SAT Fluggesellschaft m.b.H. v European Organisation for the Safety of Air Navigation (Eurocontrol) (Case C-364/92)

• Jurisdiction: European Union
• Date: 19 January 1994
• Court: European Court of Justice

SAT Fluggesellschaft mbH

and

European Organization for The Safety of Air Navigation (‘Eurocontrol’)

(Due, President; Mancini, Moitinho de Almeida, Díez de Velasco, Presidents of Chambers; Kakouris, Joliet, Schockweiler, Grévisse (Rapporteur), Zuleeg, Kapteyn, Murray, Judges; Tesauro, Advocate-General)

Court of Justice of the European Communities.

International organizations — Immunity — Jurisdictional immunity — Whether international organizations subject to application of EEC Treaty rules on competition — European Organization for the Safety of Air Navigation (‘Eurocontrol’) — Exercise of powers to collect route charges on behalf of Member States — Whether Eurocontrol acting as public authority or carrying out activities of an economic nature

Air — Safety of air space — Provision of air navigation services — European Organization for the Safety of Air Navigation (‘Eurocontrol’) — Legal status — Extent of authority — Brussels Convention establishing Eurocontrol, 1960 — Brussels Protocol amending Eurocontrol Convention, 1981

International organizations — European Community — Institutions — Court of Justice — Powers — Jurisdiction under Article 177 of EEC Treaty — Interpretation of Treaty provisions — Whether constituting contentious procedure — Whether party to main proceedings entitled to challenge jurisdiction of Court on basis of entitlement to jurisdictional immunity

Economics, trade and finance — Competition rules — EEC Treaty, 1957, Articles 86 and 90 — Whether applicable to international organizations — Concept of ‘undertaking’— Whether limited to body carrying out economic activity — The law of the European Community

Summary: The facts:—Eurocontrol was an international organization, with its seat in Brussels, established by a Convention of 13 December 1960. It was originally intended that it should provide common air navigation services within the air space of the contracting parties. But it actually performed this task only with respect to the Benelux countries and Northern Germany, while the other Contracting States preferred to retain control over their respective air space. This position was recognized by a Protocol, adopted in 1981, which substantially amended the Convention and redefined the function of Eurocontrol as being, in particular, to establish and collect the charges levied on users of air navigation services on behalf of the Contracting States of a multilateral Agreement relating to the Collection of Route Charges, concluded on 12 February 1981. The Contracting States of the amended Eurocontrol Convention included most of the Member States of the European Community, as well as a number of non-member countries. The parties to the multilateral Convention included all the Eurocontrol Contracting States plus Austria and Spain.

Proceedings were instituted before Belgian courts by Eurocontrol against SAT, an air carrier, for recovery of route charges payable over a period between 1981 and 1985. In order to justify its refusal to pay the charges, SAT argued that Eurocontrol's action in fixing its charges at different rates for equivalent services and at amounts varying from country to country, constituted an abuse of a dominant position contrary to Article 86 of the EEC Treaty. This argument was rejected by the lower Belgian courts but the Court of Cassation stayed the proceedings and made a reference to the Court of Justice of the European Communities asking for a preliminary ruling under Article 177 of the EEC Treaty on the following question:

Does the European Organization for the Safety of Air Navigation established by the Convention signed at Brussels on 13 December 1960, as amended by the Protocol concluded in Brussels on 12 February 1981, constitute an undertaking within the meaning of Articles 86 and 90 of the Treaty of Rome of 25 March 1957 establishing the European Economic Community?

Eurocontrol argued that, as an international organization whose relations with the Community were governed by the rules of public international law, it was not subject to the jurisdiction of the Court of Justice. Furthermore, Eurocontrol maintained that the question submitted was inadmissible, because it was based on the false assumption that the organization enjoyed a monopoly on air navigation control and the collection of route charges. SAT claimed that Eurocontrol was an undertaking within the meaning of the EC Treaty rules on competition and that, whatever the nature of its other activities, at least the collection of route charges was a commercial activity.

