Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Second Chamber)
9 September 2004 (1)

applicant,

v

defendant,

THE COURT (Second Chamber),

after hearing the Opinion of the Advocate General at the sitting on 4 March 2004,

gives the following

Judgment

1. In these proceedings the Commission of the European Communities asks the Court to declare that, by adopting Articles 22 to 24 and 25(2) of the Reglamento de conductores (Regulations on Drivers), adopted by Real Decreto (Royal Decree) No 77/1997, of 30 May 1977 (BOE No 135 of 6 June 1997, p. 17348), and also the seventh transitional provision of that regulation, the Kingdom of Spain had failed to fulfil its obligations under Articles 1(2) and 7(1)(a) of and point 4 of Annex 1 to Council Directive 91/439/EEC of 29 July 1991 on driving licences (OJ 1991 L 237, p. 1), as amended by Council Directive 96/47/EC of 23 July 1996 (OJ 1996 L 235, p. 1).

Legal background
The Community legislation
2. The first recital in the preamble to Directive 91/439 (-�the Directive-�) is worded as follows:
-�-� for the purpose of the common transport policy, and as a contribution to improving road traffic safety, as well as to facilitate the movement of persons settling in a Member State other than that in which they have passed a driving test, it is desirable that there should be a Community model national driving licence mutually recognised by the Member States without any obligation to exchange licences-�.
3. According to the ninth and tenth recitals:
-�-� the provisions set out in Article 8 of Directive 80/1263/EEC, and in particular the obligation to exchange driving licences within a period of one year of changing normal residence, constitute an obstacle to the free movement of persons; -� this is inadmissible in the light of the progress made towards European integration;
-� for reasons connected with road safety and traffic, Member States should be able to apply their national provisions on the withdrawal, suspension and cancellation of driving licences to all licence holders having acquired normal residence in their territory-�.
4. Article 1 of the Directive provides:
-�1. Member States shall introduce a national driving licence based on the Community model described in Annex I or a, in accordance with the provisions of this Directive.
2. Driving licences issued by Member States shall be mutually recognised.
3. Where the holder of a valid national driving licence takes up normal residence in a Member State other than that which issued the licence, the host Member State may apply to the holder of the licence its national rules on the period of validity of the licences, medical checks and tax arrangements and may enter on the licence any information indispensable for administration.-�
5. Under Article 7 of the Directive:
-�1. Driving licences shall, moreover, be issued only to those applicants:
(a) who have passed a test of skills and behaviour and a theoretical test and who meet medical standards, in accordance with the provisions of Annexes II and III-�.
6. Pursuant to Article 8 of the Directive:
-�1. Where the holder of a valid national driving licence issued by a Member State has taken up normal residence in another Member State, he may request that his driving licence be exchanged for an equivalent licence; it shall be for the Member State effecting the exchange to check, if necessary, whether the licence submitted is in fact still valid.
2. Subject to observance of the principle of territoriality of criminal and police laws, the Member State of normal residence may apply its national provisions on the restriction, suspension, withdrawal or cancellation of the right to drive to the holder of a driving licence issued by another Member State and, if necessary, exchange the licence for that purpose.
3. The Member State effecting the exchange shall return the old licence to the authorities of the Member State which issued it and give the reasons for so doing.
4. A Member State may refuse to recognise the validity of any driving licence issued by another Member State to a person who is, in the former State-�s territory, the subject of one of the measures referred to in paragraph 2.
A Member State may likewise refuse to issue a driving licence to an applicant who is the subject of such a measure in another Member State.
-�-�
7. Pursuant to Article 9 of the Directive -�normal-� residence means the place where a person usually lives, that is for at least 185 days in each calendar year, because of personal and occupational ties, or, in the case of a person with no occupational ties, because of personal ties which show close links between that person and the place where he is living.
8. Point 2 of Annex I to the Directive states that a driving licence is to consist of six pages.
9. Point 4 of Annex I states:
-�Where the holder of a driving licence issued by a Member State has taken up normal residence in another Member State, the latter may indicate:
- change(s) of residence on page 6,
- information essential for administrative purposes such as serious offences committed in its territory, on page 5,
provided that it also enters this type of information in the licences which it issues and that there is a space available for that purpose.-�
10. Directive 96/47, which entered into force on 18 September 1996, among other things added an Annex Ia to Directive 91/439. That annex gives Member States the option of issuing licences in accordance with a model different from the traditional paper model provided for in Annex I to the directive. That second model licence takes the form of a polycarbonate card of the type used for bank and credit cards.
