Report for the Hearing delivered in Case 4/88

I — Facts and procedure in the main proceedings

1. The company Lambregts Transportbedrijf (hereinafter referred to as ‘Lambregts’) was the holder of 10 general licences for domestic transport, 11 general licences for international transport and a number of German and French licences for frontier-zone and short-distance transport.

2. General licences for domestic and international transport are issued by a Member State to a transport undertaking in respect of particular vehicles. The undertaking is authorized to carry out transport operations of one or both categories with a vehicle registered in its name. The licence is issued to the undertaking and may not, in principle, be transferred. The undertaking must be established in Belgium and, consequently, must have fulfilled in that country the conditions for admission to the occupation of goods haulage operator.

3. The Belgian transport authorities became suspicious that Lambregts' registered office in Baarle-Hertog might be fictitious, and on 25 August and 7 September 1981 an official made unannounced visits to that office. He reported that the ‘registered office’ consisted of a permanently sited caravan ‘on which there was no number, name, bell or letterbox’ and that, according to a postal official, correspondence for Lambregts was delivered to a person residing in Breda (Netherlands).

4. On the basis of that investigation the Director-General of the Bestuur van het Vervoer (Transport Department) informed Lambregts by letter of 2 December 1981 that it had been determined that, although incorporated under Belgian law, the undertaking had no real establishment in Belgium and that its licences were to be withdrawn.

5. By letter of 9 December 1981, Lambregts stated that it had a registered office in Baarle-Hertog, although it admitted that for some time that office had been manned by only one employee who was there only at irregular intervals. Lambregts also emphasized that transport orders were kept in the office so that the drivers, who had keys to the office, could pick them up there, and that since November 1981 an employee was present every day to perform various administrative duties.

6. Upon receipt of that letter, the Transport Department proposed that the Minister should withdraw the licences granted to Lambregts on the ground that no transport activities were carried on at the address in Baarle-Hertog. In its view, Lambregts' observations ‘were not of such a kind as to refute or even in any way to qualify the situation found to exist at that address’.

7. On 24 February 1982, the Minister for Transport, acting under Articles 25 and 40(2) of the Royal Decree of 9 September 1967, in the version in force since 1 March 1976, decided to withdraw all the licences for domestic and international transport granted to Lambregts. Those provisions read as follows:

‘Article 25

All licences for domestic transport shall be definitively withdrawn by the Minister for Transport or a person acting under his authority from any person who ceases to have his operational base in Belgium.

Article 40(2)

General licences for international transport issued in respect of a vehicle shall be definitively withdrawn by the Minister for Transport or a person acting under his authority if the transport operator ceases to hold a general licence for domestic transport in respect of the vehicle concerned.’

8. In an application lodged on 4 March 1982, Lambregts appealed to the Administrative Division of the Raad van State against that decision. Furthermore, on 5 March 1982, Lambregts applied to the President of the Rechtbank van Eerste Aanleg (Court of First Instance), Brussels, for an order suspending the operation of the abovementioned decision until such time as the Raad van State had ruled. That application was dismissed on 25 March 1982 by the Rechtbank van Eerste Aanleg but was granted on appeal on 18 May 1982 by the Hof van Beroep (Court of Appeal), Brussels. No appeal was lodged against that decision.

9. The Fourth Chamber of the Raad van State, before which the main proceedings for the annulment of the decision withdrawing the transport licences had been brought, decided that Lambregts did not have a ‘place of business’ in Belgium. That concept must be understood as meaning ‘centre of activities’ within the meaning of Article 198 of the Vennootschappenwet (Law on Companies). The existence of such a place of business would be demonstrated by the fact that activities forming part of the commercial activity of the undertaking concerned regularly take place there and that the undertaking is there represented by an agent entitled to enter into binding commitments with third parties. The Minister therefore was right in considering that those conditions had not been fulfilled.

10. The Raad van State interpreted Lambregts' submission alleging an infringement of the general principles recognized by the EEC Treaty as invoking the principle of freedom to provide services since the contested rules did not prohibit any Community undertaking from establishing itself in Belgium nor do they make such establishment subject to restrictive or discriminatory conditions, provided that the establishment is genuine. With regard to the principle of freedom to provide services, the Raad van State, having regard to the specific rules in regard to transport laid down in Articles 74 to 84 of the EEC Treaty, raises the question whether those provisions can be relied on in proceedings before national courts, in other words, whether they have direct effect. In that regard, the Raad van State considers that the Court, in its judgment of 22 May 1985 in Case 13/83 European Parliament v Council [1985] ECR 1513 does not appear to have made a clear ruling on that question. In the event that Article 75(l)(a) and (b) should be held to be directly applicable, the further question arises as to the extent of the freedom in question, in particular, the extent to which the requirement of a special licence, to be issued to undertakings which provide services in a Member State other than that in which they are established, by the State where the services are provided, is compatible with the EEC Treaty, especially a licence subject to the condition of having an establishment (‘place of business’) in the Member State concerned. In that regard, the Raad van State observes that the judgments of the Court of 4 December 1986 in Case 220/83 Commission v France [1986] ECR 3663; Case 252/83 Commission v Denmark [1986] ECR 3713; Case 205/84 Commission v Germany [1986] ECR 3755; Case 206/84 Commission v Ireland [1986] ECR 3817 concern only the freedom to provide services in general and not the specific problem of the freedom to provide services in the field of transport, so that there remains some doubt as to the question whether the Belgian requirement regarding establishment is compatible with the EEC Treaty. Consequently, the Raad van State, by judgment of 1 December 1987, referred the following questions to the Court for a preliminary ruling: The judgment of the Raad van State was received at the Court Registry on 8 January 1988. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the plaintiff in the main proceedings, represented by M. Denys, of the Brussels Bar, by the Belgian Government, represented by E. Marissens, of the Brussels Bar, by the Netherlands Government, represented by E. F. Jacobs, of the Ministry of Foreign Affairs, and by the Commission of the European Communities, represented by T. van Rijn, acting as Agent. 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 and to assign the case to the Sixth Chamber.

‘1. Does Article 75(l)(a) and (b) of the EEC Treaty, at least in so far as it requires the Council to implement freedom to provide services in the field of transport, create individual rights on which nationals of the Member States may rely in proceedings before national courts with regard to events which took place on 24 February 1982?

2. If the answer to the first question is in the affirmative: under those provisions, can the retention of licences for national or international transport issued by the authorities of a Member State to a transport undertaking established in another Member State be made subject to the condition that the undertaking concerned have a “centre of activities” in the first State, or in other words that the undertaking regularly enter into transactions in that State which form part of its business activities and that it be represented there by an agent who is authorized to enter into commitments with third parties that are binding on it?’

II — Written observations submitted to the Court

1. The plaintiff in the main proceedings points out that the case raises the question of the possibility of relying directly on Article 75(l)(a) and (b) of the EEC Treaty before a national court, in other words, the question of whether it has direct effect. After reviewing the Court's case-law on the direct effect of provisions of the EEC Treaty, the plaintiff sets out the conditions which Community provisions must fulfil in order to have direct effect, namely that there be a clear and unconditional obligation, that there be no discretion in the implementation of the provision at issue and that no implementing measures have to be adopted by the Member States or Community institutions. With regard to the application of those principles in order to determine whether Article 75(1) (a) and (b) of the EEC Treaty has direct effect, Lambregts refers principally to the judgment of the Court of 22 May 1985, cited above. It claims that the grounds for that decision refer to all the factors necessary to show that the abovementioned provision may be regarded as having direct effect. The Court decided that the scope of the obligation imposed on the Council by Article 75 is clearly defined having regard, in particular, to the time-limit laid down in Article 75(2). The unconditional nature of the obligation may be deduced from the terms of Article 75 itself and from those of Articles 60 and 61. Those provisions provide for freedom to provide services in the transport sector as a fundamental principle recognized by the Treaty. Lambregts also claims that there is no discretion in regard to the implementation of those provisions since, according to the judgment of the Court of 22 May 1985, the Council does not have a discretion in that regard. Finally, Lambregts observes that no additional implementing measure is required and that consequently Article 75(l)(a) and (b) and (2) of the EEC Treaty do have direct effect. Nationals of Member States could therefore rely on that provision in February 1982, which means that the reply to the Raad van State's first question should be in the affirmative. With regard to the second question, to be replied to if the reply to the first question was in the affirmative, Lambregts argues that, according to the case-law of the Court concerning Articles 59 and 60 of the EEC Treaty, the realization of freedom to provide services involves the elimination of all discrimination against a supplier of services on the basis of his nationality or the fact that he is established in a Member State other than that in which the service is to be provided. More precisely, the fact of requiring a supplier of services to have a permanent residence on the territory of the Member State in which the services are to be provided could, in certain circumstances, wholly undermine Article 59, which seeks to eliminate all restrictions to freedom to provide services by persons residing outside the territory of the Member State in which the service is to be provided. Lambregts also emphasizes that, notwithstanding the existence of a certain number of exceptions to that principle regarding compliance with certain professional rules, such exceptions do not apply to a case in which the provision of services is not subject in a Member State to any professional disciplinary rules or qualification requirement or where the person providing the services holds a licence in his own Member State the issue of which is subject to conditions comparable to those laid down by the Member State in which the service is provided and when his activities are subject to supervision in his own Member State. Those exceptions do not apply in this case, since Lambregts fulfils all the conditions for admission to the occupation of road haulage operator applicable in the Netherlands, in accordance with Council Directive 74/561/EEC of 12 November 1974 on admission to the occupation of road haulage operator in national and international transport operations (Official Journal 1974, L 308, p. 18). The plaintiff therefore proposes that the reply to the second question should be in the affirmative.

2. The Belgian Government first states that, by virtue of Directive 74/561/EEC, cited above, any person wishing to establish himself in Belgium as a road haulage operator in national and international transport operations must meet and fulfil the conditions for admission to that occupation in force in Belgium, laid down in the Royal Decree of 5 September 1978. It points out that the conditions for admission to the occupation of road haulage operator are merely a preliminary requirement in order to be regarded as a trader in that sector and that they do not include any requirement of establishment or nationality. The Belgian Government also emphasizes that those Community and national rules concerning the financial and professional standing of road haulage operators must be distinguished from the licences granted by a Member State to undertakings established on its territory, in accordance with the bilateral quota agreements in the field of international transport. It points out that, apart from those international agreements governing bilateral quotas, a system of Community licences has been set up for the transport of goods by road between Member States. Those licences are also granted by the national authorities and concern international transport in the entire territory of the Community, in accordance with Council Regulation No 3164/76 of 16 December 1976 on the Community quota for the carriage of goods by road between Member States (Official Journal 1976, L 357, p. 1). In order to achieve a certain degree of harmonization between those two quota systems, the Council adopted Decision 80/48 of 20 December 1979 on the adjustment of capacity for the carriage of goods by road for hire or reward between Member States (Official Journal 1980, L 18, p. 21). That decision constitutes express recognition by the Council of the legitimacy of the system of bilateral quotas. The Belgian Government observes that the Raad van State asked for a reply concerning the direct effect of Article 75(l)(a) and (b) of the EEC Treaty only in so far as that provision requires the Council to implement freedom to provide services in the field of transport. Furthermore, the Raad van State's question relates to an administrative decision adopted on 24 February 1982, that is to say, before the judgment of the Court in Case 13/83, delivered on 22 May 1985. The national court thus wishes to know whether that judgment has an influence on any direct effect of Article 75. It is for the Court to decide whether that provision has direct effect in a more absolute sense, that is to say, independently of the failure to act on the part of the Council found to exist in the judgment of 22 May 1985, or in a more relative sense, that is to say, in so far as the Court has found that the Council had failed to act. In the latter case, the question also arises whether that direct effect also applies to measures preceding the Court's judgment such as the administrative decision which the national court has been asked to annul. The Belgian Government points out that in accordance with the settled case-law of the Court, a provision of Community law has direct effect only when it involves a clear and unconditional obligation for the Member States, when application thereof does not depend on other implementing provisions adopted by the Community institutions or the Member States and when the Member States have no discretion in its implementation. In regard to the first condition, the Belgian Government considers the Court's case-law on the definition of a ‘clear obligation’ imposed on the Member States by a Community provision and concludes that the fact that Article 75(1) was not expressly addressed to the Member States does not prevent that provision from having direct effect. With regard to freedom to provide services in the transport sector, it argues that, unlike Article 59, Article 75(1) merely contains a rule giving instructions, comparable to that contained in Article 63, and not a substantive rule. However, the Belgian Government could imagine that the Court might none the less decide that Article 75(l)(a) and (b) of the EEC Treaty has direct effect not in itself, inasmuch as it is concerned with freedom to provide services, but only in conjunction with Article 61(1) or with Article 61(1) and Article 59. With regard to the existence of an ‘unconditional obligation’, the Belgian Government proposes as a criterion that the obligation in question must no longer depend on the expiry of a time-limit. For example, the expiry of the transitional period meant that Articles 52 and 59 had direct effect. It considers that the condition concerning the unconditional nature of the obligation at issue is fulfilled since Article 75(l)(a) and (b) of the EEC Treaty refers, as do Article 57(1) and Article 63(1), precisely to the transitional period. There is thus no reason to assess the direct effect of the freedom to provide services under Article 75(1) other than in conjunction with Article 59. The latter provision became unconditional on the expiry of the transitional period, as the Court decided in its judgment of 3 December 1974 in Case 33/74 Van Binsbergen v Bedrijfsvereniging Metaalnijverheid [1974] ECR 1299. With regard to the criterion concerning the need for implementing measures, the Belgian Government considers that the freedom to provide services can operate without any further measures. However, it observes that, in replying to the question whether Article 75(1) has direct effect, the Court must decide whether a finding that the principles set out in Article 75(3) exist is a condition for the implementation of the freedom to provide services provided for in Article 75(l)(a) and (b). With regard to the fourth condition, namely that the Member States should not remain free to determine policy, the Belgian Government argues that Article 75(1) gives the Council some room for manoeuvre, but not a discretion and that it is clear that the Member States are not free to make policy choices and, therefore, the last condition for direct applicability has been fulfilled. If the Court accepts that Article 75(l)(a) and (b) of the EEC Treaty has direct effect, the Belgian Government, by raising the problem of the time at which it became directly effective, raises the question whether such direct effectiveness may already be determined now or only after the expiry of the ‘reasonable period’ referred to in the judgment of the Court of 22 May 1985, which is still running. If, on the other hand, the Court decides that Article 75(l)(a) and (b) of the EEC Treaty does not immediately have direct effect on the expiry of the transitional period, it must therefore be assessed whether that provision had direct effect at the date of the measure contested before the national court, namely 24 February 1982, a date which is after the expiry of the transitional period but before the judgment of the Court of 22 May 1985. The Belgian Government does not therefore propose a reply to the first question. If the Court replies to that question in the affirmative, the Belgian Government states that the second question deals merely with the problem of the compatibility of the Belgian legislation with Article 75(l)(a) of the EEC Treaty, on international transport between the Member States. It adds that the time at which and the manner in which the Council must implement the judgment of the Court of 22 May 1985 must be determined in accordance with Article 176. That provision concerns exclusively the Council and not the Member States. With regard to the establishment requirement for carrying on the international transport operations referred to in the second question, the Belgian Government refers first to the four judgments of the Court of 4 December 1986, cited above, on the establishment requirements imposed by certain Member States in the insurance sector. It can be seen from those judgments that an establishment requirement, which is contrary to the principle of the freedom to provide services, can be compatible with Articles 59 and 60 only under exceptional circumstances. Referring to the special nature of the establishment requirement for international road transport operators, the Belgian Government argues that the Belgian legislation, which provides for a system of licences for international transport, cannot be considered outside the context of the bilateral and Community quota systems. The establishment requirement in regard to international road haulage is, both in law and in fact, an essential condition of the functioning of, and compliance with, both the bilateral and Community quota schemes for road haulage licences. It is neither the purpose nor the consequence of the establishment requirement for international transport licences to complicate or hinder freedom to provide services in that area. The nature of the systems of bilateral and Community licences implies the inevitable and necessary introduction by each Member State of an establishment requirement. The Belgian Government states that it is for that reason that Article 2(6) of Regulation No 3164/76, cited above, provides that Community authorizations are to be issued by the competent authorities of the Member States ‘in respect of carriers established in their territory’. It is therefore inconceivable, because it is incompatible with the nature and machinery of a quota system for licences, that a carrier of goods, not forming part of the Belgian transport sector because it is not established on Belgian territory, should enjoy the benefit of a licence from the Belgian quota issued by another Member State under a bilateral agreement or from the Community quota attributed to Belgium by the Council under Regulation No 3164/76. The Belgian Government emphasizes that the establishment condition does not entail a nationality requirement because non-Belgian undertakings may set up a place of business in Belgium in order to be eligible for a general licence for international transport and additional licences under the licence quota systems. Consequently, the expression ‘Belgian undertakings’ used in the bilateral agreements and the terms of Article 2(6) of Regulation No 3164/76 do not prevent foreign undertakings establishing themselves in Belgium. The establishment requirement laid down in the Belgian rules as a condition for obtaining a licence for international transport and, in parallel, under the bilateral agreements and Regulation No 3164/76, in order to obtain licences under the quota systems, cannot therefore be regarded as an additional restriction on freedom to provide international transport services. In the context of the bilateral and Community quotas for international transport licences, the establishment requirement merely constitutes a restriction inherent in such a quota system. Consequently, that requirement does not constitute a restriction of the freedom to provide international transport services because it is inseparably linked to the nature and purpose of the quota systems. The Belgian Government states that since the establishment requirement constitutes in law and in fact both an essential condition for and the necessary and inevitable consequence of the functioning and application of any quota system, such a system would become inoperative if that requirement was itself judged to be unlawful. In other words, any decision that the establishment requirement is incompatible with Community law would imply that the quota system itself is also incompatible with Community law. The Belgian Government therefore proposes that if the Court replies in the affirmative to the first question, the reply to the second question should be as follows:

Having regard to the fact that the establishment requirement in order to obtain from the Belgian State a licence for international transport and, in addition, either a licence for international transport to a State with which the Kingdom of Belgium has concluded a bilateral international road haulage quota agreement or a Community licence under Council Regulation (EEC) No 3164/76 does not as such constitute a restriction, or an additional restriction, on the freedom to provide international transport services. It is merely a condition which is inherent in and necessary for the operation of the abovementioned bilateral and Community quota systems. Moreover, it is for the Council of the European Communities, under the powers conferred on it by Article 75 of the EEC Treaty, to make possible the freedom to provide services in international road transport between the Member States by replacing the said quota systems by a common transport policy other than that adopted in Council Decision 80/48 of 20 December 1979 and in Council Regulation (EEC) No 3164/76 of 16 December 1976. Accordingly it is not contrary to Articles 59, 60 and 75(l)(a) of the EEC Treaty for the Belgian Law of 1 August 1960 and the implementing Royal Decree of 9 September 1967 to require that foreign international transport undertakings must be established (have a ‘centre of activities’ within the meaning of Article 198 of the Consolidated Belgian Laws on Companies) on Belgian territory in order to obtain from the Belgian authorities a general licence for international transport and, in addition, either a licence for international transport to a State with which the Kingdom of Belgium has concluded a bilateral quota agreement or a Community licence under Council Regulation (EEC) No 3164/76.

3. The Netherlands Government points out the significance of the judgment of the Court of 22 May 1985 in determining whether Article 75(l)(a) and (b) of the EEC Treaty confers rights on nationals of the Member States upon which they may rely before national courts in respect of conduct engaged in before that date, that is to say, 24 February 1982, at least in so far as that provision requires the Council to introduce freedom to provide transport services. In its judgment, the Court did not expressly rule on the possible direct effect of Article 75(l)(a) and (b) of the EEC Treaty. It held that by virtue of Article 61, Articles 59 and 60 could not be regarded as having direct effect in the transport sector. However, the Court considered that the achievement of freedom to provide services in relation to transport is a sufficiently precisely defined obligation, the objectives of which are clearly determined and that the Council may not and must not disregard that obligation on the basis of an alleged discretion. The Netherlands Government emphasizes the Council's obligation to ensure the further development of the Community transport policy and argues that, even though the EEC Treaty did not define the measures to be adopted for that purpose and the time-limit within which they were to be adopted, the Council is required to adopt the decisions regarding measures necessary for the introduction of the freedom to provide services within a ‘reasonable period’. As long as freedom to provide services has not been achieved the Council is guilty of failing to act. By virtue of the fact that the Court has given the Council a reasonable time to adopt the necessary measures, an essential condition for the recognition that a Community provision has direct effect is lacking. However, the Netherlands Government argues that, on the expiry of that time-limit, the provisions of Article 75(l)(a) and (b), combined with Articles 59, 60 and 61 of the EEC Treaty, will be recognized as having direct effect because the scope and nature of the freedom to provide services in the transport sector have been precisely defined by the Court. They consist of the elimination of all discrimination against persons providing services by reason of their nationality or the fact that they are established in a Member State other than that in which the service is to be provided. Consequently, the Netherlands Government considers that it is very important in this case that the Court should specify when the reasonable period expires, since the EEC Treaty is based on precisely defined timelimits. It considers that where, by derogation from the general transitional period as defined in Article 75(2), a different reasonable period is granted to the Council, it is desirable in the interests of legal certainty to define that period more precisely.

4. The Commission observes that Article 75 does not grant rights directly to Community nationals, nor does it impose precise and unconditional obligations on the Member States from which nationals of the Member States may indirectly derive rights. It considers that the fact that the Council is required, before the end of the transitional period, to adopt measures to ensure freedom to provide services in the transport sector is not as such sufficient to conclude that Article 75 has direct effect. The Commission emphasizes that in the transport sector, freedom to provide services is subject to measures to be adopted by the Council. In the judgment of 22 May 1985, the Court clearly stated that the expiry of the transitional period did not mean that Articles 59 and 60 are also directly applicable in the transport sector. According to the Commission, the present case does not lend itself to a discussion of the possible consequences of a prolonged failure on the pan of the Council to fulfil its obligations in this matter, since the national court seeks to know the legal position as of 24 February 1982, that is to say, more than three years before the abovementioned decision. It therefore proposes that the reply to the first question should be in the negative. Since the Belgian Raad van State has put the second question only if the reply to the first question is in the affirmative, and since the Commission has replied in the negative to the first question, it does not consider it necessary to consider the second question. However, the Commission points out that according to Article 2(6) of Regulation No 3164/76, cited above, the place in which a carrier of goods is established is decisive in regard to the issue of Community licences. It argues that, although the system of Community licences is a first step towards the achievement of freedom to provide services in that sector, that freedom is seriously hindered by the systems of bilateral licences for road transport between the Member States. Moreover, from a legal point of view, the freedom to provide services does not rule out the introduction of a licensing system at Community level if such a system appeared necessary for the proper functioning of the transport market. In conclusion, the Commission proposes that the Court should reply as follows to the questions referred to it by the Raad van State:

Article 75(l)(a) and (b) of the EEC Treaty does not confer rights on nationals of the Member States upon which they may rely before national courts.

M. Diez de Velasco

Judge-Rapporteur

1 Language of the case: Dutch.