Opinion of Mr Advocate General
Mr President,
Members of the Court,
1. Introduction
The Fromme case before us today displays a number of features which will not satisfy everyone's sense of justice. The court which made the reference for a preliminary ruling manifestly found in the claim for interest in question a number of factors repugnant to its own sense of justice. However, not every offence against one's sense of justice can be removed by means of Community law. At the hearing even the plaintiff in the main action admitted that the court which made the reference for a preliminary ruling drew too heavily on Community law in its questions and explanations of them. The point for consideration in cases of this kind, in which our sense of justice may be offended against, is the sharp distinction made between:
The most important of the relevant facts before the Court are as follows:
In 1970 the merchant Fromme received from the Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets, hereinafter referred to as The Bundesanstalt] a premium amounting to DM 128497.62. The premium was paid under Regulation (EEC) No 172/67 of the Council (Official Journal, English Special Edition 1967, p. 139) in which the basic rules for the denaturing scheme were laid down. After an inspection of books had disclosed that for the purpose of such denaturing Fromme had added less blue colorant than implementing Regulation (EEC) No 1403/69 of the Commission (Official Journal, English Special Edition 1969 (II), p. 345) required, a demand was made at the end of 1977 for the payment of the premium. It is not contested that the aim of that provision on denaturing — the denatured wheat was to be used solely for cattle-feed — was fulfilled in this case. Nevertheless, by decision of 8 December 1967 Fromme was required to repay the premium and it did so. The proceedings which led to the present reference to the Court do not therefore relate to the principal claim. In 1980, however, the Bundesanstalt also claimed interest on the wrongly-paid premium which, according to the plaintiff in the main action, owing to the time which had elapsed, amounts in total to 70 to 80% of the principal sum. The questions referred to this Court by the national court relate only to that claim for interest.
The claim for interest is based on the second sentence of Article 11 (1) of the Order of the German Federal Minister of Agriculture of 8 August 1968 concerning premiums for the denaturing of cereals, as amended by Order of that Minister of 14 February 1973 concerning the adjustment of the rules on interest contained in orders implementing the common organizations of the markets. The legal basis for the last order is the Gesetz zur Duchführung der Gemeinsamen Marktorganisationen [Law on the Implementation of the Common Organization of the Markets] of 31 October 1972.
The question for this Court in these proceedings is whether rules of this kind which apply in the Federal Republic of Germany are in conformity with Community law. In a case such as this one, in which premiums which have been wrongly paid are reclaimed, the abovementioned interest order provides for a fixed rate of interest to be charged in respect of the period from the date on which the premium was paid to the date on which it was repaid (approximately seven years in this case), the rate being 3% above the prevailing discount rate of the German Federal Bank and not less than 6.5%.
The relevant German rules are in their turn based upon or must at any rate be examined in the light of Regulation (EEC) No 729/70 of the Council (Official Journal, English Special Edition 1970 (I), p. 218). In particular Article 8 of that regulation provides:
Implementing measures of the kind referred to in Article 8 (3) have not yet been adopted, a fact which, from the point of view of effective, unified action against fraud in each Member State, is cenainly to be regretted. I shall return to
(his point when I consider certain aspects of the rules on interest in question. Regulation (EEC) No 1403/69 of the Commission (Official Journal, English Special Edition, 1969 (II), p. 345) does however implement the Council regulation on matters other than those now at issue.
The Verwaltungsgericht [Administrative Court] Frankfurt am Main stayed the main proceedings in order to refer the following questions to the Court:
2. Analysis of the questions put to the Court
In their written observations the plaintiff in the main action, the Federal Republic of Germany and the Commission are at one in agreeing that the questions raised by the national court and the legal reasoning behind them, which is set out in the Report for the Hearing, reveal a fundamental misunderstanding of the general relationship between Community law and national law in the field of the organization of the agricultural markets. In the present state of Community law it is not possible to sum up that general relationship by stating that national legislatures alone have power in this field in so far as they are expressly empowered by Community law in that respect. When answering the questions that misunderstanding will need to be borne in mind. Since the misunderstanding underlies each of the questions raised, the interpretative guidelines of relevance for the national court will have to be framed more or less independently of those questions. In this regard, however, all the questions of Community law which have emerged during these proceedings and which are relevant for the national court will have to be examined.
