Judgment of the Court of 4 October 1991.
Criminal proceedings against Aimé Richardt and Les Accessoires Scientifiques SNC.
Reference for a preliminary ruling: Cour de cassation - Grand Duchy of Luxemburg.
Free movement of goods - Community transit - Strategic material.
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Criminal proceedings against Aimé Richardt and Les Accessoires Scientifiques SNC.
Free movement of goods - Community transit - Principle of the freedom of Community transit - Restrictive measures adopted on the basis of Article 36 of the Treaty - Permissibility - Transit of goods described as strategic material - Requirement for special authorization - Justification on public security grounds
(EEC Treaty, Art. 36; Council Regulation No 222/77)
The existence, as a consequence of the Customs Union, of a general principle of freedom of transit of goods within the Community does not, as Article 10 of Regulation No 222/77 affirms, have the effect of precluding the Member States from verifying the nature of goods in transit, pursuant to the Treaty, in particular Article 36. That article authorizes the Member States to impose restrictions on the transit of goods on grounds of public security, which covers both a Member State' s internal security and its external security, of which the latter manifestly requires to be taken into consideration in the case of goods capable of being used for strategic purposes.
Accordingly, the aforementioned regulation does not preclude the legislation of a Member State from requiring, on external security grounds, that special authorization must be obtained for the transit through its territory of goods described as strategic material, irrespective of the Community transit document issued by another Member State. However, the measures adopted by the Member State as a consequence of the failure to comply with that requirement must not be disproportionate to the objective pursued.
In Case C-367/89,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Cour de Cassation, Luxembourg, for a preliminary ruling in the criminal proceedings pending before that court against
Les Accessoires Scientifiques SNC,
on the interpretation of the provisions of Community law on the free movement of goods and Community transit,
composed of: T.F. O' Higgins, President of a Chamber, acting as President, J.C. Moitinho de Almeida, M. Díez de Velasco, Presidents of Chambers, C.N. Kakouris, F.A. Schockweiler, F. Grévisse and M. Zuleeg, Judges,
Advocate General: F.G. Jacobs,
Registrar: J.A. Pompe, Deputy Registrar,
after considering the written observations submitted on behalf of
the Finance Ministry of the Grand Duchy of Luxembourg and the Director of Customs, by Alphonse Berns, Director of International Economic Relations and Cooperation, acting as Agent, assisted by Pierre Bermes, of the Luxembourg Bar,
A. Richardt, Les Accessoires Scientifiques SNC, by Ernest Arendt, of the Luxembourg Bar, and Mireille Abensour-Gibert, of the Paris Bar,
the French Government, by Edwige Belliard, Deputy Director in the Directorate of Legal Affairs at the Ministry of Foreign Affairs, and Géraud de Bergues, Principal Deputy Secretary in the Directorate of Legal Affairs of that Ministry, acting as Agents,
the United Kingdom, by J.E. Collins, of the Treasury Solicitor' s Department, acting as Agent,
the Belgian Government, by G. Speltincx, Director of European Affairs at the Ministry of Foreign Affairs, External Trade and Development Cooperation, acting as Agent,
the Commission of the European Communities, by Joern Sack, Legal Adviser, assisted by Hervé Lehman, a French official seconded to the Commission' s Legal Service under the exchange scheme with national officials, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of the Finance Ministry of the Grand Duchy of Luxembourg and the Director of Customs, of A. Richardt, the French Government, the United Kingdom, represented by Derrick Wyatt, Barrister, acting as Agent, and the Commission of the European Communities at the hearing on 13 March 1991,
after hearing the Opinion of the Advocate General at the sitting on 8 May 1991,
gives the following
1 By judgment of 30 November 1989, which was received at the Court on 6 December 1989, the Cour de Cassation, Luxembourg, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Council Regulation (EEC) No 222/77 of 13 December 1976 on Community transit (Official Journal 1977 L 38, p. 1), in order to enable it to determine the compatibility with Community law of the restrictions imposed by Luxembourg legislation on the transit of goods of a strategic nature.
2 That question was raised in the course of criminal proceedings brought against Mr Aimé Richardt and four other persons by the Finance Ministry of the Grand Duchy of Luxembourg and the Director of Customs for attempting to effect the unlawful transit of goods in contravention of a Grand Ducal Regulation of 17 August 1963 requiring a licence for the transit of certain goods (Mémorial A, No 47, 17 August 1963, p. 764). The combined provisions of Articles 1 and 2 of that regulation require the production of a licence for the transit of the goods set out in list I annexed thereto coming from, inter alia, the United States of America or the French Republic and declared to be in transit and destined for, amongst other countries, the Soviet Union.
3 Mr Richardt, the chairman and managing director of Les Accessoires Scientifiques (hereinafter referred to as "LAS"), established in France, agreed to deliver to a Soviet central purchasing agency, Technoprominport, established in Moscow, a unit for the production of bubble memory circuits including, inter alia, a ten-inch Veeco Microetch which, on importation into France from the United States, was placed in free circulation in the Community.
4 Mr Richardt completed in France the necessary formalities for the goods to be exported by air to Moscow. Since the goods could not be loaded on board the aeroplane provided for that purpose at Roissy, owing to the cancellation of a flight by Aeroflot, they were taken by lorry on the initiative of Air France to the airport of the Grand Duchy of Luxembourg and presented, in transit, to the Luxembourg customs on 21 May 1985 for departure from the territory of the Grand Duchy for Moscow. The goods were accompanied, apparently in error, but without any objection by either the French or Luxembourg authorities, by the T1 document prescribed in Regulation No 222/77 for goods not in free circulation in the Community.
5 The customs check carried out at Luxembourg airport resulted in the seizure of, inter alia, the manufacturing machine, which, according to the Luxembourg authorities, was accompanied by inaccurate declarations in order to conceal its strategic nature and to permit its transit to the USSR in contravention of the Luxembourg legislation, which requires a special transit licence in such cases. Mr Richardt and four other persons were therefore charged with attempting to effect the unlawful transit of goods subject to a licence requirement.
6 At first instance, the Tribunal Correctionnel (Criminal Court) dismissed the charges against Mr Richardt and his co-accused but ordered the machine to be confiscated.
7 On appeal by LAS and Mr Richardt against the operative part of the judgment in so far as it ordered the confiscation of the machine, the Cour d' Appel de Luxembourg held that there was no ground for its confiscation, since the accompanying T1 document was to be regarded as a valid certificate of authorization for transit issued by France, exempting the person concerned from production of a licence issued by the authorities of the Grand Duchy of Luxembourg. In those circumstances, according to the Cour d' Appel, the transit had taken place in accordance with the law.
8 In their appeal in cassation, the Finance Ministry of the Grand Duchy of Luxembourg and the Director of Customs challenged the judgment of the Cour d' Appel on the ground that it ascribed too general a scope to the T1 document. They contended essentially that Article 10 of Regulation No 222/77 applied only to goods described as ordinary, whilst the transit of goods of a strategic nature could be made subject, inter alia, to authorization justified by the dictates of external security.
9 Taking the view that the outcome of the proceedings depended on the interpretation of Regulation No 222/77, the Cour de Cassation, Luxembourg, decided, by judgment of 30 November 1989, to stay the proceedings pending a preliminary ruling by the Court on the following question:
"Is Council Regulation (EEC) No 222/77 to be interpreted as laying down the mandatory obligation for the T1 document provided for therein to be recognized without reservation as a valid authorization for transit in the territory of any Member State of the European Economic Community, irrespective of the nature of the goods transported and even if they endanger the external security of the State concerned, or conversely does the regulation allow a Member State the possibility of refusing to recognize the T1 document as equivalent to a transit authorization when the national legislation of that State considers the goods transported to be strategic equipment and, on external security grounds, makes transit through its territory subject to the grant of special permission?"
10 Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the Community and national provisions at issue, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
11 It should be pointed out at the outset that at the time of seizure the goods in question had not been imported into the Grand Duchy of Luxembourg, but were there solely for the purpose of being transported to a non-member country, that is to say, they were in transit. In this case, the role of the customs authorities of the Grand Duchy of Luxembourg therefore corresponds to that of an "office of transit" within the meaning of the second indent of Article 11(d) of Regulation No 222/77. It follows that the export in question must be regarded as effected not from the Grand Duchy of Luxembourg but from the Member State of initial departure, namely the French Republic, where the export formalities appear moreover to have been completed, as provided for in Council Regulation (EEC) No 2102/77 of 20 September 1977 introducing a Community export declaration form (Official Journal 1977 L 246, p. 1). Consequently, Regulation (EEC) No 2603 of the Council of 20 December 1969 establishing common rules for exports (Official Journal English Special Edition 1969 (II), p. 590), last amended by Regulation (EEC) No 1934/82 (Official Journal 1982 L 211, p. 1), is not applicable in the main proceedings and the only relevant provisions are those contained in Regulation No 222/77, which, moreover, is the subject of the question referred for a preliminary ruling.
12 The Grand Duchy of Luxembourg, the United Kingdom of Great Britain and Northern Ireland, the French Republic, the Kingdom of Belgium and the Commission consider that Regulation No 222/77 does not preclude a Member State from requiring, in addition to the transit document accompanying the goods, special authorization where such authorization, which is justified on external security grounds, relates to goods described as strategic material.
13 On the other hand, Mr Richardt and LAS take the view that the licence requirement provided for in the Luxembourg legislation, together with the transit document T1 accompanying the goods in question, is contrary to the EEC Treaty and to Regulation No 222/77 because, pursuant to Article 37 of that regulation, the T1 document is a transit permit which, in all the Member States, is to have the same legal effects as a transit certificate, irrespective of the strategic nature or otherwise of the goods.
