C-72/91

SLOMAN NEPTUN v BODO ZIESEMER

OPINION OF ADVOCATE GENERAL DARMON delivered on 17 March 1992 *

I-903

OPINION OF MR DARMON — JOINED CASES C-72/91 AND C-73/91

6. In the proceedings instituted before the view, reference is made to the Court's judg- Arbeitsgericht Bremen, the Seebetriebstrat ment in Defrenne v Sabena. 5 Emphasis submits that the arrangements resulting from seems to be laid especially on the adverb registration in the German international reg- 'essentially' in paragraph 19 of that judg- ister constitute State aid within the meaning ment, which starts with these words: of Article 92(1) of the Treaty.

In the law merely on account of the fact that the Opinion which he delivered in that case, ship is flying the Federal German flag'. moreover, Advocate General Capotorti expressed his views on the lack of direct effect of both Article 117 and Article 118 as follows: 7. The national court has accordingly sub- mitted a question for a preliminary ruling in order to enable it to determine the compati- 'One first point with regard to those two bility with Articles 92 and 117 of the E E C provisions is that neither of them contains a Treaty of the German Law on the introduc- principle in the sense of a rule of conduct.

I-904

SLOMAN N E P T U N v B O D O ZIESEMER

10. There is nothing, moreover, in the ers do not reside in the Federal Republic of Court's case law which permits any kind of Germany, they are nevertheless liable in direct effect to be inferred from Article 117. principle to pay income tax since they are in Admittedly, a negative obligation addressed receipt of income earned in that State. Simi- to a Member State may, where the conduct larly, the social security institutions receive so prohibited is sufficiently precise, be relied smaller contributions than would be the case upon directly by an individual before a if those seafarers were paid at the rate pro- national court. 8 However, the obligation not vided for by German collective agreements. to aggravate the prevailing social situation would seem to be too imprecise on account of its general nature to be regarded as having

Such losses bstrat sees Article 117 as imposing? Far be it could, if necessary, be justified by 'the nature from me to say so. or general scheme of this system', 9 inasmuch as it is standard practice for taxes and social contributions to be calculated on the basis of workers' pay. 11. In my view, therefore, it is on the basis of Article 92(1) alone that the contested leg- islation must be examined. 14. If this case were to be assessed by refer- ence solely to the loss of 'public' resources, it

ECR 709, paragraph 15.

15. According to the Seebetriebstrat, the employers in the textile sector was paid for 'aid' in question does not only concern the by the social security institutions, the Court social security costs of undertakings but lies, considered that in view of its nature, in the rates of pay offered to the seafarers concerned, which are much lower than the minimum rate provided 'as the funds in question are financed for by German collective agreements. through compulsory contributions imposed by State legislation and as ... they are man- aged and apportioned in accordance with the 16. In this case, the 'aid' is therefore provisions of that legislation, they must be financed essentially out of private funds. regarded as State resources within the mean- ing of Article 92, even if they are adminis- tered by institutions distinct from the public authorities'. 12 17. Admittedly, the Court has frequently held that 20. Similarly, in Steinike und Weinlig, 13 a fund for sales promotion in the German 'Article 92 covers all aid granted by a Mem- agricultural and food industry and in for- ber State or through State resources and estry (the Absatzförderungsfonds der deut- there is no necessity to draw any distinction schen Land-, Forst-und Ernährung- according to whether the aid is granted swirtschaft), set up by Federal law, had as its directly by the State or by public or by pri- purpose to promote, by means of a body vate bodies established or appointed by it to financed and controlled by it called the administer the aid'. 10 'Centrale Marketing-Gesellschaft der deut- schen Agrarwirtschaft', the sale and use of German products. 14 18. However, the Court has never made it clear whether a measure designed to lessen the costs borne by certain undertakings may 21. In that judgment the Court held that be classified as aid, in the absence of any financial contribution by the State and of any public or private body established or 'in applying Article 92 regard must primarily appointed to administer the aid. be had to the effects of the aid on the under- takings or producers favoured and not the status of the institutions entrusted with the 19. In the Court's judgment on the Italian distribution and administration of the aid'. 15 textile industry, 1 1where the relief on the social security costs normally borne by 22. In its judgment in Commission v France, 16 the Caisse Nationale de Crédit 10 — For example, the judgment in Case 290/83 Commission v France [1985] ECR439, paragraph 14; see also the judg- ments in Case 78/76 Steinike und Weinlig v Germany [1977] ECR 595, in Case 57/86 Greece v Commission [1988] 12 — Paragraph 16. ECR 2855, paragraph 12, and in Joined Cases 67/85, 68/85 and 70/85 Van der Kooy v Commission [1988] 13 — Judgment in Case 78/76, cited above. ECR 219, paragraph 35. 14 — See paragraph 1. 11 — Case 173/73, cited above; see also the judgment in Case 15 — Paragraph 21, emphasis added. 47/69 France v Commission [1970] ECR 487. 16 — Case 290/83 [1985] ECR 439.

