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EEC REGULATION OF
EXTRA-NATIONAL TRAFFIC
IN AIR, MARITIME AND ROAD
TRANSPORT
LISBET LVKKE HOLM
8901680
Graduate Programmes in Law
Institute of Comparative Law
McGill University, Montreal,
November 1990
A Thesis submitted to the Faculty of Graduate Studies and
Research in partial fulfillme~t of the requirements for the
degree of LL.M.
2
Table of contents:
I. ABSTRACT
1. In English .................................. p. 6
2. In French ................................... p. 7
II. IRTR.ODUcrION .•................................. p. 8
III. AIR TRANSPORT
1. The Background for a Common EEC Air Transport
Policy/Market ..•.•.•••••••.•...•••..•.•••••. p. 12
2. International Regulation of Cabotage
a. Before the Chicago Convention ••••..•••••• p. 19
b. The Chicago Convention •.•....••.....•••.. p. 23
c. Interpretation of article 7 of the
Chicago Convention ....•.•....••••...••••. p. 26
3. Cabotage in the EEC Liberalization of Air
Services
a) Legal Basis for Cabotaqe in the EEC Treaty p. 31
b) The first Phase: "The EEC Air Transport
Package" of 14 Decernber 1987 . . . . . . . . . . . . . p • 33
c) The second Phase of the EEC Air Transport
Liberalization . . . . . . . . . . . . . . . . . . . . . . . . . . . p • 35
"f d) f
The Necessity of Regulation of Cabotage in •
the EEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p • 39
3
e) EEC Liberalization of cabotage and its
Relationship wi'':h art. 7 of the Chicago
Convention ....•......................•.•. p. 42
f) EEC Intra-Cabotage after 1992 •.•.......•. p. 46
4. External Relations in connection with EEC
Cabotage .................................... p. 49
5. International Regulation of Fifth Freedoro
Rights
a) The Chicago Convention .....•...•..•.••.•• p. 54
b) Bilateral Air Transport Agreements ..•..•. p. 57
6. Fifth Freedom Rights in the EEC Liberalization
of Air Services
a) The first Phase: "The EEC Transport Package"
of 14 December 1987 •.•.•........•.•.•.•.. p. 60
b) The second Phase .....•..•.......•....•... p. 63
7. External Relations in connection with Fifth
Freedom Rights .............................. p. 67
IV. MARITIME TRANSPORT.
1. The Background for a Common EEC Maritime
Transport POlicy ............................ p. 72
2. EEC Regulation of Inland Waterway Transport. p. 77
3. EEC Regulation of Maritime cabotage
a) "The EEC Maritime Transport Package" of
22 December ~986 ...•..................... p. 81
b) Council Meeti~gs regarding Maritime
Transport duri,ng 1990 ••••••••••.••••••••• p. 89
V. ROAD TRANSPORT.
1. The Background for ~ Common EEC Road Transport
Po 1 icy ............. ~t • • • • • • • • • • • • • • • • • • • • • • •• p. 95
2. The Implications for EEC Road Transport of
"The InternaI Market" ,' •••....•••.•...••..... p. 100
3. The EEC system of Community Quotas and
Bilateral Quotas ....•.•••..•.••.......•.•.•. p. 103
4. EEC Regulation of Road Cabotage
a) The Resistance to Cabotage in the EEC ..•• p. 106
b) The first EEC Council Regulation on the
Liberalization of Road Cabotage ....•.•••• p. 108
c) Safeguard Measures .•..•.•.........•...... p. 110
d) Rules and Regulations in force ........... p. 111
e) Penalties p. 114
f) The Future ..•......•.......••.•...•...... p. 115
VI . CONCLUSION •....••.•......•••.•....•.•....•...•• p . 117
4
5
..
VII. NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p • 125
VIII. BIBLIOGRAPHY • • • • • • • • • • • • • • • • • • • • • • • • • • If •••••••• p . 142
1
, 1. ABSTRACT.
1. In English.
The thesis is mainly on EEC regulation of cabotage. Cabotage
is carriage of passengers or goods within the territory of
one state by a carrier from another state.
The thesis describes the EEC regulation of air, maritime and
road transport and the positions of the different Member
states. One of the aims of the thesis is to exa~ine whether
a common EEC transport policy already now - before the con
clusion of the InternaI Market in 1992 - is in existence.
The thesis also examines whether the three transport modes
are so different that it is impossible to talk about a muI
ti-modal EEC cabotage policy.
The emphasis of the thesis is on air transport, especially
air cabotage and the EEC Member states' international treaty
obligations, and the EEC-North America relationship.
6
7
2. In French.
La thèse concerne principalement la réglementation communau-
taire du cabotage. Cabotage est le transfert de passagers et
de marchandises dans le territoire d'un pays par un trans-
porteur provenant d'un autre pays.
La thèse décrit la réglementation communautaire des trans-
ports aériens, maritimes et routiers, ainsi que les posi-
tions des différents pays membres. Un des buts de la thèse
est d'examiner s'il existe déjà - avant la réalisation du
marché intérieur - une politique commune des transports. De
même la thèse examinera si les trois modes de transport sont
si différentes qu'on ne peut pas parler d'un politique
commune sur le cabotage dans la CE.
La plus grande pdrtie de la thèse traite des transports aé-
riens, en particulier le cabotage aérien, et des obligations
des pays membres selon les traités internationaux, ainsi que
la relation CE-Amérique du Nord.
II. INTRODUCTION
The purpose of thls thesis is to describe one kind of policy
of the European Economie Community, namely the transport
policy.
l have found it necessary to confine myself to certain areas
within the EEC transport policy and have therefore firstly
limited the thesis to EEC regulation of air, maritime and
road transport and to ~ very limited extent to inland water
way transport, a~d secondly l have chosen to eoncentr~te on
EEC regulation of extra-national traffic.
8
Cabotage will be the main topic, but also e.g. fifth freedom
rlghts in connection with air transport and third country
naulage in connection with road transport will be dealt
wi~h.
However, it is impossible to describe only EEC regulation of
extra-national traffic as the proposaIs, regulations and
discussions have to be seen in a larger context as this kind
of regulations is connected with the total trans~ort policy
for the different modes of transport. But the starting-point
will be the regulation of cabotage.
The major part of the thesis will be on air transport - not
because the regulation of maritime cabotage and road cabota-
•
9
ge is not as relevant or urgent as air cabotage - but
because EEC regulation of air cabotage will have implica
tions on the international treaty obligation of the Member
states 3nd will involve a great deal of political and ~egal
questions, as alr transport is the most nationally, bilate
rally and multilaterally regulated mode of transport.
The thesis will probably bear the stamp of bf~ing written by
a Danish author. Not only will the Scandinavian Airline
System (SAS) be mentioned once or twice, but Danish delega
tion views in the EEC Transport Working group under the
Council will also be referred to.
The aim of this thesis is first of aIl ta describe and ta
clarify the EEC Regulation and the positions of the Member
States. EEC Regulation i5 often very confusing and extensi
ve. It is therefore not desirable to mention aIl proposaIs,
regulations, decisions, recommandations, etc. relating to
the regulation of air, maritime and road transport, whereas
a useful description is one of general rules, concrete pro
blems and issues, conclusions, national and international
consequences, political views of Member States, legal dispu
tes etc. Such a description is not only very practical in
order to ~nderstand what is actually going on in connection
with EEC Regulation of extra-national traffic, but also in
order to understand how EEC transport policy is only part of
a larger context, a context which shows who is weak and who
.,
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10
is strong in the Community and who really are ready, willing
and able to work for and to create the InternaI Market in
1992.
"cabotage" means the carriage for remuneration of passengers
or goods taken on at one point and discharged at another
point within the territory of the same state by a carrier
from another state. The term "cabotage" has a maritjme back
ground, and sorne of th~ earliest legislation reserving the
trade from national port to port is seen in hngland in 1563,
although such trade was referred to as "coasting". It is in
the French legislation that one for the first time finds the
term "cabotage" being used in 1793 1 •
But why does one find proposaIs and regulation of cabotage
in the EEC when it is a domestic matter? The answer is that
as the task of the EEC is, Qy establishing a Common Ma~ket
and pr0gressively approximating the economic policies of
Member states to promote throughout the Community a harmoni
ous development of economic activities and close relations
between the states according to article 2 of the Treaty, the
activities of the Community shall include the adoption of a
common policy in the sphere of transport, according ta
article 3 of the Treaty. And a common policy does not only
deal with intra Member states transport but aiso with trans
port within the Member states.
11
Transport is very important in ?n economic community. As the
costs of transport and the time required for it decrease,
the pos~ibility of developmept of trade increases and so
does the possibility for industrial and agricultural produ
cers to compete with each other. Transport plays an enornlous
role in the Community. Not many people are aware that for
aIl Member states transport represents a greater part of the
gross national product than agriculture2 • Sellinq transport
services is not like selling apples or bananas. First of
aIl, it is impossible to stock-pile transport services, and
it is still by many people regarded as a public utility -
especially air passengers transport which has to be
carried out under Government regulation and control.
AlI in aIl EEC Regulation (or deregulation) of transport is
very demanding, and the views differ very much from Denmark
in the north to Greece in the south. ThiS goes especially
for "cabotage" as many Member states still fear competition.
It shall be interesting to see whether the Member states
follow the same lines when dealing with EEC Regulation of
the differ.'nt transport modes - or whether the threc trans
port modes are sa different that it is impossible ta talk
about the Member states' EEC transport policy in relation to
multimodal cabotage.
12
III. AIR TRANSPORT
1. The Background for a Co_on EEC Air Transport PoliCYI
Market.
In article 3(e} of the Principles of the EEC Treaty it is
stated that in order to reach the purposes set out in
article 2 - e.g. to establish a Common Market and progressi
vely approximating the economic policies of the Member
states - one of the activities shall be the adoption of a
Common Transport Policy.
Article 3(e) shall be read in conjunction with title IV of
the Treaty (articles 74-84) on Transport.
However, according to drt. 84(1) the provisions of this
title on Transport shall apply to transport by rajl, road
and inland waterway and, according to art. 84(2), the
Council may by a qualified majority decide whether appro
priate provisions may be laid down for sea and air trans
port. (The Single European Act of 1986 changed the rule from
unanimous Council decision).
In other words, common sea and air transport pOlicies are
not immediately mandated by the Treaty.
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The somewhat unclear art. 84(2), seems to suggest that the
council is free to decide if and when there is to be a
common EEC Air Transport policy. In "The French Merchant
Seamen 1 S Case"3 of 1974, howcver, the European Court of
Justice held that sea and air transport remain sUbject to
aIl general rules of the Treaty which do not contain speci
fie exception for transport4 • Air transport is exempt only
from specifie transport rules.
Efforts te incorporate civil aviation into the Community
framework5 met with lengthy opposition. One of the main rea-
sons for the delay was that aviation dealings are governed
by bilateral agreements between the parties concerne0. Such
bilateral agreements are basically incompatible with the
community concepts of integration and non-discrimination.
When Governmental authorities negotiate bilateral air trans-
port agreements it is often the case that the "Flag-carri-
er", e.g. SAS in Scandinavia and KLM in Holland, enjoy con-
siderable protection from outside competitors. The competi-
tien is not free because in many countries commercial air
transport is considered as a public utility; as an industry
legally affected with a public interest - like e.g. the
supply of gas and electricity, which has to be conducted
under Government regulatien. In Europe - both on the Govern-
ment and airline levels there has for a long time been a
14
considerable fear of changes of the system and of a move
towards a more competitive system.
In 1978, the European Court of Justice in "The Belgian
Railway Case n6 applied certain general competition rules of
the Treaty, namely art. 92-94 on state aids to railway
transport. The Court applied th~se general competition rIes
on state aids to the transport sector notwithstanding t: ~
fact that the transport title of the Treaty contains one
specifie provision on state aids, namely art. 77.
In 1979, the Commission published its first Memorandum on
Air Transport which advocated the immediate development of a
common air transport market and suggested measures covering
tariffs, safety, traffic rights and competition7 •
The first significant action of the Council came in 1983
when it issued a Directive concerning the authorization of
scheduled inter-regional air services8 •
A year later the Commission followed with civil Aviation Me-
morandum No 2. The purpose of this Memoramdum was to develop
and expand on the objectives of the Commission's 1979 memo
randum in the light of the developments which had occured,
and to discuss the impact of deregulation.
until April 1986 there was still sorne doubt whether the com-
1
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petition rules would apply to air transport. However, the
European Court of Justice, in the "The Nouvelles Frontieres"
case9 , gave a clear and positive answer that the competition
rules of the Treaty should apply to air transport. The case
was referred by the Tribunal de Police de Paris to the Court
for a preliminary ruling under art. 177 of the Treaty. The
Court was asked whether the French statutory system of go
vernment approved tickets was contrary to the Treaty if such
tariffs were a result of an agreement between undertakings,
which is contrary to art. 85 of the Treaty. The Court held
that air transport is subject to the general rules of the
Treaty, including the rules on competition. But tariff ag
reements restricting competition were not immediately for
bidden by art. 85(1), nor automatically null and void under
art. 85(2) because at that time no competition rules had
been adopted for air transport under art. 87, and no appro
priate authori ties of the Member states or the Commission
had declared such tariff agreemencs null and void under ar
ticles 88 and 8910.
The Court did not decide whether in casu the Treaty had been
violated and it did not declare any specifie illegalities.
However, the decision had an important impact on the adop
tion, under art. 87, of the regulations implementing the
competition rules of articles 85 and 86 for air transport in
the "EEC Air Transport Package" of 14 December 1987 whieh
entered into force 1 January 1988. This "package" is the
1
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16
first phase of the liberalization of the regulation of in
tra-EEC scheduled air services. The "package" consists of 4
measures intended for a 3-year period: 1} a Directive on
setting air fares l1 , 2} a Decision on capacity sharing and
en'try into the market for new airlinesl2 , 3) a Council Regu
lation laying down the procedures for appL.cation of the
competition rules to undertakings in the air transport sec
tor l3 , and 4) a Council Regulation on the granting of block
excemption to undertakings and associations of under
takingsl4 •
A non-aviation case from the European Court of Justice of 27
September 1988, "The Wood Pulp Case"! 5 , also dealing with
the competition rules of the Treaty, has importance for EEC
aviation. The Commission had imposed fines on a number of
American, Canadian and Finish wood Pulp producers who had
agreed on price fixing which was regarded as a violation of
art. 85 of the Treaty. The Court found that although the
companies involved were aIl domiciled in non-EEC countries,
they were still subjects to EEC-competition law because
their conduct had ef.fect within the EEC Market. This deci
sion may have far-reaching consequences for inter-airline
agreements which may take place outside the EEC, but have
ef~ec~ within the Common Market.
A new and very important aviatilm case from the European
Court of Justice of 11 April 1989 is the "Ahmed Saeed
1
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Case"l6 on cross-border tickets/ import of weak currency tic-
kets. The Court ruled that tariff agreements are automati-
cally void under art. 85(2) where the authorities of the re-
levant Member State under art. 88 or the Commission under
art. 89 have ruled that the agreement is incompatible with
art. 85. This statement is not surprising after "The Nouvel-
les Frontieres Case", but the new and very important ratio-
nale is that this applies not only to tariff agreements on
routes between Member states, but also on routes between a
Member state and a non-Member State. At the time of the
judgment the Council had adopted the "EEC Air Transport Pac-
kage" of 14 December 1987, but the "EEC Air Transport Packa-
ge" only applies ta intra-EEC Air transport. It was a pio
neer case which gave EEC civil Aviation new guidelines.
AlI in aIl, up to the end of the 1980s, there had not exis
ted a common EEC air transport policy. Although the EEC came
into being in 1958, the first major steps were not taken
until December 1987.
The European Court of Justice has played an enormous role in
the creation of a Common EEC air transport policy. To a
great extent it has kept in line with precedent and has
created a "leitmotif" in its relevant cases from 1974 to the
latest "Ahmed Saeed" decision of 1989.
In the "package" of December 1987, the Council committed
1
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themselves to further liberalization by 30 June 1990 at the
latest. The completion of the internaI market by 1 January
1993 will also have consequences for civil aviation in the
EEC17 • The possibility of creating an internaI air transport
market without frontiers within the EEC by 1 January 1993,
and the issues involved in this conception should be consi
dered. It is certain that the development will have great
impact on the granting of cabotage rights and f~fth freedom
rights internally to Member states but also externally ~o
third countries; one finds in this area the potential for
many legal conflicts between national, bilateral, interna
tional and conventional obligations on the one hand, and EEC
Treaty obligations on the other.
r ,
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2. International Regulation of Cabotage.
a. Before the Chicago Convention.
In the first attempts to arrive at an international aviation
convention in Paris in 1910 (which was never signed), the
concept of cabotage was introduced18 • It was not until the
Paris Convention of 1919 relating to "the Regulation of
Aerial Navigation" that a specifie cabotage provision recei-
ved international approval. This convention, drawn up by the
Aeronautical Commission of the Peace Conference at Paris and
eventually signed by sorne thirty states, mostly European,
provided in article 16 that:
Il Each contracting state shall have the right to establish
reservations and restrictions in favour of its national air-
craft in connection with the carriage of persons and goods
for hire between two points on its territory. Such reserva-
tions and restrictions shall be immediately published and
shall be communicated to the International Commission for
Air Navigation, which shall notify them to the other con-
tracting states."
