Sofia Skanavi and Another (C-193/94) Before the Court of Justice of the European Communities ECJ

Transcription

1 Sofia Skanavi and Another (C-193/94) Before the Court of Justice of the European Communities ECJ (Presiding, RodrIguez Iglesias P.; Kakouris and Hirsch PP.C.; Mancini ( Rapporteur), Schockweiler, Moitinho de Almeida, Gulmann, Murray, Jann, Ragnemalm and Sevon JJ.) Mr Philippe Leger, Advocate General 29 February 1996 Reference from Germany by the Amtsgericht (Local Court) Tiergarten, Berlin, under Article 177 E.C. Freedom of movement. Driving licences. Community law and national law. In view of the importance of individual means of transport, possession of a driving licence duly recognised by the host State may affect the actual pursuit by persons subject to Community law of a large number of occupations for employed or self-employed persons and, more generally, freedom of movement. [23] Michel Choquet (16/78): [1978] E.C.R. 2293, [1979] 1 C.M.L.R. 535, followed. Establishment. Driving licences. Community law and national law. Harmonisation of laws. In view of the requirements of road safety, the mere recognition by a host Member State of driving licences issued by another Member State for the benefit of persons who have elected to reside permanently within the territory of the host State could not be contemplated until the requirements for the issue of those licences were harmonised to a sufficient extent. Therefore, prior to the implementation of Directive 91/439, Article 52 E.C. does not preclude a Member State from requiring the holder of a driving licence issued by another Member State to exchange that licence for a licence of the host State within one year of taking up normal residence in that State in order to remain entitled to drive a

2 motor vehicle there. [24] & [28] Michel Choquet (16/78): [1978] E.C.R. 2293, [1979] 1 C.M.L.R. 535, followed. Establishment. Driving licences. The issue of a driving licence by a Member State in exchange for the licence issued by another Member State does not constitute the basis of the right to drive a motor vehicle in the territory of the host State, which is directly conferred by Community law, but evidence of the existence of *373 such a right. In those circumstances, the obligation to exchange driving licences which Member States may impose under Directive 80/1263 is essentially a way of meeting administrative requirements. [34] & [35] Establishment. Driving licences. Community law and national law. Criminal law. Penalties. Proportionality. In the absence of Community rules governing the matter, the Member States remain competent to impose penalties for breach of administrative formalities linked to the exercise of the rights relating to the free movement of persons (in casu: the exchange of the driving licence of one Member State for the driving licence of the host State). However, in view of the effect which the right to drive has on the actual exercise of the rights relating to the free movement of persons, Member States may not impose a penalty so disproportionate to the gravity of the infringement that it becomes an obstacle to the free movement of persons; this would be especially so if the penalty consisted of imprisonment. [36] Lothar Messner (C-265/88): [1989] E.C.R. 4209, [1991] 2 C.M.L.R. 545, applied. S, a Greek national, had been resident and working in Germany for over a year, but had not exchanged her Greek driving licence for a German one, as required by German law. Although her licence remained valid in Greece, she was charged with driving without a licence after being stopped by the German police, an offence punishable by up to one year's imprisonment or a fine. The German court sought a preliminary ruling on whether the German legislation was contrary to the Community provisions governing the right of establishment. The Court held that: (1) prior to the implementation of Directive 91/439 on the mutual recognition of driving licences, Article 52 E.C. did not preclude a Member State from requiring the holder of a licence issued by another Member State to exchange that licence within one year of taking up normal residence; (2) in the absence of Community rules on the matter, Member States remained competent to impose penalties for the breach of such an obligation; (3) however, the imposition of criminal sanctions was disproportionate to the gravity of the infringement and was an obstacle to the free movement of persons, especially if the penalty consisted of imprisonment; (4) therefore Article 52 precluded Member States from treating a person who had failed to exchange her licence as if she were a person driving without a licence and thereby liable to criminal sanctions. Representation

