1. 

Two cases have been referred to the Court for a preliminary ruling relating to the exportation within the Community of foreign currency intended to pay for services in connection with tourism, health, education and business travel. In essence the issue to be decided is whether and how those matters are governed by Community law. The Court is therefore called upon to interpret the provisions of the EEC Treaty regarding liberalization of current payments for seivices which involve travel by the recipient of the service from the country in which he resides to the country in which the service is provided.

The questions on which the Court must give a ruling are also of particular importance because of their novelty. There are no exact precedents, apart from a number of general statements contained in judgments of 23 November 1978 (Case 7/78 R. v Thompson and Others [1978] ECR 2247) and 11 November 1981 (Case 203/80 Casati [1981] ECR 2595). Moreover, the lastmentioned case deals only with transfers of currency for which no consideration is given, so that at the end of the transitional period they would not be liberalized and the Member States would be empowered to limit and control them.

I shall now summarize the facts of Case 286/82. On 20 August 1979 the Ufficio Italiano dei Cambi [Italian Exchange Office] discovered that in 1975 Mrs Graziana Luisi had used foreign currency abroad of an exchange value of about LIT 25000000. The Ministro del Tesoro [Minister for the Treasury] charged her with an infringement of the Ministerial Decree of 2 May 1974 (Gazzetta Ufficiale della Repubblica Italiana No 114 of 3. 5. 1974) and fined her more than LIT 24000000. Mrs Luisi then appealed to the Tribunale di Genova [District Court, Genoa] for the quashing of that decision on the ground that the legislation on which the fine was based was inapplicable since it was contrary to Articles 3 (c), 5, 67, 68, 71 and 106 (3) of the EEC Treaty and to the two Council directives implementing Article 67 (11 May 1960 and 18 December 1962).

By a further order of 11 January 1982, based on a new finding by the Ufficio Italiana dei Cambi (12 February 1980), the Ministro del Tesoro imposed a further fine af around LIT 8000000 on Mrs Luisi for using abroad means of payment of an exchange value of around LIT 8500000. This gave rise to a second appeal by Mrs Luisi on the same grounds and before the same court. The two cases were joined. Considering that a preliminary ruling on the interpretation of Articles 67, 69 and 106 (3) of the Treaty and of the two aforesaid directives was required, the court stayed the proceedings by order of 12 July 1982 and submitted to the Court of Justice the questions which I shall set out at the same time as those in the Carbone case.

I now move on to the Carbone case (26/83). On 6 September 1979 the Ufficio Italiano dei Cambi discovered that during 1975 Mr Giuseppe Carbone had used American dollars, Swiss francs and German marks abroad of an exchange value of around LIT 14000000. On the basis of that finding the Ministro del Tesoro, by decision of the 28 October 1981, fined him around LIT 13000000. Like Mrs Luisi, Mr Carbone appealed to the Tribunale di Genova, claiming that he had used the foreign currency for a visit to Germany as a tourist and maintaining that the Ministerial Decree of 2 May 1974 was inapplicable since it was contrary to Articles 3 (c), 5, 67, 68, 71 and 106 (3) of the EEC Treaty. He too therefore requested that the decision fining him should be quashed. Thè Tribunale stayed the proceedings and referred to the Court, under Article 177 of the EEC Treaty, the questions which I shall now summarize together with those in the Luisi case.

By order of 8 June 1983 this Court joined the two cases for the purpose of the oral procedure and judgment, in view of the fact that their subject-matter is closely connected.

2. 

For a better understanding of the problems raised by the national court it would be helpful to look at the Italian rules on the exportation of foreign currency by persons resident in Italy. The principal source of such rules is Decree Law No 476 of 6 June 1956 (Gazzetta Ufficiale Nr 137 of 6. 6. 1956), which was converted into Law No 786 of 25 July 1956 (Gazzetta Ufficiale No 192 of 2. 8. 1956). I shall consider the salient points.

The last paragraph of Article 1 provides that “foreign currency” is to be taken to mean “foreign State and bank notes constituting legal tender and credit instruments constituting legal tender outside the territory of the Republic which are used as a means of payment between residents and non-residents”. Article 10 (a) provides that the Bank of Italy and credit establishments approved as agencies thereof may issue foreign bank notes to residents going abroad “for the purposes of tourism, business, education or medical treatment, subject to compliance ... with the provisions laid down by the Ministro per il Commercio con l'Estero [Minister for Foreign Trade]”. According to Article 13, the same Minister may allow the Bank of Italy and the said agencies to authorize the sale of the foreign currency to be used on travel for such purposes (subparagraph (b) of the first paragraph). The Minister availed himself of that power and issued the Decree of 26 October 1967 (Gazzetta Ufficiale No 280 of 10. 10. 1967), fixing as LIT 1000000 per trip the maximum exchange value of the currency which might be exported for travel for the purposes of tourism, business, education and medical treatment.

The conditions were made stricter by the Ministerial Decree of 2 May 1974. It provided that the export of foreign currency “by residents for the purposes of tourism, business, education and medical treatment” was allowed “up to a maximum exchange value of LIT 500000 in each calendar year” (I emphasize: calendar year, not trip); and this requirement was reiterated an a new Ministerial Decree of 22 December 1975 (Gazzetta Ufficiale of 31. 12. 1975, p. 343: Article 13 (a)). Finally, the export of foreign currency in excess of that limit constituted (and still constitutes) an offence punishable by an administrative fine of up to five times the value of the foreign currency exported (Article 15 of Law No 786 of 1956, already cited). By virtue of Article 1 of Decree Law No 31 of 4 March 1976, which became Law No 159 of 30 April 1976, the more serious offences became subject to penalties under criminal law.

Since then, the exchange regulations have remained almost unchanged. In step with the depreciation of the lira, the maximum amount which may be exported each year has been increased: in 1981 to LIT 1100000 (Ministerial Decree of 12. 3. 1981, Gazzetta Ufficiale No 82 of 24. 3. 1981) and in 1983 to LIT 1600000 (Ufficio Italiano dei Cambi, Circular No 1/11 Of 9. 5. 1983, Gazzetta Ufficiale Nr 137 of 20. 5. 1983). It should however be added that, by virtue of the Ministerial Decree of 12 March 1981, the Ufficio Italiano dei Cambi may in individual cases authorize this maximum figure to be exceeded for business trips and that, for trips for education and medical treatment, it may do so without limitation (Paragraphs 49/a and 49/b of Annex A to the said Decree).

3. 

In its observations the Italian Government first of all questions whether the dispute has any ramifications affecting the Community and therefore doubts whether this Court has jurisdiction under Article 177. In both the Luisi and Carbone cases — it says — although the facts brought to the attention of the national court show that two persons resident in Italy acquired a certain amount of foreign currency they do not show for certain that it was actually used for travel abroad rather than being retained or illegally exported through third parties. Moreover, even if it were admitted that a trip was made, the route remains uncertain; that is to say, it cannot be asserted that the trip took place within the territory of the Community and not partly or wholly in nonmember countries. This view is supported by the fact that some of the currency purchased consisted of Swiss francs and United States dollars.

That objection is unfounded. As is well known, this Court only lacks jurisdiction if it is shown that the main proceedings are fictitious in character, in other words, that there is no real conflict of interests between the parties (cf. judgment of 11. 3. 1980 in Case 104/79 Foglia v Novello [1980] ECR 745). In the present case, Mrs Luisi and Mr Carbone have asked the Tribunale di Genova to determine whether any export of foreign currency took place, whether as a result there was any infringement of Italian law and whether that law is compatible with Community law. It is not open to this Court to make further findings of fact without encroaching upon the exclusive jurisdiction of the national court. But the context of the matters about which the plaintiffs and the defendant are in dispute is a sufficient basis for concluding with reasonable certainty that the conflict between them is genuine.

4. 

The case therefore concerns individuals who went from their country of residence to another Community country for the purpose of tourism, education, medical treatment or business and who, in order to meet the costs of travel and accommodation at their destination, exported foreign currency. The national court asks us to classify those exports of currency from the point of view of Community law and specifies the possible alternatives: the exports in question might be regarded as movements of capital and so fall within the scope of Articles 67 to 73 of the EEC Treaty, or as payments for the provisions of services, in which case they would be governed by Articles 59 to 66 of the Treaty. The difference between the two alternatives is great. At the end of the transitional period movements of capital were not entirely and automatically liberalized; however, the provision of services was. The rules relating to the latter are therefore directly applicable and may be relied upon by individuals.

