C-37/73

N. V. INDIAMEX, of Antwerp (Case 37/73),

and

ASSOCIATION DE FAIT De BELDER, of Antwerp, and its partners J. W. L. and R. De Belder (Case 38/73),

on the interpretation of the provisions of the EEC Treaty and of Regulation No 950/68 of the Council (OJ 1968, L 172) implementing the Common Customs Tariff as from 1 July 1968, concerning the application by the Member States, after that date, of charges having an effect equivalent to customs duties on goods imported directly from third countries,

THE COURT

composed of: R. Lecourt, President, M. Sørensen, President of Chamber, R. Monaco (Rapporteur), J. Mertens de Wilmars, H. Kutscher, C. Ó Dálaigh and A. J. Mackenzie Stuart, Judges,

The facts of the case, the subject matter Article 2a (2) of the request and the views of the parties may be summarized as follows: Further, the King shall decree the measures necessary to bring the obligation for the payment of a I — Facts and procedure contribution into conformity with the international obligations of Belgium.' 1. The Belgian Law of 12 April 1960, Finally, Article 3 of the Royal Decree of creating a Social Fund for diamond 26 April 1971, enacted in application of workers, was supplemented, pursuant to the law of 13 April 1971, provides for the Law of 28 July 1962, by an Article the following, inter alia: 2a, which laid down, at paragraphs 1 'The contribution … shall not be and 2, that: payable on imports of rough diamonds 'Any person who imports rough from Member States of the European diamonds shall be liable to payment of a Economic Community or from countries contribution to the Social Fund in order in association with that Community.' that it may fulfil the task with which it The company 'N.V. Indiamex' (herein­ has been entrusted under Article 2 … after referred to as 'Indiamex'), and the The amount of the contribution due 'association de fait De Belder and its from such persons shall be equal to partners J. W. L. and R. De Belder' 1 /3 % of the value of the diamonds (hereinafter referred to as 'De Belder'), imported by them.' importers of rough diamonds from third Importers of rough diamonds proposed countries, maintained before the a number of exceptions in relation to Arbeidsrechtbank of Antwerp that, after this legislation claiming, inter alia, that the coming into force of the Common payments made to the Fund should be Customs Tariff (CCT) (1 July 1968), the considered as charges having an effect levying of a contribution on imports of equivalent to customs duty as prohibited rough diamonds must be considered by the Treaty, and the Court of Justice incompatible with the objectives of the was requested to give a preliminary Treaty and of Regulation No 950/68 of ruling on just such a problem in Joined the Council implementing the CCT, Cases 2 and 3/69, decided by the since, as from that date, national charges Judgment of 1 July 1969 (Rec. 1969). having an effect equivalent to customs In consequence of this Judgment, the duties are also prohibited for goods Belgian legislature adopted the following which are imported directly from third provisions by the Law of 13 April 1971, countries, which are not associated with amending the Law of 12 April 1960: the Community. The Social Fund for diamond workers 'Article 1 (hereinafter referred to as the 'Fund') Article 2a of the Law of 12 April challenged this argument, submitting, 1960 … shall be interpreted to mean inter alia, that nationals of the Member that there shall be exemption from the States cannot substantiate the existence contribution when the grant of such of any incompatibility with the Treaty exemption arises from the international unless the Commission, acting under obligations of Belgium. Articles 155 and 169 of the Treaty, has

established the existence of a serious Court of Justice of 18 February 1970 obstacle to the working of the customs in Case 40/69 (Bollmann), and of 18 union and of the Common Customs June 1970 in Case 74/69 (Krohn)? Tariff, and has intervened in this 4. Were the Member States permitted to connection. maintain charges having an effect Having regard to the abovementioned equivalent to customs duties, existing legislative provisions and to the at the time of entry into force of the Community rules, and having taken CCT, or did the latter impose on the account of the abovementioned case law Member States an obligation to of the Court of Justice in Judgment 2 and eliminate those charges? 3/69, the Arbeidsrechtbank of Antwerp decided, by judgments of 23 February 5. Does the obligation, if any, to 1973, registered at the Court on 7 March abolish those charges depend on an intervention by the Commission of 1973, to suspend the proceedings in the the EEC under Articles 155 and 169 two cases before it and refer the following questions to the Court, of the Treaty? pursuant to Article 177 of the Treaty: 6. Does the obligation, if any, to

countries? 8. Can the "limitations which" (accord 2. Must it be considered that, after 1 ing to point 2 in the operative part in July 1968, charges having an effect the Judgment of the Court of Justice equivalent to customs duties levied of 1 July 1969 in Cases 2 and 3/69 on goods imported directly from — Sociaal Fonds voor de third countries are always and in all Diamantarbeiders v Chougol and circumstances contrary to the Brachfeld) "may be imposed on the provisions or the objectives of the Member States for the purpose of EEC Treaty or the Common attaining the objectives of the CCT" Customs Tariff? Or are they so only result only from an act of the

