Commission considers that it is appropriate to apply a coefficient for seriousness of 3 on the scale of 1 to 20 established in the communication of 2005.49Concerning the duration of the infringement, the Commission claims that the decision to bring the present proceedings was taken on 16 October 2014, that is, 65 months after the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), which justifies applying the maximum coefficient of 3.50As regards the coefficient relating to the defendant Member State’s ability to pay, known as the ‘n’ factor, the Commission states that its communication of 2005 fixes that coefficient at 3.40 for the Portuguese Republic.51The Commission indicates that, according to the formula set out in that communication, the daily penalty payment is equal to the standard flat-rate amount of EUR 660 multiplied by the coefficient for seriousness, the coefficient for duration and the ‘n’ factor. Therefore, in the present case, the Commission proposes a daily penalty payment of EUR 20196 (EUR 660 x 3 x 3 x 3.40).52That institution proposes applying a decreasing daily penalty payment, the actual amount of which would be calculated every six months, reducing the total amount relating to each of those periods by a percentage corresponding to the relationship between the p.e. of the agglomerations which have brought their plants into line with the requirements of Article 4 of Directive 91/271 and the p.e. of the agglomerations which do not have such systems in place on the day of delivery of the present judgment.53According to the data available to the Commission before the bringing of the present action, the total p.e. for the agglomerations which did not have treatment systems complying with Article 4 of that directive was 321950. That total was divided between the two agglomerations concerned, as the p.e. of Vila Real de Santo António was 34950 and that of Matosinhos was 287000.54The Portuguese Republic contends that, taking into account the seriousness and duration of the infringement, the co-operation and the diligence which it has demonstrated throughout the proceedings and the progress made in complying with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), there are no grounds for imposing such a high penalty payment. That Member State thus contests the method used to calculate the amounts proposed. It considers that the penalty payment sought by the Commission is excessively high and disproportionate in relation to the seriousness of the infringement, the environmental effects of which are purely hypothetical. It refutes the Commission’s assertions concerning the seriousness of the infringement: as stated in paragraph 27 above, regarding the agglomeration of Vila Real de Santo António, it contends that the connection of effluent to the waste water treatment plant, operational since 2009, was completed on 11 April 2015, a fact of which the Commission’s staff were duly informed. Accordingly, the alleged infringement no longer exists so far as the agglomeration of Vila Real de Santo António is concerned: to that extent, the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) has been complied with in full.55Regarding the agglomeration of Matosinhos, according to that Member State it is necessary, given that the alleged infringement amounts to the need to complete the works necessary to enlarge the waste water treatment plant with a view to secondary treatment, to take account, during the period under consideration, extended by one year, of the progress made in carrying out those works in order to ascertain whether that plant is operating in accordance with the requirements of Article 4 of Directive 91/271. Accordingly, the period required to complete those works was four years, that is, a period of three years extended by a one-year delay connected with the occurrence of unforeseeable events. The total period of four years can be divided into eight stages, each of which was monitored in order to ascertain the progress made in the work being carried out on that plant with a view to rendering it fully operational.56In so far as, first, concerning the agglomeration of Vila Real de Santo António, the objectives of connecting the secondary treatment plant have now been fully achieved, second, concerning the agglomeration of Matosinhos, the actions necessary to maintain coastal waters at an excellent level of quality have been undertaken and continue to be developed and, third, of the 22 agglomerations concerned by the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), 21 agglomerations have been brought into line with that judgment, the coefficient applied should not be greater than 1 on the scale of 1 to 20 mentioned by the communication of 2005.57The Portuguese Republic also emphasises the efforts it has made to comply fully with the obligations arising from the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) and highlights, in addition, the continual co-operation which the Portuguese authorities have maintained with the Commission’s staff.58It also argues that it is necessary to take into consideration the level of compliance with that judgment which has already been achieved. Even taking into account the time which has elapsed since the delivery of that judgment, the criterion relating to the duration of the infringement is irrelevant so far as 90% of the agglomerations referred to in the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) are concerned. It is therefore right that that situation, in view of the amount of work still to be carried out in order to comply with that judgment, be taken into consideration in the weighting applied by the Court, so that that weighting does not exceed 10% of the coefficient of 3 which the Commission seeks to have applied, with the result that the weighted value of that criterion is not higher than 1.59Furthermore, in view of the circumstances of the present case, that penalty payment is also disproportionate as regards the Portuguese Republic’s ability to pay. In addition, the ‘n’ factor applied to it is debateable in the light of the temporary economic situation prevailing in that Member State as a result of the financial crisis of States in the Eurozone, since the completion of public works requires significant public investment. Accordingly, the Portuguese Republic leaves it to the Court to determine any reappraisal of that coefficient but considers that, since over 90% of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) has already been complied with, the Court should temporarily reduce that coefficient.60Consequently, if the Court were to grant that Member State’s request regarding the weighting of the coefficients for seriousness and duration and the ‘n’ factor relating to its ability to pay, the daily penalty payment would have to be calculated using the following formula: EUR 660 x 1 x 1 x 3.40 = EUR 2244 divided by p.e. 287000, that is, EUR 0.007 per day per unit of p.e.Findings of the Court61According to settled case-law, the imposition of a penalty payment is, in principle, justified only in so far as the failure to comply with an earlier judgment of the Court continues up to the time of the Court’s examination of the facts (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 47 and the case-law cited).62Regarding the agglomeration of Vila Real de Santo António, it should be noted that, as recalled in paragraphs 27 and 54 above, the Portuguese Republic explained during the hearing before the Court that the necessary works concerning the treatment plant were completed on 11 April 2015 and that several samples demonstrating the effectiveness of the secondary treatment of urban waste water for the period running from April to November 2015, a period that includes the tourist season, which is characterised by heavy pollution of that water, were sent to the Commission. In that regard, that institution has not contradicted that Member State’s assertion, in particular as regards the compliance of those samples with the requirements of Article 4 of Directive 91/271.63In those circumstances, the Court finds that, regarding the agglomeration of Vila Real de Santo António, the Portuguese Republic provided evidence that it had taken samples at regular intervals from April 2015 onwards and that, accordingly, the discharges from the urban waste water treatment plant meet the requirements of Article 4(3) of that directive, with the result that, concerning that agglomeration, there is no need to order that Member State to pay a penalty payment intended to ensure compliance with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292).64Regarding the agglomeration of Matosinhos, it can be seen from the Portuguese Republic’s statements that the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) had not been fully complied with at the date of the hearing before the Court.65In those circumstances, the Court finds that ordering the Portuguese Republic to pay a penalty payment is an appropriate financial means of encouraging that State to take the measures necessary to put an end to the established infringement and to ensure that the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) is complied with in full.66Nevertheless, it cannot be ruled out a priori that, on the date of delivery of the present judgment, full compliance with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) will have taken place. Accordingly, the penalty payment must be imposed only if the failure to fulfil obligations persists on the date of delivery of the present judgment (see, by analogy, judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 50 and the case-law cited).67It is apparent from the settled case-law of the Court that the penalty payment must be decided upon according to the degree of persuasion needed in order for the Member State which has failed to comply with a judgment establishing a breach of obligations to alter its conduct and bring to an end the infringement established (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 51 and the case-law cited).68In exercising its discretion in the matter, it is for the Court to set the penalty payment so that it is both appropriate to the circumstances and proportionate to the infringement established and the ability to pay of the Member State concerned (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 52 and the case-law cited).69The Commission’s proposals concerning the penalty payment cannot bind the Court and constitute merely a useful point of reference. Similarly, guidelines such as those set out in the communications of the Commission are not binding on the Court but contribute to ensuring that the Commission’s own actions are transparent, foreseeable and consistent with legal certainty when that institution makes proposals to the Court. In proceedings under Article 260(2) TFEU relating to a failure to fulfil obligations on the part of a Member State that has persisted notwithstanding the fact that that same failure to fulfil obligations has already been established in a first judgment delivered under Article 226 EC or Article 258 TFEU, the Court must remain free to set the penalty payment to be imposed in an amount and in a form that the Court considers appropriate for the purposes of inducing that Member State to bring to an end its failure to comply with the obligations arising under that first judgment of the Court (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 53 and the case-law cited).70For the purposes of determining the amount of a penalty payment, the basic criteria which must be taken into consideration in order to ensure that that payment has coercive effect and that EU law is applied uniformly and effectively are, in principle, the seriousness of the infringement, its duration and the ability to pay of the Member State concerned. In applying those criteria, regard must be had, in particular, to the effects on public and private interests of the failure to comply and to how urgent it is for the Member State concerned to be induced to fulfil its obligations (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 54 and the case-law cited).71In the first place, concerning the seriousness of the infringement, it should be borne in mind that Directive 91/271 is intended to protect the environment. A lack or shortage of urban waste water treatment plants is likely to harm the environment and must be regarded as particularly serious (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 55 and the case-law cited).72In addition, concerning the reduction in the chemical and biochemical oxygen demand relied on by the Portuguese Republic, it should be noted that, as the Advocate General observed in point 63 of her Opinion, the indicative values specified by that directive have not yet been achieved by that Member State, given that that directive fixes, for secondary treatment, a reduction of at least 75% in the chemical oxygen demand and of 70 to 90% in the biochemical oxygen demand, whereas that Member State cites a reduction of only 20% in the chemical oxygen demand.73Furthermore, while it can be seen from the data provided by the Portuguese Republic that the quality of bathing water is described as ‘excellent’ in the majority of beach areas in the agglomeration of Matosinhos, the fact remains that the quality of that water in, in particular, the beach areas of ‘Azul-Conchina’, into which — according to the Commission’s unchallenged data — urban waste water which has undergone a primary treatment are discharged, and of ‘Matosinhos’, the beach area nearest to that agglomeration’s urban area, were regarded as ‘sufficient’ and ‘good’ respectively. As the Advocate General observed in point 64 of her Opinion, it can be seen from this that the inadequate treatment of urban waste water is affecting the quality of that bathing water.74It is also necessary to cite as an aggravating circumstance the fact that the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) will not be fully complied with, according to the statements of the Portuguese Republic, until 2019, which is equivalent to a delay of almost 20 years, in so far as the obligation to ensure that the secondary treatment of the urban waste water of the agglomeration of Matosinhos complied with EU law should have been fulfilled on 31 December 2000 at the latest. As it is, since the Portuguese Republic maintains that it will not be in a position to comply with all of its obligations under that directive until almost 20 years after that second date, the Court cannot but confirm the particularly lengthy character of an infringement which, in the light of the objective mentioned above, is also a matter of indisputable gravity (see, by analogy, judgment of 19 December 2012 in Commission v Ireland, C‑374/11, EU:C:2012:827, paragraph 38).75However, it should also be borne in mind that, as the Court held in paragraph 57 of its judgment of 15 October 2015 in Commission v Greece (C‑167/14, EU:C:2015:684), the extent of the harm to the environment is dependent, to a large extent, on the number of agglomerations covered by the infringement complained of. It should be noted that, in the present case, the number of agglomerations in respect of which the Portuguese Republic had not provided, on the day of the hearing before the Court, proof of existence of urban waste water treatment systems complying with that directive — just one — is clearly lower than the number of agglomerations not having such installations mentioned in the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), namely 15. Therefore, it must be found that that harm is less extensive than that resulting from the initial infringement established in that judgment. The Portuguese Republic has thus considerably reduced the additional harm to the environment resulting from the infringement established by the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292).76In the second place, regarding the duration of the infringement, that duration must be assessed by reference to the date on which the Court assesses the facts and not the date on which proceedings are brought before it by the Commission. In the present case, the duration of the infringement — over seven years from the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) — is considerable.77Although Article 260(1) TFEU does not specify the period within which a judgment must be complied with, it follows from settled case-law that the importance of immediate and uniform application of EU law means that the process of compliance must be initiated at once and completed as soon as possible (see judgment of 17 September 2015 in Commission v Italy, C‑367/14, EU:C:2015:611, paragraph 95 and the case-law cited).78In the third place, concerning the ability to pay of the Member State concerned, it is apparent from the case-law of the Court that it is necessary to take account of recent trends in a Member State’s gross domestic product (GDP) at the time of the Court’s examination of the facts (see, to that effect, judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 60). In that regard, account should be taken of the Portuguese Republic’s assertions that its GDP decreased by 7.4% between 2009 and 2013.79As regards the Commission’s proposal that a decreasing penalty payment be applied and the arguments put forward by the Portuguese Republic in support of progressively reducing the amount of the penalty payment, it should be borne in mind that neither progress made in complying with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) nor progress made in complying with Article 4 of Directive 91/271 can be ascertained until it can be established, in respect of the agglomeration concerned, that there has been an increase in the proportion of its p.e. which is treated in accordance with the provisions of that directive. As the Advocate General observed in point 76 of her Opinion, the mere fact that construction works are progressing, however advanced they may be, does not entail any reduction in the threat to the environment, as such a reduction may be established only after the secondary treatment plant is put into operation: only this will enable the agglomeration concerned to treat a higher proportion of its p.e. than previously in a way which complies with Directive 91/271.80Since the Portuguese Republic claims to be unable, so far as the agglomeration of Matosinhos is concerned, to increase the proportion of its p.e. which is treated in a way which complies with that directive and, hence, to reduce the threat to the environment, it is necessary to apply a fixed penalty payment.81Having regard to all of the foregoing, the Court considers it appropriate to impose a penalty payment of EUR 8000 per day.82Consequently, the Portuguese Republic must be ordered to pay the Commission, into the ‘European Union own resources’ account, a penalty payment of EUR 8000 for each day of delay in implementing the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), from the date of delivery of the present judgment until the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) has been complied with in full. Lump sum payment 83The Commission claims that the Court should order the Portuguese Republic to pay a daily lump sum payment of EUR 2244 — an amount reached by multiplying the standard flat rate, fixed at EUR 220, by the same coefficient for seriousness as that applied for the penalty payment (3) and by the ‘n’ factor of 3.40 — from the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) until the date of delivery of the present judgment or until the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) is complied with, whichever is sooner.84The Commission states that, when calculating the daily amount for determining the lump sum, it is necessary to assess whether, having regard to the minimum fixed lump sum, it is more appropriate to propose that the Court set a daily amount or a fixed amount. To that end, it is necessary to compare, on the one hand, the cumulative total of the daily amount for determining the lump sum as calculated up until the date of the Commission’s decision to bring an action under Article 260 TFEU and, on the other hand, the minimum fixed lump sum set for the Member State concerned.85In the present case, the date of delivery of the judgment under Article 258 TFEU is 7 May 2009. The date of the Commission’s decision to bring an action under Article 260 TFEU is 16 October 2014. 1987 days have elapsed between those two dates. Consequently, on the date of that decision by the Commission, the cumulative total of the daily amount for determining the lump sum is equal to the daily amount for determining the lump sum multiplied by the number of days, namely: EUR 2244 x 1987 days = EUR 4458828.86According to the communication of 2005, the minimum fixed lump sum for the Portuguese Republic is currently set at EUR 1875000.87Accordingly, given that, on 16 October 2014, the cumulative total of the daily amount for determining the lump sum payment exceeds the minimum fixed lump sum set for the Portuguese Republic, the Commission proposes that the Court order the Portuguese Republic to pay the daily amount for determining the lump sum payment, namely EUR 2244 per day from the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) until the date of delivery of the present judgment, or until that Member State complies in full with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), whichever is sooner.88The Portuguese Republic challenges that method of calculation. It argues that, if the Court were to follow the proposal to weigh the coefficients applied by the Commission in the manner suggested by that Member State, it would be necessary to order the latter to pay a daily lump sum, not of EUR 2244, but of EUR 748. That second amount is obtained by multiplying the standard flat rate, fixed at EUR 220, by the coefficient for seriousness (1) and by the ‘n’ factor of 3.40.89The Portuguese Republic maintains that the two-month period prescribed by the Commission in its letter of formal notice of 21 February 2014 expired on 21 April 2014. Accordingly, 1810 days have elapsed between the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) and the expiry of the period prescribed by the Commission in its letter of formal notice.90That Member State contends that, if that number of days is multiplied by EUR 748, the result obtained is EUR 1339000. Since 90% of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) has already been complied with, this should be reflected in the percentage by which the sum of EUR 1875000 is reduced, with the result that the fixed lump sum which is to be paid by the Portuguese Republic may not exceed EUR 187500.91As a preliminary point, it should be borne in mind that the Court is empowered, in exercising the discretion conferred on it in such matters, to impose a penalty payment and a lump sum payment cumulatively (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 72).92The imposition of a lump sum payment and the fixing of that sum must depend in each individual case on all the relevant factors relating both to the characteristics of the failure to fulfil obligations established and to the conduct of the Member State involved in the procedure initiated under Article 260 TFEU. That provision confers a wide discretion on the Court in deciding whether to impose such a penalty and, if it decides to do so, in determining the amount thereof (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 73).93In the present case, all of the factual and legal elements which have led to the establishment of the infringement under consideration, in particular, the fact that other judgments, namely the judgments delivered on 8 May 2008 in Commission v Portugal (C‑233/07, EU:C:2008:271), 8 September 2011 in Commission v Portugal (C‑220/10, EU:C:2011:558) and 28 January 2016 in Commission v Portugal (C‑398/14, EU:C:2016:61), establishing the failure of the Portuguese Republic to fulfil its obligations concerning the treatment of urban waste water, indicate that effective prevention of future repetition of similar infringements of EU law may require the adoption of a dissuasive measure, such as an order to make a lump sum payment (see, by analogy, judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 74).94In those circumstances, it is for the Court, in the exercise of its discretion, to fix the lump sum in an amount appropriate to the circumstances and proportionate to the infringement (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 75).95Relevant considerations in this respect include factors such as the seriousness of the infringement and the length of time for which the infringement has persisted since the delivery of the judgment establishing it (judgment of 15 October 2015 in Commission v Greece, C‑167/14, EU:C:2015:684, paragraph 76).96The circumstances of the present case which must be taken into account are apparent from the considerations set out in paragraphs 71 to 78 above regarding the seriousness and the duration of the infringement and the ability to pay of the Member State concerned.97Regarding the seriousness of the infringement in question, it should however be noted that, at the date of the hearing before the Court, it was established that only one agglomeration — the agglomeration of Matosinhos — did not have the proper systems in place for the treatment of the urban waste water which was the subject matter of the infringement complained of, whereas, for most of the period between the date of delivery of the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) and the date of delivery of the present judgment, two agglomerations did not have such systems in place. Therefore, in accordance with the considerations set out in paragraph 75 above, by virtue of which the extent of the harm to the environment is dependent, to a large extent, on the number of agglomerations covered by the infringement complained of, it is necessary to regard that infringement as being more serious for the purposes of calculating the lump sum payment than for the purposes of determining the penalty payment.98In addition, for the purposes of determining the lump sum payment, it is necessary to take account of the fact that the Portuguese Republic, although it has co-operated systematically with the Commission’s staff, has not complied with its own timetables concerning the treatment plant for the urban waste water of the agglomeration of Matosinhos. Indeed, it is apparent from that Member State’s rejoinder that, concerning that agglomeration, the necessary plant will not be operational until 2019.99Lastly, as the Commission has argued, regard must be had to the large number of judgments, referred to in paragraph 93 above, which have established failures by the Portuguese Republic to fulfil its obligations in relation to the treatment of urban waste water. Repetition of unlawful conduct by a Member State is all the more unacceptable where it takes place in a sector in which the effects on human health and the environment are particularly significant. In that regard, as the Advocate General observed in point 89 of her Opinion, where a Member State repeatedly engages in unlawful conduct in a specific sector, this may be an indication that effective prevention of future repetition of similar infringements of EU law may require the adoption of a dissuasive measure, such as a lump sum payment (see, to that effect, judgment of 19 December 2012 in Commission v Ireland, C‑279/11, EU:C:2012:834, paragraph 70).100Having regard to all of the foregoing, the Court considers it a fair assessment of the circumstances of the case to fix the amount of the lump sum payment which the Portuguese Republic will have to pay at EUR 3000000.101Consequently, the Portuguese Republic must be ordered to pay the Commission, into the ‘European Union own resources’ account, a lump sum payment of EUR 3000000. Costs 102Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Commission has applied for costs and the Portuguese Republic’s failure to fulfil its obligations has been established, the Portuguese Republic must be ordered to pay the costs.On those grounds, the Court (Third Chamber) hereby: 1. Declares that, by failing to take all the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), the Portuguese Republic has failed to fulfil its obligations under Article 260(1) TFEU; 2. If the failure to fulfil obligations established in point 1 has continued until the day of delivery of the present judgment, orders the Portuguese Republic to pay the European Commission, into the ‘European Union own resources’ account, a penalty payment of EUR 8000 for each day of delay in implementing the measures necessary to comply with the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292), from the date of delivery of the present judgment until the judgment of 7 May 2009 in Commission v Portugal (C‑530/07, EU:C:2009:292) has been complied with in full; 3. Orders the Portuguese Republic to pay the European Commission, into the ‘European Union own resources’ account, a lump sum payment of EUR 3000000; 4. Orders the Portuguese Republic to pay the costs. [Signatures]( *1 ) Language of the case: Portuguese. | 3be5b-c589b2f-41b9 | EN |
The obligation to draw up cross-border invoices exclusively in a particular language, failing which they are null and void, infringes EU law | 21 June 2016 ( *1 )‛Reference for a preliminary ruling — Free movement of goods — Prohibition of measures having equivalent effect to quantitative restrictions on exports — Article 35 TFEU — Company established in the Dutch-speaking region of the Kingdom of Belgium — Legislation requiring invoices to be drawn up in Dutch, failing which they are null and void — Cross-border concession agreement — Restriction — Justification — Disproportionate’In Case C‑15/15,REQUEST for a preliminary ruling under Article 267 TFEU from the rechtbank van koophandel te Gent (Ghent Commercial Court, Belgium), made by decision of 18 December 2014, received at the Court on 16 January 2015, in the proceedings New Valmar BVBA v Global Pharmacies Partner Health Srl, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, L. Bay Larsen, A. Arabadjiev and F. Biltgen, Presidents of Chambers, J. Malenovský, J.-C. Bonichot, C. Vajda, S. Rodin and E. Regan (Rapporteur), Judges,Advocate General: H. Saugmandsgaard Øe,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 26 January 2016,after considering the observations submitted on behalf of—New Valmar BVBA, by P. Devos, advocaat,the Belgian Government, by J. Van Holm and L. Van den Broeck, acting as Agents, and by H. De Bauw and B. Martel, advocaten,the Lithuanian Government, by D. Kriaučiūnas and R. Dzikovič, acting as Agents,the European Commission, by E. Manhaeve, M. van Beek and G. Wilms, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 21 April 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 45 TFEU.2The request has been made in proceedings between New Valmar BVBA and Global Pharmacies Partner Health Srl (‘GPPH’) concerning the non-payment of various invoices. Legal context EU law 3Article 226 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2010/45/EU of 13 July 2010 (OJ 2010 L 189, p. 1) (‘Directive 2006/112’), sets out the details that are required on invoices.4Article 248a of that directive provides:‘For control purposes, and as regards invoices in respect of supplies of goods or services supplied in their territory and invoices received by taxable persons established in their territory, Member States may, for certain taxable persons or certain cases, require translation into their official languages. Member States may, however, not impose a general requirement that invoices be translated.’ Belgian law 5Article 4 of the Grondwet (Constitution), in its consolidated version of 17 February 1994 (Belgisch Staatsblad, 17 February 1994, p. 4054), states:‘Belgium comprises four linguistic regions: the French-speaking region, the Dutch-speaking region, the bilingual region of Brussels-Capital and the German-speaking region.Each municipality of the Kingdom forms part of one of these linguistic regions.…’6Article 129(1)(3) of the Constitution provides:‘The Parliaments of the Flemish and French Communities, to the exclusion of the federal legislature, shall regulate by decree, each one as far as it is concerned, the use of languages for:…3.relations between employers and their staff, as well as company acts and documents required by the law and by regulations.’7The first subparagraph of Article 52(1) of the wetten op het gebruik van de talen in bestuurszaken (laws on the use of languages in administrative matters), consolidated by the Royal Decree of 18 July 1966 (Belgisch Staatsblad, 2 August 1966, p. 7798) (‘the Law on the use of languages’), states:‘Private industrial, commercial and financial undertakings shall use, for acts and documents required by the law and by regulations ..., the language of the region in which they have their establishment or various establishments.’8The decreet tot regeling van het gebruik van de talen voor de sociale betrekkingen tussen de werkgevers en de werknemers, alsmede van de door de wet en de verordeningen voorgeschreven akten en bescheiden van de ondernemingen (decree regulating the use of languages with regard to relations between employers and employees, and with regard to company acts and documents required by the law and by regulations), of the Vlaamse Gemeenschap (Flemish Community, Belgium), of 19 July 1973 (Belgisch Staatsblad, 6 September 1973, p. 10089; ‘the Decree on the use of languages’), was adopted on the basis of Article 129(1)(3) of the Constitution.9Article 1 of the Decree on the use of languages provides:‘This decree is applicable to natural and legal persons having a place of business in the Dutch-speaking region. It regulates use of languages in relations between employers and employees, as well as in company acts and documents required by the law.10Article 2 of that decree provides that ‘the language to be used for relations between employers and employees, and for company acts and documents required by the law, shall be Dutch’.11According to Article 10 of that decree:‘Documents or acts which infringe the provisions of this Decree shall be null and void. Nullity shall be determined by the courts of their own motion.The judgment shall order that the relevant documents be replaced as a matter of course.Revocation of the nullity shall be effective only from the date of the substitution: for written documents, from the date of deposit of the substitute documents at the registry of the labour tribunal. The facts in the main proceedings and the question referred for a preliminary ruling 12On 12 November 2010, New Valmar, a Belgian company established in Evergem (Belgium), and GPPH, an Italian company established in Milan (Italy), concluded an agreement appointing GPPH as New Valmar’s exclusive concession-holder in Italy for the distribution of children’s articles. That agreement was to be valid until 31 December 2014.13Under Article 18 of that concession agreement, the agreement was to be governed by Italian law and the courts in Ghent (Belgium) had jurisdiction to hear any disputes that might arise between the parties.14By registered letter of 29 December 2011, New Valmar terminated the agreement prematurely, with effect from 1 June 2012.15By summons dated 30 March 2012, New Valmar brought an action before the rechtbank van koophandel te Gent (Ghent Commercial Court, Belgium) seeking an order requiring GPPH to pay to it a sum of approximately EUR 234192 in settlement of various invoices that had not been paid.16GPPH lodged a counterclaim seeking an order that New Valmar should pay a sum of EUR 1467448 in compensation for the wrongful termination of their concession agreement.17GPPH disputed New Valmar’s claim, contending that the invoices at issue in the main proceedings were null and void on the ground that, although they are ‘acts and documents required by the law and by regulations’ within the meaning of the Law on the use of languages and the Decree on the use of languages (together, ‘the legislation at issue in the main proceedings’), the invoices fail to comply with the public policy rules contained in that legislation, since, with the exception of the identifying particulars for New Valmar, and the VAT and bank details, all the details on the invoices, including the general terms and conditions, were set out in a language other than Dutch, namely in Italian, even though New Valmar is established in the Dutch-speaking region of the Kingdom of Belgium.18On 14 January 2014, in the course of the proceedings, New Valmar supplied to GPPH a translation into Dutch of the invoices concerned. It is apparent, however, from the file before the Court that the invoices are, and remain, in their entirety null and void under the legislation at issue in the main proceedings.19New Valmar does not dispute that the invoices in question fail to comply with the legislation at issue in the main proceedings. However, New Valmar claims that that legislation is contrary to, inter alia, the provisions of European Union law concerning the free movement of goods, in particular Article 26(2) TFEU, and Articles 34 and 35 TFEU.20The referring court questions whether, having regard to the judgment of 16 April 2013 in Las (C‑202/11, EU:C:2013:239), the imposition of an obligation on undertakings which have their place of establishment within the Dutch-speaking region of the Kingdom of Belgium to draw up, on pain of nullity, their invoices in Dutch may constitute an obstacle to international trade, whether any such obstacle may be justified by one or more objectives in the public interest, such as promoting and encouraging the use of an official language or ensuring the effectiveness of administrative checks, and whether any such obstacle is proportionate to the objectives pursued.21In those circumstances, the rechtbank van koophandel te Gent (Ghent Commercial Court) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:‘Must Article 45 TFEU be interpreted as precluding legislation of a federal entity of a Member State, such as, in the present case, the Flemish Community in the Federal State of Belgium, which requires every undertaking which has its place of establishment within the territory of that entity to draw up, pursuant to Article 52 of the [Law on the use of languages] in conjunction with Article 10 of the [Decree on the use of languages], cross-border invoices exclusively in the official language of that federal entity, failing which those invoices are to be declared by the [national] courts of their own motion to be null and void?’ Consideration of the question referred Admissibility and scope of the question 22First, it is apparent from the order for reference that the agreement at issue in the main proceedings expressly provided that it was to be subject to Italian law. However, the question is based on the assumption that, despite the choice of Italian law as the law governing the contract, the legislation at issue in the main proceedings is applicable to the dispute in the main proceedings.23In that regard, it is appropriate to note that, since it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the judicial decision to be made, to determine, in the light of the particular circumstances of the case, both the need for and the relevance of the questions that it submits to the Court (see, inter alia, judgment of 18 February 2016 in Finanmadrid EFC, C‑49/14, EU:C:2016:98, paragraph 27), the question referred must be answered on that assumption, the merits of which, however, the referring court must assess, taking into account, in particular, and as the Advocate General observed in points 25 to 28 of his Opinion, the provisions of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual relations (Rome I) (OJ 2008 L 177, p. 6).24Second, both in its written observations and at the hearing, the Belgian Government argued that, contrary to what the referring court indicated in its decision, the legislation at issue in the main proceedings prescribes the use of Dutch not for all the details on an invoice, but only for the details required by law, in the light of the applicable VAT legislation. Given that those latter details are listed in Article 226 of Directive 2006/112, it would, according to the Belgian Government, be easy to obtain a translation of them in all the languages of the European Union.25In that regard, it is appropriate to recall that the Court must take into account, under the division of jurisdiction between the Courts of the European Union and the national courts, the factual and legal context, as set out in the order for reference, of the questions referred for a preliminary ruling. Consequently, whatever criticism the Belgian Government may have made of the interpretation of national law adopted by the referring court, this reference for a preliminary ruling must be examined in the light of that court’s interpretation of that law (see, to that effect, inter alia, judgment of 29 October 2009 in Pontin, C‑63/08, EU:C:2009:666, paragraph 38).26In the present case, it is therefore necessary to provide an answer to the question asked by the referring court by proceeding on the assumption that all the details on an invoice must, in accordance with the legislation at issue in the main proceedings, be drawn up in Dutch.27Third, in its written observations, the Belgian Government argues that, in the absence of any link between the situation at issue in the main proceedings and the freedom of movement for workers, this request for a preliminary ruling is inadmissible or, at least, does not need to be answered, since it concerns the interpretation of Article 45 TFEU.28In that regard, suffice it to state that, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court may have to reformulate the questions referred to it. The Court has a duty to interpret all provisions of EU law which national courts require in order to decide the actions pending before them, even where those provisions are not expressly indicated in the questions referred to the Court of Justice by those courts (see, inter alia, judgment of 17 December 2015 in Szemerey, C‑330/14, EU:C:2015:826, paragraph 30).29Consequently, even if, formally, the referring court has limited its question to the interpretation of Article 45 TFEU alone, that does not prevent the Court from providing the referring court with all the elements of interpretation of European Union law which may be of assistance in adjudicating in the case pending before it, whether or not the referring court has referred to them in the wording of its questions. It is, in this regard, for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of European Union law which require interpretation in view of the subject matter of the dispute in the main proceedings (see, by analogy, inter alia, judgment of 17 December 2015 in Szemerey, C‑330/14, EU:C:2015:826, paragraph 31).30In the present case, notwithstanding the mention of Article 45 TFEU in the question referred, it is clear from the grounds of the order for reference that the referring court seeks to determine whether the legislation at issue in the main proceedings is in conformity with the rules laid down by the FEU Treaty on the free movement of goods, that court explicitly stating, in that regard, that New Valmar relied, in the main proceedings, on Article 26(2) TFEU and on Articles 34 and 35 TFEU.31Since the case in the main proceedings concerns not imports, but the export of goods from Belgium to another Member State, Italy in this case, it is clear that only Article 35 TFEU, which prohibits measures having equivalent effect to quantitative restrictions on exports, can apply.32The Belgian Government argues, however, that the legislation at issue in the main proceedings must be assessed by reference not to primary EU law, but to Directive 2006/112 alone, since that directive effected complete harmonisation in this field. Article 248a of that directive, in its view, permits Member States to require, in their domestic legislation, that invoices issued in a cross-border context be drawn up in a language other than that of the Member State of destination of services or goods. In providing the right, for Member States, to request, as regards invoices in respect of goods or services supplied in their territory, a translation of invoices into their official language, that provision implies, moreover, that invoices are generally to be drawn up in the official language of the Member State in which the undertaking issuing the invoice is established.33In that regard, it must, however, be borne in mind that the harmonisation of national legislation being brought about by the European Union rules on VAT is only gradual and partial (see, to that effect, inter alia, judgment of 26 February 2015 in VDP Dental Laboratory and Others, C‑144/13, C‑154/13 and C‑160/13, EU:C:2015:116, paragraph 60 and the case-law cited).34Accordingly, neither Article 226 of Directive 2006/112, which concerns the content of invoices, nor Article 248a of that directive, which permits Member States of destination to require, in certain cases, the translation, into one of their official languages, of an invoice concerning a cross-border supply, restricts, as the Advocate General observed in points 45 to 48 of his Opinion, the option for Member States to impose on the undertakings established in their territory the obligation to draw up any invoice in their official language or in the language of that territory.35In the light of the foregoing, it is necessary to reformulate the question referred as meaning that the referring court is seeking to ascertain, by that question, whether Article 35 TFEU must be interpreted as precluding legislation of a federated entity of a Member State, such as the Flemish Community of the Kingdom of Belgium, which requires every undertaking which has its place of establishment within the territory of that entity to draw up all the details on invoices relating to cross-border transactions exclusively in the official language of that entity, failing which those invoices are to be declared by the national courts of their own motion to be null and void. Whether there is a restriction falling within the scope of Article 35 TFEU 36The Court has held that a national measure applicable to all traders active in the national territory whose actual effect is greater on goods leaving the market of the exporting Member State than on the marketing of goods in the domestic market of that Member State is covered by the prohibition laid down by Article 35 TFEU (see, to that effect, judgment of 16 December 2008 in Gysbrechts and Santurel Inter, C‑205/07, EU:C:2008:730, paragraphs 40 to 43).37Moreover, it should be borne in mind that any restriction, even minor, of one of the fundamental freedoms enshrined by the FEU Treaty is prohibited by it (see, to that effect, judgment of 1 April 2008 in Government of the French Community and Walloon Government, C‑212/06, EU:C:2008:178, paragraph 52 and the case-law cited).38In this case, it is stated in the order for reference that, under the legislation at issue in the main proceedings, it is mandatory that invoices, including those relating to cross-border transactions, issued by undertakings which have their place of establishment within the Dutch-speaking region of the Kingdom of Belgium, must be drawn up in Dutch, that language alone being authentic, failing which those invoices will be declared by the national courts of their own motion to be null and void.39According to the Belgian Government, such legislation cannot be considered a restriction on the free movement of goods, since invoices, which are the sole subject matter of that legislation, merely confirm liability arising out of a contract concluded by the parties concerned. Such legislation, unlike that at issue in the case giving rise to the judgment of 16 April 2013 in Las (C‑202/11, EU:C:2013:239), does not affect the freedom of the parties to draw up such a contract in the language of their choice and, therefore, does not impinge on the establishment of consensus ad idem. Consequently, the view cannot be taken that the legislation at issue in the main proceedings has an impact on trade between Member States.40Nevertheless, in depriving the traders concerned of the possibility of choosing freely a language which they are both able to understand for the drawing-up of their invoices and in imposing on them to that end a language which does not necessarily correspond to the one they agreed to use in their contractual relations, legislation such as that at issue in the main proceedings is likely to increase the risk of disputes and non-payment of invoices, since the recipients of those invoices could be encouraged to rely on their actual or alleged inability to understand the invoices’ content in order to refuse to pay them.41Conversely, the recipient of an invoice drawn up in a language other than Dutch could, given that such an invoice is null and void, be encouraged to dispute its validity for that reason alone, even if it were drawn up in a language he understands. Such nullity could, moreover, be the source of significant disadvantages for the issuer of the invoice, including the loss of default interest, since it is apparent from the file submitted to the Court that, in the absence of a contractual term to the contrary, interest will begin to run, in principle, only from the issue of a new invoice drawn up in Dutch.42It follows that legislation, such as that at issue in the main proceedings, even if it concerns the language version in which the details on an invoice — not the content of the underlying contractual relationship — must be drawn up, produces, because of the legal uncertainty it creates, restrictive effects on trade which are likely to deter the initiation or continuation of contractual relationships with an undertaking established in the Dutch-speaking region of the Kingdom of Belgium.43While it is true that such legislation, since it applies indiscriminately to all invoices issued by an undertaking which has its place of establishment within that region, can affect both domestic trade within the Member State concerned and cross-border trade, the fact remains that it is more likely to affect the latter, as the Advocate General observed in points 61 to 68 of his Opinion, given that a purchaser established in a Member State other than the Kingdom of Belgium is less likely to be able to understand Dutch than a purchaser established in the latter Member State, where that language is one of the official languages.44Taking into account the arguments of the Belgian Government regarding the scope of the legislation at issue in the main proceedings, mentioned in paragraph 24 of the present judgment, it must be pointed out that the restrictiveness of such legislation would be no less open to challenge were it to prove – which it is for the referring court to determine – that only the obligatory details listed in Article 226 of Directive 2006/112 have to be drawn up in Dutch, since the same legal uncertainty as that identified in paragraph 42 of this judgment would also arise in that situation.45Furthermore, the restrictive effects of that legislation cannot be considered to be too indirect or too uncertain for it to be possible to regard that legislation, in accordance with the Court’s case-law stemming from, inter alia, the judgments of 7 March 1990 in Krantz (C‑69/88, EU:C:1990:97, paragraphs 10 and 11), and of 13 October 1993 in CMC Motorradcenter (C‑93/92, EU:C:1993:838, paragraphs 10 to 12), as not constituting a restriction within the meaning of Article 35 TFEU.46As is apparent from paragraphs 40 to 43 of this judgment, such legislation is likely to have an impact, however minor, on contractual relations, particularly since, as was indicated at the hearing, it is not unusual for the drawing-up of an invoice to be the only concrete manifestation of those relations. Moreover, as the Advocate General observed in point 69 of his Opinion, that impact depends not on a future and hypothetical event, but on the exercise of the right to free movement of goods (see, by analogy, inter alia, judgment of 1 April 2008 in Government of the French Community and Walloon Government, C‑212/06, EU:C:2008:178, paragraph 51).47It follows that legislation such as that at issue in the main proceedings constitutes a restriction falling within the scope of Article 35 TFEU. Whether there is justification 48According to settled case-law, a national measure restricting the exercise of the fundamental freedoms guaranteed may be allowed only if it pursues a legitimate objective in the public interest, is appropriate to ensuring the attainment of that objective and does not go beyond what is necessary to attain the objective pursued (see, to that effect, inter alia, judgment of 1 October 2015 in Trijber and Harmsen, C‑340/14 and C‑341/14, EU:C:2015:641, paragraph 70).49In this case, the Belgian Government argues that the legislation at issue in the main proceedings is aimed, first, at encouraging the use of the official language of the linguistic region concerned and, second, at ensuring the effectiveness of checks by the competent VAT authorities.50In that regard, it must be recalled that the objective of promoting and encouraging the use of one of the official languages of a Member State constitutes a legitimate objective which, in principle, justifies a restriction on the obligations imposed by EU law (see, to that effect, judgments of 28 November 1989 in Groener, C‑379/87, EU:C:1989:599, paragraph 19; of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 85, and of 16 April 2013 in Las, C‑202/11, EU:C:2013:239, paragraphs 25 to 27).51Moreover, the Court has previously recognised that the need to protect the effectiveness of fiscal supervision constitutes an objective of general interest capable of justifying a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty (see, to that effect, inter alia, judgments of 20 February 1979 in Rewe-Zentral, 120/78, EU:C:1979:42, paragraph 8, and of 15 May 1997 in Futura Participations and Singer, C‑250/95, EU:C:1997:239, paragraph 31).52It must be held that legislation such as that at issue in the main proceedings is appropriate for achieving those two objectives, since, first, it ensures that the general use of Dutch in the drawing-up of official documents, such as invoices, is protected, and, second, it can make it easier for the competent national authorities to check such documents.53Nevertheless, in order to satisfy the requirements laid down by EU law, legislation, such as that in issue in the main proceedings, must be proportionate to those objectives.54In the present case, as the Advocate General observed in points 90 to 92 of his Opinion, legislation of a Member State which not only required the use of the official language of that Member State for the drawing-up of invoices relating to cross-border transactions but which also, in addition, permitted an authentic version of such invoices to be drawn up in a language known to the parties concerned, would be less prejudicial to the free movement of goods than the legislation at issue in the main proceedings, while being appropriate for securing the objectives pursued by that legislation (see, by analogy, judgment of 16 April 2013 in Las, C‑202/11, EU:C:2013:239, paragraph 32).55Thus, as regards the objective of ensuring the effectiveness of fiscal supervision, the Belgian Government itself indicated, at the hearing, that, according to an administrative circular of 23 January 2013, the right of deduction of VAT cannot be refused by the tax authorities on the sole ground that the details that are required by law to be in an invoice were drawn up in a language other than Dutch, which tends to suggest that the use of another language is not liable to prevent the attainment of that objective.56In the light of all the foregoing, it must be held that legislation such as that at issue in the main proceedings goes beyond what is necessary to attain the objectives referred to in paragraphs 49 to 51 of this judgment and cannot therefore be regarded as proportionate.57Consequently, the answer to the question referred is that Article 35 TFEU must be interpreted as precluding legislation of a federated entity of a Member State, such as the Flemish Community of the Kingdom of Belgium, which requires every undertaking that has its place of establishment within the territory of that entity to draw up all the details on invoices relating to cross-border transactions exclusively in the official language of that entity, failing which those invoices are to be declared null and void by the national courts of their own motion. Costs 58Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber), rules as follows: Article 35 TFEU must be interpreted as precluding legislation of a federated entity of a Member State, such as the Flemish Community of the Kingdom of Belgium, which requires every undertaking that has its place of establishment within the territory of that entity to draw up all the details on invoices relating to cross-border transactions exclusively in the official language of that entity, failing which those invoices are to be declared null and void by the national courts of their own motion. [Signatures]( *1 ) Language of the case: Dutch. | 00c78-f7aa434-41ce | EN |
The occurrence of purely financial damage in a Member State does not justify in itself the jurisdiction of the courts of that State | 16 June 2016 ( *1 )‛Reference for a preliminary ruling — Judicial cooperation in civil matters — Regulation (EC) No 44/2001 — Special jurisdiction — Article 5(3) — Tort, delict or quasi-delict — Harmful event — Lawyer’s negligence in drafting the contract — Place where the harmful event occurred’In Case C‑12/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 9 January 2015, received at the Court on 14 January 2015, in the proceedings Universal Music International Holding BV v Michael Tétreault Schilling, Irwin Schwartz, Josef Brož, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, C. Toader (Rapporteur), A. Rosas, A. Prechal and E. Jarašiūnas, Judges,Advocate General: M. Szpunar,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 25 November 2015,after considering the observations submitted on behalf of—Universal Music International Holding BV, by C. Kroes and S. Janssen, advocaten,Michael Tétreault Schilling, by A. Knigge, P.A. Fruytier and L. Parret, advocaten,Josef Brož, by F. Vermeulen and B. Schim, advocaten,the Greek Government, by A. Dimitrakopoulou, S. Lekkou and S. Papaïoannou, acting as Agents,the European Commission, by M. Wilderspin and G. Wils, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 10 March 2016,gives the following Judgment 1This reference for a preliminary ruling concerns the interpretation of Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1).2The reference has been made in proceedings between Universal Music International Holding BV (‘Universal Music’), established in the Netherlands, and Michael Schilling, Irwin Schwartz and Josef Brož, all three lawyers, residing in Romania, Canada and the Czech Republic respectively, concerning negligence on the part of Mr Brož in drafting, in the Czech Republic, a contract for the purchase of shares. Legal context The Brussels Convention 3Article 5 of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (OJ 1972 L 299, p. 32), as amended by the successive conventions on the accession of new Member States to that Convention, (‘the Brussels Convention’) reads as follows:‘A person domiciled in a Contracting State may, in another Contracting State, be sued:…3.in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred;…’ Regulation No 44/2001 4Recitals 11, 12, 15 and 19 in the preamble to Regulation No 44/2001 provide as follows:‘(11)The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction.(12)In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice.(15)In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States.(19)Continuity between the Brussels Convention and this Regulation should be ensured, and transitional provisions should be laid down to that end. The same need for continuity applies as regards the interpretation of the provisions of the Brussels Convention by the Court of Justice [of the European Union] and the Protocol [of 3 June 1971 on the interpretation by the Court of Justice of the Brussels Convention] should remain applicable also to cases already pending when this Regulation enters into force.’5Article 2(1) of that regulation, conferring general jurisdiction upon the courts of the Member State in which the defendant is domiciled, is worded as follows:‘Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.’6Article 5 of the regulation provides:‘A person domiciled in a Member State may, in another Member State, be sued:in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur; The dispute in the main proceedings and the questions referred for a preliminary ruling 7Universal Music is a record company, part of Universal Music Group. Universal Music International Ltd is a sister company of Universal Music, belonging to the same group.8In the course of 1998, Universal Music International Ltd agreed with its Czech partners, in particular the record company B&M spol. s r. o. (‘B&M’) and its shareholders, that one or more companies to be determined within Universal Music Group would acquire 70% of B&M’s shares. The parties also agreed that, in the course of 2003, the purchaser would acquire the remaining shares, at a price to be agreed during that final purchase. An advance on the sale price had already been paid. The agreement and the main points of that proposed transaction were set out in a letter of intent fixing the target sale price at five times B&M’s average annual profit.9The parties then negotiated a contract for the sale and delivery of 70% of B&M’s shares as well as a contract for the option to purchase the remaining 30% of the shares (‘the share purchase option’).10At the request of the legal department of Universal Music Group, the share purchase option agreement was drawn up by the Czech law firm Burns Schwartz International. Several versions of that contract were exchanged between that firm, the legal department of Universal Music Group and B&M’s shareholders.11During those negotiations, Universal Music was designated as the buyer under the contract for the share purchase option. It was signed on 5 November 1998 by Universal Music, B&M and its shareholders.12According to the referring court, the contract shows that an amendment suggested by the legal department of Universal Music Group was not fully reproduced by Mr Brož, associate at the law firm Burns Schwartz International, which led to a fivefold increase in the sale price compared with the price originally intended, a sale price which then had to be multiplied by the number of shareholders.13In the course of August 2003, Universal Music, in order to meet its contractual obligation to buy the remaining shares, calculated the price of those shares according to the method it had planned, and came up with a sum of CZK 10180281 (approximately EUR 313770). Relying on the calculation method laid down in the contract, B&M’s shareholders were claiming a sum of CZK 1003605620 (approximately EUR 30932520).14The dispute was brought before an arbitration board in the Czech Republic, the parties having agreed a settlement on 31 January 2005. In order to implement the settlement, Universal Music paid the sum of EUR 2654280.03 (‘the settlement amount’) for the remaining 30% of the shares by transfer from an account it held in the Netherlands. The transfer was made in favour of an account that B&M’s shareholders held in the Czech Republic.15Universal Music brought proceedings before the Rechtbank Utrecht (Utrecht District Court, Netherlands), pursuant to Article 5(3) of Regulation No 44/2001, seeking to hold jointly and severally liable Mr Schilling and Mr Schwartz, as previous partners of the law firm Burns Schwartz International, as well as Mr Brož, for the payment of EUR 2767861.25, together with interest and costs, damage which it claims to have suffered further to the negligence of Mr Brož in the course of the drafting of the contract for the share purchase option. The damage is alleged to have occurred as a result of the difference stemming from that negligence between the sale price initially intended and the settlement amount and also the costs Universal Music had to incur in the context of the arbitration procedure.16In support of its application, Universal Music claimed that it suffered the damage in Baarn (Netherlands), where it was established.17By decision of 27 May 2009, the Rechtbank Utrecht (Utrecht District Court) declined jurisdiction to deal with the dispute before it on the ground that the place where the damage Universal Music claims it suffered occurred, described by it as ‘purely direct financial damage’ arising in Baarn, could not be considered the place where the ‘harmful event’ occurred, within the meaning of Article 5(3) of Regulation No 44/2001, because of the lack of a sufficient connection to attribute jurisdiction to the courts of the Netherlands.18Universal Music appealed against that decision before the Gerechtshof Arnhem-Leeuwarden (Regional Court of Appeal of Arnhem-Leeuwarden, Netherlands) which, by a judgment of 15 January 2013, upheld the judgment given at first instance. That court considered that the very close connection between the request and the court seised of the dispute, which constitutes a criterion for the application of Article 5(3) of Regulation No 44/2001, was lacking in the case in point. Therefore, the mere fact that the settlement amount had to be paid by a company established in the Netherlands is insufficient to justify the attribution of jurisdiction to the courts of the Netherlands.19Universal Music brought an appeal in cassation against the judgment of the Gerechtshof Arnhem-Leeuwarden (Regional Court of Appeal of Arnhem-Leeuwarden, Netherlands) before the referring court. Mr Schilling and Mr Brož each separately brought a cross-appeal.20In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Must Article 5(3) of Regulation No 44/2001 be interpreted as meaning that the “place where the harmful event occurred” can be construed as being the place in a Member State where the damage occurred, if that damage consists exclusively of financial damage which is the direct result of unlawful conduct which occurred in another Member State?(2)If the answer to the first question is in the affirmative:(a)What criterion or what perspectives should the national court apply, when assessing its jurisdiction on the basis of Article 5(3) of Regulation No 44/2001, in order to determine whether in the present case there has been financial damage which is the direct result of unlawful conduct (“initial financial damage” or “direct financial damage”) or whether there has been financial damage which is the result of initial damage which occurred elsewhere or damage which has resulted from damage which occurred elsewhere (“consequential damage” or “derived financial damage”)?(b)What criterion or what perspectives should the national court apply, when assessing its jurisdiction on the basis of Article 5(3) of Regulation No 44/2001, in order to determine where, in the present case, the financial damage — whether it be direct or derived financial damage — occurred or is deemed to have occurred?(3)If the answer to the first question is in the affirmative, must Regulation No 44/2001 be interpreted as meaning that the national court which is required to determine whether it has jurisdiction pursuant to that regulation in the present case is obliged, when making its determination, to proceed on the basis of the relevant submissions of the claimant or applicant in that regard, or is it obliged also to take into account the arguments put forward by the defendant to refute those submissions?’ Consideration of the questions referred for a preliminary ruling The first question 21By its first question, the referring court asks, in essence, whether Article 5(3) of Regulation No 44/2001 must be interpreted as meaning, in circumstances such as those in the main proceedings, that the ‘place where the harmful event occurred’ can be construed as being the place, in a Member State, where the damage occurred, if that damage consists exclusively of financial damage which is the direct result of an unlawful act committed in another Member State.22In order to answer that question, it should be noted that, inasmuch as Regulation No 44/2001 replaces the Brussels Convention, the interpretation provided by the Court in respect of the provisions of that convention is valid also for those of that regulation, whenever the provisions of those Union instruments may be regarded as equivalent (judgments of 16 July 2009 in Zuid-Chemie, C‑189/08, EU:C:2009:475, paragraph 18, and of 10 September 2015 in Holterman Ferho Exploitatie and Others, C‑47/14, EU:C:2015:574, paragraph 38).23It should be observed that the provisions of Regulation No 44/2001 relevant to the present case are drafted in nearly identical terms to those of the Brussels Convention. In the light of such similarity, it is necessary to ensure, in accordance with recital 19 in the preamble to Regulation No 44/2001, continuity in the interpretation of those two instruments (see, inter alia, judgment in Zuid-Chemie, C‑189/08, EU:C:2009:475, paragraph 19).24According to the Court’s case-law, the concept of ‘matters relating to tort, delict or quasi-delict’ within the meaning of Article 5(3) of Regulation No 44/2001 covers all actions which seek to establish the liability of a defendant and do not concern ‘matters relating to a contract’ within the meaning of Article 5(1)(a) of that regulation (see judgment in Kolassa, C‑375/13, EU:C:2015:37, paragraph 44). In that regard, failing any evidence in the order for reference tending to show that a contractual relationship existed between the parties in the main proceedings, which it is nevertheless a matter for the referring court to verify, the Court must restrict its analysis to Article 5(3) of Regulation No 44/2001, to which the questions referred by the national court relate.25As the Advocate General noted at point 27 of his Opinion, it is only by way of derogation from the general principle laid down in Article 2(1) of Regulation No 44/2001, attributing jurisdiction to the courts of the Member State in which the defendant is domiciled, that Section 2 of Chapter II of that regulation makes provision for certain special jurisdictional rules, such as the rule laid down in Article 5(3) of that regulation. Insofar as the jurisdiction of the courts for the place where the harmful event occurred constitutes a rule of special jurisdiction, it must be interpreted independently and strictly, which does not permit an interpretation going beyond the cases expressly envisaged by that regulation (see, to that effect, judgments of 5 June 2014 in Coty Germany, C‑360/12, EU:C:2014:1318, paragraphs 43 to 45, and of 10 September 2015 in Holterman Ferho Exploitatie and Others, C‑47/14, EU:C:2015:574, paragraphs 72 and case-law cited).26According to settled case-law, the rule of special jurisdiction laid down in Article 5(3) of that regulation is based on the existence of a particularly close connecting factor between the dispute and the courts for the place where the harmful event occurred or may occur, which justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings (judgments of 5 June 2014 in Coty Germany, C‑360/12, EU:C:2014:1318, paragraphs 47, and of 10 September 2015 in Holterman Ferho Exploitatie and Others, C‑47/14, EU:C:2015:574, paragraph 73 and case-law cited).27In matters relating to tort, delict or quasi-delict, the courts for the place where the harmful event occurred or may occur are usually the most appropriate for deciding the case, in particular on the grounds of proximity of the dispute and ease of taking evidence (judgments of 21 May 2015 in CDC Hydrogen Peroxide, C‑352/13, EU:C:2015:335, paragraph 40, and of 10 September 2015 in Holterman Ferho Exploitatie and Others, C‑47/14, EU:C:2015:574, paragraph 74).28As for the notion of ‘place where the harmful event occurred or may occur’ in Article 5(3) of Regulation No 44/2001, as the Court has already held, those words are intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the applicant, in the courts for either of those places (see in relation to pollution, judgment of 30 November 1976 in Bier, 21/76, EU:C:1976:166, paragraphs 24 and 25; in relation to counterfeiting, judgment of 5 June 2014 in Coty Germany, C‑360/12, EU:C:2014:1318, paragraphs 46; in relation to company directors’ contracts, judgment of 10 September 2015 in Holterman Ferho Exploitatie and Others, C‑47/14, EU:C:2015:574, paragraph 72).29Although it is common ground between the parties to the main proceedings that the Czech Republic is the place of the event giving rise to the damage, they disagree as regards the determination of the place where the damage occurred.30It is clear from the request for a preliminary ruling that the contract entered into on 5 November 1998 between B&M and its shareholders, on the one hand, and Universal Music, on the other hand, was negotiated and signed in the Czech Republic. The rights and obligations of the parties were established in that Member State, including the obligation for Universal Music to pay a greater amount than originally provided for for the remaining 30% of shares. That contractual obligation, which the parties to the contract did not intend to create, arose in the Czech Republic.31The damage for Universal Music resulting from the difference between the intended sale price and the price mentioned in that contract became certain in the course of the settlement agreed between the parties before the arbitration board, in the Czech Republic, on 31 January 2005, the date on which the actual sale price was fixed. Therefore, the obligation to pay placed an irreversible burden on Universal Music’s assets.32Accordingly, the loss of some assets happened in the Czech Republic, the damage having occurred there. The mere fact that, to implement the settlement agreed before the arbitration board, in the Czech Republic, Universal Music paid the financial settlement by a transfer from a bank account it held in the Netherlands, is not such as to invalidate that finding.33The solution thereby stemming from the findings made in paragraphs 30 to 32 of the present judgment satisfies the requirements of predictability and certainty laid down by Regulation No 44/2001, since the conferral of jurisdiction on the Czech courts is justified for reasons of the sound administration of justice and the efficacious conduct of the proceedings.34In that context, it should be noted that the term ‘place where the harmful event occurred’ may not be construed so extensively as to encompass any place where the adverse consequences of an event, which has already caused damage actually arising elsewhere, can be felt (judgment of 19 September 1995 in Marinari, C‑364/93, EU:C:1995:289, paragraph 14).35In the wake of that case-law, the Court has also held that that expression does not refer to the place where the applicant is domiciled and where his assets are concentrated by reason only of the fact that he has suffered financial damage there resulting from the loss of part of his assets which arose and was incurred in another Member State (judgment of 10 June 2004 in Kronhofer, C‑168/02, EU:C:2004:364, paragraph 21).36It is true that in the case which gave rise to the judgment of 28 January 2015 in Kolassa (C‑375/13, EU:C:2015:37), the Court found, in paragraph 55 of its reasoning, jurisdiction in favour of the courts for the place of domicile of the applicant by virtue of where the damage occurred, if that damage materialises directly in the applicant’s bank account held with a bank established within the area of jurisdiction of those courts.37However, as the Advocate General stated in essence in points 44 and 45 of his Opinion in the present case, that finding is made within the specific context of the case which gave rise to that judgment, a distinctive feature of which was the existence of circumstances contributing to attributing jurisdiction to those courts.38Consequently, purely financial damage which occurs directly in the applicant’s bank account cannot, in itself, be qualified as a ‘relevant connecting factor’, pursuant to Article 5(3) of Regulation No 44/2001. In that respect, it should also be noted that a company such as Universal Music may have had the choice of several bank accounts from which to pay the settlement amount, so that the place where that account is situated does not necessarily constitute a reliable connecting factor.39It is only where the other circumstances specific to the case also contribute to attributing jurisdiction to the courts for the place where a purely financial damage occurred, that such damage could, justifiably, entitle the applicant to bring the proceedings before the courts for that place.40In the light of the foregoing considerations, the answer to the first question is that Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that, in a situation such as that in the main proceedings, the ‘place where the harmful event occurred’ may not be construed as being, failing any other connecting factors, the place in a Member State where the damage occurred, when that damage consists exclusively of financial damage which materialises directly in the bank account of the applicant and is the direct result of an unlawful act committed in another Member State.41In view of the reply given to the first question, there is no need to answer the second question. The third question 42By its third question, the referring court asks, in essence, whether, in the context of the determination of jurisdiction under Regulation No 44/2001, the court seised must assess all the evidence available to it, including, where appropriate, the arguments put forward by the defendant.43As the Advocate General stated in paragraph 52 of his Opinion, notwithstanding the fact that the referring court asked that question only if the answer to the first question were in the affirmative, there is an interest in answering it, given that that question relates to the general assessment of jurisdiction and not only to the question of whether financial damage is sufficient to determine jurisdiction.44In the particular context of Article 5(3) of Regulation No 44/2001, the Court has held that, at the stage at which jurisdiction is determined, the court seised does not examine either the admissibility or the substance of the application in the light of national law, but identifies only those points of connection with the State in which that court is sitting that support its claim to jurisdiction under that provision. Thus, the court seised may regard as established, solely for the purpose of ascertaining whether it has jurisdiction under that provision, the applicant’s claims as regards the conditions for liability in tort, delict or quasi-delict (see, to that effect, judgments of 25 October 2012 in Folien Fischer and Fofitec, C‑133/11, EU:C:2012:664, paragraph 50, and of 28 January 2015 in Kolassa, C‑375/13, EU:C:2015:37, paragraph 62 and case-law cited).45Although the national court seised is not obliged, if the defendant contests the applicant’s claims, to conduct a comprehensive taking of evidence at the stage of determining jurisdiction, the Court has held that both the objective of the sound administration of justice, which underlies Regulation No 44/2001, and respect for the independence of the national court in the exercise of its functions require the national court seised to be able to examine its international jurisdiction in the light of all the information available to it, including, where appropriate, the defendant’s arguments (judgement of 28 January 2015 in Kolassa, C‑375/13, EU:C:2015:37, paragraph 64).46On the basis of the foregoing, the answer to the third question asked is that, in the context of the determination of jurisdiction under Regulation No 44/2001, the court seised must assess all the evidence available to it, including, where appropriate, the arguments put forward by the defendant. Costs 47Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: 1. Article 5(3) of Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that, in a situation such as that in the main proceedings, the ‘place where the harmful event occurred’ may not be construed as being, failing any other connecting factors, the place in a Member State where the damage occurred, when that damage consists exclusively of financial damage which materialises directly in the applicant’s bank account and is the direct result of an unlawful act committed in another Member State. 2. In the context of the determination of jurisdiction under Regulation No 44/2001, the court seised must assess all the evidence available to it, including, where appropriate, the arguments put forward by the defendant. [Signatures]( *1 ) Language of the case: Dutch. | 7b8b6-367e677-4a92 | EN |
