Opinion of Advocate General Mischo
Mr President,
Members of the Court,
1. In Case C-248/89, Cargill BV (hereinafter Cargill) has brought a direct action seeking the annulment of Commission Regulation (EEC) No 1358/89 of 18 May 1989 amending Regulation (EEC) No 735/85 fixing the amount of the subsidy on oil seeds (Official Journal 1989 L 135, p. 22). The admissibility of the action is not disputed nor is it open to dispute.
2. In Case C-365/89, on the other hand, the College van Beroep voor het Bedrijfsleven, the Hague (Netherlands), seeks a preliminary ruling from the Court on the validity of the same regulation, No 1358/89, the validity of Regulation No 735/85, and the consequences which would stem from the invalidity of either or both of those regulations.
3. The sole purpose of Regulation No 1358/89 is to amend Annex III to Regulation No 735/85, which contains a material error concerning the exchange rates of the ECU.
4. The Commission became aware of that error at once and, the following day, adopted Regulation (EEC) No 756/85 suspending advance fixing of the subsidy.
5. The same national court had already made a reference to the Court, which, in its judgment in Case 201/87 Cargill [(1989] ECR 489), ruled as follows:
6. In the version applicable at the material time, Article 8(1) of Regulation No 1594/83 provided as follows:
7. The Court considered that Regulation No 756/85 was invalid for the following reasons:
8. The Court added, obiter, that:
9. The dispute pending before the national court is still concerned with the obligation for the national body to issue to Cargill with retroactive effect the advance-fixing certificates applied for on 22 March 1985 and to pay it the subsidy at the level specified in the annexes to Regulation No 735/85.
10. I consider it appropriate to deal first of all with the question of the validity of Regulation No 735/85 (the second question submitted for a ruling), and then to address the question of the validity of Regulation No 1358/89. That approach is based on the concern to observe the chronological order of events and on the fact that the validity of Regulation No 1358/89 may depend, at least in part, on the possible invalidity of Regulation No 735/85.
The validity of Regulation No 735/85
11. The second question in Case C-365/89 is worded as follows:
12. As is clear from the relevant part of the judgment cited above, the Court, in its answer to the second question in Case 201/87, expressly left open the question of the validity of Regulation No 735/85, while stating, obiter, that, according to the parties, that regulation contains a material error (paragraph 21). The existence of that material error may thus be deemed to have been established. It has been confirmed in the course of these proceedings that the error is to be found in Annex III to the regulation, entitled Exchange rate of the ECU to be used for converting final aids into the currency of the processing country when the latter is a country other than the country of production.
13. It is important to bear in mind here that Article 33 of Commission Regulation (EEC) No 2681/83 of 21 September 1983 laying down detailed rules for the application of the subsidy system for oil seeds (Official Journal 1983 L 266, p. 1), as amended by Commission Regulation (EEC) No 1814/84 of 28 June 1984 (Official Journal 1984 L 170, p. 44), imposes the following obligations on the Commission:
14. In the circumstances, the amount of the subsidy as such, established in accordance with paragraph 2 above and published, as far as sunflower seed is concerned, in Annex II to Regulation No 735/85, has not really been disputed, notwithstanding the observations submitted by Cargill concerning what it considers to be the excessive margin of discretion enjoyed by the Commission in arriving at the world market price within the meaning of Article 27 of Council Regulation No 136/66/EEC of 22 September 1966 on the common organization of the market in fats (hereinafter the basic regulation).
15. I can thus begin by assuming that that subsidy was in conformity with Article 27(1) of the basic regulation, which is worded as follows :
16. On the other hand, when the seed is harvested in one Member State and processed in another Member State, reference is made to the exchange rates established in accordance with Article 33(3) and (4), and published in Annex III to the regulations fixing the amount of the subsidies. When these rates are fixed incorrectly, the subsidy obtained by the trader no longer corresponds to the difference between the target price and the world market price, and Article 27(1) of the basic regulation is infringed.
17. This is what happened in the present case, where the exchange rates set out in Annex III were not adopted in accordance with the requirements of Article 33 of Regulation No 2681/83.
