Opinion of Advocate General Gulmann delivered on 8 June 1994

1 Original language: Danish

2 OJ 1993 L 47, p. 1.

3 The cases in question are Case T-516/93 Pacific Fruit Company, Case T-517/93 Léon van Parijs, Case T-518/93 Anton Dürbeck, Case T-518/93 Comafrica, and Case T-520/93 Pacific Fruit Company Italy.

4 Case 143/88 [1991] ECR 415.

5 The Verwaltungsgericht made the measures subject to the condition that whilst the case was pending the companies should refrain from using their import licences for 1994 to an extent corresponding to the quantities to which the provisional measures related.

6 The following figures summarize the banana-producing countries according to the volume of their production as a percentage of total export earnings (1988): % EC Guadeloupe 60.0 Martinique 49.0 Madeira 33.0 Canary Islands 20.0 ACP Dominica 69.3 Saint Lucia 59.1 Saint Vincent 42.2 Somalia 20.0 Grenada 16.6 Belize 4.2 Côte d'Ivoire 4.1 Surinam 4.0 Jamaica 2.3 Cameroon 1.1 Third Honduras 36.3 countries Panama 29.0 Costa Rica 19.7 Ecuador 13.6 Colombia 5.2

7 The German Government states in its application that c. i. f. prices for third-country bananas for the years 1987 to 1992 were on average ECU-450 (1992: 432) per tonne, between ECU 650 and 750 per tonne for ACP and EC bananas (1992: 626 for ACP and 754 for Community bananas), whilst in Spain prices even reached ECU 830 per tonne. The British Government stated in its observations that f. o. b. prices in 1992 for third country bananas were on average ECU 242 per tonne, for ACP bananas ECU 466 per tonne (93% dearer) and for Community bananas ECU 551 per tonne (128% dearer).

8 According to the preamble the reasons for these rules are as follows: To permit the market to be supplied with products of uniform and satisfactory quality with due regard to local peculiarities and the varieties produced and to ensure the disposal of Community products at profitable prices guaranteeing an adequate income, quality standards for fresh bananas and, if necessary, marketing rules for processed products [based] on bananas should be introduced (fourth recital).

9 According to Article 12(2) of the regulation the amount is divided as follows:1. 420000 tonnes for the Canary Islands 2. 150000 tonnes for Guadeloupe 3. 219000 tonnes for Martinique 4. 50000 tonnes for Madeira, the Azores and the Algarve 5. 15000 tonnes for Crete and Lakonia.

10 OJ 1992 C 344, p. 9.

11 The annex lays down the following:Tonnes/net weight Côte d'Ivoire 155000 Cameroon 155000 Surinam 38000 Somalia 60000 Jamaica 105000 Saint Lucia 127000 Saint Vincent and the Grenadines 82000 Dominica 71000 Belize 40000 Cape Verde 4800 Grenada 14000 Madagascar 5900 857000

12 OJ 1993 L 142, p. 6.

13 See inter alia the judgments in Case 5/88 Wacbituf [1989] ECR 2609 at paragraph 17, in Case 265/87 Schrdder [1989] ECR 2237 at paragraph 21 and in Joined Cases 103 and 145/77 Royal Scholten-Homg [1978] ECR2037 at paragraph 26.

14 [1989] ECR 2237.

15 It should be mentioned that in Case C-466/93 Atlanta and Others, previously referred to, the court of reference accepted that the contested provisions of the regulation deprive the operators dealing with third countries of the benefit of the investments they have made in the banana sector, since the withdrawal of quantities devalues the whole of the production apparatus m bananas which they have created over 30 years and the capacities they have built up at all stages of the banana trade by their own investments can no longer be profitably used.

16 See for example the judgments in Joined Cases 124/76 and 20/77 Montini de Pont-á-Mousson [1977] ECR 1795 at paragraph 17 and in Case 106/83 Sermide [1984] ECR 4209 at paragraph 28.

17 See for example the judgment in Case C-331/88 Fedesa [1990] ECR I-4023 at paragraph 13.

18 Judgment in Case 114/76 Bela-Miihle v Grows-Farm [1977] ECR 1211, see p. 1232.

19 Judgment in Case C-331/88 Fedesa [1990] ECR4023 at paragraph 14. See also the judgment in Joined Cases 279, 280, 285 and 286/84 Ran [1987] ECR 1069 at paragraph 34.

20 Judgment in Joined Cases 267 to 284/88 Wuidart [1990] ECR I-435 at paragraph 14. See also judgments in Case 40/72 Schroeder v Germany [1973] ECR 125 at paragraph 14 and in Joined Cases 9 and 11/71 Compagnie d'Approvisionnement v Commission [1972] ECR 391 at paragraph 39.

21 The Commission's press communique of 8 April 1992 on the future organization of the market in bananas contains the mention that The size of the import quota ... would be set at the present volume of banana imports from the dollar zone and could be periodically adjusted. The effect on prices to those consumers mainly buying dollar zone bananas would be very limited.

22 The Council shows in its defence that the quota is correctly calculated even if the figure for 1992 is included. That result is however obtained only if the correspondingly lower figure for 1988 is included as well.

23 See Annex 1 to the Commission's observations. The figures are worked out on the basis of data from the FAO, the Member States and Eurostat and largely correspond to those given in Annex 1 to the application, the Gutachten der Zentralen Markt-und Preisberichtstelle für Erzeugnisse der Land-, Forst-und Ernährungswirtschaft GmbH.

24 The Order of the Court, in paragraphs 43, 44 and 45, states as follows in this connection:The Council admits that the forecasts which it used as its basis may be shown to be incorrect since it has not sufficient experience in this field. As the Federal Republic of Germany claims, it is true that the Council envisages the possibility of a modification of the quotas laid down in Article 18 only in the event of a considerable change in the current economic situation. It accepts, however, that the Community institutions are required to act if there should be a shortage of the extent alleged by the Federal Republic of Germany. In that respect it should be pointed out that Article 16(3) of the regulation requires the Community institutions to adjust the tariff quota if that proves necessary during the marketing year, to take account of exceptional circumstances affecting in particular import conditions. In such a case the adjustment is to be effected in accordance with the procedure laid down in Article 27, that is, it is for the Commission to adopt measures in accordance with the opinion of the Management Committee for Bananas. If the measures adopted are not in accordance with the opinion of the Management Committee the Council may take a different decision within one month. If therefore the Commission were to come to the conclusion, on the basis of reliable objective data that the quota was insufficient to satisfy demand appropriately, and if the Council's earlier estimates were to prove incorrect, the regulation obliges the Commission and if necessary the Council to make the necessary adjustments with the possibility for the Member States to make an application to the Court if those institutions were not to comply with their obligations.

25 The German Government has stated that both in October 1993 and in the spring of 1994 it requested an increase Ín the tariff quota. The first request was not met as the Commission thought that the government had not shown the need for such a step and because the German operators had not made a sufficient effort to buy Community and ACP bananas. No reply had been received to the second request at the time of the hearing. It is stated that the tariff quota is expected to be increased by 100000 tonnes in 1994 and by 200000 tonnes in 1995 by reason of the outcome of the negotiations which put an end to the disagreement within GATT between the EC and some of the banana-exporting countries in Central and South America.

26 However, by Regulation (EC) No 490/94 (OJ 1994 L 62, p. 10) and Regulation (EC) No 3298/93 (OJ 1993 L 296, p. 48) the Commission has created the possibility for total imports within the quota of 1070000 tonnes for the first half of 1994. It is not stated what consequences that will have for the quantity of imports within the quota for the two last quarters of the year.

27 The Commission stated moreover during the oral procedure that it had not been in a position to prepare a forecast for 1994 in pursuance of Article 16 of the regulation because it had come up against fundamental problems and practical difficulties in connection with its preparation.

28 See in this connection the tables in Annex 1 to the reply.

29 The government has produced a letter from the producers' organization in an ACP country stating that it is not possible to comply with an offer to buy as sales arc reserved for specified exclusive purchasers. However, in its rejoinder the Council has stated that the major part of the products of the country concerned is at present purchased by a firm which has until now marketed only third-country bananas. In the reference for a preliminary ruling in Case C-465/93 Atlanta and Others, the court of reference regarded it as established on the basis of the evidence produced that it was impossible for the plaintiff companies to obtain Community/ACP bananas.

30 Laying down detailed rules for the application of the arrangements for importing bananas into the Community, OJ 1993 L 142, p. 6.

31 See the judgment in Joined Cases 267 to 285/88 Wuidart and Others [1990] ECR I-435 at paragraph 14.

32 It should moreover be mentioned that in the order for reference in Case C-465/93 the court of reference regarded it as established that the plaintiff companies, at the time of the interim measures, had already had to discontinue one fifth of their wholesale operations and lay off some 200 employees out of a total workforce of some 2000.

33 See Joined Cases 197 to 200, 243, 245 and 247/80 Ludwigshafener Walzmiihle and Others [1981] ECR3211.

34 Sec in this respect Regulation No 26 of the Council of the EEC applying certain rules of competition to production of and tratfe in agricultural products, OJ, English Special Edition 1959-1962, p. 129, original reference Journal Officiel 1962 30, p. 993. The purpose of that regulation is not, and could not be, to limit the Council's opportunity, on the occasion of the organization of markets, for choosing the means for such organizations to select the means judged most appropriate for the attainment of objectives of agricultural policy.

35 Sec inter alia the judgment in Case 139/79 Maizena [1980] ECR 3393. Paragraph 23 states:The institution of a system of competition which is not distorted is not the only objective referred to in Article 3 of the Treaty which also provides in particular for the adoption of a common agricultural policy. Those responsible for the Treaty, conscious that the simultaneous pursuit of those two objectives could sometimes and in certain circumstances prove difficult, provided in the first paragraph of Article 42 that:The provisions of the Chapter relating to rules of competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 43(2) and (3) and in accordance with the procedure laid down therein, account being taken of the ob|ectives set out in Article 39. That simultaneously recognizes the precedence the agricultural policy has over the aims of the Treaty in relation to competition and the power of the Council to decide how far the rules on competition should apply to the agricultural sector. The Council has a wide discretion in the exercise of that power as it has in the implementation of the whole agricultural policy.

36 In Case C-389/93 Diirbeck, mentioned previously, the Court will have the opportunity to decide whether the Commission's rules of implementation as regards arrangements for newcomers comply with the principle of proportionality. As regards the distribution of tariff quotas, see inter alia the judgments in Joined Cases 213 to 215/81 Norddeutsches Vieh- und Fleischkontor Herbert Will [1982] ECR 3583 and in Case 131/73 Grosoli [1973] ECR 1555.

37 See inter alia the judgment in Case 125/77 Koninklijke Scholten-Honig [1978] ECR 1991 at paragraph 19.

38 See inter alia the judgment in Case 87/78 Welding [1978] ECR 2457 at paragraph 11.

39 See inter alia the judgment in Case 203/86 Spain v Council [1988] ECR 4563 at paragraph 10.

40 See inter alia the judgment in Case C-311/90 Hierl [1992] ECR I-2061 at paragraph 13.

41 See in this connection the judgments in Case 68/86 United Kingdom v Council [1988] ECR 855, in Case 131/87 Commission v Council [1989] ECR 3743 and in Case C-155/91 Commission v Council [1993] ECR I-939.

42 See the judgment in Case 45/86 Commission v Council [1987] ECR 1493 at paragraph 20.

43 OJ 1991 L 229 p. 3.

44 Judgments in Joined Cases 21 to 24/72 International Fruit Company [1972] ECR 1219, in Case 38/75 Nederlandse Spoorwegen [1975] ECR 1439, in Case 266/81 SIOT [1983] ECR 731, in Joined Cases 267 to 269/81 SPI and SAMI [1983] ECR 801, in Joined Cases 290 and 291/81 Singer/Geigy [1983] ECR 847, in Case 70/87 Fediol [1989] ECR 1781 and in Case C-69/89 Nakajima [1991] ECR I-2069.

45 [1989] ECR 1781.

46 [1991] ECR I-2069.

47 [1982] ECR 3641 at paragraph 17. Sec also the Court's judgment in Case 12/86 Denmei [1987] ECR 3719.

48 The Court expressed this as follows in the Kitpferberg judgment: According to the general rules of international law there must be bona fide performance of every agreement. Although each contracting party is responsible for executing fully the commitments which it has undertaken it is nevertheless free to determine the legal means appropriate for attaining that end in its legal system unless the agreement, interpreted in the light of its subject-matter and purpose, itself specifics those means (paragraph 18).

49 That case-law has been criticized in academic writings. See for example Hahn and Schuster Zum Verstoß von gemeinschaftlichem Sekundärrecht gegen das GATT in Europarecht 1993) p. 261, with supplementary bibliographical references, and in particular Petersmann, Applications of GATT by the Court of the EC in Common Market Law Review 1983, p. 397. Kapteyn, The Domestic Law Effect of Rules of International Law within the European Community System of Law and the Question of the Self-Executing Character of GATT rules in The International Lawyer, 1974, p. 74, claims that better reasons might be stated for the Court's case-law.

50 The most important judgments in this connection are those in Joined Cases 21 to 24/72 International Fruit Company [1972] ECR 1219, in Case 9/73 Schlüter [1973] ECR 1135, in Case 266/81 SIOT [1983] ECR 731 and in Joined Cases 267 to 269/81 SPI and SAMI [1983] ECR 801.

51 [1991] ECR I-2069.

52 In paragraph 20 of that judgment the Court stated:It is also appropriate to note that the Court did indeed hold in the abovententioncd judgments of 12 December 1972 International Finn Company, 24 October 1973 Schlüter and 16 March 1983 SPI and SAMI, that a particular feature of GATT is the broad flexibility of its provisions, especially those concerning deviations from general rules, measures which may be taken in cases of exceptional difficulty, and the settling of differences between the contracting parties. That view does not, however, prevent the Court rom interpreting and applying the rules of GATT with reference to a given case, in order to establish whether certain specific commercial practices should be considered incompatible with those rules. The GA'IT provisions have an independent meaning which, for the purposes of their application in specific cases, is to be determined by way of interpretation.

53 In paragraph 21 of that judgment the Court declared:Lastly the fact that Article XXIII of GATT provides a special procedure for the settlement of disputes between contracting parties is not such as to preclude its interpretation by the Court. As the Court held in the judgement of 26 October 1982 in Case 104/81 Kupferberg [1982] ECR 3641, in the context of the joint committees which are set up by free-trade agreements and given responsibility for the administration and proper implementation of those agreements, the mere fact that the contracting parties have established a special institutional framework for consultations and negotiations inter se in relation to the implementation of the agreement is not in itself sufficient to exclude all judicial application of that agreement.

54 With regard to the GATT system for settling disputes see Pescatore, Davey and Lowenfeld, Handbook of GATT Dispute Settlement, New York/Deventer, 1991. It may be appropriate to quote the following extract from the introduction by Davey:... the dispute settlement system as it currently operates can be summarized as follows: Following the inability of two contracting parties to resolve a dispute through consultations and negotiations, the aggrieved party may request the establishment of a panel to adjudicate the dispute. The request is made to the GATT Council. There is no absolute right to have a panel established, but the 1989 Improvements provide that if a contracting party so requests, a panel will be established at the second meeting of the Council at which the request appears on the Council's agenda, unless the Council decides otherwise ... (p. 66) A panel report in and of itself has no force. It is only the opinion of the panel members. It must be adopted by the Council on behalf of the contracting parties. Although the issues discussed in the report are not relitigated in the Council, in recent years it has not been unusual for individual contracting parties to express disagreement with specific aspects of a panel report. The meaning of these reservations is unclear, assuming that the Council in fact adopts the report, because the Council traditionally does not act absent consensus. Thus, the reserving party in a sense accepts the report despite the reservations expressed. In any event, the practice of requiring consensus means that the losing party (at least an important losing party) may hold up adoption of a panel report interminably while it purports to analyse it and to explore possible negotiated solutions with the prevailing party... (p. 68) As it has operated over the years, the GATT dispute settlement system has resembled a judicial system in important aspects: neutral decision-makers have determined whether a contracting party has violated the General Agreement and have usually recommended that the violation, if one is found, be terminated. Some critics of the system have argued that it should be made more judicial so as to promote more precise decisions on the merits of disputes and more effective implementation of decisions. At the same time, other critics have argued that the nature and basic philosophy of GATT dictate that the system should be used only to the extent it facilitates negotiated settlements of disputes ... (p. 70) These two conflicting viewpoints are often referred to as the legalistic model, which stresses adjudication, and the antilegalistic model, which emphasizes negotiation and consensus. Put simply, the legalistic view is that the General Agreement is a code of conduct and embodies a balance of concessions. If a contracting party violates the code or tips the balance, it is appropriate to penalize such behaviour and put pressure on that party to conform to the code or right the balance, if necessary by allowing the petitioning party to take offsetting countermeasures. On the other hand, the antilegalistic position is that the General Agreement is not a code of conduct per se, but more of a commitment by the contracting parties to deal with each other in trade matters so as to work out a mutually acceptable solution to any disagreement. The United States is generally perceived to have supported the legalistic position, while Japan and the EC have been considered supporters of the opposing position. Most developing countries and non-European developed countries have tended to support the legalistic position because they see it as a more effective protector of small-country rights. (pp. 70 and 71)

55 The origin of the Fediol case was an application made to the Commission by a trade organization for the initiation of a procedure concerning an allegedly illicit commercial practice by Argentina. The basis for that application was a Council regulation under which illicit commercial practices Avere defined as any international trade practices attributable to third countries which arc incompatible with international law or with the generally accepted rules. It was common ground that that was a reference to GATT. The Commission dismissed the application on the ground that there was no illicit commercial practice, whereupon Fediol brought an action before the Court under Article 173 of the Treaty. In the Nakajima case the Court was called upon to decide whether the Council's antidumping regulation was incompatible with the Anti-Dumping Code adopted within the framework of GATT.

56 See now Article 189.1(1) of the EC Treaty.

57 The Court rejected a somewhat similar argument in its judgment in Case C-62/88 Greece v Council [1990] ECR I-1527, in which it stated that the very terms of that provision [Article 190] show that, although it requires a reference to the Commission's proposal in measures winch may be adopted only on a proposal from the Commission, it does not thereby impose the obligation to indicate whether or not the measure in question is in conformity with that proposal (paragraph 29).

58 [1993] ECR I-4751.