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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> HP Bulmer Ltd & Anor v. J. Bollinger SA & Ors [1974] EWCA Civ 14 (22 May 1974)
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Cite as: [1974] 2 All ER 1226, [1974] EWCA Civ 14, [1974] 3 WLR 202, [1974] Ch 401

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JISCBAILII_CASE_CONSTITUTIONAL JISCBAILII_CASE_ENGLISH_LEGAL_SYSTEM

Neutral Citation Number: [1974] EWCA Civ 14
Case No.:

IN THE SUPREME COURT OF JUDICATURE.
COURT OF APPEAL.
Appeal by defendants from judgment of Mr. Justice Whitford
on 27th November, 11th and 14th December 1973.

Royal Courts of Justice.
22nd May 1974.

B e f o r e :

THE MASTER OF THE ROLLS (Lord Denning),
LORD JUSTICE STAMP
and
LORD JUSTICE STEPHENSON.

____________________

Between:
H.P. BULMER LIMITED and SHOWERINGS LIMITED
Plaintiffs Respondents
and

J. BOLLINGER S.A. and CHAMPAGNE LANSON pere et fils
(sued on behalf of themselves and of all persons who produce wine In the District of France known as the Champagne District and ship such wine to England and Wales).





Appellants Defendants

____________________

(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters, Ltd., Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C. 2.)

____________________

Mr. A.C. SPARROW, Q.C., and Mr. JOHN BURRELL, Q.C. (instructed by Messrs. Monier-Williams and Keeling) appeared on behalf of the appellant defendants.
Mr. DAVID HIRST, Q.C., Mr. WILLIAM ALDOUS and Mr. S. THORLEY (instructed by Messrs. Ashurst, Morris, Crisp & Co.) appeared on behalf of the Respondent Plaintiffs.

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    THE MASTER OF THE ROLLS: In France the name Champagne is well protected by law. It denotes a sparkling wine produced in a well favoured district of France, called the Champagne district. The vineyards are about a hundred miles east of Paris, around Rheims and Epernay. The wine has a high reputation all the world over.

    In England, too, the name Champagne is well protected by law when used for wine. As far back as 1956 some intruders brought into England a somewhat similar wine. It had been produced in the Costa Brava district of Spain. They marketed it under the name "Spanish Champagne". The French growers and shippers brought an action to stop it. They succeeded. Mr. Justice Danckwerts held that the French growers had a goodwill connected with the word Champagne: and that the Spanish intruders had been guilty of dishonest trading, see Bollinger v. Costa Brava (1960) Ch 262, 1961 1 W.L.R. 271. That case opened up a new field of English law. It gave a remedy for unfair competition. It was applied in the Sherry Case (1969) R.P.C. 1, when Mr. Justice Cross said at page 23:

    "The decision went beyond the well trodden paths of passing-off into the area of 'unfair trading' or 'unfair competition'".

    It was followed recently by Mr. Justice Foster in the Scotch Whisky Case (1970) 1 W.L.R. 917.

    That case in 1960 concerned wine - wine made from grapes -for which the French are so famous. Now we are concerned with cider and perry. Cider from apples. Perry from pears. We English do know something about these. At any rate, those who come up from Somerset or Herefordshire.

    For many years now some producers of cider in England have been marketing some of their drinks as "champagne cider" and "champagne perry". When it started the French producers of champagne took no steps to stop it. It went on for a long time. But in 1970 the French producers brought an action against an English firm, claiming an injunction. They sought to stop the use of the name Champagne on these drinks. To counter this, two of the biggest producers of cider in England on 8th October, 1970 brought an action against the French producers. They claimed declarations that they were entitled to use the expression "Champagne cider" and "Champagne perry". They said that they had used those expressions for 70 or 80 years in England; that many millions of bottles had been marketed under those descriptions; and that the Government of the United Kingdom had recognised it in the various regulations. They said further that the French producers had acquiesced in the use and were estopped from complaining.

    In answer the French producers of Champagne claimed that the use of the word "Champagne" in connection with any beverage other than Champagne was likely to lead to the belief that such beverage was or resembled Champagne, or was a substitute for it, or was in some way connected with Champagne. They claimed an injunction to stop the English producers from using the word "Champagne" in connection with any beverage not being a wine produced in the Champagne district of France.

  1. AFTER ENGLAND JOINED THE COMMON MARKET
  2. Thus far it was a straightforward action for passing-off. It was to be determined by well-known principles of English law. But on 1st January, 1973, England joined the Common Market. On 26th March, 1973, the French producers amended their pleading so as to add these claims:-

    "9A Following the adhesion of the United Kingdom to the European Economic Community the use of the word 'Champagne' in connection with any beverage other than Champagne will contravene European Community Law."

    They relied on Regulation 816/76/Article 30 and Regulation 817/70 Article 628/12 and 13.

    By a further amendment they counterclaimed for:

    "A declaration that the use by the English producers of the expression 'Champagne Cider' and "Champagne Perry' in relation to beverages other than wine produced in the Champagne District of France is contrary to European Community Law."

  3. REFERENCE TO LUXEMBOURG
  4. Now the French producers ask that two points of European Community Law should be referred to the European Court at Luxembourg. Shortened they are:-

    (A) Whether.....the use of the word "Champagne" in connection with any beverage other than Champagne is a contravention of....the provisions of European Community Law.
    (B) Whether.....a national court of a member state should.... refer to the Court of Justice of the European Community such a question as has been raised herein.