Agricole (National Agricultural Credit export undertakings had been introduced by Fund) was responsible for financing a 'soli- Greece 'through the Bank of Greece which, darity grant' through its operating surpluses for that purpose, acted under direct State for the benefit of the poorest farmers. The control' and that 'the banks reimburse the Court held that interest or send documents evidencing the purchase of foreign currency to the Bank of Greece which then makes the payment', 21 'Article 92 of the Treaty covers aid which, and concluded that this constituted aid like the solidarity grant in question, was within the meaning of Article 92(1). decided and financed by a public body and the implementation of which is subject to the approval of the public authorities, the detailed rules for the grant of which corre- 25. Although in other judgments the Court spond to those for ordinary State aid ...'. 17 seems to lay emphasis essentially on the existence of conduct attributable to the State, the fact remains that, even in those cases, 23. The Court's judgment in France v Com- there was an intermediate body between the mission 18 was concerned with the Fonds 'taxpayers' — that is to say, the workers, Industriel de Modernisation (FIM), estab- consumers or traders as a whole who ulti- lished by the French Government, which mately bear the burden of financing the aid contributed to the financing of undertakings — and the recipients. by means of loans at rates below the market rate. That fund was financed out of 'comptes de développement industriel' (industrial development accounts, known as 'Codevi') which were private short-term deposit 26. Hence in Commission v Italy, 22 con- accounts exempt from the payment of cerning storage costs for sugar, beet produc- income tax. The Court considered that, ers were charged a levy on the aid which was according to the preamble to the Commis- intended for them under a Community regu- sion decision, which was not contested by lation in order to finance a special fund to the French Government, permit the partial reimbursement of storage costs to the sugar manufacturers concerned. The levy and the special fund were intro- 'the combination of the tax exemption for duced under inter-trade agreements between Codevi and the use of the money deposited the organizations representing the sugar on such accounts to finance FIM loans industry and those representing beet grow- amounts to granting an interest subsidy to ers. The Court stated that the borrowing undertakings to the detriment of the State's tax revenue'. 19

contain various features which are foreign to Gasunie being a company incorporated an agreement voluntarily entered into by pri- under private law, the Court pointed out that vate undertakings. Thus it was the Minister for Agriculture who declared that the agree- ment had been concluded and that in the cir- cumstances in which it was concluded it was binding erga omnes; for the agreement relat- 'first of all, the shares in Gasunie are so dis- ing to the 1977/78 year that declaration is tributed that the Netherlands State directly preceded by a preamble which, the Minister or indirectly holds 50% of the shares and states, forms an integral part of the agree- appoints half the members of the supervisory ment; the agreements enter into force at the board — a body whose powers include that time of the adoption of the implementing of determining the tariffs to be applied. Sec- measures by the Price Committee; 23 and the ondly, the Minister for Economic Affairs is agreements set up a "joint committee" pre- empowered to approve the tariffs applied by sided over by a representative of the Minister Gasunie, with the result that, regardless of which is to promote the implementation of how that power may be exercised, the Neth- the provisions of the agreement and to lay erlands Government can block any tariff down certain implementing rules', 24 which does not suit it. Lastly, Gasunie and the Landbouwschap 27 have on two occa- sions given effect to the Commission's repre- sentations to the Netherlands Government from which it followed that seeking an amendment of the horticultural tariff, first following Commission Decision 83/73, which was later repealed, and then again following Decision 85/215, which is 'the conclusion and the implementation of challenged in these proceedings', 28 the inter-trade agreements, the operations of the fund and the measures adopted by the Price Committee and by the Minister for Agriculture are connected by links so close that they are inseparable. It must accordingly be declared that the inter-trade agreements and decided that form part of a body of measures which are intended to provide support for the Italian sugar industry and that the Italian Govern- ment is responsible for them'. 25 'considered as a.whole, these factors demon- strate that Gasunie in no way enjoys full autonomy in the fixing of gas tariffs but acts 27. In Van der Kooy v Commission, 26 con- under the control and on the instructions of cerning preferential tariffs for natural gas the public authorities. It is thus clear that charged to Netherlands glasshouse growers, Gasunie could not fix the tariff without tak- ing account of the requirements of the public authorities', 29 23 — Inter-departmental Price Committee. 24 — Paragraph 23. 25 — Paragraph 24. 27 — Representing horticultural organizations. 26 — Joined Cases 67, 68 and 70/85, cited above; see also the Court's recent judgment in Case C-303/88 Italy v Commis- 28 — Paragraph 36. sion [1991] ECR I-1433, paragraphs 11 to 14. 29 — Paragraph 37.

