C-7/78

composed of: H. Kutscher, President, Lord Mackenzie Stuart, (President of Chamber), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe and G. Bosco, Judges, Advocate General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of Excise Act 1952, in relation to certain the procedure and the observations goods, namely 1 500 Krugerrand gold submitted pursuant to Article 20 of the coins. The appellant Johnson was also Protocol on the Statute of the Court of charged with seven other offences of a Justice of the EEC may be summarized similar nature (in relation to 1 900 Kru­ as follows: gerrand gold coins), and the appellants Johnson and Woodiwiss were charged with conspiracy to evade the prohibition I — Facts and procedure imposed by the Export of Goods (Control) Order 1970, on the expor­ The appellants were charged before the tation of 40.39 tonnes of coins of silver Crown Court at Canterbury with being alloy minted in the United Kingdom. knowingly concerned in a fraudlent evasion of the prohibition on importation At an early stage in the trial the imposed by the Import of Goods appellant Woodiwiss pleaded guilty to (Control) Order 1954, contrary to Court 1. Subsequently all three submitted section 304 (b) of the Customs and that there was no case for them to

REGINA v THOMPSON

c) silver alloy coins of a Member an individual, State, which have been, and which although no longer legal tender in (iii) to prevent the destruction of that State are protected as coin its coins occurring outside its from destruction in that State? jurisdiction, which if it occurred within its 2. If so, can the quantity and manner in jurisdiction would be a which and the purposes for which criminal offence? such coins are traded result in such coins ceasing to be within the term Pursuant to Article 20 of the Statute of "capital" in Pan Two, Title III, the Court written observations were Chapter 4? submitted on behalf of the appellants, the 3. Do the provisions of Part Two, Title United Kingdom, Italy and the III, Chapter 4 of the Treaty of Rome Commission of the European Communities. apply to such of the aforesaid coins as are "capital" to the exclusion of the provisions of Part Two, Title I, Upon hearing the report of the Judge- Chapter 2 of the Treaty? Rapporteur and the views of the Advocate General the Court decided to 4. If the answers to all or any of the open the oral procedure without holding above questions are such as to any preparatory inquiry.

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The Department of the silver content. The silver coins the Government determines the time at subject of the criminal charges in the which such licence shall be effective and indictment had all been obtained from the quantity of coins to be exported. numerous residents in the United Section 10 of the Coinage Act 1971 Kingdom, by means of lawful enables the courts in the United advertisement and offer in a periodical Kingdom exercising criminal jurisdiction circulating in the United Kingdom. The to act against any person who melts Government in the United Kingdom had down or breaks up any metal coin which taken no measures to prevent or even is current in the United Kingdom or discourage such a trade. No system which has been current in the United existed initiated or approved by the Kingdom at any date after the 16 May Government whereby a citizen could obtain from the Government the value of 1969. (All the silver alloy coins concerned in this case were within this the silver content of the coins.

content. (Director of Public Prosecution v Doot, 1973, A. C. 807) The price at which Krugerrands were Dealings in gold currency in the United delivered to one of the appellants was Kingdom, or outside the United determined by the market price at which Kingdom by United Kingdom residents these coins then lawfully and freely are subjected to controls by the circulated in Germany. Throughout the Exchange Control hex 1947. period covered by the charges in the indictment and to the present time, Krug The appellants submit that Questions 1 errands lawfully and freely circulate in and 2 posed for the Court cannot be the United Kingdom at prices answered "in principle" since the status determined by a free market in common of the coins depends on the transactions with all other gold coins whatever the to which they are subject.

RECINA v THOMPSON

required the Court to consider Part legislation to export "goods" of the class Two, Title Three of the Treaty before concerned in this case except under the considering Part Two, Title One. They authority of a licence. submit further that it is more convenient The Community law by which such for the Court, to examine-the questions purported prohibitions must be judged is raised on this Appeal in the following found, in the first place, in Article 42 of order: (a) Articles 30 to 35, (b) Article the Act of Accession annexed to the 36, (a) Capital. These submissions are Treaty of Accession of 22 January 1972, made having regard, first, to the nature which provides: and extent of the criminal charges preferred against the appellants under "Quantitative restrictions on imports and the domestic legislation of the United exports shall, as from the date of accession, be abolished between the Kingdom, namely, that the appellants were trading in "goods" and, secondly, Community as originally established and the new Member States and between the to the concession made in the Court of new Member States themselves. Appeal (Criminal Division) by the Solicitor-General appearing on behalf of Measures having equivalent effect to the Respondents to the Appeal, Her such restrictions shall be abolished by Majesty's Commissioners of Customs 1 January 1975 at the latest". and Excise, and accepted by the Court It follows that, as from the dates set out in the Judgment as follows: specified in Article 42, quantitative "This Solicitor-General conceded that, if restrictions on imports and exports and coins of the kind in question are properly measures of equivalent effect must be to be regarded as goods to which Title justified, if at all, by some provision of One of Part Two of the Treaty (of Community law applicable to the present Rome) applies, the prohibitions imposed case.

