C-367/89

RICHARDT A N D 'LES ACCESSOIRES SCIENTIFIQUES'

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 8 May 1991 *

My Lords, these was a so-called ten-inch microetch manufactured by a United States company, Veeco Instruments Inc., and for which a price of USD 573 095.00 was to be paid. LAS acquired the microetch in April 1985 from another French company, La Physique 1. In this case, the Cour de Cassation, Appliquée Industrie SA, which had Luxembourg, asks for a preliminary ruling purchased it earlier that year from Veeco on the compatibility with Community law of SA, the French subsidiary of the manu- restrictions such as those placed by the facturer. Veeco SA purchased the microetch Grand Duchy on the export of certain from its parent company in 1984. material which is considered to be of strategic importance. That question has arisen in the course of criminal proceedings instituted by the Luxembourg Minister for Finance and Director of Customs against a number of defendants, including Mr Aimé Richardt, who is chairman and managing 3. As I understand it, the microetch is an director of a French company, Les Acces- ion milling device which permits minute soires Scientifiques SNC ('LAS'). quantities of material to be removed from the surface of a microscopic wafer or substrate with great accuracy. The United States Customs Service in Paris stated in a letter to its Luxembourg counterpart dated 28 May 1985 that the microetch embodied The background the latest technology, although, according to Veeco SA, such equipment was, at the material time, readily available in Europe and North America.

version. N o reference to any such restriction 7. The microetch was transported from appeared on the bills relating to the Roissy to Luxembourg under cover of a T l subsequent sales of the microetch. document drawn up by Air France pursuant Mr Richardt claims that the French version to Regulation N o 222/77 on Community of the bill presented to Veeco SA was transit (Official Journal 1977 L 38, p. 1). drawn up after the event for the purposes of The purpose of that regulation was to the proceedings before the Luxembourg establish a so-called Community transit courts. Its authenticity does not in my view procedure to facilitate the transport of have any bearing, however, on the answer goods between two points situated in the to the question which has been referred to Community, 'and in particular simplify the this Court. formalities to be carried out when internal frontiers are crossed' (see the fourth recital). The regulation lays down a procedure for external Community transit and a procedure for internal Community transit. A T l document is to be used where goods are 5. In June 1984, LAS applied to the being carried under the procedure for competent French authority for a licence external Community transit. This variant of permitting the export of the entire unit to the transit procedure applies to three the Soviet Union. LAS was informed that, categories of goods, only one of which is of the 27 items in respect of which authori- relevant in these proceedings, namely goods zation had been sought, 24, including the which are not in free circulation in the microetch, did not require a licence and Member States (see Article l(2)(a) of Regu- were free to leave French territory. An lation N o 222/77). export licence in respect of the three remaining machines was granted. LAS then instructed a haulage undertaking to arrange for the transport of the microetch to Moscow. An export declaration on form EX was completed in respect of it pursuant to Regulation N o 2102/77 (Official Journal 1977 L 246, p. 1) and a contract was concluded with Air France for the transport of the microetch from Roissy to Moscow on board an Aeroflot flight which was due to 8. It appears from the responses to a written leave Roissy on 14 May 1985. question put by the Court to LAS and to the French and Luxembourg Governments, however, that the microetch entered into free circulation in the Community when it . was imported into France by Veeco SA. It should therefore have been sent to 6. The flight from Roissy to Moscow was Luxembourg under cover of a T2 cancelled, however, and Air France decided, document, which is for use when goods are without consulting LAS or Mr Richardt, to carried under the procedure for internal transport the cargo to Luxembourg, from Community transit. The use of a T l where there was an alternative Aeroflot document seems to have been the result of a flight to Moscow on 21 May 1985. The mistake, but neither the French nor the microetch was, however, seized by the Luxembourg authorities objected and, in Luxembourg authorities as it was being February 1986, the French authorities loaded on to the plane. It is still in their certified that the transit procedure in respect possession. of the goods had been completed.

9. The Luxembourg authorities refused to against the other four defendants was also allow the microetch to be loaded on the dismissed. However, the Tribunal Correc- flight to Moscow because they took the tionnel ordered that the microetch be view that, in order for it to be exported to confiscated. On appeal by Mr Richardt, the the Soviet Union, a licence was required Cour d'Appel quashed the order for the under Articles 1 and 2 of a Grand Ducal confiscation of the microetch. The Regulation of 17 August 1963 ('the Grand Luxembourg authorities then appealed to Ducal Regulation'), according to which the the Cour de Cassation, which has referred transport without a licence of certain goods the following question to the Court: originating in, inter alia, the United States and France to, inter alia, the Soviet Union is prohibited. The list of goods in respect of which, at the material time, a licence under the Grand Ducal Regulation was required was annexed to a Grand Ducal Regulation 'Is Council Regulation (EEC) No 222/77 of 23 August 1982. The Luxembourg auth- to be interpreted as requiring the T l orities take the view that the microetch falls document provided for therein to be under item 1355(b)(1) and note 3(h) of that recognized without reservation as a valid list. That view is contested by the authorization for transit in the territory of defendants for reasons which are not any Member State of the European relevant to the question which has been Economic Community, irrespective of the referred to the Court. The defendants also nature of the goods transported and even if seek to rely on a provision contained in they endanger the external security of the Article 2 of the Grand Ducal Regulation, State concerned, or conversely does the according to which a licence is not required regulation allow a Member State to refuse when the country from which the goods to recognize the T l document as equivalent originate has issued a valid transit authori- to a transit authorization when the national zation certificate. The defendants maintain legislation of that State considers the goods that the T l document issued in respect of transported to be strategic equipment and, the goods by the French authorities on external security grounds, makes transit constitutes such a certificate and dispenses through its territory subject to the grant of them from the need to obtain a licence from special permission?' the Luxembourg authorities under the Grand Ducal Regulation.

Sixteen States are members, including the solution of the dispute between the parties United States and all the Member States of to the main action. According to Article the European Community with the 1(1) of the regulation, the Community exception of Ireland, which none the less transit procedure applies to the movement has a policy of complying with the rules laid of goods 'between two points situated in the down by C O C O M . In view of the changes Community'. However, no restrictions were which have taken place recently in most placed on the movement of the microetch communist countries, it is likely that the from France to Luxembourg and, by the C O C O M system will be applied less time it was seized by the Luxembourg auth- rigorously in future. orities, the Community transit procedure had run its course. T h e dispute before the national court is concerned with the transport of the microetch, not from France to Luxembourg, but from Luxembourg to 12. The basis of C O C O M is an informal the Soviet Union, a non-member State. one and its decisions have to be Regulation N o 222/77 cannot have the implemented by the participating States in effect of precluding a Member State from order to take effect in national law. The subjecting to a licensing requirement the need for implementing legislation means export of certain goods to non-member that the classes of product which are subject States, for such exports fall outside the to export restrictions in different partici- scope of that regulation. pating States might not coincide precisely at a given moment. None the less, in the present case it appears that the relevant French legislation also restricted the export of equipment falling under item 1355(b)(1) and note 3(h) of the list annexed to the Grand Ducal Regulation of 23 August 1982. Indeed, after the seizure of the microetch by the Luxembourg authorities, the matter was reopened by the French authorities, which 14. The question therefore arises whether subsequently instituted criminal proceedings there are any other provisions of against LAS. Those proceedings are still Community law which might render such a pending. Counsel for the French requirement unlawful. Reference has been Government informed the Court at the made in the course of the proceedings to hearing that the French authorities orig- the rules contained in the EEC Treaty inally approved the export of the cargo only prohibiting quantitative restrictions on the because they were not aware of its true free movement of goods and measures nature. having equivalent effect (see Articles 30 to 36). However, I do not consider those rules applicable in the circumstances of this case for, as the Commission points out, they apply only to the movement of goods The issues before the Court between Member States (see Case 51/75 EMI Records v CBS United Kingdom [1976] ECR 811). Although the Commission persisted in addressing argument to Articles 30 to 36, that approach is in my view wrong 13. Although the question put to the Court and it is necessary to consider instead the refers to Regulation No 222/77, that regu- Community provisions governing exports to lation is not in my view relevant to the non-member States.

Regulation No 2603/69 'The exportation of products from the European Economic Community to third countries shall be free, that is to say, they shall not be subject to any quantitative restriction, with the exception of those restrictions which are applied in conformity 15. The export of goods from the with the provisions of this Regulation'. Community to non-member States is covered by Regulation No 2603/69 estab- lishing common rules for exports (Official Journal English Special Edition 1969 (II), p. 590), as last amended by Regulation N o 1934/82 (Official Journal 1982 L 211, p. 1). Although little argument has been 17. That 'basic principle' constitutes Title I addressed to Regulation No 2603/69 in of the regulation; Title II sets up a these proceedings, there can be no doubt Community information and consultation about the context within which its procedure; Title III deals with protective provisions have to be considered. It was measures; and Title IV contains transitional adopted, at the end of the transitional and final provisions. These provisions period, pursuant to Articles 111 and 113 of include a derogation, in Article 10, for the Treaty, as a central part of the certain products, listed in an annex, in Community's common commercial policy. respect of which, pending the introduction While there may still be unresolved doubts of common rules, 'the principle of freedom about the scope of that policy, there can be of export from the Community' does not no doubt that measures liberalizing exports yet apply; and a safeguard clause, in Article from the Community to non-member States 11, which is similar in terms to Article 36 of fall squarely within it, and fall also, the Treaty. therefore, within the exclusive competence of the Community. Article 113(1) itself refers to the common commercial policy as being 'based on uniform principles, particularly in regard to . . . the achievement of uniformity in measures of liberalization 18. In the light of the purposes of the regu- [and] export policy . . . '. As the Court has lation and its structure and wording it is held (see e.g. Case 41/76 Donckerwolcke v clear, in my view, that the regulation Procureur de la République [1976] ECR embodies a fundamental rule that, subject to 1921, Case 174/84 Bulk OU v Sun Interna- the exceptions specified, expons from the tional [1986] ECR 559), measures of Community to non-member States are unre- commercial policy of a national character stricted. are only permissible after the end of the transitional period by virtue of specific auth- orization by the Community.

true that Articles 30 and 34 of the Treaty regarded as a measure having equivalent refer to quantitative restrictions (on imports effect, would I think be within Article 1 of and exports respectively between Member the regulation if its effect were to preclude States) and all measures having equivalent all exports of a particular product. That effect. It is true also that, while Article 1 of illustrates, to my mind, the danger of inter- the regulation refers to quantitative preting the regulation by reference to restrictions, the second citation of the Treaty provisions which have a different preamble refers, in a different context, to context, a danger which is illustrated by any measures having equivalent effect. But it attempt to read into the regulation a does not follow, in my view, that the distinction between quantitative restrictions Council must have intended to exclude such and measures having equivalent effect. measures from the scope of the basic principle set out in Article 1 of the regu-

20. That is not to say, of course, that the the provisions in question: see Case 270/80 scope of Article 1 of the regulation is the Polydor v Harlequin Record Shops [1982] same as the scope of Article 30 of the ECR 329. Again, in Case 51/75 EMI Treaty. There may be certain measures Records, already cited, the Court rejected an which fall within the prohibition of Article attempt, in the context of trade marks, to 30 of the Treaty but not within the scope of apply the doctrine of common origin to Article 1 of the regulation — just as there goods originating in non-member States.

3409. Thus, for example, a licensing system having equivalent effect. It is clear — and for the control of imports, even where all the reasons are self-evident — that the licences are granted automatically, is a case-law concerning limitations on industrial measure prohibited by Article 30 in trade and commercial property rights in trade between Member States — see Cases between Member States cannot be auto- 51-54/71 International Fruit [1971] ECR matically transposed to instruments 1107; but such a system, if used for the governing trade with non-member States, control of exports, is probably not one and that it cannot be so transposed which Article 1 of the regulation is intended regardless of whether the instrument in

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RICHARDT AND 'LES ACCESSOIRES SCIENTIFIQUES'

be drawn from the case-law is that the justified under that regulation), is, I think, scope of the various provisions depends not confirmed even if one takes a different on the formulation used, but on their approach and seeks to draw a distinction context and purposes. between quantitative restrictions and measures having equivalent effect. The argument would in that event run as follows. A system of controlling exports by way of licences may, depending on the circumstances, be regarded as falling within either the former or the latter category. Where the decision whether or not to award 22. Accordingly I conclude that, if Article 1 a licence is taken on a case-by-case basis in of the regulation is read in its context and in the light of all the prevailing circumstances, the light of its purposes, then a ban on with the result that it cannot in advance be exports of the kind in issue here must be said with certainty whether a licence will be regarded as within that article. I note also granted, the system in question will amount that Article XI of the GATT, which may be to a measure of equivalent effect: see Donc- regarded as relevant to the interpretation of kerwolcke (already cited); Case 53/76 a Community instrument governing inter- Procureur de la République v Boubelier national trade, refers in its title to 'General [1977] ECR 197; Case 68/76 Commission v Elimination of Quantitative Restrictions', France [1977] ECR 515. while the text of Article XI(1) refers to 'prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures'.

goods constitutes a quantitative restriction on grounds of public security. I have no rather than a measure of equivalent effect. doubt that the concept of public security is in principle broad enough to embrace restrictions on the transfer of goods or tech- nology of strategic importance to countries which are thought to pose a military threat. 26. Thus, even on the view, which I do not accept, that Article 1 of Regulation No 2603/69 must be read as not prohib- iting measures having equivalent effect to quantitative restrictions, it can be contended that it is applicable in the present case. 29. In my view, however, Member States may only rely on Article 11 of Regulation N o 2603/69 where the principle of propor- tionality has been respected. This means that Member States must not seek to enforce a national measure which is capable 27. Where national measures such as those of being justified under that provision by at issue in the main action fall within the steps which go further than is necessary to prohibition contained in Article 1 of Regu- achieve the objective of the measure. The lation No 2603/69, the question arises application of the principle of propor- whether they can be justified under Article tionality in specific cases is a matter for the 11 of that regulation. Article 11, which as I national courts. It should not be assumed have mentioned is similar in terms to Article that that principle produces the same effect 36 of the Treaty, provides as follows: in relation both to Article 11 of the regu- lation and to Article 36 of the Treaty, to which it also applies. Nevertheless, where failure to comply with national rules such as those at issue in the main action may lead to confiscation of the goods in question, such 'Without prejudice to other Community matters as the state of mind at the material provisions, this Regulation shall not time of the owner of the goods seized and preclude the adoption or application by a the value of the goods should in my view be Member State of quantitative restrictions on taken into account. exports on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value, or the protection of Articles 223 and 224 of the Treaty industrial and commercial property'.

'Any Member State may take such measures war, or in order to carry out obligations it as it considers necessary for the protection has accepted for the purpose of maintaining of the essential interests of its security which peace and international security'. are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes'. 32. Although it is not clear from the wording of this provision to what extent it confers upon the Member States power to adopt measures derogating from other rules of Community law, the second paragraph of Article 225, which refers to 'the powers This provision is not in my view relevant in provided for in Articles 223 and 224', the circumstances of the present case, as no suggests that Article 224 was intended to one has claimed that the microetch authorize the adoption of national measures constitutes arms, munitions or war material which would otherwise be unlawful. This for these purposes. Moreover, under the seems to have been the view taken by second paragraph of Article 223, the Advocate General Gand in Case 15/69 Council was required, within one year of Südmilch v Ugliola [1969] ECR 363 at 373, the entry into force of the Treaty, to draw where he said that Article 224, 'in the case up a list of the products to which Article of a serious crisis, enables Member States to 223(1 )(b) applies. It appears that such a list take any necessary measures without being was drawn up, but it has not subsequently bound to observe the rules of the Treaty'. been amended and it has not been suggested The question therefore arises whether the that the microetch is covered by it. Grand Ducal Regulation can be regarded as a measure which Luxembourg was called upon to take in order to carry out obli- gations it has accepted for the purpose of maintaining peace and international security. 31. The second exceptional provision which it is necessary to mention is Article 224, which provides as follows:

(1) A Member State which, on the ground of public security, makes the export of certain goods to a number of non-member States subject to the grant of a licence, is not precluded by Council Regulation N o 222/77 from requiring such a licence to be obtained in respect of goods which come from another Member State and which arrived in the first State under cover of a transit declaration drawn up pursuant to that regulation.

(2) Article 1 of Council Regulation N o 2603/69 must be interpreted as prohib- iting national measures which have the effect of precluding the export of certain categories of goods to non-member States. Nevertheless, where the purpose of such measures is to control the export of strategically important goods or technology to States which are thought by the Member State concerned to pose a military threat, they must in principle be regarded as justified on the ground of public security under Article 11 of that regulation. Any penalties imposed in the event of failure to comply with the legislation concerned must not, however, be heavier than is necessary to achieve its objectives.

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