Opinion of Mr advocate-general Warner

My Lords,

This case comes before the Court by way of a reference for a preliminary ruling by the Tribunale of Saluzzo. The plaintiff in the proceedings before that Court is Mr Leonce Cayrol, who carries on business as an importer and exporter of fruit and vegetables at Bélarga, in the Département of the Hérault, in France. The defendant is Rivoira Giovanni & Figli s.n.c, a firm which carries on a similar business at Verzuolo in Italy. The events leading up to the litigation between them, and indeed the nature of that litigation, are, as was pointed out to us by Counsel for the Defendant, reminiscent of those in Case 22/76 Import Gadgets v LAMP [1976] ECR 1371.

In December 1970 and again in December 1971 the defendant imported into Italy a quantity of Spanish table grapes. In so doing the defendant complied in Italy with the necessary import formalities and paid the appropriate duty under the Common Customs Tariff. The defendant sorted the grapes, eliminating those of defective quality, re-packed them, and affixed to them the mark of the Italian Istituto Nazionale per il Commercio Estero (the ICE). It resold a total of 186865 kgs of the grapes to the plaintiff, who imported them into France. On their importation into France, the grapes were accompanied by an ICE certificate. The plaintiff declared them to the French Customs as being of Italian origin. In August 1972, however, as the result of enquiries made at his premises, the French Customs discovered their true origin.

That same month, whether by coincidence or otherwise, the Italian police investigated the affairs of the defendant firm, with the result that three members of that firm were prosecuted before the Pretore of Saluzzo for putting an Italian national mark on Spanish grapes. That prosecution however failed. On 19 February 1974 the Pretore dismissed the charge, holding that the processes (sorting and packing) applied by the defendant to the grapes in Italy were sufficient to make them an Italian product, by virtue of Article 5 of Council Regulation (EEC) No 802/68 on the common definition of the concept of the origin of goods. In this the Pretore was in my opinion mistaken — consider Case 49/76 Gesellschaft für Überseehandel mbH v Handelskammer Hamburg [1977] ECR 41. The Pretore further held that, in any event, the ICE mark was an indication of quality and not of origin. In that too he was, as a matter of Community law, to some extent mistaken, as I shall in due course show.

The plaintiff, the defendant firm and the three members of that firm were also prosecuted by the French customs authorities before the Tribunal de Grande Instance of Montpellier on the basis that the importation of Spanish grapes into France was at the time subject to a quota which had been exhausted, so that such importation was prohibited, and that they had evaded that prohibition by giving a wrong indication of the origin of the grapes. On 26 January 1976 the Tribunal found them guilty of having imported prohibited goods by means of a false declaration as to their origin and (inter alia) fined them FF 532435, the value of the grapes, in lieu of forfeiture, plus a further FF 1064870, stated in the Judgment to be four times the value of the grapes though it is, I think only twice.

It appears that, of the accused in the proceedings before the Tribunal de Grande Instance, only the plaintiff appeared and was represented. The Judgment of this Court in Case 41/76 Donckerwoleke v Procureur de la République [1967] ECR 1921 had not of course then been delivered, and the only defence put forward on behalf of the plaintiff before the Tribunal de Grande Instance was that, by virtue of Article 5 of Regulation No 802/68, the grapes should be regarded as having been of Italian origin. The Tribunal, unlike the Pretore of Saluzzo, rejected that contention.

Following his conviction, the plaintiff reached a settlement with the French customs authorities, under which he agreed to pay a reduced fine of 175000. He then brought the present action before the Tribunale of Saluzzo in which he claims damages against the defendant, on the ground that it was the latter's use of the ICE mark and certificate that led to his troubles. By way of defence to the action, points are taken on behalf of the defendant as to whether France was entitled at the material time to restrict imports of Spanish grapes, or at all events to restrict imports of such grapes in free circulation in Italy, and as to the sanctions that a French court could properly impose on an importer for giving wrong information as to the origin of such grapes. The questions referred to this Court by the Tribunale reflect those points.

