Judgment of the Court (Sixth Chamber) 20 June 1991

In Case C-248/89,

THE COURT (Sixth Chamber), composed of: G. F. Mancini, President of the Chamber, T. F. O'Higgins, M. Diez de Velasco, C. N. Kakouris and F. A. Schockweiler, Judges, Advocate General: J. Mischo, Registrar: J. A. Pompe, Deputy Registrar,

having regard to the Report for the Hearing,

after hearing oral argument presented by the parties at the hearing on 7 February 1991,

after hearing the Opinion of the Advocate General at the sitting on 21 March 1991,

gives the following

Judgment

Infringement of Article 8 of Regulation No 1594/83

Infringement of the principles of legal certainty and protection of legitimate expectations

Misuse of powers

Costs

1. By an application lodged at the Court Registry on 7 August 1989, Cargill BV, a company incorporated under Netherlands law, whose registered office is in Amsterdam, has brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of Commission Regulation No 1358/89 of 18 May 1989 amending Commission Regulation No 735/85 of 21 March 1985 fixing the amount of the subsidy on oil seeds.

2. In application of Article 27 of Regulation No 136/66/EEC of the Council of 22 September 1966 on the establishment of a common organization of the market in oils and fats (Official Journal, English Special Edition 1966, p. 221), which provides for a subsidy to be granted for oil seed harvested and processed within the Community, the Commission adopted Regulation (EEC) No 735/85 of 21 March 1985 fixing the amount of the subsidy on oil seeds (Official Journal 1985 L 80, p. 18), whereby it fixed the amounts of aid and the corresponding exchange rates for the ECU to be applied as from 22 March 1985.

3. On 22 March 1985 Cargill purchased 10000 tonnes of sunflower seed in France; on the same day, it submitted applications for advance fixing of the subsidy for processing those products to the competent Netherlands intervention agency. Pursuant to the second paragraph of Article 5 of Council Regulation (EEC) No 1594/83 of 14 June 1983 on the subsidy for oil seeds (Official Journal 1983 L 163, p. 44), the certificates relating to the subsidy applied for should have been issued no later than on the afternoon of23 March 1985.

4. After finding an error in Regulation No 735/85 regarding the exchange rates to be used for converting final aid into the currency of the processing Member State where that State is not the country of production, an error leading to the grant of a higher subsidy than that laid down by Article 27 of Regulation No 136/66, the Commission, on the basis of Article 8 of Regulation 1594/83, adopted Regulation (EEC) No 756/85 of 22 March 1985 (Official Journal 1985 L 81, p. 38), whereby it suspended advance fixing of the subsidy for sunflower seed in the case of certificates the application for which had been lodged on 22 March 1985.

5. On the same day the Commission adopted Regulation (EEC) No 755/85 (Official Journal 1985 L 81, p. 36), by which it re-established the correct amount of the subsidy with effect from the following day.

6. By decision of 25 March 1985, the Produktschap, the Netherlands intervention agency, dismissed the applications for advance-fixing certificates submitted by Cargill on the ground that advance fixing had been suspended.

7. In appeal proceedings against that decision, the national court referred to the Court for a preliminary ruling two questions on the validity of Regulation No 756/85 and on the consequences of its possible invalidity.

8. By judgment of 28 February 1989 (in Case 201/87 [(1989] ECR 489), the Court ruled as follows: Having regard to Article 8(1) of Council Regulation No 1594/83, Commission Regulation No 756/85 is invalid. So long as Commission Regulation No 735/85 has not been declared to be invalid, the invalidity of Commission Regulation No 756/85 means that the Produktschap must issue to Cargill BV with retroactive effect the advance-fixing certificates applied for on 22 March 1985 and pay it the subsidy in the sum fixed by Commission Regulation No 735/85.

9. Following that judgment, the Commission adopted Regulation No 1358/89. That regulation, which forms the subject-matter of the present application, corrects, with retroactive effect, the exchange rates for the ECU contained in Annex III to Regulation No 735/85 in respect of applications for advance fixing lodged on 22 March 1985.

10. Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

11. In support of its claims, Cargill puts forward three submissions alleging infringement of Article 8 of Regulation No 1594/83, infringement of the principles of legal certainty and protection of legitimate expectations, and misuse of powers.

12. According to the applicant, it follows from Article 8 of Regulation No 1594/83, as amended by Council Regulation (EEC) No 935/86 of 25 March 1986 (Official Journal 1986 L 87, p. 5), that the only measure that the Commission may take when it makes a material error in fixing the amounts of the subsidy at issue is to suspend advance fixing of the subsidy, and that the Commission does not have the power in any circumstances to adjust or alter those amounts.

13. Article 8(1) and (2) of Regulation No 1594/83, as amended by Regulation No 935/86, which was applicable when Regulation No 1358/89 was adopted, provides as follows:

14. According to those provisions, advance fixing in the case of certificates applied for and not yet issued may in certain circumstances be suspended. However, that article does not operate to prevent an error from being corrected with retroactive effect.

15. It follows that the mere fact that the Commission corrects an error concerning the rate for conversion of the subsidy provided for in Article 27 of Regulation No 136/66 into the currency of the processing country does not constitute an infringement of Article 8 of Regulation No 1594/83.

16. The submission alleging infringement of Article 8 of Regulation No 1594/83 must therefore be rejected.

17. By this submission, the applicant claims that, since the advance-fixing machinery is intended to create legal certainty for traders, the clearest expression of this being the exhaustive list in Article 8 of Regulation No 1594/83 of the circumstances in which it is possible to suspend advance fixing of the subsidy or to alter the amounts thereof, the alteration of those amounts with retroactive effect, by means of the contested regulation, constitutes a particularly serious infringement of the principles of legal certainty and protection of legitimate expectations in the light of the judgment of the Court in Case 201/87.

18. First of all, it must be borne in mind that, according to Article 27(1) of Regulation No 136/66,

19. It must also be pointed out that, so far as the rate for converting the ECU into French francs is concerned, it is common ground that Regulation No 735/85 contained an error of more than 10% compared with the rate published on 21 and 22 March in the C Series of the Official Journal of the European Communities, and that this error itself led to the incorrect fixing of the amount of the final aid, thereby vitiating the legality of that regulation.

20. While it must be acknowledged that any Community institution which establishes that a measure which it has just adopted is tainted with illegality has the right to withdraw it within a reasonable period, with retroactive effect, that right may be restricted by the need to fulfil the legitimate expectations of a beneficiary of the measure, who has been led to rely on the lawfulness thereof (see the judgment in Case 14/81 Alpha Steel v Commission [(1982] ECR 749).

21. Accordingly, it is necessary to examine whether, in the present case, the Commission has complied with those requirements.

22. So far as concerns the manner in which the Commission has discharged its duty to ensure fulfilment of any expectation which the persons concerned might have had that Regulation No 735/85 was lawful, it is appropriate to point out that the error contained in that measure was so obvious that several traders already contacted the Commission on 22 March 1985, the very day on which the regulation was published, in order to bring the error to its attention and to ascertain what steps it intended to take. In those circumstances, a prudent trader could not have been led to rely on the lawfulness of a measure containing an error of that kind.

23. Next, it must be borne in mind that the contested regulation was adopted less than three months after the judgment given in Case 201/87 had revealed the need to adopt a measure withdrawing a manifestly unlawful act, on the validity of which the Court had not had the opportunity to adjudicate. The conclusion must be drawn that the contested regulation was adopted within a reasonable period.

24. Accordingly, the submission alleging infringement of the principles of legal certainty and protection of legitimate expectations must be rejected.

25. According to the applicant, by adopting the contested regulation the Commission is seeking to achieve the same legal effects as those flowing from Regulation No 756/85, which has already been declared invalid by the Court in its judgment in Case 201/87, and thus to deprive that judgment of its effectiveness.

26. It should be pointed out, in that respect, that in its consistent case-law (see, most recently, the judgment in Case C-331/88 The Queen v Minister for Agriculture, Fisheries and Food, ex parte Fedesa [(1990] ECR I-4023), the Court defines misuse of powers as the adoption, by a Community institution, of a measure with the exclusive purpose, or at any rate the main purpose, of achieving an end other than that stated or evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case.

27. As regards the requirement that the end pursued must be identical to that stated, it must be emphasized that there is nothing in the documents before the Court to suggest that, by adopting the contested regulation, the Commission sought to achieve an end other than that stated in the preamble thereto, that is to re-establish the correct conversion rates applicable in the case of applications lodged on 22 March 1985, in order to prevent certain traders from obtaining an unwarranted subsidy.

28. As for the requirement that a procedure specifically prescribed by the Treaty may not be evaded, it must be pointed out that, while it is true that by adopting the contested regulation the Commission pursued the same end as that which it had sought to achieve by suspending advance fixing, it does not follow that in so doing the Commission intended to deprive the judgment of the Court in Case 201/87 of its effectiveness.

29. It is clear that, in that judgment, the Court ruled only on the legality of the suspension measure, while leaving open the question of the possible invalidity of Regulation No 735/85. Thus the Commission was entitled, subject to compliance with the principles of legal certainty and protection of legitimate expectations, to adopt a measure withdrawing an act unconnected with the proceedings instituted before the Court.

30. Accordingly, the submission alleging misuse of powers must be rejected.

31. Since none of the submissions relied upon by the applicant has been upheld, the application must be dismissed.

32. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. As the applicant has been unsuccessful in its submissions, it must be ordered to pay the costs.

On those grounds, THE COURT (Sixth Chamber) hereby:

(1) Dismisses the application;

(2) Orders the applicant to pay the costs.

1 Language of the case: Dutch.