1 By order of 22 May 1987, which was received at the Court on 14 July 1987, the High Court of Justice of England and Wales referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Articles 7, 34, 40, 48 to 51, 52 to 58 and 59 to 66 of the EEC Treaty, Council Regulation ( EEC ) No 101/76 of 19 January 1976 laying down a common structural policy for the fishing industry ( Official Journal 1976, L 20, p . 19 ), Council Regulation ( EEC ) No 3796/81 of 29 December 1981 on the common organization of the market in fishery products ( Official Journal 1981, L 379, p . 1 ) and of Council Regulation ( EEC ) No 170/83 of 25 January 1983 establishing a Community system for the conservation and management of fishery resources ( Official Journal 1983, L 24, p . 1 ).
2 The questions were raised in proceedings involving, on the one hand, the Ministry of Agriculture, Fisheries and Food and, on the other, Jaderow Ltd and other companies operating fishing vessels, all of which are incorporated in the United Kingdom and for the most part controlled by Spanish interests ( hereinafter referred to as "the applicants in the main proceedings ").
The United Kingdom' s legislation and practice regarding fishing
3 Under the Sea Fish ( Conservation ) Act 1967, as amended by the Fishery Limits Act 1976 and the Fisheries Act 1981, fishing vessels registered in the United Kingdom must have a fishing licence . That legislation has been supplemented by the British Fishing Boats Act 1983, the British Fishing Boats Order 1983 and the Sea Fish Licensing Order 1983 .
4 The fishing licences granted pursuant to that legislation by the United Kingdom authorities as from 1 January 1986 determined the fishing area and species of fish covered by the licences and stated the conditions which had to be fulfilled cumulatively at all times, failing which the licences would be revoked . The purpose of those conditions was to ensure that fishing vessels had a "real economic link" with the United Kingdom . Those conditions concern, first, the operation of the vessel for which the licence was granted and, secondly, its crew .
5 The condition relating to the operation of the fishing vessel was worded as follows :
"The vessel must operate from the United Kingdom, Isle of Man or Channel Islands : without prejudice to the generality of this requirement, a vessel will be deemed to have been so operating if, for each six-month period in each calendar year ( i.e . January to June and July to December ) either :
( a ) at least 50% by weight of the vessel' s landings or transhipment of stocks to which this or any other licence in force at the relevant time relates have been landed and sold in the United Kingdom, Isle of Man or Channel Islands or transhipped by way of sale within British fishery limits; or
( b ) other evidence is provided of the vessel' s presence in a United Kingdom, Isle of Man or Channel Islands port on at least four occasions at intervals of at least 15 days ."
6 The conditions relating to the crew of the fishing vessel were worded as follows :
"( i)At least 75% of the crew must be British citizens, or EEC nationals ( excluding, until 1 January 1988, any Greek nationals and, until 1 January 1993, any Spanish or Portuguese nationals who are not the spouse or child under 21 of Greek, Spanish or Portuguese workers already installed in the United Kingdom in accordance with the transitional arrangements on the free movement of workers following the accession of Greece, Spain and Portugal to the Communities as provided for in the relevant Accession Treaties ) ordinarily resident in the United Kingdom, Isle of Man or Channel Islands : residence means residence on shore and for this purpose service aboard a British ship does not count as residence in the United Kingdom, Isle of Man or Channel Islands .
( ii)The skipper and all the crew must be making contributions to United Kingdom National Insurance, or equivalent Isle of Man or Channel Islands schemes : this would include Class 1, Special Mariners' , Class 2 or Class 4 self-employed contributions ".
The main proceedings
7 After 1 January 1986 the applicants in the main proceedings obtained a series of licences for their fishing vessels registered in the United Kingdom and flying the British flag . The licences granted stipulated the abovementioned conditions .
8 By letters sent on 20 August and 9 September 1986 the Minister for Agriculture, Fisheries and Food requested the applicants to prove, in respect of the period from 1 January to 30 June 1986, that the condition relating to the operation of their fishing vessels had been observed . After an exchange of correspondence between the Minister and the applicants, the Minister, by letter of 12 December 1986, notified them of his provisional decision that their fishing licences would be revoked .
9 On 17 December 1986 the applicants applied to the High Court of Justice of England and Wales for judicial review of the Minister' s provisional decisions as contained in his aforesaid letter of 12 December and of any decision which the Minister might take to uphold them . They contended inter alia that the condition relating to the operation of fishing vessels, considered in isolation or with the other conditions relating to the crew, was incompatible with Community law .
