C-26/70

In Case 26/70

Reference to the Court under Article 177 of the EEC Treaty by the Hessischer Verwaltungsgerichtshof (Higher Administrative Court of the Land of Hesse), Kassel, for a preliminary ruling in the action pending before that court between

EINFUHR- und Vorratsstelle für Getreide und FUTTERMITTEL, Frankfurt-am- Main and

Günther HENCK, Hamburg,

on the validity of Regulation No 102/64/EEC of the Commission of 28 July 1964

1— Language of the Case: German. 2— CMLR.

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure Vorratsstelle für Getreide und Futtermittel, by decision of 15 July 1966, declared On 6 January 1966 the Günther Henck DM 104.52 of the deposit forfeited. undertaking obtained an export licence in Since the Einfuhr- und Vorratsstelle failed respect of 3 000 metric tons of compound to come to a decision on the objections feeding-stuffs with the refund fixed in of Günther Henck, that undertaking on advance (in the form of an authorization 21 October 1966 brought an action in the to import free of levy a corresponding Verwaltungsgericht (Administrative Court) quantity of cereals). Frankfurt-am-Main. In accordance with Article 7(1) of Regular By judgment of 12 December 1966, the tion No 102/64/EEC of the Commission Verwaltungsgericht Frankfurt-am-Main of 28 July 1964 on import and export found in favour of Günther Henck. licences for cereals and processed cereal In the grounds of its decision the court products, rice, broken rice and processed held in particular that Regulation No 102/64 rice products (OJ 1964, p. 2125), the issue was invalid in that it instituted an obligation of the licence was conditional on the to export, made the issue of the export lodging of a deposit amounting to 5 units licence conditional upon the lodging of a of account per metric ton guaranteeing deposit and provided in principle for that the obligation to export during the forfeiture of the deposit should the obliga­ period of validity of the licence would be tion to export not be carried out, moreover, fulfilled. the Commission did not have the power to As the export transaction was only partially adopt such a regulation as it violated the carried out during the period of validity principle whereby the administration is of the said licence, the Einfuhr- und obliged to implement only measures

proportionate to the objective to be attained for the purpose of obtaining export (principle of proportionality). licences (Article 7) violate a principle On appeal against that judgment by the whereby the administration is obliged Einfuhr- und Vorratsstelle, the Hessischer to implement only measures propor Verwaltungsgerichtshof, by order of 28 tionate to the objective to be attained April 1970 received at the Court Registry or prohibiting it from recourse to on 28 May 1970, has asked the Court excessive measures?

Regulation No 102/64 concerning for gerichtshof puts the following questions, feiture of the deposit (Article 7(2)) is the scope of which is decisive for the invalid by reason of the fact that, even solution of the dispute: without the legislature's attempting to establish whether or not the failure to (1) Must the procedure laid down by carry out the obligation to export is Article 26 of Regulation No 19 of the independent of fault, the only case in, Council of 4 April 1962 on the pro which the deposit is not forfeited is gressive establishment of a common under Article 8, when exportation organization of the market in cereals cannot be effected during the period (OJ 1962, p. 933), in implementation of validity of the licence as a result of which Regulation No 102/64 was of circumstances which may be con adopted, be considered to be contrary sidered to be a case of force majeure!

oral procedure without any preparatory Or are the Commission's powers in inquiry. this connexion to be found in either The respondent in the main action and the the EEC Treaty in general or the Commission presented their oral obser combined provisions of Article 16(2) vations at the hearing on 11 November and (3) or Articles 19 and 20 of Regula 1970. tion No 19? The Advocate-General delivered his opin ion at the hearing on 2 December 1970. (3) Do the provisions of Regulation For the procedure before the Court Fritz No 102/64 relating to the obligation Modest, Advocate, of Hamburg, appeared to export inherent in every export for the respondent in the main action, licence (Article 1) and the lodging C. W. van Sanken, Assistant Legal Adviser and forfeiture of the deposit lodged at the Ministry for Foreign Affairs for the

Government of the Kingdom of The import and export licences for cereal Netherlands, Jean-Pierre Puissochet, Direc products. tor of the Secretariat-General, for the Council and Claus-Dieter Ehlermann, the (b) The substance of the system in dispute Commission's Legal Adviser, for the Commission. The respondent in the main action main tains that the system of deposits must respect the principle of proportionality, II— Observations submitted to the enshrined both in the German Basic Law Court and in Community law. In this respect the

upon him. The institutions of the Com licences, the utilization of which must be munity do not have the power to impose guaranteed by means of a deposit, is only fines or sanctions of a penal nature except of secondary importance. in cases where they are expressly authorized It appears therefore that the system of by the Treaty to do so. However, Article 39 deposits is ineffectual in attaining the et seq. relating to the organization of the objective sought by the agricultural regu agricultural markets contain no enabling lations and is even contrary to the scheme provision of this nature. of those regulations. Moreover, it is also The system of deposits is based on the so ineffectual in view of the fact that it can called Management Committee voting neither guarantee that the obligation to

Commission. The regulations of the Com by the system criticized. mission adopted in implementation of this Finally, the obligation to lodge a deposit illegal procedure are therefore invalid. places a heavy burden on the liquidity of Regulation No 19 only provided for the undertakings, in particular small and lodging of a deposit for the issue of import medium-sized undertakings, and the licences for cereals alone. The Commission amount of the deposit, especially in the was therefore not entitled on its own case of advance fixing of the levy or refund, authority to extend the system of deposits is excessive in relation to normal trade profit either to export licences for cereals or to margins.

