C-62/96

1. By application pursuant to Article 169 of Procedure the Treaty lodged on 6 March 1996 the Commission calls on the Court to rule that the Hellenic Republic has failed to fulfil its obligations under Articles 6, 48, 52, 58 and 221 of the Treaty and under Article 7 of Regulation (EEC) N o 1251/70 of the Com- mission of 29 June 1970 on the right of workers to remain in the territory of a Mem- ber State after having been employed in that State, ' and Article 7 of Council Directive 75/34/EEC of 17 December 1974 concerning the right of nationals of a Member State to remain in the territory of another Member State after having pursued therein an activity in a self-employed capacity. 2 2. The Commission sent three letters before action to the Hellenic Republic pursuant to Article 169 of the Treaty. In particular, in the first letter, dated 13 June 1990, the Commis- sion claimed that the Greek Government was in breach of Articles 7 (now 6), 52 and 221 of the Treaty by reason of the conditions for granting Greek nationality to fishing ves- sels laid down in Article 5 of the Code o n Maritime Law. In the same letter the com- patibility with Community law of Article 11 In particular, the Commission complains that of Royal Decree N o 666/66 was called into the Hellenic Republic has maintained in question (for breach of Articles 7 and 52 of force legislation (Article 5 of the Code on the Treaty) as it made the grant of a profes- Maritime Law) which restricts the right to sional licence for sponge fishing subject to a registration in the Greek shipping registers vessel owner's having spent ten years as a to vessels at least half the shares in which are member of the crew of a fishing vessel owned by Greek nationals or which are authorized to practise sponge fishing under owned by Greek legal persons at least half of that Decree. Finally, in the same letter, the whose capital is held by Greek nationals. Commission questioned the lawfulness of national legislation stipulating that a certain percentage of the crew of fishing vessels should be composed of Greek nationals * Original language: Italian. because of its incompatibility •with the prin- 1 — OJ, English Special Edition 1970 (II), p. 402. 2 — OJ 1975 L M, p. 10. ciple of freedom of movement for workers.

5. The provision whose compatibility with The complaints made in the reasoned opin­ Community law the Commission disputes is ion, like those in the letters before action, contained in Article 5 of the Greek Code on concerned the conditions for the registration Maritime Law. 5 Under that article Greek of vessels of all types in the Greek shipping nationality is granted to vessels at least half register, the restrictions on the employment the shares in which are owned by Greek on Greek fishing vessels of crew members w h o are nationals of other Member States and the requirements for the grant of 4 — It is within the Commission's power to limit the scope of the licences for sponge fishing. dispute by comparison with the pre-Iitiąation procedure without prejudicing the right to a fair hearing of the defen­ dant State (on the partial discontinuance of a complaint dur­ ing the course of the procedure, sec judgment in Case 252/85 Commission v France [1988] ECR 2243, paragraphs 21 and 3 — The Commission sutes, without being contradicted, that the 22). Hellenic Republic did not reply to the third letter before 5 — Decree Law N o 187, published in the Officiai Journal of the action. Hellenic Republic N o 261 of 8 October 1973.

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In particular, in the Factortame judg- 8 — In particular, Article 14 of the Merchant Shipping Act 1988. ment, 7 the Court ruled that national 9 — Judgment in Case C-246/89 Commission v United Kingdom [1991] ECR 1-4585. 10 — Article 217 of the Customs Code. 11 — Judgment in Case C-334/94 Commission v France [1996] ECR 1-1307, which, as far as the composition of the crew 6 — The anide lays down certain formalities, to which the Com- of vessels flying the French flag is concerned, finds that the mission raises no objection, in cases where the contract French Republic has also faued to fulfil its obligations transferring ownership of the vessel was concluded abroad under Article 171 of the Treaty in that it did not comply and where the vessels are intended for passenger transport. with the previous judgment in Case 167/73 Commission v 7 — Judgment in Case C-221/89 [1991] ECR 1-3905. France [1974] ECR 359.

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O P I N I O N OF MR TESAURO — CASE C-62/96

movement' so that 'the registration by such a Arguments advanced by the Hellenic national [from another Member State] of a Republic in its defence leisure craft in the host Member State falls within the scope of the Community provi- sions relating to freedom of movement'. 1 2

(a) Compliance with international Uw in granting nationality to vessels

7. More recently still, Irish legislation restricting the right to register pleasure craft and merchant vessels to vessels wholly or 9. The Greek Government argues that there partly owned by the government, a Minister is no Community legislation governing rules of State, an Irish national or an Irish legal for granting nationality to vessels and that, person 13 was held to be in breach of Articles therefore, as the Court of Justice itself recog- 6, 48, 52 and 58 of the Treaty, Article 7 of nized in the Factortame judgment, it is Regulation N o 1251/70 and Article 7 of within the power of each Member State to Directive 75/34/EEC. lay down conditions, in accordance with the relevant rules of international law, for the registration of vessels in the national ship- ping registers enabling them to fly the flag of the State concerned. , 4

between the State and a vessel which flies its 11. As already observed in the decided cases flag.15 The Greek Government also refers to of the Court, the existence of an interna­ the United Nations Convention on condi­ tional rule requiring a specific form of link tions for registration of ships of 7 Febru­ between a ship and the State whose flag it ary 1986 1 6 (hereinafter the '1986 Conven­ flies must be ruled out at the current stage of tion'), whose objectives include 'ensuring or, development of international law. Therefore, as the case may be, strengthening the genuine there is no requirement in international law link between a State and ships flying its that ships must be wholly or partly owned flag'.17 In particular, the defendant State by nationals of the State of registration. argues that Articles 7 to 10 of the Conven­ tion are of relevance as they stipulate that a 'genuine link' exists where ships are the property of nationals of the State whose flag they fly, or where their crew includes a suf­ ficient quota of such nationals or persons domiciled in that State.

15 — Under Article 5 of the Geneva Convention 'each Sute shall 19 — As early as in the case of Dobws of Mascate (U. N . Reports fiz the conditions for the grant of its nationality to ships, of international arbitral awards, XI, p. 92 et seq.) it was for the registration of ships in its territory, and for the right clearly suted that it fell to each Sute to decide to whom it to fly its flag.... There must exist a genuine link between the should grant the right to fly its own flag. As it came after Sute and the ship; in particular, the Sute must effectively Article 5 of the Geneva Convention, the opinion of the exercise its jurisdiction and control in administrative, tech­ International Court of Justice on the membership of the nical and social matters over ships flying its flag'. Article 91 Committee on Mariūme Safety of IMCO {Opinion of 8 of the Montego Bay Convention provides that 'every Sute June I960, ICJ Reports, I960, p. 150 et seq.) is significant. It shall fix the conditions for the grant of its nationality to suted that, in the light of international practice, ships must ships, for the registration of ships in its territory, ana for be considered to belong to the Sute Ín which they are reg- the right to fly its flag. Ships have the nationality of the istered and that it is not possible to choose the nationality Sute whose flag they are entitled to fly. There must exist a of a merchant fleet on the basis of other criteria. According to legal writings (see S. M. Carbone, La disciplina giuridica ;enuine link between the Sute and the ship'. Note that the f atter Convention, pursuant to Article 311 thereof, takes precedence, as between Contracting Sutes, over the Geneva del traffico marittimo internationale, Bologna, 1982, p. 77 ex seq.), international practice as enshrined in treaties of friendship, commercial or navigation treaties follows the Convention. same trend, with the result that many Sutes have under- 16 — See International Transport Treaties, Supplement 12 (May taken to consider ships flying the flag of Sutes known to be 1988), page 1-387 ff. willing to grant flags of convenience to belong to those 17 — Sec Article 1 of the 1986 Convention. Sutes.

