R v Ministry of Agriculture, Fisheries and Food ex p Hedley Lomas [1991]

European Law

R v Ministry of Agriculture, Fisheries and Food ex p Hedley Lomas
‘The Sheep Farmer’ by Barry Ross Smith

The application of a Treaty article while a harmonising Directive precludes the right to endorse sanctions for Member State non-compliance, results in a loss of licence for Ireland, when exporting sheep for slaughter. This led to a preliminary ruling to ascertain if such a Directive could reasonably deny, or even restrict, exportation to Member States failing to uphold the aims of the assigned article.

For clarity, art.43 EC and art.100 EC were designed to reduce the suffering of animals sent for slaughter through the use of stunning and killing within specific guidelines under Directive 74/577/EEC, while art.36 EC includes restrictive measures surrounding the importation and exportation of products (including livestock) when acting in the interests of public safety, security and protection of human, animal and plant life.

When Spain transposed Directive 74/577/EEC it mirrored the terms of art.1 of the Directive with the exception of sanctions for non-compliance,  and so the UK Ministry of Agriculture, Fisheries and Food prohibited sheep exportation to Spain through the denial of specific export licences, which left an Irish sheep farmer unable to export his livestock to a fully compliant Spanish slaughterhouse.

Having sought judicial review and damages in the High Court, the court requested a preliminary ruling under art.177 EC, and so asked the European Court of Justice: 

1. Did the terms of Directive 74/577/EEC prevent restrictive measures under art.36 EC? 

2. Did the effects of art.36 EC have universal effect, or were they subject to specific criteria?

3. Where ineffective, was the Member State applying the article liable for compensation where an export licence was denied?

Whereupon the Court held that:

1. Although the terms of Directive 74/577/EEC did not expressly outline the penalties for non-compliance, it did confer those measures to the Member States in order for legislative powers to ensure the observation of those terms, however the actions taken by the UK were entirely subjective as opposed to evidence-based, therefore to rely upon the effects of art.36 EC was to act without authority when denying the free movement of goods by another Member State.

2. The terms of art.36 EC did not allow one Member State to exercise restrictive powers over another, while the route taken must be one of either action, or complaint to the Commission under art.170 EC or art.186 EC, while continuing to allow the movement of goods unless or until proven correct.

3. When acting in breach of art.43 EC it is the obligation of the acting Member State to provide reparation for damage caused by the breach, as was established in Francovich and others v Italy and Van Gend en Loos v Nederlandse Administratie de Belastingen, and that when deciding the measure of compensation it must rely upon its own domestic legislation observe the principles of non-discrimination and effective remedy when discussing the matter in the courts and calculating the amount payable, while further reminding the parties that:

“A Member State cannot take unilateral action against defaults by other Member States. The Treaty of Rome created an original legal order in which the procedures necessary for establishing and penalizing a breach of its provisions are strictly regulated.”

Marleasing SA v La Comercial Internacional de Alimentación SA [1990]

European Law

Marleasing SA v La Comercial Internacional de Alimentación SA [1990]
‘Sunset Over Sagrada Familia’ by Ana Maria Edulescu

The composition and function of incorporated companies and the fraudulent and deceptive manner in which their assets are contained, becomes central to a contention between founders and creditors when nullity is sought before the national court.

When creditor and claimant (Marleasing SA) discovered that one of the three founders of La Comercial Internacional de Alimentación SA had used the firm to avoid third party recovery of assets, it took action against them in order to expose the company as an illegally created organisation as defined under arts.1261 and 1275 of the Spanish Civil Code.

In response the defendant founder sought the protection of art.11 of Directive 68/151/EEC (also known as the ‘First Directive’), which included an exhaustive list of qualifying conditions for company nullity, yet none of which included the grounds relied upon by the claimant, and so when debated by the Juzgado de Primera Instancia e Instrucción it was agreed that as transposition of the Directive had not been undertaken, the issue remained unsolved without reference to the European Court of Justice under art.177 EC, and so on this occasion the court asked:

1. Were the relevant terms contained in art.11(2) of Directive 68/151/EEC enforceable between individuals despite a failure to adopt them into national Spanish law?

After observing the disparities between existing domestic statute and the meaning of the Directive, the Court explained that no terms of a Directive could be used between individuals under Community law, however a failure to transpose a Directive could result in individual action against the Member State where clarity and specificity of the Directive was shown, on grounds that it remained the Member State’s obligation to align the principles of the Directive against existing statute in order that the Directive’s effect superceded domestic laws.

Going further still, the Court also held that in relation to the protection of nullity under art.11(2)(b) of Directive 68/151/EEC nullity may be provided for where the objects of the company are unlawful or contrary to public policy, or where the number of founding members is less than two, and so in conclusion the Court finally outlined how art.12 nullity entailed dissolution and thereby failed to affect the validity of the company or its dealings despite the presence of unlawful operation or intent, therefore it was down to the discretion of the national courts to determine how best to meet the needs of both the claimant and the defendant, while observing the meaning and effect of Directive 68/151/EEC, before clarifying to the parties that:

“[O]bligation on the part of the national courts to interpret their national law in conformity with a Directive, which has been reaffirmed on several occasions, does not mean that a provision in a Directive has direct effect in any way as between individuals.”

Köbler v Austria [2003]

European Law

Köbler v Austria
‘The Professor’ by Pino Daeni

art.48 EC and liability for breach of Community law by a Supreme Court, form the basis of an indirect dissemination case, when having worked as an Austrian university professor for over a decade, the claimant sought an application for a conditional length-of-service salary increment available to those serving for a period of fifteen years or more. 

While the terms of this benefit expressed that any qualifying employment must occur within Austria, the claimant applied on grounds that his employment had been within the European Community, therefore refusal for inclusion constituted indirect discrimination under art.48 EC (freedom of movement for workers) (now art.39 EC) and Regulation 1612/68/EEC (freedom of workers within the Community).

Following a rejection by the deciding authorities under para.50(a) of the 1956 Salary Law his claim was brought before the Verwaltungsgerictschof (Supreme Administrative Court), where despite his citing discrimination under Community law, insufficient clarity led to a preliminary ruling request under art.234EC, however the application for preliminary ruling was later withdrawn and judgment made against the claimant on grounds that the salary increments were tantamount to bonuses, and were thereby  exempt from the protection of art.48 EC.

In response the claimant instead sought compensation in the Landesgericht für Zivilrechtssachen Wien (State Court) for the loss of earnings arising from a national judgment which stood contrary to the effects of art.48 EC, while the respondents opposed the claim on grounds that the decision of a Supreme Court does not provide for State liability where proven unlawful, yet despite this the court agreed to seek a preliminary ruling and so asked:

1. Did a breach of Community law by a national court apply to all courts? 

2. If such a breach was applicable to a Supreme Court did the classification of a special length-of-service benefit under an employee bonus constitute a breach of art.48 EC?

3. Did the effects of art.48 EC enable individual claims before a national court? 

4. Did the Supreme Court have jurisdiction enough to answer the questions raised, or did the State Court need to pass judgment?

Upon which the European Court of Justice held that:

1. Irrespective of arguments for the narrowness of Community law upon Member State judiciaries, the findings in Francovich and others v Italy and R v Secretary of State for Transport ex p Factortame had clearly established the liability for reparation by Member States to individual claims, and that such scope included the courts when categorising public authorities.

2. The nature of the breach was vital to the right to individual remedy and while excusable (or inexcusable) errors weigh heavily on the the burden of liability, the circumstances of this claim required little adjudication other than recognition of a clear violation of art.48 EC through the withdrawal of a reference to the Court.

3. With regard to the damage caused by the breach it was held that evidence of the breach constituted sufficient grounds for damages payable by the State under individual claim, and that such reparation must come from domestic legislation provided it offered equal rights as prescribed under the Treaty.

4. As with any preliminary ruling it was not for the Court to determine the method of legal summation, but to simply to advise how best to serve the principles of Community law. 

Thus the Court held that on this occasion it was the duty of the state courts to review and establish the appropriate measure for compensation through the existing case law provided, while further reminding the parties that:

“[M]anifest breach by a Supreme Court of an obligation to make a reference for a preliminary ruling is, in itself, capable of giving rise to State liability.”

Internationale Handelsgesellschaft mbH v Einfuhr-und Vorratsstelle für Getreide und Futtermittel [1970]

European Law

Internationale Handelsgesellschaft mbH v Einfuhr-und Vorratsstelle für Getreide und Futtermittel
‘Wheat Field’ by Darko Topalski

In this instance the implementation of regulatory measures was questioned by the German courts when an import/export firm fell subject to forfeiture of a deposit under Community law. 

Under art.12(1) of Regulation 120/67/EEC the equilibrium of the European market is protected through the issuing of export and import licences, and so in order to allow for the stability of grains, cereals and rice values it was established by the European Council that traders wishing to operate in this specific field must obtain a time restricted licence clarifying the amounts and costs of those products.