It follows from the foregoing that a one cannot see by what less radical methods substantial charge is imposed without any it could be replaced. necessity on importers and exporters. The Council of the European Communities However, any measure constituting a restricts its observations to the problem charge, whether or not it is in itself tolerable, of the compatibility with the EEC Treaty violates the principle of proportionality of the so-called Management Committee when it is superfluous, when there is procedure and, in asserting such compati disproportion between the charge and the bility, advances essentially the following result which it may or must endeavour to arguments : achieve, when that objective cannot be attained by the method employed or when, (a) The Commission and the Council are in order to attain it, there are other methods empowered to adopt measures imple which may be more conveniently applied. menting a Council measure based directly The system of deposits also violates the on the Treaty. principle of proportionality in that in The last indent of Article 155 of the EEC respect of exemption from forfeiture of Treaty expressly attributes powers of the deposit it refuses, otherwise than in implementation according to a machinery cases offorce majeure, to take into consider very closely approaching the so-called

On the other hand, once of amendment of the applicable legislation such power is delegated to the Commission, between the date of the application for the it is free to exercise it under the conditions licence and that of its issue). laid down by the measure attributing the The Government of the Kingdom of The power to it and the Council may amend Netherlands maintains that Article 16(3) of decisions adopted in this way only in so Regulation No 19 delegates to the Com far as it itself provided for that possibility mission in a general manner the power in the measure delegating powers. to adopt detailed rules for the application By expressly providing for the possibility of the whole of Article 16, including in of conferring powers of implementation consequence the rules relating to export on the Commission, Article 155 implicitly,

imports and exports. It is in the logic attributed. of the system that the sum required as a guarantee for the carrying out of the (b) With regard to the procedure for the obligation to import or export reduces the adoption of rules of implementation, a cases in which that obligation is not distinction must be made according to fulfilled. The Commission therefore had to whether they are adopted by the Commis extend the rules laid down by the Council sion or by the Council. in respect of import licences to export In the first case, as Article 155 contains licences. no provision on this point, the Council The system of deposits in no way violates is free, subject to the observance of the the principle of proportionality; moreover, institutional balance of powers created by

the Treaty, to subject the exercise of the the Management Committee procedure do powers conferred on the Commission to not expressly mention the forms of mea specific, detailed rules, such as consultation sures provided for by Article 189 of the of a subsidiary body composed of experts Treaty in no way signifies that that article or representatives of the Member States. is infringed. It follows from this solely that The detailed rules of the Management the institutions have the opportunity of Committee procedure do not have the adopting, from among all the legal forms effect of putting the powers conferred on provided for by Article 189, that which the Commission in issue: they introduce, appears to them the most appropriate. it is true, the deliberations of a committee but in the exercise of the powers conferred (d) The fact that, on the one hand, only the on it the Commission remains the master Council and the Commission have a power of its own decision; it is never obliged to of decision in the application of the follow the opinion of the Committee, the Management Committee procedure, and only consequences of a difference between that, on the other hand, measures adopted the Committee's opinion and the decision by these two institutions are obliged to of the Commission being the obligation take one of the forms of executory measure for it to communicate the wording of the provided for by Article 189 of the Treaty measure to the Council, the option to enables it to be stated that the legal defer application of the measure for a guarantees offered by the Treaty, in limited period and the possibility for the particular by Articles 173 and 177, to those Council to adopt different measures. The concerned by acts of the administration complaint that the Council has illegally are safeguarded when this procedure is had conferred on itself a 'right of annul

The Council measures implementing its own rules. does not exceed the limits of that power In a case where the Council itself adopts of evaluation by subjecting the attribution measures adopting its own rules — a case of powers to the Commission to the not relevant in this instance — it is justified obligation to obtain the opinion of a and compatible with the Treaty that it may committee composed of representatives do so according to detailed rules different of the Member States before adopting from those required for basic measures measures of implementation. by Article 43 (2) of the Treaty.

EINFUHR- UND VORRATSSTELLE ν HENCK

communicate the measure adopted to the a level higher than that on the world Council and enables the Council to take a markets. Such regulation protects the different decision. There is nothing against Community market from falls in prices the Council's reserving such a right and, provoked either by internal over-produc­ when it does so, this in no way has an tion or by imports. It can only function adverse effect on review by the Court of if the regulatory mechanism is used in a Justice. rational manner; it is therefore essential The powers conferred on the Commission that data be available indicating not only within the framework of the Management the imports and exports already effected Committee procedure are powers of im­ but also enabling a valid assessment of plementation; they may thus be exercised future market trends to be made. This according to rules other than those laid prospective comprehensive view of the down by the third subparagraph of Article market is essential not only for the possible 43(2) of the Treaty solely for measures application of protective measures in the intended to lay down the principles of the face of a threat of serious disturbances of common agricultural policy and, in partic­ the market but also for the fixing of export ular, the guidelines of a common organiza­ refunds and denaturing premiums, for the tion of the market. The principles governing exercise by intervention agencies of their the institutional balance between Council right to intervene on the market at any and Commission are respected in this case. time, particularly by way of purchases, As to the Council's option, on a qualified for fixing the flat-rate amount comprised majority, to take a decision different from in the intra-Community levy, for the choice that of the Commission, it must be re­ of measures intended to avoid deflections marked that the Council's powers of of trade and, generally, for checking the amendment in the framework of the functioning of the systems set up by Management Committee procedure and Regulation No 19 and its implementing those provided for by the first paragraph regulations and for their possible amend­ of Article 149 of the EEC Treaty are not ment.

JUDGMENT OF 17. 12 .1970 —CASE 26/70

fixing does not allow of a prospective view principle of proportionality of the of the market. method to the objective sought. The complaint that the system of deposits — secondly, that, in order to attain its transforms the economy of the market objective, the system of deposits must into a planned or directed economy is not include a strict definition of the condi­ justified. The common organization of the tions which, if satisfied, justify the market in cereals cannot dispense with all release of the deposit. Limitation to intervention on the market; it is character­ cases of force majeure, in the interpre­ ized, however, by the concern to make tation given to this concept by the such interventions conform as much as Court, runs counter neither to the possible to the rules of the market and to principle of proportionality nor to any allow the widest scope for competition. other legal principle. The amount of the deposit is in no way (c) The legal basis of the system of deposits excessive, having regard to the objective on exportation of the system of deposits, by reason of the fact that forfeiture of the deposit is not The powers necessary to adopt the system the rule, that it involves only a small of deposits, which forms part of the percentage of the target price of the least implementing provisions, were conferred expensive cereals and that it is very much on the Commission by the Council in

EINFUHR- UND VORRATSSTELLE ν HENCK

2 In its judgment given today in Case 25/70 the Court has rules that examination of the question put by the Hessischer Verwaltungsgerichtshof has not revealed any factor capable of affecting the validity of the provisions referred to.

3 However, in this case the Court is also asked in one of the questions subordinate to the principal question to rule whether the provisions of Article 7 (1) of Regulation No 102/64 are valid in a case 'in which the deposit is lodged for the purpose of obtaining export licences in respect of which the amount of the refund has been fixed in advance'.

4 Under the terms of the second indent of Article 7 (1) of Regulation No 102/64 the deposit is to be 5 units of account per 1000 kg in cases where the amount of the refund has been fixed in advance. According to the defendant in the main action, this amount, which represents a multiple of the deposit laid down in cases where the refund is not fixed in advance, constitutes an excessive burden, unrelated to the real objective of the system of deposits.

JUDGMENT OF 17. 12. 1970 —CASE 26/70

5 It cannot be denied that as a principle it is necessary to fix the amount of the deposit required in the case of 'advance fixing' of the refund at a higher level than in the case of a transaction giving rise to the application of the refund applicable on the day of exportation. As the system of advance fixing was created in the interests of trade, it was necessary to provide at the same time; in the scheme of the regulation, for adequate guarantees to eliminate the possibility that machinery of the common organization of the markets might be upset by speculation made possible by the introduction of this option.

EINFUHR- UND VORRATSSTELLE ν HENCK

Having regard to the Treaty establishing the European Economic Community, especially Articles 2, 39, 40, 43, 149, 155, 173, 177 and 189; Having regard to Regulation No 19 of the Council of 4 April 1962 and Regulation No 102/64/EEC of the Commission of 28 July 1964; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; Having regard to the judgment of the Court of today's date in Case 25/70,

THE COURT

in answer to the questions referred to it by the Hessischer Verwaltungsgerichtshof by order of that court of 28 April 1970, hereby rules:

Examination of the question put has revealed no factor capable of affecting the validity of:

(1) Regulation No 102/64/EEC of the Commission of 28 July 1964 on import and export licences for cereals and processed cereal products, adopted under Article 16 (3) of Regulation No 19 in accordance with the Management Committee procedure established by Article 26 of that regulation;

OPINION OF MR ADVOCATE-GENERAL DUTHEILLET DE LAMOTHE

(See Case 11/70, p. 1140)