28. The distinguishing feature of the present and came to the conclusion that case is that there is no intermediary, estab- lished or appointed by the State, between those who finance the 'aid', namely the sea- farers who are nationals of non-member 'the advantages which such an intervention countries, and the recipients, in this case the in the formation of prices entails for the dis- German shipowners. tributors of the product are not granted, directly or indirectly, through State resources within the meaning of Article 92'. 36 29. In Norddeutsches Vieh-und Fleischkon- tor v BALM, 31 Advocate General VerLoren van Themaat took the view that 31. The same question arising in connection with the concept of subsidies, which is set 'it is quite possible to argue that the indepen- out in the Code on subsidies and counter- dent grant by Member States of pecuniary vailing duties resulting from the Agreement advantages which are not paid for by the on the interpretation and the application of Member States is caught by Article 92. Articles VI, XVI and XXIII of GATT, 37 has Advantages which come to mind here are ... not so far received a clear answer. According reduced rates which Member States might to G. Korlick, R. Quick and E. Vermulst 38 require private electricity companies or haul- age contractors, for example, to grant (with- out reimbursement) to certain undertakings or in respect of certain products'. 32 'in 1960 a Working Party on Subsidies stated:

30. Mention should be made, however, of the Court's judgment in Van Tiggele, 33 con- "The GATT does not concern itself with cerning a system of minimum prices for gin, such action (subsidies) by private persons in which the Court considered that

34. United States law permits the charging 32. In their work entitled 'Anti-Dumping of anti-subsidy duties on subsidies from pri- and Anti-Subsidy Law', 41 J. F. Beseler and vate funds, 43 even though, according to legal A. N . Williams make the following points: writers, the United States authorities are cau- tious in availing themselves of that possibili- ty. 44 In their aforesaid article, however, 'The problem is important. If a subsidy were G. Horlick, R. Quick and E. Vermulst lay to be equated with all forms of government emphasis on conduct by the State, even intervention in the economy, this would lead, where the funds are of private origin, in in the last resort, to the potential counter- coming to the conclusion that the measure in vailability of any kind of State intervention, question is to be classified as a subsidy. They whether financial or merely regulatory, for take the view that 'in between assistance pro- example price controls or pollution stan- vided by the government and subsidies by dards. private companies one could locate subsidies, provided by private companies at the order of the government. It is this government- mandated type of assistance that the phrase The United States authorities appear to "required by government action" intends to assimilate all forms of government interven- cover. A good example of this practice can be tion with subsidies.

42 — p. 123. 39 — GATT, BISD, 9th Supp., paragraph 12, p. 192 (1961). 43 — Paragraph 303 of the Tariff Act 1930, Paragraph 701(a)(i)(b) 40 — Ibid., paragraph 344, p. 200. of the Trade Agreements Act 1979. 41 — London, Sweet and Maxwell, 1986. 44 — G. Horlick, R. Quick and E. Vermulst, op. cit., p. 31.

'the last paragraph of that list defines as con- stituting an export subsidy in the sense of 35. O n the other hand, in a decision of Article XVI of the GATT "any other charge 18 April 1985 46 the Commission clearly reit- on the public account"', 49 erated its position on the matter in stating that 'as far as international trade is con- cerned, the crucial characteristic of a subsidy is that it involves a financial contribution by and came to the conclusion that government. This results inter alia from item (L) of the Illustrative List of Export Subsi- dies appended to the Code on Subsidies. The list, which is also annexed to Regulation 'it follows both from the terms of that gen- (EEC) N o 2176/84, 47 makes it clear that any eral provision and from the other examples subsidy must involve a charge on the public mentioned in the Ust that in the mind of the account. To extend the concept of subsidies Community legislature the concept of export to include practices other than those involv- subsidy necessarily implied a financial bur- ing such a charge would be excessive, and den borne direcdy or indirectly by public taken to its extreme could lead to any gov- bodies'. 50 ernment intervention whatsoever in the economy being regarded as a subsidy, including tax measures or even regulatory action such as the introduction of price con- trols or pollution standards'. 37. Consequently, it is at the very heart of a problem widely discussed within GATT that the Court is called upon to adjudicate on a similar matter.

'regard must primarily be had to the effects 39. In support of its view that the measure at of the aid on the undertakings or producers issue in this case constitutes aid within the favoured ...'. 53 meaning of Article 92(1), the Commission at the hearing referred by way of example to a levy introduced by the State on the purchase of certain products, which is paid into a fund that passes on the sums in question to a There is no special need, therefore, to take given undertaking. In its view, such a meas- account of the origin of the funds. ure indisputably constitutes aid within the meaning of Article 92(1).

I-912

SLOMAN NEPTUN v BODO ZIESEMER

tive action. In this case, the measure which may possibly be classified as aid is the result 46. This case therefore constitutes an oppor- of a Federal law and the question whether tunity through the development of Commu- the State has engaged in conduct for which it nity law on aid to initiate a parallel trend in can be held responsible is not open to doubt. anti-subsidy legislation which would enable the Commission, like its United States coun- terpart, to combat measures affecting the commercial interests of the Community

application of Article 92(1). The structure of by the Community aid schemes for under- the market, and the vigorous competition on takings. Overall consistency is required'. that market in the Community, may lead to a de facto situation in which practically all the undertakings which may benefit from the advantage in question avail themselves of the 47. Admittedly, although aid may be directly possibility thus offered to them of reducing financed by private persons, there are many their production costs. Aid to assist the official rules which, where they enable cer- installation of undertakings in a given geo- tain undertakings or certain sectors of indus- graphical area is not of an obligatory nature try to reduce their production or marketing either, nor is it any easier to identify a priori costs, can where appropriate be described as the precise range of beneficiaries. It is not aid. At the hearing the German Government disputed, however, that such measures con-

I - 913

OPINION OF MR DARMON — JOINED CASES C-72/91 AND C-73/91

referred by way of example to a measure 23 February 1980 constituted only a first which does not subject all undertakings to stage in the extension of the taking over by legislation on protection against dismissal or the State of employers' contributions to the the requirement concerning the joint man- sickness insurance scheme to the whole of agement of undertakings. It is in that con- the Italian economy and it is of a sufficiently nection, as I see it, that the criterion of the general nature not to fall within the scope of 'selectivity of aid' 59 applies for the purpose Article 92(1) except on one point relating to of distinguishing those general measures the greater reduction for female employees. from aid. That condition is expressly referred That reduction had the effect of favouring to in Article 92(1) which requires that the aid certain sectors which were particularly active should favour 'certain undertakings or the in trade between Member States and which production of certain goods'. employ a largely female work force and it thereby constituted an aid incompatible with the common market'. 63

I-914

SLOMAN NEPTUN v BODO ZIESEMER

65 — Opinion in Commission v Ireland [1982] E C R 4024, at 68 — Judgment in Case 203/82, cited above. p. 4031. 69 — Judgment in Case 173/73, cited above, paragraph 15, 66 — T h e Notion of a State Aid in the EEC', European Law emphasis added. Review, vol. 13, 1988, p. 243, at 70 — The Court's most recent decision on that point is the p. 245. judgment in Case C-303/88 Italy v Commission [1991] 67 — Judgment in Joined Cases 6/69 and 11/69, cited above. E C R I-1433.

