Criminal proceedings against Andre Allain and Steel Trading France SARL, as a party liable at civil law. (Member States) [1996] EUECJ C-341/94 (26 September 1996)

Judgment 1 By judgment of 20 December 1994, received at the Court on 30 December 1994, the Cour d' Appel (Court of Appeal), Paris, referred for a preliminary ruling under Article 177 of the EC Treaty a question concerning the consequences to be drawn, following the unification of the Federal Republic of Germany and the German Democratic Republic, for trade in goods between the territory of the former German Democratic Republic and the rest of the Community' s customs territory with regard to the possible reclassification of facts for the purpose of imposing penalties. 2 During 1985 and 1986, Steel Trading France (hereinafter "Steel Trading"), an importer and distributor of steel products based in Nantes, which was managed by André Allain, imported steel beams and plates into France, declaring that they originated in Yugoslavia. National and international customs investigations, however, established that the goods had originated in the German Democratic Republic. 3 Following those findings, the customs authorities instituted proceedings against Mr Allain and Steel Trading in November 1990 for false declarations of origin circumventing the ban on imports of those goods and avoiding payment of duties and taxes due. The customs offence of "undeclared importation of prohibited goods" is laid down in Articles 414(1), 423 to 427 and 38 of the French Customs Code. The penalties for that offence are set out in Articles 414(1), 437(1) and 438 of that Code. 4 By judgment of 21 March 1991, the Tribunal de Grande Instance (Regional Court), Nantes, imposed a suspended three-month prison sentence on Mr Allain and ordered him, jointly with Steel Trading, to pay a fine of FF 73 551 080 and the sum of FF 73 551 080 in lieu of confiscation of the goods fraudulently imported. 5 Mr Allain, acting on his own behalf and on that of Steel Trading, appealed against that decision to the Cour d' Appel, Rennes, which by a judgment of 21 January 1992 upheld the lower court' s judgment. 6 Following the lodging of an appeal on a point of law by Mr Allain and Steel Trading, the Criminal Chamber of the French Cour de Cassation (Court of Cassation), by judgment of 2 June 1993, set aside and quashed in its entirety the judgment of the Cour d' Appel, Rennes, on the ground that: "At the time when the customs proceedings were instituted, the Community provisions relating, inter alia, to the free movement of goods within the customs territory of the EEC and to the prohibition of all restrictive measures or measures having equivalent effect had, by virtue of the accession of the GDR to the FRG by the Treaty of 31 August 1990, which was effective from 3 October 1990, become applicable within the territory of the regions of East Germany. By ruling as it did, without examining, even of its own motion, whether by the effect of those more favourable Community provisions, which were immediately applicable, on the proceedings in course, the legal basis of the charge in respect of the prohibited nature of the goods was altered and, if so, whether the facts were open to a different assessment, particularly that referred to in Article 410(2)(a) of the Customs Code, the Cour d' Appel failed to comply with those provisions." 7 Paragraphs (1) and (2)(a) of Article 410 of the French Customs Code provides as follows: "1. Any breach of the laws and regulations which the customs authorities are required to apply shall be punishable by a fine of FF 20 000 if the irregularity is not more severely penalized by this Code. 2. The provisions of the preceding paragraph cover in particular: (a) Any omission or inaccuracy in the information to be included in declarations where the irregularity has no effect on the application of the duties or prohibitions." 8 The case was referred to the Cour d' Appel, Paris, which, by a judgment of 20 December 1994 prior to ruling on the substance, decided to refer the following question to the Court for a preliminary ruling: "Does the accession of the German Democratic Republic to the Federal Republic of Germany, which appears, by reason of the retroactive effect of the more lenient new legislation, to have had the consequence of rendering inoperative the criminal proceedings brought under domestic French law against André Allain for the importation of prohibited goods, preclude, in the light of the resultant Community customs provisions, a reclassification of the facts under national law, in particular reclassification as a false declaration of goods, as argued by the French customs authorities, or does it, as the defence contends, entitle those authorities only to require payment of the duties avoided, without any other financial implications?" Admissibility 9 The French Government has expressed doubts as to the admissibility of the question submitted by the Cour d' Appel, Paris, inasmuch as that appeal court appears to be asking this Court to examine the conditions under which the Cour de Cassation, in a leading case, accepted application of the principle of the retroactivity of the more favourable penal legislation concerning customs matters, in the particular case of the unification of the Federal Republic of Germany and the German Democratic Republic. 