by José Ricardo Sousa, student of the Master's degree in EU Law of UMinho

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Keywords: direct effect; tax; legal order; common market; particular

Court: CJEU | Date: Feb. 5^th 1963 | Case: 26/62 | Applicants: Van Gend en Loos v. Netherlands Inland Revenue Administration

Summary: The transport company Van Gend en Loos imported a certain quantity of urea-methanal, which belonged to a specific category in the tariff of import duties list (implies 10% tax). After that, the transport company introduced an objection against the application of this duty, with the argument that the urea-methanal was in another category duties (only implies 3% tax) when the EEC treaty entered in force in 1958. Therefore, the Dutch Government infringed the 12 article of EEC Treaty, which provides Member States to change or introduced any new customs duties.

Thus, the Inspector of Customs and Excise at Zaandam dismissed the objection of Van Gend because it was “not directed against the actual application of the tariff but against the rate”. Furthermore, Nederlandes administratie der belastingen stated that when the EEC Treaty entered into force, this product was incorporated in another category, which had the same tax (10%) as the new category, so it wasn’t raised any rate. The national court suspended the proceedings and referred two questions to the CJEU about this matter:

1. Whether Article 12. of the EEC Treaty has direct application within the territory of a Member State, in other words, whether nationals of such a State can, on the basis of the Article in question, lay claim to individual rights which the courts must protect;

The European Court referred that article 12 of EEC Treaty had direct application in national law. The main objective of EEC Treaty was to create the Common Market, which implies that the Treaty is more than a simple mutual agreement with obligations between the States. The Court points out that the Community is a new legal order of international law in benefit of the states that had limited their sovereign. Furthermore, the Court argued that Community law imposes obligations for Member States and for nationals, and wanted to confer rights for the parts, arisen by the Treaty. Article 12 is a negative obligation for states: the implementation did not require any intervention of member states for their nationals. So, ECJ supported and promoted the legal move of Van Gend company because it is the interest of the particular to defend their rights and to become one more intervenient to ensure the European law.

2. In the event of an affirmative reply, whether the application of an import duty of 8% to the import into the Netherlands by the applicant in the main action of ureaformaldehyde originating in the Federal Republic of Germany represented an unlawful increase within the meaning of Article 12 of the EEC Treaty or whether it was in this case a reasonable alteration of the duty applicable before 1 March 1960, an alteration which, although amounting to an increase from the arithmetical point of view, is nevertheless not to be regarded as prohibited under the terms of Article 12;

On this matter, CJEU refused to answer the question. According to the judges, the European court had no competence to rule on this substance. ECJ gave back to the national court the call on the substance of the case recalling that it follows the same leads for article 12. Also, they stressed the importance of knowing how the increase of the respective tax occurred so that the proper answer solves the case.

The decision can be accessed here and the opinion of the AG here.