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ADVISORY OPINION of the COURT 14 May 1997

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ADVISORY OPINION of the COURT 14 May 1997 ADVISORY OPINION OF THE COURT 14 May 1997 (Admissibility - Free movement of goods - Licensing scheme) In Case E-5/96 REQUEST to the Court under Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice by Borgarting lagmannsrett (Borgarting Court of Appeal) for an Advisory Opinion in the case pending before it between Ullensaker kommune and Others and Nille AS on the interpretation of Article 11 and 13 of the EEA Agreement THE COURT, composed of: Bjørn Haug, President, Thór Vilhjálmsson and Carl Baudenbacher (Rapporteur), Judges, Registrar: Per Christiansen, * Language of the request for an Advisory Opinion: Norwegian. - 2 - ______________________ after considering the written observations submitted on behalf of: – The appellants, Ullensaker municipality and others, represented by Counsel Morten F. Arnesen; – Nille AS (“Nille”), represented by Counsel Morten Steenstrup; – The Government of the Kingdom of Norway, represented by Hege M. Hoff, legal adviser at the Royal Ministry of Foreign Affairs, acting as Agent; – The EFTA Surveillance Authority, represented by Håkan Berglin, Director of the Legal and Executive Affairs Department, assisted by Bjarnveig Eiriksdóttir, Officer of that Department, acting as Agent; – The European Commission, represented by Richard B. Wainwright, Principal Legal Advisor, and Hans Støvlbæk, Member of its Legal Service, acting as Agents. having regard to the Report for the Hearing, after hearing the oral observations of Nille, the Norwegian Government, the EFTA Surveillance Authority and the EC Commission at the hearing on 26 February 1997 gives the following Advisory Opinion 1 By order of 21 June 1996, received at the Court on 26 June 1996, Borgarting lagmannsrett referred to the Court for an Advisory Opinion a question on the interpretation of Articles 11 and 13 of the EEA Agreement (EEA). 2 That question was raised in appeals proceedings brought by Ullensaker municipality, Nes municipality, Eidsvoll municipality, Sørum municipality and Sunndal municipality (“the appellants”) against the respondent Nille. Sunndal municipality withdrew its appeal on 3 June 1996 and, by a ruling of 2 September 1996, the case on the part of Sunndal municipality was terminated. 3 The case before the national court concerns the validity of the refusal by four municipalities of applications for licences to sell videograms and claims for - 3 - compensation for losses incurred as a result of the refusal. According to the description of the requesting court, Nille is a nation-wide chain of about 120 shops which, inter alia, sell video films. All shops have applied for a licence to sell videograms. Applications from seven shops situated in five different municipalities were refused in the autumn of 1994. The applications from the other shops were all granted. As grounds for their refusal, four of the municipalities stated that the applicants did not fulfil a requirement regarding specialised dealers. In two of these municipalities, Nes and Eidsvoll, it had been expressed prior to the final administrative decisions that the requirement regarding specialised dealers was applicable only to new establishments. Sunndal municipality had also stated that, from a cultural and political point of view, it must be an aim to build up local expert knowledge in the field of sale and rental of video films in the local firms that have already been granted a licence. 4 In a lawsuit before Indre Follo herredsrett (Indre Follo County Court) Nille claimed that the refusals were invalid under national regulations and in conflict with Article 11 EEA . 5 The Norwegian Act no. 21 of 15 May 1987 relating to films provides in Section 2, first paragraph: "No commercial showing, sale or renting out of films or videograms may take place without a licence granted by the municipal council or whomever authorised by the municipal council. This does not apply to sale or renting out of films and videograms for resale and rerental." 6 Regarding the purpose of the provision, Proposition No. 20 (1986-87) to the Odelsting states inter alia: "In the opinion of the Ministry such a licensing system scheme would, together with the regulations on the labelling and registration of videograms, be effective in preventing the sale or rental of illegal videograms. In addition, the licensing scheme would be an important measure in the cultural policy. The municipalities may, for example, require a certain diversity in the films and videograms supplied by the applicants for licences." 7 The county court ruled in favour of Nille and granted damages. All five municipalities appealed against this judgment to Borgarting lagmannsrett. 8 Borgarting lagmannsrett, considering that it was necessary to interpret provisions of the EEA Agreement in order for it to reach a decision and pursuant to Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (“Surveillance and Court Agreement”), requested the EFTA Court to give an Advisory Opinion on the following question: "Is Article 11 of the EEA Agreement, in conjunction with Article 13, to be understood to mean that it prohibits a municipality from refusing a permission for - 4 - the retail sale of recorded video cassettes (videograms) on the grounds that such permission should only be granted to shops which can be characterised as specialised dealers (speciality shops) for videograms and/or that expert knowledge should be built up by established dealers ?" 9 Reference is made to the Report for the Hearing for the legal background to the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. Admissibility of the last part of the question 10 As mentioned earlier, one of the appellants (Sunndal municipality) withdrew its appeal to Borgarting lagmannsrett on 3 June 1996, before the national court referred the case to the EFTA Court. 11 The appellants and the Norwegian Government submit that the last part of the question referred (“and/or that expert knowledge should be built up by established dealers”) is inadmissible on the grounds that it concerns a hypothetical question in so far as Sunndal municipality was the only one among the appellants which stated that expert knowledge should be built up by established dealers. At the oral hearing the EFTA Surveillance Authority and the EC Commission submitted that the dispute before the national court is genuine and the question as a whole should be declared admissible. 12 The Court observed in Case E-1/95 Ulf Samuelsson v Svenska staten [1994- 1995] EFTA Court Report 145, paragraph 13 that the advisory opinion is a specially established means of judicial co-operation between the Court and national courts with the aim of providing the national courts with the necessary elements of EEA law to decide the cases before them. According to Article 34 of the Surveillance and Court Agreement, a national court or tribunal is entitled, if it considers it necessary to enable it to give judgment, to request the EFTA Court to give such an opinion. From the wording, which in essential parts is identical to that in Article 177 EC, it follows that it is for the national court to assess whether an interpretation of the EEA Agreement is necessary for it to give judgment. It is for the national court to determine, in light of the particular circumstances of the case, both the need for an advisory opinion in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (see, in particular, the judgment of the ECJ of 24 October 1996 in Case C-217/94 Eismann Alto Adige Srl v Ufficio IVA di Bolzano, not yet reported). 13 In the case at hand, it appears from the case file that the national court decided to refer the question to the EFTA Court after the withdrawal of the appeal, on the part of Sunndal municipality. Although this part of the appeal case has been formally terminated, the last part of the question has not been withdrawn and there is still a real dispute before the national court. The question appears to be - 5 - closely related to the issues before the national court and cannot be considered hypothetical. In these circumstances, it must lie within the discretion of the national court to determine whether an Advisory Opinion is necessary on this part of the question: see Case C-412/93 Leclerc-Siplec v TF1 Publicité and M6 Publicité [1995] ECR I-179 (hereinafter “Leclerc”). 14 Consequently, the Court finds that the arguments by the appellants and the Norwegian Government must be rejected and that the request for an Advisory Opinion concerning the last part of the question is admissible. The question put to the EFTA Court 15 Article 11 EEA states: “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between the Contracting Parties.” 16 Article 13 EEA provides: “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
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