C-240/86

COMMISSION v GREECE

OPINION OF MR ADVOCATE GENERAL LENZ delivered o n 13 J a n u a r y 1 9 8 8 *

Mr President, before 16 February 1984 could not be used Members of the Court, since the goods had not undergone the required procedure. The importers were therefore informed that they must submit new applications for import permits to the Committee. This procedure of obtaining A — Facts approval from the Committee was only discontinued following a Ministerial Decision of 23 April 1986 (No E 6/4492).

* Translated from the German.

OPINION OF MR LENZ — CASE 240/86

6. T h e two procedures were combined in past and no longer in existence may be the the application made in September 1986 for subject of proceedings for a declaration that a declaration that by requiring foreign a Member State has failed to fulfil its obli- currency permits for imports of cereals and gations. This possibility cannot in general be making such permits subject to an obli- excluded since otherwise, in view of the gation to re-export the products, by length of the pre-litigation procedure, it revoking permits already granted and by would in many cases be impossible for the failing to communicate to the Commission Court to exercise its jurisdiction with regard the information and regulations requested to breaches of the Treaty of short duration. by it the defendant had failed to fulfil its Since the duration of conduct which is obligations under Articles 5, 30, and 106 (1) contrary to the Treaty is no indication of of the EEC Treaty and under Council the gravity of the infringement it must be Regulation (EEC) N o 2727/75 on the possible to bring proceedings even in common organization of the market in relation to a breach of the Treaty which is cereals. limited in time. This is particularly true inasmuch as measures dictated by seasonal requirements, for example, apply by their B — Opinion very nature only during a specific period and derive their effectiveness precisely from that fact. I— Admissibility

7. The Government of the Hellenic 10. The most important issue in deter- Republic has raised an objection of inad- mining whether an application is admissible missibility, arguing that the action is devoid is whether or not the Member State of purpose since all the alleged concerned has adopted the measures infringements had been discontinued by the required of it within the period laid down in time the application was lodged in the reasoned opinion. September 1986.

COMMISSION v GREECE

remained ignorant of it. That, in my require additional criteria, it must be held opinion, follows from the second paragraph that they are also present. That follows from of Article 169. the nature of the disputed measures, which are temporary restrictions on or barriers to imports of wheat which may be pitched to 12. Since the judgment in Case 26/69, 2the market conditions in the Member State Court has considered it necessary that an concerned. The temporary introduction of interest in bringing the proceedings should additional control and administrative be established when the alleged failure to procedures can, at the least, give rise to fulfil obligations under the Treaty was delays which are incompatible with the virtually at an end before the principle of the free movement of goods and commencement of the proceedings. It has a common organization of the market subsequently repeated this requirement a which is governed solely by Community number of times. 3However, the Court has instruments. If an element of protectionism held in the later cases 4that an interest in is concealed in the additional authorization bringing proceedings exists once the requirements it follows that there is a judgment may establish a basis for the danger of their being repeated. They would responsibility that a Member State can incur therefore be most effective if they were as regards other Member States, the applied for short periods. Community or individuals, and it is not necessary to specify the precise circum- stances of a claim or the person who may bring a claim. In the judgment in Case 14. The application is therefore admissible 103/84, 5 there is no reference to the in relation to the subject-matter of the judgment's being a potential basis for dispute as defined in the first reasoned liability. The Court simply affirms the opinion. However, the application is inad- interest in bringing the action, pointing out missible as regards the subject-matter of the that the default at issue was not remedied dispute introduced in the second reasoned until after the period laid down pursuant to opinion since it had already become devoid the second paragraph of Article 169 had of purpose when that reasoned opinion was elapsed. delivered.

(1) of the Act of Accession of the Hellenic regulation sets out the conditions under Republic) which goods covered by the common organization of the market are not admitted to free circulation. It follows, a contrario, that otherwise all goods covered by the organization of the market may circulate freely within the Community. Only the 16. First of all, the applicant complains that Community rules concerning the organ- the foreign currency permit procedure was ization of the market may restrict such made more difficult by the introduction of movement. the requirement that the consent of the Bank of Greece must be obtained for every permit granted in the cereals sector.

17. In order to ensure the free movement of instruments provided for by that organ- goods Article 30 of the EEC Treaty ization. 9 prohibits all measures having equivalent effect to quantitative restrictions on imports. It is well established in the case-law of the Court that 'all trading rules enacted by Member States which are capable of 20. This legal position was fully applicable hindering, directly or indirectly, actually or to the circumstances of the Hellenic potentially, intra-Community trade' are Republic from February 1984 to April 1986 measures having an effect equivalent to since under Article 65 (1) of the Greek Act quantitative restrictions. 6 of Accession the Community rules concerning inter alia quantitative restrictions and measures having equivalent effect have been applicable since 1 January 1981 to all products covered by a common organ-

COMMISSION v GREECE

Greece's accession. It is not disputed that at of national exchange control law and it was that time the common organization of the necessary to take appropriate measures market in cereals was in existence, so there against capital flight. is no possibility of derogation.

24. It is true that in connection with the liberalization of payments provided for in Article 106 of the EEC Treaty the Court had held that Member States may impose 21. The defendant has therefore failed to controls in order to verify whether certain fulfil its obligations under Community law if transfers of capital are in fact liberalized the introduction of a centralized system of transfers or disguised movements of capital permits for cereal imports constitutes a which have not been liberalized. 11 Within quantitative restriction on imports or a these limits Member States may impose measure having equivalent effect. It must be controls on transfers of currency. They are stated at the outset that the introduction of also at liberty to take appropriate measures a control mechanism in the form of an against capital flight or similar speculation administrative procedure for imports of against their currency. goods is of itself potentially capable of hindering trade. The need to submit applications and to tolerate delays in the granting of an import permit of itself undermines the free movement of goods. 25. However, it is extremely debatable whether the disputed measures may be justified in those terms. Apart from a general assertion that the controls were necessary because of breaches of the exchange control legislation and increased 22. It should be observed that trade was in capital flight, the defendant has not fact impeded, since the applicant became provided a detailed explanation why the aware of the procedure through complaints rules were necessary. by persons affected, and that further adverse effects on trade were brought to its attention after it had first made contact with the defendant.

30. However, if the Court should take the 27. Although that committee was located at view that Article 106 of the EEC Treaty is the Bank of Greece the purpose of the relevant, because the import permit procedure was not to control currency procedure is only apparently incorporated in outflows but to regulate imports of goods. the foreign currency permit procedure or on This much is indicated both by the wording substantive grounds, then the disputed of the decisions and by the arguments put measures are still impermissible. forward by the defendant in the course of the proceedings before the Court. Thus, for example, the defendant stated that the centralized procedure had become necessary in order to ascertain patterns of trade in the 31. The freedom to make payments must be cereal sector. It maintained that the permit regarded as a necessary concomitant of the procedure was justified by the need to free movement of goods, services, capital obtain information on stock requirements and persons. To the extent that these basic and to examine cereal requirements. freedoms are achieved, the requisite However, these arguments do not provide payments must be allowed. Since free additional grounds for justifying an actual movement of goods in the cereal sector has or even a potential restriction on trade. been fully achieved no new restrictions on payments relating to such goods may be introduced.

28. T h e fact that the applicant did not expressly complain about the Import Regu- 32. The defendant's reliance, in particular, lation Committee's approval procedure but on Articles 67 and 68 of the EEC Treaty instead directed its attention to restrictions and Article 5 of the directive implementing arising in the context of the foreign Article 67 is irrelevant since the foreign currency permit procedure is no objection currency permit procedure (in so far as it since the defendant government persistently constitutes the subject-matter of the dispute) refused to communicate the relevant texts does not concern the free movement of and consequently the applicant only became capital, which has not yet been fully aware of the restrictive practices because of achieved. their actual effect.

flight or other speculation. In any event, the mation concerning the length of time which general procedure for obtaining a foreign the procedure took. The only reply which currency permit, the legality of which has the defendant gave to these requests for not yet been conclusively determined, would information was to send a list of the permits have been sufficient. The centralized import granted during the first six months of 1984. permit procedure therefore constitutes an infringement of the Treaty in relation to the principle of the free movement of goods. 37. Finally, in view of the obdurate conduct of the defendant the applicant sent a further 34. The revocation of previously issued telex on 23 October 1985, which received import permits which took place when the no reply whatsoever. centralized procedure was introduced 12 must be considered to be incompatible with the Treaty, since it represents an increased restriction on imports. There is no discernible reason why importers could not 38. The first paragraph of Article 5 of the make use of a permit which had already EEC Treaty lays down the Member States' been granted and were instead obliged to duty to cooperate as a general principle. make a fresh application if the purpose of That provision can be relied on when n o this procedure was not to regulate the actual provisions of the Treaty expressly define the amount of imports. obligations of the Member States. By signing the Treaty the Member States bound themselves to act in conformity with it. The purpose of the pre-litigation procedure in actions for failure to fulfil (2) Breach of the obligation to cooperate obligations is to enable disputes to be settled contained in Article 5 without Court proceedings, which implies that the Member State in question has an obligation to cooperate. Without active cooperation, it cannot be determined 35. The applicant also alleges that the whether a breach of the Treaty has been defendant failed to fulfil its obligations committed, nor, a fortiori, can such a breach under Article 5 of the EEC Treaty inasmuch be eliminated. as it failed to reply to the applicant's two telexes of 12 and 15 March 1984 in which its attention was drawn to the fact that a system of import licences was contrary to Community law. 39. The purpose of the applicant's first telexes was to define the subject-matter of the dispute. The applicant enquired whether the information which it had received 36. In a letter of 13 February 1985 the concerning the practice of issuing import Commission's Director-General for Agri- licences in the guise of foreign currency culture requested the defendant to permits was accurate. It pointed out that communicate the text of the regulations and such a practice might involve measures equi- a list of applications and information valent in effect to quantitative restrictions relating the latter to cereal imports. The on imports, contrary to the Treaty. Finally it applicant requested more detailed infor- asked for an answer within a prescribed period. There was no response to either 12 — Sec Decision E 6/963 of 21 February 1984 (Annex 2 to the defendant's answer to the questions put by the Court). telex. This refusal to respond to the

41. In the course of the proceedings before 45. As regards costs, it must be borne in the Court the defendant stated that it had mind that the part of the application based no reliable comprehensive data on the on the second pre-litigation procedure is applications which had actually been made inadmissible because the defendant had for the period when foreign currency already desisted from the disputed conduct permits were handled by the approximately when the reasoned opinion was delivered. 3 000 banks. For that reason, it claimed, However, that is largely attributable to the centralization had become necessary. defendant's uncooperative attitude. Had it informed the applicant about the state of the procedure, as it was invited to do a number of times, the second reasoned opinion would certainly never have been delivered. As late as March 1986 the defendant wrote 42. Even if these claims were justified it to the plaintiff putting forward the view that would still have been the defendant's duty it was entitled to adopt the disputed at least to inform the applicant of those measures. It also considered it unnecessary circumstances and to explain them. The to inform the applicant that the measures continued indifference which the defendant had been repealed. In the light of all the displayed with regard to the telex of 23 foregoing I consider it appropriate that the October 1985, which once again referred to defendant should be ordered to pay the conduct in breach of the Treaty, also costs pursuant to Article 69 (3) of the Rules suggests a lack of willingness to cooperate. of Procedure.

(4) The defendant should be ordered to pay the costs.