11. According to point 2 of Annex Ia, that model driving licence is to have two sides and on page 2 there must be a space reserved for the possible entry by the host Member State, in accordance with point 3(a) of that annex, of information essential for administering the licence.
12. Point 3(a) of Annex Ia to Directive 91/439 states:
-�Where the holder of a driving licence issued by a Member State in accordance with this Annex has his normal place of residence in another Member State, that Member State may enter in the licence such information as is essential for administering it, provided that it also enters this type of information in the licences which it issues and provided that there remains enough space for the purpose.-�
The national legislation
13. Directive 91/439 was transposed into Spanish law by the Regulations on Drivers. Articles 21 to 29 of those regulations relate to the validity in Spain of driving licences issued by the other Member States.
14. Article 21 of the Regulations on Drivers provides that driving licences issued by the other Member States in accordance with the Community rules are to be valid in Spain in accordance with the conditions under which they were issued by the Member State of origin, provided that the age at which the holder is entitled to drive corresponds to the age prescribed for the issue of an equivalent Spanish driving licence.
15. Article 22 of the same regulations, which deals with entries in the Registro de Conductores e Infractores (Register of Drivers and Offenders), provides that, where the holder of a driving licence issued by another Member State establishes his normal residence in Spain and he drives or wishes to drive a vehicle, he is allowed a period of six months as from the date on which his normal residence was formalised (or documented) in which to have the relevant particulars from his driving licence entered on the Register of Drivers and Offenders. According to the same provision, the competent administrative authority will enter on the driving licence all the particulars necessary for administration thereof and, in particular, the normal place of residence of the holder of the licence.
16. Article 23 of the Regulations on Drivers provides:
-�1. As from the date on which the driving licence particulars are entered in the Register [of Drivers and Offenders], the holder shall undergo examinations of his mental and physical fitness at the same intervals as those prescribed by Article 16 of these regulations for driving licences issued in Spain.
2. The results of the examinations referred to in the foregoing paragraph shall be notified to the Jefatura Provincial de Tráfico (Provincial Traffic Authority), which shall take note of them and notify the person concerned of the date by which he must undergo the next examination and report the results, and that date shall be recorded on his driving licence.-�
17. Under Article 24 of the Regulations on Drivers, -�the following shall not entitle their holder to drive a vehicle in Spain:
(a) licences whose holders have not complied with the obligation to register their particulars with a Provincial Traffic Authority in accordance with Article 22 of the present regulations, until such time as they do so;
(b) licences whose holders have not undergone the examination of mental and physical fitness within the period laid down by the relevant Provincial Traffic Authority, until such time as they do so. If more than four years have elapsed since the date on which a holder should have undergone the last examination, the licence shall no longer be valid for use in Spain, and that fact shall be recorded both on the licence and in the register;
(c) licences whose holders do not pass the abovementioned examination, and that fact shall be entered on the licence and in the register;
(d) licences of which the period of validity has expired.-�
18. According to Article 25(2) of the Regulations on Drivers, -�the Provincial Traffic Authority shall renew the licence on its own initiative where, because of its characteristics, the fact that all spaces have been filled in or for other reasons, it is impossible to record the particulars necessary for administration thereof in accordance with Article 23 of the present regulations.-�
19. Pursuant to the seventh transitional provision of the regulations, entitled -�Mental and physical fitness-�:
-�Within the period of four years referred to in Article 17(3) of the present regulations, reckoned from the date of entry into force thereof, the holders of driving licences who have been unable to obtain renewal thereof because they lack the mental and physical fitness referred to in Annexes I and II to Royal Decree No 2272/1985 of 14 December 1985 may do so provided that they make an application to that effect, produce evidence of the mental and physical fitness referred to in Annex IV to the present regulations, and provided that they do so before the expiry of a period equal to twice the period of validity of the expired licence as from its issue or latest renewal.
Holders of driving licences obtained before the entry into force of the present regulations who, when applying for their period of validity to be extended, do not display the mental and physical fitness referred to in Annex IV to the said regulations, may obtain an extension provided that they make an application to that effect and prove that they display the fitness referred to in Annexes I and II to Royal Decree No 2272/1985 of 14 December 1985-�.