18. As the Commission points out,
19. The Commission adds that, for a firm such as Cargill, that difference must have been almost equivalent to the cost of processing the seed in question. Annex III to Regulation No 735/85 was therefore unlawful and its application would consequently have led to subsidies which were themselves illegal.
20. However, Cargill also claims that even if Regulation No 735/85 was invalid, that would be of no consequence in the proceedings before the national court, since a public authority (here, the Produktschap) may not rely on the invalidity of rules which it has adopted itself or, where appropriate, of rules which are applicable to it, as against a person who is asking the authority to comply with those rules. That line of reasoning obviously cannot be accepted, since a regulation is necessarily invalid erga omties.
21. As far as the second question submitted by the College van Beroep is concerned, therefore, I have come to the conclusion that Annex III to Regulation No 735/85 is invalid and that it cannot therefore constitute a basis for granting the subsidy applied for by the plaintiff, which would in fact have involved the use of the exchange rates set out in that annex.
22. Having described the magnitude of the error, I now wish to proceed further along that path and examine whether Cargill must necessarily have been aware of that error or whether, on the other hand, it was entitled to rely on the figures set out in Annex III.
23. In that regard, it is appropriate to point out that, in Annex III to the regulation which had immediately preceded Regulation No 735/85, namely Regulation No 672/85 (Official Journal 1985 L 74, p. 79), the spot rate for the French franc in relation to the ECU had been fixed at 6,799470. The difference between this rate and the incorrect rate set out in Regulation No 735/85, namely 6,025450, could only be explained if, in the meantime, the French franc had been devalued by approximately 11%. That would have been a competitive devaluation, much greater than all those which had occurred in the course of previous monetary movements. All the agents of Cargill responsible for making purchases and sales must have known that there had been no such devaluation of the French franc, or even a lesser devaluation, since the previous week. It could thus not have escaped them that Annex III to Regulation No 735/85 contained significant errors, and that its application must necessarily have led to the grant of amounts of the subsidy which were incompatible with the criteria laid down by the Community rules relating to that sector. Furthermore, the Commission stated that the representatives of several firms, including an employee of Cargill-Amsterdam, had telephoned to point out the errors and to ask it what action it was proposing to take. In view of the situation, certain other firms seem to have refrained from applying for an advance-fixing certificate on 22 March 1985 and those which did apply appear not to have instituted proceedings when they failed to receive one.
24. Cargill, for its part, submitted applications for advance fixing of the subsidy in respect of 10000 tonnes of sunflower seed. It claims to have concluded, on that same day, not only contracts of purchase, but also contracts of sale covering some 10700 tonnes.
25. In my view, it follows from the foregoing that the serious defects in Annex III were so obvious to any trader as to rule out the possibility that any company could have been led to rely on the lawfulness of that measure.
26. In addition, every commercial company must have known that the submission of an application for an advance-fixing certificate does not of itself confer the right to the subsidy: that right arises only upon the issue of the certificate. Furthermore, the rules expressly provide for the possibility of suspending advance fixing. Thus, no prudent, sensible trader will conclude contracts of purchase or sale before actually obtaining the advance-fixing certificate applied for. He will refrain from doing so a fortiori where the published rates for the ECU are indicative of a massive devaluation when none has been reported.
27. Cargill further contends, in paragraph 27 of its reply in Case C-248/89, that
28. In that regard, in must be borne in mind that according to the case-law traders must not rely on certain documents, such as the customs tariff manual in use in Germany, which are published in certain Member States, but are supposed to verify the information set out therein by comparing it with that in the Official Journal.
29. Moreover, the document annexed to Cargill's reply shows not only the net amounts of the subsidies mentioned above relating to seed purchased in France and processed in the Netherlands, but also, in a separate table, the incorrect rates of the ECU as set out in Annex III to Regulation No 735/85. On establishing that the net amounts of the subsidy in HFL for certain seeds were surprisingly high, therefore, Cargill was in a position to determine, even by consulting the Dutch publication alone, that those amounts could be explained only by the incorrect exchange rates, which were also set out.
30. It is thus quite clear that in these cases Cargill may not rely on the principles of legal certainty and protection of legitimate expectations.
The validity of Regulation No 1358/89
31. In its the direct action, Cargill seeks the annulment of Regulation No 1358/89. Furthermore, the first question submitted by the College van Beroep is worded as follows :
32. Cargill puts forward three submissions challenging the validity of that regulation, namely infringement of Article 8 of Regulation No 1594/83, misuse of powers and infringement of the principles of legal certainty and protection of legitimate expectations.
Infringement of Article 8 of Regulation No 1594/83
33. So far as concerns the arguments put forward by Cargill in support of this allegation, I would refer to the Report for the Hearing relating to the reference for a preliminary ruling (Case C-365/89, II, Question 1, paragraph 1).
34. Cargill's main argument is that, since the amendment of Article 8 in 1986, when the passage concerning the alteration of the subsidy was repealed, the only remedy available to the Commission when it makes a material error in the amounts of the subsidies which it publishes is the suspension of advance fixing. According to Cargill, the Commission is not justified in adjusting the amounts of the subsidies in any circumstances.
35. It should first of all be borne in mind that the first two paragraphs of the new version of Article 8 are worded as follows:
36. Accordingly, it follows from that provision that, if there is a material error in the amount of the subsidy and if certain other conditions are satisfied, suspension of advance fixing may be extended to certificates applied for and not yet issued. Does this also mean that the Commission is never entitled to rectify a material error, in particular when the error does not concern the amount of the subsidy as such, but the exchange rates of the ECU published in Annex III?
37. I do not think so. Let me point out first of all that the three tables annexed to the regulation at issue contain a column headed Current month which establishes the subsidy to be granted or the exchange rate of the ECU to be used on that same day, that is in cases where no advance fixing is applied for. The suspension of advance fixing cannot in any circumstances compensate for the adverse consequences arising from an error affecting the columns headed Current month.
38. On the other hand, an institution always has the power to amend one of its measures in compliance with the principle of parallel procedures, as the Commission has done in this case. Regulation No 1358/89 is not in any way based on Article 8 of Regulation No 1594/83; it is based on the same provisions as those on which Regulation No 735/85, which fell to be rectified, was based. A problem arises only where such an amendment has a retroactive effect: in that case, the legitimate expectations of those concerned must be fulfilled, provided that they are capable of being relied upon. As we have seen, that is not so in the present case.
39. Accordingly, the argument concerning the infringement of Article 8 of Regulation No 1594/83 cannot be upheld.
Misuse of powers
40. In the second place, Cargill charges the Commission with seeking to maintain, by adopting Regulation No 1358/89, the legal situation which it had created by Regulation No 756/85. In its view, there is absolutely no basis on which the Commission can now attain, by other means, the same result as that which it had sought to attain by the regulation suspending advance fixing, which was declared invalid. The conduct of the Commission thus constitutes nothing other than an attempt to deprive the judgment of the Court in Case 201/87 of its effectiveness; hence the Commission is guilty of a misuse of powers, as a result of which Regulation No 1358/89 is null and void.
41. In its recent judgment in Case C-331/88 Fedesa [1990] ECR I-4023), the Court recalled the definition of a misuse of powers :
42. Let us consider, in the first place, whether the ends pursued by Regulation No 1358/89 are different from those stated.
43. The ends stated are those set down in the preamble to that regulation, where the reasoning is essentially as follows: a substantive error in the conversion rates for the ECU, contained in Annex III to Regulation No 735/85, would have led to the granting to certain traders of excessively high subsidies; in order to prevent that improper and discriminatory advantage, the Commission adopted the following day Regulation No 756/85 suspending advance fixing and Regulation No 755/85 fixing the correct conversion rates; as the latter regulation did not enter into force until 23 March 1985, and as Regulation No 756/85 was annulled by the Court, it was necessary to re-establish the correct conversion rates for applications lodged on 22 March 1985, once again in order to prevent certain traders from obtaining an unwarranted subsidy.
44. Cargill has not disputed in any way whatsoever that those were the grounds which led the Commission to adopt Regulation No 1358/89. In other words, there was no difference between the ends stated and the ends actually pursued.
45. The question remains whether the Commission sought to evade a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case or, in the present case, a procedure specifically prescribed by the regulations applicable in that sector. In that regard, there is no doubt that the Commission sought to attain, by altering the exchange rates of the ECU, the same end as that which it had pursued by the suspension of advance fixing, namely preventing traders from being able to obtain a higher subsidy than that to which they were entitled.
46. However, it is untrue to say that in so doing it deprived the judgment of the Court in Case 201/87 of its effectiveness. In that judgment, the Court criticized only the measure suspending advance fixing. That measure is and remains null and void. On the other hand, the Court did not rule on the validity or otherwise of Regulation No 735/85, because that question had not been raised by the national court. The Commission was thus entitled to consider that regulation as (in part) invalid and to make use of the second means available to it, namely amendment of the measure with retroactive effect or withdrawal of part of the measure and replacement thereof, in order to remedy the defect.
47. As I have already pointed out, any institution is always entitled to amend one of its acts, in complicance with the principle of parallel procedures, and to rectify the act with retroactive effect while taking care not to frustrate the legitimate expectations of those concerned.
48. The Commission could, moreover, have given Regulation No 755/85 of 22 March 1985, which rectified Annex III as from 23 March 1985, retroactive effect by one day. The reason why it did not do so remains a mystery. At all events, the fact that it first made use of the possibility of suspending advance fixing did not deprive it of the right to correct the error. By availing itself of the second possibility after the first had proved to be ineffectual, following the Court's judgment, the Commission did not evade a procedure, but simply had recourse to another means available to it for the attainment of a lawful purpose.
49. That brings me to the conclusion that the allegation of a misuse of powers must be rejected.
Infringement of the principle of legal certainty
50. Cargill also disputes the validity of the regulation on the ground that, by taking effect retroactively, it infringes the principle of legal certainty.
51. In that regard, it should be borne in mind that the Court has consistently held that
52. In those circumstances, however,
53. In the preamble to Regulation No 1358/89, the Commission specifically indicated the reasons which led it to confer retroactive effect on that regulation. Those reasons, namely the need to prevent the grant of an improper advantage, are entirely convincing.
54. As for the second condition laid down by the Court in the aforesaid case-law, namely fulfilment of the legitimate expectations of those concerned, I have already explained, above, the reasons for which I consider that Cargill cannot have considered in good faith that the figures set out in Annex III to Regulation No 735/85 were correct.
55. There are also grounds for taking the view, as the Commission does, that the case-law of the Court which is applicable in the instant case is that concerning the withdrawal of measures, even though that case-law concerns the withdrawal of administrative measures (which are of individual application), and not the withdrawal of measures of general application. It follows that
56. I would remind the Court that I have already come to the conclusion that Annex III to Regulation No 735/85 is invalid. Accordingly, we are indeed dealing with the withdrawal of an unlawful measure.
57. Cargill asserts that, by not withdrawing the regulation until four years after it was adopted, the Commission has failed to comply with the criterion of a reasonable period.
58. However, the Commission had at once adopted a measure to suspend advance fixing in order to prevent traders from being able to exploit the improper advantage which might have arisen from the incorrect exchange rates. It stated, rightly to my mind, that the need for it to take further action arose only after the judgment of the Court in the first Cargill Case 201/87. It had, first of all, taken account of the possibility, indirectly suggested by the Court moreover, that the Netherlands court might submit a further question for a preliminary ruling, this time on the validity of Regulation No 735/85. Since a second reference on that point was not made forthwith, the Commission itself drew the appropriate conclusions from the judgment declaring that the regulation suspending advance fixing was invalid, and from the error made in connection with the adoption of Regulation No 735/85, by adopting Regulation No 1358/89 on 18 May 1989. In the light of those circumstances, I am of the opinion that the period to be taken into consideration is not that which elapsed between Regulations No 735/85 and No 1358/89, but the period of slightly less than three months — and therefore of an entirely reasonable duration — separating the adoption of the latter regulation from the judgment of the Court.
59. Finally, a word concerning Cargill's argument according to which the Commission was wrong to refer, in the final recital in the preamble to the regulation at issue, to the need to prevent traders whose applications for advance-fixing certificates for the subsidy had been suspended pursuant to Regulation No 756/85 from being able to obtain a subsidy which was unwarranted and discriminatory with respect to the other operators.
60. Cargill points out that other traders, who did not apply for advance fixing, were able to obtain the subsidy of the day fixed in Annex III to Regulation No 735/85 (Current month column of that annex) and that it is Cargill itself which would be discriminated against with respect to them if that regulation were not applied to it.
61. There is a possibility, in theory, that certain traders may have been able to obtain an unwarranted subsidy of the day, raising the question of the recovery of undue payments. However, those do not constitute sufficient grounds for extending the same improper advantage to a firm which had applied for advance fixing in respect of the relatively large quantity of 10000 tonnes. The Commission has emphasized, moreover — without being contradicted— that the subsidy for oil seeds is usually applied for by means of advance fixing.
62. The Commission has also explained that the relevant passage in the final recital in the preamble was intended to refer to traders who had refrained from applying for an advance-fixing certificate on March 22 1985 and had postponed their applications until the following day because of the errors contained in Regulation No 735/85. Those, to my mind, constitute sufficient grounds for concluding that that passage in the preamble to the regulation is not vitiated by a manifest error.
63. For all the reasons set out above, I have arrived at the following conclusions:
The ancillary claims brought before the national court
64. Since, in the proceedings before the national court, Cargill applied for damages together with default interest, the national court has submitted a third question, in two parts, on whether it is for the Court of Justice or the national court to adjudicate on those claims.
65. Both of those questions, however, are based on the assumption that Regulation No 1358/89 must be considered invalid. I have just proposed that the Court should come to the opposite conclusion, and I can scarcely imagine the Court doing otherwise.
66. I shall therefore refrain from adopting a position on those questions, while endorsing, in the alternative, the observations submitted in that regard by the Commission.
Conclusions
67. In the light of all the foregoing considerations, I propose that with regard to Case C-248/89, the Court dismiss the application for this annulment of Commission Regulation (EEC) No 1358/89 of 18 May 1989, and order the applicant to pay the costs.
68. In Case C-365/89, I propose that the Court answer the questions submitted by the College van Beroep voor het Bedrijfsleven as follows:
1 Original language: French
2 Commission Regulation (EEC) No 735/85 of 21 March 1985 fixing the amount of the subsidy on oil seeds (OJ 1985 L 80, p. 18)
3 Commission Regulation (EEC) No 756/85 of 22 March 1985 suspending advance fixing of the subsidy for colza, rape and sunflower seed (OJ 1985 L 81, p. 38)
4 Commission Regulation (EEC) No 1594/83 of 14 June 1983 on the subsidy for oil seeds (OJ 1983 L 163, p 44).
5 OJ English Special Fdition 1966. p 221
6 Paragraph 9 of the defence in Case C-248/89.
7 OJ 1985 C 76, p. 1, and C 77, p. 1.
8 Judgment of the Court in Case 161/88 Binder v Hauptzollamt Bad Reicbenball [1989] ECR 2415.
9 Council Regulation (EEC) No 935/86 of 25 March 1986 amending Regulation (EEC) No 1594/83 on the subsidy for oil seeds (OJ 1986 L 87, p 5, and Corrigendum published in OJ 1988 L 181, p 51)
10 Commission Regulation (EEC) No 755/85 of 22 March 1985 fixing the amount of the subsidy on oil seeds (OJ 1985 L 81, p 36)
11 Judgments in Case 98/78 Racke v Hauptzollamt Mainz [1979] ECR 69 at 86 and Case 99/78 Decker v Hauptzollamt Landau [1979] ECR 101 at 111; judgment in Joined Cases 212/80 to 217/80 Amministrazione delle Finanze dello Stalo v Salumi [1981] ECR 2735 at 2751; judgment in Case 84/81 Staple Dairy Products v Intervention Board [1982] ECR 1763 at 1777; judgments in Case 108/81 Amylum v Council [1982] ECR 3107 at 3130, Case 110/81 Roquette Frères v Council [1982] 3159 at 3178 and Case 114/81 Tunnel Refineries v Council [1982] ECR 3189 at 3206; judgment in Case 224/82 Meiko-Konservenfabrik v Germany [1983] ECR 2539 at 2548.
12 Order in Case 1/84 R Ilford v Commission [1984] ECR 423 at 431.
13 Judgment in Case 14/81 Alpha Steel v Commission [1982] ECR 749 at 964