C-300/81

J U D G M E N T OF T H E C O U R T 1 MARCH 1983 l

Commission of the European Communities v Italian Republic

(Failure of a State to fulfil its obligations — Failure to implement the first Council directive on credit institutions)

Case 300/81

Measures of institutions — Directives. — Implementation by the Member States — Conditions (EEC Treaty, Art. 189, third paragraph; Council Directive 77/780)

Directive 77/780 is intended to reduce the directive seeks. Merc administrative the discretion which the supervisory practices, which by their nature can be authorities of certain Member States changed as and when the authorities enjoy in authorizing credit institutions. please and which are not publicized From that point of view it is essential widely enough, cannot in these circum- that each Member State should stances be regarded as a proper fulfilment implement the directive in a way which of the obligations imposed by the third fully satisfies the requirements of clarity paragraph of Article 189 on Member and certainty in legal situations which States to which the directive is addressed.

composed of: J. Mertens de Wilmars, President, P. Pescatore, A. O'Keeffe and U. Everling (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco and Y. Galmot, Judges,

Advocate General: S. Rozès Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure Member States were required to bring into force the measures necessary to Council Directive 77/780 is intended to comply with the directive, which was coordinate the laws, regulations and notified to them on 15 December 1977, administrative provisions relating to the by 15 December 1979 at the latest and to taking up and pursuit of the business of inform the Commission thereof. credit institutions.

That reasoned opinion remained In the Commission's view, the mandatory unanswered and the Commission lodged nature of directives means that >:he the present application at the Court Member States must observe the time- Registry on 30 November 1981. limits which they lay down for the adoption of national implementing provisions. Disregard of those time-limits Upon hearing the report of the Judge- involves a breach of the Treaty, Rapporteur and the views of the whichever national body is responsible, Advocate General, the Court decided to by its acts or omissions, for the non- open the oral procedure without any implemtentation. The Member State in preparatory inquiry. question cannot find justification in reasons relating to national provisions or practices or particular circumstances of a national character. II — C o n c l u s i o n s of t h e p a r t i e s Those principles have consistently been upheld by the Court. The Commission claims that the Court should: In its statement of defence the Government of the Italian Republic states "Declare that, by failing to adopt within that it has submitted to the Senate of the prescribed period the provisions the Republic a bill, Article 1 of which necessary to comply with Council delegates legislative power to the Directive 77/780/EEC of 12 December Government to adopt rules for the 1977 on the coordination of the laws, implementation in Italy of Community regulations and administrative provisions Directive 77/780 of 12 December 1977, relating to the taking up and pursuit of but it observes that compliance with the the business of credit institutions, the obligations under Directive 77/780 is not

dependent on the passing of that bill and In the view of the Italian Government, on the adoption, on the basis of the that is all the more true because the delegated powers provided for therein, directive in question aims to harmonize of government decrees having the force the rules relating to the taking up and of law. pursuit of the business of credit institutions, as an economic sector subject to supervision by the public auth- orities, by means of provisions which bind — though not always rigidly — the In the view of the Government of the authorities which in the various States • Italian Republic, the Italian legislation are responsible for supervising the credit already complies with the provisions sector. In such a context the fact that of the Community directive and the those authorities comply in practice with Government's proposals to legislate in the rules laid down by the Community that field in accordance with the powers directive constitutes a very significant delegated by Parliament are motivated indication that the national provisions rather by the need to adopt precise applied by those authorities accord with provisions on matters affected by the the provisions of the directive. directive as part of a wider revision of legislation concerning the whole credit sector. Article 3 of the directive is indirectly implemented in national law by The task of ascertaining whether the means of Royal Decree-Law N o 375 of activities of those authorities comply 12 March 1935. Article 4 of the directive with the directive is facilitated by the fact and the rule laid down therein are fully that the matters governed by the observed by the Italian Government. directive are within the competence of a Observance of Article 8 of the directive single central body depending directly is guaranteed by Royal Decree-Law No on the Bank of Italy and decisions in 375, whilst the obligation of professional that field are events of considerable secrecy laid down in Article 12 of the importance and few in number. directive is guaranteed by the general duty imposed on public officials — and reinforced by criminal sanctions — not to disclose confidential information of In its reply the Commission considers which they have acquired knowledge in irrelevant the arguments put forward by performing their duties and Article 13 of the Italian Government to the effect that the directive is guaranteed by the general there is substantial harmony between the principles of the Italian legal system. national legislative provisions and the main provisions of Directive 77/780.

regulated by statute in Italy, the to rules contained in an ordinary law it is amendments made necessary by the necessary for the provisions implement- directive naturally require to be ing the directive to be adopted by means sanctioned by a measure having the force of an ordinary law when, as in the of law. present case, the provisions implementing the directive may be inserted, without conflict or contradiction, in the The Commission then challenges the legislative instrument determined by defendant's contention that Article 3 (2), national law. Article 4, Article 8 (2) (3) and (4) and Article 12 (2) and (3) have their equivalent in Italian law without specific The Italian banking legislation in force implementing provisions being necessary. and Directive 77/780 have an undeniably common basis involving the fundamental principle ' that the banking sector is Finally, the Commission emphasizes that subject to public control. The difference a certain number of provisions of the to be bridged between the national law directive which in its view are of special and the Community directive arises from importance for the purposes of the the fact that whereas the first does not present action have not been mentioned lay down criteria for the grant or refusal by the defendant. The Commission' of authorization the second determines refers, in particular, to Article 3 (3) (d), in advance the requirements for authori-· Article 4 (2), Anicie 5 and Article 7. zation and the. circumstances in which authorization must be refused. The discretionary power so accorded to the competent body by Italian legislation On .the basis of those considerations the implies the power to substitute, for Commission considers that it has individual appraisal for each case, sufficiently proved the failure by the administrative rules of a general nature. Italian Republic to fulfil its obligations Those rules, which are consistent with under Directive 77/780 and it adheres to the requirements of certainty in legal its original conclusions. relations and equality of treatment, may very well determine with binding force the objective criteria and conditions In its rejoinder the Government of the which must be observed in the adoption Italian Republic states that the bill of specific measures. delegating power to implement Directive 77/780 was approved by the Senate of the Republic and transmitted to the Chamber of Deputies on 15 April 1982. The Italian Government maintains that It states however that that must not be the provisions of Italian legislation and understood as recognition of the validity their application accord substantially of the Commission's objections to the with the directive. In that respect the way in which the Government of the Italian Government emphasizes that Italian Republic has so far implemented observance of those rules by the Directive 77/780. supervisory body is subject to judicial review: a decision emanating from the administrative authorities may be challenged before the district According to the Government of the administrative court in the first instance Italian Republic, it is wrong to claim that and before the Consiglio di Stato [State if a directive relates to a matter subject Council] by way of appeal.

2 T h e case must be considered in the light of the b a c k g r o u n d to the directive and the events which preceded the c o m m e n c e m e n t of these proceedings.

COMMISSION v ITALY

3 Council Directive 77/780 constitutes the first step in the harmonization of banking structures and the supervision thereof. The purpose of such harmon- ization is to permit the gradual attainment of freedom of establishment for credit institutions and the liberalization of banking services. In that respect the directive introduces certain minimum conditions for the authorization of credit institutions which all Member States must observe. In order to faci- litate the taking up and pursuit of business as a credit institution the directive aims in particular to reduce the discretion enjoyed by certain supervisory authorities in authorizing credit institutions.

4 Article 14 (1) of the directive provides that Member States must bring into force the measures necessary to comply therewith within 24 months of its notification. That period expired in the present case on 15 December 1979. As a result of the directive a bill was prepared in Italy and was before the Italian Parliament when the Commission's action for a declaration was brought; the bill delegates to the executive the power to adopt measures to implement the directive.

5 In its defence the Italian Government emphasizes that comparison of the national rules in force in Italy with the main provisions of the directive reveals substantial agreement which should not be underestimated. In the view of the Italian Government, the fact that the authorities supervising credit institutions comply in practice with the Community rules shows that the national provisions applied by those authorities accord with the provisions of the directive.

10 It is apparent from the preamble thereto that the directive is intended to reduce the discretion which the supervisory authorities of certain Member States enjoy in authorizing credit institutions. From that point of view it is not possible to regard a Member State as having fulfilled the obligation which the directive imposés on it when it has confined itself to meeting the requirements of the directive by means of its practice. It is indeed essential that each Member State should implement the directive in question in a way which fully satisfies the requirements of clarity and certainty in legal situations which the directive seeks in the interests of the institutions which are to benefit from the authorization provided for in the directive. Mere administrative practices, which by their nature can be changed as and when the authorities please and which are not publicized widely enough, cannot in these circumstances be regarded as a proper fulfilment of the obligations imposed by the third paragraph of Article 189 on Member States to which the directive is addressed.

1 1 It is therefore proper to declare that, by failing to adopt within the pre- scribed period the provisions necessary to- comply with Council Directive 77/780 of 12 December 1977, the Italian Republic failed to fulfil its obligations under the Treaty.

COMMISSION v ITALY

Costs

12 Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs.

13 Since the defendant has failed in its submissions it must be ordered to pay the costs.

Everling Mackenzie Stuart Bosco Galmot

Delivered in open court in Luxembourg on 1 March 1983.

P. Heim J. Mertens de Wilmars Registrar President