10 In order to resolve that dispute the High Court referred the following questions to the Court of Justice for a preliminary ruling :
"Question 1
Where a Member State grants a fishing licence to a company registered in that Member State in respect of a fishing vessel owned by that company and flying the flag of and duly registered in that Member State, and where the licence contains conditions ( all of which must be satisfied at all times ) expressed to be designed to ensure that the vessel has 'a real economic link' with the Member State in question, is a licence condition in the following form :
' The vessel must operate from the United Kingdom, Isle of Man or Channel Islands : without prejudice to the generality of this requirement a vessel will be deemed to have been so operating if, for each six-month period in each calendar year ( i.e . January to June and July to December ) either :
( a)at least 50% by weight of the vessel' s landings or transhipment of stocks to which this or any other licence in force at the relevant time relates have been landed and sold in the United Kingdom, Isle of Man or Channel Islands or transhipped by way of sale within British fishery limits; or
( b)other evidence is provided of the vessel' s presence in a United Kingdom, Isle of Man or Channel Islands port on at least four occasions at intervals of at least 15 days' ,
inconsistent with Community law either by reason of its terms and/or its relationship with the two other conditions of the licence ( which are the subject of Case C-3/87 ), and in particular is such a condition
( a)inconsistent with the common structural policy of the fishing industry as set out in, inter alia, Council Regulation ( EEC ) No 101/76;
( b)inconsistent with the common organization of the market in fishery products, as set out in, inter alia, Council Regulation ( EEC ) No 3796/81;
( c)prohibited by Articles 7, 34, 40, 48 to 51, 52 to 58 or 59 to 66 of the EEC Treaty or any of those provisions;
( d)invalid by reason of its being disproportionate, inequitable or contrary to the applicants' legitimate expectations;
( e)outside the powers of the United Kingdom or unlawful under Article 5(2 ) of Council Regulation ( EEC ) No 170/83 being by reason of the aforesaid matters contrary to applicable Community provisions?
Question 2
If the answer to Question 1 is in the negative, does it make any difference if the condition is applied by the competent authorities of that Member State as referring only to physical presence of the vessel in the Member State and so as to exclude as irrelevant to compliance with that condition all considerations of other evidence of economic, financial and fiscal links between the vessel, its owners and managers and the Member State in question?"
11 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
12 It is apparent from the order referring the preliminary questions to the Court that the main proceedings relate in substance to the conditions which may be imposed on British vessels fishing against the quotas which the Community allocates to the United Kingdom . Leaving aside the question whether such conditions are in conformity with Community law in relation to fishing not subject to quotas, it is therefore appropriate, before drawing up a list of the points raised by the preliminary questions and examining those points, to review the principal features of the rules relating to fishing quotas in the general context of the Community rules relating to fishing .
13 The Community rules establish the principle of equal conditions of access to fishery resources for any fishing vessel flying the flag of, or registered in, a Member State ( Article 2(1 ) of Council Regulation No 101/76 ), except with regard to the area encompassed by the 12-nautical-mile limit calculated from the base lines of Member States, in respect of which Member States may, until 31 December 1992, derogate from the equal access rule ( Article 100 of the 1972 Act of Accession in conjunction with Article 6 of Council Regulation No 170/83 ). The questions submitted do not concern the special rules applicable to that 12-mile coastal area .
14 As regards the conservation of fishery resources, a Community system for their conservation and management, involving limitations of the fishing effort, was established pursuant to Article 102 of the 1972 Act of Accession by Council Regulation No 170/83 . In addition, Council Regulation ( EEC ) No 2057/82 of 29 June 1982 ( Official Journal 1982, L 220, p . 1 ) had already defined the control rules in order to ensure that the limits fixed for permissible levels of fishing were observed . Regulation No 2057/82 was amended by Council Regulation ( EEC ) No 4027/86 of 18 December 1986 ( Official Journal 1986, L 376, p . 4 ).
15 Article 3 of Regulation No 170/83 provides for the fixing each year of the total allowable catches ( TACs ) available to the Community for each stock or group of stocks where, in the case of one species or a group of related species, it becomes necessary to limit the catch . Article 4(1 ) of that regulation provides that : "The volume of the catches available to the Community referred to in Article 3 shall be distributed between the Member States in a manner which assures each Member State relative stability of fishing activities for each of the stocks considered ". According to the wording of Article 4(2 ), there is a "distribution of the resources among Member States ". Article 5(1 ) of Regulation No 170/83 provides that Member States may exchange all or part of the quotas allocated to them .
16 Article 5(2 ) provides that : "Member States shall determine, in accordance with the applicable Community provisions, the detailed rules for the utilization of the quotas allocated to them ". It is provided that the detailed rules for the application of that paragraph are to be adopted, if necessary, in accordance with the procedure laid down in Article 14 - the "management committee" procedure .
17 Thus, the provisions of that regulation established a system of national fishing quotas . As is clear from the provisions of Regulation No 2057/82, in particular Article 10(1 ) thereof, and from the provisions of Regulation No 4027/86, the Community legislature links the national quotas to the fishing vessels flying the flag of, or registered in, each Member State; only those vessels may fish against its quotas .
18 It must be observed that when exercising the power granted to them to define the detailed rules for the utilization of their quotas the Member States may determine which vessels in their fishing fleets will be allowed to fish against their national quotas, provided that the criteria employed are compatible with Community law .
19 In this regard, Member States may allow fishing vessels to fish against their national quotas only if certain conditions are fulfilled with regard to, for example, the size, age or state of the vessel, its equipment, the number of fishermen on board, accommodation and mess facilities for the crew, sanitary arrangements, safety matters and so forth, in so far as those conditions are not governed exclusively by Community legislation .
20 The question to be examined is therefore whether and to what extent Community law precludes the laying down of a condition such as that at issue in the main proceedings . In this regard, the questions raised by the national court may be summarized as follows :
I . Does Community law preclude a Member State, in authorizing one of its vessels to fish against national quotas, from
( a ) laying down conditions designed to ensure that the vessel has a "real economic link" with the Member State in question?
( b ) laying down the condition, in order to ensure the existence of such a link, that the vessel must operate "from the territory" of that Member State?
( c)deeming that condition to be satisfied if it is proved that in each six-month period in each year ( i.e . from January to June and from July to December )
( i)50% by weight of the fish caught from the quota is landed and sold in the territory of that Member State, or
( ii)the vessel was present in a port of that Member State on at least four occasions at intervals of at least 15 days?
( d)excluding, in requiring the vessel to operate from its territory and thus having regard to the vessel' s presence alone, any other evidence of the existence of a real economic link between the vessel and the Member State in question?
II.Does the legitimate expectation of operators who previously carried on fishing activities preclude the laying-down of a new condition not previously laid down?
III . Does Community law preclude the laying-down of a condition such as that set forth above, having regard to its relationship with the two other conditions forming the subject of Case C-3/87?
Question I(a ): A real economic link between the vessel and the Member State
21 In order to answer this question, it is necessary to consider the aim of the system of national quotas .
22 That aim emerges above all from Article 4 of Regulation No 170/83, interpreted in the light of the preamble to that regulation . Article 4 states that the total allowable catches are to be distributed in a manner which "assures each Member State relative stability of fishing activities for each of the stocks considered ". The concepts of stability and relativity are defined in the preamble to the regulation . The sixth recital states that "that stability ... must safeguard the particular needs of regions where local populations are especially dependent on fisheries and related industries ...". The seventh recital states that "it is (( in )) this sense that the notion of relative stability aimed at must be understood ". It also emerges from the fourth recital of the preamble to Council Regulation ( EEC ) No 172/83 of 25 January 1983 fixing for certain fish stocks and groups of fish stocks occurring in the Community' s fishing zone, total allowable catches for 1982, the share of these catches available to the Community, the allocation of that share between the Member States and the conditions under which the total allowable catches may be fished ( Official Journal 1983, L 24, p . 30 ) that "in order to make a fair allocation of available resources, particular account must be taken of traditional fishing activities, the specific means of areas particularly dependent on fishing and its dependent industries and the loss of fishing potential in the waters of third countries ".
23 It follows from the foregoing that the aim of the quotas is to assure to each Member State a share of the Community' s total allowable catch, determined essentially on the basis of the catches from which traditional fishing activities, the local populations dependent on fisheries and related industries of that Member State benefited before the quota system was established .
24 It should also be pointed out that the system of national quotas was adopted in order to enable the measures for the conservation of fishery resources provided for by Article 102 of the 1972 Act of Accession to be implemented in the shortest possible time . It thus constitutes a stage towards a Community fisheries policy designed to lead to the restructuring and adaptation of the fishing fleets to the fishery resources available . That quota system constitutes none the less a derogation from the general rule of equal conditions of access to fishery resources laid down in Article 2(1 ) of Regulation No 101/76 .
25 Consequently, the measures which the Member States may adopt when exercising the power conferred on them by Article 5(2 ) of Regulation No 170/83 with a view to excluding certain of the vessels flying their flag from sharing in the utilization of their national quota are justified only if they are suitable and necessary for attaining the aim of the quotas as set out above .
26 That aim may in fact justify conditions designed to ensure that there is a real economic link between the vessel and the Member State in question if the purpose of such conditions is that the populations dependent on fisheries and related industries should benefit from the quotas . On the other hand, any requirement of an economic link which exceeds those limits cannot be justified by the system of national quotas .
27 Consequently, the answer to Question I(a ) must be that Community law as it now stands does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from laying down conditions designed to ensure that the vessel has a real economic link with that State if that link concerns only the relations between that vessel' s fishing operations and the populations dependent on fisheries and related industries .
Question I(b ): The obligation to operate from a national port
28 In view of the observations and the reply set out above, it should be pointed out that the condition to which this question relates must be considered to conform in principle with the aim of the quotas and therefore to be compatible with Community law if it merely involves the obligation to operate habitually from a national port . However, it would go beyond that aim if it were to involve the obligation to depart from a national port on each fishing trip .
29 Consequently, the answer to this question must be that Community law as it now stands does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from laying down the condition, in order to ensure that there is a real economic link as defined above, that the vessel is to operate from national ports, if that condition does not involve an obligation for the vessel to depart from a national port on all its fishing trips .
Question I(c ): Evidence of the landing of a certain proportion of catches and of the vessel' s periodic presence in national ports
30 It should be pointed out that this question concerns the issue whether the requirement for a proportion of the catches taken from the quotas to be landed in national ports or for the vessel to be present periodically in national ports is compatible with Community law not as a condition for the grant of fishing licences but as evidence of the vessel' s operation from national ports .
31 Each of those circumstances goes to show that the vessel habitually operates from a national port and provides evidence that the vessel has a real economic link with the populations dependent on fisheries and related industries, in accordance with the aim of the system of national quotas .
32 Consequently, the answer to this question must be that Community law does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from taking the position that the fact of the vessel' s operation from national ports may be proved by the landing of a proportion of its catches, or its periodic presence, in national ports .
Question I(d ): Exclusion of any other evidence of a real economic link
33 This question comprises two parts . The first part seeks to ascertain whether Community law precludes a Member State from accepting as evidence of a vessel' s operation from national ports only the landing of a specified proportion of its catches, or a specified periodic presence of the vessel, in national ports ( the evidence referred to in Question I(c ) ). The second part seeks to ascertain whether Community law precludes a Member State, for the purpose of establishing the existence of a real economic link between that State and the vessels which may fish against its quotas, from taking account of only the vessel' s operation from national ports ( the condition referred to in Question I(b ) ).
34 As far as the first part of the question is concerned, it should be observed that the placing of such a limitation on the evidence that may be accepted amounts in reality to requiring the vessel in question either to land the required proportion of its catches in national ports or to be present with the required regularity in those ports .
35 As far as the landing of a proportion of catches in national ports is concerned, it must be observed that Article 6(1 ) of Regulation No 2057/82 requires the skipper of a vessel to submit "to the authorities of the Member State whose landing places he uses a declaration" indicating in particular the quantities landed and the location of catches and that Article 9(1 ) of that regulation, as amended by Regulation No 4027/86, provides that "Member States shall ensure that all landings by fishing vessels flying the flag of, or registered in, a Member State of stocks or groups of stocks subject to TACs or quotas are recorded ". It follows from those provisions that it is possible for each fishing vessel to land its catches directly in any Member State .
36 It follows that in determining, in accordance with Article 5(2 ) of Regulation No 170/83, the detailed rules for the utilization of the quotas allocated to it, a Member State may not require catches or a proportion of them to be landed in its own ports .
37 That finding means that the evidence to be admitted of the vessel' s operation from national ports may not be confined to the landing of catches or a proportion of them in those ports .
38 However, that same finding does not exclude the possibility that, for that purpose, the landing of catches may be accepted as one means of proof amongst others, provided, however, that the other evidence admitted does not impose, directly or indirectly, an obligation to land catches in national ports . That would be the case if, in order to provide the other evidence, the operator in question were actually compelled to land the vessel' s catches in national ports or if it were so difficult in practice to provide that evidence that it left the operator no choice but to produce evidence of the landing of catches in national ports .
39 As far as a vessel' s periodic presence in national ports is concerned, it must be borne in mind that it has been established above that Community law as it now stands does not preclude a Member State, in authorizing one of its vessels to fish against its quotas, from requiring it to operate from national ports, if this does not involve the obligation to depart from such a port on all the vessel' s fishing trips .
40 That being the case, Community law also cannot preclude a Member State from requiring, for the purpose of regarding that obligation as satisfied, evidence that the vessel was present in its ports with a certain frequency, provided that the frequency required does not hinder normal fishing operations or does not in practice entail the necessity to land a proportion of catches when calls are made at those ports .
41 Consequently, the answer to this part of the question must be that Community law does not preclude a Member State from accepting, as evidence of compliance with the condition that the vessel must operate from national ports, only the landing of a specified proportion of the vessel' s catches, or a specified periodic presence of the vessel, in national ports, provided that the frequency with which the vessel is required to be present in those ports does not impose, directly or indirectly, an obligation to land the vessel' s catches in national ports or hinder normal fishing operations .
42 As far as the second part of the question is concerned, it is apparent from the order for reference and from the other documents before the Court that it refers in particular to the exclusion, as evidence of the existence of a real economic link, of certain economic, financial and fiscal evidence, such as the fact that the companies owning or managing the fishing vessels concerned are incorporated under the laws of the United Kingdom, that they are subject to corporation tax and VAT in the United Kingdom, that they return to the competent United Kingdom Ministry statistics relating to the fishing activities of their vessels, that they are subject to inspections by the United Kingdom authorities, that they invest the sums necessary to ensure that their vessels comply with United Kingdom standards and that the proceeds of the sale of their vessels' catches are paid into their bank accounts in the United Kingdom .
43 In posing that question, the national court has in mind a very wide conception of "real economic link ". However, in the answer given above to Question I(a ), it was pointed out that Community law as it now stands does not preclude a Member State from requiring its fishing vessels to have a real economic link with it, not in a general way, but in so far as that link concerns only the relations between those vessels' fishing operations and the populations dependent on fisheries and related industries .
44 In view of that very narrow definition of the link which a Member State may require when authorizing a vessel to fish against its quotas, there is no need to answer the second part of the question as set forth above .
Question II : Legitimate expectation
45 It should be pointed out in this regard that, under the powers reserved to the Member States by Article 5(2 ) of Regulation No 170/83, fishing activities could be made subject to the grant of licences which, by their nature, are subject to temporal limits and to various conditions . Furthermore, the introduction of the quota system was only one event amongst others in the evolution of the fishing industry, which is characterized by instability and continuous changes in the situation due to a series of events such as the extension, in 1976, of fishing areas to 200 miles from certain coasts of the Community, the necessity to adopt measures for the conservation of fishery resources, which was dealt with at the international level by the introduction of TACs, the arguments about the distribution amongst the Member States of the TACs available to the Community, which were finally distributed on the basis of a reference period which ran from 1973 to 1978 but which is reconsidered every year .
46 In those circumstances, operators in the fishing industry were not justified in taking the view that the Community rules precluded the making of any changes to the conditions laid down by national legislation or practice for the grant of licences to fish against national quotas or the adoption of new conditions compatible with Community law .
47 Consequently, the answer to this question must be that Community law as it now stands does not preclude legislation or a practice of a Member State whereby a new condition not previously stipulated is laid down for the grant of licences to fish against national quotas .
Question III : The relationship between the condition in question and the conditions forming the subject of Case C-3/87
48 Having regard to the answers given above, according to which, subject to the reservations set out above, a condition such as that in question is not incompatible with Community law, it is not necessary to reply to this question . The question of the compatibility with Community law of conditions such as those to which the national court refers is examined in the judgment given in Case C-3/87 delivered on the same day as this judgment .
Costs
49 The costs incurred by the United Kingdom, Ireland, the Kingdom of Spain and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, costs are a matter for that court .
On those grounds,
THE COURT,
in answer to the questions submitted to it by the High Court of Justice of England and Wales, by order of 22 May 1987, hereby rules :
Community law as it now stands :
( 1 ) does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from laying down conditions designed to ensure that the vessel has a real economic link with that State if that link concerns only the relations between that vessel' s fishing operations and the populations dependent on fisheries and related industries;
( 2 ) does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from laying down the condition, in order to ensure that there is a real economic link as defined above, that the vessel is to operate from national ports, if that condition does not involve an obligation for the vessel to depart from a national port on all its fishing trips;
( 3 ) does not preclude a Member State, in authorizing one of its vessels to fish against national quotas, from taking the position that the fact of the vessel' s operation from national ports may be proved by the landing of a proportion of its catches, or its periodic presence, in national ports;
( 4 ) does not preclude a Member State from accepting, as evidence of compliance with the condition that the vessel must operate from national ports, only the landing of a specified proportion of the vessel' s catches or a specified periodic presence of the vessel in national ports, provided that the frequency with which the vessel is required to be present in those ports does not impose, directly or indirectly, an obligation to land the vessel' s catches in national ports or hinder normal fishing operations;
( 5)does not preclude legislation or a practice of a Member State whereby a new condition not previously stipulated is laid down for the grant of licences to fish against national quotas .
