C-62/98

OPINION OF MR MISCHO — JOINED CASES C-62/98 AND C-84/98

O P I N I O N OF ADVOCATE GENERAL MISCHO delivered o n 20 October 1999 *

1. Although Cases C-62/98 and C-84/98 concluded with the People's Republic of have not in fact been joined for the Angola ('Angola') so as to provide for fair, purposes of the written procedure and the free and non-discriminatory access by hearing, they raise sufficient common Community nationals to cargo shares due points to warrant a single Opinion. to Portugal, pursuant to Regulation No 4055/86, the Portuguese Republic has failed to fulfil its obligations under Arti- cle 3 and Article 4(1) thereof and under the EC Treaty.

2. The Commission has brought two actions for failure to fulfil obligations against the Portuguese Republic, both con- cerning the implementation of Articles 3 4. In Case C-84/98, the Court is asked to and 4 of Council Regulation (EEC) declare that the Portuguese Republic has No 4055/86 of 22 December 1986 apply- failed to fulfil the same obligations by ing the principle of freedom to provide neither denouncing nor adjusting the agree- services to maritime transport between ment concluded with the Federal Republic Member States and between Member of Yugoslavia ('Yugoslavia') so as to pro- States and third countries, 1 in'which the vide for fair, free and non-discriminatory legal arguments relied on by the Portuguese access by Community nationals to cargo Republic to deny any actual failure to fulfil shares due to Portugal, pursuant to Reg- its obligations are identical. ulation No 4055/86.

5. Article 1 of that regulation states: 3. In Case C-62/98 the Commission with- drew part of its complaint in the light of further evidence produced by the defendant in the course of the proceedings and is asking the Court to declare that by neither denouncing nor adjusting the agreement 'Freedom to provide maritime transport services between Member States and * Original language: French. between Member States and third countries 1 — OJ 1986 L 378, p. 1. shall apply in respect of nationals of

' 1 . Existing cargo-sharing arrangements not phased out in accordance with Article 3 shall be adjusted in accordance with Com- munity legislation and in particular: 4. When difficulties arise in the process of adjusting agreements to bring them into conformity with paragraph 1(b), the Mem- ber State concerned shall inform the Coun- (a) where trades governed by the United cil and the Commission. In cases where Nations Code of Conduct for Liner agreements are incompatible with para- Conferences are concerned, they shall graph 1(b) and where the Member State comply with this Code and with the concerned so asks, the Council shall, acting obligations of Member States under on a proposal from the Commission, take Regulation (EEC) No 954/79; appropriate action.'

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6. In both cases, the agreement containing prove an important factor in the discussion. inter alia the disputed provisions for cargo- It is therefore necessary first to give a brief sharing was concluded both before 1 Jan- chronological summary based on informa- uary 1987, when Regulation No 4055/86 tion provided by the parties in their written came into effect, and before the Portuguese submissions. Republic joined the European Community.

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13. In reply to those formal notices, the Points of agreement Portuguese authorities pointed out that, inasmuch as they might discriminate against the shipping companies of other Member States, the cargo-sharing clauses were no longer being implemented and the process of amending the agreement had begun, although it was not yet complete. 17. Against that background, I shall now consider the arguments put forward. Although they differ radically on some points, in other respects their views are similar, if not identical. Both the Commis- sion and the Portuguese Republic agree that the aforementioned agreements provide for 14. Not satisfied with those replies, the cargo-sharing which is contrary to the rules Commission issued reasoned opinions, one laid down by Regulation No 44055/86 and in 1995 concerning the agreement with that, in any event, the period during which, Yugoslavia and one in 1997 concerning the notwithstanding the entry into force of the agreements with four African countries, Regulation on 1 January 1987, it was still including Angola. possible to implement those provisions without infringing the regulation expired on 31 December 1993.

15. In response to those reasoned opinions the Portuguese authorities reported to the Commission on the progress of the nego- tiations undertaken with a view to adjust- ing the contested agreements, arguing inter 18. They also agree that the Portuguese alia that, with regard to the agreement with Republic is under an obligation to take Yugoslavia, the break-up of that State steps to ensure that the clauses concerned created special problems since the Portu- cease to be in force. guese Republic had to renegotiate with five successor States. It gave an assurance that the Commission would be kept informed of any progress made or results achieved.

