C-3/95

REISEBURO BROEDE v SANDKER

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 27 June 1996

1. This preliminary reference raises the issue the ZPO, which applies to the Amtsgericht, of the compatibility with the freedom to refers to 'Parteiprozeß' and provides that: provide services guaranteed by the Treaty of certain German rules which, inter alia, pro­ hibit the provision of judicial debt-recovery services in Germany by debt-collecting undertakings on a professional basis, without engaging the assistance of a lawyer.

'In so far as the representation by lawyers is not prescribed, the parties may conduct the case themselves or have it conducted by any person having capacity to conduct legal pro­ ceedings, acting as agent.'

I — Factual and legal context

The cases where 'representation by lawyers is not prescribed' include applications for 'ein Pfändungs-und Überweisungsbeschluß' ('a seizure and transfer order') under 2 Article 828. 2. According to Article 828 of the Zivil­ prozeßordnung (Code of Civil Procedure, hereinafter 'the ZPO') of 30 January 1877, as reproduced in the version of 12 September 1950, ' the grant of an order designed com- pulsorily to attach a debt (i. e. an attachment order) is a judicial function which, in Ger­ many, falls within the competence of the 3. The Rechtsberatungsgesetz (Law on Legal Amtsgericht (Local Court). According to Advice, hereinafter 'the RBerG') of 17 De­ Article 78 of the ZPO , the use of the services 3 cember 1935 provides at Article 1(1)(1) of a 'Rechtsanwalt' (lawyer) is only compul­ that: sory before the 'Landgerichte' (Regional Courts) and all superior courts. Article 79 of

It may be exercised only under the occupa­ tional designation corresponding to the 4 — The last requirement is applicable only to practitioners who arc not Community nationals or nationals of an EEA Stale. authorization.' 5 — At the hearing the agent representing Germany explained that the expression 'on a professional basis' usually signified a service carried out on a recurring basis but that according to the case-law of the Bundesgerichtshof (Federal Court of Justice), the mere acceptance of fees would suffice to render professional the provision of a service. 6 — The agent representing Germany informed the Court at the hearing that the judicial enforcement of debts in Germany by debt-collecting undertakings 'was frankly prohibited'. Article 1(1 )(2) of the RBerG provides that a Reference was made, in particular, to Article 3 of the Bundcsrcchtsanwaltordnung (Federal regulation concerning licence may be issued only if the applicant lawyers, hereinafter 'the BRAU') which provides that law­ possesses the necessary reliability, personal yers are the independent, professional legal advisers every person has a right to have represent him in all legal matters aptitude and expertise and if the demand is and especially in court proceedings.

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REISEBÜRO BROEDE v SANDKER

7 — INC is registered at the registry of the Tribunal du Com merce (Commerce Court) of Senlis, France under number 391 100 021 (93B185). 'Docs Article 59 of the EEC Treaty preclude 8 — The Court is informed that in France there is no specific a national rule which prohibits an undertak­ legal regulation of the activities of debt collecting undertak­ ings. ing established in another Member State

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OPINION OF MR FENNELLY — CASE C-3/95

from securing judicial recovery of debts of ings necessary to secure the enforcement of others on the ground that this activity is debts on behalf of their clients. The second reserved under the national rule for persons question assumes an affirmative answer to to whom a special official licence has been the first and asks whether it remains affirma­ issued for that purpose? tive in circumstances where both parties to the national proceedings are resident in the same Member State and where the enforce­ able decision, which is the subject-matter of the enforcement proceedings, was obtained If the answer is in the affirmative: Is this also in that same State. the case where national law alone is to be applied in the recovery proceedings on the ground that the parties to the enforcement proceedings are resident within the State and the enforceable decision was also obtained 10. It is appropriate, in my view, firstly, to within the State?' consider whether the manifestly close con­ nection between Ms Ramthun and Germany in the present case excludes, for the purposes of the application of Community law, any genuine inter-State element. Secondly, it is necessary to consider whether the factual II — Observations submitted to the Court situation involved in the present reference is concerned with Treaty rules on the freedom of establishment rather than the freedom to provide services. These two issues have been raised expressly by the Commission and by 8. Written observations were submitted on Germany. Thirdly, I shall address the sub­ behalf of Broede, and by the debtor, the Fed­ stantive issues raised by the questions eral Republic of Germany and the Commis­ referred. sion. Oral observations were presented by the debtor, Germany and the Commission.