The pre-litigation procedure
20. After exchanging correspondence with the Spanish Government, the Commission, considering that the Kingdom of Spain had failed to fulfil its obligations under Directive 91/439, sent it a letter of formal notice dated 27 October 1999 asking it to submit its observations within a period of two months.
21. The Commission was not persuaded by the explanations given by the Spanish Government and, on 26 July 2001, issued a reasoned opinion calling on that Member State to take the measures necessary to comply with it within a period of two months following notification thereof.
22. The Spanish Government informed the Commission that its views had not changed, whereupon the Commission decided to bring the present action.
23. By orders of the President of the Court of 10 October 2002, the Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland were granted leave to intervene in support of the Kingdom of Spain. However, only the United Kingdom Government submitted a statement in intervention.

The admissibility of the United Kingdom-�s intervention
Arguments of the parties
24. The Commission contends that the form of order sought in the United Kingdom-�s application to intervene is inadmissible because that State is intervening only partly in support of the Kingdom of Spain: the form of order sought by it relates only to the first of the three complaints put forward by the Commission and does not clearly fall within the scheme of the defence put forward by the Kingdom of Spain.
25. The United Kingdom Government states in reply that the Commission-�s objection is inadmissible. The Commission-�s position derives from an incorrect analysis of the case-law and a superficial reading of the form of order sought in the application to intervene.
Findings of the Court
26. Under the fourth paragraph of Article 40 of the Statute of the Court of Justice, -�[a]n application to intervene shall be limited to supporting the form of order sought by one of the parties-�.
27. Whilst it is true, as the Commission has observed, that the United Kingdom-�s intervention is based on arguments which differ in part from those put forward by the Spanish Government, the fact remains that the United Kingdom Government-�s arguments, like those of the Spanish Government, purport to show that the Commission-�s application should be dismissed.
28. Therefore, it must be held that the purpose of the United Kingdom-�s application to intervene is to support the form of order sought by the Spanish Government.
29. In addition, contrary to the Commission-�s contention at the hearing, it does not follow from the judgment in Case C-155/91 Commission v Council [1993] ECR I-'939 that the fact that the United Kingdom-�s application to intervene relates to only one of the complaints underlying the application is liable to render the intervention inadmissible.
30. It is clear from the judgment in Commission v Council, cited above, that the form of order sought in the application to intervene in that case concerned the annulment of a specified article of a directive on grounds entirely unconnected with those relied on by the applicant in pursuit of annulment of the entire directive, which prompted the Court to hold that the intervener-�s submissions could not be regarded as having the same subject-matter as those in support of which they had been put forward.
31. In this case, the form of order sought in the United Kingdom-�s application to intervene specifically pursues the aim of supporting the form of order sought by the defendant, as indicated in paragraph 28 of the present judgment.
32. Accordingly, the Commission-�s objection that the United Kingdom-�s application to intervene is inadmissible must be rejected.

