JUDGMENT OF THE COURT (Second Chamber)

29 April 1999 (1)

(Free movement of services — Restriction — Moorings — Restriction for boat-owners resident in another Member State)

In Case C-224/97,

REFERENCE to the Court under Article 177 of the EC Treaty by theVerwaltungsgerichtshof, Austria, for a preliminary ruling in the proceedings pendingbefore that court between

Erich Ciola

and

Land Vorarlberg

on the interpretation of Articles 59 to 66 in conjunction with Article 5 of the ECTreaty and Article 2 of the Act concerning the conditions of accession of theRepublic of Austria, the Republic of Finland and the Kingdom of Sweden and theadjustments to the Treaties on which the European Union is founded (OJ 1994C 241, p. 21, and OJ 1995 L 1, p. 1),

THE COURT (Second Chamber),

composed of: G. Hirsch (Rapporteur), President of the Chamber, R. Schintgen andK.M. Ioannou, Judges,

Advocate General: J. Mischo,

Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

—    the Austrian Government, by Christine Stix-Hackl, Gesandte in the FederalMinistry of Foreign Affairs, acting as Agent,

—    the Commission of the European Communities, by Antonio Caeiro,Principal Legal Adviser, and Viktor Kreuschitz, Legal Adviser, acting asAgents,

having regard to the Report for the Hearing,

after hearing the oral observations of Erich Ciola, represented by Harald Bösch,Rechtsanwalt, Bregenz; Land Vorarlberg, represented by Peter Bußjäger, lawyerin the Legislative Department, Office of the Government of the Land ofVorarlberg, and Martina Büchel, acting head of the Department of European andExternal Affairs, Office of the Government of the Land of Vorarlberg, acting asAgents; the Austrian Government, represented by Christine Stix-Hackl; and theCommission, represented by Viktor Kreuschitz, at the hearing on 12 November1998,

after hearing the Opinion of the Advocate General at the sitting on 10 December1998,

gives the following

Judgment

1.

    By order of 26 May 1997, received at the Court Registry on 16 June 1997, theVerwaltungsgerichtshof (Administrative Court) referred to the Court for apreliminary ruling under Article 177 of the EC Treaty two questions on theinterpretation of Articles 59 to 66 in conjunction with Article 5 of the EC Treatyand Article 2 of the Act concerning the conditions of accession of the Republic ofAustria, the Republic of Finland and the Kingdom of Sweden and the adjustmentsto the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21,and OJ 1995 L 1, p. 1, hereinafter 'the Act of Accession‘).

2.

    Those questions were raised in proceedings brought by Mr Ciola against finesimposed on him for exceeding the maximum quota of moorings on the shore ofLake Constance reserved for boats whose owners are resident abroad.

3.

    Mr Ciola is the manager inter alia of ABC-Boots-Charter GmbH. In 1990 thatcompany leased certain land on the shore of Lake Constance. It obtainedpermission to establish 200 moorings for pleasure boats there.

4.

    At the company's request, the Bezirkshauptmannschaft Bregenz (the administrativeauthority of first instance of the Land of Vorarlberg) addressed to it on 9 August1990 an individual administrative decision (Bescheid), point 2 of which stated:

'With effect from 1 January 1996 a maximum of 60 boats whose owners areresident abroad may be accommodated in the harbour. Until that time theproportion of boats owned by persons resident abroad is to be progressivelyreduced. No new allocation of moorings to boat-owners resident abroad orextension of expired rental contracts with such owners is permitted until themaximum foreigner quota has been reached...‘.

5.

    Under the first sentence of Paragraph 4(1) of the Landschaftsschutzgesetz(Countryside Protection Law) of the Land of Vorarlberg, any alteration to thelandscape in lake areas and in a 500-metre-wide strip of shore adjacent thereto,calculated at mean water level, is prohibited.

6.

    However, Paragraph 4(2) allows the administrative authority to authorise exceptionsto that prohibition if there is a guarantee that such alterations will not harm theinterests of landscape protection, in particular that they will not obstruct views ofthe lake, or if the alterations are necessary for reasons of public safety.

7.

    By decision of 10 July 1996 the Unabhängiger Verwaltungssenat (IndependentAdministrative Senate) of the Land of Vorarlberg found Mr Ciola, in his capacityas manager of the aforesaid company, guilty of renting two moorings to boat-owners who were resident abroad, namely in the Principality of Liechtenstein andthe Federal Republic of Germany, even though the maximum quota of 60 mooringsreserved for foreigners had already been exceeded.

8.

    Consequently, as Mr Ciola had failed to comply with the conditions of point 2 ofthe administrative decision of 9 August 1990 and had therefore committed anadministrative offence within the meaning of Paragraph 34(1)(f) of theLandschaftsschutzgesetz, he was fined ATS 75 000 for each of the two offences.

9.

    Since it considered that Mr Ciola's appeal against the fines raised questionsconcerning the interpretation of Community law, the Verwaltungsgerichtshof stayedproceedings and referred the following two questions to the Court:

'1.    Are the provisions concerning the freedom to provide services to beinterpreted as precluding a Member State from prohibiting the operator ofa boat harbour, on pain of criminal prosecution, from renting more than aspecific quota of moorings to boat-owners who are resident in anotherMember State?

