C-11/76

JUDGMENT OF 7. 2. 1979 — CASE 11/76 NETHERLANDS v COMMISSION

CELEX: 61976CJ0011
Datum: 1979-02-07
Källa: eur-lex.europa.eu

THE COURT composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), P. Pescatore, M. Sørensen, A. O'Keeffe and G. Bosco, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and procedure

A — The origin of the butter case

B — The origin of the albumin case

C — Provisions to be considered

D — Procedure

II — Conclusions of the parties

III — Submissions and arguments of the parties

A — The principles governing the financing of intervention measures

B — The individual cases

1. The butter case

2. The lactalbumin case

IV — Oral procedure

Decision

Sale at reduced prices of butter from public stocks for export

Export refunds for lactalbumin

Costs

I —. Facts and procedure

A —. The origin of the butter case

B —. The origin of the albumin case

C —. Provisions to be considered

1. Principles governing the financing of intervention measures

2. Financing of intervention measures for butter

D —. Procedure

II —. Conclusions of the parties

III —. Submissions and arguments of the parties

A —. The principles governing the financing of intervention measures

1. The applicant's observations in this respect relate to the albumin case and, as a subsidiary matter, to the butter case. The main observations of the applicant relating to the butter case are summarized under B. 1.

2. Before stating its point of view on the matters of principle, the Commission observes that it has already defined that point of view in a succinct form in the working paper of 16 October 1975 on the procedure, practice and consequences of the clearance of accounts (Document VI/192/75) on which its decisions of 2 December 1975 are based.

3. (a) The applicant states in its reply with regard to the discharge of accounts and the consequences thereof that it is first necessary to determine whether each item of expenditure was actually incurred in favour of the individual concerned and whether the latter really undertook the factual steps which justify that expenditure; it is subsequently necessary to examine whether the expenditure was in accordance with Community law and, where appropriate, the matter may be brought before the Court of Justice; if it appears that the expenditure was not in accordance with Community law the question arises of the purport of Article 8 of Regulation No 729/70. That article is based on the idea that items relating to expenditure which, whilst not in accordance with Community rules, was nevertheless incurred, are to be discharged within the meaning of Article 5 (2) of the regulation. Such a situation is not necessarily in contradiction with Articles 2 or 3 of the regulation. Those articles in fact relate to the actual financing of the measure to be taken in accordance with the rules and not its application in concreto. The problem of implementation is touched on only by Article 4, which gives the national authorities responsibility for making payments in accordance with Community rules. In the applicant's opinion the question is whether expenditure wrongly incurred should be reimbursed by the competent authority of the Member State because the financing arrangements, in contrast to those of Regulation No 17/64, make provision for internal payments made by external authorities. Budgetary acceptance has already taken place at the time of the closure of the financial year in the course of which any unauthorized payment has been made. Budgetary apportionment between the Community and the Member States of expenditure arising from measures which are not in accordance with Community law requires: a procedure guaranteeing that decisions are taken after due reflection, based on close cooperation between the Commission and the Member States, in which respect the applicant has in mind the Fund Committee procedure as defined in Article 26 of Regulation No 17/64 (which corresponds to that laid down by Article 13 of Regulation No 729/70); and also rules laid down and formulated in some way which give concrete expression to recognized principles relating to budgetary apportionment of expenditure between the Community and the Member States. If, following that procedure, sums are charged to a Member State, that decision will annul the effect of the decision to discharge the item in question.