I mentioned that the defendant firm and its members had been convicted before the Tribunal de Grande Instance of Montpellier in their absence. This, it seems, was because they had not been notified of the proceedings before the Tribunal. Upon being notified of its Judgment they applied to have it set aside, with the result, so we were told at the hearing, that the case against them is to be re-heard on the 18th of next month. Thus, for them, the Judgment of this Court in the present case will be of importance not only in the Italian civil proceedings but also in the French criminal proceedings.

The first point to be considered is whether France was entitled in December 1970 and December 1971 to prohibit imports of Spanish grapes. As to this two Community acts are relevant, namely:

Article 1 of Regulation No 2513/69, so far as relevant, prohibited the application of any quantitative restriction or measure having equivalent effect on imports from third countries of most fruit and vegetables, but excepted from that prohibition certain products, listed in an Annex, for the periods there specified. Those products included table grapes for the period 1 July — 31 January. The exception was itself subject to a proviso that Member States should apply to such products no quantitative restrictions or measures having equivalent effect other than those which they applied during the year preceding 1 January 1970, nor should they make such measures more restrictive. Member States fulfilling those conditions and proposing to avail themselves of the exception were to notify the Commission thereof before the beginning of each relevant year. Under this provision, France notified, in respect of each of the years 1970 and 1971, that it proposed to impose, in respect of Spanish table grapes, a quota of FF 5 million for the period mid-November to 31 January. Such quotas had, I understand, previously been imposed, in conformity with a bilateral Agreement between France and Spain, in order to protect French growers of late varieties of grapes.

Under Article 2 (1) of the Agreement between the Community and Spain, the importation of Spanish products into the Community is governed by the provisions of Annex I to the Agreement. Article 1 of that Annex provides so far as material:

In the main, the subsequent provisions of the Annex provide for reductions, in respect of specified products, in the duties prescribed by the Common Customs Tariff, in many cases within an annual Community tariff quota. In the case of two kinds of product, both listed in Article 11 of the Annex, namely tomatoes and fresh grapes, the reduction provided for (50 % in each case) is to be made only during a particular period. In the case of tomatoes that period is (in effect) the months of January and February, in the case of grapes it is those of January, February and March. The question is whether Article 1 of the Annex is (as the Commission contends) to be interpreted on the footing that those products are covered by the provisions of the Annex only during those periods respectively or whether on the contrary (as the defendant contends) the mere fact that a product is mentioned anywhere in the Annex, for any purpose, means that it is covered by those provisions. If the Commission is right Member States remained, subject to the provisions of Regulation No 2513/69, entitled to impose quantitative restrictions on imports of Spanish grapes during the period April — December (both inclusive) in any year, whereas if the defendant is right, they were precluded from imposing any quantitative restrictions on imports of such grapes at any time whatever after 1 October 1970.

Your Lordships have read and heard the powerful arguments put forward in support of the defendant's contention, and I need not rehearse them. I should, I think, for my part have been inclined to accept them, had it not been for the point made on behalf of the Commission that the interpretation of the Agreement thus urged upon the Court on behalf of the defendant is inconsistent with the interpretation actually given to it in practice by the parties to it.

We were told by the Commission that France was not the only Member State to have imposed quantitative restrictions on imports of Spanish grapes. Belgium and Luxembourg have done so too. In order to protect the Belgian producers of hothouse grapes (in the Overijse area), the importation of Spanish grapes into the territory of the Belgo-Luxembourg Economic Union is prohibited from July to December (inclusive) in every year. That prohibition, unlike the French quotas, has been bolstered by successive Decisions of the Commission under Article 115 of the Treaty, authorizing Belgium and Luxembourg not to apply Community treatment to Spanish grapes in free circulation in other Member States. (The Decisions in question are listed in the Commission's written Observations, at p. 11). It appears that there has never been any complaint or protest by the Spanish Government about any of those measures. Moreover the Commission has annexed to its written Observations a copy of a Note Verbale, dated 16 March 1972, addressed to the Commission by the Spanish Mission to the European Communities which evinces the Spanish Government's acceptance of the fact that the Agreement does not have the effect contended for by the defendant.