13. As to the international conventions cited which, on the one hand, repeats the wording by the Hellenic Republic on this subject, it used in the Geneva Convention without should be pointed out that Article 5 of the shedding any further light on the concept of Geneva Convention cannot be interpreted as 'genuine link' (Article 91) and, on the other, a rule requiring a genuine link between a appears to rule out the possibility that States State and a ship to be in a particular form as might refuse to recognize the nationality a necessary precondition for the grant of granted to a ship in the absence of a 'genuine

ity. If anything, then, far from being a con- dition for the grant of nationality, the 'genu- ine link' amounts primarily to a duty of supervision resulting from the grant of 14. That interpretation of the international nationality. It is consistent with this interpre- rules on the nationality of ships has already tation of a 'genuine link' to require that the been adopted by the Court in the Poulsen place where the vessel is managed, directed and Diva Navigation judgment, in which the and controlled should be in the territory of provisions of the convention which have just the flag State. 21 been discussed were interpreted as the

tional Law Commission of the United Nations. On the dif- ferent wording of the draft compared with the definitive confirmed in the judgment in Commission v version, see H. W. Wefers Bettink, Open Registry, the Genuine Link and the 1986 Convention on Registration IreUnd, which followed soon afterwards and Conditions for Ships, in NYIL, 1987, p. 80 et seq.; in which the Court stated that 'under inter- S. M. Carbone, op. cit., p. 76. 21 — See the Factortame judgment cited in footnote 7, para- national law a vessel has the nationality of graphs 34 to 36, and the Opinion of Advocate General Mis- cho in the same case delivered on 13 March 1991 ([1991] ECR 1-3932, at points 56 to 58).

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the State in which it is registered and ... it is States the widest discretion in deciding the for that State to determine in the exercise of level of participation of nationals of the flag its sovereign powers the conditions for the State in the ownership of ships, •whilst grant of such nationality', thereby ruling out reserving the right of the State of registration any possible justification for the Irish regula- to choose the other connecting factor, tions on the basis of public international namely the nationality (or residence) of the law. 2* crew. Moreover, the nationality requirements laid down by Articles 8 and 9 only apply to ships intended for the transport of goods or passengers or both, whereas it appears from Article 2 that it was not deemed necessary to define the concept of 'genuine link' between 15. The Court has not hitherto dealt with State and ship in the case of fishing vessels. 2? the possible significance of the 1986 Conven- tion to which the Greek Government makes extensive reference in its defence. Only Advocate General Mischo, in his Opinion in the Factortame case, noted that Articles 7 to 9 of the Convention confer on States party thereto the right to choose between the cri- 16. Overall, in the light of the above obser- terion of nationality of the owner and the vations, I believe the possibility must be criterion of nationality or place of residence ruled out that possession of the nationality of the crew. Those articles, together with of the flag State by the owners (of all or part) Article 5 of the Geneva Convention and of a vessel is the link imposed on the State Article 91 of the Montego Bay Convention, by international law for the grant of that led him to conclude that 'whilst ... the crite- State's flag to the vessel. rion of the owner's nationality is consistent with a fairly widespread international prac- tice, it cannot, however, be regarded as form- ing part of customary international law'. 25

tion of a ship, the power of the Member which involves a fixed establishment in the States to determine the criteria for the grant Member State concerned, the registration of of their flag must be exercised in compliance that vessel cannot be dissociated from the with Community law and, in particular, the exercise of freedom of establishment. That principles of non-discrimination and free- freedom includes, in the case of nationals of dom of movement for persons. another Member State, the right to take up and pursue activities as self-employed per- sons under the conditions laid down for its own nationals by the law of the country where such establishment is effected.30 It follows that national legislation which, for the purposes of ownership of ships, requires natural or legal persons to be of a particular That principle was laid down in the Factor- nationality, is contrary to Articles 6 and 52 tame judgment. 28 Moreover, if the limita- of the Treaty. With reference to legal per- tions imposed by Community law apply to sons, in particular, the Greek legislation is the grant of nationality to natural persons, 29 contrary to Articles 58 and 221 of the Treaty they must also apply to the grant of nation- because it requires the legal person owning ality to ships. the ship to be constituted under Greek legis- lation, and because, by requiring that the capital of the legal person owning the ship be controlled by Greek nationals, it restricts participation by nationals of other Member States in the capital of such companies. 31