3. If, after 1 July 1968, a Member State the Fund, represented by G. Impens, and the Commission of the European maintains a charge which existed previously and which, having an Communities, represented by its legal adviser A. Abate, submitted written effect equivalent to a customs duty, is observations in accordance with Article levied on goods imported directly 20 of the Protocol on the Statute of the from third countries, must this be considered a modification of or an Court of Justice. addition to the CCT within the After hearing the report of the meaning of the Judgments of the Judge-Rapporteur and the opinion of the

Advocate-General, the Court decided to they may legitimately be levied in trade open the oral procedure without any with third countries. For the period preparatory enquiry. following the entry into force of the CCT, the principle of the legality of these charges is conditional ('subject to II — Observations submitted such limitations as may be imposed for under Article 20 of the the attainment of the objectives of the Protocol on the Statute Common Customs Tariff), but the findings of the Court on this matter are of the Court of Justice

bound together. The problems raised by (a) Distinction between the rules of the charges having equivalent effect, within Treaty relating to the customs union the context of the CCT, should therefore, in relation to imports from The Fund notes that from the point of third countries, be examined in the light view of the Treaty the elimination of of the common commercial policy, the customs duties between the Member implementation of which was entrusted States and the establishment of the by the Treaty to the Council and the Common Customs Tariff are two quite Commission.

JUDGMENT OF 13. 12. 1973 — JOINED CASES 37 and 38/73

this cannot be achieved without the intervention of the Council and of the At all events, the problem of the existence of a disturbance is a factual Commission, which are empowered to define and develop the common problem, the solution to which must be commercial policy. sought in the light of each case as it arises and not in the context of these (d) The establishment of the CCT proceedings, the sole objective of which is the interpretation of Community law. The Fund further maintains that in view Moreover, the solution to this problem of difficulties which might affect the is linked to a certain number of facts establishment of the CCT, Articles 18 to which can be ascertained neither by the 29 inclusive of the Treaty entrusted the parties nor by national courts.

the Treaty. Moreover, as soon as the avoided, in relation to the self-executing Commission takes notice that a Member character of rules of Community law, State has failed to fulfil one of its between two different concepts: the rules obligations under the Treaty, it is bound of the Treaty, on the one hand, and to act against such failure, pursuant to those of regulations, on the other. The Article 169 of the Treaty. problem as to the direct applicability of The outcome of all these rules, rules of Community law can arise only according to the Fund, is that charges at the level of the provisions of the having an effect equivalent to customs Treaty. In fact, no provision of the duties applied to goods imported directly Treaty concerning the establishment of from third countries cannot be held to the CCT fulfils the conditions which be illegal unless the Commission has first would allow it to be described as ascertained that the rule with regard to self-executing. Articles 18 to 29 inclusive the free movement of goods imported do not lay down any prohibition, in the into free circulation within a Member context of charges having equivalent

law of the Court concerning the kind (cf. statistical data given in the jurisdiction of the Member States in Fund's written observations). matters arising out of Community On numerous occasions the Fund refers regulations must be understood in the to an opinion, annexed to the written light of the foregoing comments. observations, given by G. Van Hecke, professor at the Catholic University of (f) The objectives of the Treaty Louvain. Having related the facts behind the proceedings and examined the The Fund recalls that, unlike the general problem raised by the imposition provisions of the section devoted to the of national charges having equivalent 'elimination of customs duties between effect upon goods imported directly Member States', in the section concerned from third countries, this opinion with the 'setting up of the common contains the following conclusions on customs tariff the Treaty does not each of the questions referred: prohibit the imposition of charges 1. The EEC Treaty and Regulation No having equivalent effect upon goods 950/68 do not, in principle, deprive imported directly from third countries, the Member States of their power to and therefore concludes that the authors introduce or to maintain charges of the Treaty did not consider, in having equivalent effect. Member principle, that such charges are contrary States are at liberty to introduce or to to the objectives of the Treaty. maintain a charge having equivalent The obligation incumbent upon the effect, insofar as this liberty is Member States under Article 5, compatible with the Community's paragraph 2, of the Treaty, to abstain commercial policy. from any measure which would 2. Charges having an effect equivalent to jeopardize these objectives, is to be a customs duty levied on products defined with special reference to the imported directly from third countries principle — already confirmed by the are not incompatible with the CCT, Court — according to which the extent since they do not form part of tariff of such obligation, in each case as it law. However, in certain circum­ arises, depends upon the provisions of stances, they may be contrary to the the Treaty at issue or upon such rules as objectives of the Treaty.

3. The Member States may neither Member States for the attaining of modify nor supplement the customs these objectives derive from the law as it appears in the CCT. A powers of the Community Institu charge having an effect equivalent to tions. a customs duty, levied on goods imported from third countries, does not however modify the CCT and B — Observations submitted by India adds nothing thereto. The CCT in mex and De Belder fact forms part of tariff law, whereas the above mentioned charge is the Indiamex and De Belder, who submitted product of customs legislation. identical statements, observe that these statements were drawn up in conformity

5. If the charges in question are contrary difficulties which could face the to an objective of the Treaty it is Community if a Member State takes necessary for the Commission to unilateral action in adopting or intervene to abolish them. However, maintaining national measures by which no such intervention is necessary if it applies financial charges other than the charges infringe a provision customs duties to goods imported expressly prohibiting them, or if they directly from third countries. are applied by way of a misuse of Having briefly recalled the principles

7. The Commission alone has jurisdic countries would involve not only tion to establish the existence of a 'deflections' of trade and an increase in disturbance in the context of the import costs, but also a disturbance of common commercial policy and to the balance of power as between the undertake the necessary measures to Member States and the Institutions of this end. the Community, as established by the 8. The objectives of the CCT form part Treaty. When the Judgment of the Court of the objectives of the Treaty. Such of Justice in Cases 2 and 3/69 is also limitations as may be imposed on the taken into account, it is alleged that the

unilateral action on the part of a the latter. Accordingly, interested parties Member State in levying, after the entry are empowered to claim, directly before into force of the CCT, of financial their national courts, that a charge charges other than a customs duty on having equivalent effect applied to goods imports from third countries is, in imported directly from a third country is principle, incompatible with the incompatible with the Treaty. successful functioning of the customs Moreover, the self-executing character of union. such a prohibition results not only from Furthermore, the fact must not be the abovementioned Article 5, para­ overlooked that since Regulation No graph 2, but also from the nature of 950/68 is directly applicable, the Regulation No 950/68. The fact that the Member States are prohibited, in the Common Customs Tariff instituted by absence of any provisions to the that Regulation did not come into being contrary, from adopting measures automatically but only as the result of affecting the scope of that Regulation. complex operations, in which the Accordingly, national measures provid­ Community Institutions played an ing for charges on imports from third important role, and that it may be made countries other than those laid down by the subject of amendments or of certain the CCT are contrary to the Treaty, by exceptions pursuant to Articles 25, 26 reason of the fact that they amend the and 28 of the Treaty is no obstacle to its scope of Regulation No 950/68. direct applicability. Moreover, the possibility granted to the Finally, Indiamex and De Belder Member States to apply charges having challenge the contention that the an effect equivalent to customs duties allegedly minimal amount of the charge infringes the requirement of a uniform in question could justify it in relation to application of the Common Customs the Treaty. The Court of Justice has in Tariff with regard to third countries, and fact recognized, in Cases 2 and 3/69, that thus jeopardizes the harmonious the insignificance of a charge having functioning of the customs union. equivalent effect cannot be a factor Clearly, a State which does not respect which would allow that charge to be this requirement contravenes the legitimized in the context of trade provisions of Article 5, paragraph 2, of relations between the Member States: the Treaty, since the harmonious there is no reason why such should not functioning of the customs union is one also be the case for relations with third of those objectives which the Member countries.

of this nature levied on goods which result from the very objectives imported directly from third countries of the Treaty and of the CCT, must, as from 1 July 1968, be and are not dependent on any considered, under all circumstances, intervention on the part of the as being incompatible with the Community. objectives of the Treaty establishing the European Economic Community and the CCT. The fact that the C — Observations submitted by the Commission charge may be insignificant is not sufficient to render it compatible with The Commission, in a detailed those objectives. examination of the various items of

4. The entry into force of the CCT countries, created, in respect of the Member States, the obligation to eliminate all — Regulation No 950/68 of the Council charges having an effect equivalent to and its ambit. customs duties existing at that date. 1. As for trade arrangements within the 5. This obligation does not involve any Community, the Commission points out intervention by the Commission that these are based on the concept of under Articles 155 and 169 of the 'customs union', which is to be achieved Treaty. in two different stages: that of the

7. The establishing of such a having equivalent effect in trade between disturbance — which is not however Member States, makes no mention of a precondition for the elimination of trade with third countries. Moreover, the charge — may be affected not Article 10 is based on the principle that only by the Commission, but also by such charges are applied to goods national courts, insofar as they imported directly from third countries. consider it expedient. As regards the customs union, the 8. The 'limitations which may be Commission remarks that it is not yet imposed on the Member States in complete, with the result that complete attaining the objectives of the uniformity as between the customs Common Customs Tariff, according procedures applied to imports from third to point 2 of the operative part of the countries has not been achieved.

DIAMANTARBEIDERS v INDIAMEX

2. As for trade arrangements with third adopted after 1 January 1970, as well as countries, the Commission examines trade agreements concluded with third principally the following: countries (Article 113), the Commission observes — measures of agricultural policy, — that, within the framework of — association agreements (Article 238), measures concerning the coordina as well as agreements and measures tion of trade relations between the based on Articles 111 and 113. Member States, the Community has (a) In relation to agricultural policy the not solved the problem of the levying Commission notes that the common of national charges having equivalent organizations of the markets, established effect upon goods imported directly from third countries.

These arrangements are either applicable (b) As for agreements and measures erga omnes, or contractual. In the based upon Articles 238, 111 and 113 of first case, the prohibition is contained the Treaty, the Commission distinguishes in agricultural regulations and, in the 'association agreements' (Article 238) other cases, it derives from based upon a customs union between the obligations assumed in the context of parties to the agreements, from association or trade agreements. The agreements which, at least up to the prohibition contained in these present time, do not create such a union. agreements applies equally to Logically, the former have in view the national charges already in existence elimination of all obstacles to the free and to possible Community charges. movement of goods, including charges having an effect equivalent to customs 3. Finally, as for Regulation No 950/68 duties, quantitative restrictions or of the Council and its ambit, the measures having an effect equivalent to Commission notes that the Common such restrictions. The other agreements, Customs Tariff instituted by that apart from the fact that they do not Regulation is concerned only with create a customs union, are not uniform. customs duties as such and remains In those agreements the prohibition silent on the subject of national charges upon charges having equivalent effect is having an effect equivalent to a customs the result of negotiations, between the duty. In order to solve the problem of

the levying of such charges, the drawn between national charges having objectives of the Treaty and, in equivalent effect, which do not particular, the objectives of the tariff counteract the objectives of the Treaties union and of the customs union must be and can therefore' be maintained by the examined. Member States in anticipation of Community rules, and national charges Regulation No 950/68 does not appear which do counteract those objectives to go beyond the achievement of the and are accordingly prohibited.

The uniform application of the CCT is not therefore summary of its observations, as follows: an automatic result of that Regulation, '1. The provisions of the Treaty do not but requires continual intervention by expressly prohibit national charges the Community institutions. Such having equivalent effect levied on uniform application, like the complete goods imported directly from third system of rules for trade with third countries. The problem of their countries, can result only from the compatibility with the provisions of implementation of the customs union. the Treaty is solved neither by However, since such a union has not yet reference to measures adopted in been achieved, the uniform application relation to the coordination of the of the CCT and the complete system of trade relations of Member States rules for trade have not yet been (Article 111), nor to Regulation No achieved.