The application
33. In support of its application, the Commission makes three complaints relating to the following: first, the procedure for registration of driving licences issued by other Member States; second, the compulsory exchange of such driving licences for Spanish driving licences; and, third, the conditions for renewal or extension of driving licences issued prior to the transposition into Spanish law of Directive 91/439.
The admissibility of the third complaint
34. The Spanish Government contends that the third complaint is inadmissible since it was not set out either in the letter of formal notice or in the reasoned opinion.
35. The Commission has not formally submitted any views on that objection of inadmissibility.
36. It must be borne in mind that the letter of formal notice from the Commission to a Member State, and then the reasoned opinion issued by the Commission, delimit the subject-matter of the dispute, so that it cannot thereafter be extended. The opportunity for the State concerned to be able to submit its observations, even if it chooses not to avail itself thereof, constitutes an essential guarantee intended by the EC Treaty, adherence to which is an essential formal requirement of the procedure for finding that a Member State has failed to fulfil its obligations. Consequently, the reasoned opinion and the proceedings brought by the Commission must be based on the same complaints as those set out in the letter of formal notice initiating the pre-litigation procedure (see, in particular, Case C-'191/95 Commission v Germany [1998] ECR I-5449, paragraph 55, and Case C-'340/96 Commission v UnitedKingdom [1999] ECR I-2023, paragraph 36).
37. In this case, it is clear from the letter of formal notice and from the reasoned opinion that, during the pre-litigation procedure, the Commission clearly put forward the complaint which the Spanish Government considers to be inadmissible. This finding is, moreover, borne out by the fact that, in its reply to the letter of formal notice, the Spanish Government explained its reasons for adopting the provisions to which the complaint in question relates.
38. Accordingly, the Spanish Government-�s objection that the third complaint is inadmissible must be rejected.
Substance
The first complaint
- Arguments of the parties
39. The Commission-�s first complaint is that the Kingdom of Spain failed to comply with the principle of mutual recognition of driving licences embodied in Article 1(2) of Directive 91/439 by providing, in Articles 22 to 24 of the Regulations on Drivers, for the compulsory and systematic registration of driving licences issued by other Member States when the holders of such licences have established their normal residence in Spain.
40. The Commission observes that the registration of driving licences is compulsory within six months after the licence holder-�s normal residence has been formalised or documented. In the absence of such registration, the driving licence would not be valid in Spanish territory, so that the driving of a vehicle with a licence of that kind would be regarded as driving without administrative authorisation, which might entail administrative penalties and legal consequences of a civil, criminal and administrative nature.
41. First, it is clear from the case-law of the Court that the principle of mutual recognition of driving licences must be applied -�without any formality-� (Case C-'193/94 Skanavi and Chryssanthakopoulos [1996] ECR I-929, paragraph 26, and Case C-230/97 Awoyemi [1998] ECR I-6781, paragraph 41). Since, in this case, registration of a driving licence issued by another Member State is a precondition for mutual recognition, such registration constitutes an obstacle to the free movement of persons. The fact that Spanish nationals are also obliged to register their licences is not relevant in that regard.
42. Second, contrary to the Spanish Government-�s contention, registration is not necessary in order to exercise the power granted to the Member States by Article 1(3) of the Directive. In its judgment in Case C-390/99 Canal Satélite Digital [2002] ECR I-607, moreover, the Court held that a system of compulsory registration to ensure the observance of obligations or powers granted by a directive is compatible with Community law only to the extent to which it respects the fundamental freedoms upheld by the Treaty.
43. According to the Commission, the compulsory and systematic registration of driving licences issued by other Member States and the imposition of particularly severe penalties in the event of breach of that obligation are manifestly disproportionate to the objective that the Kingdom of Spain may pursue under Article 1(3) of Directive 91/439. That objective could be achieved, for example, by means of road checks and by informing the holders of driving licences issued by the other Member States of their obligations under Spanish legislation regarding the period of validity of driving licences and medical checks.
44. The Commission adds that the registration procedure at issue in this case likewise cannot be justified under Article 8(2) of the Directive since the effectiveness of a system which takes account of repeated offences could be ensured by the registration of licence particulars at the time of the first infringement.
45. The Spanish Government contends, first, that the registration procedure at issue in this case is not contrary to the principle of mutual recognition of driving licences embodied in Article 1(2) of Directive 91/439. Admittedly, driving licences issued by the other Member States must be registered, but their holders are not subjected to additional tests. The validity of the licences is therefore recognised. Moreover, the holders of licences issued by another Member State are not compelled to exchange their licences for Spanish licences. Since the system at issue in this case does not provide for such compulsory exchange, the principles laid down by the Court in the abovementioned judgments in Skanavi and Chryssanthakopoulos and Awoyemi cannot be transposed to this case.
46. The Spanish Government then submits that only by making registration of driving licences issued by the other Member States compulsory can it comply with its obligations under Articles 1(3) and 8(2) of Directive 91/439.
47. It states in that connection that, since the registration at issue enables the competent authorities to identify all drivers established in Spanish territory, it represents an essential measure, first, to ensure application of the national provisions concerning medical checks, the period of validity of driving licences and tax arrangements and, second, to monitor the penalties imposed on drivers. In those circumstances, the free movement of persons is not undermined and no obstacles are created other than those provided for by the Directive. In any event, even if it were considered that the registration at issue constituted an impediment to the free movement of persons, that impediment would be proportionate to the objective pursued by the directive. Moreover, by analogy with the Court-�s dicta in Case C-451/99 Cura Anlagen [2002] ECR I-3193, the registration at issue is necessary and should be seen as the natural corollary of the exercise of the powers which Directive 91/439 confers on the Member States.
48. The Spanish Government submits, finally, that compulsory registration of driving licences issued by the other Member States is also intended to ensure equal treatment as regards monitoring the standard of fitness prescribed for driving a motor vehicle. That objective could not be attained by checks on public roads since such checks are random in character. To be efficient, they would have to be continuous, which, first, is not possible and, second, would undermine the free movement of persons.
49. The United Kingdom Government submits, first, that since the Commission recognises that a system of registration is permissible, it must also accept that breach of the obligation to register is punishable. However, the penalty must be in conformity with the principle of proportionality.
50. It submits, next, that in the absence of any other possible means of obtaining relevant information about the holders of driving licences who have established themselves within its territory, a Member State may, in order to give effect to the powers conferred on it by Directive 91/439, ask licence holders to register their licences. Such legislation is, moreover, in conformity with the principles laid down by the judgments in Case 16/78 Choquet [1978] ECR 2293, and Skanavi and Chryssanthakopoulos, cited above.
51. The United Kingdom Government submits, finally, that a system based on provision of information concerning the right to drive with a licence issued by another Member State and on roadside checks is not sufficient to ensure compliance with national provisions applicable to the holders of such licences.
52. First, informing the holder of a driving licence of his obligations is not equivalent to enforcement of those obligations through registration. Those Member States which do not have an official system for transfer of residence or another system of identity documentation are, moreover, not in a position to obtain such information. Second, since roadside checks, which cannot be made more effective without entailing a restriction of free movement, are neither systematic nor effective and take place only in the event of infringements, they contravene the principle of equal treatment.
- Findings of the Court
53. As regards, first, the compulsory nature of the registration provided for by the Spanish rules, it must be borne in mind that Article 1(2) of Directive 91/439 provides for mutual recognition of driving licences issued by the Member States and that the Court has held that that recognition is to be carried out without any formality (see, in particular, Case C-246/00 Commission v Netherlands [2003] ECR I-7485, paragraph 60).
54. In addition, the obligation of mutual recognition of driving licences is a precise and unconditional obligation and the Member States have no discretion as to the measures to be adopted in order to comply with that requirement (see Commission v Netherlands, paragraph 61).