20. The Commission takes the view that Regulation No 4055/86 places the Portu- 23. The Commission takes the view that guese Republic under an obligation to the Portuguese Republic really had no achieve a result. The latter cannot therefore justification for refusing to resort to that deny that it has failed to fulfil its obliga- means of fulfilling its Community obliga- tions by arguing that it is sparing no effort tions since the agreements with Angola and to persuade the non-member countries Yugoslavia both contained denunciation concerned to amend those provisions which clauses and there is no obvious legal reason are incompatible with the requirements of why they could not be implemented. Fur- Regulation No 4055/86 and that the prac- thermore, the six-year period which the tical result which the regulation seeks to regulation grants Member States in order to attain has already been achieved, since the take action to release themselves from cargo-sharing clauses are no longer being cargo-sharing provisions contrary to Com- implemented. munity law was long enough for them to reach a negotiated adjustment of the bilat- eral agreements by diplomacy.

26. The Commission also points out that 29. The effect of the first paragraph of the Portuguese Republic did not see fit to Article 234 of the Treaty is to make an avail itself of the possibilities afforded by exception to the primacy of Community Article 4(4) of Regulation No 4055/86, law, an exception which is in no way specifically for cases where a Member State intended to be permanent and which, like encounters difficulties in making adjust- any exception to that primacy, must be ments to agreements with third countries. viewed restrictively. Hence, according to the Commission, the first sentence of the second paragraph of that article obliges Member States to take all appropriate steps to remove incompatibilities found between earlier treaties and Community law.

32. With regard to the interpretation of 'all 31. As evidence of that stringency, it cites appropriate steps to eliminate the incom- the T. Port 3case, in which the Court held patibilities established' within the meaning that: of the second paragraph of Article 234 of the Treaty, the Commission considers that unilateral denunciation is unquestionably one of those steps.

'According to settled case-law (see in particular Case C-124/95 The Queen v HM Treasury and Bank of England ex parte Centro-Com [1997] ECR I-81, para- 33. In the Commission's view, that does not graphs 56 and 57), the purpose of that mean favouring denunciation. Quite the provision is to make clear, in accordance contrary: it is purely a measure of last with the principles of international law, resort and the Commission does not dis- that application of the Treaty does not pute that it may have negative conse- affect the commitment of the Member State quences, for example where the incompat- concerned to respect the rights of third ibility of the agreement with Community countries under an earlier agreement and to law arises from a single clause amongst comply with its corresponding obligations. many which, were they to remain in force, Consequently, in order to determine whe- would not cause any problem. ther a Community rule may be deprived of effect by an earlier international agreement, it is necessary to examine whether that agreement imposes on the Member State concerned obligations whose performance may still be required by third countries which are parties to it. 34. Negotiation, whose chances of success can only be increased by mutual assistance between Member States and the adoption 2 —Case 10/61 [1962] ECR 1. of a common attitude required by the 3 —Joined Cases C-364/95 and C-365/95 [1998] ECR I-1023, paragraphs 60 and 61. second paragraph of Article 234 of the

37. Finally the Commission points out that the difficulties faced by Member States as a result of the introduction of the principle of freedom to provide services in maritime transport to or from non-member countries 35. However, the Commission, relying on should not be overestimated. the Opinion of Advocate General Lenz in Asjes and Others 4and that of Advocate General La Pergola in Commission v Bel- gium and Luxembourg, 5 considers that to exclude denunciation from the appropriate steps would be to fail to take account of the 38. There is no question of asking them to scope of the obligations which Article 234 abolish cargo-sharing; they merely have to of the Treaty places on Member States. persuade the non-member country to agree that the share attributed to its shipping industry must be open to carriers of other Member States, so that the only right which the non-member country must agree to waive, and which would appear to be quite incidental, is the right to accept in its ports only vessels flying the flag of a particular Member State. 36. From that interpretation of Article 234 of the Treaty, the Commission concludes that, far from imposing on Member States obligations which have no basis in the Treaty, Regulation No 4055/86, Articles 3 and 4 of which impose an obligation to adjust or remove any cargo-sharing clauses which are incompatible with Article 1, The position of the Portuguese Republic within a mandatory time-limit, merely reinforced, in a particular context, the existing obligation to take appropriate steps to remove any obstacles which Mem- ber States might encounter in order to give 39. The Portuguese Republic's defence effect to the primacy of Community law. against that line of argument comprises Moreover, the essential feature of Regula- three objections: the first seems to be essentially procedural, being based on the assertion that, because the Commission's 4 —Joined Cases 209/84 to 213/84 [1986] ECR 1425. charge relies on Regulation No 4055/86 5 —Joined Cases C-176/97 and C-177/97 [1998] ECR I-3557. and Articles 189 of the EC Treaty (now

