Judgment of the Court of 20 February 2001.
Asociación Profesional de Empresas Navieras de Líneas Regulares (Analir) and Others v Administración General del Estado.
Reference for a preliminary ruling: Tribunal Supremo - Spain.
Freedom to provide services - Maritime cabotage - Conditions for the grant and continuation of prior administrative authorisation - Concurrent application of the methods of imposing public service obligations and of concluding public service contracts.
Case C-205/99.
European Court reports 2001 Page I-01271
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Summary
Parties
Grounds
Decision
on costs
Operative
part
1. Transport Maritime transport Freedom to provide services Regular maritime cabotage services Subjection to prior administrative authorisation Inclusion in the conditions for granting and maintaining that authorisation of a condition enabling the shipowner's solvency to be assessed Permissible Conditions
(Council Regulation No 3577/92, Arts 1 and 4)
2. Transport Maritime transport Freedom to provide services Regular maritime cabotage services Public service obligations and public service contracts Concurrent application of those two methods Permissible Conditions
(Council Regulation No 3577/92, Arts 2(3) and 4(1))
1. The combined provisions of Article 1 and Article 4 of Regulation No
3577/92 applying the principle of freedom to provide services to maritime
transport within Member States (maritime cabotage) permit the provision of
regular maritime cabotage services to, from and between islands to be made
subject to prior administrative authorisation only if: a real public service need arising from the inadequacy of the regular
transport services under conditions of free competition can be demonstrated; it is also demonstrated that that prior administrative authorisation scheme
is necessary and proportionate to the aim pursued; such a scheme is based on objective, non-discriminatory criteria which are
known in advance to the undertakings concerned. Moreover, Community law permits a Member State to include in the conditions
for granting and maintaining prior administrative authorisation as a means of
imposing public service obligations on a Community shipowner a condition
enabling account to be taken of his solvency, such as the requirement that he
have no outstanding tax or social security debts, thus giving the Member State
the opportunity to check the shipowner's capacity to provide the service,
provided that such a condition is applied on a non-discriminatory basis. ( see paras 40, 51, operative part 1-2 ) 2. Article 4(1) of Regulation No 3577/92 applying the principle of freedom to
provide services to maritime transport within Member States (maritime cabotage)
is to be interpreted as permitting a Member State to impose public service
obligations on some shipping companies and, at the same time, to conclude public
service contracts within the meaning of Article 2(3) of the regulation with
others for the same line or route in order to ensure the same regular traffic
to, from or between islands, provided that a real public service need can be
demonstrated and in so far as that application of the two methods concurrently
is on a non-discriminatory basis and is justified in relation to the
public-interest objective pursued. ( see para. 71, operative part 3 )
In Case C-205/99, REFERENCE to the Court under Article 234 EC by the Tribunal Supremo, Spain,
for a preliminary ruling in the proceedings pending before that court
between Asociación Profesional de Empresas Navieras de Líneas Regulares (Analir) and
Others and Administración General del Estado, on the interpretation of Articles 1, 2 and 4 of Council Regulation (EEC) No
3577/92 of 7 December 1992 applying the principle of freedom to provide services
to maritime transport within Member States (maritime cabotage) (OJ 1992 L 364,
p. 7), THE COURT, composed of: G.C. Rodríguez Iglesias, President, C. Gulmann and M. Wathelet
(Presidents of Chambers), D.A.O. Edward, P. Jann, L. Sevón, R. Schintgen, F.
Macken, N. Colneric, S. von Bahr and C.W.A. Timmermans (Rapporteur), Judges, Advocate General: J. Mischo, Registrar: D. Louterman-Hubeau, Head of Division, after considering the written observations submitted on behalf of: Asociación Profesional de Empresas Navieras de Líneas Regulares (Analir), by
T. García Peña, abogada, Fletamientos de Baleares SA, by J.L. Goñi Etchevers, abogada, Unión Sindical Obrera (USO), by B. Hernández Bataller, abogada, the Spanish Government, by N. Díaz Abad, acting as Agent, the Greek Government, by K. Paraskevopoulou-Grigoriou and S. Vodina, acting
as Agents, the French Government, by K. Rispal-Bellanger and D. Colas, acting as
Agents, the Norwegian Government, by H. Seland, acting as Agent, the Commission of the European Communities, by B. Mongin and M. Desantes,
acting as Agents, having regard to the Report for the Hearing, after hearing the oral observations of Asociación Profesional de Empresas
Navieras de Líneas Regulares (Analir), represented by B. Hernández Bataller; of
the Spanish Government, represented by N. Díaz Abad; of the Greek Government,
represented by K. Paraskevopoulou-Grigoriou and S. Vodina; of the French
Government, represented by M. Seam, acting as Agent; of the Norwegian
Government, represented by H. Seland; and of the Commission, represented by M.
