Report for the Hearing in Case C-55/90

I — Facts and procedure

1. Legal background to the proceedings

By Directive 83/515/EEC of 4 October 1983 concerning certain measures to adjust capacity in the fisheries sector (OJ 1983 L 290, p. 15, hereinafter the Directive), the Council authorized the Member States to introduce a system of financial aid, with Community contributions, for measures relating to the temporary or permanent reduction of production capacity in the fisheries sector in order to assist the adjustment of such production capacity to the new catch possibilities (Article 1).

Under Article 2 of the Directive, such financial aid may be granted to producers, whether natural or legal persons, operating one or more vessels flying the flag of one of the Member States and registered in the territory of the Community. The measures to reduce production capacity permanently are dealt with in Article 5, which is worded as follows:

Articles 6 and 7 of the Directive provide for a system by which the Member States can inform the Commission of measures to reduce fishing capacity and by which the Commission can carry out an examination of the measures proposed. The Member States are required, inter alia, to submit to the Commission a forward plan of each measure proposed, a forecast of estimated annual expenditure and drafts of any laws, regulations or administrative provisions which they propose to adopt in implementation of the Directive (Article 6(1]. In the light of this information, the Commission determines whether, on the basis of its conformity with the Directive and account being taken of the other structural measures existing or anticipated in the fisheries sector, the measures contemplated fulfil the conditions for financial contributions from the Community. Within two months of the communication of this information, a decision on the matter is taken in accordance with the procedure of the Management Committees, which provides for consultation with the Standing Committee for the Fishing Industry (Article 7(1]. The Member States are required to communicate to the Commission the laws, regulations and administrative provisions adopted following this decision as soon as they are adopted (Article 7(2].

Under Article 8, the Community's financial contribution to the aids granted by the Member States is subject to a decision taken in accordance with Article 7(1) on the national provisions governing them.

Finally, Article 12 points out that Articles 92, 93 and 94 of the EEC Treaty shall apply, in the field covered by the Directive, to national aid other than that provided for in the Directive itself.

The Directive has in the meantime been replaced by Council Regulation (EEC) No 4028/86 of 18 December 1986 on Community measures to improve and adapt structures in the fisheries and aquaculture sector (OJ 1986 L 376, p. 7).

On 15 November 1983, the United Kingdom submitted to the Commission the draft measures which it intended to adopt for the purposes of implementing the Directive. In Article 1 of Decision 84/17/EEC of 22 December 1983 concerning the implementation by the United Kingdom of certain measures to adjust capacity in the fisheries sector pursuant to Council Directive 83/515/EEC (OJ 1984 L 18, p. 39, hereinafter the Decision), adopted after consultation with the Standing Committee for the Fishing Industry and addressed to the United Kingdom, the Commission expressed the view that

On 19 December 1983, the United Kingdom adopted the Fishing Vessels (Financial Assistance) Scheme 1983 (hereinafter the United Kingdom Scheme) (S. I. 1983 No 1883), which entered into force on 21 December 1983. Part III of this text deals with decommissioning grants and includes the following provisions:

2. The facts

Mr James Joseph Cato, a fisherman, purchased the vessel Excelsior in 1983. Being of the opinion that his fishing activities were not profitable, he decided in 1984 to sell the vessel for £8500 to Mr and Mrs Hann, who intended to use it as a houseboat. Relying on information supplied by the local authorities representing the Minister of Agriculture, Fisheries and Food (hereinafter the Minister), Mr Cato expected to qualify for a decommissioning grant, the amount of which, calculated on the basis of information contained in a tonnage certificate drawn up for that purpose, was set at £22 144.

The contract of sale was signed on 1 August 1984. In the contract, the purchasers stated that they were aware that the vendor had applied for a decommissioning grant and that, should the vessel once more be used for fishing in Community waters under the flag of a Member State, the new owner of the vessel might be obliged to repay the amount of the grant. Mr Cato submitted his application for a decommissioning grant on 2 August. During the days which followed, he had the vessel struck off the register of fishing vessels.

Mr and Mrs Hann were forced to change their plans, and on 14 October 1984 they resold the vessel to two Irish nationals, Messrs Murphy and Boyle, who expressed an interest in the vessel's engine and in selling the hull as scrap. Messrs Murphy and Boyle declared in the contract of sale that they were aware that the Excelsior was to receive a decommissioning grant and that they might be required to repay the amount of that grant if the vessel was once again used for fishing within Community waters.

Mr Boyle, however, subsequently requested the Irish authorities to register the Excelsior as a fishing vessel. The Irish authorities were informed by their British counterparts that the previous owner of the vessel had applied for a decommissioning grant but that such grant had not been paid, and they proceeded to register the vessel and grant it a fishing licence. In the light of these developments, the British Minister, who had expected to receive proof of the use to which the vessel had been put, informed Mr Cato on 25 February 1985 of the decision to turn down his application for a grant.

Mr Cato applied on 21 December 1985 for leave to appeal against this decision, but this was refused by the High Court on the grounds, first, that the application had been made after the expiry of the legal time-limit of three months which started to run from the date of the letter of 25 February 1985 and, secondly, that the applicant was not entitled to the grant as the relevant minister was not satisfied that the vessel had been permanently withdrawn from fishing in Community waters. The High Court could have extended the three month period if it had thought that the views put forward by Mr Cato were in any way meritorious.

On 29 October 1986, Mr Cato brought a second action against the Minister in the High Court, this time one based on private law. This action was founded on the Minister's contractual liability, negligent misrepresentation on his part and estoppel based on the assurances which Mr Cato had been given with regard to payment of the grant. The High Court, by a judgment of 27 May 1988, dismissed his action.

The Court of Appeal affirmed that decision in a judgment of 15 June 1989. The Court allowed Mr Cato to rely on a new submission to the effect that the Minister had acted in breach of the United Kingdom Scheme, as that Scheme ought to have been interpreted in order to attain the objectives set out in the Directive; however, it took the view that this submission also lacked any basis. In particular, it took the view that Mr Cato had failed to prove that he was entitled to rely on any right under private law, and not merely an expectation subject to the discretionary decision of the Minister which was covered by public law. On 24 January 1990, the House of Lords refused leave to appeal.

It is not disputed that Mr Cato expected to receive the decommissioning grant relating to the Excelsior and purchased a house in Kent by way of mortgage. As the grant was not paid, Mr Cato found himself unable to repay the mortgage loan and, by an order of the Thanet County Court delivered around September 1986, he was ordered to vacate possession of his house and surrender it to the mortgagee. Mr Cato also alleges that he has experienced additional losses since this date and that he has suffered grave emotional anguish.

3. Procedure

Mr Cato's application was lodged at the Court Registry on 7 March 1990 and registered on 8 March 1990. By an order of 12 July 1990, made pursuant to Article 76 of the Rules of Procedure, the Second Chamber granted the applicant legal aid.

By an order of 4 July 1990, the Court granted leave to the United Kingdom of Great Britain and Northern Ireland to intervene in support of the defendant's conclusions.

The remainder of the written procedure proceeded normally. Upon 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. By a decision of 16 January 1991, pursuant to Article 95 of the Rules of Procedure, the Court assigned the case to the Sixth Chamber.

Following the hearing on 30 April 1991 and after hearing the Opinion of the Advocate General on 18 June 1991, the Sixth Chamber, by decision of 26 September 1991 adopted pursuant to Article 95(3) of the Rules of Procedure, referred the case back to the Court.

By order of 15 October 1991 the Court, pursuant to Article 60 of its Rules of Procedure, ordered the reopening of the oral procedure in the case.

II — Conclusions of the parties

The applicant, Mr Cato, claims that the Court should:

The defendant, the Commission of the European Communities, contends that the Court should dismiss the application and order the applicant to pay the costs.

The intervener, the United Kingdom of Great Britain and Northern Ireland, claims that the Court should dismiss the application and order the applicant to pay the costs, including those of the intervention.

III — Summary of the submissions and arguments of the parties

1. Admissibility

Mr Cato deals solely with the question of time-limits within which actions must be brought. He refers to Article 43 of the Protocol on the Statute of the Court of Justice of the European Economic Community which fixes at five years the period within which proceedings must be brought under Article 178 of the Treaty, a period extended by 10 days in the case of parties resident in the United Kingdom by virtue of Annex II to the Rules of Procedure. This period cannot begin to run before all the requirements governing an obligation to provide compensation for damage have been satisfied and in particular before the damage to be made good has materialized. In its judgment of 27 January 1982 in Joined Cases 256, 257, 265 and 267/80 and 5/81 Birra Wührer and Others v Council and Commission [1982] ECR 85, the Court ruled that, where the liability derives from a legislative measure, the period cannot begin to run before the injurious effects of the measure have been produced.

In the present case, the damage materialized either:

The United Kingdom takes the view that the application is inadmissible. In the first place, it believes that the application is in reality an attack on the validity of an individual decision taken by the United Kingdom authorities pursuant to national legislation implementing provisions of the Common Fisheries Policy, which forms part of the Common Agricultural Policy. Actions of this kind are judged inadmissible by the Court, which takes the view that they ought to be brought before national courts O'udgment of 12 December 1979 in Case 12/79 Wagner v Commission [1979] ECR 3657).

Secondly, there is in the present case no relevant connection between the individual decision taken by the national authorities and the Commission.

Thirdly, and finally, the essence of the claim for damages is the amount of the decommissioning grant requested by the applicant. In reality, therefore, the claim is one for payment of amounts allegedly due, which ought to be brought before national courts, as the Court of Justice held in its judgment of 27 March 1980 in Case 133/79 Sucrimex and Westzucker v Commission [1980] ECR 1299.

2. Substance

Mr Cato contends that, by the true construction of the Directive in the light of its objectives, a Member State which has introduced a scheme of final cessation premiums is obliged to pay such a premium if the conditions laid down by the Directive are satisfied, and to take the necessary measures to ensure that the vessel is permanently barred from fishing in Community waters. The scheme introduced by the Directive is clear, simple and fair. Since the applicant had complied with all the conditions set out in the Directive, he ought to have received the premium provided for under the United Kingdom Scheme.

That scheme, however, added an additional qualification, to the effect that it was up to the fishing vessel owner to satisfy the Minister that the vessel had been withdrawn from all operations within the sea fish catching industries of the Member States and that such withdrawal was permanent. If, as the English courts have held, the permanent nature of the withdrawal was to be judged retrospectively, it could never be ascertained if the vessel were to be sold. It should be noted that under English law a vendor may enforce by contract an obligation on the purchaser, but not on the purchaser's purchaser.

On the contrary, the Directive indicates that the obligation to guarantee the permanent nature of the withdrawal rests only on the Member State, not the owner, and arises only in respect of vessels for which a final cessation premium has been paid, there being no such obligation until the premium has been paid. It is easy for a Member State to ensure that the reduction in fishing capacity, which constitutes one of the objectives of the Directive, is permanent. When a Member State submits to the Commission the list of vessels which have been granted a premium, the Commission publishes the list in the Official Journal and sends circulars to the relevant authorities in the Member States. The Member States need then only institute an adequate system to ensure that this information is communicated to the keepers of registers of fishing vessels, and maintain an adequate system of penalties for cases of fishing from unregistered vessels.

Furthermore, although the owner who has complied with the conditions is entitled under the Directive to payment as of right, the United Kingdom Scheme confers on the Minister a discretion whether to pay the premium or not. This was confirmed by the judgment of the Court of Appeal, which took the view that such discretion could only in certain circumstances be circumscribed at the ultimate stage of the process and dismissed the opposite view taken by the applicant at that time.

The consequences of this interpretation are of significance both with regard to the subjective position of the owner of the vessel and with regard to the available means of redress, namely judicial review of the decision not to pay the premium, for which the time-limit is three months, rather than an action by way of writ, for which the time-limit is six years.

The applicant in the present case, who was one of those whom the Directive intended to encourage to withdraw his vessel from all fishing activities within the Community, did not receive the premium, even though he had satisfied all the conditions laid down in the Directive. After he had sold the vessel, he no longer had any further control over its use and there was no way in which he could ensure that it was not returned to fishing. On the other hand, if the United Kingdom authorities had paid the premium, the vessel could not lawfully have been used for fishing in Community waters, since no Member State would have been entitled to register it for that purpose. In fact, the Irish authorities, prior to issuing a new fishing licence, had checked with their British counterparts to ensure that no final cessation premium had been paid in respect of the Excelsior.

The applicant was thus lured into a trap which was wholly due to the differences between the system of the Directive and that of the United Kingdom Scheme. It was the duty of the Commission pursuant to Article 7 to ensure that such differences did not occur. The Commission itself admitted, in its reply of 14 August 1986 to a written question (No 308/86) from Mr Christopher Jackson, a Member of the European Parliament (OJ 1986 C 306, p. 26), that the United Kingdom Scheme was contrary to the Directive. The loss and damage suffered by the applicant was therefore caused by the non-contractual action of the Commission.

The Commission committed a sufficiently flagrant violation of the superior rules of law for the protection of individuals which are represented by the general principles of legal certainty and the protection of legitimate expectations (judgment of 14 May 1975 in Case 74/74 CNTA v Commission [1975] ECR 533). In the first place, the Commission, in its decision, expressly approved the United Kingdom Scheme, even though it did not comply with the Directive. As a result, a conflict arose between two Community measures, contrary to the principle of legal certainty. Secondly, the Commission contravened the legitimate expectation of the applicant, who had complied with the conditions laid down, had removed his vessel from the register of fishing vessels and had assigned it for use as a houseboat to a new owner, while all the time expecting that the premium would be paid to him. Finally, the Commission failed properly to exercise its powers of supervision over the acts of a Member State (judgment of 28 April 1971 in Case 4/69 Liitticke v Commission [1971] ECR 325).

Furthermore, the non-payment of the premium was not within the bounds of normal economic risk as the applicant had given up his livelihood when he sold the vessel.

As a result of the Commission approving the United Kingdom Scheme and/or failing to realize that it was not in accordance with the Directive, the applicant suffered loss and damage and the Court is empowered to award him compensation pursuant to Article 178 of the EEC Treaty. Unless the amount of the applicant's loss is accepted by the Commission, the applicant will ask the Court to give an interlocutory judgment so that the amount of the compensation can subsequently be dealt with.

The Commission fails to see how the damage suffered by Mr Cato can be laid at its door. It committed no act or omission in relation to Mr Cato's individual case and he, moreover, does not claim otherwise. The Commission's only involvement in the present case was its adoption of Decision 84/17 which approved the United Kingdom Scheme. The Commission believes, however, that the Scheme was entirely unobjectionable and that there is no basis for the view that it was at variance with the Directive. The Commission also points out, in limine, that the Court is not required at present to rule on the application of the Directive and the United Kingdom Scheme to Mr Cato's case.

In the first place, with regard to the permanent nature of the withdrawal of the vessel from fishing activities, the United Kingdom Scheme faithfully reflects the Directive, which clearly set out this condition in Article 5. It is necessary to reject the view that the obligation to ensure that withdrawal is permanent applies only in the case of those vessels in respect of which a final cessation premium has already been paid. It would be odd if it were open to a Member State to grant such a premium where the vessel concerned did not appear to have been permanently withdrawn from fishing within Community waters. Thus, the requirement as to permanence must be met both before and after the premium is paid. Furthermore, while a Member State is not entitled to delegate to the owner of the vessel its obligation to ensure that withdrawal is permanent, it is perfectly lawful for it to require the owner to assist it in this task.

Secondly, the Commission denies that the United Kingdom Scheme confers a discretion on the Minister. In this connection, the Court of Appeal took the view that the use of the word may in paragraph 26 of the United Kingdom Scheme had no such meaning. As for the word payable used in paragraph 18, it implies an obligation to pay and introduces no element of discretion. The remaining provisions of the United Kingdom Scheme are not of relevance to the present case and, in any event, they are not inconsistent with the Directive. Furthermore, the wording of the reply which the Commission made to the written question from Mr Jackson in no way suggests that the United Kingdom Scheme was at variance with the Directive.

Accordingly, there is no foundation to the applicant's assertion that the Commission failed properly to exercise its powers of supervision over the acts of a Member State. If the United Kingdom committed any unlawful act, this would only have been at the stage when the Scheme was being applied. The Commission would not have been involved at that stage and would not have been under any obligation to become so.

Finally, the Commission is not responsible for the fact that the applicant, having failed to commence proceedings for judicial review of the Minister's decision in good time, had to resort to private law remedies which have proved inadequate.

The United Kingdom takes the view that the implementation of the directive in its national law in no way infringed Community law and that it fully complied with the obligation as to results under Article 189 of the Treaty.

The applicant's arguments concerning the permanent nature of the withdrawal of the vessel from all fishing activity within Community waters arc based on a misunderstanding of the Directive. Permanent withdrawal is the whole basis of the Directive, as is made clear in particular by Articles 1 and 5, and the three methods of reducing fishing capacity mentioned in Article 5 are clearly intended to result in a permanent situation. As the applicant in the present case did not comply with all the conditions set out in the Directive, any payment of the decommissioning grant would have been not only contrary to the national Scheme, but would also have resulted in a breach of the Directive by the United Kingdom.

It is not an impracticable burden on an applicant to show that a vessel has been permanently withdrawn from all sea fish catching industries of the Member States; in the present case, proof that the vessel was being used for purposes of accommodation would have been sufficient, but such proof was not forthcoming. In any event, the burden referred to was an inherent element in the arrangements provided for by the Directive. In addition, entitlement to Community funds has to be strictly interpreted. Member States themselves have a special duty to protect Community funds and failure properly to do so may lead to Community disallowance of expenditure which they incur.

Contrary to the submission of the applicant, the United Kingdom Scheme did not go beyond the provisions of the Directive by giving the Minister a discretion. With regard to paragraph 26 of the Scheme, the Minister was entitled, in so far as permanent withdrawal was the basis for the whole Directive, to make approval of an application for a grant subject to proof that such withdrawal had indeed taken place. The Minister was entitled to be satisfied that the vessel had been permanently withdrawn from fishing and that the conditions imposed had been fulfilled. Finally, the question of whether the Minister would have been entitled to rely on the strict words of paragraph 26 in order to refuse to pay a decommissioning grant in circumstances where he was satisfied that all the conditions set out in the Scheme had been met does not arise in view of the circumstances of the present case. In fact, the Minister was never satisfied that those conditions had been fulfilled and the Court of Appeal considered that the facts supported such a decision.

In conclusion, both the decision of the Minister not to pay the grant and the whole Scheme itself were a proper implementation of the Directive and did not infringe Community law. Consequently, the Commission was not at fault and did not act unlawfully in approving the Scheme by Decision 84/17/EEC. In any event, there is an insufficient link between the individual decision of the Minister not to pay the grant and the Commission itself such as to render the Commission liable in damages. The Minister did not act on the specific instructions of the Commission, such as was the case in Krohn (judgment of 26 February 1986 in Case 175/84 Krohn v Commission [1986] ECR 753). Finally, the applicant had no legitimate expectation that a decommissioning grant would be paid to him. His application was approved by the Minister subject to a number of conditions, which, however, were ultimately not fulfilled.

1 Language of the case: English.