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

(Free movement of goods – Article 34 TFEU – Cautio judicatum solvi – Company governed by Monegasque law – First paragraph of Article 18 TFEU)

In Case C-291/09,

REFERENCE for a preliminary ruling under Article 234 EC from the rechtbank van koophandel te Brussel (Belgium), made by decision of 17 July 2009, received at the Court on 27 July 2009, in the proceedings

Francesco Guarnieri & Cie

v

Vandevelde Eddy VOF,

composed of A. Tizzano, President of the Chamber, J.-J. Kasel, A. Borg Barthet, E. Levits and M. Safjan (Rapporteur), Judges,

Advocate General: E. Sharpston,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        the Belgian Government, by T. Materne, acting as Agent,

–        the Commission of the European Communities, by J.-B. Laignelot and M. van Beek, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 September 2010,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Articles 28 EC to 30 EC.

2        The reference has been made in proceedings between Francesco Guarnieri & Cie (‘Guarnieri’), a company governed by Monegasque law established in Monaco, and Vandevelde Eddy VOF (‘Vandevelde’), whose registered office is in Belgium, concerning the delivery of and payment for various goods.

 Legal context

 The Community Customs Code

3        Article 3(2)(b) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), now replaced by Article 3(2)(a) of Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (OJ 2008 L 145, p. 1), provides:

‘The following territories situated outside the territory of the Member States shall, taking the conventions and treaties applicable to them into account, be considered to be part of the customs territory of the Community:

…

(b)      France

The territory of the Principality of Monaco as defined in the Customs Convention signed in Paris on 18 May 1963 (Journal officiel [de la République française] of 27 September 1963, p. 8679)’.

 Belgian law

4        Article 851 of the Belgian Judicial Code (code judiciare belge) (‘the Judicial Code’) provides:

‘Except in the case of conventions by which States have stipulated that their nationals are to be exempt from the obligation to provide security pending judgment (cautio judicatum solvi), any foreigner, whether a claimant in the proceedings or an intervener, is required, if the Belgian defendant makes an application to that effect before advancing any other plea, to provide security for the costs and damages arising from the proceedings which he may be ordered to pay. The defendant may request that security be provided, even for the first time, on appeal, if it is the respondent’.

5        It is not apparent from the file whether there is a convention in existence that allows companies governed by Monegasque law to be exempt from the payment of security pending judgment.

 The dispute in the main proceedings and the question referred for a preliminary ruling

6        The public limited company Fourcroy had placed an order with Vandevelde for 21 000 ‘twister-glazen’ (glasses) and 100 000 tea-lights with accessories in connection with a promotion campaign for the sale of bottles of ‘Mandarine Napoléon’. Vandevelde had sub-contracted that order to Guarnieri.

7        According to Vandevelde, Guarnieri did not properly fulfil its delivery obligations. According to Vandevelde, not only was delivery late, but it was not in accordance with the order, since 65% of the ‘twister-glazen’ were broken, the unbroken glasses were dirty, the plastic packaging was broken (3 000 items) and the promotional sticker was stuck on the wrong side. Vandevelde consequently refused to fulfil its payment obligation.

8        Consequently, Guarnieri brought an action before the rechtbank van koophandel te Brussel (Brussels Commercial Court), in essence seeking an order that Vandevelde must pay the outstanding invoices, plus interest for late payment. By way of counterclaim, Vandelvelde sought an order that Guarnieri must pay damages for the material damage and loss of income it claims to have suffered, plus statutory interest.

9        During the proceedings before the national court, Vandevelde raised, as a preliminary plea, the plea of cautio judicatum solvi, provided for by Article 851 of the Judicial Code, so that Guarnieri would be ordered to provide security of EUR 2 500 for the costs arising from the proceedings which it may be ordered to pay.

10      As Guarnieri claimed that an order requiring it to pay security would be contrary to Articles 28 EC to 30 EC, on the free movement of goods, the rechtbank van koophandel te Brussel considered it necessary, in order to assess the compatibility of Article 851 of the Judicial Code with European Union law, to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Do Articles [28 EC, 29 EC and 30 EC] preclude a claimant of Monegasque nationality, who lodges a claim in Belgium for payment of invoices relating to the delivery of “twister-glazen” (glasses) and tea-lights with accessories, from being required, upon application by a defendant of Belgian nationality, to give security for the costs and damages arising from the proceedings which he may be ordered to pay?’

 Consideration of the question referred

11      It should be noted at the outset that it is apparent from the statement of the facts by the national court that patterns of exports are not at issue in this case, as the case relates only to trade in goods destined for Belgium. Therefore, there is no need to examine the question of the interpretation of Article 35 TFEU.

12      In relation to the assessment of the mechanism of cautio judicatum solvi in the light of Articles 34 TFEU and 36 TFEU, it is necessary, at the outset, to rule on the applicability of the provisions on the free movement of goods in circumstances such as those of the main proceedings, that concern the import into a Member State of goods originating in Monaco by a Monegasque company.

13      In that regard, it must, admittedly, be noted that Articles 52 TEU and 355 TFEU do not include in ‘the territorial scope of the Treaties’ the territory of the Principality of Monaco and that, further, exclusion from the customs territory of the European Union entails the inapplicability of the FEU Treaty rules on the free movement of goods (see, to that effect, Case C-30/01 Commission v United Kingdom [2003] ECR I-9481, paragraph 60).

14      However, pursuant to Article 3(2)(b) of Regulation No 2913/92, the territory of the Principality of Monaco is to be considered to be part of the customs territory of the European Union. As no customs duty or charge having equivalent effect can, consequently, be applied to trade between Monaco and the Member States, goods originating in Monaco, exported directly to a Member State, must be treated as if they originated in those Member States. The result of that assimilation to goods originating in Member States is that goods originating in Monaco are covered by the rules of the Treaty on the free movement of goods (see, by analogy, Case 41/76 Donckerwolcke and Schou [1976] ECR 1921, paragraphs 17 and 18, and Commission v United Kingdom, paragraph 54).

15      In relation to the question of whether a provision of a Member State, that requires any foreign national, such as Monegasque nationals, to provide security pending judgment when he seeks to bring proceedings against a national of that Member State, although such a requirement is not imposed on nationals of that State, constitutes a hindrance to the free movement of goods, it must be noted that all trading rules enacted by Member States, that are capable of hindering, directly or indirectly, actually or potentially, intra'Community trade, are to be considered to be measures having an effect equivalent to quantitative restrictions (see, to that effect, Case 8/74 Dassonville [1974] ECR 837, paragraph 5, and Case C-421/09 Humanplasma [2010] ECR I-0000, paragraph 26).

16      However, as the Advocate General pointed out at point 46 of her Opinion, a national rule, such as that relating to cautio judicatum solvi under Article 851 of the Judicial Code, is purely procedural and its purpose is not to regulate trade in goods. Further, its application depends not on the origin of the goods in question, but on two cumulative conditions, namely, first, that a dispute must arise subsequent to the conclusion of a contract that leads to litigation before the Belgian courts and, second, that any such action must involve a Belgian national as defendant who chooses to avail himself of the provision in question.

17      Admittedly, a measure of that sort has the effect of making traders wishing to bring proceedings subject to different procedural rules according to whether or not they have the nationality of the Member State concerned. Nevertheless, as the Advocate General pointed out at points 46 and 47 of her Opinion, the possibility that nationals of other Member States would therefore hesitate to sell goods to purchasers established in that Member State who have the nationality of that State is too uncertain and indirect for that national measure to be regarded as liable to hinder intra-Community trade (see, by analogy, Case C-69/88 Krantz [1990] ECR I-583, paragraph 11; Case C-379/92 Peralta [1994] ECR I-3453, paragraph 24; Case C-96/94 Centro Servizi Spediporto [1995] ECR I-2883, paragraph 41; and Case C-412/97 ED [1999] ECR I-3845, paragraph 11). The causal link between the possible distortion of intra-Community trade and the difference in treatment at issue is therefore not established.

18      Article 34 TFEU therefore does not preclude a national measure such as that established by Article 851 of the Judicial Code.

19      That being said, it should be noted, as the Commission of the European Communities pointed out, that the Court has already held that a national provision of one Member State, such as that at issue in the main proceedings, while it does not operate any distinction according to the origin of goods, nevertheless entails, in relation to nationals of other Member States, direct discrimination based on the nationality of the claimant, in so far as it does not require security from nationals of the first-mentioned State (Case C-43/95 Data Delecta and Forsberg [1996] ECR I-4661, paragraphs 17 and 22, and Case C-323/95 Hayes [1997] ECR I-1711, paragraph 19).

20      Such discrimination, which is prohibited by the first paragraph of Article 18 TFEU, cannot however be found in relation to a Monegasque company, such as the claimant in the main proceedings, since that company may not usefully claim the benefit of that provision of the Treaty (see, to that effect, Case C-122/96 Saldanha and MTS [1997] ECR I-5325, paragraph 15; see also, on freedom of movement of persons, Joined Cases C-22/08 and C-23/08 Vatsouras and Koupatantze [2009] ECR I-4585, paragraph 52).

21      In the light of the foregoing considerations, the answer to the question referred is that Article 34 TFEU must be interpreted as not precluding the legislation of a Member State from requiring the provision of security pending judgment, by a claimant of Monegasque nationality which has brought proceedings before one of the civil courts of that State against a national of that State in order to obtain payment of invoices relating to the delivery of goods assimilated to Community goods, although such a requirement is not imposed on nationals of that Member State.

 Costs

22      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

Article 34 TFEU must be interpreted as not precluding the legislation of a Member State from requiring the provision of security pending judgment, by a claimant of Monegasque nationality which has brought proceedings before one of the civil courts of that State against a national of that State in order to obtain payment of invoices relating to the delivery of goods assimilated to Community goods, although such a requirement is not imposed on nationals of that Member State.

[Signatures]

* Language of the case: Dutch.