In that connexion the Commission referred us to Article 31 of the Convention on the Law of Treaties signed at Vienna on 23 May 1969, which provides:

The Commission concedes of course that that Convention is not yet in force, that it has been signed by only five Member States of the Community (Denmark, the Federal Republic of Germany, Italy, Luxembourg and the United Kingdom) and ratified so far by only three of them; and, moreover, that, in terms, it is applicable only to treaties between States. Nonetheless, having regard to its genesis, the Convention can be taken to represent the better view as to what the generally accepted rules of International Law are on the topic. Indeed that that is so was not questioned on behalf of the defendant. Counsel for the defendant confined themselves, in that respect, to saying that paragraph 3 (b) of Article 31 could only be invoked where there was an ambiguity in the treaty in question. I do not for my part think that that is correct (see the discussion of the point in an article by F. G. Jacobs Varieties of Approach to Treaty Interpretation: with special reference to the Draft Convention on the Law of Treaties before the Vienna Diplomatic Conference, in the International and Comparative Law Quarterly, April 1969, p. 318 et seq.). But in any case I think that Article 1 of Annex I to the Agreement here in question is ambiguous. Counsel for the defendant also submitted that, for a number of reasons, the evidence adduced by the Commission, and in particular the Note Verbale of 16 March 1972, did not reliably and convincingly establish the attitude of the Spanish Government. But I think it did.

So, in my opinion, France could lawfully, in December 1970 and December 1971, enforce its quota on imports of table grapes from Spain.

But of course we are here concerned not with imports into France from Spain, but with imports of grapes, albeit grapes of Spanish origin, which were in free circulation in Italy. As to that it is, I think, necessary to reassert certain principles that have been expounded by the Court more than once, and in particular in the Donckerwolcke case.

By virtue of Article 9 of the Treaty, the Community is based upon a customs union covering all trade in goods between Member States, and the provisions adopted for the liberalization of intra-Community trade apply both to products originating in Member States and to products originating in third countries that are in free circulation in any Member State (the latter being defined by Article 10). The result of that assimilation is that the provisions of Article 30 concerning the elimination of quantitative restrictions and all measures having equivalent effect are, as a rule, applicable without distinction to products originating in the Community and to products of non-Community origin in free circulation in a Member State.

The assimilation to products originating in the Community of products in free circulation originating outside it can, however, only take full effect if the latter are subject to the same conditions as to importation in all Member States. It is one of the purposes of Article 113 of the Treaty to secure that uniformity, by means of the establishment of a common commercial policy. The fact that, despite the expiry of the transitional period, the establishment of that common policy has not yet been fully achieved, i.e. that the importation of certain kinds of goods from certain third countries is not yet subject to the same conditions in all Member States, results in the possibility of deflections of trade (as, in this case, the importation of Spanish grapes into France via Italy). In order to avoid such results, Article 115 gives the Commission power to recommend the methods for the requisite cooperation between Member States and, failing this, power to authorize a Member State to take protective measures, particularly in the form of derogation from the principle of free circulation within the Community of products originating in a third country that are in free circulation in any Member State. In the absence however of a specific recommendation or authorization by the Commission under Article 115, a Member State is not entitled to derogate from that principle.

Thus, in my opinion, France, which never made any application to the Commission under Article 115, let alone received any recommendation or authorization from the Commission under that Article, in respect of Spanish grapes, was not entitled to prohibit the importation of such grapes from Italy if they were in free circulation there. To say that is not to say, however, that the French customs authorities were entirely precluded from concerning themselves with the origin of table grapes imported into France from another Member State, or that the French Courts were precluded from punishing those who deliberately or recklessly misled the Customs as to the origin of such grapes.

In the first place a Member State which, consistently with Community law, temporarily retains a distinct policy as to imports of a particular kind of product from a particular third country (as France did, at least in 1970 and 1971, in relation to Spanish grapes) is entitled, within limits, to retain monitoring measures in relation to trade in that product. Those limits were clearly laid down by the Court in the Donckerwolcke case, and I discerned no disagreement about them as between the Commission and the defendant (on whose behalfs only Observations were submitted in the present case).

On behalf of the defendant it was strenuously argued that the conclusion of the Agreement between the Community and Spain amounted to the adoption by the Member States of a common policy on imports from Spain, with the result that Article 115 could no longer be invoked in relation to goods of Spanish origin. The implication was, as I understood the argument, that national monitoring measures were no longer permissible in relation to such goods. It is of course, as I said in Case 29/75 Kaufhof v Commission [1967] ECR 431, at p. 448, an unexceptionable proposition that there is no room for the continued application of Article 115 in any sphere of trade where a common policy has been adopted. But the conclusion by the Community of a commercial Agreement with a third country that still leaves open the possibility for individual Member States to subject imports from that country of particular products to different conditions cannot constitute the adoption of a common policy, in the relevant sense, in relation to those products.

So I am of the opinion that the French customs authorities and the French Courts were, in 1970 and 1971, entitled to enforce French monitoring measures in respect of table grapes, within the limits laid down in the Donckerwolcke case. As to those limits, I need do no more than quote from the Judgment. After defining the context in which such measures might be retained, the Court said (in paragraphs 33 — 39 of the Judgment):

A difference between this case and the Donckerwolcke case is that some of the importations into France in this case, namely those that occurred in December 1971, occurred after the entry into force of Commission Decision No 71/202/ EEC of 12 May 1971 (OJ L 121 of 3. 6. 1971) empowering Member States to take interim protective measures with regard to the importation of certain products originating in third countries and put into free circulation in other Member States. Article 1 of that Decision contains the following passages:

Those provisions, on the face of them, are inconsistent with the Treaty as interpreted by the Court in the Donckerwolcke case and, indeed, as Mr Advocate-General Capotorti pointed out in that case [1967] ECR at pp. 1948 — 1949], with the earlier Judgment of the Court in Cases 51 to 54/71 International Fruit Company NV v Produktschap voor Groenten en Fruit [1971] 2 ECR 1107. I respectfully agree with Mr Advocate-General Capotorti that, to the extent that the Decision of the Commission is inconsistent with those Judgments of the Court, it cannot be relied upon. In particular a Member State may not resort to import authorizations for imports from another Member State when no specific recommendation or authorization by the Commission under Article 115 is in force.

As respects trade in fruit and vegetables there is another purpose for which Member States are empowered, and indeed required, to concern themselves with the origin of goods imported from other Member States, namely quality control.

As I mentioned earlier, Regulation No 1035/72 consolidated the previous legislation of the Council on the common organization of the market in fruit and vegetables. But, since we are here concerned with events that occurred before the adoption of that Regulation, I must refer to the previous legislation.

It began with Council Regulation No 23 of 4 April 1962 (OJ, Special Edition 1959-1962, p. 97) which initiated the progressive establishment of that organization. That Regulation provided, by Article 2 (1), for common quality standards to be laid down for products within that organization and, by Article 2 (2), that:

Article 3 (1) provided that the quality standards should be gradually applied to fruit and vegetables offered for sale on the home market of the producer Member State, and Article 5 provided that an exporting Member State should submit products intended for export to another Member State to a quality control before they left its territory. Article 5 continued:

Article 6 provided, putting it shortly, that detailed rules for the application of Article 5 should be adopted by the Management Committee procedure.