    The Judge at first instance refused to refer either question at this stage. He said that he would try the whole case out before he came to a decision on it.

    The French producers appeal to this Court.

  5. THE REGULATIONS
  6. The Community Regulations relied upon by the French producers are these:

    Regulation 816/70 Article 30

    "Member States may subject the use of a geographical mark for describing a table wine to this condition, in particular, that that wine is obtained wholly from certain wine-producing areas expressly designated and that it comes exclusive from the territory marked out in an exact manner, whose name it bears."

    "Wine" means "the product obtained exclusively from whole or partial alcoholic fermentation of fresh grapes, whether or not crushed, and of grape must."

    Regulation 817/70 Article 12

    The Community reference q.w.p.s.r. (quality wine produced in a specific region) is a traditional specific reference, used in member States to describe certain wines, may only be used for wines complying with the provisions of this regulation and with those adopted in application of this Regulation....

    The specific traditional reference for France is:

    "Appelation d'origine controlee. Champagne et vin delimite de quality superieure."

    Article 11

    "Each Member State shall ensure the inspection and protection of q.w.p.s.r. marketed in accordance with this Regulation."

    The French producers claim that, under those regulations, the name Champagne is their own special property. It must not be applied to any wine which is not produced in the Champagne District of France. So much the English producers concede. But the French producers go further. They say that the name Champagne must not be applied to any beverage other than their Champagne. It must not, therefore, be applied to cider or perry, even though they are not wines at all. The English producers deny this. They say that the Regulations apply only to wines - the product of grapes - and not to cider or perry - the product of apples and pears.

    This is obviously a point of the first importance to the French wine trade and to the English cider trade. It depends no doubt on the true interpretation of the Regulations. It seems that three points of principle arise:

    First, By which Court should these Regulations be interpreted? By the European Court at Luxembourg? or by the national Courts of England?

    Second. At what stage should the task of interpretation be done? Should it be done now before the case is tried out in the English Court? or at a later stage after the other issues have been determined?

    Third. In any case, whichever be the Court to interpret them, what are the principles to be applied in the interpretation of the Regulations? If we were to interpret the Regulations as if they were an English statute, I should think they would apply only to wines, not to cider or perry. But, if other principles were to be applied, the result might be different. That is indeed what the French producers say. They contend that the European Court can fill in any gaps in the Regulations. So that the words can be extended so as to forbid the use of the word "Champagne" on cider or perry. That is, no doubt, the reason why the French producers want the point to be referred here and now to the European Court.

    To answer these questions, we must consider several points of fundamental importance.

    To make the discussion easier to understand, I will speak only of the interpretation of "the Treaty", but this must be regarded as including the regulations and directions under it. I will make reference to the English Courts because I am specially concerned with them: but this must be regarded as including the national Courts of any Member State.

  7. THE IMPACT OF THE TREATY ON ENGLISH LAW
  8. The first and fundamental point is that the Treaty concerns only those matters which have a European element, that is to say, matters which affect people or property in the nine countries of the Common Market besides ourselves. The Treaty does not touch any of the matters which concern solely the mainland of England and the people in it. These are still governed by English law. They are not affected by the Treaty. But when we come to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back. Parliament has decreed that the Treaty is henceforward to be part of our law. It is equal in force to any statute. The governing provision is section 2(1) of the European Community Act, 1972. It says:

    "All such rights, powers, liabilities, obligations and restrictions from time to time created by or arising under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties and without further enactment to be given legal effect or used in the United Kingdom, shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression enforceable Community right" and similar expressions shall be read as referring to one to which this sub-section applies."

    The statute is expressed in forthright terms which are absolute and all-embracing. Any rights or obligations created by the Treaty are to be given legal effect in England without more ado. Any remedies or procedures provided by the Treaty are to be made available here without being open to question. In future, in transactions which cross the frontiers, we must no longer speak or think of English law as something on its own. We must speak and think of Community law, of Community rights and obligations, and we must give effect to them. This means a great effort for the lawyers. We have to learn a new system. The Treaty, with the regulations and directives, covers many volumes. The case law is contained in hundreds of reported cases both in the European Court of Justice and in the national Courts of the nine. Many must be studied before the right result can be reached. We must get down to it.

  9. BY WHAT COURTS IS THE TREATY TO BE INTERPRETED?
  10. It is important to distinguish between the task of interpretating the Treaty - to see what it means - and the task of applying it - to apply its provisions to the case in hand. Let me put on one side the task of applying; the Treaty. On this matter in our Courts, the English Judges have the final word. They are the only Judges who are empowered to decide the case itself. They have to find the facts, to state the issues, to give judgment for one side or the other, and to see that the judgment is enforced.

    Before the English Judges can apply the Treaty, they have to see what it means and what is its effect. In the task of interpreting the Treaty, the English Judges are no longer the final authority. They no longer carry the law in their breasts. They are no longer in a position to give rulings which are of binding force. The supreme tribunal for interpreting the Treaty is the European Court of Justice, at Luxembourg. Our Parliament has so decreed. Section 3 of the European Communities Act, 1972, says:-

    3(1) For the purposes of all legal proceedings any question as to the meaning or effect of any of the Treaties, or as to the validity, meaning or effect of any Community instrument, shall be treated as a question of law (and if not referred to the European Court, be for determination as such in accordance with the principles laid down by and any relevant decision of the European Court).
    3(2) Judicial notice shall be taken of the Treaties, of the official Journal of the Communities and of any decision of, or expression of opinion by, the European Court on any such question as aforesaid."

    Coupled with that section, we must read Article 177 of the Treaty. It says:-

    (1) The Court of Justice (i.e. the European Court of Justice) shall have jurisdiction to give preliminary rulings concerning:
    (a) the interpretation of this Treaty;
    (b) the validity and interpretation of acts of the Institutions of the Community;
    (c) the interpretation of the statutes of bodies established by an Act of the Council, where those statutes so provide.
    (2) When such a question is raised before any Court or tribunal of a Member State, the Court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.
    (3) When any such question is raised in a case pending before a Court or tribunal of a Member State, against whose decisions there is no judicial remedy under national law, that Court or tribunal shall bring the matter before the European Court of Justice."

    That Article shows that, if a question of interpretation or validity is raised, the European Court is supreme. It is the ultimate authority. Even the House of Lords has to bow down to it. If a question is raised before the House of Lords on the interpretation of the Treaty - on which it is necessary to give a ruling -the House of Lords is bound to refer it to the European Court. Article 171(3) uses that emphatic word "shall". The House has no option. It must refer the matter to the European Court, and, having done so, it is bound to follow the ruling in that particular case in which the point arises. But the ruling in that case does not bind other oases. The European Court is not absolutely bound by its previous decisions; see the Da Costa en Schaake N.V. case (1963) 2 C.M.L.R. 224. It has no doctrine of stare decisis. Its decisions are much influenced by considerations of policy and economics: and, as these change, so may their rulings change. It follows from this that, if the House of Lords in a subsequent case thinks that a previous ruling of the European Court was wrong - or should not be followed - it can refer the point again to the European Court: and the European can reconsider it. On reconsideration it can make a ruling which will bind that particular case. But not subsequent cases. And so on.

  11. THE DISCRETION TO REFER OR NOT TO REFER
  12. But short of the House of Lords, no other English Court is bound to refer a question to the European Court at Luxembourg. Not even a question on the interpretation of the Treaty. Article 177(2) uses the permissive word "may" in contrast to "shall" in Article 177(3). In England the trial Judge has complete discretion. If a question arises on the interpretation of the Treaty, an English Judge can decide it for himself. He need not refer it to the Court at Luxembourg unless he wishes. He can say: "It will be too costly", or "It will take too long to get an answer", or "I am well able to decide it myself." If he does decide it himself, the European Court cannot interfere. None of the parties can go off to the European Court and complain. The European Court would not listen to any party who went moaning to them. The European Court take the view that the trial Judge has a complete discretion to refer or not to refer: see Rheinmuhlen v. Enfuhr (l6th February 1974) - with which they cannot interfere: see Heinz Wohrmann & Sohn K.G. v. Commission of E.E.C. (1963) 2 C.M.L.R. 152. If a party wishes to challenge the decision of the trial Judge in England - to refer or not to refer - he must appeal to the Court of Appeal in England. (If the Judge makes an order referring the question to Luxembourg, the party can appeal without leave, see Order 114. If the Judge refuses to make an order, he needs leave, because it is an interlocutory order, section 31 of the Judicature Act, 1925.) The Judges of the Court of Appeal, in their turn, have complete discretion. They can interpret the Treaty themselves if they think fit. If the Court of Appeal do interpret it themselves, the European Court will not rebuke them for doing so. If a party wishes to challenge the decision of the Court of Appeal - to refer or not to refer - he must get leave to go to the House of Lords and go there. It is only in that august place that there is no discretion. If the point of interpretation is one which is "necessary" to give a ruling, the House must refer it to the European Court at Luxembourg. The reason behind this imperative is this: The cases which get to the House of Lords are substantial cases of the first importance. If a point of interpretation arises there, it is assumed to be worthy of reference to the European Court at Luxembourg. Whereas the points in the lower Courts may not be worth troubling the European Court about. See the judgment of the German Court of Appeal at Frankfurt in the Export of Oat Flakes (1969) 8 C.M.L.R. at page 97.

  13. THE CONDITION PRECEDENT TO A REFERENCE. IT MUST BE "NECESSARY"
  14. Whenever any English Court thinks it would be helpful to get the view of the European Court - on the interpretation of the Treaty - there is a condition precedent to be fulfilled. It is a condition which applies to the House of Lords as well as to the lower Courts. It is contained in the same paragraph of Article 177(2) and applies in Article 177(3) as well. It is this: English Court can only refer the matter to the European Court "if it considers that a decision on the question is necessary to enable it to give judgment". Note the words "if it, considers". That is "if the English Court considers". On this point again the opinion of the English Courts is final, just as it is on the utter of discretion. An English Judge can say either "I consider it necessary", or "I do not consider it necessary". His discretion in that respect is final. Let me take the two in order.

    (i) If the English Judge considers it necessary to refer the matter, no one can gainsay it save the Court of Appeal. The European Court will accept his opinion. It will not go into the grounds on which he based it. The European Court so held in Van Gend en Loos (1963) 2 C.M.L.R. at page 128/9; and Albatros v Sopeco (1965) 4 C.M.L.R. 159 at page 177. It will accept the question as he formulates it. Fratelli Grassi (1973) 12 C.M.L..R. at page 335. It will not alter it or send it back. Even if it is a faulty question, it will do the best it can with it. See the Deutsche Gramophone Case (1971) 10 C.M.L.R. 671 at page 656. The European Court treats it as a matter between the English Courts and themselves - to be dealt with in a spirit of co-operation - in which the parties have no place save that they are invited to be heard. It was so held in Hessische Knappschaft v. Maison Singer et Fils (1966) 5 C.M.L.R. 82 at page 94.

    (ii) If the English Judge considers it "not necessary" to refer a question of interpretation to the European Court - but instead decides it itself - that is the end of the matter. It is no good a party going off to the European Court. They would not listen to him. They are conscious that the Treaty gives the final word in this respect to the English Courts. From all I have read of their oases, they are very careful not to exceed the jurisdiction. They never do anything to trespass on any ground which is properly the province of the national Courts.

  15. THE GUIDE LINES
  16. Seeing that these matters of "necessary" and "discretion" are the concern of the English Courts, it will fall to the English Judges to rule upon them. Likewise the national Courts of other Member States have to rule on them. They are matters on which guidance is needed. It may not be out of place therefore, to draw attention to the way in which other national Courts have dealt with them.

    (1) GUIDE LINES AS TO WHETHER A DECISION IS NECESSARY

    (i) The point must be conclusive.

    The English Court has to consider whether "a decision of the question is necessary to enable it to give judgment". That means judgment in the very case which is before the Court. The Judge must have got to the stage when he says to himself:

    "This clause of the Treaty is capable of two or more meanings. If it means this, I give judgment for the plaintiff. If it means that, I give judgment for the defendant".

    In short, the point must be such that, whichever way the point is decided, it is conclusive of the case. Nothing more remains but to give judgment. The Hamburg Court stressed the necessity in Re Adjustment of Tax on Petrol (1966) 5 C.M.L.R. at page 416. In Van Duyn v. Home Office (14th February 1974) in England the Vice-Chancellor, Sir John Pennycuick, said:

    "It would be quite impossible to give judgment without such a decision."

    (ii) Previous ruling.

    In some cases, however, it may be found that the same point -or substantially the same point - has already been decided by the European Court in a previous case. In that event it is not necessary for the English Court to decide it. It can follow the previous decision without troubling the European Court. But, as I have said, the European Court is not bound by its previous decisions. So if the English Court thinks that a previous decision of the European Court may have been wrong - or if there are new factors which ought to be brought to the notice of the European Court - the English Court may consider it necessary to re-submit the point to the European Court. In that event, the European Court will consider the point again. It was so held by the European Court itself in the Da Costa case (1963) 2 C.M.L.R. 224, in Holland in Fiva v. Mertens (1963) 2 C.M.L.R. 141; and in Germany in the Export of Powdered Milk (1967) 6 C.M.L.R. 326 at page 336.

    (iii) Acte claire

    In other cases the English Court may consider the point is reasonably clear and free from doubt. In that event there is no need to interpret the Treaty but only to apply it: and that is the task of the English Court. It was so submitted by the Advocate-General to the European Court in the Da Costa case (1963) 2 C.M.L.R. at page 234. It has been so held by the highest Courts in France. By the Conseil d'Etat in the Shell-Benn (1964) 3 C.M.L.R. at page 481, and by the Cour de Cassation in State v. Cornet (1967) 6 C.M.L.R. 351; and Lapeyie v. Administration des Douanes (1967) 6 C.M.L.R. 361 at page 368. Also by a Superior Court in Germany in the French Widows Pension Settlement (1971) 10 C.M.L.R. 530.

    (iv) Decide the facts first.

    It is to be noticed, too, that the word is "necessary". This is much stronger than "desirable" or "convenient". There are some cases where the point, if decided one way, would shorten the trial greatly. But, if decided the other way, it would mean that the trial would have to go its full length. In such a case it might be "convenient" or "desirable" to take it s a preliminary point because it might save much time and expense, But it would not be "necessary" at that stage. When the facts were investigated, it might turn out to have been quite unnecessary. The case would be determined on another ground altogether. As a rule you cannot tell whether it is necessary to decide a point until all the facts are ascertained. So in general it is best to decide the facts first.

    (2) GUIDE LINES AS TO THE EXERCISE OF DISCRETION

    Assuming that the condition about "necessary" is fulfilled, there remains the matter of discretion. This only applies to the trial Judge or the Court of Appeal, not to the House of Lords. The English Court has a discretion either to decide the point itself or to refer it to the European Court. The national Courts of the various member countries have had to consider how to exercise this discretion. The oases show that they have taken into account such matters as the following:

    (i) The time to get a ruling.

    The length of time which may elapse before a ruling can be obtained from the European Court. This may take months and months. The lawyers have to prepare their briefs; the Advocate-General has to prepare his submissions; the case has to be argued; the Court has to give its decision. The average -Length of time at present seems to be between six and nine months. Meanwhile, the whole action in the English Court is stayed until the ruling is obtained. This may be very unfortunate, especially in a case where an injunction is sought or there are other reasons for expedition. This was very much in the mind of the German Court of Appeal of Frankfurt in the Export of Oat Flakes case (1969) 8 C.M.L.R. at page 57. It said that it was important "to prevent undue protraction of both the proceedings before the European Court and trial before the national Courts". On that ground it decided a point of interpretation itself, rather than submit it to the European Court.

    (ii) Do not overload the Court.

    The importance of not overwhelming the European Court by references to it. If it were overloaded, it could not get through its work. There are nine Judges of that Court. All nine must sit in plenary sessions on these cases, as well as many other important cases: see Article 165. They cannot split up into divisions of three or five Judges. All nine must sit. So do not put too much on them. The Court of Appeal in Frankfurt took this view pointedly in the case of the Import of Oats (1968) 7 C.M.L.R. 103 at page 117:

    "The European Court must not be overwhelmed by requests for rulings.....Courts should exercise their rights sparingly. A reference to the European Court must not become an automatic reaction and ought only to be made if serious difficulties of interpretation arise."

    (iii) Formulate the question clearly.

    The need to formulate the question clearly. It must be a question of interpretation only of the Treaty. It must not be mixed up with the facts. It is the task of the national Courts to find the facts and apply the Treaty. The European Court must not take that task on themselves. In fairness to them, it is desirable to find the facts and state them clearly before referring the question. That appears from the Salgoil S.p.A. Case (1969) 8 C.M.L.R. at page 193; and the Sirena case (1971) 10 C.M.L.R, page 263. In any case, the task of interpretation is better done with the facts in mind rather than in ignorance of them.

    (iv) Difficulty and importance.

    The difficulty and importance of the point. Unless the point is really difficult and important, it would seem better for the English Judge to decide it himself. For in so doing, much delay and expense will be saved. So far the English Judges have not shirked their responsibilities. They have decided several points of interpretation on the Treaty to the satisfaction, I hope, of the parties. At any rate, there has been no appeal from them. I refer to the decision of Mr. Justice Whitford in Lerose Ltd. v. Hawick Jersey International Ltd. (1973) 12 C.M.L.R. 83; Mr. Justice Graham in Minnesota Mining and Manufacturing Co. v. Geerpres Europe Ltd. (1973) 12 C.M.L.R. 250; Mr. Justice Bridge in Esso Petroleum v. Kingswood (1973) 12 C.M.L.R. 665; Mr. Justice Graham in Lowenbrau Munchen v. Grunhalle Lager International Ltd. (1974) 13 C.M.L.R. 1; Mr. Suenson-Taylor Q.C. in Leeds Value Added Tax Tribunal(1974) 13 C.M.L.R. 113.

    (v) Expense.

    The expense to the parties of getting a ruling from the European Court. That influenced a Nuremberg Court in the case of the Potato Flour Tax (1964) 3 C.M.L.R. 96 at page 106. On a request for interpretation, the European Court does not as a rule award costs, and for a simple reason. It does not decide the case. It only gives advice on the meaning of the Treaty. If either party wishes to get the costs of the reference, he must get it from the English Court, when it eventually decides the case: see Sociale Verzekeringsbank v. Van der Vecht (1968) 7 C.M.L.R. at page 167.

    (vi) Wishes of the parties.

    The wishes of the parties. If both parties want the point to be referred to the European Court, the English Court should have regard to their wishes, but it should not give them undue weight. The English Court should hesitate before making a reference against the wishes of one of the parties, seeing the expense and delay which it involves.

  17. THE PRINCIPLES OF INTERPRETATION
  18. In view of these considerations, it is apparent that in very many cases the English Courts will interpret the Treaty themselves. They will not refer the question to the European Court at Luxembourg. What then are the principles of interpretation to be applied? Beyond doubt the English Courts must follow the same principles as the European Court. Otherwise there would be differences between the countries of the nine. That would never do. All the Courts of all nine countries should interpret the Treaty in the same way. They should all apply the same principles. It is enjoined on the English Courts by section 3 of the European Community Act, 1972, which I have read.

    What a task is thus set before us! The Treaty is quite unlike any of the enactments to which we have become accustomed. The draftsmen of our statutes have striven to express themselves with the utmost exactness. They have tried to foresee all possible circumstances that may arise and to provide for them.

    They have sacrificed style and simplicity. They have foregone be brevity. They have come long and involved. In consequence, the Judges have followed suit. They interpret a statute as applying only to the circumstances covered by the very words. They give them a literal interpretation. If the words of the statute do not cover a new situation - which was not foreseen - the Judges hold that they have no power to fill the gap. To do so would be a "naked usurpation of the legislative power", see Magor and St. Mellons R.D.C. v. Newport Borough Council (1952) A.C. 189. The gap must remain open until Parliament finds time to fill it.

    How different is this Treaty. It lays down general principles. It expresses its aims and purposes. All in sentences of moderate length and commendable style. But it lacks precision. It uses words and phrases without defining what they mean. An English lawyer would look for an interpretation clause, but he would look in vain. There is none. All the way through the Treaty there are gaps and lacunae. These have to be filled in by the Judges, or by Regulations or Directives. It is the European way. That appears from the decision of the Hamburg Court in Re Tax on Imported Lemons (1968) 7 C.M.L.R. 1.

    Likewise the Regulations and Directives. They are enacted by the Council sitting in Brussels for everyone to obey. They are quite unlike our statutory instruments. They have to give the reasons on which they are based (Article 190). So they start off with pages of preambles, "whereas" and "whereas" and "whereas". These show the purpose and intent of the Regulations and Directives. Then follow the provisions which are to be obeyed. Here again words and phrases are used without defining their import. Such as "personal conduct" in the Directive 64/221 EEC, which was considered by the Vice-Chancellor, Sir John Pennycuick in Van Duyn v. Home Office (14th February 1972). In case of difficulty, recourse is had to the preambles. These are useful to show the purpose and intent behind it all. But much is left to the Judges. The enactments give only an outline plan. The details are to be filled in by the Judges.

    Seeing these differences, what are the English Courts to do when they are faced with a problem of interpretation? They must follow the European pattern. No longer must they examine the words in meticulous detail. No longer must they argue about the precise grammatical sense. They must look to the purpose or intent. To quote the words of the European Court in the Da Costa case (1963) 2 C.M.L.R. at page 237, "they must deduce from the wording and the spirit of the Treaty the meaning of the Community rules." They must not confine themselves to the English text. They must consider, if need be, all the authentic texts, of which there are now eight, see Sociale Verzekeringsbank (1968) 7 C.M.L.R. 151. They must divine the spirit of the Treaty and gain inspiration from it. If they find a gap, they must fill it as best they can. They must do what the framers of the instrument would have done if they had thought about it. So we must do the same. Those are the principles, as I understand it, on which the European Court acts.

  19. APPLIED TO THE PRESENT CASE
  20. To return to the three questions I asked at the beginning.

    First: I think these Regulations should be interpreted by the High Court and the Court of Appeal in England. But if the cases should reach the House of Lords they must be interpreted by the European Court.

    Second: The task of interpretation should be done at the time of the trial or the appeal, together with the other issues in the case.

    Third: The English Court should apply the same principles of interpretation as the European Court would do if it had to decide the point.

    I come now to the two specific questions sought to be referred. The first question raised is: "Whether.... the use of the word 'Champagne' in connection with any beverage other than Champagne is a contravention of the provisions of European Community law." I do not think it is necessary at this stage to decide that question. Take the claim in passing-off. If the French growers succeeded in this claim for passing-off in English law - for an injunction and damages - it would not be necessary to decide the point under the Regulations. So the facts must be found before it can be said that a reference is "necessary".

    Next take the claim of the French growers for a declaration that the use of the expression "Champagne cider" and "Champagne perry" was contrary to European Community law. Mr. Sparrw, Q.C., said that it would be necessary on this issue to decide the point on the Regulations. I do not agree. It is always a matter for the discretion of the Judge whether to grant a declaration or not. He could very properly say in the present case: Whatever the true interpretation of the Regulations, it is not a case in which I would make any declaration on the point. Taking that view, it would not be necessary to decide the point.

    Even if it could be said to be necessary to decide the point, I think that an English Court (short of the House of Lords) should not, as matter of discretion, refer it to the European Court. It should decide the point itself. It would take much time and money to get a ruling from the European Court. Meanwhile, the whole action would beheld up. It is, no doubt, an important point, but not a difficult one to decide. I think it would be better to deal with it as part of the whole case, both by the trial Judge and by the Court of Appeal. If it could then go to the House of Lords, it will by that time have become clear whether it is a "necessary" point or not. If it is, then the House of Lords will refer it.

    The second point is: "Whether a national Court should..... refer to the Court of Justice such a question as has been raised herein." The object of this question is to get a ruling from the European Court as to the circumstances in which a national Court should refer a question of interpretation to the European Court. I am quite clear that it is unnecessary to ask this question. The answer is clear. It is not the province of the European Court to give any guidance or advice to the national Court as to when it should, or should not, refer a question. That is a matter for the national Court itself. It is no concern of the European Court.

    In my opinion Mr. Justice Whitford was right in refusing to refer either of the questions. I would dismiss the appeal.

    LORD JUSTICE STAMP: I have had the advantage of reading, in draft, the judgment which is about to be delivered by Lord Justice Stephenson. I wholly agree with it, and because I would be reluctant to express any views which might be said to go outside the confines of this case, I am content gratefully to adopt that judgment as if it were my own.

    I too would dismiss the appeal.

    LORD JUSTICE STEPHENSON: Three things are clear - so clear that they scarcely need saying - about Article 177 of the Treaty of Rome, which my Lord, the Master of the Rolls, has read, numbering its three sentences according to the convenient practice of the Community law reporters:-

    (i) The rulings which the European Court has jurisdiction to give under Article 177(1) are not strictly "preliminary". They do not have to be given "in limine" before the Court of the Member State crosses the threshold and begins to hear a dispute, but they can be given at any time before the Court finishes hearing the dispute by giving judgment. The ruling is in that sense "prejudicial", not necessarily preliminary, though it may be.
    (ii) Article 177(2) confers a power, whereas Article 177(3) imposes an obligation. A lower Court of a Member State "may" request a ruling, a final Court "shall". The contrast in the language is as clear as in the section of the English statute which this Court construed in Re Baker (1890) 44 Ch. Div. 262, and has the same effect: the lower Court is trusted with a discretion, the final Court is not. All attempts to blur the distinction between the power of the one and the duty of the other when a question is raised under Article 177(1) break down on the different wording of Article 177(2) and (3). Section 2(1) of the European Communities Act 1972 distinguishes powers from obligations, and so by this wording does Article 177, by whatever canon of construction it is interpreted. The European Court has always recognised that distinction; e.g. in Da Costa en Schaake N.V. and Others v. Nederlande Belasting -administratie (1963) 2 C.M.L.R. 224, 237; and has recently emphasised it and described the power given to the national Courts by Article 177(2) as conferring on them "the widest discretion", which no domestic Court of Appeal can fetter: Firma Rheinmuhlen Dusseldorf v. Enfuhr und Vorratsstelle fur Getreide und Futtermittal, case 166/73 shortly reported in The Times Newspaper of 16th February 1974; to which my Lord has already referred, (iii) The only questions which the Courts of a Member State can, or in some cases must, refer to the European Court are questions of law within Article 177(1) on which decisions are necessary to enable them to give judgment. If they consider that they can give judgment in the dispute in which the question is raised without deciding the question, they need not and indeed must not trouble the European Court by requesting a ruling or bringing the matter before it. Section 3(1) of the 1972 Act recognises that questions within Article 177(1) are questions of law and may be for determination by our Courts without referring them to the European Court. That is how the Courts of Member States have rightly proceeded, including English Judges, Mr. Justice Whitford among them: Lerose Ltd. v. Hawick Jersey International Ltd. (1972) 12 C.M.L.R. 83.

    The appellants, by their amendments to paragraphs 9, 18 and 21 of their defence and counterclaim have raised the question whether the use of the word "Champagne" in connection with any beverage other than Champagne, in particular the use of the expressions "Champagne Cider" and "Champagne Perry", will contravene or be contrary to European Community Law, in particular Regulations (E.E.C.) Nos. 816/70, Article 30 and 817/70, Articles 12 and 13, and other Regulations subsequently particularised. By re-amendment they counterclaim a declaration that the use of those expressions in relation to beverages other than wine produced in the Champagne District of France is contrary to European Community law. Question A, which my Lord has read, is therefore, in my judgment, a question within Article 177 (1) (b), which was clearly raised before Mr. Justice Whitford in the Chancery Division of the High Court. But he did not consider a decision on it necessary to enable him to give judgment. So he refused to request the European Court to give a ruling on it. In that I am of opinion he was right. If he intended to refuse ever to request a ruling on it he would have been wrong. It is too early to say whether it will become necessary and whether he should request a ruling upon it later. When he has heard the evidence he may reject the respondents' claim. He may find that the appellants have a right to restrain the respondents from using the expressions "Champagne Cider" and "Champagne Perry", and from supplying beverages so described, without recourse to European law or becoming involved in any law but the law of England as it was before the adherence of the United Kingdom to the European Economic Community added anything to it. If so, it will not be necessary for him to decide any question concerning the interpretation of the Community's regulations. It was argued for the appellants that a decision of Question A might shorten proceedings and enable the Judge to give judgment without going into evidence of passing off or acquiescence. But Article 177 does not provide for a Court considering that a decision on the question is expedient or convenient, or necessary to enable it to give judgment shortly, or more shortly, or more cheaply and conveniently, but necessary to enable it to give it -justly of course but with no other implication or qualification.

    It was also argued that the declaration counterclaimed could not be granted without deciding Question A. That is true and would be relevant if it were possible to say at this stage whether it will be necessary for the Court to grant the declaration. But if the appellants succeed on other grounds, the declaration will not be necessary and the Judge in his discretion might refuse to grant it, however helpful it might be to the appellants in other litigation: Russian Commercial and Industrial Bank v. British Bank for Foreign Trade (1921) 2 A.C. at page 445; Ibeneweka v. Egbuna (1964) 1 W.L.R. at page 224. So by counterclaiming a declaration the appellants have not made an unnecessary decision necessary. They must wait and see how the case goes.

    I do not read anything which Judges of the European Court, Judge Sorensen or Lord Mackenzie Stuart, have said as encouraging Courts of Member States to refer questions under Article 177 before they know whether a decision of them will be necessary to enable them to give judgment or before they have ascertained the relevant facts or the best formulation of the question or questions. Lower Courts are rightly discouraged from postponing a simple request for a ruling in plain cases, cases where a decision of a question within Article 177 will plainly be necessary on assumed or admitted facts. Nothing I have said is intended to throw doubt on such an interpretation or application of the Article or on such decisions as that of Sir John Pennycuick, Vice Chancellor, in Van Duyn v. Home Office, on 14th February 1974. But this is an altogether different case, and all experience in our Courts of attempts to take short cuts by obtaining preliminary decisions on points of law shows how difficult it is to isolate an issue and the relevant facts and to avoid going back to the beginning and taking the ordinary route.

    Question B, which my Lord has read, seems to me to fall outside Article 177. The question borrows some words of the District Court of Amsterdam in giving judgment in F.I.V.A. v. Martens (1963) 2 C.M.L.R. at page 144, in a case where the question raised under Article 177 had already been the subject of a decision by the European Court, and seeks to derive from them general guidance in situations to which they were not addressed and to turn into a question concerning the interpretation of Article 177 of the Treaty what is really a question how its provisions should be applied in practice, Whether Article 177(2) gives a lower Court of a Member State a discretion is a question concerning the interpretation of the Article; how it should exercise that discretion is not. To concede that on its true interpretation Article 177(2) gives a discretion and to contend that the width or extent of the discretion is a question of interpretation confuses a question of construction, which is for the European Court, with a question of performance, which is for the Courts of the Member States.