Desantes, at the hearing on 24 October 2000, after hearing the Opinion of the Advocate General at the sitting on 30
November 2000, gives the following Judgment
1 By order of 12 May 1999, received at the Court on 31 May 1999, the Tribunal
Supremo (Supreme Court), Spain referred for a preliminary ruling under Article
234 EC three questions on the interpretation of Articles 1, 2 and 4 of Council
Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom
to provide services to maritime transport within Member States (maritime
cabotage) (OJ 1992 L 364, p. 7). 2 Those questions have been raised in four sets of proceedings between
Asociación Profesional de Empresas Navieras de Líneas Regulares (Analir), Isleña
de Navegación SA (Isnasa), Fletamientos de Baleares SA and Unión Sindical Obrera
(USO) (Analir and Others), respectively, on the one hand, and Administración
General del Estado, on the other, concerning applications by the applicants for
annulment of Royal Decree No 1466/1997 of 19 September 1997 on the legal rules
governing regular maritime cabotage lines and public-interest shipping (BOE No
226 of 20 September 1997, p. 27712; Royal Decree No 1466) on the ground that it
is contrary to Community legislation. Relevant provisions Community legislation 3 Article 1(1) of Regulation No 3577/92 provides: As from 1 January 1993, freedom to provide maritime transport services within
a Member State (maritime cabotage) shall apply to Community shipowners who have
their ships registered in, and flying the flag of, a Member State, provided that
these ships comply with all conditions for carrying out cabotage in that Member
State, including ships registered in Euros, once that register is approved by
the Council. 4 Article 2 of Regulation No 3577/92 provides: For the purposes of this regulation: 1. "maritime transport services within a Member State (maritime cabotage)"
shall mean services normally provided for remuneration and shall in particular
include: (a) mainland cabotage: the carriage of passengers or goods by sea between
ports situated on the mainland or the main territory of one and the same Member
State without calls at islands; (b) off-shore supply services: the carriage of passengers or goods by sea
between any port in a Member State and installations or structures situated on
the continental shelf of that Member State; (c) island cabotage: the carriage of passengers or goods by sea between: ports situated on the mainland and on one or more of the islands of one and
the same Member State, ports situated on the islands of one and the same Member State; Ceuta and Melilla shall be treated in the same way as island ports. ... 3. "a public service contract" shall mean a contract concluded between the
competent authorities of a Member State and a Community shipowner in order to
provide the public with adequate transport services. A public service contract may cover notably: transport services satisfying fixed standards of continuity, regularity,
capacity and quality, additional transport services, transport services at specified rates and subject to specified conditions, in
particular for certain categories of passengers or on certain routes, adjustments of services to actual requirements; 4. "public service obligations" shall mean obligations which the Community
shipowner in question, if he were considering his own commercial interest, would
not assume or would not assume to the same extent or under the same
conditions; .... 5 Article 4 of Regulation No 3577/92 states: 1. A Member State may conclude public service contracts with, or impose
public service obligations as a condition for the provision of cabotage services
on, shipping companies participating in regular services to, from and between
islands. Whenever a Member State concludes public service contracts or imposes public
service obligations, it shall do so on a non-discriminatory basis in respect of
all Community shipowners. 2. In imposing public service obligations, Member States shall be limited to
requirements concerning ports to be served, regularity, continuity, frequency,
capacity to provide the service, rates to be charged and manning of the
vessel. Where applicable, any compensation for public service obligations must be
available to all Community shipowners. 3. Existing public service contracts may remain in force up to the expiry
date of the relevant contract. 6 Under Article 7 of Regulation No 3577/92: Article 62 of the Treaty shall apply to the matters covered by this
regulation. National legislation 7 Article 7(4) of Spanish Law No 27/1992 of 24 November 1992 concerning State
and Merchant Navy Ports (BOE No 283 of 25 November 1992, p. 39953) defines
public-interest shipping as that which is regarded as necessary in order to
provide essential maritime connections for the peninsula, between the peninsula
and the non-peninsular Spanish territories, and between the latter territories.