3. (b) The applicant is still of the opinion that Article 8 of Regulation No 729/70 also contains provisions relating to the procedure and conduct of national bodies. There is nothing to indicate the contrary in the position of the provision, the recitals in the preamble, its origins or its purpose. The purpose of the first subparagraph of Article 8 (1) would not be affected and, taking account of the second subparagraph of that provision, would be meaningless if it did not also serve to counter wrongful acts or omissions on the part of the authorities and bodies responsible for making the payments in the performance of their duties. Finally, the system of the third subparagraph requires that irregularities or negligence must be understood as including all the factors giving rise to the wrongful payment which may be localized within or outside those authorities or bodies. Nor is Regulation No 283/72 confined to the conduct of individuals. The provisions to be communicated to the Commission under Article 2 of the regulation cover the whole of the field of the measures to be taken in application of Article 8 (1) and the main provisions relating to the role and functioning of the authorities and other bodies and the procedures which the latter are responsible for applying; Article 5 relates in a very general manner to all procedures instituted with a view to recovering sums wrongly paid as a result of irregularities or negligence; Article 6 also has a wide scope. The applicant further states that the Commission's affirmation that the scope of Article 15 of Regulation No 2306/70 and of the corresponding articles in other regulations is confined to losses suffered in storage is unfounded. If it had been intended to regulate only that aspect it would have been necessary to add an additional item to the list of those to be credited pursuant to Article 4 (2) of Regulation No 2306/70. The fact that a separate article was introduced shows that on the contrary rules with a wider scope were intended. In any event, the wording of Article 15 leaves no doubt as to its scope. The opinion of the applicant as set out above is corroborated by Working Paper R/1024/71 of 25 May 1971 relating to the financial consequences of irregular transactions drawn up by the Commission at the time of the discussion on the proposal for Regulation No 283/72. The document states at page 3 that: The question of financial responsibility is a different problem (from that of the finding of irregularities by Member States)… If no ad hoc provision were laid down the question would finally be resolved by the Commission after consulting the Fund Committee at the time of the annual decision on the discharge of the accounts referred to in Article 5 (2) (b) of Regulation No 729/70 … In the text at present under discussion these questions are, on the contrary, to form the subject-matter of appropriate contacts between the State and the Commission and — in case of dispute — ad hoc decisions which are to be taken by the Commission after an opinion has been given by the Committee in accordance with the procedure under Article 13 of the regulation (thus after the matter has been referred to the Council in the case of an unfavourable opinion)… Already in the financing arrangements prior to 1 January 1971 the regulations provided that the Member States and not the Community are to bear the financial burden of negligence attributable to the former and that decisions on the matter are to be taken by the Commission in accordance with a Management Committee-type procedure …. The applicant takes the view that the Commission should take account of the text of Working Paper R/1024/71 in applying Regulation No 283/72. It refers moreover to the examples listed at page 6 of that paper of negligence on the part of an official acting in the performance of his duties and in the context of the normal application of Community law: arbitrary conduct by an official in infringement of the instructions given to him by the State or failure by him to take the necessary steps to forestall fraud, in which case it is necessary, in the view of the applicant, to examine also whether or not such conduct constitutes negligence attributable to the Member State concerned. In these circumstances it is not possible to argue that the concept of negligence does not also cover the incorrect application of a regulation as a result, for example, of a misunderstanding of the relationship existing between the various provisions in question or of an incorrect evaluation of the wording of a provision having regard to its purpose. With regard to the Commission's reference to the penultimate recital in the preamble to the proposal for Regulation No 729/70 the applicant observes that that recital was wisely not included in the final text as it gave a one-sided picture of the problem. As it stands, the recital merely states that the financial responsibility for such irregularities or negligence must be determined. In the applicant's view the difference between the Dutch text and the German and French texts of Article 8 (2) of the proposal for Regulation No 729/70 of the Commission is due to the fact that the word attributable was mistakenly not translated in the Dutch text and that therefore that text does not correctly express the Commission's initial proposal. The applicant states that there are very few differences between the German and French texts of Article 8 (2). The essential fact is that the concepts of irregularity and negligence together cover all the causes which may give rise to wrongful payments; the word negligence covers actions or failures to act on the part of the administration in breach of the obligations incumbent on the Member State; if account is taken of the obligation imposed on the Member States in Article 8 (1) then logically negligence should be examined for the purpose of ascertaining whether it may be attributed to the Member State. In the case of negligence in breach of a duty a distinction drawn between attributable negligence and non-attributable negligence is not as incomprehensible as the Commission states in its defence. The fact that there has sometimes been a certain carelessness in this respect is of little importance; the significant fact is that it is the intention of the regulation that such negligence should be assessed and that the question whether it may or may not be attributed to the authorities or other bodies of the Member State should be resolved. The applicant believes that the reason for the interpolation of the concept of negligence in the course of the discussions was that the application of the word irregularity to actions of the authorities of the Member States was held to be less adequate. The French wording of Article 8 (3) contained in the proposal for Regulation No 729/70 would not, in this respect, have led to a result different from the present situation. In that text the crucial point is whether the negligence is attributable. On the other hand, it is significant that the expression irregular transactions was replaced by irregularities. It might be argued that the word transactions refers both to acts on the part of individuals and acts on the part of bodies or officials. The applicant contends that it is clear that implementing provisions were required by Article 8 (1) and (2). Regulation No 283/72 should be supplemented in this respect on the basis of proposals to be made by the Commission in accordance with the duties set out in Article 8 (3) and the statement made at the time of the adoption of Regulation No 283/72 (Document R/151/72). The Commission's view that, as regards questions of interpretation, the Member State must be deemed to act at its own risk and on its own responsibility unless it has consulted the Commission in advance is not reconcilable with the different duties of the Commission and of the Member State in the context of the implementation of the Community rules on the organization of the markets or with the fact that difficulties of interpretation are not always known in advance and that, generally, they cannot be resolved by the authorities of administrative bodies, including the departments of the Commission.

