Court of Justice of the European Communities (including Court of First Instance Decisions)

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1. Transport - Road transport - Social legislation - Undertaking - Concept
(Council Regulation No 3820/85, Art. 15)
2. Transport - Road transport - Social legislation - Obligation for Member States to penalize breaches of Community rules - Scope - Obligation to introduce into national law criminal liability of legal persons - None - Obligation to establish a system of strict liability - None
(EEC Treaty, Art. 5; Council Regulation No 3820/85, Arts 15 and 17(1) )

1. The expression "undertaking" appearing in Article 15 of Regulation No 3820/85 on the harmonization of certain social legislation relating to road transport refers to an autonomous natural or legal person, irrespective of legal form, regularly carrying on a transport business and empowered to organize and control the work of drivers and crew members.
2. Since Article 17(1) of Regulation No 3820/85 on the harmonization of certain social legislation relating to road transport provides only that Member States are to lay down penalties for breaches of the rules set out in the said regulation, it cannot be regarded, nor can Article 5 of the EEC Treaty, as requiring Member States to introduce into their national law the principle of criminal liability of legal persons. Infringements of Article 15 of the regulation, which imposes on the undertaking specific obligations to use its best endeavours, which are different from the obligations imposed on drivers, may be restrained by the application of provisions consistent with the basic principles of national criminal law, provided that the resulting penalties are effective, proportionate and dissuasive.
Moreover, since Member States retain a discretion in the choice of penalties, provided that they are appropriate, they are neither required to, nor precluded from, introducing a system of strict liability of the undertaking in the event of its employees' failing to comply with their obligations.

In Case C-7/90,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Politierechtbank te Hasselt (Local Criminal Court, Hasselt), (Belgium) for a preliminary ruling in the criminal proceedings pending before that court against
Paul Vandevenne,
Marc Wilms,
Jozef Mesotten,
Wilms Transport NV,
on the interpretation of Article 15 of Council Regulation (EEC) No 3820/85 of 20 December 1985 on the harmonization of certain social legislation relating to road transport (Official Journal 1985 L 370, p. 1),
THE COURT (First Chamber),
composed of: G.C. Rodríguez Iglesias, President of the Chamber, Sir Gordon Slynn and R. Joliet, Judges,
Advocate General: W. Van Gerven,
Registrar: J.A. Pompe, Deputy Registrar,
after considering the written observations submitted on behalf of:
- the German Government, by Ernst Roeder, Regierungsdirektor at the Federal Ministry for Economic Affairs, and Joachim Karl, acting as Agents;
- the Italian Government, by Oscar Fiumara, Avvocato dello Stato, acting as Agent;
- the United Kingdom, by Rosemary Caudwell, Treasury Solicitor' s Department, acting as Agent;
- the Commission of the European Communities, by Thomas van Rijn, a member of its Legal Service, acting as Agent;
having regard to the Report for the Hearing,
after hearing oral argument on behalf of the United Kingdom, represented by D. Wyatt, acting as Agent, of the Italian Government and of the Commission at the hearing on 15 January 1991,
after hearing the Opinion of the Advocate General at the sitting on 19 February 1991,
gives the following
Judgment

1 By order of 22 December 1989, which was received at the Court on 9 January 1990, the Politierechtbank te Hasselt (Belgium) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 15 of Council Regulation (EEC) No 3820/85 of 20 December 1985 on the harmonization of certain social legislation relating to road transport (Official Journal 1985 L 370, p. 1).
2 The questions were raised in the course of criminal proceedings against Mr Vandevenne, a driver employed by the undertaking Wilms Transport, for failure to observe the driving and rest periods laid down by Articles 6, 7 and 8 of Regulation No 3820/85 and against Mr Wilms and Mr Mesotten as employer, employee or agent of Wilms Transport, for failing to ensure compliance with the same provisions by Mr Vandevenne. The undertaking Wilms Transport was summoned as the party liable at civil law for Mr Vandevenne and Mr Mesotten.
3 During the proceedings before the Politierechtbank, a discussion arose as to the interpretation of Article 15 of Regulation No 3820/85, which provides as follows:
"1. The transport undertaking shall organize drivers' work in such a way that drivers are able to comply with the relevant provisions of this Regulation and of Regulation (EEC) No 3821/85.
2. The undertaking shall make periodic checks to ensure that the provisions of these two Regulations have been complied with. If breaches are found to have occurred, the undertaking shall take appropriate steps to prevent their repetition."
4 The Politierechtbank decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
"1. What is the meaning of the word 'undertaking' in Article 15 of Regulation (EEC) No 3820/85?
2. When that article was drawn up, was it envisaged that the criminal liability of legal persons should be established, even in Member States where that principle is unknown or less well known?
Or does it remain open to the national courts to continue to apply fundamental principles of national criminal law, given that the implementation of the regulation in the criminal law is provided for by national legislation?
3. Should the obligations imposed on the undertaking by the aforementioned article be construed as laying down either a duty to use best endeavours or an obligation as to the result to be achieved which gives rise, as it were, to strict liability?"
5 Reference is made to the Report for the Hearing for a fuller account of the legal background, the facts of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
The first question
6 In the first place it should be stated that the definition of "undertaking" within the meaning of Article 15 of Regulation No 3820/85 must be considered in the light of the system established by the regulation and its aims. In that respect, it may be seen from the 27th recital to the regulation that the Council wished to emphasize "the importance of and the need for compliance with this regulation by employers and drivers".
7 The main objective of Article 15(1), considered in this light, is to prevent a driver from being compelled by his superiors to perform his work in a manner contrary to the provisions of the regulation. For the same purpose Article 10 of Regulation No 3820/85 prohibits certain types of payment such as, for example, the grant of bonuses related to distances travelled, which might be likely to endanger road safety. Similarly, the purpose of Article 15(2) was to establish checks within the transport undertaking to reinforce those carried out by the public authorities on compliance with the provisions of the regulation.
8 It is therefore clear that the legal form of the undertaking referred to in Article 15 is unimportant as long as it is an autonomous natural or legal person carrying on a regular transport business; the decisive factor is the power of organization and control exercised by the undertaking in question over the manner in which drivers and other crew members assigned to road transport carry out their duties.
9 Consequently, the answer to be given to the first question should be that the expression "undertaking" appearing in Article 15 of Council Regulation (EEC) No 3820/85 of 20 December 1985 on the harmonization of certain social legislation relating to road transport refers to an autonomous natural or legal person, irrespective of legal form, regularly carrying on a transport business and empowered to organize and control the work of drivers and crew members.
The second question
10 It should be recalled that under Article 17(1) of Regulation No 3820/85, the Member States are to adopt such laws, regulations or administrative provisions as may be necessary for implementing it. Such provisions must cover, inter alia, the penalties to be imposed in case of breach of the rules which it lays down.
11 As may be seen from the Court' s consistent case-law (see, most recently, the judgment in Case C-326/88 Hansen [1990] ECR I-2911, at paragraph 17), when a Community regulation does not provide any specific penalty in case of breach but refers on this matter to national provisions, the Member States retain a discretion as to the choice of penalties. However, under Article 5 of the EEC Treaty, which requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law, they must ensure that infringements of a Community regulation are penalized under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive.
12 It follows that neither Article 5 of the Treaty nor Article 17(1) of Regulation No 3820/85 requires a Member State to introduce into its national law a specific system of criminal liability, such as the criminal liability of legal persons, in order to ensure compliance with the obligations imposed by Article 15 of the regulation.
13 The answer to the second question raised by the Politierechtbank should therefore be that neither Article 5 of the EEC Treaty nor Article 17(1) of Regulation No 3820/85 requires a Member State to introduce into its national law the principle of criminal liability of legal persons. Infringements of Article 15 of Regulation No 3820/85 may be restrained by the application of provisions in conformity with the basic principles of national criminal law, provided that the resulting penalties are effective, proportionate and dissuasive.
The third question
14 As may be seen from paragraph 12 of the judgment of the Court in Case C-326/88 Hansen, already cited, the purpose of Article 15 of Regulation No 3820/85 is to impose on the employer himself specific and distinct obligations different from those imposed on drivers by Articles 6, 7 and 8 of the regulation.
15 It may be seen from the actual terms of Article 15 that the obligation thus created is an obligation to use best endeavours: the undertaking is called upon to organize its employees' work in such a way as to enable them to comply with Regulation No 3820/85, to make periodic checks to ensure that the regulation is complied with and, where necessary, to take the appropriate steps to prevent the repetition of infringements. It follows that the finding that a breach of the regulation has been committed by a driver employed by the undertaking is not in itself enough to establish that the undertaking has failed to comply with its own obligations.
16 However, the purpose of Article 15 of Regulation No 3820/85 is not to restrict the liability of the undertaking for a failure by its employees to observe driving and rest periods. It therefore remains permissible for Member States to provide for criminal liability on the part of the employer for the fact that one of his employees has infringed the rules laid down in Articles 6, 7 and 8 of the regulation. Such liability does indeed represent one way of ensuring that the limits laid down by those provisions are observed.
17 However, the introduction of such strict criminal liability on the part of the employer is not compulsory. As has been pointed out above, Article 17(1) of Regulation No 3820/85 allows the Member States a discretion as to the choice of penalties to be imposed in the event of breach of the regulation, which is subject only to the obligations resulting from Article 5 of the EEC Treaty. It is therefore possible for a Member State to comply with those obligations whilst choosing not to provide for strict criminal liability on the part of the undertaking.
18 The answer to be given to the third question must therefore be that Regulation No 3820/85 neither requires Member States to introduce a system of strict criminal liability for the purpose of ensuring compliance with the obligations laid down by the regulation nor precludes them from doing so.

Costs
19 The costs incurred by the German, Italian and United Kingdom Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (First Chamber),
in answer to the questions submitted to it by the Politierechtbank te Hasselt (Belgium), by order of 22 December 1989, hereby rules:
1. The expression "undertaking" appearing in Article 15 of Council Regulation (EEC) No 3820/85 of 20 December 1985 on the harmonization of certain social legislation relating to road transport refers to an autonomous natural or legal person, irrespective of legal form, regularly carrying on a transport business, and empowered to organize and control the work of drivers and crew members;
2. Neither Article 5 of the EEC Treaty nor Article 17(1) of Regulation No 3820/85 requires a Member State to introduce into its national law the principle of the criminal liability of legal persons. Infringements of Article 15 of Regulation No 3820/85 may be restrained by the application of provisions in conformity with the basic principles of national criminal law, provided that the resulting penalties are effective, proportionate and dissuasive;
3. Regulation No 3820/85 neither requires Member States to introduce a system of strict criminal liability for the purpose of ensuring compliance with the obligations imposed by the regulation nor precludes their doing so.