Opinion of the Advocate-General
1 In these cases the Hoge Raad der Nederlanden seeks a ruling on two series of questions. At issue in the first series is whether that court is bound to consider on appeal certain issues of Community law which were not raised in the lower courts even though it would be contrary to national rules of procedure for it to do so. Although the questions arise in the particular context of the competition rules of the Treaty, they raise issues of general importance about the interaction of Community law with the legal systems of the Member States. At issue in the second series of questions is whether an occupational pension scheme entailing compulsory membership is compatible with the competition rules of the Treaty.
2 The national law background to both cases is the same. Article 2(1) of the Netherlands Law of 29 June 1972 on compulsory participation in an occupational pension scheme (the `Pensions Law') empowers the competent Minister, at the request of one or more professional bodies representative of the profession and following a consultation procedure, to make it compulsory for one or more specific groups of practitioners to participate in an occupational pension scheme established by members of the profession. By virtue of Article 2(2) such a scheme may entail (a) the establishment of a special pension fund or (b) an obligation on members of the profession to conclude an insurance contract either with the special fund or with an approved insurer at their discretion or (c) a combination of the two for different parts of the scheme. Article 2(3) requires the bodies requesting the introduction of a compulsory scheme to establish a legal person responsible for operating the scheme as an occupational pension fund or for supervising the performance by members of their insurance obligation. Article 2(4) provides that, where a scheme is made compulsory, any person carrying on the relevant profession, whether as a self-employed person or as an employee, is obliged to comply with the provisions of the scheme. Failure to do so constitutes an offence punishable by a fine under Article 27. Moreover, Article 31 empowers the pension fund or supervisory body to issue an enforceable order for recovery of unpaid premiums.
3 The purpose of the collective schemes, according to statements contained in the travaux préparatoires to the Pensions Law reproduced in the orders for reference, is to make possible `the adjustment of retirement income so as to reflect the rising general level of incomes', `the use of a system of actuarially based levies or variants of these, so that younger colleagues make a contribution to the higher cost of providing pensions for older colleagues' and `provision for the granting of pension rights in respect of years before the scheme came into force'. That goal could be achieved by means of a mutual scheme `only if all those belonging to the profession were in principle associated with it'.
4 In 1978 the physiotherapists' profession set up an occupational scheme, comprising a special fund, the Stichting Pensioenfonds voor Fysiotherapeuten (`the Fund'). Article 4(1) of the statutes of the Fund states that the members of the foundation comprise all physiotherapists and `heilgymnasts' complying with the membership requirements set out in the pension regulations. Article 4(2) provides that members are subject to the provisions of the statutes, the pension regulations and other regulations adopted in accordance with the statutes.
5 Article 2(1) of the pension regulations defines members of the scheme as `any physiotherapist carrying on an activity as a physiotherapist in the Netherlands and not yet of pensionable age'. It then excludes certain categories of physiotherapists including, in Article 2(1)(a), those `whose activity is solely in employment in respect of which they are covered by the rules contained in the Algemene Burgerlijke Pensioenwet (General Pensions Law) or by other pension arrangements which are at least equivalent to those laid down in those rules, provided that the persons concerned give the Fund written notice of their intention and comply with the administrative requirements set out in Article 25(3)'.
6 On 31 March 1978 the State Secretary for Social Affairs issued a decree pursuant to Article 2(1) of the Pensions Law making membership of the scheme compulsory. The decree contained an exception corresponding to that in Article 2(1)(a) of the pension regulations.
7 The Fund has adopted the following criteria for the purpose of applying Article 2(1)(a) of the regulations:
`1. The employment concerned must be the sole activity and be covered by pension arrangements that are at least equivalent.
2. The pension arrangements concerned must cover:
(a) ...
(b) (...) all practitioners employed by the company.'
8 With effect from 1 January 1988 and 1 April 1989 respectively, Mr van Veen and Mr van Schijndel (`the plaintiffs') made their own insurance arrangements with Delta Lloyd. The Fund refused exemption from compulsory membership on the ground that the arrangements did not comply with the requirement that they should apply to all physiotherapists in the service of the employer (`the collectivity requirement'). The plaintiffs' actions against the Fund's decisions were heard at first instance by the Kantonrechter (who found against Mr van Veen and in favour of Mr van Schijndel) and on appeal by the Breda Rechtbank, which found against both plaintiffs. The latter have now appealed to the Hoge Raad, which has jurisdiction to quash on a point of law only (`cassation').
9 Before the lower courts the plaintiffs sought exemption from compulsory membership, basing their cases on the lack of legal basis in Netherlands law for the collectivity requirement. On appeal the Hoge Raad upheld the Rechtbank's view that the collectivity requirement was compatible with the Netherlands legislation. However, the plaintiffs put forward a new submission before the Hoge Raad not relied on before the Kantonrechter or the Rechtbank, namely that the Pensions Law, or at least its application to the pension scheme established by physiotherapists, is incompatible with Articles 3(f), 5, 85 to 86 and 90 of the EC Treaty. The plaintiffs contend that the nature of those Treaty provisions is such that the Rechtbank should have found in their favour on those grounds even though they had made no such submission at first instance.
