C-267/78

JUDGMENT OF 10. I. 1980 — CASE 267/78

administration and the judicial auth- proceedings may therefore be relied orities. Rules which in the national upon against the Commission in so systems of criminal law prevent the far as the same restrictions may be communication to certain persons of relied upon against the national auth- documents in the criminal orities.

In Case 267/78

COMMISSION OI- THE EUROPEAN COMMUNITIES, represented by Giancarlo Olmi, Deputy Director-General of the Legal Department, and Gianluigi Campo- grande, a member of the Legal Department, acting as Agents, assisted by Giorgio Gregori, of the Trento Bar, with an address for service in Luxem- bourg at the office of Mario Cervino, Legal Adviser to the Commission, Jean Monnet Building, Kirchberg, applicant, v

ITALIAN REPUBLIC, represented by its ambassador, Adolfo Maresca, acting as Agent, assisted by Oscar Fiumara, Avvocato dello Stato, with an address for service in Luxembourg at the Italian Embassy, defendant,

APPLICATION for a ruling that the Italian Republic has failed to fulfil its obligations under Article 5 of the EEC Treaty and Article 14 of Regulation N o 2/71 of the Council of 2 January 1971 (now replaced by Article 18 of Council Regulation N o 2891/77 of 19 December 1977),

Facts and Issues

The facts of the case, the course of the Article 14 of Regulation No 2/71 procedure and the conclusions, sub- (replaced by Article 18 of Regulation No missions and arguments of the parties 2891/77) provides: may be summarized as follows: "(1) Member States shall carry out the verifications and inquiries concern- I — F a c t s and w r i t t e n p r o c e d u r e ing established entitlements and the making available of own resources

A — Community rules applicable (2) Accordingly, Member States shall : Article 2 of the Council Decision of 21 — Carry out any additional April 1970 on the replacement of measures of control the financial contributions from Member Commission may ask for in a States by the Communities' own reasoned request; resources (Official Journal, English Special Edition 1970 (I), p. 224) provides — Associate the Commission, at its that the Communities' own resources request, with the measures of shall be constituted by "agricultural control which they are carrying levies", that is to say "levies, premiums, out. additional or compensatory amounts jy

Community transit system. Nevertheless, verification programme similar to that the documents relating to this system requested of Italy." (termed " T 1") were improperly cleared both during transit and in Italy by means By letter dated 20 December 1976 the of false or forged documents relating to Italian Permanent Representation con- internal Community transit which firmed the first results of the allowed considerable amounts of agri- investigation and intimated that there cultural levies to be avoided. was probably a link between the fraudulent transactions in question and By letter dated 26 July 1976 and signed certain transactions which had been the by Mr Cheysson, the Italian Permanent subject of inquiry since 1975 by the Representative was informed that the Guardia di Finanza following a Commission had "information" justi- fortuitous occurrence which had given fying "a request for additional measures cause to suspect the existence of of control within the meaning of Article irregular traffic on a large scale, namely 14 of Regulation No 2 / 7 1 " . It was a road accident in which one of the requested not only that Italy should lorries in question was involved. There carry out additional measures of control was a promise of ". . . subsequent but also that the Commission might be communications, bearing in mind associated therewith. nevertheless that aspects involving facts capable of giving rise to criminal proceedings fall, in the last resort, within Meetings were thereupon arranged in the jurisdiction of the judicial auth- Milan and in Como between Italian orities". customs officers and officials of the Commission. It appears from a letter A request on 24 January 1977 from the from the Commission dated 18 October Financial Controller of the Commission 1976 that the central administration of for a meeting between the officials of the the Italian customs had undertaken: Commission and the Guardia di Finanza drew the following answer from the Permanent Representation : — To arrange a meeting with the Guardia di Finanza, the fiscal police force, and to inform the Commission "The meeting requested . . . seems to go of the results of that meeting; outside the scope of the additional measures of control in question". — To initiate an inquiry itself. On 22 March 1977 a letter from the Commission signed by Mr Tugendhat was sent to the Italian Permanent The Commission stressed that it Representative stating:

