JUDGMENT OF 1. 3. 1983 — CASE 250/78 DEKA v EEC
In Case 250/78
THE COURT composed of: J. Mertens de Wilmars, President, P. Pescatore and A. O'Keeffe (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges, Advocate General: G. F. Mancini Registrar: H. A. Rühi, Principal Administrator
gives the following
JUDGMENT
Facts and Issues
I — Facts, procedure and conclusions of the parties
II — Submissions and arguments of the parties
1. The validity of the assignment of the claim for compensation and the possibility of setoff
2. The request for payment to Curavest
III — Applicant's reply to a question put by the Court
IV — Oral procedure
Decision
Costs
I —. Facts, procedure and conclusions of the parties
1. In an interlocutory judgment of 4 October 1979 in Joined Cases 241, 242 and 245 to 250/78 (DGV and Others v Council and Commission [1979] ECR 3017), the Court ordered the European Economic Community to pay the applicants the amounts equivalent to the production refunds on maize gritz used by the brewing industry which each of those undertakings would have been entitled to receive if, during the period from 1 August 1975 to 19 October 1977, the use of maize for the production of gritz had conferred an entitlement to the same refunds as the use of maize for the manufacture of starch.
2. The parties in this case have agreed that the Community should pay to the applicant the sum of DM 311836.93.
3. The applicant company has been in liquidation since 3 March 1978. At that time it was called Contifex Getreideprodukte GmbH & Co. KG. Because of a risk of confusion, the applicant's name was altered at the request of the authority responsible for the commercial register, by a decision of 13 January 1979, to DEKA Getreideprodukte GmbH & Co. KG.
4. In the course of the written procedure, subsequent to the interlocutory judgment of 4 October 1979 the applicant, in its pleading of 17 March 1981, amended its original conclusions in which it claimed that the Community should pay it DM 311838.93, and it now claims that the Community should be ordered to pay that sum to Curavest. By telex message of 15 January 1982 that company asked to be substituted as applicant in this case. By order of 22 September 1982, the Court refused Curavest's request.
5. The Commissión asks the Court to declare that the applicant's claim for compensation is extinguished by way of setoff.
II —. Submissions and arguments of the parties
1. The validity of the assignment of the claim for compensation and the possibility of setoff
(a). The Commission argues that the assignment of a claim for compensation must be regarded as invalid for the purposes of the judgment of the Court of 4 October 1979 in Case 238/78 (Ireks-Arkady v Council and Commission [1979] ECR 2955) in a case, like this one, where the result would be that a company in liquidation could obtain payment of compensation from the Community, without the latter's being able to raise by way of setoff a claim in a larger amount.
(b). The applicant argues that according to paragraph 406 of the Bürgerliches Gesetzbuch the debtor under the assigned claim cannot raise a setoff against the assignee when, at the time of the acquisition of the claim, he knew of the assignment or where the claim did not become enforceable until after he acquired that knowledge and at a date subsequent to that of the assigned claim. These alternatives exist in this case.
(c). The Commission replies that the applicant cannot rely upon paragraph 406 of the Bürgerliches Gesetzbuch in respect of the setoff raised by the Commission. Since the setoff concerns a claim for the recovery of payments made under Community agricultural legislation, the German authorities and the Commission must be considered as constituting a single entity. When they acquired the debt against the applicant, they had not been informed of the applicant's assignment of the claim for compensation to Curavest.
(d). The Council concurs with the observations of the Commission.
2. The request for payment to Curavest
III —. Applicant's reply to a question put by the Court
IV —. Oral procedure
1. By application lodged at the Court Registry on 10 November 1978, Contifex Getreideprodukte GmbH & Co. KG brought an action pursuant to Article 178 and the second paragraph of Article 215 of the EEC Treaty, for an order for the payment to it by the European Economic Community of the sum of DM 311836.93 as compensation for damage resulting from the abolition of production refunds for maize gritz for use in the brewing industry between 1 August 1975 and 19 October 1977.
2. The applicant was a limited partnership of which one of the two limited partners, Mr D. K., was also the manager. The partner having unlimited liability was a limited liability company, Contifex Getreideprodukte GmbH, of which Mr D. K. was also one of the three members. Prior to bringing the action, the two undertakings went into voluntary liquidation, and Mr D. K. also acted as liquidator. Following a change of business name, which was required by the authorities in charge of the commercial register and which was the subject of a decision dated 13 January 1979, the undertaking is now called DEKA Getreideprodukte GmbH & Co. KG i. L. (in liquidation). Both the liquidation and the change of business name were made known to the Court only on 19 November 1981 by a procedural document lodged by the applicant.
3. By an interlocutory judgment of 4 October 1979 given in Joined Cases 241, 242 and 245 to 250/78 DGV and Others v Council and Commission [1979] ECR 3017, the Court ordered the European Economic Community to pay to a number of undertakings, including the applicant, sums equivalent to the production refunds for maize gritz used by the brewing industry to which each of those undertakings would have been entitled if, during the period from 1 August 1975 to 19 October 1977, the use of maize for the production of gritz had conferred an entitlement to the same refunds as the use of maize for the manufacture of starch.
4. Under the terms of the judgment the parties were required to transmit to the Court a statement of the amounts of compensation arrived at by agreement, or in the absence of agreement, a statement of their views with supporting figures. Costs were reserved.
5. Following that judgment the parties in this case agreed that the amount of the compensation was the same as that claimed by the applicant in its application. The Commission has, however, raised by way of setoff against the applicant's claim for compensation a claim for reimbursement of export refunds wrongly paid to the applicant. The applicant has responded to that plea by contending that prior to bringing the action it had assigned its claim for compensation to Curavest NV of Curaçao (Netherlands Antilles) and that that assignment, which was made known to the Court only by the aforementioned procedural document lodged on 19 November 1981, precluded the setoff. Consequently, it has asked the Court to order the Community to pay the sum of DM 311836.93 to Curavest.
6. As regards the applicant's financial position and its relations with Curavest, the documents before the Court and in particular the report drawn up by accountants on 30 November 1978 provide the following information:
7. On 3 March 1978 it was decided to liquidate the two Contifex undertakings. An out-of-court arrangement involving relinquishment of rights in the assets was reached with the applicant's creditors other than Curavest on the basis of a partial satisfaction of the creditors to the extent of 25%. The arrangement entered into force on 31 July 1978. In order to enable this arrangement to be made, Curavest, by an agreement made on 18 March 1978, waived its claim on condition that the applicant's claims, including the claim for compensation from the Community, be assigned to it.
8. The assignment was notified to the Commission by the applicant on 16 February 1981 and by Curavest on 3 April 1981, that is to say almost three years after the contract of assignment and after the applicant had brought this action and obtained judgment against the Community in the abovementioned interlocutory judgment.
9. The claim for reimbursement of sums wrongly paid which the Commission has raised against the applicant company arises from the grant of export refunds and monetary compensatory amounts, in respect of maize gritz exported during 1976 and 1977, the total of which far exceeds the applicant's claim for compensation. These sums were granted by the German authorities in pursuance of Community rules. Having realized that the grant of the amounts had been obtained as the result of fraudulent activities of the manager of the undertaking, Mr D. K., for which he had been sentenced to an immediate term of imprisonment, the German authorities, in a series of decisions, claimed from the applicant reimbursement of the wrongly paid sums. By a document dated 10 August 1981 they assigned the claim which was the subject of one of the aforementioned recovery decisions, dated 18 March 1980 and relating to an amount of DM 736106.81, in order to enable the Commission to raise a setoff against the applicant's claim for compensation.
10. The Commission raises an objection of inadmissibility to the applicant's request for an order that the Community pay the compensation to Curavest. It believes that, whether that request be classified as a fresh issue or as a new head of claim, it is inadmissible according to the Rules of Procedure of the Court. Furthermore it conflicts with the principle of res judicata since, in the interlocutory judgment referred to above, the Community has already been ordered to pay those sums to the applicant.
11. As regards the substance of the case, the main contention of the Commission is that the assignment to Curavest is invalid or at least that it cannot be raised against the Commission because it constitutes a clear abuse on the part of the applicant. In this respect the Commission refers to the judgment of 4 October 1979 (Case 238/78 Ireks-Arkady [1979] ECR 2955) in which the Court recognized the assignment of a claim for compensation for damage whilst emphasizing that in circumstances such as those of the case before it there was no cause to believe that the assignment might have led to an abuse.
12. Since the question whether the assignment constitutes an act which is valid as against the Community authorities must be considered as a preliminary issue, not only with regard to the other submissions on the substance of the case raised by the Commission, but also with regard to the objection of inadmissibility, it is appropriate to examine it first.
13. In this respect, it must be borne in mind that the Community rules on production or export refunds may give rise not only to debts which traders may raise against the authorities entrusted with administering the system, but also to claims, directed against traders, for the reimbursement of wrongly paid sums whose recovery is required by the Community rules. Those rules may thus give rise, as between authorities and traders, to reciprocal and even related claims which are an appropriate subject for setoff.
14. In the case of an insolvent trader, such a setoff may in fact constitute the only practicable way open to the authorities to recover the wrongly paid sums. In that case the assignment of the trader's claims against the authorities to a third party can, depending on the circumstances, amount to an abusive transaction.
15. In this connection, the reservation intimated in the aforementioned judgment rests upon the same considerations as those which are based upon national rules which, in the Member States, provide that certain acts of a debtor to the detriment of the interests of creditors and, in particular, those which are of a fraudulent nature vis-à-vis creditors, either cannot be pleaded against the creditors or may be set aside under procedures specifically prescribed for that purpose. Those national rules constitute the expression of a general principle common to the laws of the Member States. That principle, when applied in Community law, a possibility expressly provided for in the second paragraph of Article 215 of the Treaty, makes it necessary to consider whether the assignment upon which the applicant relies in this case is of such an abusive nature that it must be regarded as invalid as against the Community authorities.
16. It appears from the documents before the Court that the contract of assignment was concluded at a time when the assignor undertaking was in a state of insolvency and that its purpose was to make possible an amicable out-of-court arrangement with the other creditors, followed by the disposal of all the undertaking's assets, while the person who was at one and the same time a principal member, the manager and liquidator of the undertaking knew perfectly well that by reason of his fraudulent activities the undertaking had obtained Community refunds which were not due to it and which were far greater in amount than the assigned claim. In these circumstances the assignment must be held to constitute a clear abuse vis-à-vis the Community authorities.
17. However, since national provisions dealing with the setting aside of acts of a debtor as a general rule safeguard the interests of a third party acting in good faith, it is appropriate to examine not only the position of the assignor but also that of the assignee, namely Curavest.
18. In this respect it appears from the text of the assignment itself that Curavest was perfectly well aware of the financial position of the assignor as well as of the objective, described above, which the latter was seeking to achieve by means of the assignment. This fact as well as the conditions, which were unusual to say the least, under which Curavest granted an extraordinarily large loan to Contifex, given the latter's situation, the commonalty of interests which is suggested by the further financial relations mentioned in the accountant's report and the fact that the action was brought and prosecuted almost to its conclusion not by the assignee, Curavest, but by the assignor, Contifex, in the unexplained absence, until February 1981, of any notification to the Community of the assignment, warrant the finding by the Court that Curavest cannot rely upon good faith worthy of being protected.
19. It follows from the foregoing that the claim for an order for the payment by the Commission of the amount of the compensation to Curavest is unfounded and that it must therefore be dismissed without there being any necessity to consider the objections of inadmissibility.
20. As far as the applicant's original claim is concerned, it is sufficient to make a finding that the claim for compensation is extinguished by way of setoff. It is true that the applicant has pleaded a rule of German law according to which there can be no setoff in respect of a claim arising from an intentional unlawful act. Without its being necessary to decide whether that rule has its equivalent in Community law, it is sufficient to point out that the abolition by the Council of the refunds for the production of maize gritz cannot be said to constitute such an act.
21. The application must therefore be dismissed in its entirety.
22. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. As the applicant has failed in its submissions it must be ordered to pay the costs.
On those grounds, THE COURT hereby:
1 Dismisses the application;
2 Orders the applicant to pay the costs.