Costa v ENEL

• Jurisdiction: European Union
• Court: European Court of Justice
• Date: 15 July 1964

Court of Justice of the European Communities.

(Donner, President; Hammes, Trabucchi, Delvaux, Rossi, Lecourt, Strauss, Judges; Lagrange, Advocate-General)

Costa

and

Ente Nazionale Energia Elettrica (ENEL)

Relationship of international law and municipal law — Treaties — Effect in municipal law — European Economic Community Treaty, 1957, distinguished from ordinary international treaty — Partial transfer of sovereignty from Member States to Community — New legal order created by EEC Treaty — Supremacy of Community law over conflicting municipal law — Individuals benefitting from legal rights derived from EEC Treaty

Treaties — Effect in municipal law — Enforcement by municipal courts — Provisions of EEC Treaty, 1957 — Articles 102, 93, 53 and 37 — Whether direct effect — Whether conferring rights upon individuals — Whether rights of individuals can be protected in national courts

International tribunals — Duty to refer under Article 177(3) of EEC Treaty, 1957—Court of Justice of the European Communities — Jurisdiction to interpret EEC Treaty, 1957 — Subordinate Italian court asking Court of Justice to interpret articles of EEC Treaty, 1957 — Whether within jurisdiction of Court of Justice — The law of the European Economic Community

Summary: The facts:—An Italian law of 6 December 1962 nationalized the Italian electricity industry to create Ente Nazionale Energia Elettrica (‘enel’). Mr Costa objected to the nationalization law and refused to pay an electricity bill presented to him by enel. In proceedings before the Giudice Conciliatore, Milan, Mr Costa argued that the 1962 Italian law which effected the nationalization contravened Community law as well as being unconstitutional under Italian law.

The case was referred to the Italian Constitutional Court for a preliminary opinion. The Constitutional Court ruled that the 1962 Italian law would remain valid even if it failed to comply with the EEC Treaty, because a subsequent municipal law would impliedly repeal an earlier law incorporating an international treaty. Proceedings before the Giudice Conciliatore were suspended and a preliminary reference made to the Court of Justice of the European Communities under Article 177(3) of the EEC Treaty seeking a ruling on whether Articles 102, 93, 53 and 37 of the EEC Treaty produced direct effects and created individual rights which warranted protection in national courts. The Italian Government argued that the reference to the Court of Justice was inadmissible since the procedure contained within Articles 169 to 171 of the EEC Treaty (which provided for actions to be brought in the Court of Justice by the Commission or a Member State against a State accused of violating the Treaty) was the appropriate method of dealing with a Member State's alleged contravention of Articles 102 and 93 and such contravention could not render the domestic law invalid.

Opinion of the Advocate-General:—The Advocate-General disagreed with the Government's submissions. He contended that Articles 53 and 37(2) were directly effective and could be invoked before a national court. There were to be no new measures which would create discrepancy in the treatment of nationals of Member States regarding the freedom of establishment according to Article 53. Article 37(2) of the EEC Treaty prohibited measures which would effectively create new duties or restrictions and measures with similar effects.

Held:—Articles 37 and 53 of the EEC Treaty had direct effect in Member States. Directly effective Community law prevailed over inconsistent national legislation and national courts must apply directly effective rules of Community law.

(1) The reference by the Giudice Conciliatore for a preliminary ruling under Article 177(3) of the EEC Treaty was within the jurisdiction of the court in so far as it requested the interpretation of treaty provisions. The contentions of the Italian Government that the Giudice Conciliatore was not entitled to refer to the Court of Justice in this instance and that these proceedings were inadmissible were rejected. Any national court, whatever its status within the juridical hierarchy, had the power to make a reference under Article 177 (pp. 37–8).

(2) By contrast with ordinary international treaties, the EEC Treaty had created its own legal system which, on the entry into force of the Treaty, became an integral part of the legal systems of the Member States and which their courts were bound to apply. By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the States to the Community, the Member States had limited their sovereign rights, albeit within limited fields, and had thus created a body of law which bound both their nationals and themselves (p. 38).

