JUDGMENT OF 4. 10.1979 — JOINED CASES 64 AND 113/76, 167 AND 239/78, 27, 28 AND 45/79 DUMORTIER FRÈRES v COUNCIL
In Joined Cases 64 and 113/76, 167 and 239/78, 27, 28 and 45/79,
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, G. BOSCO, A. Touffait and T. Koopmans, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
II — Conclusions of the parties
A — The applicants claim that the Court should:
B — The Council claims that the Court should:
III — Submissions and arguments of the parties
A — Admissibility
B — Substance
IV — Replies by the parties to written questions put by the Court
V — Oral procedure
Decision
Admissibility
Substance
The claim for interest
I —. Facts and procedure
1. In its judgment of 19 October 1977 in Joined Cases 124/76 and 20/77 S.A. Moulins et Huileries de Pont-à-Mousson and Société Cooperative Providence Agricole de la Champagne v Office National Interprofessionnel des Céréales [1977] ECR 1795, the Court decided that:
2. By Regulations No 1125/78 of 22 May 1978, amending Regulation No 2727/75 on the common organization of the market in cereals (Official Journal L 142 of 30 May 1978, p. 21) and No 1127/78 of 22 May 1978, amending Regulation No 2742/75, on production refunds in the cereals and rice sectors (Official Journal L 142 of 30 May 1978, p. 24), the Council re-introduced until the end of the 1978/79 marketing year a scheme of production refunds for the maize used for the manufacture of groats and meal (hereinafter referred to as gritz) intended for the brewing industry. The main features of those regulations are:
3. The applicants manufacture maize groats and meal which they sell to the brewing industry and which are used in the brewing of beer.
4. All the applicants also commenced proceedings in the French administrative courts, seeking annulment of the decisions of the Office National Interprofessionnel des Céréales (ONIC) rejecting their claims for payment of the production refunds for maize gritz intended for brewing.
5. A claim for damages following the abolition of production refunds for maize gritz is also the main issue in Joined Cases 241, 242 and 245 to 250/78 D.G.V. and Others v Council and Commission.
6. By an order of 12 June 1979 the Court dectued to join the present cases for the purpose of the oral procedure.
7. After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. However, the Court asked the parties to reply to certain questions.
II —. Conclusions of the parties
A —. The applicants claim that the Court should:
B —. The Council claims that the Court should:
III —. Submissions and arguments of the parties
A —. Admissibility
1. The Council points out that a trader who claims to be entitled to receive from a French body a payment to be borne by the European Agricultural Guidance and Guarantee Fund must bring an action before the administrative court, in which action such court has unlimited jurisdiction, seeking an order requiring the body responsible for payment to pay it the sum in question.
2. The applicants emphasize that the actions which they brought in the administrative courts aimed solely to secure the annulment of ONIC's decisions rejecting their claims for payment of refunds. As those actions for abuse of powers do not give the body responsible for payment any basis for paying, particularly where there is no Community legislation stating that payment should be made, the applicants consider that the Council is contradicting itself when it maintains that there is concurrency of proceedings on the ground that the action for abuse of powers and the action under Article 215 of the Treaty have the same objective.
B —. Substance
1. The applicants claim in their applications that the Council has not taken all the measures that are necessary in order to comply with the judgment of the Court of 19 October 1977: the only effect of Regulations Nos 1125 and 1127/78 is to prevent any aggravation of the damage suffered by those in the maize industry as from the date of that judgment, without however eliminating the damage suffered during the period between 1 August 1975 and 19 October 1977. Those regulations are unlawful because they permitted the continuance of the situation created by the regulations which the Court declared invalid.
2. The Council recognizes that technically gritz and starch are entirely interchangeable as regards the brewing of beer. It asserts that in fact Community brewers, and French brewers in particular, have not altered their practice of using maize gritz for the brewing of beer, even after the abolition of the refund.
3. The applicants state in reply that the statistics produced by the Council prove only that as a whole the French producers of gritz have succeeded, at the cost of heavy losses, in retaining their traditional market more or less effectively according to the regions.
4. In its rejoinder in Cases 27, 28 and 45/79, the Council adds to its previous observations, in particular, that even if gritz and starch were technically interchangeable for the brewing of beer, no such substitution took place commercially.
IV —. Replies by the parties to written questions put by the Court
V —. Oral procedure
1. The applicants in these cases request that the European Economic Community, represented by the Council, be ordered, pursuant to the second paragraph of Article 215 of the EEC Treaty, to compensate them for the loss which they claim to have suffered on account of the abolition of the production refunds for maize groats and meal (gritz) intended for the brewing of beer as a result of Regulation No 665/75 of the Council of 4 March 1975 amending Regulation No 120/67 on the common organization of the market in cereals (Official Journal 1975 L 72 of 20 March 1975, p. 14).
2. The cases were joined for the purpose of the procedure and it is appropriate to maintain the joinder for the purpose of the judgment.
3. In its judgment of 19 October 1977 delivered pursuant to references for preliminary rulings from two French administrative courts in Joined Cases 124/76 and 20/77 S. A. Moulins et Huileries de Pont-à-Mousson and Societe Cooperative Providence Agricole de la Champagne v Office National Interprofessionnel des Cereales [1977] ECR 1795, the Court ruled that the disputed provisions of the Council regulations were incompatible with the principle of equality in so far as they provided for maize groats and meal for the brewing industry and maize starch to receive different treatment in respect of production refunds. The Court said further that it was for the institutions competent in matters of common agricultural policy to adopt the measures necessary to correct that incompatibility.
4. Following that judgment production refunds for maize gritz used by the brewing industry were re-introduced by Council Regulation No 1125/78 of 22 May 1978 amending Regulation No 2727/75 on the common organization of the market in cereals (Official Journal 1978 L 142 of 30 May 1978, p. 21). The amount of the refunds was fixed by Council Regulation No 1127/78 adopted and published on the same date as Regulation No 1125/78 (Official Journal 1978, L 142, p. 24). Both regulations entered into force on the third day following their publication in the Official Journal of the European Communities. However, pursuant to the last paragraph of Article 1 of Regulation No 1125/78 and Article 6 of Regulation No 1127/78, the refunds were granted at the request of the interested party as from 19 October 1977, that is to say with retroactive effect from the date of the judgment of the Court in the above-mentioned preliminary rulings.
5. Thus the object of the applicants' claims is to obtain compensation for the damage which they claim to have suffered as a result of the absence of refunds during the period between 1 August 1975, on which date Regulation No 665/75 was first applied, and 19 October 1977. The alleged damage consists, as regards all the applicants, in the loss of receipts equal to the amounts of the refunds which would have been paid to them if maize gritz had benefited from the same refunds as starch, and as regards some of the applicants, in additional losses caused in particular by a fall in sales and operating deficits.
6. The Council, the defendant, objects that in order to obtain the refunds claimed the applicants should have brought an action for payment of the refunds against the competent national bodies in the national administrative courts. However, that objection cannot be upheld. Although it is true that an action for the payment of amounts due under Community regulations may not be brought under Article 178 and the second paragraph of Article 215 of the EEC Treaty, the claims submitted by the applicants in this case cannot be classed as claims for the payment of amounts due, but rather as claims for compensation for the alleged damage resulting from the unlawfulness established by the judgment of the Court of 19 October 1977. Moreover, according to the applicants, that damage is not measured solely by reference to the unpaid refunds. Besides, in the circumstances of the case it is clear that, pursuant to the said judgment of the Court, a national court could not have upheld such an action in the absence of any provision of Community law authorizing the national bodies to pay the amounts claimed.
7. The same considerations apply to a plea of lis alibi pendens raised by the Council. The actions pending before the French administrative courts are actions for the annulment of the competent national body's refusal to pay refunds. Those national courts have no jurisdiction to rule on the non-contractual liability of the Community. Thus, as the subject-matter and the legal basis of the actions brought before the national courts and before the Court of Justice are different, the principles applicable to concurrency of proceedings, recognized in the national systems of legal procedure, may not be relied on in order to contest the admissibility of the actions brought before the Court of Justice in this case.
8. Since by its judgment of 19 October 1977, the Court has already established that the abolition of the refunds for maize gritz for the brewing industry, together with the retention of the refunds for maize starch, was incompatible with the principle of equality, the first problem which arises in these cases is whether the unlawfulness thus established is of such a nature as to render the Community liable under the second paragraph of Article 215 of the EEC Treaty.
9. The finding that a legal situation resulting from the legislative measures of the Community is unlawful is not sufficient in itself to give rise to such liability. The Court has already expressed that view in its judgment of 25 May 1978 in Joined Cases 83/76 and others Bayerische HNL Vermehrungsbetriebe and Others v Council and Commission [1978] ECR 1209. In this regard, the Court recalled its settled case-law, according to which the Community does not incur liability on account of a legislative measure which involves choices of economic policy unless a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred. Taking into consideration the principles in the legal systems of the Member States governing the liability of public authorities for damage caused to individuals by legislative measures, the Court said that in the context of Community provisions in which one of the chief features was the exercise of a wide discretion essential for the implementation of the Common Agricultural Policy, the Community did not incur liability unless the institution concerned manifestly and gravely disregarded the limits on the exercise of its powers.
10. In the circumstances of these cases, the Court is led to the conclusion that there was on the part of the Council such a grave and manifest disregard of the limits on the exercise of its discretionary powers in matters of the Common Agricultural Policy. In this regard the Court notes the following findings in particular.
11. In the first place it is necessary to take into consideration that the principle of equality, embodied in particular in the second subparagraph of Article 40 (3) of the EEC Treaty, which prohibits any discrimination in the common organization of the agricultural markets, occupies a particularly important place among the rules of Community law intended to protect the interests of the individual. Secondly, the disregard of that principle in this case affected a limited and clearly defined group of commercial operators. It seems, in fact, that the applicants in these cases and in the related Cases 241/78 and others Deutsche Getreideverwertung und Rheinische Kraftfutterwerk GmbH and Others v Council and Commission comprise the entire maize gritz industry of the Community. Further, the damage alleged by the applicants goes beyond the bounds of the economic risks inherent in the activities in the sector concerned. Finally, equality of treatment with the producers of maize starch, which had been observed from the beginning of the common organization of the market in cereals, was ended by the Council in 1975 without sufficient justification.
12. The Council's disregard of the limits imposed upon its discretionary power is rendered all the more manifest by the fact that, as the Court pointed out in its judgment of 19 October 1977, the Council has not acted upon a proposal made by the Commission in June 1975 to re-introduce the refunds for maize gritz on the ground that the absence of such refunds could foreseeably upset the balance between the breweries' raw materials costs in maize gritz and maize starch.
13. For those reasons the Court arrives at the conclusion'that the Community incurs liability for the abolition of the refunds for maize gritz under Regulation No 665/75 of the Council.
14. This said, it is necessary to go on to examine the damage resulting from the discrimination to which the gritz producers were subjected. The origin of the damage complained of by the applicants lies in the abolition by the Council of the refunds which would have been paid to the gritz producers if equality of treatment with the producers of maize starch had been observed. Hence, the amount of those refunds must provide a yardstick for the assessment of the damage suffered.
15. The Council objected to that method of calculating the damage on the ground that the gritz producers eliminated the damage by passing on the loss resulting from the abolition of the refunds in their selling prices. In principle, in the context of an action for damages, such an objection may not be dismissed as unfounded. In fact, it must be admitted that if the loss from the abolition of the refunds has actually been passed on in the prices the damage may not be measured by reference to the refunds not paid. In that case the price increase would take the place of the refunds, thus compensating the producer.
16. For their part, the applicants dispute that the loss was passed on in the way alleged by the Council, except for a brief initial period during the 1975/1976 marketing year. They state that, faced with the competition from the starch producers benefiting from refunds, they chose, as a matter of commercial policy, to sell gritz at a loss in order to retain their markets, rather than raise the prices at the risk of losing those markets. The price increases referred to by the Council are, in the applicants' submission, due to the rise in the threshold price of maize and to the increase in production costs.
17. The parties have put forward statistics and other data in support of their respective submissions. Those data do not permit the conclusion advanced by the Council to be accepted. The conclusion which emerges is rather that during the period in dispute the prices of gritz and starch developed along similar lines without reflecting the absence of refunds for gritz. The only exception concerns the period covering the last months of 1975 and the beginning of 1976, during which the prices of gritz were increased by amounts corresponding to the unpaid refunds. However, the applicants have explained that those increases were accepted by the breweries provisionally on condition that a clause was inserted in the contracts of sale guaranteeing the buyer the benefit, retroactively in the appropriate case, of any new refund granted by the Community.
18. It follows that the loss for which the applicants must be compensated has to be calculated on the basis of its being equivalent to the refunds which would have been paid to them if, during the period from 1 August 1975 to 19 October 1977 the use of maize for the manufacture of gritz used by the brewing industry had conferred a right to the same refunds as the use of maize for the manufacture of starch; an exception will have to be made for the quantities of maize used for the manufacture of gritz which was sold at prices increased by the amount of the unpaid refunds under contracts guaranteeing the buyer the benefit of any re-introduction of the refunds.
19. Some of the applicants have also submitted claims for compensation for certain additional items of damage which they claim to have suffered.
20. In the case of the two maize processors established in the north of France, the further damage lies particularly in a substantial fall in their sales to breweries. Although it is beyond dispute that the figures submitted by the applicants clearly show such a fall, that fact can hardly be ascribed to the absence of refunds. In fact, as has already been said, the applicants have insisted on the fact that the selling prices of gritz were not increased on account of the abolition of the refunds. On the contrary, as the Court recognized when examining the development of the prices, the gritz producers chose to sell at a loss in order to retain their markets, and not to increase their prices at the risk of losing those markets. Thus the inequality which existed between gritz and starch as regards the granting of refunds was not reflected in the selling prices. If in spite of that commercial policy the gritz producers' sales fell, the reason for this must be sought in something other than the inequality caused by the abolition of the refunds.
21. In the case of certain other applicants the further damage alleged is of a different nature. Two undertakings were forced to close their factories and a third had to commence insolvency proceedings. The Council argued that the origin of the difficulties experienced by those undertakings is to be found in the circumstances peculiar to each of them, such as the obsolescence of their plant and managerial or financial problem. The data supplied by the parties on that question in the course of the proceedings are not such as to establish the true causes of the further damage alleged. However, it is sufficient to state that even if it were assumed that the abolition of the refunds exacerbated the difficulties encountered by those applicants, those difficulties would not be a sufficiently direct consequence of the unlawful conduct of the Council to render the Community liable to make good the damage. In the field of non-contractual liability of public authorities for legislative measures, the principles common to the laws of the Member States to which the second paragraph of Article 215 of the EEC Treaty refers cannot be relied on to deduce an obligation to make good every harmful consequence, even a remote one, of unlawful legislation.
22. It follows that the claims for compensation for the further damage alleged cannot be upheld.
23. The applicants submitted a number of documents to the Court as proof of the quantities of gritz for which they claim to be entitled to compensation and of the amounts of the refunds not paid in respect of those quantities. However, the Court is not in a position at this stage of the procedure to give a decision on the accuracy of those data. Therefore, it is necessary to lay down by interlocutory judgment the criteria whereby the Court considers that the applicants must be compensated, leaving the amount of the compensation to be determined either by agreement between the parties or by the Court in the absence of such agreement.
24. The applicants further claim that the Council should be ordered to pay interest at the French legal rate from the dates on which the payment of the refunds became due each month.
25. As it is a question of a claim made in relation to the non-contractual liability of the Community, pursuant to the second paragraph of Article 215, it must be considered in the light of the principles common to the legal systems of the Member States, to which that provision refers. It follows that a claim for interest is in general admissible. Taking into account the criteria for the assessment of damages laid down by the Court, the obligation to pay interest arises on the date of this judgment, in that it establishes the obligation to make good the damage. The rate of interest which it is proper to apply is 6 %.
On those grounds, THE COURT, as an interlocutory decision, hereby:
1 Orders the European Economic Community to pay to
1) P. Dumortier Frères S.A., Tourcoing;
2) Maïseries du Nord, S.A., Marquette-lez-Lille;
3) Moulins et Huileries de Pont-à-Mousson, S.A., Pont-à-Mousson;
4) Les Maïseries de Beauce, S.àr.l., Marboué;
5) Costimex, S.A., Strasbourg;
6) La Providence Agricole de la Champagne, Société Cooperative Agricole, Rheims;
7) Maiseries Alsaciennes S.A., Colmar,
2 Orders that interest at 6 % shall be paid on the above-mentioned amounts as from the date of this judgment;
3 Orders the parties to inform the Court within twelve months from the delivery of this judgment of the amounts of compensation arrived at by agreement;
4 Orders that in the absence of agreement the parties shall transmit to the Court within the same period a statement of their views, with supporting figures;
5 Reserves the costs.