10 That new submission raises an important procedural question for the Hoge Raad. Under Netherlands law new submissions may be made in an appeal in cassation only if they concern solely matters of law, i.e. do not require any inquiry into the facts. The Hoge Raad considers that the plaintiffs' new submission does not meet that requirement because it relies on facts and circumstances not found by the Rechtbank. Nor can it be said that it formed the basis of the plaintiffs' claims but was not considered by the Rechtbank.
11 Nor, in the Hoge Raad's view, can the plaintiffs rely on Article 48 of the Netherlands Code of Civil Procedure, which requires a judge to supplement of his own motion legal grounds not put forward by the parties. According to the Hoge Raad, the principle of non-interference by the civil courts in cases involving rights and obligations freely entered into by the parties means that in supplementing the legal grounds a judge may neither go beyond the limits of the dispute nor rely on facts or circumstances other than those relied on by the party whose pleas must be supplemented. In this case the Rechtbank would have gone beyond the limits of the dispute if it had considered the Community law points of its own motion. Before the Kantonrechter the plaintiffs challenged, not their compulsory membership of the scheme, but the refusal to exempt them from membership under Article 2(1)(a) of the pension regulations. The Hoge Raad concludes that the plaintiffs thereby accepted the binding nature of the Pensions Law of 29 June 1972 and of the scheme.
12 In those circumstances the Hoge Raad seeks a preliminary ruling on the following questions:
`(A)
(1) In proceedings concerning rights and obligations which may be freely conferred and entered into at civil law, should a national civil court apply Articles 3(f), 5 and 85 to 86 and/or 90 of the Treaty establishing the European Economic Community, even where the party to the proceedings which has an interest in the application of those provisions has not relied upon them?
(2) If Question (1) must in principle be answered in the affirmative, does that answer also apply if in so doing the court would have to abandon the passive role which it should normally observe, in that it would have to (a) go outside the ambit of the legal dispute or (b) rely on facts and circumstances other than those which the party having an interest in the application of those provisions relies on in order to substantiate its claim, or do both those things?
(3) If Question (2) must also be answered in the affirmative, can the Treaty provisions referred to in Question (1) be relied on before a national court of cassation for the first time if (a) the applicable procedural law provides that new arguments may be submitted on appeal in cassation only if they are purely legal in nature, that is to say that they do not require an investigation of facts and are relevant in all events, and (b) such reliance also requires an investigation of facts?
(B)
(4) Given the aims of the Pensions Law outlined ... above, is an occupational pension scheme which, pursuant to and in accordance with the Law, makes membership compulsory for all, or one or more specified groups of, persons belonging to a profession, entailing the legal consequences outlined ... above attendant upon the Law, to be regarded as an undertaking within the meaning of Articles 85, 86 or 90 of the Treaty?
(5) If so, is the fact of making membership of the occupational pension scheme for physiotherapists referred to in 3.1(B) compulsory a measure adopted by a Member State which nullifies the useful effect of the competition rules applicable to undertakings, or is this the case only under certain conditions, and if so, under which?
(6) If the last question must be answered in the negative, can other circumstances render compulsory membership incompatible with Article 90 of the Treaty, and if so, which?'
13 The Hoge Raad points out that the questions under (B) arise only if, as a result of the Court's reply to the questions under (A), it is obliged to consider the plaintiffs' submissions based on Community law.
The procedural questions
14 The first set of questions (those under (A)) can be described as `procedural' questions, the term `procedural' being used in a very broad sense as covering rules relating to the organization of judicial remedies and the jurisdiction of the courts. At the heart of these cases lie issues about the impact of Community law on procedural matters in this broad sense as they are organized in the legal systems of the Member States.
15 The structure of the three procedural questions is based on the premise that an appeal in cassation is in principle confined to challenging an error of law made by the court whose decision is the subject of the appeal. Since in the present cases the point of law was not taken by the parties in the courts below, the question arises whether those courts could or should have raised the point themselves, since otherwise they can have made no error of law. Accordingly the Hoge Raad's first question asks whether a national civil court should apply of its own motion certain rules of the Treaty, in particular those on competition, where the parties have not relied upon them. Its second question arises only if the first question must in principle be given an affirmative reply. It asks whether that is so even though the national court would then have to go beyond the passive role assigned to it by national procedural rules by considering grounds going beyond the parties' claims and calling for further factual evidence in support of those grounds. If so, the third question asks whether the Treaty rules in question may be relied upon by parties for the first time before a court of cassation even though the court would then be obliged to set aside procedural rules which preclude reliance on new grounds requiring investigation of the facts. In my view the first and second questions, taken together, call for a negative reply. The third question therefore does not call for a reply.
16 The cases raise similar issues to those raised by the Peterbroeck (1) case, in which the Court of Appeal, Brussels, asked the Court whether a national court must set aside a national procedural rule preventing it from considering a point of Community law raised by one of the parties after the relevant deadline. I delivered my Opinion in that case on 4 May 1994. The oral procedure in the case was subsequently re-opened and a further hearing held jointly with the hearing in the present cases on 4 April 1995.
