C-97/76

JUDGMENT OF THE COURT 8 JUNE 1977 <apnote>1</apnote>

Merkur Außenhandel GmbH & Co. KG

' v Commission of the European Communities

'Compensatory amounts'

Case 97/76

Agriculture — Common organization of the markets — Monetary measures — Trade in agricultural products — Disturbances — Compensatory amounts — Abolition or modification — Injury suffered by traders — Liability of Commission — Conditions

Application for an order for the payment of damages by the defendant;

1 — Language of the Case: German.

JUDGMENT OF 8. 6. 1977 — CASE 97/76

THE COURT

composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate-General: H. Mayras Registrar: A. Van Houtte

MERKUR v COMMISSION

1). For the goods referred to under the tariff heading in question, Annex I, Part 5. Having learnt from the journal 1 of Regulation No 572/76 and Annex I, 'Ernährungsdienst' (application, Annex Part 1 of Regulation No 1312/76 fixed: 10) of 19 June 1976 that the — As regards Germany, a compensatory Commission was intending to adopt a amount of 37.01 DM on exports to regulation placing products containing Denmark and the United Kingdom; more than 50 % by weight of tapioca — As regards the United Kingdom, a under the same tariff classification as that compensatory amount on imports of applying to tapioca, Merkur requested £10.407 the Federal Minister of Food, Agriculture and Forestry (application, Annex 11) to (b) The 'accession' compensatory take steps to postpone the date of entry amounts concerning the 1975/1976 into force of the proposed regulation.

the Official Journal. As that request was 4. By Regulation No 1497/76 of 23 rejected (by a telex message of 8 July June 1976 (OJ 1976, No L 167 p. 27), 1976) Merkur requested the Commission the Commission provided in particular by letter of 2 September 1976 (in Article 1) that for products falling (application, Annex 26) to acknowledge that it was entitled to receive within subheading 23.07 B I (c) 1, containing more than 50 % by weight of compensation until 30 September 1976 products falling within heading No 07.06 in respect of the considerable loss which of the Common Customs Tariff, the it suffered as a result of being prevented accession compensatory amounts or by the entry into force of Regulation No monetary compensatory amounts shall be 1497/76 from performing in full the aforementioned contracts of sale those applicable to products falling within subheading 07.06 A of the concluded between February and May Common Customs Tariff. Heading No 1976 for the export to the United 07.06 refers to nutritious roots and tubers Kingdom and Denmark of products 'with a high starch content', the majority falling within subheading 23.07 B I (c) 1. of which are listed under subheading 07.06 A. As the Commission did not comply with that request, on 8 October 1976 the Regulation No 1497/76 entered into applicant lodged the present application force on 11 July 1976.

JUDGMENT OF 8. 6. 1977 — CASE 97/76

As a result possible liability on the part of the the material loss finally suffered Commission and to reserve, if necessary, amounted to DM 168 185.20. to a later stage of the oral procedure In support of that submission it argues consideration of the questions concern principally that by drawing up the ing the extent of the damage. contracts in question it hoped to obtain the monetary and accession com pensatory amounts applicable at that II — Conclusions of the parties time to the products falling within subheading 23.07 B I (c) 1 of the The applicant claims that the Court Common Customs Tariff when the

After The applicant maintains that the entry learning of the proposals for the into force of Regulation No 1497/76 on adoption of Regulation No 1497/76 the 11 July 1976 had prevented it from applicant informed the Commission on performing in full the contracts several occasions that it was in fact the concluded between February and May only trader concerned by the regulation with KFK, DGL and Spurnen. It found and that it only had approximately 8 000 itself faced with the alternative either of metric tons to deliver under the contracts performing the contracts for the concluded at a much earlier date.

MERKUR v COMMISSION

That notice the aim of the regulation. was only applied for and obtained after most of the contracts at issue in Moreover, it is not clear why the this instance had been concluded. Commission considered a period of 15 Furthermore, it merely records the fact days to be sufficient. It is evident that the that at a given time a specific product purpose of Regulation No 1497/76 was must be classified under a particular tariff not such as to require it to come heading and it cannot be regarded as into force immediately. Once the having any other consequences. Commission decided to allow a transitional period, such period had to be It is also incorrect to maintain that the fair and had not to be fixed in such a applicant found itself faced with the way as to cause the parties concerned to alternative either of making the suffer certain loss. Such a fair period remaining deliveries and foregoing the should have expired on 15 August 1976 compensatory amounts, or of explaining or, at all events, after 31 July 1976, which to the purchasers its failure to perform would have enabled the applicant to those contracts. That was not the only perform its contracts in full by delivering alternative available in this case.

a purely formal nature. The Ober It takes the view that the purpose of the finanzdirektion Hamburg has itself 'monetary' compensatory amounts is acknowledged that once the products at more to combat the difficulties caused by issue fall within tariff subheading 23.07 B monetary instability than to protect the I (c) 1 of the Common Customs Tariff, individual interests of the traders both the exports in question and the levy concerned. As regards the 'accession' of the compensatory amounts applying compensatory amounts, in the absence of thereto are unquestionably lawful. uniform prices within the Community and in so far as they are amounts to be In its defence the defendant replies, first, granted on exports, they perform the that contrary to the statements made by function which, before accession, was the applicant the goods sold under the performed by the 'export refunds'. contracts in question are very easily However, the system of compensatory

As regards the 'monetary' compensatory In those circumstances, since the amounts, for which no possibility of monetary compensatory amount ap­ advance-fixing exists, recognition of the plicable to tapioca only represented a liability of the Community for violation small proportion of the amount of the principle of the protection of applicable to the products falling within legitimate expectations was held in the subheading 23.07 B I (c) 1, the applicant judgment of the Court in Case 74/74 should have known in advance that the (Comptoir National Technique Agricole new compound could not for long (CNTA) SA. v Commission of the benefit from a situation which was not European Communities [1975] ECR 533 justified on economic grounds and which at p. 550, Grounds of Judgment Nos 42 led to a considerable movement of and 43) to be subject to the following exports of tapioca towards the animal conditions which, in this instance, are feed sector. Although it is true that when not satisfied: it concluded the contracts in question the applicant was not sure that the — As regards the first condition the exports in question would attract the transactions in question must be attention of the Community authorities 'irrevocably undertaken'. and would lead them to adopt the measures which were in fact adopted Such is the case as regards transactions subsequently, nevertheless, in view of the for which a trader has obtained export situation the applicant, as a prudent licences subject to giving security. Proof trader familiar with the machinery of the of the irrevocability of the transaction common agricultural policy, could and must be subject to much stricter should have assessed the position conditions: evidence of the conclusion of correctly and have taken the necessary the contract of sale is thus insufficient. precautions. Furthermore, it is clear from the contract concluded on 20 May 1976 — As regards the second condition: the with the DLG (application, Annex 6) that alteration to the particular legal the applicant expected that the relevant situation by the injurious action must rules might be modified during the be 'unforeseeable'. period of validity of the contract.

have been included in the others. In the period risked seeing considerable same way, when each contract was quantities of the product in question concluded, a clause could have been exported, on the basis of newly included providing for its termination if concluded contracts, in order to benefit such an event occurred. from the high compensatory amounts applicable. That danger was the more to — As regards the fourth condition: be feared, since the preparation of the absence of an overriding matter of original compound was not as difficult as public interest which justifies the the applicant seeks to maintain and since adoption of the measure in dispute. it is not the only company to have produced and exported it to the new It must not be forgotten, first, that Member States.

in question. Furthermore, subheading themselves of all the earlier rules without 23.07 B I (c) 1 covers a considerable risk by concluding the appropriate number of widely differing preparations long-term contracts. In those circum for animals, composed of the most varied stances, although the lawful nature of the ingredients. The tariff headings of the transactions carried out by the applicant Common Customs Tariff, which were is not in dispute, it is clear that the drawn up in order to provide protection Commission could and did understand against imports from third countries, are the risks inherent in them. not always immediately suitable to be used as a basis for the application of — As regards the fifth and sixth monetary compensatory amounts. Thus, conditions: the action which causes since it is impossible to provide for all the loss must have been taken the developments which may take place without warning and with immediate in the foreign exchange markets, it is effect and without providing for any sometimes necessary to adapt and perfect transitional measure which would that system a posteriori. permit prudent traders either to avoid the loss or to be compensated for it Secondly, it must be observed that an overriding matter of public interest That does not. apply in this instance. went against the adoption of stronger First, the measure in question was not transitional measures. In fact, the adopted with immediate effect and even foregoing considerations show that the if it had not been 'announced' before applicant had no reason to have being adopted the applicant was made confidence in the continuance of the aware of it by the publication to which it

JUDGMENT OF 8. 6. 1977 — CASE 97/76

exported. If, however, the Court of Justice should consider that a violation of law did occur The applicant also observes that, in this case it would then be necessary to although it is true that in theory the examine the nature of the violation and compensatory amounts are granted in the to consider whether, having regard to the interests of the proper functioning of the margin of discretion available to the common organization of the market, Community legislature in enactments nevertheless the aim of such a system involving such measures of economic requires them to be paid to the policy, the irregularity established con undertakings concerned.

MERKUR v COMMISSION

in the certificates applicable to exports of question, the applicant had foreseen the the compound provided for in the measures subsequently introduced by original contract carried out after 11 July Regulation No 1497/76. That clause is a 1976. general precautionary clause and was prompted by the feeling, prevalent in After making the foregoing submissions business circles, that traders must be the applicant contests the argument put more and more prepared to adjust forward by the defendant that it does not themselves to the sometimes serious and satisfy the conditions which must be unforeseeable action taken by the fulfilled if the liability of the Community Commission without regard for contracts is to be incurred. In particular, it main­ which have already been concluded. tains that: Furthermore, the special condition in question only appears in the contract of — As regards the first condition: 20 May 1976, so that it cannot be argued that when it concluded the other The applicant concluded contracts of sale contracts which were drawn up well under private law which under the rule before that date the applicant could have pacta sunt servanda, it was bound to foreseen the amendment to the law in

the legal situation existing since that date would come to an end after 10 July The fact that the high monetary 1976. compensatory amount fixed for compound feedingstuffs was, in the Furthermore, it cannot be concluded defendant's opinion, no longer from the 'special condition' contained in 'necessary' is not evidence of the vital the contract of sale concluded on 20 May reasons why the transitional period could 1976 with DLG that, at the time in not be extended beyond 15 days. First,

JUDGMENT OF 8. 6. 1977 — CASE 97/76

the fact that a measure is no longer of action taken by the Commission and, necessary does not mean that it 'must' be furthermore, was made so late that the abolished immediately or without the applicantonly became aware of the adoption of adequate transitional Commission's intentions on 22 June measures. Secondly, such an argument is 1976.

long preparation. The increase in exports dictory. The statement to the effect that of the applicant's product, which only the caking process is in no way unusual occurred after June 1976, results from refers, of course, to the process generally the fact that initial difficulties had to be used for the caking of compounds overcome. It would also be interesting to intended for animal feed and not have the defendant provide details of the specifically to the method of number of other undertakings which manufacture employed by the applicant. have manufactured and exported the product; they would be found to be few From the description of it given by the in number. applicant the manufacturing process involves two distinct stages: first, mixing Furthermore, there was nothing to the compound and, secondly, pressing it prevent the defendant from adopting a into cakes. Considered objectively both regulation relating to existing contracts. are rather simple. The difficulties referred to by the applicant are the result of the — As regards the fifth and sixth inexperience of the manufacturers who conditions: undertook that method of production for

MERKUR v COMMISSION

Furthermore, the applicant's argument factors inherent in a commercial that the extension of the time-limits transaction, nevertheless no guarantee is agreed on with KFK was made necessary given as regards the continuance of the by the difficulties which arose during the rules in force. initial period, only leads to the conclusion that the applicant had To return to the various conditions entered into its undertakings without which, according to the case-law of the even knowing whether the product Court, must be satisfied before a claim agreed on could be manufactured for compensation is allowed, the without difficulty. Moreover, the defendant's main observations are: applicant has provided no other more detailed information about the possibility — As regards the first condition: of termination for which provision was so soon made with that purchaser. If the As to the undertaking entered into with question of damages were really to arise Spurnen, the fact that, for the exports to the applicant would have to produce all that undertaking, the applicant made use the agreements made with KFK and of the possibility of fixing the 'accession' DLG concerning deliveries of substitute compensatory amounts in advance products. subject to giving security allows the conclusion to be drawn that the Having made the foregoing remarks the applicant could not terminate those defendant observers that even after the contracts without forfeiting the security entry into force of Regulation No given. Thus, as regards those contracts, 1497/76 the machinery for fixing the the first condition may be regarded as 'accession' compensatory amounts in satisfied.

JUDGMENT OF 8. 6. 1977 — CASE 97/76

Rather is product in dispute and the limited it necessary to weigh up the public and guarantee which the application of the private interests in order to decide monetary compensatory amounts could whether, for each measure, the private offer to a prudent trader also apply in interest merits protection. this case. Furthermore, the special clause included in the contract of 20 May 1976 That is not the case in this instance since with DLG is not a mere general, the applicant, as well as the other precautionary measure. It shows that, interested parties, could have foreseen a even earlier, the applicant was not change in the existing situation. confident that the rules would remain in

In disturbances in the exchange markets as addition, the fact that more than 20 000 a result of fluctuations in the rates of metric tons of the same product were exchange. The public interest requires exported from Germany between March that the financial resources of the and 10 July 1976 by other undertakings community only be used to the extent which were in a position comparable to necessary to attain the desired lawful the applicant's was evidence that objective. In this instance, the conditions considerable quantities of the product laid down by the basic Regulation No were manufactured and that an 974/71 for the application of the important pattern of trade was clearly monetary compensatory amounts are not developing with the new Member States.

MERKUR v COMMISSION

Finally, as regards the argument relating was no obligation on the Commission to to the 'regulation concerning existing adopt transitional measures. contracts', it must not be forgotten that a regulation of that nature would have had to be drawn up on the basis of general IV — Oral procedure criteria and that its application would not have been limited to the case of the The parties presented oral argument at applicant. For that reason achievement of the hearing on 26 April 1976. the aim pursued by the rules in dispute would in all probability have been frustrated. During the hearing the Commission contended that if the Court were to

— As regards the fifth and sixth acknowledge the existence of liability on conditions: the part of the Commission the costs should be reserved until judgment be Regulation No 1497/76 was not adopted given on the extent of the loss to be with immediate effect. The transitional compensated. period provided for enabled a prudent trader to take the necessary measures. In The Advocate General delivered his that respect it is also observed that there opinion at the hearing on 18 May 1976.

Decision

1 The application, which was lodged on 8 October 1976, seeks an order for the payment of damages by the European Economic Community in compensation for the injury which the applicant claims to have suffered as a result of Commission Regulation No 1497/76 of 23 June 1976, which came into force on 11 July 1976 (OJ 1976, No L 167, p. 27), the effect of which was to modify certain compensatory amounts.

2 In support of the application the applicant maintains that as a result of the modification it was prevented from performing in full contracts of sale, entered into before the entry into force of the regulation, for the delivery to two Danish companies and to one English company of products under tariff subheading 23.07 B I (c) 1 containing more than 50 % by weight of tapioca.

On the entry into force of Regulation No 1497/76 there were no monetary compensatory amounts applicable to the products under tariff subheading 07.06 A and the accession compensatory amounts applicable to trade with the United Kingdom were less than those applicable to products covered by subheading 23.07 B I (c) 1.

Thus, as regards the products falling within subheading 23.07 B I (c) 1, which are referred to in Article 1, the effect of Regulation No 1497/76, which was intended to improve the functioning of the system of compensatory amounts in agriculture, was to abolish the monetary compensatory amounts and to reduce the accession compensatory amounts applicable to trade with the United Kingdom. There was at that time no provision for the application of any amount to trade in those products with Denmark.

4 As regards in particular the accession compensatory amounts applicable to trade with the United Kingdom, a system of advance-fixing had been introduced by the Community rules in force at that time for the products falling within subheading 23.07 B I (c) 1.

MERKUR v COMMISSION

The applicant has stated that it obtained, subject to giving security, export licences fixing in advance the amount applicable to those exports.

Since Regulation No 1497/76 contains no provisions which adversely affects the above-mentioned system of advance fixing, the modification of the accession compensatory amounts could not in this instance have affected the right of the applicant to export its product to the United Kingdom on the basis of the amount fixed in advance and, thus, could not be regarded as the action giving rise to the loss which it claims to have suffered as a result of that regulation.

JUDGMENT OF 8. 6. 1977 — CASE 97/76

Thus, Regulation No 1497/76, which was introduced within the context of that power, is a legislative measure adopted by the Community in the area of economic policy in the higher interest of the proper functioning of such market organizations.

In those circumstances, although the possibility of protecting the legitimate interests of the trader cannot be excluded, nevertheless the Community could only be rendered liable for the damage suffered by such traders as a result of the adoption of legislative measures governing the above system if in the absence of any overriding public interest the Commission were to abolish or modify the compensatory amounts applicable in a specific sector with immediate effect and without warning and in the absence of any appropriate transitional measures and if such abolition or modification was not

foreseeable by a prudent trader.

6 It is clear that in this instance the regulation at issue did not take effect immediately and without warning, since its entry into force had been fixed for the fifteenth day after its publication in the Official Journal of the European Communities.

Furthermore, the file shows that an announcement in the 'Ernährungsdienst' of 19 June 1976 informed the interested parties that the Commission was intending to adopt a regulation to subject to the same tariff classification as tapioca any product composed of more than 50 % of tapioca.

8 In the present case the 'respect for existing contracts' referred to by the applicant would amount to granting to the contracts concluded a guarantee equivalent to that which they normally obtain from fixing the compensatory amount in advance.

The Community rules on monetary compensatory amounts applicable here made no provision for such amounts to be fixed in advance.

Although in certain cases concerning monetary compensatory amounts which cannot be fixed in advance the Commission has made provision for transitional measures out of a desire to respect existing contracts, nevertheless, the cases in which such measures have been adopted differ widely from the present and relate, in particular to cases in which the compensatory amounts in question were levied rather than granted on imports and exports and thus constituted an increased burden on the trader.

9 At all events, the adoption of transitional measures on the basis of the principle referred to by the applicant could only have been envisaged by the Commission if it appeared that the modification of the monetary compensatory amounts in question could not have been foreseen by a prudent trader.

On the other hand, the very fact that the regulation relating to those amounts had not provided for them to be fixed in advance, although that possibility existed in relation to the accession compensatory amounts, should have warned a prudent trader that the Commission intended the system of monetary compensatory amounts to be very flexible.

Thus, in the light of the structure of the Community rules applicable and taking into account the nature and aims of the machinery for monetary compensatory amounts, in particular, where such amounts are granted rather than levied on exports, it seems impossible that a modification of the monetary compensatory amounts could be regarded as unforeseeable by a prudent trader.

11 The result of all the foregoing is that the conditions fixed for the entry into force of Regulation No 1497/76 do not amount to a flagrant violation of a superior rule of law for the protection of the individual sufficient to incur the liability of the Community under the second paragraph of Article 215 of the Treaty.

The application must therefore be dismissed as unfounded.

Costs

12 Under Article 69 (2) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs.

The applicant has failed in its submissions.

On those grounds,

Mackenzie Stuart O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 8 June 1977.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE-GENERAL MAYRAS DELIVERED ON 18 MAY 1977 <apnote>1</apnote>

Mr President, The products listed under the headings Members of the Court, Nos 07.06 and 11.06 and subheading 23.07 B I (c) 1 are governed by the In February, March, April and May 1976 common organization of the market in the Kommanditgesellschaft in Firma cereals (processed cereal-based products). Merkur, Hamburg, concluded a certain number of contracts by which it As you are aware, on 12 May 1971 the undertook to sell to certain Danish Council adopted Regulation No 974/71 companies and one United Kingdom authorizing the Member States which, for company considerable quantities of the purposes of commercial transactions, 'pellets of tapioca containing added allow the exchange rate of their molasses', for which it obtained from the currencies to fluctuate 'temporarily' by a competent German authorities on 28 margin wider than that permitted by the April 1976 a notice classifying the goods International Monetary Fund, to charge in question under tariff subheading 23.07 on imports from Member States and B I (c) 1 (sweetened forage containing third countries and to grant on exports to more than 30 % by weight of starch and Member States and third countries no milk products). That certificate did compensatory amounts on certain not in itself entitle the applicant to any specific agricultural products under right to an export refund. conditions fixed by that regulation. This is known as the system of 'monetary Manioc, the product which is used in the compensatory amounts'. manufacture of tapioca, falls within heading No 07.06 when it is in root form The detailed rules for the application of and heading No 11.06 when it is in the Regulation No 974/71 were fixed for the form of flour. first time by Regulation No 1013/71 of