REPORT FOR THE HEARING in Case E-1/94

I. Introduction 1. By order of 19 April 1994, received at the Court Registry on 27 April 1994, the Tullilautakunta (the Appeals Committee of the Finnish National Board of Customs) made reference to the EFTA Court for an advisory opinion in the appeal by Ravintoloitsijain Liiton Kustannus Oy Restamark (Restamark) against the decision of the Helsingin piiritullikamari (the Helsinki District Customs House). The legal background, facts, procedure of the case and observations of the parties are summarized below. II. Legal background – Facts and procedure A. National legislation 2. By Section 4 of the Laki tullilaitoksesta (Customs Administration Act) (228/91) the Appeals Committee of the National Board of Customs hears those cases of appeal and advance rulings that the National Board of Customs deals with under Finnish laws and regulations. It consists of five members, the Director General of the National Board of Customs, who is its Chairman, and four members appointed by the Finnish Government from among the officials of the National Board of Customs. The latter four members are appointed for a term of three years. The rules applicable to members of the judiciary apply to their right to remain in office. At least three of the members must hold the university degree required for holding of judicial office. The Finnish rules governing judicial proceedings are applicable to the procedure before the Appeals Committee of the National Board of Customs. 3. Section 2, first paragraph, of the Alcohol Act (459/68) provides that:

Production, import, export and sale of alcoholic beverages and industrial alcohol shall be, with the exceptions prescribed hereafter in this Act, the monopoly of the limited liability company called the alcohol company.

4. The exceptions referred to are set out in Section 27, first paragraph:

In addition to the alcohol company, import of alcoholic beverages may be permitted by 1) travellers from abroad and staff on forms of transport in international traffic,

carried with them for their own use, as provided by decree; ... 2) sales agents entering the country and importing samples as provided by

decree; and 3) diplomatic missions or other representations of a foreign power in Finland of

similar status for official use and to foreign diplomatic officers and career consuls for personal use.

Further, by the second paragraph the owner of a vessel in international traffic or a ship trader may under certain conditions import alcoholic beverages intended as provisions on a vessel in international traffic. 5. Section 27, fourth paragraph, regulates the situations under which the Customs may surrender alcoholic beverages:

A consignment from abroad containing alcoholic beverages meant as a gift or for other such purpose may be surrendered by Customs, when the amount is minor and there is no reason to suspect abuse, to a consignee of twenty or over and, in the case of mild alcoholic beverages, to a consignee of eighteen or over, if the consignee pays, in addition to what is provided elsewhere, a confirmed charge to the alcohol company on the alcoholic beverages received. ...

6. Section 14a of the Decree on alcoholic beverages (636/81) defines a gift or other consignment referred to in the Alcohol Act as minor if it contains at the most 12 litres of strong beer and 5 litres of other alcoholic beverages. If the consignment contains more alcoholic beverages than the quantity mentioned in that section, the alcohol company may for special reasons approve the importation of the consignment. B. Provisions of the Agreement on the European Economic Area 7. Article 8(2) of the EEA Agreement provides:

"Unless otherwise specified, Articles 10 to 15, 19, 20 and 25 to 27 shall apply only to products originating in the Contracting Parties."

The rules of origin of the EEA Agreement are, by Article 9(1), set out in Protocol 4 to the Agreement. 8. The product coverage of the EEA Agreement is governed by Article 8(3) of the Agreement:

"Unless otherwise specified, the provisions of this Agreement shall apply only to: (a) products falling within Chapters 25 to 97 of the Harmonized Commodity

Description and Coding System, excluding the products listed in Protocol 2; (b) products listed in Protocol 3, subject to the specific arrangements set out in

that Protocol." 9. Specific provisions and arrangements in relation to the abolition of technical barriers to trade in wine are, by Article 23(b) of the EEA Agreement, laid down in Protocol 47. 10. Article 18 of the EEA Agreement states:

"Without prejudice to the specific arrangements governing trade in agricultural products, the Contracting Parties shall ensure that the arrangements provided for in Articles 17 and 23(a) and (b), as they apply to products other than those covered by Article 8(3), are not compromised by other technical barriers to trade. Article 13 shall apply."

11. Article 11 of the EEA Agreement provides:

"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between the Contracting Parties."

12. Article 13 of the EEA Agreement contains an exception to Article 11:

"The provisions of Articles 11 and 12 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Contracting Parties."

13. State monopolies of a commercial nature are governed by Article 16 of the EEA Agreement, which reads:

"1. The Contracting Parties shall ensure that any State monopoly of a commercial character be adjusted so that no discrimination regarding the conditions under which goods are procured and marketed will exist between nationals or EC Member States and EFTA States. 2. The provisions of this Article shall apply to any body through which the competent authorities of the Contracting Parties, in law or in fact, either directly or indirectly supervise, determine or appreciably influence import or exports between Contracting Parties. These provisions shall likewise apply to monopolies delegated by the State to others."

14. Protocol 8 on State monopolies provides:

"1. Article 16 of the Agreement shall be applicable at the latest from 1 January 1995 in the case of the following State monopolies of a commercial character:

- Austrian monopoly on salt; - Icelandic monopoly on fertilizers; - Liechtenstein monopolies on salt and gunpowder.

2. Article 16 shall also apply to wine (HS heading No 22.04)."1

15. The obligations of the EFTA States regarding the implementation of EEA rules are set out in the Sole Article of Protocol 35, which reads:

"For cases of possible conflicts between implemented EEA rules and other statutory provisions, the EFTA States undertake to introduce, if necessary, a statutory provision to the effect that EEA rules prevail in these cases."

C. Facts and procedure

1 As amended by Article 11 of the Protocol Adjusting the Agreement on the European

Economic Area.

16. On 10 January 1994 Restamark imported into Finland from Italy 120 bottles of Italian red wine and from Germany 18 bottles of Johnny Walker Red Label Whisky, 12 bottles of Ballantines Whisky and 30 bottles of Racke Rauchzart Whisky2 and placed the beverages in a bonded warehouse. In accordance with a recommendation by the National Board of Customs, dated 30 December 1993, Restamark on 11 January applied for the consent of Oy Alko Ab to import the consignment. On 13 January 1994 Restamark asked for a transfer order to place the goods in free circulation. 17. By decision Dno: 2/390/94-11 of 14 January 1994 the Helsinki District Customs House, however, refused to transfer the goods from the custody of the Customs into free circulation, relying on Section 2, first subsection, and Section 27 of the Alkoholilaki (the Alcohol Act) (459/68) and Section 14a of the Asetus alkoholijuomista (the Decree on Alcoholic Beverages). 18. On 19 January 1994 Restamark lodged an appeal against the decision of the Helsinki District Customs House before the Appeals Committee of the National Board of Customs, seeking annulment of the decision and an order that the District Customs House should transfer the alcohol consignment into free circulation for commercial purposes to be sold to restaurants serving alcoholic beverages on the premises. After further correspondence with Restamark, Oy Alko Ab on 19 January informed the former that it needed further information and documents, including, inter alia, the name of the sellers, the price and the name of the restaurants in Finland buying the alcoholic beverages imported by Restamark. On 21 January Restamark informed Oy Alko Ab that it considered certain of the requested information as business secrets and that it hoped that Oy Alko Ab would give its consent without this information. 19. By order of 19 April 1994 the Appeals Committee, considering that it was necessary to interpret the provisions of the EEA Agreement in order for it to reach a decision, requested the EFTA Court to give an advisory opinion pursuant to Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (hereinafter the ESA/EFTA Court Agreement) on the following questions:

"1. Can it be considered, having regard, on the one hand, to the statutory monopoly of Oy Alko Ab

(the Alcohol Company) to import alcoholic beverages but, on the other hand, also to the measures of authorisation which the company has announced it is ready to institute in order to permit commercial import of alcohol on terms laid down by the company itself,

that the commercial import of alcohol from other Contracting States is

not quantitatively restricted or hindered by a measure having equivalent effect contrary to Article 11 of the Agreement, if this administrative court of appeal confirms the decision of the competent customs authority not to permit the imported consignment of alcohol into free circulation without the permission of Oy Alko Ab, which permission is required by law?