I-915

OPINION OF MR DARMON — JOINED CASES C-72/91 AND C-73/91

56. As M. J. Sussman has pointed out, 71 with regard to the concept of subsidies in the United States legislation applying the GATT provisions 'no government benefit is used by 59. That problem can be clarified by refer- every citizen; all accrue to specific sectors. ence, by way of illustration, to the Court's For example, paved roads are mainly used judgment in Commission v France. 73 The only by vehicle drivers, and in developing fixing of a rediscount rate for all French countries, large portions of the population products, whether or not intended for may gain little from such benefits; govern- export, would have been a general measure ment support of employee training, such as which, as I see it, could not have been clas- the United States provides, accrues only to sified as aid even if that rate were more industries that have such programs; and gov- favourable than the one applied in other ernment provision of copper at prices just Member States of the Community.

p. 475. 72 — P. 505. 73 — Joined Cases 6/69 and 11/69, cited above.

an advantage actually inherent in the market measure should be in the nature of a deroga- of the State in question in favour of export tion. undertakings. Where that advantage affects trade between Member States, it constitutes aid within the meaning of Article 92(1). 62. As I have said, the derogation criterion precludes, as I see it, fiscal or social measures 60. Another example is provided by the which are of general application from being Court's judgment in Commission v Italy. 74 regarded as aid inasmuch as all the undertak- It is the more substantial reduction in the ings of the Member State in question may rate of employers' contributions solely for benefit therefrom, for instance the fixing of female employees that gives an advantage to employers' contributions or taxation of com- Italian undertakings which largely employ mercial profits at a given rate. If the level of

61. Some authors have employed the con- by national legislation of one sort or another cept of 'discrimination' in that connection. 75 cannot be caught by means of Article 92(1); Although it is not incorrect, that concept is for the application of that provision, it is ambiguous, in my view, so far as aid is con- necessary to point to the existence of an cerned since discrimination necessarily additional advantage resulting from a dero- implies the existence of undertakings or gation from the legislation in question, espe- products in an identical situation, and there- cially social or fiscal legislation. That, in my fore in competition, which are excluded from view, is what the Court stated in its judg- the benefit of the contested measure. In this ment in Italy v Commission 76 when it con- case, aid may, as I see it, be restricted de facto sidered that to certain undertakings or to certain prod- ucts when there are no competing undertak- ings or products in the Member State in

I-917

OPINION OF MR DARMON — JOINED CASES C-72/91 AND C-73/91

77 — Paragraph 17. 78 — Op. cit., p. 138; see also Decision 85/233/EEC, cited above, paragraph 7.3. 80 — Decision 85/233/EEC, cited above. 79 — EEC Memorandum in the European Steel Products Case, GATT, Doc. N o SCM/35, 21 October 1982, cited by 81 — Ibid., paragraph 7.3. Beseler and Williams, op. cit., p. 138. 82 — Decision 85/239/EEC, cited above.

I-918

SLOMAN N E P T U N v B O D O ZIESEMER

fact that a government levies tax on some thus be entirely consistent with that which people or products but not others as equiva- the Court has applied in its case law with lent to a financial contribution to the lat- regard to the concept of subsidies. ter'. 83 However, it acknowledged that 'one might ask whether the above line of reason- ing would still hold true if the new tax obli- gation constituted the general rule and the 69. United States law on that point is highly non-creation of such an obligation was an uncertain. The International Trade Adminis- exception to this general rule'. 84 tration, which is responsible for applying the anti-subsidy duty, has applied the 'specificity test' in that regard, which is generally defined as follows: 'The relevant inquiry under it is whether the benefit is bestowed 67. Moreover, the derogation criterion was upon a specific sector of the economy or is adopted by the Court in its judgment in available generally to any similarly situated Fediol v Commission, 85 where it pointed out potential beneficiary. If the benefit is tar- that geted to a specific sector, it is a countervail- able bounty or grant. If it is made generally available to all similarly situated sectors, it is considered to be a valid non-countervailable 'the concept of a charge covers not merely government program, even if it has the inci- cases in which the State advances funds but dental effect of encouraging exports'. 88 That also those in which it waives recovery of tax 'test' was, however, rejected by the Court of debts thereby introducing an exception to a International Trade in its judgment in Cahot generally applicable rule of taxation ', 86 Corporation v United States 89 in favour of an analysis concerning exclusively the effects of the contested measures.

found whenever there is a difference between conditions of competition in the common the cost of production of an imported good market and thereby gives rise to a distortion and its cost of production in the absence of a ...'. In 1956 a distinction was drawn in the particular government or private benefit Spaak Report between general distortions bestowed on the producer. Under this defini- attributable to the characteristics of the tion, virtually every act of government is a Member States' social or fiscal legislation, subsidy, including such things as the con- whose repercussions on the costs incurred struction and maintenance of roads and the by undertakings were 'normally offset by the provision of police and armies'. general conditions of trade, in particular the exchange rate', 94 and individual distortions specifically concerning a sector of a Member State's economy. Those distortions fell 71. However, the Court of International within the scope of Article 101. So far, how- Trade has excluded 'public goods' from that ever, the Court has not given any indication definition of subsidies, pointing out that of the scope of that article in its decisions. As 'governments provide many such goods and D. Vignes has pointed out, that provision has services because of the inability of the price a scope of its own inherent within the wider system to effectively provide these goods scope of Article 100. N o doubt the non- which tend to be indivisible and collectively application of Article 101 is also the result of consumable by all citizens whether they pay the fact that the situations referred to in the for them or not ... A public good provided Spaak Report as falling within that provision by government benefits society in a collec- ('distortions for the benefit or to the detri- tive manner. It is not conferred upon any ment of certain branches of industry or cer- specific enterprise or industry'. 92 tain types of undertakings', 'difference in the cost price ... artificially introduced between undertakings which, moreover, may exhibit the same economic or technical characteris- 72. N o doubt there is no need in this case to tics') would nowadays be treated as consti- determine which of Articles 99 to 102 consti- tuting aid within the meaning of Article tutes the most suitable basis for eliminating 92(1). distortions of competition resulting from the fiscal and social systems of the Member States. As D. Vignes emphasized in 1973, 93 'having established that in 14 years of the 73. I now turn to the application in the Community's existence Article 101 has very present case of the 'derogation' criterion rarely been relied upon and has not served as which I have sought to elicit from the a basis for any Community act, it is legiti- Court's case law as a whole. mate to raise the question whether that pro- vision is not inappropriate and is not based on an incorrect analysis'. And yet the actual wording of that provision would seem to be 74. The question is a delicate one. Does the aimed at national measures of general appli- measure at issue constitute a derogation from cation whose 'disparity ... distorts the a general system? The German Government submits that before the establishment of the

additional shipping register, Article 30 of the undertakings which choose to manufacture Introductory Law to the German Civil Code their products in non-member countries already permitted German law not to be where wage bills are lower. It would be applied in such a case. According to the Ger- inconceivable to apply Article 92 of the man Government, that possibility was con- Treaty to the legislation of a Member State firmed by a judgment of the Bundesarbeits- which enables such undertakings not to gericht of 24 August 1989. 95 The intervener apply the rates of pay prescribed by national recalls that in such a case international law law. The specific features of this case stem also provides for the right not to apply the from the fact that shipping companies are legislation of the flag State. Reference is able to employ workers who are nationals of made, in particular, to Article 5(1) of the non-member countries without their residing Convention of 29 April 1958 on the high in a Member State and therefore being seas and to Article 6 of the Rome Conven- required to apply for a residence permit in tion of 19 June 1980 on the law applicable to that State. contractual obligations. 96 The Law intro- ducing an additional shipping register was adopted only so as to clarify the situation since German shipowners were uncertain, at 76. It is irrelevant in that regard that the any rate until the aforesaid judgment of the German legislature considered it appropriate Bundesarbeitsgericht, whether it was open to to introduce an additional shipping register them not to apply German national law and as a reminder of that possibility. In view of preferred in any event to enter their vessels the aforesaid judgment of the Bundesarbeits- in the registers of States not belonging to the gericht, that reform does not constitute a Community. derogation from the previous legal position according to which the application of the labour law of the flag State would have been compulsory.