The reason for this window was to enable the Commission to anticipate and adjust market prices in order to protect the Member States from over saturation of non-community products and to allow for the effects of art.40(3) and art.43 EC to be applied, while these principles followed the aims of art.39 EC inasmuch as it provided that Member States were to maintain and help stabilise agricultural markets in order to ensure fair living standards via reasonable pricing. 

In addition to this, art.40(3) EC further focussed on the need to apply certain measures where necessary, which on this occasion included the forfeiture of licence deposits where no planned exportation or importation had occurred during the licence period, and so after the claimant continued exporting maize beyond their licence expiration date a percentage of their deposit was forfeited by the Einfuhr-und Vorratsstelle für Getreide und Futtermittel under the terms of art.12(1) of Regulation 120/67/EEC. 

When later challenged in the national courts, uncertainty emerged when reconciling German law with the Treaty Regulations, therefore a preliminary ruling was sought under art.177 EC, whereupon two questions asked:

1. Whether the requirement to forfeit licence deposits subject to the terms of art.12(1) was legal?

2. Whether art.9 of Regulation 473/67/EEC (which had been adopted in conjunction with Regulation 120/67/EEC) was legal, in that it included the exclusion of forfeiture in matters subject to force majeure?

It was also argued that while the terms of Community law were inherent to the existence of a Member State, it was felt that the superiority of German constitutional law contradicted the presence of deposit forfeitures on grounds that such measures were considered penal as opposed to valuable to the aims of German freedom laws.

When evaluating the views of the court and the questions set down for clarification, it was first held by the European Court of Justice that under no circumstances did the forfeiture of deposits serve any other purpose than that of market stability, as outlined in art.40(3) EC, which translated that Regulation 120/67 was legal and thus did not interfere with the aims and objectives of arts.40 and 43 EC.

Secondly, with regard to the exemption of forfeiture under the presence of force majeure (frustrations beyond control of the licence holder) it was held that while the context of the exemption was subject to wider meaning, it was deliberate in that it allowed for a number of prevailing circumstances to determine whether in each instance the claimant had taken sufficient steps to apply for the licence before citing any inability to use it, which by extension allowed for full support of the aims prescribed in art.39 EC, while the Court further reminded the parties that:

“The legality of a Community measure can be judged only in the light of the ordinary law, whether written or unwritten, but never in the light of the national law, even if that is a constitutional law.”

Francovich and others v Italy [1991]

European Law

Francovich and others v Italy [1991]
‘Azov Steel Mill’ by Konstantin Shurupov

The adoption of EU Directives is a prerequisite for all Member States, and so an when ignorance of the duty to transpose those obligations into the fabric of national and Community law remained unaddressed, the perfect vehicle emerged with which to underline it.

The importance of employee rights is one frequently contested in all forms of commerce, and so when Italy failed to adopt Directive 80/987/EEC, it was the joint action of a group of factory workers that directed the European Community’s attention towards the heart of industry and the anger of those being abused within the market system.

After serving as a loyal employee for an electronics firm, the claimant found himself redundant through the process of liquidation and yet left unpaid for work undertaken and uncompensated for his loss of earnings, and so in a conjoined hearing, Danila Bonifaci and thirty-three other employees (case C-9/90) sought recompense within the same matter.

In the first instance the Pretore di Vicenza and Pretore di Bassano del Grappa both sought a preliminary hearing under art.177 EC, and so the first approach taken by the European Court of Justice was to determine if the respondent’s failure to adjust their domestic laws in line with Directive 80/987/EEC had rendered itself liable to individual enforcement of accountability for payment of lost earnings, or whether the pecuniary losses sustained by the claimants were sufficient enough to award damages based upon state avoidance.

Through an examination of the qualifying criteria for ‘direct effect’ claims, the Court established that this particular case satisfied those terms, and yet noted how the respondent’s non-adoption had failed to fulfil a key element of the Directive requiring proper identification of the companies subscribed to those duties, which left the Commission unable to determine who the two employers were, and how they would be obliged to provide payment or legally defer the onus to the Italian government. 

However the Court also noted how in Simmenthal SpA v Italian Minister of Finance they had held that:

“[D]irectly applicable Community provisions must, notwithstanding any internal rule or practice whatsoever of the Member States, have full, complete and uniform effect in their legal systems in order to protect subjective legal rights created in favour of individuals…”

Which showed that the inability to reflect EU laws will be used as an example when serving the interests of the Community, thus the Court unanimously held that all Member State national courts were held to a duty to redress the inequity of failed transposition, thus full state funded compensation was now due, while reminding the parties that:

“[W]herever the provisions of Directive appear, as far as their subject matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the Directive or in so far as the provisions define rights which individuals are able to assert against the State.”

Defrenne v SABENA [1976]

European Law

Defrenne v SABENA [1976]

The effects of art.119 EC and the stark inequality between men and women in the workplace were brought together in a case that showcased both the power of law and the equitability of the European Community.

Employed as an air hostess in 1963 by Belgian Société Anonyme Belge de Navigation Aérienne (SABENA), the appellant was re-contracted as a cabin steward and air hostess under the title of cabin attendant, however the contractual caveat was that unlike her male counterparts she was expected to retire from her duties at the age of forty, while termination of her employment entitled her to twelve months severance pay without pension rights.

Having been forced to retire as per the contract, the appellant initiated discrimination proceedings on a number of grounds including the assertion of her right to equal pay under the terms of art.119 EC which explains that:

“1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied.”

And yet despite her contentions the Tribunal du Travail of Brussels dismissed her claims outright before her appeal to the Cour du Travail of Brussels was further dismissed with the exception of inequality of salary, however despite the court’s ability to overrule its own legislation in favour of the Treaty article, it chose instead to seek a preliminary ruling from the European Court of Justice.

For clarity, in 1957 the Treaty of Rome included the express requirement that every Member State would ensure and maintain the application of the principle that men and women should receive equal pay for equal work, and while the initial adoption period was set at two years, Belgium never amended its own legislation to reflect the values of the Treaty Article until 1967, in which s.14 of Royal Decree 40 enabled women in such situations the rights to seek remedy within the national courts.

On this occasion the Belgian government’s defence was that while art.119 conferred powers to those women paid less than men in similar roles, the effect of that principle  fell solely within the limitations of public office and not private contracts, however the claimant countered that by all accounts the direct effect of art.119 EC had existed since 1957 and so provided her with retrospective rights of recovery. 

Once before the European Court of Justice, the Advocate General clarified that direct effect relied upon the clarity of the regulation, and so when addressing sexual inequality it was clear how the principle’s purpose relied upon the differences cited, thus the Court held that going forward the national courts were to refrain from reference to art.177 EC in order to seek preliminary rulings when there was sufficient cause within art.119 EC to overrule domestic legislation under the rule of Community law, while reminding the parties that:

“Article 119, despite the fact that it is restricted to imposing an obligation on the States, is primarily concerned with the relationship between individuals. The discrimination which the provision sets out to prohibit will, in the majority of cases, consist of discriminatory action by a private undertaking against women workers.”

CILFIT and Lanificio di Gavardo SpA v Ministry of Health [1982]

European Law

CILFIT
‘Lamb of God’ by Francisco de Zurburán

Member State compliance with Community law is brought into question after an Italian national court sought to address their Ministry for Health’s contention that domestic laws precluded a right to claim, and that no regulatory terms could provide a different outcome.

When a claim was made by a number of textile firms against the excessive taxation of imported wool, they relied upon the powers conferred by Regulation 827/68/EEC and not the discriminatory rules set down under the national powers of Law No.30, which had forced companies to pay levies ten times the amount intended prior to a later amendment under Law No.1239.

In the first instance the claimants were denied a right to recover in the Tribunal di Roma (District Court) on grounds that the adoption of Regulation 827/68/EEC had excluded wool, while the Corte d’Appello (Court of Appeal) also rejected the claim before they appealed to the Court of Cassation, whereupon the Ministry of Health cross-appealed in an attempt to persuade the Court to decide the outcome without seeking a preliminary ruling under art.177 EC.

Here the Court interpreted that by virtue of the fact that the Ministry of Health argued against a consultation with the European Court of Justice, there must be a degree of uncertainty as to the effect of Regulation 827/68/EEC, and that while national legislation failed to provide an immediate remedy such a duty nonetheless existed. 

Thus in accordance with its perceived obligations the Court of Cassation asked:

1. Whether under such circumstances para.3 of art.177 EC required the national courts (or courts of first instance) to seek a preliminary ruling where uncertainty or doubt as to the interpretation of a Regulation existed?

Having evaluated the intentions and possible variances of art.177 EC it was agreed by the European Court of Justice that while certain discretions were provided for when adopting and applying the terms of Community law, the obligation to seek a preliminary ruling was one designed to establish clarity. 

This translated that even if the questions arose from claimants, government or the courts themselves, it was important that the courts looked at the complexity of the doubt and sought (where relevant) the assistance of the European Court of Justice in order that the effect of the Regulation or Directive was properly established, while the Court further reminded the parties that:

A uniform interpretation of Community law by the Court is objectively in the public interest, which may not be subordinated to the existence or otherwise of agreement between the national courts in the previous stages of an action or to the assent or dissent of the parties.”

Courage Ltd v Crehan [2001]

European Law

Courage Ltd v Crehan
‘In the Brewery in Munich, 1892’ by Philip de Laszlo

Under English law the courts refuse to endorse a claim for damages when the claimant was a party to a contract borne from illegal principles, while this is echoed in equity under the maxim ‘he who comes to equity must come with clean hands’, and so reminds those considering such arrangements that they do so without the aid of the judiciary.

However in this matter the claimant was a party to a publican agreement drawn up through the merger of a large brewery and owners of a number of public houses across the United Kingdom, while as part of this agreement the claimant brewery contracted to supply beer to existing tenants (publicans) under a non-negotiable tariff purportedly designed to protect the interests and profits of those purchasing, and yet after the tenant had somehow amassed a debt of around £15,000 the brewery sought recovery through the courts.

Having previously discovered that the brewery was supplying the same beers for lower prices to non-contracted third parties, it was then counter-claimed that the agreement demonstrated a breach of art.85 EC (formerly art.81 EC) therefore damages were owed and no payment for previously provided beer was due.

After the case reached the Court of Appeal it was decided that due to the conflict between national and Community law a preliminary ruling to the European Court of Justice under art.234 EC needed to confirm: 

1. Whether art.85 EC allowed a party to a prohibited agreement to claim damages?

2. Whether a party can claim when relying upon their own adherence to the agreement?

3. Whether a national law preventing recovery under prohibited agreements remained consistent with Community law?

4. Where deemed incompatible which situations allowed national law to apply?

Having evaluated the aims of national law and the claim’s validity it was agreed that while those contracting in the distortion of fair competition are themselves contributors to their own demise, there are certain scenarios demonstrating an inequality of bargaining power and thus grounds for reconsideration. 

Here the Court noted how in this instance the tenant was subjected to the terms of the agreement with little to no room for bargain, and so while it was agreed that the terms of art.85 EC precluded claims of that nature, it did so on the proviso that the claimant was proportionately liable for any market distortion, while it was also clear that where no such arrangement existed, the effects of art.85 EC (which provided for direct effect and application between individuals) were sufficient enough to allow for a claim despite  any objections raised under English law, while reminding the parties that:

“[C]ommunity law precludes a rule of national law which prevents a party subject to a clause in a contract which infringes Article 81 EC from recovering damages for the loss suffered by it on the sole ground that it is a party to that contract.”

Adeneler and others v Ellinikos Organismos Galaklos (ELOG) [2006]

European Law

Adeneler and others v Ellinikos Organismos Galaklos (ELOG) [2006]
‘Old Milk Bottle and Grapes’ by Mark Van Crombrugge

In this case workers rights directly related to the powers conferred under a Framework Agreement annexed to Council Directive Directive 1999/70/EC were given new protections in instances where fixed-term employment contracts were no longer seen as helpful but in fact deemed contrary to the security of European citizens. 

On this occasion a collective claim was put before the Greek Monomeles Protodikio Thessalonikis (Court of the First Instance) by eighteen publicly employed staff of the Greek Milk Organisation (ELOG), after the firm failed to renew their fixed-term contracts, and although the aim of the Framework Agreement was to reduce inherent abuses found in all forms of employment, it was intended that unless an employer could demonstrate that repeated fix-term employment contracts served both the employer and employee they were to become contracts of ‘indefinite duration’.

While it is agreed under Community law principles that Member States are expected to transpose Directives within a predetermined period, the Greek government applied for a two year extension under para.2 of Directive 1999/70/EC, however it was not fully transposed until April 2003 under the Presidential Decree No.81/2003 (later superseded by Presidential Decree 164/2004).

For clarity, protections for public employees found in the Framework Agreement were presented in such a way as their employers could continue using fixed-term employment contracts for ‘seasonal purposes’, or in times requiring periodic or temporary needs, as explained in art.21 of Law No.2190/1994, while this was further supported by art.5 of Presidential Decree 164/2004, which provided that successive contracts of employment enjoyed by the same workers were prohibited if contract renewal periods were greater than three months.