JUDGMENT OF 23. II. 1978 — CASE 7/78

The word "goods" is not used in Article the orders and licensing systems under 42 of the Act of Accession or in Articles which these charges were preferred. 30, 31 (first sentence) or 34 of the Thus the relevant Treaty provisions Treaty. But it is clear that the word prohibit quantitative restrictions which should be read into those provisions, were in effect on the date of accession having regard to the Articles 3 (a) and 9 and those which are introduced there­ and the wording of Tide One of Part after. The revocation of the Open Two of the Treaty. The appellants refer General Licences with effect, respectively to the definition of goods in Case 7/68, from 16 April 1975 (import) and 15 July Commission v Italy: 1974 (export) created new quantitative "By goods, within the meaning of Article restrictions as from those dates. After the

of the import and export of "goods", the Kingdom. charges in the present case refer (ii) The prohibitions were not necessary specifically to the import and export of for any of the purposes specified in "goods", as do the Act of Parliament, Article 36.

REGINA v THOMPSON

The United Kingdom acceded to (iv) If the purpose of the prohibitions the Treaty without securing any related to the protection of redefinition of the term as it appears in economic interests of the United the original texts. The appellants rely on Kingdom, the prohibitions could not the fact that all the language texts of the be justified by reference to Article Treaty are equally authentic. (Article 248 36. of the Treaty and Article 160 of the Act of Accession). The French and German

Treaty, where the same meaning ought The prohibitions in question include, in to be given to them. They should be the first place, the two Acts of Par narrowly as well as strictly interpreted. liament, the Act of 1939 and the They refer to Case 41/74, Van Duyn. Customs and Excise Act of 1952, under which the prosecution was brought. The appellants submit that that which These are general in form. Neither of the prohibitions and restrictions these acts could be expected to, or in permitted under Article 36 have in fact does, encompass or envisage the common is that they are intended to principles governing the Treaty or the protect substantial national interests Act of Accession. The orders which are which are shared by all Member States, similarly general in form and which are which can more appropriately be made under the authority of the first Act protected at the national rather than the of Parliament and are dated respectively Community level, which can be 1954 and 1970 similarly cannot be protected without any distortion of trade expected to encompass or envisage the or discrimination against other Member principles governing the Treaty or the States, and which cannot reasonably be Act of Accession. It is difficult to see protected by some means other than a how these acts, orders, or licences sub prohibition or restriction on imports or sequently issued could conceivably be exports. It would follow that the phrase justified on any of the grounds envisaged "public policy" cannot have been

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States. The phrase could not cover which are wholly irrelevant to a proper specific economic interests of a particular consideration of the extent of Article 36. Member State which must be protected, It cannot be right to allow weight to be if at all, through the use of the many given to an attitude which is wholly at other provisions, relating to economic variance with the spirit and intent of the matters (cf. Commission v Italy — Case Treaty. This is particularly so when a 7/61). lawful and free market exists within the The Government of the United Kingdom United Kingdom for trade in silver and seeks to justify the importation gold coins whether of domestic or prohibition on the ground of preventing foreign manufacture. It must plainly be a drain on its balance of payments. It is an "arbitrary discrimination" for one difficult to see how such a ground could Member State to prohibit a trade in such conceivably be covered by the "public articles with other Member States but to policy" exception in Article 36. In the permit such a trade within its own bound case Commission v Italy 7/61, the Court aries.

There is and has been no shortage in the volition or at the request of the United Kingdom of current coin, either United Kingdom Government) the in fact or claimed. Commission's undertaking investigation or action under Article 108. It is not As to Question 4 (b) (ii) the appellants claimed by the Government of the submit that it cannot have been the United Kingdom that such circumstances object of the Treaty to provide a existed, nor was it the action undertaken Member State with the legal means of under Article 109 or Article 135 of the acquiring an economic advantage by Act of Accession. It would threaten to requiring that the value of an article undermine the general structure of the should accrue to the State rather than to Treaty and the principles on which the an individual.

