C-221/89

OPINION OF MR MISCHO —CASE C-221/89

O P I N I O N OF MR A D V O C A T E GENERAL M I S C H O delivered on 13 March 1991 *

Mr President, 14 of the 1988 Act may be registered in the Members of the Court, new register.

3. Section 14(1) provides that, subject to a dispensation granted by the Secretary of State for Transport, a fishing vessel is only to be eligible to be registered in the new 1. The factual and legal background to the register if: two cases with which this Opinion is concerned is well known to the Court. The cases form part of a series of actions relating to the various measures which the United Kingdom, and Ireland, took '(a) the vessel is British-owned; successively from 1983 onwards in order to combat what is termed in English as 'quota hopping', that is to say the practice whereby, according to the United Kingdom, its fishing quotas are 'plundered' by vessels (b) the vessel is managed, and its oper- flying the British flag but lacking any ations are directed and controlled, from genuine link with the United Kingdom. The within the United Kingdom; and history of the British measures is summarized in the interlocutory order of the President of the Court of 10 October 1989 in Case 246/89 R Commission v United Kingdom [1989] ECR 3125. (c) any charterer, manager or operator of the vessel is a qualified person or company.'

Under section 14(2), a fishing vessel is to be regarded as being British-owned if the legal 2. As can be seen from paragraph 3 of the title to the vessel is vested wholly in one or reports for the hearings in the two cases, the more qualified persons or companies and British legislation at issue, dating from 1988, the vessel is beneficially owned wholly by a provided for the establishment of a new qualified company or companies or, as to at register of all British fishing vessels least 7 5 % , by one or more qualified including those registered in the old register persons. Section 14(7) states that 'qualified maintained under the Merchant Shipping person' means a person who is a British Act 1894. However, only fishing vessels citizen resident and domiciled in the United fulfilling the conditions laid down in section Kingdom and that 'qualified company'

means a company which is incorporated in I — The scope of the competence of the the United Kingdom and has its principal Member States with regard to the regis- place of business there; at least 7 5 % of its tration of fishing boats shares must be owned by one or more qualified persons or companies and at least 7 5 % of its directors must be qualified persons. 5. It is uncontested that as Community law stands at present competence to determine the conditions for the registration of fishing boats is vested in the Member States. The Court confirmed this in its judgment of 19 January 1988 in Pesca Valentia (Case 4. The question to be considered is whether 223/86 Pesca Valentia v Minister for Fisheries and to what extent laying down such and Forestry [1988] ECR 83, paragraph 13), requirements for the registration of fishing in which it held that although the vessels is compatible with Community law Community regulations on fisheries refer to and in particular with Articles 7, 52 and 221 fishing vessels 'flying the flag' of a Member of the EEC Treaty. In the proceedings State or 'registered' there, they leave those relating to the action for a declaration that terms to be defined in the legislation of the the United Kingdom has failed to fulfil its Member States. obligations under the Treaty (Case C-246/89) only the requirements relating to the nationality of the natural or legal persons in question are at issue. In the 6. This does not mean, however, that the reference for a preliminary ruling (Case Member States may exercise that C-221/89) it will also be necessary, in competence in complete liberty without connection with the second question before regard to the principles of Community law. the Court, to consider the requirements relating to the residence and domicile of the natural persons in question or to the principal place of business of the companies, 7. In its judgment of 21 June 1988 in Case and to the place of management, direction 127/87 Commission v Hellenic Republic and control of the vessels. In view of the [(1988] ECR 3333, paragraph 7) the Court questions put by the national court and of referred to its established case-law (see, the written observations submitted by the inter alia, the judgment of 7 June 1988 in parties, account will have to be taken in the Case 57/86 Hellenic Republic v Commission course of that examination of the [1988] ECR 2855) to the effect that: competence of the Member States in this area, of their obligations under public inter- national law (first question in Case C-221/89) and of the objectives of the 'the fact that Member States retain certain Common Fisheries Policy and, in particular, monetary powers does not entitle them to of the quota system (third question in Case take unilateral measures prohibited by the C-221/89). Lastly, the fourth question Treaty'. referred to the Court in Case C-221/89 is concerned with the fact that the 1988 Act also applies to fishing vessels which were registered in the old register but, because 8. Consequently, without having to decide they do not satisfy all the new requirements, whether the right of registration is a in principle ceased to be registered on retained power or whether the Community 31 March 1989. could legislate at any time in that field, it

9. What is at issue in this case is the taking-up, on a self-employed basis, of acti- W h a t was at issue in that case was the right vities in the fisheries sector and the pursuit to acquire, use or dispose of immovable of those activities, in other words, the right property on the territory of another of establishment in the fisheries sector. Member State; the Court held that that Indeed, even without having to go so far as right was the 'corollary' of freedom of the Commission did at hearing in arguing establishment. that registration itself already constitutes a form of establishment, it must be observed that in any event registration is a precon- dition for taking up and pursuing activities in the fisheries sector. In its judgment of 10. I take the view that the right to register a 18 June 1985 in Case 197/84 Steinhauser v fishing vessel, as a precondition for pursuing City of Biarritz [(1985] ECR 1819, the activity of fishing in another Member paragraph 16), the Court held that freedom State, likewise constitutes a element which is of establishment, as provided for in Article inseparable from the right of establishment 52 of the Treaty, included the right not only in the sea-fishing sector and, on that basis, to take up activities as a self-employed falls within the sphere of application of person but also to pursue them in the broad Article 52 of the EEC Treaty. The fact that sense of the term and that it was not expressly mentioned in the Council's General programme for the abolition of restrictions on freedom of establishment (Official Journal, English '[t]he renting of premises for business Special Edition, Second Series IX, p. 7) purposes furthers the pursuit of an occu- makes no difference, since, useful as it is, pation and therefore falls within the scope the programme only contains guidelines and of Article 52 of the EEC Treaty'. is not exhaustive. However, it appears from Annex III thereto, to which paragraph D of Title IV (Timetable) of the programme refers, that it also covers the elimination of Moreover, in the judgment of 30 May 1989 restrictions on freedom of establishment in in Case 305/87 Commission v Hellenic the sea-fishing sector. Republic [(1989] ECR 1461, paragraph 21), the Court pointed out that, as it had held on several occasions (see, inter alia, the judgment of 14 January 1988 in Case 63/86 Commission v Italy [1988] ECR 29), the 11. It also appears from the Court's prohibition of all discrimination on grounds case-law (see, for example, the judgment of of nationality set out in Article 52 of the 7 July 1988 in Case 143/87 Stanton v Inasti Treaty [1988] ECR 3877, paragraph 10) that Article 52, as a directly applicable rule of Community law, is binding on the Member States even though, in the absence of 'is concerned not solely with the specific Community legislation, they retain legis- rules on the pursuit of an occupation but lative jurisdiction in the particular field.

'is to lay down, in accordance with the prin- '[t]here must exist a genuine link between ciples of international law, that the the State and the ship' application of the Treaty does not affect the duty of the Member State concerned to respect the rights of non-member countries under a prior agreement and to perform its and that obligations thereunder'. '

'in particular, the State must effectively In the judgment of 22 September 1988 in exercise its jurisdiction and control in Case 286/86 Ministère public v Deserbais administrative, technical and social matters [(1988] ECR 4907, paragraph 18) the over ships flying its flag'. Court concluded as follows from that case-law:

1 — See, as regards a convention concluded after the entry into force of the EEC Treaty but before the accession of the 14. Admittedly, the first paragraph of United Kingdom, Ireland and Denmark, the judgment of M October 1980 in Case 812/79 Attorney General v Article 234 of the EEC Treaty provides that Burgoa [1980] ECR 2787, paragraph 8.

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16. In so far as the United Kingdom might wish to argue that it itself has the right 'the provisions of this Convention shall not under the Convention to retain affect conventions or other international

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21. The principle of non-discrimination quotas allocated to that Member State, prohibits all discrimination on grounds of which in other words are reserved to nationality both between ships of the 'national' vessels to the exclusion of vessels Member States and between nationals of the from other Member States. Member States, as the case may be. As far as fishing vessels are concerned, the principle is, moreover, expressly set out in 22. However, the matter at issue in the Article 2(1) of Council Regulation cases now before the Court is not access by N o 101/76 of 19 January 1976 laying vessels of Member States to fishing activities down a common structural policy for the in the Community but access by nationals of fishing industry (Official Journal 1976 L 20, Member States to vessels and to the p. 19), which provides as follows: operation of vessels. The argument put

territory.' persons, the prohibition of which constitutes one of the fundamental rules of the EEC Treaty. The view that ships are funda- mentally different from companies — see It is from this general rule of equal paragraph 90 of the Report for the Hearing conditions of access to fisheries resources in Case C-246/89 — does not justify that derogation is made by the system of discrimination in the field of the national quotas 2 (see paragraph 24 of the 'nationality' of vessels between companies judgment of 14 December 1989 in Case and nationals of the Member States.

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FACTORTAME A N D OTHERS

3 — I would refer in this context to the case-law of the Court 'Is it contrary to Community law and in according to which it is the registered office of a company particular to Articles 7, 52 and 221 of the within tne meaning of Article 58 that serves as the connecting factor with the legal system of a particular EEC Treaty for a Member State to stipulate State, like nationality in the case of natural persons (see the following requirements for registering a the judgments of 28 January 1986 in Case 270/83 Commiiiion v France [1986] ECR 273, paragraph 18, and fishing vessel in its national register: of 10 July 1986 in Case 79/85 Segen v Beituur van de Bedrijfsvereniging voor Bank- en Verzekeringswezen, Groothandel en Vrije Beroepen [1986] ECK 2375, 4 — Operator' covers charterers, managers or operators paragraph 13). within the meaning of section 14(l)(c) of the 1988 Act.

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'the general principle of non-discrimi- nation on grounds of nationality laid down in Article 7 of the Treaty has (1) The Commission has raised the First been implemented, in regard to their Council Direttive of 11 May 1960 for several domains, by Articles 48, 52 and the implementation of Article 67 of the Treaty (Official Journal, English Special 59 of the Treaty. Consequently, any Edition 1959-62, p. 49), as amended,5 rules incompatible with those provisions only in connection with the residence are also incompatible with Article 7' requirement laid down for shareholders ( • · . ) ,

and it will therefore be considered only in the context of part (b) of the question as I have reformulated it above. which therefore Moreover, the Commission made no mention of this directive in its action for

5 — This directive was repealed and replaced with effect from 'applies independently only to situations 1 July 1990 by Directive 88/361/EEC (OJ 1988 L '178, p· 5). governed by Community law in regard

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to which the Treaty lays down no 28. Having made these clarifications, let us specific prohibition of discrimination'. now consider each of the registration requirements at issue in turn.

30. Indeed, the second paragraph of Article 52 provides as follows: no longer adds anything to the general prohibition set out in Article 52, since the Court has held that, as from the end of the transitional period, Article 52 is 'Freedom of establishment shall include the directly applicable. right to take up and pursue activities as self-

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32. The above also holds good as regards shareholders and company directors who are nationals of other Member States. 35. Lastly, the power vested in the Under Article 52 they are entitled to set up Secretary of State under section 14(4) of the

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This is borne out by the Court's judgment of 17 September 1989 in Case 9/88 Lopes da Veiga v Staatssecretaris van Justitie [1989] ECR 2989, from which it appears that in order for a national of a Member State who 36. It follows from the foregoing consider is permanently employed on board a ship ations that part (a) of the second question in flying the flag of another Member State to Case C-221/89 must be answered in the have the status of a worker/national of a affirmative : it is contrary to Community law Member State who is employed in the for a Member State to stipulate as a territory of another Member State, the requirement for the registration of a fishing relationship of employment must exhibit a vessel in its national register that the owners sufficiently close link with that territory.

37. Before leaving the question on the graphs 12 to 17). nationality requirement, I would also point out in passing that at the hearing the Commission agreed that the flag State could stipulate that the captain of the vessel and the mate should have its nationality. 39. I consider that this must also hold good for the right of establishment: in order for a 6 — See, in particular, the judgments of 24 January 1978 in national of a Member State to be eligible to Case 82/77 Openbaar Mimitene v Van Tiįgele [1978] be regarded as exercising his right of estab ECR 25, paragraph 19, and of 16 December 1980 in Case 27/80 Fietje [1980] ECR 3839, paragraph 14. lishment in another Member State, it is not

enough that he should be operating a 42. However, I take the view that, in the fishing vessel registered in that State, in context of the right of establishment, a addition his activity must have other links residence requirement does not necessarily with the territory of that State. constitute such a criterion of differentiation leading in fact to discrimination on grounds of nationality. Certainly, a residence requirement which consisted of a 40. The question is, therefore, what are requirement to have resided for a certain those other links which a Member State, time in the country before a self-employed without infringing Article 52 of the Treaty, occupation could be taken up would involve is entitled to require of a national of covert discrimination, because it would be another Member State who wishes to satisfied virtually automatically by nationals operate a fishing vessel flying its flag and, in and would therefore affect nationals of particular, whether it can stipulate, as the other Member States, if not exclusively at 1988 Act does, that all the owners and least chiefly. operators of such a vessel and 7 5 % of the shareholders and directors of the companies owning or operating the vessel should have their residence and domicile in its territory. 43. The problem arises in different terms, however, where the residence requirement does not have to be satisfied before an occupation is taken up but when it is being

ECR 5500): and the applicants in the main proceedings in Case C-221/89 argue, however, that even though, formally, those requirements apply in the same way to nationals, they are in 'establishment within the meaning of the reality discriminatory as regards both their Treaty involves two factors: physical objectives and their effects, since the very location and the exercise of a economic great majority of British citizens fulfil them activity, both, if not on a permanent basis, automatically. Admittedly, in the judgment at least on a durable one'. of 5 December 1989 in Case C-3/88 Commission v Italy [1989] ECR 4035 (paragraph 8), the Court expressly confirmed that Article 52 of the Treaty, as a According to the Council's General specific embodiment of the principle of programme for the abolition of restrictions equal treatment, on freedom of establishment (Official Journal, English Special Edition, Second Series IX, p. 7), establishment is defined in terms of 'installation en vue d'exercer une 'prohibits not only overt discrimination by activité non salariée sur le territoire d'un reason of nationality but also all covert Etat membre' (rendered in English as forms of discrimination which, by the '[persons wishing] to establish themselves in application of other criteria of differen- order to pursue activities as self-employed tiation, lead in fact t o the same result'. persons in a Member State').

44. However, the right of establishment 46. It follows from the whole of those does not imply only physical location in the considerations that every residence country of establishment, but also that this requirement is not necessarily contrary to must have taken place with a view to Article 52, given that, by definition, the pursuing an economic activity. According to right of establishment entails continuous the Court's case-law, 7 the rules of the physical presence in the territory of the Treaty on the free movement of persons country of establishment such as to permit cover only the pursuit of effective and the effective and genuine pursuit of the genuine activities, to the exclusion of activi- economic activity in question. ties on such a small scale as to be regarded as purely marginal and ancillary.

48. There remains the question as to the provisions concerning the provision of position where such a vessel belongs wholly services, but falls within the scope of to one person. In this connection, it must be Articles 48 to 51 or Articles 52 to 58 of the observed that whilst the right of estab- Treaty, depending on the case, and that is lishment implies physical location in the certainly the position where a national of a territory of the country of establishment, it Member State goes to reside in the territory does not require that a person exercising the of another Member State and establishes his right should have his residence or, a fortiori, principal residence there. his principal residence or domicile in the territory of that country. Such an approach 7 — See, in the context of the free movement of workers, the judgments of 23 March 1982 in Case 53/81 Levin v would unduly restrict the right of estab- Staatsecretaris van Justitie [1982] ECR 1035, paragraph 17, of 3 June 1986 in Case 139/85 Kemp/v Staatssecretaris lishment guaranteed by the Treaty inasmuch van Justitie [1986] ECR 1741, paragraph 10, of 21 June as it would prevent the exercise of the right 1988 in Case 197/86 Brown v Secretary of State for of establishment on a secondary basis.

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'freedom of establishment is not confined to business to the Member State where a the right to create a single establishment certain activity, such as fishing, is to be within the Community, but entails the right carried on, deprives that company of the to set up and maintain, subject to possibility of exercising its right of estab- observance of the relevant professional rules lishment through the setting up of agencies, of conduct, more than one place of work branches or subsidiaries as is expressly within the Community'. provided for in the second sentence of the first paragraph of Article 52.

'Acceptance of the proposition that the Member State in which a company seeks to 52. For the sake of completeness I would establish itself may freely apply to it a add that the reference made by the United different treatment solely by reason of the Kingdom to the judgment of 6 November fact that its registered office is situated in 1984 in Case 182/83 Fearon v Irish Land another Member State would thus deprive Commission [1984] ECR 3677, in which the [Article 58] of all meaning.' 8 Court held to be compatible with Article 52 a requirement to reside in Irish territory which was imposed on nationals of other Member States, is not relevant. Apart from 50. That principle must also be applied the fact that in that case the residence here, since to require a company incor- requirement was not coupled with a porated under the law of one Member nationality requirement, Fearon's case can be State, which has its registered office, central distinguished on several counts. First, the administration or principal place of business residence requirement was imposed on in that Member State (within the meaning nationals of other Member States who had of Article 58) — or even in another Member already exercised their right of estab- State — , to transfer its principal place of lishment in Ireland under Article 52 of the Treaty by setting up a company within the 8 — See the judgments of 28 January 1986 in Case 270/83 meaning of Article 58, whereas in this case Cammission v France [1986] ECR 273, paragraph 18, and the very right of nationals of other Member of 10 July 1986 in Case 79/85 Segers [1986] ECR 2375, paragraphs 13 and 14. States to take part in setting up a company

in the United Kingdom is restricted by the L 332, p. 22), there was no doubt that residence requirement. Secondly, in Fearon's residence and domicile requirements case it was not the right to exercise an imposed on shareholders were unlawful. economic activity which was conditional on The fact that the First Directive was the shareholders' satisfying the residence formally concerned only with restrictions on requirement, but merely immunity from foreign-exchange transactions did not compulsory acquisition measures adopted prevent the Court, in the judgment of under legislation governing the ownership 24 June 1986 in Case 157/85 Brugnoni and of rural land designed to ensure as far as Ruffinengo v Cassa di risparmio di Genova e possible that the land belonged to those who Imperia [1986] ECR 2013 (paragraph 22),

53. Since the residence and domicile Article 1(1), under which Member States requirements as imposed, in particular, on are to grant all foreign-exchange authoriz- 7 5 % of the shareholders are therefore ations required. However, this makes no already incompatible with Article 52 of the difference to what has been stated above, Treaty I can deal relatively briefly with the since the judgment in Brugnoni is based, as question of their compatibility with the First the Commission points out, on the general Council Directive of 11 May 1960 for the objective of the First Directive in so far as it implementation of Article 67 of the Treaty applies to transactions which the directive (Official Journal, English Special Edition liberalized and it is clear from the Court's 1959-62, p. 49), as subsequently amended. judgment of 3 December 1987 in Case It is noted in passing that the First Directive 194/84 Commission v Hellenic Republic has been replaced, with effect from 1 July [1987] ECR 4737 (paragraph 9), that 1990, by Council Directive 88/361/EEC of capital movements set out in List A also 24 June 1988 (Official Journal 1988 L 178, benefit from 'unconditional liberalization'. p. 5), which, subject to some limited and temporary derogations, provides for the total abolition of 'restrictions on movements of capital taking place between persons

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company, that it must have its principal "Whether a fishing vessel is operated by a place of business there. company or an individual, the responsibility of the operator must be traceable through some real and continuous representation at the main base of operations concerned. (c) The requirement rehting to the place of management, direction and control of the vessel

Such representation must take the form of an onshore administrative unit of the under- 55. Under section 14(l)(b) of the 1988 Act, taking, commensurate with the sire of the a fishing vessel may be registered in the new latter and operating with responsibility for register only if it the technical and commercial management of the fishing vessels concerned (manning, wages, welfare benefits, leave, taxation, repairs, ships' supplies, etc.).' 'is managed, and its operations are directed and controlled, from within the United Kingdom'.

