Opinion of Mr Advocate General
Mr President,
Members of the Court,
1. Introduction
1.1. In the present case the national court has referred questions relating to the legal nature and status of deposits lodged in accordance with provisions adopted under the common agricultural policy, as referred to in Article 1 (1) of Council Regulation (EEC) No 352/78 of 20 February 1978 (Official Journal 1978, L 50, p. 1).
1.2. From the Commission's answer to the written questions put by the Court on 15 December 1983 and from our own research it appears that such deposits are very often required in the agriculture sector and in other areas also. The Commission mentions inter alia in its answer customs law and a recent measure affecting the steel industry (Decision No 3716/83/ECSC of 23 December 1983, Official Journal 1983, L 373, p. 5).
1.3. In view of that brief summary of the Commission's answer to the first written question it is understandable that the national court also considers itself faced in the present case with problems relating to the legal nature and status of a deposit which is first released and then demanded again. As appears from the Commission's answer, it is true there are cases in which the regulation in question expressly provides for the reconstitution of a deposit which has been released (Articles 31 and 40 of Commission Regulation (EEC) No 3183/80, Official Journal 1980, L 338, p. 1).That is however not so in the present case. According to the information available to the Commission, the legal practice of the Member States in the matter is not uniform. In that respect, I refer, first, to the Commission's answer to the written question and, secondly, to the further explanations which it gave at the hearing. The judgment in the present case can therefore make an important contribution to the additional clarification of the legal nature and status of deposits such as that involved and also those provided for under many other rules.
1.4. The questions put by the Verwaltungsgericht Frankfurt am Main are worded as follows:
1.5. The rest of my Opinion will take the following form:
2. The applicable Community legislation
2.1. The basic regulation
The intervention measures which are relevant in the present case have their basis in Regulation (EEC) No 989/68 of the Council (Official Journal, English Special Edition 1968 (I), p. 264). That regulation provides for the possibility of intervention in the beef and veal sector in the form of aid for private storage of fresh beef and veal originating in the Community. Article 1 (3) provides that aid shall be granted for private storage in accordance with the terms of contracts concluded with intervention agencies; such contracts shall express the. reciprocal obligations of -the' contracting parties in standard terms for each product.
The final sentence of the third recital in the preamble to the regulation shows that the requirement of uniformity arises from the need that the granting of aid should be so effected as not to discriminate between applicants established in the Community. It is clear from Article 3 and the third subparagraph of Article 4 (2) of the regulation that the storage contracts must fix, inter alia, the duration of the storage. The second subparagraph of Article 4 (2) states that only applicants who have given security for fulfilment of their contract obligations by lodging a deposit, which shall be forfeited in whole or in part if these are not fulfilled or are only partially fulfilled, shall be permitted ... to conclude such contracts (the italics and omissions are mine).
2.2. The implementing regulation
Detailed rules for implementing the Council regulation which I have just dealt with were laid down in Regulation (EEC) No 1071/68 of the Commission of 25 July 1968 (Official Journal, English Special Edition 1968 (II), p. 354). Article 3 thereof gives a detailed summary of the matters, obligations and rights which storage contracts must in all cases provide for. Article 3 (4) provides the obligation to store the agreed quantity shall be considered as fulfilled if not less than 90% and not more than 110% of that quantity has been taken in store and stored. The fifth recital in the preamble to the regulation shows that that provision is not an expression of the principle of proportionality with regard to the forfeiture of the deposit, as the Commission suggested at the hearing, but that to take account of commercial practice it was thought proper that certain margins of variation of the agreed quantity, for storage should be allowed.
The contractual obligations defined in Article 3 (2) of the regulation do not include the obligation to lodge a deposit. It is true that, under Article 3 (1) (e), the particulars in the contract must include the form and amount of the security. The storer's obligation to lodge a deposit is however governed separately by Article 4 of the regulation. Article 4 (1) states: When a contract is concluded a deposit in an amount not exceeding 50% of the amount of aid specified in the contract shall be lodged by the storer in cash or in the form of a guarantee issued by a credit institution meeting the requirements of each Member State. If I may anticipate my more detailed examination of the legal nature of the deposit I should like to observe here that such construction makes the Commission's view (advanced at great length at the hearing) that this is in fact a case of a contractual penalty seem somewhat doubtful. However, Article 3 of the regulation does not seem to exclude the insertion of such a penalty clause in the storage contract. The obligation to lodge a deposit laid down in Article 4 may however also relate to another pecuniary obligation, perhaps one arising under administrative law. For the determination of the legal nature of the deposit paragraphs (3) and (4) of Article 4 are also important. Article 4 (3) reads as follows: Thè deposit shall be forfeited in full if the obligations imposed by the contract are not fulfilled; however, if less than 90% of the quantity agreed in the contract has been taken in store and stored within the time-limits laid down, the deposit shall be forfeited proportionately to the missing part of the quantity referred to in Article 3 (1) (a). Only to a limited extent may the latter passage be regarded as recognition of the applicability of the principle of proportionality. The Commission expressly admits as much in the first complete paragraph on page 15 of its written observations. Article 4 (4) is worded as follows: The deposit shall not be forfeited if through force majeure a storer is unable to fulfil the abovementioned obligations.
2.3. Some conclusions
From the above examination it is possible straight away to draw certain preliminary conclusions which are of importance in answering the questions raised :
3. The relevant facts
For the purpose of the answers to the questions raised, the particular obligations in the storage contract which the plaintiff in the main action did not fulfil are not of crucial importance. It appears however from the judgment of 24 November 1980 of the Principal Criminal Chamber of the Landgericht [Regional Court] Bremen of 24 November 1980, which was submitted to the Court at the hearing, that obligations under 13 different contracts made between 17 May 1974 and 17 September 1975 were not honoured in relation to the nature and origin of the meat stored. Furthermore, incorrect statements were made to the intervention agency so that the persons concerned were, according to the judgment, charged inter alia with fraud in relation to aid. In view of the considerable quantities of meat for which the plaintiff undertaking had wrongly received aid, Mr Könecke, the sole proprietor of the undertaking, received a suspended prison sentence of two years and had to pay a fine of DM 216000.
Of greater significance for the present case however is that according to page 45 of its judgment the Landgericht in calculating the fine took account inter alia of the fact that Könecke had in the meantime repaid the aid received in so far as it had been claimed by the intervention agency. Further, according to page 45 of its judgment, the Landgericht also took account of the fact that the intervention agency had still not done anything after Könecke refused to repay the wrongly released deposits. The question of the possible application of the principle ne bis in idem thus remains of importance in a claim for repayment of the deposits, in so far as the criminal court could not and did not take into account any repayment of the deposits as a sum to be deducted in calculating the fine imposed. It appears however from the judgment that the criminal court took into account in favour of Könecke the fact that the intervention agency had failed properly to check that Könecke's undertakings had been observed and also to act diligently after discovering breaches. The serious and repeated failure to observe those undertakings and the Community rules in relation tó the storage of fresh beef and veal originating in the Community did not appear as the result of any initiative by the intervention agency but as a result of inspection by the customs. Partly on grounds of general prevention (page 47 of the judgment), the Landgericht then imposed the penalties mentioned above in respect of the serious frauds against the rules of the common agricultural policy which were thus discovered by chance.
However, according to the order of the Verwaltungsgericht Frankfurt am Main, the intervention agency issued two decisions on 26 May 1976 whereby it revoked the aid and the release of the deposits.
The action brought by the plaintiff is concerned solely with the revocation of the release of the deposits. The Verwaltungsgericht regards that revocation, which was accompanied by a demand for repayment of the amount released, as an administrative decision against which an appeal lies. According to the sentence at the foot of page 3 of its order, the Verwaltungsgericht considers that the central issue in the action is the question whether the revocation of the release of a deposit is at all possible. The questions asked by the Verwaltungsgericht are all connected with that central question.
4. The questions
4.1. An answer to -the central question raised by the Verwaltungsgericht requires first of all a clear definition of the legal nature and status of the deposit and the debt which it is intended to guarantee. The fourth question asked by the national court refers to that aspect. Basically, I share the Commission's view that it is clear beyond doubt from Article 4 (2) of the basic regulation and from Article 4 (1) and (3) of the Commission regulation that the system of deposits is of a dual nature. It is intended to provide security for the performance of an ancillary pecuniary obligation or a penalty in the event of a breach of the contractual obligations. In that respect I refer to my previous examination of the two regulations. However, contrary to the Commission, I think that on the basis of that previous examination the ancillary penalty which the surety provides is not necessarily in the nature of a contractual penalty. The operation of the system also take place, on the basis of the wording of the regulation, by means of administrative decisions. Such a decision may inter alia determine the amount of the deposit to be lodged on the basis of the relevant provisions. Pursuant to Article 3 (1) of the regulation, only the result of such a decision has to be mentioned as a particular in the contract. Since the manner of applying the said provisions is left to the discretion of the Member States the provisions may be regarded, in relation to the deposit, as imposing an obligation to achieve a particular result. The same is true, in my opinion, as regards forfeiture of the deposit. If in a particular Member State the deposit system, including the penalty clause, is incorporated into storage contracts and elaborated upon, the deposit may (where it has not yet been released) be declared forfeit or (where the deposit has already been released) the penalty may be recovered in the competent court. If the system of deposits is applied by means of an administrative decision, the administration may, on subsequently discovering a breach of the contractual obligations, choose — according to the terms of the national implementing decision and according to whether the deposit has already been released or not — one of the following solutions. If the deposit has not yet been released it will of course normally be declared forfeit. If however the deposit has already been released, then — depending on the terms of the decision implementing the deposit system — either the penalty secured by the deposit may be imposed or the decision releasing the deposit may be revoked. In the latter case the deposit may be declared forfeit either in whole or in part. That follows, in my opinion, from the fact that the deposit system, including the rules on forfeiture, must clearly be seen as an obligation to achieve a particular result. That the deposit system is also regarded by the Member States as an obligation to achieve a result, the detailed rules being left to the discretion of the Member States, is clearly confirmed, in my opinion, by the information supplied by the Commission in writing at the hearing in answer to a question put by the Court on the very diverse practices, of the Member States.
4.2. To answer the fifth question raised by the national court it is necessary to say something further in relation to the nature of the penalty the enforcement of which is guaranteed by the deposit. From the explanations which the national court provided in relation to its fourth and fifth questions it appears that it is not a question here in its view either of damages or of a Reugeld [penalty] within the meaning of the judgment of the Bundesverfassungsgericht which it cites. In its view, it is rather a question in the present case of a fine of a criminal nature which must be considered under the general principles of criminal law which it refers to. It thus appears that the national court is not yet convinced by the denial of that criminal nature in paragraph 18 of the aforesaid judgment in Case 11/70, a case referred to the Court of Justice by the same national court. That view is confirmed by the extrajudicial commentary on the questions asked in this case which one of the judges of the Verwaltungsgericht has somewhat unusually published in the Neue Juristische Wochenschrift (1983 pp. 2727-2730). Therefore, in order to encourage the fruitful dialogue between national courts and the Court of Justice which we are endeavouring to achieve in references for a preliminary ruling, and because of the special features of the present case, I think that, in spite of the judgment which I have just cited, it is desirable to give a more detailed consideration to the legal nature of the pecuniary obligation in question.
4.3. The fact that it is not possible to speak in the present case either of a penal measure or an administrative fine within the meaning of the Community treaties does not however mean that the penalty consisting in forfeiture of the deposit may escape being tested against the overriding princples of Community law.
4.4. A special problem arises in the present case because there have already been fines imposed in the aforementioned criminal proceedings. Although the penalties secured by the deposits in question are not completely analogous, as I have already said, to the fines provided for in Article 87 of the EEC Treaty, the specific problem may nevertheless be resolved here in my opinion by applying mutatis mutandis the view expressed by the Court at paragraph 11 of the judgment in Case 14/68 (Walt Wilhelm v Bundeskartellamt [1969] ECR 1). There the Court stated as follows:
4.5. The first three questions put by the national court may be best considered together in my opinion. They all relate directly to the central issue for the national court of whether a decision to release a deposit may be revoked (last paragraph of its general comments on those questions).
5. Conclusion
On the basis of the foregoing considerations I propose the following answers to the questions put by the national court.
1, 2 and 3: Pursuant to Article 4 of Regulation (EEC) No 989/68 of the Council and Article 4 of Regulation (EEC) No 1071/68 of the Commission, in conjunction with the prohibition of discrimination laid down inter alia in Article 40 (3) of the EEC Treaty, the national authorities responsible for the implementation of those regulations are required to claim repayment of deposits wrongly released or equivalent amounts and to declare them forfeit in whole or in part, applying if necessary their national law in order to fulfil those obligations.
4: The deposits referred to in Article 4 of Regulation No 1071/68 is a guarantee for the financial consequences which that article and the corresponding article of Regulation No 989/68 implicitly prescribe for breaches of the contractual obligations pertaining to storage by individuals of beef and veal in respect of which aid has been granted under the aforesaid regulations.
5: Article 4 of Regulation No 1071/68 does not exclude partial forfeiture, pursuant to Article 4 (2) of Regulation No 989/68 and in accordance with the principle of proportionality, which the Court has held to apply to such deposits. It is however necessary to take account of the rule arising from the nature of the deposits to the effect that, in the absence of special circumstances pleaded by the person concerned, the whole of the deposit is to be forfeited. When the seriousness of the breach of the contracts concerned has been recognized in a judgment in previous criminal proceedings and when heavy penalties have been imposed as a result, the principle of proportionality also implies that account should be taken of the judgment in the previous criminal proceedings in determining the extent to which the deposit should be forfeited.
1 Translated from the Dutch.
2 At the hearing the Commission cited as a second example Article 10 of Commission Regulation No 798 of 31 March 1980 (Official Journal 1980, L 87, p. 42). In that case however reference is made expressly to the refund of the whole or pan of a sum equal to the deposit.
3 According to the judgment, the fraud was much more serious than appears from the Repon for the Hearing, which was based on the order referring the case to the Court.
4 Bundesverfassungsgericht 37, p. 288.
5 The same view is, in my opinion, expressed in paragraph 6 of the judgment in Case 26/70 Ein/uhrund Vorratsstclle v Henck [ 1970] ECR 1183.
6 Cf. paragraph 2 of the Court's answer to the questions raised in Case 240/78, [1979] ECR 2152.
7 The observation seems to tne necessary now in the light of the judgments given by the Court since the judgment in Case 240/78. Since in the cases on the policy in relation to fines in the steel industry the Court has held that the Commission is entitled to proceed on the basis of fixed amounts even in respect of genuine administrative penalties such as those expressly provided for in the Treaties, that applies a fortiori by reason of their nature to deposits such as those in issue here.
8 Cf. the third sentence of paragraph 11 (quoted above) of the judgment in Case 14/68.