3 Ernst Roder, Ministerialrat in the Federal Ministry of Economic Affairs, acting as Agent, for the German Government. Philippe Martinet, Secretary for Foreign Affairs in the Legal Affairs Directorate of the Ministry of Foreign Affairs, and Catherine de Salins, Deputy Director in the same directorate, acting as Agents, for the French Government. Rhodri Thompson, Barrister, instructed by Stephen Braviner, of the *374 Treasury Solicitor's Department, acting as Agent, for the United Kingdom. Gotz zur Hausen, Legal Adviser to the E.C. Commission, acting as Agent, for the Commission. Cases referred to in the judgment: 1. Bordessa and Others (C-358 & 416/93), 23 February 1995: [1995] I E.C.R Corsica Ferries Italia Srl v. Corpo del Piloti del Porto di Genova (C-18/93), 17 May 1994: [1994] I E.C.R Choquet (16/78), 28 November 1978: [1978] E.C.R. 2293, [1979] 1 C.M.L.R Messner (C-265/88), 12 December 1989 : [1989] E.C.R. 4209, [1991] 2 C.M.L.R E.C. Commission v. United Kingdom (C-246/89), 4 October 1991: [1991] I E.C.R. 4585, [1991] 3 C.M.L.R Kraus v. Land Baden-Wurttemberg (C-19/92), 31 March 1993: [1993] I E.C.R Opinion of Mr Advocate General Leger 1. Must the Community law provisions on the free movement of persons and freedom of establishment be interpreted as precluding a Member State from requiring an independent worker taking up residence in its territory to exchange a driving licence issued by another Member State for a driving licence issued by the host Member State within one year, on pain of incurring penalties of up to one year's imprisonment--or six months where the offence is attributable to carelessness--by reason of the offence of driving without a licence? This, in substance, is the question to which the Court has been requested to reply by the Amtsgericht (Local Court) Tiergarten, Berlin, in a reference for a preliminary ruling on the interpretation of Articles 6, 8a and 52 E.C. 2. This question has arisen in the course of criminal proceedings brought by the Public Prosecutor at the Landgericht (Regional Court) Berlin against Mr Chryssanthakopoulos and his wife, Mrs Skanavi. 3. Both Mr Chryssanthakopoulos and Mrs Skanavi are Greek nationals. They have been resident in Berlin since 15 October Mr Chryssanthakopoulos is the managing director of a furniture company and his wife is an employee of that company. On 28 October 1993, Mrs Skanavi was stopped by the police while driving a motor vehicle belonging to the company and was able to produce only a driving licence issued by the Greek authorities and an international driving

4 licence. 4. Pursuant to Paragraph 21 of the Stra<<BETA>>enverkehrsgesetz (Act on Road Traffic, hereinafter the "StVG"). -- Mrs Skanavi was charged with the offence of driving without a licence, *375 punishable by up to one year's imprisonment--six months if the offence was committed through carelessness--or by a fine; -- Mr Chryssanthakopoulos, as the managing director of the company which owns the vehicle, was charged with having knowingly allowed his wife, who did not hold a German driving licence, to drive that vehicle, an offence which attracts the same penalties. 5. Before the Amtsgericht Tiergarten, Berlin, the Public Prosecutor has asked that the defendants be fined 3,000 DM. 6. According to the national court making the reference, failure to comply with the obligation laid down in section 4 of the Verordnung uber internationalen Kraftfahrzeugverkehr (Regulation on international vehicle traffic) [FN1] is punishable by imprisonment, as provided for under section 21 of the StVG. FN1 Under this provision, every person, whether a Community or German national, who has obtained a driving licence in another Member State, is required, in the event of taking up permanent residence in Germany--that is to say, in the event of a minimum continuous period of residence of 185 days--to exchange that driving licence for a German driving licence. 7. During the hearing, however, the Commission's representative drew the Court's attention to a judgment delivered on 15 December 1992 by the Landgericht Memmingen, [FN2] which, in a similar case, found the defendant, a foreigner driving with a foreign licence after expiry of the 12-month period, not guilty in respect of a charge brought under section 21 of the StVG. That court expressed the view that the Public Prosecutor had been wrong to bring proceedings on the basis of that provision in such a case. That observation cannot, however, have any bearing on the Court's task in the present reference-- although it may assist the national court in resolving the dispute before it--in so far as the national court alone has jurisdiction to determine whether the criminal proceedings brought against the accused by the Public Prosecutor at the Landgericht Berlin are well founded. FN2 Published in the periodical (1994) 10 Deutsches Autorecht 412, No The German court proceeds from the premise that authorisation to drive a motor vehicle is an essential condition for the exercise of a trade or profession, in particular an activity as a self-employed person. By imposing an obligation to exchange licences under the conditions set out in the national provisions in question, the German legislature has, it believes, breached Articles 6, 8a and 52 E.C. 9. According to the national court, the obligation to exchange driving licences