17 In my Opinion of 4 May 1994 in Peterbroeck I took the view that Community law did not preclude the national rule in question. I based that view on the fact that it had `long been established by this Court's case-law that, in the absence of Community rules, it is for the domestic legal system of each Member State to determine the courts having jurisdiction and the procedural conditions governing actions intended to ensure the protection of directly effective Community rights, provided that those conditions fulfil two requirements: they are not less favourable than the conditions relating to similar actions of a domestic nature; and they do not render virtually impossible (2) or excessively difficult (3) the exercise of rights conferred by Community law'. (4) Since none of the claims covered by certain exceptions provided for by the Belgian rules was comparable to Peterbroeck's claim and since the time-limit laid down by the rules could not be regarded as unreasonable, I concluded that the Belgian rules met the requirements laid down by the Court.
18 Those requirements are intended to establish a balance between the need to respect the procedural autonomy of the legal systems of the Member States and the need to ensure the effective protection of Community rights in the national courts. They are consistent with rulings in other cases in which the Court has given greater prominence to the need to ensure the effectiveness of Community law and proper judicial protection for individuals, notably the Simmenthal and Factortame cases.
19 In Simmenthal (5) the Court held that a national court which was called upon, within the limits of its jurisdiction, to apply provisions of Community law was under a duty to give full effect to those provisions without waiting for a conflicting national measure to be set aside by legislation or by the Italian Constitutional Court. The crucial importance of the ruling for the integrity of the Community legal order is clear. Under the system established by the Treaty Community law relies for its enforcement on the national courts. Each national court must be able to give effect to any Community rules relevant to the area of law in which it has jurisdiction. If the Constitutional Court alone had jurisdiction to set aside national law conflicting with Community law, that would undoubtedly have constituted a major impediment to the application of Community law and the protection of Community rights by the Italian courts. The need to refer every case involving the compatibility of a national rule with Community law to the Constitutional Court, involving long, complex and expensive proceedings, would have deterred individuals from seeking enforcement of their rights under Community law; (6) moreover, even where individuals were not deterred, Community law would have remained unapplied while the proceedings were pending. (7)
20 In Factortame (8) also there was a compelling need for the Court to remedy the inadequacy of the judicial protection of Community rights afforded by national law. The applicants had challenged, by way of an application for judicial review, the compatibility with Community law of certain provisions of a United Kingdom Act of Parliament. The Divisional Court of the Queen's Bench Division sought a ruling on the matter from the Court. At the same time the applicants sought interim relief in the form of suspension of the application of the disputed provisions. The order of the Divisional Court granting such relief was set aside by the Court of Appeal on the ground that the United Kingdom courts had no power to suspend, by way of interim relief, the application of Acts of Parliament and no power, in proceedings by way of judicial review, to grant injunctions against the Crown. Asked by the House of Lords to rule on the question, the Court held that a national court which, in a case before it concerning Community law, considered that the sole obstacle which precluded it from granting interim relief was a rule of national law must set aside that rule.
21 The ruling, although it inevitably gave rise to political debate, was not in legal terms revolutionary, or indeed surprising, as was shown by the response of the English judges themselves. (9) Judicial protection of Community rights would clearly have been inadequate, indeed illusory, if, pending the delivery of its final judgment following a ruling by the Court of Justice, the Divisional Court had been unable to grant interim relief to prevent the party seeking such relief from incurring irremediable damage. It is noteworthy also that the English courts subsequently assumed the power to grant injunctions against the Crown in proceedings of the same type even where Community rights were not in issue. (10)
22 Thus, it should be noted that in both Simmenthal and Factortame the Court's intervention was necessary in order to enable national courts, before which claims based on Community law had been properly brought, to perform effectively the task conferred upon them under the system established by the Treaty.
23 The present case is plainly distinguishable from Simmenthal and Factortame and there is in my view no reason to extend the principles stated in those cases so as to afford protection to those who have not brought claims in the appropriate way under legal systems which afford them proper opportunities of doing so. I agree therefore with the position taken by all the Member States who submitted written observations, namely France, Germany, the Netherlands and the United Kingdom (all of whom were also represented at the hearing) and with the position taken at the hearing by Ireland and (in the Peterbroeck case) Belgium. Spain and Greece, however, took a different position at the hearing. The Spanish Government suggested that a national court was required to consider, if necessary of its own motion, points of Community law notwithstanding any national procedural rules to the contrary. It based that conclusion on (a) the primacy of Community law, (b) the principle of the effectiveness of Community law and (c) the need to ensure uniform application thereof. Similar arguments were advanced by the Greek Government. I will consider each argument in turn.
Primacy of Community law
24 In my view, it does not follow from the primacy of Community law that a national court must in all circumstances set aside procedural rules which prevent a question of Community law from being raised at a particular stage in the proceedings. What the primacy of Community law requires in the first place is a general rule that, when a national court is confronted with a conflict between a substantive provision of national law and a substantive provision of Community law, the Community provision should prevail. It is easy to see that, in the absence of such a general rule, Community law would be a dead letter.
25 But as regards procedural rules, the primacy of Community law does not require that they should be overridden in all circumstances so as to allow Community law to enter the arena at any stage in the proceedings. As the Court's case-law has shown, it is sufficient that individuals are given, by the national procedural rules, an effective opportunity of enforcing their rights.