2.    Does Community law, in particular the provisions concerning the freedomto provide services in conjunction with Article 5 of the EC Treaty andArticle 2 of the Act concerning the conditions of accession of the Republicof Austria, the Republic of Finland and the Kingdom of Sweden and theadjustments to the Treaties on which the European Union is founded (OJ1994 C 241, p. 21; OJ 1995 L 1, p. 1), give the provider of the servicesreferred to in Question 1 above, who is resident in Austria, the right toassert that the prohibition issued in the terms set out in Question 1 by aspecific individual administrative decision (Bescheid) adopted in 1990 shouldnot be applied in decisions of the Austrian courts and administrativeauthorities adopted after 1 January 1995?‘

Question 1

10.

    By its first question, the national court essentially asks whether the Treatyprovisions on freedom to provide services are to be interpreted as precluding aMember State from establishing a maximum quota of moorings which may berented to boat-owners resident in another Member State.

11.

    It should be observed at the outset that, as the national court has pointed out, first,the right freely to provide services may be relied on by an undertaking as againstthe State in which it is established if the services are provided for personsestablished in another Member State (Case C-70/95 Sodemare and Others v RegioneLombardia [1997] ECR I-3395, paragraph 37) and, second, in accordance withJoined Cases 286/82 and 26/83 Luisi and Carbone v Ministero del Tesoro [1984]ECR 377, paragraph 16, and Case 186/87 Cowan v Trésor Public [1989] ECR 195,paragraph 15, that right includes the freedom for recipients of services to go toanother Member State in order to receive a service there, without being obstructedby restrictions.

12.

    Consequently, Articles 59 to 66 of the Treaty apply to a service such as that whichthe company of which Mr Ciola is manager provides, by means of a contract forthe rental of a mooring, to a boat-owner resident in another Member State whoreceives and enjoys the service in a Member State other than that in which heresides.

13.

    In those circumstances, a restriction on moorings of the kind at issue in the mainproceedings infringes the prohibition under the first paragraph of Article 59 of theTreaty of all discrimination, even indirect, with regard to providers of services.

14.

    While the restriction of the number of moorings which may be allocated to non-resident boat-owners is not based on their nationality, and so may not be regardedas direct discrimination, it does, however, use as the distinguishing criterion theirplace of residence. It is settled case-law that national rules under which adistinction is drawn on the basis of residence are liable to operate mainly to thedetriment of nationals of other Member States, as non-residents are in the majorityof cases foreigners (see Case C-350/96 Clean Car Autoservice v Landeshauptmannvon Wien [1998] ECR I-2521, paragraph 29).

15.

    To justify imposing a quota on moorings reserved for nationals of other MemberStates on mandatory grounds in the general interest, the Land of Vorarlberg reliedat the hearing on the need to reserve access to the moorings for local boat-owners,as there is a risk of such moorings being monopolised by persons resident in otherMember States and willing to pay higher rental charges. Because of the limitationof the total number of moorings available, for reasons concerning protection of theenvironment, lifting the quota would increase the pressure on the authorities of theLand of Vorarlberg.

16.

    National rules which are not applicable to services without distinction whatever theplace of residence of the recipient, and which are therefore discriminatory, arecompatible with Community law only if they can be brought within the scope of anexpress derogation, such as Article 56 of the EC Treaty (see Case 352/85 Bond vanAdverteerders and Others v Netherlands State [1988] ECR 2085, paragraph 32);however, economic aims cannot constitute grounds of public policy within themeaning of that provision (Case C-288/89 Collectieve Antennevoorziening Gouda vCommissariaat voor de Media [1991] ECR I-4007, paragraph 11).

17.

    Since the Land of Vorarlberg has justified the imposition of a quota on mooringsfor non-resident owners not on grounds of public policy, public security or publichealth, but for economic reasons for the benefit of local owners, Article 56 of theTreaty cannot be applied; in those circumstances, it must be ascertained whetherthe existence of an exception in the Act of Accession authorised the Land ofVorarlberg to take measures such as the quota at issue in the main proceedings inorder to limit the influx of boat-owners from other Member States.

18.

    On this point, it suffices to note that Article 70 of the Act of Accession lays downan express derogation, for a limited time, only for existing legislation regardingsecondary residences.

19.

    Consequently, the establishment by a Member State of a maximum quota formoorings which may be rented to boat-owners resident in another Member Stateis contrary to the principle of freedom to provide services.

20.

    The answer to Question 1 must therefore be that Article 59 of the Treaty is to beinterpreted as precluding a Member State from prohibiting the manager of a boat

harbour, on pain of prosecution, from renting moorings in excess of a specifiedquota to boat-owners who are resident in other Member States.

Question 2

21.

    By its second question, the Verwaltungsgerichtshof essentially asks whether aprohibition which is contrary to the freedom to provide services, laid down beforea Member State's accession to the European Union not by a general abstract rulebut by a specific individual administrative decision that has become final, must bedisregarded when assessing the validity of a fine imposed for failure to comply withthat prohibition after the date of accession.

22.

    It appears from the grounds of the order for reference that in a case of failure tocomply with general abstract rules which were not compatible with a fundamentalprinciple of the Treaty, the Verwaltungsgerichtshof would have set aside such rulesin favour of Community law on the basis of the Court's judgment in Case 106/77Amministrazione delle Finanze dello Stato v Simmenthal [1978] ECR 629.

23.

    However, as the case-law to date, according to the Verwaltungsgerichtshof, laysdown only the principle of the primacy of Community law over general rules ofnational law, that court asks whether that principle also applies to a specificindividual administrative decision that is not in conformity with Community lawsuch as, in the main proceedings, the Bescheid of 9 August 1990.

24.

    The Austrian Government submits that there is no reason why the case-law on theprimacy of Community law should be applied, automatically and without restriction,to specific individual administrative acts. In support of its argument, it relies on theenforceability of administrative acts and refers in that connection to the case-lawon what is known as the 'procedural autonomy of the Member States‘. In its view,to hold that Community law takes precedence over an enforceable administrativeact would be liable to call into question the principles of legal certainty, protectionof legitimate expectations or protection of lawfully acquired rights.

25.

    It must be observed at the outset, as the Advocate General does in points 40 to 43of his Opinion, that the dispute concerns not the fate of the administrative actitself, in this case the decision of 9 August 1990, but the question whether such anact must be disregarded when assessing the validity of a penalty imposed for failureto comply with an obligation thereunder, because of its incompatibility with theprinciple of freedom to provide services.

26.

    Next, since the provisions of the EC Treaty are directly applicable in the legalsystems of all Member States and Community law takes precedence over nationallaw, those provisions create rights for the persons concerned which the nationalauthorities must observe and safeguard, and any conflicting provision of national

law therefore ceases to be applicable (see Case 167/73 Commission v France [1974]ECR 359, paragraph 35).

27.

    Since the essential requirements of Article 59 of the Treaty became directly andunconditionally applicable at the end of the transitional period (see Case 279/80Webb [1981] ECR 3305, paragraph 13), that provision consequently precludes theapplication of any conflicting measure of national law.

28.

    As regards the Republic of Austria, it is apparent from Article 2 of the Act ofAccession that the provisions of the EC Treaty apply as from accession, that is, 1January 1995, the date from which Article 59 of the Treaty thus became a directsource of law.

29.

    While the Court initially held that it is for the national court to refuse if necessaryto apply any conflicting provision of national law (see Simmenthal, cited above,paragraph 21), it subsequently refined its case-law in two respects.

30.

    Thus it appears from the case-law, first, that all administrative bodies, includingdecentralised authorities, are subject to that obligation as to primacy, andindividuals may therefore rely on such a provision of Community law against them(Case 103/88 Fratelli Costanzo v Comune di Milano [1989] ECR 1839, paragraph32).

31.

    Second, provisions of national law which conflict with such a provision ofCommunity law may be legislative or administrative (see, to that effect, Case 158/80Rewe v Hauptzollamt Kiel [1981] ECR 1805, paragraph 43).

32.

    It is consistent with that case-law that those administrative provisions of nationallaw should include not only general abstract rules but also specific individualadministrative decisions.

33.

    There is no reason why the legal protection which individuals derive from the directeffect of provisions of Community law and which the national courts must ensure(see Case C-213/89 R v Secretary of State for Transport ex parte Factortame andOthers [1990] ECR I-2433, paragraph 19) should be refused to those individuals incases where the dispute concerns the validity of an administrative measure. Theexistence of such protection cannot depend on the nature of the conflictingprovision of national law.

34.

    It follows from the foregoing that a prohibition which is contrary to the freedomto provide services, laid down before the accession of a Member State to theEuropean Union not by a general abstract rule but by a specific individualadministrative decision that has become final, must be disregarded when assessingthe validity of a fine imposed for failure to comply with that prohibition after thedate of accession.

Costs

35.

    The costs incurred by the Austrian Government and by the Commission, whichhave submitted observations to the Court, are not recoverable. Since theseproceedings are, for the parties to the main proceedings, a step in the actionpending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Second Chamber),

in answer to the questions referred to it by the Verwaltungsgerichtshof by order of26 May 1997, hereby rules:

1.    Article 59 of the EC Treaty must be interpreted as precluding a MemberState from prohibiting the manager of a boat harbour, on pain ofprosecution, from renting moorings in excess of a specified quota to boat-owners who are resident in other Member States.

2.    A prohibition which is contrary to the freedom to provide services, laiddown before the accession of a Member State to the European Union notby a general abstract rule but by a specific individual administrativedecision that has become final, must be disregarded when assessing thevalidity of a fine imposed for failure to comply with that prohibition afterthe date of accession.

HirschSchintgen Ioannou

Delivered in open court in Luxembourg on 29 April 1999.

R. Grass

G. Hirsch

Registrar

President of the Second Chamber

1: Language of the case: German.