C-93/78

In Case 93/78

REFERENCE to the Court under Article 177 of the EEC Treaty by the Amtsgericht Essen for a preliminary ruling in the action pending before that court between

Lothar Mattheus, merchant, Windeck/Opperzau,

1 — Language of the Case: German.

JUDGMENT OF 22. 11. 1978 — CASE 93/78

and

JUDGMENT

Facts and Issues

The facts of the case, the course of the "This agreement is definitively procedure and the written observations concluded for a period of five years. If submitted pursuant to Article 20 of the the said accession should in fact or in Protocol on the Statute of the Court of law prove to be impracticable, the Justice of the EEC may be summarized Principal [Doego] shall have the right to as follows: terminate this agreement. The decisive factor in determining whether the said accession is practicable in law shall be a I — Facts and procedures decision of the Court of Justice of the European Communities. In the event of a On 1 August 1977 the parties in the main justified termination of this agreement action entered into an agreement under the Agent shall lose his right to which Mr Mattheus undertook to set up repayment of his expenses. a system of market surveys in respect of certain products in Spain and Portugal. The courts in Essen shall have This system was to be operational at the jurisdiction in matters arising out of this latest from the date of the decision on agreement." the accession of those States to the By a letter of 29 January 1978 Mattheus European Communities. called upon Doego to reimburse him for Doego undertook in consideration his expenses amounting to DM 527 85 thereof to pay half-yearly a lump sum, but the latter terminated the agreement the amount whereof was to be agreed pursuant to the above-mentioned subsequently. paragraph. Mattheus therefore sued The clauses at the end of the contract Doego in the Amtsgericht (Local Court) are worded as follows: Essen on 21 February 1978.

That court thereupon made the Essen, 23 March 1978 following order: Schaper, Judge of the Amtsgericht" "Amtsgericht Essen Order The order making the reference was In the Case of entered on the Court Register on 14 April 1978. Lothar Mattheus, merchant, HH, Pursuant to Article 20 of the Protocol on Halbacher Straße, 5227 Windeck/­ the Statute of the Court of Justice of the Opperzau, EEC written observations were submitted plaintiff, to the Court by Lothar Mattheus, the v plaintiff in the main action, by Doego, the defendant in the main action, Doego Fruchtimport und Tiefkühlkost (Fruit importation and frozen food) eG. represented by Gert Meier and by the (eingetragene Genossenschaft — Commission of the European registered co-operative), represented by Communities, represented by Claus- Dieter Ehlermann, Director General of its Board of Directors, being represented in turn by the Managing Director, K. the Legal Department of the Winkler, having a diploma in business Commission, acting as Agent, assisted by studies, 84 Feldstraße, 46 Dortmund 1, Peter Karpenstein, Legal Adviser to the Commission. defendant The Court, on hearing the report of the (1) Upon the application of the parties Judge-Rapporteur and the views of the the following questions are to be Advocate General, decided to open the referred pursuant to the second oral procedure without any preparatory paragraph of Article 177 of the EEC inquiry. It requested the Commission to Treaty to the Court of Justice of the give its views on the question whether European Communities for a pre­ clauses such as those found in the liminary ruling: penultimate paragraph of the contract at (a) Is Article 237 of the EEC issue are compatible with Community Treaty, either standing alone or public policy. in conjunction with other provisions of the EEC Treaty, to be interpreted as meaning that it II — Summary of the written contains substantive legal limits observations submitted to on the accession of third the Court countries to the European Communities over and above the A — Observations of the plaintiff in the formal conditions laid down in main action Article 237? As far as concerns the first question it is (b) What are those limits? immaterial according to Mattheus (c) Is therefore the accession of whether Article 237 imposes substantive Spain, Portugal und Greece to legal limits, as well as formal conditions, the European Communities for on the accession of non-member States. reasons based on Community Even if this question were to be law not possible in the fore­ answered in the affirmative the seeable future? paramount political interests of the (2) The proceedings are stayed pending Community make it necessary to admit the ruling of the Court of Justice of Greece, Spain and Portugal as new the European Communities. members.

B — Observations of the defendant in the — They must have a "liberal" main action constitution and an adequate degree According to Doego it would be appro­ of political stability. priate to answer the first question in the — Their level of economic development affirmative without making any reser­ must be on average comparable with vation. The second paragraph of Article that of the Community. 237 of the EEC Treaty clearly indicates — They must accept the "acquis that unless special conditions of Communautaire" (Community legis­ admission are fulfilled the accession of lation and decisions already non-member States to the Community is adopted), including the Community's not permissible under Community law. political objectives. Special importance must accordingly be — They must satisfy the economic attached to the need to lay down conditions for admission. conditions and those relating to persons, possess the necessary This view has for a long time been in financial resources and the instru­ keeping with the legal doctrines ments to enable them to fulfil advocated both by the Council and by effectively the requirements of the Commission of the European Community law. Communities. Doego refers to the Copenhagen Declaration of the Heads The defendant suggests that the second of State and Heads of Government of 14 question should be answered as follows: and 15 December 1973 on the European "Article 237 of the EEC Treaty in identity, to the Declaration of the conjunction with the principles or the Council of Europe of 8 April 1978 on Treaty prohibits the accession of non- democracy at Copenhagen, to the reply member States to the European of the Council of the European Communities, if and to the extent to Communities to Written Question No which the level of integration which has 930/77 by Mr Hoist (Official Journal of been reached would thereby be 14 March 1978, C 64, p. 20) and also to jeopardized and such progress with the Opinions of the Commission regard to integration as is provided for delivered to the Council on 29 in the Treaty or in decisions derived September 1967 and 1 October 1969 therefrom would be retarded. Under (Opinion of the Commission of 29 Community law the Community September 1967, (COM (67) 750) and institutions and the Member States are Opinion of 1 October 1969, Annex to under a duty to authorize the accession The Bulletin of the European of another Member State to the Communities, Nos 9/69 and 10/69), to European Economic Community only if the Commission's "General consider­ and to the extent to which the conditions

that the contract entered into by the The Commission is of the opinion that parties includes an arbitration clause the first question must be answered in appointing the Court of Justice of the the affirmative. European Communities as arbitrator. It In order to be able to start accession is apparent however from Articles 181 and 182 of the EEC Treaty that private negotiations the applicant State must persons cannot confer jurisdiction upon fulfil in the legal field two basic conditions: on the one hand it must be a the Court of Justice of the European Communities by means of an arbitration European State and on the other hand, its form of constitution must be that of a clause. pluralistic democracy whose structure C — Observation of the Commission of guarantees representation of the various political opinions and also the pro­ the European Communities cedures necessary for the protection of The Commission doubts whether the human rights. In this connexion the reference for a preliminary ruling is Commission refers to the opinion which admissible. A perusal of the agreement it delivered at the time of the first giving rise to this reference gives the enlargement of the Community and to impression that it was concluded for the the declaration on democracy adopted sole purpose of obtaining from the Court by the Council of Europe on 4 and 5 a ruling as to the existence of substantive April 1978 at Copenhagen (both of conditions for accession to the which have been mentioned above). Community. It considers that it is The first enlargement of the Community strange, to say the least, for businessmen was based on the principle that applicant to stipulate in a written contract that the States must accept the totality of the repayment of expenses incurred in per­ "acquis Communautaire". However, formance of an undertaking should there is no doubt that the increase in the depend solely upon the question whether number of Member States also presents there are legal obstacles to the accession problems of a qualitative nature. On this of new European States to the European point the Comission refers to its analysis Economic Community, and for them to on the institutional implications of provide in doing so that that question enlargement of 24 April 1978, COM should be determined by the Court of (78) 190 Final. The concept of Justice of the European Communities. "adjustments" used in the second There are accordingly grounds for paragraph of Article 237 of the EEC asking whether the parties to the main Treaty must be interpreted as meaning action are really concerned with the that, in so far as is necessary for the repayment of the expenses in question, accession of a European State to be or whether their aim is simply to obtain a effected, the concept also permits clarification in abstracto of a legal amendments to the Treaty which go question which appears to them to be of further than the purely mechanical