2. Is the statutory monopoly referred to above contrary to Article 16 of the

Agreement?

If so:

2 There is no information on the origin of "Racke Rauchzart Whisky".

is this Article so unconditional and sufficiently precise as to have direct legal effect and should the import monopoly therefore be considered as having expired from 1.1.1994?"

20. The order for reference was received at the Court Registry on 27 April 1994. 21. Pursuant to Article 20 of the Statute of the EFTA Court and Article 97(1) of the Rules of Procedure, written observations were received from: – Restamark, represented by Mr. Juhani Hopsu, Restamark's company lawyer, assisted

by Professor Kari Joutsamo, University of Turku, on 4 July 1994; – the Government of the Republic of Finland, represented by Ambassador Tom

Grönberg, Director General for Legal Affairs of the Ministry for Foreign Affairs, acting as Agent, on 12 July 1994;

– the Government of the Kingdom of Norway, represented by Mr. Didrik Tønseth, Assistant Director General of the Royal Ministry of Foreign Affairs, acting as Agent, on 14 July 1994;

– the EFTA Surveillance Authority (ESA), represented by Mr. Erling G. Rikheim, acting as Agent, on 14 July 1994; and

– the Commission of the European Communities, represented by Mr. Richard Wainright, Principal Legal Adviser, and Mr. Anders Christian Jessen, a member of its Legal Service, acting as Agents, on 13 July 1994.

22. On hearing the Preliminary Report of the Judge-Rapporteur, the Court decided to open the oral procedure without any preparatory inquiry. III. Written observations submitted to the Court

A. The Court's jurisdiction under Article 34 of the ESA/EFTA Court Agreement 23. The parties which submitted written observations address the question whether the Court has jurisdiction to give a ruling under Article 34 of the ESA/EFTA Court Agreement in this case as follows.

Restamark 24. Restamark considers that the Appeals Committee of the National Board of Customs is to be considered as a "tribunal" in the EEA legal system and points out that by Section 4 of the Finnish Customs Administration Act three of the five members have to have the legal qualifications of a judge in Finland, the members are nominated by the Government, the members enjoy similar privileges to remain in post as Finnish judges and the Appeals Committee of the National Board of Customs applies the same procedural rules as courts do in Finland. 25. Article 6 of the EEA Agreement and the judgment of the EC Court of Justice in Case 61/65 Vaassen3 are decisive on this question. In that judgment the EC Court of Justice laid down the following criteria for a "tribunal" to be a judicial body in the sense of Article 177 of the EC Treaty: a body

3 Case 61/65, Vaassen, [1966] ECR 261.

– which is properly constituted under national law, permanent and bound by procedural rules applicable in ordinary courts;

– whose rules of procedure are established by public authorities and whose members are appointed by public authorities and not by the parties;

– whose jurisdiction is compulsory and general in nature and not ad hoc; – whose function is to resolve legal disputes; and – which is obliged to apply rules of law, not discretionary rules ex aequo et bono. 26. Restamark further refers to Case 246/80 Broekmeulen,4 where the EC Court of Justice regarded an appeals Committee of a private association as a "tribunal" in the sense of Article 177 of the EC Treaty, and Case 102/81 Nordsee,5 where an ordinary business arbitration tribunal was not regarded as a body with the competence to ask for preliminary rulings.

The Government of Finland 27. The Government of Finland points out that Article 34 of the ESA/EFTA Court Agreement is based on Article 177 of the EC Treaty. Under Article 3 of the ESA/EFTA Court Agreement the EFTA Court is to pay due account to the principles laid down by the relevant rulings by the EC Court of Justice concerning Article 177 of the EC Treaty given both prior to and after the date of signature of the EEA Agreement. 28. The Government of Finland states that the concept "any court or tribunal" under Article 177 of the EC Treaty, has been interpreted by the EC Court of Justice in a broad way. Basically, the Court has given two general requirements to be fulfilled for the purposes of Article 177. First, it has to be an organ exercising judicial functions. Secondly, an interpretation of Community law has to be considered by that organ as essential for it to arrive at a decision. 29. Analysing the way the EC Court of Justice has interpreted the concept of bodies other than ordinary courts performing some judicial functions, the Government of Finland first observes that the name of the body is irrelevant. Provided it performs a judicial function, i.e. has powers to give binding determinations of the legal rights and obligations of individuals, it will be a court or tribunal within Article 177. Referring to Case 61/65 Vaassen6 the Government of Finland adds that the expression may also in certain circumstances include bodies other than ordinary courts of law. Therefore the fact that a certain body having judicial functions is not considered to be "a court" in the legislation of a Member State is not decisive. It further refers to Case 246/89 Broekmeulen,7 where an appeals committee of the Dutch professional medical body was recognized to be a court within the meaning of Article 177, Case 102/81 Nordsee,8 where the Court did not find an independent arbitrator to constitute a court, and Case 109/88 Danfoss,9 where the Danish Industrial Arbitration Board was held to qualify as a tribunal under Article 177. 30. The Government of Finland then refers to three cases in which the EC Court of Justice has analysed whether or not a body having judicial functions can be considered as a

4 Case 246/80, Broekmeulen, [1981] ECR 2311. 5 Case 102/81, Nordsee, [1982] ECR 1095. 6 Case 61/65, Vaassen, [1966] ECR 261. 7 Case 246/80, Broekmeulen, [1981] ECR 2311. 8 Case 102/81, Nordsee, [1982] ECR 1095. 9 Case 109/88, Danfoss, [1989] ECR 3199.

