Opinion of Mr Advocate General Lenz
Mr President,
Members of the Court,
Regulation (EEC) No 2750/75 of the Council fixing criteria for the mobilization of cereals intended as food aid (Official Journal 1975, L 281, p. 89) provides that, where cereals held by the intervention agencies are used, tenders are to be invited (Article 4 (2)). In that connection the terms are to be so framed that equal access and treatment are ensured for all persons concerned irrespective of their place of establishment in the Community (Article 4 (4))
The implementing rules are laid down in Commission Regulation No 1974/80 (Official Journal 1980, L 192, p. 11). They apply, by virtue of Article 1(2), to operations to be carried out either at the fob stage or at the cif stage. Article 2 provides that the intervention agency of the designated Member State is to be responsible for putting into operation the procedures for the mobilization and supply of the products. Those wishing to take part in the procedure must, by virtue of Article 4, attach to their tender:
In addition, Article 5 of the regulation provides that tenders are to be considered only if security is furnished to serve as a guarantee that the tenderer will fulfil his obligations. Article 11 provides that the successful tenderer must fulfil his obligations in accordance with the conditions laid down in the regulation opening the tendering procedure and comply with the undertakings referred to in Article 4 (4) (b), (c), (d) and (e). Finally, Article 20 lays down rules for the release of the security. The second indent is of particular interest. It provides that the security is to be released to the successful tenderer in respect of the quantities delivered ... in accordance with the provisions governing this delivery ....
Pursuant to Article 2 (1) of Regulation No 1974/80 the Commission adopted Regulation (EEC) No 588/81 on the supply of common wheat to Ethiopia as food aid. Its effect was to designate the German intervention agency as responsible for implementing the mobilization and supply procedures. Annex A to the regulation indicated the total quantity of common wheat to be taken from the stocks of the German intervention agency (a consignment of 5000 tonnes), stipulated that the wheat be delivered on cif terms from a Community port to Assab, the port of landing, and also specified the shipment period (1 to 30 April 1981).
The successful tenderer was the plaintiff in the main proceedings. However, it experienced certain difficulties, with the result that the wheat was loaded on to two ships which, although listed in the top class in the shipping registers, were more than 15 years old; moreover, loading was not completed until 5 or 6 May 1981.
The Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets], which was responsible for the conduct of the operation, therefore took the view that the provisions governing this delivery within the meaning of Article 20 of Regulation No 1974/80 had not been complied with and declared the security forfeit in its entirety.
As a result, proceedings were instituted before the Verwaltungsgericht [Administrative Court] Frankfurt. That court considers that there is some doubt as to the validity of the rules under which the security was declared forfeit. The forfeiture of the whole security in a case where the full quantity was delivered, albeit not on ships meeting the prescribed requirements and not within the shipment period, was, in the opinion of the court, not in conformity with the principle of proportionality and was absurd in view of the fact that if half the quantity is delivered only half the security is forfeited. If it is assumed — because penalties ought to be commensurate with the gravity of the infringement and the extent of the failure to fulfil an obligation — that in the plaintiff's case only part of the security lodged can be declared forfeit, then it must be concluded in the present case that the extent to which the security is affected is very small, in so far as compliance with the shipment period provides no guarantee as to the arrival of the wheat at a particular time and likewise the fact that a ship is old does not entail any greater risk if its general condition is so good that it is entered in the top class of the recognized classification registers. The Verwaltungsgericht considers that the fixing of a maximum age for the ship to be used might well be regarded as arbitrary, because the Commission itself abandoned that criterion in Regulation (EEC) No 75/84 on delivery of common wheat as food aid to the Kingdom of Lesotho. (Official Journal 1984, L 10, p. 37). Accordingly, by order of 15 November 1984 the court suspended the proceedings before it and submitted the following questions for a preliminary ruling under Article 177 of the EEC Treaty.
Only the Italian Government and the Commission have submitted written observations on the questions. The Italian Government is of the opinion (I shall not go into detail at this point) that — if the ships used display the same degree of reliability — failure to fulfil the obligation to use vessels which are no more than 15 years old cannot be punishable by forfeiture of the whole security any more than failure to comply with the prescribed shipment period (where the delay in question is not significant). The Commission, on the other hand, considers Article 20 of Regulation No 1974/80 to be in conformity with the principle of proportionality and accordingly takes the view that it is proper for the security to be declared forfeit if the criterion regarding the age of the ship is not complied with or if the shipment period is exceeded, albeit by only a few days. In the oral procedure (in which the Italian Government and the Commission amplified their observations) the plaintiff in the main proceedings also expressed its views. It submitted first of all that it was prevented from complying with the provisions governing delivery by a case of force majeure. For the rest, it takes the view that it was not proper to insist on the use of ships which had been in use for no more than 15 years and to declare the security forfeit in respect of an insignificant overstepping of the shipment period which — in the difficult circumstances of the present case — could not be regarded as an infringement of a principal obligation incumbent upon the successful tenderer.
In my opinion, the correct view of these problems is as follows.
1. The Court will recall how the principle of proportionality to which the Verwaltungsgericht Frankfurt refers in the present case is to be understood in the light of the case-law of the Court. Thus it is important to establish whether the means [a provision] employs to achieve its aim correspond to the importance of the aim and ... whether they are necessary for its achievement (judgment in Case 66/82 [1983] ECR 395 at p. 404, paragraph 8) or else simply — as in the judgment in Case 15/83 ([1984] ECR 2171 at p. 2185) — what is appropriate and necessary to attain the objective pursued (paragraph 25).
2. Before I endeavour to expound a proposal for a solution to the problem under consideration it must be made clear — since this was of considerable importance for the national court and for the Italian Government in its written submissions — that it is incorrect to take the view that Commission Regulation No 1974/80 contains a rule which operates rateably with the result that where only some of the product to be shipped is delivered only the corresponding portion of the security is forfeited. As the Commission has convincingly demonstrated, that is apparent first of all from Article 15 of that regulation. Article 15 (2) thereof specifically provides that the quantities delivered are to be determined when the goods are placed under customs control (that is to say before the departure of the vessel), and merely adds that, where the goods are to be delivered in bulk, a tolerance of minus 2% of the weight to be delivered is to be allowed. In addition Article 15(4) clearly provides as follows:
3. In. so far as the question submitted to the Court is concerned with the maximum age-limit of the vessel to be employed and the question whether Regulation No 1974/80 lays down an excessively strict requirement, the Italian Government maintains that, when the condition of a vessel is such that it is placed in the top class in recognized classification registers, no greater risk is involved where the vessel is more than 15 years old. Consequently, it maintains, it is sufficient to have regard to the objective suitability of a vessel, which, if the need should arise, can be proved by a special certificate. In that connection the Italian Government also refers to the fact that in Mediterranean ports there is little choice as regards carriers who can comply with the strict conditions imposed; it also mentions the principle of equal access and equal treatment which applies here (Article 4 (4) of Regulation No 2750/75) and argues that the principle is endangered by the imposition of excessively strict conditions, to the detriment of interested parties in the Mediterranean area. The Commission puts forward the opposing view that the criteria laid down in Regulation No 1974/80 are essential to ensure safe and prompt deliveries. According to the previous decisions of the Court, the obligations involved are principal (and not secondary, incidental) obligations and it is therefore appropriate to ensure that they are fulfilled by imposing strict penalties. The Commission also refers in that connection to the expression proper functioning of the system used in the case-law. It observes that the requirement of equal treatment in Article 4 of Regulation No 2750/75 is indeed important here; however, in the interests of complying with that requirement, specific objective criteria cannot be dispensed with, and that is so not because — as the Italian Government considers — the intention is to make certain that all the participants in a call for tenders enjoy the same insurance conditions but rather because those participants who use older — and therefore cheaper — vessels would otherwise be placed in an advantageous position.
4. It appears from the order for reference that the aforesaid condition was not complied with in this case (as a result of which the security was quite properly declared forfeit), and therefore a decision on the other matter referred to in the question submitted— failure to ship the goods within the specified period — is in fact not necessary for the purposes of the judgment to be given in the main proceedings. However I will consider it briefly.
Accordingly, the question submitted by the Verwaltungsgericht Frankfurt should be answered as follows:
The second indent of Article 20 (1) of Commission Regulation No 1974/80 laying down general implementing rules in respect of certain food-aid operations involving cereals and rice is compatible with the principle of proportionality, in so far as its effect is that the security furnished pursuant to Article 5 of the regulation is to be wholly forfeit where the successful tenderer breaks his undertaking under Article 4 (4) (d) by transporting the goods in question in vessels which, although listed in the top classes in recognized classification registers, are more than 15 years old; or where the successful tenderer breaks his undertaking to ship the goods within a specified period, by shipping the goods five or six days after the expiry of that period.
1 Translated from the German.
2 Translator's note: The German version of the Regulation reads ... die der höchsten Kategorie ... angehören.
3 Judgment of 23 February 1983 in Case 66/82 Fromancais SA v Fonds d'orientation et de régularisation des marchés agricoles (Forma [1983] ECR 395.
4 Judgment of 17 May 1984 in Case 15/83 Denkavit Nederland BV v Hoofdproáuktschap voor Akkerbottwproduklen [1984] ECR 2171.
5 Judgment of 20 February 1979 in Case 122/78 Batumi SA v Fonds d'orientation et de régularisation des marchés agricoles (Forma) [1979] ECR 677.
6 Judgment of 21 June 1979 in Case 240/78 Atalanta Amsterdam BV v Produktschap voor Vee en Vlees [1979] ECR 2137.
7 Judgment of 2 December 1982 in Case 272/81 Société RUMI v Fonds d'orientation et de régularisation det marchés agricoles [1982] ECR4167.
8 Opinion of Mr Advocate General Reisclil of 11 November 1982 in Case 66/82 Froniançais SA v Fonds d'orientation et de régidarisation des inarches agricoles (Forma) [1983] ECR 407.