JUDGMENT OF 4.3.1980 — CASE 49/79 POOL v COUNCIL

In Case 49/79

THE COURT composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

I — Facts

II — Written procedure

III — Conclusions of the parties

IV — Submissions and arguments of the parties during the written procedure

V — Oral procedure

Decision

Costs

I —. Facts

(a). for the Irish pound: £1 Irish = 1.9485 units of account;

(b). for the pound sterling: £1 sterling = 2.0053 units of account.

II —. Written procedure

III —. Conclusions of the parties

(a). award him damages of £9504 against the European Economic Community in the person of the Council of the European Communities;

(b). order the Council to pay the costs.

(a). dismiss the application;

(b). order the applicant to pay the costs.

IV —. Submissions and arguments of the parties during the written procedure

(a). Under the second subparagraph of Article 40 (3) of the EEC Treaty, a common organization of the market is to exclude any discrimination between producers or consumers within the Community and a common price policy must, under the third subparagraph of the same provision, be based on common criteria and uniform methods of calculation.

(b). It follows from the case-law of the Court that the liability of the Community arises in the case of legislative provisions if the Community has committed a sufficiently serious breach of a superior rule of law for the protection of the individual. The rules laid down in Article 40 (3) of the EEC Treaty are clearly designed to protect the interests of the individual farmer and consumer. They impose on the Council a clear and precise obligation not to manipulate prices State by State. Article 40 (3) contains a fundamental constitutional guarantee: it is the counterpart to conferring on the Community the power to regulate the agricultural markets.

(c). Regulation No 2498/74 does not contain a single word of justification for the differentiation between the representative rates of the Irish pound and the pound sterling. The Council has no discretion to treat two identical monetary situations in a different way. The reasons advanced by the Council for explaining the different treatment of the two currencies in question do not justify the differentiation: the differences between Ireland and the United Kingdom have always existed and will continue to exist.

(d). The Council does not even argue that the so-called representative rates were representative of anything; in this situation the applicant can hardly argue that the rate of exchange fixed for the pound sterling was in itself incorrectly fixed save that it was not representative of any real monetary relationship with the currency of any other country, the clearest proof of which is the absence of any similarity with the Irish pound. The applicant has chosen the Irish pound for comparison merely because the discrimination is there most obvious.

(e). It is evident from the case-law of the Court that a person who, in the event of a breach of Community law by a Member State, relies on a provision relating to nondiscrimination must be placed by the national court in such a position that in his individual case the breach of Community law by the Member State has been nullified. The Treaty should not be interpreted as laying down a greater level of protection for private individuals against breach of Community law by a Member State than against the Community in the case of breach of Community law by the Community itself. The only court in a position to uphold Community rights in this situation is the European Court. An annulment action, even if it were available, would not be suitable for this purpose; the appropriate procedure is the action for damages. The Court can, by awarding the applicant compensation, ensure that the rights which he derives from the Treaty are safeguarded.

f). It is true that the applicant has never sold in Ireland or into intervention in Ireland; the decisive point is that in terms of intervention prices or market prices expressed in pounds the applicant would at all times have received more if he had been selling in Ireland. He has thus suffered damage because of the discriminatory conduct of the Council which flagrantly infringes the Treaty.

(a). In pursuance of Regulation No 805/68 the Council fixes for each marketing year a guide price and an intervention price for adult bovine animals; that price, laid down in units of account, is the common price within the common agricultural policy. It was fixed in pursuance of the third subparagraph of Article 40 (3) of the Treaty. As European farmers are not paid for their products in units of account but in their national currencies, it is necessary to lay down an exchange ratio between the unit of account and national currencies. This was the point of Regulation No 129 which determined the value of the unit of account on the basis of its fine gold content. Subsequently the international monetary system set up by the Bretton Woods Agreements and the values of the various national currencies underwent major changes: there is no longer any firm exchange ratio between national currencies and gold; for the conversion of the unit of account into national currencies, the specific amount of fine gold has been replaced by the representative rate or green rate for each national currency and, since 1971, monetary compensatory amounts have been introduced for trade between the majority of the Member States.

(b). As regards more particularly the representative rates of the pound sterling and the Irish pound, these were fixed at the same value in the early days of the application of the common agricultural policy to the new Member States. As from 7 October 1974, Regulation No 2498/74 fixed the Irish pound at 1.9485 units of account and the pound sterling at 2.0053 units of account. This trend has continued: thus, under Council Regulation No 643/79 of 29 March 1979 (Official Journal L 83, p. 1), the rates at present applicable are, for the pound sterling, 1.49794 units of account and for the Irish pound 1.26702 units of account. The representative rates for the various national currencies are fixed on the basis of a proposal from the Commission, which is itself preceded by a suggestion from one or more Member States concerned. In this way the Council respects the prohibition on discrimination.

(c). There were objective reasons for setting different representative rates for the pound sterling and the Irish pound.

(d). Thus the adoption of different representative rates for the pound sterling and the Irish pound was a decision within the Council's discretion, taken on the basis of economically justified criteria, and it in no way infringed the prohibition on discrimination. The claim for damages made by the applicant is thus without foundation. At all events the Council did not manifestly and gravely disregard the limits on the exercise of its powers.

(e). Damages cannot be claimed in the absence of an infringing act. In any event it should be noted that the market price for beef and veal in Ireland was lower than that in the United Kingdom during the entire period in question. Thus, if the applicant had sold his produce in Ireland he would have received less than in the United Kingdom; he has therefore not incurred any loss in selling his produce in the latter Member State.

V —. Oral procedure

1. By an application of 28 March 1979 the applicant, who is a cattle breeder established in the United Kingdom, sought compensation under the second paragraph of Article 215 of the Treaty in the sum of £ 9504 for the damage which the Council was alleged to have caused him when it determined the conversion rate for the pound sterling in Regulation No 2498/74 of the Council of 2 October 1974 fixing representative conversion rates to be applied in agriculture (Official Journal L 268, p. 6) and the subsequent regulations on the same subject.

2. The applicant takes the view that as a result of the Council's improper determination of the conversion rate for the pound sterling for the purposes of the common agricultural policy (hereinafter referred to by the term green rate) he did not, when selling his produce, obtain the prices which he should have received under the provisions of the common organization of the market in beef and veal (Regulation No 805/68 of 27 June 1968, Official Journal, English Special Edition 1968 I, p. 187) if the green rate for the pound sterling used to convert agricultural prices fixed in European units of account into the national currency of the United Kingdom had been determined by the Council in the proper way. He considers that when determining the conversion rate the Council manifestly infringed the provisions of Article 40 (3) of the Treaty which requires the common organizations of the market to exclude any discrimination between producers or consumers within the Community and provides that any common price policy shall be based on common criteria and uniform methods of calculation.

3. The applicant thinks that the Council, when determining the conversion rate applicable to the pound sterling under the common agricultural policy, overvalued that currency in particular, so that agricultural prices in the United Kingdom were fixed at an appreciably lower level than that of prices guaranteed to agriculture in the other Member States. Using the monetary conversion rates applicable at the time as the basis for calculation, he comes to the conclusion that agricultural prices in the United Kingdom were 30 % lower than the highest prices existing in the Community, 23 % lower than the average prices ruling in the Member States and 21 % lower than prices guaranteed to Irish farm producers. The disparity in the latter case seems to him to be particularly flagrant because at the time under consideration the United Kingdom and Ireland were part of the same monetary system.

4. The applicant, apparently considering the conversion rate for Ireland as having been determined satisfactorily, submits that an appropriate level of damages would be such as to put him in the same position as if he had sold his produce in the Republic of Ireland. Upon comparing the prices which he received during a period from 7 October 1974 to 1 March 1979 to the prices which he could have obtained during the same period in Ireland, he estimates that his loss amounts to £ 9504 for which he seeks an award of damages from the Community.

5. The Court asked the applicant at the conclusion of the written procedure to explain precisely the reasons leading him to believe that the conversion rate for the pound sterling had been determined improperly in relation to the value of not only the Irish pound, but also the currencies of the other Member States. The applicant however confined himself to repeating the arguments put forward in his application; he confirmed that he only intended to make the comparison between the green pound sterling and the green Irish pound since he regarded the determination of the rate for the Irish pound to be more representative of the real monetary relationship than the rate determined for the pound sterling and because in his opinion this comparison illustrated the discrimination most clearly.

