Updating Q Case comments in bullet points

Since the last time my homepage was updated there have been delivered some important judgments by the ECJ. You can read about some of them in the following.

The first case I would like to draw your attention to is the case C-212/97 Centros [1999] ECR I-1459 concerning the right of establishment. In this case the ECJ repeated that the right of establishment is based upon a prohibition against restrictions and not a prohibition against discrimination. The case as such concerned a Danish case where two individuals found that the national minimum capital requirements for founding a company without personal liability were too high. Instead they registered a British limited company and registered a branch office in Denmark. The Danish authorities denied them right to register a branch office in Denmark since this could circumscribe the Danish rules. The European Court of Justice clearly said that the right of secondary establishment could not be limited by such national measures as the one at stake. This means that economic operators are fully free to establish their business structure thereby using differences in taxation while planning their business. Centros is therefore one of the most important recent judgments.

The second case is one I pleaded myself, C-319/97 Kortas, judgment of June 1. 1999, n.y.r. This case concerned the old Article 100a.p4 (now Article 95.4). The issue at stake was if Member States may act unilaterally if the Commission takes long time while dealing with an application from a Member State. The case concerned a directive which had been wrongly implemented by Sweden and followed by an application for opting out according to Article 100a p. 4. The Court found that Member States are bound by directives and that they are not entitled to restrict the principle of direct effect of directives by unilateral measures. If they are unsatisfied with the administration of the Commission they must initiate legal proceedings against the Commission according to the rules of the Treaty hereof. Thus the principal outcome of this case is that individuals shall be in such a position that they shall always be able to rely on the freedoms provided to them by the Treaty.

The third important case which in fact was decided on the same day as Kortas is the Benetton case. Case C-126/97 Eco Swiss China Time Ltd v. Benetton International NV, n.y.r. (Benetton) concerned whether or not an arbitration tribunal is obliged to observe the competition rules of the Treaty. The outcome of this case was that the EC competition rules are fundamental in the treaty context and that they reflect public regulatory interest. They shall thus be regarded as "ordre public" meaning that if an arbitration tribunal has not taken these rules into account or applied them wrongly, this is a ground for appealing to a national court. In fact such an arbitration award may even be regarded as null and void. The judgment impose extensive control functions on arbitration proceedings to be exercised by national courts. Thus arbitration tribunals must regularly consult specialist to find whether or not EC-law issues are to be dealt with in a case. This is really one of the most important judgments in recent times and will have significant impact on arbitration proceedings. However, the European Court of Justice seems to have been inspired by the U.S. Supreme Courts decision in the Mitsubishi case from 1984 in which the "doctrine of second look" was introduced. Benetton is merely only a European version of the "doctrine of second look".

A fourth interesting case is C-379/97 Upjohn v. Paranova in which the European Court of Justice clarified that a paralellimporter shall be deemed to be entitled to change a trade mark owned by the manufacturer if he otherwise is prevented from efficient market access in another Member State. This means that the necessity requirement which have caused much disputes between trade mark owners and paralell importers shall be regarded as fulfilled when it is a must for getting efficient market access. Thus the advantages of using different trademarks on various markets seems to be diminishing. This judgment will also increase the competitive pressure, particularly on prices whithin the EU, which seems necessary for the proper functioning of the EMU. Moreover, the trademark by virtue of this judgment and the earlier development to be regarded as a signal between the product and the consumer and not between the owner of the trademark and the consumer.

Man in Black and Eurotunnel: Tax Free v. Lower Consumption Levies !

The Member States under severe pressure for fiscal harmonization as a result from the recent judgements in Eurotunnel regarding the abolishment of tax free sales within the Community and the Man in Black case concerning in which state an indirect tax shall be levied.

The result of these judgements read in conjunction is that the Member States have to get back to the negotiation table and fulfill the intentions set out in 1991 concerning fiscal harmonization. This is particularly important to ensure undistorted commerce on the Internet: the instrument that can give the Common Market reality for the Comunity citizens and ensure efficient market integration not only for the undertakings.

Safir and Kohll : Taxation of capital insurances and public expenditures exposed to competition to the benefit of Community Citizens request for harmonization also in the field of direct taxation!

It is no coincidence that these to cases were delivered on the same day. The consequence of these is that harmonization of direct taxation is necessary with regard to create balance in the public expenditures within the health care sector since citizens are consumers of services subject to cross-border competition as far as concerns services covered by Community secondary legislation.

This is furthermore underlined since the Safir judgment makes it possible to create Europe-wide solutions in the field of pension- and capital insurances.

Silhouette and the consumers

This case has wrongly been presented as a landmark case regarding paralell imports. The Court has consistantly protected the right to pursue paralell imports within the Common Market. This right can however only affect goods brought into free circulation in the EC. Already in the Polydor case the EC Court made this clear. This present state of Community law was transferred into the Trademark directive. Against this background the interpretation of the Court in the Silhouette case is not very remarkable. However, the Silhouette case does not stop paralell imports.

It may rightly be critizised that goods brought into free circulation are being treated favourably compared to third country products. However, there are some important issues remaining which were not settled in this case. For example, what happens when goods are beeing parallel imported from the US which recognize international consumption. The interests of the consumers are to be focused on in this connection according to my opinion.

Furthermore, what happens when an exclusive distributor initiate legal proceedings against a paralell importer and it turns out that the goods in question have been obtained from the owner of a particular trade mark. Can the importer be sued. The answer to this must according to my opinion be negative. It is solely a matter between the European distributor and the holder of the trade mark.

The distributor is mostly only granted a right to use the trademark during the term of the distributorship agreement. In my opinion the Silhouette judgment does not stop paralell imports. It brings a new dimension and new legal problems into it. Many remaining issues have to be solved.