C-90/77

JUDGMENT OF THE COURT OF 27 APRIL 1978 1

Hellmut Stimming KG v Commission of the European Communities

Case 90/77

1. Agriculture — Common organization of the markets — Amendment of rules — Principle ofprotection of legitimate expectation — Application — Conditions

2. Common Customs Tariff — Tariff heading — Amendment — Official ruling as to tariff classification — Expectations of interested parties — Taking account thereof — Obligation — Absence

1. When rules concerning agriculture 2. Official rulings as to tariff classi­ are amended, protection of fication are issued general purposes legitimate expectation is required and are of a purely abstract nature, inter alia where under the preceding that is to say without any relation to system traders have already informed specific transactions, and so do not the competent authorities of their oblige the Community authorities in intention to carry out specific any adjustments of the rules transactions over a period extending concerned which they might consider beyond the time of the introduction necessary to take account of any of the new system and have irre­ expectations which such documents vocably committed themselves might have engendered among thereto, where appropriate by paying interested parties. a deposit.

of Mario Cervino, Legal Adviser to the Commission of the European Communities, Jean Monnet Building, Kirchberg,

defendant,

Application for compensation,

THE COURT

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

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

market in beef and veal and adapting certain products, such measures shall be Regulation (EEC) No 827/68, and adopted in accordance with the Regulation (EEC) No 950/68 on the procedure laid down in Article 27. They Common Customs Tariff. That regu­ shall be applicable until 31 December lation divided the former tariff heading 1977." 16.02 B III (b) 1 of the CCT into two By a letter of 3 June 1977 the subheadings: Subheading 16.02 B Commission refused to adopt tran­ III (b) 1 (aa) concerns uncooked prepared sitional measures. bovine meat, whereas subheading 16.02 B III (b) 1 (bb) applies to other prepared Subsequently Stimming brought an meat. Thus as from 1 April 1977, action against the Commission under uncooked prepared bovine meat became the second paragraph of Article 215 of subject to levies and to a monetary the EEC Treaty. The application was compensatory amount. lodged at the Court Registry on 21 July 1977. Stimming did not become aware of these changes until on 4 April 1977, on In its reply lodged on 7 November reading the Official Gazette of the 1977, the applicant purported to extend Federal Republic of Germany (Bun­ its action and bring it also against the desanzeiger) dated 2 April 1977. On the Council of the European Communities. same day the Oberfinanzdirektion By an order of 10 November 1977, the Munich, referring to Regulation No Court held that the reply was not to be 425/77, informed it that it was revoking served on the Council, on the grounds the official ruling as to tariff classi­ that the Rules of Procedure do not fication. The cost price of the goods allow such an alteration in the person of was thereby doubled, as is shown by the the defendant. following calculation: Upon hearing the report of the Judge- Cost price DM 500.00 Rapporteur and the views of the Advocate General the Court decided to Customs duty of 20 % DM 100.00 open the oral procedure without any Levy DM 542.54 preparatory inquiry. However, it asked Monetary compensatory the Commission to produce certain amount DM 67.57 documents.

In its reply, the applicant extended its not do in the event of an order being conclusions, claiming that the Court made in the terms of the application. In should: its pleadings, the applicant asks to be 1. Declare that the defendant is exempted from the obligation to pay a required, in order to compensate for levy, that is to say that it is seeking the removal of a financial obstacle which the damage which it has caused, to authorize the importation free of the complicates not the performance of the levy, of the quantity of marinated contract but only the subsequent impor­ meat specified in the contract of 15 tation and the sale of the goods within February 1977, by adopting a the Community. That is not the same decision ordering the Federal thing as "to guarantee performance of the contract". Republic of Germany to admit the quantity of marinated meat at issue The only action available in the present into free circulation free of the levy. case is one under Article 175 of the 2. Alternatively, EEC Treaty. (a) Declare that the Community is There is no such interest in the required to make good the protection of a right as is necessary to damage which it caused the enable the application to be treated as applicant by impeding the per­ an action for a declaration, because the formance of the contract of 15 applicant is capable of introducing an February 1977; action for damages forthwith. (b) In the further alternative, order For the same reason such interest is also the Community to pay the lacking as regards the alternative claim applicant DM 787 500, with contained in the application, as the interest at 8% as from the date applicant is capable forthwith of of the damage. assessing the damage suffered by it and of bringing an action for damages. In its defence, the defendant contends that the Court should: In its reply, the applicant argues that it is already prevented from making any 1. Dismiss the primary claim as use of Article 175 of the Treaty by the inadmissible; fact that the Commission has defined its 2. Dismiss the claim in the alternative position with regard to the applicant's as inadmissible as to part and letters. unfounded as to the whole; An action for damages under the second 3. Order the applicant to pay the costs. paragraph of Article 215 of the EEC Treaty is an autonomous type of action which is independent of Article 173 of III — Submissions and argu­ the Treaty, and that must also be true ments of the parties of Article 175 of the EEC Treaty. As to compensation in kind, the Admissibility applicant considers that it is permissible According to the Commission, the to envisage a decision by the competent primary claim in the application is not institution as set out in the conclusions admissible. in its reply. The applicant can seek only The conditions laid down in Article 38 a measure which individually concerns (1) of the Rules of Procedure are not its situation and which must come fulfilled in this case, as the wording of within the limits of the acts allowed by the application does not make clear to the Treaty. The majority of learned the defendant what it must to and must writers are agreed in acknowledging the

existence of such a right to an order in claimed and the defendant can be the form of a decision. It must be ordered directly to make compensation allowed particularly in order to ensure in money or in kind. adequate legal protection of legitimate In this case, a declaration would not interests. It must be possible for the touch upon the decisive question for the Commission to provide a fair solution defendant, namely whether an action to any difficulties which arise by issuing for damages can be used to compel the an order to a Member State in a defendant to adopt provisions in favour particular case. A finding that no such of third parties the content of which is power existed would give rise to a legal prescribed in every detail, or whether vacuum. the defendant is required to make The applicant has not brought an action compensation in money. for damages, but an action for a The primary claim would be declaration of a duty on the part of the inadmissible even if it had been Commission, because the applicant submitted in the form of an action for considers that the Commission will performance. Under the system of legal comply with a declaration in such terms protection laid down by the Treaty, by the Court of Justice. applications for the annulment of an The applicant considers that it does unfavourable provision or seeking to have an interest in claiming the obtain a favourable provision from the declaration mentioned in the reply. defendant, for the purposes of Article Nevertheless it has supplemented its 189 of the EEC Treaty, can be validly action with an action for damages in the made only within the limits of the alternative. procedure laid down in Articles 173 or 175 of the EEC Treaty; the second According to the defendant, the paragraph of Article 215 of the EEC principal claim contained in the reply is Treaty has a logical, necessary, auto­ not admissible as an action for a nomous function only in the field of declaration. financial compensation, which is not By the express wording of the reply, the covered by Articles 173 and 175 of the applicant waives any claim that the EEC Treaty. defendant should be immediately Even from the point of view of ordered to adopt a decision of the kind compensation by way of restitution in referred to. The applicant persists in kind, a legal action cannot be used to claiming a declaration of a general require the legislature to amend laws in nature to the effect that the defendant is a very precise way. required to call on the German customs authorities not to claim any levy from Substance of the case the applicant. Stimming argues that the Commission If the Court of Justice allowed that acted illegally and was also guilty of claim, the defendant would not know wrongful conduct in the exercise of its how to execute such a judgment. duties.

protection of the legitimate expectation The taxes on marinated meat are of those concerned, of proportionality excessive and have an absolutely and of equality of treatment. prohibitive effect; for that reason they infringe both the provisions of Articles Alternatively, the claim for com 39 and 110 of the EEC Treaty and the pensation for damage is based on the principles of proportionality and non general principle of the protection of discrimination. In the context of the the legitimate expectation of those common organization of the market in concerned, which requires adequate beef and veal, the institutions of the transitional periods, particularly in the

States. no overriding public interest which required that transitional measures According to the defendant, the action has no foundation in law. should not be granted in respect of the contracts which had been entered into. The provisions adopted by the Council Marinated meat is not a commodity cannot be changed by the defendant. which is produced ad hoc but is well They are as binding for the defendant known as such, and it is also not as for third parties. If the applicant possible to substitute marinated meat for challenges the legality of the levy system meat within heading 02.01 of the CCT, enacted by Regulation No 425/77, the a substitution which Regulation No Council, an autonomous legislative 425/77 is designed to prevent according institution of the Community, and not to the recitals in the preamble. the Commission, is responsible for the Regulation No 425/77 infringed the legality of legislation adopted by it. binding effected under the General The rules of the levy system of Regu Agreement on Tariffs and Trade lation No 805/68 as amended by Regu

STIMMING v COMMISSION

bound". The obligations entered into Regulation No 76/76, which already under GATT are among the obligations made the issue of the import licences referred to in the said article. required for each product within sub heading 16.02 B III (b) 1 conditional However no provision of GATT gives upon prior purchase of intervention the applicant a right to import goods meat. Although from a purely formal free of levy which can be directly point of view it did not have to pay a enforced against the defendant.

No one measures. could expect the Council to re-open a gap that the defendant had closed after Article 7 of Regulation No 425/77 gives two years of effort. the defendant a margin of discretion for reasons of administrative convenience. A prudent and well-informed trader would either have made certain of The criterion of the protection of legitimate expectation obliges the obtaining at the right time a sufficient number of licences issued within the defendant to adopt particular transitional measures only if the framework of the protective measure, or existence or performance of legal before entering into important contracts obligations between traders is im to be performed after 1 April 1977 he would have waited for the conditions of mediately and unforeseeably jeopard ized in the absence of any overriding the import system then applicable to be public interest requiring it. Such was not fixed with certainty. Details of the entry the case in this instance. into force on 1 April 1977 of the new provisions for the current levy system Explaining the background to the were communicated at the right time by

JUDGMENT OF 27. 4. 1978 — CASE 90/77

veal which that product contains have In its reply, the applicant argues that if already been processed and have had the regulation at issue is partially illegal, the Commission is also liable on the ingredients added to them, and this excludes any qualitative comparison ground that Article 1 (1) (a) and Article with beef and veal as such. 9 were inserted in Regulation No Consequendy, the system of levies 425/77 only on its proposal. cannot be applied to that product. Article 17 of Regulation No 805/68 Article 7 of Regulation No 425/77 does provided nothing different from Article not primarily refer to "reasons of

STIMMING v COMMISSION

The new subdivision of tariff sub­ grant the applicant the exemption heading 16.02 B III (b) 1 was not fore­ demanded. seeable by the applicant. The The conditions for granting an consignment of marinated meat was exemption on the grounds of protection imported on 25 March 1977 without an of expectations are not satisfied. import licence, subject to customs duties Traders must take account of the at the rate of 26%. All that emerged import rules in force. Exemption from from Regulation No 3117/76 was that the Community rules on the basis of the the protective measures would be protection of legitimate expectation is repealed and that the normal possible only where earlier Community arrangements for imports would be re­ acts or provisions were likely to give established. Thus the defendant brought into being a situation of confidence rise to such expectations. upon which the applicant was entitled to It should be noted that the applicant did base its subsequent conduct. not place its confidence in the retention of rules which were favourable to it In its rejoinder, the defendant first observes that after 31 December 1977 it When it entered into its contract with

is no longer empowered to adopt its Romanian supplier, it did not take transitional measures as provided for in account of the import system laid down Article 7 of Regulation No 425/77. by the common organization of the Thus the claim stated under heading BI market in beef and veal. of the application is unfounded. At most, it hoped that the import The defendant would be bound to give restrictions still in force at the time of compensation in money only if it was the conclusion of the contract would be under a legal duty to adopt the decision replaced by total abolition of claimed by the applicant. restrictions on imports of marinated Article 7 of Regulation No 425/77 meat.

Having entered into a contract on 15 February 1977 with the Romanian external trading organization Prodexport for the delivery of 450 000 kg of marinated meat (Sauerbraten), it considers that it is harmed by the adoption of Council Regulation (EEC) No 425/77 of 14 February 1977 amending Regulation No 805/68 on the common organization of the market in beef and veal and adapting Regulation (EEC) No 827/68, and Regulation (EEC) No 950/68 on the Common Customs Tariff (Journal Officiel L 61, p. 1).

That regulation altered the arrangements for imports as regards inter alia the calculation of the levy; and in addition, "whereas certain products submitted as ‘prepared meat’ falling within subheading 16.02 B III (b) 1 of the Common Customs Tariff were created for the sole purpose of avoiding application of the levies; whereas, to avoid levy-free imports of products which can be substituted for meat falling within heading No 02.01 of the Common Customs Tariff, it is necessary to arrive at a better definition of the products which may be imported free of levies", it amended Article 9 (2) of Regulation No 805/68 so as to apply levies to products falling within a new heading, 16.02 B III (b) 1 (aa), which it introduced in Article 5 (7).

These changes became applicable as from 1 April 1977.

2 Since they fell within the new tariff heading 16.02 B III (b) 1 (aa), the products forming the subject-matter of the aforesaid contract of 15 February 1977 became liable to the amended system of levies.

Those products, which under the old system had been liable to ad valorem customs duty of 26% — but also subject to protective measures for several years —, became liable to customs duty of 20% and a levy which at the material time amounted to more than 100% of the purchase price.

4 As the legal basis of the primary claim and of the alternative claims is the same, the question whether the action is well founded should be considered first.

5 The first point to be considered in relation to the question whether the action is well founded is whether there is a causal nexus between the damage alleged and the conduct of the Commission.

The Commission is criticized for not having used its powers under Article 7 of Regulation No 425/77 in the manner desired by the applicant.