REGINA v THOMPSON

Accordingly, the cover acts committed abroad. Principles Treaty provisions applicable to a of public international law concerning transaction involving coins will depend on the nature and circumstances of the criminal jurisdiction would not prevent or inhibit the assumption of jurisdiction transaction. The appellants submit that it over such acts. United Kingdom law is possible to form a view as to the already includes many such instances, "movement of capital" covered by namely the Exchange Control Act 1947. Articles 67 to 73, in the first place, by The assumption of jurisdiction over an elimination of transactions covered by offence of this nature committed abroad other provisions. Such other transactions would not, in the appellants' submission, would include the movement of goods constitute a restriction on trade for the and current payments connected with the purposes of the Treaty at least so far as movement of goods, service, capital or it related to current coinage. On the persons — those transactions being dealt other hand, to use a general export ban with in the Treaty in a form which as the method for achieving such a makes it clear that they are themselves purpose involves a direct restriction of distinguishable from the "movements of

So far as the appellants are aware the Court has not had occasion to define the The meaning of "movements of capital" expression "movement of capital" used for present purposes may be found with in the Treaty. The expression should be the assistance of acts of Community interpreted in the light of the wording institutions implementing the Treaty and purpose of the provisions in which it provisions. Such acts cannot be a is used and the place of those provisions conclusive interpretation of the Treaty, in the overall structure of the Treaty, but they provide useful guidance as to

the interpretation given to the provisions throughout the Community, freedom of by the institutions and by the Member establishment, equality of conditions of States. In the First Directive for the competition among firms, development implementation of Article 67 (11 May of an industrial policy and advances in 1960; consolidated version, as amended industrial combination)". by the Second Directive, in Official (Bulletin of the European Communities, Journal No 62 of 1963), List D of Annex I includes the item — May 1969, p. 21). This statement places the "movement of "Physical import and export of financial assets" capital" provisions in a context which is quite different from the unambiguous referring to item XIII in the commercial character of the transactions Nomenclature in Annex II — involved in the present case.

So far as they relate to coins, they are concerned with the coins used as within the United Kingdom. These considerations throw no light on the assets, that is to say, not with coins when question whether they were being dealt they are being transferred as goods. The with as goods or capital. expression "means of payment" in Item XIII, is used as a generic term to Finally, if, contrary to the above describe the objects in question submission, the Court should consider ("moyens de paiement") not to identify that there was an element of "movement the nature of the transaction in which of capital" in the transactions involved in they are used. This classification can the present case, the appellants therefore have reference only to the respectfully suggest that the Court transfer of assets in circumstances where should now hold that Article 67 has none of the features of trade exist. direct effect to the extent that the items Otherwise the directive would permit a in this case have a dual function as very substantial derogation from the "goods" and as "capital".

The for the achievement of a number of expression "to the extent necessary to objectives included in, or implied by, the ensure the proper functioning of the Treaty (steady and balanced expansion Common Market" makes the determi-

nation of the extent of the direct effect April 1975 of the restrictions on the difficult and means that that extent may import of, inter alia, gold coins, which change as the Common Market came into force on 16 April 1975. develops, but it cannot deprive the List "D" covers, inter alia, "physical provision of all obligatory effect. import and export of financial assets" which by reference to the explanatory B — Observations of the Government of notes in Annex II includes: the United Kingdom "A. Securities (not included under IV) and means of payment of every Article 67 and the succeeding articles in kind. the chapter headed "Capital" do not B. Gold." define the term "capital" and this Court has so far not been called upon to define or construe the term. However the word Thus the physical import and export of financial assets includes import and "capital" as internationally understood export of gold and means of payment of ordinarily applies to precious metals such

This is confirmed for the purposes of customs control be by the First Directive of the Council classified on import and export as goods, issued under Article 69 for the this does not mean that such assets are implementation of Article 67 on 11 May not regarded as capital within the 1960 (Official Journal 921/60) for the meaning of Part Two, Title III, Chapter purpose of "the greatest possible 4 of the Treaty. It merely means that on freedom of movement of capital between the import and export of such financial Member States and therefore the widest assets it would appear that both and most speedy liberalization of capital Community instruments apply. movements".