achieved in determining the ultimate From the start of the inquiries the Italian destination of the goods and any customs had notified the Netherlands estimate of the amount of customs duties customs that the clearance documents or levies evaded . . ." were false. The Netherlands customs never replied. On 15 July 1977 the Permanent Rep- resentation replied: On 19 January 1978, following a further unsuccessful approach, the Commission "Since it appeared . . . (that there was) gave Italy "the opportunity to submit its another investigation conducted by the observations" within the meaning of Ufficio Istruzione Penale, Turin, the Article 169 of the Treaty before Italian customs administration requested delivering the reasoned opinion referred a copy of the documents . . . (which was to by the same article. refused) since the documents in question were privileged as falling within the judicial inquiries . . .". The Permanent Representative replied on 2 February 1978 stating that: The Permanent Representative doubted moreover whether the Commission's request fell — The commitments of Italy in respect of the Community are confined to activities of an administrative nature; "within the scope of the rules on own resources, having regard to the fact that — The measures of control with which the administrative documents or police the Commission may be associated reports made so far contain no 'establishment of entitlement' in the relate only to the establishment of accounting sense." entitlements and the making available of own resources but not to the truth and substance of facts upon which According to the Italian customs it there has not yet been an established seemed established that the goods had entitlement to own resources; left the Netherlands accompanied with T l documents stating "butter". During — Entitlement must be established in transit the dealers had substituted for the accordance with the rules and to the T l documents T2 documents which were extent determined by municipal law; substantially false and specified other goods. The production of the false T2 documents issued, it seems, by the — Documents issued by the judicial customs at Roubaix, allowed import police force are privileged in duties to be avoided together with accordance with Article 230 of the checking at the Italian frontier Code of Criminal Procedure. (Piedmont); 327 vehicles were involved in these transactions. The clearance documents for the forged T l documents wrongly certified that there had been There were annexed to that letter: customs clearance at Como (Lombardy) so that the Netherlands customs might have proof that the certificates had been — The letter notifying the facts to the used. Netherlands customs;

— The two orders of the Turin the fact that it has "directly" suffered Examining Magistrate rejecting damage, ought, without even having to requests for copies of the documents; make itself a civil party, to have its interests defended in the criminal proceedings in Turin and in the interests of the Community the Italian Ministry of Finance, which has been made a civil — The "report" dated 22 November party through the intermediary of the 1976 from the Guardia di Finanza Avvocatura dello Stato, ought to be able stating that the customs authorities to obtain all the documents and forward had known since then that 306 them to the Commission. consignments of butter had crossed the Italian frontier and that the fiscal police had asked the Examining Magistrate to issue warrants to seize 29 vehicles, including 28 registered By letter dated 7 June 1978 the abroad and warrants of arrest in Permanent Representation stated that it relation to ten persons including nine was prepared to forward the documents aliens suspected of having committed to which the Ministry of Finance could various offences, including lawfully have access. This was done smuggling. The Turin customs following a meeting arranged at Rome estimated that butter worth more on 21 July 1978 between Italian rep- than 4 500 million lire had been resentatives and officials of the unlawfully imported and that more Commission. than 10 300 million lire in levies had remained unpaid. Details of suspects and vehicles impounded were given in a list annexed thereto. By letter dated 5 October 1978 the Commission stated that it considered the documents which had been forwarded to it to be incomplete and insufficient (in particular there were no documents showing the charges against each of the The reasoned opinion referred to in accused) and requested that the Article 169 of the Treaty was sent to the documents should be completed before Italian Republic by the Commission on 20 October. 20 April 1978. That opinion particularly stresses the Commission's power to make thorough investigations in respect also of the "facts giving rise" to the liability for levy, by reason of the precedence of On 7 November 1978 the Italian Community law over municipal law and Permanent Representative stated that the of the obligation of Member States to Turin Examining Magistrate was on the collaborate by all means available to point of issuing his order and that then them in the exercise of the right to the Italian finance administration would investigate. More specifically the be able to obtain the whole file since the Commission observes that the privilege privilege would no longer apply. of non-disclosure in relation to judicial inquiries is not unlimited since the provisions of municipal law make more than one derogation from the said On 16 December 1978 the Italian privilege. Accordingly, the Commission, customs authorities made an application which has a direct interest by reason of to the Examining Magistrate setting out

In February 1979 before the Examining (b) Declare that the Italian Republic has Magistrate took a decision closing the not failed to fulfil its obligations inquiry the Avvocatura dello Stato saw under Article 5 of the EEC Treaty, the final report drawn up by the Guardia Article 14 of Regulation N o 2/71 of di Finanza on 16 October 1976 and the the Council and Article 18 of statement of charges by the Pubblico Council Regulation No 2891/77; Ministero. Those documents and others are annexed to the rejoinder. (c) Order the Commission to pay the costs. In the meantime, on 21 December 1978 the Commission commenced this action. In its rejoinder the Italian Republic contends that the Court should: On hearing the report of the Judge- Rapporteur and the views of the Advocate General the Court decided to (a) Recognize that the documents open the oral procedure without any annexed to the rejoinder were also preparatory inquiry. made available to the Commission;