stated, in the context of the freedom of lar, the Commission questioned whether the movement of workers, that the relevant reality underlying this case was that Treaty rules 'cannot . . . be applied to situa Ms Ramthun, a German national resident in tions which are wholly internal to a Member Germany, was in fact representing Broede as State, in other words, where there is no fac one of her own clients, albeit under the guise tor connecting them to any of the situations of acting on behalf of INC . In this respect, at envisaged by Community law'. 9 This the hearing the agent for Germany pointed requirement applies mutatis mutandis to the out that in German law a managing director Treaty rules on the freedom to provide ser of a limited company possesses automatically vices, which can only apply if the services in the right to represent the company in legal

12 'represented by' INC in the national debt- division of jurisdiction in references under collection proceedings and that INC is not Article 177 of the Treaty requires it to acting gratuitously, then there can be no '[limit] itself to deducing the meaning of the doubt that the provision of a 'transfrontier' Community rules from the wording and service for the purposes of Article 59 of the spirit of the Treaty, it being left to the Treaty is at issue. national court to apply in the particular case

12. The Commission in its written and oral exclusively on the basis of German law. But observations, supported on this point by that is not the basis upon which the national Germany at the hearing, expressed reserva court has referred the case. The Court tions concerning the genuineness of the should not question the bona fides of parties Community element in this case. In particu which has not been questioned by the national court, except in the very clearest of cases. The Court must, in my view, answer 9 — Case 175/78 [1979] ECR 1129, paragraph 11 of the judgment. 10 — See Case 352/85 Bond van Adverteerders v Netherlands State [1988] ECR 2085, paragraph 13 of the judgment 11 — Case C-384/93 [1995] ECR I-1141, paragraph 27 of the 13 — See, for example. Joined Cases 28/62, 29/62 and 30/62 Da Opinion. Costa and Others v Nederlandse Belastingadministratie 12 — The German original refers to 'vertreten durch'. [1963] ECR 31.

the questions referred by the national court is applicable in the case brought before it'. on the assumption that a genuine question of The circumstances of the main proceedings the application of Community law arises. have led the Commission and Germany to suggest that the ostensible French establish ment of INC may be little more than a vehicle through which INC seeks to evade the requirements of the RBerG. At the hear ing the agent for the Commission stated that the Commission would leave it to the 'wis B — The relevant Treaty rules dom of the Court' to decide whether there was any basis for these suspicions.

1 bergen, 4 contends that, if the activities of Ms Ramthun in Germany on behalf of INC 15. The provisions of the chapters of the constitute, in reality, the permanent presence Treaty on the right of establishment and on in Germany of that undertaking, the relevant services are 'mutually exclusive' and the lat national authorities would be entitled, in ter can only apply if the provisions relating order to prevent Article 59 being used to to the right of establishment do not apply, evade the application of professional rules i. e. Articles 59 and 60 are residual to the justified by the general good, to apply such provisions governing the right of establish

18 consider provisions of Community law to ment. The only information before the which the national court has not referred in Court is that on six occasions between the text of its question. However, it is for the national court to decide whether or not the rule of Community law, as interpreted by 15 — Case 35/85 Procureur de la République v Tissier [1986] the Court of Justice pursuant to Article 177, ECR 1207, paragraph 9 of the judgment. 16 — See, for example, Case C-150/88 Parfümerie-Fabrik 4711 v Provide [1989] ECR 3891, paragraph 12 of the judgment. 17 — See, for example, Case C-55/94 Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano [1995] 14 — Case 33/74 Van Binsbergen v Bedrijfsvereniging ECR I-4165, hereinafter 'Gebhard', paragraphs 20 and 23 of Metaalnijverheid [1974] ECR 1299, hereinafter 'Van Bins- the judgment. bergen'. 18 — See Gebhard, paragraph 25 of the judgment.

2 February 1994 and 8 May 1994, INC law constitutes an unjustified restriction on undertook debt-collection work in Germany the freedom to provide debt-collection ser­ on behalf of Broede and that, according to vices. Ms Ramthun, it has other foreign clients some of whom are German. It is for the national court to determine whether the pro­ vision of such services by INC in Germany is sufficiently intermittent to be regarded as being carried out on a temporary basis. The C — The freedom to provide transfrontier national court must however apply the crite­ debt-collection services ria which have been provided by the Court. It should have regard, in particular, to the statement of the Court in Gebhard that '... the temporary nature of activities [...] has (i) The relevant restrictions to be determined in the light not only of the duration of the provision of the service, but also of its regularity, periodicity or con­ 19 tinuity'. 18. There can be little doubt, as accepted in the present case by both the national court and Germany, that Article 1(1) of the RBerG constitutes a prima facie restriction on the 16. It is clear, therefore, that the fact that the freedom to provide services contrary to provision of a service under Article 59 of the Article 59. The Court has consistently con­ Treaty must be 'temporary does not mean firmed that '[A]rticle 59 of the Treaty that the provider of services within the requires not only the elimination of all dis­ meaning of the Treaty may not equip himself crimination on grounds of nationality against with some form of infrastructure in the host providers of services who arc established in Member State (including an office, chambers another Member State but also the abolition or consulting rooms) in so far as such infra­ of any restriction, even if it applies without structure is necessary for the purpose of per­ 20 distinction to national providers of services forming the services in question'. The and to those of other Member States, which Court is informed by Ms Ramthun that the is liable to prohibit, impede or render less majority of the clients of INC arc French advantageous the activities of a provider of and that it has an office in France. I do not services established in another Member State think that the evidence available in the order where he lawfully provides similar ser­ for reference suggests that the case should be 21 vices'. In this case, it is clear, particularly considered other than under Article 59. from the observations presented at the hear­ ing by Germany, that there are effectively two separate restrictions contained in the RBerG curtailing the freedom of debt- 17. The essential question is whether a pro­ collecting undertakings to provide their ser­ hibition such as that contained in German vices on a professional basis in Germany: firstly, the requirement to be authorized by

the competent regional authorities to carry- the formulation of its first question when it out extra-judicial debt-collecting activities; referred to the need for special official secondly, the prohibition on seeking the licences for the provision of judicial debt- judicial enforcement of debts unless the ser­ collection services; this, of course, is the 22 vices of a lawyer are retained. The uncon­ requirement imposed by the RBerG on per­ tested fact that these restrictions are non­ sons seeking to provide extra-judicial ser­ discriminatory is not, however, conclusive. vices, whereas the provision of judicial ser­ vices is entirely reserved to lawyers and undertakings like INC cannot be licensed to 19. In its judgment in Säger, for example, provide those services. The provision of such the Court stated that legislation of one a professional judicial debt-collection service Member State which subjects the provision is permitted neither by the ZPO nor the of certain services 'by an undertaking estab­ RBerG and the issue whether the relevant lished in another Member State [...] to the German authorities could legitimately issue of an administrative licence for which require undertakings such as INC to obtain the possession of certain professional qualifi­ a licence to provide extra-judicial debt- 24 cations is required constitutes a restriction collection services does not therefore arise. on the freedom to provide services within In my opinion, the only issue of Community 23 the meaning of Article 59 of the Treaty'. law that in fact arises is whether the prohibi­ As it happens, the Court was concerned in tion in Germany of the provision of judicial Säger with a reservation to lawyers and debt-collection services by anyone who is authorized patent agents contained in the not a lawyer can be justified 'by an impera­ 25 same article of the RBerG of the provision tive reason of public interest'. on a professional basis of certain routine patent monitoring services. It seems to me that the restrictions at issue in the present case come within the terms of the prohibi­ tion contained in Article 59. However, as these restrictions apply equally both to Ger­ man and foreign debt-collection undertak­ ings, it is necessary to examine whether they can nevertheless be justified. (a) Observations submitted to the Court

provision of services on its territory by an 23. The Commission submits that, as in undertaking established in another Member German law the application for an attach­ State to all of the conditions required of ment order does not, by reason of Article 79 undertakings established in that State. It sub­ of ZPO , require the use of the services of a mits that neither imperative requirements lawyer, and that, as creditors can therefore concerned with the protection of consumers make such applications either personally or nor the proper functioning of the judicial through the intermediary of non-professional system justify the restrictions contained in advisers whom they have mandated, calling Article 1(1) of the RBerG. It contends that in aid, if necessary, the services of the regis­ such objectives could equally be pursued by try of the court, there can be no justification less restrictive means. As regards the inter­ for prohibiting experienced debt-collecting ests of the creditor, Broede contends that, undertakings from acting on behalf of credi­ rather than requiring a foreign service- tors. Moreover, the Commission contends provider to obtain a licence, the relevant that the interests of the proper administra­ German authorities should accept a certifi­ tion of the legal system do not justify the cate of integrity or solvency issued by the prohibition since, if such court officials are relevant authorities of the Member State obliged to deal with requests for assistance where that service-provider is established. from creditors who may be completely igno­ Secondly, it maintains that the proper func­ rant of the relevant law and legal procedures, tioning of the legal system in the host Mem­ they will more easily be in a position to deal ber State could be assured if the host with enquiries from professional debt- authorities were merely to require the for­ collecting undertakings. In its view, a general eign undertaking providing debt-collection prohibition such as that contained in the services to elect a domicile for the purposes RBerG is disproportionate to the objective of official legal correspondence. pursued.