Furthermore, under that provision, it is for the Government to determine which
shipping is of public interest and to specify the means of ensuring that that
interest is protected. 8 Article 4 of Royal Decree No 1466 states: Pursuant to Article 7(4) in conjunction with Article 6(1)(h) of the Law
concerning State and Merchant Navy Ports services on regular island cabotage
lines, meaning services for the carriage of passengers or goods by sea between
ports situated on the peninsula and the non-peninsular territories and between
ports of those territories, in accordance with Article 2(1)(c) of Regulation
(EEC) No 3577/92, are declared to be public-interest shipping. The provision of regular shipping services of public interest shall be
subject to prior administrative authorisation, the validity of which is
conditional on the fulfilment of public service obligations imposed by the
Directorate General of the Merchant Navy. Exceptionally, the competent
administrative authorities may enter into public-interest contracts in order to
ensure the existence of adequate services for the maintenance of maritime
connections. 9 The administrative authorisation provided for in Royal Decree No 1466 is
subject to two types of conditions. First, Article 6 of that decree, entitled
Conditions for authorisation, provides: Authorisation to operate a regular island cabotage line shall be issued
subject to the following conditions: (a) the applicant must be a shipowner or shipping company having no
outstanding tax or social security debts; (b) in the case of hiring or chartering, it must be shown that the owner or
the charterer has no outstanding tax or social security debts; ... (e) the undertaking which owns the ships assigned to the line must have no
outstanding tax or social security debts; (f) the applicant must, within the first 15 days of June and December of each
year, renew the documents provided for under (a), (b) and (e) above, proving
that there are no outstanding tax or social security debts; .... 10 Second, Article 8 of Royal Decree No 1466, entitled Public service
obligations, states: 1. Only the following may be regarded as public service obligations:
conditions for authorisation to operate a regular line concerning the regularity
and continuity of the service, the capacity to provide it, the manning of the
vessel or vessels and, where appropriate, the ports to be served, the frequency
of the service and where relevant the rates. The imposition of public service obligations must in any event be based on
objective public-interest reasons which are duly justified by the need to ensure
an adequate regular maritime transport service. In order to prevent distortion of competition the obligations must be imposed
in such a way as not to discriminate between undertakings providing the same or
similar services on lines which cover the same or similar routes. 2. Exceptionally, economic compensation may be granted for the public service
obligations. The compensation may not discriminate in any way between similar
services on lines which cover the same routes. The right to economic compensation in respect of the fulfilment of public
service obligations may be afforded at the request of the party concerned, or by
the Ministry of Public Works after a general call for tenders has been issued
for the purpose of establishing services on a regular line with public service
obligations. Where the person concerned requests that that right be afforded, the
undertaking which seeks authorisation to operate a regular line must first
demonstrate to the Directorate General of the Merchant Navy that that line would
be profitable in itself if it were not subject to public service
obligations. The undertaking making the request must automatically submit the relevant
documentary proof at the same time as those which it must submit in order to
obtain the authorisation. The Directorate General of the Merchant Navy shall base its assessment on, in
particular, the level of competition which the requested line will provide for
other existing lines and it shall also take account of the rates to be
charged. 3. In addition to the public service obligations which are set out in
Regulation (EEC) No 3577/92 and referred to in the authorisation, the
Directorate General of the Merchant Navy may, in accordance with Article 83(2)
of the Law concerning State and Merchant Navy Ports, impose on shipping
undertakings providing cabotage services specific public service obligations
concerning rescue, maritime safety, pollution control, health standards and
other essential matters of public or social interest. This shall, where
appropriate, entitle the undertakings concerned to receive appropriate economic
compensation for the supplementary costs they have incurred. The main proceedings and the questions referred for a preliminary ruling 11 Analir and Others brought separate actions, which were subsequently
joined, before the Tribunal Supremo, which in this case is the court with
jurisdiction at first and last instance, for annulment of Royal Decree No 1466.
