Right-Hand, or Wrong-Hand, Drive? Market Access and Proportionality

Angus MacCulloch, Lancaster University Law School

On 20 March 2014 the Court of Justice of the EU (CJEU) handed down two separate, but connected, judgements in Case C-639/11 Commission v Poland and Case C-61/12 Commission v Lithuania. Both cases involve the Commission challenging the Member States’ refusal to register right-hand drive cars within their jurisdiction. Both MSs argued that their refusal to allow the registration of right-hand drive cars was a safety measure as the driver of a right-hand drive car has a field of vision considerably reduced when the traffic is on the right-hand side of the road. It is rather contrary to the usual UK political debate on EU migration, but this issue is essentially a problem caused when former UK residents move to Poland or Lithuania and attempt to register their right-hand drive cars in those States (AG [102]). The owners of right-hand drive vehicles would have to go through the expensive process of moving the vehicle controls to the left in order to properly register their vehicle in either MS. In the rest of this post references will be to Case C-639/11 unless specifically indicated.

The judgment concerns two separate issues. The first, the registration of new vehicles, is of less general interest and I shall deal with it very briefly. The second, the registration of vehicles previously registered in another MS, is of wider application and I shall deal with it more fully.

New Vehicles

The registration process for new vehicles in the EU is comprehensively governed by Type Approval Directives (Directive 70/311/EEC and Directive 2007/46/EC) which are designed to “replace the Member States’ approval systems with a Community approval procedure based on the principle of total harmonisation” (Dir 2007/46, Recital 2). The type approval procedure was amended when the UK and Ireland became members of the, then, Community to make no distinction between left and right-hand drive cars. Both the Directives are internal market measures, but ensure within them a high degree of road safety. Art 2a of Directive 70/311/EC requires MSs not to prohibit the registration of vehicles “on grounds relating to their steering equipment” if the vehicles satisfies the requirements of the Directive. It was therefore not surprising that as the EU harmonising measure had already taken into account the safety issues arising from the differences between the type approval of new left and right-hand drive vehicles it was not possible for an individual MS to require further pre-registration changes through moving the steering equipment from right to left [47].

Vehicles Previously Registered in other MSs

As the Directives only apply to approval of new vehicles they were not relevant to the registration of vehicles which had previously been registered in other MSs. That question was governed by the Treaty principles on the free movement of goods, namely Articles 34 and 36 TFEU. Both Poland and Lithuania argued that the use of a right-hand drive vehicle in situations where traffic circulated on the right hand side of the road presented a risk to road safety such as to necessitate the refusal of registration. The Polish Government argued that there was no indirect discrimination in the measure, as right-hand drive vehicles manufactured in Poland were equally effected. Both the Polish and Lithuanian Governments argued that even if the measure was a quantitative restrict on imports, in the terms of Art 34 TFEU, it was justified on the basis of the protection of road safety. The Commission argued that the measure was contrary to Art 34 TFEU, and that the refusal of registration was not suitable for attaining the road safety objective pursued, and the measure was disproportionate.

The most interesting aspect of the findings of the Court in these cases was not the eventual decision. It was not surprising that, given the EU harmonisation provisions in place, the CJEU was resistant to the MSs attempt to restrict the import of vehicles from other MSs. However, the way in which they approach the question is interesting in two regards. First the test the Court used to decide whether the national measures fell within Art 34 TFEU, and second, the issues it took into account in deciding the proportionality question.

Advocate General Jääskinen’s approach to Article 34 TFEU was very traditional. At [69] he uses the classic Case 8/74 Dassonvilleformula, whether a measure is capable of hindering directly or indirectly, actually or potentially trade within the EU, to establish whether a measure was captured by Art 34. The approach he adopts is very much in accordance with the ‘product requirement’ line of cases typified by Case 120/78 Cassis de Dijon. It was significant then that the CJEU did not adopt that approach and went another way. In both instant cases it follows the approach previously set out in Case C-110/05 Italian Trailers. At [52] in Case C-639/11, and [57] in Case C-61/12, it sets out an identical approach, even going so far as to include an amusing ‘cut & paste’ error in the latter:

“In view of the Court’s settled case-law, the contested legislation constitutes a measure having equivalent effect to quantitative restrictions on imports within the meaning of Article 34 TFEU, in so far as its effect is to hinder access to the Polish market for vehicles with steering equipment on the right, which are lawfully constructed and registered in Member States other than the Republic of Poland”.