3. (c) The applicant then replies to the Commission's arguments relating to the procedure. As regards the albumin case the applicant's argument is that, at present, the Commission does not have the power to adopt a supplementary decision laying down the financial obligations of the Netherlands State towards the Community, either in view of the absence of rules such as those contained in Article 14 of the proposal for Regulation No 283/72 or because of the undertaking entered into by the Commission at point (c) of the statement issued at the time of the adoption of that regulation. The applicant refers in this respect to the Report on the implementation of Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and the recovery of sums wrongly paid in connexion with the financing of the common agricultural policy and the organization of an information system in this field (Document R/2608/75 of 22 October 1975) and in particular to point 44 of that report, in terms of which, in the absence of general rules defining the scope of the first paragraph of Article 8 (2) of Regulation No 729/70 and the procedure to be followed in its implementation, that provision seems difficult to apply in cases where differences in interpretation exist between the Member State concerned and the Commission. It does not follow from the statement issued at the time of the adoption of Regulation No 283/72 that the Council must give its opinion on individual cases. It is the applicant's wish that the report promised in that statement be submitted to the Council and that it be accompanied by proposals for rules within the meaning of Article 8 (3) of Regulation No 729/70 to be adopted by the Council, in application of which solutions could be found for cases where it has not been possible to reach agreement on the attribution of liability. The applicant objects to decisions on the attribution of liability being taken by the Commission after merely hearing the Fund Committee. It believes that it is necessary to follow the procedure referred to in Article 26 of Regulation No 17/64. It is also necessary that the implementing rules which are to be adopted should define the content of the concept of the attribution of liability. It is not desirable to use for this purpose very precise wording, but at least a certain number of general criteria should be established which could be partly of a substantive nature and consist partly of rules for collaboration between the Member States and the Commission.

3. (d) The applicant states that Article 15 of Regulation No 2306/70 and the corresponding provisions in other regulations were inserted in order to avoid the declaration of excessive amounts to the EAGGF where losses within the meaning of Article 3 of Regulation No 2306/70 or the corresponding provisions in other regulations were rendered worse by negligent management of intervention stocks. Article 8 of Regulation No 729/70, on the other hand, governs the refunding of amounts wrongly paid by means of funds placed by the Commission at the disposal of the national paying authorities. Thus Article 8 and Article 15 could never be applied simultaneously. Documents S/121/69 and S/176/2/69 referred to by the Commission do not show the reason why the departments of the Commission sought to generalize that question. For that reason alone the origins are of scant importance. The fifth recital of the preamble to Regulation No 2306/70, moreover, supports the applicant's opinion. In calculating the net loss which may be declared to the Community only the items listed exhaustively may be taken into consideration pursuant to the regulations. Such a general provisions is thus necessary. As Article 4 (2) (a) of Regulation No 2306/70 provides that in calculating net losses the account may be credited only with the actual amount of receipts from disposals, the applicant takes the view that, in the butter case, the shortfall in the receipts of the Netherlands intervention agency could be corrected only by applying Article 15. Clearly, Article 8 of Regulation No 729 could also have been framed with sufficient latitude to cover losses suffered in the case of so-called second category intervention within the meaning of Article 15 of Regulation No 2306/70 as well, but that solution was not adopted.

3. (e) The applicant begins its arguments relating to the apportionment of the financial risk between the Community and the Member States by analysing the possible causes of wrongful payments. In its view that analysis shows that, from the point of view of financing, the phenomenon of wrongful payments can only be treated as a whole and that in certain respects it is inevitable that losses should be recorded following wrongful payments. According to the applicant it ensues from the system of the present financing arrangements and the general institutional and budgetary framework that the Member States cannot be held to be under an obligation to refund wrongful payments unless they themselves or their agencies have failed to fulfil their obligations. Articles 2, 3, 4 and 5 of Regulation No 729/70 contain no rule automatically placing the Member States under an obligation to compensate the Commission for sums wrongly paid which cannot be recovered. On the other hand, provision is made for such an obligation to pay compensation where the authorities or other bodies of the Member States are at fault in connexion with the wrongful payments. In view of the fact that financing is, since the introduction of direct financing, the responsibility of the Commission, the latter must bear the ensuing risks. For their part the Member States are only liable for the financial consequences of irregularities or negligence attributable to the authorities or other bodies of the State. That system of liability is not only justified from a legal point of view but also complies with the political and institutional situation in the agricultural sector: the agricultural policy is a Community policy and the various Member States merely collaborate in its implementation; for that reason, in implementing the agricultural policy as such funds are no longer available to the Member States; the charging to a Member State of a financial burden in connexion with that implementation thus requires a special reason. As regards the Commission's observation that it does not have the power to give instructions to the paying authorities, the applicant states that that situation is justified by the fact that only the national legislature can confer on those authorities the necessary powers to ensure a proper application of Community provisions and only action in their own name makes it possible to remain within the context of the national organization of administrative law. The present legal procedures thus benefit the Community itself. This situation also has to do with the fact that what is at issue here is not merely a question of the application of Community provisions but also of the application of rules of national law. The principal justification for autonomous action by the implementing authorities lies in the fact that they must be in a position to act sufficiently promptly and always to react adequately to situationswhich, in the commercial context, are often unforeseeable. Finally, the Commission mistakenly presents matters as though difficulties met in practice can always be resolved by consulting the Commission's departments. Some cases can certainly be resolved in that way but in other cases doubts as to the exact meaning of a provision are not dispelled by the information obtained. With regard to the substantive criteria relating to the apportionment of the financial risk the applicant states that where an implementing body makes incorrect use of available information which is in itself correct, the rule is that the payments should be charged to that body. However, where exact and decisive information was wrongly not available the paramount factor is to what extent the Member States performed their duty to check whether information supplied by individuals with regard to transactions undertaken by them was correct. The applicant notes with regard to the incorrect application of regulations by the competent authority that payments wrongly made because of negligent acquaintance with the rules on the part of the officials responsible for their implementation or because of incomplete or belated notification to them of the rules by the central authorities seem in principle inexcusable, save in cases of force majeure or similar circumstances. A possible case of mistaken interpretation could be held to exist only where, taking account of all the relevant circumstances, the interpretation applied by the authority was indefensible from the point of view of an objective and competent observer and where the national court which was faced with the question whether reference should be made to the Court of Justice under the last paragraph of Article 177 of the Treaty had not done so. With regard to the criteria of a procedural nature relating to the apportionment of the financial risk the applicant observes that they might relate in particular to cases where problems of interpretation exist. It is of great value to ask the opinion of the Commission's departments; it does, however, create a number of complications: first, the possibility of interpreting rules in two ways may, in certain cases, only become apparent later; next, the question arises as to whether application of a rule should be suspended until the opinion is received; a third question is whether the Community should assume responsibility for all the consequences of an opinion which subsequently proved to be erroneous; finally, it is necessary that the formal conditions, for such an opinion should be clearly laid down, for example, whether it should be given in writing, possibly within a time-limit to be fixed, and whether reasons must be given. The applicant believes that it has shown in its conclusions that the questions raised by the complex matter of wrongful payments require the establishment of rules enabling an answer to be given. The institutional balance would be upset if the rules were formulated and laid down by the Commission. It was for that reason, inter alia, that the applicant asks the Court to declare that before continuing the examination of the case or cases in question the Commission should submit proposals on this matter to the Council pursuant to Article 8 (3) of Regulation No 729/70.

4. In its rejoinder the Commission emphasizes with regard to the discharge of accounts and the consequences thereof that Articles 2 (1) and 3 (1) of Regulation No 729/70 are not, as the applicant claims, confined to marking the beginning of total financing by the Community of all refunds and intervention. That already applied at the single market stage under Article 2 (2) of Regulation No 25 of 20 April 1962 on the financing of the common agricultural policy (Official Journal, English Special Edition 1959 — 1962, p. 126).

B —. The individual cases

1. The butter case

1. (a) The applicant takes the view that the vague term sale contained in Article 3 of Regulation No 1308/68 must be understood in the sense of delivery so that the period of 30 days begins to run from the time of delivery. The difference between the parties' views is evident on the following points: In the Commission's view forward sales, that is to say supplies, are excluded; the applicant takes the opposite view; In the Commission's view the sale of the butter is equivalent to its removal from the store so that within 30 days from the repeal of Regulation No 1308/68 all butter sold under that regulation should have been exported; according to the applicant, that regulation continued to apply so long as a certain number of contracts for forward delivery, relating to a subsequent date, remained to be executed. The applicant puts forward the following arguments in support of its views: There exist intervention regulations in other sectors which draw a distinction, in general terms, between the date of the conclusion of the contract of sale and the date of acceptance of delivery, the two dates being separated by a fixed period of time. As the rules in question made no such provision there therefore exists a lacuna which must be filled. Furthermore, it is evident from Regulation No 1893/70 which replaced the previous rules on this subject that the Commission had not regulated the question of the conclusion of forward contracts: a provision excluding forward sales was inserted as Article 2 (3) of that regulation.

