Europe's highest court ruled Thursday that Total Spain, a unit of Total SA (FP.FR), may be able to keep a 20-year sole-supplier contract with a gas-station owner, if Total can prove that it owns the land.

The determination of who owns the land must be made by a Spanish Court, according to a ruling in the European Court of Justice, or ECJ.

The ruling is the third ECJ case concerning Spanish gas stations and disputes with oil companies. The cases concern issues particular to Spanish civil property law. This outcome of this case is likely to affect some of the many similar cases pending in Spanish courts.

In these cases, gas station owners are trying to have long-term supply contracts ruled illegal under European Union competition rules. If they wanted to end the deals under Spanish law, they would owe compensation to the oil companies.

The case is also expected to clarify how E.U. competition law should deal with these loopholes.

Under E.U. regulation enacted in 1999, exclusive supply contracts can exist for up to five years. If an oil company owns the property or leases it from a third party, then it is exempt from the five-year rule.

The 20-year contract was legal under laws applying when it was signed. That law ceased to apply in 2001.

In 1989, Pedro IV Servicios signed a series of contracts with Total Spain to build a gas station on land Pedro IV owned in Spain. Part of the agreement was that Total would be the sole supplier of Pedro IV's fuel for twenty years.

Total, the deal said, would determine the prices Pedro paid. However, the oil company undertook to limit these to the average price set by other suppliers in the same market.

In 2004, Pedro IV took legal action to annul the contracts. Pedro IV argued the contracts severely restricted competition, in violation of limits set out in European laws on exclusive supply contracts. The plaintiff also claimed that the contracts violated rules on indirect setting of resale prices.

The court in Barcelona, Spain, has asked the ECJ to clarify whether the clauses in question can be covered under the exemptions in either the 1983 or 1999 regulations.

-By Mike Gordon, Dow Jones Newswires; +352 691 180 766; mgordon.dowjones@gmail.com