C-423/98

ALBORE

OPINION OF ADVOCATE GENERAL COSMAS delivered on 23 March 2000 *

Table of contents

I — Introduction I-5967 II — Facts and procedure I - 5968 III — Relevant national legislation I - 5968 IV — Admissibility of the question referred for a preliminary ruling I - 5969 V — Choice of legal basis I - 5970 A — The parties' arguments I - 5970 B — My views on the matter I - 5971 (a) The special nature of national measures relating to the armed forces and national defence I - 5971 (b)The legal basis offered by Article 224 of the EC Treaty I-5973 (c) Other legal bases I - 5978 VI — Compatibility of the contested national legislation with Community law I-5982 A — The criteria governing judicial review I - 5982 B — Application of those criteria to the present case I - 5986 (a) The logic of the contested national rules I - 5987 (i) Why does the special regime apply only to non-Italian nationals? . . . . I-5987 (ii) The designation of areas 'of military importance' I-5989 (b) Application of the relevant Italian legislation I - 5992 VII— Conclusion I - 5994

I — Introduction Appello di Napoli (Court of Appeal, Naples), the Court is asked to interpret certain provisions of primary Community law with a view to establishing whether national legislation under which the acqui- sition of rights in rem over immovable 1. By this reference for a preliminary ruling property situated in areas of Italian made under Article 177 of the EC Treaty national territory designated as being of (now Article 234 EC) by the Corte di military importance is subject, in the parti- cular case of foreign nationals, to prior authorisation is compatible with those * Original language: Greek. provisions.

III— Relevant national legislation 3. An action against that refusal was brought before the Tribunale di Napoli (Naples District Court) by Alfredo Albore, a notary in Forio and appellant in the main 6. Article 1 of Italian Law No 1095 of proceedings ('Mr Albore'), who submitted 3 June 1935 concerning the transfer of that the requirement for prior authorisation immovable property situated in the pro- could not be applied to foreign nationals vinces adjoining land frontiers provided as who were citizens of other Member States follows: of the European Union since it was con- trary to fundamental provisions of the Community legal order. The court of first instance rejected that plea. 'All instruments transferring wholly or in 1 — GURI (Gazzetta Ufficiale della Repubblica Italiana) No part ownership of immovable property of 22 May 1990. situated in areas of provinces adjacent to

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land frontiers shall be subject to approval authorities of the State, including autono- by the Prefect of the province.' mous agencies, to municipalities, provinces or other public economic bodies, or to any other legal person, whether governed by public or private law, of Italian nationality.'

Under Article 2 of the same Law, instru- ments effecting alienation or acquisition of ownership cannot be recorded in the public 8. The joint decree of the Ministers for registers 'unless evidence is produced that Defence and for the Interior provided for the Prefect has given his approval'. by Law No 104 of 2 May 1990 was adopted on 15 May 1990 and published in the Official Gazette on 22 May 1990 (GURI No 117). The areas of national territory designated therein as being of military importance were the same as those 7. Article 18 of Law No 898 of 24 Decem- r e f e r r e d t o in A r t i c l e 18 of L a w ber 1976 laying down new rules on military No 898/1976. They cover almost all of easements, as amended by Law No 104 of the small Italian islands, including Ischia, 2 May 1990, provides as follows: the island concerned in the main proceed- ings.

V — Choice of legal basis

10. I cannot endorse that argument. It is sufficient to point out in this connection that the acquisition, for consideration, of rights in rem by persons resident in other Member States constitutes an investment A — The parties' arguments and hence a transfrontier movement of capital, which as such is covered by the Community principle of free movement of capital. Reference can usefully be made 12. Mr Albore seeks to establish a link here to the judgment in Konle. 2In para- between the contested national prohibition graph 22 of that judgment the Court sta- and the Treaty provisions relating to free- ted: 'As for capital movements, they dom of establishment, freedom of move- include investments in real estate on the ment for workers, freedom to provide territory of a Member State by non-resi- services and free movement of capital, as dents, as is clear from the nomenclature of well as the prohibition of discrimination set capital movements set out in Annex I to out in Article 6 of the EC Treaty. To that Council Directive 88/361/EEC of 24 June end, he relies on the Court's judgment in 1988 for the implementation of Article 67 Commission v Greece, 3in which it held of the Treaty (OJ 1988 L 178, p. 5)'. that the right to acquire rights in rem over immovable property is an important con- stituent of the free movement of capital as well as of freedom of movement for work- ers and freedom to provide services. He also maintains that the prohibition of discrimination in conjunction with the right 11. In the present case, real estate situated to protection of personal privacy means on Italian territory was purchased by a that domestic legislation which requires German national. Consequently, provided nationals of other Member States to declare that he is not resident in Italy, the acquisi- the purposes for Which immovable prop- tion of a right in rem, for whatever erty is acquired, while exempting nationals purpose, falls within the scope of Commu- of the. legislating Member State from that nity law, if only because it presupposes a requirement, is contrary to Community

15. The Italian Government contends that, if the question is examined as to its substance, the relevant legislation is wholly consistent with Community law. 13. In the observations which it has sub- mitted to the Court, the Greek Government seeks to establish that the contested national prohibitions are compatible with Community law in that they relate to national defence, protection of public security and foreign policy, spheres in which, it maintains, the Member States B — My views on the matter have the widest possible discretion. With- out relying on any one Treaty provision as a specific legal basis for the purposes of the present case, it mentions Article J.1 et seq. of the Treaty on European Union (Articles J to J. 11 of the Treaty on European Union (a) The special nature of national measures have been replaced by Articles 11 EU to 28 relating to the armed forces and national EU), Articles 223 and 224 of the EC Treaty defence and Articles 36 and 48 (now, after amend- ment, Articles 30 EC and 39 EC) and 73d of the EC Treaty (now Article 58 EC), from which it infers the existence of, if not 16. I shall begin my analysis by pointing absolute, at least particularly extensive out that the present case touches on a freedom for the Member States to take sensitive issue, namely how Community measures on the grounds of national law deals with State measures which relate defence and public security, even if those to the protection of national interests of a measures restrict one of the freedoms military nature. This particular aspect of guaranteed by the Community legal order. the national public interest, directly linked to the notion of State sovereignty and forming part of the core of the State, exhibits certain special features which dis- tinguish it from the other dimensions of public security, if it is accepted that 'public 14. The Commission considers that the security' is a general concept taking in, matter in issue should more properly be among other things, State measures, deci- examined from the point of view of Arti- sions or policies relating to a Member

17. Nor is it without significance that in a number of instances primary Community law makes express mention of national defence or exceptional circumstances in which a Member State may make use of its military resources. I refer, of course, to the provisions of the Treaty on European 19. Application of Community law in this Union concerning the adoption of a com- particular connection does, nevertheless, mon foreign and security policy and to face an additional difficulty. Although, as Articles 223 and 224 of the EC Treaty, I pointed out earlier, it would make sense to provisions to which I shall return later in recognise, in certain circumstances, that, my analysis. Furthermore, the Court has because of its special nature, the particular consistently held that the definition of category of national measures 'of military national policy on public security (both interest' needs to be distinguished from internal and external) and the adoption of other national rules concerned with public the related measures fall within the exclu- security and to receive special treatment sive jurisdiction of the Member States; 4 a from the Court when it assesses the com- fortiori, not only does the management of a patibility of those measures with Commu- State's 'military affairs' fall within its own nity rules, that possibility is not conferred sovereignty but in addition it must not directly by the provisions of primary Com- encounter obstacles deriving from the munity law. In the first place, the provisions Community legal order which negate of the Treaty on European Union concern- national freedom to make the associated ing a common foreign and security policy, decisions. which recognise the freedom of the Mem- ber States to define the specific features of

21. However, is that correct, or should the Court none the less search for an appro- priate method of adapting Community review to the special features of the situa- tions in question? As I shall explain in due course, the latter approach is the only one which is acceptable, and it is in keeping 20. Such safety valves are to be found, for with the direction followed by the case-law example, in Articles 36, 56 and 73d of the up till now. Treaty, Article 66 of the EC Treaty (now Article 55 EC) and Article 100a of the EC Treaty (now, after amendment, Article 95 EC), which permit derogation from the rules on free movement and harmonisation of national laws. However, the relevant provisions — and, as I stated earlier, this is important — do not refer specifically to military matters or national defence, but in general terms to national measures required 'on grounds of public policy or public (b) The legal basis offered by Article 224 of security', and they make national derogat- the EC Treaty ing measures dependent on observance of the principle of proportionality and subject

6 — See, for example. Article J.4(4) or the Treaty on European Union: 'The policy of the Union in accordance with this Article shall not prejudice the specific character of the security and defence policy of certain Member States ...'. 22. It seems to me to be helpful to start by 7 — See Article M of the Treaty on European Union (now Article 47 EU): '... nothing in this Treaty shall affect the considering Article 224 of the EC Treaty Treaties establishing the European Communities or the subsequent Treaties and Acts modifying or supplementing and examining its applicability to the case them'. in point.

10 — Up till now there have been at least two occasions on which application of Article 224 of the Treaty was, in my view, theoretically possible. The first was in the case of 24. This latter consideration has led the Johnston, cited in footnote 8 above, relating to a national Court, particularly following the Opinion measure which allowed only male police officers to carry fire-arms, to be trained in the handling and use of fire-arms of Advocate General Darmon in John- and to be employed as armed members of the reserve police force operating in Northern Ireland; and the second ston, 8 to regard Article 224 as ancillary was in Sirdar, cited in footnote 5 above, which concerned a review of the compatibility with Community law of a vis-à-vis other Treaty provisions, constitut- national rule excluding women from service in the select ing 'the ultima ratio to which recourse may military corps of the Royal Marines. On both occasions, the Court refrained from examining the matter in its be had only in the absence of any Commu- Article 224 dimension and merely reviewed the national provisions in question from the standpoint of other nity provision enabling the demands of Community rules. public order in question to be met'. 9 That, I should also mention the Macedonia case concerning the compatibility with Community law of the trade embargo indeed, is the main reason why this provi- which the Hellenic Republic nad imposed on the former Yugoslav Republic of Macedonia. Although, following the Commission's decision to discontinue the proceedings, the Court never ruled on the substance of the case (see the order in Case C-120/94 Commission v Greece [1996] 8 — Case 222/84 Johnston v Chief Constable of the RUC [1986) ECR I-1513), Advocate General Jacobs had the opportu- ECR 1651. nity in his Opinion to set out a number of interesting ideas 9 — Advocate General Darmon's Opinion in Johnston, cited in regarding the scope of Article 224 and the manner of its application. footnote 8 above, point 5.

29. First, the interpretation of this Treaty provision presents a major difficulty. The cases which it enumerates ('serious internal disturbances affecting the maintenance of law and order', 'war', 'serious international 27. Nevertheless, I am of the opinion that tension constituting a threat of war' and 'to Article 224 is intended to fulfil an addi- carry out obligations it has accepted for the tional role in the system of the Treaty purpose of maintaining peace and interna- provisions beyond merely enabling Mem- tional security') are directly linked to ber States to take specific measures dero- political, strategic and geopolitical assess- gating from a Community rule, measures ments which fall in principle within the which could perhaps be justified by competence of the Member States. As recourse to other provisions of primary Advocate General Jacobs observed in his Community law. Article 224 seems to con- Opinion in Case C-120/94, 11 this raises the stitute the demarcation line between the 'fundamental issue of the scope of the normal circumstances in which national Court's power to exercise judicial review and Community institutions function and in such situations', 12 particularly those difficult situations of national danger involving the concept of 'war' or 'threat which affect the more general relationship of war'. In those cases 'the intensity of the between the Community and Member review may be severely curtailed by the States. Since it brings about significant absence of any appropriate legal criteria changes to the nature, strength and extent capable of judicial application'. 1 3Further- of the ties binding a national legal order to more, the Advocate General pointed out the Community legal order, it is imperative that the scope of the judicial review (carried to establish, in each particular case, whe- out under Article 225) as to a possible ther the preconditions for its application improper use of powers 'is extremely are met. That explains why the Community limited — not just because of the terminol- legislature did not make exercise of the ogy of that and the preceding article but powers conferred by Article 224 expressly conditional on the inadequacy of the other legal remedies which the Treaty affords 11 — Cited in footnote 10 above. Member States for the purposes of safe- 12 — Opinion of Advocate General Jacobs, point 50 guarding their interests. 13 — Ibid., point 51.

also because of the nature of the subject- 31. In my view, however, a different matter'. 14 Consequently, while the national approach could be adopted, based on the perception of whether the circumstances particular nature if the situations to which meet the conditions of Article 224 is not the framers of the Treaty referred in uncontrolled from the point of view of drafting Article 224. More specifically, I Community law, it is not amenable to full consider that the main and ultimate objec- judicial review as to the substance, such as tive of the drafters of this article was to the review of proportionality carried out in confer on the Member States the greatest the context of Articles 36, 56, 66 and so possible capability to deal with certain forth of the EC Treaty. exceptional and truly dangerous eventuali- ties. The adoption of measures to that end does not necessarily presuppose the actual occurrence of the situations in question; it is sufficient if the measures taken are directly and exclusively linked to those situations. It could therefore be maintained that the power of the Member States to act as necessity dictates when they are con- fronted with a crisis also entitles them to 30. A further question of interpretation take the preventive measures necessary to arises. Does recourse to Article 224 pre- enable them to respond in the event of war, suppose the actual materialisation of the international disturbances or breakdown of events and circumstances it describes, that the State. An entirely narrow interpretative is to say actual situations of internal approach to Article 224, automatically anarchy, war or threat of war or an removing from its scope national decisions obligation (usually military) actually which are directly and exclusively linked to accepted by a Member State for the pur- the exceptional situations it describes pose of maintaining peace and interna- (usually decisions regarding the organisa- tional security? Both Mr Albore and the tion of national defence and of the armed Commission seem to answer this question forces), may render the provision in ques- in the affirmative. In his Opinion in Sir- tion entirely redundant. Narrow interpre- dar, 15 Advocate General La Pergola sup- tation of a derogating provision — an ported the view that Article 224 cannot be approach with which I entirely concur — applied in order to justify national mea- is not the same as attributing it a meaning sures relating to the organisation of special so restrictive as to rob it of all practical military forces of the Member State con- usefulness. cerned is not confronted at that very moment with serious disturbance, war, threat of war and so forth. That restrictive approach seems, at first sight, to be in keeping both with the wording of the provision itself and with the principle whereby derogations from observance of Community law must be interpreted and applied narrowly. 32. It is possible to counter that line of 14 — Ibid., point 63. reasoning with the argument that, precisely 15 — Cited in footnote 5 above. because the situations envisaged by Arti-

33. To move on from the purely theoretical level, I shall now attempt to transpose the foregoing considerations into the context of the present case. I ask myself whether the disputed provisions prohibiting the acquisi- tion of rights in rem in areas designated as 34. It is clear, in my view, that at least for being of military importance could fall some Member States fulfilment of the within the scope of Article 224. If the conditions of Article 224 is not as remote prohibitions concerned were of a tempor- as is customarily imagined. The difficulties ary and special nature it would not be inherent in defining the limits of, and impossible, in my view, to answer this carrying out, judicial review under Arti- question in the affirmative. I need only cle 225 of any improper use of powers are mention the state of anarchy which pre- noteworthy in every respect, this, of course, vailed for a time in Albania, a country being on the basis that application of neighbouring on Italy, or, a fortiori, Italy's Article 224 cannot be avoided by rely-

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36. Nevertheless, the foregoing analysis is not without value. It is necessary in order to demonstrate the meaning of the disputed 38. Before considering each of these legal national legislation and the particular man- bases in detail, it is relevant to note that the ner in which it should be treated. Inasmuch Treaty provisions concerned share a com- as that legislation concerns a matter which mon feature: on their proper construction is declared by Italy to be 'of military they explicitly or implicitly permit, under importance' and, on that basis, is connected certain conditions, the establishment of

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interest as represented here by national likewise not an absolute right. It is con- defence. ceivable for national law to maintain or introduce restrictions for legitimate reasons relating to the public interest corresponding to those provided for under Articles 36, 59 (now, after amendment, Article 49 EC), 69 and so forth of the EC Treaty.

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VI — Compatibility of the contested by virtue of the protection of public national legislation with Community law security.

A — The criteria governing judicial review

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27 — Commission v Greece, cited in footnote 3 above, para- 29 — Case C-302/97, cited in footnote 2 above. graph 11. 28 — Case 352/85 Bond van Adverteerders v Netherlands State 30 — Ibid., paragraph 23. [1988] ECR 2085, paragraph 36. 31 — Ibid., paragraph 40.

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national legislation on secondary residences the principle of free movement of capital are to be prevented'. 32 because they are not essential for protection of the public interest invoked by the national authorities, inasmuch as it is possible to safeguard that interest with provisions which affect the freedom under Community law less seriously. 51. That case-law is relevant here not only on account of its connection with the subject-matter of the present case but also because it reveals the depth of the review of proportionality conducted by the Court in connection with application of Article 73 d of the Treaty. In order to assess the 53. I do not agree with the Commission's necessity and the strict proportionality of approach. I find it difficult to accept that it national rules, the Court adopts a line of is possible to follow the aforementioned legal reasoning similar to that of the drafter case-law step by step, firstly, examining in of the rules at issue, seeking a solution detail the specific military imperatives under which the objective pursued by the relied on by Italy and, secondly, proposing public authorities will be achieved in a alternative ways of meeting those impera- manner involving the least possible effect tives. For reasons which I have already on the Community freedoms guaranteed by explained, 33 the full substantive review the Treaty. In other words, at a certain normally accompanying application of the stage in its judicial reasoning the Court principle of proportionality is not appro- places itself in the position of the national priate in the case in point. legislature concerned in order to ascertain whether the national measures undergoing review meet the conditions of necessity and strict proportionality.

56. That does not mean, in the case in point, that the body applying Community law must assess Italy's defence policy in terms of its substance or carry out an 55. What, however, are the criteria for exhaustive assessment of the regulatory determining the extent of judicial interven- choices made by the national legislature. tion in cases such as that under considera- It is for the latter alone, first, to designate a tion here? As the Commission rightly particular matter as being one of military observes, the Community legal order does importance and, secondly, to find the not permit, as the basis for derogation from means of meeting that specific public- Community rules, the invocation of a interest objective. Reliance on national national public interest, even one of a defence cannot, however, be uncontrolled: military nature, in general, abstract and the national measures concerned must, up hypothetical terms. The opposite approach to a certain point, be supported by a would entail recognition of the existence of statement of reasons which makes clear a category (of indeterminate extent) of the objective pursued and the logical con- national 'acts of State' immune from Com- nection between the national measures munity control of their legality. Conse- adopted and attainment of that objective. quently, a Member State wishing to diverge The Court cannot tolerate reference to the from the Community path must provide concept of national defence without further logical explanation in such a way that is it used as a pretext for circumventing a 35 — Adopting the same approach, it is to be inferred that the Member State's obligations under the review of proportionality associated with the application Treaty. When national authorities refer to of Articles 36, 59, 69 and 73d of the EC Treaty exhibits, following the limitation deriving from the special nature of the military dimension of public security, the national measures under scrutiny, similarities with the review of 'improper use' which is provided for under they must in any case abide by the rules of Article 225 of the EC Treaty. In that way, balance is logic and the lessons of common experi- restored in the application of provisions of primary Community law, and the boundaries herween Community ence. Nor is it permissible for military and national action are traced more clearly without risk of encroaching on national sovereignty through the exercise interest to be used as a pretext concealing of excessive Community control. some other State objective contrary to the

B — Application of those criteria to the .57. The Court's judgment in Case C-62/96 present case Commission v Greece 36 is a characteristic example of the review conducted by the Court with respect to national rules which a Member State links to its military 58. It remains to transpose to the present defence. Greece had maintained in force case the conclusions of the above analysis legislative provisions which restricted the relating to the limits of the Community right to be registered in the Greek shipping judicial review and the criteria governing registers and to fly the Greek flag to vessels that review. I should mention, once again, more than half the shares in which were that although Member States may have a owned by Greek nationals or owned by very wide degree of discretion with regard Greek legal persons more than half of to the protection of their military interests, whose capital was held by Greek nationals. that discretion is not uncontrolled. Thus, To justify that legislation, it relied, inter when national authorities introduce dero- alia, on the particular nature of its national gations from the fundamental Community defence organisation and the need to be principle of freedom of movement, they are able to requisition ships in order to cope under an obligation to state the reasons on with exceptional situations. The Court which those derogations are based, in that simply responded to that line of argument they are to state the objective pursued by as follows: '... as regards organisation of the national rules concerned and demon- the military defence of the Hellenic Repub- strate the logical connection between the lic, suffice it to note that the Greek attainment of that objective and the rules authorities could decide to requisition for enacted. Observance of that obligation, the military purposes any ship flying the Greek specific features of which vary, of course, flag, whatever the nationality of its according to the particular nature of each owner'. 37 In other words, the Court based individual case, is an essential precondition its reasoning on deductions of logic and the of the judicial review under Community lessons of common experience, in accor- law, so as to ensure, in each instance, that dance with which a State's power to Member States are not exceeding the limits requisition certain goods for national of the discretion which they have with regard to protection of the national military interest or that they are not improperly 36—[1997] ECR I3-6725. relying on that aspect of the public interest 37 — Commission v Greece, cited in footnote 36 above, in order to pursue, in reality, different paragraph 26.

60. As regards, first, the drawing up of the legislation at issue, it is essential to make (i) Why does the special regime apply only clear the logic of the system whereby to non-Italian nationals? certain parts of Italian national territory are designated to be areas 'of military importance', the general criteria which might be applied in identifying those areas 63. It is apparent from the answers given and the reason why it is necessary specifi- by the Italian Government to the questions cally for foreign purchasers of immovable posed by the Court in the course of the property to be subject to the prior author- written procedure that the application of a isation procedure. system of prior authorisation to the acqui- sition by non-Italian nationals of rights in rem over immovable property in areas designated as being of military importance is based on the following reasoning. Per- sons having the nationality of a particular 61. As regards, secondly, the implementa- Member State belong, by reason of that tion of those rules in practice, it would be attribute, to a 'national community' and useful if the body applying Community share the fundamental interests of that law — as far as possible, of course, given community. First, the interests of those the particular nature of situations in which persons are assumed to be identical with the protection of national military interests the interests of the corresponding 'national is involved — were aware of the matters community'. Secondly, those persons, by scrutinised, by the national administrative the mere fact of their nationality, are authorities and the specific criteria taken subject to a special obligation to conform into account for granting or refusing to the interests of the national community authorisation. which stems from the duty of solidarity

binding a citizen to the State of which he is nationals cannot be equated with that of a national. That duty finds practical expres- Italian nationals, the question arises as to sion in a series of separate obligations whether it is acceptable under Community incumbent on nationals, such as that laid law to impose a system of preventive down in Article 246 of the Italian Penal control specifically on the former when it Code which makes it an offence for any is apparent that the latter are not subject to citizen to accept monetary reward or other a corresponding regime: 38 under Arti- advantage from a foreign source for behav- cle 246 of the Italian Penal Code, any ing in a manner contrary to national Italian citizen who prejudices national (in interests. It is clear that persons not having the case in point, military) interests incurs Italian nationality are not in the same penal sanctions; it is, however, inconsistent position, in law or in fact, as Italian with the very logic of the system for nationals, in the sense that they cannot be safeguarding national military interests for regarded as 'sharing' Italy's national inter- the Italian legal order to allow prejudice to ests and are not subject to the special those interests when the person causing it is obligations imposed by Italian law to con- an Italian national and to intervene only form to those interests. afterwards with penal measures, but to consider preventive intervention necessary, for the purposes of safeguarding the very same interests, with regard to the activities of foreign nationals in Italy. Does the 64. Thus, whereas — in the sovereign opi- contested Italian legislation perhaps ulti- nion of the Italian authorities — the Italian mately mask a more general negative nationality of a purchaser of immovable position on the part of the national legis- property situated in areas of military lature towards non-Italian nationals to the importance and the special duties inherent effect that foreign nationals are treated in in that nationality are sufficient to ensure law as more likely to engage in anti- that national military interests are not national conduct and hence as more dan- jeopardised by the purchase, corresponding gerous in practice, especially where the guarantees do not exist where the purcha- national military interest is at stake? ser is a foreign national. It is therefore essential, in the opinion of the Italian Government, to provide for an additional system for safeguarding national military interests. That is precisely the objective 66. That approach, if it truly reflects the pursued by the Italian legislation con- intentions of the Italian legislature, cerned, which introduces a system of prior undoubtedly troubles the body applying authorisation specifically for cases where Community law, inasmuch as it can be the purchaser of immovable property in regarded as rejecting the idea of continuous areas of military importance is a foreign convergence of the peoples of the Member national. States and of advancement of European integration, an idea which is projected by the Community legal order. That criticism, however, is political, not legal. At the

68. However, even following the written and oral observations of the Italian Gov- ernment, the rationale of the contested legislation has not been made sufficiently (ii) The designation of areas 'of military clear. The Ministerial Decree of 15 May importance' 1990, implementing the provisions of Law No 104/90 and designating the areas of military importance in which special rules on the transfer of immovable property apply, merely lists without further explana- 67. Although the logic of the distinction tion the island areas envisaged by Law made between Italian nationals and foreign No 898/1976, which, in turn, refers to the nationals with regard to the matter at issue, earlier Laws No 1 0 9 5 / 1 9 3 5 and namely, the acquisition of rights in rem on No 2207/1939. It appears, therefore, that Italian territory, may, at least theoretically, the competent ministers did not carry out be acceptable in terms of Community law, any substantive assessment of the appro- that does not mean that the contested priateness or otherwise of keeping the Italian legislation is automatically compa- island areas concerned subject to the afore- tible with the rules of the Community legal mentioned special rules or, assuming that order in every respect. If the need for that they considered the matter, did not set out

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70. In short, Italian law provides no infor- mation explaining why and according to what criteria certain parts of national territory, as opposed to others, are of such 69. It is particularly notable that, whereas military interest as to justify the application Law No 898/1976 regulates exhaustively of special rules affecting foreign nationals the question of military easements burden- with respect to the transfer of immovable ing land in the vicinity of military installa- property. That is to say there is no indica- tions (Articles 1 to 15) and issues concern- tion of the logical connection which speci- ing the restrictions imposed on the con- fically links the areas in question to the struction of certain works in 'municipalities national military interest, or of the connec- of military importance', 39 it is especially tion between the safeguarding of that vague so far as concerns the 'areas of interest and the application of a system of military importance' mentioned in Arti- preventive authorisation to immovable cle 18. In particular, the legislation defines property transactions where the purchaser in detail the cases in which restrictions are is a non-Italian national. imposed on the use of land by reason of its proximity to military installations, the scope of those restrictions and the precon- ditions for their imposition. The validity of the restrictions is limited in time, the need for them is subject to regular review and the Law provides for the possibility of 71. It should be pointed out that the lack of lifting them or awarding compensation to a statement of the reasons on which the persons who have suffered damage because contested legislation is based cannot be of them. By contrast, the system of a justified, as the Italian Government general division of Italian territory into attempted to do at the hearing, by relying areas respectively with and without mili- on a general and undefined concept of 'military secrecy'. The latter might justify a refusal to disclose specific information regarding the particular military interest 39 — Those municipalities are listed exhaustively in Schedules A. B and C to Law No 898/1976. of a certain area. It is not, however, capable

75. Secondly, as specifically regards island regions such as that to which the national court's question refers, it should be noted 73. I consider it appropriate at this point to that the Italian legislature placed every make two further observations which small Italian island in the category of areas aggravate the position of the contested of military importance. 40 It would appear, Italian legislation from the point of view therefore, that the particular geopolitical of its compatibility with Community law. and strategic characteristics of Ischia, the island in question in this case, were not considered when it was included among the areas designated as being of military impor-

74. First, it is not without significance that 40 — I refer on this point to the text of the joint ministerial the system of prior authorisation for trans- decree of 15 May 1990 mentioned in point 8 above.

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76. Consequently, at least on the basis of which case the legislation concerned is the information available to the Court, the not — theoretically, at least — contrary to contested Italian legislation, in so far as it the Community rules relating to the free constitutes a derogation from the principle movement of capital. If that is so, it is of free movement of capital without suffi- cient justification being provided of the necessity of introducing that derogation for 41 — I consider it necessary, at this point, to draw attention to the fundamental distinction to be drawn, in procedural the purpose of safeguarding the national terms, between the preliminary reference procedure under Article 177 of the Treaty and the procedure under military interest, does not appear to be Article 169 of the EC Treaty (now Article 226 EC).

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essential to consider whether the manner in based on confidential assessments whose which the relevant legislation is implemen- disclosure is considered likely to be pre- ted in particular cases constitutes an obsta- judicial to public security. Although this cle to exercise of the aforementioned free- thorny problem of the compatibility of the dom which is unjustified and therefore judicial function with the preservation of contrary to Community law. Consequently, military secrecy clearly concerns the Com- it is vital to assess the elements of the munity legal order since it affects the preventive administrative control on the review, in individual cases, of the obser- transfer of immovable property as exer- vance of Community law, it nevertheless cised in practice. remains within the domain of national law, that is to say it is covered by the principle of the Member States' procedural autonomy. It is for the national court, acting in its capacity as ordinary court of Community 78. It is apparent from the answers given law, to seek the most appropriate solution, by the Italian Government to the Court's taking into account, first, its obligation to questions on the matter that the real examine whether or not the manner to authority to grant to a foreign national which the Italian legislation at issue is authorisation to acquire rights in rem over implemented in practice constitutes unlaw- immovable property situated in an area of ful discrimination against non-Italian military importance lies with the competent nationals and, secondly, the possibilities military authorities whose opinion is for, and restrictions on, its access to the sought on the matter. Ultimately, it is those relevant information under national law. authorities who decide whether the military importance of a particular region precludes the acquisition of immovable property by a particular foreign national. There are, however, no clear criteria governing the exercise of this preventive control, nor do we know whether the military authorities' investigation is centred on the foreign national or the characteristics of the immo- vable property.

VII — Conclusion

81. In view of the foregoing consideration, I propose that the Court should answer the question referred to it for a preliminary ruling as follows:

National legislation which imposes conditions on the acquisition by foreign nationals of rights in rem over immovable property situated in areas designated as being of military importance is contrary to Community law, and in particular to the principle of free movement of capital, where there is a lack of satisfactory explanation regarding the criteria under which an area is designated as being of military importance and regarding the necessity of exercising that preventive control for the purpose of safeguarding national military interests.

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