6 December 1962

[Gene Cryder]

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1 . PROCEDURE - OBLIGATIONS OF THE MEMBER STATES OF THE EEC - FAILURE TO FULFIL THOSE OBLIGATIONS - POWERS OF THE COMMISSION - PROCEDURES FOR OBTAINING DEROGATIONS - NO EFFECT UPON THE EXERCISE OF THOSE POWERS

1 . PROCEDURES FOR SEEKING A DEROGATION SUCH AS THOSE PROVIDED FOR BY ARTICLE 226 OF THE EEC TREATY, THE OUTCOME OF WHICH DEPENDS UPON THE VIEW TAKEN BY THE COMMISSION, ARE ENTIRELY DISTINCT IN BOTH THEIR NATURE AND EFFECTS FROM THE WARNING PROCEDURE AVAILABLE TO THE COMMISSION UNDER ARTICLE 169 AND CANNOT THEREFORE IN ANYWAY FRUSTRATE THE LATTER PROCEDURE .

2 . A REQUEST FOR DEROGATION FROM THE GENERAL RULES OF THE TREATY CANNOT HAVE THE EFFECT OF LEGALIZING UNILATERAL MEASURES WHICH CONFLICT WITH THOSE RULES AND CANNOT THEREFORE LEGALIZE RETROACTIVELY THE INITIAL INFRINGEMENT .

3 . IT FOLLOWS FROM THE CLARITY, CERTAINTY AND UNRESTRICTED SCOPE OF ARTICLES 9 AND 12, FROM THE GENERAL SCHEME OF THEIR PROVISIONS AND OF THE TREATY AS A WHOLE, THAT THE PROHIBITION OF NEW CUSTOMS DUTIES, LINKED WITH THE PRINCIPLES OF THE FREE MOVEMENT OF PRODUCTS, CONSTITUTES AN ESSENTIAL RULE AND THAT IN CONSEQUENCE ANY EXCEPTION, WHICH MOREOVER IS TO BE NARROWLY INTERPRETED, MUST BE CLEARLY STIPULATED .

4 . A CHARGE HAVING EQUIVALENT EFFECT WITHIN THE MEANING OF ARTICLES 9 AND 12 OF THE EEC TREATY, WHATEVER IT IS CALLED AND WHATEVER ITS MODE OF APPLICATION, MAY BE REGARDED AS A DUTY IMPOSED UNILATERALLY EITHER AT THE TIME OF IMPORTATION OR SUBSEQUENTLY, AND WHICH, IF IMPOSED SPECIFICALLY UPON A PRODUCT IMPORTED FROM A MEMBER STATE TO THE EXCLUSION OF A SIMILAR DOMESTIC PRODUCT, HAS, BY ALTERING ITS PRICE, THE SAME EFFECT ON THE FREE MOVEMENT OF PRODUCTS AS A CUSTOMS DUTY .

THE CONCEPT OF A CHARGE HAVING EQUIVALENT EFFECT, INVARIABLY LINKED TO THAT OF 'CUSTOMS DUTIES', IS EVIDENCE OF A GENERAL INTENTION TO PROHIBIT NOT ONLY MEASURES WHICH OBVIOUSLY TAKE THE FORM OF THE CLASSIC CUSTOMS DUTY BUT ALSO ALL THOSE WHICH, PRESENTED UNDER OTHER NAMES OR INTRODUCED BY THE INDIRECT MEANS OF OTHER PROCEDURES, WOULD LEAD TO THE SAME DISCRIMINATORY OR PROTECTIVE RESULTS AS CUSTOMS DUTIES .

5 . ALTHOUGH THE FIRST PARAGRAPH OF ARTICLE 95 BY IMPLICATION ALLOWS 'TAXATION' ON AN IMPORTED PRODUCT, IT IS ONLY TO THE LIMITED EXTENT TO WHICH THE SAME TAXATION IS IMPOSED EQUALLY UPON SIMILAR DOMESTIC PRODUCTS . THE FIELD OF APPLICATION OF THIS ARTICLE CANNOT BE EXTENDED TO THE POINT OF ALLOWING COMPENSATION BETWEEN A TAX BURDEN CREATED FOR THE PURPOSE OF IMPOSITION UPON AN IMPORTED PRODUCT AND A TAX BURDEN OF A DIFFERENT NATURE, FOR EXAMPLE ECONOMIC, IMPOSED ON A SIMILAR DOMESTIC PRODUCT .