55. As the Court held in paragraph 62 of Commission v Netherlands, if registration of a driving licence issued by another Member State becomes an obligation because holders of such a licence are subject to a sanction if, after having taken up residence in the host Member State, they operate a motor vehicle without having registered their driving licence, such registration must be deemed to constitute a formality within the meaning of the case-law of the Court and is thus contrary to Article 1(2) of Directive 91/439.
56. In this case, as the Spanish Government admitted at the hearing, the holder of a driving licence issued by another Member State who has been normally resident in Spain for more than six months and drives a vehicle without having had his licence registered in Spain is regarded as committing an offence for which a fine may be imposed. Accordingly, it must be held that the registration at issue in these proceedings constitutes a formality which infringes the principle of mutual recognition laid down in Article 1(2) of the Directive.
57. As far as the explanations given by the Spanish Government are concerned, it must be observed, first, that, contrary to the latter-�s contention, Articles 1(3) and 8(2) of the Directive do not impose any obligation on the Member States but grant them powers.
58. It must then be pointed out that, as the Court held in paragraphs 68 and 69 of Commission v Netherlands, the compulsory registration of driving licences issued by other Member States is not necessary in order to ensure that national provisions concerning medical checks, periods of validity and tax arrangements are complied with, since a system based on road checks and the provision of information to the holders of licences enables that objective to be attained.
59. First, the fact that a driving licence issued by another Member State is not registered in the host Member State does not mean that, during roadside checks, the competent authorities of the latter State cannot correctly apply the national provisions regarding the period of validity of driving licences by adding the period of validity prescribed by those provisions to the date of issue stated on the licence (see, to that effect, Commission v Netherlands, cited above, paragraph 68, and the order of 29 January 2004 in Case C-253/01 Krüger [2004] ECR I-0000, paragraph 27).
60. Second, it is for the holder of a driving licence issued by a Member State who has acquired normal residence in the territory of another Member State and has exercised the right provided for in Article 1(3) of Directive 91/439 to produce evidence that he has complied with the provisions of the host Member State concerning medical checks and renewal of the driving licence. It would therefore be sufficient to inform the holders of driving licences issued by other Member States of their obligations under the legislation of the host Member State when they take the steps necessary to take up residence there, and to apply the prescribed penalties in the event of non-compliance with those provisions (see, that effect, Commission v Netherlands, paragraph 69, and the order in Krüger, paragraphs 28 and 34).
61. However, it must be pointed out that Community law does not prevent the host Member State from offering the holder of a driving licence issued by another Member State the option of registering his licence voluntarily, with, for example, the consequence for the holder that he will be invited to present himself for medical checks and will therefore be less likely to infringe the legislation of the host Member State inadvertently.
62. Furthermore, as the Advocate General observed in point 52 of his Opinion, there is no need for compulsory and systematic registration in the host Member State of licences issued by the other Member States in order to enable the authorities of the host Member State to apply their national provisions regarding restriction, suspension, withdrawal or cancellation of the right to drive and, if necessary, have the licence in question exchanged for that purpose.
63. At the time of the first infringement in the territory of the host Member State that might give rise to the application of those provisions, the competent authorities of that State can proceed to register those particulars from the offending driver-�s driving licence. Thus, when the driver re-offends, they have the information needed to enable them, if appropriate, directly to suspend the driving licence or to take any other measure under the national provisions referred to in Article 8(2) of Directive 91/439. Likewise, to enable the authorities of the host Member State, when applying those provisions, to take account of infringements committed in the Member State of issue of the driving licence, there is nothing to prevent them from requesting information from the authorities of the Member State which issued the driving licence as part of the mutual assistance and exchange of information provided for in Article 12(3) of the Directive.
64. It must be observed, finally, that the road checks advocated by the Commission can be carried out without the free movement of persons or the principle of equal treatment being undermined. First, contrary to what the Spanish and United Kingdom Governments appear to suggest, the fact that, at roadside checks, the driver of a vehicle may, for the duration of the check, be temporarily immobilised cannot be regarded as constituting, in principle, a restriction on the free movement of persons contrary to the Treaty. Second, the fact that roadside checks are carried out on a selective basis certainly does not imply that the principle of equal treatment is infringed.
65. In those circumstances, it must be held that the Commission-�s first complaint is well founded.
The second complaint
- Arguments of the parties
66. By its second complaint, the Commission criticises the Kingdom of Spain for infringing point 4 of Annex I to Directive 91/439 by providing, in Article 25(2) of the Regulations on Drivers, that a driving licence issued by another Member State which has no further space in which to enter the particulars required for administrative purposes must be exchanged for a Spanish driving licence.
67. According to the Commission the possibility of entering new particulars in a driving licence is strictly limited by the Directive, which, in that connection, lays down a condition of non-discrimination and makes the entry of information conditional upon the availability, on the licence, of the space needed for that purpose. Neither Article 8, which deals with the exchange of licences, nor any other provision of the Directive imposes the obligation to exchange a licence when the requisite space is no longer available. The Directive deals exhaustively with the exchange of driving licences and therefore it must be concluded that it precludes any compulsory exchange of the kind at issue in this case.
68. According to the Spanish Government, since the Directive grants Member States the right to enter certain particulars on driving licences issued by other Member States, it cannot be validly contended that that power lapses as a result of the space provided on licences for those particulars ceasing to be available. Compulsory exchange is therefore essential to enable the national authorities to exercise their right to enter those particulars on the licences. That right cannot be limited by considerations of a practical nature such as the format of the licence concerned or the behaviour of its holder. Without compulsory exchange, exercise of the right granted by point 4 of Annex I to Directive 91/439 would result in a breach of the principle of equal treatment, since drivers would be treated differently according to whether or not additional particulars could be entered on their driving licences. In any event, the exchange of such a licence for a new Spanish licence does not in any way adversely affect its holder.
- Findings of the Court
69. It must be borne in mind that the power which Article 1(3) of Directive 91/439 grants to the host Member State to enter on a driving licence issued by another Member States the particulars needed for its administration is, as is apparent from point 4 of Annex I to Directive 91/49, expressly subject to the condition that the necessary space on the licence is available to the host Member State for that purpose.
70. Exchanging a driving licence issued by another Member State when the space provided on the licence for recording the observations necessary for the administration thereof ceases to be available is not compatible with Directive 91/349 since the exhaustive list of circumstances in which exchange is authorised contained in Article 8 of the Directive does not include such a case.
71. In view of that finding and of the fact that it is clear from the case-law that Articles 1(2) and 8(1) of the Directive, read in conjunction with the ninth recital in its preamble, prohibit the Member States, in particular, from requiring the exchange of driving licences issued by another Member State (see, in particular, the order in Krüger, paragraph 30), exchange of the kind provided for by Article 25(2) of the Regulations on Drivers must be regarded as incompatible with the Directive and more particularly with point 4 of Annex I thereto.
72. It follows that the Commission-�s second complaint is also well founded.
The third complaint
- Arguments of the parties
73. By its third complaint, the Commission criticises the Kingdom of Spain for infringing Article 7(1)(a) of Directive 91/439 by providing, in the seventh transitional provision of the Regulations on Drivers, that the holders of driving licences issued in accordance with the legislation applicable before the entry into force of the Directive are entitled to have their licences renewed provided that they fulfil the minimum conditions laid down by that legislation.
74. The seventh transitional provision of the Regulations on Drivers thus recognises that such licence holders have a vested right that is not provided for by Directive 91/439, in so far as the latter provides, in Article 7(1)(a) and Annex III, that the requirements concerning mental and physical fitness laid down therein must be fulfilled each time a driving licence is renewed.
75. The Commission adds that, contrary to the Spanish Government-�s contention, first, the fact that Directive 91/439 does not recognise vested rights is not an oversight and, second, the Directive does not contravene the principle of non-retroactivity of laws since it applies only to the future effects of driving licences. In any event, in proceedings for failure to fulfil obligations, the Spanish Government is not entitled to allege that the directive which the Commission accuses it of failing to comply with is illegal.
76. The Spanish Government states that the seventh transitional provision of the Regulations on Drivers provides for the retroactive application of the rules at present in force where the latter are more favourable than the previous rules and, where that is not the case, for maintenance of the previous conditions for driving licences obtained under the previous rules. That measure, which is of limited scope, is in its view essential in order to avoid breach of the principle that vested rights must be respected and the principle that laws which impose more severe penalties or limit individual rights must not have retroactive effect. The Spanish Government also states that, under its domestic law, a provision of a regulation which does not recognise rights acquired under a rule having the status of a law is vitiated by illegality, so that it is not possible for the Regulations on Drivers to prevent a holder who satisfies the medical conditions laid down by the national rules applicable prior to the entry in force of Directive 91/439 from renewing his licence.
- Findings of the Court
77. It must be pointed out that it is clear from a combined reading of Article 7(1)(a) of Directive 91/439 and Annex III thereto, to which that provision refers, that the minimum rules concerning mental and physical fitness to drive a motor vehicle laid down by the Directive apply to any person seeking the issue or renewal of a driving licence.
78. Since the Directive does not distinguish between the renewal of driving licences issued after its entry into force and that of driving licences issued before that date, it must be concluded that such a distinction is incompatible with the Directive.
79. That conclusion is borne out by the finding that the interpretation advocated by the Kingdom of Spain would seriously compromise the objective pursued by Article 7(1)(a) of the Directive, namely the improvement of road safety, by allowing a large number of driving licence holders to continue to use a licence issued under rules which do not observe the minimum medical standards laid down by the Directive.
80. Since it is common ground in this case that the seventh transitional provision of the Regulations on Drivers specifically allows holders of driving licences issued prior to the entry into force of the Directive to have their licences renewed without being obliged to fulfil the minimum standards of physical and mental fitness laid down by the Directive, it must be concluded that that provision is contrary to Article 7(1)(a) of Directive 91/439.
81. Furthermore, that non-compliance cannot be justified by the existence of national provisions pursuant to which the holders of driving licences issued before the entry into force of the Directive cannot be obliged to fulfil the conditions laid down by it when renewing their licences.
82. According to settled case-law, a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations and time-limits laid down by a directive (see, in particular, Case C-'66/03 Commission v France [2003] ECR I-0000, paragraph 12).
83. In those circumstances, it must be held that the Commission-�s third complaint is also well founded.
84. In view of all the foregoing considerations, it must be held that, by adopting Articles 22 to 24 and 25(2) of the Reglamento de conductores (Regulations on Drivers) and also the seventh transitional provision of those regulations, the Kingdom of Spain has failed to fulfil its obligations under Articles 1(2) and 7(1)(a) of and point 4 of Annex I to Council Directive 91/439.

Costs
85. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party-�s pleadings. Since the Commission has applied for costs and the Kingdom of Spain has been unsuccessful, the latter must be ordered to pay the costs. Under the first subparagraph of Article 69(4) of the Rules of Procedure, the Kingdom of the Netherlands and the United Kingdom, which intervened in support of the Kingdom of Spain, must pay their own costs.




On those grounds, the Court (Second Chamber) hereby:
1. Declares that, by adopting Articles 22 to 24 and 25(2) of the Reglamento de conductores (Regulations on Drivers), of 30 May 1977, and also the seventh transitional provision of those regulations, the Kingdom of Spain has failed to fulfil its obligations under Articles 1(2) and 7(1)(a) of and point 4 of Annex I to Council Directive 91/439/EEC of 29 July 1991 on driving licences, as amended by Council Directive 96/47/EC of 23 July 1996;
2. Orders the Kingdom of Spain to pay the costs;
3. Orders the Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland to bear their own costs.

Signatures.

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1 - Language of the case: Spanish.