The term Article 4 the Monetary Committee is "gold" in the said directive must be required to examine such restrictions and interpreted as including not only gold under Article 7 Member States must bullion but also gold coin other than make known to the Commission any coin which is classifiable as "a collector's amendment of the provisions governing piece of numismatic interest" under the capital movements set out in List heading 99.05 of the Tariff. In this "D". The. United Kingdom in fact particular case the Krugerrands which notified the Commission orally on 4 July formed the subject of counts 2 to 8 of 1974 and in writing on 15 July 1974 of the indictment were used as means of the restrictions on the export of pre-1947 payment for the silver coin which the silver alloy coin which came into force appellants sold to Allgemeine Gold- und on the latter date, and in writing on 15 Silberscheideanstalt.

With regard to paragraph (b), silver alloy to be judged at the time when they were coins which are legal tender in a imported or exported. The transactions Member State are "capital" within the which took place in regard to the silver meaning of the said chapter of the coins subsequent to their export are Treaty. They are "means of payment of irrelevant. Items which are capital for the any kind" and thus covered by the said purpose of the Treaty do not cease to be directive. The fact that the silver content capital by reason only of the nature of of United Kingdom coins minted before the commercial transactions in which 1947 exceeds the face value of such coins they are involved. Coins may (but do not emphasizes the status of the coins as necessarily) cease to be capital as a result

they were legal tender. Because of specialibus non derogant). Deutschmann v silver's historic role as a medium of Germany (Case 10/65) [1965] ECR 469 currency the fact that (as in the case of and Iannelli & Volpi (Case 74/76) [1976] ECR 557 are referred to. the half-crown) the silver content of the silver alloy coins exceeds their face value The provisions of Part Two, Title III, means that they will still be accepted as a Chapter 4 of the Treaty and the means of payment. provisions of Part Two, Title I, Chapter 2 of the Treaty cannot both apply at the It should be noted that the term "legal same time because there are fundamental tender" in the above two paragraphs has differences between the provisions which a technical meaning in United Kingdom would give rise to insoluble conflicts if law and although coins may not be legal they were both to apply.

REGINA v THOMPSON

arbitrary discrimination or a disguised It is relevant in this context to recall restriction on trade between Member Article 104 of the Treaty which provides: States". "Each Member State shall pursue the The Court is asked if necessary to clarify economic policy needed to ensure the the limitation which appears to be laid equilibrium of its overall balance of down in Commission v Italy (Case 7/61) payments and to maintain confidence in and consider whether matters of a purely its currency, while taking care to ensure

JUDGMENT OF 23. 11. 1978 — CASE 7/78

individual; The EEC Treaty does not directly give a (iii) to prevent the destruction of United precise legal definition of "capital". Kingdom coins occurring outside its However, such a concept may be held to jurisdiction when it would be a be "common" to the Member States and criminal offence if its coins were may be deduced from their legislative destroyed within the United provisions. Some indications towards a Kingdom. legal definition of "capital" have moreover been provided in the context The functions of a State include minting of the Community system by a directive of coins and protecting the coins that it of the Council of the EEC of 11 May mints to ensure that those within its 1960 and in particular by the lists jurisdiction are able to carry on trade. It annexed to the said directive. is submitted that unless and until the coins of one Member State are protected As is well known, in almost every period, from destruction in other Member "movements of capital" from one State States, Member States should be entitled to another have been subject to strict to take such steps as are necessary to controls which primarily serve two ensure that their coinage is not destroyed objectives: (a) to integrate and render effective controls on the international indiscriminately.

United Kingdom. As a result large European Community order. One of the quantities of similar coins were being fundamental provisions of the EEC exported purely for the purpose of de Treaty is Article 104, according to which struction and not for any numismatic "Each Member State shall pursue the purpose. Although the proportion of economic policy needed to ensure the such coins was small in relation to the equilibrium of its overall balance of total amount of coinage in circulation, payments and to maintain (international) the amounts of such coins being confidence in its currency .

REGINA v THOMPSON

given full effect by the courts, imprints equivalent to money) which is used or on the Community system one of its which may be used for the acquisition of most significant characteristic traits, since capital goods or which may be such as to it gives the individual Member States all give rise to "investments" which produce (or almost all) the responsibility for the returns; the returns may in their turn equilibrium of their balance of payments take the form either of "physical" and therefore, by implication, all (or property (flow of goods) or of monetary almost all) the powers to pursue that aim property (for example "interest"). and, in more general terms, to regulate Where, with regard to the objectives their national currency. This is a fact which must not be underestimated as it is sought by Article 67 et seq. of the EEC Treaty, reference is made to "monetary not possible to evaluate the obligations of the Member States towards the capital" this is intended to mean quantities of precious metals or Community independently and quantities of national currencies which, separately from an evaluation of the in the form of "currency" or "currency responsibilities which, particularly with credits" are, in effective terms, used as regard to monetary policy, have international means of payment. remained virtually the exclusive task of the Member States; thus it would be There can be no doubt that the legal quite wrong even from the juridical point concept of "capital" within the meaning of view merely to establish in a of Article 67 et seq. of the EEC Treaty as formalistic spirit specific and circum­ delineated above must include precious scribed obligations on the Member States metals (gold, platinum and silver) and without taking account of the above- "physical (import and export of) mentioned more general responsibilities financial assets" in general (this is the of the States themselves. term used in list D annexed to the said