Article 249 EC) and Article 5 of the EC words, there is no absolute, unconditional Treaty (now Article 10 EC), without refer- obligation. There is only an obligation to ring to Article 234 of the Treaty, it is use best endeavours. Of course, it remains without legal foundation; the second is to be determined whether denunciation based on the interpretation which the falls within that category. Portuguese Government believes should be placed on Article 234 of the Treaty as to the exact scope of the obligations it imposes on Member States; and the third focuses on the practical aspects of each case covered by this Opinion, that is to say the manner in which the Portuguese Republic has dealt with the issue of its maritime transport relationships with both Angola 41. The Portuguese Republic considers that and Yugoslavia. since the obligation is merely to use best endeavours and not to achieve a particular result, it cannot be contended that a Member State should be obliged to resort to that brusque course of action. In support of that view, it relies first on the actual wording of the second sentence of the second paragraph of Article 234, explain- ing that there would be little point in having made provision for mutual assis- tance between Member States if problems of incompatibility could be resolved by the State concerned taking unilateral action. Second, it relies on the case-law of the 40. In the first paragraph of Article 234 of Court, as expressed in Centro-Com, cited the Treaty the Portuguese Republic per- above. ceives primarily the principle whereby, after joining the European Community, Member States must honour earlier agreements concluded with non-member Countries. That assertion calls for an interpretation of paragraph 2 of that article to the effect that elimination of incompatibilities between an earlier agreement concluded with a non-member country and Commu- 42. The Portuguese Republic has difficulty nity regulations must take the form which, in reconciling the compulsory nature of the whilst guaranteeing the full effect of Com- denunciation of an agreement which cre- munity law, least affects the law of the non- ates obligations for a Member State that member countries. Thus, there can be no are incompatible with Community law and question of interpreting the second para- with the Court's statement in paragraph 61 graph as imposing an obligation on Mem- of that judgment that a Member State may ber States to achieve a specified result, take steps contrary to Community law if thereby requiring them to remove the those steps 'are necessary to ensure that the incompatibility regardless of the legal con- Member State concerned fulfils its obliga- sequences and the political cost. In other tions towards the third country arising

— it is impossible to safeguard the Com- 47. That factual situation and the readiness munity interests by means of political of non-member countries to renegotiate or other processes. preclude the view that denunciation has become necessary. It is therefore possible both to agree with the view expressed by Advocate General Lenz in his Opinion, cited above, and to deny, in the two cases raised by the Commission, that there is an 44. According to the Portuguese Republic, obligation to denounce with which the if that interpretation is applied to the Portuguese Republic has refused to comply. practical aspects of both cases, it necessa- rily follows that it cannot be accused of failing to fulfil its obligations. The Portu- guese authorities have spared no efforts to remove from the agreements concerned those provisions which are incompatible with Regulation No 4055/86 and they 48. Comparisons cannot be drawn with the cannot be blamed for the fact that it has situation on which the Court ruled in not yet been possible to complete the Joined Cases C-176/97 and C-177/97 adjustment process. because the incompatible agreement at

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issue in those cases was concluded after eral agreements concluded by Member Regulation No 4055/86 entered into force States with third countries shall be phased and was therefore not covered by the out or adjusted in accordance with the principles and rules laid down in Arti- provisions of Article 4'. cle 234 of the Treaty, which refer to earlier agreements.

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be appraised by reference to that provision States could, without recourse to any other of primary law. procedure, release themselves from the obligation to fulfil earlier commitments to non-member countries. In my view it is therefore wrong to construe the paragraph concerned as having introduced an excep- tion to the principle of the primacy of Community law which, as a principle 55. That, in fact, is what the Portuguese peculiar to Community law, was in any Republic has done. Without calling in event irrelevant to the requirements arising question the compatibility of the regulation from a principle of general public interna- with Article 234 of the Treaty (which tional law. would have been the more logical position to adopt), it disputes the obligation to achieve a result contained in the regulation and counters by invoking Article 234 of the Treaty which, in its view, does not contain any such obligation.

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59. In my view, the very idea that the of international law as expressed in the Member States could have given an under- 1969 Vienna Convention on the Law of taking to one another to resort to denun- Treaties. ciation, thereby incurring liability under international law, is just as indefensible as the contention that, by laying down the rule contained in the second paragraph of Article 234, Member States reserved the right to decide for themselves, alone, with- 62. In that regard I must point out that I out any supervision and on a case-by-case cannot accept the Commission's assertion basis, whether or not a step is appropriate, that it follows from case-law that Member since the structure of the Community is not States cannot invoke external difficulties as based on commitments which the parties an excuse for not observing Community may choose whether or not to fulfil. law. On the contrary, in my view a Member State which finds it impossible under public international law to release itself from a previous commitment made to a non-mem- ber country cannot be accused of a failure to fulfil its obligations if it has allowed those commitments to take precedence over its obligations under Community law.

defence for not complying with an obliga- to provide services, provided of course that tion imposed on it by Community law, it is the non-member countries concerned have also essential that the international agree- no objection to carriers from other Member ment it invokes to that end genuinely States unloading or loading in their ports creates obligations whose fulfilment the cargoes which, under the terms of the non-member country is entitled to demand. agreements, were to be reserved for Portu- If that is not the case, and particularly guese shipping companies. where rights are conferred on the Member State by the agreement, that Member State must, in accordance with the interpretation of Article 234 of the Treaty adopted in the case-law, bow to the primacy of Commu- nity law and simply waive the rights it derives from the agreement, thereby 67. The issue here therefore comes down to enabling it simultaneously to avoid incur- whether a Member State which cannot rely ring any liability under international law on Article 234 of the Treaty to dispute its and to fulfil its Community obligations. fundamental obligation, and which, more- Paragraphs 60 and 61 of the T. Port over, does not dispute it since it complies judgment relied on by the Commission in with it de facto, is none the less obliged to support of its argument are unequivocal on denounce an agreement made with a third this point. country if it fails to secure adjustment of it by negotiation.

69. In my view, denunciation should be regarded as a last resort to be used after a reasonable period has elapsed and a less severe procedure has proved unsuccessful in achieving the result required by Com- munity law. 73. The civil war in Angola cannot be invoked as a justification. The fact that the Portuguese Republic was finally able to secure an agreement in principle from Angola at the beginning of 1998 implies that, if it had taken action in 1987 or after the Commission wrote to it on 3 December 1992 drawing its attention to the problem for the first time, even the agreement with 70. What is the tangible result of applying Angola could have been adjusted in time. that principle to the present case? First, I would point out that the agreements with Angola and Yugoslavia each contain an explicit denunciation clause.

76. As for the argument based on the break-up of that State, it must be pointed out that the Republics of Croatia and Slovenia were recognised by all Member 79. Finally, I must point out, as the Com- States of the European Union on 15 Janu- mission has done, that the Portuguese ary 1992 7 and the Republic of Bosnia- Republic could have relied on Article 4(4) Herzegovina on 7 April 1992. 8 It was not of Regulation No 4055/86 which states: considered necessary to recognise the Fed- eral Republic of Yugoslavia. The former Yugoslav Republic of Macedonia was recognised by the Member States, apart from the Hellenic Republic, in 1993.

'When difficulties arise in the process of adjusting agreements to bring them into conformity with paragraph 1(b), the Mem- ber State concerned shall inform the Coun- cil and the Commission. In cases where agreements are incompatible with para- 77. With regard to most of those States, graph 1(b) and where the Member State greater diligence would probably have concerned so asks, the Council shall, acting enabled a successful outcome to have been on a proposal from the Commission, take achieved well before the final date set by appropriate action'. However, the Portu- the reasoned opinion, that is to say 5 Feb- guese Republic did not avail itself of that ruary 1996. However, diplomatic commu- opportunity. nications proposing adjustment of the agreement which the five republics created from the Federal Socialist Republic of Yugoslavia had inherited were not sent until 23 June 1997.

7 — EC Bulletin 1/2 — 1992, p. 115. 80. It remains to be seen whether, as the 8 — EC Bulletin 4 — 1992, p. 86. Portuguese Republic maintains, denuncia-

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85. Nevertheless, in the case of unilateral legislation allegedly infringed details denunciation, none of those measures regarding the means to be used which are would guarantee that the contracting third not contained in it? country would allocate cargoes due to Portugal to a shipping company of another Member State.

89. The result prescribed by Article 3, that is to say removal of the disputed clauses, may be achieved either by renegotiating the 86. Apart from the fact that it does not agreements or by denouncing them. meet the requirements of Articles 3 and 4 of the regulation, that solution would have the disadvantage of not offering economic operators the legal certainty to which they are entitled.

in Case C-62/98:

— declare that, by neither terminating nor adjusting the agreement made with Angola so as to provide for fair, free and non-discriminatory access by all Community nationals to the cargo shares due to the Portuguese Republic, in accordance with Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries, the Portuguese Republic has failed to fulfil its obligations under Article 3 and Article 4(1) of that regulation and under the EC Treaty;

— order the Portuguese Republic to pay the costs;

in Case C-84/98:

— declare that, by neither terminating nor amending the agreements concluded by it with the Republic of Bosnia-Herzegovina, the Republic of Croatia, the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia so as to provide for fair, free and non-discriminatory access by all Community nationals to the cargo shares due to the Portuguese Republic, I - 5192

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