Report for the Hearing in Case C-17/90

I — Legislative background

1. The plaintiff is an undertaking established in the Federal Republic of Germany engaged in the transport of goods within Germany under an authorization issued pursuant to the Güterkraftverkehrsgesetz (Law on the Carriage of Goods by Road, hereinafter referred to as the ‘GüKG’). It wished to enter into contractual relations with Transvenlo, a carrier established in the Netherlands, under which that carrier would undertake to carry out the longdistance transport of goods within the Federal Republic of Germany. To that end, it had submitted a request for an authorization to the Bundesanstalt für den Güterfernverkehr (Federal Office for the Long-Distance Carriage of Goods). The Bundesanstalt für den Güterfernverkehr refused to grant an authorization because it took the view that the plaintiff's intention was unlawful because internal goods transport may be carried on only by a carrier established in and authorized by the Federal Republic of Germany.

2. The plaintiff thereupon applied to the Verwaltungsgericht (Administrative Court) Cologne, for a declaration that it was entitled to arrange for Transvenlo to carry out the internal transport of goods within the Federal Republic of Germany and to agree, in the context of that contract, on carriage costs lower than those determined by the German authorities in accordance with the abovementioned legislation. The action was unsuccessful both in the Verwaltungsgericht and, on appeal, in the Oberverwaltungsgericht (Higher Administrative Court).

3. The Oberverwaltungsgericht noted that according to the legislation in question internal goods transport in the Federal Republic of Germany may be carried on only by a carrier who has a place of business in the Federal Republic of Germany and who has been issued with the relevant authorization under the system of quotas fixed by the Federal Government.

4. The plaintiff lodged an appeal on a point of law against that decision. It claimed that the restrictions under the national legislation on the services of carriers who are not established in the Federal Republic of Germany, but are established in other Member States of the Community and are there authorized to engage in the carriage of goods, have been rendered invalid through the direct effect of Articles 59 and 60 of the EEC Treaty.

5. The Bundesverwaltungsgericht thereupon referred the following question to the Court of Justice for a preliminary ruling: The order for reference was lodged at the Registry of the Court of Justice on 22 January 1990. 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 U. Wiemann and B. Eidering, Rechtsanwälte, Cologne, by the defendant in the main proceedings, represented by R. Wilke, Rechtsanwalt, Berlin, by the Government of the Kingdom of Spain, represented by C. Bastarreche Sagiies and A. Hierro Hernández-Mora of the Ministry of Foreign Affairs, acting as Agents, and by the Commission of the European Communities, represented by R. Wägenbaur and R. Gosalbo Bono, Members of the Legal Service, acting as Agents. 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.

‘In the light of the continuing failure by the Council of the European Communities to ensure freedom to provide services in the sphere of international transport and to lay down the conditions under which nonresident carriers may operate transport services within a Member State, are Articles 59 and 60 of the EEC Treaty at least directly applicable in so far as an undertaking established in the Federal Republic of Germany may not be prohibited from appointing a Netherlands carrier to undertake on its behalf the internal carriage of goods within the Federal Republic of Germany, using vehicles which are licensed in the Netherlands for goods transport and at rates generally in force in the Federal Republic of Germany?’

II — Summary of the written observations submitted to the Court

1. The plaintiff in the main proceedings observes that the preliminary question falls within the context of the common market in transport which has still not been realized and the organization of which is provided for by the Commission in its proposal for a regulation on the introduction of the final regime for the organization of the market for the carriage of goods by road (Official Journal 1990 C 87, p. 4). The plaintiff refers to the judgment of the Court of Justice in Case 13/83 Parliament v Council [1985] ECR 1513 and states that the reasonable period for compliance with that judgment expired a long time ago. It explains that the Commission submitted on 25 November 1985 a proposal for a regulation laying down the conditions under which nonresident carriers may operate national road haulage services within a Member State. According to the draft regulation, the principle of free cabotage should have entered into force on 1 July 1986. According to the plaintiff, the Council, instead of complying with the judgment of the court, did the exact opposite. It points out that on 14 November 1985 the Council adopted guidelines for an open market in transport, with no quantitative restrictions, to be established in 1992 at the latest. By proceeding in this way, the Council postponed until 1992 the introduction of the principle of free cabotage in the transport sector. The Council thereby demonstrated that it did not intend to fulfil its obligations under Article 176 of the Treaty. The plaintiff maintains that Articles 59 and 76 of the Treaty contain clear and unconditional obligations and that their effectiveness is not, moreover, subject to any implementing measure on the part of the Community institutions or the Member States. According to the plaintiff, although it is the case that Article 75(l)(b) of the Treaty imposes an obligation on the Council to lay down the conditions under which nonresident carriers may operate transport services within a Member State, nevertheless, with the expiry of the period of time for the adoption of the measures necessary to comply with the judgment of the Court of Justice, the Council's power of implementation has lapsed, so that the conditions under which nonresident carriers may operate transport services within a Member State subsequently stem directly from Article 59 of the Treaty. The consequence of this is that any undertaking, and therefore even an undertaking unauthorized in the country where transport services are to be operated, is free to operate transport services under the law and conditions of the State in which it is established. The plaintiff claims that the application of that principle means that Transvenlo is entitled to offer its transport services in Germany under the same conditions as those which must be fulfilled for the same services in the State where its principal place of business is situated. In the absence of Community legislation to the contrary, it is the legislation on provision of services of the State where the principal place of business is situated (Netherlands) which applies in the State where those services are to be provided (Federal Republic of Germany). It is therefore of the opinion that: (1) Article 59 has become directly applicable, at least in the context of Article 75(1 )(b), so that conflicting provisions of German transport legislation are no longer applicable to services provided by nonresident carriers, and (2) the principles laid down in the ‘Cassis de Dijon’ decision are fully applicable to the freedom to provide services.

2. The defendant in the main proceedings notes the steps taken by the Council since 1985 in conformity with Article 75(l)(b) of the Treaty. It considers that, by adopting Regulation (EEC) No 4059/89 of 21 December 1989 laying down the conditions under which nonresident carriers may operate national road haulage services within a Member State, the Council has now fulfilled its obligation under the aforementioned provision. According to the defendant, Regulation 4059/89 defines in particular the conditions under which any road haulage carrier for hire and reward who is established in a Member State of the Community is to be entitled to operate on a temporary basis national road haulage services for hire and reward, namely within Community cabotage quotas. The defendant states that under that regulation the cabotage authorizations issued by the Member State of establishment give the recipient free access to the territory of the host Member State in order to enable him to carry out any carriage of goods by road for hire and reward. It adds that the regulation determines the conditions for the issue and use of the said authorizations as well as the steps to be taken in the event of disturbances of the markets. It also provides that Member States are to assist one another and determine the action to be taken in the event of serious or repeated infringements committed by a nonresident carrier. The defendant considers that, on the basis of the date of judgment of the Court of Justice, Regulation No 4059/89 was adopted within a reasonable period of time, as the Court had required. According to the defendant, account should be taken of the fact that provisions concerning cabotage constitute a complex system of fundamental importance for which consideration of many aspects was necessary in order to ensure its functioning. Nor is it possible to ignore the fact that, at the time when the Council's failure to act was declared, there existed no basis for the implementation of Article 75(l)(b) of the Treaty. The defendant argues that, in so far as the Council has now fulfilled its obligation under Article 75(1 )(b) of the Treaty, the question of the direct application of Articles 59 and 60 of the Treaty no longer arises. The access of nonresident carriers to the operation of national road haulage services within a Member State is now subject to the conditions laid down in Regulation No 4059/89. The defendant therefore considers that the question referred to the Court may be answered to the effect that the direct application of Articles 59 and 60 of the Treaty does not come into consideration even as regards the limited question of establishment, as raised by the Bundesverwaltungsgericht.

3. The Spanish Government considers that the question referred for a preliminary ruling does not call for an answer following the entry into force of Regulation No 4059/89 which the Council adopted by virtue of the obligation imposed on it by Article 75(l)(b) of the Treaty. It argues that, although the validity of Regulation No 4059/89 is limited in time, that is from 1 July 1990 to 31 December 1992, on which date a definitive cabotage system will become applicable, the freedom to provide services in the transport sector is already established at Community level. Should the Court rule on the question whether the effect of the failure of the Council to act, declared by the Court in its judgment in Case 13/83, and the subsequent failure to take implementing measures under Article 75(l)(b) of the Treaty may be that Articles 59 and 60 of the Treaty directly introduce the freedom to provide services in the road haulage sector, the Spanish Government suggests that the reply should be in the negative. According to the Spanish Government, the fact that the Council omitted in the past to implement Article 75(l)(b) of the Treaty, while constituting sufficient grounds for the Court to declare that the Council had failed to fulfil its obligations under that provision, nevertheless does not mean that the rules which have been expressly excluded by the Treaty apply in the field of transport with a view to regulating the system of provision of services in that sector. According to the Spanish Government, it follows from Article 61(1) and from Articles 74 and 75(l)(b) of the Treaty that the draughtsmen of the Treaty considered that it was not appropriate that the principle of freedom to provide services should be applied without the distinctive features of that sector being taken into account. On the contrary, the Community opted for a gradual application of that freedom by introducing a common transport policy to be adopted by the Council, in particular with regard to the adoption of a number of rules to the conditions under which nonresident carriers may operate national road haulage services. The freedom to provide services in the transport sector is therefore subject to measures which the Council must take in the context of the common policy in that area. Consequently, should the Court consider it necessary to reply to the question referred to it for a preliminary ruling despite the entry into force on 1 July 1990 of Regulation No 4059/89, the Spanish Government proposes that the reply should be as follows:

‘Articles 59 and 60 of the Treaty are not directly applicable to the road transport sector so that until 1 July 1990, the date of the entry into force of Council Regulation No 4059/89, an undertaking established in the Federal Republic of Germany may be prohibited from appointing a Netherlands carrier to carry out on its behalf the internal long-distance transport of goods within the Federal Republic of Germany, using vehicles which are licensed in the Netherlands.’

4. The Commission explains that the question which has been referred to the Court may be divided into three parts: a first point on the content of the obligation on the Council to achieve freedom to provide transport services; a second point concerning the effects of the Court's declaration that the Council had failed to act in this matter; and a third point relating to the effects of applying provisions guaranteeing freedom to provide services on internal tariff systems which are applicable to transport operations carried out within the territory of Member States. The Commission considers that the application of the principle of freedom to provide transport services must be achieved by the adoption of the common transport policy consisting, in particular, of the establishment of common rules applicable to international transport operations and of conditions under which nonresident carriers may operate national road haulage services. It states that Articles 59 and 60 of the Treaty require the abolition of any discrimination against a person providing services based on his nationality or on the fact that he is established in a Member State other than that where the service is to be provided. Nevertheless, in the opinion of the Commission, the question of the direct effect of those provisions no longer arises since the Council has fulfilled its obligation to comply with the judgment in Case 13/83 within a reasonable period of time. The Commission observes that, as regards international transport, the Council adopted on 21 June 1988 Regulation (EEC) No 1841/88 amending Regulation (EEC) No 3164/76 on the Community quota for the carriage of goods by road between Member States. That regulation contains a number of provisions which are of fundamental importance for the introduction of the freedom to provide services in that field. The Commission maintains that with the adoption of Regulation No 1841/88 the Council decided to introduce, from a certain date, a market in which international transport services may be operated freely within the meaning of Articles 59 and 60 of the Treaty. By so doing, the Council fulfilled the obligation under Article 176 to take the measures necessary to comply with the judgment of the Court of Justice in Case 13/83. Thus, in future, access to the market is to be regulated by a system of authorizations granted on the basis of qualitative criteria. For the carrier it will be a question of fulfilling the conditions under which nonresidents may operate haulage services and to demonstrate good professional conduct and also a certain level of experience. It adds that the introduction of freedom to provide services in the international transport sector does not exclude the adoption of restrictions by way of implementing measures in so far as those restrictions are based on Community policy in that field and are nondiscriminatory. As regards cabotage, the Commission notes that the Council adopted on 21 December 1989 Regulation (EEC) No 4059/89 of 21 December 1989 laying down the conditions under which nonresident carriers may operate national road haulage services within a Member State. The regulation provides that, with effect from 1 July 1990, any road haulage carrier for hire and reward who is established in a Member State and is authorized, in that State, to operate international road haulage services, is to be entitled, under the conditions laid down in the regulation, to operate on a temporary basis national road haulage services for hire and reward in another Member State (cabotage) without having a registered office or other establishment in that State. The Commission adds that the cabotage system provided for in that regulation is none the less a transitional scheme since it is applicable only until 31 December 1992. The regulation stipulates that cabotage is to be carried out within Community cabotage quotas which are increased annually by the Commission in line with the average trends in internal road haulage in the Member States on the basis of the Community statistics available. It also provides that the performance of cabotage transport operations is to be subject, save as otherwise provided in Community regulations, to the laws, regulations and administrative provisions in force in the host Member State with regard to rates and conditions governing the transport contract, the weights and dimensions of road vehicles, the requirements relating to the carriage of certain categories of goods, driving and rest time as well as VAT on transport services. The Commission observes that the Council thus remedied its failure to act and fulfilled the obligation arising from Article 176 of the Treaty to take the measures necessary to comply with the judgment of the Court of Justice in Case 13/83 within a reasonable period of time. The introduction with effect from a given date of a definitive cabotage system coincides moreover with what is provided for international transport. The Commission points out that a definitive cabotage system can only be a system in which cabotage services may be performed freely, without restrictions within the common market, that is to say, without Community quotas. Furthermore, a totally liberalized cabotage system can be definitive only if it applies without discrimination on the basis that the person providing that service is established in a different Member State from the one in which the service is to be provided. As regards the question whether the introduction of freedom to provide cabotage is compatible with the existence of national restrictions in host Member States with regard to carriage costs, the Commission notes that the difficulties experienced by the Council in that field and which played an important part in delaying the achievement of freedom to provide transport services derived largely from the divergence in viewpoints between Member States which were ready to accept an open market in road transport without harmonization of the conditions of competition and those which considered that the introduction of such a market should be accompanied by some harmonization of the conditions under which transport services are operated, whether they be economic conditions or action by the Member States in the social field. The Commission observes that the introduction of free access to the transport market without discrimination on the ground that the person providing that service is established in a Member State other than that where the services are to be provided does not necessarily require the existence of an open market with regard to carriage costs. A market where cabotage services are liberalized, that is to say, a market with no restriction on their circulation within the common market, is not perforce synonymous with an open market. It is still possible to have restrictions or conditions with regard to carriage of goods for reasons relating to Community policy in that field. In the absence of a common policy, it is possible to have national restrictions on grounds connected with the internal situation of each Member State, on a nondiscriminatory basis and on condition that national legislation is compatible with the Treaty, in particular with the rules on competition. The Commission considers that that absence of a common policy does not preclude the introduction of freedom to provide services in the transport sector. According to the Commission, the Council, in introducing freedom to provide transport services, has a discretionary power to determine the accompanying measures to be taken and the degree of harmonization of national provisions in that field. The absence of a common transport policy with regard to those measures does not in itself constitute failure to act since it is for the Council to determine the objectives of and means for implementing that policy. According to the Commission, in the absence of a common policy with regard to internal carriage costs in each Member State, the Member States are free to take the measures which they consider to be necessary on condition that those measures are compatible with the provisions of the Treaty and its rules on competition. National systems concerning internal carriage costs may be applied to all kinds of transport operations performed within the relevant Member State, including cabotage, on condition that there is no discrimination with regard to the place of establishment of the carrier. In conclusion, the Commission proposes to reply to the question referred for a preliminary ruling in the following manner:

‘(1) By adopting Regulation (EEC) No 1841/88 of 21 June 1988 for international transport services and Regulation (EEC) No 4059/89 of 21 December 1989 on cabotage, the Council has taken within a reasonable time the measures required to comply with the judgment of the Court of Justice in Case 13/83 with regard to the introduction of freedom to provide services in relation to transport. Since there is no longer a failure on the part of the Council to act, the question of the direct application of Articles 59 and 60 of the Treaty to transport is no longer relevant.

2) The introduction of freedom to provide services in relation to transport means that services are free from any restriction on their circulation within the common market and the abolition of any discrimination against the person providing services based on his nationality or the fact that he is established in a Member State other than that where the service is to be provided.

3) The introduction of freedom to provide services is compatible with the existence of Community restrictions connected with the common transport policy. In the absence of a common policy, national restrictions in respect of areas other than freedom of movement are compatible with the freedom to provide transport services on condition that said national restriction comply with the provisions of the Treaty, in particular with its rules on competition.’

Diez de Velasco

Judge-Rapporteur

1 Language of the Case: German.