6 . TO RESOLVE THE DIFFICULTIES WHICH MIGHT ARISE IN A GIVEN ECONOMIC SECTOR, THE MEMBER STATES WISHED COMMUNITY PROCEDURES TO BE ESTABLISHED IN ORDER TO PREVENT UNILATERAL INTERVENTION BY NATIONAL ADMINISTRATIONS .

COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY, REPRESENTED BY HUBERT EHRING, LEGAL ADVISER OF THE EUROPEAN EXECUTIVES, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF HENRI MANZANARES, SECRETARY OF THE LEGAL SERVICE OF THE EUROPEAN EXECUTIVES, 2 PLACE DE METZ, APPLICANT

1 . GRAND DUCHY OF LUXEMBOURG ( CASE 2/62 ) REPRESENTED BY JEAN RETTEL, LEGAL ADVISER ATTACHED TO THE MINISTRY OF FOREIGN AFFAIRS, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE MINISTRY OF FOREIGN AFFAIRS, 5 RUE NOTRE-DAME,

2 . KINGDOM OF BELGIUM ( CASE 3/62 ) REPRESENTED BY ITS DEPUTY PRIME MINISTER AND MINISTER OF FOREIGN AFFAIRS, HAVING APPOINTED AS ITS AGENT JACQUES KARELLE, DIRECTOR OF THE MINISTRY OF FOREIGN AFFAIRS AND FOREIGN TRADE, ASSISTED BY MARCEL VERSCHELDEN, ADVOCATE OF THE COUR D'APPEL OF BRUSSELS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE BELGIAN EMBASSY, 9 BOULEVARD DU PRINCE-HENRI, DEFENDANTS,

IN CLAIMING THE APPLICATION TO BE INADMISSIBLE, THE DEFENDANTS SUBMIT THAT THE COMMISSION HAS PREVENTED THE RECTIFICATION OF THE SITUATION UNDER CONSIDERATION BY IMPROPERLY DEMANDING THE SUSPENSION OF THE MEASURES CRITICIZED BEFORE DECIDING UPON THE REQUESTS FOR DEROGATION PUT FORWARD BY THEM BOTH UNDER ARTICLE 226 OF THE TREATY AND UNDER A REGULATION ADOPTED BY THE COUNCIL OF MINISTERS ON 4 APRIL 1962, PURSUANT TO ARTICLE 235 .

BY 'ABUSING ITS POWERS AND BY ADOPTING AN EXCESSIVELY LEGALISTIC ATTITUDE' AND BY FAILING TO DECIDE AS A MATTER OF URGENCY UPON THE REQUESTS, AS IT WAS OBLIGED TO DO, THE COMMISSION HAS IN THE DEFENDANTS' SUBMISSION, LOST THE RIGHT TO TAKE PROCEEDINGS AGAINST THE DEFENDANTS FOR INFRINGEMENT OF THE TREATY .

AS THE COMMISSION IS OBLIGED BY ARTICLE 155 TO ENSURE THAT THE PROVISIONS OF THE TREATY ARE APPLIED, IT CANNOT BE DEPRIVED OF THE RIGHT TO EXERCISE AN ESSENTIAL POWER WHICH IT HOLDS UNDER ARTICLE 169 TO ENSURE THAT THE TREATY IS OBSERVED . IF IT WERE POSSIBLE TO PREVENT THE APPLICATION OF ARTICLE 169 BY A REQUEST FOR RECTIFICATION, THAT ARTICLE WOULD LOSE ALL ITS EFFECT .

A REQUEST FOR DEROGATION FROM THE GENERAL RULES OF THE TREATY - IN THIS CASE, MOREOVER, MADE AT A VERY LATE DATE - CANNOT HAVE THE EFFECT OF LEGALIZING UNILATERAL MEASURES WHICH CONFLICT WITH THOSE RULES AND CANNOT THEREFORE LEGALIZE RETROACTIVELY THE INITIAL INFRINGEMENT .