10 According to the French Government, the Court of Justice would in that case be required to interpret rules of national law, namely, in this case, a principle which the French Conseil Constitutionnel (Constitutional Council), in Decision No 81-127-DC of 19 and 20 January 1981, recognized as having constitutional status on the basis of Article 8 of the Declaration of the Rights of Man and of the Citizen of 26 August 1789, and which has been transcribed into Article 112-1 of the new Penal Code. 11 It must be borne in mind, at the outset, that the Court of Justice has no power, within the framework of Article 177 of the EC Treaty, to give preliminary rulings on the interpretation of rules pertaining to national law (see Case 75/63 Hoekstra v Bedrijfsvereniging voor Detailhandel [1964] ECR 177). 12 However, it is clear from the order for reference that the national court considers it necessary to ask the Court about the interpretation of the Community provisions resulting from the unification of the Federal Republic of Germany and the German Democratic Republic on the ground that it will, if appropriate, apply the principle, existing in French law, of the retroactivity of a more lenient criminal provision. It will therefore set aside the national law relating to criminal proceedings for false declaration of goods under Article 410(2)(a) of the French Customs Code in so far as the Community customs provisions resulting from the unification of Germany would preclude such proceedings for punishing breaches of the Community rules applicable at the material time. 13 Consequently, the question submitted should be answered since it is for the national court to determine both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (Joined Cases C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361 , paragraph 10). The substance 14 In 1977, the Commission drew up, on the basis of Articles 74 and 86 of the ECSC Treaty, Recommendation 77/328/ECSC of 15 April 1977 relating to protection against imports which constitute or threaten to constitute a serious danger to production in the common market of similar or directly competitive products (OJ 1977 L 114, p. 4) and, on the basis of Article 74 of the ECSC Treaty, Recommendation 77/330/ECSC of 15 April 1977 to the Governments of the Member States of the Community establishing Community surveillance in respect of the importation into the Community of certain iron and steel products covered by the Treaty establishing the European Coal and Steel Community, originating in third countries (OJ 1977 L 114, p. 15). 15 The fourth and fifth recitals in the preamble to Recommendation 77/330 stated that "detailed preparation of the forward programmes requires the most accurate possible knowledge of import intentions ... care must also be taken to see that the imports [or] the conditions under which they are effected do not threaten to cause serious injury to Community production". The seventh recital in the preamble to Recommendation 77/330 stated that "it is therefore in the Community' s interest that the importation into the Community of certain iron and steel products originating in third countries should temporarily be made subject to the presentation of an import document meeting uniform criteria". 16 At the material time, the German Democratic Republic was regarded as a third country for the purpose of trade in goods coming under the ECSC Treaty with Member States other than the Federal Republic of Germany. The recommendations in force relating to Community surveillance were Commission Recommendation No 41/85/ECSC of 4 January 1985 on Community surveillance in respect of the importation of certain iron and steel products covered by the ECSC Treaty and originating in certain non-member countries other than Spain (OJ 1985 L 7, p. 5) and subsequently Commission Recommendation No 3658/85/ECSC of 23 December 1985 on Community surveillance in respect of the importation of certain iron and steel products covered by the ECSC Treaty and originating in certain non-member countries (OJ 1985 L 348, p. 32). 17 Article 1 of Recommendation No 41/85 provided that the importation into the Community of iron and steel products covered by the ECSC Treaty, listed in Annexes III A and III B to that recommendation and originating in non-member countries other than Spain, were to be subject to the issue of an import licence. Article 1 of Recommendation No 3658/85 also provided for the issue of this licence in order to enable those same products originating in non-member countries to circulate freely. 18 Under Article 2(1)(a) of Recommendations Nos 41/85 and 3658/85, the importer' s application was required to state the country of origin and the country of consignment of the goods. Article 2(4) of those recommendations provided that "the importer shall certify that his application for an import licence is accurate". 19 It appears from the French Government' s replies to the questions put by the Court that the French Ministry of Foreign Trade published, on 7 March 1985, a notice to importers of certain products originating in all countries (Journal Officiel de la République Française ("JORF") (Official Journal of the French Republic) of 7 March 1985, p. 2848) to comply with Recommendation No 41/85. Section 4 of that notice provided that the special regime of surveillance of imports originating in the German Democratic Republic was to continue to apply. 20 Imports of the products in question from that country were subject to a special surveillance regime, by means of import licences, in accordance with the notices to importers of certain iron and steel products originating in and coming from the German Democratic Republic, issued by the Ministry of Industrial Redeployment and Foreign Trade (JORF of 29 December 1984, p. 12168, and of 5 March 1986, p. 3452). 