C-102/81

JUDGMENT OF 23. 3. 1982 — CASE 102/81

questions of Community law are raised for them to make a reference to the which the ordinary couru may be called Court of Justice under Article 177 of the upon to examine either in the context of Treaty in order to obtain the interpret- their collaboration with arbitration ation or assessment of the validity of tribunals or in the course of a review of provisions of Community law which they an arbitration award, it is for those may need to apply in exercising such courts to ascertain whether it is necessary functions.

In Case 102/81

R E F E R E N C E t o the Court under Article 177 of the EEC Treaty by Walther Richter, President o f the Hanseatischen Oberlandesgericht [Hanseatic Higher Regional Court] Bremen, acting as arbitrator, for a preliminary ruling in the arbitration before him between

NORDSEE DEUTSCHE HOCHSEEFISCHEREI GMBH, Bremerhaven, Federal Republic of Germany,

and

gives the following

JUDGMENT

Facts and Issues

The order making the reference, the together with a 3 % reduction in the course of the procedure and the obser- interest rate on the bank loans. vations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized In 1972 the shipping companies applied as follows: for financial aid under Regulation No 17/64 of the Council of 5 February 1964 on the conditions for granting aid from the European Agricultural Guidance and I — F a c t s and w r i t t e n p r o c e d u r e Guarantee Fund (hereinafter referred to as "the Fund") (Official Journal 1963- 1964, p. 103) in respect of four ships. 1. Three German shipping groups, Earlv in 1973 they became aware of Nordsee Deutsche Hochseefischerei Regulation (EEC) No 2722/72 of the GmbH [hereinafter referred to as Council of 19 December 1972 on the "Nordsee"], the claimant in the arbi- financing by the Fund's Guidance tration; Hochseefischerei Nordstern AG, Section of conversion projects in the salt to which the respondents belong; and cod-fishing industry (Official Journal, Hanseatische Hochseefischerei (Reederei English Special Edition 1972 (28-30 Sohle), undertook, together a joint December), p. 31). Under that regulation project for the building of factory-ships they applied for aid in respect of a for fishing (freezer ships). Thirteen ships further five ships, within the special were built under the project, which was programme. begun in 1970; they were put into operation between September 1972 and April 1973. Federal loans were obtained The Commission finally granted six of for the construction of all the ships, the the nine applications, one based on same amount being allotted for each ship Regulation No 17/64 and one based on

Regulation No 2722/72 for each of the validity in the light of recent three shipping groups. The other appli- developments in the law. cations for aid were either withdrawn or rejected, although all thirteen ships were of the same kind and were ordered, built At a meeting in Brussels with officers of and put into operation at the same time. the Commission in the latter half of 1976 two members of Nordsee's management raised the question whether the pooling of aid was permissible. The officers of the Commission replied that a pooling of 2. After they had submitted their aid could not be endorsed and that if applications in the spring of 1973, but pooling took place the Commission before the first decision of the Com- would attempt to obtain repayment of mission in October 1973, the shipping aid not used for the purpose for which it companies learned that Community was granted. funds would probably be insufficient to satisfy all the applications. In addition, they did not know on what criteria aid Through a German official of the would be granted by the Fund. In the Federal Ministry of Food, Agriculture light of those circumstances, and under and Forestry the Commission stated that pressure from the Office of Economic it wished for a declaration that no Affairs and Foreign Trade of the Senate pooling had been arranged. The of the Land Bremen, Nordsee, the Sohle following declaration was sent to the group and the Nordstern group made an Commission in a telex message of 25 agreement on 27 June 1973 whereby the November 1976 by that official, who parties to the agreement would share stated that he was acting on behalf of the among themselves all aid from Hanseatische Hochseefischerei (Reederei Community funds so that one-thirteenth Sohle) and Nordsee: of the total aid granted would be allotted to each freezer ship (a so-called "pooling" contract). On the same day "No pooling of EAGGF aid between our they made a "supplementary agreement" shipping companies has taken place, and whereby in the event of total or partial no such obligation exists. Furthermore, repayment of the aid "as a result of the there is no intention to earn- out such a existence and the performance of the pooling in the future, either for aid aforementioned agreement" a re-distri- already received or for future aid." bution was to be made "on the basis of the aid not to be repaid, in the manner provided for in the aforementioned When an official of the management of agreement". the Nordstern group referred in the presence of the official of the Federal Ministry of Food, Agriculture and Forestry to the existence of a pool within the Nordstern group his attention w as 3.· Towards the end of 1975 the auth- drawn to the abovementioned dei orities in Bremen, and the federal auth- laration and he was requested to make a orities who were aware that the declaration to the same effect, whun hr agreements had been made, began to did orally. have doubts as to whether such pooling was legal. Shortly afterwards Hochseefischerei Nordstern AG in- formed Nordsee by letter of 5 July 1976 4. The claimant in the arbitration. that the pooling contract was of doubtful Nordsee, in now seeking payment under

the pooling contract of DM 2 162 894, 2722/72; Article 8 of Regulation No the amount of which is not in dispute, 729/70 of the Council of 21 April 1970 together with interest at 9.5 % from on the financing of the common agri- 1 September 1975, from two of the cultural polio,' (Official Journal, English shipping companies belonging to the Special Edition 1970 (I), p. 218), and Nordstern group. Six ships were built for therefore decided to defer a decision and Nordsee, but only three for the refer the following questions to the Nordstern group. Nordsee considers that Court for preliminar)' ruling: the pooling contract, which contravenes neither German nor Community law, is valid and that the declarations made by 1. Is a German arbitration court, which the parties as to the absence of any must decide not according to equity pooling agreement are irrelevant since but according to law, and whose they were made only in response to decision has the same effects as doubts raised by the authorities regards the parties as a definitive regarding its legality which were, judgment of a court of law (.Article however, unfounded. 1040 of the Zivilprozeßordnung [rules of civil procedure]) authorized to make a reference to the Court of The respondents contend that the claim Justice of the European Communities should be rejected. They take the view for a preliminary ruling pursuant to that the pooling agreement is void under the second paragraph of Article 177 German law inasmuch as it infringes of the EEC Treaty? Community law on aid because the aid is linked to a specific project and is not transferable. 2. Where persons in receipt of aid from the Guidance Section of the European Agricultural Guidance and Guarantee Fund for projects of the same kind 5. Since the agreement of 17 June 1973 (construction of factory-ships) agree included an arbitration clause excluding after applying for but before being recourse to the ordinary courts the claim granted Community aid that the aid was referred to Dr Walther Richter, granted after the ships have been put President of the Hanseatisches Oberlan- into service and paid for is to be desgericht Bremen, acting as arbitrator. divided (pooled) between them in The parties were unable to agree on an proportion to the number of all arbitrator, and he was therefore objects of the same kind built and put appointed by the Chamber of Commerce into use by them, that is to say of Bremen in accordance with the terms including objects which are of the of the agreement. same kind but not the subject of a grant, and subsequently divide the aid in accordance with that agreement, The arbitrator found that the pooling does that amount to an irregularity agreement was not void under German leading to a total or partial recovery law but that the respondent companies' within the meaning of Community obligation to compensate Nordsee law, in particular Regulation No depended under German law wholly on 17/64/EEC of the Council of 5 whether the pooling of aid from the February 1964, Regulation (EEC) No 729/70 'of the Council of 21 April Fund amounted to an "irregularity" 1970 and Regulation (EEC) No within the meaning of Community law 2722/72 of the Council of 19 on aid (Article 22 (2) of Regulation No December 1972? 17/64; Anicie 19 ('l) of Regulation No

The order making the reference, dated ordnung, the same effecte as regards 22 April 1981, was lodged at the Court the parties as a definitive judgment. Registry on 27 April 1981. The arbitration agreement of 27 June 1973 provides, moreover, (last 6. As to the first question, the arbi- paragraph) that 'the decision of the trator took the view that the Court had arbitrator is to be final, any recourse not yet decided the question. It would to courts of law being excluded. appear from the judgment of 30 lune 1966 in G Vaassen (née Göbbels) v In contrast to a definitive judgment of Beambtenfonds voor het Mijnbedrijf (Ca.se a German national court, for the 61/65 [1966] ECR 261) that it is not enforcement of an arbitration award only the State courts forming part of the leave to issue execution must admittedly various national judicial systems which be obtained from a national court are to be regarded as courts or tribunals (Article 1042 of the Zivilprozeßordnung) within the meaning of the second and the award may be set aside by the paragraph of Article 177 of the EEC national court (Article 1041 of the Treaty but also bodies which have the Zivilprozeßordnung), but leave to issue characteristics of a court or tribunal. execution may only be refused and the Endorsing the views expressed by Mr award may only be set aside on one of, Advocate General Gand (in his opinion the six grounds listed in that article. in Case 61/65, referred to above), the Those differences do not, however, arbitrator considered that the issue justify a denial of the arbitration depended on whether the arbitration tribunal's status as a judicial body, as the tribunal, "having regard to the general grounds for setting aside its award are principles applicable in the different patterned on the requirements for the re- Member States concerning the organ- opening of proceedings which have been ization of the administration of justice, settled before a national court by a

Zivilprozeßordnung). European Communities. (b) It is true that the arbitrator is It would also be in keeping with the appointed by the parties, but on meaning and purpose of Article 177 of account of the absence of agreement the EEC Treatv to allow such arbitration between the parties he was appointed tribunals to refer questions to the Court bv the Bremen Chamber of for a preliminary ruling. Commerce, which is independent of The purpose of the procedure for pre- the parties. liminary rulings is to guarantee the (c) The form of procedure is the same as uniformitv of Community law and it that before a court of law. ensures that that law is applied in the (d) An arbitration award has, pursuant same manner throughout the Member to Article 1040 of the Zivilprozeß- States.

While certain courts and tribunals are Justice of the EEC written observations required to refer questions to the Court were submitted by Messrs Deringer, of Justice for a preliminary ruling under Tessin, Herrmann and Sedemund, the third paragraph of Article 177 of the Rechtsanwälte of Cologne, on behalf EEC Treaty, the discretionary power to of Reederei Mond Hochseefischerei make references to the Court for a Nordstern AG & Co. KG and.Reederei preliminary ruling under the second Friedrich Busse Hochseefischerei Nord- paragraph of Article 177 ensures that stern AG & Co. KG, the respondents in Community law will be applied the arbitration; by the Government of uniformly at an earlier stage in the the Italian Republic; by the United

The first question public policy (Paragraph 1041 (1) (2) of the Zivilprozeßordnung), cannot be In the opinion of the respondents in the rectified in proceedings for enforcement arbitration the answer to the first or to have the award set aside. question should be in the affirmative, for Consequently, if arbitration tribunals are the reasons given by the arbitrator. They denied jurisdiction to refer matters to the add that it would be incompatible with Court of Justice for a preliminary ruling the principle of the efficient use of legal the uniform application of Community procedure to allow references to be law will be jeopardized in a field of made exclusively in the context of vital importance for the European proceedings for recognition of an arbi- Communities, namely commercial law, tration award.

7. Pursuant to Article 20 of the The respondents suggest that the Court Protocol on the Statute of the Court of reply to the first question as follows:

"An arbitration tribunal which is called were allowed to reter questions to the upon to decide an issue in place of Court under Article 177 the objectives national couru of law and whose awards which the parties seek to achieve in have, under the national judicial system, submitting their dispute to arbitration — the same force of res judicata as the speed, finality, and privacy — would be judicial decisions of State courts and frustrated. tribunals, is empowered to refer questions to the Court of Justice of the European Communities for a preliminary ruling under the second paragraph of Article 177 of the EEC Treaty, provided The United Kingdom emphasizes that that it may not decide issues on grounds arbitrators are subject to the ordre of equity but is bound to apply all the publique of the legal systems within relevant rules of law, including those of which they operate. To that end, their Community law." awards are subject to judicial control and in that context any questions of Community law which may arise may be raised before the national courts or tribunals and, ultimately, before the The observations submitted by the Court of Justice pursuant to Article 177. United Kingdom are based on the assumption that the "arbitration court" mentioned in the reference has the status and exercises the functions of a private arbitrator, that is to say, it is composed Were Article 177 to apply to arbitration of individuals appointed by agreement tribunals considerable practical diffi- between the parties. That being so, the culties would arise, and there would be arbitrator does not exercise his functions harmful consequences for the Com- or his jurisdiction on behalf of the State, munity. A high proportion of arbitration and is therefore not an organ of the conducted in the Member States State. Arbitration of that kind, moreover, concerns disputes where one of the may deal only with issues which the parties, or even both of them, are not parties would be free to settle between nationals of a Member State. In addition, themselves were they able to agree. most arbitrators are not lawyers but people with experience in the subject- matter of the dispute, or professional arbitrators. They would have great difficulty in identifying points of The United Kingdom is of the opinion Community law. that the language of Article 177 supports the view that private arbitrators do not have the right of reference to the Court of Justice. The phrase "court or tribunal of 3. Member State" implies the existence Another practical difficulty concerns the of a close link between the adjudicatory geographical character of arbitrations. In body in question and the system of international cases it would be necessary legal remedies in the Member State to decide whether the arbitration body concerned. The reference must therefore was "of" one State or another, par- be to an official organ of the Member ticularly if the arbitration agreement State and not to a tribunal of a private allowed the tribunal to select the place of nature which is free to conduct its its seat or when the tribunal has held proceedings in the territory of a Member sittings in a number of countries, which State. Moreover, if private arbitrators may include non-member countries.

In addition, a large amount of inter- so long as that character has not been national commercial or maritime arbi- attributed to it by the subsequent tration is conducted at the choice of the intervention of a judge invested with parties in certain important centres such judicial powers. as London, Paris, Frankfun and Amsterdam, or even Geneva, Zürich or New York. According to the United The Danish Government distinguishes Kingdom Government the possibility that between permanent courts of arbitration arbitration proceedings in one of the created by law, with jurisdictional and Member States of the Community might procedural rules linking them to the be the subject of a reference to the Court normal judicial system on the one hand of Justice for a preliminary ruling might and other arbitration tribunals whose affect the choice of the place of arbi- only legal basis lies in the agreement tration by private parties who might made between the parties on the other move it outside the Community.

The Danish Government alternatively sutes that it is necessary to ensure that arbitration tribunals do not become a The Italian Government refers to the means of obtaining from the Court judgment of 30 June 1966 in G. Vaassen rulings devoid of any useful purpose, for (née Göbbels) v Beambtenfonds voor het the purpose of the resolution of an actual Mijnbedrijf, Case 61/65 (cited above). dispute. The arbitration tribunal in this instance is

judgment. An arbitrator's award cannot tration tribunal has the same duty as be described as an act of public authority ordinary courts of law to decide of its

own motion whether a reference for a would encourage the uniform interpret- preliminary ruling appears necessary in ation and application of Community law order to resolve an actual case before it. in an important sector of the administration of justice. The Commission reviews the arguments of academic authorities on whether an Exclusion of the right of reference would arbitration tribunal has jurisdiction to create the risk that arbitration tribunals make a reference to the Court of Justice might seek to evade or ignore provisions under Article 177 of the Treaty. Writers of Community law. who deny it such jurisdiction rely on the following arguments: There are no objective grounds for denying arbitrators the right of reference An arbitration tribunal cannot be when the arbitrators are bound to apply considered a "court or tribunal of a statute and other legal rules. Member State" within the meaning of the second paragraph of Article 177 of In international law the Member States the EEC Treaty. which countenance arbitration awards which run counter to Community law Arbitration tribunals generally decide on would be held liable for such grounds of equity and are bound neither contraventions. by statute nor by legal rules. Arbitration tribunals are not bound by In the light of those arguments the rulings delivered by the Court of Justice Commission takes the view that it is under the second paragraph of Article difficult to give a categorical answer to 177 of the EEC Treaty: thus the effect the question because the concept of an of such rulings would be that of mere arbitration tribunal is imprecise, par- legal opinions. ticularly in view of the differences in practice and legislation between Member A right to make a reference for a pre- States. The question is rather under what liminary ruling would be supererogatory conditions a body deciding a dispute because the Court of Justice may still be may be considered to be a court or requested to give a ruling by the tribunal within the meaning of Article ordinary court of law during the 177. proceedings for enforcement of the arbi- trator's award. Adopting that approach, the Commission proceeds to examine the status of arbi- The application of Community law in tration bodies under German law arbitration proceedings would be of a (Articles 1025 to 1048 of the Zivil- "private" nature and would have no prozeßordnung). A comparison of the significance for the general development nature of the powers of an arbitrator of Community law. under German law with the criteria laid Since arbitration awards are not subject down by the Court in Case 61/65 leads to appeal, recognition of the right to to the conclusion that there is agreement on the most essential aspects. make references for a preliminary ruling would automatically create an obligation The arbitration tribunal in question here: to make them. Those who favour a right of reference by Was properly constituted under national . arbitration tribunals on the other hand law; rely on the following arguments: Is considered under national law as a A recognition that there is jurisdiction to body charged with the settlement of make references for a preliminary ruling disputes;

Is bound by national rules of legal European Communities for a preliminary procedure; ruling under the second paragraph of Article 177 of the EEC Treaty." And is bound io apply rules of law. 2. Second question It does not, however, satisfy the requirement that the jurisdiction to The respondents in the arbitration submit decide a given case must have been that the wording and context of Regu- conferred directly by a national lations Nos 17/64 and 2722/72 indicate provision, or the requirement relating to that the aid provided for in the Guidance che permanency of the body. Section is not aid for a general sector, granted without distinction to all the Nevertheless, the Commission stresses undertakings in a particular branch of that the judicial powers of the arbitration economic activity. On the contran', the tribunal, as an organ entrusted with the aid is granted only on a selective basis, administration of justice, are rooted in with reference to specific individual the judicial system itself, which investment projects which must satisfy recognizes it and authorizes it to give precise conditions laid down in advance, legally binding decisions in disputes both of substance and of form, and also of a technical nature. The aid is thus (Article 1040 of the Zivilprozeß- linked to a given project.

judicial system. No 2722/72), more particularly to the beneficiaries who are responsible for the The Commission considers, therefore, cost "of the project" (Article 22 (1) of that Anicie 177 should be interpreted to Regulation No 17/64; Article 13 of include as a court or tribunal all national Regulation No 2722/72). bodies which give judgment. The German arbitration tribunal does so and, The specificity of the aid which is given what is more, is bound to apply is even more apparent in the decisions Community law. made by the Commission in the field: those decisions bear as their heading the name of the fishing vessel for which the In conclusion the Commission suggests

Moreover, it

Such a practice conflicts with the Commission's exclusive power of "Where the recipients of aid from the decision and with the principle that aid is Guidance Section of the European Agri- linked to the applications submitted. The cultural Guidance and Guarantee Fund terms of the applications require the aid agree, after applying for but before the to be used in each case wholly for the grant of Community aid, that such aid financing of the relevant project. The will be shared among them on the basis pooling contract, however, provided for of the total number of vessels of the the transfer to third parties of a portion, same type, when no aid has been as yet undetermined, of the aid in order requested for some of them or such aid to assist projects not included in the has been refused by the Commission, application. The applications for aid that amounts to an "irregularity" within were not amended, and the Commission

NORDSEE v REEDEREI MOND

"It is incompatible with Community law on aid and, in particular, with Regu- It emphasized that all the vessels in lations Nos 17/64 and 2722/72 for question were put into service in October recipients of aid from the Guidance 1973 and paid for at that time. The Section of the European Agricultural agreement in question was entered into Guidance and Guarantee Fund for on 27 June 1973, on which date ten projects of a similar nature (the con- vessels were already in service and three struction of factory-ships for fishing) to others were in the course of completion. agree after applying for Community aid Consequently at that time it was already but before such aid is granted that aid known that aid would be given only at a granted after the ships have been put time when all the vessels were already- into service and paid for will be shared built, in service and paid for. (pooled) between them according to the total number of ships of the same type which they have had built and put into There can therefore be no question in service, that is to say, including ships in the circumstances of the aid's being respect of which no aid was granted but intended to encourage the recipient to which are of a similar type. The do something in the common interest; Commission is entitled to take steps to the aid was a pecuniary supplement recover pavments made by way of which went to the undertaking and adjustment under such an agreement." which did not fulfil the same purposes as a subsidy. The payments made by the Commission to the undertakings amounted therefore to a financial benefit which could no longer be linked to a Ill — Oral procedure project since it did not really form pan of the financing of the individual project, which had already been completed. That At the sitting of 1 December 1981 oral eventually is, moreover, expressly argument was presented by "Nordsee" provided for in Anicie 21 of Regulation

J Of those nine applications the Commission finally accepted only six, the others being either withdrawn or rejected. One of the undertakings par- ticipating in the building programme sought payment from two of the other undertakings of the amounts to which it was entitled under the contract of 27 June 1973.

NORDSEE v REEDEREI MOND

4 A dispute arose on the subject and was submitted for arbitration, as the contract of 1973 contained a clause stating that in the event of disagreement between the parties on any question arising from the contract a final decision was to be given by an arbitrator, all recourse to the ordinary courts being excluded. In accordance with that clause the arbitrator was appointed by the Chamber of Commerce of Bremen after it had become apparent that the parties to the dispute could not agree on the appointment of an arbitrator.

5 During the arbitration hearing the respondents claimed that the 1973 contraa was void in so far as it arranged for aid from the Fund to go to the building of ships in respect of which the Commission had not granted such aid. They took the view that aid from the Fund was linked to completion of a specific project and could not therefore validly be transferred by the recipient to a different project.

6 The arbitrator was of the opinion that under German law the validity of a contract to share aid from the Fund depended on whether such sharing amounted to an irregularity under the relevant Community regulations. Considering that a decision on the point was necessary in order to allow him to make his award he referred the matter to the Court for a preliminary ruling.

ic It is true, as the arbitrator noted in his question, that there are certain similarities between the activities of the arbitration tribunal in question and those of an ordinary court or tribunal inasmuch as the arbitration is provided for within the framework of the law, the arbitrator must decide according to law and his award has, as between the parties, the force of res judicata, and may be enforceable if leave to issue execution is obtained. However, those characteristics are not sufficient to give the arbitrator the status of a "court or tribunal of a Member State" within the meaning of Article 177 of the Treaty.

n The first important point to note is that when the contract was entered into in 1973 the parties were free to leave their disputes to be resolved by the ordinary courts or to opt for arbitration by inserting a clause to that effect in the contract. From the facts of the case it appears that the parties were under no obligation, whether in law or in fact, to refer their disputes to arbitration.

12 The second point to be noted is that the German public authorities are not involved in the decision to opt for arbitration nor are they called upon to intervene automatically in the proceedings before the arbitrator. The Federal Republic of Germany, as a Member State of the Community responsible for the performance of obligations arising from Community law within its territory pursuant to Article 5 and Anieles 169 to 171 of the Treaty, has not entrusted or left to private individuals the duty of ensuring that such obligations are complied with in the sphere in question in this case.

u It follows that in this instance the Court has no jurisdiction to give a ruling.

Costs

17 The costs incurred by the Kingdom of Denmark, the Italian Republic, the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main dispute are concerned, in the nature of a step in the arbitration proceedings, the decision as to costs is a matter for the arbitrator.

O P I N I O N OF MR REISCHL — CASE 102/81

On those grounds,

T H E COURT,

O P I N I O N O F MR ADVOCATE GENERAL REISCHL DELIVERED O N 2 FEBRUARY 1982 «

Mr President, Nordsee Deutsche Hochseefischerei Members of the Court, GmbH, Reederei Mond Hochsee- fischerei Nordstern AG & Co. KG and A number of German undertakings Friedrich Busse Hochseefischerei engaged in deep-sea fishing, namely Nordstern AG & Co. KG (both of the I — Translated from the German.