5 discriminates against nationals of other Member States who have decided to establish themselves in Germany. Even if the exchange of licences is not made subject to any particular condition and amounts to a mere formality, the fact that failure to do so is treated as constituting driving without a licence and is punishable by imprisonment means that the Community in question runs the risk of acquiring a criminal record. Such a consequence will adversely affect the exercise of his trade or profession and on that ground constitutes a barrier to freedom of establishment. *376 Furthermore, even though the obligation to exchange licences may be justified on objective grounds (for instance, the need to check the authenticity of the licence in question), it nonetheless constitutes an obstacle to the free movement of persons which must, according to the case law of the Court, comply with the principle of proportionality. The criminal penalties provided for under the German legislation are, the national court believes, excessive in relation to the gravity of the offence committed. 10. However, since it is unsure as to how the provisions of Community law should be interpreted, the national court has submitted the following question to the Court for a preliminary ruling: Are Articles 6, 8a and 52 E.C. to be interpreted as being incompatible with a provision of national law which requires a national driving licence issued by an E.C. Member State to be exchanged for a German driving licence within one year of the holder's taking up normal residence in Germany, failure to do which will mean that driving a motor vehicle constitutes the offence of driving without a licence, punishable by up to one year's imprisonment or a fine? 11. A similar question of interpretation in a preliminary reference concerning a practically identical case was referred to the Court by order of 13 February 1978 of the Amtsgericht Reutlingen in Choquet. [FN3] However, the Court's interpretation in that case cannot be directly applied to the present proceedings in so far as the Community law framework was amended by the entry into force of First Council Directive 80/1263 on the introduction of a Community driving licence. [FN4] FN3 Case 16/78, Choquet: [1978] E.C.R. 2293, [1979] 1 C.M.L.R FN4 [1980] L375/ The reply to the question which has been submitted to the Court makes it necessary, first, to examine whether the obligation to exchange is compatible with the freedom of establishment and, second, to determine whether the penalties which may be imposed are contrary to the Treaty rules, in particular those on freedom of establishment and freedom of movement. I shall examine those two aspects in turn. I. The Compatibility of the Obligation to Exchange with Articles 6, 8a and 52 of the E.C. Treaty 13. Although the facts underlying the dispute in the main proceedings date from

6 28 October 1993, that is to say, four days prior to the entry into force of the Treaty on European Union, the Amtsgericht Tiergarten, Berlin, has cited Articles 6, 8a and 52 E.C. as possibly precluding the contested national provisions. 14. My view is that the question submitted must be considered in the light of Articles 7 and 52 EEC. Although the Court pointed out in Bordessa and Others [FN5] that:... it is for the national court to determine both the need for a preliminary *377 ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court..., FN5 Joined Cases C-358/93 and C-416/93, Bordessa and Others: [1995] I E.C.R. 361, para. [10]. the national court must nonetheless specify why the interpretation of legal rules which are not applicable to the facts before it will be useful in resolving the dispute facing it. [FN6] FN6 ibid., para. [9]. 15. In the present case, the national court has not provided this information in its order for reference. 16. In any event, the reply which I propose that the Court should make to the question submitted by the national court in this case would have been the same had the Treaty on European Union been applicable. 17. The first paragraph of Article 6 E.C. sets out the general principle of nondiscrimination on grounds of nationality in terms identical to those of the first paragraph of Article 7 EEC: Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. 18. In terms identical to those of Article 52 EEC, Article 52 E.C. provides as follows: Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be abolished by progressive stages in the course of the transitional period. Such progressive abolition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 58, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital. 19. Finally, Article 8a(1) E.C. guarantees for every citizen of the Union the right to move and reside freely within the territory of the Member States:

7 1. Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect. 20. This is the first time that the Court has been requested to interpret Article 8a E.C. However, I do not believe that this provision would have been applicable in this case, for the same reasons as those which the Court has set out in its case law on the independent application of the general principles contained in the Treaty. [FN7] FN7 See paras of this Opinion. 21. Article 8a relates to the right, for every citizen of the Union, to *378 move and reside freely within the territory of the Member States. The right of residence, however, necessarily follows from the specific right of free establishment given effect by Article 52 of the Treaty. Consequently, any rule that is incompatible with Article 52 is necessarily also incompatible with Article 8a. 22. In my opinion, Article 7 EEC is not applicable. In its judgment in Case C- 246/89, E.C. Commission v. United Kingdom, the Court ruled that the principle of non-discrimination on grounds of nationality contained in Article 7 EEC applies independently only to situations governed by Community law in respect of which the Treaty lays down no specific rules against discrimination:... the Court has consistently held (see, for example, judgment in Case 305/87, E.C. Commission v. Greece [FN8]) that Article 7 applies independently only to situations governed by Community law in regard to which the Treaty lays down no specific prohibition of discrimination. [FN9] FN8 [1989] E.C.R. 1461, para. [13]. FN9 Case C-246/89, E.C. Commission v. United Kingdom: [1991] I E.C.R. 4585, [1991] 3 C.M.L.R. 706, para. [17]. 23. In that same judgment, the Court ruled that such was the case with regard to Article 52 EEC:... the general prohibition of discrimination on grounds of nationality laid down in Article 7 of the Treaty has been implemented by Article 52 of the Treaty in the specific domain governed by that article and..., consequently, any rules incompatible with the latter provision are also incompatible with Article 7 of the Treaty. [FN10] FN10 ibid., para. [18]. 24. My view is that Community law does not, in principle, preclude the obligation to exchange driving licences under the conditions laid down in the German legislation. This view is based essentially on two grounds: Directive 80/1263 and the Court's case law. First, the Court's case law