(3) The supremacy of Community law was assured by the new legal order embraced by Member States after the entry into force of the EEC Treaty on 1 January 1958, a treaty whose powers extended beyond that of an ordinary international agreement. Municipal legislation subsequent to, and inconsistent with, the EEC Treaty could not prevail over directly effective provisions of the Treaty. Any other decision would threaten the whole legal basis of the Community (p. 39).

(4) Individual rights which could be invoked before national courts were created in Community law when the provisions of the EEC Treaty were negative, legally complete and required no further action on the part of the Member State or the European Community. Articles 102 and 93 of the EEC Treaty, which imposed positive obligations on Member States and required action to be taken by the Community, did not, therefore, create such rights (pp. 39–41).

(5) Articles 53 and 37 of the EEC Treaty contained prohibitions which were legally complete and did not require any further steps to be taken by the State or at Community level and thus had direct effects on relations between Member States and individuals from the date of entry into force of the EEC Treaty. An individual was thus entitled to allege contravention of these provisions before a national court and to have his rights safeguarded (pp. 41–2).

(6) Article 53 did not confer a right to engage in any occupation whatsoever, but prohibited the introduction of any new measure which would make it more difficult for the nationals of other Member States to be established than the nationals of the host Member State (pp. 41–2).

(7) Under Article 37 of the EEC Treaty the creation of a state monopoly was forbidden only when it was commercial in its character and dealt with commercial products capable of transactions and competition between Member States and played a major role in such transactions. The determination of this was a matter for the court which dealt with the main action of the case (pp. 42–3).

The text of the judgment of the Court of Justice of the European Communities commences at p. 33. The following is the text of the relevant parts of the opinion of Advocate-General Lagrange delivered on 25 June 1964:

The preliminary question upon which you have to give a ruling under Article 177 of the EEC Treaty does not, for once, come from a Netherlands court, but from an Italian one, and it is no longer a question of social security or of Regulation No 3, but rather of a certain number of provisions of the Treaty itself, in respect of which your interpretation is requested in circumstances that are such as to bring in issue the constitutional relations between the European Economic Community and its Member States. This highlights the importance of the judgment you are called upon to pronounce in this case. The facts are known to you: Mr Costa1, a lawyer practising in Milan, claims that he is not under an obligation to pay an invoice amounting to 1925 lire demanded of him in respect of the supply of electricity by the “Ente Nazionale per l'Energia Elettrica (ENEL)”. He objected to this

payment before the Giudice Conciliatore (which has sole jurisdiction by virtue of the amount involved) claiming that the Law of 6 December 1962 nationalizing the electricity industry in Italy was contrary to a certain number of provisions of the Treaty of Rome, and was unconstitutional. In this connexion he requested—and obtained—a reference of the case, on the one hand to the Italian Constitutional Court, and on the other hand to this Court for a preliminary ruling pursuant to Article 177 of the Treaty.

I—Preliminary questions

Two preliminary questions in connexion with the validity of the reference to this Court must be resolved.

A. The first is the question whether the Milan court has referred to you questions which really relate to the interpretation of the Treaty. The order contained in the judgment in question does no more than mention “the allegation that the Law of 6 December 1962 and the presidential decrees issued in pursuance of that Law infringe Articles 102, 93, 53 and 37 of the Treaty” and, as a consequence, suspends proceedings and orders the “transmission of a certified copy of the file to the Court of Justice of the European Economic Community in Luxembourg”. However, in its reasoning, the judgment shows in a brief but nevertheless precise manner, how the law nationalizing the electricity industry in Italy might constitute an infringement of each of the relevant Articles of the EEC Treaty and hence be incompatible with the Treaty. I think that this Court can and must make the necessary effort from the four points of difficulty set out in the judgment that which is relevant to the interpretation of the Treaty. You have been willing to make such efforts in other cases with a view to enabling a national court to give a decision within the limits of its jurisdiction, whilst remaining within the sphere of your own; and this, after all, is quite...