All this clearly emerges from previous decisions of the Court and from Community legislation. Article 67 (1) — the Court stated in the Casati judgment cited earlier — differs from the provisions on the three freedoms already put into effect because there is an obligation to liberalize capital movements only “to the extent necessary to ensure the proper functioning of the common market”. The scope of that restriction, the Court added, varies in time and depends on other factors: namely the needs of the market and the risks or advantages accruing to it as a result of the liberalization, account being taken of the level of integration attained in the areas in which capital movements are particularly significant.

In the circumstances, therefore, the only restrictions to have been abolished are those referred to in the Council directives of 11 May 1960 (Official Journal, English Special Edition 1959-1962, p. 49) and 18. 12. 1962 (Official Journal, English Special Edition 1963-1964, p. 5): they do not include those relating to imports and exports of currency not intended for private purposes (such as investments, the granting of loans and guarantees, the repayment of loans granted in respect of commercial transactions and the provision of services, transactions involving securities and the performance of certain contracts). This is laid down by Article 4 of the directive of 11 May 1960 and by List D in an annex thereto under the heading “Physical Import and Export of Financial Assets”, which — as indicated in Section XIII of the other annex to that directive — includes movements of “means of payments of all kinds”.

On the other hand, as regards Articles 59 to 66, it is well established that, whether or not implemented, they have direct effect and are therefore capable of conferring upon individuals rights which may be relied upon in legal proceedings. On dozens of occasions the Court has held that the restrictions imposed by the Treaty upon the free movement of goods, persons and services became completely inoperative at the end of the transitional period; and that is the case even where the Treaty prescribes that appropriate directives are to provide for the abolition of such restrictions during that period. As regards persons and services it is sufficient to cite the judgments of 21 June 1974 in Case 2/74 (Reyners [1974] ECR 631), 3 December 1974 in Case 33/74 (Binsbergen [1974] ECR 1299), 12 December 1974 in Case 36/74 (Walrave [1974] ECR 1405), 8 April 1976 in Case 48/75 (Royer [1976] ECR 497), 14 July 1976 in Case 13/76 (Dona [1976] ECR 1333), 28 April 1977 in Case 71/76 (Thieffry [1977] ECR 765) and 22 September 1983 in Case 271/82 (Auer [19S3] ECR 2727).

5. 

In the opinion of the Italian and French Governments, travel by any person from one Community country to another for the purpose of tourism, education, medical treatment or business, where the person concerned takes with him foreign currency, entails the physical export of means of payment; that is to say, an operation is carried out which has not yet been liberalized and may therefore be controlled, limited or prohibited by any Member State. There is practically no restriction on State intervention, if it is true that in this area the Member States are not bound by the “standstill” provisions either. In fact, the first paragraph of Article 71 provides that “Member States shall endeavour to avoid introducing ... any new ... restrictions ...”. Thus it uses a term which is much less explicit than those appearing in the corresponding rules regarding the movement of goods, persons and services. It may be deduced from that, as the Court noted in the Casati judgment, that the provision “does not impose on the Member States an unconditional obligation capable of being relied upon by individuals” (paragraph 19 of the decision).

The Italian Government also observes that it may be inferred from Articles 59 and 60 of the Treaty that a “service” is provided only where there is “a specific relationship ... of which the essential components are identified, such as the persons concerned, and the nature and duration of what is provided”. In short, the facility provided must be specified, which means at least requested and offered by persons who are identifiable and clearly established in different States.” A facility offered indiscriminately in one State ... to users in general”, of which they may avail themselves only if they go to the place where it is provided, does not constitute a service (cf. observations submitted on 28 January 1983 in Case 286/82, pp. 17 and 18); thus medical, educational and tourist facilities (for example, hotels and restaurants), which in all or most cases are not intended for specific customers, do not constitute services.

Mr Advocate General Trabucchi expressed very similar views in his opinion in Case 118/75 (Watson and Belmann [1976] ECR 1201). He said that Article 59 provides for freedom of movement in respect of specific categories of traders; it is concerned therefore with the providers of services and not with the recipients thereof. However, I disagree with this approach: various arguments convince me that the rules on the movement of services apply beyond the limits within which that view seeks to confine them.

Let us begin with tourism. Since tourism is characterized by the movement of recipients of services, that is to say tourists, it is obvious, according to the Italian Government and Mr Trabucchi, that the facilities provided in this sector fall outside the sphere of the free movement of services. But what about the other side of the coin? A State which is free to limit or prohibit the export of foreign currency by its own residents is also free to deny them tourist services available in other member countries and thereby adversely to affect the business of whoever offers such services. I wonder whether such a result, in so far as it is pursued by others, is conducive to Italian interests; and in particular I doubt whether it stands up to detailed criticism. Among the values embodied in the Treaty, the free movement of services stands in the forefront. To remove from it an extremely important economic sector such as tourism would be to curtail its scope drastically, thus depriving it of that preeminent position and denying it the importance conferred upon it for the process of integration by Article 3.

And the same may be said of health or educational facilities. To ask that the person moving from one country to another should be the doctor, who relies upon sophisticated instruments close at hand or operates only in a clinic where he has the necessary equipment and expert helpers, or to ask that it should be the school which goes to the place where the pupils reside, is unreasonable; but that is precisely what is demanded by the proponents of the argument which I criticize in order for those activities to be regarded as liberalized and for the scope of Articles 59 to 66 to avoid further truncation. On the other hand, the position is less certain with regard to business travel, which, as the Commission observes, constitutes a heterogeneous category. At most, it may be said that certain travellers, such as journalists, lawyers and so forth, are certainly providers of services and may rely upon the provisions of the Treaty.

6. 

But the argument which I have expounded — namely, that the Italian Government is denying freedom of movement for such economically or socially crucial services as tourism, health care and education — may be reinforced by others, based on the provisions implementing Articles 59 to 66.

In the first place, I have in mind the General Programme for the Abolition of Restrictions on the Freedom to Provide Services which was adopted by the Council on 18 December 1961 (Official Journal, English Special Edition, Second Series IX, p. 3). The General Programme cites tourism among the economic activities in respect of which there is to be removed “any prohibition of, or hindrance to, payments for services, where the provisions of such services ... is limited only by restrictions in respect of the payments therefor” (Section D of Title III). But that is not all. It is stated in the same programme that the restrictions to be abolished are of two kinds: those which “affect the person providing the services directly” and those which affect him “through the recipient of the service or through the service itself” (Title III). Finally, the programme touches upon the specific matter at issue in these cases. Thus, in Section D of Title III it is stated that “Member States shall retain the right to verify the nature and genuineness of transfers of funds and of payments” and to take all necessary measures in order to prevent contravention of their laws “as regards the issue of foreign currency to tourists”; and Title V provides as follows: “The effective abolition of restrictions in respect of freedom to provide services shall take place according to the. following timetable: -A: ... B. Transfer of Funds, Payment — The restrictions specified in Title III (C) and (D) shall be abolished before the end of the first stage. However, limits on foreign currency allowances for tourists may be maintained in force during the transitional period, but they are to be progressively raised from the end of the first stage.”

After removal of “the excessive and the vain”, as Dante would have said, those provisions have a twofold message:

Moreover, that fact that that interpretation is correct is confirmed a contrario by Council Directive 63/340 of 31 May 1963. Article 3 thereof provides that the abolition of prohibitions or obstacles relating to services is to “apply to the services specified in Articles 59 and 60 of the Treaty”; it is not to apply on the other hand “to foreign exchange allowances for tourists”. What do these words mean? Obviously, that such allowances (and therefore the export of foreign currency within the Community) were regarded by the Council as falling within the scope of the freedom to provide services; otherwise it would not have been necessary to exclude them from the scope of the restrictions destined to be abolished before the end of the transitional period. In short, the Council recognized that they would cease to exist at the end of that period.

Two further Council directives follow the same line: Directive 65/221 of 25 February 1964 on the coordination of special measures concerning the movement and residence of foreign nationals which are justified on grounds of public policy, public security or public health (Official Journal, English Special Edition 1963-1964, p. 117) and Directive No 73/148 of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services (Official Journal 1973, L 172, p. 14). Both oblige Member States to remove the limits imposed upon the movement and residence of “nationals of Member States wishing to go to another Member State” as “recipients of services”, thereby demonstrating once again that Articles 59 to 66 are concerned with the recipients no less than with the providers of services.

The tourist therefore appears to be a person for whom “freedom of movement is safeguarded by provisions of the Treaty which [are now] directly applicable”, Those are the words of Mr Advocate General Trabucchi, who, as we have already seen, refuses to accord to those provisions the scope deriving from the secondary legislation to which I have just referred. I do not think that his view stands up to the arguments so far put forward. If any doubt remains, however, it should be finally dispelled by a piece of primary legislation, namely the Act of Accession of Greece. Article 54 thereof allows, on certain conditions, until 31 December 1985 the maintenance of restrictions on transfers of foreign exchange by tourists; and, as the Commission points out, such a derogation has no meaning unless it is accepted that such transfers have actually been liberalized as between Member States.

7. 

We have thus ascertained that tourist, medical and educational services fall within the scope of Articles 59 to 66 even where, as is the rule, they require the recipient of the service to travel from his country of residence to the country in which the service is provided. Since restrictions on the freedom to provide services should have been abolished at the end of the transitional period, it must necessarily follow — because it is both a result of such travel and a condition for its taking place — that there is freedom of movement for transfers of foreign currency intended to pay for the services in question. Of this freedom too, there are many indications in a number of provisions. It is appropriate to recall at this stage that it was implemented by the first paragraph of Article 106 (1) of the Treaty.

According to that provisions, “Each Member State undertakes to authorize, in the currency of the Member State in which the creditor or the beneficiary resides, any payments connected with the movement of goods, services or capital ... to the extent that the movement of goods, services, capital and persons between Member States has been liberalized ...”. Mr Advocate General Capotorti was therefore quite right to attribute to it an “instrumental” role in the context of Titles I and III (opinion in Casati, already cited); and no less correctly the Court acknowledged its leading role in attaining the “free movement of goods, services or capital which is of fundamental importance for the attainment of the common market” (judgment in Thompson already cited, paragraph 22).

The free movement of capital is, as we know, subject to restrictions; on the other hand, the freedom to provide services is not so restricted, otherwise than for the reasons referred to in Article 66. It follows that when that freedom was fully implemented the associated freedom to transfer currency for the purpose of paying for the services in question (and for all other services) came into being ipso jure; in other words, the first paragraph of Article 106 (1) automatically created it.

8. 

In Questions 2 and 3, however, the national court advances the theory that exports of foreign currency for the purposes of tourism, education and medical treatment are governed by Article 106 (3). Since I have indicated that such exports are not covered by paragraph (1), I could ignore that conjecture, which, moreover, presupposes a negative reply to the first question; I shall nevertheless deal with it because an Advocate General's opinion is expected to be complete. The Tribunale di Genova refers to both the first and the second subparagraphs of Article 106 (3). As regards the first, it wishes to know whether the residents of one Member State going to another Member State for the purpose of tourism, medical treatment, education or business are entitled to export foreign currency by virtue of the “standstill” clause contained in the said subparagraph and by reason of the fact that, according to Annex III to the Treaty, such transfers constitute invisible transactions.

The provision reads as follows: “Member States undertake not to introduce between themselves any new restrictions on transfers connected with the invisible transactions listed in Annex III to this Treaty.” The transfers are of three kinds: those connected with the movement of goods, services and persons, others relating to the movement of capital, and still others which cannot be classified within those categories (such as representation expenses, consular receipts and maintenance payments). Whilst the first category must, in view of what I have already said, be regarded as wholly liberalized and the second has been liberalized within the limits imposed by the directives of 11 May 1960 and 18 December 1962, the third category can benefit only from the obligation progressively to remove restrictions which is laid down in the second subparagraph of Article 106 (3).

The scope of the provision having been thus defined, the question then arises as to the significance of the fact that the first type of transfer includes those relating to “business travel”, “tourism” and “travel for private reasons (health)”. The answer is obvious: it is of no significance with respect to the present cases. Those transfers are mentioned only to give effect to the “standstill” obligation regarding payments in foreign currency; upon expiry of the transitional period and upon liberalization of the said payments by virtue of the first subparagraph of Article 106 (1), the reference to them lost all significance since the purpose of that obligation had ceased to exist.

9. 

I shall now consider the second subparagraph of Article 106 (3). The Tribunale di Genova asks whether it may be interpreted as meaning that the export of foreign currency to cover expenses for the purposes of tourism, medical treatment and so forth, is included, as a physical transfer of means of payment, among the movements of capital which are not liberalized, with the result that Member States may lawfully limit or prohibit it.

I have already said that transfers of foreign currency intended to cover such expenses cannot be assimilated to movements of capital. In any case, it does not seem to me that the provision to which the national court refers lends itself to the interpretation which that court puts forward. That provision states that: “The progressive abolition of existing restrictions shall be effected in accordance with the provisions of Articles 63 to 65, in so far as such abolition is not governed by the provisions contained in paragraphs (1) and (2) or by the chapter relating to the free movement of capital.” The use, of the words “in so far as” and of the following words proves that the field of application of the provision is residual and extremely narrow: because they do not relate to transactions falling within the scope of the free movement of goods, services and capital, the transfers affected by the restrictions which the provision is intended to abolish must necessarily be classified within the third group of invisible transactions (representation expenses and so forth) to which — in that very sense — I referred earlier. But, if that is the position, it is not evident what light the second subparagraph can throw upon the liberalization of payments which relate to the provision of services.

10. 

Now that it has been established that transfers of foreign currency effected in order to pay for the services in question are liberalized, it remains to be decided what controls Member States are entitled to apply to them. Although the three questions are silent on that point, there is in fact a need for controls. The Italian Government has properly placed much emphasis on the risk that a tourist or patient or student might use foreign currency for purposes other than those for which it was obtained; that is to say, they might use it for the establishment of reserves abroad, thus effecting movements of capital in the strict sense. And I have said several times that such movements remain subject to restrictions. I would add here that there are logical reasons for this. The relevant provisions of the Treaty (I now cite the opinion of Mr Advocate General Capotorti in Casati)“may not be interpreted independently of those on economic policy”; and because Article 104 makes the Member States responsible for maintaining the equilibrium of their balance of payments, it would be incongruous to compel them to liberalize transfers unconditionally without their receiving anything in return.

Moreover, all the foregoing is recognized, particularly with regard to tourist expenses, in secondary Community law. I have already referred to Title III of the General Programme of 18 December 1961 in which it is stated that “Member States shall retain the right to verify the nature and genuineness of transfers of funds and of payments ... in order to prevent contravention of their laws and regulations, in particular as regards the issue of foreign currency to tourists”. It will be said that those words were written in the middle of the transitional period. True. But since the movement of capital was liberalized only partially after the end of that period it seems to me to be obvious that they retain their full force.

In short, controls are admissible; but of what kind, and how far-reaching? In the first place, I believe, they must take clue account of the different risks of fraud which attach to transfers of currency for tourist purposes or business travel, on the one hand, and to those for medical treatment and education on the other. In the case of tourism, the activity which best lends itself to concealing transfers of capital, a practical solution, being effective and at the same time not excessively rigid, might be based on the amount of foreign currency which those concerned wish to transfer. For example, three bands might be fixed. Within the lowest band (sums lower than X) foreign currency could be purchased and exported without any check. In the intermediate band (sums between X and Y) the expenses for the purpose of which the currency was acquired would have to be proved in advance, at least in general terms. In the highest band (sums over Y), it would be necessary in addition to provide documentary evidence ex post facto of the payments made.

Naturally, Member States would be entitled to impose penalties on residents who evaded such measures; but, as the Court has so often held, such penalties would have to be proportionate to their purpose (cf. judgments of 7. 7. 1976 in Case 118/75 Watson and Belmann [1976] ECR 1185; 15. 12. 1976 in Case 41/76 Donckerwolcke [1976] ECR 1921; 14. 7. 1977 in Case 8/77 Sagulo [1977] ECR 1495; and 30. 11. 1977 in Case 52/77 Cayrol [1977] ECR 2261).

11. 

In view of all the foregoing considerations, I suggest that, the-Court reply as follows to the questions submitted by the Tribunale di-'Genova byorders of 12 July and 22 November 1982 in the proceedings between Graziana Luisi and the Ministero del Tesoro and between Giuseppe Carbone and the same Ministry: