Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

A number of German undertakings engaged in deep-sea fishing, namely Nordsee Deutsche Hochseefischerei GmbH, Reederei Mond Hochseefischerei Nordstern AG & Co. KG and Friedrich Busse Hochseefischerei Nordstern AG & Co. KG (both of the Nordstern Group), and Reederei Sohle, placed ordere prior to 31 December 1970 for the construction of thirteen factory-ships for fishing of the same type as pan of a joint project. The orders were completed and the ships put into service during the period between September 1972 and October 1973.

When the undertakings which had ordered the ships learned in the spring of 1973 that it was possible to obtain aid from the European Agricultural Guidance and Guarantee Fund [hereinafter referred to as the Fund] under the provisions of Regulation No 17/64/EEC of the Council of 5 February 1964 (Official Journal, English Special Edition 1963-1964, p. 103) they submitted applications for such assistance in respect of four ships, that is to say, two for Nordsee, and one each for Reederei Sohle and the Nordstern Group. It became known early in 1973 that measures to encourage conversion projects in the salt cod-fishing industry were to be taken pursuant to Regulation (EEC) No 2722/72 of the Council of 19 December 1972 (Official Journal, English' Special Edition (28-30 December, p. 31) and the same undertakings then submitted additional applications under that programme in the spring of 1973 in respect of five other ships — Nordsee for two ships, Reederei Sohle also for two ships, and the Nordstern Group for one ship. In the case of the last four ships which I said were to be constructed — two ships for Nordsee and one ship each for Reederei Sohle and the Nordstern Group — the undertakings decided not to request aid from Community funds.

The applications which they submitted were, in part, successful. Certain funds were granted by the Commission and paid to Nordsee, Reederei Sohle and the Nordstern Group in July and August 1974, for one ship in each case under the provisions of Regulation No 17/64. In addition, certain sums were granted in June 1974 and paid in 1975 by the Commission under the special programme for the cod-fishing sector in respect of three ships, one each for Nordsee, Reederei Sohle and the Nordstern Group. An application for aid in respect of one ship in the case of Nordsee was withdrawn; two applications in respect of a ship each for Nordsee and Reederei Sohle were rejected.

After all applications had been submitted it became known — by a letter of 10 May 1973 from an official in the German Federal Ministry of Food, Agriculture and Forestry to the Verband der Deutschen Hochseefischereien [German Deep-sea Fishing Association], if I am not mistaken, a copy of which was received by Nordsee — that there were insufficient Community funds available to satisfy all the applications which had been made. As a result an agreement was made on 27 Juhe 1973 between Nordsee, Reederei Sohle and three of the shipping undertakings in the Nordstern Group whereby the aid from EEC funds was to be so pooled between the contracting parties that one-thirteenth of the total aid would be allotted to each of the thirteen factory ships in question. The agreement also provided that all questions arising out of the agreement were to be settled by mutual agreement between the parties, and that in the absence of agreement the issue was to be finally settled, without recourse to couru of law, by an arbitrator who, if the parties were unable to agree on one, was to be appointed by the Industrie- und Handelskammer [Chamber of Industry and Commerce] Bremen. The undertakings also made a supplementary agreement, likewise of 27 June 1973, to the effect that if one or more of the parties was compelled, owing to the existence and implementation of the first agreement, to pay back all or pan of the aid, the aid not to be repaid was to be reapportioned in accordance with the terms of the first agreement.

In 1976 doubts arose as to whether the aforementioned redistribution might not entail the risk of having to repay aid to the Commission, and the Nordstern Group therefore insisted on clarification. Nordsee approached officers of the Commission on the matter in the latter half of 1976. Its representatives then learned that the Commission considered that pooling of aid was not permissible and would attempt to obtain repayment of aid disposed of in such a manner.

Following that an official of the Federal Ministry of Food, Agriculture and Forestry informed Reederei Sohle that the Commission was anxious to obtain a declaration that no pooling of aid had occurred, or would occur. In a telex message sent by Reederei Sohle, on behalf of itself and Nordsee, to the Ministry on 25 November 1976 an assurance was given that no pooling of aid from EEC funds had taken place, no such obligation existed and there was no intention to effect such pooling. That information was passed to the officers of the Commission. A similar declaration was also made by a representative of the Nordstern Group to an official of the Federal Ministry of Food, Agriculture and Forestry.

Nevertheless, Nordsee insisted that the parties abide by the agreement of 27 June 1973 and claimed from Mond and Friedrich Busse of the Nordstern Group a compensators payment, the amount of which is not in dispute, together with payment of interest from 1 September 1975. That was refused, first on the ground that because the pooling agreement infringed Community law on aid, which stipulates that aid is linked to a given project, it was void under Article 134 of the German Bürgerliches Gesetzbuch [Civil Code], and secondly because the claim was precluded by-Article 242 of the Bürgerliches Gesetzbuch as Nordsee would be obliged to return such readjustment payments to the Commission.

In those circumstances recourse was had to the arbitrator provided for in the agreement, who in the absence of agreement between the parties was appointed by the Industrie- und Handelskammer [Chamber of Industry and Commerce] Bremen.

In examining the case the arbitr: vor came to the conclusion that the ci.urn depended on the answer to the quemón whether the pooling arrangement was reconcilable with the provisions of Community law on aid set out in the two regulations already referred to, Regulations No 17/64 and No 2722/72, together with Regulation (EEC) No 729/70 of the Council of 21 April 1970 (Official Journal, English Special Edition 1970 (I), p. 218). If, despite the fact that the principal aim of the aid — the carrying out of the projects as planned — had been achieved, the agreement amounted to an irregularity in particular within the meaning of Article 8 of Regulation No 729/70 because Community aid must not be passed on to other parties but was linked to a given project inasmuch as it was intended to benefit only projects selected for special promotion, then the claimant in the arbitration proceedings, Nordsee, had in fact no entitlement. On the contrary, in such circumstances Member States would have to take steps to recover the aid; immediate withdrawal of the aid might also be expected from the Commission. Moreover, the declarations made to the Commission by the undertakings participating in the pooling agreement (to which I referred earlier) must be taken as an indication that they had withdrawn from the pooling agreement. Furthermore, if it was to be accepted that there was an irregularity there could be no claim under the supplementary agreement of 27 June 1973 either, for if the pooling itself amounted to an irregularity the agreement readjusting the pooling must also be regarded as an infringement of Community law on aid and thus void under Article 134 of the Bürgerliches Gesetzbuch. However, because the arbitrator was uncertain as to the interpretation of the law on aid and as to what precisely was to be understood by the term irregularity, he considered that a preliminar) ruling on the point from the Court of Justice was required.

Another problem which he encountered, of course, was whether a court of arbitration is entitled at all to make a reference under Article 177. He considers that there are grounds for allowing that it is, although in the case-law to date only judicial organs of the State, forming pan of the national organization of the administration of justice, have been recognized as having the right to submit a reference for a preliminary ruling. He relies on the fact that as arbitrator his duty is to apply substantive law and Community law with the same precision as the ordinary courts, that he is bound to ensure that the procedure adopted is compatible with the requirements of the due administration of justice, and that his findings are reachtd independently, the fact that he is appointed by the Industrie- und Handelskammer being significant in this respect; he also observes that his decision is final since recourse to the courts was excluded, that pursuant to Article 1040 of the German Zivilprozeßordnung [rules of civil procedure] it has the same effects as a definitive judgment, and that in proceedings for leave to issue execution or have the award set aside under Articles 1041 and 1042 of the Zivilprozeßordnung such awards are subject to only limited review and not to a review of their application of the law such as that which is exercisable by a final court of appeal. The arbitrator also refers to the purpose of the procedure for obtaining a preliminary ruling which is to guarantee uniformity in applying the law, a purpose which would not be so well served were references for preliminär)' rulings to be allowed solely in proceedings either for leave to issue execution or to have the award set aside, owing to the limited scope for review which they afford in the case of arbitration awards.

By an order of 22 April 1981, therefore, he suspended the proceedings before him and referred the following questions to this Court for a preliminary ruling:

My views on this case are as follows.

The first point to be considered is the admissibility of the reference, that is to say, of a request for a preliminary ruling to the Court of Justice by an arbitrator called upon to decide a dispute under the terms or a private agreement.

Consideration of that point must be automatic and quite independent of the fact that the first question referred to this Court by the arbitrator concerns just one point. Moreover, the question at issue — all that is required for the purposes of the main proceedings — is solely that of determining the authority of the person who has actually re/erred the matter to this Court; it is not therefore simply to make a general interpretation of Article 177 in relation to arbitration which, as has been made clear by the views expressed in the present proceedings, takes many forms.

1. In this context it is important to note that the decisions of the arbitrator who has made the reference are based not on equity but on law, including statute law, and that such proceedings are regulated in certain respects by the German Zivilprozeßordnung (Article 1025 et seq.). Thus Article 1034, for instance, contains a few basic rules of procedure guaranteeing respect for the rule of law. By virtue of them the arbitrator is required to hear the parties and establish the facts giving rise to the dispute before making his award; in addition, legal representation by lawyers may not be refused. Article 1039 provides that the arbitrator's award must be deposited at the registry of the competent court; Article 1040 provides that an arbitration award has the same effects as between the parties as a definitive judgment of the courts. It should be noted, however, that its effects may not take precedence over the effects of a judgment emanating from a court or tribunal of the State because they are enforceable not automatically but only on application by one of the parties (see the judgment of the Bundesgerichtshof [Federal Court of Justice] of 11 April 1958, reported in Neue Juristische Wochenschrift, 1958, p. 930) and because the parties may, by agreement between them, refuse to be bound by an arbitration award (see the judgment of the Oberlandesgericht [Higher Regional Court] Bremen of 14 December 1956, reported in Neue Juristische Wochenschrift 1957, p. 1035). Funher to that, Article 1041 defines the grounds on which an arbitration award may be set aside, and it is especially noteworthy that for that purpose no comprehensive review to ensure correct application of the law is undertaken, the only test — as far as the content of the award is concerned — being whether it offends against public morality or public policy. Finally, Article 1042 provides that execution is based upon the arbitrator's award once it has been declared enforceable. The requisite declaration in that respect is made by an ordinary court of law whose jurisdiction is governed by Articles 1045 and 1046 of the Zivilprozeßordnung, and it may be refused if one of the grounds of nullity listed in Article 1041 is present.

2. Whether a reference arising from arbitration proceedings of this kind is admissible or not cannot be deduced from the previous decisions of this Court, which has already more than once had to consider questions raised by bodies which are not courts or tribunals of the State. Clearly, in the present instance not all the criteria are present which were considered to be important in the two cases which are relevant on the issue, Case 61/65 and Case 246/80.

3. The crucial question is therefore whether one may go considerably further than the cases just described in applying Article 177 and regard in addition arbitration courts constituted under private law of the kind described at the beginning of this opinion as courts or tribunals within the meaning of that provision.

The substance of the arbitrator's enquiry is whether agreements such as those to be assessed in the original proceedings, and implementation of them, constitute irregularities within the meaning of Regulations Nos 17/64, 729/70 and 2722/72 rendering aid granted by the Guidance Section of the European Guidance and Guarantee Fund liable to recovery in whole or in pan.

The German deep-sea fishing undertakings named at the beginning of this opinion had agreed after applying for, but before being granted, EEC aid that the aid granted after the ships had been put into service and paid for would be shared among them on the basis of the number of all factory-ships of the same kind which had been constructed and put into service by them; in other words, the agreement was to include projects which had not been assisted, for which applications for aid had not been submitted or had been withdrawn or assistance for which had been expressly refused. As stated in the order making the reference, in all except three cases the ships in question had not yet been put into service when the applications for aid were submitted.

1. Before examining the question I shall briefly review the content of the relevant Community regulations.

2. From those provisions the following principles may be extracted:

3. In the light of those fundamental facts, the claimant's attempts in the oral procedure to defend the agreements cannot suffice to alter that conclusion.

4. If the pooling contract under examination by the arbitrator constitutes an irregularity within the meaning of Community law, therefore, that being obviously something which does not require the presence of elements constitutive of a criminal offence, and the original attitude of the German authorities — who when passing on the applications for aid did not mention the existence of the agreement which was known to them and made no attempt to have the applications altered — being irrelevant, then that pan of the arib-trator's second question which refers to the recovery of aid requires the following brief comments.

To sum up, my conclusion is as follows:

I consider that there are good reasons for regarding as inadmissibible the reference for a preliminary ruling which has been submitted to this Court the President of the Hanseatisches Oberlandesgericht in his capacity as arbitrator.

If the Court does not endorse that view, the question which was submitted should be answered as follows:

Where the recipients of aid from the Guidance Section of the European Agricultural Guidance and Guarantee Fund for similar projects agree, after applying for EEC aid but before it has been granted to them, that after the ships have put into operation and paid for the aid which has been granted shall be shared among them on the basis of the number of all objects of the same kind constructed and put into operation by them, that is, so as to include objects for which no aid was granted, and to share the aid in accordance with that agreement, that amounts to an irregularity within the meaning of Regulation No 17/64 and Regulation No 2722/72. Such an irregularity may lead to the recovery of the aid which was granted.

1 Translated from the German.

2 Judgment of 30 June 1966 in Case 61/65 G. Vaassen tnee Goubbelsy v Management of the Beambtenfonds voor het Mijnbedrijt [1966] ECR 261.

3 Judgment ol 6 Octobtr 1981 in Case 246/80 Broekmeulen \Hunam Regimane Commune [1981] ECR 2311