C-169/73

1. When in a resolution passed to informing which it has assumed and inform and guide commercial makes itself liable.

operators on the subject of the contents of a future regulation the 2. The existence of a chain of causation Council omits to make reservations between the conduct of the on the possible application of a administration and the alleged provision of the Treaties, knowledge damage presupposes that this conduct of which is important for action by is such as to cause error in the mind those concerned, it distorts the task of of a prudent person.

In Case 169/73

COMPAGNIE CONTINENTALE FRANCE, Paris, represented by P. de Font-Reaulx, avocat at the court at Paris, with an address for service in Luxembourg at the chambers of Georges Margue, avocat-avoué, 20 rue Philippe-II,

applicant,

v

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

Advocate-General: A. Trabucchi

Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The applicant claims that the 2. For products in respect of which Community is liable by reason of the fact prices are fixed in accordance with of having in July 1972 in the Council's Articles 51 and 52, the compensatory Resolution formally stated the value of amounts applicable in trade between the compensatory amounts payable in the Community as originally trade with the United Kingdom and then constituted and the new Member in a regulation of 31 January 1973 States, and between those States and having amended these amounts under third countries shall be equal to the Article 55 (6) without safeguarding the difference between the prices fixed position of exporters who had already for the new. Member States entered into contracts for the 1972/1973 concerned and the common prices. marketing year.

3.-5. … 2. The system of compensatory amounts 6. The compensatory amount levied or a. The Community agricultural rules granted by a Member State in apply to the new Member States as from accordance with paragraph 1 (a) may 1 February 1973. Part Four, Title II of not exceed the total amount levied the Act of Accession laid down the by that same Member State on transitional measures necessary to imports from third countries. facilitate the adoption by the new The Council, acting by a qualified Member States of the rules in force in majority on a proposal from the the Community. Commission, may derogate from this Articles 51 and 52 of the Act of rule, in particular in order to avoid Accession provide for fixing prices in the deflections of trade and distortions of

The resolution and the draft regulation Advocate-General, the Court decided to were published in the OJ C 86/16 on 10 open the oral procedure without any August 1972. preparatory inquiry. Article 1 of the draft regulation provides for the compensatory amounts appli- cable until 31 July 1973. For barley II — Conclusions of the exported to the United Kingdom the amount was to be 42-33 u. a. per metric parties ton. (For denatured common wheat the compensatory amount was to be that The applicant submits that the Court should: applicable to barley). This amount remained well under the levy applicable — order the European Economic on the adoption of the regulation that is Community to pay the applicant the 52-88 u. a. per metric ton. The draft sum of FF 5 728 660-17; contained no reference to the situation — order the European Economic provided for in the abovementioned Community to pay the costs. Article 55 (6). The Council submits that the Court c. During the course of the months should: following the adoption of the Resolution the world prices of cereals increased — dismiss the application; considerably. As a result the levies on — order the applicant to pay the costs. imports were reduced, so that by September 1972 they reached a level lower than the compensatory amounts provided for by the draft regulation, that is to say the situation provided for in the III — Submissions and ar-

first paragraph of Article 55 (6) arose. guments of the parties

1972. Whatever provisions the Council The draft regulation annexed to the thought of making for the future it Resolution was the only text in existence would have been proper as regards the such as to enable cereal exporters to past not to alter the provisions of the know the conditions in which they could draft of 20 July 1972 which French undertake new transactions. exporters had relied on in entering into The indications thus given irreversibly contracts for the 1972/1973 marketing affected the policy of cereal exporters in year. More precisely, the system in this resolution should have been maintained their forward transactions by encourag- ing them, from then on, to fill their and the application of the first order books until July 1973. It was thus paragraph of Article 55 (6) of the Act of on the basis and in consideration of the Accession ruled out.

payable on import from third countries. trends on the markets of the Community in relation to the world market, the The whole structure of the contracts for Council had seen fit to draw a cereal exports made by French dealers distinction between two kinds of trade, on the basis of the Council's Resolution the one intra-Community and the other of 20 July 1972, would be upset and with third countries. The principle on exporters would consequently suffer which the common organization of the considerable loss. cereal markets is based is the protection French cereal exporters did not fail to of the Community market with its draw the attention of the Commission corollary, the establishment of Com- and the Council to this situation when, munity preference and the integration of on 1 January 1973, the latter finally had national peculiarities. The application of to adopt the regulation. this principle means that intra-Commu- Further, on several occasions the nity trade benefits from a common applicant mentioned the situation to the organization of the markets with fixed

JUDGMENT OF 4. 2. 1975 — CASE 169/73

The reverse are completely exposed to the variations process takes place for an exporter from in world prices. an original Member State: the The Act of Accession states clearly that compensatory amount which he was to the new Member States would be receive in trade with Britain is similarly immediately subject to the obligations reduced and he suffers a loss on his and enjoy the benefits of the common original price. agricultural policy. This policy therefore applies ipso facto in its entirety to the The logical consequences of the system United Kingdom which thus loses its established by the Resolution of 20 July status as a third country to gain that of a 1972 are that the Community has opted Member State. for the most simple system of rules. There is only one category of The fixed nature of the compensatory compensatory amounts fixed very clearly amounts on accession is thus by the draft regulation as being the undoubtedly in accordance both with result of the difference between the two the spirit and with the letter of the

preference. The price fixing could be once again to decide to abandon this maintained in every case and does not latter in order to adopt flexibility in constitute either a hindrance, distortion regulation No 229/73 without even in the different kinds of trade or discrimi- making use of its correcting factor, natory dumping. The only objection advance fixing. would be of a bugetary nature in the The application of Article 55 (6) is also financing of the EAGGF. inconceivable for another reason.

departing from the principle of fixed c. The applicant's expectation has been disappointed. compensatory amounts through the application of Article 55 (6), that is to Not only is Regulation No 229/73 of the say by making use of a compensatory Council quite different from the draft amount of a variable type, the Council annexed to the Resolution, but further it has not only disregarded Community in no way safeguards the special position

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July 1972 has adopted a system outside f. Confronted with the position created the scope of this paragraph. Nor does it by Regulation No 229/73, the applicant criticize the legality of the system immediately took the necessary measures implemented by Regulation No 229/73. to try to limit its loss, which amounts to Its real complaint is that the Council has FF 5 728 660-17 following the cancella- successively adopted two radically tion of certain contracts and payments of different systems. compensation for withdrawal, the e. As regards the EEC, the applicant completion of other contracts by the contends that the Community's liability supply of equivalent products and finally must be regarded as being widely the performance of other contracts defined, since, without there being resulting in a compensatory amount express reference to misconduct, 'the lower than that expected. It does not Community shall, in accordance with the object to the hearing of experts,

JUDGMENT OF A. 2. 1975 — CASE 169/73

Article 55 (6). likewise in the light of the principles of The Council explains the significance of GATT; if a compensatory amount were Articles 51, 52 and 55 (1) and (2) of the automatically paid, the exporting Act of Accession and states that the Member State could supply at less than world prices, which would seem difficult applicant exaggerates in claiming that the result of these provisions is that the to justify (dumping). markets of the new Member States are c. The Council rejects the three bound to that of the original complaints by the applicant against Community in an 'immutable' manner in Article 55 (6). There is no such a way that 'on accession, the new incompatibility between this provision Member States and the original and Articles 51 and 52. The first Community henceforth form a single complaint is based on a false analysis Community with the same price since it exaggerates the rigidity of the structure'. Certainly from the legal point Community mechanism in price fixing. of view the systems are the same. On the The Council contends, as regards the other hand, from the economic point of second complaint, that even if the first view, this is not the case, since during paragraph of Article 55 (6) prohibits the first six months of 1973 the British Community preference during the market was to remain at its previous transitional period — and the Council level, which was that of the world doubts whether it has in fact such scope market. — there is nothing in this incompatible b. As regards Article 55 (6), the with Article 51 and 52, but only an Council states that it is necessary to express derogating provision in the ensure the relationship with the Treaty as ratified. Community system of flexible protection The Council recalls that the third

As regards wheat and barley, advance July 1972 and Regulation No 229/73. It fixing was done by the original states that the applicant complains about Community but only for a short term, in the differences between the regulation the present case, two months. It is and the draft of July 1972 and not about therefore possible to take the view that its provisions since the applicant advance fixing of compensatory amounts recognizes their validity. The differences relate to three articles: Article 7 which would have been made only for this same period does not have the scope (establishment of the so-called scale which the applicant attributes to it. system), Article 6 (possibility of instituting a system of advance fixing) 1 The Council stresses that, since the Act and Article 9 (publication of the effective of Accession was not in force in 1972, compensatory amounts). None of these the mechanism of advance fixing could complaints is consistent, for these not be applied in a binding manner for innovations, save perhaps the third, do the contracts in question here. not constitute implementing measures of d. The Council examines the im- the first paragraph of Article 55 (6). plementation of Articles 51, 52 and 55 Neither Article 7 nor Article 6 depend and first of all the extension to the new directly on the first paragraph of Article Member States of the common 55 (6) nor do they determine the agricultural policy. It stresses that before application of it. On the contrary they the Treaty of Accession came into rather have the effect of tempering the force there was no possibility of issuing full force of it and in this respect they texts implementing it. relate to the second paragraph rather than the first paragraph of Article 55 (6). There is however a need to indicate the Therefore the Council does not see how level of the compensatory amount they are responsible for the applicant's arising under Article 55 (1). This is the damage. reason for the Resolution to which was e. The Council then considers the annexed the draft regulation formally to be issued after the accession of the new power of derogation provided for in the Member States. It is a question only of second paragraph of Article 55 (6). It indicating the terms where the stresses that no application for application of the Act of Accession derogation has been made either by the requires the Community to establish applicant or by anyone else. It considers certain facts. Although there is no such moreover that it would not have been

the one hand, solely on French for damage arising from the exercise of administrative case-law and on the other legislative power involving the choice of hand on the judgment of the Court in economic policy. The Council is of the the case of Kampfmeyer. opinion that the conditions giving rise to liability on its part are not fulfilled. In the Council's opinion Article 215 constitutes an obstacle to the argument g. The Council considers that it has seeking to draw a legal principle from a shown that it is not liable so that the single Member State. However this may question of the chain of causation, the be, an examination of the French directness of the damage, does not seem case-law shows that its remedies do not to it to require to be examined. It lead in the present case to a declaration therefore reserves the right to deal, only of liability on the part of the should it be necessary, with the Community. The Council in states, examination of the figures, which in any particular that in French law liability on event an examination of the commercial the part of the administration for false documents submitted by the applicant in information or promises not kept is support of its claim for compensation recognized only where the party would require. It also reserves the right wronged relies on a 'document' to request investigation with regard to addressed to it personally and formally the operations in question. communicating to it the information or promise. Oral procedure In the Council's opinion the case-law of this Court in regard to information or During the oral procedure on 13 March promises would appear to be no 1974 the parties raised new facts which different. are summarized as follows:

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ordered the procedure to be re-opened. disregarded. It denies that the Resolution Referring to the fact that the Council in of 20 July was in the nature of an its statement of defence reserved the inducement to develop exports to the right, should it be necessary, United Kingdom. It is not established subsequently to go into the question of that the parties concerned were not the alleged damage suffered by the disposed to maintain and develop their applicant, including the question of the commercial relations with that country. existence of a chain of causation This accorded with Community policy, between the conduct of the Council and which already granted higher refunds for the damage which the applicant claimed, exports to certain countries, in particular the Court considered it necessary to have the United Kingdom, than for exports to the observations of the parties on the other countries. What was to be feared questions reserved. at the beginning of the 1972/1973 The observations of the Council were marketing year was that the prolonged filed on 17 June 1974 and those of the ignorance in which the parties concerned were liable to find themselves as to the applicant on 16 September 1974. These conditions in which their commercial observations may be summarized as follows: relations would henceforth be conduc-

an undertaking — a promise in the conduct of the Community was apparent proper legal sense — by the Community from the figures, that is the amount of administration with regard to the refunds These figures show that any company. This case is dismissed by the encouragement to export was completely Council. The Resolution of 20 July 1972 withdrawn by the Commission by its could not constitute a promise addressed Regulation No 1984/72 of 15 September to the applicant upon the basis of which 1972 (OJ L 213) which abolished the it altered its position and thus had a refund on the cereals in question as from personal right. And it had never been 16 September 1972. The Council recalls alleged that, independently of the that the contracts in question were entered into between 22 and 26 Resolution of 20 July, the applicant had received from the Community adminis- September 1972. tration any assurance equivalent to a It finally examines the case of liability promise by the Council. arising from misconduct in respect of The Council then considers the case of information. It refers to the case-law of

liability arising by information such as to the Court relating to causation, in mislead persons concerned as to the particular the judgment of 16 December intentions of the administration so that in Case 36/62 Société des Aciéries du

the principle of legitimate expectation is Temple v High Authority of the ECSC

JUDGMENT OF 4. 2. 1975 — CASE 169/73

The Council considers moreover that the tons sold, 51 150 metric ton? were to be three letters dated 12 and 18 October delivered in February and 37 150 in and 18 December 1972 from the March. If the company had sold for applicant to the Office National delivery in January it would have lnterprofessionnel in Paris show that the received nothing. The Council raises the question whether the company could applicant did not have any doubts as to really believe that by delaying delivery the consequences of the movement of prices. until February it would receive 42 u.a./t. On the question of advance fixing the As regards the level of prices at which Council states that a prudent operator the contracts were concluded, the Council contends that the terms of the could not be unaware that the grant of refunds was not obligatory and that in contracts show that the applicant had certain cases of fluctuation in the market reserved an excessive profit margin. The protective measures could be taken prices allowed a margin of £4-90 and which could go as far as the imposition £6-01 whereas it ought to have been of a levy on export. The Council normally of £0-50. concludes that the certainty on which The Council concludes that the

the applicant has founded its arguments applicant took risks which gave an does not have the absolute character objectively speculative character to the which the applicant has claimed for it. operation. The Council considers whether the As regards the damages, the Council applicant has acted as a prudent states that it could not, with the facts operator. It contends that there are produced by the applicant, go into the strong reasons for doubting the details of its calculations, and that it is applicant's prudence both as to the date therefore dealing only with the questions of the conclusion of the contracts and as of principle raised by this aspect of the to their conditions. application.

know whether the company is covered, maintenance and even strengthening of a fact which does not appear from the the privileged pattern of trade. file. The applicant states that it is wrong to imagine that when cereal operators enter 2. The applicant states that the into their contracts for each marketing supplementary observations of the year they take into account the fore- Council continue the arguments already seeable errors on the part of the put forward and these arguments distort Community institutions. the basic question of the liability of It sets out the exact structure of its prices Community institutions. It also states and the very limited nature of its profit that the observations of the Council margins — 0-62 FF per 100 kg — contain serious inaccuracies. It mentions inherent in a market characterized by only some of these inaccuracies which very strong competition. characterize the Council's defence. After having stated these points of It is first of all a serious error on the disagreement with the oberservations of Council's part systematically to equate the Council, the applicant attempts to the system of refunds which depends on establish the actual damages which it has the movement of world prices with the suffered and the chain of causation system of compensatory amounts between the Council's action and the established for the accession and damages by analysing in turn the intended to create a single market and a Community mechanisms, the Council's privileged pattern of trade between the liability, the practical aspects of cereal Community as originally constituted and trade and the operations in question in the new Member States. the present proceedings. The applicant states that although It shows that the damage is directly refunds had sagged in October, they had associated with the conduct of the not ceased to climb up again until administration, which suffices in the case December. This was why it was wrong of a promise to give rise to liability on to claim that the Council was opposed the part of the Council. It reiterates the to exports to Britain. arguments already advanced during the The applicant rejects the Council's first stage of the proceedings relating to proposition according to which the date the reliance which it placed on the fact of the transaction had an influence on its that the compensatory amounts provided

to deflections of trade to the advantage It stresses that it had concluded the of operators from third countries. contracts at the date when its usual The applicants attitude would have British customers had been the buyers. been different if the possibility of the The fact that the date of the contracts application of this paragraph had been coincided with an appreciable lowering suggested In this event it would in the refund was of no consequence. certainly not have contracted with its The amount of the refund on the date British purchasers. Only the advance when the contract was entered into is of fixing of the compensatory amount, no consequence to the operator who has established at the same time, would then fixed it in advance or has been assured have made it possible to conclude that it is fixed. contracts. The applicant denies that it delayed As regards the Council's reference to deliveries by a month. Since the Article 6 of the draft regulation, it states contracts were registered in Britain with that this article does not suggest the the Home Grown Cereals Authority, application of Article 55 (6). This article they cannot be altered to suit the is too general to fulfil such a role. It convenience of one or other party. It obviously applies to changes in preferred to export during the first marketing years. period of the marketing year. It used for The applicant then endeavours to refute this purpose export certificates fixed in the Council's argument that the advance in August at the time when the compensatory amounts laid down by the refund was high. texts of July 1972 represented 'a ceiling' It rejects the Council's complaint or a 'maximum possibility'. The Council regarding its alleged 'passivity'. It has ends up by caricaturing its own been in permanent contact with the attitude by thus endeavouring to French and Community authorities. introduce an element of hazard which is However, it has not been able to obtain not only contrary to its intentions, which any satisfactory reply since the Council were to avoid any risk, but is also alien and Commission have revealed to the concept of international trade, themselves helpless when faced with a which can only develop if the risks are situation which they had not foreseen. calculable and can be judged. The applicant therefore is of the opinion The applicant states that the that it has demonstrated that it has acted observations of the Council show that it with the greatest prudence when does not appreciate the daily practice of entering into the contracts. It moreover the cereal market. The applicant states thinks that it has already shown in its

The Council observes that the figures in advance for exports to Britain since given by the applicant relating to the this country does not have the necessary warehouses. taking up of export certificates during the period from 27 September to 24 The Advocate-General delivered a October 1972 should be altered. It refers second opinion on 5 December 1974.

Law

1 The application lodged on 28 September 1973 seeks an order against the European Economic Community for the payment of FF 5 728 660-17 as compensation for damage the applicant claims to have suffered as a result of the system of* compensatory amounts established by Article 55 of the Act annexed to the Treaty of 22 January 1972 concerning the accession of the new Member States to the Communities.

2 Articles 55 (1) (a) provides that in trade in certain agricultural products compensatory amounts shall be levied by the importing State and granted by

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the exporting State in order to compensate the differences in price levels which may exist until 1 January 1978 between the new Member States and the Community as originally constituted.

8 The Resolution, with the draft regulation annexed, was published in the Official Journal of the European Communities of 10 August 1972 in the C section under the heading 'Information'.

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9 Regulation No 229/73 of the Council of 31 January 1973 laying down general rules for the system of compensatory amounts for cereals, while fixing these amounts as provided for in the draft annexed to the resolution of 20 July 1972, expressly provided, in accordance with Article 55 (6) of the Act of Accession, that if the levy is lower than the compensatory amount, the Commission should apply the scale set out in the annex to the regulation to determine the amount applicable by way of compensatory amount.

10 On the basis of these provisions and following the increase in prices on the world market since the summer of 1972 the compensatory amounts actually applied since 1 February 1973 were lower than the amounts provided for by the draft regulation annexed to the Resolution of 20 July 1972.

11 In view of the Resolution of 20 July 1972 the applicant concluded during September 1972 contracts for export to the United Kingdom of barley and denatured wheat, the delivery of which was to take place between February and June 1973.

12 Since the applicant was not able to receive the amounts expected, it had to perform some of these contracts at a loss while others had to be rescinded or revised with the agreement of the purchaser, which likewise involved losses for the applicant.

17 The applicant complains that the Council encouraged it, by the Resolution of 20 July 1972, to conclude contracts within the framework of a system involving fixed compensatory amounts, and then, by Regulation No 229/73, abandoned this system in favour of flexible compensatory amounts.

18 It is right to observe in this respect that the flexibility of the compensatory amounts results from the first paragraph of Article 55 (6) of the Act of Accession, according to which these amounts could not exceed the total amount levied on imports from third countries.

19 This provision applies automatically, so that it is not possible, by reason of the fact that the Resolution and the draft regulation annexed did not mention it, to impute to the Council an intention not to apply it.

20 Nevertheless, since the Council adopted the abovementioned Resolution with the object of informing and guiding commercial operators, it ought to have issued a reminder as to the provision in question and expressed reservations as to its possible application.

21 The omission to make the Resolution subject to such reservations, while explicable by the situation of the world market at the time, when the subsequent increase in prices was not yet foreseeable, was likely to distort the task of informing which the Council had assumed and was such as to make it liable.

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28 The applicant, as a prudent exporter, fully informed of the conditions of the market, was not unaware and in any event could not be unaware that such was the position at the time the contracts were concluded, and of the consequences which would result therefrom as regards the compensatory amounts.

29 Its subsequent correspondence with the Office National Interprofessionnel des Céréales, moreover, leaves no doubt in this respect.

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30 With regard to this, mention may be made in particular of its letter of 12 October 1972, in which it expresses itself thus: ‘... following a price movement which was as unforeseeable as it is exceptional... the Community levies risk being lower than the compensatory amounts. The latter are liable to be revised so that they do not exceed the levy in force; this follows from Articles 55 and 56 of the Act of Accession.’

31 This letter confirms that the applicant was effectively in a position to appreciate the effect which an alteration in the conditions of the market could have on the application of the Articles referred to.

32 Accordingly the damage alleged has not been caused by the conduct of the Council.

On those grounds,

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THE COURT

hereby:

1. Dismisses the application;

2. Orders each party to bear its own costs.

DELIVERED ON 3 APRIL 1974 1

Mr President, of the text of the draft Regulation, Members of the Court, published as an Annex to the Resolution, and made it clear that the

1. By Resolution of 20 July 1972, text would be formally adopted published in OJ C 86 of 10. 8. 1972, the immediately after the Treaty of Accession came into force. Council, considering that it was essential to ensure that persons with an economic Article 1 of the draft Regulation interest should be aware immediately of provided that the compensatory amounts the tenor of the implementation applicable until 31 July 1973 in trade provisions to be adopted at the between the Community as originally beginning of 1973 to carry out the constituted and the new Member States, transitional measures provided for in the and between the new Member States and agricultural field under the Act of third countries, should, in the case of the Accession to enable the new Member United Kingdom, be 44-31 u.a. per States to adjust to the rules in force in metric ton for common wheat and 42-33 the Community, announced its approval u.a. per metric ton for barley. The levy

1 — Translated from the Italian.