be passive. Firstly, the Member States charges of that nature. are not allowed to raise the level of 2. Regulation No 950/68 does not go charges in force as at 1 January 1970, or beyond the tariff union. Tariff to introduce new ones. The obligation protection under this Regulation is on the Member States to respect this common and uniform with regard to 'standstill' in relation to such charges is anything in the nature of customs a consequence of the close relationship duties, but does not appear to which exists between the actions of the include charges having equivalent Community in the context of the effect. The uniform application of customs union on the one hand and the Common Customs Tariff is commercial policy on the other, in which subordinated to the achievement of fields the national authorities are not the customs union and to the

DIAMANTARBEIDERS v INDIAMEX

3. The Member States have continued, imports from third countries are even after 1 July 1968, to levy prohibited, and that this prohibition charges having equivalent effect upon results implicitly from the objectives goods imported directly from third of the Treaty or of Regulation No countries. In the absence of any 950/68, would mean that the general community rules, the Community has pursued or is prohibition of such charges can only pursuing, with respect to third arise from acts adopted by the countries, a more liberal commercial Community in the exercise of its policy than that pursued by those powers. countries with regard to the Com­ munity, and would deny the Com­ 4. Although they hinder international munity the means of obtaining the trade, national charges having same advantages from third countries, equivalent effect which do not which apply charges having equivalent counteract the objectives of the Treaty effect to goods imported from the may be maintained in anticipation of Community. Community rules. It is nevertheless The parties to the main action and the intended that they be eliminated or Commission of the European Communi­ transformed into Community meas­ ties made their oral observations at the ures, within the framework of the hearing on 19 September 1973. common commercial policy. By decision of 4 October 1973, the 5. Member States may, in principle, Court, having heard the report of the maintain such charges as remain. Judge-Rapporteur and the opinion of the They are not however empowered to Advocate-General, dismissed a request increase them or to introduce new submitted by the defendant parties to the ones after the end of the transitional main action on 2 October 1973 that the period, that is to say as from 1 oral procedure be reopened. January 1970, since the Commission The Advocate-General presented his has exclusive jurisdiction in this field, opinion at the hearing on 11 October pursuant to Article 113 of the Treaty. 1973.

4 The application of such charges in this case is dependant upon the trade arrangements with third countries, instituted at Article 3 (b) of the Treaty, and especially upon the principles governing the customs union, such as those set out at Article 9.

5 The customs union, which is one of the foundations of the Community, involves, on the one hand, the elimination of customs duties between the Member States and of all charges having equivalent effect.

6 The elimination of such charges is designed to promote the free movement of goods within the Community.

7 It must therefore be sufficiently comprehensive to include the abolition of all pecuniary, administrative or other obstacles, for the purpose of achieving a unified market between the Member States.

8 On the other hand, the customs union involves the establishment of a single customs tariff for the whole Community, as envisaged at Articles 18 to 29 of the Treaty.

9 This common tariff is intended to achieve an equalization of customs charges levied at the frontiers of the Community on products imported from third countries, in order to avoid any deflection of trade in relations with those countries and any distortion of free internal circulation or of competitive conditions.

15 According to Article 113 (1) of the Treaty, the common commercial policy shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalization, export policy and measures to protect trade.

16 The definition of these uniform principles involves, as does the common tariff itself, the elimination of national disparities, whether in the field of taxation or of commerce, affecting trade with third countries.

17 It is for the Commission or the Council to evaluate these requirements in each case both as regards the establishment of the Common Customs Tariff and the adoption of the commercial policy.

18 It follows therefore that subsequent to the introduction of the Common Customs Tariff all Member States are prohibited from introducing, on a unilateral basis, any new charges or from raising the level of those already in force.

JUDGMENT OF 13. 12. 1973 — JOINED CASES 37 and 38/73

19 As regards charges already in existence, prior evaluation by the Community authorities is necessary in order to establish their incompatability with the Treaty and the obligation to eliminate them.

Costs

26 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before a national court, the decision on costs is a matter for that court.

DIAMANTARBEIDERS v INDIAMEX

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the observations of Indiamex, De Belder and its partners J. W. L. and R. De Belder, the Sociaal Fonds voor de Diamantarbeiders and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 3,9 to 29, 110 to 116, 177 and 238; Having regard to Regulation No 950/68 of the Council of 28 June 1968 on the establishment of the Common Customs Tariff (OJ L 172, 1968); Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the rules of procedure of the Court of Justice of the European Communities;

THE COURT

A. Van Houtte R. Lecourt

Registrar President