Opinion of Advocate General Van Gerven
Mr President,
Members of the Court,
1. The applicants in the joined cases which I am now to consider are farmers who, in accordance with undertakings given pursuant to Council Regulation (EEC) No 1078/77 of 17 May 1977, delivered no milk or dairy products during the reference year that their Member States adopted for the application of the additional levy introduced by Council Regulations Nos 856/84 and 857/84 of 31 March 1984 (hereinafter referred to as the levy scheme). As a result, they received no reference quantity, that is to say, a quantity exempted from the additional levy by virtue of Article 2 of Regulation No 857/84. Pursuant to Article 178 and the second paragraph of Article 215 of the EEC Treaty, the applicants claim that the European Economic Community, represented by the Council and the Commission, should be ordered to pay compensation for the damage which they have sustained and are still to sustain as a result.
1. The levy scheme and the Court's case-law
2. The applicants' actions follow on from the Court's judgments of 28 April 1988 in Mulder and von Deetzen, which were concerned with the application of Regulation No 857/84 to producers who, pursuant to a non-marketing undertaking given under Regulation No 1078/77, had not delivered any milk during the reference year adopted by the Member State concerned. Regulation No 1078/77, which has since been repealed, provided for two types of premium, namely a non-marketing premium and a conversion premium. Only the former is relevant to these proceedings. The non-marketing premium was granted on request to any producer undertaking not to dispose of milk or milk products from his holding whether for a consideration or free of charge for a period of five years. For the sake of brevity I shall refer to producers who took advantage of the scheme introduced by Regulation No 1078/77 as non-marketers.
3. In the judgment in Mulder the Court answered two questions which were referred by the College van Beroep voor het Bedrijfsleven (administrative court of last instance in matters of trade and industry) for a preliminary ruling. In its first question, the national court asked whether in establishing the reference quantities referred to in Article 2 of Regulation No 857/84 Member States might not take account of the specific situation of non-marketers. The Court stated in reply that the Member States might take account of the special circumstances of non-marketers only in so far as each producer fulfils the specific conditions laid down in Regulation No 857/84 and if the Member States have reference quantities available for that purpose.
4. Approximately one year after the judgments in Mulder and von Deetzen, the Council, by means of Regulation No 764/89, added an Article 3a to Regulation No 857/84 providing for the grant of provisional special reference quantities to non-marketers. The grant of such reference quantities was subject to certain conditions with a view to ensuring, in the words of the second recital in the preamble to the new regulation, that the producers concerned
5. In order to make the allocation of the special reference quantity provided for in Article 3a possible, the Council proceeded as follows. In order to achieve the objective of production control, it first reduced the guaranteed total quantity of each Member State. It compensated for the impact of the reduction on producers' individual reference quantities by decreasing the rate of withdrawal introduced by Regulation No 775/87 from 5.5% to 4.5%. By Regulation No 3881/89 the Council increased the Community reserve referred to in Article 5c(4) of Regulation No 804/68 to 2082887.750 tonnes for 1989-1990 (the corresponding figure for 1988-1989 was 443000 tonnes), of which 600000 tonnes was earmarked for the allocation by the Member States of the special reference quantities provided for in Article 3a of Regulation No 857/84.
6. In the judgments given on 11 December 1990 in the Spagl and Pastätter cases the Court answered the question whether the 60% rule laid down in Article 3a(2) of Regulation No 857/84 was valid. On the one hand, the Court held that the Community legislature was entitled to apply a reduction coefficient to the volume of milk delivered by the producers concerned, in order to ensure that they were not accorded an undue advantage by comparison with the producers who had continued to deliver milk during the reference year. On the other hand, it held that, in comparison with the percentages by which the reference quantities of the latter producers had been reduced — which in no case exceeded 17.5% —, the reduction coefficient might not be fixed at such a high level as specifically to affect non-marketers by very reason of the non-marketing undertaking which they had given. The Court took the view that a 40% reduction was in breach of the principle of protection of legitimate expectations. Accordingly, it declared Article 3a(2) of Regulation No 857/84 invalid.
7. By Regulation No 1639/91 of 13 June 1991 the Council amended the Article 3a(2) which the Court had declared invalid, replacing it by a provision of which the first subparagraph reads as follows:
2. The applicants
8. The applicants in Case C-104/89, Messrs Mulder, Brinkhoff, Muskens and Twijnstra, are dairy farmers resident in the Netherlands who gave five-year non-marketing undertakings. The premiums which they received in return were calculated on the basis of the following production quantities respectively: 463566 kg, 296507 kg, 300340 kg and 591905 kg. None of the applicants delivered any milk in 1983, the reference year adopted by the Netherlands. Mr Mulder's undertaking expired on 30 September 1984, Mr Brinkhoff's on 4 May 1989, Mr Muskens's on 21 November 1984 and Mr Twijnstra's on 9 April 1985.
9. The applicant in Case C-37/90, Mr Heinemann, a dairy farmer resident in the Federal Republic of Germany, also entered into a non-marketing undertaking pursuant to Regulation No 1078/77. His premium was calculated on the basis of a production quantity of 39102 kg. In accordance with the undertaking which he gave, he delivered no milk during 1983, the reference year adopted by Germany. Mr Heinemann's undertaking expired on 20 November 1984.
3. The admissibility of the applications
10. The Council and the Commission contest the admissibility of the applications brought before the Court. Referring to the Court's judgment in Krohn they argue that a claim based on non-contractual liability on the part of the Community is admissible only if the decision adversely affecting the applicant can be attributed to a Community institution. They claim that in the cases before the Court the refusal to allocate a reference quantity must, however, be attributed to the relevant national authorities, since Articles 3, 4 and 4a of Regulation No 857/84 give the national authorities the power to allocate special or additional referenee quantities to producers such as the applicants.
11. I agree with the applicants that that objection of inadmissibility must be rejected. In Krohn (paragraphs 18 and 19) the Court stated as follows:
12. In support of their action for damages against the Community institutions the applicants rely in the first place on the invalidity of Regulation No 857/84 as held by the Court in Mulder and von Deetzen. The Court considered that that regulation was invalid on the ground that, because it did not provide for the allocation of a reference quantity to non-marketers, it frustrated that class of producers' legitimate expectations that the effects of the non-marketing undertaking which they had entered into would be temporary. As the Court stated in von Deetzen No 2 (paragraph 21), non-marketers were
13. The institutions also rely on other pleas of inadmissibility. In their defences in Case C-104/89, for instance, the Council and the Commission argued that the application did not satisfy the requirements of Article 38 of the Rules of Procedure. They maintained that it did not set out the factual grounds necessary in order to found a claim for noncontractual liability on the part of the Community. In their rejoinders they dropped that plea.
4. Assessment of the Community's liability
4.1. The requirements for liability applied by the Court in connection with legislative measures
14. As the Court has consistently held, the liability of the Community on account of its legislative powers depends on the coincidence of a set of conditions as regards the unlawfulness of the act of the institution, the fact of damage and the existence of a direct link in the chain of causality between the act and the damage complained of. The requirements for a direct link in the chain of causality and for actual damage and also the problems arising in connection with the assessment of the damage will be discussed later (sections 37, 38 and 39 and 40 to 53 inclusive). I shall first consider the requirement for the legislative measures to have been unlawful.
15. In my view, it appears from this wording — although a clear pronouncement is warranted — that the expression manifestly and gravely disregarded the limits on the exercise of its powers qualifies the words a sufficiently serious breach. It indicates more specifically that in the case of legislative measures carried out pursuant to a broad discretion the public authority is allowed a certain margin of error. Only where the public authority's error is inexcusable, that is to say where it could reasonably not have committed it, have powers been manifestly and gravely disregarded and there therefore has been a sufficiently serious breach (of a superior rule of law for the protection of individuals).
16. The Court's case-law fleshes out the criterion manifest and grave disregard of the limits on powers and therefore also the requirement for there to have been a sufficiently serious breach. It appears from the case-law that that criterion is made up of two components: on the one hand, a component related to the type and seriousness of the breach, in other words related to unlawfulness; on the other, a component relating to the type of the damage caused thereby. More specifically, in the judgments of 4 October 1979 in the Quellmehl and Maize Gritz cases, the Court invoked the following circumstances in deciding that the Council had manifestly and gravely disregarded the limits on its powers through the exercise of a wide discretionary power essential for the implementation of the common agricultural policy: (i) the particular importance of the principle infringed by the regulation (in those cases, the principle of equality) and hence the (objective) seriousness of the breach; (ii) the fact that the disregard of that principle affected a limited and clearly defined group of commercial operators; (iii) the fact that the damage alleged by the applicants went beyond the bounds of the economic risks inherent in the operators' activities in the sector concerned; (iv) the fact that the principle in question was infringed without sufficient justification (which points to the inexcusable nature of the error made by the authority: see section 15 above).
17. As regards the unacceptable or inexcusable character of the breach, the judgment of 26 June 1990 in Sofrimport contains an important pointer for the present cases. That case, like these proceedings, was concerned with regulations which the Court had declared invalid for infringing the principle of protection of legitimate expectations and which had caused the applicant undertaking to sustain damage in so far as they made it impossible for it to carry on a particular commercial activity (importation of dessert apples).
18. It is also appropriate to refer to previous cases decided by the Court in connection with the kind of damage, in particular the judgment in HNL v Commission. In that case the Court stated (in paragraph 6) that:
4.2. Liability on account of the Court's dec-Uration that Regulation No 857/84 is invalid
19. In the light of the case-law which has just been discussed, I shall now consider — having regard to the Court's decision relating to the invalidity of Regulation No 857/84, first in Mulder's and von Deetzen's cases and then in Spagl's and Pastätter's cases — the question whether there was a sufficiently serious breach of a superior rule of law for the protection of individuals. In accordance with that case-law I shall consider the following four points, namely whether
4.2.1. Liability as a result of the judgments in Mulder and von Deetzen declarìng the regulation invalid
(i) Breach of a superior rule of law for the protection of the individual
20. In Mulder (paragraph 26) and von Deetzen (paragraph 15), the Court declared Regulation No 857/84 partially invalid on the ground that it frustrated the legitimate expectation of non-marketers, having regard to the provisions of Regulation No 1078/77, that the effects of the scheme would be temporary. The Court accordingly held that the Council had created a situation which was such as to arouse expectations in individuals in a system from which they derived certain rights, and that, by frustrating those expectations, the Council had acted contrary to the principle of protection of legitimate expectations. In the aforementioned judgments in CNTA and Sofrimport the Court has already held that that principle, in conjunction with provisions of Community law from which individuals may derive rights, constitutes a superior rule of law for the protection of individuals the breach of which may cause the Community to incur liability. Moreover this is not contested by the institutions.
(ii) Serious and inexcusable nature of the breach of the principle of protection of legitimate expectations
21. The Council and the Commission argue that the invalidity of Regulation No 857/84 as held by the Court in Mulder and von Deetzen cannot be regarded as a sufficiently serious breach. They point out that Regulation No 1078/77 came into being in a market situation characterized by substantial and increasing milk surpluses. As appears from the first recital in the preamble to the regulation, the Community legislature considered it worthwhile in the circumstances to encourage the trend among farmers to cease milk production through the grant of a premium. 90% of non-marketers, the applicants included, opted to take advantage of the system of the non-marketing premiums and committed themselves to marketing no milk or milk products for a period of five years.
22. I do not agree. As can be seen from the passage cited above (section 17) from Sofrimport, to fail completely to take account of the particular situation of traders, without invoking any overriding public interest, constitutes a serious, inexcusable breach.
23. First, the institutions knew, or were in a position to know, that a not insignificant number of non-marketers would wish to resume production after the expiry of their non-marketing undertakings. Although it can be accepted, as the institutions maintain, that one of the aims of Regulation No 1078/77 was to encourage a number of producers to cease milk production early and for good, the institutions knew, or in any case were in a position to know, that the means which had been chosen, that is to say the grant of a premium to persons undertaking temporarily to give up the production of milk and dairy products, was not capable of achieving that aim in all cases.
24. Secondly, Regulation No 857/84 made no provision for measures to deal sufficiently certainly with the non-marketers' special situation, of which the institutions were, or should have been, aware. The possibility of procuring a reference quantity by purchasing or leasing a farm certainly does not deal with the non-marketers' special situation. That possibility — which is not reserved specifically for non-marketers — requires an unforeseen financial effort that is unjustified on the part of producers who are entitled to resume milk production. Neither are Articles 3, 4 and 4a of Regulation No 857/84 appropriate to secure non-marketers' rights, since they merely empower and do not oblige the Member States to grant a special or an extra reference quantity under certain conditions. Moreover, those provisions cannot assist, or at best can only partly assist, non-marketers wishing to resume milk deliveries:
25. In their defences, the institutions attach particular importance to the second subparagraph of Article 3(1) of Regulation No 857/84. That provision authorizes the Member States to grant a special reference quantity to producers who have carried out investment even without a development plan. It is indeed broadly worded and permits a special reference quantity to be granted to non-marketers who, like the applicants in these proceedings, invested in dairy cattle with a view to resuming milk production.
26. Thirdly and lastly, the institutions cannot invoke any overriding grounds of public interest in order to justify the failure to accommodate in Regulation No 857/84 the special situation of non-marketers who wished to resume milk production. Of course, I do not deny that the levy system itself pursues an important aim in the public interest. Nevertheless, I can see no reason — and have searched in vain for justification in the statement of reasons of the system introduced in 1984 — for the Community legislature's failure to take any account at all of the non-marketers' special situation.
(iii) A limited and clearly defined group of producers are adversely affected by the breach
27. According to the Council and the Commission, the breach did not affect a limited and clearly defined group of commercial operators. To that end they refer to the Court's statement in Ireks-Arkady (paragraph 11) and Inter quell (paragraph 14) to the effect that only a small number (namely 18) quellmehl producers were affected and hence that requirement was satisfied. They further point out that in HNL (paragraph 7) the Court stated that the regulation which had been declared invalid affected very wide categories of traders, in other words all buyers of compound feeding-stuffs containing protein. In their view, that was one of the reasons why in that case the Court did not hold the Community liable.
28. A clearly defined group and a limited group (in terms of numbers) are two different criteria. The fact that the group concerned must be clearly defined in order for the Community to be able to be held liable means that the number of persons affected must be capable of being determined at the time when the ruling is given on the compensation. That requirement is met in this instance.
29. As far as the criterion of the limited group is concerned, I can find no support in the case-law of the Court for making the Community's liability depend on the (absolute) number of persons adversely affected. Even apart from the fact that it would be impossible for the Court to set a figure on that number, the words limited group should be construed as referring to a group of undertakings on which the unlawful act imposed a specific disadvantage, in comparison with other groups of undertakings, which those other groups did not have to bear. That condition is clearly satisfied in the present cases: compared with milk producers who did not interrupt their milk production, the non-marketers concerned were affected by the levy system specifically — and, moreover, seriously — since they alone were prevented by the contested rules from producing milk and, as a result, could not resume milk deliveries.
30. In connection with the determinacy and the number of persons adversely affected, I would, moreover, qualify the institutions' view that the number of non-marketers who are entitled to claim compensation is much in excess of those who applied for a special 60% reference quantity.
(iv) The alleged damage went beyond the bounds of the economic risks inherent in activities in the milk sector
31. The Council and the Commission maintain that the criterion applied by the Court in the quellmehl and maize gritz cases that the damage alleged by the applicants should have gone beyond the bounds of the normal economic risks inherent in the operators' activities in the sector concerned is not satisfied in the present cases. Each of the institutions sets forth a number of arguments.
32. The Commission further argues that, in view of the large amount of intervention and adjustments in the milk sector, carrying on an activity in that sector entails not only the general risks to which every economic operator is subject, but also specific risks peculiar to activities in that sector. As a result, the alleged damage does not qualify for compensation.
33. In view of the foregoing, it must be concluded that the invalidity of Regulation No 857/84 as found by the Court in Mulder's and von Deetzen's cases is such as to cause the Community to incur liability for the damage suffered by the applicants.
4.2.2. (No) liability as a result of the dedaration of invalidity in the Spagl and Pastätter cases
34. In Spagl and Pastätter and subsequently also in von Deetzen (No 2) the Court declared that Article 3a(2) of Regulation No 857/84, as amended by Regulation No 764/89, was invalid in so far as it restricted the special reference quantity provided for in that provision to 60% of the quantity of milk delivered by the producer during the twelve calendar months preceding the month in which the application for the premium was made. I consider that the declarations of invalidity in the Spagl and Pastätter cases, unlike the invalidity found in the Mulder and von Deetzen cases, cannot cause the Community to incur liability. Admittedly, the Court also held in Spagl (paragraph 29) and in Pastätter (paragraph 20) that the restriction was void for breach of the principle of protection of legitimate expectations and therefore in breach of a superior rule of law. However, it appears to me that the Community legislature's decision to restrict to 60% the reference quantity to be granted to non-marketers cannot be regarded as a manifest and serious misjudgment of its powers and therefore does not constitute a sufficiently serious breach of the principle of legitimate expectations.
35. The fixing of the 60% rule is the outcome of the policy choices which the Community legislature made with regard to the way in which account is be taken of the non-marketers' special situation. Following the judgments in Mulder and von Deetzen it was plain to the Community legislature that the non-marketers in question could invoke an entitlement to the allocation of a reference quantity (see the third recital in the preamble to Regulation No 764/89). However, it also had to take account of the overriding necessity of not jeopardizing the fragile stability that currently obtains in the milk products sector (fifth recital in the preamble to Regulation No 764/89) and of the interests of other producers and of the disadvantage at which they would be put if the reference quantities allocated to them had to be reduced in order to enable a reference quantity to be granted to the non-marketers. The balancing of these interests led the Community legislature to increase the Community reserve by 600000 tonnes for the benefit of the non-marketers and to decrease commensurately the total guaranteed quantity of each Member State, whilst offsetting the impact of that cut on individual reference quantities by decreasing the rate of withdrawal introduced by Regulation No 775/87 (see section 5 above). The limitation of the reference quantity to be allocated to non-marketers to 60% — which is very different from their being completely excluded from having a reference quantity — remains in my view within the scope of the broad discretion which the Community legislature has in this sphere and cannot therefore be regarded as being a sufficiently serious breach, even though it turned out that the 60% rule was invalid.
36. I therefore conclude that the adoption by the Community legislature of the 60% rule in Article 3a(2) of Regulation No 857/84 did not constitute a sufficiently serious breach of the principle of protection of legitimate expectations. Consequently, the Community cannot be held liable on account of the declarations of invalidity in Spagl and Pastätter and the applicants' action must be dismissed as regards the damage which they maintain they sustained as a result of that invalidity. Neither can the Community be held liable for the damage which the applicants maintain that they are still to suffer following the grant of an additional reference quantity pursuant to Article 3a(2) as amended by Regulation No 1639/91, since the arrangements introduced by that regulation go even further towards accommodating the non-marketers' special situation than the arrangements introduced by Regulation No 764/89 and do not manifestly and seriously disregard the Council's discretion with regard to the size of the percentage reduction, as that discretion was established in Spagl and Pastätter (see section 6 above).
4.3. The existence of damage and the causal link
37. The applicants claim that they could not carry on their occupation as dairy farmers from the time when their non-marketing undertaking expired until the time when they resumed milk deliveries to the extent of the 60% reference quantity which they were granted. During that period they were not entitled to receive a reference quantity as a result of Regulation No 857/84 and therefore, owing to the magnitude of the additional levy, obtained no income from the normal exercise of their occupation. They therefore had to resort to other — in some cases, loss-making — agricultural activities.
38. The institutions argue that there is no causal link between the relevant Community act and the alleged damage. In this connection, they rely, first, on the possibilities provided for in Articles 3, 4 and 4a whereby Member States may grant reference quantities in certain specific situations and, secondly, on the opportunities which were available to the applicants to take action themselves in order to limit the damage.
39. It appears from the foregoing that all the preconditions have been established for the Community to incur liability as a result of the declarations of invalidity in the judgments in Mulder and von Deetzen but that that is not the case as regards the declaration of invalidity in the Spagl and Pastätter judgments. In the next part of this Opinion I shall therefore consider how the damage caused in connection with the first finding of invalidity only is to be assessed.
5. Assessment of the damage
40. As the starting point for assessing the damage, the applicants in Case C-104/89 assume that financially they must be put in the situation in which they would normally have been had they been able to resume milk deliveries immediately after the expiry of the non-marketing undertaking on terms which did not discriminate against them compared with the producers referred to in Article 2 of Regulation No 857/84. In my view, that seems to be a proper starting point, although its working out will involve a number of practical difficulties with which the Court has not yet been faced.
41. How, then, is the damage to be assessed? I consider that it is necessary to draw a distinction in this regard. First, the period to be taken into account for the purposes of calculating the damage has to be established together with the reference quantity which the applicants could normally have claimed during that period. It appears to me that the Court has sufficient information to rule definitively on these aspects now.
5.1. The period and reference quantity to be taken into account in calclating the damage
5.1.1. The period to be taken into account
42. Since I have already reached the conclusion that the Community cannot be held liable for the damage which the applicants maintain they suffered and have still to suffer as a result of the unlawfulness of the 60% rule laid down in Article 3a(2) of Regulation No 857/84 as established in the judgments in Spagl and Pastätter, the applicants are entitled to seek compensation only for the period during which they had no reference quantity at all, that is to say for the period between the expiry of their non-marketing undertakings and, in principle, the entry into force of Regulation No 764/89, Article 3 a of which introduced the 60% rule.
5.1.2. The reference quantity to be taken into account
(i) Basis for the calculation
43. The starting point for determining the reference quantity which the applicants could normally have claimed during the period in question must be Article 2(1) of Regulation No 857/84, which provides that the reference quantity to be granted is to be equal to the quantity of milk delivered by the producer in 1981, plus 1%. However, under Article 2(2) the Member States were free to choose 1982 or 1983 as the reference year (in fact they all opted for 1983) provided that the quantity produced in that year was weighted by a percentage established so as not to exceed the guaranteed quantity defined in Article 5c of Regulation (EEC) No 804/68. Article 2(3) further provides that the percentages referred to in Article 2(1) and (2) may be adapted by the Member States with a view to the grant of special or additional reference quantities pursuant to Articles 3 and 4 of Regulation No 857/84.
(ii) The reduction coefficient
44. The Court expressly recognized in Spagl (paragraph 21) and Pastätter (paragraph 12) that the Community legislature was entitled to apply to the basic figure for calculating the reference quantity to be allocated to non-marketers a reduction coefficient designed to ensure that the category of producers concerned was not accorded an undue advantage by comparison with the producers who continued to deliver milk during the reference year. However, the Court considered that a reduction coefficient of 40% was too high, on the ground that it appeared from the information provided to the Court that in no case did the reduction coefficient applied in the Member States pursuant to Article 2 of Regulation No 857/84 (inclusive of the rate of withdrawal discussed in section 46) exceed 17.5%. In this way, the Court indicated how an appropriate reduction coefficient for non-marketers has to be determined, namely by applying a percentage which in the Member State of the producer concerned is representative of all the abatements which were applied there pursuant to Article 2 of Regulation No 857/84 to the reference quantity allocated to the producers referred to in that article.
45. The origin of the first objection lies in the fact that, as already mentioned, all the Member States opted for 1983 as the reference year, rather than for the volume produced in the (basic) reference year 1981, plus 1%. In order in those circumstances to avoid exceeding the guaranteed total quantity per Member State, the Member States had — as expressly provided for in Article 2(2) of Regulation No 857/84 — to reduce the individual reference quantities by a certain percentage.
45. The applicants' second objection relates to the taking into account of the withdrawal of a uniform proportion of each reference quantity, as laid down by Regulation No 775/87. That withdrawal was not introduced until the fourth year of application of the levy scheme and may therefore not be taken into account when calculating the damage which the applicants suffered during the first three years of application of the scheme. However, as from the fourth year the reference quantity taken as the basis for calculating the damage may be reduced by the same percentage as was applied to producers referred to in Article 2, provided, however, that when the damage is assessed account is taken of the compensation which was received by those producers under Article 2 of Regulation No 775/87 in respect of the withdrawal. The non-marketers would also have received that compensation when the reference quantity to which they would normally have been entitled was withdrawn.
5.2. Assessment of the damage suffered by way of loss of profit
47. As I have already observed, this is a point on which, owing to the lack of sufficiently certain and precise evidence, the Court can for the time being provide only general indications with a view to the parties' reaching agreement. Such indications can relate only to the situation of the applicants in the present joined cases but may, nevertheless, be useful when assessing the compensation claims of other non-marketers who are in a similar situation.
48. As regards the calculation of loss of profits, there are two specific problems which the Court can resolve as of now. First, there is a problem raised by the institutions. According to them, it is not possible for the applicants to have actually produced, after the expiry of the non-marketing period, from young cows whose milk yield had not yet developed a quantity of milk equal to the reference quantity which they claim. The applicants state in the reply in response to this claim that they were in fact able to exploit the reference quantity in full since they purchased more mature cattle.
49. The second problem is concerned with setting income from replacement activities against lost profits. After their non-marketing undertakings expired all the applicants took up replacement activities when Regulation No 857/84 made it impossible for them to resume milk production. By so doing they undoubtedly acted in accordance with a general legal principle to the effect that the injured party must display ordinary vigilance in order as far as possible to contain the damage within reasonable limits. The institutions consider, however, that the applicants did not make enough efforts to obtain adequate profits from the replacement activities. The applicants disagree, although it appears that the applicants in Case C-104/89 recorded operating losses in a large number of financial years during which they carried on replacement activities. They claim that the Community must also compensate them for those losses.
50. I would make one final observation concerning the circle of persons entitled to claim compensation — mainly only those non-marketers who applied for and obtained a provisional 60% reference quantity pursuant to Regulation No 764/89 (see section 30 above) — with whom the institutions will have to reach agreement in the event that the Court decides that the Community is liable for the damage suffered as a result of the invalidity of Regulation No 857/84.
5.3. Interest due
5.3.1. Legal interest
51. The parties agree that if the Community is held hable to pay compensation, it will have to pay legal interest on the amount payable as from the day on which judgment is given. However, their opinions differ about the rate of interest. The applicants in Case C-104/89 claim 8%. The applicant in Case C-37/90 proposes 7%. The institutions put the rate of interest at 6%.
5.3.2. Compensatory interest
51. In their application, the applicants in Case C-104/89 assessed the damage which they sustained allowing for an amount for interest not received for each year from 1984 to 1989. In their reply they claim compensatory interest only from 30 March 1989 (that is to say, from the date of the application) on the total amount of the damage which they allege they suffered up until the end of 1989. The applicant in Case C-37/90 has not applied for compensatory interest in this application or in his reply. At the hearing, however, he asked the Court to assess the damage allowing for compensatory interest. He observed that that unreceived interest constituted part of the damage sustained, since he had to pay interest on a bank loan which he had taken out.
53. It is for the Court to order the Community to pay compensation for the whole of the damage suffered by the applicants, which would therefore include compensatory interest in so far as the amount of compensation fixed by the parties by mutual agreement after the interlocutory judgment does not already take full account of the time which has elapsed until that date. For the reasons set out above (in section 51) that interest also must be calculated on the basis of the usual rate of interest in the applicants' Member State.
Conclusion
54. For the reasons set out in the foregoing I propose that, before deciding further, the Court should:
1 Original language: Dutch.
2 Council Regulation (EEC) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1).
3 Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10).
4 Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13).
5 Case 120/86 Mulder v Minister van Landbouw en Visserij [1988] ECR 2321.
6 Case 170/86 von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355.
7 Council Regulation (EEC) No 764/89 of 20 March 1989 amending Regulation (EEC) No 857/84 adopting general rules for tne application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1989 L 84, p. 2).
8 Since none of the applicants sold the milk which he used to produce direct, I shall, for the sake of brevity, make no reference to the provisions of the levy scheme which deal with direct sale.
9 Council Regulation (EEC) No 3879/89 of 11 December 1989 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1989 L 378, p. 1).
10 Council Regulation (EEC) No 775/87 of 16 March 1987 temporarily withdrawing a proportion of the reference quantities mentioned in Article 5c(l) of Regulation (EEC) No 80-4/68 on the common organization of the market in milk and milk products (OJ 1987 L 78, p. 5).
11 Council Regulation (EEC) No 3882/89 of 11 December 1989 amending Regulation (EEC) No 775/87 temporarily withdrawing a proportion of the reference quantities mentioned in Article 5c(l) of Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1989 L 378, p. 6).
12 Council Regulation (EEC) No 3881/89 of 11 December 1989 establishing, for the period 1 April 1989 to 31 March 1990, the Community reserve for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1989 L 378, p. 5).
13 Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (OJ, English Special Edition 1968(1), p. 176.
14 For the 1990-91 and 1991-92 periods see Council Regulation (EEC) No 1184/90 of 7 May 1990 (OJ 1990 L 119, p. 30) and Council Regulation (EEC) No 1636/91 of 13 June 1991 (OJ 1991 L 150, p. 35).
15 The balance of the increase in the Community reserve (1039885.740 tonnes) was intended for the producers referred to in Article 3b of Regulation No 857/84, a provision added by Council Regulation No 3880/89 of 11 December 1989 (OJ 1989 L 378, p. 3).
16 Case C-189/89 Spagl v Hauptzollamt Rosenheim [1990] ECR I-4539.
17 Case C-217/89 Pastätter v Hauptzollamt Bad Reichenhall [1990] ECR I-4585.
18 In the judgment of 22 October 1991 in Case C-44/89 von Deetzen [1991] ECR I-5119, (hereinafter referred to as von Deetzen No 2) the Court confirmed, by reference to the judgments in Spagl and Pastätter, that Article 3a(2) of Regulation No 857/84 was invalid.
19 Council Regulation (EEC) No 1639/91 of 13 June 1991 amending Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1991 L 150, p. 35).
20 Judgment of 26 February 1986 in Case 175/84 Krohn v Commission [1986] ECR 753.
21 In contrast, in the judgment of 7 July 1987 in Joined Cases 89 and 91/86 L'Etoile commerciale and CNTA v Commission [1987] ECR 3005, in which the Court based itself on the same considerations (paragraphs 17 and 18) as I have quoted above, it was decided that the national authority bore the responsibility on the ground that in that case the Commission's act was not at the root of the damage found (paragraph 19).
22 Judgment of 8 December 1987 in Case 50/86 Grands Moulins de Paris v EEC [1987] ECR 4833, paragraph 7.
23 Grands Moulins de Paris, paragraph 8. See also the judgment of 18 April 1991 in Case C-63/89 Assurances du Crédit v Council and Commission [1991] ECR I-1799, paragraph 12, and the judgment of 27 June 1991 of the Court of First Instance in Case T-120/89 Stahlwerke Peine-Salzeitter v Commission [1991] ECR II-279, which in paragraph 74 provides an extensive review of the case-law of the Court of Justice.
24 In my estimation, that case-law remains intact following the judgment of 17 November 1991 in Joined Cases C-6/90 and C-9/90 Francovich and Bonifad [1991] ECR I-5357. Even if one shares the view taken by Mr Advocate General Mischo in his Opinion on those cases (see section 71 in particular) that the same requirements must apply in order for the Community to incur liability on account of legislative measures as apply in order for the Member Sutes to incur liability in that area, it must be borne in mind that the situation in Francovich and Bonifaci was one in which the relevant Member Sute to attain a result clearly prescribed by a directive and hence had only a limited discretion. In contrast, the case-law discussed in this context applies to situations in which the (Community) legislature has a broad measure of discretion.
25 The case-law of the Court is not unambiguous. Sometimes the use of the word or gives the impression that alternative criteria are involved (see, for example, the judgment of 30 May 1989 in Case 20/88 Roquette frères v Commission [1989] ECR 1553, paragraph 26); at others the criteria are joined by and and therefore used conjunctively (see the judgment in Assurances du Crédit, citea above, paragraph 12).
26 See also F. Schockweiler, Ín collaboration with G. Wivenes and J. M. Godart, Le régime de la responsabilité extracontractuelle du fait d'actes juridiques dans la Communauté européenne, Revue trìmesprieue de droit européen, January-March 1990, p. 27, at p. 60.
27 In Peine-Salzgitter (see in particular paragraph 108), the Court of First Instance speaks of the Commission manifesdy and gravely and therefore inexcusably disregarding the limits of its powers.
28 See also my Opinion of 19 November 1991 in Joined Cases C-363 and C-364/88 Finsider and Falck v Commission, paragraph 25.
29 Judgments in Case 238/78 Ireks-Arkady v Council and Commission [1979] ECR 2955, paragraph 11, Joined Cases 241, 242 and 245 to 250/78 DGV v Council and Commission [1979] ECR 3017, paragraph 11, Joined Cases 261 and 262/78 Interquell Stärke-Chemie v Council and Commission [1979] ECR 3045, paragraph 14, and Joined Cases 64 and 113/76, 167 and 239/78, 27, 28 and 45/79 P. Dumortier Frères v Council [1979] ECR 3091, paragraph 11.
30 Case C-152/88 Sofrimport v Commission [1990] ECR I-2477.
31 See also the judgment of 14 May 1975 ¡n Case 74/74 CNTA v Commission [1975] ECR 533, in which (paragraph 44) the Court declared as follows: In the absence of an overriding matter of public interest (in French: un intérêt public peremptoire), the Commission has violated a superior rule of law, thus rendering the Community hable, by failing to include in Regulation No 189/72 transitional measures for the protection of the confidence which a trader might legitimately have had in the Community rules.
32 On the basis of the judgment in Amylum (Joined Cases 116/77 and 124/77 Amylum v Council and Commission [1979] ECR 3497, paragraph 19) the Council and the Commission argue that the Community may be held liable only if blame can be attributed to a Community institution and to arbitrary conduct. Arbitrary conduct is one of the least acceptable wavs, but not therefore the only way, in which a public authority may seriously and manifestly disregard the limits of its powers. Furthermore, failure to take account of the specific situation of economic operations (in this case the non-marketers: sections 22-26 infra), without its being possible to invoke any overriding public interest comes close to amounting to arbitrary treatment of those operators.
33 Judgment of 25 May 1978 in Joined Cases 83 and 94/76, 4, 15 and 40/77 Bayerische HNL v Council and Commission [1978] ECR 1209.
34 Judgment of 6 December 1984 in Case 59/83 Biovilac v EEC [1984] ECR 4057.
35 The others opted for the conversion premium, which can be left out of account in the present cases. For more information about the system of premiums see the Special report of the Court of Auditors on the application of Regulations (EEC) No 1078/77 and (EEC) No 1041/78 introducing a system of premiums for the non-marketing of milk products and for the conversion of dairy herds (OJ 1983 C 278, p. 1).
36 Council Regulation (EEC) No 590/85 of 26 February 1985 amending Regulation (EEC) No 857/84 laying down general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1985 L 68, p. 1).
37 For more information about the aims of Regulation No 1078/77, see sections 1.1.3 and 1.1.4 of the Court of Auditors' report to which reference has already been made.
38 Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms (OJ, English Special Edition 1972(11), p. 324).
39 It emerges from Spronk's case how sparingly the possibility afforded by this provision has been taken up in the Netherlands. In its judgment of 12 July 1990 in that case (Case C-16/89 Spronk v Minister van Landbouw [1990] ECR I-3185) the Court held that the relevant Netherlands implementing provision was not contrary to Regulation No 857/84.
40 It appears from the answer given by Mr MacSharry on behalf of the Commission to Mr John Hulme (OJ 1990 C 93, p. 26) that 13187 non-marketers applied for such a reference quantity. It does not appear from the case-file how many non-marketers actually obtained such a reference nuantitv.
41 Judgment in Joined Cases 5, 7 and 13 to 24/66 Kampffmeyer y Commission [1967] ECR 245, at 266.
42 I would point out again (see section 30 above) that, in my view, non-marketers who did not apply for a 60% reference 3uantity pursuant to Regulation No 764/89 should be eemed, in the absence of proof to the contrary, to have given up milk production for good during the currency of their non-marketing undertakings, with the result that normally they cannot argue that they suffered damage as a result of Regulation No 857/84. That presumption that they discontinued milk production does not operate in the present cases, since the applicants did in fact apply for and obtain a 60% reference quantity.
43 Regulation No 1639/91 amended Article 2(3) of Regulation No 857/84 so that the percentages in question may now also be adapted with a view to the grant of a special reference quantity to non-marketers pursuant to Article 3a of Regulation No 857/84.
44 The Council also took this view, as appears from the new version of Article 3a(2) of Regulation No 857/84 introduced by Regulation No 1639/91 (as set out in section 7 above).
45 The levy scheme was originally introduced for five successive periods of 12 months (see Article 5c(l) of Regulation No 804/68 as added by Regulation No 856/84).
46 To have regard to the normal course of events seems to be a general principle common to the legal systems of the Member States. See the references to Belgian, English, French, German, Netherlands and Swiss law in the Belgian standard work by J. Ronse, Schade en schadeloosstelling (onrechtmatige daad), Algemene Praktische Rechtsverzameling, 1957, Nos 73 and 74. See more specifically the wording of § 252 of the German Bürgerliches Gesetzbuch (Civil Code), which reads as follows: Der zu ersetzende Schaden umfasst auch den entgangenen Gewinn. Als entgangen gilt der Gewinn, welcher nach dem gewöhnlichen Laufe der Dinge oder nach den besonderen Umständen, insbesondere nach den getroffenen Anstalten und Vorkehrungen, mit Wahrscheinlichkeit erwartet werden konnte. [The compensation shall also include lost profits. Profit is deemed to have been lost which could probably have been expected in the ordinary course of events, or according to the special circumstances, especially in the light of the preparations and arrangements made. (The German Civil Code, trans, by Forrester, Goren and Ilgen, North-Holland Publishing Co., Amsterdam.)]
47 The Court has recognized this principle in staff cases. More specifically, in the judgment in Case 58/75 Sergy v Commission [1976] 1139 (paragraphs 46 and 47) the Court held that a lack of ordinary vigilance was partly responsible for the damage suffered by the applicant and that that had to be taken into account when assessing the extent to which the defendant had to make good the damage. For a recent study in comparative law, see R. Kruithof, L'obligation de la partie lésée de restreindre la dommage, Revue critique de jurisprudence belge, 1989, p. 12 et seq ļ., which includes numerous references to Belgian, English, French, German and Netherlands law.
48 If it should appear that the applicants obtained a higher profit than the normal profit from the replacement activities, that extra profit should not be deducted from the lost profits, since the Community should not derive an advantage from special efforts made by the applicants.
49 There may in fact be a causal connection between some losses and the regulation which was declared invalid, for example in the case of the loss alleged by some applicants in Case 104/89 on the sale of cows purchased in 1983 or 1984 with a view to the resumption of milk production, which was subsequendy made impossible by Regulation No 857/84.