Opinion of Advocate General
Mr President,
Members of the Court,
1. In this case the Finanzgericht Hamburg has submitted a number of questions in which it seeks a preliminary ruling on the interpretation and the application of the Convention on a common transit procedure, which was concluded on 20 May 1987 between the Community and the EFTA countries (hereinafter the Convention). Those questions arose in a dispute between Deutsche Shell AG, the plaintiff in the main proceedings (hereinafter Shell), and the Hauptzollamt (Principal Customs Office) Hamburg-Harburg.
Background
2. The Convention contains provisions concerning the carriage of goods in transit between the Community and the EFTA countries as well as between those countries themselves. Article (1) of the Convention provides for a common transit procedure — also known as a common system of transit — for such goods, regardless of their kind and origin. The Community transit procedure, as laid down in Regulation (EEC) No 222/77, constituted a model for that system. The Convention was approved by the Council by decision of 15 June 1987.
3. A Joint Committee was set up under the Convention with responsibility for administering the Convention and ensuring its proper implementation. The Joint Committee consists of representatives of the Contracting Parties — the Community being represented by the Commission — and acts by mutual agreement, that is to say unanimously. It issues recommendations in implementation of the Convention and may by decision make a number of specified amendments or adopt certain measures (Articles 14 and 15 of the Convention).
4. Shell is an authorized consignor under both the Community transit procedure and the common transit procedure. In that capacity it was permitted by the Hauptzollamt for some considerable time to ship its oil products without being required to affix customs seals. By decision of 1 November 1988 the Hauptzollamt amended that authorization inter alia by permitting Shell henceforth to identify goods by description under the common transit procedure with (all) the EFTA countries only where (i) the goods concerned are difficult to seal, bulky or unsuitable for transportation under customs seal (animals), (ii) for technical reasons vehicles cannot be sealed, or (iii) the customs office of destination is a customs office at the point of entry into an EFTA country. In so doing, the Hauptzollamt was following the instructions of the Federal Ministry of Finance, which were based on the aforesaid act of the Joint Committee, more specifically the special measures comprised therein which apply to trade with Switzerland and Austria.
5. After unsuccessfully lodging an objection with the Oberfinanzdirektion (Principal Revenue Office) Hamburg, Shell instituted proceedings in the national court, claiming that the relevant part of the Hauptzollamt's decision and the decision of the Oberfinanzdirektion should be set aside. It would like simply to describe its shipments of oil products made under the common transit procedure, as was the case hitherto. In Shell's view, Article 11(4) of the Convention confers on the customs office of departure a discretion in individual cases. That possibility of determining the identification measures which are necessary in the light of the particular circumstances of each individual case is nullified, in its view, by the aforesaid act of the Joint Committee. Shell also considers that the obligation to affix customs seals when shipping its products to EFTA countries is disproportionate. As an authorized consignor, the plaintiff is under constant and effective supervision by the customs authorities, which rules out any abuse of the transit procedure. The practice followed hitherto, also under the Community transit procedure, of identification through description in the transit papers has not given rise to any complaints and is sufficient to safeguard the revenue interests of the countries involved in the transit procedure. In contrast, identification by means of sealing involves considerable expenditure in terms of time and labour in carrying out transit operations, especially where inland waterway vessels have to be sealed. This requires each vessel to be secured using forty to sixty seals, entailing hours of work. In Shell's view, customs interests cannot justify those formalities in the case of transit to EFTA countries, whilst, on the basis of the Hauptzollamt's own assessment and administrative practice, the same is not required in the case of transit to Member States of the Community.
6. Taking the view that the solution of the dispute raises problems of Community law, the national court has submitted the following questions to the Court of Justice:
Jurisdiction of the Court and legal nature of the contested act
7. In Questions 1 and 3 the national court seeks to ascertain whether the Court has jurisdiction in relation to the Convention of 20 May 1987 or in relation to the contested act of the Joint Committee established under the Convention.
8. So far as the Jurisdiction of the Court is concerned in relation to the contested act of the Joint Committee, I must begin by considering, in reply to (the first part) of Question 1, how the contested act is to be classified for legal purposes under the Convention.
