C-15/78

on the interpretation of Articles 59 and 60 of the EEC Treaty with reference to the legislation of the Federal Republic of Germany relating to stock exchanges and commodity markets,

THE COURT

composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

While Mr Koestier was resident in The Oberlandesgericht Köln (Higher France he arranged for the Société Regional Court, Cologne) by a default Générale Alsacienne de Banque, a judgment of 11 August 1977 upheld in limited liability company incorporated substance the judgment of the court of first instance. It held that, although the under French law, having its registered legal relations between the panics were office at Strasbourg, which passed on undoubtedly governed by French law, in his orders to a stockbroker, to carry out the case of stock exchange time- stock exchange time-bargains on the Paris stock exchange, mainly in foreign bargains carried out on a foreign stock shares. These transactions did not take exchange the plea that the contraa was an agreement to pay differences the form of the purchase of the shares themselves but of the settlement of the provided for by German law, by virtue of the provision relating to public policy differences between the agreed share in Article 30 of EGBGB (Law intro­ prices and the actual share prices on ducing the Civil Code), can be raised settling day. The gains or losses arising even if the law applicable is a foreign out of these time-bargains were entered law which does not recognize this plea. by the Société Générale Alsacienne de Furthermore, Mr Koestler has capacity Banque in an account opened in the to carry out stock exchange time- name of Mr Koestier. bargains within the meaning of Article 53 (2) 2 of the Law relating to stock On 31 January 1975 the debit balance exchanges and commodity markets payable by Mr Koestier to the Société because, when the transactions were Générale Alsacienne de Banque arising concluded, he had neither residence nor out of these transactions, including place of business in the Federal interest, costs and taxes amounted to FF Republic. Finally, recognition of this 852 620.39. plea that the contraa was an agreement to pay differences does not contravene Since the Société Générale Alsacienne Articles 59 and 60 of the EEC Treaty. de Banque was unable to obtain payment of this sum from Mr Koestier Mr Koestier appealed on 6 September it commenced legal proceedings in the 1977 against the default judgment of 11 Landgericht (Regional Court) Bonn on August 1977. 22 May 1975 for recovery of the debt. The Oberlandesgericht Köln, before which the case was brought again, by an In its judgment of 13 January 1977 that order of its 10th Civil Senate dated 23 court decided that the sum of FF January 1978 decided, pursuant to 473 937.47 attributable to the time- Article 177 of the EEC Treaty, to stay bargains was not actionable, because the proceedings until the Court of Justice claim was barred by the plea that the had given a preliminary ruling on the contract was an agreement to pay following questions: differences (Differenzeinwand) deriving from Article 62 et seq. of the Law 1. Properly interpreted, do Articles 59 relating to stock exchanges and and 60 of the EEC Treaty exclude commodity markets (Börsengesetz) of the objection under German law that 22 June 1896 and in Articles 762 and a contract is an agreement to pay 764 of the BGB German Civil Code). differences (Differenzeinwand —

articles 764 and 762 of the Bür­ desgerichtshof (Federal Court of gerliches Gesetzbuch (Civil Code); Justice) a customer who is a French Articles 61, 58 and 50 of the national may also avoid payment of a Borsengesetz (Law relating to stock debt due to a French bank arising out of exchanges and commodity markets; a stock exchange time-bargain by Bundesgerichtshof, Neue Juristische moving to the Federal Republic of Wochenschrift 75, 1600; 72 382) in a Germany. case where a French bank is claiming, from a customer of Articles 59 and 60 of the EEC Treaty German nationality, the repayment have direct effect and take precedence on the basis of French law of credit not only over Articles 764 and 762 of for dme-bargains (agreements to pay the BGB and Articles 58 and 60 of the differences) carried out on the Paris Law relating to stock exchanges and stock exchange in accordance with commodity markets but also over the an agreement? rule on conflict in private international law contained in Article 61 of this Law 2. Is it relevant for the answer to and the exception of public policy Question 1 whether under German contained in Article 30 of EGBGB. law the German customer had capacity in accordance with Article Articles 59 and 60 prohibit restrictions 53 of the Börsengesetz to enter into on freedom to provide services within time-bargains? the Community where nationals of the Member States are concerned. Article 60 defines the concept of "provision of The order of the Oberlandesgericht services": activities of a commercial Köln was lodged at the Court Registry character are considered to be such on 13 February 1978. services, in so far as they are not Pursuant to Article 20 of the Protocol governed by the provisions relating to freedom of movement for goods and on the Statute of the Court of Justice of capiul. In this case the operations of the the EEC written observations were Société Générale Alsacienne de Banque submitted on 19 April 1978 by the cannot be assigned to the categories of Commission of the European movement of capiul or of goods; the Communities and on 2 May 1978 by the transactions in question were а specific Société Générale Alsacienne de Banque. provision of services for а customer subject to the business conditions of а On hearing the repon of the Judge- bank. Rapporteur and the views of the Advocate General the Court decided to The respective registered office and open the oral procedure without any residence of the two parties, who are preparatory inquiry. nationals of a Member Sute, were in France. However this fact does not preclude the application of Article 59: II — Written observations sub­ the provision of services continues until the business relations between the mitted to the Court parties have been brought to an end. The situation envisaged by Article 59, The Société Générait Alsacienne de namely that nationals of Member States Banane, the plaintiff in the main action established in a Member Sute other considers the fact that its customer is a than that of the person for whom the German national to be irrelevant: service is intended are to enjoy the according to the case-law of the Bun- benefit of freedom to provide services,

arose at the latest when Mr Koestier Freedom to provide services does not took up his residence in the Federal allow Articles 764 and 762 of the BGB Republic of Germany. and Article 61 of the Law relating to stock exchanges and commodity Having regard to the case-law of the markets to be interpreted as meaning Court of Justice on the interpretation of that they can apply to a time-bargain restrictions on freedom to provide based in French law and governed by services and the prohibition of discrimi the French legal system; it matters little nation on ground of nationality Article in this connexion whether the German 59 must be interpreted as prohibiting customer has capacity or not under every anual or legal restriction and German law, in accordance with Article obstacle likely to have an effen on 53 of the Law relating to stock freedom to provide services within the exchanges and commodity markets, to

bargains. Otherwise German law or into time-bargains within the meaning case-law could in fan nullify a debt of Article 53 of the Law on stock payable under French law simply exchanges and commodity markets, is because the debtor has taken up entitled to raise the plea that a time- residence in the Federal Republic of bargain in currencies which is valid in Germany and thus submitted to the law France, is an agreement to pay of that country. Freedom to provide

with Articles 61 and 58 of the Law on apprehensive lest the plea that the stock exchanges and commodity contract was an agreement to pay differences under German law be raised markets is clearly incompatible with at a later date and its customers avoid Articles 59 and 60 of the EEC Treaty. The consequential discrimination not payment by moving to the Federal only lies in the fan that the Paris stock Republic of Germany as soon as a large debt arose from the time-bargains exchange suffen a disadvanuge compared with the Frankfurt stock covered by a credit. exchange; as far as banks are concerned Community law does not allow a the discrimination lies primarily and Member State such hegemony; Article 5 conclusively in the fan that carrying out of the Treaty does not permit one time-bargains on the Paris stock Member Sute to put its own legal exchange for a customer and the provisions into effen in another opening of a credit for this purpose are Member Sute, especially if as a result given a different legal interpretation in they adversely aften undertakings and the Federal Republic of Germany, citizens of that Sute. having regard to Article 50 of the Law

relating to stock exchanges and been proved that he was still resident in commodity markets, from similar the Federal Republic. It is for the transactions carried out on a German national court, for the purpose of stock exchange in the same securities. determining the preliminary question The discrimination in question occurs in whether the business relations between the laws relating to the running of stock the parties to the main action are to be exchanges. classified as provision of services within the meaning of the EEC Treaty, to The Commission of the European decide whether Mr Koestler arranged Communities points out that the Court from his residence in France for all the is requested in the first question to rule transactions to be carried out or whether, having regard to the facts whether he gave some of his orders therein mentioned, the application of from Germany. German law, and in particular those provisions which provide for the plea Subject to this reservation it must be that a contract is an agreement to pay said that the concept of "restrictions" differences lead inevitably to a within the meaning of Article 59 of the restriction on the freedom of the Treaty must be given a broad interpret plaintiff company in the main action to ation as is shown by the case-law of the provide services. In this connexion it is Court of Justice and the General necessary to take into consideration the Programme for the abolition of fact that Article 61 of the German Law restrictions on freedom to provide on stock exchanges and commodity services, adopted by the Council on 18 markets is generally regarded as a rule December 1961 (Official Journal, on conflict in German private inter national law and Article 50 as an

Treaty. Article 59 implies that services attaching to an activity as a self- are provided beyond the frontiers of employed person and in particular the Member States of the Community either power to enter into contracts. . . and to where the person providing the services enjoy all rights arising under such and the person for whom the services contracts" is regarded as a restriction. are intended are resident in different "Any requirements imposed, pursuant Member States or where the services are to any provision laid down by law, regu provided in a Member Sute other than lation or administrative anion or in that in which the person providing the consequence of any administrative services resides.

SOCIETE GENERALE ALSACIENNE DE BANQUE v KOESTLER

The mere fact that there are differences justify the application of the German between the national provisions which Law relating to stock exchanges and allow time-bargains in securities is not commodity markets to time-bargains sufficient to show that there is a concluded abroad must give way before "restriction" within the meaning of the principles of Article 59 of the Treaty Article 59 of the EEC Treaty. Should and the introduction of the free the need arise measures for the co-ordi­ movement of services within the nation or the approximation of national Community which is the objective of laws can be envisaged in this field. that article.

view that there is a "restriction" of the activities of the bank providing services 1. Article 59 of the EEC Treaty must in France owing to the fact that it has be interpreted as meaning that a been subjected to a legal order which in Member State may not make the the last resort prevents it from carrying provision of services subject to any out stock exchange time-bargains on restriction which subjects the exercise behalf of customers resident in of the rights invoked by the person Germany. In this case all the services providing the services as against the were provided in France; the person for whom the services are unconditional applicability of the intended to the latter's domestic legal German Law relating to stock system, if the recovery of debts exchanges and commodity markets does arising out of the provision of not appear to be in any way objectively services is thereby barred, even if the whole of the service has been justified or necessary' in order to protect German public policy in a case where a provided in the country of the person German national of his own accord providing the services. concludes. outside the field of application of the German legal system, 2. The question whether the person for time-bargains governed by the law of whom the services are intended has another country. Such an "export" of capacity or not under his domestic the German legal system cannot be law to conclude time-bargains is justified as being in the interest of the irrelevant in interpreting Article 59 general public. A comparison with of the EEC Treaty. Council Directive 63/340/EEC of 31 May 1963 (Official Journal, English III — Oral procedure Special Edition 1963-1964. p. 31) makes it clear that the considerations which, The Société Générale Alsacienne de according to the German view, might Banque, the plaintiff in the main action,

The plaintiff in the main action is a French bank having its registered office at Strasbourg, which on the instructions of the defendant in the main action, a German national who at the time was resident in France, carried out orders on the Paris stock exchange which were time-bargains in respect of the differences between the prices of transferable securities (Differenzgeschäfte). The credit or debit balance resulting from these specu­ lative transactions was entered in a current account in conjunction with a credit which the bank had opened in favour of the party concerned. When the defendant took up his residence again in Germany he had, as a result of the losses which he had incurred, a large overdraft with the bank which he refused to discharge. Since the Société Générale Alsacienne de Banque had brought an action for recovery of the amount payable in the court having jurisdiction by reason of the debtor's residence, namely the Landgericht Bonn, that court, after analysing the items of the current account, rejected the pan of the claim relating to the debit balance arising out of the time- bargains carried out on the instructions of the defendant. The Landgericht was in fact of the opinion that under the Law relating to stock exchanges and commodity markets and the German Civil Code (Articles 762 and 764)

SOCIETE GENERALE ALSACIENNE DE BANQUE v KOESTIER

2. Is it relevant for the answer to Question 1 whether under German law the German customer had capacity in accordance with Article 53 of the Börsengesetz to enter into time-bargains?

3 The national court was right to accept that in a case of this kind the provisions of the EEC Treaty relating to the liberalization of the provision of services apply.

There is in fact no doubt that services such as those at issue which consist in a bank having orders carried out on a stock exchange and in current account transactions in conjunction with the opening of а credit constitute the provision of services within the meaning of the first paragraph of Article 60 of the Treaty which refers generically to all activities of a commercial character.

JUDGMENT OF 24. 10. 1978 — CASE 13/78

Furthermore the transactions in question cannot be regarded as services provided only within a Member State, when the person in receipt of the services, before the termination of the contractual relations between the parties, has taken up residence in another Member Sute, so that the requirement of the first paragraph of Article 59 that liberalization measures provided for by the Treaty must benefit all persons providing services "who are established in a Sute of the Community other than that of the person for whom the services are intended" has been met.

This must in particular be the case if the subject-matter of the action consists, as it does in these proceedings, of the balance of a current account, the transactions on which cannot be regarded as completed before this balance has been discharged.

IV«:

SOCIETE GENERALE ALSACIENNE DE BANQUE v KOESTLER

The question whether the legal concepts indicated by the above-mentioned German judgments might lead in law or in fact to discrimination against a person providing services established in another Member Sute must be examined in the light of these provisions.

5 The fact that debts arising out of a wagering contraa or other similar debts are not actionable cannot be regarded as discrimination against a person providing services established in another Member Sute if the same limitation applies to any person providing services established within the territory of the same Sute whenever that person claims payments of a debt of the same kind, and this has not been disputed in the present case.

The refusal by a Member State, for reasons founded on the social order to allow an action based on a claim of this kind, even if it was valid in another Member Sute, to be brought by a financial institution established in that Member State cannot therefore be regarded as contrary to Community law, when the Treaty, whilst it prohibits discrimination, does not impose any obligation to treat a foreigner providing services more favourably, with reference to his domestic law, than a person providing services established in the Member State where the services have been provided.

6 Therefore the answer to the first question must be that Articles 59 and 60 of the EEC Treaty do not affect the application of legislative provisions whereby a Member State bars the recovery by legal action of certain debts, such as debts arising out of a wagering contract and similar debts, provided that such provisions arc not applied in a discriminatory manner, either in law or in fact, compared with the way in which similar debts contracted within the territory of the Member State in question are treated.

THE COURT

in answer to the questions referred to it by the Oberlandesgericht Köln by an order of 23 January 1978, hereby rules:

Articles 59 and 60 of the EEC Treaty do not affect the application of legislative provisions whereby a Member State bars the recovery by legal action of certain debts, such as debts arising out of a wagering contract and similar debts, provided always that such provisions are not applied in a discriminatory manner, either in law or in fact, compared with the way in which similar debts contracted within the territory of the Member State in question are treated.

Kutscher Menens de Wilmars Mackenzie Stuart Donner Pescatore

Sørensen O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 24 October 1978.