18. The Hellenic Republic argues that the conditions for the registration of fishing and merchant ships do not constitute a breach of the principle of equal treatment nor a restric- tion of the freedoms guaranteed by the Treaty to nationals of other Member States. 19. The Greek Republic justifies its own leg- islation on the registration of ships by refer- ence to the existence of a Community sys- tem for fisheries deriving from Council Regulation (EEC) N o 3760/92 of 20 Decem- ber 1992. 32 In particular, it argues that the

nationality requirement laid down in Article 20. N o r can the Greek legislation be justi- 5 of the Code on Maritime Law serves to fied on the basis of the system of maritime ensure compliance with the system of cabotage introduced by Council Regulation national catch quotas which, under Article 6 (EEC) N o 3577/92 of 7 December 1992. 35 of Regulation N o 3760/92, is to be retained The fact that, under Article 6(3) of that regu- until 31 December 2002. lation, Greece enjoys a temporary exemption from the system of freedom to provide mari- time transport services until 1 January 2004 cannot justify legislation affecting the condi- tions for the registration of ships. As the exemption which the Hellenic Republic enjoys under the regulation constitutes a derogation from the principle of freedom to provide transport services, it must be inter- preted narrowly and thus allowed only where necessary to fulfil the socio-economic purpose for which it was intended. Accord- ingly, the legislation in question cannot jus- tify restrictive rules which have no direct Apart from the fact that this argument could bearing on access to maritime transport ser- only apply in the case of fishing vessels, it vices. has already been considered and rejected in the Jaderow and Agegate judgments. 33 The Greek legislation at issue in these proceed- ings, like the United Kingdom legislation in the above cases, is concerned not with access to fishing activities but with the registration of ships and thus operates ultimately as an obstacle to fishing as such, and not just as a set of rules for managing the national quota. In the light of the above case-law, Member States may determine which vessels in their fishing fleet are authorized to include their catches in the national quotas, but the con- dition for such authorization is that there 21. Next, the Hellenic Republic seeks to jus- must be a link between the activities of the tify the legislation in issue by reference to vessel and the coastal population which is the requirements of its military defence orga- particularly dependent on fishing and related nization, 'which it considers to be particu- industries. On the other hand, any require- larly relevant in the light of the specific his- ment of an economic link which exceeds torical and geo-political background of this those limits cannot be justified by the system region of the Mediterranean. In particular, of national quotas. 34 the nationality of owners of vessels, it is argued, is a link which allows the Greek

authorities to requisition ships, if necessary, lives in a State to pursue an employed or and make the ship and its crew subject to the self-employed activity, or after having pur- decisions of the military authorities. sued such an activity there, is a corollary to freedom of movement and, in laying down rules governing such access, a State must respect the principle of equal treatment. 36 For that reason, the Greek legislation in issue, which reserves to Greek nationals alone the right to register a leisure craft in In this connection, suffice it to note that the Greece, is incompatible with Articles 6, 48 Greek authorities could decide for military and 52 of the Treaty and with Article 7 of purposes to requisition ships flying the Regulation N o 1251/70 and Article 7 of Greek flag whatever the nationality of the Directive 75/34. 37 owner of the vessel. In more general terms, if, by such arguments, the Hellenic Republic seeks, even implicidy, to refer to possible derogations from the freedoms guaranteed by the E C Treaty in the event of war or seri- ous international tension, it is sufficient to refer to Article 224 of the Treaty which, in Costs laying down rules governing this eventuality, does not allow Member States to adopt uni- lateral derogations from fundamental prin- ciples of Community law as general preven- tive measures where the exceptional circumstances described do not obtain and are not even alleged to prevail.

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Conclusion

In the light of the foregoing considerations, I propose that the Court should:

(1) declare that, by maintaining in force legislation which restricts the right to reg- ister in the Greek shipping register and to fly the Greek flag to vessels at least half the shares in which are owned by Greek nationals or which are owned by Greek legal persons at least half of whose capital is held by Greek nationals, the Hellenic Republic has failed to fulfil its obligations under Articles 6, 48, 52, 58 and 221 of the Treaty and under Article 7 of Regulation (EEC) N o 1251/70 of the Commission of 29 June 1970 and Article 7 of Council Directive 75/34/EEC of 17 December 1974.

(2) order the Hellenic Republic to pay the costs.