Report for the Hearing delivered in Case 305/87

I — Summary of the facts

1. The Greek Presidential Decree of 22 to 24 June 1927 prohibiting certain legal acts in respect of immovable property and the Greek Emergency Law No 1366 of 2 to 7 September 1938 prohibiting certain legal acts in border regions set up a special regime for foreign natural and legal persons concerning the conclusion of legal acts in respect of immovable property situated in border regions.

2. The second paragraph of the sole article in the Presidential Decree of 22 to 24 June 1927 provides that the acquisition by foreign natural or legal persons of ownership of immovable property or other real property rights, with the exception of mortgages, in respect of property situated in the border regions of the country is prohibited on pain of absolute nullity of the legal act in question and the penalties listed in the seventh paragraph of the article. The same penalties are laid down in respect of the prohibition against letting or any other form of assignment to such persons of the right to use urban immovable property situated in the border regions of the country for a period of more than three years.

3. Articles 1, 2, 3, 4 and 5 of Emergency Law No 1366 of 2 to 7 September 1938 prohibiting certain legal acts in border regions, as amended and supplemented by Emergency Laws Nos 1629/1939 and 21123/1939, prohibit the conclusion of any legal act relating to immovable property situated in the border regions or on an island or islet of Greece, or in a coastal area or an area in the interior of the country designated as a border region by decree, that is to say any legal act by which the ownership or other immovable property right is transferred or a tenancy or other relationship under the law of obligations established with a natural or legal person, with the exception of the State or urban or rural authorities. In order for the conclusion of such a legal act to be valid, and only in respect of a natural person of Greek nationality or legal person under the management of Greek nationals, the person concerned must produce an attestation from the Minister for Agriculture issued subject to a proposal by a special commission, certifying that there are no security reasons to preclude the transaction. Foreigners are not permitted to conclude such acts unless the decree designating the area as a border region is revoked by a later decree.

4. By various decrees, areas covering approximately 55% of Greek territory were designated border regions pursuant to the Presidential Decree of 1927 and the Emergency Law of 1938.

5. The Commission considered that the abovementioned provisions, in so far as they prohibit, restrict or impose conditions on the acquisition by natural or legal persons with the nationality of another Member State of rights in immovable property situated in Greek border regions, establish to the detriment of such persons an unequal system contrary to Articles 7, 48, 52 and 59 of the EEC Treaty.

6. By a letter of 17 July 1984 the Greek Government informed the Commission that it was in the process of revising the legislation at issue and would ensure that Greek nationals and nationals of other Member States of the Community were treated in an equal manner.

7. Since no measure had been adopted, on 2 April 1985 the Commission delivered a reasoned opinion, pursuant to the first paragraph of Article 169 of the EEC Treaty to the effect that the Hellenic Republic, by failing to adapt its legislation concerning legal acts in respect of immovable property situated in border zones under which the transactions concerned are prohibited for nationals of other Member States, but not for Greek nationals, or are more difficult for nationals of other Member States than for Greek nationals, has failed to fulfil its obligations under Articles 7, 48, 52 and 59 of the EEC Treaty. Pursuant to the second paragraph of Article 169 of the EEC Treaty, the Commission called upon the Hellenic Republic to take the measures necessary to comply with that opinion within two months.

8. On 29 May 1985 the Hellenic Republic informed the Commission that draft amending legislation was in the course of preparation but that because of political and administrative difficulties there would be a delay in drawing up the final version and having it adopted.

9. By a letter of 23 July 1985 the Hellenic Republic informed the Commission that the draft legislation had been prepared and, once finalized, it would be laid before Parliament within a reasonable period of time.

10. By a letter of 17 October 1986 the Hellenic Republic forwarded the draft legislation in question to the Commission for comment with a view to laying it before Parliament and requested at the same time that no proceedings should be brought before the Court until the draft had been examined.

11. By a letter of 10 December 1986 the competent department of the Commission informed the Hellenic Republic that the draft legislation submitted seemed, in principle, not to contravene Community law and that it would propose to the Commission that it should postpone carrying out its decision to bring proceedings before the Court until the end of March 1987.

II — Written procedure and conclusions of the parties

1. By an application lodged at the Court Registry on 5 October 1987, pursuant to the second paragraph of Article 169 of the EEC Treaty, the Commission brought proceedings before the Court for a declaration that the Hellenic Republic had failed to fulfil its obligations under Articles 7, 48, 52 and 59 of the EEC Treaty.

2. 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.

3. The Commission, the applicant, claims that the Court should:

4. The Government of the Hellenic Republic, the defendant, contends that the Court should:

III — Submissions and arguments of the parties

1. The Commission states that the provisions in question form two groups:

A — Article 52 of the EEC Treaty

The Commission points out that Article 52 requires the abolition of restrictions on the freedom of establishment and that the exercise of that freedom is subject to the conditions laid down for its own nationals by the law of the country where such establishment is effected; in other words that article prescribes that foreigners who are nationals of other Member States of the Community should be accorded equal treatment to its own nationals, confirming the solutions provided for in Article 7 of the Treaty in that sphere. Among the more specific manifestations of freedom of establishment are the right to acquire and use immovable property in the territory of a Member State as the exercise of the right of establishment and the right to acquire a second home if that furthers the exercise of freedom of establishment. That is the express result of Article 54(3)(e) of the Treaty, confirmed by the General programme for the abolition of restrictions on freedom of establishment of 18 December 1961 (Official Journal, English Special Edition, Second Series IX, p. 7) and Directive 67/43 of the Council of 12 January 1967 concerning the attainment of freedom of establishment and freedom to provide services in respect of activities of self-employed persons concerned with matters of real estate (Official Journal, English Special Edition 1967, p. 3).

The Commission maintains that in so far as the Greek legislation prohibits or restricts the exercise by persons who are nationals of other Member States of the right to buy or use immovable property, it impedes or restricts in an unjustified manner the exercise of that right in breach of Article 52 of the Treaty.

B — Article 59 of the EEC Treaty

The Commission maintains that where acquisition or use of immovable peoperty is essential to the freedom to provide services, the prohibition against acquiring or using immovable property constitutes a restriction contrary to Article 59 of the EEC Treaty. That applies in particular to the case mentioned in the third paragraph of Article 60 of the EEC Treaty. In that case, the prohibition laid down by the Greek legislation against letting immovable property or assigning agricultural property from or in which provision of services is effected constitutes a restriction within the meaning of Article 59 of the Treaty.

C — Article 48 of the EEC Treaty

The Commission states that Article 48 constitutes a particular expression of the principle of equal treatment of employed persons. Its application in Greece is not yet complete because of the transitional measures of the Act of Accession, Article 45(1) of which provided in particular that Articles 1 to 6 and 13 to 23 of Regulation (EEC) No 1612/68 on the freedom of movement of workers within the Community was to apply in Greece with regard to nationals of the then Member States only as from 1 January 1988 and that the Hellenic Republic could maintain in force until 1 January 1988, with regard to nationals of the other Member States, national provisions submitting to prior authorization immigration undertaken with a view to pursuing an activity as an employed person and/or the taking up and pursuit of paid employment. The Commission maintains, however, that for workers of other Member States who were already regularly employed in Greece before 1 January 1981 and who continued to be employed there after that date, or for workers who were regularly employed for the first time in Greece after that date application of the provisions applicable as from 1 January 1981 is not postponed. That is true in particular for Article 9 of Regulation No 1612/68, which provides that a worker who is a national of a Member State and who is employed in the territory of another Member State is to enjoy all the rights and benefits accorded to national workers in matters of housing, including ownership of the housing he needs. According to the Commission, in so far as the Greek legislation does not permit workers who are nationals of another Member State who are already employed in Greece to purchase the property they live in or to rent property for a period of more than three years, it is contrary to Article 48 of the EEC Treaty.

D — Article 7 of the EEC Treaty

The Commission states that Article 7 constitutes the lex generalis in relation to Articles 48, 52 and 59 which constitute the lex specialis in respect of the questions with which they deal. Since the Greek legislative provisions in issue are contrary to those particular provisions, the Commission considers it inopportune for the time being to examine how far the Greek provisions in issue are also contrary to Article 7. It suffices to note that transactions in respect of immovable property do in principle constitute economic activity falling within the scope of application of the Treaty.

In conclusion, the Commission considers that the Greek legislative provisions in issue which lead to unequal treatment and restrictions which are detrimental to nationals of other Member States with regard to the acquisition of real and personal rights in immovable property situated in border regions are contrary to Articles 52, 59 and 48 of the Treaty and, alternatively, to the general principle of equal treatment in Article 7 of the Treaty.

2. The Government of the Hellenic Republic contends that during the entire course of the exchange of correspondence which preceded the application, the Commission was kept informed of the Greek Government's intentions to adopt legislation on the matter in accordance with Community law. From 17 October 1986 the draft law on the legal situation in the border regions was communicated to the competent departments of the Commission. On 5 October 1987 the Greek Government informed the Commission that the draft legislation had been placed before Parliament.

1 Language of the case: Greek.