Although it is usually wise to be cautious of one’s own impression of the outcome of a court hearing, the result was already foreseeable during the hearing on Friday 23 August before the interim applications judge of the Council of State in the review of the appeal to temporarily lift the suspension of sales of Mercedes vehicles equipped with air conditioning units using the older refrigerant. Indeed, ruling on 27 August in an urgent application by the French subsidiary of Mercedes, the Council of State ordered the lifting of the blocking of sales of the brand.
The Environment Ministry seemingly had some difficulty in justifying its position, giving the impression that the suspension of sales had been put in place in something of a rush without an adequate review of the legal basis of such a measure.
In addition, in terms of procedural strategy, by attempting to challenge the jurisdiction of the Council of State, as well as the urgency of the matter and the claim of illegality of the measures adopted, the Ministry was fighting on too many fronts by upholding, in some cases highly indefensible positions (e.g. claiming a lack of urgency whereas 60% of vehicles of the brand were unable to be registered), whereas that the plaintiff concentrated its criticisms and relied on the case law in similar matters.
However, although the Ministry was unsuccessful, the order issued might be to the advantage of all parties to the extent that without the lifting of the suspension, the administrative authorities run the risk of incurring the State’s liability for very large sums of money, given the duration of proceedings on the merits.
After a brief reminder of the facts of the case, we discuss the main issues that the interim applications judge had to address.
I. Facts of the case
Despite being approved in Germany, the French government decided to block the registration of certain vehicles of the Mercedes brand on the French territory. Purchasers of the models in question, which represented a significant proportion of the vehicles sold by the brand, can no longer register those vehicles. Auto dealers, finding themselves in a difficult situation in respect of their current clients are seeing their sales compromised.
From a legal point of view, the regulations in force, which are based on the need to ensure the free movement of goods within the Union, a founding principle of European law, provide that Member States must recognize the conformity with the applicable standards recognized by another State and, accordingly, do what is required to ensure that the vehicles are able to be registered.
A safeguard clause, provided for in the TFEU still allows Member States to restrict the free movement of goods if such restrictions can be justified on imperative grounds such as product safety or protection of the environment. This safeguard clause can be implemented in the case of the approval of vehicles by another Member State (the conditions for which are set out in Article 29 of Directive 2007/46/EC; the same provisions have also been transposed to Article R. 321-14 of the French Highway Code [Code de la route]).
The French government decided to implement this clause on the grounds that Mercedes- Benz used, as it has been authorized to do by the agency responsible for motor vehicles in Germany, a refrigerant gas, which is used and will continue to be used in all vehicles currently in circulation and in all new vehicles of existing types put into circulation up to 31 December 2016.
However, as is the case each time there is an infringement of one of the founding principles of EU law, the implementation of such a safeguard clause must meet strict conditions and requires evidence of a serious risk to the environment.
The French importer of Mercedes vehicles in France therefore decided to lodge an appeal on the merits and make an urgent application to the Council of State against the measure taken by the French government on 26 July 2013 on the basis of Article R. 321-14 of the Highway Code refusing to register some of the brand’s vehicles (namely classes A, B, CLA and SL) on the grounds of serious and immediate harm to the environment.
II. The legal issues raised
- Jurisdiction of the Council of State
The question of whether the Council of State had jurisdiction to hear the case was raised and decided at the hearing. The interim order does not refer to it and so we will limit ourselves to a brief review of the arguments raised. The question was whether the ministerial decision was of a regulatory character, falling within the competence of the Council of State, or if it was an individual decision, falling under the jurisdiction of the Administrative Tribunal in Versailles. An initial decision refusing the registration of vehicles had indeed been lifted by the Versailles Tribunal. However, the deliberations show that there was a fundamental difference between the first decision which was deferred to the Tribunal in Versailles and the general prohibition contested before the Council of State.
In effect, the first decision was directed to the importer of Mercedes vehicles it being a refusal of that company’s application for approval. As such an action is non-regulatory; the jurisdiction of the Administrative Tribunal was justified. However, in spite of the fact that it concerns a manufacturer, the decision of 26 July 2013 is in reality a prohibition on registration which applies to all distributors, importers and purchasers. A judgment handed down on 1 August 2013 by the French Council of State in the Monsanto case came to a similar conclusion: it concerned an order issued by the Minister of Agriculture suspending the cultivating of genetically modified maize, which was annulled; the regulatory nature of the order was acknowledged in that case and, consequently, so was the jurisdiction of the Council of State. The same reasoning had to be applied mutatis mutandis in the refrigerant case and such reasoning led the judge to declare that the Council of State was competent.
- Condition for interim suspension of a decision under Article L. 521-1 of the Code of Administrative Justice
Article L. 521-1 lays down two conditions for a decision to be suspended under this procedure: 1. urgency and 2. serious doubt as to the legality of the decision.
- Legality condition
The issue concerned whether the safeguard clause in the directive transposed in France under Article R. 321-11 of the Code de la route had been used legitimately. In effect, pursuant to Directive 2007/46/EC of 5 September 2007 and its transposition into French law, any vehicle having received EC type-approval accompanied by a valid certificate of conformity may be commercialized and sold in all Member States of the European Union; these provisions prohibit Member States from refusing registration on grounds relating to the requirements of the directive unless the directive’s safeguard clause has been properly implemented.
Article R. 321-14 of the Code de la route (Highway Code) which enacted the safeguard clause of the directive in French law only allows exemptions to the freedom to sell and enter into service vehicles having received EC type-approval accompanied by a certificate of conformity if they » present a serious risk to road safety or seriously harm the environment or seriously harm public health ».
The provision sets out strict and exhaustive conditions for such exemptions.
The interim applications judge therefore first of all dismissed all the grounds in the contested French decision according to which the extension of the grant of EC type-approval as a result of the decisions of the German Federal Motor Transport Authority (KBA) was a circumvention of the directive and distorted competition between manufacturers insofar as “they are irrelevant to the exhaustively listed grounds set out in Article R. 321-14, which alone can justify a temporary refusal of registration in application of this safeguard clause”. The judge then reviewed the reasoning of the decision according to which the entry into circulation of the vehicles at issue would be “detrimental to the environment and to efforts for the reduction of greenhouse gases”. In the reasoning for his decision, the judge compared the quantitative analysis in absolute value proposed by the government and the proportional analysis in relative value proposed by Mercedes and was clearly much more convinced by the second analysis. The Ministry’s reasoning was based on the mass of CO2 produced during the life of a vehicle fitted with R 134a gas, i.e. 629 kg more than R 1234 yf gas according to the administration, which for 4500 blocked vehicles amounts to 2,800 tonnes of CO2 equivalent according to the figures given by the Ministry, with an extrapolation up to 81,000 tonnes by 2017, with the risk that other manufacturers follow the same route.
These raw figures did not appear to be especially representative to the interim relief judge given that fewer than 6% of new models registered in 2013 are equipped with the new gas, that for all vehicles registered, this represents a tiny proportion of 1.74 %, and that the new gas is only fitted in a tiny share of vehicles fitted with air-conditioning in circulation in France, also taking into account the fact that the obligation to use the new gas has been postponed from 2011 to 2013 for new models, that it will only be operative for all new vehicles in 2017.
In light of all those factors, the judge came to the logical conclusion that “the circulation in France of the vehicles concerned by the contested decision does not appear to be of a nature, in itself, to seriously harm the environment within the meaning of Article R. 321-14 of the Code de la route”, and that this ground could in itself give rise to “serious doubt as to the legality of the decision”.
- Urgency condition
Urgency was characterized by the serious and immediate harm to the interests of the importer and its network. The judge found that the vehicles concerned represented more than 60% of the sales of the brand in France for the first 6 months of the year and nearly 40% of its turnover, a bailiff’s report showed that the sale of 2,704 vehicles had already been blocked on 5 July 2013, and that Mercedes and its network are exposed to the cancellation of orders, thus creating a serious commercial and financial risk as well as severe harm to its image.
The judge concluded that the serious and immediate harm that the execution of the contested decision causes to the interests of the brand is an urgent situation justifying the ordering of emergency interim measures.
Consequently, the interim applications judge of the Council of State has suspended the decision of the Minister of the 26 July 2013 by which the latter refused to register on the French territory a number of models of Mercedes vehicles (with EC type–approval el*98/14*0169*19 –type 230- of 6 June 2013 with the exception of the SZBBA200 version and EL*2001/116*0470/04 – type 245G version of 3 June 2013 except variant Y2GBM2).
The Minister of Ecology was enjoined to issue on a provisional basis the national vehicle type identification codes (CNIT) covered by the decision of 26 July 2013 in order to allow their registration in France in the 2 days following the issue of the order.