JUDGMENT OF 23. 11. 1978 — CASE 7/78

intrinsic value (for example, as objects of With regard to the exportation of numismatic or archaeological interest) : currency, the export of gold coins is in such circumstances coins may subject to permission from the Ministero reasonably be compared to goldsmiths' per il Commercio Estero while for other or silversmiths' wares. coins there is no restriction "for reasonable imports" (circular No A 360 In this respect Italian law (Article 1 of of 8 August 1977 of the aforesaid the D.L. Lgt. No 343 of 26 April 1946) Ministry). prohibits the exportation from the national territory of gold, platinum, Apart from the fact that they are in silver and other precious metals whether conformity with the parallel provisions in in ingots or granules or in the form of force in other Member States, the said coins. rules on the import and export of gold and silver coinage appear to be Moreover, under Italian law (Articles 1, compatible with the EEC Treaty and in 2 and 8 of the R.D.L. No 1935 of 14 particular with Article 67 of that Treaty: November 1935) the Ufficio Italiano dei the restrictions referred to do not Cambi (the Italian exchange office), a conflict with the "proper functioning of public body, has the monopoly of the the Common Market", as any acquisition abroad of unwrought gold hypothetical free movement of coinage (but not silver in granules). would in no way promote intra- The position is different for foreign Community trade or the Common metal coins which are legal tender. With Market in general: moreover, the restrictions do not give rise to "dis­ the exclusion of subsidiary coinage crimination" between residents of the which does not contain substantial various Member States of the quantities of precious metals, such coins Community. must be considered for the present purposes as equivalent to "currency" and It is arguable, however, that the reasons therefore, to the extent stated above, to of "public policy" set out by the British "capital": a gold coin, especially one of court have a serious, and real substance

REGINA v THOMPSON

"Capital" as such is not defined in the Member State is counterbalanced by an Treaty. Although Articles 67 to 73 are equivalent value leaving it. headed "capital"; they are primarily On the basis of all the above concerned, not with the precise nature of considerations, and without seeking to "capital" itself, but with certain activities define every circumstance in which a concerning capital. Nevertheless, those movement of capital can take place, it is articles do refer to a number of matters consered that in many cases a movement which are affected by restrictions on the of capital will occur when financial movement of capital, and thus help to resources situated in one country are show what meaning is to be attributed to used to make an investment in another "capital" for the purposes of the Treaty. country, and the investment is not Thus reference is made to: transferred to the country where those

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place when resources owned by a person or body resident in a particular country and the Court has in this context stated are transferred to a body or person in case 7/68, Commission v Italy ([1968] which is not resident there, provided that ECR 423): the non-resident person does not give "by goods, within the meaning of that something of equivalent value in return. In that case also the resources would provision, there must be understood products which can be valued in money pass from the resident to the non­ and which are capable, as such, of resident person or body and would not forming the subject of commercial be counterbalanced by something of transactions". equivalent value received in return. Fur­ thermore, no movement of goods would The concept of "goods" and the need to take place, though the operation freedom of movement which is accorded could involve the actual physical to them by Title I of Part Two is very movement of goods from one country to wide, and is also a quite different another. However, the transfer would, in concept to the concept of "movement of any event, be made without anything capital". The two concepts of being received in return and would "movement of goods" and "movement therefore not amount to a trade in of capital" are not analogous or parallel goods. Of course, if something were concepts. On the contrary they are quite received in return, the operation would different in nature one from the other

REGINA v THOMPSON

and the use of the word "movement" in had in contemplation, that is to say the both is perhaps misleading. unilateral transfer of value of some kind

Thus, for example, they decisive, provided that such coins may will still be subject to customs formalities legally form the subject-matter of a commercial transaction and be traded. and, where appropriate, value added tax. That is to say, that the coins may legally Nevertheless, it is considered that where be exchanged for a consideration which the transfer is not made by way of trade reflects their open market value. The and amounts to movement of capital open market value would, of course, then it will be subject to the provisions of reflect such diverse factors as the Title III rather than Title I of Part Two condition of the particular coin, its metal

provisions. Moreover, even if the former Movements from one Member State to provisions were held to apply to capital movements, this would only be so in another of gold or of coins must be cases where the individuals concerned classified according to the kind of chose to effect the capital movement by movement which is being undertaken or means of the physical transfer of goods effected, and cannot be regarded as a from one Member State to another, and movement of capital simply because the would not be so if they chose to effect it "thing" (to use a neutral expression)

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(and very often are) movements of eliminated, must be interpreted strictly. It "goods" within Title I of Pan Two of does not establish a generic safeguard the Treaty. clause which is in addition to other

Its provisions deal with exceptional cases which are (2) In the United Kingdom legislation clearly defined. National rules or itself, the Import of Goods (Control) practices do not, in any event, fall within Order 1954 and the Open General the exceptions specified in Article 36 if Import Licence dated 5. 7. 1973 (as the same objects can be achieved by amended by Amendment No 10), measures which do not restrict intra- which have the effect of prohibiting the importation of gold coins, are Comunity trade so much.

Nevertheless, even where goods, the question still remains to be restrictions on the free movement of considered whether the national goods is capable of being justified on the provisions prohibiting or restricting such grounds of public policy, recourse by a movements may be justified by the national authority to that concept provisions of Article 36 of the Treaty presupposes the existence of a genuine and, in particular, may be justified on and sufficiently serious threat to the the grounds of "public policy" within the requirements of public policy affecting meaning of that article. one of the fundamental interests of Article 36, which constitutes a dero society, in the same way as recourse to gation from the basic rule that all that concept would presuppose such obstacles to the free movement of goods considerations in the context of Article between Member States shall be 48 (3) of the Treaty.

(i) "Speculation" and "hoarding" (1) (a) With regard to the prohibition (apart from any possible moral on the importation of gold coins in order implications) seem to be concerned to prevent the drain on its balance of primarily with economic matters, payments. Specific provision is made in whereas Article 36 Chapter 2 of Title II ("economic "... aims at hypothetical events of a policy") of Part Three of the Treaty, non-economic nature that are not concerning Policy of the Community, in likely to affect the principles laid respect of balance payments. In down in Articles 30 to 34 as particular, Articles 108 and 109 in that confirmed by the last sentence of chapter provide detailed procedure to be this article". followed by the Institutions of the Community and by Member States when (ii) If the true object of the prohibition certain difficulties arise or threaten with by United Kingdom legislation of regard to a Member State's balance of the importation of gold coins is to payments, or where a sudden crisis in the prevent speculation and the balance of payments occurs. It is hoarding of unproductive assets, the therefore considered that Article 36 means adopted seem to be cannot serve as a basis for justifying remarkably inept. national measures designed to ensure the (iii) In any event, measures which affect equilibrium of its overall balance of the free circulation of goods, in payments, any more than it could have derogation from the fundamental served, during the transitional period, as rules of the Treaty, by prohibiting a legal basis for measures which should the importation of one class of properly have been taken under Article goods, would constitute a means of 226 of the Treaty. arbitrary discrimination or a disguised restriction on trade (b) "To prevent the speculation and between Member States (contrary to hoarding of unproductive assets". It does the provisions of Article 36) if not appear to be the case that specu­ comparable goods in free circulation lation and hoarding in general are activities which are either defined or in the Community could still be imported freely, or sales of the same regulated by United Kingdom legislation. goods on the domestic market were Nor is it apparent that speculation and not restricted in the same way. hoarding in the United Kingdom have assumed such proportions that public (2) With regard to the prohibition on policy demands that they be regulated. It the exportation from the United may, therefore, be doubted whether, in Kingdom of silver alloy coinage in order present circumstances, measures to prevent the speculation and hoarding of (a) "to ensure that there is no shortage of current coins for use of the gold coins are within the discretion which the national authorities enjoy in public": implementing measures of public policy (i) It may be observed first of all in derogation from the rules of the that such an objective can only Treaty. However, even if it were to be apply in respect of those coins admitted that Member States may, at which remain legal tender their discretion, derogate from the (sixpences, shillings, florins);

since coins which have ceased to prohibition may be justified on be legal tender (halfcrowns) are other grounds relating to public no longer used by the public as policy. money (though it seems they (iii) It is, nevertheless, still possible can be traded as goods). In so that in such a situation a far as this policy is applied to prohibition on the exportation the coins which are legal tender it would seem that a Member of current coinage could be justified as a measure of public State which is, of course, policy imposed to meet some responsible for its own currency other threat to the interests of does have a legitimate interest in society provided that the threat ensuring that its coins remain in was a genuine and sufficiently sufficient quantities in the serious one. But in such cases, it territory where it can be is submitted that the consequent tendered legally. derogation from Articles 30 to (ii) However, even though a 34 of the Treaty would have to Member State may have a be justified by reference to the legitimate interest in prohibiting real and serious threat which is the exportation of its own actually being posed to the current coinage, it is submitted interests of society and which that in so far as such expor­ the measure, as a matter of tation can be regarded as being public policy, is designed to governed by the provisions of meet, and should not be the Treaty concerning the free justified by reference to matters movement of goods (and in all which pose threats of a probability this will seldom be theoretical nature only. the case) any justification for such measures based on "public (iv) In fact, it could be argued that a Member State does have a policy" must be the true justification, and not be merely legitimate interest, as a matter an incidental matter of pre­ of public policy, in preventing sentation. its coinage from being removed from its territory without auth­ Thus, a prohibition on the expor­ orization. However, it is tation of coins traded as goods submitted that the Member can only be justified on the State would not be justified in grounds that it prevents a imposing a prohibition on the shortage of current coins for the export of coins if those coins public's use if in fact, that is the could be freely traded as goods reality of the situation. If, on within the national territory but the other hand, the reality of the the prohibition would need to situation is that the prohibition be applied fairly without is intended to prevent the expor­ discrimination, and, indeed, it tation of a minute proportion of would be a far less effective current coins (those few coins instrument of public policy if it remaining in circulation which were not so applied. have a higher silver content), then it is submitted that the (b) "To ensure that any profit resulting prohibition cannot be justified from any increase in the value of on the grounds of preventing a metal content of the coin accrues to shortage of current coinage, the Member State rather than to an though, of course, the individual".

(i) As the Member States are entitled to exercise its discretion entirely responsible for the issue within the limits imposed by the of their own coinage, the value Treaty. Moreover, in the United of the metal content of the coins Kingdom, the destruction of the. which they issue is of legitimate coinage is forbidden by the criminal interest to them, and may law. It is therefore considered that a reasonably be regarded as a prohibition on the exportation of matter of public policy upon coins which may not be melted down which they may exercise their or broken up within the national discretion within the limits territory, in order to prevent such imposed by the Treaty. melting down or breaking up However, it is considered that a occuring in another Member State, is Member State would be justified a matter of "public policy" within in prohibiting the exportation of the meaning of Article 36 of the its own coinage (whether Treaty and that in the circumstances current legal tender or not) in set out in the Statement of Facts no order to prevent the profit arbitrary discrimination or disguised resulting from the increase in restriction on trade between Member value of the metal content States would arise. accruing to an individual only if individuals were prohibited in all The Commission adds a short summary cases from obtaining that profit. of the exchange restrictions in force in (c) "To prevent the destruction of its Member States at the end of 1976 coins occurring outside its concerning gold. jurisdiction, which if it occured within its jurisdiction would be a At the hearing on 14 June 1978 the criminal offence". appellants, represented by R. Du Cann O.C. and R. Alun Jones, the As has been noted above; the Government of the United Kingdom, Member States are entirely represented by P. Archer O.C, Solicitor responsible for the issue of their own General and H. Woolf and the coinage. The destruction of its Commission, represented by its Legal coinage would therefore seem to be Adviser, T. Townsend, acting as Agent, a matter of legitimate interest to any submitted their oral observations. Member State, and one which may reasonably be regarded as a matter The Advocate General delivered his of public policy upon which it is opinion at the hearing on 4 July 1978.

5 By virtue of the Export of Goods (Control) Order 1970, made in exercise of powers under the said Act of 1939, the export from the United Kingdom, except under licence, of silver alloy coins minted before 1947 in a quantity exceeding ten in number and not more than 100 years old at the date of exportation is prohibited.

6 The export of such coins to another Member State of the EEC was auth­ orized by an Open General Licence dated 20 December 1972 which was granted by the Secretary of State and which, as far as such coins are concerned, was revoked and replaced by another Open General Licence dated 25 June 1973.

7 This second Open General Licence was revoked by another Open General Licence dated 5 July 1974 which came into operation on 15 July 1974 and had the effect of taking such coins out of the ambit of the Open General Licence with the result that as from 15 July 1974 they could not be exported except under licence.

