Case C-377/02

Léon Van Parys NV

v

Belgisch Interventie- en Restitutiebureau (BIRB)

(Reference for a preliminary ruling from Raad van State (Belgium))

(Common organisation of the markets – Bananas – GATT 1994 – Articles I and XIII – Framework agreement of 23 April 1993 between the EEC and the Cartagena Group – Direct effect – Recommendations and decisions of the WTO Dispute Settlement Body – Legal effects)

Opinion of Advocate General Tizzano delivered on 18 November 2004

Judgment of the Court (Grand Chamber), 1 March 2005.

Summary of the Judgment

Preliminary rulings – Determination of validity – Not possible to rely on WTO agreements to challenge the legality of a Community measure – Exceptions – Community measure intended to ensure their implementation or referring to them expressly and specifically – Decision of the WTO Dispute Settlement Body – Community obligations – Right to rely on the WTO agreements – None

(Art. 234 EC)

Given their nature and structure, the WTO agreements are not in principle among the rules in the light of which the Court is to review the legality of measures adopted by the Community institutions. It is only where the Community has intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to the precise provisions of the WTO agreements, that it is for the Court to review the legality of the Community measure in question in the light of the WTO rules.

By undertaking after the adoption of the decision of the WTO Dispute Settlement Body (DSB) to comply with the rules of that organisation and, in particular, with Articles I(1) and XIII of GATT 1994, the Community did not intend to assume a particular obligation in the context of the WTO, capable of justifying an exception to the impossibility of relying on WTO rules before the Community Courts and enabling the latter to exercise judicial review of the relevant Community provisions in the light of those rules.

First, even where there is a decision of the DSB holding that the measures adopted by a member are incompatible with the WTO rules, the WTO dispute settlement system nevertheless accords considerable importance to negotiation between the parties. In those circumstances, to require courts to refrain from applying rules of domestic law which are inconsistent with the WTO agreements would have the consequence of depriving the legislative or executive organs of the contracting parties of the possibility afforded in particular by Article 22 of the Understanding on rules and procedures governing the settlement of disputes of reaching a negotiated settlement, even on a temporary basis.

Secondly, to accept that the Community Courts have the direct responsibility for ensuring that Community law complies with the WTO rules would deprive the Community’s legislative or executive bodies of the discretion which the equivalent bodies of the Community’s commercial partners enjoy.

Therefore, an economic operator cannot plead before a court of a Member State that Community legislation is incompatible with certain WTO rules, even if the DSB has stated that that legislation is incompatible with those rules.

(see paras 39-42, 48, 53-54, operative part)

JUDGMENT OF THE COURT (Grand Chamber) 1 March 2005 (1)

(Common organisation of the markets – Bananas – GATT 1994 – Articles I and XIII – Framework agreement of 23 April 1993 between the EEC and the Cartagena Group – Direct effect – Recommendations and decisions of the WTO dispute settlement body – Legal effects)

In Case C-377/02,REFERENCE for a preliminary ruling under Article 234 EC from the Raad van State (Belgium), made by decision of 7 October 2002, received at the Court on 21 October 2002, in the proceedings

v

THE COURT (Grand Chamber),,

composed of V. Skouris, President, P. Jann, C.W.A. Timmermans and A. Borg Barthet, Presidents of Chambers, J.-P. Puissochet, R. Schintgen (Rapporteur), N. Colneric, S. von Bahr, G. Arestis, M. Ilešič, J. Malenovský, J. Klučka and U. Lõhmus, Judges,

Advocate General: A. Tizzano,

having regard to the written procedure and further to the hearing on 21 September 2004,after considering the observations submitted on behalf of:

after hearing the Opinion of the Advocate General at the sitting on 18 November 2004,

gives the following

‘The agreements and associated legal instruments included in Annexes 1, 2 and 3 ... are integral parts of this Agreement, binding on all Members.‘

‘With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation …, any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.’

‘1.

2.(a)

(b)

(c)

(d)

…

5.‘2. The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. …

3. The prompt settlement of situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members.

…

5. All solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements, including arbitration awards, shall be consistent with those agreements and shall not nullify or impair benefits accruing to any Member under those agreements, nor impede the attainment of any objective of those agreements.

…

7. Before bringing a case, a Member shall exercise its judgement as to whether action under these procedures would be fruitful. The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements. The provision of compensation should be resorted to only if the immediate withdrawal of the measure is impracticable and as a temporary measure pending the withdrawal of the measure which is inconsistent with a covered agreement. The last resort which this Understanding provides to the Member invoking the dispute settlement procedures is the possibility of suspending the application of concessions or other obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorisation by the [Dispute Settlement Body of the WTO, “the DSB”] of such measures.’

‘1. Prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members.

…

3. At a DSB meeting held within 30 days after the date of adoption of the panel or Appellate Body report, the Member concerned shall inform the DSB of its intentions in respect of implementation of the recommendations and rulings of the DSB. If it is impracticable to comply immediately with the recommendations and rulings, the Member concerned shall have a reasonable period of time in which to do so. …

…

5. Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel. …

6. The DSB shall keep under surveillance the implementation of adopted recommendations or rulings. The issue of implementation of the recommendations or rulings may be raised at the DSB by any Member at any time following their adoption. …’

‘1. Compensation and the suspension of concessions or other obligations are temporary measures available in the event that the recommendations and rulings are not implemented within a reasonable period of time. However, neither compensation nor the suspension of concessions or other obligations is preferred to full implementation of a recommendation to bring a measure into conformity with the covered agreements. Compensation is voluntary and, if granted, shall be consistent with the covered agreements.

2. If the Member concerned fails to bring the measure found to be inconsistent with a covered agreement into compliance therewith or otherwise comply with the recommendations and rulings within the reasonable period of time determined pursuant to paragraph 3 of Article 21, such Member shall, if so requested, and no later than the expiry of the reasonable period of time, enter into negotiations with any party having invoked the dispute settlement procedures, with a view to developing mutually acceptable compensation. If no satisfactory compensation has been agreed within 20 days after the date of expiry of the reasonable period of time, any party having invoked the dispute settlement procedures may request authorisation from the DSB to suspend the application to the Member concerned of concessions or other obligations under the covered agreements.

…

8. The suspension of concessions or other obligations shall be temporary and shall only be applied until such time as the measure found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or rulings provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. In accordance with paragraph 6 of Article 21, the DSB shall continue to keep under surveillance the implementation of adopted recommendations or rulings, including those cases where compensation has been provided or concessions or other obligations have been suspended but the recommendations to bring a measure into conformity with the covered agreements have not been implemented’.

‘The Contracting Parties hereby grant each other most-favoured-nation treatment in trade, in accordance with the General Agreement on Tariffs and Trade (GATT).

Both Parties reaffirm their will to conduct trade with each other in accordance with that Agreement.’

‘For the purposes of this Title [“Trade with third countries”]:

‘1. A tariff quota of 2 200 000 tonnes (net weight) shall be opened each year for imports of third State and non-traditional ACP bananas.

Imports of third State bananas under the tariff quota shall be subject to duty of ECU 75 per tonne, while imports of non-traditional ACP bananas shall be free of duty.

2. An additional tariff quota of 353 000 tonnes (net weight) shall be opened each year for imports of third State and of non-traditional ACP bananas.

Imports of third State bananas under this tariff quota shall be subject to duty of ECU 75 per tonne while imports of non-traditional ACP bananas shall be free of duty.

3. No duty shall be payable on imports of traditional ACP bananas.

4. Should there be no reasonable possibility of securing agreement of all WTO contracting parties with a substantial interest in the supply of bananas, the Commission may under the procedure set out in Article 27 allocate the tariff quotas provided for in paragraphs 1 and 2 and the traditional ACP quantity between those States with a substantial interest in the supply.’

‘1.

2.‘Where, for a given quarter and for any one or more of the origins listed in Annex I, the quantities applied for appreciably exceed any indicative quantity fixed under Article 14, or exceed the quantities available, a percentage reduction to be applied to the amounts requested shall be fixed’.

‘1.

2.‘If the quantities covered by applications for licences in respect of the first quarter of 1999 covering imports from one or more of the origins listed in Annex I exceed 26% of the quantities set out in that Annex, the Commission shall fix a percentage reduction to be applied to all applications in respect of the origin(s) concerned’.

‘Import licences shall be issued under the arrangements for the importation of bananas, tariff quota arrangements and arrangements for traditional ACP bananas for the first quarter of 1999 for the quantity indicated in the licence application, multiplied by reduction coefficients of 0.5793, 0.6740 and 0.7080 for applications indicating the origins “Colombia”, “Costa Rica” and “Ecuador” respectively’.

On those grounds, the Court (Grand Chamber) rules as follows:

[Signatures]