(b) Declare that there is no further purpose in the proceedings; and/or II — C o n c l u s i o n s of the p a r t i e s (c) Declare in any event that the Italian - Republic has not failed to fulfil its The Commission claims that the Court obligations under Article 5 of the should: EEC Treaty, Article 14 of Regu- lation No 2/71 of the Council and (a) Declare that the Italian Republic, by Article 18 of Council Regulation N o refusing to associate the Commission 2891/77. with inspection measures on the establishment of entitlement and making available of own resources of III — Submissions and argu- the Communities and to notify it of m e n t s of the p a r t i e s the results obtained, has failed to fulfil its obligations under Article 5 of the EEC Treaty and under Article A — In its application the Commission 14 of Regulation No 2/71 of the first of all observes that the object of the

— To co-ordinate the investigations of the various national bodies involved in one and the same inquiry; — From the system of the division of powers between the Member States and the Commission and the purpose in giving the latter its investigatory — To draw conclusions in good time powers. The fact that it is for each of from the methods employed in frauds the Member States to establish, in order to improve where necessary collect and verify the resources the rules and methods of supervision. produced within its territory confirms the Commission's view of the role given it by Article 155 of the Treaty as a guarantor of the interests both of The Commission claims that its the Community and of the Member investigatory powers extend over all acts States as a whole. of the Member States. This follows:

— From the wording of the provisions Only investigations extending from the governing investigations (cf. Article identification of the originating fact to

COMMISSION v ITALY

JUDGMENT OF 10. I. 1980 — CASE 267/78

which coincide with evasions in relation respect of the Italian administration and to the Community's own resources, they indirectly for the Community the effect would not have jeopardized the aims for of res judicata and would give rise to an the achievement of which certain estoppel or a negative effect in relation provisions of municipal law making to the res judicata as regards any civil certain documents in criminal' proceed- proceedings for the offence and civil ings privileged were instituted. proceedings could no longer be commenced, continued or recommenced before the civil or administrative court. It is not possible to accept that the Community should be prejudiced solely Moreover, the obligation to collaborate because the rules of domestic procedure with the institutions of the Community of the various Member States are so (based on Article 5 of the Treaty and on defined. In other words the Community Regulation No 2/71) is linked with the should not be regarded as a "party" in duty to respect the privilege of non- the strict sense, but as a legal entity disclosure laid down by municipal law interested in the same way as the Italian both in respect of the parties and those State in having access to any document subject to the law of the Member State in criminal proceedings commenced in and in respect of other Member States or Italy. This fact ought to have encouraged foreign nationals. Since professional and allowed at least a "wide" interpre- secrecy is guaranteed by Article 214 of tation of the powers of the civil party the Treaty and Article 5 of Regulation thus allowing the principles of municipal No 165/74, to supply to the Commission law to be reconciled with the rights of information for which it asks in the the supra-national body. common interest in recovering own resources is thus compatible with the Italian system itself.

tardily and partially. It ought in addition evasion in relation to the levies set out in to have insisted on obtaining copies of all the statement of facts and that the the summonses in order to know the reasons cited by it to justify its conduct precise terms of the charges made. are without substance. Finally, as a party with an interest in the proceedings the financial administration could have more satisfactorily and completely fulfilled its duty towards the Community if it had requested that the B — In its defence the Italian Republic information to be supplied to interested answers the Commission's complaints as parties by way of the procedural notice follows: should be such as might be inferred from Article 6 (3) (a) of the European Convention for the Protection of Human — The Italian administration was not a Rights ("nature" and "cause" of the party to the investigation carried out accusation made). by the Guardia di Finanza, nor could it take part in it or know the results. During the second stage, that of the criminal investigation, the adminis- As regards the inquiries made before the tration could not send the criminal court was involved, in respect of Commission the documents in which the Commission had already connexion with the investigation (in shown interest, the Commission observes particular the transcript setting out that the transition from the the final findings of the Guardia di administrative to the judicial stage of Finanza) because it was prevented by proceedings is neither sudden nor the privilege attaching to criminal accidental. Criminal proceedings in a investigations. case such as this begin with a "report" from the Guardia di Finanza which, after administrative investigation, finds that an offence has been committed. Since the — A copy of the charges was supplied Italian authorities knew the obstacles to the Commission so that this is no which the commencement of criminal longer at issue. Information relating proceedings would put in the way of to the action taken following the giving the necessary information to the results of the interrogatories put in Community, it would have been correct hand by letters rogatory by the and useful and naturally consistent with Examining Magistrate in Turin and the spirit of collaboration if, before the information capable of throwing light "report" had been drafted involving the on the roles played in the criminal criminal court and privilege as respects transactions as a whole by Belgian, the preliminary inquiries, the facts French, German, Netherlands and assembled had been made available to Swiss natural and legal persons had the Community. not been supplied by the Italian administration simply because it did not have it;

notice announcing the opening of the national law makes provision for criminal proceedings should include intervention in such proceedings." the most important factors and in particular the "nature" of and the "causes" for the charge, the Italian Government recalls that the first The Community provisions provide that stage of the proceedings, that of in the first place the claim shall be the preliminary investigation, is "determined" by the appropriate concerned exclusively with the pre- department or agency of the Member liminary collection of evidence in State. "An entitlement shall be deemed order to establish whether or not the to be established as soon as the charges against the accused must be corresponding claim has been duly pursued and thus the customs determined" (Article 2 of the regulation). administration could not satisfy the Only then may the Commission exercise requests of the Commission either its supervision which may extend also to physically or legally. the earlier stages including the finding of the facts. This interpretation of the scope of the Commission's supervision is apparent on the one hand from the logic of the system and on the other: The Italian Republic is of the opinion that the Commission is using the present case as a pretext and seeking a theoretical definition of scope of its own — From a comparison of the provisions powers rather than a resolution of the of Article 14 (1) and (2) of Regu- actual problems arising in the present lation No 2 / 7 1 ; whereas Article 14 case. (1) states that "Member States shall carry out the verifications and inquiries concerning established entitlements", Article 14 (2), referring clearly to the work of It cites the judgment of the Court of 5 finding the facts, speaks, as regards May 1977 in Case 110/76 Pretore of the Commission's function, only of Cento v A person or persons unknown "measures of control", an expression [1977] ECR 851 which states that "In which has a restrictive sense and the present state of Community law only shows clearly that the previous stage the Member States and their authorities of finding the facts has terminated; are empowered to take proceedings before national courts for the purpose of claiming payment of Community revenue constituting own resources" and rejects — From the reference in Article 2 of the Commission's contention that "the Regulation No 165/74 to the national court is required to give notice definition of establishment referred to to the Community of the initiation of in Article 2 of Regulation No 2 / 7 1 ; criminal proceedings for smuggling if the provisions of national law require it to give such notice not only to those parties which are themselves entitled to take proceedings against the accused, but also — From the last paragraph of Article 14 to parties whose interests could justify an (2) of Regulation No 2/71 which intervention in the case, provided that speaks of placing "at its disposal the

"— The primary aim of the method adopted on associated inspection — From the distinction made in Article visits is to ascertain from the 4 of Regulation No 165/74 between vouchers kept by the Member national "departments or agencies States: that the own resources pro- responsible for establishing and cedural route adopted by the auth- making available" and the national orities and agencies in the Member authorities which have been States comprises calculation of the "instructed to carry out measures of revenue in accordance with the control"; Community rules; that the application of these procedures by the national departments in — From Article 4 (2) (a) of the same accordance with the current regulation to the effect that the national provisions does not prevent measures of control relate to Community revenue from being "establishment, based on information calculated regularly and in available to the national accordance with the Community departments", which implies that rules. there is a stage during which that "information" is collected preceding — The procedures are reviewed on the the measures of control regarding the basis of the vouchers." documents establishing the "own" resources; In this case the Commission was not able and is still unable to be associated in the — The new wording in Article 1 of inspection since the Italian customs Regulation No 2891/77 which (which at the present stage still does not henceforth stipulates that " 'own have the necessary facts to pay the resources' . . . shall be established by entitlement and pursue the debtors) has Member States . . . and shall be made not yet "determined" the claim. It is available to the Commission and therefore not possible to speak of non- inspected as specified in this regu- fulfilment by the Italian Republic of its lation", so that once again it is obligations.