21 It should be pointed out in this regard that the Community rules on surveillance of imports of certain iron and steel products originating in certain non-member countries at present in force still include an obligation on the importer to declare the country of origin and the country of consignment of the goods imported (see Article 2 of Commission Regulation (EC) No 2914/95 of 18 December 1995 introducing prior Community surveillance of imports of certain iron and steel products covered by the ECSC and EC Treaties originating in certain third countries (OJ 1995 L 305, p. 23)). 22 However, neither Recommendations Nos 41/85 and 3658/85 nor Regulation No 2914/95 set out specific penalties for breaches of their provisions. 23 The third paragraph of Article 14 of the ECSC Treaty provides that "Recommendations shall be binding as to the aims to be pursued but shall leave the choice of the appropriate methods for achieving these aims to those to whom the recommendations are addressed". Although that provision leaves Member States free to choose the ways and means of implementing a recommendation, that freedom does not affect the obligation imposed on all the Member States to which the recommendation is addressed to adopt, in their national legal systems, all the measures necessary to ensure that the recommendation is fully effective, in accordance with the objective which it pursues (see, to that effect, Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891 (concerning directives), paragraph 15). 24 Where Community legislation does not specifically provide for any penalty for an infringement or refers for that purpose to national legislation, Article 86 of the ECSC Treaty and Article 5 of the EC Treaty require the Member States to take all measures necessary to guarantee the application and effectiveness of Community law. For that purpose, while the choice of penalties remains at their discretion, they must ensure in particular that infringements of Community law are penalized under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive (see, in this regard, Case C-36/94 Siesse v Director da Alfândega de Alcântara [1995] ECR I-3573 (which concerned regulations), paragraph 20, and Case C-382/92 Commission v United Kingdom [1994] ECR I-2435 (which concerned directives), paragraph 55). 25 The Member States' obligation, under a recommendation, to achieve the result envisaged by the recommendation and their duty under Article 86 of the ECSC Treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation, is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts (see, with regard to directives, Von Colson and Kamann, cited above, paragraph 26). 26 The Commission points out that when the Federal Republic of Germany and the German Democratic Republic were unified on 3 October 1990, Community law automatically became applicable within the territory of the former German Democratic Republic. In this new Community context, customs declaration formalities continued to apply between the Member States, but essentially for fiscal or statistical purposes or within the context of Articles 36 or 115 of the EEC Treaty. 27 Furthermore, the Commission takes the view that, with effect from 1 January 1993 and the establishment of the internal market, those formalities were abolished, thereby excluding any possibility for a Member State to require production of a declaration of origin of Community products when such products are imported into its territory. Consequently, it is for the national court to consider what effect this change, in conjunction with the inclusion in the customs territory of the Community of the territory of the former German Democratic Republic and having regard to the requirements of the free movement of goods and the internal market, may have had on a reclassification, for the purpose of imposing penalties, of facts occurring prior to accession. At the hearing, the French Government supported this position. 28 However, it must be stressed that the extension of the Community customs territory due to the unification of a Member State or to the accession of new Member States constitutes a new material fact which does not have the effect of releasing Member States from their obligation to take all appropriate measures for guaranteeing the operation and efficacity of the Community law applicable at the material time. 29 Consequently, such an extension does not have the effect of precluding national courts from penalizing breaches of Community legislation on conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive. 30 In those circumstances, the answer to the question submitted must be that the Community customs provisions, applicable following the unification of the Federal Republic of Germany and the German Democratic Republic, do not preclude a reclassification of facts under national law with a view to penalizing breaches of the Community legislation applicable at the material time. Costs 31 The costs incurred by the French Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court. On those grounds, THE COURT (Sixth Chamber), in answer to the question referred to it by the Cour d' Appel, Paris, by judgment of 20 December 1994, hereby rules: The Community customs provisions, applicable following the unification of the Federal Republic of Germany and the German Democratic Republic, do not preclude a reclassification of facts under national law with a view to penalizing breaches of the Community legislation applicable at the material time. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII