1. OJ 1979 L 121/1 of 17 May 1979. The text is given in an annex to this article.

2. See Chapter I, Definitions, of the Code of Conduct.

3. See Bronislaw, Gosovic, UNCTAD, Conflict and Compromise (Leyden, 1972), p. 142 et seq.Google Scholar

4. See statement by W.R. Malinowski, UN Doc. TD/CODE/7, p. 4

5. See Annex to UNCTAD Res. 66(III).

6. G A Res. 3035 (XXVIII).

7. Text in UN Doc. TD/CODE/11/Rev. 1 of 9 May 1974 and in 13 ILM (1974) p. 912.

8. A national shipping line of any given country is defined by the Code as “a vessel-operating carrier which has its head office of management and its effective control in that country and is recognised as such by an appropriate authority of that country or under the law of that country.” See Chapter I of the Code.

9. A “cunency adjustment factor” (CAF) is introduced by conferences when exchange rate changes lead to changes in the aggregate operational costs and/or revenues of the shipping lines members of such conference in order to compensate for unexpected losses or windfall profits resulting from these exchange rate changes. See Art. 17 of the Code. There are complaints by shippers that CAFs do not always have neutral effects and result in discrimination between shippers.

10. Art. 23(4) mentions disputes relating to:

“(a) Refusal of admission of a national shipping line to a conference serving the foreign trade of the country of that shipping line;

(b) Refusal of admission of a third country shipping line to a conference;

(c) Expulsion from a conference;

(d) Inconsistency of a conference agreement with this Code;

(e) A general freight rate increase;

(f) Surcharges;

(g) Changes in freight rates or the imposition of a currency adjustment factor due to exchange rate changes;

(h) Participation in trade; and

(i) The form and terms of proposed loyalty agreements.”

11. The question of whether this power may also be exercised by the Commission is dealt with below at p. 101.

12. Cf., statement of the US representative after adoption of the text of the Code, TD/CODE/10, p. 121.

13. Examples: Art. 13(2): “Conference tariffs should be drawn up simply and clearly…”; Art. 14(9): “Conferences should institute any general freight rate increase…”; Art. 15(6): “When examining a request for a promotional freight rate, the conference may take into account that …”. Examples of vague drafting: Art. 3: “… these procedures shall ensure that the voting rules do not hinder the proper work of the conference and the service of the trade…”; Art. 7: “The terms of loyalty arrangements shall provide safeguards … inter alia: …”.

14. UN Doc. TD/CODE/10, p. 121 (statement of the American representative) and ibid. p. 123 (statement of the Indian representative).

15. See Art. 48(2) of the Code: “All States are entitled to become Contracting Parties to the present Convention…”.

16. Opinion (EEC) 1/75, [1975] ECR p. 1355; Opinion (EEC) 1/76, [1977] ECR p. 741; Opinion (EEC) 1/78, [1979] ECR p. 2871.

17. Judgment of 31 March 1971, Case 22/70 (Commission v. Council), [1971] ECR p. 263.

18. Art. 84(2) of the EEC Treaty: “The Council may, acting unanimously, decide whether, to what extent and by what procedure appropriate provisions may be laid down for sea and air transport.” The present situation with respect to the measures based on this article is given in: George, Close, “Art. 84, the Development of Transport Policy in the Sea and Air Sectors”, [1980] European Law Review p. 188 et seqGoogle Scholar. See also Bredimas, Anna E., “The Common Shipping Policy of the EEC”, 18 C.M.L. Rev. (1981) pp. 9–32.Google Scholar

19. There is, given the reasoning of Opinion 1/76, the possibility that the Community would would begin “the laying down of appropriate provisions for sea transport” (to borrow a phrase from Art. 84(2)) by concluding a treaty with third states. See Opinion 1/76, loc.cit. n. 16, points 3 and 4.

20. This approach to the common commercial policy recently found support in Opinion 1/78 of 4 October 1979, [1979] ECR p. 2871 point 45.; see Kapteyn, P.J.G., case note in 29 SEW (1981) p. 109, at p. 127Google Scholar, This approach has never been accepted by the Council and in the field of transport is not insisted upon by the Commission.

21. On the freedom to provide services see below p. 90.

22. For this definition, see supra, n. 8.

23. Art. 52 (second sentence) EEC Treaty: “Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Art. 58, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital.”

Article 58 EEC Treaty: “Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community shall, for the pruposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.”

23a. See the General Programme for the elimination of the restrictions concerning the freedom of establishment, JO 1962, p. 36.

24. Judgment of 21 June 1974, Case 2/74 (Reyners v. Belgian State), [1974] ECR p. 631.

25. Such plans were based on the General Programme of 1961 cited in n. 23a. On the retraction of these plans, see Commission Communication to the Council on the Consequences of the Judgment of the Court of Justice of 21 June 1974, Doc. SEC (74) 4024 final, reprinted in: Stein, E., Hay, P. and Waelbroeck, M., European Community Law and Institutions in Perspective (Indianapolis, 1976) p. 543 et seq.Google Scholar

26. It is known, for example, that the East-African conference operating out of Western Europe is probably in a dominant position in that trade.

27. On loyalty rebates, see Case 85/76 (Hoffman-La Roche v. Commission), [1979] ECR p. 461 et seq. at p. 540. This was in the framework of Art. 86, abuse of a dominant position, but it seems highly unlikely that the Court, under Art. 85, would take a friendlier approach to loyalty rebates if practised by cartels.

28. JO 1962, p. 2751, [1959–1962] OJ Spec. Ed., p. 291.

29. First Regulation implementing Art. 85 and 86 of the Treaty, JO 1962, p. 204, [1959–1962] OJ Spec. Ed., p. 87.

30. Case 167/73 (Commission v. French Republic), [1974] ECR p. 357 et seq. at p. 371, cf., Mestmäcker, E.J., Europäisches Wettbewerbsrecht (München, 1974) pp. 682–83.Google Scholar

31. These general rules certainly include the competition rules, see Case 167/73, cited in n. 30, and Case 156/77 (Commission v. Kingdom of Belgium), [1978] ECR p. 1881 et seq. at p. 1884–95. They probably also include the commercial policy rules.

32. Text of Art. 116 EEC Treaty insofar as relevant here: “From the end of the transitional period onwards [i.e., 1/1/1970] Member States shall in respect of all matters of particular interest to the common market, proceed within the framework of international organizations of an economic character only by common action. To this end, the Commission shall submit to the Council, which shall act by qualified majority, proposals concerning the scope and implementation of such common action.”

33. See Opinion of the UN Legal Adviser, UN Juridical Yearbook 1968 p. 201; id., 1970 p. 181.

34. Cf., Smit, H. and Herzog, P., The Law of the European Economic Community, A Commentary on the EEC Treaty (New York, 1978), 3–710Google Scholar and supp. to 3–711. Confirmed in Opinion 1/78, [1979] ECR p. 2871, points 50–51.

35. See 9th General Report 1975, point 375, Bull. EC 3–75, point 2264.

36. As was asserted above, in the final stages of the negotiations, resort would have to be made to an article on which a treaty-making power could be based.

37. This was the last date that the Convention was open for signature, see Art. 48(1) of the Convention.

38. See Bull. EC 6–75, point 2292

39. See UN doc. TD/223, p. 5. The German declaration, for example, reads as follows: “The Convention under the law of the Federal Republic of Germany requires the approval of the legislative bodies for ratification. At the appropriate time, the Federal Republic of Germany will implement the Convention in conformity with its obligations under the Treaty of Rome establishing the European Economic Community as well as under the OECD Code of Liberalisation of Current Invisible Operations.”

40. See Trb., Maandbericht Jan. 1980.

41. Cf., Werner, Morvay, “The Obligation of a State not to Frustrate the Object of a Treaty Prior to its Entry into Force”, 27 ZaöRV (1967) pp. 451–62Google Scholar and Joseph, Nisot. “L'article 18 de la Convention de Vienne sur le Droit des Traités”, RBDI (1970) pp. 498–503.Google Scholar

42. Cf., Morvay, loc.cit., at p. 458. The PCIJ ruled on the question of rights of the signatory state in the Case concerning certain German interests in Polish Upper Silesia, PCIJ Reports Series A No. 7, at pp. 29–31, and the ICJ did so in its Advisory Opinion on the Reservations to the Genocide Convention, ICJ Reports 1959, pp. 28–9. In both cases the Court seemed to attach some importance to signature as a generator of legal rights and duties, but it certainly stayed well within the bounds of the present Art. 18 of the Vienna Convention.

43. The explicit mention of such an obligation in Art. 19(5)(b) of the ILO Constitution would seem to exclude it as a general rule.

44. Moreover, their explicitly expressed intention at the ratification to respect the Treaty of Rome is not entirely without importance.

45. See Art. 164 of the EEC Treaty: “The Court of Justice shall ensure that in the interpretation and application of this Treaty the law is observed.”

46. See 9th General Report EC, point 375 and 10th General Report EC, point 451. In other cases, an action for Treaty infringement under Art. 169 on the basis of an infringement of Art. 5 alone may well be conceivable.

47. It is also possible to take the position that the infringement procedure should be started only after ratification has been completed, but it is felt that this would drive a strict interpretation of Art. 169 (“If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty …”) too far; irretrievable harm would have occurred by then. The course advocated in the text would not seem to be contrary to the spirit of what the Court said in the so-called Cacao Beans Case (Case 28/69, [1970] ECR p. 187, points 14–17), where it ruled that legislation which formally was contrary to Art. 95 of the EEC Treaty, but could not in fact lead to discrimination under that article, formed an unproven infringement. It has been concluded from this Case that potential infringements do not suffice for an Art. 169 action, but a government initiative to ratify a Convention can no longer be called a potential infringement in the sense implied by the Cacao Beans Case.

48. See the Draft Regulation presented by the Commission to the Council, OJ 1978, C 35/3.

49. See n. 17 supra.

50. Points 84–86 of the Judgment.

51. Points 88–89 of the Judgment.

52. Point 90 of the Judgment. Italics supplied.

53. OJ 1977, L 334/11.

54. This is due perhaps to the intention to make the Community a party to the Convention when the Code comes up for reyision, see Art. 7 in the original Commission draft, loc.cit., n. 53. This article was not retained by the Council, but the intention was formally expressed by the Council at the time it adopted Reg. 954/79.

55. Art. 1(1) of Reg. 954/79 and Art. 2(1) of Reg. 2829/77.

56. Art. 1(2) of Reg. 954/79 plus Annex and Art. 2(2) of Reg. 2829/77.

57. For a recent example see the Agreement concerning international trade in endangered species of flora and fauna, OJ 1980, C 243/16.

58. Such a review conference could be convened if one-third of the states entitled to become Contracting Parties requested it, see Art. 52(4) of the Code. This number was quasi-unobtainable without the help of at least some LDCs.

59. See point 56 of the Judgment cited in n. 17 supra.

60. Also because this course was taken with a view to obtaining fully-fledged EEC participation in the Code at a later date, though this no longer figured in the preamble to the Regulation. See n. 54 supra. Kovar, in his “La contribution de la Cour de Justice au développement de la condition internationale de la Communauté Euiopéenne”, 14 CDE (1978) p. 527 et seq. at p. 545Google Scholar, has suggested that the Court in its Kramer decision ([1976] ECR p. 1279) wanted to open the possibility for substitution of the Member States for the Community in concluding an international agreement, if the latter could not effectively exercise its competence.

61. The word “when” deserves special emphasis; it was chosen in order to avoid creating the impression that the Member States were ordered to ratify the Code. For some Member States this would have been unacceptable for constitutional reasons: sovereignty of Parliament in the UK for example.

62. See pp. 79–80.

63. Note the phrasing of the reservation: “such Member State”.

64. Case 167/73, see n. 30 supra.

65. Art. 7 (first sentence) EEC Treaty: “Within the scope of the application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.” A different approach from the one advocated in the text is to emphasize the italicized words and to interpret them as a reference to Art. 76 of the Treaty, which lays down a standstill rule in the field of transport (prohibition on making national provisions less favourable to carriers of the Member States than to national carriers) as long as no common policy on the basis of Art. 75 has been agreed upon. Thus, the non-discrimination principle would not even apply fully in the transport sector. It is highly doubtful, however, that Art. 76 can be regarded as a general rule of the Treaty in the sense of the Court's decision in Case 167/73 or that the general reference in Art. 7 would make it into such a general rule. Art. 7, therefore, would seem to apply to the shipping sector, but not so as to rob Art. 61(1) of all its meaning.

66. In the wake of the Court's decision in the Reyners Case (Case 2/74, [1974] ECR p. 631) the Commission informed the Member States of this opinion, see 9th General Report EC 1975, point 103.

67. See the examples given by Korthals Altes, A. in “Mededelingen van de Nederlandse Vereniging voor Intemationaal Recht” [Proceedings of the Netherlands International Law Association] No. 79 (Deventer, 1979) pp. 70–1Google Scholar. That the nationality of ships is not as simple a matter as implied in the text is clear from: Meijers, H., The Nationality of Ships (The Hague, 1967) passim.Google Scholar

68. Paragraph 3 of Art. 2 is phrased in a very general way, but a restrictive interpretation purely within the context of Art. 2 is also possible, see infra p. 96.

69. As well as the additional criterion of an effective and continuous link with the economy of a Member State, see n. 23a and accompanying text, supra.

70. See doc. Conseil 6845/79 Annex.

71. Art. 55 (second sentence): “The Council may, acting by a qualified majority on a proposal from the Commission, rule that the provisions of this Chapter shall not apply to certain activities.”

72. Art. 2 of the Code of Liberalisation of Invisible Transactions, corresponding to Art. 14 of the consolidated Code of Liberalisation, OECD.

73. Corresponding to Art. 22 of the consolidated Code.

74. C(57)71 of 2 April 1957.

75. Cf., Art. 6 of the OECD Convention.

76. OECD Doc. C(74)235, para. 78.

77. This minority opinion was based primarily on the consideration that there was always room for competition from outsiders to the conferences, that shipping companies could freely choose to operate as outsiders, and that shippers always had the possibility to choose between a conference line and an outsider: See paras. 80 et seq. of the document cited in n. 76.

77a. It is unlikely that all of them will do so, because some of them, e.g., the USA, will probably not sign nor ratify the Code.

78. See Art. 4(4) in the body of the Regulation.

79. See UN doc. TD/B/C.4/L 37, Annex III, p. 3.

80. See p. 75.

81. Such a reservation could not effectively change the system for the whole conference, as the latter includes lines from third countries.

82. It must be assumed that these are “national” lines within the meaning of the first reservation.

83. See Regulation, Art. 2(1), first sentence.

84. See Regulation, Art. 2(1), second sentence.

85. Art. 2 para, (d) of the Vienna Convention on the Law of Treaties.

86. This is in conformity with Art. 23(2) of the Code, which provides that disputes between shipping lines of the same flag, as well as those between organizations belonging to the same country, shall be settled within the framework of the national jurisdiction of that country.

87. Art. 6 of the proposal of the Commission to the Council (OJ 1978, C 35/3) reads, in part, as follows: “The ratification or accession of Member States to the Code of Conduct shall take place within one year after … the adoption of a Regulation by the Council concerning the application of the competition rules to agreements entered into under the Code of Conduct.”

88. Art. 85(3) of the EEC Treaty: “The provisions of paragraph 1 may, however be declared inapplicable in the case of:

- any agreement or category of agreements between undertakings;

- any decision or category of decisions by associations of undertakings;

- any concerted practice or category of concerted practices;

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.”

89. See Ninth Report on Competition Policy, points 14–15; Tenth Report on Competition Policy, points 7–8.

90. As to a possible conflict with Art. 86 (abuse of dominant position) it should be noted that this article does not contain a possibility of exemption comparable to para. 3 of Art. 85. Art. 87(2)(c), however, provides that the Council may adopt Regulations designed in particular “to define, if need be, in the various branches of the economy, the scope of the provisions of Articles 85 and 86.”

91. Conferences without pools are rare exceptions.

92. Unless a decision is taken to the contrary by all the lines members of the conference and parties to the present (i.e., existing) redistribution rules.

93. These factors are:

“(a) the volume of cargo carried by a conference and generated by the Member States whose trade is served by it;

(b) past performance of the shipping lines in the trade covered by the pool;

(c) the volume of cargo carried by the conference and shipped through the ports of the Member States;

(d) the needs of the shippers whose cargoes are carried by the conference.”

It is odd that reference should be made in this Community regulation to the volume of cargo generated by a Member State.

94. Although in principle it is certainly not impossible, it is in practice hard to conceive how Regulation 954/79 could ever function without a complementary competition regulation. In this sense, it is unfortunate that the link between the two, as proposed by the Commission, has been dropped in the Council.

95. This procedure was described in abridged form at pp. 76–7 supra. The simplified Community procedure is laid down in Annex II to the Regulation.

96. See Art. 23(4) of the Code.

97. Since they do not qualify as courts or tribunals of a Member State in the words of Art. 177, see Schermers, H.G., Judicial Protection in the European Community, 2nd ed. (Deventer, 1980) paras. 568–9Google Scholar. It can be argued, however, that the logic of Art. 177 requires that arbitral tribunals, at least, should be able to refer to the Court, see Smit, and Herzog, , The Law of the European Economic Community, A Commentary on the EEC Treaty, 5.462. In Vaassen (61/65), [1966] ECR p. 272Google Scholar, the Court regarded an arbitral tribunal which had a permanent character, whose members were appointed and whose rules laid down by the Minister responsible for Mines and which had to rule in accordance with the law, as a tribunal in the sense of Art. 177. It is doubtful if an arbitral tribunal under the Code would conform to such criteria. Presently a new case is pending before the Court which may throw additional light on this problem, case 102/81 announced in OJ 1981, C 125/5.

98. The notion of an agreement is habitually broadly interpreted under Art. 85, see Thiesing, J., Schröter, H. and Hochbaum, I.F., Les Ententes et les positions dominantes dans le droit de la CEE (Paris 1977) p. 71Google Scholar. If the parties were free to enter into the agreement, it does not make any difference to their responsibility under Art. 85, that they were no longer free to disregard any subsequent award or judgment under that agreement.

99. See pp. 76–7 supra.

100. Art. 39(2) of the Code, see p. 77 supra.

101. Art. 35(2) of the Code: “When the Code is silent upon any point, the conciliators shall apply the law which the parties agree at the time the conciliation proceedings commence or thereafter, but not later than the time of submission of evidence to the conciliators. Failing such agreement, the law which in the opinion of conciliators is most closely connected with the dispute shall be applicable.”

102. See n. 97.

103. Assuming that the Council were to grant the Commission powers to apply the competition rules to sea transport, which were more or less equivalent to those relating to land transport, Reg. 1017/68, OJ 1968–1 Spec. Ed., p. 302.

104. The word “remedies” used in Art. 25(3) of the Code would, in any case, seem to leave the way open for ex offlcio intervention by the Commission.

105. Art. 89 of the EEC Treaty, see also Art. 155 and Art. 87(2)(d).

106. Art. 87(2)(c) and (d) of the Treaty.

107. Unless the future competition Regulation included a provision on the lines of Art. 11(3) of Reg. 1017/68 which gives the complainant a right to a decision rejecting his complaint. The existence of such a system can trigger the procedure for failure to act under Art. 175 of the Treaty. Cf., also Art. 6 of Reg. 99/63, OJ 1963–1964 Spec. Ed., p. 47.

108. Art. 47(1) of the Code: “Each Contracting Party shall take such legislative or other measures as may be necessary to implement the present Conventions” (Italics supplied).

109. Statement by the spokesman for the EEC, UN doc. TD/B/C.4/L. 137, Annex III p. 1.

110. See Art. 19 of the Vienna Convention on the Law of Treaties.

111. See Averin, I., in Journal de la marine marchande, 29 May 1980, p. 1230, et seq.Google Scholar, and statement by the spokesman of Group D, UN doc. TD/B/C.4/L.137, Annex III, p. 1.

112. Averin, loc.cit, p. 1231.

113. Reply by the EEC Commissioner, Mr. Burke, to Mr. Averin's article, and the statement by the EEC spokesman, loc.cit., in n. 109.

114. Cf., the principle under (e) in the preamble to the Code.

115. See n. 111.

116. See p. 75 supra.

117. It should be noted that these are mainly CMEA countries.

118. Italics supplied. This could be interpreted to mean that such positive discrimination is not intended to be in favour of LDC lines participating in conferences serving the trade of third countries, but that seems unduly restrictive.

119. UN doc. TD/B/C.4(IX) Misc. 3, pp. 34–5.

120. A Declaration on the Prohibition of Military, Political or Economic Coercion in the Conclusion of Treaties was annexed to the Vienna Convention. It “solemnly condemns the threat or use of pressure in any form, whether military, political or economic, by any State in order to coerce another State to perform any act relating to the conclusion of a treaty in violation of the principles of sovereign equality of States and freedom of consent.” But this declaration is not part of the lex lata. In another context, the present author has tried to show that economic coercion is contrary to international law only if it amounts to intervention, and in particular if it leads to abridgement of every state's “inalienable right to choose its political, economic, social and cultural systems” (UN Declaration on Principles, GA Res. 2625 (XXV), Principle 3, para 4). This inalienable right of Czechoslovakia is certainly not affected by the Community reservation. Cf., Kuyper, P.J. et al. , “Enkele juridische aspecten van de Arabische boycot van Israel” [Some legal aspects of the Arab boycott of Israel], NJB (1978) pp. 456–64, at pp. 457–8.Google Scholar

121. De lege lata: Convention of Barcelona of 20 April 1921 and the UN Convention on Transit Trade of Land-locked countries, New York 8 July 1965, 4 ILM (1965), p. 957 et seq. De lege ferenda: Draft Convention on the Law of the Sea (Informal Text), Arts. 124–132, 19 ILM (1980) p. 1129.

122. It is for this reason that the spokesman for Group D in the UNCTAD Committee on Shipping called upon the UNCTAD Secretariat to decide on this question, see the statement cited in n. 111. The UNCTAD Secretariat has taken the position that it is not competent to do so, see loc.cit. n. 119, p. 34.

123. See Art. 65 of the Statute of the Court and Art. 96(2) of the UN Charter. No such authorization appears in the ICJ Yearbook 1977–1978, p. 42 et seq.

124. See also Bowett, D.W., “Reservations to Non-Restricted Multilateral Treaties”, 48 BYIL (1976-1977), p. 167 et seq., at pp. 175–87.Google Scholar

125. Bowett's theory of the separability of the clauses to which impermissible reservations relate would not seem to be relevant in the case of alleged impermissibility for reasons concerning the object and purpose of the treaty concerned, see Bowett, loc.cit., at p. 184.

126. Art. 20(4)(b) of the Vienna Convention.

127. It must be admitted that there is thus a certain risk of circumvention of Art. 20(4)(b) of the Vienna Convention if states make such allegations lightly when objecting to a reservation.

128. Ait. 21(3) of the Vienna Convention.

129. The limits for a group exemption can be found in Art. 85(3) cited in n. 88; the limits of Art. 87(2)(c) are much more difficult to indicate. It is clear, however, that some equilibrium must be found between the hard core of Arts. 85 and 86 and the situation in which the full application of these articles to the conference system could lead to a breakdown of sea-transport to the detriment of the consumer (i.e., shippers).

130. It may be quite some time before the intentions behind Reg. 954/79 have been realized, and the EEC has become a party.