6. The application calls in question several Council regulations relating to fairly fundamental questions of economic and monetary policy in the agricultural sector. Essentially, by making choices in the determination of the conversion rate for the pound sterling in relation to the unit of account, the Council allegedly incurred liability to the applicant.

7. With a view to dealing with this claim, it is appropriate to recall the conditions upon which the liability of the Community may arise under the second paragraph of Article 215. As the Court has already indicated in its judgment of 2 July 1974, Holtz & Willemsen v Council and Commission (Case 153/73, ECR 675), Community liability depends on the coincidence of a set of conditions as regards the unlawfulness of the acts alleged against the institution, the fact of damage, and the existence of a direct link in the chain of causality between the wrongful act and the damage complained of.

8. It is in the light of those criteria that the substance of the application should be examined. The applicant was mainly intent upon demonstrating in the light of the provisions of Article 40 (3) of the Treaty the unlawfulness of the Council regulations designed to determine the conversion rate for the pound sterling in the context of the common agricultural policy. However, before entering into these arguments, it is appropriate to ask whether the applicant has proved, if only prima facie, that he has in reality suffered the damage for which he claims compensation.

9. In order to prove the existence of the damage which he claims he has suffered, the applicant has put before the Court statistics meant to show the comparative trend of sale prices for cattle in the different Member States following a system of his own, using both monetary exchange rates and the agricultural exchange rates determined by the disputed regulations. He himself admits that these calculations have an illustrative value only; in the final analysis the proof of the existence and the amount of damage alleged rests exclusively upon the relationship between the level of prices in the United Kingdom and that of prices in Ireland. This attempted proof is not convincing for two reasons.

10. First, the applicant fails to see the legal nature of prices determined under the common organization of the market for beef and veal. He could establish damage only if the determination of certain levels of prices in the context of the common organization of the market had the effect of giving producers the right to dispose of their produce at a guaranteed price level. Only in that case in fact could a producer establish that damage was caused, ascertainable from the level of prices determined under the common organization of the market and from the level of prices ruling as a result of monetary measures adopted by the Council. That is not the effect of the price system established under the applicable rules. Those prices are to determine on the one hand the implementation of the various measures of intervention in the market, and on the other to adjust the level of levies and refunds applicable in trade with non-Member States. By virtue of that machinery the common organization of the market gives the Community producers the advantage of a level of prices substantially higher than the level of prices prevailing on the world market. It is true that the prices obtained by individual producers are indirectly determined by the combination of intervention in the market and the arrangements for the Community's external trade, but in spite of that it is not possible to take the view that the price system guarantees to individual traders that their produce will be disposed of at the precise price level determined by Community rules. As a result, that level, expressed in units of account, does not constitute a value which could be used as a basis for comparison with the prices obtained by a producer on the market with a view to demonstrating that certain damage has been caused.

11. It should moreover be observed that the demonstration undertaken by the applicant to prove that he has really suffered damage is based upon an unreal comparison. He asks, in fact, to be placed in the same position as if he had sold his produce on the Irish market. In actual fact he carries on his activity as a cattle breeder in the United Kingdom and has sold his produce on the market there. If he had sold his produce on the Irish market, he would have been liable to the payment of monetary compensatory amounts on import into Ireland so that the prices obtained by him would in principle not have been different from those which he obtained by disposing of his produce on the United Kingdom market. If he had lived in Ireland, his produce would have been dependent upon the economic conditions for production prevailing in that State.

12. It follows from the foregoing that the applicant has not been able to prove the existence of the damage which he claims to have suffered; this is sufficient for the dismissal of his application without there being any need to enter into the question of the lawfulness of the monetary measures criticized by the applicant.

13. Under Article 69 (2) of the Rules of Procedure of the Court of Justice the unsuccessful party must be ordered to pay the costs.

14. Since the applicant has failed in his submissions, he 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.