court under Article 177 in circumstances where that body has specific links to the public administration. In Case 318/85 Unterweger10 a consultative commission was not considered to have the capacity of a court. On the other hand, in Case 61/65 Vaassen11, the Scheidsgerecht, a Dutch arbitration tribunal in the field of social security, was regarded as a court. The decisive criteria were that the body in question was properly constituted under the law of the Netherlands; it was a permanent body charged with the settlement of the disputes under the law of the Netherlands; it was bound by rules of adversary procedure similar to those used by ordinary courts of law; the parties to certain matters were bound to take any disputes arising between them to the Scheidsgerecht as a proper judicial body and the Scheidsgerecht was bound to apply the rules of law. In Case C-24/92 Corbiau12, le directeur des contributions directes et des accises of Luxembourg did, however, not qualify as a court. The Court held that a body qualifying as a court must have an objective status in relation to the parties to the proceedings and that le directeur placed at the head of the administration in question could not qualify as a court under the above criteria because he had an organizational link with the contested administrative services. Moreover, if the decision of le directeur were taken to the Conseil d'Etat, he would be considered as a party to such proceedings. 31. According to the Government of Finland, the Appeals Committee of the National Board of Customs is one of those bodies in Finland which are viewed merely as special decision-making compositions of a particular administrative authority, in this case the National Board of Customs. Section 4 of the Customs Administration Act contains provisions on the Appeals Committee of the National Board of Customs. It provides that the Director-General of the National Board of Customs chairs the Appeals Committee and that the Government appoints the other four members from among the officials of the National Board of Customs. The members are appointed for a term of three years. During this period, they enjoy the same security of tenure as judges. Consequently, a member of the Appeals Committee cannot be dismissed prior to the end of his term unless he is ordered by a court to be removed from office. The Chairman, on the other hand, does not enjoy the same security of tenure. His seat on the Appeals Committee is connected with his office as the Director-General of the National Board of Customs and he may, in accordance with Section 47 of the State Civil Servants Act (755/86), be dismissed when necessary. It is further provided that at least three members of the Appeals Committee must hold the academic degrees in law required for judges. The Chairman and the members of the Appeals Committee do not act on a full-time basis but also perform other tasks in the National Board of Customs. 32. Under Section 17 of the Decree on the Customs Administration, decisions are made in the Appeals Committee of the National Board of Customs upon presentation. Under the same section, the Appeals Committee has a quorum when the Chairman and at least two other members are present. As a general rule Section 4 of the Customs Administration Act provides that the normal rules of judicial procedure should be observed. According to the Government of Finland, such a reference does not imply, however, that all rules applied by the general courts also apply to administrative adjudication. In fact, it is always a matter of evaluation whether, or to what extent, the provisions of the Code of Judicial Procedure are applicable in such cases. In general, the central procedural principles of administrative adjudication have been developed through judicial practice. Administrative authorities that do not have a special composition for appeals also deal with appeals in accordance with the procedure for administrative adjudication. The Government of Finland therefore submits that the fact that an administrative authority, when considering appeals, observes the procedure for administrative adjudication does not of itself mean that it constitutes a tribunal.

10 Case 318/85, Unterweger, [1986] ECR 955. 11 Case 61/65, Vaassen, [1966] ECR 261. 12 Case C-24/92, Corbiau, [1993] ECR I-1277.

33. The district customs houses are supervised by the National Board of Customs, which is also the appellate authority for decisions by district customs houses that pertain to customs clearance or customs and excise duties. In such matters the National Board of Customs is therefore both the supervisory authority and the appellate authority. A decision of the National Board of Customs made by the Appeals Committee of the National Board of Customs is always subject to appeal to the Supreme Administrative Court. No restrictions on such appeals have been imposed in Finland. In these cases, the State's right of appeal is exercised by the customs agent in the National Board of Customs. 34. The Government of Finland points out that the dual role of the National Board of Customs has been noted in other contexts as well. The Government Proposal for a Reform of the Tax Appeals System (No. 43/1993) has found that a fundamental problem with the current system is that the National Board of Customs case is both the supervisory authority and the appellate authority in the same case. The Proposal foresees that the appeals that are now considered by the Appeals Committee of the National Board of Customs will be transferred to the general regional administrative courts, i.e. the county courts. The Proposal has been adopted by the Finnish Parliament and will enter into force on 1 December 1994. 35. The Government of Finland points out that, as appears from the recent Case C-24/92 Corbiau,13 the EC Court of Justice has emphasized, with regard to the notion of "tribunal" in Article 177 of the EC Treaty, that only an authority that is a third party in relation to the authority which made the decision under appeal can be deemed a tribunal. A person who has a leading position in the same branch of administration as the authority that made the decision under appeal was found to lack the status of third party. 36. The Government of Finland agrees that the concept of "tribunal" in Article 34 of the ESA/EFTA Court Agreement should be interpreted in conformity with the interpretation of the concept in Article 177 of the EC Treaty and the case law of the EC Court of Justice. In the view of the Government of Finland, having regard to the points raised by Case C-24/92 Corbiau, it would seem that the Appeals Committee of the National Board of Customs could not be considered as a tribunal in the sense of Article 34 of the ESA/EFTA Court Agreement, and therefore it could not request an advisory opinion. The Government of Finland suggests that this conclusion is in line with the general interest of not overburdening the system of European preliminary jurisdiction so that it loses its ability to deliver interpretations of EEA/EC rules without considerable delay. Administrative authorities which observe the rules of judicial procedure in administrative adjudication are not, for that reason alone, to be deemed tribunals for the present purposes. It is an essential characteristic of a tribunal that it is both independent and impartial in relation to the parties and to the authority which made the decision under appeal. The independence and impartiality of an institution must be evaluated, inter alia, on the basis of organisational aspects, and internal revisory procedures within the administration should not be deemed an indication of the status of an authority as a tribunal.

The Government of Norway

37. The Government of Norway also first points out that Article 34 of the ESA/EFTA Court Agreement corresponds in substance to Article 177 of the EC Treaty. It submits, though, that the EFTA Court has no direct obligation according to Article 3 of the ESA/EFTA Court Agreement to interpret Article 34 in conformity with the rulings given by the EC Court of Justice on Article 177 of the EC Treaty.

13 Case C-24/92, Corbiau, [1993] ECR I-1277.

38. Thereafter the Government of Norway states that the EC Court of Justice has developed the notion of "court or tribunal" into an independent concept of Community law. Under this system it has permitted national authorities to make references even if they are not considered to be courts by the national legal system of the Member State in question. In Case 61/65 Vaassen14 a Dutch security tribunal which did not consider itself to be a court or tribunal under Dutch law, was held to be a court or tribunal of a Member State for the purposes of Article 177 of the EC Treaty. This was due to the fact that the members of the tribunal were appointed, its chairman designated and its rules of procedure laid down by the responsible minister, and that it was a permanent body which heard disputes according to an adversarial procedure and was bound to apply rules of law. In Case C-24/92 Corbiau15 the EC Court of Justice refused to accept a question referred for a preliminary ruling from the directeur des contributions of the Grand Duchy of Luxembourg because he was not in a third party relationship to the administration which took the decision against which an appeal had been brought. The Director was at the head of that administration and represented an obvious organisational link between the departments which had calculated the disputed taxation and against which the complaint brought before him was directed. 39. In the present case, all members of the Appeals Committee of the National Board of Customs are officials of the National Board of Customs, appointed by the Government to serve on the Appeals Committee for a term of three years. The Chairman is at the same time the Director General of the National Board of Customs. The National Board of Customs is both an appeals instance for decisions taken by the Finnish regional customs offices and administratively responsible for those same bodies. The Appeals Committee of the National Board of Customs must therefore, in the view of the Government of Norway, be considered to be part of the customs administration in Finland which took the decision against which an appeal has been made. There are thus clear parallels between this case and Case C-24/92 Corbiau. 40. In the opinion of the Government of Norway, the EFTA Court should not apply a broader definition of the term "court or tribunal" than that applied by the EC Court of Justice. Therefore, the EFTA Court should not accept a request for an advisory opinion from a body which is not an independent third party to a dispute. If bodies that are not in a third party position in relation to the parties to a dispute are to be permitted to refer questions for an advisory opinion, it would be difficult to draw the distinction between this situation and situations in which the parties themselves were allowed to request an advisory opinion in the course of the proceedings. Moreover, in most cases, as in the present case, a decision of an administrative body may be brought before a national court. Thus, it should be up to that national court to refer questions to the EFTA Court for an advisory opinion. Therefore, such cases could still be referred to the EFTA Court at a later stage. 41. In the light of this, the Government of Norway maintains that the request for an advisory opinion from the Appeals Committee of the National Board of Customs should be declared inadmissible.

The EFTA Surveillance Authority 42. The EFTA Surveillance Authority (ESA) points out that Article 34 second paragraph of the ESA/EFTA Court Agreement corresponds to Article 177 second paragraph of the EC Treaty. Under Community law, the expression "any court or tribunal of a Member State" is understood to have its own meaning, and is not just a reference to what are considered courts

14 Case 61/65, Vaassen, [1966] ECR 261. 15 Case C-24/92, Corbiau, [1993] ECR I-1277.

or tribunals by the legal systems of the Member States. Criteria for deciding whether the body requesting the opinion is a "court or tribunal" or not have been developed in the case law of the EC Court of Justice, see e.g. Case 61/65 Vaassen.16 The ESA submits that this case law should be regarded as relevant for EEA law. However, the ESA is of the view that the information submitted does not provide a sufficient basis for assessing whether or not the Appeals Committee of the National Board of Customs fulfils the criteria developed in Community law, and thus may be recognized as a "court or tribunal in an EFTA State".

The EC Commission 43. The EC Commission observes that since it does not possess any detailed information on the functions, jurisdiction or procedures that apply to the Appeals Committee of the National Board of Customs, it is not in a position to make observations on whether such a body qualifies as a "court or tribunal" within the meaning of Article 34 of the ESA/EFTA Court Agreement, and consequently, whether the reference is admissible.

B. The material scope of application of the EEA Agreement 44. Three of the parties which submitted written observations address the question whether the products concerned in the case fall within the material scope of application of the EEA Agreement.

The Government of Finland 45. The Government of Finland states that the application of Articles 11 and 16 of the EEA Agreement is complicated by differences in the scope of the provisions on free movement of goods in the Agreement and the EC Treaty. Free movement of agricultural goods is not provided for in the EEA Agreement and, therefore, provisions concerning free movement of goods are not applicable to wine, except for Article 16 which is referred to in Protocol 8 to the Agreement.

The EFTA Surveillance Authority 46. ESA, referring to Article 8(2) of and Protocol 47 to the EEA Agreement, assumes that the products concerned in this case originated in the EEA. 47. With regard to the product coverage of the EEA Agreement, the ESA points out that, through the reference to Protocol 3, the EEA Agreement applies inter alia to products originating within the EEA, listed in Table II in that Protocol subject to the provisions in the Protocol and unless otherwise specified in the Agreement. Whisky falls under HS heading 22.08.20, which is listed in Table II to Protocol 3, and is thus covered by the EEA Agreement. 48. Wine falls under HS heading 22.04, and is not covered by the reference in Article 8(3) of the EEA Agreement. Article 18 of the Agreement requires that trade in products covered by the arrangements provided for in Articles 17 and 23(a) and (b) are not compromised by "other technical barriers to trade". Article 23(b) refers to the specific provisions and arrangements for the abolition of technical barriers to trade in wine in Protocol 47. In the view of ESA the concept "technical barriers to trade" is a more narrow concept than the concept "[q]uantitative restrictions ... and all measures having equivalent effect" used in Article 11 of the Agreement. This means that some, but not all, measures prohibited by Article 11 are also prohibited by Article 18. However, they are still two different provisions.

16 Case 61/65, Vaassen, [1966] ECR 261.

Thus, in the opinion of the ESA, the fact that Article 18 applies to trade in wine does not mean that Article 11 applies to trade in wine.

The EC Commission 49. The EC Commission points out that the material scope of Articles 10 to 15, 19, 20 and 25 to 27 of the EEA Agreement is limited by virtue of Article 8(2) to products originating in the Contracting Parties. In other words, a product only enjoys the benefits of free circulation if it fulfils the detailed provisions on rules of origin set out in Protocol 4 to the Agreement. There is no information in the file upon which one can determine whether these criteria are fulfilled in the present case. The Commission is of the view that, in any event, it is up to the Appeals Committee of the National Board of Customs to determine whether the products in question satisfy these criteria and thus benefit from free movement. 50. The Commission further notes that the EEA Agreement does not apply to all kinds of products. Article 8(3) provides that the Agreement only applies either to products listed in Chapters 25 to 97 of the Harmonized Commodity Description and Coding System (HS), excluding the products listed in Protocol 2 to the Agreement, or products specified in Protocol 3. Protocol 3 covers a number of processed agricultural products falling within Chapters 1 to 24 of the HS, as well as certain other products falling within Chapters 35 to 38 of the HS. These products therefore benefit from free movement, subject to specific arrangements set out in that Protocol. 51. As far as alcoholic beverages are concerned most of these are listed in Tables I and II of Protocol 3 to the Agreement, e.g. beer, vermouth, gin, whiskies. They are therefore covered by the provisions of the EEA Agreement. However, wine (HS heading 22.04), which is one of the products that Restamark has attempted to import, does not figure in the tables to Protocol 3 and is thus, in principle, excluded from the EEA Agreement. Nevertheless, special provisions regarding technical barriers to trade in wine are laid down in Protocol 47 EEA. The result of the special provisions on technical barriers is to oblige the Contracting Parties to authorize imports and marketing of spirit and wine products which are in conformity with the Community acts referred to in Annex II and Protocol 47 to the EEA Agreement. In other respects than trade between the EFTA States and the Community, EFTA States may continue to apply their national legislation (see the third paragraph of Protocol 47). 52. The EC Commission therefore considers that the limitation on the material scope of application of the rules on the free movement of goods entails that, inter alia, Article 11 of the EEA Agreement does not apply to wine. On the other hand, the Commission recalls that by virtue of point 2 in Protocol 8 on State monopolies, irrespective of the general limitation, Article 16 of the Agreement should also apply to wine.

C. The questions referred

(a) The first question 53. All parties which have submitted written observations thereon agree that Article 11 of the EEA Agreement is identical in substance to Article 30 of the EC Treaty. While the EC Commission concludes that it thus is clear that "the rulings of the [EC] Court of Justice on the latter provision are therefore a primary source for deciding on the proper construction of Article 11 EEA", the ESA and the Government of Norway state that consequently, in accordance with Article 6 of the Agreement, Article 11 should be interpreted in conformity with the relevant rulings of the EC Court of Justice given prior to 2 May 1992. The ESA adds

that due account should be paid to the principles laid down by the relevant rulings by the EC Court of Justice after 2 May 1992 (Article 3(2) ESA/EFTA Court Agreement).

Restamark 54. In the opinion of Restamark, the free movements of goods rule in Article 11 of the EEA Agreement, together with the principle of proportionality, make it quite clear that no monopolistic restrictions on the imports of alcoholic products from other EEA countries can be maintained in Finnish legislation. 55. It refers to the case law of the EC Court of Justice, in particular Case 120/78 Cassis de Dijon,17 where the Court decided that alcohol products, legally marketed in one Member State, must be allowed to be exported to other Member States. This rule applies also to the free movement of goods in the EEA. 56. Restamark further points out that Article 36 of the EC Treaty allows exceptions to the free movement of goods on the basis of "human health". However, in Case 178/84 Commission v. Germany18 the EC Court of Justice held that exceptions on the basis of "human health" must be based on international scientific proof on health risks. The exceptions and limitations must also be necessary and measures which are least restrictive to the free movement of goods between the Member States must be used. 57. In the submission of Restamark it is proposed that the answer to the first question should be as follows:

The obligation to guarantee the free movement of goods according to Article 11 EEA obliges the Government and Parliament of Finland to pass legislation abolishing monopolistic restrictions on the free movement of goods, which violate not only Article 11, but also Articles 16, 54 and 59 of the EEA Agreement.

