C-44/77

JUDGMENT OF 26.1.1978 — JOINED CASES 44 TO 51/77

to have the system for advance the period of validity of the export payment of the refund applied to him licences. The period of validity of in accordance with the rules in force those licences is fixed in the context on the day of issue of the licence. In of the relevant rules and may only be particular, the special objectives of amended under the conditions the system for advance payment of provided for therein, without regard refunds and the reason for its for the rules relating to the advance existence cannot justify its being used payment of refunds. as if its principal aim were to overrun

In Joined Cases 44 to 51/77

44/77: GROUPEMENT D'INTERÊT ECONOMIQUE 'UNION MALT', whose registered office is at Aurec-sur-Loire; 45/77: SOCIÉTÉ 'GRANDES MALTERIES MODERNES', whose registered office is in Paris;

46/77: SOCIÉTÉ 'MALTERIES FRANCO-BELGES ', whose registered office is in Paris;

47/77: SOCIÉTÉ 'ETABLISSEMENTS J. SOUFFLET 5 , whose registered office is at Nogent-sur-Seine, and SOCIÉTÉ 'LA PROVIDENCE AGRICOLE DE CHAMPAGNE', whose registered office is at Rheims;

UNION MALT v COMMISSION

address for service in Luxembourg at the offices of Mr Cervino, Legal Adviser to the Commission, Jean Monnet Building, Kirchberg,

defendant,

Application for damages under Article 178 and the second paragraph of Article 215 of the EEC Treaty,

THE COURT

composed of: H. Kutscher, President, M. Sørensen and G. Bosco (Presidents of Chambers), A. M. Donner, P. Pescatore, Lord Mackenzie Stuart and A. O'Keeffe, Judges,

No 2727/75 although it may be includes malt. The procedure consist in modified by the Commission in the placing under customs control, in intervening period in the light of the premises specially approved by the situation in the market. Furthermore, customs authorities, a certain quantity the export of malt out of the of malt, for which the export licence is Community is subject to production of discharged. The declarations by which an export licence, the issue of which is the products are brought under one of conditional upon the lodging of the procedures may be made by the

That licence. procedure provides for the lodging of Finally, in accordance with Article 16 security guaranteeing the repayment of (4) of Regulation No 2727/75 the the refund paid, increased by 20% if, refund may be fixed in advance when (in the absence of force majeure, the the export licence is issued. products in question have not actually left the geographical territory of the 2. Within the context of that system Community within the prescribed time- the Community rules also provided that limits. The maximum period fixed by in respect of certain products, including Regulation No 1957/69 was six months malt and barley, the refunds could be from the date on which the products paid in advance, subject to certain were placed under customs control, conditions, before the product actually which, in an extreme case, gave a dealer leaves the geographical territory of the a maximum period for the performance Community and, in the case of of an export agreement of 18 months processed products, even before (11 + 1 + 6). processing takes place. To that end, The bonded warehouse procedure for Regulation No 441/69 of the Council processing products under customs control, of 4 March 1969 (OJ, English Special also known as the 'pre-financing' Edition 1969 (I), p. 91), set up (in procedure, is only applied to basic Articles 2 and 3) two systems for products which are exported in the form advance payment, by providing for the of the processed products listed in product to be placed under the bonded Annex I to the regulation, including warehouse procedure 'for the export of malt. It consists — as regards malt — in unprocessed goods' or under the placing under customs control a certain procedure 'for processing products quantity of barley which must be shown under customs control'.

The applied to the products referred to in refund applicable to the product to be Annex II to the same regulation, which exported is paid as soon as the basic

an agreement of 15 months 3, Regulation No 413/76 entered into (11 + 1+3). force on the seventh day following its publication in the Official Journal, that 3. By means of Regulation No 413/76 is to say, on 4 March 1976. The second of 25 February 1976 (OJ 1976, L 50, paragraph of that provision provides p. 18) the Commission made certain that the regulation shall not apply to modifications to the aforementioned products which, before its entry into procedure. In particular, it reduced the force, were placed under one of the period during which certain cereal systems for advance payment of refunds products, — inter alia the products in instituted by Regulation (EEC) No dispute — may remain under the 441/69.

they were adversely affected, as regard — FF 274 152 by the Société La those agreements, by the entry into Providence Agricole in Case 47/77; force of that regulation, they lodged — FF 6 058 585.51 in Case 48/77; claims for damages under the second paragraph of Article 215 of the EEC — FF 2 802 934.87 by the Société Malteries Chevalier Martin and Treaty on 18 April 1977. — FF 53 924.20 by the Société Union 5. By order of 13 May 1977 the Court Champagne Malt in Case 49/77; decided in pursuance of Article 43 of — FF 4 197 444.00 in Case 50/77; the Rules of Procedure to join the present cases for the purposes of the — FF 125 025.20 in Case 51/77. procedure and judgment. The defendant contends that the Court Upon hearing the report of the Judge- should: Rapporteur and the views of the Advocate General the Court decided to '(1) Dismiss the application brought by open the oral procedure without the applicants as unfounded; holding any preliminary inquiry and to (2) Order the applicants to pay the limit the first stage of that procedure to costs.' a discussion of existence of a wrongful act on the part of the Commission such as to impose on it a liability towards the III — Submissions and argu­ applicants. ments of the parties

UNION MALT v COMMISSION

On a formal level a contract entered into at the end of September or beginning of October that all the potential char sometimes forms the subject of a written acteristics of the newly-harvested document (confirmation) only when all the additional details have been settled. barley are 'revived'. It is for that reason that many confir — It is at precisely that period that the individual conditions of sale are mations are only subsequently settled, even in November or December. drawn up between brewers and maltsters, who are people in the same For those reasons, the maltsters had to line of business. For the brewer the and must still take out, at the time the conditions of sale drawn up with a brewers decide to purchase, a number maltster, for example, in Europe, of export licences corresponding to the take account of the potential char tonnage which they they usually deal in acteristics of the barley available in with them. The refund, which is linked

It is the applicants had to negotiate with impossible to change supplier every their customers on the basis of fixed two, three or four months. rules providing for periods which exceeded by six months (warehouse That explains why the existence of a procedure for unprocessed goods) and bonded warehouse procedure of six by three months (warehouse procedure months, in addition to licences valid for for processing the products) the period 11 months, did not constitute an of validity of the export licence for the abnormal privilege and one which was issue of which they had provided outside the scope of the general law.

12 months. Other factors render it entered into force on 4 March 1976, necessary to provide for a period of retroactively and abruptly modified the

financial conditions on the basis of 31 July of that year, they had carried which the maltsters had contracted out all their exports to the third between May and October 1975 for countries. No one, not even the exports to be carried out from Commission, could envisage such a September/October 1975 to October/ possibility. November, or even December, of the Even supposing that the maltsters were following year. The wrongful act of the able to anticipate such a modification, Commission therefore consists in having they were and are unable, without abolished with effect from 4 March suffering injury, to change any of the 1976 the excess periods over and above details and conditions of performance the period of validity of the export of the contracts already finally licences obtained by the maltsters in concluded. Furthermore, the question of May/June or June/July 1975, without that modification was only submitted to taking account of the fact that certain the Management Committee for Cereals maltsters, not to say all of them, had for the first time on 6 February 1976 obtained such licences and had lodged and it had not been previously placed corresponding securities on the basis of on the agenda. those excess periods.

August or 30 September 1976 protected. respectively for the bonded warehouse procedure for processing products To have adhered, in strict conformity under customs control, under the with the rules in force, to the excess system established by Regulation No periods over and above the period of 413/76 those same traders may only validity of the export licences would not count on a period for performance not have injured the interests of the extending beyond 31 July 1976 for both Community in any way. Those periods

contract. Community, in whose interest it is that Such a wrongful act on the part of the the position on the world market of the Commission could only have failed to European malt market be maintained or affect the maltsters adversely if, at the even improved as regards third beginning of 1976 and at the latest on countries. It is futile for the Commission