The Trailers ‘market access’ test is therefore the basis for the decisions in these cases; although the Court in its reference to previous case law does draw a direct line from Dassonville, to Cassis and Trailers. There is very little in the judgment itself that deals directly with how the Polish measure hinders market access, only the acknowledgement, at [57], that the measure is likely to reduce the number of vehicles in use. The key issue of note is that notwithstanding the AG’s use of the classic form of reasoning under Art 34 TFEU, the CJEU has chosen, in two cases, to depart from the classic form and rely entirely on the more recent test in Trailers. One wonders whether the approach adopted by the 5th Chamber might indicate a more comprehensive shift in the Court’s attitude.

When the CJEU came to address proportionality it again justified its reasoning on the basis of Trailers, [59]-[62], rather than the older case law, at [53]:

“legislation may be justified in order to meet imperative requirements, on condition that it is appropriate for securing the attainment of the objective pursued and that it does not go beyond what is necessary in order to attain that objective”.

This two part test, of appropriateness and necessity, is then applied. The Court accepts that in the absence of harmonisation it is for the MS to decide the level of protection of road safety. The Court accepts there is “empirical evidence” that having a car’s steering equipment positioned on the same side as the direction of traffic restricts the driver’s field of vision and increases risk. It therefore appears, although it does not say so explicitly, to accept that some form of measure to deal with that risk may be appropriate [57]. The Court, however, took a much stronger line on whether the refusal of registration was necessary.

It first noted that new right-hand drive vehicles could be registered and used, due to the harmonised type approval procedure, and that previously registered vehicles posed no more risk than new vehicles [59]. It went on to note that tourists and other temporary road users could operate right-hand drive vehicles without restriction. They too could not be considered as presenting less risk that a domestic vehicle [60]. It also drew attention to the fact that 22 MSs made no distinction between right and left-hand drive vehicles [61]. The final element in the Court’s argument is perhaps the most important and wide ranging. It stressed that the statistical data presented by the Polish Government did not prove “to the requisite legal standard” the relationship between right-hand drive vehicles and the number of accidents [62]. Through this argument the Court highlights that while the risk is real, it is already tolerated to an extent with the MS, and that there is limited evidence of a significant risk to road safely. On that basis the Court decides that the refusal of registration to all right-hand drive vehicles is therefore disproportionate; other “means and measures” could be employed to enhance visibility for the driver which would less restrictive [63].

A Change in Tone?

The decision in this case can hardly be seen to be a surprise in an area where the EU has taken meaningful steps to adopt ‘total harmonisation’ provisions, but the 5th Chamber of the CJEU has taken a step forward in the way it dealt with the decision. It is interesting that the Court relied on the Trailers ‘market access’ test in a case which would have fitted neatly within the established ‘product requirement’ line of cases. It perhaps heralds a move away from the classic MEEQR way of thinking, in terms of ‘product requirements’ and ‘selling restrictions’, towards a single ‘market access’ methodology. Only time will tell whether this will become the norm rather than the exception. The adoption of the Trailers bifurcated approach to proportionality, whether the measure is appropriate and necessary, is also interesting; particularly the focus the Court gave to a MS’s ability to provide evidence “to the requisite legal standard” on the proportionality of the measure. The ability to provide robust evidence as the nature and the significance of the risk that is being addressed through the measure looks likely to play a significant role in future Art 34 TFEU cases. This may mean that MSs will be required to adopt clear evidence-based policy if they wish their measures to stand up to EU scrutiny.

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