The restriction of the Commission's Likewise there is no foundation for the powers of supervision to the Commission's alternative claim to the administrative work of the Member effect that supervision is carried out States follows from the Community always at the administrative level and provisions which assume that the that it is not possible to plead against the measures of control are above all the national administration and the direct responsibility of the States. It is Community departments associated with the States who "associate" the such supervision provisions of municipal Commission (at its request) and who law capable in any way of restricting the "carry out" (still at the Commission's Commission's knowledge of the inquiries request) any additional measures of in progress relating to determining the

the sovereignty of the Member States in lation). The Community is associated carrying out their tasks. Thus the only with supervision of administrative question of the precedence of departments carried out by other Community law does not arise. administrative departments which the Commission may be called upon to complement. The Commission cannot, Privilege as regards disclosure of the therefore, in any way interfere in the work of the preparatory inquiry does not judicial process (any more than can the cause incompatibility with the Treaty administrative departments of the and the negative consequences of which Member States concerned with the Commission speaks:

available to the Commission. A principle criminal procedure and is removed even before the preparatory inquiry is to the effect that the examining magi- finished; strate is bound to associate the Commission as a collaborator in his preparatory inquiry is thus quite unac- — Not only may any order of the ceptable. examining magistrate dismissing the

— So far the Italian customs authorities have informed the Commission of all In the Commission's view, if its powers the important facts of which it has of supervision had no substance as would had possession during the course of be the position if the defendant's case the administrative inquiries relating were conceded, there would no longer to the case and of all the important be any reason for giving the various facts to which it has been possible to Member States sole power to act. It is have access as a civil party in the not possible to accept a system in which criminal proceedings pending. the true claimant not only has to have recourse to third parties to enforce his claim, but does not even have a right to inspect their documents. Since the — As it has stated on several occasions powers given to the Commission are the it will pass on all the other facts and logical complement of the duty of the information it obtains especially States to establish the Communities' own when the Examining Magistrate resources and of their consequent makes his report and this will finally responsibilities, the powers should allow a full and not merely partial necessarily have the same scope as the examination of the whole case. responsibilities. The Commission's duty to check not only the recovery of the resources established but also that of the — This attitude on the part of the resources which ought to have been Italian administration shows in a established and have not been, as far tangible fashion its willingness to back as what may be called the orig- afford the greatest collaboration inating event, can thus scarecely be possible, even going beyond its contested.

The Commission does not directly that context "as soon as it has been supervise the activities of those who owe established", but "as it must be the charges in question. On the contrary carried out on the basis of Regulation it checks the activities of the States in No 2/71". recovering such sums, that is to say the "verifications and inquiries concerning established entitlements and the making — As to the second pan of Article 14 available of own resources" which the (2) of Regulation No 2/71 it Member States are required to carry out provides only that the Member States in accordance with the provisions of are bound to place at the Article 14 of Regulation No 2/71. Commission's disposal when it carries out its measures of control "the supporting documents referred to in Article 3". However, on the one hand, it does not seem that Article 3 The restrictive interpretation of the must be interpreted as necessarily Commission's power of supervision put referring to an establishment of own forward in the defence is not confirmed resources which has already been by the working of the regulation : carried out and on the other hand, and especially, Article 14 (2) in no way limits the Commission's powers — The supervision with which the of supervision to the documents in Commission may be associated covers question. all measures which the Member State is entitled to carry out on the basis of municipal law in order correctly to — As for the argument relating to fulfil its obligations under Com- Article 4 of Regulation No 165/74 it munity rules and in the first place to shows that both the national auth- establish all the Communities' own orities instructed to carry out resources which are owing. measures of control and all the other departments or agencies which have any responsibility for such establish- — The words "concerning established ment must co-operate with the entitlements" used in Article 14 of Commission for the purpose of the Regulation No 2/71 have been supervision which it carries out. explained by Regulation No 165/74 as refering to "measures of control relating to: (a) establishment... of — The argument relating to Article 4 own resources . . .; (b) conformity of (2) (a) is unfounded: the aim of the the operations establishing . . . own measures of control is "establishment, resources with the Community rules based on information available to the laid down in the Decision of 21 April national departments", "conformity 1970 . . .". of the operations establishing . . . own resources with the Community rules" and "the existence of the supporting — The words of Article 2 of Regulation documents . . .and their conformity No 165/74 ("all those required for with the above operations". the establishment and the making available of own resources, both being provided for in Regulation — As for the " Vade-mecum to the (EEC, Euratom, ECSC) No 2/71") Control of Own Resources", the do not mean literally or a fortiori in sentence cited in the defence is taken

— Finally, Article 1 as amended by Regulation No 2891/77 can in no The Commission states that it did not way be interpreted restrictively. intend in this case to supervise the work of the courts in considering the criminal aspects of the offences. Moreover, ' consideration of the conduct of the As for the extension of its powers of Italian Finance Administration seems to supervision the Commission adds: show that it alone is responsible for the offence, full liability for which is in any case borne by the Member State: the — The Italian Republic agreed to carry plea of privilege as regards criminal out in association with the investigations and the position adopted Commission additional measures of by the magistrate seem to have been only control relating precisely to the facts an excuse for the obstructionist attitude at the origin of the present case. adopted from the beginning and a Those facts had not yet, in the view pretext for continuing it. of the Italian Republic, been established in the accounts as involving the Communities' own In support of this statement the resources. Commission considers in detail the Italian provisions laid down by law, — That is quite contrary to what the regulation or administrative action in Italian Republic is maintaining today. relation to establishing customs offences from which it draws the following inferences : — The Commission's settled practice (which has never been challenged) is — The Italian Finance Administration to carry out measures of control in had or ought to have had from the all Member States relating to beginning full knowledge of what the transactions which have not yet been Guardia di Finanza reported to the established in the accounts as the magistrate. It was moreover em- Communities' own resources. powered in accordance with ministerial instructions to draft notes — When Regulation No 165/74 was and make observations to facilitate approved it was stated that measures not only an objective application of of control by the Commission could the law but also a proper and fair not relate to national proceedings to safeguard of the financial interests counteract fraud but that statement prejudiced by the infringement of the was possible only because Regulation customs system. No 165/74 related solely to the dispatch into the Member States of — The Italian Republic cannot rely on officials appointed by the the fact that a department of State Commission and that it was did not perform its obligations considered that if the Commission properly and in due time by keeping were fully informed by the Member from the Finance Adminsitration States as provided for in Article 14 of matters which it ought to know.

— The Turin customs authorities had all trative means to collect the duties the information allowing them to evaded (naturally within the limits of assess the nature, quantity and value what has been found and subject to of the goods on which the Guardia di reimbursement or compensation Finanza found levies had not been according to the outcome of the paid and to determine the amount of criminal proceedings) or to await the duty owing. The Commission outcome of those proceedings. observes that on the one hand the fine for smuggling is determined on the basis of the amount of duty — That is a particularly important evaded and consequently any decision since the coercive procedure judgment may have the effect of res for recovery by administrative means judicata especially as regards the allows the speedy sequestration of the precise amount of the duty. On the goods of persons other than the other hand, the precise assessment of accused who are liable for payment the duty has had a special importance of the duty, against whom it is not from the beginning of the possible to adopt measures of proceedings since it is on the basis of attachment by operation of law or in such assessment that the Pubblico criminal proceedings, and thus Ministero under Article 616 et seq. of provides at least a guarantee in the Code of Criminal Procedure respect of such persons. The interest may, from the beginning of the of the Community and through it of proceedings, lawfully attach and the Commission, in supervising at the sequestrate the goods of the accused proper time the use which the to guarantee the sums which may be customs administration makes of this due from him. From this arises the power seems beyond dispute. special interest of the Community in checking the technical assessment of the duties which have been evaded as made by the national Finance As regards the scope and limits of Administration, not only before the privilege in matters of criminal charges against the accused have investigation the Commission adds that been finally notified, thus restricting the report which it requires in order to the court's decision regarding the establish in particular the facts giving rise amount ultimately found to have to the liability for the levy is not in the been involved, but as soon as possible possession of this or that body or in order to allow the departments of department of the State but of the State State to commence proceedings in itself together with all its administrative due time before the institutions which and judicial machinery. It is therefore the national law entrusts with not possible to claim that the recovering the duties which have Commission must deal solely with the been evaded. Italian customs administration and not on the contrary directly with the Italian courts. — As soon as the customs adminis- tration receives from the Guardia di Finanza the information allowing it to classify the goods and determine Moreover, it is important for the the duty, it considers all the infor- Commission, whatever kind of inquiry is mation which it has in order to take conducted, to be informed speedily and a decision on the wisdom of completely: to delay the receipt of this immediately proceeding by adminis- important information until long after