9. The Commission, which in its observations also comes to the conclusion that the contested act is a recommendation, infers therefrom that the Court has no jurisdiction under Article 177 of the EEC Treaty to rule on the validity and interpretation of an act of that kind. It its view, a wide interpretation of Article 177 is called for only when there is a genuine need for it. That is not so in the case of acts which are not legally binding, that are adopted by institutions acting on the basis of international conventions concluded by the Community. Such acts, according to the Commission, do not form part of the Community legal system. The Commission concedes that in its judgment in Sevince the Court itself claimed jurisdiction to give a ruling on the interpretation of the decisions of a joint council of association set up under an association agreement concluded by the Community with a non-member country. However, the Court's primary reason for applying Article 1 77 of the Treaty is, according to the Commission's reading of Sevince, the need for a uniform application of all Community rules throughout the Community. Where a measure has no binding force, that need never arises. The national court can still submit questions to the Court concerning the interpretation of provisions of Community law on which those acts are based. If those acts appear to be compatible with Community law, there is no problem; nor is there a problem if they are incompatible with Community law, as they are not binding.
10. I disagree with that reasoning. In the first place, I do not see why the acts, which are not legally binding, of a body set up pursuant to an international agreement approved by the Council should not form part of the Community legal system, when the binding acts of such a body do form part thereof. It is clear from the recent case-law of the Court that it is not the binding force of the act which is decisive, but the direct connection between the act and the international agreement concluded by the Community. If there is a direct connection of that kind, then the act, in the same way as the international agreement on which it is based, forms an integral part of the Community legal system. Crucial factors for establishing a close connection of that kind are, also according to the Court's case-law, that the act is placed within the institutional framework of the agreement and gives effect to it. It follows that the requirement of a direct connection is fulfilled once it is clear that the contested act has been adopted by the authority established by the agreement and entrusted with responsibility for its implementation. It cannot be disputed that a direct connection of that kind exists in this case; as will become apparent, the act at issue here was adopted within the institutional framework of the Convention by the administrative and supervisory body designated by the Convention (see paragraph 13), and gives effect thereto by aiming to lay down practical guidelines for the customs office of departure as regards the identification of the goods in transit. Consequently the act is directly connected with the fundamental objectives of the Convention, namely simplification of the carriage of goods in trade between the Community and EFTA (see below, paragraphs 15 and 16).
11. If an act is deemed to form part of Community law, the fact that it is not binding does not preclude the application of Article 177. That has already been confirmed by the Court on several occasions in connection with recommendations issued on the basis of the EEC Treaty. In its judgment in Grimaldi, the Court considered that:
Compatibility of the act with the Convention
12. The question whether the act in question is compatible with the Convention bears essentially on the interpretation of the Convention itself, in particular Articles 11(4) and 15(2) thereof, and Articles 63 and 65 of Appendix II.
13. As I said earlier, Article 15(1) of the Convention entrusts the Joint Committee with responsibility for administering the Convention and ensuring its proper implementation. To that end, the Committee acts as a forum for discussion between the Contracting Parties (the Community and the EFTA countries) in which the experiences gained in applying the Convention are compared; it also has an advisory role and, in certain cases, a power of decision. As regards proposals to make amendments to the Convention (other than those which are made necessary by amendments to the appendices: see Article 15(3)(c)) and measures required for the application of the Convention, the Joint Committee only has power to issue recommendations (Article 15(2)).As is clear from the terms of the contested act and, as stated earlier (paragraph 8, above), from the minutes of the meeting at which the act was discussed, it is clearly concerned with the application of the Convention — which had already led me to conclude that the act in question was not a decision but a recommendation. Moreover, the national court also refers to Article 15(2) in its question.
14. It is now necessary to spell out the discretion conferred by Article 11(4) of the Convention on the customs office of departure, or where appropriate on the higher national customs authorities, with a view to the grant of exemption from the general rule in Article 11(1), according to which the identification of the goods is to be ensured by sealing. As Article 11(4) states, the office of departure may dispense with sealing in an individual case if, having regard to other possible measures for identification, the description of the goods in the T1 or T2 declaration or in the supplementary documents makes them readily identifiable.
15. There remains the question whether, having regard to the power conferred on the Joint Committee by the Convention as well as the discretion which the Convention confers on the national authorities, the Joint Committee has unlawfully restricted that discretion by issuing the contested recommendation.
16. In my view, the special provisions in the contested act relating to trade with Switzerland and Austria (paragraph 3, above) also explain the general context in which dispensation may be granted from the general principle that goods must be placed under seal. Admittedly, the possibility which is left to the national customs authorities of granting dispensation as regards trade with those two countries is defined in the act more restrictively than is the case as regards trade with the other EFTA countries. However, that is justified, as is clear from the minutes of the meeting of the Joint Committee on 21 January 1988, by the fact that shortly after the entry into force of the Convention it was established that the identification of goods by means of a description in the transit documents instead of sealing, as sought by Shell, had the effect of hindering the crossing of the frontier with Austria. As the Commission confirmed at the hearing, that method of identification led the Swiss and Austrian customs authorities to step up spot checks carried out at the borders concerned.
Compatibility of the act with the principle of proportionality
17. Shell further submits that the contested act is contrary to the general principles of Community law, more specifically the principle of proportionality. In its view, the restriction of the discretion vested in the national customs offices of departure constitutes a disproportionate exercise of power in relation to an authorized consignor such as Shell. This problem is raised by the national court in Question 4.
Conclusions and proposed answers
18. It is apparent from the foregoing — and this is one answer to Question 2 — that the contested act of the Joint Committee is not, in my view, incompatible either with the Convention or with the Community principle of proportionality and that, consequently, there is no reason why the authorities of the Member States should not, or indeed should not be required to, take into account the recommendations decided upon in that act, as the Court has stated in its case-law, more specifically in the Grimaldi judgment.
19. In the light of the foregoing considerations, I consider that the Court should answer the questions submitted by the national court as follows:
1 Original language: Dutch.
2 OJ 1987 L 226, p. 2.
3 According to Article 3(1)(a) of the Convention, transit means a customs procedure under which goods are carried, under customs control, from a customs office in one country to a customs office in the same or another country over at least one frontier.
4 Council Regulation (EEC) No 222/77 of 13 December 1976 on Community transit, OJ 1977 L 38, p. 1.
5 OJ 1987 L 226, p. 1.
6 See Article 18 of Regulation No 222/77.
7 See point 4 of the Minutes of the meeting, Annex I to the Commission's written observations.
8 See the judgment of 30 April 1974 in Case 181/73 Haegeman v Belgium [1974] ECR 449, at paragraph 5; see also the judgments of 30 September 1987 in Case 12/86 Demirel [1987] ECR 3719, at paragraph 7, 14 November 1989 in Case 30/88 Greece v Commission [1989] ECR 3711, at paragraph 12, and 20 September 1990 in Case C-192/89 Sevince [1990] ECR I-3461, at paragraph 8; see, more recently still, the Opinion of 14 December 1991, Opinion 1/91 [1991] ECR I-6079, at paragraph 37.
9 Judgment in Haegeman, at paragraphs 4 and 6; judgment in Demirel, at paragraph 7; Opinion 1/91, at paragraph 38.
10 Judgment in Sevince, at paragraph 9; judgment in Greece v Commission, at paragraph 13.
11 Judgment of 27 September 1988 in Case 204/86 Greece v Cornial [1988] ECR 5323, at paragraph 20; judgment in Greece v Commission, at paragraph 13.
12 Judgment in Sevince, at paragraph 9.
13 Judgment in Sevince, at paragraph 10.
14 See the judgments of 15 June 1976 in Case 113/75 Frecassetti v Amministrazione delle Finanze dello Stato [1976] ECR 983, 9 June 1977 in Case 90/76 Van Ameyde [1977] ECR 1091, and 13 December 1989 in Case 322/88 Grimaldi v Fonds des Maladies Professionnelles [1989] ECR 4407, at paragraph 9.
15 Judgment in Grimaldi, at paragraph 8.
16 Ibid., at paragraph 19.
17 With regard to a power of definition of that kind, see also my Opinion in Case 14/88 Italy v Commission [1989] ECR 3689, at pp 3694-3695 (paragraph 13), which was concerned with a power of application or definition conferred on the Commission by Regulation (EEC) No 729/70.
18 See Article 19 of the Convention.
19 See the first recital in the preamble to the Council Decision of 15 June 1987, OJ 1987 L 226, p. 1.
20 Shell claims that, according to the Federal Ministry of Finance, the special rules recommended for Austria and Switzerland in the contested act are generally applicable and therefore extend to trade with other EFTA countries as well. The national court has not submitted a question on that point. It is not for the Court to rule on the proportionality of that national measure which is more far-reaching (than the recommendations of the Joint Committee).
21 Sec paragraph 11, above.