1. (a) (2) The applicant further argues, relying on its observations set out under A 1 (b) that the Commission had no reason to refuse to approve the accounts relating to the butter case as the implementing body was not aware that Community provisions had been infringed.

1. (b) The Commission argues that in common parlance the concept of sale refers to an agreement for the transfer of the property in goods in return for payment. Regulation No 1308/68 does not define the term in detail Nevertheless, in various articles and various recitals in the preamble indications may be found to support an interpretation in accordance with general usage. The Commission refers in this respect to Articles 1, 2, 4 (1) and 5 of the regulation in question. It is also clear from Regulation No 1893/70 that that view is the correct one. The Commission argues that it is not possible to rely on Article 2 (3) of Regulation No 1893/70 in order to maintain that there is a lacuna in Regulation No 1308/68: in view of the fact that Regulation No 1893/70 made no provision for an obligation to export which had to be satisfied within a given period it was necessary to lay down directly the period within which the purchaser had to accept delivery of the goods. Where Article 2 (3) of Regulation No 1893/70 referred to the day of conclusion of the contract of sale the word sale could, in the Commission's view, have no meaning other than that which it had in Regulation No 1308/68. In fact the party entering into a contract with the intervention agency was referred to as the purchaser and had to accept delivery of the butter purchased. Consequently, Regulation No 1893/70 used the same terminology as Regulation No 1308/68 with the same meaning. The Commission does not think that the intervention agency had a valid reason for applying the regulation as it did. In fact the applicant had no reason to substitute in practice for the wording used in Regulation No 1308/68 the words of Article 3 of Regulation No 2059/69 of 20 October 1969 on the sale of skimmed-milk powder from public stocks intended for export (Journal Officiel No L 263 of 21 October 1969, p. 17), pursuant to which the milk powder sold must be exported within 30 days after delivery by the intervention agency. The applicant was moreover aware from a very early stage that the Commission interpreted the term sale referred to in Article 3 of Regulation No 1308/68 in the sense advocated in the present case even after the adoption of Regulation No 2059/69. The Commission's representative explained that point of view at the 195th meeting of the Management Committee for Milk and Milk Products on 13 August 1970.

1. (c) The applicant replies that the dispute turns on the question whether the term sale excluded the conclusion of contracts relating to forward deliveries. Once such contracts had been concluded it was not possible, after the cancellation of the scheme for selling butter at reduced prices, to obtain supplementary payments from the contracting parties or to declare that securities which had been lodged were forfeit. The applicant denies that the wording of Regulation No 1308/68 is clear. It makes reference to the fact in two Member States the concept of sale has been interpreted in a wider sense, including the possibility of concluding provisional agreements or preliminary contracts. Moreover, the Euroterm dictionary gives in place of vendu: commercialisé ou (re)distribué [marketed or (re)distributed] and in place of verkauft: vertrieben, verteilt, abgesetzt [marketed, distributed, disposed of]. The Commission fails to recognize that its analysis of Regulation No 1308/68 does not exclude, under the terms of that regulation, the possibility of a forward sale. That form of transaction is in accordance with the intervention agencies established practice. The aim of Article 5 of Regulation No 1308/68, which obliged the Member States to notify to the Commission regularly quantities sold, was to enable the Commission to know the quantities sold each month and not what quantities were or were not sold in forward dealing. It was for that reason that the Netherlands always stated each month the quantities entering storage and the quantities leaving store. The Commission never remarked on the point. The applicant is unable to understand how the Commission purports to show that its opinion is correct by relying on the provisions of Regulation No 1893/70. In fact the structure of that regulation is quite different from that of Regulation No 1308/68 as it lays down an obligation to accept delivery within a certain period from the conclusion of the sales contract. In the present proceedings the only important question is, moreover, whether the intervention agency could reasonably be deemed to have known that the term sale should be interpreted in a sense which was specified two years later. That is surely an exaggerated requirement. The Commission had, moreover, in the applicant's view, given it grounds for interpreting and applying the regulation incorrectly. All the market organizations which were set up after 1967 made provision for intervention arrangements involving in particular very specific rules relating to sale by tender; there were no grounds for arguing that the agency could not interpret in the same way a regulation which, like Regulation No 1308/68, was not complete in this respect. The applicant denies that it was aware from a very early stage of any view held by the Commission on this matter. The applicant concludes that it applied Article 3 of Regulation No 1308/68 correctly and that its implementing authority was not in this instance guilty of a mistake for which it may be held liable.