In this instance the claimants had worked under contracts lasting no more than eight months, while contract renewals ranged between twenty-two days and eleven months, therefore it was argued that cessation of their employment constituted a breach under the terms of the Framework Agreement and Directive 1999/70/EC inasmuch as they had all been employed for fixed and permanent needs as opposed to those described in art.21 of Law No.2190/1994.

When referred to the European Court of Justice under art.234 EC the Court of the First Instance sought a preliminary ruling as to four questions: 

1. What was the exact date of effect of Directive 1999/70?

2. What was the definition of ‘objective reasons’ as per clause 5(1)(a) of the Framework Agreement when determining the renewal of fixed-term contracts?

3. What was the practicality of Presidential Decree 81/2003 when interposed with the terms of the Directive? 

4. Did the limitations of art.21 of Law No.2190/1994 allow for abuses in contrast to the reductive effects of the Framework Agreement?

Having appreciated the somewhat unnecessary aims of the questions it was ultimately  agreed by the European Court of Justice that:

1. The date of effect was that of the publication of the Directive, which was July 1999 and not April 2003.

2. That national legislation cannot overrule the aims of objective reasoning as prescribed within the framework agreement.

3. That clause 5(1)(a) to (c) offered a number of available measures to the Member States in order to reduce contractual abuses.

4. That the same clause again offered sufficient remedies in order to fully support the effects of Directive 1999/70 and the Framework Agreement.

Therefore the Court upheld the claim while reminding the parties that:

“[F]rom the date upon which a Directive has entered into force, the courts of the Member States must refrain as far as possible from interpreting domestic law in a manner which might seriously compromise, after the period for transposition has expired, attainment of the objective pursued by that Directive.”

Commission v United Kingdom [Excise Duties on Wine] [1980]

European Law

 

Commission v United Kingdom [Excise Duties on Wine]
‘Still Life with Bottle, Glass and Loaf’ by Imitator of Jean-Siméon Chardin

Member State obligations to observe the fairness of the European market when allowing for competition were crystallised in this taxation matter surrounding the importation and domestic production of alcoholic drinks.

The terms of Art.95 EC (in particular para.1) were constructed so as to allow and support the freedom of competition between Member States when selling comparable products including alcoholic beverages in their various forms, however during a period between 1973 and 1981 the United Kingdom deliberately increased the taxation rates for bottled wines over that of bottled beers, thus the margin between the two remained disproportionate for a considerable period and significantly hampered the sale of affordable imported wines in lieu of an over-proliferation of domestic low-volume beers.

When addressed by the European Commission under the inference that such disparity amounted to a breach of para.2 of art.95 EC, it was suggested that while running contrary to the harmonisation of Community law, the Member State was, under art.169 EC now required to submit its own observations in defence of its failure to follow the terms prescribed.

In response the United Kingdom contested the findings with little supporting evidence, thereby prompting the Commission to apply to the European Court of Justice on the strength of the breach, while citing that by way of reparation the United Kingdom was to pay the costs of the action. 

Shortly afterwards the Court also allowed Italy to intervene in support of the Commission under art.37 of the Protocol on the Statute of the Court of Justice, whereupon the Court instructed the three parties to reexamine their arguments and submit relevant chronological sales data before reconvening for judgment.

Having established that the manufacturing processes for beer and wine were comparable, it was then revealed that due to the complex structure of the British market it was only possible to compare prices through the taxation rates applicable to the volume (strength) of the alcohol in hand. 

It was this contradistinction that showed clear support for the suggestion that protective measures had been implemented in order to deprive the import of affordable wines from other Member Sates despite the measures laid down under art.95 and the United Kingdom’s obligation to follow them.

Citing numerous and unsustainable arguments for the heavy taxation of wines (including manufacturing costs (as previously ruled out) and alleged ‘social’ reasons) the Court held that a serious breach of art.95 EC had been in existence not only for a considerable period, but that recent attempts to narrow the margin were indicative of reasons beyond that expected from a Member State when observing their duty to encourage and support the free movement of goods and equality of competition between states, before reminding those responsible that:

“[A] Member State may lay down differing tax arrangements even for identical products on the basis of objective criteria provided that such arrangements pursue objectives of economic policy which are themselves compatible with Community law and that they are not discriminatory or protective in nature.”