Art. 16 was supplemented by art. 17 which states that
Il The Aircraft of a contracting state which establishes re-
servation and restrictions in accordance with art. 16 may be
l
20
subjected to the same rese~vations and restrictions in any
other contracting state even if the latter state does not
impose the reservations on other foreign aircrafts".
The cabotage system under articles 16 and 17 is based on two
fundamental principles in international treaty law, namely
the principles of reciprocity and national sovereignty19.
"Territory" was defined in article 1:
"For the pllrpose of the present Convention the territory of
astate shall be understood as including the national terri
tory both that of the mother country and of the colonies and
the territorial waters adjacent thereto".
It is interesting to note that by using this definition the
Convention was able to establish a concept of air cabotage
much more extensive than the concept of surface cabotage
prevailing then and today20. The justification for the esta-
blishment of air and surface cabotage must be the same for
both types: each state should have the right to control its
own parts or cities. Commerce and trade, originated in and
destinated for points in the same state, however may move
across the seas or make intermediate stops in foreign parts,
and therefore are of international as weIl as national con-
cern. Why should the state of origin and destination be
given absolute control over this commerce when carried on by
1
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air, but not when surface transportation is involved. One
explanation is that whereas maritime cabotage evolved for
the most parts during peace, the Paris Convention was drawn
against a background of post-war tension in which nationa
listic pressure predominated21 • The cabotage system domina-
ted by reciprocity qualified for bilateral reciprocity
without precedented consequences. The system apparently
worked satisfactorily until the Second World War22 •
However, in 1929, a certain development of the cabotage
concept took place on the initiative of the International
commission for Air Navigation (ICAN). The reason behind this
was a proposaI from the British delegation that the British
colonies and India should be given its own vote in the Com-
mission. Other delegations claimed that this would have the
consequence that the UK no longer could invoke art. 16 of
the Paris Convention. But this assumption was not in accor-
dance with the definition of the Convention of "territory".
In spite of art. 1 many delegates believed that art. 16 only
applied to traffic between 2 points within a state's fronti-
ers. ICAN was then asked to evaluate the 3 following rnethods
of restriction23 •
A. Restriction of the concept of territory by declaring it
to apply only separately to metropolitan territory, colo
nies and rnandated or protected territeries. Traffic
between these separate terri tories would net be cens ide-
(
22
red as cabotage.
B. Exclusion of the concept of cabotage from aIl traffic
which includes an intermediate landing on foreign terri
tory.
C. Determination of groups of territories between which ca
botage could be reserved on the basis of geographical,
political or economical consideratio:ls.
ICAN could not agree on any of the restriction methods and
one year later, in 1930, ICAN sent out the following recom
mendation to the Member states24 :
"The Commi ttee decided to recommend contracting states to
use the utmost reserve in invoking art. 16 of the Con
vention, taking care to safeguard to the greatest possible
extent the spirit of freedom and equality of treatment con
tained in the Convention".
This was regarded as a victory for Great Britain who now
could invoke art. 16 for traffic between the mother country
and the colonies. The term "grand cabotage" was hereby esta
blished, which was contrary to the "spirit of the freedom"
which was the main source of inspiration to the Paris Con
vention of 1919.
1
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b. The Chicago Convention.
The most important regulation of cabotage in modern times is
art. 7 of the Chicago Convention of 1944 on International
civil Aviation which states that:
"Each contracting state shall have the right to refuse per
mission to the airera ft of other contracting states to tnke
on in its territory passengers, mail and cargo carried for
remuneration or hire and destinated for another point within
the territory. Each contracting state undertakes not to
enter into any arrangements which specifically grant any
such privilege on an exclusive basis to any other state or
airline of any other state and not to obtain any such exclu
sive privilege from any other state".
Article 7 has to he seen in relation to art. 2 on territory:
"For the purposes of this Convention the territory of a
state shall he deemed to be the land area and territorial
waters adjacent thereto under the sovereignity, suzerainty,
protection or mandate of such state."
When art. 7 is seen in connection wi th art. 2 on terri tory
it is clear that the extension of the original concept of
cabotage in order to cover "grand cabotage" was accepted.
1
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24
There was an opportunity for the new Convention to bring the
narrower concept of maritime cabotage, allowing more freedom
of international air navigation, back into practice but
the idea was not taken up by any major group25. It cannot be
said that this wide interpretation of cabotage in aviation
law is against the rules of international law, and there is
no cogent reason why air law should be ~~bject to the rules
built up on maritime law.
Shortly after the conc:lusion of the Ch icago Convention
"open-jaw" air t'ravel was suggested to be regarded on cabo
tage in accordance with art. 7. "Open-jaw" travel is travel
where the beginning and end of the journey are different
points and both are in the same national territory. This is
fairly common across the Atlant.lc. For example, in the case
of air travel frem New York to London to Boston, the journey
is from one point in the US to another point in the US, and
unless the stop at London consti tutes London as a place of
destination, the flight clearly falls within the definition
of cabotage in art. 7. However, an English court held that
on a roundtrip from London to Brussels the place of destina
tion within the meaning of the Warsaw Convention for the
Unificatio~ of Certain Rules relating to International
Transportation by Air is not Brussels but London26 . Sorne
American cases have reached a similar result. Sorne authors,
like Sheehan in the 1950's, argued that "open-jaw" travel
was covered by art. 7. However, Sheehan/s argumentation does
•
,
----------------------------------------------........ , .... 25
not seem very convincing in modern times of aviation. It
cannot reasonably be stated that the passenger's intention
on an open-jaw trip, e.g. Oslo-New York/New YorK-fr,'J ~nger
is to travel from Oslo ta Stavanger. His primary aim is ta
fly to another state and secondarily to return to another
point as the starting-point but within the sarne territory.
Other authors agrec - e.g. Meyer and Goedhuis - that open-
jaw travel cannat be included in the cabotage concept since
in practice, it would lead to absurd results27 •
Previously, it was also assumed by sorne authors, e.g. Goed-
huis, that an intermediate foreign stop would not remove a
flight from the concept of cabotage28 • In modern tirnes it is
impossible to have a categorical attitude towards cabotage
in relation ta stop-over-flights. The reason behind the
stop-over shall have ta be a conclusive criterion. If a pas-
senger continues with the same aircraft/airline, e.g. on a
trip London-Gibraltar after a short landing in Madrid,
Madrid cannot be regarded as the passenger's destination and
art. 7 will be relevant in this case. This is "grand cabota-
ge". However, if the passenger undertakes a stop-over in
Madrid for more that 24 hours one has ta regard the routes,
London-Madrid and Madrid-Gibraltar as two separate ~outes
and the total journey will not be regarded as cabotage acc-
ording to art. 7 of the Chicago Convention. The stop-over is
tao long in order to regard Gibraltar as the final destina-
tian. But it should also be remembered that when dealing
1
26
with cabotage it is not so mu ch the travelling passenger who
is in focus, but the travelling aircraft itself - opposed to
the Warsaw Convention for the Unification of certain Rules
relating to International Transportation by Air.
c. Interpretation of Article 7 of the Chicago Convention.
There has been some criticism both inside and outside acade-
mie circles of the text of the provision in art. 7 of the
chicago Convention on eabotage29 • It has been accused of
being vague and ambiguous which has led to different ways of
interpretation of the article. The first sentence gives no
problems. It confirms in the particular case of cabotage the
principle of the absolute sovereignty of states expressed
at the beginning of the Convention (article 1)30. The second
sentence of art. 7 is rather ambigous and consequently con-
trovArsial. 'he main idea seems to stand out quite clearly:
the diseriminatory system which would result from partially
granting the privilege in question is excluded, the rule
sanctioned in the Convention is multilateralism which
applied to aIl its contracting states.
First of aIl, the act of granting the right is qualified by
the adverb "specifically" which needs interpretation. Se-
condly the prohibition refers only to exclusiveness. Final-
ly, this very notion of exclusiven~ss is expressed am-
biguosly as it covers both the act of granting a right - for
J
27
example by state A to state B and the reaction to this act
by third states, C, D, E, etc.
This second sentence has two possible interpretations. The
first is that even if a contracting state grants cabotage
rights to the airline of another contracting state, it may
refuse similar tr.eatment to other contracting states and
their airlines, provided that the cabotage rights have not
been declared exclusive. This interpetation, liberal and
practical as it may be, however leads to the de facto
exclusivity31.
Another interpretation of art. 7 is that if a state party to
the Chicago Convention grants another contracting party the
right to carry domestic traffic on certain routes, it must
grant similar rights to other contracting states requesting
the same treatment for their airlines. This last restrictive
interpretation has obtained most recognition.
The broad definition of air cabotage in art. 7 is attribu
table partially to the circumstances surrounding the Chicago
Convention. The wartime environment then existing allowed
nationalistic concerns to prevail over international goals.
It was argued that air transportation must remain totally
under domestic control to ensure adequate protection of na
tional interests. The developing states of the commercial
aviation industry further encouraged recognition of extensi-
1
28
ve cabotage rights as a protective device necessary to insu
late carriers from competition and thereby assure their fi-
nancial viability32.
The liberal interpretation of art. 7 was discussed within
ICAO (International civil Aviation Organization) in the
Council in 1966 and in the Assembly in 1968 in an attempt to
have art. 7, 2nd sentence changed or deleted. Nothing came
out of these discussions and art. 7 is therefore still in
force and unchanged.
It was the Swedish representative to ICAO who requested the
Council to give an interpretation of art. 7 in 196633 . The
request was subJltitt€~d to the 16th Session of the ICAO Assem-
bly in 1968, and to its 18th Session in lQ71. According to
the Swedish proposaI a deletion of tho second sentence of
art. 7 would clarify and simplify the situation since States
would thereby retain their rights to refuse cabotage rights
to other States and become free to grant such rights in ac-
cordance with their proper interests34 .
The Secretary General of ICAO proposed an amendment to art.
7 to the Convention for consideration by the Council during
its continuing study of the Swedish request. The proposed
amendment would delete the second sentence of art. 7 and
rewrite the first sentence to provide that "carriage by air
of passengers, mail or cargo picked up at one point in the
T
29
territory of a State and to be set down at another point in
th~t territory is subject to the law and regulations of that
state".
However, the proposed amendment failed to obtain the requi
red nurnber of affirmative votes and was not adopted by the
Assembly. Arguments in favour and against the amendment or
uncertainty of position were expressed repeatedly. The main
argument was of course the absence of evidence of actual
difficulties or problems, and some developing countries
argued that the amendment would rnake it possible in the
future for powerful states to exercise pressure on small
states to grant cabotage rights benefiting only their air
lines35 • International civil aviation was therefore left
with status quo.
Specifie problems in connection with art. 7 have been ex
perienced in Scandinavia since the creation of Scandinavian
Airlines System (SAS). The aircraft which are at SAS's dis
posaI are registered according to an inter-Scandinavian ar
rangement between the 3 national cornpanies (DNL in Norway,
ABA in Sweden and DDL in Denmark). This system of registra
tion puts the Scandinavian countries in a difficult situa
tion, which according to article 7 will entail that the n~
tional traffic is open for any third non-Scandinavian
country when e.g. a Swedish or a Norwegian registered plane
is flying on a Danish domestic route. When SAS was created
:1
1
JO
the Scandinavian countries were of course aware of this and
asked ICAO for a declaration in order to prevent demands
from third countries. ICAO issued such a statement which
stated that cabotage in the Nordic countries cannot be con
tained within the framework of art. 7(2) - as SAS because of
its organizational character cannot be regarded as a foreign
airline in any of the Scandinavian countries and the SAS
traff ic in Scandinavia is to be regarded as national
traffic36 •
The granting of cabotage rights in international air trans
port is not unknown, but it is fairly rare. Most bilateral
air transport agreements specifically exclude the granting
of cabotage rigthts and in sorne States the granting of cabo
tage rights is forbidden by national legislation37 •
l
1
31
3. Cabotage in the EEC Liberalization of Air Services.
a. Legal Basis for Cabotage in the EEC Treaty.
Air cabotage has been regulated for years by international
conventions, and now sorne of the Member states of the
present Convention on International civil Aviation also have
obligations as Members of the EEC. Has the EEC anything to
do with the regulation of cabotage? In order to answer this
question one has to examine the Treaty o[ Rome to state
whether there is any legal basis for EEC regulation of cabo
tage.
As a starting-point the concept of cabotage is basically not
compatible with Community concepts of integration and non
discrimination. However, this is not enough in order to find
a legal basis for EEC regulation. Are there any articles in
the Treaty which a Member state or an airline of a Member
state can use to claim cabotage rights within another Member
state? The relevant articles are article 7 on the general
principle df non-discrimination, articles 52-58 on freedom
of establishment, articles 59-66 on freedom to provide ser
vices, and the chapter on transport, art. 74-84.
Actually, art. 75,1,b. deals
providing that the Council will
explicitly with cabotage in
lay down the conditions
under which non-resident carriers may operate tranSp0rt ser-
«
32
vices within a Member state. This was confirmed in a case
from the European Court of Justice, "The Parliament v. the
Council" from 1985. This case will be described in the road
transport section.
But aIl these articles do not help the Member state or the
airline of the Member state claiming cabotage rights as the y
do not apply directly to air transport without any further
concretization by the Council pursuant to article 84(2) of
the Treaty.
One way out of the problem seems the freedom of establish
ment. Article 52 of the Treaty acknowledges the rights of
Community companies
state. For example, if
to establish themselves in any Member
British Airways was to establish
itself in France it would be able to provide domestic servi
ces between Paris and Nice - and in this way conflicts with
art. 7 of the Chicago Convention would be avoided38 •
However, art. 52 is no sufficient legal basis at present for
a Community airline to claim cabotage rights, as there must
also be freedom to provide services according to art. 61,(1)
which refers back to art. 84(2) of the title on Transport.
Airlines will normally also only qualify for an operating
licence if they are substantially owned and effectively con
trolled by the granter state or by its nationals. So the
right of establishment does not guarantee that a Community
l
33
airline which establishes itself in another Member state
will automatically qualify to operate domestic air services
in that state. Furthermore the civil Aviation Authorities of
the relevant Member state can always under its discretionary
licensing policy and supervision decide not to grant the
applied traffic right.
b. The first phase: The EEC Air Transport "Package" of 14
December 1987.
The first major step towards a more final Community policy
on civil aviation with respect to the relations between
Member states was the EEC Air Transport "Package" of 14 De
cember 1987 on fares, capacity, market access and competi-
tion.
From a purely Community viewpoint, the most important issue
was to set up a common system with common rules for all air
lines established in the Member states which would take pre-
cedence over existing bilateral agreements, except where
member states have bilaterally agreed to more flexible
arrangements3~ .
According to the "package", the sharing of passenger capaci
ty and market access traffic rights are created between main
airports and regional airports and it is possible to autho-
rize airlines to open up intra-Community routes between main
34
and regional airports even if these routes are not included
in the existing bilateral agreements between the states con-
cerned40 •
Traffic rights between main airports exist already under bi
lateral agreements and pursuant to the Communitive Directive
of 1983 on interregional air services also between regional
airports4 1 •
cabotage is not at aIl mentioned in the liberalization "pac-
kage". It was not even proposed by the Commission at any
time before the Council meeting of 14 December 1987. The
Commission knew that the Member states were totally unready
and unsymphathetic towards an EEC liberalization of cabota-
ge. It was almost unthinkable that e.g. Lufthansa should be
allowed to fly Nice-Lyon. This was regarded as a domestic
flight which is kept for national airlines even if the fares
of the national carriers are more expensive that what a
foreign airline would charge.
However, the Commission which has as one of its objective
the assurance of a smoother functioning of the Community's
interests as such, does not consider national interest and
sovereignty arguments. The passage into law of "The Single
European Act" of 198639 , according to which an internaI EEC
market without frontiers should be a reality on 1 January
1993, has made it somewhat easier for the Commission. As far
1
..
35
as art. 84 of the Treaty of title IV on transport is concer
ned it made two changes. One was the requirement that the
Council in deciding procedures for air ~ransport should act
unanimously be replaced by a requirement to act only by a
qUdlified majority. The other was that art. 84 be supplemen
ted by a requirement that in effect required the Council to
act on a proposaI from the Commission after consulting the
Economic and Social Committee and the European parliament42.
In the "package" of December 1987 , the Ministers committed
themselves to further liberalization by 30 June 1990 at the
latest. This indicates further relaxation of rules concer
ning establishment of fares and more possibilities for
market access. However, the completion of the InternaI
Market by 1 January 1993 will have far greater consequences
for aviation. This will in time result in the disappearance
of bilateral air capacity control, and traffic rights will
not be the result of bilateral bargaining but will be di
rectly established by Community law. As a result at least an
introduction of cabotage will take place43 .
c. The Second Phase of the EEC Air Transport Liberalization.
The Commission made it very clear in its proposaI for the
second phase of the EEC Air Transport liberalization of 7
september 198944 that, although the "package" of December
1987 constitutes a sound foundation on which to build a com-
36
prehensive common air transport policy, it had to be regar
ded only as a first phase. It was specifically stated that
the Council would decide on a revision by 30 June 1990 on
the basis of a Commission proposaI to be submitted by 1 No
vember 1989.
The proposaI for a second liberalization "package" from the
Commission of 7 September 1989 consisted of 6 proposaIs on
fares, competetion, market access 3nd capacity sharing. When
dealing with cabotage, the proposaI for a Council Regulation
on access for air carriers to scheduled inter-community air
services routes and on the sharing of passenger capacity
between air carriers of scheduled air services between
Member states is relevant. In the introduction to the propo
saIs the commission, knowing that cabotage is a rather sen
sitive subject, states that the Commission proposes the
gradual introduction of cabotage within the community, and
proposes that this should be do ne aiong the lines that were
adopted by the Council for fifth-freedom in the "package" of
December 1987. This indicates that cabotage should begin as
only a supplementary operation45 •
Art. 2,b of the proposaI defines cabotage as the right for
an air carrier to undertake the commercial air transport of
passengers, freight and mail between 2 points within a
Member State other than the state in which it is registered.
, •
37
Art. 9 of the proposaI is also concerned with cabotage. This
article proposes the exercise of cdbotage between combined
points within the same Member state under very strict condi-
tions. Firstly, the proposed cabotage traffic rights are
restricted to air service constituting an extension of
service from, or a preliminary of service to, its state of
registration. These kinds of cabotage rights are often re-
ferred to as eight-freedom cabotage46 •
Secondly, it is a condition that the cabotage traffic rights
are operated between two airports of which at Ieast one is a
regional airport. Regional airports are also c~lled category
2 airports, and include, for exampIe, Hamburg in Germany and
Nice and Lyon in France. FinaIIy, it is stipulated that the
air carrier may not use more than 30% of its annual seat ca-
pacity on the air service concerned for the carriage of ca-
botage passengers.
The traffic rights stipulated in the proposaI to and from
the carrier's desired combinat ion of points along the cabo-
tage route constitute third and fourth freedom rights under
the bjlateral agreements with the states whose territories
are involved47 •
The proposaI represents a very cautious step towards a libe
ralization of EEC cabotage - and one very far from the crea-
tion of a de facto European Aviation Entity. An internaI
38
Aviation market without frontiers, would effectively mean
one inter-EEC cabotage area, in which there would be no dis
tinction between Italian and Dutch carriers and no distinc-
tion between fifth freeJom and cabotage rights for EEC-
carriers.
The second liberalization "package" leaves national sove-
reignty untouched - but it does put pressure upon it.
The Council met in Brussels during the days of 18-19 June
1990 in order, amongst other things, to discuss and to put
to the vote the Commission' s p~.:oposal for the second phase
of the liberalization of EEC civil aviation.
The second phase of the "package" was passed, but the
article on cabotage was totally removed from the Council Re-
gulation on market access and capacity sharing. The proposaI
on cabotage was already taken out at the Council meeting in
December 1989. However, it emerged aga in in January 1990
under the Irish Chairmanship but only in connection with
freight, but eventually it was not included in the Commis-
sion's Iast proposaIs before the Councii meeting 17 June
1990 on air transport.
AlI Mernber states are at this stage against liberalization
of air cabotage - everyone agreed that it is too early to
change the system. Especially th. Southern countries are
39
against the liberalization of cabotage - i.e. Greece, Spain
and Italy who do not want foreign carriers to take their
tourist traffic.
d. The Necessity of Regulation of Cabotage in the EEC.
The question might be raised whether the European InternaI
Market should include freedom of cabotage at aIl as it seems
that the Member States are reluctant to liberalize domestic
air traffic which for many years has been entrusted to na
tional carriers48 • If national and bilateral cabotage
clauses could be mai~tained, aIl the problems with art. 7 of
the Chicago Convention could be avoided. However, the situa
tion is not so simple.
A~cording to the Commission the elaboration of a comprehen
sive Community policy on air transport which would encourage
the development of a strong, healthy and competitive civil
aviation sector capable of making its full contribution to
the economic growth of the Community and the attainment of
its objectives, must encompass extensive liberalization.
Measures covering fares, capacity, market access, competi
tion on international routes are not enough. New measures
must be taken in other areas: aircraft noise, air traffic
congestion, Computer Reservation System and regulation of
national traffic49 •
40
One of the goals of a common air transport policy is for
users ta have a wide choise of services at as low a cost as
possible consistent with maintaining satisfaotory safety
standards50 •
From a community point of view it is more important that the
passengers who want to fIl' London-Paris-Nice get more
choice, convenience and reliability, irrespect ive of the na-
tionality of the carrier.
It is not compatible with the genuine, barrier-free internaI
market intended by the single European Act ta keep national
air transport out of the liberalization and reserve it for
national carriers. First of aIl, the size of the domestic
air transport market of the Member States is rather compre-
hensive. In 1984 for example, the number of domestic air
traffic pass~ngers in France was 20 million, Italy 10 rnilli-
on, S~ain 8 million, UK 5 million51 • The exclusion of this
domestic air transport from the EEC air transport policy
would without doubt hinder development towards the achiement
of integration and free competition.
In February, 1989 The Dutch civil aviation authorities
granted the Danish airline "Midtfly International Airways"
cabotage rights for the carriage of scheduled traffic
between Groningen and Rotterdam52 • These rights were granted
only because there was no scheduled air service open to the
r 41
public between the cities concerned (no competition from
Dutch carriers!), and because explicit reference was made to
the national policy objective of stimulating the development
of regional airports and local economies. It is interesting
to note that the most important consideration for the civil
aviation authorities was the competition for Dutch carriers
and that the needs of the passengers were)f secondary im
portance. This attitude is inconsistent with the aim of a
future common EEC air transport market.
It is not enough that aviation authorities grant cabotage
rights to carriers from other Member states if it is only
"hard rights" that are given. Hard rights are the right ... to
operate services on specified routes by carrying traffic.
Soft rights - the rights to make the operations effective as
pricing, marketing, service and destribution of services
are aiso important and shouid be dealt with at the national
level. If an internaI air transport market is to become a
reality and not just a legai notion on paper - the dis
tinction between "national" and "foreign" carriers shaii
have to blur increasingly.
The situation can be described as "in for a penny in for at
pound". When the Ministers signed the air transport Iibera
lizations "package" of December 1987, it was made totally
clear that this was to be regarded only as a f irst step
- and it seems logical that if a common air transport market
,
42
has to be created, it is necessary to liberalize cabotage
and to create free competition in this area, too!
This liberalization will probably not be possible in near
future - but it i5 important that the Member states change
their attitudes and realize that it is going te come about
eventually.
e. EEC Liberalization of Cabotage and its Relationship with
Art. 7 of the Chicago Convention.
Mr. Frederik S0rensen, Head of the Air Transport Division,
Directorate General for Transport of the Commission spoke on
26 May 1989 in Brussels at an international Congress on EEC
Air TransportS 3 and said "1 do not see any conflict between
the basic international system embodied by the Chicago Con
vention and the EEC Treaty although a number of bilateral
agreements will have to be changed".
But how about the granting of cabotage rights to the EEC
Member states which takes place by Council decision accor
ding to article 84,2 of the Treaty?
Article 7 of the Chicago Convention is basèd on the complete
and exclusive sovereignty of states and it gives the con
tracting states the right to refuse cabotage. But, it does
not forbid the granting of cabotage rights to a foreign car-
43
rier. This means that the EEC Member states are free to
grant each other cabotage rights. The second sentence of
art. 7 is the controversial provision which limits the sove-
reignty of states as the EEC Member states rnay not grant
each other rights on an exclusive basis to any other state
or airline of any other state.
As mentioned earlier, the Most common interpretation of
article 7,(2) is that if a contracting state would concede
cabotage rights to one state it would he obliged to grant
the same rights to aIl states which are party to the Chicago
Convention. So a strict reading of the provision seerns to
give aIl 148 non-EEC parties to the Chicago Convention the
right to demand traffic rights, e.g. Paris-Nice, as soon as
this privilege has been awarded to a non-French comrnunity
carrier, following an EEC Council Regulation on cabotage.
Naturally, the EEC Member states and their airlines are
afraid of this, which is also the reason why the Member
states are very reserved as to liberalization of EEC cabota-
ge. It would destroy the idea of an intra-EEC grant of cabo
tage rights if similar rights had to be granted non-EEC
states on a massive basis.
Another interpretation of art. 7(2), which suits the Commis-
sion much better, is that the article addresses itself to
both granting and receiving states by saying: Do not conclu-
,
44
de cabotage deals which explicitly exclude third states from
benefitting from the same rights. subsequent demands by
third countries for the same privilege could then be evaded
simply by the exercise of the right laid down in the first
sentence of art. 7; and if such cabotage rights are granted
mutually between the participating states on a non-exclusive
basis, a third non-paticipating state would have to offer
adequate reciprocity, not necessarily in kind, in order to
obtain such cabotage rights54 •
If art. 7 is to be interpreted strictly as a Most Favoured
Nation Clause, which a natural reading of the provision
would require, the question remains: What is the consequence
of the prohibition of explicit exclusivity? The wording of
the Chicago Convention itself does not give a clear answer.
Of course it could always be submitted to the ICAO Council,
or the ICAC Assembly could be asked ta consider a proposaI
for an amendment of article 7.
There is no doubt that if the twelve EEC Member states ex-
change cabotage rights among themselves as a consequence of
their EEC Treaty obligations, even with or without mentio-
ning that such a grant is exclusive, such rights are in fact
exclusively granted, and the EEC countries would aIl be in
breach of article 7(2). It seems to be nothing more than an
artificial grammatical interpretation to justify the few
cases of exclusive grants55 • Counter arguments hold that a
45
strict reading of the provision is contrary to the spirit of
the Chicago Convention and to the nature of the industry
namely that the states can decide themselves what to do with
their air space. On the other hand, the Chicago Convention
forbids discrimination and article 7 is one of its most pro
minent applications.
Why not face the facts and realize that it is 45 years ago
that the Chicago Convention was drafted and naturally poli-
tical, economical,
~uch a space of time
chicago Convention.
and conventional changes take place in
and it is possible to change the
According to article 94 of the Chicago
Convention, amendments to the Convention must b~ approved by
a two-third vote of the (now) 160 Member states and must be
ratified by at least that mumber56 •
The Member states must ask for an amendment of art. 7 or at
least for a statement of the interpretation of art. 7(2} in
relation to the EEC air transport market. This will take
time but it will show respect by the EEC for the 45 year old
Convention that the European Community not just take for
granted that a flexible interpretation of art. 7 is in
order.
Perhaps, Mr. Frederik S0rensen's statement is somewhat su
perficial. Co-operation in civil aviation is first of aIl at
an international level - and in our EEC co-operation, which
(
46
can have the best intentions and implications, we still have
to consider our international civil aviation obligations.
f. EEC Intra-Cabotage after 1992.
There has been a great deal of confusion about the concept
of European cabotage after 1992 when the InternaI Market in
the EEC is to be a reality. It is often too easily assumed
that removal of internaI trade barriers in the EEC implies
transformation of the respective airspaces of the Member
states into a single airspace in the sense of art. 1 of the
Chicago ConventionS 7 •
The Single European Act of July 1986 clearly speaks of mea
sures to be taken by the community with the aim to progres
sively establish the InternaI Market over a period expiring
on 31 December 1992. This was the solemn intention and ob-
jective of the Member states in 198658 • However, in this In-
ternal Market there is to be free movement of goods persons,
services and capital but it does not abolish the sove-
reignty over the airspace of the Member states.
As long as the European airspace does not legally represent
a single airspace the term, "European cabotage" is essenti-
ally a contradiction in ter~s. It is a misrepresentation to
assume that intra-EEC fifth freedom services will become ca-
botage after 1992. Cabotage can only take place within the
47
boundaries of a single sovereign entity.
Judging from the confusion about "European Cabotage" that
one still finds in some aviation circles, it seems that for
many people it is difflcult to delimit what lies in the
words "deregulation" and "liberalization" of air transport.
This field has for a long time been too regulated by govern-
ments and it is understandable that the enthusiasm for dere-
gulation in the EEC is great, but it does not at aIl lead to
the enactment of a common EEC airspace, and a common inter-
nal air transport market does not legally crea te one commen
air sovereignty.
The EEC group under IATA (International Air Transport Asso
ciation) stated at a meeting in March 1990 that the position
of IATA was that the term EEC cabotage cannot be used - not
even after 1992 59 • The simple reason behind this is that
art. 7 of the Chicago Convention talks about territory,
meaning state according to art. 2 of the convention. The
right legal term is rather "International intra-EEC traf
fic". According to IATA 100% free cabotage rights in the EEC
after 1992 would have an enormous importance for the airli
nes. But it is much too early - at least 10 years too early.
It is unrealistic to think that we, e.g. in 1993, will see
KLM fly a German tr~ak route like Frankfurt-Municr. The
recent proposaIs from the Commission to grant cabotage
rights under certain conditions to EEC Member states would
48
by the nature of facts only be on an exclusive basis which
is contrary to art. 7(2) of the Chicago Convention. However,
the problem is that non-EEC Member states cannot go to an
international court and claim that the Chicago Convention
has been violated. The right forum is ICAO. Unfortunately,
negotiations take a very long time in ICAO, but discussions
in ICAO will without doubt "make waves" even in Brussels.
The role of ICAO should not be underestimated!
49
4. External Relations in connection vith BEC Cabotage.
until now this thesis has concentrated on intra-EEC cabotage
by EEC carriers, but other issues are intra-EEC cabota9~ by
ngn-EEC carriers and cabotage by EEC carriers in ngn-EEC
states.
In recent years, European nations and Canada have been
seeking cabotage rights for their airlines in the U.S. In
this way the issue of cabotage has become topical outside
the EEC60. For instance, for SAS it would have great impor-
tance to be able to fly Copenhagen-New York and then go on
to e.g. Chicago or Los Anqeles. But the Americans have never
opened up for cabotage rights. "The Air Cabotage Law" prohi-
bits foreign civil aireraft from transporting persons, pro-
pert y or mail for compensation or hire between points in the
united States61 • The Act only permits the Department of
Transport to authorize cabotage traffic in certain very con-
ditioned emergency situations.
The development of a common civil aviation policy within the
EEC and the emergence of the concept "European cabotage"
have now also created sorne confusion in the U.S. Many U.S.
carriers fear that in 1992 air traffic from one EEC country
te another will be deemed to be "internaI travel" wi thin the
EEC which is prohibited to foreign carriers. T~e carriers
'.
50
fear that e.g. their fifth freedom rights between London-
Paris will be jeopardized, unless EEC airlines are offered
reciprocal accessibility in the U.S. 62 •
This is a misunderstanding. The Commission presented in Fe
bruary 1990 a proposaI for a Council Decision on "Comll1uni ty
Relations with Third Countries in Aviation Matters63 • In
this proposaI the Commission states that it should be consi-
dered that the creation of the InternaI Market has as a
logical consequence for the outside world that the community
should be considered as one entity. The Commission states
that the experience with the "package" so far has shown that
the liberalized traffic rights are being used by Community
air carriers. The value of these traffic rights is in-
fluenced by whether or not other airlines are present on the
route or have the intention to enter the market. The possi-
bility for airlines from third countries to enter the market
on routes between Member states therefore directly in-
fluences Community legislation and trade between Member
states. In these circumstances it is, according to the Com-
mission, necessary to consider fifth freedom rights to air-
lines from third countries as a Community asset.
This proposaI was not passed at the Council meeting in June
1990. The proposaI is actually saying that in the future it
should be the Commission and not the single Member states
which will negotiate fifth freedom rights in the Community.
- -----
51
The Commission' s use of the term "Communi ty cabotage area"
is confusing, as the Commjssion cannat decide that aIl the
EEC Member states constitute one territory or one sovereign
entity. The Commission's alternative term: " international
aviation area" is on the other hand sui table.
In fact, this proposaI from the Commission is not on EEC ca-
bot age by third countries but on the granting of fifth
freedom rights to third countries.
It is interesting to note that US civil aviation authorities
have resigned themselves much more readily than European
civil aviation authorities to the ide a that in dealing with
the EEC foreign nations shall have to reach agreements with
the Community as a single entity rather than with the indi-
vidual states.
The European carriers are, as mentioned earlier, very in-
terested in getting cabotage rights in the U.S. But what is
the economic value of cabotage rights? Some authors suggest
that the estimated value for European carriers in the U.S.
has been exaggerated64 • A cabotage extension of a transat-
lantic flight for example, would find the competition from
U.S. carriers very harde The deregulati0n of airlines in the
U.s. since 1978 has brought about the fluctuation of airfa-
res as a reflection of changes in supply and ~emand.
52
Over 80% of aIl tickets in the u.s. are sold through un-
regulated travel agencies which are free to modify their
commission as they see fit. And, in addition, the growth of
frequent flyer programs may have the consequence that tra
vellers want to stay with their frequent flyer airline.