8 25. In its judgment in Choquet, [FN11]--that is to say, even before the entry into force of Directive 80/1263--the Court ruled that:... it is not in principle incompatible with Community law for one Member State to require a national of another Member State, who is permanently established in its territory, to obtain a domestic driving licence for the purpose of driving motor vehicles, even if he is in possession of a driving licence issued by the authorities in his State of origin. [FN12] FN11 Cited above. FN12 Para. [9]. 26. In order to arrive at this finding, the Court acknowledged that the Member States had full competence to determine the conditions under which a foreign driving licence could be recognised or exchanged for a domestic driving licence in so far as, within their national territory, the rules concerning the safety of highway traffic fell primarily within the scope of the responsibilities devolving upon the Member States. [FN13] FN13 ibid., para. [6]. * Consequently, the Court sanctioned the measures taken by national authorities which are designed to enable them to ensure that every driver resident within the territory of the Member State in question holds a driving licence that satisfies the requirements imposed on that State's own nationals, [FN14] on condition that those measures can reasonably be regarded as proportionate to the requirements of road safety. The obligation to exchange licences must therefore be regarded as such a measure. FN14 ibid., para. [7]. Second, Directive 80/ The first subparagraph of Article 8(1) of Directive 80/1263 provides as follows: The Member States shall provide that, if the holder of a valid national driving licence or valid Community model licence issued by a Member State takes up normal residence in another Member State his licence shall remain valid there for up to a maximum of a year following the taking up of residence. At the request of the holder within that period, and against surrender of his licence, the State in which he has taken up normal residence shall issue him with a driving licence (Community model) for the corresponding category or categories without subjecting him to the conditions laid down in Article 6. However, that Member State may refuse to exchange the licence if its national regulations, including medical standards, preclude the issue of the licence. 29. In my view, there is no ambiguity whatever in the wording of the second

9 sentence of the first subparagraph of Article 8(1) of Directive 80/1263. It sets out expressly the obligation to exchange a national driving licence or a Community model licence within a year of taking up normal residence. 30. Examination of all the provisions and general purpose of Directive 80/1263, as well as that of its rationale, reveals that this obligation is consistent with Community law. 31. Directive 80/1263 represents substantive progress vis-a-vis the previous situation in so far as no common rules on the issue and mutual recognition of driving licences had hitherto been adopted. 32. The objective pursued by the Community legislature in 1980 was twofold: -- first, it was necessary to guarantee freedom of movement for Community nationals settling in a Member State other than that which had issued the original driving licence [FN15]; -- second, it was necessary not to deprive Member States of their natural competence regarding road safety on their own public road systems. [FN16] FN15 First, second, third and fourth recitals in the preamble to Directive 80/1263. FN16 ibid., sixth recital in the preamble. 33. This was the reason why, during the first phase of this harmonisation, while establishing a Community model for national *380 driving licences [FN17] and laying down the principle of Member States' mutual recognition of national driving licences and the automatic exchange of licences by holders transferring their place of residence or place of employment from one Member State to another, [FN18] the Community legislature allowed Member States to retain a measure of competence in respect of the rules governing driving licences. [FN19] FN17 ibid., Article 1. FN18 ibid., first and second recitals in the preamble. FN19 Particularly with regard to the issue (Article 6(2)) or validity (Articles 7 and 9) of driving licences. 34. The reconciliation of these two--apparently contradictory--objectives was achieved by endeavouring to improve road traffic safety within the Community. [FN20] Thus, any national legislature exercising the possibility of derogating from the Community rules in relation to the issue, validity or exchange of driving licences must be able to justify such action on the ground that it is pursuing this single objective--improved road traffic safety on the public highway. If it cannot do so, those national measures may be regarded as indirectly affecting the exercise of the rights of free movement and freedom of establishment guaranteed by Article 52 E.C. and consequently as being incompatible with the Treaty.

10 FN20 First recital in the preamble to Directive 80/ Likewise, with more particular regard to the question of exchanging driving licences, even though the second sentence of the first subparagraph of Article 8(1) of Directive 80/1263 is couched in general terms, I take the view that the potential situations in which a Member State would be entitled to refuse to exchange licences are limited. [FN21] This follows not only from an analysis of Article 8 as a whole but also, as I have already demonstrated, from the general scheme and purpose of Directive 80/1263. FN21 These potential situations are those in which (a) driving licences have been issued to those under 18 years of age (Article 5(2)); (b) the medical standards applied by the Member State in which the holder of the driving licence takes up residence are more stringent (Article 6(1)(a)); (c) the driving licence was obtained while the holder was resident in the Member State in which he requests the exchange (Article 8(1), a contrario ); (d) penalties may have been imposed on the holder of the licence prohibiting him from driving a vehicle (Article 8(1)). It should be noted that the representative of Germany mentioned during the hearing that, with regard to exchanging driving licences, the German national legislation does not provide for derogations other than those mentioned above. 36. By using the prescriptive form of the verb "shall" in the second sentence of the first subparagraph of Article 8(1), the Community legislature has, in my opinion, demonstrated its desire to lay down the principle that the change should be automatic:... At the request of the holder..., and against surrender of his licence, the State in which he has taken up normal residence shall issue him with a driving licence (Community model) for the corresponding category or categories without subjecting him to the conditions laid down in Article 6. [FN22] FN22 My emphasis. *381 The third sentence of the first subparagraph of Article 8(1) must be understood as constituting an exception to the established rule. 37. An analysis of the general scheme and objectives of Directive 80/1263 confirms this position. As has already been seen, [FN23] in so far as the primary purpose of Directive 80/1263 is to ensure free movement for Community nationals establishing themselves in a Member State other than that which issued the driving licence, the necessary conclusion is that Member States can derogate from the automatic nature of licence exchange only if such derogations are justified by the desire to ensure improved road safety for road users. Any different interpretation of these Community law provisions would deprive them of all effectiveness. FN23 See, in particular, paras of this Opinion.

11 38. A new state in this harmonisation was achieved by Council Directive 91/439 on driving licences, [FN24] which substantively implements the principle of mutual recognition of driving licences issued by Member States [FN25] by removing the obligation to exchange licences. This Community measure will enter into force on 1 July [FN26] FN24 [1991] O.J. L237/1. FN25 Article 1(2). FN26 Article I wish to conclude this examination by expressing my view that the principles of free movement and freedom of establishment must be understood as not precluding national legislation from requiring every resident holding a driving licence issued by another Member State to exchange that licence for a national driving licence with one year of taking up residence, on condition, however, that the conditions imposed by those national rules on the holder of a driving licence issued by another Member State are consistent in all respects with the objective of the Community law provision in question. For that purpose, it is necessary that those national rules should be reasonably proportionate to the requirements of road safety. II. Are the Penalties Provided for under the Contested National Legislation Contrary to Community Law? 40. According to the national court, the penalty provided under the German legislation for failure to comply with the exchange procedure can be up to one year's imprisonment--or six months where the offence is attributable to carelessness--by reason of the offence of driving without a licence. 41. In so far as I have concluded that the obligation to exchange licences is not, in principle, contrary to Community law, it must be accepted that national authorities are entitled to make noncompliance with the exchange procedure subject to penalties. Pursuant, however, to the Court's judgment in Kraus, [FN27] the penalties *382 imposed must not be disproportionate to the nature of the offence committed. FN27 Case C-19/62, Kraus: [1993] I E.C.R., para. [41]. 42. Thus, in the present case, if the national driving licence held by Mrs Skanavi was such as to render the exchange automatic in Germany, it would be manifestly disproportionate to the objective pursued by the German legislation if her carelessness were to have the result that penalties might be imposed on her which would be similar to those applicable to an offender driving without any authorisation whatever, that is to say, without ever having passed the test required for the issue of a driving licence. During the hearing, the representative of Germany pointed out that the national court is not obliged to apply the

12 maximum penalty provided for by the contested legislation and that it may impose more lenient penalties, such as simple fines. 43. As the Court pointed out in its judgment in Kraus, [FN28] it is a matter for the national court to determine whether the penalties provided for by the legislation of the Member State in question are so severe as to constitute an obstacle to the fundamental freedoms guaranteed under the Treaty:... whilst the national authorities are entitled to prescribe penalties for noncompliance with the authorisation procedure, the penalties imposed should not exceed what appears proportionate to the offence committed. It is for the national court to determine whether the penalties laid down for that purpose in the rules of the Member State concerned are not so severe as to impede the exercise of the fundamental freedoms guaranteed by the Treaty. [FN29] FN28 Cited above. FN29 ibid. 44. In conclusion, I propose that the Court reply as follows to the question submitted by the Amtsgericht Tiergarten, Berlin: Article 52 EEC must be interpreted as not precluding a host Member State, in principle, from: (1) requiring that a driving licence issued by another Member State be exchanged for a national driving licence within one year of the holder's taking up normal residence within the territory of the host Member State; such a requirement may, however, indirectly affect the exercise of the right of free movement and the right of free establishment guaranteed by Article 52 of the Treaty if it appears that the conditions which the national legislation imposes on the holder of a foreign licence are not reasonably proportionate to the requirements of road traffic safety; (2) making non-compliance with the obligation to exchange licences subject to criminal penalties, on condition that those penalties are not disproportionate to the gravity of the offence; it is for the national court to determine whether the principle of proportionality has been complied with. *383 JUDGMENT [1] By order of 20 May 1994, received at the Court on 4 July 1994 and rectified by order of 26 July 1994, received at the Court on 8 August 1994, the Amtsgericht (Local Court) Tiergarten, Berlin, submitted a question under Article 177 E.C. for a preliminary ruling on the interpretation of Articles 6, 8a and 52 E.C. [2] That question has arisen in criminal proceedings brought by the Public Prosecutor against Mrs Skanavi and her husband, Mr Chryssanthakopoulos. [3] Under the combined provisions of section 4 of the Verordnung uber internationalen Kraftfahrzeugverkehr (Regulation on international vehicle traffic) (hereianfter the "IntVO") and section 21(1)(1) of the Stra<<BETA>> enverkehrsgesetz (Act on Road Traffic) (hereinafter the "StVG" ), Mrs Skanavi

13 has been charged with driving without a licence, an offence punishable by up to one year's imprisonment or by a fine, or, if the offence was committed as a result of carelessness, by up to six months' imprisonment or a fine. Mr Chryssanthakopoulos faces the same penalties under the combined provisions of section 4 of the IntVO and section 21(1)(2) of the StVG on the ground that, as the person regularly in charge of a motor vehicle, he directed or allowed a person to drive that vehicle without a licence. The Directives on Driving Licences [4] Driving licences were first made the subject of harmonisation through the adoption of the First Council Directive 80/1263 on the introduction of a Community driving licence, [FN30] which, as the first recital in its preamble indicates, sought in particular to contribute to improving road traffic safety as well as to assist the movement of persons settling in a Member State other than that in which they have passed a driving test or moving within the Community. FN30 [1980] O.J. L375/1. [5] To that end, Directive 80/1263 harmonised the relevant national rules, in particular those governing national systems of issuing driving licences, categories of vehicles and the conditions of validity of those licences. It also established a Community model licence and introduced a system for the mutual recognition of driving licences by Member States as well as for the exchange of those licences when the holders transferred their residence or place of work from one Member State to another. [6] Article 8(1) of that directive provides that, if the holder of a valid national driving licence or valid Community model licence issued by a Member State takes up normal residence in another Member State, his licence shall remain valid there for up to a maximum of a year following the taking up of residence. At the request of the holder within that period, and against surrender of his licence, the host Member State is to issue him with a Community model driving licence *384 for the corresponding category or categories without requiring him, inter alia, to pass a practical and theoretical test or to meet medical standards. That State may, however, refuse to exchange the licence if its national regulations, including medical standards, preclude the issue of the licence. [7] Council Directive 91/439 on driving licences [FN31] marked a new stage in the harmonisation of national provisions, particularly with regard to conditions governing the issue of licences and vehicle categories. It also removed the obligation to exchange driving licences in the event of a change in the normal State of residence, which, according to the ninth recital in its preamble, constitutes an obstacle to the free movement of persons and is inadmissible in the light of the progress made towards European integration. FN31 [1991] O.J. L237/1.

14 [8] Article 1(2) of Directive 91/439 provides that driving licences issued by Member States are to be mutually recognised. Article 8(1) of the same directive states that the holder of a valid national driving licence issued by a Member State who has taken up normal residence in another Member State may request that his driving licence be exchanged for an equivalent licence, but is not obliged to do so. [9] Under Article 12 of Directive 91/439, Member States were required, after consulting the Commission, to adopt, before 1 July 1994, the laws, regulations or administrative provisions necessary to comply with the Directive as of 1 July Article 13 repeals Directive 80/1263 as of 1 July The Facts [10] Mrs Skanavi and Mr Chryssanthakopoulos, who are Greek nationals, took up residence in Germany in order to take over the undertaking Gustrower Mobel GbmH (hereinafter "Gustrower") from the Treuhand. At the material time, Mr Chryssanthakopoulos was the managing director of Gustrower. [11] Mrs Skanavi, who had been resident in Germany since 15 October 1992, was stopped by police on 28 October while driving a car belonging to Gustrower. She was in possession of a driving licence issued by the Greek authorities but did not have a German driving licence. [12] In the light of those facts, the Public Prosecutor at the Landgericht (Regional Court) Berlin asked for fines of 15 per diem amounts of 200 DM, making a total of 3,000 DM, to be imposed on each accused. [13] The national court took the view that the accused had committed the offences with which they were charged as a result of carelessness, Mrs Skanavi having neglected to exchange her licence within one year of taking up normal residence in Germany. However, *385 it considered that the German legislation in question might be at variance with Articles 6, 8a and 52 of the Treaty. [14] In this regard, the national court noted, inter alia, that authorisation to drive a motor vehicle is under present circumstances an essential condition for the exercise of a trade or profession and that excessive requirements are for that reason liable to impair free movement. In that context, the obligation to exchange discriminates against nationals of other Member States who take up residence in Germany. Even though exchange of a licence is not subject to any special conditions, the holder of a driving licence issued by another Member State who drives a vehicle after the period set for exchanging licences has expired is treated in the same way as a person who has never held a driving licence or whose licence has been withdrawn. That person will thereby incur a custodial sentence or a fine and consequently acquire a criminal record, which might also have consequences for the exercise of his trade or profession, such as withdrawal of a concession on grounds of unreliability. Even if the obligation to exchange were justified on objective grounds, such as the need to check the authenticity of the driving licence or to make additional entries which may be required under German law, the penalties which may be imposed for the breach of such an obligation are, in the national court's view, disproportionate to its

