Opinion of Mr Advocate General

Mr President,

Members of the Court,

1. Introduction (Similarities and differences between the three cases)

1.1. The regulation to which the three cases relate

Although the three cases with which I shall deal today are not joined, they are nevertheless so closely related that I consider it useful to discuss them together despite the differences between them.

In the first place they all concern the application of Regulation (EEC) No 232/75 of the Commission of 30 January 1975 on the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream (Official Journal 1975, L 24, p. 45) with which the Court will be familiar from a number of earlier cases. After these introductory remarks I shall therefore first discuss the scheme of that regulation in so far as this is necessary for a proper understanding of the three cases.

1.2. The extent of the tenderer's strict liability

Secondly, a key point in all three cases is a special aspect of the extent of the tenderer's strict liability for the proper processing of the quantities of butter offered for sale at a reduced price and sold by the relevant intervention agency in accordance with the regulation. In these three cases this strict liability relates only to the processing of butter into one of the final products (pastry products or ice-cream) referred to in Article 6 (1) (c). The Court has in principle recognized the existence of such strict liability in its judgment in Joined Cases 99 and 100/76, Roomboterfabriek De Beste Boter NV and Firma Josef Hoche Butterschmelzwerk v Bundesanstalt für landwirtschaftliche Marktordnung, [1977] ECR 861, having regard in particular to Article 6 (1) (c), (d) and (e), Article 9, Article 10 (5), Article 12 and Article 18 of Regulation No 1259/72 which are worded in identical terms. In this regard I refer in particular to paragraphs 7 and 11 of that judgment. However, that judgment only concerned in general the question of the tenderer's liability for the default of one or more final users of the concentrated butter if he had complied with the obligations laid down in Article 6 (1) and it was clear in particular that the final users concerned had agreed to assume in their sales contracts the processing obligations under the provision which is now Article 6 (1) (f). On the other hand, another aspect of the extent of the tenderer's strict liability plays a major part in one form or another throughout these present cases. This aspect concerns the question of the extent to which a tenderer may retrospectively be held liable for the negligence of the supervisory authorities of the Member States of which the authorities later prove to be guilty by wrongly issuing the documents of proof referred to in Article 18 (2) of the regulation and thus triggering the release of the processing security. So far as I have been able to ascertain, an entirely comparable problem has never been before the Court in a previous case. The only remotely comparable case is perhaps the Court's judgment of 21 September 1983 in Joined Cases 205 to 215/82, Deutsche Milchkontor GmbH and Others v Federal Republic of Germany, [1983] ECR 2633. That case concerned aid which was wrongly paid to producers of compound feeding-stuffs under Regulation No 804/68 owing to insufficient supervision of suppliers of skimmed-milk powder and was later required to be repaid. On this question the Court ruled: Community law does not prevent national law from having regard, in excluding the recovery of unduly-paid aids, to such considerations as the protection of legitimate expectation, the loss of unjustified enrichment, the passing of a time-limit or the fact that the administration knew, or was aware owing to gross negligence on its part, that it was wrong in granting the aids in question, provided however that the conditions laid down are the same as for the recovery of purely national financial benefits and the interests of the Community are taken fully into account (paragraph 3 of the operative part). The principle about taking into account of the interests of the Community is defined more closely in paragraph 19 of the judgment in relation to another question raised by the national court; the Court, referring to earlier relevant decisions, stated that the rules and procedures laid down by national law (for recovery) must not have the effect of making it virtually impossible to implement Community regulations.

In so far as the facts and Community provisions in the present cases appear sufficiently comparable on this point to those in the Milchkontor cases, the conclusion will readily be reached that the rejection of the tenderer's liability for breaches of the processing obligations committed after the securities have been released would indeed make it virtually impossible to implement the relevant Community regulations. Under Article 8 (2) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition, 1970 (I), p. 218) Member States which had proved themselves negligent in checking in good time whether the processing obligations had been fulfilled would themselves run the risk of having to bear the financial consequences of the infringements established a posteriori. That risk would undoubtedly deter Member States from later carrying out thorough checks to ascertain whether the regulation had been complied with supplementary to the inevitably more general and random checks which usually precede the issue of the documentary evidence referred to in Article 18 (2) of the regulation in question. Compliance with the directive would thus no longer be sufficiently guaranteed in order for it to fulfil its purpose. When examining the different cases I shall concentrate especially on the question how far the differing facts of each of these cases and the terms of the relevant Community provisions justify a different conclusion with regard to this key question.

1.3. The relationship between the release of the securities and the question whether or not the contractual obligations continue to exist

A second question which plays a different part in all three cases is the question of the relationship between the basic obligations assumed by tenderers and the securities lodged to secure their fulfilment. In view of the nature of securities in general, I think that it must be assumed for the time being as a working hypothesis that the release of a security does not in principle cause the basic contractual or other type of obligations secured by the security to be discharged. In this regard it will also be necessary to examine the question how far the different facts of the three cases on this point and the provisions of the relevant regulation lead to different or additional conclusions.

1.4. Reliance on general legal principles

Thirdly, general principles of law, such as force majeure, good faith, legitimate expectation and proportionality, play a part in all three cases, although in different ways.

1.5. Specific problems in the different cases

Finally, different specific facts exist in each of the three cases and in the Belgian case (Case 125/83) some specific legal questions arise (date of taking over and whether the second subparagraph of Article 19 (2) of Regulation No 232/75 is valid in the light of the principle of proportionality). Naturally, the different tenor of the questions submitted to the Court in the three cases and the different specific facts and questions of law, or the different contexts in which those questions arise, exclude uniform answers. Nevertheless, I shall now consider those basic issues of Community law in the following analysis of the regulation in question and of a number of other relevant regulations. Only after that examination will I then proceed to examine each of the three cases in turn. I consider that the chronological order of the cases is the most logical order for the separate analyses.

2. Preliminary analysis of the relevant regulations

2.1. Regulation (EEC) No 232/75

2.2. Regulation No 729/70 of the Council

As pointed out earlier, the system of supervision established by Regulation No 232/75 governs in particular the obligations of the tenderer (see the fourth recital of the preamble, cited above). The control obligations of the Member States are themselves governed by Article 8 of Regulation No 729/70 of the Council (Official Journal, English Special Edition 1970 (I), p. 218). That regulation is general in nature. It concerns the financing of the common agricultural policy in general. This also applies to the control obligations of the Member States laid down in Article 8 which are of course absolutely indispensable for the prevention of fraud. This is why they are reiterated in Article 15 of Regulation No 232/75 for the purposes of that regulation. The basic provision of Regulation No 729/70 reads as follows:

From that provision there arises inter alia an obligation to investigate and pursue irregularities but in addition an obligation to recover sums lost as a result of irregularities or negligence. In my view, it follows that the private law control system laid down in Regulation (EEC) No 232/75 (governing the tenderer's obligations) exists side by side with the public law control system laid down in Regulation No 729/70 and Article 15 of Regulation No 232/75 (governing the obligations of the Member States regarding supervision and the pursuance of irregularities). It then follows, in my view, that the defective or delayed operation of the public law control system may have practical consequences, but in principle no legal consequences, for the application of the private law control system. Since the regulation in question in the Milchkontor cases which I discussed above (see paragraph 1.2 of this Opinion) did not provide for any comparable contractually established private law control system, it is not possible to draw from the relevant judgment any argument supporting possible derogations from that principle. However, that conclusion does not rule out further examination of the possibility of invoking force majeure and other general legal principles.

Also relevant to the application of Regulation No 729/70 as regards cross-frontier events of the kind involved in these cases is Council Directive No 76/398/EEC óf 15 March 1976 on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties (Official Journal 1976, L 73, p. 18). Finally, Commission Regulation (EEC) No 2315/69, of 19 November 1969, on the use of Community transit documents for the purpose of applying Community measures for verifying the use and/or destination of goods (Official Journal, English Special Edition 1969 (II), p. 515) is also important for a proper understanding of these cases. Article 18 (2) of Regulation No 232/75 appears to be an application of that earlier general regulation. However, I do not think it is possible to conclude from Regulation No 2315/69 that it is also relevant to the application of Article 6 (1) of Regulation No 232/75.

Finally, in case the Court might consider this important for the assessment of the case, I would point out that Regulation No 232/75 was amended no less than 23 times although those amendments do not appear directly relevant to these cases. A complete amendment of the regulation and of the system laid down therein was made by Commission Regulation (EEC) No 262/79 (Official Journal 1979, L 41, p. 1). Only then was the omission which I pointed out in Article 6 (1) of Regulation No 232/75 (regarding the obligation to keep stock records) remedied.

3. Case 124/83, (Direktoratet for Markedsordningerne, Copenhagen v Nicolas Corman et fils SA, Brussels)

3.1. The facts and the questions submitted

I will now examine Case 124/83 more closely. As in the two following cases, a precise understanding of the main facts is essential for answering the questions submitted. I will adopt a summary of those facts from the Report for the Hearing.

3.2. Regrouping the questions

On the basis of my preceding analysis of the three cases and of the scheme of Regulations Nos 729/70 and 232/75 I share the view of the plaintiff in the main action, the Commission and the Government of the Federal Republic of Germany that the first five questions submitted by the national court and the eighth question, which is directly related to them, are best dealt with together.

I will then go on to examine the sixth, seventh and ninth questions, which are also interconnected and deal with the object and amount of the sum to be recovered as well as the burden of proof.

3.3. Questions 1 to 5 and Question 8

3.4. Questions 6, 7 and 9

3.5. Conclusion

To sum up, then, I suggest that the Court should give the following answers to the questions submitted to it in this case:

4. Case 125/83 (Office belge de l'economie et de l'agriculture v Nicolas Corman & fils SA)

4.1. The facts and the questions submitted

4.2. Examination of the first question (the phrase day on which the butter was taken over in Article 6 (1) (d) of Regulation No 232/75)

4.3. Examination of the second question (the concept of force majeure within the meaning of Articles 18 and 19 (1) of Regulation No 232/75)

4.4. Examination of the third question (determining whether the second subparagraph of Article 19 (2) of Regulation No 232/75 is valid in the light of the principle of proportionality)

4.5. Conclusion

To sum up, then, I therefore suggest that the Court should answer the three questions submitted to it by the Tribunal de commerce, Brussels, as follows:

5. Case 20/84 (NV De Jong Verenigde and Coöperatieve Melkprodukten Bedrijven Domo-Bedum GA v Voedselvoorzienings In- en Verkoopbureau (VIB))

5.1. Tlie facts and relevant provisions

The most relevant facts to the questions raised, as summarized in the Report for the Hearing, correspond, except on one point which I have clarified, to the main facts on which, according to its judgment, the Hoge Raad based its decision. I will therefore now adopt that summary, subject to any clarification. For further details I refer to Part 3.1. of the judgment of the Hoge Raad.

Since 1974 the company NV De Jong Verenigde of Noordwijk (Netherlands) has supplied to the company Sahne-Heinrich KG of Frankenthal, Federal Republic of Germany, under the scheme described above concentrated butter processed by it in the Netherlands from butter bought at a reduced price from the Netherlands and German intervention agencies. The processing securities were given to the Voedselvoorzienings In- en Verkoopbureau, which is the Netherlands intervention agency. In accordance with its tenders, De Jong required Sahne-Heinrich to give an undertaking to process the butter purchased into bakery products or ice-cream. Sahne-Heinrich resold the concentrated butter to W. F. Scheunemann of Bad Kreuznach, Federal Republic of Germany, which in turn resold it without complying with the aforementioned conditions regarding its processing.

Until the autumn of 1975 the Netherlands intervention agency received in good time the T5 control copies endorsed by the German authorities to the effect that the butter had been processed in accordance with the aforementioned conditions whereupon the Netherlands intervention agency released the processing securities provided by De Jong.

In 1975 a delay arose in the remission by the German authorities of a number of T5 control copies. De Jong asked the Frankenthal Customs Office for the reasons for the delay. The Customs Office replied by letter of 4 November 1975 that, unless the authorities decided to dispense with supervision of firtal users, control copies could not be returned until the period in which the butter had to be processed had expired since it was hardly possible to verify before that date whether final users had used the butter within the prescribed period and for the prescribed purpose.

The national court found that, contrary to the control rules adopted by the German authorities, and until the autumn of 1975, the Frankenthal Customs Office had failed to supervise adequately the sale and subsequent processing of the consignments of concentrated butter for which it had returned the control copies.

The Netherlands intervention agency refused to release the securities relating to the consignments for which the T5 control copies had not been returned. The amount in question was HFL 2561714.13 relating to a total quantity of 611661 kg of butter.

For an analysis of the relevant provisions of Regulation No 232/75 I again refer to my analysis of that regulation in Part 2 of this Opinion. Of particular relevance in this case are Articles 6, 10 (5), 12, 15 and 18 (2). Also relevant in this case is Regulation No 2315/69 to which I referred in the same part of my Opinion and under which, in the case of transactions such as those in question here the proof referred to in Article 18 (2) of Regulation No 232/75 must be furnished in the form of the socalled T5 control copy.

5.2. The main action and the question submitted

As I pointed out earlier, the present dispute would probably never have been submitted to the civil court if the intervention agency had not finally accepted security in the form of a performance guarantee (borgtocht). In reply to a question which I asked at the hearing the Commission stated that it did not consider that this form of security was contrary to Article 8 (2) of Regulation No 232/75, although it is certainly less effective than for example a bank guarantee or a cheque made out to the intervention agency referred to in that article and in the present case caused the intervention agency to waste a great deal of time in closing the file. I again adopt from the Report for the Hearing the summary of the main proceedings and the questions raised.

When De Jong and the Coöperatieve Melkprodukten Bedrijven Domo-Bedum GA, which had guaranteed the performance of De Jong's obligation, refused to pay the amount of the forfeited security, the Netherlands intervention agency sued them in the Arrondissementsrechtbank, Amsterdam. De Jong and Domo-Bedum pleaded force majeure under Article 18 (2) of Regulation No 232/75, arguing that De Jong had relied on the controls carried out by the German authorities: if the principal customs office at Frankenthal had carried out the control properly, it would have become clear sooner that the concentrated butter had not been processed by Sahne-Heinrich's buyers as prescribed; De Jong would then have stopped buying butter at a reduced price and supplying concentrated butter to Sahne-Heinrich whom it could no longer trust. The processing securities relating to later supplies would not therefore have been lost.

By judgment of 4 February 1981 the Arrondissementsrechtbank rejected that argument and upheld the claim. Its judgment was upheld by judgment of the Gerechtshof, Amsterdam, of 6 January 1983.

On appeal in cassation against the judgment of the Gerechtshof, Amsterdam, the Hoge Raad of the Netherlands decided that the resolution of the dispute depended on the answer to the question whether the circumstances pleaded by De Jong and Domo-Bedum required the processing securities to be released although the control copies had not been produced. By judgment of 13 January 1984 the Hoge Raad therefore decided to stay the proceedings and to submit the following question to the Court for a preliminary ruling:

5.3. Answering the question raised

5.4. Conclusion

I find that I can agree entirely with the arguments of the Netherlands Government and of the Commission which I have summarized above, save for the qualification that I expressed in a footnote as regards the possibility for the first buyer to require in turn a security from his own buyers.

The arguments advanced by the appellants in cassation and their suggested answer might wrongly create the impression that, like Cases 124/83 and 125/83, this case involves the recovery either of the difference between the reduced purchase price of the butter bought by the tenderer and its market price or of the security itself after it later transpired that it had been released on the strength of incorrect documents. However, that is not the case. On the contrary, the appellants in cassation are in effect arguing that the return of their security in previous transactions gives them a right to the release of a security for a later transaction in which it was discovered in good time that they had not fulfilled the obligations which the Court set out in its judgment in De Beste Boter (Joined Cases 99 and 100/76) and for which the required proof could not therefore be furnished. Those facts, which are fundamentally different from those of Cases 124/83 and 125/83, also explain why the Netherlands Government reached a conclusion unfavourable to the interested parties in this case whereas in Case 124/83 it intervened on their side. Its intervention in that case also probably explains why, unlike the Danish intervention agency in Case 124/83, it has not apparently taken action hitherto to recover the profit derived from the reduced purchase price which, as is shown by this case, the appellants gained in the previous transactions, or to recover the amount of the security covering those transactions (as the Belgian intervention agency did in Case 125/83). The Court will recall that at the hearing the appellants mentioned the agreement reached between the Commission and the various intervention agencies on the practice to be followed; the Danish intervention agency also drew attention to it in its written observations in Case 124/83 (bottom of page 10 of the Danish text and bottom of page 12 of the French text). This again emphasizes the close connection between the three cases that I have examined in this Opinion.

For the reasons I gave in my Opinion on Case 124/83, I think that the appellants are wrong to rely on the Court's judgment in the Milchkontor case (Joined Cases 205 to 215/82, Deutsche Milchkontor GmbH and Others v Germany, [1983] ECR 2633).

Their argument that the Schutznorm doctrine developed in actions for tort is applicable to this case I consider irrelevant for the reasons I have given. No action in tort has been brought and their argument contains no indication why the doctrine should also apply to their plea of legitimate expectation in the main proceedings which, according to the judgment referring the questions to the Court, is, however, the only plea they raise besides their plea of force majeure. Moreover, as I have already pointed out, the competent control authorities did not fail in their duty in this case and, like the intervention agency, did not infringe the provisions of the relevant regulation; on the contrary, they applied them in the way prescribed. Perhaps the appellants also invoked the doctrine of tortious liability at the hearing because they thought that they could not rely, in the main civil action, on principles of good administration, like those raised in the Milchkontor cases. In any case, whatever their reasons, as far as the transaction in question is concerned, their argument on this point has no factual foundation for the reasons given by the Netherlands Government and the Commission.

In conclusion, since I find that in the final analysis I agree entirely with the arguments of the Netherlands Government and the Commission in this case, I suggest that the Court should answer the questions raised by the Hoge Raad in the way suggested by the Commission:

1 Translated from the Dutch.

2 At the hearing the appellants suggested the following, somewhat simplified, answer: Community law does not preclude the existence of a rule of national law under which the person providing a processing security as provided for in Article 12 of Regulation No 232/75 may, in proceedings for the enforcement of the security, plead by way of defence circumstances beyond his control consisting in particular in actions or omissions on the paa of the authorities implementing Community agricultural policy if it can be shown that the person providing the security may have acted on the justified belief that the authorities had performed their duties under the relevant provisions in the usual and proper manner for an authority acting with the normal degree of care.

3 More generally, the Schutznorm doctrine (which is not easy to translate into Dutch or French) is a test for deciding whether a person may bring an action in ton against a private person or public body which acts in breach of a legal provision, the decisive test being whether the provision must also be regarded as protecting his own interests.

4 In particular, the appellants' argument about Article 12 of Directive No 76/308/EEC (Official Journal 1976, L 73, p. 18) might perhaps merit consideration in a different factual context.

5 On some points I have added my own clarification in parentheses.

6 Willi regard to this view, I refer to my opinion in Case 124/83 in which I stated that it appears correct only in so far as the first buyer's right of action against his own buyers is not yet time-barred. Beyond that limit, it will in practice be probably very difficult to obtain a bank guarantee or other security.