THE PROCEDURES FOR SEEKING A DEROGATION USED IN THE PRESENT CASE, THE OUTCOME OF WHICH DEPENDED UPON THE VIEW TAKEN BY THE COMMISSION, ARE ENTIRELY DISTINCT BOTH IN THEIR NATURE AND EFFECTS FROM THE WARNING PROCEDURE AVAILABLE TO THE COMMISSION UNDER ARTICLE 169 : THEY CANNOT IN ANY WAY FRUSTRATE THE LATTER PROCEDURE . THERE IS NO NEED TO CONSIDER WHETHER A POSSIBLE ABUSE BY THE COMMISSION OF ITS RIGHTS CAN DEPRIVE IT OF ALL THE METHODS AVAILABLE TO IT UNDER ARTICLE 169, AS IT SUFFICES TO STATE THAT IN THIS CASE NO PROOF OF SUCH AN ABUSE HAS BEEN GIVEN OR TENDERED .

IT EMERGES FROM THE ORAL PROCEDURE, MOREOVER, THAT THE DEFENDANTS NEGLECTED TO FURNISH THE COMMISSION WITH THE NECESSARY DETAILS TO ENABLE IT TO DECIDE UPON THEIR REQUESTS . WHAT IS MORE, ANY WRONGFUL ACT OR DEFAULT ON THE PART OF THE COMMISSION - WHICH WOULD HAVE TO BE DECIDED UPON IN AN ACTION ESPECIALLY BROUGHT ON THIS POINT - WOULD NOT IN ANY WAY AFFECT THE PROCEEDINGS FOR INFRINGEMENT OF THE TREATY BROUGHT IN RESPECT OF DECISIONS WHICH STILL SUBSIST AT PRESENT AND THE LEGALITY OF WHICH THE COURT IS BOUND TO EXAMINE .

THE APPLICATIONS ARE BROUGHT FOR THE PURPOSE OF OBTAINING A DECLARATION OF ILLEGALITY IN RESPECT OF THE INCREASE OF THE SPECIAL IMPORT DUTY ON GINGERBREAD IMPOSED AFTER THE TREATY ENTERED INTO FORCE, AND OF THE EXTENSION OF THAT DUTY TO OTHER SIMILAR PRODUCTS CONSIDERED AS A CHARGE HAVING EQUIVALENT EFFECT TO A CUSTOMS DUTY PROHIBITED BY ARTICLES 9 AND 12 .

ACCORDING TO THE TERMS OF ARTICLE 9, THE COMMUNITY IS BASED ON A CUSTOMS UNION FOUNDED ON THE PROHIBITION OF CUSTOMS DUTIES AND OF 'ALL CHARGES HAVING EQUIVALENT EFFECT '. BY ARTICLE 12 IT IS PROHIBITED TO INTRODUCE ANY 'NEW CUSTOMS DUTIES ON IMPORTS....OR CHARGES HAVING EQUIVALENT EFFECT' AND TO INCREASE THOSE ALREADY IN FORCE .

THE POSITION OF THESE ARTICLES TOWARDS THE BEGINNING OF THAT PART OF THE TREATY DEALING WITH THE 'FOUNDATIONS OF THE COMMUNITY' - ARTICLE 9 BEING PLACED AT THE BEGINNING OF THE TITLE RELATING TO 'FREE MOVEMENT OF GOODS', AND ARTICLE 12 AT THE BEGINNING OF THE SECTION DEALING WITH THE 'ELIMINATION OF CUSTOMS DUTIES' - IS SUFFICIENT TO EMPHASIZE THE ESSENTIAL NATURE OF THE PROHIBITIONS WHICH THEY IMPOSE .

THE IMPORTANCE OF THESE PROHIBITIONS IS SUCH THAT, IN ORDER TO PREVENT THEIR EVASION BY DIFFERENT CUSTOMS OR FISCAL PRACTICES, THE TREATY SOUGHT TO FORESTALL ANY POSSIBLE BREAKDOWN IN THEIR APPLICATION .

ARTICLE 95, WHICH IS TO BE FOUND BOTH IN THAT PART OF THE TREATY DEALING WITH THE 'POLICY OF THE COMMUNITY' AND IN THE CHAPTER RELATING TO 'TAX PROVISIONS', SEEKS TO FILL IN ANY LOOP-HOLE WHICH CERTAIN TAXATION PROCEDURES MIGHT FIND IN THE PRESCRIBED PROHIBITIONS .

THIS CONCERN IS TAKEN SO FAR AS TO FORBID A STATE EITHER TO IMPOSE IN ANY MANNER HIGHER TAXATION ON THE PRODUCTS OF OTHER MEMBER STATES THAN ON ITS OWN OR TO IMPOSE ON THE PRODUCTS OF THOSE STATES ANY INTERNAL TAXATION OF SUCH A NATURE AS TO AFFORD INDIRECT 'PROTECTION' TO ITS DOMESTIC PRODUCTS .

IT FOLLOWS, THEN, FROM THE CLARITY, CERTAINTY AND UNRESTRICTED SCOPE OF ARTICLES 9 AND 12, FROM THE GENERAL SCHEME OF THEIR PROVISIONS AND OF THE TREATY AS A WHOLE, THAT THE PROHIBITION OF NEW CUSTOMS DUTIES, LINKED WITH THE PRINCIPLES OF THE FREE MOVEMENT OF PRODUCTS, CONSTITUTES AN ESSENTIAL RULE AND THAT IN CONSEQUENCE ANY EXCEPTION, WHICH MOREOVER IS TO BE NARROWLY INTERPRETED, MUST BE CLEARLY STIPULATED .

THE CONCEPT OF 'A CHARGE HAVING EQUIVALENT EFFECT' TO A CUSTOMS DUTY, FAR FROM BEING AN EXCEPTION TO THE GENERAL RULE PROHIBITING CUSTOMS DUTIES, IS ON THE CONTRARY NECESSARILY COMPLEMENTARY TO IT AND ENABLES THAT PROHIBITION TO BE MADE EFFECTIVE .

THIS EXPRESSION, INVARIABLY LINKED TO THAT OF 'CUSTOMS DUTIES' IS EVIDENCE OF A GENERAL INTENTION TO PROHIBIT NOT ONLY MEASURES WHICH OBVIOUSLY TAKE THE FORM OF THE CLASSIC CUSTOMS DUTY BUT ALSO ALL THOSE WHICH, PRESENTED UNDER OTHER NAMES OR INTRODUCED BY THE INDIRECT MEANS OF OTHER PROCEDURES, WOULD LEAD TO THE SAME DISCRIMINATORY OR PROTECTIVE RESULTS AS CUSTOMS DUTIES .

IN ORDER TO SEE WHETHER A CHARGE HAS AN EQUIVALENT EFFECT TO A CUSTOMS DUTY, IT IS IMPORTANT TO CONSIDER THIS EFFECT IN CONNEXION WITH THE OBJECTIVES OF THE TREATY, NOTABLY IN THAT PART, TITLE AND CHAPTER CONTAINING ARTICLES 9 AND 12, THAT IS IN RELATION TO THE FREE MOVEMENT OF GOODS, AND STILL MORE GENERALLY THE OBJECTIVES OF ARTICLE 3 WHICH ARE AIMED AT PREVENTING THE DISTORTION OF COMPETITION .

IT IS, THEREFORE, OF LITTLE IMPORTANCE TO KNOW WHETHER ALL THE EFFECTS OF CUSTOMS DUTIES ARE PRESENT AT THE SAME TIME, OR WHETHER IT IS MERELY A QUESTION OF ONE ONLY, OR AGAIN WHETHER SIDE BY SIDE WITH THESE EFFECTS OTHER PRINCIPAL OR ANCILLARY OBJECTIVES WERE INTENDED, SINCE THE CHARGE JEOPARDIZES THE OBJECTIVES OF THE TREATY AND IS THE RESULT NOT OF A COMMUNITY PROCEDURE BUT OF A UNILATERAL DECISION .

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