C-308/86

OPINION OF SIR GORDON SLYNN — CASE 308/86

OPINION OF ADVOCATE GENERAL SIR GORDON SLYNN delivered on 31 May 1988

CRIMINAL PROCEEDINGS AGAINST LAMBERT

'1 . Is it contrary to the liberalization of the common market is not distorted, payments connected with intra- preclude such inverted discrimination Community trade under Article 67 (2) where, independently of the specific and Article 106 (1) of the EEC Treaty objective pursued by the restrictive rules, for an exporter residing in the territory their effect is to give a substantial of the Belgo-Luxembourg Economic advantage to similar traders in other Union to be required to sell on the Member States and they are thereby controlled exchange market to approved likely directly or indirectly, in fact or banks foreign currency received in potentially, to form an obstacle to trade payment for goods sold in Germany and between the Member States? the Netherlands, it being understood that the amount ultimately received in national currency is some 5 to 10% less than what could have been obtained on the free market?

5. Do the standstill provisions of Article 5, 31, 32 and 34 of the EEC Treaty apply to the measures described in questions 1 and 2 which were adopted before the Treaty entered into force but have since 2. Is the prohibition on receiving the price caused appreciable distortion where the of the abovementioned exports in differences between the exchange rates foreign or national banknotes an obtaining on the controlled and free obstacle to the liberalization of markets reach some 5 to 10% of the payments? value in national currency of the price charged in foreign currency, as happened in the present case in 1981, 1982 and 1983?'

The national court mentions first Article 67. Payment to an exporter in Belgium or It can be said on one reading that Article Luxembourg for goods exported elsewhere 106 (1) is addressed to the Member State of in the Community is not, however, a import rather than to that from which the movement of capital within Article 67 of the goods are exported. It is directed to Treaty as was made clear in paragraphs 21 payments rather than to receipt of and 22 of the Court's judgment in Joined payments. That seems to me to be too Cases 286/82 and 26/83 (Luisi and Carbone narrow an approach. The necessary v Ministero del Tesoro [1984] ECR 377, at corollary of the freedom to pay is the p. 404): '. . . current payments are transfers freedom of the recipient to remit the of foreign exchange which constitute the payment — an interpretation borne out by consideration within the context of an Article 106 (2) which provides: underlying transaction, whilst movements of capital are financial operations essentially concerned with the investment of the funds in question rather than remuneration for a service ... the physical transfer of banknotes may not therefore be classified as a 'In so far as the movements of goods, movement of capital where the transfer in services and capital are limited only by question corresponds to an obligation to pay restrictions on payments connected arising from a transaction involving the therewith, these restrictions shall be movement of goods or services'. progressively abolished by applying, mutatis mutandis, the provisions of the chapters relating to the abolition of quantitative restrictions, to the liberalization of services and to the free movement of capital.'

On the other hand, as the first question makes clear, the restriction in issue is not imposed on the basis that payment cannot be received in a foreign currency, but that To the same effect are Article 5 (1) of the once received the foreign currency must be first Capital Directive which provides that sold on the controlled market to an the Directive shall not 'restrict the right of approved bank. Although the first Member States to verify the nature and subparagraph of Article 106 (1) requires genuineness of transactions or transfers, or Member States to authorize payments only to take all requisite measures to prevent in the 'currency of the Member State in infringements of their laws and regulations' which the creditor or the beneficiary resides' and the Court's statement in Case 203/80 it seems to me that having regard to the Criminal proceedings against Guerrino Casati second paragraph of Article 106 (1) and to [1981] ECR 2595 that the first two para­ Article 106 (2), Article 106 imposes an obli­ graphs of Article 106 'do not require the gation on Member States, in so far as their Member States to authorize the importation economic situation in general and the state and exportation of banknotes for the of their balance of payments in particular performance of commercial transactions, if permit, to authorize payments in the such transfers are not necessary for the free currencies of other Member States. movement of goods' and that 'in connection with commercial transactions, that method of transfer which, moreover, is not in conformity with standard practice, cannot be regarded as necessary to ensure such free The question is thus whether the obligation movements' (paragraph 24, p. 2617). to sell such currency when received to an authorized bank is in breach of Article 106.

a requirement that payment for goods sold breach of Article 106 of the Treaty with should be made through the normal which this case is concerned. exchange market for such purposes (here the controlled market) is not in itself a restriction contrary to Article 106 of the Treaty. Even though the judgment in Luisi and Carbone was dealing with services, it seems to me that the principle stated there Nor do I consider that the rules in question applies to restrictions on payments for the restricted the movements of goods as consti­ supply of goods. As Casati shows Member tuting a disincentive to export. If exporters States are not required by Community law were given a free choice of exchange rates, to tolerate current payments in cash if cash the rates would be likely to align and the payments are not necessary to achieve the two-tier market become effectively one liberalized movements of goods, particularly market. if cash is not the normal commercial method of payment. Nor can it be said that a 'free' exchange market is a necessary corollary or precondition of a free market in goods. If indeed there were one exchange market in Belgium and Luxembourg it would be the regulated market on which the Mr Lambert further argued that the dual central bank could intervene. exchange market was contrary to Community law, not for the technical reasons already considered but on the grounds that its operation hampered his competitiveness as against livestock traders based in other Member States. In so far as that constitutes an argument that the IBLC rules acted as a measure of equivalent effect to a quantitative restriction, I have already Whether a single exchange rate must be rejected it. However, he observed that he adopted for all liberalized movements of was in competition with German traders capital and current payments, as the and sold his cattle at the same market in Commission has forcibly contended, is a Trier. He was subject to the IBLC rules, question not necessary to decide in this case. whereas his German competitors were not, which constituted discrimination on nationality grounds contrary to Article 7.

observes, unlawful discrimination must be on nationality grounds: a German national found in the legislation or practice of one resident in Luxembourg exporting as does a State and not as between Member States. In Luxembourg national would be subject to Case 126/82 (D. J. Smit Transport BV the same rules. v Commissie Grensoverschrijdend Beroeps- goederenvervoer [1983] ECR 73, at p. 92) it is said: As to the fourth and fifth questions, I adopt the Commission's approach. It observes first 'The application of national legislation that the provisions of Articles 3 and 5 are cannot be regarded as discrimination general statements of more specific prin­ contrary to the Treaty on the ground that ciples developed in other Treaty articles and other Member States may apply less severe cannot be relied on in isolation and second restrictions to ... undertakings established that Articles 30 to 32, dealing with imports, in their territory. The aim of Article 7 of the are not relevant here. It also observes that, Treaty is to eliminate any discrimination on since on the basis which I have accepted, the ground of nationality resulting from the the IBLC rules do not restrict either trade legislation or administrative practices of a or current payments, the question whether given Member State rather than any they infringe the standstill provision does disparity in the way in which undertakings not arise. of different Member States are treated as a result of differences between the legislation of the Member States ... '. There is thus no incompatibility with the Treaty rules on current payments on which In my view, it is manifest that the IBLC Mr Lambert can rely to overturn his rules do not discriminate, even indirectly, conviction.

Questions 4 and 5 do not require independent answers given these proposed replies to Question 3 and Questions 1 and 2 respectively.

The costs of the parties to the national proceedings, Mr Lambert and the Public Prosecutor, are a matter for the referring court. Those of the Belgian, French, Italian and Luxembourg Governments and of the Commission are not recoverable.