Summary
Parties
Grounds
Decision on costs
Operative part
Keywords

Association of the overseas countries and territories - Implementation by the Council - Economic and social development of the French overseas departments - Obligations of the institutions - Council Decision authorising temporary exemptions, subject to monitoring by the Commission, from the octroi de mer applied in the French overseas departments - Validity - Condition

(EC Treaty, Arts 9, 12, 13, 95, 226 and 227(2); Council Decision 89/688)

Summary

In so far it authorises a system, subject to monitoring by the Commission, of exemptions in favour of products from the French overseas departments from the charge termed octroi de mer, and provided that such exemptions are granted in accordance with the strict conditions which it lays down, Decision 89/688 concerning the dock dues (octroi de mer) in the French overseas departments is not incompatible with Articles 9, 12 and 13 of the Treaty, and the temporary derogations from Article 95 for which it provides are justified in accordance with Article 227(2), read in conjunction with Article 226, of the Treaty.

Under the third subparagraph of Article 227(2) of the Treaty, the institutions of the Community are required to make full use of the procedures provided for in the Treaty, in particular Article 226, in order to make the economic and social development of the French overseas departments possible. Article 226 specifies that urgent protective measures cannot be adopted unilaterally by the Member States but only with the intervention of the Community institutions, which may authorise only strictly necessary derogations for limited periods, giving priority to such measures as least disturb the functioning of the common market.

The imposition of the strict conditions laid down in Article 2(3) of Decision 89/688, interpreted in the light of the limits laid down in Article 226 of the Treaty for derogations from the provisions of the Treaty, is such as to ensure that the system of precisely determined exemptions is compatible with the Treaty.

Parties

In Case C-212/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunal Administratif, Saint-Denis de la Réunion (France), for a preliminary ruling in the proceedings pending before that court between

Paul Chevassus-Marche

and

Conseil Régional de la Réunion

on the interpretation of Articles 9, 12 and 13 and the second paragraph of Article 95 of the EC Treaty, and on the interpretation and validity of Council Decision 89/688/EEC of 22 December 1989 concerning the dock dues (octroi de mer) in the French overseas departments (OJ 1989 L 399, p. 46),

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C. Gulmann, H. Ragnemalm, M. Wathelet (Presidents of Chambers), G.F. Mancini, J.C. Moitinho de Almeida, P.J.G. Kapteyn, J.L. Murray, D.A.O. Edward (Rapporteur), J.-P. Puissochet, G. Hirsch, P. Jann and L. Sevón, Judges,

Advocate General: G. Tesauro,

Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

- the Conseil Régional de la Réunion, by Pierre Soler-Couteaux, of the Strasbourg Bar,

- the French Government, by Catherine de Salins, Head of Subdirectorate in the Legal Directorate of the Ministry of Foreign Affairs, and Anne de Bourgoing, Chargé de Mission in that directorate, acting as Agents,

- the Council of the European Union, by Ramón Torrent, Director in its Legal Service, acting as Agent, and

- the Commission of the European Communities, by Michel Nolin, of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of the Conseil Régional de la Réunion, represented by Katia Merten, of the Strasbourg Bar; of the French Government, represented by Jean-François Dobelle, Deputy Director of Legal Affairs in the Ministry of Foreign Affairs, acting as Agent, and Anne de Bourgoing; of the Council, represented by Ramón Torrent; and of the Commission, represented by Michel Nolin, at the hearing on 15 January 1997,

after hearing the Opinion of the Advocate General at the sitting on 20 March 1997,

gives the following

Judgment

Grounds

1 By judgment of 5 June 1996, received at the Court on 25 June 1996, the Tribunal Administratif (Administrative Court), Saint-Denis de la Réunion, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Articles 9, 12 and 13 and the second paragraph of Article 95 of the Treaty, and on the interpretation and validity of Council Decision 89/688/EEC of 22 December 1989 concerning the dock dues (octroi de mer) in the French overseas departments (OJ 1989 L 399, p. 46).

2 Those questions were raised in the context of proceedings brought by Mr Chevassus-Marche, a commercial agent residing in metropolitan France, for annulment of the resolution of 11 December 1992 by which the Conseil Régional de la Réunion adopted the new rates of octroi de mer applicable in Réunion, on the ground that locally-produced goods may be exempted.

3 The applicant in the main proceedings claims that that resolution is incompatible with Decision 89/688.

4 Like Council Decision 89/687/EEC of 22 December 1989 establishing a programme of options specific to the remote and insular nature of the French overseas departments (Poseidom) (OJ 1989 L 399, p. 39, `the Poseidom Decision'), which was adopted on the same day, Decision 89/688 was adopted by the Council on the basis of Articles 227(2) and 235 of the EEC Treaty.

