JUDGMENT OF 29. 11. 1978 — CASE 21/78 DELKVIST v ANKLAGEMYNDIGHEDEN

In Case 21/78 REFERENCE to the Court under Article 177 of the EEC Treaty by Københavns Byret (Copenhagen City Court) for a preliminary ruling in the action pending before that court between

THE COURT composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges, Advocate General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities may be summarized as follows:

I — Facts and written procedure

A — The Council Directive

For the purpose of harmonizing the legislation of the Member States in the matter of transport, on 12 November 1974 the Council adopted Directive No 74/562/EEC on admission to the occupation of road passenger transport operator in national and international transport operations.

Article 2 of the Council Directive reads as follows:

‘(1) Natural persons or undertakings wishing to engage in the occupation of road passenger transport operator shall: (a) be of good repute; … (2) Pending co-ordination at a later date, each Member State shall determine the provisions relating to good repute which must be satisfied by the applicant and, where appropriate, the natural persons referred to in paragraph (1). …’.

Article 4 (1) provides that: ‘Natural persons and undertakings furnishing proof that before 1 January 1978 they were authorized under national regulations in a Member State to engage in the occupation of road passenger transport operator in national and/or international transport operations shall be exempt from the requirement to furnish proof that they satisfy the provisions laid down in Article 2’.

Article 5 (2) provides that: ‘Member States shall ensure that the competent authorities withdraw the authorization to pursue the occupation of passenger transport operator if they establish that the provisions of Article 2(1) (a), (b) or (c) are no longer satisfied. In this case, however, they shall allow sufficient time for a substitute to be appointed’. Article 5 (3) provides that: ‘With regard to the decisions referred to in paragraphs (1) and (2), Member States shall ensure that the natural persons or undertakings covered by this directive are able to defend their interests by appropriate means’.

Article 6 (1) provides that: ‘Member States shall, after consulting the Commission and before 1 January 1977, adopt the measures necessary for the implementation of this directive …’ (In spite of this provision, none of the nine Member States has so far adopted all the national provisions necessary to ensure the implementation of the directive.)

B — The national legislation applicable

Under Danish law (Article 78 of the Danish Penal Code (Straffelov)), criminal conduct does not automatically lead to the forfeiture of civil rights. When a person is found guilty of criminal conduct, such forfeiture occurs only as a result of a judicial decision, either in the sentence itself or in subsequent review by the court when an administrative authority refuses to issue a permit, authorization or licence to a person who has been previously sentenced because of his previous record. Under Article 78 (2) of the Danish Penal Code, a person may be prohibited on grounds of criminal conduct from engaging in an occupation which requires special public authorization or approval, only if the criminal conduct provides grounds for considering that there is imminent danger of misuse of the position or occupation which he wishes to keep or take up. It is not enough for the person concerned to be considered unworthy of engaging in a certain occupation.

Road passenger transport is governed in Denmark by the Lov om Omnibuskørsel (Law on Motorbus Transport) (Law No 346 of 14 July 1970, as amended by Law No 364 of 13 July 1973), which provides for written authorization notified to the applicant in advance. It contains no particular requirement regarding the character of the holder of the authorization. Thus the general rule in Article 78 (2) of the Penal Code applies.

Moreover, a procedure to check the criminal record of applicants was introduced in Denmark in 1976 in order to ensure compliance with Article 2 (1) (a) of the Council directive on the requirements relating to good repute.

C — The facts

A road passenger transport licence (‘tourist’ category) valid for the whole of Denmark was issued to Knud Oluf Delkvist for the period from 11 November 1974 to 30 September 1976. By a decision of 29 December 1976 the Landsnaevnet for Omnibuskarsel (National Motorbus Transport Board) refused to renew that licence in view of the applicant's criminal record, from which it appeared that he had several convictions for theft and burglary, and because his criminal conduct provided grounds for considering that there was imminent danger of misuse of his position as a road passenger transport operator.

D — The questions referred to the Court for a preliminary ruling

On 17 October 1977 the Copenhagen police submitted to Københavns Byret (Copenhagen City Court) Mr Delkvist's complaint against the refusal to renew his road passenger transport licence (‘tourist’ category), with a request that the court should rule on the legality of that refusal. By an order of 10 February 1978, Københavns Byret decided to refer the following questions to the Court of Justice for a preliminary ruling pursuant to Article 177 of the EEC Treaty:

1) Is the Council Directive of 12 November 1974 lawful, valid, directly binding on Danish courts and applicable to relations between a Danish national and the Danish public authorities?

2) Does the Council Directive of 12 November 1974 cover a legal situation such as the present case?

3) If Question 2 is answered in the affirmative an answer to the following preliminary question is requested, namely must it be considered that the Council Directive of 12 November 1974 has amended Article 78 (2) and (3) of the Penal Code in that the stipulation in that provision that criminal conduct may only entail loss of civil rights if such conduct provides grounds for considering that there is imminent danger of misuse of the position of the person concerned has been superseded wholly or in part so that the provision relating to good repute in the Council Directive has been substituted for the provision in Article 78 (2) and (3) of the Penal Code?

4)

a) Does Article 78 (2) and (3) of the Danish Penal Code, which is worded in negative terms, namely that a person can be deprived of the right to engage in an occupation which requires special public authorization or approval only if his conduct provides grounds for considering that there is imminent danger of misuse of his position or occupation, satisfy the requirements relating to good repute which, according to the Council directive, the Member States must lay down for persons in this situation since the Member States, pending co-ordination at a later date, remain free themselves to lay down a more detailed definition of the requirement relating to good repute?

b) Is the present case covered by the transitional provisions in Article 4 (1) so that, because the applicant was authorized before 1 January 1978 under the Danish provisions to engage in the occupation of road passenger transport operator within Denmark, he is exempt from the requirement to furnish proof that he fulfils inter alia the requirement relating to good repute contained in Article 2 (1) (a)?

5) If the answer to Question 4 (b) is in the affirmative, does this imply that the case can be decided by Københavns Byret without regard to the provisions laid down in the Council Directive of 12 November 1974 or does Article 5 (2), concerning the duty of Member States to withdraw authorizations when the conditions in Article 2 (1) (a) (b) and (c) are no longer satisfied, mean that it is in any event necessary to fix requirements relating to the good repute of the applicant? The order of Københavns Byret was received at the Court on 24 February 1978. After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

II — Summary of the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

A — Observations submitted by the Danish Government

The Danish Government takes the view that the Council did not intend to give a Community meaning to the term ‘good repute’: the Council imposed an express duty on the Member States to take account of the character of the applicant (which is an innovation for Danish law, under which the requirements relating to good repute took the form of a power, not a duty, on the part of the authorities to refuse a licence, but the Council did not consider it necessary to define the content of the requirements relating to good repute.

If the Council had gone any further, as the Commission proposed it should, the directive by requiring automatic action in every case would have been contrary to a fundamental principle of Danish criminal law.

The Council undertook an approximation of the rules of procedure concerning the requirements relating to good repute which are defined at the level of the Member States by Directive No 77/796/EEC of 12 December 1977 (Official Journal 1977, L 334, p. 37) but this applied only to foreign nationals. Thus that directive does not apply to an evaluation by a Danish administrative authority of the good repute of a Danish national.

Therefore the Danish Government considers that Questions 3 and 4 (a) of the order making the reference should be answered as follows:

‘Article 2 of Directive No 74/562 imposes a duty on the Member States to ensure that applicants wishing to engage in the occupation of transport operator are of good repute. It is for the Member States to define the content of that concept. The directive therefore contains no factor of such a kind as to affect the criterion of good character laid down in Articles 78 and 79 of the Danish Penal Code’.

Although it is of the opinion that there is no need for the Court to answer the other questions, the Danish Government none the less points out in the alternative that:

a) As regards Question 1, the court making the reference did not state any reason to doubt the validity of the directive. As to its direct applicability, it is unacceptable for reasons of legal certainty, which are decisive in this case, for a directive to be able to give rise directly to duties on the part of citizens or to restrict their rights.

b) As regards Questions 2 and 4 (b), it follows from the combined provisions of Article 6 (1) (implementation of the directive) and of Article 4 (1) (transitional provisions) that the directive does not apply to a decision granting or refusing authorization which was notified before 1 January 1977, and also does not concern the legal effects flowing from such a decision after that date. Consequently, Article 5 (2) is not relevant to this case.

B — Observations submitted by the Italian Government

The Italian Government considers that the (limited) binding effect attributed in the case-law of the Court to Community directives when they confer specific benefits on individuals, cannot be denied where, on the contrary, they impose burdens on individuals. Directives are not instruments capable themselves of having the legal effect of repealing (or in any case of abolishing or substituting) ‘incompatible’ national statutory provisions; they could have such an effect only in relation to rules of the same nature and of equal scope; directives merely constitute a duty on the pan of the Member States to achieve a certain result, that is to say, they give rise to ‘mandatory effects’.

As a general rule administrative assessment of good repute is unconnected with the possession of civil rights and the status of the person concerned. Consequently the administrative authority with power to authorize admission to the occupation of transport operator is perfectly able to decide that the requirements relating to good repute are not fulfilled, even in the absence of a court decision ordering the forfeiture of civil rights. In itself the directive does not establish any connexion between good repute and the possession of civil rights, but in principle there appears to be no reason why such a connexion should not be explicitly provided for by the internal legal order of a Member State, it being understood however that the Community rules would be infringed if an internal legal order were to extend the concept of good repute so as to stultify the provisions of Article 2 (1) (a) of the directive.

The question whether even vis-à-vis all administrative authorities the Danish internal legal order absolutely prohibits the refusal of an administrative authorization to a person in possession of his civil rights is a question of internal law which falls outside the jurisdiction of the Court of Justice, save as regards what has already been said concerning the incompatibility with the Community legal order of an excessive extension of the concept of good repute.

The Italian Government proposes that the questions raised should be answered as follows:

a) Anicle 2 (1) (a) of Directive No 74/562 is valid and binding on individuals in so far as it is held that they may rely upon it, but it cannot directly repeal or take the place of a national provision which is incompatible with it.

b) Article 2 (1) (a) must be interpreted as meaning that as a general rule the requirements relating to good repute are unconnected with the general status of an applicant for admission to the occupation of road passenger transport operator, and cannot be stultified by internal provisions of a Member State.

c) Anicle 4 (1) cannot apply in favour of a person not formally authorized before 1 January 1978 to engage in the occupation at issue.

C — Observations submitted by the Netherlands Government

The Netherlands Government points out that the national coun draws no clear distinction between a situation in which a previous conviction can justify a refusal by an authorizing institution to grant the applicant the approval or authorization applied for, and a situation in which a coun prohibits a person, by way of a supplementary penalty for criminal conduct, from engaging in an occupation for a cenain period. As the criteria for an administrative decision and those for a penal decision are not the same, the actual decisions themselves may also be different. A person guilty of a particular offence might well be banned from an occupation because he no longer satisfied the requirements relating to good repute, without this giving rise to an order by a criminal coun prohibiting him from engaging in his occupation. The converse is equally possible.

The Netherlands Government therefore asks for the scope of the requirements relating to good repute in the directive to be defined. The Community directives are designed to bring into line the administrative conditions for admission to and pursuit of an occupation or trade: they do not concern national provisions of criminal law whereby cenain offences are punishable by a prohibition on engaging in the occupation or trade in the context of which the offence was committed.

D — Observations submitted by the Commission

According to the Commission, there can be no doubt that the Council directive is lawful and was validly adopted in accordance with the provisions of Article 75 of the EEC Treaty. As to whether the directive is directly applicable and whether it must in consequence count among the factors which the national coun must take into account in order to reach a decision in the case before it, each of its provisions must be assessed in relation to actual facts.

The Council directive applies to the facts of the main action, which concerns a road passenger transpon licence (tourist category), that is to say a licence valid for the transportation of more than nine persons, which is an activity coming within the scope of the directive by virtue of Anicle 1 thereof. On the other hand the actual application of the various provisions of the directive depends on the answer given to the other questions.

Until further notice the Council has left it to the Member States to apply relatively vague requirements relating to good repute to natural persons or undertakings seeking authorization as road passenger transpon operators. The Council amended the Commission's initial proposal, which specifically defined the requirements relating to good repute by reference to criminal penalties and left it to the Member States to determine only the offences to be taken into account, and imposed in a more general way certain requirements relating to good character. Since the Member States are left entirely free to define these requirements, the criteria relating to good repute may continue to differ from one Member State to another. Therefore Question 3 must be answered in the negative. However, this does not imply that the national court may decide the question without taking any account of the provisions of the directive relating to good repute. According to the judgment of the Court in Case 51/76 ([1977] ECR 113), it is the duty of the national court to establish whether national provisions fall outside the margin of the discretion left by the directive.

Even though the scope of Article 78 (2) of the Danish Penal Code is extremely limited, the Commission none the less considers that in concrete terms it correctly implements the provisions of the directive relating to good repute. The Danish provision imposes (very limited) requirements relating to good repute, but the margin of discretion left to the Member States by Article 2 (2) of the directive does not appear to have been exceeded.

If, on the other hand, Article 78 were to be regarded as not satisfying the requirements of the directive relating to good repute, it could nevertheless be inferred therefrom that the Danish Penal Code has been amended or repealed by that provision of the directive as from 1 January 1977. The extent to which directives and decisions can impose direct duties on individuals is a question which gives rise to much discussion among academic writers. In its case-law, the Court of Justice has established that the directly applicable provisions of the Treaty may also impose certain duties on individuals. On the other hand, there do not appear to have been any judgments in which the Court has given an unequivocal ruling to the same effect as regards the direct applicability of directives and decisions to individuals.

As to Question 4 (b), the Commission thinks that Article 4 (1) of the directive entirely fulfils its purpose but, in its present form, goes beyond what is strictly necessary. In order to benefit from the derogation provided, the applicant does not necessarily have to be engaging in the occupation of road passenger transport operator (tourist category) at the time when the directive is implemented in national legislation or have to have engaged in that occupation for a certain number of years before that time. According to the wording of Article 4 (1), it is enough for him to rely on the fact that he has already been authorized, albeit only once, to engage in the occupation of road passenger transport operator in national or international transport operations. It follows that the transitional provision in Article 4 (1) of the directive applies to all persons engaging or having engaged in the occupation of road passenger transport operator (tourist category) before 1 January 1978.

As to Question 5, the Commission takes the view that Article 5 (2) of the directive, read together with Article 4 thereof, requires the national authorities to verify inter alia whether the requirements relating to good repute are fulfilled. This verification must be carried out as from the time when the directive is implemented in national law, that is to say not later than 1 January 1977. However, such verification does not oblige transport operators coming within Article 4 of the directive to furnish proof that they satisfy inter alia the requirement relating to good repute. Such transport operators may be refused renewal of authorization, or their authorization may be withdrawn, only if the authorities can show that they no longer fulfil the aforesaid requirement. Therefore it follows that under Article 5 (2) of the directive the authorities are obliged to verify whether the requirements imposed by the directive, in particular the requirement relating to good repute, are fulfilled, but that when transport operators coming within Article 4 (1) of the directive are the subject of such verification, they cannot be obliged to furnish special proof.

In view of the foregoing, the Commission proposes that the questions raised should be answered as follows:

1) Council Directive No 74/562/EEC of 12 November 1974 on admission to the occupation of road passenger transport operator in national and international transport operations is lawful and valid. The answer to the question whether the various provisions of the directive can apply directly to relations between the Member States and their nationals depends on a specific interpretation and assessment of the nature, structure and wording of each of them.

2) An application for the renewal of a road passenger transport licence (tourist category) falls within the scope of the Council directive mentioned in the preceding answer.

3) Article 2 (1) (a) and (2) of the aforesaid Council directive cannot be regarded as having amended or repealed Article 78 (2) and (3) of the Danish Penal Code which provide that criminal conduct may entail forfeiture of certain rights only if such conduct provides grounds for considering that there is imminent danger of misuse by the person concerned of his occupation.

4)

a) The provisions of Article 78 (2) and (3) of the Danish Penal Code satisfy the requirements relating to good repute which under Article 2 (1) and (2) of the aforesaid Council directive the Member States must impose on such of their citizens as apply for admission to the occupation of road passenger transport operator.

b) Article 4 (1) of the aforesaid Council directive must be interpreted as meaning that persons who had been authorized before 1 January 1978 to engage in the occupation of road passenger transport operator are exempt from the requirement to furnish proof that they satisfy the requirements relating to good repute laid down in Article 2 (1) (a) of the directive.

5) Article 5 (2) of the Council directive must be interpreted as meaning that the Member States are under a duty to ensure that the requirements laid down in Article 2 (1) (a), (b) and (c) are fulfilled as from the time when the directive is implemented in national law. However, when road passenger transport operators (tourist category) coming within Article 4 (1) of the directive are the subject of verification, they cannot be obliged to furnish proof that they satisfy inter alia the requirements relating to good repute.

III — Oral procedure

The Danish Government, represented by P. Lachmann, acting as Agent, and the Commission of the European Communities, represented by B. Hoff-Nielsen, acting as Agent, submitted oral argument at the hearing on 5 October 1978.

The Commission argued that the principle of effectiveness applied by the Court may be considered to favour direct application of directives to individuals. None the less, the Commission agrees with the view of the Danish Government that directives and decisions are not suitable for directly imposing duties on citizens or for restricting their rights. As the Danish Government has also emphasized, decisive considerations of legal certainty militate in favour of restricting such direct application to the provisions of the Treaty alone.

The Advocate General delivered his opinion at the hearing on 25 October 1978.

Decision

1. By an order of 10 February 1978, which was received at the Court on 24 February 1978, Københavns Byret (Copenhagen City Court) referred to the Court under Article 177 of the EEC Treaty several questions on the interpretation and validity of Article 2 (1) (a) of Council Directive No 74/562/EEC of 12 November 1974 on admission to the occupation of road passenger transport operator in national and international transport operations (Official Journal 1974, L 308, p. 23), in particular the concept of ‘good repute’ contained in that article.

2. These questions were raised in the context of an action concerning the rejection by the competent Danish authority on 29 December 1976 of an application by a road passenger transport operator (tourist category) for the renewal of his transport licence.

3. The grounds for that rejection were that the applicant's previous record showed that he had several convictions for theft and burglary and that his criminal conduct provided grounds for considering that there was imminent danger of misuse of his position as a passenger transport operator.

4. The competent Danish authority applied the provisions of Article 78 (2) of the Danish Penal Code (Straffelov), according to which a person may be prohibited on grounds of criminal conduct from engaging in an occupation which requires special public authorization or approval only if the criminal conduct provides grounds for considering that there is imminent danger of misuse of the position or occupation which he wishes to keep or take up.

5. For the purpose of harmonizing the legislation of the Member States in the matter of transport, on 12 November 1974 the Council adopted Directive No 74/562/EEC on admission to the occupation of road passenger transport operator in national and international transport operations.

6. Article 2 of that directive provides that:

‘(1). Natural persons or undertakings wishing to engage in the occupation of road passenger transport operator shall:

a) be of good repute;

(2). Pending co-ordination at a later date, each Member State shall determine the provisions relating to good repute which must be satisfied by the applicant and, where appropriate, the natural persons referred to in paragraph (1).

…’

7. Article 6 (1) provides that the Member States shall, after consulting the Commission, implement the directive before 1 January 1977.

8. Københavns Byret has referred the following questions to the Court for a preliminary ruling: 1. Is the Council directive of 12 November 1974 lawful, valid, directly binding on Danish courts and applicable to relations between a Danish national and the Danish public authorities? 2. Does the Council directive of 12 November 1974 cover a legal situation such as the present case? 3. If Question 2 is answered in the affirmative an answer to the following preliminary question is requested, namely must it be considered that the Council directive of 12 November 1974 has amended Article 78 (2) and (3) of the Penal Code in that the stipulation in that provision that criminal conduct may only entail loss of civil rights if such conduct provides grounds for considering that there is imminent danger of misuse of the position of the person concerned has been superseded wholly or in part so that the provision relating to good repute in the Council directive has been substituted for the provision in Article 78 (2) and (3) of the Penal Code? 4. (a) Does Article 78 (2) and (3) of the Danish Penal Code, which is worded in negative terms, namely that a person can be deprived of the right to engage in an occupation wich requires specific public authorization or approval only if his conduct provides grounds for considering that there is imminent danger of misuse of his position or occupation, satisfy the requirements relating to good repute which, according to the Council directive, the Member States must lay down for persons in this situation since the Member States, pending co-ordination at a later date, remain free themselves to lay down a more detailed definition of the requirement relating to good repute? (b) Is the present case covered by the transitional provisions in Article 4 (1) so that, because the applicant was authorized before 1 January 1978 under the Danish provisions to engage in the occupation of road passenger transport operator within Denmark, he is exempt from the requirement to furnish proof that he fulfils inter alia the requirement relating to good repute contained in Article 2 (1) (a)? 5. If the answer to Question 4 (b) is in the affirmative, does this imply that the case can be decided by Københavns Byret without regard to the provisions laid down in the Council directive of 12 November 1974 or does Article 5 (2), concerning the duty of Member States to withdraw authorizations when the conditions in Article 2 (1) (a) (b) and (c) are no longer satisfied, mean that it is in any event necessary to fix requirements relating to the good repute of the applicant?

The first part of Question 1

9. The Council directive was adopted in accordance with Article 75 of the Treaty for the implementation of a common transport policy.

10. The aim pursued in the directive, namely the introduction of common rules for admission to the occupation of road passenger transport operator in national and international transport operations in order to ensure that road passenger transport operators are better qualified, in the interests of users, transport operators and the economy as a whole, is unquestionably in accordance with the objectives of the said Article 75.

11. Therefore the answer to the first part of Question 1 must be that consideration of the directive has disclosed no factor of such a kind as to affect its validity.

Questions 3 and 4 (a)

12. It will be convenient to deal with Questions 3 and 4 (a) before the others.

13. Article 2 (2) of the directive provides that pending co-ordination at a later date, each Member State shall determine the provisions relating to good repute which must be satisfied by the applicant.

14. That provision leaves the Member States a wide margin of discretion as to the requirements relating to good repute imposed on applicants wishing to engage in the occupation of road passenger transport operator.

15. A provision of national law whereby an applicant who has a criminal conviction may be regarded as not being of good repute if the criminal conduct provides grounds for considering that there is imminent danger of misuse of his occupation cannot be regarded as exceeding the margin of discretion left to a Member State.

16. Therefore the answer to Questions 3 and 4 (a) should be that a statutory provision such as Article 78 of the Danish Penal Code is to be regarded as a provision validly enacted by the State within the limits of the directive.

Question 4 (b)

17. Article 4 (1) of the directive provides that: ‘Natural persons and undertakings furnishing proof that before 1 January 1978 they were authorized under national regulations in a Member State to engage in the occupation of road passenger transport operator in national and/or international transport operations shall be exempt from the requirement to furnish proof that they satisfy the provisions laid down in Article 2’.

18. Question 4 (b) raises the general issue of the effects of a directive adopted under Article 189 of the Treaty.

19. On this issue, the Court has already held, in its judgment of 1 February 1977 in Case 51/76 (Nederlandse Ondernemingen [1977] ECR 113)inter alia, that if, by virtue of the provisions of Anicle 189, regulations are directly applicable and, consequently, may by their very nature have direct effects, it does not follow from this that other categories of acts mentioned in that article can never have similar effects.

20. It would be incompatible with the binding effect attributed to a directive by Article 189 to exclude, in principle, the possibility that the obligation which it imposes may be invoked by those concerned.

21. In particular, where the Community authorities have, by directive, imposed on Member States the obligation to pursue a particular course of conduct, the effectiveness of such an act would be weakened if individuals were prevented from relying on it before their national courts and if the latter were prevented from taking it into consideration as an element of Community law.

22. Therefore it is to be inferred that even if national law does not contain any provision analogous to Article 4 of the directive, a national authority cannot, subject to application of Article 5 of the directive, require an applicant wishing to engage in the occupation of road passenger transport operator to furnish proof that he satisfies the requirements relating to good repute, if he furnishes proof that he was authorized to engage in that occupation before 1 January 1978.

Question 5

23. However, Article 5 (2) of the directive provides that Member States shall ensure that the competent authorities withdraw the authorization to pursue the occupation of passenger transport operator if they establish that the provisions of Article 2(1) (a), (b) or (c) are no longer satisfied. In that case however, they are to allow sufficient time for a substitute to be appointed.

24. If the authorities consider that applicants do not fulfil the requirements relating to good repute, they must therefore refuse them renewal of their transport licence, but when transport operators coming within Article 4 (1) of the directive are the subject of verification, they cannot be obliged to furnish special proof.

25. Therefore the answer to Question 5 must be that although persons who before 1 January 1978 had obtained authorization to engage in the occupation of road passenger transport operator are exempt from the requirement themselves to furnish proof that they satisfy the requirement relating to good repute laid down in Article 2 (1) (a) of the directive, the national authorities nevertheless remain competent to verify in each case that the said requirement is fulfilled.

26. The answers given make it unnecessary to reply to the other questions.

Costs

27. The costs incurred by the Danish Government, the Italian Government, the Netherlands Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

28. As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT, in answer to the questions referred to it by Københavns Byret by an order of 10 February 1978, hereby rules:

1 Consideration of Council Directive No 74/562/EEC of 12 November 1974 has disclosed no factor of such a kind as to affect its validity.

2 A statutory provision such as Article 78 of the Danish Penal Code is to be regarded as a provision validly enacted by the State within the limits of the directive.

3 Although persons who before 1 January 1978 had obtained authorization to engage in the occupation of road passenger transport operator are exempt from the requirement themselves to furnish proof that they satisfy the requirement relating to good repute laid down in Article 2 (1) (a) of the directive, the national authorities remain competent to verify in each case that the said requirement is fulfilled.