1. (d) The Commission observes in its rejoinder that the expressions referred to in the Euroterm dictionary in place of vendu or verkauft are merely generic terms which include the legal act of sale and which cannot be assimilated to removal from store or acceptance of delivery. The terms sale contained in Article 5 of Regulation No 1308/68 should also be interpreted in the sense of the conclusion of the contract of sale. That interpretation enables the exact consequences of the regulation to be assessed in their entirety and is even necessary if the repeal of that regulation is not to affect contracts already concluded. Information confined to quantities already stored would give only an incomplete idea of those consequences. The Commission maintains that it did not cause the applicant to apply the relevant provisions incorrectly.

2. The lactalbumin case

2. (a) The applicant recognized that it applied a mistaken interpretation in this case. In reliance on its observations set out under A (1) (b), it argues that there are nevertheless no grounds for refusing to discharge the accounts in question by virtue of the fact that at the time the rules were so complicated that it is not possible to criticize the implementing body for its mistake. The confusion was fostered by the fact that since May 1971 monetary compensatory amounts could also be paid for lactalbumin. Application of a provision in accordance with requirements which are not expressly set out in that provision can moreover not be required of the persons concerned. That situation formed the subject-matter of discussions within the Management Committee for Pouhrymeat and Eggs. In the course of those discussions it merely became apparent that the grant of refunds was less desirable from the economic point of view and that finding led to a proposal from the Commission to modify Regulation No 204/69. The Commission had not previously challenged the interpretation adopted and it was therefore not possible to conclude that the Commission would not assume any financial responsibility in this respect. The judgment of the Court of Justice delivered on 13 December 1973 in Case 150/73 (Hollandse Melksuikerfabriek v Hoofdproduktschap voor Akkerbouwprodukten [1973] 2 ECR, p. 1633, which established that during the period in question there existed no right to export refunds for lactalbumin, contained, however, no ruling on the question whether the implementing body could reasonably have taken the view that it could interpret the provision in question as it did.

2. (b) The Commission is of the opinion that it did not give the applicant cause to apply Regulation No 204/69 incorrectly. In this respect it disputes the applicant's view that payment must always be made to an individual who applies for it so long as it is not established that no legal obligation to make the payment exists. Application of such a principle would be dangerous and would lead to unacceptable consequences: if payment was made without reservation it would generally be impossible, under national law, for reasons of protection of legitimate expectations, to seek reimbursement of the amount paid even if it was established beyond doubt that no right to such a payment in fact existed. The problem of the grant of export refunds for lactalbumin was in fact discussed at the meeting of the Management Committee for Pouhrymeat and Eggs of 21 September 1971. At that meeting the Commission's departments stated that no refund was to be paid for lactalbumin.

2. (c) The applicant argues in its reply that in this instance it has not made a mistake for which it can be held liable. Objectively there are excellent reasons for treating the two products as being similar, since they can be substituted one for the other. The opinion expressed by the Commission in the course of the meeting of the Management Committee of 21 September 1971 to the effect that no refund was to be granted for lactalbumin was the personal opinion of the Commission's representative who admitted that, taking account of the wording of the provision and the system of Regulation No 204/69, a different interpretation was defensible. It was for that reason that the official report of that meeting (Document 3771/VI/71 of 27 September 1971) states on this matter under point 7: The Committee Takes note of the additional information supplied by the representative of the relevant department of the Commission; Is informed that the delegations of the Member States will receive for their information a note on the application of Regulation No 204/69 to refunds for albumin. That note was never received. That is all the more regrettable as the report does not indicate the substantive purport of the information supplied. In those circumstances the applicant decided to grant the applications for refunds. That decision was made taking account in particular of the fact that the Netherlands authorities took the view that the reasonable period for payment had been exceeded and that the absence of a decision stating the reasons on which it was based might form the subject of legal proceedings. The solution of making payment subject to a reservation, suggested by the Commission, gives rise to difficulties if, as was the case here, the person claiming the refund satisfies all the relevant substantive conditions. In such a case the adminstration can only grant the application for payment or reject it. The applicant informed the Commission, pursuant to Articles 3 and 5 of Regulation No 283/72, of the procedure adopted by it to recover the sums when it became apparent that payment had been made in error. The Commission did not challenge the validity of that information which shows that it accepted the applicant's notification. The applicant wonders whether the revocation of that acceptance by the Commission almost three years later is in accordance with the principles of proper management. In the autumn of 1972 the Commission sent to the Council its proposal for replacing Regulation No 204/69 by a new regulation. In the explanatory memorandum the following reason was given for the need for such replacement: … the body of rules applicable in this area has become difficult to understand …. Viewed in that light the conclusion that under Regulation No 204/69 the grant of an export refund for lactalbumin was justified appears to be plausible. The applicant's statement also shows that opinions which have financial consequences must be given by the Commission in writing and must set out the reasons on which they are based.

2. (d) In its rejoinder the Commission repeats that it did not cause the incorrect application. It emphasizes that at management committee meetings the chairman is not the only person to speak in the name of the departments of the Commission but that, at his request, other officials of the Commission may set out the departments' point of view. Such statements thus clearly convey the view of the relevant departments of the Commission. The document considered at that meeting by the Commission was conceived, from the beginning, as a general document on Regulation No 204/69 and not as a special written statement of its position on the question raised by the Netherlands delegation. The minutes are indeed not clear on this point. The absence of a written statement of opinion can nevertheless not alter the fact that from the time when the relevant meeting of the Management Committee was held all the Member States were informed of the solution which the Commission regarded as appropriate to the problems raised. If doubts remained the applicant should have requested a written statement of the Commission's point of view and it could certainly not continue to pay refunds without any reservation, even if it awaited written confirmation of the Commission's point of view following the meeting on 21 September 1971. The argument that the time-limits relating to the payment of refunds are generally short and that the risk exists of judicial proceedings being brought by applicants against the national administration therefore carries little weight. The reasons given by the Commission's departments to show that it was impossible to grant the refund should therefore have been sufficient as a statement of reasons for a negative reply or at least a reply subject to a reservation.

IV —. Oral procedure

1. By an application lodged on 2 February the Government of the Netherlands sought the partial annulment under the first and third paragraphs of Article 173 of the EEC Treaty of Commission Decisions 76/145 and 76/151 of 2 December 1975 concerning the discharge of the accounts in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1971 and 1972 (Official Journal No L 27 of 2 February 1976, p. 11 and p. 23).

2. The applicant Government complains that the Commission failed to charge to the EAGGF the amount of Hfl 590072.67 in respect of the release of securities lodged to guarantee the export, within a fixed period, of intervention butter sold at a reduced price in 1971 and two amounts of Hfl 968643.33 and Hfl 12148.73 in respect of the grant of export refunds for lactalbumin in 1971 and 1972 respectively.

3. In contesting the legality of the decisions adopted by the Commission, the applicant Government cites, apart from the provisions of the specific regulations applicable to the products in question, certain general rules set out in Regulation No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970 (I), p. 218), in particular the first subparagraph of Article 8 (2) which is worded as follows:

4. The Government argues that that provision must be interpreted as meaning that the financial consequences of an incorrect application of a Community provision by a national authority must be borne by the Community in all cases where the error committed is not the fault of the administrative authorities or other bodies of the Member State concerned but is the result of an interpretation which, albeit objectively incorrect, was adopted in good faith.

5. The Commission, on the other hand, denies that Article 8 (2) is relevant to the solution of the problems in question, arguing that that provision relates to irregularities and negligence attributable to individuals as persons in receipt of EAGGF expenditure and that it relates to negligence or irregularities which are attributable to the Member States only in the exceptional case of irregularities or negligence on the part of officials in the public service acting in breach of their professional duty.

6. The text of Article 8 in the different language versions, considered in the light of the origins of the provision and the preparatory documents, on which the parties have based their arguments in the course of the proceedings, contains too many contradictory and ambiguous elements to provide an answer to the questions at issue.

7. In this respect it should be noted, first, that Article 8 defines the principles in accordance with which the Community and the Member States are to organize measures to combat fraud and other irregularities in connexion with the operations financed by the EAGGF.

8. In cases where, viewed objectively, Community law has been incorrectly applied on the basis of an interpretation adopted in good faith by the national authorities it is not possible as a general rule, either under Community law or under most of the national legal systems, to recover sums paid in error from the recipients and it is not possible to undertake administrative or judicial procedures against those responsible.

9. That strict interpretation of the conditions under which expenditure is. to be borne by the EAGGF is necessary, moreover, in view of the objectives of Regulation No 729/70.

10. The applicant Government further argues that the expenditure cannot be charged either to the Community or to a Member State on the occasion of the discharge of the accounts of the national authorities and bodies under Article 5 (2) (b) of Regulation No 729/70 but must be attributed by means of a separate procedure.

11. It should be noted that that statement was issued with regard to a regulation (Regulation No 283/72 of 7 February 1972, Official Journal, English Special Edition 1972 (I), p. 90) which was adopted under Article 8 of Regulation No 729/70 and that its scope is consequently limited to the financial consequences of irregularities and negligence referred to by that article, which is not relevant here.

12. It is moreover established that up to the present no specific procedure for attributing liability has been laid down by Community law for the purpose of settling differences between the Community and the Member States.

13. It is clear from Article 5 (2) of Regulation No 729/70 that the Commission's decision is to be adopted only after the consultation with the Fund Committee referred to in Article 11, but that the special procedure defined in Article 13 is not applicable.

14. It is evident from the foregoing that the argument based on the alleged failure to comply with the prescribed procedure cannot be upheld.

15. It is therefore necessary to examine with regard to each of the items at issue whether the expenditure which the Commission refused to charge to the EAGGF was incurred in accordance with the Community provisions applicable in the sector in question.

16. Certain of the amounts which the Commission refused to charge to the EAGGF constitute expenditure incurred by the applicant Government in respect of the sale of butter from public stocks at reduced prices under Regulation No 1308/68 of the Commission of 28 August 1968 (Journal Officiel No L 214 of 29 August 1968, p. 10).

17. The applicant Government contends that the reduced price is applicable and the condition laid down in Article 3 is satisfied in cases where the contract of sale was concluded pursuant to the regulation which was repealed and where the butter was exported within 30 days of its removal from storage, even if that took place after 22 September 1970, the date on which Regulation No 1893/70 entered into force.

18. In support of the interpretation advocated by the applicant Government it is argued in particular, on the one hand, that only that interpretation enables forward sales and sales effected over relatively long periods to benefit from the reduced prices and, on the other, that it does not open the way to abuses, since unauthorized use of the butter is excluded while the butter is still in the intervention agency's store.

19. However, in the context of the regulation in question there is no reason why the term sale used in Article 3 should be given a meaning different to that which it has in ordinary legal language and which corresponds, moreover, to that assigned to it in other provisions of the regulation.

20. The period of 30 days laid down in Article 3 must therefore be calculated from the date of the conclusion of the contract of sale and not from the date when the butter left the store.

21. As the expenditure considered in this connexion was not therefore incurred in accordance with Community law the Commission's refusal to charge it to the EAGGF is justified.

22. The disputed items relating to export refunds for lactalbumin concern refunds paid by the competent Netherlands agency on the basis of provisions of Community regulations providing for the grant of export refunds for ovalbumin, on the one hand, and the application of an identical method of calculation for ovalbumin and lactalbumin, on the other.

23. As the Court ruled in its judgment of 13 December 1973 in Case 150/73 ([1973] 2 ECR 1633), the provisions in question were not to be interpreted as implying that export refunds for ovalbumin, a product in the egg sector, were to apply to lactalbumin, a product in the milk and milk products sector, in the absence of a special provision adopted in the context of the common organization of the market in the latter sector.

24. The applicant Government recognizes that the interpretation adopted by the Netherlands authorities was objectively incorrect but it nevertheless claims that it is not guilty of an error in this respect for which it may be held liable.

25. It is evident from the interpretation of Regulation No 729/70 adopted above that the Commission would be obliged to bear the expenditure in question only if the incorrect application of Community law could be attributed to a Community institution.

26. Even if it is accepted that the provisions relating to the refunds in question might give rise to doubts as to their exact scope, none of the evidence produced by the parties in the course of the proceedings, including in particular the discussions of the relevant management committee, enables it to be said that the incorrect interpretation of the provisions may be attributed to the Commission's conduct.

27. The Commission's refusal to charge the amounts considered in this connexion to the EAGGF is therefore justified.

28. The application must, therefore, be dismissed in its entirety.

29. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs if they have been asked for the successful party's pleading.

30. The applicant Government has failed in its submissions.

On those grounds, THE COURT hereby:

1 Dismisses the application;

2 Orders the applicant Government to pay the costs.