To date the debate and proposaIs from the Commission on ca-
botage ri~hts have been limited to the question whether non-
resident air carriers from one EEC country should receive
cabotage riqhts in another EEC country. The debate could
become broader and include the question whether air carriers
from non-EEC countries should receive domestic traffic
rights in EEC countries65 • It would have great impact to
open up the domestic air transport markets to competition
from foreign non-EEC carriers. The economic value of domes-
tic air traffic is enormous in the EEC. For instance the do-
mestic markets for the routes Paris-Nice, Paris-Marseilles,
Milan-Rome and Paris-Toulouse are larger than the market for
the second Iargest international route in the EEC: Amster
dam-London66 •
As the Member states could not agree on a proposaI from the
Commission on cabotage at the Council meeting in June 1990,
which would give cabotage rights to the Member states under
very strict condit~~ns, the Member states are even less
willing to grant cabotage rights to third countries. Howe-
ver, the Member states know that, after 1992, in order to
f
•
53
create a common ëir transport market, they have to open up
liberalization of the regulation of cabotage. But it will
take time and it certainly will take much longer time before
- if we ever - see a third contry carrier fly e.g.
Paris-Marseilles - just as the .~mericans will not let the
Europeans fly cabotage routes in the u.s. in near future.
Art. 7 of the Chicago Convention still applies. So if the
U.S. grant EEC carriers cabotage rights, carriers from other
states can demand the sarne rights. The Commission may be the
body which in the future negotiates fifth freedom rights
with third contries - but this has nothing to do with cabo
tage as the EEC is no state and cabotage can only take place
within astate - and it takes much more than a proposaI from
the Commission to change this!
54
5. International Regulation of Fiftb Freedo. Rights.
a. The Chicago Convention.
Another kind of extranational traffic is the fifth freedom
right, which is the privilege of embarking or disembarking
for an aircraft/airline of state A in state B traffic which
is destined for or has come from state C. Fifth freedom
rights can be divided into "intermediate" fifth t-reedom
traffic and "beyond" fifth freedom traffic. Where state C is
geographically located between states A and B, one speaks of
"intermediate" fifth freedom, and where in relation to state
Astate C is located beyond the territory of state B, one
speaks of "beyond" fifth freedom67 •
The Chicago Conference was far less successfull in the field
of international air commerce than in the technical field of
international civil aviation, and therefore international
air commerce is to a much larger extent governed by bilate
raI air transport agreements than by mul"tilateral agree-
ments.
The Chicago Convention of 7 December 1944 actually gave very
little "freedom" in the political public international law
sense as the very important art. 1 on sovereignty states
that "the Contracting states recognize that every state has
1
55
complete and exclusive sovereignty over the airspace above
its territory". It was the idea at the time of the chicago
Conference that a multilateral understanding between states
on the exchange of commercial aviation rights would be ex
changed. This never happened and the bilateral air transport
agreements became the forum for exchange of freedom rights.
However, there were other multilateral agreements: "The In
ternational Air Service Transit Agreement" exchanged first
and second freedoms of the air, and "The International Air
Transport Agreement" purported to exchange multilaterally
third, fourth and fifth freedom rights. The latter never had
any value due to lack of ratifications. It is important to
note that for non-scheduled aviation services the Chicago
Convention succeeded in exchanging some of the freedoms,
namely first and second freedoms and the remaining three
freedoms, the commercial ones, under strict conditions.
The import~nt aviation nations came to the Chicago Con
ference with very different positions. The united states and
most Latin American nations wanted free competition and the
U.K., Canada and most European nations rejected free compe
tition and wanted ua system of 'Jrder in the air". Especially
the issue of fifth freedom traffic made the large-scale mul
tilateral agreement on international commercial air trans
port impossible. This was left unsettled among other issues
such as air tariffs and capacity to the provisional Interna
tional civil Aviation Organization (PICAO) for a further
56
study.
The most important provisions of the Chicago Convention in
connection with fifth freedom rights are art. 5 on non-
scheduled flights and art. 6 on scheduled air service. Art.
6 is very clear (as opposed to art. 7) and states that "no
scheduled international air service may be operated over or
into the territory of a contracting State, except with the
special permission or other authorization of that State and
in accordance with the terms of such permission or authori
zation". Attempts have been made after the Chicago Con
vention to achieve a multilateral agreement on commercial
rights, but it was impossible to reach an agreement. Fifth
freedom rights were always the problem, and after sorne at
tempts the ICAO Assembly in 1953 concluded in a resolution
that "There is no present prospect of achieving a universal
multilateral agreement".
However, it has been possible to reach a regional multilate
raI agreement, but only for non-scheduled air services: "The
Multilateral Agreement on Commercial Rights of Non-scheduled
Air Services in Europe", usually called the 1956 Paris
Agreement.
1
57
b. Bilateral Air Transport Agreements.
The Chicago Conference recommended to states wishing to con
clude bilateral air transport agreements a model called the
"Chicago standard Agreement". One of the objectives of a bi
lateral agreement is to specify the routes and rights. The
granting of rights is reciprocal, but the rights granted do
not have to be symmetrical68 •
The first important post-World War II bilateral Air trans
port agreement was concluded between the u.s. and the U.K.
in February 1946 and is known as the Bermuda l Agreement.
This Bermuda l Agreement became the standard model for the
majority of aIl bilateral air transport agreements in the
world. This agreement exchanged the freedoms 1-4 dnd also
freedom 5 for scheduled international air services69 •
The granting of a freedom right or route is important but
capacity on the route also plays an significant role. The
term of capacity is normally used to denote the traffic car
rying ability of an airlina determined by su ch factors as
type of aircraft and frequency of flights. The Chicago stan
dard Agreement had no specifie provision on capacity and the
Bermuda l has a very vague provision on capacity. The provi
sion states e.g. that there must be a fair and equal oppor
tunity for the carriers to operate on the agreed air route
58
and that the primary objective is to meet traffie demands.
It is certain that a strict 50-50 percent traffie division
was not intended - but unfair competition should be avoided.
The aviation duthorities were not required to approve the
capacity offered by the air carriers but in case of
trouble or dis~atisfaction a system of consultations was
provided for.
There are other widely used models for bilateral agreements,
namely the Pre-determination Model and the U.S. Liberal Mo
del70 • The Pre-determination mode 1 exchanges 1-5 freeèom
rights, but it has a system of prior governmental approval
or determination of capacity and very often only 50-50 capa
city sharing is approved. In 1978 onder the deregulation
tendency the U.S. Liberal Model was introduced. It differs
from the other models in two ways: there i5 free determina-
tion of capacity and not only 1-5 freedom rights are exchar-
ged, also sixth freedom can be exchanged. sixth freedom
traffic is traffic carried by the aircraft/ai~line of state
A between Band C, but via a point in the territory of state
A.
An example of a Pre-determinal type is the bilateral agree
ment between Can~da and China of 1973, which clearly states
that capacity shall be subject te the approval of their re-
spective aeronautical authorities. This agreement does not
exchange fifth freedom rights.
1
59
The U. S-Belgium bilateral air tr,msport agreement of 1980 is
the liberal type. It does not mention anything about Govern
mental approval of capacity. The Annex of the agreement
grants fifth freedom rights for the U.S: "to any point ,or
points outside Belgium without geographical or directional
limitations". Belgium on the other hand is given beyond
rights to any point or points in Canada and/or Mexico. This
agreement is a typical example of the fact that the granting
of rights ("The core of the bargain between the contracting
parties": Ben Cheng) does not have to be symmetrical - or
fair!
......
r •
60
6. Fifth Freedoa Rights in the EEC Liberalization of Air
Services.
a. The first Phase: The EEC Transport Package of 14 Decem-
ber 1987.
One of the stated objectives of the Council decision on the
"package" on capac i ty shar ing and market access7 1 was to
relax the constraints on capacity imposed on airlines by the
present bilateral system. In place of the traditional 50/50
division between states of permitted capacity of third and
fourth freedom carriers of any Member state the decision
stated that carriers of Member states could durinq a period
of two years from 1 October 1987 have a capacity share of as
much as 55% or as li ttle as 45% of the total, and that
during the following year the relevant percentages should be
60% and 40%.
The "package" stated that, subject to Many exceptions and
limitations, third and fourth freedom rights services should
be permitted between category l airports and regional air-
ports, and that third ~nd fourth freedom carriers might
combine services provided that no trafic rights existed
between the combined points72 •
The Council decision aiso has a provision on fifth freedom
61
rights. According to article 8 of the decision a Community
air carrier shall he permitted to operate a fifth freedom
scheduled air service where third or fourth fredom traffic
rights exists, provided that the service meets the following
conditions:
(a) it is authorized by the state of registration of the
Community air carrier concerned
(b) it is operated as an extension of a service from or as a
preliminary of a service to its state of registration
(c) it is operated between two airports, at least one of
which is not a category l airport.
(d) and not more than 30% of the carrier's annual capacity
on the route concerned may be used for the carriage of
fifth-freedom passengers.
Limitation (a) shows clearly that this decision is restric
ted not only to intra-EEC carriage but also to aIl EEC
registered aircrafts only. If an aircraft from an EEC Member
state is registered in a non-EEC sta~e for taxation or other
convenience reasons, it loses its EEC nationality, for acc-
ording to art. 17 of the Chicago Convention aircrafts have
the nationality of the state in which they are registered,
and according to art. 18 on aircraft cannot be validly re-
«
62
gistered in more than one State.
Condition (b) indicates tha~ only traditional intermediate
and beyond fifth freedom rights are allowed. sixth freedom,
which is traffic carried by the aircraft or the airlines of
state A between states Band C, but via a point in State A,
and seventh freedom, traffic carried by the aircraft or the
airlines of state A between states Band C on dn air service
which does not originate in state A, is not destined for
state A nor passes through State A, are not exchanged.
Condition (c) is interesting as it shows that one of the
main ideas is to support the traffic to the smaller regional
airports. This is just in line with the Directive issued by
• the Council in 1983, and changed again in 1989, concerning
the authorization of scheduled inter-regional air services.
73 This Directive has been of limited importance in practice
because of the exclusion of category 1 airports74 , but this
new Council decision breathed new life into regional air
services in the EEC.
And finally condition (d) shows how cautious the Member
states still are when passing liberalizations measures.
A special provision was included for Spain, so that the part
of the decision on fifth freedom rights does not apply to
routes to and from Spain or to spanish airlines. In the case
t
"
63
of Gibraltar, special rules for Spain had to be agreed upon
for the "package" to be carried out. The Spanish Government
had taken the view that Gibraltar Airport should be added to
the list of the smaller Spanish airports which were exempt
from certain of the council' s proposals. It claimed that the
site of this airport, the isthmus joining Gibraltar to
Spain, was not included in the ~arritory ceded to Britain
under the treaty of Utrecht in 1713. This position was and
remains unacceptable to the British Government75 •
The Council decision remains in force until 1 November 1990.
During the 21 / 2 years since the enforcement of the decision
few fifth freedom rights have been granted, but sorne examp
les are SAS' route Copenhagen-Glasgow-Dublin and Air Lingus '
route Dublin-Manchester-Copenhagen.
b. The Second Phase.
When the Commission came out with its first );.'roposal for the
second phase of the liberalization of thE' EEC air transport
in September 1989, i t stated clearly i ts dissatisfaction
that fifth freedom operations had not increased significant
ly during the first phase. The Commission had therefore
decided to gradually expand the scope of fifth freedom in
1991 and 199276 •
According to article 8 of the proposaI for a council Regula-
64
tion on market access and capacity sharing Community air
carriers shaii be permitted to exercise fifth freedom rights
between combined points in two different Member states - and
this time only under two conditions (a) the traffic rights
shali be exercised on a service which constitutes an exten-
sion of a service from, or as a preliminary of a servic~ to,
its state of registration (a condition familiar from the
"package" of 1987) and (b) the air carriers shaii not use
more than 50% of their annuai seat capacity on the service
concerned for the carriage of fifth freedom passengers. This
limitation does not apply to aircrafts with no more than 100
seats.
The Commission also suggested a provision about "change of
gate" - according to which the air carrier May for the fifth
freedom service use an airera ft which is different, but not
bigger than the aircraft which it uses for the third and
fourth freedom services.
At the Council meeting on 18 June 1990, aIl the Member
states agreed to the proposaI from the Commission on fifth
freedom rights. During discussions from September 1989 to
June 1990 in the Transport Working Group under the Council,
however, an extra condition was added to art. 8 - namely
about the "change of gate" situation. When more than one
fifth freedom service is operated as an extension of or as a
preliminary to a third or fourth freedom service, the capa-
,
•
65
city provision of the article (50%) shall represent the gg
gregated seat capacity available on those fifth freedom ser
vices?7.
The new liberalization measures as to fifth freedom rights
in the second "package" are fairly comprehensive. It is very
important that fifth freedom rights are allowed between aIl
kinds of airports, and are not restricted to situations in
which at least one airport is not a category 1 airport. SAS,
for instance will naw be able to fly Capenhagen-London
Dublin.
This new Council Regulation, which will be enforced on 1 No
vember 1990, also has a new provision which states that air
carriers who wish ta operate a fifth freedom service in ac
cordance with art. 8 shall send a request to the Member
States involved with aIl relevant information cancerning
seat capacity and third and fourth freedom service. This
provision, paragraph 4 of article 8, was not in the Commis
sion's first proposaI of September 1989. It shows clearly
how used the Member States are to Government regulation of
air tranpsort. Th3 Member States are not yet ready, willing
and able to hand over the tasks of treatment of airline app
lications, requests, acknowledgements, etc. to the Commis
sion.
It still seems a long way before bilateral capacity control
---~~-~-~-
66
« will disappear and traffic rights will no longer be the
result of bilateral bargaining but will be direcly establis-
hed by Community law.
.'
67
7. External Relations in connection vi th Fifth Freedo.
Rights.
The first step of the 1ibera1ization of the EEC air trans-
port, the "package" of December 1987, had no provisions or
even comments to the externa1 aviation relations - it was
simply an intra-EEC package. But aviation is certain1y an
industry which does not keep to the area within the borders
of the EEC Member states, and fifth freedom rights, e.g. a
route like London-paris-New York, never can be regulated by
EEC Regulations only. This i~ 1eft to be negotiated and re-
gulated by bilateral air transport agreements - either by
the single Member states or perhaps in the future by the
Commission with third countries.
There are in average about 60 bi1atera1 air transport agree
ments between each individual Member state and third coun-
tries78 • The Netherlands e.g. has 85 bilateral agreements,
U.K. has 72, Germany has 80, Italy has 38 and Ireland has 12
agreements. The "package" of December 1987 does not touch as
su ch the bilateral system of air transport agreements
between Member states and third countries. The "package" ho-
wever, does have sorne impact on third country carriers. The
Directive on fares of the "package" provides that only third
and foutth freedom air carriers - that is, Community carri-
ers can act as price leaders. The Council Regulations on
,
68
competition also apply to fifth freedom operators within 1~he
community, in spite of the fact that they are not EEC carri-
ers. This follows from the Europeen Court of Justice Cases,
"The Wood Pulp Case" of 1988 and "The Ahmeci Saeed Case" of
1989. The EEC competition rules apply to conduct outside the
EEC which has effect within the EEC. These rules affect in-
tra-airline tariff agreements between non-EEC carriers
which have the effects within the EEC - e.g. American carri-
ers flying fifth freedom routes within the EEC. The latter
of the cases states that art. 86 of the Treaty applies di-
rectly, ~ven in the absence of implementing rules, to the
behaviour of carriers on routes between the Community and
third countries.
During the first phase of the liberalization of the EEC air
transport, the outside world has not felt any significant
changes, since traffic rights by non-EEC carriers in EEC and
traffic by EEC carriers in non EEC states have been regula
ted by bilateral air transport agreements.
The Commission's proposal of 7 September 1989 on Council Re-
gUlation of market access and capacity sharing, which - like
the "1987-package" is restricted to intra-EEC air transport,
has a very vague provision in art. 8, paragraph 2, stating
that Member States shall not oppose the operation by Commu-
nit y air carriers of a scheduled fifth freedom air service
between an airport within the Community and an airport in a
69
third country if the authorities of the third country con-
cerned agree to the service in question. This provision was
agreed upon with no changes at the Councii meeting in June
199079 • This provision is not very daring, but the commis
sion's proposal of February 1990 for an Councii decision on
Community relations with third countries is much more "full
of explosives". In this proposaI, which was not agreed upon
at the Council meeting in June 1990 the Commission expresses
conviction that the possibility for airlines from third
countries to enter the market on routes between Member
states directly influences community legislation and trade
and it is therefore necessary to consider fifth freedom
rights to non-EEC airlines as a Community asset80 • The Com
mission aiso states that the "Package" of 1987 and the
second phase proposaIs of 1989 limit Community carriers in
their capacity and in fifth freedom operations, whereas
fifth freedom onerations by nen-EEC carriers are not lirnited
by Community legislation. AlI that is necessary for these
carriers for such operations is the approval of two Member
states. The carriers from the Member states are therefore
discriminated against.
If fifth freedom operation by third contry carriers in the
EEC in the future is to be regarded as a Cornrnunity asset te
be negotiated by the Commission, aIl the bilateral agree-
ments of the Member states with third contries must be chan-
ged. This is an enormous step. Again the commission has
1
(
70
"been out" too early! Even if the Member states agree to
under a threat of art. 113 of the Treaty by the Commission -
to give their power to the Commission to negotiate bilateral
air transport agreements with third contries a great deal of
third countries are not willing to negotiate with the Com-
mission instead of with the individual Member states, as
sorne states are of the opinion that bilateral agreements
take precedence over EEC Treaty commitments81 •
It is Inevitable that the more integrated the EEC air trans-
port market becomes, the more logical and necessary it seems
to have bilateral air transport agreements negotiated and
included between the EEC as such and contries outside Euro-
pe82 , leaving open the possibility of bilateral agreements
between individual EEC states and third cor tries in appro-
priate cases; and also leaving open the possibility of
common European-wide multilateral agreements with third
~ountries through The European civil Aviation Conference
(ECAC) which is an aviation organization of 24 European
Member states with organizational strong ] inks wi th the
ICAO.
