C-355/87

3. In July 1985 the Italian Republic informed the other Member States and the Commission of the European Communities (i) Italy would accede as rapidly as (the applicant) of those difficulties. possible to the United Nations However, a diplomatic démarche in October Convention on a Code of Conduct for 1985 on behalf of the Community and the Liner Conferences; Member States met with no practical results. 1 — This draft agreement will hereinafter be referred to as the 'Agreement'. * Original language: German. 2 — OJ 1986, L 378, p. 1.

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(ii) the cargo-sharing arrangement 9. The applicant takes the view that by contained in the Agreement would be adopting the decision the defendant has brought into line with Community law; infringed Articles 5 and 6 of Regulation No 4055/86 and Article 7 of the EEC Treaty. It also alleges a breach of essential procedural requirements.

(iii) the cargo-sharing arrangement would cease to have effect as soon as the Code of Conduct was applicable to 10. The applicant therefore claims that the trade between Italy and Algeria, and at contested decision should be declared void. the latest three years after the adoption of the Council's decision.

11. The defendant and the intervener contend that the application should be 7. On 17 September 1987 the Council dismissed. They consider the decision to be unanimously adopted the contested decision lawful. relating to maritime transport between Italy 3 and Algeria, in which the Italian Republic was authorized to ratify the Agreement with Algeria 'on the understanding that [nelľ 12. I shall examine the content of the intesa che essa, étant entendu que] Italy' Agreement, the details of the proposed decision and the submissions of the parties during the course of my analysis. For the rest I would refer to the contents of the (i) would take the necessary steps to Report for the Hearing. accede as soon as possible to the Code of Conduct;

14. In the statement of the reasons for its proposal for the contested decision, the applicant explained that the negotiation and 17. The Community thereby made maritime conclusion of a cargo-sharing arrangement transport subject to Community rules. fall in fact within the powers of the Consequently, as the Court has held, the Community. In the oral procedure too the Member States no longer have the right, plaintiff put forward that basic view, but acting individually or even collectively, to stated that in certain circumstances, in undertake obligations with third countries particular if an international agreement had which affect those legal rules. already been negotiated and only certain amendments were to be added before its ratification, the Member State could be authorized to conclude the agreement.

23. Consequently it must be held that Italy has the power to conclude a maritime transport agreement with Algeria. 20. That result is further underscored by the fact that under Article 2 of Regulation No 4055/86 national restrictions in existence before 1 July 1986 are to be phased out in accordance with a specific Breach of Articles 5 and 6 of Regulation No timetable, that is to say, as regards carriage 4055/86 between Member States and third countries by 31 December 1991 or 1 January 1993. That point, which is relevant here, since the negotiations between Italy and Algeria had already been initiated before 1 January 24. The applicant complains that the 1987, shows that the implementation of Agreement between Italy and Algeria Community law in maritime transport to contains a cargo-sharing arrangement. The and from non-member countries was not conditions under which the defendant could required immediately but was to be authorize a Member State to conclude a introduced in stages. cargo-sharing arrangement were not, however, fulfilled.

21. Finally, that conclusion is supported by a comparison with Regulation No 4056/86, 25. The defendant and, albeit not so also adopted on 22 December 1986, laying clearly, the intervener regard the main down detailed rules for the application of purpose of the Agreement as the estab­ Articles 85 and 86 of the Treaty to maritime lishment of a liner conference, not transport. Under the heading 'Conflicts of provisions on the sharing of cargoes. international law', Article 9(2) of that regu­ lation, which entered into force in its entirety on 1 July 1987, also provides fot the possibility of agreements with third countries and lays down rules for the nego­ 26. Article 4 of the Agreement provides as tiating procedure modelled on the: follows:

28. I have no hesitation in regarding such a provision as a cargo-sharing arrangement under Anieles 5 and 6 of Regulation No 31. It is not disputed that Algeria's conduct 4055/86. That assessment does not neces­ in reserving for ships flying the Algerian sarily follow from the applicant's flag the transport of cargoes to Algeria led submissions, which conclude from the to a significant fall in the Italian share of wording of the French version of the regu­ trade from 40 to 12% of the total volume. lation ('arrangement en matière de partage Such a change in the share of trade, des cargaisons') that the concept of a cargo­ brought on by the deliberate conduct of a sharing arrangement should be interpreted third country can be regarded as exceptional broadly so as to cover every arrangement circumstances warranting the action that provides for or entails the sharing of provided for in Article 6 of Regulation No trade. The decisive point to my mind is that 4055/86. according to the spirit and purpose of Regulation No 4055/86 cargo-sharing arrangements are in principle undesirable and only permitted in exceptional cases. If, as a rule, the Member States are not allowed to conclude cargo-sharing agreements themselves, then they cannot encourage or prescribe the making of such arrangements by private individuals either. 32. Having regard to the basic stance of Regulation No 4055/86, the rejection of

COMMISSION v COUNCIL

cargo-sharing arrangements, the applicant's and Algeria in the framework of the Code view that such arrangements should be of Conduct is 'more in keeping with considered only as a last resort when all Community law' than the solution sought other possible means of giving shipowners by means of the Agreement. an effective opportunity to ply for trade to and from the third country concerned have been exhausted is perfectly valid.

36. However, Article 3(1) of Regulation No 954/79 expressly permits other arangements by unanimous decision. The decisive point is that Regulation No 954/79 constitutes 34. It should be pointed out first of all that purely internal Community law which is in Article 2 of the Code of Conduct provides no way binding on third countries. that a conference is to determine the shares Furthermore, in that respect the content of of trade of the member lines. It is not Article 3 of that regulation is not the same obvious — and was not explained — how as that of the reservations which the the 'determination of the share of trade' can Member States are to enter when ratifying be distinguished from a cargo-sharing the Code of Conduct. Even if it was incor­ arrangement under Regulation No 4055/86. porated into the reservations, there is It should also be borne in mind that Article nothing at all to say how far third countries 4 of the Agreement between Italy and are to accept those reservations or to Algeria provides for the organization and comply with them. sharing of trade in the framework of a conference 'in accordance with the trade- sharing principle laid down in the Code of Conduct for Liner Conferences'. Since the Agreement refers to the Code of Conduct and that code permits the determination of 37. Moreover, the interpretation of Articles shares of trade, it is not clear how the 5 and 6 of Regulation No 4055/86 put resolution of the difficulies between Italy forward by the applicant would have the result of obliging Member States who find 8 — Council Regulation No 954/79 of 15 May 1979 concerning the ratification by the Member States of, or their accession themselves in 'exceptional circumstances' to to, the United Nations Convention on a Code of Conduct for Liner Conferences (Official Journal 1979, L 121, p. 1) accede to the Code of Conduct. The obli-

41. With regard to the alternative claim that the contested decision is contrary to the 38. Regulation No 954/79 was intended prohibition of discrimination contained in only to lay down measures concerning Article 7 of the EEC Treaty, it should first accession by Member States to the Code of be observed that Article 3 of the agreement Conduct, not to create an obligation to between Italy and Algeria expressly accede to it. mentions only ships flying the Algerian or Italian flag. However, Article 3 also provides that it is not to affect the right of ships from third countries to carry cargoes. Furthermore, it is open to the contracting parties to charter ships from third countries 39. When Regulation No 954/79 was and, finally, it is laid down in Article 4 of adopted the Member States were no doubt the Agreement that conferences are to share entitled, given that the common maritime out trade subject to compliance with the transport policy had not then been international obligations of each party. elaborated, to accede to the Code of Conduct. After the adoption of the measures of 22 December 1986, which considerably advanced the common maritime transport policy, the question arises whether Member States still have the 42. In view of those rules the intervener is power to accede to the Code of Conduct. at least in a position when implementing the Having regard to the principles set out in Agreement to fulfil its obligations under the judgment of 31 March 1971 in Case Community law, including, naturally, 22/70 on the division of powers between compliance with Article 7 of the EEC the Community and the Member States I Treaty and the more specific expression of would have very serious doubts on the issue, that principle contained in Article 6(4) of which would not be dispelled by reference Regulation No 4055/86. to the fact that under Article 48 only States are entitled to accede to the Code of Conduct. If need be the Code of Conduct would have to be amended to enable the Community to accede to it, either by way of the simplified amendment procedure under 43. The obligation in Article 7 of the EEC Article 51 or as part of a review under Treaty indirectly implies compliance with Article 52 of the Code of Conduct. the content of Article 6(4) of the regulation, and the same would be true directly if the

46. The applicant complains that in not regarding Article 4 of the Agreement as a cargo-sharing arrangement and not speci­ fying the 'exceptional circumstances' in which the intervener found itself the defendant has not fulfilled its duty to state 50. That submission does not stand up to a reasons under Article 190 of the EEC reading of the proposal for the decision and Treaty. the decision itself.

OPINION OF MR LENZ —CASE 355/87

51. The applicant's assertion during the oral tuting directions for the 'preconditions' procedure that it proposed a negative proposed by the applicant. decision to the defendant is not correct. Rather, it proposed that the intervener 53. Since the proposal for the decision and should be authorized to ratify the the decision are essentially consistent and agreement, but that that ratification should modifications are to be found only in the be made subject to certain preconditions. conditions on which the authorization was granted, I do not consider it necessary in the present case to enter into the question of principle whether Article 149(1) places limits 52. In its decision the defendant gave such on the Council's right of amendment and authorization but weakened the conditions where those limits might lie in any given for the grant of authorization by substi­ case.

C — Opinion

54. In the result I propose that the Court decide as follows:

'(1) The application is dismissed.