They submitted, in support of their claims, that Royal Decree No 1466 was
inconsistent with Community law, in particular Regulation No 3577/92. 12 Since it considered that the outcome of the proceedings before it depended
on the interpretation of that regulation, the Tribunal Supremo decided to stay
proceedings and to refer the following questions to the Court for a preliminary
ruling: 1. May Article 4, in conjunction with Article 1, of Council Regulation (EEC)
No 3577/92 of 7 December 1992 applying the principle of freedom to provide
services to maritime transport within Member States (maritime cabotage) be
interpreted as permitting the provision of island cabotage services by
undertakings covering regular shipping lines to be made subject to prior
administrative authorisation? 2. If so, may the grant and continuation of such administrative authorisation
be made subject to conditions, such as having no outstanding tax or social
security debts, other than those set out in Article 4(2) of the regulation? 3. May Article 4(1) of Regulation No 3577/92 be interpreted as permitting
public service obligations to be imposed on some shipping companies and public
service contracts within the meaning of Article 1(3) of the regulation to be
concluded with others at the same time for the same line or route, in order to
ensure the same regular traffic to, from or between islands? The first question 13 Analir and Others claim that the combined provisions of Articles 1 and 4
of Regulation No 3577/92 do not permit the provision of island cabotage services
to be made subject to prior administrative authorisation, as required by Royal
Decree No 1466. In their submission, it is sufficient to indicate when the
activity is first undertaken on the basis of a system of licences by category
and of declaration procedures, without prejudice to the option for the
administrative authorities to impose public service obligations. 14 They are supported by the Norwegian Government and the Commission, which
consider that a system of prior administrative authorisation which, without any
real connection with the public-service need, is generally applicable to any
carriage between the peninsula and the Spanish islands and between those
islands, does not meet the requirements of Articles 2 and 4 of Regulation No
3577/92. The implementation of Article 4 requires, in the Commission's
submission, that the existence of such a need be determined separately in each
case and for each line. 15 On the other hand, the Spanish Government submits that the requirement of
prior administrative authorisation does not constitute an obstacle to the
liberalisation of maritime island cabotage. It has proved impossible in practice
to provide detailed justification for each line, and on other economic markets
which are also liberalised, such as telecommunications, the provision of
services is still subject to an authorisation scheme. Extending by analogy the
justifications which may be relied upon in connection with telecommunications to
the field of maritime cabotage services, the fact that islands are involved
should enable the Member States to impose universal service obligations by means
of prior administrative authorisation. 16 The Spanish Government is supported by the Greek Government, which submits
that it is precisely with the aim of protecting the public interest that Article
4 of Regulation No 3577/92, which must be construed in the light of the
generally liberal spirit of that regulation, provides for the possibility of
imposing public service obligations by means of prior administrative
authorisation. 17 The first point to be noted here is that, under Article 3(c) of the EC
Treaty (now, after amendment, Article 3(1)(c) EC), the activities of the
Community are to include an internal market characterised, in particular, by the
abolition, as between Member States, of obstacles to the free movement of
services. 18 Under Article 61 of the EC Treaty (now, after amendment, Article 51 EC),
freedom to provide services in the field of transport is to be governed by the
provisions of the title of that treaty relating to transport, which include
Article 84(2) of the EC Treaty (now, after amendment, Article 80(2) EC), which
permits the Council of the European Union to lay down appropriate provisions for
sea transport. 19 On the basis of Article 84(2) of the Treaty, the Council adopted
Regulation No 3577/92, the aim of which is to implement freedom to provide
services for maritime cabotage under the conditions and subject to the
exceptions which it lays down. 20 To that end, Article 1 of that regulation clearly establishes the
principle of freedom to provide maritime cabotage services within the Community.