80. The crucial factor, in my view, is to '... it is irrelevant that, by comparison with ascertain whether there is a general rule the previous export credit system, the repay- according to which the labour law of the flag ment of interest is economically neutral in its State must be applied to contracts of effect on the competitiveness of Greek employment for non-resident seafarers w h o exports and that the Commission took no are nationals of non-member countries. action regarding the previous system, since the present system, viewed independently from its predecessor, favours certain under- takings'. 101 81. That is not the case either under German law or under the rules of private interna- tional law in force as between the Member 79. Similarly, no account can be taken of the States. Thus the Rome Convention enables intentions expressed by the German legisla- the parties to a contract of employment to ture at the time of the adoption of that sec- choose the law applicable to the contract ond shipping register. In the first place, in (Articles 3(1) and 6(1)), provided the connection with the point at issue here, that employee is not deprived of the protection register does not, I would remind the Court, afforded to him by the mandatory rules of derogate from the legal position as it was; the law applicable in the absence of choice. secondly, in its case law the Court does not That law, according to Article 6(2), may be lay emphasis on the 'aims of the measures of either the law of the country in which the intervention concerned' 1 0 2 but defines the employee habitually carries out his work, or concept of aid 'in relation to their effects'. 103 the law of the country in which the place of In the only case 104 in which the Court took business through which he was engaged is account of the fact that the contested provi- situated, or else the law of another country sions had been described by the government with which the contract of employment is in question as forming part of a group of more closely connected. In that regard, it is measures in favour of certain traders, that not unreasonable, as I see it, to take the view government, after notifying the provisions in that, if that were the case, a contract of question to the Commission pursuant to employment for a Filipino seafarer, drafted Article 93(3), denied before the Court that in Spanish, concluded in the Philippines and they were in the nature of aid within the concerning employment on a vessel plying between south-east Asia and Germany, with the seafarer unable to reside in Germany in 99 — See paragraphs 17 to 19. any circumstances, might be governed by 100 — Judgment in Case 57/86, cited above. Filipino law. 101 — Paragraph 10, emphasis added. 102 — Judgment in Case 173/73, cited above, paragraph 13. 103 — Ibid. 104 — Judgment in Case 290/83 Commission v France, cited above. 105 — Ibid., paragraphs 11 to 15.

84. Admittedly, Article 9(3) of the initial proposal provided that 'the law of the Mem- ber State of registration of the vessel or, if and in Article 9(1) that explicitly referred to in the agreement, any other Member State, shall apply' to collective wage agreements concluded with organiza- tions representing seafarers who are nation- als of non-member countries, and Article 'if Community vessel owners who have reg- 15(3) of the amended proposal provides that istered the vessels which they own or oper- 'the law of the Member State of registration ate in EUROS employ seafarers who are not of the vessel or, if explicitly referred to in the nationals of a Member State such seafarers agreement, any other Member State 109 shall may be employed only on the basis of col- apply to such collective wage agreements'. lective wage agreements concluded with Even in the initial version of the proposal, trade unions or similar organizations of the the application of the law of a Member State country where they are resident'. was of interest to seafarers only in so far as the minimum rate of pay is authoritively fixed by legislation and must therefore as such be taken into account by collective 83. It is worth noting that the Commission agreements. It is otherwise where, as under submitted an amended proposal of that regu- German law for instance, the minimum rate lation on 13 December 1991. 108 In the is determined by agreements negotiated between workers and employers.

106 — C O M (89) 266 final — OJ 1989 C 263, p. 11. 107 — According to the Belgian Government, this provides for a 109 — The French version should, it seems, read 'tout autre État minimum wage of US Dollars 286 per month. Membre', as is clear from the Italian and German versions 108 — C O M (91) 483 final (OJ 1991 C 19, p. 10). of this provision.

85. The application of the rates of pay pro- on workers particularly with regard to pay, vided for by the collective agreements in are not applicable to seafarers who are force in the flag State is thus not made com- nationals of non-member countries working pulsory in the proposal for a regulation. on vessels flying the flag of the United King- dom but are not resident there. Such persons are not required to pay social security 86. With regard to the solutions adopted contributions. 111 under the national laws of the Member States, it must be stated that a number of those States permit the law of the flag State not to be applied, without necessarily having 90. However, Member States which make no recourse to a second register. provision for a secondary or international flag or whose law does not permit a foreign law to be applied so far as concerns entide- ment to remuneration to seafarers sailing on 87. Under Greek law, for instance, Article vessels flying their flag are those in which 25(2) of the Civil Code provides that, in the the employment of non-Community seafar- absence of a choice by the parties 'the proper ers is prohibited or seriously restricted. law of the contract, according to all the rele- vant circumstances, is to apply'. For those purposes the courts rely on criteria such as the nationality of the seafarer, the place 91. Thus, under Belgian law, the Law of where the contract was concluded and the 5 June 1928 laying down rules in respect of place of performance, the language in which contracts of employment at sea provides in the contract was drawn up, the location of Article 10 that seafarers must be recruited, the shipowner's registered office, and the flag 'except in cases of force majeure, from flown by the vessel, although the last- amongst persons registered in the pool of mentioned factor is not decisive. 110 merchant sailors'. Registration in the pool, according to the Royal Decree of 9 April 1965, is conditional on residence in Belgium (Article 7(1)). Without prejudice to interna- 88. Under Irish law, the application of tional agreements, foreigners may not be reg- national law with regard to remuneration is istered in the pool except in the absence of conditional on the recruitment of the sea- Belgian applicants and subject to residence in farer in Ireland, which thus makes it possible Belgium. to exclude the application of Irish law in relation to seafarers who are nationals of non-member countries and are not resident in the Community. 92. Under Spanish law, Basic Law N o 7 of 1 July 1985 on the rights and freedoms of foreign nationals in Spain 112 and Articles 89. Under English law, the 1978 Employ- 30 to 33 of Royal Decree N o 1119 of 26 May ment Protection (Consolidation) Act and the 1986 Wages Act, which confer various rights 111 — Sections 87 to 98 of the Social Security (Contribution) Regulations 1979 (Statutory Instrument 1979, N o 591), amended by the Social Security (Contributions) (Mariners) 110 — Piraeus CA 868/1980, E N D 1981, p. 47, A P 102/1961; Amendment Regulations 1982 (Statutory Instrument 1982, Athens CA 1238/1976, N O B 1976-807, Piraeus CA N o 206). 142/1983, E N D 1983, p. 180, Piraeus CA 852/1983. 112 — BOE N o 158 of 3 July 1985.

93. The recruitment of seamen under Italian law is subject to their registration as 'gente di mare' in seafarers' registers. 115 Such registra- tion is restricted to Italian nationals, without 96. That brief analysis of the situation prejudice to the obligations imposed by obtaining in the Member States shows that in Community law. 116 no circumstances can the application of the law of the flag State to the rates of pay under contracts of employment for non-resident seafarers who are nationals of non-member 94. Similarly, access to 'inscrição marítima' countries be taken as the general rule. Legis- in Portugal, which makes it possible for per- lation which merely permits the application sons to be recruited as seafarers and to of another law is not therefore at all in the obtain the corresponding permit, is restricted nature of a derogation from what is, as it to Portuguese nationals, subject to the obli- were, the 'legal norm'. gations imposed by Community law and to international agreements ratified by Portu- gal. 117

I - 925

OPINION OF MR DARMON — JOINED CASES C-72/91 AND C-73/91

the latter in no way constitute a derogation 100. Meanwhile, it would no longer be pos- from the rules resulting from the 'nature or sible to apply the German system, which has scheme' of the system. not been notified under Article 93(3).

101. Let me point out in that regard that, 98. On those grounds, I have come to the according to the Court's recent judgment in conclusion that Article 92(1) of the EEC FNCEPA v France, 121 it is then for the Treaty should be interpreted as not applying national courts to to legislation of the kind which I have con- sidered above. 'guarantee to individuals who are able to rely on such an infringement that all the conse- quences will be drawn therefrom, in accord- 99. A final observation. Should the Court ance with their national law, as regards both decide not to adopt the solution which I the validity of measures involving the imple- advocate, it would then be for the Commis- mentation of the aid schemes and the recov- sion to determine whether such aid affects ery of the financial subsidies granted in dis- trade between Member States and whether it regard of that provision or any interim distorts or threatens to distort competition. measures'. 122

102. I therefore p r o p o s e t h a t the C o u r t h o l d that

(1) Article 92(1) of t h e E E C T r e a t y does n o t a p p l y t o national legislation w h i c h , so far as c o n c e r n s rates of p a y a n d w o r k i n g c o n d i t i o n s , leaves t h e parties free to c h o o s e t h e l a w applicable t o a c o n t r a c t of e m p l o y m e n t c o n c l u d e d b e t w e e n a s h i p o w n e r a n d a seafarer w h o is a n a t i o n a l of a State w h i c h d o e s n o t b e l o n g t o t h e C o m m u n i t y a n d w h o does n o t reside w i t h i n the t e r r i t o r y of a M e m b e r State.