26 It is true that the public interest in the proper application of Community law must be taken into account, as well as the interests of the parties. However, the approach consistently taken over the years by the Court suggests that what is sufficient to satisfy the public interest in this respect corresponds precisely to the well established principles already referred to, namely the principles that national courts must ensure the enforcement of Community rights where they are invoked in national proceedings in accordance with national procedural rules; and that the national rules need only be set aside where they make it impossible or unduly difficult for those rights to be enforced. Moreover, as a subsidiary point it may be noted that the Community interest can also be protected by the Commission, whether in securing observance of the competition rules, which are invoked in the present cases, or more generally in securing observance by Member States of their Community obligations, resorting if necessary to Article 169 of the Treaty.
27 Moreover, if the view were taken that national procedural rules must always yield to Community law, that would, as will appear below, unduly subvert established principles underlying the legal systems of the Member States. It would go further than is necessary for effective judicial protection. It could be regarded as infringing the principle of proportionality and, in a broad sense, the principle of subsidiarity, which reflects precisely the balance which the Court has sought to attain in this area for many years. It would also give rise to widespread anomalies, since the effect would be to afford greater protection to rights which are not, by virtue of being Community rights, inherently of greater importance than rights recognized by national law. It can, for example, scarcely be argued that Mr van Schijndel's and Mr van Veen's putative right under Community law to choose their own insurance scheme is more important and merits greater protection than, for example, the right of a plaintiff to recover damages for personal injury.
28 To recognize this is not to underestimate the importance of enforcement by national courts of Community law, or their duty under Article 5 of the Treaty to give full effect to Community provisions and to enforce rights conferred by Community law on individuals. Indeed as I suggested in my Opinion in BP Supergas, (11) national courts should interpret broadly the requirement that claims based on Community law should be placed on an equal footing with claims based on national law. Moreover, the Court will intervene to ensure that effect is given to Community law where specific national rules frustrate Community rights: see, in addition to the judgments in Simmenthal and Factortame, the judgments in Johnston, (12) Emmott (13) and Marshall II. (14)
29 The assumption underlying the system established by the Treaties, however, is that the need for effectiveness and proper judicial protection can normally be satisfied by national remedies enforced through the national courts in accordance with national procedural rules. Thus, for example in Rewe (15) the Court stated:
`although the Treaty has made it possible in a number of instances for private persons to bring a direct action, where appropriate, before the Court of Justice, it was not intended to create new remedies in the national courts to ensure the observance of Community law other than those already laid down by national law. On the other hand the system of legal protection established by the Treaty, as set out in Article 177 in particular, implies that it must be possible for every type of action provided for by national law to be available for the purpose of ensuring observance of Community provisions having direct effect, on the same conditions concerning admissibility and procedure as would apply were it a question of ensuring observance of national law.'
30 The underlying premise is that States based on the rule of law will organize their national legal systems in such a way as to ensure proper application of the law and adequate legal protection for their subjects. It is therefore only exceptionally that the Court will need to intervene to ensure that effect is given to Community law.
Effectiveness of Community law
31 This brings me to the second argument put forward by the Spanish Government based on the need to ensure the effectiveness of Community law. It should be noted first that the proper application of the law does not necessarily mean that there cannot be any limits on its application. The interest in full application may need to be balanced against other considerations such as legal certainty, sound administration and the orderly and proper conduct of proceedings by the courts. Legal systems commonly impose various restrictions which, in the absence of a reasonable degree of diligence on the part of the plaintiff, will lead to full or partial denial of his claim. These include time-limits for commencing, and completing steps in, administrative and judicial proceedings, limits on retrospective claims, rules limiting the introduction of new claims and restrictions on grounds of appeal and on matters which courts may raise of their own motion.
32 In proceedings before the Court of Justice itself an unwary litigant may find that his action or appeal is time-barred or that he is precluded from making certain claims or putting forward certain pleas which might have been relevant to his case. Quite apart from the time-limits laid down in the Treaties and Statutes for instituting the various categories of proceedings, there are significant restrictions on the broadening of the scope of actions and on the introduction of new grounds at later stages of proceedings. The scope of direct actions is in principle determined by the application to the Court or, in the case of actions brought by the Commission under Article 169, by the Commission's reasoned opinion. In addition, applicants must set out in summary form in the application the pleas in law on which they rely: see Article 38(1) of the Rules of Procedure. Article 42(2) of the Rules provides that `no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.' Only in very limited circumstances will the Court raise an issue of its own motion.
33 The extent to which a national court can raise a question of law not relied upon by the parties may depend upon the nature of the procedure governing the case. Indeed it might be tempting to suggest that there is a basic distinction between two fundamentally different types of procedure within the Member States: a distinction between, broadly speaking, the continental systems on the one hand and the English, Irish and Scottish systems on the other. On that view, the court in the continental systems is deemed to know the law (`jura novit curia' or `curia novit legem'); it must apply the appropriate legal rules to the facts as they are presented to the court by the parties (`da mihi factum, dabo tibi jus'); and if necessary it will engage for that purpose in its own legal research. In the English, Irish and Scottish systems, on the other hand, the court has a less active, or even a passive, role: the procedure is generally based on the assumption that the court has no independent knowledge of the law, that it is dependent upon the submissions advanced by counsel for the parties, and that its function essentially is to adjudicate on the exclusive basis of their submissions. According to one commentator, `perhaps the most spectacular feature of English procedure is that the rule curia novit legem has never been and is not part of English law'. (16)
34 Such contrasts between different categories of legal system often prove on closer examination to be exaggerated, and the present issue is no exception. Even in the case of civil proceedings, where the contrast is least inaccurate - it may have very little application in criminal proceedings, or in administrative courts, where different principles apply - the distinction between the two approaches can hardly be sustained. The contrast as expressed above suggests that courts in the continental systems may, or even must, raise of their own motion a point of law not relied upon by the parties, while in the common law systems the courts will not do so. The reality is otherwise. While, in the former systems, the court may raise a new point of law, it must not exceed the limits of the case as defined by the claims of the parties, who remain `masters of the litigation' (dominus litis). Nor may it generally raise a new point involving new issues of fact. That is precisely the position in the civil procedure of the Netherlands, as explained by the Hoge Raad in the orders for reference, (17)
35 Moreover, an English court, like any other court, will of course take of its own motion a point which is a matter of public policy. For centuries English law has for that reason refused to enforce illegal contracts; as the point was put in a modern case:
`Where a transaction is on its face manifestly illegal the Court will refuse to enforce it whether the point is pleaded or not and whether either party raises the point or not, and even if the point arises for the first time on appeal. The reason for this rule is that the Queen's Courts may not be used to enforce unlawful contracts, whatever the wishes of the parties ... .' (19)
36 Even within the English system, however, the extent to which a court will intervene and raise questions of its own motion will vary according to the context: it may depend, for example, on the type of proceedings (civil, criminal, administrative), on the level of proceedings (first instance, appeal on law and fact, or appeal on law alone), on the nature of the judicial body (court or tribunal).
37 A comparative study of the position in the courts of the Member States shows that further variations may exist among their legal systems. There is certainly no agreement, for example, on what constitutes a matter of public policy (moyen d'ordre public). To impose on all national courts a requirement to apply Community law of their own motion, although it might not be impossible to put into practice in any system, would cause a degree of disruption which might vary in different systems but would probably be significant in all of them. There would also be difficulty in deciding whether such treatment of Community law was required for the whole of Community law or only for certain parts of it, and if so which parts.
38 For reasons both of principle and of practice, therefore, the conclusion should be that a national court must apply of its own motion a provision of Community law only where it would be required to apply of its own motion a corresponding provision of national law. That might admittedly lead to the unequal application of Community law but such unequal application is, as we have seen, a consequence of the variety of the national legal systems themselves.
39 The conclusion is reinforced when one considers appeal proceedings, and in particular cassation proceedings. In appeal proceedings limitations are generally imposed on the right of an appellant or respondent to raise new points which will broaden the scope of the proceedings. In the absence of such limitations, the very nature of the appellate process would be subverted, and the procedure transformed into a re-hearing.
40 Such considerations apply especially in cassation proceedings in the Member States, since in cassation proceedings the jurisdiction is generally limited to considering whether there was an error of law in the judgment of the court below, so that there is no scope either for the parties or for the court to raise new points of law.
41 The raising of new grounds not pleaded in the courts below is often severely restricted. While, for example, the German Bundesgerichtshof and the French Cour de Cassation are comparatively free to raise grounds of their own motion, the Belgian, Spanish, Italian and Netherlands Courts of Cassation must in principle limit themselves to the grounds put forward by the parties. Subject to limited exceptions the Belgian Court of Cassation is not even entitled to raise grounds of public policy.
42 Restrictions are, moreover, imposed by this Court's own Rules of Procedure: on appeal from the Court of First Instance, neither party may change `the subject-matter of the proceedings before the Court of First Instance'. (20) Admittedly, there may be an exception, once again, whereby the Court of Justice may raise a `public policy' issue, even if the Court of First Instance did not do so. (21) But it seems clear that that exception must be narrowly defined, if the appellate system is to function properly.
43 Turning then to the Netherlands rules in issue in the present cases, I do not consider that they make it unduly difficult for a plaintiff to enforce his Community rights. The rules merely seek to ensure the orderly and efficient conduct of proceedings by preventing the plaintiff from subsequently broadening the subject matter of the dispute as defined in his application to the trial judge and from raising new issues on appeal in cassation which go beyond the subject matter of the dispute and which would require further investigation of the facts. It may be noted that, subject to those restrictions, the Netherlands rules are not particularly demanding of the parties. Indeed Article 48 of the Netherlands Code requires the trial judge, if necessary, to supplement their legal arguments of his own motion.
44 Since the Netherlands rules appear to provide adequate protection for Community rights, it is sufficient that the national courts, in applying those rules, should accord the same treatment to grounds based on Community law as they do to similar grounds based on national law.
Uniform application of Community law
45 The third objection raised by the Spanish Government was that such a view would lead to a lack of uniformity in the application of Community law; in Member States whose procedural rules are less strict, effect may be given to Community law notwithstanding a lack of diligence on the part of the parties. A degree of disparity in the application of Community law is however inevitable in the absence of harmonized rules on remedies, procedure and time-limits. To take an obvious example, if an unwary plaintiff fails to observe a time-limit for lodging an administrative complaint or bringing proceedings, his claim may be time-barred; such time-limits vary from State to State and may also depend on the particular form of remedy. It cannot seriously be suggested that, in the interests of uniformity, Community law requires that all time-limits for claims arising from it must be set aside. In the absence of harmonized rules, the sole requirement can be that national remedies and procedural rules provide adequate legal protection. (22)
Other arguments
46 I shall comment finally on several other arguments put forward during the proceedings. First, as I noted at paragraph 44 of my Opinion of 4 May 1994 in Peterbroeck, it is not possible to rely on Article 177 of the Treaty in support of the proposition that a national court must always be able to raise of its own motion a Community law issue which the parties have failed to plead. Article 177 merely establishes the mechanism by which a national court, properly seized of a Community law issue, may obtain a ruling on it from the Court. While Article 177 precludes the application of procedural rules which prevent a national court from seeking a ruling in such circumstances, it does not address the prior question of the conditions under which such an issue is to be raised before the national court.
47 Secondly, it may be noted that the Hoge Raad's first question is based on the assumption that the proceedings before it concern `rights and obligations which may be freely conferred and entered into at civil law'. The plaintiffs contend that that phrase refers indirectly to the Netherlands definition of public policy rules, namely those which cannot be applied or disapplied at the discretion of the parties. They challenge that assumption on the ground that Community rules, being superior to national law, must be regarded as being ones of public policy which must be raised by a court of its own motion. They cannot be applied at the discretion of the parties.
48 For the reasons already given, I do not think that it follows from the principle of primacy that all Community rules must be given special status as far as national rules of procedure are concerned. The Community public interest in preserving the integrity of the Community legal order and proper protection of the rights of individuals under Community law can be adequately met by the principles already developed by the Court.
49 I do not however rule out the possibility that there might be circumstances in which a national court would be obliged to consider a Community rule not relied on by the parties, even if that entailed going beyond the dispute as defined by the parties' claims. A national court might be obliged not to enforce an agreement which was manifestly illegal under Article 85 of the Treaty. That could arise if, for example, a party to a price-fixing agreement which was manifestly contrary to Article 85 of the Treaty sought damages for breach of the agreement by another party to it, and the defendant failed to invoke Article 85. In that event the national court no doubt could, and should, do so. But since it can safely be assumed that no court would enforce a transaction which was manifestly illegal as a matter of national law, even if the illegality was not invoked by the parties, that result requires no more than an application of the non-discrimination principle. Moreover in the case of illegality under Articles 85 and 86 of the Treaty, there is the additional safeguard of the Community interest inasmuch as the Commission could always intervene.
50 No such issue arises in these cases. If none of the parties to the present dispute had chosen to rely on Community law, there would have been no overriding Community public interest in requiring the national court to raise complex issues of Community competition law regardless of the wishes of the parties. The sole Community interest in the present cases is that of adequate judicial protection, an interest which in my view was met.
51 Finally, the present cases are plainly distinguishable from Duijnstee. (23) There the Court held, in response to a question put by the Hoge Raad, that Article 19 of the Brussels Convention (24) required a national court of cassation to declare of its own motion that it had no jurisdiction whenever it found that a court of another Contracting State had exclusive jurisdiction under Article 16 of the Convention, notwithstanding national rules of procedure limiting its review to the grounds raised by the parties. However, as the Court held, (25) the Convention, which determined the jurisdiction of the courts of the Contracting States in civil matters, was intended to override national provisions which were incompatible with it. Article 19 of the Convention imposed a specific obligation on national courts to raise the matter of their jurisdiction of their own motion in certain circumstances. A national rule precluding a court from doing so was therefore contrary to the express terms of the Convention.
52 Consequently, in my view the answer to be given to the national court's first and second questions is that, in proceedings such as those brought before the national courts in the present cases, Community law neither requires nor empowers a national court to set aside national procedural rules, applicable without distinction to claims based on national and Community law, preventing it from applying Community provisions not relied upon by the parties where that would require the national court to go outside the ambit of the dispute or to raise issues of fact not pleaded by the parties. Since the third question is put only in the event of an affirmative reply to the second question, it does not call for a reply.
The substantive questions
53 The Hoge Raad's fourth, fifth and sixth questions are designed to ascertain whether the physiotherapists' scheme and in particular the fact of compulsory membership are compatible with the competition rules of the Treaty. Since those issues were not raised before the Kantonrechter, the latter made no findings of fact with respect thereto. In its order for reference the Hoge Raad merely refers to the aims of the Pensions Law and to the consequences of a scheme being made compulsory: see paragraphs 2 and 3 above.
54 The Court has consistently held that: (26)
`The need to provide an interpretation of Community law which will be of use to the national court makes it necessary that the national court define the factual and legislative context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based ... .'
That is particularly true in an area such as competition law which is characterized by complex legal and factual situations. (27) It is of course precisely because the competition issues have not been debated before the national courts that the Hoge Raad was unable, in its order for reference, fully to describe the factual and legal background to this aspect of the case.
55 If, contrary to the view which I have expressed, the Hoge Raad is required to consider the competition issues, the Court should in my view rule on those issues only after the factual and legal background to the dispute has been further clarified. In this Opinion I shall confine myself to giving a provisional view on the national court's fourth question in the light of the information concerning the Fund contained in the written observations. By that question the Hoge Raad asks whether an occupational pension scheme set up under the Pensions Law which makes membership compulsory for all, or one or more specified groups of, persons belonging to a profession constitutes an undertaking for the purposes of Article 85, 86 or 90 of the EC Treaty. It seems to me that that question should receive a negative reply.
56 The plaintiffs refer to the judgment in Höfner (28) in support of a broad view of the concept of undertaking encompassing the Fund. There the Court held that a public body carrying on employment procurement activities was to be regarded as an undertaking for the purposes of Articles 85 and 86 of the Treaty. The Court stated: (29)
`It must be observed, in the context of competition law, first that the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed and, secondly, that employment procurement is an economic activity.
The fact that employment procurement activities are normally entrusted to public agencies cannot affect the economic nature of such activities. Employment procurement has not always been, and is not necessarily, carried out by public entities. That finding applies in particular to executive recruitment.'
57 The position in relation to social security schemes is however more complex. Pension schemes take a variety of forms, ranging from State social security schemes at one end of the spectrum to private individual schemes operated by commercial insurers at the other. Although the potential for competition exists even between those schemes (as is demonstrated by the fact that in the United Kingdom private pension arrangements may partly replace the state social security system), it seems clear that the Community competition rules were not intended to apply to State social security schemes. The difficulty lies in classifying intermediate categories of schemes such as those concerned in these proceedings. In its initiatives in the sphere of pensions the Commission has recognized the broad range of schemes and also the need to respect the choices made by Member States regarding pension arrangements in pursuing its three goals of cross-border pension fund management, removal of restrictions on investment of pension fund assets and cross-border membership of schemes.(30) It may be noted in particular that the Commission's Amended Proposal of 26 May 1993, (31) while making a number of proposals regarding cross-border management and removal of investment restrictions, recognises in its preamble that further work is necessary on the question of cross-border membership of pension funds in order to take account of the different types of institution and so as not to call in question the functioning of institutions with compulsory membership. (32)
58 The Court has already had occasion to consider the scope of the Treaty rules on competition in relation to certain schemes falling in the intermediate category in Poucet and Pistre. (33) There the Court held that the term `undertaking' in Articles 85 and 86 of the Treaty did not cover bodies administering the sickness and maternity insurance scheme for self-employed persons engaged in non-agricultural occupations and the pension scheme for skilled trades. The schemes pursued a purely social objective, were non-profit-making and were based on the principle of solidarity. They were intended to provide insurance cover for all persons subject to the scheme regardless of their wealth or state of health at the time of their affiliation.
59 The principle of solidarity found expression, in the case of the sickness and maternity scheme, in a redistribution of revenue inasmuch as members contributed in proportion to their professional income (persons in receipt of invalidity pensions and retired members being exempt from the obligation to contribute) but received identical benefits. In the case of the pension scheme, the principle of solidarity was reflected in the fact that the pensions of retired members were financed by contributions of active members and by the fact that pensions were not awarded in proportion to contributions paid. There was also a degree of solidarity between different schemes. The schemes were necessarily based on compulsory membership, which was essential for the financial equilibrium of the schemes.
60 The administration of the schemes was subject to the control of the public authorities. The funds had no influence over the levels of contributions and benefits.
61 The Court concluded that the administration of the schemes fulfilled a purely social function and did not constitute an economic activity. Consequently, the funds did not fall within the definition of `undertaking' given in the judgment in Höfner. (34)
62 It seems to me that, although the pension fund in question here differs in certain respects from those in issue in Poucet and Pistre, it does have the essential characteristics which led the Court to its conclusion in those cases. The Fund unquestionably performs a purely social function. It was set up by the physiotherapists' profession and compulsory membership of it was provided for at the request of the profession by a ministerial decree issued under the Pensions Law. As already noted, the aims of that Law are to ensure that retirement incomes reflect the rising general level of incomes, to allow younger colleagues to contribute to the higher cost of providing pensions for older colleagues and to provide for pension rights in respect of years prior to the entry into force of the schemes. The Fund is non-profitmaking. Its board of directors, who do not receive remuneration but merely expenses (Article 7 of the Fund's Statutes), is made up exclusively of members of the Fund (Article 5 of the Statutes).
63 Furthermore, it appears from the Fund's written observations that the scheme operated by it entails a substantial degree of solidarity between members which goes beyond that which would normally be expected of commercial arrangements. In principle a standard contribution is levied and a standard pension paid. That is so regardless of the age at which an individual member entered the profession and regardless of his state of health on joining; moreover, pensions rights are granted retrospectively for those members who were already engaged in the profession when the scheme entered into force. In addition, as a subsidiary point it may be noted that insurance cover continues without payment of contributions in the case of incapacity for work.
64 In the light of the foregoing it seems to me that the Fund more closely resembles a social security institution than a commercial insurer, and the scheme itself is more akin to a social security scheme than to commercial pension arrangements, even those organized on a collective basis. The members of the scheme are contributing to a common fund rather than receiving a commercial service. Consequently, in my view the Fund, in its relations with its members, does not act as an undertaking but as a social institution which the members of the profession have entrusted with responsibility for making their pension arrangements.
65 That is so notwithstanding the fact that the scheme is funded, so that pensions are financed from reserves rather than from current contributions. The Fund has convincingly argued that the establishment of substantial reserves is necessary if a scheme not financed from the State budget is to maintain the real value of pensions in times of severe inflation. That pension funds are major investors on capital markets certainly explains the Commission's initiatives with respect to cross-border fund management and investment, but it is not a decisive factor in determining whether in its relations with its members a fund acts as an undertaking for the purposes of competition law.
Conclusion
66 Accordingly, I am of the opinion that the Court should give the following reply to the first and second questions put by the Hoge Raad, the remaining questions not calling for a reply.
In proceedings such as those brought before the national courts in the present cases, Community law neither requires nor empowers a national court to set aside national procedural rules, applicable without distinction to claims based on national and Community law, preventing it from applying Community provisions not relied upon by the parties where that would require the national court to go outside the ambit of the dispute or to raise issues of fact not pleaded by the parties.
(1) - Case C-312/93, Opinion of 4 May 1994.
(2) - See e.g. Case 33/76 Rewe v Landwirtschaftskammer Saarland [1976] ECR 1989, paragraph 5 of the judgment; Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, paragraph 12; Case C-208/90 Emmott [1991] ECR I-4269, paragraph 16. See also Joined Cases C-31/91 to C-44/91 Lageder and Others [1993] ECR I-1761, paragraphs 27 to 29.
(3) - See San Giorgio, cited in note 2, paragraph 14 of the judgment; Joined Cases C-6/90 and C-9/90 Francovich and Others [1991] ECR I-5357, paragraph 43.
(4) - Paragraph 17.
(5) - Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal [1978] ECR 629.
(6) - See the Opinion of Advocate General Reischl at p. 653.
(7) - Ibid. at p. 656.
(8) - Case C-213/89, The Queen v Secretary of State for Transport, ex parte Factortame Ltd e.a. [1990] ECR I-2433.
(9) - See the speech of Lord Bridge of Harwich in Regina v Secretary of State for Transport ex parte Factortame Limited and Others [1991] AC 603, in particular at p. 658; [1990] CMLR 375.
(10) - See the decision of the House of Lords in M v Home Office [1994] 1 AC 377.
(11) - Case C-62/93, Opinion of 9 March 1995.
(12) - Case 222/84 Johnston v Chief Constable of the Royal Ulster Constabulary [1986] ECR 1651.
(13) - Case C-208/90 Emmott v Minister for Social Welfare and the Attorney General [1991] ECR I-4269.
(14) - Case C-271/91 Marshall v Southampton and South West Hampshire Area Health Authority [1993] ECR I-4367.
(15) - Case 158/80 Rewe v Hauptzollamt Kiel [1981] ECR 1805.
(16) - Mann, `Fusion of the Legal Professions?' Law Quarterly Review 1977, 367 at p. 369.
(17) - See above, paragraph (18)$$(18) - See Jolowicz, `Da mihi factum dabo tibi jus: a problem of demarcation in English and French law', in Multum non multa: Festschrift für Kurt Lipstein (1980), p. 79.
(19) - Bank of India v Trans Continental Commodity Merchants Ltd & J.N. Patel [1982] 1 Lloyd's Reports 427 per Bingham J at 429.
(20) - Article 113(2) and Article 116(2).
(21) - Lenaerts, `The Development of the Judicial Process in the European Community after the Establishment of the Court of First Instance' in Collected Courses of the Academy of European Law, Vol. I, Book 1 (1990), pp. 53 to 113, at p. 109.
(22) - See Case 130/79 Express Dairy Foods v Intervention Board for Agricultural Produce [1980] ECR 1887, paragraph 12 of the judgment.
(23) - Case 288/82 Duijnstee v Goderbauer [1983] ECR 3663.
(24) - `Where a court of a Contracting State is seised of a claim which is principally concerned with a matter over which the courts of another Contracting State have exclusive jurisdiction by virtue of Article 16, it shall declare of its own motion that it has no jurisdiction.'
(25) - See in particular paragraph 14 of the judgment.
(26) - Case C-378/93 La Pyramide [1994] ECR I-3999, paragraph 14 of the judgment. See also Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo e.a. [1993] ECR I-393.
(27) - Telemarsicabruzzo, paragraph 7 of the judgment.
(28) - Case C-41/90 Höfner and Elser v Macrotron [1991] ECR I-1979.
(29) - At paragraphs 21 and 22.
(30) - See the Commission's working document of 23 October 1990 on completion of the internal market for private retirement provisions in the sphere of private pensions, annexed to the Commission's observations in Case C-244/94. See also the Proposal of 21 October 1991 for a Council Directive relating to the freedom of management and investment of funds held by institutions for retirement provision (91/C 312/04, OJ 1991 C 312, p. 3), as amended on 26 May 1993 (93/C 171/11, OJ C 171, p. 13).
(31) - Cited at note 30.
(32) - See the last recital.
(33) - Joined Cases C-159/91 and C-160/91 [1993] ECR I-637.
(34) - Cited above, note 28.
Full & Egal Universal Law Academy