To enable a useful answer to be given to the national court the questions may therefore be reframed as follows: Is the power of a Member State to charge interest on reclaiming wrongly-paid denaturing premiums calculated from the date on which the premium was paid at a rate of 3o/o above the prevailing discount rate of the central bank concerned but in any event at not less than 6'/:o/c restricted by:
I shall deal with those questions in the following order. Because of the misunderstanding which each question reveals on this point I shall first consider some fundamental principles of Community law concerning the implementation of the common agricultural policy by national authorities. Next I shall consider how far Article 8 of Regulation (EEC) No 729/70 leads to different conclusions in this regard.
I shall then consider the two most important restrictions which, albeit with varying results for the purposes of this case, are inferred in all the written observations from the Court's case-law. Finally, with reference to the third question, I shall also consider whether other restrictions on national authorities arise from provisions or general principles of Community law other than those which figured in the Court's decision previously dealt with. In so doing I shall devote particular attention to the question of the applicability in this case of the principle of proportionality developed in other decisions of the Court.
3. Basic principles of Community law concerning the implementation of the common agricultural policy by national authorities
The point is made in all the written observations that it appears from the way in which the questions are framed that the national court which referred them for a preliminary ruling wrongly assumed that Member States may charge interest, in cases of the reclaiming of wrongly-paid premiums, only if they are expressly authorized to do so by Community law.
In very general terms it may be inferred from the first sentence of Article 5 of the EEC Treaty that Member States have the obligation to take appropriate measures, whether general or particular, to ensure the implementation of the regulations in the field of the common agricultural policy. To that extent authorization is not necessary.
However, the Court had already made it clear in its judgment in Case 40/69 Bollmann [1970] ECR 69 and Case 74/69 Krohn [1970] ECR 451 that such national implementing measures may not adversely affect, alter or expand the scope of the Community regulation. In its judgment in Case 118/76 Balkan -Import-Export [1977] ECR 1177 the Court reaffirmed that restriction on national powers which may be considered to be an elaboration of the second paragraph of Article 5 of the EEC Treaty.
As regards the present problems, the Court gave substance to that principle in Joined Cases 119 and 126/79 Lippische Hauptgenossenschafi [1980] ECR 1863 by ruling that as far as the grant of premiums is concerned it is the duty of the national authorities to require the repayment of any premium paid without justification (paragraph 7 of the decision). It may be inferred from subsequent passages of that judgment that that power of the Member States relates not only to the adoption of procedural measures for reclaiming of sums mistakenly paid, whilst the laying down of substantive conditions would be reserved to the Community. The Court merely stated that in such matters the national authorities must proceed with the same care and attention as they exercise in implementing corresponding national laws, in order to prevent any weakening of the effectiveness of Community law (paragraph 8 of the decision). In that connexion the laying down of limitation periods or timelimits expressly held to be permissible by Court. Referring to the principle i tained in Article 5 of the Treaty that national implementing measures must not undermine Community law, the Court stated in its judgment in Case 265/78 Ferwerda [1980] ECR 617 that it is for the Member States to determine the courts having jurisdiction and to fix the procedural rules but such rules may not be less favourable than those governing similar national claims and may in no case be laid down in such a way as to render it impossible in practice to exercise the rights which the national courts must protect (paragraph 10 of the decision). In paragraph 17 of its judgment in the Express Dairy Foods case (Case 130/79 [1980] ECR 1887) the Court held in the same line that it is for the Member States, and particularly for national courts, to settle ancillary questions, such as the payment of interest, relating to the problem of undue payments.
However, besides imposing the requirement of effectiveness and prohibiting the scope of Community law from being adversely affected, altered or extended, the previous decisions of the Court also enunciated a prohibition of discrimination. This prohibition is clearly more specific in nature than the prohibition, contained in the second paragraph of Article 4C (3) of the EEC Treaty, of any discrimination between producers or consumers within the Community. That prohibition of discrimination which is designed to give legal protection to all traders in the Community certainly also applies to national measures implementing the common organization of the market. However in the decisions of the Court now under consideration the prohibition of discrimination was formulated in such a way as to assimilate implementing measures of Community law to other comparable provisions of national law. That was expressed by the Court in paragraph 12 of its judgment in Ferwerda (Case 265/78 [1980] ECR 617) in the following terms: ...the express reference to national laws is subject to the same limits as those affecting the implied reference, the need for which has been acknowledged in the absence of Community provisions, inasmuch as the application of national legislation must be effected in a nondiscriminatory manner having regard to the procedural rules relating to disputes of the same type, but purely national .... Earlier, in paragraph 8 of the same judgment, the Court had also stated that there must be no discrimination in respect of procedural and substantive conditions on which the authorities of the Member States may levy the said charges and, if necessary, recover financial benefits which were wrongly granted. In the Express Dairy Foods case (Case 130/79 [1980] ECR 1887) the Court likewise held in paragraph 12 that: ... the application of national legislation must be effected in a non-discriminatory manner having regard to the procedural rules relating to disputes of the same rype, but purely national.... Finally, the Court held in Lippische Hauptgenossenschaft (Joined Cases 119 and 126/79 [1980] ECR 1863) that: It is for the national authorities to assess a situation such as that which has been brought before the Verwaliungsgericht on the basis of the rules and principles of their national laws, provided that they do not make a distinction between situations governed by Community law and similar situations subject to the application of national law alone.
I therefore infer from the decisions of this Court first that the method of application of Community law adopted by Member States may not undermine the effectiveness of that law and may not therefore be less effective than the method of applying comparable national rules. That follows in particular from paragraph 8 of the Court's decision in the Lippische Hauptgenossenschaft cases. Secondly, it appears to me to follow from the passages which I later cited from the Ferwerda, Express Dairy Foods and Lippische Hauptgenossenschafi cases that individuals too, may not be treated less favourably than is the case where comparable, purely national provisions are applied. Since opinion is sharply divided on the exact meaning of the prohibition of discrimination in this case, I shall, when considering the third question put to the Court, also examine the extent to which further clarification is possible here. Furthermore, 1 shall then also return to the question of effectiveness which I shall consider in the light of the arguments submitted during the proceedings.
4. The rules governing the allocation of powers contained in Article 8 of Regulation (EEC) No 729/70
The abovementioned principles emerging from the Court's decisions apply of course only so far as Community law does not provide otherwise. I shall therefore now consider to what extent Article 8 of Regulation (EEC) No 729/70 enables conclusions to be drawn which constitute anything more than a refinement of the principles established so far.
In Cases 146, 192 and 193/81 Baywa and Raiffeisenbankgenossenschafi, one of the questions put by the same national court as that which made the reference to the Court in this case is: Does Article 8 of Regulation (EEC) No 729/70 ... require Member States in every case to recover unlawfully granted denaturing premiums or does the regulation allow Member States to leave individual cases of recovery to the discretion of the competent authorities, in accordance with national legal provisions?.
Since the hearing in those more recent cases had not yet taken place when this opinion was being prepared it is not possible to take account in this opinion of what emerges from that hearing. The judgment in this case may perhaps be able to do so, however. The question raised in regard to Article 8 in this case is based on the misunderstanding of the allocation of powers which I have already pointed out. The point is not whether Article 8 contains an enabling provision but whether it contains restrictions on the powers of Member States which depart from the abovementioned general principles which emerge from the decisions of the Court.
In any event Article 8 provides further elaboration of the abovementioned general obligation contained in Article 5 of the EEC Treaty. According to Article 8 Member States must, in accordance with their national legislation, take inter alia the measures necessary to:
Article 8 (2) further provides inter alia that the sums recovered are to be paid to the paying authorities or bodies and deducted by them from the expenditure financed by the fund.
The Council has not used the power provided for by Article 8 (3) to adopt general rules for the application of Article 8 in spite of a Commission proposal made on the very issue of the calculation of interest.
Like the Commission I can find nothing in the wording of Article 8 which would exclude the power of Member States, as inferred from the decisions which I have just cited, to lay down rules for the payment of interest on recovery claims as well. The Commission also rightly observes that Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and recovery which is also applicable in this case, does not contain any restrictive provisions either. Therefore it may be inferred from the decisions of the Court, in particular from the judgments in Case 26/74 Roquette [1976] ECR 677 and Case 131/77 Express Dairy Foods [1980] 1887, that in principle Member States have the power to adopt rules on the question of the payment of interest. But in this respect, too, the restrictions which I mentioned earlier, namely that such rules may not adversely affect, alter or expand the scope of the Community regulation, in this case Article 8 of Regulation (EEC) No 729/70, apply. I share the Commission's view that in this respect the plaintiff in the main action and the national court, in its judgment, are wrong to place a restrictive, literal interpretation on Article 8. According to their interpretation only the actual sums wrongly paid may be reclaimed.
The Court has already held in Case 11/76 Netherlands v Commission [1979] ECR 245 that: The text of Article 8 in the different language versions contains too many contradictory and ambiguous elements to provide an answer to the questions at issue. In order to interpret that provision, therefore, it is necessary to consider its context and the objective of the rules in question (paragraph 6 of the decision). In the next paragraph the Court stated 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. It makes provision both for measures for the recovery of sums wrongly paid and for administrative and judicial procedures against the persons responsible.
In this regard the Commission is. in my view, right in its submission that the first consideration in assessing the national implementing measures is whether they are effective from the point of view of the aims of Article 8 (as defined by the Court).
Finally, the plaintiff in the main action has stressed, in particular in the course of the hearing, the importance of the national court's finding that the interest claimed is not paid to the Community but accrues to the budget of the Federal Republic. It might well be asked whether that is in accordance with the provisions of Article 8 (2). Nevertheless, I share the view of the Federal Republic of Germany and the Commission that this point is not relevant to the relationship between the plaintiff in the main action and the Bundesanstalt. So far as that relationship is concerned only the first part of Article 8 (2) is relevant, and not in addition the relationship between the national implementing bodies and the Fund, which is governed by the last part of Article 8 (2).
Article 8 does not throw any new light on the two general restrictions which Community law places on national implementing measures (the scope of Community law must not be affected and there must be no discrimination) and which are in principle acknowledged in all the written observations. To that extent Article 8 does not change the general principles contained in the case-law of the Court. As I indicated earlier, I shall now return to the question to what extent must those general principles be further defined in a situation such as the one in this case.
When considering the third question of the Verwaltungsgericht, in the form in which I have recast it, I shall also examine separately the problem of the extent to which it may be inferred from Article 8 that the principle of proportionality expressed in other branches of the case-law of the Court must also be applied in this case and the meaning which might then be given to it.
5. Further definition, for the purposes of the situation in this case, of the general restrictions laid down in the case-law of the Court
6. Proposals for answering the questions put to the Court
I now come to my specific proposals for the answers to be given to the questions put to the Court in this case. The answers may run parallel, as indicated in the introduction to my opinion, with the three questions put to the Court and in my view provide the national court with ample guidelines for interpreting all questions of Community law which have emerged during the proceedings. I recall that I reframed the questions raised to read as follows:
I propose the following answers to the question as reformulated above:
1. Inasmuch as Community law does not contain any provisions by way of derogation or restrictions Member States not only have the power but are also required by virtue of the first sentence of Article 5 of the EEC Treaty to adopt all appropriate measures, whether general or particular, to ensure the fulfilment of the obligations arising out of that Treaty or resulting from the common organization of the agricultural markets. It results from the present general state of Community law that in principle this is also the case as regards rules on interest in the case of reclaiming wrongly-made payments such as those in question in this case.
2. Although the obligation resulting from the first sentence of Article 5 of the EEC Trearv itself is amplified by Article 8 of Regulation (EEC) No 729/70 (Official Journal, English Special Edition 1970 (I), p. 218) it is not restricted as regards rules on interest of the kind at issue in this case, at any rate so long as Article 8 (3) is not implemented and without prejudice to the principles of interpretation stated below.
3. A Member State's powers to adopt and apply rules on interest such as those at issue in this case are restricted in particular by the following general principles of Community law which emerge inter alia from the case-law of the Court of Justice:
1 Translated trom the Dutch