C-80/77

Receveur DES DOUANES

and in Case 81/77

between

S.a.r.l. Les FILS de Henri RAMEL

and

Receveur des Douanes

JUDGMENT

Facts and Issues

The judgments making the references to "1. The following shall be prohibited in the Court and the written observations the internal trade of the Com­ submitted under Article 20 of the munity: Statute of the Court of Justice of the (a) The levying of any charge EEC may be summarized as follows: having effect equivalent to a customs duty, subject to the provisions of Article 2 of Regu­ I — Facts and procedure lation (EEC) No 541/70; (b) Any quantitative restriction or 1. Between October 1975 and March measure having equivalent 1976 the plaintiffs in the main actions effect. when importing into France con­ signments of wine originating in Italy 2. By way of derogation from the paid to the French customs FF provisions of paragraph 1, so long 81 614.40 (Case 80/77) and FF as all the administrative mechanisms 2 009 494.14 (Case 81/77) as duty on necessary for the management of table wine and wine suitable for making the market in wine are not in

into table wine imposed by Decree No application — with the exception, 75/846 of 11 September 1975. This until 31 December 1971, of the decree was repealed on 31 March 1976 viticultural land register — with effect from 1 April 1976. The producer Member States shall be Commission had initiated proceedings authorized in order to avoid disturb­ on 21 November 1975 against the ances on their markets to take

on the free movement of goods II — Observations submitted applicable after the end of the under Article 20 of the transitional period? Protocol on the Statute of the Court of Justice of the (2) If the answer to the foregoing EEC question is in the affirmative, were the provisions of Article 31 (2) of the said regulation still applicable A — Observations of the plaintiffs in the on 11 September 1975, having main actions regard to the possibility that all the administratrive mechanisms necess­ The plaintiffs in the main actions claim ary for the management of the that since the end of the transitional market in wine had been set up?" period Article 31 (2) of Regulation No 816/70 is repealed. They stress that in The judgments making the references to this respect it follows from the case-law the Court were received at the Court of the Court of Justice that the principle Registry on 4 July 1977. of free movement of goods is fundamental and applies to every Upon hearing the report of the Judge- Member State as a rule basic to the very Rapporteur and the views of the existence of the Common Market. The Advocate General the Court on 26 agricultural policy cannot derogate October 1977 ordered that the cases be from this principle and the judgment in joined and decided to open the oral Case 48/74 Charmasson [1974] ECR procedure without any preparatory 1383 confirmed the priority of the inquiry. objective of free movement over the establishment of an agricultural policy. The plaintiffs in the main actions, the If there are exceptions to the principle Commission of the European of free movement of goods they can be Communities, the Council of the only temporary and partial without European Communities and the French becoming an "obstacle" to trade. The Government made written observations plaintiffs in the main actions, moreover, in accordance with Article 20 of the observe that in any case there was no Protocol on the Statute of the Court of longer any cause on 11 September 1975 Justice of the EEC. and subsequently to apply Article 31 (2) of Regulation No 816/70 because "all By order of 30 November 1977 the the administrative mechanisms necessary Court, after consulting the French for the management of the market in Government, the Council and the wine" had already been set up at that Commission and obtaining their date in all Member States including consent, added to the file of Joined Italy. Accordingly, by establishing and Cases 80 & 81/77 a certain number of levying a duty on table wine and wine documents from the French suitable for making into table wine orig­ Government, the Council and the inating in another Member State the Commission produced in Case 117/75, French Republic was failing to fulfil the which was a case of proceedings obligations imposed on it by Articles 9 brought by the Commission against the and 12 of the Treaty and Article 31 (1) French Republic for a finding of failure (a) of Regulation No 816/70 and the by a Member State to fulfil an decree in question was unlawful thus obligation under the Treaty, registered making the levying of the said duties on 27 November 1975 but discontinued unlawful with the result that no on 21 April 1976. payment was due.

B — Observations of the Commission judgments of the Court of Justice of 24 October 1973 (Case 5/73 Balkan Since the parties to the main actions did not deny that the duty in question [1973] ECR 1091; Case 9/73 constituted a charge having an effect Schlüter [1973] ECR 1135; and equivalent to a customs duty on imports Case 10/73 Rewe [1973] ECR prohibited by Articles 9 and 12 of the 1175) and the provisions of Regu EEC Treaty and by Article 31 (1) of lation No 1876/74 of 15 July 1974 Regulation No 816/70, the problems (Official Journal L 198 of 20 July arising are first whether Article 31 (2) is 1974, p.

1. The lawfulness of Article 31 (2) of prescribe measures which, if taken Regulation No 816/70 unilaterally by Member Stales, would constitute obstacles The lawfulness of Article 31 (2) of Regu prohibited by the Treaty to free lation No 816/70 depends on the movement of goods, in so far as answers to the question whether in such measures respect the unity of order to resolve problems arising in the the Common Market and do not context of the Common Agricultural Policy Article 43 of the EEC Treaty discriminate between producers or enables the Community legislature to consumers of the Community. create obstacles to trade contrary to The Commission claims that if Article Articles 9 to 37 of the Treaty. 31 (2) of Regulation No 816/70 is It follows from Articles 39 to 43 of the looked at in the light of these principles Treaty and in particular Article 38 (4)

national market could continue so long masson [1974] ECR 1383 that if an as such organization was not replaced order of precedence had to be by a common organization. It followed established between the objective that it must be lawful for Community of free movement and the institutions to incorporate such obstacles establishment of a common agri in a Community regulation. The cultural policy, the former would judgment of the Court in the Char come first. masson case (judgment of 10 December (2) Exceptions to this rule are more 1974, Case 48/74 [1974] ECR 1383) apparent than real.

JUDGMENT OF 20. 4. I978 — JOINED CASES 80 AND 81/77

common organization could not justify of dispute, is for a court to resolve. The obstacles to intra-Community trade. Council moreover had included in the

It would appear moreover that Article minutes of its meeting on 27 and 28 31 (2) does not fulfil the conditions laid April 1970 a statement that there should down in the above-mentioned case-law be a finding, not by the Council, but by the Commission, which should make a of the Court of Justice, namely that Community measures restricting the report to the Council. Although it free movement of goods must preserve appears from the report submitted by the Commission to the Council on 27 the unity of the Common Market and may not be of a discriminatory July 1971, that the condition had not character. Article 31 (2) clearly dis­ then been satisfied, it is apparent on the criminates against producers. The other hand from the reports submitted Commission considers that the in January and February 1972 by the judgment of the Court of 21 March Working Party on Wine and by the 1972 (Case 82/71 SAIL [1972] ECR Special Committee on Agriculture, both 119) does not run counter to its under the Council, that the necessary contention for although in that case the administrative mechanisms had in the

COMMISSIONNAIRES RÉUNIS v RECEVEUR DES DOUANES

lation No 816/70 requires a general and distillation) which were criticized at assessment and not an analysis of the the time by the French Government administrative mechanisms set up. functioned in Italy, it is necessary to Article 31 (2) applies only in the absence consider what quantities have been and not the malfunctioning of the stocked and distilled rather than the administrative mechanisms. Although periods within which payments were this makes it unnecessary to consider made. whether the administrative mechanisms functioned well or not so well in Italy, As regards the quantities stocked the the Commission observes nevertheless figures for the 1974/1975 marketing that to appreciate how only those year are for Italy and France administrative mechanisms (stocking respectively: Italy France Short-term storage contracts HI 4 276 000 HI 6 435 000

Long-term storage contracts HI 1 900 000 HI 5 841 000

HI 6 176 000 HI 12 276 000

As for the checks on movement of wine The Commission suggests that in the the Member States had adopted all the event of the first question put by the measures for implementation of the national court being answered in the Community rules, drawing up affirmative, the Court of Justice should accompanying documents and answer the second question in the determining the obligations of wine negative.

JUDGMENT OF 20. 4. 1971 — JOINED CASES 80 AND 81/77

ment. With regard to the latter sphere the French Government cites examples prevailing over all other considerations on the basis that the first must always of restrictions decided on by the Council to meet specific needs in the prevail over the second. This would amount to a wrong interpretation of the markets in oil seeds, fruit and vegetables and sugar. It is thus clear that the Treaty. objectives of freedom of movement and The French Government takes the view of the Common Agricultural Policy that the special nature of agriculture must not be set one against the other justifies its exemption from the general nor in order of precedence but on the application of the liberal principles contrary combined: freedom of which are the basis of the Common movement is the principle save when the

Finally, such as those provided for by Article 31 Article 38 (2) undoubtedly enables the (2) of Regulation No 816/70. The Council to derogate from the rules aforementioned judgment in Char provided for the establishment of the masson and the judgment of 16 March Common Market where such dero 1977 in Case 68/76 Commission v gations are legally justified by Articles French Republic [1977] ECR 515 show 39 to 46. The Court of Justice has so that although before the end of the ruled in Case 17/67 Neumann v Haupt transitional period two types of dero zollamt Hof/Saale [1967] ECR 441, at gation were allowed by the Treaty, the p. 452. first relating to organizations of the The French Government observes that market established by national auth the Council has on numerous occasions orities and the second to organizations derogated from the principle of freedom of the market established by the

Community institutions, since the end hand of a set of homogeneous principles of the transitional period only those of and on the other of a heterogeneous the first type are considered by the exception naturally separable from the Court as abolished whilst those of the remainder. On the contrary they are second type remain lawful, it being two kinds of provisions mutually understood that the Council's power to affecting each other and closely inter establish them is exercised subject to dependent. The consequence of the review by the Court. This distinction principle of indivisibility, a principle between derogating measures of a recognized both in international law national and Community origin, the and national law is that if the Court only criteria which are compatible with were to declare the provision in the letter and spirit of Articles 38 to 46 question unlawful, it would also, in the of the Treaty, is really decisive and view of the French Government have to explains the various derogations from declare that the unlawfulness of this the principle of free movement of goods clause involves the annulment of the accepted by the Court. The lawfulness whole of Regulation No 816/70. of compensatory amounts has thus been recognized because they had been Second question (lapse of Article 31 (2) established by the Council (Case 5/73 of Regulation No 816/70). Balkan [1973] ECR 1091, at p. 1108,

It must accordingly be taken 31 (2) of Regulation No 816/70 the French Government observes that this that Article 31 (2) of Regulation No 816/70 remained in force until 17 May provision cannot be separated from the 1976. regulation as a whole. If it were to be regarded as invalid, the validity of the It is not possible to maintain that this whole of the regulation would be express repeal was preceded by a tacit affected, since its adoption had been repeal so that the express repeal was to possible only by reason of the inclusion some extent superfluous.

JUDGMENT OF 20. 4 1978 — JOINED CASES 80 AND 81/77

for procedural reasons as for reasons of part deferred its decision and limited substance. itself to noting the said report. Both the Commission and the Council sub­ As regards the procedural reasons the French Government observes that to sequently took the view that the accept in the present case the tacit situation remained so little changed that when difficulties appeared on the wine repeal (which arises in national law only when an existing provision is found to market the representative of the be incompatible with a subsequent Commission himself at the meeting of provision) would mean introducing a the Council on 9 September 1975 serious element of legal uncertainty into referred to the possibility of taking the Community structure and would measures based on Article 31 (2) in pref­ disregard the special procedure erence to monetary measures and this established by the Council by the view was seriously opposed only by the declaration recorded in the minutes of Italian Government.

COMMISSIONNAIRES RÉUNIS ν RECEVEUR DES DOUANES

In the context of producer Member States. this division of powers which the Court of Justice has moreover itself confirmed As to (1) on several occasions the Court certainly does not consider itself bound to The concept of "all the administrative mechanisms" covers all the means disregard the actual facts of the case as calculated to ensure a fair standard of set forth by the national court, but it can look into the context of the living for the agricultural community, namely: stability of markets and question raised only through the statement which the national court reasonable prices.

basically watching over oenological the national court's task in applying the practices. Such management requires on Community regulation was to the one hand mechanisms for acquiring investigate the facts and it is clear this information and for checking the basic has not been done sufficiently in the economic facts and on the other hand present case since the question raised effective mechanisms for implementation. involves the national court's transferring Deficiencies were observed at both responsibility for this investigation to stages in the Member State in question. the Court of Justice. Other French At the stage of mechanisms for courts dealing with similar cases acquiring information, the information considered that the question whether was not always collected and in any the conditions referred to in Article 31 event it was not checked at any stages (2) were fulfilled raised a question of of production either as regards planting, fact which it was for them to resolve grubbing and replanting or as regards and they had first ordered inquiries to harvest declarations, checking on determine whether all the administrative movements and mechanisms for mechanisms had been set up. watching over oenological practices. Subject to the above the French The economic facts which those Government considers that the responsible for the management of the administrative mechanisms necessary for market in wine had are both incomplete the management of the wine market and uncertain.

JUDGMENT OF 20. 4. 1978 — JOINED CASES 80 AND 81/77

In these circumstances the Italian wine growers D — Observations of the Council no longer had any inducement to apply The Council limits its observations to for contracts for stocking or distillation and were reduced to putting their the first question raised by the national court in each of the cases. It maintains production on the market even at a low price which naturally tended to bring that Article 31 (2) of Regulation No prices down and to render nugatory all 816/70, which has in the meantime been intervention measures decided upon at a expressly repealed by Regulation No Community level. 1160/76 of 17 May 1976, is objectively

At by the Council on 22 December 1969. these levels the massive influx of Italian According to these conclusions it was wines on the French market obviously anticipated:

— That the organization of the market having equivalent effect and observes would be adopted before 28 that in the first place the judgment in February 1970 and enter into force Charmasson was concerned only with on 1 April 1970; national measures and organizations of the market the existence of which was — At the same time the frontiers would independent of any Community be opened; decision. Such case-law should not be — That a producer Member State applied in a case where, such as the would be able to suspend the present, the national measures were opening of the frontiers in the event retained expressly on a temporary basis of the measures for managing the and subject to review within the terms market, provided for and regarded of the establishment of a Community as necessary, failing to function and organization of the market functioning of its being necessary to avoid on the basis of Articles 40 and 43.

At the same time it On a more general level the Council was subject to Community control since considers that the maintenance on a the measures taken on the basis of it by the Member State concerned "shall be temporary basis and subject to review of a quantitative restriction connected with communicated to the Commission, the development by degrees of the which shall decide without delay Common Agricultural Policy as whether to maintain, amend or abolish provided for in Article 40 (1) of the such measures". Finally, the measures Treaty may legitimately derogate from were to be kept under review in that on Article 30 et seq. (Case 17/67 Neumann the one hand their objective was "to avoid disturbances" on the market of

JUDGMENT OF 20. 4. 1978 — JOINED CASES 80 AND 81/77

fact that all the administrative Treaty" and that the institutions are at mechanisms necessary for it were not liberty, pending all the difficulties on set up) are not prohibited. the market being overcome, "to take Thus the Community institutions have provisional measures, which are limited arrived at a more flexible interpretation to those Member States in which the

of the rules on the abolition in the agri­ market has been more particularly cultural sector by the end of the affected" (judgment of 2 July 1974, transitional period of charges or Case 153/73 Holtz & Willemsen v measures having equivalent effect. This Council and Commission [1974] ECR interpretation seeks to take account of 675 at p. 695). the complexity of the different interests The Council proposes that the first and situations and to prevent the question put by the Tribunal d'Instance, absence of, or delay in, the Bourg-en-Bresse, should be answered in establishment of a common organiz­ the affirmative. ation of the market from causing in a particular sector confusion highly At the hearing on 22 February 1978 the prejudicial to the Common Market. plaintiffs in the main actions, Such interpretation comes nevertheless represented by Mr Imbach, the French within the terms of the strict Government, represented by Mr de Community criteria: limited duration, Lacharrière, the Commission of the objective of the measures and review. European Communities, represented by There is no justification in the its Legal Adviser, Mr Béraud, acting as contention that measures permitted on Agent, and the Council of the European the basis of Article 31 (2) of Regulation Communities represented by the No 816/70 discriminate between Director of its Legal Service, Mr Member States. The Court has Vignes, submitted oral observations. recognized that "at its initiation the common organization of the market The Advocate General delivered his may not completely measure up to the opinion at the hearing on 15 March objectives listed in Article 39 of the 1978.

(2) If the answer to the foregoing question is in the affirmative, were the provisions of Article 31 (2) of the said regulation still applicable on 11 September 1975, having regard to the possibility that all the administrative mechanisms necessary for the management of the market in wine had been set up?"

3 They have been raised in proceedings brought against the French customs authorities by wine traders who imported into France between the beginning of September 1975 and March 1976 consignments of wine from Italy which proceedings contest whether a duty of FF 1.13 per degree on each hectolitre introduced with effect from 12 September 1975 by Decree No 75/846 of 11 September 1975 of the President of the Republic (Journal Officiel de la République Française of 12 September 1975) and imposed at the time of the said imports was in accord with the Treaty.

4 By order of 26 October 1977 the Court ordered that the two cases be joined for the purposes of the oral procedure and judgment.

General considerations

5 Regulation No 816/70, which entered into force at the end of the transitional period, established a system of organization of the market in wine involving the setting up on the one hand of a prices and intervention system, rules concerning production and for controlling planting, rules concerning oenological processes and conditions for release to the market involving a division of the Community into wine-growing zones, aids for storage and distillation and on the other hand a system of trade with third countries involving inter alia the issue of import and export licences, the establishment of reference prices, countervailing charges on import and export refunds and a safeguard clause allowing appropriate measures to be taken in the event of serious disturbances.

8 The year 1975 saw an exceptional influx of Italian wines especially on to the French market due, inter alia, to the abundant harvest and successive devaluations of the lira.

9 The Council considered this situation at its meetings on 15 April, 21 and 22 July and 9 September 1975 and contemplated various measures; after the reintroduction of compensatory amounts had been rejected it was decided that Regulation No 816/70 should be amended to take into account the resolution of the Council of 21 April 1975 on new guidelines to bring the market in wine into balance.

10 On 11 September 1975 the Government of the French Republic in reliance on Article 31 (2) of Regulation No 816/70 issued a decree imposing the above-mentioned duty on the import of certain wines originating in Italy.

11 In the communication of this measure made in accordance with the second paragraph of Article 31 (2) of Regulation No 816/70 to the Commission by a telex of 11 September 1975 it is stated:

"At the meetings of the Council of Ministers on 15 April, 21 July and 9 September 1975 the situation of the Community market in table wines was analysed at length. It was found that the present inadequacy of the Community intervention mechanisms prevented the spontaneous restoration

COMMISSIONNAIRES RÉUNIS v RECEVEUR DES DOUANES

13 The plaintiffs in the main actions, in reliance on the direct effect of the prohibition on levying after the end of the transitional period charges having an effect equivalent to customs duties in trade between Member States challenged the validity and, in any event, the application at the date of the imports in question of Article 31 (2) of Regulation No 816/70 and brought actions before the national court claiming refund of the duties previously paid under Decree No 75/846.

First Question

14 The first question asks in substance whether Article 31 (2) of Regulation No 816/70 is valid in so far as it authorizes producer Member States to prescribe and to levy, after the end of the transitional period and in the circumstances that it specifies, charges having an effect equivalent to customs duties in intra-Community trade on a product falling within Annex II of the Treaty, in the present case table wine.

JUDGMENT OF 20. 4. 1978 — JOINED CASES 80 AND 81/77

15 The answer to this question requires the interpretation of Article 38 (2) of the EEC Treaty which reads: "Save as otherwise provided in Articles 39 to 46, the rules laid down for the establishment of the Common Market shall apply to agricultural products."

16 According to the plaintiffs in the main actions this provision means that as regards trade in agricultural products, whether they are subject to an organization of the market or not, the Community institutions cannot after the end of the transitional period derogate, or allow Member States to derogate, from the provisions of the Treaty on the free movement of goods.

21 Finally, according to the Commission, Article 38 (2) should, in conjunction with the other provisions of Title II, be interpreted as not allowing the Community institutions after the transitional period to evade the rules on free movement of goods unless it is a question of measures which exclude any discrimination between producers or consumers within the Community as provided by the second subparagraph of Article 40 (3) and do not affect the unity of the market; this straight away rules out the establishment of charges having equivalent effect in intra-Community trade.

22 Article 2 of the EEC Treaty provides that it is by establishing a common market and progressively approximating the economic policies of Member States that the Community must promote throughout the Community development of economic activities, the raising of the standard of living and closer relations between the Member States.

23 As is stressed by Article 38 (1) of the Treaty, placed at the head of the title devoted to the Common Agricultural Policy, the Common Market shall extend to agriculture and trade in agricultural products.

24 The abolition between Member States of customs duties and charges having equivalent effect constitutes a fundamental principle of the Common Market applicable to all products and goods with the result that, as has been found by the Court in its judgment of 13 November 1964 (Joined Cases 90 & 91/63 Commission v Grand Duchy of Luxembourg and Kingdom of Belgium [1964] ECR 625, at p. 633) "any possible exception, which in any event must be strictly construed, must be clearly laid down".

so Article 44 expressly mentions the progressive abolition of customs duties and quantitative restrictions during the transitional period and these words in the context of Articles 12 to 17 and 30 to 35 of the Treaty must be interpreted as also covering charges having an effect equivalent to customs duties and measures having an effect equivalent to quantitative restrictions.

31 The same article creating a provisional system valid only during the transitional period provides that in so far as progressive abolition of customs duties and quantitative restrictions between Member States may result in prices likely to jeopardize the attainment of the objectives set out in Article 39, Member States may, subject to certain conditions, apply a system of minimum prices in a non-discriminatory manner.

32 Thus even during the transitional period obstacles to trade other than minimum prices were expressly prohibited.

33 It would be obviously contrary to the Treaty to permit after the end of the transitional period other obstacles to trade as, if not more, restrictive than those which were permitted only during the transitional period.

34 The other provisions of Articles 39 to 46 either contain no derogation, express or implied, from the rules of the Treaty, such as Articles 39 and 41, or refer to a different and clearly specified sphere such as Article 42 on the rules of competition, or again expressly concern the case of the provisional maintenance during the transitional period of national organizations of the market pending the substitution of common organizations, such as Articles 45 and 46.

38 It follows from the above considerations that the answer to the first question put by the national court should be that Article 31 (2) of Regu­ lation No 816/70 in so far as it authorizes producer Member States to prescribe and levy, in intra-Community trade in the products covered by the organization of the market which that regulation sets up, charges having an effect equivalent to customs duties, is incompatible with Article 13, in particular paragraph (2) thereof, and with Articles 38 to 46 of the Treaty and is consequently invalid.

39 The answer given to the first question makes it unnecessary to reply to the second.

Costs

40 The costs incurred by the French Government, the Council of the European Communities and Commission of the European Communities which submitted observations to the Court are not recoverable.

OPINION OF MR WARNER — JOINED CASES 80 AND 81/77

41 As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

Delivered in open court in Luxembourg on 20 April 1978.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED ON 15 MARCH 1978

My Lords, It is common ground that that influx was due, at all events in the main, first In 1975 there was an exceptional influx to the fact that in 1973 and 1974 the of Italian wine onto the French market. weather had been such that yields had