the risk of incurring not only the systems could have resulted in unduly displeasure of their customers but delaying the date on which the products also considerable costs by way of were actually exported as compared to the date on which the refund was fixed storage, warehousing, demurrage, etc.; or finally and, therefore, in allowing those exports to take place under market — To observe the terms of the conditions which bore no relation to the contracts, that is to say, to carry out situation in the light of which the part of the deliveries provided for applicable refund was fixed. therein, in accordance with the detailed rules for performance pre­ It is for that purpose that Article 5 of viously agreed with the brewers but implementing Regulation No 1957/69 after 31 July 1976, with the of the Commission of 30 September following financial consequences: 1969 (Official Journal, English Special Edition 1969 (II), p. 417) provides that: — Loss on the difference between 'In order to prevent difficulties arising the refunds; on markets on account of the char­ — Loss on the difference between acteristics of the products or goods' the the compensatory amounts, time-limits applicable to the two subject to their possibly being customs procedures 'may be reduced,

JUDGMENT OF 26.1.1978 — JOINED CASES 44 TO 5l/77

At period of validity of the export licences that time, however, the Community at the date on which the products come under customs control. That reduction malt exporters already held export licences for more than 1.5 million in the time-limits was based (second tonnes, together with higher refunds recital) on experience of the difficulties which could result for malt from the fixed in advance for one year. In the eyes of the Commission the taking out time-limits applicable at that period. of licences for that massive quantity During the latter months (June and appeared to be largely speculative, for July) of the 1974/75 marketing year the following reasons in particular: export licences covering more that 1.5 1. The amount for which the licences million tonnes (metric tons) of malt were taken out was almost double were taken out, with advance fixing of the amount of malt exported during the overall refund (including the the preceding marketing years; corrective) at between 60 and 70 units of account per tonne. Since actual 2. A detailed investigation suggests that the licences at issue were taken out exports of malt per marketing year amounted to between 700 000 and without contracts of sale having been 900 000 tonnes there was reason to concluded for the quantities of malt anticipate the existence at the end of the in question, as is assumed in principle 1975/76 marketing year of a by the advance-fixing system. considerable number of undischarged According to the information licences and, therefore, of numerous supplied to the Commission most of the offers for malt are made to the requests for the goods to be brought under customs control in order to breweries only when it is possible for extend the period of validity of the the parties concerned to have a clear licences and thereby to avoid the threat idea how prices for the annual of loss of the security. That could have harvest are settling. As regards barley meant that, in an extreme case, exports this can hardly be until after the first with advance fixing of the refund based fortnight of July.

UNION MALT v COMMISSION

The previous rules taken out when the refund had contained in Regulations Nos 441/69 reached its maximum level. Thus, for and 1957/69 continued to apply to the example, they were taken out during consequences of situations existing May and June although the prices earlier (products brought before 5 were not clearly established and it March 1976 within the system for was not yet possible for the delivery advance payment of refunds). contracts for the new marketing year (b) As regards the principle of respect to be concluded. for established rights the applicants' argument is based on confusion as to The result was that by profiting from the true scope of the two groups of those refunds the Community malt rules in question: those relating to the exporters were able to offer some of advance fixing of export refunds their product on the market in third (Article 16 (4) of Regulation No countries at prices which were 120/67) and those relating to the sometimes below the quotations for systems for the advance payment of barley on the world market.

In fact, the warehouse procedures. procedure for the advance fixing of the After referring to the other measures refunds and the systems for their ad introduced first by the Commission and vance payment have quite separate aims then by the Council in order to and they are intended to deal with different situations. 'improve the system for the grant of licences for malt', the defendant gives In those circumstances, the fact that its opinion on the submission put before the entry into force of Regu forward by the applicants and refutes lation No 413/76 it was possible under the argument that Regulation No the Community rules for exporters of 413/76 constituted 'a flagrant violation barley and malt to combine the benefit of a superior rule of law for the of those two types of system is an protection of the individual' embodying indirect consequence of the application the principles that laws shall not be of the systems for advance payment of retroactive in effect, that they shall the refunds but does not result from- protect legitimate expectation and either their logic or their aims.

JUDGMENT OF 26.1.1978 - JOINED CASES 44 TO 51/77

take advantage of the possibility of which the goods are brought under the overrunning the periods in which the said procedure. export licences must be taken up is to As regards the exporters who had misuse that machinery. In fact, the placed their products under a system for effect of the issue of export licences advance payment of refunds before the involving the advance fixing of the aforementioned date, their rights are refund is not to fix irrevocably the legal also fully preserved by the second position of the holders of those licences paragraph of Article 3 of the said regu­ as regards the present or future, possible lation. or real, applicability of all the elements of the Community rules to the com­ mercial transactions concerned. The (c) Finally, as regards the question of respect for legitimate expectation, the only rights which the parties may claim arguments which the applicants put are those which they derive from the forward to support their position are far rules relating to the export licence from proving that in this instance a procedure, that is, the right to collect, legitimate expectation existed or that in the circumstances provided for by the the Commission wrongfully disregarded Community provisions relating to the it. products in question, the refund fixed in advance, if, before the expiry of the First of all, the conditions under which period of validity of the licences, the the parties took out the licences in June products are exported or otherwise and July 1975 were largely abnormal. treated in a manner which is assimilated As has previously been indicated, those to exportation. Furthermore, it is a conditions suggest that they were contingent right, which only becomes largely taken out for speculative absolute on satisfaction of a condition, reasons.

UNION MALT v COMMISSION

and 3. even before they concluded many of the The same uncertainty existed as regards contracts for the supply of malt, the the possible duration of the period applicants could have expected measures during which the products may remain to be adopted by the Community in under the aforementioned procedure. order better to adapt the system for the The possibility referred to expressly in payment of refunds on barley and malt Article 5 of Regulation No 1957/69 of and the conditions of their advance a reduction in the periods during which fixing or pre-financing to the actual the goods remain under such a pro situation on the world market. cedure is in fact an element which any normally careful exporter should have Finally, the applicants can hardly claim taken into consideration in his forecast. that they were not in a position to avoid Although as regards barley and malt the the consequences of the contested time-limits provided for by Articles 3 reduction in the periods during which and 4 of Regulation No 1957/69 had the products could remain under never been changed since the entry into customs control, since when Regulation force of that regulation, that did not No 413/76 was adopted, that is to say, mean that it was impossible for them to on 25 February 1976, the export be changed but rather that as conditions licences held by the applicants were still on the barley and malt market did not valid until the end of May or June appear to be abnormal and likely to 1976, with the result that they had lead to disturbances as a result of sufficient time available to take the recourse to the aforementioned necessary measures to adjust their plans procedure the Commission had had no in the light of the new legal situation reason to make use of the power and to avoid its resulting for them in provided for in Article 5 of Regulation transactions involving a loss.

They could also not have been unaware of the cultural policy. complaints made to the Community The conditions of application of the against that policy by the competing refund gave the Community exporters third countries, the threats of retaliation of malt an undue advantage over their and the inquiries into the matter competitors in the third countries, undertaken by the Commission. which was perpetuated by the rules

wrongful disregard for the legitimate fact that, according to the statements expectation of the parties concerned. made by the Commission, the bases of Furthermore, according to the case-law the systems for the advance fixing and of the Court of Justice in Case 74/74, advance payment of the refunds are different. CNTA ([1975] ECR 533), the loss for which compensation may be paid on Although the bases of the systems are that ground does not lie in the not the same, the systems themselves are consequences of the modification of the supplementary, since they both seek to previous rules but rather in those which guarantee to traders in the Community derive from the absence, which is ex equality of treatment with their com­ hypothesi regarded as wrongful, of petitors in third countries. transitional measures which for reasons of natural justice are intended to No one can really dispute that it is on prevent such a modification from the basis of the bonded warehouse pro­ weighing too heavily on the parties cedures for unprocessed goods or for concerned. the processing of goods under customs control, established by Regulations Nos However, the existence of such loss is 441/69 and 1957/69, that the maltsters not proved in this instance. The took out their export licences (in this applicants are in fact seeking to obtain, instance, in June/July 1975), with the by way of compensation, sums which result that the real nature of their are sufficient to put them into the established rights and their legitimate financial position in which they would expectation must be considered as at the have been if they had been able to carry date of issue of those licences to the out their exports under the conditions applicants and not at the date on which existing before the entry into force of their products were brought under Regulation No 413/76; they are customs control. therefore seeking compensation for the full measure of their failure to earn a Furthermore, the Commission is wrong to complain of the 'aggressiveness' of profit and not just for any losses which the malsters towards their competitors they may in practice have suffered. in third countries as in the light of the Be that as it may, it would be premature pressures put on the malsters by those at this stage to examine more closely the same countries it was fairer to speak of figures for the alleged loss. the aggressiveness of the latter.

Contrary to the statements made by the of the Community reached more than one million tonnes in 1975. Further­ Commission, the number of export licences issued to the French maltsters more, the figures available in the customs statistics show that the never exceeded the exportable balance of their production or, a fortiori, their Community exported one million tonnes productive capacity but, on the con­ in that same year. Having regard to the fact that for the reasons set out above trary, faithfully reflected the steady progress over the years. On that point the taking out of the licences must not the applicants refer to the development be analysed over a period of 12 months but rather over 16 to 18 months of use of their productive capacity, expressed in terms of tonnes of malt per year, for (August 1975-December 1976), it may be seen that if the aforementioned the years 1972 to 1978 and compare those figures with the information figure is related to a period of 16 to 18 relating to the licences taken out from months it corresponds precisely to the 1 500 000 tonnes referred to by the 1973 to 1976 and to the quantities Commission. Furthermore, the fact that exported to third countries from 1972 to 1976. in 1976 the increase in the productive capacities of the Community and, in The picture of the situation in the malt particular, of France could result in a market given by the Commission in its level of exports higher than that figure defense (p. 29) is not a true reflection of is quite normal. the real situation. Whereas that picture For that reason, the Commission's is based on a cereal marketing year ground of complaint relating to the beginning on 1 August and ending on 31 July, a proper picture of the state of allegedly speculative nature of the the market requires the taking out of applicants' recourse to the system for the licences to be re-allocated, since advance payment of refunds is without real foundation. It is all the more ill they are issued in May/June and July founded as: and are in practice used in the following cereal marketing year. It may therefore — Since the rise in the world price of be seen that in setting out its case on barley in July 1975 was neither the taking out of the licences the foreseen nor foreseeable, the Commission allocates to three mar- European maltsters cannot be ac-

Finally, as regards the problem of the The applicants then reply to the various extent of the loss which they have objections put forward by the defendant suffered as a result of the adoption of and insist on the irrevocable nature of Regulation No 413/76, the applicants the undertakings which they had entered into with their customers and state that they have no objection to the Court's dealing with the question of the on the fact that — in their opinion — liability of the Commission in an interlo­ the amendment in question took place with immediate effect and without cutory judgment and leaving the determination of the amount of the loss warning. to an agreement between the parties or, The adoption of the transitional in the absence of such agreement, to a measures could in no way adversely subsequent decision on the part of the affect the interests of maltsters in third Court. countries. Even assuming that the grie­ In that context it considers that it is vances expressed by those countries are justified, the Commission could have necessary to supplement the information limited the application of the new regu­ with which the Court has been provided lation to the new 1976/1977 marketing by informing it that: year without adversely affecting per­ — The French malt industry is formance of the current contracts probably since 1964/1965 and cer­ entered into by the European maltsters tainly since 1966/1967 the leading for the 1975/1976 marketing year. world exporter of malt for brewing In those circumstances, therefore, there with customers in more than 100 is no doubt that no speculative ma- countries;

— The steady increase in exports by exports are of malt which will be that industry is the result of a produced from barley from a harvest number of factors, in particular its which, in the light of the climatic industrial investment programme conditions of the Community, has a and trading policy; good chance of still being at least partly — The Commission itself noticed the standing at that period. It is really only special conditions obtaining in the with effect from the first fortnight of malt market when it stated in the July that one can begin to form an idea second recital to its Regulation No of the prices for the harvested barley of 1125/77 of 27 May 1977 (Official a clearly defined brewing quality.

fulfilled, in particular as regards the out for the largest quantities of malt is destination of the exports and the not always June or July but varies from period within which the destination one year to another. During each must be indicated on the export licence'. marketing year that month has always corresponded to the month for which the refund, with the corresponding In the rejoinder the Commission goes in corrective where appropriate, was the greater detail into the argument that the parties concerned could not find in the highest. rules previously in force, looked at from After giving the reasons why the the angle of their objectives, structure applicants are mistaken as to the scope and wording, any justification for a of the second recital to Regulation No legitimate expectation of the main 1125/77, which is quoted at the end of tenance in force, as regards them, of the reply, the Commission emphasizes benefits which the new provisions call in that allowing the parties concerned to question. overrun the periods of validity of the First of all, as regards the malsters the export licences fixing the refund in fact of applying for and of obtaining in advance by placing the products in June or July licences fixing the refunds question under the systems for the in advance is not a requirement which is advance payment of refunds provided strictly inherent in the conditions of for by Regulation No 441/69 is not one conclusion of their supply contracts. of the objectives of the two groups of Such licences providing for refunds may Community rules at issue, that is, those be one of the factors determining the relating to refunds and their advance terms of the contract, but they are not fixing and those relating to their

JUDGMENT OF 26.1.1978 - JOINED CASES 44 TO 51/77

In those circum situation existing in the market at the stances it could have been a drawback time it was paid. for exporters to be uncertain of the The Commission then returns to its amount of the refund when they arguments relating to the essentialy concluded the supply contracts. It is precisely in the light of that drawback speculative reasons which appear to have motivated the taking out of the that the system for the advance fixing of the refunds was conceived, with the aim export licences and states that the of enabling traders to be certain that consideration put forward on that during the period of validity of the subject do not so much relate to any licences the cost of the export will not particular course of conduct adopted by be affected by changes in the amount of the maltsters of the Community during the refund. Regulation No 413/76, the year 1975 alone. They apply in a which is contested by the applicants, in more general way to practices followed no way prejudiced the rights and as much that year as in preceding years, benefits on which the applicants could until the adoption of the amendments to count under the Community rules the Community rules made, in par relating to those refunds and to the ticular, by Commission Regulation No systems for their advance fixing. 1157/76 of 17 May 1976, replaced by Council Regulation No 1381/76 of 16 The systems for the advance payment of June 1976. refunds provided for by Regulation No 441/69 satisfied aims of a different type. Having said that, the Commission They are based on the idea of the pref observes that if a comparison is made erence for Community products. When between the quantities of malt for which it introduced them the Council intended export licences were issued at the to avoid a reverse preference in favour request of the parties concerned and the of products from third countries, having quantities which were actually exported regard to the establishment, at the same to third countries, the explanations of period, of the inward processing the applicants and the statistics which arrangements and bonded warehouse they produce in their reply call for

refer to the grounds for the said regu­ First of all, the reference periods chosen lation. by the applicants for the different sets of The procedure systematically followed statistics produced vary, with the result by the applicants at the time of the that it is difficult to compare the events giving rise to the present action different tables.

UNION MALT v COMMISSION

appreciable. It draws attention to those the basis of overall statistics drawn up measures and to the relevant regulations for the whole of the Community. which were adopted in 1974 and 1975. Furthermore, the applicants' criticisms Furthermore, it is unavailing for the of the picture given by the Commission, applicants to claim that there has been a based upon a cereal marketing year violation of established rights. The beginning on 1 August and ending on prolonged maintenance in force of a 31 July, derive from a misunder rule cannot create an 'established right'

provisions. actually carried out by the Community during a given year with the total Finally, as regards the complaint that quantities for which export licences had the amendment at issue is all the more been sought during the same period, contrary to the principle of the even if they were acquired for exports protection of legitimate expectation which were to take place subsequently. because the European maltsters were unable to foresee its adoption, the Furthermore, although it is true that the Commission insists that the trade circles checks carried out by the Commission concerned were already aware of the have shown that the figures given in its defence were inaccurate, nevertheless difficulties encountered by the Com neither the corrections thus made to munity in the malt market and of the fact that the Commission was those figures nor the statistics to which the applicants refer ('Euromalt' and considering adopting amendments to 'Bios' statistics) are sufficient to call the system for the export of that once again in question the arguments or product in order to avoid a repetition of the situation which existed in 1975. conclusions of the Commission.

JUDGMENT OF 26.1.1978 - JOINED CASES 44 TO 51/77

accordance with the logic and spirit of through the adoption of retaliatory the rules relating to the advance fixing measures taken by those same countries. of the refunds, they had applied for and In addition, the public interest of the obtained the licences at a date close to Community consists solely in ensuring that on which the firm contracts were that the Community rules are applied in concluded with the brewers who were accordance with their objective which, their customers. That such a procedure in this instance, was to avoid in 1976 is possible is shown by the practice now the perpetuation of the difficulties followed since the adoption of the encountered in 1975 as a result of the amendment in question. Furthermore, rules in question. If the Commission had the question arises whether the dif­ provided in Regulation No 413/76 for ficulties encountered by the malt- measures enabling the malt-producing producing undertakings in the external undertakings to continue to use the markets in 1976 are not caused, first of export licences already obtained by all, by a surplus production capacity resorting to the systems for the advance and, secondly, by the fact that as a payment of refunds as they existed result of the massive deliveries made in before the adoption of the said regu­ 1975 and 1976 their customers had lation, the latter would have lost all greater stocks of malt available and practical effect for 12 months. their demand diminished correspon­ dingly. Moreover, no overriding public interest IV — Oral procedure prevented the adoption of the amendment in dispute, since the desire The parties submitted oral argument at of the Commission was not to protect the hearing on 15 November 1977. the private interests of the maltsters in The Advocate General delivered his third countries but to avoid injury to the opinion during the hearing on 15 interests of other Community producers December 1977.

5 Paragraph 4 of the same article provides for the possibility of fixing the refund in advance by stipulating that the refund applicable on the day on which application for the licence is lodged may be applied to an export to be effected during the period of validity of the licence.

6 The Community rules also provide that for certain products, including malt and barley, the refund thus fixed in advance may be paid to Community exporters before the product actually leaves the geographical territory of the Community or, in the case of processed products, even before they are processed.

7 To that end Regulation No 441/69 of the Council provided for the exporter to place the product under customs control before the validity of the export licence expired.

8 It therefore laid down in Articles 2 and 3 two procedures for bringing the product under customs control, first, the procedure for processing the goods under customs control, which applies to basic products intended for export after processing, and, secondly, the bonded warehouse or free zone procedure for products intended for export unprocessed.

JUDGMENT OF 26. 1. 1978 — JOINED CASES 44 TO 51/77

9 Regulation No 1957/69 of the Commission, which lays down the detailed rules for the implementation of the aforementioned Regulation No 441/69, fixed at six months the period during which the products or goods could remain under the bonded warehouse or free zone procedure.

14 By reducing to one month the periods by which the period of validity of the export licence could be overrun, without providing for any transitional measure for undertakings finally entered into and in the course of per­ formance when it entered into force, that regulation amended retroactively and in an unforeseeable manner the financial stipulations on the basis of which the undertakings were entered into and thus caused the applicants a loss for which compensation is due.

UNION MALT v COMMISSION

15 Following the adoption of the amendment the applicants found it impossible to perform fully the aforementioned contracts of sale, thus going back on the decisions adopted with regard to their customers and risking the loss of the securities relating to the unused export licences.

16 In order to avoid that consequence they had either, by carrying out the terms of the contracts, to suffer losses on the difference between the refunds and compensatory amounts applicable or, by attempting to obtain an appro­ priate modification of certain contracts, to bear considerable expense, such as the costs of storage and of warehousing the goods.

17 The applicants conclude that by adopting Regulation No 413/76 the Commission violated the principles of respect for established rights and for the legitimate expectation of traders as well as the principle that laws shall not be retroactive and thereby flagrantly violated a superior rule of law for the protection of the individual.

18 Such a violation represents in a concrete form a wrongful act of such a nature as to impose a liability on the Community towards the parties concerned.

24 In particular, the special objectives of the system for advance payment of refunds and the reason for its existence cannot justify its being used as if its principal aim were to overrun the period of validity of the export licences.

25 The period of validity of those licences is fixed in the context of the relevant rules and may only be amended under the conditions provided for therein, without regard for the rules relating to the advance payment of refunds.

26 It results, in fact, from Annex II to Regulation No 2042/75 of the Commission of 25 July 1975 (Official Journal 1975, L 213, p. 5), which provides that the export licence for malt shall be valid until the end of the eleventh month following its date of issue, even though the period of validity for the other products listed is shorter, that the appropriate place for the special considerations inherent in the particular features of the trade in each product is in the rules relating to the export licences and that those considerations cannot be invoked within the context of the system for advance payment of refunds in order to overrun the period of validity of the export licences fixed by the rules relating thereto.

27 It follows from the foregoing considerations that the complaint relating to violation of established rights put forward by the applicants in relation to the amendment made by Regulation No 314/76 to Regulation No 1957/69 cannot be upheld.

UNION MALT v COMMISSION

28 In addition, the system introduced by Regulation No 441/69 must be applied in such a way as to prevent, in particular in the case of export licences valid for a long period, the opportunity offered to the exporter but the system from resulting in an excessive advantage, having regard to the need to ensure a balance between Community products and products orig­ inating in third countries, and from leading to serious difficulties in trade with third countries.

33 The crisis caused on the same market by the massive purchases by a third country in July 1975 could only increase the difficulties and render it

JUDGMENT OF 26. 1. 1978 — JOINED CASES 44 TO 51/77

henceforth impossible for the Commission to postpone action to modify the conditions of application of the aforementioned system.

34 The trade circles concerned could not, therefore, be unaware when they negotiated and entered into their undertakings for the year 1975/1976 that in the light of the particular development which had taken place in the malt market since 1972/1973 the maintenance in force of the system for advance payment of the refund, applied in accordance with the time-limit laid down by Regulation No 1957/69, gave rise to very serious difficulties as regards trade with third countries and an increasingly heavy financial burden for the Community.

35 Those circumstances should have made the applicants aware of the possibility that in the light of the conditions on the malt market the Commission might be led during the 1975/1976 cereal year to make use, as regards that product, of the possibility offered by Article 5 of Regulation No 1957/69 of reducing the periods during which the goods may remain under customs control, in order to re-establish a balance between the advance-fixing procedure and the system for advance payment of refunds, in accordance with the state of the market.

36 In fact, on 5 February 1976, the Commission, which considered that it should not interfere with the advance-fixing procedure, presented the Management Committee for cereals provided for in Article 25 of Regulation 2727/75 of the Council with the alternative of reducing either the periods during which the goods remain in the warehouse or the periods of validity of the export licences.

42 By that provision the regulation allows goods brought before its entry into force under the bonded warehouse procedures for unprocessed goods or for processing under customs control to continue to benefit from the periods under customs control provided for by Regulation No 1957/69 and is therefore not retroactive in effect.

43 On those grounds it does not appear that when it adopted Regulation No 413/76 the Commission acted in flagrant violation of a superior rule of law for the protection of the individual and thereby imposed a liability of the Community towards the applicants.

44 The applications are therefore dismissed as unfounded.

Costs

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

46 As the applicants have been unsuccessful in their action they must be ordered to pay the costs.

Kutscher Sørensen Bosco

Donner Pescatore Mackenzie Stuart O'Keeffe

Delivered in open court in Luxembourg on 26 January 1978.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL MAYRAS DELIVERED ON 15 DECEMBER 1977 1