Summary
Parties
Grounds
Decision on costs
Operative part
Keywords

++++

Free movement of capital and freedom of payments ° Restrictions on capital movements ° National rules making physical transfers of money subject generally to authorization ° Not permissible ° Justified by the option contained in Article 73c of the Treaty ° No ° Possibility for individuals to rely on the corresponding provisions

(EC Treaty, Arts 73b(1), 73c and 73d(1)(b))

Summary

Articles 73b(1) and 73d(1)(b) of the Treaty, which prohibit restrictions on movements of capital between Member States and between Member States and non-member countries, on the one hand, and authorizing Member States to take all requisite measures to prevent infringements of national law and regulations, on the other, preclude national rules which make the export of coins, banknotes or bearer cheques generally subject to prior authorization but do not by contrast preclude a transaction of that nature being made conditional on a prior declaration.

Although the measures authorized by Article 73d(1)(b) include those designed to ensure effective fiscal supervision and to prevent illegal activities such as tax evasion, money laundering, drug trafficking and terrorism, the requirement of an authorization is not necessary for those purposes, which may be achieved by measures less restrictive of the free movement of capital. It is sufficient, rather than requiring an authorization, which has the effect of subjecting the free movement of capital to the discretion of the administrative authorities and is thus capable of making that freedom illusory, to set up an adequate system requiring a declaration indicating the nature of the operation envisaged and the identity of the declarant, which would require the competent authorities to proceed with a rapid examination of the declaration and enable them, if necessary, to carry out in due time the investigations found to be necessary to determine whether capital was being unlawfully transferred and to impose the requisite penalties if national legislation was being contravened, a course which would not suspend the operation concerned but would nevertheless enable the national authorities to carry out, in order to uphold public policy, effective supervision to prevent infringements of national law and regulations.

Moreover, rules requiring an authorization as a general principle do not fall within the scope of Article 73c(1) of the Treaty, which authorizes, subject to certain conditions, restrictions on movements of capital between Member States and non-member countries where they involve direct investment, establishment, the provision of financial services or the admission of securities to capital markets because, on the one hand, the physical export of means of payment cannot itself be regarded as a capital movement of that kind, and on the other hand the rules apply to all exports of means of payment, including those which do not, in the non-member countries, involve such operations.

Article 73b(1), in conjunction with Articles 73c and 73d(1)(b), may be relied on before national courts and may render inapplicable national rules inconsistent therewith.

Parties

In Joined Cases C-163/94, C-165/94 and C-250/94,

REFERENCES to the Court under Article 177 of the EC Treaty by the Juzgado Central de lo Penal de la Audiencia Nacional (Spain) for a preliminary ruling in the criminal proceedings pending before that court against

Lucas Emilio Sanz de Lera,

Raimundo Díaz Jiménez,

Figen Kapanoglu,

on the interpretation of Articles 73b, 73c(1) and 73d(1)(b) of the EC Treaty,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C.N. Kakouris and G. Hirsch (Presidents of Chambers), G.F. Mancini, F.A. Schockweiler, P.J.G. Kapteyn (Rapporteur), C. Gulmann, J.L. Murray, P. Jann, H. Ragnemalm and L. Sevón, Judges,

Advocate General: G. Tesauro,

Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

° the Ministerio Fiscal (C-250/94), by Florentino Orti Ponte, Fiscal de la Audiencia Nacional,

° the Spanish Government, by Alberto José Navarro González, Director-General for Community Legal and Institutional Coordination, and Miguel Bravo-Ferrer Delgado, Abogado del Estado for Community Matters, acting as Agents,

° the Belgian Government (C-163/94 and C-165/94), by Jan Devadder, Directeur d' Administration, Legal Department of the Ministry of Foreign Affairs, acting as Agent,

° the French Government, by Edwige Belliard, Deputy Director in the Legal Affairs Directorate of the Ministry of Foreign Affairs, Catherine de Salins, Deputy Director in the same directorate, and Philippe Martinet, Foreign Affairs Secretary in the same directorate, acting as Agents,

° the Portuguese Government (C-163/94 and C-165/94) by Luis Fernandes, Director of Legal Services in the Directorate-General for European Community Affairs in the Ministry of Foreign Affairs, and Jorge Santos, Legal Adviser with the Bank of Portugal, acting as Agents,

° the Commission of the European Communities, by Blanca Rodríguez Galindo and Hélène Michard, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of the Spanish Government, represented by Miguel Bravo-Ferrer Delgado, and the Commission, represented by Blanca Rodríguez Galindo, at the hearing on 11 July 1995,

after hearing the Opinion of the Advocate General at the sitting on 19 September 1995,

gives the following

Judgment

Grounds

1 By orders of 24 May, 26 May and 1 July 1994, received at the Court on 16 June, 17 June and 13 September 1994 respectively, the Audiencia Nacional (High Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a number of questions on the interpretation of Articles 73b, 73c(1) and 73d(1)(b) of the EC Treaty.

2 Those questions were raised in three sets of criminal proceedings. In Case C-163/94 Mr Sanz de Lera, a Spanish national residing in Spain, was apprehended in France on 27 October 1993 whilst driving his car to Geneva. Although he stated that he had nothing to declare, French officers searched his vehicle and found in it PTA 19 600 000 in banknotes.

3 In Case C-165/94, on 28 October 1993 during a security check at the international terminal at Barajas Airport, Madrid, where he was intending to board a flight to Zurich with a connecting flight to London, Mr Díaz Jiménez, a Spanish national residing in Great Britain, was found to be carrying PTA 30 250 000 in banknotes in his hand baggage.

4 Finally, in Case C-250/94, Mrs Kapanoglu, a Turkish national residing in Spain, was arrested by police officers on 10 May 1993 at Barajas Airport, Madrid, when boarding a flight for Istanbul, in possession of PTA 11 998 000 in banknotes.

5 Since no authorization had been sought from the Spanish authorities for the export of those sums, criminal proceedings were commenced in the Spanish courts against the three persons concerned.

6 Under Article 4(1) of Royal Decree No 1816 of 20 December 1991 on economic transactions with other countries, the export of, inter alia, any coins, banknotes and bank cheques payable to bearer, made out in pesetas or in foreign currencies, is subject to a prior declaration when the amount concerned exceeds PTA 1 000 000 per person and per journey and to a prior administrative authorization when the amount concerned is in excess of PTA 5 000 000 per person and per journey.

7 The wording of Article 4(1) of that decree was amended by Royal Decree No 42 of 15 January 1993 which, according to the national court, constitutes no more than a technical improvement.

8 The national court considers that it is necessary to determine the validity in the light of Community law of Article 4(1) of Royal Decree No 1816 before making a finding of a criminal offence under Law No 40 of 10 December 1979 on the regulations governing exchange control, as amended by Organic Law No 10 of 16 August 1983.

9 The national court also points out that, by contrast with Joined Cases C-358/93 and C-416/93 Criminal proceedings against Aldo Bordessa and Others [1995] ECR I-361, which concerned movements of capital between Member States, this case involves movement of capital from a Member State to a non-member country. The national court refers, however, to the entry into force on 1 January 1994 of Article 73b of the Treaty, which also covers capital movements between Member States and non-member countries.

10 In Bordessa the Court held that Articles 1 and 4 of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5) preclude the export of coins, banknotes or bearer cheques being made conditional on prior authorization but do not by contrast preclude a transaction of that nature being made conditional on a prior declaration.

11 In those circumstances, the national court stayed the proceedings and in all three cases referred the following questions to the Court of Justice for a preliminary ruling:

"1. Are rules of a Member State which require a person leaving national territory carrying coins, banknotes or bear