C-11/70

JUDGMENT OF 17. 12. 1970 — CASE 11/70

an integral part of the general principles 4. The concept of force majeure adopted of law protected by the Court of Justice. by the agricultural regulations is not The protection of such rights, whilst limited to absolute impossibility but inspired by the constitutional traditions must be understood in the sense of common to the Member States, must be unusual circumstances, outside the con­ ensured within the framework of the trol of the importer or exporter, the structure and objectives of the Com­ consequences of which, in spite of the munity. exercise of all due care, could not have (Judgment of 12 November 1969, Case been avoided except at the cost of ex­ 29/69, Rec. 1969, p. 425) cessive sacrifice. (Judgment of 11 July 1968, Case 4/68, 3. The requirement by the agricultural Rec. 1968, p. 563) regulations of the Community of import and export licences involving for the 5. By limiting the cancellation of the licensees an undertaking to effect the undertaking to export and the release proposed transactions under the guar­ of the deposit to cases of force majeure antee of a deposit constitutes a method the Community legislature adopted a which is both necessary and appropriate, provision which, without imposing an for the purposes of Articles 40 (3) and undue burden on importers or exporters, 43 of the EEC Treaty, to enable the is appropriate for ensuring the normal competent authorities to determine in functioning of the organization of the the most effective manner their interven­ market in cereals, in the general interest tions on the market in cereals. The as defined in Article 39 of the Treaty. system of deposits violates no funda­ mental right.

INTERNATIONALE HANDELSGESELLSCHAFT v EINFUHR- UND VORRATSSTELLE GETREIDE

THE COURT

composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore (Rapporteur) and H. Kutscher, Judges.

Advocate-General : A. Dutheillet de Lamothe

Registrar: A. Van Houtte

gives the following

I — Facts and procedure On the Einfuhr- und Vorratsstelle's failure to come to a decision on the objections of On 7 August 1967 Internationale Handels­ Internationale Handelsgesellschaft mbH, gesellschaft mbH, an import-export un­ that undertaking on 18 November 1969 dertaking based at Frankfurt-am-Main, brought an action before the Verwaltungs­ obtained an export licence in respect of gericht (Administrative Court) Frankfurt- 20 000 metric tons of maize meal, the am-Main. validity of which expired on 31 December By order of 18 March 1970, received at the 1967. Court Registry on 26 March, the Ver­ In accordance with the third subparagraph waltungsgericht Frankfurt-am-Main, asked of Article 12 (1) of Regulation No 120/67/­ the Court under Article 177 of the EEC EEC of the Council of 13 June 1967 on the Treaty for a preliminary ruling on the common organization of the market in following questions : cereals (OJ Special Edition 1967, p. 33) the 1. Are the obligation to export, laid down issue of the licence was conditional on the in the third subparagraph of Article lodging of a deposit, amounting to 0.5 12 (1) of Regulation No 120/67/EEC units of account per metric ton, guaran­ of the Council of 13 June 1967, the teeing that exportation would be effected lodging of a deposit, upon which such during the period of validity of the licence. obligation is made conditional, and for­ As exportation was only partially effected feiture of the deposit, where exportation (11 486.764 metric tons) during the period is not effected during the period of of validity of the said licence, the Einfuhr- validity of the export licence, legal? und Vorratsstelle für Getreide und Futter­ mittel declared DM 17 026.47 of the 2. In the event of the Court's confirming deposit to be forfeited, in accordance with the legal validity of the said provision, is Regulation No 473/67/EEC of the Com­ Article 9 of Regulation No 473/67/EEC mission of 21 August 1967 on import and of the Commission of 21 August 1967, export licences for cereals and processed adopted in implementation of Regula­ cereal products, rice, broken rice and tion No 120/67, legal in that it excludes processed rice products (OJ 1967, No 204, forfeiture of the deposit only in cases of p. 16). force majeure?

In its order the Verwaltungsgericht empha Rapporteur and the views of the Advocate- sized the following considerations in General, the Court decided to open the oral particular: procedure without any preparatory inquiry. As the court has refused, by reason of The plaintiff in the main action and the established case-law, to accept the legality Commission submitted their oral observa of the provisions cited, it appears to it tions at the hearing on 11 November 1970. essential to put an end to the resultant legal The Advocate-General delivered his opin uncertainty. ion at the hearing on 2 December 1970. Although Community regulations are not For the procedure before the Court Fritz German national laws, but legal rules Modest, Advocate, of Hamburg, appeared pertaining to the Community, they must for the plaintiff in the main action, Albrecht respect the elementary, fundamental rights Stockburger, Advocate, of Frankfurt-am- guaranteed by the German Constitution Main, for the defendant in the main action, and the essential structural principles of W. Riphagen, Legal Adviser to the Ministry

Legal Adviser, for the Commission of the position, of economic liberty and of European Communities. proportionality stemming in particular from Articles 2 (1) and 14 of the German Basic Law. More particularly, the adverse II — Observations submitted to the effects of the system of deposits on the Court interests of trade appear disproportionate to the objective sought by the regulation, which is to ensure for the competent Thewritten and oral observations submitted authorities as precise and comprehensive a to the Court may be summarized as follows : view as possible of market trends.

In accordance with Article 20 of the Proto obligation to import or export, in reality col on the Statute of the Court of Justice of constitutes a fine or a penalty. The pro the EEC written observations were sub visions of the Treaty concerning the or mitted on 15 June 1970 by the Government ganization of the agricultural markets óf the Kingdom of The Netherlands, the contain no provision enabling the Council defendant in the main action and the Com or the Commission to impose sanctions of mission of the European Communities, on a penal nature. 17 June by the plaintiff in the main action and on 18 June by the Government of the (b) The system of deposits, as it is instituted Federal Republic of Germany. by the provisions criticized, is contrary to After hearing the report of the Judge- the principle of proportionality which

forms part of the general principles of law, when that objective cannot be attained by recognition of which is essential in the the method employed or when, in order to framework of any structure based on respect attain it, there are other methods which may for the law. As these principles are recog be more conveniently applied. nized by all the Member States, the prin ciple of proportionality forms an integral (c) The plaintiff in the main action casts part of the EEC Treaty. doubt on the validity of Article 9 of Regula The plaintiff in the main action points out tion No 473/67, which allows importers and more particularly in this connexion that the exporters to be relieved of their obligations agricultural regulations of the Community, and of forfeiture of the deposit in cases of in particular Regulation No 120/67, are force majeure, for the following reasons : limited in principle to the formation of market policy by means of prices.

On the ward processing trade, a system to which other hand, a quantitative check, such as the goods concerned in the main action arises from the system of import and export are subject; licences, the implementation of which must be guaranteed by means of a deposit, is — the whole of Regulation No 473/67, in only of secondary importance. cluding Article 9 thereof, was adopted, It appears therefore that the system of by virtue of Article 26 of Regulation No deposits is ineffectual in attaining the 120/67, according to the 'Management objective sought by the regulation and is Committee' procedure; the application therefore contrary to the scheme of the of that procedure is incompatible with regulation. the institutional structure laid down by Moreover, it is also ineffectual in view of the EEC Treaty. the fact that it can neither guarantee that

system criticized. However, the fundamental right to free Lastly, the amount of the deposit, particu expression and free choice in commercial larly in cases of advance fixing of levies or decisions, enounced by the Basic Law of the refunds, is excessive when compared to Federal Republic, constitutes an element trade profit margins. of that common fund of fundamental It follows from these findings that a sub values which form part of Community law; stantial charge is imposed without any as to the principle of proportionality, it is necessity on importers and exporters. Any recognized by several provisions of the measure constituting a charge, whether or EEC Treaty, in particular Article 40, and not it is in itself tolerable, infringes the the Court of Justice has already had re principle between the charge and the result course to it in assessing various measures which it may or must endeavour to achieve, adopted by Community institutions.

But both in Community law and in national competent authorities are informed in good law there is violation of the principle of time of the utilization or otherwise of the proportionality only where no objectively licence. defensible consideration can justify recourse It is impossible to substitute for the system to a specific method intended to attain a of deposits other methods imposing lesser given objective. In this instance, therefore, charges on the persons concerned. Neither it is merely a question of establishing the system whereby exporters report exports whether or not the economic assessment on actually effected nor that consisting in the which the legislature of the EEC based the obligation to report non-exportation is regulations in dispute is vitiated by obvious capable of providing the Commission and errors. the competent national administration with the necessary comprehensive view over the (a) With regard to the first question sub market and to prevent speculation.

ties. Such a permanent check is indispen reference to periods usual in the commercial sable, not to establish statistics, but to world. enable the powers with regard to market The amount of the deposit does not impose guidance to be exercised to the correct an excessive burden on the exporter; it is degree, to facilitate intervention without in particular very much less than the normal delay in case of crisis and to enable any profit margin for this type of transaction. precautionary measures to be taken. The In the case of export licences with the refund available information must continuously fixed in advance, it was obviously necessary provide a prospective, comprehensive view to fix the amount of the deposit at a higher of the market. figure, as the deposit must forestall the risk However, the informatory value of licences of more serious speculation on the fixed can only be trusted when they are actually rate of refund, which could lead to the non- made use of, when, in other words, there is utilization of the licence. an obligation to import or export, sanc tioned by a penalty which consists precisely (b) With regard to the second question, the in the forfeiture of the deposit. This system defendant in the main action denies that the alone is equally capable of preventing with principle of proportionality is violated by sufficient certainty speculations which, the fact that Article 9 of Regulation No when made in the context of import and 473/67 excludes the obligation to utilize export licences and of levies and refunds, the licence within the prescribed period have a decisive effect on the informatory only in circumstances which may be con value of the unused licences. The absence sidered to amount to force majeure. of such a system would in all probability The cases of force majeure provided for by lead to an unlimited number of import and this provision are not exhaustively listed, export licences being renounced and it since the competent agencies are enabled to would no longer be possible effectively to countenance circumstances other than keep watch over the market. those expressly referred to therein.

INTERNATIONALE HANDELSGESELLSCHAFT ν EINFUHR- UND VORRATSSTELLE GETREIDE

These conditions are not satisfied if certain data relating to expected imports (c) In conclusion, the defendant in the and exports remain uncertain. main action is of the opinion that if the The obligation to export and the lodging of scope of the system of deposits is considered a deposit have other than purely statistical in its true light it cannot seriously be functions; they form an integral part of the maintained that the provisions referred to system established by the common organi the Court violate the principle of pro zations of the agricultural markets.

The Commission of the European Com stituted by Regulation No 120/67 is only munities makes the preliminary observation ensured by a prospective comprehensive that the Community institutions are bound view of the market. The issue of licences by by Community law alone and that in their itself cannot guarantee it. Certain informa regard the protection conferred by the tion on imports and exports can only be fundamental rights of national constitu obtained if the transactions to which the tions flows only from Community law, licences relate are actually effected.

JUDGMENT OF 17. 12. 1970 — CASE 11/70

world markets. Such regulation protects future state of the market. the internal market from falls in prices A reduction in the duration of the validity provoked either by over-production by the of licences is not an adequate solution: it Community or by imports from third runs counter to the objectives of the com countries. It can only function if the regula mon organization of the market in cereals tory mechanisms are used in a rational and is incompatible with the principle that manner; it is therefore essential that data be trade must be taxed as lightly as possible. available indicating not only the imports The cases in which the licences remain and exports already effected but also unused are the exception and do not prevent enabling a valid assessment of future the system of deposits from attaining its market trends to be made. This prospective objective. comprehensive view of the market is The complaint that the system of deposits essential not only for the possible applica transforms the economy of the market into tion of protective measures in the face of a a planned or directed economy is not threat of serious disturbances to the market justified. The common organization of the but also for the fixing of export refunds and market in cereals cannot dispense with all denaturing premiums. intervention on the market; it is charac The system of deposits is a necessary in terized, however, by the concern to make strument for such a prospective compre such intervention conform as much as hensive view of the market. possible to the rules of the market and to Such a view requires sure data on future allow the widest scope for competition. imports and exports; the licence only To sum up, the Commission considers that provides such information if it can be with regard to the first question posed by expected with sufficient certainty that the the Verwaltungsgericht Frankfurt it should issue of the licence will actually lead to im be held that the functioning of the common

The other than forfeiture of the deposit; thus it system complained of not only conforms in no way has a particularly adverse effect to the objective sought but is necessary to on the rights of the individual. its attainment; thus it does not run counter In the absence of a deposit, the licence is to the principle of proportionality of the not capable of providing sure data as to method to the objective sought. future imports or exports. In fact, there are (b) With regard to the second question, the several reasons for a trader to apply for Commission repeats that the system of more licences than he needs. deposits must ensure that utilization of the It is not possible to obtain a valid com licence remains the general rule and its non- prehensive view of the market by obliging utilization the exception; this is only the licensee to report non-utilization of his possible if, where the licence is not used, licence and by penalizing any failure to the deposit is forfeited as a general rule and fulfil that obligation by the imposition of a the release of the deposit is limited to fine; in fact, in order to acquire a prospec- exceptional cases.

2 It appears from the grounds of the order referring the matter that the Verwaltungs­ gericht has until now refused to accept the validity of the provisions in question and that for this reason it considers it to be essential to put an end to the existing legal uncertainty. According to the evaluation of the Verwaltungsgericht, the system of deposits is contrary to certain structural principles of national constitutional law which must be protected within the framework of Community law, with the result that the primacy of supranational law must yield before the principles of the German Basic Law. More particularly, the system of deposits runs counter to the principles of freedom of action and of disposition, of economic liberty and of proportionality arising in particular from Articles 2 (1) and 14 of the Basic Law. The obligation to import or export resulting from the issue of the licences, together with the deposit attaching thereto, constitutes an excessive intervention in the freedom of disposition in trade, as the objective of the regulations could have been attained by methods of intervention having less serious consequences.

JUDGMENT OF 17. 12. 1970 —CASE 11/70

The protection offundamental rights in the Community legal system

3 Recourse to the legal rules or concepts of national law in order to judge the validity of measures adopted by the institutions of the Community would have an adverse effect on the uniformity and efficacy of Community law. The validity of such measures can only be judged in the light of Community law. In fact, the law stemming from the Treaty, an independent source of law, cannot because of its very nature be overridden by rules of national law, however framed, without being deprived of its character as Community law and without the legal basis of the Community itself being called in question. Therefore the validity of a Community measure or its effect within a Member State cannot be affected by allegations that it runs counter to either fundamental rights as formulated by the constitution of that State or the principles of a national constitutional structure.

INTERNATIONALE HANDELSGESELLSCHAFT ν EINFUHR- UND VORRATSSTELLE GETREIDE

licences are requested are actually effected in order to ensure both for the Com­ munity and for the Member States precise knowledge of the intended transactions.

7 This knowledge, together with other available information on the state of the market, is essential to enable the competent authorities to make judicious use of the instruments of intervention, both ordinary and exceptional, which are at their disposal for guaranteeing the functioning of the system of prices instituted by the regulation, such as purchasing, storing and distributing, fixing denaturing pre­ miums and export refunds, applying protective measures and choosing measures intended to avoid deflections of trade. This is all the more imperative in that the implementation of the common agricultural policy involves heavy financial re­ sponsibilities for the Community and the Member States.

8 It is necessary, therefore, for the competent authorities to have available not only statistical information on the state of the market but also precise forecasts on future imports and exports. Since the Member States are obliged by Article 12 of Regulation No 120/67 to issue import and export licences to any applicant, a fore­ cast would lose all significance if the licences did not involve the recipients in an undertaking to act on them. And the undertaking would be ineffectual if observance of it were not ensured by appropriate means.

9 The choice for that purpose by the Community legislature of the deposit cannot be criticized in view of the fact that that machinery is adapted to the voluntary nature of requests for licences and that it has the dual advantage over other possible systems of simplicity and efficacy.

14 However, examination should be made as to whether or not certain detailed rules of the system of deposits might be contested in the light of the principles enounced by the Verwaltungsgericht, especially in view of the allegation of the plaintiff in the main action that the burden of the deposit is excessive for trade, to the extent óf violating fundamental rights.

15 In order to assess the real burden of the deposit on trade, account should be taken not so much of the amount of the deposit which is repayable—namely 0.5 unit of account per 1 000 kg—as of the costs and charges involved in lodging it. In assessing this burden, account cannot be taken of forfeiture of the deposit itself, since traders are adequately protected by the provisions of the regulation relating to circum­ stances recognized as constituting force majeure.

16 The costs involved in the deposit do not constitute an amount disproportionate to the total value of the goods in question and of the other trading costs. It appears therefore that the burdens resulting from the system of deposits are not excessive and are the normal consequence of a system of organization of the markets con­ ceived to meet the requirements of the general interest, defined in Article 39 of the Treaty, which aims at ensuring a fair standard óf living for the agricultural com­ munity while ensuring that supplies reach consumers at reasonable prices.

17 The plaintiff in the main action also points out that forfeiture of the deposit in the event of the undertaking to import or export not being fulfilled really constitutes a fine or a penalty which the Treaty has not authorized the Council and the Com­ mission to institute.

21 By the second question the Verwaltungsgericht asks whether, in the event of the Court's confirming the validity of the disputed provision of Regulation No 120/67, Article 9 of Regulation No 473/67 of the Commission, adopted in implementation of the first regulation, is in conformity with the law, in that it only excludes for­ feiture of the deposit in cases offorce majeure.

22 It appears from the grounds of the order referring the matter that the court con­ siders excessive and contrary to the abovementioned principles the provision in Article 1 [sic] of Regulation No 473/67, the effect of which is to limit the cancella­ tion of the obligation to import or export and release of the deposit only to 'circumstances which may be considered to be a case offorce majeure'. In the light of its experience, the Verwaltungsgericht considers that provision to be too narrow, leaving exporters open to forfeiture of the deposit in circumstances in which exportation would not have taken place for reasons which were justifiable but not assimilable to a case offorce majeure in the strict meaning of the term. For its part, the plaintiff in the main action considers this provision to be too severe because it limits the release of the deposit to cases offorce majeure without taking into account the arrangements of importers or exporters which are justified by considerations of a commercial nature.

23 The concept of force majeure adopted by the agricultural regulations takes into account the particular nature of the relationships in public law between traders and the national administration, as well as the objectives of those regulations. It follows from those objectives as well as from the positive provisions of the regula­ tions in question that the concept of force majeure is not limited to absolute im­ possibility but must be understood in the sense of unusual circumstances, outside the control of the importer or exporter, the consequences of which, in spite of the

25 It therefore appears that by limiting the cancellation of the undertaking to export and the release of the deposit to cases offorce majeure the Community legislature adopted a provision which, without imposing an undue burden on importers or exporters, is appropriate for ensuring the normal functioning of the organization of the market in cereals, in the general interest as defined in Article 39 of the Treaty. It follows that no argument against the validity of the system of deposits can be based on the provisions limiting release of the deposit to cases of force majeure.

Costs

26 The costs incurred by the Government of the Kingdom of The Netherlands, the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

27 As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Verwaltungsgericht Frank­ furt-am-Main, the decision as to costs is a matter for that court.

INTERNATIONALE HANDELSGESELLSCHAFT ν EINFUHR- UND VORRATSSTELLE GETREIDE

On those grounds,

Lecourt Donner Trabucchi

Monaco Mertens de Wilmars Pescatore Kutscher

Delivered in open court in Luxembourg on 17 December 1970.

A. Van Houtte R. Lecourt

Registrar President