The UK can require recipients of child benefit and child tax credit to have a right to reside in the UK | 14 June 2016 ( *1 )‛Failure of a Member State to fulfil obligations — Coordination of social security systems — Regulation (EC) No 883/2004 — Article 4 — Equal treatment as regards access to social security benefits — Right of residence — Directive 2004/38/EC — National legislation under which child benefit and child tax credit are not granted to nationals of other Member States who do not have a right of lawful residence’In Case C‑308/14,ACTION under Article 258 TFEU for failure to fulfil obligations, brought on 27 June 2014, European Commission, represented by D. Martin and M. Wilderspin, acting as Agents,applicant,v United Kingdom of Great Britain and Northern Ireland, represented by M. Holt and J. Beeko, acting as Agents, and J. Coppel QC,defendant,THE COURT (First Chamber),composed of A. Tizzano, Vice-President of the Court, acting as President of the First Chamber, F. Biltgen, E. Levits, M. Berger (Rapporteur) and S. Rodin, Judges,Advocate General: P. Cruz Villalón,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 4 June 2015,after hearing the Opinion of the Advocate General at the sitting on 6 October 2015,gives the following Judgment 1By its application, the European Commission requests the Court to declare that, by the requirement that a claimant for child benefit or child tax credit must have a right to reside in the United Kingdom of Great Britain and Northern Ireland, that Member State has failed to comply with its obligations under Article 4 of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1, and corrigendum at OJ 2004 L 200, p. 1). Legal context EU law Regulation No 883/20042Article 1(j) and (z) of Regulation No 883/2004 contains the following definitions:‘For the purposes of this Regulation:...(j)“residence” means the place where a person habitually resides;(z)“family benefit” means all benefits in kind or in cash intended to meet family expenses, excluding advances of maintenance payments and special childbirth and adoption allowances mentioned in Annex I.’3Article 3(1)(j) of Regulation No 883/2004 provides:‘This Regulation shall apply to all legislation concerning the following branches of social security:family benefits.’4Article 4 of Regulation No 883/2004, headed ‘Equality of treatment’, provides:‘Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any Member State as the nationals thereof.’5Article 11(1) and (3) of Regulation No 883/2004 states:‘1. Persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. Such legislation shall be determined in accordance with this Title.3. Subject to Articles 12 to 16:(e)any other person to whom subparagraphs (a) to (d) do not apply shall be subject to the legislation of the Member State of residence, without prejudice to other provisions of this Regulation guaranteeing him/her benefits under the legislation of one or more other Member States.’6Article 67 of Regulation No 883/2004 provides:‘A person shall be entitled to family benefits in accordance with the legislation of the competent Member State, including for his/her family members residing in another Member State, as if they were residing in the former Member State. …’Regulation (EC) No 987/20097Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (OJ 2009 L 284, p. 1) provides in Article 11, headed ‘Elements for determining residence’:‘1. Where there is a difference of views between the institutions of two or more Member States about the determination of the residence of a person to whom the basic Regulation applies, these institutions shall establish by common agreement the centre of interests of the person concerned, based on an overall assessment of all available information relating to relevant facts, which may include, as appropriate:(a)the duration and continuity of presence on the territory of the Member States concerned;(b)the person’s situation, including:(i)the nature and the specific characteristics of any activity pursued, in particular the place where such activity is habitually pursued, the stability of the activity, and the duration of any work contract;(ii)his family status and family ties;(iii)the exercise of any non-remunerated activity;(iv)in the case of students, the source of their income;(v)his housing situation, in particular how permanent it is;(vi)the Member State in which the person is deemed to reside for taxation purposes.2. Where the consideration of the various criteria based on relevant facts as set out in paragraph 1 does not lead to agreement between the institutions concerned, the person’s intention, as it appears from such facts and circumstances, especially the reasons that led the person to move, shall be considered to be decisive for establishing that person’s actual place of residence.’Directive 2004/38/EC8Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda at OJ 2004 L 229, p. 35, OJ 2005 L 30, p. 27, and OJ 2005 L 197, p. 34) provides in Article 7, headed ‘Right of residence for more than three months’:‘1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they:are workers or self-employed persons in the host Member State; orhave sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State; or(c)—are enrolled at a private or public establishment, accredited or financed by the host Member State on the basis of its legislation or administrative practice, for the principal purpose of following a course of study, including vocational training; andhave comprehensive sickness insurance cover in the host Member State and assure the relevant national authority, by means of a declaration or by such equivalent means as they may choose, that they have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence; or(d)are family members accompanying or joining a Union citizen who satisfies the conditions referred to in points (a), (b) or (c).3. For the purposes of paragraph 1(a), a Union citizen who is no longer a worker or self-employed person shall retain the status of worker or self-employed person in the following circumstances:he/she is temporarily unable to work as the result of an illness or accident;he/she is in duly recorded involuntary unemployment after having been employed for more than one year and has registered as a job-seeker with the relevant employment office;he/she is in duly recorded involuntary unemployment after completing a fixed-term employment contract of less than a year or after having become involuntarily unemployed during the first twelve months and has registered as a job-seeker with the relevant employment office. In this case, the status of worker shall be retained for no less than six months;he/she embarks on vocational training. Unless he/she is involuntarily unemployed, the retention of the status of worker shall require the training to be related to the previous employment....’9By virtue of Article 14(1) to (3) of Directive 2004/38:‘1. Union citizens and their family members shall have the right of residence provided for in Article 6, as long as they do not become an unreasonable burden on the social assistance system of the host Member State.2. Union citizens and their family members shall have the right of residence provided for in Articles 7, 12 and 13 as long as they meet the conditions set out therein.In specific cases where there is a reasonable doubt as to whether a Union citizen or his/her family members satisfies the conditions set out in Articles 7, 12 and 13, Member States may verify if these conditions are fulfilled. This verification shall not be carried out systematically.3. An expulsion measure shall not be the automatic consequence of a Union citizen’s or his or her family member’s recourse to the social assistance system of the host Member State.’10Article 15(1) of Directive 2004/38 states:‘The procedures provided for by Articles 30 and 31 shall apply by analogy to all decisions restricting free movement of Union citizens and their family members on grounds other than public policy, public security or public health.’11Article 24 of Directive 2004/38, headed ‘Equal treatment’, provides:‘1. Subject to such specific provisions as are expressly provided for in the Treaty and secondary law, all Union citizens residing on the basis of this Directive in the territory of the host Member State shall enjoy equal treatment with the nationals of that Member State within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a Member State and who have the right of residence or permanent residence.2. By way of derogation from paragraph 1, the host Member State shall not be obliged to confer entitlement to social assistance during the first three months of residence or, where appropriate, the longer period provided for in Article 14(4)(b), nor shall it be obliged, prior to acquisition of the right of permanent residence, to grant maintenance aid for studies, including vocational training, consisting in student grants or student loans to persons other than workers, self-employed persons, persons who retain such status and members of their families.’ United Kingdom law Legislation relating to child benefit12Section 141 of the Social Security Contributions and Benefits Act 1992 (‘the 1992 Act’) provides:‘A person who is responsible for one or more children or qualifying young persons in any week shall be entitled, subject to the provisions of this Part of this Act, to a benefit … for that week in respect of the child or qualifying young person, or each of the children or qualifying young persons, for whom he is responsible.’13The benefit referred to in section 141 of the 1992 Act (‘child benefit’) is a benefit intended, in particular, to meet some of the costs borne by a person responsible for one or more children. A payment can be made for each child, a higher payment being made for the first child than for subsequent children. Child benefit is a universal non-contributory benefit the cost of which is met out of general taxation. However, higher-income child-benefit claimants are subject to a tax charge whereby they must pay back an amount up to the benefit received.14Section 146 of the 1992 Act provides:‘(1) No child benefit shall be payable in respect of a child or qualifying young person for a week unless he is in Great Britain in that week.(2) No person shall be entitled to child benefit for a week unless he is in Great Britain in that week.(3) Circumstances may be prescribed in which any person is to be treated for the purposes of subsection (1) or (2) above as being, or as not being, in Great Britain.’15Regulation 23 of the Child Benefit (General) Regulations 2006 (SI 2006/223) provides:‘(1)A person shall be treated as not being in Great Britain for the purposes of section 146(2) of [the 1992 Act] if he is not ordinarily resident in the United Kingdom.(2)Paragraph (1) does not apply to a Crown servant posted overseas or his partner.(3)A person who is in Great Britain as a result of his deportation, expulsion or other removal by compulsion of law from another country to Great Britain shall be treated as being ordinarily resident in the United Kingdom.(4)A person shall be treated as not being in Great Britain for the purposes of section 146(2) of [the 1992 Act] where he makes a claim for child benefit on or after 1st May 2004 and does not have a right to reside in the United Kingdom.’16Equivalent provisions exist in respect of claims for child benefit that are made in Northern Ireland. They are, first, section 142 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, a provision which requires the claimant to be ‘in Northern Ireland’ in the week in question, and secondly, regulation 27 of the Child Benefit (General) Regulations 2006, which sets out conditions similar to those laid down by regulation 23 thereof as regards claims made in Great Britain.Legislation relating to tax credits17The Tax Credits Act 2002 lays down a child tax credit regime. According to the explanation provided by the United Kingdom in its defence, that regime was introduced in order to consolidate support provided for families under the tax and benefit system, including several pre-existing forms of income-related support for children, within a single social benefit. The objective pursued by the enactment of the Tax Credits Act 2002 is said to be the combating of child poverty. Child tax credit is paid to a person or persons who are responsible for one or more children (section 8 of the Tax Credits Act 2002). It is a means-tested benefit, the amount of which decreases on a sliding scale once family income exceeds a threshold amount and which depends on the number of children in the family. This tax credit regime replaced various payments that were made to recipients of means-tested benefits on the basis of their being responsible for children. Child tax credit is a benefit the cost of which is met out of general taxation.18Section 3 of the Tax Credits Act 2002, headed ‘Claims’, provides:‘...A claim for a tax credit may be made—jointly by the members of a married couple or unmarried couple both of whom are aged at least sixteen and are in the United Kingdom, orby a person who is aged at least sixteen and is in the United Kingdom but is not entitled to make a claim under paragraph (a) (jointly with another).(7)Circumstances may be prescribed in which a person is to be treated for the purposes of this Part as being, or as not being, in the United Kingdom.’19Regulation 3 of the Tax Credits (Residence) Regulations 2003 (SI 2003/654) states:A person shall be treated as not being in the United Kingdom for the purposes of Part 1 of the [Tax Credits Act 2002] if he is not ordinarily resident in the United Kingdom.For the purposes of working tax credit, a person shall be treated as being ordinarily resident if he is exercising in the United Kingdom his rights as a worker pursuant to Council Regulation (EEC) No 1612/68 [of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475),] as amended by [Directive 2004/38], or Commission Regulation (EEC) No 1251/70 [of 29 June 1970 on the right of workers to remain in the territory of a Member State after having been employed in that State (OJ, English Special Edition 1970 (II), p. 402)] or he is a person with a right to reside in the United Kingdom pursuant to [Directive 2004/38].(5)A person shall be treated as not being in the United Kingdom for the purposes of Part 1 of the [Tax Credits Act 2002] where he—makes a claim for child tax credit … on or after 1st May 2004; anddoes not have a right to reside in the United Kingdom.’Immigration Act 197120Section 2 of the Immigration Act 1971 provides:‘Statement of right of abode in the United Kingdom(1) A person is under this Act to have the right of abode in the United Kingdom if—he is a British citizen; orhe is a Commonwealth citizen who—immediately before the commencement of the British Nationality Act 1981 was a Commonwealth citizen having the right of abode in the United Kingdom by virtue of section 2(1)(d) or section 2(2) of this Act as then in force; andhas not ceased to be a Commonwealth citizen in the meanwhile.…’ Pre-litigation procedure 21After receiving numerous complaints from nationals of other Member States resident in the United Kingdom that the competent United Kingdom authorities had refused to grant them certain social benefits on the ground that they did not have a right to reside in that Member State, the Commission sent a request for clarification to the United Kingdom in 2008.22The United Kingdom confirmed, by two letters dated 1 October 2008 and 20 January 2009, that, under national legislation, whilst the right to reside in the United Kingdom is conferred on all United Kingdom nationals, in certain circumstances nationals of other Member States are not considered to have a right to reside. According to the United Kingdom, that restriction is based on the concept of ‘right of residence’ within the meaning of Directive 2004/38 and on the limitations upon that right which were established by the directive, in particular the requirement that an economically inactive person must have sufficient financial resources to avoid becoming an unreasonable burden on the social assistance system of the host Member State.23On 4 June 2010 the Commission sent the United Kingdom a letter of formal notice regarding the provisions of its legislation under which, if claimants are to qualify for certain benefits, they must, as a precondition to their being considered habitually resident in the United Kingdom, have the right to reside there (‘the right to reside test’).24By letter of 30 July 2010, the United Kingdom replied to the letter of formal notice, stating that its national system was not discriminatory and that the right to reside test was justified as a proportionate measure to ensure that benefits were paid to persons sufficiently integrated in the United Kingdom.25On 29 September 2011 the Commission issued a reasoned opinion, to which the United Kingdom replied by letter dated 29 November 2011.26As the Commission was not satisfied with that reply, it brought the present action. The action Scope of the action 27In the light of the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565), the Commission decided to confine its action to child benefit and child tax credit (‘the social benefits at issue’), to the exclusion of the ‘special non-contributory cash benefits’ that were also the subject of the reasoned opinion and which, in accordance with that judgment of the Court, can be classified as ‘social assistance’ within the meaning of Article 7(1)(b) of Directive 2004/38. Substance Arguments of the parties28The main complaint put forward by the Commission against the United Kingdom is that, by requiring a person claiming the social benefits at issue to satisfy the right to reside test in order to be treated as habitually resident in that Member State, the United Kingdom has added a condition that does not appear in Regulation No 883/2004. That condition deprives persons who do not meet it of cover under the social security legislation of one of the Member States, cover which that regulation is intended to ensure.29According to the Commission, by virtue of Article 11(3)(e) of Regulation No 883/2004 an economically inactive person is, in principle, subject to the legislation of the Member State of residence. Article 1(j) defines ‘residence’, for the purposes of the regulation, as the place where a person habitually resides, the term ‘habitual residence’ having an autonomous meaning in EU law.30In the Commission’s submission, under the Court’s settled case-law, in particular paragraph 29 of the judgment of 25 February 1999 in Swaddling (C‑90/97, EU:C:1999:96), that term designates the place where the habitual centre of interests of the person concerned is to be found. In order to determine that centre of interests, account should be taken in particular of the worker’s family situation, the reasons which have led him to move, the length and continuity of his residence, whether he is in stable employment and his intention as it appears from all the relevant circumstances.31More specifically, that place is to be determined in the light of the factual circumstances and the situation of the persons concerned regardless of their legal status in the host Member State and of whether they have a right to reside in its territory on the basis, for example, of Directive 2004/38. Therefore, Regulation No 883/2004 confers on the concept of ‘residence’ a specific meaning which is independent of the meaning attributed to it in other measures of EU law or in national law and is not subject to any legal pre-conditions.32The purpose of Article 11 of Regulation No 883/2004 is not to harmonise Member States’ substantive law but, rather, to provide a system of conflict rules the effect of which is to divest the national legislature of the power to determine the ambit and the conditions for the application of its own national legislation on the matter. That system therefore has the aim, on the one hand, of ensuring that only one national system of social security is applicable and, on the other hand, of guaranteeing that persons covered by Regulation No 883/2004 are not left without social security cover because there is no legislation which is applicable to them.33In the alternative, the Commission submits that, by imposing a condition for entitlement to certain social security benefits which its own nationals automatically meet, such as the right to reside test, the United Kingdom has created a situation involving direct discrimination against nationals of other Member States and has therefore infringed Article 4 of Regulation No 883/2004.34According to the Commission, in the course of the pre-litigation procedure the United Kingdom changed position, contending initially that the right to reside test is merely one of the matters to be checked in order to determine whether a person is habitually resident in the United Kingdom and subsequently that it is a condition distinct from habitual residence, which, though discriminatory, is justified.35The Commission, relying on the Advocate General’s Opinion in the case which gave rise to the judgment of 13 April 2010 in Bressol and Others (C‑73/08, EU:C:2010:181), submits that the right to reside test constitutes direct discrimination based on nationality, given that it involves a condition that applies only to foreign nationals because United Kingdom nationals who are resident in the United Kingdom satisfy it automatically.36Furthermore, even if it were to be accepted that the right to reside test results in indirect discrimination only, as the United Kingdom asserts, the latter, according to the Commission, has not put forward any argument to show that the unequal treatment in question is appropriate and proportionate to the aim pursued by the national legislation concerned of ensuring that there is a genuine link between the benefit claimant and the host Member State.37In addition, the Commission contests the argument put forward by the United Kingdom that economically inactive persons should not become a burden on the welfare system of the host Member State unless they have a sufficient degree of connection to that State. The Commission accepts that a host Member State may wish to ensure that the link between the benefit claimant and that State exists, but, in the case of social security benefits, it is the EU legislature itself, through Regulation No 883/2004, which has established the means of testing whether that link exists — that is to say, in this instance, by means of the habitual residence criterion — and the Member States may make no changes to the provisions of that regulation or couple them with additional requirements.38In its defence, the United Kingdom contests the main complaint put forward by the Commission by relying, in particular, on the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565, point 44), in which the Court, after rejecting arguments identical to those which the Commission puts forward in the present instance, held that ‘there is nothing to prevent, in principle, the granting of social security benefits to Union citizens who are not economically active being made conditional upon those citizens meeting the necessary requirements for obtaining a legal right of residence in the host Member State’.39The United Kingdom explains that the Court also held that Article 70(4) of Regulation No 883/2004, which, like Article 11 thereof, lays down a ‘conflict rule’ the aim of which is to prevent the concurrent application of a number of national legislative systems to the same situation and to ensure that persons covered by the regulation are not left without social security cover because there is no legislation that is applicable to them, is not intended to lay down the conditions creating the right to the social benefits in question, namely special non-contributory cash benefits, so that it is in principle for the legislation of each Member State to lay down those conditions. In the United Kingdom’s submission, the same reasoning applies to the conflict rule in Article 11 of Regulation No 883/2004, which performs the same function as Article 70(4) thereof — which relates specifically to special non-contributory cash benefits — for the purpose of determining the legislation to which the claimant is subject.40As regards the complaint relied on by the Commission in the alternative alleging direct discrimination, referred to in paragraph 33 of the present judgment, the United Kingdom maintains that this complaint is not set out in the reasoned opinion which the Commission sent to it during the pre-litigation procedure and appears for the first time in the application, so that the Court should declare it inadmissible.41Furthermore, the United Kingdom submits that the Court has already held on numerous occasions that it is lawful to require economically inactive EU nationals to demonstrate that they have a right of residence as a condition for qualifying for social security benefits and that in Directive 2004/38 the EU legislature expressly authorises host Member States to make their intervention subject to such a condition, in order that those nationals do not become an unreasonable burden on the social assistance system of those States. The principle of equal treatment referred to in Article 4 of Regulation No 883/2004 must be read in the light of that requirement.42Finally, the United Kingdom observes that the right to reside test is only one of the three cumulative conditions which must be satisfied in order to demonstrate that the claimant ‘is in’ the United Kingdom, for the purposes of the national legislation. The other two conditions, namely presence in the territory and ordinary residence, may or may not be satisfied regardless of the claimant’s nationality, so that a United Kingdom national will not automatically satisfy the condition of ‘being in’ the United Kingdom, which confers entitlement to the social benefits at issue.43The United Kingdom acknowledges that those conditions are more easily satisfied by its own nationals than by nationals of other Member States and that the measure at issue is indirectly discriminatory. However, relying on the grounds set out by the Court in paragraph 44 of the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565), which fall within a similar context, the United Kingdom submits that the measure is objectively justified by the need to protect public finances, given that the social benefits at issue are funded not from recipients’ contributions but from taxation. Nor is there any indication that the measure is disproportionate for the purpose of attaining the objective pursued, in accordance with the guidance set out in paragraphs 71 to 78 of that judgment of the Court.44The Commission submits in its reply, as regards the main complaint, that the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565) concerned only the application of Directive 2004/38 to special non-contributory cash benefits, which have characteristics of both social security and social assistance, whereas the present case relates to two family benefits within the meaning of Article 3(1)(j) of Regulation No 883/2004, that is to say, pure social security benefits, to which Directive 2004/38 does not apply. In this connection, the Commission notes that, in paragraph 44 of that judgment, there is a problem of divergent translation between the English and German versions, as the former uses the words ‘social security benefits’ whereas in the latter, which is the authentic version, it is the wider concept of ‘Sozialleistungen’ (‘social benefits’) that is used.45In addition, the Commission contends that the United Kingdom legislation, instead of encouraging the free movement of Union citizens, which is the underlying purpose of the EU legislation on the coordination of social security systems, impedes it by introducing a barrier to that freedom, which takes the form of discrimination on the basis of nationality. That has the consequence that a person may not be entitled to the social benefits at issue either in his State of origin, in which he is no longer habitually resident, or in the host State if he has no right of residence there.46Finally, so far as concerns the complaint relied upon in the alternative, the Commission contests the United Kingdom’s interpretation of the conflict rule laid down in Article 11 of Regulation No 883/2004, because it follows from the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565) that the principle that Member States may legitimately impose restrictions in order to prevent a Union citizen hosted by them becoming an unreasonable burden on their social assistance system is restricted to social assistance and does not extend to social security benefits.47Furthermore, as regards any justification of the condition under the right to reside test, the Commission maintains that the United Kingdom does not put forward any matter relating to the condition’s proportionality in the light of the objective pursued by the national legislation. The right to reside test is an automatic mechanism that systematically and ineluctably bars claimants who do not satisfy it from being paid benefits, regardless of their personal situation and of the extent to which they have paid tax and social security contributions in the United Kingdom. That mechanism therefore does not permit the complex individual assessment which the Court requires of host Member States according to the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565).48In its rejoinder, the United Kingdom emphasises that its national law is applicable under the conflict rule laid down by Regulation No 883/2004 and that a person habitually resident in its territory may, despite everything, not be entitled to the social benefits at issue.49As regards a divergence between the language versions of the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565), the United Kingdom submits that the term ‘social benefits’ is broader than ‘social security benefits’ and that, whilst, in that judgment, the Court used the first term instead of the second in the German and French versions, that broadens the scope of the principle laid down in paragraph 44 of the judgment, which also covers social security benefits. According to the United Kingdom, that judgment does not in any way indicate that the reasoning set out by the Court is confined exclusively to special non-contributory cash benefits, a point which was indeed confirmed by the judgment of 11 November 2014 in Dano (C‑333/13, EU:C:2014:2358).50The United Kingdom further submits that it is difficult to conceive that Member States are not required to pay special non-contributory cash benefits, which guarantee a basic, minimum level of income, to Union citizens with no right of residence, but would, on the other hand, be required to pay them benefits such as the social benefits at issue and which go beyond the guarantee of a basic, minimum level of income, given that the latter benefits, being funded from taxation, also have the potential to impose an unreasonable burden on the public finances of the host Member State, within the meaning of the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565).51The United Kingdom adds that the social benefits at issue display in any event some characteristics of social assistance, even though this is not a condition that must be satisfied in order for the principle established in the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565), which concerns ‘social benefits’ generally, to be applicable also to the social benefits at issue. In the United Kingdom’s submission, the Court confirmed in the judgment of 11 November 2014 in Dano (C‑333/13, EU:C:2014:2358) that only economically inactive Union citizens whose residence complies with the conditions in Article 7(1)(b) of Directive 2004/38 can claim a right of equal treatment with nationals so far as concerns access to social benefits.52Finally, the United Kingdom submits that, in contending for the first time in its reply that the right to reside test is ‘an automatic mechanism’ which does not permit the circumstances of the particular case to be assessed as required by the Court in the judgment of 19 September 2013 in Brey (C‑140/12, EU:C:2013:565), the Commission puts forward a new complaint, which must on that basis, in accordance with Article 127 of the Rules of Procedure of the Court of Justice, be declared inadmissible.53The United Kingdom also submits that the view of how the right to reside test operates, as set out by the Commission in this new complaint, is incorrect. In practice, the administrative department responsible for the social benefits at issue takes into account, amongst other data, information provided by the Department for Work and Pensions in order to determine whether a person has claimed social assistance. That information enables the administrative department to decide whether the claimant has a right of residence in the United Kingdom and whether he is therefore eligible for the social benefits at issue. When it is not possible to decide whether the claimant has a right of residence in the United Kingdom, an individual assessment of his personal circumstances is carried out, including in relation to the social security contributions which he has paid and to whether he is actively seeking work and has a genuine chance of being engaged.Findings of the Court– Classification of the social benefits at issue54In order to examine the merits of the present action for failure to fulfil obligations, it is necessary to determine, as a preliminary point, whether the social benefits at issue must be classified as ‘social assistance’ or as ‘social security benefits’.55It should be recalled that this action for failure to fulfil obligations concerns child benefit and child tax credit, that is to say, two cash benefits which have the objective of helping to cover family expenses and are funded not from recipients’ contributions but from compulsory taxation.56Neither of those benefits has been entered by the United Kingdom in Annex X to Regulation No 883/2004 and it is not in dispute between the parties that they are not special non-contributory cash benefits within the meaning of Article 70 of that regulation.57As regards child benefit, under section 141 of the 1992 Act a person who is responsible for at least one child is entitled, subject to the provisions of that Act, to a weekly benefit for each child.58It is undisputed that child benefit is a social benefit intended, in particular, to meet some of the costs that must be borne by a person responsible for one or more children. In principle, it is a universal benefit which is granted to any person claiming it. However, claimants having a high income must repay, in the context of their tax obligations, an amount up to the benefit received.59As regards child tax credit, it is also undisputed that it is a cash benefit paid to any person responsible for one or more children, the amount of which varies according to family income, the number of such children and other factors concerning the individual situation of the family concerned. Despite its name, child tax credit is a sum which the competent authority pays periodically to the recipients and which seems to be associated with their status as taxpayers. This benefit replaced a range of additional payments which were made to persons claiming various income-linked maintenance allowances in respect of children for whom they were responsible, and the overall aim of which was to combat child poverty.60According to the Court’s case-law, benefits which are granted automatically to families that meet certain objective criteria relating in particular to their size, income and capital resources, without any individual and discretionary assessment of personal needs, and which are intended to meet family expenses must be regarded as social security benefits (see to this effect, in particular, judgments of 16 July 1992 in Hughes, C‑78/91, EU:C:1992:331, paragraph 22, and of 10 October 1996 in Hoever and Zachow, C‑245/94 and C‑312/94, EU:C:1996:379, paragraph 27).61The result of applying the criteria referred to in the previous paragraph of the present judgment to the social benefits at issue is that the latter must be classified as ‘social security benefits’, as referred to in Article 3(1)(j) of Regulation No 883/2004, read in conjunction with Article 1(z) thereof.– The main complaint62By the main complaint relied upon by it in support of the present action, the Commission criticises the United Kingdom for making grant of the social benefits at issue conditional on the claimant meeting the right to reside test in addition to the test, laid down in Article 11(3)(e) of Regulation No 883/2004, read in conjunction with Article 1(j) thereof, that he ‘habitually resides’ in the territory of the host Member State. According to the Commission, examination of the right to reside test thus gives rise to an additional condition for which no provision is made.63Article 11(3)(e) of Regulation No 883/2004, upon which the Commission relies, sets out a ‘conflict rule’ for determining the national legislation applicable to payment of the social security benefits listed in Article 3(1) of the regulation — which include family benefits — that may be claimed by persons other than those to whom Article 11(3)(a) to (d) applies, that is to say, in particular, economically inactive persons.64Article 11(3)(e) of Regulation No 883/2004 is intended not only to prevent the concurrent application of a number of national legislative systems to a given situation and the complications which may ensue, but also to ensure that persons covered by that regulation are not left without social security cover because there is no legislation which is applicable to them (see, in particular, judgment of 19 September 2013 in Brey, C‑140/12, EU:C:2013:565, paragraph 40 and the case-law cited).65On the other hand, that provision as such is not intended to lay down the conditions creating the right to social security benefits. It is in principle for the legislation of each Member State to lay down those conditions (see, to this effect, judgments of 19 September 2013 in Brey, C‑140/12, EU:C:2013:565, paragraph 41 and the case-law cited, and of 11 November 2014 in Dano, C‑333/13, EU:C:2014:2358, paragraph 89).66It cannot therefore be inferred from Article 11(3)(e) of Regulation No 883/2004, read in conjunction with Article 1(j) thereof, that EU law precludes a national provision under which entitlement to social benefits, such as the social benefits at issue, is conditional upon the claimant having a right to reside lawfully in the Member State concerned.67Regulation No 883/2004 does not set up a common scheme of social security, but allows different national social security schemes to exist and its sole objective is to ensure the coordination of those schemes in order to guarantee effective exercise of freedom of movement for persons. It thus allows different schemes to continue to exist, creating different claims on different institutions against which the claimant possesses direct rights by virtue either of national law alone or of national law supplemented, where necessary, by EU law (judgment of 19 September 2013 in Brey, C‑140/12, EU:C:2013:565, paragraph 43).68It is clear from the Court’s case-law that there is nothing to prevent, in principle, the grant of social benefits to Union citizens who are not economically active being made subject to the requirement that those citizens fulfil the conditions for possessing a right to reside lawfully in the host Member State (see to this effect, in particular, judgments of 19 September 2013 in Brey, C‑140/12, EU:C:2013:565, paragraph 44, and of 11 November 2014 in Dano, C‑333/13, EU:C:2014:2358, paragraph 83).69The conflict rule laid down in Article 11(3)(e) of Regulation No 883/2004 is accordingly, contrary to the Commission’s submissions, not distorted by the right to reside test, as that test forms an integral part of the conditions for grant of the social benefits at issue.70That being so, the argument relied upon by the Commission that a person who does not satisfy the conditions that must be met in order to be eligible for the social benefits at issue is in a situation in which neither United Kingdom law nor any other law is applicable to him cannot succeed.71Such a situation is not different from the situation of a claimant who does not satisfy for any other reason one of the conditions that must be met in order to be eligible for a family benefit and who, on that basis, is not in fact entitled to such a benefit in any Member State. That would be due not to the fact that no law of a Member State is applicable to him, but to the fact that he does not satisfy the substantive conditions laid down by the Member State whose legislation is applicable to him by virtue of the conflict rules.72In this connection, it should also be noted that, from its reply to the reasoned opinion onwards, the United Kingdom has consistently disputed that it has sought to make verification that the claimant is habitually resident in its territory subject to the condition in particular that he has a right to reside lawfully there. As the Advocate General has observed, in essence, in point 54 of his Opinion, there is nothing in the documents before the Court showing that the United Kingdom intended to link the right to reside test to the checking of habitual residence for the purposes of Article 11(3)(e) of Regulation No 883/2004. As the United Kingdom submitted at the hearing, legality of the claimant’s residence in its territory is a substantive condition which economically inactive persons must meet in order to be eligible for the social benefits at issue.73In the light of the foregoing considerations, since the Commission has not shown that the right to reside test introduced by the United Kingdom legislation affects, in itself, Article 11(3)(e) of Regulation No 883/2004, read in conjunction with Article 1(j) thereof, the main complaint put forward by the Commission must be dismissed.– The complaint in the alternative74In the alternative, if it were to be held that verification of whether the right to reside test is met is not, as such, incorporated into verification of whether the person claiming the social benefits at issue is habitually resident in the United Kingdom and that the checking of whether that test is met is carried out autonomously, the Commission contends that the introduction of the right to reside test in the national legislation inevitably results in direct, or at least indirect, discrimination, prohibited by Article 4 of Regulation No 883/2004.75As stated in paragraph 68 of the present judgment, there is nothing to prevent, in principle, the grant of social benefits to Union citizens who are not economically active being made subject to the substantive condition that those citizens meet the necessary requirements for possessing a right to reside lawfully in the host Member State.76Nevertheless, a host Member State which, for the purpose of granting social benefits, such as the social benefits at issue, requires a national of another Member State to be residing in its territory lawfully commits indirect discrimination.77Indeed, it is clear from settled case-law of the Court that a provision of national law must be regarded as indirectly discriminatory if it is intrinsically liable to affect nationals of other Member States more than nationals of the host State and there is a consequent risk that it will place the former at a particular disadvantage (see, to this effect, judgment of 13 April 2010 in Bressol and Others, C‑73/08, EU:C:2010:181, paragraph 41).78In the present action, the national legislation requires persons claiming the benefits at issue to possess a right to reside in the United Kingdom. Thus, that legislation gives rise to unequal treatment between United Kingdom nationals and nationals of the other Member States as such a residence condition is more easily satisfied by United Kingdom nationals, who more often than not are habitually resident in the United Kingdom, than by nationals of other Member States, whose residence, by contrast, is generally in a Member State other than the United Kingdom (see, by analogy, judgment of 13 April 2010 in Bressol and Others, C‑73/08, EU:C:2010:181, paragraph 45).79In order to be justified, such indirect discrimination must be appropriate for securing the attainment of a legitimate objective and cannot go beyond what is necessary to attain that objective (see to this effect, in particular, judgment of 20 June 2013 in Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 46).80In that regard, it is clear from the Court’s case-law that the need to protect the finances of the host Member State justifies in principle the possibility of checking whether residence is lawful when a social benefit is granted in particular to persons from other Member States who are not economically active, as such grant could have consequences for the overall level of assistance which may be accorded by that State (see to this effect, in particular, judgments of 20 September 2001 in Grzelczyk, C‑184/99, EU:C:2001:458, paragraph 44; of 15 March 2005 in Bidar, C‑209/03, EU:C:2005:169, paragraph 56; of 19 September 2013 in Brey, C‑140/12, EU:C:2013:565, paragraph 61; and of 11 November 2014 in Dano, C‑333/13, EU:C:2014:2358, paragraph 63).81So far as concerns the proportionality of the right to reside test, as the Advocate General has observed in point 92 of his Opinion, verification by the national authorities, in connection with the grant of the social benefits at issue, that the claimant is not unlawfully present in their territory must be regarded as a situation involving checks on the lawfulness of the residence of Union citizens, under the second subparagraph of Article 14(2) of Directive 2004/38, and must therefore comply with the requirements set out in the directive.82It should be recalled that, under Article 14(2) of Directive 2004/38, Union citizens and their family members are to enjoy the right of residence referred to in Articles 7, 12 and 13 of the directive as long as they meet the conditions set out therein. In specific cases, where there is a reasonable doubt as to whether a Union citizen or his family members satisfy the conditions set out in those articles, Member States may verify if those conditions are fulfilled. Article 14(2) provides that this verification is not to be carried out systematically.83It is apparent from the observations made by the United Kingdom at the hearing before the Court that, for each of the social benefits at issue, the claimant must provide, on the claim form, a set of data which reveal whether or not there is a right to reside in the United Kingdom, those data being checked subsequently by the authorities responsible for granting the benefit concerned. It is only in specific cases that claimants are required to prove that they in fact enjoy a right to reside lawfully in United Kingdom territory, as declared by them in the claim form.84It is thus evident from the information available to the Court that, contrary to the Commission’s submissions, the checking of compliance with the conditions laid down by Directive 2004/38 for existence of a right of residence is not carried out systematically and consequently is not contrary to the requirements of Article 14(2) of the directive. It is only in the event of doubt that the United Kingdom authorities effect the verification necessary to determine whether the claimant satisfies the conditions laid down by Directive 2004/38, in particular those set out in Article 7, and, therefore, whether he has a right to reside lawfully in United Kingdom territory, for the purposes of the directive.85In this context, the Commission, which has the task of proving the existence of the alleged infringement and of providing the Court with the evidence necessary for it to determine whether the infringement is made out (see, in particular, judgment of 23 December 2015 in Commission v Greece, C‑180/14, EU:C:2015:840, paragraph 60 and the case-law cited), has not provided evidence or arguments showing that such checking does not satisfy the conditions of proportionality, that it is not appropriate for securing the attainment of the objective of protecting public finances or that it goes beyond what is necessary to attain that objective.86It follows from the foregoing that the fact that, under the national legislation at issue in the present action, for the purpose of granting the social benefits at issue the competent United Kingdom authorities are to require that the residence in their territory of nationals of other Member States who claim such benefits must be lawful does not amount to discrimination prohibited under Article 4 of Regulation No 883/2004.87Consequently, the action must be dismissed in its entirety. Costs 88Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the United Kingdom has applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs.On those grounds, the Court (First Chamber) hereby: 1. Dismisses the action; 2. Orders the European Commission to pay the costs. [Signatures]( *1 ) Language of the case: English. | 14216-8af57c6-473b | EN |
Advocate General Wathelet considers that a child in a reconstituted family may be regarded as the child of the stepparent for the purposes of a cross-frontier social advantage | 15 December 2016 ( *1 )‛Reference for a preliminary ruling — Freedom of movement of persons — Worker’s rights — Equal treatment — Social advantages — Financial aid for the pursuit of higher education studies — Requirement of a parent-child relationship — Concept of ‘child’ — Child of a spouse or registered partner — Contribution towards the maintenance of that child’In Joined Cases C‑401/15 to C‑403/15,THREE REQUESTS for a preliminary ruling under Article 267 TFEU from the Cour administrative (Higher Administrative Court, Luxembourg), made by decisions of 22 July 2015, received at the Court on 24 July 2015, in the proceedings Noémie Depesme (C‑401/15), Saïd Kerrou (C‑401/15), Adrien Kauffmann (C‑402/15), Maxime Lefort (C‑403/15)v Ministre de l’Enseignement supérieur et de la Recherche, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, A. Prechal, A. Rosas (Rapporteur), C. Toader and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: A. Calot Escobar,after considering the observations submitted on behalf of:—Ms Depesme and Mr Kerrou, by P. Peuvrel, avocat,Mr Kauffmann, by S. Jacquet, avocat,Mr Lefort, by S. Coï, avocat,the Luxembourg Government, by D. Holderer, acting as Agent, and P. Kinsch, avocat,the European Commission, by D. Martin and M. Kellerbauer, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 9 June 2016,gives the following Judgment 1These requests for a preliminary ruling concern the interpretation of Article 45 TFEU and Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1).2The requests have been made in three sets of proceedings between Ms Noémie Depesme and Mr Saïd Kerrou, Mr Adrien Kauffman, and Mr Maxime Lefort, and the Ministre de l’Enseignement supérieur et de la Recherche (Minister for Higher Education and Research, Luxembourg; ‘the Minister’), concerning the Minister’s refusal to grant Ms Depesme, Mr Kauffman and Mr Lefort State financial aid for the pursuit of higher education studies for the academic year 2013/2014. Legal context EU law 3Under Article 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475):‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and, should he become unemployed, reinstatement or re-employment.2. He shall enjoy the same social and tax advantages as national workers.…’4Article 10 of Regulation No 1612/68 provided:‘1. The following shall, irrespective of their nationality, have the right to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State:(a)his spouse and their descendants who are under the age of 21 years or are dependants;5Article 10 of Regulation No 1612/68 was repealed by Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ 2004 L 158, p. 77, and corrigenda in OJ 2004 L 229, p. 35, and OJ 2005 L 197, p. 34).6Recitals 3 and 5 to Directive 2004/38 state:‘(3)Union citizenship should be the fundamental status of nationals of the Member States when they exercise their right of free movement and residence. It is therefore necessary to codify and review the existing Community instruments dealing separately with workers, self-employed persons, as well as students and other inactive persons in order to simplify and strengthen the right of free movement and residence of all Union citizens.…(5)The right of all Union citizens to move and reside freely within the territory of the Member States should, if it is to be exercised under objective conditions of freedom and dignity, be also granted to their family members, irrespective of nationality. For the purposes of this Directive, the definition of “family member” should also include the registered partner if the legislation of the host Member State treats registered partnership as equivalent to marriage.’7Article 2 of that directive provides:‘For the purposes of this Directive:(2)“family member” means:the spouse;(b)the partner with whom the Union citizen has contracted a registered partnership, on the basis of the legislation of a Member State, if the legislation of the host Member State treats registered partnerships as equivalent to marriage and in accordance with the conditions laid down in the relevant legislation of the host Member State;(c)the direct descendants who are under the age of 21 or are dependants and those of the spouse or partner as defined in point (b);8Regulation No 1612/68 was repealed and replaced, with effect from 16 June 2011, by Regulation No 492/2011. Article 7 of Regulation No 492/2011 reproduced the wording of Article 7 of Regulation No 1612/68.9Recital 1 of Directive 2014/54/EU of the European Parliament and of the Council of 16 April 2014 on measures facilitating the exercise of rights conferred on workers in the context of freedom of movement for workers (OJ 2014 L 128, p. 8) is worded as follows:‘The free movement of workers is a fundamental freedom of Union citizens and one of the pillars of the internal market in the Union enshrined in Article 45 of the Treaty on the Functioning of the European Union (TFEU). Its implementation is further developed by Union law aiming to guarantee the full exercise of rights conferred on Union citizens and the members of their family. “Members of their family” should be understood as having the same meaning as the term defined in point (2) of Article 2 of Directive [2004/38/EC], which applies also to family members of frontier workers.’10Article 1 of that directive provides:‘This Directive lays down provisions which facilitate the uniform application and enforcement in practice of the rights conferred by Article 45 TFEU and by Articles 1 to 10 of Regulation [No 492/2011]. This Directive applies to Union citizens exercising those rights and to members of their family (“Union workers and members of their family”).’11According to Article 2 of that directive:‘1. This Directive applies to the following matters, as referred to in Articles 1 to 10 of Regulation [No 492/2011], in the area of freedom of movement for workers:access to social and tax advantages;2. The scope of this Directive is identical to that of Regulation [No 492/2011].’ Luxembourg law 12State financial aid for higher education studies was governed, at the time of the facts in the main proceedings, by the loi du 22 juin 2000 concernant l’aide financière de l’État pour études supérieures (Law of 22 June 2000 on State financial aid for higher education studies) (Mémorial A 2000, p. 1106), as amended by the Law of 19 July 2013 (Mémorial A 2013, p. 3214) (‘the amended Law of 22 June 2000’).13The Law of 19 July 2013, which was adopted to give effect to the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411) and which made amendments to the Law of 22 June 2000 relating solely to the academic year 2013/2014, inserted Article 2 bis into the Law of 22 June 2000.14Article 2 bis of the amended Law of 22 June 2000 was worded as follows:‘A student not residing in the Grand Duchy of Luxembourg may also receive financial aid for higher education studies where that student is the child of an employed or self-employed person who is a Luxembourg national or a national of the European Union or of another State party to the Agreement on the European Economic Area[, of 2 May 1992 (OJ 1992 L 1, p. 3)] or of the Swiss Confederation, is employed or pursuing an activity in Luxembourg, and has been employed or has pursued an activity in Luxembourg for a continuous period of at least five years at the time the student makes the application for financial aid for higher education studies. Employment in Luxembourg must be for at least half the normal working hours applicable within the undertaking, under statute or by virtue of any collective labour agreement that may be in force. A self-employed worker is required to have been affiliated to the social security system in the Grand Duchy of Luxembourg under Article 1(4) of the Social Security Code for a continuous period of five years prior to the application for financial aid for higher education studies.’15The amended Law of 22 June 2000 was repealed by the loi du 24 juillet 2014 concernant l’aide financière de l’État pour études supérieures (Law of 24 July 2014 on State financial aid for higher education studies) (Mémorial A 2014, p. 2188).16Article 3 of the Law of 24 July 2014 provides:‘A student or pupil, as defined in Article 2, hereinafter referred to as a “student”, who fulfils one of the following conditions may benefit from State financial aid for higher education studies:a student not resident in the Grand Duchy of Luxembourg who:is the child of a worker who is a Luxembourg national or a national of the European Union or of another State party to the Agreement on the European Economic Area or of the Swiss Confederation employed or pursuing an activity in the Grand Duchy of Luxembourg at the time when the student’s application for financial aid for higher education studies is made, provided that the worker is continuing to contribute to the maintenance of the student and that the worker has been employed or has pursued an activity in the Grand Duchy of Luxembourg for at least five years at the time of the student’s application for financial aid for higher education studies, within a reference period of seven years counting back from the date of the application for financial aid for higher education studies or, by way of derogation, the person retaining worker status met the aforementioned criterion of five years out of seven when he or she finished work. The disputes in the main proceedings and the question referred for a preliminary ruling 17The disputes in the main proceedings concern the conditions for the granting of financial aid from the Luxembourg State, for the academic year 2013/2014, to non-Luxembourg-resident students for the pursuit of higher education studies, laid down by the amended Law of 22 June 2000.18In accordance with that law, the financial aid in question is granted to students who are not resident in Luxembourg on the condition, first, that the student is the child of a worker, whether employed or self-employed, who is a Luxembourg national or an EU national and, second, that the worker has been employed or pursuing an activity in Luxembourg for a continuous period of at least five years at the time the application for financial aid is made.19It is common ground that Ms Depesme and Mr Kauffmann, French nationals residing in France, and Mr Lefort, a Belgian national living in Belgium, applied to the Luxembourg authorities for State financial aid for higher education studies – in France in the case of Ms Depesme and Mr Kauffmann, and in Belgium in the case of Mr Lefort – for the academic year 2013/2014.20By letters dated, respectively, 26 September, 17 October and 12 November 2013, the Minister rejected those applications on the ground that Ms Depesme, Mr Kauffmann and Mr Lefort did not satisfy the conditions laid down by the amended Law of 22 June 2000.21It is clear from the three orders for reference that the students in question each lodged an application for aid asserting, in this connection, only their stepfathers’ status as an employed person in Luxembourg. The Minister then took the view that Ms Depesme, Mr Kauffmann and Mr Lefort could not be regarded as ‘children’ of a frontier worker, in accordance with the condition laid down in Article 2 bis of the amended Law of 22 June 2000, given that only their stepfathers worked in Luxembourg.22On 20 December 2013, Ms Depesme brought an action before the tribunal administratif de Luxembourg (Administrative Court, Luxembourg) for annulment of the Minister’s decision refusing her application. Her stepfather, Mr Kerrou, relying on his status as an employed person in Luxembourg and claiming to provide maintenance for Ms Depesme, intervened voluntarily in the proceedings brought by her.23On 29 January and 25 April 2014, Mr Lefort and Mr Kauffmann each brought a similar action against the decisions refusing their applications before the same court.24By judgments of 5 January 2015, the tribunal administratif (Administrative Court) declared the applications of Ms Depesme, Mr Kauffmann and Mr Lefort admissible but unfounded.25Ms Depesme, Mr Kerrou, Mr Kauffmann and Mr Lefort lodged appeals against those judgments before the referring court.26Ms Depesme and Mr Kerrou state, inter alia, that Mr Kerrou, who has been a frontier worker in Luxembourg for 14 years, married Ms Depesme’s mother on 24 May 2006 and that, since then, all three have lived together in the same household. Mr Kerrou contributes to the maintenance of his spouse’s child, including in relation to her higher education studies, and was also in receipt of Luxembourg family benefits for his stepdaughter prior to the commencement of her higher education studies.27Mr Kauffmann states that his parents have been separated since 2003, they divorced on 20 June 2005, and his mother was awarded sole custody of the couple’s children. He indicates that, on 10 March 2007, his mother married Mr Kiefer, a frontier worker in Luxembourg, and Mr Kauffmann has lived with him under the same roof since that time. Mr Kiefer has provided for Mr Kauffmann’s maintenance and education, and has received Luxembourg family benefits in respect of Mr Kauffmann.28Mr Lefort states that his father is deceased, that his mother married Mr Terwoigne, a frontier worker in Luxembourg for over five years, and that, since that marriage, he has lived with his mother and stepfather in the same household. Mr Terwoigne contributes to the financial cost of running the household and also contributes to Mr Lefort’s higher education costs.29The Luxembourg State contends that the judgments of the tribunal administratif (Administrative Court) of 5 January 2015 should be upheld and submits that Ms Depesme, Mr Kauffmann and Mr Lefort are not the children of their stepfathers within the legal meaning of the term.30The Cour administrative (Higher Administrative Court, Luxembourg) notes that the requirement of a parent-child relationship, laid down by Article 2 bis of the amended Law of 22 June 2000, was introduced in order to take account of the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411).31According to the referring court, the resolution of the three disputes pending before it depends on the interpretation of the concept of ‘child’ of a frontier worker, as referred to in Article 2 bis of the amended Law of 22 June 2000, in the light of that judgment and the observance of the principle of non-discrimination provided for under Article 7(2) of Regulation No 492/2011. The referring court accordingly states that ‘the relevant criterion highlighted by [that judgment] is the actual degree of attachment of the non-resident student, who has applied for financial aid for higher education studies from the Grand Duchy of Luxembourg, with the society or the labour market of Luxembourg’. In a situation where that connection does not directly originate from the student, on the ground that he is not resident, but from the frontier worker of reference, the referring court is uncertain as to whether a strictly legal or a more economic concept of the parent-child relationship between the student seeking State financial aid for higher education studies and the frontier worker is to be adopted. According to the referring court, those two interpretations are a priori conceivable. If the concept of a ‘child’ for the purposes of the amended Law of 22 June 2000 refers to that of a dependent child, the further question would then arise as to whether the extent to which the frontier worker provides for the student has any impact. The Cour administrative (Higher Administrative Court) specifies that that question relates to a comparison of the level of provision for the student by the frontier worker, on the one hand, and by his parent(s) on the other. Finally, the referring court is uncertain as regards the significance of intensity of the relationship between the frontier worker and one of the parents of the student.32In those circumstances, the Cour administrative (Higher Administrative Court) decided to stay the proceedings and to refer the following question, which is worded in identical terms in Cases C‑401/15 to C‑403/15, apart from an addition in Case C‑403/15 which is noted in brackets, to the Court for a preliminary ruling:‘In order properly to meet the requirements of non-discrimination under Article 7(2) of [Regulation No 492/2011], together with Article 45(2) TFEU [Case C‑403/15: “against the background of Article 33(1) of the Charter of Fundamental Rights of the European Union together with, if appropriate, Article 7 of the Charter”], when taking into account the actual degree of attachment of a non-resident student, who has applied for financial aid for higher education studies, with the society and with the labour market of Luxembourg, being the Member State in which a frontier worker has been employed or has carried out his activity in the conditions referred to in Article 2 bis of the [amended Law of 22 June 2000], in direct consequence of the judgment of the Court of Justice of 20 June 2013 [Giersch and Others, C‑20/12, EU:C:2013:411],should the requirement that the student be the “child” of that frontier worker be taken to mean that he must be the frontier worker’s “direct descendant in the first degree whose relationship with his parent is legally established”, with the emphasis being placed on the child-parent relationship established between the student and the frontier worker, which is supposed to underlie the abovementioned attachment, orshould the emphasis be placed on the fact that the frontier worker “continues to provide for the student’s maintenance” without necessarily being connected to the student through a legal child-parent relationship, in particular where a sufficient link of communal life can be identified, of such a kind as to establish a connection between the frontier worker and the student’s parent with whom the child-parent relationship is legally established?From the latter perspective, where the contribution, by definition non-compulsory, of the frontier worker is not exclusive but made in parallel with that of the parent or parents connected with the student through a legal child-parent relationship, and therefore in principle under a legal duty to maintain the student, must that contribution satisfy certain criteria as regards its substance?’ Consideration of the question referred 33By its question, the referring court asks, in essence, whether Article 45 TFEU and Article 7(2) of Regulation No 492/2011 must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in Article 7(2) of Regulation No 492/2011, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means only a child who has a child-parent relationship with that worker or also a child of the spouse or registered partner of that worker. In the latter case, the referring court is uncertain, in essence, about the impact of the extent of the contribution by the frontier worker to the maintenance of that child on that child’s right to receive financial aid with a view to pursuing higher education studies, such as the financial aid at issue in the main proceedings.34As a preliminary point, it must be recalled that Article 45(2) TFEU provides that freedom of movement for workers is to entail the abolition of any discrimination based on nationality as regards employment, remuneration and other conditions of work and employment (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 34).35The Court has held that Article 7(2) of Regulation No 1612/68, the wording of which was reproduced in Article 7(2) of Regulation No 492/2011, is the particular expression, in the specific area of the grant of social advantages, of the principle of equal treatment enshrined in Article 45(2) TFEU, and must be accorded the same interpretation as that provision (see judgments of 23 February 2006, Commission v Spain, C‑205/04, not published, EU:C:2006:137, paragraph 15; of 11 September 2007, Hendrix, C‑287/05, EU:C:2007:494, paragraph 53; and of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 35).36According to Article 7(2) of Regulation No 1612/68 and Article 7(2) of Regulation No 492/2011, a worker who is a national of a Member State is to enjoy, in the territory of another Member State, the same social and tax advantages as national workers.37The Court has repeatedly held that, in relation to Article 7(2) of Regulation No 1612/68, that provision equally benefits both migrant workers resident in a host Member State and frontier workers employed in that Member State while residing in another Member State (see judgments of 18 July 2007, Geven, C‑213/05, EU:C:2007:438, paragraph 15; of 14 June 2012, Commission v Netherlands, C‑542/09, EU:C:2012:346, paragraph 33; of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 37; and of 14 December 2016, Bragança Linares Verruga and Others, C‑238/15, EU:C:2016:949, paragraph 39).38Furthermore, according to settled case-law, assistance granted for maintenance and education in order to pursue university studies evidenced by a professional qualification constitutes a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 (judgments of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 38, and of 14 December 2016, Bragança Linares Verruga and Others, C‑238/15, EU:C:2016:949, paragraph 40 and the case-law cited).39The Court has also found that study finance granted by a Member State to the children of workers constitutes, for the migrant worker, a social advantage within the meaning of Article 7(2) of Regulation No 1612/68, where the worker continues to support the child (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 39 and the case-law cited).40Moreover, according to the case-law of the Court, the members of a migrant worker’s family are the indirect recipients of the equal treatment granted to the worker under Article 7(2) of Regulation No 1612/68. Since the grant of funding for studies to a child of a migrant worker constitutes a social advantage for the migrant worker, that child may himself rely on that provision in order to obtain that funding if, under national law, such funding is granted directly to the student (judgment of 20 June 2013, Giersch and Others, C‑20/12, EU:C:2013:411, paragraph 40 and the case-law cited).41In the cases in the main proceedings, actions have been brought before the referring court by non-Luxembourg-resident students to the refusal by that Member State to grant those students State financial aid for higher education studies. Those students submit that they qualify for that aid on account of their family ties to a frontier worker who, while not being their father, has become the spouse of their mother after their parents’ divorce or, in the case of Mr Lefort, after the death of his father.42It is therefore necessary to examine whether the term ‘child of a migrant worker’ in the sense in which it is used in the case-law of the Court relating to Article 7(2) of Regulation No 1612/68, which is applicable to Article 7(2) of Regulation No 492/2011, and in particular in the judgment of 20 June 2013, Giersch and Others (C‑20/12, EU:C:2013:411), includes the children of the spouse or recognised partner under national law of that worker.43In that regard, it is important to note that Article 10(1)(a) of Regulation No 1612/68, repealed by Directive 2004/38, provided that the spouse of that worker ‘and their descendants who are under the age of 21 years or are dependants’, irrespective of their nationality, had the right to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State.44The Court interpreted that provision as meaning that both the descendants of that worker and those of his spouse had the right to install themselves with that worker. To give a restrictive interpretation to that provision, to the effect that only the children common to the migrant worker and his spouse enjoyed that right, would have failed to have regard to the aim of integration of members of the families of migrant workers pursued by Regulation No 1612/68 (see, to that effect, judgment of 17 September 2002, Baumbast and R, C‑413/99, EU:C:2002:493, paragraph 57).45Furthermore, the Court has previously held that the members of a worker’s family, who qualify indirectly for the equal treatment accorded to migrant workers by Article 7 of Regulation No 1612/68, were family members within the meaning of Article 10 of Regulation No 1612/68 (see, to that effect, judgment of 18 June 1987, Lebon, 316/85, EU:C:1987:302, paragraph 12).46It must be stated that Article 10 of Regulation No 1612/68 was repealed by Directive 2004/38 on the ground that the EU legislature wished to codify, in one legislative text, the right to family reunification for workers, self-employed persons, students and other inactive persons, in order to simplify and strengthen that right.47In the context of that reform, the legislature again restated, in Article 2(2)(c) of that directive, the concept of ‘family member’, as it has been defined by the Court in relation to Regulation No 1612/68, specifying that it is to mean the direct descendants of that citizen who are under the age of 21 years or are dependants, ‘and the direct descendants of his spouse or partner’ recognised under national law.48As the Advocate General observed in point 43 of his Opinion, the judgment of 20 June 2013, Giersch and Others, (C‑20/12, EU:C:2013:411) and the term ‘child’ used therein are part of the jurisprudential and legislative context set out in paragraphs 42 to 47 above.49It is therefore clear that the term ‘child of a migrant worker’ in the sense used in the case-law of the Court in relation to Article 7(2) of Regulation No 1612/68 must be interpreted as including the children of the spouse or recognised partner under national law of that worker.50The Luxembourg Government’s argument that Directive 2004/38 relates only to the right of Union citizens and members of their family freely to move about and reside in Member States, and not to the right of frontier workers to benefit from the same social advantages as national workers provided for in Article 7(2) of Regulation No 492/2011, does not cast doubt on that interpretation.51It follows from the development of EU legislation, as set out in paragraphs 46 and 47 above, and from the fact that Article 7(2) of Regulation No 492/2011 simply reproduced the wording of Article 7(2) of Regulation No 1612/68 without amendment, that the family members able to benefit indirectly from equal treatment under Regulation No 492/2011 are those family members within the meaning of Directive 2004/38. There is nothing to suggest that the EU legislature intended to establish, as regards family members, a watertight distinction between the scope of Directive 2004/38 and the scope of Regulation No 492/2011, under which family members of a Union citizen, within the meaning of Directive 2004/38, would not necessarily be the same persons as the family members of that citizen when he is considered in his capacity as a worker.52Moreover, the fact that the term ‘child of a frontier worker’, who is able to benefit indirectly from the principle of equality enshrined in Article 7(2) of Regulation No 492/2011, should be interpreted in the light of the concept of ‘family members’ as defined by the case-law of the Court in relation to Regulation No 1612/68 and restated in Article 2 of Directive 2004/38, is borne out by Directive 2014/54, the deadline for transposition into national law of which expired on 21 May 2016.53It is clear from recital 1 of Directive 2014/54, under which the free movement of workers ‘is further developed by Union law aiming to guarantee the full exercise of rights conferred on Union citizens and the members of their family’, that the expression ‘“members of their family” should be understood as having the same meaning as the term defined in point (2) of Article 2 of Directive [2004/38], which applies also to family members of frontier workers’.54Under Article 2(2) of Directive 2014/54, the scope of that directive is identical to that of Regulation No 492/2011. Under to Article 1 of Directive 2014/54, the subject matter of that directive moreover consists of provisions to facilitate the uniform application and enforcement in practice of the rights conferred by Article 45 TFEU and by Articles 1 to 10 of Regulation No 492/2011.55As long as they meet the definition of ‘family member’, within the meaning of Article 2(2)(c) of Directive 2004/38, of a frontier worker who himself has sufficient links with the society of the host Member State, it is therefore clear that the children of the spouse or partner recognised by the host Member State of that frontier worker may also be considered to be the children of that frontier worker for the purposes of qualifying for the right to receive financial aid for the pursuit of higher education studies, which is considered to be a social advantage within the meaning of Article 7(2) of Regulation No 492/2011.56The referring court also asks, in essence, what impact the extent of the contribution, by the frontier worker, to the maintenance of his spouse’s child, has on the right of that child to receive financial aid such as that at issue in the main proceedings.57In that regard, it is clear from the case-law referred to in paragraph 39 above that, where the migrant worker continues to support the child, the study finance granted by the Member State to that child constitutes a social advantage for that worker within the meaning of Article 7(2) of Regulation No 1612/68. It should be noted further that Article 10 of Regulation No 1612/68, repealed by Directive 2004/38, provided that a worker’s ’spouse and their descendants who are under the age of 21 years or are dependants’ had a right, irrespective of their nationality, to install themselves with a worker who is a national of one Member State and who is employed in the territory of another Member State. The EU legislature, by Directive 2004/38, also takes the view that ‘direct descendants [of a Union citizen] who are under the age of 21 or are dependants and those of the spouse or [recognised] partner’ are to be regarded as being ‘family members’ within the meaning of Article 2(2)(c) of that directive.58The Court took the view that the status of dependent member of a family, within the meaning of Article 10 of Regulation No 1612/68, did not presuppose a right to maintenance. If that were the case, the composition of the family that Article 10 provided for would depend on national legislation, which varies from one State to another, and that would lead to a lack of uniformity in the application of EU law. The Court therefore interpreted Article 10(1) and (2) of Regulation No 1612/68 as meaning that the status of dependent member of a family is the result of a factual situation. The person having that status is a member of the family who is supported by the worker and there is no need to determine the reasons for recourse to the worker’s support or to raise the question whether the person concerned is able to support himself by taking up paid employment. That interpretation is dictated by the principle that the provisions establishing the free movement of workers, which constitutes one of the foundations of the Union, must be construed broadly (see, to that effect, judgment of 18 June 1987, Lebon, 316/85, EU:C:1987:302, paragraphs 21 to 23).59However, as the Advocate General noted in point 67 of his Opinion, such an interpretation applies also where the contribution of a frontier worker to the maintenance of the children of his spouse or recognised partner is at issue.60It must therefore be held, in the present case, that the status of dependent member of a family is the result of a factual situation, which it is for the Member State and, if appropriate, the national courts to assess. The status of a family member of a frontier worker who is dependent on that worker may, when it relates to the case of a child of a spouse or recognised partner of that worker, be evidenced by objective factors, such as a joint household shared by that worker and the student, and it is not necessary to determine the reasons for the frontier worker’s contribution to the maintenance of the student or make a precise estimation of its amount.61However, the Luxembourg Government submits that it would be difficult to require the competent authorities to find out, in each case, whether and to what extent the frontier worker, who is the step-parent of a student applying for the financial aid at issue in the main proceedings, contributes to the maintenance of that student.62First, it must be stated that the EU legislature takes the view that the children are, in any case, presumed to be dependent until the age of 21 years, as is apparent, in particular, from Article 2(2)(c) of Directive 2004/38.63Second, it is apparent from the documents before the Court that the Luxembourg legislature itself made the grant of State financial aid for higher education studies, pursuant to Article 3 of the Law of 24 July 2014, which is applicable from the academic year 2014/2015, subject to the condition that the worker ‘is continuing to contribute to the maintenance of the student’. The Luxembourg Government cannot therefore reasonably maintain that a condition of contribution to the maintenance of the student cannot be verified by the authorities.64In the light of all the above considerations, the answer to the question referred is that Article 45 TFEU and Article 7(2) of Regulation No 492/2011 must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in the latter provision, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means not only a child who has a child-parent relationship with that worker, but also a child of the spouse or registered partner of that worker, where that worker supports that child. The latter requirement is the result of a factual situation, which it is for the national authorities and, if appropriate, the national courts, to assess, and it is not necessary for them to determine the reasons for that contribution or make a precise estimation of its amount. Costs 65Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) hereby rules: Article 45 TFEU and Article 7(2) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union must be interpreted as meaning that a child of a frontier worker, who is able to benefit indirectly from the social advantages referred to in the latter provision, such as study finance granted by a Member State to the children of workers pursuing or who have pursued an activity in that Member State, means not only a child who has a child-parent relationship with that worker, but also a child of the spouse or registered partner of that worker, where that worker supports that child. The latter requirement is the result of a factual situation, which it is for the national authorities and, if appropriate, the national courts, to assess, and it is not necessary for them to determine the reasons for that contribution or make a precise estimation of its amount. [Signatures]( *1 ) * Language of the case: French. | 78b55-44b9bf2-46a7 | EN |