    It is significant, and not surprising, that the European Court does not yet appear to have been asked to lay down guide lines for the exercise of the national Courts' discretion under Article 177(2). If any guide lines are to be laid down, they should, in my judgment, be laid down by national Courts, in this country by this Court, which is accustomed to doing so in such matters as costs, interest, mode of trial or disposition of matrimonial property. But, in my opinion, the guide lines should be few and firmly related to the basic requirement that the decision of the question raised must be necessary at the time the reference is requested to enable the Court to give judgment at the end of the case. The best judge of that in any particular case is the Court to which the Treaty submits the discretion, the Judge who will have to give that judgment. If he does not consider that he needs a ruling from the European Court, an appellate Court should be slow to consider that he does. He must bear in mind that Article 177, as the European Court has said, "provides a procedure to safeguard the uniform judicial interpretation of Community law": Sociale Verzekeringsbank v. M.J. Van der Vecht (1967) 7 C.M.L.R. 151, 161, to which my Lord has referred, and exercise his right to refer sparingly and in cases of serious doubt or difficulty only, as the Verwaltungagericht, Frankfurt am Main said in Re Import Licence for Oats (1966) ib. 103, 117: compare the judgment of the same Court in Re Export of Oat Flakes (1967) 8 C.M.L.R. 85, 97. He should also bear in mind the other considerations which the Master of the Rolls has set out, but beyond that I would not go to guide the Court of trial.

    The ordinary jurisdiction of an appellate Court is entirely unaffected by Article 177 except in one respect: Article 177(3) (paraphrased but not I hope misinterpreted) imposes on it if it is a final Court of Appeal a duty in a case pending before it to bring a "necessary" question before the European Court. We do not have to decide the question whether Article 177(3) applies to a final Court before which an appeal against a refusal to refer is brought at a preliminary or interlocutory stage, because neither Question A nor Question B is a necessary question; but I would be wary of so construing Article 177(3) as to make nonsense of Article 177(2) or reduce it to a dead letter. Nor do we have to decide whether the absence of any right of appeal from this Court without leave would ever bring it within Article 177 (3); but on that further argument I would not feel able either to assume that this Court is under the same duty as the House of Lords, or to agree with the Master of the Rolls that in the hierarchy of our Courts that House is the only Court "against whose decisions there is no judicial remedy" under our law. What we do have to decide is whether to uphold or upset the Judge's refusal to request a ruling now.

    It is not and cannot be disputed that we have jurisdiction to hear an appeal from such a refusal. It is curious that new Rules of the Supreme Court - Order 114, rules 1 to 6 - deal with references to the European Court under Article 177 (and under Articles of two other Treaties) but, perhaps by an oversight, Order 114 rule 6, which deals with appeals, does not deal with refusals to make an order referring to the European Court. By Order 114, rule 6 an appeal lies against an order referring without leave, but that special provision cannot affect the general power of the Judge or this Court to grant leave against a refusal to make such an order just as against any other interlocutory exercise of judicial discretion. The special provision cannot give a party dissatisfied with a Judge's refusal to refer a corresponding right to appeal, nor can it take away his right to apply for leave to appeal - which the Judge appears to have given here. And it cannot alter this Court's duty to interfere with an exercise of judicial discretion when and only, when the Judge's decision "exceeds the generous ambit within which reasonable disagreement is possible and is, in fact, plainly wrong"; for I respectfully agree with Lord Justice Asquith that that is the principle which emerges from the decisions of the House of Lords in Evans v. Bartlam (1937) A.C. 473 and Charles Osenton & Co. v. Johnston (1942) A.C. 130; see Bellendon (formerly Satterthwaite) v. Satterthwaite (1948) 1 A.E.R. at page 345 B; compare Ward v. James (1966) 1 Q.B. at page 293.

    One other thing the rule cannot do, and that is to fetter the Judge's discretion to refer or refuse. If it did, I would agree that it would be invalid: Rheinmuhlen, Dusseldorf v. Einfur-und Vorratsstelle Fur Getreide und Futtermittel, Case 166/73, to which I have already referred. But it does not. I find it hard to follow the argument that a rule which gives a right of appeal to a party dissatisfied with a Judge's exercise of his discretion one way restricts in some manner the Judge's power to exercise it. It may facilitate appeals against one way of exercising it; it does nothing thereby to prevent its exercise either way. The Judge is left as free to exercise this discretion as any judicial discretion and this Court has its customary freedom to correct its exercise if unjudicial, unjust or wrong.

    In my judgment the Judge considered all the matters which he should have considered and no others, exercised the discretion given him by Article 177(2) rightly, and was correct in refusing to refer either question. He may later consider it necessary to obtain a decision from the European Court on Question A to enable him to give judgment in this action. Before he gives judgment the answer may have become obvious or have been already given by a ruling of the European Court in another case. The question may or may not have to be referred. But I cannot, as at present advised, see how Question B can ever became a question for decision by the European Court. I agree that this appeal fails.

    Appeal dismissed with costs. Leave to appeal to the House of Lords refused.


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