C-389/00

Case C-389/00 Commission of the European Communities v Federal Republic of Germany «(Failure of a Member State to fulfil obligations – Articles 23 EC and 25 EC – Charge having equivalent effect – Export of waste – Basle Convention – Regulation No 259/93 – Contribution to a solidarity fund)» Opinion of Advocate General Tizzano delivered on 14 November 2002 I - 0000      Judgment of the Court (Fifth Chamber), 27 February 2003 I - 0000      Summary of the Judgment Free movement of goods – Customs duties – Charges having equivalent effect – Shipments of waste – Mandatory contribution to a solidarity fund for the return of waste – Incompatibility with the Treaty (Arts 23 EC and 25 EC) By subjecting shipments of waste to other Member States to a mandatory contribution to the solidarity fund for the return of waste, a Member State fails to fulfil its obligations under Articles 23 EC and 25 EC.Such a contribution cannot be considered as payment for a service actually provided specifically to the economic operators in question, since compliance by that Member State with an obligation which Community law imposes on all the Member States in pursuit of protection of health and the environment does not confer on exporters of waste established in its territory any specific or definite benefit.Moreover, the contribution to the solidarity fund cannot be viewed as a lawful charge in the form of compensation for a measure imposed by Community law with a view to promoting the free movement of goods, since it has not been established that the contribution collected when each shipment of waste is carried out is in any way related to the actual costs that operation is likely to generate for the State in the event that it becomes necessary to return the waste shipped and to dispose of or recover it.see paras 35, 37-38, 45, 51, operative part JUDGMENT OF THE COURT (Fifth Chamber) 27 February 2003 (1) ((Failure to fulfil obligations – Articles 23 and 25 EC – Charge having an equivalent effect – Export of waste – Basle Convention – Regulation No 259/93 – Contribution to a solidarity fund)) In Case C-389/00, Commission of the European Communities, represented by J.C. Schieferer, acting as Agent, with an address for service in Luxembourg, applicant, v Federal Republic of Germany, represented by B. Muttelsee-Schön, acting as Agent, assisted by H.-J. Koch, Professor, defendant, APPLICATION for a declaration that, by enacting the Gesetz über die Überwachung und Kontrolle der grenzüberschreitenden Verbringung von Abfällen (Abfallverbringungsgesetz) (Act on the supervision and control of transboundary shipments of waste; the waste shipment act) of 30 September 1994, BGBl. 1994 I, p. 2771), establishing a solidarity fund for the return of waste and requiring exporters of waste, including those exporting to other Member States, to contribute to that fund, the Federal Republic of Germany has failed to fulfil its obligations under Articles 23 EC and 25 EC, THE COURT (Fifth Chamber),, composed of: D.A.O. Edward, acting for the President of the Chamber, A. La Pergola, P. Jann, S. von Bahr and A. Rosas (Rapporteur), Judges, Advocate General: A. Tizzano, Registrar: H.A. Rühl, Principal Administrator, having regard to the Report for the Hearing, after hearing oral argument from the parties at the hearing on 27 June 2002, at which the Commission was represented by J.C. Schieferer and the Federal Republic of Germany by W.-D. Plessing, acting as Agent, assisted by H.-J. Koch, after hearing the Opinion of the Advocate General at the sitting on 14 November 2002, gives the following Judgment By an application lodged at the Court Registry on 20 October 2000, the Commission brought an action under Article 226 EC for a declaration that, by enacting the Gesetz über die Überwachung und Kontrolle der grenzüberschreitenden Verbringung von Abfällen (Abfallverbringungsgesetz) (Act on the supervision and control of transboundary shipments of waste; the waste shipment act) of 30 September 1994, BGBl. 1994 I, p. 2771, ( the AbfVerbrG) establishing a solidarity fund for the return of waste and requiring exporters of waste, including those exporting to other Member States, to contribute to that fund, the Federal Republic of Germany has failed to fulfil its obligations under Articles 23 and 25 EC. Legal framework The Basle Convention and Community law Under Articles 23 EC and 25 EC, the Community is based upon a customs union which is to cover all trade in goods and which is to involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect. Shipments of waste within, into and out of the Community are subject to Council Regulation (EEC) No 259/93 of 1 February 1993 on the supervision and control of shipments of waste within, into and out of the European Community (OJ 1993 L 30, p. 1). Shipments of waste which are excluded from the scope of application of that regulation are laid down in Article 1(2) and (3). Regulation No 259/93 implements inter alia the obligations undertaken by the Community and the Member States in their capacity as parties to the Basle Convention of 22 March 1989 on the control of transboundary movements of hazardous wastes and their disposal ( the Basle Convention). That convention was approved on behalf of the Community by Council Decision 93/98/EEC of 1 February 1993 (OJ 1993 L 39, p. 1). In addition to the Community, all of the Member States are parties to the Basle Convention. Under Article 4(5) of the Basle Convention, the parties thereto are not to permit hazardous wastes or other wastes to be exported to a non-party State or to be imported from a non-party State. Exceptions to this rule are nevertheless provided for in Article 11 of the convention, subject to certain conditions. Article 8 of the Basle Convention lays down an obligation for the State of export to ensure that, when a transboundary movement of hazardous wastes or other wastes to which the consent of the States concerned has been given cannot be completed in accordance with the terms of the contract, the wastes in question are taken back into the State of export by the exporter if alternative arrangements cannot be made for their disposal in an environmentally sound manner within 90 days. Article 9(2)(a) of the Basle Convention provides that, in case of a transboundary movement of hazardous wastes or other wastes deemed to be illegal traffic as the result of conduct on the part of the exporter or generator, the State of export is to ensure that the wastes in question are taken back by the exporter or the generator or, if necessary, by itself into its territory. The obligation to return laid down in Article 8 of the Basle Convention has been implemented in the Community legal order by Article 25(1) of Regulation No 259/93, which reads as follows: Where a shipment of waste to which the competent authorities concerned have consented cannot be completed in accordance with the terms of the consignment note or the contract referred to in Articles 3 and 6, the competent authority of dispatch shall, within 90 days after it has been informed thereof, ensure that the notifier returns the waste to its area of jurisdiction or elsewhere within the State of dispatch unless it is satisfied that the waste can be disposed of or recovered in an alternative and environmentally sound manner. Article 26(2)(a) of Regulation No 259/93 transposes in the following terms the obligation to return waste as laid down in Article 9(2) of the Basle Convention: If such illegal traffic is the responsibility of the notifier of the waste, the competent authority of dispatch shall ensure that the waste in question is: (a) taken back by the notifier or, if necessary, by the competent authority itself ... . In addition, Article 27(1) of Regulation No 259/93 provides: All shipments of waste covered within the scope of this Regulation shall be subject to the provision of a financial guarantee or equivalent insurance covering costs for shipment, including cases referred to in Articles 25 and 26, and for disposal or recovery. As regards the allocation of administrative costs and costs associated with shipments, disposal or recovery of waste, Article 33 of Regulation No 259/93 states: 1. Appropriate administrative costs of implementing the notification and supervision procedure and usual costs of appropriate analyses and inspections may be charged to the notifier. 2. Costs arising from the return of waste, including shipment, disposal or recovery of the waste in an alternative and environmentally sound manner pursuant to Articles 25(1) and 26(2), shall be charged to the notifier or, if impracticable, to the Member States concerned. 3. Costs arising from disposal or recovery in an alternative and environmentally sound manner pursuant to Article 26(3) shall be charged to the consignee. 4. Costs arising from disposal or recovery, including possible shipment pursuant to Article 26(4), shall be charged to the notifier and/or the consignee depending upon the decision by the competent authorities involved. National rules Paragraph 8(1) of the AbfVerbrG establishes a solidarity fund for the return of waste (Solidarfonds Abfallrückführung; the solidarity fund). The sixth and seventh sentences of that provision read as follows: In order to cover the payments and administrative costs of the solidarity fund, notifiers within the meaning of Regulation [No 259/93] are required to contribute to this fund proportionally to the type and quantity of waste to be shipped. Contributions which have not yet been used at the end of a three-year period shall be repaid pro rata to the contributors after prior payment of the additional cover under Paragraph 8(2). The first sentence of Paragraph 8(2) of the AbfVerbrG reads as follows: In so far as the means which the solidarity fund must provide ... are insufficient to cover the costs incurred for the return and non-harmful recovery or disposal in a manner in keeping with the general interest, the Länder shall be required, following deduction of a federal portion to be determined by regulation ... to complete the cover according to an allocation formula established on the basis of population and tax revenues (Königstein formula) or according to another formula agreed to by the Länder. The obligation to contribute to the solidarity fund is in addition to the obligation imposed on the notifier by Paragraph 7(1) of the AbfVerbrG to provide a financial guarantee or proof of equivalent insurance covering costs for shipment, in accordance with Article 27 of Regulation No 259/93. Paragraph 17 of the Verordnung über die Anstalt Solidarfonds Abfallrückführung (regulation on the solidarity fund for the return of waste) of 20 May 1996, BGBl. 1996 I, p. 694, ( the solidarity fund regulation) provides that the obligation to contribute arises at the same time as the duty to give notice of waste to be shipped out of the Federal Republic of Germany. Article 18 of the same regulation lays down the methods for calculating the contributions which amount to DEM 0.30, DEM 3.00, DEM 10.00 or DEM 15.00 per tonne, depending on the type of waste involved. Pre-litigation procedure By letter of formal notice of 25 May 1998, the Commission informed the German authorities that it was of the view that the contributions to the solidarity fund collected pursuant to the AbfVerbrG constituted a charge having equivalent effect to an export customs duty prohibited by Articles 9 and 12 of the EC Treaty (now, after amendment, Articles 23 EC and 25 EC). It added that such a contribution was not provided for by Regulation No 259/93. In their response dated 11 September 1998, the German authorities maintained that the contribution to the solidarity fund was proportionate payment for a definite and/or specific benefit conferred on economic operators and therefore not a charge having equivalent effect to a customs duty. The German Government added that the specific characteristics of waste justified certain restrictions on the free movement of goods of that type. On 16 August 1999, the Commission sent a reasoned opinion to the Federal Republic of Germany in which it dismissed the arguments of the German authorities, stating, however, that it did not object to the contribution paid in respect of exports of waste from Germany to third countries. It invited Germany to comply with the reasoned opinion within two months of its notification. In a letter of 21 January 2000, the German Government continued to maintain that it had not infringed the Treaty, whereupon the Commission decided to bring the present action. Infringement The Commission claims that the obligation imposed by the AbfVerbrG on all exporters of waste to contribute to a solidarity fund is partially incompatible with Community law. It submits that, since the contribution must be paid when waste is shipped to other Member States, it constitutes a charge having effect equivalent to an export customs duty prohibited by Articles 23 EC and 25 EC. As the Court has held on a number of occasions, the justification for the prohibition of customs duties and any charges having an equivalent effect lies in the fact that any pecuniary charge, however small, imposed on goods by reason of the fact that they cross a frontier, constitutes an obstacle to the movement of goods which is aggravated by the resulting administrative formalities. It follows that any pecuniary charge, whatever its designation and mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier and is not a customs duty in the strict sense constitutes a charge having an equivalent effect to a customs duty within the meaning of Articles 23 EC and 25 EC, even if it is not imposed on behalf of the State (see, inter alia , Case 158/82 Commission v Denmark [1983] ECR 3573, paragraph 18; and Case 18/87 Commission v Germany [1988] ECR 5427, paragraph 5). However, the Court has also held that such a charge escapes that classification if it relates to a general system of internal dues applied systematically and in accordance with the same criteria to domestic products and imported products alike, if it constitutes payment for a service in fact rendered to the economic operator of a sum in proportion to the service, or again, subject to certain conditions, if it attaches to inspections carried out to fulfil obligations imposed by Community law (see Commission v Germany , cited above, paragraph 6, and case-law cited). It is common ground that, in the present case, the mandatory contribution to the solidarity fund constitutes a pecuniary charge, the amount of which is determined according to the nature and quantity of waste to be shipped, in accordance with the sixth sentence of Paragraph 8(1) of the AbfVerbrG. Under that provision, read together with section 17 of the solidarity fund regulation, any person required to notify of a shipment of waste within the meaning of Regulation No 259/93 must contribute to the fund and that obligation arises at the same time as the duty to notify of a shipment of waste outside the territory of the Federal Republic of Germany. The German Government acknowledges that the disputed contribution appears to be a charge having equivalent effect within the meaning of the Court's case-law. It denies, however, that the contribution is a charge prohibited by Articles 23 EC and 25 EC. According to the German Government, the contribution to the solidarity fund is, first, adequate payment for the services actually provided to specific economic operators. Second, it is a lawful charge because it is compensation for a measure required of Member States by Community law with a view to promoting the free movement of goods. In this light and in two ways, the disputed charge thus comes within the exceptions allowed in the case-law of the Court which allow for certain pecuniary charges not to be charges having equivalent effect to a customs duty. The contribution to the solidarity fund as payment for a service provided to economic operators The German Government essentially submits that the State provides a financial service to the economic operators by agreeing, in accordance with the relevant provisions of the Basle Convention and Regulation No 259/93, to guarantee the financing of the return of waste into its territory in the event of illegal or incomplete exports, when the party responsible is not in a position to bear the costs thereof or cannot be identified. This service confers a real benefit on operators which export waste from the territory of the Federal Republic of Germany, since the subsidiary guarantee taken on by the State allows them to penetrate the markets of the other Member States of the Community and also the other States-Parties to the Basle Convention. According to the German Government, although the money from the solidarity fund is used for the return of illegally exported waste, only those operators who export waste legally and contribute to the fund derive a benefit from the State's guarantee for the return. This service provided by the State confers a specific benefit on each exporter of waste, which can avail itself of the export possibilities created by the guarantee for each legal operation notified in accordance with Regulation No 259/93. In addition, the amount of the contribution collected for each given export, determined according to the nature and quantity of waste to be shipped, is itself proportional, within the meaning of that term as held by the Court in its case-law, to the actual service provided to the operator. Each notifier's contribution is thus collected by way of payment for its making use of the export opportunity created by the guarantee for the return of the waste. The German Government stresses that the contribution provided for in Paragraph 8 of the AbfVerbrG is aimed precisely at covering the costs incurred in providing the financing guarantee which makes each shipment of waste out of Germany possible. Consequently, it is proper that the actual cost of this service be passed on in an equitable and proportional manner to the economic operators which benefit from it. The Court notes that the argument of the German Government is based on the hypothesis that the opportunities economic operators established in Germany have to export waste may be largely attributed to the State's agreeing to provide a subsidiary guarantee for the financing of waste return operations, when they become necessary. The Court finds, however, that the opportunities those economic operators have are no different from those enjoyed by their competitors established in other Member States. Waste shipments out of Germany must comply with the same rules and are subject to the same conditions as those applicable to shipments out of other Member States, since those rules and conditions are provided for inter alia in Regulation No 259/93. Even for exports to other States which are party to the Basle Convention (although the contributions for those exports are not directly concerned by these proceedings), the opportunities for operators established in Germany are identical to those enjoyed by other Community exporters, since the Community and all the Member States are party to that convention and the obligations flowing therefrom are implemented in the Community legal order through Regulation No 259/93. It is, moreover, not disputed that, in agreeing to bear the costs associated with the return of waste, including shipment and disposal or recovery when those costs cannot be charged to a given operator, the Federal Republic of Germany is merely complying with an obligation imposed uniformly on all Member States by Article 33(2) of Regulation No 259/93. As pointed out by the Advocate General in paragraph 37 of his Opinion, compliance with that obligation helps to ensure that no transboundary movement of waste is undertaken without adequate guarantees in place for protection of the environment and health. The same objective is pursued by many other obligations imposed on the States of export by various provisions of international law and Community law governing the circulation of waste. It is, moreover, evident that the proper functioning of the specific system for the circulation of waste thereby established presupposes that each State complies with the obligations imposed on it. In those circumstances, compliance by the Federal Republic of Germany with an obligation which Community law imposes on all the Member States in pursuit of a general interest, namely protection of health and the environment, does not confer on exporters of waste established in its territory any specific or definite benefit (see, to this effect, Commission v Germany , cited above, paragraph 7). That finding is supported by the fact that the obligation to contribute to the solidarity fund arises at the same time as the obligation to notify a shipment of waste for outside Germany and that, in reality, the pecuniary charge borne by exporters is determined solely according to the type and quantity of the waste to be shipped. There is thus nothing given in return for any service actually provided to them, either as a category of operators or in an individual capacity. It follows that the disputed contribution cannot be considered as payment for a service actually provided specifically to the economic operators in question. The contribution paid by way of compensation for a measure imposed by Community law with a view to promoting the free movement of goods In the light of the foregoing, it is appropriate to examine whether the contribution to the solidarity fund can be viewed as a lawful charge in the form of compensation for a measure imposed by Community law with a view to promoting the free movement of goods. It should be recalled in this connection that, since the pecuniary charge in question is intended solely as financially and economically justified compensation for an obligation imposed in equal measure on all the Member States by Community law, it cannot be regarded as equivalent to a customs duty; nor, consequently, can it fall within the ambit of the prohibition laid down in Articles 23 EC and 25 EC (Case 46/76 Bauhuis [1977] ECR 5, paragraphs 34 to 36; and Commission v Germany , cited above, paragraph 14). This finding is not, in principle, precluded by the mere fact that other Member States themselves agree to finance the return of waste, including shipment and disposal or recovery, through their own budgets (see, to that effect, Case 89/76 Commission v Netherlands [1977] ECR 1355, paragraph 18; Case 1/83 IGF [1984] ECR 349, paragraphs 21 and 22; and Commission v Germany , cited above, paragraph 15). It is, however, settled case-law of the Court that the pecuniary charge imposed on economic operators must be economically justified in that there must be a direct link between the amount and the actual cost of the operation it is intended to finance, in this case the possible return of the waste shipped, including shipment and disposal or recovery thereof (see, to that effect, Case C-111/89 Bakker Hillegom [1990] ECR I-1735, paragraphs 11 and 12). The German Government argues in that respect that the contributions to the solidarity fund provided for in Germany do not exceed the costs incurred by the State and that each fee, considered by itself, is proportional to the actual benefit conferred on each specific operator. The German Government adds that Article 33(2) of Regulation No 259/93 allows the Member States some discretion in determining the methods of financing the costs they incur as guarantors of the return of waste, inter alia through collection of fees. The Court notes, however, that Article 33(2) of Regulation No 259/93 already provides that the costs arising from the return of waste, including shipment, disposal or recovery of the waste in an alternative and environmentally sound manner are to be charged to the notifier. The costs are borne by the Member States concerned only if that is not possible. It should also be recalled that, under Articles 25(1) and 26(2)(a) of Regulation No 259/93, notifiers who have notified shipments of waste which cannot be completed or which turn out to be illegal are required to proceed with the return of that waste themselves. In addition, under Article 27(1) of Regulation No 259/93, all shipments of waste covered within the scope of that regulation are to be subject to the provision of a financial guarantee or equivalent insurance covering costs for the possible return of waste, including shipment and disposal or recovery. It has therefore not been established that the contribution collected when each shipment of waste is carried out, when it is notified pursuant to the provisions of Regulation No 259/93, is in any way related to the actual costs that operation is likely to generate for the State in the event that it becomes necessary to return the waste shipped and to dispose of or recover it. Given the provisions of that regulation, discussed in paragraphs 42 to 44 of this judgment, it appears, moreover, that the scenarios in which the State will most frequently have to bear the costs associated with returning waste, including shipment, disposal or recovery, will be precisely where, in the absence of notification, the guarantee or equivalent insurance has not been provided and nor, therefore, has the contribution been paid. The lack of correlation between the amount of the contribution and the actual cost of the operation it is intended to finance is clear, notwithstanding the fact that, pursuant to the seventh sentence of Paragraph 8(1) of the AbfVerbrG, contributions from the solidarity fund not used at the end of a three-year period are repaid to the operators proportionally to the amounts they have paid in. Even on the supposition that this periodic repayment system is intended to adjust the individual contributions to reflect the actual costs incurred by the State, as contended by the German Government, it should be remembered that the portion of those contributions used to cover the administrative costs of the solidarity fund is not repaid. Likewise, the financial loss resulting from the forfeiture of the amounts in question for three years ─ a loss not compensated for by interest ─ is, in any event, borne by the operators concerned. Neither does the progressive reduction of the overall volume of the solidarity fund, which was initially established at DEM 75 million and was under DEM 16 million at the time the present proceedings were brought, shed light on the costs actually incurred by the State to meet its obligation to return waste or establish that the individual contributions are set at a level which is adequate in relation to those costs. With respect to the issue of whether each contribution is proportional to the alleged benefit for each operator, it should be recalled that, as the Court has found in paragraphs 35 to 37 above, the economic operators called upon to pay the contributions to the solidarity fund do not derive any actual definite specific benefit from the activities financed by the fund. As for the possible discretion the Member States may have under Article 33(2) of Regulation No 259/93, it cannot, in any event, be used to levy additional, unjustified charges on notifiers. The Court notes that appropriate administrative costs of implementing the notification and supervision procedure and usual costs of appropriate analyses and inspections may be charged to the notifier, as provided for in Article 33(1) of Regulation No 259/93. Consequently, the Court finds that the contribution to the solidarity fund is a charge having equivalent effect to a customs duty, which is prohibited by Articles 23 EC and 25 EC. The Court thus finds that, by subjecting shipments of waste to other Member States to a mandatory contribution to the solidarity fund established by the AbfVerbrG, the Federal Republic of Germany has failed to fulfil its obligations under Articles 23 EC and 25 EC. Costs Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party's pleadings. Since the Commission has so applied and the Federal Republic of Germany has failed in its submissions, the latter must be ordered to pay the costs. On those grounds, THE COURT (Fifth Chamber) hereby: 1. Declares that, by subjecting shipments of waste to other Member States to a mandatory contribution to the solidarity fund for the return of waste established by the Gesetz über die Überwachung und Kontrolle der grenzüberschreitenden Verbringung von Abfällen (Abfallverbringungsgesetz) of 30 September 1994, the Federal Republic of Germany has failed to fulfil its obligations under Articles 23 EC and 25 EC; 2. Orders the Federal Republic of Germany to pay the costs. Edward La Pergola Jann von Bahr Rosas Delivered in open court in Luxembourg on 27 February 2003. R. Grass M. Wathelet Registrar President of the Fifth Chamber – Language of the case: German.