monopoly of lawyers; the fact that lawyers Germany, the complexity of the procedures were subject to ethical requirements and involved in the judicial enforcement of debts, owed a duty to the courts which they served the variety of the available enforcement could not mean that the protection of the methods and their often widely differing consumer or of the legal system required the consequences for both creditors and debtors, outright exclusion of the provision of judi­ coupled with the need to ensure respect for cial debt-collection services by non-German the monopoly of the State concerning the debt-collecting undertakings. The Commis­ use of force, justify the restrictions. sion accepted that the discrimination against German debt-collecting undertakings which would result from the non-application of the RBerG prohibition to the occasional provi­ sion in Germany of such services by under­ takings authorized to provide them in another Member State, would, in the absence of harmonized Community rules, have to be accepted, but that it would not justify a refusal of freedom to provide services to for­ eign debt collectors.

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REISEBÜRO BROEDE v SANDKER

ZPO , i. e. that the representatives of liti­ Member State is free to regulate the exercise gants in legal proceedings should as often as of the legal profession in its territory'. The possible be lawyers. Court has also recognized 'the special nature 31 of the legal profession'. This flows essen­ tially from the fact that lawyers are subject to obligations not only to their clients but also to the administration of justice in the legal system where they are established and, (b) Analysis in the case of a transfrontier provision of ser­ vices, to the host legal system. This latter obligation is reflected in the 1977 Directive, which requires lawyers providing services temporally in another Member State to '...observe the rules of professional conduct of the host Member State, without prejudice 27. The Court has consistently held that to his obligations in the Member State from 'national measures liable to hinder or make which he comes'. 32 In this respect, the less attractive the exercise of fundamental Court, speaking in Säger of advisery legal freedoms guaranteed by the Treaty must ful­ services, stated that the public interest in the fil four conditions: they must be applied in a protection of the recipients of such services non-discriminatory manner; they must be 'against the harm which they could suffer as justified by imperative requirements in the a result of the legal advice given to them by general interest; they must be suitable for persons who did not possess the necessary securing the attainment of the objective professional or personal qualifications ... jus­ which they pursue; and they must not go tifies a restriction of the freedom to provide beyond what is necessary in order to attain services'. 33 28 it'.

non-discriminatory basis, to restrict the right public must be protected against unqualified to represent third parties, on a professional laymen who masquerade as lawyers, just as basis, before their courts to persons who are they must be protected against charlatans 36 both appropriately qualified and personally who pass themselves off as doctors'. When suitable. What is at issue in the present case, interests of such fundamental importance are therefore, is whether the monopoly in favour at stake, I am of the opinion that great cau­ of lawyers represents an appropriate means tion ought to be exercised before the propor­ of achieving the legitimate national policy of tionality of indistinctly applicable national protecting debtors and creditors involved in measures should be questioned on the basis debt-collection proceedings and the integrity of Article 59 of the Treaty. In the present case, unlike in Säger, it is not the provision of the national legal system itself and, in par­ of essentially routine, quasi-legal services of ticular, whether it could be achieved by other 37 'a straightforward nature' that is at issue. less restrictive means. Furthermore, in contrast to Säger, the ser­ vices in question may often be provided 'to 38 the ordinary, unlearned man-in-the-street', since it should not be assumed either that trade creditors will be conversant with the law or that all clients of debt-collecting undertakings will be persons whose debts arose in the course of trade.