15 gravity. [15] In view of the foregoing, the Amtsgericht Tieregarten, Berlin, decided to stay the proceedings and refer the following question to the Court for a preliminary ruling: Are Articles 6, 8a and 52 E.C. to be interpreted as being incompatible with a provision of national law which requires a national driving licence issued by an E.C. Member State to be exchanged for a German driving licence within one year of the holder's taking up normal residence in Germany, failure to do which will mean that driving a motor vehicle constitutes the offence of driving without a licence, punishable by up to one year's imprisonment or a fine? The Subject-matter of the Preliminary Question [16] The question submitted by the national court concerns the interpretation of the provisions of the E.C. Treaty, although the facts material to the main proceedings occurred on 28 October 1993, that is to say, three days before the Treaty on European Union entered into force. Although Article 6 E.C. substantially reproduces Article 7 EEC and Article 52 was not amended by the Treaty on European Union, Article 8a is a new provision which, in the view of the national court, may preclude application of the national rules at issue in the criminal proceedings which have been brought before it. [17] It thus appears that the national court could apply the principle, recognised by its national law, that the more favourable rule of criminal law should take retroactive effect and, consequently, set aside national law to the extent to which it is contrary to the provisions of the Treaty. *386 [18] It is therefore necessary to answer the question submitted since it is for the national court to determine both the need for a preliminary ruling in order to enable it to give judgment and the relevance of the questions which it submits to the Court (see, in particular, Joined Cases C-358/93 and C-416/93, Bordessa and Others [FN32]). FN32 [1995] I E.C.R. 361, para. [10]. The Obligation to Exchange a Licence Issued by Another Member State [19] By its question, the national court seeks to determine first of all whether, as Community law stands at present and prior to the implementation of Directive 91/439, Articles 6, 8a and 52 of the Treaty preclude a Member State from requiring the holder of a driving licence issued by another Member State to exchange that licence for a licence of the host Member State within one year of taking up normal residence in that State in order to remain entitled to drive a motor vehicle there. [20] The Court has consistently held that Article 6 of the Treaty, which lays down the general principle of the prohibition of discrimination on grounds of nationality, applies independently only to situations governed by Community law in respect of which the Treaty lays down no specific prohibition of discrimination (see, in

16 particular, Case C-18/93, Corsica Ferries Italia v. Corpo dei Piloti del Porto di Genova [FN33]). FN33 [1994] I E.C.R. 1783, para. [19]. [21] The principle of non-discrimination was implemented and specifically laid down, in relation to the right of establishment, by Article 52 of the Treaty. [22] Article 8a of the Treaty, which sets out generally the right of every citizen of the Union to move and reside freely within the territory of the Member States, finds specific expression in Article 52 of the Treaty. Since the facts with which the main proceedings are concerned fall within the scope of the latter provision, it is not necessary to rule on the interpretation of Article 8a. [23] So far as Article 52 is concerned, the Court has already held, at para. [4] of its judgment in Case 16/78, Choquet, [FN34] that national rules relating to the issue and mutual recognition of driving licences by the Member States exert an influence, both direct and indirect, on the exercise of the rights guaranteed by the provisions of the Treaty relating to freedom of movement for workers, to freedom of establishment and to the freedom to provide services. In view of the importance of individual means of transport, possession of a driving licence duly recognised by the host State may affect the actual pursuit by persons subject to Community law of a large number of occupations for employed or self-employed persons and, more generally, freedom of movement. FN34 [1978] E.C.R. 2293, [1979] 1 C.M.L.R. 535 *387. [24] At para. [7] of the same judgment, however, the Court also stated that, in view of the requirements of road safety, mere recognition of driving licences for the benefit of persons who elected to reside permanently within the territory of a Member State other than the State which issued a driving licence to them could not be contemplated unless the requirements for the issue of those driving licences were harmonised to a sufficient extent. [25] In those circumstances, it was for the Council to achieve that harmonisation and to provide that driving licences issued by the Member States should be mutually recognised in order to remove the obstacles to the free movement of persons resulting from the obligation to obtain a driving licence by the host Member State. [26] Those obstacles will be totally removed only upon the application, as from 1 July 1996, of Directive 91/439, Article 1(2) of which provides for mutual recognition, without any formality, of driving licences issued by Member States. Furthermore, the obligation imposed on persons taking up residence in a Member State to exchange the licence issued by another Member State for a licence of the host State constitutes in itself an obstacle to the free movement of persons, as the Council points out in the preamble to Directive 91/439. [27] However, in view of the complexity of the matter and the differences between the legislation of the Member States, the Council was empowered to achieve the necessary harmonisation progressively. It was therefore quite open

