C-47/75

JUDGMENT OF 4. 5. 1976 — CASE 47/75

Committee that, as a general rule, its request that it should accept advance authorization is essential. responsibility merely because the However, no such rule having been request was made after transportation. promulgated, it could not reject a

In Case 47/75

Federal Republic of Germany, represented by its Agents, Martin Seidel and Klaus Winkel, with an address for service in Luxembourg at the Chancellery of the Embassy of the Federal Republic of Germany, 20-22 avenue de l'Arsenal,

applicant, v

Commission of the European Communities, represented by its Legal Adviser, Peter Gilsdorf acting as Agent, with an address for service in Luxembourg at the Office of its Legal Adviser, Mario Cervino, Bâtiment CFL, place de la Gare,

gives the following

GERMANY v COMMISSION

JUDGMENT

Facts

incurred through storage, calculated on the basis of a standard amount In addition to normal transfer operations per unit of weight/period of shortage for the purpose of releasing the

JUDGMENT OF 4. 5. 1976 — CASE 47/75

warehouse for storage of the new harvest, batches and notified to the Commission there are transfer operations which are every three months. If, during any three made necessary by the determination of a months, very few transfers of stocks took lease by the warehouse owner, usually place, the three-monthly notification with a view to putting the capacity of the would not be submitted but one covering warehouse to profitable use. six months would be submitted instead.

Committee for cereals on 22 April 1971, when the draft of the Commission's On 23 September 1974 the Government decision of 14 May was discussed, the of the Federal Republic of Germany representative of the Commission had lodged an application for authorization to given the representative of the Federal make a change of warehouse affecting Republic of Germany agreement in 2 175 tonnes of cereals.

principle to the costs incurred by the German intervention agency on account The Commission once again placed the of warehouse changes being classified in German applications on the agenda of

GERMANY v COMMISSION

The Commission has taken the The defendant concludes that the Court following decision: should: 1. The costs of change of warehouses (a) dismiss the application; incurred as a result of the (b) order the applicant to pay the costs. determination of a storage contract cannot be debited to the EAGGF. Because the transfer is a routine III — Submissions and argu­ administrative act on the part of the ments of the parties intervention agencies, costs thereby incurred are covered by the standard A — Infringement of Article 4 (1)(g) amount provided for in Article 4 (1) (e). It follows that Article 4 (1) (g) does Differentiation between the costs covered not apply. by subparagraph (e) and those covered by 2. Furthermore, the applications lodged subparagraph (g) after transportation by your Govern­ ment for reimbursement by the The Federal Republic of Germany states EAGGF of the necessary transport that Regulation No 729/70, quoted costs incurred by the intervention above, makes the Community entirely agency are unfounded.' responsible for costs connected with the taking over of goods which are the By application registered at the Court of subject of intervention. Justice on 27 May 1975 the Federal Republic of Germany initiated The standard amounts calculated for proceedings under Article 173 of the Member States on the basis of

EEC Treaty for annulment of the subparagraph (e) cover only costs Commission's decision. incurred for normal storage. Normal storage, within the meaning of the After hearing the report of the provision, consists of the holding of the Judge-Rapporteur and the views of the goods in a given warehouse without their Advocate-General the Court decided that being moved.

According to the wording of incurred in the taking over of goods. On subparagraph (g), all warehouse changes the contrary, only interventions carried and, consequently, the cost of warehouse out in accordance with Community rules are financed. changes resulting from the determination by the warehouse owner of the storage contract, come under that provision. The transportation effected by the Federal Republic as a result of the determination of warehouse leases The Federal Republic of Germany draws appears, prima facie, to satisfy the attention to the history of the contested conditions in subparagraph (g). The decision and to the statement which the concept of 'need for transportation' must Commission made when Regulation No not however be considered from the 787/69 was adopted: in expressing viewpoint of the contractual duty of the therein its intention to define a priori intervention agency but solely in the the cases in which transportation was light of the meaning and purpose of that necessary, the Commission was thinking provision. mainly of normal transportation carried out as part of the routine management of It is clear from the purpose of warehouses. Since the Commission has subparagraph (g) that it can only refer to not adopted any general rules, transportation arising from measures for subparagraph (g) cannot be interpreted in common management of the markets or a way which would, in a substantial which are due to objective changes in the number of cases, make it impossible for market situation. The provision was Member States to be reimbursed for intended to ensure that, if abnormal transportation costs. situations make abnormal movement of goods necessary, this can take place even The wording of the provision in during storage under the intervention subparagraph (g) and, with even greater system. clarity, the Commission's statement on the provision show in fact that provision The Commission emphasizes that the was originally made for general cases referred to in subparagraph (g) recognition of the need for transportation primarily involve complete financing by for a whole range of typical cases. The the Community and not a standard cases involved in the present case would amount and that, in the second place, the have been covered by a general rule, and Management Committee procedure is this would have relieved the Management laid down. It concludes from this that the Committee of much routine work. provision is concerned only with

When a State chooses to rent warehouses The Federal Republic contends that from private warehousemen it must also there is nothing in the wording or the take into account the transportation origin of the provision in subparagraph which must be effected every time a (g) requiring the request for the taking contract for lease of a warehouse, over of transportation costs to be lodged concluded for a limited period of time, before the change of warehouse. The fact expires or a warehouse owner determines that, under the terms of this provision, the lease. transportation must comply with the conditions laid down in no way affects The decision of 14 May 1971, the only this interpretation. The actual conditions one of its kind, was taken at the time in which it is carried out can be checked because the Commission believed that before or after transportation. In so far as the determination of the lease of the other conditions apply, the general warehouses concerned reflected wholly principle of legality requires that these unusual circumstances unconnected with conditions should be laid down in routine management by the intervention general terms in advance; it is, indeed, agency of storage warehouses. often easier to assess the need for a change of warehouse after rather than Only the subsequent development before it is carried out. In no sense, showed that the real cause was goods therefore, does the submission of a movements of a routine character which request ex post facto conflict with were inherent in the German storage Community interests. arrangements under an intervention system. Moreover, the decision of 14 May The Commission contends that the 1971 was an isolated precedent which request must be made before took place at a time when not sufficient transportation. The Commission and the experience was yet available and it could Management Committee have a real certainly not be the foundation stone of margin of discretion and power of standing practice on the part of the decision only if they are not faced with a Commission. fait accompli which precludes any possibility of modifying the conditions So long as the letting contract contains a and does not leave room for anything determination clause such changes are more than agreement or outright refusal inevitable under the storage arrange­ to recognize the need for transportation. ments applied by the applicant. There is no reason why the criteria The fact that, in the working drafts of the enabling the need for such transport to Commission, the section 'Storage Costs' be determined or the conditions in does not contain any heading for 'Costs which it must be carried out should not of changing stores' does not mean that be laid down in general terms so as to

In practice, a decision authorizing The applicant did not become aware of transportation goes further than to fix a the whole of the legal standpoint time-limit for transportation and, in contended for by the Commission until particular, indicates the place to which the decision which is the subject of these the goods are to be sent. It may specify proceedings. that the transportation must be the subject of an invitation to tender. The Commission doubts whether the principle that good faith must be B — Legitimate expectation protected can be applied in dealings between the Community and Member The principle of good faith and the States to the same extent as in those prohibition against venire contra factum between the Community or the Member proprium are, according to the Federal States on the one hand, and individuals Republic of Germany, a settled principle on the other. of law which prevails in civil and commercial as well as international law. As a general rule, the Member States play There can be no doubt that the legal a part, in one form or another, in the relationship between the Commission actions of the Community institutions. and Member States must also be In consequence, they are, because of governed by that principle. their day-to day contact with the Community authorities, much better The actions of the Commission conflict informed than an individual can be with its Decision of 14 May 1971. The about developments as they take shape. procedure, proposed by the Commission itself, whereby requests were summarized The applicant ought to have known, by and submitted ex post facto, should at March 1973 at the latest, that the least entail consideration whether Commission would not for long transfers of stocks already carried out maintain its previous attitude. From that were necessary and not a rejection based date at the latest there could no longer on the grounds set out in the Decision. be any question of good faith in pursuing Moreover, the way in which the the practice previously considered to be Commission handled the requests, the correct one. Although the draft particularly by submitting, on two decision which was placed on the agenda occasions, proposals for affirmative of the meeting of the Management decisions to the Management Com­ Committee for cereals on 1 August 1974 mittee, strengthened the belief of the adopted the standpoint of the German Federal Government that there was no Federal Republic, it is equally true that, need to make the request in advance. at the time, officials of the Commission expressed reservations on this point, with The fact that the Federal Republic of the result that the draft was not discussed Germany had, since March 1973, been in depth. aware of the viewpoint of the legal department of the Commission cannot Whilst it is true that different

the question had not yet been finally quantities of intervention cereals were clarified as between the departments sold, the figure of storage contracts concerned and that it could not, even in determined was also high, and vice versa. general terms, rely upon a draft decision from a single department especially as it The Commission doubts whether there is was aware that another department took any relation of cause and effect between the opposite view. the sale of a large quantity of intervention cereals and the figure of C — Whether transportation was storage contracts determined. In its 'made necessary'. opinion it might at most be possible in each individual case to establish that The Federal Republic of Germany transportation carried out after contends, in the alternative, that, even if determination of a warehouse lease was the Commission's interpretation is the due to a measure of market management, correct one, the warehouse changes for example if, as a result of an export concerned are the result of measures tender for food aid, a particular connected with the common manage­ warehouse were emptied to such an ment of the market. extent that, for the sake of greater efficiency, it was considered desirable to During 1968 and 1969 the quantity of transfer the small remaining quantity to intervention cereals stored in the Federal another warehouse. Republic suddenly rose to more than 2.7 million tonnes. This development was On this point the Commission states kept within limits by different measures that, in 1969, it declared to be 'necessary' of the Commission in favour of exports the transportation of a total of more than and in particular by consignments one million tonnes of intervention delivered as food aid. It was this which cereals in order to free the warehouses enabled numerous depots to be largely concerned for the new harvest. emptied. As there was nothing to indicate at that time that the warehouses concerned would shortly be filled, the IV — Procedure warehouse owners determined the contracts in order to fill up their storage The oral observations of the parties were space with other more profitable goods. made at the hearing on 5 February 1976.

1. because these transportations constituted routine administrative acts on the part of the intervention agencies and the costs involved were included in the standard amount provided for under subparagraph (e) of Article 4 (1);

2. because the application for recognition of the need for the transportation should have been submitted before transportation took place.

4 According to the wording of the preamble to Regulation No 787/69 a standard method should be established for taking over any losses arising from intervention, taking into account the degree of discretion which Member States have under Community rules and the fact that a certain number of costs are not harmonized. It is provided, under Article 2 (a) of the regulation, that net losses borne by intervention agencies shall be chargeable to the Guarantee Section of the European Agricultural Guidance and Guarantee Fund. Under Article 3 (1) (a) it is provided that, in order to apply Article 2 (a), the agencies shall draw up, for each marketing year, an account which shall be debited with the items mentioned in Article 4 (1). These items, seven in all, are:

(a) the value of the quantities in stock at the beginning of the marketing year;

(b) the expenditure on buying-in during the marketing year in question;

(c) the costs incurred, during buying-in and selling, by placing in and removing from storage;

6 Subparagraph (g) reads as follows: 'the total amount of the costs incurred through transportation made necessary after the taking over of goods by the intervention agency, and carried out under conditions concerning, in particular, the need for transportation to be determined according to the [so-called Management Committee] procedure …; this amount shall include the costs of placing in and removing from storage arising from such transportation, calculated as provided for under (c).' To enable the expenditure to be classified under (g), the first requirement is that transportation is made necessary and the second is that the transportation made necessary shall be carried out under conditions to be determined by the Commission after hearing the opinion of the Management Committee.

7 In so far as the transportation does not fulfil these two conditions, the costs of transportation carried out after the taking over by the intervention agency are not to be borne by the Agricultural Guidance and Guarantee Fund. Item (e), which is intended to cover the storage costs of all quantities of cereals stored by the intervention agency is not capable, either by its wording or by the method of calculation described by the Commission, of covering the costs of transportation which does not fulfil the conditions in subparagraph (g). To enable a Member State to submit to the Commission, pursuant to Article 5 (2) of the regulation, information necessary for calculation of the standard amount used for item (e), which also includes the incidental costs of transportation which is not made necessary within the meaning of

11 The Commission is also under a duty, after consultation with the Management Committee, to determine whether the second condition in subparagraph (g) is fulfilled, in particular whether the mode of transport chosen for the cereals and the route followed involve the Fund in necessary costs only.

GERMANY v COMMISSION

12 It does not follow from the wording of subparagraph (g) that the request for recognition of the need for the transportation must be submitted before transportation takes place.

1. Annuls the decision of the Commission communicated to the Federal Republic of Germany by letter of 20 March 1975;

OPINION OF MR TRABUCCHI — CASE 47/75

2. Orders the Commission of the European Communities to pay the costs.

Lecourt Kutscher O'Keeffe

Donner Mertens de Wilmars Sørensen Mackenzie Stuart

Delivered in open court in Luxembourg on 4 May 1976.

1 — Translated from the Italian.