C-13/83

Council of the European Communities, represented by its Legal Adviser, H.-J. Glaesner, acting as Agent, assisted by A. Sacchettini and J. Aussant, members of its Legal Department, acting as Joint Agents, and by R.M. Chevallier, Professor at the University of Strasbourg, W. von Simson, Professor at the University of Freiburg, and B. Laloux, a member of its Legal Department, with an address for service in Luxembourg at the office of H.J. Pabbruwe, Director of the Legal Department of. the European Investment Bank, 100 Boulevard Konrad- Adenauer,

defendant, supported by

The Kingdom of the Netherlands, represented by A. Bos, Deputy Legal Adviser in the Ministry of Foreign Affairs, acting as Agent, assisted by L.H. Klaassen, Professor at the Erasmus University, Rotterdam, with an address for service in Luxembourg at the Embassy of the Kingdom of the Netherlands, 5 Rue C.-M.- Spoo,

intervener. * Language of the Case: German.

PARLIAMENT v COUNCIL

APPLICATION for a declaration under Article 175 of the Treaty that the Council has failed to fulfil its obligations in respect of the common transport policy,

Facts and issues 1558

I — Facts and Procedure 1558

A. Preliminary procedure 1558

B. The provisions of the Treaty 1561

C. The action 1562

D. The written procedure 1562

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B. Substance 1570

1. General observations 1570

2. First claim: failure to introduce a common transport policy 1573

3. Second claim: failure to act on 14 proposals of the Commission 1578

4. The legal consequences of the absence of a common transport policy 1580

C. The subject-matter of the action 1590

D. The first claim: the failure to introduce a common transport policy 1593

1. The common transport policy in general 1593

2. Freedom to provide services in relation to transport 1597

E. The second claim: the failure to take a decision on the 16 proposals of the Commission 1601

Costs 1602

E. having regard to the fact that the time-limits for proceedings to be provisions of Article 3 (e) and Articles started, to take all necessary steps to 74 to 84 of the EEC Treaty have not keep Parliament's rights alive; if, been complied with, which constitutes following such consultation, it is an infringement of the Treaty, decided not to bring proceedings, to bring the matter back before Par­ liament as soon as possible; F. having regard to the fact that the Council has not reached a decision on a large number of Commission proposals (5) Reserves the right to review the on which the European Parliament long President's decision in the plenary ago adopted a favourable opinion, sitting immediately thereafter and in this connection instructs its Committee on Transport to submit a G. having exhausted all other means report as the committee responsible provided by the Treaty to enforce its and its Legal Affairs Committee to claim for the adoption of a common submit an opinion; transport policy, (6) States expressly that the annex (1) Instructs its President to bring an forms an integral part of this action before the Court of Justice of resolution; the European Communities against the Council of the European (7) Requests the Commission to take Communities pursuant to Article part in this action; 175 of the EEC Treaty, (8) Instructs its President to forward (2) Instructs its President, in this this resolution and the report of its connection, first of all forthwith to committee to the Council and call upon the Council to act in the Commission.' terms of the accompanying draft, in accordance with the second Pursuant to the mandate given to him by paragraph of Article 175 of the EEC that resolution the President of the Treaty; European Parliament sent the President of the Council of the European Communities on 21 September 1982 a letter, the first (3) Instructs its President, if the Council paragraphs of which read as follows: does not reply within the period of two months laid down in the EEC '(1) I have the honour to inform you that Treaty, to bring an action before the the European Parliament resolved on Court of Justice of the European 16 September 1982 to set in motion the Communities within the further procedure against the Council under period of two months laid down by Article 175 of the Treaty establishing the Treaty for this purpose; the European Economic Community, as the Council has, in breach of the (4) Instructs its President, if the Council Treaty, failed to determine, on the replies within the two-month period basis of Articles 3 (e), 61 and 74, the laid down in the Treaty, to consult framework of a common transport with the Committee on Transport policy within which the objectives of and the Legal Affairs Committee, the Treaty may be pursued, and has and in the light of such consultation also failed to take the decisions to decide whether proceedings provided for in Articles 75 to 84 for the should be instituted; if such consul­ purpose of implementing Articles 61 tation is not completed within the and 74.

(2) I should like, by this letter, to call upon — ' ... forthwith to take the decisions the Council, in accordance with the which should already have been adopted second paragraph of Article 175, to act during the transitional period, according as set out in detail below. to the wording of the Treaty, in other words, pursuant to Article 75 (1), laying (3) I look forward with interest to any down: opinion which I may receive within two months. This opinion will be examined in great detail. If this examination shows that the opinion is unsatisfactory (a) common rules applicable to inter­ or if no opinion is forthcoming I shall national transport to or from the bring, within the prescribed period, an territory of a Member State or action before the Court of Justice of passing across the territory of one or the European Communities to have more Member States; the infringement established; in this connection I reserve the right to make all or only some of the points (b) the conditions under which non­ mentioned below the subject-matter of resident carriers may operate the action.' transport services within a Member State.' The letter goes on to say that taken as a whole the measures adopted by the Council in relation to transport do not satisfy either Article 3 (e) of the Treaty, which requires More precisely, the Parliament invites the the adoption of a common policy in the Council to act without delay on a series of sphere of transport, or Article 74, which 24 proposals of the Commission on which states that the objectives of the Treaty are the Parliament has already given its opinion. to be pursued in relation to transport within According to the Parliament's letter, the the framework of a common transport proposals relate to international transport by policy. rail, road and inland waterway. They concern in particular price policy, policy in In the letter the Parliament calls upon the relation to transport capacity, observation of Council inter alia: the market, infrastructures and the har­ monization of social provisions, taxes, — ' ... to decide the framework of a technical provisions and intervention by common transport policy pursuant to public authorities. Each of those proposals Articles 3 (e) and 74, on the basis of the may be regarded as subject to the time-limit Commission's communication of 24 applicable pursuant to Article 75 (2). October 1973;

aforementioned circumstances, the pro­ According to the letter from its President, visions in question must nevertheless be the Council has the firm intention of adopted on a qualified majority on the achieving further substantial progress in ground that they relate to the necessary spite of the very complex nature of the adaptation of Member States' transport subject and the difficult economic and social rules to the economic changes brought context of the debates. about by the establishment of the common market. In a note attached to its reply the Council summarizes the action it has taken in Finally, the Council is called upon to relation to the common transport policy. decide, pursuant to Article 84 (2) of the The summary is accompanied by a list of 71 Treaty, to what extent and by what measures of the Council in force in the procedure appropriate provisions must be transport sector and a commentary on the laid down for sea and air transport and in progress made on each of the proposals particular to act without delay on three cited in the letter from the President of the specific proposals with regard thereto which Parliament. It shows that the Council has in were submitted to it by the Commission and the meantime acted on a number of the in respect of which the Parliament has given proposals in question and that certain its opinion. proposals are likely to be amended or replaced by the Commission.

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In the first place the action seeks a D. The written procedure declaration that the Council has failed to lay down the principles of the common transport policy which should form the The originating application of the European framework for the implementation of Parliament was received at the Court Articles 74 to 84 of the Treaty. Registry on 24 January 1983.

PARLIAMENT v COUNCIL

By orders of 23 March and 22 June 1983 C 259, p. 2, amended by Official the Court, pursuant to Article 93 of the Journal 1979, C 206, p. 3; Opinion Rules of Procedure, allowed the Com­ of the European Parliament: mission of the European Communities to Official Journal 1977, C 57). intervene in support of the claims of the European Parliament, and the Kingdom of (2) Proposal for a first directive on the the Netherlands to intervene in support of harmonization of national systems the Council's conclusions. of taxation for commercial vehicles (Official Journal 1968, C 95, p. 41 ; By an application lodged on 2 March 1983 Opinion of the European Par­ the Council, pursuant to Article 91 of the liament: Official Journal 1969, Rules of Procedure, asked the Court to C 63). decide the admissibility of the action as a preliminary issue. By an order of 22 June 1983 the Court reserved the decision on the (3) (Proposal in the meantime objection for the final judgment. adopted.)

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(12) Proposal for a regulation on access — Order the Council of the European to the market in inland navigation Communities to pay the costs.

PARLIAMENT v COUNCIL

The Council of the European Communities Community, prima facie appears to include (the defendant) contends that the Court the European Parliament among the should: institutions which may bring an action there­ under. In its opinion, however, the general — Dismiss the action as inadmissible; structure of the Treaty precludes the Par­ liament from having such a right of action. — In the alternative dismiss it as unfounded; In that respect it observes that Article 173 expressly restricts the right of action by the — Order the applicant to pay the costs. institutions to the Council and the Commission. Inasmuch as the Treaty thus III — Submissions and arguments of the excludes the Parliament from reviewing the parties lawfulness of measures adopted by the Council or the Commission, it would be illogical for it to be able to bring an action A. Admissibility before the Court for unlawful failure of one of those two institutions to act. The legal In the view of the Council of the European remedies afforded by Articles 173 and 175 Communities (the defendant) the question of must be regarded as complementary to one the admissibility of the action is of another. fundamental importance to the subsequent development of relations between the Community institutions. It observes that the Next, the Council raises the question action is inspired by the efforts of the Par­ whether the effect of recognizing the Par­ liament (which are legitimate) to increase its liament as having a right to bring an action influence in the process for reaching under Article 175 would not be to extend decisions in the Community. Cooperation the powers conferred on it by the Treaty between the Community institutions cannot, and to invest it with powers of review which however, be governed by means of Article the Treaty did not contemplate. In that 175 of the Treaty and the Parliament is not respect it refers to the principle of conferred entitled to have recourse to the action powers mentioned in Article 4 of the afforded by that article in order to achieve Treaty. its political aims.

of supervision exercisable by means of an Article 175. All the institutions of the action for failure to act. If the Court were Community referred to in Article 4 are to give a judgment under Article 175 which responsible for ensuring that the Treaty is would have to be enforced pursuant to observed. Article 176, the Parliament would obtain legislative powers not given to it by the Treaty. It was on that basis that the aforementioned judgment of 29 October 1980 confirmed the right of any institution, including the Par­ Those considerations lead the Council to liament, to intervene in proceedings before conclude that only an express conferment of the Court pursuant to Article 37 of the powers would allow the Parliament to be Statute of the Court on the ground that it is recognized as having a right to bring an not possible to restrict the exercise of that action for failure to act. The fact that right by any one of them without adversely according to the judgment of 29 October affecting its status as an institution under 1980 (Case 138/79 Roquette v Council the Treaty, in particular Article 4 (1). A [1980] ECR 3333) the Parliament is fortiori that consideration applies to a right included among the 'institutions' referred to of action given to all the institutions. in Article 37 of the Statute of the Court which may intervene in proceedings before the Court does not support a different view. The two institutions deny that a right of On that issue the Council observes that the action for the Parliament under Article 175 function of the right to intervene is different would be incompatible with the division of from that of the right of action and powers provided for by the Treaty. accordingly Article 37 of the Statute was not interpreted in the light of Article 173 of the Treaty. Conversely, the interpretation of Article 175 does not depend on the The Parliament submits that its restricted existence of a right to intervene. powers at the legislative level cannot be pleaded to deny it access to the Court for the purposes of review by the Court of the exercise by the Council of its legislative The European Parliament (the applicant) powers. The Parliament's right of action and the Commission of the European must not be confused with its political right Communities (the intervener) refer to the to participate in the legislative process. The wording of Article 175 in support of their present action is brought not for the contention that there is no doubt about the purpose of exercising its right of political Parliament's capacity to bring an action for control but to exercise its right of action failure to act. The clear wording of Article under the Treaty in order to obtain a 175 allows no other interpretation. declaration that there have been specific omissions which it considers to be contrary to the Treaty.

necessary to comply with the judgment, Should the Court regard the letter from the pursuant to Article 176. President of the Parliament as calling upon the Council to act pursuant to Article 175, the Council contends that its reply of 22 The Commission states that if the Council's November 1982 satisfies the requirements of argument based on the exclusive nature of a definition of its position within the its legislative powers were valid, an action meaning of that article, and that the action against the Council for failure to act is therefore inadmissible. brought by others who have a right of action under Article 175, such as a Member State or the Commission, would also be inadmissible. Such an interpretation, In that respect it observes that Article 175, however, which would in fact exclude as distinct from Article 35 of the ECSC altogether any action for failure to act Treaty, does not require the adoption of against the Council in its capacity as any formal measure. Article 175 clearly legislature, would be incompatible with the distinguishes between the word 'act' in the broad terms in which Article 175 is drafted. first paragraph and the notion of a 'definition of its position' in the second paragraph, which concerns the admissibility 2. The conditions in the second paragraph of the action. of Article 175 of the Treaty

JUDGMENT OF 22. 5. 1985 — CASE 13/83

In the light of those considerations the A refusal to act, even an express refusal, analysis of the Council's action set out in cannot constitute a definition of position for its letter of 22 November 1982 and the purposes of Article 175. In the system of accompanied by particulars of each of the legal protection afforded by the EEC Treaty proposals referred to by the Parliament the action for failure to act constitutes a constitutes a sufficiently clear definition of legal remedy independent of the action for its position to exculpate it from any failure annulment. The action under Article 175 to act on which an action might be based. differs from the action provided for in

PARLIAMENT v COUNCIL

However, the Commission considers that not only a positive definition of position but also a The Parliament states that the notion of a negative definition by the institution, in definition of position has not yet been the other words a definite refusal to act as subject of consideration by the Court since requested, is capable of terminating the actions for failure brought so far have been failure. According to this view the action dismissed either because of lack of interest would also be inadmissible in the case of a in bringing an action or because there was definition of position which is partly positive no obligation on the institution concerned but which rejects the call to act. vis-à-vis the applicant to adopt the measure requested. In the present case there is no doubt that there is an obligation to act, in particular under Articles 74 and 75 of the

Treaty. The Council's reply contains no specific undertakings as to the manner in As regards the specific claims of failure the which it proposes to fulfil its obligation to Parliament and the Commission consider introduce a common transport policy. that the Council's comments in relation to the Commission's proposals referred to in the action are confined to setting out the state of the preliminary work and consequently do not amount to a true definition of position. The Commission On the basis of the wording of Article 175 points out, however, that in relation to the and the purpose of the action for failure to proposal referred to in No 15 of the Par act the Commission puts forward an in liament's claims the Council states that it terpretation of the notion of definition of has been agreed not to take a formal position which differs slightly from that put decision. It suggests that that statement may

3. The alternative claim based on Article The Parliament argues that a common 173 of the Treaty transport policy for the purposes of the Treaty means a coherent system of binding measures providing at Community level In the Council's view the claim in the alter­ guidelines and planning of the measures native for a declaration pursuant to Article needed to remove distance as an obstacle to 173 that its reply is void is inadmissible at the movement of persons, goods and infor­ the outset because on the clear wording of mation. The aim of such a system of binding Article 173 the Parliament has no right of measures is to create in the transport sector action thereunder. It considers that an throughout the territory of the Community interpretation based on the need for legal conditions similar to that of a domestic protection but going beyond the wording of market. Article 173 cannot be contemplated since the Council's action is already subject to legal review by means of the right of action The common transport policy is part of the enjoyed by the Commission, which is the general process of integration contemplated institution entrusted with the role of by the Treaty. Among the activities of the guardian of the Treaty. Community referred to in Article 3 of the Treaty the common transport policy has the same rank as the common agricultural Furthermore, the Council's reply cannot be policy or the institution of a system ensuring the subject of an application for a that competition in the common market is declaration that it is void since it is not a not distorted. It must be achieved in step measure which has legal effects. with the development in the other areas governed by the Treaty, since inadequate progress in the transport sector risks The Parliament maintains that a reply in the compromising the achievement of the negative allows the failure to continue and objectives of the Treaty in other areas, in is not a definition of position which makes particular with regard to the free movement the action inadmissible. If a definition of of goods. position which did not remedy the failure nevertheless excluded an action under Article 175 the only possible alternative In the Parliament's view the introduction of would be to recognize the Parliament as the common transport policy on the basis of having an alternative right of action under Articles 74 to 84 of the Treaty requires a Article 173 and to treat such a definition of three-stage planning and implementing position as a measure open to challenge procedure which is typical of the under that provision. Any other solution Community Treaties. It requires first of all would leave a lacuna in the system of legal determination of the aims or principles protection. which make up the framework in which, according to Article 74, the Member States have, in the transport sector, to pursue the B. Substance objectives referred to in Article 2 of the Treaty. Next, it requires the drafting of instruments to achieve those objectives or 1. General observations principles and the adoption of implementing decisions. The general terms employed in The European Parliament (the applicant) and Article 75 (1) and Article 84 (2), namely the Commission (the intervener) give an 'common rules', 'conditions' and 'appro-

Moreover, a feature of the transport sector is the high degree of public intervention in different forms which explains the political As regards the method for the introduction sensitivity associated with the tasks it has to of the common policy the Commission perform in the public interest and the special observes that the title on transport does not problems arising from the competition clearly state the sequence and level of the between the various transport means. In decisions which have to be taken. It particular, the railways provide important considers that the Treaty leaves the services in the public interest and tend to Community institutions to decide whether incur large deficits which have to be borne to adopt a systematic approach, or the more by the national budgets. In the view of pragmatic approach consisting of a gradual certain Member States that is incompatible introduction of the common policy with a policy confined to the liberalization according to the circumstances, provided of the transport of goods within the that the result amounts to a coherent policy Community and the application of the which furthers the aims of the Treaty. general rules of the Treaty. Finally, even before the Treaty was concluded transport was the subject of numerous bilateral and multilateral agreements by the Member States both inter se and with non-member The Parliament then gives a general outline countries. of the activities which the Community institutions have undertaken over the years in respect of transport. On many occasions, notably in 1962, 1973, 1977 and 1980, the Commission has sent the Council communi­ The Commission concludes from those cations and memoranda encouraging it to observations that the organization of the draw up the guidelines of a common policy transport sector is closely connected with and a programme of urgent action. The

All that was produced by the Council in response to that preparatory work was a — the harmonization of social provisions handful of planning decisions adopted in the relating to transport. 1960s. Those decisions, in particular the Council decision of 13 May 1965 on the harmonization of certain provisions The Council (the defendant) observes that affecting competition in transport by rail, Title IV of Pan Two of the Treaty, on road and inland waterway (Official Journal, transport, posed special difficulties to the English Special Edition 1965-1966, p. 67), authors of the Treaty owing to the broad have remained a dead letter. differences of opinion which obtained among the future Member States in relation to transport policy. The provisions of this The other legal measures adopted so far by title reflect agreement on rather vague the Council have been of a sporadic nature compromises which elude substantive without any coherent underlying policy. On decisions. None of these provisions provides 31 December 1982 some 30 proposals of the for the fixing of the main guidelines of a Commission were pending before the common policy in a manner comparable to Council (some had been pending for several that referred to in Article 43 (1) for the years) whilst a similar number of proposals common agricultural policy. Furthermore, had been withdrawn by the Commission as Title IV does not give a timetable for the being no longer up to date. In consequence achievement of the common policy and, the Community legislation on transport has contrary to Titles II and III, does not fix the serious gaps in it, especially in relation to objectives to be achieved at the end of the social, fiscal and technical harmonization, transitional period.

The transport sector is extremely complex in one sector may create serious problems and varied and a common policy can be for other sectors and have negative effects worked out for it only progressively by on transport as a whole. Solving the means of specific regulations for the various problem of competition between rail, road branches. Accordingly, the Council has and, to a certain extent, inland waterway is adopted various measures which may be crucial to progress in achieving a common regarded as the beginnings of a common policy. Nevertheless the Commission's policy. Since the purpose and the content of proposals, especially as regards the position a common policy are not laid down in the of railways, relate only to certain partial Treaty, it is not really possible to determine aspects and have not permitted a general with certainty when the measures which the solution of the problem to be found. Council must adopt pursuant thereto are sufficiently specific to be regarded, when taken together, as a common transport policy. The Council states, moreover, that the common transport policy cannot be separated from the other Community policies. As the Commission stated in its most recent communication, the creation of The Council does not deny that other a single transport market must accompany, measures remain to be adopted. It relies, rather than precede, a further approxi­ however, on a communication from the mation of national economic policies. Commission of 9 February 1983 headed 'Progress towards a common transport policy' (Official Journal 154, p. 1) as evidence that the preparation of a common policy encountered objective difficulties, 2. The first claim: failure to introduce a notably as a result of the diversity of common transport policy national policies in the matter. National policies are determined by the geographical, economic and social conditions of the Member States, which have led to different strategies in relation to transport. The The European Parliament, supported by the differences in the Community of Six were Commission, contends that, taken as a accentuated on the subsequent enlargement whole, the measures adopted so far by the of the Community. Thus the geographically Council in regard to transport in no way peripheral States depend more on road meet the requirements of the Treaty for a transport than the central States, which rely common policy. more on rail.

In the Parliament's view a general obligation is also to be inferred from Article 74, which In the Commission's view there is no legal assumes that there is a binding framework obligation in the Treaty to establish before of a common policy as a logical and the end of the transitional period a necessary condition for the implementation framework for a common transport policy. of individual measures. The establishment of Nevertheless, it supports the Parliament's a binding framework is necessary to provide argument that the competent institutions of general guidelines and to prevent the Community are legally bound to fulfil Community action from leading to the general obligation to introduce such a uncoordinated and even contradictory policy within an appropriate period. The results by way of reaction to circumstances precise content of that obligation must be of the moment. According to Article 8 (7) determined in accordance with the of the Treaty the basis of the common individual provisions of the title on policy ought to have been laid down by the transport. end of the transitional period.

PARLIAMENT v COUNCIL

from the fact that the conditions of disturbances in competition and has had competition in sea and air transport make it adverse repercussions on trade. impossible to integrate those markets solely by applying the general rules of the Treaty. If the wide discretion given to the Council under Article 84 (2) justifies more time being allowed for the adoption of appro­ The general complaint of omission is priate measures in those areas than for the corroborated by the fact that the Council, in other means of transport, that time has breach of the Treaty, has failed to act on already expired. the proposals submitted to it by the Commission. The Parliament refers to the 24 proposals it listed when it called upon the Council to act and in respect of which there is an obligation to act under Article 75 of the Treaty.

JUDGMENT OF 22. 5. 1985 — CASE 13/83

respect of freight rates resulting from Treaty in cases where a consensus cannot be national policies on structural surplus achieved and unanimity is not required. capacity in the sector.

PARLIAMENT v COUNCIL

The Council denies, moreover, that there is any obligation to act under Article 84 (2) in the fields of sea and air transport. The very The Council then contends that Article 74 wording of the article shows that the neither obliges nor empowers the Council to Council has a discretion not only to decide act. In addition, the title on transport how far and by what procedure measures indicates a course to be pursued but it gives should be adopted, but also to decide neither particulars of the aim to be achieved whether measures should be adopted at all.

JUDGMENT OF 22. 5. 1985 — CASE 13/83

As regards the examples of measures whose far it is answerable as a Community lack is pleaded in support of the general institution for the political situations in complaint of failure to act, the Council Member States which influence the considers that Article 175 of the Treaty does Council's decisions. As for the argument put not enable the Court to determine the scope forward by the Parliament and Commission and particulars of rules which ought to have regarding the procedure for reaching been adopted by the Council under Article decisions, it considers that Article 5, which 75 (1) (a) and (b). Just as the Court in an imposes obligations solely on the Member action under Article 173 cannot review the States, is not addressed to the Council . way in which a discretion is actually exercised it cannot in an action for failure to act require that a discretion be exercised.

3. Second claim: Failure to act on 14 proposals of the Commission

The proposals relating to the road transport sector are eight in number . They include five proposals, listed in the applicant's claims under Nos 7 to 11 , which are In its role as mediator between the exclusively based on Article 75 (1) (a) and Community obligations and national concern measures for liberalizing the interests — the role emphasized by Articles carriage of goods by road between Member 74 and 75 — the Council must take account States. In the Parliaments view the proposal of any circumstances likely to hinder or relating to the adjustment of capacity ( No even prevent the implementation of the 7), in particular, represents an important provisions laid down in Article 75 (1) (a) step in replacing bilateral quotas with a and (b) and capable of having unforeseeable Community quota . It considers that there is consequences for the Community . In that a qualified majority in the Council in favour respect the Council raises the question how of the proposals relating to the issue of

PARLIAMENT v COUNCIL

Proposals Nos 5 and 6, relating to the position of the railways, have their legal Proposals Nos 2 and 4, which contemplate basis in Article 75 (1) (a) and (c) and Article the harmonization of fiscal and technical 94 of the Treaty. provisions in the road transport sector, are based on Article 75 (1) (a) and (c), the harmonization of taxation being also based on Article 99. The Parliament claims that Proposal No 5 seeks an amendment of the two measures are important for the Regulation No 1191/69 on action by harmonization of the conditions of Member States concerning the obligations competition in the transport market. In inherent in the concept of a public service. failing to act on the adjustment of the The Parliament stresses its importance for national systems of taxation (No 2) the the conditions of competition between rail, Council has infringed its own decision of 13 road and inland waterway. The Council says May 1965. The adoption of that proposal that it is awaiting the results of information cannot depend on a decision on weights and the Commission is obtaining from national measures (No 4) which, moreover, ought administrations. also to have been taken before the end of the transitional period. The Commission states that proposal No 2 represents the first step towards a common system of liability for infrastructure costs. The lack of a Proposal No 6 concerns amendment of decision prevents any progress in that Regulation No 1192/69 on common rules direction. The Council contends that the for the normalization of the accounts of proposal relating to the harmonization of railway undertakings. The Parliament states taxation (No 2) requires unanimity and that that that proposal can be adopted on a the harmonization of weights and measures qualified majority since only one Member (No 4) is a subject on which there are State is against it. The Council is no longer serious differences of view between the considering the proposal because it has no Member States. practical importance.

market in the transport of goods and to experimental system which is, however, bring about a reduction of excess structural inadequate. The Council, in view of the capacity. The Parliament and the initial results of the experiment and costs, Commission stress that in failing to reach a has preferred to await further information. decision on Article 38, which defines the conditions under which non-resident carriers may operate transport services within a Member State, the Council has failed to fulfil its obligations under Article 75 (1) (b) of the Treaty. According to the Proposal No 14, also based on Article 75 Commission a laying-up system is no longer (1) (c), is for a basic regulation on financial needed. The Council states that it awaits support for projects of Community interest accordingly a fresh proposal based on the in transport infrastructure. The Commission former Article 38. observes that it has cooperated in the adoption of certain transitional measures relating to limited action for the purpose, in particular, of not losing the budgetary appropriations for infrastructures. However, its report in 1981 on bottlenecks in infra­ Proposal No 1, which is based on Article 75 structures shows the importance of the basic (1) (a) and (c), seeks the harmonization of proposal. The Parliament refers to its social provisions relating to the transport of resolution of 15 October 1982 to the effect goods by inland waterway. According to the that the adoption of a regulation on limited Council and the Commission, consideration action cannot replace the adoption of a of that proposal was suspended pending the basic regulation. The Council considers that results of the work of the Central the experience gained with transitional Commission for the Navigation of the measures can only facilitate the adoption of Rhine on the same matter. In the Parlia- more general rules. ments view the Council's failure lies in the fact that it did not define the Community's position by adopting the proposal before entering into negotiations under the Convention of Mannheim. 4. The legal consequences of the absence of a common transport policy

As the Court has confirmed in a judgment The Netherlands Government concludes of 4 April 1974 (Case 167/73 Commission v that even where the Council has not laid French Republic [1974] ECR 359), the down common rules it may be accepted that general rules of the Treaty are applicable to under Article 75 there is the same obligation transport. Although as regards freedom to to achieve a result as in the other areas provide services in the field of transport referred to by Article 59. In that case the Article 61 refers to the provisions of the title Council may take the view that it is no relating to transport, it is not to be inferred longer bound to take some of the measures therefrom that the expiry of the transitional listed in the application and that in that period can have no legal effect on freedom respect it is exonerated from the charges of to provide services. Pursuant to Article 8 (7) failure to act which the Parliament makes of the Treaty the rules relating to the against it. establishment of the common market, including the common market in transport, must have been adopted before the expiry of the transitional period. The Commission concedes that the argument of the Netherlands Government is not without a certain attraction. It points out that the judgment of 10 December 1974 in Case 48/74 (Charmasson v Minister for Economic Affairs and Finance [1974] ECR As regards the legal consequences of the 1383) seems to confirm that interpretation. expiry of the transitional period, the In that judgment the Court held that dero­ case-law of the Court shows that the gations which a national market organiz­ absence of implementing rules expressly ation might effect from the general rules of provided for by the Treaty does not prevent the Treaty were permissible only until the the application of the general rules of the end of the transitional period and to the Treaty or the principles on which they are extent necessary to ensure the functioning based, such as the principle of non-discrimi­ of the market, without, however, impeding nation, which by their nature can have the adjustments which were necessary for direct effect. Article 61 in conjunction with the establishment of the common agri­ Article 75 (1) (a) and (b) thus does not cultural policy. At the expiry of the exclude the possibility that after the expiry transitional period the general rules of the of the transitional period the obligation to Treaty (in that case Article 33) must be fully achieve a result in relation to liberalization, effective. recognized by the Court on the basis of Article 59, may also apply to the areas referred to in Article 75 (1) (a) and (b).

Nevertheless, the Commission considers that persistent failure by the Council, in breach of the Treaty, to adopt the provisions needed to apply the principle of freedom to From that point of view the Member States provide services in the transport sector may not adopt unilateral measures in should not be without legal consequences. It relation to transport which are likely to suggests that the principle of freedom to affect the preparation of the common policy provide services may be regarded as save in so far as they are necessary and after applicable to those transport sectors for consulting the Commission, which may which at the expiry of an appropriate period object if necessary. In that respect the the Council has adopted no rules. Rather Commission mentions that there are pro­ than state a precise date it prefers to link the cedures for notification with regard to application of that principle to a finding by domestic transport and for sea and air navi­ the Court that the Council has persistently gation. Those procedures, however, need to refused to fulfil its obligations. Evidence of be strengthened. such a negative attitude may, for example, be provided by a failure by the Council to adopt the measures needed under Article 176 to comply with a judgment establishing that it has so failed to act. IV — Oral procedure

Finally, the Commission draws attention to At the sitting on 17 and 18 September 1984 the case-law of the Court on the common the parties presented oral argument. policy on fisheries. Although that case-law may not be directly applicable to the transport sector the reasoning to be found therein is also valid for other sectors in which the Community legislature was At the hearing the Parliament explained in required to adopt provisions before the relation to the precise object of its first expiry of a particular period and failed to claim that it had not presented a detailed do so. In essence, it states that the Member version of a common transport policy States are allowed to adopt provisional because it did not wish to assume the role of measures in that case but only in the Community legislator, a role which the common interest and subject to review by Treaty had not conferred on it. The first

Decision

1 By an application lodged at the Court Registry on 24 January 1983 the European Parliament brought an action under the first paragraph of Article 175 of the EEC Treaty for a declaration that the Council has infringed the EEC Treaty, in particular Articles 3 (e), 61, 74, 75 and 84 thereof, by failing to introduce a common policy for transport and in particular to lay down the framework of such a policy in a binding manner and further by failing to reach a decision on 16 specified proposals submitted by the Commission in relation to transport.

JUDGMENT OF 22. 5. 1985 — CASE 13/83

2 The common transport policy is included among the activities in which the Community must engage according to Article 3 of the EEC Treaty in order to establish a common market and progressively approximate the economic policies of · the Member States. It is the subject of Title IV of Part Two of the Treaty, namely the part concerned with the 'foundations of the Community'. The first article under that title, Article 74, lays down that the objectives of the Treaty are to be pursued in the transport sector 'within the framework of a common transport policy'. Article 75 (1) provides that for the purpose of implementing Article 74 the Council must lay down, on a proposal from the Commission and after consulting the Economic and Social Committee and the European Parliament:

(a) common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States;

(b) the conditions under which non-resident carriers may operate transport services within a Member State;

16 January 1979 (Official Journal C 39, p. 16) and 3 March 1982 (Official Journal C 87, p. 42) the Parliament repeated its demand that the Council should introduce without delay a coherent common policy in the transport sector.

5 After observing that there was still no common policy as required by the Treaty, the European Parliament finally adopted on 16 September 1982 a resolution on the institution of proceedings against the Council of the European Communities for failure to act in the field of transport policy (Official Journal C 267, p. 62). The resolution noted that only minimal measures of transport policy which failed entirely to meet the requirements of the common market had been adopted, so that the provisions of Article 3 (e) and 74 to 84 of the EEC Treaty had not been complied with. The resolution also noted that 'the Council has not reached a decision on a large number of Commission proposals on which the European Parl­ iament long ago adopted a favourable opinion'.

6 In the same Resolution of 16 September 1982 the Parliament instructed its President to bring an action against the Council pursuant to the first paragraph of Article 175 of the Treaty after calling upon the Council to act pursuant to the second paragraph of that article. In a letter dated 21 September 1982 the President of the Parliament informed the Council of the Parliament's intention to bring an action against the Council for failing to lay down pursuant to Articles 3 (e), 61 and 74 the framework of a common transport policy within which the objectives of the Treaty might be pursued and to take the decisions provided for in Articles 75 to 84 in order to implement Articles 61 and 74.

— to deal without delay with a number of specified proposals of the Commission on which the Parliament had already given its opinion.

8 The President of the Council replied by letter dated 22 November 1982. In the letter the Council, 'without expressing an opinion at this stage on the legal aspects' referred to by the President of the Parliament but 'in keeping with the spirit of its good relations with the European Parliament', submitted a report to enable the Parliament to acquaint itself with 'the Council's assessment, at the present stage, of the development of the common transport policy'. The Council added that it shared the Parliament's concern to see that policy implemented, that it had already adopted in various transport sectors a series of decisions representing significant steps towards the implementation of a common transport policy, but that it was nevertheless aware that in spite of the progress achieved the common transport policy required further action.

9 In a note enclosed with that letter the Council supplied a list of 71 Council measures adopted in the field of transport and a commentary on the stage reached in the consideration of each of the Commission's proposals referred to in the letter from the President of the Parliament.

10 After the Council's reply had been considered by the competent Parliamentary committees as provided for in the Resolution of 16 September 1982 the President of the European Parliament took the view that the reply did not constitute a 'definition of position' for the purposes of the second paragraph of Article 175 of the Treaty. He therefore decided to bring the present action.

14 In the light of that the Council, while recognizing that Article 175 gives a right of action in respect of omissions of the Council and Commission to Member States and 'the other institutions of the Community', enquires whether the right of review conferred on the Parliament by the Treaty is not exhausted by the powers provided for in Articles 137, 143 and 144 of the Treaty, which govern the ways in which the Parliament may exercise influence on the activities of the Commission and the Council. If so, the Parliament can have no right of review over the Council which may be exercised by means of an action for failure to act.

15 The Council adds that upon a systematic interpretation of the Treaty the Par­ liament has no capacity to bring proceedings. The Parliament has no right of action under Article 173, which enables a review of the legality of measures of the Council and Commission to be obtained by means of an action for annulment. In so far as the Treaty deprives the Parliament of the right to review the legality of measures of the two institutions it would be illogical to allow it a right of action in the case of unlawful failure by one of those institutions to act. Accordingly, only

JUDGMENT OF 22. 5. 1985 — CASE 13/83

through an express attribution of powers would it have been possible to confer on the Parliament a right to bring an action for failure to act.

16 The European Parliament and the Commission contest that argument on the basis of the actual wording of Article 175, which in their view does not lend itself to any interpretation which would prevent the Parliament from bringing an action for failure to act. Both institutions also consider that recognition of such a power is in no way incompatible with the division of powers provided for by the Treaty.

PARLIAMENT v COUNCIL

21 On the first issue the Council maintains that the letter from the President of the Parliament was not regarded at the time as calling upon it to act within the meaning of Article 175. The Council's reply shows that the correspondence between the two institutions represented in the Council's view a contribution to the political dialogue and not the first step in proceedings. It is for that reason that the Council gave the Parliament all the information necessary to show how the Council envisaged the future development of the common transport policy.

22 On the second issue the Council points out that what constitutes a 'definition of position' for the purposes of Article 175 depends upon the nature of the omission with which the institution in question is charged. Where the institution is required to take a decision without having the least discretion it is difficult to imagine that a definition of position which differed from the measure required could make an action inadmissible. If, on the other hand, the Treaty gives the institution a wide discretion, as in the present case, the situation is different: a reply from the institution in question setting out the state of progress and showing why the institution has not yet acted and the way in which it intends to proceed suffices in such a situation to establish that there is no failure for the purposes of Article 175 and that consequently the action is inadmissible.

23 The Parliament and the Commission take the view that the letter from the President of the Parliament of 21 September 1982 set out with sufficient clarity the measures called for by the Parliament pursuant to the second paragraph of Article 175 and that the reply from the President of the Council of 22 November 1982 did not define the Council's position on any of those measures, so that the Par­ liament's charge that the Council had failed to act was left unanswered.

28 In its defence the Council criticizes the Parliament for having failed to address the key issue in the case, namely whether the word 'act' in Article 175 may be interpreted as including the introduction of a common transport policy. The Council explains that the policy concerns an extremely complex subject with numerous aspects, such as infrastructure, prices, conditions of transport, freedom of establishment and freedom to provide services, social problems, competition and so forth. Accordingly a common policy in this sector, which must cover not only road traffic but also inland navigation and railways, cannot be introduced by a single decision: it must be built up progressively by means of specific rules.

29 The Council submits that the procedure provided for in Article 175 was designed for cases where the institution in question has a legal obligation to adopt a specific legal measure and that it is an inappropriate instrument for resolving cases involving the introduction of a whole system of measures within the framework of a complex legislative process. Should the Court find that an institution has, in

PARLIAMENT v COUNCIL

breach of the Treaty, failed 'to act', the institution is required under Article 176 'to take the ... measures' necessary to comply with the judgment of the Court. The applicant, however, has failed to specify the precise measures which it complains the Council has not adopted.

30 The European Parliament concedes that a common transport policy will probably not be adopted at a stroke but must be achieved by means of successive measures which will have to be harmonized inter se within a single coherent system. It is obvious, however, that it is necessary 'to act' one way or another to bring the requisite set of measures into being in accordance with a pre-determined plan.

JUDGMENT OF 22. 5. 1985 — CASE 13/83

33 The Court notes that the Parliament has made two separate claims: one concerning the failure to introduce a common transport policy and in particular to lay down its framework, and the other concerning the Council's failure to act on 16 proposals relating to transport which the Commission had submitted to it. Only the first claim raises the question whether the terms of Article 175, and its place in the system of legal remedies provided by the Treaty, permit the Court to find that there has been a breach of the Treaty in the form of a failure to act.

34 Although the wording of Article 175, especially in the German and Dutch versions, seems to call for an interpretation which presupposes the existence of a failure to adopt the specific measure, that argument is not conclusive. In the first place, the other language versions are so worded as to allow the inclusion of a less clearly circumscribed failure; in the second place the purpose of Article 175 would be frustrated if an applicant were not able to refer to the Court an institution's failure to adopt several decisions, or a series of decisions, where the adoption of such decisions is an obligation which the Treaty imposes on that institution.

35 In those circumstances the issue raised by the Council is, in essence, whether in the present case the European Parliament, in describing in its first claim the measures which it complains the Council has failed to take, has done so with a degree of precision which would make it possible for the Council to comply, pursuant to Article 176, with a judgment of the Court allowing that claim.

39 Given that situation, the basic principles which the Council ought to have adopted, according to the Parliament, should at least pursue certain aims and cover certain areas. The very nature of a common transport policy implies the need to ensure that certain aims are pursued, especially with a view to bringing about liber­ alization of transport and facilitating international traffic. The relevant principles must also indicate the areas to be covered by the system of rules which is to be established; in view of the economic situation in the transport sector the areas of action should above all cover competition between rail and road transport and restrictions on capacity in transport by inland waterway and road transport.

40 The Commission points out that there are serious lacunae in all areas of transport policy notwithstanding the numerous proposals which it has submitted to the Council over a period of more than twenty years. It refers in particular to the inadequacy of the measures adopted on the carriage of goods by road, where restrictions on capacity are generally fixed by means of bilateral agreements

JUDGMENT OF 22. 5. 1985 — CASE 13/83

between. Member States on the basis of very diverse criteria which often prevent the best use being made of existing capacity because so many return journeys are made unladen, and where, moreover, transport within each of the Member States is restricted to undertakings established in the territory of that Member State. Finally, the considerable number of border checks continues to impede inter­ national transport.

PARLIAMENT v COUNCIL

44 The Council states that in its view liberalizing the carriage of goods by road is scarcely conceivable without a substantial approximation of the conditions of competition, which is, however, impossible to achieve unless the problem of the railways and their relationship with the public authorities is resolved. However, the Council has never received a proposal from the Commission which would enable that fundamental problem to be resolved.

47 Accordingly it is necessary to determine whether, in the absence of a set of measures capable of constituting a common transport policy, the Council's repeated failure to act may be the subject of an action under Article 175.

JUDGMENT OF 22. 5. 1985 — CASE 13/83

48 In that respect it must first of all be observed that objective difficulties which, according to the Council, stand in the way of the necessary progress towards a common transport policy are irrelevant for the purposes of the present action. Under Article 175 the Court must find that there has been an infringement of the Treaty if the Council or the Commission fails to act when under an obligation to do so. Article 175 takes no account of how difficult it may be for the institution in question to comply with the obligation.

49 Nevertheless, the Council's argument that it has a discretion must, in principle, be accepted. Although it is true that the discretion is limited by the requirements which stem from the establishment of the common market and by certain precise provisions in the Treaty such as those laying down time-limits, the fact remains that under the system laid down by the Treaty it is for the Council to determine, in accordance with the rules of procedure provided for in the Treaty, the aims of and means for implementing a common transport policy.

50 As part of its obligation to introduce a common transport policy the Council is required to make all the decisions necessary for the gradual introduction of such a policy, but the substance of those decisions is not determined by the Treaty. Thus, for example, the Treaty leaves it to the Council to decide whether action in the transport sector must deal first with relations between the railways and the public authorities or with competition between road and rail. It is also for the Council to determine what priorities are to be observed in harmonizing the laws and administrative practices in the sector and to decide what matters such har­ monization must cover. In that respect the Treaty gives the Council a discretion.

54 The Parliament and the Commission claim in this respect that not only do the provisions of Article 75 (1)(a) and (b) require common rules applicable to inter­ national transport and the conditions under which non-resident carriers may operate transport services to be adopted within a certain period , but they also impose on the Council obligations sufficiently specific to be capable of being the subject of a finding of failure to act under Article 175 of the Treaty . Both institutions stress the close relationship between those provisions and freedom to provide services, the achievement of which is one of the main tasks entrusted to the Community .

55 The Council contests that argument on the basis that even in the area covered by Article 75 (1)(a) and (b) the substance and aim of the rules to be adopted are not sufficiently defined.

56 The Commission points out that in any event the common transport policy called for by the Treaty contains one element, the substance of which is sufficiently well- defined to be classified as a specific obligation, namely freedom to provide services. The scope of that obligation can be determined on the basis of the

JUDGMENT OF 22. 5. 1985 — CASE 13/83

provisions of the Treaty relating to the provision of services, in particular Articles 59 and 60, and the relevant directives and case-law.

57 The Netherlands Government also stress the importance of freedom to provide services.

61 The Commission, on the other hand, considers that Articles 59 and 60 are not directly applicable in the transport sector. Pursuant to Article 61 freedom to provide services in relation to transport must be achieved within the framework of the rules provided for by Article 75 (1) (a) and (b). The aim of that provision is to allow the Council an appropriate period, extending if necessary beyond the expiry

PARLIAMENT v COUNCIL

of the transitional period, within which to achieve freedom to provide services in relation to transport within the framework of a common policy. That appropriate period cannot, however, extend indefinitely, and now that more than 15 years have elapsed since the end of the transitional period it must almost have reached its end; if it were otherwise freedom to provide services, although guaranteed by the Treaty, would apply in all but one sector of activity, a situation which in the long term would be likely to cause distortion of competition. In those circums­ tances the Court should indicate by way of a warning in the present judgment what is a reasonable period for the purposes of Article 61.

62 It should first be borne in mind that Article 61 (1) provides that freedom to provide services in the field of transport is to be governed by the provisions of the Title relating to transport. Application of the principles governing freedom to provide services, as established in particular by Articles 59 and 60 of the Treaty, must therefore be achieved, according to the Treaty, by introducing a common transport policy and, more particularly, by laying down common rules applicable to international transport and the conditions under which non-resident carriers may operate transport services, the rules and conditions of which are referred to in Article 75 (1) (a) and (b) and necessarily affect freedom to provide services.

67 The Council was required to extend freedom to provide services to the transport sector before the expiry of the transitional period, pursuant to Article 75 (l)(a) and (2), in so far as the extension related to international transport to or from the territory of a Member State or across the territory of one or more Member States and, within the framework of freedom to provide services in the transport sector, to lay down, pursuant to Article 75 (l)(b) and (2), the conditions under which non-resident carriers may operate transport services within a Member State. It is common ground that the necessary measures for that purpose have not yet been adopted.

68 On that point the Court must therefore hold that the Council has failed to act since it has failed to adopt measures which ought to have been adopted before the expiry of the transitional period and whose subject-matter and nature may be determined with a sufficient degree of precision.

69 The Parliament, the Commission and the Netherlands Government also refer to the legal situation which would arise if, after judgment against it, the Council still failed to act. That problem is, however, hypothetical. Article 176 requires the Council to take the measures necessary to comply with this judgment; since that provision does not prescribe a time-limit for such compliance it must be inferred that the Council has a reasonable period for that purpose. It is not necessary in the present judgment to consider what would be the consequences if the Council still fails to act.

PARLIAMENT v COUNCIL

70 Accordingly, the Court must find that in breach of the Treaty the Council has failed to ensure freedom to provide services in the sphere of international transport and to lay down the conditions under which non-resident carriers may operate transport services in a Member State.

75 That view implies that the obligation of the Council to which the Parliament refers forms part of its general obligation to introduce a common transport policy, in so

JUDGMENT OF 22. 5. 1985 — CASE 13/83

far as that policy must be determined within a certain period. In those circums­ tances only the proposals concerning matters covered by Article 75 (1)(a) and (b) can come into consideration.

76 Only one of the proposals referred to is based on Article 75 (1)(b), namely the proposal for a regulation on access to the market in transport by inland waterway, submitted to the Council in 1967. It appears from the observations of the Council and the Commission that that proposal is no longer applicable in its original form. The Commission has informed the Council that it is maintaining only Article 38 of the proposal, since the other provisions are the subject of discussion on the mandate to be given to the Commission for negotiations with Switzerland through the Central Commission for the Navigation of the Rhine.

77 The majority of the proposals based on Article 75 (1)(a) concern road traffic. That is so in the case of the two proposals relating to the requisite authorizations for coupled vehicles and the proposal for the liberalization of the transport of live animals and works of art by special vehicles.

78 In so far as the proposals based on Article 75 (1)(a) and (b) are intended to contribute towards the achievement of freedom to provide services in the transport sector, the Council's obligation to reach a decision thereon is apparent from the above finding of the Court that the Council has failed to act. In so far as the proposals do not fall within that category they belong to the class of accompanying measures which may be adopted in addition to the requisite measures for liberalization and their adoption lies within the discretion of the Council.

hereby:

(1) Declares that in breach of the Treaty the Council has failed to ensure freedom to provide services in the sphere of international transport and to lay down the conditions under which non-resident carriers may operate transport services in a Member State;

(2) For the rest, dismisses the application;

(3) Orders the parties and interveners to bear their own costs.

Mackenzie Stuart Bosco Due Kakouris

Koopmans Everling Bahlmann Galmot Joliét