The Government of Finland

58. The Government of Finland submits that the EC Court of Justice has, in its case law, found that there are circumstances where restrictions on importation caused by prerogatives granted to a State monopoly are justified in order to achieve the objectives set out in Article 36 of the EC Treaty (Case 72/83 Campus Oil19), which is in substance identical to Article 13 of the EEA Agreement. In Finland, as in all Nordic countries, alcohol policy is part of the general health and social policy: state control measures are used to minimize the harmful effects to health by restricting the consumption of alcoholic beverages. This was emphasized by the Nordic countries in their declaration on alcohol monopolies in the EEA Agreement. Restrictions concerning importation have also been used to implement health and social policy objectives by preventing the importation of products that are considered harmful. This policy is in line with the 1984 Resolution on the Targets for Health for All by the WHO Regional Committee for Europe. 59. The Government of Finland further submits that, since the harmonization of taxation is not included in the EEA Agreement, it is for each Contracting Party to choose its own method of fiscal control over alcoholic products on sale in its territory. As a consequence,

17 Case 120/78, Cassis de Dijon, [1979] ECR 649. 18 Case 178/84, Commission v. Germany, [1987] ECR 1274. 19 Case 72/83, Campus Oil, [1984] ECR 2727.

some obstacles to trade resulting in particular from different methods of ensuring the collection of taxes are inevitable and cannot be regarded as incompatible with the Agreement.

The Government of Norway 60. According to the Government of Norway, all restrictive measures under an import monopoly of alcoholic beverages, including the requirement to obtain authorization for the commercial import of alcohol, may fall under Article 11 of the EEA Agreement rather than Article 16. This should e.g. be the case if the monopoly in question does not have the possibility of refusing importation. In such a situation there is no import monopoly as understood by the EC Court of Justice in Case 59/75 Manghera.20 61. Whether restrictive measures under an import monopoly of alcoholic beverages are in conformity with the EEA Agreement will depend on whether they are justified under Article 13 of the Agreement or fulfil the test of mandatory requirements and are proportionate to the aims pursued. This must be assessed specifically for the various functions of the monopoly in question. In this connection consideration must be given inter alia to whether a monopoly has been established mainly for trade policy reasons, or for control purposes on grounds of public health or for the effectiveness of fiscal supervision. If a monopoly only carries out functions in keeping with national alcohol policy, it may be more likely that such a monopoly will be considered to be justified under Article 13 or the Cassis de Dijon doctrine. 62. The Government of Norway maintains, without prejudice to the case law of the EC Court of Justice, that the Contracting Parties to the EEA Agreement must have some discretion in determining which measures they wish to employ for the purposes of their national alcohol monopoly, pointing out that the present system of commercialization of alcohol has long-standing traditions in the Nordic EFTA States. Assuming that the principle laid down in Article F 1 of the Treaty on European Union, that the Union must respect the national identities of its Member States, also had to be respected in Community law before the entry into force of the Treaty, the Government of Norway is of the view that that principle should also be taken into consideration in the context of the EEA Agreement in relation to the Nordic alcohol monopolies.

The EFTA Surveillance Authority 63. The EFTA Surveillance Authority, after having referred to a number of judgments of the EC Court of Justice, inter alia Case 8/74 Dassonville,21 Case 41/76 Donckerwolcke,22 Joined Cases 51-54/71 International Fruit Co.23 and Case 120/78 Cassis de Dijon,24 proposes that the first question be answered as follows:

Article 11 EEA must be interpreted as prohibiting a requirement of permission to put into free circulation in an EEA State products covered by Article 11 EEA and imported from another EEA State when a corresponding requirement does not apply to domestic products of the same kind. The prohibition also applies if there is a corresponding requirement in respect of domestic products of the same kind, unless

20 Case 59/75, Manghera, [1976] ECR 91. 21 Case 8/74, Dassonville, [1974] ECR 837. 22 Case 41/76, Donckerwolcke, [1976] ECR 1921. 23 Joined Cases 51-54/71, International Fruit Co., [1971] ECR 1107. 24 Case 120/78, Cassis de Dijon, [1979] ECR 649.

the requirement is necessary in order to satisfy mandatory requirements and proportionate in view of the aim pursued.

The EC Commission

64. The EC Commission describes the existing case law of the EC Court of Justice on Article 30 EC in relation to exclusive import rights, referring to Case 8/74 Dassonville,25 Case 145/85 Commission v. Greece26 and Case C-202/88 France v. Commission.27 It points out that the existence of a State monopoly within the European Community with an exclusive right to import alcoholic beverages would prevent Community exporters based in other Member States from selling their products to anyone but the monopoly in that Member State. At the same time, the State monopoly's right would prevent the customers in that Member State from freely choosing the source of their supplies. Such a right is therefore likely to restrict trade between Member States. The EC Court of Justice has consequently ruled that exclusive import rights are covered by the prohibition against measures having equivalent effect to quantitative restrictions contained in Article 30 of the EC Treaty (Case C-202/88 France v. Commission). 65. The Commission does not consider that exclusive import rights should be regarded as provisions "restricting or prohibiting certain selling arrangements" within the meaning of ground 16 of the judgment in Joined Cases C-267/91 and C-268/91 Keck and Mithouard.28 In any event, given their discriminatory nature (Case 59/75 Manghera29), they could not benefit from this exception so as to fall outside the scope of Article 30 of the EC Treaty. Moreover, the Court of Justice has recently confirmed that rules which prevent an importer from making his own arrangements for the transportation and delivery of his goods within a municipality, unless he pays to a local undertaking a sum corresponding to the services rendered by the latter in the context of an exclusive concession with regard to the handling, transportation and delivery of the goods in question, violated Article 30 EC.30 66. The Commission therefore submits that it is clear that an exclusive right to import certain goods constitutes a measure having equivalent effect to a quantitative restriction within the meaning of Article 30 of the EC Treaty. Given the similarity between this provision and Article 11 of the EEA Agreement, such a right must also be regarded as prohibited by the latter provision. 67. In the view of the Commission, a system of prior authorizations that, subject to a number of conditions laid down by Oy Alko Ab, would allow others to effect imports for commercial purposes, would merely amount to a procedure for making imports dependent on an import licence. The EC Court of Justice has already found that such a procedure is incompatible with Article 30 of the EC Treaty even when it is purely a formality (Joined cases 51-54/71 International Fruit Co.31).

25 Case 8/74, Dassonville, [1974] ECR 837. 26 Case 145/85, Commission v. Greece, [1986] ECR 3935. 27 Case C-202/88, France v. Commission, [1991] ECR 1223. 28 Joined Cases C-267/91 and C-268/91, Keck and Mithouard, [1993] ECR I-6097. 29 Case 59/75, Manghera, [1976] ECR 91. 30 Joined Cases C-277/91, C-318/91 and C-319/91, Ligur Carni, [1993] ECR I-6621. 31 Joined Cases 51-54/71, International Fruit Co., [1971] ECR 1107.

68. Finally, the Commission considers that such a measure is incapable of justification under Article 13 of the EEA Agreement or any other "mandatory requirements". First, given the discriminatory nature of an exclusive right to import, the restriction cannot be justified by any of the "mandatory requirements" recognized by the EC Court of Justice. Secondly, an exclusive right to import cannot be justified on the grounds for derogation contained in Article 13 of the EEA Agreement, which corresponds to Article 36 of the EC Treaty. It follows from the last sentence of Article 36 that measures taken in pursuance of the aims referred to in the Article must not constitute a means of arbitrary discrimination or a disguised restriction of trade. Measures are only justified by Article 36 if it is established that they are necessary in order to attain the objective of protection referred to and that such protection cannot be achieved by means less restrictive of the free movement of goods. 69. The Commission accepts that there are important social and health considerations behind the Finnish alcohol policy and that the decision to adopt a State monopoly system was strongly motivated by such concerns. The protection of "life and health of humans" is a justification recognized by Community law and it is specifically listed in Article 36 of the EC Treaty as a possible ground for derogating from Article 30. The issue is therefore not whether the objectives pursued by the Finish authorities, namely limiting the sale and controlling the consumption of alcohol, are acceptable but rather whether an import monopoly is necessary to achieve such objectives.32 If one examines the various measures taken to control the consumption of alcohol in Finland most of these, such as price regulation, prohibition on advertising, restricted opening hours for outlets, legal drinking age, information, education and research activities, do not, in fact, require the existence of a State monopoly, but could be dealt with by normal legislative intervention. Furthermore, measures taken to restrict the availability of alcohol by limiting the number of outlets could only justify intervention at the retail level. The most important factor in favour of a State monopoly in this sector would appear to be that the absence of a profit element for the retailer limits the risk that customers will be "exposed to any sort of sales pressure or inducement" while in the outlets. In the absence of any harmonized rule at Community level in this area, it is for the Member States to decide on the degree of protection they wish to afford to public health and the way in which that protection is to be achieved, within the limits set by the EC Treaty and the principle of proportionality.33 However, the Commission submits that considerations of public health could only justify intervention at the retail level, which is where the contact with the customer takes place. Thus, an import monopoly for alcoholic beverages is not necessary for safeguarding "life and health of humans" or any of the other interests referred to in Article 36. The Commission further notes that the Government of Finland accepted this view in an exchange of letters with the Commission on 20 and 21 December 1993. 70. In the light of its observations, the EC Commission submits that the first question should be answered as follows:

Article 11 of the EEA Agreement must be interpreted as precluding a national measure which confers on a State monopoly the exclusive rights to import alcoholic beverages listed in Tables I and II of Protocol 3 EEA and originating in the Contracting Parties or the application to intra-EEA trade of national provisions which require the authorization of the State monopoly for the importation of such products.

(b) The second question

32 Joined Cases C-1 and C-176/90, Aragonesa, [1991] ECR 4151, at 4184. 33 Joined Cases C-1 and C-176/90, Aragonesa, supra note 32, at 4184.

71. All the parties which have submitted written observations agree that Article 16 of the EEA Agreement is identical in substance to Article 37 of the EC Treaty. 72. In the written observations on the second question the following subquestions have been commented on: Interpretation, Direct effect and Transitional period. In addition, three of the parties have proposed answers to the second question.

(i) Interpretation

Restamark 73. Restamark points out that the EC Court of Justice has decided in particular in Case 59/75 Manghera34 that Article 37 of the EC Treaty means that the Member States cannot maintain import monopolies after the transitional period. Free movement of goods and the non-discrimination principle imply competition in the import of goods from other Member States. Article 37 covers not only the sale but also the marketing of products from one Member State to another. The EC Court of Justice has interpreted this provision to the effect that the exporter must be allowed to exercise non-discriminatory sales promotion and the consumer must be in a position to be able to choose freely between domestic products and products from other Member States (Case 161/82 Commission v. France35). This interpretation obliges a monopolistic company to stock for sale all the brands any exporter from another Member State is willing to offer for sale. Wholesale monopoly of alcohol is therefore contrary to the existing interpretation of Article 37.

The Government of Finland 74. The Government of Finland points out that after the transitional period, which for the original Member States ended on 31 January 1969, the interpretation of Article 37 of the EC Treaty has been the subject of numerous cases before the EC Court of Justice. The Court has specified in its case law what is to be understood by the provision, and in particular the concepts "adjustment" and "discrimination". The Court has made it clear that Article 37(1) is to be interpreted as meaning, among other things, that exclusive rights to import are prohibited (Case 59/75 Manghera36). 75. The Government of Finland states that although Oy Alko Ab is granted, under the Alcohol Act, the exclusive right to import alcoholic beverages, the company has, in practice, also made importation possible for individuals. In such cases the monopoly company is only formally the importer of the goods. Products may be imported for private use or to be sold in an establishment where it is consumed on the premises. As a general rule, products are ordered from Oy Alko Ab, which negotiates the purchase price of the product to be imported either with a producer or an agent. However, the purchaser has also been able to negotiate on the price of the particular stock of alcoholic beverages being imported at his request. In both cases, Oy Alko Ab determines the price on which the excise duty is based. Customs clearance can in principle only be performed by Oy Alko Ab, but in practice customs clearance is taken care of by a forwarding agent who has the required permit for the consignment given by the monopoly company. After customs clearance, the goods are delivered to Oy Alko Ab's central warehouse to be forwarded to the purchaser. After the entry into force of the EEA Agreement, the National Board of Customs recommended to the competent customs authorities that they

34 Case 59/75, Manghera, [1976] ECR 91. 35 Case 161/82, Commission v. France, [1983] ECR 2079. 36 Case 59/75, Manghera, [1976] ECR 91.

advise possible declarants of alcoholic beverages, who have no agreement on the importation of the goods with Oy Alko Ab, to contact the monopoly company in order to obtain a permit for the consignment. The declarant was advised in this way in the matter before the Appeals Committee of the National Board of Customs. In view of the EEA Agreement, the monopoly company had decided to grant its consent for such consignments, on the condition that the declarant submits information on the original price of the products needed for determining the excise duty, as well as information concerning the origin and the final destination of the products. 76. Until 1 July 1994, when the new Act on Taxation of Alcoholic Beverages entered into force, information on product prices was essential because the taxation of alcoholic beverages was based on a fiscal monopoly. The excise duty on alcoholic beverages was determined according to the retail sales price of the product set by the monopoly company. For a sale on the premises, the monopoly company set a range within which restaurants could select the prices charged. Pricing was completely neutral with regard to the supplier and the country of origin. 77. Since the monopoly company has the exclusive right to the retail trade of alcoholic beverages, it is also essential to supervise the destination of imported products. Under the present legislation, supervision of the observance of the prohibitions of the Alcohol Act is entrusted to Oy Alko Ab. 78. The Government of Finland claims that the concept of adjustment, as set out in Article 16 of the EEA Agreement, should not be interpreted as meaning abolition of the alcohol monopoly from 1 January 1994. The EC Court of Justice has repeatedly ruled that Article 37(1) of the EC Treaty does not require the abolition of State monopolies, only their adjustment in order to eliminate any discrimination against nationals of other States. Neither the maintenance of existing special or exclusive rights or public undertakings, nor the creation of new ones is prohibited as such by the EC Treaty.

The Government of Norway 79. Referring to the case law of the EC Court of Justice, inter alia Case 59/75 Manghera,37 the Government of Norway submits that, when assessing existing alcohol monopoly schemes in relation to Article 16 of the EEA Agreement, it must first and foremost be determined whether the existence of these schemes has a discriminatory effect or distorts competition. A traditional import monopoly will determine which goods are to be imported into the country. Such a monopoly controls the flow of goods in a way which is contrary to the principle of the free movement of goods and is discriminatory. On the other hand, an import monopoly which cannot refuse to handle an import order is not in itself discriminatory. This is the case where suppliers of the goods in question are given, through the monopoly, an unlimited right to place their products on the market, and where consumers are able to obtain whichever products they require. Such an import monopoly would not be an import monopoly within the meaning of Article 16, but should instead be assessed under Article 11.

The EFTA Surveillance Authority 80. After quoting various parts of the judgment of the EC Court of Justice and the opinion of the Advocate General in Case 59/75 Manghera,38 the ESA maintains that Article 37 of the EC Treaty must be interpreted so as to prohibit the maintenance of a State monopoly with exclusive import rights. The same must also apply to Article 16 of the EEA Agreement. 37 Case 59/75, Manghera, [1976] ECR 91. 38 Case 59/75, Manghera, [1976] ECR 91.

81. The ESA further recalls that the Governments of Finland, Iceland, Norway and Sweden have made a Declaration on alcohol monopolies, contained in the Final Act to the EEA Agreement. In its view this declaration cannot be taken to affect the obligations of the States concerned under Article 16 of the EEA Agreement. The declaration is made unilaterally only by some Contracting Parties and it is explicitly stated to be made without prejudice to the obligations arising under the Agreement.

The EC Commission 82. The EC Commission points out that the provisions of Article 37 of the EC Treaty on State monopolies are specifically designed to prevent the effects of Articles 30 to 36 of the Treaty being circumvented by the existence of a State monopoly, which can adapt its purchasing and sales policy so as to exclude others from the national market. It submits that a public undertaking, such as Oy Alko Ab, created for the particular purpose of operating a national monopoly in trade in a certain good enables the State appreciably to influence imports in the sense required by Article 37(1) of the EC Treaty. 83. The Commission adds that the EC Court of Justice has found that the overriding objective of ensuring free movement throughout the Community could not be achieved if, in a Member State where a State monopoly exists, the free movement of goods from other Member States, similar to those with which the national monopoly is concerned, was not guaranteed (Case 59/75 Manghera,39 confirmed in Case C-347/88 Commission v. Hellenic Republic40). A State monopoly enjoying an exclusive right to import certain goods in a discretionary way determines supply and demand for those products and consequently their price on the domestic market. Not only in relation to exporters based in other Member States but also in relation to users based in the Member State concerned, an exclusive right to import certain goods constitutes discrimination of the kind prohibited by Article 37 of the EC Treaty and should constitute discrimination for the purposes of Article 16 of the EEA Agreement. Consequently, the failure to abolish Oy Alko Ab's exclusive right to import alcoholic beverages into Finland by 1 January 1994 when the EEA Agreement came into force constitutes an infringement of Article 16 of the Agreement.

(ii) Direct effect

Restamark 84. According to Restamark this question manifests some kind of a misunderstanding of the EEA system on the part of the Appeals Committee. All EEA norms, which belong to the "acquis communautaire" have been implemented according to the constitutional requirements of each EFTA State into their national legal systems. This also included the main part of the EEA Agreement. To the extent that corresponding EEC primary norms have been interpreted to have direct effect within the EC, the same, nationally implemented, norms naturally have identical legal force in the EFTA States. Paragraphs 1 and 2 of Article 37 of the EEC Treaty, corresponding to Article 16 of the EEA Agreement, have been declared to have direct effect by the EC Court of Justice in Case 59/75 Manghera41 and in Case 6/64 Costa v. ENEL42.

39 Case 59/75, Manghera, [1976] ECR 91. 40 Case C-347/88, Commission v. Hellenic Republic, [1990] ECR 4747. 41 Case 59/75, Manghera, [1976] ECR 91. 42 Case 6/64, Costa v. ENEL, [1964] ECR 585.

85. In Section 2 of the Finnish Act implementing the EEA Agreement (1504/93) EEA norms have been given direct effect and a status hierarchically superior to conflicting national parliamentary legislation. According to Restamark this question should not have been submitted to the EFTA Court at all, because it should be answered mainly on the basis of national legislation. However, for the sake of legal certainty it suggests that the EFTA Court briefly comments upon the questions and confirms the direct effect of Article 16 of the EEA Agreement.

The Government of Finland 86. The Government of Finland points out that the EEA Agreement has been brought into force by national legislation according to which the Agreement, including its Protocols, Annexes and the EC acts referred to in the Annexes, are in force "as agreed", i.e., the provisions are part of Finnish law in their original form. Priority of EEA rules over conflicting provisions of law of purely national origin and their direct effect is provided for in Sections 2 and 3 of the Finnish Act implementing the EEA Agreement (1504/93) by prescribing that a provision of a Finnish act or decree shall not apply if it is contrary to an EC regulation referred to in an Annex of the Agreement, or an unconditional and sufficiently specific provision in the main agreement, in a Protocol, in an Annex or in an EC directive referred to. A further condition for directives is that the provision concerns the relationship between an individual and a public authority and the non-application of a provision of Finnish law is in the interest of the individual. Finland has thus fulfilled the obligation relating to the particular commitment to enact legislation according to which the EEA rules have priority over conflicting national provisions set out in Protocol 35 to the EEA Agreement. If such conflicts arise, individuals may rely on the provisions of the Agreement before national courts, which are under an obligation to ensure that the rights of individuals are protected.

The Government of Norway 87. The Government of Norway points out that, like all the other EFTA States that are parties to the EEA Agreement, Finland has incorporated the main part of the EEA Agreement into its national legal order. Since Article 16 of the Agreement is thus Finnish law, it is not necessary to answer the question whether Article 16 has direct effect. 88. Nevertheless, the Government of Norway makes a certain number of comments on the nature of the EEA Agreement as compared with Community law. 89. According to the Government of Norway the fundamental difference between the cooperation between the Member States of the Community and the cooperation between the Contracting Parties to the EEA Agreement is that the latter does not require any transfer of legislative powers to any of the institutions established under the Agreement (cf. the Preamble to Protocol 35 to the Agreement), whereas the EC Treaty does require such a transfer. As is stated in Article 103 of the Agreement, the decision-making procedure set out in the Agreement is designed to allow the Contracting Parties to fulfil their respective constitutional requirements in order for EEA rules to become binding at the international level. 90. Moreover, as illustrated by Article 7 of the EEA Agreement, an act corresponding to an EC regulation is as such to be made part of the internal legal order of the Contracting Parties. Article 189 of the EC Treaty, on the other hand, provides that a regulation is directly applicable in all Member States.

91. The Government of Norway further refers to Opinion 1/91,43 in which the EC Court of Justice comments on the difference between the EEA and the Community, and Case 26/62 Van Gend en Loos,44 in which the EC Court of Justice established the doctrine of direct effect under Community law. 92. According to the Government of Norway, direct effect presupposes the transfer of legislative powers to international institutions. According to Article 6 of the EEA Agreement, relevant rulings of the EC Court of Justice are only to be applied when interpreting the provisions of the Agreement. As there is no transfer of legislative powers from the EFTA States to any institutions established under the Agreement, and thus no direct effect of provisions in the Agreement, rulings by the EC Court of Justice relating to the doctrine of direct effect are not relevant under the EEA Agreement, and should not be applied. 93. According to the Government of Norway the constitutional framework of each Contracting Party must determine the legal effects of the EEA Agreement in the respective legal orders. This means that in dualistic EFTA States the legal effects will depend on the specific implementing measures, supplemented by other sources of national law such as case law on the relationship between national and international law.

The EFTA Surveillance Authority 94. The ESA underlines the wording of the eighth recital of the Preamble to the EEA Agreement ("CONVINCED of the important role that individuals will play in the European Economic Area through the exercise of the rights conferred on them by this Agreement and through the judicial defence of these rights."). In addition, it points out that one of the main objectives of the EEA Agreement is "to create a dynamic and homogeneous European Economic Area based on common rules and equal conditions of competition and providing for the adequate means of enforcement" (fourth recital of the Preamble to the EEA Agreement). In the view of the ESA, it is important for attaining these objectives that EEA law applies as far as possible in the EFTA States in the same manner as in the European Union. The ESA notes that the Nordic EFTA States, which adhere to the so-called "dualist" doctrine of international law, have all found it necessary to incorporate the provisions of the main part of the EEA Agreement in each national legal system in order to secure the high level of legal homogeneity which the EEA Agreement requires. It further notes that Protocol 35 of the Agreement states that the common rules will have to be established by national procedures, and requires the EFTA States to give primacy to the extent necessary to implemented EEA rules in conflict with other national provisions. The ESA thus submits that there is an obligation on the part of Finland to ensure that rights granted under sufficiently clear, precise and unconditional provisions of the EEA Agreement can be enforced by national courts and authorities. 95. Referring to Case 59/75 Manghera,45 the ESA points out that within the Community Article 37(1) of the EC Treaty may be relied on by private parties before national courts. It submits that Article 16 of the EEA Agreement is identical in substance to Article 37(1) of the EC Treaty and that Article 6 of the EEA Agreement also applies to this aspect of the interpretation of the provision. The provision in Article 16 of the Agreement is thus sufficiently clear, precise and unconditional to place Finland under an obligation to ensure its enforceability by national courts and authorities.

43 Opinion 1/91, [1991] ECR I-6079. 44 Case 26/62, Van Gend en Loos, [1963] ECR 1. 45 Case 59/75, Manghera, [1976] ECR 91.

The EC Commission 96. The EC Commission recalls that the EC Court of Justice has previously held that Article 37 of the EC Treaty, since the end of the transitional period, was capable of conferring rights on individuals which the national courts must protect (Case 45/75 Rewe II46 and Case 59/75 Manghera47). As far as the EEA Agreement is concerned the Commission recalls that the Contracting Parties have emphasized the importance of the role played by individuals in the EEA through the exercise of the rights conferred upon them by the Agreement and through the judicial defence of these rights (eighth recital of the Preamble to the Agreement). This indicates that the provisions of the EEA Agreement, despite its differences with the EC Treaty, are capable of producing direct effect and so may be relied upon by individuals before national courts in the legal orders of the EFTA States.

(iii) Transitional period

Restamark 97. According to Restamark no general transitional period exists for the main agreement and no specific transitional period, such as in Article 37 of the EEC Treaty, has been set out in Article 16 of the EEA Agreement. The latter Article should be understood to mean that the EFTA States and the EC should "ensure" that the monopolies "be adjusted" by the time the Agreement entered into force. 98. Protocol 8 to the Agreement contains a list of those State monopolies in the EFTA States for which a special transitional period was established. Oy Alko Ab does not figure in that list. 99. Restamark therefore concludes that the EEA obligations regarding Article 16 entered into force in Finland on 1 January 1994.

The Government of Finland 100. The Government of Finland recalls as its point of departure that Article 16 of the EEA Agreement imposes a duty of adjustment concerning the alcohol monopoly from 1 January 1994. It emphasizes, however, that adjustment should not be interpreted as abolition. Article 37 of the EC Treaty is based on adjusting the monopolies in question during a transitional period of considerable length and under the guidance of the EC Commission. Article 16 of the EEA Agreement is different in this respect; it is silent as regards the question of the timetable for adjustment. Taking into account the complexity of the issue and the important social and economic considerations involved, the Government of Finland is of the opinion that a reasonable period of adjustment should be allowed.

The EFTA Surveillance Authority 101. With regard to the question whether the Finnish import monopoly for alcoholic beverages should be considered to have expired from 1 January 1994, the ESA, basing itself on Case 59/75 Manghera,48 maintains that, while the questions of the obligation of Finland with regard to the implementation of the EEA Agreement and of the interpretation of Article

46 Case 45/75, Rewe II, [1976] ECR 181. 47 Case 59/75, Manghera, [1976] ECR 91. 48 Case 59/75, Manghera, [1976] ECR 91.

16 are clearly questions "on the interpretation of the EEA Agreement" within the meaning of Article 34 of the ESA/EFTA Court Agreement, this is not the case when it comes to applying a given interpretation, together with any relevant provisions of national law, to the facts of a specific case. This, in the view of the ESA, is reserved for national courts and authorities.

The EC Commission 102. The EC Commission notes that Article 16 of the EEA Agreement, unlike Article 37 of the EC Treaty, does not provide for a transitional period during which the required adjustments are to take place. In other words any adjustments which were required in order to comply with Article 16 of the EEA Agreement should have taken place by the time the Agreement came into force on 1 January 1994. Furthermore, it should be noted that Oy Alko Ab does not benefit from the special derogations set out in Protocol 8 to the EEA Agreement for certain State monopolies in the EFTA States.

(iv) Proposed answers to the second question 103. Restamark proposes the following answer to the second question:

The right to import alcohol into Finland according to Article 16 EEA covers the right to import, market and sell these products in Finland without monopolistic restrictions. Even if the monopoly of retail sale could be defended on the basis of human health and social policy arguments (Article 13 EEA), this argument cannot be used to defend any monopolistic rights in the wholesale and imports of alcohol into any EEA State, contrary to Article 16 EEA. All EEA obligations have been implemented in the national legal systems of the EFTA States according to the relevant national constitutional requirements. Section 2 of the Implementing Act of the EEA Agreement in Finland (1993/1504) gives a clear rule on both direct effect and the hierarchical status of EEA obligations in Finland; these rules apply with similar effect as national laws and they overrule conflicting national legislation. It is the task of Finnish courts and tribunals to make the necessary conclusions in this respect, not for the EFTA Court. There is no transitional period for the Finnish alcohol monopoly in Protocol 8 to the EEA Agreement, nor can one argue any right for transitional periods on the basis of Article 16 of the Agreement. By not implementing the obligations of Article 16 Finland is in breach of its EEA obligations from 1 January onwards in this respect.

104. The EFTA Surveillance Authority proposes that the question be answered as follows:

Article 16 EEA must be interpreted as prohibiting the maintenance of exclusive rights for a State monopoly to import into one EEA State from another EEA State alcoholic beverages covered by Article 16 EEA and originating in, or having been put into free circulation in, another EEA State. The EEA Agreement creates an obligation on the Contracting Parties to ensure that rights granted under sufficiently clear, precise and unconditional provisions of the Agreement can be enforced by national courts and authorities. Article 16 EEA is sufficiently clear, precise and unconditional to come within the scope of this obligation.

105. The EC Commission submits that the second question should be answered as follows:

Article 16 of the EEA Agreement must be interpreted as meaning that as from 1 January 1994 every State monopoly of a commercial character must be adjusted so as to eliminate the exclusive right to import alcoholic beverages listed in Tables I and II of Protocol 3 EEA and wine, and originating in the Contracting Parties, from other Contracting Parties and that from that date the provisions were capable of being relied upon by nationals of the Contracting Parties before the national courts.

Sven Norberg Judge-Rapporteur