Opinion of Advocate General

Mr President,

Members of the Court,

1. One of the means of ensuring and improving the quality of wine consists in restricting the quantity of wine produced per hectare.

2. Those provisions led to the German Wine Law being amended in 1989 and 1990. Paragraph 2a of the Wine Law now provides:

3. The authorities of Rheinland-Pfalz fixed the permissible yield per hectare in accordance with the Wine Law. In 1990, Mr Kuhn, a wine-grower, applied for a control number for a certain quantity of wine, entitling him to market it as quality wine.

4. Mr Kuhn started proceedings before the Verwaltungsgericht (Administrative Court) Neustadt an der Weinstraße against the authorities for the purpose of obtaining a control number for the surplus quantity of wine.

5. The Administrative Court considers that doubts may be entertained regarding the compatibility of Paragraph 2a of the Wine Law with Article 11 of the Regulation; it therefore referred to the Court of Justice for a preliminary ruling a question asking whether Article 11 of the Regulation is to be construed in such a way that the scheme laid down in Paragraph 2a of the Wine Law is permissible.

6. It may appear somewhat surprising at first sight to assert that the incompatibility between Article 11 of the Regulation and Paragraph 2a of the Wine Law is such as to affect the outcome of the main proceedings. It seems that, in any event, those two sets of rules are in agreement as regards the issue contested by Mr Kuhn in the main proceedings, since the two sets of rules mean that surplus wine cannot be marketed as quality wine.

7. In its observations to the Court of Justice, the Commission stated that it considered that there was some degree of incompatibility between the Wine Law and the Community regulation, but it also emphasized that in this case that incompatibility could not render the German rules inapplicable as was claimed by Mr K and envisaged by the Administrative Court. Basically, the Commission considers that a finding that the German rules were inapplicable in this case would give Mr Kuhn an advantage which would itself be incompatible with Community law.

8. In spite of everything, Community law has come a long way. This case does not give the Court an opportunity, as has so often been the case in the past, to explain the principle of the precedence of Community law and the fundamental importance of observance of that principle by the national courts for the uniform and effective application of Community law in the Member States. The question submitted for a preliminary ruling would not have been raised had not the court of reference been aware of that principle and its consequences. On the other hand, this case gives the Court an opportunity to rule whether there are cases in which a party to proceedings before a national court may not rely upon a provision of a regulation to obtain a declaration that a conflicting domestic rule does not apply.

9. In my opinion therefore, the question submitted for a preliminary ruling presupposes that a decision is taken by way of introduction as to whether the relevant rule of Community law in this case is such that Mr Kuhn may rely upon it before the Administrative Court to support his contention that the refusal to grant him a control number is unlawful. In my view, the Court need only rule on the question referred to it if it considers that in this case Mr Kuhn may rely on the Regulation. However, a decision on that point presupposes a knowledge of the relevant rules and issues of law set out in the observations submitted to the Court as regards the alleged incompatibility between the Regulation and the German legislation. I shall therefore start by discussing them.

The fact that a permissible yield per hectare is also fixed for table wine in Germany

10. The Administrative Court rightly points out that under Paragraph 2a of the Wine Law, wines other than quality wines psr are covered by the obligation for the Land authorities to fix the permissible yield per hectare, whereas Article 11 of the Regulation merely provides that a permissible yield per hectare should be fixed for quality wines psr.

The calculation of permissible yield per hectare (cultivated areas as against uncultivated but cultivable areas)

11. Under Article 11(1) of the Regulation:

The penalty for exceeding the permissible yield per hectare

12. Article 11(2) reads as follows:

13. The Administrative Court points out that the Wine Law docs not provide that the Länder must fix a yield per hectare but merely the quantities which may be sold every year as quality wine and that, therefore, the scheme is first and foremost a marketing scheme. The Administrative Court adds thai, according lo the German rules, a wine-grower may produce as much as he wishes per hectare without his wine thereby losing the designation quality wine psr; and that thai is even true for the surplus quantity which may, in accordance with Paragraph 2a(3) of the Wine Law, be marketed as quality wine psr in the course of subsequent wine-growing years. It considers that the scheme laid down by the German rules is far removed from that fixed by Article 11(2) of the Regulation and that the penalty prescribed by the Regulation is much more severe than that prescribed by the Wine Law.

14. It is true that the German Government docs not deny that the two sets of rules to a certain extent prescribe different legal consequences for exceeding the permissible yield per hectare. However, it points out that the two sets of rules have fundamentally the same purpose, namely to restrict the production of quality wine psr in order to guarantee and improve its quality and to avoid disrupting the market and that in reality there is no essential difference between the effects of the respective penalties in restricting production. It points out in particular that under the Community rules nothing prevents a winegrower who exceeds the permissible yield per hectare from selling all his produce as table wine, whereas a German wine-grower who exceeds the permissible yield per hectare docs not have the option of selling the surplus wine as tabic wine. The government also contends that the option of using surplus wine in later wine-growing years by storing it is not very important in practice because of the limited possibilities for such storage. In those circumstances, it contends that the German scheme may be considered as covered by the possibility left open for Member Slates in accordance with Article 11(2) to provide for derogations on a general basis.

Production scheme as against marketing scheme

15. The Administrative Court is of the opinion that the German rules introduced a marketing scheme whereas the Regulation provides for a production scheme. In their observations submitted to the Court, Mr Kuhn and the Commission expressed their agreement on this point.

Restrictions on the possibility of enforcing the principle of the precedence of Community law in proceedings before the national courts

16. In the Simmenthal judgment, the Court gave its reasons for stating that the precedence of Community law was of fundamental importance. Indeed any recognition that national legislative measures which encroach upon the field within which the Community exercises its legislative power or which are otherwise incompatible with the provisions of Community law had any legal effect would amount to a corresponding denial of the effectiveness of obligations undertaken unconditionally and irrevocably by Member States pursuant to the Treaty and would thus imperil the very foundations of the Community. In the same judgment, the Court stressed the obligations of the national courts and their decisive role in that respect. Every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals and must accordingly set aside any provision of national law which may conflict with it, whether prior or subsequent to the Community rule. ... In accordance with the principle of the precedence of Community law, the relationship between provisions of the Treaty and directly applicable measures of the institutions on the one hand and the national law of the Member States on the other hand is such that those provisions and measures not only by their entry into force render automatically inapplicable any conflicting provision of current national law but... also preclude the valid adoption of new national legislative measures to the extent to which they would be incompatible with Community provisions.

17. The national courts' enforcement of the principle of precedence undoubtedly helps to a great extent to ensure — as Mr Kuhn has also emphasized — that the Member States observe their obligations under Community law. In the Van Cend en Loos judgment, the Court stressed the importance of the national courts in this respect. In particular, it stated:

18. It is however established that general authority to seek a declaration as to whether the Member States have fulfilled their obligations under Community law lies with the Commission and the Member States, which may bring proceedings before the Court of Justice under Articles 169 and 170 of the EEC Treaty.

19. Generally, individuals can rely only upon Community rules which have direct effect. The precise characteristic of such rules is that they may be relied upon before the national court and that that court is bound, in accordance with Community law, to take them into consideration in reaching its decision.

20. The Community rule which Mr Kuhn relies upon in the main proceedings is a provision of a regulation. Referring to Article 189 of the EEC Treaty, the Court established that, by reason of their nature and function in the system of the sources of Community law, regulations have direct effect and are, as such, capable of creating individual rights which national courts must protect. Of course, that docs not mean that every provision of a regulation is suitable, by virtue of its contents, to be relied upon as a source of rights for individuals. Regulations may include provisions which are directed solely at Member States and oblige them to adopt rules with a specific content and, as will be seen later, there may be provisions which, by virtue of their objective, do not seek to confer any right on individuals to rely on them for a declaration that a conflicting domestic rule is inapplicable.

21. Hence in this case the fact that the rule relied upon is contained in a regulation does not provide a clear answer to the question whether Mr Kuhn may rely upon that provision for a declaration that the national rule is inapplicable.

22. The characteristic feature of a situation such as this is that:

23. In a case such as this, the individual is relying upon a Community rule in order to create a right — namely, the right not to have to comply with an existing domestic rule which imposes obligations on him. However, the Community rule which he relies upon does not seek to create rights for him, but rather obligations. In such circumstances it may be asked whether the individual should have the right to rely upon the Community rule only if its content is such that it may be used by the national court as an alternative legal basis for positively determining the legal position of the person concerned.

24. In my opinion, the limit which may be needed in cases like this to individuals' opportunities for relying on Community rules is best shown by a requirement that individuals must have an interest protected by Community law to be able to rely on the rule.

25. It seems to me that the observations of the Commission and of the German Government are based on the same kind of reasoning. They emphasize the fact that an individual cannot rely upon a Community rule which imposes obligations on him in order to obtain a declaration that a domestic rule which also imposes obligations on him docs not apply, and thereby to create a legal vacuum which is incompatible with the objective of both rules.

26. I think the judgment of the Court in the Ratti case contains features expressing the same approach. Mr Ratti was prosecuted in Italy for marketing solvents in breach of Italian rules on the labelling of such goods. Mr Ratti claimed that the marketing had complied with the rules laid down in a Council directive which ought to have been implemented by Italy. In this respect, the Court stated, inter alia, that:

27. Before I consider whether, in the main proceedings, Mr Kuhn can rely on Article 11 of the Regulation, it may be useful to point out that in my opinion there would in practice be no appreciable restriction on the possibility of national courts' upholding the precedence of Community law, were individuals required to have an interest protected by Community law to rely upon Community rules in order to obtain a declaration that domestic rules do not apply. In the relatively few cases in which it must be actually questioned whether that requirement is met, the Court must lay down the precise content of that requirement in the light of the experience acquired in dealing with such cases.

28. In all normal cases national courts will continue to be able to deal with conflict between Community and domestic rules where they are in a position to establish that the conflict does exist on the basis of the Community rules in question. There will only be reason to consider whether an exemption applies in situations in which it is contrary to the purpose of the Community rule that a legal vacuum be created in such a way that the nationals of Member States are not subject to obligations which it is the common purpose of the Community rules and the domestic rules to impose on them.

Can Mr Kuhn rely on Article 11 of the Regulation to obtain a declaration that Paragraph 2a of the German Wine Law is inapplicable?

29. In my opinion, an application of the views mentioned above leads to the following results.

30. The alleged incompatibility between the German and Community rules in view of the fact that the German rule also provides for fixing a permissible yield per hectare for table wine and in addition permits account to be taken of uncultivated areas for the purposes of permissible yield per hectare is not in my opinion such that Mr Kuhn may rely upon it in the main proceedings in order to obtain a decision that Paragraph 2a of the Wine Law docs not apply as the legal basis for the administrative act rejecting his application for a control number. There arc at least two reasons for this.

31. The crux of the case undeniably lies in the alleged conflict between the rule on penalties in Article 11(2) of the Regulation and that in Paragraph 2a of the German Wine Law. Mr Kuhn's application for a control number was rejected on the basis of the rule on penalties in Paragraph 2a of the Wine Law.

32. As regards the penalty provided for in Article 11(2) of the Regulation, it is desirable to consider a matter which was not dealt with in the observations submitted to the Court. It should be considered whether the material provisions in Article 11(2) of the Regulation — that is to say prohibition of using the quality designation for the entire harvest if the permissible yield per hectare is exceeded — has direct effect. It must be considered whether it is for the national authorities and, therefore, also for the national courts to enforce that prohibition directly on the basis of the Regulation. It seems that the German administrative system enables such a prohibition to be imposed since failure to observe the rule on permissible yield per hectare may be penalized by a refusal to grant a control number, with the result that the wine cannot be marketed as quality wine.

33. It is not, however, certain that the penalty rule in Article 11(2) has direct effect. In that context it is important that the Commission has not contended that that provision has direct effect and there may be several reasons for that. That direct effect may possibly be excluded by the far-reaching option open to Member States to provide for derogations to the material content of Article 11(2). Confirmation of the absence of the direct effect of that provision may possibly also be found in the context in which it is set. Article 11(1) on the Member States' obligation to fix permissible yields per hectare does not meet the general requirements for the existence of direct effect in such a way that in itself it could form the basis of obligations for individuals, and most of the other provisions of the Regulation have a similar content, that is to say they lay down general obligations for Member States to create in specified areas a more or less clearly defined situation in law. Furthermore, the Commission gave explanations during the proceedings of the legal position in the other Member States, showing that those States implemented Article 11(2) in ways which to some extent diverge from the exact content of the penalty rule in Article 11(2). That may perhaps be seen as showing that that provision is not suitable for producing direct effect.

34. In my opinion, however, the Court is not called upon to decide whether Article 11(2) may be enforced as directly creating obligations. I consider that it can be established that, in any event, it would be contrary to the objective of that provision for Mr Kuhn to be able to rely on a possible conflict between that provision and Paragraph 2a of the German Wine Law for the sole purpose of obtaining a decision that Paragraph 2a is inapplicable. In my opinion, Mr Kuhn has no interest protected by Community law enabling him to rely on the Community rule in order to obtain such a result.

35. In that regard, the Commission strongly emphasizes that Article 11(2) of the Regulation must be regarded as containing a more severe provision in relation to winegrowers than Paragraph 2a of the Wine Law.

36. In my opinion, the Court should, in this case, confine itself to finding that the plaintiff in the main proceedings does not have an interest protected by Community law enabling him to rely upon Article 11 of the Regulation for the purpose of establishing the inapplicability of Paragraph 2a of the German Wine Law, which was used as the basis for rejecting his application for a control number.

Whether the Court considers that it has to reply to the question raised by the Administrative Court

37. If the Court agrees that the plaintiff in the main proceedings cannot rely upon Article 11 to obtain a declaration that Paragraph 2a of the Wine Law is inapplicable, I do not think that the Court is called upon to reply to the specific question referred to it for a preliminary ruling. The reason why the plaintiff cannot rely upon the Community rule is that its application by the Administrative Court would, in certain circumstances, lead to an outcome contrary to the objective of the Regulation. In those circumstances, a reply to the question raised would be of no use to the national court.

Conclusion

38. Having regard to the foregoing, I shall propose that the Court should reply to the question referred to it for a preliminary ruling by the Verwaltungsgericht Neustadt an der Weinstraße as follows:

1 Original language: Danish.

2 It cannot be denied that restricting the quantity of wine produced per hectare is of crucial importance for the quality of the wine. That point was stressed by the British wine critic Hugh Johnson in an interview published in Time Magazine, No 3, 1993, p. 42. Johnson was asked to clarify the comment: The integrity of Germany's viticulture is threatened. He replied: What went wrong with German wines, basically, was overproduction. Nineteenth century German wines were dry, but they were wines produced at low yield levels. They had lots of body and flavour, and they had the great virtue of ageing practically forever. But when you suddenly start producing 200 hectolitres per hectare, then you wonder why the wine tastes of water — well, it is water — and why it doesn't last — because it doesn't have any structure ...

3 OJ 1987 L 84, p. 59.

4 It appears from the documents in the main proceedings that the relevant yields per hectare for the purpose of those proceedings were as follows: quality wine mil Pradikat (first quality wine) 80 hl quality wine 105 hl table wine 140 hl.

5 Mr Kuhn had recognized wine growing land of 82445 m2 and had already obtained a control number for the following quantities: quality wine mit Pradikat 23850 l = 29813 m2 quality wine 27011 l = 25725 m2 tabic wine 37538 l = 26813 m2 82351 m2 There were left, therefore, 94 m2 (824452 82351 m2). These proceedings concern an application for a control num ber for 1500 additional litres. Mr Kuhn received a control number for only 75 litres of quality wine mit Pradikatcor responding to the permitted yield per hectare for the remain ing 94 m2.

6 Case 106/77 [1978] ECR 629.

7 Simmenthal, paragraph 18.

8 Simmenthal, paragraph 21.

9 Simmenthal, paragraph 17.

10 Case 26/62 [1963] ECR 1.

11 Case 43/71 Pohts,[1971] ECR 1039. paragraph 9.

12 Sec the judgment of the Court in Case 31/78 Bussone [1978] ECR 2429 where it was established, in paragraph 30, that the direct applicability of a regulation requires that its entry into force and its application in favour of or against those subject to it must be independent of any measure of reception into national law. See also the opinion of Advocate General Warner in Case 74/76 Iannelli [1977] ECR 557 stating: The fact that a provision in a regulation is directly applicable (by virtue of Article 189) does not necessarily mean that it has direct effect: it can do so only in so far as it satisfies the familiar tests of being clear and unconditional and of requiring no further legislative action for its implementation.

13 Case 148/78 [1979] LCR 1629.

14 In Cases C-46/90 Lagauche, C-69/91 Decoster, C-92/91 Taillandier and C-93/91 Evrard, the Court is called upon to give judgment on a question which is similar, to some extent, to the one at issue in this case. As wc know, the background to the cases is that prosecutions were brought in Belgium and France in a series of cases against persons alleged to have been in possession of various items of telecommunications equipment which had not been authorized by the authorities as required under domestic law. The Court has previously determined that domestic rules on the authorization of such equipment arc not in themselves incompatible with Community law but that the rules applying in the four cases conflict with Community law to the extent to which they provide that authorization is to be granted by a body which itself competes as an economic operator on the market. In those cases, one question is whether the incompatibility of the Belgian and French rules with Community law on these grounds and as thus defined may be relied upon by the defendants in order to establish the unlawfulness of the domestic rules on which prosecution is based. Certain statements by Advocate General Lenz in his Opinions in Cases C-46/90 Lagauche and C-93/91 Evrard, delivered on 2 December 1992, may, I think, be interpreted, to some extent, as saying that the defendants, who have not requested authorization, do not have an interest protected by Community law enabling them to rely upon the Community rules at issue in order to establish that the Belgian requirement of authorization as such did not apply to them as such (see paragraphs 44 and 45 of the Opinion in Lagauche and paragraphs 17 and 18 in the Opinion in Evrard).