14 Having regard to those opposing points of view, it should first be recalled that, as the Court held in its judgment in Case 266/81 SIOT v Ministero delle Finanze  ECR 731, paragraph 16, it is necessary, as a consequence of the Customs Union and in the mutual interest of the Member States, to acknowledge the existence of a general principle of freedom of transit of goods within the Community. That principle is, moreover, confirmed by the reference to "transit" in Article 36 of the Treaty.
15 As the Court stated in its judgment in Case C-117/88 Trend-Moden Textilhandels GmbH v Hauptzollamt Emmerich  ECR I-631, paragraph 16, the purpose of Regulation No 222/77 is to facilitate the transport of goods within the Community by simplifying and standardizing the formalities to be carried out when internal frontiers are crossed.
16 Finally, the tenth recital in the preamble to Regulation No 222/77 states that the Community transit procedure should, in principle, be applied to all movements of goods within the Community. That procedure thus covers all goods, irrespective of their possible strategic nature.
17 However, that situation does not preclude the Member States from verifying goods in transit, in accordance with the provisions of the Treaty. Article 10 of Regulation No 222/77 provides that prohibitions and restrictions on importation, exportation and transit issued by the Member States are to apply to the extent to which they are compatible with the three Treaties establishing the European Communities.
18 It must therefore be considered whether the rules of the Treaty, in particular Article 36, preclude a requirement for special authorization and also the consequences, such as confiscation measures, of a failure to comply with that requirement.
19 In that connection the Court has consistently held that the purpose of Article 36 of the Treaty is not to reserve certain matters to the exclusive jurisdiction of the Member States, but merely to allow national legislation to derogate from the principle of the free movement of goods to the extent to which this is and remains justified in order to achieve the objectives set out in the article (see, in particular, the judgment in Case 72/83 Campus Oil Limited v Minister for Industry and Energy  ECR 2727, paragraph 32).
20 The Court has stated on several occasions (see the judgment in Campus Oil, cited above, paragraph 37, concerning restrictions on imports) that Article 36, as an exception to a fundamental principle of the Treaty, must be interpreted in such a way that its scope is not extended any further than is necessary for the protection of the interests which it is intended to secure. Measures adopted on the basis of Article 36 can therefore be justified only if they are such as to serve the interest which that article protects and if they do not restrict intra-Community trade more than is absolutely necessary.
21 Having regard to that case-law, a Member State may invoke Article 36 in order to justify a measure restricting transit only if no other measure, less restrictive from the point of view of the free movement of goods, permits the same objective to be attained.
22 In that respect, it is necessary to state, along with the Commission and the Member States which submitted written observations to the Court, that the concept of public security within the meaning of Article 36 of the Treaty covers both a Member State' s internal security and its external security. It is common ground that the importation, exportation and transit of goods capable of being used for strategic purposes may affect the public security of a Member State, which it is therefore entitled to protect pursuant to Article 36 of the Treaty.
23 Accordingly, in order to verify the nature of goods described as strategic material, the Member States are entitled under Article 36 of the Treaty to make their transit subject to the grant of a special authorization.
24 As regards the penalties laid down for failure to comply with the obligation to obtain such authorization, it should be stated, as the Commission, LAS and Mr Richardt pointed out, that a measure involving seizure or confiscation may be considered disproportionate to the objective pursued, and thus incompatible with Article 36 of the Treaty, in a case where the return of the goods to the Member State of origin could suffice.
25 However, it is for the national court to determine whether the system established complies with the principle of proportionality, taking account of all the elements of each case, such as the nature of the goods capable of endangering the security of the State, the circumstances in which the breach was committed and whether or not the trader seeking to effect the transit and holding documents for that purpose issued by another Member State was acting in good faith.
26 It follows from the foregoing considerations that the reply to the question submitted by the national court must be that Regulation No 222/77 must be interpreted as meaning that it does not preclude legislation of a Member State which, on external security grounds, requires special authorization to be obtained for the transit through its territory of goods described as strategic material, irrespective of the Community transit document issued by another Member State. However, the measures adopted by the Member State as a consequence of the failure to comply with that requirement must not be disproportionate to the objective pursued.
Decision on costs
27 The costs incurred by the Belgian, French, Luxembourg and United Kingdom Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
On those grounds,
in answer to the question referred to it by the Cour de Cassation of the Grand Duchy of Luxembourg, by judgment of 30 November 1989, hereby rules:
Council Regulation (EEC) No 222/77 of 13 December 1976 on Community transit must be interpreted as meaning that it does not preclude legislation of a Member State which, on external security grounds, requires special authorization to be obtained for the transit through its territory of goods described as strategic material, irrespective of the Community transit document issued by another Member State. However, the measures adopted by the Member State as a consequence of the failure to comply with that requirement must not be disproportionate to the objective pursued.