At least until the end of the second phase of the liberali
zation of the EEC air transport, which shall be revised by
31 July 1992 at the latest, fifth freedom rights in the EEC
by third states will be regulated by bilateral agreements by
the individual Member states. And as much as these agree-
1 ments are influenced by "give-and-take"
Member states will have to, in order
71
negotiations, the
to achieve fifth
freedom rights in non-EEC states, open up Europe for further
competition from third country carriers. It will be interes
ting to see how much free compet1tion the EEC carriers can
take both from inside and outside the EEC. In many ways
"American conditions" seem to be the future: A common policy
for inter- and intra-EEC transportation based on a "survival
of the fittest" philosophy.
72
IV. IlARITDIE TRANSPORT.
1. The Background for a Co_on EEC llariti.e Transport
Policv.
As in the case of air transport, a special regime is provi-
ded for by the EEC Treaty in respect of maritime transport.
According to article 84, title IV on Transport shall apply
to transport by rail, road and inland waterway, but the
Council may acting by a qualified majority decide to what
extent and by what procedure approprjate provisions may be
laid down for sea and air transport. For many years no
action was taken on the basis of this provision and there
was even a controversy - as mentioned before under the chap-
ters on air law - whether even the general rules of the
Treaty applied to air transport and maritime transport. This
was settled in the affirmative in 1974 by the European Court
cf .Justice in the "The French Merchant Seamen' s Case"s 3. As
a result of the decision of the Court of Justice, of the
growing importance of maritime transport to the enlarged
Community and of particular problems arising in this sector,
the Community slowly began to develop policies with respect
te this mode of transport. However, no comprehensive deci-
sion was taken until 1986 to lay down the general lines of
an EEC Maritime transport policy. until 1986 the Council
proceeded on an ad hoc basis and developed a policy to me et
particular problems as they had arisenS4 •
, ! J i
73
ProposaIs relating to air transport and to maritime trans-
port have similar legislative histories. Although articles
85 and 86 of the Treaty could be considered by analogy with
air transport to be applicable to maritime transport in the
lighL of the Court of Justice decision in the 1986 Nouvelles
Frontieres Case, (which has been described in the air trans-
port chapter 1), no implementing regulation had bee.l enacted
pursuant to article 87 of the Treaty before 22 December 1986
when the "EEC Maritime Transport Package" was agreed upon by
the Council, one year before the "EEC Air Transport
Package"85 .
"The Maritime Transport Package" of 22 December 1986 con-
sists of four Regulations:
- a Council Regulation applying the principle of freedom to
provide services to maritime transport between Member
states and between Meuber states and third countriesB 6 •
a Council Regulation on unfair pricing practices in mari-
time transport87 .
a Council Regulation concerning co-ordinated action to sa-
feguard free access to cargoes in ocean tradeB8 •
- a Council Regulation laying down detailed rules for appli-
74
cation of articles 85 and 86 of the Treaty to maritime
transport89 •
The Commission issued in 1985 together with the proposaI for
the above mentioned Council Regulations also a proposaI on
EEC maritime cabotage, but the council felt unable either to
adopt the proposaI or to reach any other conclusion with
regard to cabotage9 0 • The Comndssion' s proposaI was not
withdrawn so consequently the Council remained called upon
to solve this issue.
A number of Council Regulations, Decisions, Recommendation
and Resolutions have been adopted in the field of maritime
transport since 1977. They deal mostly with safety at sea,
the prevention of pollution, procedure, marked access and
commercial behavior - e.g. collection of information concer-
ning thp activities of certain third country shipowners in
the field of cargo shipping91 • The Regulations are of ,inor
importance to maritime transport in general wh~n compaired
to the 1986-Package and to the very important Council Regu
lation of 15 May 1979 concerning the ratification by Member
stat~s of the United Nations Convention on the Code of
Conduct for Liner Conferences92 •
As a whole, the Il 1986-Package" embodies the determination of
the Community to ensure free and non-discriminatory access
to cargoes for Community shipowners and to secure free com-
75
petition on a commercial basis in the trades to, from and
within the Community. There seems to be a clear influence of
the "1986-Maritime Transport Package" on the "1987-Air
Transport Package" as both "packages" deal with market
access, fares, application of the competition rules of the
Treaty, and group exemptions from the competition rules.
The Community is not only a major trading nation - actually
it is the biggest trading partner in the world - but it is
also a major maritime nation. About 90% of its foreign trade
is carried by sea, and the internaI trade has to rely on
about 33% on transport by ship. Approxamately 70% of inter-
nal Community trade is carried by Community flag carries,
whereas the level for its foreign trade is about 40%93. The
Community is interested in free trade and in an open world-
wide shipping market. These interests are reflected in the
Community maritime transport policy which includes the fol-
lowing in its objectives94 :
- the safeguarding of free access to a free world shipping
market which will offer the advantages required for an
economic entity whose lifeline is trade.
- the promotion of fair competition on the world shipping
market which will quarantee, in the long term, the availa-
bility of the entrepreneurial skills required.
•
76
- to promote social progress for the Community seafarers by
improving their employment and working conditions.
- to maintain and improve the safety standards and the pro-
tection of the environment.
1
77
2. EEC Regulation of Inland Watervay Transport.
The White Paper from the Commission to the Council of 14
June 1985 on the completion of the InternaI Market95 stated
among other things that for the international transport of
goods by inland waterways, freedom to provide services,
where this is not yet the case, should be introduced. Where
necessary, conditions should be established under which non
resident carriers may operate inland navigation schemes in
another Member state (cabotage).
As rail and road transport the provisions of Title IV of the
Treaty on Transport apply directly to transport by in land
waterways, so the very important article 75 applies, accor
ding to which the Council shall lay down:
a) Common rules applicante to international transport to or
from the territory of a Member state or passing across
the territory of one or more Member states and
b) The conditions under which non-resident carriers may
operate transport services within a Member state (cabota
ge) .
Although the EEC Council has not yet adopted any measures to
introduce freedom to provide services for carriage by inland
{
78
waterway in the Community, free access to the market is
secured by the "Revised Convention for Rhine Navigation" for
the most important inland waterways of the community, that
is the Rhine and its principal tributaries96 •
The major problem with this mode of transport is the chronic
excess of carrying capacity. "The Central Commission for the
l~hine" is rl..:.sponsible for regulating the inland waterway
sector and actions by the Community need to take account of
the work of this body in which six Member states as well as
a third country, Switzerland, participate as members, and
where the Community has observer status.
Sorne general measures have been taken at Community level
specifie to inland waterways relating to problems of overca-
pacity, access to the market and vessels from third states,
safety and social qustions.
The first measure adopted by the Community with respect to
inland waterway was a Commission recommp.ndation of 1968 to
Mernber States to introduce measures to secure the withdrawal
of the excess capacity97.
EEC council actions have also been taken to co-ordinate the
actions of EEC Member States with respect to a modification
of the "Revised Convention for Rhine Navigation" in order to
control access to the inland waterway network of the Commu-
79
nit y, to ensure that there would be no discrimination
between vessels flying the flag of EEC Member states and to
safeguard the development of a common transport policy. The
Council issued a Decision of 19 December 1978 concerning the
adoption by certain Member states of two additional proto
cols to the Rhine Conventions. This decision provided that
Member states which were also parties to the Rhine Con
vention were obliged to adopt the two protocols.
The first protocol limited the right to carry goods and
persons between two points situated in the relevant water
ways to vessels which are deemed to belong to the Rhine na
vigation, i.e. those having the right to fly the flag of the
contracting states and the documentation issued by a compe
tent authority to prove this right.
The second protocol defined the conditions under which the
documentation may be issued which prove that a boat belongs
to the Rhine Navigation. This documentation may only be de
livered by the competent authority of the state concerned to
a boat which has a real link with the state, and this link
is to be determined on the basis of equality of treatment of
the contracting parties98 • The Community incorporated jnto
Community law by a Council Regulation of 1985 the conditions
for certification of a vessel's inclusion in the Rhine Navi
gation99 •
80
A formaI liberalization of EEC inland waterway cabotage
remains to be achieved, although in the majority of the
Member states concerned cabotage services may be performed.
A commission proposal which dates from 1967100 concerns the
provisions of inland navigation services, including cabota-
ge. However, this proposaI has Iain before the Council for
more than 20 years and has not been adopted, withdrawn or
modified. It has not been regarded as urgent in the Communi
ty as the discussions and the proposaIs on cabotage in air,
maritime and road transport.
l
81
3. BEC Regulation of Mariti.e Cabotage.
a. "The EEC Maritime Transport Package" of 22 December 1986.
When the Council in DecemLer 1986 adopted the EEC "Maritime
Transport Package" consistjng of four Regulations which con
stitute the core of the current maritime transport legisla
tion of the European Community it was actually only 4/5 of
the Commission's proposaIs which was agreed upon. Although
the Commission issued a proposaI for a council Regulation
applying the principle of freedom to provide services to ma
ritime transport leading to the adoption of a Regulation co
vering the case of cabotage between regions of the Communi
ty, the Council felt unable either ta adopt the proposaI or
to reach any other conclusion with regard to cabotage101 •
The Commission issued 3 proposaI of liberalization of cabo
tage in the EEC on 19 March 1985102 • In this proposaI the
commission suggested that in accordance with article 3 (e)
of the Treaty on the abolishment between Member states of
obstacles to freedom of movements of services, su ch obstac
les and restrictions shouid be abolished for maritime trans
port in the Community 1 July 1986 at the Iatest.
According to the proposaI, this shaii apply to maritime
transport services, including:
82
a) transport of passengers and goods at sea between parts
within a Member state, including this Member states over-
seas territories (coasting trade).
b) tran~port of passengers and goods at sea between a port
in a Member state and installations on this Member
state's continental shelf (off-shore supply services).
c) transport of passengers and goods at sea between a port
in a Member state and a port in another Member state.
d) transport of passengers and goods at sea which is carried
out by a shipowner belonging to a Member state, between
ports in another Member state and parts in a third
country (cross-trading).
The ward "cabotage" was not directly mentioned in the propo
saIs but can be labelled under group a) on coasting trade.
The Council was unable to reach an agreement on a fifth Re-
gulation, applying the principle of freedom to provide
service to maritime trar.sport wi thin Member States when it
adopted the four Regulations concerning maritime transport
on 22 December 1986:
1. Regulation No 4055/86 applying the principle of freedom
83
to provide services to maritime transport between Member
states and between Member states and third countries103 •
This Regulation applies to nationals of Member states who
are established in a Member state, to nationals of Member
states established outside the Community and to shipping
companies established outside the Community and control
led by nationals of a Member state if that vessel is re
gistered in that Member state.
The purpose of the Regulation is to lift any existing re
strictions - e.g. the restrictions in some Member states
to carry certain goods or restrictions through the exis
tence of cargo sharing clauses in bilateral agreements.
The Regulation provides for a phasing out of these res
trictions according to a time schedule the la st day of
which is 1 January 1993. At that time there will be full
freedom for Community nationals to operate ships to and
from other Member states than their own country.
2. Regulation No 4056/86 laying down the detailed rules of
articles 85 and 86 of the Treaty to maritime transport-
1 0 4
The purpose of this Regulation is to ensure that the com
petition principles laid down in articles 85 and 86 can
be applied effectively to agreements, concerted practices
f
84
and to abuses of dominant position in order to protect
the interests of transport users105 • But as for air
transport and the application of the competition rules
there are also exception ru les which apply to agreements
which are considered to be beneficial or harmless. These
exception rule~ apply for technical agreements, individu-
al exceptions and group exceptiops for liner conferences.
The liner conferences are subject to effective competi-
tion from non-conference lines in open trade and are
under a number of obligations, e.g. to consult with
transport users on general issues or principles concer-
ning rates, conditions and quality of services106 •
3. Regulation No 4057 on unfair pricing practices in mariti-
me transport107 •
According to this Regulation, the Community can redress a
situation of fair competition on a commercial basis on
foreign third country shipowners, if the foreign shipow-
ner benefits from an uncommercial advantage, g~d the
foreign shipowner charges freight rates which are lower
than the normal freight rates, and Community shipowners
suffer injury owing to the serious disruption of the
freight pattern. It is determined what rate js "normal"
by taking into account the comparable ra~e of commercial-
ly operating companies or otherwise the costs of such
companies.
,
85
4. Regulation No 4058/86 concerning co-ordinated action to
safeguard free access to cargoes in ocean trades108 •
This Regulation enables the Community to provide for
actions if the competitive position of Member states mer
chant fleets or Member states' trading interests are ad
versely affected by cargo reservation to shipping compa
nies of third countries or if required by an internatio
nal agreement.
The Regulation covers aIl types of cargoes and shipping
services as weIl as passenger transport. Co-ordinated
actions may take the form of diplomatie representation or
counter-measures against shipping companies of the third
country. Diplomatic representations have ta be made
before counter-measures which may consist of an obliga
tion to obtain a permit ta load or discharge, or/and a
quota, or/and a tax or dut Y which will be applied in a
specific trade or in a range of ports against shipping
c·\)mpanies of the third country concerned.
The reason why the Council in 1986 was unable to re~ch an
agreement or a fifth Regulation on cabotage was that five
delegations - Greece, Spain, Italy, Portugal and France -
entered general reservations109 • The strongest opposition
to liberalization of cabotage in the Community cornes
86
first and foremost from Greece and secondly from Italy.
Spain and Portug31 make common cause with their neighbour
states. France is also against free cabotage as it fears
the competition froln the very effective and skilful car-
riers from Holland and Belgium in the north and from the
low-priced carriers from Italy and spain in the south.
The rest of the Member states were in 1985-1986 and still
are in favour of free cabotage in the Community.
Greece's argumentation for its resistence is that foreign
ships from other Member States will only be interested in
domestic Greek routes e.g. Rhodes-Athens or Crete-
Mykonos in the height of the season, and Greece therefore
fears that as the Greek shipowners cannot compete with
the carriers from other EEC Member States, the Greek car-
riers will only be left with the routes outside the
height of the season which are not profitable, and this
will aIl i~ aIl give the result that the routes will not
be served at aIl outside the season.
In Denmark, united Kingdom and Hc>lland it is the position
that this problem can be solved by government regulation
e.g. by a regulation demanding that a cabotage route
must be served the whole year. It is understandable that
Greece fears the competition from other Member states,
because Greece has an old fleet which is rather expensive
to run because of the high number of employees, but the
----------------
87
Danish position is that this problem will not be solved
by protectionism110 •
Denmark is very much in favour of free cabotage in EEC,
and is clearly against protections when it comes to mari
time transport. Denmark has furthermore many world-wide
maritime routes with stops in Europe - for example in the
south of France, where the ShlpS have room for cargo and
passengers to the North of France.
The strongest supporters of free cabotage in the Communi
ty are the UR and Ireland. These two countries are the
only Member states to have 100% free cabotage in their
national legislation and are therefore very interested in
homogeneous legislation in the other Member states in
order not to lose competition. In the UK there is now a
political pressure on the Government for national regula
tion of cabotage, since it has not yet been possible to
reach an agreement in the EEC on free cabotage within the
Community.
In the remaining Me~ber states there exists more or less
regulation of cabotage. In Denmark there is almost free
cabotage. According to Danish legislation there is
totally free cabotage for foreign ships up to 499 mt.
Foreign ships of 500 mt or more are not allowed to sail
Danish domestic routes unless they receive a permission
88
from the Danish Ministry of Industry, which is given very
often. A great deal of Danish domestic routes at sea are
served by foreign ships - e.g. 20% of aIl Danish domestic
maritime transport is carryed out by Swedish carrierslll •
The Danish Ministry of Industry has sometimes been criti-
zed by the Danish "Shipowner's Association for Smaller
Ships" for having a too gentle practise when giving per-
missions!
Although the proposaI on cabotage of 1985 from the Com-
mission was not adopted in 1986 together with the rest of
the "package", the Commission did not give up the idea
of a Iiberalization of cabotage ar1-i in its communication
of 31 July 1989 on measures to improve the operating con··
ditions of community shipping the Commission replaced its
proposaI on cabotagell2 •
After a first policy debate on 16 October 1989, the
Council adopted at its meeting on 4-5 December 1989 conc-
lus ions on shipping where 11 delegations and the Commis-
sion agreed to actively pur sue discussions on the propo-
salon cabotage as parts of the process of the completion
of "The InternaI Market".
Severai delegations requested parailel progress in the
harmonization of the operating conditions of ships, and
the Greek delegation was unable to concur with these con-
..
..
89
clusions and maintained its general reservation on the
proposaI.
b. Council Meetings regarding Maritime Transport during
1990.
The year 1990 has been more active as far as attempts on EEC
regulation of Maritime cabotage have been concerned, than
the years since 1985, when the Commission introduced a pro
posaI on liberalization of EEC cabotage for the first time.
Especially UK and Ireland have made reseach during the
spring of 1990 on EEC cabotage and have together been pres
sing on new debates in the Couneil and its working groups.
This resulted in a proposaI from the Commission on cabotage
being included and diseussed at the Couneil meeting on 29
March 1990. No decision was agreed upon at this meeting, but
the Permanent Representatives' Committee was requested to
pursue its work regarding cabotage.
The proposaI for a Council Regulation applying the principle
of freedom ta provide services ta maritime transport within
Member states was issued on 28 May 1990 from the Commission
together with the eomments of the delegations. This was
issued as preparation of the couneil meeting on 18/19 June
19901 1 J •
1
90
The proposaI consists of 7 articles in aIl. Art. 1 states
that restrictions on freedom to provide maritime transport
services within Member states shall be abolished in respect
of Community shipowners who are established in a Member
state of the Community other than that of the person for
whom the services are intended. However, there is a limita
tion as the proposaI states that this only applies for
vessels registered in the Community Ship Register and which
do not exceed 6.000 grt.
According to art. 1, this Regulation shall also apply to na
tionals of the Member states established outside the Commu
nit y, and to shipping companies established outside the Com
munit y and controlled by nationals of a Member state if the
vessels are registered in that Member state.
Art. 1 furthermore defines which maritime transport services
are covered by the Regulation, namely cabotage: the carriage
of passengers or goods between parts in any one Member
state, including overseas departments of that State, and
off-shore supply services: the carriage of passengers and
goods by sea between any part in a Member state and instal
lation or structures on the continental shelf of that Member
state.
The Danish, German, Belgian, Dutch and UK delegation had in
the comments stated that they were not in favour of the
,
1
y 1
•
91
adoption of a "Community Ship Register". These delegations
were satisfied with the "Cornmunity Shipowner" within the
meaning frarn the "package" of Decernber 19861 1 4. The sarne
states were also against any tonnage limitation, as they
wanted 100% free cabotage.
The Greek delegation wanted a further tonnage limitation, as
it requested that the Regulation should benefit only ships
of 500-3.000 grt registered in a Mernber state and operated
by companies 51% owned by Cornmunity nationals.
Art. 1 aiso has the very interesting provision that Member
states where the cabotage takes place May require that the
vessel used for these services are rnanned with nationals of
the Mernber states to the sarne degree as required in respect
of the vessels flying its own flag which are used for these
services. The Greek delegation added in its comments to the
provision that cabotage vessels must comply with the legis-
lation and regulations - including inter alia conditions of
employrnent, requisition of vessels and crew, public order,
national defence etc. - applicable to vessels flying its own
flag which are used for the sarne services.
Art. 2, which the Commission has put in its proposaI in
order to appease the opponents of liberalization of EEC ca-
bot age especially Greece - is on public service obliga-
tions. It states that in order to rnaintain sufficient mari-
92
time transport services in the case of cabotage between the
mainland and its islands and between its islands, public
service obligations can be imposed as a condition for the
right to provide the service, in order to guarantee the con
tinuity, regularity, and efficiency of the services and the
provision of goods which are of fundamentai importance to
the econornic well-being of such terri tories.
This proposaI did not satisfy the opponents, however. The
Spanish, Italian, Portuguese and French delegations reque
sted a specifie regime for island services, and the Greek
delegation requested that restrictions might be retained for
reasons of national defence until the Council unanimously
decides otherwise, and that restrictions might be retained
on island services with vesseis less than 500 grt.
The Chairmen of the Councii then suggested an addition of
art. 2a with the foilowing text:
"In the event of serious disturbances of the internaI
transport in a given geographical area due to cabota
ge, any Member state may refer the matter to the Com
mission with a view to the adoption of safeguard mea
sures.
Such measures may invoive the temporary exclusion of
the area concerned from the scope of this Regula-
l
93
tian."
Art. 3 states that articles 55-58 and 62 of the Treaty shall
apply ta the matters covered by this Regulation. Art 4
allows a person who wishes to provide a cabotage service in
a Member state to pursue this activity temporarily under
the same conditions imposed by the state on its own natio
naIs. Art. 5 requires that Member states shall consult the
Commission before they adopt laws and regulations on imple-
mentation of art. 2 on public service obligations. According
to art. 6, this regulation shall be reviewed before 1
January 1993 and according to art. 7, shall enter into
force 1 January 1991.
The fact that no solutions were found and no agreements were
reached at the Council meeting 18/19 June 1990 was not sur-
prising given the huge inconsistency between the Commission
alld the or~onent Member states' points of view on the propo
saI. A table summarizing positions of delegations in 1990 is
found in annex l. lt is quite clear that the points of view
have not changed to any great extent since 1985 when the
Commission introduced its proposaI of free EEC cabotage for
the first tirne, even though the Commission has in its latest
proposal made attemts to comply with the opponents' wishes.
But it is difficult to reach an agreement when one group
(Spain, France, ltaly and Portugal) wants a tonnage limita-
tion of 500-6.000 grt, and another group (Belgium, Denmark,
1
94
Holland, Germany and UK) wants totally free cabotage with no
tonnage limitation at aIl, and finally Greece wants a very
strict limitation of 500-3.000 grt. It is therefore the
Danish opinion that it is not realistic to expect anything
to happen with the liberalization of EEC cabotage within the
next 5 years!
The supporters of free EEC cabotage have clearly in 1989 and
1990 stated contrary to Greece, Spain, Italy, rortugal and
France that cabotage shall not be linked to the other ele-
ments of the package of "positive measures on EEC maritime
transport" which the Commission issued 31 July 1989 on the
establishment of a Community Ship Register (EUROS), on the
definition of a Community ship owner and on the application
of freedom to provide services to maritime transport within
Member States11S • They fear that examination of these ele-
ments will lead to undue delay in the adoption of the Regu
lation on cabotage as the proposaIs on EUROS and the Commu-
nit y shipowner are met with strong objections within the
Council and need to be re-examined in the light of the
opinion of the European Parliament.
Denmark is against the establl~hment of EUROS, which acco
ring to Danish views will only be an "exclusive club" which
will lead to even more regulation - and the Danish object
which is worked for within the EEC maritime transport policy
is: deregulationl16 •
"
lA
Subjert
~~SE_mp_a_ny!ng
Ml'asurp~
1
l SpainfFraneP/ltaly:Pnrtugal
IReQul'st
- paral 'el agrppmpnt on fURn~
1 and COmmunl!y ~hlpownpr 1
clarification of ~upport
mea~ur('s
- study of repprcusslon~ of
cabotage
:A Ben e flc l arleslCommunlty shlpownpr~
+ rURQS
'-;'a .... -1 r
') (rrw
1+ 500-6000 grt
(ro~~orm ln CommIssion r~nr
, :~pp(1flr rr~1np
i i
Host StaIl' dpèprmlnps ppr(p~
tage of Co~munlty national~
(cnnçnr~ ta 1~~~'~~1~r prnp
TARIF~~AJ~I~_PO~ITIONS_Of_J~LrCAT!ON~
Relglum!Denmark/Germany/
Nrtherland~/Unltp~ Klngdom
nPQat!\le
tl'ar oplay
fpar dplay
(ommun!ty p~tab11shmrnt
or Mpmbpr ~!a!p f1ag ano
co~trol
no tonnage 1 -
'1 Trmpnrary dprogatlon
1
+ public srrv"p ohljga~!on~ (ronform to (omml~sl~ pror ,
1
I~n mann!ng rrQulrf'mpnt~
1 1
Creeee
paral1e1 e.am1nation
of package
support E IF Il 'P
suppnrt F IF Il fI'
Member St.te flrst fla" and control
506-3000 grt
r~rmanpnt dprogatlon
1!~pstr1ctlons for nat,nnal 1efcncr
IWulP~ of host State 1
Ifnr ras5~ng~r services
fnr pa~sp~~er ~pr\llcr
1
f'
MllEI 1
Prpsldency
- Ad hoc deflnltlon of benefl
clarles comp1emented after
rxamlnatlon of proposaIs
CommIssion statement that
Art 97 will be Ipp11ed 1 1- Arcomp.nylng me.sures
- trlnsltlon31 perfods
- S.f~9u.rds
- State or (o~unlty alds
(ommunlty establishment l' Member State flrst fla" or fUROS
, Member State control
1. 500-6000 grt for- 5 yrars
Tpmporary derogatlon
PubliC s~rvtcp obll1atlon~
(onsult Legal Sprvl(p
-..
1
95
V. ROAD TRANSPORT
1. The Background for a Co_on EEC Raad Transport policy.
Road t.ransport is in the same special situation as rail and
inland waterway transport, that it is ruled by specifie
Treaty provisions, namely art. 74-84 in title IV of the
Treaty. But the transport sector is as mentioned earlier not
only subject to the rules elaborated within the framework of
the common transport policy but aiso to the general rules of
the Treaty, unle~s they expressly provide otherwise. So when
applying Community Iaw to this sector it is important to
apply the generai rules and any relevant provisions of the
common transport policy - e.g. the general principles of the
free movements of goods, free movements of persons and
capital and the right of establishment. As regards the pro
vision on services it is expressly provided that freedom to
provide services in the field of transport is to be governed
by the provisions of the title in the Treaty relating to
transport.
But what provisions does title IV on Transport actually con
tain? It has provisions on transport rates, transport condi
tions, transport aids, charges or dues in respect of the
crossing of frontiers, discrimination etc. However, as title
IV on transport is a title under Part two of the Treaty
" t
96
called "Foundation of the community" only general transport
political lines are stated, e.g. art. 78 states "any measu
res taken within the framework of this Treaty in respect of
transport rates and conditions shall take account of the
economic circumstances of carriers". Secondary legislation
is therefore very often required in order for an EEC haulage
operator to be regulated by a common EEC road transport
policy.
The title has the very important article 75 which demands
that for the purpose of implementing article 74, which is te
pur sue within the framework of a common transport policy the
objectives of this Treaty, the Council shall on a proposaI
from the Commission lay down
- common rules for border-crossing transport between the
Member states
the conditions under which non-resident carriers may
operate transport services within a Member state
- any other appropriate provisions.
The Commission has for many years based its proposaIs on the
following principles: f.!'ee competition, the consumers' free
choice of means of transport, economic and commercial inde-
pendence for the transport activities and co-ordination of
97
the intra-fraeturel17 •
Through the years it has been difficult to aehieve broad
support of these prineiples in the Couneil, however. The
work in the road transport field has therefore been charae
terized by minimal progres~, ~nd seeondary legislation has
only to a limited extent contributed to the realization of a
common road transport poliey in the EEC. The main reason
behind this deadloek is that for a long time Member states
could not agree on the aims of a eommon road transport
poliey. Some of the large Member states found that a common
policy did not have to be tantamount to free competition
between the transport operators, and a common policy in
their view eould therefore be limited to a harmonization of
the rulesl18 •
This fundamental difference in opinion between Member states
was not definitively clarified until the European Court of
Justice, in its case "the Parliament v. the Couneil" of
1985, stated its opinionl19 • The parliament alleged that the
Couneil of 1983 was failing to act as it had not yet laid
down any rules in aeeordanee with article 75(1). The Court
held in its judgement of 1985120 that the Couneil should
carry out a liberalization of border-erossing transport and
should agree on rules under whieh cabotage eould apply. This
resulted in the Couneil, at a number of Coneil meetings in
1985-87, laying down lines in directions for the deeision of
1
98
a common EEC road transport policy, but in spite of the jUd
gement from the Court of 1985, it would not be until Decem-
ber 1989 that the council allowed cabotage for road trans-
port of goods under rather strict conditions.
It took quite a long time before the Council could agree on
a common road transport policy, but this does not mean tha'",
the Council had not before the late 1980's issued secondary
legislation in this field. Actually, the secondary legisla
tion which the Council has adopted in this field is more
substantial, at least in volume, than is generally rea
lized1 21 .
The measures which are relevant to consider are those which
liberalize the provision of services. Some of these are di-
rectly concerned with opening up access to the market and
are thus measures of positive liberalization. others assist
the provision of services indirectly, e.g. by introducing
common standards or harmoni~ing documentation and procedu-
res. Such measures reduce the possibilities of delays or ob-
struction in the provision of the service, whether intentio-
nal or otherwise, by the Member state in receipt of the ser-
vice.
Examples of positive liberalization in the road transport
field are:
1 - Council Directive of 23 July 1972122 on the establish
ment of common rules for certain types of carriage of
goods by road between Member states. Under this Direc
tive Member states must free fram quota schemes which
certair Member states impose on commercial goods
traffic - e.g. carriage of goods on own account, fron
tier traffic, carriage in small lorries. It has been
estimated that 35% of the traffic has been freed from
quotas123 •
- Council Regulation of 16 December 1976 introducing a
Community quota for the carriage of goods by road
between Member states. Under this Regulation hauliers
may ohtain Community authorizations which allow their
holders to perform carriage between Member states free
of quota restrictions. The authorizations cover about
9% of the market of carriage of goods between Member
states124 •
99
The measures af indirect assistance ta the provision of s~r
vices are much more numerous. Among them may be counted mea
sures dealing with e.g. driving licences, bil~teral quotdS,
insurance, frantiers contraIs, taxation, vehicle standards
and social conditions.
r
100
2. The I.plications for EEC Raad Transport of RThe InternaI
MarketR •
In 1985, the CQuncil decided to extend the European integra
tion by the preparation of "The single Euro\pean Act" \,hich
came into force on 1 July 1987, 30 years after the Rome
Treaty.
"The Single European Act" is now an integrat,ed part of the
Treaty on the establishment of the European EC()'rlomic Commu
ni ty, and of special importance is the provisil.t)!1 in article
8(a} of the Treaty, according to which over a period ex
piring 31 December 1992 measures shall be adopted with the
aim of progressi vely establishing "The InternaI Market".
"The InternaI Market" implies a market without internaI
frontiers with free movements of gocds, persons, services
and capital in accordance with the provisions of the Treaty.
The background for the decision about the establishment of
"The InternaI Market" was a recognition of the necessity of
a change in Western Europe's comparative decline in relation
ta the biggest competitors, the U.S. and Japan.
"The InternaI market" will result in increased commercial
intercourse between the Member states, and concurrently the
importance of a well-functioning system of transport will be
increased. The importance of transport will furthermore in-
T
101
crea se as a consequence of changes in production potential,
where of fer and order governed production and reduced stocks
in trade will require promptness, reliability and flexibili
ty.
According to the "Cecchini-report", the total national
product of the EEC will after the realization of 'lThe Inter
naI Market" grave within a few years grow by about 200
billion ECU125 • The liberalization of road transport in the
EEC is estimated to save of 400-800 million ECU within a few
years after 1993. To this am ou nt one has to add savings in
connection with the removal of quantitative limitations and
the possibility of cabotage transport.
By the establishment of the free EEC transport market, a
market of 320 millions inhabitants will be opened up a
market which is 11 / 2 times as big as the U.S. market or 3
times as big as the Japanese market l26 •
The planned liberalization will remove a major portion of
the obstacles of physical and technical character which
until now have divjded the EEC into 12 more or less limited
transport markets. The removal of the prior restrictions of
quota authorizations will allowin principle every carrier of
goods by road within the EEC who fulfills the necessary
conditions to act as an international carrier.
102
As to road transport of goods, the creation of "The InternaI
Market" is already far advanced, since by 1 January 1993 a
system without quantitative restrictions shall be establis
hed - which is a system without limitation in the number of
community quotas while before 1993 graduaI liberalization
will be introduced.
In many of the Member states, especially the smaller states
such as Denmark, the business of haulage enterprises con
sists mostly of small businesses. The new market situation
will demand changes in this structure as international
haulage in the future is expected to demand large bus ines
ses. Already now one can nctice a tendency toward8 mergers
or co-operation contracts.
Especially the Dutch carriers seem to be determined in their
preparations for "The InternaI Market". The position on the
EEC Market is improved by take-overs, mergers and the esta
blishment of networks. More than 200 carriers have at least
one establishment abroad. 56% have establishments in Belgium
and 36% in West-Germany127. It is regarded as a clear advan
tage to be established abroad in connection with third
country traffic and cabotage as weIl as in connection with
the maintenance of customers. Also Belgian carriers are to a
great extend established abrodd, mostly in France, West
Germany and Spain128 .
103
3. The BEC Systea of co .. unity Quotas and Bilateral Quotas.
The secondary EEC legislation with respect to the carriage
of goods by road which has been adopted can be divided into
3 main sectors: 1) liberalization measures, 2) the introduc
tion of a Community quota by virtue of which goods may be
carried between Member states, and 3) a general framework
for bilateral agreements between Member states for the car
riage of goods by road.
The liberalization measures for certain types of transport
are contained in the previously mentioned Council Directive
of 1972129 • The aim of the Directive was to secure a pro
gressive enlargement of the carriage of goods by road
between Member states by freeing sorne carriage from quota
schemes and authorizations.
A system of Community authorizations was first established
by a Council ~egulation of 1976130 • The Regulation fixed the
total number of authorizations at 2,363 and allocated them
to the different Member States. Thi~ system has been conti
nued and extended over the years. For 1989, the total number
of authorizations was fixed at 24,021131 • In 1980 the total
number was aboùt 4,000 and in 1985, it was about 5,000. From
1988 to 1989, there was an enormous increase of authoriza
tions, an increase of 380%!132.
104
It is acknowledged that the existence of the EEC quota-
system promotes the execution of a Community-wide transport
market to which road haulage operators from ali Member
states may have equal access regardless of nationality133.
Nevertheless the Community quotas only cover a small percer-
tage of the total road transport market and there is still a
way to go before the market can be said to be free and
equal. The Community quota applies only to carriage of goods
by road between Member states and entitle their holders to
effect over transpor.t between Member states. community aut
horizations are issued by the competent authorities of the
Member state and are made out in the name of tile carrier, to
be used only by one vehicle for one calendar year, and they
cannot be transferred to a third carrier.
The system of carriage of goods by r0ad between Member
states, however, is still to a great extent governed by a
system of bilateral agreements conclude~ between them. This
was also recognised in a Council DecisioL of 1979 on the ad-
justment of capacity for the carriage of goods by road134 •
The decision Iays down a common procedure and criteria for
the determination of bilater~l quotas, thus putting the ne
gotiations of these agreements within a Community framework.
The system of community quotas and bilateral quotas will di-
sappear after 1 January 1993, as according to Council Regu-
,
105
lation of 21 June 1988135 these will be abolished as per
this date, and from this date on border-crossing transport
of goods by road will be subject to a syst~m of Community
licenses which will be issued on the basis of qualitative
criteria. Already starting 1 January 1990, more rigorous
conditions were introduced for admission to the occupation
as a haulier by a Council Directive of 21 June 1989 136 • The
conditions concern the applicant's conduct, economic and
educationai background. The provisions require the applicant
to go through a test and to have at his disposaI certain fi
nancial means of 3,000 ECU per vehicle. This clearly shows
the development. It is not so import~nt anymore to allocate
a certain number of EEC authorizations to the different
Member states, but what is at issue is the standard of the
carrier irrespecti ve of the Member states fronl wh tell ne car
ries.
106
4. EEC Regulation of Road Cabotage.
a. The Resistance to Cabotage in the EEC.
At the Council meeting of 4-5 December 1989, it was agreed
to allow cabotage in connection with carriage of goods by
road under limitations starting 1 July 1990. This happened
after the Traaly provision, art. 59, on freedom to provide
services .,ithin the Community, had been neglected for more
than JO years. Far a very long time there has been resistan
ce to cabotage among sorne of the Member states, especially
anlonq tne large Member states. In Italy, France and
w~st Germany there was and still is fear that many of the
small national hauliers cannot cope with the competition
from the foreign hauliers. In every Member state, especially
th~ Benelux-carriers are regarded as serious competitors.
'fhese operators have the advantage of being centrally situa
ted in Eu~ope and have for many years not been protected by
regulation.
Because of "competition-distortion" the opponents of cabota
ge demanded that a harmonization of the competttion condi
tions should take place first. Differences in value added
tax levels and structure, levels of wages etc. are regarded
as "distortion" of the competition - especially in favour of
the Benelux countries137 •
107
Supporters of cabotage are especially found in the Benelux
countries and in Denmark. Here the general opinion is that
there is no reason to ~ear cab~tage in these countries. The
transport distances as weIl as che quantities ot goods are
considered to be too small and the priee competition too
tough in order to be of any interest to foreign carriers. At
the same time, these countries are very interested in free
admission to foreign markets which up till now have been
protected. This applies especially to West-Germany and
France where there is expected to be a large potential
market for cabotage. By allowing cabotage in geographically
centrally situated countries such as West Germany and
France, it will be possible to use the transport materjal
much better in connection with export carriage of goods by
road.
When the Community was establisherl, the opponents of cabota
ge were in the majority anà, for over 30 years, they stopped
a liberalization of road cabotage. Pressure, however, from
the Commission, the Parliament and countries su rh as Denmark
and Holland resulted in the ryarliament suing the Cauncil in
1983 for failure to act and for having neglected ta carry
through the Treaty obligations. The European Court of
Justice agreed with the Parliament, so that the situation
became such that if the Council would not agree an liberali
zation of cabotage, the Coure would probably force it
., ,~
f
108
through. The Council therefore preferred to adopt secondary
EEC legislation in this field, which was done by a Council
Regulation of 21 December 1989138 •
b. The first EEC Council Regulation on the Liberalization of
Road Cabotage.
This Council Regulation, laying down the conditions under
which non-resident carriers may operate national road
haulage services within a Member state, only allows a total
of 15,000 2-months' cabotage authorizatjons during the
period 1 July 1990 - 1 July 1991. A 2-months' authorization
can be ~hanged into two I-month authorizations.
The quotas shall be allocated among the Member states as
follows:
Belgium: 1302 Ireland: 585
Denmark: 1263 Italy: 1767
Germany: 2073 Luxembourg: 606
Greece: 572 Netherlands: 1842
Spain: 1350 Portugal: 765
France: 1767 united Kingdom: 1107
The quotas are allocated among the Member States proportio
nally to the Community quotas.
109
It has been agreed that the number of authorizations shall
be increased equally with the amount of the Member states'
internaI transport of goods by road with a minimum of 10%
per year.
The Council Regulation entered into force on 1 July 1990 and
remains in force until 31 December 1992 when a final arran
gement shall be agreed upon.
In order to be able to apply for an authocization an opera
tor must be established in a Member state and must have the
right to carry out international haulage.
The authorizations shall be administered individually by
each Member state, but if an operator feels that he has
been passed over he can apply to the Commission in order to
have an interpretation matter examined.
By the end of April 1990, a final decision regarding the al
location criteria had not been reached in many Member
tes. In Holland and Germany it is expected that the aut
la.=izations will be allocated in bunches of 12 1-month aut
horizations (one annual authorization). Each operator will
only be able to obtain one annual authorization. In order to
be considered it is required by the German and Dutch autho
rities that information be given concerning customers who
want to have cabotage transport carried out, to which desti-
"
110
nation and the expected number of driven annual kilometres.
This puts great demands on the haulier's planning of cabota-
ge transport.
In an earlier proposaI from the Commission it was suggested
that only carriers where the majority holding is owned by
EEC citizens ought to be given the cabotage authoriza-
tion139 • The new Regulation of 21 December 1989 does not
contain such a provision. However, it is definitely not out
of the question that an eye will be kept on large non-EEC
owned carriers in the EEC in order ta introduce limitations
later on. Especially American and Australian owned companies
are referred toI 4 0 •
c. safeguard Measures.
Because of the resistance against it in some Member states,
the ne~l Regulation contains possibilities for safeguard mea-
sures. They are to enter into force in case of serious
market disturbances caused by cabotage. The possibility of
safeguard measures is given in two cases. Firstly, if a
certain geographical area is exposed to serious disturbances
in the market for national carriage of goods by road, it
will be possible ta stop cabotage transport within this
certain area. Secondly, if more than 30% of total EEC cabo-
tage transport is carrl.ed out in one single Member state it
will be possible to stop cabotage transport in this Member
•
---------------
111
state temporarily. The total amount of c,ibotage can be mea
sured in number of days of cabotage transport or in tonnes/
km. The Commission expects that it will primarily be West
Germany which can find .l.-cself in the~ê: situations.
The Regulation thus offers both the possibility of safeguard
measures in a certain region <:and in a certain Member state.
However, there are no lines of direction for the application
of these safeguard measures which were included in the Re
gulation for political reasons, namely to satisfy West
Germany and France. It will be interesting to see whether
the protection measures will be used in practise.
d. Rules and Regulations in Force.
As a starting-point cabotage haulage is subj ect to the rules
and regulations of the Member state where the hauli er is I~S
tablished. However, the following items are subject ta the
laws, regulations and administrative provisions of the host
Member state:
a) rates and conditions governing the transport contract,
b) weights and dimensions of road vehicles,
c) carriage of dangerous goods, perishable foodstuffs,
live animaIs etc.,
112
d) driving and rest times, and
e) VAT on transport services.
The purpose of having th" host Member state's laws and regu
lation apply in these above-mentioned areas is that the na
tionaljdomestic carriers are herehy not exposed to competi
tion distortion from foreign carrier3.
The provision on rates and conditions is incll:ded in order
to avoid price wars. Here again, Germany is mostly referred
to, as one still finds fixed price systems here for domestic
road transport. However, in Denmark there has always been a
free pricing competition in the road transport market. A
rather liberal admission to the market and free pricing com
petition are the main reasons why the Danish rate level for
national transport is low compared to the level of freight
in the rest of Europe. It is therefore difficult to imagine
that foreign carriers will be able to offer lower freight
priees in Denmark on Danish domestic routes141 • On the other
hand, foreign cabotage hauliers in Denmark may keep priees
at a low leve 1.
The allowed maximum total weights of road vehicles are as
follows in the Member states:
1
113
Belgium: 44 tons Italy: 44 tons
Denmark: 48 Luxembourg: 44
France: 40 Portugal: 40
Greece: 40 Spain: 40
Holland: 50 U.K.: 38
Ireland: 38 West Germany: 40 _142
In conrection with frontier-crossing transport in the Commu
nit y, the maximum allowed weight of the vehicles is 40 tons,
provided that the national ru les in the Member state where
the transport is carrjed out do not allow for higher maximum
total weights.
International transport of dangerous goods is carried out in
accordance with the European Agreement concerning the Inter
national Carrlage of Dangerous Goods by Road (the ADR
Convention). However, national laws and regulations are
often not as strict as the ADR-Convention.
In the community there are uniform rules regarding driving
and rest times; therefore, the foreign cabotage carrier will
be used to the laws and regulations of the host Member
state. However, the interpretation and the enforcement of
the ru les differ very rnuch in the Mernber states. It should
be noted that Denmark has an exceptional position within
this field, as it is the only Member state which has strict
liability for the carrier if the driver violates the driving
114
and rest time rules. An English inquiry of 1989 showed that
West Germany has the most strict enforcement of the rules
but that it imposes rather low fines, whereas Denmark and
the U.K. do not have a very strict enforcement of the rules
but impose very high fines. The rest of the Member states
seld~m impose fines - and if they do, then only rather low
fines.1 43 •
In the field of VAT on transport services, uniform rules
also apply to cabotage services in the Member states by
virtue of a Council Directive of 1977, amended by a Council
Directive of 1989144 .
Finally, art. 5(1) of the Regulation states that the same
technical standards shall apply to both international and
cabotage transport. In this way it will not be possible to
hinder cabotage by special technical standards and require-
ments and discrimination between national and foreign
carrier is thus impossible.
e. Penalties.
In the event of serious or repeated infringements by a cabo
tage haulier of e.g. traffic laws and regulations, technical
standards or weight limits the competent authorities of the
hast Member state may ask the competant authorities of the
Member state of establishment to impose penalties.
115
It is not possible for the host Member state to issue a tem
porary or permanent ban on the carrier for national carrlage
within the host Member state, as only the Member state of
establishment can impose such a penalty. Therefore, it is
important that the Member states have the same perception of
the seriousness of different infringements. However, this is
not always the case, e.g. not in connection with driving and
rest times.
f. The Future.
The new Regulation of December 1989 on the liberalization of
cabotage in road transport is to be regarded as part of the
total process towards a common road transport market in the
EEC. One very essential step was taken when it was decided
to abolish the quantitative limitations for tfle frontier
crossing transport from 1993 on.
It is also planned that the number of cabotage authoriza
tions shall be increased eventually, and at a certain time
totally without limitations. with free cabotage transport in
the Community it will be impossible to maintain the national
restricted admission, which is e.g. known in West Germany.
The Commission will probably aIso, in the longer run, inter
vene in the national fixed priee system - e.g. also known in
West Germany.
116
It is expected that the Community will, in the future, form
a common transport market with free access for foreign EEC
carriers to the EEC market for carriage of goods by road.
Only qualitative - and not quantitative - requirements will
have to be fulfilled.
European hauliers have in an inquiry145 been asked about
their opinion of the future use of cabotage in the EEC.
Dutch and German carriers regard cabotage transport of short
distances as uninteresting. Road cabotage in Denmark will
therefore probably not be very popular because of short di-
stances, small amounts of goods and a very low price level.
The German hauliers pre fer the German home market, but the
Dutch hauliers look forward to carrying out cabotage trans-
port in West Germany and France, mostly as "coincidence ca-
botage" which is cabotage carried out ad hoc
without fixed routes and shipments.
that means
t
117
VI. CONCLUSION.
A study of EEC regulation of cabotage in air, maritime and
road transport shows that by autumn 1990 only one of the
three transport modes has actually been EEC-regulated,
namely road transport. This did not happen very easily: not
until the European Court of Justice in 1985 condemned the
Council for failure to act and for having neglected to carry
through its Treaty obligations, and not until the Council on
20 December 1989 issued a Regulation on liberalization of
cabotage, however, under rather strict limitations.
In connection with the two other modes of transport, air
transport and maritime transport, several proposaIs on cabo
tage have been issued by the Commission, papers have been
issued and discussions have been held in the Community - but
with no result. It seems very clear that the Member states
are not yet ready for it, mostly because of fear of destruc
tive competition, and probably it will take at least 5 years
before EEC Regulation of air and maritime cabotage is a rea
lity.
Not aIl Member states are against a liberalization of the
national cabotage rules, but this aiso varies very much in
relation to the different transport modes.
118
When it cornes to air passenger transport, which is the most
nationally, bilaterally and multilaterally regulated mode of
transport, few Member states at this stage are in favour of
EEC regulation of cabotage.
In connection with maritime cabotage transport, which in
volves both carriage of goods and of passengers, there is a
huge gap in the opinions of the Member states. One can see
that the northern Member states, e.g. UK, Denmark, Holland,
Germany and Belgium, are very strongly in favour of deregu
lat ion of maritime regulation and therefore also of requla
tion of cabotage. These states to a great extent have a very
liberal national cabotage regulation. The southern Member
states such as Italy, Spain and especially Greece are oppo
sed. The reason behind their opposition is not a wish to
work against the commi tments to achieve the process of
market unification and to achieve a "European market without
internaI frontiers" by the end of 1992. The explanation has
to be found in the great differencies of the age, condition,
size and profitability of the fleet of the different Member
states.
Raad cabotage has been regulated in the Community, but only
in connection with carriage of goods by road, and the oppo
nents were for a very long time to he found among sorne of
the largest Member states, e.g. ltaly, France and Germany,
who had feared the competitjon from the hauliers from the
•
119
Benelux-countries. The UK did not, for obviously gAographi
cal reasons, have this fear. Denmark, because of its very
low freight level, did not fear the competition.
AlI in aIl, it is not possible to divide the Member states
into a group of Member states in favour of EEC Regulation of
cabotage and another group of opponents, as it depenùs on
the particular transport mode involved. E.g. Germany is in
favour of EEC regulation of maritime cabotage but against
regulation of air cabotage and road cabotage. The characte
ristics of the particular mode of transport are of decisive
importance.
EEC road transport policy and regulation are moving with a
rather high sp~ed towards an EEC road transport market
without internaI frontiers. In connection with EEC road
transport one of the major problems is the differences in
content, interpretation and enforcement of the national
rules which are issued as an implementation of EEC legisla
tion in the different Member states. Denmark e.g., has an
exceptional position in the EEC regarding the driving and
rest time rules, as Denmark is the only Member state with
strict liability for the carrier if the driver violates the
rules.
This has even been tested in the European Court of Justice,
which in its judgement of 10 July 1990, in a preliminary
120
rUling, stated that the Danish national rule is not a viola
tion of Community Law146 •
EEC regulation of maritime transport - ex~cpt for cabotage -
also seems to move very fast towards liberalization and dc
regulation of national rules and legislation - even though
the Commission from time to time issues new proposaIs, which
would bring about ever more regulation - e.g. the proposaI
of the Commission on "The EEC Shipowner Register". The "Ma
ritime transport package" of 22 December 1986 contains a
Council Regulation applying the prlnciple of freedom to
provide services to maritime transport between Member states
and between Member states and third countries. This regula
tion will after the "opening up" of the East European market
give EEC maritime transport a great chance of new transport,
as the possibilities for road transport still are rather
poor because of the bad infra-structure in the East European
countries.
The Council is not under a severe time-pressure regarding
the second phase of the liberalization of maritime transport
as opposed to air transport, as it is not bound by the first
"EEC maritime transport package" to review the regulation on
freedom to provide maritime services until 1 January 1995.
The council committed itself in the "EEC Air transport pac
kage" of 14 December 1987 to further liberalization by 30
i 4
121
June 1990 at the latest. The second phase of the EEC air
transport liberalization was carried o~t with a new "packa-
ge", which the Council agreed upon in June 1990, but aIl the
Member states were against the Commission's proposaI on li-
beralization of cabotage. The possibilities of fifth freedom
rights are increassed from 30% to 50% capacity. However,
sorne airlines e.g. SAS - do not regard this as a major
change with great impacts, since fjfth freedom rights are
used to the greatest extent by airlines wi~hout direct
routes, and SAS almost always flies non-stop. As a whole,
however, the new package is regarded by SAS as a very good
result since it provides that Norway and Sweden be involved
in Community negotiations, and that the three countries' co-
operation in SAS and the common Scandinavian air transport
policy ran continue147 •
It still remains unclear whether, or to what extent the re-
maining reforms necessary to achieve full liberalization and
market unification can be accomplished by the end of 1992.
The very basic issue, now being considered by the EEC coun-
tries, is whether there is to be a multilateral approach to
bilateral air transport agreements, in which the EEC will
speak with a unified voiee (namely the voice of the Commis-
sion) in dealing with its aviation partners around the world
to begin the process of replacing the existing network of
agreements with individual Member States. Today it seems so-
mewhat unrealistic, however, that the Member states should
122
be willing to give their negotiation power to the Commis-
sion.
Histor.y repeats itself, and in the aviation world the huge
US cabotage discussion has emerged again. Major carriers
have been calling for a re-examination of the u.s. ban on
cabotage with a view towards opening up the U.S. domestic
market to foreign carriers, provided that equivalent oppor
tunities for u.s. carriers operating in foreign countries
are obtained in exchange. Many EEC carriers hold that it
would be fair to EEC carriers to achieve cabotage rights
from the U.S. as the U.S. has free access to fifth freedom
rights in the Community. Some Americans regard the issue of
more emotional than practical significance, as U.S. carriers
have much broader fifth freedom rights within Europe than
they are actually using in practice, and since the clear
trend has been towards increasing non-stop service between
U.S. and European gateways, as evidenced by Pan Am's New
York-Hamburg and New York-Nice routes, and American Airli
nes' New York-Lyon and Chicago-Manchester services148 •
One of the major opportunities expected to flow from the
market unification is the ability of EEC carriers to expand
services among points in other EEC Member states. E.g. it is
expected that British Airways will be free to enter the Pa-
ris-Frankfurt market - or even the Paris-New York market -
if the U.S. were to agree.
123
AlI in aIl the deregulation of air transport in the Communi
ty implies that new airlines and many new national and in
ternational routes and services will emerge. However, there
is one major problem and that is congestion of airports and
of the airspace. The airspace is already now filled up with
planes which during summers of recent years has resulted in
air traffic delays throughout Europe. This, in its turn, has
resulted in massive costs for the affected carriers and tre
mendous inconvenience for the passeng~rs. It is therefore of
great importance that EEC air transport regulation and poli
cies are not limited to regulation of air services, but that
also major resources for the upgrading of air traffic
control technology must be committed in order to ensure
safety and that maximum capacity is achieved from the avai
lable airspace.
Perhaps it is not yet possible in 1990 for the Commission to
convince the Member states to delete the national borders in
order to create an EEC transport market where it makes no
difference whether a Spanish or a Dutch shipowner carries
goods or passengers from Majorca to Ibiza. But social and
safety measures cannot be neglected because of fear of com
petition in an Economie Community which actually has as a
major goal: free competition.
EEC regulation regarding traffic control, safety and social
-
(
124
measures indicates that the Member states are aware of their
commitments to achieve a "Europe without internaI frontiers"
by the end of 1992, and that they are in due time even
willing to fully liberalize cabotage in both air, maritime
and road transport. In the future it shall not be possible
for the Member states to have such different transport poli-
cies and regulations depending on the particular transport
mode involved, as it is impossible to imagine an "InternaI
Market" without a common EEC policy for air transport, mari
time transport, road transport as weIl as railway transport.
These transportation modes are the visible expression of the
free border passage.
125
VII. ilOTES.
1. Ian E. McPherson, The Theory of Cabotage in Air Trans
port, (Term paper at McGill University, Institute of Air
and Space Law, Montreal, 1952).
2. P.J.G. Kapteyn & P. Verloren van Themaat, Introduction
to the Law of the European Communities, second edition
(Deventer, 1989) at p. 705.
3. European Commission v. French Republic, Case 167/73
(1974) 2 C.M.L.R. 216.
4. P.P.C. Haanappel, "The external aviation relations of the
European Economie community and of EEC Member states
into the twenty-first century. Il Part l (1989) volume XIV,
number 2, Air Law, 69, at p. 73.
5. F. S0rensen, "The Air Transport policy of the EEC",
(1989) volume XXIV, number 4, European Transport Law,
411, at p. 412.
6. European Commission v. Belgium, Case 156/77 (1978)
E.C.R 1881.
(
126
7. V.J. Clarke, "New Frontiers in EEC Air Transport Competi
tion" (1988) volume 8, number 3, Northwestern Journal of
Internation~l Law & Business, 455, at p. 466.
8. EC Council Directive 8J/416.
9. Ministére Public v. Lucas Asjes et al., Cases 209-213/84
(1986) 3 C.M.L.R. 173.
10. V.J. Clarke, supra, note 7, at p. 465-66.
11. Council Directive on fares for scheduled air
services between Member states. (87/601), 14 December
1987.
12. Council Decision on the sharing of passenger capacity
between air carriers on scheduled air services
between Member states and on access for air carriers to
scheduled air service routes between Member
states (87/602), 14 December 1987.
13. Council Regulation laying down the procedure for the ap
plication of the rules on competition to undertakings in
the air transport sector. (3975/87), 14 December 1987.
14. Council Regulation on the application of article 85(3)
, ,
127
of the Treaty to certain categories of agreements and
concerted practices in the air transport sector (3976/87),
14 December 1987.
15. A. Ahlstrom Asakeyhno and others v. The Commission,
Cases 89, 104, 114, 117, 125-129/85.
16 Ahmed Saeed Flugreisen & Silver Line Reisebüro GmbH v.
Zentrale zur Bekampfung unlauteren Wettbewerbs e.v.,
Case 66/86, 11 April 1989.
17. F. S0rensen, supra, note 5, at p. 414.
18. Nicky E. Hesse, "Sorne questions on Aviation Cabotage"
(1953) volume 1, The McGill Law Journal, 129, at p. 130-
131.
19. T.V. Nordeng, "Luftrettens cabotage begrepp", (1984)
Afl, Oslo, 247, at p. 250.
20. W.M. Sheehan, "Air Cabotage and the Chicago Convention"
(1950), volume 63, Harward Law Review, 1157, at p. 1158.
21. Ibid. at p. 1159.
22. ITA Group: 1969/7-E "Cabotage in International Air
Transport: Historical and Present-day aspects".
128
(
23. T.V. Nordeng, supra, note 19, at p. 249-250.
24. Ibid.
25. Nicky E. Hesse, supra, note 18, at p. 153.
26. Ibid.
27. T.V. Nordeng, supra, note 19, at p. 252-254.
28. W.M. Sheehan, supra, note 20, at p. 1162-1163.
29. J. Gertle.c, "Towards a new, rational and fair exchange
of opportunities for airlines" 1 Paper presented at the
Conference: "EEC Air Transport Policy and Regulation and
their implications for North America" 13-15 September
1989, Institute of Air and Space Law, McGill University,
Montreal.
30. ITA Group, supra, note 20, at p. 9.
31. P.P.C. Haanappel, Government Regulation of Air Trans-
port, Cases and Materials, (Institute of Air and Space
Law, McGill University, 1988-89) at p. 103.
32. Douglas R. Lewis, "Air Cabotage: Historical and Modern-
129
day prespectives", (1979-1980), volume XLV, Journal of
Air Law and Commerce, 1059, at p. 1063.
33. George S. RObinson, "Chang ing Concepts of Cabotage: A
Challenge to the Status of United states Carriers in
international civil Aviation", (1968) , volume XXXIV,
Journal of Air Law and Commerce, 553, at p. 560.
34. Ibid.
35. J. Gertler, supra, note 29, at p. 6.
36. T.V. Nordeng, supra, note 19, at p. 257.
37. P.P.C. Haanappel, supra, note 31, at p. 103.
38. Jan Ernst C. de Groot, "Cabotage liberalization in the
European Economie Community and art. 7 of the Chicago
convention", (1989), volume XIV, Annals of Air and
Space Law, 139, at p. 145-147.
39. F. S0rensen, supra, note 5, at p. 412.
40. Supra, note 12.
41. Supra, note 8.
(
130
42. The Single European Act, Done at Luxembourg, 17 February
1986, and at The Hague, 28 February 1986 (1987) 2
C.M.L.R. 741.
43. F. S0rensen, supra, note 5, at p. 413.
44. Commission Proposal for a Council Regulation on access
for air carriers to scheduled intra-community air
service routes and on the sharing of passenger capacity
between air carriers on scheduled air services between
Member states and for a council Regulation on fares for
scheduled air services COM (89) 373 final, 7 September
1989 and Commission Proposals on Application of the Com
petition rules to Air Transport COM (89) 417 final, 7
September 1989.
45. Ibid.
46. Pablo Mendes de Leon, "Euro-Cabotage: A lever for libe
ralization of international civil Aviation", Paper
presented at the Conference: "EEC Air Transport Policy and
Regulation and their implications for North America"
13-15 September 1989, Institute of Air and Space
Law, McGill University, Montreal, at p. 5.
47. Ibid., at p. 10.
l
131
48. Jan Ernst c. de Groot, supra, note 38, at p. 151.
49. Supra, note 44.
50. Ibid.
51. P.P.C. Haanappel "The External relations of the European
Econc,mic Communi ty and of EEC Member States into the
twenty-first century" Part II (1989), volume XIV, Air Law,
122, at p. 136. Unpublished IATA statistics.
52. Jan Ernst C. de Groot, supra, note 38 . 152.
53. F. Sorensen, supra, note 5, at p. 411.
54. H .A. wassenbergh, "EEe Cabotage after 1992", (1988)
volume XIII, Air Law, number 6, 282, at p. 283.
55. Jan Ernst C. de Groot, supra, note 38, at p. 158.
56. P.P.C. Haanappel, supra, note 51, at p. 139.
57. Jan Ernst C. de Groot, supra, note 38, at p. 177.
58. H.A. Wassenbergh, supra, note 54, at p. 282.
59. Interview with LUdwig Weber, IATA, Montreal 17 May 1990.
,
«
132
60. P.P.C. Haanappel, supra, note 31, at p. 103.
61. Matthew V. Scocozza, "EEC-US Aviation Relations and ca
botage", Paper presented at the Conference: "EEC Air
Transport Policy and Regulation and their implications
for North America" 13-15 September 1989, Institute of
Air and Spa ce Law, McGi11 University, Montreal, at p. 11.
62. Ibid., at p. 4.
63. ProposaI for a Council Decision presented by the Commis-
sion "Community Relations with Third Countries in
Aviation Matters", Document 8 (a), Special Meeting of the
Aviation Regulatory Watch Group of 6-7 February 1990.
64. Matthew V. Scocozza, supra, note 61.
65. P.P.C. Haanappel, supra, note 51, at p. 136.
66. P.P.C. Haanappel, supra, note 41, at p. 100-102.
67. Ibid., at p. 114.
68. J. Gertler, "Bilateral Air Transport Agreements"
(1987-88), Handouts during course: Government Regula-
tion of Air Transport, Institute of Air and Space
Law, McGill University.
69. P.P.C. Haanappel, supra, note 31, p. 316-319.
70. Ibid., p. 342-345.
71. Supra, note 12.
133
72. Bernard Wood, "Europe's Liberalisation of Air Services:
An Update", (1988), International Business Lawyer",
volume 16, 269.
73. EC Council Directive 83/416 changed by Council Directive
of 18 July 1989.
74. P.P.C. Haanappel, supra, note 4, at p. 80.
75. Bernard Wood, supra, note 72, at p. 271.
76. Supra, note 44, at p. 6.
77. EEC Council Regulation (EEC) on access for air carriers
to scheduled intra-Community air service routes and
on the sharing of passenger capacity between air carri-
ers on scheduled air services between Member States
134
(6932/90) .
78. Supra, note 63, at p. 2 of the introduction.
79. Supra, note 77.
80. Supra, note 63, at p. 11-12.
81. Ludwig Weber, supra, note 59.
82. P.P.C. Haanappel, supra, note 51, at p. 133.
83. European Commission v. French Republic, Case 167/73
(1974) 2 C.M.L.R. 216.
84. Lord Hailsham of st. Marylebone + David Vaughan, Law of
the European Communities, Vol. 2 (London: Butterworths,
1986) at p. 825.
85. Willem Rycken, "European Antitrust Aspects of Maritime and
Air Transport" (1987) Vol. XXII, number 5, European
Transport Law, 483, at p. 487.
86. Council Regulation No. 4055/86, O.J.L. 378/1 31 December
1986.
87. Council Regulation No. 4057/86, O.J.L. 378/14 31 December
135
1986.
88. Council Regulation No. 4058/86, O.J.L. 378/21 31 December
1986.
89. Council Regulation No. 4056/86, O.J.L. 378/4 31 December
1986.
90. "progress towards a Common Tran3port POlicy (Maritime
Transport). Information and proposaI from the Commission
sent to the Council 19 March 1985, Bulletin from the Euro-
pean Economic community S. 5/85, S1.
91. Jürgen Erdmenger, "Development and prospect of the Mariti-
me Transport Law of the European Community (1988) volume
XXIII, number 1, European Transport Law 543, at p. 547-548.
92. Council Regulation No 954/79, O.J.L. 121, 17 May 1979.
93. Jürgen Erdmenger, supra, note 91, at p. 543-544.
94. Ibid.
95. COM (85) 310 final of 14 June 1985.
96. Supra, note 84, at p. 799.
1
(
1
136
97. EC Commission Recommendation, No 68/335.
98. Supra, note 84, at p. 801.
99. EC Council Regulation. No 2919/85.
100. ProposaI for a councii Regulation on the access to the
market for carriage of goods by inland waterway. O.J .L.
1968, C95/1 as amended in 1969 COM (69), 311 final of 25
April 1969.
101. supra, note 91, at p. 553.
102. Supra, note 90.
103. Supra, note 86.
104. Supra, note 89.
105. Jürgen Erdmenger, supra, note 91, at p. 550.
106. Willem Rycken, supra, note 85, at p. 489.
107. Supra, note 87.
108. Supra, note 88.
l
f
137
109. Revised Report from the Council "Preparation of the
meeting of the Council (Transport) on 18/19 June 1990.
ProposaI for a Council Regulation (EEC) applying the prin
ciple of freedom to provide services to maritime trans
port" 6688/90, Brussels 28 May 1990.
110. Interview with Jesper Martens, The Danish Ministry of
Industry, 30 August 1990.
111. Ibid.
112. Ibid.
113. Supra, note 109.
114. Supra, note 87, article 3.
115. COM (89) 266 final, Brussels, 3 August 1989.
116. Supra, note 110.
117. Lord Hailsham of st.Marylebone & David Vaugham, Law of
the European communities, volume 2 (London: Butter
worths, 1986) at p. 674-676.
118. Vognmandserhvervet og Det Indre Marked, en brancheanaly
se, (Denmark: Trafikministeriet, 1989) at p. 21-22.
f
138
119. Vil tilladelse til cabotage betyde Q)get konkurrence for
de nationale vognmamd? (Denmark: Institut for Trans-
portstudier, May 1990) at p. 1.
120. European Parliament v. EEC Council, Case 13/83 (1986)
C.M.L.R. 138.
121. George 1. Close, "Inland Transport Services: Recent de-
velopments in Community Policy" (1985) 22 Common Market
Law Review, 587, at p. 591.
122. EEC Council Directive 72/426, Amended by Council Direc
tives 74/149, 77/158, 78/175, 80/49, 82/50, 83/572 and
84/647.
123. COM(83), final, Brussels, 9 February 1983, "progress
towards a Common Transport Policy", at p. 8.
124. Supra, note 123.
125. Europa 92- realiserjngen af Det indre Marked (Cecchini-
rapporten), (Denmark: B~rsens Forlag, 1988).
126. Ibid.
127. structuur van de Bedrij fstak van het Beroepsgoederen-
f
1 r •
1 f ~' ~
l r (
i , , i i • • f
!
l' 1 1
139
vervoer over de Weg, (Den Haag: Rijksverkeersinspectie,
1989) .
128. Ibid.
129. Supra, note 122.
130. EEC Council Regulation 3164/76, Amended by EEC Council
Regulations 3024/77, 3062/78, 2964/79, 305/81, 663/82,
3515/82 and 1814/88.
131. EEC Council Regulation 1841/88 of 21 June 1988.
132. Supra, note 118, at p. 16.
133. Supra, note 117, at p. 743.
134. Supra, note 117, at p. 746.
135. EEC Council Regulation 1841/88 of 21 June 1989.
136. EEC Council Directive 89/438 of 21 June 1989.
137. Supra, note 119, p. 4.
138. EEC Council Regulation 4059/89 of 21 Oecember 1989.
(
140
139. Com(85) 611 final proposaI.
140. Supra, note 119, p. 11.
141. Supra, note 118, p. 16-18.
142. FDE-Hândbogen (Denmark: Foreningen af Danske Eksport-
vognm~nd, Padborg, 1990).
143. Philip Butt, "The EEC' s Social Regulation for Commercial
Road Transport", ESTI, Brussels, 1989.
144. Council Directive 77/388/EEC of 17 May 1977, last
amended by Council Directive 89/465/EEC of 3 August
1989.
145. Supra, note 119, p. 6.
146. Judgement of The European Court of Justice of 10 July
1990, Case C-326/88. "The Prosecution v. Hansen & S0n
1/5".
147. Bodil Jessen, "En god Pakke for SAS" (1990) SAS-Inside,
number 22, at p. 5.
148. Joanne W. Young, "What will be the effects of EEC Mar-
ket unification on intercontinental air services after
141
1992?", ICAO Journal, January 1990, 25, at p. 26.
142
4{
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