court, there cannot possibly be said to be European Economic Community a breach of Community provisions must be the subject of the relating to public policy. There is no agreement between the Member doubt that contracting parties are, in the States and the applicant States main, forbidden to dictate to courts in a provided for in the second clause governed by private law, the paragraph of Article 237. In action they must take in procedural accordance with that provision matters. the only restrictions to which the States taking part in the On the other hand it is impossible to negotiations on the terms of the prevent the contracting parties from accession agreement are subject expressing their wishes as to the are the following: procedure to be adopted. The Commission takes the view that the (a) The derogations from the Amtsgericht Essen appears to have EEC Treaty and from the interpreted the penultimate paragraph of secondary legislation under the agreement of 1 August 1977 as only the Treaty which they being a suggestion. It might already have contemplate may only be come to its decision on the basis of the transitional, that is to say of right of termination mentioned in the limited duration; penultimate paragraph (second sentence). (b) They may make adjustments To sum up the Commission submits that: to the EEC Treaty only in so — The third question should be rejected far as that proves to be as inadmissible; necessary by reason of the accession; — Should the Court hold that the other part of the reference for a pre­ (c) When making adjustments to liminary ruling is admissible the the EEC Treaty and to the answers to the first and second secondary legislation they questions should be as follows: may not depart from the principles governing the (1) Article 237 of the EEC Treaty European Economic. Com­ must be interpreted as meaning munity. that, in addition to the requirements which it lays down for the application and III — Oral procedure agreement, it permits the accession of a State to the At the hearing on 3 October 1978 the European Economic Community defendant in the main action and the only if: Commission of the European — that State is a European Communities presented their oral obser­ State; and vations.

"This agreement is definitively concluded for a period of five years. If the said accession should in fact or in law prove to be impracticable, the Principal [Doego] shall have the right to terminate this agreement. The decisive factor in determining whether the said accession is practicable in law shall be a decision of the Court of Justice of the European Communities. In the event of a justified termination of this agreement the Agent shall lose his right to repayment of his expenses.

The courts in Essen shall have jurisdiction in matters arising out of this agreement."

3 When Doego terminated the agreement in reliance on the provision for ter­ mination in the above-mentioned clause Mattheus sued Doego in the Amtsgericht for repayment of his expenses.

JUDGMENT OF 22. 11. 1978 — CASE 93/78

That court thereupon referred the following questions to the Court of Justice:

"(a) Is Article 237 of the EEC Treaty, either standing alone or in conjunction with other provisions of the EEC Treaty, to be interpreted as meaning that it contains substantive legal limits on the accession of third countries to the European Communities over and above the formal conditions laid down in Article 237?

6 The facts in these proceedings raise the question whether a clause such as the one contained in the contract between the parties to the main action, which has given rise to this reference for a preliminary ruling and which makes the legality of the termination of the contract dependent upon a ruling of the Court of Justice is not void as being incompatible with the above-mentioned provisions.

However, no such question has been raised by the national court and in view of what follows it is unnecessary for the court to give a ruling of its own motion on this matter.

MATTHEUS v DOEGO

The questions referred to the Court

7 As provided for in the first paragraph of Article 237 of the EEC Treaty: "Any European State may apply to become a member of the Community. It shall address its application to the Council, which shall act unanimously, after obtaining the opinion of the Commission".

The second paragraph of the article reads: "The conditions of admission and the adjustments to this Treaty necessitated thereby shall be the subject of an agreement between the Member States and the applicant State. This agreement shall be submitted for ratification by all the Contracting States in accordance with their respective constitutional requirements".

As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

OPINION OF MR MAYRAS — CASE 93/78

On those grounds,

THE COURT,

in answer to the questions referred to it by the Amtsgericht Essen by an order of 23 March 1978, hereby rules:

The Court of Justice has no jurisdiction to give a ruling on the questions referred to it by the national court.

Mr President and Portugal. These surveys were to be Members of the Court, ready at the date of accession of those This request for a preliminary ruling in States and, as everyone knows, such which no Member State and no accession has not yet taken place. institution other than the Commission has The penultimate paragraph of that shown any interest will not take up very agreement provided that it should be for much of the Court's time. a period of five years and that, if the By an agreement dated 1 August 1977 accession of those countries should in the plaintiff in the main action fact or in law prove to be impracticable, undertook to prepare, for a financial the defendant should have the right to consideration, on behalf of a fruit terminate the agreement without having importer, the defendant in the main to indemnify the plaintiff. It was a term action, a series of market surveys of of the contract that "The decisive factor various agricultural products in Spain in determining whether the said

1 — Translated from the French.