C-17/92

Mr President, distribution of foreign films — the distribu- Members of the Court, tion of a Spanish film being a condition for the granting of a licence — and finally laid down the proportion of foreign and Spanish films which might be exhibited or distrib- 1. The Tribunal Supremo de Espana, Sala de uted by television or the cinema. 1 lo Contencioso-Administrativo (Sección Ter- cera) (Supreme Court of Spain, Third Cham- ber for Contentious Administrative Proceed- ings, hereinafter 'the Tribunal Supremo') is asking the Court as to the compatibility with Community law of Spanish rules regarding the granting of licences for dubbing films from third countries. These rules impose the After accession to the Community Spain condition that for the distribution in Spain adapted its film legislation by Royal Decree- of a dubbed version of such films into one of Law 1257/1986 of 13 June 1986 (hereinafter the official languages of Spain the distribu- 'the Decree-Law'), 2 the sole article of which tion undertaking applying for a licence must contains two rules with regard to the distri- enter into an agreement to distribute a Span- bution of non-Spanish films. 3 Films pro- ish film at the same time. The Tribunal duced in other Member States of the Com- Supremo is raising this question in the munity may be freely distributed by the course of an application for annulment legally established distribution undertakings. brought by the Federación de Distribuidores For films from third countries on the other Cinematográficos (Fedicine), a Spanish asso- hand the Decree-Law repeats the previous ciation of film distributors. rules in so far as the distribution of such films in a dubbed version remains subject to a prior licence. For every Spanish film which they have agreed to distribute the distribu- tion undertakings receive a maximum of four Background to the case dubbing licences. They must by contract accept the following conditions: (i) the first licence is issued as soon as the competent 2. There were in force in Spain until its authority (the Instituto de la Cinematografía accession to the European Communities par- y de las Artes Audiovisuales, hereinafter 'the ticularly strict rules in the field of films. The ICAA') is informed that filming of the Span- rules involved a condition of nationality for ish film which the distributor has undertaken film producers established in Spain and for undertakings dubbing films and in addition provided for a licence for the dubbing and 1 — In its written observations the Commission goes into detail as regards these former Spanish rules. 2 — Boletín Oficial del Estado No 153 of 27 June 1986, p. 23427. 3 — See the Report of the Judge-Rapporteur for the text of that * Original language: Dutch. article.

3. Fedicine brought before the Tribunal 5. For a correct answer to the question Supremo an application for the annulment of raised by the Tribunal Supremo I must in the the Decree-Law, which, it claims, lays down first place, in view of the general manner in protectionist rules and discriminates against which that court raises the question of com- films of other Member States, since it com- patibility with Community law, consider pels the film distributors to give preference which Community rules are applicable to to the distribution of Spanish films. The Tri- this case. bunal Supremo thought it appropriate to refer the following question to the Court for a preliminary ruling: Before the national court Fedicine claimed that the Spanish rules at issue were contrary to Articles 30 to 36, 59 and 92 of the Treaty, to Directives 63/607/EEC and 65/264/EEC 6 as well as to the General Agreement on Tar- 'Is a measure making the grant of licences to iffs and Trade (GATT). In its observations to dub films from non-member countries, with the Court it challenges the legality of the a view to their distribution in Spain in a ver- Decree-Law solely on the basis of Articles sion dubbed into one of the official languages 30 and 36 of the Treaty, that is, the Commu- of Spain, subject to a prior contractual nity rules on movement of goods. The Span- undertaking by the distributor applying for ish Government and the Commission on the the licence to distribute a Spanish film com- patible with Community law?' 5 — See inter alia the judgment in Case 14/86 Pretore di Saló v Persons unknown [1987] ECR 2545 at paragraphs 15 and 16; see most recendy the judgment in Joined Cases 4 — That licence is automatically cancelled if the film is not sub- C-330/90 and 331/90 López Brea and Hidalgo Palacios mitted within 200 days from the commencement of filmine. [1992] ECR I-323 at paragraph 5. The ICAA may extend that period upon a reasonable 6 — For the precise references to these directives see footnote request from those concerned. 9 infra.

7. It is obvious that the recording of a cine- matograph film presupposes the manufacture of a material base for the film, the film band, which may be the original of a film or a copy thereof. This film band undoubtedly consti- 6. As I mentioned, Fedicine in its observa- tutes 'goods' within the meaning, as specified tions to the Court takes the view that the by the Court, of the Treaty provisions rules contained in the Decree-Law constitute regarding movement of goods, namely a measure having an effect equivalent to a 'products which can be valued in money and quantitative restriction on imports contrary which are capable, as such, of forming the to Article 30 of the E E C Treaty, since they subject of commercial transactions'. 7 That give preference to the distribution of Spanish was also the view taken by the Court in the films by means of the system of licences pre- Cinéthèque judgment with regard to the viously outlined and thus make the distribu- production of video-cassettes. It declared tion of films from another Member State less that: attractive. Fedicine's assumption in this con- nection is clearly that films are goods within the meaning of the Treaty.

8. However, that by no means indicates that the exploitation of films falls under the 'the film belongs to the category of literary Treaty provisions with regard to movement and artistics works made available to the of goods. Although the exploitation in one public by performances which may be infi- Member State of a cinematograph film pro- nitely repeated and the commercial exploita- duced in another Member State presupposes tion of which comes under the movement of a trans-frontier movement of goods in the services, no matter whether the means sense that at least one copy of the film must whereby it is shown to the public be the cin- be imported into the country of exploita- ema or television'. 11 tion, 9 I too think that the essential feature of the exploitation of a film does not lie in that physical trade in film bands. 10 As the Court confirmed in the Coditel judgments, the cin- 9. The essential aspect of the exploitation of ematograph film differs from other cultural a film therefore lies in the producer's making products which depend on the circulation in available the rights to distribution in a spe- cific market together with the temporary transfer of the right of public exhibition in 8 — Judgment in Joined Cases 60/84 and 61/84 Cinéthèque v that market. 12 The (trans-frontier) transfer Féderation Nationale des Cinémas Français [1985] ECR of the material base of a film is only a logical 2605 at paragraph 10. Cf. also the judgment in Case 18/84 Commission v France [1985] ECR 1339 at paragraph outcome of that, so that it is not possible to 12 in which the Court refused to describe printing work as a service 'since it leads directly to the manufacture of a speak of movement of goods within the physical article which, as such, is classified in the Common meaning of the Treaty. The fact that this rep-

The second directive adopted in this sector requires the Member Treaty also applies. 13 States by 31 December 1966 at the latest to abolish all import quotas for films of one or more Member States: Article 7 of the Second Council Directive of 13 May 1965 implementing in respect of the film industry the pro- visions of the General Programmes for the abolition of restrictions on freedom of establishment and freedom to 11 — Judgment in Case 262/81 Coditel v Ciné-Vog Films ('Codi- provide services (OJ, English Special Edition 1965-1966, p. tel II') [1982] ECR 3381 at paragraph 11, which refers t o

paragraph 14. Moreover 'Photographic and cinemato- more generally of the concept of economic activity within graphic goods', including cinematograph film are the sub- the meaning of the E E C Treaty see in particular the judg- ject of a special chapter of the Common Customs Tariff, ments in Case 13/76 Donà v Mantero [1976] E C R 1333 at namely Chapter 37: see Council Regulation (EEC) N o paragraph 12; in Case 196/87 Steymann v Staatssecretaris 2658/87 of 23 July 1987 on the tariff and statistical nomen- van Justitie [1988] ECR 6159 at paragraph 14; and in Case clature and on the Common Customs Tariff (OJ 1987 L C-159/90 Society for the Protection of Unborn Children

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10. None of this necessarily means that the economic presence in the country in which Treaty provisions with regard to movement the services are provided — whether by of services will always be applicable. It is means of a branch office, by an independent necessary in addition (according to the first agent or in some other form — it is not the paragraph of Article 59 of the EEC Treaty) Treaty provisions with regard to the provi- for the persons who provides the services to sion of services which will apply but those be a national of a Member State established relating to the right of establishment (Arti- in the Community and for the services pro- cles 52 to 58 of the Treaty). 17 That is clear vided by him to be of an intra-Community from the priority rule set out in Article 60 of nature. The latter aspect is present, according the EEC Treaty which makes the rules with to the case-law of the Court, when (i) the regard to provision of services applicable person supplying the services moves to only in so far as the provisions relating (inter another Member State to perform them; 14 alia) to free movement of persons are not (ii) the person for whom the services are applicable. intended goes to another Member State to receive the services; 15 (iii) neither of the two goes to another Member State but the service is supplied by a person established in a Member State other than that of the person Is the Decree-Law contrary to the Treaty for whom the services are intended. 16 provisions with regard to provision of ser- vices?

As the Court has consistently held, such 14 — Article 59 is also applicable, according to the so-called incompatibility exists when there is discrimi- 'tourist guide' judgments, where the person supplying the services and the person for w h o m they are intended are nation against a person providing services on established in the same Member State, but the services themselves are offered on the territory of another Member grounds of his nationality or of the fact that State: judgments in Case C-154/89 Commission v France [1991] ECR I-659 at paragraph 10, in Case C-180/89 Com- he is established in a Member State other mission v Italy [1991] E C R I-709 at paragraph 9 and in than that in which the service must be Case C-198/89 Commission v Greece [1991] ECR I-727 at paragraph 10. 15 — Judgments in Joined Cases 286/82 and 26/83 Luisi and Car- bone v Ministero del Tesoro [1984] E C R 377 at paragraph 10; and in Case 186/87 Cowan v Trésor Public [1989] E C R 17 — See the judgment in Case 205/84 Commission v Germany 195 at paragraph 15. [1986] ECR 3755 at paragraph 21; see also the judgment in 16 — Judgment in Case C-76/90 Säger [1991] ECR I-4221 at Case C-221/89 Factortame and Others ('Factortame II') paragraph 13. [1991] ECR I-3905 at paragraph 20.

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provided. 18 In the Säger judgment the Court distributed for every four dubbing-licences added that Article 59 requires in addition the for these films. In these circumstances it can- elimination of any restriction, even if it not be denied that the Decree-Law places applies without distinction to national pro- producers of films from other Member States viders of services and to those of other in a more unfavourable position than Span- Member States, when it is liable to prohibit ish producers since the former are deprived or otherwise impede the activities of a pro- of the advantage of the distribution require- vider of services established in another Mem- ment and the relevant levels of takings. ber State •where he lawfully provides similar services. 19

18 — Cf. the judgment in Case 33/74 Van Binsbergen [1974] 15. The Court has consistently held that ECR 1299 at paragraph 25; see more recently inter alia the judgment in Commission v Germany cited in the previous national rules involving discriminatory treat- footnote, at paragraph 25; the so-called 'tourist guide' cases ment as regards provision of services from previously cited, Commission v France at paragraph 12, Commission v Italy at paragraph 15 and Commission v another Member State can be compatible Greece at paragraph 16; the judgment in ERT, cited in foot- note 10, at paragraph 19; the 'Mediawet' judgments in Case with Community law only if they can be C-353/89 Commission v NetherUnds [1991] ECR I-4069 at paragraph 14 and Case C-288/89 Collectieve Anten- nevoorziening Gouda [1991] ECR I-4007 at paragraph 10; and in Case C-106/91 Ramrath [1992] ECR I-3351 at para- graph 27. 20 — Cf. the 'Mediawet' judgment Commission v Netherlands at 19 — Säger judgment at paragraph 12. paragraph 23.

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brought within the scope of an express der- Nevertheless the question arises at legal level ogation of the Treaty. 21 how far there is room in the concept of pub- lic policy within the meaning of Article 66 of the Treaty in conjunction with Article 56 for The only derogative provision which Spain national or regional rules which, with a view can invoke lies in Article 66 of the Treaty in to the protection of the national film indus- conjunction with Article 56, which allows try within the framework of a policy discriminatory rules justified on grounds of directed towards the preservation of the cul- public policy, public security or public tural heritage, grants to domestic film pro- health. It seems to me that of those only the ducers an important competitive advantage first ground of justification, public policy, to the detriment of producers from other might possibly be considered. Member States.

21 — Cf. judgments in Case 352/85 Bond van Adverteerders v 23 — Judgment in Case 30/77 Regina v Bouchereau [1977] ECR Netherlands State [1988] ECR 2085 at paragraph 32; in 1999 at paragraph 35. Collectieve Antennevoorziening Gouda at paragraph 11; in 24 — See the judgment in Case 7/61, Commission of the EEC v Commission v Netherlands at paragraph 15. Italy [1961] ECR 317, in particular at p. 329. For more 22 — Apparently the report referred to is the 'Rapport fait au recent confirmations of this principle, see inter alia the nom de la commission de la jeunesse, de la culture, de l'édu- judgments in Case 238/82 Duphar v Netherlands [1984] cation, de l'information et des sports sur la promotion du ECR 523 at paragraph 23; in Case 288/83 v cinéma des pays de la Communauté', drawn up by Mrs Ireland [1985] ECR 1761 at paragraph 28; and in Case Marie-Jeanne Pruvot, Parlement européen, Documents de 103/84 Commission v Italy [1986] E C R 1759 at para- Séance 1983-1984, 15 July 1983, PE 76.975/final. graph 22.

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. . affecting one of the fun- 56) is excluded by reason of 'the mere fact damental interests of society'. Moreover it that national provisions, justified by objec- does not extend to economic objectives, tive circumstances corresponding to the which means that national or regional rules needs of the interests referred to therein, which, in the guise of protection of funda- enable other objectives of an economic mental interests, pursue exclusively or prin- nature to be achieved as well'. 26 This applies cipally an economic aim, are not covered b y even more when the economic objective it. Finally, even if the rules actually seek to must make possible the realization of an uphold public policy they can be accepted objective mentioned in that provision (in only on condition that that aim cannot be that case the protection of health). 27 achieved by means of less restrictive, that is, less discriminatory or non-discriminatory,

objective. As an exception to a fundamental principle of the Treaty, Article 56 of the Treaty must be interpreted in such a way 19. The first of those cases concerned Neth- that its effects are limited to that which is erlands rules which at that time prohibited necessary in order to protect the interests the distribution by cable of radio and televi- which it seeks to safeguard.' 28 sion programmes transmitted from other Member States containing advertising intended especially for the public in the Netherlands or subtitles in Dutch.

The Netherlands Industry and Energy [1984] ECR 2727 at paragraph 36; see also the Opinion of Advocate General Mancim in Case 238/82 Duphar v Netherlands [1984] 546 at pp. 549 and 550. 27 — Judgment in Nertsvoederfabriek Nederland, paragraph 15. 29 — Judgment in Case 41/74 Van Duyn [1974] ECR 1337 at 28 — Judgment in Bond van Adverteerders, paragraph 36. paragraph 18; Bouchereau judgment, paragraph 34.

21. If I apply that case-law to this case, I must conclude that rules such as those con- 20. In the case of the Flemish cable decree tained in the Decree-Law cannot lay any the Belgian Government received even claim to the exception in Article 56 regarding shorter shrift. A decree of the Flemish Com- public policy. The Decree-Law does not rep- munity prohibited television organizations resent any protection against 'a genuine and from broadcasting on their channels sound sufficiently serious threat' affecting one of and television programmes from other Mem- the fundamental interests of society. More- ber States which were not in one of the lan- over it seems to me, as in the case of the guages of the Member State in which the Flemish cable decree, to be largely dictated broadcasting organization was established. by motives of economic policy. Although the To justify that discriminatory restriction the Decree-Law may actually have the objective Belgian Government had invoked objectives inter alia of promoting films in one of the of cultural policy, particularly the mainte- official languages of Spain, it seems to have nance of pluralism in the printed media (the in view above all the preservation of the direct recipients of a part of the advertising national film industry, 34since the advantage revenue of the national television organiza- of adequate distribution is offered only to tions, the preservation and development of producers of Spanish films. the artistic heritage and the viability of the national broadcasting organizations. The Court did not seem convinced by these argu- ments and on the contrary found in them 31 — Judgment in Case C-211/91 Commission v Belgium [1992] ECR I-6757, paragraph 9. (particularly in the first and third of them) 32 — See the Opinion of Advocate General Tesauro in this case, an indication that the rules at issue had the delivered on 24 November 1992, section 5, [1992] ECR I-6769. 33 — Judgment in Commission v Belgium, paragraph 10. 34 — That may also be seen clearly from the passage, quoted by the Commission in its written observations, from the state- ment of the reasons on which the draft of Law N o 3/80 was 30 — Bond van Adverteerders judgment, paragraph 37. based, that is, the predecessor of the Decree-Law.

The importance attached to the cultural her- In the field of provision of services I may itage will further increase when the Treaty point to the 'tourist guide' cases in which the on European Union has come into force. I Court emphatically recognized 'the conser- should like to point out that that Treaty vation of the national historical and artistic charges the Community to make a contribu- heritage' 36 and 'the proper appreciation of tion 'to the flowering of the cultures of the places and things of historical interest and Member States', 35 a task which, according to the widest possible dissemination of knowl- the new Article 128(1) of the Treaty, must be edge of the artistic and cultural heritage of a fulfilled while respecting the 'national and country' 37 as overriding reasons of general regional diversity' of the Member States 'and interest such as might justify a restriction on at the same time bringing the common cul- free movement of services. tural heritage to the fore'. In addition Article 128(4) prescribes that the Community in its action under other provisions of the Treaty is to take 'cultural aspects' into account. Still more recently the Court has recognized in its 'Mediawet' judgments that a national cultural policy aimed at preserving freedom of expression of the various social, cultural, As regards that last aspect attention may be drawn, by way of example, to the new Arti- cle 92(3)(d) of the EEC Treaty envisaged in 36 — Judgment in Commission v Italy, previously cited in foot- the Treaty on European Union. Under that note 14, at paragraph 20; confirmed by the Court in the 'Mediawet' judgments: in Collectieve Antennevoorziening provision Gouda at paragraph 14 and in Commission v Netherlands at paragraph 18. 37 — Judgment in Commission v France, previously cited in foot- note 14, at paragraph 17; judgment in Commission v Greece, previously cited in footnote 14, at paragraph 21; 35 — Article 3(p) of the EEC Treaty, as amended by Article G of since then also confirmed in the 'Mediawet' judgments in the Treaty on European Union. The text of the Treaty was the same paragraph of the grounds of judgment as those published in OJ 1992 C 191, p. 1. referred to in the preceding footnote.

24. In the field of free movement of workers In the Cinéthèque judgment the Court too the Court shows its understanding with decided that a national system which, 'in regard to national and regional rules which order to encourage the creation of cinemato- seek to preserve the cultural identity of a graphic works irrespective of their origin, people, as may be seen in the Groener judg- gives priority, for a limited initial period, to ment in which the Court, in answer to a the distribution of such works in the cine- question with regard to the compatibility ma', is seeking to attain an objective which is with Community law of Irish rules making justified with regard to Community law. In appointment as a lecturer in a public educa- so far as barriers to intra-Community trade tional institution conditional upon proof of arising from the application of that prohibi- an adequate knowledge of the Irish language, tion do not exceed what is necessary for declared as follows: attaining that objective, Article 30 is not applicable to such a system. 40

'The E E C Treaty does not prohibit the adoption of a policy for the protection and promotion of a language of a Member State In the recent Sunday-closing cases too the which is both the national language and the Court confirmed that it was for the Member first official language. However, the imple- States to make choices relating to national or mentation of such a policy must not regional socio-cultural characteristics with due regard to the requirements resulting

38 — Judgment in Collectieve Antennevoorziening Gouda at paragraph 23; judgment in Commission v Netherlands at p aragraph 30; that paragraph has been expressly confirmed y the Court: judgment in Case C-148/91 Vereniging 39 — Judgment in Case C-379/87 Groener v Minister for Educa- tion and the City of Dublin Vocational Education Commit- Veronica Omroep Organisatie [1993] E C R I-487, at para- tee [1989] ECR 3967 at paragraph 19. graphs 9 and 10. 40 — Cinéthèque judgment, paragraphs 23 and 24.

However, it is clear that such an overriding reason cannot justify obstacles which go fur- ther than is objectively necessary to attain 26. It follows from this case-law that rules the intended aim. 43 Moreover such rules within the framework of the cultural policy may not seek to attain objectives of an econ- of national or regional authorities may where omic nature (even though secondary econ- appropriate be warranted by an overriding omic aims need not be totally excluded). 44 reason of general interest recognized by Finally, as the Court stated in the Groener Community law justifying certain restric- judgment (section 24 above), implementing tions to the movement within the Commu- measures for such a cultural (in that case lin- nity of persons, goods or services. That guistic) policy must not lead to discrimi- applies to measures intended to ensure the nation against nationals of other Member preservation and appreciation of historical States. and artistic treasures or the dissemination of knowledge of the arts and culture ('tourist- guide' judgments), 42 which are directed towards preserving the freedom of pluralistic expression of the various social, cultural, 27. As regards that last condition, namely religious and philosophical trends in a coun- the non-discriminatory nature of the meas- try ('Mediawet' judgments) or towards the ure, a certain flexibility of the case-law must protection of a national language (Groener not, I think, be excluded. Measures adopted judgment). These overriding reasons of gen- for the protection of the cultural heritage of eral interest may, I think, be described in a Member State or a region thereof will not general as the protection, development and infrequently involve a direct or indirect dissemination of a Member State's own cul- advantage for its own artists or cultural insti- tural heritage or that of a region thereof, in a tutions (for example, the establishment of a pluralist context and as a component part of a film or literature prize or other encourage- cultural heritage common to the Member ment of artists or artistic societies). 45 Even States (hereinafter referred to for the sake of when such measures concern the provision

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of services falling within the field of applica- own cultural heritage, although the Court tion of Article 59 of the EEC Treaty — that has accepted that the list in Article 36 is is, in so far as the cultural pursuit in question restrictive. 50 This view cannot prevent sig- constitutes an economic activity such as nificance being attached to the grounds of referred to in Article 60 of the E E C Treaty justification mentioned in Article 36 in con- and in addition it is not exclusively internal formity with the evolution of Community as regards a given Member State 46 — they law previously mentioned (section 22 et may where appropriate still be considered seq.). 51 for justification under Community law.

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29. Since the foregoing examination has led ther into the other Community rules which me to the conclusion that the Decree-Law is Fedicine has claimed in the main proceedings incompatible with Article 59 of the Treaty it have been infringed (section 4 supra). does not seem to me necessary to go any fur-

30. I suggest that the Court should reply as follows to the question referred to it by the Tribunal Supremo:

National rules which make the dubbing of films from third countries subject to a system of licences which imposes on the distributor the obligation of entering into a contract for the distribution at the same time of a film from the Member State in question constitute discrimination against film producers from other Member States contrary to Article 59 of the Treaty for which, since the rules pursue prin- cipally economic objectives, it is not possible to demonstrate any ground of justi- fication recognized by Community law.

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