Council Regulation No 23 was followed by Commission Regulation No 58, which laid down common quality standards for, among other products, table grapes. These were contained in Annex I/7 to that Regulation. Section I of Annex I/7 defined, by reference to a list, the varieties of grapes to which the standard applied. Section II laid down the actual Quality Requirements. Under heading A. General it stated: The purpose of the standard is to define the quality requirements for table grapes at the dispatching stage, after preparation and packaging. Under heading C. Classification it stated in the case of each class that. In shape, size and colouring the bunches must be typical of the variety, allowing for the district in which they are grown, and have no defects. Section VI, which was entitled Marking, required each package to bear among other particulars legibly and indelibly marked on the outside the District of origin, or national, regional or local trade name.

The Commission, in the course of a very detailed and interesting account, given in its written Observations, of the procedures that would be applicable to the grapes here in question as they moved from Spain to Italy and thence to France, referred to two Decisions of the Council of the OECD, dated respectively 30 July 1963 and 28 July 1964, copies of which are annexed to its Observations. It is clear that much of the subsequent Community legislation reflects those Decisions. Nonetheless, I do not think it necessary, at all events in this case, to take up Your Lordships' time in analysing their contents, except to say that the first of those decisions prescribed a form of control certificate for use under the OECD scheme for the application of international standards for fruit and vegetables.

The Commission also referred to its own Regulation No 80/63/EEC of 31 July 1963 on quality inspection of fruit and vegetables imported from third countries. Since we are here concerned only with questions arising in relation to importations from Italy into France, I need not trouble Your Lordships with the details of that Regulation either. It is, however, interesting to note that its Annex names as the authorities responsible for inspection in France the Ministère de l'agriculture, Service de la repression des fraudes and the Ministère des finances, Direction générale des douanes, and as the authority so responsible in Italy the ICE.

Council Regulation No 158/66/EEC of 25 October 1966 provided, by Article 1 (1), that products for which quality standards had been established should not be displayed or offered for sale, sold, delivered or marketed in any other manner within the Community unless they conformed to the standards. Exceptions were made to that rule by Article 1 (2) and (3), in particular for products consigned to processing plants. By Article 4 retailers were required, among other things, to display clearly the information specified in the quality standards as to the origin of products. Article 5 provided that, in order to establish whether products conformed to the provisions of the Regulation, a check should be made by sampling at all marketing stages, and during transport, by the authorities appointed by each Member State. A check should preferably be made prior to dispatch from the production areas when the goods were being packed or loaded. The same Article required each Member State to communicate to the other Member States and to the Commission the names of the authorities that they had appointed to be responsible for such checking. The Court has not been told which authority or authorities were appointed for that purpose in France, and in particular whether they included the Customs. Lastly, Article 8 of the Regulation provided that Member States should take all appropriate measures to penalize infringements of the provisions of the Regulation, and should notify the Commission of such measures.

Regulation No 158/66 was supplemented by two Regulations of the Commission, namely Regulation No 93/67/EEC of 3 May 1967 and Regulation (EEC) No 2638/69 of 24 December 1969 (OJ L 327 of 30. 12. 1969). Article 3 of the former provided inter alia that where items inspected failed to comply with the rules in force the inspector shall, without prejudice to the penalties provided for in Article 8 of Regulation No 158/66/EEC, require them to be brought into conformity with these rules if the goods concerned are for sale within the meaning of Article 1 of Regulation No 158/66/EEC. Article 1 (1) of Regulation No 2638/69 provided that, prior to the dispatch of any relevant goods from a forwarding area, the consignor should notify the inspector. (The forwarding areas were defined in Annex I to the Regulation and together covered the whole territory of the Community). Articles 1 (3), 2 (1) and 3 provided between them that, where inspection was carried out on dispatch from the forwarding area, a certificate to accompany the goods, in the form shown in Annex II, should be issued by the inspector. The form in Annex II was modelled on the OECD form of control certificate. It appears to have been such a certificate that was issued by the ICE in respect of each consignment in the present case. Article 5 provided, among other things:

The effect of that legislation can, I think, be summarized as follows:

I can now turn to the questions referred to the Court by the Tribunale of Saluzzo, which are these:

I would answer those questions as follows: