Van Gend en Loos Case PDF (European Court of Justice, 1963)

Judgement of the European Court of Justice 5th February 1963 Case 26/62 Van Gend en Loos European Union Law 2024/2025 Global Law Prof. Avv. Luca Calzolari, LL.M, Ph.D 0 1. Preliminary remar...

Judgement of the European Court of Justice 5th February 1963 Case 26/62 Van Gend en Loos European Union Law 2024/2025 Global Law Prof. Avv. Luca Calzolari, LL.M, Ph.D 0 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the provisions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 1 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the provisions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 2  The preliminary reference procedure  The preliminary reference procedure is one of the (fundamental) competences of the ECJ, together with the annulment procedure and the infringement procedure.  It is part of the EU legal order ever since the Treaty of Rome (article 177 EEC) and today is disciplined by Article 267 TFEU  As we will see during the course, the preliminary reference procedure is a mechanism that allow cooperation and dialogue between national judges and the Court of Justice.  National judges can suspend the proceedings pending before them and submit to the ECJ a question related to the interpretation or the validity of a provision of EU law, as long as they consider the solution of the question necessary to decide the case.  In the case at stake, the Dutch Tariefcommissie asked to the ECJ to provide the correct interpretation of Article 12 EEC (today Article 30 TFEU, although the text has been significantly modified) 3  The free movement of goods  The Van Gend en Loos case concerns the free movement of goods, which is one of the four fundamental freedoms on which the establishment of the internal market (i.e. the main purpose of the EEC) is based ever since the Treaty of Rome.  The free movement of goods is composed by three different elements:  the creation of a custom union, composed in turn by (i) the abolition (first) and the prohibition (then) of custom duties and charges having equivalent effect between Member States and (ii) the creation of a common customs tariff vis-à-vis third countries,  the prohibition of quantitative restrictions on imports and exports between Member States as well as of measures having an equivalent effect to a quantitative restriction; and  a prohibition of discriminatory or protectionist regime of internal taxation (now art. 110 TFEU) 4  The abolition (first) and the prohibition (then) of custom duties between Member States  The Van Gend en Loos case concerns the first point mentioned in the previous slide, i.e. the abolition of custom duties between Member States  Today the legal regime can be found in Article 30 TFEU, which poses an absolute prohibition of custom duties (“Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature”)  When the Court was called to decide the Van Gend en Loos case, the legal regime was different and the Treaty of Rome requested Member States to progressively reduce and abolish the customs duties in force before 1957.  In line with this goal, Article 12 EEC introduced a so-called standstill obligation on the Member States, i.e. a prohibition to introduce new duties and/or to increase the level of any duty compared to the level applicable before the entrance into force of the Treaty of Rome (“Member States shall refrain from introducing, as between themselves, any new customs duties on importation or exportation or charges with equivalent effect and from increasing such duties or charges as they apply in their commercial relations with each other.”) 5 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the provisions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 6  The “indirect” increase of the custom duty on urea formaldehyde due to its new tariff classification  At the end of 1960, Van Gend en Loos imported in the Netherland from Germany a parcel of urea formaldehyde (“UF”) and the Dutch Custom Office applied a custom duty equal to the 8% of the value of the imported goods, while in precedent occasions Van Gend en Loos paid a duty equal to the 3% of the value of the imported goods.  The application of this different (and higher) rate was not due to an increase of the rate applicable to the heading of the tariff classification applicable to UF but rather to a rearrangement of UF under a different heading of the tariff classification which, already before the Treaty of Rome, was subject to a 8% custom duty.  More precisely, (i) up to the 1960 UF was included in the heading no. 279-a-2 and was subject to a 3% custom duty, while (ii) from 1st March 1960 UF was moved to the different heading no. 39.01-a-1, subject to the higher custom duty.  For more information about check the so-called TARIC 7 The “indirect” increase of the custom duty on urea formaldehyde due to its new tariff classification (2)  If you are confused by the mechanism, just think of a different example which does not involve chemical matters and numbers  Let’s assume that:  (i) the imported products were bikes;  (ii) bikes were traditionally included in the custom heading named “sport instruments” subject to a 3% custom duty;  (iii) bikes are then moved to the different custom heading named “vehicle”, which is always been subject to a 8% custom duty 8  The – potential (?) – violation of the standstill clause  Van Gend en Loos argued that the fact that UF has been moved to a different custom heading had the effect to indirectly increase the custom duty on UF to a level higher than the one applicable before the entrance into force of the Treaty of Rome.  Van Gend en Loos therefore claimed that the standstill obligation imposed on Member States by Article 12 EEC was breached and challenged the application of the new and higher rate before all the competent courts in the Netherlands, up to the Tariefcommissie, which is the highest level of tax jurisdiction in that country 9  The questions referred by the Tariefcommissie to the ECJ for a preliminary ruling  “whether article 12 of the EEC Treaty has direct application within the territory of a member state, in other words, whether nationals of such a State can, on the basis of the article in question, lay claim to individual rights which the Courts must protect” (direct effect of the dispositions of the Treaty )  “in the event of an affirmative reply, whether the application of an import duty of 8% to the import into the Netherlands by the applicant in the main action of [UF] originating in the federal republic of Germany represented an unlawful increase within the meaning of article 12 of the EEC treaty or whether it was in this case a reasonable alteration of the duty applicable before 1 march 1960, an alteration which, although amounting to an increase from the arithmetical point of view, is nevertheless not to be regarded as prohibited under the terms of article 12» (formal vs. substantial approach to the economic fundamental freedoms) 10 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the provisions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 11  International law …. In short, all the Member States that decided to intervene in the proceeding before the ECJ held that:  traditionally, individuals are not included among the subjects of the international legal order, as only States have legal personality under international law  as a consequence, international law can be applied only to States: it confers rights and obligations only to States and not to individuals (as you have probably studied in the IL course, there are a few exception to this principle: human rights, international criminal law and BITs, for example)  Van Gend en Loos is not a Member State of the (then) EEC and, therefore, it cannot directly benefit from the content of a disposition of the Treaty of Rome  moreover, the Treaty of Rome explicitly provides a specific remedy for the case that a Member State breaches EC (and now EU law): the infringement procedure (as we will see during the course) 12  …vs. EU legal order: the direct effect of the Treaties  According to the ECJ, in order to establish whether a disposition included in an international agreement (such as the Treaty of Rome) can be applied within the national legal orders of the States that are part of that Treaty (as the Member States) (or, in other words, if it can have direct effect) , it is “necessary to consider the spirit, the general scheme and the wording of those provisions”  “the objective of the EEC Treaty, which is to establish a common market, the functioning of which is of direct concern to interested parties in the community, implies that this Treaty is more than an agreement which merely creates mutual obligations between the contracting states”  “this view is confirmed by the Preamble to the Treaty which refers not only to governments but to peoples. It is also confirmed more specifically by the establishment of institutions endowed with sovereign rights, the exercise of which affects member states and also their citizens”.  Therefore, contrary to international law, EU law enjoys direct effect, so that EU dispositions can confer rights to individuals that shall be protected and enforced by national Courts  More specifically, according to the ECJ, all the dispositions that are clear, precise and unconditional and that confer rights to individuals can have direct effect  as Article 12 EEC complies with these requirements, Van Gend en loos could invoke it before national courts 13  Infringement procedure v. preliminary reference procedure  Already in Van Gend en Loos, the ECJ highlights the importance that the EU legal order includes a system of effective judicial review and judicial protection.  If the remedies to cope with a violation of the Treaty committed by a Member State were to be limited to the infringement procedure (today disciplined by Articles 258 and 259 TFEU) , this “would remove all direct legal protection of the individual rights of their nationals”.  Moreover, “there is the risk that recourse to the procedure under these articles would be ineffective if it were to occur after the implementation of a national decision taken contrary to the provisions of the treaty”  The direct action of the individuals, who have a specific interest in safeguarding and enforcing their individual rights, represents an effective additional level of control that can help the infringement procedure (which is a public procedure, carried out by the Commission) to achieve its result, i.e. to ensure that Member States do comply with their obligations stemming form EU law (a sort of so-called private enforcement, at least in nuce) 14 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the provisions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 15  The essential role of individuals in the EU legal order In the light of what we have discussed above, already in 1962 the ECJ concluded that: “the European economic community constitutes a new legal order of international law for the benefit of which the States have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only the Member States but also their nationals” 16  The distinctive features of this new legal order There are essentially three main aspects that characterize the new legal order and make it clear that the EU legal order is different from the international one These are usually referred as part of the so-called “community method” (now also “Union method”)  Some of the institutions do not represent the Member States (e.g. Commission, the ECJ)  Qualified majority vs. unanimity  Possibility for the EU institutions to adopt binding measures  Judicial review 17 1. Preliminary remarks 2. Facts of the main proceeding & the questions referred for a preliminary ruling 3. Direct effects of the dispositions … 4. … of a new legal order of international law 5. The substantive approach to the economic fundamental freedoms 18  Substance over form  The ECJ has no doubt that the fact that the increase of the level of taxation occurred not because the rate of the custom duty was increased but due to the rearrangement of UF in another custom heading was enough to hold that Article 12 EEC was breached.  The ECJ focus is on the effect of the measure, while the modalities according to which the increase is achieved is irrelevant  «where, after the entry into force of the Treaty, the same product is charged with a higher rate of duty, irrespective of whether this increase arises from an actual increase of the rate of customs duty or from a rearrangement of the tariff resulting in the classification of the product under a more highly taxed heading, such increase is illegal under Article 12 of the EEC treaty». 19