Ι. Concessions for the occupation of State-owned maritime property are a matter of interest under EU law

For the inhabitants of Mediterranean countries, the sun and the sea are a self-evident pleasure, but the management of natural resources by the public authorities is anything but easy. In the case of exploitation of State-owned coastal and lakeside property, conflicting interests are to be reconciled: οn the one hand, the economic claim of businessmen, who owns, for example, cafés, canteens, in coastal and lakeside areas or provide sunbed rental services, sporting and recreational activities, etc., to maintain and continue their business activities in these areas and on the other hand, the reasonable claim of potential investors to gain equal access to the profitable exploitation of natural resources in terms of transparency. This conflict, focuses primarily on the economic aspect of the environment, since it focuses on ways in which natural resources can be exploiter in a of profitable commercial manner. However, the aspect of sustainable development, as well as consumers’ interest, in their capacity as tourists, in having quality access to the relevant services have their own impact on the shaping of the conflict. Reconciling these interests is complex indeed.

The issue also seems to have a significant European dimension, since concessions for coastal areas concern the freedom of establishment for providers in a State-owned area in light of economic exploitation for tourist and leisure purposes. Τhese concessions, therefore, constitute a matter relating to the functioning of the internal market and, by their very nature, fall within the scope of Article 49 TFEU. The Court of Justice of the European Union (hereinafter: the CJEU) has held that public authorities are bound, when they envisage granting a concession, to comply with the fundamental rules of the Treaty, in general, and the principle of non-discrimination on the grounds of nationality, in particular (see, to that effect, judgment of 17 July 2008, ASM Brescia, C- 347/06, EU:C:2008:416, para. 58).

In this context, the Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (hereinafter: the Directive) contains a number of provisions that Member States must comply with, when a service activity is subject to a prior system of authorisation. Since granting of a concession to a national undertaking, without any transparency, constitutes discrimination against undertakings established in another Member State, which are also interested in providing the relevant service activities, the Directive laid down specific requirements as regards the conditions and procedure for the concession. The purpose of these rules is to ensure the observance of competition within the functioning of the internal market. In particular, Article 12 regulates the specific case where the number of authorisations available for a particular activity is limited due to the scarcity of available natural resources or technical capacity. In such a case, the Member States shall apply a selection procedure to potential candidates which provides full guarantees of impartiality and transparency, including, in particular, adequate publicity about the launch, conduct and completion of the procedure. Article 10 of the same Directive concerns the conditions for granting such authorisations and Article 11 regulates their duration.

In its judgment in Case C-348/22, (ECLI:EU:C:2023:30), the Court of Justice provided interpretative guidance on Article 12 of the Directive and, in particular, explicitly clarified whether Article 12 has direct effect and thus, applies automatically to national law. Ιn the following analysis, the references are to the reasoning in this judgement.

II. Individuals at the service of effective transposition of directives into national legal order

Article 12 of the Directive confers on the Member States the discretion to lay down the rules for the selection procedure. Could the wording of that provision lead to the conclusion that Article 12 lacks direct effect, as the referring Italian court considered (para. 27-28)? Dealing with this crucial question, the CJEU answered unequivocally that the provision is unconditional and sufficiently precise. Individuals may therefore rely on that provision against the Member State before the national courts, either where the Member State has failed to transpose it into national law on time or where it has incorrectly transposed it. The Court noted that the Member States retain a degree of latitude when they decide to adopt provisions to ensure in practice the impartiality and transparency of the selection procedure. “Nevertheless, by requiring the organisation of an impartial and transparent selection procedure, Article 12(1) of Directive 2006/123 prescribes, unconditionally and sufficiently precisely, content comprising minimum protection in favour of potential candidates”” (para. 67).

This finding leads to the conclusion that this EU law provision, according to which concessions for the occupation of State-owned maritime property are granted for a limited period of time and cannot be renewed automatically, is also subject to private enforcement. In the system of legal remedies provided for by the Treaty, there is a twofold parallel pressure that may be exerted on the recalcitrant State. Οn the one hand, there is the pressure exerted at the transnational level, when the Commission or other Member States area able to bring proceedings against it before the CJEU. On the other hand, there is the pressure exerted at the domestic level, when any natural or legal person can bring proceedings before the competent national courts. In the latter case, the competent national courts should ensure that the rules of European Union law are protected.

In the case of Italy, the initial pressure exerted by the Commission by means of the letter of formal notice did not lead to the desired result of compliance. However, the national municipal authorities are still accountable towards individuals. In this regard, competitors may claim their participation for the exploitation of a profitable activity by directly invoking Article 12 of the Directive in order to call off any non-transparent procedure on the renewal of authorisations that perpetuates the problematic status quo. The national court should, therefore, provide for the relevant legal protection by directly applying the European Union law prohibition in the national legal order.

III. The collateral consequences of the “private enforcement” of the prohibition of concessions for State-owned maritime property in the absence of a selection procedure: from the market protection to the protection of property and the environment.

The exploitation of State-owned maritime property may be the central issue but there are many aspects to be considered.

Firstly, existing concessionaires are affected in many ways by the radical change of the status quo. Could these investors, on whose part the national authorities create expectations through the problematic legislation, have legitimate expectations for the renewal of theirs authorisations? Further, any investments they made in the said maritime property, particularly those relating to the establishment of permanent, non-movable facilities, seem to be lost. Is there a claim against the municipality for compensation under either national tort provisions or those for unjust enrichment? The CJEU declined to go into these questions because these questions are hypothetical and relate to possible future cases involving actions brought by the current concessionaires for the direct damage suffered. However, it is highly probable that, in the normal course of events, such actions will be brought immediately.

Secondly, the question that arises is whether, in addition to any competitors of the current concessionaires and the supervisory authorities, citizens, such as residents of the municipalities, may also challenge the renewals of authorisations. In such a case, several citizens’ movements and NGOs that advocate the minimal interference with natural wealth make extensive use of the classic civil law proceedings, such as, for example, the right to privacy due to the infringement of the free use of part of the seashore by enterprises in the coastal line (see, judgment of First Instance of Athens, no 4810/2023). Could these activists possibly also invoke Article 12 of the Directive? This may be done so as not to achieve greater competition in the selection process, but the blockage, for a limited time period, of the current unlawful commercial exploitation. In other words, could a market tool be transformed, under particular conditions, into a tool in favor of environmental goods?

In this context the obligation of national authorities not to apply provisions of national law, which do not comply with EU law leaves little room for maneuver. The path nevertheless is anything but easy. The highest hurdle protestors need to prove is individual interest to seek remedies against breaches of the directive before national courts.

All these open issues may be answered by the Italian courts or by the CJEU in the context of new preliminary questions from Italian courts. However, the problems are common to the Mediterranean countries which benefit from the wealth of the coastline, while they have to deal with the difficult issue for a reasonable exploitation. Typically, the Greek legislation provides for an auction procedure. Nevertheless, certain exceptions are also found in the relevant legislative texts, in particular the possibility of granting the use of a beach without an auction in the case of hotels, tourist establishments and leisure centers that are established near the seashore under exploitation (Article 13 of Law 2971/2001 and Decree No 386//2023). Such an exception is difficult to reconcile with the strict requirements of the Directive for a competitive and transparent selection procedure before the concession. Having in mind the extensive length of the Greek coastlines, many businesses appear to be able to take advantage of the exemption and exploit the adjacent beach without prior open selection procedure. Taking into account that Article 12 of the Directive has direct effect, it is likely that challenges to these authorisations in the Greek courts will proliferate, while this EU law provision may also be invoked.

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Michail Rodopoulos, LL.M, Attorney-at-law

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Suggested citation: Michail Rodopoulos, “Could Greek protesters against commercial sunbeds rely on a pro-market ΕU-directive to achieve their goal? Comment on Case C 348/22”, REALaw.blog, available at https://realaw.blog/?p=3082