Opinion of the Advocate-General: The Advocate-General argued that Eurocontrol's contention that, as an international organization, it was not subject to the jurisdiction of the Court of Justice, was irrelevant because the reference procedure under Article 177 of the EEC Treaty gave rise to a non-contentious procedure in which the parties could not take any initiative. Any objection to the jurisdiction should have been raised, if necessary, in the proceedings before the Belgian courts, which Eurocontrol had itself initiated as the plaintiff (pp. 14–15). The fact that a body had the character of an international organization was not, of itself, sufficient to render the Community's competition rules inapplicable to it. It had to be pointed out that it was nowadays accepted that international organizations enjoyed only limited immunity from jurisdiction, generally confined to the exercise of the typical features of State power. Furthermore, the Court of Justice could not be denied jurisdiction on the basis of possible inaccuracies in the reference order relating to the legal position of Eurocontrol (pp. 15–17).

In the view of the Advocate-General, the essential factor determining whether Eurocontrol could be subject to the Community's competition rules was whether it could be classified as an undertaking pursuing an economic activity. The purpose of air navigation control was primarily to secure safety and national defence. These matters were connected with the exercise of State sovereignty and could only be pursued by a public authority, irrespective of the form chosen for their organization and management. The provision of air navigation control services with which Eurocontrol had been entrusted was therefore a public service to which any idea of commercial exploitation with a view to profit was alien. With regard to the collection of route charges, once the non-economic nature of the service to which they related had been established, their collection had to be regarded as having the same nature. Furthermore, Eurocontrol was not able to take any decisions independent of the will of the Contracting States and merely acted as their agent in collecting the charges. Accordingly, the Advocate-General proposed, in agreement with the Commission and four Member States, that the Court should rule that Eurocontrol, in collecting the charges in question, was not an undertaking within the meaning of EEC Treaty rules on competition (pp. 18–22).

Held:—Articles 86 and 90 of the EEC Treaty were to be interpreted as meaning that an international organization such as Eurocontrol did not constitute an undertaking within the meaning of those Articles.

(1) The Court of Justice had jurisdiction to give preliminary rulings concerning the interpretation of the EEC Treaty pursuant to Article 177, which established direct cooperation between the Court and the courts of Member States by way of a non-contentious procedure which excluded any initiative by the parties, who were merely invited to be heard. The question put to the Court, as to whether the rules of Community law could be relied upon as against Eurocontrol, was connected with the substance of the case and had no bearing on the jurisdiction of the Court. While it was important to define the powers of Eurocontrol, in order to answer the question submitted, any allegedly incorrect findings made by the national court as to those powers had no bearing on the admissibility of the reference for a ruling (pp. 24–5).

(2) Under Community competition law, the concept of an undertaking encompassed every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it was financed. It was therefore necessary to establish whether Eurocontrol was engaged in an economic activity (p. 26).

(3) Pursuant to the Chicago Convention on International Civil Aviation, 1944, it was in the exercise of their exclusive sovereignty that States ensured, subject to compliance with the applicable international conventions, the supervision of their air space and the provision of air navigation services. Under the terms of the Convention establishing Eurocontrol, 1960, as amended by the Protocol of 1981, that body was a regionally-oriented international organization with the tasks of strengthening cooperation between the Contracting States in the field of air navigation, settling and collecting the route charges levied on users of air space on behalf of the Contracting States, and exercising air navigation control in a limited manner at the specific request of individual Contracting States (pp. 26–7).

(4) Eurocontrol thus carried out, on behalf of the Contracting States, tasks in the public interest aimed at contributing to the maintenance and improvement of air navigation safety. Taken as a whole, Eurocontrol's activities, by their nature and aims, were connected to the exercise of powers relating to the control and supervision of air space which were typically those of a public authority. They were not of an economic nature justifying the application of the Treaty rules on competition (pp. 28–9).

The text of the judgment of the Court of Justice of the European Communities commences at p. 22. The text of the opinion of Advocate-General Tesauro* delivered on 10 November 1993 commences on the opposite page.

Mr President,

Members of the Court,

1. By order of 10 September 1992, the Belgian...