Report for the Hearing delivered in Case C-358/88
I — Facts and procedure
As a producer of feedingstuffs for animals, Oberhausener Kraftfutterwerk Wilhelm Hopermann GmbH, the plaintiff in the main proceedings (hereinafter referred to as the plaintiff), benefits from the application of special Community measures for peas and field beans.
The dispute in the main proceedings relates to a consignment of peas (batch No 83030) whose entry within the applicant's undertaking was the subject of a notification sent to the Bundesanstalt für landwirtschaftliche Marktordnung, the defendant in the main proceedings (hereinafter referred to as the Bundesanstalt), prior to the end of utilization. The applicant lodged the application to place the products under supervision, which is deemed also to constitute notification of the entry of the products, on 16 December 1982, and the peas in question were not used until the end of December, as is clear from a report made by inspectors from the Bundesanstalt. The application was, however, lodged only some months later, namely on 28 March 1983. The Bundesanstalt refused to pay the aid applied for by decision of 5 November 1985, on the ground that the period for lodging the application for aid, laid down in Article 22(1) of Regulation (EEC) No 2192/82, had not been observed.
By an order of 10 November 1988, the Verwaltungsgericht (Administrative Court) Frankfurt am Main, decided to stay the proceedings and to refer to the Court for a preliminary ruling under Article 177 of the EEC Treaty the following question:
As is apparent from the order for reference, the national court raises the question whether the temporal connection established in Article 22(1) of Regulation No 2192/82, according to which the application for aid must also be lodged at the latest on the date on which the application for placing under supervision is lodged, constitutes a mandatory rule whose non-observance entails the refusal of aid, notwithstanding the fact that in the present case the substantive and legal conditions conferring entitlement to the aid are satisfied. Consequently, it wonders whether it is justified, on administrative grounds, to attribute to the linkage between the application for aid and the application for placing under supervision the status of a condition of entitlement, that is to say a preclusive time-limit.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by the plaintiff, represented by Messrs Modest, Gündisch, Landry and Partners, Rechtsanwälte, Hamburg, and by the Commission of the European Communities, represented by Jürgen Grunwald, a member of its Legal Department.
After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry and to assign the case to the Third Chamber.
II — The legislative background
Council Regulation (EEC) No 1431/82 of 18 May 1982 laying down special measures for peas and field beans (Official Journal 1982, L 162, p. 28) provides in Article 3(1) that aid is to be granted for products harvested in the Community and used in the manufacture of animal feed. Under the terms of the first subparagraph of Article 3(3), aid is to be granted only to operators of those products who satisfy the conditions necessary to qualify for aid.
On the basis of Article 3(5) and Article 4 of that regulation, the Council adopted Regulation (EEC) No 2036/82 of 19 July 1982 adopting general rules concerning special measures for peas and field beans (Official Journal 1982, L 219, p. 1). In accordance with Article 5(1) of the latter regulation, aid is to be granted to any operator provided that he lodges an application with the competent national agency, together with a certificate attesting that the producer has obtained at least the minimum price for the quantity he has delivered, and that the quantity specified in the certificate has actually been used, after being placed under supervision, in the undertaking in which use took place. Placing under supervision is defined in Article 3(4) as:
Moreover, Article 14(1) provides that Member States in whose territory the products are used shall set up a control system ensuring that only the products entitled to aid receive it.
In pursuance of Article 3(7) of Regulation No 1431/82, the Commission adopted Regulation No 2192/82. Given that the products in question entered the plaintiff's undertaking in December 1982, it should be stated that since it is applicable to this case, at the material time, Article 18(1) and (3a) of the latter regulation, as amended by Article 1(7) and (8) of Regulation No 3322/82 of 10 December 1982 amending for the second time Regulation No 2192/82, was worded as follows:
As is indicated in the sixth recital, Regulation No 3322/82 abolished the requirement that notification of the entry of the products into the undertaking should occur simultaneously with the application for placing under supervision; it did so by granting operators an additional period in order to determine the actual quantities of the products entered which they wish to place under supervision and which are for use in their undertakings.
Commission Regulation (EEC) No 1956/83 of 15 July 1983 amending for the seventh time Regulation No 2192/82 (Official Journal 1983, L 192, p. 26) extended the period referred to in Article 18(3a), mentioned above, from 30 to 80 working days.
Under the terms of the first and second indents of Article 29(2) of Regulation No 2192/82, as amended by Article 1(13) of Regulation No 3322/82, aid is to be paid to the user applying therefor on condition that he has lodged with the agency designated by the Member State the certificate attesting the payment of the minimum price to the producer and the fact that the agency responsible for supervision has checked that the quantity placed under supervision was actually used within 150 days of the date on which the application for placing under supervision was lodged.
Finally, Article 22(1) of Regulation No 2192/82, as amended by Article 1(11) of Regulation No 3322/82, provides:
III — Observations submitted to the Court
The plaintiff argues, first, that the only conditions to be satisfied in order to receive aid in respect of the vegetable products in issue are those set out in Article 5(1) of Regulation No 2036/82. Those conditions, which are substantially reproduced in Article 29(2) of Regulation No 2192/82, were satisfied in this case.
It points out that the fact that the period for lodging the application for aid is contained not in the basic regulation adopted by the Council but in a Commission regulation laying down detailed rules of application precludes the observance of that period from being deemed to be a condition of entitlement. In that connection the plaintiff observes that, when a user has notified the entry of products into his undertaking and has placed them under supervision, the date of the application for aid is of little importance to the intervention agency. The later the application is lodged, the later the Community resources relating to the vegetable products in issue have to be paid. The mere interest of the administration in the swift completion of the procedure for granting the aid cannot justify the total loss of the right to such aid if there is a failure, however minimal, to adhere to the one-day period laid down for the lodging of the application for aid.
The plaintiff also claims that the same conclusion may be arrived at by applying the principle of proportionality. In its view, the objective of aid for vegetable products, which is to guarantee adequate price levels for producers and to dispose of expensive vegetable products on the national market, is achieved if the two main obligations contained in Article 5 of Regulation No 2036/82 are satisfied. It would therefore be wrong in law, because it would be disproportionate, to cause non-observance of an evidently ancillary obligation laid down for purely administrative reasons, such as the obligation to lodge the application for aid within a period of one day after the entry of the products into the undertaking, to produce the severe penalty of non-payment of the aid.
In support of that conclusion, the plaintiff places reliance on the case-law of the Court of Justice, in particular the judgments of 20 February 1979 in Case 122/78 Buitoni SA v EAGGF [1979] ECR 677 and of 21 June 1979 in Case 240/78 Atalanta Amsterdam BV v Produktschap voor Vee en Vlees [1979] ECR 2137. In the Buitoni judgment, the Court held to be disproportionate the penalty of forfeiture provided for in the event of a failure to observe the period laid down for the production of certain proofs. Although, in view of the inconvenience caused by the belated production of proofs, the Commission was entitled to set a period in this connection, it should have sanctioned failure to comply with that period only with a penalty considerably less onerous for those concerned than that prescribing the loss of the whole of the security and more commensurate with the practical effects of such an omission. In the Atalanta Amsterdam judgment, the Court held that because of its automatic consequences a provision of a Commission regulation which provided that deposits paid were to be forfeit in the event of the late transmission of documentary evidence in respect of the storage of pigmeat contravened the principle of proportionality, inasmuch as it did not permit the penalty provided for to be made commensurate with the degree of failure to implement the contractual obligations or with the seriousness of the breach of those obligations.
The Commission points out first of all that, according to Article 3(3) of Regulation No 1431/82, aid is to be paid only to operators who satisfy the conditions necessary to qualify for aid. It argues that under Articles 22 and 23 of Regulation No 2192/82, those conditions include the obligation to apply in time to the competent agency for aid. Moreover, an application for aid is in fact necessary because, under the third indent of Article 22(3) of the aforementioned regulation, the operator must decide whether the aid being applied for is that referred to in Article 3(1) (use in the manufacture of animal feed), or Article 3(2) (use for human consumption) of that regulation because those two types of aid present different characteristics.
The Commission observes that the importance of lodging the application for aid at the proper time is borne out by Article 23 of Regulation No 2192/82 which contains a specific rule as regards the deadline for the lodging of applications. It also points out that, according to Article 6(1) of Regulation No 2036/82, the aid to be granted shall be the amount in force on the day the person concerned lodges the application referred to in Article 5(1). If applications for aid were allowed to be lodged even after the time-limit resulting from Article 22(1) and Article 23 of Regulation No 2192/82, that would open the way for isolated applications for placing under supervision with no indication of whether, when and in respect of what use, aid on a given date is being applied for. In the Commission's view, to permit that form of procedure would also entail the risk that those concerned, on account of Article 6(1) of Regulation No 2036/82, would adopt a waiting policy in order to take advantage, if possible, of a favourable trend in prices by lodging their application for aid as late as possible and to obtain from the aid an unjustified profit. Consequently, it argues that the obligation to lodge applications for aid at the proper time should be regarded as being of a mandatory nature.
In the Commission's view, that conclusion is not invalidated by the principle of proportionality. It recalls that in its judgment of 22 January 1986 in Case 266/84 Denkavit France SARL v FORMA [1986] ECR 149, the Court considered that the barring of claims on the ground that the requisite documents have been submitted out of time is not a penalty but, as a general rule, the normal consequence of the expiry of any prescribed period the observance of which is mandatory.
1 Language of the case: German.