Report for the Hearing in Case C-157/91
I — Legislative background
1. The Eighth Council Directive (84/253/EEC) of 10 April 1984 based on Article 54(3)(g) of the EEC Treaty on the approval of persons responsible for carrying out the statutory audits of accounting documents (OJ 1984 L 126, p. 20, the Directive) seeks inter alia to harmonize the qualifications of persons entitled to carry out statutory audits of accounting documents and to ensure that such persons are independent and of good repute. It lays down coordination measures which, under Article 1(1):
2. The directive includes rules on approval (Section II), on professional integrity and independence (Section III), and on publicity (Section IV).
3. Article 30 of the Directive provides:
4. Article 18 of the Directive provides:
II — Pre-litigation procedure
5. Since the Commission had received no information from the Kingdom of the Netherlands on the laws, regulations and administrative provisions needed to implement the Directive, on 27 July 1989 it began the procedure under Article 169 of the EEC Treaty by sending the Kingdom of the Netherlands a letter giving formal notice and inviting it to submit its observations within two months of receipt of the letter.
6. In reply to the Commission's letter, the Kingdom of the Netherlands sent the following information on 26 September 1989:
7. The Commission considered that the Directive had not been wholly transposed into domestic legislation; on 2 May 1990 it therefore sent the Kingdom of the Netherlands a reasoned opinion inviting the Netherlands government to take the measures needed to comply with the opinion within three months of receiving it.
8. In reply to that reasoned opinion, on 9 July 1990 the Kingdom of the Netherlands sent the Commission a letter which essentially reiterated the replies which the Netherlands government had sent the Commission on 26 September 1989.
9. The Commission states that since that letter it has received no information from which it can be concluded that the Kingdom of the Netherlands has fulfilled its obligations under the Directive. Consequently, the Commission brought the present action.
III — Written procedure and forms of order sought by the parties
10. The Commission's application was lodged at the Court Registry on 14 June 1991.
11. The written procedure followed the usual course. 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. However, it invited the Commission to reply to one question. The Commission replied with the time allowed.
12. The Commission claims that the Court should:
13. The Kingdom of the Netherlands states that it defers to the judgment of the Court.
IV — Pleas in law and arguments of the parties
14. The Kingdom of the Netherlands states in limine that since its observations in reply to the reasoned opinion it has continued to keep the Commission informed on a sufficiently regular basis of action taken towards the transposition of the Directive, and refers in this regard to the documents of 25 July 1990 and of 9 August 1991 which are appended to its defence. Furthermore, according to the Kingdom of the Netherlands, as a result of the information provided to it the Commission was aware of the matters which have delayed the implementation of the Directive in the Netherlands.
15. According to the Commission, since 9 July 1990 it has received no information from the Netherlands from which it can be concluded that the Kingdom of the Netherlands has fulfilled its obligations under the Directive.
16. The Kingdom of the Netherlands maintains that on 1 January 1988, that is to say the date specified in Article 30(1) of the Directive, Netherlands legislation, in particular the legislation on the profession of accountancy, already satisfied the requirements of the Directive with regard to professional integrity and independence (Section III) and publicity (Section IV). The same was true of all the requirements relating to approval (Section II), except for the statutory obligation to undertake practical training as provided for by Articles 4 and 8 of the Directive. The Commission, it says, did not contest those assertions. The Kingdom of the Netherlands concludes that the finding of a failure to fulfil obligations can only relate to part of the Directive. It emphasizes the reasons for the delay and, with regard to practical training, explains that whilst it is not yet formally part of auditors' training that type of training is already undertaken by the very great majority of accountancy students.
17. The Commission maintains that under Article 30 of the Directive the Kingdom of the Netherlands is obliged to implement, before 1 January 1988, all the laws, regulations and administrative provisions necessary to comply fully with the Directive and to inform the Commission of them forthwith. According to the Commission, it is these two rules that have been infringed, inasmuch as the Kingdom of the Netherlands has not taken the measures needed in order to bring its legislation completely into line in particular with the criteria relating to practical training of persons responsible for carrying out the statutory audits of accounting documents provided for by Articles 4 and 8 of the Directive. Furthermore, the Commission argues that the fact that the situation in the Netherlands complies de facto with Articles 4 and 8 of the Directive does not exempt that Member State from its obligations under the Directive.
18. The Kingdom of the Netherlands invokes Article 18 of the Directive and argues that that provision allows it to apply transitional measures. It states that not only do the great majority of accountancy students actually undergo practical training as part of their training, but in view of the transitional period provided for by Article 18 of the Directive, the training of all those who are currently finishing their accountancy training also complies with the Directive.
19. In the Commission's view, the transitional measures provided for by Article 18 of the Directive presuppose the existence of detailed implementing rules in accordance with Article 30(2) of the Directive. According to the Commission, there are no such rules in the Netherlands.
V — Replies to the questions asked by the Court
20. The Commission was asked to define the precise scope of the dispute, that is to say, whether its action related to all the provisions of the Directive or only to Articles 4 and 8.
21. The Commission states that the provisions of the Directive form a coherent whole and that failure to comply with Articles 4 and 8 of the Directive has repercussions on other articles. It gives as an example the register (Article 28) in which the names and addresses of all natural persons and firms of auditors approved to carry out statutory audits appear.
22. The Commission also points out that an implementing measure taken prior to the date for transposition of the Directive and restricted to Articles 4 and 8 of the Directive would have made it impossible for the Kingdom of the Netherlands subsequently to reply on the transitional measures under Articles 12 to 19. In that regard, the Commission considers that it is virtually impossible to implement the Directive without recourse to the transitional measures. Not only would a substantial number of accountants be refused approval to carry out statutory audits of annual accounts, but accountants currently on the register would overnight become unable to carry out statutory audits because of their lack of practical training.
23. In the light of the foregoing, the Commission rejects the arguments of the Kingdom of the Netherlands on the limited scope of the alleged infringement.
1 Language of the case: Dutch.