In particular it is alleged that the principle of the protection of legitimate expectation should have prompted it to provide transitional exemptions from the new system where importers who had already accepted commitments to import were surprised by an unforeseeable amendment in the system.

JUDGMENT OF 27. 4. 1978 — CASE 90/77

6 Although the wording of Article 7 of Regulation No 425/77 expressly refers not to difficulties which the implementation of the new system might cause for those concerned but rather to difficulties of an administrative nature which might be encountered by the authorities responsible for such implementation, the wording is couched in terms broad enough to enable the Commission if necessary to adopt measures designed to protect the legitimate expectation of traders inasmuch as the amendment introduced is such as to jeopardize it.

7 Moreover the Commission was entitled to take the view that both the division of the old tariff subheading 16.02 B III(b)l into two new sub­ headings and the application of the levy system to products falling within the first of those subheadings would not be detrimental to the legitimate expectation of traders.

Those amendments were already foreshadowed by the earlier rules concerning protective measures in the sector in question.

STIMMING v COMMISSION

As examples in that connexion it suffices to cite Regulation No 610/75 of the Commission of 7 March 1975 on protective measures for certain beef and veal products falling within subheading 16.02 B III (b) 1 of the Common Customs Tariff (Official Journal L 63, p. 37), Commission Regulation No 76/76 of 16 January 1976 setting up a system linking imports of beef and veal products effected by way of protective measures with the sale of beef held by intervention agencies (Official Journal L 10, p. 21), Commission Regulation No 223/76 of 30 January 1976 setting up a system linking imports of beef and veal products effected by way of protective measures with the sale of preserved beef held by intervention agencies (Official Journal L 26, p. 59) and the aforementioned Regulation No 3117/76.

The third recital in the preamble to Regulation No 610/75 and the tenth recital in the preamble to Regulation No 76/76 both noted the gradual development of new import patterns in the case of certain products falling with tariff subheading 16.02 B III (b) 1 which were not covered by the protective measures already adopted but which were replacing products for which import licences and advance fixing certificates were not issued at the time.

On 25 March 1977 at Passau the applicant imported a consignment of approximately 10 000 kg of marinated meat on the authority of that ruling without the system of protective measures, which was still in force at the time, being applied to it.

9 However it emerges from the applicant's statements at the hearing that it was able to obtain that clearance into free circulation only owing to an amendment of the ruling concerned dated 13 October 1976 stating that the goods came under the above-mentioned exceptions laid down in Regulation No 76/76.

It is clear from those statements that at the time of the amendment the applicant had already realized that any importation of the goods might fall foul of the protective measures then in force and was to be regarded as being very hazardous.

At all events the issue of such a ruling, which by its very nature can refer only to the rules in force at the time and thus cannot protect the person to whom it was issued from amendments to such rules, cannot be considered as equivalent to the issue of certificates, declarations and other documents concerning specific transactions envisaged for a set time and for set quantities.

Whereas documents of the latter kind are capable of giving rise to liability on the part of the Community authorities, rulings as to classification on the other hand are issued for general purposes and are of a purely abstract nature, that is to say without any relation to specific transactions, and so are not such as to oblige those authorities in any adjustments of the rules concerned which they might consider necessary to take account of any expectations which such documents might have engendered among interested parties.

The Commission also contends, as regards the alleged infringement of GATT, that the applicant is unable to specify which rule of that Agreement has been infringed in this case but has merely cited the negotiations concerning the binding of subheading 16.02 B III (b) 1 which concerned only preserved beef and veal, particularly corned beef, as well as preparations of beef and veal made by thoroughly cooking the meat during the manufacturing and preserving process, these being the only products within the subheading which were imported in appreciable quantities at the time of the binding.

The Commission also contends that, the original decision formally to extend the conventional rate to all products falling within the subheading at issue was a unilateral concession by the Community which has been progressively withdrawn since the adoption of Regulation No 610/75.

13 As regards the allegedly excessive amount of the levies, the point of reference is the basic levy applicable to cattle, determined by reference to the difference between the guide price and the free-at-frontier offer price.

Under the provisions of Article 12 of Regulation No 805/68 as amended by Regulation No 425/77, the levy may in fact amount to 114% where the market price of adult bovine animals is less than 90% of the guide price.

14 The defendant's arguments have not been refuted by the applicant to the extent required by law.

JUDGMENT OF 27. 4. 1978 — CASE 90/77

hereby:

1. Dismisses the application.

2. Orders the applicant to pay the costs.

Kutscher Sørensen Bosco Donner Mertens de Wilmars

Pescatore Mackenzie Stuart O'Keeffe Touffait

Delivered in open court in Luxembourg on 27 April 1978.