JUDGMENT OF 2. 3. 1983 — CASE 155/82 COMMISSION v BELGIUM

In Case 155/82

THE COURT composed of: J. Mertens de Wilmars, President, P. Pescatore, A. O'Keeffe and U. Everling (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco, T. Koopmans, O. Due and K. Bahlmann, Judges, Advocate General: S. Rozès Registrar: P. Heim

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the conclusions, submissions and arguments of the parties may be summarized as follows:

I — Facts

The Royal Decree of 5 June 1975 on the storage, marketing and use of pesticides and phyto-pharmaceutical products (Moniteur Belge [Belgian Official Gazette], p. 13864) provides in Article 4:

It is prohibited to market, purchase, offer, put up for sale, keep, prepare, transport, sell, transfer for a fee or free of chargé, import or use phyto-pharmaceutical products which have not first been approved by the minister with responsibility for agriculture.

In the event of an alteration in the composition, the appellation or the use of the approved product, a supplementary approval is required.

Article 8 of the Royal Decree contains identical provisions for pesticides for nonagricultural use; they are subject to the prior authorization of the minister with responsibility for public health.

Article 1 (2) of the Royal Decree provides that in the decree “phyto-pharmaceutical products” means: pesticides for agricultural use; substances and preparations intended to improve or to regulate agricultural production or to ensure the preservation of plants, parts of plants and plant products; substances and preparations intended to resist weeds, lichen and algae; substances and preparations intended to destroy plants and parts of plants, to prevent or to restrict unwanted growth; substances and preparations intended to resist or to eliminate ectoparasites in livestock and production, animals, including pigeons; microorganisms and viruses used as active anti-parasitic agents; softening agents, adhesives or other additives intended to promote the action of those substances and preparations, in so far as they are marketed for that purpose.

According to Article 1 (3) of the Royal Decree, “pesticides for nonagricultural use” means substances and preparations and also microorganisms and viruses intended for use outside the agricultural sphere to resist or to eliminate animals which may damage plant products and ainimals, to prevent the decomposition of plant products and animals, to resist or to eliminate harmful animals, plants or microorganisms in habitations, buildings, vehicles, swimming pools, rubbish tips and drains, to treat materials and objects in order to resist or to eliminate animals, plants or microorganisms, to resist or to eliminate by the treatment of plants, of soil or of water organisms which may cause disease in humans or in animals and to resist or to eliminate ectoparasites of small domestic animals.

Article 12 of the Royal Decree provides that:

The application for approval or authorization, the application for a renewal of the approval or the authorization and the application for supplementary approval or authorization shall be submitted on a form, a model of which is included in Annex I to this decree.

The application shall be submitted in triplicate to the competent minister by the person established in Belgium who is responsible for the marketing of the phyto-pharmaceutical product or the pesticide for nonagricultural use, whether he is the manufacturer, importer, proprietor or concessionnaire.

By letter of 5 November 1979, the Commission drew the attention of the Government of the Kingdom of Belgium to the fact that it had received a complaint from the authorities of the Federal Republic of Germany, which considered that Article 12 of the Royal Decree, by making the admission of the abovementioned goods conditional on having a representative in Belgium, put foreign producers at a disadvantage and therefore constituted a barrier to intra-Community trade.

The Commission pointed out that, according to Article 2 (3) (g) of Commission Directive 70/50/EEC of 22 December 1969, based on the provisions of Article 33 (7), on the abolition of measures which have an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the EEC Treaty (Official Journal, English Special Edition 1970 (I), p. 17), measures having an effect equivalent to quantitative restrictions include those which “make access of imported products to the domestic market conditional upon having an agent or representative in the territory of the importing Member State”.

In its reply of 31 December 1979, the Government of the Kingdom of Belgium maintained that, where a procedure for authorization and approval was provided for, the nomination of a national representative with responsibility for marketing was necessary in view of the risks connected with the use of the products in question.

By letter of 27 March 1981, the Commission commenced the procedure provided for under Article 169 of the EEC Treaty against the Kingdom of Belgium. It claimed that Article 12 of the Royal Decree of 5 June 1975 constituted, in respect of the products concerned, a barrier to intra-Community trade and infringed the requirements imposed by Article 30 of the EEC Treaty, inasmuch as it rendered the marketing of imported products more difficult than that of domestic products; arguments based on public policy and public health were not sufficient to justify the measure under the provisions of Article 36 of the Treaty.

In its observations of 21 May 1981, the Belgian Government conceded that Article 12 of the Royal Decree might “certainly have the apparent effect of rendering the marketing of imported goods more difficult than that of domestic goods”. However, it reaffirmed its opinion that the provision was necessary. The products concerned were of a dangerous nature, and were therefore regulated by the imposition of extremely strict rules throughout the marketing process. It was essential that the system of control be as effective as possible. For that system to be effective, it was necessary to be able to locate the products at all times, in particular, so as to be able to withdraw an entire consignment from the market when a product was shown to be defective. It was also necessary that any resulting prosecutions should not be deprived of their practical effect from the outset. The safeguard laid down in order to attain that objective was simply the nomination of a person with responsibility for the quality of the products in Belgium, who might merely be a local concessionnaire, and therefore it did not seem that it should immediately be assumed that, with reference to the objectives pursued, an excessive burden was imposed on the undertakings concerned.

Pursuant to the first paragraph of Article 169 of the EEC Treaty, the Commission issued a reasoned opinion on 23 October 1981, notified to the Kingdom of Belgium on 30 October 1981, in which it drew attention to that State's failure to fulfil its obligations under the Treaty and requested it to take the necessary measures within a period of two months.

In its reply of 18 February 1982, the Belgian Government emphasized the necessity of protecting public health in the sector of pesticides for nonagricultural use and phyto-pharmaceutical products; the requirement that the person with responsibility for marketing be established in Belgium provided in that respect a number of safeguards, whch could not be regarded as incompatible with the Treaty.

II — Written procedure

By application lodged on 17 May 1982, the Commission instituted these proceedings pursuant to the second paragraph of Article 169 of the EEC Treaty for a declaration that the Kingdom of Belgium had failed to fulfil its obligations under the Treaty.

The written procedure followed the normal course.

Upon 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. However, it requested the Belgian Government and the Commission to submit written replies to a number of questions; the parties replied to those questions within the specified periods.

III — Conclusions of the parties

The Commission claims that the Court should:

Declare that the Kingdom of Belgium, by providing that only a person established in Belgium may apply for the approval and authorization of pesticides and phyto-pharmaceutical products, has failed to fulfil its obligations under Article 30 et seq. of the EEC Treaty;

Order the Kingdom of Belgium to pay the costs.

The Government of the Kingdom of Belgium claims that the Court should :

Declare the Commission's application to be unfounded;

Order the Commission to pay the costs.

IV — Submissions and arguments

of the parties in the course of the written procedure The Commission does not dispute the fact that numerous phyto-pharmaceutical products and pesticides for nonagricultural use do indeed present a potential danger of intoxication; that fact however cannot justify the disputed provision.

The Commission points out moreover that it submitted to the Council on 4 August 1976 a proposal for a Council directive concerning the placing of EECaccepted plant-protection products on the market (Official Journal 1976, C 212, p. 3), which provides a Community solution to the question of establishment. That solution is incompatible with a “national” solution. The Commission has already taken action against several Member States for breaches similar to that which is the subject of the present case, particularly in the sector of medicinal products and phyto-pharmaceutical products.

From a legal point of view, it should be noted that Article 12 (2) of the Royal Decree of 5 June 1975 imposes an imperative obligation on producers from other Member States to call upon the services of an importer or distributor established in Belgium who will be “responsible for marketing” and who, as such, is the only person eligible to apply for the approval or authorization of their products by the appropriate minister.

a) That obligation impedes commercial transactions connected with importation and marketing, inasmuch as an exporter, who is nearly always the producer, from another Member State is prevented from himself applying for the necessary authorizations in Belgium. The necessity of acting through the intermediary of an undertaking established in Belgium inevitably entails costs and imposes a burden which is not imposed on domestic producers. Under Directive 70/50/EEC such measures are to be regarded as measures having an effect equivalent to quantitative restrictions. The restriction of the right to apply for the necessary approvals and authorization for phyto-pharmaceutical products and pesticides for nonagricultural use to persons established in Belgium constitutes a barrier to trade. It is likely to hinder, directly or indirectly, actually or potentially, intra-Community trade and therefore constitutes a measure having an effect equivalent to a quantitative restriction on imports, which is contrary to Article 30 of the Treaty unless it is covered by Article 36. The requirement of an approval or authorization for marketing is justified under Article 36. The point at issue in this case is the necessity of having recourse to a person established in Belgium who alone may apply for that approval or authorization. A comparison with the situation in other Member States shows that it is perfectly possible to differentiate between an authorization and the necessity of establishment. The practical effect of the disputed legislation is perhaps limited, inasmuch as the majority of the undertakings concerned have a local representative in any case for reasons of sales policy; nevertheless that consideration raises the question why Belgium considers it necessary to retain legislation which is of minimal effect. There is a contradiction in the Belgian Government's argument. On the one hand it seeks to discount the effect on intra-Community trade, but on the other hand emphasizes all the obligations which the applicant for approval or authorization must fulfil. In view of those obligations, the applicant for the approval naturally requires appropriate reward for his services, with the result that considerable expense is involved. Moreover, as it is an expense which the domestic producers are not required to bear, it is completely discriminatory.

b) The necessity and legality of organizing in the sector concerned a system of monitoring, inspection and checks and of adopting the measures necessary for the protection of public health is not disputed. The requirement of establishment in Belgium is by no means a necessary element in such preventive legislation. The Belgian Government confuses the application for approval and the marketing of the product; there is no logical necessity for the applicant or the holder of the approval and the person with responsibility for marketing to be the same person. The obligations imposed on the holder of the approval, in particular as regards liability, might equally well be assigned to the person with responsibility for marketing the product in question. The authority which granted the approval or authorization is as well placed as anyone to provide the necessary information as to the chemical composition of the product and its toxic properties. Moreover the possibility of initiating criminal or civil proceedings provides no justification for the disputed measure. Within the framework of international legal and administrative cooperation, there are already sufficient possibilities for prosecuting an offender, even when he is established in the territory of another Member State; as regards civil actions, the Convention of 1968 on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters meets the requirements of individual citizens who have suffered injury.

c) According to the case-law of the Court, it is for the party who relies on one of the grounds for exemption contained in Article 36 of the Treaty to establish that the measures in question are necessary and conform to the principle of proportionality. In this case that has not been established. The arguments put forward by the Belgian Government are founded on a confusion between the application for approval and the marketing of the product. In particular, the necessity of providing for effective criminal penalties, if it is conceded that they are indeed indispensable to ensure the protection of public health, does not automatically mean that such penalties must be enforceable against the holder of the approval; it is sufficient if they apply to the producer and the retailer of the product. The fact that the majority of Member States dò not have legislation comparable to the disputed provisions is in itself sufficient evidence that there are other means of ensuring the protection of the health and life of humans. As regards the argument that the measure in question does not constitute either a means of arbitrary discrimination or a disguised restriction on trade, it should be pointed out that Article 52 of the Royal Decree of 5 June 1975 provides for a Benelux approval or authorization which enables Belgium to set aside not only the requirement that a person be established in Belgium but also that of a national approval or authorization, provided that a Benelux approval or authorization has been issued by the Netherlands or Luxembourg. What is possible within the framework of the Benelux Economic Union should be possible within that of the EEC. The Government of the Kingdom of Belgium emphasizes that phyto-pharmaceutical products and pesticides for nonagricultural use are products which are dangerous for the health of any person who comes into contact with them, either as a trade or domestic user or as a third party who is exposed to their action. The danger of intoxication by ingestion, inhalation or cutaneous absorption has substantially increased over the last few years as a result of the considerable increase in the use of pesticides and phyto-pharmaceutical products. It is indispensable for the protection of the user to adopt legislative measures concerning the imposition of liability. Article 12 of the Royal Decree of 5 June 1975 is intended to satisfy that objective. At present the protection of public health within the European Community depends on a system of approval for which each Member State is individually responsible. The schemes of approval are in the process of being harmonized. That harmonization applies only to the classification, packaging and labelling of dangerous substances (Council Directive 67/548/EEC of 27 June 1967, Official Journal, English Special Edition 1967, p. 234). Belgium, supported by other Member States, has reaffirmed its view that it is necessary to allow Member States to impose a requirement that the applicant for acceptance reside in the territory of the State to which the application is submitted.

a) The Belgian legislation in question is intended to provide every possible safeguard in order to avoid accidents and the extremely serious consequences thereof. The holder of the approval established in Belgium is unquestionably in a better position than a holder living abroad, perhaps at some considerable distance from the place where the product is used, to verify that the product satisfies the requirements. In order to ensure real safety, it is necessary, after the authorization has been issued, to take other measures. Such measures may include checks on the composition and labelling of consignments, restrictions on sales, a requirement that the most toxic products be used by persons with the appropriate qualifications and insistence on the immediate availability of the person with responsibility. In the event of an accident, it is for the holder of the approval, as the person who has knowledge of the total composition of the product and its particular toxic properties, to provide the doctor in attendance with the necessary information. Moreover, in order to effect the withdrawal from circulation of the toxic product, it is easier to discover the identity of the distributors of the product if the person with responsibility is established in Belgium. Moreover, the holder of the approval is liable for the harmful effects on health which result from the product's nonconformity with the specifications of the approval.

b) The fact that a foreign producer must satisfy conditions for approval, fixed in the absence of a harmonized system of approval within the Community by each Member State, and that he must apply to each individual government to obtain the national approval in itself amounts to an obstacle to trade. The requirement of having a representative within the national territory is, in that respect, only one element of the system of national approval considered as a whole.

c) The requirement has only a slight effect on trade. The foreign undertaking is completely at liberty to appoint a representative and the expense of so doing is not excessive. The fact of having a representative in the Member State may, moreover, have commercial advantages for the foreign undertaking. In practice, even in States which do not require the establishment of a representative within the national territory, all undertakings have a local representative. Undertakings are not required to establish a new representative in Belgium, as the application for approval may be submitted by a concessionnaire who is already established. In any event, if there is a barrier to trade, it cannot be regarded as having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the EEC Treaty. Not every measure adopted by governments in connection with imports constitutes such a restriction. This case is concerned with a measure intended to provide the best possible protection for public health. As far as the threat of criminal prosecution is concerned, the requirement of a representative has the effect, not of creating discrimination, but, on the contrary, of placing a foreign undertaking in the same position as a national undertaking. Without that requirement, foreign undertakings would be at an advantage, because it would be more difficult to enforce the criminal law against them than against national undertakings.

d) In view of the potential danger to public health of phyto-pharmaceutical products and pesticides for nonagricultural use, every attempt should be made to impose liability on the undertaking. The requirement provided for by Article 12 of the Royal Decree should be regarded as safeguarding a public interest which takes precedence over the demands of free trade.

e) In any event, the disputed measure may be justified under Article 36 of the Treaty on the ground of the protection of the health and the life of humans. The Court has held that Member States áre entitled to adopt the necessary measures to ensure that public health is protected effectively. For that reason, the holder of the approval must bear the consequences of the liability which he incurs by marketing products which do not conform to the specifications of the approval. The holder must be liable to criminal penalties, which, in addition to being punitive, have a preventive effect. The problem is not, as has been suggested by the Commission, whether it is possible to initiate criminal prosecutions. Offences committed on Belgian territory are always capable of giving rise to prosecution and in those circumstances recourse may be had to conventions on legal cooperation in criminal matters. Nor is there any difficulty in obtaining a judgment in Belgium against an offender established abroad. The problem arises in connection with the enforceability of such a judgment. In other words the question is whether, when Belgian legislation has been contravened, effective criminal penalties can be enforced against the perpetrator of an offence who is established abroad. In that respect, international legal cooperation is in practice nonexistent. Neither extradition, nor the exchange of information nor orders for the enforcement of foreign criminal judgments provide valid solutions. As regards the enforcement of criminal sentences for offences committed in Belgium, if the perpetrator is established abroad, he is in practice protected from all effective penalties. The imposition of liability on those who offer products for sale on national territory (importers, wholesalers, retailers) would weaken the liability and therefore reduce the effectiveness of the legislation. The Convention of 1968 is irrelevant, since it operates outside the sphere of criminal law and of international legal cooperation in criminal matters. The threat of enforceable criminal penalties is the condition sine qua non for the liability which must be imposed on the person who markets the toxic product on national territory.

f) Article 12 of the Royal Decree is compatible with the principle of proportionality. The objective consists in establishing the best protection for public health, in particular, by ensuring the enforceability of a criminal penalty which is both punitive and preventive. The nomination by a foreign undertaking of an intermediary residing in Belgium may scarcely be regarded as a commercial restriction likely to hinder intra-Community trade.

g) The disputed measure does not constitute either a means of arbitrary discrimination or a disguised restriction on trade between Member States. There is nothing arbitrary in the requirement that foreign producers act through an intermediary established in Belgium. On the contrary, the objective is to ensure that all holders of the approval are subject to the same penalties in order to safeguard public health. To maintain that the measure constitutes a disguised restriction on trade between Member States is completely to misinterpret the objective of public health pursued by the provision in question. The Benelux system of approval, cited by the Commission, is a harmonized system, which is moreover not yet applicable to pesticides and phyto-sanitary products.

V — Oral procedure

The Commission, represented by R. Wägenbaur, and the Government of the Kingdom of Belgium, represented by R. Hoebaer, presented oral argument at the sitting on 7 December 1982.

The Advocate General delivered her opinion at the sitting on 19 January 1983.

Decision

1. By application lodged at the Court Registry on 17 May 1982, the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that, by restricting the right to apply for authorization or approval for pesticides for nonagricultural use and phyto-pharmaceutical products to persons established in Belgium, the Kingdom of Belgium has failed to fulfil its obligations under Article 30 et seq. of the EEC Treaty.

2. By the Royal Decree of 5 June 1975 on the storage, marketing and use of pesticides and phyto-pharmaceutical products (Moniteur Belge, p. 13864), Belgium made the marketing on its territory of pesticides for nonagricultural use and phyto-pharmaceutical products, more fully defined in the abovementioned Royal Decree, subject to governmental authorization. Article 12 of the decree provides that authorization may be obtained only by a person established in Belgium who has responsibility for the marketing of one of those products as a producer, importer, proprietor or concessionnaire.

3. The Commission considers that the provision, by making the admission of such products conditional on the requirement of having a representative in Belgium, has the effect of placing non-Belgian producers at a disadvantage and, consequently, constitutes an obstacle to intra-Community trade which is incompatible with Article 30 of the Treaty. It points out in particular that, according to Article 2 (3) (g) of Commission Directive 70/50/EEC of 22 December 1969, based on the provisions of Article 33 (7), on the abolition of measures which have an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the EEC Treaty (Official Journal, English Special Edition 1970 (I), p. 17), measures which “make access of imported products to the domestic market conditional upon having an agent or representative in the territory of the importing Member State” are to be considered measures having an equivalent effect to quantitative restrictions.

4. Consequently, the Commission commenced the procedure under Article 169 of the Treaty and, on 23 October 1981, issued a reasoned opinion in which it requested the Kingdom of Belgium to remove from its legislation the requirement that the recipient of the authorization to market one of the products in question be established on national territory.

5. In its statement of 18 February 1982, the Belgian Government declared that it considered the disputed measure to be justified, in view of the dangerous nature of the products concerned, on the ground of the protection of public health.

6. Following that statement, on 17 May the Commission brought an action under Article 169.

7. It is not disputed that the requirement imposed by the Belgian legislation constitutes an obstacle to the importation of the products concerned into Belgium, inasmuch as it compels undertakings established in other Member States to incur the cost of establishing a representative in Belgium, and that it may, as a result, make it difficult, if not impossible, for certain undertakings, in particular small or medium-sized undertakings to enter the Belgian market.

8. The Belgian Government acknowledges that the requirement constitutes an impediment to trade within the Community, but argues that it is justified on the ground of the protection of public health, as recognized by Article 36 of the Treaty.

9. It points out that there is, as yet, no harmonized system of approval at Community level in the sphere in question, so that each Member State lays down the rules for approval for its own territory. The requirement of having a representative on national territory is, in that respect, only one element of the system of national approval, taken as a whole.

10. It maintains that, in view of the considerable increase in the use of the products concerned and of the high degree of toxicity of certain of them, strict measures are necessary for their control and for the imposition of liability. In that respect, the requirement that any producer wishing to market a specified product must have a representative on Belgian territory who is responsible for the product is justified by a number of considerations relating to: The need to ensure the proper completion of the approval formalities, which for certain products are particularly complicated and, as a result, require direct contact between the applicant and the administration; The enforcement of the rules concerning the labelling of products; The need to check the conformity of the product marketed with the product for which the approval was issued; and The necessity of having on the territory a person who may be contacted easily and quickly in the event of an accident or in the event of complaints from users.

11. In addition, the Belgian Government claims that only the establishment on national territory of a person with responsibility for the product ensures the effectiveness of prosecutions for infringements of public health legislation.

12. The principle behind the arguments put forward by the Belgian Government can not be disputed, inasmuch as each Member State is entitled to take within its territory, in particular in a sphere in which the objective of the harmonization of health control measures has not yet been achieved, appropriate measures in order to ensure the protection of public health. However, such measures are justified only if it is established that they are necessary in order to attain the objective of protection referred to in Article 36 and that such protection cannot be achieved by means which place less of a restriction on the free movement of goods within the Community.

13. In that connection two observations should be made concerning the arguments put forward by the Belgian Government.

14. On the one hand, it seems that the objectives pursued by the Belgian Government with regard to the completion of the approval formalities, the rules on labelling, the verification of the conformity of the product marketed with the product approved and the availability of information in the event of an accident or a complaint may be fully satisfied by appropriate administrative measures taken when the application is examined and the approval is issued, without its being necessary to require the establishment of a representative on national territory.

15. On the other hand, questions of criminal liability are relevant to the objective of Article 36 only in so far as the application of criminal provisions may have a preventive effect. In that respect it is clear that, as far as effective prevention is concerned, only the preliminary formalities connected with the issue of the approval and the checks carried out at that stage and, possibly, at the moment when the goods are placed on the market can provide an adequate safeguard for the attainment of the objective pursued by Article 36. Even though criminal penalties may have a deterrent effect as regards the conduct which they sanction, that effect is not guaranteed and, in any event, is not strengthened, in the case of a manufacturer in another Member State who has been issued with an approval, solely by the presence on national territory of a person who may legally represent the manufacturer.

16. The requirement that a representative be established on national territory is not therefore such as to provide, with a view to the attainment of the objective of the protection of public health, sufficient additional safeguards to justify an exception to the prohibition contained in Article 30.

17. It must therefore be concluded that the requirement imposed by the Belgian legislation, according to which the right to apply for approval for pesticides for nonagricultural use and phyto-pharmaceutical products is restricted to persons established in Belgium, is not justified under Article 36 and therefore constitutes a restriction on intra-Community trade which is incompatible with Article 30 of the Treaty.

Costs

18. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the defendant has failed in its submissions it must be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Declares that, by restricting the right to apply for authorization or approval for pesticides for nonagricultural use and phyto-pharmaceutical products to persons established in Belgium, the Kingdom of Belgium has failed to fulfil its obligations under Article 30 et seq. of the EEC Treaty;

2 Orders the defendant to pay the costs.