5 Under a law dating from 1946, a charge termed octroi de mer (`dock dues'; hereinafter `the old octroi de mer') was levied in the French overseas departments on all goods, irrespective of their origin (including those from metropolitan France and, in principle, those from other overseas departments), by reason of their introduction into the overseas department in question. Products of the overseas department itself were, however, exempted from the old octroi de mer or any equivalent internal levy. The revenue from the old octroi de mer went essentially to finance local authority budgets according to the rules governing autonomous regions.

6 According to the first recital in the preamble to Decision 89/688, the powers necessary to ensure the economic and social development of the French overseas departments were not provided for under Article 227(2) of the Treaty `and it is therefore appropriate to have recourse to Article 235 of the Treaty'.

7 The fifth recital states that the old octroi de mer system had features which necessitated its reform as a means of integrating the French overseas departments fully into the process of completing the internal market, while taking account of their fragile economic structure.

8 According to the sixth recital, the octroi de mer system ought to be adjusted into a system of internal taxation applicable to all products marketed in the French overseas departments.

9 The seventh recital states that, for the purposes of creating, maintaining and developing activities in those departments, it would be advisable to authorise the local authorities to exempt local activities either totally or partially, according to economic requirements, from the application of the new octroi de mer for a period not exceeding, in principle, 10 years.

10 According to the ninth recital, at the end of that 10-year period the tax arrangements should be fully in line with the principles of Article 95 of the Treaty, it being understood that support measures with the same aims can still be adopted in the context of regional aid and in compliance with the provisions of Articles 92, 93 and 94 of the EC Treaty. The Commission is to present a report to the Council, before the expiry of the 10-year period, concerning the implementation of the arrangements and their impact on the development of the overseas departments, together, where appropriate, with a proposal directed towards maintaining the possibility of exemptions.

11 Article 1 of Decision 89/688 provides:

`By 31 December 1992 at the latest, the French authorities shall take the necessary measures for the dock dues arrangements at present in force in the French overseas departments to apply, in accordance with the principles and procedures set out in Articles 2 and 3, to all products whether imported into or produced in those areas.'

12 Article 2 provides:

`1. The revenue from this tax shall be put to use by the competent authorities of each French overseas department in such a way as to encourage as effectively as possible its economic and social development. The Commission shall be informed at the earliest opportunity of the measures adopted by the competent authorities in order to achieve this objective.

2. The competent authorities of each French overseas department shall establish a basic rate of tax. This rate may be adjusted according to the categories of products. This adjustment shall in no case be such as to maintain or introduce discrimination against products from the Community.

3. In the light of the specific constraints on the French overseas departments and with a view to achieving the objective referred to in Article 227(2) of the Treaty, partial or total exemptions from the charge according to economic requirements, may be authorised for local production activities for a period of not more than 10 years from the date of introduction of the system of changes under the conditions laid down in Article 3. These exemptions must contribute to the promotion or maintenance of an economic activity in the French overseas departments and be in line with the economic and social development strategy of each French overseas department, taking account of its Community aid framework, while not being such as to adversely affect the terms of trade to an extent contrary to the common interest.

Exemption arrangements adopted by the competent authorities in each French overseas department shall be notified to the Commission, which shall inform the Member States thereof and define its position within two months on the basis of the above criteria. If the Commission has not defined its position within that period, the arrangement shall be deemed to be approved.

The Commission shall submit to the Council a report on the implementation of the exemption arrangements no later than five years after the introduction of the system of charges in question.'

13 Article 3 of Decision 89/688 provides:

`Not later than one year before the end of the period provided for in Article 2(3), the Commission shall submit to the Council a report on the implementation of the arrangements referred to in Article 2, in order to ascertain the impact of the measures adopted on the economies of the French overseas departments and their contribution to the promotion or maintenance of local economic activities. The matters to be covered in the report shall include the effect of the system of charges in question on the economic and social adjustment of the French overseas departments taking as criteria the level of unemployment, the balance of trade, the regional gross domestic product both on the free movement of products within the Community and on regional cooperation between the French overseas departments and their neighbours.

In the light of the report's conclusions, the Commission, taking into account the objective regarding the economic and social development of the French overseas departments set out in Article 227(2) of the Treaty shall, if necessary, at the same time submit to the Council a proposal for maintaining the possibility of exemptions.

Support measures with the same objectives may be taken in the context of regional aid.'

14 Under Article 4, pending implementation of the reform set out in Article 1, the French Republic was authorised to maintain the old octroi de mer until not later than 31 December 1992.

15 Finally, Article 5 states that the decision is addressed to the French Republic.

16 On 17 July 1992, the French Republic adopted Law No 92-676 concerning the octroi de mer and implementing Decision 89/688 (`the new octroi de mer').

17 The national court considers that its decision in the litigation before it is dependent on whether Decision 89/688 is consistent with the Treaty in so far as Article 2(3) thereof allows the local production of undertakings situated in the French overseas departments to be exempted from the new octroi de mer. It has therefore stayed proceedings and sought a preliminary ruling by the Court on the following questions:

`1. Is Council D