essentially on the interests of creditors and the level of the jurisdiction involved. The the legal system. According to Broede, for uncontrolled supply of legal services by example, measures ensuring the protection of unqualified persons is another matter. The the financial interests of creditors in the dangers to the integrity of the administration event of the debt collector obtaining pay­ of justice are well-known. The potential vic­ ment from the debtor before paying the tims of such unsupervised persons are not creditor would suffice. I do not find this only their clients, but their opponents, the argument convincing. Such a measure would, courts and the public. The potential burden which the pursuit (or defence) of legal claims at most, protect creditors from financially by impecunious litigants places on the unscrupulous debt collectors. It would pro­ smooth operation of a legal system is a bur­ vide no protection from the potentially grave den which many, if not all, Member States effects, for both debtors and creditors, and arc prepared to accept, at least to some disruption for the legal system, of incompe­ 40 degree. Assuming, although it should be tence or lack of expertise on the part of such stated that there is no evidence in this regard collectors in the provision of judicial debt- before the Court, that France permits under­ collecting services. takings engaged in debt collection to bring, for example, applications before the appro­ priate French courts for attachment orders without the assistance of a lawyer, I do not think that Article 59 of the Treaty requires the German legal system to bear the burden of facilitating the exercise by French-based debt-collecting undertakings of professional legal services before German courts. It is one thing for a national legal system, such as that of Germany, to make available on an

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intermittent basis the services (and time) of liability — which are binding upon any per­ its court officials to private litigants but, in son established in the State in which the ser­ my view, altogether another to require them vice is provided, where the person providing to supervise the activities of professional the service would escape from the ambit of debt-collecting undertakings so as to ensure those rules being established in another not only that such undertakings are not pro­ Member State.' viding a defective service to their clients, but also to prevent them, having regard to the implications which attachment orders obtained under false pretences may have, especially for debtors, from misleading courts before which applications for judicial enforcement are brought. As the activities of advisers like Mr Kort­ mann were unrestricted in the Netherlands, the Court considered that 'the requirement of residence within that State constitute[d] a restriction ... which is incompatible with Articles 59 and 60 of the Treaty if the admin­ istration of justice can satisfactorily be ensured by measures which are less restric­ 33. I am satisfied that this conclusion is sup­ tive, such as the choosing of an address for ported by the relevant case-law of the Court. service'. In Van Binsbergen, which concerned the professional provision of legal services by a non-lawyer (Mr Kortmann) before Dutch social security courts, the representation by an 'advocaat' (lawyer) was not obligatory. The circumstances of that case are, thus, fun­ damentally different from the present case, where only lawyers may professionally rep­ resent clients in Germany. In Van Binsber- gen, it is significant, in my view, that the 34. In this case the RBerG, as interpreted by Court stated that: the German courts, does not require the resi­ dence in Germany of undertakings providing debt-collecting services, but merely that they engage the services of a lawyer when under­ taking judicial debt-collection work on 41 behalf of their clients. Such lawyers, as Germany expressly accepted at the hearing,

do not have to be German lawyers. An professional regulation. It is the applica­ undertaking such as INC could thus, for tion of these professional obligations to the example, retain a French lawyer to travel to lawyers that provides the necessary guaran­ Germany to make the relevant application tee of integrity and expertise to the ultimate on its behalf. In this respect I think it is consumers of legal services (here, the credi­ appropriate to recall that in Commission v tors), to debtors and to the legal system. The 41 Germany the Court, inter alia, declared RBerG prohibition is, thus, both apt and that by requiring a non-German lawyer who necessary to ensure the protection of those was providing services in Germany to act in interests. conjunction with a lawyer established on German territory, even where under German law there was no requirement of representa­ tion by a lawyer, Germany had failed in its obligations under Articles 59 and 60 of the Treaty and the 1977 Directive. Thus, the 36. I do not think that the appropriateness Commission is mistaken when it states that of the German legislation is undermined the effect of the RBerG requirement is to simply because another Member State — in partition off the German market for the the present case, France — does not make monopolistic benefit of lawyers. Lawyers the same legislative choice. As the Court from other Member States can be retained by stated, in the context of national legislation national or non-national debt-collecting designed to protect the good reputation of a undertakings whenever they deem it neces­ national financial sector, in Alpine Invest- sary to invoke the judicial process in Ger­ ments, 'the fact that one Member State many on behalf of their client creditors. imposes less strict rules than another Mem­ Non-German debt-collecting undertakings ber State does not mean that the latter's rules arc not therefore prevented from providing a are disproportionate and hence incompatible comprehensive debt-collection service to cli­ 44 with Community law'. ents whose debtors are resident in Germany.

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