The Commission may require Member States to remove all plants capable of being infected by the Xylella fastidiosa bacterium, even when there are no symptoms of infection, when such plants are in the vicinity of plants already affected by that bacterium | 9 June 2016 ( *1 )‛References for a preliminary ruling — Protection of plant health — Directive 2000/29/EC — Protection against the introduction into and spread within the European Union of organisms harmful to plants or plant products — Implementing Decision (EU) 2015/789 — Measures to prevent the introduction into and the spread within the Union of Xylella fastidiosa (Wells and Raju) — Article 6(2)(a) — Obligation to remove host plants immediately, regardless of their health status, within a radius of 100 meters around the infected plants — Validity — Article 16(3) of Directive 2000/29 — Principle of proportionality — Precautionary principle — Obligation to state reasons — Right to compensation’In Joined Cases C‑78/16 and C‑79/16,REQUESTS for a preliminary ruling under Article 267 TFEU from the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio, Italy), made by decisions of 16 December 2015, received at the Court on 10 February 2016, in the proceedings Giovanni Pesce and Others (C‑78/16), Cesare Serinelli and Others (C‑79/16)v Presidenza del Consiglio dei Ministri (C‑79/16), Presidenza del Consiglio dei Ministri — Dipartimento della Protezione Civile, Commissario Delegato Per Fronteggiare il Rischio Fitosanitario Connesso alla Diffusione della Xylella nel Territorio della Regione Puglia, Ministero delle Politiche Agricole Alimentari e Forestali, Regione Puglia, THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, A. Arabadjiev, C.G. Fernlund, S. Rodin and E. Regan (Rapporteur), Judges,Advocate General: Y. Bot,Registrar: L. Carrasco Marco, Administrator,having regard to the decision of the President of the Court of 13 April 2016 to apply the accelerated procedure to these cases pursuant to Article 23a of the Statute of the Court of Justice of the European Union and Article 105(1) of the Rules of Procedure of the Court,having regard to the written procedure and further to the hearing on 4 May 2016,after considering the observations submitted on behalf of:—Mr Pesce and Others, by G. Pesce, avvocato,Mr Serinelli and Others, by M. Alterio and M. Tagliaferro, avvocati,the Italian Government, by G. Palmieri, acting as Agent, assisted by S. Fiorentino and G. Caselli, avvocati dello Stato,the Greek Government, by E. Leftheriotou, A. Vassilopoulou and G. Kanellopoulos, acting as Agents,the European Commission, by F. Moro, I. Galindo Martín, D. Bianchi and A. Sauka, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 12 May 2016,gives the following Judgment 1These requests for a preliminary ruling concern the validity of Article 6(2) to (4) of Commission Implementing Decision (EU) 2015/789 of 18 May 2015 as regards measures to prevent the introduction into and the spread within the Union of Xylella fastidiosa (Wells et al.) (OJ 2015 L 125, p. 36).2The references have been made in proceedings between several owners of agricultural holdings situated in the province of Brindisi, in the Puglia Region (Italy), used for growing olive trees of the plant species Olea europaea L., and the Presidenza del Consiglio dei Ministri (Office of the Italian Prime Minister) (Case C‑79/16), the Presidenza del Consiglio dei Ministri — Dipartimento della Protezione Civile (Office of the Italian Prime Minister — Department of Civil Protection (Italy)), the Commissario Delegato Per Fronteggiare il Rischio Fitosanitario Connesso alla Diffusione della Xylella nel Territorio della Regione Puglia (Commissioner for addressing the phytosanitary risk connected with the spread of Xylella in the territory of the Puglia Region (Italy)) (‘the Commissioner’), the Ministero delle Politiche Agricole Alimentari e Forestali (Ministry of Agriculture, Food and Forestry (Italy)) and the Regione Puglia (Puglia Region (Italy)) concerning the measures taken by those authorities in order to eradicate the bacterium Xylella fastidiosa (Wells and Raju) (‘Xylella’) from that region and to prevent its spread. Legal context EU law Directive 2000/293Under Article 16 of Council Directive 2000/29/EC of 8 May 2000 on protective measures against the introduction into the Community of organisms harmful to plants or plant products and against their spread within the Community (OJ 2000 L 169, p. 1), as amended by Council Directive 2002/89/EC of 28 November 2002 (OJ 2002 L 355, p. 45) (‘Directive 2000/29’):‘1. Each Member State shall immediately notify in writing the Commission and the other Member States of the presence in its territory of any of the harmful organisms listed in Annex I, Part A, Section I …It shall take all necessary measures to eradicate, or if that is impossible, inhibit the spread of the harmful organisms concerned. It shall inform the Commission and the other Member States of the measures taken.2. Each Member State shall immediately notify in writing the Commission and the other Member States of the actual or suspected appearance of any harmful organisms not listed in Annex I or in Annex II whose presence was previously unknown in its territory. ……3. In cases referred to in paragraphs 1 and 2, the Commission shall examine the situation as soon as possible within the Standing Committee on Plant Health. On-site investigations may be made under the authority of the Commission and in accordance with the relevant provisions of Article 21. The necessary measures based on a pest risk analysis or a preliminary pest risk analysis in cases referred to in paragraph 2 may be adopted, including those whereby it may be decided whether measures taken by the Member States should be rescinded or amended, under the procedure laid down in Article 18(2). The Commission shall follow the development of the situation and, under the same procedure, shall amend or repeal, as that development requires, the said measures. Until a measure has been adopted under the aforesaid procedure, the Member State may maintain the measures that it has employed.5. If the Commission has not been informed of measures taken under paragraphs 1 or 2, or if it considers the measures taken to be inadequate, it may, pending the meeting of the Standing Committee on Plant Health, take interim protective measures based on a preliminary pest risk analysis to eradicate, or if that is not possible, inhibit the spread of the harmful organism concerned. …’4Annex I, Part A, of Directive 2000/29 lists, as appears from its heading, ‘harmful organisms whose introduction into, and spread within, all Member States shall be banned’. Under the heading ‘harmful organisms not known to occur in any part of the Community and relevant for the entire Community’, Section I(b) of that part, headed ‘Bacteria’, contains paragraph 1, worded as follows: ‘Xylella …’.Implementing Decisions 2014/87/EU and 2014/497/EU5Commission Implementing Decision 2014/87/EU of 13 February 2014 as regards measures to prevent the spread within the Union of (Xylella) (OJ 2014 L 45, p. 29), which was adopted on the basis of Directive 2000/29 and, in particular, of the fourth sentence of Article 16(3) thereof, sets out the following in recitals 2, 3 and 7:‘(2)On 21 October 2013 Italy informed the other Member States and the Commission of the presence of [Xylella (‘the specified organism’)] in its territory, in two separate areas of the province of Lecce, in the Region Puglia. Subsequently two further separate outbreaks have been identified in the same province. The presence of the specified organism was confirmed in respect of several plants species, including Olea europaea L., ..., showing leaf scorching and rapid decline symptoms. ...(3)On 29 October 2013 the Region Puglia took emergency measures for the prevention and eradication of the specified organism … in accordance with Article 16(1) of Directive 2000/29 ...(7)In view of the nature of the specified organism, it is likely to spread rapidly and widely. In order to ensure that the specified organism does not spread to the rest of the Union, it is necessary to take measures immediately. Until more specific information becomes available concerning host range, vectors, pathways and risk reduction options, it is appropriate to prohibit movement [of plants for planting] out of areas possibly containing infected plants …’6Under that initial implementing decision, the Commission therefore prohibited ‘the movement, out of the province of Lecce, Region Puglia, Italy, of plants for planting’ (Article 1), provided for official annual surveys to be conducted with a view to detecting the presence of the bacterium Xylella (Article 2) and required the Member States to ensure that where anyone becomes aware of the presence of that bacterium or has reason to suspect such a presence, that person is to notify the competent authority within ten days (Article 3).7That decision was repealed by Commission Implementing Decision 2014/497/EU of 23 July 2014 as regards measures to prevent the spread within the Union of Xylella … (OJ 2014 L 219, p. 56).8Under that second implementing decision, which has the same legal basis as the first, the Commission restricted the movement of plants which are host plants of the bacterium Xylella and established various conditions for their introduction into the Union where they originate from third countries where that bacterium is known to be present (Articles 2 and 3). In addition, in order to eradicate the bacterium Xylella and to prevent its spread, the Commission imposed on the Member States, where necessary, ‘demarcated areas’ consisting of an ‘infected zone’ and a ‘buffer zone’, in which the Member States were, inter alia, to remove all plants infected by the bacterium Xylella, as well as all plants showing symptoms indicating possible infection by that bacterium and all plants which have been identified as likely to be infected (Article 7 and Annex III, Section 2(a)).Implementing Decision 2015/7899Implementing Decision 2014/497 was repealed by Implementing Decision 2015/789, which, adopted under the same legal basis as the first two implementing decisions, includes the following relevant recitals:‘(1)In view of the audits carried out by the Commission and notifications of new outbreaks by the Italian authorities the measures provided for in Commission Implementing Decision [2014/87] should be strengthened.(2)The European Food Safety Authority (EFSA …) published on 6 January 2015 a Scientific Opinion on the risk to plant health posed by Xylella … in the EU territory, with the identification and evaluation of risk reduction options … In addition, on 20 March 2015, [EFSA] published a scientific report on the categorisation of those plants for planting, excluding seeds, according to the risk of introduction of the specified organism. The report categorises the plant species which have been so far confirmed to be susceptible to the European and non-European isolates of the specified organism by natural infection, experimental infection via vector transmission, or unknown type of infection (hereinafter “specified plants”). That list is longer than the list set out in Implementing Decision [2014/497]. Therefore, it is appropriate that this Decision applies to a longer list of species than [that] decision. However, in order to ensure proportionality some measures should only apply to plant species susceptible to the European isolates of the specified organism (hereinafter “host plants”). In this regard, while the EFSA opinion of 6 January 2015 points to the uncertainty as regards the range of plant species since research is still ongoing, the results of the investigations carried out by the Italian authorities have confirmed the capacity of certain specified plants to be host plants.(4)In order to eradicate the specified organism and prevent its further spread in the rest of the Union, Member States should establish demarcated areas consisting of an infected zone and a buffer zone, and apply eradication measures. ...In the province of Lecce, the specified organism is already widely established. Where evidence shows that in certain parts of that area the specified organism has been present for more than 2 years and it is no longer possible to eradicate it, the responsible official body should have the possibility to apply containment measures, instead of eradication measures, to protect at least production sites, plants with particular cultural, social or scientific value, as well as the border with the rest of the Union territory. The containment measures should aim to minimise the amount of bacterial inoculum in that area and keep the vector population at the lowest level possible.(8)In order to ensure effective protection of the rest of the Union territory from the specified organism, taking into account the possible spread of the specified organism by natural and human assisted means other than the movement of the specified plants for planting, it is appropriate to establish a surveillance zone immediately outside the buffer zone surrounding the infected zone of the province of Lecce.(17)The measures provided for in this Decision are in accordance with the opinion of the Standing Committee on Plants, Animals, Food and Feed.’10Under Article 1 of Implementing Decision 2015/789, headed ‘Definitions’:‘For the purposes of this Decision, the following definitions shall apply:(a)“specified organism” means European and non-European isolates of [Xylella];(b)“specified plants” means all plants for planting, other than seeds, belonging to the genera or species listed in Annex I;(c)“host plants” means all specified plants belonging to the genera or species listed in Annex II;…’11Article 4 of that decision, headed ‘Establishment of demarcated areas’, provides:‘1. Where the presence of the specified organism is confirmed, the Member State concerned shall without delay demarcate an area in accordance with paragraph 2, hereinafter “demarcated area”.2. The demarcated area shall consist of an infected zone and a buffer zone.12Under Article 6 of the decision, headed ‘Eradication measures’:‘1. The Member State having established the demarcated area referred to in Article 4 shall take in that area the measures as set out in paragraphs 2 to 11.2. The Member State concerned shall, within a radius of 100 m around the plants which have been tested and found to be infected by the specified organism, immediately remove:host plants, regardless of their health status;plants known to be infected by the specified organism;plants showing symptoms indicating possible infection by that organism or suspected to be infected by that organism.3. The Member State concerned shall sample and test the specified plants within a radius of 100 m around each of the infected plants, in accordance with the International Standard for Phytosanitary Measures ISPM No 31 …4. The Member State concerned shall carry out appropriate phytosanitary treatments prior to the removal of plants referred to in paragraph 2 against the vectors of the specified organism and plants that may host those vectors. Those treatments may include, as appropriate, removal of plants.5. The Member State concerned shall, in situ or in a nearby location designated for this purpose within the infected zone, destroy the plants and parts of plants referred to in paragraph 2, in a manner ensuring that the specified organism is not spread.13Article 7 of Implementing Decision 2015/789, headed ‘Containment measures’, provides:‘1. By way of derogation from Article 6, only in the province of Lecce, the responsible official body of the Member State concerned may decide to apply containment measures, as set out in paragraphs 2 to 6 ...2. The Member State concerned shall immediately remove at least all plants which have been found to be infected by the specified organism if they are situated in any of the following locations:14Article 8(1) of that decision, headed ‘Establishment of a surveillance zone in Italy’ provides that the Member States are to establish a surveillance zone with a width of at least 30 km adjacent to the demarcated area covering the infected zone of the province of Lecce.15Annexes I and II to Implementing Decision 2015/789, which contain, under their respective headings, the ‘list of plants known to be susceptible to the European and non-European isolates of the specified organism (“specified plants”)’ and the ‘list of plants known to be susceptible to the European isolates of the specified organism (“host plants”)’, refer to Olea europaea L. Italian law 16The decreto del Ministero delle Politiche Agricole Alimentari e Forestali n. 2180 con cui sono state disposte nuove misure di emergenza per la prevenzione, il controllo e l’eradicazione di Xylella fastidiosa (Decree of the Ministry of Agriculture, Food and Forestry No 2180 laying down new emergency measures for the prevention, control and eradication of Xylella fastidiosa) of 19 June 2015 (‘Decree of 19 June 2015’) implemented Implementing Decision 2015/789. Articles 8 and 9 of that decree correspond, in essence, to Articles 6 and 7 of that decision.17On 30 September 2015, the Commissioner adopted an intervention plan also laying down the measures provided for in that decree. The actions in the main proceedings and the questions referred for a preliminary ruling 18In a number of decisions notified in July and October 2015, the Servizio Agricoltura della Regione Puglia (Puglia Region Department for Agriculture) ordered the applicants in the main proceedings to cut down the olive trees on the agricultural holdings they owned which were deemed to be infected by the bacterium Xylella and all the host plants within a radius of 100 metres of the infected plants. Those decisions also provided that, in the event of failure to comply, the applicants in the main proceedings would be charged the costs of eradicating that bacterium as carried out by the competent authorities, independently of the imposition of an administrative fine.19The applicants in the main proceedings brought an action before the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio, Italy) for the annulment of those decisions and of the administrative acts adopted by the competent public authorities of the Puglia Region and the Commissioner for the purposes of curbing the spread of the bacterium Xylella in the territory of that region, including, inter alia, the Decree of 19 June 2015 and the intervention plan of 30 September 2015.20According to the applicants, those various national measures are unlawful, since Implementing Decision 2015/789, on which they are based, is itself inconsistent with the principle of proportionality and the precautionary principle and since that decision is vitiated by a failure to state reasons.21Harbouring doubts as to the validity of Implementing Decision 2015/789, the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio), having suspended the implementation of the national measures at issue in so far as they order the uprooting of all host plants within a radius of 100 metres of the infected plants, decided to stay the proceedings and to refer the following questions for a preliminary ruling:Do Directive 2000/29/EC …, in particular [Article] 11(3) [to Article] 13c(7), and [Article] 16(1) [to] (3) and (5) thereof, and the principles of proportionality, logic and reasonableness preclude the application of Article 6(2) and (4) of Implementing Decision [2015/789], as implemented in the Italian legal order by Article 8(2) and (4) of the Decree of [19 June 2015], in so far as it requires that host plants, regardless of their health status, be immediately removed within a radius of 100 metres around the plants which have been tested and found to be infected by the specified organism, and at the same time provides that the Member State is to carry out appropriate phytosanitary treatments prior to the removal of plants referred to in paragraph 2 against the vectors of the specified organism and plants that may host those vectors and that those treatments may include, as appropriate, removal of plants?Does Directive 2000/29 …, in particular Article 16(1) thereof, preclude, in particular by use of the phrase ‘necessary measures to eradicate, or if that is impossible, inhibit the spread of the harmful organisms concerned’, the application of Article 6(2) of Decision [2015/789], as implemented in the Italian legal order by Article 8(2) of the Decree of [19 June 2015], in so far as it provides for the immediate removal of host plants, regardless of their health status, within a radius of 100 metres around the plants which have been tested and found to be infected?Do Articles 16(1) [to] (3) and (5) of Directive 2000/29 … and the principles of proportionality and logic and the right to due process preclude an interpretation of Article 6(2) and (4) of Implementing Decision [2015/789] — as implemented in the Italian legal order by Article 8(2) and (4) of the Decree of [19 June 2015] — to the effect that the eradication measure referred to in Article 6(2) can be imposed [prior to the application of] the preventive measures provided for in Articles 6(3) and (4) and independently of their application?Do the precautionary principle and the principles of adequacy and proportionality preclude the application of Article 6(2) [to] (4) of Implementing Decision [2015/789], as implemented in the Italian legal order by Article 8(2) and (4) of the Decree of [19 June 2015], in so far as it imposes measures to eradicate host plants within a radius of 100 metres around the plants which have been found to be infected by the organism [Xylella], without adequate scientific evidence … to demonstrate with certainty the causal relationship between the presence of the organism and the desiccation of the plants deemed to be infected?(5)Do the second paragraph of Article 296 TFEU and Article 41 of the Charter of Fundamental Rights of the European Union [‘the Charter’] preclude the application of Article 6(2) and (4) of Implementing Decision [2015/789], in so far as it provides for the immediate removal of the hosts plants, regardless of their health status, within a radius of 100 metres around the plants which have been tested and found to be infected, since it fails to provide an adequate statement of reasons?(6)Do the principles of adequacy and proportionality preclude the application of Implementing Decision [2015/789] — as implemented in the Italian legal order by the Decree of [19 June 2015] — which provides measures for the removal of host plants, regardless of their health status, of plants known to be infected by the specified organism, and of plants showing symptoms indicating possible infection by the organism [Xylella], or suspected of being infected by that organism, without providing for any form of compensation for the owners not responsible for the spread of the organism in question?’22By order of 13 April 2016 in Pesce and Others (C‑78/16 and C‑79/16, EU:C:2016:251), the President of the Court granted the request of the referring court for application to the present cases of the accelerated procedure provided for in Article 23a of the Statute of the Court of Justice of the European Union and Article 105(1) of the Rules of Procedure of the Court. Application to reopen the oral procedure 23Following the delivery of the Advocate General’s Opinion, Mr Pesce and Others, by document lodged at the Court Registry on 13 May 2016, applied for the oral part of the procedure to be reopened. In support of that application, Mr Pesce and Others claim, in essence, that the Advocate General advances erroneous arguments in his Opinion as well as new elements which have not been the subject of debate between the parties.24It should be noted that the Statute of the Court of Justice of the European Union and the Rules of Procedure make no provision for the interested parties referred to in Article 23 of the Statute of the Court of Justice of the European Union to submit observations in response to the Advocate General’s Opinion (see, inter alia, judgment of 4 September 2014 in Vnuk, C‑162/13, EU:C:2014:2146, paragraph 30).25Under the second paragraph of Article 252 TFEU, it is the duty of the Advocate-General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice, require his involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (judgment of 3 December 2015, Banif Plus Bank, C‑312/14, EU:C:2015:794, paragraph 33).26Consequently, a party’s disagreement with the Opinion of the Advocate General, irrespective of the questions that he examines in his Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (see, to that effect, judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraph 26).27Nevertheless, pursuant to Article 83 of its Rules of Procedure, the Court may, at any time after hearing the Advocate General, order the reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not been debated between the interested parties (see, to that effect, judgment of 7 April 2016, Marchon Germany, C‑315/14, EU:C:2016:211, paragraph 19).28That does not apply to the present case. The applicants in the main proceedings, the Italian and Greek Governments and the Commission presented, in the course of the written part of the procedure and, apart from the Greek Government, during the oral part of the procedure, all their arguments of fact and law concerning the validity of Implementing Decision 2015/789. Therefore, the Court considers, after hearing the Advocate General, that it has all the necessary information to give judgment and that that information has been the subject of debate before it.29In the light of the foregoing, the Court considers that there is no need to reopen the oral part of the procedure. The questions referred for a preliminary ruling 30By its questions, which overlap in part, the referring court asks, in essence, whether the obligation, imposed on the Member State concerned, by Article 6(2)(a) of Implementing Decision 2015/789, to remove host plants immediately, regardless of their health status, within a radius of 100 metres around the plants which have been tested and found to be infected by the specified organism, in the present case the bacterium Xylella, without that obligation being accompanied by a compensation scheme, is invalid on the ground of inconsistency with EU law, and, inter alia, with Directive 2000/29 (the first three questions and the sixth question), read in the light of the precautionary principle (fourth question) and the principle of proportionality (the first, third, fourth and sixth questions), and with the requirements deriving from the obligation to state reasons laid down in Article 296 TFEU and Article 41 of the Charter (fifth question).31In that context, the referring court also has doubts as to the internal consistency of the provisions contained in Article 6(2) to (4) of the decision in so far as they simultaneously impose, first, the obligation to remove ‘immediately’ host plants within the radius referred to and, second, to take samples and to apply phytosanitary treatments capable of including ‘as appropriate’ the removal of plants (first and third questions).32In order to answer the questions concerning the validity of Article 6(2)(a) of Implementing Decision 2015/789, it is appropriate to examine that last line of reasoning as a preliminary matter since it concerns the precise scope of the various obligations laid down in that article. The scope of the obligations laid down in Article 6(2) to (4) of Implementing Decision 2015/789 33Mr Pesce and Others claim that Article 6 of Implementing Decision 2015/789 is vitiated by an internal contradiction. Whereas it is apparent from Article 6(2)(a) that the Member States must remove all the host plants situated near the inflected plants ‘immediately’, regardless of their health status, Article 6(3) and (4) appears to require the States concerned to undertake action prior to that removal. In those circumstances, it is appropriate to interpret Article 6(2)(a) of that decision requiring host plants to be removed only after ascertaining their health status and the application of the appropriate phytosanitary measures.34It should be noted that, under Article 6(2)(a) of Implementing Decision 2015/789, the Member State concerned has the obligation to remove host plants immediately, regardless of their health status, within a radius of 100 metres around the plants infected by the bacterium Xylella, which belongs, under Annex I, Part A, Section I(b) of Directive 2000/29, to the harmful organisms not known in any part of the European Union whose introduction and circulation must be prohibited in all Member States.35The Court finds, as did the Commission, that that obligation is not in any way inconsistent with the obligations laid down in Article 6(3) and (4). As is clear from the heading of Article 6(4), the Member State concerned must, ‘prior’ to the removal of the host plants referred to in Article 6(2)(a), apply an appropriate phytosanitary treatment which, contrary to the assumption of the applicants in the main proceedings, is not intended for the plants themselves but to the ‘vectors’ of the bacterium, namely the infectious insects, in order to control those vectors by eradicating them or, ‘as appropriate’, by removing the plants that host those vectors.36As stated by EFSA in its opinion of 6 January 2015, entitled ‘Scientific Opinion on the risk to plant health posed by Xylella … in the EU territory, with the identification and evaluation of risk reduction options’ (‘the EFSA opinion of 6 January 2015’), to which the Commission refers in recital 2 of Implementing Decision 2015/789, that preliminary measure is necessary in so far as the insect vectors may move from infected plants to other plants (p. 109). As the Commission explained in its written observations, that measure therefore allows for the risk of those vectors and, consequently, of the bacterium itself spreading to be limited, on the removal, pursuant to Article 6(2)(a) of that decision, of host plants capable of hosting those vectors.37Moreover, under Article 6(3) the Member State concerned must, without further direction as to timing, sample and test the ‘specified plants’ within a radius of 100 metres around each of the infected plants, which includes, not only the ‘host’ plants referred to in Article 6(2)(a), namely those which are susceptible to the European isolates of the bacterium Xylella, but also the plants which are susceptible to the non-European isolates of that bacterium.38It follows that the obligations laid down in Article 6(2) to (4) of Implementing Decision 2015/789 do not provide for autonomous obligations which are mutually exclusive but for a collection of intrinsically-linked measures differing in nature and in scope, which, as regards those provided for in Article 6(2)(a) and (4), must be applied in succession. The obligations laid down in Article 6(3) and (4) cannot therefore be understood as affecting the mandatory nature of the obligation to remove host plants within the radius concerned around the infected plants ‘immediately’.39It is in the light of those preliminary clarifications that the validity of Article 6(2)(a) of Implementing Decision 2015/789 must be examined. The validity of Article 6(2)(a) of Implementing Decision 2015/789 as regards Directive 2000/29, read in the light of the precautionary principle and the principle of proportionality 40It should be noted that most of the provisions of Directive 2000/29 referred to by the referring court in its first question are not relevant in assessing the validity of Article 6(2)(a) of Implementing Decision 2015/789.41First of all, Article 11(3) and Article 13c(7) of Directive 2000/29 do not concern the situation referred to in Article 6(2)(a) in so far as those provisions concern, respectively, the movement of the plants between the Member States and imports of plants originating from third countries into the European Union.42Next, Article 16(1) and (2) of that directive, taken individually, concerns measures to be taken, not by the Commission, but by the Member States, since Article 16(2) refers, in addition, to harmful organisms which do not appear, unlike bacterium Xylella, in the annexes to that directive.43Finally, the purpose of Article 16(5) is to allow the Commission to adopt protective measures to eradicate, or if that is not possible, inhibit the spread of the harmful organism concerned based on a preliminary pest risk analysis ‘pending the meeting of the Standing Committee on Plant Health’. In the present case, it is common ground that Implementing Decision 2015/789, as appears from recital 17 thereof, was preceded by a favourable opinion of the relevant Standing Committee on Plant Health.44However, it should be noted that Article 6(2)(a) of Implementing Decision 2015/789 was adopted on the basis of the fourth sentence of Article 16(3) of Directive 2000/29, which empowers the Commission, as the development of the situation in terms of plant-health risk requires, to amend or repeal the ‘necessary measures’ taken by the Member States, inter alia, under Article 16(1) in order to eradicate the harmful organism concerned.45Accordingly, it is in the light of Article 16(3) of Directive 2000/29 that the validity of Article 6(2)(a) of Implementing Decision 2015/789 must be assessed.46In that regard, it is settled case-law that, within the framework of the Commission’s implementing power, the limits of which must be determined by reference amongst other things to the essential general aims of the legislative act in question, the Commission is authorised to adopt all the measures which are necessary or appropriate for the implementation of that act, provided that they are not contrary to it. Furthermore, it follows from the first paragraph of Article 290 TFEU in conjunction with the second paragraph of Article 291 TFEU that in exercising an implementing power, the Commission may neither amend nor supplement the legislative act, even as to its non-essential elements (judgment of 15 October 2014, Parliament v Commission, C‑65/13, EU:C:2014:2289, paragraphs 44 and 45).47Furthermore, it should be noted that the EU legislature must take account of the precautionary principle, according to which, where there is uncertainty as to the existence or extent of risks to human health, protective measures may be taken without having to wait until the reality and seriousness of those risks become fully apparent. Where it proves to be impossible to determine with certainty the existence or extent of the alleged risk because of the insufficiency, inconclusiveness or imprecision of the results of studies conducted, but the likelihood of real harm to public health persists should the risk materialise, the precautionary principle justifies the adoption of restrictive measures (see, inter alia, judgment of 17 December 2015, Neptune Distribution, C‑157/14, EU:C:2015:823, paragraphs 81 and 82).48That principle must, in addition, be applied having regard to the principle of proportionality, which requires that measures adopted by EU institutions should not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question, and where there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see, inter alia, judgment of 17 October 2013, Schaible, C‑101/12, EU:C:2013:661, paragraph 29).49As regards the judicial review of respect for those principles, the Court has previously held that it must be acknowledged that the Commission has a wide discretion when it adopts risk management measures. That procedure entails political choices on its part and complex assessments. The validity of a measure adopted in that area can be affected only if the measure is manifestly inappropriate (see, inter alia, judgment of 22 December 2010, Gowan Comércio Internacional e Serviços, C‑77/09, EU:C:2010:803, paragraph 82).50In that regard, it should also be recalled that the validity of an EU measure must be assessed on the basis of the facts and the law as they stood at the time when that measure was adopted and cannot therefore depend on retrospective assessments of its efficacy. Where the EU legislature is obliged to assess the future effects of rules to be adopted and those effects cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question (see, inter alia, judgment of 17 October 2013, Schaible, C‑101/12, EU:C:2013:661, paragraph 50 and the case-law cited).51That said, according to case-law, when new elements change the perception of a risk or show that that risk can be contained by less restrictive measures than the existing measures, it is for the institutions and in particular the Commission, which has the power of legislative initiative, to bring about an amendment to the rules in the light of the new information (judgment of 12 January 2006, Agrarproduktion Staebelow, C‑504/04, EU:C:2006:30, paragraph 40). Accordingly, in the present case, it is for the Commission, under Article 16(3) of Directive 2000/29, to assess periodically, as has already been stated in paragraph 44 above, whether the measures taken in order to address the particular risk to plant health must be amended or repealed.52It is in the light of those provisions and of those principles that it is appropriate to consider the validity of the obligation, laid down in Article 6(2)(a) of Implementing Decision 2015/789, to remove immediately, within a radius of 100 metres around the infected plants, host plants, regardless of their health status (the first four questions), before evaluating the impact in that regard of the lack of a compensation scheme in that decision (the sixth question).Assessment of the validity of the obligation laid down in Article 6(2)(a) of Implementing Decision 2015/78953It should be noted that Directive 2000/29 aims to ensure a high level of phytosanitary protection against the bringing into the European Union of harmful organisms in produce imported from non-member countries (see, to that effect, judgment of 30 September 2003, Anastasiou and Others, C‑140/02, EU:C:2003:520, paragraph 45).54In the present case, in accordance with that objective, Article 6(2)(a) of Implementing Decision 2015/789 aims, as appears from recital 4 thereof, to eradicate the bacterium Xylella and to prevent its further spread beyond the Puglia Region, by strengthening the measures laid down in Implementing Decisions 2014/87 and 2014/497, following the notification by the Italian authorities of the presence of that bacterium in the province of Lecce.55It is common ground that health protection and the completion in the sector concerned of the agricultural internal market constitute legitimate objectives in the public interest pursued by EU legislation (see, inter alia, judgment of 17 October 2013, Schaible, C‑101/12, EU:C:2013:661, paragraph 35 and the case-law cited).56In those circumstances, it is appropriate to examine whether the Commission was entitled to take the view, having regard to its wide margin of appreciation in the sector concerned on the basis of Article 16(3) of Directive 2000/29 and of the precautionary principle, that the obligation to remove host plants immediately, regardless of their health status, within a radius of 100 metres around the infected plants, laid down in Article 6(2)(a) of Implementing Decision 2015/789, was, in the light of the scientific data available at the date of the adoption of that decision and of the alternative measures conceivable at that date, appropriate and necessary in order to attain that objective and strictly proportional to it.57In the first place, and as a preliminary matter, the applicants in the main proceedings contest whether the destruction of the infected plants is in fact appropriate for eradicating the infection. In their view, the causal link between the bacterium Xylella and the rapid olive tree desiccation recorded in the Puglia Region has not been proven. It follows a fortiori that the destruction of all host plants located near the infected plants is also not appropriate for eradicating the infection.58In that regard, the Court finds that it is clear from the EFSA opinion of 6 January 2015, which has not been contested by the applicants in the main proceedings, that olive trees are, to the same degree as a relatively high number of other plants, host plants of the bacterium Xylella.59Although it is true that EFSA has not in its opinion proved the existence of a definite causal link between the bacterium Xylella and the rapid olive tree desiccation in the Puglia Region, that opinion nevertheless demonstrated (p. 3), as noted by the Advocate General in point 116 of his Opinion, a significant correlation between the bacterium and the occurrence of such a pathology.60In that regard, the Court notes that, contrary to what the applicants in the main proceedings submit, the precautionary principle, far from prohibiting the adoption of any measures in the absence of scientific certainty as to the existence or the extent of a health risk, may, in fact, justify, as was stated in paragraphs 46 and 47 above, the adoption by the EU legislature of protective measures even if scientific uncertainties remain in that regard.61Moreover, the Court points out that, although the applicants in the main proceedings contest the veracity of a causal link between the bacterium Xylella and the rapid olive tree desiccation in the Puglia Region, they do not advance any evidence capable of supporting their allegations.62The Court therefore finds that the Commission was entitled to take the view that the obligation to remove the infected plants immediately was an appropriate and necessary measure for preventing the spread of the bacterium Xylella. Furthermore, as regards the strict proportionality of that obligation, no less restrictive alternative measures have been mentioned as regards the infected plants which would be capable of attaining the same objective.63In those circumstances, it is appropriate to examine, in the second place, whether the obligation to remove the host plants which are located ‘within a radius of 100 metres’ around the infected plants immediately, ‘regardless of their health status’, constitutes an adequate measure, as regards the precautionary principle and the principle of proportionality, for attaining the objective sought.64As regards, first, the obligation to remove host plants ‘within a radius of 100 metres’ around the infected plants immediately, it is appropriate, with a view to determining whether that obligation is appropriate and necessary for attaining the objective sought, to assess the data available to the Commission at the time of the adoption of its decision as regards the risk of dispersal of the infection from infected plants.65In that regard, it should be noted that, having concluded in its opinion of 6 January 2015 that ‘infectious vectors may spread locally by flying or be passively transported longer distances by wind’ (p. 4), EFSA states, whilst conceding that ‘the contributions of human- and wind-mediated spread mechanisms are still uncertain [and that] there is a lack of data on how far the insect vectors can fly’ (p. 4), that ‘some data are available … to suggest a scale of 100 metres is an appropriate mean dispersal distance’ (p. 62). Moreover, it is stated in that opinion that ‘dispersal is primarily limited to short-range leafhoppers, which fly, on average, 100 metres, but which can also be dispersed at longer distances by wind’ (p. 94).66It must be found that, in the light of that scientific data, the Commission was entitled to take the view, having regard to its wide margin of appreciation of the subject matter, that the obligation to remove host plants within a radius of 100 metres around the infected plants immediately was an appropriate and necessary measure for preventing the spread of the bacterium Xylella from those plants by the insect vectors of that bacterium.67As for the strict proportionality of that obligation, Mr Pesce and Others claim that, when the Commission adopted Decision 2015/789, a degree of scientific uncertainty was present concerning the way in which the bacterium Xylella is spread. In particular, it cannot be excluded that the vectors of its spread may extend the infection well beyond the radius of 100 metres around the infected plants.68Nevertheless, far from putting the proportionality of Article 6(2)(a) of Implementing Decision 2015/789 into question, the fact that the Commission limited the obligation to remove host plants at a radius of 100 metres, although the vectors are capable of spreading the bacterium beyond that distance, shows, on the contrary, that that obligation was limited to what is necessary for attaining the objective sought (see, by analogy, judgment of 12 July 2001, Jippes and Others, C‑189/01, EU:C:2001:420, paragraph 120).69As regards, second, the obligation to remove host plants within the radius concerned immediately ‘regardless of their health status’, namely, even if they did not show any symptoms of infection by the bacterium Xylella and are not suspected of being infected by that bacterium, the applicants in the main proceedings claim, both in their written observations and at the hearing, that the concept of ‘to eradicate’ referred to in Article 16 of Directive 2000/29 refers exclusively to the harmful organisms. The Commission is therefore exclusively empowered to order the plants infected by those organisms to be removed.70However, as the Advocate General stated in point 92 of his Opinion, since Article 16 of Directive 2000/29 is couched in general terms, it does not permit the inference of such a limitation in the scope of the measures which may be taken by the Commission. Having regard to the precautionary principle, Article 16(3), read in conjunction with Article 16(1), must, on the contrary, be understood as authorising the Commission to adopt any necessary measure, in accordance with the case-law cited in paragraphs 46 and 47 above, to eradicate or contain the harmful organisms, so that if attainment of that objective requires that not only the infected plants but also nearby host plants be removed, even if they do not show any symptoms of infection by the bacterium Xylella and are not suspected of being infected by it, that institution is empowered to impose such a measure.71In the present case, in order to determine whether that measure is appropriate and necessary for attaining the objective sought, it is appropriate to ascertain whether corroborating data was available to the Commission at the time it adopted its decision which was capable of showing that, despite the removal of the infected plants, the nearby host plants, even if they did not show any symptoms of infection by the bacterium Xylella and are not suspected of being infected by that bacterium, are nevertheless capable of being carriers and of contributing to the spread of that bacterium.72In that regard, it must be found that, according EFSA’s opinion of 6 January 2015, ‘asymptomatic hosts, asymptomatic infections or low infections can escape surveys based solely on visual inspection and even based on laboratory tests as early infections or heterogeneous distribution of the bacterium in the plant may lead to false-negative results’ (p. 6). According to that opinion, it follows that the presence of the bacterium Xylella is difficult to detect on asymptomatic or recently contaminated plants (p. 97). The opinion therefore concludes that, ‘as the disease is spread by insect vectors from plant to plant, and as there is a delay between the inoculation of the bacterium by the vector and the appearance of symptoms, and even the possibility of detecting the bacterium in planta, it is of key importance when eradicating known infected plants to also destroy all the other plants in their vicinity’ (p. 100).73Having regard to that scientific data, it appears that the Commission was entitled to take the view, having regard to its wide margin of appreciation of the subject matter, that the obligation to remove all host plants located near the infected plants immediately was, contrary to the removal of only the plants infected or that of the plants presenting rapid desiccation, as envisaged by Mr Pesce and Others, an appropriate and necessary measure for preventing the spread of the bacterium Xylella from those plants by the insect vectors of that bacterium.74As regards the strict proportionality of that obligation, it should be noted that the EU legislature was obliged to reconcile the various interests at stake, namely, first, inter alia, the right to property of the owners of olive trees in the Puglia Region and the economic, social and environmental consequences for that region following the removal of the affected plants and, second, the importance of plant production in the European Union and the public interest in safeguarding effective protection of EU territory, including Italian territory beyond the province of Lecce, against the spread of the bacterium Xylella throughout the European Union.75In that regard, the Court notes, first of all, that the obligation to remove all host plants within the radius concerned immediately was imposed by the Commission due to the rapid spread of the bacterium in the north of the province of Lecce, after that institution confined itself, in Implementing Decision 2014/87, to prohibiting the movement of plants for planting out of that province, then, in Implementing Decision 2014/497, in imposing the removal of only the infected plants, thereby demonstrating a certain progression in the measures adopted.76Next, it should be noted that the Commission has not imposed the obligation to remove the host plants under all circumstances. By way of derogation from Article 6 of Implementing Decision 2015/789, only in the province of Lecce, when eradication is no longer possible, does Article 7 of that decision authorise the competent national authorities to adopt containment measures which do not entail the removal of all host plants situated in the vicinity of the infected plants.77At the hearing, the applicants in the main proceedings nevertheless submitted that that derogation demonstrates, on the contrary, the disproportionality of the obligation to remove those plants in so far as the obligation has not in fact been imposed in the geographical zone most contaminated by the bacterium.78It is, however, common ground that, as appears from recital 7 of Implementing Decision 2015/789, in the province of Lecce the Commission no longer seeks to eradicate the bacterium Xylella, that being no longer possible, but to contain the bacterium by allowing the Member States to order infected plants to be removed only in certain specified zones to protect at least production sites, plants with particular cultural, social or scientific value, as well as the border with the rest of the Union territory. To that end, Article 8 of the decision requires a surveillance zone to be put in place immediately outside the buffer zone surrounding the infected zone of the province of Lecce. As the Italian government stated at the hearing, those measures therefore have as their objective, in the light of the fact that that province is surrounded by the sea, to confine the bacterium Xylella as much as possible in that province in order to prevent its spread to zones located further north.79Nevertheless, beyond the province of Lecce, the Commission seeks, by way of the measures laid down in Article 6 of Implementing Decision 2015/789, to eradicate the bacterium Xylella, such eradication being still possible, in order to prevent its spread throughout the European Union. For the reasons already set out in paragraphs 69 to 73 above, the attainment of those objectives requires not only the infected plants but also all the host plants situated nearby to be removed.80Lastly, as regards the issue of whether the host plants concerned could not be subject to less restrictive measures, such as pruning or pollarding olive trees and the application of a pesticide treatment, namely measures proposed by Mr Pesce and Others, it should be noted that, not only do Mr Pesce and Others not base their allegations in that regard on any scientific data, but, furthermore, it appears from EFSA’s opinion of 6 January 2015 that ‘no treatment is currently available to cure diseased plants in the field and, most often, plants that are contaminated remain infected throughout their life or collapse quickly. Changes in cropping systems could have some impact on the disease (e.g. pruning, fertilisation and irrigation), but this is generally not enough to cure plants’ (p. 97). Moreover, that opinion states that, ‘in Puglia, severe pruning of infected olive trees resulted in the emission of new sprouts from the base of the tree, but, so far, this has not been shown to cure the plants and prevent them from dying’ (p. 97).81In those circumstances, although it is true that, as Mr Pesce and Others state, the obligation to remove all the host plants situated near to the infected plants is capable of harming both their right to property and the environment in the Puglia Region, the Commission was justified, within the frame of its wide margin of appreciation in that regard and having reconciled the various interests at stake, to impose that obligation.82Nonetheless, it should be noted that, as has been stated in paragraph 51 above, if the situation were to change to the effect that the eradication of the bacterium Xylella no longer requires, on the basis of new relevant scientific data, all the host plants within a radius of 100 metres around the infected plants to be removed immediately, it would be for the Commission, pursuant to Article 16(3) of Directive 2000/29, to amend Implementing Decision 2015/789 or to adopt a new decision, in order to take account of that development, whilst taking account of the precautionary principle and the principle of proportionality.The absence of a compensation scheme in Implementing Decision 2015/78983According to Mr Pesce and Others, in so far as Implementing Decision 2015/789 leads to a genuine expropriation of the agricultural holdings concerned by that decision from their owners, the Commission should have expressly provided in that decision for compensation in proportion to the actual value of the non-infected plants that it orders to be removed.84In that regard, the Court points out that it has previously held that the EU legislature may consider, in the context of its broad discretion in the field of agricultural policy, that full or partial compensation is appropriate for owners of farms on which animals have been destroyed and slaughtered. Nonetheless, the Court considered that the existence, in EU law, of a general principle requiring compensation to be paid in all circumstances cannot be inferred from that fact (see judgment of 10 July 2003, Booker Aquaculture and Hydro Seafood, C‑20/00 and C‑64/00, EU:C:2003:397, paragraph 85).85That said, it should be noted that Article 17(1) of the Charter, concerning the right to property, now provides, inter alia, that ‘no one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss’ and that ‘the use of property may be regulated by law in so far as is necessary for the general interest’.86In so far as the right to compensation flows directly from Article 17 of the Charter, the mere fact that neither Directive 2000/29 nor Implementing Decision 2015/789 provides specifically for a compensation scheme or that they do not impose an explicit obligation to provide for such a scheme cannot be interpreted as precluding such a right. It follows that the decision cannot be deemed invalid on that ground.87It follows from all of the foregoing that Article 6(2)(a) of Implementing Decision 2015/789 is neither contrary to Directive 2000/29 nor the principle of proportionality and the precautionary principle. The validity of Article 6(2)(a) of Implementing Decision 2015/789 as regards the requirements flowing from observance of the obligation to state reasons 88It should be noted that, while the statement of reasons required by Article 296 TFEU must show clearly and unequivocally the reasoning of the EU 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, it is not required to go into every relevant point of fact and law (see judgment of 18 June 2015 in Estonia v Parliament and Council, C‑508/13, EU:C:2015:403, paragraph 58). This is a fortiori the case where the Member States have been closely associated with the process of drafting that measure and are thus aware of the reasons underlying it (see, inter alia, judgment of 9 September 2004, Spain v Commission, C‑304/01, EU:C:2004:495, paragraph 50).89In addition, as regards measures of general application, the statement of reasons may be limited to indicating, first, the general situation which led to its adoption and, second, the general objectives which the measure at issue is intended to achieve (see, inter alia, judgment of 9 September 2004, Spain v Commission, C‑304/01, EU:C:2004:495, paragraph 51).90Consequently, 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, inter alia, judgment of 18 June 2015, Estonia v Parliament and Council, C‑508/13, EU:C:2015:403, paragraph 60).91In the present case, it must be found that recitals 1 to 4 of Implementing Decision 2015/789 set out clearly the reasons why the Commission decided to extend the eradication measures to all the host plants in the vicinity of the infected plants. It appears from those recitals that that extension measure aims to pursue the general objective of strengthening, following new outbreaks of the bacterium Xylella, the eradication measures previously taken and to prevent the spread of that bacterium to the whole of the European Union, having regard to the new scientific opinions of EFSA, which extended the list of plants susceptible to the bacterium, whilst limiting some of those measures solely to host plants ‘in order to ensure proportionality’. In addition, in accordance with recital 1 of that decision, the Italian authorities were involved in the adoption of the decision and thus should be aware both of the reasons leading to its adoption and of the measures envisaged by the Commission to eradicate the bacterium Xylella.92In those circumstances, the Commission was in no way bound to detail, in the recitals of its decision, the reasons justifying each of the specific measures imposed by it.93It therefore follows that Implementing Decision 2015/789 complies with the obligation to state reasons under Article 296 TFEU.94It follows from the foregoing considerations that the examination of the questions referred has not revealed any factors capable of affecting the validity of Article 6(2)(a) of Implementing Decision 2015/789 in relation to Directive 2000/29, read in the light of the precautionary principle and the principle of proportionality, and regard being had to the obligation to state reasons laid down in Article 296 TFEU and Article 41 of the Charter. Costs 95Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (First Chamber) hereby rules: The examination of the questions referred has not revealed any factors capable of affecting the validity of Article 6(2)(a) of Commission Implementing Decision (EU) 2015/789 of 18 May 2015 as regards measures to prevent the introduction into and the spread within the Union of Xylella fastidiosa (Wells et al.), in relation to Council Directive 2000/29/EC of 8 May 2000 on protective measures against the introduction into the Community of organisms harmful to plants or plant products and against their spread within the Community, as amended by Council Directive 2002/89/EC of 28 November 2002, read in the light of the precautionary principle and the principle of proportionality, and regard being had to the obligation to state reasons laid down in Article 296 TFEU and Article 41 of the Charter of Fundamental Rights of the European Union. [Signatures]( *1 ) Language of the case: Italian. | 74d7b-ceda53f-46af | EN |
The copyright directive precludes fair compensation due to authors for private copying of their works from being financed by a budgetary scheme such as that established in Spain | 9 June 2016 ( *1 )[Text rectified by order of 7 September 2016]‛Reference for a preliminary ruling — Intellectual and industrial property — Copyright and related rights — Directive 2001/29/EC — Article 5(2)(b) — Reproduction right — Exceptions and limitations — Private copying — Fair compensation — Financing from the General State Budget — Whether permissible — Conditions’In Case C‑470/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 10 September 2014, received at the Court on 14 October 2014, in the proceedings Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de Medios Audiovisuales (DAMA), Visual Entidad de Gestión de Artistas Plásticos (VEGAP) v Administración del Estado, Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic), intervening parties: Artistas Intérpretes, Sociedad de Gestión (AISGE), Centro Español de Derechos Reprográficos (CEDRO), Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE), Sociedad General de Autores y Editores (SGAE), THE COURT (Fourth Chamber),composed of J. Malenovský (Rapporteur), acting as President of the Chamber, M. Safjan, A. Prechal, S. Rodin and K. Jürimäe, Judges,Advocate General: M. Szpunar,Registrar: M. Ferreira, Administrator,having regard to the written procedure and further to the hearing on 1 October 2015,after considering the observations submitted on behalf of:—Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de Medios Audiovisuales (DAMA) and Visual Entidad de Gestión de Artistas Plásticos (VEGAP), by J. Suárez Lozano, abogado,Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic), by A. González García and D. Sarmiento Ramirez-Escudero, abogados,Artistas Intérpretes, Sociedad de Gestión (AISGE), by J. Montes Relazón, abogado,Centro Español de Derechos Reprográficos (CEDRO), by S. Vázquez Senin, procuradora, and by I. Aramburu Muñoz and J. de Fuentes Bardají, abogados,Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE) and Sociedad General de Autores y Editores (SGAE), by J. Marín López and R. Blanco Martínez, abogados,the Spanish Government, by M. Sampol Pucurull, acting as Agent,the Greek Government, by A. Magrippi and S. Charitaki, acting as Agents,the French Government, by D. Colas and D. Segoin, acting as Agents,[Text rectified by order of 7 September 2016] the Finnish Government, by J. Heliskoski, acting as Agent,the Norwegian Government, by E. Leonhardsen and M. Schei, acting as Agents,the European Commission, by É. Gippini Fournier and J. Samnadda, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 19 January 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).2The request has been made in proceedings between, on the one hand, Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de Medios Audiovisuales (DAMA) and Visual Entidad de Gestión de Artistas Plásticos (VEGAP), and, on the other hand, the Administración del Estado (State Administration, Spain) and the Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic) in connection with national legislation relating to a scheme for fair compensation for private copying financed from the General State Budget. Legal context EU law 3Recitals 4, 9, 31, 35 and 38 of Directive 2001/29 state:‘(4)A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. This will safeguard employment and encourage new job creation.…(9)Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.(31)A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. Existing differences in the exceptions and limitations to certain restricted acts have direct negative effects on the functioning of the internal market of copyright and related rights. Such differences could well become more pronounced in view of the further development of transborder exploitation of works and cross-border activities. In order to ensure the proper functioning of the internal market, such exceptions and limitations should be defined more harmoniously. The degree of their harmonisation should be based on their impact on the smooth functioning of the internal market.(35)In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. …(38)Member States should be allowed to provide for an exception or limitation to the reproduction right for certain types of reproduction of audio, visual and audio-visual material for private use, accompanied by fair compensation. This may include the introduction or continuation of remuneration schemes to compensate for the prejudice to rightholders. …’4Article 2 of that directive, entitled ‘Reproduction right’, provides, inter alia:‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:(a)for authors, of their works;(b)for performers, of fixations of their performances;…’5Article 5 of that directive, entitled ‘Exceptions and limitations’, provides, inter alia, in paragraph 2:‘Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject matter concerned; Spanish law 6The Real Decreto-Ley 20/2011 sobre medidas urgentes en materia presupuestaria, tributaria y financiera para la corrección del déficit público (Royal Decree-Law 20/2011 concerning urgent budgetary, taxation and financial measures for correcting the public deficit) of 31 December 2011 (BOE No 315 of 31 December 2011, p. 146574) contains a Tenth Additional Provision, entitled ‘Modification of the fair compensation scheme for private copying’ (‘the Tenth Additional Provision’), which provides, inter alia:‘1.The fair compensation for private copying, provided for under Article 25 of the [Texto Refundido de la Ley de Propiedad Intelectual (consolidated text of the Intellectual Property Law)], approved by the [Real Decreto Legislativo 1/1996 (Royal Legislative Decree 1/1996)] of 12 April 1996, and the limits of which are defined in Article 31(2) of that law, is abolished.2.The government shall establish, by legislative act, the procedure for payment to tax collectors of the fair compensation financed by the General State Budget.7The Real Decreto 1657/2012 que regula el procedimiento para el pago de la compensación por copia privada con cargo a los Presupuestos Generales del Estado (Royal Decree 1657/2012 regulating the procedure for paying fair compensation in respect of private copying from the General State Budget) of 7 December 2012 (BOE No 295 of 8 December 2012, p. 84141) seeks to implement the Tenth Additional Provision.8Article 1 of that royal decree, entitled ‘Purpose’, provides:‘The purpose of the present Royal Decree is to regulate:the procedure and objective criteria for determining the annual amount of fair compensation for private copying based on the harm caused;the procedure for the calculation and payment to the beneficiaries of fair compensation for private copying financed by the General State Budget.’9Article 3 of that royal decree, entitled ‘Amount of Compensation’, provides, inter alia, in paragraph 1:‘The appropriate amount to compensate for the harm to copyright holders resulting from the introduction of the private copying exception defined in Article 31 of the consolidated text of the Intellectual Property Law, approved by Royal Legislative Decree 1/1996 of 12 April 1996, is to be determined, within the budgetary limits established for each financial year, by order of the Minister for Education, Culture and Sport, in accordance with the procedure laid down in Article 4.’ The dispute in the main proceedings and the questions referred for a preliminary ruling 10The applicants in the main proceedings are intellectual property rights collecting societies which are entitled to collect the fair compensation due to copyright holders in situations of private copying of their protected works or subject matter.11On 7 February 2013 they brought an action for annulment of Royal Decree 1657/2012 before the Tribunal Supremo (Supreme Court, Spain) sitting as a court with jurisdiction in administrative disputes.12That court subsequently authorised Artistas Intérpretes, Sociedad de Gestión (AISGE), Centro Español de Derechos Reprográficos (CEDRO), Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE) and Sociedad General de Autores y Editores (SGAE) to intervene in the proceedings. A number of those other intellectual property rights collecting societies brought their own actions against Royal Decree 1657/2012.13In support of their claims, the applicants in the main proceedings submit that Royal Decree 1657/2012 is incompatible with Article 5(2)(b) of Directive 2001/29 in two respects. First, they submit, in essence, that Article 5(2)(b) of Directive 2001/29 requires that the fair compensation granted to rightholders in situations of private copying is to be borne, at least ultimately, by the natural persons at the origin of the harm to their exclusive right of reproduction caused by such copying, whereas the scheme established by Tenth Additional Provision and by Royal Decree 1657/2012 places the burden of that compensation on the General State Budget, and therefore on all taxpayers. Second, they argue that that scheme does not guarantee the fairness of that compensation.14For their part, the defendants in the main proceedings contend that Article 5(2)(b) of Directive 2001/29 does not preclude a Member State from establishing a scheme such as that established by the Tenth Additional Provision and by Royal Decree 1657/2012.15After recalling the background which led the Spanish authorities to replace the digital levy scheme in place until 2011 with a scheme for fair compensation for private copying financed from the General State Budget, the referring court notes first of all that, in conformity with the principle that budgetary revenue is not to be assigned to a specific purpose, the new scheme is, unlike that which preceded it, funded by all Spanish taxpayers regardless of whether they may make private copies or not. The referring court then asks in essence whether Directive 2001/29 must be interpreted as meaning that it requires Member States who opt for such a scheme to ensure, in the same way as when they favour implementing a levy, that its cost is borne, either directly or indirectly, solely by the persons deemed to have caused harm to the rightholders on the grounds that they make, or have the capacity to make, private copies. If not, the referring court wishes to know whether the fact that the sum allocated for payment of fair compensation to rightholders is predetermined for each financial year is such as to guarantee the fairness of that compensation.16In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:‘(1)Is a scheme for fair compensation for private copying compatible with Article 5(2)(b) of Directive 2001/29 where the scheme, while taking as a basis an estimate of the harm actually caused, is financed from the General State Budget, it thus not being possible to ensure that the cost of that compensation is borne by the users of private copies?(2)If the first question is answered in the affirmative, is the scheme compatible with Article 5(2)(b) of Directive 2001/29 where the total amount allocated by the General State Budget to fair compensation for private copying, although it is calculated on the basis of the harm actually caused, has to be set within the budgetary limits established for each financial year?’ Consideration of the questions referred 17By its first question the referring court asks in essence whether Article 5(2)(b) of Directive 2001/29 must be interpreted as precluding a scheme for fair compensation for private copying which, as in the main proceedings, is financed from the General State Budget, and under which it is not possible to guarantee that the cost of that fair compensation is borne by the users of private copies.18In the first place, it must be observed in that respect that, in accordance with Article 5(2)(b) of Directive 2001/29, Member States may provide for an exception or limitation to the exclusive reproduction right provided for under Article 2 of that directive in the case of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on the condition that the exclusive rightholders receive fair compensation, taking account of the technological measures referred to in Article 6 of that directive (‘the private copying exception’).19As is apparent from recitals 35 and 38 of Directive 2001/29, that provision reflects the EU legislature’s intention to establish a specific compensation scheme which is triggered by the existence of harm caused to rightholders, which gives rise, in principle, to the obligation to ‘compensate’ them (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 41).20It follows that, when the Member States decide to implement the private copying exception provided for under that provision in their national law, they are required, in particular, to provide for the payment of fair compensation to rightholders (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 30, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 19).21Furthermore, the Court has already held that, if Article 5(2)(b) of Directive 2001/29 is not to be devoid of all practical effect, that provision must be regarded as imposing an obligation to achieve a certain result upon the Member States which have implemented the private copying exception, in the sense that they must guarantee, within the framework of their competences, the actual recovery of the fair compensation intended to compensate the rightholders (see, to that effect, judgments of 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 34, and 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 57).22Nonetheless, in so far as that provision is merely optional and does not provide any further details concerning the various parameters of the fair compensation scheme that it requires to be established, the Member States must be considered to enjoy broad discretion in regard to the parameters of their national law (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 37; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 20; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 20).23In particular, it falls to the Member States to determine the persons who have to pay that fair compensation, and to determine the form, detailed arrangements and level thereof, in compliance with Directive 2001/29 and, more generally, with EU law (see, to that effect, judgments of 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 23; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 21; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 20).24Taking account of that broad discretion, and even though the case-law cited at paragraphs 19 to 23 above has been developed in the context of fair compensation schemes financed by a levy, Article 5(2)(b) of Directive 2001/29 cannot be regarded as precluding, in principle, Member States which have decided to introduce the private copying exception from choosing to establish, in that context, a fair compensation scheme financed not by such a levy, but by their General State Budget.25Indeed, provided that such an alternative scheme guarantees the payment of fair compensation to rightholders on the one hand, and that its detailed arrangements guarantee actual recovery on the other, it must be regarded as being, in principle, compatible with the essential objective of Directive 2001/29, namely, as is apparent from recitals 4 and 9, to ensure a high level of intellectual property and copyright protection.26In the second place, it is clear from recitals 35 and 38 of Directive 2001/29 that the fair compensation provided for in Article 5(2)(b) of that directive is intended to adequately compensate rightholders for the non-authorised use of their protected works or subject matter. In order to determine the level of that compensation, account must be taken, as a useful criterion, of the harm suffered by the rightholder concerned as a result of the act of reproduction at issue (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 39).27It follows that it is for the persons who reproduce the protected works or subject matter without the prior authorisation of the rightholder concerned, and who therefore cause harm to them, to make good that harm by financing the fair compensation provided for that purpose (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 45, and 12 November 2015 in Hewlett-Packard Belgium, C‑572/13, EU:C:2015:750, paragraph 69).28In that regard, the Court has made clear that it is not at all necessary for such persons to have actually made private copies. Indeed, where the appliances or reproduction media are made available to them, that availability is sufficient to justify their contribution to the financing of the fair compensation provided to rightholders (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 54 to 56, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraphs 24, 25 and 64).29It follows from the clear terms of Article 5(2)(b) of Directive 2001/29 that the private copying exception is intended exclusively for natural persons making, or having the capacity to make, reproductions of protected works or subject matter for private use and for purposes neither directly nor indirectly commercial (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 43 to 45 and 54 to 56, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraphs 22 to 25 and 64).30It follows that, unlike natural persons who fall within the private copying exception under the conditions specified by Directive 2001/29, legal persons are in any case excluded from benefiting from that exception and thus they are not entitled to make private copies without receiving prior authorisation from the rightholders of the protected works or subject matter concerned.31In that regard the Court has already ruled that it is inconsistent with Article 5(2) of Directive 2001/29 to apply a private copying levy, in particular with regard to digital reproduction equipment, devices and media which are acquired by persons other than natural persons for purposes clearly unrelated to such private copying (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 53, and 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 28).32However, such an interpretation of Article 5(2)(b) of Directive 2001/29 does not preclude legal persons being, where appropriate, under an obligation for the financing of the fair compensation intended for rightholders as compensation for that private copying.33The Court has thus accepted that, given the practical difficulties which might arise when implementing such financing, Member States were free to finance that fair compensation by means of a levy imposed, prior to the making of private copies, on persons who have reproduction equipment, devices and media and make them available to natural persons (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 46; 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 27; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 24; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 46).34Nothing prevents persons from passing on the private copying levy by including it in the price charged for making the reproduction equipment, devices and media available or in the price for the copying service supplied. Thus, the burden of the levy will ultimately be borne by the private user who pays that price. In those circumstances, the private user for whom the reproduction equipment, devices or media are made available or who benefits from a copying service must be regarded as being, in reality, the ‘person indirectly liable to pay’ fair compensation, that is to say the person actually liable for payment (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 48).35Financing such as that referred to in paragraph 33 above must therefore be regarded as consistent with the fair balance that is to be struck, in accordance with recital 31 of Directive 2001/29, between the interests of rightholders and the interests of users (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 49; 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraphs 28 and 29; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 53).36It follows from that line of case-law that, as EU law currently stands, although Member States are indeed free to establish a scheme under which legal persons are, under certain conditions, liable to pay the levy intended to finance the fair compensation referred to in Article 5(2)(b) of Directive 2001/29, such legal persons should not in any event be the persons ultimately actually liable for payment of that burden.37The considerations underlying that case-law apply in all situations in which a Member State has introduced the private copying exception, regardless of whether it has established a fair compensation scheme financed by a levy or, as is the case in the main proceedings, financed by its General State Budget.38It should be borne in mind that the concept of fair compensation is not defined by reference to national law, and it must thus be regarded as an autonomous concept of EU law and interpreted uniformly throughout the territory of the European Union (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 31 to 33 and 37, and 12 November 2015 in Hewlett-Packard Belgium, C‑572/13, EU:C:2015:750, paragraph 35).39In the present case, it is clear from the order for reference that, taking account of the fact that there is no definite allocation of revenue — such as revenue from a specific levy — to particular expenditure, the budgetary item intended for the payment of the fair compensation must be regarded as being financed from all the budget resources of the General State Budget and therefore also from all taxpayers, including legal persons.40Moreover, there is nothing in the file submitted to the Court to suggest that there is, in the present case, a particular measure allowing legal persons, which do not in any event fall within Article 5(2)(b) of Directive 2001/29, to request to be exempted from contributing to the financing of that compensation or, at least, to seek reimbursement (see, in that regard, judgments of 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraphs 25 to 31 and 37, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 45) under the detailed rules that it is solely for the Member States to establish.41In those circumstances and as the referring court points out in the very question referred, such a scheme for financing the fair compensation from the General State Budget of the Member State concerned is not such as to guarantee that the cost of that compensation is ultimately borne solely by the users of private copies.42In the light of all those considerations, the answer to the first question is that Article 5(2)(b) of Directive 2001/29 must be interpreted as precluding a scheme for fair compensation for private copying which, like the one at issue in the main proceedings, is financed from the General State Budget in such a way that it is not possible to ensure that the cost of that compensation is borne by the users of private copies.43In the light of the answer given to the first question, there is no need to answer the second question referred to the Court. Costs 44Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Fourth Chamber) hereby rules: Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as precluding a scheme for fair compensation for private copying which, like the one at issue in the main proceedings, is financed from the General State Budget in such a way that it is not possible to ensure that the cost of that compensation is borne by the users of private copies. [Signatures]( *1 ) Language of the case: Spanish. | ed674-2e3c634-4464 | EN |
The Return Directive prevents a national of a non-EU country who has not yet been subject to the return procedure being imprisoned solely because he or she has entered the territory of a Member State illegally across an internal border of the Schengen area | 7 June 2016 ( *1 )‛Reference for a preliminary ruling — Area of freedom, security and justice — Directive 2008/115/EC — Common standards and procedures for returning illegally staying third-country nationals — Police custody — National legislation providing for a sentence of imprisonment in the event of illegal entry — Situation of ‘transit’ — Multilateral readmission arrangement’In Case C‑47/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (Court of Cassation, France), made by decision of 28 January 2015, received at the Court on 6 February 2015, in the proceedings Sélina Affum v Préfet du Pas-de-Calais, Procureur général de la cour d’appel de Douai, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, M. Ilešič (Rapporteur), L. Bay Larsen, T. von Danwitz and C. Lycourgos, Presidents of Chambers, A. Rosas, E. Juhász, A. Borg Barthet, J. Malenovský, E. Levits, M. Berger, K. Jürimäe, M. Vilaras and E. Regan, Judges,Advocate General: M. Szpunar,Registrar: V. Tourrès, Administrator,having regard to the written procedure and further to the hearing on 10 November 2015,after considering the observations submitted on behalf of:—Ms Affum, by P. Spinosi, avocat,the French Government, by D. Colas and F.-X. Bréchot, acting as Agents,the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,the Greek Government, by M. Michelogiannaki, acting as Agent,the Hungarian Government, by M.M. Tátrai, G. Koós and M. Fehér, acting as Agents,the Swiss Government, by C. Bichet, acting as Agent,the European Commission, by M. Condou-Durande, acting as Agent,after hearing the Opinion of the Advocate General at the sitting on 2 February 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Directive 2008/115/EC of the European Parliament and of the Council of 16 December 2008 on common standards and procedures in Member States for returning illegally staying third-country nationals (OJ 2008 L 348, p. 98).2The request has been made in proceedings between Sélina Affum, on the one hand, and the préfet du Pas-de-Calais (Prefect of Pas-de-Calais, France) and the procureur général de la cour d’appel de Douai (Principal State Prosecutor at the Court of Appeal, Douai, France), on the other, concerning Ms Affum’s illegal entry into French territory and the extension of her administrative detention. Legal context EU law Directive 2008/1153Recitals 2, 4, 5, 10, 17 and 26 of Directive 2008/115 state:‘(2)The Brussels European Council of 4 and 5 November 2004 called for the establishment of an effective removal and repatriation policy, based on common standards, for persons to be returned in a humane manner and with full respect for their fundamental rights and dignity....(4)Clear, transparent and fair rules need to be fixed to provide for an effective return policy as a necessary element of a well-managed migration policy.(5)This Directive should establish a horizontal set of rules, applicable to all third-country nationals who do not or who no longer fulfil the conditions for entry, stay or residence in a Member State.(10)Where there are no reasons to believe that this would undermine the purpose of a return procedure, voluntary return should be preferred over forced return and a period for voluntary departure should be granted. ...(17)... Without prejudice to the initial apprehension by law-enforcement authorities, regulated by national legislation, detention should, as a rule, take place in specialised detention facilities.(26)To the extent that it applies to third-country nationals who do not fulfil or who no longer fulfil the conditions of entry in accordance with the Schengen Borders Code, this Directive constitutes a development of provisions of the Schengen acquis in which the United Kingdom [of Great Britain and Northern Ireland] does not take part …; moreover, … the United Kingdom is not taking part in the adoption of this Directive and is therefore not bound by it in its entirety or subject to its application.’4Article 1 of Directive 2008/115, headed ‘Subject matter’, provides:‘This Directive sets out common standards and procedures to be applied in Member States for returning illegally staying third-country nationals, in accordance with fundamental rights as general principles of Community law as well as international law, including refugee protection and human rights obligations.’5Article 2 of Directive 2008/115, headed ‘Scope’, states:‘1. This Directive applies to third-country nationals staying illegally on the territory of a Member State.2. Member States may decide not to apply this Directive to third-country nationals who:(a)are subject to a refusal of entry in accordance with Article 13 of the Schengen Borders Code, or who are apprehended or intercepted by the competent authorities in connection with the irregular crossing by land, sea or air of the external border of a Member State and who have not subsequently obtained an authorisation or a right to stay in that Member State;(b)are subject to return as a criminal law sanction or as a consequence of a criminal law sanction, according to national law, or who are the subject of extradition procedures....’6Article 3 of Directive 2008/115, headed ‘Definitions’, states:‘For the purpose of this Directive the following definitions shall apply:2.“illegal stay” means the presence on the territory of a Member State, of a third-country national who does not fulfil, or no longer fulfils the conditions of entry as set out in Article 5 of the Schengen Borders Code or other conditions for entry, stay or residence in that Member State;3.“return” means the process of a third-country national going back — whether in voluntary compliance with an obligation to return, or enforced — to:his or her country of origin, ora country of transit in accordance with Community or bilateral readmission agreements or other arrangements, oranother third country, to which the third-country national concerned voluntarily decides to return and in which he or she will be accepted;4.“return decision” means an administrative or judicial decision or act, stating or declaring the stay of a third-country national to be illegal and imposing or stating an obligation to return;5.“removal” means the enforcement of the obligation to return, namely the physical transportation out of the Member State;7Article 4 of Directive 2008/115, headed ‘More favourable provisions’, states in paragraph 4:‘With regard to third-country nationals excluded from the scope of this Directive in accordance with Article 2(2)(a), Member States shall:ensure that their treatment and level of protection are no less favourable than as set out in Article 8(4) and (5) (limitations on use of coercive measures), Article 9(2)(a) (postponement of removal), Article 14(1)(b) and (d) (emergency health care and taking into account needs of vulnerable persons), and Articles 16 and 17 (detention conditions) andrespect the principle of non-refoulement.’8Article 6 of Directive 2008/115, headed ‘Return decision’, provides:‘1. Member States shall issue a return decision to any third-country national staying illegally on their territory, without prejudice to the exceptions referred to in paragraphs 2 to 5.3. Member States may refrain from issuing a return decision to a third-country national staying illegally on their territory if the third-country national concerned is taken back by another Member State under bilateral agreements or arrangements existing on the date of entry into force of this Directive. In such a case the Member State which has taken back the third-country national concerned shall apply paragraph 1.9Article 7 of Directive 2008/115, headed ‘Voluntary departure’, provides in the first subparagraph of paragraph 1:‘A return decision shall provide for an appropriate period for voluntary departure of between seven and thirty days, without prejudice to the exceptions referred to in paragraphs 2 and 4. ...’10Article 8 of Directive 2008/115, headed ‘Removal’, provides:‘1. Member States shall take all necessary measures to enforce the return decision if no period for voluntary departure has been granted in accordance with Article 7(4) or if the obligation to return has not been complied with within the period for voluntary departure granted in accordance with Article 7.4. Where Member States use — as a last resort — coercive measures to carry out the removal of a third-country national who resists removal, such measures shall be proportionate and shall not exceed reasonable force. They shall be implemented as provided for in national legislation in accordance with fundamental rights and with due respect for the dignity and physical integrity of the third-country national concerned.5. In carrying out removals by air, Member States shall take into account the Common Guidelines on security provisions for joint removals by air ...11Article 9 of Directive 2008/115, headed ‘Postponement of removal’, states in paragraph 2(a):‘Member States may postpone removal for an appropriate period taking into account the specific circumstances of the individual case. Member States shall in particular take into account:the third-country national’s physical state or mental capacity’.12Article 11 of Directive 2008/115, headed ‘Entry ban’, provides in paragraphs 1 and 2:‘1. Return decisions shall be accompanied by an entry ban:if no period for voluntary departure has been granted, orif the obligation to return has not been complied with.In other cases return decisions may be accompanied by an entry ban.2. The length of the entry ban shall be determined with due regard to all relevant circumstances of the individual case and shall not in principle exceed five years. ...’13Article 14 of Directive 2008/115, headed ‘Safeguards pending return’, states in paragraph 1:‘1. Member States shall, with the exception of the situation covered in Articles 16 and 17, ensure that the following principles are taken into account as far as possible in relation to third-country nationals during the period for voluntary departure granted in accordance with Article 7 and during periods for which removal has been postponed in accordance with Article 9:emergency health care and essential treatment of illness are provided;(d)special needs of vulnerable persons are taken into account.’14Article 15 of Directive 2008/115, headed ‘Detention’, provides:‘1. Unless other sufficient but less coercive measures can be applied effectively in a specific case, Member States may only keep in detention a third-country national who is the subject of return procedures in order to prepare the return and/or carry out the removal process, in particular when:there is a risk of absconding orthe third-country national concerned avoids or hampers the preparation of return or the removal process.Any detention shall be for as short a period as possible and only maintained as long as removal arrangements are in progress and executed with due diligence.4. When it appears that a reasonable prospect of removal no longer exists for legal or other considerations or the conditions laid down in paragraph 1 no longer exist, detention ceases to be justified and the person concerned shall be released immediately.5. Detention shall be maintained for as long a period as the conditions laid down in paragraph 1 are fulfilled and it is necessary to ensure successful removal. Each Member State shall set a limited period of detention, which may not exceed six months.6. Member States may not extend the period referred to in paragraph 5 except for a limited period not exceeding a further twelve months in accordance with national law in cases where regardless of all their reasonable efforts the removal operation is likely to last longer owing to:a lack of cooperation by the third-country national concerned, ordelays in obtaining the necessary documentation from third countries.’15Article 16 of Directive 2008/115, headed ‘Conditions of detention’, provides in paragraph 1:‘Detention shall take place as a rule in specialised detention facilities. Where a Member State cannot provide accommodation in a specialised detention facility and is obliged to resort to prison accommodation, the third-country nationals in detention shall be kept separated from ordinary prisoners.’16Article 17 of Directive 2008/115 lays down special conditions for the detention of minors and families.17Under Article 20 of Directive 2008/115, Member States had to bring into force the laws, regulations and administrative provisions necessary to comply with the directive by 24 December 2010.The CISA and the Schengen Borders Code18The Convention implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, signed in Schengen (Luxembourg) on 19 June 1990 (OJ 2000 L 239, p. 19; ‘the CISA’), forms part of the Schengen acquis.19In Chapter 4 of Title II of the CISA, headed ‘Conditions governing the movement of aliens’, Article 19(1) and (2), Article 20(1) and Article 21(1) and (2) lay down the conditions under which, respectively, aliens who hold a uniform visa, or a visa issued by one of the Contracting Parties, aliens not subject to a visa requirement, and aliens who hold a valid residence permit, or provisional residence permit, issued by one of those parties may move freely within the territories of the Contracting Parties. Those provisions refer in particular to some of the conditions laid down in Article 5(1) of the CISA for entry into their territories.20Regulation (EC) No 562/2006 of the European Parliament and of the Council of 15 March 2006 establishing a Community Code on the rules governing the movement of persons across borders (Schengen Borders Code) (OJ 2006 L 105, p. 1) consolidated and developed the Schengen acquis.21The Schengen Borders Code, as stated in recital 27 thereof, ‘constitutes a development of provisions of the Schengen acquis in which the United Kingdom does not take part … The United Kingdom is therefore not taking part in its adoption and is not bound by it or subject to its application’.22According to Article 1 thereof, the Schengen Borders Code ‘provides for the absence of border control of persons crossing the internal borders between the Member States of the European Union’ and ‘establishes rules governing border control of persons crossing the external borders of the Member States of the European Union’.23Article 2(1) and (2) of the Schengen Borders Code contains the following definitions:‘1.“internal borders” means:the common land borders, including river and lake borders, of the Member States;the airports of the Member States for internal flights;(c)sea, river and lake ports of the Member States for regular ferry connections;“external borders” means the Member States’ land borders, including river and lake borders, sea borders and their airports, river ports, sea ports and lake ports, provided that they are not internal borders.’24In Chapter I of Title II of the Schengen Borders Code, headed ‘Crossing of external borders and conditions for entry’, Article 4, headed ‘Crossing of external borders’, states:‘1. External borders may be crossed only at border crossing points and during the fixed opening hours. The opening hours shall be clearly indicated at border crossing points which are not open 24 hours a day.3. Without prejudice to the exceptions provided for in paragraph 2 or to their international protection obligations, Member States shall introduce penalties, in accordance with their national law, for the unauthorised crossing of external borders at places other than border crossing points or at times other than the fixed opening hours. These penalties shall be effective, proportionate and dissuasive.’25In that chapter, Article 5, headed ‘Entry conditions for third-country nationals’, provides:‘1. For stays not exceeding three months per six-month period, the entry conditions for third-country nationals shall be the following:they are in possession of a valid travel document or documents authorising them to cross the border;they are in possession of a valid visa, if required …, except where they hold a valid residence permit;they justify the purpose and conditions of the intended stay, and they have sufficient means of subsistence, both for the duration of the intended stay and for the return to their country of origin or transit to a third country into which they are certain to be admitted, or are in a position to acquire such means lawfully;they are not persons for whom an alert has been issued in the [Schengen Information System (SIS)] for the purposes of refusing entry;(e)they are not considered to be a threat to public policy, internal security, public health or the international relations of any of the Member States ...4. By way of derogation from paragraph 1,third-country nationals who do not fulfil all the conditions laid down in paragraph 1 but hold a residence permit or a re-entry visa issued by one of the Member States or, where required, both documents, shall be authorised to enter the territories of the other Member States for transit purposes so that they may reach the territory of the Member State which issued the residence permit or re-entry visa ...third-country nationals who do not fulfil one or more of the conditions laid down in paragraph 1 may be authorised by a Member State to enter its territory on humanitarian grounds, on grounds of national interest or because of international obligations. …’26In Chapter II of Title II of the Schengen Borders Code, headed ‘Control of external borders and refusal of entry’, Article 7, headed ‘Border checks on persons’, states:‘1. Cross-border movement at external borders shall be subject to checks by border guards. Checks shall be carried out in accordance with this chapter.3. On entry and exit, third-country nationals shall be subject to thorough checks.27In that chapter, Article 13, headed ‘Refusal of entry’, provides in paragraph 1:‘A third-country national who does not fulfil all the entry conditions laid down in Article 5(1) and does not belong to the categories of persons referred to in Article 5(4) shall be refused entry to the territories of the Member States. This shall be without prejudice to the application of special provisions concerning the right of asylum and to international protection or the issue of long-stay visas.’28According to Article 20 of the Schengen Borders Code, which forms part of Chapter I of Title III of that code, headed ‘Abolition of border control at internal borders’, internal borders may be crossed at any point without a border check on persons, irrespective of their nationality, being carried out.29By virtue of Article 39(1) of the Schengen Borders Code, which forms part of Title IV, headed ‘Final provisions’, Articles 2 to 8 of the CISA were repealed with effect from 13 October 2006. In particular, the entry conditions, previously set out in Article 5(1) of the CISA, were thus replaced by the entry conditions laid down in Article 5 of the Schengen Borders Code.30After the time material in the main proceedings, the Schengen Borders Code was amended by Regulation (EU) No 610/2013 of the European Parliament and of the Council of 26 June 2013 (OJ 2013 L 182, p. 1).31Article 12 of the Schengen Borders Code as amended by Regulation No 610/2013, which is headed ‘Border surveillance’ and forms part of Chapter II of Title II of that code, headed ‘Control of external borders and refusal of entry’, states in paragraph 1:‘The main purpose of border surveillance shall be to prevent unauthorised border crossings, to counter cross-border criminality and to take measures against persons who have crossed the border illegally. A person who has crossed a border illegally and who has no right to stay on the territory of the Member State concerned shall be apprehended and made subject to procedures respecting Directive 2008/115/EC.’ French law Ceseda32Article L. 621-2 of the Code on the Entry and Stay of Foreign Nationals and the Right of Asylum (code de l’entrée et du séjour des étrangers et du droit d’asile; ‘Ceseda’), as amended by Law No 2012-1560 of 31 December 2012 on the holding of foreign nationals to verify their right to stay and amending the offence of aiding an illegal stay in order to exclude humanitarian and disinterested actions (loi No 2012-1560, du 31 décembre 2012, relative à la retenue pour vérification du droit au séjour et modifiant le délit d’aide au séjour irrégulier pour en exclure les actions humanitaires et désintéressées) (JORF of 1 January 2013, p. 48; ‘the Law of 31 December 2012’), states:‘A foreign national who is not a national of a Member State of the European Union shall be liable to a sentence of one year’s imprisonment and a fine of EUR 3750:1.if he has entered the territory of Metropolitan France without satisfying the conditions referred to in Article 5(1)(a), (b) and (c) of [the Schengen Borders Code] and without having been admitted to that territory pursuant to Article 5(4)(a) and (c) of that [code]; the same shall apply where an alert has been issued for the purpose of refusing the foreign national entry pursuant to an enforceable decision adopted by another State party to the [CISA];or if, arriving directly from the territory of a State party to that convention, he has entered the territory of Metropolitan France without complying with the requirements of Article 19(1) or (2), Article 20(1) and Article 21(1) or (2) thereof, with the exception of the conditions referred to in Article 5(1)(e) of [the Schengen Borders Code] and in Article 5(1)(d) where the alert for the purpose of refusing entry does not result from an enforceable decision adopted by another State party to the [CISA];For the purposes of this article, criminal proceedings may be instituted only in cases where the facts have been found in the circumstances provided for in Article 53 of the Code of Criminal Procedure (code de procédure pénale).’Code of Criminal Procedure33The Code of Criminal Procedure, in the version in force at the material time, provides in Article 53 :‘A crime or other offence shall be classified as in flagrante delicto where it is in the course of being committed or has just been committed. A crime or other offence shall also be so classified where, at a time very close to the act, the person suspected is pursued by hue and cry, is found in the possession of articles or has on or about him traces or clues so as to give grounds for believing that he has taken part in the crime or other offence.Following the discovery of a crime or other offence classified as in flagrante delicto, the investigation conducted under the direction of the public prosecutor under the conditions provided for by the present chapter may continue without interruption for eight days.34Article 62-2 of the Code of Criminal Procedure states:‘Police custody is a coercive measure decided upon by a senior police officer, under the supervision of the courts, whereby a person reasonably suspected on one or more grounds of having committed or attempted to commit a crime or other offence punishable by imprisonment is held at the disposal of investigators.…’ The dispute in the main proceedings and the questions referred for a preliminary ruling 35On 22 March 2013, Ms Affum, a Ghanaian national, was subject to a check by French police officers in Coquelles (France), the point of entry to the Channel Tunnel, when she was on a bus from Ghent (Belgium) to London (United Kingdom).36After presenting a Belgian passport with the name and photograph of another person, and lacking any other identity or travel document in her name, she was placed in police custody on the ground of illegal entry into French territory, on the basis of Article L. 621-2(2) of Ceseda, as amended by the Law of 31 December 2012.37By order of 23 March 2013, the Prefect of Pas-de-Calais, who was dealing with Ms Affum’s administrative situation for the purpose of a decision on her possible removal from French territory, decided that she should be transferred to the Belgian authorities, with a view to her readmission, on the basis of the arrangement between the Government of the French Republic, of the one part, and the Governments of the Kingdom of Belgium, the Grand Duchy of Luxembourg and the Kingdom of the Netherlands, of the other part, concerning the taking charge of persons at the common borders between France and the territory of the Benelux States, signed in Paris on 16 April 1964.38By that order, the Prefect of Pas-de-Calais ordered that Ms Affum be placed in administrative detention in premises not administered by the prison authorities for a period of five days following the end of her police custody, pending her removal.39On 27 March 2013, the Prefect of Pas-de-Calais asked the judge responsible for matters relating to liberty and detention at the tribunal de grande instance de Lille (Regional Court, Lille, France) to extend the administrative detention pending a reply from the Belgian authorities concerning his request for readmission.40By way of defence, Ms Affum maintained that the request of the Prefect of Pas-de-Calais had to be rejected since it had been illegal to place her in police custody, in the light in particular of the judgment of 6 December 2011 in Achughbabian (C‑329/11, EU:C:2011:807): under national law such an illegality invalidated the whole procedure and was punished by a refusal to extend the detention and by the release of the person concerned.41By order of 28 March 2013, the judge responsible for matters relating to liberty and detention at the tribunal de grande instance de Lille (Regional Court, Lille) held, however, that the police custody measure taken against Ms Affum was lawful and that she was therefore placed in administrative detention following a lawful procedure. Accordingly, the judge granted the request of the Prefect of Pas-de-Calais and ordered that Ms Affum’s administrative detention be extended for a maximum period of 20 days from that date.42That order, against which Ms Affum appealed, was confirmed by order of 29 March 2013 made by the First President of the cour d’appel de Douai (Court of Appeal, Douai).43Hearing an appeal on a point of law brought by Ms Affum against that last order, the Cour de cassation (Court of Cassation) decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:‘(1)Is Article 3(2) of Directive 2008/115 to be interpreted as meaning that a third-country national is staying illegally on the territory of a Member State and thus falls within the scope of that directive, as defined in Article 2(1) thereof, where that foreign national is merely in transit as a passenger on a bus travelling on the territory of that Member State from another Member State forming part of the Schengen area and bound for a different Member State?(2)Is Article 6(3) of Directive 2008/115 to be interpreted as meaning that that directive does not preclude national legislation under which a third-country national who has entered the territory of a Member State illegally is liable to a sentence of imprisonment where the foreign national in question may be taken back by another Member State pursuant to an agreement or an arrangement concluded with that State prior to the entry into force of the directive?(3)Depending on the answer given to the previous question, is Directive 2008/115 to be interpreted as precluding national legislation under which a third-country national who has entered the territory of a Member State illegally is liable to a sentence of imprisonment, under the same conditions as those laid down by the Court of Justice in the judgment [of 6 December 2011] in Achughbabian [(C‑329/11, EU:C:2011:807)] so far as concerns illegal stay, which are contingent on the person concerned not having been previously subject to the coercive measures referred to in Article 8 of the directive and the duration of that person’s detention?’ Consideration of the questions referred 44A preliminary point to note is that the main proceedings relate to the situation of a third-country national who entered illegally the territory of a Member State forming part of the Schengen area by crossing a common border of that State and another Member State also forming part of that area, and who was then intercepted when she was preparing to go to the territory of a third Member State, which does not form part of that area. Question 1 45By its first question, the referring court asks, in essence, whether Article 2(1) and 3(2) of Directive 2008/115 must be interpreted as meaning that a third-country national is staying illegally on the territory of a Member State and therefore falls within the scope of that directive when, without fulfilling the conditions for entry, stay or residence, he passes in transit through that Member State as a passenger on a bus from another Member State forming part of the Schengen area and bound for a third Member State outside that area.46All the interested persons who have submitted observations in the proceedings before the Court agree that a third-country national is not excluded from the scope of Directive 2008/115 merely because he is in such a situation of ‘mere transit’ and is therefore present on the territory of the Member State concerned only temporarily or briefly.47It should be noted that, as regards the scope of Directive 2008/115, Article 2(1) provides that the directive applies to third-country nationals staying illegally on the territory of a Member State. The concept of ‘illegal stay’ is defined in Article 3(2) of the directive as ‘the presence on the territory of a Member State, of a third-country national who does not fulfil, or no longer fulfils the conditions of entry as set out in Article 5 of the Schengen Borders Code or other conditions for entry, stay or residence in that Member State’.48It follows from that definition that any third-country national who is present on the territory of a Member State without fulfilling the conditions for entry, stay or residence there is, by virtue of that fact alone, staying there illegally, without such presence being subject to a condition requiring a minimum duration or an intention to remain on that territory. Nor is the fact that such presence is merely temporary or by way of transit among the grounds, listed in Article 2(2) of Directive 2008/115, on which Member States may decide to exclude an illegally staying third-country national from the directive’s scope.49Since a third-country national travelling on a bus across the territory of a Member State in breach of the conditions for entry, stay or residence is clearly present on its territory, he is staying there illegally, within the meaning of Article 3(2) of Directive 2008/115, and falls within the directive’s scope, in accordance with Article 2 thereof.50Accordingly, the answer to the first question is that Article 2(1) and Article 3(2) of Directive 2008/115 must be interpreted as meaning that a third-country national is staying illegally on the territory of a Member State and therefore falls within the scope of that directive when, without fulfilling the conditions for entry, stay or residence, he passes in transit through that Member State as a passenger on a bus from another Member State forming part of the Schengen area and bound for a third Member State outside that area. Questions 2 and 3 51By its second and third questions, which it is appropriate to deal with together, the referring court asks, in essence, whether Directive 2008/115 must be interpreted as precluding legislation of a Member State under which a third-country national who has entered its territory illegally and to whom the return procedure established by that directive has not yet been applied is liable to a sentence of imprisonment, and whether that is also the case where the third-country national may be taken back by another Member State pursuant to an agreement or arrangement within the meaning of Article 6(3) of that directive. In this connection, the referring court raises in particular the question of the relevance of the judgment of 6 December 2011 in Achughbabian (C‑329/11, EU:C:2011:807).52In that judgment, the Court ruled that Directive 2008/115 precludes legislation of a Member State laying down criminal penalties for illegal stays, in so far as that legislation permits the imprisonment of a third-country national who, though staying illegally on the territory of that Member State and not being willing to leave that territory voluntarily, has not been subject to the coercive measures referred to in Article 8 of the directive and has not, if placed in detention with a view to the preparation and carrying out of his removal, yet reached the end of the maximum term of that detention (judgment of 6 December 2011 in Achughbabian, C‑329/11, EU:C:2011:807, paragraph 50).53However, the Court explained that Directive 2008/115 does not does not preclude a third-country national being placed in administrative detention with a view to determining whether or not his stay is legal. In that regard, the competent authorities are required to act with diligence and take a position without delay on the legality of the stay of the person concerned (see, to this effect, judgment of 6 December 2011 in Achughbabian, C‑329/11, EU:C:2011:807, paragraphs 29 to 31).54The Court also explained that Directive 2008/115 likewise does not preclude national legislation which permits the imprisonment of a third-country national to whom the return procedure established by the directive has been applied and who is staying illegally on the territory of the Member State without a justified ground for non-return (judgment of 6 December 2011 in Achughbabian, C‑329/11, EU:C:2011:807, paragraph 50).55In particular, the Court observed that national legislation such as Article L.621-1 of Ceseda in the version prior to its amendment by the Law of 31 December 2012, which that judgment concerned and which provided for a term of imprisonment for any third-country national ‘who has entered or resided in France without [holding the documents and visas required for entry and, in the event of a stay exceeding three months, a residence permit,] or who has remained in France beyond the period authorised by his visa’, is capable of leading to imprisonment whereas, following the common standards and procedures set out in Articles 6, 8, 15 and 16 of Directive 2008/115, such a third-country national must be made the subject matter of a return procedure and may, as regards deprivation of liberty, at the very most be ordered to be detained (see judgment of 6 December 2011 in Achughbabian, C‑329/11, EU:C:2011:807, paragraphs 10, 11, 14 and 38).56It is not in dispute that, following delivery of that judgment, Ceseda was amended by the Law of 31 December 2012, which in particular repealed the offence of staying illegally, while retaining the offence of illegal entry. Thus, Article L.621-1 of Ceseda, whose content has been noted in the previous paragraph, was repealed and Article L. 621-2 of Ceseda was accordingly amended. It is in those circumstances that the referring court raises the question whether a national provision such as Article L. 621-2 of Ceseda, as amended by the Law of 31 December 2012, under which a third-country national who has entered the territory of a Member State illegally is liable to a sentence of imprisonment, is compatible with Directive 2008/115.57Ms Affum, the Czech, Greek, Hungarian and Swiss Governments and the European Commission submit, in essence, that the Court’s interpretation in the judgment of 6 December 2011 in Achughbabian (C‑329/11, EU:C:2011:807) can be applied to the cases covered by that national provision and that, in addition, a third-country national continues to fall within the scope of Directive 2008/115 even when he is taken back, pursuant to an agreement or arrangement, within the meaning of Article 6(3) thereof, by a Member State other than the one in which he was apprehended.58On the other hand, according to the French Government it follows from Article 2(2)(a) and Article 6(3) of Directive 2008/115 and Article 4(3) of the Schengen Borders Code that a national provision such as that at issue in the main proceedings is compatible with the directive.Illegal entry under Directive 2008/11559It follows both from the definition of the concept of ‘illegal stay’, set out in Article 3(2) of Directive 2008/115 and recalled in paragraph 47 of the present judgment, and from recital 5 of the directive, according to which the directive applies ‘to all third-country nationals who do not or who no longer fulfil the conditions for entry, stay or residence’, that a third-country national who, after entering the territory of a Member State illegally, is present on that territory without fulfilling the conditions for entry, stay or residence is, on that basis, staying there illegally.60Thus, in the context of Directive 2008/115 the concepts of ‘illegal stay’ and ‘illegal entry’ are closely linked, as such entry is one of the factual circumstances that may result in the third-country national’s stay on the territory of the Member State concerned being illegal.61Since third-country nationals who, like Ms Affum, have entered the territory of a Member State illegally and who, on that basis, are regarded as staying there illegally therefore fall, under Article 2(1) of Directive 2008/115, and without prejudice to Article 2(2), within the directive’s scope, they must be subject to the common standards and procedures laid down by the directive for the purpose of their removal, as long as their stay has not, as the case may be, been regularised.62By virtue of those standards and procedures, such a third-country national must be the subject of a return procedure, the order of whose stages corresponds to a gradation of the measures to be taken in order to enforce the return decision and which permits, so far as concerns deprivation of liberty, at the very most detention in a specialised facility, a measure which is, however, strictly regulated, pursuant to Articles 15 and 16 of Directive 2008/115, in order to ensure observance of the fundamental rights of the third-country nationals concerned (see, in particular, judgment of 28 April 2011 in El Dridi, C‑61/11 PPU, EU:C:2011:268, paragraphs 41 and 42).63Therefore, for the same reasons as those set out by the Court in the judgment of 6 December 2011 in Achughbabian (C‑329/11, EU:C:2011:807), the Member States cannot permit third country nationals in respect of whom the return procedure established by Directive 2008/115 has not yet been completed to be imprisoned merely on account of illegal entry, resulting in an illegal stay, as such imprisonment is liable to thwart the application of that procedure and delay return, thereby undermining the directive’s effectiveness.64Such a situation can thus be clearly distinguished from the situation at issue in the case giving rise to the judgment of 1 October 2015 in Celaj (C‑290/14, EU:C:2015:640), in which an illegally staying third-country national to whom the common standards and procedures established by Directive 2008/115 were applied in order to end his first illegal stay on the territory of a Member State re-entered the territory of that Member State in breach of an entry ban.65Finally, it must be made clear that Directive 2008/115 does not prevent the Member States from being able to impose a sentence of imprisonment to punish the commission of offences other than those stemming from the mere fact of illegal entry, including in situations where the return procedure has not yet been completed.66As regards the main proceedings, it is not in dispute that the French authorities have not yet begun a return procedure as provided for by Directive 2008/115 in respect of Ms Affum.67The French Government submits, however, that the Member States have, first, the power, pursuant to Article 2(2)(a) and Article 6(3) of Directive 2008/115, to exclude certain third-country nationals who have entered their territory illegally from the directive’s scope and, secondly, the obligation, under Article 4(3) of the Schengen Borders Code, to prescribe penalties for such illegal entry.Article 2(2)(a) of Directive 2008/11568In the first place, it should be recalled that, under Article 2(2)(a) of Directive 2008/115, Member States may decide not to apply the directive to third-country nationals who are subject to a refusal of entry in accordance with Article 13 of the Schengen Borders Code, or who are apprehended or intercepted by the competent authorities in connection with the irregular crossing by land, sea or air of the external border of a Member State and who have not subsequently obtained an authorisation or a right to stay in that Member State.69It is clear from that provision that the two situations covered by it relate exclusively to the crossing of a Member State’s external border, as defined in Article 2(2) of the Schengen Borders Code, and therefore do not concern the crossing of a common border of Member States forming part of the Schengen area. That provision thus cannot permit the Member States to exclude certain illegally staying third-country nationals from the directive’s scope on the ground of illegal entry across an internal border.70Furthermore, so far as concerns the first of the situations covered in Article 2(2)(a) of Directive 2008/115, it is not in dispute that only third-country nationals wishing to cross an external border in order to enter the Schengen area are subject to a refusal of entry in accordance with Article 13 of the Schengen Borders Code.71As regards the second of those situations, it follows from Article 2(2)(a) of Directive 2008/115, which specifies that those nationals ‘have not subsequently obtained an authorisation or a right to stay in that Member State’, namely, the Member State whose external border they have crossed and whose competent authorities have apprehended or intercepted them, that, as the Advocate General has observed in point 68 of his Opinion, this situation also concerns the case where those nationals have entered the territory of the Member State concerned and not the case where they have sought to leave that territory and the Schengen area. The latter case corresponds, moreover, to the directive’s objective, as confirmed by recital 10 thereof, consisting in preferring the voluntary return of third-country nationals. The second of the situations covered in Article 2(2)(a) of Directive 2008/115 thus reflects the situation which is covered in the final sentence of Article 12(1) of the Schengen Borders Code as amended by Regulation No 610/2013.72Finally, still in relation to that second situation, Article 2(2)(a) of Directive 2008/115 specifies that the apprehension or interception of the third-country nationals concerned must take place ‘in connection with the irregular crossing’ of an external border, which, as Ms Affum, the Greek Government and the Commission submit in essence, and as the Advocate General has observed in point 41 of his Opinion, implies a direct temporal and spatial link with that crossing of the border. That situation therefore concerns third-country nationals who have been apprehended or intercepted by the competent authorities at the very time of the irregular crossing of the border or near that border after it has been so crossed.73In the second place, it is to be noted that the exception provided for in Article 2(2)(a) of Directive 2008/115, unlike the exception provided for in Article 2(2)(b), is coupled with certain obligations which are set out in Article 4(4) of the directive.74The fact that Article 4(4) of Directive 2008/115 thus regulates in detail the exercise by the Member States of the power provided for in Article 2(2)(a) of the directive can be explained, as the Commission set out at the hearing, by the purpose of Article 2(2)(a), as apparent from the directive’s history, of permitting the Member States to continue to apply simplified national return procedures at their external borders, without having to follow all the procedural stages prescribed by the directive, in order to be able to remove more swiftly third-country nationals intercepted when crossing those borders. Article 4(4) of Directive 2008/115 is intended in that context to ensure that those simplified national procedures observe the minimum guarantees prescribed by the directive, which include, in particular, the detention conditions laid down in Articles 16 and 17.75As regards the main proceedings, it is not in dispute that Ms Affum was placed in police custody on the basis not of Article L. 621-2(1) of Ceseda, as amended by the Law of 31 December 2012, which provides for a sentence of imprisonment where a third-country national enters French territory illegally by crossing an external border, but of Article L. 621-2(2) of Ceseda, as amended by the Law of 31 December 2012, because she entered French territory illegally by crossing the Franco-Belgian border.76That being so, it is not necessary to determine whether a provision such as Article L. 621-2(1) of Ceseda, as amended by the Law of 31 December 2012, meets the requirements of Article 2(2)(a) and Article 4(4) of Directive 2008/115.77As regards Article L. 621-2(2) of Ceseda, as amended by the Law of 31 December 2012, which provides for a sentence of imprisonment where a third-country national enters French territory illegally by crossing an internal border, it should be recalled that, as has been pointed out in paragraph 69 of the present judgment, Article 2(2)(a) of Directive 2008/115 cannot permit the Member States to exclude certain illegally staying third-country nationals from the directive’s scope on the ground of illegal entry across an internal border.78As to the fact that Ms Affum was intercepted and apprehended not when she entered French territory by crossing an internal border but when trying to leave French territory and the Schengen area through the Channel Tunnel, it is clear from paragraph 71 of the present judgment that that fact is not in any event capable of excluding that illegally staying third-country national from the scope of Directive 2008/115 pursuant to Article 2(2)(a) thereof.Article 6(3) of Directive 2008/11579Under Article 6(1) of Directive 2008/115, Member States are to issue a return decision to any third-country national staying illegally on their territory, without prejudice to the exceptions referred to in Article 6(2) to (5).80Under Article 6(3) of Directive 2008/115, Member States may refrain from issuing a return decision to a third-country national staying illegally on their territory if the third-country national concerned is taken back by another Member State under bilateral agreements or arrangements existing on the date of entry into force of the directive. In such a case the Member State which has taken back the third-country national concerned is to apply Article 6(1).81As the French Government submits, and as the Advocate General has observed in point 77 of his Opinion, the arrangement referred to in paragraph 37 of the present judgment can be equated with a ‘bilateral arrangement’ within the meaning of Article 6(3) of Directive 2008/115 since, although concluded by four Member States, it treats the territory of the Benelux as a single territory.82However, contrary to the French Government’s contentions, Article 6(3) of Directive 2008/115 cannot be interpreted as laying down an exception to the directive’s scope, which would be additional to those set out in Article 2(2) and would enable the Member States to exclude illegally staying third-country nationals from the common return standards and procedures when they are taken back, pursuant to an agreement or arrangement existing on the date of the directive’s entry into force, by a Member State other than the one in which they have been apprehended.83As all the other parties who have submitted observations in the present proceedings in essence contend, and as the Advocate General has noted in points 75 and 76 of his Opinion, an interpretation to that effect would run counter to the wording of Article 6 of Directive 2008/115 and to the scheme and purpose of Directive 2008/115.84It must be found that it is apparent from the wording of Article 6(1) and (3) of Directive 2008/115 that the exception laid down in Article 6(3) concerns solely the obligation of the Member State on whose territory the national in question is present to issue a return decision to him and thus to attend to his removal, that obligation then falling, as the second sentence of Article 6(3) makes clear, to the Member State who has taken him back.85That finding is borne out by the scheme of Directive 2008/115, as that exception is indeed not among the derogations from the directive’s scope, which are expressly laid down in Article 2(2) thereof.86Therefore, it is clear that, according to the wording and scheme of Directive 2008/115, the situation of an illegally staying third-country national who is taken back, pursuant to an agreement or arrangement within the meaning of Article 6(3) of the directive, by a Member State other than the one in which he has been apprehended remains governed by the directive and that the Member State which decides to transfer him to another Member State pursuant to that provision acts within the framework of the common standards and procedures established by the directive.87Since that decision to transfer the third-country national constitutes one of the measures provided for by Directive 2008/115 in order to bring his illegal stay to an end and a stage preparatory to his removal from the territory of the European Union, the Member State concerned must, in the light of the directive’s objectives, adopt that decision with diligence and speedily so that he is transferred as soon as possible to the Member State responsible for the return procedure (see, to this effect, judgments of 6 December 2011 in Achughbabian, C‑329/11, EU:C:2011:807, paragraphs 31 and 45, and of 15 February 2016 in N., C‑601/15 PPU, EU:C:2016:84, paragraph 76).88Clearly, not to transfer that national to the latter Member State until a sentence of imprisonment has been imposed upon him and enforced would delay the triggering of that procedure and thus his actual removal, thereby undermining the directive’s effectiveness.Article 4(3) of the Schengen Borders Code89Under Article 4(3) of the Schengen Borders Code, Member States are to introduce penalties, in accordance with their national law, for the unauthorised crossing of external borders at places other than border crossing points or at times other than the fixed opening hours. These penalties are to be effective, proportionate and dissuasive.90First, that provision does not require the Member States to introduce sentences of imprisonment for the situations which it covers, but lets them choose the penalties that they wish to adopt, provided that those penalties are effective, proportionate and dissuasive. Therefore, even in the situations for which Article 4(3) of the Schengen Borders Code lays down an obligation to introduce penalties, the Member States may comply with that obligation while observing at the same time the obligations stemming from Directive 2008/115. The fact that Article 4(3) of the Schengen Borders Code is not in any way intended to derogate from the common standards and procedures established by that directive is, moreover, expressly confirmed in Article 12(1) of the Schengen Borders Code as amended by Regulation No 610/2013.91Secondly, Article 4(3) of the Schengen Borders Code limits the obligation on the Member States to introduce penalties solely to the case of ‘unauthorised crossing of external borders at places other than border crossing points or at times other than the fixed opening hours’ and Ms Affum’s situation is not such a case. Nor does any other provision of the Schengen Borders Code prescribe a penalty for the cases not covered in Article 4(3), namely those of unauthorised crossing of external borders at border crossing points during the fixed opening hours and of unauthorised crossing of internal borders.92Accordingly, the French Government cannot invoke the obligations imposed on the Member States by the Schengen Borders Code to justify a failure to comply with Directive 2008/115.93It follows from all the foregoing considerations that the answer to the second and third questions is that Directive 2008/115 must be interpreted as precluding legislation of a Member State which permits a third country national in respect of whom the return procedure established by that directive has not yet been completed to be imprisoned merely on account of illegal entry across an internal border, resulting in an illegal stay. That interpretation also applies where the national concerned may be taken back by another Member State pursuant to an agreement or arrangement within the meaning of Article 6(3) of the directive. Costs 94Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: 1. Article 2(1) and Article 3(2) of Directive 2008/115/EC of the European Parliament and of the Council of 16 December 2008 on common standards and procedures in Member States for returning illegally staying third-country nationals must be interpreted as meaning that a third-country national is staying illegally on the territory of a Member State and therefore falls within the scope of that directive when, without fulfilling the conditions for entry, stay or residence, he passes in transit through that Member State as a passenger on a bus from another Member State forming part of the Schengen area and bound for a third Member State outside that area. 2. Directive 2008/115 must be interpreted as precluding legislation of a Member State which permits a third country national in respect of whom the return procedure established by that directive has not yet been completed to be imprisoned merely on account of illegal entry across an internal border, resulting in an illegal stay. That interpretation also applies where the national concerned may be taken back by another Member State pursuant to an agreement or arrangement within the meaning of Article 6(3) of the directive. [Signatures]( *1 ) Language of the case: French. | bff8a-4877383-42cd | EN |
The General Court dismisses the actions brought by the four Spanish companies which had participated in the cartel on the European pre-stressing steel market | JUDGMENT OF THE GENERAL COURT (Sixth Chamber)2 June 2016 ( *1 )‛Competition — Agreements, decisions and concerted practices — European market for prestressing steel — Price fixing, market sharing and the exchange of commercially sensitive information — Decision finding an infringement of Article 101 TFEU — Economic unit — Direct participation in the infringement — Secondary liability of parent companies — Succession of undertakings — Complex infringement — Single and continuous infringement — 2006 Guidelines on the method of setting fines — Principle of non-retroactivity and principle that penalties must be lawful — Mitigating circumstances — Ability to pay — Rights of the defence — Obligation to state reasons — Request for reconsideration — No change in the factual circumstances — Letter of rejection — Inadmissibility’In Joined Cases T‑426/10 to T‑429/10, T‑438/12 to T‑441/12, Moreda-Riviere Trefilerías, SA, established in Gijón (Spain), represented, in Case T‑426/10, by F. González Díaz and A. Tresandi Blanco and, in Case T‑440/12, initially by F. González Díaz and P. Herrero Prieto, and subsequently by F. González Díaz and A. Tresandi Blanco, lawyers,applicant in Cases T‑426/10 and T‑440/12, Trefilerías Quijano, SA, established in Los Corrales de Buelna (Spain), represented, in Case T‑427/10, by F. González Díaz and A. Tresandi Blanco and, in Case T‑439/12, initially by F. González Díaz and P. Herrero Prieto, and subsequently by F. González Díaz and A. Tresandi Blanco,applicant in Cases T‑427/10 and T‑439/12, Trenzas y Cables de Acero PSC, SL, established in Santander (Spain), represented, in Case T‑428/10, by F. González Díaz and A. Tresandi Blanco and, in Case T‑441/12, initially by F. González Díaz and A. Herrero Prieto, and subsequently by F. González Díaz and A. Tresandi Blanco,applicant in Cases T‑428/10 and T‑441/12, Global Steel Wire, SA, established in Cerdanyola del Vallés (Spain), represented, in Case T‑429/10, by F. González Díaz and A. Tresandi Blanco and, in Case T‑438/12, initially by F. González Díaz and A. Herrero Prieto, and subsequently by F. González Díaz and A. Tresandi Blanco,applicant in Cases T‑429/10 and T‑438/12,v European Commission, represented, in Cases T‑426/10, T‑427/10, T‑429/10 and T‑438/12 to T‑441/12, by V. Bottka, F. Castillo de la Torre and C. Urraca Caviedes, acting as Agents, and by L. Ortiz Blanco and A. Lamadrid de Pablo, lawyers, and, in Case T‑428/10, by V. Bottka and F. Castillo de la Torre, and by L. Ortiz Blanco and A. Lamadrid de Pablo,defendant,APPLICATION for annulment and variation of Commission Decision C(2010) 4387 final of 30 June 2010 relating to a proceeding under Article 101 [TFEU] and Article 53 of the EEA Agreement (Case COMP/38344 — Prestressing Steel), as amended by Commission Decision C(2010) 6676 final of 30 September 2010 and Commission Decision C(2011) 2269 final of 4 April 2011, and also by the letter of 25 July 2012 from the Director-General of the Directorate-General for Competition of the Commission,THE GENERAL COURT (Sixth Chamber),composed of S. Frimodt Nielsen (Rapporteur), President, F. Dehousse and A.M. Collins, Judges,Registrar: J. Palacio González, Principal Administrator,having regard to the written procedure and further to the hearing on 9 July 2015,gives the following Judgment ( 1 )… Law II – The third set of cases B – Admissibility of the actions 539The Commission disputes the admissibility of the third set of cases, by raising pleas of inadmissibility. Those pleas, which were disputed by the applicants, were joined to the substance.540It should be borne in mind that any expression in writing of an opinion issued by an EU institution cannot constitute a decision against which an action for annulment under the first paragraph of Article 263 TFEU may be brought, since it is not capable of having legal effects or is not intended to have such effects (see, to that effect, judgments of 27 March 1980 in Sucrimex and Westzucker v Commission, 133/79, EU:C:1980:104, paragraphs 15 to 19, and of 27 September 1988 in United Kingdom v Commission, 114/86, EU:C:1988:449, paragraphs 12 to 15).541Likewise, any letter issued by an EU body in response to a request from its addressee does not constitute an act against which an action may be brought under the fourth paragraph of Article 263 TFEU (see, to that effect, order of 27 January 1993 in Miethke v Parliament, C‑25/92, ECR, EU:C:1993:32, paragraph 10).542Conversely, according to settled case-law, any measure the legal effects of which are binding on, and capable of affecting the interests of, third parties by bringing about a distinct change in their legal position is an act against which an action may be brought under Article 263 TFEU (see judgments of 11 November 1981 in IBM v Commission, 60/81, EU:C:1981:264, paragraph 9 and the case-law cited, and of 17 April 2008 in Cestas v Commission, T‑260/04, EU:T:2008:115, paragraph 67 and the case-law cited).543In addition, it is necessary to look to the substance of the measure annulment of which is sought in order to ascertain whether it may be the subject of an action for annulment, the form in which that measure was cast being, in principle, immaterial in that regard (see judgments in IBM v Commission, cited in paragraph 542 above, EU:C:1981:264, paragraph 9 and the case-law cited, and in Cestas v Commission, cited in paragraph 542 above, EU:T:2008:115, paragraph 68 and the case-law cited).544Only the act whereby an EU body determines its position unequivocally and definitively, in a form enabling its nature to be identified, constitutes a decision that may form the subject-matter of an action under Article 263 TFEU, on condition, however, that that decision does not merely constitute confirmation of a prior act (see, to that effect, judgment of 26 May 1982 in Germany and Bundesanstalt für Arbeit v Commission, 44/81, EU:C:1982:197, paragraph 12).545According to settled case-law, an action for the annulment of a measure which merely confirms a previous decision that has become final is inadmissible. A decision is a mere confirmation of an earlier decision where it contains no new factors as compared with the earlier measure and is not preceded by any reconsideration of the situation of the addressee of the earlier measure (judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 44 ; of 22 May 2012 in Sviluppo Globale v Commission, T‑6/10, not published, EU:T:2012:245, paragraph 22; and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 40).546However, the confirmatory or other nature of a measure cannot be determined solely by reference to its content as compared with that of the previous decision which it is said to confirm. The nature of the contested measure must also be assessed in the light of the nature of the request to which it constitutes a reply (judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 45; of 22 May 2012 in Sviluppo Globale v Commission, T‑6/10, not published, EU:T:2012:245, paragraph 23; and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 41).547In particular, if the measure constitutes the reply to a request in which substantial new facts are relied on, and whereby the administration is requested to reconsider its previous decision, that measure cannot be regarded as merely confirmatory in nature, since it constitutes a decision taken on the basis of those facts and thus contains a new factor by comparison with the previous decision (judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 46; of 22 May 2012 in Sviluppo Globale v Commission, T‑6/10, not published, EU:T:2012:245, paragraph 24; and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 42).548It is settled case-law that the existence of substantial new facts may justify the submission of a request for reconsideration of a previous decision which has become final. If a request for reconsideration of a decision which has become final is based on substantial new facts, the institution concerned is required to comply with the request. After the reconsideration, the institution must take a new decision, the legality of which may where necessary be challenged before the Courts of the European Union. If, on the other hand, the request for reconsideration is not based on substantial new facts, the institution is not required to comply with it (see judgments of 7 February 2001 in Inpesca v Commission, T‑186/98,EU:T:2001:42, paragraphs 47 and 48 and the case-law cited, and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 43).549An action brought against a decision refusing to reconsider a decision which has become final will be declared admissible if it appears that the request was actually based on substantial new facts. On the other hand, if it appears that the request was not based on such facts, an action against the decision refusing to reconsider it will be declared inadmissible (see judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 49 and the case-law cited, and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 44).550As regards the question of the criteria which determine whether facts are to be classified as ‘substantial new’ facts, it is clear from the case-law that, in order for a fact to be ‘new’, it is essential that neither the applicant nor the administration was aware of, or in a position to be aware of, the fact in question when the previous decision was adopted (see judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 50 and the case-law cited, and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 45).551In order to be ‘substantial’, the fact concerned must be capable of substantially altering the applicant’s situation forming the basis of the initial request that gave rise to the previous decision which has become final (see judgments of 7 February 2001 in Inpesca v Commission, T‑186/98, EU:T:2001:42, paragraph 51 and the case-law cited, and of 2 October 2014 in Euro-Link Consultants and European Profiles v Commission, T‑199/12, not published, EU:T:2014:848, paragraph 46).552It is in the light of that case-law that the admissibility of the present action, in so far as it is directed against the letter of 25 July 2012, must be examined.553It must be observed at the outset that, in rejecting the second requests, the Director-General relied, in the letter of 25 July 2012, on the same grounds as those which the College of Members of the Commission had taken into consideration in the contested decision.554Thus, in the present case, the Director-General considered that the material which the applicants had submitted since the adoption of the contested decision showed that their financial situation had improved by comparison with that which the Commission had taken into account when it considered that they were able to pay the fine, having recourse, if necessary, to credit institutions.555As regards the second ground taken into consideration in the contested decision, namely the possibility of having recourse to shareholders, both legal and natural persons, the Director-General repeated it in identical terms, taking the view that the death of Mr Rub., which occurred while the second requests were under consideration, was not substantial, since his estate had been transferred to his heirs.556Although the Commission is not correct to maintain that it is only where an undertaking’s financial situation has deteriorated that it can properly request a reconsideration of its ability to pay, it must nonetheless be considered that where the only change by comparison with the factual situation examined by the Commission at the time when it assessed an undertaking’s ability to pay consists in an improvement in its financial situation, the undertaking in question is not entitled to request the Commission to reconsider the position which it previously adopted. In such a situation, therefore, the Commission’s rejection of that request for reconsideration does not constitute an act against which an action may be brought.557A distinction must thus be drawn, when the administration receives a request to reconsider a decision which it has previously adopted, between the question of the examination of the factual and legal situation of the person concerned and the question of the reconsideration of the earlier situation. It is only where, following the examination of the situation of the person concerned, the administration finds that there has been a substantial change, in fact or in law, of the situation of the person concerned that it is then required to reconsider its decision. Conversely, where there has been no substantial change in the factual or legal circumstances, the administration cannot be required to reconsider its decisions and the position which it adopts when rejecting a request for a reconsideration submitted in those circumstances is not in the nature of a decision, so that an action brought against such a position must be rejected as inadmissible, as it is directed against an act against which an action cannot be brought. However, the assessment on the basis of which the administration finds that the person concerned has presented no new fact and has not established that there has been a substantial change in his factual and legal situation is amenable to review by the Courts of the European Union.558It is therefore appropriate to examine whether, as the Commission claims, the applicants’ financial situation improved by comparison with the situation which it had taken into consideration in the contested decision, which the applicants deny.559As a preliminary point, it should be borne in mind that the Commission was correct to take into account, when it adopted the contested decision, the applicants’ situation as it appeared in the last available annual accounts, which related to the business year 2009 (see paragraph 518 above). Furthermore, the applicants put forward a considerable amount of material relating to their financial situation in support of the second requests (see paragraph 532 above). The first material was submitted on the date of those requests, that is to say, in July 2011, and related to the beginning of 2011. The examination of the second requests lasted almost one year, during which the Commission requested and obtained information, so that, in the letter of 25 July 2012, the Director-General relied on the financial data existing at the end of 2011.560In support of their assertion that their situation deteriorated after the adoption of the contested decision, the applicants do not compare the data relating to the end of 2011 — namely, the most recent data available when the Director-General determined the matter — with those for 2009 — namely, the data which the Commission took into consideration in the contested decision –, but compare the data from the beginning of 2011 with the data for 2008, the year when the economic crisis was at its height.561It must be stated, however, that the comparison between the applicants’ situation as apparent in July 2012 with the situation, relating to 2009, which the Commission took into account in the contested decision shows a significant improvement; and the data which the Commission submits in that regard are not disputed by the applicants.562Thus, while the total amount of the fines, including interest, was EUR 54.26 million in 2010, and amounted to EUR 58.6 million at the end of 2011, GSW’s worldwide turnover during the same period increased from EUR 543 million to EUR 823 million. The ratio between the amount of the fines and GSW’s turnover thus fell from 10%, on the date of adoption of the contested decision, to 7.1%, on the date on which the Director-General made his determination.563It should be noted that during that period the ratio between the amount of the fines and the value of the combined assets of GSW and TQ remained stable, at between 6 and 7%.564While it is the case that the applicants’ own funds declined between 2009 and 2011, from EUR 212 million to EUR 196 million, so that the ratio between the total amount of the fines and the applicants’ own funds also worsened slightly, going from 26 to 30%, it is necessary, however, to consider the projections submitted by the applicants to the Commission, which indicate that the level of own funds expected in 2015 was EUR 244 million, higher than that recorded for 2009.565During the same period, GSW’s prospects of profitability also substantially improved. Thus, in 2009, GSW recorded losses after five consecutive years of positive results. The results forecasts for 2010 and 2011 drawn up at the end of 2009 predicted losses of EUR 6 million and EUR 5 million respectively. In fact, the results achieved were higher than forecast, namely a profit of EUR 1 million in 2010 and of EUR 25 million in 2011. Likewise, although ‘earnings before interest, taxes, depreciation, and amortization’ (EBITDA) were EUR ‑20 million in 2009, they reached EUR 51 million in 2010 and EUR 90 million in 2011. GSW’s risk profile, made up of the ratio between its net debt, with or without the fine, and its EBITDA thus considerably improved between 2009 and 2011.566In addition, the availability of liquid assets also improved between 2009 and 2011, working capital going from EUR ‑51 million in 2010 to EUR ‑42 million in 2011. Although the result of the Altmann Z-score test, an indicator of the probability of bankruptcy based on retrospective data, gave rise to concern in 2009 (0.59 without a fine and 0.44 including the fines), it no longer did so in 2011 (1.35 without a fine and 1.29 including the fines), the threshold for the industry being 1.23.567Last, although in 2009 GSW had available a total amount of bank credits of more than EUR 160 million, EUR 22 million of which was not used in 2011, its bank debts had been successfully negotiated for an amount of EUR 3000 million, of which the fines represented around 2%.568The applicants do not dispute the accuracy of those financial data. They merely propose other comparisons, of figures relating to different years. In that regard, for the reasons stated in paragraph 559 above, the Commission is correct to maintain that, for the purpose of assessing whether there had been a change in the applicants’ situation at the date of the letter of 25 July 2012, what must be compared are, on the one hand, the situation prevailing at the end of 2009, which was taken into consideration in the contested decision, and, on the other, the situation existing on the date on which the Director-General adopted the letter of 25 July 2012. It is quite clear that the applicants’ situation significantly improved between those two dates.569In the light of the considerations set out in paragraphs 556 and 557 above, it follows that the facts alleged by the applicants in the second requests were not capable of substantially altering the assessment of their ability to pay made in the contested decision. Accordingly, the letter of 25 July 2012 is not in the nature of a decision and the actions constituting the third set of cases (Cases T‑438/12 to T‑441/12), which are directed against that letter, must be dismissed as inadmissible.570It follows from all of the foregoing that the present actions must all be dismissed.On those grounds,THE GENERAL COURT (Sixth Chamber)hereby: 1. Dismisses the actions; 2. Orders Moreda-Riviere Trefilerías, SA, Trefilerías Quijano, SA, Trenzas y Cables de Acero PSC, SL and Global Steel Wire, SA to pay the costs. Frimodt NielsenDehousseCollinsDelivered in open court in Luxembourg on 2 June 2016.[Signatures]( *1 ) Language of the case: Spanish.( 1 ) Only the paragraphs of this judgment which the Court considers it appropriate to publish are reproduced here. | 4e956-3f89d9d-4b7e | EN |
A name containing several tokens of nobility and freely chosen by a German in another Member State of which he also holds the nationality does not necessarily have to be recognised in Germany | 2 June 2016 ( *1 )[Text as amended by order of 6 October 2016]‛Reference for a preliminary ruling — Citizenship of the Union — Article 21 TFEU — Freedom to move and reside in the Member States — Law of a Member State abolishing privileges and prohibiting the conferring of new noble titles — Surname of an adult, national of that State, obtained during a habitual residence in another Member State of which that person also holds the nationality — Name comprising tokens of nobility — Residence in the first Member State — Refusal by the authorities of the first Member State to enter the name acquired in the second Member State in the register of civil status — Justification — Public policy — Incompatibility with the essential principles of German law’In Case C‑438/14,REQUEST for a preliminary ruling under Article 267 TFEU from the Amtsgericht Karlsruhe (Local Court, Karlsruhe, Germany), made by decision of 17 September 2014, received at the Court on 23 September 2014, in the proceedings Nabiel Peter Bogendorff von Wolffersdorff v Standesamt der Stadt Karlsruhe, Zentraler Juristischer Dienst der Stadt Karlsruhe, THE COURT (Second Chamber),composed of M. Ilešič, President of the Chamber, C. Toader, A. Rosas (Rapporteur), A. Prechal and E. Jarašiūnas, Judges,Advocate General: M. Wathelet,Registrar: K. Malacek, Administrator,having regard to the written procedure and further to the hearing on 12 November 2015,after considering the observations submitted on behalf of—Mr Nabiel Peter Bogendorff von Wolffersdorff, by Mr Bogendorff von Wolffersdorff in person and by T. Donderer, Rechtsanwalt,the Zentraler Juristischer Dienst der Stadt Karlsruhe, by D. Schönhaar and P. Becker, acting as Agents,the German Government, by T. Henze, J. Kemper and K. Petersen, acting as Agents,the European Commission, by G. von Rintelen, M. Wilderspin and C. Tufvesson, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 14 January 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Articles 18 TFEU and 21 TFEU.2The request has been made in proceedings between Mr Nabiel Peter Bogendorff von Wolffersdorff and the Standesamt der Stadt Karlsruhe (Register Office, Karlsruhe) and the Zentraler Juristischer Dienst der Stadt Karlsruhe (Central Legal Service of the city of Karlsruhe, Germany), concerning the refusal by those authorities to modify the forenames and surname entered on the birth certificate of the applicant in the main proceedings and to state in the register of civil status tokens of nobility forming part of the surname acquired by him in another Member State. German law 3Paragraph 123(1) of the Grundgesetz für die Bundesrepublik Deutschland (Basic Law of the Federal Republic of Germany) of 23 May 1949 (BGBl. 1949, I, p. 1; ‘the Basic Law’) provides that ‘the law in force prior to the first meeting of the Bundestag shall remain in force in so far as it does not run counter to the Basic Law’.4Article 109 of the Verfassung des Deutschen Reichs (Constitution of the German Reich), adopted on 11 August 1919 in Weimar ((Reichsgesetzblatt 1919, p. 1383; ‘the Weimar Constitution’) which entered into force on 14 August 1919, provides:‘All Germans are equal before the law.Men and women have in principle the same civic rights and duties.Public law advantages or disadvantages of birth or rank are to be abolished. Titles of nobility are valid only as part of a name and may no longer be conferred.Titles may be conferred only if they denote an office or profession; this does not affect academic degrees.Neither orders nor decorations may be conferred by the State.No German may accept a title or an order from a foreign Government.’5By decisions of 11 March 1966 and 11 December 1996, the Bundesverwaltungsgericht (Federal Administrative Court, Germany) took the view that, by virtue of Paragraph 123(1) of the Basic Law, Article 109 of the Weimar Constitution remains in force and, in the hierarchy of norms, has the status of ordinary federal law.6Under the heading ‘Personal status’, Paragraph 5 of the Einführungsgesetz zum Bürgerlichen Gesetzbuch (Law introducing the Civil Code) of 21 September 1994 (BGBl. 1994 I, p. 2494, and corrigendum BGBl. 1997, I, p. 1061), in the version applicable at the time material to the main proceedings (‘the EGBGB’) provides, in paragraph 1:‘Where reference is made to the law of the State of which a person is a national, and the person is a national of several States, the law to be applied is the law of the State with which the person is most closely linked, in particular by his habitual residence or by the course of his life. If the person is also German, that legal position takes precedence.’7Paragraph 6 of the EGBGB, entitled ‘Public policy’, is worded as follows:‘A rule of law of another State is not to be applied if its application leads to a result that is manifestly incompatible with essential principles of German law. In particular, it is not to be applied if application is incompatible with fundamental rights.’8Paragraph 10 of the EGBGB, entitled ‘Name’, provides, in paragraph 1:‘A person’s name is subject to the law of the State of which that person is a national.’9Paragraph 48 of the EGBGB, entitled ‘Choice of a name acquired in another Member State of the European Union’, provides:‘If a person’s name is subject to German law, he may, by declaration to the register office, choose the name acquired during habitual residence in another Member State of the European Union and entered in a register of civil status there, where this is not manifestly incompatible with essential principles of German law. The choice of name shall take effect retroactively from the date of entry in the register of civil status of the other Member State, unless the person expressly declares that the choice of name is to have effect only for the future. The declaration must be publicly attested or certified. …’10Paragraph 48 of the EGBGB was created by the Gesetz zur Anpassung der Vorschriften des Internationalen Privatrechts an die Verordnung (EU) Nr. 1259/2010 und zur Änderung anderer Vorschriften des Internationalen Privatrechts (Law on the adaptation of the rules of private international law to Regulation (EU) No 1259/2010 and on the amendment of other rules of private international law) of 23 January 2013 (BGBl. 2013 I p. 101), which entered into force on 29 January 2013. That provision was introduced into German law following the judgment of the Court of Justice of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559). The dispute in the main proceedings and the question referred for a preliminary ruling 11[As amended by order of 6 October 2016] The applicant in the main proceedings is a German national, born on 9 January 1963 in Karlsruhe (Germany). At birth he was given the forename ‘Nabiel’ and the surname ‘Bagdadi’, which were entered in the register of civil status of the city of Karlsruhe.12Subsequently, following administrative change of name proceedings in the city of Nuremberg (Germany), the applicant in the main proceedings firstly acquired the surname ‘Bogendorff’ and secondly obtained the addition to his forename of ‘Nabiel’ of the forename ‘Peter’. By the effect of an adoption, the German personal status of the applicant in the main proceedings was again amended so that, according to that personal status, he henceforth bore the forenames ‘Nabiel Peter’ and the surname ‘Bogendorff von Wolffersdorff’.13In 2001, the applicant in the main proceedings moved to the United Kingdom where, from 2002, he exercised the profession of insolvency adviser in London.14In 2004, he acquired British nationality by naturalisation, while retaining his German nationality.15By a deed poll of 26 July 2004, registered on 22 September 2004 at the Supreme Court of England and Wales (United Kingdom) and published in The London Gazette on 8 November 2004, the applicant to the main proceedings changed his name so that, under English law, he is called ‘Peter Mark Emanuel Graf von Wolffersdorff Freiherr von Bogendorff’.16In 2005, the applicant in the main proceedings and his spouse left London to live in Chemnitz in Germany, where their daughter was born on 28 February 2006. They have lived there since then.17The birth of their daughter, who has double German and British nationality, was declared at the Consulate General of the United Kingdom in Düsseldorf (Germany) on 23 March 2006. The forenames and surname of their daughter entered in her birth certificate and British passport are ‘Larissa Xenia Gräfin von Wolffersdorff Freiin von Bogendorff’.18However, the Register office of the city of Chemnitz refused to register her under her British name, basing its refusal on Paragraph 10 of the EGBGB. The applicant in the main proceedings applied to the Oberlandesgericht Dresden (Higher Regional Court of Dresden, Germany), seeking an order that that Register office enter his daughter’s name in the register of civil status in the form appearing on the birth certificate issued by the British authorities.19By decision of 6 July 2011, the Oberlandesgericht Dresden (Higher Regional Court of Dresden) granted that application.20In accordance with that order, the city of Chemnitz made the relevant entry. Consequently, the daughter of the applicant in the main proceedings, as a German citizen, bears forenames and surname identical to those which she bears as a British citizen, namely ‘Larissa Xenia Gräfin von Wolffersdorff Freiin von Bogendorff’.21On 22 May 2013, the applicant in the main proceedings declared that he had instructed the Register office of the city of Karlsruhe to enter in the register of civil status, in accordance with Paragraph 48 of the EGBGB, the forenames and surname he has acquired under British legislation.22Since that office refused to make that entry, the applicant in the main proceedings applied to the Amtsgericht Karlsruhe (District Court, Karlsruhe) for an order that the office, pursuant to Paragraph 49(1) of the Personenstandsgesetz (Law on personal status), amend his birth certificate, with retroactive effect to the date of 22 September 2004, so that it shows the forenames and surname ‘Peter Mark Emanuel Graf von Wolffersdorff Freiherr von Bogendorff’.23The Register office of the city of Karlsruhe opposed that application on the basis of the exception of incompatibility with the essential principles of German law provided for in Paragraph 48 of the EGBGB.24The Amstgericht Karlsruhe (District Court, Karlsruhe) notes in that regard, that, in German specialised legal literature, the question of the scope of Paragraph 48 of the EGBGB, adopted following the judgment of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559), which permits a person whose name is subject to German law to bear a name acquired during habitual residence in another Member State, is debated, in particular where that name was acquired independently of any change of personal status which occurred following the application of family law provisions. The case-law of the Court of Justice does not give an answer to this question of law. Thus, the judgements of 2 October 2003 in Garcia Avello (C‑148/02, EU:C:2003:539) and of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559) concern cases in which, from the birth of the persons concerned, their names, capable of recognition by the competent authorities of the Member States concerned, were different. The case which gave rise to the judgment of 22 December 2010 in Sayn-Wittgenstein (C‑208/09, EU:C:2010:806) is distinguished from the main proceedings by the facts that, in the first case, the person concerned did not have dual nationality, the difference in the names was the result of a change in personal status following application of provisions of family law, in that case an adoption, and, finally, the constitutional identity of the Republic of Austria in the matter of the use of titles of nobility is comparable only to a limited extent to that of the Federal Republic of Germany.25In those circumstances the Amtsgericht Karlsruhe (District Court, Karlsruhe) decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Are Articles 18 TFEU and 21 TFEU to be interpreted as meaning that the authorities of a Member State are obliged to recognise the change of name of a national of that State if he is at the same time a national of another Member State and has acquired in that Member State, during habitual residence, by means of a change of name not associated with a change of family law status, a freely chosen name including several tokens of nobility, where it is possible that a future substantial link with that State does not exist and in the first Member State the nobility has been abolished by constitutional law but the titles of nobility used at the time of abolition may continue to be used as part of a name?’ Consideration of the question referred Preliminary observations 26It is appropriate to note at the outset that Mr Bogendorff von Wolffersdorff has applied to the referring court for an order changing not only his surname but also his forenames from ‘Nabiel Peter’ to ‘Peter Mark Emanuel’. Consequently, it is appropriate to understand the reference made in the question to the concept of ‘change of name’ as being made to the refusal by the authorities of a Member State to recognise both the forenames and surname acquired by a national of that State during habitual residence in a second Member State of which that national also holds the nationality.27Accordingly, the view must be taken that, by its question, the referring court asks, in essence, whether Articles 18 TFEU and 21 TFEU must be interpreted as meaning that the authorities of a Member State are bound to recognise the surname and forenames of a national of that Member State when he also holds the nationality of another Member State in which he has acquired a name which he has chosen freely and which contains a number of tokens of nobility. It asks in particular whether reasons connected with the constitutional choice of the first Member State and the abolition of titles of nobility can authorise that Member State not to recognise a change of forenames and surname obtained in those circumstances.28Article 20 TFEU confers on any person holding the nationality of a Member State the status of citizen of the Union (see judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 59 and the case-law cited). The appellant in the main proceedings, who holds the nationality of two Member States, benefits from that status.29The Court has stated several times that citizenship of the Union is intended to be the fundamental status of nationals of the Member States (see judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 60 and the case-law cited).30That status enables those among such nationals who find themselves in the same situation to enjoy, within the scope ratione materiae of the Treaty, the same treatment in law irrespective of their nationality, subject to such exceptions as are expressly provided for (see judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 61 and the case-law cited).31The situations falling within the scope ratione materiae of EU law include those which involve the exercise of the fundamental freedoms guaranteed by the Treaty, in particular those involving the freedom to move and reside within the territory of the Member States, as conferred by Article 21 TFEU (see judgments of 20 September 2001 in Grzelczyk, C‑184/99, EU:C:2001:458, paragraph 33; of 11 July 2002 in D’Hoop, C‑224/98, EU:C:2002:432, paragraph 29; and of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 62).32Although, as EU law stands at present, the rules governing the way in which a person’s surname and forename are entered on certificates of civil status are matters coming within the competence of the Member States, the latter must nonetheless, when exercising that competence, comply with EU law and, in particular, with the Treaty provisions on the freedom of every citizen of the Union to move and reside in the territory of the Member States (see judgments of 2 October 2003 in Garcia Avello, C‑148/02, EU:C:2003:539, paragraph 25; of 14 October 2008 in Grunkin and Paul, C‑353/06, EU:C:2008:559, paragraph 16; and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraphs 38 and 39, and of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 63).33In the main proceedings, it is established that the applicant in the main proceedings holds the nationality of two Member States and, as a citizen of the Union, exercises his freedom to move and reside in a Member State other than his Member State of origin in accordance with Article 21 TFEU.34It is therefore necessary to examine, in the light of that provision alone, the refusal by the authorities of a Member State to recognise the name acquired by a national of that State in another Member State, of which he also holds the nationality, in circumstances such as those at issue in the main proceedings (see, by analogy, judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 65). The existence of a restriction 35It must be noted, as a preliminary point, that a person’s forename and surname are a constituent element of his identity and of his private life, the protection of which is enshrined in Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and in Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’). Even though Article 7 of the Charter does not refer to it expressly, a person’s forename and surname, as a means of personal identification and a link to a family, none the less concern his private and family life (see, as regards Article 8 of the ECHR, judgments of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 52 and the case-law cited, and of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 66).36National legislation which places certain of the nationals of the Member State concerned at a disadvantage simply because they have exercised their freedom to move and to reside in another Member State is a restriction on the freedoms conferred by Article 21(1) TFEU on every citizen of the Union (see, inter alia, judgments of 14 October 2008 in Grunkin and Paul, C‑353/06, EU:C:2008:559, paragraph 21; of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 53; and of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 68).37It follows from the case-law of the Court that a refusal by the authorities of a Member State to recognise the name of a national of that State who exercised his right to move and reside freely in the territory of another Member State, as determined in that second Member State, is likely to hinder the exercise of the right, enshrined in Article 21 TFEU, to move and reside freely in the territories of the Member States. Confusion and inconvenience are liable to arise from the divergence between the two names used for the same person (see, to that effect, judgment of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraphs 39, 41, 42, 66 and 71).38In the present case, the refusal by the German authorities to recognise the change of forenames and surname of a German national, obtained under the legislation of another Member State of which that national also holds the nationality, is likely to constitute such a restriction. However, according to the Court’s case-law, in order to constitute a restriction on the freedoms recognised by Article 21 TFEU, the refusal to amend the forenames and surname of a national of a Member State and to recognise the forenames and surname which he has acquired in another Member State must be liable to cause him ‘serious inconvenience’ at administrative, professional and private levels (see, to that effect, judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 76 and the case-law cited).39Thus, the Court has already held that, every time the surname used in a specific situation does not correspond to that on the document submitted as proof of a person’s identity, or the surname in two documents submitted together is not the same, such a difference in surnames is liable to give rise to doubts as to the person’s identity and the authenticity of the documents submitted, or the veracity of their content (judgment of 14 October 2008 in Grunkin and Paul, C‑353/06, EU:C:2008:559, paragraph 28).40The Court has also held, with regard to a person who is a national of a Member State which refuses to recognise the name acquired by that person as an effect of his adoption in another Member State, in which that person resides, that the real risk of being obliged because of the discrepancy in names to dispel doubts as to one’s identity is such as to hinder the exercise of the right which flows from Article 21 TFEU (see, to that effect, judgment of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 70).41In the present case, the German Government states its doubts as to the prejudicial effect on the applicant in the main proceedings in his private and professional life of the inconvenience caused by the divergence between the forenames and surnames which he bears. There is nothing to show that the name acquired in the United Kingdom is of considerable importance to the identification of the applicant in the main proceedings and his membership of a family.42However, the applicant in the main proceedings argued, at the hearing before the Court, that he has been faced with serious inconvenience, within the meaning of the case-law cited in paragraph 38 of this judgment, in particular when registering in Germany a branch of the limited company which he formed in the United Kingdom, for which, as a German citizen, he has had to prove his identity using German documents which bear a name different from that shown on the documents coming from the United Kingdom, and when opening a bank account for that company and also simple road-side police checks, when he has had to produce his British driving licence and, in accordance with the German law on identity documents, a German piece of identification.43In that regard, it must be borne in mind that many daily actions, both in the public and in the private domains, require a person to provide evidence of his or her own identity and also, in the case of a family, evidence of the nature of the links between different family members (judgment of 12 May 2011 in Runevič-Vardyn and Wardyn, C‑391/09, EU:C:2011:291, paragraph 73).44Since the applicant in the main proceedings holds two nationalities, both the German authorities and the British authorities may issue him with official documents, such as a passport. The applicant in the main proceedings is registered under different forenames and surnames in the German register of civil status and with the British authorities. The forenames and surname ‘Peter Mark Emanuel Graf von Wolffersdorff Freiherr von Bogendorff ‘which appear on his British passport and driving licence are not identical to the forenames and surname ‘Nabiel Peter Bogendorff von Wolffersdorff ‘which are entered in the German Registers of civil status and German identity documents.45In the same way as in the case which gave rise to the judgment of 22 December 2010 in Sayn-Wittgenstein (C‑208/09, EU:C:2010:806), the real risk, in circumstances such as those in the main proceedings, of being obliged because of the discrepancy in names to dispel doubts as to one’s identity is such as to hinder the exercise of the right which flows from Article 21 TFEU.46Furthermore, it must be noted that, since the minor daughter of the applicant in the main proceedings holds two passports in the name of ‘Larissa Xenia Gräfin von Wolffersdorff Freiin von Bogendorff’, issued by the United Kingdom authorities and, following the judgment of the Oberlandesgericht Dresden (Higher Regional Court, Dresden), by the German authorities, the applicant in the main proceedings also runs the risk, because of the name, different from that of his daughter, which appears in his German passport, of encountering difficulties in proving his family links with her.47Consequently, the refusal by the authorities of a Member State to recognise the forenames and surname of a national of that Member State, as determined and registered in another Member State of which he also holds the nationality, constitutes a restriction on the freedoms conferred under Article 21 TFEU on all citizens of the Union. The existence of justification 48In accordance with settled case-law, an obstacle to the freedom of movement of persons can be justified only where it is based on objective considerations and is proportionate to the legitimate objective of the national provisions (see judgments of 14 October 2008 in Grunkin and Paul, C‑353/06, EU:C:2008:559, paragraph 29, and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 81).49The referring court mentions four grounds which could justify the refusal to recognise and register the forenames and surname obtained by the applicant in the main proceedings in the United Kingdom. Those grounds are based on the principles of immutability and continuity of names, the fact that the applicant in the main proceedings made a deliberate choice to change his name in the United Kingdom, without any connection to a change of personal status following the application of the provisions of family law, the length and complexity of the name chosen and reasons connected to the German constitutional choice and the abolition of titles of nobility.The principles of immutability and continuity of names50According to the referring court, the reason that a change of name by an intentional act, independent of any change of personal status following the application of the provisions of family law, is not permitted in German law rests mainly on the principles of the immutability and continuity of names, which must constitute a reliable and lasting identifying feature of a person.51Nonetheless, the Court has previously held, in paragraphs 30 and 31 of the judgment of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559), in which the principles of certainty and continuity were relied upon by the German authorities to justify using nationality as the connecting factor for the determination of a person’s surname, that, however legitimate those principles may be in themselves, they do not, in themselves, warrant having such importance attached to them as to justify a refusal by the competent authorities of a Member State to recognise the surname of the person concerned as already lawfully determined and registered in another Member State.The intentional nature of the change of name52According to the referring court, the divergence between the names which appear on the British and German passports of the applicant in the main proceedings cannot be imputed either to the circumstances of his birth, to an adoption or to any other amendment of his personal status, but is the result of his decision to change his name in the United Kingdom. That decision was dictated only by personal reasons. The referring court is unsure whether such a choice is worthy of protection.53It must be noted that, at that hearing before the Court, the German Government stated that, contrary to the submissions of the Register office of the city of Karlsruhe, the scope of Paragraph 48 of the EGBGB is not limited to situations which fall under family law. According to that Government, that provision, adopted following the judgment of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559), creates a legal basis permitting a person subject to German law to choose a name acquired and registered in another Member State provided there is no incompatibility with the basic principles of German law. That government stated that transcription of that name may be made by a declaration by the person concerned to the Register office stating that he wishes to bear the name acquired in another Member State instead of the name which follows from the application of the German law on personal status, the requirement being that the name be acquired in another Member States during habitual residence there, that is to say residence of a certain duration which led to a degree of social integration. That requirement is intended to prevent German nationals, with the sole aim of circumventing their national law on persons, from residing briefly in another Member State with more advantageous legislation in order to acquire the name that they wish to bear.54In that regard, as stated in paragraph 35 of this judgment, a person’s surname is a constituent element of his identity and of his private life, the protection of which is enshrined in Article 7 of the Charter and in Article 8 of the ECHR.55In the judgment of the ECtHR of 25 November 1994 in Stjerna v. Finland (ECLI:CE:ECHR:1994:1125JUD001813191, § 38 and 39), the European Court of Human Rights recognised the crucial role of surnames in the identification of persons and considered that the Finnish authorities’ refusal to authorise an applicant to adopt a particular new surname could not necessarily be considered an interference in the exercise of his right to respect for his private life, as would have been, for example, an obligation on him to change surname. Nonetheless, it recognised that there may exist genuine reasons prompting an individual to wish to change name, while accepting that legal restrictions on such a possibility may be justified in the public interest; for example in order to ensure accurate population registration or to safeguard the means of personal identification and of linking the bearers of a given name to a family.56In those circumstances, the view must be taken that the voluntary nature of a change of name does not, in itself, undermine the public interest and, in consequence, cannot alone justify a restriction under Article 21 TFEU. Accordingly, the German authorities cannot refuse to recognise a name legally obtained by a German national in another Member State on the sole ground that that change of name is made on personal grounds and without taking into consideration the reasons for the change.57With regard, in particular, to the concern expressed, as regards voluntary changes of name, to prevent circumvention of the national law on the status of persons by the exercise, for that purpose alone, of the freedom of movement and the rights flowing therefrom, it must be borne in mind that, in paragraph 24 of the judgment of 9 March 1999 in Centros (C‑212/97, EU:C:1999:126), the Court has held that a Member State is entitled to take measures designed to prevent certain of its nationals from attempting, under cover of the rights created by the Treaty, improperly to circumvent their national legislation or to prevent individuals from improperly or fraudulently taking advantage of provisions of EU law.58It follows therefrom that the refusal to recognise the British name of the applicant in the main proceedings cannot be justified by the mere fact that the change of name was made at his own initiative, without account being taken of the reasons for the change.The length of the name59According to the referring court, the German legal order also pursues the objective of avoiding disproportionately long names or names which are too complex. It notes, in that regard, that the name chosen by the applicant in the main proceedings, namely ‘Peter Mark Emanuel Graf von Wolffersdorff Freiherr von Bogendorff’ is, in Germany, unusually long.60In that regard, the Court has already held, in paragraph 36 of the judgment of 14 October 2008 in Grunkin and Paul (C‑353/06, EU:C:2008:559), in response to the German Government’s argument that German law does not allow double-barrelled surnames for practical reasons intended to limit the length of surnames, that such considerations of administrative convenience cannot suffice to justify an obstacle to freedom of movement.The abolition of privileges and the prohibition on bearing titles of nobility or recreating the appearance of noble origins61According to the central legal service of the city of Karlsruhe and the German Government, in the main proceedings, an objective reason justifying a restriction on the freedom of movement may be drawn from the principle of the equality of German citizens before the law and the constitutional choice to abolish the privileges and inequalities based on birth or condition and to prohibit the bearing of titles of nobility as such, set out in the third subparagraph of Article 109 of the Weimar Constitution, read in conjunction with Paragraph 123 of the Basic Law. Recognising a freely chosen name, composed of a number of titles of nobility, which was acquired in another Member State and the acquisition of which is not the consequence of a change of personal status following the application of provisions of family law would entail the creation of a new title of nobility, which runs counter to German public policy.62The German Government states that, in accordance with Paragraph 123 of the Basic Law, read in conjunction with the third subparagraph of Article 109 of the Weimar Constitution, all privileges and inequalities connected with birth or position have been abolished in Germany. Although titles of nobility which were actually borne when the Weimar Constitution entered into force may continue as elements of a name and may be transmitted as a fact of personal status, the creation of new titles of nobility and the grant of such titles are prohibited. The German Government states that, in accordance with established national case-law, the grant, by way of a change of name, of a name including a title of nobility as an element of the name also falls under the prohibition laid down in the third subparagraph of Article 109 of the Weimar Constitution and that it is also prohibited to recreate the appearance of noble origins, in particular by a change of name. Those provisions, which, according to the German Government, form part of German public policy, are intended to ensure equal treatment of all German citizens.63The Central Legal Service of the city of Karlsruhe and the German Government refer, in that regard, to paragraph 94 of the judgment of 22 December 2010 in Sayn-Wittgenstein (C‑208/09, EU:C:2010:806), in which the Court held that the refusal, by the authorities of a Member State, to recognise all the elements of the surname of a national of that State, as determined in another Member State — in which that national resides — at the time of his or her adoption as an adult by a national of that other Member State, where that surname includes a title of nobility which is not permitted in the first Member State under its constitutional law cannot be regarded as a measure unjustifiably undermining the freedom to move and reside enjoyed by citizens of the Union.64In that regard, although, as the referring court points out, German law differs from the provisions of Austrian law examined in the case which gave rise to the judgment of 22 December 2010 in Sayn-Wittgenstein (C‑208/09, EU:C:2010:806) in that it does not provide for a strict prohibition on the use and transmission of titles of nobility, which may be borne as an integral part of a name, in the present case it must also be accepted that, considered in the context of the German constitutional choice, the third subparagraph of Article 109 of the Weimar Constitution, as an element of the national identity of a Member State, referred to in Article 4(2) TEU, may be taken into account as an element justifying a restriction on the right to freedom of movement of persons recognised by EU law.65The justification relating to the equality of German citizens before the law and the constitutional choice to abolish privileges and inequalities and to prohibit the bearing of titles of nobility as such must be interpreted as relating to a ground of public policy.66In accordance with established case-law, objective considerations relating to public policy are capable of justifying, in a Member State, a refusal to recognise the name of one of its nationals, as accorded in another Member State (see, to that effect, judgments of 14 October 2008 in Grunkin and Paul, C‑353/06, EU:C:2008:559, paragraph 38, and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 85).67The Court has repeatedly held that the concept of public policy as justification for a derogation from a fundamental freedom must be interpreted strictly, so that its scope cannot be determined unilaterally by each Member State without any control by the EU institutions. It follows therefrom that public policy may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society (see judgments of 14 October 2004 in Omega, C‑36/02, EU:C:2004:614, paragraph 30 and the case-law cited, and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 86).68The fact remains, however, that the specific circumstances which may justify recourse to the concept of public policy may vary from one Member State to another and from one era to another. In that regard, it is therefore necessary to accord the competent national authorities a certain discretion within the limits laid down in the Treaty (see judgments of 14 October 2004 in Omega, C‑36/02, EU:C:2004:614, paragraph 31 and the case-law cited, and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 87).69In the present case, the German Government has stated that the third subparagraph of Article 109 of the Weimar Constitution, which abolishes the privileges and titles of nobility as such and prohibits the creation of titles giving the appearance of noble origins, even in the form of part of a name, constitutes the implementation of the more general principle of equality before the law of all German citizens.70As the Court noted in paragraph 89 of its judgment of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, the EU legal system undeniably seeks to ensure the observance of the principle of equal treatment as a general principle of law. That principle is also enshrined in Article 20 of the Charter.71There can therefore be no doubt that the objective of observing the principle of equal treatment is compatible with EU law.72Measures which restrict a fundamental freedom may be justified on public policy grounds only if they are necessary for the protection of the interests which they are intended to secure and only in so far as those objectives cannot be attained by less restrictive measures (see judgments of 14 October 2004 in Omega, C‑36/02, EU:C:2004:614, paragraph 36; of 10 July 2008 in Jipa, C‑33/07, EU:C:2008:396, paragraph 29; and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 90).73The Court has already explained in that regard that it is not indispensable for the restrictive measure issued by the authorities of a Member State to correspond to a conception shared by all Member States as regards the precise way in which the fundamental right or legitimate interest in question is to be protected and that, on the contrary, the need for, and proportionality of, the provisions adopted are not excluded merely because one Member State has chosen a system of protection different from that adopted by another State (see judgments of 14 October 2004 in Omega, C‑36/02, EU:C:2004:614, paragraphs 37 and 38, and of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 91). It must also be noted that, in accordance with Article 4(2) TEU, the European Union is to respect the national identities of its Member States, which include the status of the State as a Republic (judgment of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, paragraph 92).74In paragraph 93 of the judgment of 22 December 2010 in Sayn-Wittgenstein, C‑208/09, EU:C:2010:806, the Court held that it does not appear disproportionate for a Member State to seek to attain the objective of protecting the principle of equal treatment by prohibiting any acquisition, possession or use, by its nationals, of titles of nobility or noble elements which may create the impression that the bearer of the name is holder of such a rank. It thus took the view that, by refusing to recognise the tokens of nobility in a name such as that at issue in the case which gave rise to that judgment, the competent Austrian civil status authorities did not appear to have gone beyond what is necessary to ensure that the fundamental constitutional objective which they pursue was achieved.75As the referring court noted, although an administrative practice, such as that at issue in the main proceedings, consisting of refusing declarations concerning the choice of name, is based on reasons of public policy similar to those on which the Austrian legislation referred to in the preceding paragraph of this judgment, the German legal system, unlike the Austrian legal system, does not contain a strict prohibition on maintaining titles of nobility. Although, since the date of entry into force of the Weimar Constitution, no new titles have been granted, the titles which existed at that date have been maintained as elements of names. In consequence, it is accepted that, despite the abolition of nobility, the names of German citizens, because of the origins of those citizens, include elements corresponding to ancient titles of nobility. In addition, under the German Law on personal status currently in force, the acquisition of such elements of names is also possible through adoption.76However, it would run counter to the intention of the German legislature for German nationals, using the law of another Member State, to adopt afresh abolished titles of nobility. Systematic recognition of changes of name such as that at issue in the main proceedings could lead to that result.77To the extent that it is accepted in Germany that some persons may bear in their name elements corresponding to former titles of nobility, the question arises whether the prohibition on freely choosing a new name including former titles of nobility and the practice of the German authorities to refuse such a name are appropriate and necessary to ensure that the objective of protecting that Member State’s public policy, marked by the principle of equality before the law of all German citizens, is achieved.78Unlike the case which gave rise to the judgment of 22 December 2010 in Sayn-Wittgenstein (C‑208/09, EU:C:2010:806), the assessment of the proportionate nature of a practice such as that at issue in the main proceedings requires an analysis and weighing-up of various elements of law and fact peculiar to the Member State concerned, which the referring court is in a better position to carry out than the Court.79In particular, it is for the referring court to assess whether the competent German civil status authorities, by refusing to recognise the name acquired in the United Kingdom by the applicant in the main proceedings on the ground that achievement of the objective of safeguarding the principle of equality before the law of all German citizens presupposes that it is prohibited for German nationals to acquire and use, in certain circumstances, titles or tokens of nobility likely to give the impression that the bearer of the name is the holder of such a rank, have not gone beyond what is necessary to ensure achievement of the fundamental constitutional objective which they pursue.80In that regard, in weighing up the right to freedom of movement conferred on citizens of the Union under Article 21 TFEU and the legitimate interests pursued by the restrictions placed by the German legislature on the use of titles of nobility and by its prohibition of the recreation of the appearance of noble origins, various factors must be taken into consideration. Although those factors cannot serve as justification as such, they must be taken into account when assessing proportionality.81Thus, firstly, the fact must be taken into account that the applicant exercised that right and holds double German and British nationality, that the elements of the name acquired in the United Kingdom which, according to the German authorities, undermine public policy, do not formally constitute titles of nobility either in Germany or in the United Kingdom and that the German court which ordered the competent authorities to make the entry of the name, which is made up of tokens of nobility, of the daughter of the applicant in the main proceedings, as registered by the United Kingdom authorities, did not take the view that that entry was contrary to public policy.82Secondly, it is also necessary to take into account the fact that the change of name under consideration rests on a purely personal choice by the applicant in the main proceedings, that the difference in name which follows therefrom cannot be attributed either to the circumstances of his birth, to adoption, or to acquisition of British nationality and that the name chosen in the United Kingdom includes elements which, without formally constituting titles of nobility in Germany or the United Kingdom, give the impression of noble origins.83In any event, it must be pointed out that, although the objective reason based on public policy and the principle that all German citizens are equal before the law is capable, if it is accepted, of justifying the refusal to recognise the change of surname of the applicant in the main proceedings, it cannot justify the refusal to recognise his change of forenames.84It follows from all the foregoing considerations that the answer to the question referred is that Article 21 TFEU must be interpreted as meaning that the authorities of a Member State are not bound to recognise the name of a citizen of that Member State when he also holds the nationality of another Member State in which he has acquired that name which he has chosen freely and which contains a number of tokens of nobility, which are not accepted by the law of the first Member State, provided that it is established, which it is for the referring court to ascertain, that a refusal of recognition is, in that context, justified on public policy grounds, in that it is appropriate and necessary to ensure compliance with the principle that all citizens of that Member State are equal before the law. Costs 85Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Second Chamber) rules as follows: Article 21 TFEU must be interpreted as meaning that the authorities of a Member State are not bound to recognise the name of a citizen of that Member State when he also holds the nationality of another Member State in which he has acquired that name which he has chosen freely and which contains a number of tokens of nobility, which are not accepted by the law of the first Member State, provided that it is established, which it is for the referring court to ascertain, that a refusal of recognition is, in that context, justified on public policy grounds, in that it is appropriate and necessary to ensure compliance with the principle that all citizens of that Member State are equal before the law. [Signatures]( *1 ) Language of the case: German. | ae7a2-ff735f8-417b | EN |
In the view of Advocate General Kokott, a ban on wearing headscarves in companies may be admissible | 14 March 2017 ( *1 )‛Reference for a preliminary ruling — Social policy — Directive 2000/78/EC — Equal treatment — Discrimination based on religion or belief — Workplace regulations of an undertaking prohibiting workers from wearing visible political, philosophical or religious signs in the workplace — Direct discrimination — None — Indirect discrimination — Female worker prohibited from wearing an Islamic headscarf’In Case C‑157/15,REQUEST for a preliminary ruling under Article 267 TFEU from the Hof van Cassatie (Court of Cassation, Belgium), made by decision of 9 March 2015, received at the Court on 3 April 2015, in the proceedings Samira Achbita, Centrum voor gelijkheid van kansen en voor racismebestrijding v G4S Secure Solutions NV, THE COURT (Grand Chamber),composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, M. Ilešič, L. Bay Larsen, M. Berger, M. Vilaras and E. Regan, Presidents of Chambers, A. Rosas, A. Borg Barthet, J. Malenovský, E. Levits, F. Biltgen (Rapporteur), K. Jürimäe and C. Lycourgos, Judges,Advocate General: J. Kokott,Registrar: M. Ferreira, Principal Administrator,having regard to the written procedure and further to the hearing on 15 March 2016,after considering the observations submitted on behalf of:—the Centrum voor gelijkheid van kansen en voor racismebestrijding, by C. Bayart and I. Bosmans, advocaten,G4S Secure Solutions NV, by S. Raets and I. Verhelst, advocaten,the Belgian Government, by L. Van den Broeck and M. Jacobs, acting as Agents,the French Government, by G. de Bergues, D. Colas and R. Coesme, acting as Agents,the United Kingdom Government, by J. Kraehling, S. Simmons and C.R. Brodie, acting as Agents, and by A. Bates, Barrister,the European Commission, by G. Wils and D. Martin, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 31 May 2016,gives the following Judgment 1This request for a preliminary ruling concerns the interpretation of Article 2(2)(a) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (OJ 2000 L 303, p. 16).2The request has been made in proceedings between Ms Samira Achbita and the Centrum voor gelijkheid van kansen en voor racismebestrijding (Centre for Equal Opportunities and Combating Racism; ‘the Centrum’), and G4S Secure Solutions NV (‘G4S’), a company whose registered office is in Belgium, concerning the prohibition by G4S on its employees wearing any visible signs of their political, philosophical or religious beliefs in the workplace and on engaging in any observance of those beliefs. Legal context Directive 2000/78 3Recitals 1 and 4 of Directive 2000/78 state:‘(1)In accordance with Article 6 of the Treaty on European Union, the European Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to all Member States and it respects fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, as general principles of Community law.…(4)The right of all persons to equality before the law and protection against discrimination constitutes a universal right recognised by the Universal Declaration of Human Rights, the United Nations Convention on the Elimination of All Forms of Discrimination against Women, United Nations Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights and by the European Convention for the Protection of Human Rights and Fundamental Freedoms, to which all Member States are signatories. Convention No 111 of the International Labour Organisation (ILO) prohibits discrimination in the field of employment and occupation.’4Article 1 of Directive 2000/78 provides:‘The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.’5Article 2 of the directive provides:‘1. For the purposes of this Directive, the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1.2. For the purposes of paragraph 1:(a)direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in Article 1;(b)indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having a particular religion or belief, a particular disability, a particular age, or a particular sexual orientation at a particular disadvantage compared with other persons unless:(i)that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, …5. This Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others.’6Article 3(1) of Directive 2000/78 states as follows:‘Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to:(c)employment and working conditions, including dismissals and pay;…’ Belgian law 7The purpose of the wet ter bestrijding van discriminatie en tot wijziging van de wet van 15 februari 1993 tot oprichting van een Centrum voor gelijkheid van kansen en voor racismebestrijding (Law to combat discrimination and amending the Law of 15 February 1993 establishing a Centre for Equal Opportunities and Combating Racism) of 25 February 2003 (Belgisch Staatsblad, 17 March 2003, p. 12844) was, inter alia, to implement the provisions of Directive 2000/78.8Article 2(1) of that law states:‘There is direct discrimination where a difference of treatment which is not objectively or reasonably justified is directly based on sex, alleged race, colour, background, national or ethnic origin, sexual orientation, marital status, birth, property, age, faith or belief, current or future state of health, disability or a physical characteristic.’9Article 2(2) of that law provides:‘There is indirect discrimination where an apparently neutral provision, criterion or practice, as such, has a detrimental effect on persons to whom one of the grounds of discrimination referred to in paragraph 1 applies, unless that provision, criterion or practice is objectively and reasonably justified.’ The dispute in the main proceedings and the question referred for a preliminary ruling 10G4S is a private undertaking which provides, inter alia, reception services for customers in both the public and private sectors.11On 12 February 2003, Ms Achbita, a Muslim, started to work for G4S as a receptionist. She was employed by G4S under an employment contract of indefinite duration. There was at that time an unwritten rule within G4S that workers could not wear visible signs of their political, philosophical or religious beliefs in the workplace.12In April 2006, Ms Achbita informed her line managers that she intended, in future, to wear an Islamic headscarf during working hours.13In response, the management of G4S informed Ms Achbita that the wearing of a headscarf would not be tolerated because the visible wearing of political, philosophical or religious signs was contrary to G4S’s position of neutrality.14On 12 May 2006, after a period of absence from work due to sickness, Ms Achbita notified her employer that she would be returning to work on 15 May and that she was going to wear the Islamic headscarf.15On 29 May 2006, the G4S works council approved an amendment to the workplace regulations, which came into force on 13 June 2006, according to which ‘employees are prohibited, in the workplace, from wearing any visible signs of their political, philosophical or religious beliefs and/or from engaging in any observance of such beliefs’.16On 12 June 2006, Ms Achbita was dismissed on account of her continuing insistence that she wished, as a Muslim, to wear the Islamic headscarf at work. She received a severance payment equivalent to three months’ salary and benefits acquired under the terms of her employment contract.17Following the dismissal of the action brought by Ms Achbita in the arbeidsrechtbank te Antwerpen (Labour Court, Antwerp, Belgium) against her dismissal from G4S, Ms Achbita lodged an appeal against that decision with the arbeidshof te Antwerpen (Higher Labour Court, Antwerp, Belgium). The appeal was denied on the ground, in particular, that the dismissal could not be considered unjustified since the blanket ban on wearing visible signs of political, philosophical or religious beliefs in the workplace did not give rise to direct discrimination, and no indirect discrimination or infringement of individual freedom or of freedom of religion was evident.18As regards the lack of direct discrimination, the arbeidshof te Antwerpen (Higher Labour Court, Antwerp) noted more specifically that it was common ground that Ms Achbita was dismissed not because of her Muslim faith but because she persisted in wishing to manifest that faith, visibly, during working hours, by wearing an Islamic headscarf. The provision of the workplace regulations infringed by Ms Achbita was of general scope in that it prohibited all workers from wearing visible signs of political, philosophical or religious beliefs in the workplace. There was nothing to suggest that G4S had taken a more conciliatory approach towards any other employee in a comparable situation, in particular as regards a worker with different religious or philosophical beliefs who consistently refused to comply with the ban.19The arbeidshof te Antwerpen (Higher Labour Court, Antwerp) rejected the argument that the prohibition, within G4S, on wearing visible signs of religious or philosophical beliefs constituted in itself direct discrimination against Ms Achbita as a religious person, holding that that prohibition concerned not only the wearing of signs relating to religious beliefs but also the wearing of signs relating to philosophical beliefs, thereby complying with the criterion of protection used by Directive 2000/78, which refers to ‘religion or belief’.20In support of her appeal on a point of law, Ms Achbita argues, in particular, that, by holding that the religious belief on which G4S’s ban is based is a neutral criterion and by failing to characterise the ban as the unequal treatment of workers as between those who wear an Islamic headscarf and those who do not, on the ground that the ban does not refer to a particular religious belief and is directed to all workers, the arbeidshof te Antwerpen (Higher Labour Court, Antwerp) misconstrued the concepts of ‘direct discrimination’ and ‘indirect discrimination’ as referred to in Article 2(2) of Directive 2000/78.21In those circumstances, the Hof van Cassatie (Court of Cassation) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Should Article 2(2)(a) of Directive 2000/78 be interpreted as meaning that the prohibition on wearing, as a female Muslim, a headscarf at the workplace does not constitute direct discrimination where the employer’s rule prohibits all employees from wearing outward signs of political, philosophical and religious beliefs at the workplace?’ Consideration of the question referred 22By its question, the referring court asks, in essence, whether Article 2(2)(a) of Directive 2000/78 must be interpreted as meaning that the prohibition on wearing an Islamic headscarf, which arises from an internal rule of a private undertaking imposing a blanket ban on the visible wearing of any political, philosophical or religious sign in the workplace, constitutes direct discrimination that is prohibited by that directive.23In the first place, under Article 1 of Directive 2000/78, the purpose of that directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.24Article 2(1) of Directive 2000/78 states that ‘the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1’ of that directive. Article 2(2)(a) of the directive states that, for the purposes of Article 2(1), direct discrimination is to be taken to occur where one person is treated less favourably than another in a comparable situation, on any of the grounds, including religion, referred to in Article 1 of the directive.25As regards the meaning of ‘religion’ in Article 1 of Directive 2000/78, it should be noted that the directive does not include a definition of that term.26Nevertheless, the EU legislature referred, in recital 1 of Directive 2000/78, to fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), which provides, in Article 9, that everyone has the right to freedom of thought, conscience and religion, a right which includes, in particular, freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.27In the same recital, the EU legislature also referred to the constitutional traditions common to the Member States, as general principles of EU law. Among the rights resulting from those common traditions, which have been reaffirmed in the Charter of Fundamental Rights of the European Union (‘the Charter’), is the right to freedom of conscience and religion enshrined in Article 10(1) of the Charter. In accordance with that provision, that right includes freedom to change religion or belief and freedom, either alone or in community with others and in public or in private, to manifest religion or belief, in worship, teaching, practice and observance. As is apparent from the explanations relating to the Charter of Fundamental Rights (OJ 2007 C 303, p. 17), the right guaranteed in Article 10(1) of the Charter corresponds to the right guaranteed in Article 9 of the ECHR and, in accordance with Article 52(3) of the Charter, has the same meaning and scope.28In so far as the ECHR and, subsequently, the Charter use the term ‘religion’ in a broad sense, in that they include in it the freedom of persons to manifest their religion, the EU legislature must be considered to have intended to take the same approach when adopting Directive 2000/78, and therefore the concept of ‘religion’ in Article 1 of that directive should be interpreted as covering both the forum internum, that is the fact of having a belief, and the forum externum, that is the manifestation of religious faith in public.29It is necessary, in the second place, to determine whether the internal rule at issue in the main proceedings gives rise to a difference in treatment of workers on the basis of their religion or their belief and, if so, whether that difference in treatment constitutes direct discrimination within the meaning of Article 2(2)(a) of Directive 2000/78.30In the present case, the internal rule at issue in the main proceedings refers to the wearing of visible signs of political, philosophical or religious beliefs and therefore covers any manifestation of such beliefs without distinction. The rule must, therefore, be regarded as treating all workers of the undertaking in the same way by requiring them, in a general and undifferentiated way, inter alia, to dress neutrally, which precludes the wearing of such signs.31It is not evident from the material in the file available to the Court that the internal rule at issue in the main proceedings was applied differently to Ms Achbita as compared to any other worker.32Accordingly, it must be concluded that an internal rule such as that at issue in the main proceedings does not introduce a difference of treatment that is directly based on religion or belief, for the purposes of Article 2(2)(a) of Directive 2000/78.33Nevertheless, according to settled case-law, the fact that the referring court’s question refers to certain provisions of EU law does not mean that the Court may not provide the referring court with all the guidance on points of interpretation which may be of assistance in adjudicating on the case pending before it, whether or not that court has referred to those points in its question. It is, in this regard, for the Court of Justice to extract from all the information provided by the referring court, in particular from the grounds of the order for reference, the points of EU law which require interpretation in view of the subject matter of the dispute (see, inter alia, judgment of 12 February 2015, Oil Trading Poland, C‑349/13, EU:C:2015:84, paragraph 45 and the case-law cited).34In the present case, it is not inconceivable that the referring court might conclude that the internal rule at issue in the main proceedings introduces a difference of treatment that is indirectly based on religion or belief, for the purposes of Article 2(2)(b) of Directive 2000/78, if it is established — which it is for the referring court to ascertain — that the apparently neutral obligation it encompasses results, in fact, in persons adhering to a particular religion or belief being put at a particular disadvantage.35Under Article 2(2)(b)(i) of Directive 2000/78, such a difference of treatment does not, however, amount to indirect discrimination within the meaning of Article 2(2)(b) of the directive if it is objectively justified by a legitimate aim and if the means of achieving that aim are appropriate and necessary.36In that regard, it must be noted that, although it is ultimately for the national court, which has sole jurisdiction to assess the facts and to determine whether and to what extent the internal rule at issue in the main proceedings meets those requirements, the Court of Justice, which is called on to provide answers that are of use to the national court, may provide guidance, based on the file in the main proceedings and on the written and oral observations which have been submitted to it, in order to enable the national court to give judgment in the particular case pending before it.37As regards, in the first place, the condition relating to the existence of a legitimate aim, it should be stated that the desire to display, in relations with both public and private sector customers, a policy of political, philosophical or religious neutrality must be considered legitimate.38An employer’s wish to project an image of neutrality towards customers relates to the freedom to conduct a business that is recognised in Article 16 of the Charter and is, in principle, legitimate, notably where the employer involves in its pursuit of that aim only those workers who are required to come into contact with the employer’s customers.39An interpretation to the effect that the pursuit of that aim allows, within certain limits, a restriction to be imposed on the freedom of religion is moreover, borne out by the case-law of the European Court of Human Rights in relation to Article 9 of the ECHR (judgment of the ECtHR of 15 January 2013, Eweida and Others v. United Kingdom, CE:ECHR:2013:0115JUD004842010, paragraph 94).40As regards, in the second place, the appropriateness of an internal rule such as that at issue in the main proceedings, it must be held that the fact that workers are prohibited from visibly wearing signs of political, philosophical or religious beliefs is appropriate for the purpose of ensuring that a policy of neutrality is properly applied, provided that that policy is genuinely pursued in a consistent and systematic manner (see, to that effect, judgments of 10 March 2009, Hartlauer, C‑169/07, EU:C:2009:141, paragraph 55, and of 12 January 2010, Petersen, C‑341/08, EU:C:2010:4, paragraph 53).41In that respect, it is for the referring court to ascertain whether G4S had, prior to Ms Achbita’s dismissal, established a general and undifferentiated policy of prohibiting the visible wearing of signs of political, philosophical or religious beliefs in respect of members of its staff who come into contact with its customers.42As regards, in the third place, the question whether the prohibition at issue in the main proceedings was necessary, it must be determined whether the prohibition is limited to what is strictly necessary. In the present case, what must be ascertained is whether the prohibition on the visible wearing of any sign or clothing capable of being associated with a religious faith or a political or philosophical belief covers only G4S workers who interact with customers. If that is the case, the prohibition must be considered strictly necessary for the purpose of achieving the aim pursued.43In the present case, so far as concerns the refusal of a worker such as Ms Achbita to give up wearing an Islamic headscarf when carrying out her professional duties for G4S customers, it is for the referring court to ascertain whether, taking into account the inherent constraints to which the undertaking is subject, and without G4S being required to take on an additional burden, it would have been possible for G4S, faced with such a refusal, to offer her a post not involving any visual contact with those customers, instead of dismissing her. It is for the referring court, having regard to all the material in the file, to take into account the interests involved in the case and to limit the restrictions on the freedoms concerned to what is strictly necessary.44Having regard to all of the foregoing considerations, the answer to the question put by the referring court is as follows:Article 2(2)(a) of Directive 2000/78 must be interpreted as meaning that the prohibition on wearing an Islamic headscarf, which arises from an internal rule of a private undertaking prohibiting the visible wearing of any political, philosophical or religious sign in the workplace, does not constitute direct discrimination based on religion or belief within the meaning of that directive.By contrast, such an internal rule of a private undertaking may constitute indirect discrimination within the meaning of Article 2(2)(b) of Directive 2000/78 if it is established that the apparently neutral obligation it imposes results, in fact, in persons adhering to a particular religion or belief being put at a particular disadvantage, unless it is objectively justified by a legitimate aim, such as the pursuit by the employer, in its relations with its customers, of a policy of political, philosophical and religious neutrality, and the means of achieving that aim are appropriate and necessary, which it is for the referring court to ascertain. Costs 45Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.On those grounds, the Court (Grand Chamber) hereby rules: Article 2(2)(a) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation must be interpreted as meaning that the prohibition on wearing an Islamic headscarf, which arises from an internal rule of a private undertaking prohibiting the visible wearing of any political, philosophical or religious sign in the workplace, does not constitute direct discrimination based on religion or belief within the meaning of that directive. By contrast, such an internal rule of a private undertaking may constitute indirect discrimination within the meaning of Article 2(2)(b) of Directive 2000/78 if it is established that the apparently neutral obligation it imposes results, in fact, in persons adhering to a particular religion or belief being put at a particular disadvantage, unless it is objectively justified by a legitimate aim, such as the pursuit by the employer, in its relations with its customers, of a policy of political, philosophical and religious neutrality, and the means of achieving that aim are appropriate and necessary, which it is for the referring court to ascertain. [Signatures]( *1 ) * Language of the case: Dutch. | 34e02-f2f07dc-4ea1 | EN |
The General Court annuls the Commission’s decision classifying the unlimited implied guarantee granted by the French State to the Institut français du pétrole (French Petroleum Institute) as State aid | 5 October 2020 ( *1 )(State aid – Oil exploration – State aid scheme implemented by France – Implied and unlimited State guarantee conferred on IFPEN by the grant of the status of EPIC – Advantage – Presumption of an advantage – Proportionality)In Joined Cases T‑479/11 RENV and T‑157/12 RENV, French Republic, represented by P. Dodeller, acting as Agent,applicant in Case T‑479/11 RENV, IFP Énergies nouvelles, established in Rueil-Malmaison (France), represented by E. Lagathu and É. Barbier de La Serre, lawyers,applicant in Case T‑157/12 RENV,v European Commission, represented by B. Stromsky and D. Grespan, acting as Agents,defendant,APPLICATION pursuant to Article 263 TFEU seeking the annulment of Commission Decision 2012/26/EU of 29 June 2011 on State aid granted by France to the Institut Français du Pétrole (Case C 35/08 (ex NN 11/2008)) (OJ 2012 L 14, p. 1),THE GENERAL COURT (Eighth Chamber),composed of A.M. Collins, President, M. Kancheva (Rapporteur) and G. De Baere, Judges,Registrar: L. Ramette, Administrator,having regard to the written stage of the procedure and further to the hearing on 28 November 2019,gives the following Judgment Background to the dispute 1By their actions, the French Republic and IFP Énergies nouvelles (‘IFPEN’), known prior to 13 July 2010 as the Institut Français du Pétrole (French Petroleum Institute), seek the annulment in full of Commission Decision 2012/26/EU of 29 June 2011 on State aid granted by France to the Institut Français du Pétrole (Case C 35/08 (ex NN 11/2008)) (OJ 2012 L 14, p. 1, ‘the contested decision’).2IFPEN is a publicly owned research establishment entrusted with three general-interest tasks: research and development in the fields of oil and gas prospecting, refining and petrochemicals technologies; the training of engineers and technicians; and the provision of sector information and documentation (recital 14 of the contested decision).3Furthermore, IFPEN has direct and indirect control over three commercial companies, Axens, Beicip-Franlab and Prosernat, with which it has concluded exclusive research and licensing agreements.4Until 2006, IFPEN was a legal person governed by private law which, in accordance with provisions of French national law, operated under the economic and financial supervision of the French Government. Under Loi 2005-781, du 13 juillet 2005, de programme fixant les orientations de la politique énergétique (Law No 2005‑781 of 13 July 2005 establishing the energy policy guidelines) (JORF of 14 July 2005, p. 11570), IFPEN was converted, with effect from 6 July 2006, into a legal person governed by public law, more specifically a publicly owned industrial and commercial establishment (EPIC) (recitals 21 to 23 of the contested decision).5It is apparent from the documents before the Court, first, that that conversion was motivated by the French authorities’ desire to bring IFPEN’s nature and operating model into line with its financing model. In so far as IFPEN was financed primarily from a budget allocation, the purpose of the conversion was to reduce the discrepancy between the private status of that establishment and the public origin of a significant proportion of its resources. Secondly, that conversion formed part of the process of standardising the status of French research establishments.6With regard to the legal status of EPICs in French law, it should be pointed out that such establishments form a category of legal persons governed by public law which perform economic activities. Their legal personality is separate from that of the State, they are financially independent and they exercise certain special powers which usually include the performance of one or more public service tasks. Under French law, legal persons governed by public law are not subject to the ordinary law applicable to insolvency procedures by virtue of the general principle of the immunity from seizure enjoyed by public assets. The inapplicability of insolvency procedures to EPICs has been confirmed by the case-law which the French Cour de cassation (Court of Cassation) has formulated on the basis of Loi 85‑98, du 25 janvier 1985, relative au redressement et à la liquidation judiciaire des entreprises (Law No 85-98 of 25 January 1985 on the compulsory administration and winding-up of undertakings) (JORF of 26 January 1985, p. 1097).7The specific features of the legal status of EPICs attracted the attention of the European Commission, which, in Decision 2010/605/EU of 26 January 2010 on State aid C 56/07 (ex E 15/05) granted by France to La Poste (OJ 2010 L 274, p. 1, ‘the La Poste decision’), examined that status for the first time in the light of the rules governing State aid in the European Union. In that decision, the Commission concluded that, because of their status, the economic activities pursued by EPICs benefited from an implied and unlimited State guarantee mobilising public resources. That conclusion was based on the following considerations (recital 25 of the contested decision and recitals 20 to 37 of the La Poste decision):–the insolvency procedures provided for under ordinary law are not applicable to EPICs;EPICs are, however, subject to the provisions of Loi 80-539, du 16 juillet 1980, relative aux astreintes prononcées en matière administrative et à l’exécution des jugements par les personnes morales de droit public (Law No 80‑539 of 16 July 1980 on the penalties imposed in administrative matters and on the execution of judgments by legal entities governed by public law) (JORF of 17 July 1980, p. 1799), and its implementing rules. Those provisions expressly identify the State as the authority responsible for covering the debts of publicly owned establishments, give it extensive powers, such as the issuing of mandatory payment orders and the creation of sufficient resources, and organise a principle of last-resort State liability for the debts of legal entities governed by public law;in the event that an EPIC is wound up, the principle generally applicable is that its debts will be transferred to the State or to another public entity, meaning that any creditors of an EPIC are assured of never losing the claims they hold against this type of establishment;EPICs might also have preferential access to ‘Treasury imprest accounts’.8In the La Poste decision, the Commission took the view that the implied and unlimited State guarantee inherent in La Poste’s EPIC status constituted State aid within the meaning of Article 107(1) TFEU, in that it allowed La Poste to obtain more favourable borrowing terms than it would have obtained had it been judged solely on its own merits (recitals 256 to 300 of the La Poste decision).9It was in the context of the proceedings that led to the adoption of the La Poste decision that, during 2006, the French authorities informed the Commission of IFPEN’s conversion into an EPIC. The Commission was so informed in the course of proceedings initiated in 2005 in connection with the investigation, in the light of the rules governing State aid, of public funding granted to IFPEN by the French authorities (recitals 1 to 3 of the contested decision).10The Commission then decided to separate the investigation of whether IFPEN’s conversion into an EPIC was capable of constituting State aid within the meaning of Article 107(1) TFEU from the investigation of IFPEN’s public funding. Accordingly, on 16 July 2008, it closed the investigation of the public funding granted to IFPEN by adopting Decision 2009/157/EC on the aid measure implemented by France for the IFP Group (C 51/05 (ex NN 84/05)) (OJ 2009 L 53, p. 13). On the same day, by a decision published in the Official Journal of the European Union (OJ 2008 C 259, p. 12, ‘the decision initiating the formal procedure’), the Commission decided to initiate a formal investigation procedure concerning the unlimited State guarantee in favour of IFPEN and invited interested parties to submit their comments.11In the decision initiating the formal procedure, the Commission noted, in particular, that IFPEN derived an advantage from its conversion into an EPIC, mainly through the more favourable funding terms from which it was considered to benefit on the financial markets. According to the Commission, that advantage, which is financed from State resources, constitutes State aid within the meaning of its Notice on the application of Articles [107] and [108 TFEU] to State aid in the form of guarantees (OJ 2008 C 155, p. 10, ‘the Guarantees Notice’).12The French authorities submitted their comments on that decision by letter of 14 October 2008. They subsequently also replied to the Commission’s additional questions and provided information on IFPEN’s dealings with various creditor groups. A meeting between the Commission and the French authorities was also scheduled for 20 May 2010.13In addition, one of Axens’ competitors, UOP Limited, an English company established in Guildford (United Kingdom), submitted its comments in response to the decision initiating the formal procedure. The French authorities were able to submit their observations on those comments.14On 29 June 2011, the Commission adopted the contested decision.15First of all, in the contested decision, the Commission applied the same reasoning it had used in the La Poste decision and also made numerous references to that decision (see, inter alia, recital 98 et seq. of the contested decision), to form the view that IFPEN’s conversion into an EPIC in July 2006 conferred on it the benefit of an implied and unlimited State guarantee. The Commission further considered that that guarantee resulted in a transfer of State resources within the meaning of point 2.1 of the Guarantees Notice, inasmuch as IFPEN paid no premium for that guarantee. There was thus, in the Commission’s opinion, both an advantage to the undertaking and a drain on public resources, as the State waived the remuneration that normally accompanies guarantees. Furthermore, the Commission asserted, the guarantee created the risk of a potential and future claim on the resources of the State, which could find itself obliged to pay IFPEN’s debts (recitals 134 and 135 of the contested decision).16With regard to IFPEN’s subsidiaries, on the other hand, the Commission commented that, as commercial companies, they were subject to the insolvency procedures provided for in ordinary law and that, furthermore, their creditors could not automatically trigger the liability of their controlling shareholder. It concluded that those subsidiaries were not covered by the unlimited State guarantee from which IFPEN benefited by virtue of its EPIC status (recitals 176 and 177 of the contested decision).17In the second place, the Commission stated that the unlimited State guarantee arising from IFPEN’s EPIC status was capable of constituting State aid in so far as it covered IFPEN’s economic activities. The Commission therefore decided to limit the scope of its investigation into the existence of State aid exclusively to the economic activities carried on by IFPEN, as distinct, on the one hand, from the activities of its subsidiaries, which were not covered by that guarantee, and, on the other hand, from IFPEN’s non-economic activities. The Commission stated that IFPEN’s economic activities were confined to the contract research it carried out on behalf of its subsidiaries and third parties, technology transfers in the fields in which the subsidiaries Axens, Prosernat and Beicip-Franlab were exclusively active and the renting out of infrastructure, procurement of staff and provision of legal services for its subsidiaries (recitals 187 and 189 to 191 of the contested decision).18In the third place, the Commission examined, in particular, whether the implied and unlimited guarantee at issue conferred a selective advantage on the group made up of IFPEN and its subsidiaries (‘the IFPEN group’).19In that regard, the Commission decided, as a first step, to examine whether IFPEN had itself been able to derive an advantage from the implied and unlimited State guarantee and, as a second step, to ascertain whether it had been able to transfer that advantage to its subsidiaries (recital 192 of the contested decision).20As regards the advantage from which IFPEN supposedly benefited, the Commission decided to examine the dealings of that EPIC with banks and financial institutions, suppliers and customers (recitals 193 and 194 of the contested decision).21First of all, as regards IFPEN’s dealings with banks and financial institutions, the Commission concluded that IFPEN had not derived any real economic advantage from the State guarantee associated with its EPIC status during the period from its conversion into an EPIC, in July 2006, until the end of 2010 (‘the period at issue’) (recitals 195 to 199 of the contested decision). The Commission nevertheless noted that such a conclusion was valid only retrospectively, since it could not make any presumptions about how market operators would behave in the future or how their perception of the impact of the State guarantee on the risk of default by IFPEN would evolve (recital 200 of the contested decision). As a consequence, the Commission decided to require the French Republic to furnish information relating to the levels and terms of IFPEN’s debt and provide proof that those loans were in line with market conditions, or add the gross equivalent of the aid component to the estimate of the maximum impact of the guarantee. The Commission stated that the obligations imposed on the French Republic and the latter’s commitment to include a written statement in the financing contract for each transaction that the State would not be obliged to act as financial substitute for IFPEN for payment of the claim in the event of IFPEN’s insolvency, while not resolving all the issues surrounding the guarantee, would allow the plea of accepted risk to be relied upon, and any negative repercussions of the guarantee to be limited considerably (recitals 201 and 202 of the contested decision).22Next, as regards IFPEN’s dealings with its suppliers, the Commission concluded that IFPEN had benefited from a real economic advantage, consisting in a reduction of prices charged by its suppliers. That price reduction resulted from a more favourable assessment by those suppliers of the risk of default on the part of IFPEN, due to the unlimited State guarantee conferred by its EPIC status (recitals 203 to 215 of the contested decision).23Finally, as regards IFPEN’s dealings with its customers, the Commission considered that, in the light of the guarantee granted by the State to IFPEN, its customers were assured that the latter would never be subjected to compulsory winding up, and would therefore always be able to fulfil its contractual obligations, or, if it could not, that customers would be compensated. In the absence of that guarantee, a customer wishing to benefit from the same level of protection would need to obtain a performance bond from a financial intermediary. Therefore, IFPEN benefited from a real economic advantage, consisting in the absence of payment of a premium for a performance bond, or at the very least a best efforts guarantee, which it was able to offer its customers (recitals 216 to 237 of the contested decision).24The Commission considered that the economic advantage derived by IFPEN from the State guarantee was selective, in so far as IFPEN’s competitors, who were subject to insolvency procedures provided for under ordinary law, did not benefit from a comparable State guarantee (recitals 215 and 238 of the contested decision).25As regards a potential transfer of the advantage conferred on IFPEN to its private-law subsidiaries, the Commission, referring to the analysis of IFPEN’s dealings with its subsidiaries carried out in Decision 2009/157, concluded that, although relations between IFPEN and Beicip-Franlab were conducted on normal market terms, the subsidiaries Axens and Prosernat had to some extent been able to benefit from the economic advantage enjoyed by IFPEN as a result of the guarantee conferred by its EPIC status. The Commission classified that advantage as selective on the ground that Axens’ and Prosernat’s competitors did not have access to the technologies and human and material resources available to IFPEN on such favourable terms (recitals 226 and 243 to 250 of the contested decision).26In the fourth place, the Commission examined the question of distortion of competition and the effect on trade. The Commission stated that the State guarantee ‘… may lead to a reduction in the operating costs of [IFPEN] for the services it supplies to third parties (contract research) and in those of Axens and Prosernat for the services they obtain from their parent (research in their exclusive field, contract research, provision of staff and infrastructures, and provision of administrative services), which has the effect of favouring the [IFPEN] group and therefore of distorting competition within the meaning of Article 107(1) TFEU’. According to the Commission, since the markets on which the IFPEN group operates are wide open to trade within the European Union, the grant of the State guarantee to IFPEN is liable to have an unfavourable impact on competing undertakings which have, or wish to develop, similar economic activities in the markets concerned and, therefore, to distort competition and to affect trade within the meaning of Article 107(1) TFEU (recitals 251 to 253).27The Commission concluded that the guarantee constituted State aid within the meaning of Article 107(1) TFEU (recital 255).28In the fifth place, the Commission examined the compatibility of that aid, drawing a distinction between, on the one hand, aid in the field of contract research and services provided by IFPEN both on behalf of third parties and on behalf of its subsidiaries, and, on the other, aid to the IFPEN group in the exclusive fields of activity of Axens and Prosernat. The Commission concluded that the State aid granted to the IFPEN group was compatible with the internal market, subject to certain conditions specified in the contested decision.29The essential points of the operative part of the contested decision are reproduced below: ‘Article 1 1. The status of publicly owned industrial and commercial establishment granted by France to [IFPEN] conferred on [IFPEN], from 7 July 2006 onward, an unlimited public guarantee (“the State guarantee”) covering the totality of its activities.2. The cover provided by the State guarantee for the non-economic activities of [IFPEN], in particular its training activities with a view to increased, better qualified human resources, its independent [research and development] activities with a view to more extensive knowledge and better understanding, and its activities for the dissemination of research results, does not constitute State aid within the meaning of Article 107(1) TFEU.3. The cover provided by the State guarantee for the technology transfer activities carried out by [IFPEN] in the fields provided for by the exclusive development, marketing and use agreement concluded with its subsidiary Beicip‑Franlab does not constitute State aid within the meaning of Article 107(1) TFEU.4. The cover provided by the State guarantee for the technology transfer activities carried out by [IFPEN] in the fields provided for by the exclusive agreements concluded with its subsidiaries Axens and Prosernat referred to in Article 3(1) of [Decision 2009/157] constitutes State aid within the meaning of Article 107(1) TFEU.5. The cover provided by the State guarantee for the contract research and other services performed by [IFPEN], on behalf of both third parties and the subsidiaries, constitutes State aid within the meaning of Article 107(1) TFEU.… Article 3 In the period between 7 July 2006 and 31 December 2009, the cover provided by the State guarantee for the economic activities referred to in Article 1(4) and (5) constituted aid compatible with the internal market. Article 4 From 1 January 2010 onward, and until the date of expiry of the exclusive agreements between [IFPEN] and its subsidiaries Axens and Prosernat referred to in Article 3(1) of [Decision 2009/157], the cover provided by the State guarantee for the economic activities referred to in Article 1(4) of this decision constitutes aid compatible with the internal market, subject to compliance with the conditions in Articles 5 and 6 of this decision. Article 5 1. The annual financial report referred to in Article 4(2) of [Decision 2009/157] shall include, in addition to the information already mentioned in Article 5(1) of that decision, the information listed in paragraphs 2, 3 and 4 of this Article.2. The annual financial report shall include the value, interest rate and contractual terms of the loans subscribed to by [IFPEN] during the year under review, and an estimate of the gross grant equivalent of any interest rate subsidy deriving from the State guarantee, unless proof is supplied that these loan contracts are in accordance with normal market conditions, either by comparing their terms with those obtained by [IFPEN] before its change of legal form, or on the basis of a more precise methodology approved in advance by the Commission.3. The annual financial report shall include the value of goods and services obtained by [IFPEN] from suppliers to carry out the economic activities referred to in Article 1(4) and (5), during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from a more favourable assessment by suppliers of the risk of default of the establishment. This estimate shall be made either by applying a flat rate of 2.5% to the value of acquisitions made, or on the basis of a more precise methodology approved in advance by the Commission.4. The annual financial report shall include the value of the economic activities referred to in Article 1(4) and (5) carried out by [IFPEN] during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from the lack of payment of a premium corresponding to a performance bond or, at the very least a best efforts guarantee, offered to the beneficiaries of the above-mentioned economic services. This estimate shall be made either by applying a flat rate of 5% to the value of the services provided or on the basis of a more precise methodology approved in advance by the Commission. Article 6 1. The total amount of public funding allocated to the activities of [IFPEN] in the exclusive fields of activity of Axens and Prosernat, including the maximum impact of the State guarantee as estimated in Article 5(2), (3) and (4), must be lower than the maximum intensity permitted by the Community framework for State aid for research and development and innovation.2. If the threshold referred to in paragraph 1 is exceeded, the surplus aid shall, where appropriate, be refunded by the subsidiary concerned, Axens or Prosernat, to [IFPEN]. Article 7 From 1 January 2010, the cover provided by the State guarantee for the economic activities referred to in Article 1(5) constitutes State aid which is compatible with the internal market, subject to compliance with the conditions in Article 8. Article 8 1. The contract research activities and the provision of services carried out by [IFPEN] referred to in Article 1(5) shall remain ancillary to its principal activity of independent public research.3. France shall submit each year to the Commission a report on the contract research activities and provision of services carried out by [IFPEN] which specifies the ratio of their value to the budget devoted by [IFPEN] to its independent public research activities. Article 9 1. The French authorities and [IFPEN] shall include the following written statement in the financing contract for each transaction (for all instruments covered by a contract):“The issue/programme/loan does not enjoy any form of direct or indirect State guarantee. In the event of insolvency, the State would not be obliged to act as financial substitute for [IFPEN] for payment of the claim.”2. The French authorities shall have a similar clause, ruling out State liability, included in any contract relating to contract research services or other services referred to in Article 1(5).3. The French authorities shall have a similar clause, ruling out liability of [IFPEN] and the State, included in any contract involving a claim concluded by the public limited companies Axens, Beicip-Franlab and Prosernat.4. [IFPEN] shall refrain from issuing any form of suretyship, endorsement, guarantee, or letter of intent or comfort in favour of the public limited companies Axens, Beicip-Franlab and Prosernat which does not comply with normal market terms.…’ Earlier proceedings before the General Court and the Court of Justice 30By application lodged at the Registry of the General Court on 9 September 2011, the French Republic brought an action against the contested decision which was registered under number T‑479/11.31By application lodged at the Registry of the General Court on 5 April 2012, IFPEN brought an action against the contested decision which was registered under number T‑157/12.32By order of 2 December 2013, the President of the Eighth Chamber of the General Court, after having heard the parties, suspended the proceedings in the cases which subsequently gave rise to the judgment of 26 May 2016, France and IFP Énergies Nouvelles v Commission (T‑479/11 and T‑157/12, ‘the initial judgment’, EU:T:2016:320), pending the final decision of the Court of Justice in the case which subsequently gave rise to the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217).33After the Court of Justice, by its judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), dismissed the appeal brought by the French Republic against the judgment of 20 September 2012, France v Commission (T‑154/10, EU:T:2012:452), by which the General Court had dismissed the action brought by the French Republic against the La Poste decision, the General Court asked the French Republic, IFPEN and the Commission to submit their observations on the conclusions to be drawn from the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), for the actions in the cases which subsequently gave rise to the initial judgment.34By letter of 5 May 2014, the French Republic withdrew the pleas by which it had disputed that there was an implied and unlimited State guarantee inherent in the status of an EPIC and a connection between the alleged advantage conferred on IFPEN under that guarantee and the transfer of State resources. By letter of the same date, IFPEN also withdrew the plea by which it had disputed that there was an implied and unlimited State guarantee inherent in the status of an EPIC.35By decision of 8 September 2015, the President of the Eighth Chamber of the General Court, after having heard the parties, joined the cases which subsequently gave rise to the initial judgment for the purposes of the oral part of the procedure and the decision closing the proceedings.36The parties to the joined cases presented oral argument and answered the questions put to them by the Court at the hearing on 8 October 2015.37By the initial judgment, delivered on 26 May 2016, the Court upheld in part the actions brought by the French Republic and IFPEN and annulled the contested decision inasmuch as it had classified the guarantee arising from IFPEN’s EPIC status as ‘State aid’ within the meaning of Article 107(1) TFEU and to the extent that it had determined the conclusions to be drawn from that classification. The Court dismissed the actions as to the remainder.38In particular, the Court held that, as far as the definition of the advantage in IFPEN’s dealings with its suppliers and customers was concerned, the Commission had infringed its obligation to state reasons and its obligation to provide proof of that advantage and had committed errors of law in choosing to use factoring and the performance bond to calculate the value of the advantage in question. The Court also held that, in order to prove such an advantage, the Commission could not rely on the presumption of an advantage conferred on an EPIC by the implied and unlimited State guarantee inherent in its status, as established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217). The Court held, first, that the hypothesis underlying that presumption was not plausible with regard to dealings between IFPEN and its suppliers and, secondly, that, as the Commission had not defined the advantage accruing to IFPEN from the guarantee in its dealings with its customers, the presumption on which it intended to rely was redundant. Furthermore, the Court held that the presumption of an advantage was confined to dealings involving a financing transaction, a loan or, more broadly, credit and could not be extended to dealings between an EPIC and its suppliers and customers. The Court also held that, even though the Commission was able to rely on the presumption established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217) to adduce evidence of the existence of the advantage derived by IFPEN from its EPIC status in its dealings with banks and financial institutions, in the present case that presumption had been rebutted. The Court stated that, from the time of IFPEN’s conversion into an EPIC in July 2006 until the end of the period examined in the contested decision, namely the end of 2010, IFPEN did not derive from its EPIC status any real economic advantage in the form of more favourable credit terms granted to it by banks and financial institutions. The Court also found that, since the presumption had been rebutted for the period in question, it could not be relied on again in the future as proof that the guarantee in question conferred an advantage on IFPEN in its dealings with banks and financial institutions without a substantial change in the circumstances in which it was rebutted. In that regard, the Court held that the Commission could not rely on the mere fact that IFPEN was able, by virtue of its status, to take on debt as a basis for forming the view that the advantage accruing to it in the future could be established by way of presumption.39Following an appeal brought by the Commission, the Court of Justice, by its judgment of 19 September 2018, Commission v France and IFP Énergies nouvelles (C‑438/16 P, ‘the judgment under appeal’, EU:C:2018:737), set aside the initial judgment and referred the case back to the General Court.40The Court of Justice upheld the second ground of appeal put forward by the Commission, finding that the General Court had committed errors of law in holding that the possibility of relying on the presumption established in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), depended on there being actual effects in favour of the beneficiary of the guarantee and that, with respect to IFPEN’s dealings with banks and financial institutions, that presumption had been rebutted. The Court of Justice stated that the presumption in question could be rebutted only in so far as it was shown that, in the light of the economic and legal context of the guarantee associated with the status of the EPIC concerned, the latter had not obtained in the past and, in all plausibility, would not obtain in the future any real economic advantage from that guarantee.41The Court of Justice also upheld the Commission’s third ground of appeal. The Court of Justice held that the General Court had committed an error of law in holding that the presumption established in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), was restricted to dealings involving a financing transaction, a loan or, more broadly, credit from the creditor of an EPIC, and in particular to that EPIC’s dealings with banks and financial institutions. However, the Court of Justice stated that, since the presumption established in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), was based on the hypothesis that, thanks to the guarantee associated with its status, the EPIC concerned benefited or could benefit from better financial conditions than those which were normally granted on the financial market, that presumption could only be applied to dealings between the EPIC and its suppliers and customers if such conditions arose in the latter’s dealings on the markets concerned, which the Commission was required to verify.42Furthermore, the Court of Justice rejected the Commission’s first ground of appeal in its entirety. In particular, it found that the General Court had not erred in law when it held that, in so far as the conversion of IFPEN into an EPIC could be classified as ‘State aid’, it constituted individual aid within the meaning of Article 1(e) of Regulation No 659/1999.43The Court of Justice also observed that, contrary to what was claimed by the Commission, the French Republic and IFPEN had, on several occasions and in sufficient detail, contested the Commission’s conclusions relating to the existence of an advantage for IFPEN in its dealings with banks and financial institutions. Procedure and forms of order sought after referral back 44By decision of 19 September 2018, the General Court joined Cases T‑479/11 RENV and T‑157/12 RENV for the purposes of the oral part of the procedure and the decision closing the proceedings. The cases were allocated to the Eighth Chamber of the General Court.45In accordance with Article 217(1) of the Rules of Procedure of the General Court, the French Republic, IFPEN and the Commission each lodged written observations. IFPEN’s observations were lodged on 28 November 2018 while those of the French Republic and the Commission were lodged on 29 November 2018.46In accordance with Article 217(3) of the Rules of Procedure, the French Republic, IFPEN and the Commission each lodged a supplementary statement on 21 February 2019.47By letter of 12 March 2019, IFPEN requested a hearing.48In the context of a measure of organisation of procedure, the Court put written questions to the parties. The parties responded within the time allowed.49On 28 November 2019, the parties presented oral argument and answered the questions put by the Court.50The French Republic claims that the Court should:annul the contested decision in its entirety;order the Commission to pay the costs.51IFPEN claims that the Court should:principally, annul the contested decision;in the alternative, annul the invalid parts of the operative part of the contested decision;52The Commission contends that the Court should:dismiss the action as unfounded;order the French Republic and IFPEN to pay the costs of the proceedings. Law 53In Case T‑479/11, the French Republic now puts forward two pleas in support of its action. The first plea alleges infringement of Article 107(1) TFEU, in that the Commission failed to establish to the requisite legal standard the existence of State aid. The second plea alleges infringement of Article 107(1) TFEU, in that the Commission misconstrued the concept of a selective advantage. By that plea, which is divided into two parts, the French Republic, first, submits that the Commission wrongly concluded that the existence of a guarantee would confer an advantage on IFPEN, both in its dealings with its suppliers and its customers and in its dealings with banks and financial institutions. Secondly, and in the alternative, the French Republic disputes the Commission’s findings concerning the transfer of that advantage to IFPEN’s private-law subsidiaries, Axens and Prosernat.54In Case T‑157/12, IFPEN now puts forward four pleas in support of its action.55The first plea alleges infringement of Article 107(1) TFEU, in that the Commission failed to establish the existence of a real economic advantage accruing to IFPEN and its subsidiaries. By this plea, which is divided into three parts, IFPEN first of all submits that the Commission did not successfully demonstrate, to the standard of proof required by case-law, the existence of a real economic advantage accruing to IFPEN from the guarantee at issue, in particular in its dealings with suppliers and its dealings with customers. Next, it submits that the Commission failed to demonstrate to the requisite legal standard that that economic advantage had been transferred to its private-law subsidiaries, Axens and Prosernat. Finally, it considers that there is no adequate connection between that economic advantage and the transfer of State resources arising from the guarantee at issue.56The second plea alleges an infringement of the Guarantees Notice or, in the alternative, of Article 107(1) TFEU. By this plea, IFPEN submits, in essence, that point 1.2 of the Guarantees Notice cannot be interpreted as validating the existence of an automatic link between the impossibility, on a legal or statutory basis, of being the subject of insolvency proceedings, on the one hand, and the benefit of more favourable funding terms on the markets to an extent such as to constitute a selective advantage, on the other.57The third plea alleges errors of assessment in the determination of the value of the advantage granted to IFPEN. By this plea, which is divided into two parts, IFPEN first disputes the relevance of using factoring and performance bonds or best efforts guarantees to estimate the value of the advantage which it is said to have derived from the guarantee at issue in its dealings with suppliers and customers. Secondly, it submits that the Commission’s determination of the extent of the State aid allegedly identified as having been granted both to it and to its subsidiaries was incorrect.58Finally, the fourth plea alleges breach of the principle of proportionality. By this plea, IFPEN claims, in essence, that the consequences of recognising the existence of an implied and unlimited State guarantee in favour of EPICs which is such as to constitute State aid, in particular the obligation of prior notification and other obligations imposed on it and the French Republic, are disproportionate.59A preliminary point to note is that, given that the existence of an implied and unlimited State guarantee inherent in the status of EPIC is no longer challenged in the present proceedings, in the light of the pleas raised by the French Republic and IFPEN, the Court must, first of all, examine whether the Commission rightly concluded that the fact that that guarantee covered, first, the technology transfer activities carried out by IFPEN in the fields provided for by the exclusive agreements concluded with its subsidiaries Axens and Prosernat and, secondly, the contract research and other services performed by IFPEN, on behalf of both third parties and the subsidiaries, constituted State aid within the meaning of Article 107(1) TFEU.60In that connection, the Court will examine, as a first step, whether the Commission was entitled to consider, in the present case, that IFPEN derived an advantage in its dealings with banks and financial institutions and with its customers and suppliers as a result of the implied and unlimited State guarantee associated with its status, and also whether the Commission established to the requisite legal standard that that advantage had been transferred to IFPEN’s subsidiaries, Axens and Prosernat. Next, if appropriate, the Court will need to examine the pleas by which the French Republic and IFPEN dispute that that advantage involves a transfer of State resources.61If the Court should find that the Commission was entitled to conclude that State aid had been granted within the meaning of Article 107(1) TFEU in the present case, the Court must then, as a second step, determine whether the conditions laid down by the Commission for that aid to be regarded as compatible with the internal market breach the principle of proportionality, as is submitted by IFPEN. The pleas alleging an infringement of Article 107(1) TFEU and relating to the existence and calculation of the advantage accruing to IFPEN 62The first part of the second plea and the fourth plea of the application in Case T‑157/12, and the second part of the first plea and the first part of the third plea of the application in Case T‑479/11 are concerned, in essence, with the existence of the advantage that IFPEN is said to have derived from the State guarantee inherent in its EPIC status and, to a lesser extent, with the estimate of the value of that advantage.63The arguments of the French Republic and of IFPEN are concerned, in essence, with the Commission’s demonstration of the existence of the advantage in IFPEN’s dealings with its customers and suppliers. The French Republic, however, also challenges some of the Commission’s observations relating to the advantage that might arise in IFPEN’s dealings with banks and financial institutions.64The Court must therefore begin by examining the arguments concerning the advantage which arose in IFPEN’s dealings with its suppliers and customers and then examine the advantage that could arise in IFPEN’s dealings with banks and financial institutions. The advantage in the case of IFPEN’s dealings with its suppliers and customers 65In the first place, in their applications, the French Republic and IFPEN argue that the Commission failed to successfully establish to the standard of proof required by the case-law that there was a real economic advantage in favour of IFPEN in its dealings with its suppliers and customers. They state that, while the Commission’s analysis may be prospective, it cannot be entirely hypothetical and must enable a real economic advantage to be defined.66According to the French Republic and IFPEN, in the present case, the proof of the existence of an advantage in IFPEN’s dealings with suppliers and customers was based on assumptions not substantiated by evidence. The French Republic and IFPEN comment, in particular, that the Commission did not produce any testimony from suppliers or customers and, a fortiori, did not demonstrate that there was a habitual and automatic expectation on the part of suppliers and customers that insolvency proceedings could not be brought against an EPIC. Moreover, so far as IFPEN’s dealings with customers are concerned, the French Republic and IFPEN point to the confused, even incomprehensible, nature of some parts of the statement of reasons in the contested decision. The French Republic and IFPEN conclude from this that the Commission failed to comply with its investigative obligations in reasoning by supposition rather than by turning to IFPEN’s suppliers and customers for tangible evidence of the conduct attributed to them.67In their written observations on the conclusions to be drawn from the judgment under appeal for the resolution of the dispute, the French Republic and IFPEN argue that the Commission was unable to rely on the presumption of an advantage established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), to demonstrate the existence of the advantage derived by IFPEN from the unlimited State guarantee in its dealings with its suppliers and customers without having first ascertained that the conduct of the players on the market justified the assumption of an advantage similar to that found in IFPEN’s dealings with banks and financial institutions. According to the French Republic and IFPEN, there was no such assessment in the contested decision.68Furthermore, according to the French Republic, an examination of the economic and legal context of the market affected by IFPEN’s dealings with its suppliers and customers renders the presumption of an advantage similar to that found in IFPEN’s dealings with banks and financial institutions implausible. The French Republic and IFPEN then put forward in their observations various factual matters in order to demonstrate that the presumption of an advantage in IFPEN’s dealings with its suppliers and customers is, in any event, rebutted.69In the second place, the French Republic and IFPEN dispute the method chosen by the Commission to estimate the value of the advantage conferred on IFPEN by the guarantee at issue in its dealings with suppliers and customers. In particular, they submit that the factoring and performance bonds or best efforts guarantees chosen by the Commission as comparative indicators are irrelevant when making that estimate.70The Commission submits, in its written observations on the conclusions to be drawn from the judgment under appeal for the resolution of the dispute, that the use of a presumption to demonstrate the existence of the advantage in dealings between IFPEN and its customers and suppliers was justified. The Commission observes that, with regard to the market in which IFPEN operates, the economic activities of research organisations include research agreements and provision of services to undertakings and, as is the case with IFPEN, technology transfer activities. The Commission also comments that a research organisation may acquire instruments, equipment and various research resources for its laboratories from suppliers. As for IFPEN’s customers, the Commission notes that they enter into research agreements with IFPEN. According to the Commission, the mere fact that IFPEN’s research projects are characterised by a high level of uncertainty and therefore by the acceptance of a high level of risk by the commercial partners of the research organisation does not mean that those partners are indifferent to the risk of insolvency of the other party to the contract. In fact, on the contrary, the long duration of research and development agreements underlines the interest that IFPEN’s customers have in obtaining protection against the insolvency of their co-contractor, particularly when they are committing to complex research in the long term. According to the Commission, a distinction must be drawn between the risk inherent in the research project and the risk of insolvency of the other party. The guarantee from which IFPEN benefits could therefore constitute a competitive advantage over other research organisations with regard to long-term agreements. In addition, certain research and development agreements involve significant after-sales services, meaning that the commercial partners remain much more dependent on one another than in the context of the purchase of a more standard product or service. Similar reasoning could be used with regard to IFPEN’s dealings with its suppliers where, again, even if some of the supplies are standardised, other supply contracts may relate to very specialised instruments that can only be delivered after a lengthy period. That situation may incentivise the suppliers of a research organisation to forearm themselves against the risk of the other party to the contract becoming insolvent. In the same way, according to the Commission, the high price of such instruments could lead to a deferred payment in instalments which would also present a risk to the supplier and lead to the same incentive. The Commission concludes that the use of a presumption to demonstrate the existence of an advantage arising from the unlimited State guarantee conferred on IFPEN in its dealings with its customers and suppliers was entirely justified.71In its further observations, the Commission also disputes the claim made by the French Republic and by IFPEN that the presumption that the unlimited State guarantee allows IFPEN to benefit from an advantage in its dealings with suppliers and customers similar to that found in the dealings of an EPIC with banks and financial institutions is rendered implausible by an examination of the economic and legal context of the market in which IFPEN operates. The Commission also disputes that the presumption of an advantage in IFPEN’s dealings with its suppliers and customers has been rebutted in the present case.72Moreover, the Commission maintains that, contrary to the French Republic and IFPEN’s submission, the use of factoring and the performance bond to calculate the advantage derived by IFPEN from the unlimited State guarantee in its dealings with its suppliers and customers is appropriate. The Commission observes in that regard that the use of ‘reasoning in terms of the cost of equivalent risk cover’ in order to estimate the value of the advantage that IFPEN could have derived from the guarantee at issue was justified by the difficulties that it had to overcome in making that estimate, in particular, difficulties arising from the absence on the market of any service comparable to a guarantee against the risk of insolvency marketed as such.73First of all, it must be borne in mind that, for a measure to be classified as State aid within the meaning of Article 107(1) TFEU, four conditions must all be met. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Third, it must entail an advantage accruing exclusively to certain undertakings or certain sectors of activity. Fourth, it must distort or threaten to distort competition (see, to that effect, judgment of 23 March 2006, Enirisorse, C‑237/04, EU:C:2006:197, paragraphs 38 and 39 and the case-law cited, and of 29 September 2000, CETM v Commission, T‑55/99, EU:T:2000:223, paragraph 39 and the case-law cited).74The concept of aid embraces not only positive benefits, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, therefore, without being subsidies in the strict sense of the word, are similar in character and have the same effect. Also, State measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the beneficiary undertaking would not have obtained under normal market conditions, are regarded as aid (see judgment of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 94 and the case-law cited).75Next, it must be borne in mind that it is for the Commission to provide the proof of the existence of State aid within the meaning of Article 107(1) TFEU (see, to that effect, judgment of 12 September 2007, Olympiaki Aeroporia Ypiresies v Commission, T‑68/03, EU:T:2007:253, paragraph 34 and the case-law cited). In that regard, according to the case-law, in assessing whether the beneficiary undertaking enjoys an economic advantage which it would not have obtained under normal market conditions, the Commission has an obligation to make a complete analysis of all factors that are relevant to the transaction at issue and its context, including the situation of the beneficiary undertaking and of the relevant market (judgments of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission, T‑228/99 and T‑233/99, EU:T:2003:57, paragraph 251, and of 3 March 2010, Bundesverband deutscher Banken v Commission, T‑163/05, EU:T:2010:59, paragraph 37).76As regards the administration of proof in the sector of State aid, it is settled case-law that the Commission is required to conduct a diligent and impartial examination of the contested measures, so that it has at its disposal, when adopting the final decision establishing the existence and, as the case may be, the incompatibility or unlawfulness of the aid, the most complete and reliable information possible for that purpose (see judgment of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 63 and the case-law cited).77However, as the Court of Justice has held, in the course of that examination, the Commission may rely on a simple presumption that the grant of an implied and unlimited State guarantee in favour of an undertaking which is not subject to the ordinary compulsory administration and winding-up procedures results in an improvement in its financial position through a reduction of charges which would normally encumber its budget. Consequently, in the context of the procedure relating to existing schemes of aid, to prove the advantage obtained by such a guarantee to the beneficiary undertaking, it is sufficient for the Commission to establish the mere existence of that guarantee, without having to show the actual effects produced by it from the time that it is granted (judgment of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraphs 98 and 99, and judgment under appeal, paragraph 110).78With regard to the extent of judicial review of the contested decision in the light of Article 107(1) TFEU, according to the case-law, the concept of State aid, as set out in that provision, is a legal concept which must be interpreted on the basis of objective factors. For that reason, the European Union judicature must, in principle, having regard both to the specific features of the case before them and to the technical or complex nature of the Commission’s assessments, carry out a comprehensive review as to whether a measure falls within the scope of Article 107(1) TFEU (see judgment of 2 March 2012, Netherlands and ING Groep v Commission, T‑29/10 and T‑33/10, EU:T:2012:98, paragraph 100 and the case-law cited).79It is also clear from the case-law that judicial review is limited with regard to whether a measure comes within the scope of Article 107(1) TFEU, where the appraisals by the Commission are technical or complex in nature. It is, however, for the Court to decide whether that is the case (see judgment of 2 March 2012, Netherlands and ING Groep v Commission, T‑29/10 and T‑33/10, EU:T:2012:98, paragraph 101 and the case-law cited).80In that regard, although the Commission enjoys a broad discretion the exercise of which involves economic assessments which must be made in a European Union context, that does not imply that the European Union judicature must refrain from reviewing the Commission’s interpretation of economic data. According to the case-law, not only must the EU judicature establish, among other things, whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (see judgment of 2 March 2012, Netherlands and ING Groep v Commission, T‑29/10 and T‑33/10, EU:T:2012:98, paragraph 102 and the case-law cited).81First, as the Court of Justice held in the judgment under appeal, the measure at issue, namely the conversion of IFPEN into an EPIC, did not come within the concept of ‘aid scheme’ referred to in Article 1(d) of Regulation No 659/1999, but, in so far as it could be classified as ‘State aid’, it constituted individual aid for the purposes of Article 1(e) of Regulation No 659/1999. It follows that the Commission could not limit itself to examining the general characteristics of that measure to demonstrate that it constituted State aid (judgment under appeal, paragraphs 64 to 73 and 82).82Secondly, it must be noted that the presumption of an advantage established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), referred to in paragraph 77 above, is based on the hypothesis that, thanks to the guarantee associated with its status, the EPIC concerned benefits or could benefit from better financial conditions than those which are normally granted on the financial markets. Therefore, the application of that presumption to the EPIC’s dealings with suppliers and customers is justified only in so far as such more advantageous conditions arise also in the latter’s dealings on the markets concerned (judgment under appeal, paragraph 150).83Consequently, when the Commission seeks to apply that presumption, it must examine the economic and legal context of the market affected by the dealings in question. In particular, the Commission is required to verify whether the conduct of players on the market concerned justifies a hypothesis of an advantage similar to that found in the EPIC’s dealings with banks and financial institutions (judgment under appeal, paragraph 150).84It is in the light of these considerations that the complaints made by the French Republic and IFPEN should be assessed.– The complaint alleging a lack of evidence of an advantage in IFPEN’s dealings with its suppliers 85It must be observed that it is clear from recitals 203 and 214 of the contested decision that the Commission considers there to be a fall in price as a result of a more favourable assessment by co-contractors of the risk of default on the part of an entity which they know to be protected from the risk of compulsory winding up by its status as a publicly owned establishment.86In recital 204 of the contested decision, the Commission outlined the method which it had used to calculate the fall in price, as follows:‘To estimate the fall in price resulting from the more favourable assessment of the risk of default made by suppliers in the case of an EPIC, the Commission will look at the cost of equivalent risk cover. In the absence of a State guarantee, a supplier to [IFPEN] wishing to benefit from a comparable guarantee (i.e. to cover itself in full against the risk of default of the other party) could have recourse to the services of a specialised credit institution or insurance undertaking. Such cover against the risk of default is commonly offered by specialised factoring companies.’87The observations set out in recitals 203 and 204 of the contested decision, read in conjunction with recital 214 of the same decision, highlight the fact that the Commission assumed that there was a fall in price as a result of suppliers making a more favourable assessment of the risk of default on the part of IFPEN, without verifying the soundness of that assumption, and that it then sought to assess the extent of that fall in price by means of an indicator that did not measure the fall in price itself, but only the value of a guarantee that it regarded as comparable to the guarantee from which IFPEN benefited. That conclusion is supported by the absence in the contested decision of any analysis of the prices actually charged by IFPEN’s suppliers before and during the period in question.88The Commission was invited, by means of a measure of organisation of procedure, to clarify whether the assertion that the advantage from which IFPEN benefited in its dealings with its suppliers had consisted of a fall in the price charged by the suppliers was based on any such analysis and, if so, in which part of the contested decision that analysis had been carried out.89In response to that measure of organisation of procedure, the Commission explained that, in recitals 203 and 204 of the contested decision, it had ‘assumed that the existence of an implied and unlimited guarantee was likely to influence the perception held by IFP[EN]’s suppliers of the risk of non-payment by [IFPEN], which ought logically to translate into a series of advantages granted in return to the beneficiary of the guarantee (in particular, a price reduction)’. In its response, the Commission also stated that ‘the conclusion that the guarantee at issue gave IFPEN a real economic advantage in its dealings with its suppliers, consisting in a fall in the prices charged by the latter, [was] based not on an empirical and concrete analysis of how IFP[EN]’s suppliers set prices on that market, but on a presumption supplemented by certain empirical observations’ and that, ‘in other words, it [was] demonstrated indirectly and based largely on logic’. In conclusion, the Commission stated that it was re-examining the reasons given in the contested decision in the light of the requirements set out in the judgment under appeal.90It should also be noted that, at the hearing, the Commission itself stated that, with regard to dealings between IFPEN and its suppliers and customers, there was information in the contested decision which suggested that the Commission had reasoned by presumption, as well as certain market factors, but there was no full demonstration in due and proper form of what the Court of Justice had considered necessary in the judgment under appeal. According to the Commission, that explained the conclusion to its response to the Court’s question referred to in paragraph 89 above.91It must therefore be held that, as the Commission acknowledged in its written submissions before the Court and subsequently stated at the hearing, the contested decision does not contain the demonstration required by the Court of Justice in the judgment under appeal that the conduct of the players on the market in question justified the hypothesis that there was an advantage in the dealings between IFPEN and its suppliers similar to that found in the dealings between an EPIC and banks and financial institutions.92The Commission was therefore wrong to conclude, in recitals 203 and 214 of the contested decision, that IFPEN had benefited from a real economic advantage consisting of a fall in the prices charged by its suppliers as a result of those suppliers making a more favourable assessment of a risk of default on its part.93In the light of the foregoing, there is no need to examine the arguments by which the French Republic and IFPEN dispute the relevance to the action of factoring in estimating the value of the advantage accruing to IFPEN as a result of the guarantee in question in its dealings with its suppliers. The Commission could not estimate the value of an advantage the existence of which has not been demonstrated.– The complaint alleging a lack of evidence of an advantage in IFPEN’s dealings with its customers 94It is apparent from the contested decision that the Commission defined the advantage which IFPEN was able to derive from the State guarantee inherent in its status as an EPIC in its dealings with its customers as the absence of payment of a premium for a performance bond, or at the very least a best efforts guarantee, which it was able to offer its customers.95That definition is based on a finding substantiated only by comments made by UOP Limited, according to which, in the field of technology transfer, acquirers were particularly sensitive to the guarantees that their providers were able to give them, in terms of cover of contractual and non-contractual liability (recital 216 of the contested decision). On the basis of that finding, having dismissed as irrelevant the fact that the guarantee in question did not cover IFPEN’s non-contractual liability, the Commission stated the following:‘(220)… in view of the State guarantee granted to [IFPEN], its customers are assured that [IFPEN] will never be subjected to compulsory winding up and therefore will always be able to fulfil its contractual obligations, or failing that that they will be compensated for any such breach.(221)By analogy with the arguments … set out in recitals 204 et seq. with regard to dealings with suppliers, the Commission considers that in the absence of a State guarantee, a customer wishing to enjoy the same level of protection would take out a performance bond from a financial intermediary (a bank or insurance company, for example) to ensure the completion of the contract between it and [IFPEN]. The purpose of such protection would be to guarantee financial compensation for the customer for loss caused by (total or partial) breach of contract.’96In the subsequent recitals of the contested decision, the Commission calculated the cost of a performance bond or best efforts guarantee and considered that the maximum rate applied in such a guarantee was 5% of the turnover generated by the service covered (recitals 223 to 225 of the contested decision). It also sought to determine which of IFPEN’s economic activities would be services covered by ‘such a guarantee’ (recitals 226 to 235 of the contested decision). In recital 236 of the contested decision, the Commission stated the following:‘… in the pursuit of its economic activities [IFPEN] has benefited from a real economic advantage, consisting in the absence of payment of a premium for a performance bond, at the very least for best efforts, which it was able to offer in respect of its research activities to its customers, including to its subsidiaries Axens and Prosernat in their exclusive fields. The Commission cannot quantify this advantage precisely, but in view of the specific nature of the risk covered, the Commission considers that in any case it would not exceed, service by service, year by year, the sums shown in Table 5 in this recital …’.97It is apparent from the recitals of the contested decision quoted in paragraphs 95 and 96 above that the advantage from which IFPEN allegedly benefited in its dealings with its customers stems from the fact that, in view of the unlimited State guarantee associated with its EPIC status, it can offer those customers the assurance that it will never be subjected to compulsory winding up and therefore will always be able to fulfil its contractual obligations, or failing that, that they will be compensated for any such breach whereas, without that assurance, those customers would be obliged to take out a performance bond from a financial intermediary.98As the French Republic and IFPEN note, the reasoning used by the Commission in defining the advantage from which IFPEN benefited in its dealings with its customers is based on the hypothesis that, under normal market conditions, customers of research institutes such as IFPEN use performance bonds or best effort guarantees to protect themselves against the risk of the institute becoming insolvent and that, when offered a guarantee such as the one from which IFPEN benefits, the latter’s customers no longer need to use such a performance bond or best efforts guarantee.99However, apart from the comments made by UOP Limited, appearing in recital 216 of the contested decision and according to which ‘… in technology transfer … acquirers are particularly sensitive to the guarantees that their providers are able to give them in terms of cover of both contractual and non-contractual liability’, the Commission did not undertake any study of the market that would justify the validity of the hypotheses summarised in paragraph 98 above.100Although the contested decision does contain further explanations relating to the best efforts guarantee or the performance bond in recitals 221 to 236, it must be observed that they only concern the calculation of the value of the alleged advantage, as is clear from the reference to the reasoning appearing in recitals 204 et seq. of the contested decision concerning the quantification of the alleged advantage in dealings between IFPEN and its suppliers. It must be noted in that regard that the Commission stated in its defence that a best efforts guarantee and a performance bond should not be compared to the unlimited State guarantee from which IFPEN benefits, which is much wider in scope than the former two and that it is very clear from the contested decision that the Commission used those types of guarantee as comparison tools, in order to obtain the most accurate estimate possible of the value of the advantage conferred on IFPEN by the State guarantee in its dealings with its customers. The Commission makes it clear, in recital 236 of the contested decision, that it based that part of its reasoning on a possible quantification of the advantage already received, rather than on the ability of the measure to procure an advantage.101It must therefore be found that the Commission used hypothetical reasoning. It must, however, be noted that the Commission cannot, in the present case, justify that reasoning by relying on the presumption of an advantage established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217).102It must be observed that the Commission’s decision does not contain any prior examination of the economic and legal context of the market in question, as provided for in the case-law cited in paragraph 83 above, which would allow the hypothesis of an advantage in IFPEN’s dealings with its customers similar to that encountered in dealings between an EPIC and the banks and financial institutions to be regarded as plausible, something that the Commission in fact expressly admitted at the hearing, as the Court has pointed out in paragraph 90 above.103It follows that, as regards the definition of the advantage derived by IFPEN from the implied and unlimited State guarantee conferred on it by its EPIC status in its dealings with its customers, the Commission failed in its obligation to provide proof of that advantage in accordance with the case-law cited in paragraph 75 above. The Commission was therefore wrong to conclude, in recital 236 of the contested decision, that, because of the guarantee at issue, IFPEN had benefited from a real economic advantage, consisting in the absence of payment of a premium for a performance bond, or at the very least a best efforts guarantee, which it was able to offer to its customers in respect of its research activities, including to its subsidiaries Axens and Prosernat in their exclusive fields.104It follows that there is no need to examine the arguments by which the French Republic and IFPEN dispute the relevance to the action of performance bonds or best efforts guarantees in estimating the value of the advantage derived by IFPEN from the guarantee in question in its dealings with customers.105In the light of all the foregoing considerations, as regards the existence of an advantage which IFPEN was able to derive from the guarantee in question in its dealings with its suppliers and customers, the Commission has not discharged the burden of proof as defined by the case-law cited in paragraph 75 above. The advantage in the case of IFPEN’s dealings with banks and financial institutions 106In the proceedings in Case T‑157/12, IFPEN submitted that it had not derived any advantage from the State guarantee in its dealings with banks and financial institutions, which the Commission itself acknowledged in recital 199 of the contested decision. It argued that there was therefore no need to revisit that question.107In Case T‑479/11, the French Republic also pointed out that the Commission had acknowledged in recital 199 of the contested decision that, over the period between its change of legal form and 2010, IFPEN had not derived any real economic advantage from its EPIC status in its dealings with banks and financial institutions.108In addition, the French Republic maintained that the Commission’s assertion in recital 200 of the contested decision – which it disputed – that an actual economic advantage could arise in future in IFPEN’s dealings with banks and financial institutions, was not based on any evidence.109In that regard, the French Republic challenged the Commission’s assertion in the defence that it was for the French authorities to demonstrate that, with effect from 1 January 2011, IFPEN’s borrowing terms would still be comparable to those which it used to obtain prior to its change in status. The French Republic claimed that this was impossible to prove due to the unpredictable nature of the economic environment. The French Republic noted that the Commission itself had acknowledged that it could not make assumptions concerning future conduct by market operators.110At the hearing of 8 October 2015, the French Republic had relied on Article 12 de la loi 2010/1645, du 28 décembre 2010, de programmation des finances publiques pour les années 2011 à 2014 (Article 12 of Law No 2010/1645 of 28 December 2010 on public finance planning for the years 2011 to 2014) (JORF of 29 December 2010, p. 22868), which states that ‘notwithstanding any provision to the contrary in the texts applicable to them, French bodies falling within the classification of central government for the purposes of Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community, other than the State, the Caisse d’amortissement de la dette sociale (Social Debt Redemption Fund), the Caisse de la dette publique (Public Debt Fund) and the Société de prises de participation de l’État (State-owned investment company), may not take out with a credit institution a loan with a term greater than 12 months or issue a debt security with a term greater than 12 months’ and ‘the list of the bodies to whom this prohibition applies shall be drawn up by joint order of the Ministers responsible for the economy and the budget’. According the French Republic, as a result of that provision, IFPEN was unable to take out with a credit institution a loan with a term greater than 12 months, which, in any event, excluded the possibility of an advantage arising in future in IFPEN’s dealings with banks and financial institutions. The Commission had contended that that argument was inadmissible, on the ground that the French authorities did not rely on the text of that law during the formal investigation procedure.111In its observations on the conclusions to be drawn from the judgment under appeal, the French Republic claims that the case-law relied on by the Commission to dispute the admissibility of the argument concerning Article 12 of the Law of 28 September 2010 is irrelevant given the objective and public nature of the said law. Moreover, the French Republic argues that, in accordance with the case-law, the power of review exercised by the Court must extend to all the relevant data submitted by the applicant, regardless of whether those data predate or post-date the contested decision, and whether the data were submitted previously in the context of the administrative procedure or, for the first time, in the context of the proceedings currently before the Court. In that regard, the French Republic comments, in particular, that, since neither the presumption of an advantage nor the need to rebut that presumption for the future had been discussed during the administrative procedure, it cannot be criticised for not having brought Article 12 of the Law of 28 September 2010 to the attention of the Commission.112The French Republic adds that the prohibition under Article 12 of the Law of 28 September 2010 was reproduced in Loi 2014-1653, du 29 décembre 2014, de programmation des finances publiques pour les années 2014 à 2019 (Law No 2014-1653 of 29 December 2014 on public finance planning for the years 2014 to 2019) (JORF of 30 December 2014, text No 1), and in Loi 2018-32, du 22 janvier 2018, de programmation des finances publiques pour les années 2018 à 2022 (Law No 2018-32 of 22 January 2018 on public finance planning for the years 2018 to 2022 (JORF of 23 January 2018, text No 1). The French Republic points out the Order of 4 September 2018 drawing up the list of various central government bodies which are prohibited from taking out with a credit institution a loan with a term greater than 12 months or issuing a debt security with a term greater than 12 months (JORF No 230 of 5 October 2018, text No 22).113In its observations on the conclusions to be drawn from the judgment under appeal, IFPEN submits that the Commission itself rejected the application of the presumption of an advantage established by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), including its future application. It claims that this is clear from recital 200 of the contested decision, in which the Commission concluded its examination of a potential advantage to IFPEN in its dealings with banks and financial institutions by stating, with regard to dealings subsequent to the contested decision, that the Commission ‘[could not] make assumptions concerning future conduct by market operators or about their perception of the impact of the State guarantee on the risk of default of the publicly owned establishment IFP’. According to IFPEN, the conclusion that assumptions could not be made is all the more significant given that, in the contested decision, the Commission did not reach a clear conclusion as to the existence of an advantage in its favour. Thus, although Article 107 TFEU requires the Commission, on which the burden of proof falls, to prove the existence of an advantage rather than the possibility of an advantage, the Commission merely mentioned, as regards the past, a potential advantage which had not materialised (recital 199 of the contested decision) and, as regards the future, the fact that assumptions could not be made about the future conduct of market operators (recital 200 of that decision).114In any event, IFPEN considers that the simple presumption of an advantage is rebutted not only in relation to the past, as demonstrated by an analysis of the cost of the loans which it took out between its change of status and November 2018, but also in relation to the future.115In the latter regard, IFPEN submits that the implausibility of any future advantage in its favour is confirmed by all of the background information submitted by the French authorities to the Commission during the administrative procedure. IFPEN refers to three particular matters: first, the fact that its conversion into an EPIC had no effect on its financial situation or on its funding terms, in accordance with a principle of general continuity established by Article 95-VI of the Law of 13 July 2005; second, IFPEN’s excellent financial management, which resulted in a continued increase in its own resources; third, the lack of any borrowing at more than one year over the five previous years, and only one instance of borrowing at less than one year, for a negligible sum, as noted in recitals 197 and 198 of the contested decision.116Using arguments similar to those of the French Republic, IFPEN claims that the implausibility of any future advantage in its favour is also demonstrated by Article 12 of the Law of 28 September 2010.117Furthermore, according to IFPEN, it cannot be said that IFPEN and the French Republic had many opportunities to inform the Commission of the existence of that text during the administrative procedure, as the text was published on 29 December 2010, more than a month after the response of the French authorities to the most recent request for information made to them during the administrative procedure; nor can it be claimed that the reason why the text was not produced during the administrative procedure was the wish to use it in contentious proceedings.118Finally, IFPEN claims that the Commission’s argument that Article 12 of the Law of 28 December 2010 structurally reduced its borrowing options but still enabled it to secure an advantage over one year on a loan of a large amount is refuted by the data produced by three banking institutions.119In its observations on the conclusions to be drawn from the judgment under appeal, the Commission submits that the Court of Justice confirmed that it was not required to demonstrate the real effects produced by the guarantee in IFPEN’s dealings with banks and financial institutions because there was a simple presumption that the guarantee constituted an advantage in those dealings. According to the Commission, it is apparent from the judgment under appeal that, for that presumption to be rebutted, it was not sufficient to find that the guarantee had historically not had any real effect on dealings between IFPEN and banks and financial institutions, but it was also necessary to demonstrate that, when the economic and legal context of the guarantee associated with the status of the EPIC in question was taken into account, the EPIC would not, in all plausibility, obtain any real economic advantage from that guarantee in the future.120At the hearing, the Commission disputed IFPEN’s argument that it had not relied on a presumption in the contested decision concerning the relative advantage in dealings between IFPEN and banks and financial institutions.121In addition, the Commission claims that, in accordance with the case-law, the arguments of the French Republic and IFPEN seeking to rebut that presumption for the future must be dismissed as inadmissible to the extent that they are based on factual matters which post-date the contested decision or which were not brought to the Commission’s attention by the French Republic and IFPEN during the administrative procedure, even though that procedure had given rise to numerous exchanges about the national legislation applicable to IFPEN.122Furthermore, the Commission disputes the arguments raised by the French Republic and IFPEN, assuming that they are even admissible, that Article 12 of the Law of 28 December 2010 had the effect of rebutting the presumption of an advantage in future dealings between IFPEN and banks and financial institutions.123In that regard, it must be noted that, as the Court of Justice held in the judgment under appeal, the mere fact that IFPEN benefited from a State guarantee was such as to enable the Commission to rely on the presumption of an advantage, as developed by the Court of Justice in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), since that presumption is based on the idea that, thanks to the guarantee associated with its status, an EPIC benefits or could benefit from better financial terms than those normally available on the financial markets (judgment under appeal, paragraph 116).124It must also be noted that, despite IFPEN’s claims to the contrary, the Commission did indeed use reasoning in the present case based on a presumption that an advantage existed in dealings between IFPEN and banks and financial institutions.125First, having examined the data provided by the French Republic in recitals 196 to 198 of the contested decision, the Commission concluded, in recital 199 of that decision, that such an advantage had not materialised over the period between IFPEN’s change of status and 2010.126Second, in recital 200 of the contested decision, the Commission stated that the conclusion that the State guarantee had not conferred an advantage on IFPEN in its dealings with banks and financial institutions over the period in question applied only to the past since it ‘[could not] make assumptions concerning future conduct by market operators or about their perception of the impact of the State guarantee on the risk of default of [IFPEN]’.127Also in recital 200 of the contested decision, the Commission stated that, ‘in the context of the annual reports that the French authorities will be called upon to send the Commission in the future, they should furnish information relating to the levels and terms of [IFPEN]’s debt, providing proof that these loans are in line with market conditions, or adding the gross equivalent of the aid component to the estimate of the maximum impact of the guarantee using a methodology similar to that described in [the contested decision]’.128It is therefore apparent from recital 200 of the contested decision that the Commission implicitly, but necessarily, presumed that the advantage existed in dealings between IFPEN and banks and financial institutions by considering that it could not exclude such an advantage for the future and by placing a consequential obligation on the French authorities to show that there was no such advantage or, if there was, that it remained within the limits of the maximum permitted impact of the guarantee.129It should be recalled that, as the Court of Justice stated in the judgment under appeal, in order for such a presumption to be rebutted, it must be shown that, in light of the economic and legal context in which the guarantee associated with the EPIC status concerned takes place, the latter did not obtain in the past and, according to any plausibility, will not obtain in the future, any real economic advantage from that guarantee (judgment under appeal, point 117).130In the present case, it must be noted that the Commission itself found, in recital 199 of the contested decision, that the advantage in dealings between IFPEN and banks and financial institutions did not materialise over the period between IFPEN’s conversion into an EPIC and 2010 and, therefore, acknowledged that the presumption of an advantage had been rebutted for the past.131It is therefore necessary to determine whether the arguments put forward by the French Republic and IFPEN are capable of rebutting the presumption of an advantage for the future under the conditions established by the Court of Justice in the judgment under appeal and recalled in paragraph 129 above.132In that regard, it is settled case-law that the legality of a decision concerning State aid must be assessed by reference to the information available to the Commission at the time of adoption of that decision (see judgment of 23 November 2017, SACE and Sace BT v Commission, C‑472/15 P, not published, EU:C:2017:885, paragraph 76 and the case-law cited).133Accordingly, IFPEN’s arguments concerning an analysis of the funding terms offered to it by banking establishments between 2011 and 2018, and the approach it made to banks in order to show that short-term credit was granted to it in 2016 on commercial market conditions, must be dismissed as inadmissible, since they are based on information that post-dates the adoption of the contested decision. The same goes for the French Republic’s argument that the prohibition on certain public bodies taking out with a credit institution a loan with a term greater than 12 months, introduced by Article 12 of the Law of 28 December 2010, was systematically reproduced in public finance planning laws published after the date of the contested decision.134In relation to the French Republic’s argument concerning Article 12 of the Law of 28 December 2010, it must be borne in mind that, in accordance with the case-law, the Commission is required to conduct a diligent and impartial examination of the contested measures, so that it has at its disposal, when adopting the final decision, the most complete and reliable information possible for that purpose (see judgment of 13 December 2018, Ryanair and Airport Marketing Services v Commission, T‑53/16, EU:T:2018:943, paragraphs 223 and 224 and the case-law cited).135However, it must also be recalled that, according to the case-law, it cannot be complained that the Commission failed to take into account matters of fact or of law which could have been submitted to it during the administrative procedure but which were not, since the Commission is under no obligation to consider, of its own motion and on the basis of prediction, what information might have been submitted to it (see judgment of 13 December 2018, Ryanair and Airport Marketing Services v Commission, T‑53/16, EU:T:2018:943, paragraph 223 and the case-law cited).136In the present case, it must be observed that it is common ground between the parties that the French Republic and IFPEN did not bring that text to the knowledge of the Commission during the formal investigation procedure and that it does not appear from the file that the Commission knew about the text in question when the contested decision was adopted.137Accordingly, it must be found that the French Republic’s argument concerning Article 12 of the Law of 28 December 2010 must be rejected as inadmissible.138That finding cannot be called into question by the arguments put forward by the French Republic.139First, it must be noted that the case-law resulting from the judgment of 21 January 2016, Galp Energía España and Others v Commission (C‑603/13 P, EU:C:2016:38), cited by the French Republic, is irrelevant in the present case.140It is true that the Court of Justice held in paragraph 72 of the judgment of 21 January 2016, Galp Energía España and Others v Commission (C‑603/13 P, EU:C:2016:38), that the scope of judicial review provided for in Article 263 TFEU extends to all the elements of Commission decisions relating to proceedings applying Articles 101 TFEU and 102 TFEU which are subject to in-depth review by the General Court, in law and in fact, in the light of the pleas raised by the appellants, and taking into account all the elements submitted by the latter, whether those elements predate or post-date the contested decision, whether they were submitted previously in the context of the administrative procedure or, for the first time, in the context of the proceedings before the General Court, in so far as those elements are relevant to the review of the legality of the Commission decision (judgment of 21 January 2016, Galp Energía España and Others v Commission, C‑603/13 P, EU:C:2016:38, paragraph 72).141However, it is clear from the actual wording of paragraph 72 of the judgment of 21 January 2016, Galp Energía España and Others v Commission (C‑603/13 P, EU:C:2016:38), referred to above, that that case-law relates to the review of the legality of decisions adopted on the basis of Articles 101 and 102 TFEU and not to the review of the legality of decisions adopted on the basis of Article 107 TFEU.142Secondly, the French Republic cannot claim that it should have been permitted to rely on the text of Article 12 of the Law of 28 January 2010 to rebut the presumption of an advantage to IFPEN in its dealings with banks and financial institutions before the Court solely because it was unable to rely on that text at the time of the formal investigation procedure, since that procedure did not give rise to any discussion concerning the said presumption.143It must be observed that, in the decision to initiate the formal investigation procedure, the Commission had stated that, notwithstanding the explanations provided by the French authorities, in view of the characteristics of the State guarantee enjoyed by IFPEN by virtue of its EPIC status, it could not exclude the fact that IFPEN benefited from an economic advantage due to the applicability of the principle of last-resort State responsibility. The Commission also stated that the advantage arose from a more favourable assessment by creditors of the credit repayment risk, thanks to the unlimited State guarantee and that it could translate into more favourable financing conditions. It follows that it was up to the French Republic, which participated in the formal investigation procedure, to provide the information which it considered capable of calling into question the Commission’s assessment in the decision to initiate the formal investigation procedure of the existence of an economic advantage in dealings between IFPEN and banks and financial institutions, including, if appropriate, the text of Article 12 of the Law of 28 December 2010.144In any event, even supposing that the French Republic could rely on the text of Article 12 of the Law of 28 December 2010 in the present proceedings, it must be found that that text was not, in itself, capable of rebutting the presumption of an advantage in dealings between IFPEN and banks and financial institutions at the date on which the Commission adopted the contested decision.145Article 12(1) of the Law of 28 December 2010 provided that, ‘notwithstanding any provision to the contrary in the texts applicable to them, French bodies falling within the classification of central government for the purposes of Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community, other than the State, the Caisse d’amortissement de la dette sociale (Social Debt Redemption Fund), the Caisse de la dette publique (Public Debt Fund) and the Société de prises de participation de l’État (State-owned investment company), may not take out with a credit institution a loan with a term greater than 12 months or issue a debt security with a term greater than 12 months’ and ‘the list of the bodies to whom this prohibition applies shall be drawn up by joint order of the Ministers responsible for the economy and the budget’.146Therefore, it must be noted that, contrary to the French Republic’s submissions at the hearing, the mere reference to the classification of central government for the purposes of Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community administrations (OJ 1996 L 310, p. 1) could not lead to the conclusion that that provision was applicable to IFPEN, given that the provision itself stated that the list of bodies to whom it was to apply would be drawn up by a ministerial order.147It must also be observed that, in reply to a question posed by the Court, the French Republic stated that IFPEN was included on the list of French bodies falling within the classification of central government referred to in Article 12 of the Law of 28 December 2010 annexed to the order of 28 September 2011 drawing up the list of the said bodies prohibited from taking out with a credit institution a loan with a term greater than 12 months or issuing a debt security with a term greater than 12 months (JORF No 232 of 6 October 2011, p. 16907).148As regards IFPEN’s argument that the background information submitted by the French authorities to the Commission during the administrative procedure, referred to in paragraph 115 above, was sufficient to rebut the presumption of an advantage in IFPEN’s dealings with banks and financial institutions for the future, it must be noted, as did the Commission, that that information, which related to the past, was insufficient to exclude the existence of an advantage in the future, given that IFPEN’s statutes contained a provision allowing for the possibility of IFPEN taking out loans of unlimited length or amount.149In the light of the foregoing, it must be found that the French Republic and IFPEN have not succeeded in rebutting the presumption of an advantage in IFPEN’s dealings with banks and financial institutions for the future.150It must therefore be held that the Commission was entitled to consider that the State guarantee enjoyed by IFPEN by virtue of its EPIC status conferred an economic advantage on IFPEN.151Therefore, notwithstanding the finding, in paragraph 105 above, that the Commission did not discharge the burden of proof concerning the existence of an advantage that IFPEN was able to derive from the implied and unlimited State guarantee in its dealings with its suppliers and customers, the pleas alleging an infringement of Article 107(1) TFEU and relating to the existence and calculation of an advantage accruing to IFPEN must be rejected as unfounded. The pleas alleging an infringement of Article 107(1) TFEU and relating to a transfer of the advantage to IFPEN’s subsidiaries, Axens and Prosernat 152The arguments concerning a transfer of the advantage from which IFPEN allegedly benefited as a result of the implied and unlimited State guarantee inherent in its EPIC status to its private-law subsidiaries, Axens and Prosernat, are set out in the second part of the second plea of the action in Case T‑157/12 and in the second part of the third plea of the action in Case T‑479/11.153IFPEN and the French Republic claim that the Commission did not demonstrate to the requisite legal standard that the economic advantage from which IFPEN allegedly benefited as a result of the State guarantee in question was transferred to its private-law subsidiaries, Axens and Prosernat.154IFPEN maintains, in that regard, that the statement of reasons in the contested decision was insufficient. It claims, further, that, since the Commission is required, in every decision, to examine the specific facts of the case, its approach of basing the reasoning in the contested decision by analogy on the reasoning used in Commission Decision C(2005) 5412 (final) of 21 December 2005 on State aid N 531/2005 France – Measures relating to the creation and operation of Banque Postale (‘the Banque Postale decision’) is inappropriate and unfounded. In that regard, IFPEN comments that that decision took into account the particular architecture of the La Poste group’s operations, which is different from that of the IFPEN group, and that the scientific nature of the activities of IFPEN and its subsidiaries can in no way be compared to postal activities. Furthermore, IFPEN maintains that it is apparent from recital 246 of the contested decision that the Commission, having found no sign of a transfer of the advantage in its accounting, based its demonstration of such a transfer on the presumption that the advantage had been transferred by means of a failure to price into the services provided by IFPEN to the subsidiaries the costs associated with the cover provided by the unlimited guarantee.155The French Republic submits, first, that the Commission misinterpreted the Banque Postale decision and, secondly, that it ignored the fact that the research services and other services provided by IFPEN were invoiced on the basis of costs incurred by IFPEN plus a margin and therefore that commercial relations between IFPEN and its subsidiaries were concluded under normal market conditions. The French Republic also maintains that the Commission committed an error of law in regarding the reasoning it had followed in its Decision 2009/157 as transposable to the full range of relations between IFPEN and its subsidiaries, whereas it should have limited itself to those relations established in the context of the exclusive agreements negotiated between IFPEN and its subsidiaries Axens and Prosernat.156In addition, the French Republic asserts that, contrary to the Commission’s arguments, it is apparent from the operative part of the contested decision that the question of the transfer of the advantage to the subsidiaries is inseparable from the rest of that decision.157The Commission submits that the question of whether an advantage was transferred is subsidiary for the purposes of demonstrating the existence of State aid in favour of IFPEN as a result of its EPIC status and can seek to achieve only a partial annulment of the contested decision, namely the part concerning the transfer of the aid to the subsidiaries. According to the Commission, the question of whether an advantage was transferred to IFPEN’s subsidiaries is separable from the preliminary question of whether an advantage existed in favour of IFPEN.158The Commission also disputes the arguments of the French Republic and IFPEN and contends that the present pleas should be dismissed.159As a preliminary matter, it must be recalled that Article 1(4) of the contested decision deals with the cover provided by the State guarantee for the technology transfer activities carried out by IFPEN in the fields provided for by the exclusive agreements concluded with Axens and Prosernat.160It must be observed that, as is apparent from recitals 249 and 250 of the contested decision, the economic advantage in the exclusive fields of activity of the subsidiaries Axens and Prosernat, deriving from the cover provided by the State guarantee granted to IFPEN, is a selective advantage because it allows the subsidiaries to access IFPEN’s technologies and human and material resources on more favourable terms than their competitors.161Accordingly, in order for the measure referred to in Article 1(4) of the contested decision to be regarded as State aid under Article 107(1) TFEU, it is necessary to demonstrate that the advantage was transferred from IFPEN to its subsidiaries Axens and Prosernat.162It must also be recalled that Article 1(5) of the contested decision relates to the cover provided by the State guarantee for the contract research and other services performed by IFPEN on behalf of both third parties and the subsidiaries.163It must be observed that, by definition, for that measure to be regarded as State aid, there is no need to demonstrate that the advantage was transferred from IFPEN to its subsidiaries Axens and Prosernat in relation to the contract research and other services performed by IFPEN on behalf of third parties, or on behalf of its subsidiaries outside the fields provided for in the exclusive agreements.164By contrast, it must be pointed out that, in order for the cover provided by the State guarantee of the contract research and other services performed by IFPEN on behalf of those subsidiaries in the fields provided for in the exclusive agreements concluded with them to be regarded as State aid, it is essential to demonstrate that the advantage was transferred from IFPEN to its subsidiaries Axens and Prosernat. If so established, then it is IFPEN’s subsidiaries, Axens and Prosernat, which are the beneficiaries of the aid since, as a result of the exclusive agreements, those services can only be performed by IFPEN on their behalf.165It follows that, as the Commission essentially submits, the plea alleging that a transfer of the advantage has not been demonstrated must be rejected as ineffective in that it seeks to challenge the classification of the measure referred to in Article 1(5) of the contested decision as State aid, since that relates to the cover provided by the State guarantee for the contract research and other services performed by IFPEN on behalf of both third parties and the subsidiaries outside of the field of the exclusive agreements.166It is in the light of these considerations that the complaints made by the French Republic and IFPEN must be examined.167First, in relation to IFPEN’s complaints that the Commission wrongly based its demonstration of the transfer of the advantage from IFPEN to its subsidiaries on an inappropriate analogy with the reasoning used in the Banque Postale decision and, therefore, failed in its obligation to state sufficient reasons, it must be stated that this is based on an erroneous premiss.168In recital 240 of the contested decision, the Commission stated that, ‘given that in French law a shareholder in a group of companies does not bear general vicarious liability for its subsidiaries, there [was] no reason to take the view that [IFPEN], and consequently the French State, can be liable for the payment of claims held by third parties in respect of the economic activities of Axens and Prosernat, in particular if those subsidiaries were to be subjected to compulsory winding up’.169The Commission therefore excluded the possibility that Axens and Prosernat could benefit from a direct transfer of the advantage from which IFPEN had allegedly benefited in its dealings with its creditors.170However, the Commission considered in recitals 241 to 247 of the contested decision that Axens and Prosernat had benefited from an indirect transfer of the advantage in question, according to the following reasoning:‘(241)However, it should be noted that in [the Banque Postale decision] cited above, although it took the view … that as a public limited company La Banque Postale remained subject to ordinary law with regard to compulsory administration and winding-up and did not therefore itself enjoy an unlimited State guarantee, the Commission nevertheless examined the question of a possible transfer to the subsidiary of the effects of the public guarantee conferred on its sole shareholder.(242)More precisely, the Commission took the view that the operating structure of the group resulted in permeability between the shareholder (La Poste) and the subsidiary (La Banque Postale), owing to the combined effect of (i) the use by the subsidiary of human and material resources made available by the parent and (ii) the remuneration of these resources on the basis of the costs borne by the parent, in such a way that in the event of an economic advantage of a nature to cause the costs of La Poste to fall, the remuneration paid by La Banque Postale to its parent would have been reduced accordingly, resulting in an (at least partial) transfer of this economic advantage to the subsidiary.(243)In the same way, in decision C 51/2005, the Commission considered that there was a measure of porosity, in particular in the prices applied by [IFPEN] for the services supplied to Axens and Prosernat in their exclusive fields, such that the intra-group business relations did not follow a market-driven logic, but on the contrary offered the possibility of cross-subsidisation of the economic activities of the subsidiaries via public funds made available by the parent. …(244)In the case cited above relating to La Banque Postale, the Commission considered it necessary for the French authorities to enter into commitments permitting a mechanism to be put in place which neutralised at the level of the subsidiary any advantages that might be enjoyed by the parent. …(245)In the present case, the French authorities have given a commitment, with regard to the borrowing terms of [IFPEN’s] subsidiaries (Axens, Beicip-Franlab and Prosernat), to state in writing in the financing contract for each transaction (for any instrument covered by a contract) that “Pursuant to French law (in particular the need for express statutory authority for each guarantee), the present financing transaction shall not enjoy any form of direct or indirect State guarantee”.(246)As regards the use by the subsidiaries of human and material resources made available by their parent, as noted by the Commission in decisionC 51/2005, “if there is any subsidisation of economic activities, it results from the level of the remunerations paid by the subsidiaries concerned to the parent company and is reflected in [IFPEN]’s accounts”. In the examination of [IFPEN]’s accounts, the only cost components not taken into account by the Commission for the year 2006 in decision C 51/2005, and for the following years in the annual reports sent by the French authorities, are those relating to the cover provided by the unlimited guarantee for the services provided by [IFPEN] to its subsidiaries. Since the premium corresponding to a performance bond, at the very [least] for best efforts, was not paid to the State, it was not possible for it to be priced into the services supplied to the subsidiaries either.(247)Consequently, it must be held that the economic advantage conferred on the publicly owned establishment by the guarantee it enjoys by virtue of its legal form was transferred in this way to its private-law subsidiaries Axens and Prosernat.’171In addition, in recital 269 of the contested decision, the Commission stated that ‘the pricing of [IFPEN]’s contract research services is established on the basis of their total production cost, to which a margin is applied, the rate of which varies according to the outcome of the negotiations with the customer …’ and that ‘the only cost component which [IFPEN] does not seem to have taken into account is an insurance premium to be paid by [IFPEN] for the performance bond (or best efforts guarantee)’.172It follows from the aforementioned recitals that the basis for demonstrating a transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat was a finding that the services supplied by IFPEN were underpriced. That finding stemmed, first, from Decision 2009/157 in which the Commission found that, with regard to 2006, there was a measure of porosity, in particular in the exclusive fields of Axens and Prosernat, that allowed for cross-subsidisation, and, secondly, from the fact that the annual reports supplied by the French authorities for the years 2007 to 2009 to show that the pricing of the services performed by IFPEN on behalf of its subsidiaries was in line with market prices did not take account of the fact that IFPEN did not invoice its subsidiaries, as customers, for the cover provided for those services by the State guarantee enjoyed by IFPEN by virtue of its EPIC status.173Therefore, despite what IFPEN maintains to the contrary, the Commission did not base its demonstration of the transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat on a simple analogy with the reasoning used in the Banque Postale decision, but took into account the specific circumstances of the internal relations in the IFPEN group.174For that reason, the French Republic’s complaint that the Commission misinterpreted the Banque Postale decision must also be dismissed as ineffective.175Secondly, in view of the finding referred to in paragraph 172 above concerning the reasoning which the Commission used as its basis for demonstrating a transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat, IFPEN’s argument that the Commission based that demonstration purely on the presumption of a transfer of the advantage through the failure to price the costs associated with the cover provided by the State guarantee for the services performed by IFPEN on behalf of its subsidiaries must equally be dismissed as unfounded.176Thirdly, with regard to the French Republic’s argument essentially claiming that the Commission could not rely on Decision 2009/157 to demonstrate the transfer of the advantage from IFPEN to its subsidiaries in the context of the contract research and other services performed by IFPEN on behalf of those subsidiaries outside their exclusive fields, it must be held that, as that argument does not relate to the transfer of the advantage in the fields covered by the exclusive agreements, it must be dismissed as ineffective for the reason set out in paragraph 165 above.177Fourthly, the French Republic complains that the Commission did not take into account the fact that contract research and other services are invoiced by IFPEN to its subsidiaries on market conditions.178In that regard, first, it must be pointed out that the Commission did take that fact into account in relation to the demonstration of the transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat outside the field of their exclusive activities. As the Commission observes in its defence, it is apparent from recital 269 of the contested decision that, although the description supplied by the French authorities of the way in which IFPEN’s prices were fixed showed that the pricing of IFPEN’s contract research services, outside the field of its exclusive relations with its subsidiaries, was established on the basis of their total production cost, to which a margin was applied, it did not, however, mention an insurance premium paid to the State in return for its unlimited guarantee.179Secondly, as the Commission also asserts, it is apparent from recital 246 of the contested decision that, in order to demonstrate the transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat, in their exclusive field of activity, the Commission relied on Decision 2009/157, recitals 146 and 147 of which make it clear that payments made by Axens and Prosernat to IFPEN for services performed in their exclusive fields were lower than their cost price and involved a transfer of State aid. It must be noted that the French Republic has not disputed Decision 2009/157 and also has not called into question the conclusions of that decision relating to payments made by Axens and Prosernat to IFPEN for services performed in their exclusive fields in the course of the present proceedings.180The French Republic’s complaint alleging that the Commission did not take into account the fact that contract research and other services are invoiced by IFPEN to its subsidiaries at market price must therefore be rejected as unfounded.181In the light of the foregoing considerations, the pleas alleging an infringement of Article 107(1) TFEU and relating to a transfer of the advantage from IFPEN to its subsidiaries Axens and Prosernat must be dismissed as unfounded. The plea alleging an infringement of Article 107(1) TFEU and relating to the transfer of State resources 182By an argument presented in the third part of the second plea of the action in Case T‑157/12, IFPEN submits, for the sake of completeness, that there is not a sufficient connection between the advantage from which it allegedly benefits and the transfer of State resources arising from the unlimited guarantee. Both in relation to its dealings with its suppliers and those with its customers, any connection between an alleged price decrease or the alleged use of the performance bond on the one hand, and the transfer of State resources on the other, is objectively artificial and entirely built on hypothetical constructions not based on any objective data.183In that regard, it must be noted that, although IFPEN’s arguments are presented in the part of its action dealing with the existence of the advantage, they refer to another condition for the existence of State aid within the meaning of Article 107(1) TFEU, namely the commitment of State resources.184Furthermore, it must be noted that those arguments only apply to dealings between IFPEN and its suppliers and customers.185It follows that, given that the Court found in paragraph 105 above that the Commission had failed to demonstrate that the implied and unlimited State guarantee in favour of IFPEN had granted, or was capable of granting, an advantage for the exclusive benefit of IFPEN in its dealings with its suppliers and customers, the present plea must be rejected as ineffective. The plea alleging an infringement of the principle of proportionality 186The arguments relating to an infringement of the principle of proportionality are put forward by IFPEN in the fifth plea of its action in Case T‑157/12.187These arguments are divided into two parts. By the first part, IFPEN submits essentially that, since the Commission failed to adduce objective evidence of the existence of an implied and unlimited State guarantee in favour of EPICs and, therefore, based its reasoning on a series of unverified hypotheses, the requirement to systematically make the creation of an EPIC subject to an obligation of prior notification and, subsequently, to a series of administrative compatibility reports, is disproportionate. The breach of the principle of proportionality is all the more evident given, first, that the principles applicable to EPICs predate the Treaty of Rome and the French Government has put forward a solid legal argument to demonstrate the erroneous nature of the Commission’s theory and, secondly, that the French Government has provided a sufficient solution to allay the doubts raised by the Commission as to the existence of a guarantee in favour of EPICs, by proposing to amend the decree implementing the Law of 16 July 1980.188By the second part, IFPEN maintains that the contested decision requires the French authorities and, consequently, IFPEN itself, to comply with a certain number of obligations which are clearly disproportionate both in relation to the objective pursued and to the very limited scope, in its case, of the effects of EPIC status.189Thus, in the first place, IFPEN observes that the contested decision requires the French authorities and, consequently, IFPEN itself, to produce every year, from 1 January 2010 onward and until the date of expiry of the exclusive agreements, a financial report including the information listed in Article 5 of that decision. According to IFPEN, the Commission’s requirement to include in the annual report an estimate of the uplift effect of the alleged unlimited guarantee resulting from a more favourable assessment by suppliers of IFPEN’s risk of default and from the lack of payment of a premium corresponding to a performance bond is a waste of its own resources, such an exercise being totally artificial and not a reflection of economic reality. The fact that such an ‘uplift’ does not exist in IFPEN’s accounts and that, after several years, the Commission has been unable to find acceptable comparison rates confirms the excessively artificial ‐ or even fanciful ‐ nature of any suggestion of an ‘uplift’. In addition, IFPEN notes that, between the date of the adoption of the contested decision and the date when the present action was lodged, the French authorities, as required by Article 3(2) of Decision 2009/157, gave notification of the renewal of the industrial research agreements between IFPEN and its subsidiaries Axens and Prosernat in their fields of exclusive activity. According to IFPEN, the contested decision expressly makes a favourable examination of the compatibility of those agreements conditional on compliance with the whole of the contested decision. That is because, in practice, the contested decision requires the French authorities to produce an annual report until the date of expiry of the exclusive agreements, in other words, for 10 years, which is clearly disproportionate in view of the objective of reviewing State aid the existence of which could legitimately be doubted.190In the second place, IFPEN complains that the Commission required the French authorities to include in IFPEN’s contracts the clauses set out in Article 9 of the contested decision, which, it claims, constitutes an extremely restrictive measure that is particularly unjustified given that the Commission’s finding that State aid existed was based on a series of unconfirmed hypotheses and manifest errors of assessment.191In relation to the first part of the first plea, it must be observed that this is based on the premiss that the Commission failed to demonstrate that EPIC status conferred the benefit of an implied and unlimited State guarantee on IFPEN.192However, it must first be recalled that the Court of Justice held in the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217), that, in order to prove the existence of such a guarantee, which does not result expressly from any legislative or contractual document, it was permissible for the Commission to rely on the method of a firm, precise and consistent body of evidence to determine whether there was, in domestic law, a real obligation on the State to use its own resources for the purposes of covering losses of an EPIC in default and therefore, in accordance with settled case-law, a sufficiently concrete economic risk of burdens on the State budget (judgment of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 65).193Secondly, it should also be recalled that, when asked by the Court about the consequences of the judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217) on the present dispute, IFPEN stated, in its letter of 5 May 2014, that it regarded the consideration set out in paragraph 192 above to be applicable in the present case and, therefore, withdrew its first plea alleging an error of law in that the Commission had exceeded the recognised limits on its interpretation of national law in the context of State aid legislation.194It follows that the first part of the present plea, to the extent that it has not been withdrawn by IFPEN, must be dismissed as unfounded.195With regard to the second part of the present plea, IFPEN submits that the obligations imposed on the French Republic and, indirectly, on IFPEN itself, by Article 5 and Article 9(1) to (3) of the contested decision are disproportionate.196It should be borne in mind that, according to the case-law, the principle of proportionality, which is one of the general principles of EU law, requires that measures adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (judgment of 24 May 2007, Maatschap Schonewille-Prins, C‑45/05, EU:C:2007:296, paragraph 45).197In the present case, it must be observed that Article 4 of the contested decision makes clear that the measure referred to in Article 1(4) thereof constitutes aid compatible with the internal market, subject to compliance with the conditions in Articles 5 and 6 of that decision, from 1 January 2010 onward, and until the date of expiry of the exclusive agreements between IFPEN and its subsidiaries Axens and Prosernat.198Under Article 5(1) of the contested decision, ‘the annual financial report referred to in Article 4(2) of decision C 51/2005 shall include, in addition to the information already mentioned in Article 5(1) of that decision, the information listed in paragraphs 2, 3 and 4 of this Article’.199Article 5(2) of the contested decision provides that ‘the annual financial report shall include the value, interest rate and contractual terms of the loans subscribed to by [IFPEN] during the year under review, and an estimate of the gross grant equivalent of any interest rate subsidy deriving from the State guarantee, unless proof is supplied that these loan contracts are in accordance with normal market conditions, either by comparing their terms with those obtained by [IFPEN] before its change of legal form, or on the basis of a more precise methodology approved in advance by the Commission’.200Article 5(3) of the contested decision provides that ‘the annual financial report shall include the value of goods and services obtained by [IFPEN] from suppliers to carry out the economic activities referred to in Article 1(4) and (5), during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from a more favourable assessment by suppliers of the risk of default of the establishment’ and that ‘this estimate shall be made either by applying a flat rate of 2.5% to the value of acquisitions made, or on the basis of a more precise methodology approved in advance by the Commission’.201Under Article 5(4) of the contested decision, ‘the annual financial report shall include the value of the economic activities referred to in Article 1(4) and (5) carried out by [IFPEN] during the year under review, and a maximum estimate of the gross grant equivalent of the aid resulting from the lack of payment of a premium corresponding to a performance bond or, at the very least a best efforts guarantee, offered to the beneficiaries of the above-mentioned economic services’ and ‘this estimate shall be made either by applying a flat rate of 5% to the value of the services provided or on the basis of a more precise methodology approved in advance by the Commission’.202It follows from those provisions that Article 5 of the contested decision, in essence, imposes requirements on IFPEN to ensure that aid granted to it by the State is compatible with the internal market. It requires IFPEN to provide the Commission, every year, with information about the terms of the loans that it has subscribed to, the value of goods and services obtained from suppliers to carry out its economic activities, with a maximum estimate of the gross grant equivalent of the aid and, finally, the value of the economic activities with a maximum estimate of the gross grant equivalent of the aid.203In that regard, it should be noted that, in cases where a State measure can be classified as State aid, within the meaning of Article 107(1) TFEU, it is subject to a notification requirement under Article 108(3) TFEU. The requirement to give the necessary information to the Commission to assess the compatibility of aid cannot, therefore, be regarded as contrary to the principle of proportionality per se.204In addition, it must be noted that, as the Commission submits, the obligations imposed on IFPEN form part of the continuity of obligations imposed on it by Decision 2009/157, which has not been disputed either by IFPEN or by the French Republic.205Furthermore, it must be observed that, as the Commission also submits, the production of an annual report in the context of an aid scheme is common practice and proportionate to the objective of State aid control.206However, in the present case, it must be observed that, while the obligation imposed by Article 5(2) of the contested decision relates to the presumption of an advantage in favour of IFPEN in its dealings with banks and financial institutions, which the Court found the Commission was entitled to use to classify the measure referred to in Article 1(4) of that decision as State aid, the same cannot be said of the obligations imposed by Article 5(3) and (4) thereof.207It must be held that the obligations imposed by those provisions relate to the advantage from which IFPEN was alleged to have benefited in its dealings with suppliers and customers, the existence of which, as the Court found in paragraph 105 above, had not been demonstrated by the Commission. It follows that those obligations cannot, by definition, be regarded as appropriate and necessary within the meaning of the case-law referred to in paragraph 196 above.208Furthermore, it must be observed that Article 9(1) to (3) of the contested decision requires the French authorities, in essence, to include in contracts concluded by IFPEN a clause excluding liability of the State and in contracts concluded by IFPEN’s subsidiaries a clause excluding liability of IFPEN and of the State.209However, IFPEN merely submits, in that regard, that the requirement to include the non-liability clauses are particularly onerous for it, without explaining why the different clauses referred to in Article 9 of the contested decision are not necessary or appropriate in the present case.210Such a complaint must therefore be dismissed as inadmissible in view of the case-law according to which, under Article 21, first paragraph, of the Statute of the Court of Justice of the European Union, applicable to the procedure before the General Court pursuant to Article 53, first paragraph thereof, and Article 76(d) of the Rules of Procedure, an application must contain a brief statement of the pleas in law on which the application is based. That statement must be sufficiently clear and precise to enable the defendant to prepare its defence and for the General Court to rule on the action, if necessary without further information. The application must, therefore, specify the nature of the plea in law on which the action is based, so that a mere abstract reference to that plea does not satisfy the requirements of the Rules of Procedure. Similar requirements are called for where a submission is made in support of a plea in law (see judgment of 7 June 2018, Winkler v Commission, T‑369/17, not published, EU:T:2018:334, paragraph 53 and the case-law cited).211The second part of the present plea, alleging infringement of the principle of proportionality, must therefore be upheld to the extent that it relates to Article 5(3) and (4) of the contested decision and must be rejected as inadmissible as to the remainder.212It follows that the Court must uphold IFPEN’s action in Case T‑157/12 in part.213By contrast, given that all of the pleas raised by the French Republic have been dismissed, the Court must dismiss the action in Case T‑479/11. The extent of the annulment 214IFPEN seeks, principally, the annulment of the contested decision in its entirety and, in the alternative, the annulment of the invalid parts of the operative part of the contested decision.215In that regard, it must be observed that the plea that the Court has upheld – the plea alleging infringement of the principle of proportionality – relates only to the conditions of compatibility of the measures constituting State aid in Article 1(4) of the contested decision.216In view of all of the foregoing, Article 5(3) and (4) of the contested decision must be annulled, as must Article 6(1) thereof to the extent that it refers to the maximum impact of the State guarantee as estimated in Article 5(3) and (4) of that decision, and the actions must be dismissed as to the remainder. Costs 217Under Article 219 of the Rules of Procedure, in judgments delivered after its judgment has been set aside and the case referred back to it, the General Court is to decide on the costs relating to the proceedings instituted before the General Court and to the proceedings on the appeal before the Court of Justice.218Given that, in the judgment under appeal, the Court of Justice set aside the initial judgment and reserved the costs, it is for the General Court to decide, in the present judgment, on all the costs relating to the proceedings brought before it, including the proceedings at first instance, and on the costs relating to the appeal proceedings in Case C‑438/16 P.219Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Under Article 134(3), where each party succeeds on some and fails on other heads, each party is to bear its own costs. However, if it appears justified in the circumstances of the case, the Court may order that one party, in addition to bearing his own costs, pay a proportion of the costs of the other party.220Since the French Republic, IFPEN and the Commission were all partly unsuccessful in the proceedings at first instance, each party is to bear its own costs incurred in those proceedings.221The French Republic, IFPEN and the Commission are to bear their own costs incurred in the appeal proceedings.222Since the French Republic has been unsuccessful in Case T‑479/11 RENV, it is to bear its own costs and to pay those incurred by the Commission in those proceedings, in accordance with the form of order sought by the Commission.223Since IFPEN and the Commission have each been unsuccessful in Case T‑157/12 RENV, given that the Court has decided to annul the contested decision in part and to dismiss the action as to the remainder, IFPEN and the Commission are to bear their own costs incurred in those proceedings.On those grounds,THE GENERAL COURT (Eighth Chamber)hereby: 1. Annuls Article 5(3) and (4), together with Article 6(1) to the extent that it refers to the maximum impact of the State guarantee as estimated in Article 5(3) and (4), of Commission Decision 2012/26/EU of 29 June 2011 on State aid granted by France to the Institut Français du Pétrole (Case C 35/08 (ex NN 11/08)); 2. Dismisses the actions as to the remainder; 3. Orders the European Commission, the French Republic and IFP Énergies nouvelles to bear their own costs in Cases T‑479/11 and T‑157/12; 4. Orders the French Republic, IFP Énergies nouvelles and the Commission to bear their own costs incurred in Case C‑438/16 P; 5. Orders the French Republic to bear its own costs and to pay those incurred by the Commission in Case T‑479/11 RENV; 6. Orders IFP Énergies nouvelles and the Commission to bear their own costs in Case T‑157/12 RENV. CollinsKanchevaDe BaereDelivered in open court in Luxembourg on 5 October 2020.[Signatures]Table of contentsBackground to the disputeEarlier proceedings before the General Court and the Court of JusticeProcedure and forms of order sought after referral backLawThe pleas alleging an infringement of Article 107(1) TFEU and relating to the existence and calculation of the advantage accruing to IFPENThe advantage in the case of IFPEN’s dealings with its suppliers and customers– The complaint alleging a lack of evidence of an advantage in IFPEN’s dealings with its suppliers– The complaint alleging a lack of evidence of an advantage in IFPEN’s dealings with its customersThe advantage in the case of IFPEN’s dealings with banks and financial institutionsThe pleas alleging an infringement of Article 107(1) TFEU and relating to a transfer of the advantage to IFPEN’s subsidiaries, Axens and ProsernatThe plea alleging an infringement of Article 107(1) TFEU and relating to the transfer of State resourcesThe plea alleging an infringement of the principle of proportionalityThe extent of the annulmentCosts( *1 ) Language of the case: French. | 76a46-280660d-44f6 | EN |
Advocate General Szpunar considers that the EU trade mark representing the shape of a Rubik’s Cube must be declared invalid | 10 November 2016 ( *1 )‛Appeal — European Union trade mark — Three-dimensional mark in the shape of a cube with surfaces having a grid structure — Application for a declaration of invalidity — Rejection of the application for a declaration of invalidity’In Case C‑30/15 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 January 2015, Simba Toys GmbH & Co. KG, established in Fürth (Germany), represented by O. Ruhl, Rechtsanwalt,appellant,the other parties to the proceedings being: European Union Intellectual Property Office (EUIPO), represented by D. Botis and A. Folliard-Monguiral, acting as Agents,defendant at first instance, Seven Towns Ltd, established in London (United Kingdom), represented by K. Szamosi and M. Borbás, ügyvédek,intervener at first instance,THE COURT (First Chamber),composed of R. Silva de Lapuerta, President of the Chamber, E. Regan, J.‑C. Bonichot, A. Arabadjiev and S. Rodin (Rapporteur), Judges,Advocate General: M. Szpunar,Registrar: V. Giacobbo-Peyronnel, Administrator,having regard to the written procedure and further to the hearing on 2 March 2016,after hearing the Opinion of the Advocate General at the sitting on 25 May 2016,gives the following Judgment 1By its appeal, Simba Toys GmbH & Co. KG seeks to have set aside the judgment of the General Court of the European Union of 25 November 2014, Simba Toys v OHIM — Seven Towns (Shape of a cube with surfaces having a grid structure) (T‑450/09, EU:T:2014:983, ‘the judgment under appeal’), by which the General Court dismissed its action for annulment of the decision of the Second Board of Appeal of the European Union Intellectual Property Office (EUIPO) (‘the Board of Appeal’) of 1 September 2009 (Case R 1526/2008-2), relating to cancellation proceedings between the appellant and Seven Towns Ltd (‘the decision at issue’). Legal context 2Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) was repealed and replaced by Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), which entered into force on 13 April 2009.3However, given the timeframe of the facts, the present dispute remains governed by Regulation No 40/94, at least with regard to those provisions which are not strictly procedural.4Article 7 of Regulation No 40/94, entitled ‘Absolute grounds for refusal’, provides:‘1. The following shall not be registered:…(b)trade marks which are devoid of any distinctive character;(c)trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;(e)signs which consist exclusively of:(i)the shape which results from the nature of the goods themselves; or(ii)the shape of goods which is necessary to obtain a technical result; or(iii)the shape which gives substantial value to the goods;…’5Under Article 74(1) of Regulation No 40/94:‘In proceedings before it the Office shall examine the facts of its own motion; however, in proceedings relating to relative grounds for refusal of registration, the Office shall be restricted in this examination to the facts, evidence and arguments provided by the parties and the relief sought.’ Background to the dispute 6The background to the dispute, as set out in paragraphs 1 to 12 of the judgment under appeal, may be summarised as follows.7On 1 April 1996, Seven Towns filed an application for registration of a Community trade mark with EUIPO, relating to the three-dimensional sign reproduced below:8The goods in respect of which registration was sought are in Class 28 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond to the following description: ‘three-dimensional puzzles’.9On 6 April 1999, the mark at issue was registered as a Community trade mark under No 162784. It was renewed on 10 November 2006.10On 15 November 2006 Simba Toys filed an application for a declaration of invalidity of that mark pursuant to Article 51(1)(a) of Regulation No 40/94, read in conjunction with Article 7(1)(a) to (c) and (e) thereof.11By decision of 14 October 2008, the Cancellation Division of EUIPO rejected that application in its entirety.12On 23 October 2008, the appellant filed a notice of appeal with EUIPO, pursuant to Articles 57 to 62 of Regulation No 40/94 (now Articles 58 to 64 of Regulation No 207/2009), against that decision. In support of its action it alleged infringement of Article 7(1)(a) to (c) and (e) of Regulation No 40/94.13By the decision at issue, the Board of Appeal confirmed the decision of the Opposition Division of 14 October 2008 and dismissed the action. The proceedings before the General Court and the judgment under appeal 14By application lodged at the Registry of the General Court on 6 November 2009, Simba Toys brought an action seeking annulment of the decision at issue.15In support of its action, it relied on eight pleas in law, alleging infringement of the first sentence of Article 75 and of the first sentence of Article 76(1) of Regulation No 207/2009, and infringement of Article 7(1)(b), Article 7(1)(c), Article 7(1)(e)(i) to (iii) and Article 7(3) of Regulation No 40/94.16By the judgment under appeal, the General Court dismissed that action as unfounded. Forms of order sought 17Simba Toys claims that the Court should:—set aside the judgment under appeal;annul the decision at issue; andorder Seven Towns and EUIPO to pay the costs.18Seven Towns and EUIPO contend that the Court should:dismiss the appeal; andorder Simba Toys to pay the costs. The request for the reopening of the oral part of the procedure 19By letter of 7 July 2016, Seven Towns requested the reopening of the oral part of the procedure.20That company claims, in essence, that the Advocate General, in his Opinion, relied on facts and raised arguments which had not been debated between the parties or before the General Court or the Court of Justice, so far as concerns, inter alia, the definition of the function of the goods at issue, the identification of the essential characteristics of the sign and the assessment of the functionality of the shape of a cube.21It that respect, it must be recalled that the Court may at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure under Article 83 of its Rules of Procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not been debated between the interested parties (see, to that effect, judgment of 7 April 2016, Marchon Germany, C‑315/14, EU:C:2016:211, paragraph 19).22That is not the case here. The Court, after hearing the Advocate General, considers that it has all the information necessary to enable it to give a ruling and that the case does not have to be examined in the light of any new fact which is of such a nature as to be a decisive factor for its decision or in the light of any argument which has not been debated before it.23In those circumstances, it is not appropriate to accede to the request of Seven Towns that the oral part of the procedure be reopened. The appeal Arguments of the parties 24In support of its appeal, Simba Toys puts forward six grounds. By its first ground of appeal, it submits that the General Court, in paragraphs 50 to 77 of the judgment under appeal, infringed Article 7(1)(e)(ii) of Regulation No 40/94, which provides that signs which consist exclusively of the shape of goods which is necessary to obtain a technical result are not to be registered.25In that respect, Simba Toys claims, in the first place, that the General Court, in paragraph 72 of the judgment under appeal, erred in making the application of Article 7(1)(e)(ii) of Regulation No 40/94 subject to the requirement that a technical result may at least be ‘inferred with sufficient certainty’ from the representation of the mark concerned. According to the appellant, no such requirement to ‘fathom precisely’ can be inferred from either the wording of that provision or from the case-law and, in addition, such a requirement goes against the objective thereof.26The appellant maintains, in the second place, that the General Court interpreted the notion of ‘technical function’ too narrowly by taking the view, in paragraph 60 of the judgment under appeal, that the grid structure on the surfaces of the cube did not perform that function. The appellant claims that the General Court failed to take into consideration the fact that that structure and the general shape of the cube are no arbitrary features and must therefore necessarily be technical features.27In the third place, the appellant claims that the General Court, in paragraph 53 of the judgment under appeal, erred in law by making the refusal to register a sign on the basis of the ground mentioned in Article 7(1)(e)(ii) of Regulation No 40/94 subject to the condition that the essential characteristics of the mark at issue themselves perform the technical function of the goods that it covers, and not that they are the result thereof.28In the fourth place, the appellant criticises the General Court for dismissing the head of claim alleging the lack of alternative shapes for the representation of that mark which might perform the same technical function. In any event, it submits that the availability of alternative shapes would not preclude the application of Article 7(1)(e)(ii). As regards, in particular, the black lines that criss-cross the surfaces of the cube, even if it were possible to produce a magic cube without those elements, such a cube would still be protected by the contested mark, as it is within the range of similarity. In those circumstances, the appellant claims that the General Court misconstrued the public interest underlying that provision, which is to prevent the granting of a permanent monopoly on technical solutions.29In the fifth place, the appellant submits that the General Court, when assessing the technicality of the essential characteristics of the goods at issue, failed to take into consideration the existence of goods that were already on the market before the application for registration of the mark at issue was lodged — in particular, the ‘Rubik’s Cube’ produced by the intervener — and have the essential characteristics of the contested mark, including a rotating capability which is well known to consumers.30In the sixth place, Simba Toys criticises the General Court on the ground that it held, in paragraph 55 of the judgment under appeal, after concluding that the mark at issue was registered for ‘three-dimensional puzzles’ in general without being restricted to those that have a rotating capability, that registration of a mark may be refused only if the ground referred to in Article 7(1)(e)(ii) of Regulation No 40/94 applies with regard to all or at least many of the goods which it covers.31According to Seven Towns and EUIPO, the first ground of appeal must be rejected as inadmissible, at least in part, due to the fact that it is seeking to call into question findings of fact.32In any event, according to those parties, that ground must be rejected as unfounded. They claim, in essence, that the Court should confirm the grounds in the judgment under appeal which are challenged by this ground of appeal. In that respect, they submit that the General Court, far from introducing new requirements, merely applied the existing case-law which requires, inter alia, that any technical function is to be determined on the basis of the graphic representation of the mark concerned. Sevens Towns and EUIPO also draw attention to the fact that the goods at issue include all three-dimensional puzzles, of which magic cubes do not form an autonomous subcategory. Findings of the Court 33By its first ground of appeal, Simba Toys claims that the General Court misapplied Article 7(1)(e)(ii) of Regulation No 40/94 by relying, inter alia, in paragraphs 56 to 77 of the judgment under appeal, on an interpretation of that provision that is too narrow in regard to the functional character of the shape at issue. Consequently, according to the appellant, the General Court erred in taking the view that the essential characteristics of that shape do not perform a technical function of the goods at issue.34In that regard, while it is true that, in so far as it includes findings of a factual nature, the assessment of the functionality of the essential characteristics of a sign cannot, as such, be subject to review by the Court on appeal, save in the case of a distortion (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 74, and of 17 March 2016, Naazneen Investments v OHIM, C‑252/15 P, not published,EU:C:2016:178, paragraph 59), the position is different with regard to the questions of law raised by an examination of the relevance of the legal criteria applied when carrying out that assessment and, in particular, of the factors taken into consideration to that end (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraphs 84 and 85, and of 6 March 2014, Pi‑Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 61).35The first ground of appeal is therefore admissible because it seeks to challenge the General Court’s application, in the judgment under appeal, of the criteria and factors stemming, inter alia, from the case-law of the Court of Justice for the purpose of assessing the functional nature of the sign at issue within the meaning of Article 7(1)(e)(ii) of Regulation No 40/94.36As regards the merits of that ground of appeal, the first point to be noted here is that trade mark law constitutes an essential element in the system of competition in the European Union. In that system, each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin (judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 38 and the case-law cited).37Moreover, as is apparent from Article 4 of Regulation No 40/94, a sign representing the shape of a product is one of the signs that may constitute a mark provided that, first, it is capable of being represented graphically and, secondly, it is capable of distinguishing the goods or services of one undertaking from those of other undertakings (see, to that effect, judgments of 29 April 2004, Henkel v OHIM, C‑456/01 P and C‑457/01 P, EU:C:2004:258, paragraphs 30 and 31, and of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 39).38It is also apparent from the Court’s case-law that each of the grounds for refusal to register listed in Article 7(1) of Regulation No 40/94 must be interpreted in the light of the underlying public interest (judgments of 29 April 2004, Henkel v OHIM, C‑456/01 P and C‑457/01 P, EU:C:2004:258, paragraph 45, and of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 43).39In that context, the Court has pointed out that Article 7(1)(e)(ii) of Regulation No 40/94 seeks to prevent trade mark law from granting an undertaking a monopoly on technical solutions or functional characteristics of a product (judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 43).40Furthermore, it must, first of all, be recalled that a correct application of that provision requires that the essential characteristics of the three-dimensional sign at issue be properly identified (see, to that effect, judgments of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 68, and of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 46).41In the present case, the General Court, in paragraph 47 of the judgment under appeal, confirmed the Board of Appeal’s finding that the essential characteristics of the sign at issue are a cube and a grid structure on each surface of the cube. That finding is not challenged in the present appeal.42Next, as to the question of whether such essential characteristics perform a technical function of the product, the General Court answered that question in the negative by rejecting, inter alia in paragraphs 56 to 61 of the judgment under appeal, the appellant’s argument that the black lines and, more generally, the grid structure on each surface of the cube perform a technical function.43In that respect, the General Court rejected the appellant’s arguments relating to the rotating capability of the individual elements of the cube at issue, which, according to the appellant, are reflected by those black lines, by pointing out, in particular in paragraphs 58 and 59 of the judgment under appeal, that those arguments were essentially based on knowledge of the rotating capability of the vertical and horizontal lattices of the ‘Rubik’s Cube’ and that that capability cannot result from the characteristics of the shape presented but, at most, from an invisible mechanism internal to that cube. The General Court held that the Board of Appeal was right not to include that invisible element in its analysis of the functionality of the essential characteristics of the contested mark. In that context, the General Court took the view that inferring the existence of an internal rotating mechanism from the graphic representations of that mark would not have been consistent with the requirement that any inference must be drawn as objectively as possible from the shape in question, as represented graphically, and with sufficient certainty.44The General Court, in paragraph 60 of the judgment under appeal, therefore took the view, as did the Board of Appeal, that the grid structure on each surface of the cube at issue did not perform any technical function since the fact that that structure had the effect of dividing visually each surface of that cube into nine equal square elements could not constitute a technical function for the purposes of the relevant case-law.45However, as the Advocate General has noted, inter alia in point 99 of his Opinion, that line of reasoning is vitiated by an error of law.46In order to analyse the functionality of a sign for the purposes of Article 7(1)(e)(ii) of Regulation No 40/94, which concerns only signs which consist of the shape of the actual goods, the essential characteristics of a shape must be assessed in the light of the technical function of the actual goods concerned (see, to that effect, judgment of 14 September 2010, Lego Juris v OHIM, C‑48/09 P, EU:C:2010:516, paragraph 72).47Thus, and since it is not disputed that the sign at issue consists of the shape of actual goods and not of an abstract shape, the General Court should have defined the technical function of the actual goods at issue, namely a three-dimensional puzzle, and it should have taken this into account when assessing the functionality of the essential characteristics of that sign.48While it was necessary, as the General Court indeed pointed out in paragraph 59 of the judgment under appeal, for the purpose of that analysis, to proceed on the basis of the shape at issue, as represented graphically, that analysis could not be made without taking into consideration, where appropriate, the additional elements relating to the function of the actual goods at issue.49First, it follows from the case-law of the Court that, when examining the functional characteristics of a sign, the competent authority may carry out a detailed examination that takes into account material relevant to identifying appropriately the essential characteristics of a sign, in addition to the graphic representation and any descriptions filed at the time of application for registration (judgment of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry, C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129, paragraph 54).50Secondly, as the Advocate General has noted in points 86 and 91 to 93 of his Opinion, in each of the cases which gave rise to the Court’s judgments of 18 June 2002, Philips (C‑299/99, EU:C:2002:377), of 14 September 2010, Lego Juris v OHIM (C‑48/09 P, EU:C:2010:516), and of 6 March 2014, Pi-Design and Others v Yoshida Metal Industry (C‑337/12 P to C‑340/12 P, not published, EU:C:2014:129), the competent authority would not have been able to analyse the shape concerned solely on the basis of its graphic representation without using additional information on the actual goods.51It follows that the General Court interpreted the criteria for assessing Article 7(1)(e)(ii) of Regulation No 40/94 too narrowly, in that it took the view, inter alia in paragraphs 57 to 59 of the judgment under appeal, that for the purpose of examining the functionality of the essential characteristics of the sign concerned, in particular the grid structure on each surface of the cube, the shape at issue, as represented graphically, should have been taken as a basis, without necessarily having to take into consideration any additional circumstances which an objective observer would not have been able to ‘fathom precisely’ on the basis of the graphic representations of the contested mark, such as the rotating capability of individual elements in a three-dimensional ‘Rubik’s Cube’-type puzzle.52Furthermore, the fact, as set out in paragraph 55 of the judgment under appeal, that the contested mark was registered for ‘three-dimensional puzzles’ in general, that is to say, without being restricted to those that have a rotating capability, and that the proprietor of that mark did not append to its application for registration a description specifying that the shape at issue had such a rotating capability, cannot preclude account from being taken of the technical function of the actual goods represented by the sign at issue for the purpose of examining the functionality of the essential characteristics of that sign, as the proprietor of that mark would otherwise be allowed to broaden the scope of the protection arising from the registration thereof to cover every type of puzzle with a similar shape, namely any three-dimensional puzzle with cube-shaped elements, regardless of the principles by which it functions.53However, that last option would be contrary to the objective pursued by Article 7(1)(e)(ii) of Regulation No 40/94, which is, as has been recalled in paragraph 39 of the present judgment, to prevent an undertaking from being granted a monopoly on technical solutions or functional characteristics of a product.54In the light of all of those considerations, the first ground of appeal must be upheld and, consequently, the judgment under appeal must be set aside, without it being necessary for the Court to examine the other arguments under that ground of appeal or the other grounds of appeal. The dispute at first instance 55In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, the Court may, where it has quashed the decision of the General Court, either itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.56In the present case, the Court has the necessary information to enable it to give final judgment on the second plea of the action at first instance, alleging infringement of Article 7(1)(e)(ii) of Regulation No 40/94.57It follows from paragraphs 42 to 53 of the present judgment that that ground of appeal is well founded.58The decision at issue must therefore be annulled on the ground of an infringement of Article 7(1)(e)(ii) of Regulation No 40/94. Costs 59As provided in Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to the costs.60Under Article 138(1) of those rules, which applies to appeal proceedings pursuant to Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.61Since the appellant has applied for costs to be awarded against EUIPO and Seven Towns, and since the latter have been unsuccessful, EUIPO and Seven Towns must be ordered to pay the costs relating both to the proceedings at first instance in Case T‑450/09 and to the appeal.On those grounds, the Court (First Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 25 November 2014, Simba Toys v OHIM — Seven Towns (Shape of a cube with surfaces having a grid structure) ( T‑450/09, EU:T:2014:983 ); 2. Annuls the decision of the Second Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 1 September 2009 (Case R 1526/2008-2) relating to cancellation proceedings between Simba Toys GmbH & Co. KG and Seven Towns Ltd; 3. Orders Seven Towns Ltd and the European Union Intellectual Property Office to bear their own costs and to pay the costs of Simba Toys GmbH & Co. KG relating both to the proceedings at first instance in Case T‑450/09 and to the appeal. Silva de LapuertaReganBonichotArabadjievRodinDelivered in open court in Luxembourg on 10 November 2016.A. Calot EscobarRegistrarR. Silva de LapuertaPresident of the First Chamber( *1 ) Language of the case: English. | 01d8c-47ed203-4e09 | EN |
The General Court confirms that the proposed European citizens’ initiative intended to promote the development of geographical areas populated by national minorities cannot be registered | 10 May 2016 ( *1 )‛Law governing the institutions — European citizens’ initiative — Cohesion policy — National minority regions — Refusal of registration — Manifest lack of powers of the Commission — Article 4(2)(b) and (3) of Regulation (EU) No 211/2011’In Case T‑529/13, Balázs-Árpád Izsák, residing in Târgu Mureş (Romania), Attila Dabis, residing in Budapest (Hungary),represented initially by J. Tordáné dr. Petneházy, and subsequently by D. Sobor, lawyers,applicants,supported by Hungary, represented by M. Fehér, G. Szima and G. Koós, acting as Agents,intervener,v European Commission, represented initially by H. Krämer, K. Talabér-Ritz, A. Steiblytė and P. Hetsch, and subsequently by Talabér-Ritz, K. Banks, Krämer and B.-R. Killmann, acting as Agents,defendant, Hellenic Republic, represented by E.-M. Mamouna, acting as Agent, Romania, represented by R. Radu, R. Haţieganu, D. Bulancea and M. Bejenar, acting as Agents, Slovak Republic, represented by B. Ricziová, acting as Agent,interveners,ACTION for annulment of Commission Decision C(2013) 4975 final of 25 July 2013 refusing to register the applicants’ proposal in dispute,THE GENERAL COURT (First Chamber),composed of H. Kanninen, President, I. Pelikánová (Rapporteur) and E. Buttigieg, Judges,Registrar: S. Bukšek Tomac, Administrator,having regard to the written part of the procedure and further to the hearing on 15 December 2015,gives the following Judgment Background to the dispute 1On 18 June 2013, the applicants, Mr Balázs-Árpád Izsák and Mr Attila Dabis, in association with five other persons, submitted a proposed citizens’ initiative (‘the proposal in dispute’), entitled ‘Cohesion policy for the equality of the regions and sustainability of the regional cultures’, to the European Commission pursuant to Article 11(4) TEU and Regulation (EU) No 211/2011 of the European Parliament and of the Council of 16 February 2011 on the citizens’ initiative (OJ 2011 L 65, p. 1).2In an online register made available for that purpose by the Commission (‘the register’), the applicants provided the minimum information laid down in Annex II to Regulation No 211/2011 (‘the required information’) pursuant to Article 4(1) of the regulation, in particular a brief statement of the subject matter and objectives of the proposal in dispute.3It was apparent from the information provided by the applicants in the required information that the proposal in dispute aimed to ensure that the cohesion policy of the European Union paid special attention to regions with ethnic, cultural, religious or linguistic characteristics that are different from those of the surrounding regions. For those regions, including geographic areas with no administrative competencies, the prevention of any gap or lag in economic development with the surrounding regions, the sustainment of economic development and the preservation of the conditions for economic, social and territorial cohesion needed to be achieved in a way that ensures their characteristics remain unchanged. For that purpose, those regions required equal opportunities in terms of access to various EU funds and the preservation of their characteristics and their proper economic development needed to be guaranteed, so that the development of the European Union could be sustained and its cultural diversity maintained.4In an annex to the information as part of the required information, the applicants provided more detailed information on the subject, objectives and background to the proposal in dispute pursuant to Annex II to Regulation No 211/2011 (‘the additional information’).5First, it was apparent from the additional information that, to the applicants’ minds, national minority regions corresponded to regions and geographic areas which did not necessarily have structures with administrative competencies, but in which there were communities with ethnic, cultural, religious or linguistic characteristics different from those of the surrounding regions which formed a local majority or were present there in substantial number, though being only in a minority at national level, and which have expressed their desire (by referendum) to possess autonomous status within the Member State in question (‘national minority regions’). Such national minority regions were, according to the applicants, the keepers of ancestral European cultures and languages and represented significant sources of the cultural and linguistic diversity of the European Union and, more broadly, of Europe.6Second, the additional information showed that, above all, the purpose of the proposed legal act of the Union (‘the proposed act’) was to safeguard the equality of the regions and the sustainability of regional cultures by preventing the emergence of any gap or lag in economic development of national minority regions with surrounding regions and preserving the economic social and territorial cohesion of national minority regions in a way that ensures their characteristics remain unchanged. According to the applicants, the coherence policy governed by Article 174 TFEU to Article 178 TFEU should, in order to reflect the fundamental values defined in Article 2 TEU and Article 3 TEU, contribute to preserving the specific ethnic, cultural, religious or linguistic characteristics of the national minority regions, which are endangered by European economic integration, and to the correction of handicaps and discrimination affecting the economic development of those regions. Accordingly, the proposed act sought to give national minority regions the opportunity to access EU cohesion policy funds, resources and programmes equal to that of currently eligible regions, such as those listed in Annex I to Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) (OJ 2003 L 154, p. 1). Those guarantees should, according to the applicants, include the establishment of autonomous regional institutions vested with powers sufficient to assist national minority regions in preserving their national, linguistic and cultural characteristics as well as their identity.7To that end, in the first place, the proposed act was to lay down a definition of a ‘national minority region’, in reference, first, to the concepts and objectives mentioned in certain instruments of international law, in particular to the definition of ‘national minority’ set out in Recommendation 1201 (1993) of the Parliamentary Assembly of the Council of Europe adopted on 1 February 1993 on an additional protocol on the rights of minorities to the European Convention on Human Rights, second, to the constitutional traditions common to the Member States, third, to the case-law arising from the application of the Convention for the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950, fourth, to Article 3 TEU and Article 167 TFEU and, fifth, to the desire expressed by communities (by referendum) to benefit from autonomous status within the relevant Member State. In the second place, the proposed act was to list, in accordance with the abovementioned definition, existing national minority regions within the European Union, which were then to be included in the common classification of territorial units for statistics (‘the NUTS’) in Annex I to Regulation No 1059/2003.8Moreover, in order to avoid the EU cohesion policy’s funds, resources and programmes from being used by national administrative authorities to fund policies detrimental to national minorities, the proposed act sought a declaration that the Member States were bound, without delay, to fulfil their international obligations and commitments regarding national minorities and that infringement of, or non-compliance with, those commitments by any Member State would constitute an infringement of the values laid down in Article 2 TEU, falling under the procedure described in Article 7 TEU and capable of leading the Council of the European Union to suspend certain rights of the Member State in question resulting from the application of the Treaties.9On 25 July 2013, the Commission adopted Decision C(2013) 4975 final refusing to register the proposal in dispute (‘the contested decision’) on the ground that it was apparent from an in-depth examination of the provisions of the Treaties cited in that initiative, and of all the other possible legal bases, that the proposal in dispute fell manifestly outside the framework of its powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties. Procedure and forms of order sought 10The applicants brought the present action by application lodged at the Registry of the General Court on 27 September 2013.11On 3 January 2014, the Commission lodged its defence.12By document lodged at the Court Registry on 18 February 2014, the Slovak Republic sought leave to intervene in the present case in support of the form of order sought by the Commission.13On 21 February 2014, the applicants lodged a reply.14By document lodged at the Court Registry on 3 March 2014, Hungary sought leave to intervene in the present case in support of the form of order sought by the applicants.15By documents lodged at the Court Registry on 7 and 12 March 2014 respectively, the Hellenic Republic and Romania sought leave to intervene in the present case in support of the form of order sought by the Commission.16On 7 April 2014, the Commission lodged a rejoinder.17After receiving the observations of the parties, the President of the First Chamber of the Court granted, by order of 12 May 2014, leave to intervene to the Slovak Republic, Hungary, the Hellenic Republic and Romania.18The Slovak Republic, then Hungary and Romania, lodged their statements in intervention on 23 and 25 June 2014. The Hellenic Republic has not lodged a statement in intervention.19By documents lodged at the Court Registry on 18 and 23 June and 25 August 2014 respectively, the Judeţul Covasna (Romanian Province of Covasna), Bretagne réunie and the Obec Debrad’ (Slovak County of Debrad’) sought leave to intervene in the present case in support of the form of order sought by the applicants.20After receiving the observations of the parties, the President of the First Chamber of the Court refused, by order of 18 May 2015, leave to intervene to the Judeţul Covasna, Bretagne réunie and the Obec Debrad’.21On a proposal from the Judge-Rapporteur, the Court decided to open the oral part of the procedure and, by way of the measures of organisation of procedure provided for in Article 89(3)(b) of its Rules of Procedure, requested the main parties to give their views in writing on certain aspects of the case. They complied with those requests within the specified time limits. In their reply, the applicants withdrew their head of claim seeking that the Court order the Commission to register the proposal in dispute and adopt any other measures required by law.22The parties presented their oral arguments and answered the oral questions put to them by the Court at the hearing on 15 December 2015, with the exception of the Hellenic Republic, whose representative was not present at the hearing. At the hearing, the Commission informed the Court that the applicants had published the defence that it had lodged in the present case on the website of the proposal in dispute and that, despite its request, the applicants had refused to remove it. It requested the Court to take account of such abusive conduct on the part of the applicants in apportioning costs. The applicants have not contested the allegations of the Commission, but claim that their conduct did not constitute a misuse of powers in the absence of any text prohibiting such conduct. They therefore requested the Court to apply the general rules on costs.23Having amended the form of order which they seek (paragraph 21 above), the applicants, supported by Hungary, claim that the Court should:—annul the contested decision;order the Commission to pay the costs.24The Commission contends that the Court should:dismiss the action as partly inadmissible and unfounded as to the remainder;order the applicants and Hungary to pay the costs.25Although the Hellenic Republic has not formally sought a form of order, it is appropriate to consider that, as a party intervening in support of the form of order sought by the Commission, it simply endorses that of the Commission.26The Slovak Republic, intervening in support of the Commission, contends that the Court should:order the applicants to pay the costs.27Romania, intervening in support of the Commission, in essence, adopts the form of order sought by the Commission in so far as it contends that the Court should dismiss the action as partly inadmissible and unfounded as to the remainder. Law Admissibility of certain heads of claim 28At the stage of the reply, the applicants, supported by Hungary, relied, in essence, on the heads of claim based, first, on misuse of powers and infringement of the principle of sound administration and, second, on a misinterpretation of Article 352 TFEU.29When requested by the Court to respond to that aspect of the case (paragraph 21 above), the Commission, supported by the Slovak Republic, objected that the head of claim based on a misuse of powers and an infringement of the principle of sound administration was inadmissible in so far as that head of claim had been brought, for the first time, only at the stage of the reply and that it did not satisfy the conditions of admissibility resulting from the provisions of Article 44(1)(c) read in conjunction with Article 48 of the Rules of Procedure of the General Court of 2 May 1991.30As regards the head of claim based on a misinterpretation of Article 352 TFEU, the Commission, supported by Romania and the Slovak Republic, also claimed that that head of claim should be dismissed as inadmissible on the ground that it had been brought, for the first time, at the stage of the reply.31The applicants retort that they formulated the present heads of claim in response to the arguments presented by the Commission in its defence and submit that those heads of claim amount merely to an amplification of those already set out in their application.32The Court notes that, in accordance with Article 44(1)(c) read in conjunction with Article 48(2) of the Rules of Procedure of 2 May 1991, no new plea in law may be introduced after the application has been lodged unless that plea is based on matters of law or of fact which come to light in the course of the procedure. However, a plea which constitutes an amplification of a plea previously made, either expressly or by implication, in the original application and is closely linked to it must be declared admissible (see judgment of 15 October 2008 in Mote v Parliament, T‑345/05, ECR, EU:T:2008:440, paragraph 85 and the case-law cited). The same applies to a head of claim made in support of a plea in law (see judgment of 19 March 2013 in In’t Veld v Commission, T‑301/10, ECR, EU:T:2013:135, paragraph 97 and the case-law cited).33To be regarded as an amplification of a plea or a head of claim previously advanced, a new line of argumentation must, in relation to the pleas or heads of claim initially set out in the application, present a sufficiently close connection with the pleas or heads of claim initially put forward in order to be considered as forming part of the normal evolution of debate in proceedings before the Court (see, to that effect, judgment of 26 November 2013 in Groupe Gascogne v Commission, C‑58/12 P, ECR, EU:C:2013:770, paragraph 31).34In the present case, it is true that the heads of claim based on a misuse of powers and an infringement of the principle of sound administration and the head of claim based on a misinterpretation of Article 352 TFEU, referred to in paragraph 28 above, were not part of the application.35However, the heads of claim based on a misuse of powers and an infringement of the principle of sound administration correspond, in the present case, to an amplification of pleas made in the application and are based on factors which arose during the proceedings before the Court. First, those heads of claim are closely connected to the single plea in law raised, in essence, by the applicants in the application, based on an infringement of Article 4(2)(b) of Regulation No 211/2011 on the ground that the proposal in dispute did not fall manifestly outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties. The heads of claim appear as a new legal analysis of arguments presented in support of that plea in the light of certain arguments advanced by the Commission in its defence, from which it would appear, according to the applicants, that the only ground of the contested decision was that the Commission did not consider it appropriate, as EU law currently stands, to exercise its powers to the effect desired by the applicants. Second, the applicants base the submission of those heads of claim on certain factors which came to light in the proceedings before the Court, namely the arguments advanced by the Commission in its defence that ‘EU policies [could] not become political instruments to the detriment of minorities’ and that ‘the particularities of national minorities [were] capable of being taken into consideration in an appropriate manner during the establishment of the NUTS nomenclature at the level of the Member States’.36The heads of claim based on a misuse of powers and an infringement of the principle of sound administration are therefore admissible.37By contrast, the head of claim based on a misinterpretation of Article 352 TFEU is not sufficiently connected to the heads of claim set out in the application. Moreover, that head of claim is not based on factors which came to light during the proceedings before the Court, since, independently of the Commission’s arguments in its defence, that head of claim could have already been presented in the action. In the contested decision, the Commission had already taken the view that no provision of the Treaties, other than those cited in the proposal in dispute, could have served as a basis for the proposed act, which included Article 352 TFEU.38The Court therefore rejects the head of claim based on a misinterpretation of Article 352 TFEU as inadmissible and dismisses, as to the remainder, the pleas of inadmissibility raised by the Commission. Substance 39In support of their action for annulment of the contested decision, the applicants, supported by Hungary, rely, in essence, on a single plea in law based on an infringement of Article 4(2)(b) of Regulation No 211/2011 on the ground that the proposal in dispute does not fall manifestly outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties. In the light of the conclusions drawn in paragraph 38 above, it is appropriate to consider this plea to be composed of several heads of claims alleging, first, an incorrect interpretation of Article 4(2)(c) TFEU, Article 174 TFEU and Article 3(5) of Regulation No 1059/2003, read in the light of recital 10 thereof, second, an incorrect interpretation of Article 167 TFEU, third, an incorrect interpretation of the first paragraph of Article 19 TFEU, fourth, an erroneous consideration of information not referred to in Article 4(1) and (2) of Regulation No 211/2011 and, fifth, a misuse of powers and an infringement of the principle of sound administration.40It is appropriate, in the present case, to begin by examining the head of claim based on an erroneous consideration of information not referred to in Article 4(1) and (2) of Regulation No 211/2011.The head of claim based on an erroneous consideration of information not referred to in Article 4(1) and (2) of Regulation No 211/201141The applicants, supported by Hungary, claim that the Commission erred in taking account, in the contested decision, of the additional information, as defined in paragraph 4 above.42The Commission, supported by Romania and the Slovak Republic, contends that the Court should dismiss this head of claim.43This head of claim concerns the information on which the Commission may base a decision that the conditions for the registration of a proposed citizen’s initiative, laid down in Article 4(2)(b) of Regulation No 211/2011, are not met.44Article 4 of Regulation No 211/2011 provides, inter alia, the following:‘1. Prior to initiating the collection of statements of support from signatories for a proposal in dispute, the organisers shall be required to register it with the Commission, providing the information set out in Annex II, in particular on the subject matter and objectives of the proposal in dispute.…2. Within two months from the receipt of the information set out in Annex II, the Commission shall register a proposal in dispute under a unique registration number and send a confirmation to the organisers, provided that the following conditions are fulfilled:(b)the proposal in dispute does not manifestly fall outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties;3. The Commission shall refuse the registration if the conditions laid down in paragraph 2 are not met.…’45Since Article 4 of Regulation No 211/2011 refers directly, in that regard, to Annex II to the regulation, that annex must be regarded as having binding force identical to that of the regulation (see, to that effect and by analogy, judgment of 24 April 1996 in Industrias Pesqueras Campos and Others v Commission, T‑551/93 and T‑231/94 to T‑234/94, ECR, EU:T:1996:54, paragraph 84).46Annex II to Regulation No 211/2011, headed ‘Required information for registering a proposal in dispute’, provides as follows:‘The following information shall be provided in order to register a proposal in dispute on the Commission’s online register:1.The title of the proposal in dispute, in no more than 100 characters;2.The subject matter, in no more than 200 characters;3.A description of the objectives of the proposal in dispute on which the Commission is invited to act, in no more than 500 characters;4.The provisions of the Treaties considered relevant by the organisers for the proposed action.Organisers may provide more detailed information on the subject, objectives and background to the proposal in dispute in an annex. They may also, if they wish, submit a draft legal act.’47It appears from Article 4 of Regulation No 211/2011 and Annex II thereto that the Commission is to consider the information communicated by the organisers in order to assess whether the proposal in dispute satisfies the conditions laid down, inter alia, in Article 4(2)(b) of that regulation.48Contrary to what the applicants submit, the ‘information set out in Annex II’ to Regulation No 211/2011, to which Article 4 of the regulation refers, is not limited to the minimum information which must be provided in the register under that annex.49The right under Annex II to Regulation No 211/2011 of the organisers of the proposed initiative to provide additional information, and even a draft legal act of the Union, has as a corollary an obligation for the Commission to consider that information as any other information provided pursuant to that annex, in accordance with the principle of sound administration, including the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (see judgments of 29 March 2012 in Commission v Estonia, C‑505/09 P, ECR, EU:C:2012:179, paragraph 95 and the case-law cited, and of 23 September 2009 in Estonia v Commission, T‑263/07, ECR, EU:T:2009:351, paragraph 99 and the case-law cited).50Consequently, irrespective even of whether the required information, provided in the register, was sufficient, the Court finds that, for the purposes of determining whether the proposal in dispute met the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011, the Commission was under a duty to examine the additional information.51That conclusion is not called into question by the applicants’ line of argumentation, in essence, that the Commission should not, in the contested decision, have taken account of the additional information which did no more than set out draft acts potentially capable of being proposed by the Commission, but not relating to the proposed act.52In that regard, the Court notes that, in the contested decision, the Commission considered on the basis of the additional information that, by the proposal in dispute, the applicants requested it to propose a draft legal act of the Union aiming to safeguard ‘equality of the regions and the sustainability of regional cultures’, which, according to the applicants, necessarily entailed, first, ensuring that the Member States respect their commitments in international law with regard to national minorities and, second, ‘paying special attention to [national minority] regions as part of the EU’s cohesion policy’ through a definition of a ‘national minority region’ which takes account of the criteria used in the international instruments cited in the proposal in dispute and of the desire expressed by the communities concerned and which lists those regions.53The applicants cannot claim that the measures thus outlined in the contested decision were put forward in the additional information as mere examples of draft measures potentially capable of being proposed by the Commission. In the additional information, first of all, they expressly state that ‘the legislation should … provide that the Member States must, without delay, fulfil their international commitments regarding national minorities’. Next, the applicants state, by reiterating a request previously formulated on the basis of the required information, that, for the purposes of pursuing the objectives sought by the proposal in dispute, ‘[the national minority regions] must be granted equal opportunity to access structural and other EU funds, resources and programmes [of the cohesion policy] [and] the sustainability of their characteristics and the appropriate economic development must be guaranteed’. Finally, they clearly refer to a ‘concept [of national minority regions] needing to be defined in a legal act of the Union’ and state that, ‘beyond defining the concept of national minority regions, the legal act of the Union elaborated by the Commission must also identify them by name in an appendix, taking into account the criteria in the listed international documents [in the additional information], and the will of the affected communities’. It appears from the abovementionned passages of the additional information that the proposed measures which the Commission took into account in the contested decision were clearly put forward by the applicants in the additional information as measures which had to appear in the proposed act.54The Commission was therefore entitled, in the contested decision, to take those measures into account for the purposes of determining whether the proposal in dispute met the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011.55Furthermore, the conclusion reached in paragraph 50 above is not called into question by the parties’ line of argumentation relating to whether or not taking into account the additional information in the contested decision was, in the present case, in the applicants’ interests.56In that regard, the Court notes that it is for the organisers of a proposal in dispute to consider, in every individual case, whether it is in their interest to exercise their right, laid down in Annex II to Regulation No 211/2011, to provide additional information on the subject, objectives and background to the proposal in dispute, given the correlative obligation for the Commission to examine that information for the purposes of determining, inter alia, whether the European citizens’ initiative must be registered. However, after the organisers of a proposal in dispute have decided to exercise their right and to provide such additional information, that information must be taken into account by the Commission, without the Commission being entitled nor obliged to ask itself whether or not the taking into account of that information is in the organisers’ interests.57In the present case, the applicants have provided additional information to the Commission which was therefore under a duty to examine it, regardless of whether or not that was in the applicants’ interests.58Since the applicants’ line of argumentation has been refuted in its entirety, the Court rejects the head of claim based on an erroneous consideration of information not referred to in Article 4(1) and (2) of Regulation No 211/2011.Preliminary remarks on the other heads of claim raised by the applicants59In so far as all the other heads of claim raised by the applicants relate, in essence, to an infringement of Article 4(2)(b) of Regulation No 211/2011 (paragraph 39 above), it should be noted that, in accordance with Article 5 TEU, the limits of EU competences are to be governed by the principle of conferral that, under Article 13(2) TEU, each institution is to act within the limits of the powers conferred on it in the Treaties, and that it is in that context that Article 4(2)(b) of Regulation No 211/2011 lays down the condition that a proposal in dispute must not fall manifestly outside the framework of the Commission’s powers to submit a proposal for a legal act of the European Union for the purpose of implementing the Treaties.60It appears from the wording of Article 4(2)(b) of Regulation No 211/2011 that the Commission must carry out an initial assessment of the information at its disposal in order to determine whether the proposal in dispute does not manifestly fall outside the framework of its powers, given that a more exhaustive assessment is provided for in the event of registration of the proposed initiative. Article 10(1)(c) of Regulation No 211/2011 provides that, where the Commission receives a European citizens’ initiative, it is, within three months, to set out in a communication its legal and political conclusions on the initiative, the action it intends to take, if any, and its reasons for taking or not taking that action.61In order to ascertain whether, in the present case, the Commission correctly applied the condition set out in Article 4(2)(b) of Regulation No 211/2011, it is appropriate to consider whether, as regards the proposal in dispute and in the framework of an initial assessment of the evidence at its disposal, the Commission was manifestly not entitled to propose the adoption of an act of the Union based on the articles of the Treaties, in particular those cited by the applicants in the proposal in dispute.The heads of claim based on an erroneous interpretation of Article 4(2)(c) TFEU and Article 174 TFEU and of Article 3(5) of Regulation No 1059/2003 read in the light of recital 10 thereof62The applicants, supported by Hungary, claim that the Commission rendered the contested decision unlawful by way of an erroneous interpretation in refusing to conclude in that decision that Article 4(2)(c) TFEU and Article 174 TFEU and Article 3(5) of Regulation No 1059/2003, read in the light of recital 10 thereof, were capable of providing it with a legal basis to propose a draft legal act of the Union in relation to the proposal in dispute.63The Commission, supported by Romania and the Slovak Republic, claim that the Court should reject these heads of claim.64In the contested decision, having defined the content of the proposed act as stated in paragraph 52 above, the Commission observed the following:‘According to [the] request, [certain measures] are necessary in order to pay special attention to [national minority] regions in the context of the EU cohesion policy. However, any measure adopted under the [EU] cohesion policy legal bases of [Article] 177 [TFEU] and [Article] 178 TFEU [is] limited to achieving the objective of strengthening economic, social and territorial cohesion as referred to in Article 174 TFEU. Promoting the conditions of national minorities cannot be understood as helping to reduce “disparities between the levels of development of the various regions” and “backwardness of [the least favoured] regions”, as set out in the second paragraph of Article 174 TFEU. In that respect, the list of “disadvantages” set out in the third paragraph of 174 TFEU that trigger an obligation to pay “special attention” to a given region is exhaustive. Therefore Articles 174 [TFEU], 176 [TFEU], 177 [TFEU] and 178 TFEU cannot constitute … bases to adopt the proposed … act.’65Furthermore, having stated that its assessment was based not only on the provisions of the Treaties cited in the proposal in dispute but also on ‘all other possible legal bases’, the Commission concluded the following:‘there is no legal basis in the Treaties which would allow a proposal for a legal act with the content [that the organisers of the proposal in dispute] envisage.’66As a preliminary matter, it should be noted that the choice of the legal basis for a legal act of the Union must rest on objective factors amenable to judicial review, which include the aim and content of that measure (see judgments of 11 June 2014 in Commission v Council, C‑377/12, ECR, EU:C:2014:1903, paragraph 34 and the case-law cited, and of 18 December 2014 in United Kingdom v Council, C‑81/13, ECR, EU:C:2014:2449, paragraph 35 and the case-law cited).67These heads of claim prompt the question of whether, in the light, inter alia, of the aim and content of the proposed act, that act could be adopted on the basis of the provisions concerning the EU cohesion policy as cited by the applicants in the proposal in dispute.68Article 3 TEU mentions, among other objectives pursued by the European Union, the promotion of economic, social and territorial cohesion. Such cohesion ranks among the areas of shared competency between the European Union and the Member States laid down in Article 4(2) TFEU. As the Commission correctly observes, the legal basis for the adoption of a legal act of the Union allowing for the consolidation and development of increased EU action in the area of economic, social and territorial cohesion, inter alia through structural funds, is to be found in all of the provisions of Part Three, Title XVIII, of the TFEU, namely Articles 174 TFEU to 178 TFEU. That also appears from Protocol (No 28) on economic, social and territorial cohesion, annexed to the TEU and the TFEU.69It appears from a combined reading of Article 174 TFEU to 178 TFEU that the EU legislature is empowered to adopt measures which aim to promote the harmonious development of all of the European Union and, in particular, to reduce disparities between the levels of development of the various regions and the backwardness of the least favoured regions, by paying particular attention to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions.70In accordance with Article 4(2) TEU, which provides inter alia that the Union is to respect the national identity of Member States inherent in their fundamental structures, political and constitutional, inclusive of regional and local self-government, the concept of a ‘region’, within the meaning of Articles 174 TFEU to 178 TFEU, must be defined in accordance with the prevailing political, administrative and institutional status quo. However, there are extensive differences between the existing administrative units within the various Member States, demographically and geographically as well as with regard to their competencies. The adoption of legal acts of the Union in the area of cohesion policy implies that the EU legislature has at its disposal comparative data relating to the level of development of each of those administrative units. As appears from recital 9, Regulation No 1059/2003 therefore laid down a NUTS, which, through the definition of ‘territorial units’ or of ‘NUTS regions’, of which the level in the ranking depends on their size in terms of population, allows for comparability of statistics relating to the level of development of the various administrative units existing in the Member States and which therefore constitutes a point of reference for the implementation of EU cohesion policy.71In that regard, Article 3 of Regulation No 1059/2003 on the establishment of a common classification of territorial units for statistics lays down, in the version applicable at the time of the facts of the case, the following:‘1. Existing administrative units within the Member States shall constitute the first criterion used for the definition of territorial units.To this end, “administrative unit” shall mean a geographical area with an administrative authority that has the power to take administrative or policy decisions for that area within the legal and institutional framework of the Member State.2. In order to establish the relevant NUTS level in which a given class of administrative units in a Member State is to be classified, the average size of this class of administrative units in the Member State shall lie within the following population thresholds:If the population of a whole Member State is below the minimum threshold for a given NUTS level, the whole Member State shall be one NUTS territorial unit for this level.3. For the purpose of this Regulation, the population of a territorial unit shall consist of those persons who have their usual place of residence in this area.4. The existing administrative units used for the NUTS classification are laid down in Annex II. Measures designed to amend non-essential elements of this Regulation and adapting Annex II shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 7(2).5. If for a given level of NUTS no administrative units of a suitable scale exist in a Member State, in accordance with the criteria referred to in paragraph 2, this NUTS level shall be constituted by aggregating an appropriate number of existing smaller contiguous administrative units. This aggregation shall take into consideration such relevant criteria as geographical, socio-economic, historical, cultural or environmental circumstances.The resulting aggregated units shall hereinafter be referred to as “non-administrative units”. The size of the non-administrative units in a Member State for a given NUTS level shall lie within the population thresholds referred to in paragraph 2.Some non-administrative units may, however, deviate from those thresholds because of particular geographical, socio-economic, historical, cultural or environmental circumstances, especially in the islands and the outermost regions. Those measures, designed to amend non-essential elements of this Regulation, by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 7(2).’72Given the statutory framework set out in paragraphs 68 to 71 above, the Commission was entitled to adopt the view in the contested decision that ‘Articles 174 [TFEU], 176 [TFEU], 177 [TFEU] and 178 TFEU cannot constitute legal bases to adopt the proposed … act’.73It appears from the proposal in dispute, as described in paragraphs 3 and 5 to 8 above, that the proposed act was to enable national minority regions to be included within the concept of a ‘region’, within the meaning of Articles 174 [TFEU] to 178 TFEU, and to benefit from special attention within the frame of EU cohesion policy so that their specific ethnic, cultural, religious or linguistic characteristics may be preserved. The proposed act was, inter alia, to oblige the Member States to respect their commitments with regard to national minorities, including in the implementation of EU cohesion policy, to define the concept of ‘national minority regions’, which would also be covered by a ‘region’ within the meaning of Articles 174 [TFEU] to 178 TFEU, and to lay down a list naming the national minority regions capable of benefiting from special attention within the framework of EU cohesion policy so that their specific characteristics be preserved.74It appears, in addition, from the proposal in dispute that the national minority regions were to be defined on the basis of autonomous criteria, and therefore independently of the administrative units existing in the Member States. The proposal in dispute states that ‘all of the essential elements of the concept [of national minority regions] to be defined in a legal act of the Union already exist in countless international documents adopted by many of the Member States’ and refers, in that regard, to ‘regions with national, ethnic, cultural, religious or linguistic characteristics that are different from those of the surrounding regions’. According to the proposal in dispute, regions thereby defined included ‘geographical areas with no administrative competencies’. Consequently, according to the proposal in dispute, for the creation of regions complying with the NUTS, the linguistic, ethnic and cultural boundaries were to be taken into account, along with the will of the autochthonous communities that form the majority of the region’s population, expressed in a prior referendum, and ‘the guarantees [resulting from the proposed act], in line with the … resolution [of the European Parliament on the protection of minorities and anti-discrimination policies in an enlarged Europe] and the will of the communities in question, could become the institutions of regional self-government, that have to be endowed with sufficient competence to help sustain the region’s national, linguistic and cultural characteristics, and [the] identity [of the national minority regions]’. Thus, it appears from the proposal in dispute that the proposed act was to lead to a redefinition of the concept of ‘region’, within the meaning of Articles 174 TFEU to 178 TFEU, by conferring a genuine status to national minority regions, without regard for the political, administrative and institutional status quo existing in the Member States in question.75As has been stated in paragraph 70 above, and pursuant to Article 4(2) TEU, the Union must, within the framework of policy cohesion, respect the political, administrative and institutional status quo existing in the Member States. Thus, where, for the purposes of ensuring comparability of regional statistical data, Article 3(5) of Regulation No 1059/2003 provides for regard to be had to criteria such as geographical, socio-economic, historical, cultural or environmental circumstances, this is only for the purposes of grouping, in non-administrative units of a sufficient size in terms of population, the administrative units existing in the Member States in question and with the sole aim of ensuring the comparability of the statistics relating to the level of development of those various administrative units. Moreover, where that provision provides that the population thresholds maybe deviated from because of geographical, socio-economic, historical, cultural or environmental circumstances, this refers only to non-administrative units corresponding themselves to an aggregation of administrative units existing in the Member States in question for purely statistical purposes and without that being able to lead to a modification, in any way, in the political, administrative and institutional framework existing in the Member States in question.76It follows that the EU legislature could not, without infringing Article 4(2) TEU, adopt an act which, like the proposed act, would define national minority regions, capable of benefiting from special attention within the framework of EU cohesion policy, on the basis of autonomous criteria and, therefore, without regard to the political, administrative and institutional status quo existing in the Member States in question.77In any event, even supposing that national minority regions may correspond to administrative units existing in the Member States in question or aggregations of such units, the Court notes that the preservation of the specific ethnic, cultural, religious or linguistic characteristics of those regions is not an aim which could justify the adoption of a legal act of the Union on the basis of Articles 174 [TFEU], 176 [TFEU], 177 [TFEU] and 178 TFEU.78Under those articles, the EU legislature is empowered only to adopt measures which aim to promote the harmonious development of all of the European Union and, inter alia, to reduce disparities between the levels of development of the various regions and the backwardness of the least-favoured regions, by paying particular attention to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions.79Indeed, the applicants claim in essence that, first, European integration and, in particular, the implementation of EU cohesion policy do not currently promote a harmonious development of all of the European Union because they endanger the specific characteristics of national minority regions, which thereby tend to be ‘blurred’, and that, second, national minority regions suffer from severe and permanent demographic handicaps related to their being a minority of the population at national level, which affects their economic development in comparison with the surrounding regions.80Nevertheless, as the Commission correctly submits, the applicants’ line of argumentation is based on claims which are in no way substantiated, nor, a fortiori, evidenced.81First, the applicants have not provided evidence that the implementation of the EU cohesion policy, both by the European Union and by the Member States, endangered the specific characteristics of national minority regions.82Under Article 2 TEU, the Union is to be founded on respect for human rights, including the rights of persons belonging to minorities. Furthermore, Article 21(1) of the EU Charter of Fundamental Rights prohibits any discrimination based on membership of a national minority. Article 6(1) TEU provides that the Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights, which is to have the same binding force as the Treaties, and Article 51(1) of the Charter states that its provisions are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing EU law. It follows that, in exercising their shared competency in relation to economic, social and territorial cohesion, the European Union and the Member States may not discriminate against persons and populations due to their membership of a national minority.83Moreover, the Court notes that the proposal in dispute did not aim to fight against discrimination to which persons and populations situated in national minority regions are allegedly subject due to their membership of such a minority but to prevent any gap or lag in the economic development of national minority regions with the surrounding regions due to the alleged handicap of such national minority regions’ specific ethnic, cultural, religious or linguistic characteristics. In paragraph 5 of the application, the applicants did incidentally admit that the proposal in dispute was not ‘aimed’ to ‘prevent discrimination’, even though they did not rule out that the proposed act could have such a ‘consequence’.84Thus, contrary to what the applicants submit, neither Article 2 TEU, nor Article 21(1) of the Charter of Fundamental Rights, nor any other provision of EU law aiming to prevent discrimination, inter alia, the provisions based on membership of a national minority, could, within the framework of EU cohesion policy, allow the Commission to propose a legal act of the Union the purpose and content of which would have corresponded to those of the proposed act.85Second, the applicants have not shown that the specific ethnic, cultural, religious or linguistic characteristics of the national minority regions could be regarded as a serious and permanent demographic handicap within the meaning of the third paragraph of Article 174 TFEU.86In that regard, although the third paragraph of Article 174 TFEU states that the northernmost regions with very low population density and island, cross-border and mountain regions suffer from severe and permanent natural or demographic handicaps relating to their insularity, their cross-border character, their terrain, their isolation, their low or very low population density, it does not mention regions the ethnic, cultural, religious or linguistic characteristics of which differ from those of the surrounding regions. Article 121(4) of Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ 2006 L 347, p. 320), as cited by the applicants, does not in any way extend in that regard the scope of Article 174 TFEU, since it refers only to island areas, mountainous areas, to sparsely or very sparsely populated areas and the outermost regions. It cannot therefore be deduced from Article 121(4) of that regulation that the concept of a ‘serious and permanent demographic handicap’, within the meaning of the third paragraph of Article 174 TFEU could include the specific ethnic, cultural, religious or linguistic characteristics of national minority regions.87Even supposing that such characteristics may be analysed as specific demographic data of the regions in question, it has not been established that they systematically constitute a handicap for the economic development of those regions in relation to the surrounding regions. It is true, as the applicants submit, that differences, inter alia linguistic, between those regions and the surrounding regions may be at the source of certain increased transaction costs or of certain employment difficulties. However, as the Commission correctly submits, the specific characteristics of those regions may also bring them certain comparative advantages, such as a certain touristic attraction or multilingualism.88As for legal acts of the Union which aim to promote regional and minority languages, such as the communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions of 24 July 2003 entitled ‘Promoting Language Learning and Linguistic Diversity: an Action Plan 2004-2006’ [COM(2003) 449 final] on the promotion of regional and minority languages, such acts do not proceed from the observation that such languages would constitute a handicap for the economic development of the regions in which they are spoken, but on the basis that such languages contribute to the linguistic diversity of the European Union and to multilingualism, which is itself seen as an advantage.89In the absence of any conclusive evidence put by the applicants, there is therefore no reason for supposing that the specific ethnic, cultural, religious or linguistic characteristics of national minority regions systematically hinder their economic development in relation to that of the surrounding regions so that those characteristics could be regarded as a ‘serious and permanent demographic handicap’ within the meaning of the third paragraph of Article 174 TFEU.90For all of the foregoing reasons, the Court rejects in their entirety the heads of claim based on an erroneous interpretation of Article 4(2)(c) TFEU and Article 174 TFEU and of Article 3(5) of Regulation No 1059/2003, read in the light of recital 10 thereof.The head of claim based on an erroneous interpretation of Article 167 TFEU91The applicants, supported by Hungary, claim that the Commission rendered the contested decision unlawful through an erroneous interpretation by taking the view that the proposal in dispute fell manifestly outside the framework of its powers to submit a proposal for a legal act of the Union for the purpose of implementing the cultural policy referred to in Article 167 TFEU.92The Commission, supported by Romania and the Slovak Republic, contends that this head of claim should be rejected.93In the contested decision, after having defined the content of the proposed act as set out in paragraph 52 above, the Commission stated the following:‘Article … 167 … TFEU cannot either constitute [a] legal [basis] for the proposed legislation as it would not contribute to any of the objectives and policies set out in [that] provision …’94This head of claim raises the question of whether, having regard inter alia to its aim and content, the proposed act was to contribute to one of the objectives pursued by the cultural policy of the Union referred to in Article 167 TFEU.95In that regard, the Court recalls that, in accordance with Article 22 of the Charter of Fundamental Rights and the fourth subparagraph of Article 3(3) TEU, the Union is to respect its rich cultural and linguistic diversity and is to ensure that Europe’s cultural heritage is safeguarded and enhanced.96Article 6(c) TFEU mentions culture among the areas in which the Union is to have competence to carry out actions to support, coordinate and supplement the actions of the Member States. As also appears from the first subparagraph of Article 2(5) TFEU, that EU competency does not replace the competency of the Member States and is subsidiary to it.97Article 167 TFEU states:‘1. The Union shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore.2. Action by the Union shall be aimed at encouraging cooperation between Member States and, if necessary, supporting and supplementing their action in the following areas:improvement of the knowledge and dissemination of the culture and history of the European peoples,conservation and safeguarding of cultural heritage of European significance,non-commercial cultural exchanges,artistic and literary creation, including in the audiovisual sector.3. The Union and the Member States shall foster cooperation with third countries and the competent international organisations in the sphere of culture, in particular the Council of Europe.4. The Union shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures.5. In order to contribute to the achievement of the objectives referred to in this Article:the European Parliament and the Council acting in accordance with the ordinary legislative procedure and after consulting the Committee of the Regions, shall adopt incentive measures, excluding any harmonisation of the laws and regulations of the Member States;the Council, on a proposal from the Commission, shall adopt recommendations.’98It appears from Article 167 TFEU and, more specifically, from Article 167(2) and (5) TFEU that, within the framework of EU cultural policy and for the purposes of contributing to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore, the EU legislator is empowered to adopt incentive measures, excluding any harmonisation of the laws and regulations of the Member States, or recommendations furthering specific objectives, namely, first, improvement of the knowledge and dissemination of the culture and history of the European peoples, second, conservation and safeguarding of cultural heritage of European significance, third, non-commercial cultural exchanges and, fourth, artistic and literary creation, including in the audiovisual sector.99The Commission was therefore entitled to adopt the view in the contested decision that ‘the proposed legislation … would not contribute to any of the objectives of [the EU cultural policy referred to in Article 167 TFEU]’.100It appears from the proposal in dispute, as set out in paragraphs 3 and 5 to 8 above, that the proposed act was, in essence, to implement, within the framework of EU cohesion policy, certain guarantees so that the specific ethnic, cultural, religious or linguistic characteristics of the national minority regions could be preserved. Those guarantees were, in essence, to consist in offering national minority regions access to EU cohesion policy funds, resources and programmes, in order to prevent any gap or lag in economic development with the surrounding regions, as far as recognising autonomous status for national minority regions in accordance with the desire expressed by their population (by referendum), irrespective of the existing political, administrative and institutional situation in the Member States concerned.101Article 167 TFEU cannot provide a basis for the adoption of a legal act of the Union in pursuit of such an aim and of such content. The preservation of national minority regions through their specific ethnic, cultural, religious or linguistic characteristics, to the extent of recognising the autonomous status of such regions, for the purposes of implementing EU cohesion policy is an objective which, first, goes well beyond merely contributing to the flowering of the cultures of the Member States, while respecting their national and regional diversity or merely bringing common cultural heritage to the fore and which, second, does not directly relate to one of the objectives specifically referred to in Article 167(2) TFEU. Incidentally, in paragraph 5 of the application, the applicants themselves admitted that the proposal in dispute was not ‘aimed’ to ‘protect cultural diversity’, even though they did not rule out that the proposed act could have such a ‘consequence’.102Thus, contrary to the submission of the applicants, neither Article 3(3) TEU, nor the first paragraph of Article 167 TFEU, nor even Article 22 of the Charter of Fundamental Rights would allow, in the present case, for the Commission to propose, within the framework of the EU cohesion policy, a legal act aiming to protect the cultural diversity represented by national minorities, such an act, moreover, would have corresponded neither to the aim nor to the content of the proposed act.103In any event, it should be noted that the adoption of the proposed act, which necessarily implied that a definition be given to the concept of a ‘national minority regions’ for the purpose of implementing EU cohesion policy, did not relate to any of the possibilities of action provided for in the second paragraph of Article 167 TFEU for contributing to the achievement of the objectives sought by EU cultural policy, namely the adoption of incentive measures, excluding any harmonisation of the laws and regulations of the Member States or the adoption of recommendations.104For all of the foregoing reasons, the Court rejects the head of claim based on an erroneous interpretation of Article 167 TFEU.The head of claim based on an erroneous interpretation of the first paragraph of Article 19 TFEU105The applicants, supported by Hungary, claim that the Commission rendered the contested decision unlawful through an erroneous interpretation of the first paragraph of Article 19 TFEU by taking the view that none of the Treaty provisions constituted a legal basis for whatever action by the institutions aiming to combat discrimination based on membership of a national minority.106107In the contested decision, having defined the content of the proposed act as set out in paragraph 52 above and having stated that its assessment would concern ‘the Treaty provisions … suggested and … all other possible legal bases’, the Commission made the following observation:‘In conclusion, … there is no legal basis in the Treaties which would allow a proposal for a legal act [of the Union] with the content … envisage[d] [in the proposal in dispute].’108The applicants accuse the Commission, in that regard, of an erroneous interpretation of the first paragraph of Article 19 TFEU, which could have served as a legal basis for the proposed act.109This head of claim prompts the question of whether, having regard inter alia to its aim and content, the proposed act could have been adopted on the basis of the first paragraph of Article 19 TFEU.110Article 19 TFEU states:‘1. Without prejudice to the other provisions of the Treaties and within the limits of the powers conferred by them upon the Union, the Council, acting unanimously in accordance with a special legislative procedure and after obtaining the consent of the European Parliament, may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.2. By way of derogation from paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may adopt the basic principles of Union incentive measures, excluding any harmonisation of the laws and regulations of the Member States, to support action taken by the Member States in order to contribute to the achievement of the objectives referred to in paragraph 1.’111Without prejudice to the other Treaty provisions and within the limits of the powers they assign to the Union, the first paragraph of Article 19 TFEU empowers the EU legislature to adopt measures needed to combat any discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.112In the present case, without it even being necessary to consider whether or not the concept of ‘discrimination’ within the meaning of that provision includes any discrimination based on membership of a national minority, it should be noted that, as has already been stated in paragraph 83 above, the proposal in dispute did not aim to combat discrimination against persons and populations due to their membership of a national minority, but to prevent any gap or lag in economic development of national minority regions with the surrounding regions due to the alleged handicap of such national minority regions’ specific ethnic, cultural, religious or linguistic characteristics.113Therefore, as the Commission correctly stated in the contested decision, the first paragraph of Article 19 TFEU could not constitute an appropriate legal basis for proposing a legal act of the Union in pursuit of the aim and of such content as set out in the proposal in dispute.114For all of the foregoing reasons, the Court rejects the head of claim based on an erroneous interpretation of the first paragraph of Article 19 TFEU.The heads of claim based on a misuse of powers and an infringement of the principle of sound administration115The applicants, supported by Hungary, claim that the Commission misused its powers in so far as it refused to register the proposal in dispute not on the ground, stated in the contested decision in accordance with Article 4(2)(b) of Regulation No 211/2011, that the initiative fell manifestly outside the framework of its powers, but, as is apparent from its written pleadings in these proceedings, because it did not appear to the Commission appropriate, as EU law currently stands, to exercise its powers to the effect sought by the applicants, which is not provided for in Article 4(2)(b) of Regulation No 211/2011.116In addition, they claim that the Commission infringed the principle of sound administration in so far as it was, in the present case, guided by the intention of discouraging citizens’ initiatives, even where, as in the present case, they satisfied the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011 by resorting to unlawful grounds, such as taking into account information not referred to in Article 4(1) and (2) of Regulation No 211/2011.117The Commission, supported by the Slovak Republic, contends that the Court should reject these heads of claim.118As regards, in the first place, the head of claim based on a misuse of powers, it must be borne in mind that, according to settled case-law, the concept of misuse of powers has a specific meaning in EU law and relates to cases where an administrative authority exercises its powers for a purpose other than that for which they were conferred. A decision amounts to a misuse of powers only if it appears, on the basis of objective, relevant and consistent factors, to have been taken to achieve an end other than that stated (see judgment of 9 September 2008 in Bayer CropScience and Others v Commission, T‑75/06, ECR, EU:T:2008:317, paragraph 254 and the case-law cited).119In the present case, in order to demonstrate that there has been a misuse of powers, the applicants rely on certain arguments in the defence submitted by the Commission from which it would appear that the Commission did not consider it appropriate, as EU law currently stands, to exercise its powers to the effect sought by the applicants.120In that regard, the Court notes that the contested decision is sufficiently well-grounded as to why the proposal in dispute did not satisfy the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011, since it fell manifestly outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties. In points 10 and 11 of its defence, the Commission reiterated the grounds for its decision and stated that it ‘maintain[ed] its position’ for the reasons subsequently set out in its defence in the light of the arguments elaborated in the application. Similarly, in paragraphs 2 and 97 of its rejoinder, the Commission stated that it ‘maintain[ed] in full the reasoning and conclusions … set out in its defence’ and that it ‘ha[d] rejected the application for registration of [the proposal in question] on a well-grounded and lawful basis under Article 4(2)(b) of Regulation … No 211/2011’. It appears from the foregoing that, in its pleadings, the Commission defended the merits of the grounds set out in the contested decision, which has not been called into question in the examination of this action.121Against that background, the statements highlighted by the applicants, namely paragraph 17 of the defence, pursuant to which ‘EU policies cannot become political instruments to the detriment of minorities’ and paragraph 58 of the defence, which states that ‘the Commission believes that the particularities of national minorities are capable of being taken into consideration in an appropriate manner during the establishment of the NUTS … at the level of the Member States’, cannot be regarded as evidence establishing that the contested decision was based, in actual fact, on grounds other than those cited in it, of which the merits could not be called into question at the time of the assessment of the present action and as demonstrating a misuse by the Commission of the powers conferred on it by Article 4(2)(b) of Regulation No 211/2011.122It follows that the applicants have not, in the present case, adduced objective, relevant and consistent evidence from which the conclusion may be drawn that the contested decision was taken for reasons other than those stated, namely because the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011 were not satisfied, since the proposal in dispute fell manifestly outside the framework of the Commission’s powers to submit a proposal for a legal act of the Union for the purpose of implementing the Treaties.123The Court therefore rejects the head of claim based on a misuse of powers by the Commission as unfounded.124As regards, in the second place, the head of claim based on an infringement of the principle of sound administration, the Court notes that, pursuant to Article 41(1) of the Charter of Fundamental Rights, ‘every person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions, bodies, offices and agencies of the Union’. It appears, in addition, from recital 10 of Regulation No 211/2011 that the general principle of sound administration requires, inter alia, that the Commission register all proposal in disputes satisfying the conditions laid down in that regulation within the time frame stipulated in Article 4(2) of the regulation, namely within two months from the receipt of the information set out in Annex II.125In the present case, contrary to the assertion of the applicants, the conditions for registration laid down in Article 4(2)(b) of Regulation No 211/2011 were not satisfied, as appears from an examination of the heads of claim based on erroneous interpretation by the Commission of articles of the Treaties, so that that institution was entitled to refuse to register the proposal in dispute in accordance with Article 4(3) of the regulation.126Accordingly, the Commission was able to adopt the contested decision without infringing the general principle of sound administration.127The Court therefore also rejects the head of claim based on an infringement of that principle as unfounded.128Since all of the heads of claim raised by the applicants in support of their single plea in law based, in essence, on an infringement of Article 4(2)(b) of Regulation No 211/2011 have been rejected accordingly, the Court therefore rejects that plea and, consequently, dismisses the action in its entirety. Costs 129Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered to bear their own costs and to pay those of the Commission, without it being necessary to take into account, in that regard, that the applicants have undermined protection of the court proceedings, inter alia in compromising the principles of equality of arms and the sound administration of justice (see, to that effect and by analogy, judgment of 21 September 2010 in Sweden and Others v API and Commission, C‑514/07 P, C‑528/07 P and C‑532/07 P, ECR, EU:C:2010:541, paragraphs 85 and 93) by publishing the Commission’s defence on the website of the proposal in dispute (paragraph 22 above).130In addition, under Article 138(1) of the Rules of Procedure, the Member States which have intervened in the proceedings are to bear their own costs. Those provisions must be applied to Hungary, the Hellenic Republic, Romania and the Slovak Republic.On those grounds,THE GENERAL COURT (First Chamber)hereby: 1. Dismisses the action; 2. Orders Mr Balázs-Árpád Izsák and Mr Attila Dabis to bear their own costs and those incurred by the European Commission; 3. Orders Hungary, the Hellenic Republic, Romania and the Slovak Republic to bear their own costs. KanninenPelikánováButtigiegDelivered in open court in Luxembourg on 10 May 2016.[Signatures]Table of contentsBackground to the disputeProcedure and forms of order soughtLawAdmissibility of certain heads of claimSubstanceHeads of claim based on misuse of powers and of infringement of the principle of sound administrationCosts( *1 ) Language of the case: Hungarian. | 2d4a7-48b4b10-4478 | EN |
The General Court confirms that the German law on renewable energy of 2012 (the EEG 2012) involved State aid | 10 May 2016 ( *1 )‛State aid — Renewable energy — Aid granted by certain provisions of the amended German law concerning renewable energy sources (EEG 2012) — Aid supporting renewable electricity and reduced EEG surcharge for energy-intensive users — Decision declaring the aid partially incompatible with the internal market — Concept of State aid — Advantage — State resources’In Case T‑47/15, Federal Republic of Germany, represented initially by T. Henze and K. Petersen, and subsequently by T. Henze and K. Stranz, acting as Agents, and by T. Lübbig, lawyer,applicant,v European Commission, represented initially by T. Maxian Rusche and R. Sauer, and subsequently by T. Maxian Rusche and K. Herrmann, acting as Agents,defendant,APPLICATION under Article 263 TFEU for the annulment of Commission Decision (EU) 2015/1585 of 25 November 2014 on the aid scheme SA.33995 (2013/C) (ex 2013/NN) (implemented by Germany for the support of renewable electricity and of energy-intensive users) (OJ 2015 L 250, p. 122),THE GENERAL COURT (Third Chamber),composed of S. Papasavvas (Rapporteur), President, E. Bieliūnas and I.S. Forrester, Judges,Registrar: S. Bukšek Tomac, Administrator,having regard to the written part of the procedure and further to the hearing on 21 January 2016,gives the following Judgment Background to the dispute 1In December 2011 the Bund der Energieverbraucher (German Association of Energy Consumers) lodged a complaint with the European Commission in which it contended that certain measures laid down by the Gesetz zur Neuregelung des Rechtsrahmens für die Förderung der Stromerzeugung aus Erneuerbaren Energien (Law revising the legal framework for the promotion of electricity production from renewable energy) of 28 July 2011 (BGBl. 2011 I, p. 1634; ‘the EEG 2012’), which was to enter into force on 1 January 2012, constituted aid incompatible with the internal market. Measures at issue 2The EEG 2012 has the aim of protecting the climate and the environment by ensuring the sustainable development of energy supply, reducing the cost of energy supply for the German economy, relieving fossil energy sources and developing technologies for the production of electricity from renewable energy sources and mine gas (‘EEG electricity’). To that end, it seeks in particular to increase renewable energy’s share of electricity supply to a minimum of 35% in 2020 and then, in successive stages, to a minimum of 80% in 2050 (Paragraph 1 of the EEG 2012).3In that context, the EEG 2012 lays down in particular a scheme to support producers of EEG electricity (Paragraph 2 of the EEG 2012), the main characteristics of which are described below.4In the first place, network operators at all voltage levels (‘NOs’) ensuring the general supply of electricity are required (i) to connect installations producing EEG electricity within their area of activity to their network (Paragraphs 5 to 7 of the EEG 2012), (ii) to feed that electricity into their network, transmit it and distribute it by way of priority (Paragraphs 8 to 12 of the EEG 2012) and (iii) to make to the operators of those installations a payment that is calculated on the basis of tariffs laid down by law, in the light of the nature of the electricity at issue and the rated or installed capacity of the installation concerned (Paragraphs 16 to 33 of the EEG 2012). Alternatively, operators of installations producing EEG electricity are entitled, first, to sell all or part of that electricity directly to third parties and, secondly, to require the NO to which the installation would have been connected but for such direct sale to pay them a market premium calculated on the basis of the amount that would have been payable had the installation been connected (Paragraphs 33a to 33i of the EEG 2012). In practice, it is not in dispute that those obligations are borne essentially by local low or medium-voltage distribution system operators (‘DSOs’).5In the second place, the DSOs are required to transmit the EEG electricity to the interregional upstream operators of high and very-high-voltage transmission systems (‘TSOs’) (Paragraph 34 of the EEG 2012). As consideration for that obligation, the TSOs are required to pay the DSOs the equivalent of the payments and market premiums received by installation operators from the DSOs (Paragraph 35 of the EEG 2012).6In the third place, the EEG 2012 provides for a ‘nationwide compensation mechanism’ in respect of, first, the quantities of EEG electricity which each TSO feeds into its network and, secondly, the sums paid by way of consideration to the DSOs (Paragraph 36 of the EEG 2012). In practice, each TSO that has fed in and paid for a quantity of EEG electricity greater than the quantity provided by electricity suppliers to final customers located in its area may claim, in regard to the other TSOs, an entitlement to compensation corresponding to that difference. Since the years 2009-10, the compensation no longer takes place in actual form (exchange of EEG electricity flows) but in financial form (compensation of the related costs). Three of the four TSOs concerned by that compensation mechanism are private undertakings (Amprion GmbH, TenneT TSO GmbH and 50Hertz Transmission GmbH), whilst the fourth is a public undertaking (Transnet BW GmbH).7In the fourth place, the TSOs are required to sell the EEG electricity which they feed into their network on the spot market of the electricity exchange (Paragraph 37(1) of the EEG 2012). If the price thereby obtained does not enable them to cover the financial burden imposed upon them by the statutory obligation to pay for that electricity at the rates laid down by law, they are entitled, under the conditions laid down by the legislative authorities, to require the suppliers to the final customers to pay them the difference, in proportion to the quantities sold. This mechanism is called the ‘EEG surcharge’ (Paragraph 37(2) of the EEG 2012). The amount of the EEG surcharge may nevertheless be reduced by EUR 0.02 per kilowatt hour (kWh) in certain cases (Paragraph 39 of the EEG 2012). In order to obtain such a reduction, referred to by the EEG 2012 as a ‘reduction of the EEG surcharge’, but also known as the ‘green electricity privilege’, electricity suppliers must in particular demonstrate (i) that at least 50% of the electricity that they deliver to their customers is EEG electricity, (ii), that at least 20% of that electricity is derived from wind or solar radiation energy and (iii) that the electricity is sold directly to their customers.8The detailed rules governing the EEG surcharge were specified, in particular, in the Verordnung zur Weiterentwicklung des bundesweiten Ausgleichsmechanismus (regulation developing further the nationwide compensation mechanism) of 17 July 2009 (BGBl. 2009 I, p. 2101), as amended by Article 2 of the Gesetz zur Änderung des Rechtsrahmens für Strom aus solarer Strahlungsenergie und zu weiteren Änderungen im Recht der erneuerbaren Energien (Law amending the legal framework for electricity from solar radiation and further amending legislation governing renewable energy) of 17 August 2012 (BGBl. 2012 I, p. 1754), and in the Verordnung zur Ausführung der Verordnung zur Weiterentwicklung des bundesweiten Ausgleichsmechanismus (regulation implementing the regulation developing further the nationwide compensation mechanism) of 22 February 2010 (BGBl. 2010 I, p. 134), as amended by the Zweite Verordnung zur Änderung der Ausgleichsmechanismus-Ausführungsverordnung (second regulation amending the implementing regulation on the compensation mechanism) of 19 February 2013 (BGBl. 2013 I, p. 310).9In the fifth place, it is not in dispute that, although the EEG 2012 does not oblige electricity suppliers to pass the EEG surcharge on to the final customers, it does not prevent them from doing so either. Nor is it in dispute that the suppliers, which are themselves obliged to pay the surcharge to the TSOs, in practice pass it on to their customers, as the Federal Republic of Germany indeed confirmed at the hearing. The manner in which the surcharge is to be shown on the bill sent to customers is prescribed by the EEG 2012 (Paragraph 53 of the EEG 2012), as are the conditions under which customers must be informed of the proportion of renewable energy subsidised under the Law on renewable energy that is supplied to them (Paragraph 54 of the EEG 2012).10In addition, the EEG 2012 lays down a special compensation scheme, under which the Bundesamt für Wirtschaft und Ausfuhrkontrolle (Federal Office for Economic Affairs and Export Control; ‘the BAFA’) each year caps the amount of the EEG surcharge that may be passed on by electricity suppliers to two specified categories of customers — namely, first, ‘electricity-intensive undertakings in the manufacturing sector’ (‘EIUs’) and, secondly, ‘railways’ — following a request which must be submitted by them by 30 June of the previous year, with the aim of reducing their electricity costs and, in so doing, of maintaining their competitiveness (Paragraph 40 of the EEG 2012).11The EEG 2012 specifies the conditions for qualifying for that scheme, the procedure that must be followed by eligible undertakings, the detailed rules for determining the cap on a case-by-case basis and the effects of decisions adopted in this connection by the BAFA (Paragraphs 41 to 44 of the EEG 2012). The EEG 2012 provides in particular that, for undertakings in the manufacturing sector whose electricity consumption costs represent at least 14% of their gross value added and whose consumption is at least 1 gigawatt hour (GWh), the cap is set at 10% of the EEG surcharge for the part of their consumption between 1 GWh and 10 GWh, at 1% of that surcharge for the part of their consumption between 10 GWh and 100 GWh, and at EUR 0.0005 per kWh above that. The EEG 2012 also provides that, for undertakings in the manufacturing sector whose electricity consumption costs represent at least 20% of their gross value added and whose consumption is at least 100 GWh, the EEG surcharge is capped at EUR 0.0005 per kWh from the first kilowatt hour. The EEG 2012 further states that electricity suppliers must inform undertakings that have received a notice capping the EEG surcharge (i) of the proportion of renewable energy benefiting from aid under the Law on renewable energy that is supplied to them, (ii) of the composition of their overall energy mix and (iii), for undertakings which are supported pursuant to the Law on renewable energy, of the composition of the energy mix that is provided to them (Paragraph 54 of the EEG 2012).12In the sixth place, the EEG 2012 contains a set of obligations requiring the provision of information and publication that are imposed on operators of installations, NOs and electricity suppliers, in particular vis-à-vis TSOs and the Bundesnetzagentur (Federal Networks Agency; ‘the BNetzA’), as well as a series of transparency obligations owed specifically by TSOs (Paragraphs 45 to 51 of the EEG 2012). That law also specifies the powers of supervision and control that the BNetzA possesses in respect of DSOs and TSOs (Paragraph 61 of the EEG 2012). Decision to initiate the formal investigation procedure 13By letter of 18 December 2013, the Commission informed the German authorities that it had decided to initiate the formal investigation procedure in respect of the measures contained in the EEG 2012 and implemented in the form of aid supporting renewable electricity and energy-intensive users.14By application lodged at the Registry of the General Court on 28 February 2014, the Federal Republic of Germany brought an action for annulment of the decision to initiate the formal investigation procedure, an action which it withdrew by letter of 28 April 2015.15By order of 8 June 2015, the President of the Third Chamber of the General Court ordered that the case be removed from the Court’s register (Germany v Commission, T‑134/14, not published, EU:T:2015:392). Contested decision 16On 25 November 2014 the Commission adopted Decision (EU) 2015/1585 on the aid scheme SA.33995 (2013/C) (ex 2013/NN) (implemented by Germany for the support of renewable electricity and of energy-intensive users) (OJ 2015 L 250, p. 122; ‘the contested decision’).17First, the Commission considered that the feed-in tariffs and market premiums, which guarantee producers of EEG electricity a higher price for the electricity they produce than the market price, constitute State aid compatible with the internal market. Secondly, it considered that the reduction of the EEG surcharge for certain energy-intensive users also constitutes State aid, the compatibility of which with the internal market is recognised only if it falls into certain categories.18The operative part of the contested decision reads as follows:‘Article 1 The State aid for the support of electricity production from renewable energy sources and from mine gas, including its financing mechanism, granted on the basis of the Erneuerbare-Energien-Gesetz 2012 …, unlawfully put into effect by Germany in breach of Article 108(3) [TFEU], is compatible with the internal market subject to the implementation of the commitment set out in Annex I by Germany.… Article 3 1. The State aid consisting of reductions in the surcharge for the funding of support for electricity from renewable sources … in the years 2013 and 2014 for energy-intensive users …, unlawfully put into effect by Germany in breach of Article 108(3) [TFEU], is compatible with the internal market if it falls into one of the four categories set out in this paragraph.Where the State aid was granted to an undertaking which belongs to a sector listed in Annex 3 to the Guidelines on State aid for environmental protection and energy 2014-20 …, it is compatible with the internal market if the undertaking paid at least 15% of the additional costs faced by electricity suppliers due to obligations to buy renewable energy which are subsequently passed on to their customers. If the undertaking paid less than 15% of those additional costs, the State aid is nevertheless compatible if the undertaking paid an amount that corresponds to at least 4% of its gross value added or, for undertakings having an electro-intensity of at least 20%, at least 0.5% of gross value added.Where the State aid was granted to an undertaking which does not belong to a sector listed in Annex 3 to the 2014 Guidelines but had an electro-intensity of at least 20% in 2012 and belonged, in that year, to a sector with a trade intensity of at least 4% at Union level, it is compatible with the internal market if the undertaking paid at least 15% of the additional costs faced by electricity suppliers due to obligations to buy renewable energy which were subsequently passed on to electricity consumers. If the undertaking paid less than 15% of those additional costs, the State aid is nevertheless compatible if the undertaking paid an amount that corresponds to at least 4% of its gross value added or, for undertakings having an electro-intensity of at least 20%, at least 0.5% of gross value added.Where the State aid was granted to an undertaking eligible for compatible State aid on the basis of the second or third subparagraph, but the amount of the EEG surcharge paid by that undertaking did not reach the level required by those subparagraphs, the following parts of the aid are compatible:(a)for 2013, the part of the aid which exceeds 125% of the surcharge that the undertaking actually paid in 2013;(b)for 2014, the part of the aid which exceeds 150% of the surcharge that the undertaking actually paid in 2013.Where the State aid was granted to an undertaking not eligible for compatible State aid on the basis of the second or third subparagraph, and where the undertaking paid less than 20% of the additional costs of the surcharge without reduction, the following parts of the aid are compatible:2. Any aid that is not covered by paragraph 1 is incompatible with the internal market.’ Procedure and forms of order sought 19By application lodged at the Registry of the General Court on 2 February 2015, the Federal Republic of Germany brought the present action.20The Federal Republic of Germany claims that the Court should:—annul the contested decision;order the Commission to pay the costs.21The Commission contends that the Court should:dismiss the action;order the Federal Republic of Germany to pay the costs. Law 22In support of its action, the Federal Republic of Germany puts forward three pleas, alleging, in essence, (i) that there were manifest errors of assessment in the evaluation of the facts, (ii) that there is no advantage linked to the special compensation scheme and (iii) that there is no advantage financed through State resources. First plea: manifest errors of assessment in the evaluation of the facts Admissibility23Without formally raising an objection of inadmissibility pursuant to Article 130 of the Rules of Procedure of the General Court, the Commission puts forward as its principal submission that the first plea is inadmissible, essentially on the ground that it is incomprehensible.24The Commission contends that, in its description of the subject matter of the plea, the Federal Republic of Germany criticises the Commission generally for having manifestly misunderstood the various forms of State action, a criticism which in the Commission’s submission is incomprehensible. The Commission adds that the General Court does not have the task of reinterpreting an incomprehensible line of argument in the application so as to give it a meaning.25It should be recalled that, under the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union, which is applicable to the procedure before the General Court in accordance with the first paragraph of Article 53 thereof, and Article 76(d) of the Rules of Procedure, all applications must contain the subject matter of the dispute and a summary of the pleas in law relied on. Irrespective of any question of terminology, that information must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application, if necessary without any further information. In order to guarantee legal certainty and the sound administration of justice it is necessary, if an action is to be admissible under the aforementioned provisions, that the basic legal and factual particulars relied on be indicated, at least in summary form, coherently and intelligibly in the application itself (see order of 28 April 1993 in De Hoe v Commission, T‑85/92, EU:T:1993:39, paragraph 20 and the case-law cited).26More specifically, whilst it should be acknowledged, first, that the statement of the pleas in the application need not conform with the terminology and layout of the Rules of Procedure and, secondly, that the pleas may be expressed in terms of their substance rather than of their legal classification, the application must nonetheless set out those pleas with sufficient clarity. Moreover, a mere abstract statement of the pleas in the application does not satisfy the requirements of the Statute of the Court of Justice of the European Union and the Rules of Procedure and the expression‘brief statement of the pleas in law’ or ‘summary of [the] pleas in law’ used therein means that the application must specify on what grounds the action is based (see order of 28 April 1993 in De Hoe v Commission, T‑85/92, EU:T:1993:39, paragraph 21 and the case-law cited).27In the present case, it is apparent from the application that the subject matter of the first plea is clearly defined, in that it seeks the annulment of the contested decision, and that it alleges manifest errors of assessment in the evaluation of the facts and of the State’s role in the operation of the EEG 2012. It is also apparent from the application that, by this plea, the Federal Republic of Germany submits, in essence, that the contested decision infringes Article 107(1) TFEU, so that the application sets out the plea with sufficient clarity.28It follows that the plea of inadmissibility must be dismissed as unfounded.Substance29The Federal Republic of Germany submits, in essence, that the contested decision infringes Article 107(1) TFEU in that the Commission committed various manifest errors of assessment in its evaluation of the State’s role in the operation of the EEG 2012. The Federal Republic of Germany contends that the State does not perform a particular role and is not involved in the operation of the EEG 2012.30In the first place, as regards the parties that are involved in the system under the EEG 2012, the Federal Republic of Germany submits, first, that only entities governed by private law participate in the mechanism under the EEG 2012, secondly, that that law is applicable without distinction to (i) public network or system operators and public electricity suppliers and (ii) their private equivalents, thirdly, that no individual undertaking is entrusted with particular tasks by the EEG 2012 or its implementing regulations, but only the TSOs taken together, and fourthly, that the State bodies which are conferred powers by the EEG 2012 have as their sole task monitoring the legality and the proper operation of the mechanisms established, without having any influence on the origin and use of the resources generated.31In the second place, the Federal Republic of Germany contends that the financial flows generated by operation of the EEG 2012 are neither imposed nor controlled by the State. It maintains in support of this contention (i) that the EEG 2012 is a scheme setting the price for the production of electricity from renewable energy that does not enable the State to set the amount of the EEG surcharge, which is determined by the parties in the context of their contractual freedom, and (ii) that implementation of the right to payment between persons, which arises from the mechanisms of the EEG 2012, is not in any way ensured by State bodies and, in the event of dispute, is a matter for the civil courts.32In the third place, the Federal Republic of Germany submits that, as regards the role of the authorities in the special compensation scheme provided for by the EEG 2012, the task of the BAFA is limited to ruling on the requests for a cap that are submitted to it and to drawing up, under a circumscribed power which does not leave it any discretion, a decision which merely states, as the case may be, that the necessary conditions for obtaining entitlement to a cap are met. Thus, the BAFA does not have direct possession of financial flows generated by operation of the EEG 2012, nor does it have access to those resources or means of controlling them.33It should be recalled at the outset that, under Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the common market.34Article 107(1) TFEU makes that incompatibility subject to confirmation that four conditions have been met. First, there must be an intervention by the State or through State resources. Secondly, the intervention must be liable to affect trade between Member States. Third, it must confer an advantage on the recipient. Fourth, it must distort or threaten to distort competition (see judgment of 15 July 2014 in Pearle and Others, C‑345/02, EU:C:2004:448, paragraph 33 and the case-law cited).35With regard to the first of those conditions, settled case-law shows that only advantages granted directly or indirectly through State resources are to be considered aid within the meaning of Article 107(1) TFEU. The distinction made in that provision between ‘aid granted by a Member State’ and aid granted ‘through State resources’ does not signify that all advantages granted by a State, whether financed through State resources or not, constitute aid but is intended merely to bring within that definition both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State (see judgment of 13 March 2001 in PreussenElektra, C‑379/98, EU:C:2001:160, paragraph 58 and the case-law cited). Thus, the prohibition laid down in Article 107(1) TFEU may also cover, in principle, aid granted by public or private bodies established or designated by the State to administer aid (see, to this effect, judgment of 15 July 2004 in Pearle and Others, C‑345/02, EU:C:2004:448, paragraph 34 and the case-law cited).36However, for advantages to be capable of being categorised as aid within the meaning of Article 107(1) TFEU, they must indeed, first, be granted directly or indirectly through State resources but also, secondly, be imputable to the State (see judgment of 15 July 2004 in Pearle and Others, C‑345/02, EU:C:2004:448, paragraph 35 and the case-law cited). It is clear from the case-law that these are separate and cumulative conditions (see judgment of 5 April 2006 in Deutsche Bahn v Commission, T‑351/02, EU:T:2006:104, paragraph 103 and the case-law cited).37As regards, the condition that the measure must be imputable to the State, it is settled case-law that it is necessary to examine whether the public authorities must be regarded as having been involved in the adoption of that measure (see, to this effect, judgment of 19 December 2013 in Association Vent De Colère! and Others, C‑262/12, EU:C:2013:851, paragraph 17 and the case-law cited).38In the present instance, whilst the Federal Republic of Germany submits that the contested decision is vitiated by manifestly incorrect assessments of the facts, in its first plea its line of argument relates exclusively to the operation of the EEG 2012 and the State’s role in that system.39In support of its first plea the Federal Republic of Germany merely explains the operation of the EEG 2012 by recalling the statutory provisions, but does not put forward any specific matter enabling the Court to find an error of fact in the description of the mechanisms at issue or a manifest error of assessment in the analysis of them.40Furthermore, in so far as the Federal Republic of Germany calls into question by its first plea whether the EEG 2012 is imputable to the State, it is clear that the support and compensation mechanisms at issue in the present case were established by law, here the EEG 2012, a fact which the Federal Republic of Germany indeed acknowledges when it refers in the application to a ‘statutory framework’. Those mechanisms must therefore, pursuant to the case-law cited in paragraph 37 above, be regarded as imputable to the State.41Accordingly, contrary to the Federal Republic of Germany’s contentions, it is not necessary to carry out a more detailed analysis of the State’s role in the operation of the EEG 2012, as this question is covered by the appraisal of the condition relating to the commitment of State resources within the meaning of Article 107(1) TFEU, examined in the context of the third plea.42Therefore, the first plea must be dismissed. Second plea: no advantage linked to the special compensation scheme 43The Federal Republic of Germany submits, in essence, that the contested decision infringes Article 107(1) TFEU in that the Commission incorrectly considered that the special compensation scheme establishes an advantage for EIUs. The present plea is in five parts.44First of all, it should be noted, as the Commission has in its defence, that the arguments in the Federal Republic of Germany’s second plea concern exclusively the very existence for EIUs of an advantage, for the purposes of Article 107(1) TFEU, that is linked solely to the special compensation scheme, and not the question of the selectivity of such an advantage or that of the existence of a selective advantage linked to the support scheme, questions which therefore should not be examined by the Court.45Also, the Court considers it expedient to begin by examining the first, second and fifth parts of the plea together, and then to examine the third part and, finally, the fourth part.First, second and fifth parts46By the first part of the second plea, the Federal Republic of Germany contends that the special compensation scheme does not grant EIUs an advantage, but is intended to compensate for the reduction in their international competitiveness that is connected in particular with the fact that charges are markedly lower in other countries of the European Union, including the Member States where there is also a reduction in charges for EIUs. The Federal Republic of Germany adds that in third States there are often no comparable charges.47By the second part of the second plea, the Federal Republic of Germany submits that a large number of energy-intensive sectors, such as production or processing of copper, steel, aluminium or petroleum, are subject to very strong international competition. Thus, the special compensation scheme does not bring an advantage, but compensates for a disadvantage, in that, without that scheme, undertakings whose conditions of production are particularly energy-intensive would be in a very unfavourable competitive situation compared with undertakings in the same industry that are established in other Member States or in third States.48By the fifth part of the second plea, the Federal Republic of Germany submits that the special compensation scheme is justified in order to maintain the competiveness of German undertakings with particularly energy-intensive conditions of production. From this viewpoint, the special compensation scheme is an important instrument to ensure the same conditions of competition for energy-intensive German undertakings and to promote the transition to an energy supply founded on renewable resources. The Federal Republic of Germany further submits that the EIUs assisted by the special compensation scheme, which must demonstrate, in the procedure prescribed by Paragraph 41(1)(2) of the EEG 2012, that certification has taken place in which their energy consumption has been noted and assessed, must make considerable efforts as regards audits. The corresponding requirements also give rise to considerable costs. According to the Federal Republic of Germany, a greater reduction of the EEG surcharge in those cases constitutes appropriate compensation for the efforts regarding energy-resource management made by the undertakings concerned.49According to settled case-law, the definition of aid is more general than that of a subsidy because it includes not only positive benefits, such as subsidies themselves, but also State measures which, in various forms, mitigate the charges that are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect (see judgment of 7 March 2012 in British Aggregates v Commission, T‑210/02 RENV, EU:T:2012:110, paragraph 46 and the case-law cited).50In order for a measure to be classified as State aid within the meaning of Article 107(1) TFEU, it is necessary in particular, first, that it involves an advantage, which may take various forms (aid granted ‘in any form whatsoever’), and secondly, that that advantage derives, directly or indirectly, from public resources (aid granted ‘by a Member State or through State resources’).51It is in the light of those reminders of the case-law that it should be determined whether the cap on the EEG surcharge granted to EIUs entails, in itself, the grant to them of an advantage, within the meaning of Article 107(1) TFEU.52In the present instance, the Commission pointed out in recital 65 of the contested decision that Paragraphs 40 and 41 of the EEG 2012 grant EIUs a cap on the EEG surcharge and thereby prevent the TSOs and electricity suppliers from recovering the additional costs relating to EEG electricity from EIUs.53It must be found, as the Commission did in the contested decision, that Paragraph 40 of the EEG 2012 lays down the principle that the amount of the EEG surcharge which electricity suppliers may pass on to energy-intensive users is limited by providing that, upon request, the BAFA will issue an administrative act that prohibits the electricity supplier from passing on the totality of the EEG surcharge to an end-user when the end-user is an EIU. Paragraph 41 of the EEG 2012 makes the limitation of the EEG surcharge for EIUs subject to certain conditions, relating, principally, to the extent of their energy consumption.54It should also be pointed out that no argument has been put forward to contradict that finding, the Federal Republic of Germany itself acknowledging that the scheme established by those paragraphs is intended to limit the additional economic burden resulting, for EIUs, from the support for the production of EEG electricity and, therefore, mitigates the charges which are normally included in their budget.55Accordingly, the Commission did not commit an error of law in concluding, in the contested decision, that the special compensation scheme created by Paragraphs 40 and 41 of the EEG 2012 releases EIUs from a charge which they should normally bear and that, therefore, the existence of an advantage granted to EIUs, which results from the mere description of the mechanism set up by the EEG 2012, is established.56This conclusion is not called into question by the fact that, by that special compensation scheme, the Federal Republic of Germany seeks to compensate for a competitive disadvantage. According to settled case-law, the fact that a Member State seeks to approximate, by unilateral measures, the conditions of competition in a particular sector of the economy to those prevailing in other Member States cannot deprive the measures in question of their character as aid (see judgment of 3 March 2005 in Heiser, C‑172/03, EU:C:2005:130, paragraph 54 and the case-law cited).57The first, second and fifth parts of the second plea should therefore be dismissed.Third part58By the third part of the second plea, the Federal Republic of Germany maintains that, by using the special compensation scheme to cap the surcharges paid by EIUs, the German legislature seeks solely to compensate for structural disadvantages, so that it appears from the outset that there can be no advantage. In this regard, the Federal Republic of Germany submits that the General Court has already held that compensation of structural disadvantages is not an advantage for the purposes of the definition of aid in Article 107(1) TFEU.59It should be noted that, according to settled case-law, measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions are regarded as State aid (see judgment of 2 September 2010 in Commission v Deutsche Post, C‑399/08 P, EU:C:2010:481, paragraph 40 and the case-law cited).60It should also be noted that the grounds underlying an aid measure do not suffice to exclude the measure at the outset from classification as aid within the meaning of Article 107 TFEU. Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects (see judgment of 9 June 2011 in Comitato Venezia vuole vivere and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 94 and the case-law cited).61It should therefore be held at the outset that the special compensation scheme created by Paragraphs 40 and 41 of the EEG 2012 cannot escape classification as State aid merely because a structural disadvantage is removed for EIUs by it.62On the assumption that, by its line of argument, the Federal Republic of Germany seeks to refer to the case-law relating to compensation for the services provided by undertakings responsible for a service of general economic interest in order to discharge public service obligations, such a measure must fulfil the criteria set out in the judgment of 24 July 2003 in Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415) if it is not to be caught by Article 107(1) TFEU (see, to this effect, judgment of 26 February 2015 in Orange v Commission, T‑385/12, not published, EU:T:2015:117, paragraph 43 and the case-law cited).63Here, however, it is not apparent from the facts of the present case that EIUs are responsible for a service of general economic interest and must discharge public service obligations.64Moreover, the Federal Republic of Germany does not contend, in the third part of its second plea, that the criteria set out in the judgment of 24 July 2003 in Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415) are fulfilled in respect of the measures at issue.65The third part of the second plea should therefore be dismissed.Fourth part66By the fourth part of the second plea, the Federal Republic of Germany submits that the special compensation scheme observes the ability-to-pay principle, in that the German Government hopes that, by reducing the EEG surcharge for energy-intensive undertakings, those undertakings will be able to be kept in Germany and will thus provide at least some contribution to the EEG surcharge.67It should be pointed out at the outset that, by its general and abstract line of argument relating to observance of the ‘ability-to-pay principle’, the Federal Republic of Germany merely asserts, in essence, that if EIUs had been burdened with the EEG surcharge at the full rate, they could have relocated their production abroad and, by so doing, would no longer have contributed to the financing of the funds generated by that surcharge. The Federal Republic of Germany does not, however, adduce any evidence in support of that line of argument. In particular, it does not demonstrate that it took individual account of the financial situations of the undertakings which benefit from the cap on the EEG surcharge or that, but for the cap, they would in fact have relocated their production.68Furthermore, on the assumption that, by its line of argument relating to the ability-to-pay principle, the Federal Republic of Germany seeks to refer to the case-law according to which the concept of State aid does not refer to State measures which differentiate between undertakings and which are, therefore, prima facie selective where that differentiation arises from the nature or the general scheme of the system of which they form part (see, to this effect, judgment of 15 November 2011 in Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 145 and the case-law cited), that line of argument is unconvincing. It has not shown that the differentiation between undertakings regarding charges is actually justified by the nature and general scheme of the system in question, as the case-law requires (see, to this effect, judgment of 15 November 2011 in Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 146 and the case-law cited).69The fourth part of the second plea should therefore be dismissed.70It follows from all the foregoing that the second plea, alleging that there is no advantage linked to special compensation scheme, must be dismissed. Third plea: no advantage financed through State resources 71The Federal Republic of Germany submits, in essence, that the contested decision infringes Article 107(1) TFEU in that the Commission wrongly took the view that the operation of the EEG 2012 involves State resources, whereas, in its submission, the findings in the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160) do not permit it to be accepted in the present case that there is State aid, as regards both the support scheme and the compensation scheme. The EEG 2012 is said to be, like what the Court of Justice held in relation to the legislative provisions at issue in the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160), legislation of a Member State which, first, requires private electricity supply undertakings to purchase electricity produced in their area of supply from renewable energy sources at minimum prices higher than the real economic value of that type of electricity and, secondly, allocates the financial burden resulting from that obligation amongst those electricity supply undertakings and upstream private electricity network operators.72In the first place, the Federal Republic of Germany contends that the system under the EEG 2012 is not connected with the budget of the State or of a public body, so that the involvement of State resources is precluded.73In that regard, first of all the Federal Republic of Germany asserts that the legislation relating to the system under the EEG 2012 provides neither for the financing of aid for renewable energy by State resources nor for imputability to the State. It adds that, according to the case-law, payments between individuals which are ordered by the State without being imputable to the budget of the State or of another public body and in respect of which the State does not relinquish any resources, in whatever form (such as taxes, duties, charges and so on), retain their private-law nature.74Next, the Federal Republic of Germany submits that it is also apparent from the case-law that charges, taxes and fees are characterised by the fact that the revenue generated must, in one form or another, flow into the budget of the State or of a public body. That is precisely not so in the case of the EEG 2012. The TSOs are not public bodies and the sums which they are paid to cover the costs resulting from the sale on an exchange of the electricity produced from renewable sources do not in any way reduce, directly or indirectly, State revenue.75Finally, the Federal Republic of Germany contends that the fact that the EEG surcharge is not attributed to the federal budget or the budget of a public body also results from the fact that any surplus or deficit of the TSOs must be offset, with interest, the following year when the EEG surcharge is set, corresponding to what applies in civil law in the case of a claim for reimbursement of expenses. In this regard, it adds that any disputes arising from the amount payable pursuant to the system of financing under the EEG 2012 fall within the jurisdiction of the civil courts, and the administrative authorities have no influence over the handling of those disputes.76In the second place, the Federal Republic of Germany submits, in essence, that the mechanism of the EEG 2012 does not provide for State supervision of the use made of the resources generated by the EEG surcharge. Whilst the EEG 2012 admittedly lays down a series of supervisory tasks for checking that the mechanisms set up by the private bodies in performing the legal requirements are valid, lawful and operate properly, the fact remains, according to the Federal Republic of Germany, that the State bodies to which those tasks fall do not have competence to influence payments or financial flows and have no power over the financial resources utilised by the various parties involved in the system. It relies, principally, on the judgment of 15 July 2004 in Pearle and Others (C‑345/02, EU:C:2004:448).77First of all, the Federal Republic of Germany asserts that the supervisory tasks of the BNetzA concern for the most part implementation of the provisions relating to the EEG surcharge that electricity suppliers may demand from final consumers. According to the Federal Republic of Germany, the BNetzA may intervene only if the setting of the EEG surcharge infringes the standards laid down, by the inclusion for example of costs that cannot be incorporated into the EEG surcharge.78Next, the Federal Republic of Germany maintains that the statutory imposition of a calculation method and the obligations of transparency and associated rights of supervision serve merely to prevent enrichment of an economic operator at some point in the chain.79Finally, the Federal Republic of Germany contends that the Commission committed an error of law in the contested decision by assuming that regulation and supervision make private flows of money State aid within the meaning of Article 107 TFEU. It submits that the Court of Justice has held that there are no State resources where influence of the State over use of the resources is sufficiently ruled out.80In the third place, the Federal Republic of Germany states that the arguments which are set out in the first two parts of the third plea, and which focus principally on the issue of involvement of State resources in operation of the support scheme, apply by analogy to the special compensation scheme.81By way of preliminary points, first, it is to be recalled that, according to settled case-law, only advantages which are granted directly or indirectly through State resources are to be regarded as aid within the meaning of Article 107(1) TFEU. It follows from the very wording of that provision and from the procedural rules laid down in Article 108 TFEU that advantages granted from resources other than State resources do not fall within the scope of the provisions in question. The distinction between aid granted by the State and aid granted through State resources serves to bring within the definition of aid not only aid granted directly by the State, but also aid granted by public or private bodies designated or established by the State (see, to this effect, judgments of 22 March 1977 in Steinike & Weinlig, 78/76, EU:C:1977:52, paragraph 21, and of 17 March 1993 in Sloman Neptun, C‑72/91 and C‑73/91, EU:C:1993:97, paragraph 19 and the case-law cited). EU law cannot permit the rules on State aid to be circumvented merely through the creation of autonomous institutions charged with allocating aid (judgment of 16 May 2002 in France v Commission, C‑482/99, EU:C:2002:294, paragraph 23).82Secondly, it should be pointed out that it is not necessary to establish in every case that there has been a transfer of State resources in order for the advantage granted to one or more undertakings to be capable of being regarded as State aid within the meaning of Article 107(1) TFEU (see judgment of 16 May 2002 in France v Commission, C‑482/99, EU:C:2002:294, paragraph 36 and the case-law cited).83Indeed, Article 107(1) TFEU covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. Therefore, even if the sums corresponding to the measure in question are not permanently held by the Treasury, the fact that they constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as State resources (see judgment of 16 May 2002 in France v Commission, C‑482/99, EU:C:2002:294, paragraph 37 and the case-law cited).84In the present instance, the Commission took the view in the contested decision that, through the EEG 2012, the Federal Republic of Germany introduced a special levy, the EEG surcharge, and defined its purpose, which is the financing of the difference between the costs that TSOs incur in purchasing EEG electricity and the revenue they generate from selling this electricity. The Commission found that the calculation method for determining the level of the EEG surcharge was also set in the EEG 2012, as was the principle that deficits and surpluses are corrected in the following year, thereby ensuring that TSOs incur no losses, but also implying that they cannot use the revenue from the surcharge for anything other than the financing of EEG electricity. The Commission concluded that, unlike in the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160), the State had, within the framework of the EEG 2012, provided TSOs with the required financial resources to finance the support for EEG electricity.85The Commission relied on four series of arguments in the contested decision in order to support that conclusion.86First, the Commission took the view, in recitals 112 to 116 of the contested decision, that, as the EEG surcharge was introduced by the State and the State designated the TSOs to administer the funds, the mere fact that the advantage is not financed directly from the State budget is not sufficient to exclude that State resources are involved. In that regard, the Commission stated that it is settled case-law that the entities designated to administer the aid can be either public or private bodies; therefore, the fact that the TSOs may be private operators cannot as such exclude the existence of State resources, and neither can the originally private nature of the resources collected.87Secondly, in recitals 117 and 118 of the contested decision the Commission relied on the designation of the TSOs to administer the EEG surcharge in order to demonstrate that State resources were involved in the system set up by the EEG 2012. The Commission adhered to the preliminary conclusions set out in the decision to initiate the formal investigation procedure and found that the TSOs had to:purchase EEG electricity produced in their area either directly from the producer when it was directly connected to the transmission line or from DSOs at feed-in tariffs, or pay the market premium (as a result the EEG electricity as well as the financial burden of the support provided for by the EEG 2012 were centralised at the level of each of the four TSOs);apply the ‘green electricity privilege’ to suppliers which asked for it and fulfilled the relevant conditions, set out in Paragraph 39(1) of the EEG 2012;equalise between themselves the amount of EEG electricity so that each of them purchased the same proportion of EEG electricity;sell the EEG electricity on the spot market under rules defined in the EEG 2012 and its implementing provisions, which could be done jointly;jointly calculate the EEG surcharge, which had to be the same for each kWh consumed in Germany, as the difference between revenue from the sale of EEG electricity and expenditure linked to the purchase of EEG electricity;jointly publish the EEG surcharge in a specific format on a joint website;publish aggregate information on the EEG electricity;compare the forecasted EEG surcharge with what it should really have been in a given year and adapt the surcharge for the following year;publish forecasts for several years in advance;collect the EEG surcharge from electricity suppliers;(each) record all financial flows (expenditure and revenue) linked to the EEG 2012 in separate bank accounts.88The Commission inferred from this that the TSOs did not just settle private claims between themselves, but were implementing their legal obligations under the EEG 2012.89Thirdly, the Commission found, in recitals 119 to 122 of the contested decision, that the TSOs were being strictly monitored by the State as regards administration of the EEG surcharge. According to the Commission, that monitoring is performed by the BNetzA, which also has the necessary enforcement powers. In the Commission’s view, the BNetzA in particular monitors the way in which the TSOs sell on the spot market the EEG electricity for which feed-in tariffs are paid and checks that TSOs properly determine, set and publish the EEG surcharge, that TSOs properly charge electricity suppliers for the EEG surcharge, that feed-in tariffs and premiums are properly charged to the TSOs, and that the EEG surcharge is reduced only for electricity suppliers fulfilling the conditions of Paragraph 39 of the EEG 2012. The Commission also found that the BNetzA receives information from the TSOs on the support for EEG electricity and on the charging of the suppliers and that, finally, it can set fines and adopt decisions, including decisions influencing the level of the EEG surcharge.90Fourthly, the Commission found, in recitals 123 to 138 of the contested decision, that there is, in the context of the operation of the EEG 2012, general State control resulting from the fact that the State organises a transfer of financial resources through legislation and establishes for what purposes those financial resources may be used. According to the Commission, which relies in particular on the judgment of 19 December 2013 in Association Vent De Colère! and Others (C‑262/12, EU:C:2013:851), the decisive element is that the State has created a system where the costs incurred by the TSOs are fully compensated by the EEG surcharge and where the electricity suppliers are empowered to pass on the EEG surcharge to final consumers. The Commission observed that State control over the resources does not mean that there have to be flows from and to the State budget involving the respective resources, but that, in order for the State to exercise control over the resources, it is enough that, as in this instance, it fully regulates what is supposed to happen in the event of a deficit or a surplus in the account relating to the EEG surcharge.91In the present case, it must be determined, in the light of the arguments raised by the Federal Republic of Germany, whether the Commission was correct in finding in the contested decision that the EEG 2012 involves State resources within the meaning of Article 107(1) TFEU.92At the outset, it must be observed that it is not in dispute that, as has been noted in paragraphs 2 to 12 above, the EEG surcharge, collected and administered by the TSOs, is intended ultimately to cover the costs generated by the feed-in tariffs and market premium provided for in the EEG 2012 by guaranteeing producers of EEG electricity a price for the electricity they produce that is above the market price. Therefore, the EEG surcharge must be considered to result, principally, from implementation of a public policy, laid down by the State through legislation, to support producers of EEG electricity.93In the first place, it should be noted that in the present instance the TSOs are entrusted by the EEG 2012 with managing the system for supporting the production of electricity from renewable sources. As the Commission correctly found (see paragraphs 87 and 88 above), the EEG 2012 clearly confers on the TSOs a series of obligations and rights as regards implementation of the mechanisms resulting from that law, so that the TSOs are the central point in the operation of the system laid down by it. The tasks for the management and administration of that system, laid down in particular by Paragraphs 34 to 39 of the EEG 2012, can be assimilated, from the point of view of their effects, to a State concession. Indeed, the funds involved in the operation of the EEG 2012 are administered exclusively for purposes in the general interest, in accordance with detailed rules defined beforehand by the German legislature. Those funds, consisting in the additional costs passed on to the final consumers and paid by electricity suppliers to the TSOs for the EEG electricity whose price exceeds that of electricity bought on the market, do not pass directly from the final consumers to the producers of EEG electricity, that is to say, between autonomous economic operators, but require the intervention of intermediaries, entrusted in particular with their collection and administration. It should be pointed out in particular that the funds are not paid into the TSOs’ general budget or freely available to them, but are subject to separate accounting and allocated exclusively to the financing of the support and compensation schemes, to the exclusion of any other purpose. Thus, contrary to the assertions of the Federal Republic of Germany, the situation of the TSOs in the case at issue displays points in common with the situation of Samenwerkende ElektriciteitsProduktiebedrijven NV in the case giving rise to the judgment of 17 July 2008 in Essent Netwerk Noord and Others (C‑206/06, EU:C:2008:413) and with that of Abwicklungsstelle für Ökostrom AG in the case giving rise to the judgment of 11 December 2014 in Austria v Commission (T‑251/11, EU:T:2014:1060).94Accordingly, it must be held that the funds generated by the EEG surcharge and administered collectively by the TSOs remain under the dominant influence of the public authorities in that the legislative and regulatory provisions governing them enable the TSOs, taken together, to be assimilated to an entity executing a State concession.95In the second place, it is clear that the resources at issue in the present instance, generated by the EEG surcharge and intended to finance both the support scheme for EEG electricity and the compensation scheme, are obtained by means of charges ultimately imposed on private persons by the EEG 2012. Paragraph 37 of the EEG 2012 provides, on account of the obligation imposed by that law on NOs to make an additional payment or pay a market premium to producers of EEG electricity, that the TSOs may impose a price supplement on suppliers, which may then pass it on to the final customers in accordance with the detailed rules, in particular regarding transparency of bills, defined by the legislature. It is not disputed that electricity suppliers in practice pass on the financial burden resulting from the EEG surcharge to the final customers (see paragraph 9 above), in order to recover the costs brought about by the expenditure linked to that obligation. It should, moreover, be observed that that burden, which for EIUs is capped in accordance with the detailed rules noted in paragraph 11 above, represents, as the Federal Republic of Germany acknowledged at the hearing, 20% to 25% of the total amount of an average final consumer’s bill. Having regard to the extent of that burden, its passing on to final consumers must therefore be regarded as a consequence foreseen and organised by the German legislature. It is thus indeed on account of the EEG 2012 that final electricity consumers are, de facto, required to pay that price supplement or additional charge. It is a charge that is unilaterally imposed by the State in the context of its policy to support producers of EEG electricity and can be assimilated, from the point of view of its effects, to a levy on electricity consumption in Germany. Indeed, that charge is imposed by a public authority, for purposes in the general interest, namely protection of the climate and the environment by ensuring the sustainable development of energy supply and developing technologies for producing EEG electricity, and in accordance with the objective criterion of the quantity of electricity delivered by suppliers to their final customers (see, by analogy, judgment of 17 July 2008 in Essent Netwerk Noord and Others, C‑206/06, EU:C:2008:413, paragraphs 43 to 47). As the Commission points out in recital 99 of the contested decision, the State has not only defined to whom the advantage is to be granted, the eligibility criteria and the level of support, but it has also provided the financial resources necessary to cover the costs of the support to EEG electricity. Furthermore, in contrast to the factual circumstances of the case giving rise to the judgment of 30 May 2013 in Doux Élevage and Coopérative agricole UKL-ARREE (C‑677/11, EU:C:2013:348), it has not been maintained by the Federal Republic of Germany, nor is there anything in the case file to indicate, that the initiative to impose the charge, by means of the measure at issue, was taken by entities liable to pay it, that the TSOs act solely as an instrument in an arrangement which those entities themselves envisaged or that they themselves decided on the use of the financial resources thereby generated.96Accordingly, the sums at issue, which are generated by the EEG surcharge, are levied on final electricity consumers and originate in the obligation, imposed by the EEG 2012 on NOs, to make an additional payment or pay a market premium to producers of EEG electricity, are to be classified as funds which involve a State resource and can be assimilated to a levy (see, by analogy, judgments of 17 July 2008 in Essent Netwerk Noord and Others, C‑206/06, EU:C:2008:413, paragraph 66, and of 11 December 2014 in Austria v Commission, T‑251/11, EU:T:2014:1060, paragraph 68). In any event, those funds cannot be regarded as the TSOs’ own resources for which the State simply prescribed, by a legislative measure, a particular use, as the funds, as the Commission points out in recital 128 of the contested decision, are not at any time freely available to the TSOs.97It should also be noted that it is settled case-law that, in order for a levy, such as that at issue, to be capable of being regarded as forming an integral part of an aid measure, it must be hypothecated to the aid measure under the relevant national rules, in the sense that the revenue from the levy is necessarily allocated for the financing of the aid (see, to this effect, judgment of 15 June 2006 in Air Liquide Industries Belgium, C‑393/04 and C‑41/05, EU:C:2006:403, paragraph 46 and the case-law cited). In the present case, it is not in dispute that the levy collected by the TSOs, through the EEG surcharge, is hypothecated to the aid measure supporting the production of EEG electricity.98So far as concerns the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160), which the Federal Republic of Germany seeks to rely on, it should be observed that, in order to preclude classification as State aid within the meaning of Article 107(1) TFEU, the Court of Justice relied, in essence, on the fact that the German legislation at issue in the case giving rise to that judgment, which, first, required private electricity supply undertakings to purchase EEG electricity at prices higher than its real economic value and, secondly, allocated the ensuing financial burden between the electricity supply undertakings and upstream private electricity network operators, did not display elements from which it could have been inferred that there was a direct or indirect transfer of State resources. That being so, the Court of Justice held that the fact that the legislation conferred an undeniable advantage on undertakings producing EEG electricity and that such an advantage was the consequence of the intervention of the public authorities was not sufficient for the measure at issue to be classified as aid.99It is apparent, however, from analysis of the factual background of the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160) that, unlike the German measure forming the subject matter of the present proceedings, the mechanism laid down by the previous German law provided neither for the additional costs to be expressly passed on to final consumers nor for the intervention of intermediaries entrusted with the collection or administration of the sums constituting aid and, therefore, did not provide for entities comparable, in their structure or their role, to the TSOs taken together.100Unlike in the present case, the advantage analysed by the Court of Justice in the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160) consisted in the guarantee, in favour of the beneficiary undertakings, of being able to resell all the energy produced from renewable resources and in the fact that the selling price exceeded the market price, without any scheme for the financing of that price supplement — by means of a charge that can be assimilated to a levy on electricity consumption, the amount of which is identical for each kWh of electricity supplied to a final customer — being set up.101Furthermore, in the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160), the private undertakings were not, as in the present case, appointed by the Member State concerned to manage a State resource, but were only bound by an obligation to purchase by means of their own financial resources (see, to this effect, judgment of 19 December 2013 in Association Vent De Colère! and Others, C‑262/12, EU:C:2013:851, paragraph 35). In the present case, it is not in dispute that the obligation on the TSOs that additional payment be made to producers of EEG electricity is not satisfied by means of the TSOs’ own financial resources, but by means of the funds generated by the EEG surcharge, administered by the TSOs and allocated exclusively to financing the support and compensation schemes set up by the EEG 2012.102Thus, the funds at issue in the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160) could not be considered a State resource since they were not at any time under public control and there was no mechanism, such as that at issue in the present case, established and regulated by the Member State, for offsetting the additional costs arising from that obligation to purchase and through which the State offered those private operators the certain prospect that the additional costs would be covered in full (see, to this effect, judgment of 19 December 2013 in Association Vent De Colère! and Others, C‑262/12, EU:C:2013:851, paragraph 36).103Moreover, it is also apparent from analysis of the factual background of the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160) that, unlike the German measure forming the subject matter of the present proceedings, the system created by the previous German law did not provide for a mechanism comparable to the special compensation scheme, by which the EEG surcharge that electricity suppliers can pass on to EIUs is capped.104It follows from the foregoing that the system set up by the Federal Republic of Germany in the case at issue is substantially different from the system at issue in the case giving rise to the judgment of 13 March 2001 in PreussenElektra (C‑379/98, EU:C:2001:160), in the light, in particular, of the detailed rules governing the administration, use, levying and allocation of the funds at issue.105In the third place, it is admittedly not in dispute that the TSOs are, for the most part, entities in the form of public limited companies governed by private law. However, that cannot be considered sufficient, in the particular circumstances of the case, to set aside the conclusion that State resources are present in the context of the measures resulting from the EEG 2012.106As has been pointed out in paragraphs 93 and 94 above, the TSOs are entrusted, in addition to the responsibilities inherent in their main activity, with managing the system of aid for the production of EEG electricity. They are, moreover, monitored when performing that task, as the Commission notes in recital 107 of the contested decision, so that they are unable to use the funds collected in the context of the measure at issue — which are paid to them by the suppliers covered by that measure — for purposes other than those laid down by the German legislature. That being so, it must be held that, in the context of performance of the tasks falling to them under the EEG 2012, the action of those bodies is not that of an economic entity acting freely on the market for the purpose of making a profit, but an action defined by the German legislature, which circumscribed it so far as the performance of those tasks is concerned.107In that regard, it should be added that the TSOs are under an obligation to administer the sums obtained pursuant to the measure at issue in a specific joint account subject to control by State authorities, as is apparent, in particular, from Paragraph 61 of the EEG 2012. That, when analysed with the specific powers and obligations conferred on the TSOs by the EEG 2012, constitutes a further indication that the funds in question are not funds corresponding to normal resources belonging to the private sector, which would be fully available to the undertaking administering them, but special resources, the use of which for strictly defined purposes was laid down in advance by the German legislature (see, by analogy, judgment of 27 January 1998 in Ladbroke Racing v Commission, T‑67/94, EU:T:1998:7, paragraphs 106 to 108).108More specifically, monitoring of the TSOs by State bodies is carried out at various levels. First, monitoring is carried out by the BNetzA. Under Paragraph 61 of the EEG 2012, the BNetzA must in particular, within the framework of its supervisory tasks, check that the TSOs sell EEG electricity in accordance with Paragraph 37 of the EEG 2012 and establish, set, publish and charge electricity suppliers the EEG surcharge in compliance with the legislative and regulatory requirements.109Secondly, under Paragraph 48 of the EEG 2012, the BNetzA is presented by the TSOs with the data used for the compensation mechanism.110The existence of such strict monitoring of compliance of the TSOs’ activities with the legislative framework laid down, even when carried out retroactively, falls within the general approach of the overall structure provided for in the EEG 2012. That monitoring thus corroborates the conclusion, drawn in particular from the powers accorded to those entities, and adopted in the light of their tasks and obligations, that the TSOs do not act freely and on their own behalf, but as administrators of aid granted through State funds. Even if the monitoring to which the TSOs are subject has no direct effect on the day-to-day administration of the funds in question, the fact remains that it is indeed an additional factor designed to ensure that the TSOs’ activities do indeed remain circumscribed within the framework laid down in the EEG 2012.111Accordingly, it must be held that the Commission was correct in maintaining, in recital 138 of the contested decision, read in conjunction with recitals 98 to 137, that the advantage provided for by Paragraphs 16 to 33i of the EEG 2012 for producers of EEG electricity through the feed-in tariffs and market premiums is akin, in the present instance, to a levy set by the State authorities involving State resources in that the State organises a transfer of financial resources through legislation and establishes for what purposes those financial resources may be used.112That conclusion also applies to the advantage for the energy-intensive users consisting of the EIUs in that, as the Commission correctly pointed out in recital 114 of the contested decision, the compensation mechanism laid down by the EEG 2012 constitutes an additional burden for the TSOs. Any reduction in the amount of the EEG surcharge has precisely the effect of reducing the amounts collected by electricity suppliers from EIUs and may be regarded as leading to losses in revenue for the TSOs. However, those losses are subsequently recovered from other suppliers and, de facto, from other final customers, in order to offset the losses thus incurred, as the Federal Republic of Germany indeed confirmed at the hearing in reply to a question from the Court. Thus, the average final consumer in Germany is involved, in a certain way, in the subsidising of the EIUs for which the EEG surcharge is capped. Moreover, the fact that final electricity consumers who are not EIUs must bear additional costs caused by the capping of the EEG surcharge for EIUs is a further indication, when analysed with the foregoing reasoning, that the funds generated by the EEG surcharge are indeed special resources, equivalent to a levy on electricity consumption, the use of which for strictly defined purposes was laid down in advance by the German legislature within the framework of implementation of a public policy and not of a private initiative.113Those conclusions are not invalidated by the other arguments put forward by the Federal Republic of Germany.114In so far as the Federal Republic of Germany also bases its line of argument on the alleged similarity of the factual and legal circumstances of the present case with those of the case giving rise to the judgment of 30 May 2013 in Doux Élevage and Coopérative agricole UKL-ARREE (C‑677/11, EU:C:2013:348), it is clear that those circumstances may be distinguished from the circumstances of the present dispute.115In the case giving rise to the judgment of 30 May 2013 in Doux Élevage and Coopérative agricole UKL-ARREE (C‑677/11, EU:C:2013:348), the question referred to the Court of Justice was that of the legality, in the light of State aid law, of a decision of the competent national authorities extending on a compulsory basis to all traders in the agricultural industry of turkey farming and production an agreement, made within the inter-trade organisation representing that industry, introducing the levying of a contribution for the purposes of financing common activities decided on by that organisation.116In paragraph 36 of the judgment of 30 May 2013 in Doux Élevage and Coopérative agricole UKL-ARREE (C‑677/11, EU:C:2013:348), the Court of Justice stated that the national authorities cannot actually use the resources resulting from the contributions at issue to support certain undertakings inasmuch as it is the inter-trade organisation that decides how to use those resources, which are entirely dedicated to pursuing objectives determined by that organisation.117By contrast, in the present case, it is not in dispute that the TSOs cannot freely decide how to use the resources generated by the EEG surcharge and devote them, as the case may be, to objectives that they would determine themselves. Under the EEG 2012, the TSOs are required to administer the EEG surcharge with a view solely to remunerating producers of EEG electricity. They must record all financial flows (expenditure and revenue) linked to the EEG 2012 in a joint bank account separate from their own accounting and compare the EEG surcharge collected with what it should really have been in a given year in order to adapt the surcharge for the following year, so as to preclude any positive or negative balance in the bank account used to manage the financial flows linked to the EEG 2012. Thus, it cannot be disputed, in the present case, that the objectives pursued by the EEG 2012, that is to say, principally the support for producers of EEG electricity but also the support for EIUs, are, in contrast to the situation in the case giving rise to the judgment of 30 May 2013 in Doux Élevage and Coopérative agricole UKL-ARREE (C‑677/11, EU:C:2013:348), entirely determined by the State by means of the laws and regulations adopted on its initiative alone.118Accordingly, the fact that the State does not have actual access to the resources generated by the EEG surcharge, in the sense that they indeed do not pass through the State budget, does not affect, in the present instance, the State’s dominant influence over the use of those resources and its ability to decide in advance, through the adoption of the EEG 2012, which objectives are to be pursued and how those resources in their entirety are to be used.119So far as concerns the judgments of 14 January 2015 in Eventech (C‑518/13, EU:C:2015:9) and of 16 April 2015 in Trapeza Eurobank Ergasias (C‑690/13, EU:C:2015:235), relied upon by the Federal Republic of Germany in its reply, it should be noted that the Court of Justice held in those judgments that, for the purposes of determining the existence of State aid within the meaning of Article 107(1) TFEU, it is necessary to establish a sufficiently direct link between, on the one hand, the advantage given to the beneficiary and, on the other, a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget.120However, the judgments of 14 January 2015 in Eventech (C‑518/13, EU:C:2015:9) and of 16 April 2015 in Trapeza Eurobank Ergasias (C‑690/13, EU:C:2015:235) relate to different factual circumstances. Moreover, the Court has already held that the expression ‘aid’ necessarily implies advantages granted directly or indirectly through State resources or constituting an additional charge for the State or for bodies designated or established for that purpose (see judgment of 1 December 1998 in Ecotrade, C‑200/97, EU:C:1998:579, paragraph 35 and the case-law cited). In that regard, it is clear from settled case-law, recalled in paragraph 35 above, that no distinction should be drawn according to whether the aid is granted directly by the State or by a public or private body designated or established by the State. Since, in the present case, the TSOs were designated to administer collectively the EEG surcharge and it falls to them to manage the financial flows brought about by operation of the mechanisms resulting from the EEG 2012, the Federal Republic of Germany’s line of argument that the scheme supporting the production of EEG electricity does not impose a burden on the State budget does not mean that State resources are not involved in the present case.121Nor are those conclusions invalidated by the other contentions of the Federal Republic of Germany.122First of all, the contention to the effect that any overpayment of the EEG surcharge would not in any event accrue to the State budget should be rejected. It is true that it follows from the very operation of the EEG 2012 that, as the parties all acknowledge, any surplus or deficit of the TSOs resulting from the EEG surcharge must in any event be offset, with interest, the following year when the EEG surcharge is set. That offsetting year by year, required by the EEG 2012, means that there ultimately cannot be any surplus or deficit in the TSOs’ accounts for administering the EEG surcharge, so that it is necessarily not possible for any overpayment of the EEG surcharge to accrue to the State budget. However, as has been established in paragraph 111 above, the involvement of State resources in the present case results from the very fact that the State organises a transfer of financial resources through legislation and establishes for what purposes those financial resources must be used, and not from the existence of close links with the State budget.123In any event, it is apparent from the analysis of the EEG 2012 in paragraphs 92 to 112 above that, in principle, the measure at issue provides for uninterrupted access of the TSOs to the funding necessary to perform the tasks in the general interest which they are assigned for the carrying out of their functions and which are intended to implement a policy set by the State. That merely reinforces the conclusion that the TSOs do not act as typical undertakings on the market, bearing all the normal risks and hazards, including financial risks, but as special entities whose role is strictly defined by the legislation at issue.124Next, it is also necessary to reject the Federal Republic of Germany’s contentions that (i) the measure at issue does not provide for a link with the budget of the State or the budget of a public body, (ii) neither the BNetzA nor the State, in a broader sense, determines the precise amount of the EEG surcharge, (iii) the BAFA’s role does not mean that the resources used for the special compensation scheme are State resources and (iv) any judicial proceedings connected with the system for the EEG surcharge are dealt with, in accordance with the measure at issue, under the normal civil procedure and not the administrative procedure.125It has already been stated that the funds at issue must be classified from the outset as State funds, in particular because final consumers are required to pay a price supplement that can be assimilated to a levy for implementation of a policy set by the State. Also, it has been pointed out that the TSOs act, so far as concerns performance of the tasks falling to them, within a framework clearly defined by the German legislature. They are, moreover, strictly monitored by the competent German administrative bodies. Funds financed through compulsory contributions imposed by the legislation of the Member State, administered and apportioned in accordance with that legislation, may be regarded as State resources within the meaning of Article 107(1) TFEU even if they are administered by entities separate from the public authorities. Indeed, it has already been held that a mechanism for offsetting in full the additional costs imposed on undertakings because of an obligation to purchase wind-generated electricity, at a price higher than the market price that is financed by all final consumers of electricity in the national territory, such as that provided for in the French legislation analysed in the case in point, constitutes an intervention through State resources (see, to this effect, judgment of 19 December 2013 in Association Vent De Colère! and Others, C‑262/12, EU:C:2013:851, paragraph 25 and the case-law cited, and, by analogy, paragraph 26).126Finally, it is also necessary to reject the Federal Republic of Germany’s contentions put forward at the hearing to the effect that the cap on the EEG surcharge granted to EIUs amounts to a differential pricing practice known to economists as ‘Ramsey pricing’, or to a cross-subsidy between small and large electricity consumers. It is true that the very existence of the EEG surcharge results from policy choices and its level cannot be influenced by consumers, so that its level may be higher, as a proportion of the final bill, for small consumers, who, from the point of view of demand, are less sensitive than EIUs to changes in the price of electricity. However, it is settled case-law that operating aid is aid which is intended to release an undertaking from costs which it would normally have had to bear in its day-to-day management or normal activities (see, to this effect, judgment of 16 October 2014 in Alcoa Trasformazioni v Commission, T‑177/10, EU:T:2014:897, paragraph 92 and the case-law cited). Therefore, the cap at issue, which permits EIUs to reduce the costs connected with their electricity consumption, which by definition falls within day-to-day management, amounts to operating aid involving, as has been demonstrated in particular in paragraphs 95 and 96 above, the existence of State resources.127It follows from that analysis that the mechanisms under the EEG 2012 result, principally, from implementation of a public policy, laid down through the EEG 2012 by the State, to support producers of EEG electricity and that, first, the funds generated by the EEG surcharge and administered collectively by the TSOs remain under the dominant influence of the public authorities, secondly, the amounts in question, generated by the EEG surcharge, are funds which involve a State resource and can be assimilated to a levy and, thirdly, it may be concluded from the powers and tasks given to the TSOs that they do not act freely and on their own behalf, but as administrators, assimilated to an entity executing a State concession, of aid granted through State funds.128It follows from all the foregoing that the Commission was correct in finding in the contested decision that the EEG 2012 involves State resources within the meaning of Article 107(1) TFEU.129Consequently, the third plea, and the action in its entirety, should be dismissed. Costs 130Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Federal Republic of Germany has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.On those grounds,THE GENERAL COURT (Third Chamber)hereby: 1. Dismisses the action; 2. Orders the Federal Republic of Germany to pay the costs. PapasavvasBieliūnasForresterDelivered in open court in Luxembourg on 10 May 2016.[Signatures]( *1 ) Language of the case: German. | 4b417-07ef475-4ddb | EN |
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