REGINA v THOMPSON

8 The appellants arranged for 3 400 South African Krugerrands which came from the Agosi firm in Pforzheim in the Federal Republic of Germany to be brought into the United Kingdom between 24 April 1975 and 30 June 1975.

9 They also exported between 7 August 1974 and 26 May 1975 for the same German firm 40.39 tonnes of silver alloy coins minted in the United Kingdom before 1947, namely sixpences, shillings, florins and half-crowns.

JUDGMENT OF 23. 11. 1978 — CASE 7/78

16 As far as concerns the restrictions on imports the ban on the importation of certain gold coins into the United Kingdom was, according to the British Government, enacted in order:

(i) to prevent the drain on its balance of payments and

(ii) to prevent the speculation and hoarding of unproductive assets.

17 As far as concerns the restrictions on exports the ban on exports from the United Kingdom of silver coins minted before 1947 was enacted in order:

(i) to ensure that there is no shortage of current coins for use of the public;

(c) silver alloy coins of a Member State, which have been, and which, although no longer legal tender in that State are protected as coin from destruction in that State?

2. If so, can the quantity and manner in which and the purposes for which such coins are traded result in such coins ceasing to be within the term "capital" in Part Two, Title III, Chapter 4?

3. Do the provisions of Pan Two, Title III, Chapter 4 of the Treaty of Rome apply to such of the aforesaid coins as are "capital" to the exclusion of the provisions of Part Two, Title I, Chapter 2 of the Treaty?

REGINA v THOMPSON

4. If the answers to all or any of the above questions are such as to determine that the articles in this case fall within Part Two, Title I, Chapter 2, does the term "public policy" in Article 36 of the Treaty of Rome mean that a Member State may seek to justify restrictions on:

(a) The import of gold coins on either or both of the following grounds:

19 An examination of the questions asked shows that, even if these questions have been formulated so as to lay emphasis on the description of the coins in question as "capital", their actual purpose is to find out whether these coins are goods falling within the provisions of Articles 30 to 37 of the Treaty or constitute a means of payment falling within the scope of other provisions.

20 Understood in this way, these questions must be considered in the context of the general system of the Treaty.

21 An analysis of this system shows that the rules relating to the free movement of goods and, in particular, Articles 30 et seq. concerning the elimination of quantitative restrictions and measures having equivalent effect, must be considered not only with reference to the specific rules relating to transfers of capital but with reference to all the provisions of the Treaty relating to monetary transfers, which can be effected for a great variety of purposes, of which capital transfers only comprise one specific category.

JUDGMENT OF 23. 11. 1978 — CASE 7/78

22 Although Articles 67 to 73 of the Treaty, which are concerned with the liber­ alization of movements of capital, assume special importance as far as one of the aims set out in Article 3 of the Treaty is concerned, namely the abolition of obstacles to freedom of movement for capital, the provisions of Articles 104 to 109, which are concerned with the overall balance of payments and which for this reason relate to all monetary movements, must be considered as essential for the purpose of attaining the free movement of goods, services or capital which is of fundamental importance for the attainment of the Common Market.

REGINA v THOMPSON

29 Having regard to the above-mentioned considerations it is unnecessary to deal with the question under what circumstances the transfer of these two categories of coins might possibly be designated either as a movement of capital or as a current payment.

30 Question 1 (c) refers to silver alloy coins of a Member State, which have been legal tender in that State and which, although no longer legal tender, are protected as coinage from destruction.

31 Such coins cannot be regarded as means of payment within the meaning stated above, with the result that they can be designated as goods falling within the system of Articles 30 to 37 of the Treaty.

32 It is for the Member States to mint their own coinage and to protect it from destruction.

33 The Court's file shows that in the United Kingdom the melting down or destruction of national coins is prohibited, even if they are no longer legal tender.

THE COURT

in answer to the questions referred to it by the Court of Appeal (Criminal Division) by order of 15 December 1977, hereby rules:

1. The provisions of Articles 30 to 37 of the Treaty do not apply to

(a) silver alloy coins which are legal tender in a Member State,

(b) gold coins such as Krugerrands which are produced in a non- member country but which circulate freely within a Member State.

2. A ban on the export from a Member State of silver alloy coins, which have been but are no longer legal tender in that State and the melting down or destruction whereof on national territory is forbidden, which has been adopted with a view to preventing such melting down or destruction in another Member State, is justified on grounds of public policy within the meaning of Article 36 of the Treaty.