EU Court dismisses Commission action against Malta on Gozo Channel

In April 2004, Malta granted a Public Service Obligation (PSO) by means of an exclusive Public Service Contract to Gozo Channel Co Ltd (GCCL) for the provision of an adequate passenger and cargo all year round ferry service between the islands of Malta and Gozo.

The granting of this exclusive Public Service Obligation Contract to Gozo Channel Company Ltd prior to Malta’s accession to the European Union was the result of numerous discussions with the European Commission during accession negotiations, eventually leading to the closure of the Transport Chapter of the Acquis Communautaire.

However, the Commission argued that by signing of an exclusive public service contract with Gozo Channel Co Ltd on 16 April 2004, without having undertaken a prior call for tenders, Malta had failed to fulfill its obligations under Regulation (EEC) No 3577/92.

In its judgment the Court argued that the Commission had based its case (in its Reasoned Opinion and in its application to the ECJ) on the failure of Malta to fulfil obligations under Regulation No 3577/92, but that at the hearing the Commission stated that the ‘non-compliance consists in having maintained the contract in force after the date of accession of the Republic of Malta to the European Union’, and the Commission did not dispute Malta’s plea that the Regulation was not applicable to the contract since it was concluded before Malta’s accession to the EU.

The ECJ therefore considered that the action should be dismissed because the claims made by the Commission at the hearing did not correspond to the form of order sought in the application; therefore, if the ECJ had to rule on the Commission’s later claims, its ruling would be ultra petita (a court cannot rule beyond the claim sought by the applicant).

The ECJ referred to the Opinion given by Advocate General Sharpston, which argued that ‘the Commission’s action could only succeed if Regulation 3577/92 nevertheless required…Malta to comply with certain obligations before that date [accession]’ but the Commission did not base its pleas on the possible existence of such obligations.

The Court, therefore, dismissed the action by the Commission and ordered the European Commission to pay the costs.