the unlawful events occurred means that asked for a copy of such as it considered the information received will be most important, that is to say the final completely useless. report from the Turin Guardia di Finanza and the statement of charges drawn up by the Pubblico Ministero. A copy of these documents has been sent to the Commission and is annexed to the As for the claim that the privilege rejoinder. Since there is no longer any attaching to criminal investigation could purpose in the proceedings, the Italian in no way prejudice the interests of the Republic invites the Commission not to parties since "it relates solely to a stage pursue its application. of the criminal proceedings", the Commission stresses that the inquiries prior to the investigation itself are vitally important for the subsequent course of the whole of the criminal proceedings The Italian Republic once again rehears and moreover until the investigation is the facts which appear to it to show terminated by the lodging of the clearly that far from adopting a negligent documents at the registry, the "parties" and obstructionist attitude, the Italian in the strict sense are forbidden access to administration passed all the information the decisive evidence which constitutes to the Commission as soon as it came to the most patent part of the probatory its knowledge, "thus revealing a factors required to reach a decision, that readiness to co-operate going beyond its is, the statements of witnesses and the strict Community and national documents impounded. Finally, as for obligations". the comment that an examining magis- trate's decision that there is no case in no way bars the civil party, the Commission observes that it is unusual for new evidence to be revealed or new avenues Against the arguments contained in the of inquiry opened up during the reply the Italian Republic contends: proceedings in court and that the preparatory inquiry determines the whole proceedings. — Supervision by the Commission must be carried out after and not during the inquiry stage for otherwise the supervision would have the D — In its rejoinder the Italian appearance of a power to direct the Republic observes first that the inquiry. documents and exhibits in the criminal proceedings were lodged at the registry of the Turin court. It is now for the Examining Magistrate to make a — The conclusions arrived at in a decision closing the preparatory inquiry, definitive finding may also be that is to say a committal order negative and the Commission may regarding the persons against whom he certainly ask why there has been no considers there is sufficient evidence for positive finding. On the other hand it charges and an order that there is no is not possible for it to interfere case against the others. In the meantime during the inquiry: during that stage the Avvocatura dello Stato has examined it is moreover not sufficient to point the documents in the criminal file and out any omissions or deficiencies, for

they can become relevant for liability different nature. The reason is that while only at the final stage, that is, the it is a question of the infringement of final finding. purely customs laws the treasury interests are paramount so that the report may be forwarded to the customs to be completed immediately by the addition — The "Vade-mecum to the Control of of the technical data which will sub- Own Resources" of the Commission sequently be used for the determination fully supports the case put forward of the penalty (which is basically pro- by the Italian Republic. portionate to the duty which has been evaded). On the other hand when the customs offences are combined with other serious offences, the overriding interest changes and the necessity to safeguard the treasury interests is tempered by the necessity rigorously to As regards the "subject-matter" of the establish all the accompanying offences measures of control the Italian Republic so that it is worth while to wait a certain does not accept that the Examining time (until the end of the preparatory Magistrate may be regarded as a inquiry) to have all the customs infor- department or agency responsible for mation in order to calculate the establishing own resources of which penalties. The national rules were above all the Commission has to be therefore correctly applied. informed in accordance with Article 4 (1) of Regulation No 2/71. In view of the clear provision in Article 3 (1) (a) of Regulation No 165/74 (where there is reference to "officials" of the Member As regards the claim to obtain infor- States, which certainly does not include mation by asking the Examining Magi- judges), it must be accepted that there is strate to send more detailed notices, the in fact a limit to the powers of control of Italian Republic states that the notice the Commission. No legal system sent to a party who may be interested in moreover allows supervision of the work becoming a civil party is a summary of the courts by administrative bodies. notice intended to inform a person who may be interested of the existence of the proceedings and is not a document setting out, as the Commission would like, "the content of the report forwarded by the Guardia di Finanza to It is apparent today that the only the judicial authorities"; otherwise it is document of any importance originating difficult to see what the point of the from the Guardia di Finanza which the privilege relating to the preparatory administration did not send to the inquiry would be. Commission, namely the final report of 16 October 1976 annexed to the rejoinder, was never sent to the finance administration which never had knowledge of it until now. This is As regards such privilege, the because the Guardia di Finanza is not Commission accepts that in so far as bound to forward to the customs reports, national provisions in relation thereto which relate not only to customs may be invoked against the national offences but also to offences of a very department responsible for establishing

Decision

1 By application d a t e d 21 D e c e m b e r 1978 and registered at the C o u r t o n 22 D e c e m b e r 1978 the Commission sought a declaration p u r s u a n t t o the second paragraph of Article 169 of the E E C T r e a t y that the Italian Republic, by refusing to associate the Commission with certain measures of control on the establishment and m a k i n g available of the C o m m u n i t i e s ' o w n resources and

JUDGMENT OF 10. 1. 1980 — CASE 267/78

to notify it of the results obtained, has failed to fulfil its obligations under Article 5 of the Treaty and under Article 14 of Regulation N o 2/71 of the Council of 2 January 1971 implementing the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources (Official Journal, English Special Edition 1971 (I), p. 3) now replaced by Council Regulation N o 2891/77 of 19 December 1977 (Official Journal L 336, p. 1).

2 In April 1976 the Commission was informed that fraudulent transactions relating to 6 000 tonnes of butter from non-member countries had taken place on the basis of intra-Community trade. The goods had been taken by lorry to Italy from a warehouse in Rotterdam. On leaving the port the consignments were dealt with regularly under the external Community transit system. However, the (so-called " T 1") documents relating to that system had been improperly cleared both during the journey and in Italy by means of false or forged documents relating to internal Community transit so as to allow considerable amounts of agricultural levies to be avoided.

6 A further application made on 24 January 1978 by the Minister for Finance was dismissed by the Turin Examining Magistrate for the same reasons.

7 In view of the dismissal of those applications it appears that the Italian customs authorities could not obtain the information in the file of the criminal proceedings or, therefore, pass it on to the Commission.

8 On 20 April 1978 the Commission sent to the Italian Republic a reasoned opinion as referred to in Article 169 of the Treaty. That opinion stresses in particular the Commission's power, because Community law has precedence over municipal law, to carry out a thorough investigation of the "facts giving rise" to the fiscal claim which had been evaded; it also stresses the duty of the Member States to co-operate with all means available to them in the exercise of the right of supervision. In the Commission's view the direct applicability of Regulation N o 2/71 must be understood as meaning that the rules of Community law must have full effect as an immediate source of rights and duties for all those whom they concern whether they be individuals or Member States. That effect also applies to all courts which, as part of their jurisdiction, must, as organs of a Member State, have regard to powers given by Community law to the institutions. Further, by the very fact of their entry into force the provisions of Community law ipso jure render inapplicable any previous provision of national law to a contrary effect, including the provisions of the Code of Criminal Procedure which cannot therefore be invoked against the exercise by the Commission of its power of supervision given it by Regulation N o 2 / 7 1 .

i3 The Italian Government contends that the power of supervison given to the Commission by Regulation N o 2/71 cari be exercised only after the national administrative body has finished its task of establishing the Communities' own resources, that is to say has determined the claim and made it available to the Communities. The procedure laid down by the Community rules in fact comprises three stages: "establishing" the Communities' own resources, "making available" the resources which have been established and carrying out "measures of control". Before the stage of measures of control, in which the Commission has power to intervene, can begin, the national administrative departments must have completed the previous stages. Only then can the Commission co-operate with those departments to check whether the Communities' own resources have been properly established and paid over.

COMMISSION v ITALY

i4 Against this argument the Commission maintains that to be effective it must be able to effect its supervision as soon as a fact giving rise to the Communities' own resources has been established. This is apparent from the provisions governing measures of control and in particular Articles 6 and 14 of Regulation No 2/71.

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is Article 14 of Regulation N o 2/71 as re-enacted by Article 18 of Regulation N o 2891/77 ' provides as follows:

"(1) Member States shall carry out the verifications and inquiries concerning the establishment and the making available of own resources. The Commission shall make use of its powers as specified in this article.

(2) Accordingly, Member States shall:

— Carry out any additional inspection measures the Commission may ask for in a reasoned request,

— Associate the Commission, at its request, with the inspection measures which they carry out.

may carry out but it is not possible to infer from the regulations in question an intention to alter the relations between the administration and the judicial authorities.

22 Rules which in the national systems of criminal law prevent the communi- cation to certain persons of documents in the criminal proceedings may therefore be relied upon against the Commission in so far as the same restrictions may be relied upon against the national authorities.

23 It appears from consideration of the file that the Italian Government co- operated with the Commission as far as was legally possible during the proceedings and transmitted to the Commission the information which was privileged as relating to criminal investigation as soon as the privilege was lifted by the Examining Magistrate.

24 It is therefore necessary to find that Italy did not fail to fulfil its obligations under the Treaty.

25 The application must therefore be dismissed.

Costs

1. Dismisses the application;

2. Orders the applicant to pay the costs.

O'Keeffe Touffait Mertens de Wilmars

Pescatore Mackenzie Stuart Bosco Koopmans

Delivered in open court in Luxembourg on 10 January 1980.

A. Van Houtte A. O'Keeffe Registrar President of the First Chamber, Acting President