17 to the Council to allow Member States temporarily to impose an obligation to exchange licences. [28] The answer to the first part of the question submitted must therefore be that, as Community law stands at present and prior to the implementation of Directive 91/439, Article 52 of the Treaty does not preclude a Member State from requiring the holder of a driving licence issued by another Member State to exchange that licence for a licence of the host Member State within one year of taking up normal residence in that State in order to remain entitled to drive a motor vehicle there. The Penalties Provided for in the Event of Breach of the Obligation to Exchange [29] Secondly, the national court asks whether Articles 6, 8a and 52 of the Treaty preclude the driving of a motor vehicle by a person who could have obtained a licence from the host State in exchange for the licence issued by another Member State but who did not make the exchange within the prescribed period from being treated as driving without a licence and thus rendered punishable by imprisonment or a fine. [30] For the reasons set out in paragraphs [20] to [22], it is necessary to rule only on the interpretation of Article 52. [31] Under the provisions of Directive 80/1263, a driving licence issued by a Member State is recognised by the other Member States in *388 which the holder is not normally resident and, for one year, also in the State in which he takes up normal residence. [32] Although the holder may be required to have his licence exchanged in order to remain entitled to drive motor vehicles within the territory of the host Member State after the expiry of the one-year period, his original licence remains valid in the Member State which issued it and continues to be recognised by the other Member States. [33] Member States may indeed refuse to exchange licences in certain circumstances expressly set out in the Directive, but that possibility cannot affect the entitlement of licence holders to have their licences exchanged if there are no such exceptional circumstances. [34] It follows that the issue of a driving licence by a Member State in exchange for a licence issued by another Member State does not constitute the basis of the right to drive a motor vehicle in the territory of the host State, which is directly conferred by Community law, but evidence of the existence of such a right. [35] In those circumstances, the obligation to exchange driving licences which Member States may impose under the Directive is essentially a way of meeting administrative requirements. [36] In the absence of Community rules governing the matter, the Member States remain competent to impose penalties for breach of such an obligation. However, it follows from settled case law concerning non-compliance with formalities for establishing the right of residence of an individual enjoying the protection of Community law that Member States may not impose a penalty so disproportionate to the gravity of the infringement that this becomes an obstacle

18 to the free movement of persons; this would be especially so if the penalty consisted of imprisonment (see, in particular, Case C-265/88, Messner [FN35]). In view of the effect which the right to drive a motor vehicle has on the actual exercise of the rights relating to the free movement of persons, the same considerations must apply with regard to breach of the obligation to exchange driving licences. FN35 [1989] E.C.R. 4209, [1991] 2 C.M.L.R. 545, para. [14]. [37] Treating a person who has failed to have a licence exchanged as if he were a person driving without a licence, thereby causing criminal penalties, even if only financial in nature, such as those provided for in the national legislation in question in this case, to be applied, would also be disproportionate to the gravity of that infringement in view of the ensuing consequences. [38] As the national court has pointed out, a criminal conviction may have consequences for the exercise of a trade or profession by an employed or selfemployed person, particularly with regard to access to certain activities or certain offices, which would constitute a further, lasting restriction on freedom of movement. [39] The answer to the second part of the question submitted by the national court must therefore be that, in view of the resultant *389 consequences, such as may arise under the national legal system in question, Article 52 of the Treaty precludes the driving of a motor vehicle by a person who could have obtained a licence from the host State in exchange for the licence issued by another Member State but who did not make that exchange within the prescribed period from being treated as driving without a licence and thus rendered punishable by imprisonment or a fine. Costs [40] The costs incurred by the German and French Governments, the United Kingdom and the E.C. Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court. Order On those grounds, THE COURT, in answer to the question referred to it by the Amtsgericht Tiergarten, Berlin, by order of 20 May 1994, rectified by order of 26 July 1994, HEREBY RULES: 1. As Community law stands at present and prior to the implementation of Council Directive 91/439 on driving licences, Article 52 E.C. does not preclude a Member State from requiring the holder of a driving licence issued by another Member State to exchange that licence for a licence of the host Member State within one year of taking up normal residence in that State in order to remain

19 entitled to drive a motor vehicle there. 2. In view of the resultant consequences, such as may arise in the national legal system in question, Article 52 of the Treaty precludes the driving of a motor vehicle by a person who could have obtained a licence from the host State in exchange for the licence issued by another Member State but who did not make that exchange within the prescribed period from being treated as driving without a licence and thus rendered punishable by imprisonment or a fine. (c) Sweet & Maxwell Limited [1996] 2 C.M.L.R. 372 END OF DOCUMENT