The conditions governing the application of the principle of freedom to provide
services which is laid down inter alia in Article 59 of the EC Treaty (now,
after amendment, Article 49 EC) and Article 61 of the Treaty have thus been
defined in the maritime cabotage sector. 21 It is settled case-law that freedom to provide services requires not only
the elimination of all discrimination on grounds of nationality against
providers of services who are established in another Member State, but also the
abolition of any restriction, even if it applies without distinction to national
providers of services and to those of other Member States, which is liable to
prohibit, impede or render less attractive the activities of a provider of
services established in another Member State where he lawfully provides similar
services (see, in particular, Case C-76/90 Säger [1991] ECR I-4221, paragraph
12; Case C-43/93 Vander Elst [1994] ECR I-3803, paragraph 14; Case C-272/94
Guiot [1996] ECR I-1905, paragraph 10; Case C-266/96 Corsica Ferries France
[1998] ECR I-3949, paragraph 56; and Joined Cases C-369/96 and C-376/96 Arblade
and Others [1999] ECR I-8453, paragraph 33). 22 It is clear that national legislation, such as Article 4 of Royal Decree
No 1466, which makes the provision of maritime cabotage services subject to
prior administrative authorisation, is liable to impede or render less
attractive the provision of those services and therefore constitutes a
restriction on the freedom to provide them (see, to that effect, Vander Elst,
paragraph 15; and Case C-355/98 Commission v Belgium [2000] ECR I-1221,
paragraph 35). 23 However, the Spanish Government argues that Article 4 of Regulation No
3577/92 permits Member States to impose public service obligations as a
condition for the provision of maritime cabotage services and establish a prior
administrative authorisation scheme to that end. 24 In that regard, it should be noted, first, that the wording of Article 4
of Regulation No 3577/92 provides no indication as to whether a prior
administrative authorisation scheme may be used as a means of imposing the
public service obligations to which that article refers. 25 Second, it is important to note that freedom to provide services, as a
fundamental principle of the Treaty, may be restricted only by rules which are
justified by overriding reasons in the general interest and are applicable to
all persons and undertakings pursuing an activity in the territory of the host
Member State. Furthermore, in order to be so justified, the national legislation
in question must be suitable for securing the attainment of the objective which
it pursues and must not go beyond what is necessary in order to attain it (see,
to that effect, Säger, paragraph 15; Case C-19/92 Kraus [1993] ECR I-1663,
paragraph 32; Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37; and Guiot,
paragraphs 11 and 13). 26 Accordingly, it is necessary to consider whether the establishment of a
prior administrative authorisation scheme may be justified as a means of
imposing public service obligations. 27 First, it cannot be denied that the objective pursued, namely to ensure
the adequacy of regular maritime transport services to, from and between
islands, is a legitimate public interest. 28 The possibility of imposing public service obligations for maritime
cabotage with, and between, islands was expressly afforded by Article 4 of
Regulation No 3577/92. The Treaty, as amended by the Treaty of Amsterdam, also
takes into account, in the conditions which it lays down, the particular nature
of island regions, as is clear from the second paragraph of Article 158 EC and
Article 299(2) EC. That particular nature was further referred to in Declaration
No 30 on island regions, annexed to the Final Act of the Treaty of
Amsterdam. 29 However, it cannot be inferred from those provisions that all maritime
cabotage services with, or between, islands within a Member State must, by
reason of the fact that islands are involved, be regarded as public
services. 30 Second, the question thus arises of whether a prior administrative
authorisation scheme is necessary having regard to the objective pursued. 31 The first point to note in that respect is that the purpose of imposing
public service obligations is to ensure adequate regular transport services to,
from and between islands, as the ninth recital in the preamble to Regulation No
3577/92 states. 32 Furthermore, public service obligations were defined in Article 2(4) of
that regulation as obligations which the Community shipowner in question, if he
were considering his own commercial interest, would not assume or would not
assume to the same extent or under the same conditions. 33 Moreover, the aim of the public service contract provided for in Article 4
of Regulation No 3577/92 was expressly defined in Article 2(3) thereof as being
to provide the public with adequate transport services. 34 It follows that the application of a prior administrative authorisation
scheme as a means of imposing public service obligations presupposes that the
competent national authorities have first been able to determine, for specific
routes, that the regular transport services would be inadequate if their
provision were left to market forces alone. In other words, it must be possible
to demonstrate that there is a real public service need. 35 Second, for a prior administrative authorisation scheme to be justified,
it must also be demonstrated that such a scheme is necessary in order to be able
to impose public service obligations and that it is proportionate to the aim
pursued, inasmuch as the same objective could not be attained by measures less
restrictive of the freedom to provide services, in particular a system of
declarations ex post facto (see, to that effect, Joined Cases C-163/94, C-165/94
and C-250/94 Sanz de Lera [1995] ECR I-4821, paragraphs 23 to 28). 36 It is possible that prior administrative authorisation is a sufficient and
appropriate means of enabling the content of the public service obligations to
be imposed on an individual shipowner to be specified, taking account of his
particular circumstances, or of enabling a prior check to be made on his ability
to fulfil such obligations. 37 However, such a scheme cannot render legitimate discretionary conduct on
the part of the national authorities which is liable to negate the effectiveness
of provisions of Community law, in particular those relating to a fundamental
freedom such as that at issue in the main proceedings (see, to that effect,
Joined Cases C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361,
paragraph 25; and Sanz de Lera, paragraph 25). 38 Therefore, if a prior administrative authorisation scheme is to be
justified even though it derogates from a fundamental freedom, it must, in any
event, be based on objective, non-discriminatory criteria which are known in
advance to the undertakings concerned, in such a way as to circumscribe the
exercise of the national authorities' discretion, so that it is not used
arbitrarily. Accordingly, the nature and the scope of the public service
obligations to be imposed by means of a prior administrative authorisation
scheme must be specified in advance to the undertakings concerned. Furthermore,
all persons affected by a restrictive measure based on such a derogation must
have a legal remedy available to them. 39 It is for the national court to consider and determine whether the prior
administrative authorisation scheme at issue in the case before it satisfies
those conditions and those criteria. 40 In the light of the foregoing, the answer to the first question must be
that the combined provisions of Articles 1 and 4 of Regulation No 3577/92 permit
the provision of regular maritime cabotage services to, from and between islands
to be made subject to prior administrative authorisation only if: a real public service need arising from the inadequacy of the regular
transport services under conditions of free competition can be demonstrated; it is also demonstrated that that prior administrative authorisation scheme
is necessary and proportionate to the aim pursued; such a scheme is based on objective, non-discriminatory criteria which are
known in advance to the undertakings concerned. The second question 41 By its second question, the national court asks, in the event of the first
question being answered in the affirmative, whether the grant and continuation
of prior administrative authorisation may be made subject to conditions, such as
having no outstanding tax or social security debts, other than those set out in
Article 4(2) of Regulation No 3577/92. 42 Analir and Others, supported by the Norwegian Government, claim that the
obligation of having no outstanding tax or social security debts has no specific
connection with the maritime traffic which is the subject-matter of the prior
administrative authorisation. Furthermore, such an obligation does not fall
within the public service obligations set out in Article 4(2) of that
regulation. They infer that national legislation making the grant and
continuation of prior administrative authorisation subject to conditions other
than those set out in Regulation No 3577/92 is a national measure which
constitutes a new restriction on the freedom already in fact attained, within
the meaning of Article 62 of the EC Treaty (repealed by the Treaty of
Amsterdam), and which is, accordingly, contrary to the EC Treaty. 43 The Spanish Government submits that the conditions relating to the absence
of outstanding tax or social security debts set out in Article 6 of Royal Decree
No 1466 constitute general conditions for the grant of prior administrative
authorisation and are not public service obligations within the meaning of
Regulation No 3577/92. Accordingly, in its submission, that national provision
does not go beyond the requirements of Article 4(2) of the regulation and is
thus compatible with Community law. 44 The Commission, for its part, submits that the conditions mentioned in
Article 6 of Royal Decree No 1466 may be regarded as covered by the reference to
capacity to provide the service in Article 4(2) of Regulation No 3577/92, which
includes not only the economic capacity of the Community shipowner, but also his
financial capacity. 45 The first point to be noted here is that it follows from the answer to the
first question that the public service obligations imposed by Member States for
certain maritime cabotage services by means of prior administrative
authorisation may be compatible with Community law provided that certain
conditions are satisfied. 46 The national court is essentially asking, by its second question, whether
in such a case a Member State may, where it intends to impose public service
obligations for maritime cabotage to, from and between islands, make
authorisation relating to such a service subject to the condition that the
shipowner have no outstanding tax or social security debts. 47 In that regard, it must be borne in mind that the public service
obligations which may be imposed under Article 4(2) of Regulation No 3577/92
relate to requirements concerning ports to be served, regularity, continuity,
frequency, capacity to provide the service, rates to be charged and manning of
the vessel. No condition according to which the shipowner must have no
outstanding tax or social security debts is expressly mentioned among those
requirements. Clearly, such a condition, taken in isolation, cannot itself be
characterised as a public service obligation. 48 However, where public service obligations for maritime cabotage are
imposed on Community shipowners by means of prior administrative authorisation,
the checks carried out by a Member State in order to ascertain whether the
shipowners have any outstanding tax or social security debts may be regarded as
being a requirement coming within the notion of capacity to provide the service,
as mentioned in Article 4(2) of the regulation. 49 Where a Community shipowner is subject to public service obligations, such
as ensuring the regularity of the maritime cabotage service to be supplied, the
fact that he is in a precarious financial position of which failure to pay his
tax or social security debts could be an indication may show that he would not
be capable, in the more or less long term, of providing the public services
imposed on him. 50 It follows that the Member State may take account of the solvency of a
Community shipowner who performs public service obligations in the field of
maritime cabotage in order to assess that shipowner's financial capacity to
supply the services which have been entrusted to him, by requiring that he have
no outstanding tax or social security debts. It goes without saying that such a
condition must be applied on a non-discriminatory basis. 51 Accordingly, the answer to the second question must be that Community law
permits a Member State to include in the conditions for granting and maintaining
prior administrative authorisation as a means of imposing public service
obligations on a Community shipowner a condition enabling account to be taken of
his solvency, such as the requirement that he have no outstanding tax or social
security debts, thus giving the Member State the opportunity to check the
shipowner's capacity to provide the service, provided that such a condition is
applied on a non-discriminatory basis. The third question 52 By its third question, the national court asks whether Article 4(1) of
Regulation No 3577/92 is to be interpreted as permitting a Member State to
impose public service obligations on some shipping companies and, at the same
time, to conclude public service contracts within the meaning of Article 2(3) of
the regulation with others for the same line or route, in order to ensure the
same regular traffic to, from or between islands. 53 It should be noted at the outset that there is an obvious typing error in
this last question. The reference to Article 1(3) of Regulation No 3577/92 must
be understood as meaning Article 2(3) of the regulation, since Article 1 is not
relevant for the purposes of the answer to the question. There is, in any event,
no paragraph (3) in Article 1. 54 As regards this question, Analir and Others claim, essentially, that
concluding a public service contract or imposing public service obligations on
economic operators under Article 4 of Regulation No 3577/92 are alternative
options available to the Member States, which cannot be exercised
simultaneously. Having a public service contract for certain lines whilst
imposing public service obligations on other economic operators serving the same
lines is contradictory, and constitutes a distortion of free competition under
the relevant Treaty provisions. 55 More specifically, Analir and Others submit that the operator which
concludes a public service contract with the competent authorities receives,
unlike the other operators, specific subsidies in respect of the transport
services provided. In view of the fact that, in addition, the operators which
enter into such public service contracts are either public operators or
undertakings which formerly enjoyed monopolies, the resulting situation
constitutes a breach of Article 90(1) of the EC Treaty (now Article 86(1) EC) on
the ground of discrimination and distortion of the rules of free
competition. 56 On the other hand, the Spanish Government submits that the two methods by
which maritime cabotage services may be carried out, namely the public service
contract and public service obligations, mentioned in Article 4 of Regulation No
3577/92, may be used concurrently. The two systems which make it possible to
ensure the provision of the public service, namely the conclusion of a contract
or the imposition of public service obligations on the shipowner, have very
different purposes. According to the Spanish Government, the Member State
imposes public service obligations in order to ensure a minimum provision of a
specific public service. It could, where appropriate, supplement that regime by
concluding a contract. 57 The French Government, whose written observations deal only with the third
question, supports the Spanish Government's argument. It submits that the
criteria for using the public service contract or public service obligations are
different and that those two methods may therefore be used simultaneously in
relation to one route, regardless of which method was established first. 58 At the hearing, the Norwegian Government refined its written observations
by submitting that each Member State should, first of all, define the level of
maritime cabotage services which it seeks to have in its territory in respect of
certain, or all, of the maritime cabotage lines to, from or between islands.
Next, it should examine whether, without public authority intervention, the
market can, by itself, meet such a level in respect of the lines or routes to be
served. If it cannot, the Member State concerned should, finally, determine
whether public service obligations imposed on Community shipowners would be
likely to ensure the level of maritime cabotage services which it deems
desirable. It is only where such a level could not be ensured by imposing public
service obligations on those shipowners that the Member State would be able to
resort to the method of concluding a public service contract with one of
them. 59 The Commission considers that, in principle, there is nothing to prevent a
Member State from deciding to impose public service obligations generally and
from concluding a public service contract in respect of one or more lines
subject to those obligations in order to ensure an adequate level of service.
However, where the two methods are used at the same time, the Commission submits
that the level of the public service obligations should be as low as possible in
order not to create obstacles which might result in distortion of
competition. 60 In that regard, it must be noted that Article 4(1) of Regulation No
3577/92 does not expressly indicate whether the two methods of performing the
public service laid down in those provisions, namely the public service contract
or the imposition of public service obligations on the shipowners, may be used
by Member States at the same time or only as alternatives. 61 Furthermore, the two methods pursue the same objective, namely to ensure
an adequate level of regular maritime transport services to, from and between
islands, as stated in the ninth recital in the preamble to Regulation No
3577/92. 62 However, it is important to specify that those two methods differ both in
nature and degree. 63 First, use of the contractual method enables the public authority to
obtain an undertaking from the shipowner to provide the transport services
stipulated in the contract. Second, the shipowner will generally be prepared to
be bound by such stipulations only if the Member State agrees to grant him a
quid pro quo, such as financial compensation. 64 On the other hand, where public service obligations are imposed in the
absence of a contract, the shipowner remains generally free to withdraw from the
provision of the transport services in question. It is only if he wishes to
provide those services that he must comply with the obligations imposed.
Moreover, that method could also be combined with a scheme of financial
compensation under the second subparagraph of Article 4(2) of Regulation No
3577/92, as evidenced by the Spanish legislation at issue in the main
proceedings. 65 It therefore follows from a comparison of the features of the two methods
of performing the maritime cabotage service that the contract gives more
guarantees to the State that that service will actually be provided.
Furthermore, as the Spanish Government rightly pointed out, the contractual
method makes it possible to ensure that, if the contract is terminated, the
provider will continue to carry out the service until a new contract is
concluded, assuming that such a guarantee will normally be obtained only by
granting a quid pro quo. 66 In the light of the features of the two methods in question and their
shared purpose, there is no reason why they should not be used concurrently in
respect of one line or transport route in order to ensure a certain level of
public service. For the reasons given by the Advocate General in points 109 to
111 of his Opinion, where the level of service attained, even after public
service obligations have been imposed on the shipowners, is not regarded as
adequate or where there are still specific gaps, complementary services could be
provided by concluding a public service contract, as laid down in the Spanish
legislation. 67 Therefore, although Regulation No 3577/92, and more specifically Article 4
thereof, does not preclude national legislation such as that at issue in the
main proceedings, which allows the public service contract method to be employed
where the public service obligations imposed on the shipowner in respect of the
regular maritime cabotage transport services on a certain line or route to, from
and between islands have proved to be insufficient to ensure an adequate level
of transport, such application of those two methods concurrently in a concrete
case will be compatible with Community law only if a number of specific
conditions are met. 68 In the first place, it is clear from paragraph 34 of this judgment that
Member States may impose public service obligations on Community shipowners only
if a real public service need can be demonstrated. The same must also be true of
the conclusion of a public service contract. Any combination of the two methods
in respect of one line or route would be justified only if the same condition
were met. 69 Second, as is also clear from Article 4(1) and (2) of Regulation No
3577/92, any application of the two methods concurrently must be on a
non-discriminatory basis in respect of all Community shipowners. 70 Third, as an obstacle to the freedom to provide maritime cabotage services
is involved, any application of the two methods concurrently must, if it is to
be justified and compatible with Article 1 in conjunction with Article 4(1) and
(2) of that regulation, be consistent with the principle of proportionality. In
other words, the combination of the two methods of having those services
performed must be such as to ensure an adequate level of the services and not
have restrictive effects on the freedom to provide maritime cabotage services
which would go beyond what is necessary in order to attain the objective
pursued. 71 Accordingly, the answer to the third question must be that Article 4(1) of
Regulation No 3577/92 is to be interpreted as permitting a Member State to
impose public service obligations on some shipping companies and, at the same
time, to conclude public service contracts within the meaning of Article 2(3) of
the regulation with others for the same line or route in order to ensure the
same regular traffic to, from or between islands, provided that a real public
service need can be demonstrated and in so far as that application of the two
methods concurrently is on a non-discriminatory basis and is justified in
relation to the public-interest objective pursued. Summary
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