The Commission added in the context of the present cases that 56. It is clear from the more general obser- vations which I have set forth with regard to the actual concept of establishment within the meaning of the Treaty that that requirement is compatible with Article 52 of 'In this context the Member State may also the Treaty. As I have already stated, estab- require a person appointed by the owner or lishment entails continuous, physical operator of the vessel to be resident in its presence in the territory of the country of territory so as to be legally responsible for establishment and the effective and genuine the operations of that administrative unit pursuit, on or from that territory, of the and the management of the fishing vessel economic activity in question, even in the concerned' (see section 8.1. of the case of sea fishing. Commission's written observations in Case C-221/89).

59. This does not mean that the 'base of requirement that the vessel must be operations' cannot receive general directives managed and its operations directed and from the owners of the vessel residing in controlled from within that Member State. another Member State or from a company having its registered office, central adminis- tration or principal place of business in another Member State. In my view, the Ill — The Community system of fishing requirement at issue as it is worded does not quotas in itself rule this out: it is the vessel which has to be operated from within the United Kingdom and it is its use, that is to say the operations of the vessel, which must be directed and controlled from the United 63. In its third question in Case C-221/89 Kingdom; this does not prevent the onshore the national court asks whether the answer unit responsible for the actual management to question II is affected by of the vessel — whether it be in the form of a subsidiary, a branch, an agency or an administrative unit — from being subject to the general control of the natural or legal 'the existence of national catch quotas person who set it up. allocated to Member States pursuant to the common fisheries policy'.

lations dependent on fisheries and related 66. However, it is debatable whether the industries' (paragraph (1) of the operative judgment in Jaderow, and the judgment of part). the same date in Case C-3/87 Agegate (The Queen v Ministry of Agriculture, Fisheries and Food, ex parte Agegate Ltd [1989] ECR 4459), are of any relevance to the cases now before the Court. In those The Court reached that conclusion after judgments the Court expressly left aside the holding that the quota system established by question whether the conditions at issue Council Regulation N o 170/83 constituted were in conformity with Community law in a derogation from the general rule of equal relation to fishing not subject to quotas 9 conditions of access to fishery resources ¡aid and limited its examination to whether and down in Article 2(1) of Regulation to what extent Community law permits a N o 101/76, cited above (paragraph 24 of Member State to determine, by means of the judgment). such conditions, those vessels in its fishing fleet which are to be allowed to fish against its national quota. However, the 1988 Act does not govern access to quotas but the registration of fishing vessels and therefore 65. In paragraph 25 of the judgment in affects access to all sea-fishing activities, Jaderow, the Court stated that therefore including fishing for species not subject to quotas.

'the measures which the Member States may 67. Secondly, the Member States' power to adopt when exercising the power conferred exclude certain vessels from sharing in the on them by Article 5(2) of Regulation utilization of their national quota, as N o 170/83 with a view to excluding certain recognized by the Court in paragraph 25 of of the vessels flying their flag from sharing the judgment in Jaderow, stems from Article in the utilization of their national quota are 5(2) of Regulation N o 170/83, which justified only if they are suitable and provides that necessary for attaining the aim of the quotas . . . ',

conditions for the grant of licences, access also give my views on this aspect in case the to fishing activities, including fishing for Court should consider that the registration species subject to quotas — do not requirements are capable of constituting constitute measures for the management of 'detailed rules for the utilization of the national quotas within the meaning of quotas' within the meaning of Article 5(2) Article 5(2) of Regulation No 170/83. of Regulation N o 170/83. Moreover, if they were, in themselves, to constitute measures relating to the conser- vation of fishery resources — which, in the light of paragraph 11 of the judgment of 19 January 1988 in Case 223/86 Pesca Valentia v Minister for Fisheries and Forestry [1988] ECR 83, is very doubtful in the case 70. In the judgment in Agegate the Court of requirements relating to the charac- held that a requirement for 7 5 % of the teristics of the natural or legal persons who vessel's crew, irrespective of their are the owners of the fishing vessels — they nationality, to reside ashore in the Member would fall 'fully and definitively' within the State in question was irrelevant to the aim competence of the Community (see of the quota system and could not therefore paragraph 10 of the judgment in Pesca be justified by that aim (paragraph 25).

68. I consider in the light of the foregoing enable the local populations dependent on that a reference to the objectives of the fisheries and related industries to benefit Community system of quotas cannot be from the quotas. In my Opinion in the used to justify national rules on the regis- Agegate case, the fact that the residence tration of fishing vessels, even if those rules requirement was applicable to British were applicable only to vessels intended to citizens and nationals of other Member fish for species subject to quotas. States alike was the main element in the reasoning which led me to take the view, unlike the Court, that that requirement was compatible with Community law (see paragraph 57, [1989] ECR 4483).

The Commission discussed the compatibility of residence requirement at issue in Agegate did the nationality requirements with not include the latter stipulation, although, Community law also in the light of those to my mind, it was implicit therein. Perhaps judgments, that is to say in relation to the the Court would have accepted it had that aims of the quota system. I would therefore stipulation been explicit.

'in view of that very narrow definition of the link which a Member State may require when authorizing a vessel to fish against its 73. It must moreover be noted that the only quotas' (paragraph 44), requirement which the Court held to be justified under the quota system in Jaderow concerned precisely the operations of the vessels. The requirement was for vessels to that the Court considered that there was no operate habitually from a national port need to answer the second part of question (paragraph 28) and, hence, for vessels to be 1(d) in the Jaderow case and hence held that present at national ports with a certain certain economic, financial and fiscal frequency (paragraph 40). As I have already evidence was irrelevant in order to establish stated, I consider that that rule is merely a the existence of a real economic link manifestation of the more general rule that between the vessel and the Member State in the vessel must be operated from the flag question, such as, for example: State and that its use must be directed and controlled from the territory of that State. Hence, the primary justification for that requirement is to be found in the very concept of establishment, even though it 'the fact that the companies owning or may, in addition, be justified under the managing the fishing vessels concerned are quota system.

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79. In order to avoid any misunderstanding IV — The application of the requirements at I would add, however, that since the issue to fishing vessels previously registered requirement for the vessel to be operated in the old register from the national territory is indissociable from the very concept of establishment, its formal introduction could not constitute an infringement of anyone's legitimate expec- 76. In its fourth question referred to the tations. In addition, it should be observed Court for a preliminary ruling in Case that although the 1988 Act entered into C-221/89, the national court seeks essen- force on 1 December 1988, the validity of registrations effected under the former 10 — Judgment of 26 April 1988 in Case 352/85 Bond van system was extended by section 13 of the Adverteerders v The Netherlands State [1988] ECR 2085, paragraph 36. 1988 Act until 31 March 1989, and hence

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owners and operators who might not have 80. Accordingly, rather than declaring that fulfilled that requirement in the past were the fourth question in Case C-221/88 has given a reasonable transitional period in become otiose, I propose that the Court which to comply therewith. should answer it in the negative.

Conclusion

81. In the light of all the considerations set out above I propose that the Court should rule as follows in Case C-221/89:

FACTORTAME AND OTHERS

4. The matters advened to in the fourth question do not affect the answers given to questions 2 and 3.'

82. It follows from those answers that the Commission's action against the United Kingdom for failure to fulfil its obligations is well founded and 'hence the Court should declare in Case C-246/89 that, by imposing the nationality requirements enshrined in sections 13 and 14 of the Merchant Shipping Act 1988, the United Kingdom has failed to fulfil its obligations under Articles 52 and 221 of the EEC Treaty.

83. As for the costs in Case C-221/89, it should be held that the costs incurred by the Kingdom of Belgium, the Commission of the European Communities, the Federal Republic of Germany, the Kingdom of Spain, the Hellenic Republic, the Kingdom of Denmark, Ireland and the United Kingdom, which have submitted observations to the Court, are not recoverable. Since the proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

84. As far as Case C-246/89 is concerned, the United Kingdom must be ordered to pay all the costs, including those of the Kingdom of Spain, which intervened in support of the Commission's conclusions, but with the exception of the costs incurred by Ireland, which intervened in support of the United Kingdom.

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